Q3 2025 Boyd Group Services Inc Earnings Call

Good morning, everyone. Welcome to the boy 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 boys, annual information form and other periodic, filings and registration statements. And you can access these documents at Cedars, database found at cedar-planked and chief executive officer of Boyd group Services Inc, please. Go ahead Mr. Kerr.

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 open today, you can access our news release as well, as our complete financial statements, and management discussion and Analysis, on our website at Boyd group.com. Our news, release financial statements, and mdna have also been filed on Cedar 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 is truly been 1 of the most exciting and transformative periods in boy'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 exciting. 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, following within the range outlined in our five-year plan.

Several headwinds that have been negatively impacting repairable claims. These include a moderation and 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 we've begun to see some insurance carriers in the United States, seek regulatory approval to decrease insurance premiums.

These Trends combined with with our return, to same store positive, same store sales. The support our view that the industry conditions are normalizing and that Boyd is well positioned to continue to outperform.

in addition, to the Topline growth, we generated strong, adjusted ebit down, margin Improvement, during the third quarter with margins, increasing, 170 basis points over a year on a year-over-year basis to 12.4%

As a result. Adjusted ebit. Ebita grew by 22.8% in the third quarter. The margin Improvement came from both gross margins.

And positive operating leverage as we continue to make Headway on our project 360 initiatives, our cost transformation plan.

And achieved positive operating leverage from the return to same stores from the return deposit of same store sales.

With project 360, we have achieved over million dollars in annualized, run rate savings and are on track to reach. A seventy million dollar run rate by the end of 2026, with the full hundred million dollar 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 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 7 new startup locations. In addition earlier this week, we completed a 5 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 currently expect to owe and currently expect to open 13, start up locations in the fourth quarter, with an additional 18 currently in development through the end of the, 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 as they Mark, a significant milestone in our company.

Joe Hudson's is a company. We've long respected for its strong. Operational performance discipline growth strategy, culture and concentrated Regional footprint in the Southeastern portion of the US 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 complimentary MSO to come along 1. That made sense strategically and finance financially and Joe Hudson checks both boxes.

This acquisition accelerates, our growth solidifies our position as 1 of the leading players in the highly fragmented North American Collision industry and generates meaningful synergies.

The anticipated synergies will benefit both void 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 Baht deal initial public offering in the U in the US and a 525 million, 20 525, 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 of 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 Evita ratio to be at 3.1 times at the closing of the acquisition returning, to levels returning to current levels as early as the end of 2026,

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 resource 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 continue 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 2 to 3 years, we expect that they will contribute meaningfully to sales.

Over the past 2 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 3% to 5%.

This represents a meaningful improvement from both. The second quarter of 2025, which experienced an estimated decline of 6% to 8%, and the first quarter of 2025, during which claims were down an estimated 9% to 10%.

As Brian highlighted, we have seen this strength continued 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 5-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, increase due to several factors, including the benefits of internalization of scanning and calibration.

And an increase in Parts margins.

Improvement of 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 by 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 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 void 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 IBA. It does not contribute incremental sales and therefore increases operating expenses as a percentage of sales.

adjusted IBA or IBA adjusted for fair value adjustments to financial instruments and costs related to Acquisitions and transformational costs initiatives was 98.4 Million an increase of 22.8% over the same period of 2024

Adjusted IBA to 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 debit that 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 62 cents per share, compared to 3.2 million, or 15 cents per share in the same period of the prior year.

Net earnings and adjusted net earnings for the period benefited from higher adjusted IBA which was partially offset by increased depreciation expense and increased Finance costs.

With 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 senior unsecured notes. The net proceeds of the offering were used to repay existing indebtedness.

During 2025 the company plans to make cash, expend 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 acquisition development during the same period of 2024.

I will now pass it back to Brian for closing remarks.

Thanks Jeff. Looking for, excuse me, looking forward, our Outlook remains strong with a return to same store positive. Same store sales growth on the back of improved industry conditions, a positive start to the fourth quarter, continued progress on projects 360 and a transformative acquisition void is well positioned for sustainable growth and continued value Creation in the coming years.

Before I conclude, I want to thank our entire team, from technicians and Frontline staff to Regional leaders and support teams for their hard work and dedication. It's their commitment and collaboration that makes the movements like this possible.

With that. I'd now like to turn the call over to the operator for questions.

Thank you, ladies and gentlemen, we will now begin the question and answer session. Should you have a question please? Press star. Followed by the 1 on your touchtone phone. You will hear prompts by your hand. Has been raised to do, wish to decline from the polling process. Please press star followed by the 2. If you are using a speaker-phone, please lift the hands up before pressing any Keys 1 moment, please for your first question.

Your first question comes from Chris Murray with ATB Capital markets, your line is now open.

Thanks folks. Good morning, Chris.

Morning, maybe turning back to the Outlook a little bit. Um, can you maybe give us some more color on what you're starting to see in the industry in terms of the turn? Um, and you talked about same store, um, sales growth in line with your historical average, but that's kind of a, a 3 to 5 range is a bit uh, bit wide. I was wondering if you could maybe help us understand, you know, kind of the magnitude of the uplift you're seeing um, and and anything that we should be aware of, in terms of thinking about how this might extend into 2026.

Sure, yeah, thanks. Uh, thanks Chris. Um, yeah, in terms of what we're seeing we we we're really commenting on the fact that the conditions that that are improving in terms of seeing the diminishment in the inflation, around insurance premiums stabilization of used car pricing. And those are the Dynamics that are helping to that. We're seeing, uh, affect our business. Um, we did see an improvement in, um, in the first month of, of Q4 compared to the queue, Q3 pushing us into that range and so Q3 was 2.4% the range. Our long term Outlook range is kind of in that 3 to 5%. So,

You know, it's only 1 month. It's hard to necessarily provide much clearer guidance than that, for just 1 month results. But um, but essentially, we're moving into that 3 to 5% long-term range which is, which is obviously incredibly positive

Okay, and any thoughts around. Um, you know, anything you're hearing around industry Trends as we extended in 2026,

Yeah, I'll I'll take that. I mean, look, I think as we've said, the the industry drivers around what's happening with with used car prices that, you know, are, are, are up to or, you know, kind of flat to slightly up. Um, certainly helping the total loss, uh, situation. Um, and then I think is, is insurance premiums come down. You know, our expectation is that people will better better better ensure themselves and put themselves in a better coverage position, which will ultimately result in them being able to file a claim. Should they get into an accident?

Um, 1 question, I just wanted to maybe get some explanation on is, uh, what the Joe Hudson acquisition. Um, you talked about it with a bit of 1.3 billion, purchase price. But then you also mentioned briefly that it was kind of net of uh, net of tax. It's more like 1.15. Can you guys walk us through? Um, how that Delta works and how we should be thinking about your tax rates and then and and and kind of like for what duration or how structural is this going to be on a go forward basis and and and I guess the cash,

Tax impact of all that would be helpful, too.

Sure. Yeah, thanks Chris. So really what we're talking about is the fact that uh, through the structuring of this transaction, we're able to get full tax shield or tax shelter, um, on approximately 1 billion dollars, um, worth of the purchase price. And so we're going to be able to have tax amortization, that's going to shelter. Not only what we expect to be uh, Joe Hudson's. Um, net income for for a, you know, a period of time um, to use up that shelter. But also some of uh, some of per void's, uh, taxable income as well. So there's going to be this opportunity where, from a, you know, from an accounting perspective, we'll still be recognizing tax, um, income tax expense at the same level, but it won't be on current tax. We'll actually have cash tax savings. And so we, we'll pay very little cash taxes. As long as we have those deductions over the next period of time. And we've essentially done a, a DCF on those

Savings to determine that, the 1 billion dollars of, uh, of shelter. You know, it's approximately 250, 260 million of actual tax deductions. And when you present value that, um, it results in a $50 million, um, current benefit.

That's, uh, that's helpful. Leave it there. Thank you.

Thanks Chris. Thanks Chris.

Your next question comes from Derek lassard with TD Cowen.

Your line is now open.

Yeah, good morning, Brian Jeff. Uh, congrats uh, all around.

Okay, thank you.

Uh just a couple of questions for me. Um, outside of the Joe Hudson's acquisition. It does look like sort of your bread and butter type SSO, MSO Acquisitions. Have picked up the pace in the last couple of quarters. Just wondering if you can maybe talk about the the drivers behind that and and sort of the Outlook going forward.

Yeah, I well I think first of all that we we've always suggested that we, you know, we'd get back to a level where, you know, we we had been historically where we're planning for 80 to 100s a year. Um, you know, we did have a slower start to the quarter, or to the, to the first half of the year that was primarily driven by just what was happening in the market itself. Uh, tougher to put new locations in the ground. When the market backdrop is soft, uh, just tougher to get insurance carrier support, what we're doing that. So as the market starts to come back, um, you know, it comes back to the larger players first. And so, what we're seeing is probably a bit of an influx.

in the pipeline of of, you know, those kind of smaller msos and single shops that are more willing to sell, um, that coupled with then our confidence in the ability to get, you know, those locations ramped to a level

that we, uh, we would expect them to ramp to over our normal, over our normal, uh, maturity curve, uh, that gives us the confidence, to be able to, to turn on the acquisition pipeline, a little bit more, um, aggressively. In addition to that, we're starting to see the, you know, what we've also talked about is, you know, half of our growth coming from Greenfield locations. Greenfield Brownfield locations, you're starting to see that pipeline mature and as that pipeline matures to that 8 to 10 locations, a quarter gives us that insulation that we need to, you know, to really have you know almost a guaranteed number of new units opening every single quarter. And then, you know, really the toggle becomes, you know, how are we going to do on the on the uh on the m&a side and you know, so far, the pipeline remains very robust. Um as we've outlined in the, in the commentary with Joe Hudson, we still expect, you know, even with Joe Hudson, we still expect to acquire 80 to 100, or acquire, or open. 80 to 100 new locations.

Every single year as part of our 5-year plan. Um, and you know the leverage positions that we we reference in the material, um, include us continuing to open, you know, 80 to 100 new locations, every single year.

Yeah, great color, Brian, thanks for that. And then the 1 final 1 for me, just in terms of returning, Capital shareholders 2% dividend bump, just how do you think about? Uh, how do you think about that? And, and the balance between between growth and Acquisitions and, you know, BuyBacks and and, and dividend raisins and versus your Leverage?

And then the payout ratio for, for a long time. And, and we've had a history of a very nominal increase annually, really, to help support the inclusion in certain funds. And so, um, you know, the vast majority of our free cash flow gets reinvested in the business because there are just lots of really attractive investments to be made to grow the business and expand even down. We think that that's, that is.

Still our best use of capital but um, this notional dividend and the notional increase are just there as part of inclusion and some funds.

Okay. Thanks Brian. And Jeff and congrats to you and your team again. Thanks. I appreciate it sir. Thank you.

Your next question comes from Mark, Jordan with Goldman Sachs, your line is now open.

Great. Yeah. Thank you very much for for taking my question. Um, you know as we think about the impact of tariffs I'm wondering if you could um give us some insight as to you know what you're seeing in terms of Parts price inflation, maybe how much if any of it was a benefit to your samsar sales growth during 3 q and um, I guess how should we think about it going forward?

Yeah. So look, I think Parts price inflation continues to kind of creep up. If you look at it over the past, if you look at a run from July to August, it's 2.9% up in July 3.4% in August 3.1% in, um, in September, um, as it relates to how much that's actually helping our same store sales growth. I would tell you that the

The average cost of repair um continues to be, you know, much lower or the average. The increase in the average cost of a repair continues to be much lower than it's been historically. If you look at the first half of the year, it's only up 0.9% and we only talk about the first half because it's the mature, uh, the mature data that's out there, um, and that's coming off a 24. That was 3.7%, you know, a 23 that was 7.4%. So I would tell you right now, we're benefiting from is taking some market share, um, in a down environment, uh, we're taking market share because, you know, we're really focused on the success of our clients. Um, our stores are really are really dialed into making sure, that they understand how to win with the clients and that's putting us in a much better position to be able to take, take share in a down environment.

Perfect. Thank you very much. And I guess kind of thinking about that in terms of the, um, the repair cost you mentioned, you know, how should we view that? Um, going forward, in terms of total loss rates, you know, do you expect used vehicle values to to be an offset there to, to raise the pre-colonial values? Um, or you know, how do you how do you expect the repair costs to um, increase going forward?

Yeah, I mean, I I I think there's no reason to expect that it won't return back to kind of those normal levels where we always say that our growth algorithm contemplates, an average repair cost or average repair cost growing at 3 to 5%. Um, you know, with the market backdrop from a claims perspective that's down roughly 1. Um, I think we're headed towards a claims environment where, you know, we're now starting to see that, you know, that 3 to 5, you know, that's coming off a down 6 to 8 and a down 9 to 10, um, in q1 and or Q2 and q1, respectively. So we're seeing the claims environment start to come back closer to that down 1 to 2%. Um, I would expect

You know, as as total loss rates start to react accordingly, you know, because used car prices are going up. Um and I don't think we've seen yet, the influx of of used car price increases um to the extent that I think they will. Um, but as they do continue to go up, I would expect total losses to come down. I'd expect those tickets. Those larger tickets to come back into our, our repair, into our repair facilities. And as that happens, I'd expect the, you know, the overall to continue to increase. When you look at what, you know, at CCC reports

The you know, the increase in labor rates that's still up around 44 and a half percent. Um so the rates themselves are increasing the you the part prices as I referenced earlier, are still continuing to increase. What's really offsetting? That is the the larger tickets coming out of the shop and the mix effect of that going backwards.

Perfect. Thank you very much and congrats on a great quarter.

Thank you, appreciate it.

Your next question comes from Steve Hansen with Raymond James. Your line is now open.

Still encouraging another less. But do do you have any disparity in the regional performance? On that recovery?

Uh, nothing that's different than you know, what we've seen.

Uh, even historically, I mean, I the West Still Remains, you know, a little depressed versus the rest of the country, um, you know, which, you know, but it has, and it, it has been depressed. But as the markets returned, we see it returning the same. It returning to the same Pace as the rest of the country into your point. I, you know, I we we got a pretty good snowstorm here across much of the Midwest, um, over the last couple of days, which is, which is quite early in the year for us. So, you know, we we, we would hope that some of that actually even provides some incremental, Tailwind to the business in the fourth quarter.

Very helpful and just wanted to go back to an Enterprise agreement. You signed with Mitchell back in October at least for the Gerber side of your platform. Can you maybe just elaborate on the motivation there and uh you know how you think that impacts sort of some of the volume pull into 2026 as you stand. That agreement up. Thanks.

Yeah. Yeah. Well, a couple things there. I mean, do you you also saw earlier in the I think it was in the third quarter that you know, the largest insurance carrier came out and said you know, that they have they've agreed to allow, you know, for our to allow service providers to use either platforms CCC or Mitchell. Um you know and as you well know, the the second largest carrier in the US actually except

Exclusively uses Mitchell. So, you know, our agreement with Mitchell is really to make sure that we're continuing to position ourselves, you know, to meet our customers, where they're at um, regardless of what platform they want to use, we're going to be a, we're going to be amenable to that. And, you know, I think this just opens up the the possibility for us to continue to grow with both of those care, both of those carriers.

Appreciate the time, guys. Congrats on all the Milestones, it's great.

Yeah, thank you.

Your next question comes from Daryl young with steal. Your line is now open.

Hey, good morning guys. Uh I just wanted to follow on that Mitchell line of thinking and questioning. Um is there any added complexity or cost that's going to be associated with with running dual systems going forward?

Uh, complexity. Yes. I mean, it is, it does create a little bit of complexity, but when we have, you know, when typically when we have, um, dual Platforms in the shops like that, we're we're really only talking about the estimatics platform, not the, not the shop management. So, um, and we do have Proficiency in the shop right now, to write in Mitchell, we, we write in Mitchell for for other customers, as well. Um, and so I, I don't, I don't see that it being an inhibitor to that. And look at the end of the day, you know, we need to build a Proficiency in the shops to make sure that they can write in either platform. Um, you know, I tell our shops I don't it doesn't matter to me. If if carriers want us to write estimates in,

Crayon. You know, we have to be in a position where we can meet the customers where they're at and take care of the volume that comes to us. Um so complexity a little bit um from a cost perspective

Not substantial. We don't expect to see an increment. There are a lot of incremental costs associated with running both platforms.

Got it. Uh and then 1 more on margins, the Joel Hudson platform, obviously, as as very strong margins and you've called out density as a key component. That's also density, also seems to be a key part of your 5 year. Plan does does Joe Hudson basically lay out the road map for you in terms of what we should expect to see on margins? Uh uh for for the the Gerber platform in the US. And does this give you optimism? You could maybe deliver faster or higher than the 5 year, plan on your Consolidated margin

Yeah, I would. I mean, look, we we have the road map inside of void as well. You know, we talked about on the, you know, during the Joe Hudson calls. The, the 1 thing that we see in our own businesses, if you were to look at our North Division, uh, which is where we have the most density, particularly around, Illinois, Michigan. And um, in in markets like that, we have a similar profit profile as, as Joe Hudson. So we have the road map. That's why, when we came out with our 5-year plan, we talked a lot about building density, uh, because we know that the density matters, both, you know, it matters to our relationships with carriers and their Reliance on us in the marketplace. Um, it matters to us with our dealer relationships, where we buy our OE Park,

Think we have the roadmap internally. We now have the roadmap with Joe Hudson as well. Um, or we have another point of validation with Joe Hudson. Um, certainly you would expect that,

you know, as we blend in, you know, 258, new sites, that, you know, what was reported in the financials at 14.4%, you'd expect that to accelerate our path to, you know, the timing of our path to 14% because we're blending in a very healthy business and actually having profit to go on top. Have synergies to go on top of that. So, yes, I would expect that to be the case.

Got it. Thanks very much. I'll get back in the queue and congrats on the deal.

Thank you.

Your next question comes from Gary. Ho with Deja blink, Capital markets your line is now

hey Gary.

Hey, guys, um, yeah, so a couple of questions on, on my side. Um, first just want me just go back to the, um, put a final point on the Mitchell question.

Um, so I know in your annual filings you disclose the top two in terms of contribution to revenue. I'm assuming that's, uh, neither of them is kind of related to kind of the.

The progressive that can you kind of mentioned in the past?

Can you maybe give us a sense? Um, its contribution today, you know, if it's the third largest player um, where would that, where would that be? And how quickly can you ramp up to get to that atrop penetration? You think, is it relatively quick? Is it 12 or 24 months? Um, just want to pick your brain on that?

Yeah, well, I look we're not going to disclose anything more than what we've already disclosed in terms of top carrier relationships. Um

you know, again, I I would just reiterate the point that, you know,

As 1 of the larger players in the space, we need to be able to. We need to be able to serve our customers the way they want to be served um, opening up Mitchell just gives us the opportunity to do that with, you know, on a much more broad scale. With the second largest, certainly with the second largest carrier in the US and, you know, as it relates to, then the first largest carrier in the US. Um,

You know, they're open, they're openness and willingness to be able to use both platforms, gives us the ability and the confidence then to be able to leverage that platform in our stores and start to build the proficiency, you know, on Mitchell that allows us to then be be able to, you know, regardless of platform, be able to take care of customers. So I I I think I'll leave it at that. I don't there's really nothing more to say than, you know, we're we're making sure that we're being responsive to our customers needs.

And we're going to continue to do that. And we're going to continue to train and educate the organization as fast as we possibly can to make sure that's happening.

Okay.

Got it. Okay, thanks, thanks for that. Um,

and then, uh, my, my next question, uh, I know in your Joe Hudson kind of presentation. You talked about a perform, a 9.3 times about multiple that kind of breaks in 19 million of ibida for mature store contribution. Um, that does seem sizable to me, just relative to the 63 million of ibida, uh, after Ren on the LTM basis. So what what has to happen for you to hit that 19 million? Um,

Of contribution.

Yeah, well look, it's really more reflective of the fact that Joe Hudson's B has bought 140 locations in the last 3 years. So, when you think about 140 of the 258 coming in the last 3 years, there's just a lot of locations that are maturing. Um, so nothing. I think special needs to happen. Other than that, those locations need to, um, need to reach their full scale. Uh, the 1 benefit. I would think we have right now, is it feels like the Market's kind of at a bit of an inflection point. Um, so it might be that we've, you know, we've actually been able to procure or to buy this, you know, this business with, you know, a a set of maturing stores that might be able to accelerate in a much more expedient fashion that we were than we were anticipating. So I think, I think that it's nothing more than just the size, the sheer number.

Number of locations that are maturing.

Okay, great. Maybe I can sneak in a quick numbers, question for Jeff. Um, just on your slide on Proform coverage. Uh, 3.4 times post close expected, uh, to return to 2.7 times as early, as 27. Correct me if I'm wrong. I, I don't believe that takes into account, kind of the overall alignment of the equity raise. Um, so now you have all the final pieces in place and, and the debt deal, does that change the 3.4 times and the timing to get back to the 2.7

Recently and so, yeah. Now we believe that at closing, we'd be at 3.1 times and believe that we would get to approximately 2.6 times within the end of 2026.

Got it. Okay, that makes sense. Okay, that's it for me. Thank you.

Perfect. Thanks.

Your next question comes from Brett, Jordan with Jeffrey's your line is now open.

Hey, good morning, guys.

I guess when you think about the comps being within the 3 to 5 range, is it realistic to think about them being above that range in the first half of 26, just given the low bar or is what you're seeing in a ramp? Still pretty modest?

Yeah, I I think it's it's certainly conceivable given that we're, you know, we're basing it off a lower, you know, sort of a more challenged environment as a as a Lo comp period, a normal level of of growth with a low comp could see us succeeding that 3 to 5 for a for a period of time. You know, we haven't seen that yet. So we're only commenting on what we're seeing thus far this quarter. But um, you know, we have seen some low comps. And if you look at our history, when you see periods of of low comps, they typically are, you know, followed by periods of of higher same store, sales naturally. But, you know, as they said we can't, we can't tell that for sure. But that's it's a reasonable thing to to be. Considering, do you have any caller on the Joe Hudson's, comp their relative performance versus yours in the period?

Uh, yeah, we think they were slightly behind where where we were at in the current period.

Okay. And then 1, quick question I think they had been stronger though. I think they had been stronger throughout the first part of the year. Yeah. They were actually up in the first part of the year and then slightly slightly behind where we finished in the in the third quarter. But I think look, I mean there was obviously going through a lot of distractions and a lot of a lot of a lot of activity in the third quarter as well. So nothing to really read into that.

Okay. And then I quick question on the insurance pricing that you were commented on. Do policies need to actually come down on an absolute basis or just moderating or going up less to get the consumer to be, you know, either putting deductibles, uh, lower or putting comprehensive back on

Well, I think there's a couple things that'll happen 1, there's a tremendous amount of switching that's happening. Um, so as people switch, I think there's going to be a higher propensity to better position themselves from a coverage perspective. Um, there have been 2 2 of the large carriers have. Um, you know, State Farm actually filed to, uh, with the regulatory environment, or regulatory group, to to put a 10% premium decrease in the State of Florida. Um, and then you also saw that Progressive announced, um, that they were going to put a billion dollars, which is roughly $300, a vehicle, um, into the State of Florida as a decrease. So, you know, our our thought is, you know, if you, if you can't afford the

Insurance coverage that you're in. Um, people need to start and we saw this. We saw this coming out of the, the recession, as well. People better ensure themselves when they start making switches, or they start to see the carrier for the pricing decreases and that's what we're expecting.

Great. Thank you.

Yep.

Your next question comes from Nathan Poe with National Bank, Capital markets, your line is now open.

Good morning guys. Thanks for taking my question.

No worries.

I just want to pull on that thread a bit more regarding what you saw in the last recession and

talk about or ask about.

kind of the timeline that you might expect between insurance companies, decreasing

Decreasing rates.

People noticing this bettering themselves and how that finally translates into more volumes in your repair facilities.

Yeah. Well look, I'd start off by saying the the reasons for, you know, the, you know, the um, softness in those 2 periods is very different. You know, the during the recession people were out of work on employment was high. And what what really brought it back in line was people actually getting back to work and then you know, kind of getting themselves back into a better financial position in order to be able to

So as liability claims have been much more stable in that kind of down, you know, 3ish percent even through this period, you know, the same thing we saw was happening on collision claims which leads us to believe that, you know, when Collision claims aren't filed. It's because, you know, the at fault party, can't afford their deductible, or they don't have Collision coverage. So, as the second part of the question, when does it, when does it return? You know it, the, the immediacy of nobody would take the premium decrease and then go back later on and add the coverage. So, you know, my suspicion is that what's happening is, as people go to switch their switch, their insurance, you know, the carriers, you know, are having conversations around. I can save you a couple hundred dollars and at the same time I can actually put you in a lower deductible, um, a lower deductible plan and I can add back Collision coverage and you know, care in in in the consumers are generally making decisions at that point in time. Um, when they get

Get a premium decrease. Um, you know, probably a look, the point of having insurance is to be able to use it if you need it. Um, so if you have insurance and you've put yourself in a position where you can't afford the deductible, should you get into an accident? It's kind of pointless to have it. So I think, you know, generally speaking I would I would assume that people are trying to educate, you know, the the agents and the insurance carriers or educating consumers around, you know, get yourself in a position to where

Of something did happen. You can actually use it. And I think, you know, when they've got the ability to have that conversation with decreases coming in, obviously their objective is going to be to preserve the amount of Premium that they can. The way they can preserve some premium is to increase the coverage.

Gotcha. Thank you for the caller on that.

uh, we'll swap over to m&a, so,

With Joe Hudson, patting out your South Eastern presence. Where does your focus now shift to geographically after that's been, uh, integrated or in the books? Yeah, look, I don't I don't see any meaningful shifts. There's still plenty of of given, how fragmented the market is, um, there's still plenty of growth opportunities for us to cross the southeast, as well as the rest of the United States. Um, you know, so I would expect us to continue to be active in the Southeast. We pick up 2, new states with Joe Hudson West, Virginia and minister in Mississippi. Um, you know, side expect to see continued growth. It just really opens up a lot more whites space for us to be able to build out density, you know. So it it it puts us in as we talked about on the call, it puts us in the the number 1 position in 14 new markets and the number 2 position and 2 new markets, you know continuing to build out those markets and fill in any white space. You know really is is uh

It's part of our Market planning initiative that we had kicked off earlier this year.

Excellent. And with Joe Hudson. Now, out of the MSO pool, are you able to describe what the MSO pipeline looks like now in terms of size?

Yeah. Well, I mean, Joe Hudson was 1 of the 1 of the assets that was longer in their whole period, um, with private Equity. Um, so the pipeline of larger transactions, most of them are fairly immature in their whole period. So the pipeline of larger deals like that, you know, is probably in pushed out to the, you know, call the 2 to 5 year period of time, but there are still plenty of, um, you know, call it 3 to 10 store locations that are out there that you're seeing us, be a lot more active in right now. Um, you know, obviously, the L&M transaction gave us 8, new locations, the the new

The business in Nova Scotia gave us five locations. So, we're starting to get a lot more active, and they're starting to see a lot more activity in that, kind of, call it smaller MSO, smaller regional MSO category that we're going to continue to be very active in. You know, while the other ones, you know, get longer in their hold period and come back to the market again. And, you know, if they make sense for us, then, you know, we'll continue to be participating.

Participative at that point in time.

Gotcha and 1. Last 1 for me.

Uh, with the new entry into Nova Scotia, if you take a step back, are you seeing any major valuation differentials between Canada and the US, um, between like single stores or multi stores?

No. And, you know, we haven't been as active in Canada recently, but I think as, as you know, our leader in Canada's really gotten that business back on track. Um, and we've seen the Canadian Marketplace emerge. The same way we've seen some of the the benefits we've seen in the US. We're we're really refocusing in on you know continuing to build out the Canadian market and I'm really happy that um we open up a new province with a lot of white space for us to be able to go build out.

Thank you guys, I'll turn it over.

Thanks.

Your next question comes from Tristan Thomas Martin with BMO Capital markets. Your line is now open.

Hey, good morning.

Um, I think it's kind of been asked a couple of ways. I was just curious. Is there any correlation outside of insurance pricing and used car values? Is there any correlation between consumer confidence levels and claims volumes?

Uh I probably but harder to certainly harder to quantify. I mean the 1 thing that that that we can correlate and we have seen move as the drivers have moved is, you know, those drivers being what's happening with premiums and what's happening with used car prices. You know, we've said those were the 2 kind of cyclical things that were happening that were were driving the claim softness. And you know, as those things have started to show signs of improvement so have the claims environments, I think it

Gives us a a fairly High degree of confidence in the, in the correlation between. You know, those 2 drivers and what's happening in the industry. Does it, does it? It is there, some incremental, you know, positive or negative associated with consumer sentiment, as I said, probably, but much harder to quantify

Okay. And then just 1 more that for thirty thoughts of 45 million of potential synergies. My understanding is that's all operational. Is there any way to think about maybe potential Topline synergies or market share from this densification?

There's there's certainly is probably, you know, Synergy opportunity as it relates to revenue. Uh, we haven't baked any of that into our into our thinking, at this point, um, but we certainly believe that there's a benefit to densification and, and, you know, would would anticipate that being upside to the transaction?

Okay. Great Brian. Feel better.

Yeah, appreciate it. Thank you.

Your next question comes from razi. Hassan with Paradigm Capital, your line is now open.

Good morning. Thanks for taking my questions. Um, could you maybe just highlight the added relationships with insurance carriers? That Joe Hudson's brings, and then that new opportunities for Boyd, is there much overlap between the 2 companies.

Uh, there's from an overlap of insurance carrier relationships. I mean, they're, they're they're doing business with all the same carriers that we do business with, um, you know, so I don't, there's no meaningful difference in the, you know, in the carrier makeup. So we don't see any

Anything, you know, anything kind of anomalous there?

Okay, great. And and then just moving on to um, operating expenses as a percentage of sales, you mentioned indirect and direct procurement savings is going forward. Could you maybe quantify that a bit just in terms of the impact in the coming quarters?

Yeah, I I, I guess we'll stick to our to our, um, the guidance that we've been providing all alongs that that we sort of expect to get to 70 70, 70 million dollars worth of run rate benefit by the end of 2026. Um, you know, the, the indirect Staffing model, um, that we put through in Q2 of 2020, uh, Q2 of 2025 resulted in approximately, 30 million of that 70 million. So we are expecting to be, uh, factoring in another 40 million between the end of Q2 of 2025. And and the end of 2026 is kind of the way we're thinking kind of in a ratable way is how we're modeling out. So that by the end of 2026, you've got to run rate of 70 million

Okay. That would, that would impact the operating expense line, right?

Yeah, primarily there'll still be a little bit of wins, um, on the, on the on the gross margin side as well, but um, the majority of it would be coming from the Opex slide.

Okay, great, and maybe just, lastly, I think on your presentation deck, you mentioned, um, with the with the Joe Joe Hudson's, acquisition market share in the US, goes to 7.6%. Um, do I have that number right?

Yeah, that is what we referenced in the materials.

Okay, great. Thanks very much and congrats on record.

Yeah, thank you. I appreciate it. Thank you.

So, Baja Khan with RBC Capital Markets, your line is now open.

Hey s. Good morning.

Good morning.

is just on the

just on the project 360 kind of kind of the execution. And as you look ahead to the integration of Joe Hudson, I think there was some comments that you know, it could be similar teams that executes. This can we just talk about kind of the the team that's going to deliver the synergies, will you just sort of be up your existing team? Will it be a separate integration team? Um, as we sort of work through 2026 to deliver on the these targets and the synergies thanks.

Yeah, so there, there's 2 things. I'd add to that. 1 is um, you know, as part of project 360, we opened up what's called the results, delivery office, um, you know, to execute on those initiatives. What we're what we're doing with Joe Hudson is, you know, we're we're combining the results, delivery office with an integration management office, and we're going to have that team responsible for going after. Now, not just the 100 million that we committed to, from a project 360 perspective. But now the incremental 35 to 45 million of synergies that we're anticipating from the Joe Hudson transaction. Um, so that, that that team and that process is very, very robust, the Rd. The results delivery office obviously has proven that, you know that we can get the type of Attraction, you know, that we need so many of the same resources that we're working on that are going to be what's

What's now helping us with?

With the actual Synergy realization of of, um, the Joe hats and transaction, the leader of that who's Kim, which is Kim Min, who's done a phenomenal job of managing through the RDO process is also going to lead the IMO process now. Um, that'll be a much more wholesome approach to not just Synergy realization but making sure that we integrate, you know, the Joe Hudson transaction properly. The most important thing that we need to do in the short term is preserve the base business that we just bought and make sure that we keep the team stable in that organization because really our desire is to put the best of the best, you know, people on the field when we're done with the transaction. So, um, the team is really dialed into making sure that happens. Um, and, you know, I, I couldn't have any, I couldn't be more confident in the leader, that we have running it.

Great, thanks for that caller. Then just continue on that discussion, particularly as it relates to the procurement savings and maybe consolidating some of the purchasing agreements with your vendors. Are there suppliers with whom you have agreements? Is there a sort of timeline to these? Is it something you can, following a major transaction, sort of call them all to the table? Understanding the project 360 savings are quite front-loaded, just wondering if the procurement savings related to Joe Hudson could also maybe come a bit sooner than the rest of the synergies. Thanks very much. Yeah, I mean, we've talked about, you know, slightly...

More than 50% of the savings coming in the first year. You know, when we talked about the Joe Hudson transaction. And, and our confidence in that really comes from the fact that we know that, you know, some of those procurement relationships, will have immediate benefit. Um, so yeah, you're right. We do expect some of that to be front-end loaded and we expect, you know, the, you know, kind of more of the, you know, the back off the, The backend synergies to be really more realized at the, you know, towards the tail end of the integration process.

Great. Thanks very much.

Yeah, appreciate it. S.

Don't know further questions at this time. I will now turn the call over to Brian for closing remarks.

All right. Well, thank you, operator. And thank you all once again for joining our call today. We look forward to reporting our fourth quarter results in March. Thanks again, and have a great day.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in essay, please disconnect your lines,