The key word for Driven Brands Holdings Inc. (DBHI) in 2022 is growth. And auto glass services are part of that growth.
In a conference call discussing quarterly results last Wednesday, president and CEO Jonathan Fitzpatrick said 2022’s growth will include 35 new stores that offer auto glass and collision repair services. The company’s report highlighted more growth in auto glass than in the quick lube and car wash areas.
“These three businesses share several characteristics: simple operating models, highly fragmented competition, significant white space in terms of unit growth and very strong unit-level economics. These highest growth businesses are supported by the rest of our highly cash-generative and asset-light businesses,” says Fitzpatrick.
His thesis on auto glass is simple: it’s a more than $5 billion and growing industry in North America. All vehicle models require glass repair and replacement, and calibration is becoming more and more essential. “We’ve learned a lot about the glass operating model since we first entered the Canadian market in 2019,” Fitzpatrick adds.
On December, 30, 2021, Driven Brands acquired 79 Auto Glass Now stores, and announced just Friday, April 29, its acquisition of 30 All Star Glass stores in the Southwest. Fitzpatrick says that the growth of auto glass “adds to our conviction” for success in 2022.
First-quarter 2022 results for Driven Brands show $468.3 million in revenue, a 42% increase over the first quarter of 2021. Results are in spite of inflationary pressures created by the war in Ukraine, high gas prices, rising interest rates, a labor shortage and supply-chain challenges.
“We have not experienced any impact to consumer demand in the first quarter, and we do not expect any material impact to demand as we look at the balance of 2022,” says Fitzpatrick. Driven Brands provides needs-based services and the company’s core customer has been driving and will continue to drive despite high gas prices. The company’s customers are experiencing higher wages. Recent surveys, according to Fitzpatrick, reveal that customers are adjusting to increased costs of living. “This mirrors what we have seen from history — Q1 of 2020, in 2007 and 2008 — that Driven performs well, even in the most difficult economic conditions,” Fitzpatrick says.
While not immune to labor challenges, Driven Brands franchise owners are efficient in hiring staff, Fitzpatrick says, and the company’s growth provides opportunities for a career path. The company’s partnerships with suppliers are making it possible for Driven to serve customers despite supply chain challenges. “We remain as confident as ever to be able to deliver on our short, medium and long-term goals,” Fitzpatrick says.
System-wide sales of the company were $1.3 billion, an increase of 26% compared to the first quarter of last year, according to a company statement. Net store growth was 8% and the company had an increase of 15.6% in consolidated same-store sales. In the glass, paint and collision segment, the company reported system-wide sales of $659 million for 1,730 stores and revenue of $79.4 million.
DBHI added 114 net new stores in the first quarter, according to the company statement, and net income was $34.4 million.
“Driven Brands posted strong first-quarter results despite a challenging macroeconomic landscape,” Fitzpatrick says in a company statement. “Our scale and sophistication allowed us to navigate continued supply chain challenges and an accelerating inflationary environment. This scale and sophistication, coupled with our proven playbook for growth, allowed us to once again outperform expectations. This would not be possible without the hard work of the entire team, from our employees to franchisees. Their relentless focus on operational excellence delivered quality results.”
Fitzpatrick adds that the company continues to be enthusiastic about fiscal 2022 and that the company’s business model “remains well-positioned to maximize long-term value for all of our stakeholders.”
Headquartered in Charlotte, N.C., Driven Brands projects an approximate revenue of $1.9 billion for fiscal year 2022.