Investor Presentation June 2014

Transcription

1 Investor Presentation June 2014

2 2 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 of information currently available. Although management believes that its expectations are reasonable, it can give no assurance that such expectations will prove to be correct. The forward-looking statements contained herein are subject to these factors and other risks, uncertainties and assumptions relating to the operations, results of operations and financial position of the Fund. For more information concerning forward-looking statements and related risk factors and uncertainties, please refer to the Boyd Group s interim and annual regulatory filings.

3 3 Capital Markets Profile Stock Symbol: Units and Shares Outstanding: TSX: BYD.UN 15.3 million Price (May 22, 2014): $ Week Low / High: $19.61 / $41.39 Market Capitalization: $620.4 million Annualized Distribution (per unit): $0.48 Current Yield: 1.2% Payout Ratio (TTM*): 21.5% * Trailing twelve months

4 Company Overview Own and operate collision repair centres in the U.S. and Canada Largest operator of collision repair shops in North America by number of locations Highly fragmented $33.5 billion market Collision repair companies that derive a high percentage of their revenue from insurance companies are the most insulated from the effects of the economy of any segment of the auto aftermarket industry The Company is a major retail auto glass operator in the U.S. with operations across 28 U.S. states and an auto glass repair and replacement referral business with approximately 3,000 affiliated service providers Revenue Contribution: By Country Canada By Payor < 10% Customer Pay U.S. > 90% Insurance 4

5 5 North American Collision Repair Footprint Canada U.S. Manitoba (14) Alberta (12) B.C. (10) Saskatchewan (2) Ontario (1) Illinois (55) Florida (39) North Carolina (25) Michigan (24) Arizona (17) Georgia (15) Washington (15) Colorado (13) Indiana (12) Maryland (10) Ohio (9) Pennsylvania (5) Nevada (4) Oklahoma (3) Kansas (1) 39 centres 247 centres

6 North American Glass Footprint U.S. Alabama Arizona Colorado Connecticut District of Columbia Florida Georgia Illinois Indiana Kansas Kentucky Massachusetts Maryland Michigan Missouri Nevada New Hampshire New York North Carolina Ohio Oklahoma Pennsylvania Tennessee Texas Virginia Washington West Virginia Wisconsin 6

7 7 U.S. Operations 247 collision locations across fifteen U.S. states Operate full-service repair centres offering collision repair, glass repair and replacement services Strong relationships with insurance carriers Advanced management system technology Single brand strategy

8 8 Canadian Operations 39 Company-owned/operated centres; 8 franchise locations Operate full-service repair centres offering collision repair, glass repair and replacement Customer focused: Modern retail locations ISO 9002 certified Standard operating procedures MIS Systems

9 Market Overview & Business Strategy

10 10 Large, Fragmented Market Revenue for North American collision repair industry is estimated to be approximately $33.5 billion annually (US$30.7B, CDA $2.8B) Car dealerships are estimated to have approximately 22.5% of the total US market Multi-shop operators and dealerships with revenues > $20 million are estimated to have approximately 14.7% of the US market The remaining North American collision repair industry is dominated by smaller independent family-owned businesses operating in local markets

11 11 Importance of Direct Repair Programs 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 collision repair claims volume Growing preference among insurers for DRP arrangements with multi-location collision repair operators Boyd is well positioned to take advantage of these trends, and has DRPs with all major insurers and most regional insurers Boyd has minimal exposure to one insurance customer Top 5 largest customers contribute 48% of revenue Largest customer contributes 17% of revenue

12 12 Business Strategy Expense management Same-store sales growth and optimize returns from existing operations New location and acquisition growth Operational excellence

13 13 Growth Strategy 6-10% growth in new start-ups or single-location acquisitions Large, accretive acquisitions Same-store sales growth

14 14 New Start-Ups Growth through Greenfield & Brownfield development of collision facilities Low-cost growth No dilution High ROI Typical New Start-Up Funding Model: Funded By: Revolving credit facility Seller Financing/Capital Leases Total Capital Investment US$300,000 US$200,000 US$500,000

15 15 Evolving Collision Repair Market U.S. Collision Repair Market Estimated market size in 2012 of 35,200 total collision repair locations Long-Term Decline of Independent and Dealership Repair Facilities Total number of independent and dealership collision repair locations has declined by 22% from 2006 to 2011, and 56% over the past 30 years Large Multi-Shop Collision Repair Operator (MSO) Market Share Opportunity Large MSOs represented 3.9% of total locations in 2012 and 14.7% of estimated 2012 revenue (up from 9.1% in 2006) in the US 68 MSOs had $20-million or greater revenues in 2012 (Boyd acquired seven in the last four years) The Top 10 MSOs together represent 54.1% of revenue of large MSOs MSOs benefit from standardized processes, integration of technology platforms, and expense reduction through large-scale supply chain management Source: The Romans Group, A Profile of the Evolving Collision Repair Marketplace

16 16 True2Form Acquisition August 2010 Strategic Benefits Added 37 locations in four new eastern U.S. states Complements existing Boyd U.S. footprint Strong management, operational expertise Financial Benefits Immediately accretive to earnings and cash flow US$16.8-mm transaction (net purchase price excluding costs) with no dilution to current Unitholders

17 17 Cars Collision Acquisition June 2011 Strategic Benefits Added 28 locations Increased locations to 45 from 23 in the Chicagoland market (IL and northern IN) New Colorado market with 6 locations Similar business model and long-term vision as Boyd Group Financial Benefits Immediately accretive to earnings and cash flow US$20.5-mm transaction, with no dilution to Unitholders

18 18 Master Collision Acquisition January 2012 Strategic Benefits First entry into the Florida market with the addition of 8 new locations Complementary business model providing a similar fully-integrated service offering Financial Benefits Immediately accretive to earnings and cash flow US$11.3-mm transaction (net purchase price excluding costs) with no dilution to current Unitholders

19 19 Pearl Auto Body Acquisition July 2012 Strategic Benefits Added 6 locations in Denver, Colorado Doubled number of locations in the market to 12 Similar business model and customer care as Boyd Group Financial Benefits Immediately accretive to earnings and cash flow US$4.1-mm transaction (net purchase price excluding costs), with no dilution to current Unitholders

20 20 The Recovery Room Acquisition November 2012 Strategic Benefits Added 11 locations in Orlando, Florida Similar business model and customer care as Boyd Group Financial Benefits Expected to be accretive to earnings and cash flow in first year of operations US$7.3-mm transaction (net purchase price excluding costs), with no dilution to current Unitholders

21 21 Autocrafters Acquisition November 2012 Strategic Benefits Added another 14 Florida locations in Jacksonville, Tallahassee, and Gainesville Increased total Florida locations to 37 (from none one year earlier) Similar business model and customer care as Boyd Group Financial Benefits Immediately accretive to earnings and cash flow US$19.5-mm transaction (net purchase price excluding costs), with no dilution to current Unitholders

22 22 Glass America Inc. Acquisition May 2013 Strategic Benefits Added 61 retail auto glass locations in 23 U.S. states Complimentary extension of collision repair business Better positions glass business for growth Financial Benefits Immediately accretive to earnings and cash flow Significant synergy opportunities available as the Glass America operations are integrated into Gerber Glass s operating model

23 23 Hansen Collision and Glass Acquisition September 2013 Strategic Benefits Added 24 locations in Michigan and 1 location in Indiana Entered Michigan collision repair market Financial Benefits Immediately accretive to earnings and cash flow US$23.6-mm transaction total purchase price

24 24 Collision Revision April 2014 Strategic Benefits Added 25 locations in Illinois, Indiana and Florida Increased presence in Chicagoland market Financial Benefits Immediately accretive to earnings and cash flow US$32.5-mm transaction total purchase price

25 Financial Review

26 26 Revenue Growth (C$ millions) $700 $600 $578.3 $500 $434.4 $400 $357.0 $300 $200 $209.7 $224.9 $256.8 $100 $

27 27 SSSG - Optimizing Returns from Existing Ops 13% Same-store sales increases in 28 of 37 most recent quarters Same-Store Sales Growth* 8% 3% -2% -7% Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11** Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 *Total Company, excluding FX. **Adjusting for the positive impact of hail in Q4-10, Q4-11 SSSG was 4.7%.

28 28 Expense Management Well managed operating expenses as a % of sales 41% 40.5% Operating Expenses as % of Sales 40% 39% 38% 39.5% 39.1% 38.4% 37.9% 37.8% 38.0% 38.0% 38.4% 38.8% 37%

29 Financial Summary (C$ millions, except per unit and percent amounts) Three-months ended Mar. 31, 2014 Mar. 31, 2013 Sales $183.6 $130.6 Gross Profit $85.7 $58.8 Adjusted EBITDA* $15.0 $8.2 Adjusted EBITDA Margin* 8.2% 6.3% Fair Value Adjustments $7.4 $3.0 Income Tax Expense $2.5 $0.4 Net (Loss) Earnings $(1.7) $0.03 Net (Loss) Earnings per unit (diluted) $(0.112) $0.002 Adjusted Net Earnings $7.3 $3.7 Adjusted Distributable Cash $10.6 $2.4 Adjusted Distributable Cash per diluted unit and Class A common share $0.694 $0.182 Payout Ratio 17.3% 64.2% Payout Ratio (ttm) 21.5% 32.8% * Adjusted EBITDA, adjusted net earnings, and adjusted distributable cash are not recognized measures under International Financial Reporting Standards ("IFRS"). See the Fund s 2014 First Quarter MD&A for more information.

30 Balance Sheet (in C$ millions) Mar 31, 2014 Dec 31, 2013 Cash $28.7 $19.3 Long-Term Debt $33.0 $27.1 Convertible Debentures $31.1 $31.0 Obligations Under Finance Leases $9.3 $9.6 Net Debt (total debt, including current portion and bank indebtedness, net of cash) $44.7 $48.4 Current Ratio Net Debt / Adjusted EBITDA (TTM) 0.93x 1.17x Net Debt / Adjusted EBITDA (pro forma for multi-location acquisitions < 12 months old and higher paint post-purchase discount structure) 0.83x 0.97x

31 31 Distributions Annualized Distribution per Unit (C$) Annualized distributions have increased by 167% since December 2007 $0.50 $0.45 $0.420 $0.450 $0.468 $0.480 $0.40 $0.35 $0.30 $0.25 $0.20 $0.180 $0.195 $0.210 $0.225 $0.240 $0.255 $0.270 $0.285 $0.300 $0.315 $0.330 $0.345 $0.360 $0.15 $0.10 $0.05 $0.00 Dec 07 - Mar 08 Apr 08 - May 08 Jun 08 - Aug 08 Sept 08 - Dec 08 - Apr 09 - Nov 08 Mar 09 May 09 Jun 09 - Aug 09 Sept 09 - Dec 09 - Apr 10 - Nov 09 Mar 10 May 10 Jun 10 - Sept 10 - Aug 10 Nov 10 Dec 10 Jan 11- Oct 11 Nov 11 - Oct 12 Nov 12 - Oct 13 Nov 13 - Present

32 32 Convertible Debentures Announced a bought deal $30-million 5.75% convertible unsecured subordinated debenture offering on Nov. 29, 2012 Further announced an additional $4.2 million of convertible debentures to be issued pursuant to over-allotment option Due Dec. 31, 2017 with a conversion price of $23.40 Net proceeds used to replenish cash balances after the acquisitions of The Recovery Room and Autocrafters, to fund ongoing growth strategy in 2013, and for general working capital purposes

33 33 Equity Offering Completed a bought deal equity offering on October 22, 2013 Issued 2,000,000 Units from treasury at a price of C$27.60 per Unit for net proceeds of $52.4 million Upon closing Underwriters exercised over-allotment option purchasing an additional 300,000 Units and increasing net proceeds to $60.3 million The majority of the funds raised used to repay unamortized prepaid rebates (unearned income) received under the previous paint supply arrangement with the remaining available to fund growth and for general corporate purposes

34 34 New Paint Arrangements New agreement with paint supplier signed March 31, 2014 moving from a pre-purchase rebate structure to a higher post-purchase discount structure New structure was effective October 1, 2013 while Boyd and its paint supplier negotiated a final agreement and Boyd validated the market competitiveness of the post-purchase discount Realized on the accretive nature of this restructured arrangement beginning in the fourth quarter of Impact has been approximately a 1% improvement in Gross Margin. Repaid unamortized prepaid rebates received under the previous paint supply arrangement in the fourth quarter of 2013

35 35 US$100 Million Credit Facility Announced a new US$100 million revolving facility on December 20, year committed facility which can increase to US$135 million with accordion feature Combined with strong balance sheet, provides financial flexibility (funding) to further execute growth strategy for a number of years into the future US$100 million plus of debt financing available within conservative leverage Attractive covenants (Total Leverage of 4 X EBITDA; Senior Debt Leverage of 3.5 X EBITDA) Attractive pricing TD Bank (Lead), Bank of America, National Bank and Scotiabank

36 36 Tax Efficient Trust Structure Boyd Group Income Fund Canada The Boyd Group Inc. Canadian Operations & Operating Entities U.S. to fund distributions U.S. The Boyd Group (U.S.) Inc. U.S. Operations & Operating Entities

37 37 Five-Year Outlook 6-10% growth in new collision repair locations per year Increase North American presence through: Targeted start-ups and/or acquisitions in existing and adjacent markets Drive same-store sales growth through enhanced capacity utilization, development of DRP arrangements and leveraging existing major and regional insurance relationships Continue to look for accelerated growth opportunities through the acquisition of multi-location collision repair businesses Margin enhancement opportunities from higher post purchase paint discounts, other margin enhancement initiatives and leveraging scale over time

38 Experienced & Committed Management Team Brock Bulbuck President & CEO Dan Dott Chief Financial Officer Tim O Day President & Chief Operating Officer (U.S. Operations) Eric Danberg President, Canadian Operations 38

39 39 Summary Stability + Growth + Cash Distributions Balance sheet strength Insurer preference for professional, multi-unit operators Recession resilient $33.5-billion fragmented industry High ROI growth strategy Conservative payout ratio = A Strong Foundation for Future Growth