I’m back from Barcelona, having presented at IBIS (International Bodyshop Industry Symposium) on consolidation trends. IBIS is one of the marquee organizations, the only I know of that looks at the collision industry globally. It was a true honor to get in front of this group. So many fascinating presentations – email me to discuss one on one.
If you haven’t heard already, at IBIS Caliber made the bold prediction that in 3.5 years they will be at $6 billion in revenues (with a current run rate of $1.75 billion). They then subsequently implied in a press release they were not excluding the possibility of international expansion. This has set off a flurry of conjecture across the industry that a major merger may be in the works. But for those of you who have been subscribers for some time, this should come as little surprise as I have been saying this for months.
There was a lot of fascinating information to be had at IBIS and I’ll continue to discuss it over the coming weeks. In the meantime, I want to continue to discuss The Boyd Group’s financial statements. The purpose of this is to help compare your business to one of the largest in the collision repair industry, and see how you stack up. Knowing how your competitors run their businesses will help you run a better business yourself. But it is also an opportunity for you to see how I evaluate businesses, and to give you an idea of how I may look at your company when working with you.
Sales per Location
In 2015 Boyd generated $1.17 billion dollars in revenues across the entire business (all amounts are Canadian dollars, unless otherwise specified). At the end of 2015 Boyd’s business consisted of 38 Boyd locations in Canada, 310 Gerber locations in the U.S. as well as a retail glass business. Unfortunately the company does not break out glass sales from collision repair sales, but based on the 2014 annual report, I estimate that about $100 to $130 million in revenues are attributed to the glass business.
Of the $1.17 billion in total sales Boyd reported, $749 million in same store sales, or sales at locations that had been open for all of 2014 and 2015. Geographically, $83 million of the $749 million is attributable to 38 locations in Canada. This implies an average of $2.4 million of revenues per location in Canada.
In the U.S. however, Boyd operates substantially larger facilities. Of the 310 locations Boyd operated as Gerber stores in 2015, 93 locations were added over 2014 and 2015. The remaining balance of $666 million in same store sales implies an average per store revenues of just over $3 million dollars in the U.S, or about U.S. $2.5 million assuming an average exchange rate of .8 CAD/USD.
Compare that to Caliber’s recently reported numbers. When I was at IBIS, Caliber reported sales of US $1.75 billion across 400 locations, implying average sales per location of about $4.4 million. While all the consolidators are growing rapidly, each one has a unique business model. Many owners who I work with are surprised to find out that different consolidators have different preferences when it comes to the size of the business they are looking to operate or acquire.
Sales per Employee
Sales per employee is another interesting easy to calculate metric that tells a lot about the overall efficiency of an operation. At the time Boyd published their annual report of 2015, the company employed 5,922 people (538 in Canada, 5,384 in the U.S.). Average revenue per employee is just under $200,000 per employee.
Again, compare this with figures Caliber presented while I was at IBIS. At the time of the presentation, Caliber employed about 8,000 staff at 400 locations collectively generating $1.75 billion in revenues. Average revenue per employee at Caliber is $219,000
What is of particular note is the trend of increasing efficiency per employee. In 2013, Boyd’s sales per employee were $129,000. In 2014, Boyd’s sales per employee were $155,000. In 2015, Boyd’s sales per employee were $200,000. Currency translation gains aside, this is a testament to the power of building economies of scale.
What is Measured is Managed
These are two simple metrics to use to compare your efficiency to that of the large players in the industry. There are a lot more that I will get into in coming weeks. Have you looked at your ROIC, ROA, or cash conversion cycle lately? If you have no idea what I’m talking about, that’s OK. I’ll go through each one and explain what those metrics are and why they are important to measure.
But in general, what gets measured gets managed. That is the big benefit of brining on an outside CFO. You get the benefit of someone who understands the financial side of the business and can focus you working ON the business rather than just IN the business. And it is a fraction of the cost of a full time salaried employee.
I could go on and on about the benefits, but this time change is killing me (9 hours from Barcelona to Los Angeles)! As always, if this is in your inbox, simply press reply to get a hold of me.
Until next week!