Q2 2023 Boyd Group Services Inc Earnings Call
Good morning, everyone.
Welcome to the Boyd Group Services, Inc. Second quarter 2023 results conference call.
Listeners are reminded that certain matters discussed on today's conference call or answers that may be given to questions asked could constitute forward looking statements that are subject to risks and uncertainties related to boyd's future financial or business performance.
Actual results could differ materially from those anticipated in these forward looking statements.
The risk factors that may affect results are detailed in boyd's annual information form and other periodic filings and registration statements and you can access these documents at SEDAR database found at Www Dot SEDAR Dot com.
I would like to remind everyone that this conference call is being recorded today Thursday August 10 2023.
I would now like to introduce Mr. Tim Eau de <unk>, President and Chief Executive Officer of Boyd Group Services, Inc.
Go ahead, Mr O'day.
Thank you operator.
Morning, everyone and thank you for joining us for today's call.
On the call with me today is Jeff Murray, who has joined me for a number of calls as interim CFO I'm excited to have him joining me in the permanent role of executive Vice President and Chief Financial Officer.
We released our 2023 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 Dotcom, 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 and six month period ended June 32023, and provide a general business update we will then open the call for questions.
During the second quarter of 2023, Boyd recorded record sales of $753 2 million.
Adjusted EBITDA of $95 4 million and net earnings of $26 3 million.
The initiatives put in place to improve throughput and increase capacity along with solid execution resulted in record sales levels and improved profitability during the second quarter.
Our team continues to adapt to challenging market conditions and to deliver results, including doubling the level of adjusted net earnings per share when compared to the same period of the prior year.
Well the ability to service demand continues to be constrained by market conditions, new technician training and other initiatives are providing some improved capacity.
However, the path to servicing the level of demand requires continuing increases in technician compensation to attract more labor into the industry and company and this will require continued price increases from our customers.
As we address this issue, we will able to we will be able to reduce cycle times and better serve our customers.
For the second quarter of 2023 sales were $753 2 million or 22, 9% increase when compared to the same period of 2022.
This reflects a $21 $29 $1 million increase from 64 new locations.
Our same store sales, excluding foreign exchange increased by 18, 9% in the second quarter, recognizing the same number of selling and production days in both the U S and Canada when compared to the same period of 2022.
Same store sales benefited from high levels of demand for services as well as some increase in production capacity related to technician hiring growth and the technician development program as well as productivity improvement, although ongoing staffing constraints continue to impact sales and service levels that could add.
Wise be achieved.
Sales also increased based on higher repair costs due to increasing vehicle complexity increased scanning and calibration services as well as general market inflation.
Gross margin was 45, 5% in the second quarter compared to 45, 3% achieved in the same period of 2022.
Gross margin benefited from improved glass margins higher part margins and increased scanning and calibration.
Labor margins were relatively flat with pricing increases to date not haven't been sufficient to attract requisite talent into the industry and offset wage increases experienced.
Performance based programs negatively impacted gross margin during the second quarter of 2023 as compared to the same period of the prior year.
Operating expenses for the second quarter were $247 3 million or 32, 8% of sales compared to $205 5 million or 33, 5% of sales in the same period of 2022.
Operating expenses as a percentage of sales was positively impacted by improved sales levels, which provided improved leveraging of certain operating costs.
Adjusted EBITDA or EBITDA adjusted for fair value adjustments to financial instruments and costs related to acquisitions and transactions was $95 4 million an increase of 32, 5% over the same period of 2022.
The increase was primarily the result of the improved sales levels and improved leveraging of certain operating expenses.
Net earnings for the second quarter of 2023 was $26 3 million compared to $13 3 million in the same period of 2022 <unk>.
Excluding fair value adjustments and acquisition and transaction costs adjusted net earnings for the second quarter of 2023 was $27 million or $1 26 per share compared to $13 6 million or <unk> 63 per share in the same period of the prior year.
Adjusted net earnings for the period was positively impacted by increased sales and improved leveraging of operating expenses.
For the six months ended June 32023 sales totaled $1 5 billion, an increase of $298 6 million or 25, 5% when compared to the same period of the prior year driven by same store sales growth of 21, 9% as well as contributions from new located.
<unk> that had not been in operation for the full comparative period.
Gross margin increased to 45, 6% of sales compared to 44, 7% in the comparative period gross margin percentage was positively impacted by improved product margins, along with increased scanning and calibration services labor.
Labor margins have improved however, pricing increases to date have not been sufficient to attract the requisite talent into the industry and offset the wage increases experienced.
Performance based programs negatively impacted gross margin during the first six months of 2023 as compared to the same period of the prior year.
Operating expenses increased by $92 5 million when compared to the same period of prior year, primarily as a result of increased sales based on same store sales growth as well as location growth. In addition to inflationary increases.
Adjusted EBITDA for the six months ended June 30 was $180 1 million compared to $125 8 million in the same period of the prior year.
The $54 $3 million increase was primarily the result of improved sales levels and gross margin percentage, which also provide an improved leverage of certain operating costs.
We reported net earnings of $47 1 million compared to $14 9 million in the same period of the prior year adjusted.
Net earnings per share increased from 73.
To $2 25.
The increase in adjusted net earnings per share is primarily attributed to increased sales and improvements in the gross margin percentage as well as improved leverage of certain operating expenses.
At the end of the period, we had total debt net of cash of just over $1 billion.
Debt net of cash decreased when compared to the prior quarter, primarily as a result of increased cash flow from operations.
During the second quarter of 2023, the company was able to reduce the level of long term debt held under its revolving credit facility net of financing costs from $184 1 million to $174 5 billion.
During 2023, the company plans 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 the company plans to invest in network technology upgrades to further strengthen our technology and security infrastructure and prepare for advanced technology needs in the future the.
The investment in the second half of 2023 is expected to range from $5 million to $6 million.
With investments expected in 'twenty, four and 'twenty, five ranging from $5 million to $9 million per year.
We remain focused on the key challenge of building capacity through increased staffing include.
Including negotiation negotiating sufficient client price increases to attract talent into the industry and our company and recover lost labor margin from wage pressure.
Workforce initiatives are having a positive impact on capacity and ongoing investments in technology equipment and training positioned the company well for continued operational execution Boyd.
Boyd remains committed to addressing the labor market challenges so that the company can service additional demand.
Relative to the second quarter, the third quarter of 2023 will have one less selling in production today and will also be negatively impacted by seasonal vacations that have a dampening effect on capacity and sales thus.
Thus far in the third quarter same store sales increases are approximately half of what we have experienced during the first six months of 2023.
Boyd is pleased to have opened or acquired 57 closing repair locations. Thus far in 2023, and the pipeline to add new locations and expanded to new markets is robust.
Operationally boy just focused on optimizing performance of new locations as well as scanning and calibration services and consistent execution of the Wow operating way.
Given the high level of location growth in 2021, the strong same store sales growth during 2022.
And the combination of strong same store sales growth and location growth. Thus far in 2023 Boyd remains confident that the company is on track to achieve its long term goals, including doubling the size of the business on a constant currency basis from 2021 to 2025 against 2019.
Sales with that I would now like to open the call to questions operator.
Thank you Sir.
Ladies and gentlemen, we will now begin the question and answer session.
If you would like to ask a question. Please press star followed by the number one on your telephone keypad.
If your question has been answered and you would like to withdraw from the queue. Please press star followed by the number too.
And if you are using a speaker phone. Please lift your handset before pressing any keys one moment. Please for your first question.
Your first question will come from Jimmy Chen at BMO Capital markets. Please go ahead.
Hi, good morning, Jamie.
<unk>.
So just to confirm the understanding of so far what the same store sales growth was like in Q3.
Are you effectively saying the average same store sales growth rate in Q, sorry in the first half of Tcf divided by two that's the rate that you're currently seeing.
That's approximately what we have seen quarter to date, yes.
Okay. Thank you.
And then as a follow up to the same store sales trajectory I guess I'm. Just wondering if you can talk a little bit about your backlog I think we can see industry average backlog I think it recently declined a bit.
But can you talk a bit about how your backlog is trending has it seen some decent improvement I'm just trying to assess how much more this elevated level of comp can continue because it does seem like the underlying collision claim counts and the industry has.
Garnett negative here.
Yes, I would I don't see that Tammy I think the demand remains very very strong the constraint is really labor.
If you look at our balance sheet, you will see that our investments in work in process has been decreasing.
But I would attribute that.
Much of that to improve supply chain and our ability to finish all jobs that may have been suspended for a period of time.
Other than same store sales growth is obviously labor related.
Improved capacity, but there is still tremendous demand available in the marketplace.
Okay and a bit more.
The bigger picture I guess a bit more longer term is I think historically the way the company has approached investing in new processes or equipment.
Ebola, we can get more complex you talk about this hub and spoke model.
Can you update us on how youre thinking about.
To be.
Appropriate model as we look out in the secular trend of the vehicles.
The new vehicle, becoming much more complex, whether its the penetration of electric vehicles as well as more Adas features in the vehicles do you think you may need to accelerate over the next couple of years, the investment and capability to be able to service. These types of vehicles or do you feel your current.
Approach and that hub and spoke model is still appropriate for the next couple of years. Thank you.
Yes, there's no question that the hub and spoke model is still the right way to approach. This you Kat.
Vehicle Park changes very slowly.
So as Evs for example come into the market, we'll be well prepared to address the needs.
That are arising from that on a hub and spoke basis and because as it becomes more predominant.
We will continue to add to our capacity to service those vehicles.
I think we're very well served by our current hub and spoke approach and I would expect that to continue.
We continue to evolve but be a good model for servicing the changing car park.
Sounds good thank you.
Thanks Tommy.
Okay.
Your next question will come from Steve Hansen at Raymond James. Please go ahead.
Yes, good morning, guys. Thanks for the time.
Congrats on a solid print it's actually it's good to see some margin progression here Tim.
Tim first question is just on the price increase backdrop, how confident are you still in negotiating further price increases from your carriers.
We're probably six or seven quarters into this process now.
Some people suggest that we're starting to get pushed back but as I look at the backlogs are still being deep.
And capacity constraints in the system. It also striking is further price increases are necessary, but maybe you can give us a sense for how you are feeling about those discussions and the confidence in further increases.
Well, we can we continue to see a steady stream of increases from our clients on an ongoing basis and the trend has been pretty consistent for several quarters and we are still experiencing wage inflation and we don't have enough technicians.
Boyd and we don't have enough technicians in the industry to service the demand.
I think that.
Until we can catch up with demand.
Which is going to require attracting more labor into the industry.
I think that will continue.
To be successful at getting price increases.
Okay, Great that's helpful.
Just to follow up on the scanning and calibration.
Reference it continues to be a tailwind as you called out maybe just give us a sense for what youre doing on the ground. Thus far in terms of sort of rolling out that that additional service package is it still focused predominantly on in sourcing.
Existing work that's been done in the past for on an outsource basis or where do we stand.
Its really both I mean, the market for calibration services continues to grow as more vehicles with a des come into the market.
Our ability to identify what needs to be done.
Continues to improve so we will execute on the needed operations and we're growing our separate calibration business.
The service more of the work internally.
We've talked about the putting the infrastructure in place to grow that business more rapidly.
We are in a good position to to begin to grow that business a little more rapidly now which will allow us to convert what is frequently done by a third party over to being serviced by our own internal calibration business. So.
That's a I think a good tailwind that has a lot of a lot of runway left in it.
Okay, great appreciate the color guys. Thanks.
Thanks, Steve.
Your next question will come from Gary Ho at D. Jordan <unk> capital markets. Please go ahead.
Thanks Sanjay.
Thanks, and good morning, so good progress on the margin side, especially on the operating expense line you mentioned some leverage benefits maybe you can elaborate on that and how sustainable that is.
And have you given out any.
Kind of where that could go in a more normalized environment.
We haven't provided any guidance on that what we've said consistently over the past few years, although it's a long road as well.
We've seen nothing structural that would prevent us from getting back to the EBITDA margins.
We achieved before the pandemic and.
And that will require further leverage of our operating costs, which have been a <unk>.
<unk> with <unk>.
Cost inflation, and then reduced capacity, but I think as we continue to improve capacity manage expenses effectively and recover our gross margin.
We expect overtime to be able to get back to historical EBITDA margins.
And maybe I'll just add that what we have commented on is that if you look at our track record over.
Pre pandemic five years previous through same store sales growth, we had a consistent track record of slowly increasing our operating leverage.
Okay. Thanks.
Thanks for the color and then my next question just on the technician training program have you disclosed the costs associated with that like what's the run rate costs.
I know you are still experiencing technician shortages it sounds like any thoughts on expanding that so greater demand and how do you balance the costs and the benefits.
Yes. So it's a good question, we have not provided a lot of detail on that.
As.
It is a pretty meaningful investment on our part to develop that talent.
The program has grown a bit from from where we had originally set our goal.
But we're continuing to evaluate the trade off of spending money.
Training more through our technician development program versus more aggressive recruitment in the marketplace.
And it's really going to take all avenues to get the labor that we.
We really need to service the available demand.
Okay.
And then just my last question, maybe more generic one.
Any of the U S and sure wanted to hire.
Atrophy this past quarter.
Curious historically.
Played into increased sales if at all and did you see any with the Q2 results.
We did have.
A number of markets that had hail repair in the quarter that was tailored.
Tailwind for US one of the big benefits to.
That type of the catastrophe for us is that the labor thats used to service much of that is sublet labor, so well it could dampen margins a bit it does drive some incremental revenue and profitability.
But we see some of that every year I would say that in Q2, we saw a little bit more of it than.
And what we had seen in the prior year Q2.
Okay that makes sense those are my questions. Thanks very much.
Thanks, Gary.
Your next question will come from Bret Jordan of Jefferies. Please go ahead.
Hey, good morning, Chris.
Can you talk a little bit more of a scanning.
Maybe sort of what the margin profile is there and as you transition to more in house versus third party.
It could be from a tailwind and I guess would you consider doing third party scanning for others or is that too much competitive conflict.
So we do do third party scanning for others as well with our calibration business.
It is a component of it we don't really talk about how much is external versus internal.
But we intend to continue to serve as third parties with our our calibration business in terms of the margin profile.
Much of the work that we're doing today, we are relying on third parties to complete.
And as we shift that to our own calibration company we.
We would expect to receive more normal labor margins on that work versus sublet margins and sublet.
Historically has been our lowest margin category and labor our highest margin category. So there's a there's a.
A benefit to us of converting that labor or that operation from sublet to labor.
And it'll take us some time to do that to build a workforce to do that but.
We have we are underway with that now.
Okay. And then you also talked about parts margin improvement is that mix more alternative than OE or is it pricing.
It's both we have continued to see an improvement in the availability and as a result, our usage of aftermarket parts, which.
Can have a negative impact on revenue.
Because they.
They cost less for the repair it's good from a customer standpoint, we do reduce the cost to repair, but it is a better margin profile, but.
But we also have been working to.
Negotiate.
New pricing agreements and markets to improve our OE margins and I think the other thing that we're seeing is as supply chain loosens up.
To get the parts that we need from our primary suppliers, where we get better discounts and we talked a lot over.
Probably starting about two years ago, we talked about the negative impact on our margins of having to buy it from suppliers that we didn't have a relationship with so we're seeing some benefit from that turning around.
Okay, and then just a quick follow up on the scanning question I guess, given the investment in scanning equipment and tools.
As you increase the volume they are potential for a margin tailwind or is basically going to be sort of in line with our labor margin over history.
It's hard to tell exactly where that will end up but the benefit we will get as the revenue in scanning and calibration is going is growing.
And right now were serve as seen too much of it with third party sublet. So we should be able to at a minimum turn that into normal labor margins, which will be a benefit to us.
Okay, great. Thank you.
Thanks, Brett.
Your next question will come from Jonathan <unk>.
Laurentian Bank Securities. Please go ahead.
Hi, Jonathan.
Good morning, Thanks for taking my question.
And just following up on your.
Our comments in the press release about efforts to optimize new locations in the scanning and calibration services.
I guess just.
On the scanning and calibration.
Specifically when will your efforts.
On that.
Our run rate.
It's something that could take.
Several years to set up or would you expect or should investors be thinking about the benefits.
Place for 2024.
I wouldn't I would not expect that we would complete the build out of that business by the end of 2024, we are going to move as quickly.
As we can because it's.
It's a really attractive segment of the business.
But it is a people business.
We will require that we recruit train and put that workforce in place. There is an equipment portion of it too as you would expect but really the constraint is labor versus equipment equipments available, we just have to get and train the labor.
Interestingly in this case because that market is growing pretty rapidly.
We're really going to bring new labor in for that that has not worked in that segment before.
So it will take some time, we haven't we haven't laid out a specific timetable on it yet, but it isn't something that can happen.
Overnight it will take many months to build out that workforce.
Okay. So for a portion of that scanning calibration skills.
My understanding is youll train.
Your existing technicians with those skills and you are planning to bring additional.
Labor as well.
It's a little bit more about that.
For the most part.
We view this as a separate skill set that.
That requires separate tools and expertise so it really is a.
Workforce from our core collision workforce.
We operated as a as a very independent business.
Okay. Thanks for your comments.
Thanks, Jonathan.
Your next question will come from Christopher freezing at CIBC. Please go ahead.
Alright, Thanks for taking my question.
Congrats on.
Solid quarter here.
Just wondering thank you.
Looking at your margins I mean margins were pretty good this quarter.
Right.
Still not getting all the price increases you need from your insurance partners.
Much more operating leverage would you say.
Excluding labor left in the business as we look at it.
In the next six months I guess you don't receive.
The price increase that Youre looking forward do you think you can still kind of flattish margins higher here.
Well.
I mean, there have been a number of questions on calibration.
We're confident that we have an opportunity to improve margin by internalizing the calibration operations.
So there is there is opportunity there I think we still have opportunity in other categories as well, we do need to increase our labor margins.
Back to historical levels.
And I think as we grow we continue to see opportunities to leverage other expenses or other opportunities even on the margin level. So.
I would expect to see over time, continuing improvement to drive us back towards those historical EBITDA margins.
Okay, Great and then maybe if you can just provide a little bit more color on that.
Conversations youre, having with your insurance partners obviously.
I mean, they are incentivized to reduce their their wait times.
It seems like they're not necessarily giving you everything that you're asking for at this point can you provide a little bit more color on on the back and forth there aren't just about youre hearing.
I would just say generally I think our insurance clients have been very supportive.
<unk>.
Worked hard to provide us with increases to allow us to.
Get back to normal levels of profitability and build our workforce, it's a bit of a moving target. We we still see tremendous demand for our services in the industry, including Boyd doesn't have the workforce that we need to properly service that we have seen some improvement in length of rental metrics.
I think much of that is related to <unk>.
Supply chain improvement.
Some probably some improvement in labor capacity.
But.
We're still not at a point.
Or as an industry of serving our clients the way that they need to be serviced in order for their.
Their customers to be happy so I think that pressure will.
Continue to allow us to.
Pull in price so that we can build a workforce to properly service the marketplace.
I guess I'll add though there is a lag there is a lag. So we're looking at current situations and then working with your insurance partners to get increases based on that set of facts then by the time that works its way through the system.
The cost of change too and so that leveling off needs to needs to happen.
And we've talked about that a lot in the past too that there is there is a lag time.
But we've made improvements and I think we will continue to make progress with our clients.
And I think they've been really supportive.
It's a difficult situation for for everybody, we'd like to have a more stable environment, where we're not chasing this but but everybody sees the need.
Because customers need to be properly serviced.
Great. Thank you I appreciate your commentary I'll jump back into queue.
Thanks Kristen.
Your next question will come from Zachary ever Shack at National Bank. Please go ahead.
Exactly.
Good morning, everybody. Thanks for taking my questions and congrats on the quarter.
Thank you.
Hoping you could give us an update on the competitive landscape in.
In the M&A sphere with three more months of high interest rates.
Your soul source sole sourcing the smaller deals but have you received any inbounds from maybe msos that are feeling a pinch.
I wouldn't comment on anything specific.
We really began to focus on single shop acquisitions, probably more than a year ago now we've been very successful with it I think you can see that we built up a.
Good capacity to process. These.
And we're happy with <unk>.
Both with the pace and what the the.
The price that we're paying for those businesses.
If multi shop opportunities come along that are accretive.
We're very open to that but also confident about our ability to achieve our revenue goals our growth goals.
Even without multi shop acquisitions.
That's great. Thanks.
Then we're seeing some interesting developments in carrier strategies in Florida and California.
Foreign insurers start to exit markets, where they cant get enough pricing to cover costs.
The impact on Boyd.
I'm not sure, we'll really have much impact Boyd insurance as a required product regulators are going to have to allow carriers.
At some point they have to provide an up rate increase for carriers to be profitable and right in the state.
If you look at the exit in Florida was more related to catastrophic risk.
And maybe an unwillingness to our belief that they couldnt get the premiums they needed to underwrite that and I think thats, Dave may have some requirements that you don't pull out of one category.
California, I think has been slower to move rates with some carriers, but progress is being made so I really think that.
The impact on us should not be significant I am not sure there should be any impact on us.
That's good color, thanks, I'll turn it over.
Thanks for that great.
Your next question will come from Michael <unk> at Scotiabank. Please go ahead.
Good morning, Michael.
Hey, good morning, guys.
So maybe I'll start with a clarification question it.
It feels a little bit of DJ Vu for last quarter, but are you, suggesting same store sales growth.
In Q3 to date.
<unk> is tracking at a 11% year on year. It again, I mean to me if I do the math.
Quite a step down.
If that number does persist through the quarter and reflects a little bit more pronounced seasonality than I would expect which again would have implications for operating leverage in the quarter as well. So just just to clarify on that please.
Yes, I think there are two two factors that we pointed out one is if we have one less selling in production day in the quarter than we did in the prior year, which will take away a full day's worth of production and capacity production and revenue in the quarter and in comparison to Q2, we're faced.
With much higher seasonal vacation.
Capacity losses, which will have a dampening effect on sales.
Would have had that in the prior year as well.
But we were really looking at the run rate year to date versus what we've seen thus far in the third quarter.
So I'd say your assessment as to what we are communicating thus far in the quarter is accurate.
Perfect. Thank you and then maybe just turning to the operating costs.
I guess the question is are you at peak spend here as far as the TDP program is concerned and I guess.
The thinking behind it is presumably a point, where youre seeing technicians graduate nationals, and some costs up into the cost of the cost of revenues.
Okay.
<unk>.
I'm not sure whether I would say.
We do make a significant investment in our PDP program the biggest investment.
As when they are in the first level, which is approximately six months.
They are really fully absorbed as an expense.
Including a lot of training expense.
Outside outside of wages.
I would say that what we've seen in the past couple of quarters reflects the most money that we've spent on PDP.
Whether we will increase that spend or not we haven't made any decisions but.
It's an important program in and it is producing increased capacity.
But it does come at a cost.
Okay.
That's helpful and maybe a last one.
I wanted to talk about the total loss ratio.
<unk>.
Just in terms of the collisions in the industry.
Pre pandemic, plus 20% chance of 17% that's bouncing back now with higher repair costs.
Lower used vehicle prices, just how to think about the normalization and the impact to your demand.
<unk> our mix.
Yes.
I think one of the things we did see when used car prices.
Moved way up in total loss rates went down.
We were repairing vehicles that you typically would not had been repair just because it was economic to repair them because of high used car prices that would tend to skew our sales mix toward parts, which would not be favorable.
Also increases the average size of our repaired vehicle in our shops, which is also an unfavorable we tend to be less productive on heavily damaged vehicles than more modestly damaged vehicles. So the increase in total loss rates will remove some of those vehicles from our repair.
And move them through the total loss channel.
Right now there is so much demand that I really don't see an increase in total loss rates have returned to more normal levels, having an impact on our revenue.
It could actually be favorable to our mix.
Although I wouldn't expect that to be all that significant.
That's great color. Thank you Tim.
Thanks, Michael.
Your next question will come from Saba Khan RBC. Please go ahead.
Great. Thanks very much.
You provided some color on kind of the thought process around building out your in house calibration and scanning services.
Just wondering what that entails is that also a labor thing as you have to get staff to sort of run that operation is that some capex that training and I guess is there a timeline when you think that.
Entire business could be brought in house, assuming that's been intentionally do about a 100% in house, just some thoughts on where that goes from here.
Yes. It is it is a labor intensive business and its skilled labor.
So we recruit and train we recruit some people that have the experience we bring others in the go through.
A similar program to GDP on the calibration side to grow that workforce.
Really spent the last.
Several months getting infrastructure in place too.
To allow us to grow that business management systems things of that nature.
We were right about done with that now and we will plan to grow that business more rapidly.
As I said earlier in the call.
It is a business that will require a skilled labor some of which we will have to train. So it will take time to roll it out.
Haven't communicated a timetable, but it won't be.
At the end of this year or even at the end of next year. It will take more time than that to grow it out.
Just to clarify also.
This is a separate business within Boyd.
Well, we service more of our own business, we do service third party business and intend to continue to do that with our mobile calibration business.
Alright, great and then on M&A, you noted that smaller transactions should get you to your 2025 targets I was just wondering I guess as you just look at.
The outlook across the industry has kind of the events of the last year has made some of the larger folks a bit more available for take out obviously some of transact. It seems some of the headlines but I'm just wondering.
From today onwards, do you think there'll be some of the larger players that could potentially come up for sale at some point or should we expect you to continue on this sort of singles and doubles.
Road for a while here.
I think that.
You can expect that we will continue to focus on these single shops for small acquisitions because they are.
There are plenty out there we performed well with them, it's a great great return on our investment.
We're able to absorb them pretty easily into our network having.
Having said that if you look at our balance sheet, we certainly have the capacity to do more and if we can find attractive returns for mid sized businesses or even larger businesses as long as they make sense from a accretion and shareholder value we're open to that.
The point that I've been making is that we can accomplish our revenue goals for 2025.
Having to do that so we're not forced into those we'll do what's right for our shareholders.
Great. Thanks, very much for the color.
Thanks, Kevin.
Your next question will come from Steve Hansen at Raymond James. Please go ahead.
Yes, sorry, guys.
Tim you referenced an increase in your intangible increasing your capabilities to process. These smaller tuck ins.
The onesie Twosies.
You also referenced your balance sheet being in sound shape is there an ability to accelerate the pace from here that we've seen in the last quarter or two if it had been accelerating would you try to get a sense for.
That capability set.
Set internally relative to your goals in the <unk> tuck ins. Thanks.
Yes, I think the model that we built for this.
Can be expanded.
What we have to be conscious of is making sure that operationally, we can absorb the growth.
And we don't.
Push more new unit growth on the field in the field can handle but I think the model that we've established for growth.
Is one that.
Is pretty easy to scale up.
If I, if we were to choose to do that.
Great and just a follow up to that there are some new store openings as well just on the relative mix basis will the tuck in M&A side be more prevalent going forward than greenfield or how do you still feel about that mix.
Hi.
I feel really good about.
Opportunity that we've got with Greenfield and brownfield developments and.
I think we will probably increase our mix on those over time.
Okay, I think I forget one of them.
Steve.
That is valuable about those is that we we have a building design that allows us to really integrate all aspects of our business and do that in a.
A site that set up for calibration for glass and for collision.
And some mix of that I think is important as we look to stay current with our our network stay current with the change in demand.
That's really helpful. I appreciate that thanks.
There are no further questions. So at this time I will turn the conference back to Jim <unk> for any closing remarks.
Great. Thank you operator.
Thanks to all of you once again for joining our call and we look forward to reporting our third quarter results due in November .
Thanks, again and have a great day.
Yeah.
Ladies and gentlemen, this does conclude your conference call for this morning, we would like to thank you all for participating and ask you to please disconnect your lines.
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