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Letter to the Editor

Old-Fashioned Hard Work: It Works for Me

In our April issue the headline for the Investment Page was “Boyd’s Big Box Is Big News.” Well, this month’s headline could well have been “Boyd’s Big Net Loss Is Big News.” As the only public company dealing exclusively with Collision Repair, Boyd’s numbers are of significant interest to individual shop owners, consolidators, and insurers.

Boyd’s sales for the three months ending March 31, 2003, as compared to the same period a year ago, were down only slightly less than a half million dollars to total $36,286 Cdn. Net income before non-recurring expenses was down less than $100,000 Cdn to $934,000 Cdn. When it comes to showing a net profit number, however, the number is $260,000 Cdn.

Even though a loss was shown, Boyd generously declared a cash dividend of $411,000 Cdn, paid to holders of the new “Investment Company” stock. This distribution was apparently made from a positive cash flow/ Distributable Cash of $562,000 Cdn.

Boyd reported that the year-over-year decline in quarterly sales and earnings was primarily attributed to a softening in the U.S. economy, coupled with the impact of translating the results of U.S. operations at a lower exchange rate due to a weakening U.S. dollar. In spite of these factors, according to Boyd, earnings before interest, taxes, depreciation, and amortization have trended upwards over three quarters, and distributable cash generated during the month of March 2003 exceeded cash distributions declared by approximately 37 percent.

The Boyd Group operates 65 company-owned repair facilities. The Boyd Group Income Fund is traded on the Toronto Stock Exchange.

On the domestic scene with industry related stocks, all but three of the stocks we follow were up from April. These are Earl Scheib, FinishMaster, and 3M. The rest are all up this month. Some, like DuPont, Progressive, and United Auto Group, rose substantially.

As I write, Earl Scheib announced that the company has retained the New York investment banking firm of Ryan Beck & Co., Inc. to act as its exclusive financial advisor to explore strategic alternatives available to the company to enhance shareholder value.

While Accessity Corporation, the old Drivershield, is up for the year, the latest quarterly report shows little in sales and a drop in cash from $6.3 million at year-end to $5.3 million reported. At this rate, Accessity may well be out of business in less than two years.

Not to worry about poor old Barry, company president, however. The company has moved to Florida, and appears to have a strong pension plan.

Of the major companies covered, UAG and Progressive Insurance are the clear winners this month. Both companies are controlled by hard-driving entrepreneurs: Roger Penske in the case of United Auto Group, and Peter Lewis at Progressive. Both of these individuals know how to make money the old-fashioned way - through good products, good service, and hard work.

-Charles Baker-

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