Driven Brands Holdings Inc. (NASDAQ:DRVN) Q3 2023 Earnings Conference Call November 1, 2023 8:30 AM ET Company Participants Joel Arnao - Senior Vice President-Finance Jonathan Fitzpatrick - President & Chief Executive Officer Danny Rivera - Executive Vice President & Chief Operating Officer Gary Ferrera - Executive Vice President & Chief Financial Officer Conference Call Participants Peter Benedict - Baird Seth Sigman - Barclays Simeon Gutman - Morgan Stanley Liz Suzuki - Bank of America Kate McShane - Gold ...

Financial Data and Key Metrics Changes - The company reported a system-wide sales increase of 18% year-over-year, reaching $1.7 billion, driven by an 8% increase in same-store sales and 7% net store growth [36] - Revenue for Q2 2023 was $606.9 million, reflecting a 19% increase compared to Q2 2022, with adjusted diluted EPS of $0.29 per share [24][70] - Adjusted EBITDA for the quarter was $151 million, a 12% increase year-over-year, with an adjusted EBITDA margin of 24.9%, down approximately 170 basis points from the previous year [65][70] Business Line Data and Key Metrics Changes - The Maintenance segment, primarily driven by Take 5 Quick Lube, achieved positive same-store sales growth of 10.2%, with Take 5 Oil Change locations delivering same-store sales growth of 17% [37][27] - The Car Wash segment experienced negative same-store sales of 4%, although this was an improvement from a double-digit decline in Q1 [38] - The Paint, Collision & Glass segment saw positive same-store sales growth of 12%, despite integration challenges with the Auto Glass Now brand [68] Market Data and Key Metrics Changes - The company noted a significant increase in competitive unit growth in the Car Wash segment, with approximately 1,500 new locations added in the last two years, leading to market share decline [58] - Retail traffic softness was observed in the first half of 2023, impacting customer acquisition and margins, particularly in the Car Wash segment [15][30] Company Strategy and Development Direction - The company is focused on building national brands with Take 5 Oil Change and Car Wash, aiming to consolidate market share and drive long-term growth [26] - A unified tech stack is being developed across Car Wash locations to enhance customer loyalty and membership programs, expected to launch in late 2023 [18] - The company plans to continue its capital-light strategy through sale and leaseback activities to reduce investment capital and improve leverage [12][44] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the Car Wash and Glass segments due to competitive pressures and integration delays, but remains optimistic about long-term growth prospects [45][75] - The company anticipates double-digit revenue growth and mid-single-digit adjusted EBITDA growth for the full year, despite revising guidance downward [72][46] Other Important Information - The company has a robust pipeline for new locations, with approximately 900 units planned for Take 5 [14] - Liquidity at the end of Q2 was $493 million, comprising $212 million in cash and cash equivalents, and $281 million of undrawn capacity [42] Q&A Session Summary Question: What steps are being taken to improve the Glass business integration? - Management acknowledged the complexity of integrating 12 acquisitions and is assessing underperforming stores to improve overall performance [51][49] Question: How is the company addressing competitive pressures in the Car Wash segment? - The company is implementing cross-brand promotions and leveraging the Take 5 brand to drive customer acquisition [30][136] Question: What is the outlook for store count expansion? - The company remains on track for Quick Lube and Car Wash growth, but has adjusted Glass expansion plans from 130 to about 90 new stores for the year [97] Question: How is inflation impacting the business? - Inflation is still present, particularly in supply chain costs, but the company is able to pass on many of these costs to consumers [123] Question: What are the expectations for future EBITDA performance? - Management indicated that the revised EBITDA guidance reflects underperformance in the Car Wash and Glass segments, but long-term profitability remains intact [89][90]

Financial Data and Key Metrics Changes - The company reported a 20% revenue growth, supported by 9% same-store sales growth and 7% new-store growth [6][109] - Adjusted net income for the first quarter was $42 million, with adjusted EPS of $0.25 [14] - Adjusted EBITDA for the quarter was $128 million, an increase of 8%, with an adjusted EBITDA margin of 23%, about 260 basis points below the prior year [49][100] - The net leverage ratio was 4.7x at the end of the first quarter, with expectations to naturally delever to the low 4s due to projected growth in adjusted EBITDA [15] Business Line Data and Key Metrics Changes - The Maintenance segment posted positive same-store sales of 13%, driven by strong car count and higher average ticket due to price increases and ancillary product attachment rates [35] - The Car Wash segment experienced negative same-store sales of 11%, impacted by softer retail volume and foreign exchange rate movements [50] - The Paint, Collision & Glass segment posted positive same-store sales of 14%, with strong performance in Paint and Collision [110] Market Data and Key Metrics Changes - The company’s footprint grew over 20% year-over-year, with a robust pipeline of 950 units, primarily franchise locations [8] - The Car Wash business is seeing a rationalization of competitive intensity due to macroeconomic conditions, which is expected to impact future M&A activity [9][45] Company Strategy and Development Direction - The company is focused on three growth priorities: Take 5 Oil Change, Take 5 Car Wash, and Auto Glass Now, leveraging cash flow generation to invest in these areas [22] - The integration of acquisitions under the Auto Glass Now brand is expected to enhance long-term opportunities with commercial customers [52] - The company aims to grow its footprint by an additional 20% in 2023, largely driven by franchise store growth [8] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter unfolded as anticipated, with resilience in the needs-based automotive services category [13][97] - The company expects continued momentum into the second quarter, with positive trends aligning with current expectations [77][134] - Management remains optimistic about the long-term potential of the Car Wash business despite current macroeconomic pressures [39][88] Other Important Information - The company ended the quarter with $466 million of liquidity, including $191 million in cash and $275 million of undrawn capacity on revolving credit facilities [34] - The company expects to deliver approximately $300 million of cash flow from operations for the year [37] Q&A Session Summary Question: Impact of weather on performance - Management acknowledged that poor weather conditions, particularly on weekends, have affected retail performance, alongside ongoing macroeconomic pressures [42] Question: Differences in performance between U.S. and international markets - Both U.S. and international businesses performed similarly on a constant currency basis, with a lag in international performance compared to the U.S. [55] Question: Expectations for Car Wash segment performance - Management expects improved performance in same-store sales and margins as the rebranding continues [58] Question: Financing sources for franchisees amid banking challenges - Franchisees use a mix of funding sources and are not heavily exposed to troubled banks, with a strong pipeline indicating continued growth [121][136] Question: Update on the glass business and commercial mix - The company is making progress in improving the commercial mix, with expectations for significant opportunities in late 2023 and early 2024 [139]

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 ...

Driven Brands Holdings, Inc. (NASDAQ:DRVN) Q1 2022 Earnings Conference Call April 27, 2022 9:00 AM ET Company Participants Jonathan Fitzpatrick - CEO, President Tiffany Mason - CFO, EVP Rachel Webb - VP, IR Conference Call Participants Simeon Gutman - Morgan Stanley Christopher Horvers - JPMorgan Peter Benedict - Baird Liz Suzuki - Bank of America Kate McShane, - Goldman Sachs Chris OÂ'Cull - Stiefel Karen Short - Barclays Peter Keith - Piper Sandler Operator Good morning and welcome to Driven Brand's First ...

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 – ...