Boyd Group Income Fund reported its financial results for the three-month period ended March 31, 2012.
Highlights include:
- Added 6 new single locations plus 8 location Master Collision acquisition, together totalling fourteen new locations year- to-date
- Sales increased by 31.7% to $107.4 million from $81.6 million in Q1 2011; Cars Collision, Master Locations, and eleven new single locations added since Q1 2011 contributed $26.1 million of sales
- Same-store sales decreased by 0.4%, excluding the impact of foreign exchange translation
- Gross margin increased to $47.9 million, or 44.6%, compared with $36.8 million, or 45.2%, in Q1 2011
- Adjusted EBITDA1 of $7.0 million compared with $5.5 million in Q1 2011
- Net earnings were $2.1 million, or $0.166 per unit (diluted), compared with $0.9 million, or $0.082 per unit (diluted), in Q1 2011
- Adjusted distributable cash of $2.3 million compared with $3.0 million in Q1 2011
- Payout ratio of 63.0% compared with 38.2% in Q1 2011
"We are pleased with our achievements for the Quarter," said Brock Bulbuck, President and Chief Executive Officer of the Boyd Group. "We made significant progress towards our growth goals for the year and we posted respectable results despite the weather-related challenges of the mild and dry winter.
"Total same-store sales were only down slightly, and U.S. same-store sales recorded modest positive growth. Our acquisitions of Cars Collision and Master Collision over the last 12 months, as well as the addition of new single locations, have been positive to our business.
"We will continue to evaluate similar attractive opportunities as part of our growth strategy," Bulbuck said. "We believe that this strategy, combined with our strong industry position, has helped us mitigate the softer market in the first quarter."
Financial Results
Sales increased by 31.7% to $107.4 million, compared with sales of $81.6 million for the same period last year. The $25.8-million increase was driven largely by sales from Cars Collision, Master Collision, and eleven other new collision repair locations.
Sales in Canada were $19.5 million for the three months ended March 31, 2012, reflecting a 0.3% decline from $19.6 million for the same period in 2011. Flat sales in Canada resulted primarily from same store-sales decline of 3.6%, offset by sales of $1.2 million from three new locations.
Sales in the U.S. totalled $87.9 million, an increase of $25.9 million, or 41.8%, over the same period in 2011. The increase resulted from $17.3 million of sales from Cars Collision, $5.1 million from Master, $2.5 million from 8 new locations, $0.4 million from 0.6% same-store sales growth, and $0.9 million from favourable currency translation of same-store sales, offset by lost sales from the closure of one location.
Adjusted earnings before interest, income taxes, depreciation and amortization ("Adjusted EBITDA") for the first quarter totalled $7.0 million, or 6.5% of sales, compared with Adjusted EBITDA of $5.5 million, or 6.7% of sales, for the same period a year ago. The 27.2% increase in Adjusted EBITDA was the result of EBITDA contribution from Cars Collision, Master, and from other new locations, offset by moderate same- store declines due to the mild winter conditions.
In the first quarter of 2012, the fund recorded income tax expense in the amount of $0.7 million, compared with $0.9 million for the same period in 2011.
Net earnings were $2.1 million, or 2.0% of sales, compared with net earnings of $0.9 million, or 1.1% of sales for the same period last year. Excluding the impact of fair value adjustments for exchangeable shares and unit options, acquisition costs and the accelerated amortization of the True2Form, Cars Collision and Master brands, adjusted net earnings increased to $3.3 million, or 3.0% of sales, compared with adjusted earnings of $2.6 million, or 3.2% of sales, for the same period in 2011.
During the first quarter, the fund generated adjusted distributable cash of $2.3 million and declared distributions and dividends of $1.5 million, resulting in a payout ratio based on adjusted distributable cash of 63.0% for the quarter. This compares with adjusted distributable cash of $3.0 million and a payout ratio of 38.2% a year ago. The decline in adjusted distributable cash and increase in payout ratio was largely due to higher payments of cash taxes, higher maintenance capital expenditures as well as additional cash used for working capital changes, combined with higher distributions in 2012.
Outlook
"Our growth strategy targets 6%-10% growth in new start-up locations or single-location acquisitions, as well as being alert for opportunities to acquire attractive multi-location collision operators such as Cars Collision and Master," added Bulbuck.
"Thus far this year, we have executed on growth at a pace which keeps us well on track with our goal. Our business has proven fairly resilient in the face of external and uncontrollable weather and market factors that have had some impact for the first quarter, and which are also expected to negatively impact the second quarter, which has historically been our weakest quarter.
"We remain positive on the long-term dynamics of our industry and the merits of our business model," he said. "We will continue to integrate our acquisitions to benefit from operational synergies while growing organically by adding new and carefully selected single locations, to counter any adverse market conditions.
"In line with this, we have begun the standardization of our management information systems across all of our repair center locations, which should further enhance our operational and administrative efficiency.
"Such initiatives will help strengthen our positioning as a growth company that offers an attractive payout, while maintaining the financial flexibility to support our growth strategy and gradually increase distributions to our unitholders over time," Bulbuck said.
