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Letter to the Editor
This article originally appeared in the July 2006 Issue of INSIGHT
©2006 Collision Repair Industry INSIGHT All Rights Reserved
Keystone Automotive Q4 Net Income Up Record 74%
CCC Information Services Acquires ProcessClaims
Ford Collision Truckload Program Adds 41 New Parts
LKQ Corporation Acquires Three Businesses
Hanover Sees 150% New Business Growth with Connections Auto Product
Audatex Launches ClaimsElement
PPG Names Five New Vice Presidents
URG and Keystone Automotive Industries Form Partnership
NATEF Becomes Certified Charity in eBay Giving Works Program
BASF Coatings Receives Ford World Excellence Award as Global Supplier
Troy Aikman to Keynote NACE 2006 Opening General Session
INDUSTRY UPDATE
Keystone Automotive Industries, Inc. reported record earnings and sales for its fourth quarter and fiscal year ended March 31, 2006.
Net income for the fiscal fourth quarter increased 74 percent to $7.6 million, or $0.46 per diluted share, from $4.3 million, or $0.27 per diluted share, a year ago. Net sales for the same period climbed 18 percent to $179.9 million from $152.5 million last year.
For the full fiscal year, net income jumped 56.1 percent to $22.3 million, or $1.38 per diluted share, from $14.3 million, or $0.90 per diluted share last year. Net sales for the fiscal year climbed 12.7 percent to $628.3 million from $557.7 million in fiscal 2005.
Same store sales growth for the fourth quarter and fiscal year were 11.6 percent and 11.3 percent (adjusted to reflect the 53-week period a year ago), respectively.
"Fiscal 2006 was an outstanding year for Keystone. Our results for fiscal 2006 reflect, among other things, improved fulfillment rates to our customers, improved operating efficiencies, increased momentum within the aftermarket collision repair industry and the dedication of the Keystone team to continuous improvement," said Richard L. Keister, president and chief executive officer.
Keister noted that the company's acquisition in October 2005 of Veng USA, a provider of generic collision parts in New England, contributed to the company's solid performance. He added that in April, the company successfully converted the Veng locations to Keystone's ERP systems and processes.
Subsequent to its fiscal year end, Keystone announced its intention to relocate some of the company's senior executives to new offices in Nashville, Tennessee, with a majority of the company's accounting, IT, and marketing operations remaining in California. Select corporate offices relocating to Nashville include the chief executive officer, the chief financial officer, and the chief people officer. As previously indicated, the decision to relocate the offices of certain corporate executives to Nashville reflects the strategic evolution of Keystone.
"With more than 3,700 team members located across the United States and more than half of the company's operations east of the Mississippi River, the practical benefits of relocating the senior team to a central geographic location are clearly significant," Keister added.
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Vector Capital, a private equity firm specializing in buyouts, spinouts, and recapitalizations of established technology businesses, has announced a definitive agreement under which CCC Information Services Inc. will acquire Vector portfolio company ProcessClaims, Inc. The acquisition, terms of which were not disclosed, is expected to close in the next few weeks, subject to customary closing conditions.
The sale of ProcessClaims to CCC demonstrates Vector's strategy of funding the growth of established technology businesses. Vector invested in ProcessClaims in June 2002. At that time, the company had already developed a web-based solution for streamlining the claims process for the automotive insurance, collision repair, and related industries. Several of the world's largest insurance companies were ProcessClaims customers and had made long term commitments to use the ProcessClaims solution to gain greater control and insight into their interactions with the claims supply chain.
"In 2002, during an exceedingly difficult time for technology companies to be raising money, Vector made a bet on the ProcessClaims management team and our proven technology for the automotive insurance industry," said Paul Farber, CEO of ProcessClaims. "We were looking for a hands-on investor to take us to the next level, and Vector lived up to our expectations."
ProcessClaims, headquartered in Manhattan Beach, California, is a provider of software connectivity and business process solutions designed to boost productivity, enhance customer service, and deliver significant return on existing IT investments. ProcessClaims solutions automate communication and information flow between insurers’ employees, partners, and their extended community.
In addition to funding the growth of established technology businesses, Vector also focuses on spinouts of non-core technology businesses from large corporate parents. In April Vector announced the sale of LANDesk Group Ltd to Avocent Corporation for $416 million. LANDesk was spun out by Vector from Intel Corporation in 2002. On May 4, 2006, Vector announced the sale of Savi Technology, Inc. to Lockheed Martin, terms of which were not disclosed. Savi was spun out by Vector from Raytheon Company in 1999. Vector's take-private transactions include the buyout of Corel Corporation in 2003 and Register.com in 2005. In April, 2006, Corel completed its IPO and returned to the public markets, and in May, 2006, Register.com announced the sale of its Corporate Services Division to Corporation Services Company.
Ford Customer Service Division (FCSD) has updated its popular Collision Truckload Program, adding 41 new parts, including bumper fascias, exterior lighting, mirrors, hoods, header panels and – for the first time – valances.
“The Truckload Program continues to evolve because of the value its products provide,” said George Gilbert, FCSD crash parts merchandising manager. “With feedback from our dealers, repairers and insurers, we continue to identify opportunities where we can help reduce repair cycle time and lower overall collision repair costs.”
An important tool in allowing dealers to effectively compete in the wholesale collision parts market, the Truckload Program revises its part offerings at least twice a year. With this round of updates, Ford has added two bumper fascias, trimming their list prices an average of 7.2 percent; 18 exterior lighting part numbers, with an average list price reduction of 16.8 percent; one hood with a 11.7 percent off list reduction; eight mirrors, averaging 10.7 percent off of their list prices; four header panels/GOR-GOPs, taking an average list price cut of 11.2 percent; and the new part line offering of eight valances, with their list prices reducing an average of 10.2 percent.
The list price reductions, in combination with reduced packaging costs, are passed on to all collision repair shops that purchase the high-volume truckload parts through participating Ford, Lincoln and Mercury dealers. The program, which boasts a user-friendly online ordering system available to all Ford, Lincoln and Mercury dealers at the FMCDealer.com website, also includes car and truck radiators, bumper bars, steel bumpers, wheels, fascia fastener kits and radiator/condenser modules.
LKQ Corporation has acquired an aftermarket business and two recycled parts businesses with aggregate 2005 revenue of approximately $20 million. Terms of these transactions were not disclosed.
The company expects that these businesses will generate approximately $13 million of revenue and $0.01 of diluted earnings per share for LKQ during 2006.
The aftermarket business operates as Global Automotive Parts from three warehouses located in the Los Angeles, CA; Portland, OR; and Seattle, WA markets. This business reported 2005 revenue of approximately $11 million.
The two recycled parts business acquisitions consist of three facilities in Western Michigan with a total of approximately 25 acres and three facilities in the Tulsa, OK market with about 40 acres. Combined, these businesses consist of four operations that sell primarily into the retail market and two facilities that sell primarily into the professional repair market. These two businesses reported 2005 revenue of approximately $9 million.
"We remain pleased with the overall acquisition environment, and are particularly happy with the geographical and product mix reflected by these three transactions. In particular, Global provides immediate access to three major West coast markets that completes our near-term aftermarket parts strategy for the West, as we now have the ability to provide aftermarket parts sales and distribution to our customer base and insurance partners in the four major markets of Los Angeles, the Bay area, Portland, and Seattle," said Joe Holsten, LKQ's President and Chief Executive Officer. "On the recycled parts businesses that we acquired, our Tulsa acquisition fits nicely in terms of adding more capacity and density to our Central Region as well as providing warehousing capacity for our aftermarket operations in Oklahoma and Northwestern Arkansas. While we currently provide a limited service to the Grand Rapids and Western Michigan market, our Michigan acquisition provides important additional processing and storage capacity to our Michigan recycled parts business."
LKQ Corporation is the largest nationwide provider of recycled light vehicle OEM products and related services and the second largest nationwide provider of aftermarket collision replacement products and refurbished wheels. LKQ operates over 100 facilities.
The Hanover Insurance Group, Inc. has announced that its multi-variate auto product, Connections(TM) Auto, has been embraced by the company's agent partners in the year since its introduction, increasing new business by more than 150 percent in launch states.
"Feedback from our independent agent partners is consistent. Connections Auto delivers the broad market reach, ease of doing business, and competitive rates they are looking for," said Marita Zuraitis, president of The Hanover's property and casualty companies. "As a result, the market has responded enthusiastically to Connections Auto in its first year. Clearly, the growth in our new business throughout all ten launch states speaks to our ability to listen to our agents and deliver the quality products and services they need to meet their customers' needs, and to grow their businesses."
Connections Auto's segmentation modeling approach to personal automobile insurance is easy to use and helps The Hanover's independent agent partners attract new customers. Agents can quote and issue business for approximately 95 percent of the market, enabling them to write policies for customers that may have been previously turned away.
Sam Engardio, Senior VP, Kapnick Insurance Group, which wrote 100 new Connections Auto policies on the first day the product was offered in Michigan, commented, "Connections Auto has expanded our business reach, enabling us to write policies for almost every customer who walks through our door."
Added Frank Ferland, Chief Operating Officer for Maine's Cross Insurance, "In addition, it is apparent that The Hanover has made significant investments in technology to improve ease of use and online capabilities. Competitive rates and customer service have also added to the product's appeal for our agents and, more importantly, our clients."
Connections Auto is now available in ten states: Connecticut, Florida, Illinois, Indiana, Louisiana, Maine, Michigan, New York, Tennessee, and Virginia, and will continue to be rolled-out throughout 2006. Connections Auto is part of The Hanover's personal lines product suite.
The Hanover Insurance Group, Inc., based in Worcester, Mass., is the holding company for a group of insurers that includes The Hanover Insurance Company, also based in Worcester; Citizens Insurance Company of America, headquartered in Howell, Michigan; and their affiliates.
Audatex, a Solera company, has announced the release of ClaimsElement(TM), a Shoplink(R) add-on module that allows collision repair facilities to electronically retrieve data from insurance adjuster estimates prepared using Audatex solutions.
A secure, server-based solution, ClaimsElement eliminates the need for shops to re-key estimates by retrieving estimate data directly from Audatex in an encrypted format and importing it directly into the Shoplink estimating system.
Security is a critical concern for insurance carriers and their policy holders, and all of Audatex's carrier - partners have approved the use of ClaimsElement for repair facilities.
According to surveys conducted by the Collision Industry Conference (CIC), of the 9 million auto claims each year, 2.5 million require re-keying.
"The ability to retrieve electronic versions of estimates via ClaimsElement has significantly improved my daily workflow," said Kathie Wright of Walled Lake Collision in Walled Lake, Wisconsin. "Instead of spending time re-keying insurance estimates into Shoplink, I am now able to retrieve them with a click of a button, directly from within the estimating application. This new and innovative Claims-Element feature saves my business at least half-an-hour for every estimate that I don't have to manually re-key."
According to a company press release, in addition to the time saved in preparing estimates, ClaimsElement improves carrier and vehicle owner satisfaction by eliminating the errors that occur as a result of re-keying, shortening the repair cycle time, and reducing the need for supplements. ClaimsElement also improves workflow in repair shops by making it easier to get estimate information into shop management systems.
For carriers, ClaimsElement provides a greater degree of efficiency and data security than existing manual methods and proposed removable media solutions. As an added security convenience, carriers can track estimate sharing data on a regular basis.
"Audatex is dedicated to developing solutions that help repair shops improve their business performance and build stronger relationships with insurance carriers," said Tony Aquila, Chairman and CEO of Audatex. "ClaimsElement reflects our philosophy of using innovation to deliver quantifiable business process improvements for our customers."
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PPG Industries has named the following individuals vice presidents effective July 1:
- James V. Latch, vice president, automotive replacement glass and insurance and services
- Viktor Sekmakas, vice president, coatings, and managing director, Asia/Pacific
- Jorge A. Steyerthal, vice president, coatings, and managing director, Latin America
- Glenn E. Bost II, vice president and associate general counsel
- Reg Norton, vice president, environment, health and safety.
Latch joined PPG's automotive replacement glass business as zone manager for the West Coast in 1990 and advanced through a series of corporate and automotive aftermarket leadership positions before being named to his current position as general manager, sales and marketing, automotive aftermarket, North America, in June 2005.
Sekmakas joined PPG in 1997 as market development manager for powder coatings and moved to the Asia/Pacific region in 2001, becoming managing director, coatings, and general manager, industrial coatings, Asia, in March 2005.
Steyerthal joined PPG in 1996 as general manager, automotive refinish, South America, and was appointed to his current position of general manager, coatings, Latin America, based in Sumare, Brazil, in 2003.
Bost joined PPG's legal department in Pittsburgh in 1985 and progressed through a series of international and corporate legal assignments before being appointed to his current position of associate general counsel, operations, in 2005.
Norton joined PPG in 1999 during the company's acquisition of ICI's automotive refinish business, moving to PPG headquarters in Pittsburgh as director, global manufacturing and supply chain, for the automotive refinish business before being named to his current position as global director of environment, health and safety in April 2004.
United Recyclers Group (URG) has announced a new partnership with Keystone Automotive Industries. This creates a strategic affiliation between Keystone Automotive, which offers the widest selection of replacement collision parts and supplies in the industry, and URG, representing over 330 independent and industry leading automotive recycling firms.
“Our new partnership with Keystone Automotive Industries will make it possible for URG members to create a ‘one stop shop’ for their customers when it comes to providing a full range of automotive repair and replacement parts,” said Michelle Alexander, director of the URG Board. “This creates another benefit of URG membership, and we are excited about the potential this alliance brings to the automotive recycling industry. We think it is going to help ‘level the playing field’ for our independent automotive recyclers as they compete with the consolidators in this industry. ”
According to URG manager Tom Denton, owner of Knox Auto Parts in Knoxville, Tennessee, “The bottom line is that this partnership brings together used parts suppliers (URG members) with a new and recycled parts supplier (Keystone Automotive) in a way that will allow a full product line of automotive parts to be sold to our customers. The people who buy from us are the collision repair/body shop industry, including those direct repair facilities acting on behalf of the auto insurance industry.”
Christopher Northup, Vice President of Sales and Marketing for Keystone, commented, “This is really an alliance of business leaders in their respective fields. There has been a lot of maturity developing in the automotive repair market the last 10 to 15 years, and it has changed the landscape of the whole industry. Consumers, and their insurers, want their cars repaired in a high quality manner, but cost effectively too. Now two of the most respected names in the business are working together in order to make that happen.”
Launch plans are underway, and in the future it is anticipated that the applicable automotive part elements of the Keystone parts inventory will eventually become integrated with URGNet. This will make it available to the URG members serving their collision repair industry customers.
There are clear advantages to URG members, explained Denton. “URG consolidates our buying power tremendously, and the prices we are able to get through them will be much better than we could do on our own as independent operators. We are in direct competition with a large organization, so utilizing the economies of scale that this new partnership will make possible is very important. Another benefit that URG members are going to gain from is the marketing power that we will now have, which is national in scope, instead of being limited to whatever it is that we could do in our own local markets.”
Since 1947 Keystone has been the nation’s largest supplier of new and remanufactured collision repair parts. With over 130 distribution and service centers Keystone provides products and services to the nationwide community of collision repair specialists.
United Recyclers Group, LLC is a partnership of over 330 industry leading auto recyclers that work together to improve and modernize the automotive recycling industry.
The National Automotive Technicians Education Foundation (NATEF) is now listed in the nonprofit directory for the eBay Giving Works program (http://givingworks.ebay.com).
eBay Giving Works is the dedicated program for charity listings on eBay, enabling sellers to help causes important to them by listing an item on eBay and donating part or all of the final sale price to a nonprofit organization.
By listing items on eBay and donating some or all of the proceeds to NATEF, one can help improve automotive service education. Donations can range from ten percent to 100 percent of the final sale price. Since 2000, more than $74 million has been raised for charity from listings sold on eBay worldwide.
“We are heartened to have become a designated charity on eBay,” noted NATEF President Bill Kersten. “The eBay Giving Works program will allow public-minded shop owners and technicians alike to support NATEF’s efforts to provide a steady stream of entry-level technicians.”
All eBay Giving Works listings stand out with a charity icon, and donation information is displayed in the item description, instilling buyer confidence and trust. Donations that result from eBay Giving Works listings are tax-deductible.
BASF has received Ford Motor Company’s “World Excellence Award” for exemplary performance during 2005 as a supplier of automotive coatings to Ford in North America and Europe.
Ford’s World Excellence Awards recognize suppliers not only for the highest levels of performance in cost, quality and delivery, but also for embracing Ford’s vision of building on its legacy and driving innovation to new heights. The award was presented to Jay Baker, Group Vice President of BASF’s coatings businesses in North America, during ceremonies held May 3 at the Henry Ford Museum in Dearborn, Mich.
In announcing the award recipients, Ford’s senior vice president for global purchasing Thomas K. (“Tony”) Brown characterized the honored suppliers as an integral part of his company’s ability to address the needs of its customers, now and in the future. “We are grateful for their ceaseless concentration on delivering value,” Brown said.
Jeffrey A. Leone, BASF’s Global Account Director for Ford, emphasized the award’s significance for BASF. “As a major global supplier to Ford, BASF is extremely proud to receive this prestigious honor," Leone said. “We share Ford’s passion for excellence and for delivering top-quality vehicles to its customers around the world. This award demonstrates not only BASF’s superior performance in the areas of cost, quality and delivery, but also our commitment to helping our automotive customers to be more successful.”
The International Autobody Congress & Exposition (NACE) announced that former NFL quarterback and Hall of Famer Troy Aikman will be the NACE 2006 keynote speaker. DuPont Performance Coatings is the sponsor of the Opening General Session taking place Thursday morning, November 2 at the Mandalay Bay Convention Center.
"It is with great pride that DuPont will sponsor Troy Aikman as this year’s NACE keynote speaker. Troy set the mold of what a NFL quarterback should be during his eleven year career with the Dallas Cowboys,” said Raymond Anderson, Vice President Refinish Americas, DuPont Performance Coatings.
While his football accomplishments are impressive, Aikman’s business successes are equally outstanding. During his presentation, “Playing a Winning Game,” Troy will share experiences from his football career, dealership ownership, and recent NASCAR involvement. His successes both on and off the field have allowed him to gain a solid understanding of what it takes to be a winner in any situation. From team building and partnerships, to entrepreneurship and charitable contributions his message will undoubtedly have an effect on the NACE audience.
“Most know Troy as a record-setting, All-Star quarterback from his dominating performances as a college and NFL athlete. Others have come to know him from his career as a FOX Sports analyst. But, many may not know that Troy is the owner of a top-performing Texas Ford dealership (Troy Aikman Ford in Dallas), and co-owner of one of NASCAR’s newest racing teams (Hall of Fame Racing). And for years, Troy has used his success as an athlete and a winning personality to raise hundreds of thousands of dollars for children through his charity (The Troy Aikman Foundation). Whether it’s the Super Bowl or one of his many business endeavors, Troy knows how to win. We are pleased that Troy will bring his winning spirit to NACE 2006," concluded Anderson.
NACE 2006 will be held Nov. 1-4, at the Mandalay Bay Convention Center in Las Vegas, Nevada. The educational Conference will run from Nov. 1-4 (Wednesday-Saturday), and the Exposition will take place Nov. 2-4 (Thursday-Saturday). The event will again be held during Automotive Aftermarket Industry Week (AAIW), taking place that same week in Las Vegas.
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