Boyd Group Services Inc. Q3 2024 Financial Report

Date: November 5, 2024

Boyd Group Services Inc. (BYD (SZ:002594)) released its Q3 financial results showing a slight rise in sales but a notable fall in net earnings and adjusted EBITDA. The decline was attributed to lower claims volumes and rising operating costs. Despite economic challenges, Boyd expanded its footprint by adding 41 new locations this year. Management expressed cautious optimism, focusing on strategic acquisitions and organic growth while maintaining a conservative dividend policy.

Key Takeaways

• Q3 sales increased by 2% YoY to $752.3 million.
• Adjusted EBITDA fell by 14.7% to $80.1 million.
• Net earnings dropped from $20.5 million to $2.9 million YoY.
• Same-store sales declined by 3.5%.
• Boyd opened 41 new locations and focuses on long-term growth.
• The target is to return to a 14% EBITDA margin through expense management.

Company Outlook

• Boyd intends to uphold a conservative dividend policy to facilitate growth.
• The company is wary about Q4 and 2025 performance, committing to its goal of doubling business size from 2021 to 2025.
• Management is optimistic about gaining market share in North America's collision repair sector.

Bearish Highlights

• Operating expenses rose to 35% of sales.
• Repairable claims dropped by 12.6% industry-wide.
• Economic uncertainties and inflation have hindered growth.

Bullish Highlights

• Gross profit margins improved through the use of alternative parts and internal repair strategies.
• Enhanced glass margins and calibration growth were noted.
• There's optimism about future improvements in EBITDA margins.

Misses

• Year-to-date net income for the nine months ended September 30, 2024, fell to $22.1 million from $67.6 million last year.
• Significant decreases in same-store sales and overall claims volume were reported.

Q&A Highlights

• Executives acknowledged limited visibility over repairable claims in Q4.
• High fixed costs and declining same-store sales have pressured operational expenses.
• Improved gross profit margins were due to internal efficiencies rather than price increases.
• Management is prioritizing internal efficiencies over aggressive revenue growth strategies.
• Concerns about consumer behavior affecting volume were raised.

Conclusion

Boyd Group Services Inc. is navigating a challenging economic landscape with a commitment to operational efficiency and market share expansion. The focus remains on strategic acquisitions and organic growth. Investors will closely monitor Boyd's next earnings report in March for insights into performance and outlook.