Driven Brands (DRVN) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4 2021, revenue increased by 36% to $392 million compared to the previous year, with adjusted EBITDA rising by 29% to $85 million [8][24] - Adjusted EPS increased to $0.18 from $0.01 a year ago, marking a significant improvement [8] - For fiscal 2021, total revenue reached $1.5 billion, a 62% increase, while adjusted EBITDA grew by 76% to $362 million [24] Business Line Data and Key Metrics Changes - The maintenance segment posted positive same-store sales growth of 26%, benefiting from targeted digital marketing and increased car count [32] - The car wash segment achieved same-store sales growth of 6%, with wash club subscriptions now accounting for 50% of sales [34] - The Paint Collision and Glass segment reported positive same-store sales growth of 11%, with a significant increase in direct repair programs [36] Market Data and Key Metrics Changes - The company operates in a $300 billion-plus fragmented industry, holding less than 5% market share, indicating substantial growth potential [5][24] - System-wide sales for Q4 reached $1.2 billion, driven by same-store sales growth and new store additions [26] Company Strategy and Development Direction - The company aims to achieve adjusted EBITDA of $465 million in 2022, representing a nearly 30% increase over 2021 [5][21] - Key growth priorities include Quick Lube, car wash, and glass services, all characterized by simple operating models and strong unit-level economics [11][12] - The company plans to open approximately 225 net new stores in fiscal 2022, focusing on organic growth [43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business model despite challenges from COVID, inflation, and supply chain issues, emphasizing strong cash generation and growth potential [22][23] - The company anticipates mid-single-digit same-store sales growth for fiscal 2022, supported by industry tailwinds and effective marketing strategies [42] Other Important Information - The company has a robust pipeline for unit growth, including franchise and M&A opportunities, with a focus on maintaining competitive advantages through scale [21][40] - A potential non-cash impairment charge of up to $130 million may occur due to brand strategy changes in the car wash segment [36][78] Q&A Session Summary Question: Revenue guidance above consensus - Management acknowledged the revenue upside but noted that increased expenses and interest costs could affect EBITDA flow-through [47][50] Question: Car wash same-store sales performance - Management indicated that 6% growth was reasonable and highlighted ongoing improvements in the car wash business [51][52] Question: Labor pressures in car wash segment - Management reassured that the efficient labor model in the car wash segment mitigates labor challenges, contributing to strong performance [55][56] Question: Regional performance disparities - Management noted that southern states generally outperformed northern states, with vehicle miles traveled tracking positively [59][60] Question: Impact of inflation on comps - Management stated that inflation had a mid-single-digit impact year-to-date, with a more pronounced effect in Q4 [64][65] Question: Greenfield development support - Management confirmed a strong pipeline for Greenfield locations, focusing on both infill and new market opportunities [68][69] Question: Opportunities for increasing car wash sales - Management highlighted product mix management, new customer acquisition, and equipment upgrades as key strategies for revenue growth [70][72]