Boyd Group Services Inc.

Good morning, everyone. Welcome to the Boyd Group Services, Inc. 2026 First Quarter Results Conference Call. Listeners are reminded that certain matters discussed in today's call or answers that may be given to questions asked could constitute forward-looking statements that are subject to risk and uncertainties relating 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 CDAR's database found at cdarplus.ca and EDGAR at www.scc.gov. We released our 2026 first quarter results before markets 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 have also been filed at CDAR Plus and EDGAR this morning. On today's call, we will discuss the financial results for the quarter ended March 31, 2026 and provide a general business update. We will then open the call for questions. I'd like to remind everyone that this conference call is being recorded today, Wednesday, May 13th, 2026. 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 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. Building on the strong foundation that we established in 2025, I'm pleased to report we delivered all-time record first quarter results. We achieved both all-time record revenue and adjusted EBITDA, grew our location footprint by 33%, recorded our third consecutive quarter of positive same-store sales growth, achieved an incremental 20 million in Project 360 and Synergy cost savings, and expanded our adjusted EBITDA margins by 200 basis points. We also successfully closed our Joe Hudson's acquisition, the largest MSO transaction in the company's history, with the integration successfully completed subsequent to quarter end. This success would not have been possible without the hard work and dedication from the entire Boyd team including our new Joe Hudson's team members. I want to thank all of our employees for their meaningful contributions. Turning to our financial performance, in the first quarter we generated all-time record revenue of $997 million, an increase of 28% compared to the first quarter of last year, and increased adjusted EBITDA by 52% to an all-time record of $122 million. Adjusted EBITDA margins expanded by 200 basis points to 12.3%, driven by benefits from Project 360 and acquisition synergies, as well as the inclusion of Joe Hudson's, which is accretive to our adjusted EBITDA margins. To date, we have realized over $60 million in cost savings from the combination of Project 360 and acquisition synergies. This is up from $40 million at the end of 2025. We remain on track to realize an additional $30 million in 2026 and the remaining $50 million expected to be achieved between 2027 and 2029 for a total anticipated savings of $140 million. Same store sales increased 1.7%. However, adjusting for the weather impact in the south, same store sales growth would have been approximately 2.6%. Our same-store sales performance has benefited from continued market share gains and the improvement in repairable claims volumes throughout 2025 and Q1 2026. In the first quarter of 2026, based on repairable claims processing data, we estimate that repairable claims volumes declined between 0% and 2%, which is now back in line with our long-term growth framework. This framework contemplates average same-store sales growth of 3% to 5%, supported by continued incremental market share gains driven by ongoing consolidation within the highly fragmented collision repair industry, strong performance with insurance clients, and disciplined operational execution. This framework also assumes 3% to 4% annual growth in average total cost of repair and approximately 1% growth in miles driven, partially offset by an approximate 2% decline in repairable claims due to the impact of collision avoidance systems. It is important to note that this framework represents long term averages. As a result, performance may vary outside of these ranges over shorter periods of time without impacting our confidence in achieving our long term growth objectives. During recent quarters, the growth and average total cost of repair has fallen below the expected range required to support our long term growth framework. We expect total cost of repair will return to levels outlined in our framework Matt Pinyan, driven by lower total losses from rising vehicle prices increasing vehicle complexity and continued inflation and parts in Labor costs. Matt Pinyan, The positive same store sales trends we experienced in our business over the past three quarters has continued thus far in the second quarter with same store sales in April approaching the low end of our long term range. complementing same store sales growth new location growth remains an important driver of our long term performance as we continue to target five to 7% average annual unit growth over the long term. same store sales growth generates strong cash flows that we reinvest to expand our footprint through acquisitions and startup locations funding expansion through internally generated cash flow has proven to be highly accretive over the long term. In the first quarter, we saw strong contributions from new locations. We increased our location footprint by 33% to 1,312 locations at quarter end, including 258 locations acquired through the Joe Hudson's transactions, three single shop acquisitions, and eight new startups. We remain focused on market densification through acquisition and new location growth, aiming to be a number one or two player in the markets we serve. Market density provides the foundation for market share gains, same-store sales growth, and increased profitability. We continue to have an active pipeline of new startups in development and expect to open five new startup locations in the second quarter of 2026, with an additional 17 new startup locations currently under development for the remainder of the year. We expect startup activity to be complemented by acquisitions of both single shops and small MSOs as we continue to build on the strong momentum we established last year. Turning to Joe Hudson's, we successfully closed the acquisition on January 9th and I'm pleased to report that the integration and synergy realization remains on track. Subsequent to quarter end, we have completed the conversion of all Joe Hudson's locations to our systems and have begun to realize expected synergies. We continue to expect to generate approximately $40 million in synergies from the combination of the Boyd and Joe Hudson's businesses, with approximately 50% realized in 2026. Although Joe Hudson's locations experienced some sales disruptions from the storms in Q1, as well as from the store conversion process through the end of April, the conversions are now complete, which allows sales to return to normal projection shortly. We remain on track to realize 50% of the synergies in 2026 and the balance by 2028. I will now turn it over to Jeff to go through the first quarter financial results in more detail. Jeff.

Thanks, Brian. As Brian highlighted, we delivered all-time record first quarter performance with positive same store sales growth, significant growth from new locations, and strong margin improvement as we continue to execute on Project 360, and began to realize expected synergies from the Joe Hudson's acquisition. During the first quarter, our sales increased by 28.1% year over year to an all-time record $996.7 million, with same-store sales, excluding foreign exchange, increasing by 1.7%. Without the negative impact of storm activity in the south, we estimate that same-store sales growth of 2.6 would have been achieved in the first quarter. In addition, $203.3 million in incremental sales were generated from 339 new locations that were not in operation for the full comparative period. The acquisition of Joe Hudson's, which closed on January 9, 2026, contributed $168 million in sales, while other new location growth contributed an incremental $35.3 million. As mentioned on our fourth quarter, 2025 results conference call same store sales and Joe Hudson sales early in the first quarter were negatively impacted by unusual winter storm activity in the US South region with activity levels returned to normal as the quarter progressed. Gross profit increased 29.1% year over year to $463.7 million. Gross margin was 46.5% in the first quarter of 2026. compared to the 46.2% achieved in the same period of 2025. The gross margin percentage benefited from increased parts and paint margins from Project 360 and Joe Hudson's synergy realization, partially offset by a lower mix of glass sales and variability in performance-based pricing. The gross margin was also impacted by lower gross margins inherent in Joe Hudson's business. Turning to operating expenses, for the first quarter of 2026, operating expenses as a percent of sales were 34.2%, compared to 35.8% of sales for the same period in 2025. Operating expenses were positively impacted by Project 360, the inclusion of the Joe Hudson's acquisition, which had a lower operating expense ratio, and the mitigating effect of same-store sales growth, which partially offset typical cost increases. Adjusted EBITDA increased 51.9% year-over-year to an all-time record $122.4 million. Adjusted EBITDA margins improved 200 basis points to 12.3% in the first quarter, up from 10.3% in the same period of the prior year. The increase was primarily the result of Project 360 and Synergy Realization, as well as the acquisition of Joe Hudson's, which is accretive to adjusted EBITDA margins. During the quarter, the company realized an incremental $20 million in cost savings from Project 360 and Joe Hudson Synergies, bringing the total savings achieved to date to over $60 million. Net loss for the first quarter of 2026 was $7.9 million, compared to a net loss of $2.6 million in the same period of 2025. The net loss was negatively impacted by acquisition and transformational cost initiatives. These costs are expected to decline as integration finalizes. Excluding fair value adjustments, acquisition and transformational cost initiatives, and amortization of intangibles arising from acquisitions, adjusted net earnings for the first quarter of 2026 was $16.1 million, or 58 cents per share, compared to adjusted net earnings of $6.6 million, or 31 cents per share, in the same period of the prior year. The company expects one-time costs associated with Project 360 and Joe Hudson synergies to total approximately $50 million, of which $26.5 million have been recorded to date. During 2026, the company plans to make cash capital expenditures, excluding those related to acquisition and development, within the range of 1.6% and 1.8% of sales. In the first quarter, capital expenditures as a percent of sales were 1.3%, excluding sales achieved by Joe Hudson's locations compared to 1.5% of sales in the same period of 2025. We continue to expect capital expenditures related to the Joe Hudson's acquisition to total $30 million with $2.6 million incurred in Q1 and most of the remainder to be spent in 2026. At the end of Q1 2026, the company had total debt net of cash of $2 billion compared to $488 million at the end of the fourth quarter of 2025 and $1.3 billion at the end of Q1 2025. Before lease liabilities, Boyd exited Q1 2026 with net debt of $946 million, compared to net cash of $290.1 million at the end of December 2025. The increase in debt compared to the fourth quarter of 2025 reflects the closing of the Joe Hudson's acquisition on January 9, 2026, which had a total transaction value of approximately $1.3 billion. Boyd continues to have strong liquidity to support future growth. with ample room available under our credit facility, complemented by strong cash flow generation from our capital light business model. At the end of the first quarter, pro forma debt leverage declined to approximately 2.9 times, down from 3.1 times at the end of the fourth quarter of 2025. We continue to expect leverage to reach 2.6 times as early as the end of 2026. I will now pass it back to Brian for closing remarks.