August 12, 2011
Boyd Group Income Fund Reports Second Quarter Results
Not for distribution to U.S. newswire services or for dissemination in the United States
Winnipeg, Manitoba - August 12, 2011 - Boyd Group Income Fund (TSX: BYD.UN) (“the Fund” or “the Boyd Group”) today reported its financial results for the three-month and six-month periods ended June 30, 2011. The Fund’s complete fiscal 2011 second quarter financial statements and MD&A have been filed on SEDAR (www.sedar.com). This news release is not in any way a substitute for reading the Boyd Group’s financial statements including notes to the financial statements and Management’s Discussion & Analysis.
- Record sales and Adjusted EBITDA when compared to previous second quarter results
- Sales increased by 48.3% to $77.6 million from $52.3 million in Q2 2010; True2Form Collision Repair Centers, Inc. (“True2Form”) and 10 other new locations contributed $22.9 million of sales
- Same-store sales increased by 8.8%, excluding the impact of foreign exchange translation
- Gross margin increased to $34.7 million or 44.7% compared with $23.9 million or 45.7% in Q2 2010
- Adjusted EBITDA1 totalled $4.9 million compared with $3.5 million in Q2 2010.
- Payout ratio was 42.5% compared with 35.1% in Q2 2010, due to a higher level of distributions
- Completed the acquisition of Cars Collision Center of Colorado, LLC and Cars Collision Center, LLC, (collectively “Cars”) which added 14 locations in Illinois, eight locations in northern Indiana, and six locations in Colorado on June 30, 2011.
“The second quarter of 2011 has proven to be reasonably strong, despite challenging market conditions, including high gas prices, year over year reductions in miles driven and persistent high unemployment rates,” said Brock Bulbuck, President and Chief Executive Officer of the Boyd Group. “Specifically, the continued improvement in same-store sales is indicative of continuing market share gains and is therefore encouraging, as we expand our U.S. presence with the completed acquisition of Cars at the end of the second quarter. This is in addition to the positive contribution of True2Form to our operating results, a 2010 acquisition that continues to meet and exceed our expectations. Overall, we are pleased with our positive financial results, particularly given the observed year over year declines in miles driven in the U.S. in March through May. Additionally, the acquisition of Cars Collision on June 30 has firmly positioned Boyd as the largest multi-location collision operator in North America in both annual sales and number of locations, at 164.”
For the three-months ended June 30, 2011
Sales increased by 48.3% to $77.6 million, compared with sales of $52.3 million for the same period last year. The increase consisted of $22.9 million in sales generated from True2Form and 10 other new collision repair locations, and $4.6 million in same-store sales growth, offset by $2.2 million due to a lower U.S. dollar translation rate on sales generated from Boyd Group’s U.S. operations. Excluding the effect of foreign currency translation, same-store sales grew by 8.8%.
Sales in Canada were $18.7 million for the three months ended June 30, 2011, an increase of $2.2 million, or 13.3%, over the same period in 2010. Sales growth in Canada was due entirely to same-store sales increases, reflecting the return to more normal conditions when compared to the unusually low sales experienced in Canada for the same period in 2010.
Sales in the U.S. totalled $58.9 million, an increase of $23.1 million, or 64.4%, over the same period in 2010. Sales in the U.S. included sales of $19.8 million from True2Form as well as $3.1 million from new locations in Cartersville, Georgia; Owasso, Oklahoma; Evanston, Illinois; Las Vegas, Nevada; Bellingham, Washington; Yuma, Arizona; Savannah, Georgia; McDonough, Georgia; and two new locations in the Atlanta, Georgia area. Translation of U.S. revenues at a lower U.S. dollar exchange rate relative to the Canadian dollar resulted in a decrease of $2.2 million. Excluding the impact of currency translation, same-store sales in the U.S. increased by $2.4 million, or 6.7%, compared with the same period in 2010.
Earnings before interest, income taxes, depreciation and amortization, adjusted for the fair value adjustments related to the exchangeable shares and unit options as well as acquisition and transaction costs (“Adjusted EBITDA”1) for the second quarter totalled $4.9 million, or 6.3% of sales, compared with Adjusted EBITDA of $3.5 million, or 6.6% of sales, for the same period a year ago. The 40.1% increase in Adjusted EBITDA was the result of improvements in same-store sales, which contributed $0.6 million, combined with $0.8 million of EBITDA contribution from the acquisition of True2Form and another $0.2 million contribution from other new locations. Adjusted EBITDA was negatively impacted by changes in the U.S. dollar and foreign exchange losses in the amount of $0.2 million.
In the second quarter of 2011, the Fund recorded income tax expense in the amount of $0.2 million, compared to less than $0.1 million in 2010.
Net loss was $2.4 million, or (3.1)% of sales, compared with net earnings of $1.7 million, or 3.2% of sales for the same period last year. The decrease in net earnings was the result of recording fair value adjustments for exchangeable shares in the amount of $3.0 million and unit options in the amount of $0.7 million, as well as the recording of acquisition and transaction costs of $1.3 million and income tax expense of $0.2 million. Excluding the impact of these adjustments, net earnings would have increased to $2.8 million or 3.6% of sales, compared to adjusted earnings of $2.1 million, or 4.0% of sales, for the same period in 2010. This increase is the result of the contribution of new acquisitions and new location growth as well as increases in same-store sales. Diluted loss per unit was $0.221, compared to diluted earnings per unit of $0.153 in the second quarter of 2010.
During the second quarter, the Fund generated adjusted distributable cash of $2.9 million, which includes adjustments for acquisition and transaction costs, the collection of additional prepaid rebates, proceeds on the sale of equipment, and capital lease repayments. The Fund paid distributions of $1.2 million, representing a payout ratio of 42.5% for the quarter.
For the six-months ended June 30, 2011
Sales increased by 48.4% to $159.1 million, compared with sales of $107.2 million for the same period last year. The increase consisted of $45.4 million in sales generated from True2Form and ten other new collision repair locations, and $10.9 million in same-store sales growth, offset by $4.4 million due to a lower U.S. dollar translation rate on sales generated from Boyd Group’s U.S. operations. Excluding the effect of foreign currency translation, same-store sales grew by 10.1%.
Sales in Canada were $38.3 million for the six months ended June 30, 2011, an increase of $2.8 million, or 8.0%, over the same period in 2010. Similar to the quarter, sales growth in Canada was due entirely to same-store sales increases, in part due to the carry-over impact of more normal conditions when compared to the prior year.
Sales in the U.S. totalled $120.9 million, an increase of $49.1 million, or 68.4%, over the same period in 2010. Sales in the U.S. included sales of $40.0 million from True2Form as well as $5.4 million from new locations in Cartersville, Georgia; Owasso, Oklahoma; Evanston, Illinois; Las Vegas, Nevada; Bellingham, Washington; Yuma, Arizona; Savannah, Georgia; McDonough, Georgia; and two new locations in the Atlanta, Georgia area. Translation of U.S. revenues at a lower U.S. dollar exchange rate relative to the Canadian dollar resulted in a decrease of $4.4 million. Excluding the impact of currency translation, same-store sales in the U.S. increased by $8.1 million, or 11.2%, compared with the same period in 2010.
Adjusted EBITDA1 for the first six months of 2011 totalled $10.4 million, or 6.5% of sales, compared with Adjusted EBITDA of $6.7 million, or 6.3 % of sales, during the same period a year ago. The 53.7 % increase in Adjusted EBITDA was the result of improvements in same-store sales which contributed $2.2 million, combined with $1.9 million of EBITDA contribution from the acquisition of True2Form as well as another $0.2 million contribution from other new stores. Adjusted EBITDA was negatively impacted by changes in the U.S. dollar and foreign exchange losses in the amount of $0.6 million.
In the first six months of 2011, the Fund recorded income tax expense in the amount of $1.0 million, compared to $0.1 million in 2010.
Net loss was $1.5 million, or 0.9 % of sales, compared with net earnings of $3.6 million, or 3.3% of sales, for the same period last year. The decrease in net earnings was the result of recording fair value adjustments for exchangeable shares in the amount of $4.2 million and unit options in the amount of $1.0 million, as well as the recording of acquisition and transaction costs of $1.5 million and income tax expense of $1.0 million. Excluding the impact of these adjustments, net earnings would have increased to $6.2 million, or 3.9% of sales, compared to adjusted earnings of $3.9 million, or 3.6% of sales, for the same period in 2010. This increase is the result of the contribution of new acquisitions and new location growth as well as increases in same-store sales. Diluted loss per unit was $0.139, compared to diluted earnings per unit of $0.299 for the first half of 2010.
As at June 30, 2011, the Fund had total debt outstanding, net of cash, of $31.2 million, compared with $14.4 million at March 31, 2011, $16.0 million at December 31, 2010, $19.4 million at September 30, 2010 and $13.4 million at June 30, 2010. The Fund has a cash position, net of bank indebtedness of $2.9 million, compared with $9.4 million at the end of 2010. The changes in debt outstanding, net of cash, is primarily the result of the acquisition of Cars, which was funded without any equity dilution to unitholders. While our net debt has increased as a result of our investment in Cars, our reported earnings and cash flows do not yet include any results for Cars.
“We remain cautiously optimistic for the remainder of 2011, alongside the positive results recorded for the first half of the year,” stated Mr. Bulbuck. “With high automobile gas prices persisting into the second quarter, miles driven have similarly been reduced, impacting accident frequency. We are pleased with the strength of our same-store sales growth in both Canada and the U.S., attesting to the merits of our business model and the strength in our core business irrespective of these headwinds. With 2 new locations added in the quarter and a number of additional locations expected to open in the third quarter, we are confident in our ability to execute on our organic growth strategy of adding eight to 13 new locations this year, excluding any large-scale acquisitions. As we continue on our path of growth, we are maintaining our focus on same-store sales, enhancing gross margins and Adjusted EBITDA margins, and increasing efficiencies across our operations. Our long-term objective continues to be to increase distributions over time, while maintaining the financial flexibility to support our stated growth strategy.”
2011 Second Quarter Results Conference Call & Webcast
Management will hold a conference call on Friday, August 12th, 2011, at 10:00 a.m. (ET) to review the Fund’s 2011 second quarter financial results. You can join the call by dialing 888-231-8191 or 647-427-7450. A live audio webcast of the conference call will be available through www.boydgroup.com. An archived replay of the webcast will be available for 90 days. A taped replay of the conference call will also be available until Friday, August 19th, 2011, at midnight by calling 1-855-859-2056 or 416-849-0833, reference number 86492822.
(1)(2) EBITDA, Adjusted EBITDA, distributable cash and adjusted distributable cash are not recognized measures under International Financial Reporting Standards (“IFRS”). Management believes that in addition to revenue, net earnings and cash flows, the supplemental measures of distributable cash, adjusted distributable cash, EBITDA and Adjusted EBITDA are useful as they provide investors with an indication of earnings from operations and cash available for distribution, both before and after debt management, productive capacity maintenance and non-recurring and other adjustments. Investors should be cautioned, however, that EBITDA, Adjusted EBITDA, distributable cash and adjusted distributable cash should not be construed as an alternative to net earnings determined in accordance with IFRS as an indicator of the Fund’s performance. Boyd’s method of calculating distributable cash and adjusted distributable cash may differ from other public issuers and, accordingly, may not be comparable to similar measures used by other issuers. For a detailed explanation of how the Fund’s non-GAAP measures are calculated, please refer to the Fund’s MD&A filing for the three-month period ended June 30, 2011, which can be accessed via the SEDAR Web site (www.sedar.com).
About The Boyd Group Inc.
The Boyd Group Inc. is the largest operator of collision repair centres in North America. The Company operates locations in the four Western Canadian provinces under the trade name Boyd Autobody & Glass, as well as in thirteen U.S. states under the trade names Gerber Collision & Glass, True2Form, and Cars. The Company also operates Gerber National Glass Services, an auto glass repair and replacement referral business with approximately 3,000 affiliated service providers throughout the United States. For more information on The Boyd Group Inc. or Boyd Group Income Fund, please visit our website at www.boydgroup.com.
To view Boyd Group Income Fund’s Q2 2011 financial statements and notes, please click here: http://files.newswire.ca/698/Q2_2011_Boyd.pdf
About The Boyd Group Income Fund
The Boyd Group Income Fund is an unincorporated, open-ended mutual fund trust created for the purposes of acquiring and holding certain investments, including a majority interest in The Boyd Group Inc. and its subsidiaries. The Boyd Group Income Fund units trade on the Toronto Stock Exchange (TSX) under the symbol BYD.UN.
For further information, please contact:
President & CEO
Tel: (204) 895-1244
Tel: (416) 815-0700 or toll free 1-800-385-5451 (ext. 242)
Chief Financial Officer
Tel: (204) 895-1244
Caution concerning forward-looking statements
Statements made in this press release, other than those concerning historical financial information, may be forward-looking and therefore subject to various risks and uncertainties. Some forward-looking statements may be identified by words like “may”, “will”, “anticipate”, “estimate”, “expect”, “intend”, or “continue” or the negative thereof or similar variations. Readers are cautioned not to place undue reliance on such statements, as actual results may differ materially from those expressed or implied in such statements. Factors that could cause results to vary include, but are not limited to: the economic downturn; loss of key customers; fluctuations in cash distributions; dependence on the Fund’s operating subsidiaries to pay its interest obligations; loss of services of key senior management personnel; damage to the Company’s brand; variation in the number of insurance claims; margin pressure; management of credit and refinancing risks; responding to changes in the market environment; technology risks; the management of key supplier relationships; capital expenditures; competition from established competitors and new entrants in the businesses in which the Company operates; employee relations; the ability to complete acquisitions of collision repair facilities and other businesses and to integrate these acquisitions successfully; the ability to identify start-up locations and reach anticipated profitability levels; potential discovery of undisclosed liabilities associated with acquisitions; energy costs; weather conditions; operational and infrastructure risks including possible equipment failure and performance of information technology systems; fluctuations in operating results and seasonality; ability to expand into the United States; insurance coverage of sufficient scope to satisfy any liability claims; environmental, health & safety risk; interest rate fluctuations and general economic conditions; quality of corporate governance; pending and proposed legislative or regulatory developments including the impact of changes in laws, regulations and the enforcement thereof; quality of internal control systems; fluctuations in foreign currencies; fluctuations in the cost of benefit plans; impact of government owned insurance; and the possible impacts from public health emergencies, international conflicts and other developments including those relating to terrorism; and the Fund’s success in anticipating and managing the foregoing risks.
We caution that the foregoing list of factors is not exhaustive and that when reviewing our forward-looking statements, investors and others should refer to the “Risk Factors” section of the Fund’s Annual Information Form, the “Risks and Uncertainties” and other sections of our Management’s Discussion and Analysis of Operating Results and Financial Position and our other periodic filings with Canadian securities regulatory authorities. All forward-looking statements presented herein should be considered in conjunction with such filings.