Driven Brands (DRVN) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Results Overview Executive Summary and Key Highlights Driven Brands achieved its 18th consecutive quarter of same store sales growth, with Q2 2025 revenue up 6.2% to $551.0 million and system-wide sales up 3.1% to $1.6 billion - Achieved 18th consecutive quarter of same store sales growth[1] - Take 5 segment delivered 15% revenue growth and 7% same store sales growth[1] - Pro forma net leverage ratio of 3.9x Adjusted EBITDA post sale of U.S. car wash seller note[1] Q2 2025 Key Financial Highlights | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Revenue | $551.0M | $518.8M | +6.2% | | System-wide Sales | $1.6B | $1.58B | +3.1% | | Same Store Sales Growth | 1.7% | N/A | N/A | | Store Count Growth | 3.9% | N/A | N/A | | Net Income from Continuing Operations | $11.8M | $37.2M | -68.3% | | Diluted EPS from Continuing Operations | $0.07 | $0.22 | -68.2% | | Adjusted Net Income | $59.1M | $60.4M | -2.15% | | Adjusted Diluted EPS | $0.36 | $0.37 | -2.7% | | Adjusted EBITDA | $143.2M | $143.4M | -0.14% | CEO Commentary CEO Danny Rivera highlighted consistent performance, successful debt reduction, and the strength of the diversified platform, expressing confidence in sustainable growth and leverage reduction - Achieved pro forma net leverage of 3.9x following the sale of the U.S. car wash seller note in July[3] - Take 5 Oil Change delivered its 20th consecutive quarter of same store sales growth[3] - Key priorities include driving continued growth, generating robust free cash flow, and reducing leverage[4] Q2 2025 Key Performance Indicators by Segment Take 5 and Car Wash segments showed strong performance with significant same store sales and revenue growth, while Franchise Brands maintained a large system-wide sales base Q2 2025 Key Performance Indicators by Segment | Segment | System-wide Sales (in millions) | Store Count | Same Store Sales | Revenue (in millions) | Adjusted EBITDA (in millions) | | :---------------- | :------------------------------ | :---------- | :--------------- | :-------------------- | :---------------------------- | | Take 5 | $406.6 | 1,244 | 6.6 % | $304.2 | $108.2 | | Franchise Brands | $1,075.2 | 2,673 | (1.5) % | $74.6 | $45.4 | | Car Wash | $71.8 | 718 | 19.4 % | $73.4 | $27.3 | | Corporate and Other | $71.2 | 214 | N/A | $98.8 | $(37.7) | | Total | $1,624.8 | 4,849 | 1.7 % | $551.0 | $143.2 | Financial Statements Consolidated Statements of Operations Total net revenue increased by 6.2% to $551.0 million in Q2 2025, but operating income and net income from continuing operations significantly decreased due to higher expenses Q2 2025 Consolidated Statements of Operations Highlights | Metric (in thousands) | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | | Total Net Revenue | $550,988 | $518,796 | +6.2% | | Operating Income | $38,112 | $90,074 | -57.6% | | Net Income from Continuing Operations | $11,809 | $37,217 | -68.3% | | Diluted EPS from Continuing Operations | $0.07 | $0.22 | -68.2% | | Net Income | $47,564 | $30,159 | +57.7% | | Net Diluted EPS | $0.29 | $0.18 | +61.1% | - Selling, general, and administrative expenses increased from $119.8 million in Q2 2024 to $183.1 million in Q2 2025[17] - Gain on sale of discontinued operations, net of tax, contributed $37.367 million to net income in Q2 2025[17] Consolidated Balance Sheets Total assets decreased to $4.28 billion as of June 28, 2025, primarily due to divestitures, while total liabilities also fell significantly, and shareholders' equity increased Consolidated Balance Sheet Highlights | Metric (in thousands) | June 28, 2025 | December 28, 2024 | Change (%) | | :-------------------------------- | :-------------- | :---------------- | :--------- | | Total Assets | $4,283,514 | $5,261,787 | -18.6% | | Total Liabilities | $3,540,119 | $4,654,453 | -23.9% | | Total Shareholders' Equity | $743,395 | $607,334 | +22.4% | | Cash and Cash Equivalents | $166,131 | $149,573 | +11.1% | | Long-term Debt | $2,094,535 | $2,656,308 | -21.2% | - The balance sheet reflects the divestiture of the U.S. car wash business, with "Assets held for sale" decreasing and "Seller note receivable" appearing at $113.0 million[19] Consolidated Statements of Cash Flows Net cash provided by operating activities increased to $155.5 million for the six months ended June 28, 2025, while investing activities significantly improved, and financing activities saw a substantial increase in debt repayment Six Months Ended June 28, 2025 Cash Flow Highlights | Metric (in thousands) | Six Months Ended June 28, 2025 | Six Months Ended June 29, 2024 | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | | Net Cash Provided by Operating Activities | $155,527 | $107,224 | +45.1% | | Cash Provided by (Used in) Investing Activities | $157,552 | $(34,026) | N/A (significant improvement) | | Cash Used in Financing Activities | $(321,882) | $(102,063) | +215.4% | | Proceeds from sale or disposal of businesses and fixed assets | $259,585 | $112,845 | +130.0% | | Repayment of long-term debt | $(305,446) | $(34,005) | +798.2% | Capital and Liquidity Liquidity Position Driven Brands ended Q2 2025 with total liquidity of $654.8 million, including cash and undrawn capacity from its variable funding securitization senior notes and revolving credit facility Q2 2025 Liquidity Position | Metric | Amount (in millions) | | :-------------------------------- | :------------------- | | Total Liquidity | $654.8 | | Cash and Cash Equivalents | $166.1 | | Undrawn Capacity (VFN & Revolver) | $488.7 | | Additional VFN Borrowing Capacity | $135.0 | Seller Note Divestiture Driven Brands divested its U.S. car wash seller note for $113.0 million in cash, using proceeds to reduce debt and achieve a pro forma net leverage ratio of 3.9x Adjusted EBITDA - Divested seller note for $113.0 million in cash proceeds on July 25, 2025[8] - Net proceeds used to pay off outstanding term loan principal and $65.0 million of revolving credit facility[8] - Achieved pro forma net leverage of 3.9x Adjusted EBITDA after debt reduction[8] Fiscal Year 2025 Outlook Reaffirmed Financial Outlook Driven Brands reaffirmed its fiscal year 2025 financial outlook, projecting revenue between $2.05 billion and $2.15 billion, Adjusted EBITDA between $520 million and $550 million, and Adjusted Diluted EPS between $1.15 and $1.25 - Reaffirmed fiscal year 2025 financial outlook[9] Fiscal Year 2025 Financial Outlook | Metric | 2025 Outlook | | :-------------------- |