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$BYD.UN the largest operator of (non-franchised) collision repair shops in North America
90% of revenues paid by insurance companies
90% of revenues paid by insurance companies
Large and fragmented
What's going to stop this?
"As $BYD.UN integrates acquired companies participation in insurance company DRPs (direct repairs) increase... large MSOs (multi-shop operations) participate in 2x the DRPs with with 3x the revenue vs independently-owned shops"
"Raising repair costs push insurers to professionally managed MSOs as DRPs have shorter turnaround and lower length of rental"
Average rental under a DRP is two and a half days shorter.
"There are literally thousands of independent small shops that lack the scale and financial resources to capitalize in DRPs"
"We expect severity continues to increase and cost inflation to be passed through... an increasing number of parts which need to be replaced per claim (increasing vehicle complexity and content levels)"
CEO (Since 2010) Brock Bulbuck discussing insurance company integration into collision repairs
"Allstate has entered into an agreement to sell Sterling Collision Centers, Inc. to Service King Collision Repair Centers."
prnewswire.com/news-releases/…
prnewswire.com/news-releases/…
Consumer Journey Through the Claim and Repair Process
Average total Cost of Repairs
Repair Cost Breakdown
Average parts Replaced versus Repaired
Increasing Complexity as measured by parts per collision
Increasing Complexity as measured by parts per collision
Why not take me car to the dealer?
"The industry operates with negative working capital due to short-term receivable cycles from insurers. In general, an estimated 50% of receivables are collected before the car leaves the shop, with the remaining received in <1 month."
valueinvestorsclub.com/idea/BOYD_GROU…
valueinvestorsclub.com/idea/BOYD_GROU…
$BYD.UN targeting 25% ROIC on single store acquisitions
Some teeny tiny EBITDA margins
"In 2018, the Fund was able to achieve record revenue of $1.9 billion and Adjusted EBITDA of $173.4 million"
"In 2018, the Fund was able to achieve record revenue of $1.9 billion and Adjusted EBITDA of $173.4 million"
Not too far off CEOs long-term target of 10%
Impact of Collision Avoidance Systems
CEO is 58
Q: What is the most important strategy you are using to enhance your business?
A: Invest in OEM certifications
A: Invest in OEM certifications
"We cannot, no matter what cycle time or CSI we generate, compete to obtain DRP referrals against the large MSO’s in our area."
Mawer discussing $BYD.UN long thesis
