- High demand for services leading to Revenue
Growth and Improved Profitability -
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SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES/
WINNIPEG, MB, March 22,
2023 /CNW/ - Boyd Group Services Inc. (TSX:
BYD.TO) ("the Boyd Group", "Boyd" or "the Company") today announced
the results for the three and twelve-month periods ended
December 31, 2022. The Boyd Group's fourth quarter 2022
financial statements and MD&A have been filed on SEDAR
(www.sedar.com). This news release is not in any way a substitute
for reading Boyd's financial statements, including notes to the
financial statements, and Boyd's Management's Discussion &
Analysis.
2022 Results and Highlights:
- Sales increased by 29.9% to $2.4
billion from $1.9 billion in
the same period of 2021, including same-store sales1
increases of 19.8%. Fiscal 2022 recognized one additional selling
and production day when compared to fiscal 2021, which increased
selling and production capacity by 0.4% in 2022 when compared to
2021
- Adjusted EBITDA1 increased 24.6% to $273.5 million, compared with Adjusted EBITDA of
$219.5 million in 2021, which
included the benefit of $9.8 million
of Canada Emergency Wage Subsidy
("CEWS")
- Adjusted net earnings1 increased 51.3% to
$42.4 million, compared with
$28.0 million in adjusted net
earnings in 2021 and adjusted net earnings per share1
increased 51.5% to $1.97, compared
with $1.30 in 2021
- Net earnings increased 74.0% to $41.0
million, compared with $23.5
million in 2021 and net earnings per share increased 74.0%
to $1.91, compared with $1.10 in 2021
- Positive cash flows provided by operating activities of
$264.2 million, compared with
$196.7 million in 2021
- Increased quarterly dividends by 2.1% in November 2022, bringing dividends to an
annualized amount of C$0.59 per share
from C$0.58 per share
- Added 40 new locations, including 23 acquisition locations, 12
start-up locations and five intake centers
- Announced the completion of the CEO Succession Plan, first
announced in August 2019
- Proactively entered into an amendment to the Credit Facility to
provide additional flexibility to the covenant calculations
- Published Boyd's inaugural Environmental, Social and Governance
Report
- Announced the planned retirement of Pat
Pathipati from the role of Executive Vice President &
CFO and announced the appointment of Jeff
Murray as Interim CFO, effective January 1, 2023
- Announced the appointment of Brian
Kaner as Executive Vice President and Chief Operating
Officer for the Boyd Group's collision business, effective
October 31, 2022
- Rolled out the expanded Wow Operating Way practices to
corporate business processes
- Achieved growth in the Technician Development Program, from
approximately 200 apprentices at the beginning of 2022 to over 400
apprentices
Subsequent to Quarter End
- Resumed focus on location growth and added 17 locations
- Closed 23 intake centers in the U.S. based on demand for
collision repair services exceeding Boyd's collision repair
capacity
- Declared first quarter dividend in the amount of C$0.147 per share
____________________________________________
|
1 Same-store
sales, Adjusted EBITDA, Adjusted net earnings and Adjusted
net earnings per share are non-GAAP financial measures and ratios
and are not standardized financial measures under International
Financial Reporting Standards and might not be comparable to
similar financial measures disclosed by other issuers. For
additional details, including a reconciliation of each non-GAAP
financial measure to its nearest GAAP equivalent, please see
"Non-GAAP financial measures and ratios" section of this news
release.
|
"We are pleased with the strong financial results reported in
2022, achieving record sales and showing resilience in the face of
many challenges, including supply chain disruption and an extremely
tight labor market with accompanying wage pressure", said
Timothy O'Day, President & Chief
Executive Officer of the Boyd Group. "Demand for services
consistently exceeded our capacity in all U.S. markets. Supply
chain disruption began to ease in 2022, when compared to the impact
during the second half of 2021; however, the disruption continued
to delay the completion of many repairs and work-in-process
inventory increased as a result", added Mr. O'Day. "We were
able to successfully negotiate selling rate increases from our
insurance company clients to better reflect the labor cost
increases we have been experiencing, although continuing wage
pressure requires further increases. "
Results of
Operations
|
For the three months
ended,
December 31,
|
For the years
ended,
December 31,
|
(thousands of U.S.
dollars, except per share
amounts)
|
2022
|
% change
|
2021
|
2022
|
% change
|
2021
|
|
|
|
|
|
|
|
Sales –
Total
|
637,094
|
23.4
|
516,206
|
2,432,318
|
29.9
|
1,872,670
|
Same-store sales –
Total (excluding foreign
exchange) (1)
|
617,614
|
20.7
|
511,846
|
2,075,204
|
19.8
|
1,731,699
|
|
|
|
|
|
|
|
Gross margin
%
|
44.3 %
|
1.8
|
43.5 %
|
44.7 %
|
(0.2)
|
44.8 %
|
Operating expense
%
|
32.6 %
|
0.6
|
32.4 %
|
33.5 %
|
1.2
|
33.1 %
|
|
|
|
|
|
|
|
Adjusted EBITDA
(1)
|
74,693
|
30.4
|
57,300
|
273,500
|
24.6
|
219,544
|
Acquisition and
transaction costs
|
576
|
(58.6)
|
1,391
|
1,700
|
(70.9)
|
5,835
|
Depreciation and
amortization
|
44,787
|
7.9
|
41,525
|
175,619
|
14.3
|
153,694
|
Fair value
adjustments
|
—
|
N/A
|
0
|
146
|
(1.4)
|
148
|
Finance
costs
|
9,967
|
29.9
|
7,673
|
37,308
|
34.9
|
27,653
|
Income tax
expense
|
5,179
|
186.1
|
1,810
|
17,765
|
104.8
|
8,674
|
Adjusted net
earnings (1)
|
14,610
|
146.4
|
5,930
|
42,366
|
51.3
|
28,006
|
Adjusted net earnings
per share (1)
|
0.68
|
142.9
|
0.28
|
1.97
|
51.5
|
1.30
|
|
|
|
|
|
|
|
Net earnings
|
14,184
|
189.4
|
4,901
|
40,962
|
74.0
|
23,540
|
Basic earnings per
share
|
0.66
|
189.4
|
0.23
|
1.91
|
74.0
|
1.10
|
Diluted earnings per
share
|
0.66
|
189.4
|
0.23
|
1.91
|
74.0
|
1.10
|
|
1. Same-store sales,
Adjusted EBITDA, Adjusted net earnings and Adjusted net earnings
per share are non-GAAP financial measures. Please see"Non-GAAP
measures" section of this news release.
|
Outlook
"We are pleased with the progress we made in 2022 and, in
particular, the level of same-store sales growth that we achieved
and the improved Adjusted EBITDA delivered consistently during the
last three quarters of the year. We remain focused on our key
challenges of building our capacity through increased staffing and
negotiating sufficient price increases to recover lost margin from
wage pressure," said Mr. O'Day. "We continue to experience high
volumes of work and we are benefiting from increased scanning and
calibration revenue; however, there has also been a continued shift
to a higher mix of parts in relation to labor, driven by increasing
repair complexity. Thus far in the first quarter of 2023,
same-store sales results have been consistent with the growth
experienced over the past few quarters. The balance of 2023 will
have higher comparative periods for which same-store sales will be
measured against."
"Workforce initiatives, such as the Technician Development
Program, are having a positive impact on capacity and ongoing
investments in technology, equipment and training position us well
for continued operational execution", continued Mr. O'Day. "We
remain committed to addressing the labor market challenges so that
we can service additional demand through initiatives such as the
Technician Development Program. Price increases for labor
continue to work their way through the system market by market and
client by client. This has resulted in gradual improvement in labor
margins. The timeline of when this issue resolves is difficult to
predict but the impact is expected to be less and less as wage
increases stabilize and pricing matures. As communicated
previously, performance based programs may cause margin to vary on
a quarter by quarter basis."
"Our intake location strategy is intended to drive same-store
sales growth at times when capacity is not constrained. In late
2022 and early 2023, we decided to close many intake locations in
the U.S. based on the reality of current capacity constraints we
face", added Mr. O'Day. "We plan to increase production
location growth during 2023 in relation to 2022. We are
pleased to have opened or acquired 17 locations thus far in the
quarter and the pipeline to add new locations and to expand into
new markets is robust. Operationally, we are focused on optimizing
performance of new locations, as well as scanning and calibration
services, and consistent execution of the WOW Operating Way. Given
the high level of location growth in 2021 and the strong same-store
sales growth during 2022, we remain confident that the Company is
on track to achieve its long-term growth goals, including doubling
the size of the business on a constant currency basis from 2021 to
2025 against 2019 sales."
"At the end of 2022, Pat
Pathipati retired from the role of Executive Vice President
& CFO. As the search to succeed Pat Pathipati continues, we appointed
Jeff Murray as Interim CFO,
effective January 1, 2023", said Mr.
O'Day. "We believe Jeff's long-tenure, skills and experience
will serve us well during the search period and enable us to carry
on with the achievement of our long-term growth goals."
2022 Fourth Quarter Conference Call & Webcast
As previously announced, management will hold a conference call
on Wednesday, March 22, 2023, at
10:00 a.m. (ET) to review the
Company's 2022 fourth quarter results. You can join the call by
dialing 888-256-1007 or 647-484-0475. To join the conference call
without operator assistance, you may register and enter your phone
number at https://bit.ly/BYDQ42022 to receive an instant
automated call back. A live audio webcast of the conference call
will be available through www.boydgroup.com. An archived
replay of the webcast will be available for 90 days. A taped
replay of the conference call will also be available until
Wednesday, March 29, 2023, at
midnight by calling 888-203-1112 or 647-436-0148, reference number
8860557.
About Boyd Group Services Inc.
Boyd Group Services Inc. is a Canadian corporation and controls
The Boyd Group Inc. and its subsidiaries. Boyd Group Services Inc.
shares trade on the Toronto Stock Exchange (TSX) under the symbol
BYD.TO. For more information on The Boyd Group Inc. or Boyd Group
Services Inc., please visit our website at
http://www.boydgroup.com.
About The Boyd Group Inc.
The Boyd Group Inc. (the "Company") is one of the largest
operators of non-franchised collision repair centres in
North America in terms of number
of locations and sales. The Company operates locations in
Canada under the trade names Boyd
Autobody & Glass (http://www.boydautobody.com) and Assured
Automotive (http://www.assuredauto.ca) as well as in the U.S. under
the trade name Gerber Collision & Glass
(http://www.gerbercollision.com). In addition, the Company is a
major retail auto glass operator in the U.S. with operations under
the trade names Gerber Collision & Glass, Glass America, Auto
Glass Service, Auto Glass Authority and Autoglassonly.com. The
Company also operates a third party administrator, Gerber National
Claims Services ("GNCS"), that offers glass, emergency roadside and
first notice of loss services. For more information on The Boyd
Group Inc. or Boyd Group Services Inc., please visit our website at
(http://www.boydgroup.com).
Non-GAAP Financial Measures and Ratios
Same-store sales, Adjusted EBITDA, Adjusted net earnings and
Adjusted net earnings per share are non-GAAP financial
measures. Boyd's management uses certain non-GAAP financial
measures to evaluate the performance of the business and to reward
employees. These non-GAAP financial measures are not defined in
International Financial Reporting Standards ("IFRS") and should not
be considered an alternative to net earnings or sales in measuring
the performance of BGSI.
The following is a reconciliation of BGSI's non-GAAP financial
measures and ratios:
ADJUSTED EBITDA
Standardized EBITDA and Adjusted EBITDA are measures commonly
reported and widely used by investors and lending institutions as
an indicator of a company's operating performance and ability to
incur and service debt, and as a valuation metric. They are also
key measures that management uses to evaluate performance of the
business and to reward its employees. While EBITDA is used to
assist in evaluating the operating performance and debt servicing
ability of BGSI, investors are cautioned that EBITDA and Adjusted
EBITDA as reported by BGSI may not be comparable in all instances
to EBITDA as reported by other companies.
|
Three Months
Ended
December
31,
|
|
Year
Ended
December
31,
|
(thousands of U.S.
dollars)
|
2022
|
2021
|
|
2022
|
2021
|
|
|
|
|
|
|
Net earnings
|
$
14,184
|
$
4,901
|
|
$
40,962
|
$
23,540
|
Add:
|
|
|
|
|
|
Finance
costs
|
9,967
|
7,673
|
|
37,308
|
27,653
|
Income tax
expense
|
5,179
|
1,810
|
|
17,765
|
8,674
|
Depreciation of
property, plant and
equipment
|
12,279
|
11,723
|
|
47,902
|
42,602
|
Depreciation of right
of use assets
|
26,035
|
24,177
|
|
101,150
|
88,523
|
Amortization of
intangible assets
|
6,473
|
5,625
|
|
26,567
|
22,569
|
Standardized
EBITDA
|
$
74,117
|
$
55,909
|
|
$
271,654
|
$
213,561
|
Add:
|
|
|
|
|
|
Fair value
adjustments
|
—
|
—
|
|
146
|
148
|
Acquisition and
transaction costs
|
576
|
1,391
|
|
1,700
|
5,835
|
Adjusted
EBITDA
|
$
74,693
|
$
57,300
|
|
$
273,500
|
$
219,544
|
ADJUSTED NET EARNINGS
BGSI believes that certain users of financial statements are
interested in understanding net earnings excluding certain fair
value adjustments and other items of an unusual or infrequent
nature that do not reflect normal or ongoing operations of the
Company. This can assist these users in comparing current
results to historical results that did not include such items.
(thousands of U.S.
dollars, except share and per
share amounts)
|
Three Months
Ended
December 31,
|
Year Ended
December 31,
|
|
2022
|
2021
|
2022
|
2021
|
|
|
|
|
|
Net earnings
|
$
14,184
|
$
4,901
|
$
40,962
|
$
23,540
|
Add:
|
|
|
|
|
Fair value adjustments
(non-taxable)
|
—
|
—
|
146
|
148
|
Acquisition and
transaction costs (net of tax)
|
426
|
1,029
|
1,258
|
4,318
|
Adjusted net
earnings
|
$
14,610
|
$
5,930
|
$
42,366
|
$
28,006
|
Weighted average number
of shares
|
21,472,194
|
21,472,194
|
21,472,194
|
21,472,194
|
Adjusted net earnings
per share
|
$
0.68
|
$
0.28
|
$
1.97
|
$
1.30
|
SAME-STORE SALES
Same-store sales is a non-GAAP measure that includes only those
locations in operation for the full comparative period. Same-store
sales is presented excluding the impact of foreign exchange
fluctuation on the current period.
(thousands of U.S.
dollars)
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
2022
|
2021
|
2022
|
2021
|
|
|
|
|
|
Sales
|
$
637,094
|
$
516,206
|
$
2,432,318
|
$ 1,872,670
|
Less:
|
|
|
|
|
Sales from locations
not in the comparative
period
|
(23,140)
|
(3,403)
|
(362,574)
|
(135,385)
|
Sales from
under-performing facilities closed
during the period
|
7
|
(957)
|
(1,598)
|
(5,586)
|
Foreign
exchange
|
3,653
|
—
|
7,057
|
—
|
|
|
|
|
|
Same-store sales
(excluding foreign exchange)
|
$
617,614
|
$
511,846
|
$
2,075,204
|
$ 1,731,699
|
Caution concerning forward-looking statements
Statements made in this press release, other than those
concerning historical financial information, may be forward-looking
and therefore subject to various risks and uncertainties. Some
forward-looking statements may be identified by words like "may",
"will", "anticipate", "estimate", "expect", "intend", or "continue"
or the negative thereof or similar variations. Readers are
cautioned not to place undue reliance on such statements, as actual
results may differ materially from those expressed or implied in
such statements. Factors that could cause results to vary include,
but are not limited to: employee relations and staffing; margin
pressure and sales mix changes; acquisition risk; operational
performance; brand management and reputation; market environment
change; reliance on technology; supply chain risk; pandemic risk
& economic downturn; changes in client relationships; decline
in number of insurance claims; environmental, health and safety
risk; climate change and weather conditions; competition; access to
capital; dependence on key personnel; tax position risk; corporate
governance; increased government regulation and tax risk;
fluctuations in operating results and seasonality; risk of
litigation; execution on new strategies; insurance risk; interest
rates; U.S. health care costs and workers compensation claims;
foreign currency risk; low capture rates; capital expenditures; and
energy costs and BGSI's success in anticipating and managing the
foregoing risks.
We caution that the foregoing list of factors is not
exhaustive and that when reviewing our forward-looking statements,
investors and others should refer to the "Risk Factors" section of
BGSI's Annual Information Form, the "Risks and Uncertainties" and
other sections of our Management's Discussion and Analysis of
Operating Results and Financial Position and our other periodic
filings with Canadian securities regulatory authorities. All
forward-looking statements presented herein should be considered in
conjunction with such filings.
SOURCE Boyd Group Services Inc.