UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 25, 2021 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Title of each class Common Stock, $0.01 par value Trading Symbol DRVN Name of each exchange on which registered The Nasdaq Global Select Market Commission file number: 001-39898 Driven Brands Ho ...

Driven Brands Holdings Inc. (NASDAQ:DRVN) Q4 2021 Earnings Conference Call February 16, 2022 9:00 AM ET Company Participants Jonathan Fitzpatrick – President & Chief Executive Officer Tiffany Mason – Executive Vice President & Chief Financial Officer Rachel Webb – Vice President of Investor Relations Conference Call Participants Jackie Sussman – Morgan Stanley Christian Carlino – JPMorgan Liz Suzuki – Bank of America Sharon Zackfia – William Blair Chris O’Cull – Stifel Karen Short – Barclays Peter Keith – ...

Financial Data and Key Metrics Changes - For Q3 2021, revenue increased by 39% to $371 million compared to Q3 2020, with adjusted EBITDA rising by 42% to $98 million and adjusted EPS increasing by 30% to $0.26 per share [9][36][42] - Consolidated same-store sales grew by 13% year-over-year, driven by a healthy balance of new customers and increased repeat rates [10][36] Business Line Data and Key Metrics Changes - The maintenance segment posted positive same-store sales growth of 17%, benefiting from targeted digital marketing and increased car count [43] - The car wash segment achieved a same-store sales growth of 6%, with wash club subscriptions increasing to over 49% of sales [45] - The Paint, Collision & Glass segment reported positive same-store sales growth of 11%, supported by improved direct repair programs with insurance customers [48] Market Data and Key Metrics Changes - System-wide sales reached $1.2 billion for the quarter, with a strong performance across all segments contributing to growth [36][37] - Vehicle miles traveled (VMT) showed a positive trend, rebounding in September after a slight dip in August due to concerns over the Delta variant [11] Company Strategy and Development Direction - The company aims for organic double-digit revenue growth and adjusted EBITDA growth, leveraging its asset-light business model to generate significant cash for acquisitions [8][34] - The company has a robust pipeline for new unit openings, with over 1,000 units identified for future growth, including 250 expected openings in 2022 [17][20] - M&A is a core strength, with the company having acquired 70 car wash units in 2021, contributing to a total of 288 units in the U.S. [22][25] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the consumer outlook for 2022, expecting VMT to return to pre-pandemic levels [12] - The company raised its full-year adjusted EBITDA guidance to $350 million, reflecting strong performance in Q3 [31][55] - Management acknowledged ongoing challenges from inflation and supply chain disruptions but emphasized confidence in the company's ability to navigate these issues [62][88] Other Important Information - The company closed a $450 million whole business securitization issuance, improving its debt portfolio and providing liquidity for strategic growth [52][53] - The company has a total liquidity of $268 million, which will support its growth initiatives [51] Q&A Session All Questions and Answers Question: Store growth and segment performance - Management confirmed that some underperforming operators were pruned from the coalition business, impacting net store growth in the short term, but emphasized the importance of maintaining strong relationships with insurance partners [59][60] Question: Full-year EBITDA guidance and conservatism - Management acknowledged a conservative approach to guidance, maintaining Q4 forecasts despite raising the full-year EBITDA estimate due to strong Q3 performance [61][63] Question: Car wash segment performance - Management noted that the car wash segment remains strong despite a slight slowdown, with confidence in long-term potential and ongoing unit growth [68] Question: Maintenance segment margins - Management indicated that improvements in labor trends are expected to continue, contributing to margin expansion as the business shifts more towards franchising [70][71] Question: Inflation impact - Management reported mid-single-digit cost inflation year-to-date but has successfully passed these costs to consumers, maintaining strong average ticket prices [80] Question: Market share gains - Management highlighted strong performance across all segments, particularly in maintenance and car wash, indicating significant market share gains [85][86]

Financial Data and Key Metrics Changes - Driven Brands reported consolidated same-store sales growth of 39% compared to Q2 2020, with a two-year growth of 19% [7][36] - Revenue more than doubled to $375 million, and adjusted EBITDA also more than doubled to $101 million, with adjusted EPS at $0.25, exceeding expectations [8][34] - System-wide sales reached $1.2 billion in the quarter, driven by strong same-store sales growth and new store additions [33] Business Line Data and Key Metrics Changes - The maintenance segment posted same-store sales growth of 42%, the strongest across the portfolio, with a two-year growth of 27% [41] - The car wash segment achieved same-store sales growth of 35%, with a two-year growth of 21% [43] - The Paint, Collision & Glass segment reported same-store sales growth of 37%, with a two-year increase of 11% [45] - The platform services segment saw same-store sales growth of 37%, with a two-year growth of 34% [47] Market Data and Key Metrics Changes - The company added 17 net new units in Q2, with a strong pipeline of over 950 units for future growth [18][19] - The company expects to open between 160 and 190 new stores in 2021, reaffirming its store opening guidance [21][52] - Active customers reached an all-time high, indicating strong demand for services [16] Company Strategy and Development Direction - Driven Brands aims to leverage its scale and competitive advantages to continue gaining market share in a fragmented industry [5][30] - The company is focused on organic growth through new store openings and same-store sales growth, while also pursuing tuck-in acquisitions [22][25] - The company is testing rebranding some car wash locations to unify branding, which may enhance marketing synergies [69][100] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about achieving updated guidance for adjusted EBITDA of $345 million for 2021, citing strong operational performance [29][51] - The company anticipates that vehicle miles traveled (VMT) will trend towards pre-COVID levels by mid to late 2022 [28] - Management acknowledges ongoing labor challenges but believes operational efficiency will mitigate impacts on performance [92] Other Important Information - The company ended Q2 with $147 million in cash and a total liquidity of $468 million, providing a strong financial position for future growth [48] - Adjusted EBITDA margin was nearly 27%, with company store four-wall margins at 40% [34][26] Q&A Session Summary Question: Can you provide insights on the cadence of sales and EBITDA for the back half of the year? - Management indicated that monthly comps in Q2 were strong, with expectations for positive comps across all segments in the back half of the year [56][58] Question: Are acquisitions included in the updated guidance? - The guidance includes acquisitions made to date but does not account for future potential acquisitions [62] Question: Is there seasonality in Wash Club penetration? - Management noted that while there is natural seasonality, the focus is on operational execution and improving customer engagement [66][68] Question: Are there any impacts from COVID spikes on recovery? - Management stated that they are not seeing detrimental moves in traffic or demand in areas with COVID spikes [75] Question: How significant was being in stock compared to competitors? - Management emphasized proactive inventory management, which has allowed them to maintain market share despite supply chain challenges [79] Question: What is the strategy behind rebranding car wash locations? - The company is testing rebranding to unify branding, which is expected to enhance marketing synergies over time [99][100]

Financial Data and Key Metrics Changes - Consolidated same-store sales increased by 0.5% compared to Q1 2020, exceeding expectations [10] - Revenue surged by 83% year-over-year, reaching $329 million [35] - Adjusted EBITDA more than doubled to $78 million, with a margin of nearly 24% [10][35] - Adjusted EPS was $0.19, significantly beating expectations [10] Business Line Data and Key Metrics Changes - Maintenance segment reported same-store sales growth of 16.5%, benefiting from a new advertising campaign and improved marketing strategies [45] - Car Wash segment achieved same-store sales growth of 27.8%, with Wash Club subscriptions contributing significantly to revenue [47] - Paint, Collision & Glass (PC&G) segment experienced a decline in same-store sales of 9.4%, attributed to reduced collision trends [50] - Platform Services saw the strongest same-store sales growth at 22%, driven by strong inventory levels and increased average selling prices [53] Market Data and Key Metrics Changes - System-wide sales reached a record $1 billion in Q1, driven by new store additions and franchise growth [35] - Vehicle miles traveled were down approximately 10%, yet same-store sales improved sequentially from Q4 [38] - The company added 1,157 net new stores since Q1 last year, with 22 new stores added in Q1 alone [37] Company Strategy and Development Direction - The company aims for consistent double-digit revenue and adjusted EBITDA growth, leveraging its asset-light business model [9] - Focus on expanding market share in a fragmented $300 billion industry, with plans to open 160 to 190 new stores in 2021 [59] - Emphasis on data analytics to drive marketing effectiveness and operational efficiencies [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for the remainder of the year, citing strong consumer demand and confidence [11][29] - The reopening of markets is expected to drive increased vehicle usage, benefiting the company's services [18][31] - Despite regional variances in recovery, the company remains confident in its diversified business model [30][71] Other Important Information - The company ended Q1 with over $185 million in cash and approximately $100 million of undrawn capacity on its revolving credit facility [54] - A one-time noncash loss of $45 million on debt extinguishment was recognized in the quarter [44] Q&A Session Summary Question: Can you discuss the cadence through Q1 and the factors influencing sales? - Management noted strong growth in January, a low point in February due to weather impacts, and a strong recovery in March driven by vaccine distribution and consumer sentiment [62][64] Question: How do you expect trends to continue for the rest of the year? - Management confirmed that Q1 performance has been rolled into guidance, but they remain cautious about Q2 due to potential volatility [68][69] Question: Are there regional differences in segment performance? - Management indicated that southern markets are recovering faster than northern markets, correlating with increased driving activity [71][72] Question: What impact did weather have on performance? - Severe weather in Texas and Canada affected performance, with Texas representing about 14% of the company's footprint [80] Question: What is the outlook for the collision business? - Management emphasized a focus on market share gains rather than solely on miles driven, indicating confidence in continued growth [97][99] Question: How is advertising spend being managed? - The company utilizes a data-driven approach to marketing, allowing for targeted investments based on proven effectiveness [110] Question: Can you provide details on repeat rates for customers? - Management reported a 500 basis point improvement in repeat rates within the Take 5 business, driven by effective marketing and operational execution [108]

Financial Obligations and Compliance - The company relies on cash dividends and distributions from its subsidiaries to meet obligations, with potential limitations due to legal and contractual restrictions [220]. - Future payments under the income tax receivable agreement are expected to aggregate between $145 million and $165 million, contingent on sufficient taxable income realization [225]. - The company is subject to significant legal and financial compliance costs due to public company requirements, which may divert management attention from operational matters [223]. - The income tax receivable agreement may require payments that exceed actual cash tax savings if certain conditions are met, impacting liquidity [227]. - Ineffective internal controls over financial reporting could lead to regulatory investigations and negatively affect stockholder confidence [230]. Corporate Governance and Control - Principal stockholders hold approximately 73% of the outstanding shares, allowing them substantial control over corporate actions requiring stockholder approval [232]. - The company qualifies as a "controlled company" under NASDAQ rules, allowing it to rely on exemptions from certain corporate governance requirements [234]. - The company may face challenges in attracting and retaining qualified board members due to increased costs associated with compliance and liability insurance [223]. - The company’s organizational documents may impede or discourage takeovers, potentially depriving investors of premium opportunities [238]. - The issuance of preferred stock could delay or prevent a change in control, as the board has the authority to issue shares without stockholder approval [240]. - The company has an exclusive forum provision in its certificate of incorporation, designating Delaware courts for certain disputes, which may limit stockholders' ability to choose a favorable judicial forum [243]. - The company is authorized to issue additional common stock and convertible securities, which could dilute existing stockholders' ownership percentage [247]. Financial Risks - The company is exposed to interest rate risk primarily due to financing activities, with movements in LIBOR being a significant factor [427]. - As of December 26, 2020, the company had variable interest rate exposure related to its Car Wash Senior Credit Facilities, which was fully repaid in January 2021 [428]. - The company faces commodity risk due to price volatility in products like motor oil and paint, which are affected by global commodity prices [432]. - Foreign exchange risk exists due to operations in Canada, Europe, and Australia, impacting net income and cash flows [433]. - The company has implemented cross-currency interest rate swap agreements to hedge against foreign currency exchange risk related to its debt [433]. - Inflation did not significantly impact the company's operations in 2020 or 2019, but severe inflation could adversely affect its financial condition [434].

Financial Data and Key Metrics Changes - For Q4 2020, system-wide sales reached $935 million, with revenue of $289 million, representing a 58% increase year-over-year [15] - Adjusted EBITDA for Q4 was $66 million, more than double that of Q4 2019, with an adjusted EBITDA margin of 23% [15][17] - Fiscal 2020 revenue was over $904 million, a 51% increase compared to the prior year, with adjusted EBITDA of $205 million, up 72% [21][22] Business Line Data and Key Metrics Changes - Same store sales for the maintenance segment grew by 1.2%, while the platform services segment saw a 9.5% increase; however, the paint, collision, and glass segment declined by 7.3% [16][19] - The Car Wash segment's Wash Club subscriptions increased from 41% to 45% of sales, indicating a strong recurring revenue stream [10][19] - The company added 42 net new stores in Q4 alone, contributing to a total of 1,121 locations added in 2020, representing a net store growth of 36% [21][22] Market Data and Key Metrics Changes - Same store sales declined by 5.6% for the year, but the company outperformed the industry, gaining market share primarily from independents and small chains [6][21] - The company ended 2020 with over 4,200 locations, nearly 40% more than at the end of fiscal 2019, with significant growth potential in North America [11][12] Company Strategy and Development Direction - The company aims to capitalize on the recovery trends in the automotive services industry, focusing on consistent same store sales growth and leveraging its marketing and data analytics capabilities [14][24] - The long-term growth model includes adding new stores, growing same store sales, and maintaining stable margins, which translates into significant cash flow generation [24] - The company has a strong franchise pipeline with over 600 new store commitments, indicating confidence in future growth [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in consumer trends as mobility increases due to vaccine distribution and stimulus effects [25][59] - The company expects positive same store sales growth in fiscal 2021, with Q1 anticipated to be the low point and significant growth expected in Q2 [25][31] - Management highlighted the resilience of the business model during the pandemic and the ability to navigate challenges effectively [21][22] Other Important Information - The company ended the year with over $188 million in cash and cash equivalents, along with $156 million of undrawn capacity on revolving credit facilities [22] - The company anticipates depreciation and amortization of approximately $110 million for fiscal 2021, with a lower annual interest expense due to debt repayment [26] Q&A Session Summary Question: Impact of government support on M&A opportunities - Management noted that while there was some residual impact from PPP loans on smaller businesses, they remain confident in their M&A pipeline and opportunities moving forward [28] Question: Organic store growth opportunities - Management identified significant opportunities in the maintenance segment, particularly in quick lube, and expressed excitement about the Car Wash segment's growth potential [29] Question: Specifics on same store sales guidance - Management indicated that they expect positive same store sales across all segments, with a return to historical averages in the latter half of the year [31][33] Question: Segment performance and COVID impact - Management acknowledged that while the maintenance segment performed well, the paint, collision, and glass segment lagged due to lower congestion miles affecting collision trends [38][40] Question: Competitive environment in the Car Wash segment - Management expressed confidence in their competitive positioning and ability to execute M&A effectively in the Car Wash space, leveraging their experience from the Take 5 business [42][43] Question: Franchise renewal rates and interest - Management reported strong franchise renewal rates and an increasing interest in the automotive space, indicating a robust franchise pipeline [45] Question: Vehicle miles traveled and impact on paint, collision, and glass segment - Management projected that congestion miles would recover by September 2021, which would positively impact the paint, collision, and glass segment [48] Question: Stimulus impact on sales - Management expressed optimism that stimulus checks would benefit their core customer base, leading to increased mobility and spending in 2021 [59][60]