Prepared remarks
Good morning, everyone. Welcome to Boyd Group Services, Inc.'s 2026 Second Quarter 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 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 SEDAR+ found at sedarplus.ca and EDGAR at www.sec.gov. Boyd released its 2026 second quarter results before markets opened today. You can access the news release as well as the complete financial statements and management discussion and analysis on the company's website at boydgroup.com. The news release, financial statements and MD&A have also been filed on SEDAR+ and EDGAR this morning. On today's call, Boyd will discuss the financial results for the quarter ended June 30, 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, August 12, 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 on today's call. On the call with me today are Jeff Murray, our Executive Vice President and Chief Financial Officer; and Steve Savard, who recently joined our team to lead our investor relations and capital markets efforts. We look forward to Steve maturing and professionalizing this function and driving direct and meaningful engagement with our shareholders. Our second quarter results reflect deliberate execution across our business, evidenced by strong revenue growth, meaningful margin expansion and measurable progress against our strategic priorities. Revenue increased 30% year-over-year, exceeding $1 billion for the first time in Boyd's history, while adjusted EBITDA grew 45%. Adjusted EBITDA margin expanded to 13.4%, up from 12% in the second quarter of 2025 and 11.5% in Q2 of 2024 prior to the launch of Project 360, our cost transformation program. Our top-line performance reflects continued market share gains as well as ongoing execution of our densification strategy, driving a 32% year-over-year expansion of our location footprint, anchored by the acquisition of Joe Hudson's Collision Center alongside new location development. Importantly, this top-line expansion was paired with strong margin gains. The 140 basis point year-over-year increase in adjusted EBITDA margin reflects the continued execution of Project 360 alongside accelerated synergy realization from the Joe Hudson's acquisition. As a result, we are raising our 2026 synergy target to $35 million, up from our previous estimate of $20 million. During the quarter, we successfully completed the system conversion across all Joe Hudson's locations. This marks a critical integration milestone, establishing a unified operating platform that will drive greater consistency, productivity and margin expansion across the entire business. While the conversion resulted in temporary sales disruption, we have implemented targeted initiatives to strengthen throughput and local execution. These actions are now gaining traction and driving revenue on a more profitable foundation. Turning to the broader operating environment. Based on second quarter claims processing data, we estimate that repairable claims volumes were flat to down 2% year-over-year. This represents a meaningful improvement compared to the decline seen in Q2 of 2025 and points to ongoing stabilization consistent with our long-term planning assumptions. Against this backdrop, we generated 2.9% same-store sales growth in the second quarter with limited contribution from total cost of repair. This performance confirms continued market share gains, reflecting the strength of the company's insurer relationships, continued improvement in carrier performance and the benefits of our 2025 regional incentive realignment. In July 2026, same-store sales remained positive in the low single digits, continuing to reflect the aforementioned market share gains. Monthly results can vary widely. Consequently, we track same-store sales trends over broader horizons and do not view any single month's performance as indicative of a full quarter's results. Our continued outperformance relative to the industry repair volumes reflects the strength of our strategy and execution. We remain focused on driving sustainable, profitable growth by improving capacity utilization, capturing local market share and selectively expanding our footprint through disciplined acquisitions and new location development, all while driving profitability and cash flow. Given the highly fragmented nature of our industry, we see a significant runway to expand our market share, both organically and through disciplined M&A while leveraging our network scale to drive further operational efficiencies. I will now pass the call over to Jeff, who will provide a more detailed analysis of our second quarter results. Jeff?
Thanks, Brian. As highlighted, we delivered strong second quarter performance, marked by robust top-line growth, positive same-store sales and strong margin expansion. Second quarter revenue increased 30% year-over-year to $1,013 million. Growth was driven by $211 million in incremental contributions from 340 new locations not in operation for the full prior year period, alongside 2.9% same-store sales growth as Boyd continued to outperform the broader industry. During the quarter, Joe Hudson's locations contributed $175 million to total sales. Gross profit increased 31% year-over-year to $480 million, representing a gross margin of 47.4%, up 60 basis points compared to 46.8% in the second quarter of 2025. This margin expansion was driven by higher paint and parts margins, supported by accelerated synergies and Project 360 cost savings as well as increased scanning, calibration and sublet margins. Turning to operating expenses. For the second quarter of 2026, operating expenses as a percentage of sales improved to 33.9% compared to 34.8% in the prior year period. This 90 basis point improvement was driven by Project 360 and Joe Hudson synergy realization. Adjusted EBITDA grew 45% to $135.9 million, outpacing revenue growth. Adjusted EBITDA margin expanded 140 basis points to 13.4%, up from 12% in the prior period. These gains were anchored by approximately $15 million in combined Project 360 cost savings and Joe Hudson synergies realized during the quarter. Net earnings for the second quarter of 2026 were $1.3 million, compared to $5.4 million in the same period of 2025. Net earnings were impacted by higher amortization and depreciation costs related to new location growth as well as higher financing costs. An adjustment was made in the quarter to revise the initial purchase price allocation, which negatively impacted amortization in the quarter in the amount of $5 million. Net earnings adjusted for this incremental intangible amortization would have resulted in net earnings of $6.4 million, up $1 million from the same period of 2025. Adjusted net earnings for the second quarter increased 47% year-over-year to $22.4 million and adjusted EPS increased to $0.80 from $0.71 in the same period of the prior year. For full year 2026, the company continues to expect maintenance capital expenditures to range between 1.6% and 1.8% of sales. Additionally, capital expenditures associated with the Joe Hudson's acquisition remain on track at an estimated $30 million, of which approximately $9.8 million has been invested through Q2 of 2026. Boyd's balance sheet remains strong, providing the financial flexibility to fund our future growth initiatives. Robust earnings growth in the first half of the year, combined with our capital-light business model, drove improvement in pro forma net leverage to approximately 2.8x at quarter end, down from 3.1x at the close of fiscal 2025. I will now pass it back to Brian for closing remarks.
Thanks, Jeff. To wrap up, our second quarter performance underscores the strength of our operating model and our ability to deliver profitable, high-quality growth. We are executing well on our strategic priorities, successfully integrating Joe Hudson's and expanding our margins through Project 360 and network synergies. With a strong balance sheet and a clear runway in a highly fragmented market, we remain well positioned to drive long-term value for our shareholders. With that, I would like to open the call to questions. Operator?
Questions and answers
The conference operator provided instructions for asking questions. Your first question comes from the line of Steven Hansen with Raymond James.
Brian, I wanted to focus on the margin expansion first. It looked pretty solid at 140 basis points. Some of that's coming from Project 360 and faster-than-expected synergy realization. Just trying to get a level set on how you think that journey is going. I know you raised the guidance for the year, but are you seeing more synergies, where are they coming from specifically? And how are you getting them faster ultimately?
Yes. First of all, I'm very pleased with the progress around margins and the cadence we've seen. If you look back to Q2 of last year, 12% in Q2, 12.4% in Q3, 13.1% in Q4, and then seasonally we dip down in Q1 to 12.3% and bounce right back up to 13.4%. We're seeing about a 40 basis point expansion on our journey back toward 14% on a quarterly basis. I expect that to continue. The Project 360 benefits were planned to be ratably distributed throughout the balance of the year, and I think this quarter's results evidence that. As it relates to synergies, the pull-forward really has to do with the timing and pacing of the Joe Hudson integration. We were able to integrate Joe Hudson more quickly. Operationally, that was the right move because we needed visibility into the operations more deeply than we were able to on their prior systems. Getting them on our systems platform and accelerating back-office synergies allowed us to increase our synergy expectation while continuing to achieve strong margins in the quarter.
Very helpful. And just quickly on the July outlook, you're referencing low single digits on the July mark. I know you don't like to extrapolate a single month, but how are you viewing the recovery in the claims environment and your ability to continue to take share?
The recovery in the claims environment appears to have stabilized in the 0% to down 2% range, which allows us to achieve our long-term growth algorithm. We are still seeing limited price in the market, which is the only notable downside right now. I believe this stabilization is persistent. Last year the drivers of the decline were heavy insurance premium inflation, and insurance premium inflation has now almost turned to a deflationary category. Total losses are essentially flat year-over-year at this point. As the factors that drove the negative results get better, the marketplace becomes a much more stable environment for us to operate in.
The next question comes from the line of Mark Jordan with Goldman Sachs.
As we think about total cost of repair, how should we think about the second half of the year? Any color on the various components that make up that measure, be it the mix between parts and labor, alternative parts usage, et cetera?
A couple of points on total cost of repair. Relative to timing, we don't have a strong point of view on precise timing, but structurally there are drivers to consider. In the near term, factors like higher total loss rates, a bit more alternative part usage, and when there's less work in the marketplace you tend to see technicians repair rather than replace, which can negatively impact TCOR. More importantly, structural tailwinds remain. The cost of repairing a vehicle 0 to 3 years old is approximately $2,000 greater than the overall average, and we now see the cost to repair a 0- to 3-year vehicle close to $6,000. As the car park evolves and newer vehicles become a larger portion of the repair set, average ticket will continue to blend up. I believe those structural tailwinds remain. In the short term, we're focused on taking market share in the current 0% to down 2% environment, and when price returns, it will be a nice overlay on top of current performance.
Perfect. And one follow-up: last quarter you mentioned a headwind from mix shift to aftermarket parts given the older car park. How does that play out over the coming years? Is that something that should diminish as the car park ages with newer vehicles becoming a larger portion?
I think it laps. The usage of aftermarket parts should stabilize rather than accelerate; it should become a muted impact over time. I don't see aftermarket parts usage accelerating—it's more likely to normalize and then stop being a growing headwind.
Your next question comes from the line of Bret Jordan with Jefferies.
Could you talk a little bit about your longer-term expectations on total loss rates, perhaps where you see the upper boundary over a 5- or 10-year basis?
When thinking about total loss rates, there are multiple stakeholders who prefer fewer total losses: insurance carriers, OEMs and we prefer to repair vehicles and get customers back on the road safely. Longer term, I could see some upward movement in total loss rates, but I do not expect very large movement. If I were to peg a number, I would expect something in the neighborhood of three-tenths of a percent per year of movement, which is not a large change. There is also momentum to try to drive total losses down—legislative actions such as the example in Rhode Island moving toward an 85% threshold for total losses versus the industry standard of about 70% today indicate this. The aging car park might push rates higher, but other factors are suppressing the increase and could offset that.
I would add it's important to think about total loss rates in the context of overall market size growth. Even if total loss percentages increase slightly, the total market size could change such that there are still more cars available to be repaired.
Great. And could you talk about regional performance? Are you seeing densification benefits from the Joe Hudson acquisition in particular markets or any outliers?
We see continued strength in the North, which is influenced in part by weather-related activity and is contributing to some outsized growth there. The South was going through heavy integration in Q1 and Q2 due to Joe Hudson, so performance there is impacted by that work. Broadly, we see opportunity across all markets. The most important thing is continuing to perform against our clients' metrics—when we do that, it opens up more opportunities and allows us to capture more work locally. On balance, we control much of what's happening in regional performance through execution.
The next question comes from the line of Thomas Wendler with Stephens Inc.
Solid quarter. You highlighted 13 new start-ups for the remainder of the year. How should we be thinking about acquisitions for the remainder of the year?
Think of acquisitions similar to historical patterns: we tend to start slow and finish strong, and we have a robust pipeline. Expect acceleration as we get into the second half of the year, which is typical. Historically, we've had a strong fourth quarter for acquisitions, largely due to timing of opportunities coming to market. We are also working to stabilize our NTI pipeline. We had a couple of NTI opportunities pushed out or canceled because of overlap with Joe Hudson, which explains some erosion in third quarter expectations. We would like the NTI cadence to normalize to around eight per quarter; currently we have 10 NTIs planned for the fourth quarter and will layer on acquisitions on top of that.
Appreciate the color. One more: you mentioned capacity utilization as an opportunity for the back half of the year. Can you help us think about current utilization rates and how fixed costs will lever as utilization improves?
Technician workforce productivity is our primary capacity utilization metric—hours per technician per week. We still see upside in utilizing the existing technician base. We continue to recruit additional technicians where needed, but there is room to improve utilization. Given our current growth and the 2.9% same-store sales versus the down 2% a year ago, that's about a 5% swing and is absorbing a chunk of available capacity. As utilization improves, fixed costs should lever, but we will also continue adding technicians to support growth.
Your next question comes from the line of Sabahat Khan with RBC Capital Markets.
Can you provide color on the market share gains? Is the share capture broad-based nationally or concentrated in densified regions? Any thoughts on where you're capturing share above market growth rates?
Market share gains come from outperforming our competitive set and improving client performance. We realigned regional incentives to tie field leadership compensation to the performance of their top three clients, which improved client metrics and opened more opportunities. That action was deliberate and is broad-based rather than concentrated in a single region; as we continue to execute on those initiatives, more opportunities enter the funnel and we focus on capturing them in our stores.
Thanks. As a follow-up, can you share more color on Joe Hudson synergies—what's been completed, what's left, supply chain benefits, and whether you're starting to see scale benefits from suppliers versus initial expectations?
We've completed the systems conversion and rebranding of locations, and moved a substantial portion of the back office onto our platform. The systems conversion centrally aligned supply chain contracts, so we are seeing supply chain benefits. We've internalized scanning and calibration, and many of the longer-tail integration items were accelerated with the systems conversion. Because of the accelerated pace, we were able to increase our synergy estimate by approximately $15 million. Much of the back office has already been transitioned into our systems, so there's not a great deal left from an integration perspective. We are pleased with the accelerated integration and the ability now to apply our operating model to the 258 Joe Hudson locations the same as our existing stores.
The next question comes from the line of Derek Lessard with TD Cowen.
Congrats on a solid operating performance. You did a good job parsing out cost synergies. Can you speak to potential revenue synergies around customer service best practices and leveraging insurance partnerships? Anything you can add on that side would be appreciated.
There are revenue synergies on both sides. Joe Hudson had certain relationships that are complementary to ours, and we also have strong insurance carrier relationships. We retained Joe Hudson's sales team to leverage both sets of relationships. The primary revenue synergy will come from improved client performance, which is a focus for us. That includes the core components such as lower average cost to repair, strong NPS and lower length of rentals, but also the detailed execution and training that helps stores win with each customer and each carrier. We have improved training modules and a better operating model to drive that, and we expect revenue synergies to accrue over time from these efforts.
The next question comes from the line of Razi Hasan with Paradigm Capital.
On the internalization of scanning and calibration, I believe you had a target of 80%. Can you remind us where you are now? Is 80% the practical high watermark or can you go higher?
We achieved 80% last quarter and are currently between 80% and 85%. There is a utilization point at which increasing penetration starts to sacrifice productivity, so 80% to 85% is a comfortable range where you avoid overstaffing the field and preserve productivity. We have good secondary relationships to fill the remaining need. This internalization is a key lever for improving gross margin, which you can see reflected in the 47.4% gross margin this quarter.
While utilization is in the right range today, the business continues to grow and service needs continue to expand. We'll keep adding team members and expanding capacity in line with demand.
To add, as calibration service penetration grows, we will continue to grow the workforce to meet demand. Achieving 80% wasn't the end; it's an operational baseline we will build upon as the car park changes.
One follow-up: in past cycles with elevated inflation and changes in car prices, what's the typical time lag between insurance premium moderation or car price changes and the flow-through to repair volumes? Is it around a year when consumers return to repair shops, or any other color?
On insurance premiums, we're looking for premiums to become less of an issue and for consumers to better position themselves with their insurance products. During times of high premium inflation, people raise deductibles or drop coverages, and collision claims—first-party accident repairs—tend to falter. We're looking for signs of deductibles coming back down and people adding coverages. Another structural tailwind is longer loan terms for new cars; more consumers with extended loans tend to keep coverages in place, which supports claims. Used car pricing affects total loss math directly with little lag—if used car prices rise, total losses decrease; when used car prices moderate, we see stabilization in total loss rates. Right now, the 0% to down 2% repairable claim environment is within our expectations.
The next question comes from the line of Zachary Evershed with National Bank of Canada.
Congrats on the quarter. You mentioned earlier that some revenue synergies would come from relationships where Joe Hudson had stronger ties and where Boyd had stronger ties. Progressive captured a large portion of insurance premium growth in 2025. How are things going with that relationship?
We continue to work on that relationship; there's nothing fractured. It's a function of their needs, and when they have needs we want to perform to be their first choice. Our pacing with that client is on par with their growth. Geographically, Joe Hudson had deeper penetration in some markets—Alabama is an example—so the combination of the two companies gives us better options to go deeper with carriers in certain regions. As those relationships grow, they become tailwinds for us.
Thanks. One follow-up: Insurify is flagging that insurance premiums are rising in just over half of states. Any immediate concerns about impacts to claim counts, or does it still look stable?
I don't have concerns. When premiums rise in low single digits or at CPI levels, that's generally manageable. The stress comes from very high increases of 17% to 20%. Also, some carriers are rebating dollars back to customers, and that activity isn't always captured in the publicly reported data. Overall, we view the environment as stable.
The next question comes from the line of Jonathan Goldman with Scotiabank.
Brian, can you help us parse out the cadence of same-store sales for the quarter and maybe the June exit rate? Last quarter you noted ex-weather Q1 would have been 2.6%. April approached the low end of the range, and you finished the quarter at 2.9%.
We won't comment on month-to-month cadence because one month does not define a trend in this business. We're trying to move away from tying success to a single monthly number. Historically, performance varies—some months are above and some below any given threshold. What's important is that the underlying environment has stabilized and our share gains are manifesting as same-store sales. We've now seen four consecutive quarters of positive same-store sales growth. We continue to see limited benefit from average cost of repair, which historically has been around 4%, and when the industry returns to that level it will be a solid tailwind. In the near term, we'll focus on controlling what we can control to sustain same-store sales growth.
Was there anything in the quarter you would classify as a one-time item or a headwind on a year-over-year basis affecting same-store sales volume?
No, not particularly. Weather events like hail can create positive or negative variances in summer months, which is why we avoid focusing on a single month. Year-over-year hail events and volumes have been relatively stable so far this season.
One more: do you have a view on the potential upper bound of the age of the car park in the U.S.? I think we're currently around 13 years on average.
If you're referring to the fleet age overall, there's been a bubble from the pandemic-era shortage of new cars that drove aging. Over time that bubble will move through, and we would expect the average age to normalize and potentially decrease as supply conditions normalize and more new cars enter the fleet.
There are no further questions at this time. I will now turn the call back to Mr. Brian Kaner for closing remarks.
Thank you, operator, and thank you all once again for joining our call today. We look forward to reporting our third quarter results in November. Thanks again, and have a great day.
This concludes today's call. Thank you for attending. You may now disconnect.