Good afternoon, ladies and gentlemen. Thank you for joining us today. My name is Al Davis, and I am the Independent Chair of the Board of Directors of Boyd Group Services Inc. I would like to take a moment to introduce our head table for this afternoon. Seated at the head table with me today are Brock Bulbuck, Executive Chair of Boyd, and Peter Toney, Corporate Counsel of Boyd. Due to COVID-19 travel restrictions, participating by telephone are Tim O'Day, President and Chief Executive Officer of Boyd, and Pat Pathipati, Executive Vice President and Chief Financial Officer of Boyd. To reduce the spread of COVID-19 and to protect the health and safety of Boyd's shareholders and employees and the communities in which we live, Boyd strongly encouraged shareholders to vote by completing and submitting the form of proxy rather than attending this meeting in person.
On behalf of Boyd, I would like to thank the shareholders who are listening to this meeting on the webcast and for accommodating this request. The annual meeting and special meeting of the shareholders of Boyd Group Services Inc. will now officially come to order. I will preside as Chair of the meeting, and Brock Bulbuck, Executive Chair, will act as Secretary. Due to COVID-19 travel restrictions, Bart Wingorak of Computershare Trust Company, Boyd's registrar and transfer agent, will act as scrutineer remotely. Greg Tallon, Partner of the law firm Thompson Dorfman Sweatman LLP, is present at the meeting and will provide assistance to Mr. Wingorak as needed. The Secretary has filed with me proof of mailing of the notice of meeting and accompanying documents to all shareholders of record as of May 25th, 2020.
If anyone present would like a copy of this material, please let us know as copies are available. For those listening on the webcast, copies of the material are available on Boyd's website. Accordingly, with the consent of this meeting, we will dispense with the formal reading of the notice. The consolidated financial statements of Boyd Group Income Fund for the fiscal year ended December 31st, 2019, together with the report of the auditors, has been mailed to the shareholders. As it is not a requirement to do so, we do not propose to ask shareholders to approve the financial statements. Copies of the financial statements, along with the auditor's report on the financial statements, are tabled at this meeting and available on Boyd's website. Prior to the meeting, proxies representing 13,524,772 shares were received by Boyd.
The scrutineer has advised that the requisite quorum of shareholders is present, and I therefore declare that this meeting is properly constituted for the transaction of business. At this point, I'd like to comment on the voting procedure. Each shareholder of Boyd is entitled to one vote for each share held by that shareholder. In order to expedite the voting on each resolution to come before the meeting today, excluding the special resolution dealing with the amendment to Boyd's articles, I propose to conduct the vote by a show of hands, unless a shareholder or proxyholder demands that a ballot be conducted on any of these resolutions. I have asked certain proxyholders present to move and second the motions to be considered at today's meetings.
On any ballot conducted on a resolution, including the special resolution to amend the articles, I intend to vote by ballot all proxies submitted to me as proxyholder, as required by law. Please raise your hand to vote only if you are registered with the scrutineer at today's meeting as a shareholder or proxyholder. We will now proceed with the business of the amendment of Boyd's articles of incorporation to allow the appointment by the directors of one or more additional directors between annual meetings of shareholders, in accordance with and in compliance with the provisions of the Canada Business Corporations Act. The amendment to the articles and the reason for it is described in detail in the management information circular. I will not go over it again at this time. The wording of the special resolution of shareholders is also set forth in the management information circular.
Would someone please raise their hand to move passage of the special resolution? Thank you, Mr. Murray. Will someone please second the special resolution? Thank you, Mr. Toney. While the ballot has not been requested to conduct the vote on this special resolution, I direct that a ballot be conducted. The special resolution is required to be passed by two-thirds of the votes cast at this meeting. All registered shareholders present have been provided with a form of ballot. Each registered shareholder or proxy nominee should record his or her vote in respect to the special resolution, which has been put to the meeting in the usual manner, by indicating whether the voter is in favor or against the resolution. The scrutineer will now collect the ballots.
We will proceed with the other business of the meeting while the scrutineer confirms whether at least two-thirds of the votes cast at this meeting with respect to the special resolution are in favor of it. The next item of business is fixing the number of directors to serve on the board of directors of Boyd. Boyd's articles provide for a minimum of three directors and a maximum of 15 directors. It is proposed that the board of directors of Boyd be fixed at nine directors. Will someone please raise their hand to move the resolution? Thank you, Mr. Murray. May I have the resolution seconded? Thank you, Mr. Toney. We will now put the resolution to the meeting. All those in favor of the resolution, please raise your hands. Opposed, if any? Resolution carried. We will now proceed with the business of the election of the directors.
The persons listed in the information circular for election as directors for the current year, each of whom has agreed to serve as a director if elected, are as follows: Dave Brown, Brock Bulbuck, Allan Davis, Robert Gross, John Hartmann, Violet Konkle, Timothy O'Day, William Onuwa, Sally Savoia. Would someone please raise their hand to move the foregoing nominations? Thank you, Mr. Murray. May I have the nomination seconded? Thank you, Mr. Toney. I now declare nominations closed. Will someone please raise their hand to move a resolution confirming that the foregoing nominees be elected and appointed as directors of Boyd to serve until the conclusion of the next annual meeting of Boyd? Thank you, Mr. Murray. Will someone please second the resolution? Thank you, Mr. Toney. We will now put the resolution to the meeting. All those in favor of the resolution, please raise your hands. Opposed, if any?
Motion carried. The next item of business is a resolution to appoint Deloitte LLP as auditors of Boyd for the fiscal year ended December 31st, 2020, and thereafter until the close of the next annual meeting of Boyd, and to authorize the board of directors to fix the auditors' remuneration. Will someone please raise their hand to move the resolution? Thank you, Mr. Murray. May I have the motion seconded? Thank you, Mr. Toney. We will now put the resolution to the meeting. All those in favor of the resolution, please raise your hands. Opposed, if any? Resolution carried. We will now proceed with the business of the non-binding advisory resolution on Boyd's approach to executive compensation, as described in detail in the management information circular.
The board believes that Boyd shareholders should have the opportunity to understand how and why the board makes its executive compensation decisions and provide input to the board on executive compensation. As this is an advisory resolution, the results will not be binding on the board. The board will take the results of the vote into account as appropriate when considering future compensation policies, procedures, and decisions, and in determining whether there is a need to increase engagement with shareholders on compensation and related matters. Would someone please raise their hand to move the non-binding advisory resolution on Boyd's approach to executive compensation? Thank you, Mr. Murray. May I have the resolution seconded? Thank you, Mr. Toney. I now call the resolution and ask for a vote on the resolution. All in favor? Opposed, if any? Resolution carried.
I now have the results of the ballot on the special resolution, and I can confirm that votes in favor of the resolution exceeded two-thirds of the votes cast. If any shareholder is interested in the exact number of votes cast in favor for or against the special resolution which has been voted upon by ballot, he or she may obtain particulars after the meeting or on inquiry from the secretary. I declare the special resolution carried. Before turning the meeting over to Mr. O'Day to give his management presentation, there are a few additional items I would like to address. First, I would like to acknowledge Gene Dunn's retirement from the board of directors. Gene has served on the board of Boyd since 1998. During that time, the company has grown exponentially.
The board expresses its gratitude to Gene for his service on the board of directors, for his sound business advice and valued counsel, and for all that he has contributed to the board of directors, to the company during the past 22 years. I would also like to take a moment to welcome our two new board members, John Hartmann and William Onuwa. The board has an ongoing commitment to board renewal and to ensuring the board has the necessary skills and expertise to support the growth of Boyd's business. We are very excited that Mr. Hartmann and Mr. Onuwa are joining the board, and we look forward to working with them. Last, I would also like to acknowledge the commitment of the board and management to the ongoing safety and wellbeing of Boyd's employees and customers during the COVID-19 pandemic.
As an essential service, certain of Boyd's employees were asked to continue to work throughout the COVID-19 pandemic. Boyd immediately responded with protocols and procedures to help protect the safety of employees and customers. In addition to the immediate actions taken by the company to reduce the spread of COVID-19, management has worked to develop and implement policies and protocol for its employees to follow to ensure that as the economies of Canada and the U.S. reopen, Boyd's business will continue to be conducted in accordance with recommended safety precautions. On behalf of the board, I would like to thank management and Boyd's employees for their extraordinary efforts during this crisis. I will now call on Tim O'Day, President and Chief Executive Officer, to make a management presentation on matters of interest concerning Boyd and its subsidiaries.
Thanks, Al, good afternoon, everyone. Before I get started, I'd like to remind our listeners that certain matters discussed on today's call 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 the results are detailed in Boyd's annual information form and other periodic filings and registration statements. You can access these documents at SEDAR's database found at sedar.com. As noted by Al at the onset of this meeting, to reduce the spread of COVID-19 and to protect the health and safety of Boyd's shareholders and employees and the communities in which they live, Boyd strongly encouraged shareholders to participate in the annual meeting and special meeting without in-person attendance.
On behalf of Boyd, I would like to once again thank shareholders for accommodating this request. I would also like to thank the team at Boyd for the steps taken thus far during the COVID-19 pandemic. Our team has adapted to the current environment and allowed us to maintain our strong financial position. We've been able to adjust our business and manage through this challenging situation. Boyd team members have demonstrated exceptional perseverance and entrepreneurial spirit to adapt our operational excellence strategy by developing and executing revised operating procedures that provide a safe and healthful work environment while maximizing the business opportunities that exist. Throughout the recent months, we've been preparing to put ourselves in the best possible position to come out of this crisis as a stronger company.
This is the first annual meeting and special meeting where I've had the opportunity to address you, our shareholders, as President and CEO, as I was just appointed to this position on January 2nd, 2020. Concurrent with this change, Brock Bulbuck moved into the role of Executive Chair. My remarks today will focus on the 2019 fiscal year results, moving on to some updates on the 2020 fiscal year results to date. Overall, we are pleased with our results in 2019, which saw meaningful growth in locations, sales, same-store sales, adjusted EBITDA, and adjusted net earnings. We added a record 108 locations and entered three new states, including California, New York, and South Carolina, further expanding our market presence while also enhancing our ability to grow in these new geographies.
During 2019, we continued to build on our multi-year track record of profitable growth, validated by being named in September 2019 the inaugural TSX 30, a flagship program recognizing the 30 top-performing TSX stocks over a three-year period based on dividend-adjusted share price appreciation. In fact, Boyd has either been the best or second best performing 10-year stock on the TSX for the five consecutive years. At the beginning of 2019, we adopted the new leasing standard, IFRS 16, which resulted in the recognition of right of use assets in the amount of CAD 452.9 million and lease liabilities in the amount of CAD 488 million on January 1st of 2019. The adoption of this new standard impacted certain financial metrics with a decrease in operating expenses and increases in depreciation and finance costs. During 2019, we chose to make adjustments for comparative purposes in disclosing these metrics.
We stopped making such adjustments beginning with the first quarter of 2020. Looking at our results for 2019, our sales were CAD 2.3 billion, a 22.5% increase when compared to 2018. Our same-store sales, excluding foreign exchange, increased by 3.3% in 2019. Foreign exchange increased sales by CAD 38.8 million due to the translation of same-store sales at a higher U.S. dollar exchange rate. While demand for our services continued to be healthy in most of our markets, 2019 did present a number of challenges, particularly in the second half of the year, including continued technician capacity constraints combined with strong comparatives, the challenges of vacation, and softness in some markets. Same-store sales declined in Canada due to a combination of economic challenges in Alberta and technician capacity constraints in other Canadian markets.
Despite these challenges, we were able to report meaningful same-store sales growth that contributed to double-digit increases in adjusted EBITDA compared to 2018. Gross margin was 45.4% in 2019 compared to 45.2% in 2018. The slight gross margin percentage increase is primarily due to increased DRP pricing as well as improved parts and labor margins, partially offset by a higher mix of parts sales in relation to labor. Operating expenses for 2019 were CAD 716.6 million or 31.4% of sales, compared to 35.9% in 2018. Operating expenses for the year were significantly impacted by the adoption of IFRS 16, which removed CAD 104.3 million of property lease expense from our operating expenses. If we normalize for the adoption of IFRS 16 for comparative purposes, operating expenses would have been CAD 820.9 million or 36% of sales.
Adjusted EBITDA or EBITDA adjusted for fair value adjustments to financial instruments, costs related to acquisitions and transactions, and the impact of the adoption of IFRS 16 was CAD 215.6 million, an increase of 24.3% over 2018. Adjusted EBITDA growth was primarily due to contributions from new locations and same-store sales growth. Adjusted EBITDA margin improved by 14 basis points from 9.3% in 2018 to 9.44% in 2019. As I've already stated, for 2019 reporting, we chose to adjust out the impact of IFRS 16 in our reporting for adjusted EBITDA for comparative purposes. Beginning in Q1 2020, we are no longer adjusting out the impact of IFRS 16. Had we chosen to exclude the impact of IFRS 16 and calculate an adjusted EBITDA, adjusted EBITDA would have been CAD 319.9 million or 14% of sales. Net earnings for 2019 were CAD 64.1 million compared to CAD 77.6 million in 2018.
Impacting net earnings in both current and prior years was the recording of fair value adjustments for exchangeable shares, unit options, and the non-controlling interest put option, as well as recording of acquisition and transaction costs. The net earnings amount in 2019 was also impacted by the adoption of IFRS 16, which reduced net earnings by approximately CAD 4.5 million net of tax, or CAD 0.23 per unit. Excluding these impacts, adjusted net earnings for 2019 was CAD 100.5 million, or CAD 5.06 per unit, compared to adjusted net earnings of CAD 85.6 million or CAD 4.35 per unit in the prior year. The increase in adjusted net earnings is a result of the contributions of new location growth and same-store sales growth. Adjusted net earnings was also impacted by the increased finance costs based on additional borrowings under our credit facility to fund acquisitions.
You will note we have chosen to adjust out the impact of IFRS 16 in our reporting adjusted net earnings for comparative purposes. In 2019, we generated CAD 141 million in adjusted distributable cash, compared with CAD 154.8 million generated in 2018. We paid distributions and dividends of CAD 10.9 million, resulting in a payout ratio of 7.7%, compared to a payout ratio of 6.8% in 2018. Our approach to distributions has been to maintain a conservative payout ratio to provide returns while preserving capacity to act on growth opportunities. Based on our continued growth, the strength and confidence in our business, we increased our distributions by 2.2% to CAD 0.552 per unit on an annualized basis effective November 2019. This was the 12th consecutive year that we increased distributions.
We continue to have a very strong balance sheet with conservative leverage at the end of 2019 of approximately 1.8 times adjusted EBITDA after removing for the impacts of IFRS 16. Overall, we are very pleased with the 2019 fiscal year results. As we moved into 2020, we changed the corporate structure of the business when we completed the conversion of the Boyd Group Income Fund to a corporate form, reporting as Boyd Group Services Inc., effective January 1, 2020. While this is an important change, it does not impact or change the underlying business or operations of Boyd. Looking at our results for the first quarter of 2020, Q1 sales, profitability, and cash flow were all negatively impacted by the business slowdown caused by the COVID-19 pandemic that began in the last two to three weeks of March.
Our total sales were CAD 628.4 million, a 12.6% increase when compared to the same period of 2019. This reflects a CAD 75.4 million contribution from 119 new locations. Our same-store sales, excluding foreign exchange, decreased by 1.5% in the first quarter of 2020. Foreign exchange increased sales by CAD 4.9 million due to the translation of same-store sales at a higher U.S. dollar exchange rate. Same-store sales, excluding foreign exchange, decreased by 3.1% on a days adjusted basis, recognizing an additional selling and production day in the U.S. and Canada in 2020 compared to the same period in 2019. The decrease in same-store sales percentage was negatively impacted by an estimated four percentage points, or CAD 21 million, due to the reduced demand caused by the COVID-19 pandemic. Gross margin was 44.8% for the first quarter of 2020, compared to 45.3% achieved in the same period of 2019.
The gross margin percentage decrease is primarily due to fluctuations in DRP pricing, as well as lower parts and labor margins, partially offset by a favorable mix of labor sales in relation to parts. Operating expenses for the first quarter of 2020 were CAD 200 million or 31.8% of sales, compared to 31.3% in the same period of 2019. The increase as a percentage of sales was primarily due to the impact of negative same-store sales on the fixed component of operating expenses. Adjusted EBITDA, or EBITDA adjusted for fair value adjustments to financial instruments and costs related to acquisitions and transactions, was CAD 81.4 million, an increase of 4% over the same period of 2019. Adjusted EBITDA growth was primarily due to contributions from new locations. Adjusted EBITDA was negatively impacted by an estimated CAD 8 million due to the reduced demand caused by the COVID-19 pandemic.
Net earnings for the first quarter of 2020 were CAD 22.7 million, compared to CAD 21.4 million in the same period of 2019. Impacting net earnings in both the current and prior years was the recording of fair value adjustments, as well as the recording of acquisition and transaction costs. Excluding these impacts, adjusted net earnings for the first quarter of 2020 was CAD 20.2 million, or CAD 1 per share, compared to adjusted net earnings of CAD 28.1 million, or CAD 1.42 per share in the same period of the prior year. The decrease in adjusted net earnings is a result of negative same-store sales growth, resulting in lower leverage on our fixed costs, along with increased finance, depreciation, and amortization costs. Adjusted net earnings was also negatively impacted by an estimated CAD 6 million due to the reduced demand from the COVID-19 pandemic.
We continue to have a very strong balance sheet with conservative leverage at the end of the first quarter of 2020 of approximately 1.9 times adjusted EBITDA on a pre-IFRS 16 basis. During the first quarter of 2020, we increased and extended our revolving credit facility to $550 million US with an accordion feature which can increase the facility to a maximum of $825 million US, accompanied by the addition of a new seven-year fixed rate Term Loan A in the amount of $125 million US, maturing in 2025, March 2025, and March 2027, respectively. With these facilities, we had over CAD 1 billion of dry powder available in cash and existing credit facilities at the end of Q1 for financial flexibility and growth.
As previously noted, out of an abundance of caution during the uncertainty created by the COVID-19 pandemic, in late March, we drew down all of our available credit facilities other than the swingline facilities and the accordion feature, providing us with a significant cash balance of approximately CAD 576 million at the end of the first quarter. Additionally, subsequent to the end of the quarter, we issued 1,265,000 common shares at a price of CAD 183 per share for gross proceeds of CAD 231.5 million.
We have also amended certain financial covenants under our credit agreement to provide additional covenant headroom. The amendments include a suspension of Boyd's requirement to comply with its leverage and interest coverage covenants from July 1, 2020, through December 30, 2020, as well as to provide more flexibility in the calculation of such covenants beginning with the second quarter of 2020 and through the second quarter of 2021. During the suspension period, the company is required to meet minimum liquidity covenant calculations, which, given the company's cash position and undrawn revolver, is not expected to be burdensome. We continue to adjust and adapt to the ongoing changes as a result of the COVID-19 pandemic.
Rapidly flexing Boyd's operating expenses and effectively managing working capital expenditures, and investments in growth has enabled us to manage this challenging environment while preserving our ability to scale our business lower if necessary and higher as demand increases. Our solid balance sheet and tremendous financial flexibility, combined with our scalable reopening plan, will allow us to take advantage of market opportunities as they present themselves. We continue to be prudent about near-term capital expenditures. Prior to the COVID-19 pandemic, for 2020, the company had planned to make cash capital expenditures, excluding those related to acquisition and development of new locations, within the range of 1.6%-1.8% of sales. In addition to normal capital expenditures, the company had planned to invest in LED lighting and corporate applications and process improvement efficiency projects.
In March, we paused on these planned investments due to the uncertainty of the impact of COVID-19. As the impact has become more clear, we have begun to fund certain high-value investments. Growth in the 12 months to the end of the first quarter of 2020 brought Boyd to within 97% of achieving its 2015 five-year growth goal of doubling the size of our business on a trailing 12-month revenue basis, measured in a constant currency. Annualizing the most recent quarter, Boyd has effectively achieved this long-term goal. As a result, we are closing out this goal as accomplished at the end of Q1. Our current plan is to articulate our next level of growth and operational goals in the second half of 2020 once we have greater visibility into the extent, duration, and longer-term opportunities and challenges of COVID-19.
In summary and in closing, I am incredibly proud of the steps that we've taken, including the recent equity offering, the amendments to our credit agreement covenants, and the expense in capital spending reductions we've put in place. Along with our recent increase to our credit agreement, these steps position us well for the future. As stated earlier, our team has adapted to the current environment and allowed us to maintain our strong financial position. We've been able to adjust our business to manage through this challenging situation, while also being prepared to ramp back up as demand for our services increases and growth opportunities emerge. We believe there will be opportunities that come from this crisis, both internal and external, and we are preparing to put ourselves in the best possible position to come out of this crisis as a stronger company.
I'm humbled by the sacrifices our team members have made, and we look forward to being in the position to reinstate many of those who were laid off when the time is right. Our priorities remain taking care of the health and safety of our team members and our customers, while scaling our business appropriately during this pandemic, as well as preserving financial flexibility and preparing for the opportunities that lie ahead. As I said when I opened my comments, I've been CEO of Boyd only for six months, and much of that time has been challenging due to the impact of COVID-19. However, this challenge has not diminished my excitement for the opportunity we have, and I remain excited to lead our business to the next level in the coming months and years.
On behalf of Boyd management and the board, I'd like to once again thank you for your participation in our annual meeting and special meeting today. This concludes the management presentation. At this time, I'll turn the proceedings back to Allan Davis.
Thank you, Tim. Is there any further business to come before this meeting? Being no further business, that concludes this annual and special meeting of the shareholders. Mr. Bulbuck, as secretary of the meeting, will you please move the final resolution? I move that the meeting be terminated. Thank you. May I have the resolution seconded? Thank you, Mr. Toney. All in favor, raise your hands. Opposed. Carried. I declare the motion carried and the meeting terminated. Thank you, everyone.