By Jeff Sanford
Toronto, Ontario — November 28, 2016 — This week’s edition of Tuesday Ticker looks at how Boyd’s Q4 glass business may decline, NAPA’s parent company is enjoying some big moves in the market and LKQ makes another move into Europe.
– Executives at Winnipeg-based collision repair consolidator Boyd Group have warned investors about a possible decline in the company’s glass business in the fourth quarter of 2016, due to a change in the US National Auto Glass Specifications (NAGS). NAGS, published by Mitchell, effectively sets the prices insurers and consumers pay for auto glass. A temporary error in the May pricing information contributed to the downturn. Mitchell has since issued a corrected copy of the May NAGS information. Going forward, Mitchell says outlier data will be reviewed by a human editor and discarded if appropriate.
“Mitchell and NAGS caught us all off guard in September when NAGS dropped about 5 percent,” said Brock Bulbuck, CEO of the Boyd Group during a conference call. The error was in May’s data, but the correction came through in September.
The “usual” fourth-quarter seasonal slowdown in the glass sector will also have an effect on Q4 numbers, according to Boyd. Overall about 10 percent of Boyd’s revenue comes from the glass side of the business. Boyd operates the Gerber brand in the US, Boyd Collision & Glass in Canada, as well as Auto Glass Authority, Autoglassonly.com, Glass America and Auto Glass Service.
– The parent company of NAPA Auto Parts, Genuine Parts Company (GPC), continues to enjoy big market moves. Last week it was reported that the stock price of GPC had jumped over three percent in a single day. This past week the company enjoyed a single day advance of 1.26 percent for a week-long advance gain of 1.13 percent. Stock in GPC was trading at $96.99 Monday morning.
– LKQ has made another big step into Europe. The company announced last week that it had bought a 26.5 percent share in Swedish parts distributor Mekonomen Group from Axel Johnson AB. The deal expands LKQ’s footprint in Europe and continues its push into that region.
The transaction is expected to close in early December. LKQ will be able to nominate two representatives for election to Mekonomen AB’s board of directors to replace Axel Johnson’s two representatives.
“Our strategic investment in Mekonomen Group allows us to obtain a significant interest in a leading company with a strong brand and a diverse operating model. This transaction is a natural extension of our goal to becoming the preeminent pan-European distributor of aftermarket automotive parts and accessories,” said Robert L. Wagman, President and Chief Executive Officer of LKQ Corporation.
LKQ executives made an appearance at an investor showcase in New York recently to make their business case to Wall Street investors. Some of the highlights from the LKQ presentation included the following details: The global market for “collision products” is $15 billion today. The average number of “alternative parts” used per claim is rising. LKQ’s regional distribution system allows the company to reduce costs. The increase in the age and size of cars means LKQ’s “collision sweet spot” is growing.
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| Robert L. Wagman, CEO of LKQ, addressing an investory conference in March 2016. LKQ has recently {source}<br/>{/source}made another acquisition in Europe. |
– AutoCanada has entered into an agreement to purchase all of the operating assets of 993527 Ontario Ltd., a company that operates Guelph Hyundai in Guelph, Ontario. The transaction is subject to customary closing conditions and is expected to close within 30 days according to a pres release.
“We are extremely pleased to welcome Guelph Hyundai into our Ontario dealer group. The dealership recently owned and operated by Graham Dennis has a long history in the Guelph community, serving their customers for decades,” said Steven Landry, Chief Executive Officer of AutoCanada. AutoCanada is one of Canada’s largest multi-location automobile dealership groups. In 2015 the company’s dealerships sold approximately 62,800 vehicles and processed approximately 848,000 service and collision repair orders in 912 service bays.
The most recent analyst report on AutoCanada was released by Royal Bank of Canada (RBC) at the end of October. RBC has an “outperform” rating and set a $47 price objective on shares of the company. Shares in AutoCanada were trading Monday at $20.18.
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| AutoCanada has announced the acquisition of Guelph Hyundai, shown above. |
– The very well-respected magazine Institutional Investor just released it annual All-America Executive Team ranking. The ranking judges companies on attributes such as, “accessibility to senior management, quality and depth of answers to inquiries, and transparency of financial reporting.” Axalta Coating Systems did extremely well in the rankings. The company was recognized among the leaders in the 2017 Midcap (mid-sized company) rankings, garnering the top position in the chemicals sector and receiving honours in other categories.
“We are very honoured to receive this recognition from the investor community – especially considering that we completed our initial public offering only two years ago. The Axalta team is delighted to be ranked among the most effective corporate executive teams in the chemicals industry,” said Christopher Mecray, Axalta’s Vice President of Investor Relations.
Within the 2017 Honored Midcap ranking, Charlie Shaver, Chairman and CEO, Robert Bryant, Executive Vice President and CFO, and Christopher Mecray, Vice President of Investor Relations, received designations in the Best CEO, Best CFO and Best IR Professional categories respectively.
– As the fourth quarter rolls along, forecasters are beginning to offer estimates of year-end and end-of-quarter results. Analysts expect PPG Industries to post earnings per share of $1.19 for the quarter.
