Driven Brands Earnings Call: Growth Amid Challenges

Driven Brands Holdings, Inc. ((DRVN)) has held its Q2 earnings call. Read on for the main highlights of the call.

Driven Brands Holdings, Inc. recently held its earnings call, revealing a mixed sentiment among its business segments. The company showcased robust growth in its Take 5 Oil Change and international car wash operations, yet faced challenges within its collision and Maaco businesses. Despite these hurdles, Driven Brands is making strides in debt reduction and maintaining a solid financial footing.

Revenue Growth and Store Expansion

Driven Brands reported a 6% increase in revenue, achieving an adjusted EBITDA of $143 million. The company also saw a 3% rise in system-wide sales, bolstered by the addition of 184 net new stores over the past year, including 52 in the most recent quarter.

Take 5 Oil Change Performance

The Take 5 Oil Change segment led the company’s growth, with a remarkable 10% increase in adjusted EBITDA year-over-year. The segment added 169 net new stores over the past 12 months, with 41 added this quarter, and achieved a 7% rise in same-store sales.

International Car Wash Segment Success

Driven Brands’ international car wash business, IMO, delivered impressive results with a 19% increase in same-store sales for the quarter. The segment reported an adjusted EBITDA of $27 million and maintained strong margins at 37%.

Debt Reduction Progress

The company has made significant progress in reducing its debt, lowering its net leverage to 3.9x on a pro forma basis. Driven Brands has paid down nearly $700 million in debt since the end of 2023.

Collision and Maaco Business Softness

The collision and Maaco businesses experienced softness year-over-year, attributed to industry pressures and reduced discretionary spending among lower-income consumers.

Franchise Brands Segment Challenges

Driven Brands’ franchise segment faced a 1.5% decline in same-store sales, largely due to ongoing challenges in the Maaco business and the collision industry.

Increased Operating Expenses

Operating expenses rose by $84.2 million year-over-year, driven by higher sales volumes, the addition of more stores, and increases in SG&A expenses.

Forward-Looking Guidance

Looking ahead, Driven Brands provided comprehensive guidance for its financial performance and strategic initiatives. The company expects revenue between $2.05 billion and $2.15 billion for fiscal 2025, with adjusted EBITDA projected between $520 million and $550 million. Same-store sales growth is anticipated to be between 1% and 3%. Driven Brands aims to reduce its net leverage to 3x by the end of 2026.

In summary, Driven Brands Holdings, Inc. presented a mixed yet optimistic outlook during its recent earnings call. While the company faces challenges in certain segments, it continues to demonstrate strong growth in others, particularly Take 5 Oil Change and its international car wash business. With ongoing efforts in debt reduction and strategic expansion, Driven Brands is poised for continued progress in the coming years.