BOYD GROUP SERVICES INC.
(formerly reporting as Boyd Group Income Fund)
2019 Annual Report
BOYD GROUP SERVICES INC.
(formerly reporting as Boyd Group Income Fund)
2019 Annual Report
Table of Contents
Report to Shareholders……..…………………………………………….……..…. 3
Message from the Independent Board Chair………………..……………….…. 5
Management’s Discussion & Analysis……………………………..…………
Certification of Annual Filings …………..……………………………..…………
Consolidated Financial Statements
Management’s Responsibility for Financial Reporting…………...……
Independent Auditor’s Report………………………………………….…
Consolidated Statements of Financial Position………………………...
Consolidated Statements of Changes in Equity….………...………….
Consolidated Statements of Earnings……….………………………….
Consolidated Statements of Comprehensive Earnings………....…….
Consolidated Statements of Cash Flows…………………………….…
Notes to Consolidated Financial Statements………..………………....
Board of Directors………………………………………………………………….
Corporate Directory……………………………………………………….……….
6-46
47-50
52
53-55
56
57
58
58
59
60-96
97-98
99
Shareholder Information……………………………………………………………..
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2
BOYD GROUP SERVICES INC.
(formerly reporting as Boyd Group Income Fund)
REPORT TO SHAREHOLDERS
To our Shareholders,
In 2019, Boyd Group Income Fund (the “Fund”) was able to achieve record revenue of $2.3 billion and Adjusted EBITDA1
of $215.6 million. In addition, growth during this year and over the past four years remained on track to reach our long-term
goal of doubling the size of the business based on revenues on a constant currency basis during the five-year period ending
in 2020, although this could now be delayed due to uncertainty surrounding the COVID-19 pandemic. We are pleased to
report that the Fund once again successfully delivered meaningful increases in revenue, Adjusted EBITDA1 and Adjusted
net earnings1.
On January 1, 2020, the Fund completed the conversion from an income trust to a corporate structure pursuant to a plan of
arrangement. Fund unitholders and Boyd Group Holdings Inc. (“BGHI”) Class A common shareholders received one
common share of Boyd Group Services Inc. (“BGSI”) in exchange for each Fund unit and BGHI Class A common share
held by them. The benefits of the conversion from an income trust to a corporate structure were outlined in detail in the
Information Circular which is available on SEDAR as well as BGSI’s website at www.boydgroup.com. The benefits of the
conversion include removal of the non-Canadian ownership restriction, as well as adopting a public company structure that
is more typical, more easily understood and therefore more accepted by global investors and capital markets. On December
2, 2019, at a Special Meeting, unitholders voted overwhelmingly in favor of the conversion with 97.77% of votes cast in
favor.
On January 1, 2019, the Fund adopted IFRS 16, Leases. The new standard has brought most leases onto the statement of
financial position through recognition of right of use assets and lease liabilities. The adoption of this standard had a
significant impact on the consolidated statement of financial position, through recognition of right of use assets of
$452.9 million and lease liabilities of $488.0 million. In 2019, the Fund recorded a $104.3 million decrease in
operating expenses, as well as an $88.1 million increase in depreciation expense and a $22.2 million increase in finance costs
as a result of the adoption of the new standard. Notwithstanding the adoption of IFRS 16, Leases, the Fund has continued to
report Adjusted EBITDA1 on a pre-adoption of IFRS 16, Leases basis in 2019 to provide for comparability to the prior
year’s results. Beginning in Q1 2020, we will no longer be adjusting out the impact of IFRS 16 in calculating Adjusted
EBITDA.
During 2019, we added 108 locations, including seven intake centers, and entered into the states of California, New York
and South Carolina. This new location growth, including entry into new markets, is in line with our growth strategy. Our
corporate development team continues to have a healthy pipeline of targets and we remain confident that we will achieve
our long-term growth goal.
Total sales in 2019 were $2.3 billion, a 22.5% increase over the $1.9 billion achieved in 2018. The increase in sales was
largely the result of contributions from new locations, along with same-store sales growth of 3.3%.
1 EBITDA, Adjusted EBITDA, distributable cash, Adjusted distributable cash, Adjusted net earnings and Adjusted net earnings per unit are not
recognized measures under International Financial Reporting Standards (“IFRS”). Management believes that in addition to revenue, net earnings
and cash flows, the supplemental measures of distributable cash, Adjusted distributable cash, Adjusted net earnings, Adjusted net earnings per unit,
EBITDA and Adjusted EBITDA are useful as they provide investors with an
indication of earnings from operations and cash available for
distribution, both before and after debt management, productive capacity maintenance and non-recurring and other adjustments. Investors should be
cautioned, however, that EBITDA, Adjusted EBITDA, distributable cash, Adjusted distributable
cash, Adjusted net earnings and Adjusted net
earnings per unit should not be construed as an alternative to net earnings determined in accordance with IFRS as an indicator of the Fund's
performance. Boyd's method of calculating these measures may differ from other public issuers and, accordingly, may not be comparable to similar
measures used by other issuers. For a detailed explanation of how Boyd’s non-GAAP measures are calculated, please refer to Boyd’s MD&A filing for
the year ended December 31, 2019, which can be accessed via the SEDAR Web site (www.sedar.com).
3
Adjusted EBITDA1 grew to $215.6 million, or 9.4% of sales, compared with $173.4 million, or 9.3% of sales in 2018,
representing a 0.14% or 14 basis point improvement in Adjusted EBITDA margin. Contributions from new locations and
same-store sales growth contributed to the 24.3% increase. As previously stated, for 2019 reporting we have chosen to
adjust out the impact of IFRS 16 in reporting our Adjusted EBITDA, for comparative purposes. Beginning in Q1 2020, we
will no longer be adjusting out the impact of IFRS 16. Had we chosen to include the impact of IFRS 16 in calculating
Adjusted EBITDA for 2019, Adjusted EBITDA would have been $319.9 million or 14.0% of sales.
The Fund had net earnings of $64.1 million in 2019, compared to $77.6 million in 2018. Impacting net earnings were fair
value adjustments to financial instruments as a result of unit price increases during the year, as well as acquisition and
transaction costs (net of tax). The net earnings amount in 2019 was also negatively impacted by the adoption of IFRS 16,
Leases which reduced net earnings by $4.5 million. After adjusting for these items, Adjusted net earnings1 for 2019 was
$100.5 million or 4.4% of sales. This compares to Adjusted net earnings1 of $85.6 million or 4.6% of sales in 2018.
Adjusted net earnings was impacted by increased finance costs based on additional borrowing under the credit facility to
fund acquisitions. Adjusted net earnings1 for the year ended December 31, 2019 was $5.06 per unit, compared to $4.35 in
2018.
With respect to the balance sheet, at December 31, 2019 the Fund held total debt, net of cash, of $893.2 million, compared
to $232.1 million at December 31, 2018. Total debt was significantly impacted in 2019 by the adoption of the new leasing
standard under IFRS. Excluding the lease liabilities of $513.4 million at December 31, 2019, debt, net of cash, would have
been $379.8 million. The increase from December 31, 2018 is the result of acquisition activity in 2019.
In 2019, we generated adjusted distributable cash1 of $141.0 million and paid distributions and dividends of $10.9 million,
resulting in a payout ratio based on adjusted distributable cash1 of 7.7%. This compares with adjusted distributable cash1 of
$154.8 million and distributions and dividends paid of $10.5 million, resulting in a payout ratio of 6.8% a year ago. We
again increased distributions in November 2019, our 12th consecutive year of distribution increases. Shareholders of BGSI
now receive an annualized dividend of $0.55, a 2.2% increase over the annualized distribution set in November 2018 of
$0.54. Dividends have moved to a quarterly payment schedule beginning in the first quarter of 2020. Also, beginning in the
first quarter of 2020, we will no longer report standardized and adjusted distributable cash. These changes are being made in
conjunction with the conversion from an income trust to a corporate structure, effective January 1, 2020.
On March 17, 2020, BGSI increased and extended the existing revolving credit facility to US$550 million, with an
accordion feature which can increase the facility to a maximum of US$825 million, accompanied by the addition of a new
seven-year fixed-rate Term Loan A in the amount of U$125 million, maturing in March 2025 and March 2027,
respectively.
Worldwide, we are adjusting and adapting to daily changes as a result of the COVID-19 pandemic. While the impact on our
business thus far has not been material, this could change quickly. This pandemic will impact operations, including staffing,
the volume and pace at which collision repair shops can fix damaged vehicles and may lead to the temporary closure of
facilities. The pandemic may also result in decreased demand for our services, as well as interruptions to the supply chain,
including temporary closure of supplier facilities. Given the high level of uncertainty surrounding COVID-19 impacts, we
are in the process of making proactive changes and contingency plans relating to the current environment and we will
continue to work to address COVID-19 challenges as they evolve, so as to minimize the risk and impact to our employees,
customers and shareholders.
As we report this quarter and year end, my first in the role of CEO, I want to thank our highly talented and experienced
senior leadership team, who continues to drive our growth and success.
On behalf of the Directors of the BGSI and Boyd Group employees, thank you for your continued support.
Sincerely,
(signed)
Tim O’Day
President & Chief Executive Officer
4
BOYD GROUP SERVICES INC.
(formerly reporting as Boyd Group Income Fund)
MESSAGE FROM THE INDEPENDENT BOARD CHAIR
To our Shareholders,
January 1, 2020 was a day of change, as Boyd Group Income Fund (the “Fund”) successfully completed the conversion from
an income trust to a corporate structure, operating as Boyd Group Services Inc. (“BGSI”), pursuant to a plan of arrangement.
The Board of Trustees of the Fund was extremely pleased when, on December 2, 2019, at a Special Meeting of unitholders,
votes were cast overwhelmingly in favor of the conversion, with 97.77% of votes in favor. The market reaction has also
been favorable, with a significant increase in share price subsequent to the announcement of the conversion. The Board
would like to thank the management team at Boyd for the seamless transition in structure and the unitholders of the Fund for
their overwhelming support in favor of this change.
BGSI will continue to focus on value creation for shareholders through a commitment to innovation and continuous
improvement, customer service and respect for customers and employees alike. These focus areas remain critical to
continued success, especially as BGSI continues to face rapid change while executing on growth. The Board remains
confident in Management’s ability to face these challenges and continue to execute the long-term growth strategy, including
doubling the size of the business by the end of 2020, although this could be delayed due to uncertainty surrounding the
COVID-19 pandemic. The Fund’s track record is strong, as demonstrated by the fact the Fund has now achieved the best or
second best 10-year performance on the TSX for the fifth year in a row. During 2019, the Fund was also named to the
inaugural TSX30, a flagship program recognizing the 30 top-performing TSX stocks over a three-year period based on
dividend-adjusted share price appreciation.
The Fund’s solid footing and positive outlook positioned the Company very well for the CEO succession plan, which
became effective January 2, 2020. At that time, Brock Bulbuck moved into an Executive Chair role, and Tim O’Day
succeeded Brock to become President & CEO. Tim and Brock have worked side-by-side for many years building Boyd, so
Tim’s leadership, combined with a long-tenured leadership team and Brock’s continuing support as Executive Chair,
continues to position Boyd well for the future.
The Board, through the Compensation Committee, has advanced compensation practices for executives to increase
alignment between unitholders/shareholders and management. At last year’s Annual General Meeting, unitholders were
asked to vote, for the first time and on an advisory basis, whether they supported the compensation practices as outlined in
the Fund’s information circular. Unitholders showed strong support support, casting 97.95% of votes in favor of the
approach to executive compensation. At this year’s Annual General Meeting, shareholders will again be asked to vote, on
an advisory basis, whether they support the compensation practices as outlined in BGSI’s information circular.
On June 27, 2019, the Fund detected a ransomware cyber-attack on a subset of its information technology systems. The
Fund immediately implemented countermeasures and was able to fully recover from the cyber-attack with minimal financial
impact. A forensic investigation confirmed that there was no evidence of exfiltration or breach of any data. The Board of
Directors would like to thank the team at Boyd for protecting stakeholders from significant harm as a result of this
unfortunate event.
On behalf of the Board of the Boyd Group Services Inc., I would like to thank the management team and all employees for
their continued commitment and hard work, and to our stakeholders for their continued support. While the COVID-19
pandemic in 2020 has created new challenges, we have confidence that the team at Boyd will make proactive changes and
contingency plans as the situation evolves, with a view to minimizing the risk and impact to stakeholders.
Sincerely,
(signed)
Allan Davis
Independent Chair
5
Management’s Discussion & Analysis
OVERVIEW
Boyd Group Services Inc. (“BGSI”), through its operating company, The Boyd Group Inc. and its subsidiaries (“Boyd” or
the “Company”), is one of the largest operators of non-franchised collision repair centers in North America in terms of
number of locations and sales. The Company currently operates locations in Canada under the trade name Boyd Autobody &
Glass and Assured Automotive, as well as in the U.S. under the trade name Gerber Collision & Glass. The Company is also
a major retail auto glass operator in the U.S. under the trade names Gerber Collision & Glass, Glass America, Auto Glass
Service, Auto Glass Authority and Autoglassonly.com. In addition, the Company operates a third party administrator,
Gerber National Claims Services (“GNCS”), that offers glass, emergency roadside and first notice of loss services. The
following is a geographic breakdown of the collision repair locations, including intake centers, and trade names.
48
locations
British Columbia
Manitoba
Alberta
Saskatchewan
15
15
14
4
83
locations
Ontario
83
567
locations
Oregon
T ennessee
Maryland
California
Alabama
Nevada
Pennsylvania
Missouri
Oklahoma
Utah
Kentucky
South Carolina
Idaho
Kansas
12
11
10
9
7
7
7
5
5
5
4
4
1
1
Michigan
Illinois
Florida
New York
Washington
Indiana
Georgia
North Carolina
Ohio
Arizona
Colorado
Wisconsin
T exas
Louisiana
67
64
63
38
37
36
30
28
28
24
20
17
14
13
The ab o ve numb ers includ e 3 4 intake lo catio ns .
The ab o ve numb ers includ e 19 intake lo catio ns
and two fleet lo cat io ns co -lo cated with co llis io n rep air centers .
Boyd provides collision repair services to insurance companies, individual vehicle owners, as well as fleet and lease
customers, with a high percentage of the Company’s revenue being derived from insurance-paid collision repair services. In
Canada, government-owned insurers operating in Manitoba, Saskatchewan and British Columbia dominate the insurance-
paid collision repair markets in which they operate. In the U.S. and Canadian markets other than Manitoba and
Saskatchewan, private insurance carriers compete for consumer policyholders, and in many cases significantly influence the
choice of collision repairer through Direct Repair Programs (“DRP’s”).
BGSI’s shares trade on the Toronto Stock Exchange under the symbol TSX: BYD.
Prior to January 1, 2020, BGSI operated as Boyd Group Income Fund (the “Fund”). Pursuant to a plan of arrangement
agreement (the “Arrangement”), under the Canada Business Corporations Act (“CBCA”), on January 1, 2020, Fund
unitholders and Boyd Group Holdings Inc. (“BGHI”) Class A common shareholders received one BGSI common share in
exchange for each Fund unit and BGHI Class A common share held by them.
As the Arrangement was effective on January 1, 2020, information presented in this MD&A as at, and for periods prior to,
or ending December 31, 2019, is provided for the Fund and information provided at January 1, 2020 and later is provided for
BGSI. Therefore, as the context requires, references may be made to either the Fund or BGSI.
6
The following review of the Fund’s operating and financial results for the year ended December 31, 2019, including material
transactions and events of BGSI up to and including March 17, 2020, as well as management’s expectations for the year
ahead, should be read in conjunction with the annual audited consolidated financial statements of Boyd Group Income Fund
for the year ended December 31, 2019, included on pages 50 to 95 of this report, and as filed on SEDAR at www.sedar.com.
SIGNIFICANT EVENTS
On January 1, 2019, the Fund adopted IFRS 16, Leases using the modified retrospective approach. The new standard has
brought most leases onto the statement of financial position through recognition of right of use assets and lease liabilities.
IFRS 16 establishes principles for recognition, measurement, presentation and disclosure of leases. The adoption of this
standard had a significant impact on the consolidated statement of financial position, through recognition of right of use
assets of $452.9 million and lease liabilities of $488.0 million. During 2019, the Fund recognized a decrease in
operating expenses, as well as increases in depreciation expense and finance costs as a result of the adoption of the new
standard.
On January 31, 2019, the call option transaction to acquire the 30% non-controlling interest in Glass America LLC held by
GAJV Holdings Inc. was completed, and Gerber Glass LLC acquired the 30% non-controlling interest in Glass America
LLC.
On April 3, 2019, the Fund amended its credit agreement to expand the facility to $400.0 million U.S. through the exercise
of $100.0 million of the $150.0 million available under the accordion feature.
On July 2, 2019, the Fund reported that on June 27, 2019, it detected a ransomware cyber-attack on a subset of its
information technology systems. The Fund immediately implemented countermeasures and was able to fully recover from
the cyber-attack with minimal financial impact. A forensic investigation confirmed that there was no evidence of exfiltration
or breach of any data.
On August 13, 2019, the Fund announced its CEO succession plan, which would have current CEO, Brock Bulbuck move
into an Executive Chair role in 2020 and Tim O’Day, current President and Chief Operating Officer, become President &
CEO. These changes were planned to be effective January 2, 2020.
On September 16, 2019, the Fund announced a proposed conversion from an income trust to a corporate structure effective
January 1, 2020 pursuant to a plan of arrangement. If approved, Fund unitholders would receive one publicly traded
common share of the new corporation (Boyd Group Services Inc.) for each Fund unit held by the unitholder, subject to
unitholder approval at a Special Meeting of unitholders, to be held on December 2, 2019.
On September 26, 2019, the Fund announced that it was named to the inaugural TSX30, a flagship program recognizing the
30 top-performing TSX stocks over a three-year period based on dividend-adjusted share price appreciation.
On December 2, 2019, the Fund announced that unitholders voted overwhelmingly in favor of the plan of arrangement, with
97.77% of votes cast being voted in favor.
On January 2, 2020, BGSI announced the completion of the conversion of the Fund from an income trust to a public
corporation, pursuant to the plan of arrangement under the Canada Business Corporations Act.
On January 2, 2020, BGSI announced the appointment of Tim O’Day as President & CEO, pursuant to the previously
announced CEO succession plan. Also pursuant to this CEO succession plan and concurrent with this change, Brock
Bulbuck moved into the role of Executive Chair.
On March 17, 2020, the BGSI Board of Directors declared a cash dividend for the first quarter of 2020 of $0.138 per
common share. The dividend will be payable on April 28, 2020 to common shareholders of record at the close of business
on March 31, 2020.
On March 18, 2020, BGSI announced an increase to its existing credit agreement to expand the facility to $550.0 million
U.S., with an accordion feature to increase the facility to a maximum of $825 million U.S., accompanied by the addition of a
new seven-year fixed-rate Term Loan A in the amount of $125 million U.S., maturing in March 2025 and March 2027,
respectively.
7
The Fund added 126 new collision locations since January 1, 2019 as follows:
Location
Union City, GA
Cayce, SC
Peoria, AZ
Date
January 1, 2019
January 9, 2019
January 11, 2019
February 28, 2019 New York (18 locations)
Michigan (11 locations)
March 8, 2019
Guelph, ON
March 15, 2019
Richland, WA
March 18, 2019
Bullhead City, AZ
March 25, 2019
Oregon & Washington (7 locations)
March 29, 2019
New York (3 locations)
April 15, 2019
Holly Springs, GA
April 18, 2019
Trussville, AL
May 14, 2019
Nevada & Arizona (4 locations)
May 14, 2019
Louisville, KY (2 locations)
June 7, 2019
Watauga, TX
June 10, 2019
Austin, TX
June 24, 2019
Rochester, NY (16 locations)
July 19, 2019
Steinbach, MB
July 29, 2019
Destin, FL
July 31, 2019
August 1, 2019
Ottawa, ON
August 19, 2019 Moody & Anniston, AL (2 locations)
September 3, 2019 Lincolnwood, IL
September 3, 2019 Pasco, WA
September 6, 2019 Evansville, IN (4 locations)
September 13, 2019 Columbia, Irmo & Lexington, SC (3 locations)
September 16, 2019 Lindenhurst, IL
September 30, 2019 East Peoria, IL
September 30, 2019 Port Orchard & Gig Harbor, WA (2 locations)
October 8, 2019
November 1, 2019 Huntsville, AL
November 1, 2019
Pelham, AL
November 15, 2019 Dayton, FL
November 20, 2019 Roswell/Jackson, GA
November 22, 2019 Nashville, TN
Tacoma, WA
December 2, 2019
Los Angelas, CA (6 locations)
December 6, 2019
Los Angeles, CA (3 locations)
December 6, 2019
December 10, 2019 Gallatin, TN
December 13, 2019 Utica, MI
December 13, 2019 Kingston, ON
Parksville, BC
January 2, 2020
Williamsville, NY
January 6, 2020
Littleton, CO
January 17, 2020
Indiana & Michigan (14 locations)
March 6, 2020
Waukesha, WI
March 13, 2020
Gonzales, LA
8
Previously operated as
n/a intake center
Bob Johnson's Body Shop
Lake Pleasant Collision Center
Carubba Collision
Dusty's, Whitney's and Wright Brothers Collision
Majestic Collision
Atomic Auto Body and Detail
Gordy's Auto Body
Beaverton Auto Rebuilders, Inc.
Carubba Collision
n/a intake center
Myers Auto Collision Repair, Inc.
New Look Collision Center
Bill Etscorn & Sons Auto & Collision Center
PlanetPaint Collision Center
Aus-Tex Body & Frame
Nu-Look Collision Center
Stony Brook Collision Center
n/a start-up
n/a start-up
Auto Collision Experts
n/a intake center
n/a intake center
Lefler Collision & Glass
Baker Collision Express
n/a intake center
n/a start-up
Rainier Collision
Precision Collision Center
Quality Body Shop
Oak Mountain Body Shop
n/a start-up
n/a intake center
Whaley Body Shop
Salatino's Collision Center
International Auto Crafters
Centre Pointe Collision Center
n/a intake center
Macomb Collision Tire & Service
Limestone Auto Body
Crashpad Collision Services
n/a intake center
n/a start-up
Vision Collision
Nagel Auto Body
OUTLOOK
Boyd continues to execute on its growth strategy. During 2019, the Company added 108 locations, while at the same time
achieving organic growth through same-store sales increases of 3.3%.
Worldwide, we are all adjusting and adapting to daily changes as a result of the COVID-19 pandemic. While the impact on
the Company thus far has not been material, this could change quickly. The outbreak of contagious illness such as this can
impact operations, including staffing and the volume and pace at which collision repair shops can fix damaged vehicles and
may lead to the temporary closure of facilities. The pandemic could also result in decreased demand for services, as well as
interruptions to the supply chain, including temporary closure of supplier facilities. In fact, over the past few days the
Company has noted a weakening of demand, possibly from customers deferring repairs to avoid exposure and the result of
reduced miles driven and less road congestion as fewer people travel to schools, offices, sporting and other public events and
places. Given the high level of uncertainty surrounding COVID-19 impacts, the Company is in the process of making many
proactive changes and contingency plans relating to the current environment and will continue to work to address COVID-
19 challenges as they evolve, so as to minimize the risk and impact to our employees, customers and shareholders.
While long-term, the Company will continue to pursue accretive growth through a combination of organic growth (same-
store sales growth) as well as acquisitions and new store development, our immediate focus is on preserving financial
flexibility as we deal with the uncertain impacts of COVID-19. Boyd will be taking a near-term pause on closing and
funding acquisitions until we have greater clarity. After the pause, acquisitions will continue to include both single location
acquisitions as well as multi-location acquisitions. Our long-term goal of doubling the size of the business and revenues (on
a constant currency basis) during the five-year period ending in 2020 could be delayed due to uncertainty surrounding the
COVID-19 pandemic. Boyd’s conservative financial strategy has positioned the Company with a strong balance sheet and
financial flexibility to deal with the current uncertain economic environment.
While results in the fourth quarter of 2019 showed a small same-store sales decline, this was primarily the result of same-
store sales declines in Canada due to a combination of economic challenges in Alberta and technician capacity constraints in
other Canadian markets, along with continuing technician capacity constraints in many U.S. markets that limited U.S. same-
store sales growth. Prior to the more recent disruption of COVID-19, modest same-store sales were being forecasted in both
Canada and the U.S. due to a combination of very mild winter weather in some northern markets and technician capacity
constraints in other markets where demand was strong. Technician capacity challenges continue to be addressed through
previously disclosed initiatives, such as standardized recruitment processes and new hire on-boarding and orientation, as
well as continued investment in our Technician Development Program..
Management remains confident in its business model and its ability to increase market share by expanding its presence in
North America through strategic acquisitions alongside organic growth from Boyd’s existing operations. Accretive growth
remains the Company’s focus whether it is through organic growth or acquisitions. The North American collision repair
industry remains highly fragmented and offers attractive opportunities for industry leaders to build value through focused
consolidation and economies of scale. As a growth company, Boyd’s objective continues to be to maintain a conservative
dividend policy that will provide the financial flexibility necessary to support growth initiatives while gradually increasing
dividends over time. The Company remains confident in its management team, systems and experience. This, along with a
strong statement of financial position and financing options, positions Boyd well for success into the future.
BUSINESS ENVIRONMENT & STRATEGY
The collision repair industry in North America is estimated by Boyd to represent approximately $30 to $40 billion U.S. in
annual revenue. The industry is highly fragmented, consisting primarily of small independent family owned businesses
operating in local markets. It is estimated that car dealerships have approximately 17% of the total market. It is believed
that multi-unit collision repair operators with greater than $20 million in annual revenues (including multi-unit car
dealerships), now have approximately 29% of the total market. In February 2019, two of the four largest multi-location
collision repairers closed a merger, making the combined entity more than twice the current size of Boyd in terms of
revenue.
Customer relationship dynamics in the Company’s principal markets differ from region to region. In three of the Canadian
provinces where Boyd operates, government-owned insurance companies have, by legislation, either exclusive or semi-
exclusive rights to provide insurance to automobile owners. Although Boyd’s services in these markets are predominantly
paid for by government-owned insurance companies, these insurers do not typically refer insured automobile owners to
9
specific collision repair centers. In these markets Boyd focuses its marketing to attract business from individual vehicle
owners primarily through consumer based advertising. Boyd manages relationships in the government-owned insurance
markets through active participation in industry associations.
In Alberta, British Columbia, Ontario and in the United States, where private insurers operate, a greater emphasis is placed
on establishing and maintaining DRP’s and other referral arrangements with insurance, fleet and lease companies. DRP’s
are established between insurance companies and collision repair shops to better manage automobile repair claims and
increase levels of customer satisfaction. Insurance, fleet and lease companies select collision repair operators to participate
in their programs based on integrity, convenience and physical appearance of the facility, quality of work, customer service,
cost of repair, cycle time and other key performance metrics. There is a continuing trend among insurers in both the public
and private insurance markets towards using performance-based criteria for selecting collision repair partners and for
referring work to them. Local and regional DRP’s, and national and self-managed DRP relationships, represent an
opportunity for Boyd to increase its business. Insurers have also moved to consolidate DRP repair volumes with a fewer
number of repair shops. There is some preference among some insurance carriers to do business with multi-location
collision repairers in order to reduce the number and complexity of contacts necessary to manage their networks of collision
repair providers and to achieve a higher level of consistent performance. Boyd continues to develop and strengthen its DRP
relationships with insurance carriers in both Canada and the United States and believes it is well positioned to take
advantage of these trends.
In addition, Boyd has used consumer based advertising in some of its markets to complement and supplement its DRP
growth strategies. The Company believes this strategy is effective in increasing its brand awareness and overall sales. Boyd
plans to continue this strategy and may expand it into other Canadian and U.S. markets, as it achieves sufficient critical mass
in these other markets to do so.
As described further under “Business Risks and Uncertainties”, operating results are expected to be subject to fluctuations
due to a variety of factors including changes in customer purchasing patterns, pricing by insurance companies, general
operating effectiveness, automobile technologies, availability of qualified employees, general and regional economic
downturns, unemployment rates and weather conditions. A negative economic climate has the potential to affect results
negatively. The Fund has worked to mitigate this risk by continuing to focus on meeting insurance companies’ performance
requirements, and in doing so, grow market share.
Boyd’s primary strategy is to continue to focus on maximizing its opportunities through a commitment to:
Use of best practices, economies of scale and infrastructure and systems to enhance profitability and achieve
operational excellence;
Expense management through a focus on cost containment and efficiency improvements;
Optimizing returns from existing operations by achieving same-store sales growth; and
Growing the business through single location and multi-location acquisitions, along with new location
development.
Through these strategies, Boyd expects to generate growth sufficient to double the size of its business (measured against its
2015 revenue on a constant currency basis) over a five-year period, implying an average annual growth rate of 15%,
although this could be delayed due to uncertainty surrounding the COVID-19 pandemic.
10
BUSINESS STRATEGY
Operational Excellence
Operational excellence has been a key component of Boyd’s past success and has contributed to the Company being viewed
as an industry leading service provider. Delivering on our customers’ expectations related to cost of repair, time to repair,
quality and customer service are critical to being successful and being rewarded with same-store sales growth. The
Company’s commitment to operational excellence is embodied in its mission and goal, which is condensed into a top of
mind cheer for its employees which is ‘Wow every customer, be the best’. In 2015, Boyd rolled out and implemented its
Wow Operating Way process improvement initiative which is now in place at all of its locations, except newly acquired
locations, where it will be implemented as part of acquisition integration. The Wow Operating Way is a series of systems,
processes and measurements that drive excellence in customer satisfaction, repair cycle times and operational metrics.
Boyd also conducts extensive customer satisfaction polling at all operating locations to assist in keeping customer
satisfaction at the forefront of its mandate.
Boyd will also continue to invest in its infrastructure, process improvement initiatives and IT systems to contribute to high
quality service to its customers and improved operational performance.
11
Expense Management
Boyd continues to manage its operating expenses as a percentage of sales. By working continuously to identify cost savings
and to achieve same-store sales growth, Boyd will continue to manage this expense ratio. Operating expenses have a high
fixed component and therefore same-store sales growth contributes to a lower percentage of operating expenses to sales.
Same-Store Sales / Optimize Returns
Increasing same-store sales and running shops at or near capacity has a positive impact on financial performance. Boyd
continues to seek opportunities to help grow same-store sales.
New Location and Acquisition Growth
In line with stated growth strategies, Boyd was successful in opening 108 new locations in 2019. Boyd will continue to
pursue accretive growth through a combination of organic growth (same-store sales growth) as well as acquisitions and new
store development. Acquisitions will include both single-location acquisitions as well as multi-location acquisitions.
Combined, Boyd expects this strategy to generate growth sufficient to double the size of its business (measured against its
2015 revenue on a constant currency basis) over the five year period from 2015-2020, implying an average annual growth
rate of 15%, although this could be delayed due to uncertainty surrounding the COVID-19 pandemic.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Statements made in this annual report, other than those concerning historical financial information, may be forward-looking
and therefore subject to various risks and uncertainties. Some forward-looking statements may be identified by words like
“may”, “will”, “anticipate”, “estimate”, “expect”, “intend”, or “continue” or the negative thereof or similar variations.
Readers are cautioned not to place undue reliance on such statements, as actual results may differ materially from those
expressed or implied in such statements.
The following table outlines forward-looking information included in this MD&A:
Forward-looking Information
The stated objective of generating
growth sufficient to double the size of
the business over the five-year period
ending in 2020
Key Assumptions
Acquisition opportunities continue to be
available and are at acceptable and accretive
prices
Financing options continue to be available at
reasonable rates and on acceptable terms and
conditions
New and existing customer relationships are
expected to provide acceptable levels of
revenue opportunities
Most Relevant Risk Factors
Acquisition market conditions change and repair shop owner
demographic trends change
Credit and refinancing conditions prevent or restrict the
ability of the Company to continue growth strategies
Changes in market conditions and operating environment
Significant declines in the number of insurance claims
Integration of new stores is not accomplished as planned
Anticipated operating results would be
accretive to overall Company results
Increased competition which prevents achievement of
acquisition and revenue goals
Growth is defined as revenue on a constant
currency basis
Economic conditions deteriorate
12
Forward-looking Information
Boyd remains confident in its business
model to increase market share by
expanding
in North
its presence
America through strategic and accretive
acquisitions alongside organic growth
from Boyd’s existing operations
Key Assumptions
Continued stability in economic conditions
and employment rates
Pricing in the industry remains stable
The Company’s customer and supplier
relationships provide it with competitive
advantages to increase sales over time
Market share growth will more than offset
systemic changes in the industry and
environment
Anticipated operating results would be
accretive to overall Company results
Most Relevant Risk Factors
Economic conditions deteriorate
Loss of one or more key customers or loss of significant
volume from any customer
Decline in the number of insurance claims
Inability of the Company to pass cost increases to customers
over time
Increased competition which may prevent achievement of
revenue goals
Changes in market conditions and operating environment
Changes in weather conditions
Inability to maintain, replace or grow same-store technician
capacity could impact organic growth
Stated objective to gradually increase
dividends over time
Growing profitability of the Company and its
subsidiaries
BGSI is dependent upon the operating results of the
Company
The continued and increasing ability of the
Company to generate cash available for
dividends
Economic conditions deteriorate
Changes in weather conditions
Balance sheet strength and flexibility is
maintained and the dividend level is
manageable taking into consideration bank
covenants, growth requirements and
maintaining a dividend level that is
supportable over time
Decline in the number of insurance claims
Loss of one or more key customers or loss of significant
volume from any customer
Changes in government regulation
The actual cost for these capital expenditures
agrees with the original estimate
Expected actual expenditures could be above or below
1.6% to 1.8% of sales
The purchase, delivery and installation of the
capital items is consistent with the estimated
timeline
The timing of the expenditures could occur on a different
timeline
No other new capital requirements are
identified or required during the period
All identified capital requirements are
required during the period
BGSI may identify additional capital expenditure needs that
were not originally anticipated
BGSI may identify capital expenditure needs that were
originally anticipated; however, are no longer required or
required on a different timeline
Investment in LED lighting and process
efficiency projects will generate positive
returns
Expected positive returns are not generated due to delays,
increased costs, or unanticipated challenges in
implementation
to
related
in LED
acquisition
lighting which
Subject to adjustments that may be
necessary due
the COVID-19
to
pandemic, for 2020, the Company plans
to make capital expenditures (excluding
those
and
development of new locations) within
the range of 1.6% to 1.8% of sales. In
addition, the Company may invest $5
million
is
expected to achieve accretive returns on
the
invested capital. Additionally,
Company may expand
its Wow
Operating Way practices to corporate
related
processes. The
business
technology and process efficiency
project would result in a total $9-10
million investment and would also be
expected to generate economic returns
after the project is fully implemented as
well as streamline various processes.
We caution that the foregoing table contains what BGSI believes are the material forward-looking statements and is not
exhaustive. Therefore when relying on forward-looking statements, investors and others should refer to the “Risk Factors”
section of BGSI’s Annual Information Form, the “Business Risks and Uncertainties” and other sections of our
Management’s Discussion and Analysis and our other periodic filings with Canadian securities regulatory authorities. All
forward-looking statements presented herein should be considered in conjunction with such filings.
13
SELECTED ANNUAL INFORMATION
The following table summarizes selected financial information for the Fund over the prior three years:
For the years ended December 31,
(thousands of Canadian dollars, except per unit amounts)
Sales
Net earnings
Adjusted net earnings
Basic earnings per unit
Diluted earnings per unit
Adjusted net earnings per unit
Cash distributions per unit declared:
Trust unit distributions
As at December 31,
(thousands of Canadian dollars)
2019
2018
2017
$
2,283,325
$
1,864,613
$
1,569,448
$
64,147
$
77,639
$
58,435
$
100,548
$
85,607
$
58,833
$
$
3.23
3.12
$
$
3.94
3.79
$
$
3.16
2.81
$
5.06
$
4.35
$
3.18
$
0.54
$
0.53
$
0.52
2019
2018
2017
Total assets
$
1,901,253
$
1,233,483
$
1,011,393
Total long-term financial liabilities
$
847,950
$
319,720
$
329,756
Acquisitions and new single location growth had the largest impact on growing sales from 2017 to present. In 2018, sales
growth was driven primarily by the addition of 81 locations, as well as same-store sales growth of 4.8%. In 2019, sales
growth was driven primarily by the addition of 108 locations, as well as same-store sales growth of 3.3%.
The net earnings reported were impacted by fair value adjustments related to financial instruments that mainly arose as the
Fund’s unit price increased. Excluding these adjustments, net earnings would have increased each year as a result of the
increase in sales and gross profit.
The change in total assets and total long-term financial liabilities was significantly impacted by acquisitions in 2018 and
2019. Total assets and total long-term financial liabilities were also significantly impacted by the adoption of IFRS 16,
Leases on January 1, 2019, through initial recognition of right of use assets of $452.9 million and lease liabilities of
$488.0 million. In addition to these changes, fluctuations in total assets have primarily related to increases in property,
plant and equipment, intangible assets and goodwill as a result of new location growth. Long-term financial liabilities have
also been impacted by financing of acquisitions. The recognition of exchangeable Class A common shares, unit based
payment obligations and the non-controlling interest put options and call liability as financial liabilities under IFRS has also
contributed to the growth in long-term financial liabilities. The decrease in long-term financial liabilities in 2018 was
primarily the result of the settlement of unit options and the reclassification of the non-controlling interest call liability,
partially offset by draws on the revolving credit facility to finance acquisitions. The increase in long-term financial
liabilities in 2019 was primarily the result of the adoption of IFRS 16, Leases, as well as financing of acquisitions. These
increases were partially offset by the settlement of unit options.
Since the end of 2007 through the end of 2019, the Fund increased monthly distributions to unitholders and Boyd Group
Holdings Inc. increased dividends to its Class A shareholders annually. The same rate of dividends has been maintained by
BGSI beginning January 1, 2020, such that as of March 17, 2020 the dividend rate is $0.138 per quarter or $0.552 on an
annualized basis.
14
BOYD GROUP INCOME FUND AND BOYD GROUP SERVICES INC.
On January 1, 2020, Boyd Group Income Fund was converted from an income trust to a public corporation named Boyd
Group Services Inc., pursuant to a plan of arrangement (the “Arrangement”) under the Canada Business Corporations Act.
The Arrangement received all required unitholder, trustee, court, TSX and regulatory approvals, as well as approval from the
shareholders of Boyd Group Holdings Inc. (“BGHI”).
As a result of the Arrangement, Fund unitholders and Boyd Group Holdings Inc. (“BGHI”) Class A common shareholders
received one BGSI common share in exchange for each Fund unit and BGHI Class A common share held by them.
Boyd Group Income Fund (the “Fund”), is a subsidiary of BGSI and is an unincorporated, open-ended mutual fund trust.
On December 31, 2019, the Fund owned 100% of the Class I common shares of the Company and 100% of the subordinated
notes issued by a U.S. subsidiary of the Company, The Boyd Group (U.S.) Inc. (the “Notes”). Distributions to unitholders,
when paid by the Fund, were funded from a combination of interest income earned on the Notes and from dividends on the
Class I common share investment or as a return of capital on Notes. There was no return of capital in 2018 and 2019. On
January 1, 2020, the Class I common shares held by the Fund were exchanged on a one-for-one basis for Class A Preferred
Shares of the Company.
On December 31, 2019, Boyd Group Holdings Inc. (“BGHI”) owned 100% of the Class II common shares issued by the
Company. On January 1, 2020, the Class II common shares held by BGHI were exchanged on a one-for-one basis for
Common Shares of the Company. The Common Shares of the Company, currently, through March 17, 2020, represent
100% of the common shares of the Company. The share structure of BGHI at March 17, 2020, consists of 100 million
Voting shares, 184,813 Class A common shares, 1,852,619 Class B common shares and 25,431 Class C common shares.
The Fund, through the ownership of 70 million or 70% of the Voting shares, has voting control of BGHI. The remaining
30% is held by BGSI. The Class A common shares are all held by BGSI. The Class B and Class C common shares are all
held by Boyd. Although the Fund has voting control, it did not and continues not to have any significant economic interest
in the activities of BGHI. All dividends received by BGHI from Boyd on the Class II common shares until December 31,
2019 have been passed on as dividends to Class A and B common shareholders of BGHI.
On December 31, 2019, the Fund also held 67,730 Class IV non-voting, redeemable, retractable preferred shares of the
Company issued as a result of an internal restructuring in 2007, the bought deal public equity offerings completed in 2014,
2013 and 2011, the convertible debenture offering completed in 2012, the subsequent conversion and redemption of 2012
Debentures into units, the convertible debenture offering completed in 2014 and the subsequent conversion and redemption
of 2014 Debentures into units. On January 1, 2020, the Class IV preferred shares were exchanged on a one-for-one basis for
Class B preferred shares of the Company.
The consolidated financial statements of the Fund, BGHI and their subsidiaries have been prepared in accordance with
International Financial Reporting Standards and contain the consolidated financial position, results of operations and cash
flows of the Fund, BGHI and the Company and the Company’s subsidiary companies for the year ended December 31,
2019.
NON-GAAP FINANCIAL MEASURES
EBITDA AND ADJUSTED EBITDA
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is not a calculation defined in International
Financial Reporting Standards (“IFRS”). EBITDA should not be considered an alternative to net earnings in measuring the
performance of the Fund, nor should it be used as an exclusive measure of cash flow. The Fund reports EBITDA and
Adjusted EBITDA because it is a key measure that management uses to evaluate performance of the business and to reward
its employees. EBITDA is also a concept utilized in measuring compliance with debt covenants. EBITDA and Adjusted
EBITDA are measures commonly reported and widely used by investors and lending institutions as an indicator of a
company’s operating performance and ability to incur and service debt, and as a valuation metric. While EBITDA is used to
assist in evaluating the operating performance and debt servicing ability of the Fund, investors are cautioned that EBITDA
and Adjusted EBITDA as reported by the Fund may not be comparable in all instances to EBITDA as reported by other
companies.
15
The CPA’s Canadian Performance Reporting Board defined standardized EBITDA to foster comparability of the measure
between entities. Standardized EBITDA represents an indication of an entity’s capacity to generate income from operations
before taking into account management’s financing decisions and costs of consuming tangible and intangible capital assets,
which vary according to their vintage, technological age and management’s estimate of their useful life. Accordingly,
standardized EBITDA comprises sales less operating expenses before finance costs, capital asset amortization and
impairment charges, and income taxes. Adjusted EBITDA is calculated to exclude items of an unusual nature that do not
reflect normal or ongoing operations of the Fund and which should not be considered in a valuation metric or should not be
included in assessment of ability to service or incur debt. Included in this category of adjustments are the fair value
adjustments to exchangeable Class A common shares, the fair value adjustments to unit based payment obligations, and the
fair value adjustments to the non-controlling interest put option and call liability. These items are adjustments that did not
have any cash impact on the Fund. Also included as an adjustment to EBITDA are acquisition and transaction costs and fair
value adjustments to contingent consideration, which do not relate to the current operating performance of the business units
but are typically costs incurred to expand operations. Prior to the adoption of IFRS 16, Leases on January 1, 2019, lease
expenses were included in operating expenses and were thereby included in the calculation of both standardized and
Adjusted EBITDA. On adoption of IFRS 16, Leases on January 1, 2019, lease expenses are no longer included in operating
expenses. In 2019, these amounts have been deducted in arriving at Adjusted EBITDA to enhance comparability with prior
period. Beginning January 1, 2020, these amounts will no longer be deducted in arriving at Adjusted EBITDA. From time
to time, the Fund may make other adjustments to its Adjusted EBITDA for items that are not expected to recur.
The following is a reconciliation of the Fund’s net earnings to EBITDA and Adjusted EBITDA:
ADJUSTED EBITDA
(thousands of Canadian dollars)
Net earnings
Add:
For the three months ended
December 31,
For the year ended
December 31,
2019
2018
2019
2018
$
14,253
$
29,904
$
64,147
$
77,639
Finance costs
Income tax expense
Depreciation of property, plant and equipment
Depreciation of right of use assets - property
Depreciation of right of use assets - vehicles
and equipment
Amortization of intangible assets
10,129
7,608
11,740
23,317
727
6,489
2,911
6,771
9,274
-
-
4,750
38,185
29,402
41,601
88,148
2,742
22,467
10,283
24,635
34,067
-
-
17,674
Standardized EBITDA
$
74,263
$
53,610
$
286,692
$
164,298
Add (less):
Fair value adjustments
Acquisition and transaction costs
Adjusted EBITDA, post IFRS 16, Leases basis
Less:
8,799
991
84,053
(8,673)
2,626
47,563
28,330
4,850
4,787
4,298
319,872
173,383
Lease liability payments - property
(27,623)
-
(104,276)
-
Adjusted EBITDA
$
56,430
$
47,563
$
215,596
$
173,383
16
ADJUSTED NET EARNINGS
In addition to EBITDA and Adjusted EBITDA, the Fund believes that certain users of financial statements are interested in
understanding net earnings excluding certain fair value adjustments and other unusual or infrequent adjustments. This can
assist these users in comparing current results to historical results that did not include such items. The following is a
reconciliation of the Fund’s net earnings to adjusted net earnings:
(thousands of Canadian dollars, except unit and per unit
amounts)
Net earnings
Add (less):
Fair value adjustments (non-taxable)
Acquisition and transaction costs (net of tax)
Depreciation of right of use assets - property
(net of tax)
Finance cost on lease liabilities - property
(net of tax)
Less:
For the three months ended
December 31,
For the year ended
December 31,
2019
2018
2019
2018
$
14,253
$
29,904
$
64,147
$
77,639
8,799
733
17,255
4,280
(8,673)
1,943
-
-
-
28,330
3,589
65,230
16,416
(77,164)
4,787
3,181
-
-
-
Lease liability payments - property (net of tax)
(20,441)
Adjusted net earnings
$
24,879
$
23,174
$
100,548
$
85,607
Weighted average number of units
19,931,963
19,732,171
19,878,567
19,684,337
Adjusted net earnings per unit
$
1.25
$
1.17
$
5.06
$
4.35
Distributions and Distributable Cash
Until December 31, 2019, the Fund and BGHI made monthly distributions, in accordance with their distribution policies, to
unitholders of the Fund and dividends to Class A common shareholders of BGHI of record on the last day of each month,
payable on or about the last business day of the following month. The amount of cash distributed by the Fund was equal to
the pro rata share of interest or principal repayments received on the Notes and distributions received on or in respect of the
Class I common shares of the Company held by the Fund, after deducting expenses of the Fund and any cash redemptions of
the Fund during the period. The amount of cash distributed by BGHI was equal to the pro rata share of dividends received
on or in respect of the Class II common shares of the Company held by BGHI, after deducting expenses of BGHI. All
dividends paid or allocated to unitholders of the Fund or Class A shareholders of BGHI are considered to be eligible
dividends for Canadian income tax purposes.
During 2019, the Fund paid distributions totaling $10.8 million (2018 - $10.4 million) while BGHI paid dividends to Class
A common shareholders during this same period of $116 thousand (2018 - $117 thousand).
Distributable cash is a non-GAAP measure presented to provide an indication of the Fund’s ability to sustain distributions
while maintaining productive capacity. Distributable cash can be compared to cash flow provided by operating activities,
which is its nearest GAAP measure. In addition, a comparison can also be made to earnings.
The Fund’s distribution level was well below cash flow provided by operating activities and adjusted distributable cash
during the periods presented. Excess funds were retained to grow the business and strengthen the statement of financial
position. A continuation of this trend will permit BGSI to continue to increase dividends over time while maintaining a
strong statement of financial position and executing its growth strategy.
17
Distributions to unitholders and dividends to the BGHI shareholders were declared and paid as follows:
(thousands of Canadian dollars, except per unit and per share amounts) Distribution per Unit / Distribution Dividend
amount
Record date
Dividend per Share
Payment date
amount
January 31, 2019
February 28, 2019
March 31, 2019
April 30, 2019
May 31, 2019
June 30, 2019
July 31, 2019
August 31, 2019
September 30, 2019
October 31, 2019
November 30, 2019
December 31, 2019
February 26, 2019
March 27, 2019
April 26, 2019
May 29, 2019
June 26, 2019
July 29, 2019
August 28, 2019
September 28, 2019
October 29, 2019
November 27, 2019
December 20, 2019
January 29, 2020
$
0.0450
0.0450
0.0450
0.0450
0.0450
0.0450
0.0450
0.0450
0.0450
0.0450
0.0460
0.0460
$
891
892
894
894
894
895
894
894
895
894
921
921
$
10
10
9
10
10
9
10
10
9
9
10
10
$
0.5420
$
10,779
$
116
(thousands of Canadian dollars, except per unit and per share amounts) Distribution per Unit / Distribution Dividend
amount
Record date
Dividend per Share
Payment date
amount
January 31, 2018
February 28, 2018
March 31, 2018
April 30, 2018
May 31, 2018
June 30, 2018
July 31, 2018
August 31, 2018
September 30, 2018
October 31, 2018
November 30, 2018
December 31, 2018
February 26, 2018
March 27, 2018
April 26, 2018
May 29, 2018
June 27, 2018
July 27, 2018
August 29, 2018
September 26, 2018
October 29, 2018
November 28, 2018
December 21, 2018
January 29, 2019
Maintaining Productive Capacity
$
0.0440
0.0440
0.0440
0.0440
0.0440
0.0440
0.0440
0.0440
0.0440
0.0440
0.0450
0.0450
$
865
865
866
865
865
866
865
866
866
865
892
892
$
10
10
9
10
10
9
10
10
9
9
10
10
$
0.5300
$
10,438
$
116
Maintaining productive capacity is defined by Boyd as the maintenance of the Company’s facilities, equipment, signage,
vehicles, systems, brand names and infrastructure. Although most of Boyd’s repair facilities are leased, funds are required
to ensure facilities are properly repaired and maintained to ensure the Company’s physical appearance communicates
Boyd’s standard of professional service and quality. The Company’s need to maintain its facilities and upgrade or replace
equipment, signage, systems and vehicles forms part of the annual cash requirements of the business. The Company
manages these expenditures by annually reviewing and determining its capital budget needs and then authorizing major
expenditures throughout the year based upon individual business cases.
18
Subject to adjustments that may be necessary to preserve financial flexibility due to the COVID-19 pandemic, for 2020, the
Company plans to make cash capital expenditures, excluding those related to acquisition and development of new locations,
within the range of 1.6% and 1.8% of sales. In addition to normal capital expenditures, the Company plans to invest $5
million in LED lighting in order to reduce energy consumption and enhance the shop work environment. This investment
would not only provide environmental and social benefits but also achieve accretive returns on invested capital.
Additionally, the Company plans to expand its Wow Operating Way practices to corporate business processes. The related
technology and process efficiency project would result in a total $9-10 million investment and would also be expected to
streamline various processes as well as generate economic returns after the project is fully implemented. The Company will
pause on these planned investments until there is greater clarity on the impact of COVID-19.
In many circumstances, property, as well as large equipment expenditures including automobiles, shop equipment and
computers can be financed using leases. Cash spent on maintenance capital expenditures plus the repayment of leases,
including the finance costs thereon, form part of the distributable cash calculations.
Non-recurring and Other Adjustments
Non-recurring and other adjustments may include, but are not limited to, post closure environmental liabilities, restructuring
costs and acquisition and transaction costs. Management is not currently aware of any environmental remediation
requirements. Acquisition and transaction costs are added back to distributable cash as they occur. On adoption of IFRS 16,
Leases on January 1, 2019, lease expenses are no longer included in operating expenses and therefore have been deducted in
arriving at Adjusted distributable cash since they represent ongoing cash requirements of the business.
Debt Management
In addition to lease obligations arranged to finance growth and maintenance expenditures on property and equipment, the
Company has historically utilized long-term debt to finance the expansion of its business, usually through the acquisition
and start-up of collision and glass repair and replacement businesses. Repayments of this debt do not form part of
distributable cash calculations. Boyd’s bank facilities include restrictive covenants, which could limit BGSI’s ability to
distribute cash. These covenants, based upon current financial results, would not prevent BGSI from paying future
dividends at conservative and sustainable levels. These covenants will continue to be monitored in conjunction with any
future anticipated dividends.
19
The following is a standardized and adjusted distributable cash calculation for 2019 and 2018:
Standardized and Adjusted Distributable Cash (1)
(thousands of Canadian dollars, except per unit and
per share amounts)
Cash flow from operating activities before
changes in non-cash working capital items (2)
Changes in non-cash working capital items
Cash flows from operating activities
Less adjustment for:
Finance costs
Sustaining expenditures on plant, software
and equipment (3)
Standardized distributable cash
Standardized distributable cash per average unit
and Class A common share
For the three months ended
December 31,
For the year ended
December 31,
2019
2018
2019
2018
$
78,029
10,224
88,253
$
47,423
22,581
70,004
$
294,148
1,674
295,822
$
156,724
34,023
190,747
(10,129)
(2,911)
(38,185)
(10,283)
(14,103)
64,021
$
(9,344)
57,749
$
(35,928)
221,709
$
(26,651)
153,813
$
Per average unit and Class A common share
Per diluted unit and Class A common share (6)
$
$
3.18
3.18
$
$
2.89
2.85
$
$
11.03
11.02
$
$
7.73
7.66
Standardized distributable cash from above
Add (deduct) adjustments for:
Acquisition and transaction costs (4)
Proceeds on sale of equipment and software
Repayments of leases, principal (5)
Adjusted distributable cash
Adjusted distributable cash per average unit and
Class A common share
$
64,021
$
57,749
$
221,709
$
153,813
991
225
(22,633)
42,604
$
2,626
62
(928)
59,509
$
4,850
392
(85,966)
140,985
$
4,298
565
(3,906)
154,770
$
Per average unit and Class A common share
Per diluted unit and Class A common share (6)
$
$
2.12
2.12
$
$
2.98
2.94
$
$
7.02
7.01
$
$
7.78
7.71
Distributions and dividends paid
Unitholders
Class A common shareholders
Total distributions and dividends paid
Distributions and dividends paid
Per unit
Per Class A common share
Payout ratio based on standardized
distributable cash
Payout ratio based on adjusted distributable cash
$
$
$
$
2,623
29
2,652
10,751
116
10,867
10,405
117
10,522
$
$
$
$
2,708
29
2,737
$
$
0.14
0.14
$
$
0.13
0.13
$
$
0.54
0.54
$
$
0.53
0.53
4.3%
6.4%
4.6%
4.5%
4.9%
7.7%
6.8%
6.8%
(1) As defined in the non-GAAP financial measures section of the MD&A.
(2)
The January 1, 2019 modified retrospective adoption of IFRS 16, Leases, has resulted in an increase to cash flow from operating activities in the 2019
periods presented, as lease expenses are no longer included in operating expenses. The comparative 2018 periods have not been restated.
20
(3)
(4)
(5)
(6)
Includes sustaining expenditures on plant and equipment, information technology hardware and computer software but excludes capital expenditures
associated with acquisition and development activities including rebranding of acquired locations. In addition to the maintenance capital expenditures
paid with cash, during 2019 the Company acquired a further $2.7 million (2018 - $2.8 million) in vehicles and equipment which were financed through
leases and did not affect cash flows in the current period. On January 1, 2019, the Company recorded $442.6 million in property leases as right of use
assets on adoption of IFRS 16, Leases. During 2019, the Company recorded additional property leases of $129.3 million as right of use assets under
this new accounting standard.
The Company has added back to distributable cash the costs related to acquisitions.
Lease payments represent additional cash requirements to support the productive capacity of the Company and therefore have been deducted when
calculating Adjusted distributed cash.
Per diluted unit and Class A common share amounts have been calculated in accordance with definitions of dilution and anitdilution contained in IAS
33, Earnings per Share. Diluted distributable cash amounts will differ from average distributable cash amounts on a per unit basis if earnings per unit
calculations show a dilutive impact.
RESULTS OF OPERATIONS
Results of Operations
(thousands of Canadian dollars, except per unit amounts)
For the three months ended
December 31,
% change
2019
2018
For the year ended
December 31,
% change
2018
2019
Sales - Total
Same-store sales - Total (excluding foreign exchange)
585,966
480,708
18.3
(0.2)
495,131
481,745
2,283,325
1,852,154
22.5
3.3
1,864,613
1,793,170
Gross margin %
Operating expense %
45.0
30.7
1.6
(11.5)
44.3
34.7
45.4
31.4
Adjusted EBITDA (1)
Adjusted EBITDA (post IFRS 16, Leases basis)
Acquisition and transaction costs
Depreciation and amortization
Fair value adjustments
Finance costs
Income tax expense
(1)
Adjusted net earnings (1)
Adjusted net earnings per unit (1)
Net earnings
Basic earnings per unit
Diluted earnings per unit
Standardized distributable cash
Adjusted distributable cash
(1)
(1)
56,430
84,053
991
42,273
8,799
10,129
7,608
24,879
1.25
14,253
0.72
0.72
64,021
42,604
18.6
47,563
215,596
N/A
(62.3)
201.4
(201.5)
248.0
12.4
7.4
6.8
(52.3)
(52.6)
(39.5)
10.9
(28.4)
N/A
2,626
14,024
(8,673)
2,911
6,771
23,174
1.17
29,904
1.52
1.19
57,749
59,509
319,872
4,850
154,958
28,330
38,185
29,402
100,548
5.06
64,147
3.23
3.12
221,709
140,985
0.4
(12.5)
24.3
N/A
12.8
199.5
491.8
271.3
19.4
17.5
16.3
(17.4)
(18.0)
(17.7)
44.1
(8.9)
45.2
35.9
173,383
N/A
4,298
51,741
4,787
10,283
24,635
85,607
4.35
77,639
3.94
3.79
153,813
154,770
Distributions and dividends paid
2,737
3.2
2,652
10,867
3.3
10,522
(1) As defined in the non-GAAP financial measures section of the MD&A.
21
Sales
Sales totaled $2.283 billion for the year ended December 31, 2019, an increase of $418.7 million or 22.5% when compared
to 2018. The increase in sales was the result of the following:
$326.9 million of incremental sales were generated from 175 new locations that were not in operation for the full
comparative period.
Same-store sales excluding foreign exchange increased $59.0 million or 3.3% and increased $38.8 million due to
the translation of same-store sales at a higher U.S. dollar exchange rate. Same-store sales excluding foreign
exchange increased 3.3% on a days adjusted basis, recognizing the same number of selling and production days in
the U.S. and Canada in 2019 and 2018.
Sales were affected by the closure of under-performing facilities which decreased sales by $5.9 million.
Same-store sales are calculated by including sales for locations and businesses that have been in operation for the full
comparative period.
Gross Profit
Gross Profit was $1.036 billion or 45.4% of sales for the year ended December 31, 2019 compared to $842.5 million or
45.2% of sales for the same period in 2018. Gross profit increased primarily as a result of higher sales due to acquisition
and same-store sales growth compared to the prior period. The gross margin percentage is impacted by increased DRP
pricing as well as improved parts and labour margins, partially offset by a higher mix of parts sales in relation to labour.
Certain DRP performance pricing arrangements have recently changed in a way that is resulting in slightly greater pricing
variability. The gross margin percentage is within normal ranges for mix and margin changes period to period.
Operating Expenses
Operating Expenses for the year ended December 31, 2019 increased $47.5 million to $716.6 million from $669.1 million
for the same period of 2018, primarily due to the acquisition of new locations. Adjusting for the impact of the adoption of
IFRS 16, Leases on the year ended December 31, 2019, operating expenses would have increased $104.3 million to $820.9
million. The increase in operating expenses adjusted for the impact of IFRS 16, Leases adoption, is primarily due to the
acquisition of new locations. Excluding the impact of foreign currency translation which increased operating expenses by
approximately $16.5 million, expenses increased $135.0 million from 2018. Closed locations lowered operating expenses
by $2.5 million.
Operating expenses as a percentage of sales were 31.4% for the year ended December 31, 2019. Operating expenses,
adjusted for the impact of IFRS 16, Leases adoption, as a percentage of sales were 36.0% for the year ended December 31,
2019, which compared to 35.9% for the same period in 2018.
Acquisition and Transaction Costs
Acquisition and Transaction Costs for the year ended December 31, 2019 were $4.9 million compared to $4.3 million
recorded for the same period of 2018. The costs relate to various acquisitions, including acquisitions from prior periods, as
well as other completed or potential acquisitions. For the year ended December 31, 2018, $1.9 million in acquisition and
transaction costs related to the costs incurred to complete the Glass America call option transaction.
Adjusted EBITDA
Earnings before interest, income taxes, depreciation and amortization, adjusted for the fair value adjustments related to the
exchangeable share liability, unit option liability, non-controlling interest put option and call liability and contingent
consideration, as well as acquisition and transaction costs and the impact of adoption of IFRS 16, Leases (“Adjusted
EBITDA”)1 for the year ended December 31, 2019 totaled $215.6 million or 9.4% of sales compared to Adjusted EBITDA
of $173.4 million or 9.3% of sales in the prior year. The $42.2 million increase was primarily the result of incremental
1 As defined in the non-GAAP financial measures section of the MD&A.
22
EBITDA contribution from new location and same-store sales growth, as well as changes in U.S. dollar exchange rates in
2018, which increased Adjusted EBITDA by $4.0 million. Adjusted EBITDA on a post IFRS 16, Leases basis was $319.9
million or 14.0% of sales for the year ended December 31, 2019.
Depreciation and Amortization
Depreciation related to property, plant and equipment totaled $41.6 million or 1.8% of sales for the year ended December
31, 2019, an increase of $7.5 million when compared to the $34.1 million or 1.8% of sales recorded in the same period of
the prior year. The increase in depreciation expense was primarily due to acquisition growth as well as investments in
capital equipment.
Depreciation related to right of use assets totaled $90.9 million or 4.0% of sales for the year ended December 31, 2019.
Amortization of intangible assets for the year ended December 31, 2019 totaled $22.5 million or 1.0% of sales, an increase
of $4.8 million when compared to the $17.7 million or 0.9% of sales expensed for the same period in the prior year. The
increase is primarily the result of the addition of new intangible assets from recent acquisitions.
Fair Value Adjustments
Fair Value Adjustment to Exchangeable Class A Common Shares liability resulted in a non-cash expense of $16.7 million
during 2019 compared to a non-cash expense of $2.4 million in the prior year. The Class A exchangeable shares of BGHI
are exchangeable into units of the Fund. This exchangeable feature results in the shares being presented as financial
liabilities of the Fund. The liability represents the value of the Fund attributable to these shareholders. Exchangeable Class
A shares are measured at the market price of the units of the Fund as of the statement of financial position date. The fair
value adjustment, which increased the liability and resulted in the recording of the related expense, is the result of the
increase in the value of the Fund’s units. On January 1, 2020, the Class A exchangeable shares of BGHI were exchanged on
a one-for-one basis for shares of BGSI.
Fair Value Adjustment to Unit Based Payment Obligation liability resulted in a non-cash expense of $13.7 million for 2019
compared to a non-cash expense of $4.9 million in the prior year. Similar to the exchangeable share liability, the unit option
liability is impacted by changes in the value of the Fund’s units. The cost of cash-settled unit-based transactions is measured
at fair value using a Black-Scholes model and expensed over the vesting period with the recognition of a corresponding
liability. On November 25, 2019, the remaining 150,000 unit options were settled thereby eliminating the unit based
payment option liability from the statement of financial position. The fair value adjustment is the result of the increase in
the value of the Fund’s units.
Fair Value Adjustment to Non-controlling Interest Put Option and Call liability resulted in a non-cash recovery of $2.1
million for 2019 compared to a non-cash recovery of $2.5 million in the same period of the prior year. The non-controlling
interest call liability transaction was completed on January 31, 2019, with no fair value adjustment recorded during the year
ended December 31, 2019. The non-controlling interest put option has been calculated based on the Gerber Glass LLC
Company Agreement. Revisions to the EBITDA amount on which the calculation is based resulted in a decrease in the put
option liability and a corresponding non-cash recovery in 2019.
Fair Value Adjustment to Contingent Consideration resulted in a non-cash expense of $0.02 million for 2019. Contingent
consideration is impacted by changes to the estimated payment due to sellers based on the acquisition meeting
predetermined earnings targets during specified periods subsequent to the acquisition date.
Finance Costs
Finance Costs of $38.2 million or 1.7% of sales for the year ended December 31, 2019 increased from $10.3 million or
0.6% of sales for the prior year, primarily due to the adoption of IFRS 16, Leases. Removing the impact of the adoption of
IFRS 16, Leases on the year ended December 31, 2019, finance costs would have been $16.0 million or 0.7% of sales. The
increase in finance costs after removing the impact of IFRS 16, Leases was due to increased borrowing under the credit
facility to fund acquisitions.
23
Income Taxes
Current and Deferred Income Tax Expense of $29.4 million for the year ended December 31, 2019 compares to an expense
of $24.6 million for 2018. Income tax expense continues to be impacted by permanent differences such as mark-to-market
adjustments which impacts the tax computed on accounting income. Adjusting for the impact of the adoption of IFRS 16,
Leases on the year ended December 31, 2019, income tax expense would have increased $1.6 million.
Net Earnings and Earnings Per Unit
Net Earnings for the year ended December 31, 2019 was $64.1 million or 2.8% of sales compared to $77.6 million or 4.2%
of sales in the prior year. The net earnings amount in 2019 was negatively impacted by fair value adjustments to financial
instruments of $28.3 million, which were primarily due to the increase in unit price during the period, and acquisition and
transaction costs of $3.6 million (net of tax). The net earnings amount in 2019 was also negatively impacted by the adoption
of IFRS 16, Leases, which reduced net earnings by $4.5 million (net of tax). After adjusting for fair value and other unusual
items, Adjusted net earnings1 for 2019 was $100.5 million, or 4.4% of sales. This compares to Adjusted net earnings of
$85.6 million or 4.6% of sales in 2018. The increase in the Adjusted net earnings for the year is the result of the
contribution of new location and same-store sales growth.
Basic Earnings Per Unit was $3.23 per unit for the year ended December 31, 2019 compared to $3.94 in 2018. The
decrease in basic earnings per unit is primarily attributed to fair value adjustments to financial instruments and the adoption
of IFRS 16, Leases, partially offset by the contribution of new location and same-store sales growth. Diluted earnings per
unit was $3.12 for the year ended December 31, 2019 compared to $3.79 in 2018. Adjusted net earnings per unit1 was $5.06
compared to $4.35 in 2018.
S ummary of Quarterly Results
(in thousands of Canadian
dollars, except per unit amounts)
2019 Q4
2019 Q3
2019 Q2
2019 Q1
2018 Q4
2018 Q3
2018 Q2
2018 Q1
Sales
$
585,966
$
566,957
$
572,505
$
557,897
$
495,131
$
459,564
$
456,627
$
453,291
Adjusted EBITDA (1)
Adjusted EBITDA,
post IFRS 16, Leases basis
(1)
$
56,430
$
50,656
$
54,335
$
54,175
$
47,563
$
41,203
$
42,494
$
42,123
$
84,053
$
77,398
$
80,099
$
78,322
N/A
N/A
N/A
N/A
Net earnings
Basic earnings per unit
Diluted earnings per unit
$
$
$
14,253
0.72
0.72
$
$
$
14,766
0.74
0.74
$
$
$
13,739
0.69
0.63
$
$
$
21,389
1.08
0.95
$
$
$
29,904
1.52
1.19
$
$
$
16,571
0.84
0.75
$
$
$
12,828
0.65
0.65
$
$
$
18,336
0.93
0.93
Adjusted net earnings (1)
Adjusted net earnings per unit (1)
$
$
24,879
1.25
$
$
21,880
1.10
$
$
24,614
1.24
$
$
29,176
1.47
$
$
23,174
1.17
$
$
20,403
1.04
$
$
21,141
1.07
$
$
20,888
1.06
(1) As defined in the non-GAAP financial measures section of the MD&A.
Sales and adjusted EBITDA have increased in recent quarters due to the acquisition of new locations as well as same-store
sales increases.
1 As defined in the non-GAAP financial measures section of the MD&A.
24
STATUS AS A SPECIFIED INVESTMENT FLOW-THROUGH AND TAXATION
Under the previous taxation regime for income trusts, the Fund had been exempt from tax on its income to the extent that its
income was distributed to unitholders. This exemption did not apply to the Company or its subsidiaries, which are
corporations that are subject to income tax. Under the tax regime effective for 2010 and years thereafter for trusts, certain
distributions from a “specified investment flow-through” trust or partnership (“SIFT”) are no longer deductible in computing
a SIFT’s taxable income, and a SIFT is subject to tax on such distributions at a rate that is substantially equivalent to the
general tax rate applicable to a Canadian corporation. Foreign investment income from non-portfolio investments is not
subject to the SIFT tax.
In 2009, the Fund investigated and evaluated its structuring alternatives in connection with the SIFT rules with a view of
preserving and maximizing unitholder value. Based upon its investigation, analysis and due diligence and given its size and
circumstances, the Fund determined at that time, that a change to a share corporation structure would not be advantageous to
the Fund or its unitholders. This determination was based on several reasons. First, the Fund did not believe it would
achieve any net tax savings by converting. Second, the Fund believed that the cost of conversion was not a prudent use of
cash and was not justified by any perceived benefits from conversion for a fund of Boyd’s size. Third, to the extent that the
Fund paid SIFT tax, it believed that its taxable unitholders would benefit from the lower tax rate on distributions received, as
it expected to be able to maintain distributions, despite any trust tax that the Fund would incur. Lastly, the Fund’s
distribution level to unitholders was being funded almost entirely by its U.S. operations and since distributions that are
sourced from U.S. business earnings are not subject to the SIFT tax, the Fund benefited from a tax deduction at the U.S.
corporate entity level for interest paid to the Fund which was distributed to unitholders.
During meetings during 2018 and 2019, the Trustees again discussed the possibility of a conversion to a corporate structure.
On December 2, 2019, a Special Meeting of unitholders was held and unitholders voted overwhelmingly in favor of the
conversion to a corporate structure. Required approvals were obtained and the Fund completed the conversion to a
corporate structure effective January 1, 2020.
The principal consideration for restructuring to a corporate structure was to expand Boyd’s investor base and improve
liquidity by: (a) simplifying the organization’s capital structure and adopting one that is more generally accepted and
understood by the capital markets; and (b) removing the restriction on non-resident ownership (under the Declaration of
Trust and the Tax Act, ownership of Units by non-residents cannot exceed 49%).
Although there is some loss of tax efficiency under the corporate structure as the corporate entity, BGSI, will be required to
pay income tax at the corporate level, such amounts will not be material. In addition, as a corporation, BGSI will pay
dividends to its shareholders (as opposed to distributions on the Units under the Fund structure), which will result in
Canadian resident shareholders who hold their shares as capital property receiving more favorable tax treatment in respect of
those dividends.
The Fund is required to record income tax expense at its effective tax rate. The Fund’s effective tax rate varies due to the
fixed level of interest that is deducted from the U.S. operations and paid to the trust unitholders as distributions. This
amount of interest was approximately $10.8 million for the year ended December 31, 2019 (2018 - $10.4 million). The
Fund estimates that its basic Canadian provincial and federal tax rate is approximately 27% and its U.S. federal and state tax
rate is approximately 26% for the years ending December 31, 2019 and 2018. In forecasting future tax obligations, BGSI
anticipates an effective tax rate of approximately 26% to 27%.
25
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operations, together with cash on hand and unutilized credit available on existing credit facilities are
expected to be sufficient to meet operating requirements, capital expenditures and distributions. At December 31, 2019, the
Fund had cash, net of outstanding deposits and cheques, held on deposit in bank accounts totaling $35.5 million (December
31, 2018 - $64.5 million). The net working capital ratio (current assets divided by current liabilities) was 0.57:1 at
December 31, 2019 (December 31, 2018 – 0.81:1). Removing the impact of the adoption of IFRS 16, Leases from net
working capital, the ratio becomes 0.79:1.
At December 31, 2019, the Fund had total debt outstanding, net of cash, of $893.2 million compared to $895.0 million at
September 30, 2019, $804.3 million at June 30, 2019, $809.6 million at March 31, 2019 and $232.1 million at December 31,
2018. Debt, net of cash, increased when compared to December 31, 2018 as a result of the adoption of IFRS 16, Leases,
which resulted in the recognition of additional lease liabilities of $488.0 million on January 1, 2019, as well as draws on the
revolving credit facility and seller notes used to fund acquisitions.
Total debt, net of cash
(thousands of Canadian dollars)
Revolving credit facility
(net of financing costs)
Seller notes (1)
Obligations under finance leases
December 31,
2019
September 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
$
339,185
$
343,176
$
288,928
$
296,218
$
222,039
76,084
-
75,174
-
70,185
-
70,450
-
66,120
8,407
Total debt before lease liabilities
$
415,269
$
418,350
$
359,113
$
366,668
$
296,566
Cash
35,468
41,068
46,296
52,192
64,476
Total debt, net of cash
before lease liabilities
$
379,801
$
377,282
$
312,817
$
314,476
$
232,090
Lease liabilities
513,373
517,735
491,523
495,126
-
Total debt, net of cash
$
893,174
$
895,017
$
804,340
$
809,602
$
232,090
(1) Seller notes are loans granted to the Company by the sellers of businesses related to the acquisition of those businesses.
The following table summarizes the contractual obligations at December 31, 2019 and required payments over the next five
years:
Contractual Obligations
(thousands of Canadian dollars)
Total
Within 1
year
1 to 2
years
2 to 3
years
3 to 4
years
4 to 5
years
After 5
years
Bank indebtedness
Accounts payable and accrued
liabilities
Long-term debt
Lease liability
Purchase obligations (1)
$
-
$
-
$
-
$
-
$
-
$
-
$
-
269,769
415,269
513,373
269,769
22,122
109,559
-
15,623
96,446
-
10,077
80,627
-
348,566
61,846
-
16,403
45,218
-
2,478
119,677
-
unknown unknown unknown unknown unknown unknown
$
1,198,411
$
401,450
$
112,069
$
90,704
$
410,412
$
61,621
$
122,155
(1) S ubje c t to fulfilling c e rta in c o nditio ns s uc h a s m e e ting c o ntra c tua l purc ha s e o bliga tio ns a nd no c ha nge in c o ntro l the re pa ym e nt a m o unt wo uld be nil.
26
Operating Activities
Cash flow generated from operations, before considering working capital changes, was $294.1 million for the year ended
December 31, 2019 compared to $156.7 million in 2018. The increase was primarily due to reduced operating expenses
associated with the adoption of IFRS 16, Leases, as well as increased Adjusted EBITDA resulting from new location and
same-store sales growth.
In 2019, changes in working capital items provided net cash of $1.7 million compared with providing net cash of $34.0
million in 2018. Increases and decreases in accounts receivable, inventory, prepaid expenses, income taxes, accounts
payable and accrued liabilities are significantly influenced by timing of collections and expenditures.
Financing Activities
Cash used by financing activities totaled $40.6 million for the year ended December 31, 2019 compared to cash used by
financing activities of $22.2 million during the prior year. During 2019, cash was provided by draws of the revolving credit
facility in the amount of $182.5 million, offset by cash used to repay draws as well as long-term debt associated with seller
notes in the amount of $75.6 million and cash used to fund interest costs on long-term debt of $15.5 million. Cash used by
financing activities was impacted by the adoption of IFRS 16, Leases, which resulted in an additional $104.3 million used to
repay leases being classified as financing activities in 2019. Cash was also used to repay vehicle and equipment leases
previously classified as finance leases in the amount of $4.3 million and to pay distributions to unitholders and dividends to
Class A common shareholders totaling $10.9 million. In the first quarter of 2019, the Company completed the call option
transaction and paid $13.2 million to acquire the non-controlling interest in Glass America LLC. During 2018, cash was
provided by draws on the revolving credit facility in the amount of $67.8 million, offset by cash used to repay draws as well
as long-term debt associated with seller notes in the amount of $66.1 million and cash used to fund interest costs on long-
term debt of $9.7 million. In 2018, cash was also used to repay finance leases in the amount of $4.4 million and to pay
distributions to unitholders and dividends to Class A common shareholders totaling $10.5 million.
Debt Financing
The Company has a credit facility agreement expiring in May 2022 which consists of a revolving credit facility of $400
million U.S. with an accordion feature which can increase the facility to a maximum of $450 million U.S. The facility is with
a syndicate of Canadian and U.S. banks and is secured by the shares and assets of the Company as well as by guarantees of
the Fund and BGHI. The interest rate is based on a pricing grid of the Fund’s ratio of total funded debt to Adjusted EBITDA
as determined under the credit agreement. The Company can draw the facility in either the U.S. or in Canada, in either U.S.
or Canadian dollars. The Company can make draws in tranches as required. Tranches bear interest only and are not
repayable until the maturity date but can be voluntarily repaid at any time. The Company has the ability to choose the base
interest rate between Prime, Bankers Acceptances (“BA”) or London Inter Bank Offer Rate (“LIBOR”). The total syndicated
facility includes a swing line up to a maximum of $5.0 million U.S. in Canada and $20.0 million U.S. in the U.S. At
December 31, 2019, the Company has drawn $158.3 million U.S. (December 31, 2018 - $61.3 million U.S.) and $134.0
million Canadian (December 31, 2018 - $139.0 million) on the revolving credit facility.
Under the revolving credit facility, Boyd is subject to certain financial covenants which must be maintained to avoid
acceleration of the termination of the credit agreement. The financial covenants require the Fund to maintain a total debt
excluding property leases to Adjusted EBITDA ratio of less than 4.25; a senior debt excluding property leases to Adjusted
EBITDA ratio of less than 3.25; and a fixed charge coverage ratio of greater than 1.03. For three quarters following a
material acquisition, the total debt excluding property leases to Adjusted EBITDA ratio may be increased to less than 4.75,
the senior debt excluding property leases to Adjusted EBITDA ratio may be increased to less than 3.75.
On March 17, 2020, the Company entered into a third amendment of its credit agreement, increasing the revolving credit
facility to $550 million U.S., with an accordion feature which can increase the facility to a maximum of $825 million U.S.
The revolving credit facility is accompanied with a new seven-year fixed-rate Term Loan A in the amount of $125 million
U.S. at an interest rate of 3.455%. The facility is with a syndicate of Canadian and U.S. banks and is secured by the shares
and assets of the Company as well as guarantees by BGSI, BGIF, BGHI, and subsidiaries. The interest rate for draws on the
revolver are based on a pricing grid of BGSI’s ratio of total funded debt to EBITDA as determined under the credit
agreement. The Company can draw the facility in either the U.S. or in Canada, in either U.S. or Canadian dollars. The
Company can make draws in tranches as required. Tranches bear interest only and are not repayable until the maturity date
but can be voluntarily repaid at any time. The Company has the ability to choose the base interest rate between Prime,
Bankers Acceptances (“BA”), U.S. Prime or London Inter Bank Offer Rate (“LIBOR”). The total syndicated facility
27
includes a swing line up to a maximum of $10.0 million U.S. in Canada and $30.0 million U.S. in the U.S.
Under the revolving credit facility, the Company is subject to certain financial covenants which must be maintained to avoid
acceleration of the termination of the credit agreement. The financial covenants require BGSI to maintain a senior debt to
EBITDA ratio of less than 3.50 and an interest coverage ratio of greater than 2.75. For four quarters following a material
acquisition, the senior debt to EBITDA ratio may be increased to less than 4.00.
The Company supplements its debt financing by negotiating with sellers in certain acquisitions to provide financing to the
Company in the form of term notes. The notes payable to sellers are typically at favourable interest rates and for terms of
one to 15 years. This source of financing is another means of supporting the Fund’s growth, at a relatively low cost. During
2019, the Fund entered into 22 new seller notes for an aggregate amount of $30.8 million. The Company repaid seller notes
in 2019 totaling approximately $16.1 million (2018 - $14.7 million).
The Fund has traditionally used leases to finance a portion of both its maintenance and expansion capital expenditures. The
Fund expects to continue to use this source of financing where available at competitive interest rates and terms, although this
financing also impacts the total leverage capacity covenants under its debt facility. During 2019, $2.7 million (2018 - $2.8
million) of expenditures for new equipment, technology infrastructure and vehicles were financed through leases, which
have been included within right of use assets and lease liabilities.
The Company recognized lease liabilities on property leases of $479.6 million at January 1, 2019 and additional property
leases of $129.3 million during 2019, based on the adoption of IFRS 16, Leases. Cash used by financing activities was
impacted by the adoption of IFRS 16, Leases, which resulted in an additional $104.3 million used to repay property leases,
consisting of $82.1 million in principal repayments and $22.2 million in finance costs during 2019. These payments were
previously classified as operating expenses and included in cash flows from operating activities.
Unitholders’ Capital
On January 2, 2020, BGSI announced the completion of the conversion of the Fund from an income trust to a public
corporation, pursuant to the plan of arrangement under the Canada Business Corporations Act. As a result of the
Arrangement, Fund unitholders and Boyd Group Holdings Inc. (“BGHI”) Class A common shareholders received one BGSI
common share in exchange for each Fund unit and BGHI Class A common share held by them..
During 2019, the Fund cancelled 2,436 Fund units held by a subsidiary without payment of any consideration.
On November 25, 2019, the Fund completed the settlement of the unit options issued on January 2, 2010. As a result of the
settlement, 150,000 units were issued at an exercise price of $5.41. The fair value of the unit options at settlement was
$28.6 million.
On February 28, 2019, the Fund acquired Carubba Collision. Funding for the transaction included the issuance of 45,371 units
to the sellers at a unit price of $122.05.
On November 26, 2018, the Fund completed the settlement of the unit options issued on January 2, 2009. As a result of the
settlement, 150,000 units were issued at an exercise price of $3.14. The fair value of the unit options at settlement was
$15.4 million.
On January 2, 2018, the Fund completed the settlement of the unit options issued on January 2, 2008. As a result of the
settlement, 150,000 units were issued at an exercise price of $2.70. The fair value of the unit options at settlement was
$14.7 million.
Until December 31, 2019, a unitholder was entitled to request the redemption of units at any time, and the Fund was
obligated to redeem those units, subject to a cash redemption maximum of $25,000 for any one month. The redemption
price was determined as the lower of 90% of the market price during the 10 trading day period commencing immediately
after the date of the redemption or 100% of the closing market price on the date of redemption. No amounts were redeemed
in either 2019 or 2018.
Until December 31, 2019, a Class A common shareholder of BGHI could exchange Class A common shares for units of the
Fund upon request. The retraction of Class A common shares was achieved by BGHI issuing Class B common shares to the
Fund in exchange for units of the Fund, and the units so received being delivered to the Class A shareholder requesting the
28
retraction. For the year ended December 31, 2019, BGHI received requests and retracted 5,971 (2018 – 9,611) Class A
common shares, issued 5,971 (2018 – 9,611) Class B common shares to the Fund and received 5,971 (2018 – 9,611) units of
the Fund as consideration, which were delivered to the Class A shareholders in respect of the retractions.
Until December 31, 2019, the Fund sold the Class B shares to the Company in exchange for Notes and Class I shares to fund
future distributions on the Trust units. The exchange value was equivalent to the unit value provided to the Class A
common shareholder.
Until December 31, 2019, the holders of the Class A common shares received cash dividends on a monthly basis at a rate
equivalent to the monthly cash distribution paid to unitholders of the Fund.
Investing Activities
Cash used in investing activities totaled $282.2 million for the year ended December 31, 2019, compared to $156.0 million
used in the prior year. The investing activity in both periods related primarily to new location growth that occurred during
these periods.
Acquisitions and Development of Businesses
Since the beginning of 2019, the Company has added 126 collision locations as follows:
29
Location
Union City, GA
Cayce, SC
Peoria, AZ
Date
January 1, 2019
January 9, 2019
January 11, 2019
February 28, 2019 New York (18 locations)
Michigan (11 locations)
March 8, 2019
Guelph, ON
March 15, 2019
Richland, WA
March 18, 2019
Bullhead City, AZ
March 25, 2019
Oregon & Washington (7 locations)
March 29, 2019
New York (3 locations)
April 15, 2019
Holly Springs, GA
April 18, 2019
Trussville, AL
May 14, 2019
Nevada & Arizona (4 locations)
May 14, 2019
Louisville, KY (2 locations)
June 7, 2019
Watauga, TX
June 10, 2019
Austin, TX
June 24, 2019
Rochester, NY (16 locations)
July 19, 2019
Steinbach, MB
July 29, 2019
Destin, FL
July 31, 2019
Ottawa, ON
August 1, 2019
August 19, 2019 Moody & Anniston, AL (2 locations)
September 3, 2019 Lincolnwood, IL
September 3, 2019 Pasco, WA
September 6, 2019 Evansville, IN (4 locations)
September 13, 2019 Columbia, Irmo & Lexington, SC (3 locations)
September 16, 2019 Lindenhurst, IL
September 30, 2019 East Peoria, IL
September 30, 2019 Port Orchard & Gig Harbor, WA (2 locations)
October 8, 2019
November 1, 2019 Huntsville, AL
November 1, 2019
Pelham, AL
November 15, 2019 Dayton, FL
November 20, 2019 Roswell/Jackson, GA
November 22, 2019 Nashville, TN
Tacoma, WA
December 2, 2019
Los Angelas, CA (6 locations)
December 6, 2019
December 6, 2019
Los Angeles, CA (3 locations)
December 10, 2019 Gallatin, TN
December 13, 2019 Utica, MI
December 13, 2019 Kingston, ON
Parksville, BC
January 2, 2020
Williamsville, NY
January 6, 2020
Littleton, CO
January 17, 2020
Indiana & Michigan (14 locations)
March 6, 2020
Waukesha, WI
March 13, 2020
Gonzales, LA
Previously operated as
n/a intake center
Bob Johnson's Body Shop
Lake Pleasant Collision Center
Carubba Collision
Dusty's, Whitney's and Wright Brothers Collision
Majestic Collision
Atomic Auto Body and Detail
Gordy's Auto Body
Beaverton Auto Rebuilders, Inc.
Carubba Collision
n/a intake center
Myers Auto Collision Repair, Inc.
New Look Collision Center
Bill Etscorn & Sons Auto & Collision Center
PlanetPaint Collision Center
Aus-Tex Body & Frame
Nu-Look Collision Center
Stony Brook Collision Center
n/a start-up
n/a start-up
Auto Collision Experts
n/a intake center
n/a intake center
Lefler Collision & Glass
Baker Collision Express
n/a intake center
n/a start-up
Rainier Collision
Precision Collision Center
Quality Body Shop
Oak Mountain Body Shop
n/a start-up
n/a intake center
Whaley Body Shop
Salatino's Collision Center
International Auto Crafters
Centre Pointe Collision Center
n/a intake center
Macomb Collision Tire & Service
Limestone Auto Body
Crashpad Collision Services
n/a intake center
n/a start-up
Vision Collision
Nagel Auto Body
The Company completed the acquisition or start-up of 81 locations during 2018.
30
Start-ups
In 2019, the Company commenced operations in four new start-up collision repair facilities. The total combined investment
in leaseholds and equipment for these facilities was approximately $2.4 million. The Company commenced operations in
six new start-up collision repair facilities in 2018 with a combined investment of approximately $2.7 million. The Company
anticipates it will use similar start-up strategies as part of its continued growth in the future.
Capital Expenditures
Although most of Boyd’s repair facilities are leased, funds are required to ensure facilities are properly repaired and
maintained to ensure the Company’s physical appearance communicates Boyd’s standard of professional service and
quality. The Company’s need to maintain its facilities and upgrade or replace equipment, signage, computers, software and
vehicles forms part of the annual cash requirements of the business. The Company manages these expenditures by annually
reviewing and determining its capital budget needs and then authorizing major expenditures throughout the year based upon
individual business cases. Excluding expenditures related to acquisition and development and those funded through leases,
the Company spent approximately $35.9 million or 1.6% of sales on capital expenditures during 2019, compared to $26.7
million or 1.4% of sales during 2018.
LEGAL PROCEEDINGS
Neither the Fund, Boyd nor any of its subsidiaries are involved in any legal proceedings which are material in any respect.
RELATED PARTY TRANSACTIONS
In certain circumstances the Company has entered into property lease arrangements where an employee of the Company is
the landlord. In most cases, the Company assumes these property lease arrangements initially in connection with an
acquisition. The property leases for these locations do not contain any significant non-standard terms and conditions that
would not normally exist in an arm’s length relationship, and the Fund has determined that the terms and conditions of the
leases are representative of fair market rent values.
31
The following are the lease payment amounts for facilities under lease with related parties (in thousands of Canadian
dollars):
Landlord
Affiliated Person(s)
Location
Lease December 31, December 31,
Expires
2018
2019
Kard Properties Ltd.
Desmond D'Silva
Richmond Hill, ON 2035
$
192
$
188
Kard Properties Ltd.
Desmond D'Silva
Ottawa, ON
Kard Properties Ltd.
Desmond D'Silva
Ajax, ON
Kard Properties Ltd.
Desmond D'Silva
Mississauga, ON
Kard Properties Ltd.
Desmond D'Silva
Oakville, ON
D'Silva Real Estate
Holdings Inc.
Desmond D'Silva
Barrie, ON
2035
2036
2032
2035
2032
Gerber Building No. 1
Ptnrp
Eddie Cheskis,
& Tim O'Day
South Elgin, IL
2023
Kard Properties Ltd.
Desmond D'Silva
Missisauga, ON
Kard Properties Ltd.
Desmond D'Silva
Hamilton,ON
Kard Properties Ltd.
Desmond D'Silva
Missisauga, ON
Kard Properties Ltd.
Desmond D'Silva
Missisauga, ON
Kard Properties Ltd.
Desmond D'Silva
Missisauga, ON
Kard Properties Ltd.
Desmond D'Silva
Scarborough, ON
Kard Properties Ltd.
Desmond D'Silva
Toronto, ON
Kard Properties Ltd.
Desmond D'Silva
Brampton, ON
Kard Properties Ltd.
Desmond D'Silva
Hamilton, ON
Kard Properties Ltd.
Desmond D'Silva
Woodstock, ON
Kard Properties Ltd.
Desmond D'Silva
Etobicoke, ON
Kard Properties Ltd.
Desmond D'Silva
Milton, ON
Kard Properties Ltd.
Desmond D'Silva
Brantford, ON
Kard Properties Ltd.
Desmond D'Silva
Ottawa, ON
Kard Properties Ltd.
Desmond D'Silva
Newmarket, ON
2035
2036
2035
2035
2036
2036
2023
2036
2035
2037
2037
2035
2020
2036
2024
263
88
50
192
430
127
107
64
51
315
102
89
50
102
105
69
217
115
113
217
45
257
87
50
188
420
122
105
62
50
309
100
87
50
100
103
67
213
113
83
212
-
The Fund’s subsidiary, The Boyd Group Inc., has declared dividends totaling $58 thousand (2018 – $57 thousand), through
BGHI to 4612094 Manitoba Inc., an entity controlled by a senior officer of the Fund. At December 31, 2019, 4612094
Manitoba Inc. owned 107,329 (2018 – 107,329) Class A common shares and 30,000,000 (2018 – 30,000,000) voting
common shares of BGHI, representing approximately 30% of the total voting shares of BGHI.
On September 29, 2017, Gerber Glass LLC, a subsidiary of the Fund, exercised its’ call option, as provided for in the GA
Company Agreement, to acquire the 30% non-controlling interest in Glass America LLC held by GAJV Holdings Inc. The
exercise price had been calculated in accordance with the terms of the GA Company Agreement. GAJV Holdings Inc. did
not agree with the calculation of the exercise price, including certain material changes, and the matter was submitted to
binding arbitration in accordance with the terms of the GA Company Agreement. On January 31, 2019, the call option
transaction was completed, and Gerber Glass LLC acquired the 30% non-controlling interest in Glass America LLC.
32
On November 25, 2019, the Fund completed the settlement of the unit options issued on January 2, 2010. As a result of the
settlement 150,000 units were issued at an exercise price of $5.41. The fair value of the unit options at settlement was $28.6
million.
On November 26, 2018, the Fund completed the settlement of the unit options issued on January 2, 2009. As a result of the
settlement 150,000 units were issued at an exercise price of $3.14. The fair value of the unit options at settlement was $15.4
million.
On January 2, 2018, the Fund completed the settlement of the unit options issued on January 2, 2008. As a result of the
settlement 150,000 units were issued at an exercise price of $2.70. The fair value of the unit options at settlement was $14.7
million.
FOURTH QUARTER
Sales for the three months ended December 31, 2019 totaled $586.0 million, an increase of $90.9 million or 18.3%
compared to the same period in 2018. Overall same-store sales excluding foreign exchange decreased $1.0 million, or 0.2%
in the fourth quarter of 2019 when compared to the fourth quarter of 2018 and decreased a further $0.3 million due to the
translation of same-store sales at a lower U.S. dollar exchange rate. Same-store sales excluding foreign exchange decreased
0.2% on a days adjusted basis, recognizing the same number of selling and production days in the U.S. and Canada in the
fourth quarter of 2019 and 2018. The same-store sales decline was primarily the result of same-store sales declines in
Canada due to a combination of economic challenges in Alberta and technician capacity constraints in other Canadian
markets, along with continuing technician capacity constraints in many U.S. markets that limited U.S. same-store sales
growth. Sales growth of $93.7 million was attributable to incremental sales generated from 147 new locations. The closure
of under-performing facilities accounted for a decrease in sales of $1.6 million.
Gross Profit for the fourth quarter increased to 45.0% from 44.3% in the same period in 2018. The gross margin percentage
increase is due to improved parts and labour margins and a higher mix of retail glass sales. Certain DRP performance
pricing arrangements have recently changed in a way that is resulting in slightly greater pricing variability. While not a
factor in this comparison, these arrangements are resulting in slightly greater variability quarter to quarter. The gross margin
percentage is within normal ranges for mix and margin changes period to period.
Adjusted EBITDA for the fourth quarter of 2019 totaled $56.4 million or 9.6% of sales compared to Adjusted EBITDA of
$47.6 million or 9.6% of sales in the same period of the prior year. The $8.8 million increase was primarily the result of
incremental EBITDA contribution from new locations and same-store sales growth, offset by a higher operating expense
ratio. The higher operating expense ratio is primarily the result of increased salaries and benefits. Adjusted EBITDA on a
post IFRS 16, Leases basis was $84.1 million or 14.3% of sales for the three months ended December 31, 2019.
Current and Deferred Income Tax Expense of $7.6 million in 2019 compared to an expense of $6.8 million in 2018. Income
tax expense continues to be impacted by permanent differences such as mark-to-market adjustments which impact the tax
computed on accounting income. Adjusting for the impact of the adoption of IFRS 16, Leases on the three months ended
December 31, 2019, income tax expense would have increased $0.4 million.
Net Earnings for the fourth quarter was $14.3 million or $0.72 per fully diluted unit compared to net earnings of $29.9
million or $1.19 per fully diluted unit for the same period in the prior year. The net earnings amount in the fourth quarter of
2019 was negatively impacted by fair value adjustments to financial instruments of $8.8 million, which were primarily due
to the increase in unit price during the period, and acquisition and transaction costs of $0.7 million (net of tax). The net
earnings amount in the fourth quarter of 2019 was also negatively impacted by the adoption of IFRS 16, Leases, which
reduced net earnings by $1.1 million (net of tax). After adjusting for fair value and other unusual items, Adjusted net
earnings1 for the fourth quarter of 2019 was $24.9 million, or 4.2% of sales. This compares to Adjusted net earnings of
$23.2 million or 4.7% of sales in the fourth quarter of 2018. The increase in the Adjusted net earnings for the period is
primarily the result of the contribution of new location and same-store sales growth. Adjusted net earnings was impacted by
increased finance costs based on additional borrowing under the credit facility to fund acquisitions.
1 As defined in the non-GAAP financial measures section of the MD&A.
33
FINANCIAL INSTRUMENTS
In order to limit the variability of earnings due to the foreign exchange translation exposure on the income and expenses of
the U.S. operations, the Company may at times enter into foreign exchange contracts. These contracts are marked to market
monthly with unrealized gains and losses included in earnings. The Company did not have any such contract in place during
2019 or 2018.
Transactional foreign currency risk also exists in limited circumstances where U.S. denominated cash is received in Canada.
The Company monitors U.S. denominated cash flows to be received in Canada and evaluates whether to use forward foreign
exchange contracts. No such foreign exchange contracts were used during 2019 or 2018.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements that present fairly the financial position, financial condition and results of operations
requires that the Fund make estimates and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the balance sheet date and reported amounts of revenues and expenses during
the reporting period. Actual results could differ materially from these estimates. The following is a summary of critical
accounting estimates and assumptions that the Fund believes could materially impact its financial position, financial
condition or results of operations:
Impairment of Goodwill and Intangible Assets
When testing goodwill and intangibles for impairment, the Fund uses the recorded historical cash flows of the cash
generating unit (“CGU”) or group of CGU’s to which the asset relate for the most recent two years, and an estimate or
forecast of cash flows for the next year to establish an estimate of the Fund’s future cash flows. An estimate of the
recoverable amount is then calculated as the higher of an asset’s fair value less costs to sell and value in use (being the
present value of the expected future cash flows of the relevant asset or CGU). An impairment loss is recognized for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The methods used to value intangible assets
and goodwill require critical estimates to be made regarding the future cash flows and useful lives of the intangible assets.
Goodwill and intangible asset impairments, when recognized, are recorded as a separate charge to earnings, and could
materially impact the operating results of the Fund for any particular accounting period.
Impairment of Other Long-lived Assets
The Fund assesses the recoverability of its long-lived assets, other than goodwill and intangibles, after considering the
potential impairment indicated by such factors as business and market trends, the Fund’s ability to transfer the assets, future
prospects, current market value and other economic factors. In performing its review of recoverability, management
estimates the future cash flows expected to result from the use of the assets and their potential disposition. If the discounted
sum of the expected future cash flows is less than the carrying value of the assets generating those cash flows, an impairment
loss would be recognized based on the excess of the carrying amounts of the assets over their estimated recoverable value.
The underlying estimates for cash flows include estimates for future sales, gross margin rates and operating expenses.
Changes which may impact these estimates include, but are not limited to, business risks and uncertainties and economic
conditions. To the extent that management’s estimates are not realized, future assessments could result in impairment
charges that may have a material impact on the Fund’s consolidated financial statements.
Fair Value of Financial Instruments
The Fund has applied discounted cash flow methods to establish the fair value of certain financial liabilities recorded on the
statement of financial position, as well as disclosed in the notes to the financial statements. The Fund also establishes mark-
to-market valuations for derivative instruments, which are assumed to represent the current fair value of these instruments.
These valuations rely on assumptions regarding future interest and exchange rates as well as other economic indicators,
which at the time of establishing the fair value for disclosure, have a high degree of uncertainty. Unrealized gains or losses
on these derivative financial instruments may not be realized as markets change.
34
Income Taxes
The Fund is subject to income tax in several jurisdictions and estimates are used to determine the provision for income taxes.
During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is
uncertain. As a result, the Fund recognizes tax liabilities based on estimates of whether additional taxes and interest will be
due. Uncertain tax liabilities may be recognized when, despite the Fund’s belief that its tax return positions are supportable,
the Fund believes that certain positions are likely to be challenged and may not be fully sustained upon review by tax
authorities. The Fund believes that its accruals for tax liabilities are adequate for all open audit years based on its
assessment of many factors including past experience and interpretations of tax law. To the extent that the final tax outcome
is different than the amounts recorded, such differences will impact income tax expense in the period in which such
determination is made.
CHANGES IN ACCOUNTING POLICIES
The Fund has adopted IFRS 15 Revenue from Contracts with Customers on January 1, 2018 using the modified retrospective
approach, which recognizes the cumulative effect of initial application as an adjustment to the opening balance of retained
earnings (deficit) at January 1, 2018 without restatement of comparatives. Beginning January 1, 2018, the Fund recognizes
revenue upon completion and delivery of the repair to the customer, which has been determined to be the performance
obligation that is distinct and the point at which control of the asset passes to the customer. Revenue is measured at the fair
value of the consideration received. Previously, revenue was recognized to the extent that it was probable that the economic
benefits would flow to the Fund, the sales price was fixed or determinable and collectability was reasonably assured. As a
result, revenue that met the revenue recognition criteria under the prevailing IAS 18 was recognized in the year ended
December 31, 2017. The same revenue, however, would not have met the recognition criteria under IFRS 15. As such, the
impact on the consolidated financial statements as at January 1, 2018 is a decrease to opening retained earnings (deficit) of
$6.7 million.
The Fund has adopted IFRS 9 Financial Instruments on January 1, 2018 using the modified retrospective approach. The
adoption of IFRS 9 did not have a material impact on the Fund’s consolidated financial statements.
The Fund has adopted the narrow-scope amendments to IFRS 2, Share-based Payment on January 1, 2018. The adoption
of IFRS 2 did not have a material impact on the Fund’s consolidated financial statements.
IFRS 16, Leases, was issued by the IASB on January 13, 2016 and replaced the guidance found in IAS 17, Leases and
related interpretations. The new standard has brought most leases onto the statement of financial position through
recognition of right of use assets and lease liabilities. IFRS 16 establishes principles for recognition, measurement,
presentation and disclosure of leases.
On January 1, 2019, the Fund adopted IFRS 16, Leases. The adoption of this standard had a significant impact on the
consolidated statement of financial position, through recognition of additional right of use assets of $452.9 million
and lease liabilities of $488.0 million.
35
The impact of IFRS 16 on the consolidated statements of earnings and cash flows, and the calculation of standardized and
Adjusted distributable cash was as follows:
(thousands of Canadian dollars,
except per unit and percentage amounts)
Sales
Cost of sales
Gross profit
Operating expenses
Operating expenses %
Adjusted EBITDA ( 1)
Adjusted EBITDA %
Acquisition and transaction costs
Depreciation
Amortization of intangible assets
Fair value adjustments
Finance costs
Earnings before income taxes
Income tax expense
For the three months ended
December 31, 2019
IFRS 16
For the year ended
December 31, 2019
IFRS 16
As reported Adjustment Pre-IFRS 16 As reported Adjustment Pre-IFRS 16
$
585,966
322,249
$
-
-
$
585,966
322,249
$
2,283,325
1,246,845
$
-
-
$
2,283,325
1,246,845
263,717
179,664
30.7%
84,053
14.3%
991
35,784
6,489
8,799
10,129
21,861
7,608
-
263,717
1,036,480
-
1,036,480
27,623
(27,623)
-
(23,317)
-
-
(5,783)
1,477
384
207,287
35.4%
56,430
9.6%
991
12,467
6,489
8,799
4,346
23,338
7,992
716,608
31.4%
319,872
14.0%
4,850
132,491
22,467
28,330
38,185
93,549
29,402
104,276
(104,276)
-
(88,148)
-
-
(22,184)
6,056
1,575
820,884
36.0%
215,596
9.4%
4,850
44,343
22,467
28,330
16,001
99,605
30,977
Net earnings
$
14,253
$
1,093
$
15,346
$
64,147
$
4,481
$
68,628
Basic earnings per unit
Adjusted net earnings ( 2)
Adjusted net earnings per unit ( 3)
0.72
23,786
1.20
0.05
1,093
0.05
0.77
24,879
1.25
3.23
96,067
4.83
0.23
4,481
0.23
3.46
100,548
5.06
Cash flows from operating activities
Cash flows from financing activities
$
88,253
(38,661)
$
(27,623)
27,623
$
60,630
(11,038)
$
295,822
(40,563)
$
(104,276)
104,276
$
191,546
63,713
$
49,592
$
-
$
49,592
$
255,259
$
-
$
255,259
Standardized distributable cash
Repayments of leases
Adjusted distributable cash
$
$
$
64,021
28,518
42,604
$
(28,518)
$
(28,518)
$
-
$
35,503
$
-
$
42,604
$
$
$
221,709
108,624
140,985
$
(104,276)
(104,276)
$
$
-
$
$
$
117,433
4,348
140,985
(1) Adjusted EBITDA "as reported" was $56,430 for the three months ended December 31, 2019 and $215,596 for the year ended December 31,
2019. It is shown above as if property lease payments had not been deducted in arriving at Adjusted EBITDA, for illustrative purposes.
(2) Adjusted net earnings "as reported" was $24,879 for the three months ended December 31, 2019 and $100,548 for the year ended December
31, 2019. It is shown above as if IFRS 16 adjustments had not been made in arriving at Adjusted net earnings, for illustrative purposes.
(3) Adjusted net earnings per unit "as reported" was $1.25 for the three months ended December 31, 2019 and $5.06 for the year ended December
31, 2019. It is shown above as if IFRS 16 adjustments had not been made in arriving at Adjusted net earnings per unit, for illustrative purposes.
36
CERTIFICATION OF DISCLOSURE CONTROLS
Management’s responsibility for financial information contained in this Annual Report is described on page 51. In addition,
BGSI’s Audit Committee of the Board of Directors has reviewed this Annual Report, and the Board of Directors has
reviewed and approved this Annual Report prior to its release. BGSI is committed to providing timely, accurate and
balanced disclosure of all material information about BGSI and to providing fair and equal access to such information. As
of December 31, 2019, the Fund’s management evaluated the effectiveness of the design and operation of its disclosure
controls and procedures, as defined under the rules adopted by the Canadian securities regulatory authorities. Disclosure
controls are procedures designed to ensure that information required to be disclosed in reports filed with securities
regulatory authorities is recorded, processed, summarized and reported on a timely basis, and is accumulated and
communicated to the Fund’s management, including the CEO and the CFO, as appropriate, to allow timely decisions
regarding required disclosure.
The Fund’s management, including the CEO and the CFO, does not expect that the Fund’s disclosure controls will prevent
or detect all misstatements due to error or fraud. Because of the inherent limitations in all control systems, an evaluation of
controls can provide only reasonable, not absolute assurance, that all control issues and instances of fraud or error, if any,
within the Fund have been detected. The Fund is continually evolving and enhancing its systems of controls and procedures.
Based on the evaluation of disclosure controls, the CEO and the CFO have concluded that, subject to the inherent limitations
noted above, the Fund’s disclosure controls are effective in ensuring that material information relating to the Fund is made
known to management on a timely basis, and is fairly presented in all material respects in this Annual Report.
CERTIFICATION ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for the design and effectiveness of internal control over financial reporting in order to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with Canadian generally accepted accounting principles which incorporates International Financial
Reporting Standards for publicly accountable enterprises. The Fund’s management, including the CEO and the CFO, does
not expect that the Fund’s internal control over financial reporting will prevent or detect all misstatements due to error or
fraud. Because of the inherent limitations in all control systems, an evaluation of controls can provide only reasonable, not
absolute assurance, that all control issues and instances of fraud or error, if any, within the Fund have been detected. The
Fund is continually evolving and enhancing its systems of internal controls over financial reporting. The CEO and CFO of
the Fund have evaluated the design and effectiveness of the Fund’s internal control over financial reporting as at the end of
the period covered by the annual filings and have concluded that, subject to the inherent limitations noted above, the controls
are sufficient to provide reasonable assurance.
In addition, during the fourth quarter of 2019, there have been no changes in the Fund’s internal control over financial
reporting that have materially affected, or are reasonably likely to materially affect, the Fund’s internal control over financial
reporting.
BUSINESS RISKS AND UNCERTAINTIES
The following information is a summary of certain risk factors relating to the business of BGSI and its subsidiaries, and is
qualified in its entirety by reference to, and must be read in conjunction with, the detailed information appearing elsewhere
in this Annual Report and the documents incorporated by reference herein.
BGSI and its subsidiaries are subject to certain risks inherent in the operation of the business. BGSI and its subsidiaries
manage risk and risk exposures through a combination of management oversight, insurance, systems of internal controls and
disclosures and sound operating policies and practices.
The Board of Directors has the responsibility to identify the principal risks of BGSI’s business and ensure that appropriate
systems are in place to manage these risks. The Audit Committee has the responsibility to discuss with management BGSI's
major financial risk exposures and the steps management has taken to monitor and control such exposures, including BGSI's
risk assessment and risk management policies. In order to support these responsibilities, management has a risk and
sustainability management committee which meets on an ongoing basis to evaluate and assess BGSI’s risks.
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The process being followed by the risk and sustainability management committee is a systematic one which includes
identifying risks; analyzing the likelihood and consequence of risks; and then evaluating risks as to risk tolerance and
control effectiveness. This approach stratifies risks into four risk categories as follows:
Extreme Risks:
Immediate/ongoing action is required – involvement of senior management is required. Avoidance of
the item may be necessary if risk reduction techniques are insufficient to address the risk.
High Risks:
Risk item is significant and management responsibility should be specified and appropriate action
taken.
Moderate Risks:
Managed by specific monitoring or response procedures. Additional risk mitigation techniques could
be considered if benefits exceed the cost.
Low Risks:
Managed by routine procedures. No further action is required at this time.
Risks can be reduced by limiting the likelihood or the consequence of a particular risk. This can be achieved by adjusting
the Company’s activities, implementing additional control/monitoring processes, or insuring/hedging against certain
outcomes. Residual risk remains after mitigation and control techniques are applied to an identified risk. Awareness of the
residual risk that BGSI ultimately accepts is a key benefit of the risk management process.
The following describes the risks that are most material to BGSI’s business; however, this is not a complete list of the
potential risks BGSI faces. There may be other risks that BGSI is not aware of, or risks that are not material today that
could become material in the future.
Pandemic Risk & Economic Downturn
Disruptions in financial markets, regional economies and the world economy could be caused by the pandemic outbreak of a
contagious illness, such as the recent COVID-19 pandemic. In turn, such disruption could result in a decrease in demand for
the services the Company provides as well as interruptions to the supply chain, including temporary closure of supplier
facilities. A significant outbreak of contagious disease, such as the recent COVID-19 pandemic, could result in a
widespread health crisis that could adversely affect the economies and financial markets of many regions and countries.
There can be no assurance that a disruption in financial markets, regional economies and the world economy would not
negatively affect the financial performance of the Company.
Historically the auto collision repair industry has proven to be resilient to typical economic downturns along with the
accompanying unemployment, and while the Company works to mitigate the effect of economic downturn on its operations,
economic conditions, which are beyond the Company’s control, could lead to a decrease in accident repair claims volumes
due to fewer miles driven or due to vehicle owners being less inclined to have their vehicles repaired. It is difficult to predict
the severity and the duration of any decrease in claims volumes resulting from an economic downturn and the accompanying
unemployment and what affect it may have on the auto collision repair industry, in general, and the financial performance of
the Company in particular. There can be no assurance that an economic downturn would not negatively affect the financial
performance of the Company.
Operational Performance
In order to compete in the market place, the Company must consistently meet the operational performance metrics expected
by its insurance company clients and its customers. Failing to deliver on metrics such as cycle time, quality of repair,
customer satisfaction and cost of repair can, over time, result in reductions to pricing, repair volumes, or both. The
Company has implemented processes as well as measuring and monitoring systems to assist it in delivering on these key
metrics. However, there can be no assurance that the Company will be able to continue to deliver on these metrics or that
the metrics themselves will not change in the future.
Acquisition Risk
The Company plans to continue to increase revenues and earnings through the acquisition of additional collision repair
facilities and other businesses. The Company follows a detailed process of due diligence and approvals to limit the
possibility of acquiring a non-performing location or business. However, there can be no assurance that the Company will
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be able to find suitable acquisition targets at acceptable pricing levels without incurring cost overruns, or that the locations
acquired will achieve sales and profitability levels to justify the Company’s investment.
Boyd views the United States and Canada as having significant potential for further expansion of its business. There can be
no assurance that any market for the Company’s services and products will develop either at the local, regional or national
level. Economic instability, laws and regulations, increasing acquisition valuations and the presence of competition in all or
certain jurisdictions may limit the Company’s ability to successfully expand operations.
The Company has grown rapidly through multi-location acquisitions as well as single location growth opportunities. Rapid
growth can put a strain on managerial, operational, financial, human and other resources. Risks related to rapid growth
include administrative and operational challenges such as the management of an expanded number of locations, the
assimilation of financial reporting systems, technology and other systems of acquired companies, increased pressure on
senior management and increased demand on systems and internal controls. The ability of the Company to manage its
operations and expansion effectively depends on the continued development and implementation of plans, systems and
controls that meet its operational, financial and management needs. If Boyd is unable to continue to develop and implement
these plans, systems or controls or otherwise manage its operations and growth effectively, the Company will be unable to
maintain or increase margins or achieve sustained profitability, and the business could be harmed.
A key element of the Company’s strategy is to successfully integrate acquired businesses in order to sustain and enhance
profitability. There can be no assurance that the Company will be able to profitably integrate and manage additional repair
facilities. Successful integration can depend upon a number of factors, including the ability to maintain and grow DRP
relationships, the ability to retain and motivate certain key management and staff, retaining and leveraging client and
supplier relationships and implementing standardized procedures and best practices. In the event that any significant
acquisition cannot be successfully integrated into Boyd’s operations or performs below expectations, the business could be
materially and adversely affected.
To the extent that the prior owners of businesses acquired by Boyd failed to comply with or otherwise violated applicable
laws, the Company, as the successor owner, may be financially responsible for these violations and any associated
undisclosed liability. The Company seeks, through systematic investigation and due diligence, and through indemnification
by former owners, to minimize the risk of material undisclosed liabilities associated with acquisitions. The discovery of any
material liabilities, including but not limited to tax, legal and environmental liabilities, could have a material adverse effect
on the Company’s business, financial condition and future prospects.
Employee Relations and Staffing
Boyd currently employs approximately 9,922 people, of which 1,513 are in Canada and 8,409 are in the U.S. The current
work force is not unionized, except for approximately 31 employees located in the U.S. who are subject to collective
bargaining agreements. The automobile collision repair industry typically experiences high employee turnover rates. A
shortage of qualified employees can impact the volume and pace at which collision repair shops can fix damaged vehicles.
Although the Company believes that it is on good terms with its employees, there are no assurances that a disruption in
service would not occur as a result of employee unrest or employee turnover. The collision repair industry is experiencing
significant competition for talent, and, in particular, a limited pool of qualified technicians. There is no guarantee that a
significant work disruption or the inability to maintain, replace or grow staff levels would not have a material effect on the
Company.
Attracting, training, developing and retaining employees at all levels of the organization is required to effectively manage
Boyd’s operations. The Company has rolled out various retention and recruitment initiatives to mitigate this risk. Failure to
attract, train, develop and retain employees at all levels of the organization could lead to a lack of knowledge, skills and
experience required to effectively manage the business and could have a material adverse effect on the Company’s business,
financial condition and future performance.
The outbreak of a contagious illness, such as the recent COVID-19 pandemic could disrupt staffing and impact the volume
and pace at which collision repair shops can fix damaged vehicles. Such disruption could result in temporary closure of
collision repair facilities. A significant outbreak of contagious disease, such as the recent COVID-19 pandemic, could result
in a widespread health crisis that could adversely affect the financial performance of the Company.
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Brand Management and Reputation
The Company’s success is impacted by its ability to protect, maintain and enhance the value of its brands and reputation.
Brand value and reputation can be damaged by isolated incidents, particularly if the incident receives considerable publicity
or if it draws litigation. Incidents may occur as a result of events beyond the Company’s control or may be isolated to
actions that occur in one particular location. Demand for the Company’s services could diminish significantly if an incident
or other matter damages its brand or erodes the confidence of its insurance company clients or directly with the vehicle
owners themselves. With the advent of the Internet and the evolution of social media there is an increased ability for
individuals to adversely affect the brand and reputation of the Company. There can be no assurance that past or future
incidents will not negatively affect the Company’s brand or reputation.
Market Environment Change
The collision repair industry is subject to continual change in terms of regulations, repair processes and equipment,
technology and changes in the strategic direction of clients, suppliers and competitors. The Company endeavors to stay
abreast of developments and preferences in the industry and make strategic decisions to manage through these changes and
potential disruptions to the traditional business model. In certain situations, the Company is involved in leading change by
anticipating or developing new methods to address changing market needs. The Company however, may not be able to
correctly anticipate the need for change, may not effectively implement changes, or may be required to increase spending on
capital equipment to maintain or improve its relative position with competitors. There can be no assurance that market
environment changes will not occur that could negatively affect the financial performance of the Company.
Reliance on Technology
As is the case with most businesses in today’s environment, there is a risk associated with Boyd’s reliance on computerized
operational and reporting systems. Boyd makes reasonable efforts to ensure that back-up systems and redundancies are in
place and functioning appropriately. Boyd has disaster recovery programs to protect against significant system failures.
Although a computer system failure would not be expected to critically damage the Company in the long term, there can be
no assurance that a computer system crash or like event would not have a material impact on its financial results.
Reliance on technology in order to gain or maintain competitive advantage is becoming more significant and therefore the
Company is faced with determining the appropriate level of investment in new technology in order to be competitive. There
can be no assurance that the Company will correctly identify or successfully implement the appropriate technologies for its
operations.
Increased reliance on computerized operational and reporting systems also results in increased cyber security risk, including
potential unauthorized access to customer, supplier and employee sensitive information, corruption or loss of data and
release of sensitive or confidential information. Disruptions due to cyber security incidents could adversely affect the
business, results of operations and financial condition of the Company. Cyber security incidents could result in operational
delays, disruption to work flow and reputational harm. There can be no assurance that Boyd will be able to anticipate,
prevent or mitigate rapidly evolving types of cyber-attacks.
Foreign Currency Risk
In the past, the Company has financed acquisitions of U.S. businesses in part by making U.S. denominated loans available
under its credit facilities that could then be serviced and repaid from anticipated future U.S. earnings streams. Although this
natural hedging strategy is partially effective in mitigating future foreign currency risks, a substantial portion of Boyd’s
revenue and cash flow are now, and are expected to continue to be, generated in U.S. dollars. Fluctuations in exchange rates
between the Canadian dollar and the U.S. currency may have a material adverse effect on the Company’s reported earnings
and cash flows and its ability to make future Canadian dollar cash dividends. Fluctuations in the exchange rates between the
Canadian dollar and the U.S. currency may also have a material adverse effect on BGSI’s share price.
There can be no assurance that fluctuations in the U.S dollar relative to the Canadian dollar can be hedged effectively for
long periods of time and there can be no assurances given that any currency hedges or partial hedges in place would remain
effective in the future.
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Loss of Key Customers
A high percentage of the Company’s revenues are derived from insurance companies. Over the past 25+ years, many
private insurance companies have implemented customer referral arrangements known as Direct Repair Programs (DRP’s)
with collision repair operators who have been recognized as consistent high quality, performance based repairers in the
industry. The Company’s ability to continue to grow its business, as well as maintain existing business volume and pricing,
is largely reliant on its ability to maintain these DRP relationships. The Company continues to develop and monitor these
relationships through ongoing measurement of the success factors considered critical by insurance clients. The loss of any
existing material DRP relationship, or a material component of a significant DRP relationship, could have a material adverse
effect on Boyd’s operations and business prospects. Of the top five non-government owned insurance companies that the
Company deals with, which in aggregate account for approximately 44% (2018 – 40%) of total sales, one insurance
company represents approximately 15% (2018 – 13%) of the Company’s total sales, while a second insurance company
represents approximately 10% (2018 – 11%).
DRP relationships are governed by agreements that are usually cancellable upon short notice. These relationships can
change quickly, both in terms of pricing and volumes, depending upon collision repair shop performance, cycle time, cost of
repair, customer satisfaction, competition, insurance company management, program changes and general economic
activity. To mitigate this risk, management fosters close working relationships with its insurance company clients and
customers and the Company continually seeks to diversify and grow its client base both in Canada and the U.S. There can
be no assurance given that relationships with insurance company clients will not change in the future, which could impair
Boyd’s revenues and result in a material adverse effect on the Company’s business.
Decline in Number of Insurance Claims
The automobile collision repair industry is dependent on the number of accidents which occur and, for the most part,
become repairable insurance claims. The volume of accidents and related insurance claims can be significantly impacted by
technological disruption and changes in technology such as ride sharing, collision avoidance systems, driverless vehicles and
other safety improvements made to vehicles. Other changes which have and can continue to affect insurance claim volumes
include, but are not limited to, weather, general economic conditions, unemployment rates, changing demographics, vehicle
miles driven, new vehicle production, insurance policy deductibles, auto insurance premiums, photo radar and graduated
licensing. In addition, repairable claims volumes have been and can continue to be impacted by an increased number of
non-repairable claims or total loss. Reduced travel due to the outbreak of a contagious illness, such as the recent COVID-19
pandemic, could negatively impact claim volumes. There can be no assurance that a significant decline in insurance claims
will not occur, which could impair Boyd’s revenues and result in a material adverse effect on the Company’s business.
Margin Pressure and Sales Mix Changes
The Company’s costs to repair vehicles, including the cost of parts, materials and labour are market driven and can fluctuate.
Increasing vehicle complexity due to advances in technology may also increase the cost associated with vehicle repair. The
Company is not always able to pass these cost increases on to end users in the form of higher selling prices to its customers
and/or its insurance company clients. As a result, there can be no assurance that increases in the costs to repair vehicles will
ultimately be recoverable from its insurance company clients and customers. While negotiations with insurance companies
and other influencing factors over time can result in selling price increases, the timing and extent of such increases is not
determinable. In addition, some DRP relationships contain performance based pricing, which can impact margins. There
can be no assurance that increases in the costs to repair vehicles will ultimately be recoverable from the Company’s clients
or customers.
The Company’s margin is also impacted by the mix of collision repair, retail glass and glass network sales as well as the mix
of parts, labour and materials within each business area. There can be no assurance that changes to sales mix will not occur
that could negatively impact the financial performance of the Company.
The Company currently makes its own part sourcing decisions for parts used in the provision of vehicle repair services. The
Company’s clients could, in the future, decide to source products directly, impose the use of certain parts suppliers on the
Company or otherwise change the parts sourcing process. Such a decision could have an adverse effect on the Company’s
margin.
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Weather Conditions and Climate Change
The effect of weather conditions on collision repair volume represents an element of risk to the Company’s ability to
maintain sales. Historically, extremely mild winters and dry weather conditions have had a negative impact on collision
repair sales volumes. Natural disasters resulting in business interruption, or supply chain interruption could also negatively
impact the Company’s operations. Climate change has increased the frequency and severity of natural disasters and extreme
weather condition events. Even with market share gains, weather-related decline in market size can result in sales declines
which could have a material impact on the Company’s business. Business interruption due to natural disasters and extreme
weather condition events, including supply chain interruption, may result in temporary store closures and could adversely
impact Boyd’s ability to complete repairs, which could have a material adverse effect on the Company’s business.
Competition
The collision repair industry in North America, estimated at approximately $30 to $40 billion U.S. is very competitive. The
main competitive factors are price, service, quality, customer satisfaction and adherence to various insurance company
processes and performance requirements. There can be no assurance that Boyd’s competitors will not achieve greater
market acceptance due to pricing or other factors.
Although competition exists mainly on a regional basis, Boyd competes with a small number of other multi-location
collision repair operators in multiple markets in which it operates.
Given these industry characteristics, existing or new competitors, including other automotive-related businesses, may
become significantly larger and have greater financial and marketing resources than Boyd. Competitors may compete with
Boyd in rendering services in the markets in which Boyd currently operates and also in seeking existing facilities to acquire,
or new locations to open, in markets in which Boyd desires to expand. There can be no assurance that the Company will be
able to maintain or achieve its desired market share.
Access to Capital
The Company grows, in part, through future acquisitions or start-up of collision and glass repair and replacement businesses.
There can be no assurance that Boyd will have sufficient capital resources available to implement its growth strategy.
Inability to raise new capital, in the form of debt or equity, could limit Boyd’s future growth through acquisition or start-up.
The Company will endeavour, through a variety of strategies, to ensure in advance that it has sufficient capital for growth.
Potential sources of capital that the Company has been successful at accessing in the past include public and private equity
placements, convertible debt offerings, using equity securities to directly pay for a portion of acquisitions, capital available
through strategic alliances with trading partners, lease financing, seller financing and both senior and subordinate debt
facilities or by deferring possible future purchase price payments using contingent consideration and call or put options.
There can be no assurance that the Company will be successful in accessing these or other sources of capital in the future.
The Company and its subsidiaries use financial leverage through the use of debt, which have debt service obligations. The
Company’s ability to refinance or to make scheduled payments of interest or principal on its indebtedness will depend on its
future operating performance and cash flow, which are subject to prevailing economic conditions, prevailing interest rates,
and financial, competitive, business and other factors, many of which are beyond its control.
The Company’s revolving credit facilities contain restrictive covenants that limit the discretion of the Company’s
management and the ability of the Company to incur additional indebtedness, to make acquisitions of collision repair
businesses, to create liens or other encumbrances, to pay dividends, to redeem any equity or debt, or to make investments,
capital expenditures, loans or guarantees and to sell or otherwise dispose of assets and merge or consolidate with another
entity. In addition, the revolving credit facilities contain a number of financial covenants that require BGSI and its
subsidiaries to meet certain financial ratios and financial condition tests. A failure to comply with the obligations under
these credit facilities could result in an event of default, which, if not cured or waived, could permit acceleration of the
relevant indebtedness. If the indebtedness were to be accelerated, there can be no assurance that the assets of the Company
and its subsidiaries would be sufficient to repay the indebtedness in full. There can also be no assurance that the Company
will be able to refinance the credit facilities as and when they mature. The revolving credit facility is secured by the assets
of the Company.
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Dependence on Key Personnel
The success of the Company is dependent on the services of a number of members of management. The experience and
talent of these individuals is a significant factor in Boyd’s continued success and growth. The loss of one or more of these
individuals could have a material adverse effect on the Company’s business operations and prospects. The Company has
entered into management agreements with key members of management in order to mitigate this risk.
Tax Position Risk
BGSI and its subsidiaries account for income tax positions in accordance with accounting standards for income taxes, which
require that the Company recognize in the financial statements, the impact of a tax position, if that position is more likely
than not of being sustained on examination by taxation authorities, based on the technical merits of the position.
Inherent risks and uncertainties can arise over tax positions taken, or expected to be taken, with respect to matters including
but not limited to acquisitions, transfer pricing, inter-company charges and allocations, financing charges, fees, related party
transactions, tax credits, tax based incentives and stock based transactions. Management uses tax experts to assist in
correctly applying and accounting for the tax rules, however there can be no assurance that a position taken will not be
challenged by the taxation authorities that could result in an unexpected material financial obligation.
Expenses incurred by BGSI and its subsidiaries are only deductible to the extent they are reasonable. There can be no
assurance that the taxation authorities will not challenge the reasonableness of certain expenses. If such a challenge were
successful, it may materially and adversely affect the financial results of BGSI and its subsidiaries.
The Shares will cease to be qualified investments for a Registered Plan under the Tax Act unless the Shares are listed on a
“designated stock exchange” (as defined in the Tax Act).
There can be no assurance that additional changes to the taxation of corporations or changes to other government laws, rules
and regulations, either in Canada or the U.S., will not be undertaken which could have a material adverse effect on BGSI’s
share price and business. There can be no assurance BGSI will benefit from these rules, that the rules will not change in the
future or that BGSI will avail itself of them.
Corporate Governance
Securities law imposes statutory civil liability for misrepresentations in continuous disclosure documents including failure to
make timely disclosure. Investors have a right of action if they are harmed by a misrepresentation in an issuer’s disclosure
document or in a public oral statement relating to an issuer, or the failure of an issuer to make timely disclosure of a material
change. Potentially liable parties include the issuer, each officer, Director or Trustee of the issuer who authorizes, permits or
acquiesces in the release of the document containing a misrepresentation, the making of the public statement containing a
misrepresentation or in the failure to make a timely disclosure.
Under the Ontario Securities Act, section 138.4(6), a due diligence defense is available. The due diligence defense requires
the following items to be addressed:
the issuer must have a system designed to ensure the issuer is meeting its disclosure obligations;
the defendant must have conducted a reasonable investigation to support reliance on the system; and
defendants must have no reasonable grounds to believe that the document or a public oral statement contained a
misrepresentation or that the failure to make the required disclosure would occur.
BGSI is keenly aware of the significance of these laws and the interrelationships between civil liability, disclosure controls
and good governance. BGSI has adopted policies, practices and processes to reduce the risk of a governance or control
breakdown. A statement of BGSI’s governance practices is included in its most recent information circular which can be
found at www.sedar.com. Although BGSI believes it follows good corporate governance practices, there can be no
assurance that these practices will eliminate or mitigate the impact of a material lawsuit in this area.
The area of governance is growing to encompass not only traditional governance matters, but also environmental and social
matters. This area is often referred to as Environmental, Social and Governance, or “ESG”. Increased awareness and
attention by investors to ESG matters means that the Company needs to become more transparent in developing and
43
reporting on ESG initiatives and increase or add ESG initiatives where there are significant gaps. BGSI is developing and
enhancing ESG reporting and initiatives and has adopted policies on reporting and anti-retaliation, occupational health and
safety, non-discrimination, human rights, diversity and anti-corruption, which are available on the Boyd website at
www.boydgroup.com.
Increased Government Regulation and Tax Risk
BGSI and its subsidiaries are subject to various federal, provincial, state and local laws, regulations and taxation authorities.
Various federal, provincial, state and local agencies as well as other governmental departments administer such laws,
regulations and their related rules and policies. New laws governing BGSI or its business could be enacted or changes or
amendments to existing laws and regulations could be enacted which could have a significant impact on Boyd. For
example, privacy legislation continues to evolve rapidly and tariff changes are being introduced with greater frequency.
BGSI utilizes the services of professional advisors in the areas of taxation, environmental, health and safety, labour and
general business law to mitigate the risk of non-compliance. Failure to comply with the applicable laws, regulations or tax
changes may subject BGSI to civil or regulatory proceedings and no assurance can be given that this will not have a material
impact on financial results.
A number of jurisdictions in which the Company operates have regulations to limit emissions and pollutants. The Company
has adapted its processes in an effort to comply with these regulations. Although to date, there have been no negative
consequences as a result of these regulations, there can be no assurance that these regulations will not have a material
adverse impact on BGSI’s business or financial results. Future emission or pollutant regulation compliance requirements
may have a material adverse impact on BGSI’s business or financial results.
Environmental, Health and Safety Risk
The nature of the collision repair business means that hazardous substances must be used, which could cause damage to the
environment or individuals if not handled properly. The Company’s environmental protection policy requires environmental
site assessments to be performed on all business locations prior to acquisition, start-up or relocation so that any existing or
potential environmental situations can be remedied or otherwise appropriately addressed. It is also Boyd’s practice to secure
environmental indemnification from landlords and former owners of acquired collision repair businesses, where such
indemnification is available. Boyd also engages a private environmental consulting firm to perform regular compliance
reviews to ensure that the Company’s environmental and health and safety policies are followed.
To date, the Company has not encountered any environmental protection requirements or issues which would be expected to
have a material financial or operational effect on its current business and it is not aware of any material environmental issues
that could have a material impact on future results or prospects. No assurance can be given, however, that the prior activities
of Boyd, or its predecessors, or the activities of a prior owner or lessee, have not created a material environmental problem
or that future uses or evolving regulations will not result in the imposition of material environmental, health or safety
liability upon Boyd.
Fluctuations in Operating Results and Seasonality
The Company’s operating results have been and are expected to continue to be subject to quarterly fluctuations due to a
variety of factors including changes in customer purchasing patterns, pricing paid to insurance companies, general operating
effectiveness, automobile technologies, general and regional economic downturns, unemployment rates, employee vacation
timing and weather conditions. These factors can affect Boyd’s ability to fund ongoing operations and finance future
activities.
Risk of Litigation
BGSI and its subsidiaries could become involved in various legal actions in the ordinary course of business. Litigation loss
accruals may be established if it becomes probable that BGSI will incur an expense and the amount can be reasonably
estimated. BGSI’s management and internal and external experts are involved in assessing the probability of litigation loss
and in estimating any amounts involved. Changes in these assessments may lead to changes in recorded litigation loss
accruals. Claims are reviewed on a case by case basis, taking into consideration all information available to BGSI.
The actual costs of resolving claims could be substantially higher or lower than the amounts accrued. In certain cases, legal
claims may be covered under BGSI’s various insurance policies.
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Execution on New Strategies
New initiatives are introduced from time to time in order to grow Boyd’s business. Initiatives such as entering new markets,
introducing and improving related products and services, or identifying new strategies to capture additional market share
have the potential to be accretive to the Company’s business when the opportunity is accurately identified and executed.
There can be no assurance that the Company identifies new strategies that are accretive to the business or that it is successful
in implementing such initiatives.
Insurance Risk
BGSI insures its property, plant and equipment, including vehicles, through insurance policies with insurance carriers
located in Canada and the U.S. Included within these policies is insurance protection against property loss and general
liability. BGSI also insures its directors and officers against liabilities arising from errors, omissions and wrongful acts.
Management uses its knowledge, as well as the knowledge of experienced brokers, to ensure that insurable risks are insured
appropriately under terms and conditions that would protect BGSI and its subsidiaries from losses. There can be no
assurance that all perils would be fully covered or that a material loss would be recoverable under such insurance policies.
Dividends Not Guaranteed
The amount of dividends declared and paid by BGSI in the future will depend upon numerous factors, including
profitability, fluctuations in working capital, sustainability of margins, required capital expenditures, the need to maintain
productive capacity, required funding of long-term contractual obligations, required funding to meet growth targets,
restrictions on dividends arising from compliance with financial debt covenants, taxation on income or on dividends and
debt repayments expected to be funded by cash flows generated from operations. There can be no assurance regarding the
amount of dividends to be declared and paid by the Company or its subsidiaries in the future.
Interest Rates
The Company occasionally fixes the interest rate on its debt using interest rate swap contracts or other provisions available
in its debt facilities. There can be no guarantee that interest rate swaps or other contract terms that effectively turn variable
rate debt into fixed rates will be an effective hedge against long-term interest rate fluctuations.
The Company has not fixed interest rates within its revolving credit facility. There can be no assurance that interest rates
either in Canada or the U.S. will not increase in the future, which could result in a material adverse effect on the Company’s
business.
U.S. Health Care Costs and Workers Compensation Claims
BGSI accrues for the estimated amount of U.S. health care claims and workers compensation claims that may have occurred
but were not reported at the end of the reporting period under its health care and workers compensation plans. The accruals
are based upon the Company’s knowledge of current claims as well as third party estimates derived from past experience.
Significant claim occurrences which remain unreported for a number of months could materially impact this accrual. In
addition, as U.S health care costs increase, there can be no assurance given that the Company can continue to offer health
care insurance to its employees at a reasonable cost.
Low Capture Rates
Sales growth can be enhanced if the Company is effective at booking repair orders for all sales opportunities that are
identified. The Company is exposed to missed jobs to the extent employees are ineffective at capturing all sales
opportunities. Measurement of capture rates, management support and training are methods that are employed to enhance
capture rates. However, it is possible that the Company may not be able to capture sales effectively enough to maximize
sales.
Supply Chain Risk
The Company requires access to parts, materials and paint in order to complete repairs. Certain of the Company’s suppliers
operate in unionized environments, where their workers are subject to collective bargaining agreements. A prolonged strike
45
at a supplier could adversely impact Boyd’s ability to complete repairs. It is possible that a prolonged strike could disrupt
the Company’s supply chain, which could have a material impact on the Company’s financial results.
The Company sources certain parts and materials from overseas vendors. Global issues, such as outbreak and spread of
contagious disease, political instability or other disruptive events can negatively impact global supply chains, which could
adversely impact Boyd’s ability to complete repairs. It is possible that global issues could disrupt the Company’s supply
chain, which could have a material impact on the Company’s financial results.
Capital Expenditures
The business of the Company requires ongoing capital maintenance. Moreover, opportunities may arise for capital upgrades
providing returns or cost savings that may not be realized in the immediate future, but rather over several years. As vehicle
technology advances and market needs change, the capital intensity of the industry is changing, requiring expenditures in
excess of historical capital maintenance levels. To the extent that capital expenditures are in excess of amounts budgeted, the
amounts of cash available for dividends may decrease.
Energy Costs
The Company is exposed to fluctuations in the price of energy. These costs not only impact the costs associated with
occupying and operating collision repair facilities but may also affect costs of parts and materials used in the repair process
as well as miles driven by automobile owners. There can be no assurance that escalating costs which cannot be offset by
energy conservation practices, price increases to clients and customers or productivity gains, would not result in materially
lower operating margins. As well, there can be no assurance that escalating energy costs will not materially reduce
automobile miles driven and in turn reduce the number of collisions.
ADDITIONAL INFORMATION
BGSI’s shares trade on the Toronto Stock Exchange under the symbol TSX: BYD. Additional information relating to the
Boyd Group Income Fund and BGSI is available on SEDAR (www.sedar.com) and the Company website
(www.boydgroup.com).
46
FORM 52-109F1
CERTIFICATION OF ANNUAL FILINGS
FULL CERTIFICATE
I, Timothy O’Day, Chief Executive Officer, Boyd Group Services Inc., certify the following:
1. Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater
certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual
filings”) of Boyd Group Income Fund (the “issuer”) for the financial year ended December 31, 2019.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not
contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is
necessary to make a statement not misleading in light of the circumstances under which it was made, for the period
covered by the annual filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements
together with the other financial information included in the annual filings fairly present in all material respects the
financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods
presented in the annual filings.
4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are
defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the
issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying
officer(s) and I have, as at the financial year end
(a)
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i)
(ii)
material information relating to the issuer is made known to us by others, particularly during the
period in which the annual filings are being prepared; and
information required to be disclosed by the issuer in its annual filings, interim filings or other
reports filed or submitted by it under securities legislation is recorded, processed, summarized
and reported within the time periods specified in securities legislation; and
(b)
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with the issuer’s GAAP.
5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s
ICFR is the Internal Control – Integrated Framework (COSO 2013 Framework), published by The Committee of
Sponsoring Organizations of the Treadway Commission.
5.2 ICFR – material weakness relating to design: N/A
5.3 Limitation on scope of design: N/A
6. Evaluation: The issuer’s other certifying officer(s) and I have
(a)
(b)
evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the
financial year end and the issuer has disclosed in its annual MD&A our conclusions about the
effectiveness of DC&P at the financial year end based on that evaluation; and
evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the
financial year end and the issuer has disclosed in its annual MD&A
(i)
our conclusions about the effectiveness of ICFR at the financial year end based on that
evaluation; and
(ii)
N/A
47
7. Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that
occurred during the period beginning on October 1, 2019 and ended on December 31, 2019 that has materially
affected, or is reasonably likely to materially affect, the issuer’s ICFR.
8. Reporting to the issuer’s auditors and board of directors or audit committee: The issuer’s other certifying
officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board
of directors or the audit committee of the board of directors any fraud that involves management or other
employees who have a significant role in the issuer’s ICFR.
Date: March 18, 2020
(signed)
Tim O’Day
President & Chief Executive Officer
48
FORM 52-109F1
CERTIFICATION OF ANNUAL FILINGS
FULL CERTIFICATE
I, Narendra Pathipati, Chief Financial Officer, Boyd Group Services Inc., certify the following:
1. Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater
certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual
filings”) of Boyd Group Income Fund (the “issuer”) for the financial year ended December 31, 2019.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not
contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is
necessary to make a statement not misleading in light of the circumstances under which it was made, for the period
covered by the annual filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements
together with the other financial information included in the annual filings fairly present in all material respects the
financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods
presented in the annual filings.
4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are
defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the
issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying
officer(s) and I have, as at the financial year end
(a)
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i)
(ii)
material information relating to the issuer is made known to us by others, particularly during the
period in which the annual filings are being prepared; and
information required to be disclosed by the issuer in its annual filings, interim filings or other
reports filed or submitted by it under securities legislation is recorded, processed, summarized
and reported within the time periods specified in securities legislation; and
(b)
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with the issuer’s GAAP.
5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s
ICFR is the Internal Control – Integrated Framework (COSO 2013 Framework), published by The Committee of
Sponsoring Organizations of the Treadway Commission.
5.2 ICFR – material weakness relating to design: N/A
5.3 Limitation on scope of design: N/A
6. Evaluation: The issuer’s other certifying officer(s) and I have
(a)
(b)
evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the
financial year end and the issuer has disclosed in its annual MD&A our conclusions about the
effectiveness of DC&P at the financial year end based on that evaluation; and
evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the
financial year end and the issuer has disclosed in its annual MD&A
(i)
our conclusions about the effectiveness of ICFR at the financial year end based on that
evaluation; and
(ii)
N/A
49
7. Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that
occurred during the period beginning on October 1, 2019 and ended on December 31, 2019 that has materially
affected, or is reasonably likely to materially affect, the issuer’s ICFR.
8. Reporting to the issuer’s auditors and board of directors or audit committee: The issuer’s other certifying
officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board
of directors or the audit committee of the board of directors any fraud that involves management or other
employees who have a significant role in the issuer’s ICFR.
Date: March 18, 2020
(signed)
Narendra Pathipati
Executive Vice President & Chief Financial Officer
50
BOYD GROUP INCOME FUND
CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2019
51
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
These consolidated financial statements have been prepared by management in accordance with Canadian generally
accepted accounting principles. Management is responsible for their integrity, objectivity and reliability, and for the
maintenance of financial and operating systems, which include effective controls, to provide reasonable assurance that the
Fund’s assets are safeguarded and that reliable financial information is produced.
The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting,
disclosure control and internal control. The Board exercises these responsibilities through its Audit Committee, all members
of which are not involved in the daily activities of the Boyd Group Services Inc. The Audit Committee meets with
management and, as necessary, with the independent auditors, Deloitte LLP, to satisfy itself that management’s
responsibilities are properly discharged and to review and report to the Board on the consolidated financial statements.
In accordance with Canadian generally accepted auditing standards, the independent auditors conduct an examination each
year in order to express a professional opinion on the consolidated financial statements.
(signed)
(signed)
Tim O’Day
President & Chief Executive Officer
Narendra Pathipati
Executive Vice President & Chief Financial Officer
Winnipeg, Manitoba
March 17, 2020
52
BOYD GROUP INCOME FUND
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31,
(thousands of Canadian dollars)
Assets
Current assets:
Cash
Accounts receivable
Income taxes recoverable
Inventory
Prepaid expenses
Property, plant and equipment
Right of use assets
Intangible assets
Goodwill
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities
Distributions and dividends payable
Current portion of long-term debt
Current portion of lease liabilities
Non-controlling interest call liability
Long-term debt
Lease liabilities
Deferred income tax liability
Unearned rebates
Exchangeable Class A common shares
Unit based payment obligation
Non-controlling interest put option
Equity
Accumulated other comprehensive earnings
Retained earnings
Unitholders' capital
Contributed surplus
Note
17
6
7
4,8
10
11
12
13
4,14
17
13
4,14
9
15
12,17
18
17
20
21
22
2019
2018
$
35,468
112,748
1,267
47,912
33,488
$
64,476
105,088
3,064
41,804
30,292
230,883
295,584
472,818
347,367
554,601
244,724
253,103
-
295,789
439,867
$
1,901,253
$
1,233,483
$
269,769
931
22,122
109,559
-
$
267,991
902
16,390
3,846
13,651
402,381
393,147
403,814
39,010
9,142
37,332
-
4,515
1,289,341
52,164
44,504
511,242
4,002
302,780
271,769
4,561
39,882
-
21,549
14,936
6,905
662,382
77,637
14,038
475,424
4,002
611,912
1,901,253
$
571,101
1,233,483
$
The accompanying notes are an integral part of these consolidated financial statements
Approved by the Board:
TIM O'DAY
Trustee
ALLAN DAVIS
Trustee
56
BOYD GROUP INCOME FUND
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(thousands of Canadian dollars, except unit amounts)
Balances - January 1, 2018
19,513,864
$
443,463
$
4,002
$
38,810
$
(46,432)
$
439,843
Unitholders' Capital
Units
Amount
Contributed
Surplus
Accumulated Other
Comprehensive
Earnings
Retained
Earnings
(Deficit)
Total Equity
Note
Issue costs (net of tax of $nil)
Units issued from treasury in connection with options exercised
Retractions
Other comprehensive earnings
Net earnings
Comprehensive earnings
Adjustment on adoption of IFRS 15 (net of tax of $1,804)
Distributions to unitholders
Balances - December 31, 2018
Issue costs (net of tax of $nil)
Units issued in connection with acquisition
Units issued from treasury in connection with options exercised
Retractions
Cancellation of units held by a subsidiary
Other comprehensive loss
Net earnings
Comprehensive earnings
Adjustment on adoption of IFRS 16 (net of tax of $8,442)
Distributions to unitholders
18
17
12
5
18
17
4
12
300,000
9,611
(101)
31,020
1,042
38,827
38,827
77,639
77,639
(6,731)
(10,438)
(101)
31,020
1,042
38,827
77,639
116,466
(6,731)
(10,438)
19,823,475
$
475,424
$
4,002
$
77,637
$
14,038
$
571,101
45,371
150,000
5,971
(2,436)
(126)
5,537
29,456
951
-
(126)
5,537
29,456
951
-
(25,473)
64,147
38,674
(22,902)
(10,779)
(25,473)
(25,473)
64,147
64,147
(22,902)
(10,779)
Balances - December 31, 2019
20,022,381
$
511,242
$
4,002
$
52,164
$
44,504
$
611,912
The accompanying notes are an integral part of these consolidated financial statements
57
BOYD GROUP INCOME FUND
CONSOLIDATED STATEMENTS OF EARNINGS
For the years ended December 31,
(thousands of Canadian dollars, except unit and per unit amounts)
Sales
Cost of sales
Gross profit
Operating expenses
Acquisition and transaction costs
Depreciation of property, plant and equipment
Depreciation of right of use assets
Amortization of intangible assets
Fair value adjustments
Finance costs
Earnings before income taxes
Income tax expense
Current
Deferred
Net earnings
The accompanying notes are an integral part of these consolidated financial statements
Basic earnings per unit
Diluted earnings per unit
Basic weighted average number of units
outstanding
Diluted weighted average number of units
outstanding
2019
2018
Note
25
$
2,283,325
1,246,845
$
1,864,613
1,022,162
1,036,480
716,608
4,850
41,601
90,890
22,467
28,330
38,185
942,931
93,549
20,237
9,165
29,402
842,451
669,068
4,298
34,067
-
17,674
4,787
10,283
740,177
102,274
12,143
12,492
24,635
$
64,147
$
77,639
$3.23
$3.12
$3.94
$3.79
19,878,567
19,684,337
19,902,469
19,856,163
7
8
10
16
9
9
30
30
30
30
BOYD GROUP INCOME FUND
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
For the years ended December 31,
(thousands of Canadian dollars)
Net earnings
Other comprehensive (loss) earnings
Items that may be reclassified subsequently to Consolidated Statements of
Earnings
Change in unrealized earnings on translating
financial statements of foreign operations
Other comprehensive (loss) earnings
Comprehensive earnings
The accompanying notes are an integral part of these consolidated financial statements
58
2019
2018
$
64,147
$
77,639
(25,473)
38,827
$
(25,473)
38,674
$
38,827
116,466
BOYD GROUP INCOME FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,
(thousands of Canadian dollars)
Cash flows from operating activities
Net earnings
Adjustments for
Fair value adjustments
Deferred income taxes
Finance costs
Amortization of intangible assets
Depreciation of property, plant and equipment
Depreciation of right of use assets
Other
Changes in non-cash working capital items
Cash flows used in financing activities
Fund units issued from treasury
in connection with options exercised
Issue costs
Increase in obligations under long-term debt
Repayment of long-term debt, principal
Repayment of obligations under property
leases, principal
Repayment of obligations under vehicle and
equipment leases, principal
Interest on long-term debt
Interest on property leases
Interest on vehicle and equipment leases
Acquisition of non-controlling interest in
Glass America LLC
Dividends and distributions paid
Cash flows used in investing activities
Proceeds on sale of equipment and software
Equipment purchases and facility improvements
Acquisition and development of businesses
(net of cash acquired)
Software purchases and licensing
Effect of foreign exchange rate changes on cash
Net (decrease) increase in cash position
Cash, beginning of year
Cash, end of year
Income taxes paid
Interest paid
The accompanying notes are an integral part of these consolidated financial statements
59
Note
16
10
7
8
18, 32
32
13
13
13
17
12, 32
7
10
2019
2018
$
64,147
$
77,639
28,330
9,165
38,185
22,467
41,601
90,890
(637)
294,148
1,674
295,822
812
(126)
182,453
(75,603)
(82,092)
(3,874)
(15,456)
(22,184)
(474)
(13,152)
(10,867)
(40,563)
392
(33,911)
(246,700)
(2,017)
(282,236)
(2,031)
(29,008)
64,476
4,787
12,492
10,283
17,674
34,067
-
(218)
156,724
34,023
190,747
876
(101)
67,799
(66,079)
-
(3,906)
(9,700)
-
(532)
-
(10,522)
(22,165)
565
(25,742)
(129,948)
(909)
(156,034)
4,097
16,645
47,831
$
35,468
$
64,476
$
$
18,538
37,647
$
$
8,258
10,181
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
1. GENERAL INFORMATION
Prior to January 2, 2020, Boyd Group Services Inc. (“BGSI”) operated as an income trust under the name Boyd Group
Income Fund (“the Fund”). Pursuant to a plan of arrangement (the “Arrangement”) under the Canada Business
Corporations Act, on January 2, 2020, unitholders of the Fund received one BGSI common share for each Fund unit
held as at December 31, 2019. Also pursuant to the Arrangement, Boyd Group Holdings Inc. (“BGHI”) Class A
common shareholders received one BGSI common share for each BGHI Class A common share held as at December
31, 2019.
As the Arrangement was effective on January 2, 2020, information presented in these financial statements as at, and for
periods prior to, or ending on December 31, 2019, is provided for Boyd Group Income Fund, and information provided
as at January 1, 2020 and later is provided for Boyd Group Services Inc. Therefore, as the context requires, references
to “Boyd” or the “Company” mean, collectively, Boyd Group Services Inc, Boyd Group Income Fund and Boyd Group
Holdings Inc.
The Company’s business consists of the ownership and operation of autobody/autoglass repair facilities and related
services. At the reporting date, the Company operated locations in Canada under the trade name Boyd Autobody &
Glass and Assured Automotive, as well as in the U.S. under the trade name Gerber Collision & Glass. In addition, the
Company is a major retail auto glass operator in the U.S. under the trade names Gerber Collision & Glass, Glass
America, Auto Glass Service, Auto Glass Authority and Autoglassonly.com. The Company also operates Gerber
National Claim Services (“GNCS”), that offers glass, emergency roadside and first notice of loss services.
The shares of the Company are listed on the Toronto Stock Exchange and trade under the symbol “BYD”. Prior to the
Arrangement, the Fund was listed on the Toronto Stock Exchange under the symbol “BYD.UN”. The head office and
principal address of the Company are located at 1745 Ellice Avenue, Winnipeg, Manitoba, Canada, R3H 1A6.
The consolidated financial statements for the year ended December 31, 2019 (including comparatives) were approved
and authorized for issue by the Board of Trustees on March 17, 2020.
2.
SIGNIFICANT ACCOUNTING POLICIES
a) Basis of presentation
The consolidated financial statements of the Fund have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These
consolidated financial statements are presented in thousands of Canadian dollars, except unit, share and per unit/share
amounts.
b) Revenue recognition
The Fund is in the business of collision repair. The Fund recognizes revenue upon completion and delivery of the
repair to the customer, which has been determined to be the performance obligation that is distinct and the point at
which control of the asset passes to the customer. Revenue is measured at the fair value of the consideration received.
c) Inventory
Inventory is valued at the lower of cost and net realizable value. Cost is determined on the first-in, first-out basis.
Net realizable value is the estimated selling price in the ordinary course of business less any applicable selling
expenses.
60
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
d) Property, plant and equipment
Property, plant and equipment assets are stated at cost less accumulated depreciation and accumulated impairment
losses. The cost of an item of property, plant and equipment consists of the purchase price, any costs directly
attributable to bringing the asset to the location and condition necessary for its intended use and an estimate of the costs
of dismantling and removing the item and restoring the site on which it is located.
Depreciation is calculated using the declining balance and straight line rates as disclosed in the property, plant and
equipment note. Leasehold improvements are amortized on the straight line basis over the period of estimated benefit.
An item of property, plant and equipment is reclassified as held for sale or derecognized upon disposal, or when no
future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal
of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is
recognized in the consolidated statement of earnings.
The Fund conducts an annual assessment of the residual balances, useful lives and depreciation methods being used for
property, plant and equipment and any changes arising from the assessment are applied by the Fund prospectively.
e) Consolidation
The financial statements of the Fund consolidate the accounts of the Fund and its subsidiaries. All intercompany
transactions, balances and unrealized gains and losses from intercompany transactions are eliminated on
consolidation.
Subsidiaries are those entities which the Fund controls by having the power to govern the financial and operating
policies. The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Fund controls another entity. Subsidiaries are fully consolidated from the
date on which control is obtained by the Fund and are de-consolidated from the date that control ceases.
f) Business combinations, goodwill and other intangible assets
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method of accounting. The cost of
the acquisition is measured at the aggregate of the fair values (at the acquisition date) of assets transferred, liabilities
incurred or assumed, and equity instruments issued by the Fund in exchange for control of the acquired company.
Acquisition costs are expensed as incurred. The acquired company’s identifiable assets (including previously
unrecognized intangible assets), liabilities and contingent liabilities are recognized at their fair values at the acquisition
date.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Fund’s share of the net
identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is carried at cost less accumulated
impairment losses.
Intangible assets are recognized only when it is probable that the expected future economic benefits attributable to the
assets will accrue to the Fund and the cost can be reliably measured. Intangible assets acquired in a business
combination are recorded at fair value. Intangible assets that do not have indefinite lives are amortized over their useful
lives using an amortization method which reflects the economic benefit of the intangible asset. Customer relationships
are amortized on a straight-line basis over the expected period of benefit of 20 years. Contractual rights, which consist
of non-compete agreements, zoned property rights and favourable lease agreements, are amortized on a straight-line
basis over the term of the contract. Computer software is amortized on a straight-line basis over periods of three and
five years. Brand names which the Company continues to use in the conduct of its business are considered indefinite
life because their value is not expected to degrade over time. To the extent the Company decides to discontinue the use
of a certain brand, an estimate of the remaining useful life is made and the intangible asset is amortized over the
remaining period.
61
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
g)
Impairment of non-financial assets
Property, plant and equipment and definite life intangible assets are tested for impairment when events or changes in
circumstances indicate that the carrying amount may not be recoverable. For the purpose of measuring recoverable
amounts, assets are grouped at the lowest levels for which there are separately identifiable cash inflows (cash-
generating unit or “CGU”). The recoverable amount is the higher of an asset’s fair value less costs to sell and value
in use (being the present value of the expected future cash flows of the relevant asset or CGU). An impairment loss
is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.
Goodwill and indefinite lived intangible assets are reviewed for impairment annually or at any time if an indicator of
impairment exists. As well, newly acquired goodwill is reviewed for impairment at the end of the year in which it
was acquired.
Goodwill acquired through a business combination is allocated to each CGU, or group of CGUs, that are expected to
benefit from the related business combination. A group of CGUs represents the lowest level within the entity at
which the goodwill is monitored for internal management purposes, which is not higher than an operating segment.
Impairment losses on goodwill are not reversed.
The Fund evaluates impairment losses, other than goodwill impairment, for potential reversals when events or
circumstances warrant such consideration.
h) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held with banks, and other short-term highly liquid
investments with original maturities of three months or less.
i) Income taxes
Income tax comprises of current and deferred tax. Income tax is recognized in the consolidated statement of earnings
except to the extent that it relates to items recognized directly in equity, in which case the income tax is recognized
directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted, or substantively
enacted, at the end of the reporting period, and any adjustment to tax payable in respect of previous years.
In general, deferred tax is recognized in respect of temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined on a
non-discounted basis using tax rates and laws that have been enacted or substantively enacted at the statement of
financial position date and are expected to apply when the deferred tax asset or liability is settled. Deferred tax assets
are recognized to the extent that it is probable that the assets can be recovered.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries except, in the case of
subsidiaries, where the timing of the reversal of the temporary difference is controlled by the Fund and it is probable
that the temporary difference will not reverse in the foreseeable future.
j) Unearned rebates
Prepaid purchase rebates are recorded as unearned rebates on the statement of financial position and amortized, as a
reduction of the cost of purchases, on a straight-line basis over the term of the contract.
62
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
k) Unitholders’ capital
Under IAS 32, a financial instrument that gives the holder the right to put the instrument back to the issuer for cash
or another financial asset (a ‘puttable instrument’) is a financial liability, except for those instruments that meet the
exceptions to be classified as equity instruments. The trust units of the Fund meet the puttable equity exceptions
and therefore are classified as equity.
The Fund’s declaration of trust allows a unitholder to tender their units for cash redemption. This cash redemption
right is restricted, at the Fund’s option, to an aggregate cash amount of $25 per month. Historically, the Fund has
not been asked to redeem units for cash.
l) Unit-Based compensation
The Fund issued unit-based awards to certain employees in the form of unit options during the period 2006-2010.
The unit options are financial liabilities since the units are ultimately puttable back to the Fund in exchange for cash.
The cost of cash-settled unit-based transactions are measured at fair value using a Black-Scholes model and
expensed over the vesting period with the recognition of a corresponding liability. The liability is re-measured at
each reporting date with changes in fair value recognized in earnings.
m) Earnings per unit
Basic earnings per unit (“EPU”) is calculated by dividing the net earnings for the period attributable to equity owners of
the Fund by the weighted average number of units outstanding during the period.
Diluted EPU is calculated by adjusting the weighted average number of units outstanding and corresponding earnings
impact for dilutive instruments. The Fund’s dilutive instruments comprise of unit options, exchangeable shares, and
non-controlling interest put option and call liability. The number of shares included with respect to unit options is
computed using the treasury stock method. The exchangeable Class A shares are evaluated as to whether or not they
are dilutive based on the effect on earnings per unit of eliminating the liability adjustment for the period and increasing
the weighted average number of units outstanding for the units that would be exchanged for the Class A shares. The
dilutive impact of the non-controlling interest put option and call liability is calculated using the “if converted” method.
n) Foreign currency translation
Items included in the financial statements of each subsidiary are measured using the currency of the primary economic
environment in which the entity operates (the “functional currency”). The consolidated financial statements are
presented in Canadian dollars, which is the Fund’s functional currency. The financial statements of entities that have a
functional currency different from that of the Fund are translated into Canadian dollars. Assets and liabilities are
translated into Canadian dollars at the noon rate of exchange prevailing at the statement of financial position dates and
income and expense items are translated at the average exchange rate during the period (as this is considered a
reasonable approximation to actual rates). The adjustment arising from the translation of these accounts is recognized
in other comprehensive earnings (loss) as cumulative translation adjustments.
When an entity disposes of its entire interest in a foreign operation, or loses control, joint control, or significant
influence over a foreign operation, the foreign currency gains or losses accumulated in other comprehensive earnings
(loss) related to the foreign operation are recognized in earnings. If an entity disposes of part of an interest in a foreign
operation which remains a subsidiary, a proportionate amount of foreign currency gains or losses accumulated in other
comprehensive earnings (loss) related to the subsidiary are reallocated between controlling and non-controlling
interests.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Generally, foreign exchange gains and losses resulting from the settlement of foreign currency
transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in
currencies other than an operation’s functional currency are recognized in earnings.
63
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
o) Financial instruments
Recognition
Financial assets and liabilities are recognized when the Fund becomes a party to the contractual provisions of the
instrument.
Classification
The Fund classifies its financial assets and liabilities in the following categories depending on the Fund’s business
model for managing the financial assets and the contractual terms of the cash flows:
Those to be measured subsequently at fair value, either through profit or loss (“FVPL”) or through OCI,
and
Those to be measured at amortized cost.
Cash and accounts receivable are classified as amortized cost. After their initial fair value measurement, they are
measured at amortized cost using the effective interest method, as reduced by appropriate allowances for estimated
lifetime expected credit losses.
Accounts payable and accrued liabilities, dividends and distributions payable, and long-term debt are classified as
amortized cost and are net of any related financing fees or issue costs. After their initial fair value measurement,
they are measured at amortized cost using the effective interest method.
Derivative contracts including the non-controlling interest put option and call liability are classified as financial
assets or financial liabilities at FVPL with mark-to-market adjustments being recorded to net earnings at each period
end.
As a result of the Fund’s units being redeemable for cash, the exchangeable Class A shares of the Fund’s subsidiary
BGHI, are presented as financial liabilities and classified as financial assets or financial liabilities at FVPL.
Exchangeable Class A shares are measured at the market price of the units of Fund as of the statement of financial
position date.
Measurement
At initial recognition, the Fund measures a financial asset at its fair value plus, in the case of a financial asset not at
FVPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of
financial assets carried at FVPL are expensed in profit or loss.
For those financial instruments where fair value is recognized in the Consolidated Statement of Financial Position
the methods and assumptions used to develop fair value measurements have been classified into one of the three
levels of the fair value hierarchy for financial instruments:
Level 1 includes quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 includes inputs that are observable other than quoted prices included in Level 1
Level 3 includes inputs that are not based on observable market data
p) Non-controlling interests
The Company accounts for transactions where a non-controlling interest exists, and where a put option has been
granted to third parties under IFRS 10 whereby the non-controlling interest is initially recognized at fair value and then
immediately derecognized upon the issuance and recognition of the put option. Differences between the put option
liability recognized at fair value and the amount of any non-controlling interest derecognized is recognized directly in
equity.
When there is no allocation of profit or loss to non-controlling partners, no non-controlling interest is recognized in the
Consolidated Statement of Financial Position. Distributions to non-controlling partners are recognized as an expense
when paid or payable based on the distribution formula of the agreement.
64
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
q) Pensions and other post-retirement benefits
The Company contributes to defined contribution pension plans of employees. Contributions are recognized within
operating expenses at an amount equal to contributions payable for the period. Any outstanding contributions are
recognized as liabilities within accrued liabilities.
r) Provisions
Provisions are recognized when the Fund has a present legal or constructive obligation that has arisen as a result of a
past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a
reliable estimate can be made of the amount of the obligation.
Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the end of
the reporting period, and are discounted to present value where the effect is significant. The increase in the provision
due to the passage of time is recognized as a finance cost.
s) Segment reporting
The chief operating decision-maker is responsible for allocating resources and assessing performance of the
operating segments and has been identified as the joint responsibility of the Chief Executive Officer of the Fund, the
Chief Operating Officer and President of the Fund and the Executive Vice President and Chief Financial Officer of
the Fund.
The Fund’s primary line of business is automotive collision and glass repair and related services, with the majority
of revenues relating to this group of similar services. This line of business operates in Canada and the U.S. and both
regions exhibit similar long-term economic characteristics. In this circumstance, IFRS requires the Company to
provide specific geographical disclosure. For the years reported, the Company’s revenues were derived within
Canada or the U.S. and all property, plant and equipment, right of use assets, goodwill and intangible assets are
located within these two geographic areas.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting estimates
The Fund makes estimates, including the assumptions applied therein, concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are addressed below.
Impairment of Goodwill and Intangible Assets
When testing goodwill and intangibles for impairment, the Fund uses the recorded historical cash flows of the CGU or
group of CGU’s to which the assets relate for the most recent two years, and an estimate or forecast of cash flows for
the next year to establish an estimate of the Fund’s future cash flows. An estimate of the recoverable amount is then
calculated as the higher of an asset’s fair value less costs to sell and value in use (being the present value of the
expected future cash flows of the relevant asset or CGU). An impairment loss is recognized for the amount by which
the asset’s carrying amount exceeds its recoverable amount. The methods used to value intangible assets and goodwill
require critical estimates to be made regarding the future cash flows and useful lives of the intangible assets. Goodwill
and intangible asset impairments, when recognized, are recorded as a separate charge to earnings, and could materially
impact the operating results of the Fund for any particular accounting period.
65
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
Impairment of Other Long-lived Assets
The Fund assesses the recoverability of its long-lived assets, other than goodwill and intangibles, after considering the
potential impairment indicated by such factors as business and market trends, the Fund’s ability to transfer the assets,
future prospects, current market value and other economic factors. In performing its review of recoverability,
management estimates the future cash flows expected to result from the use of the assets and their potential disposition.
If the discounted sum of the expected future cash flows is less than the carrying value of the assets generating those
cash flows, an impairment loss would be recognized based on the excess of the carrying amounts of the assets over
their estimated recoverable value. The underlying estimates for cash flows include estimates for future sales, gross
margin rates and operating expenses. Changes which may impact these estimates include, but are not limited to,
business risks and uncertainties and economic conditions. To the extent that management’s estimates are not realized,
future assessments could result in impairment charges that may have a material impact on the Fund’s consolidated
financial statements.
Fair Value of Financial Instruments
The Fund has applied discounted cash flow methods to establish the fair value of certain financial liabilities recorded
on the Consolidated Statement of Financial Position, as well as disclosed in the notes to the consolidated financial
statements. The Fund also establishes mark-to-market valuations for derivative instruments, which are assumed to
represent the current fair value of these instruments. These valuations rely on assumptions regarding interest and
exchange rates as well as other economic indicators, which at the time of establishing the fair value for disclosure, have
a high degree of uncertainty. Unrealized gains or losses on these derivative financial instruments may not be realized
as markets change.
Income Taxes
The Fund is subject to income tax in several jurisdictions and estimates are used to determine the provision for income
taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax
determination is uncertain. As a result, the Fund recognizes tax liabilities based on estimates of whether additional
taxes and interest will be due. Uncertain tax liabilities may be recognized when, despite the Fund’s belief that its tax
return positions are supportable, the Fund believes that certain positions are likely to be challenged and may not be
fully sustained upon review by tax authorities. The Fund believes that its accruals for tax liabilities are adequate for all
open audit years based on its assessment of many factors including past experience and interpretations of tax law. To
the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will
impact income tax expense in the period in which such determination is made.
66
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
4.
CHANGES IN ACCOUNTING POLICIES
Leases
The Fund has adopted IFRS 16, Leases on January 1, 2019 using the modified retrospective approach, which
recognizes the cumulative effect of initial application as an adjustment to the opening balances of property, plant and
equipment, right of use assets, accounts payable and accrued liabilities, lease liabilities, obligations under finance
leases, deferred income tax liability and retained earnings at January 1, 2019 without restatement of comparatives.
Accounts payable and accrued liabilities were impacted on adoption of IFRS 16 due to the reversal of deferred rent
amounts recorded under the previous accounting standard, IAS 17, Leases. The impact on the consolidated financial
statements as at January 1, 2019 is as follows:
December 31, 2018
Adjustment as a
result of IFRS 16
January 1, 2019
Assets
Property, plant and equipment
Right of use assets
Liabilities
Accounts payable and accrued liabilities
Current portion of lease liabilities
Current portion of obligations under
finance leases
Lease liabilities
Obligations under finance leases
Deferred income tax liability
Equity
Retained earnings (deficit)
$
$
$
253,103
-
253,103
(10,382)
452,938
442,556
242,721
452,938
695,659
$
$
$
$
267,991
-
$
(5,679)
103,880
$
262,312
103,880
3,846
271,837
-
4,561
39,882
316,280
(3,846)
94,355
384,106
(4,561)
(8,442)
465,458
-
366,192
384,106
-
31,440
781,738
14,038
14,038
330,318
$
(22,902)
(22,902)
442,556
$
(8,864)
(8,864)
772,874
$
67
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
As part of the initial application of IFRS 16, the Fund has utilized the following recognition exemptions and practical
expedients:
not to apply the requirements to short term leases and leases for which the underlying asset is of low value;
not to reassess whether a contract is, or contains, a lease at the date of initial application;
to apply a single discount rate to a portfolio of leases with reasonably similar characteristics;
to adjust the right of use asset at the date of initial application by the amount of any provision for onerous leases
recognized in the statement of financial position immediately before the date of initial application;
to exclude initial direct costs from the measurement of the right of use asset at the date of initial application;
to use hindsight, such as in determining the lease term if the contract contains options to extend or terminate the
lease; and
not to apply the requirements to leases for which the lease term ends within 12 months of the date of initial
application.
The following reconciliation to the opening balance for the lease liabilities as at January 1, 2019 is based upon the
operating lease obligations as at December 31, 2018:
Operating lease obligations at December 31, 2018
Finance lease obligations at December 31, 2018
Discounting
Adjustment for extensions
Other adjustments
Lease liabilities at January 1, 2019
January 1, 2019
$
535,533
8,407
(88,306)
30,018
2,334
487,986
$
On adoption of IFRS 16, the Fund’s right of use assets were measured based on the carrying amount as if the Standard
had been applied since the commencement date, discounted at the incremental borrowing rate at the date of initial
application. For leases previously classified as finance leases, the carrying amount of the right of use asset and the
lease liability at the date of initial application were measured based on the carrying amount of the lease asset and lease
liability immediately before that date, measured applying IAS 17.
The right of use assets and lease liabilities were discounted at the incremental borrowing rate as at January 1, 2019.
The weighted average discount rate was 4.47%. In order to calculate the incremental borrowing rate, reference interest
rates were derived for periods of up to 20 years from the yields of corporate bonds in Canada and the U.S. The
reference interest rates were supplemented by a leasing risk premium.
Extension options exist for a number of leases, particularly for property. In determining lease terms, extension options
are considered only if they are reasonably certain to be exercised.
Leases are presented in the consolidated statement of earnings as follows:
Operating expenses
Depreciation of right of use assets
Finance costs
For the year ended
December 31, 2019
$
$
$
4,556
90,890
22,658
68
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
Under IFRS 16, right of use assets are tested for impairment in accordance with IAS 36, Impairment of Assets.
This replaces the previous requirement to recognize a provision for onerous lease contracts.
After initial implementation of IFRS 16 on January 1, 2019, the Fund assesses whether a contract is or contains a
lease, at inception of the contract. The Fund recognizes a right of use asset and a corresponding lease liability with
respect to all lease arrangements in which it is the lessee, except for short term leases, defined as leases with a lease
term of 12 months or less, and leases of low value assets. For these leases, the Fund recognizes the lease payments
as operating expenses on a straight-line basis over the term of the lease unless another systematic basis is more
representative of the time pattern in which economic benefits from the leased asset are consumed.
After initial implementation of IFRS 16 on January 1, 2019, the lease liability is initially measured at the present
value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the
lease. If the interest rate implicit in the leases cannot be readily determined, the Fund uses its incremental
borrowing rate. In order to calculate the incremental borrowing rate, reference interest rates are derived from the
yields of corporate bonds in Canada and the U.S. The reference interest rates are supplemented by a leasing risk
premium.
Lease payments included in the measurement of the lease liability include:
fixed lease payments;
variable lease payments that depend on an index or rate, initially measured using the index or rate at the
commencement date;
the exercise price of purchase options, if the Fund is reasonably certain to exercise the options; and
payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to
terminate the lease.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease
liability and by reducing the carrying amount to reflect lease payments made.
The Fund remeasures the lease liability when:
the lease term has changed or there is a change in the assessment of the exercise of a purchase option, in
which case the lease liability is remeasured by discounting the revised lease payments using a revised
discount rate.
the lease payments change due to changes in an index or rate or a change in expected payment under a
guaranteed residual value, in which case the lease liability is remeasured by discounting the revised lease
payments using the initial discount rate.
a lease contract is modified and the lease modification is not accounted for as a separate lease, in which
case the lease liability is remeasured by discounting the revised lease payments using a revised discount
rate.
During the period presented, the Fund made the following such adjustments:
the lease term has changed or there is a change in the assessment of the exercise of a purchase option.
the lease payments have changed due to changes in an index or rate or a change in expected payment
under a guaranteed residual value.
After initial implementation of IFRS 16 on January 1, 2019, right of use assets include the initial measurement of the
corresponding lease liability, lease payment made at or before the commencement date and any initial direct costs.
Right of use assets are subsequently measured at cost less accumulated depreciation and impairment losses.
Depreciation is recorded on a straight line basis over the term of the lease.
69
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
5.
ACQUISITIONS
The Fund completed 29 acquisitions that added 97 locations during the year ended December 31, 2019 as follows:
Acquisition Date
January 9, 2019
January 11, 2019
February 28, 2019
March 8, 2019
March 15, 2019
March 18, 2019
March 25, 2019
March 29, 2019
April 15, 2019
May 14, 2019
May 14, 2019
June 7, 2019
June 10, 2019
June 24, 2019
July 19, 2019
July 29, 2019
August 19, 2019
September 6, 2019
September 13, 2019
September 30, 2019
October 8, 2019
November 1, 2019
November 1, 2019
November 22, 2019
December 2, 2019
December 6, 2019
December 6, 2019
December 13, 2019
December 13, 2019
Location
Cayce, SC
Peoria, AZ
New York (18 locations)
Michigan (11 locations)
Guelph, ON
Richland, WA
Bullhead City, AZ
Oregon & Washington (7 locations)
New York (3 locations)
Trussville, AL
Nevada & Arizona (4 locations)
Louisville, KY (2 locations)
Watauga, TX
Austin, TX
Rochester, NY (16 locations)
Steinbach, MB
Moody & Anniston, AL (2 locations)
Evansville, IN (4 locations)
Columnbia, Irmo & Lexington, SC (3 locations)
Port Orchard & Gig Harbor, WA (2 locations)
Gonzales, LA
Hunstville, AL
Pelham, AL
Nashville, TN
Tacoma, WA
California (6 locations)
California (3 locations)
Utica, MI
Kingston, ON
70
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
The Fund has accounted for the 2019 acquisitions using the acquisition method as follows:
Acquisitions in 2019
Identifiable net assets acquired at fair value:
Cash
Other currents assets
Property, plant and equipment
Right of use assets
Identified intangible assets
Customer relationships
Non-compete agreements
Liabilities assumed
Lease liability
Identifiable net assets acquired
Goodwill
Total purchase consideration
Consideration provided
Cash paid or payable
Units issued
Seller notes
Total consideration provided
Total
acquisitions
$
1,332
7,744
41,208
94,866
79,751
3,802
(18,804)
(94,866)
$
115,033
133,425
$
248,458
$
212,133
5,537
30,788
$
248,458
71
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
The Fund completed 28 acquisitions that added 69 locations during the year ended December 31, 2018 as follows:
Acquisition Date
January 19, 2018
January 31, 2018
February 20, 2018
February 23, 2018
April 17, 2018
May 18, 2018
May 25, 2018
May 28, 2018
June 8, 2018
June 27, 2018
July 3, 2018
July 6, 2018
July 9, 2018
July 10, 2018
August 3, 2018
August 3, 2018
September 21, 2018
October 10, 2018
October 10, 2018
October 12, 2018
October 15, 2018
October 15, 2018
November 1, 2018
November 30, 2018
November 30, 2018
December 11, 2018
December 14, 2018
December 19, 2018
Location
Collier County, FL (2 locations)
Sudbury, ON (4 locations)
Falcon, CO
Dallas, TX (3 locations)
Seattle, WA (3 locations)
Alexandria, LA
Atlanta, GA (2 locations)
Bradford, ON
Chicago, IL
Elk Grove Village, IL
Aurora, ON
Brunswick, OH
Nanaimo, BC
Elkhart, IN
Bessemer & Birmingham, AL (2 locations)
Kenosha, WI
Dundas, ON
Kennewick, WA
Springfield, IL
Saskatoon, SK (2 locations)
Turtle Creek, PA
Brownsburg & Greenwood, IN (2 locations)
Kansas City, MO (5 locations)
West Hawksbury, ON
Wisconsin and Northern Illinois (18 locations)
Albany, OR
Western & Central Regions, TX (9 locations)
Jacksonville, NC
72
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
The Fund has accounted for the 2018 acquisitions using the acquisition method as follows:
Acquisitions in 2018
Identifiable net assets acquired at fair value:
Cash
Other currents assets
Property, plant and equipment
Identified intangible assets
Customer relationships
Non-compete agreements
Liabilities assumed
Deferred income tax liability
Identifiable net assets acquired
Goodwill
Total purchase consideration
Consideration provided
Cash paid or payable
Contingent consideration
Sellers notes
Total consideration provided
Total
acquisitions
$
416
3,464
34,876
43,935
1,408
(1,499)
(595)
$
82,005
65,381
$
147,386
$
118,426
8,887
20,073
$
147,386
The preliminary purchase prices for the 2019 acquisitions may be revised as additional information becomes available.
Further adjustments may be recorded in future periods as purchase price adjustments are finalized.
Funding for the February 28, 2019 transaction was a combination of cash and the issuance of 45,371 units to the sellers at a
unit price of $122.05.
U.S. acquisition transactions are initially recognized in Canadian dollars at the rates of exchange in effect on the
transaction dates. Subsequently, the assets and liabilities are translated at the rate in effect at the Statement of Financial
Position date.
A significant part of the goodwill recorded on the acquisitions can be attributed to the assembled workforce and the
operating know-how of key personnel. However, no intangible assets qualified for separate recognition in this respect.
Goodwill recognized during 2019 is expected to be deductible for tax purposes. The goodwill recognized in 2018 is
deductible for tax purposes except for the goodwill related to the January 31, 2018 acquisition in Sudbury. Goodwill
recognized on this transaction totaled $2,658.
On November 1, 2018, the Company acquired the assets of A&B Body Shop, Inc. The contingent consideration
recorded is based on the business meeting predetermined earnings targets during the period from January 1, 2019 to
December 31, 2021. A maximum payment of $3,284 in 2021 would be required if the business meets or exceeds the
target. The present value of the contingent consideration of $647 has been determined using a cost of borrowing
discount rate.
73
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
On December 14, 2018, the Company acquired the assets of Paceline Collision Centers. The contingent consideration
recorded is based on the business meeting predetermined earnings targets during the period from January 1, 2019 to
December 31, 2021. A maximum payment of $6,690 in 2021 would be required if the business meets or exceeds the
target. The present value of the contingent consideration of $4,888 has been determined using a cost of borrowing
discount rate.
The results of operations reflect the revenues and expenses of acquired operations from the date of acquisition.
Revenue contributed by acquisitions since being acquired were $168,498. Net losses incurred by acquisitions since
being acquired were $685. If 2019 acquisitions had been acquired on January 1, 2019, the Fund’s net earnings for the year
ended December 31, 2019 would have been $69,538 (unaudited).
6.
INVENTORY
As at
Parts and materials
Work in process
December 31, December 31,
2019
2018
$
18,556
29,356
$
15,533
26,271
$
47,912
$
41,804
Included in cost of sales for the year ended December 31, 2019 are parts and material costs of $719,294 (2018 –
$581,337) and labour costs of $369,238 (2018 – $304,968) with the balance of cost of sales primarily made up of sublet
charges.
74
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
7.
PROPERTY, PLANT AND EQUIPMENT
La nd
B uildings
S ho p
Equipm e nt
Offic e
Equipm e nt
C o m pute r
Ha rdwa re
S igna ge
Ve hic le s
De pre c ia tio n ra te s
5%
15%
20%
30%
15%
30%
Le a s e ho ld
Im pro ve m e nts
10 to 25 ye a rs
s tra ight line
To ta l
As a t J a nua ry 1, 2018
C o s t
Ac c um ula te d
de pre c ia tio n
$
7,015
$
19,510
$
133,477
$
13,275
$
16,812
$
11,370
$
20,686
$
103,186
$
325,331
-
(1,288)
(58,553)
(6,415)
(8,491)
(4,691)
(12,785)
(37,009)
(129,232)
Ne t bo o k va lue
$
7,015
$
18,222
$
74,924
$
6,860
$
8,321
$
6,679
$
7,901
$
66,177
$
196,099
F o r the ye a r e nde d
De c e m be r 31, 2018
Ac quire d thro ugh
bus ine s s
c o m bina tio ns
Additio ns
P ro c e e ds o n
dis po s a l
Ga in (lo s s ) o n
dis po s a l
De pre c ia tio n
F o re ign e xc ha nge
3,215
805
-
-
-
754
5,118
2,489
-
-
(863)
1,739
13,272
17,993
-
(22)
-
1,547
-
(1)
-
4,630
-
-
-
1,041
-
-
326
3,329
(468)
234
12,945
9,636
(97)
(1)
34,876
41,470
(565)
210
(13,684)
(1,500)
(2,941)
(1,108)
(2,964)
(11,007)
(34,067)
5,373
450
597
536
681
4,950
15,080
Ne t bo o k va lue
$
11,789
$
26,705
$
97,856
$
7,356
$
10,607
$
7,148
$
9,039
$
82,603
$
253,103
As a t De c e m be r 31, 2018
C o s t
Ac c um ula te d
de pre c ia tio n
$
11,789
$
29,016
$
175,704
$
15,801
$
23,009
$
13,284
$
24,625
$
133,876
$
427,104
-
(2,311)
(77,848)
(8,445)
(12,402)
(6,136)
(15,586)
(51,273)
(174,001)
Ne t bo o k va lue
$
11,789
$
26,705
$
97,856
$
7,356
$
10,607
$
7,148
$
9,039
$
82,603
$
253,103
75
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
La nd
B uildings
S ho p
Equipm e nt
Offic e
Equipm e nt
C o m pute r
Ha rdwa re
S igna ge
Ve hic le s
De pre c ia tio n ra te s
5%
15%
20%
30%
15%
30%
Le a s e ho ld
Im pro ve m e nts
10 to 25 ye a rs
s tra ight line
To ta l
As a t J a nua ry 1, 2019
C o s t
Ac c um ula te d
de pre c ia tio n
$
11,789
$
29,016
$
175,704
$
15,801
$
23,009
$
13,284
$
24,625
$
133,876
$
427,104
-
(2,311)
(77,848)
(8,445)
(12,402)
(6,136)
(15,586)
(51,273)
(174,001)
Ne t bo o k va lue
$
11,789
$
26,705
$
97,856
$
7,356
$
10,607
$
7,148
$
9,039
$
82,603
$
253,103
F o r the ye a r e nde d
De c e m be r 31, 2019
IF R S 16 o pe ning
ne t bo o k va lue
Ac quire d thro ugh
bus ine s s
c o m bina tio ns
Additio ns
P ro c e e ds o n
dis po s a l
Ga in (lo s s ) o n
dis po s a l
Tra ns fe rs fro m
right o f us e
a s s e ts
De pre c ia tio n
F o re ign e xc ha nge
-
-
(2,633)
-
-
-
(7,625)
(124)
(10,382)
1,237
788
3,252
2,165
17,843
23,812
-
-
-
153
3,171
-
253
6,281
-
3,711
613
652
17,857
22,429
41,208
63,009
-
-
(369)
(23)
(392)
-
-
(9)
-
(1)
-
3
(4)
(11)
-
-
(515)
-
(1,544)
(1,602)
1,937
(17,594)
(4,835)
-
(1,733)
(303)
-
-
(3,956)
(1,283)
(418)
(294)
31
(656)
(489)
-
(14,835)
(2,862)
1,968
(41,601)
(11,318)
Ne t bo o k va lue
$
13,299
$
28,976
$
116,377
$
8,644
$
12,766
$
9,282
$
1,199
$
105,041
$
295,584
As a t De c e m be r 31, 2019
C o s t
Ac c um ula te d
de pre c ia tio n
$
13,299
$
32,690
$
207,789
$
18,407
$
27,913
$
16,398
$
8,710
$
167,604
$
492,810
-
(3,714)
(91,412)
(9,763)
(15,147)
(7,116)
(7,511)
(62,563)
(197,226)
Ne t bo o k va lue
$
13,299
$
28,976
$
116,377
$
8,644
$
12,766
$
9,282
$
1,199
$
105,041
$
295,584
76
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
8. RIGHT OF USE ASSETS
Property
Vehicles
Equipment
Total
As at January 1, 2019
$
442,557
$
7,624
$
2,757
$
452,938
Acquired through business combinations
Additions and modifications
Depreciation
Loss on disposal
Transfers to property, plant and
equipment
Foreign exchange
94,866
27,250
(88,148)
-
-
(11,456)
-
2,723
(2,510)
(229)
(31)
(346)
-
-
(232)
(2)
(1,937)
(68)
94,866
29,973
(90,890)
(231)
(1,968)
(11,870)
Net book value
$
465,069
$
7,231
$
518
$
472,818
9.
INCOME TAXES
The Fund is a “specified investment flow-through” (“SIFT”) and until December 31, 2010 was exempt from tax on its
income to the extent that its income was distributed to unitholders. This exemption did not apply to the Company or its
subsidiaries, which are corporations that are subject to income tax. Fund distributions that are sourced from U.S.
business earnings are not subject to the SIFT tax.
The Fund accounts for deferred income tax assets and liabilities in respect of accounting and tax basis differences.
Deferred income tax assets and liabilities which relate to the same jurisdiction are netted on the Consolidated Statement of
Financial Position.
a) The reconciliation between income tax expense and the accounting earnings multiplied by the combined basic
Canadian and U.S. federal, provincial and state tax rates is as follows:
For the years ended December 31,
2019
2018
Earnings before income taxes
Earnings subject to tax in the hands of unitholders not the Fund
$
93,549
(10,779)
$
102,274
(10,438)
Income subject to income taxes
$
82,770
$
91,836
Combined basic Canadian and U.S. federal, provincial and state tax rates
24.96%
25.42%
Income tax expense at combined statutory tax rates
$
20,659
$
23,345
Adjustments for the tax effect of:
Other non-deductible expenses
Allocation to non-controlling interest
Dividends treated as interest
Non-deductible fair value adjustments
Effective rate adjustment
Items affecting equity - issue costs
Other
452
-
1,273
7,622
59
(33)
(630)
383
(692)
1,142
1,330
45
(27)
(891)
Income tax expense
$
29,402
$
24,635
77
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
The structure of the Fund as at December 31, 2019 is such that a portion of the Fund’s earnings continue to be subject to
tax in the hands of the unitholders, not the Fund. This permits the Company to reduce its tax obligation. As a result during
the year, the Company benefitted from an interest deduction in the amount of $8,301 (2018 - $8,301). This amount was
received by the Fund who then is permitted to reduce its taxable income for the distributions declared in the year.
b) Deferred income taxes consist of the following:
As at
Intangible assets
Accrued liabilities
Property, plant and equipment
Acquisition costs
Right of use assets net of lease liabilities
Other
Deferred income tax liability
c) The movement in deferred income liabilities during the year is as follows:
Deferred income tax liability as at
Balance, beginning of period
Acquired through business combination
Deferred income tax expense
Foreign exchange
Balance, end of period
December 31, December 31,
2019
2018
$
34,713
(10,499)
29,409
(3,783)
(9,619)
(1,211)
$
30,029
(8,557)
21,826
(3,097)
-
(319)
$
39,010
$
39,882
December 31, December 31,
2019
2018
$
39,882
-
9,165
(10,037)
$
26,302
595
12,386
599
$
39,010
$
39,882
d) Deferred income tax assets are recognized to the extent it is probable that sufficient future taxable income will be
available to allow a deferred income tax asset to be realized. At December 31, 2019, the Fund has recognized all of
its deferred income tax assets with the exception of $7,510 (2018 - $7,510) in capital losses available in Canada. At
December 31, 2019, the Fund has non-capital losses in Canada of $1,172 (2018 - $1,583) and net operating losses in
the U.S. of $nil (2018 - $nil).
The losses expire as follows:
Year of expiry
2034
$
1,172
78
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
10. INTANGIBLE ASSETS
C us to m e r
R e la tio ns hips
B ra nd
Na m e
C o m pute r
S o ftwa re
No n-
c o m pe te
Agre e m e nts
Zo ne d
P ro pe rty
R ights
F a vo ura ble
Le a s e
Agre e m e nts
To ta l
As a t J a nua ry 1, 2018
C o s t
$
252,696
$
28,503
$
5,055
$
18,257
$
54
$
7,909
$
312,474
Ac c um ula te d a m o rtiza tio n
(41,088)
(6,222)
(3,929)
(8,225)
(54)
(1,054)
(60,572)
Ne t bo o k va lue
F o r the ye a r e nde d
De c e m be r 31, 2018
$
211,608
$
22,281
$
1,126
$
10,032
$
-
$
6,855
$
251,902
Ac quire d thro ugh bus ine s s c o m bina tio ns
43,935
Additio ns
Am o rtiza tio n
F o re ign e xc ha nge
-
(13,639)
13,689
-
-
-
723
-
909
(765)
58
1,408
-
(2,724)
267
-
-
-
-
-
$
45,343
-
(546)
572
909
(17,674)
15,309
Ne t bo o k va lue
$
255,593
$
23,004
$
1,328
$
8,983
$
-
$
6,881
$
295,789
As a t De c e m be r 31, 2018
C o s t
$
314,260
$
29,772
$
6,763
$
20,585
$
54
$
8,601
$
380,035
Ac c um ula te d a m o rtiza tio n
(58,667)
(6,768)
(5,435)
(11,602)
(54)
(1,720)
(84,246)
Ne t bo o k va lue
F o r the ye a r e nde d
De c e m be r 31, 2019
Ac quire d thro ugh bus ine s s c o m bina tio ns
Additio ns
Am o rtiza tio n
F o re ign e xc ha nge
$
255,593
$
23,004
$
1,328
$
8,983
$
-
$
6,881
$
295,789
79,751
-
(17,858)
(10,420)
-
-
-
(432)
-
2,017
(951)
(176)
3,802
-
(3,100)
(179)
-
-
-
-
-
$
83,553
-
(558)
(318)
2,017
(22,467)
(11,525)
Ne t bo o k va lue
$
307,066
$
22,572
$
2,218
$
9,506
$
-
$
6,005
$
347,367
As a t De c e m be r 31, 2019
C o s t
$
380,722
$
29,015
$
7,731
$
23,744
$
-
$
8,189
$
449,401
Ac c um ula te d a m o rtiza tio n
(73,656)
(6,443)
(5,513)
(14,238)
-
(2,184)
(102,034)
Ne t bo o k va lue
$
307,066
$
22,572
$
2,218
$
9,506
$
-
$
6,005
$
347,367
79
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
11. GOODWILL
As at
Balance, beginning of period
Acquired through business combination
Purchase price allocation adjustments within the measurement period
Foreign exchange
Balance, end of period
December 31, December 31,
2019
2018
$
439,867
133,425
(789)
(17,902)
$
351,943
65,381
-
22,543
$
554,601
$
439,867
The Fund has used the value in use method to evaluate the carrying amount of goodwill. The key assumptions used in the
assessment include an estimate of current cash flow, taxes, a growth rate of 2% and capital maintenance expenditures.
These assumptions are based on past experience. A discount rate of 8% has been applied to the expected cash flow, after
adjusting the cash flow for an estimate of the taxes and capital maintenance expenditures.
The purchase price allocation adjustments represent additional working capital adjustments which resulted in the
reduction of goodwill in 2019 as well as balance sheet reclassifications between property, plant and equipment and
goodwill within the measurement period for certain 2018 acquisitions.
12. DISTRIBUTIONS AND DIVIDENDS
The Fund’s Trustees have discretion in declaring distributions. The Fund’s distribution policy is to make distributions
of its available cash from operations taking into account current and future performance amounts necessary for principal
and interest payments on debt obligations, amounts required for maintenance capital expenditures and amounts
allocated to reserves.
Distributions to unitholders and dividends on the exchangeable Class A shares were declared and paid as follows:
Record date
Payment date
Dividend per Share Distribution amount Dividend amount
Distribution per Unit /
January 31, 2019
February 28, 2019
March 31, 2019
April 30, 2019
May 31, 2019
June 30, 2019
July 31, 2019
August 31, 2019
September 30, 2019
October 31, 2019
November 30, 2019
December 31, 2019
February 26, 2019
March 27, 2019
April 26, 2019
May 29, 2019
June 26, 2019
July 29, 2019
August 28, 2019
September 28, 2019
October 29, 2019
November 27, 2019
December 20, 2019
January 29, 2020
$
0.0450
0.0450
0.0450
0.0450
0.0450
0.0450
0.0450
0.0450
0.0450
0.0450
0.0460
0.0460
$
891
892
894
894
894
895
894
894
895
894
921
921
$
10
10
9
10
10
9
10
10
9
9
10
10
$
0.5420
$
10,779
$
116
80
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
Record date
Payment date
Dividend per Share Distribution amount Dividend amount
Distribution per Unit /
January 31, 2018
February 28, 2018
March 31, 2018
April 30, 2018
May 31, 2018
June 30, 2018
July 31, 2018
August 31, 2018
September 30, 2018
October 31, 2018
November 30, 2018
December 31, 2018
February 26, 2018
March 27, 2018
April 26, 2018
May 29, 2018
June 27, 2018
July 27, 2018
August 29, 2018
September 26, 2018
October 29, 2018
November 28, 2018
December 21, 2018
January 29, 2019
$
0.0440
0.0440
0.0440
0.0440
0.0440
0.0440
0.0440
0.0440
0.0440
0.0440
0.0450
0.0450
$
865
865
866
865
865
866
865
866
866
865
892
892
$
10
10
9
10
10
9
10
10
9
9
10
10
$
0.5300
$
10,438
$
116
At December 31, 2019, there were 184,813 (December 31, 2018 – 190,784) exchangeable Class A shares outstanding
with a carrying value of $37,332 (December 31, 2018 - $21,549).
During 2019, a fair value adjustment expense in the amount of $16,734 (2018 – $2,732) was recorded against earnings
related to these exchangeable Class A shares.
Further dividends were declared by BGSI for the first quarter of 2020 in the amount of $0.138 per share. The total
amount of dividends declared after the reporting date was $2,789.
13. LONG-TERM DEBT
The Company has a credit facility agreement expiring in May 2022 which consists of a revolving credit facility of
$400,000 U.S. with an accordion feature which can increase the facility to a maximum of $450,000 U.S. The facility is
with a syndicate of Canadian and U.S. banks and is secured by the shares and assets of the Company as well as
guarantees by the Fund and BGHI. The interest rate is based on a pricing grid of the Fund’s ratio of total funded debt to
Adjusted EBITDA as determined under the credit agreement. The Company can draw the facility in either the U.S. or
in Canada, in either U.S. or Canadian dollars. The Company can make draws in tranches as required. Tranches bear
interest only and are not repayable until the maturity date but can be voluntarily repaid at any time. The Company has
the ability to choose the base interest rate between Prime, Bankers Acceptances (“BA”) or London Inter Bank Offer
Rate (“LIBOR”). The total syndicated facility includes a swing line up to a maximum of $5,000 U.S. in Canada and
$20,000 U.S. in the U.S. At December 31, 2019, the Company has drawn $158,300 U.S. (December 31, 2018 - $61,300
U.S.) and $134,000 Canadian (December 31, 2018 - $139,000) on the revolving credit facility.
Under the revolving facility, the Company is subject to certain financial covenants which must be maintained to avoid
acceleration of the termination of the credit agreement. The financial covenants require the Fund to maintain a total
debt excluding property leases to Adjusted EBITDA ratio of less than 4.25; a senior debt excluding property leases to
Adjusted EBITDA ratio of less than 3.25; and a fixed charge coverage ratio of greater than 1.03. For three quarters
following a material acquisition, the total debt excluding property leases to Adjusted EBITDA ratio may be increased
to less than 4.75, the senior debt excluding property leases to Adjusted EBITDA ratio may be increased to less than
3.75.
Financing costs of $859 incurred during 2017 to complete the second amended and restated credit agreement have been
deferred. These fees are amortized to finance costs on a straight line basis over the five year term of the second
amended and restated credit agreement. The unamortized deferred financing costs of $415 have been netted against the
debt drawn as at December 31, 2019.
81
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
As at December 31, 2019, the Company was in compliance with all financial covenants.
Seller notes payable of $76,084 (of which $75,593 or $58,202 U.S., are U.S. denominated) on the financing of certain
acquisitions are unsecured, at interest rates ranging from 1% to 8%. The notes are repayable from January 2020 to
January 2027 in the same currency as the related note.
Long-term debt is comprised of the following:
As at
Revolving credit facility (net of financing costs)
Seller notes
Current portion
The following is the continuity of long-term debt:
As at
Balance, beginning of period
Consideration on acquisition
Draws
Repayments
Amortization of deferred finance costs
Foreign exchange
Balance, end of period
The following table summarizes the repayment schedule of the long-term debt:
Principal Payments
Less than 1 year
1 to 5 years
Greater than 5 years
December 31, December 31,
2019
2018
$
339,185
76,084
$
222,039
66,120
$
415,269
22,122
$
288,159
16,390
$
393,147
$
271,769
December 31, December 31,
2019
2018
$
288,159
30,788
182,453
(75,603)
172
(10,700)
$
257,976
20,073
67,799
(66,079)
172
8,218
$
415,269
$
288,159
December 31, December 31,
2019
2018
$
22,122
390,669
2,478
$
16,390
256,674
15,095
$
415,269
$
288,159
Included in finance costs for the year ended December 31, 2019 is interest on long-term debt of $15,456 (2018 - $9,700).
On March 17, 2020, the Company entered into a third amendment of its credit agreement, increasing the revolving credit
facility to $550,000 U.S., with an accordion feature which can increase the facility to a maximum of $825,000 U.S. The
revolving credit facility is accompanied with a new seven-year fixed-rate Term Loan A in the amount of $125,000 U.S. at
an interest rate of 3.455%. The facility is with a syndicate of Canadian and U.S. banks and is secured by the shares and
assets of the Company as well as guarantees by BGSI, BGIF, BGHI, and subsidiaries. The interest rate for draws on the
revolver are based on a pricing grid of BGSI’s ratio of total funded debt to EBITDA as determined under the credit
agreement. The Company can draw the facility in either the U.S. or in Canada, in either U.S. or Canadian dollars. The
Company can make draws in tranches as required. Tranches bear interest only and are not repayable until the maturity
82
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
date but can be voluntarily repaid at any time. The Company has the ability to choose the base interest rate between
Prime, Bankers Acceptances (“BA”), U.S. Prime or London Inter Bank Offer Rate (“LIBOR”). The total syndicated
facility includes a swing line up to a maximum of $10,000 U.S. in Canada and $30,000 U.S. in the U.S.
Under the revolving credit facility, the Company is subject to certain financial covenants which must be maintained to
avoid acceleration of the termination of the credit agreement. The financial covenants require BGSI to maintain a senior
debt to EBITDA ratio of less than 3.50 and an interest coverage ratio of greater than 2.75. For four quarters following a
material acquisition, the senior debt to EBITDA ratio may be increased to less than 4.00.
14. LEASE LIABILITIES
The following is the continuity of lease liabilities:
As at
Balance, January 1, 2019
Assumed on acquisition
Additions and modifications
Repayments
Financing costs
Foreign exchange
Balance, end of period
Current Portion
The following table summarizes the repayment schedule of the lease liability:
Less than 1 year
1 to 5 years
Greater than 5 years
December 31,
2019
$
487,986
94,866
29,973
(108,624)
22,658
(13,486)
$
513,373
109,559
$
403,814
$
109,559
284,137
119,677
$
513,373
Included in operating expenses are short-term and low-value asset lease expenses of $4,431 for the year ended
December 31, 2019.
15. UNEARNED REBATES
In connection with a 2019 acquisition, the Company recognized prepaid rebates received from a trading partner of
$7,500 U.S. These rebates have been deferred as unearned rebates. Under the terms of this agreement, the Company
will amortize the unearned rebate on a straight line basis over a term of 12 years, as a reduction of cost of sales.
The Company is obliged to purchase the suppliers’ products on an exclusive basis over this term. In exchange for this
exclusive arrangement, and subject to certain conditions, the trading partners are required to continue to price their
products competitively to the Company. Termination of the arrangement by the Company, the occurrence of an event of
default or a change in control, as defined by the agreement, require the Company to repay all unarmortized balances and
all other amounts as outlined within the agreement.
At December 31, 2019, the Company has unearned rebates of $9,142 (December 31, 2018 – nil).
83
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
16. FAIR VALUE ADJUSTMENTS
Exchangeable Class A common shares
Unit based payment obligation
Non-controlling interest put option
and call liability
Contingent consideration
For the year ended
December 31,
2019
2018
$
16,734
13,708
$
2,372
4,896
(2,128)
16
(2,481)
-
Total fair value adjustments
$
28,330
$
4,787
17. FINANCIAL INSTRUMENTS
Carrying value and estimated fair value of financial instruments
Classification
Fair value
hierarchy
December 31, 2019
Fair
value
Carrying
amount
December 31, 2018
Carrying
amount
Fair
value
Financial assets
Cash
Amortized cost
n/a
35,468
35,468
64,476
64,476
Accounts receivable
Amortized cost
n/a
112,748
112,748
105,088
105,088
Financial liabilities
Accounts payable and
accrued liabilities
Distributions and dividends
payable
Amortized cost
n/a
269,769
269,769
267,991
267,991
Amortized cost
n/a
931
931
902
902
Long-term debt
Amortized cost
n/a
415,269
415,269
288,159
288,159
Exchangeable Class A
common shares
(1)
FVPL
Non-controlling interest put
options and call liability
(1)
FVPL
1
3
37,332
37,332
21,549
21,549
4,515
4,515
20,556
20,556
(1) Fair Value Through Profit or Loss
84
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
For the Fund’s current financial assets and liabilities, including accounts receivable, accounts payable and accrued
liabilities, and distributions and dividends payable, which are short term in nature and subject to normal trade terms, the
carrying values approximate their fair value. As there is no ready secondary market for the Fund’s long-term debt, the fair
value has been estimated using the discounted cash flow method. The fair value using the discounted cash flow method is
approximately equal to carrying value. The fair value for the non-controlling interest put option and call liability is based
on the estimated cash payment or receipt necessary to settle the contract at the Statement of Financial Position date. Cash
payments or receipts are based on discounted cash flows using current market rates and prices and adjusted for credit risk.
The fair value of the exchangeable Class A shares is estimated using the market price of the units of the Fund as of the
Statement of Financial Position date.
Collateral
The Company’s syndicated loan facility is collateralized by a General Security Agreement. The carrying amount of the
financial assets pledged as collateral for this facility at December 31, 2019 was approximately $148,216 (December 31,
2018 - $169,564).
Interest rate risk
The Company’s operating line and syndicated loan facility are exposed to interest rate fluctuations and the Company
does not hold any financial instruments to mitigate this risk. Seller notes are at fixed interest rates.
Foreign currency risk
The Company’s operations in the U.S. are more closely tied to its domestic currency. Accordingly, the U.S. operations
are measured in U.S. dollars and the Company’s foreign exchange translation exposure relates to these operations.
When the U.S. operation’s net asset values are converted to Canadian dollars, currency fluctuations result in period to
period changes in those net asset values. The Fund’s equity position reflects these changes in net asset values as
recorded in accumulated other comprehensive earnings. The income and expenses of the U.S. operations are translated
into Canadian dollars at the average rate for the period in order to include their financial results in the consolidated
financial statements. Period to period changes in the average exchange rates cause translation effects that have an
impact on net earnings. Unlike the effect of exchange rate fluctuations on transaction exposure, the exchange rate
translation risk does not affect local currency cash flows.
Transactional foreign currency risk also exists in circumstances where U.S. denominated cash is received in Canada.
The Company monitors U.S. denominated cash flows to be received in Canada and evaluates whether to use forward
foreign exchange contracts. No forward foreign exchange contracts were used during 2019 or 2018.
The Fund earns interest on promissory notes issued to The Boyd Group (U.S.) Inc., the parent of the Fund’s U.S.
operations. As at December 31, 2019 and December 31, 2018, promissory notes denominated in Canadian dollars are
as follows:
Promissory notes
As at
Promissory note at 5.0% due September 29, 2027
Promissory note at 5.75% due January 1, 2030
Promissory note at 8.58% due January 1 2024
Promissory note at 8.58% due January 1, 2024
Promissory note at 8.58% due January 1, 2024
December 31, December 31,
2019
2018
$
108,000
41,800
6,800
25,000
30,000
$
108,000
41,800
6,800
25,000
30,000
$
211,600
$
211,600
The Fund’s U.S. operations purchase Canadian dollars at market rates to fund the monthly interest payments.
85
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
Credit risk
The carrying amount of financial assets represents the maximum credit exposure. Cash is in the form of deposits on
demand with major financial institutions that have strong long-term credit ratings. The Fund is subject to risk of non-
payment of accounts receivable; however, the Fund’s receivables are largely collected from the insurers of its customers.
Accordingly, the Fund’s accounts receivable comprises mostly amounts due from national and international insurance
companies or provincial crown corporations.
Aging of accounts receivable
As at
Neither impaired nor past due
Past due:
Over 90 days
Allowance for doubtful accounts
Accounts receivable
December 31, December 31,
2019
2018
$
108,746
$
102,980
5,386
3,587
$
114,132
(1,384)
$
106,567
(1,479)
$
112,748
$
105,088
The Fund uses an allowance account to record an estimate of potential impairment for accounts receivables. The Fund has
not identified specific accounts it believes to be impaired.
Allowance for doubtful accounts
As at
Balance, beginning of period
Increase (decrease) in allowance (net of recoveries and amounts
written off)
Balance, end of period
Liquidity risk
December 31, December 31,
2019
2018
$
1,479
$
1,508
(95)
(29)
$
1,384
$
1,479
The following table details the Fund’s remaining contractual maturities for its financial liabilities.
Accounts payable and
accrued liabilities
Long-term debt
Lease obligations
Total
Within 1
year
1 to 2
years
2 to 3
years
3 to 4
years
4 to 5
years
After 5
years
$
269,769
415,269
513,373
$
269,769
22,122
109,559
$
-
15,623
96,446
$
-
10,077
80,627
$
-
348,566
61,846
$
-
16,403
45,218
$
-
2,478
119,677
$
1,198,411
$
401,450
$
112,069
$
90,704
$
410,412
$
61,621
$
122,155
Obligations of the Fund are generally satisfied through future operating cash flows and the collection of accounts
receivable.
86
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
Market Risk and Sensitivity Analysis
Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in
market prices. Components of market risk to which the Fund is exposed are interest rate risk and foreign exchange rate
risk as discussed above.
The Fund has used a sensitivity analysis technique that measures the estimated change to net earnings and equity of a 1%
(100 basis points) difference in market interest rates. The sensitivity analysis assumes that changes in market interest rates
only affect interest income or expense of variable financial instruments not covered by hedging instruments. For the year
ended December 31, 2019 it is estimated that the impact of a 1% increase to market rates would result in a $3,097 decrease
(2018 – $2,051 decrease) to net earnings as well as comprehensive earnings.
The currency risk sensitivity analysis is based on a 5% strengthening or weakening of the Canadian Dollar against the U.S.
Dollar and assumes that all other variables remain constant. Under this assumption, net earnings for the year ended
December 31, 2019 as well as comprehensive earnings would have changed by $nil due to no foreign exchange contracts
being in place at the end of 2019 and 2018.
Exchangeable Class A Common Shares
The Class A common shares of BGHI are exchangeable into units of the Fund. To facilitate the exchange, BGHI issues
one Class B common share to the Fund for each Class A common share that has been retracted. The Fund in turn issues
a trust unit to the Class A common shareholder. The exchangeable feature results in the Class A common shares of
BGHI being presented as financial liabilities of the Fund. Exchangeable Class A shares are measured at the market
price of the units of the Fund as at the statement of financial position date. Exchanges are recorded at carrying value.
At December 31, 2019 there were 184,813 (2018 – 190,784) shares outstanding with a carrying value of $37,332 (2018
– $21,549). Total retractions for the year were 5,971 (2018 – 9,611) for $951 (2018 – $1,042).
Non-controlling interest put option and call liability
On May 31, 2013, the Fund entered into a contribution agreement (“GA Company Agreement”) whereby Glass
America Inc. contributed its auto-glass business to Gerber Glass in exchange for membership representing a 30%
ownership interest in a new combined Glass America LLC. The GA Company Agreement contained a put option as
well as a call option, which provided the non-controlling interest with the right to require Gerber Glass to purchase their
retained interest and Gerber Glass with the right to require the non-controlling interest to sell their retained interest
respectively, according to a valuation formula defined in the GA Company Agreement. On September 29, 2017,
Gerber Glass exercised its call option to acquire the 30% interest in the Glass America entity. On January 31, 2019, the
call option transaction was completed, and Gerber Glass LLC acquired the 30% non-controlling interest in Glass
America LLC.
On May 31, 2013, in connection with the acquisition of Glass America, the Fund amended and restated the limited
liability company agreement of Gerber Glass LLC (the “Gerber Glass Company Agreement”) which provides a member
of its U.S. management team the opportunity to participate in the future growth of the Fund’s U.S. glass business.
Within the agreement was a put option held by the non-controlling member that provided the member an option to put
the business back to the Fund according to a valuation formula defined in the agreement. On October 31, 2016, the
Fund amended the Gerber Glass Company Agreement. The put option held by the non-controlling member continues
to provide the member an option to put the business back to the Fund according to a valuation formula defined in the
Gerber Glass Company Agreement; however, the put option was not exercisable until December 31, 2018. All fair
value changes in the estimated liability are recorded in earnings.
The liability recognized in connection with both the put option and the call liability have been calculated using formulas
defined in the applicable limited liability company agreements. The formula for the Glass America call is based on a
multiple of EBITDA for the trailing twelve months ended August 31, 2017. The formula for the U.S. management
team member put option is based on a multiple of EBITDA for the trailing twelve months ended December 31, 2019.
87
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
During 2019, the Fund made $nil (2018 - $nil) in payments to the Glass America non-controlling interest.
The liability for non-controlling interest put options comprises the following:
As at
December 31, December 31,
2019
2018
Glass-business operating partner non-controlling interest put option
Glass America non-controlling interest call liability
$
4,515
-
$
6,905
13,651
$
4,515
$
20,556
The change in the non-controlling interest put option and call liabilities is summarized as follows:
December 31, 2019
December 31, 2018
Glass-business
operating
partner
Glass America
non-controlling
interest
Glass-business
operating
partner
Glass America
non-controlling
interest
Balance, beginning of period
Fair value adjustments
Payment to non-controlling interests
Foreign exchange
$
6,905
(2,128)
-
(262)
$
13,651
-
(13,152)
(499)
$
7,075
(753)
-
583
$
14,167
(1,728)
-
1,212
Balance, end of period
$
4,515
$
-
$
6,905
$
13,651
During 2019, a fair value adjustment recovery in the amount of $2,128 (2018 – $2,481) was recorded to earnings
related to the non-controlling interest put option and call liability.
18. UNIT BASED PAYMENT OBLIGATION
Pursuant to the Fund’s Option Agreement and Confirmation, the Fund granted options to purchase units of the Fund to
certain key executives.
On November 25, 2019, the Fund completed the settlement of the unit options issued on January 2, 2010. As a result
of the settlement, 150,000 units were issued at an exercise price of $5.41. The fair value of the unit options at
settlement was $28,644.
On November 26, 2018, the Fund completed the settlement of the unit options issued on January 2, 2009. As a result of
the settlement, 150,000 units were issued at an exercise price of $3.14. The fair value of the unit options at settlement
was $15,416.
On January 2, 2018, the Fund completed the settlement of the unit options issued on January 2, 2008. As a result of the
settlement, 150,000 units were issued at an exercise price of $2.70. The fair value of the unit options at settlement was
$14,729.
During 2019, a fair value adjustment expense in the amount of $13,708 (2018 – $4,896) was recorded to earnings
related to these unit based payment obligations.
19. CONTINGENCIES
The Fund has two U.S. denominated letters of credit for $225 U.S. (2018 –$225 U.S.).
88
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
20. ACCUMULATED OTHER COMPREHENSIVE EARNINGS
Balance, beginning of period
Unrealized (loss) gain on translating financial statements of foreign
operations
Balance, end of period
December 31, December 31,
2019
2018
$
77,637
$
38,810
(25,473)
38,827
$
52,164
$
77,637
There is no tax impact of translating the financial statements of the foreign operation.
21. CAPITAL
Unitholders’ Capital
Authorized:
Unlimited number of trust units
An unlimited number of units are authorized and may be issued pursuant to the Declaration of Trust. All units are of
the same class with equal rights and privileges. Each unit is redeemable and transferable. A unit entitles the holder
thereof to participate equally in distributions, including the distributions of net earnings and net realized capital gains of
the Fund and distributions on termination or winding-up of the Fund, is fully paid and non-assessable and entitles the
holder thereof to one vote at all meetings of unitholders for each unit held.
22. CONTRIBUTED SURPLUS
Units purchased under the Fund’s Normal Course Issuer Bid for a value below their carrying amount represent a
contribution to the benefit of the remaining unitholders and the difference is credited to contributed surplus. The Fund
purchased units for cancellation under Normal Course Issuer Bids in 2009, 2008, and 2007.
89
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
23. CAPITAL STRUCTURE
The Fund’s and Company’s objective when managing capital is to maintain a flexible capital structure which optimizes
the cost of capital at acceptable risk. The Fund includes in its definition of capital: equity, long-term debt, convertible
debentures, convertible debenture conversion features, exchangeable Class A shares, non-controlling interest put
options and call liability, unit based payment obligations, non-property obligations under lease liabilities, and unearned
rebates, net of cash.
The Fund and Company manage the capital structure and make adjustments to it by taking into account changing
economic conditions, operating performance and growth opportunities. In order to maintain or adjust the capital
structure, the Fund or Company may adjust the amount of distributions and dividends it pays, purchase units or shares
for cancellation pursuant to a normal course issuer bid, issue new units or shares, exchange Class A shares, issue new
debt or replace existing debt with different characteristics, issue convertible debentures, issue unit or share options,
expand the revolver, increase or decrease its non-property lease liabilities, pursue alternative structuring of acquisitions,
trigger call options on certain acquisition obligations, negotiate unearned rebates, or settle certain acquisition
obligations using a greater amount of cash, units or shares.
The Company monitors capital on a number of bases, including a fixed charge coverage ratio, total debt to Adjusted
EBITDA ratios, return on invested capital, a debt to capital ratio, a current ratio, its adjusted distributable cash payout
ratio, diluted earnings per unit and distributions per unit. The fixed charge coverage ratio is the ratio of Adjusted
EBITDA, adding back rental expense, less unfunded capital expenditures, less income tax expense, less dividends and
distributions to debt, rental expense and non-property lease liability payments. Total debt to Adjusted EBITDA is
calculated as the Company’s total debt and non-property lease liabilities but excluding convertible debentures divided
by Adjusted EBITDA. Return on invested capital is the ratio of Adjusted EBITDA to average invested capital.
Adjusted EBITDA is a non-GAAP measure, whose nearest GAAP measure is Cash Flow from Operations. The
distributable cash payout ratio is calculated by dividing the distributions paid during the period by adjusted distributable
cash. Adjusted distributable cash is a non-GAAP measure, whose nearest GAAP measure is Cash Flow from
Operations.
The Fund’s strategy has been to maintain a strong statement of financial position including its cash position and
financial flexibility while maintaining consistent distributions in order to capitalize on growth opportunities. In
addition, the Fund believes that, from time to time, the market price of the units may not fully reflect the underlying
value of the units and that at such times the purchase of units would be in the best interest of the Fund. Such purchases
increase the proportionate ownership interest of all remaining unitholders.
The Company grows, in part, through the acquisition or start-up of collision and glass repair and replacement
businesses, or other businesses. Sources of capital that the Company has been successful at accessing in the past
include public and private equity placements, convertible debt offerings, the use of equity securities to directly pay for a
portion of acquisitions, capital available through strategic alliances with trading partners, non-property lease financing,
seller financing and both senior and subordinate debt facilities or by deferring possible future purchase price payments
using contingent consideration and call or put options.
90
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
24. RELATED PARTY TRANSACTIONS
In certain circumstances the Company has entered into property lease arrangements where an employee of the Company
is the landlord. In most cases, the Company assumes these property lease arrangements initially in connection with an
acquisition. The property leases for these locations do not contain any significant non-standard terms and conditions
that would not normally exist in an arm’s length relationship, and the Fund has determined that the terms and conditions
of the leases are representative of fair market rent values.
The following are the lease payment amounts for facilities under lease with related parties:
Landlord
Affiliated Person(s)
Location
Lease December 31, December 31,
Expires
2018
2019
Kard Properties Ltd.
Desmond D'Silva
Richmond Hill, ON
Kard Properties Ltd.
Desmond D'Silva
Ottawa, ON
Kard Properties Ltd.
Desmond D'Silva
Ajax, ON
Kard Properties Ltd.
Desmond D'Silva
Mississauga, ON
Kard Properties Ltd.
Desmond D'Silva
Oakville, ON
D'Silva Real Estate
Holdings Inc.
Desmond D'Silva
Barrie, ON
2035
2035
2036
2032
2035
2032
Gerber Building No. 1
Ptnrp
Eddie Cheskis,
& Tim O'Day
South Elgin, IL
2023
Kard Properties Ltd.
Desmond D'Silva
Missisauga, ON
Kard Properties Ltd.
Desmond D'Silva
Hamilton,ON
Kard Properties Ltd.
Desmond D'Silva
Missisauga, ON
Kard Properties Ltd.
Desmond D'Silva
Missisauga, ON
Kard Properties Ltd.
Desmond D'Silva
Missisauga, ON
Kard Properties Ltd.
Desmond D'Silva
Scarborough, ON
Kard Properties Ltd.
Desmond D'Silva
Toronto, ON
Kard Properties Ltd.
Desmond D'Silva
Brampton, ON
Kard Properties Ltd.
Desmond D'Silva
Hamilton, ON
Kard Properties Ltd.
Desmond D'Silva
Woodstock, ON
Kard Properties Ltd.
Desmond D'Silva
Etobicoke, ON
Kard Properties Ltd.
Desmond D'Silva
Milton, ON
Kard Properties Ltd.
Desmond D'Silva
Brantford, ON
Kard Properties Ltd.
Desmond D'Silva
Ottawa, ON
Kard Properties Ltd.
Desmond D'Silva
Newmarket, ON
2035
2036
2035
2035
2036
2036
2023
2036
2035
2037
2037
2035
2020
2036
2024
$
192
$
188
263
88
50
192
430
127
107
64
51
315
102
89
50
102
105
69
217
115
113
217
45
257
87
50
188
420
122
105
62
50
309
100
87
50
100
103
67
213
113
83
212
-
The Fund’s subsidiary, The Boyd Group Inc., has declared dividends totaling $58 (2018 - $57), through BGHI to
4612094 Manitoba Inc., an entity controlled by a senior officer of the Fund. At December 31, 2019, 4612094 Manitoba
Inc. owned 107,329 Class A common shares and 30,000,000 voting common shares of BGHI, representing
approximately 30% of the total voting shares of BGHI.
91
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
25. SEGMENTED REPORTING
The Fund has one reportable line of business, being automotive collision repair and related services, with all revenues
relating to a group of similar services. In this circumstance, IFRS requires the Fund to provide geographical disclosure.
For the periods reported, all of the Fund’s revenues were derived within Canada or the United States of America.
Reportable assets include property, plant and equipment, right of use assets, goodwill and intangible assets which are all
located within these two geographic areas.
Revenues
Canada
United States
Reportable Assets
As at
Canada
United States
For the year ended
December 31,
2019
2018
$
285,490
1,997,835
$
289,482
1,575,131
$
2,283,325
$
1,864,613
December 31,
2019
December 31,
2018
$
305,946
1,364,424
$
239,504
749,255
$
1,670,370
$
988,759
The Fund’s revenues are largely derived from the insurers of its customers, who are generally automobile owners. In
three Canadian provinces where the Fund operates, government-owned insurance companies have, by legislation, either
exclusive or semi-exclusive rights to provide insurance to the Fund’s customers. Sales generated in these three markets
represent approximately 2% (2018 – 2%) of the Fund’s total sales. Although the Fund’s services in these markets are
predominately paid for by these government-owned insurance companies, the Fund’s customers (automobile owners)
have freedom of choice of repair provider. In markets where non-government owned insurance companies are
predominant, formal relationships with insurance companies such as Direct Repair Programs (“DRPs”) play an
important role in generating sales volumes for the Fund. Although automobile owners still have the freedom of choice
of repair provider, that choice can be influenced by the insurance companies with DRPs. Of the top five non-
government owned insurance companies that the Fund deals with, which in aggregate account for approximately 44%
(2018 – 40%) of total sales, one insurance company represents approximately 15% (2018 – 13%) of the Fund’s total
sales, while a second insurance company represents approximately 10% (2018 – 11%).
92
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
26. COMPENSATION OF KEY MANAGEMENT
Compensation awarded to key management included:
Salaries and short-term employee benefits
Post-employment benefits
Long-term incentive plan
Unit options
For the years ended December 31,
2019
2018
$
5,743
99
2,466
13,708
$
5,234
95
2,872
4,896
$
22,016
$
13,097
Key management includes the Fund’s Trustees as well as the most senior officers of the Fund and Subsidiary
Companies.
27. SHARE-BASED COMPENSATION
Certain executive officers of the Company, as well as the Board of Directors of the Company and BGHI and the Board of
Trustees of the Fund, participate in share-based compensation plans. These plans are cash-settled, with compensation
expense determined based on the fair value of the associated liability at the end of the reporting period until the awards are
settled.
Long-term incentive plan
On January 1, 2017, January 1, 2018, and January 1, 2019 Performance Cash Units were granted to certain executive
officers for the 2017, 2018, and 2019 grant years. Performance Cash Units are tied to unit value from date of grant to the
date of vesting and will be paid out in cash over a three-year period, subject to the terms of the plan. Performance Cash
Units represent the right to receive payments linked to the Fund’s unit value, conditional, in whole or in part, upon the
achievement of one or more objective performance goals. The distribution rate declared by the Fund on issued and
outstanding units of the Fund is also applied to the Performance Cash Units. The distribution amount on the Performance
Cash Units is converted into additional Performance Cash Units based on the market value of the Fund’s units at the time
of the distribution. These additional Performance Cash Units vest at the same time as the Performance Cash Units that the
distribution rate was applied on.
The 2017, 2018, and 2019 Awards include non-market performance conditions. The impact of market and non-market
performance conditions is recognized through the adjustment of the award that is expected to vest. At the end of each
reporting period, the Fund re-assesses its estimates of the number of awards that are expected to vest and recognizes the
impact of the revision to compensation expense in earnings over the vesting period.
The fair value of each outstanding Performance Cash Unit is estimated based on the fair market value of the Fund’s
units at the grant date, subsequently adjusted for additional units granted based on the reinvestment of notional
distributions and the market value of the units at the end of each reporting period. The associated compensation
expense is recognized over the vesting period, factoring in the probability of the performance criteria being met during
that period.
93
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
Directors Deferred Share Unit Plan
A Directors Deferred Share Unit Plan (“DSUP”) is administered through BGHI and requires independent Trustees,
who are also Directors of BGHI, to receive at least 60% of their Director compensation in the form of deferred shares,
which are essentially notional shares of BGHI and are redeemable for cash on termination. Directors may elect to
receive up to 100% of their Director compensation in the form of deferred shares. The number of deferred share units
to which a Director is entitled will be adjusted for the payment of dividends or other cash distributions on the Class A
common shares of BGHI.
The fair value of each outstanding Director Deferred Share Unit is estimated based on the fair market value of the
BGHI’s shares at the grant date, subsequently adjusted for additional shares granted based on the reinvestment of
notional dividends and the market value of the shares at the end of each reporting period.
28. EMPLOYEE EXPENSES
Salaries and short-term employee benefits
Post-employment benefits
Long-term incentive plan
Unit options
For the years ended December 31,
2019
2018
$
858,696
99
7,880
13,708
$
701,476
95
4,150
4,896
$
880,383
$
710,617
29. DEFINED CONTRIBUTION PENSION PLANS
The Fund has defined contribution pension plans for certain employees. The Fund matches U.S. employee
contributions at rates up to 6.0% of the employees’ salary. The expense and payments for the year were $2,584 (2018 -
$1,639). The Fund has established a Retirement Defined Contribution Arrangement Trust Agreement for the Executive
Chair which qualifies as retirement compensation arrangement as defined in the Income Tax Act (Canada), RSC 1985,
c.1 (5th Supplement), as amended. The agreement specifies that quarterly contributions are to be made until the end of
2024. During 2019, $99 (2018 - $95) was paid related to these arrangements.
94
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
30. EARNINGS PER UNIT
Net earnings
Less:
Non-controlling interest put options
and call liability
Net earnings - diluted basis
Basic weighted average number of units
Add:
Non-controlling interest put options
and call liability
Average number of units outstanding -
diluted basis
Basic earnings per unit
Diluted earnings per unit
For the year ended
December 31,
2019
2018
$
64,147
$
77,639
(2,128)
(2,481)
$
62,019
$
75,158
19,878,567
19,684,337
23,902
171,826
19,902,469
19,856,163
$
$
3.23
3.12
$
$
3.94
3.79
Exchangeable class A shares and unit options are instruments that could potentially dilute basic earnings per unit in the
future, but were not included in the calculation of diluted earnings per unit because they are anti-dilutive for the periods
presented.
31. CHANGES IN NON-CASH OPERATING WORKING CAPITAL ITEMS
Accounts receivable
Inventory
Prepaid expenses
Accounts payable
Income taxes, net
For the year ended December 31,
2019
2018
$
(6,820)
(2,694)
(3,896)
1,618
13,466
$
(11,294)
(972)
(2,814)
45,238
3,865
$
1,674
$
34,023
95
BOYD GROUP INCOME FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2019 and 2018
(thousands of Canadian dollars, except unit, share and per unit/share amounts)
32. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
As at
Non-cash changes
December 31,
2018
Cash
Flows
Acquisition Other items
Fair value
changes
Foreign December 31,
exchange
2019
Fund units issued from
treasury in connection
with options exercised
Long-term debt
Obligations under finance
leases
Lease liabilities
Dividends and distributions
Non-controlling interest
put option and call
liability
Issue costs
$
-
288,159
$
812
91,394
$
-
30,788
$
-
15,628
$
-
-
$
-
(10,700)
$
-
415,269
8,407
-
902
-
(108,624)
(10,867)
-
94,866
-
(8,407)
540,617
10,896
-
-
-
-
(13,486)
-
-
513,373
931
20,556
-
(13,152)
(126)
-
-
-
-
(2,128)
-
(761)
-
4,515
-
$
318,024
(40,563)
125,654
558,734
(2,128)
(24,947)
$
934,088
As at
Non-cash changes
December 31,
2017
Cash
Flows
Acquisition Other items
Fair value
changes
Foreign
exchange
December 31,
2018
Fund units issued from
treasury in connection
with options exercised
Long-term debt
Obligations under finance
leases
Dividends and distributions
Non-controlling interest
put option and call
liability
Issue costs
$
-
257,976
$
876
(7,980)
$
-
20,073
$
-
9,872
$
-
-
$
-
8,218
$
-
288,159
8,921
869
(4,438)
(10,522)
-
-
3,316
10,555
-
-
608
-
21,242
-
-
(101)
-
-
-
-
(2,481)
-
1,795
-
8,407
902
20,556
-
$
289,008
(22,165)
20,073
23,743
(2,481)
10,621
$
318,024
96
BOARD OF DIRECTORS
Boyd Group Services Inc. Board of Directors consists of eight members – two that are officers of BGSI and six that are
independent Directors. The Independent Chair of the Board is Allan Davis. Boyd Group Services Inc. Board of Directors
has established three standing committees: The Corporate Governance and Nomination Committee, The Audit Committee,
and the Executive Compensation Committee.
The Corporate Governance and Nomination Committee is chaired by Sally Savoia and includes Robert Gross, Allan Davis
and Violet (Vi) A.M. Konkle. The Audit Committee is chaired by David Brown and includes Allan Davis, Gene Dunn and
Violet (Vi) A.M. Konkle. The Executive Compensation Committee is chaired by Gene Dunn and includes David Brown,
Robert Gross and Sally Savoia.
David Brown is currently President and CEO of Richardson Capital and Managing Director of RBM Capital Limited.
Previously, he was Corporate Secretary of James Richardson & Sons, Limited, and a partner in the independent law and
accounting firm of Gray & Brown. In addition to serving on the Board of Directors of BGSI, he also serves as a Director of
GMP Capital, Inc., Richardson Financial Group and Pollard Banknote Limited. He graduated from the University of
Manitoba law school, and is a Chartered Professional Accountant and member of the Manitoba Bar Association.
Brock Bulbuck is the Executive Chair of BGSI. Since joining Boyd in 1993, he has played a leading role in the
development and growth of the business, including serving as CEO from 2010 to 2019. He is a Chartered Professional
Accountant. In addition to serving on the Board of Directors of BGSI, he also serves as a Director on the Board of The
North West Company and as a Director of the Pan Am Clinic Foundation. He is also a former Chair of the Winnipeg
Football Club Board of Directors and a former Governor of the Canadian Football League.
Allan Davis is the Independent Chair of BGSI’s Board of Directors. He is also President and Director of AFD Investments
Inc., a Winnipeg based management consulting firm specializing in corporate finance, mergers and acquisitions, and
strategic development. Mr. Davis is a past Director, Audit Committee member and Compensation Committee member of
Exchange Income Corporation (a TSX listed public company). He is a Chartered Professional Accountant and holds a
Bachelor of Commerce (Honours) degree from the University of Manitoba.
Gene Dunn is the Chair of Monarch Industries Ltd. of Winnipeg, a leading Canadian manufacturing company, where he
previously served as President and CEO. He is Past Chair of the Board of Governors for Balmoral Hall School for Girls and
Past Chair of the Winnipeg Blue Bombers Football Club. Mr. Dunn is also the Past Chair of the Board of Governors of the
Canadian Football League.
Robert Gross is the past Executive Chair of Monro, Inc., the largest chain of company-operated automotive undercar repair
and tire service facilities in the United States. He served as CEO of Monro from 1999 until October 2012 and as Executive
Chair from October 2012 to August 2017. Prior to his time at Monro, he served as Chair and CEO at Tops Appliance City,
Inc. and before that as President and COO at Eye Care Centers of America, Inc., a Sears, Roebuck & Co. company.
Violet (Vi) A.M. Konkle is the past President and Chief Executive Officer of The Brick Ltd. Prior to joining The Brick in
2010 as President, Business Support, she held a number of positions with Walmart Canada, including Chief Operating
Officer and Chief Customer Officer. Ms. Konkle also held a number of senior executive positions with Loblaw Companies
Ltd., including Executive Vice President, Atlantic Wholesale Division. Ms. Konkle is a director of The North West
Company Inc. (a TSX listed public company) as well as being on the board of three privately held companies including
Bailey Metal Products, Elswood Investment Corporation and Abarta. Ms. Konkle also serves on the Advisory Board of
Longo’s Brothers Fruit Markets Inc., a privately held company. She is a past director of Dare Foods, The Brick Ltd., Trans
Global Insurance, the Canadian Chamber of Commerce and the National Board of Habitat for Humanity.
Tim O’Day is the President and CEO of BGSI. He joined Gerber Collision & Glass in February 1998. With Boyd Group’s
acquisition of Gerber in 2004, he was appointed COO for Boyd’s U.S Operations. In 2008, he was appointed President and
COO for U.S. Operations. On January 2, 2020, he was appointed President and CEO of BGSI. Earlier in his career, he was
with Midas International, where he was elevated to Vice President–Western Division, responsible for a territory that
encompassed 500 Midas locations. Mr. O’Day also serves on the I-Car Board as Chairman and served on the Board of the
Collision Repair Education Foundation until March 2016 for a period of six years.
97
Sally Savoia is a former Vice President and Chief Human Resource Officer for Praxair Inc. and since her retirement in
2014, has served as an independent corporate consultant. Ms. Savoia’s human resources experience includes executive
compensation design and implementation, executive level succession planning, global talent management, leadership
development, diversity and inclusion efforts and global benefits design.
98
CORPORATE DIRECTORY
COMPANY OFFICERS & PRIMARY SUBSIDIARY COMPANY OFFICERS
Tim O’Day
President & Chief Executive Officer
Brock Bulbuck
Executive Chair
Stephen Boyd
Vice President,
Corporate Development
Jeff Murray
Vice President,
Finance
Narendra (Pat) Pathipati
Executive Vice President,
Chief Financial Officer &
Secretary-Treasurer
Gary Bunce *
Senior Vice President,
Sales
US Operations
Vince Claudio *
Senior Vice President,
U.S. Collision
Kevin Burnett *
Chief Operating Officer,
U.S. Collision
Eric Danberg *
President,
Boyd Autobody & Glass
Eddie Cheskis *
Chief Executive Officer,
Glass America and Gerber National
Claim Services
Susie Frausto*
Vice President,
Marketing
Kim Morin *
Vice President & Chief Human
Resources Officer
Srikanth Venkataraman*
Vice President,
Information Services
Desmond D’Silva*
Chief Executive Officer,
Assured Automotive
Tony Canade*
President,
Assured Automotive
Peter Toni
Assistant Secretary
Eric Olhava*
Senior Vice President,
U.S. Collision
* Officers of subsidiary companies only
CORPORATE OFFICE
1745 Ellice Avenue, Unit C1
Winnipeg, Manitoba, Canada
R3H 1H9
Telephone: (204) 895-1244
Fax: (204) 895-1283
Website: www.boydgroup.com
For location information, please visit us at www.boydgroup.com
99
SHAREHOLDER INFORMATION
BOYD GROUP SERVICES INC. SHARES AND EXCHANGE LISTING
Units of BGSI are listed on the Toronto Stock Exchange under the symbol BYD.
Registrar, Transfer Agents and
Distribution Agents
Computershare Trust Company
8th Floor, 100 University Avenue
Toronto, Ontario
M5J 2Y1
Legal Counsel
Auditors
Thompson Dorfman Sweatman
1700-242 Hargrave Street
Winnipeg, Manitoba
R3C 0V1
Deloitte LLP
2200 – 360 Main Street
Winnipeg, Manitoba
R3C 3Z3
Bank Syndicate Lead Member
Additional Bank Syndicate Members
Toronto-Dominion Bank
TD North Tower
77 King Street West, 25th Floor
Toronto, Ontario
M5K 1A2
Bank of America N.A., Canada Branch
The Bank of Nova Scotia
National Bank of Canada
Annual General Meeting & Special Meeting
Wednesday, May 13, 2020
Hilton Winnipeg Airport Suites Hotel
1800 Wellington Avenue
Winnipeg, Manitoba
R3H 1B2
1:00 p.m. (CT)
100