In announcing its Q4 and full year 2024 financials, Boyd Group (TSX: BYD.TO), the Canada-based parent company of Gerber Collision & Glass in the U.S., was clearly not immune to the business downturn many collision repair businesses experienced last year.
The company increased its sales by 4.2% to $3.1 billion last year, but that was fueled in part by the addition of new locations given that same-store sales were down 1.8%.
Tim O'Day.
Tim O’Day, CEO of the company until his retirement in May, pointed to the “challenging environment” the company faced, “characterized by low claims volumes driven by significant insurance premium inflation, and overall economic uncertainty,” as well as mild winter weather, “the warmest winter in over 129 years.”
“In spite of these factors, in which industry sources reported a year-over-year decrease in repairable claims of 9% for all losses -- and 7.9%, excluding comprehensive claims -- Boyd posted year-over-year same-store sales declines of only 1.8%, demonstrating Boyd's ability to gain market share in this very challenging environment,” O’Day said on the company’s quarterly earnings call.
Jeff Murray, executive vice president and CFO for Boyd Group, said the company’s gross margin stayed consistent with the prior period at 45.5%.
“The internalization of scanning and calibration contributed to an increase in gross margin percentage, as did improved performance-based pricing,” Murray said. “However, these gains were offset by labor rate margins, which remained below historical levels. Operating expenses increased $89.9 million when compared to the same period of the prior year, primarily as a result of growth and inflationary increases.”
He said although “operating expenses as a percentage of sales was positively impacted by reductions in staffing made to better align with current levels of demand, as well as reduced incentive compensation and recruiting costs, these impacts were more than offset by fixed costs on existing and new locations.”
Looking at just the fourth quarter, Murray said the company saw a 1.7% increase in sales compared to the same period a year earlier, again thanks to growth in shop count, given that same-store sales for the quarter were down 2.6%.
The company’s debt grew somewhat to $1.2 billion at the end of 2024 compared to $1.1 billion at the end of 2023, Murray said.
“Debt net of cash increased when compared to Dec. 31, 2023, primarily as a result of location growth,” he said. “Based on the confidence we have in our business, we announced an increase to our dividends of 2% to 61.2 cents per share on an annual annualized basis in Canadian dollars, beginning in the fourth quarter of 2024.”
Boyd in late February announced a five-year goal of reaching $5 billion in annual revenue in 2029, up from its current $3 billion, and having the No. 1 or No. 2 market share position in every market it serves. Company executives said this goal is based not just on adding new locations along with same-store growth of 3% to 5%, but also on “the implementation of a company-wide cost optimization initiative, focused on enhancing profitability and returns across the organization.”
Boyd is the second-largest shop operator in North America, behind Caliber Collision, ending 2024 with 856 U.S. shops and 128 in Canada under the trade names Boyd Autobody & Glass and Assured Automotive.
Brian Kaner, the company's current president and COO who will succeed O'Day as CEO later this year, has said the company holds about 6% of the total market share in the industry, and the company’s five-year growth plans would help it reach about 10% market share by 2029.
John Yoswick