Boyd Group Services Inc · TSX:BYD
Boyd Group Services — Q1 2020 Earnings Presentation
33 slides from Boyd Group Services's earnings presentation, May 2020
Slide 1: Boyd Group Services Inc. Investor Presentation May 2020
BOYD GROUP SERVICES INC. Investor Presentation May 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 (as at May 14, 2020)
Capital Markets Profile (as at May 14, 2020) Stock Symbol: TSX: BYD.TO Shares Outstanding: 21.5 million Price (May 14, 2020): $192.28 52-Week Low / High: $125.01/$231.52 Market Capitalization: $4,134.0 million Annualized Dividend (per share): $0.552 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$39.4 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 • 698 company operated collision locations across 28 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 (83) British Columbia (16) 132 locations • Manitoba (15) • Alberta (14) • Saskatchewan (4) U.S. • 566 Oregon (12) locations • Michigan (67) • Illinois (64) • Tennessee (11) • Florida (62) • Maryland (10) • New York (38) • California (9) •
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$39.4 billion annually (U.S. $36.9B, CDA $2.5B) • 32,000 shops in the U.S., 4,575 shops in Canada • Composition of the collision repair market in the U.S.:
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 23.1% from 2008 to 2018, and almost 60% over the past 38 years • Large multi-shop collision repair operator (“M
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, 2018 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 operat
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: Operating Expenses as % of Sales
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 34 of 40 most recent quarters 13% 10-year average SSSG: 4.5% 5-year average SSSG: 4.0% Same-Store Sales Growth* 3-year average SSSG: 3.2% 8% 3% -2% -7% Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11** Q1-12 Q2-12 Q3-12 Q4-12
Slide 19: Focus on Accretive Growth
Focus on Accretive Growth • Goal achieved: double the size of the business during the five-year period ending in 2020 based on revenues on a constant currency basis. ▪ Growth in the trailing 12-months to the first quarter of 2020 brought BGSI to within 97% of achieving this long-term goal. ▪ Annuali
Slide 20: Strong Growth in Collision Locations
Strong Growth in Collision Locations 120 900 800 100 108 698 700 105 80 600 81 500 60 64 400 40 58 300 42 200 20 29 19 100 0 0 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: acqu
Slide 21: Financial Review
Financial Review THE pp Boyd GROUP
Slide 22: 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 $0 2014 2015 2016 2017 2018 2019 22
Slide 23: Adjusted EBITDA Growth
Adjusted EBITDA Growth (C$ 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 $319.9 for the year ended December 31, 2019
Slide 24: Q1 2020 Financial Summary
Q1 2020 Financial Summary 3-months ended (C$ millions, except per unit/share and percent amounts) Mar 31, Mar 31, 2020 2019 Sales $628.4 $557.9 Gross Profit $281.4 $253.0 Adjusted EBITDA* $81.4 $78.3 Adjusted EBITDA Margin* 13.0% 14.0% Adjusted Net Earnings* $20.2 $28.1 Adjusted Net Earnings* per un
Slide 25: Strong Balance Sheet
Strong Balance Sheet (in C$ millions) March 31, 2020 December 31, 2019 Cash* $576.5 $35.5 Long-Term Debt $975.9 $415.3 Net Debt before lease liabilities (total debt, including current portion and bank $399.4 $379.8 indebtedness, net of cash) Lease liabilities $550.5 $513.4 Total debt, net of cash $9
Slide 26: Financial Flexibility
Financial Flexibility • Cash of $576.5 million • Net Debt to EBITDA TTM ratio of 1.9x • 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$125 million, maturing May 2
Slide 27: Distributions
Distributions * Annualized distributions have increased by 9.5% since 2015 Annualized Distribution per Unit (C$) $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 Present *BGSI will continue to declare dividends in t
Slide 28: Five-year Return to Unitholders / Shareholders
Five-year Return to Unitholders / 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
Slide 29: 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, 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 p
Slide 30: Experienced & Committed Management Team
Experienced & Committed Management Team Tim O’Day Pat Pathipati Brock Bulbuck President & CEO Executive Executive Chair Vice-President & CFO 30
Slide 31: Corporate Conversion
Corporate Conversion • On January 2, 2020, Boyd converted from an income trust to a corporation, named Boyd Group Services, Inc. (“BGSI”) • A simplified, better understood structure removes the foreign ownership restriction on public ownership, and allows for an expansion of Boyd's shareholder base
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. • BGSI implemented various initiatives to address the decline in sales including: ▪ Staffing reductions ▪ Salary and other compensation adjustments ▪ Negotiated lease payment reduction
Slide 33: Summary
Summary ✓ Strong balance sheet Stability ✓ Insurer preference for MSOs ✓ Recession resilient + ✓ US$39.4 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