Q2 2021 Boyd Group Services Inc Earnings Call
Good morning, everyone. Welcome to the Boyd Group Services, Inc. Second quarter 2021 results conference call listeners are reminded that certain matters discussed in todays conference call or answers that maybe given to questions asked could constitute forward looking statements that are subject to risks and uncertainties related to <unk>.
Boyd group.
The future financial or business performance actual results could differ materially from those anticipated and these forward looking statements. The risk factors that may affect results are detailed and boyd's annual information form and other periodic filings and registration statements and you can ask the access these documents at the <unk>.
<unk> database found at SEDAR Dot com.
Like to remind everyone that this conference call is being recorded today Wednesday August 11th 2021, I would now like to introduce Mr. Tim O Day, President and Chief Executive Officer of Boyd Group Services, Inc. Please go ahead Mr. O'day.
Thank you operator, good morning, everyone and thank you for joining us for today's call.
And on the call with me today are Pat pass of Patty, Our executive Vice President and Chief Financial Officer, and <unk> <unk>, our executive chair.
We released our 'twenty, one 2021 second quarter results before markets opened today, you can access our news release as well as our complete financial statements and management discussion and analysis on our website at Boyd group Dot Com, Our news release financial statements and MD&A have all been also been filed.
On SEDAR this morning.
On today's call, we will discuss the financial results for the three and six month periods ended June 32021, and provide a general business update we will then open the call for questions.
Comparing the second quarter of 2021 to the same period of 2020 demonstrates how significantly the business was impacted by the pandemic one year ago, and how far we've come since that time.
During the second quarter, we saw infection numbers and restrictions decrease will vaccination levels increased.
We achieved strong same store sales growth and the quarter, which resulted in increased adjusted EBITDA margins and net earnings both in the quarter and on a year to date basis.
And although we continued to experience reduced demand in certain markets at the beginning in the second quarter.
And accelerated and most U S markets as the quarter progressed.
By the end of the second quarter demand and the U S was a meaningfully higher levels than we experienced in Q1 of 2021 by contrast demand and Canada remained significantly lower than the pre pandemic levels and below the levels experienced in the first quarter of 2021.
As was previously communicated beginning January one 2020, one Boyd is reporting results and U S. Dollars. This change has been made in order to better reflect the companys business activities given the significance of U S denominated revenues.
During the second quarter, we recorded sales of 440, and $44.6 million adjusted EBITDA of $58 million and net earnings of $10.5 million.
Sales at 446, $444.6 million short of 44, 4% increase when compared to the same period of 2020.
This reflects a $28.3 million contribution from 72 new locations.
Our same store sales, excluding foreign exchange increased by 34, 5% and the second quarter, recognizing the same number of selling and production days and the U S and Canada and the second quarter of 2021, when compared to the same period of 2020.
Same store sales growth and Canada was much lower and same store sales growth and the U S and unfavorable when compared to the first quarter of 2021.
We will claim volumes increased meaningfully in the U S staffing capacity constraints for location level administrative staff and technicians limited same store sales growth and the second quarter of 2021.
Gross margin was 46, 1% and the second quarter compared to 46, 8% achieved and the same period of 2020.
The gross margin percentage was negatively impacted by reduced parts and labor margins as well as variability and direct repair program pricing.
Operating expenses for the second quarter of 2021 were $147.1 million or 33, one percentage of sales compared to $108.5 million or 35, two percentage of sales and the same period of 2020.
The increase in operating expenses was primarily the result of growth and the number of locations as well as the COVID-19 related cost reductions that impacted the second quarter of 2020.
The decrease as a percentage of sales was primarily due to increased sales and the second quarter of 2021 as compared to the same period of the prior year, which was significantly impacted by the COVID-19 pandemic.
Increased sales levels provided improved leveraging of certain costs, such as property taxes and utilities.
Adjusted EBITDA or EBITDA adjusted for fair value adjustments, the financial instruments and costs related to acquisitions and transactions was $58 million and increase of 62, 7% over the same period of 2020.
Adjusted EBITDA was positively impacted by improved sales levels, which also provided improved leveraging of certain operating costs.
And total adjusted EBITDA and the second quarter benefited from the Canadian emergency wage subsidy and the amount of $3.6 million as compared to $3.4 million and the same period of the prior year.
As is the objective of the program Boyd continued to employ and incur costs for employees that would have been laid off or for load absent the wage subsidy.
As a result of the steady progress toward normal more normal business conditions and the U S. EBITDA margin percent improved 50 basis points compared to Q1.
Net earnings for the second quarter of 2021 was $10.5 million compared to a net loss of $5 million and the same period of 2020.
Excluding fair value adjustments and acquisition and transaction costs adjusted net earnings for the second quarter of 2021 was $11.4 million or <unk> 53 per share two and adjusted compared to an adjusted net loss of $4.8 billion or <unk> 23 per share and the same period of the prior year.
The increase and adjusted net earnings per share is primarily attributable to improved sales levels, which also provided improved leveraging of certain operating costs and other relatively fixed costs, such as depreciation and amortization that could not be reduced in relation to a decline in sales.
Due to the COVID-19 pandemic during the second quarter of 2020.
For the six months period ended June 30 of 2021, we reported sales of $866.3 million and increase of 11, 7% over the same period of the prior year.
Driven by same store sales growth of four 9% or five 7% on the days adjusted basis as well as contributions from new locations that had not been and operation for the full comparative period.
Gross margin increased to 46, one percentage of sales compared to 45, 6% and the comparative period.
The gross margin percentage was positively impacted by improved retail glass margins and a higher mix of glass sales in relation to collision sales, partially offset by variability and director of pure pricing.
Operating expenses increased $30.8 billion when compared to the same period of the prior year, primarily due to the growth and the number of locations as well as the COVID-19 related cost reductions that impacted the prior year.
Adjusted EBITDA for the six months period ended June 32021 was $110.7 million compared to $96.1 million and the same period of the prior year.
The $14.6 million increase was primarily due to improved sales levels, which also provided improved leveraging of certain operating costs compared to the prior year period that was much more significantly impacted the pandemic.
We reported net earnings of $18.2 million compared to $12 million and the same period of the prior year.
Adjusted net earnings per share increased from 51 to <unk> 92.
These increases are primarily attributed to improved sales levels, which also provided improved leveraging of certain operating costs and other relatively fixed costs, such as depreciation and amortization that could not be reduced in relation to the decline of sales due to the COVID-19 pandemic during the second quarter of 2020.
And.
But at the end of the period, we had total debt net of cash of $671.1 million compared to $539.9 million at March 31, and 2021.
During 2021, the company expects to make cash capital expenditures within the previously guided range of one six to one eight percentage of sales.
This excludes those capital expenditures related to acquisition and development of new locations, the investment and environmental initiatives.
Such as led lighting and the investment and the expansion of our wall operating way practices through the corporate applications and process improvement and efficiency project.
During the first six months of the year. The company has invested approximately $2.4 million environmental initiatives. These.
These investments will not only provide environmental and social benefits, but also achieve accretive returns on invested capital.
Additionally, the company is expanding its wow operating way practices towards corporate business processes.
The related technology and process efficiency project will result in the total of $2 million to $3 million of additional investment before the end of this year and will also be ex drive the expected to streamline various processes as well as generate economic returns. After the project is fully implemented.
This initiative began in the third quarter of 2020.
As has been our practice I would now like to comment on some potential for insider selling.
And for personal or estate planning reasons, some insiders, although excluding myself may choose to sell some of their Boyd holdings during the balance of the year, but in any event, we will continue to hold ownership and Boyd shares at levels well above those required by the companys share ownership policies.
While the COVID-19 pandemic significantly impact of Boyd's business over the past year, we experienced increased demand and most U S markets. During the second quarter of 2021 as restrictions continued to ease during this period.
Thus far in the third quarter of 'twenty one.
Although still below pre pandemic levels demand is exceeding our capacity and all U S markets, which has resulted and high levels of work and process.
The process of adding location level of administrative staff and technician capacity to address this constrained remains a work and process and is resulting and increased wage pressure.
By contrast demand and Canada remains significantly lower than pre pandemic levels.
Demand in Canada, and Q3 is building very slowly and comparison to Q1 and Q2 as restrictions are eased and removed.
Looking to the balance of 2021 and beyond we continue to be confident that we will maintain progress toward our long term growth targets and operational plans.
We've added 100 locations on a year to day basis.
And our pipeline to add new locations and existing markets and to expand into new markets is healthy.
The recent acquisitions of John Harris body shops, and collision works, which added the combined 51 locations with quality leadership are strategically opportunistic and better position us to execute and our comprehensive plans for accretive market build out in and around these platforms.
For these reasons Boyd paid towards the upper end of our historical multiple range for similar strategic growth platforms.
In addition to take and time to execute on our build out plans as with many acquisitions, especially those of larger size. It will also take time to integrate and achieve our expected synergies and the result and earnings from these acquisitions and other new locations, especially given the continuing impact of the.
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We continue to have financial flexibility with our conservative balance sheet and more than $600 million and dry powder to take advantage of opportunities as they arise.
Notwithstanding our strong growth and positioning for the future. The previously mentioned factors are contributing to adjusted EBITDA margin pressure with very modest sequential quarterly same store sales gains in the third quarter to date.
We are excited and optimistic about our positioning for the future our pipeline, including acquisitions as well as Greenfield and brownfield locations is healthy and we are confident and our ability to achieve our five year plan.
As market demand returns to normal levels and all areas of our business and we build our staffing and capacity, we are well positioned for the future with our leadership position our growth pipeline and many business initiatives, including our Wow operating way scalable technician development program scanning and calibration.
And always certifications and intake center strategy to name a few.
As always operational excellence remains central to our business model and with ongoing investment and our Wow operating way, we continue to work to drive excellence from repair quality customer satisfaction and repair of cycle times to ensure the continued support of our insurance partners and vehicle owners.
With that I would now like and I'd like to open the call to questions operator.
Ladies and gentlemen, we'll now begin the question and answer session should you have a question. Please press star followed by one on your Touchtone phone, you'll hear of three Tom prompt acknowledging your request and your questions will be pulled and the order of the of received should you wish the decline from the polling process. Please press star followed by two if you're using.
The speaker phone please lift the handset before pressing any keys one moment for your first question.
And your first question comes from David Newman from days of our day David. Please go ahead.
Good morning, gentlemen, good morning Debbie.
Just on the same store sales growth.
Do you have an estimate of what you think was left off the table.
And because of capacity of labor constraints, and the second quarter or was it just deferred and.
Two a work in progress and I'm, just trying to reconcile the ramp or acceleration that you're talking about and demand versus the temporary sequential outlook outlook. So just trying to get and understanding of what was left the table how much of the other.
It doesn't work in progress and and it and the kind of the mix outlook.
Yes, we haven't quantified quantified that David.
I will say the volumes have not returned to pre pandemic levels, but the labor shortage is making the difficult for us to process. The available work. So our work and process has increased I think there is.
And there is some risk that his work and process continues at high levels that our capture rates could diminish a bit so it could impact some of that available revenue.
But as I communicated we're working hard to build our staffing to take advantage of the work that is available and so.
Kevin just in terms of the just trying to reconcile the acceleration that youre above capacity and all of your U S market versus sort of the temporary sequential outlook what.
How do we reconcile that.
I think it's really the the labor constraint is really what's temporary and our same store sales growth right now.
The not so much the market volumes, although market volumes have not yet returned to normal.
And then if you look at sort of supply chain labor challenges the <unk>.
Benefits from Baidu and are poised to end of September maybe labor will become less of an issue, but what sort of margin pressure or maybe just the quantum of the upside and labor labor inflation as you head into the second half here.
I would say, it's clearly a very tight labor market and the United States right now and we will remain competitive to attract our fair share of the labor.
Historically as we've had to do that over a period of time, we've been able to recover any labor rate increases and we've had to provide through pricing with clients. Although I wouldn't expect that in lockstep and we've had pretty stable margins over a very long period of time.
Okay and last one for me guys is just the if you look at the coming out of the pandemic here.
Any change that you're seeing at all and and ensure behavior the.
The concentrate the D R.
The piece of larger players, especially those of have always certifications technology people et cetera.
In other words, you guys enjoy of natural advantage by being a larger player and youre greater ability to process work because if you are having difficulties I have to think of lot of the mom and pops out there of having even more difficulty in terms of securing labor. So any change that you're seeing and insurer behavior at all.
Well I think insurers and still have a desire to concentrate their volume.
With fewer players and creates benefits for them and I believe that the investments, we're making bolt and training and in the OEM certifications will make us more attractive to our partners over time I think the OE certifications, we've we've grown our network of certified locations extensively over the past.
Few years, I don't think Thats and immediate payback I think it's a longer term longer term benefit that we can provide and as we do with other things like our aluminum repair capabilities.
We can hub and spoke are always certifications, so the where there's a need or desire for and OE certification, we can move vehicles too and adjacent repair centers.
Has the appropriate certifications.
Excellent Thanks, Pat Thanks, Tim.
David.
Your next question comes from Jonathan Lamers from BMO capital markets. Jonathan. Please go ahead.
Thanks, Jonathan.
Todd and Tim could you update us on.
The labor rate situation and whether insurers are prepared to absorb the wage pressures the industry is seeing.
Scott.
I guess I don't have anything specific to comment on that other than Jonathan over several years, we've experienced labor rate pressure before and we've been able to recover that over time through market pricing.
So I'm.
We intend to be competitive to attract the labor that we need and I would expect and over time, we will recover that incremental cost.
Thanks.
And Tim I'm curious about opportunities for automation and collision repair.
Such as automated inspection systems with cameras.
Or software.
Are there any opportunities that you see there longer term, maybe for identify minor dance or anything else.
There is some equipment out there.
It is.
Not common but although it has grown and its presence and primarily used for things like PDR or hail damage to assess the quantity of dense on panels.
I think there is there will be more automation coming into our industry I think the early part of it may come on.
Improving the efficiency of the repair of planning and estimating process.
And I around estimating.
And and looking at maybe some of the technical requirements to properly complete a repair that could also evolve and scanning and diagnostics to help with the interpretation and the repair procedures necessary to two.
Repair or correct.
Diagnostic or calibration issues with vehicles.
Haven't seen anything yet.
Really going to greatly improve the efficiency of labor other than things like the investments, we make and our Wow operating way, which are really more process focused and nature.
Thanks, and one follow up on.
The recent acquisitions.
The things are tracking.
And on target.
Would you frame the multiple paid for collision works and setting a new.
Benchmark versus assured and I and the other history.
No. It is within the range, but it's towards the higher end of that range.
Okay. Thank you for your comments.
Thanks, Jonathan.
Thank you Jonathan.
Your next question comes from Bret Jordan from Jefferies. Bret. Please go ahead.
Hey, good morning, guys.
Net.
Could you give us just a little bit more clarity I guess on you talked about variability and DRP pricing a couple of times and maybe the cadence of that variability is it just you.
And your costs are going up at a faster rate than they are passing through pricing and it will catch up or is there anything else going on.
No when we refer to the variability has to do more with performance based agreements.
And in price and adjustments that can happen.
Favorably or unfavorably on a quarter to quarter basis as it relates to our agreements and it.
It's not.
These are not large large adjustments typically.
But they do have an impact.
Okay, and then I think you mentioned a couple of times that we are still below pre COVID-19 volumes, but but but picking up could you give us a feeling for where we are on a queue of.
Comparable basis to the second quarter of 19.
From a cost standpoint.
What I've, what I've heard through CCC, alright, and I've actually read of more and the analysts' reports directly from CCC was somewhere of the volumes are down about 12% to 15% for.
19 levels.
And the simulcast but I guess theoretically you would have gained share of that period and so.
Could you talk or would you be and the same ballpark or would you be doing somewhat better than the market.
We don't.
We don't disclose specifics on that and it's pretty difficult to measure because we've grown and awful lot of since 2019 as well.
And Brett if you look at the same store sales decline and again. This is a proxy of is not perfect and Q2, they were down by 33% and reporting debt up by 34.5. So if you compound it essentially a testimony of down 10%. Obviously you have Canada you have other things, but that's a proxy and then you can come back.
To the CCC benchmark so it might give you some hints.
Okay, great. Thank you.
Thanks for your next question coming from.
Sorry. Your next question comes from Maggie Macdougall from Stifel. Maggie. Please go ahead.
Good morning, Matt.
Maggie.
You made some comments around some initiatives you have in Q.
The central increase operational efficiency or find some coffee and in the business and.
I'm wondering if you can provide us with a bit more detail in terms of and the opportunities that you see and whether there is cost associated with that.
And whether there is investment cost associated with that Maggie yeah exactly.
Yes.
I think we're always working on refining our Wow operating way processes.
We've talked a lot over the past year above what we do what we're doing at the corporate level, but we continue to look at our operating practices in the field as well.
And that there would be designed to help us you'll move cars through the process faster and more efficiently. So we continue to make investments. There those are really largely built into our cost structure. So they're not necessarily incremental I would say if we if we had an opportunity that we thought would require.
The significant expense or significant investment, we would probably speak to that separately.
Okay.
Okay. Thanks, gentlemen.
Okay.
Your next question comes from Daryl Young from TD Securities Darrell. Please go ahead.
Good morning, guys.
And that will occur.
First question is just around the contribution from recent acquisitions I noticed it looked significantly lower than maybe I would've expected.
Is that the reflection of just more greenfield and brownfield.
Locations opening during the period.
I think that that's part of it although that's not the lion's share. It's really we're buying businesses that are still impacted by the pandemic.
And it takes time to get our synergies our relationships in place and the current environment. So it's really more related to that and it has two greenfield brownfield.
Okay.
And then just the longer term question around some of the U S. Electric vehicle targets that were that had been proposed.
Can you just remind us what some of the considerations are and preparing electric vehicles and.
And I know Theres, obviously less engine work and your business, but just any any consideration there we should keep in mind for future income.
Yeah, I think the vehicles all newer vehicles are going to come with more technology.
And that's true of electric vehicles is probably as well as the general population, although electric may even have more than average so I think you'll see more a das type systems on on these vehicles as it becomes a greater share of the market.
There are fewer mechanical parts, that's not necessarily bad from a collision and repair perspective.
The the the panels that are.
Typically repair by us would continue to be damaged and B and opportunity there are safety related matters around electric vehicles or of their hybrid the high voltage vehicles and.
And in some cases may require some specialized equipment and in many cases do require specialized training. So we would we would intend to use our hub and spoke network to create those capabilities, whether it's equipment for training or certifications in certain locations.
And then route vehicles to doble for those locations as needed.
That will change as it becomes a greater share of the market, but as it begins to evolve I think we'll be well prepared to service debt segment of the business.
Okay, Great I'll hop back in the queue. Thanks, guys.
Thanks, Phil.
Your next question comes from Steve Hansen from Raymond James Steve. Please go ahead.
Yes, good morning, guys.
And just wanted to circle back and circle back on the John Harris and works deals.
And the upgrade of the multiples that you paid.
And it.
Could you just give us some out of context or do you think thats just reflective purely of the quality of those two franchises or is it more indicative of.
The more competitive M&A environment out there.
Well, certainly it's a competitive environment for M&A right now.
But but I think it's probably more related to the quality and what we believe we can do with those platforms.
Once they were under our ownership while they were both decent sized businesses, we assessed it carefully and identified.
Lots of fill and market opportunities and are in and around these platforms that we can use our single shop and Greenfield brownfield strategy.
To grow those networks out the both also came with high quality leadership.
Was accustomed to and experienced and a growing business. So we think it added to our capabilities and and they were both really good high quality platforms and air.
Areas that we intended to grow and as well.
And lots of room for further growth so that was really all.
And we came to the conclusion that it was a good investment for us Steve.
Steve we would kind of cranes and thesis of strategic growth platform signed a stomach multiple we acquired it reflects that.
Okay. That's helpful. Maybe let me ask it another way is do you see any multiple inflation and the smaller single and double type shop acquisitions out there at the moment.
The the market right now as we discussed before.
The ample supply so we were able to acquire those things like the video attractive valuations and we consistently told we underwrite to 25000 of pretax auto IC.
Basically is saying that we've been able to get those valuations.
Okay. That's helpful and just one last and if I may is on the emerging technician and people shortage issue Alright, I guess re and moving it feels like that was the big issue and Nick.
And as well.
And how do you feel like you're positioned relative to the industry I'm just I'm just thinking back to your strategic decision last quarter or even in the late December last year to re staff for repopulate and many of your scale and operations. It strikes me that that might and giving you and advantage relative to some of the other parties that might have been more flat footed on re staffing.
Do you have a sense for how you are positioned relative to others out there that could benefit you have and the back half.
There is there is no real industry day down at my my sense is that most and the industry right now are feeling the same pressure that we are.
And so it's a very tight labor market and the.
The business has picked up picked up over the past few months. So I think it's.
It's probably.
We're not in an unusual position I do think we've continued to make investments over the past few quarters to grow our technician development program and and will that and we've talked a lot about this and the past that's not an immediate fix.
We've been doing that for a while now and we do see graduates coming out of that program.
And with greater frequency now and and we've expanded the program as well so.
And this is not an easy thing to address but it's our intent to invest and people to grow their skills and capabilities to solve the problem longer term and be competitive in the marketplace and the near term.
Okay. Thanks for that appreciate it.
Your next question comes from Nauman, Sadie from the Laurentian Bank. Please go ahead.
Hi, good morning, everyone might know Marty.
And so my first question as I remember and the last call I think you mentioned debt not all shops, and Canada were opened and so I'm. Just wondering if that has changed or are there still shops that are closed.
And it kind of it.
Right.
We still have some locations in Canada the intake only.
At this time.
But in the near term do you expect then opening up sooner or is it going to stay that way.
No I expect them to open up I don't have a timeframe and we're going to base. It on the the recovery of the business.
And I'm hopeful that with the reduced.
Restrictions and Canada that will start to see a pickup in volume there relatively soon I think as most people know Canada has done an outstanding job with vaccinations and.
And pretty recently has begun to reopen the economy and it and a way that is very positive. So we will just have to wait for that to unfold into improved business conditions.
Fair enough and just on the cost side I know you've mentioned about the technician pressures and wage pressures, but I'm just wondering debt last year, you guys had taken out some cost.
Are there any permanent cost reductions that can sort of offset these cost pressures are those costs that are also coming back.
We've really brought a lot of the costs back.
In Q4 and in Q1.
So we were prepared for the increase and business, where we have fallen short of where I would like to be as with the <unk>.
Specific level of shop staffing.
We did identify some permanent savings, but our focus has been on preparing ourselves for the recovery and the growth of our business and and I think that's the right place for us to be where we're seeing positive signs and we need the people to take advantage of.
Okay.
For the color and maybe just the last one from my and this is more of like a big picture of long term question and I would say you just mentioned the hub and scope.
A framework, where you could take and a car and then moved to another location and I'm just wondering.
At what stage are you in that because you'll have dose of 700 locations is that something which is widely available within your net worth or few states, which and which of doing it and eventually yield and roll it out to other states.
I'd say, it's it's fairly widely available, but it is evolving.
Take aluminum, which we've had of aluminum capabilities for six or seven years now we would have the hub and spoke capability for structural aluminum repair broadly throughout our network.
We would also we have plenty of OEM certifications and most repairs today don't require and always certification.
More premium based vehicles that that may be routed to a specific specific shop, but I think that could evolve and and we're building our network to be well prepared for that.
One of the other benefits of the hub and spoke network.
Is that when we have a location that has enough work or maybe even too much we can pretty easily move work to adjacent locations to take advantage of available capacity.
And it goes beyond just when it's required to properly repair of vehicle and it it allows us to better take advantage of our capacity, which really allows us to deliver better results for our insurance clients by reducing length of rental and increasing customer satisfaction.
Okay. That's it for me. Thank you for your day.
Thanks Noah.
Your next question comes from Chris Murray from the ATB financial Chris. Please go ahead.
Yeah. Thanks, guys good morning.
The.
Turning back to look at some of the larger acquisitions and and I had I think you mentioned earlier that part of this is looking at it on a return on capital basis.
And when Youre looking at doing these larger acquisitions and I and I appreciate youre talking about paying for higher multiples and.
Maybe that's just the brain damage of getting a larger transaction done as opposed to of several small ones.
But in order to meet your hurdle rate are you looking at this from a perspective of just the baseline transaction and are you looking.
Got it more in the terms of everything that will go with it over the next couple of years in terms of as you said expanding the network for synergies or anything like that.
Yes, we do look at the future Chris like when we talk about distinguished shops that is I think.
You did the growth is not the critical but when we talk about <unk>. When you look at the walked the brings to the table. So these are the strategic acquisitions, we look at the quantity of the earnings quality of the management and the growth opportunities. It brings.
Brought in and the relationships stuff like that so we do look at the future of it these things.
So I mean is it fair to think that the effect of multiple fear and go back and look at the <unk>.
Got it on an EBITDA basis of whatever out further the the multiple ox, you'll probably end up being kind of more in the range and that would be just the first blusher when youre talking about the higher level. Okay. So the higher level of must be talking about and just on the base transaction, it's not on the alright.
Okay, and then I was wondering I just want to clarify.
And then just sort of thinking about.
The average revenue per store.
And growth I think somebody alluded to the fact that and maybe the revenue growth wasn't as big as they thought maybe around.
The store growth.
And I guess two pieces of the question one and how do we think about now that you're starting to add additional intake centers.
Should we be starting to make sure that we're not we're separating those out in terms of revenue generation.
Or how should we think about intake centers impacting revenue generation.
Or is it just more still kind of of utilization play and then the other piece of this question is.
And since you've started really adding intake centers I guess, maybe in December when and if you really started seeing that step up.
How are you seeing the performance so far.
And maybe over the past six six to eight months.
Chris I would I would clarify that the intake center strategy is intended to help us boost the same store sales and it ties into our OE certifications and.
And take centers are typically and in OE dealer.
And in OE dealer location. So it gives us another point of contact with customers.
And and more of our revenue channel for that brand.
In the short term the labor capacity constraints make that a little bit more challenging but as we begin to solve the labor problem I think it can be one of the strategies that we have in place to help us generate incremental same store sales.
Okay, and so but I guess the way to think about it as and when we think about.
Yes.
Store, our revenue growth side of the auto store base of dump, including the intake centers is the way to think about it.
Yes, we don't count the revenue and the intake center, we counted in the production facility. Okay. That's helpful. Thanks.
Thanks, Chris Thanks, Chris.
Your next question comes from Zachary ever share from National Bank Financial Zachary. Please go ahead.
Good morning, and thankfully.
And for good morning, Dan.
Most of my questions asked and answered and then one last one looking at and then the pipeline we've seen the nice.
And then it'll pick up and pay for older Q2, and now Q3.
Do you think disappear for sustainable and <unk>.
And then.
Uptake from from the current.
Thanks.
No we don't.
Extrapolating the current pace. So we provided guidance on the long term basis, and we are sticking to the guidance of doubling of revenues.
<unk> 2019, as the base and we'd like to double by 2025 and at any point in time, though you might see ebbs and flows because of the acquisition comes in lumps and we don't want people to get too excited when we do more and that's what it's a good to dictate when.
And there is a lull in the activity.
Sounds good thank you.
Thank you.
There are no further questions at this time I'll turn it back to Mr. O day for closing remarks.
Great. Thank you operator, and thank you all for once again, joining our call today, and we look forward to reporting our third quarter results in November.
Thanks, and have a great day.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.