Driven to Expand September/October 2022

By Tara Taffera

In January 2022, the editors and research team at Key Media & Research, the parent company to AGRR, finalized its list of Top Auto Glass Retailers based on 2021 revenue. Driven Brands shot to the number three spot in the category of companies with $100-$200 million. The news in early January that it acquired Auto Glass Now and its 75 locations contributed to that ranking. In April, Driven Brands acquired All Star Glass, number five on AGRR’s top retailer list.

Seven months later, in early August, that top retailer list would look different, with Driven Brands sitting at the number two spot. The companies perched at numbers five (All Star Glass), six (K&K Glass), 10 ( Jack Morris Auto Glass) and 19 (Perfection Auto Glass) would all be gone—all acquired by Driven as of late July.

AGRR interviewed Michael Macaluso, executive vice president and group president for Paint, Collision, and Glass for Driven Brands, in March, and he talked about the company’s acquisition of Auto Glass Now. In that interview, which appeared on, he alluded to future purchases. What happened in those next few months proved he wasn’t kidding. AGRR talked to him again in early August to learn more. Following are the results of both of those conversations.

Macaluso explained that Driven Brands includes four business segments for the automotive aftermarket, including franchises and independent operations.

Q: Are there any plans to create one unifying auto glass brand, or will you keep separate naming for your different auto glass companies?

A: We can’t dictate the future, but Auto Glass Now has been our main brand
since January, which includes strong retail brand recognition in the markets it serves across the country in 79 locations. We will continue to grow in the same way we have for decades and take on all the opportunities to make the business a success.

Q: Since we first talked in March, you acquired All Star Glass in April, Perfection in June, K & K, then Jack Morris in July. Does the answer above change? Is Auto Glass Now still your main brand?

A: We have acquired a handful of fantastic brands that have shared core competencies and strong local reputations. We have gotten to know about a lot more great companies and great brands. What we are doing now is understanding the growth levers and opportunities to optimize these businesses, and branding is something we are looking at. We now have a handful of brands operating as is, and we are applying our Driven Brands
playbook while understanding what makes these companies so strong. Every one of them has multi-decades worth of recognition. That is a great part of our portfolio— the local and family-owned connection. If you look at the core of our Paint, Collision and Glass segment, it’s comprised of strong family-owned businesses.

Q: There has been speculation that Driven Brands is working on challenging Safelite in the national marketplace. How do you respond to that?

A: Competition is great, and we have a tremendous amount of respect for our
competitors. The glass industry is very fragmented with individual owners, so we have plans for continued expansion. We think our core strength is that we are the largest automotive services company across North America, providing a range of automotive needs. We have a unique and robust set of resources while also being rooted in family-owned and operated businesses, setting us apart from others in the industry. This gives us a unique opportunity to bring to auto glass companies across the country.

Q: How does your share break out between the U.S. and Canada? Do you see one, in particular, riper for growth?

A: Driven Brands first entered the glass business in Canada in 2019, and we now have 220 locations there. We kicked off 2022 with the acquisition of Auto Glass Now in the U.S., bringing us to more than 300 locations across the continent. Our focus is to grow and succeed in both countries, but the opportunity is much larger in the U.S. due to the sheer size of the market.

We are a dominant player in Canada and have a significant share [in the top two], and we are broken up into corporate stores and a strong franchise. We also have a TPA there. That business is going extremely well, and that franchise network of 220 and 230 locations is strong.

In the U.S., our model is comprised of more corporate owners.

Q: What about acquiring franchises here in the U.S?

A: Everything is on the table. We are focused on growing across both countries, both organic and inorganically. We opened a handful of corporate-owned stores in the U.S. All options are on the table all of the time.

Q: You have companies that specialize in auto glass only then you have companies such as ABRA involved in auto glass and bodywork, etc. Do you think we will see more companies that do both?

A: It’s very interesting how the collision and glass markets are becoming more intertwined as the vehicle becomes more complex. ABRA is an incredible business that is entirely franchised, with some owners having a strong presence in the glass part of the business. In the Minnesota market, for example, they have a big mobile and in-store presence. We have
other collision stores in both CARSTAR and Fix Auto USA looking to diversify their portfolio. Auto Glass Now is exclusively glass.

Q: What will your model for calibration be?

A: Auto Glass Now performs its own calibrations. We want a safe proper standard repair and that requires calibration, whether it is collision or glass, so we want to follow prescribed rules and ensure the proper repair based on how the vehicle is made. We will provide that service. A big part of that is calibration and how it is done. So, our first and foremost priority is making sure we do it correctly today.

Q: How has your answer above changed here in August with the addition of four more brands?

A: First of all, I want to point out that we aren’t looking to acquire just for the sake of acquiring companies. We are being smart about it, looking at things like geography, core competencies and track records. All Star Glass was predominantly insurance work and it had a strong calibration part of its business. K&K has a strong mobile contingent for calibration. This is ever-evolving, and we will always do the right thing regarding calibration. There is an increasing need to make sure it is done safely and properly, and we know this from our experience in the collision business. Our acquisitions have added additional layers to our core competencies.

Q: How will you drive the insurance business? Do you have/are you contemplating working as a Third Party Administrator?

A: To explain where we are today, I will use the collision business as an example. We have a very strong partnership and a good understanding of insurance needs. We are evaluating opportunities with our partners, and if there is a need, we will engage with our partners to see if there is a solution.

Q: What is the most challenging item facing auto glass companies? What are you doing to help your shops combat this challenge?

A: I think there are unique challenges to the glass market and global challenges related to inflation and the pandemic that every business is encountering. We are focused on solutions we can bring to the table. How can we fix cars quicker? How can we provide the best customer service and provide the best working environment? We are excited about what we can do … we are very bullish on the auto glass business today. Glass is in every vehicle regardless of engine type. We are focused on how we can succeed and win in the ever-evolving part of the automotive after-market, which is auto glass.

Q: Why will a company choose you over Safelite, for example, who has also focused on acquisitions?

A: Mergers and acquisitions have historically been a core strength of Driven Brands and who we are, whether it’s in collision, quick lube or glass. It’s a core strength of ours, but it’s not the only growth lever. We are constantly exploring new opportunities for our customers, and glass is no exception. We have added 120 locations, 350 mobile units and 750 employees across 27 states [not counting the recent acquisition of Jack Morris], making us the second largest auto glass retailer. M&A will continue to be a core strength, and we have been clear that we will continue evaluating opportunities.

Q: What else would you like to share about the future of Driven Brands?

A: We absolutely love this business, and what we have done in the last six months has been unbelievably exciting. We aren’t going after one competitor. We are going after being the best we can be while providing optimal service, quality, value and speed. We love the fact that the acquisitions we made have extremely strong cultures. For our businesses, bringing those competencies together is what is going to make this so incredibly special.

Driven Brands Reports Revenue Up, Profit Down for Q2

By Travis Rains

Driven Brands Holdings Inc. announced its second-quarter financial results in July, with president and CEO Jonathan Fitzpatrick reporting a 36% revenue increase over 2021 alongside a net loss for the quarter. The company’s new glass sector grew throughout the first two quarters of the year and Driven Brands forecasts the growth to continue.

Driven Brands reported a second-quarter revenue of $508.6 million, an increase of 36% versus the prior year. System-wide sales totaled $1.4 billion, an increase of 22% versus the prior year, with 7% net store growth and an increase in consolidated same-store sales of 13.2%.

The company reported a net loss of $57 million for the second quarter, which it says was the result of a $125.5 million one-time non-cash impairment charge. The charge relates to intangible assets resulting from the decision to re-brand its U.S. car wash business, according to the release.

“We delivered strong results in the second quarter,” Fitzpatrick says. “These results are a testament to the resilience of our needs-based service offering and our ability to drive sustainable growth and cash flow leveraging a proven playbook.”

Driven Brands acquired Auto Glass Now (AGN) in December 2021. Fitzpatrick says the platform comes with low initial investments and a differentiated operating model. “AGN is a business where we can leverage our growth blueprint and significantly accelerate our presence in this segment,” he continues, noting the highly-fragmented $5 billion
North American market. “There are tailwinds with increasing needs for calibration, glass replacement is required for all vehicle types, and we can leverage our unique same-store sales levers, including our 27 million-plus unique retail customers, our insurance relationships and our fleet customers, to grow this business.”

Driven Brands’ Paint, Collision and Glass segment posted positive same-store sales of 16.1% for the second quarter of 2022. Same-store sales is a figure used to determine the amount of sales growth attributable to new store openings. More than 195 direct repair programs with insurance carriers were added as well. System-wide sales totaled $724.7 million for the segment with a revenue of $95.4 million.

“We have significant momentum across our business, capitalizing on the benefits of our scale, the quality of our offerings, the strength of our brands, our best-in-category data and marketing capabilities, and our ability to generate robust cash flow. We are delivering against our Dream Big plan of at least $850 million of adjusted EBITDA by the end of 2026, demonstrating our ability to drive significant shareholder value over time.”

Driven Brands forecasts the glass segment of its business to total 160 stores by the end of 2022, 5% of which will be franchised and 95% operated by the company.

To view the laid-in version of this article in our digital edition, CLICK HERE.

This entry was posted in AGRR. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.