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]