Collision Industry Survey: Growth steady, technician shortages ‘Less Worse’


In partnership with Supplement Advisory, consulting firm Raymond James recently completed its 2Q19 survey of the North
American collision repair sector, a process designed to gauge the impact of key trends/issues shaping the industry.

Key takeaways from our latest survey (157 respondents), include:

  • Technician Shortages “Less Worse” — While labor/technician shortages remain a key pain point for the industry, our survey data suggests this issue could finally be stabilizing — or perhaps even improving on the margin (becoming “less worse”).
    • Specifically, we highlight that our 2Q19 net survey score improved sequentially to (1.5), a modest improvement over
      (1.7) in 1Q19, and material improvement vs. the (2.1) endured in 3Q18.
    • Underpinning this improvement, we note only 35% of respondents indicated that conditions worsened in the period (vs. 1Q19: 40%), with 60% feeling availability held roughly the same.
  • Organic Growth: Still Healthy (Holding Steady) — Our survey results indicate that industry same-store-sales (SSS) growth remained healthy during 2Q19, with our net composite score holding flat q/q at 2.1 (vs. 2.1 in 1Q19). Underpinning these improvements, we note 67% of our respondents characterized SSS growth as ‘Higher’ (1%–5%) or ‘Much Higher’ (>5%) in the period, while only 10% characterized growth as negative (Lower/Much Lower).
    • `Roughly 24% of respondents suggested business held flat. Given these results, we have elected to bump
      our 2Q19 SSS estimate for BYD to 4.0% (vs. 3.5% prior).
  • Access to Growth Capital Improving — Access to growth capital continues to show steady signs of improvement, with our 2Q19 net score improving to 0.91 (vs. 0.59 prior).
    • While the proportion of respondents that characterized access to growth capital as “better” held flat at 22% (1Q19: 22%), we note that only 4% felt it worsened (vs. 10% LQ).
    • Given the M&A and capital investment trends sweeping the sector, we will continue to monitor this variable closely.
  • Bumping Target; Reiterate OP2—While we regard these results as broadly consistent with our constructive thesis, we are increasing our target price on Boyd Group (BYD-UN-TSX) to $190.00 (vs. $180.00 prior) based upon modest upward revisions to our SSS growth forecast and increased confidence in the firm’s consolidation strategy. Our revised $190.00 target is based upon a 12.5x EV/EBITDA multiple applied to our 2020E estimates, near the mid-to-upper end of the firm’s 3-yr historical trading range (9.0x-15.0x) given the firm’s attractive growth prospects.