Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Boyd Group Services Inc (BYDGF, Financial) achieved a gross margin increase to 46.2% in Q1 2025, up from 44.8% in the same period of 2024.
- The company reported a 1% increase in sales to $778.3 million, driven by $20.4 million in incremental sales from 58 new locations.
- Project 360 is showing early signs of success, with a new indirect staffing model expected to save approximately $30 million annually.
- Boyd Group Services Inc (BYDGF) continues to outperform the industry, gaining market share despite a challenging environment.
- The company is on track with its five-year growth plan, aiming to grow revenue to $5 billion and double adjusted EBITDA to $700 million by 2029.
Negative Points
- Same-store sales declined by 2.8% in Q1 2025, reflecting a challenging market environment.
- Net loss for Q1 2025 was $2.6 million, compared to net earnings of $8.4 million in the same period of 2024.
- Operating expenses increased to $278.7 million, or 35.8% of sales, negatively impacting profitability.
- Adjusted EBITDA decreased by 1.4% to $80.5 million, primarily due to a decline in same-store sales and lower contributions from new locations.
- Total debt net of cash increased to $1.3 billion, driven by acquisition activity and other investments, raising concerns about leverage.
Q & A Highlights
Q: Can you elaborate on the same-store sales estimate and how production days fit into your guidance?
A: Jeff Murray, Executive Vice-President & Chief Financial Officer, explained that same-store sales have been stubbornly in the small single-digit down range. The first quarter had one fewer production day, and on a days-adjusted basis, same-store sales would be closer to 1.2% versus the reported 2.8%.
Q: How should we think about the margin progression and the expectation for margin increases?
A: Brian Kaner, Executive Vice President and Chief Operating Officer, stated that the gross margin improved by 140 basis points year-over-year, driven by internalization of scanning and calibration. There were no anomalies in Q1 results, and they expect operating expenses to decrease in Q2 due to cost-saving initiatives and payroll benefit resets.
Q: What is the outlook for acquisition growth, and how does it fit into your strategy?
A: Brian Kaner mentioned that the pipeline for acquisitions is robust, and they remain committed to delivering 80 to 100 new locations annually over the five-year period. The pace of acquisitions is influenced by insurance support for new locations, but they are confident in accelerating progress towards the end of the year.
Q: Can you provide more details on Project 360 and the indirect staffing model?
A: Brian Kaner explained that the indirect staffing model was fully rolled out in early April, resulting in $30 million in annualized savings. The remaining $40 million in savings by the end of 2026 will target both gross margin and operating expenses, with a focus on procurement savings and other pay initiatives.
Q: How are collision claims trends expected to evolve in the back half of the year?
A: Brian Kaner noted that it is difficult to predict, but the current claims environment is similar to past cycles. They expect claims declines to ease, driven by consumer confidence and insurance adjustments, but do not anticipate a return to positive growth immediately.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
