Boyd Group Services Inc. (BGSI) Q4 2025 Earnings Call Transcript

Thank you for standing by, and welcome to the Boyd Group Services' fourth quarter and year-end 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again, press star 1. Thank you. I'd now like to turn the call over to Linda Funk, VP Finance. You may begin.

Good morning, everyone. Welcome to the Boyd Group Services, Inc. 2025 fourth 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 CDAR's database found at cedarplus.ca and edgar at sec.gov. I'd like to remind everyone that this conference call is being recorded today, Wednesday, March 18, 2026. I would now like to introduce Mr. Brian Kainer, President and Chief Executive Officer of Boyd Group Services, Inc. Please go ahead, Mr. Kainer.

Good morning, everyone, and thank you for joining us on today's call. On call with me today is Jeff Murray, our Executive Vice President and Chief Financial Officer. We released our 2025 fourth quarter and year-end 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 voidgroup.com. Our news release, financial statements, and MD&A have also been filed on CDaR Plus and Edgar this morning. On today's call, we will discuss the financial results for the three-month period and the year ended December 31, 2025, provide a general business update, and discuss the we will then open the call. The 2025 fiscal year was both busy and highly successful for In the first half of the year, we focused on implementing a number of key initiatives, including Project 360, an enhanced go-to-market strategy, and a more localized customer. We moved into the second having meaningful adjusted EBITDA, margin expansion, and industry. The continued improvement in repairable claims, this supported a return to positive same-store sales in the second half of the year, a trend that has continued. Alongside these operational improvements, we also took advantage of an improving acquisition environment and our strong balance sheet to complete four small mso acquisitions and announced the acquisition of joe hudson's collision center we also listed our shares on the new york stock exchange and completed two unsecured note offerings important milestones in void's evolution that we expect to be will broaden our access to u.s investors and further strengthen discuss our results in more detail i want to thank our employees and senior leadership team their dedication and hard work are the foundation of our success and these results are a direct reflection of turning to our financial performance in 2025 we delivered 3.1 billion in revenue four percent year over year an adjusted adjusted EBITDA increased by 12.4 percent with adjusted EBITDA margins expanding by 110 basis points to 12 percent driven by the successful execution of project 360 our cost transformation plan, and the internalization. We exited the year with strong momentum. In the fourth quarter, we generated our second consecutive store sales growth and grew EBITDA by 24.2%. Our EBITDA margin expanded to 13.1% in the fourth quarter, up from 11.1% in the fourth quarter. In 2025, we saw consistent improvement in several of the industry headwinds that had been negatively, namely moderation of insurance premium growth and increasing. This resulted in a reduction in estimated declines in claims activity from 9% to 10% in the first quarter down to 2% to 4% by the fourth quarter. I'm pleased to report that this improvement has continued into 2026. Auto insurance premium growth is now running below CPI levels. Insurance carriers have implemented rate reductions. These improvements combined with increased activity levels we've seen in our business since the end of the second quarter give us confidence that the industry conditions continue to normalize. In the early months of 2026, while winter storms benefited our northern regions, this benefit was partially offset by unusual storm activity in the south. These storms resulted in lower driving activity and therefore a short-term reduction in volume in our southern locations, including Joe Hudson's. As the quarter progressed, we've seen the volumes in the south normalize, with overall same-store sales thus far tracking similar to fourth quarter levels. Throughout 2025, we also continue to expand our location footprint through the execution of our long-standing growth strategy. During the year, we opened 70 new locations, including 27 startups. Looking ahead, we continue to have a robust pipeline of startup locations under development through 2026. We expect to open eight new locations in the first quarter, with an additional 24 locations in development. Edition 2025 marked a strong balance sheet. In August, we completed our first small acquisition body shop in Virginia. We also completed three additional MSO acquisitions. With the Nova Scotia acquisition representing our initial entry into that province and underscores our commitment to continued growth. Looking ahead, our pipeline for single shop and small MSO acquisition remains strong. And we'll continue, we'll complement our focuses on building density in our existing markets and achieving leading positions where we strengthens our ability to serve our insurance company clients. And turning now to Joe Hudson's, we successfully closed the acquisition in early January and the integration is progressing well and in line with our expectation, some softness and activity levels early in the, early in the Southern region. It's been very, I've been very encouraged and the teams have worked with both organizations Our initial focus has been on, similar to the success of realizing early procurement savings to accelerate once store conversions are complete, and we are able to fully leverage our, we remain on track to achieve approximately 50% of the $35 to $45 million in expected synergies in 2026. Before turning the call over to Jeff, I'd like to provide a brief update on Project 360. When we launched the $100 million cost transformation plan in the fourth quarter of 2024, we set ambitious targets. I'm pleased to report that we delivered on those targets in 2025. We realized $40 million in annualized cost savings in 2025 from the successful implementation of our indirect staffing model as well as procurement savings. Going forward, we will report Project 360 savings and Joe Hudson synergies together as the team will oversee both initiatives. This team has successfully executed information since its launch and will now also lead the reeling disclosed as a single integrated cost program totaling 140 million dollars consisting of 100 million from project 360 and approximately 40 to date 40 million of the project 365 with an additional 50 million expected in 2026 and the remaining 50 million to be real with that thanks brian i will start off with an overview of our fourth quarter results followed by a brief summary

of our full year 2025 results. As Brian highlighted, we had a strong fourth quarter and positive same-store sales growth and solid margin improvement as we continued to execute on Project 360. In the fourth quarter, our sales increased by 5.5% year-over-year to $793.9 million, with the same-store sales, excluding foreign exchange, increasing by 2.2%. In addition, $26.9 million in incremental sales were generated from 83 new locations that were not in operation for the full comparative period. Industry conditions continued to improve in the fourth quarter. Assessing platform data, we estimate that repairable claims declined by approximately 2% to 4%, a meaningful improvement from the first three quarters of 2025, with claims volume improving sequentially each quarter. Boyd continued to solidly outperform the industry during the fourth quarter, 36.3 percent in the fourth quarter of 2025, compared to 45.8 percent achieved in the same period of 2024. This percentage benefited from internalization of scanning and calibration, an increase in parts margins, and improvements in performance-based pricing. The improvement in parts margin was a result of Project 360 initiatives, while the improvement in performance-based pricing was driven by improved alignment across our regional teams to meet the unique KPIs of their insurance company clients. Turning to operating expenses, for the fourth quarter of 2025, operating expenses as a percentage of sales were 33.3% and 50 basis points from 34.8% of sales for the same period in 2024. Operating expenses as a percentage of sales were positively impacted by Project 360 and our return to positive same-store sales growth, which provided improved operating leverage on certain operating costs. Adjusted EBITDA increased 24.2% year-over-year to $103.6 million. Adjusted EBITDA margins improved 200 basis points to 13.1% in the fourth quarter, up from 11.1% in the same period of the prior year. The increase was a result of an improvement in same-store sales, benefits from the internalization of scanning and calibration, and cost savings from Project 360. In 2026, we expect to achieve additional cost savings from Project 360, including continued procurement savings and operational efficiencies. We would like to highlight that as we enter 2026, first-year quarter expenses consistent with prior years are impacted by higher payroll taxes that occur early in the year. In addition, the fourth quarter of 2025 benefited from reductions in expense accruals as certain estimates were finalized at amounts lower than previously accrued. These items should be considered when comparing sequential margin performance between the fourth quarter of 2025 and the first quarter of 2026. Earnings for the fourth quarter of 2025 was $4.8 million, compared to $2.4 million in the same period of 2024. Net earnings for the period benefited from higher operating income, partially offset by an increase in depreciation expense due to location growth and acquisition and transformation costs. Excluding fair value adjustments, acquisition and transformational cost initiatives, and amortization of intangibles arising from acquisitions, adjusted net earnings for the fourth quarter of 2025 were $22.8 million or $0.90 per share compared to adjusted net earnings of $10.8 million or $0.50 per share in the same period of the prior year. Commencing in the fourth quarter of 2025 and to align with many other growth companies, the calculation of adjusted net earnings now also excludes amortization of intangibles arising on acquisitions. Comparative periods have been restated for consistency. Now, moving on to our annual results. For the year ended December 31st, 2025, we reported sales of $3.1 billion, an increase of 2.4% over the prior year, driven by contributions from 119 new locations that had not been in operation for the full comparative period, partially offset by same-store sales declines of 0.2%. It is important to note that fiscal 2025 included one fewer selling and production day compared to fiscal 2024, which reduced capacity by approximately point four percent and resulted in the decline in same store sales i'm pleased to report that we once again outperformed the industry in 2025 with our same store sales performance exceeding the estimated five percent to seven percent decline in repairable claims gross margin increased by 90 basis points year over year to 46.4 of sales compared to the prior period reflecting the benefits from internalization of scanning and calibration improved parts margins, and improvement in performance-based pricing. Operating expenses of the percentage of sales declined 20 basis points to 34.4% for the year end of December 31st, 2025, compared to 34.6% for the same period in 2024, primarily driven by Project 360 cost savings. These improvements were partially offset by negative leverage on lower same-store sales, incremental costs from scanning and calibration, and an investment in facilities maintenance costs. Adjusted EBITDA for the year-end of December 31st, 2025 increased 12.4% year-over-year to $376.3 million, while adjusted EBITDA margins expanded to 12% from 10.9% in the same period of the prior year. The improvement in adjusted EBITDA was a result of an increased sales from new location growth, gross margin improvement, and the significant cost savings achieved through Project 360. We reported net earnings of $18.4 million compared to $24.5 million in the prior year. The decline was driven in part due to acquisition and transformational cost initiatives of $22.6 million net of tax including $9.1 million related to the Joe Hudson's acquisition and $9.9 million related to Project 360 implementation. Adjusted net earnings in 2025 increased 28.8% year-over-year to $62.4 million, while adjusted net earnings per share increased to $2.78 in 2025 from $2.26 in 2024. The growth in adjusted net earnings came from increased sales, improvement in gross margins, and cost efficiencies from Project 360. As previously noted, commencing in the fourth quarter, we have begun to exclude amortization of intangibles arising from acquisitions from adjusted net earnings and comparative periods have also been restated at the end of 2025 we had total debt net of cash of 488.1 million dollars compared to 1.28 billion dollars at the end of the third quarter of 2025. before lease liabilities we exited 2025 with net cash of 290.7 million dollars compared to net debt of 521.1 million dollars at the end of september 2025. The decrease of debt net of cash was a result of the proceeds received from the $525 million Canadian senior unsecured note offering and the $897 million bought deal initial public offering in the U.S. that reduced draws on the credit facilities and partially offset by location growth. The net proceeds of these offerings were used to fund the $1.3 billion acquisition of Joe Hudson's Collision Centre on January 9, 2026. During 2026, the company plans to make capital expenditures excluding those related acquisition development of new locations within the range of 1.6% and 1.8% of sales. In addition to these capital expenditures, the company expects to incur approximately $30 million related to the Joe Hudson's acquisition, as well as completing our planned investment and network technology updates. In 2026, we also expect to incur one-time costs related to the Project 360 cost savings initiative and the realization of the synergies from the Joe Hudson's acquisition. For Project 360, the total costs to achieve are expected to be between $20 to $23 million, of which $13.4 million were incurred in 2025. In 2024, similar transformation costs were incurred totaling $4.4 million. The costs to achieve the Joe Hudson synergies are estimated at approximately $30 million in one-time costs. I will now pass it back to Brian for closing remarks.

Thank you, Jeff. We significantly strengthened our business through improved profitability, a more focused location growth strategy centered on densification, a meaningfully expanded footprint, and a stronger capital markets profile. Looking ahead to 2026 and beyond, I believe our strength and position enables us to deliver even greater value as we leverage our leadership in the highly fragmented North American collision repair industry and continue executing the disciplined growth strategy that has driven Boyd's success for more than three decades with that i would now like to open the call to questions thank you we will now begin the question and answer session if you'd like to ask a question please press star one in your telephone keypad if you'd like to withdraw your question simply press star one again your first question today comes from the line of krista friesen from cibc your line is open hi krista hi thanks for taking my question good morning um can you give a little bit more color

on what you're seeing for same-store sales growth right now. I appreciate there were some storms in January, but just curious how you view Boyd exiting Q1 and maybe what the run rate is in March, if you can share that.

Yeah, well, obviously we won't share the run rate in March, but as we look at the first two months of the year, what we saw was what we said, you know, of strength in the northern market, you know, the storm in that partial, you know, to get back in the range, which is reflective of, which is certainly reflective of the macro backdrop that we're experiencing. You know, we've continued to outperform the market, you know, by, you know, in that, you know.

Okay, thank you. And then maybe just on the Q4, same store sales growth, I believe when you had reported Q3 in mid-November, you talked about Q4 kind of being back within the uh the target range and just wondering if you can speak to kind of what caused that uh difference in in the last half of q4 thank you yeah yeah i mean i think the only thing i can really point to that that caused any sort of you know we you know we saw a little bit more um you know a little bit more vacation time from the technicians and you know that that put

of the shops or a slowdown and we're coming into the shops it had more to do with our ability to get through it in light of just the the way that the hot okay thank you for the color i'll leave it there thank you your next question comes from a line of sabaha khan from rbc capital markets your line is open great thanks and good morning um maybe i guess just kind of continuing on 26 you know with sort of that operating backdrop you just talked about and the integration of joe hudson how are you thinking about just run rate mna of smaller shops you know what is kind

of the capacity or just the willingness to sort of pursue that uh over the course of this year while you integrate the joe hudson transaction things yeah well look i think if we as we've said a couple of on a couple different occasions we intend to integrate the joe hudson's um business with you know a separate team of people that then that that's focused on you know the base business acquisition activity that we do. So we don't expect to see an activity as it relates to acquisitions driven by what we're, our intention is to get, you know, get through the integration of Joe Hudson by, you know, early in the, so I don't expect it to introduce and would expect to infill the balance of the, you know, the balance of our.

Great. And then I guess just to put a finer point on the same store sales discussion that you outlined a bit earlier, you know, is I guess the expectation based on the operating backdrop and how you're sort of evolving through q1 that you could still be within that sort of three to five percent range for the year or too early to sort of comment on that thanks yeah I mean look I think we you know we we've said we expect to be in a three to five percent you know range over you know towards that um you know the the the claims environment continues to get better quarter um you know which gives us you

that we can get back into that range. As I said, without the impact of, you know, this couple-day impact, it very much would have lost. I don't agree.

Great. Thanks very much.

Your next question comes from a line of Chris Murray from ATB Cormor Capital Markets. Your line is open.

Thanks, folks. You know, maybe, Ryan, going back to maybe some of the bigger macro pieces, you know, it sort of feels like you are seeing the improvement in the in the underlying um so i guess a couple pieces of this one you know is your expectation that um sort of the claims volume numbers i mean at least they're trending to be positive and would you expect that the kind of a spread between what boyd has historically been doing versus the industry to continue uh yeah i would expect the the spread to continue i don't know that the claims environment is going to go positive um you know i think it's progressing less negative

which is you know what we expect it to do you know we we've always said that you know based on collision avoidance systems we expect the underlying marketplace to be negative by two percent um we expect that to be offset by one percent you know one percent improvement in miles driven as well as a one percent increase in the car park you know which leaves the market kind of down one percent you know as as we suggested in the fourth quarter we're starting to near that one percent so you know we would we wouldn't expect you know to give up the share gains that we're getting right now you know in the down environment we'd expect that to continue even as the market improves and maybe i'd just add to that brian is that we certainly have seen

sort of a delay in the maturation of some of the stores we've added over the last, you know, few years. So I think that's also something to take into account is that we could benefit just from maturation of those stores.

Okay, that's helpful. And then maybe just looking at operating expenses, you know, certainly some really good performance in the quarter. I'm just wondering, you know, how you're thinking about it. There were a lot of things called out. I mean, you talked about scanning and calibration helped you, but it also hurts you a little bit. and then that maturation piece like if we were thinking about net net that kind of pace of or directionality of margin improvement you know if you were to kind of back out the call it the one-time accrual adjustments like how do you how are we thinking about kind of progressive margin improvement through the balance of the year well i think i would go back to our looking are just our project 360 you know ambition that we've talked about of getting back to 14 by 2029 and we've also really highlighted the the improvements in terms of project 360 and joe

hudson that we expect to realize in uh 2026 and so um that number's 50 50 million dollars so i would just layer that 50 million dollar improvement into the uh into your assumptions around opex and and that'll give you your answer.

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

Your next question comes from a line of Mark Jordan from Goldman Sachs. Your line is open.

Hey, good morning. Thank you very much.

As we think about the same-store sales growth, are you able to talk about the pricing benefit that you're seeing from the pass-through of parts inflation, and maybe how would you think about that tailwind going forward? yeah well if you look at what's happening with with um you know parts prices as you've highlighted they continue to go up you know parts pricing cpi in february was 2.6 percent we also continue increases um we still believe that you know that's still partially being offset by um the blending down of the overall claims population driven by the elevated total losses so we still haven't really seen i think the tailwind is to come down reflecting the used car price increases that are now in the marketplace and you know manheim would suggest those are up four percent in the in the uh in the month of february which is really probably the first meaningful improvement in or increase in the last few months. We haven't yet seen it in our results to date. You know, right now, if you look at, you know, through about one point.

Perfect. Thank you very much. You know, as we think about the synergies that are expected for Joe Hudson, midpoint, 40 million, half are expected to be realized this year.

You know, it kind of sounds like you've realized some already, but it's fair to say the majority of that should be more back half-weighted no no I mean I think some of the the savings that we're expecting for 2026 are really largely driven by procurement savings in those procurement savings you know we're starting to be reaction we had very good visibility to where those opportunities were at the team worked very very quickly to put those um best of the best contracts in place and i think we're we'll start to see some of that benefit even in the first you know fair to say that some of the some of the other synergies would be you know more likely executed towards the back half but i wouldn't i wouldn't i wouldn't wait it so perfect thank you very much your next question comes from the line of thomas wendler from stevens Your line is open.

Hey, good morning, everyone. We've heard some chatter that OEMs intend to raise their prices with the 2027 model year. You know, as new prices kind of increase, the used generally follows suit. Do you think the company could see a bit of a bump up in the back half of the year as the repair versus replace dynamics kind of start leaning towards repairing?

It's very possible. I mean, I've been surprised that the used car prices have been moved more meetings. So it wouldn't surprise, you know, total losses come down. And I think what the way that manifests, it shows itself as, you know, instead of total loss, you know, similar to what we saw in, you know, 20.

Thank you. And maybe just one more. It's been almost a year since you've kind of aligned the regional and field management compensation to key performance metrics from the insurance partners. Can you talk about how this has impacted your volumes, maybe some wins you've seen on the market share side from this?

Yeah, I mean, look, I would tell you that I think that's what performance to the market, as we, you know, the client performance metrics have moved over the past 12 months. The team has done a phenomenal job of focusing in on, you know, on not, we're not just winning on the big three insurance carriers that are important.

Perfect. I appreciate you answering my questions.

Your next question comes from a line of Steve Hansen from Raymond James. Your line is open.

Yeah, I'm right, guys. Thanks for the time. Brian, not to beat the same source horse too hard here, but is it fair to say that the activity levels in March have improved back to the range you would have expected absent the weather stuff you saw earlier in the year? I'm just trying to understand sort of the cadence through the quarter.

Yeah, I would say that it's less about March and frankly more about we saw the activity bounce back pretty quickly even as we got into February. It was very much so that that impact was there, you know, to a few days of access all the way to the Carolinas, you know, but it was very short term in nature. And as we came out of it, we saw we saw the dip and then we saw the, you know, the bounce back.

OK, that's helpful. And just want to circle back on the M&A side again. These small MSOs become more thematic or topical here. I mean, how competitive are they? The broader landscape has had some challenges, of course, but are you having to pay up for these small MSOs or are you finding there's still good value to be had there?

Yeah, I think there's actually, as time goes on, there's even more value to be had there. The competitive backdrop is less competitive right now as, you know, as a few of the major players in the business or in the industry are going through different things. um you know i think it's you know a bit of the acquirer of choice you know as you well can appreciate as that happens the competitive environment actually starts to slant more towards the buyer versus the seller appreciate the time thanks your next question comes from a line of derek lassard from td cowan your line is open yeah good morning everybody so i just i i want to switch gears here and focus on your your strong excuse me your strong margin performance

in the quarter. Can you just maybe break down how much of the remaining path is driven by...

You're breaking up there.

Can you hear me now?

Yeah, we can hear you now. Yeah, so how much, I guess, the remaining path to your 14% target, how much of that is being driven by Project 360 versus Mix and Scale and Joe Hudson Synergies? uh good question i mean we we we still expect the pathway to 14 in the base business to be paved by project 360. um no doubt that that joe hudson's profit profile enhances and accelerates our ability to get to that objective um so we're not we're not slowing anything down relative to the benefits we would need to deliver and frankly would expect you know as we get further out

into the plan period um you know that plus that we have at the end of the 14 to be positively impacted by you know joe hudson mixing in okay and then and when you think about the the internalization of your scanning and and calibration i think you you put out in the press release, you're at 75% in Q4. Where does this, I guess, ultimately plateau and how should we be thinking about the incremental margin and competitive benefits from further internalization?

Yeah, well, we've talked about the benefits associated with it or, you know, that labor cat or that revenue category from a sublet category. You know, we've talked about that being a difference benefit what we do know is when we do it internally we're getting you know we're drive down the cycle time for repair because we're actually lots of benefits there as far as where it plateaus um you know we've said to do that continues to require more to a shop and we've talked about how that migration into a shop will offer up and will open up the opportunity for us to leverage the the mobile capabilities that we have to expose that more to the external market and maybe even those that don't have the financial wherewithal to invest in this type of equipment.

Maybe I'll highlight those. There's really, there is two components. There's the internalization piece, which offers a margin uplift, but there is also just the growth in the volume of calibrations, the number of cars that require calibrations.

And since it is a higher margin category, just higher margin, or sorry, higher volumes over time is also going to help provide additional margin lift going forward awesome thanks for the color guys your next question comes from a line of daryl young from steeple your line is open hey good morning everyone um just as it relates to the insurance um pricing i know we talk a lot about the the macro and and pricing coming down but are you seeing any signs of customer behavior around customer cash pay or any previous deferrals that are starting to come back through the shops or is there any green shoots

there that you can speak to that that kind of corroborate the upside that should come i don't know that we're seeing anything differently as it relates to customer pay or obviously the claims environment is beginning is getting left people are more likely to file they're more likely filing claims when they get into an accident um you know whether or not there's there's a deferral benefit you know as we look back to the last two times we saw you know the industry kind of react or behave this way um there was coming out of the recession there was a period of time i think it was two years after the the recession ended that we saw an outsized growth in the market um certainly covid you know we saw you know in the year right after covid we saw it an exact inverse of what we in the COVID period. And then the period after, you know, 20 and 2023, we saw an outsized performance. So if you look at history, you might believe that there's something there. Right now, the focus of our organization is just to make sure that we're taking care of the volume that's coming in and that we're continuing to deepen the relationships we have with our insurance partners. And as we do that, we know that we're continuing to outpace the market and would expect to continue to do that if the market continues to get more positive got it okay and then one one other question just around labor rates seeing some news headlines around regional pressure on labor rates and actually coming down from insurance companies is that something that's more idiosyncratic or are you are you seeing pressure on labor rates from your insurance partners we are not seeing pressure from labor rates I mean I think the insurance carriers recognize that the cost of labor continues to move that generally speaking at inflationary it's going to have to move commiserate with that got it okay thanks very

much your next question comes from a lineup brett jordan from jeffries your line is open hey good morning guys just to flog obviously the impact on arrivals um that you had on the very short term does the longer term impact from higher weather related crash become a net positive or Or do you think the driving reduction makes weather a net negative in Q1?

You broke up on, like, one piece of your question. I don't know.

I was saying, does the weather-related collision create a net positive in Q1? Or was the timing of the arrivals and lack of driving a negative?

Yeah, I think it probably creates a slight net negative. But the benefit works to the second quarter of a whipped tail.

About scanning and calibration, you know, it is outgrowing the underlying market. Do you have a feeling for what the maybe three-year outlook for scanning and calibration growth might be, just as more cars require it?

There's been research, you know, reports that piece of business, you know, 20 to 25 percent a year. So I think we saw something very early on, a billion dollars to $5 billion. I believe the timeframe was till 2029. Great, thanks.

Your next question comes from a line of Razih Hassan from Paradigm Capital. Your line is open.

Good morning. Thanks for taking my questions.

Could you maybe just talk about operating leverage potential at same-store sales growth and which costs you saw improve in the quarter uh related to leverage if any color that would be helpful yeah well we i think we've always continued to well we've always really discussed what we would expect from an operating leverage perspective and same store sales based on what you've seen historically if you see a steady level same store sales growth in that two to four percent range over time we've seen kind of a 20 basis point improvement in operating leverage and it really just comes down to you know we do have fixed costs that we can leverage like general manager salaries and and other occupancy type costs that don't flex at all with growth and so that's where we get that that leverage from so so you could see you know at 20% a year you could see sort of a 1% overall improvement over a five year period if you get consistent same store sales growth okay great that's helpful.

And then maybe just your cash position, expect that to get back to historical levels going forward.

Sorry, could you repeat the question? Our cash flow? Yeah, certainly this year, the end of this year was an anomaly in terms of the cash on the balance sheet as a result of preparing for the closure of the transaction with Joe Hudson. So yes, going forward, we would expect to have the cash balances come back to their normal range.

Okay, great. Thanks for taking my questions.

Your next question comes from a line of Tristan Thomas-Martin from BMO Capital Markets. Your line is open.

Hey, good morning. Brian, I think you called out kind of in a normalized year, basically a 1% benefit for miles driven. Should we think about that for this year as well, given just we've seen such an increase in gas prices recently?

I mean, look, over a long term, over a long period of time, you know, that's what we expect. In fact, I don't know that I haven't seen any data relative to what's happened thus far given the gas price movement. I also don't wouldn't want to predict how long that's going to be. So it'd be speculative for me to suggest that we're going to see any negative associated with that. you know people also do tend to drive more when um you know you're also seeing inflation on on you know airline tickets as well driven by the price of gas which you know puts people in their cars more for vacations and things like that particular as we get into these types of months so i i think that might be an offset anyways okay no that makes sense um and i'm just kind of curious as you continue to do work on the joe hudson integration anything that surprised you or any sources of like incremental upside from when you last updated us thanks yes i mean jeff mentioned earlier the the notion that there's you know they bought a you know they did they not dissimilar to us have a lot of stores that are in the maturation process um still believe those stores have you know good opportunity for to to be a tailwind to the to the business um they certainly were purchased we bought 140 locations you know over the last three years leading up to 2025 five so there's there's probably some untapped value there but the team has been very positive very efficient the integration frankly be happier with the pacing of the integration process at this point in time and um you know the synergies that we were expecting are real okay great thanks

again if you'd like to ask a question press star one in your telephone keypad your next question comes from a line of zachary evershed from national bank financial your line is open.

Hey, Zach. Good morning, everyone. Congrats on the quarter. Hoping you could quantify the impact of paint rebates in gross margins, and what are your expectations of changes there as supply consolidates?

I mean, when you're talking about rebates, are you talking about rebates from suppliers, or are you talking about rebates? I'll really talk about what's happening with rebates with suppliers. I mean, obviously, we have some volume trigger that will benefit from you know, in our purchases. And, you know, frankly, as we integrate Joe Hudson, those things can be a benefit for us as well, but nothing on the specific numbers.

And any downdraft expected as supply consolidates?

No. No, there's nothing that we would, nothing that we see from that perspective.

Beauty. Thanks. I'll turn it over.

Your next question comes from a line of Jonathan Goldman from Scotiabank.

Your line is open. hey good morning team and thanks for taking my questions good morning maybe maybe just the first one uh brian like i understand all the comments around the weather in q1 and obviously no one has a crystal ball but you know going back to your comments you know back on the q3 earnings call about kind of trending back to the three to five percent same store sales range based on what you saw in october the industry fundamentals did you have any visibility on the vacation schedule and and how that would line up for Q4 and the impact on that?

Not good visibility. You know, we made some changes to the way that we pay out vacation, you know, for people that had unused vacation time. We stopped doing that last year and it probably had a bit of a short-term negative impact on the business, but would have been difficult for us to see that ahead of time. So no real visibility as we exited the you know as we exited the month of october uh we did see you know we had seen you know a nice bounce back in in the activity in the month of october uh but nothing really you know nothing from uh as we got into november december it was really more a function of our ability to get to get through the work um that was coming in okay and then maybe one more for me so if we were to strip out the noise from the vacation schedules in the weather q1 would you have seen a sequential improvement in same store sales in q4 versus q3 and then again sequential improvement from q1 versus q4 uh probably yes yeah probably okay thanks for taking my questions and that concludes our question and answer session i will now turn the call back over to brian for closing remarks okay all right well thank you all again um for joining the call today uh we look forward to reporting our first quarter results in may and thanks again have a great day this concludes today's conference call thank you for your participation you may now just