Boyd Group Services Inc · TSX:BYD
Boyd Group Services — Q2 2019 Earnings Presentation
34 slides from Boyd Group Services's earnings presentation, August 2019
Slide 1: Investor Presentation
Investor Presentation August 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 August 14, 2019) Stock Symbol: TSX: BYD.UN Units and Shares Outstanding*: 20.1 million Price (August 14, 2019): $172.84 52-Week Low / High: $181/$103.83 Market Capitalization: $3,474.1 million Annualized Distribution (per unit): $0.540 Current Yield: 0.3% Payout Ratio*
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 • One of the largest retail auto glass operators in the U.S. • Only public company in the auto co
Slide 5: Collision Operations
Collision Operations • 648 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 (81) Alberta (15) 129 locations • Manitoba (15) • British Columbia (14) • Saskatchewan (4) U.S. 519 locations • Florida (62) • Oregon (12) • Illinois (61) • Maryland (10) • Michigan (58) • Tennessee (9) • New York (37) • Nevada (7) • Washi
Slide 7: Glass Operations
Glass Operations • Retail glass operations across 34 U.S. states Asset light business model • Third-Party Administrator business that offers glass, emergency roadside and first notice of loss services with approximately: 5,500 affiliated glass provider locations 4,600 affiliated emergency road
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.: Dealer- owned Large MSO
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 Other Insurers 27.5% Other 38.3% DRP Top 10 61.7% Insurers 72.5% 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 accident frequency by ~30% in next 25-30 Claim Counts * years -31% CY 2050 • Collision avoidance technology may lessen -30% CY 2045 the extent of damage in some accidents, -29% CY 2040 l
Slide 15: Business Strategy
Business Strategy Operational Expense excellence management Enhance UNIT Unitholder THE BOYD HOLDERS GROUP Value Same-store sales growth and optimize returns New location and from existing operations acquisition growth 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: Operating Expenses as % of Sales
Expense Management Well managed operating expenses as a % of sales 45.0% 40.0% 38.8% 38.0% 37.1% 36.8% 36.5% Operating Expenses as % of Sales 35.9% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2013 2014 2015 2016 2017 2018 17
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: 4.0% 5-year average SSSG: 4.8% Same-Store Sales Growth* 13% 3-year average SSSG: 3.8% 8% 3% -2% -7% Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11**
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 120 700 648 600 100 105 500 80 81 400 60 64 58 300 40 73 200 20 42 29 100 0 0 2013 2014 2015 2016 2017 2018 YTD 2019 Annual additions Total locations • May 2013: acquisition of Glass America added 61 retail auto glass locations • March 2016: acquisition of 4 reta
Slide 21: Financial Review
Financial Review 21
Slide 22: Revenue Growth
Revenue Growth (C$ millions) $1,864.6 $1,800 $1,569.4 $1,600 $1,387.1 $1,400 $1,174.1 $1,200 $1,000 $844.1 $800 $578.3 $600 $400 $200 $0 2013 2014 2015 2016 2017 2018 22
Slide 23: Adjusted EBITDA Growth
Adjusted EBITDA Growth (C$ millions) $180 $173.4 $160 $145.6 $140 $124.3 $120 $101.7 $100 $80 $69.0 $60 $41.5 $40 $20 $0 2013 2014 2015 2016 2017 2018 23
Slide 24: Q2 2019 Financial Summary
Q2 2019 Financial Summary 3-months ended 6-months ended (C$ millions, except per unit and percent amounts) June 30, June 30, June 30, June 30, 2019 2018 2019 2018 Sales $572.5 $456.6 $1,130.4 $909.9 Gross Profit $262.8 $209.9 $515.7 $414.4 Adjusted EBITDA* $54.3 $42.5 $108.5 $84.6 Adjusted EBITDA (p
Slide 25: IFRS 16 Impact
IFRS 16 Impact IMPACT OF IFRS 16 ON NET EARNINGS, CASH FLOWS & DISTRIBUTABLE CASH $(000's)Cdn Q2 2019 IFRS 16 Q2 2019 Statement of Earnings As reported Adjustment Pre-IFRS 16 Sales 572,505 - 572,505 Cost of sales 309,748 - 309,748 Gross profit ($) 262,757 - 262,757 Operating expenses 182,658 25,764
Slide 26: Strong Balance Sheet
Strong Balance Sheet (in C$ millions) June 30, 2019* December 30, 2018 Cash $46.3 $64.5 Long-Term Debt $359.1 $288.2 Obligations Under Finance Leases 0 $8.4 Net Debt before lease liabilities (total debt, including current portion and bank indebtedness, $312.8 $232.1 net of cash) Lease liabilities $4
Slide 27: Financial Flexibility
Financial Flexibility • Cash of $46.3 million • Net Debt to EBITDA TTM ratio of 1.6x 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 $250 million in cash and available cre
Slide 28: Distributions
Distributions Annualized distributions have increased by 9.8% since 2014 Annualized Distribution per Unit (C$) $0.55 0.540 0.528 0.516 0.504 $0.50 0.492 $0.45 $0.40 Nov 14 - Nov 15 - Nov 16 - Oct Nov 17 - Nov 18 - present Oct 15 Oct 16 17 Oct 18 28
Slide 29: Five-year Return to Unitholders
Five-year Return to Unitholders Boyd Group S&P/TSX Composite S&P/TSX Income Trust 350% 5-year 300% total return: 250% 253.84%* 200% 150% S&P/TSX Income Trust 100% 41.1% 50% 0% S&P/TSX Composite -50% 22.0% 31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 *Source: Thomson Reuters Eikon. Tot
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 S&P/TSX Composite Index BYD.UN +9,966.5% +5,795.6% 5,901.2% +118% +58.6% +57.5% 2006 - 2016 2007 - 2017 2008 - 2018 *Source: Thomson Reuters
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: 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 34: 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