分组1 - Driven Brands Holdings Inc. reported quarterly earnings of $0.34 per share, exceeding the Zacks Consensus Estimate of $0.29 per share, and showing an increase from $0.26 per share a year ago, resulting in an earnings surprise of +17.24% [1] - The company achieved revenues of $535.68 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.41%, although this represents a decline from year-ago revenues of $591.68 million [2] - Driven Brands has consistently surpassed consensus EPS estimates over the last four quarters, achieving this four times [2] 分组2 - The stock has underperformed, losing about 11.7% since the beginning of the year, compared to the S&P 500's gain of 16.5% [3] - The current consensus EPS estimate for the upcoming quarter is $0.28 on revenues of $517.66 million, and for the current fiscal year, it is $1.20 on revenues of $2.11 billion [7] - The Automotive - Retail and Wholesale - Parts industry, to which Driven Brands belongs, is currently ranked in the bottom 20% of over 250 Zacks industries, indicating potential challenges ahead [8]

Financial Performance - The company's net leverage ratio as of Q3 2025 was 3.8x [1, 2] - Net loss for the twelve months ended September 27, 2025, was $221.808 million [1] - Debt Agreement Adjusted EBITDA for the twelve months ended September 27, 2025, was $543.930 million [1] - Total debt as of September 27, 2025, was $2.21438 billion, less cash and cash equivalents of $162.028 million, resulting in net debt of $2.052352 billion [1] Key Adjustments to EBITDA - Depreciation and amortization expenses totaled $151.776 million for the twelve months ended September 27, 2025 [1] - Share-based compensation expense was $40.767 million for the twelve months ended September 27, 2025 [1] - Asset sale leaseback loss, net, impairment, notes receivable loss, and closed store expenses amounted to $443.625 million for the twelve months ended September 27, 2025 [1] Pro Forma and Other Adjustments - Pro forma EBITDA adjustments reduced EBITDA by $11.808 million [1] - Run rate adjustments related to store openings and closings increased EBITDA by $10.208 million [1] - Other adjustments permitted under the Debt Agreement increased EBITDA by $10.227 million [1]

Financial Performance - Driven Brands reported Q3 2025 revenue of $535.7 million, a 6.6% increase year-over-year[2] - Net income from continuing operations was $60.9 million, or $0.37 per diluted share, compared to a net loss of $11.5 million, or $(0.07) per diluted share, in the prior year[3] - Adjusted EBITDA for the quarter was $136.3 million, up $4.3 million from the previous year[3] - Net income for the nine months ended September 27, 2025, was $113,932,000, a significant increase from $19,473,000 for the same period in 2024, representing a growth of 484%[20] - Adjusted net income from continuing operations for the three months ended September 27, 2025, was $56,195,000, up from $38,081,000 in the prior year, representing a 47.6% increase[27] - Adjusted EBITDA for the three months ended September 27, 2025, was $136,260,000, compared to $131,943,000 for the same period in 2024, reflecting a 3.5% increase[32] Sales and Revenue Growth - System-wide sales increased by 4.7% to $1.6 billion, driven by a 2.8% rise in same store sales and a 3.5% increase in store count[2] - The Take 5 segment revenue increased by 14%, marking the 19th consecutive quarter of growth in same store sales[1] - Total system-wide sales for the three months ended September 27, 2025, reached $1,625,432,000, a significant increase from $1,552,422,000 for the same period in 2024, representing a year-over-year growth of approximately 4.7%[36] - Total system-wide sales for the nine months ended September 27, 2025, were $4,797,037,000, compared to $4,641,368,000 for the same period in 2024, representing an increase of approximately 3.4%[37] Outlook and Projections - The company narrowed its fiscal year 2025 revenue outlook to approximately $2.10 - $2.12 billion and Adjusted EBITDA to approximately $525 - $535 million[10] - Same store sales growth is expected at the low end of the original range of 1% to 3%, with net store growth projected at approximately 175 to 200[10] - Adjusted EBITDA and Adjusted EPS are included in the company's Fiscal Year 2025 Outlook, although specific figures were not provided due to the uncertainty of future events[24] Cash Flow and Liquidity - The net leverage ratio improved to 3.8x Adjusted EBITDA, with total liquidity of $755.7 million[7] - Cash provided by operating activities for the nine months ended September 27, 2025, was $234,745,000, compared to $208,508,000 for the same period in 2024, indicating an increase of approximately 12.5%[20] - The company experienced a net change in cash, cash equivalents, and restricted cash of $(5,518,000) for the period, compared to an increase of $33,344,000 in the prior year[21] Assets and Liabilities - Total assets decreased to $4,152,930,000 as of September 27, 2025, down from $5,261,787,000 as of December 28, 2024, reflecting a decline of approximately 21%[19] - Total current liabilities increased to $648,148,000 as of September 27, 2025, compared to $433,895,000 as of December 28, 2024, marking an increase of about 49%[19] - Total liabilities decreased to $3,359,440,000 as of September 27, 2025, from $4,654,453,000 as of December 28, 2024, representing a decline of approximately 28%[19] - The company reported an accumulated deficit of $(888,651,000) as of September 27, 2025, an improvement from $(1,002,583,000) as of December 28, 2024[19] Segment Performance - The company reported a total revenue of $107,307,000 from the Take 5 segment for the three months ended September 27, 2025, an increase from $93,287,000 in the prior year[35] - Franchise Brands generated $49,734,000 in revenue for the three months ended September 27, 2025, slightly down from $50,196,000 in the same period of 2024[35] - The Car Wash segment reported revenue of $15,030,000 for the three months ended September 27, 2025, compared to $16,000,000 in the prior year[35] - Corporate and Other segments reported a loss of $35,811,000 for the three months ended September 27, 2025, compared to a loss of $27,540,000 in the same period of 2024[35] Store Count and Expansion - The total store count as of September 27, 2025, was 4,888, which includes 3,165 franchise stores, 1,006 company-operated stores, and 717 independently operated stores[36] - The number of franchise stores increased from 3,078 in September 2024 to 3,165 in September 2025, showing a growth of 2.8%[36] - The company plans to continue expanding its store count and enhancing its service offerings to drive future growth[36] Strategic Initiatives - The company expects to continue incurring acquisition-related costs and non-core items as part of its strategic transformation initiatives[33] - The company is focusing on new product development and technology advancements to improve customer experience and operational efficiency[36]

Core Insights - Driven Brands Holdings Inc. reported a strong third quarter for 2025, with revenue of $535.7 million, reflecting a 6.6% increase year-over-year [3][4] - The Take 5 segment experienced a revenue increase of 14%, with same-store sales growth of 7%, marking the 19th consecutive quarter of growth in same-store sales [1][5] - The company narrowed its fiscal year 2025 outlook, projecting revenue between $2.10 billion and $2.12 billion and adjusted EBITDA between $525 million and $535 million [11] Financial Performance - Net income from continuing operations was $60.9 million, or $0.37 per diluted share, compared to a net loss of $11.5 million, or $(0.07) per diluted share, in the prior year [4][19] - Adjusted net income was $56.2 million, or $0.34 per diluted share, compared to $38.1 million, or $0.23 per diluted share, in the prior year [4][19] - Adjusted EBITDA for the quarter was $136.3 million, an increase of $4.3 million from the previous year [4][19] Segment Performance - The Take 5 segment generated system-wide sales of $411.6 million, with a same-store sales increase of 6.8% [6] - Franchise Brands reported system-wide sales of $1.09 billion, with a same-store sales increase of 0.7% [6] - The Car Wash segment achieved system-wide sales of $51.4 million, with a same-store sales increase of 3.9% [6] Capital and Liquidity - The company ended the quarter with a net leverage ratio of 3.8x adjusted EBITDA and total liquidity of $755.7 million, including $162.0 million in cash [8] - Driven Brands divested a seller note for $113.0 million in cash proceeds, which were used to pay off outstanding term loan principal and part of the revolving credit facility [9] - The company completed an offering of $500 million in senior notes, with proceeds primarily used to repay existing senior secured notes [10] Outlook - The company expects same-store sales growth at the low end of its original range of 1% to 3% and anticipates net store growth of approximately 175 to 200 [11][12] - The narrowed fiscal year 2025 outlook reflects continued execution of the company's Growth and Cash strategy, focusing on expansion and cash generation [5][11]

Core Viewpoint - Johnson Fistel, PLLP is investigating potential breaches of fiduciary duties by certain directors and officers of Driven Brands Holdings Inc. (NASDAQ: DRVN) towards the company and its shareholders [1][4]. Group 1: Investigation Details - The investigation aims to determine if senior officers or board members harmed Driven Brands by breaching fiduciary duties or violating securities laws related to misrepresentations and omissions [4]. - The court has previously denied the defendants' motion to dismiss a shareholder class action lawsuit, which alleges misrepresentations regarding Driven's ability to integrate acquired businesses and the performance of its car wash segment [3]. Group 2: Shareholder Rights - Current long-term shareholders of Driven Brands may have legal claims that can be brought against the company's directors and officers [2]. - Shareholders can join the investigation through a provided link to discuss their legal rights [3].

Core Viewpoint - Driven Brands Holdings Inc. has successfully closed an offering of $500 million in Series 2025-1 Fixed Rate Senior Secured Notes, Class A-2, which will mature in October 2055 and have an anticipated repayment date in October 2030 [1] Group 1 - The proceeds from the issuance will be utilized alongside funding from the Company's revolving credit facility to refinance existing debt [1]

Core Insights - Headwaters Capital Management's third-quarter 2025 investor letter focused on AI and reported a portfolio return of -2.7% (-2.9% net), underperforming the Russell Mid Cap Index which gained +5.3% [1] Company Summary - Driven Brands Holdings Inc. (NASDAQ:DRVN) was highlighted as a key stock in the investor letter, providing automotive services to retail and commercial customers [2] - The one-month return for Driven Brands Holdings Inc. was -12.49%, while its shares increased by 4.42% over the last 52 weeks [2] - As of October 13, 2025, Driven Brands Holdings Inc. closed at $15.13 per share, with a market capitalization of $2.486 billion [2] - The company was recommended for a starter position by Headwaters Capital Management during the quarter [3]

Group 1 - The article recommends a buy rating for Driven Brands Holdings (NASDAQ: DRVN) due to strong performance from Take 5 and the sale of its US car wash [1] - The investment approach focuses on fundamentals-based value investing, emphasizing long-term durability and affordability [1] - There is a common misconception that low multiple stocks are necessarily cheap, but the article argues for a focus on companies with steady long-term growth and robust balance sheets [1] Group 2 - The article acknowledges the risks associated with investing in successful companies, particularly the potential to overpay [1] - It highlights that in certain situations, the vast development runway of a company can make immediate price less significant [1]

Segment Analysis - The discussion focuses on the quick lube model and its differentiation from traditional local repair shops [1] - Take 5 is highlighted as a diversified auto services business, emphasizing its unique value proposition to customers [1]

Financial Data and Key Metrics Changes - Driven Brands reported approximately $6.5 billion in system-wide sales and $2 billion in revenue, primarily from non-discretionary services [4][5] - The company aims for mid-30% EBITDA margins, with some quarter-over-quarter variations noted [41][42] Business Line Data and Key Metrics Changes - Take 5 Oil Change has grown from 40 units in 2016 to 1,300 locations today, with system-wide sales expected to reach $1.4 billion [9] - Same-store sales growth for Take 5 has been in the mid to high single-digit range, driven by store maturation, new store openings, and increased ticket sizes [12][13][14] - Non-oil change revenue currently accounts for about 20% of sales, with an attach rate in the upper 40% [15][17] Market Data and Key Metrics Changes - The collision repair industry is facing a 10% year-over-year decline in estimate counts, attributed to claim avoidance and high total loss rates [48] - The average age of vehicles in the U.S. is at an all-time high of 12.8 years, benefiting maintenance businesses like Meineke [54] Company Strategy and Development Direction - Driven Brands focuses on growth through Take 5, with plans to open over 150 new locations annually, primarily through franchising [25][36] - The company is committed to maintaining its promise of a 10-minute oil change experience while exploring new service offerings that fit operational and financial criteria [26][27] Management's Comments on Operating Environment and Future Outlook - Management reiterated a positive outlook for the second half of the year despite some headwinds, particularly in discretionary spending [69] - The company believes it can thrive in the automotive service market through the 2020s and 2030s, even with the rise of electric vehicles [31] Other Important Information - Driven Brands operates a diversified platform, with only one business segment exposed to electric vehicles, while the rest remain EV-agnostic [29] - The franchise segment generates robust cash flow and EBITDA margins north of 60%, which supports growth in other areas [43][44] Q&A Session Summary Question: What is the outlook for the core consumer in the second half of the year? - Management reiterated their outlook, noting some headwinds but feeling comfortable with their projections [69] Question: How does pricing impact your business? - The company has not had to pass along price increases due to its non-discretionary nature, with growth driven by premiumization rather than price hikes [72] Question: What is the expectation for market consolidation in the industry? - The trend of consolidation among a few players acquiring smaller ones is expected to continue, without significant acceleration [74]