Your Source for Up-To-Date News and Research on the Collision Repair Industry
click here to subscribe to the FREE INSIGHT Editor's Desk News Alert Email
SUBSCRIBERS-ONLY
Today's News
INSIGHT This Month
INSIGHT Archives
Survey Center
Letter to the Editor
Business Tools
Subscription Information
CSI Reporting
Financial Analysis
IRS Audit Guide
Management/
Technical Info
Market Watch Rates
INSIGHT Inside this month's issue...
Feedback
Letter to the Editor
This article originally appeared in the August 2001 Issue of INSIGHT
CCC Takes a Roller Coaster Ride
As I look at the last few months of financial news relating to our industry, I am struck by the amount of coverage released byCCC.
No matter how they may put a spin on it, the news was all bad.
First was the late April announcement that they were exiting from the U.S. insurance claims outsourcing market. The exiting started with shutting down D.W. Morris in the UK and has been followed with the shutting down and/or divestitures of similar operations here in the U.S.; total cost reported to be just under $3 million.
Next came the quarterly earnings report in May - bad news provided with a record $9.8 million loss compared to a $1.8 million loss the previous year. A major component of the drain on profits was DriveLogic’s $5.7 million loss in sales.
Following all this news was CCC’s January 26th announcement of both a "strategic realignment" and news of further write offs in the next quarter of $5.2 million for costs associated with a 130 person reduction in head count and $2.7 million in costs related to the winding down of CCC International, the president of which, Phil Carter formerly of Carter and Carter, has resigned.
If this wasn’t enough bad news, the word on the street is that CCC has lost a major portion of its business with State Farm, being replaced by ADP.
Just to make things appear even worse for stockholders, CCC filed with the SEC for the issue of $100 million in "shelf registration" for the future sales of additional shares of stock and debentures that would dilute the present shareholders’ position.
While all this news based on CCC’s stellar performance was being announced, the president and CEO Githesh Ramamurthy, managed a combined compensation package for last year of just under a million.
CCC’s stock is down from a high in 2000 of $29.00 to a current $5.60, up slightly from its 52 week low of $4.90.
Will CCC’s stock ever come back? Will Harvard College (prime stockholder) ever recover the value on the 7,247,566 shares it holds?
Why is CCC in such a mess? That’s the $64,000 question. As can be seen in this month’s TrendLine survey, CCC’s estimating system still has the highest customer satisfaction rating among the 2,000 shops we surveyed this month, replacing Mitchell, which was last year’s winner in our CSI estimating system sweepstakes.
Our best guess is that management took their eyes off the ball and got enamored with other businesses that were related to, but not a part of the core business.
CCC’s core businesses, estimating system, total loss valuation, and insurer data management, appear to be growing slightly, and showed a small but important growth in earnings.
It will, in my judgment, take several quarters for CCC to sort out its problems and complete its divestiture of related but unprofitable business ventures, perhaps even its joint venture with ADP and Reynolds and Reynolds, ChoiceParts, now embroiled in lawsuits as they try to bring a product to market.
All in all, it was not a great month for Collision Industry related stocks, with both insurers and suppliers showing drops in the valuation of their securities.
-Charles Baker-
Feedback
Have a comment about this article? Send Email to Charles Baker, INSIGHT's Publisher
©2001 Collision Repair Industry INSIGHT
All Rights Reserved
FEATURED
LINKS:
