← 返回

2026.10.08 | TB | Auto | Belron IPO Analysis

原标题：Belron – IPO Analysis – Competitive Moat, Margin Sustainability & Growth Trajectory

#auto #consumer

Third Bridge · 2026-10-08

Analyst-led • 5 Oct 2026

Jon Cardi (JC) Independent Consultant

Orwa Mohamad (OM) — Third Bridge Sector Analyst

Agenda

Key Insights

Introduction

OM [00:00:02]: Welcome to Third Bridge's Interview entitled Belron – IPO Analysis – Competitive Moat, Margin Sustainability & Growth Trajectory. I'm Orwa Mohamad, and I'll be facilitating today's Interview with Mr Jon Cardi, former SVP, Strategic Client Sales and Support at Safelite Group. Jon, welcome to the Interview.

JC [00:00:25]: Thank you.

OM [00:00:26]: Before we get started, could you please state I agree or I disagree in response to the following statement: You understand the definition of material non-public information and agree not to disclose any such information, or any other information which is confidential, during this Interview.

JC [00:00:45]: Yes, I agree.

OM [00:00:46]: Could you also give a brief introduction to your background?

JC [00:00:54]: Recently retired from Safelite, nearly 30 years of experience with the company, started out in operations in multiple markets up in the New England, then moved into a Regional Vice President position. At that point, we had four regions. I managed the centre part of the country and then stepped on to the commercial side as we had a knack to grow the commercial business within the central region, took national sales for a number of years and then transitioned over to strategic account management on the insurance segment and have led the insurance, I'm going to say, claims management organisation and sales teams for about the last 10 years prior to my retirement.

Questions

00:01:43] What are your initial thoughts on Belron's potential IPO? How realistic is the rumoured valuation of around EUR 30bn?

JC [00:02:00]: I think that if investors are good with the 16%, I think it's a very reasonable return. It's very reasonable on a multiple. Belron is very strong from a cash perspective and cash turn. A lot of that is driven from the insurance industry and fair settlement practices. I think that the revenue has continued to grow. As we continue to press ahead in the market, as the car park continues to evolve and advanced safety equipment becomes more prolific through the car parks across the globe, that is driving enhanced margins, not only in higher glass costs from complexity, but also for the need for recalibration of those safety systems once the windshield is replaced, which has added a good 40% more gross margin to the transaction. It's been, for the last 5-6 years, a little bit of strong growth and strong profits as well.

OM [00:03:05]: You're saying that 16x EBITDA multiple is quite realistic for the business.

JC [00:03:14]: I think that it is only in the fact that there's high cash turn. I think there's value in that in and of itself. You're not sitting and waiting on receivables for 45 or 90 days. A lot of that money and cash is coming through the system, and it allows the opportunity for investment. If you're turning a 25-plus EBITDA, there's that opportunity to reinvest in the business and continue to grow.

00:03:46] What are the key underlying demand drivers for Belron and the market? Is it miles driven, vehicle car park age and size?

JC [00:04:01]: I think all of those are obviously factors and weather certainly either hot or cold extremes have drivers throughout Europe and the US. If the Northeast has a really strong winter weather where you've got ice and you've got salt and you've got gravel on roads, the miles driven factor continues to be a pretty strong piece of that. The other thing that's not really looked at that closely is because of the mileage standards, glass is getting thinner. Trying to take weight out of the car. If you think about EVs, the battery is a whole heck of a lot of weight. They're trying to take weight out of the car. Glass surface area, in terms of the cabin, glass is far less from a weight perspective than metal. In that also the thinner, so the technology that's going into the glass and the capability, the windshields are actually being made thinner. The likelihood for star breaks and breakage with less impact is a reality for what we're seeing. Then when you also have the rake of cars, so the rake of the windshield, whether it be flatter or more on a slope. As you go look at the US car park, very, very heavy truck market or light truck market, a lot of those windshields are still predominantly north and south, if you will, on the vehicle and not laid down like some of the newer vehicles are.

00:05:46] How cyclical vs secular is the auto glass repair and replacement market?

JC [00:06:00]: It's interesting because you do have the weather events that are going to go drive things, but the summer drive season throughout Europe and the US, basically, you'll see almost a 30-40% swing in demand during that high time where, like here in the US, as school comes back in, people don't necessarily have the disposable income to get their cars repaired. It slows down. Then again, during Christmas. A lot of this is disposable income, even if it's being covered by an insurance claim because the tender or the deductible is real in most people's worlds and as a coping mechanism to higher insurance costs, people have raised their deductible. It's more out-of-pocket expense than what's been seen, but you do have pockets of wind or hail or extreme heat events that will go ahead and drive additional demand, but there's a very consistent base, I would say, of business that is around the miles driven factor. Then the second piece of that is the weather extremes.

00:07:10] What market share does Belron hold in each of its core regions?

JC [00:01:44]: If you look throughout Europe, you're at 30-40% in those markets. I would say the US is a little bit stronger, upwards of 50%. You've really got to look at market segmentation to look where Belron wants to play and Safelite as well in the US. The Nordics, they're coming along, I would say, in growth, but haven't necessarily been extremely strong. The UK, which was where Belron is based, very strong markets there. France, Spain, Germany are a number of the top markets for the company. Those do have stronger market share and continues to grow. Again, the other one is Netherlands. The Netherlands is very strong as well. As you look at growth potential in those markets, there's a different market dynamic going on in Europe than there is in the US. That equation is really around dealer and the dealer services. Europe seems to have a stronger allegiance to customers going to dealer than here in the US. The US is a little bit weaker. I would say it's probably only 5-7% of glass replacement is done by dealerships here in the US, where it may be upwards of 20% is done in Europe through dealerships.

00:08:53] What do you think is at the core of Belron's competitive positioning and strength? Is it mostly related to the insurance network relationships and what comes with that from a preferred supplier status?

JC [00:09:16]: I'm going to actually say no. What the strength of Belron and their brands, whether it be Carglass, Autoglass or Safelite, is the years of investment in advertising. There's very few folks either across the pond or here in the US that don't know the Autoglass jingle or the Safelite jingle. The reality of it is those relationships are enhanced because of… When you think about a moat, the hundreds of millions of dollars that have been spent over the years in TV advertising to drive brand, all of these are extremely strong brands. You go look in Australia with O'Brien is an extremely strong brand, service brand, even to the point where they're doing home services and other things under the O'Brien brand. They've actually expanded the business beyond just auto glass into others. I think that that's the first, if you will, moat is the brand awareness that customers have. I can tell you if I go back 15 years ago or a little bit more, the top brand in the United States was, I don't know, because people just don't really… When you think about how often they need glass replacement per vehicle, it's about once every seven years.

In a household every 3-4 years, folks don't have that longer-term memory, but if you can create a memorable experience, you get that return customer coming back. A lot of times, those insurance relationships allow Safelite to flex or Belron or Autoglass or Carglass to flex because they say, "Hey, would you like to use Safelite or would you like to use Autoglass?" People are like, "Sure," because it's a known brand.

00:11:09] How durable is Belron's competitive moat? Is there anything that could drive market share attrition for the company?

JC [00:11:34]: I think that the Cary Group has been growing in Europe. They're not here in the US, but they've been growing. They're in 13 or 14 countries now over in Europe. They had started in the Nordics. They've expanded to Germany, France, some of the larger European markets, Spain. I think that is… What they're working through is acquisition and also new dirt green space, green locations based on geography. That is a competitive, I would say, threat, but that's also a consolidation of the market, the mom-and-pops that are out there. In the US, very, very heavy mom-and-pop, not so much dealer. You've got competitors like Gerber, Caliber, Driven Brands through Auto Glass Now, but those companies, even though Driven did a ton of consolidation of regional carriers or individual shops that they've purchased over the last 5-6 years, things have really quietened down in the last 2-3 years from an acquisition perspective, but I think from a competitive landscape perspective, Belron is in strong, strong position throughout each of the markets, including the US.

00:13:00] How material is the risk for Belron in terms of customer concentration with a handful of insurance partners, particularly in major markets?

JC [00:13:10]: It's an interesting question because I'm going to have to put it into two parts. I think there's a separation in Europe. Many of the contracts, if you will, are tendered annually. The Safelite business is a little bit unique in the fact that the claims management side, and this has been something that has been happening for 20-plus years is the claims management side of the business. Within the top 25, many are managed by the Safelite Solutions Group. Those relationships come. When you think about the insurance market here in the US, the top 25 insurance companies write about 87% of all the insurance. Managing those companies and having those strong relationships is actually an asset. I wouldn't say it's a deterrent. The challenge that you have in Europe is when you have a carrier group coming competitive, you can get margin erosion as you're trying to be a preferred supplier inside of their programmes. The insurance industry, and there's a major difference between the two.

Here in the US, consumers always have the right to choose. If they have a shop in mind or if they want to go to a specific body shop or glass shop that they've done business with in the past, that preference is honoured in the US through the insurance companies. It's a little bit different in Europe. The European markets can actually direct to preferred suppliers. The strength of the insurance company from year-to-year could be a little bit of a disadvantage if you're not competitive on that bid process, but Belron has done a really good job working with AXA and Aviva and many of the others, MAPFRE, in working those contracts on a broader scale than just one country and have made arrangements and worked through with those companies and having multiple country contracts and understanding how that all works.

00:15:26] Do you see a risk of margin compression in Europe, where you have a competitor such as Cary Group coming in, due to competitive intensity?

JC [00:15:44]: I think every day the prices on the street, so the cash consumer. The majority of the industry and how they gauge it, the mom-and-pops, it's a Tuesday, and am I busy Thursday? They literally will alter their pricing based on that. There's no consistency in price around that specifically. The insurance market is a little bit of a different animal along with the commercial market. The commercial market is about time and not having a vehicle down. Price is secondary to time and service. You've got a little bit more time to service customers within the insurance side of the business. I do think that the US has not seen, and it's been pretty competitive margin erosion because of the competitive marketplace. I think that it's a possibility, but it hasn't been from what I've seen is the competitors or Cary Group coming and just throwing price on the street to get business. It hasn't been that. It's been, I would say, more of a respectful competitive environment.

00:17:02] You mentioned that the contracts in Europe are on a yearly tender process. What about in the US? You said the consumer has the right, but is there still a preferred supplier status that insurance companies could indicate?

JC [00:17:32]: They do. Ultimately, if the customer doesn't have a shop of choice, many of them are looking for. Studies would show that they're looking for a suggestion. They're looking for a trusted resource. The insurance companies run the programme. Everyone is a little bit unique and different. It could be that you're offering a rotation of two or three preferred suppliers to a customer and have them choose out of the two or three suppliers. It's no different than the body shop or collision side of the business where you have, they call them, direct repair facilities where it's a preferred relationship contract that they have with the insurance company. Those contracts are typically longer term, and they could be 3-5 years typically. There's nuance in all of that as it's being built and taking into consideration cost structure, CPI, labour, all of those pieces are part of the equation.

00:18:37] Who do you think has more pricing power in the value chain today?

JC [00:18:54]: I think that there's actually a balance because you have to maintain these relationships long term. When you go look in the US with a State Farm or Progressive, which are the number one and number two companies or if you go look at AXA in some of the countries where it's the number one insurer, you need to maintain a longer-term relationship. In doing that, you have to figure out win-win scenarios that make sense for both organisations. The insurance companies want great service providers, and they want service providers that are going to take care of their policyholder. When you think about the insurance business, and there's been many shopping studies over the years, but one of the number or top one or two reasons why insured shop their policies because of a poor claims experience. You've got to think about the insurance companies are collecting money every six months or every year, year after year after year. Then finally, when a customer wants to go use that insurance, if it's a poor experience, there's a high likelihood to shop, 30%-plus will switch. They're investing just as much in Belron in that transaction because it takes the average insurance company about 1.5 years to even become profitable on premium with no loss. When you think about the marketing dollars they're spending to get new business, but there's a give and take in all facets from my perspective.

00:20:39] Is there anything more to add regarding insurer relations?

JC [00:20:51]: It's a big piece of the US market and European markets. I think it's the lion's share, if you will, of balance of sale for Belron in total. It's a very important piece. Those relationships have been invested in for many, many years, and they're long term and strong. I think it's part of that moat, quite honestly, particularly in the US, which is 60-65% of Belron's overall portfolio. Those relationships are very strong.

00:21:25] How does the shift to EVs change glass repair economics, if at all?

JC [00:21:37]: It's limited, but the challenge that you have is part proliferation. If I would go back 20 years ago, the options in windshields would be a few. What we have going on in the US and across Europe is you have a lot of new manufacturers entering the market where you've got to have those parts available and SKUs available and some of it may only be OEM. Being able to produce or purchase parts in the aftermarket is a key to the margin market. There's many wholesalers out there in the marketplace, but part proliferation is a challenge for the entire industry and getting parts if it's only one or two suppliers is a challenge. I think that you have to think about because the parts are so complex, it's not like 20 years ago where in six months, you'd have 10 manufacturers making the Ford pickup windshield as an example. The parts have become so complex now with all the added features and bends and equipment going into the windshield that there may only be two or three suppliers, and it's typically a longer pull, if you will, to get those three suppliers supply in the marketplace. That's the low numbers of parts in the market of those vehicle counts make it a little bit more difficult to serve them.

OM [00:23:15]: Does that favour a player such as Belron because of its scale, or is it also a challenge for the company?

JC [00:23:27]: It's both. I think that you've got vertical integration with Belron, which is, again, another piece of the moat. I go back and look during COVID, really, because suppliers were short, manufacturers were short, having an ample supply of parts in the market, and it's been investment in those areas over the last five years also because there's a great importance of having the parts in the market. The reality of it is, is the tempered and side glass is only 10-12% of transaction broader than that, it's the windshields and then it's about windshield availability in market when needed vs customers waiting. It's interesting. Customers will wait two, three, four weeks to have a windshield replaced, but when they make the decision, they want it done within a few days typically. Having part availability and the ability to go leverage aftermarket in the marketplace is a strength.

00:24:37] You mentioned parts proliferation is an issue with EVs. You might only have a couple of different suppliers who can supply the parts. Does that also create a supplier concentration risk?

JC [00:25:01]: It does to a point, and you've got a little bit of trust in the OEMs that they've chosen the right supplier to produce their parts for the manufacturing process because ultimately, you're buying them in the short, you're buying them from the market or from that manufacturer directly. They're typically the first to produce an aftermarket part with reverse engineering of the parts themselves. I think that, again, the challenge is when you only have 10,000 vehicles in the entire United States first line of production in a model or 20,000. That's literally the numbers we're talking about in the US on some of these early models of EVs. Having that part availability where and when you need it is pretty difficult. Then it's just not profitable to go carry it everywhere. You go look at your regional pockets of vehicle saturation or where it's being sold and then stock parts there, but it can be a challenge. You got a handful of EVs that started up in the US that went away. You have cars on the street. There's literally no manufacturer for the part because there's no manufacturer that can make it profitably. That vehicle in many cases, if it's covered by an insurance company, literally lose a windshield. It could be a total loss because you can't get the part.

OM [00:26:35]: As the industry consolidates around EVs, do you expect that problem to increase because some more players might drop off the market?

JC [00:26:57]: I think it does. It limits who can actually serve vehicles. It's going to be the larger players that have the distribution capabilities, but also the long arm to import parts from other parts of the world. I think that the other piece and the other dynamic that's changing rapidly is the Chinese EVs in Europe. The US has somewhat protected, I guess, this market from those, but that is a big driver in many of the EVs throughout Europe. I would say here… If you go look at a Norway, 80% of all new car sales are EV. Part of that is looking at Tesla's very, very strong market share because they were early-to-market in that country. You've got a lot more Chinese EVs coming to market in different countries based on their economic policy.

00:27:57] How much of Belron's margin story is the ADAS [advanced driver-assistance systems]-driven mix?

JC [00:28:09]: It gets stronger and stronger. If you go look at just the cost to repair without the recalibration services, the cost of repair goes up by 25-30% on that vehicle that has the advanced safety features. Again, part of that is because you don't have multiple manufacturers of that part, or if you do, they're not all quality parts to the point where you can recalibrate the vehicle. The glass quality and clarity has a lot to do with the cameras, which is 98% of the vehicles out there are operating from forward-facing camera systems. Not having quality parts is a problem, you don't want to do a job twice. That can be an advantage, a strategic advantage that I think that Safelite has done and also Belron has done a great job in sourcing quality within the supply chain. It is a differentiating factor, I would say, from some other parts that are in the market. Then, the need for recalibration on those vehicles is, in the US, it's getting done 90%-plus of the time by the US service providers. That service adds about another 40% to gross margin. As that car park, and it's really new car sales. You've got anywhere from 5% to 7% of your car park turning over.

The challenge, I think, in the US economy right now is the average vehicle is about, I think, USD 54,000. When you think about affordability is a challenge within the new car park. I think throughout Europe, it's similar, but the adoption of the technology as the car park evolves continues to grow that share of work that needs to be done with that more complex part and the need for recalibration. Then as the US has a relatively strong insurance market, in that insurance market, typically, it's cars that are five and six years and newer that are financed that need to be insured. As that evolves, you've got a greater penetration or a greater saturation of insurance claims on those newer vehicles at the higher cost.

OM [00:30:59]: From this perspective, an ageing car park is not necessarily to Belron's advantage because you want new vehicles on road, where you could capture the ADAS calibration revenue.

JC [00:31:17]: If you look for the need for recalibration, it's interesting because if you look at the rental industry, far higher OEM part needed because they're two years old and newer, or maybe three years old at the most. All of them require recalibration. All of them have complex parts. That one, you see very high car turn and you look at that market and is a lot of those complex parts very, very high need for recalibration. In the insurance segment, it's probably 60-70% in today's world. From 2023 in the US, all the cars were being manufactured with the safety systems and the need for recalibration. As, I'm going to say that those vehicles continue to come into the car park, but you have a base of vehicles starting from, actually, 2017 was the first year where car manufacturers were a part of their or a portion of those vehicles had the safety equipment in them as options and then it went to basically all the car manufacturers agreed that starting in '23, they would move to this.

The average car that's being served out in the market is 9-10 years old, which is very similar to the collision space, but if I go back nine years, I'm back at 2017. That car park is now maturing and you're getting the need for recalibration in those complex parts in more of your transactions, and it will continue to go forward. The age of the car park doesn't affect you nearly as much as it did three and four years ago.

OM [00:33:15]: You mentioned the fleet and car rental customers. Does that go through an insurance partner and then through Belron? Does it matter more that you have the preferred supplier status, or do the customers not care much about that, and they want the cheapest possible route?

JC [00:33:49]: Sure, it's not through an insurance. It's typically a direct relationship with an Avis or a Budget or an Enterprise. The managed fleet is a little bit different. The fleet leasing companies, those are a part of the portfolio, if you will, of management. Many of those drivers, again, to your point, don't care where the work is done. That work is directed based on those contracts and relationships that Safelite and Belron have throughout the world. That's another big piece of the commercial business. Then over in Europe, you've got a very large bus market over there and truck market, no different than here in the US, but it's those pieces, and that's why I said market segmentation is important. Belron is operating and maximising and leveraging every segment of the market and those relationships that they have that have been held for years.

OM [00:35:02]: Are margins lower in that channel?

JC [00:35:13]: I would say they're more competitive because some of it is regionalised where you don't have necessarily a national agreement. It is a space where the mom-and-pops also play. Depending how fragmented, but many have national procurement organisations vs the local manager, if you will, making a decision of where they're buying from. It's a little bit of a mixed bag, but you've got to remember that, again, in the rental side, all new cars. If you go look at… Though they may be competitive and the margin may be thinner, it's on a far higher ticket than the average.

00:35:57] Do you see a risk that OEM software and data access could become more restricted and limited, or be a bottleneck for calibration revenue for players such as Belron?

JC [00:36:18]: First off, Belron throughout Europe actually had a major win against Chrysler in Europe, and it's basically right to repair. You're asking the question around the right to repair and access to information on the capability of repairing, but also accessing the vehicle because there are security features within all vehicles today that are being manufactured that you need basically as a gatekeeper. What the OEMs have done is basically created a toll road where to have access, you're paying a fee per access or you're paying a broader fee, an umbrella fee and then a lower, but we've worked with… There's a number of companies that are out there that are doing a one-to-many and work with many of the OEM manufacturers that have consolidated that process and allowed Belron and Safelite access to those vehicles. It's a cost of business today. I think that the challenge, depending on the country and depending on the car manufacturer, it could be tens of euros vs pennies, if you will, in some areas. The right to repair is pretty open. When you go look at the equipment, there's been, I would say, material litigation against in the US, John Deere as an example, and that case was probably seven years ago or so that's kept that door open. It's really hard to lock out individuals or companies from the vehicles because, again, maintaining their right to repair.

00:38:20] What are your thoughts on the longer-term autonomy thesis that if more cars are autonomous, there will be fewer collisions, which would repress volumes and it would become a cycle for a player such as Belron?

JC [00:38:47]: I think that, and I'm not familiar with European collision stats, but I am with the US. Over the last five years, there's been a general trend of reduction of collisions. Part of that is due to the safety equipment that's being installed in these vehicles with the auto braking features and the pre-braking features. Autonomous vehicles is a very interesting question and the fact that if you're looking at the average vehicle is used only 5% of the time. Most vehicles sit 95% of the time. In a shared economy, if you have fully autonomous vehicles and with the cost of car ownership going up so high, if I have the ability to have a vehicle at my door within five minutes and pick me up at the grocery store when I'm ready within five minutes, does everyone need a car? Does everyone need transportation? I think there's a little bit of a hump to overcome. In many markets, in the US, in particular, a vehicle means autonomy to the driver, and it's freedom and it's a symbol. Getting my licence as a 15-year-old or a 16-year-old is a symbol of a key milestone, if you will, in people's lives.

I think that it's going to be really slow where that autonomy takes hold and that shared economy of vehicle ownership, if you will, which will be mobility of the enterprises of the world and others will be, the Hertz will be those leaders of mobility and Uber, but I think that it's going to be slower. If you're sitting and you're thinking about investing in this company and worried that the market is going to change dramatically in the next 3-5 years, it's not, or it's going to be insignificant. By the way, if you would have asked everyone 10 years ago, self-driving cars should be 50% of the car park in the US at this point, and it's not. It's a couple of percent.

OM [00:41:11]: I guess maybe not in the next 3-5 years or in the next 10 years, but do you see a future in 25 years or more where that scenario comes to fruition? I appreciate that a lot of what you've mentioned would remain the case, a car is a symbol of autonomy for the American consumer, etc. However, is that more of a risk in the long term?

JC [00:41:46]: I think if you're looking at 20-25 years, I see it as a slow erosion, not as this disruptor. The smart companies will see the trend, take advantage of the trend and create new business around the trend because if you think about it, those cars still need to be on the roads. Those cars still will have most likely glass cabins. I've seen some there's no glass in the vehicle. Literally, it's an artificial environment that the people are sitting in. I don't know if that's what is an appeal to folks, but I just don't see it as a disruptor. I see it as a slow evolution that a smart company like Belron can react to and look at the market opportunity around it and capitalise on it.

00:42:48] How difficult is it to recruit and retain qualified technicians who can repair and calibrate ADAS?

JC [00:43:09]: I think that that is interesting because that service, in particular, has opened up the door, which would be a traditionally male-dominated service and bringing far more female techs into the equation. You're looking at smart technical minds working with equipment, setting up targets. There's not heavy physical standards needed to go do that work. It's opened up a whole new opportunity for Belron in their recruiting. If you really want to go think about it, the customer service side is enhanced as well then with female technicians, which has also helped the business. I think Belron has been very proactive in recruiting and training those type of technicians. The learning curve to operate and Belron has done a phenomenal job in the adoption of the equipment and the partnerships that they've developed to basically not have a heavy tech need that the equipment itself, if properly set up and run through, it's got a process that it runs through, will recalibrate the vehicle successfully at a high percentage of time on the first time.

The training is really not there. It is still on the glass installation side is where the majority of the training is spent and the time is spent. It really, to get a technician proficient in installing vehicle glass is a 4-6-month process, retaining those technicians. Belron has been moving, I would say, the wage scale up to retain those technicians and retain the best technicians and done a really good job at that. Recruiting because of the wage that Belron pays, retention has been at all-time highs over the last few years and also the ability to recruit the right profiles of people of individuals that will stay with the company.

00:45:41] Could you walk us through the economics of a typical Belron job from an insurer or customer acquisition through the costs and overheads? How does a job move through the business?

JC [00:46:03]: The majority of Belron's acquisition comes through digital platforms today. The economics of having the call centres and personal involvement, there are literally millions and millions of transactions that occur with only the technician is the only physical body touching that transaction. I think that part of this also is because of the insurance relationships that we have, we've literally created all of these EDI transactions, claim transactions, payment transactions, auto cashing and disbursement of funds, but as you look through the economics of that, obviously, maintaining websites and marketing through the web, some of it's pay-per-click, a lot of it's direct, but there's economics around all of that. We've improved and gained margin, I would say, from not having to throw bodies, if you will, at that base intake of information. Beyond that, fully integrated, most of the insurance clients are fully integrated or we're collecting personal information. A lot of times, we can get a licence plate and have all of the vehicle information, VIN numbers and things of that nature. The VIN-to-part technology has been another major milestone, I would say, that's reduced the cost and the ability to get a successful VIN hit through build sheet data that has been basically you're procuring build sheet data based on VIN to get to the right windshield. You're not spending time with the customer and trying to run through all those options.

Then at the end of the day, the largest part of this is obviously the glass part itself. In the industry, those margins run from 65-75% gross margin on the parts. Then labour, the tech labour is another big piece of that. If you look at what the average job, you're putting probably USD 70-plus. The other major equation is real estate vs mobile service. US market is more mobile today than ground-based. Europe is more ground-based physical locations and sites. With that, you have CSRs that are greeting customers. You have management teams that are running the local location, whereas with the techs on the road, you have mobile units. It could be one dispatcher is handling 15 technicians from a day-to-day perspective. Then you obviously have the van expense and cost. Overhead is relatively light. It's really the investments of technology and glass cost and labour expense are where the majority of the expense is coming from.

OM [00:49:19]: A job that requires ADAS calibration is about 25-30% more expensive than one that doesn't. Is that correct?

JC [00:49:36]: Yes. In the US market, the average is somewhere around USD 275-300 for a recalibration service. Europe is similar. Europeans, it's a little bit less than the US, I would say, based on the markets that I know.

00:49:54] In addition to increasing ADAS calibration, what are the most critical or important operational levers to increase or to grow margins?

JC [00:50:14]: Procurement, obviously, is an important piece of this in glass procurement, investment in inventory and inventory turns. There's been major investments in all of those technology to make sure that you don't have idle parts, that parts are sitting in markets that are needed. There's an annual procurement process from the manufacturers by Belron. You've got global purchasing going on in leveraging all manufacturers within the world and those relationships, and there's quality standards tied to all of that. The other piece that Belron has is wipers, cabin air filters. Ancillary services tied to the transaction is another margin opportunity. Some countries do it better than others, but it adds to the bottom line very quickly because you're sitting at 70%-plus in most cases, gross margin on those parts, which add to that transaction. The individual transaction cost drivers, and that's an opportunity. I think it's being flexed and leveraged, but can be even more in the future state. Then the second piece of this is recalibration services as a standalone. Today, we're really not doing major diagnostics. Is there an opportunity for Belron to provide diagnostic and recalibration services beyond just the cars they serve, which is another market, and that's being explored as well?

00:51:57] Belron's operating margins hit 23% in H1 2026. Do you think that margin is sustainable going forwards?

JC [00:52:09]: Yes. I think it's been sustained for 2-3 years now. It's been somewhere in that 20% to 23-24% range. Yes, I don't see anything curbing it. It just continues to get enhanced a little bit each year based on the car park and the higher ticket and higher gross margin.

OM [00:52:33]: How realistic is a 25%-plus operating margin?

JC [00:52:39]: I think you're coming down to little levers and pulls. Is it possible? Yes. I think that as efficiencies continue to become more part of the process. You've got to appreciate the last… Not the last few years, but prior to that, there was a lot of learning going on. There's not many companies that have the capability to serve 98% of the car park and recalibrate those vehicles. A lot of the other service providers are sending customers to the dealer after they've done service, which is not a great experience. Streamlining that process, continuing to drive digital, touching less transactions, less manual work, having the right parts based on VIN where I can continue to get 10% and 15% increases in transactions and reducing the number of touches to a transaction could eke out another few percent easily.

00:53:55] How much CAPEX is required to maintain and expand the technician network and infrastructure?

JC [00:54:07]: That's an interesting ask. I think for me guessing a little bit more. It is ongoing. It's more around technology and continuing to evolve technology and those capabilities is probably where it's going to be spent. I think that the overall marketplace is figuring out where AI sits, plays and how heavily is leveraged. It's not just Belron. It's not just the glass marketplace. It's all service providers. It's all manufacturers, but at the end of the day, a computer is not going to put a windshield in a car. The potential of a robot doing that is, though it's done in the manufacturing process, it's unique to that specific vehicle. Even that's years and years away. The economics don't change dramatically, I think. That that's been another staple of Belron. I would say when Belron purchased Safelite, at least in my world, 20-some-odd years ago, a change was made to invest a considerable amount to make sure that the business was able to grow that it stayed on the forefront and remained the leader.

A lot of that reward reaping is today and in the future. I think it's more tweaking than having major overhauls in CAPEX vs having a more consistent investment that doesn't need to be as extreme as it was 10 and 15 years ago. I think AI plays a role in that because I think if AI can… You think about technology still today, it's still a lot of people. Driving technology, a lot of programmers, a lot of… That is going to change. When you think about accounting and the people that it takes to count big numbers, that's going to change, so all of these. The business can only get better by the intelligence being applied over a broader spectrum of capabilities and services.

00:56:54] Belron is concentrated in Europe, North America and the US, with a limited presence in APAC. Why do you think the company hasn't built a meaningful position in APAC? Do you see this as a meaningful opportunity going forwards?

JC [00:57:26]: I think Asia is a challenge. Belron did have a go, and this is the reality. Belron was in China. It lasted for a few years. The margins were razor. I think the ethics of business weren't, I'm trying to be careful here, just weren't up to our standard of how business was done. You'll find that there is not a higher standard of ethical business being done than what Belron does. The way the grafting and the things that happened at the port and things that happened with the government, all of those things did not lead to Belron wanting to invest more. I don't know if those dynamics have changed. I think that what Belron has done, they've maintained the direct relationship in 20-plus countries and franchised another 17 or 18 countries. I do potentially see expansion from a franchise perspective in some of those countries, but to go in and acquire existing businesses or doing greenfields, it would be difficult.

OM [00:59:19]: It's a structurally different market. Do you think acquisition is the route in that case?

JC [00:59:32]: I think that you're going to struggle to find companies that Belron has been extremely successful at acquiring companies with similar culture. The culture within Belron is extremely strong and within Safelite and throughout all of the business units, people matter a lot. I just don't know if in other countries, the associates are valued the way that they are within this organisation today in those other countries. People are not disposable. You're investing in them. I think it's a challenge.

OM [01:00:19]: It's been a very, very insightful conversation. I just want to close by saying thank you very much for your input.

JC [01:00:33]: Thank you.

Transcription ends at 01:00:41 of the recorded material