Tax Receivable Agreement - The company expects future payments under the Tax Receivable Agreement to aggregate between $160 million and $180 million, assuming no material changes in tax law and sufficient taxable income [199]. - The majority of the obligation under the Tax Receivable Agreement is expected to be repaid by the end of the 2025 fiscal year [199]. - Payments under the Tax Receivable Agreement could be substantial and may exceed actual cash tax savings if tax benefits are disallowed [198]. - The ability to make payments under the Tax Receivable Agreement is dependent on the subsidiaries' ability to make distributions, which may be restricted by existing debt agreements [202]. - The company has variable interest rate exposure in the Tax Receivable Agreement, with deferred payments accruing interest at LIBOR plus 1.00% or 5.00% per annum depending on the reason for non-payment [331]. Corporate Governance and Control - As of February 27, 2023, Principal Stockholders hold approximately 61% of the outstanding shares, significantly influencing corporate decisions [205]. - The company is classified as a "controlled company" under NASDAQ rules, allowing it to rely on exemptions from certain corporate governance requirements [206]. - The company’s organizational documents may impede or discourage a takeover, potentially depriving investors of premium share opportunities [207]. - The company’s certificate of incorporation restricts business combinations with interested stockholders for three years following their designation as such [209]. - The issuance of preferred stock could delay or prevent a change in control, as the board has the authority to issue shares without further stockholder approval [210]. - The exclusive forum provision in the certificate of incorporation limits stockholders' ability to obtain a favorable judicial forum for disputes [212]. - The company’s certificate of incorporation includes provisions that may limit stockholder actions and empower the board to fill vacancies, which could affect governance [215]. - The company has a board of directors consisting of eight members, three of whom are directors from Principal Stockholders, potentially leading to conflicts of interest [215]. - Future sales of common stock by Principal Stockholders could reduce stock prices, impacting market perception and trading conditions [216]. Financial Risks - The company is exposed to interest rate risk, with a hypothetical 1% increase or decrease in variable debt resulting in a $5 million change in interest expense as of December 31, 2022 [329]. - The company faces commodity risk due to fluctuating global prices for products like motor oil and paint, with attempts to mitigate this through contract renegotiations [332]. - Foreign exchange risk exists from operations in Canada, Europe, and Australia, impacting net income and cash flows, with hedging strategies in place using cross-currency interest rate swaps [333][334]. - Inflation did not significantly affect the company's annual results during 2022, 2021, or 2020, but severe inflation could adversely impact business operations [335]. Market Operations - The company’s common stock began trading on The Nasdaq Global Select Market on January 15, 2021, with outstanding shares including restricted securities eligible for sale under Rule 144 [216]. - The company does not engage in speculative transactions and aims to manage market risks as part of its ongoing business operations [328].

Driven Brands Holdings Inc. (NASDAQ:DRVN) Q4 2022 Earnings Conference Call February 22, 2023 8:30 AM ET Company Participants Kristy Moser - Vice President of Investor Relations Jonathan Fitzpatrick - President and Chief Executive Officer Tiffany Mason - Executive Vice President and Chief Financial Officer Conference Call Participants Simeon Gutman - Morgan Stanley Seth Sigman - Barclays Christopher Horvers - J.P. Morgan Karen Short - Credit Suisse Liz Suzuki - Bank of America Sharon Zackfia - William Blair ...

Financial Data and Key Metrics Changes - Driven Brands reported a 39% revenue growth in Q3 2022, with adjusted EBITDA increasing by 32% to $129 million, and adjusted EPS at $0.32 [6][23][27] - System-wide sales reached $1.5 billion, driven by a 12% same-store sales growth and the addition of 101 net new stores [23][24] - Adjusted EBITDA margin was 25%, with four-wall margins at company-operated stores reaching 39% [26][27] Business Line Data and Key Metrics Changes - The Maintenance segment saw a 14% same-store sales growth, benefiting from digital marketing and retail pricing increases [29] - The Car Wash segment experienced a 9% decline in same-store sales, impacted by foreign exchange rates and softer retail volumes [31][32] - The Paint, Collision, and Glass segment posted a 16% same-store sales growth, with the glass business generating mid-30% four-wall EBITDA margins [35][36] Market Data and Key Metrics Changes - Driven Brands operates in a $350 billion automotive aftermarket industry, which continues to grow despite economic challenges [7][8] - The company has a customer database of 29 million unique customers, indicating strong market presence [7] - Vehicle miles traveled increased by approximately 1% year-to-date, with a positive forecast for Q4 [42] Company Strategy and Development Direction - The company aims to achieve at least $850 million of adjusted EBITDA by the end of 2026, with a focus on organic growth and acquisitions [9][22] - Driven Brands is expanding its footprint through a robust pipeline of new openings and acquisitions, with over 1,500 locations in development [19][41] - The company is leveraging its scale and shared service capabilities to enhance competitive advantages and drive growth [16][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating inflationary impacts and supply chain disruptions, highlighting the resilience of the automotive aftermarket [8][21] - The company remains optimistic about the balance of the year, with expectations for continued growth and market share gains [42][43] - Management noted that the operating environment may differ from initial expectations, but they are pleased with the current performance [21][43] Other Important Information - The company ended Q3 with $190 million in cash and equivalents, and $288 million in total liquidity [38][40] - A $365 million whole business securitization transaction was completed post-Q3, with proceeds used for debt repayment and general corporate purposes [39][41] - The pro forma weighted average interest rate of the debt portfolio is now 4.2%, with a net leverage ratio of 4.7 times [40] Q&A Session Summary Question: Car wash segment EBITDA performance - Management indicated that the contraction in car wash segment adjusted EBITDA was due to foreign exchange impacts, softer retail volumes, and promotional activity [46][47] Question: PC&G business incremental margins - Management explained that the contraction in the PC&G segment was influenced by the acquisition of company-owned stores, but the glass business is generating strong margins [48][49] Question: Impact of inflation on margins - Management noted effective management of inflationary impacts, with successful price increases in the Take 5 quick lube business [51][52] Question: Car wash decline in the U.S. - Management attributed the decline to FX impacts and softer retail volume, but highlighted the growth in the Wash Club program [53][54] Question: Clarification on guidance - Management clarified that the guidance reflects the impact of FX headwinds and includes M&A benefits, with expectations for organic growth to exceed prior guidance [56][57] Question: CapEx spending details - Management provided CapEx guidance of $400 million for the year, with a focus on unit development and corporate projects [61][62] Question: Glass business insurance opportunity - Management discussed the timing of unlocking insurance opportunities and the importance of calibration services in the glass business [64][65] Question: Labor constraints in the industry - Management highlighted structural advantages in labor efficiency and training, allowing the company to navigate hiring challenges effectively [67][70] Question: Commercial opportunity growth - Management expressed optimism about the commercial opportunity, emphasizing the stickiness of commercial customers [73][74] Question: Marketplace test details - Management described the upcoming marketplace test as a way to enhance procurement offerings for franchisees, aiming for increased profitability [75][76]

Driven Brands Holdings, Inc. (NASDAQ:DRVN) Q2 2022 Earnings Conference Call July 27, 2022 9:00 AM ET Company Participants Jonathan Fitzpatrick - President, CEO & Director Tiffany Mason - CFO & EVP Conference Call Participants Christopher O'Cull - Stifel, Nicolaus & Company Simeon Gutman - Morgan Stanley Elizabeth Suzuki - Bank of America Merrill Lynch Sharon Zackfia - William Blair & Company Peter Keith - Piper Sandler & Co. Christopher Horvers - JPMorgan Chase & Co. Peter Benedict - Robert W. Baird & Co. O ...

Financial Data and Key Metrics Changes - Consolidated same-store sales increased by 16% compared to Q1 2021 [7] - Revenue rose by 42% to $468 million [7] - Adjusted EBITDA increased by 52% to $119 million [7] - Adjusted EPS grew by 47% to $0.28 [7] - System-wide sales reached $1.3 billion [32] Business Line Data and Key Metrics Changes - Maintenance segment posted same-store sales growth of 19% [37] - Car Wash segment achieved same-store sales growth of 7% [37] - Glass segment reported same-store sales growth of 14% [39] - Platform Services segment experienced same-store sales growth of 31% [40] Market Data and Key Metrics Changes - The total addressable market for the company is over $300 billion, with less than 5% market share [4] - The company added 114 net new stores in Q1, including 79 Auto Glass Now sites [33] Company Strategy and Development Direction - The company aims for at least $850 million of adjusted EBITDA by 2026, with a focus on exceeding this target [6][29] - Growth priorities include Quick Lube, Car Wash, and Glass, leveraging a diversified portfolio for revenue and profit growth [14] - The company is pursuing a strategy of franchising, building, and acquiring new stores [6][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in consumer demand remaining stable despite inflationary pressures [8][44] - The company is not experiencing material impacts from rising gas prices or labor challenges [8][9] - Management remains optimistic about the balance of 2022, expecting continued strong performance [43][45] Other Important Information - The company ended Q1 with $271 million in cash and cash equivalents, and $397 million of undrawn capacity on revolving credit facilities, totaling $668 million in liquidity [42] - The net leverage ratio at the end of Q1 was 4.8 times [42] Q&A Session Summary Question: Insights on same-store sales split between car count and inflation - Management noted positive car count and ticket growth, with performance skewed more towards ticket due to inflation and complexity of vehicles [48][49] Question: Car Wash segment EBITDA margin sustainability - The Car Wash segment's margin expansion was driven by strong volume in the international business, particularly due to dust storms [51][52] Question: Impact of rising interest rates on M&A and leverage - Rising interest rates do not change the company's M&A strategy, which focuses on improving acquired assets [60][62] Question: Price increases in U.S. Car Wash and subscription attrition - No systematic price increases have been taken in the U.S. Car Wash business, and subscription attrition rates remain stable [63][65] Question: Guidance philosophy and future updates - The company plans to provide annual guidance and update it mid-year based on performance and M&A activity [70][71] Question: Supply chain pressures in Platform Services - Platform Services is experiencing significant supply chain pressures, but the company is managing these challenges effectively [72][73] Question: Surprises from the Auto Glass Now acquisition - The biggest surprise has been the growth potential in the glass repair market, driven by calibration services required for modern vehicles [78][79]

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 ...

Financial Data and Key Metrics Changes - For Q4 2021, revenue increased by 36% to $392 million compared to the previous year, with adjusted EBITDA rising by 29% to $85 million [8][24] - Adjusted EPS increased to $0.18 from $0.01 a year ago, marking a significant improvement [8] - For fiscal 2021, total revenue reached $1.5 billion, a 62% increase, while adjusted EBITDA grew by 76% to $362 million [24] Business Line Data and Key Metrics Changes - The maintenance segment posted positive same-store sales growth of 26%, benefiting from targeted digital marketing and increased car count [32] - The car wash segment achieved same-store sales growth of 6%, with wash club subscriptions now accounting for 50% of sales [34] - The Paint Collision and Glass segment reported positive same-store sales growth of 11%, with a significant increase in direct repair programs [36] Market Data and Key Metrics Changes - The company operates in a $300 billion-plus fragmented industry, holding less than 5% market share, indicating substantial growth potential [5][24] - System-wide sales for Q4 reached $1.2 billion, driven by same-store sales growth and new store additions [26] Company Strategy and Development Direction - The company aims to achieve adjusted EBITDA of $465 million in 2022, representing a nearly 30% increase over 2021 [5][21] - Key growth priorities include Quick Lube, car wash, and glass services, all characterized by simple operating models and strong unit-level economics [11][12] - The company plans to open approximately 225 net new stores in fiscal 2022, focusing on organic growth [43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business model despite challenges from COVID, inflation, and supply chain issues, emphasizing strong cash generation and growth potential [22][23] - The company anticipates mid-single-digit same-store sales growth for fiscal 2022, supported by industry tailwinds and effective marketing strategies [42] Other Important Information - The company has a robust pipeline for unit growth, including franchise and M&A opportunities, with a focus on maintaining competitive advantages through scale [21][40] - A potential non-cash impairment charge of up to $130 million may occur due to brand strategy changes in the car wash segment [36][78] Q&A Session Summary Question: Revenue guidance above consensus - Management acknowledged the revenue upside but noted that increased expenses and interest costs could affect EBITDA flow-through [47][50] Question: Car wash same-store sales performance - Management indicated that 6% growth was reasonable and highlighted ongoing improvements in the car wash business [51][52] Question: Labor pressures in car wash segment - Management reassured that the efficient labor model in the car wash segment mitigates labor challenges, contributing to strong performance [55][56] Question: Regional performance disparities - Management noted that southern states generally outperformed northern states, with vehicle miles traveled tracking positively [59][60] Question: Impact of inflation on comps - Management stated that inflation had a mid-single-digit impact year-to-date, with a more pronounced effect in Q4 [64][65] Question: Greenfield development support - Management confirmed a strong pipeline for Greenfield locations, focusing on both infill and new market opportunities [68][69] Question: Opportunities for increasing car wash sales - Management highlighted product mix management, new customer acquisition, and equipment upgrades as key strategies for revenue growth [70][72]

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]