The Boyd Group will spend between $4 million and $5 million this year on “specialized collision repair equipment relating to new-vehicle technologies,” CEO Brock Bulbuck said during the company’s 2016 earning conference call.
The money will go toward MIG braze welders and diagnostic scan tools, Bulbuck added.
In addition to the investment in welders and scanners, Bulbuck announced that Winnipeg-based Boyd Group will spend between $8 million and $10 million on a “technology refresh” aimed at boosting the speed and bandwidth of its IT infrastructure.
Asked whether the IT spending is an effort to improve technician efficiency, Bulbuck explained that the investment will support administrative and operational employees such as Boyd Group’s estimators, “who are writing damage estimates and repair-plan blueprints.”
“And as everyone knows, we live in an era where the expectations for speed of Internet are increasing on an ongoing basis, so we have to upgrade our Internet bandwidth not only for our own processing purposes but for the experience of our customers who visit our locations,” Bulbuck added.
The planned investments in collision repair technology and IT infrastructure are higher than Boyd Group’s recent spending levels for maintenance capital expenditures. Given the ongoing changes in vehicle technologies and materials, one analyst asked if investors should expect equipment spending to continue to rise.
“I think it’s too early to know what the regularity of these investments will be,” Bulbuck responded, noting that the company recently invested several million dollars in aluminum repair equipment for 10 percent to 15 percent of its repair centers.
He said the ability to place specialized repair equipment in some but not all locations “translates into a further competitive advantage of the multi-store model versus the independent model.”
“[We can] move work or load-level specific repairs that require that equipment to those locations,” Bulbuck added.
Another Big Year for Boyd
Boyd Group, which operates as Body Autobody & Glass in Canada and Gerber Collision & Glass in the United States, now has 404 repair centers in 20 U.S. states and five provinces, according to Bulbuck.
The company added 58 new locations in 2016, marking its largest annual increase since adding 64 locations in 2014.
For full-year 2016, Body Group reported sales of $1.4 billion, up 18.1 percent from 2015. Profits increased 33 percent to $52.6 million.
Boyd Group shareholders made money as well. For the second straight year, Boyd Group was the best-performing stock on the Toronto Stock Exchange, delivering a total return of nearly 10,000 percent for the 10 years ending in 2016, according to Bulbuck.
So far in 2017, Boyd Group has added seven collision repair centers, which is “a little behind last year’s pace,” Bulbuck noted. Overall, though, the company is on pace to achieve its goal of doubling in size by 2020, based on its size in 2015, he added.
“There continues to be a healthy pipeline of attractive single and multi-store operations available to add to our portfolio, along with opportunities for new store development,” Bulbuck said.