Driven Brands Holdings, Inc. ((DRVN)) has held its Q1 earnings call. Read on for the main highlights of the call.
Driven Brands Holdings, Inc. recently held its Q1 2025 earnings call, revealing a generally positive sentiment driven by robust revenue and operational growth. The company showcased strong performances in its Take 5 Oil Change and International Car Wash segments. However, challenges were noted in the Franchise Brands segment, particularly with Maaco, alongside increased SG&A expenses that impacted operating income.
Revenue Growth
Driven Brands reported a revenue of $516 million for Q1 2025, marking a 7.1% increase year-over-year. This growth was supported by the addition of 177 net new stores and a 0.7% increase in same-store sales, marking the 17th consecutive quarter of positive same-store sales growth.
Take 5 Oil Change Performance
The Take 5 Oil Change segment continued its impressive streak with an 8% same-store sales growth for the 19th consecutive quarter. The segment also achieved a 15% increase in revenue and a 14% rise in adjusted EBITDA, maintaining healthy adjusted EBITDA margins of 34%.
Debt Reduction
Driven Brands has made significant strides in reducing its debt, having paid down nearly $290 million since the start of 2025 and more than $0.5 billion since early 2024. This was largely facilitated by the sale of its U.S. Car Wash business.
International Car Wash Segment Success
The International Car Wash segment posted strong results, with a 26% growth in same-store sales. Year-over-year, the segment saw a 25% increase in revenue and a 36% rise in adjusted EBITDA.
Franchise Brands Softness
The Franchise Brands segment faced challenges, particularly with Maaco, which saw a 2.9% decline in same-store sales and a 6.1% drop in revenue. This resulted in a $3.2 million decrease in adjusted EBITDA.
Operating Income Decline
Operating income for Q1 declined by $6.8 million to $61.3 million, with the adjusted EBITDA margin decreasing by 120 basis points to 24.2%.
SG&A Increase
SG&A expenses rose by $19.2 million year-over-year. This increase was attributed to investments in growth initiatives and the absence of gains from the previous year’s refranchising.
Forward-Looking Guidance
During the earnings call, Driven Brands provided strategic guidance, reiterating its fiscal 2025 outlook. The company emphasized its focus on cash flow generation and debt reduction, aiming for a net leverage target of 3 times by the end of 2026. The positive results from the Take 5 Oil Change and International Car Wash segments are expected to continue driving growth.
In summary, Driven Brands Holdings, Inc. demonstrated strong revenue growth and operational success in its Q1 2025 earnings call, despite challenges in the Franchise Brands segment and increased SG&A expenses. The company’s focus on debt reduction and strategic growth initiatives positions it well for future success.