Callander, Ontario -- While still being bruised by the ongoing trade war with the U.S., Canada's leading automotive aftermarket are starting to look far more concerned with ensuring long-term profitability than short-term survival.
In this week's Tuesday Ticker, we take a look at the way one major collision repair brand is taking active steps to invest its own expansion and another determined to expand its performance in overseas markets.
Boyd's new ballast
The Winnipeg-based Boyd Group Services Inc., one of North America's largest collision repair operators, has arranged two major financing deals to support its expansion plans through 2029.
The company announced on August 20th that it has entered into an underwriting agreement to sell $275 million in senior unsecured notes. Similar to corporate bonds without being backed by collateral, these notes will become due in 2033 and carry a 5.75% annual interest rate.
At the same time, Boyd increased and extended its existing revolving credit facilities -- a business credit line that can be borrowed against and repaid repeatedly -- to US$575 million for a five-year term. The credit line includes an accordion feature, meaning Boyd can expand the credit up to US$875 million if needed. These facilities will mature in August 2030 and provide more favourable pricing than the previous arrangement.
"The new notes, along with the amended credit facilities, increase our financial flexibility," said Jeff Murray, executive vice-president and chief financial officer of the Boyd Group. "These financing arrangements will enable us to continue executing our latest five-year goal, designed to drive growth and enhance profitability through 2029."
The company plans to use the net proceeds from the notes offering to repay existing debt, essentially refinancing at what appears to be better terms. Boyd also maintains its existing US$125 million term loan (a traditional business loan with set payment schedule) that matures in March 2027.
The notes will be offered in Canadian institutional investors and to certain qualified institutional buyers in the U.S.
Long-term thinking at Linamar
The Guelph, Ontario-based Linamar Corporation delivered mixed second quarter results, with its automotive parts business driving earnings growth despite challenging industrial equipment markets.
The diversified manufacturer reported total sales of $2.6 billion, down 7.2 percent year-over-year. However, normalized net earnings (profit after adjusting for one-time items) climbed 10.6 percent to $168.4 million, with normalized earnings per share rising 8.2 percent to $2.81.
Linamar's Mobility segment, which makes automotive parts, saw normalized operating earnings (profit from core operations) surge 19.6 percent to $150.9 million despite modest revenue decline. This pushed operating margins (percentage of sales that becomes profit) back into the normal seven-to-10 percent range.
Content per vehicle, representing Linamar's average earnings from each vehicle produced by automaker customers, remained strong. North American CPV rose 1.1 percent to $291.63 per vehicle, while Asia Pacific increased 5.2 percent to $11.32 per vehicle.
The Industrial segment, manufacturing aerial work platforms and agricultural equipment under brands like Skyjack, faced headwinds with double-digit declines in both sales and earnings as construction and agricultural markets remained soft.
Free cash flow (cash remaining after expenses and capital investments) improved 81 percent to $177.6 million CAD. Since November 2024, Linamar's share buyback program has retired nearly 1.8 million shares, returning almost $100 million to shareholders.
The company maintains a strong balance sheet with net debt to EBITDA (earnings before interest, taxes, depreciation and amortization) of 1.02 times, well below its 1.5 times target and the 3.13 times peer average.
The market reacted positively, with Linamar stock rising 4.52 percent to close at $73.28 CAD following the earnings announcement.
