Financial Data and Key Metrics Changes - Driven Brands reported a revenue increase of 7% year-over-year, totaling $535.7 million for Q3 2025, with adjusted EBITDA of $136.3 million, reflecting a growth of approximately $4.3 million compared to Q3 2024 [5][20][29] - The company achieved a net leverage ratio of 3.8 times, down from 4.1 times at the end of Q2 2025, and is on track to reach a target of three times by 2026 [6][27][28] - Adjusted diluted EPS from continuing operations increased to $0.34, up $0.011 from Q3 2024, driven by higher operating income and lower interest expenses [21][29] Business Line Data and Key Metrics Changes - The Take Five segment, which represents over 75% of Driven's overall adjusted EBITDA, experienced a same-store sales increase of 6.8% and revenue growth of 13.5% [21][22] - The Franchise segment reported a same-store sales growth of 0.7%, with adjusted EBITDA margins of 66%, despite a revenue decline of 2.3% due to a decrease in the weighted average royalty rate [10][22] - The International Car Wash segment saw a 3.9% increase in same-store sales, although adjusted EBITDA decreased to $15 million, or 27.8% of sales, due to higher costs [23][24] Market Data and Key Metrics Changes - System-wide sales increased by 4.7% to $1.6 billion in Q3 2025, supported by the addition of 39 net new stores during the quarter [19][20] - The company continues to face a dynamic consumer environment, with Q4 expected to be choppy due to macroeconomic uncertainties, including a government shutdown [11][29] Company Strategy and Development Direction - Driven Brands remains focused on growth and cash generation, with plans to open approximately 170 new Take Five locations in 2025, maintaining a commitment to open 150 or more new units annually [8][16] - The company is innovating to drive traffic and efficiency, including the implementation of a new media mix model for better advertising spend allocation and testing AI-driven technology for operational improvements [9][52] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the consumer environment, noting ongoing pressure on lower-income consumers and potential disruptions from government funding issues [11][60] - Despite the challenges, management remains optimistic about the strength of the Take Five brand and its growth prospects, expecting continued performance in Q4 [36][80] Other Important Information - The company announced two key organizational changes, appointing Mo Khalid as COO and Tim Austin as President of Take Five Oil Change, aimed at strengthening operational leadership [12][14] - Driven Brands has a robust pipeline of approximately 900 locations, with over a third secured or further along in the development process [8][45] Q&A Session Summary Question: Can you provide more details on the comps progression and the exit rate for Q3? - Management noted consistent performance in Q3, but highlighted choppiness in Q4 due to broader consumer environment uncertainties, indicating a potential for negative comps in Q4 [32][36] Question: What is the expected free cash flow conversion rate going forward? - Management indicated a conversion rate of about 70% of adjusted EBITDA into free cash flow year-to-date, with potential for improvement as capital expenditures may decline in 2026 [38][39] Question: What are the unit growth expectations for Take Five given increasing competition? - Management remains confident in achieving 150 or more new Take Five locations annually, supported by a strong franchisee base and a robust pipeline [46][47] Question: How has the new media mix model impacted brand awareness? - The new media mix model is expected to optimize advertising spend and improve return on investment, with potential for expanded marketing channels as the brand grows [52][55] Question: Are there signs of oil change deferrals among lower-income consumers? - Management acknowledged pressure on lower-income consumers but noted strong performance in non-oil change revenue and attachment rates, indicating resilience in the business [66][67] Question: What is the outlook for the collision industry? - Management observed a mixed outlook for the collision industry, with expectations of continued share gains despite industry headwinds [72][74]

Financial Data and Key Metrics Changes - Driven Brands reported a revenue increase of 6% year-over-year, totaling $551 million for Q2 2025 [9][18] - Adjusted EBITDA for the quarter was $143.2 million, reflecting a slight decrease of approximately $200,000 compared to the previous year [19][20] - The adjusted EBITDA margin decreased by roughly 160 basis points to 26% due to increased operating expenses [20] - Net income from continuing operations was $11.8 million, with adjusted net income of $59.1 million, leading to an adjusted diluted EPS of $0.36, down $0.01 from the previous year [20] Business Line Data and Key Metrics Changes - The Take Five Oil Change segment, which represents about 75% of the company's overall adjusted EBITDA, saw same-store sales increase by 6.6% and revenue growth of 14.7% [21] - Franchise Brands experienced a 1.5% decline in same-store sales, although this marked a sequential improvement from Q1 [22] - The Car Wash segment reported same-store sales growth of 19.4%, with adjusted EBITDA increasing to $27.3 million [23] Market Data and Key Metrics Changes - System-wide sales increased by 3.1% to $1.6 billion, supported by the addition of 52 net new stores in Q2 [18] - The company added 184 net new stores over the last twelve months, with 41 new stores opened in the current quarter [9][18] Company Strategy and Development Direction - The company remains focused on delivering consistent growth, particularly through the Take Five segment, and aims to reduce leverage to three times by 2026 [13][14] - Driven Brands is committed to expanding its service offerings, including the rollout of differential services across locations [10][11] - The company plans to continue opening over 150 new locations annually, enhancing brand awareness and customer loyalty [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience despite a dynamic macro environment, noting strong performance in the Take Five segment and market share gains in Collision and Mako [12][29] - The company anticipates ongoing softness in the Collision and Mako segments due to discretionary spending pullbacks among lower-income consumers [12][29] - For the full year, the company reiterated its revenue guidance of $2.05 billion to $2.15 billion and adjusted EBITDA of $520 million to $550 million [29][30] Other Important Information - The company successfully monetized a seller note from its U.S. Car Wash transaction for $113 million, which was used to retire its term loan and reduce net leverage to 3.9 times on a pro forma basis [13][26] - Driven Brands has paid down approximately $700 million of debt since the end of 2023, reducing net leverage from five times to 3.9 times [14][26] Q&A Session Summary Question: Can you dive deeper into the traffic versus ticket side within Take Five? - Management indicated satisfaction with the comps for Take Five, noting strong performance in both traffic and ticket metrics, with non-oil change revenue being a significant driver [34][36] Question: What are the profitability implications for the Take Five segment in the back half of the year? - Management expressed confidence in maintaining mid-30s margins for Take Five, despite some expected variability due to increased repair and maintenance costs [38][39] Question: How much of the strength in the Car Wash business is attributed to internal initiatives? - Management acknowledged that both internal initiatives and favorable weather contributed to the Car Wash segment's strong performance, but anticipated moderation in growth due to weather conditions [47][50] Question: What is the outlook for non-oil change services? - Management sees significant growth potential in non-oil change services, with attachment rates improving and new services being introduced [54][56] Question: Can you provide insights on the collision industry softness? - Management noted that the collision industry is facing challenges due to claim avoidance and high total loss rates, but Driven Brands is gaining market share [66][68] Question: What is the current state of franchisee profitability in the Mako and Collision segments? - Management reported that while some franchisees are facing challenges, the overall health of the franchise system remains strong, with some closures but net positive growth in Q2 [82][83]