Maybe this'll help. From Canaccord
STRONG BUY The Boyd Group Inc. (BYD.A : TSE : $2.00 : Issued 13.5M)
Tony Yue, Ph.D. (604) 643-7542 tony_yue@canaccord.com
HIGHLIGHTS
* Reported another year of acquisition driven, strong, double-digit growth for f2000. While sales were up 77.6% to $97.0 million, EBITDA operating income rose 64.4% to $9.7 million, and net earnings increased 70.4% to $2.6 million. Basic EPS were also up 80.0% to 0.17. US operations accounted for roughly 49% and Canadian operations
accounted for 51% of f2000 sales. Boyd also achieved an overall 1.7% same-store sales growth in f2000.
* Boyd has acquired five locations in the United States since the beginning of 2001 and now operates 23 company owned collision repair shops in US and 37 in Canada for a total of 60. At present, US-based operations account for 63% of Boyd's $133 million annualized sales. With recently expanded bank credit facility, the company will continue
to pursue consolidation opportunities in the highly fragmented, $40 billion, North American collision repair industry.
Recommendation: STRONG BUY
12-month target price: $4.50
52-week price range: $2.90-1.45
Shares O/S ("A"): basic 13.5M fully diluted 18.7M
Public float: 53%
Indicated dividend: Nil
Weekly trading volume: 32,500
Market capitalization: $27.0M
Sector: Wholesale Distributors
Web site address: www.boydgroup.com
Posted Strong Acquisition Driven Growth for Fiscal 2000
The Boyd Group achieved another strong year of acquisition driven, double-digit growth for f2000. While sales were up 77.6% to $97.0 million from $54.6 million, EBITDA operating income rose 64.4% to $9.7 million (10.0% margin) from $5.9 million (10.8% margin), and net earnings increased 70.4% to $2.6 million from $1.6 million. Basic EPS were also up 80.0% to $0.171 from $0.095. Canadian operations accounted for roughly 51% and US operations accounted for 49% of f2000
sales. Although most of the sales growth came from acquisitions in the United States made during f1999 and f2000, Boyd also experienced an overall 1.7% of same-store increases in f2000, with its Canadian operations posting an average gain of 3%. The decline in EBITDA margin is largely due to lower profitability of newly acquired US
operations.
Continued Expansion in the United States
Boyd exited f1999 with 43 company owned locations and annualized sales of $66 million, compared with 32 company owned locations and annualized sales of $41 million at the end of f1998. During f2000 the company acquired 12 collision repair locations in the United States, added $42 million to its annualized sales, and exited f2000 with 55
company owned locations and annualized sales of $110 million. Boyd has so far in f2001 acquired another five locations in the United States and added $23 million of annualized sales, raising the total to 133 million. About 63% of these sales are derived from US operations.
The recent purchase of Car-Tech Holdings, Inc., which operates four high volume repair facilities in metro Atlanta, Georgia, has expanded Boyd's operations to eight US states. Boyd also has entered into an agreement with the principals of Car-Tech for a purchase option of a
fifth Atlanta area facility.
Boyd now operates 60 company owned collision repair locations in Manitoba (13), Saskatchewan (4), Alberta (11), British Columbia (9), Georgia (4), Kansas (4), Washington (4), Arizona (3), Nevada (3), Oklahoma (2), Illinois (2), and Indiana (1). In addition, Boyd has seven third party owned licensed locations in BC operating under its trade names. Boyd is the largest operator of collision repair shops in Canada and is among the largest in North America.
Remains a STRONG BUY
Despite the recent gains, we continue to rate BYD.A as a STRONG BUY because of the company's rapid and profitable growth and the attractive valuation. However, investor will need patience. The current share price represents roughly an EV/EBITDA multiple of 4.3 times based on our f2001 forecast, and it compares well with the 4.5-5.0 times industry norm of acquisition. The reported EPS of $0.17
on sales of $97.0 million for f2000 are as expected and we are forecasting EPS of $0.23 on revenue of $150.0 million for f2001. Note that Boyd has recently renewed and expanded its credit facility to $50 million from $40 million with the Toronto-Dominion Bank as the lead bank, and with the participation of the Scotia Bank. This credit
facility will be used primarily to finance future acquisitions as the company continues to pursue its growth strategy, to consolidate the highly fragmented $40 billion collision repair industry in North America. |
