Boyd Group Services Inc. reports Q2 results and planned CFO retirement

WINNIPEG — Boyd Group Services Inc. announced the results for the three and six month periods ended June 30, 2022.

“During the second quarter of 2022, we delivered record sales and Adjusted EBITDA, supported by strong same-store sales growth in both Canada and the U.S. as well as solid contributions from new location growth, glass and calibration services. Prudent financial management has allowed Boyd to reduce the level of debt, net of cash prior to lease liabilities during both the first and second quarters of 2022. Demand for Boyd’s services continued to substantially exceed capacity in all U.S. markets, while Canadian markets continued to experience recovery of demand for services as conditions began to normalize. The ability to service demand continues to be constrained by market conditions. The path to achieving historical levels of performance requires additional labor, pricing increases and continued easing of supply chain pressure,” said Timothy O’Day, President & Chief Executive Officer of the Boyd Group. “These market conditions continued to result in an under absorption of fixed costs and high levels of work-in-process at the end of the second quarter.”

“Building on the success we achieved early in 2022, Boyd continues to negotiate pricing increases from clients, which are necessary in order to support the attraction of talent to the industry and the retention of the current talent pool” added Mr. O’Day. “We have made good progress with many clients, but have not achieved the level of pricing that will return our labor margins to historical levels. In addition, we are experiencing pricing variability between clients, which, in addition to receiving sufficient pricing overall, is a key area of focus in ongoing pricing discussions. The fact is that a higher level of pricing is critical for the industry to attract and retain the skilled labor that is needed to meet even reduced levels of demand. Supply chain disruption has continued to impact the completion of many repairs and has resulted in continued high levels of work-in-process; however, this disruption is showing early signs of normalization, as the underlying manufacturing and distribution issues reduce.”

“We remain committed to addressing the labor market challenges through initiatives such as the Technician Development Program, including a commitment to double the number of trainees in the program to help meet future needs. We are increasing the number of apprentices in the Technician Development Program from approximately 200 apprentices at the beginning of 2022 to 400 apprentices by the second quarter of 2023.”

“In the short-term, we remain focused on addressing the labor shortage for our core business”, added Mr. O’Day. “Our revenue will be impacted in the near term by continuing levels of absenteeism from COVID, which will be further compounded by challenges of vacation, especially given the already tight workforce. We are focused on optimizing performance of new locations, as well as scanning and calibration, and consistent execution of the WOW operating way. Notwithstanding near-term challenges, Boyd remains confident in the business model and the Company’s plan to double the size of the business on a constant currency basis from 2021 to 2025 against 2019 sales.”

BGSI also announced the planned retirement of Pat Pathipati from the role of Executive Vice President & CFO, effective December 31, 2022. An executive search process for his successor has commenced.

“I would like to thank the outstanding leadership team at Boyd that I have had the privilege of working with”, said Mr. Pathipati. “I have every confidence that the Company will continue to execute against a solid business strategy supported by an excellent long-tenured leadership team.”