Boyd Group Services Inc · TSX:BYD
Boyd Group Services — Investor Presentation (March 2018)
33 slides from Boyd Group Services's investor presentation, March 2018
Slide 1: Investor Presentation
Investor Presentation March 2018 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 (as at March 21, 2018)
Capital Markets Profile (as at March 21, 2018) Stock Symbol: TSX: BYD.UN Units and Shares Outstanding*: 19.9 million Price (March 21, 2018): $106.48 52-Week Low / High: $81.76/$111.99 Market Capitalization: $2,119 million Annualized Distribution (per unit): $0.528 Current Yield: 0.5% Payout Ratio (T
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$38.0 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 • 509 company operated collision locations across 22 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 (75) Alberta (16) Manitoba (14) 120 locations • British Columbia (13) • Saskatchewan (2) U.S. • • Florida (61) Illinois (53) 389 locations • Michigan (47) • North Carolina (30) • Ohio (26) • Indiana (24) • Georgia (23) • Washington (23)
Slide 7: Glass Operations
Glass Operations • Retail glass operations across 31 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 • Arizona • Colorado • Connecticut • District of Columbia • Florida • Georgia • Idaho • Illinois • Indiana • Kentucky • Louisiana • Massachusetts • Maryland • Michigan • Missouri • Nevada • New Hampshire • New York • North Carolina • Ohio • Oklahoma • Or
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$38.0 billion annually (U.S. $35.7B, CDA $2.3B) • 32,400 shops in the U.S. • Composition of the collision repair market in the U.S.: Dealer- Large MSO owned
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 24.7% from late 2007 to 2016, and almost 60% over the past 36 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 Insurer DRP Usage Other Insurers 28.3% Other 40.5% DRP Top 10 59.5% Insurers 71.7% Source: The Romans Group 13
Slide 14: Impact of Collision Avoidance Systems
Impact of Collision Avoidance Systems Impact of Crash Avoidance on Vehicle Claim Counts • CCC estimates technology will -31% CY 2050 reduce accident frequency by -30% CY 2045 ~30% in next 25-30 years -29% CY 2040 -25% CY 2035 • As per industry studies, decline -19% CY 2030 should be somewhat offset
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 – WOW Operating Way
Operational Excellence – WOW Operating Way • Best-in-Class Service Provider Average cost of repair Cycle time Customer service Quality Integrity • “WOW” Operating Way Implemented in all of our locations other than those added in the last 12 months 16
Slide 17: Operating Expenses as % of Sales
Expense Management Well managed operating expenses as a % of sales 45.0% 40.0% 38.4% 38.8% 38.0% 37.1% 36.8% 36.5% Operating Expenses as % of Sales 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2012 2013 2014 2015 2016 2017 17
Slide 18: Same-Store Sales Growth
SSSG - Optimizing Returns from Existing Operations Same-store sales increases in 34 of 40 most recent quarters 10-year average SSSG: 3.9% 5-year average SSSG: 5.1% Same-Store Sales Growth* 13% 3-year average SSSG: 4.4% 8% 3% -2% -7% Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q
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 120 600 509 100 105 500 80 400 60 300 64 58 54 40 200 42 20 29 100 11 0 0 2012 2013 2014 2015 2016 2017 YTD 2018 Annual additions Total locations • May 2013: acquisition of Glass America added 61 retail auto glass locations • March 2016: acquisition of 4 retail a
Slide 21: Financial Review
Financial Review 21
Slide 22: Revenue Growth
Revenue Growth (C$ millions) $1,569.4 $1,600 $1,387.1 $1,400 $1,174.1 $1,200 $1,000 $844.1 $800 $578.3 $600 $434.4 $400 $200 $0 2012 2013 2014 2015 2016 2017 22
Slide 23: Adjusted EBITDA Growth
Adjusted EBITDA Growth (C$ millions) $145.6 $140 $124.3 $120 $101.7 $100 $80 $69.0 $60 $41.5 $40 $29.4 $20 $0 2012 2013 2014 2015 2016 2017 23
Slide 24: Financial Summary
Financial Summary 3-months ended 12-months ended (C$ millions, except per unit and percent amounts) December 31, December 31, December 31, December 31, 2017 2016 2017 2016 Sales $414.6 $360.4 $1,569.4 $1,387.1 Gross Profit $188.1 $165.1 $718.4 $635.0 Adjusted EBITDA* $41.8 $32.6 $145.6 $124.3 Adjust
Slide 25: Strong Balance Sheet
Strong Balance Sheet (in C$ millions) December 31, 2017 December 31, 2016 Cash $47.8 $53.5 Long-Term Debt $258.0 $101.6 Convertible Debentures* - $50.8 Obligations Under Finance Leases $8.9 $11.9 Net Debt (total debt, including current portion and bank indebtedness, $219.1 $110.8 net of cash) Net De
Slide 26: Financial Flexibility
Financial Flexibility • Cash of $47.8 million • Net Debt to EBITDA TTM ratio of 1.4x pro forma for Assured • 5-year committed facility of US$300 million which can increase to US$450 million with accordion feature, maturing May 2022 • Over $400 million in cash and available credit • Only public compa
Slide 27: U.S. Tax Reform Impact
U.S. Tax Reform Impact • U.S. effective tax rate to decrease by 13% after considering state taxes beginning in 2018 • Proforma 2017 (if tax reform was effective January 1, 2017): would have lowered total tax expense (current and deferred) by approximately $11.0M • Boyd’s low leverage makes interest
Slide 28: Distributions
Distributions Annualized distributions have increased by 12.8% since 2012 Annualized Distribution per Unit (C$) $0.55 0.528 0.516 0.504 $0.50 0.492 0.48 0.468 $0.45 $0.40 Nov 12 - Nov 13 - Nov 14 - Nov 15 - Nov 16 - Oct 17 Nov 17 - Oct 13 Oct 14 Oct 15 Oct 16 present 28
Slide 29: Five-year Return to Unitholders
Five-year Return to Unitholders Boyd Group S&P/TSX Composite S&P/TSX Income Trust 800% 5-year 700% total return: 600% 553.50%* 500% 400% 300% 200% S&P/TSX Composite 100% 51.3% 0% S&P/TSX Income Trust -100% 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16 40.8% 31-Dec-17 *Source: Thomson Reuters Eik
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 S&P/TSX Composite Index +9,966.5% BYD.UN +5,795.6% +4,655% +58.6% +57.5% +15.4% 2005 - 2015 2006 - 2016 2007 - 2017 Source: Thomson One, includes rein
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: 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 33: Summary
Summary Strong balance sheet Stability Insurer preference for MSOs Recession resilient + US$38.0 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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