Driven Brands Paint, Collision & Glass sales down 9.4%; CEO says it beat market, seeks share

Driven Brands a week ago announced same-store sales in its Paint, Collision & Glass segment including CARSTAR, Fix Auto USA, ABRA, Maaco and Uniban fell 9.4 percent compared to the first quarter of 2021.

However, CEO Jonathan Fitzpatrick told an April 28 earnings call that compared to industry metrics, “you can see that we’re sort of 500 basis points much better than the industry.” This could suggest competitors within the auto body, paint and glass industry are down 14.4 % for that quarter when compared with 2021.

Chief Financial Officer Tiffany Mason said Driven Brands had expected the Paint, Collision & Glass group to show a “sequential deceleration” between your fourth quarter of 2021 and the first quarter of 2021 because of the prior year’s statistics and COVID-19 lockdowns, specifically in Canada.

“However, PC&G performed better than we expected, and outperformed the competition, based on industry data,” she said.

Nevertheless, Paint, Collision and Glass was the only Driven Brands segment to publish a same-store sales decline last quarter.

“This segment lags others in terms of COVID recovery,” Mason said of Paint, Collision & Glass. She attributed this to less congestion and much less collisions.

“This can be a unique challenge for PC&G,” Mason said. However, as miles driven increased, “so too will the pace of the segment’s recovery.” She said a rise has started.

“Said simply, as consumers drive more, Driven wins,” Fitzpatrick said. “And we are already seeing more of our customers decide to try the street.” He explained studies found 40 % of shoppers having booked or planning trips — and two-thirds of these likely to travel by car.

“This is good for Driven,” he explained.

Paint, Collision & Glass is definitely an interesting animal within Driven Brands. It accounts for more than half of the company’s sales , however it calculates to under 15 % of the company’s actual revenue , “because it’s effectively all franchised” having a lower royalty payment, based on Mason.

Market share and insurers

Asked if miles driven needed to show a year-over-year increase for collision sales to develop year-over-year, Fitzpatrick said certainly not.

It could also be done by claiming more share of the market — which would be Driven Brands’ strategy, based on Fitzpatrick.

“We’re not too centered on miles driven, but we’re focused on share gains,” he characterized the company’s five-year plan.

He called 2021 an “inflection point” where having conducted hundreds of millions of dollars worth of repairs for “insurance carriers and our partners … they now absolutely see the benefit of using the services of fewer scale providers.”

“Our insurance partners continue to place increased value on using the services of fewer scale suppliers that can service their clients better,” Fitzpatrick said earlier within the earnings call. “The DRPs we added in 2021 still add more cars into 2021.”

Asked to elaborate on repeat commercial customer business, Fitzpatrick said, “We have a very dedicated team that focuses on delivering great service to our insurance partners.”

As insurers see a franchisee’s capabilities, “they give us more business, right?” he explained. “So that’s how we win more business. It’s a very meritocratic system.”

Mason called Driven Brands “very well-positioned with this insurance partners as the reopening begins to take shape over the markets we serve. Actually, estimate counts are up, which is a great leading indicator.”