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Letter to the Editor

Reality Checks

This month’s Collision Repair Industry Stock Report shows very little change from last month’s little slump, but at least that little change is a bit of an improvement. Sigh. We’re down but not as much as last month. Our Supplier Index has climbed to be only ten percent from its January standing. Our Insurer Index is up about six percentage points from its January starting place.

As of June 15, our refinish manufacturers’ per share stock prices were still slightly down YTD, except for Sherwin-Williams. The Cleveland-based paint manufacturer’s per share stock price is at $45.29, up a hair from its January $44.57.

Two of our car dealership stocks, AutoNation and United Auto Group, are showing some improvement on Wall Street. Both dealer consolidators have per share stock prices up about six percent from January prices. CarMax, however, is still having a rough time. After the company lowered its earnings and sales targets for the quarter, the mood at the NYSE remained fairly unforgiving. CarMax’s per share stock price is down just under 20 percent from its January $31.00 level to $24.84.

In my opinion, CarMax executives did what needed to be done, and I anticipate some real improvement for CarMax at the Dow. I am counting on seeing some shrewd adjustments to the company’s business operations throughout the remainder of this year. This is a company that will learn valuable, practical lessons from its present reality check.

Insurance Auto Auctions, Inc. has announced the closing of the company’s acquisition by an affiliate of Kelso & Com-pany, a New York based private equity firm, for approximately $400 million. I have enjoyed tracking IAA’s journey and hope to continue to hear about the salvage auction provider. I was impressed by the company’s ability to read the writing on the wall and to act on it. IAA’s huge investment in state-of-the-art software was a wise business decision.

In Canada, the Boyd Group Income Fund units are still down in the dumps this month, still suffering from the collision repair consolidator’s necessary decision last month to cut its distributions by nearly 40 per cent. Boyd’s reality check will, I am confident, make the company stronger in the long run.

Keystone Automotive Industries reported that Q4 and full year net income was down, despite increased sales. New CEO Richard L. Keister, calling this a “transition year,” can be justifiably proud of the work done to connect Keystone’s locations to its new enterprise management system.

It remains to be seen if Keister’s optimism about anticipated sales of his aftermarket headlights for Ford Taurus and Pontiac Grand Am autos is justified. Keystone is working with CAPA toward certification of aftermarket headlamps for several popular models, hoping that insurers will begin to specify aftermarket lighting for collision repairs.

-Charles Baker-

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