Driven Brands Conference Call Summary Company Overview - **Company**: Driven Brands (NasdaqGS:DRVN) - **Date**: December 03, 2025 - **Speakers**: Danny Rivera (President and CEO), Mike Diamond (Executive VP and CFO) Key Points Industry and Business Transformation - Driven Brands is undergoing a transformation focused on growth and cash generation, particularly after selling its U.S. and international car wash businesses, which did not align with its core growth and cash strategy [4][5][6] - The company aims to concentrate on its franchise businesses, which have a strong margin profile, particularly in the oil change sector [5][11] Financial Strategy and Leverage - Driven Brands is committed to reducing its net leverage to three times by the end of 2026, with the recent sale expected to accelerate this process by approximately 0.3 times [7][8][9] - The company plans to use cash from the sale to pay down debt and improve its balance sheet [7][8] Growth and Cash Framework - The growth strategy is anchored in the success of the Take 5 oil change business, which has expanded from 40 locations in 2016 to approximately 1,350 locations, with plans to reach 2,500 units [11][23] - The company is focused on maintaining a balance between growth and cash generation, with a target of opening over 150 locations annually [14][23] Performance Metrics - Driven Brands reported a 19th consecutive quarter of positive same-store sales growth, with Take 5 achieving a 21st consecutive quarter of growth [16] - Take 5 has seen a 7% increase in Q3, while the franchise segment grew by 1% [20] Market Dynamics - The company operates in a non-discretionary service category, which provides resilience against economic cycles, as car maintenance remains essential [16][21] - Despite some choppiness in Q4, the company remains optimistic about its guidance and overall performance [20][21] New Service Rollouts - Driven Brands has successfully introduced new services, such as differential fluid service, which has been well-received by customers, maintaining high Net Promoter Scores (NPS) [28][29] - The company has increased attachment rates for additional services from mid-30s to low 50s since acquiring Take 5 [29][30] Collision and Glass Segments - The collision industry is facing challenges, including inflation and high total loss rates, but Driven Brands continues to gain market share [49][50][51] - The newly established glass division, Autoglass Now, is expected to grow through strategic acquisitions and partnerships, with a focus on insurance and commercial deals [40][41][42] Long-term Vision - Driven Brands aims to maintain a diversified portfolio, with a focus on franchise growth while balancing company-owned locations [57][58] - The company is committed to a long-term vision of expanding its franchise network while ensuring strong unit economics [59][60] Conclusion - Driven Brands is positioned for continued growth through strategic divestitures, a focus on core businesses, and a commitment to improving its financial metrics. The company remains optimistic about its future prospects and the resilience of its business model in the face of economic challenges [70][71]

Dec 2, 2025 6:00 AM Eastern Standard Time Driven Brands Announces Agreement to Divest International Car Wash Business Under the terms of the agreement, Franchise Equity Partners will acquire IMO for € 406 million, based on IMO's balance sheet as of June 30, 2025, which amount is not subject to post-closing adjustments for cash, debt or working capital. The agreement includes customary 'locked box' protections against certain types of financial leakage, and a customary 'ticker' whereby the purchase price inc ...

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]

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]

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 [42][43] 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 projected to reach $1.4 billion [9] - Same-store sales growth for Take 5 has been consistent in the mid to high single-digit range, driven by store maturation, advertising, and premiumization of services [12][14] - Non-oil change revenue currently accounts for about 20% of total revenue, with an attach rate in the upper 40% [15][16] 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 [49] - The average age of vehicles in the U.S. is at an all-time high, benefiting vehicle maintenance services like Meineke [55] Company Strategy and Development Direction - Driven Brands focuses on growth through new unit openings, targeting 150+ locations annually, with a preference for a 2:1 ratio of franchise to company-operated stores [25][36] - The company is committed to maintaining its promise of a 10-minute oil change experience while exploring new service offerings that align with operational and financial fit [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 [70] - 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 a portion of its business exposed to electric vehicles, while the rest remains EV-agnostic [29] - The company has a strong cash flow generation from its franchise segment, which supports growth initiatives in higher-margin businesses like Take 5 [44][58] Q&A Session Summary Question: What is the outlook for the core consumer in the second half of the year? - Management reiterated their outlook for the second half, noting some headwinds but feeling comfortable with their projections [70] Question: How do you see pricing elasticity affecting your business? - The company noted that it operates in a non-discretionary market, allowing for price adjustments without significant elasticity response [73][74] Question: What are the expectations for market consolidation in the industry? - Management expects the trend of consolidation among a few players to continue, without significant acceleration [75]

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 [42][43] 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 projected to reach $1.4 billion [9] - Same-store sales growth for Take 5 has been consistent in the mid to high single-digit range, driven by store maturation, advertising, and premiumization of services [12][14] - Non-oil change revenue currently accounts for about 20% of total revenue, with an attach rate in the upper 40% [15][16] Market Data and Key Metrics Changes - The collision repair industry is facing a 10% year-over-year decline in estimate counts due to claim avoidance and high total loss rates, but Driven Brands is gaining market share [49][50] - The average age of vehicles in the U.S. is at an all-time high, benefiting vehicle maintenance services like Meineke [55] Company Strategy and Development Direction - Driven Brands plans to open over 150 new locations annually, with a focus on franchise growth, aiming for a two-to-one ratio of franchise to company-operated stores [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 [70] - 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' franchise segment generates robust cash flow with EBITDA margins exceeding 60%, which supports growth in other areas like Take 5 [44][58] - The company is leveraging its position in the fragmented auto glass market, focusing on insurance and commercial opportunities for growth [63][66] Q&A Session Summary Question: What is the outlook for the core consumer in the second half of the year? - Management reiterated their outlook for the second half, noting some headwinds but feeling comfortable with their projections [70] Question: How do you see pricing elasticity affecting your business? - The company noted that they operate in a non-discretionary market, allowing them to pass along prices if necessary, but they have not had to do so significantly [73][74] Question: What are your expectations for market consolidation in the industry? - Management expects the trend of consolidation among a few players to continue, without significant acceleration or deceleration [75]

Financial Data and Key Metrics Changes - For Q4 2024, Driven Brands reported revenue of $564 million, a 2% increase year-over-year, with adjusted EBITDA of $130.7 million and diluted adjusted EPS of $0.30 [10][11] - For the full fiscal year 2024, revenue reached $2.3 billion, with adjusted EBITDA of $553 million, reflecting a 2% and 7% increase respectively compared to the previous year [11][57] - The company achieved a net leverage ratio of 4.4x in Q4, improving from 4.5x in Q3, and paid down approximately $248 million of debt throughout the year [19][54] Business Line Data and Key Metrics Changes - The Take 5 Oil Change segment experienced 9.2% same-store sales growth in Q4, marking the 18th consecutive quarter of positive growth, with a total of 174 net new stores opened in fiscal year 2024 [21][43] - The Paint, Collision & Glass segment generated revenue of $97.3 million and adjusted EBITDA of $33 million in Q4, with same-store sales increasing by 1% despite a 7% decline in industry-wide collision repair estimates [39] - The Platform Services segment reported revenue of $40.2 million and adjusted EBITDA of $16.3 million in Q4 [40] Market Data and Key Metrics Changes - System-wide sales for Driven Brands grew by 5.5% in Q4 to $1.6 billion, with total revenue for the quarter increasing by 1.9% year-over-year [49] - The company noted that lower-income households are most affected by ongoing inflationary pressures, which may impact consumer spending in 2025 [12][60] Company Strategy and Development Direction - The company plans to focus on three key priorities for 2025: delivering the 2025 outlook, utilizing cash flow to reduce debt, and active portfolio management [9][27] - A definitive agreement has been made to sell the U.S. car wash business, with the transaction expected to close in Q2 2025 [13][41] - The company will adopt a simplified segment structure starting Q1 2025, with Take 5 Oil Change becoming a stand-alone segment to better reflect its growth potential [14][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic macroeconomic environment, despite anticipated pressures on consumer spending [12][60] - The company expects a more normalized level of same-store sales growth in 2025, while still maintaining a strong growth outlook for Take 5 Oil Change [37][86] - Management highlighted the importance of investing in frontline employees and maintaining high levels of customer loyalty [36][38] Other Important Information - The company has sold approximately $208 million of assets in fiscal year 2024, with over 75% of the divestiture process completed [18][54] - The company plans to provide quarterly unaudited pro forma results for FY 2024 in the new segment structure by mid-March 2025 [68] Q&A Session Summary Question: Can you provide color on the 2025 outlook and expected growth? - Management indicated that the U.S. car wash business contributed approximately $50 million of adjusted EBITDA, and the growth in 2025 will primarily come from Take 5 Oil Change, which has a strong unit pipeline and customer engagement [73][74] Question: What is the expected breakdown of unit growth between segments? - The majority of the expected net unit growth of 175 to 200 units will come from the Take 5 pipeline, with a historical trend of 2/3 being franchise stores and 1/3 company-owned [105][108] Question: What drove the increase in corporate costs in Q4? - The increase was attributed to performance-based compensation and share-based compensation related to IPO grants, reflecting strong company performance [102][103] Question: What is the plan for the Auto Glass Now segment? - Management confirmed that the TPA deal signed in Q4 2024 will start generating revenue in Q1 2025, with a focus on growing regional and national insurance partnerships [117][118] Question: Is there an appetite for M&A following the car wash sale? - Management stated that while they have historically been acquisitive, the focus will be on organic growth, but they remain open to accretive opportunities in the automotive aftermarket space [128]