Toronto, Ontario — May 22, 2018 — In this week’s Tuesday Ticker, Boyd units gain on another great quarter, the next step in global collision consolidation, fancy board members, and much, much more.
The Boyd Group this week released its financials for the first quarter. The Winnipeg-based collision repairer had another great three months. Sales expanded to $453.3 million from $378.9 million in the first quarter of 2017. The chain added another eleven locations over the quarter as the company continues to consolidate the North American collision repair sector. According to Brock Bulbuck, CEO, Boyd, “We continue to be on track and have a high level of confidence in achieving our long-term goal of doubling our business by 2020 compared to 2015, on a constant currency basis.” Most impressive was a big four percent gain in same-store sales. This is a key metric. It seems existing shops are increasing their level of business, and so growth in the company is occurring at that level, not just as a result of acquisitions. That’s what you want to see.
“Despite the continuing headwinds of the industry-wide shortage of technicians, we returned to respectable levels of same-store sales growth in Q1. We attribute this to a combination of being up against weak 2017 same-store sales comparatives as a result of a mild and dry winter, modest growth in our technician capacity and an increased component of parts sales in our sales mix,” said Bulbuck. Going on about the labour issue Bulbuck also said, “We continue to work to address the shortage with a number of initiatives, including our recently announced benefit enhancements for our U.S. employees. And while we believe that these initiatives will prove successful in the long-term, we will continue to be challenged by technician capacity in the near term, including in Q2, where we are up against much stronger 2017 same-store sales comparatives.” The CEO also said he thought the market conditions were right for more consolidation. “In terms of continued growth, we continue to see many opportunities to add new locations and we see the conditions driving continued consolidation and market-share gain opportunities intensifying. We continue to be very well-positioned to take advantage of these opportunities,” said Bulbuck. An interesting point in the earnings release: U.S. corporate tax expense has been reduced by approximately $2.7 million. This is a result of the U.S. tax cut, which has taken that expense down from approximately 39 percent to 26 percent. As well, subsequent to quarter end, the company added five locations, including two intake centers. Units in the Boyd income fund continued their upward march. In the wake of the good results units in the income fund moved up over the past few days, rising from about CAD $104.50 to $112.00.
Another bit of news concerning the ongoing global consolidation of the collision repair industry comes from Fix Auto World, which announced this week that it plans to enter the market in Ireland with its two franchise network brands, Fix Auto and NOVUS Glass. The operation will be led by Jonathan Penny in partnership with Denis Dineen. The two recently spoke at the IBIS Ireland 2018 Forum where Fix announced the new global initiative. Penny’s official title is market operations director for Fix Auto and NOVUS Ireland. He started his career in the 1980s as an apprentice painter, and then went on to work for Sikkens paint distributor Reftech. That company was eventually acquired by AkzoNobel. Penny also worked at PPG Industries as a business development manager before establishing a repair supply business, Shop Bodyshop Direct, in 2002. According to an announcement from Fix, along with recently declared intention to enter the New Zealand market, Fix will soon have a presence in eleven countries (including Ireland). David Lingham, head of business for Fix Auto World, said, “The Irish aftermarket space understands the need for consolidation and seems to be ready to embrace a service offering like ours. We are pleased to bring our proven business model to Ireland and to do so by integrating both our body shop and glass brands from the very start.”
Publicly trade dealership group AutoCanada announced this past week that all of the nominees to its board had voted on the slate of directors. AutoCanada runs several hundred collision repair bays. The company recently purchased a Chicago-area dealership that is the first U.S. acquisition for the company. It is thought that deal will be the start of a consolidation play in the U.S. The organization bought up GM and Toyota based dealership. Those companies prevent publicly-traded companies like AutoCanada from owning dealerships here in Canada. Some have wondered if the Chicago deal is an attempt to get those companies to relax the regulations here in Canada. GM doesn’t seem to be playing along. It launched a lawsuit against the Chicago deal. And so it will be interesting to see how that plays out. But it’s interesting to note some of the names just voted onto the AutoCanada board. Some of the interesting names on the board and their connections to the wider auto aftermarket: Maryann Keller, principal, Maryann Keller & Associates, LLC. She started the firm after working as automotive industry analyst on Wall Street where she was known for her accurate economic predictions. She’s also on the board of Lee Automotive Group, a privately held multi-line dealership group in Maine, and DriveTime Group (the largest BHPH [buy here, pay here] automotive retailer in the U.S. She served as a director at Dollar Thrifty Automotive Group (until that organization was acquired by Hertz Global Holdings), and has held many other positions. Way back in 1996 she led the initial public offering (IPO) of Cross Country Auto Retailers, the first IPO of a public auto retailer. She also advised on the IPO of Penske (among others). In 2006 she published a major report that focused on how technology would facilitate the buying and selling of vehicles via electronic media. Another board member is Arlene Dickinson, the CEO of Venture Communications, Canada’s largest independent marketing and communications firms (offices in Calgary and Toronto). She has a net worth of CAD $125 million. Most Canadians know her from the CBC show, Dragons’ Den. She has been named Calgary Business Owner of the Year, and was included on PROFIT magazine’s Top 100 Women Business Owners. She’s also a member of Canada’s Walk of Fame.
Paul Antony is from London, Ontario and is a founding partner and board member of CarProof. The company is a used vehicle data provider that collects and publishes vehicle history, appraisals and valuations. CarProof’s vehicle history products are used by dealerships, consumers, major auctions, governments, insurance providers and police agencies. The Canadian Red Book is one of their leading brands. The company is said to be getting ready to launch a next-generation VIN-specific valuation tool that is, according to the company’s PR material, “expected to change the way vehicles are bought and sold in Canada.” A couple years ago Antony appointed Ed Woiteshek to the CEO position of CarProof. Woiteshek led the purchase of a minority share of CarProof by Hellman & Friedman (H&F) a private equity firm based in San Francisco that has a history of investing in information services, digital media, automotive services and insurance. Current and former H&F companies include HUB International, Applied Systems, Mitchell International, Scout 24, Autodata Solutions (a subsidiary of Internet Brands), ABRA Auto Body & Glass, DoubleClick, Catalina Marketing and Formula One. CarProof was eventually sold to Colorado-based IHS, parent company of Carfax, another company involved in used car data.
