Boyd Group Services Inc

Boyd Group Services Inc (TSX: BYD) is a Canadian Company and is amongst North America’s largest operator of non-franchised collision repair centres. The Group operates in Canada under Assured Automotive and Boyd Autobody & Glass trade names and under Gerber Collision & Glass trade name in the US. The Group is also one of the major auto glass operators in the United States.

Financial Highlights – Q2 and H1 Financial Year 2020 (30 June 2020, CAD, thousand)

(Source: Quarterly Report, Company Website) 

In the first half of the financial year 2020, due to a decline in the same-store sales for the period, the total sales declined by 6.7% to CAD 1,054,823 thousand (H1 FY2019: CAD 1,130,402 thousand). The total sales in Q2 FY2020 declined by 25.5% to CAD 426,473 thousand (Q2 FY2019: CAD 572,505 thousand). Reflecting the decline in revenue, the adjusted EBITDA declined by 17.6% to CAD 130,599 thousand in H1 FY2020 (H1 FY2019: CAD 158,421 thousand), and adjusted EBITDA declined significantly in Q2 FY2020 by 38.6% to CAD 49,182 thousand (Q2 FY2019: CAD 80,099 thousand). Reflecting the decline in revenue and adjusted EBITDA, the Group reported net income of CAD 15,596 thousand in H1 FY2020 (H1 FY2019: CAD 35,128 thousand), reflecting a decline of 55.6%, and in Q2 FY2020, the Group reported a net loss of CAD 7,059 thousand (Q2 FY2019: net income of CAD 13,739 thousand). The basic and diluted earnings per share stood at $0.76 in H1 FY2020 and basic and diluted loss per share of $0.34 in Q2 FY2020. The cash balance as on 30 June 2020 stood at CAD 510,197 thousand (31 December 2019: CAD 35,468 thousand).

Share Price Performance

BYD 1 Year Technical Chart. Source: Refinitiv (Thomson Reuters)

Boyd Group Services Inc shares closed at CAD 215.85 at the time of writing after the market close on 14 August 2020. Stock's 52 weeks High is CAD 231.52 and Low is CAD 125.01.

Key Risks

The outbreak of Covid-19 pandemic resulted in disruption in financial markets, world economy, regional economies and supply chain, which impacted negatively on the financial and operational performance. The Company actively looking for acquisitions to increase revenue and earnings and need to go through detailed due diligence; however, it may not be able to find suitable acquisition or may acquire an unattractive business.

Conclusion

The Group has shown a decline in financial performance in the first half and second quarter of the financial year 2020. Both the top-line and the bottom-line performance have declined with reduced profitability margins for the period. The revenue from core operations has declined, while cash balance has improved significantly. The Company continues to monitor the situation and expect covid-19 to impact adversely on short-term revenue and EBITDA and transaction volume. In long-run, the Group is well-positioned to manage the uncertain challenges. Presently, the company is trading near a 52-week high, raising doubts at its upside potential at current prices.

Based on the factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the closing price of CAD 215.85 (as on 14 August 2020), with support from few catalysts needs to be evaluated at a later stage.

Disclaimer

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