Winnipeg Free Press - PRINT EDITION

Boyd buoyed by plenty of cold-weather crashes

But along with rise in sales, there are challenges

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Boyd Group CEO Boyd Brock Bulbuck says the company's business model continues to work well as sales increase.

KEN GIGLIOTTI / WINNIPEG FREE PRESS FILES Enlarge Image

Boyd Group CEO Boyd Brock Bulbuck says the company's business model continues to work well as sales increase. Photo Store

He won't quite say it this way, but when Brock Bulbuck sees cars sliding into ditches and each other after a little snow in Georgia or North Carolina, he knows it's going to be good for business.

And it was.

Bulbuck is the CEO of Boyd Group Income Fund, the Winnipeg-based collision-repair company that operates 220 shops in the U.S. and 47 in Canada. It just produced its best single quarter result in the company's 11-year history.

Total sales for the fund were up 40 per cent to $161.1 million from $115 million a year earlier, due to acquisitions and internal growth.

Boyd's adjusted net earnings were $6.4 million or 44.6 cents per unit, up from $5 million or 39.8 cents per unit.

'Last year truly was an incredible year for the Boyd Group on multiple fronts'

-- Brock Bulbuck

Both were record results for the company as was total sales for the year of $578.3 million and adjusted EBITDA of $41.5 million for the year.

The company has continued to successfully execute a three-pronged growth strategy of individual store acquisitions, multi-shop collision-repair operators and same-store sales growth. During the last quarter of 2013, the same-store sales growth rate was 6.7 per cent in the U.S., more than twice the rate for the overall market in the regions in which it operates.

"Last year truly was an incredible year for the Boyd Group on multiple fronts: in terms of organic growth, executing on our growth strategy and taking prudent steps to position the company for enhanced profitability and continued growth in the future," Bulbuck said.

In addition to the favourable weather conditions, the company amended its agreement with its paint supplier, allowing it to obtain higher back-end purchase discounts.

That temporary agreement signed in October produced a full percentage point increase in its gross profit margin for the quarter.

The company is about to sign a long-term agreement with the paint supplier that is expected to continue to bolster the company's profit margins.

Trevor Johnson, an analyst with National Bank Financial, calls Boyd "a beautiful story."

The company's units hit a 52-week high of $37.50 in early trading on Friday, but fell to $34 at the close.

"The big takeaway for me in the quarter was the profitability," Johnson said.

On the paint deal, he said, "We expect the agreement will be even sweeter when they sign at the end of the month. We're looking at a very nice margin expansion year over year of 100 basis points. That's phenomenal."

While the nasty winter weather has meant its body shops have been busier, Bulbuck tried to tone down the hype by saying it also caused business interruptions in several states. Even here at home, where Manitoba Public Insurance has reported record claims volumes, the many days of bitter cold had a negative effect on operations with the challenges of trying to move cars that won't start in the cold around Boyd properties.

"Our business model continues to work," Bulbuck said. "We have momentum and some favourable weather for us. Everyone knows the winter was so severe. I'm trying to moderate what I fear to be unrealistically high expectations."

Looking ahead to the current quarter, the unusually severe winter weather conditions experienced in both Canada and many parts of the U.S. continue to increase demand for Body's collision services in many of its markets.

The company continues to be favoured by U.S. auto insurance companies that increasingly look to standardized service operators they can turn to across the U.S.

Bulbuck said the company has recently embarked on a $1-million-plus efficiency review with outside consultants to further bolster its efficiencies in terms of customer satisfaction, claims cycle times and cost controls, all areas that are crucial to ongoing national insurance company support.

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition March 22, 2014 B6

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