November 9, 2011
Boyd Group Income Fund Reports Solid Third Quarter Results
Not for distribution to U.S. newswire services or for dissemination in the United States
- Allan Davis Appointed Chairman of the Board of Trustees of the Boyd Group Income Fund;
Monthly Distributions Increased by 7.1% -
Winnipeg, Manitoba — November 9, 2011 — Boyd Group Income Fund (TSX: BYD.UN) (“the Fund” or “the Boyd Group”) today reported its financial results for the three-month and nine-month periods ended September 30, 2011. The Fund’s complete fiscal 2011 third 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. The Boyd Group also announced that the Trustees of the Fund have approved a 7.1% increase in monthly distributions from $0.035 per unit to $0.0375 per unit commencing November 2011, payable on December 22, 2011 for unitholders of record on November 30, 2011.
- Record sales and Adjusted EBITDA when compared to previous third quarter results
- Sales increased by 41.1% to $97.3 million from $69.0 million in Q3 2010; True2Form Collision Repair Centers, Inc. (“True2Form”), Cars Collision Center of Colorado, LLC and Cars Collision Center, LLC, (collectively “Cars Collision”), and seven other new locations contributed $26.3 million of sales
- Same-store sales increased by 8.7%, excluding the impact of foreign exchange translation
- Gross margin increased to $43.5 million or 44.7% compared with $31.5 million or 45.7% in Q3 2010
- Adjusted EBITDA1 totalled $6.4 million compared with $5.0 million in Q3 2010
- Payout ratio was 22.8% compared with 16.9% in Q3 2010, due in part, to a higher level of distributions
- The Fund completed a bought deal public offering, issuing 1,300,000 units out of treasury at a price of $10.75
- On September 16, 2011, the Fund was added to the S&P/TSX SmallCap Index
- Fund Trustees approved a 7.1% increase in distributions to $0.0375 per unit
“Results for the third quarter of 2011 are solid, driven by positive growth in same-store sales despite continued challenging market conditions,” said Brock Bulbuck, President and Chief Executive Officer of the Boyd Group. “Although unemployment and gas prices remained elevated and miles driven has continued to trend downwards, we have been able to grow revenue as a result of successful operational execution and superior industry position. The completed acquisitions of Cars Collision and True2Form have proven to be incrementally positive to our business, meeting and exceeding our expectations. As the largest multi-location collision operator in North America, both in annual sales and number of locations, we continue to look to leverage our scale to capitalize on attractive opportunities going forward. The equity injection of approximately $12.7 million, net of costs, this quarter strengthens our balance sheet and puts us in an excellent position to execute on future opportunities.”
“Additionally, we are pleased to announce a 7.1% increase in our monthly distributions to $0.0375 per unit, or an annualized distribution of $0.45, beginning with our November 2011 distribution. The increase is being introduced at this time after reviewing the Fund’s expected cash requirements and taking into consideration the incremental cash flow expected from the Cars acquisition. As a growth company offering an attractive payout, our objective continues to be to maintain a conservative distribution policy that will provide us with the financial flexibility necessary to support our growth initiatives and gradually increase distributions over time,” added Mr. Bulbuck.
The Fund also announced that effective November 8, 2011, Mr. Allan Davis, CA, has been appointed to the role of Chairman of the Board of Trustees of the Fund. Mr. Davis is President and Director of AFD Investments Inc. a Winnipeg-based management consulting firm. In addition to serving on the Boyd Group Income Fund Board of Trustees (since 2005), he is also a member of the Manufacturing Advisory Board of Exchange Income Corporation. Mr. Davis is a Chartered Accountant and holds a Bachelor of Commerce (Honours) degree from the University of Manitoba.
For the three-months ended September 30, 2011
Sales increased by 41.1% to $97.3 million, compared with sales of $69.0 million for the same period last year. The increase consisted of $26.3 million in sales generated from True2Form, Cars Collision, and eight other new collision repair locations, and $4.7 million in same-store sales growth, offset by $2.3 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 8.7%. The closure of two underperforming facilities decreased sales by $0.4 million.
Sales in Canada were $18.0 million for the three months ended September 30, 2011, an increase of $0.2 million, or 1.3%, over the same period in 2010. Sales growth in Canada was due entirely to same-store sales increases. Sales of a further $0.2 million generated from a new location were offset by a sales decrease of $0.2 million from a location closure.
Sales in the U.S. totalled $79.3 million, an increase of $28.1 million, or 54.9%, over the same period in 2010. Sales in the U.S. included sales of $19.6 million from 37 True2Form locations, $17.2 million of sales from 28 Cars Collision locations, as well as $2.7 million from new locations in Las Vegas, Nevada; two new locations in the Atlanta, Georgia area; Bellingham, Washington; Yuma, Arizona; Savannah, Georgia; McDonough, Georgia. Translation of U.S. revenues at a lower U.S. dollar exchange rate relative to the Canadian dollar resulted in a decrease of $2.3 million. Excluding the impact of currency translation, same-store sales in the U.S. increased by $4.5 million, or 12.1%, 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 EBITDA1”) for the third quarter totalled $6.4 million, or 6.6% of sales, compared with Adjusted EBITDA of $5.0 million, or 7.3% of sales, for the same period a year ago. The 26.6% increase in Adjusted EBITDA was the result of improvements in same-store sales, which contributed $0.5 million, combined with $1.5 million of EBITDA contribution from the acquisition of Cars Collision, offset by an EBITDA reduction of $0.2 million 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 and locations closed during the period reduced EBITDA by a further $0.2 million.
In the third quarter of 2011, the Fund recorded income tax expense in the amount of $0.7 million, compared to $7 thousand in 2010.
Net earnings were $6.5 million, or 6.7% of sales, compared with net earnings of $1.9 million, or 2.8% of sales for the same period last year. The increase in earnings was primarily the result of recording fair value adjustments for exchangeable shares in the amount of $3.3 million and unit options in the amount of $0.7 million. Net earnings were also impacted by the variability of acquisition and transaction costs and the recording of an income tax expense of $0.7 million. Excluding the impact of these adjustments, net earnings would have increased to $3.4 million or 3.5% of sales, compared to adjusted earnings of $3.1 million, or 4.5% 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 earnings per unit were $0.220, compared to diluted earnings per unit of $0.180 in the third quarter of 2010.
During the third quarter, the Fund generated adjusted distributable cash of $5.4 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 22.8% for the quarter.
For the nine-months ended September 30, 2011
Sales increased by 45.6% to $256.5 million, compared with sales of $176.2 million for the same period last year. The increase consisted of $72.3 million in sales generated from True2Form, Cars Collision, and eleven other new collision repair locations, and $15.2 million in same-store sales growth, offset by $6.6 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 9.6%. The closure of two underperforming facilities decreased sales by $0.6 million.
Sales in Canada were $56.3 million for the nine months ended September 30, 2011, an increase of $3.0 million, or 5.7%, over the same period in 2010. Similar to the quarter, sales growth in Canada was primarily due to same-store sales increases. Sales of a further $0.2 million generated from a new location were offset by a sales decrease of $0.1 million from a location closure.
Sales in the U.S. totalled $200.2 million, an increase of $77.2 million, or 68.2%, over the same period in 2010. Sales in the U.S. included sales of $59.6 million from 37 True2Form locations, $17.2 million from 28 Cars Collision locations, as well as $8.7 million from new locations in Cartersville, Georgia; Owasso, Oklahoma; Evanston, Illinois; Las Vegas, Nevada; two new locations in the Atlanta, Georgia area; Bellingham, Washington; Yuma, Arizona; Savannah, Georgia; and McDonough, Georgia. Translation of U.S. revenues at a lower U.S. dollar exchange rate relative to the Canadian dollar resulted in a decrease of $6.6 million. Excluding the impact of currency translation, same-store sales in the U.S. increased by $12.2 million, or 11.4%, compared with the same period in 2010.
Adjusted EBITDA1 for the first nine months of 2011 totalled $16.7 million, or 6.5% of sales, compared with Adjusted EBITDA of $11.8 million, or 6.7% of sales, during the same period a year ago. The 42.1% increase in Adjusted EBITDA was the result of improvements in same-store sales which contributed $2.3 million, combined with $1.8 million of incremental EBITDA contribution from the acquisition of True2Form, $1.5 million of EBITDA contribution from the acquisition of Cars Collision. In addition, other new stores contributed another $0.1 million and locations closed during the period increased EBITDA by $0.1 million. Adjusted EBITDA was negatively impacted by changes in the U.S. dollar and foreign exchange losses in the amount of $0.9 million.
In the first nine months of 2011, the Fund recorded income tax expense in the amount of $1.7 million, compared to $0.1 million in 2010.
Net earnings were $5.0 million, or 2.0% of sales, compared with net earnings of $5.5 million, or 3.1% 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 $0.9 million and unit options in the amount of $0.4 million, as well as the recording of acquisition and transaction costs of $1.6 million and income tax expense of $1.7 million. Excluding the impact of these adjustments, net earnings would have increased to $9.4 million, or 3.7% of sales, compared to adjusted earnings of $7.0 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 earnings per unit were $0.462, compared to diluted earnings per unit of $0.512 for the first half of 2010.
As at September 30, 2011, the Fund had total debt outstanding, net of cash, of $19.2 million, compared with $31.2 million at June 30, 2011, $14.4 million at March 31, 2011, $16.0 million at December 31, 2010 and $19.4 million at September 30, 2010. The Fund has a cash position of $17.0 million, compared with a cash position, net of bank indebtedness of $2.9 million at June 30, 2011.
“We are pleased with the results of our operations through the first three quarters of 2011 and remain cautiously optimistic for the remainder of the year and going into 2012,” said Mr. Bulbuck. “We are also on track to reach our goal for the year of adding eight to 13 new locations as we announced five new locations subsequent to the end of the quarter, bringing the total to seven new locations thus far in 2011. Effectively integrating new acquisitions is a crucial component of our growth strategy and, alongside favourable growth experienced in same-store sales for the quarter, further validates our strategy and direction. Although the trend in miles driven shows a decline over the past several months, our sales across the U.S. and Canada have been resiliently positive. Our focus for the remainder of the year continues to be on growth in revenues, both organically and through new location growth, while enhancing efficiencies and profitability 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 Third Quarter Results Conference Call & Webcast
Management will hold a conference call on Wednesday, November 9, 2011, at 10:00 a.m. (ET) to review the Fund’s 2011 third 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 Wednesday, November 16, 2011, at midnight by calling 1-855-859-2056 or 416-849-0833, reference number 19510053.
(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 September 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 Q3 2011 financial statements and notes, please click here: http://stream1.newswire.ca/media/2011/11/09/20111109_C3960_DOC_EN_6323.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:
Boyd Group Income Fund
President & CEO
Boyd Group Income Fund
VP & CFO
(416) 815-0700 / 1-800-385-5451 (ext. 242)
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.