Boyd Group Services Inc. (NYSE:BGSI) Q1 2026 Earnings Call Transcript

Boyd Group Services Inc. (NYSE:BGSI) Q1 2026 Earnings Call Transcript May 13, 2026

Boyd Group Services Inc. beats earnings expectations. Reported EPS is $0.58, expectations were $0.56.

Operator: Good morning, everyone. Welcome to the Boyd Group Services Inc. 2026 First Quarter Results Conference Call. Listeners are reminded that certain matters discussed in today’s 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. We released our 2026 first quarter results before markets opened today.

You can access our news release as well as our complete financial statements and management discussion and analysis on our website at boydgroup.com. Our news release, financial statements, and MD&A have also been filed at SEDAR+ and EDGAR this morning. On today’s call, we will discuss the financial results for the quarter ended March 31, 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, May 13, 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.

Brian Kaner: 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. Building on the strong foundation that we established in 2025, I’m pleased to report we delivered all-time record first quarter results. We achieved both all-time record revenue and adjusted EBITDA, grew our location footprint by 33%, recorded our third consecutive quarter of positive same-store sales growth, achieved an incremental $20 million in Project 360 and synergy cost savings, and expanded our adjusted EBITDA margins by 200 basis points. We also successfully closed our Joe Hudson’s acquisition, the largest MSO transaction in the company’s history, with the integration successfully completed subsequent to quarter end.

This success would not have been possible without the hard work and dedication from the entire Boyd team, including our new Joe Hudson’s team members. I want to thank all of our employees for their meaningful contributions. Turning to our financial performance. In the first quarter, we generated all-time record revenue of $997 million, an increase of 28% compared to the first quarter of last year, and increased adjusted EBITDA by 52% to an all-time record of $122 million. Adjusted EBITDA margins expanded by 200 basis points to 12.3%, driven by benefits from Project 360 and acquisition synergies as well as the inclusion of Joe Hudson’s, which is accretive to our adjusted EBITDA margins. To date, we have realized over $60 million in cost savings from the combination of Project 360 and acquisition synergies.

This is up from $40 million at the end of 2025. We remain on track to realize an additional $30 million in 2026, and the remaining $50 million expected to be achieved between 2027 and 2029, for a total anticipated savings of $140 million. Same-store sales increased 1.7%. However, adjusting for the weather impact in the South, same-store sales growth would have been approximately 2.6%. Our same-store sales performance has benefited from continued market share gains and the improvement in repairable claims volumes throughout 2025 and Q1 2026. In the first quarter of 2026, based on repairable claims processing data, we estimate that repairable claims volumes declined between 0% and 2%, which is now back in line with our long-term growth framework.

This framework contemplates average same-store sales growth of 3% to 5%, supported by continued incremental market share gains driven by ongoing consolidation within the highly fragmented collision repair industry, strong performance with insurance clients and disciplined operational execution. This framework also assumes 3% to 4% annual growth in average total cost of repair and approximately 1% growth in miles driven, partially offset by an approximate 2% decline in repairable claims due to the impact of collision avoidance systems. It is important to note that this framework represents long-term averages. As a result, performance may vary outside of these ranges over shorter periods of time without impacting our confidence in achieving our long-term growth objectives.

During recent quarters, the growth in average total cost of repair has fallen below the expected range required to support our long-term growth framework. We expect total cost of repair will return to levels outlined in our framework, driven by lower total losses from rising vehicle prices, increasing vehicle complexity, and continued inflation in parts and labor costs. The positive same-store sales trends we experienced in our business over the past 3 quarters has continued thus far in the second quarter with same-store sales in April approaching the low end of our long-term range. Complementing same-store sales growth, new location growth remains an important driver of our long-term performance as we continue to target 5% to 7% average annual unit growth over the long term.

Same-store sales growth generates strong cash flows that we reinvest to expand our footprint through acquisitions and start-up locations. Funding expansion through internally generated cash flow has proven to be highly accretive over the long term. In the first quarter, we saw strong contributions from new locations. We increased our location footprint by 33% to 1,312 locations at quarter end, including 258 locations acquired through the Joe Hudson’s transactions, 3 single shop acquisitions, and 8 new start-ups. We remain focused on market densification through acquisition and new location growth, aiming to be a #1 or #2 player in the markets we serve. Market density provides the foundation for market share gains, same-store sales growth and increased profitability.

We continue to have an active pipeline of new start-ups and development and expect to open 5 new start-up locations in the second quarter of 2026 with an additional 17 new start-up locations currently under development for the remainder of the year. We expect start-up activity to be complemented by acquisitions of both single shops and small MSOs as we continue to build on the strong momentum we established last year. Turning to Joe Hudson’s. We successfully closed the acquisition on January 9, and I’m pleased to report that the integration and synergy realization remains on track. Subsequent to quarter end, we have completed the conversion of all Joe Hudson’s locations to our systems and have begun to realize expected synergies. We continue to expect to generate approximately $40 million in synergies from the combination of the Boyd and Joe Hudson’s businesses with approximately 50% realized in 2026.

Although Joe Hudson’s locations experienced some sales disruptions from the storms in Q1 as well as from the store conversion process through the end of April, the conversions are now complete, which allows sales to return to normal projections shortly. We remain on track to realize 50% of the synergies in 2026 and the balance by 2028. I will now turn it over to Jeff to go through the first quarter financial results in more detail. Jeff?

Jeff Murray: Thanks, Brian. As Brian highlighted, we delivered all-time record first quarter performance with positive same-store sales growth, significant growth from new locations, and strong margin improvement, as we continue to execute on Project 360 and began to realize expected synergies from the Joe Hudson’s acquisition. During the first quarter, our sales increased by 28.1% year-over-year to an all-time record $996.7 million, with same-store sales, excluding foreign exchange, increasing by 1.7%. Without the negative impact of storm activity in the South, we estimate that same-store sales growth of 2.6% would have been achieved in the first quarter. In addition, $203.3 million in incremental sales were generated from 339 new locations that were not in operation for the full comparative period.

The acquisition of Joe Hudson’s, which closed on January 9, 2026, contributed $168 million in sales, while other new location growth contributed an incremental $35.3 million. As mentioned on our fourth quarter 2025 results conference call, same-store sales and Joe Hudson’s sales early in the first quarter were negatively impacted by unusual winter storm activity in the U.S. South region, with activity levels returning to normal as the quarter progressed. Gross profit increased 29.1% year-over-year to $463.7 million. Gross margin was 46.5% in the first quarter of 2026 compared to the 46.2% achieved in the same period of 2025. The gross margin percentage benefited from increased parts and paint margins from Project 360 and Joe Hudson’s synergy realization, partially offset by a lower mix of glass sales and variability in performance-based pricing.

The gross margin was also impacted by lower gross margins inherent in Joe Hudson’s business. Turning to operating expenses. For the first quarter of 2026, operating expenses as a percent of sales were 34.2% compared to 35.8% of sales for the same period in 2025. Operating expenses were positively impacted by Project 360, the inclusion of the Joe Hudson’s acquisition, which had a lower operating expense ratio, and the mitigating effect of same-store sales growth, which partially offset typical cost increases. Adjusted EBITDA increased 51.9% year-over-year to an all-time record $122.4 million. Adjusted EBITDA margin improved 200 basis points to 12.3% in the first quarter, up from 10.3% in the same period of the prior year. The increase was primarily the result of Project 360 and synergy realization as well as the acquisition of Joe Hudson’s, which is accretive to adjusted EBITDA margin.

During the quarter, the company realized an incremental $20 million in cost savings from Project 360 and Joe Hudson’s synergies, bringing the total savings achieved to date to over $60 million. Net loss for the first quarter of 2026 was $7.9 million compared to a net loss of $2.6 million in the same period of 2025. The net loss was negatively impacted by acquisition and transformational cost initiatives. These costs are expected to decline as integration finalizes. Excluding fair value adjustments, acquisition and transformational cost initiatives, and amortization of intangibles arising from acquisitions, adjusted net earnings for the first quarter of 2026 was $16.1 million or $0.58 per share compared to adjusted net earnings of $6.6 million or $0.31 per share in the same period of the prior year.

The company expects onetime costs associated with Project 360 and Joe Hudson’s synergies to total approximately $50 million, of which $26.5 million have been recorded to date. During 2026, the company plans to make cash capital expenditures, excluding those related to acquisition and development within the range of 1.6% to 1.8% of sales. In the first quarter, capital expenditures as a percent of sales were 1.3%, excluding sales achieved by Joe Hudson’s locations compared to 1.5% of sales in the same period of 2025. We continue to expect capital expenditures related to the Joe Hudson’s acquisition to total $30 million with $2.6 million incurred in Q1, and most of the remainder to be spent in 2026. At the end of Q1 2026, the company had total debt net of cash of $2 billion compared to $488 million at the end of the fourth quarter of 2025 and $1.3 billion at the end of Q1 2025.

Before lease liabilities, Boyd exited Q1 2026 with net debt of $946 million compared to net cash of $290.1 million at the end of December 2025. The increase in debt compared to the fourth quarter of 2025 reflects the closing of the Joe Hudson’s acquisition on January 9, 2026, which had a total transaction value of approximately $1.3 billion. Boyd continues to have strong liquidity to support future growth with ample room available under our credit facility, complemented by strong cash flow generation from our capital-light business model. At the end of the first quarter, pro forma debt leverage declined to approximately 2.9x, down from 3.1x at the end of the fourth quarter of 2025. We continue to expect leverage to reach 2.6x as early as the end of 2026.

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

Brian Kaner: Thanks, Jeff. As we look ahead, we are excited by the significant progress being made across the business through our operational and strategic initiatives. We continue to focus on delivering a high-quality experience for our customers and insurance clients while positioning the company to drive sustainable long-term growth. At the same time, initiatives such as Project 360 and the integration of Joe Hudson’s are supporting meaningful operational and cost efficiencies that we expect will contribute to long-term margin expansion. Combined with our proven acquisition capabilities and strong financial position, we believe that Boyd remains well positioned to execute on our strategy and continue to grow in the highly fragmented North American collision industry. With that, I would now like to open the call to questions. Operator?

Q&A Session

Operator: [Operator Instructions] Your first question comes from Derek Lessard with TD Cowen.

Derek Lessard: Congrats on the quarter. Just maybe one question for me is, could you maybe highlight the biggest buckets of that $20 million incremental cost savings from the Project 360 and the integration?

Brian Kaner: Yes. Yes. So one of the largest buckets within there in this quarter is the carryover of the indirect headcount action we took last year in April. So that’s probably the largest single bucket that’s in there, which obviously rolls off then into the second quarter. Beyond that, it’s the procurement savings and the other impact of the initiatives we’ve talked about previously.

Derek Lessard: Okay. And good news on the normalization of the claims volumes. It looks like your April same-store sales is getting back towards your targeted range. Just curious if you have or maybe talk about any initiatives that you might have in place that could accelerate that growth?

Brian Kaner: Yes. I mean, look, the one initiative we’ve had in place for quite some time is really the strong focus on client performance. And we’ve talked previously about linking our GM’s compensation to the performance of the top 3 clients. We know the strong client performance in this industry actually drives an outsized volume and allows us to take market share in this environment. So one of the largest things that we’re doing is really focusing on how do we make sure that we’re performing with clients and getting more opportunities into our stores. And then as we get those opportunities into our stores, the stores are really focused on how do we make sure we capture as many of those opportunities as we possibly can. And that all comes down to making sure that we have the right staff inside of our stores.

And we’ve spent a lot of time over the past few years working on staffing models and making sure that the stores are prepared when that volume comes back. And look, thus far, it has provided us meaningful benefit in an environment where claims have been down, where we’ve been able to deliver outsized performance against them.

Operator: Your next question comes from Sabahat Khan with RBC Capital Markets.

Bhaven Shah: This is Bhaven on the line for Saba. Can you give an idea of what the landscape and appetite is for tuck-in M&A throughout the second half of this year and onwards?

Brian Kaner: Can you say that question again? I’m sorry.

Bhaven Shah: Yes. Can you give an idea of what the landscape is and the appetite for tuck-in M&A throughout the second half of this year and onwards?

Brian Kaner: Yes. I mean, look, we still believe that the opportunities for tuck-in M&A are still obviously very plentiful out in the marketplace. There’s over 30,000 locations in the industry. The largest players comprise only a small fraction of that. So the opportunity is still certainly there for tuck-in M&A. If you look at our acquisition or our unit growth strategy, it’s really focused on 3 pillars. It’s one, the M&A activity that you just discussed, and that can be single shop M&A as well as some of the smaller MSOs, 5 to 10 store MSOs that are out there that we have an opportunity to continue to buy with the balance sheet that we have. The other is our brownfield greenfield strategy, which is really what we’re calling our new-to-industry activity.

And you can see that we’ve already got — we did 8 of those in this quarter. We’ve got 5 planned to open in the second quarter already, and we’ve got 17 that are planned for the balance of the year. So it’s a good balance between us building and putting new locations into markets that are focused on building density in the markets that we participate in today, as well as taking advantage of the opportunities that come to the marketplace from an M&A perspective.

Operator: Your next question is from Daryl Young with Stifel.

Daryl Young: Just wanted to ask around the industry claims activity and the reference to volumes being down 0% to 2% as normalized and indicative of the environment. But claims have been very weak for the last 2 years. So are we thinking that the absolute number of claims have just stepped lower now and we’re going to settle into that? Or is there an argument that claims could actually increase above that 0% to 2% decline?

Brian Kaner: Yes. I mean, look, as we’ve talked about this in the past, we certainly saw coming out of the– we saw coming out of the financial crisis, we saw where 2007, ’08 claims were depressed, and we ultimately saw in that ’11 and ’12 time frame that claims kind of came a little bit outsized to the normal range. We saw the same thing happen coming out of COVID, where during COVID, we saw very depressed claims environment, and then we saw really 2 or 3 years of positive claims. So I think we’re certainly prepared should that happen. And there’s every reason to believe that looking back, history would suggest that, that could happen. When it happens, I think, is probably a little bit more elusive from our perspective. And we’re just pleased that as we look at what we’ve been watching is the drivers of what’s been driving claims negative, as those things have gotten better, we’ve seen the claims environment recover, which obviously points us to a place where you’d really argue that there really isn’t something more structural happening in the industry.

It was really a bit of a cyclical impact of insurance premium increases and people’s reluctance or fear to file claims over that period of time. And so we still think the growth algorithm is intact. Could there be an opportunity in the future that we see an outsized year? Certainly.

Daryl Young: Okay. And just as a follow-up to that, the volumes within your shop, are you able to share where you’re at relative to, say, a 2019 level? Or I guess, how much latent capacity exists in the network today that could be filled as either claims come back or market share wins drive more volumes for those shops?

Brian Kaner: Yes. I mean I don’t know that we’ll share — we’re not going to share the specific volume numbers against ’19. I will tell you that what our shops are focused on is making sure that — and every shop is unique. What our shops are focused on is making sure that when an opportunity comes in, that we capture as many of those as we possibly can, and maximize the potential of the opportunities that we’re getting, and that means that we will fluctuate staffing between stores. Wherever demand is, is where we’re making sure there’s people. And as we continue to hone that and master that, we put ourselves in a better position to take advantage of the opportunities that are coming.

Operator: Your next question is from Steve Hansen with Raymond James.

Steven Hansen: So just really quick, what do you think the key factors are that’s still keeping the TCOR or the total cost of repair a little more muted here? I’m still a little surprised we haven’t started to see the inflationary costs percolating into same-store sales.

Brian Kaner: Yes. I think there’s a couple of factors. One, we are actually seeing — certainly seeing the labor price movement come into the — labor price inflation affect the TCOR positively. What continues to mute that is, when you look on a year-over-year basis, we still have elevated total losses Q1 of last year to Q1 of this year. Certainly, over the last couple of months, you’ve seen total losses actually start coming down, which is good. They’re responding in a way that we would expect them to respond when used car prices actually go up and the total cost of a car actually is going up as well. So we do see total losses and the mix effect of high dollar tickets impacting the average cost of repairs. The other thing that’s impacting the average cost of repairs, we’ve started to do a lot more work around just the aging car park, and what’s happening with that is you’re seeing a bit of a — we’re still seeing a bit of a trough in new car sales over the past 5 years coming out of COVID that ultimately still puts us in a position where now the car park age is skewed by about 10 points from that 7 years to newer to 7 years to older.

And as you put older cars into the car park, you have a higher propensity for aftermarket part consumption and more repair versus replace and things that when you’re repairing a new car, you don’t tend to have. You tend to replace a lot more parts, you tend to use OE more frequently. They also will obviously tend to have more calibration services and needs, which pushes the price up. So I think as we look at that, again, it’s a bit of a temporal thing that new car sales have, over the last couple of years, at least has started to respond more positively. But as you look at that, I think we’re in this period where we’re working our way through this trough in the new car sales that ultimately manifests itself as a slightly older set of vehicles that we’re working on.

Steven Hansen: That’s great. And just one follow-up just quickly. Going back to the M&A environment. I just wanted to ask about your perception of sellers out there. I know last year and, to a certain degree the year prior, there was more deal breakage than ever before given the claims environment. Do you think that sellers have started to rebaseline their expectations to more of what I call the current environment that should allow you to accelerate that M&A flywheel? I’m just trying to get a sense for the pushback that have been there in getting deals done.

Brian Kaner: Yes. Look, I think we’ve talked about in the past, as volume comes back into the marketplace, it comes back to the bigger players fastest. It’s the nature of the DRP relationships that we have and the reliance on us from insurance carriers to continue to drive down their loss adjustment expenses by taking on the work that maybe an adjuster would. So we know that when volume comes back, it comes back to us first, which then means that some of the single shop operators and some of the smaller multi-shop operators feel the pain of the industry longer. And as they feel that pain, they become more susceptible to wanting to sell. We are certainly seeing more of that smaller MSO activity in the space. As you know, we did 4 of those transactions last year.

So I think the opportunity for us to continue to consolidate the space is as good as it’s ever been. Our balance sheet is well positioned to allow us to continue to do that. And I think we certainly are positioning ourselves as one of the, call it, the buyers of choice.

Operator: Our next question is from Nathan Po with National Bank Capital Markets.

Nathan Po: So it seems like most, if not all, forward-looking indicators are pointing to tailwinds on same-store sales growth. So can you walk us through your expectations or anything related to the timing of that recovery towards your long-term range?

Brian Kaner: Yes. I think, I mean, the only indication I would continue to point back to is just the sequential improvement that we’ve seen quarter after quarter after quarter in claims environment. And as you look at that, we knew that the drivers that we were watching, as they became less negative, it would positively impact that environment. As we get closer to that, now we’re kind of in that 0% to 2% range, which is certainly more normal from a volume perspective. As we get that total cost of repair to start to meaningfully move up, we’re still expecting 3% to 4% growth from total cost of repair. And I do think there’s no reason for us to believe that, that won’t come back. We certainly know that the average labor rates for insurance carriers increase every single year as inflation increases.

We know that part prices increase every single year as we see inflation on parts, and that’s a simple pass-through from us as an organization. So those things are kind of the tailwinds to average cost of repair. The headwind right now, as I said earlier, is just this mix of total losses. And as we see total losses continue to come down, I think you’ll see that muting benefit — or that muting impact start to continue to wane. And when that happens, you’d expect us to be back into the normal range. For right now, our focus is on just taking as much volume as we possibly can. And we know, based on what the industry claims environment is against where our arrivals and our volume of vehicles that we’re seeing is, we know that we’re taking share, and we’re going to continue to do that in the environment that we’re in.

Nathan Po: All right. And for my follow-up, I just want to get some more color on your outlook for April. Was there any carryover backlog from the storm season that was of any benefit to April?

Brian Kaner: Probably not more than — as we think about what happened in the first quarter, we saw storm activity in the North partially offset or mostly offset by storm activity in the South that negatively impacted the business to a greater extent than the positive impact we saw in the North. So I wouldn’t — we’re largely through the work that would have come out of that. So I wouldn’t read any more into carryover on storm activity, both positive or negative.

Operator: Your next question comes from Krista Friesen with CIBC.

Krista Friesen: Just on the same-store sales growth number for the quarter. Can you give a little bit more color on kind of what changed through the last few weeks of March there? Just given when you had reported Q4, it sounded like you had expected same-store sales to be in line with Q4. And at that point, we already knew about the winter storms in the South.

Brian Kaner: Yes. I mean, look, we don’t and won’t comment on monthly results. I’ll provide a little bit of clarity. One, it’s important to remember that there is some degree of monthly variability in same-store sales. That’s normal in our business, particularly given a number of factors that can influence the results in any period of time. These include things like the timing of the month end. I mean, the month ended, I think, on a Monday or Tuesday, that’s typically not favorable for a month end for us. You got holidays, you got weather patterns. So I think one of the reasons we talk about our guide of a long term is we know that those variations will happen month-to-month. In addition, the difference between 2.2% and 1.7% is really about $3 million of sales, and that $3 million of sales on $1 billion of revenue at this point is quite a small difference, relatively speaking.

So that’s why we’re not guiding to — we guide to a longer-term objective. We know that — if you look back to 2008, 40% of the quarters, we were actually below the 3% to 5% range; 44% of the quarters, we were actually above the 3% to 5% range. But if you look back on a 5-year basis, we’re 8.8% up; on a 10-year basis, we’re 4.3% up; on a 15-year basis, we’re 4.6% up on same-store sales. So when we get into this monthly game, there’s lots of things that can affect the month end. And again, it’s why we focus the guide on a longer-term 3% to 5%. And if you look back in any buckets of history, I mean, it really is — or any longer-term buckets of history, it will tell you that we’ve seen that, and continue to then complement it with new unit growth, which in this quarter was obviously the bigger portion of the positive.

Having 28% sales growth in the quarter, driven by both Joe Hudson’s and the new locations that we purchased last year is really what makes this business — the growth algorithm of this business tick. And I think that’s where I’ll leave it.

Krista Friesen: I appreciate the color there. And just for my follow-up, any comments or thoughts on how you’re thinking about the summer driving season and where gas prices are at the moment? And I’ll leave it there.

Brian Kaner: Yes. It’s interesting when you look at — there’s a couple of periods of time where you can look back where gas prices were elevated. One was that 2008 period of time where gas prices were elevated and VMT came down a bit. But we look at that as probably not the best comparative period, because at the same time you had unemployment that was super high. When you look back at 2022, which was another period of time where we saw elevated gas prices, the average vehicle miles traveled continued to grow slightly; vehicle miles traveled per car was 13,500, which is pretty much the normal rate in that period. So I think the other factors come into play when gas prices move the way they’ve moved. And some of those other factors that have been there historically are not there now, which will tend to be a positive.

I think the other benefit on summer travel is, I’m not sure if many people have booked plane tickets recently, but as you look at the cost of a plane ticket right now for families that are traveling to vacations, you may actually see a lot more people driving to vacations given the elevated price of fuel on the airlines, which seems to have been caught a little bit flat-footed on hedging of fuel. So I don’t think we will see and haven’t seen any negative impacts associated with it.

Operator: [indiscernible].

Unknown Analyst: Just a couple of quick ones here. You reached your 80% internalization of calibration goal. I know you’re not targeting 100%, but how should we think about kind of maybe a continued move upward there? And where do you think it finally shakes out?

Brian Kaner: Yes. Look, I mean, we’ve talked about the 80% historically. To your point, we reached it. We’re happy we reached it. That doesn’t mean we slow down the hiring or slow down the objective of continuing to drive as much internalization as possible. What I would say around where the — there’s a balance between having too much idle capacity to staff for 100% or staff for 95% and the margin benefit associated with it. So what we’re trying to do is just make sure we keep the techs that we have productive 100% of their day. And as we do that, we will continue to inch up. We have markets that are obviously greater than 80%. We have markets that are in the 90s. So we’ll continue to, as a company, focus on hiring the technicians to take care of as much of the demand as we possibly can.

But we’re very pleased that — and you can see it in the gross margin results, we’re very pleased that we’ve beat the time frame on the expected realization of this particular initiative. And that team has certainly done a fantastic job of capturing the opportunity that we outlined a little over almost 2 years ago.

Jeff Murray: And Brian, maybe I’ll just add that it is important to remember that the calibration market does continue to expand itself. So even though we’ve got the targeted level of technicians now in place that we commented on, the market will continue to expand and grow. So we should still see further benefits coming through our gross margin.

Unknown Analyst: Perfect. I appreciate the color. Maybe one more quick one on the Joe Hudson’s side. Their stores make a little bit less on average than yours. Can you give us any color on the opportunity there, maybe some revenue synergies and the timing that you could see those?

Brian Kaner: Yes. I mean I’ve spent quite a bit of time in the Joe Hudson’s locations over the past 4 months. And what I’ll tell you is still very encouraged by what we bought and the opportunity that exists. And one of the reasons for us accelerating the conversion process, and I will give a shout out to the team that we had that was really working those conversions. I mean, converting 258 stores in just under a 3-month period of time is no easy feat, and that team did a phenomenal job of accomplishing that. So really appreciate the team that did that. What that gave us was then the visibility to be able to see what we see in the legacy Boyd and Gerber business, which is a lot more data, a lot more focus on client performance, and I see the opportunity in those locations to be just as good, if not even slightly better than I would have thought when we were buying the transaction.

So timing of it will, as we said in the prepared remarks, Q1, obviously impacted by a little bit of weather and then the focus on conversion, that works itself out of the system as we get into Q2. And now the focus is just on the same maniacal focus on driving car count, driving capture rates, focusing on client experience in those locations. And I think that as we do that, we’ll see meaningful benefit from a top line perspective in that business.

Operator: Our next question is from Gary Ho with Desjardins Capital Markets.

Gary Ho: First question, wondering if we can get an update on the Mitchell platform onboarding. Are you seeing early benefits, market share gains with the key insurer? I believe you mentioned kind of Joe Hudson’s is on that platform already. Anything you’ve learned or conversations with them?

Brian Kaner: Yes. We continue to have conversations. I would tell you, there really has been no meaningful benefit in the results as we sit here today, which that’s, from my perspective, good news. It means there’s still a bit of a tailwind for us as we continue to work on that relationship. I still believe the opportunity will be out there as our objective is to just make sure that our stores are prepared when it comes. So to your point, we’ve put Mitchell into every location now. We’re on a pathway of getting our teams trained on — in many of our stores, we already use Mitchell. So the training is not something that has to happen everywhere. But as we look at stores that have gaps, where they’re not using Mitchell today, we’re getting those estimators trained on how to use it and making sure that when we unlock that opportunity, that we’re ready to take advantage of it.

Gary Ho: Okay. Great. And then my follow-up, more of a capital allocation question. I get that you plan to deleverage back down to 2.6x as early as the end of this year. But given the shares are down 30% year-to-date, is there a path where you’d consider buybacks over slowing down the deleveraging or slowing down the M&A and greenfield/brownfield build-out perhaps?

Jeff Murray: Gary, it’s Jeff here. No, I don’t think that’s in the cards in the near term. We’ve just got so many opportunities to still expand the footprint and take advantage of the growth opportunity that, in the long term, we feel that’s the best use of our capital.

Operator: Your next question is from Chris Murray with ATB Capital Markets.

Chris Murray: Maybe turning back to the margin profile that we’ve seen over the last couple of quarters. We’ve seen some meaningful improvement. And I think you guys called out about 200 basis points of improvement this quarter. So I guess a couple of pieces of this question. One, related to the storms, was there any kind of unusual costs that we should maybe be thinking about? I know Q1 is historically a bit lower, but just anything to think about there. But I guess more importantly, as we go through the year, I know you kind of talked to synergies and other improvements, probably guiding to about 150 basis points over the full year, but it looks like we’re a little ahead of that pace at this point. So any thoughts around how you’ll be able to improve margins on a go-forward basis would be helpful.

Brian Kaner: Yes. Well, look, I think the objective, as we’ve laid out, is to continue to work our way towards the 14-plus percent at this point. I mean, you said it earlier in your commentary. We know that Q4 to Q1, if you look over the longer term, we see about 100 basis point dip just based on the resetting of accruals and excess cost that sits in the first quarter. So we saw a number similar to that in this quarter. We obviously saw a little bit of a benefit associated with the incremental projects that were initiated this year, plus the mix effect of bringing Joe Hudson’s in, which put us at 12.3% in the quarter. I’d expect that, as we look at Q1 to Q2, we typically will see that bounce back from — that 100 basis points essentially bounces back.

And so I’d expect that to happen no different than it usually does. If you were to look at that then, if that puts us at a 13.2%, 13.3%, and you look at that against a year ago at 12%, which is where we were in Q2 of 2025, you’re seeing that kind of 120, 130 basis point movement year-over-year, and that’s coming off of then an 11.5% that would have happened in Q2 of 2024, which then solidifies the incremental 50 basis points or so to get you to 200. But as we think about just building the profitability back, we had $40 million of Project 360 savings realized last year. We expect $30 million of incremental Project 360 savings to be realized this year. And we now expect $20 million of Joe Hudson’s synergies to have a total of $90 million of realized benefit over that period of time to be in our financials, which should certainly be pushing us closer to that 14% as we get into the fourth quarter.

Chris Murray: Okay. That’s helpful. And then one other question. We talked a little bit about hitting the 80% goal on scanning and calibration. But the other thing I wanted to ask about is sort of your mobile calibration services. You’ve got the operation in the U.S. operation in Canada. As the market needs more scanning and calibration, how do you think about those mobile services playing out there? And in a lot of ways, how do you see those working across your networks? And any benefits that they bring outside of maybe incremental growth at this particular point?

Brian Kaner: Yes. I mean, look, I think what we’re going to be left with at some point in time is a large collection of mobile assets that can be utilized and deployed to do external work, because ultimately what will happen is the penetration rate of calibration services goes up and calibration needs per shop go up, the necessity for us to have a calibration tech inside the shop will actually become greater. And at that point in time, you’d assume that we’re doing almost 100% of our calibrations as we look out into the future. That mobile team then can be deployed to work external opportunities with single shop operators that may not have the financial flexibility to be able to invest in the equipment needed to conduct those calibrations.

And I think that’s where we see in the future an opportunity for us to continue to grow and expand our revenue in the calibration space. As we sit here today, that opportunity is more focused on continuing to internalize our own work and drive the profitability associated with that. But certainly, in the long term, we do expect that to be a revenue stream that, as Jeff has pointed out, continues to grow and continues to grow at an outsized rate to the industry, probably somewhere in the neighborhood of 20% to 25% a year, that we will be able to take advantage of externally at some point in time.

Operator: Your next question is from Mark Jordan with Goldman Sachs.

Mark Jordan: First one is focused on follow-up to total cost of repair. You made some comments earlier that you’re seeing more, I think, repair versus replace just given the age mix. But if you could share anything you might be seeing in terms of parts inflation and how that might be impacted maybe between the mix of OEM and aftermarket parts that you’re using?

Brian Kaner: Yes. I mean we certainly continue to see a normal environment of part inflation. I think you probably have heard in some of those reports, or at least I’ve heard in some of the reports where there’s some slight competitive activity taking place in the aftermarket parts space that might be putting a little bit of pressure on aftermarket parts at the moment. But we still have the tariff environment that’s out there. We still have kind of the normal impact of inflation. Obviously, one area where gas prices does impact, frankly, positively impact is you’re going to see people having to increase part prices for the cost of moving them around, because gas prices are elevated. So there’s no reason to believe that we’re going to see anything but positive.

Right now, as I said before, the bigger challenge is that we’re seeing that muted by just the shifting age of the car park and shifting age of the vehicles that we’re working on, and that’s really just a function of working through that kind of post-COVID period where new car sales were slightly depressed and that’s now working its way into the latter part of the car park. And as that comes back, we’ll expect that, that will continue to — that the mix will shift us back towards some of those high-dollar tickets that makes that inflation come out more prominently.

Mark Jordan: And then as a follow-up, just switching to labor. How do you feel about your current labor levels and ability to meet demand if volumes were to continue to improve throughout the remainder of the year? And maybe what you’re seeing in terms of technician wage inflation?

Brian Kaner: Yes. Really, on the last part first, I mean, no real — I mean, technician wage inflation is really kind of at, call it, normal CPI levels, not last reported. But we’re always looking for technicians. And the beauty of this industry is technicians want to go where there’s work, because they get paid for the hours that they produce, not the hours that they work. So as we look to go, we’ve got a great sales proposition for the technician, which is we have work right now. We have volume in the shops, which is not a luxury that many of the single shop operators and even some of the MSOs actually have. So when you have work, it’s a lot easier for us to recruit. We focus on hiring technicians every single day. And that still does remain an opportunity for us, but I can tell you that the team is intensely focused on continuing to make sure that we put the capacity in where the capacity is needed.

Operator: Your next question is from Bret Jordan with Jefferies.

Bret Jordan: On the total loss rates, I guess, maybe I missed it, but could you tell us what the number was for the first quarter? And I guess, it sounds from the remarks as if you expect it to continue to come down. But could you maybe give us some color as to where you think we should expect total loss rate ranges to be in the next year or 2, sort of the intermediate term?

Brian Kaner: Yes. Look, I won’t try to predict that. I will tell you that if you look at the industry, the industry total loss rate is 23.6% as of the end of Q1 ’26. And what I’m referencing is more of our internal numbers where I do continue to see the total loss rates in the business. We tend to be less than the industry from a total loss position, because many of those total losses never work their way into a store. So when I think about our internal numbers, I can see that year-over-year were slightly elevated from Q1 of last year. But I have seen those come down around. When you look at the decline that we’ve seen just month to month to month, I mean, you’re still seeing declines that are probably from the peak, which kind of happened in that September time frame of last year. From the peak, we’re down 200 to 300 basis points. So there is meaningful change that’s happening in total losses as used car prices continue to grow.

Bret Jordan: Okay. Great. And then I guess contribution from scanning and calibration when you think about the — is it comparable to labor margin? Or are you sort of charging the insurance company for that, getting a better return because there’s technology and your equipment involved?

Brian Kaner: No, I think as we’ve talked about it, I think about it as more akin to a labor operation, which carries labor margin associated.

Operator: Your next question is from William Staudinger with BMO Capital Markets.

William David Staudinger: Beyond the weather headwinds you highlighted in your southern markets, can you just comment on trends you saw across your other regions and if there’s any pockets of relative strength you want to call out?

Brian Kaner: Yes. Obviously, the pocket of relative strength is in the North, where in the first quarter, we saw more snow events. As we exited the winter months and got into the spring, we’re starting to see some hail events that are happening both across the South and the North, some even impacting what we would call our West. So I think weather was impactful in the South in the first quarter just because when there’s snow in the South, it really curtails driving. When there’s snow in the North, people drive and they get into accidents. We know that people are 10 times more likely to get into an accident during a snow event than they are in dry conditions. So we had more snow events in the North in the first quarter than we would have had historically.

So that benefits the North. Unfortunately, in the first quarter, that was more than offset by the softness that the 3-day — there was really a 3-day storm that affected everything from Texas, Oklahoma, all the way up into the Carolinas. And as you know, we’ve got quite a few stores down in that area. There was a point in time where there were close to 100 locations shut down just because people couldn’t get into work. So that has a negative impact on the business. The good news is, that’s behind us. But that is part of the reason we will call for 3% to 5% in the long term, because those types of things can happen in any given quarter. And it’s just important to note that those things are temporal and they don’t indicate anything about what’s happening in the underlying business itself.

They’re just things that will happen. And when $3.5 million can affect 40 basis points or 50 basis points of revenue, an event like that can cost $3.5 million very easily.

William David Staudinger: Okay. Great. And then can you just give us an update on what you saw with used car prices and insurance premiums within the quarter?

Brian Kaner: Yes. I’ll give you the latest on used car prices. If you look at Manheim, April data would suggest up 1.8%. So I think that continues to be a positive. What was the second part of the question?

William David Staudinger: And just insurance premium…

Brian Kaner: Yes. Insurance premiums at this point are — I think the last data I saw was 0.8% up. So at this point, insurance premiums are all but completely flat against the CPI that — actually they were 0.2% up in the month of April. So auto insurance premiums are all but kind of like flat at this point.

Operator: Your next question is from Jonathan Goldman with Scotiabank.

Jonathan Goldman: Maybe just the first one, it looks like the outperformance gap, the spread to the industry narrowed in Q1. You were tracking, I guess, for the past few years, 500 bps plus. It looks like this quarter was maybe 250 bps. Even if you normalize for weather, it still looks like only a 350 bps outperformance. Still impressive, but it does look like it’s narrowed. So I was wondering if you had any color on the trend there.

Brian Kaner: Yes. I don’t think there’s anything necessarily super notable on that. I think, again, you’ll see, as we’re starting to lap in the first quarter, we’re starting to lap some of that benefit associated with the change in our compensation structure that put a lot more eyes on performance. Again, I think there’s still — you’re going to see quarter-to-quarter fluctuations, in particular related to just things like you articulated. The storm impacts obviously affects — can affect our business. Just based on the concentration of stores now in the South, it can affect our business differently than it affects another business. So I don’t think there’s anything really to read into that. In the long run, what we expect our long-term growth to contemplate is somewhere in the neighborhood of 100 to 300 basis points of market share gains to achieve that 3% to 5%. The fact that we’re still sitting at anywhere from 300 to 500 basis points is, I would take as a positive.

Jonathan Goldman: Okay. Fair enough. And then maybe another one. Brian, I think on the Q3 call last year, you were saying it could be certainly conceivable that we can be above the 3% to 5% same-store sales range in the early part of this year as you were lapping easier comps. I mean, you did offer some color earlier in the call about TCOR and price of cost of repair being held back a bit. I mean that would probably fill in the delta there. But is there anything else that was different versus your expectations back then to how things played out this quarter?

Brian Kaner: No. I mean that fills in all and then some of the delta. I mean, if we had the normal price that we have been getting over the last historically, just even the 3% to 4%, I don’t have to do the math for you, but we’d be outside of the range.

Jonathan Goldman: Yes, that’s fair. And then maybe if I could squeeze one more in. Thinking about the growth algorithm over the long term, does your baking in the 3% to 4% increase in average cost of repair come at the expense of repairable claims volumes? I mean, one of the headwinds the industry has been dealing with is insurance inflation, which is a product of cost of repair and parts inflation that obviously had an impact on claims volumes. What gives you confidence that we can get back to this 3% to 4% inflation and still maintain the historical range of claims volumes?

Brian Kaner: Yes. I think probably what’s most notable about that commentary is it’s really not 3% to 4% that’s driven by pure inflation. It’s 3% to 4% that’s driven by the complexity of the repair. If you think about the fact that as more cars require a calibration service, and that calibration service is roughly just north of $500 a calibration on average on a ticket, that is what’s driving the cost of repair up. It really isn’t just a pure inflation equation, which, to your point, I mean, the algorithm still calls for claims volume to be down 2%, but then offset by 3% to 4% combination of price and complexity. And so that price piece is probably — it may be half of that equation, the complexity piece of it is the other half.

So I think there’s a benefit on one side and a cost on the other, which allows for then the marketplace to just continue to grow. So I think it’s important not to just think about that as pure inflation, because a lot of it has to do with the complexity of the repair. The hours are increasing. The calibration services are increasing. And frankly, as those things happen, the cost of a labor hour is increasing at probably normal CPI. The cost of parts is increasing at normal CPI, but that would only give you about 2 points of the 3 to 4.

Operator: At this time, there are no further questions. I’ll now turn the call back over to Brian for any closing remarks.

Brian Kaner: Yes. Thank you. I appreciate that. So look, I want to, again, take the opportunity to thank the team for all the hard work and efforts in the quarter. And with that, I thank you, operator, and thank you all once again for joining the call today, and we look forward to reporting our second quarter results in August. Thanks again, and have a great day.

Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.