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