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Letter to the Editor
This article originally appeared in the May 2001 Issue of INSIGHT
The News Gets Even Better
Investors continue to favor companies that actually do something and make a profit doing it.
The Collision Supplier Index continues to rise, showing an average 7.69 percent increase in the value of stocks in the collision supplier companies shown in the chart.
This month’s leader in growth of the value of its stock on a year to date basis is Keystone Automotive, up over 26 percent YTD. It would appear from the company’s latest quarterly report that Keystone has recovered much of the sales loss in crash parts attributable to the State Farm decision last year. While sales have recovered, profits have lagged as a result of reduced margins on crash parts resulting from heavy competition coupled with an increased emphasis on sales of refinish materials and other parts with margins lower than those usually attributed to crash parts.
Seasonality is a recognized factor in the sale of both collision repairers and their suppliers. The accompanying chart shows a rolling twelve-month index of Keystone crash parts sales. With 118 locations, Keystone now has national distribution. It is interesting to note that this year’s tough winter impacted sales from the east coast through Texas to California, where wet weather pushed up the accident frequency.
Insurers confirm this year’s boost in volume with complaints about not only increased claim counts but significant increases in severity as well, with some reporting increases as much as twelve percent over 2000 on a YTD basis.
Part of the severity increase can be tied to parts or labor cost increases, and some can no doubt be attributed to the fact that when shops are loaded estimators tend to write a stronger sheet when it comes to judgment time items.
Allstate for one appears to be addressing the severity issue by putting unusual pressure on its DRP shops and "just saying no!!" when it comes to items that in the past were negotiable.
In another vein, Driversshield.com has filed an appeal with NASDAQ to avoid being delisted, as time had run out for its stock to have been traded for ten consecutive days over one dollar, a NASDAQ rule.
Down in Florida, Parts.com put out an earnings report that showed cumulative losses of over $20 million. That’s something for a company whose reported sales for the past year were under one million. These folks really know how to spend money, having spent almost $750,000 on shows such as NADA in 2000.
It would appear that the dot-com frenzy is really over.
-Charles Baker-
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