Boyd Group Services Q3 2026 Earnings Results & Report

Boyd Group Services EPS Results

• Actual EPS: C$0.97
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A
• EPS Beat Rate: 2 of last 8 quarters

Boyd Group Services Revenue Results

• Actual Revenue: C$1.44 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Boyd Group Services (TSE:BYD) ('BGSI'), through its operating company, The Boyd Group Inc. and its subsidiaries ('Boyd' or the 'Company'), is one of the largest operators of non-franchised collision repair centers in North America in terms of number of locations and sales. The Company currently operates locations in Canada under the trade name Boyd Autobody & Glass and Assured Automotive, as well as in the U.S. under the trade name Gerber Collision & Glass. The Company is also a major retail auto glass operator in the U.S., under the trade names Gerber Collision & Glass, Glass America, Auto Glass Service, Auto Glass Authority and Autoglassonly.com. In addition, the Company operates a third party administrator, Gerber National Claims Services ('GNCS'), that offers glass, emergency roadside and first notice of loss services. The Company also operates Mobile Auto Solutions ('MAS') in the U.S. and Volta Auto Diagnostics Ltd. ('Volta') in Canada that offer scanning and calibration services.

Boyd Group Services Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Third-quarter revenue rose 28% year over year to just over $1 billion, while adjusted EBITDA increased 34% and adjusted EBITDA margin expanded to 13% from 12.4%. Same-store sales grew 2.2%, as Boyd said it continued to outperform industry volumes.
• Positive Sentiment: Project 360 savings and Joe Hudson’s synergies are progressing: Boyd has realized $90 million to date and expects $105 million by year-end toward a combined $140 million target. Adjusted EBITDA margin has improved 230 basis points since the third quarter of 2024; the remaining $35 million in savings is expected between 2027 and 2029.
• Neutral Sentiment: Industry repairable claims were estimated to be down 1%–3%, but Boyd reported positive same-store sales in October, supported by volume growth and a sequential improvement in total cost of repair. Management said total losses have stabilized, allowing underlying pricing and calibration-related gains to show more clearly.
• Neutral Sentiment: Boyd said Joe Hudson’s year-over-year revenue trend improved in the quarter and into October as locations transitioned to Boyd’s systems and operating model. Management expects further improvement but noted that the turnaround will take time.
• Negative Sentiment: Adjusted earnings per share fell to $0.68 from $0.83 a year earlier, despite higher adjusted net earnings, as increased depreciation and finance costs weighed on results.

Presentation

[Operator]

Good morning, everyone. Welcome to the Boyd Group Services Incorporated 2026 third 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+'s database found at sedarplus.ca and EDGAR at www.sec.gov. Boyd released its 2026 third 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.

[Operator]

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 September 30th, 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, November 11th, 2026. I would now like to introduce Mr. Brian Kaner, President and Chief Executive Officer of Boyd Group Services Incorporated. Please go ahead, Mr. Kaner.

[Brian Kaner, President and CEO at Boyd Group Services]

Thank you, operator. Good morning, everyone, and 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, and Steven Savard, Vice President Investor Relations and Capital Markets. During the third quarter, we continued to make solid progress across our business. We expanded margins through the disciplined execution of Project 360 and the realization of acquisition synergies while continuing to outperform industry volumes and generate positive same-store sales growth, supported by a sequential improvement in total cost of repair. We also launched a normal course issuer bid, reinforcing our commitment to a disciplined and balanced approach to capital allocation with a focus on supporting our existing operations, strengthening our market position, and creating long-term shareholder value.

[Brian Kaner, President and CEO at Boyd Group Services]

Revenue increased 28% compared to the third quarter of 2025, while adjusted EBITDA grew 34%, with adjusted EBITDA margins expanding to 13% from 12.4% last year. While I'm pleased with the margin improvement we've achieved this quarter, it's important to take a step back and look at the progress we've made since launching Project 360 in the fourth quarter of 2024. Since that time, we've improved adjusted EBITDA margins by 230 basis points, reaching 13% this quarter compared to 10.7% in the third quarter of 2024. This progress reflects the benefits of several initiatives we implemented over the past two years. In 2025, we introduced our indirect staffing model and made significant progress in bringing scanning and calibration services in-house. We continued building on that foundation in 2026, generating additional savings through indirect procurement and realized synergies from the Joe Hudson's acquisition ahead of schedule.

[Brian Kaner, President and CEO at Boyd Group Services]

When we launched Project 360, we set a goal of delivering $100 million in cost savings between 2025 and 2029. With the addition of approximately $40 million in expected synergies from the Joe Hudson's acquisitions, which closed in January, that target increased to $140 million. Through the end of the third quarter, we have realized $90 million in savings, with another $15 million expected in the fourth quarter, bringing the total to an expected $105 million by year-end. Looking ahead, we expect to capture the remaining $35 million between 2027 and 2029, with a growing emphasis on using technology and AI to improve shop productivity, streamline operations, and drive further efficiencies across the business. Turning to Joe Hudson's, as I discussed last quarter, we completed the conversion of its locations onto Boyd's system in an accelerated manner. We now have greater visibility into the business's operational performance.

[Brian Kaner, President and CEO at Boyd Group Services]

Our focus has now shifted to embedding Boyd's customer-centric operating model, including our successful WOW Operating Way and our regional management incentive structure across the Joe Hudson's locations. The sequential revenue trend versus the prior year improved during the third quarter, with positive momentum continuing into October as the locations progressed under Boyd's operating model. These results support our confidence in their continued improvement and contribution to Boyd's long-term growth and profitability. Turning to industry conditions, third quarter claims data continues to point to a more stable operating environment, with repairable claims volumes estimated to be down 1%-3% year-over-year. As we have seen throughout 2026, industry conditions have improved compared to last year and remain broadly consistent with our long-term planning assumptions.

[Brian Kaner, President and CEO at Boyd Group Services]

We continued to outperform the broader market in the third quarter, generating 2.2% same-store sales growth, driven by higher volumes and modest improvement in total cost of repair. Our continued market share gains reflect the strength of our insurer relationships, improving carrier performance, and broad regional market coverage. in October 2026, same-store sales remained positive, with continued volume growth supported by a sequential increase in total cost of repair. As we have discussed previously, monthly performance can fluctuate, so we remain focused on underlying trends over the longer periods rather than any individual month's results. I will now pass the call over to Jeff, who will provide a more detailed analysis of our third quarter results. Jeff?

[Jeff Murray, EVP and CFO at Boyd Group Services]

Thanks, Brian. During the third quarter, sales increased 28% year-over-year to just over $1 billion, driven by $206 million of incremental sales from 342 new locations not in operation for the full prior year period, and 2.2% same-store sales growth as we continue to successfully outperform industry volumes during the third quarter. During the quarter, Joe Hudson's locations contributed $170 million in total sales. Gross profit increased to $473 million in the third quarter, up 29% year-over-year, and gross margin increased 40 basis points to 46.7% from 46.3% in the third quarter of 2025. The expansion in margins was driven by higher paint margins from acquisition synergies and Project 360 cost savings, as well as increased scanning, calibration, and sublet margins. This was partially offset by slightly lower labor and parts margins.

[Jeff Murray, EVP and CFO at Boyd Group Services]

Turning to operating expenses, in the third quarter, operating expenses as a percentage of sales improved to 33.7% compared to 33.9% in the prior year. This improvement reflects acquisition synergies, cost savings from Project 360, and increased operating leverage from same-store sales growth. If we look back to the third quarter of 2024, just before we launched Project 360, operating expenses were 35% of sales. Fast-forward two years, and we've improved this ratio by 130 basis points, reflecting the success of Project 360 and, more recently, the additional benefits from acquisition synergies. Adjusted EBITDA increased 34% to $132 million over the third quarter of 2025, while adjusted EBITDA margins expanded to 13% from 12.4% in the prior year period. During the third quarter, we realized approximately $15 million in combined synergies from Joe Hudson's and cost savings from Project 360, bringing the year-to-date total to $50 million.

[Jeff Murray, EVP and CFO at Boyd Group Services]

Adjusted net earnings in the third quarter was $19 million, up from $17.8 million in the third quarter of 2025, as higher adjusted EBITDA was partially offset by higher depreciation expense and increased finance costs. Adjusted earnings per share was $0.68 in the quarter compared to $0.83 in the prior year period. For the nine-month period ended September 30th, 2026, adjusted earnings per share was $2.06 compared to $1.85 in the same period last year. The company continues to expect maintenance capital expenditures to range between 1.6% and 1.8% of sales for the full-year in 2026. Additionally, capital expenditures associated with the Joe Hudson's acquisition remain on track at an estimated $30 million. As Brian mentioned, we launched a normal course issuer bid in September, providing us with additional flexibility in our capital allocation strategy.

[Jeff Murray, EVP and CFO at Boyd Group Services]

During the quarter, we repurchased approximately $14 million of our shares, and we also declared our third quarter dividend. As at September 30th, 2026, our pro forma net leverage ratio was 2.9x compared to 3.1x at the end of 2025. I will now pass it back to Brian for closing comments.

[Brian Kaner, President and CEO at Boyd Group Services]

Thanks, Jeff. As we approach the end of 2026 and I reflect on the year, I'm proud of what our team has accomplished. It has been a busy and productive year for Boyd as we successfully integrated Joe Hudson's, realized meaningful synergies, and continued to make progress on Project 360. Importantly, throughout the year, we've maintained our focus on what has been core to Boyd's success for many years: delivering a strong customer experience, improving carrier performance, and building lasting relationships with our insurance partners. This focus has been a key driver of our ability to consistently outperform the broader industry and will remain central to our strategy going forward. With that, I'd now like to open the call to questions. Operator?

[Operator]

We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Sabahat Khan with RBC Capital Markets. Your line is now open. Please go ahead.

[Sabahat Khan, Analyst at RBC Capital Markets]

Good morning. Maybe just for the first question, wanted to get a bit more color, Brian, on the commentary you made about TCOR. It sounds like over the last few quarters, the claims volumes are in a reasonable place. There's likely some market share capture, and maybe TCOR and pricing might be the delta versus going higher on the same-store sales side. Can you just maybe give us an update on where TCOR is, pricing discussions with your insurance partners, how those are looking? Thank you.

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah. Good morning to you, Sabahat. Yeah, so on TCOR, look, we have seen now, even leading into October, as we said in the prepared remarks, that TCOR continues to improve. We've said for quite some time that the underlying metrics beyond TCOR, behind TCOR, were still moving as they normally moved. We still saw normal pricing increases. On the labor side, we still saw normal price movement on parts through the inflationary environment that we're in. What had been muting that was just the year-over-year impact of more total losses, so bigger tickets coming out of the repair set, driving down or mixing down the overall TCOR. We saw that level out in Q3, and we continue to see it now stable as we get into the fourth quarter. That's giving us now, that's allowing the underlying movement in price to actually illuminate.

[Brian Kaner, President and CEO at Boyd Group Services]

I mean, obviously, the other thing that is driving price up is the increase in calibration services. We continue to see a higher penetration rate of calibration services on the average ticket that we're seeing. All of those things are starting to move the ticket back in a more positive direction. Still muted from the, I would say, still muted from the, call it, 4% that we expect, but certainly moving its way back towards them.

[Sabahat Khan, Analyst at RBC Capital Markets]

Great. Then maybe just an update on sort of the startups. I think you might have had a few planned for this quarter. I might have caught that wrong, but don't think those happened. Maybe just give us an update on the infrastructure you set up on the new store openings, how many are expected through late this year, and maybe the cadence into sort of, what could we expect annually going forward? Thank you.

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah, if you saw in the MD&A, I think we flagged, we've got 34 new startup locations planned for the next 12 months. Like any construction project, we'll see delays where things shift slightly in and out of quarters. You saw after the quarter, subsequent to the quarter, we announced seven new locations opening subsequent to the quarter after 10 in the quarter, not just startup, but all acquisitions. I think I would suggest that we'll get to that kind of 30-35, maybe pushing 40 some years of startup locations, which is in line with what we said back in the five-year when we launched our five-year plan.

[Sabahat Khan, Analyst at RBC Capital Markets]

Thank you.

[Brian Kaner, President and CEO at Boyd Group Services]

Thanks.

[Operator]

Your next question comes from the line of Chris Murray with ATB Capital Markets. Your line is now open. Please go ahead.

[Chris Murray, Analyst at ATB Capital Markets]

Yeah. Thanks, folks. Maybe just turning to some of the margin performance and just kind of the cadence as we are walking into, I guess, the target or getting closer to it. Can you just talk about how you are seeing kind of the entire system now behaving with margins and your confidence level of being able to get to, I guess, the targets that you have set, and how we should think about kind of margin cadence and the pace of improvement as we go into next year?

[Brian Kaner, President and CEO at Boyd Group Services]

Well, look, as it relates to the pace of improvement, we said that the balance of the Project 360 savings would come in ratably, so the pace of improvement should be thought of as the incremental savings that are yet to be achieved on Project 360 coming through ratably. That should be the pace of change. Obviously, some incremental same-store sales will help give us a little bit more leverage and push that up a little bit more.

[Brian Kaner, President and CEO at Boyd Group Services]

But I am actually very pleased with the cadence that we have been on, as I said in my opening remarks, and we have seen a 230 basis point improvement from the time we started this project, if you end up calling Q3 of 2024, to now what we just reported in Q3 of 2026. So the progress on the actual project itself has been very much so in line with what we have expected.

[Brian Kaner, President and CEO at Boyd Group Services]

The pace, as I said, will be more tempered as you go forward. So I think if you look at, and I think just commenting more broadly on Q3's sequential decline in EBITDA rate, we normally see a 50-60 basis point downward movement in Q2 or Q3 versus Q2, just based on some of the seasonality related to our glass business in particular. So if you think about that, if you would have normally seen 60 basis points of downward pressure, 50 basis points of downward pressure, we offset that with Project 360 savings. And we did have some incremental cost in the quarter that related to things like fuel costs and utility costs that were a little bit elevated versus a year ago that ate up some of that savings. Then we had a little bit of leverage loss.

[Brian Kaner, President and CEO at Boyd Group Services]

But by and large, I am very pleased with where we are at from the progress against the 14% goal that we set in February.

[Chris Murray, Analyst at ATB Capital Markets]

Okay, that's helpful. Just one question on acquisition and single-store acquisitions. We talked a little bit about each startup locations and, understandably, construction will throw those schedules around. At the pace that you're kind of running through single-store acquisitions right now, just trying to think of how's the environment out there? I know that there's been the midterms sometimes can throw things around with sellers trying to figure out how to optimize their sale price, things like that. Are you seeing any change in the market, or is the pace that you're kind of adding stores, like single-store operators right now, is that kind of the way we should be thinking about, call it, six to eight a quarter type of thing is a good cadence to be thinking about?

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah. Look, I think we've said this before. I mean, the fourth quarter always tends to be our largest quarter from an acquisition perspective and store openings. I frankly wouldn't expect anything different this year. I will say that because we are taking a more measured approach to acquisitions, I.E., we're focusing on building density, getting in that number one or number two position in the markets that we operate in, that shrinks the pool of available opportunities that are out there for us. It doesn't mean that there's not a lot of available opportunities. It just means that we're looking for the right opportunity that, again, has the right size box, gives us the ability to do $3.5 million-$4 million of volume out of a location. When we find that, we're happy to go, we're happy to engage in purpose.

[Brian Kaner, President and CEO at Boyd Group Services]

If we don't find that, then we're going to be more apt to look for brownfields and greenfield opportunities to build in those markets. So, it really is just, there's nothing behind it right now. The sellers in the marketplace outside of the bigger, certainly the regional MSOs and some of the larger players that are out there, I think given where we're trading, have to start to see their multiples contract, their multiple expectations contract. We're not a buyer in that environment. But the opportunity for single shops is still out there.

[Chris Murray, Analyst at ATB Capital Markets]

Okay, I'll leave it there. Thanks, folks.

[Brian Kaner, President and CEO at Boyd Group Services]

Great. Thanks.

[Operator]

Your next question comes from the line of Mark Jordan with Goldman Sachs. Your line is now open. Please go ahead.

[Brian Kaner, President and CEO at Boyd Group Services]

Hey, Mark.

[Mark Jordan, Analyst at Goldman Sachs]

Hey, good morning. Hey, thank you for taking my question. Can you talk about how same store sales trended throughout the quarter and maybe what you are seeing quarter to date? I know you said it was positive in October, but just any color as it relates to maybe the rate of change.

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah, I think what we said in the opening remarks is what I would reflect on again. We said that the volume continues to be positive, and we're starting to see some incremental TCOR. So those two things at least point us to an environment that we're positive. We're moving away from, we're evolving our messaging away from giving a pointed amount because we want people to focus on the underlying business performance. We're not providing additional quantitative details. We highlighted during the month of October, we saw continued volume growth. Once again, we outperformed the industry, and as well as that sequential improvement in TCOR. I think that should give us the sense that the marketplace continues to be positive.

[Mark Jordan, Analyst at Goldman Sachs]

Perfect. Thank you very much. Just one follow-up. As we think about the parts mix between aftermarket and OEM, how that might have impacted margins for the quarter, can you just talk about that a little bit? Because I know it was noted that parts margins were lower year-over-year.

[Brian Kaner, President and CEO at Boyd Group Services]

You want to take that?

[Jeff Murray, EVP and CFO at Boyd Group Services]

Sure. Well, yeah, I mean, we have seen just really, there's been some shifting, I think, in the marketplace. There's really not much to say. I'd say that I would focus more on the, I mean, there's been some pretty positive improvements year-over-year in terms of gross margin. There's a lot of factors that were positive. There were a couple that were slightly negative, and we mentioned the parts and labor as being a couple of them, but they really weren't all that meaningful. Some element of it was aftermarket parts related, but again, I would focus more on the net positive overall.

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah, and I would just follow on to that typically on a quarter-over-quarter basis, Q2 to Q3, the erosion that I talked about in the margin, EBITDA margin, most of that falls in gross margin. If you just think about the sequential margin decline, we did report a couple of tenths of points of benefit on a year-over-year basis, but the sequential margin decline is simply more tied to that seasonality, and the seasonality is more tied to just the reductions we see in the glass business as we get into the third quarter.

[Mark Jordan, Analyst at Goldman Sachs]

Perfect. Thank you very much.

[Brian Kaner, President and CEO at Boyd Group Services]

Great. Thanks.

[Operator]

Your next question comes from the line of Steven Hansen with Raymond James. Your line is now open. Please go ahead.

[Brian Kaner, President and CEO at Boyd Group Services]

Hey, Steve.

[Steven Hansen, Analyst at Raymond James]

Yeah, good morning, guys. Thanks for the time. Brian or Jeff, I just wanted to ask you about your conviction in the buyback around that opportunity that you see there. Valuations obviously come down a fair bit. Brian, you just referenced that it's more expensive to buy the MSOs now. Single shops may be still doable, but how do you feel about the pace of the buyback relative to some of the opportunities for acquisitions out there in the market? Thanks.

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah, look, I mean, as our business evolves, I mean, so does our capital allocation opportunities. That includes the addition of share repurchases. The focus of the business remains on directing capital towards the opportunities that frankly offer the most attractive risk-adjusted returns and create long-term shareholder value. We're not going to be prescriptive about what we're doing on share buybacks. I think we have that as an option in our capital allocation strategy now, and if there aren't other places to deploy capital, that does certainly become an option for us.

[Steven Hansen, Analyst at Raymond James]

Okay, that's helpful. And then just lastly, I just wanted to go back to just the M&A environment just quickly and how you think some of the smaller shop sellers, I think it sounds like the multiple opportunity there is still quite good. The MSOs in the smaller tier MSOs are still probably off the table, but does the flywheel allow you to continue to move fast enough to meet your targets, or do you feel like you can slow a little bit and focus on the greenfield opportunity a little more, I don't know, aggressively, if that's the right word? And how do you feel about that MSO, single-shop MSO versus the greenfield opportunity.

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah. I mean, look, I think the acquisition strategy is still, or the whole new unit growth strategy is still predicated off of building out market density or building out market density. As we have talked about before, we have a map that has dots on the map, and our acquisition team is out in the marketplace looking for the opportunities to fill that dot on the map. It comes across as a little bit more opportunistic, where we will go into the marketplace. It is just the pacing of the way that the team can get into the market to fill those opportunities. If you get into a market and you realize that there is not somebody to buy in the market, now you have got to get somebody that is out looking for land in the market or looking for a brownfield opportunity in that market.

[Brian Kaner, President and CEO at Boyd Group Services]

I think it is because we have gotten a lot more purposeful with our capital deployment and have just gotten very specific around where we want to grow, that inherently will slow the pace. If I had a shotgun approach to buying across the U.S., there are all kinds of places. I am sure there are places I could buy in Wyoming and Idaho and Montana, and places that I ultimately do not want to be. The opportunities to go build out densification just narrows the pool of things that we can go do or places that we can go buy. That, I think, it puts a little bit of pressure on the pace, but that is okay, because it is ultimately driving. We know that the success of those, we are hedging our bets on success on the ones that we are buying.

[Jeff Murray, EVP and CFO at Boyd Group Services]

Brian, I will just add too that because we are opportunistic, it is lumpy. If you look back over time, as a result, it has been lumpy over time, and it will continue to have some level of lumpiness. The startup strategy does mitigate that to some degree because you are going to have some bleeding in that are essentially planned for like that, but otherwise, there is still lumpiness.

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah. Look, we said in the MD&A, we have got 34 new startup locations. Those are the ones that we have certainty around, and acquisitions will, as Jeff said, they will just be lumpy.

[Steven Hansen, Analyst at Raymond James]

Very good. Appreciate that.

[Operator]

Your next question comes from the line of Derek Lessard with TD Cowen. Your line is now open. Please go ahead.

[Derek Lessard, Analyst at TD Cowen]

Yeah. Good morning, Brian, Jeff, Steven. Hope you're well. I just wanted to maybe just hit on the volume trends in the quarter. It was down 1%-3%, but that seems like it was a bit of a deterioration compared to Q2. I think it was down 0%-2%. So, maybe just talk about some of the trends that you were seeing there, and then maybe specific to you guys, looks like you did outperform the industry a little bit better in Q3. So, if there's anything you'd like to point out there.

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah. You're right. The volume in the quarter did contract a bit, a little bit. I think a large portion of that is if you look at vehicle miles traveled in the quarter, you saw some suppression in vehicle miles traveled in the summer months. That's largely what probably drove the decline in volume. Still within the range that we expected to be, so it's not that it didn't go back down to the high single digits. It stayed in that band. Relative to our performance against it, remember we said there was a little bit more TCOR movement in the quarter, so that gave us a little bit of incremental spread against how the market was performing. We talk about claims in terms of units. We talk about same-store sales in terms of dollars.

[Brian Kaner, President and CEO at Boyd Group Services]

That incremental TCOR helped us increase the spread, albeit the volume spread, if you will, was probably fairly consistent.

[Jeff Murray, EVP and CFO at Boyd Group Services]

I think it's also worth pointing out, it's the third quarter in a row now where we're essentially in the typical range of 0%-3%. So, that's good.

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah.

[Derek Lessard, Analyst at TD Cowen]

Absolutely. Thanks for that color. And maybe one last one for me. Just correct me if I'm wrong too. I think you guys are pretty much done on the internalization of your scanning and calibration. Are you able to quantify the margin impact on that $90 million year-to-date realized, or maybe just highlight sort of like the biggest margin bucket contributors to the $90 million in savings you've realized so far?

[Jeff Murray, EVP and CFO at Boyd Group Services]

I think you're talking about just the overall progress on both the Project 360 and the synergies from the Joe Hudson's transaction?

[Derek Lessard, Analyst at TD Cowen]

Right. Would it be scanning and calibration contribute to those savings that you've realized?

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah. I do not know that we have not split out the incremental improvement we are getting from scanning and calibration. I think I will answer your first part of your question. We are at the threshold that we said we would be at. We are at and beyond, frankly, the 80% in coverage of internalization. That team needs to continue to build, as you see higher penetration rates of calibration services now.

[Brian Kaner, President and CEO at Boyd Group Services]

It is not that the journey is done, because now we need to continue to add staff to maintain the growing environment that we are in. I just wanted to make sure we are clear. The $90 million that you are referencing is, we said we would be at $105 million by the end of the year on total Project 360 savings, not a year-to-date, but a project to date is the $90 million. So that is project to date as of the quarter.

[Brian Kaner, President and CEO at Boyd Group Services]

That includes Joe Hudson synergies. Remember, when we get the incremental 15 at the end of, in the fourth quarter, we will be $105 million towards our goal of $140 million, with the remaining $35 million that is out there being, really, as we have talked about before, coming from investments in technology that will help drive efficiency in our stores.

[Jeff Murray, EVP and CFO at Boyd Group Services]

Maybe just to add to prepare you, the internalization of scanning calibration was not part of those numbers. However, there was some of them in the synergy element.

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah, it wasn't part of Project 360. It was part of Joe Hudson synergies. I mean, just like, you know. But I think about it that way. We've got $15 million to achieve in Q4, and we'll have another $35 million that will come in ratably throughout the balance of 2028 and 2029.

[Derek Lessard, Analyst at TD Cowen]

Got it. I think that was my point. It was the scanning and calibration margin improvement on the back of the synergies.

[Brian Kaner, President and CEO at Boyd Group Services]

No, no. It is part of the synergies are definitely driven by the, frankly, some of the pull forward in synergies is driven by the faster internalization of scanning and calibration versus what we anticipated. So you are seeing some of that in that number.

[Derek Lessard, Analyst at TD Cowen]

Got it. Thanks, guys.

[Brian Kaner, President and CEO at Boyd Group Services]

Yep.

[Operator]

Your next question comes from the line of Gary Ho with Desjardins Capital Markets. Your line is now open. Please go ahead.

[Gary Ho, Analyst at Desjardins Capital Markets]

Thanks. Good morning. Just first question just on the Joe Hudson contribution. I think it's roughly $170 million in the quarter. Feels like that business is running a little bit lighter than it was acquired. Correct me if I'm wrong, maybe it's seasonality. Your disclosure noted trend versus the prior year improved through Q3 and into October. Perhaps can you update us on the progress on kind of stores moved onto the Boyd operating model and thinking, fixing some of the underperforming stores and the path to growth from there?

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah. Look, I mean, we, as said on the last call, we accelerated the integration of Joe Hudson because when we got the business, remember, we closed at the end of October. We actually got the business on January 9th, for all intents and purposes. There had been erosion in that business in that period of time. So as we picked that up and we started to realize what tools we had in the available operating environment to run the business, we realized that they didn't have the same type of tools and data visibility and business processes that, frankly, we had in the Boyd business. As we bought that, we realized we needed to integrate more quickly. We did that.

[Brian Kaner, President and CEO at Boyd Group Services]

As I said in the prepared remarks, the focus now is just improving client scores that we know will drive incremental volume, making sure that we've got the staffing in the stores to deliver on that volume, and implementing the WOW Operating Way within that environment. As we do that, we continue to see sequential progress from the business. No, you are right. There is seasonality from Q2 to Q3, so we do see that. So we do, the business normally sees a dip. The whole South normally sees a dip from Q2 to Q3. What we're referencing is, as we look on a year-over-year basis, the business is actually getting better. So we do continue to see improvement there, and it will take a little bit of time.

[Brian Kaner, President and CEO at Boyd Group Services]

It takes a little time for us to get the metrics that we normally look at to get enough data behind them for us to form an opinion on what's happening. But I am actually, as I have said before, I mean, I have confidence in the fact that what we bought with Joe Hudson's will ultimately be there. We bought ourselves now an opportunity with the air cover for incremental synergies, an opportunity to get the revenue flowing in the business the way that we had expected to, and that is progressing each and every month as we go forward.

[Gary Ho, Analyst at Desjardins Capital Markets]

Okay. Thanks. Appreciate that. My second question, just want to touch on self-pay. Some industry peers have pointed to self-pay repairs approaching historical highs, just with more work not going through insurance carriers. Just curious what you are seeing with your own customer experience there, and how does that affect volumes, average ticket, and margins?

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah. We certainly do see, I mean, albeit a small piece of our business, we do continue to see self-pay growing at a pace that is greater than what the insurance volume is, but it is growing off of a much smaller base. You are right on the average. The average ticket on a self-pay job is much lower than an insurance-paid job. But look, our focus today still remains on providing great service for the insurance partners that we do business with. It is the largest portion of our business.

[Brian Kaner, President and CEO at Boyd Group Services]

As we continue to focus on client metrics and driving performance and driving, frankly, or outperforming our competitors on metrics, we continue to accrue more volume from that. On customer pay or self-pay, we have started to introduce tools like the Sunbit financing program in our business that will allow a consumer to be able to finance a self-pay job.

[Brian Kaner, President and CEO at Boyd Group Services]

We are taking steps towards being able to be more amenable to a consumer, but the focus of the business still remains heavily on our insurance partners.

[Gary Ho, Analyst at Desjardins Capital Markets]

Okay, great. Those are my questions.

[Brian Kaner, President and CEO at Boyd Group Services]

Great. Thank you.

[Operator]

Your next question comes from the line of Bret Jordan with Jefferies. Your line is now open. Please go ahead.

[Bret Jordan, Analyst at Jefferies]

Hey, good morning, guys.

[Brian Kaner, President and CEO at Boyd Group Services]

Hey, Bret.

[Bret Jordan, Analyst at Jefferies]

On the self-pay question, the ticket's lower, but is the margin potentially higher in the sense that you're not negotiating with an insurance company on labor rates, et cetera?

[Brian Kaner, President and CEO at Boyd Group Services]

No, I wouldn't reflect it that way. I think that the challenge with consumer pay is you're actually dealing with somebody that might be more price competitive because there's a threshold by which they can do the repair versus not do the repair. So, oftentimes, and it's why consumer pay is really not a great It's not something that's so prevalent in the MSOs because oftentimes you'll see that they want to do different things with the repair, maybe not fix it completely, maybe not do something that needs to get done on the vehicle. And our job as collision repair providers is to make sure that we complete the repair, we get the car back on the road safely, we do everything that needs to be done, and insurance carrier work allows us to do that.

[Brian Kaner, President and CEO at Boyd Group Services]

When you get into consumer pay, I think you get into a lot more negotiating of what can or should be done. Not that it's so price sensitive from a rate perspective, but there really isn't any discernible margin difference between the two.

[Bret Jordan, Analyst at Jefferies]

Okay. Then sort of a macro question on the space. I mean, you said down 1%-3%, sort of in line with longer term expectation. Is there any pent-up demand out there? I mean, obviously being down high singles a year ago, you would think there would be more cars driving around with a dent, and that customer, when they can come up with a deductible, might fix it. Is there a chance that you are going to see some snapback, or are we sort of back to normal and do not expect any surge of pent-up demand?

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah, I mean, we have said this in previous discussions. When you look back to that 2007, 2008 timeframe when we were in the financial crisis and unemployment was high, there was a bounce-back year. I think it was 2011 that became the bounce-back year. So, could there be something? Certainly. Is that what we are banking on? No. But I think history would tell you that there could be something like that, but that is not the way we are thinking about the business right now.

[Jeff Murray, EVP and CFO at Boyd Group Services]

Or it could come up as through over time, rollover of loans, rollover of leases. That could be where it starts to come through, but it would sort of bleed in.

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah

[Jeff Murray, EVP and CFO at Boyd Group Services]

over time.

[Bret Jordan, Analyst at Jefferies]

Okay, great. Thank you.

[Brian Kaner, President and CEO at Boyd Group Services]

Yep.

[Operator]

Your next question comes from the line of Daryl Young with Stifel. Your line is now open. Please go ahead.

[Daryl Young, Analyst at Stifel]

Hey, good morning, everyone. Looks like the free cash flow generation was quite strong this quarter, but EPS was a little weaker than I might have anticipated. Is that a function of maybe some lease accounting depreciation nuances, or is it more operating leverage in the seasonally weaker Q3 period?

[Jeff Murray, EVP and CFO at Boyd Group Services]

No, I would agree. It's probably more the former. The right-of-use asset depreciation and other depreciation on assets from our growth is probably the one that's contributing the most.

[Daryl Young, Analyst at Stifel]

Got it. That is all for me. Thanks very much.

[Brian Kaner, President and CEO at Boyd Group Services]

Thanks, Daryl.

[Operator]

Your next question comes from the line of Tristan Thomas-Martin with BMO Capital Markets. Your line is now open. Please go ahead.

[Tristan Thomas-Martin, Analyst at BMO Capital Markets]

Hey, good morning.

[Brian Kaner, President and CEO at Boyd Group Services]

Hey, good morning.

[Tristan Thomas-Martin, Analyst at BMO Capital Markets]

Just a point of clarification. The moving away from giving quantitative numbers, is that just strictly for the quarter ahead? Just want to make sure nothing else is changing.

[Brian Kaner, President and CEO at Boyd Group Services]

You faded in the last part of your question. Say that again.

[Tristan Thomas-Martin, Analyst at BMO Capital Markets]

Oh, just the moving away from giving quantitative numbers. That's strictly talking about the quarter ahead, right?

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah, that's talking about the month that we're currently in. We're not going to continue to talk about the months that we're in, because as we know, there is variability in the business, and one month does not make a trend.

[Tristan Thomas-Martin, Analyst at BMO Capital Markets]

Okay, got it. Then just on the paint benefit, I think a couple quarters ago, you called those types of volume trigger rebates. Is it still that, or is there something else going on there?

[Brian Kaner, President and CEO at Boyd Group Services]

You must be on a cell phone. It's hard to hear you. Can you say that again, just slower?

[Tristan Thomas-Martin, Analyst at BMO Capital Markets]

Yeah, sorry. Yep. I'm just excited to be here. Just the paint benefit. In the past, you've called that volume rebates. Is it still volume rebates as you expand, or is there some other benefit in there?

[Jeff Murray, EVP and CFO at Boyd Group Services]

No, it is just volume rebates. It is just the ability to have volume rebates come through the bottom line. That is if we just say anything else in terms of where the paint benefits come from, it is primarily just as we continue to grow, we can concentrate more volume.

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah

[Jeff Murray, EVP and CFO at Boyd Group Services]

Got nothing more to add there.

[Brian Kaner, President and CEO at Boyd Group Services]

Got nothing more to add there.

[Tristan Thomas-Martin, Analyst at BMO Capital Markets]

Okay. Great.

[Brian Kaner, President and CEO at Boyd Group Services]

Sorry about that. I was not picking up on paint, Tristan. That's the part I was missing.

[Tristan Thomas-Martin, Analyst at BMO Capital Markets]

No, it's 100% my fault. 100% my fault, I'm sure. Thank you, though.

[Brian Kaner, President and CEO at Boyd Group Services]

All right. Appreciate you. Thank you.

[Operator]

Your next question comes from the line of Razi Hasan with Paradigm Capital. Your line is now open. Please go ahead.

[Razi Hasan, Analyst at Paradigm Capital]

Good morning. Thanks for taking my questions. Most of them have been answered, but just a follow-up on TCOR. Brian, did you mention you saw total losses lower in the quarter, or was it just stable from where we've been at?

[Brian Kaner, President and CEO at Boyd Group Services]

It's actually just stable. What we're not seeing is a negative impact from the year-over-year impact, but we are seeing it just be relatively stable.

[Razi Hasan, Analyst at Paradigm Capital]

Okay, great. Lastly, not sure if I missed it, how should we think about gross margin exiting the year in line sequentially? Any color that you can provide would be helpful there.

[Brian Kaner, President and CEO at Boyd Group Services]

Anything, yeah. I mean, we've always talked about gross margins kind of operating in a band. I think the band has gotten tighter over the years as we've gotten bigger. Sequentially, I think we normally see a little bit of We see heavier hits as we get into the fourth quarter, which ultimately suppresses some of the other, likely suppresses some of the other positives that we would see. So, I think stable margins is probably the best bet.

[Jeff Murray, EVP and CFO at Boyd Group Services]

Yeah, the other item would be glass. Glass would be our seasonally low period through the winter season versus the summer, so that can have a moderating effect on gross margin.

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah.

[Razi Hasan, Analyst at Paradigm Capital]

Okay, thanks very much. I'll leave it there.

[Operator]

Your next question comes from the line of Carol Adu-Bobie with Scotiabank. Your line is now open. Please go ahead.

[Carol Adu-Bobie, Analyst at Scotiabank]

Good morning. This is Carol on for Jonathan Goldman from Scotiabank. Thanks for taking my question. I wanted to ask, have you been dealing with any incremental inflation on parts, paint, and logistics since Q2? I know you mentioned there was a year-over-year impact, but I just wanted to clarify if it accelerated in the quarter, and has this continued into the fourth quarter?

[Brian Kaner, President and CEO at Boyd Group Services]

We actually got our contractual paint increase in the second quarter, so we certainly have seen a little bit of incremental inflation on paint. That has to roll through the paint and material rates, and as that rolls through, obviously the TCOR will continue to move up, and the slight margin compression we saw from that will go away. The other parts inflation, labor inflation, I wouldn't say we've seen anything different in Q3 versus Q2.

[Carol Adu-Bobie, Analyst at Scotiabank]

Okay, appreciate the color. Just a broader question, but as you continue to realize these Joe Hudson's synergies and Project 360 moves towards the more mature phase, and the cadence of margin improvement becomes more modest, what additional cost actions or process improvements could you undertake to continue to drive that margin improvement?

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah. Look, I think that one of the biggest focuses of the business going forward is going to be the usage of technology to lessen the administrative burden of claims in our business. I've said this at other times, almost half of our people are just simply in stores that are moving a claim to the back of the shop. If we can continue to focus in on leveraging technology, leveraging agentic AI, leveraging other technologies to make that process more efficient, there is a big cost pool that is out there for us to be able to go attack. We've started to do some things now with agentic AI. We've got agentic AI now answering calls and after hours to schedule repairs. We've got follow-up appointment, we've got follow-up on opportunities going through an AI agent.

[Brian Kaner, President and CEO at Boyd Group Services]

We are starting to really see some of the benefits of AI really accruing in this business to make the part of our business that's really getting the car to the back more efficient.

[Carol Adu-Bobie, Analyst at Scotiabank]

I appreciate the color. Thanks for taking my questions.

[Brian Kaner, President and CEO at Boyd Group Services]

Thank you.

[Operator]

Your next question comes from the line of David Bellinger with Mizuho. Your line is now open. Please go ahead.

[David Bellinger, Analyst at Mizuho]

Hey, good morning. Thanks for the questions. I want to ask about the leverage point of the business. There's an investor perception out there that you need to be in this 3%-5% same-store sales growth bracket in order to get EBITDA margins higher. I know you've got a lot of the Project 360 synergies and cost cuts coming in. Can you talk about where the comp sales growth has to be in order to get EBITDA margins higher? Should we think about it as more of a low single-digit sort of qualitative measure in order to get there?

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah. Jeff has talked about this in the past. I mean, if you look back historically, if you look back 10 years, the average same-store sales growth was around 4%. When we were getting that 4%, the margin expansion was anywhere from 10 to 15 basis points of, call it, operating leverage that we were getting out of 4%. I think that's probably where the expectation of margin expansion through the 3%-5% range comes from. Obviously, we've expanded margins through very prescriptive actions in the business and continue to see those things and continue to have those opportunities to do that. Have every bit of confidence that when we get into that, when we start to get ourselves into that 3%, 4% range, that we can certainly see the same type of benefit we've seen historically.

[David Bellinger, Analyst at Mizuho]

Got it. Thanks for all that. I just wanted to follow up on the insurance commentary. Are there any carriers that you're looking to do more or less with? Maybe just talk about the concentration of where claims come from today for potentially where that could shift to. Thank you.

[Brian Kaner, President and CEO at Boyd Group Services]

Yeah, I won't comment on specific carriers. The majority of our business, as we know, comes from, or as you know, comes from insurance carriers. Our focus is on, there's lots of different regional, we understand the different regional coverages by carrier, so our focus is on making sure that we are taking care of every carrier that we do business with. I'll just leave it at that.

[Operator]

Your next question comes from the line of Thomas Wendler with Stephens. Your line is now open. Please go ahead.

[Thomas Wendler, Analyst at Stephens]

Hey, good morning, everyone. Thanks for taking my question. Just one quick one from me. We've seen some total loss thresholds increase in a few states, Oklahoma and Rhode Island. How impactful can these be to total loss rates? With that and insurance premiums moving lower, you'd expect deductibles to move in kind. Is there a scenario where total loss rates don't just stabilize, but they start to decrease?

[Brian Kaner, President and CEO at Boyd Group Services]

I think if you see more regulation like that, I think you will see them start to decrease. Total losses are getting a tremendous amount of attention in the industry right now. We know that it's not a great customer experience. There's more people that are upside down in loans right now, so if their car gets totaled, they end up not only not being able to get a car, but they end up writing a check to get out of the car that they're actually in. So, we know that it's not a great experience. I think many people are picking up on that, inclusive of the insurance carriers. The insurance carriers are seeing, if you trust the data that's out there, the data that CCC would reflect, or that J.D. Power reflects, is 40% of people after a total loss event switch insurance carriers.

[Brian Kaner, President and CEO at Boyd Group Services]

The attrition after a total loss event versus a repair event that's 7% is super high. That's got carriers' attentions. It's got OEMs' attention because people are actually defecting from the brand after a total loss event. So, I think there is a lot of positive momentum in the industry to push total losses down. We haven't seen that yet. But I do think, as you said, if those things start becoming more pervasive in the marketplace, raising the threshold of, Rhode Island raised it to 85%. If you see people raising thresholds to 85%, those borderline total losses will end up becoming repairable vehicles again and ultimately help our business.

[Thomas Wendler, Analyst at Stephens]

Perfect. I appreciate all the color.

[Brian Kaner, President and CEO at Boyd Group Services]

Yep. Thanks. We will see you next week.

[Thomas Wendler, Analyst at Stephens]

Yeah. See you guys next week.

[Operator]

There are no further questions at this time. I will now turn the call back to Mr. Brian Kaner for closing remarks.

[Brian Kaner, President and CEO at Boyd Group Services]

Thank you, operator. Once again, everybody, thanks for joining the call today. We look forward to reporting our fourth quarter results in the new year. Thanks again, and have a great day.

[Operator]

This concludes today's call. Thank you for attending. You may now disconnect.

Participants

Executives

• Brian Kaner, President and CEO
• Jeff Murray, EVP and CFO

Analysts

• Sabahat Khan, Analyst at RBC Capital Markets
• Chris Murray, Analyst at ATB Capital Markets
• Mark Jordan, Analyst at Goldman Sachs
• Steven Hansen, Analyst at Raymond James
• Derek Lessard, Analyst at TD Cowen
• Gary Ho, Analyst at Desjardins Capital Markets
• Bret Jordan, Analyst at Jefferies
• Daryl Young, Analyst at Stifel
• Tristan Thomas-Martin, Analyst at BMO Capital Markets
• Razi Hasan, Analyst at Paradigm Capital
• Carol Adu-Bobie, Analyst at Scotiabank
• David Bellinger, Analyst at Mizuho
• Thomas Wendler, Analyst at Stephens