Q4 2022 Boyd Group Services Inc Earnings Call
Our goals and achieve our long term goals.
We released our 2022 fourth quarter and year end results before markets opened today you.
You can access our news release as well as our complete financial statements and management's discussion and analysis on our website at <unk> Dot Com, Our news release financial statements and MD&A have also been filed on SEDAR. This morning.
On today's call, we will discuss the financial results for the three months period ended December 31, 2020 to provide a general business update and discuss our long term growth strategy.
We'll then open the call for questions.
In 2022 boy, who was able to achieve record sales and demonstrate resilience in the face of many challenges, including supply chain disruption and an extremely tight labor market with the accompanying wage pressure.
We are pleased with the progress we made in 2022 and in particular the level of the same store sales growth and the improved adjusted EBITDA delivered consistently during the last three quarters of the year.
We remain focused on our key challenges of building capacity to increase staffing and negotiating sufficient price increases to recover lost margin from wage pressure.
For the year ended December 31, 2022, we reported sales of $2 4 billion, an increase of 29, 9% over the prior year driven by same store sales increases of 19, 8% and contributions from 136, new locations that had not been in operation.
For the full comparative period.
Gross margin decreased to 44, 7% of sales compared to 44, 8% in the comparative period.
The prior period included the recognition of Canada emergency wage subsidy pursues of approximately $4 1 million.
Gross margin percentage was negatively impacted by reduced labor and power margins as well as a higher mix of parts sales in relation to labor.
During 2022, Boyd face supply chain disruptions, which resulted in a negative impact on margins.
Pricing increased and improvements were made throughout the year labor margins were negatively impacted by the extraordinarily tight labor market, which continues to result in increased wage cost to both retain and recruit staff.
The shortage of labor and increasing vehicle complexity also resulted in a higher mix of parts sales in relation to labor.
Negative impacts were partially upset by performance based credit relief to address the constraints caused by current market conditions and increased scanning and calibration services.
Operating expenses increased to $194 1 million when compared to the same period of the prior year, primarily as a result of increased sales based on same store sales as well as location growth.
The prior period included the recognition of <unk> of approximately $5 $8 million.
Operating expenses were negatively impacted by the extraordinarily tight labor market, which resulted in increased wage and benefit cost to both retain and recruit staff.
Also impacting the year ended December 31, 2022 were increased support costs related to recruitment and training, including costs associated with the technician development program as well as support costs related to the expansion of the wall operating way practices to corporate business processes.
Adjusted EBITDA for the year ended December 31, 2022 was $273 5 billion compared to $219 5 million in the same period of the prior year.
$54 million increase was primarily the result of improved sales levels.
Adjusted EBITDA for the year was constrained by technician capacity and was also negatively impacted by wage inflation and supply chain disruption.
In total adjusted EBITDA for the year ended December 31, 2022, or 2021 benefited from the Suez payment of approximately $9 $8 million.
We reported net earnings of $41 million compared to $23 5 million in the same period of the prior year adjusted net earnings per share increased from $1 30 to $1 97.
The increase in adjusted net earnings per share is primarily attributable to increased sales, partially offset by the lower gross margin percentage and higher levels of operating expenses.
Now moving onto Q4 results.
During the fourth quarter, we recorded sales of $637 1 million or 23, 4% increase when compared to the same period of 2021.
Our same store sales, excluding foreign exchange increased by 27% in the fourth quarter.
Same store sales benefited from price increases and high levels of demand for services as well as an increase in production capacity related to technician hiring and the growth and the technician development program, although ongoing staffing constraints and supply chain disruption continued to impact the sales levels that could be achieve.
During the fourth quarter of 2022.
Sales also increased based on higher repair costs due to increasing vehicle complexity increased scanning and calibration services as well as general market inflation.
Same store sales in Canada continued to recover with this recovery continued to be impacted by supply chain disruption as well as the labor capacity constraints in the fourth quarter of 2022.
Gross margin was 44, 3% in the fourth quarter of 2022 compared to 43, 5% achieved in the same period of 2021.
Gross margin percentage benefited from price increases, including performance based credit really to address the constraints caused by the conditions market conditions and increased scanning and calibration services.
Benefits were partially offset by a higher mix of parts sales in relation to labor.
Creasing vehicle complexity, resulting at a higher mix of parts sales in relation to labor.
Our gross margin percentage in the fourth quarter of 2022 relative to the third quarter of 2022 is primarily the result of variability in parts sourcing and pricing, which was resulting in slightly greater part by some variability quarter to quarter. The margin for the year ended December 31 2022.
It's within the normal range.
Adjusted EBITDA or EBITDA, just prepare value adjustments to financial instruments and costs related to acquisitions and transactions with $74 7 million an increase of 34% over the same period of 2021.
The increase was primarily the result of improved sales levels and total adjusted EBITDA for the three months ended December 31, 2021 benefit from the <unk> and the amount of $2 3 million.
Net earnings for the fourth quarter of 2022 was $14 2 million compared to $4 9 million in the same period of 2021.
Excluding fair value adjustments and acquisition and transaction costs adjusted net earnings for the fourth quarter of 2022 were $14 6 million or <unk> 68 per share compared to adjusted net earnings of $5 9 million or <unk> 28 per share in the same period of the prior year.
Adjusted net earnings for the period was positively impacted by higher levels of sales and higher gross margin percentage, partially offset by higher levels of operating expenses.
At the end of the year, we had total debt net of cash of $963 million compared to 948 billion.
At September 32000, $20 million to $957 million at the end of 2021.
Debt net of cash increased when compared to December 31, 2021, primarily as a result of an increase in lease liabilities driven by lease renewal activity.
During the year ended December 31, 2022, the company completed the sale leaseback transactions for proceeds of $55 1 million increase in startup locations resulted in a buildup of real estate assets. The company's strategy has been to not hold real estate and the sale leaseback trans.
Actions allowed the company to replenish capital and continuing to use these properties.
Based on the confidence we have in our business, we announced an increase to our dividend by two 1% to 58 eight cents per share on an annualized basis in Canadian dollars beginning in the fourth quarter of 2022. This is the 15th consecutive year that we've increased dividends to shareholders.
During 2023, we plan to make cash capital expenditures, excluding those related to acquisition and development of new locations within the range of one six to one 8% of sales.
In addition to these capital expenditures, we plan to invest in network technology upgrades to further strengthen our technology and security infrastructure and prepare for advanced technology needs in the future.
This investment is expected in 2023 to be in the range of $5 million to $8 million with similar investments expected in 2024 and 2025.
These investments align with our ESG sustainability roadmap to responsibly address data privacy and cyber security.
In November of 2020, we announced our new five year growth strategy, and which buoyed intends to again double the size of the business over a five year period from 2021% to 2025 based on 2019 constant currency revenues, implying a compound annual growth rate of 15%.
Given the high level of location growth in 2021, and the strong same store sales growth in 2022, we remain confident that we were on track to achieve our long term growth goals.
Our intake location strategy is intended to drive same store sales growth at times when capacity is not constrained.
Late 'twenty two in early 'twenty, three we decided to close many intake locations in the U S based on the reality of our current capacity constraints.
We plan to increase production location growth during 'twenty 2023 in relation to 2022, we're pleased to have opened or acquired 17 startup booked 17 locations. Thus far in the quarter all of which have been single locations in the pipeline to add new locations and to expand into new markets as robot.
<unk>.
We remain focused on our key challenges are.
Building, our capacity through increased staffing and negotiating sufficient price increases to recover lost margin from wage pressure.
We continue to experience high volumes of work and we are benefiting from increased scanning and calibration revenue. However, theres also been a continued shift of higher mix of parts in relation to labor driven by increase in repair complexity.
Thus far in the first quarter of 2023 same store sales results have been consistent with the growth experienced over the past few quarters the.
The balance of 2020, Threep will have higher comparative periods for which same store sales will be measured against.
Workforce initiatives such as the technician development program are having a positive impact on capacity and ongoing investments in technology equipment and training position us well for continued operational execution.
We remain committed committed to addressing the labor market challenges. So that we can service additional demand through initiatives such as the technician development program.
This increases for labor continue to work their way through the system market by market and client by client. This has resulted in gradual improvement in labor margins.
<unk> for Windows to issue resolved is difficult to predict but the impact is expected to be less and less as wage increases stabilize and pricing matures.
As communicated previously performance.
Performance based pricing programs may cause margins to vary on a quarter by quarter basis.
Throughout 2022, we made progress on the priority areas and each of environmental social and governance pillars outlined in our first ESG report published in March of 'twenty two.
We recognized that we have the potential to deliver significant positive impacts to society and the environment. We look forward to publishing our second ESG report in the coming months.
In summary, and in closing I continue to be incredibly proud of our team who have adjusted to the new environment.
Working hard to position us well for the future with that I would like to open the call for questions operator.
Thank you.
To our phone audience joining today, if you would like to ask a question simply press star and one on your telephone keypad pressing star and one will place your line into our Q and we ask that if you are joining today on a speaker phone. Please return to your handset prior to pressing star and wanted to be certain that youre signal does reach our equipment. Once again, ladies and gentlemen that is star in one if you'd like to ask you.
A question, we will hear first from Chris Murray at ATB capital markets.
Okay great.
Good morning.
Couple of quick questions.
Quick questions for you folks.
Just thinking about kind of the mix of work as we go into 2023 it sounds like.
Pricing is continuing to improve I'm, just curious about what you're seeing in terms of kind of parts and labor dynamics and I was wondering if you could maybe make some comments on what you're seeing year round scanning and calibration.
How how that you think will play in through.
The margin profile as we get to call it more normalize.
Operations are pricing.
Later in 'twenty three 'twenty four.
Yeah. There are a few different questions in there, Chris but I think on the first one as it relates to parks I think we're seeing two things impact our revenue mix and skewing more toward parts.
One is is one trend that I think will continue and that's just increasing vehicle complexity and higher parts context. When we look at the mix of vehicles of newer vehicles have a higher number of parts and a higher average cost apart when going through repair than older vehicles. So as we begin to.
Grow newer vehicles as part of our mix will likely see that shift.
The second issue really relates to the capacity constraints.
Our non drive vehicles comes to one of our facilities.
We really have to address it.
Which means we may be scheduling hours later hit drivable vehicles and those later had drive up the vehicles would tend to have a better labor to parts mix than the non drive vehicles.
If you can just to just add as well.
The fact that we've got some supply chain challenges still they talk like that.
Sometimes we have to choose the right.
Optimal choice in terms of.
In terms of the part selection. So we've had for the year, we've had a richer mix of OE parts from what we've historically had because of limited availability or less availability of aftermarket. Although we have seen some improvement in the availability of aftermarket, particularly in the fourth quarter and that should smooth out over time.
As it relates to the calibration and the scanning.
Scanning and calibration is.
<unk> continued to gradually become a richer part of our mix of sales and what we don't go into specific details on that.
It's a trend that I would expect to continue.
Vehicles require more calibration operations, we our business practices to a sketch it is to really scanned everything that comes in to identify any potential.
Damage to a to.
A desk components and then obviously repair those require repair is a part of the repair. So I'd say, that's a favorable tailwind in the <unk>.
The margins on that are somewhat less attractive because much of it is sublet our strategy is to bring more of it in house over time.
Which should be a positive for us as we accomplish that.
Okay. That's that's helpful.
And then one other question just on acquisitions I think.
In your in your prepared remarks in the MD&A you talked about completing 40.
Acquisitions in 2022, and then talking about.
Growing growing.
I guess stores. This year should we think about that is growing above like adding more than 40.
17, so far year to date.
Like how should we be thinking about scaling that in.
Of the acceleration in.
And you also noted.
Most of the most of the store growth so far has been single store.
Any thoughts around multi store and how that might be shaping up as you go further end of the year.
To answer your first question I think in our MD&A, we did specifically say that we expect it to grow at a faster rate from a unit standpoint.
In 2023 than we did in 2022 I think the fact that we've opened 17 partway through the first quarter is a good indication of that of those were all single shops.
As most people know the single shops have a higher return on capital than multi shop operations and we believe we can accomplish our double 25 goal without significant multi shop investment that does.
Doesn't mean that we will acquire multi shop operators.
There's one that's attractive that makes sense.
We're willing to make those investments, but we're also pretty focused on a single shop acquisitions and Greenfield brownfield development.
Okay fair enough. Thanks, a lot.
Thanks, Chris.
Our next question today comes from Steve Hansen with Raymond James. Please go ahead.
Yeah, Good morning, guys.
Tim how should we think about the intake center closures.
And that strategy shift.
From a revenue standpoint are they.
I understand the concept it.
Capacity is already constrained so there's no real need to add those shops are those intake centered referring volume over but do you expect any material impact on the top line from those closures.
Not at all no we were trading off work.
The reason that we closed a number of intake centers is that.
We didn't have capacity to service the incremental business and it didn't make sense to bear the expense will be expense wasn't material.
It just didn't make sense to continue that we do have a very successful model, we know how to deploy it so I think.
Okay.
Other point the market returns to demand, what we're really looking to identify more demand I am confident in our ability to pull the intake intake center strategy back in.
Know how to execute it and if it does work well just isn't necessarily in the current environment.
Okay. That's very helpful. And then just on the margin front it sounds like you're pretty confident in.
Labor margins, improving incrementally as you get additional price and perhaps an additional throughput I just wanted to be a little bit more clear on the idea around complexity and our severity is there is there a difference between that.
That severity and new car impact that you're describing.
Parse out some of the differences there I think you described it earlier.
<unk> comment there is the new car issue, but there's also a dry blood versus Andre but can you just maybe help us understand that issue a little bit better as it relates to margins.
But I think the.
Anytime you shift mix towards parts and away from labor in terms of the total mix.
Sure.
Gross margin is going to be impacted because part margins while its not exact part margins are about half of what labor margins are so that shift will impact the overall gross margin.
The cause of the higher mix of parts right now one is <unk>.
Systematic or not systematic I'd say, a trend will continue which is vehicle complexity.
The other.
The other trend is high used car values, which are causing the insurers to repair cars that.
In a normal environment would have been totaled out and those cars tend to have more damage because they are the high value repairs that I would expect to normalize as you car used car values normalized total loss rates normalize.
Perfect very helpful.
And then just lastly on <unk>.
As we think about that growth profile.
This earlier are the single shot you know the decision to accelerate the single shop acquisitions.
Clearly eligible thus far in the quarter.
The piece that we're seeing today, thus far in Q1 that piece that you expect you can continue or accelerate through the year.
I think the only guidance, we've really provided on that Steve as it were.
Our ability to double the size of the business and we expect units to be above what we had in 2023.
The challenge with providing specifics on that is that.
Deals deals sometimes don't go through but we're pretty confident we've got a good pipeline of accretive opportunities and we've got a great team in place to execute on those.
Okay. Thank you for that.
Our next question will come from the line of Bret Jordan at Jefferies. Please go ahead.
Hi, guys.
On that growth question as you sort of look around the environment and clearly some others consolidated the collision space as well do you see any change or have others taken a step back just given the pressures on internal costs and capacity do you see yourself I guess.
And I have changed competitive.
Competitive situation, either better or worse than you were a couple of years ago and M&A.
We're pretty focused on single shops, right now in Greenfield brownfield development.
On that front I'm not sure we've seen much of a change even over the past several years.
I'm not sure that we get asked this question every quarter and I, usually answer by saying I think it's too early to tell I think what we have to look at it is due to some of the growing private equity backed competitors continue to buy.
By multi shop operations and they don't disclose their value is but do they continue to be aggressive with those acquisitions.
And I think I'm not sure what the answer to that is yes, what I am sure of is that we have a single shopping Greenfield brownfield strategy that we're confident combined with same store sales growth could allow us to achieve our growth goals.
Okay, Great and then on the the mix shift obviously more more parts and labor.
Could you sort of maybe bucket how much of that has also been in the parts mix I think you called out more OE parts because of aftermarket supply but.
Could you guys already gives us a perspective, where we were in the quarter maybe versus pre pandemic.
<unk> alternative part versus OE, and then presented parts versus labor.
We don't disclose that specifically, Brad I think the the <unk>.
<unk> has been growing over the past couple of years.
We we.
Have seen an improvement in the availability of alternative parts.
And I know <unk> also reported that they had much better fill rates and availability, so we've seen that and thats.
Good because it helps us keep repair costs down.
As many people know, we generally have better margins on aftermarket parts of wood on OLED.
But that's probably all I can give you on it.
Okay and then one quick last question, you said Theres no real topline impact from shutting intake centers is there any cost associated in the short term, we're shutting intake centers.
There is some cost it's not material.
It's intake centers are staffed with one individual.
And typically not much other expenses associated with it.
Okay, great. Thank you.
Thanks, Brian .
Okay.
What's more ladies and gentleman that is star one if you would like to ask a question today. Our next question will come from the line of Michael demand Scotiabank.
Good morning, Michael Hey, good morning, guys.
Hey, Tim Hey, Jeff.
First question is actually a clarification in your commentary.
You talked about Q1 to date same store sales growth being consistent with the growth in the last few quarters. I mean is that to mean to us at least that can be roughly 20% year on year in line with the last three or four corners.
Yes, we're really just referring to what we've seen thus far in the quarter.
So.
We're clearly signaling that we're going to have.
Pretty respectable same store sales growth this quarter, we expect that.
Yeah.
Beginning in Q2, we saw a significant same store sales growth last year. At this time I think Q2 was over 14% in Q2 was over 22%.
In Q3 was in the 20% range.
So we're moving up against pretty significant.
Comp periods.
So that's really what we're trying to bring clarity to it.
Yeah, no that makes sense.
It's just different many of them.
With 20% same store sales growth Q1 revenue per location. So far again, so far through Q1, it looks like it can increase 5% to 7% quarter on quarter.
So again I was wondering if you could comment on that.
Right plus.
What the sequential improvement is a reflection of and I'm wondering if that price or volume and if that shouldn't necessarily slow down to the bottom line.
Yes.
It's a combination of price and volume were certainly benefiting from.
Price increases.
We're benefiting from some increased vehicle complexity, although that does use labor capacity because the.
The average repair today has both more parts and more labor hours on it and labor is really our constraint.
I don't know if you have anything on flows I guess productive capacity, we've seen some improvement without our technician development program, we're really impressed with how it developed over the course of the year and so that's.
That's making a difference.
Improvement in technician staffing generally so.
Those are really the drivers.
Okay, Yeah, I know that that looks good.
Good for you and I guess second question, maybe you can dig into the operating expenses on a bet.
For the year up 31% versus 21.
By comparison, the average store count I think increased about 7%. So presumably a lot of that is inflationary pressures, but theres. The balance is associated with the corporate initiatives, assuming it's namely that the GDP.
Some of these project base.
Like how should we think about opex growth.
<unk> 2023.
Maybe just like.
Can we think of that as a slowing down in some of these.
Sure.
We're certainly looking to drive more sales growth to absorb operating costs were very conscious of the fact that our operating cost ratio is above our historical levels.
So we're.
Looking carefully at that and expect to absorb operating costs with sales growth over time.
But there are there are inflationary pressures that we're still seeing that that we have to deal with and we're going to benefit.
Benefiting from some inflationary pricing on the other side too.
But we do lag and we've talked about this before but.
We see things like wage increases or other utility cost increases from things that.
We don't have much control over that have gone up but our pricing comes in more slowly. So we're going to continue to focus on pricing on managing our business more effectively.
To recover our margins back to our historical levels.
Got it okay and before I pass the line just one technicality, if you could clarify it but just wondering if the salary of unproductive technician. So somebody in the GDP in the first or second phase of the training.
If that moves from SG&A to cost of sales when they do become productive I'm just trying to think about the two lines there.
It moves.
It moves once they're beginning to become productive as opposed to cost of sales prior to that it is in SG&A.
Perfect Alright, thanks, a lot guys.
Okay.
Thanks, Michael.
We'll hear next from Daryl young of TD Cowen.
Hey, good morning.
Just one quick one for me following up on the parts mix and the impact on margins.
Some of those.
Complexities of repair or being structural does that prevent you from getting back to historic margin levels.
Or is the number of parts and the operating leverage that's driven by the greater number of parts in same store sales growth offsetting such that you can get back to your historic.
Overall margin level.
Yeah.
The park is a headwind although it doesn't increase total revenue.
One of the.
What are the other trends thats going the other way relates to calibration scanning and calibration services, which are also growing as we address more vehicles with a das equipment.
So I think there are some offsetting factors that overtime.
We expect to help us leverage our margin back up.
Okay.
Okay.
In addition to continuing to seek out improve pricing recovery labor margins.
Got it okay. That's all for me thanks.
Thanks, Rob.
Yeah.
Zachary ever shed, but rather pardon zachary ever shared with National Bank financial. Please go ahead. Your line is open.
Thank you and good morning, everyone.
Right exactly.
So we saw a slight downtrend in the number of DRP relationships from 2022, four national Msos and we did note that your top five concentration kicked up a bit.
How are you thinking about your <unk> in the current environment and do you think youre adjusting your competitive positioning.
Okay.
I'm not sure quite what Youre getting at.
DRP is as our primary source of revenue obviously.
And we have grown with our larger partners.
But I'm not sure.
Please we understand exactly what youre trying to get to.
I guess what would be driving at is do you see yourselves, increasing your business with DRP partners, who have moved more quickly on wage increases.
Yes.
Well, we've talked about this over the last several quarters and we've been patient.
We do have a very limited capacity and at some point I think we have to.
Make sure that we're serving the clients who allow us to get the returns that we needed to attract and retain the staff that's net.
Sorry to build our business.
We don't take those decisions lightly so we want to be really cautious and fairly patient about it.
We've made a lot of progress with our clients.
Have seen.
Greater parity in pricing.
But there are still gaps so.
Do you think at some point, we're going to have to.
<unk>.
Remove capacity, where we can't be as profitable as we need to be.
We're just fairly cautious about what how and when we do that.
Understood and then if we if we think about those steps.
Creating capacity by raising wages to attract talent.
Which relies on the carriers raising rates, which relies on passing premiums to customers.
Where are we now for each of those three dynamics versus where we need to be for a balanced picture.
But I probably can't speak fully towards the carriers are I mean, but but I read the same reports that others do in carriers.
Aggressively seeking rate increases so that they can make their auto books profitable.
Most of the carriers are not there yet.
And expect to have some continued increases.
I don't know that.
We are fully dependent on carrier is going to increase before we get it we've been very successful to date.
Increases familiar to all of our partners.
So.
I would I would say that there is a complete dependency.
But we've seen good improvements from our clients over the last several quarters.
It really hasnt slowed down so I think we're in.
Probably we're certainly not done we've got more work to do.
But there seems to be a willingness on the part of our partners.
To adjust rate to make sure that we can continue to build our capacity.
Thank you for that.
E train needs, where are they mostly coming from any industry in particular.
Well actually a lot of them come internally they start an entry level position in our company could be somebody that's a detailer car washer.
And demonstrate their commitment to the company their ability to show up to work every day to be on time at the right attitude.
Those are probably our preferred path for bringing them into GDP.
Also had been using the TDP program to drive our inclusion and diversity initiatives. So we've recruited from trade schools and we've tried to identify some of our trade schools in the areas that will help us increase our diversity.
We do have a number of women and the TDP program now we're very proud of the progress we've made there.
But I think we're going to focus as much as we can on internal promotions and the TDP.
Because it's.
Somebody that we know is committed and prepared to work hard to learn.
And referrals referrals has been another channel that's been affected.
But we also do recruit from trade schools I mean, it's a multifaceted approach and we've been very successful with.
With recruiting and building our TEP.
Great color. Thanks, and then just one last one given the pipeline for acquisitions in new locations. This year, how do you feel about your balance sheet funding that.
I feel really good about our balance sheet, we've got.
We're in.
A great position our debt is conservative more.
We're generating good positive cash flow.
And the focus that we have on single shop growth and I'm, not saying that we're not going to look at multi shop growth, but to focus on a single shop growth is.
Not terribly burdensome from a total investment standpoint, so I feel really good about our balance sheet. We've made a lot of progress on our leverage ratio over the last year.
And a big important factor in getting our balance sheet, where it needs to.
Pete.
I appreciate that thanks, I'll turn it over.
Our next question will come from Gary Ho, David or Dan go ahead. Please.
Thank you.
Good morning.
The intake just going back to the intake locations the position to close them down and I think you mentioned this more permanent than temporary or some of these stores and in specific dealership location and if so does that jeopardize that relationship and just lastly are you done with the intake location closures.
Just noticed there is still a bunch in the Canada and a smaller number in the U S.
Yes, that's right there are several in Canada, and it's still a few in the U S. It doesn't affect our dealer relationships.
<unk>.
We have a relationship that goes beyond the intake center with those dealers.
And always certifications ties into parts purchases. So no. We don't expect that to have any impact on dealer relationships.
And are you mostly done with the closures there.
Yes, we're mostly done by the closures.
Great and then my second question, just going to come back to the technicians, just remind me what's the average technician per single repair shop, just wondering the magnitude of the PDP program as it relates to kind of.
The number of technicians prayer pushout.
Yeah, we don't we don't actually disclose the number of technicians per shop.
T D. P program overall is a fairly meaningful part of our overall technician head count.
Obviously, it's that.
Is that equal to it or even close to that but it's pretty meaningful and.
As the program is maturing.
Our seed.
A regular cadence of graduates moving out of GDP and then into our formal full time experienced technician workforce.
We're successfully replenishing those graduates with new trainees.
Okay, great. Thanks.
Thanks for the color.
Thanks, Gary.
Christa Friesan at CIBC you have our next question.
Hey, everyone.
Good morning.
Wondering on the TDP. It do you have the opportunity to increase the capacity of that or if you have if you.
That's enough interest.
We have plenty of interest.
And we do have the ability to increase the capacity of it if we chose to do that.
It does come with an.
<unk> expense burden.
Have a fairly sizable team that supports and manages the program.
There is additional compensation to the mentors for the work that they do to help us develop the apprentice.
There is a considerable amount of training expense.
Both the mentor training as well as third party third party trading generally its icon training, which is the organization that develops and helps to deliver training to the industry, but the program is very scalable obviously, we built it from 200 at the beginning of last year to 400 when we.
We reported in November it's got tremendous support from the operational teams.
We have enough measures in the organization that we could grow the program further based on mentor interest so it's definitely scalable.
But we're trying to balance the expense associated with that versus just recruiting and focusing on experienced technicians as well and we had a big step up last year I mean that was a big step up in <unk>, but I think it's just time to monitoring for a period of time.
But.
We remain really pleased with the program and excited with what it's deliberate purposes.
Okay. That's great and then I was wondering if you could speak to even if patients.
Qualitatively.
The retention that you're seeing.
Boyd and and if the wage.
Greece's you've implemented.
And they have to at least retain the talent you do have.
Maybe it's not enough to attract enough talent, but just the retention that you're seeing.
We don't give specifics on retention, but we've put a number of programs in place to improve retention and I think we've seen some positive results from that.
<unk> consistently reviewing our benefits forward, we're reviewing the rates that we pay technicians to make sure that we're competitive our proactive on that.
Leadership training initiatives in place to improve the ability of our frontline leaders to engage with their team members.
We.
We have.
Put some other resources in place to help make sure that we're listening and responsive to our team members' needs.
So we are.
We've had some good success, we've got more work to do and we have plans to do that but overall I'm pleased with our progress and expect this to continue to make further progress.
Okay, Great and then I was just wondering.
As you as you look at acquisitions.
Do you also.
Yes, that's a separate bucket, where you consider kind of be the mobile scanning and calibration business similar to the one you acquired in 2021 I believe.
Yes, I think that's a fair way to look at it we look at that for both our calibration business and our auto glass business. We think we have acquisition opportunities there as well the majority of the acquisitions are still going to be collision related.
And we've been pretty successful at organically growing our auto glass and calibration business.
But we're open to acquisitions in those segments as well.
Okay, perfect I'll jump back in the queue. Thanks, guys.
Thanks Kristen.
Our next question today will come from Jonathan Lamers Laurentian Bank. Please go ahead.
Thank you.
Good morning.
On the calibration business.
Tim you mentioned the opportunity there from internalizing the skilled side.
Do you see that as more of a.
2023 opportunity or more of a 2024 opportunity based on your training plans.
I would say, both we expect to grow that in 2023, but.
We won't get to the end state in 2023.
Well, it's another skilled labor position that.
It's not there's not a plethora of full supply we are growing our own and recruiting.
But we've got plans in place to continue to grow market by market.
Our offering in that area.
Thanks, and just to circle up on the sequential improvement in the sales and the labor capacity comments, you mentioned that you did see some price increases.
Q4 to Q1 benefits from price increases could you saw improvement in labor capacity.
Is it fair to say that you are getting further rate labor rate increases that are enabling more technician recruitment and retention and is there any color you can provide us from the recent insurance partner discussions.
How that relates to the labor situation.
But I think the fact that we're seeing such good same store sales growth confirms that we are having success at growing our capacity, it's not all price.
But.
I think it's going to be a continuing.
It's gonna be a continuing effort.
Both to raise wages in the industry pretty industry to attract from other other segments.
So.
We're certainly not done, but we're pleased with our progress.
Thanks for your comments.
Thanks, Jonathan.
And that was our final question in the queue from our audience. This morning, Mr de I wish Mr. O'day, rather I will turn it back to you Sir for any closing remarks that you have sir.
Well. Thank you operator, and thank you everyone for joining our call and we look forward to reporting our first quarter results with you in there.
And have a great day.
This does conclude today's teleconference and we thank you all for your participation you may now disconnect your lines and we hope that you enjoy the rest of your day.