Boyd Group Services Inc · TSX:BYD
Boyd Group Services — Q3 2020 Earnings Presentation
34 slides from Boyd Group Services's earnings presentation, November 2020
Slide 1: Boyd Group Services Inc. Investor Presentation
BOYD GROUP SERVICES INC. Investor Presentation November 2020 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 November 11, 2020) Stock Symbol: TSX: BYD.TO Shares Outstanding: 21.5 million Price (November 11, 2020): $215.50 52-Week Low / High: $125.01/$231.52 Market Capitalization: $4,633.3 million Annualized Dividend (per share): $0.564 Current Yield: 0.3% 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$41.2 billion market • Second largest retail auto glass operator in the U.S. • Only public company in the auto collisi
Slide 5: Collision Operations
Collision Operations • 705 company operated collision locations across 29 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 • Process improvement initiatives 5
Slide 6: North American Collision Repair Footprint
North American Collision Repair Footprint Canada • • • Ontario (82) British Columbia (16) Alberta (15) 131 locations • Manitoba (14) • Saskatchewan (4) The above numbers include 34 intake locations. U.S. • 574 Oregon (12) locations • Michigan (71) • Illinois (64) • Tennessee (10) • Florida (63) • Ma
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$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% Top 10 Insurers 73.0% Source: The Romans Group, 2019 13
Slide 14: Impact of Collision Avoidance Systems
Impact of Collision Avoidance Systems Impact of Crash Avoidance on Vehicle • CCC estimates technology will Claim Counts * CY 2050 reduce accident frequency by CY 2045 ~30% in next 25-30 years CY 2040 CY 2035 • As per industry studies, decline CY 2030 should be somewhat offset by CY 2025 increases in
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 technology • I-Car Gold Class facilities • Industry leade
Slide 17: Expense Management
Expense Management Well managed operating expenses as a % of sales 40.0% 37.1% 36.8% 36.5% 35.9% 36.0% Operating Expenses as % of Sales 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2015 2016 2017 2018 2019 *Operating expenses as a % of sales for 2019 is shown on a Pre-IFRS 16 basis for comparative
Slide 18: Same-Store Sales Growth
SSSG - Optimizing Returns from Existing Operations Same-store sales increases in 33 of 40 most recent quarters 10-year average SSSG: 4.4% 5-year average SSSG: 4.3% Same-Store Sales Growth* 3-year average SSSG: 3.4% *Total Company, excluding FX. **Adjusting for the positive impact of hail in Q4-10, Q
Slide 19: Focus on Accretive Growth
Focus on Accretive Growth • New 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 average annual growth rate of 15%: • Same-store sales • Acquisition or development of single locations • Acquisition of
Slide 20: U.S. Dollar Reporting
U.S. Dollar Reporting • To reduce volatility from exchange rates, effective January 1, 2021, Boyd will begin 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 108 705 105 81 64 58 42 29 30 2013 2014 2015 2016 2017 2018 2019 YTD 2020 Annual additions Total locations • May 2013: acquisition of Glass America added 61 retail auto glass locations • March 2016: acquisition of 4 retail auto glass locations 21
Slide 22: Financial Review
Financial Review THE SP Boyd GROUP
Slide 23: Revenue Growth
Revenue Growth (C$ millions) $2,500 $2,283.3 $2,000 $1,864.6 $1,569.4 $1,500 $1,387.1 $1,174.1 $1,000 $844.1 $500 $0 2014 2015 2016 2017 2018 2019 23
Slide 24: Adjusted EBITDA Growth
Adjusted EBITDA Growth (C$ millions) $300 $250 $215.6 $200 $173.4 $145.6 $150 $124.3 $101.7 $100 $69.0 $50 $0 2014 2015 2016 2017 2018 2019 *Adjusted EBITDA for 2019 is shown on a Pre-IFRS 16 basis for comparative purposes. Post-IFRS 16 Adjusted EBITDA was $319.9 for the year ended December 31, 2019
Slide 25: Q3 2020 Financial Summary
Q3 2020 Financial Summary 3-months ended 9-months ended (C$ millions, except per unit/share and percent amounts) Sept 30, Sept 30, Sept 30, Sept 30, 2020 2019 2020 2019 Sales $508.3 $567.0 $1,563.1 $1,697.4 Gross Profit $240.0 $257.0 $721.0 $772.8 Adjusted EBITDA* $84.5 $77.4 $215.1 $235.8 Adjusted
Slide 26: Strong Balance Sheet
Strong Balance Sheet (in C$ millions) Sept 30, 2020 Dec 31, 2019 Cash $141.5 $35.5 Long-Term Debt $282.1 $415.3 Net Debt before lease liabilities (total debt, including current portion and bank $140.6 $379.8 indebtedness, net of cash) Lease liabilities $531.5 $513.4 Total debt, net of cash $672.0 $8
Slide 27: Financial Flexibility
Financial Flexibility • Cash of $141.5 million • Net Debt to EBITDA TTM ratio of 0.8x • 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$125 million, maturing May 2
Slide 28: Dividends
Dividends Annualized dividends have increased by 11.9% since 2015 Annualized Dividend per Share (C$) $0.60 0.552 $0.55 0.540 0.528 0.516 0.504 $0.50 $0.45 $0.40 Nov 15 - Nov 16 - Nov 17 - Nov 18 - Nov 19 - Oct 16 Oct 17 Oct 18 Oct 19 Sep 20 Boyd has announced a dividend increase of 2.2% to $0.564 pe
Slide 29: Five-year Return to Shareholders
Five-year Return to Shareholders Boyd Group S&P/TSX Composite S&P/TSX Income Trust 400% 5-year 350% total return: 300% 336.94%* 250% 200% S&P/TSX 150% Income Trust 61.39% 100% 50% 0% S&P/TSX Composite -50% 35.59% 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 *Source: Factset. Total return based
Slide 30: Delivering long-term value to shareholders
Delivering long-term value to shareholders • Best 10-year performance on the TSX in 2015 and 2016 • Second best 10-year performance on the TSX in 2017, 2018 and 2019 • Named to the inaugural TSX 30 in September 2019, a flagship program recognizing the 30 top- performing TSX stocks over a three-year
Slide 31: Experienced & Committed Management Team
Experienced & Committed Management Team Tim O’Day Pat Pathipati Brock Bulbuck President & CEO Executive Executive Chair Vice-President & CFO 31
Slide 32: COVID-19 Impact and Outlook
COVID-19 Impact and Outlook • COVID-19 began to significantly impact the business just prior to the end of Q1 2020 and continues to impact results • Boyd continues to take proactive steps to adapt to the new environment, including increased health and safety practices such as contactless drop-off &
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 June 2021. • Boyd determined it was eligible for 7 periods from April 12 to September 26th and will continue to apply for eligible periods. • Adjusted EBITDA for the nine months ended Se
Slide 34: Summary
Summary ✓ Strong balance sheet Stability ✓ Insurer preference for MSOs ✓ Recession Resilient + ✓ US$41.2 billion fragmented industry ✓ High ROIC growth strategy Growth ✓ Market leader/consolidator in North America = ✓ Cash dividends/conservative payout ratio Shareholder Value ✓5-year total sharehold