Boyd PowerPoint Presentation · 3/21/2019 · 5 Collision Operations ... **Adjusting for the...
Transcript of Boyd PowerPoint Presentation · 3/21/2019 · 5 Collision Operations ... **Adjusting for the...
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Investor PresentationMarch 2019
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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.
Forward-Looking Statements
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Capital Markets Profile (as at March 21, 2019)
Stock Symbol: TSX: BYD.UN
Units and Shares Outstanding*: 20.1 million
Price (March 21, 2019): $141.13
52-Week Low / High: $101.03/$142.46
Market Capitalization: $2,836.7 million
Annualized Distribution (per unit): $0.540
Current Yield: 0.4%
Payout Ratio**: 6.8%
*Includes 190,610 exchangeable shares** Year ended December 31, 2018
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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$38.6 billion market
• One of the largest retail auto glass operators in the U.S.
• Only public company in the auto collision repair industry in North America
• Recession resilient industry
By Country By Payor< 10% Customer Pay/Other
> 90% Insurance
15-20%Canada
U.S.
Revenue Contribution:
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Collision Operations
• 611 company operated collision locations across 27 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 technology
• Process improvement initiatives
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North American Collision Repair Footprint
Canada
129locations
482locations
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• Florida (62)• Illinois (61)• Michigan (58)• North Carolina (29)• Georgia (28)• Ohio (28)• Washington (28)• Indiana (27)• Arizona (22)• Colorado (19)• New York (18)• Wisconsin (17)• Louisiana (12)• Texas (12)
• Maryland (10)• Oregon (10)• Tennessee (9)• Pennsylvania (7)• Missouri (5)• Oklahoma (5)• Utah (5) • Nevada (4)• Alabama (2)• Idaho (1)• Kansas (1)• Kentucky (1)• South Carolina (1)
U.S.
• Ontario (81)• Alberta (15)• Manitoba (15) • British Columbia (14)• Saskatchewan (4)
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Glass Operations
• Retail glass operations across 34 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-side service
providers
• Canadian Glass Operations are integrated in the collision business
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North American Glass Footprint
• Alabama• Arizona• Colorado• Connecticut• District of Columbia• Florida• Georgia• Idaho• Illinois• Indiana• Kentucky• Louisiana• Massachusetts• Maryland• Michigan• Minnesota• Missouri
• Nevada• New Hampshire• New York• North Carolina• Ohio• Oklahoma• Oregon • Pennsylvania• Rhode Island• Tennessee• Texas• Utah• Virginia• Washington• West Virginia• Wisconsin• Wyoming
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U.S.
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Market Overview & Business Strategy
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Large, Fragmented Market
• Revenue for North American collision repair industry is estimated to be approximately US$38.6 billion annually (U.S. $36.2B, CDA $2.4B)
• 32,200 shops in the U.S.
• Composition of the collision repair market in the U.S.:
U.S. Collision Repair Market
Source: The Romans Group, “Advancing Our Insights Into the 2017 U.S. and Canadian Collision Repair Marketplace”
Large MSO26.9%
Small MSO and
Franchises9.0%
Single Shops64.1%
Dealer-owned Shops18.5%
Independent Repair Shops81.5%
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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 25.1% from late 2007 to 2017, and almost 60% over the past 37 years
• Large multi-shop collision repair operator (“MSO”) market share opportunity Large MSOs represented 8.6% of total locations in 2017 and 26.9% of estimated
2017 revenue (up from 9.1% in 2006) in the U.S. 96 MSOs had revenues of $20 million or greater in 2017 The top 10 MSOs together represent 67.3% 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, “Advancing Our Insights Into the 2017 U.S. and Canadian Collision Repair Marketplace”
New development: Two major MSOs, Caliber and ABRA, announced a merger in November 2018. The transaction closed in February 2019.
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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 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 DRP trends with all major insurers and most regional insurers
• Boyd’s relationship with insurance customers Top 5 largest customers contributed 40% of revenue in 2018 Largest customer contributed 13% of revenue in 2018
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Insurer Market Dynamics
Top 10 Insurer Market Share (U.S.) Insurer DRP Usage
Source: The Romans Group, 2017
Top 10 Insurers72.5%
Other Insurers27.5%
DRP61.7%
Other38.3%
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Impact of Collision Avoidance Systems
• CCC estimates technology will reduce accident frequency by ~30% in next 25-30 years
• Collision avoidance technology may lessen the extent of damage in some accidents, leading to less required repairs, but also a higher percentage of repairable vehicles (less total losses)
• Offsetting factors to accident frequency decline include: Increases in repair costs due to the additional
repair or replacement requirements of collision avoidance technology; and
Increases in vehicle miles driven resulting from increases in ride-share and related increased utilization of registered vehicles
• Large operators could also mitigate market decline by continued market share gains in consolidating industry
*Source: CCC Information Services Inc. Crash Course 2019: Projection includes ADAS technology systems like lane departure warning, adaptive headlights, and blind spot monitoring, uses HLDI’s predictions in regard to the ramp-up in percent of registered vehicle fleet equipped with each system, and includes projections of the number of vehicles in operation in the U.S. Projections based on current projected annual rate of change -impact may increase with changes in market adoption and system improvements
0%
0%
0%
0%
-1%
-1%
-3%
-11%
-19%
-25%
-29%
-30%
-31%
-35% -30% -25% -20% -15% -10% -5% 0%
CY 2010
CY 2011
CY 2012
CY 2013
CY 2014
CY 2015
CY 2020
CY 2025
CY 2030
CY 2035
CY 2040
CY 2045
CY 2050
Impact of Crash Avoidance on VehicleClaim Counts *
All Rights Reserved Copyright 2019 CCC Information Services Inc.
Chart1
CY 2010
CY 2011
CY 2012
CY 2013
CY 2014
CY 2015
CY 2020
CY 2025
CY 2030
CY 2035
CY 2040
CY 2045
CY 2050
Estimated reduction in frequency
Impact of Crash Avoidance on Vehicle Claim Counts
-0.0015024366
-0.002231752
-0.0033178701
-0.0048460615
-0.0067864643
-0.009191147
-0.0316133832
-0.1089588215
-0.1914723687
-0.2518896783
-0.2856234948
-0.3021522684
-0.3106278904
Sheet1
Estimated reduction in frequency
CY 2010-0%
CY 2011-0%
CY 2012-0%
CY 2013-0%
CY 2014-1%
CY 2015-1%
CY 2020-3%
CY 2025-11%
CY 2030-19%
CY 2035-25%
CY 2040-29%
CY 2045-30%
CY 2050-31%
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Business Strategy
Operational excellence
New location and acquisition growth
Expense management
Same-store sales growth and optimize returns from existing operations
EnhanceUnitholder
Value
THE BOYD GROUP
UNITHOLDERS
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Operational Excellence – WOW Operating Way
• Best-in-Class Service Provider Average cost of repair Cycle time Customer service Quality Integrity
• “WOW” Operating Way Embedded as part of our operating culture
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Expense ManagementO
pera
ting
Expe
nses
as %
of S
ales
Well managed operating expenses as a % of sales
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38.8% 38.0% 37.1% 36.8% 36.5% 35.9%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
2013 2014 2015 2016 2017 2018
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SSSG - Optimizing Returns from Existing Operations
Same-store sales increases in 33 of 40 most recent quarters
*Total Company, excluding FX.
**Adjusting for the positive impact of hail in Q4-10, Q4-11 SSSG was 4.7%
***Adjusting for the negative impact of Hurricane Irma and Hurricane Harvey, Q3-17 SSSG was 1.0%
****Normalizing for the impact of hurricanes in the comparative period, Q3-18 SSSG was 3.6%18
Sam
e-St
ore
Sale
s Gro
wth
*
-7%
-2%
3%
8%
13%
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
Q2-14
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Q1-17
Q2-17
Q3-17***
Q4-17
Q1-18
Q2-18
Q3-18****
Q4-18
3-year average SSSG: 4.0%
5-year average SSSG: 5.1%10-year average SSSG: 3.9%
Chart1
Q1-09Q1-09
Q2-09Q2-09
Q3-09Q3-09
Q4-09Q4-09
Q1-10Q1-10
Q2-10Q2-10
Q3-10Q3-10
Q4-10Q4-10
Q1-11Q1-11
Q2-11Q2-11
Q3-11Q3-11
Q4-11**Q4-11**
Q1-12Q1-12
Q2-12Q2-12
Q3-12Q3-12
Q4-12Q4-12
Q1-13Q1-13
Q2-13Q2-13
Q3-13Q3-13
Q4-13Q4-13
Q1-14Q1-14
Q2-14Q2-14
Q3-14Q3-14
Q4-14Q4-14
Q1-15Q1-15
Q2-15Q2-15
Q3-15Q3-15
Q4-15Q4-15
Q1-16Q1-16
Q2-16Q2-16
Q3-16Q3-16
Q4-16Q4-16
Q1-17Q1-17
Q2-17Q2-17
Q3-17***Q3-17***
Q4-17Q4-17
Q1-18Q1-18
Q2-18Q2-18
Q3-18****Q3-18****
Q4-18Q4-18
Same-Store Sales Growth
Column1
0.013
-0.057
-0.036
0.002
-0.063
-0.013
0.049
0.106
0.115
0.088
0.087
0.047
-0.005
-0.004
-0.013
-0.008
0.02
0.021
0.079
0.044
0.052
0.076
0.073
0.076
0.075
0.055
0.047
0.073
0.06
0.074
0.051
0.047
0.045
0.012
0.034
0.01
-0.005
0.014
0.04
0.032
0.049
0.068
Sheet1
Same-Store Sales GrowthColumn1
Q1-091.30%
Q2-09-5.70%
Q3-09-3.60%
Q4-090.20%
Q1-10-6.30%
Q2-10-1.30%
Q3-104.90%
Q4-1010.60%
Q1-1111.50%
Q2-118.80%
Q3-118.70%
Q4-11**4.70%-0.50%
Q1-12-0.40%10 year3.9%
Q2-12-1.30%5 year5.0%
Q3-12-0.80%3 year3.9%
Q4-122.00%
Q1-132.10%
Q2-137.90%
Q3-134.40%
Q4-135.20%
Q1-147.60%
Q2-147.30%
Q3-147.60%
Q4-147.50%
Q1-155.50%
Q2-154.70%
Q3-157.30%
Q4-156.00%
Q1-167.40%
Q2-165.10%
Q3-164.70%
Q4-164.50%
Q1-171.20%
Q2-173.40%
Q3-17***1.00%-0.50%
Q4-171.40%
Q1-184.00%
Q2-183.20%
Q3-18****4.90%
Q4-186.80%
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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 advantage of large acquisitions
*Growth from 2015 on a constant currency basis.
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42
64
29
58
105
81
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611
0
20
40
60
80
100
120
0
100
200
300
400
500
600
700
2013 2014 2015 2016 2017 2018 YTD 2019
Annual additions Total locations
Strong Growth in Collision Locations
• May 2013: acquisition of Glass America added 61 retail auto glass locations• March 2016: acquisition of 4 retail auto glass locations
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FinancialReview
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Revenue Growth
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$578.3
$844.1
$1,174.1
$1,387.1
$1,569.4
$1,864.6
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
2013 2014 2015 2016 2017 2018
(C$ millions)
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Adjusted EBITDA Growth
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$41.5
$69.0
$101.7
$124.3
$145.6
$173.4
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2013 2014 2015 2016 2017 2018
(C$ millions)
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Financial Summary
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* Adjusted EBITDA, adjusted net earnings, and adjusted distributable cash are not recognized measures under International Financial Reporting Standards ("IFRS"). See the Fund’s Q4 2018 MD&A for more information.
(C$ millions, except per unit and percent amounts)
3-months ended Years ended
December 31,2018
December 31,2017
December 31,2018
December 31,2017
Sales $495.1 $414.6 $1,864.6 $1,569.5
Gross Profit $219.3 $188.1 $842.5 $718.4
Adjusted EBITDA* $47.6 $41.8 $173.4 $145.6
Adjusted EBITDA Margin* 9.6% 10.1% 9.3% 9.3%
Adjusted Net Earnings* $23.2 $17.4 $85.6 $58.8
Adjusted Net Earnings* per unit $1.174 $0.907 $4.349 $3.182
Adjusted Distributable Cash* $59.5 $40.9 $154.8 $94.5
Adjusted Distributable Cash* per average unit and Class A common share $2.983 $2.104 $7.778 $5.046
Payout Ratio 4.5% 6.1% 6.8% 10.2%
Payout Ratio (TTM) 6.8% 10.2% 6.8% 10.2%
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Strong Balance Sheet
(in C$ millions) December 31, 2018 December 31, 2017
Cash $64.5 $47.8
Long-Term Debt $288.2 $258.0
Obligations Under Finance Leases $8.4 $8.9
Net Debt (total debt, including current portion and bank indebtedness, net of cash)
$232.1 $219.1
Net Debt / Adjusted EBITDA (TTM) 1.3x 1.4x
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Financial Flexibility
• Cash of $64.5 million
• Net Debt to EBITDA TTM ratio of 1.3x
• 5-year committed facility of US$300 million which can increase to US$450 million with accordion feature, maturing May 2022
• Over $300 million in cash and available credit
• Only public company in the industry Access to all capital markets
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Distributions
Annualized Distribution per Unit (C$)
Annualized distributions have increased by 9.8% since 2014
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0.4920.504
0.5160.528
0.540
$0.40
$0.45
$0.50
$0.55
Nov 14 -Oct 15
Nov 15 -Oct 16
Nov 16 - Oct17
Nov 17 -Oct 18
Nov 18 - present
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Five-year Return to Unitholders
*Source: Thomson Reuters Eikon. Total return based on reinvestment of dividends.
-50%
0%
50%
100%
150%
200%
250%
300%
350%
31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18
Boyd Group S&P/TSX Composite S&P/TSX Income Trust
5-year total return: 253.84%*
S&P/TSX Composite22.0%
S&P/TSX Income Trust41.1%
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2007 - 2017
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 and 2018
*Source: Thomson Reuters Eikon. Total return based on reinvestment of dividends.
+57.5%
+5,795.6%
2006 - 2016
S&P/TSX Composite Index
BYD.UN
+58.6%
+9,966.5%
2008 - 2018
+118%
5,901.2%
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Experienced & Committed Management Team
Brock BulbuckCEO
Pat PathipatiExecutive Vice-President & CFO
Tim O’DayPresident & COO
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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-location collision repair businesses
• Margin enhancement opportunities through same-store-sales growth, operational excellence and leveraging scale over time
• Double size of the business during the five-year period ending in 2020*
*Growth from 2015 on a constant currency basis.
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Summary
Stability
Unitholder Value
Growth
+
=
Strong balance sheet Insurer preference for MSOs Recession resilient
Cash distributions/conservative payout ratio
5-year total unitholder return of 253.8%
US$38.6 billion fragmented industry High ROIC growth strategyMarket leader/consolidator
in North America
Focus on enhancing unitholders’ value
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Slide Number 1Forward-Looking StatementsCapital Markets Profile (as at March 21, 2019)Company OverviewCollision OperationsNorth American Collision Repair FootprintGlass OperationsNorth American Glass FootprintSlide Number 9Large, Fragmented MarketEvolving Collision Repair MarketStrong Relationships with �Insurance Companies through DRPsInsurer Market DynamicsImpact of Collision Avoidance SystemsBusiness StrategyOperational Excellence – WOW Operating WayExpense ManagementSSSG - Optimizing Returns �from Existing OperationsFocus on Accretive Growth Strong Growth in Collision LocationsSlide Number 21Revenue GrowthAdjusted EBITDA GrowthFinancial SummaryStrong Balance SheetFinancial FlexibilityDistributionsFive-year Return to UnitholdersDelivering long-term value to unitholders Experienced & Committed �Management TeamOutlookSummary