Boyd Group Services, parent company of Gerber Collision & Glass, reported Wednesday that there have been early signs of success with its project to match changing industry demand with staffing, as claims volumes continue to decline amid overall economic uncertainty.

During the company’s Q1 earnings call, Vice President and CFO Jeff Murray said a new indirect staffing model was piloted and a temporary hiring freeze was placed on non-production roles in preparation for the full rollout of Project 360 in Q2.

Boyd is working on changing its store staffing model, including right-sizing indirect staff numbers to match the volume of work under the project. It was launched in Q4 and is aimed at company-wide profitability transformation, which is projected to generate $100 million in annual recurring cost savings and enhanced margins over the company’s new five-year plan period.

“Boyd continues to outperform the industry, consistently demonstrating market share gains and is positioning itself well for when conditions improve,” Murray said.

New President and Chief Operating Officer Brian Kaner officially took the reins from retiring Tim O’Day on Wednesday. Kaner said Project 360 is meant to drive store economics, cost leverage, and customer satisfaction.

“The indirect staffing model allows us to optimize our cost structure, driving near term profitability, while more importantly laying the foundation for sustained operating leverage as we scale,” he said. “The model includes a detailed playbook for adding non-production staff in alignment with business growth, along with robust controls to ensure disciplined execution and adherence. This represents a significant milestone under Project 360, a company wide initiative to

When asked by an investor what the reaction to the changes from shops has been, Kaner said “we dealt with what we needed to deal with with empathy and kindness.”

“These things are always hard and they’re not they’re certainly not the types of things that we want to do on a frequent basis,” he said. “The shops now are back to business and realizing that the way to not have to do this again is to drive more sales through our system so that we’re getting the leverage out of the resources that we have. I think it’s almost created a renewed focus on driving the top line of our business out in the stores.”

Murray reported that Q1 operating expenses as a percentage of sales was negatively impacted by the decline in same-store sales and new locations. New locations contributed positively to sales but had a higher operating ratio of 38.4%, he said.

“Our sales today are very much in line with what sales were at a year ago, although we’ve added 58 additional locations during that time,” Murray said. “This cost burden that exists now within the structure with some immature stores that are still still developing and not seeing the volume that they would have normally seen in a normal environment. They’re not contributing the same sales that we would expect.

“And then you’ve also got the same store sales declines on the mature base of stores that isn’t helping their operating expense leverage either. That’s really the kind of dilemma that we’re in in the current environment.”

He added that bringing scanning calibration in-house positively contributed to gross profit and adjusted EBITDA; however, it doesn’t contribute incremental sales, leading to increases in operating expenses as a percentage of sales.

According to Kaner, 60% of the company’s scanning and calibration services are now in-house.

Overall, he said Q2 same-store sales so far have been consistent with Q1 and there have been positive trends emerging — early signs of insurance premium inflation moderating and used car prices increasing.

“The glass business is entering its seasonally higher period and location growth through acquisition as well as startup continues,” he said. “During the second quarter, the company has eight startup sites currently scheduled to be opened and an additional 16 startup locations anticipated to be opened through the balance of the year.”

Kaner added that liability claims remain consistent, down to between 2% and 3%, and Boyd expects the market to be down 2% from a claims volume perspective, driven by the penetration of ADAS. However, increased ADAS and “other movements” on parts labor pricing will also improve the average cost of repair, he said.

“With some of the stuff that’s happening in the industry as it relates to used car pricing going up, that actually pushes total losses down or should push total losses down,” Kaner said. “Insurance premiums are moderating, which should be a positive for us, but I think what consumers are going to have to do, and what they are doing right now, is switching carriers. Carrier switching and carrier shopping is at an 18-year high because people are underinsured at this point… General consumer confidence is down right now and that’s putting pressure on collision claims.”

Kaner said Boyd is seeing that tariffs aren’t yet having an effect on the average cost of repair perspective.

“The total losses are muting the benefit of some of the price increases and other normal movements that happen with average cost of repair,” he said. “As we either ease or overlap those total loss ratios, we would expect that to start to return to a more normal level where we’d see 4% or 5% improvement in price every single year, or increase in price every single year, partially offset by a claims environment that’s down 1% to 2%.”

When asked about predicted collision claims trends in the second half of the year, Kaner said outcomes will have a lot to do with how well-positioned people are from an insurance perspective and what happens with consumer confidence.

“The person that gets into an accident has a deductible, or the person that causes an accident has a deductible to pay. When insurance premiums go up, they have a tendency to raise their deductible, which could put them in a position where they don’t have the financial flexibility to pay that deductible to get the repair done,” Kaner said.

“I think that’s the one elusive element for us, is when will that ease? Because what we do know is accidents are still occurring. The liability claims being only down in the 2% to 3% range indicates to us the same level of accident frequency is out there as it was before. The notion that something magical happened where ADAS has magically now changed the dynamic of accident frequency, we don’t think has happened because liability claims are still pretty consistent with where they’ve been. We just need the collision side to follow suit. And again, we don’t need it to turn positive. We just need it to be less negative.”

Images

Featured image: A Gerber Collision shop in Manistee, Michigan. (Repairer Driven News file photo)