KeyStone’s Stock Talk Show, Episode 234. 

Once again, we have a busy show – on the heels of our final DIY Stock Investing Webinars of 2023 – which are still available on demand – we answer 4 YSOT’s. Aaron begins by going back-to-back on restaurant investments, answering a question on A&W Revenue Royalties Income Fund (AW.UN: TSX), the famous Root Beer selling Quick Service Burger joint which sports a 6% plus yield. The yield is strong and Aaron looks into whether it has any room for growth.  I will be answering a listener question on a stock which should be no stranger to our clients, having been a long-term BUY for well over a decade in our Canadian Small-Cap Growth Research, Boyd Group Services Inc. (BYD:TSX). Boyd is one of North America’s largest operators of non-franchised collision repair centers with approximately ~130 locations in Canada and ~724 sites in the US for a total of over 850 centers. The stock reported solid Q3 results, and the listener asks if we are still positive on the name with it close to $250, for a stock we originally recommended under $2.50. Brett answers a viewer question on Pivotree Inc. (PVT:TSX-V), an end-to-end provider of e-commerce, supply chain, and Master Data Management (MDM) services to >180 large- and mid-market retailers, branded manufacturers, wholesalers, and distributors in North America. The stock is down 45% year-to-date, and the viewer wants to know if we saw any improvements in the just reported Q3 numbers. Finally, in our YSOT segment, Brennan answers a question on Pollard Banknote Limited (PBL:TSX) which serves the lottery instant ticket and charitable gaming markets primarily in North America. The stock is up 66% this year, following a significant drop from mid 2021. Is the recovery sustainable? Brennan let’s you know.

Let’s get to the show – we welcome my cohost, Mr. Aaron Dunn and the killer B’s, Brett, with Brennan.

Live & On-Demand Webinar

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  • How 2-3 great stocks in your life can be game-changing in your portfolio – Real examples from our research include Boyd Group (BYD: TSX) the best-performing stock in Canada over the past decade up over 10,500% and Hammond Power (HPS.A:TSX) up over 9,800% (Best performing TSX stock past year).
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  • How the Big Banks Are Killing Your Returns: Build a Buffett Growth Portfolio in 8 Simple Steps – 15-25 growth & dividend growth stock portfolio designed to enrich you, not your advisor.
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  • 5 Simple Steps to Review Any Stock in 5 Minutes or Less.

Where & When? Online November 2nd @ 7:00PM Pacific & November 9th @ 7:00PM Eastern

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Boyd Group Services Inc. (BYD:TSX) 

Price: $246.14

Market Cap: $5.285 Billion

Company Description: Boyd Group Services is one of North America’s largest operators of non-franchised collision repair centers. The company operates ~130 locations in Canada under the trade names Boyd Autobody & Glass and Assured Automotive, as well as ~724 sites in the US under the Gerber Collision & Glass brand, for a total of over 850 centers.

Results and Highlights for the Third Quarter Ended September 30, 2023:

Revenues increased by 17.9% to $737.8 million from $625.7 million in the same period of 2022, including same-store sales increases of 11.8%.

Adjusted EBITDA increased 28.7% to $94.0 million, or 12.7% of sales, compared with Adjusted EBITDA of $73.0 million, or 11.7% of sales in the same period of 2022.

Adjusted net earnings increased to $21.5 million or $1.00 per share, compared with $12.1 million or $0.56 per share in the same period of 2022.

Net earnings increased to $20.5 million or $0.95 per share, compared with $11.9 million to $0.55 per share in the same period of 2022.


Forward looking EV/EBITDA is 14.7 which is slightly below its 10 year average. We see it as fair value near-term.

Our Take:

Some quarterly notes: Coming out of a challenging pandemic, Boyd has continued to have success capturing price increases from insurance partners, alongside better parts margins. While the acute labour challenges in prior years are now fading, labour scarcity remains a challenge and Boyd continues to work with insurers to secure progressively higher pricing, so as to ensure sufficient available labour and operating capacity.

On M&A: BYD added 21 locations, consisting of 4 greenfield and 17 acquired shops in Q3, including one small 3 shop MSO. BYD’s strong earnings momentum this year has supported a return to more active M&A, with an initial focus on single shop adds. Management’s commentary on its quarterly call suggested that the firm is becoming more open to larger deals once gain.

Same-location-growth – After 7 quarters of double-digit same-location-growth coming out of the pandemic, as Boyd tackled labour and supply challenges, and sought to improve capacity, Management suggested Boyd will see some modest deceleration through year-end, although still quite healthy at ~6% – 12% – growth.

Overall, Boyd is a quality capital compounder and we will update our clients fully on the stock this week.


Pollard Banknote Limited (PBL:TSX)
Price: $30.18
Market Cap: $812 Million
Dividend Yield: 0.5%

Slide 2


Pollard serves the lottery instant ticket and charitable gaming markets primarily in North America. It is one of the largest printers of instant tickets in North America with approximately 85% market share in Canada and 22% in the US. The company also serves the US iLottery market through its JV NeoPollard, of which it owns 50%.

In the last quarter ended Q3 2023, product breakdown was:

Slide 3

Looking at the last quarter (Q3 2023) reported last week:
Revenue was up 2.5% Y/Y to $128.7M
This growth was primarily due to an increase in Charitable Games, E-Gaming, and higher average selling price of tickets but was offset by a decline in lower instant ticket sales volumes as the company focused its sales mix to avoid lower margin work.
Adj. EBITDA was up 21% to $24.8M
Net income was up to $7.7M or $0.29 per share compared to a loss for Q3 of last year.
The primary increase for both Adjusted EBITDA and net income was an increase in equity income from its 50% JV of iLottery which grew its revenue from increased sales of Mega Millions and Powerball jackpots.

Balance sheet is healthy with no current cash balance but a trailing net debt to EBITDA multiple of 1.6x. And just a note, the restricted cash is related to amounts held on behalf of iLottery customers.

Right now the business trades with a trailing P/E of 26x and an EV/EBITDA of about 11x. And just for reference that PE multiple remains slightly below its 10-year average of about 30x.

Slide 4

To Conclude:

I certainly think the Pollard Banknote is a good business which has produced tremendous long-term growth with a revenue CAGR of 11% from 2013-2022. It trades with fair valuations given its dominant market share and track record, has a healthy balance sheet, and pays a slight dividend which it has grown over the years. However, as management voiced in Q3 there was weakness in Ticket Sales Volume which was only offset by pricing increases – which essentially is not a sustainable source of growth over the long term. Looking forward to 2024, management noted that the repricing of instant ticket contracts will continue, which could potentially impact demand and hurt volume further as we see consumers tighten their wallets with increased interest rate. Now overall I think the business will likely perform well long term, but seeing the potential near term weakness in volume and potential difficult comparables to this year, I think the business trades close to fair value in the near term.

YSOT Pivotree


Pivotree symbol PVT on the TSX Venture is an end-to-end provider of e-commerce, supply chain, and Master Data Management (MDM) services to over 180 large and mid-market retailers, branded manufacturers, wholesalers, and distributors in North America. The company supports clients on digital strategy, platform design and build, implementation, and hosting through to ongoing support.


The shares are trading at $1.83 a share, down 44% year-to-date nearly the all time low which was only set in late September. The market cap is $49 million.

3) Zooming out looking at the stock since its IPO in late 2020, where it opened above $10, moved up to $13.50 and has fallen in price almost continuously since. Like many companies at the time, Pivotree benefitted from the euphoria in the market at the time allowing for a lofty valuation based on revenue growth potential.


But now we’re in very different market conditions, so has Pivotree come down enough in price to have value as an investment?

Looking at the company’s last quarter Q3 2023,

Total Revenue decreased 14.4% to $21.1 million, or a decrease of 16.5% in constant currency.

Managed services increased by 9% to $11.2 million, however, what drove the decline was professional services fell 31.2% to $9.9 million. The decline was driven by the conclusion of projects and delays of additional pipeline projects.

Additionally, Annual Recurring Revenue fell by 2.9% to $42.8 million as legacy Oracle projects fell off. Similarly, bookings for ARR fell to only $0.1 million from $0.6 million and Total bookings fell 44.5% to $10.7 million, signalling weaker market conditions.

The company had a net loss of $1.8 million compared to a loss of $3.6 million, due to cost savings in SG&A and R&D.

Adjusted EBITDA also improved, to a positive $0.6 million from a loss of $0.4 million.


Shifting to the balance sheet, the company does have a great net cash including leases balance of $9.1 million, but has been coming down almost continuously since the IPO, so still needs to be watched. The company does note it is pushing towards being cash flow positive, which it was positive when not including earnouts or the NCIB, meaning the actual operations were cash flow positive during the quarter. However, once you include capex adjusted free cash flow was still slightly negative at $75 thousand. So while the cash balance is great, the cash flows are still in a precarious position.

6) Using the company’s adjusted EBITDA, which does exclude share compensation and acquisition costs, it is trading at an EV EBITDA of 14.2 times.


As well, we can look back using price to sales, we can see that after its first quarter as a public company, it traded at 3 times sales and has since fallen to under 0.5 sales, showing a clear shift in how the market is valuing unprofitable stocks.


Our Take,
Pivotree came onto the market extremely overvalued, while valuations have come down it is still not cheap, the company is still unable to be GAAP profitable and has signs of a continued weak market going forward. The company does have a good balance sheet and is nearing positive cash flow it still isn’t positive. The company’s operations do have potential but, the company needs to be able to shift back into growth and show a positive bottom line before we go any further.


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