Boyd Group Services Inc · TSX:BYD
Boyd Group Services — Boyd Group Income Fund — Q3 2019 Earnings Presentation
35 slides from Boyd Group Services's earnings presentation, November 2019
Slide 1: Boyd Group Income Fund Investor Presentation
BOYD GROUP INCOME FUND Investor Presentation November 2019 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 Fund's management with respect to future events. Such forward-looking statements reflect the current views of the Fund's management and are made on the basis o
Slide 3: Capital Markets Profile
Capital Markets Profile (as at November 13, 2019) Stock Symbol: TSX: BYD.UN Units and Shares Outstanding*: 20.1 million Price (November 13, 2019): $189.58 52-Week Low / High: $103.17/$196.89 Market Capitalization: $3,810.6 million Annualized Distribution (per unit): $0.552 Current Yield: 0.3% Payout
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$38.6 billion market • Second largest retail auto glass operators in the U.S. • Only public company in the auto collis
Slide 5: Collision Operations
Collision Operations • 667 company operated collision locations across 27 U.S. states and five Canadian provinces • Operate full-service repair centers offering collision repair, glass repair and replacement services • Strong relationships with insurance carriers • Advanced management system technol
Slide 6: North American Collision Repair Footprint
North American Collision Repair Footprint Canada • • Ontario (82) Alberta (15) 130 locations • Manitoba (15) • British Columbia (14) • Saskatchewan (4) U.S. • 537 Oregon (12) locations • Illinois (64) • Florida (62) • Maryland (10) • Michigan (58) • Tennessee (9) • New York (37) • Alabama (7) • Wash
Slide 7: Glass Operations
Glass Operations • Retail glass operations across 34 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 ▪ 4,600 affiliated emerge
Slide 8: North American Glass Footprint
North American Glass Footprint U.S. • Alabama • Nevada • Arizona • New Hampshire • Colorado • New York • Connecticut • North Carolina • District of Columbia • Ohio • Florida • Oklahoma • Georgia • Oregon • Idaho • Pennsylvania • Illinois • Rhode Island • Indiana • Tennessee • Kentucky • Texas • Loui
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$38.6 billion annually (U.S. $36.2B, CDA $2.4B) • 32,200 shops in the U.S. • Composition of the collision repair market in the U.S.: Source: The Romans Grou
Slide 11: Evolving Collision Repair Market
Evolving Collision Repair Market • Long-term decline of independent and dealership repair facilities ▪ Total number of independent and dealership collision repair locations has declined by 25.1% from late 2007 to 2017, and almost 60% over the past 37 years • Large multi-shop collision repair operato
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 Source: The Romans Group, 2017 13
Slide 14: Impact of Collision Avoidance Systems
Impact of Collision Avoidance Systems • CCC estimates technology will reduce Impact of Crash Avoidance on Vehicle Claim Counts * accident frequency by ~30% in next 25-30 years CY 2050 • Collision avoidance technology may lessen -31% -30% CY 2045 the extent of damage in some accidents, -29% CY 2040 l
Slide 15: Business Strategy
Business Strategy Expense management Operational excellence Enhance UNIT Unitholder 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 technology • I-Car Gold Class facilities • Industry leade
Slide 17: Expense Management: Operating Expenses as % of Sales
Expense Management Well managed operating expenses as a % of sales Operating Expenses as % of Sales 17
Slide 18: Same-Store Sales Growth
SSSG - Optimizing Returns from Existing Operations Same-store sales increases in 35 of 40 most recent quarters 13% 10-year average SSSG: 4.4% 5-year average SSSG: 4.6% Same-Store Sales Growth* 3-year average SSSG: 3.7% 8% 3% -2% -7% Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11** Q1-12 Q2-12
Slide 19: Focus on Accretive Growth
Focus on Accretive Growth • Goal: double the size of the business during the five-year period ending in 2020* • Implied average annual growth rate of 15%: ▪ Same-store sales ▪ Acquisition or development of single locations ▪ Acquisition of multiple-location businesses • Well-positioned to take advan
Slide 20: Strong Growth in Collision Locations
Strong Growth in Collision Locations • May 2013: acquisition of Glass America added 61 retail auto glass locations • March 2016: acquisition of 4 retail auto glass locations 20
Slide 21: Financial Review
Financial Review THE SP Boyd GROUP
Slide 22: Revenue Growth
Revenue Growth (C$ millions) 22
Slide 23: Adjusted EBITDA Growth
Adjusted EBITDA Growth (C$ millions) 23
Slide 24: Q3 2019 Financial Summary
Q3 2019 Financial Summary 3-months ended 9-months ended (C$ millions, except per unit and percent amounts) Sept 30, Sept 30, Sept 30, Sept 30, 2019 2018 2019 2018 Sales $567.0 $459.6 $1,697.4 $1,369.5 Gross Profit $257.0 $208.7 $772.8 $623.2 Adjusted EBITDA* $50.7 $41.2 $159.2 $125.8 Adjusted EBITDA
Slide 25: IFRS 16 Impact
IFRS 16 Impact IMPACT OF IFRS 16 ON NET EARNINGS, CASH FLOWS & DISTRIBUTABLE CASH $(000's)Cdn Q3 2019 IFRS 16 Q3 2019 Statement of Earnings As reported Adjustment Pre-IFRS 16 Sales 566,957 - 566,957 Cost of sales 309,934 - 309,934 Gross profit ($) 257,023 - 257,023 Operating expenses 179,625 26,742
Slide 26: Strong Balance Sheet
Strong Balance Sheet September 30, (in C$ millions) December 31, 2018 2019* Cash $41.1 $64.5 Long-Term Debt $418.4 $288.2 Obligations Under Finance Leases 0 $8.4 Net Debt before lease liabilities (total debt, including current portion and bank $377.3 $232.1 indebtedness, net of cash) Lease liabiliti
Slide 27: Financial Flexibility
Financial Flexibility • Cash of $41.1 million • Net Debt to EBITDA TTM ratio of 1.9x calculated on a Pre-IFRS 16 basis • 5-year committed facility of US$400 million which can increase to US$450 million with remaining accordion feature, maturing May 2022 • Over $250 million in cash and available cred
Slide 28: Distributions
Distributions Annualized distributions have increased by 9.5% since 2015 Annualized Distribution per Unit (C$) 28
Slide 29: Five-year Return to Unitholders
Five-year Return to Unitholders 5-year total return: 253.84%* S&P/TSX Income Trust 41.1% S&P/TSX Composite 22.0% *Source: Thomson Reuters Eikon. Total return based on reinvestment of dividends. 29
Slide 30: Delivering long-term value to unitholders
Delivering long-term value to unitholders • Best 10-year performance on the TSX in 2015 and 2016 • Second best 10-year performance on the TSX in 2017 and 2018 • Named to the inaugural TSX 30 in September 2019, a flagship program recognizing the 30 top- performing TSX stocks over a three-year period
Slide 31: Experienced & Committed Management Team
Experienced & Committed Management Team Brock Bulbuck Pat Pathipati Tim O’Day CEO Executive President & COO Vice-President & CFO 31
Slide 32: CEO Succession Plan
CEO Succession Plan • On August 13, 2019, Boyd announced its CEO succession plan that will have current CEO, Brock Bulbuck, move into an Executive Chair role in 2020 and Tim O’Day, current President and Chief Operating Officer (“COO”), succeed Brock in the CEO role to become President & CEO. These c
Slide 33: Proposed Corporate Conversion
Proposed Corporate Conversion • On September 16, 2019, Boyd announced a proposed conversion from an income trust to a corporation, to be named Boyd Group Services, Inc. (“BGSI”) - effective January 1, 2020 • A simplified, better understood structure would remove the foreign ownership restriction on
Slide 34: Outlook
Outlook • Increase North American presence through: ▪ Drive same-store sales growth through enhanced capacity utilization, development of DRP arrangements and leveraging existing major and regional insurance relationships ▪ Acquire or develop new single locations as well as the acquisition of multi-
Slide 35: Summary
Summary ✓ Strong balance sheet Stability ✓ Insurer preference for MSOs ✓ Recession resilient + ✓ US$38.6 billion fragmented industry ✓ High ROIC growth strategy Growth ✓ Market leader/consolidator in North America = ✓ Cash distributions/ Unitholder Value conservative payout ratio ✓5-year total unith
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