Repairer Driven News
« Back « PREV Article  |  NEXT Article »

Mild weather, used car prices returning to normal cut into Boyd Group’s earnings in Q1

By on
Announcements | Market Trends
Share This:

A milder winter and used car prices returning to a more normal level negatively impacted Boyd Group Services Inc.’s bottom line during the first quarter, according to financial data released by the company. 

While the company’s gross profit increased by 7.8%, its net earnings decreased to $8.4 million compared with $20.8 million in the same period last year. 

Timothy O’Day, Boyd president and CEO, called the results “disappointing” in the company’s earnings call. 

“Following several quarters of demand for services exceeding capacity, the first quarter was significantly impacted by mild winter weather with claims and appraisal volumes experiencing decline while used car pricing returned to more normal levels, increasing the frequency of total losses,” O’Day said. 

Repairable claims were down 8% during the first quarter with a greater share of the decline in the month of March, he said. 

John Yoswick, Crash Network newsletter editor, reported similar data in an Enterprise U.S. Length of Rental Report late last month.

“On a national basis, the average backlog reached a two-year low in January — just shy of four weeks,” Yoswick said. “That’s down by nearly two full weeks since the high of 5.8 weeks in the first quarter of 2023. But the average backlog remains significantly higher than the same period in January 2020 (2.1 weeks) and January 2021 (1.6 weeks).”

Work-in-process (WIP) is also declining, Yoswick said. He said this could be a sign that parts-related issues are easing. WIP is measured as the number of jobs a shop has in process compared to its typical job count.

On average, 550 shops in March had a WIP equal to 57% of their typical monthly volume, he said.

“That was down 11 points from the prior quarter, and 8 percentage points lower than a year earlier,” Yoswick reports.

O’Day said the company expects miles driven to increase during the summer months and result in an increase in the claims volume and demand for services. 

“While the company expects claims volume and demand for services to normalize as the year progresses, Boyd is prepared to take steps to address the challenges the business is currently facing should the current softer demand continue,” O’Day said. “Boyd has made meaningful progress towards our goal of internalizing scanning and calibration services to drive down cost to our customers and to convert a sublet operation to an internal operation.”

A Boyd press release says it has increased scanning and calibration services by increasing its workforce in this area by over 60%. 

O’Day spoke about scan and calibrations during his Q1 2023 call as well.

“Increased scan and calibration services also positively impacted gross margin,” O’Day said in 2023. “Much of the calibration work today is done via mobile, although we are equipping stores with — where we have space for equipment — with targeting systems and mobile technicians can travel to our stores. We will move work around on a hub-and-spoke basis to provide some of that work. But I think we’re going to continue to see a growth in revenue around scanning and calibration and we’re going to internalize more of it.”

During the first quarter, Boyd added 13 collision repair locations, including 12 through acquisition and one startup location. 


Photo courtesy of Dzmitry Dzemidovich/iStock

Share This:

Tagged with: