WINNIPEG – Boyd Group Income Fund (TSX:BYD.UN) says its North American auto repair business showed strong revenue growth and higher adjusted earnings in the fourth quarter of 2013, but also a net loss due to non-cash expense items required under standard accounting rules.
Total sales for the Winnipeg-based fund were up 40 per cent to $161.1 million, from $115 million a year earlier, due to acquisitions and internal growth.
Boyd’s adjusted net earnings were $6.4 million or 44.6 cents per unit, up from $5.0 million or 39.8 cents per unit.
However, fund also posted a $6.9 million net loss in the fourth quarter, or 48 cents per share, due to several non-cash expense items, compared with a profit of $2.4 million or $0.19 per unit a year earlier.
Among the contributors to the net loss was a $11.9-million fair-value adjustment to certain financial instruments that were required mainly because of the higher value of Boyd’s fund units.
Boyd’s units began the quarter on Oct. 1 at $27.57 and ended trading Dec. 31 at $33.15, for a gain of about 20 per cent. The units closed on Thursday on the Toronto Stock Exchange at $34.44.
For the full year ended Dec. 31, Boyd had a net loss of $11.6 million or 89 cents per unit, compared with net earnings of $7.1 million or 56 cents per share in 2012.
The 2013 loss was primarily from non-cash expenses for fair value adjustments of $27.1 million due to the fund’s unit price appreciation from $16.29 at the beginning of the year to $33.15 at Dec. 31, 2013.
The net earnings, for both the year and quarter, were also affected by items such as acquisition costs, a gain on sale of software, write-down of goodwill assets and amortization of brands related to rebranding.
Boyd said its net earnings adjusted for these items, or adjusted net earnings, increased to $18.5 million for 2013, compared with adjusted earnings of $14.7 million in 2012.
“We expect the momentum gained by the company in 2013 to continue into 2014,” said Brock Bulbuck, Boyd Group’s president and chief executive officer.
He said the group has completed three single-location acquisitions so far in 2014. It’s also on the hunt for multi-locations accusations, in addition to its purchase of Glass America and Hansen Collision and Glass, which were completed last year and contributed to sales growth.
“Looking ahead to our first quarter, the unusually severe winter weather conditions experienced in both Canada and many parts of the U.S. have increased demand for our collision services in many of our markets, however this has been somewhat offset by weather related production challenges and business interruption that we have also experienced in multiple markets.” Bulbuck said.
“We need to also bear in mind the seasonality of some of our operating expenses, including payroll taxes, which are typically highest during the first quarter, as well as the seasonality of our expanded glass business, which experiences its lowest demand in the winter months.”