Your Source for Up-To-Date News and Research on the Collision Repair Industry
click here to subscribe to the FREE INSIGHT Editor's Desk News Alert Email
SUBSCRIBERS-ONLY
Today's News
INSIGHT This Month
INSIGHT Archives
Survey Center
Letter to the Editor
Business Tools
Subscription Information
CSI Reporting
Financial Analysis
IRS Audit Guide
Management/
Technical Info
Market Watch Rates
INSIGHT Inside this month's issue...
Feedback
Letter to the Editor
Friday May 13
Boyd Group Income Fund Reduces Monthly Distributions
The Boyd Group Income Fund has reported its financial results for the three-month period ended March 31, 2005. The Fund also announced that, effective immediately and until further notice, monthly distributions will be reduced from $0.095 per unit to $0.0583 per unit. On an annualized basis, this represents a reduction in distributions from $1.14 per unit, per year to $0.70 per unit, per year."Since the end of the second quarter last year, we have been focused on increasing distributable cash generated and reducing the Fund's payout ratio. While we have made progress in this regard, as demonstrated by the three consecutive quarters of sequential reductions to the Fund's payout ratio, the Board of Trustees of the Fund have determined it would be prudent at this time to reduce distributions to more sustainable levels," said Terry Smith, President and CEO of the Boyd Group.
According to a company press release, since the end of the second quarter of 2004, Boyd Group has made progress in executing its strategy to increase the Fund's distributable cash, including: opening six new collision repair facilities in the U.S.; acquiring two new collision repair centres in western Canada; acquiring a U.S. based auto glass repair and replacement referral network; rolling out auto glass repair and replacement services to its U.S. stores; and expanding its involvement in the Direct Repair Programs of major insurance companies. Each of these developments is expected to have a positive impact on distributable cash going forward. Further, Boyd Group has implemented a number of initiatives to reduce operating costs, such as the consolidation of the company's U.S. property and liability insurance, and employee benefits plan, which are expected to cumulatively add more than $500,000 to earnings before interest, taxes, depreciation and amortization ("EBITDA") on an annual basis. The company also entered into new pricing contracts with certain parts and service suppliers, that are expected to contribute approximately $600,000 in new EBITDA on an annual basis.
"We believe that the trends that have been driving the prolonged slowdown in North American auto collision repair industry have prevented us from achieving the results that have been anticipated. While we expect our initiatives to have a positive impact on distributable cash going forward, we believe that in the near term, they will not be sufficient to offset the challenges we are facing in the market," continued Smith. "We are now entering what has typically been a seasonally slower period in the industry, and given prevailing conditions, a decision was made today to expedite a reduction in the Fund's payout ratio."
For the quarter ended March 31, 2005 revenue increased 16 percent to $47.7 million compared to $41.1 million in the first quarter of 2004 and net earnings for the first quarter of 2005 totalled $1.4 million or $0.159 per fully diluted unit compared to net earnings of $1.5 million or $0.221 per fully diluted unit in the first quarter of 2004.
Distributable cash generated for the quarter totalled $2.4 million, while distributions paid to unitholders and dividends paid to non-controlling shareholders totalled $2.7 million for the period, representing a payout ratio of 110 percent for the quarter.
On a segmented basis, sales in Canada in the first quarter of 2005 increased to $16.2 million from $15.5 million in the first quarter of 2004.
U.S. sales in the first quarter of 2005 increased to $31.6 million from $25.6 million in the corresponding quarter a year ago. U.S. sales growth in the first quarter of 2005 was primarily attributable to $7.1 million in new revenue resulting from: the acquisition of two Atlanta area collision repair centres in August, 2004; the acquisition of Globe Amerada Glass Network in January, 2005; and, a full quarter of revenue contribution from the Gerber Group, which Boyd Group acquired in the first quarter in 2004.
As of March 31, 2005, the Fund had bank indebtedness of $1.6 million, compared to $0.6 million in cash and cash equivalents as at December 31, 2004. The Fund's total debt outstanding was $39.3 million compared to $38.0 million as at December 31, 2004. The Fund's increased total debt resulted primarily from the restatement of the presentation of convertible debentures to reflect the change in accounting policy implemented in the first quarter of 2005. Total debt increased by $1.3 million, while net debt (net of cash and cash equivalents) increased by $3.5 million, primarily due to the financing of the Globe Amerada Glass Network and Abbotsford acquisitions and the continued development of start-up locations.
©2005 Collision Repair Industry INSIGHT
All Rights Reserved
FEATURED
LINKS:
INSIGHT Supports the NABC!
Do You?