Boyd Group Services Inc · TSX:BYD
Boyd Group Services — Q2 2021 Earnings Presentation
34 slides from Boyd Group Services's earnings presentation, August 2021
Slide 1: Boyd Group Services Inc. Investor Presentation August 2021
BOYD GROUP SERVICES INC. Investor Presentation August 2021 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements, other than historical facts, which reflect the view of the Company's management with respect to future events. Such forward-looking statements reflect the current views of the Company's management and are made on the b
Slide 3: Capital Markets Profile
Capital Markets Profile (as at August 12, 2021) Stock Symbol: TSX: BYD.TO Shares Outstanding: 21.5 million Price (August 12, 2021): C$241.47 52-Week Low / High: C$184.84/$249.19 Market Capitalization: C$5,191.6 million Annualized Dividend (per share): C$0.564 Current Yield: 0.2% 3
Slide 4: Company Overview
Company Overview • Leader and one of the largest operators of collision repair shops in North America by number of locations (non-franchised) • Consolidator in a highly fragmented US$40 billion market • Second largest retail auto glass operator in the U.S. • Only public company solely focused on aut
Slide 5: Collision Operations
Collision Operations • 819 company operated collision locations across 30 U.S. states and 5 Canadian provinces • Operate full-service repair centers offering collision repair, glass repair and replacement services • Strong relationships with insurance carriers • Process improvement initiatives 5
Slide 6: North American Collision Repair Footprint
North American Collision Repair Footprint Canada • • Ontario (81) British Columbia (17) 130 locations • Alberta (14) • Manitoba (14) • Saskatchewan (4) Note: The above numbers include 35 intake locations. U.S. • Michigan (73) • • South Carolina (18) Kansas (13) 689 locations • Florida (71) • Illinoi
Slide 7: Glass Operations
Glass Operations • Retail glass operations across 35 U.S. states ▪ Asset light business model • Third-Party Administrator (“TPA”) business that offers glass, emergency roadside and first notice of loss services with approximately: ▪ 5,500 affiliated glass provider locations ▪ 7,000 affiliated roadsi
Slide 8: North American Glass Footprint
North American Glass Footprint U.S. • Alabama • Nevada • Arizona • New Hampshire • California • New York • Colorado • North Carolina • Connecticut • Ohio • District of Columbia • Oklahoma • Florida • Oregon • Georgia • Pennsylvania • Idaho • Rhode Island • Illinois • Tennessee • Indiana • Texas • Ke
Slide 9: Market Overview & Business Strategy
Market Overview & Business Strategy 9
Slide 10: Large, Fragmented Market
Large, Fragmented Market U.S. Collision Repair Market • Revenue for North American collision repair industry is estimated to be approximately US$41.2 billion annually (U.S. $38.3B, CDA $2.9B) • 31,800 shops in the U.S., 4,430 shops in Canada • Composition of the collision repair market in the U.S.:
Slide 11: Evolving Collision Repair Market
Evolving Collision Repair Market • Large multi shop collision repair operator (“MSO”) market share opportunity ▪ The top 3 consolidators represent an 18.8% share of collision repair revenue in 2019 as compared to 15.7% in 2018 and only 1.7% in 2006. ▪ 106 MSOs had revenues of $20 million or greater
Slide 12: Strong Relationships with Insurance Companies through DRPs
Strong Relationships with Insurance Companies through DRPs • Direct Repair Programs (“DRPs”) are established between insurance companies and collision repair shops to better manage auto repair claims and the level of customer satisfaction • Auto insurers utilize DRPs for a growing percentage of coll
Slide 13: Insurer Market Dynamics
Insurer Market Dynamics Top 10 Insurer Market Share (U.S.) Insurer DRP Usage Other Insurers 27.0% Other 40.5% DRP Top 10 59.5% Insurers 73.0% Source: The Romans Group, 2019 13
Slide 14: Impact of Collision Avoidance Systems
Impact of Collision Avoidance Systems • CCC estimates technology will * reduce accident frequency by ~30% in next 25-30 years • As per industry studies, decline should be somewhat offset by increases in average cost of repair (increased expense of technology) and vehicle miles driven • Large operato
Slide 15: Business Strategy
Business Strategy Expense management Operational excellence Enhance SHARE Shareholder THE BOYD HOLDERS GROUP Value Same-store sales growth New location and and optimize returns from acquisition growth existing operations 15
Slide 16: Operational Excellence
Operational Excellence • Best-in-Class Service Provider ▪ Average cost of repair ▪ Cycle time ▪ Customer service ▪ Quality ▪ Integrity • “WOW” Operating Way ▪ Embedded as part of our operating culture • Company-wide diagnostic repair scanning and calibration technology • I-Car Gold Class facilities
Slide 17: Expense Management: Operating Expenses as % of Sales
Expense Management Well managed operating expenses as a % of sales Pre-IFRS 16 Post-IFRS 16 40.0% 35.0% 37.1% 36.8% 36.5% 35.9% 31.4% 32.0% Operating Expenses as % of Sales 35.0% 30.0% 30.0% 25.0% 25.0% 20.0% 20.0% 15.0% 15.0% 10.0% 10.0% 5.0% 5.0% 0.0% 0.0% 2015 2016 2017 2018 2019 2020 *Results fo
Slide 18: Same-Store Sales Growth
SSSG - Optimizing Returns from Existing Operations Same-store sales increases in 31 of 40 most recent quarters 35% 30% 10-year average SSSG: 4.5% 5-year average SSSG: 4.0% Same-Store Sales Growth* 25% 3-year average SSSG: 3.2% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% -35% Q1-11 Q2-11 Q3-11 Q4-
Slide 19: Focus on Accretive Growth
Focus on Accretive Growth • Goal: double the size of the business during the five-year period from 2021 to 2025, based on 2019 revenues, on a constant currency basis • Implied compound average annual growth rate of 15%: • Same-store sales • Acquisition or development of single locations • Acquisitio
Slide 20: U.S. Dollar Reporting
U.S. Dollar Reporting • To reduce volatility from exchange rates, effective January 1, 2021, Boyd began reporting results in U.S. Dollars. • Given almost 90% of Boyd’s revenues come from the U.S., this is considered an appropriate currency for reporting purposes. U.S. > 90% Insurance 20
Slide 21: Strong Growth in Collision Locations
Strong Growth in Collision Locations 120 900 819 800 100 700 80 600 500 60 105 108 400 100 40 81 300 64 58 54 200 20 42 29 100 0 0 2013 2014 2015 2016 2017 2018 2019 2020 YTD 2021 Annual additions Total Locations *Results for 2020 were severely impacted by the COVID-19 Pandemic 21
Slide 22: Financial Review
Financial Review THE pp Boyd GROUP
Slide 23: Revenue Growth
Revenue Growth (C$ millions) $2,500 $2,283.3 $2,089.1 $2,000 $1,864.6 $1,569.4 $1,500 $1,387.1 $1,000 $500 $0 2016 2017 2018 2019 2020 *Results for 2020 were severely impacted by the COVID-19 Pandemic 23
Slide 24: Pre-IFRS 16 Adjusted EBITDA Growth
Pre-IFRS 16 - Adjusted EBITDA Growth (C$ millions) $300 $250 $215.6 $200 $173.4 $145.6 $150 $124.3 $101.7 $100 $50 $0 2015 2016 2017 2018 2019 *Adjusted EBITDA for 2019 is shown on a Pre-IFRS 16 basis for comparative purposes. 24
Slide 25: Post-IFRS 16 Adjusted EBITDA
Post-IFRS 16 - Adjusted EBITDA (C$ millions) 1-YR Decline of 8.23% $319.9 $293.6 $300 $250 $200 $150 $100 $50 $0 2019 2020 *IFRS 16 was adopted effective January 1, 2019 **Results for 2020 were severely impacted by the COVID-19 Pandemic 25
Slide 26: Q2 2021 Financial Summary
Q2 2021 Financial Summary 3-months ended 6-months ended (US$ millions, except per share and percent amounts) Jun 30, Jun 30, Jun 30, Jun 30, 2021** 2020** 2021** 2020** Sales $444.6 $308.0 $866.3 $775.8 Gross Profit $205.1 $144.2 $399.1 $353.7 Adjusted EBITDA* $58.0 $35.6 $110.7 $96.1 Adjusted EBITD
Slide 27: Strong Balance Sheet
Strong Balance Sheet (in US$ millions) Jun 30, 2021 Dec 31, 2020 Cash $35.6 $61.0 Long-Term Debt $238.3 $180.2 Net Debt before lease liabilities (total debt, including current portion and bank $202.7 $119.2 indebtedness, net of cash) Lease liabilities $468.5 $419.3 Total debt, net of cash $671.1 $53
Slide 28: Financial Flexibility
Financial Flexibility • Cash of US$35.6 million • Net Debt to EBITDA TTM ratio of 1.4x • 5-year committed facility of US$550 million which can increase to US$825 million with remaining accordion feature, maturing May 2025 • 7-Year fixed-rate Term Loan A in the amount of US$125 million, maturing May
Slide 29: Dividends
Dividends Annualized dividends have increased by 9.3% since 2016 Annualized Dividend per Share (C$) $0.60 0.564 0.552 $0.55 0.540 0.528 0.516 $0.50 $0.45 $0.40 Nov 16 - Nov 17 - Nov 18 - Nov 19 - Nov 20 - Oct 17 Oct 18 Oct 19 Present Present 29
Slide 30: Five-year Return to Shareholders
Five-year Return to Shareholders Boyd Group S&P/TSX Composite 300% 5-year 250% total return: 243.87%* 200% 150% S&P/TSX 100% Composite 34.00% 50% 0% -50% 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20 *Source: Irwin. Total return based on reinvestment of dividends. 30
Slide 31: Delivering long-term value to shareholders
Delivering long-term value to shareholders • Best or second best 10-year performance on the TSX for 6 consecutive years • Best 10-year performance on the TSX in 2015 and 2016 • Second best 10-year performance on the TSX in 2017, 2018, 2019 and 2020 +9966.5% 10-year Total Return +5795.6% +5901.2% +46
Slide 32: Experienced & Committed Management Team
Experienced & Committed Management Team Timothy O’Day Narenda “Pat” Pathipati Brock Bulbuck President & CEO Executive Vice-President & CFO Executive Chair 32
Slide 33: Canadian Emergency Wage Subsidy (CEWS)
Canadian Emergency Wage Subsidy ("CEWS") • CEWS was put into place on April 11, 2020 and has now been extended to September 25, 2021, with a proposal to further extend the program until October 23, 2021 • As is the objective of the program, Boyd has been able to retain more of its employees than wou
Slide 34: Summary
Summary ✓ Strong balance sheet Stability ✓ Insurer preference for MSOs ✓ Recession Resilient + ✓ US$40 billion fragmented industry ✓ High ROIC growth strategy Growth ✓ Market leader/consolidator in North America = ✓ Cash dividends/conservative payout ratio Shareholder Value ✓5-year total shareholder