Boyd Group Services Inc.

Good morning, everyone. Welcome to the Boyd Group Services, Inc. Second Quarter 2025 Results Conference Call. Listeners are reminded that certain matters discussed in today's conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to risks and uncertainties related to Boyd's future financial or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are detailed in Boyd's Annual Information Form and other periodic filings and registration statements, and you can access these documents at CDER's database found at cderplus.ca. I would like to remind everyone that this conference call is being recorded today, Wednesday, August 13, 2025. I would now like to introduce Mr. Brian Kaner, President and Chief Executive Officer of Void Group Services, Inc. Please go ahead, Mr. Kaner.

Thank you, Operator. Good morning, everyone, and thank you for joining us for today's call. On the call with me today is Jeff Murray, our Executive Vice President and Chief Financial Officer. We released our second quarter. 2025 results before markets open today. You can access our news releases as well as our complete financial statements and management discussion and analysis on our website at BoydGroup.com. Our news release, financial statements, and MD&A have also been filed on CR Plus this morning. On today's call, we will discuss the financial results of the quarter ended June 30, 2025 and provide a general business update. We will then open the call for questions. The Boyd team has been focused on improving profitability, deepening our customer relationships, and strengthening our go-to-market strategy for new location growth. I'm pleased to report that we've begun to see the results of the team's hard work in our second quarter results. Throughout the second quarter, we continued to gain market share despite industry headwinds and expanded our growth margins by 120 basis points on the back of continued internalization of scanning and calibration, improved performance-based pricing, and improved parts margins. We also made headway with Project 360, which helped increase adjusted EBITDOT margins to 12%, the highest quarterly adjusted EBITDOT margin performance since 2023. In addition, early in the second quarter, we closed our first MSO acquisition since 2021 and surpassed the 1,000th location milestone. During the second quarter, we successfully executed the indirect staffing model, which was the first major initiative of Project 360. We are on track to generate $30 million in annual run rate savings from this initiative starting in Q2 and expect to achieve $40 million in incremental savings between Q3 of 2025 and the end of 2026 with incremental key initiatives focused on direct and indirect procurement spending. The remaining $30 million of our $100 million cost savings goal will be realized between 2027 and 2029. In addition to Project 360, there are several other important initiatives that we have been working on to strengthen our customer relationships, gain market shares, and improve the cadence and strategic fit of our new location growth. To further strengthen our customer relationships, we've taken our long-standing while operating way one step closer to our insurance company clients. While this enabled Boyd to achieve above industry performance in net promoter score, total cycle time, and average cost of a repair, we've expanded this initiative to focus on each of our insurance company clients' unique performance indicators, striving to provide all vehicle owners with an exceptional customer service experience. We have linked the compensation structure of our regional and field management to these custom performance metrics and believe this initiative has played an important role in our same-store sales industry outperformance. We have augmented our go-to-market strategy. We have undergone a comprehensive analysis of each of our regions to enable the company to take a more strategic approach to our new location growth with an emphasis on strengthening our position in our core markets. This will enable Boyd to generate enhanced revenue synergies and operating leverage, provide a more predictable cadence of new startup locations, and position our self-serve insurance company clients. In early 2025, we shifted our approach to the development of new startup locations. On a go-forward basis, the development of startup facilities will be primarily outsourced, and upon completion, ownership will transfer directly to a leasing company. This approach will streamline the development process, deliver greater cost certainty, and enable the company to build a robust pipeline of new location growth. We have seen great progress in building this pipeline, and beginning Q3 2025, we are now on track to open an average of 8 to 10 new startup locations per quarter going forward. While the industry volumes continue to be challenged in the second quarter, over the past six months we've seen an improvement in several factors that contributed to the industry decline, namely a return to positive growth in used car pricing and moderating growth rates in insurance premiums. While we expected to take time for the industry volumes to normalize and customers to adjust to higher insurance costs, we did experience some initial signs in our business late in the second quarter. We have thus far in the quarter an increase This has continued thus far in the third quarter, enabling the company to post a modest amount of same-store sales growth in July. While we are pleased to see the initial signs of improvement in our volumes, We will continue to maintain our steadfast focus on executing our growth strategy, enhancing our profitability, and generating strong returns for our shareholders. I will now turn the call over to Jeff to run through our future results in more detail.

Thanks, Ryan. During the second quarter, our sales increased 0.2% to $780.4 million with same-store sales, excluding foreign exchange, decreasing by 2.1%. This decline was offset by $21 million of incremental revenue from 53 new locations that were not in operation for the full comparative period. Over the next four quarters, Boyd continued to outperform the industry. Based on claims processing platform data for the second quarter, the industry volumes were down in the range of 6% to 8%. Gross margin was 46.8% in the second quarter of 2025, up 120 basis points from the 45.6% achieved in the same period of 2024. Gross margin percentage increased due to several factors, including the benefits of internalization of scanning and calibration, improvements to performance-based pricing, and an increase in parts margins. Improvements to parts margins are the result of Project 360 initiatives to improve cost efficiencies. To date, the company has not experienced any material impact as a result of tariffs. Operating expenses for the second quarter of 2025 were $271.7 million, or 34.8% of sales, compared to $265.9 million, or 34.1% of sales in the same period of 2024. Operating expenses as a percentage of sales were positively impacted by the introduction of Project 360, the transformational cost initiative launched during the fourth quarter of 2024. During the quarter, the company successfully rolled out the indirect staffing model and is on track to realize an annualized cost savings run rate of $30 million as a result. More than offsetting this positive impact were lower Saints Row sales causing negative leverage, quarter-to-quarter variation in certain accruals, and an investment in facilities maintenance costs, with spend in the quarter being elevated due to pent-up demand from deferred work. The company also experienced incremental costs associated with the internalization of scanning and calibration, and higher information technology expenses related to additional licensing and security costs. While the internalization of scanning and calibration continues to be positive for gross profit and adjusted EBITDA, it does not contribute to incremental sales. and therefore increases operating expenses as a percentage of sales. Despite the challenges faced this quarter, the company remains on track to realize its margin enhancement objectives. Adjusted EBITDA or EBITDA adjusted for fair value adjustments to financial instruments and cost-related acquisitions and transformational cost initiatives was $93.8 million, an increase of 4.7% over the same period of 2024. Adjusted EBITDA margins increased to 12% in the second quarter, up from 11.5% in Q2 2024 and 10.3% in Q1 of 2025. The year-over-year increase in adjusted EBITDA was a result of improvements in gross margin as well as lower operating costs and shop labor as a result of the rollout of Project 360. Net earnings for the second quarter of 2025 were $5.4 million compared to $10.8 million in the same period of 2024. Excluding fair value adjustments and acquisition and transformational cost initiatives, adjusted net earnings for the second quarter of 2025 was $10.8 million, or 50 cents per share, compared to $11.9 million, or 56 cents per share, in the same period of the prior year. Net earnings and adjusted net earnings for the period benefited from higher adjusted EBITDA, but were negatively impacted by increased depreciation expense and increased finance costs. The increase in depreciation expense was primarily due to growth in locations, investment in network technology upgrades, as well as growth related to the calibration business. At the end of the period, we had total debt, net of cash of $1.2 billion. Debt net of cash before lease liabilities increased from $487.2 million at December 31, 2024 to $505.8 million at June 30, 2025. Debt-headed cash-to-lease liability increased as a result of location growth. As noted earlier during the first quarter, the company has changed its approach, whereby on a go-forward basis, the development of startup facilities will primarily be outsourced, and upon completion, ownership will transfer directly to a leasing company. During the first half of 2025, the company completes sale-leaseback transactions for proceeds of back $2 million. The sale-leaseback transactions allow for a re-fledged capital that can be redeployed to further grow business. During 2025, the company plans to make cash capital expenditures related to network technology upgrades and acquisition and development of new locations within the range of 1.6% and 1.8% of sales. In addition to these capital expenditures, the company plans to invest in network technology upgrades to further strengthen our technology and security infrastructure and prepare for advanced technology needs in the future. Excluding expenditures related to network technology upgrades and acquisition and development, the company spent approximately $1 million or 1.4% of sales on capital expenditures during the second quarter of 2025. The company spent $16.1 million or 2.1% of sales on capital expenditures, excluding expenditures related to acquisition and development during the same period of 2024. I will now pass it back to Brian for closing remarks.