Boyd Group Income Fund Reports Record Third Quarter Results - BodyShop Business
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Boyd Group Income Fund Reports Record Third Quarter Results

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Boyd Group Income Fund reported its financial results for the three and nine-month periods ended Sept. 30, 2010. Boyd Group also announced that the Trustees of the Fund have approved a 4.3 percent increase in monthly distributions from $0.02875 per unit to $0.03 per unit commencing January 2011 for unitholders of record on December 31, 2010.

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Q3 2010 Highlights

• Sales increased by 32.1% to $69.0 million from $52.2 million in Q3 2009, primarily due to two months of sales contribution from True2Form Collision Repair Centers, Inc. ("True2Form"), acquired at the end of July
 
• Same-store sales increased by 4.9%, excluding the impact of foreign exchange translation
 
• Gross margin improved to 45.7% compared with 44.9% in Q3 2009

• EBITDA1 totalled $5.0 million compared with Adjusted EBITDA1 of $3.8 million in Q3 2009 despite a $0.6-million negative impact of foreign exchange translation

• Adjusted distributable cash2 totalled $5.7 million compared with $2.8 million in Q3 2009
 
• Payout ratio of 16.9% compared with 28.6% in Q3 2009

• Net earnings were $3.2 million, or 4.6% of sales, compared with $2.2 million, or 4.3% of sales, in Q3 2009

"Once again, we are pleased to report record sales, net earnings, EBITDA, and operating cash flow during the quarter," said Brock Bulbuck, president and CEO of the Boyd Group. "As a result of continued operational efficiencies and cash flow strength, we have announced a further 4.3% increase in our monthly distributions, which represents the twelfth consecutive quarterly increase."

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"In addition to posting record results this quarter, we have made significant progress in integrating True2Form Collision Repair Centers, Inc., one of the largest multi-location collision repair companies in the United States.  As a result of this acquisition, we are now the largest multi-site operator of automotive collision repair service centers in North America by number of locations, currently with 133 locations. We believe we are well positioned to capitalize on our size as the collision repair industry continues to consolidate repair volume with a fewer number of large collision repair companies," added Bulbuck.   

Financial Results

Three Months Ended September 30, 2010

Sales for the three months ended September 30, 2010 increased by 32.1% to $69.0 million, compared with sales of $52.2 million for the three months ended September 30, 2009, after adjusting for the effect of discontinued operations. The increase consisted of $16.2 million in sales generated from True2Form and other new collision repair start-ups, $2.5 million in same-store sales growth offset by $1.9 million due to a lower U.S. dollar translation rate on sales generated from Boyd Group’s U.S. operations.  

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On a segmented basis, sales in Canada totalled $17.8 million for the three months ended September 30, 2010, an increase of $0.4 million or 2.5%.  Sales growth in Canada was due entirely to same-store sales increases.

Sales in the U.S. totalled $51.2 million in the third quarter of 2010, an increase of $16.4 million, or 46.9%, over the same period in 2009.

Sales in the U.S. included sales of $13.4 million from True2Form as well $2.8 million from new locations in Glendale, Arizona; Anthem, Arizona; Rome, Georgia; Avondale, Arizona; three new locations in Tucson, Arizona; Cartersville, Georgia; Owasso, Oklahoma; Evanston, Illinois; Las Vegas, Nevada; and two new locations in the Atlanta, Georgia area. Translation of U.S. revenues at a weaker U.S. dollar exchange rate relative to the Canadian dollar resulted in a decrease of $1.9 million. Excluding the impact of currency translation, same-store sales in the U.S. increased by $2.1 million or 6.1% when compared with Q3 2009.

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Earnings before interest, income taxes, depreciation and amortization ("EBITDA") for the third quarter of 2010 totalled $5.0 million, or 7.3% of sales, compared with EBITDA adjusted for discontinued operations ("Adjusted EBITDA") of $3.8 million, or 7.3% of sales, during the same period a year ago.  Changes in the U.S. dollar negatively impacted
EBITDA by $0.6 million in Q3 2010 in comparison to Q3 2009.  This decline was more than offset by the impact of sales from new locations, same-store sales growth, and improvements in gross margin percentage.

For the three months ended September 30, 2010, net earnings after discontinued operations were $3.2 million, or $0.267 per diluted unit and Class A common share, compared with net earnings of $2.2 million, or $0.188 per diluted unit and Class A common share, for the same period in 2009.

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During the third quarter of 2010, the Fund generated adjusted distributable cash of $5.7 million, which includes adjustments for the collection of additional prepaid rebates, cash flow used in discontinued operations, proceeds on the sale of equipment, and capital lease repayments. The Fund paid distributions of $1.0 million, representing a payout ratio of 16.9% for the quarter.  

Nine Months Ended September 30, 2010

Sales for the nine months ended September 30, 2010 increased by 3.1% to $176.0 million, compared with $170.6 million for the nine months ended September 30, 2009, after adjusting for the effect of discontinued operations. The increase consisted of $20.8 million in sales generated from True2Form and other new collision repair start-ups, partially offset by the result by a lower U.S. dollar translation rate on sales generated from Boyd Group’s U.S. operations of $13.5 million and $1.9 million due to a 1.1% same-store sales decline.  

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On a segmented basis, sales in Canada decreased by 4.6% to $53.2 million in the first nine months of 2010 compared with sales of $55.8 million for the same period a year ago. The decrease in sales was due to same-store sales declines in the first half of the year, partially offset by same-store increases in the third quarter.

Sales in the U.S. increased by 6.9% to $122.8 million in the first nine months of 2010 compared with $114.8 million for the same period a year ago. Sales in the U.S. included sales of $13.4 million from True2Form as well as $7.4 million from 13 other new locations.  Translation of U.S. revenues at a weaker U.S. dollar exchange rate relative to the Canadian dollar resulted in a decrease of $13.5 million. Excluding the impact of foreign currency translation, same-store sales in the U.S. increased by $0.7 million, or 0.6%, compared with the same period in the prior year.
 
Adjusted EBITDA for the nine-month period ended September 30, 2010 increased by 7.5% to $11.9 million, or 6.8% of sales, compared with Adjusted EBITDA of $11.1 million, or 6.5% of sales, in the same period a year ago. Changes in the U.S. dollar negatively impacted EBITDA by $1.7 million.  This decline was more than offset by the impact of sales from new locations, and improvements in gross margin percentage.
 
For the nine months ended September 30, 2010, net earnings after discontinued operations were $7.1 million or $0.614 per unit (basic) and $0.602 per unit (diluted), compared with net earnings of $6.3 million or $0.538 per unit (basic) and $0.533 per unit (diluted), in the same period a year ago.

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In the first nine months of 2010, the Fund generated adjusted distributable cash of $11.0 million, which includes adjustments for the collection of additional prepaid rebates, cash flow used in discontinued operations, proceeds on the sale of equipment, and capital lease repayments. The Fund paid distributions of $2.7 million, representing a payout ratio of 24.8% for the period.

As at September 30, 2010, the Fund had total debt outstanding, net of cash, of $19.4 million, compared with $13.4 million at June 30, 2010, $13.6 million at March 31, 2010, $16.7 million at December 31, 2009 and $17.2 million at September 30, 2009. The increase in the third quarter of 2010 was primarily due to the Company incurring approximately $7.0 million in new U.S. senior term debt and a $2.1 million vendor take-back note as part of the True2Form acquisition; partially offset by growth in the Company’s cash position.  

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Outlook

"We are encouraged by the initial results of our integration of True2Form, as well as improvements in same-store sales growth rates in both the U.S. and Canada. We expect to continue to evaluate strategic opportunities that will help us achieve our growth targets. While our objective continues to be to gradually increase distributions to unitholders over time, we are also committed to a conservative distribution policy that will provide us financial flexibility, the ability to support our growth initiatives, and the ability to maintain distribution levels into 2011 despite any trust taxes that may be payable on distributions under the Tax Fairness Law," Bulbuck added. "We will, therefore, continue our prudent approach in evaluating the appropriateness of distribution increases in the future."

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