Toronto, Ontario — As second-quarter financials are unveiled, this week’s Tuesday Ticker takes a look at major industry players Driven Brands, Axalta and PPG’s quarterly numbers.
Driven to grow
Driven Brands Holdings reported financial results for the second quarter of 2021 earlier this week, marking revenues of US$374.8 million, an increase of 123 percent versus 2020.
System-wide sales hit a record US$1.2 billion, an increase of 65 percent versus the prior year, with 34 percent net store growth and an increase in consolidated same-store sales of 38.7 percent. On a two-year basis, same-store sales increased 19.1 percent.
Earnings per share were $0.21 for the second quarter, an increase of 600 percent versus the prior year.
Adjusted earnings per share were $0.25, an increase of 79% versus the prior year.
“The power of Driven Brands is evident in our continued strong operating results,” said Jonathan Fitzpatrick, president and chief executive officer. “While this quarter laps the depths of COVID-19 in the prior year, our strong two-year trend indicates continued momentum in the fundamentals of our business.
“Initiatives we implemented last year, coupled with strong execution from employees and franchisees drove compounding same-store sales and store growth. We continued to capitalize on opportunities as consumers drove more in the second quarter,” Fitzpatrick added.
Axalta is back up
Axalta announced its second-quarter financial earnings last week, reporting a 72.6 percent increase to its net sales year-over-year.
Second-quarter net sales of $1,126.8 million increased 72.6 percent year-over-year, wrote the company in a press release. Volume growth across all end markets was driven by ongoing recovery from pandemic-related macroeconomic impacts. Both price and product mix were positive in the period within Performance Coatings and included initial pricing offsets to the variable input inflation witnessed in 2021 that intensified during the second quarter.
Mobility Coatings segment price and product mix was impacted by negative mix effects, offset by stable overall pricing versus the prior-year quarter. Performance Coatings recorded a 67.1 percent net sales increase, including ongoing strong growth for the Industrial end-market and a continued recovery in Refinish end-market demand conditions. The 88.2% net sales increase for Mobility Coatings included the rebound from COVID-19-related vehicle production shut-downs in the prior-year quarter, offset partly by ongoing volume impacts due to semiconductor chip shortages, primarily in Light Vehicle.
Robert W. Bryant, Axalta’s President and CEO, commented, “Axalta’s second quarter represented a strong rebound from the pandemic-impacted second quarter last year and was slightly better than our expectation set for the period communicated in our last earnings release. The company saw notable improvement across all businesses from the prior-year period, including continued strong growth in Industrial coatings and solid sequential recovery in Refinish.
“We have continued this year to focus relentlessly on innovating and introducing new products.
These innovations are illustrations of the myriad of sustainable new product activities that surround our organic growth strategy, and we remain very excited about our pipeline looking forward,” concluded Bryant.
PPG faces supply chain challenges
PPG stock has fallen more than seven percent in the last two weeks as the paint manufacturer faces rising costs and supply chain challenges.
PPG said it earned $431 million, or $1.80 a share, in the second quarter, compared with $102 million, or 43 cents a share, in the year-ago quarter—coming out below Wall Street’s Q2 expectations for the company. Adjusted EPS was below PPG’s April forecast due to the twin impacts from supply disruptions and continued increases in raw material and transportation costs throughout the quarter, the company said.
PPG said it increased its prices and continued to trim costs.
The supply-chain disruptions are likely to persist through the third quarter, and as a result input and logistics costs likely will be higher in the third quarter as compared to the second quarter, Chief Executive Michael H. McGarry said in a statement.
“We continue to prioritize further selling-price increases, which we expect will fully offset raw-material cost inflation before the end of 2021,” he said. “Overall economic-demand growth remains very broad and robust and, as supply conditions normalize, we expect strong sales growth later this year and into next year.”
As of Friday’s close, PPG stock was trading at US$163.47 per share.
