AMA Group released it's fourth quarter cash flow and activities report on 29 July. The nation's largest repair group is contracting and cites labour constraints associated with COVID-19 (staff illness and isolation) combined with a constrained labour market as the reason for reduced productivity. "The impact is expected to continue into FY23, although AMA Group is seeking to address its workforce needs through a combination of increased apprenticeship numbers and the commencement of a targeted multi-country skilled migration program." the report states.
Repair volumes are similar to the previous quarter however the company says that historical volumes become less meaningful as the group continues network optimisation activities. These activities see the closure of a number of sites. As previously reported in WA Gemini Melville and Gemini Welshpool as being merged into a 'super site' at Booragoon creating a co-located Captial S.M.A.R.T and Gemini.
The gigantic S.M.A.R.T site at Riverwood in Sydney is closed with staff being moved to RPM Milperra which AMA says has been underutilised. Three 'hibernating' Sydney sites are being vacated - Luxury Bodyworks in Five Dock, Gemini Campbelltown and JPV Smash Repairs in Kogarah.
Californian Smash Repairs in Botany, Sydney has apparently been operating with inadequate volume for some time so this site is closing ,while over in Melbourne Gemini Sunshine will close at the end of July.
AMA Group CEO Carl Bizon said: "Our skilled technicians are our most precious resource. With a vast, and in serveral sites, understaffed network it is crictical that our team is deployed in the most efficient manner across our network."
Negotiating with insurers
Referring to pricing negotiations with insurers Bizon said: "It is critical that we are paid fairly for the value we deliver to our insurer partners. Insurers understand the pressures the industry is facing, and I look forward to concluding our negotiations with them, as we seek to continue our long-term partnerships which deliver value to all parties. " The report states that volumes at some sites will be affected during the negotiations.
The company reported a cash balance of approximately $52.2 million and unused available finance facilities of approximately $5.6 million versus $58.3 million and 5.3 million last quarter and $81.8 million with $8 million available finance in quarter 2.
The quarter revenue included $10million of one off-cash inflows, including 'prepayment of future revenues that will not carry forward into future trading periods'. In Suncorp's financial report today there is a reference to a warranties claim by AMA Group. It says that "As part of the sale of Capital S.M.A.R.T and ACM Parts, the Group provided warranties in the respctive share sales and purchase agreements entered into with AMA Group.
"As disclosed in the 31 December 20221 interim financial report, AMA lodged a warranty claim under the warranty regime. In April 2022 as agreement was reached with AMA to settle and release the claim with sufficient provisions recognised to fund the settlement. As at 30 June 2022, no claims are outstanding and the period in which claims may be commenced has expired except for tax warranties."
Full year results will be released on 23 August when the group expects to report at EBITDA of $20-$22 million.