Boyd Group Services Inc.

Good morning, everyone. Welcome to the Boyd Group Services, Inc. Third 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 CEDAR's database found at cedarplus.ca and on edgar.sec.gov. I'd like to remind everyone that this conference call is being recorded today, Wednesday, November 12, 2025. I would now like to introduce Mr. Brian Kaner, President and Chief Executive Officer of Boyd Group Services, Inc. Please go ahead, Mr. Kaner.

Thank you, Operator. Good morning, everyone, and apologize for my voice. I'm fighting off a bit of a cold, but 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 third quarter results before market opened today. You can access our news release 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 CDAR Plus and EDGAR this morning. On today's call, we'll discuss the financial results for the quarter ended September 30, 2025, and provide a general business update. We will then open the call for questions. It's great to be here today to discuss our third quarter results and what has truly been one of the most exciting and transformative periods in Boyd's history. Since the beginning of the third quarter, we've made significant strides across our business. We announced a return to positive same-store sales on the back of improved industry conditions, executed well on our margin initiatives, and reached several exciting milestones, including surpassing our 1,000th location, announcing a definitive agreement to acquire Joe Hudson's Collision Center, and listing our stock on the New York Stock Exchange. It's been an exciting quarter, and I'm proud of what the team has accomplished. Turning to our third quarter results, I'm excited to report that the momentum we experienced in our business in July was sustained throughout the quarter and early into the fourth quarter. For the third quarter, we generated positive same-store sales growth of 2.4%, with growth coming from continued market share gains as well as an improvement in industry conditions. While it remains early in the fourth quarter, same-store sales for October continued to show positive growth. delivering further improvement compared to the third quarter, falling within the range outlined in our five-year plan. Over the past year, we've seen an improvement in several headwinds that have been negatively impacting repairable claims. These include a moderation in insurance premium increases, which are now back in line with historical levels, as well as a return to growth in used vehicle prices. Most recently, we've begun to see some insurance carriers in the United States seek regulatory approval to decrease insurance premiums. These trends, combined with our return to same-store, positive same-store sales, support our view that the industry conditions are normalizing and that Boyd is well-positioned to continue to outperform. In addition to the top-line growth, we generated strong adjusted EBITDA margin improvement during the third quarter, with margins increasing 170 basis points on a year-over-year basis to 12.4%. As a result, adjusted EBITDA grew by 22.8% in the third quarter. The margin improvement came from both gross margins and positive operating leverage as we continued to make headway on our Project 360 initiatives, our cost transformation plan, and achieved positive operating leverage from the return to positive same-store sales. With Project 360, we've achieved over $30 million in annualized run rate savings and are on track to reach a $70 million run rate by the end of 2026, with a full $100 million of savings expected by 2029. With the indirect staffing model now fully implemented, we continue to focus on direct and indirect procurement savings, through centralization of our procurement spending to fully leverage the benefit of Boyd's scale. We also had a busy quarter with new location growth, adding 24 locations with 17 coming from acquisitions, including the acquisition of L&M Auto Body in August, as well as seven new startup locations. In addition, earlier this week, we completed a five-location multi-store operator acquisition in Nova Scotia, Canada, which marks our initial entry into this province. We continue to target the opening of an average of approximately 8 to 10 new startup locations per quarter and currently expect to open 13 startup locations in the fourth quarter, with an additional 18 currently in development through the end of September 2026. I'd like to take some time on today's call to discuss our definitive agreement to acquire Joe Hudson's Collision Center and the related financing as they mark a significant milestone in our company. Joe Hudson's is a company we've long respected for its strong operational performance, disciplined growth strategy, culture, and concentrated regional footprint in the southeastern portion of the U.S. With 258 locations, Joe Hudson's brings scale, operational excellence, and strong local presence to complement our existing footprint. As we've mentioned in previous calls, we've been patient and waiting for the right complementary MSO to come along, one that made sense strategically and financially, and Joe Hudson checks both boxes. This acquisition accelerates our growth, solidifies our position as one of the leading players in the highly fragmented North American collision industry, and generates meaningful synergies. The anticipated synergies will benefit both Boyd and Joe Hudson's as we look to achieve direct and indirect procurement savings from the combined business, as well as achieve operational benefits from our enhanced density. We estimate that these synergies will be between $35 and $45 million, with approximately 50% in the near term and the remainder by 2028. To support the deal, we successfully implemented an $897 million bought deal, initial public offering in the U.S., and a $525 million Canadian dollar senior unsecured notes offering, which together secured the financing we needed to complete the acquisition. We also completed a $275 million Canadian dollar bond offering to refinance existing debt and strengthen our balance sheet earlier in the third quarter. Through these initiatives and based on the exercise in full by the underwriters of their option to purchase additional common shares as part of the public offering, we have maintained a disciplined financial approach and expect our pre-IFRS debt-to-EBITDA ratio to be at 3.1 times at the closing of the acquisition, returning to current levels as early as the end of 2026. Lastly, the listing of our shares on the New York Stock Exchange marks a major milestone in Boyd's journey. increasing our visibility and giving us access to a broader pool of investors as we continue to execute our long-standing growth strategy. I'll now turn it over to Jeff to go through our third quarter financial results in more detail. Jeff?

Thanks, Brian. As Brian highlighted, we had a strong third quarter with positive same-store sales growth and solid margin improvement. As we continued to execute on Project 360, During the third quarter, our sales increased by 5% to $790.2 million with same-store sales, excluding foreign exchange, increasing by 2.4%. In addition, $22.2 million in incremental sales were generated from 64 new locations that were not in operation for the full comparative period. As these stores mature over the next two to three years, we expect that they will contribute meaningfully to sales. Over the past two quarters, we have begun to see an improvement in industry conditions. Based on claims processing platform data for the third quarter, we estimate that repairable claims were down in the range of three to 5%. This represents a meaningful improvement from both the second quarter of 2025, which experienced an estimated decline of six to 8%, and the first quarter of 2025 during which claims were down an estimated nine to 10%. As Brian highlighted, We have seen this strength continue in the early part of the fourth quarter and our same-store sales delivering further improvement when compared to the third quarter, falling within the range outlined in our five-year plan. Gross margin was 46.3% in the third quarter of 2025, up 60 basis points from the 45.7% achieved in the same period of 2024. Gross margin percentage increased due to several factors, including the benefits of internalization of scanning and calibration, and an increase in parts margins. Improvement in parts margin was a result of Project 360 initiatives to enhance parts procurement to drive cost efficiencies. Now turning to operating expenses. For the third quarter of 2025, they were $267.6 million compared to $263.4 million in the same period of 2024. As a percentage of sales, operating expenses declined. 110 basis points to 33.9% from 35% last year. Operating expenses as a percentage of sales were positively impacted by the indirect staffing model, which was introduced in the second quarter of 2025 as part of our Project 360 initiative. The full cost savings from the indirect staffing model were successfully realized during the third quarter. Future savings are expected to include additional direct and indirect procurement savings as we focus on a more centralized approach to purchasing in order to fully leverage Boyd's scale. In addition to Project 360, the decrease in operating expenses as a percentage of sales was positively impacted by our return to positive same-store sales growth, which provided improved operating leverage on certain operating costs. Offsetting some of the benefits to operating expenses were incremental costs associated with the internalization of scanning and calibration and new location growth. While the internalization of scanning and calibration contributes positively to gross profit and adjusted EBITDA, it does not contribute incremental sales and therefore increases operating expenses as a percentage of sales. Adjusted EBITDA, or EBITDA adjusted for fair value adjustments to financial instruments and cost-related acquisitions and transformational cost initiatives, was $98.4 million, an increase of $22.8 over the same period of 2024. Adjusted EBITDA margins improved 170 basis points to 12.4% in the third quarter, up from 10.7% in the third quarter of 2024. The year-over-year increase in adjusted EBITDA was a result of improvements in gross margin, realization of the cost savings from the indirect staffing model, and direct and indirect procurement cost savings. Net earnings for the third quarter of 2025 was $10.8 million compared to $2.9 million in the same period of 2024. Excluding fair value adjustments and acquisition and transformational cost initiatives, adjusted net earnings for the third quarter of 2025 was $13.3 million, or $0.62 per share compared to $3.2 million, or $0.15 per share in the same period of the prior year. Net earnings and adjusted net earnings for the period benefited from higher adjusted EBITDA which was partially offset by increased depreciation expense and increased finance costs. The increase in depreciation expense was primarily due to the growth in new locations, investments 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 $1.3 billion. Debt net of cash before lease liabilities increased from $487 million at December 31, 2024 to $521 million at September 30, 2025. Debt net of cash before lease liabilities increased as a result of new location growth. During the third quarter of 2025, the company successfully closed a private placement offering of $275 million Canadian dollar senior unsecured notes. The net proceeds of the offering were used to repay existing indebtedness. During 2025, the company plans to make cash capital expenditures, excluding those 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 $16.2 million, or 2% of sales on capital expenditures during the third quarter of 2025. The company spent $20.5 million, or 2.7% 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.