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Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 8:30 a.m. ET Investor Relations - Steve Alexander President and Chief Executive Officer - Daniel Rivera Executive Vice President and Chief Financial Officer - Michael Diamond Operator: Thank you for standing by. My name is Matt, and I will be your conference operator today. At this time, we would like to welcome everyone to the Driven Brands Second Quarter 2026 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Steve Alexander, Investor Relations. You may begin. Steve Alexander: Good morning. Welcome to Driven Brands Second Quarter 2026 Earnings Conference Call. The earnings release and net leverage ratio reconciliation are available for download on our website at investors.drivenbrands.com. On the call with me today are Danny Rivera, President and Chief Executive Officer; and Mike Diamond, Executive Vice President and Chief Financial Officer. In a moment, Danny and Mike will walk you through our financial and operating performance for the quarter. Before we begin our remarks, I would like to remind you that management will refer to certain non-GAAP financial measures. You can find the reconciliations to the most directly comparable GAAP financial measures on the company's Investor Relations website and in its filings with the Securities and Exchange Commission. During this call, we will also make forward-looking statements regarding our current plans, beliefs and expectations. These statements are not guarantees of future performance and are subject to a number of risks and uncertainties and other factors that could cause actual results and events to differ materially from results and events contemplated by these forward-looking statements. Please see our earnings release and our filings with the Securities and Exchange Commission for more information. Today's remarks will be followed by a question-and-answer session. We ask that you limit yourself to one question and one follow-up. Now I'll turn the call over to Danny. Daniel Rivera: Good morning, and thank you for joining us to discuss Driven Brands' Second Quarter 2026 financial results. Driven delivered another quarter of positive same-store sales and continued growth, led once again by Take 5. Our Franchise Brands segment continued to serve as a reliable, high-margin cash generator, and we further strengthened the balance sheet during the quarter, reducing net leverage to 3.1x. For the quarter, compared to prior year, system-wide sales grew 5% to $1.6 billion, revenue grew 7% to $507 million and adjusted EBITDA was $107 million. Consolidated same-store sales increased 1.4%, and we grew our total footprint 5% to more than 4,300 locations, adding 192 net new stores over the last 12 months, with growth once again led by Take 5. Our strategy remains consistent, drive strong growth through Take 5 and generate reliable free cash flow from Franchise Brands. That combination of growth and cash allows us to invest in our highest return opportunities while continuing to strengthen the business. The operating environment remains dynamic and is being shaped by several factors, starting with a K-shaped consumer economy in which lower-income households remain under significant pressure. Moreover, renewed conflict in the Middle East has disrupted energy markets, driving volatility in oil prices and supply and pushing gas prices higher, which weighs directly on consumers and demand. While the broader industry is facing supply chain pressure, our scale and strong supplier relationships mean we do not foresee near-term supply concerns, absent a significant change in conditions. Our largely nondiscretionary portfolio is built to perform in exactly this kind of environment. That said, resilient does not mean impervious. So we are approaching the back half of the year with caution and a disciplined focus on execution. Let me start with Take 5, home of the stay-in-your-car 10-minute oil change. Take 5 delivered its 24th consecutive quarter of same-store sales growth with same-store sales up 3.6% and system-wide sales growth of 13%. On a 2-year basis, Take 5 same-store sales grew 10.2%, reflecting the underlying strength of the business as we lap a strong prior year period. Adjusted EBITDA grew 8% with margins of 34%. We opened 50 net new Take 5 locations in the quarter and have grown the segment by more than 175 stores over the past 12 months, ending the quarter with more than 1,400 locations. The Take 5 model continues to resonate with our customers. Our Net Promoter Scores remain in the mid-70s, and we continue to see meaningful contribution from our non-oil change services, which represented almost 30% of Take 5 sales for the quarter. Our new unit pipeline remains robust at approximately 800 locations, more than 1/3 of which are site secured or further along. And we remain committed to opening 150 or more units annually as we progress toward our long-term goal of more than 2,500 total locations. That said, we continue to watch the consumer closely. As we noted last quarter, we are seeing some moderation, particularly among newer customers and lower-income consumers who have been under sustained pressure. We are at our best when we are the fastest, friendliest and simplest oil change on the planet, and the team remains focused on delivering that value proposition and on building lasting customer relationships. We believe the largely nondiscretionary nature of our services positions us well as we manage through a more dynamic macro environment. A brief word on input costs. Like the broader market, we have seen upward pressure on oil and related input costs in recent months. Here, Take 5's scale is an advantage. We benefit from strong long-standing supplier relationships, a diversified supply chain and healthy product availability and a seasoned procurement team that continues to manage supply and cost effectively. We have a track record of taking modest disciplined price increases to offset rising input costs, and we will keep managing that lever thoughtfully while staying focused on protecting the value we deliver to our customers. Turning to Franchise Brands, home to iconic brands like Meineke, Maaco and CARSTAR. This segment did exactly what it is designed to do, generating reliable, high-margin cash flow. Same-store sales increased 0.5%, and the segment delivered strong adjusted EBITDA margins of 59%. Performance was led by continued strength at Meineke. In collision, while the broader industry remained under pressure, we continue to outperform, taking share and running approximately 200 basis points ahead of the industry. Maaco, our most discretionary brand, also remains under pressure, consistent with the trends we have previously discussed. Even so, this segment continues to be a dependable source of cash that funds our growth. Turning to Auto Glass Now, which delivered same-store sales growth of 2.6% and continued to make steady progress. Since entering the automotive glass market, we have scaled Auto Glass Now into the second largest operator in the industry, and we see a long growth runway ahead. The glass market is large, fragmented and growing, and we have meaningful opportunity to expand across our retail, commercial and insurance channels and to continue taking share over time. As a reminder, this business remains in its incubation period and performance will be uneven from quarter-to-quarter, but we are encouraged by the foundation we have built and by the long-term opportunity in front of us. Before turning to our outlook, let me spend a moment on our financial foundation. We remain focused on strengthening the foundation of Driven Brands, continuing to invest in our people, systems and processes, and we are making solid progress. This work positions us to operate with greater discipline and consistency as we execute our strategy. Now turning to our outlook. We are reiterating our full year 2026 guidance, revenue of $1.95 billion to $2.05 billion, same-store sales of flat to 2% and net new unit growth of 160 to 190 units. We are also reiterating our adjusted EBITDA range of $430 million to $460 million. That said, consistent with our approach to providing you visibility into key developments and based on what we are seeing today, we expect to be closer to the lower end of our range. Given the continued uncertainty around consumer demand, particularly among lower-income households and the conflict in the Middle East, we believe a measured posture is appropriate in a dynamic environment. Mike will take you through the details in a moment. Let me close with a few key takeaways. First, we delivered another quarter of positive same-store sales growth across all segments. Second, Take 5 again led the way with another quarter of strong consistent growth and its 24th consecutive quarter of same-store sales growth. Third, our Franchise Brands segment continues to serve as a reliable, high-margin cash generator. And finally, we remain firmly committed to our capital allocation priorities, including reaching our target of 3x net leverage by the end of 2026. I want to thank our more than 7,000 Driven Brands team members and our franchise partners for their continued dedication and execution. Their commitment to taking care of our customers every day is what drives our results. With that, I'll turn it over to my partner and Driven CFO, Mike. Michael Diamond: Thank you, Danny, and good morning, everyone. We are pleased to return to a normal reporting cadence for Q2 and deliver another quarter of same-store sales growth across all our segments. A reminder that with the divestiture of both our U.S. and international car wash businesses, the results for those businesses are included in discontinued operations and are not included in quarterly financial details provided today unless otherwise noted. For Q2, Driven recorded same-store sales growth of 1.4% and added 42 net new units. System-wide sales for the company grew 4.9% in Q2 to $1.6 billion. Total revenue for Q2 was $507.4 million, an increase of 6.8% year-over-year. Q2 operating expenses increased $6.2 million year-over-year, driven primarily by higher costs from higher sales and more stores, $11.8 million in nonrecurring restatement costs and approximately $4 million of out-of-period costs. Restatement costs were approximately $3 million below our initial Q2 expectations. We expect those costs to shift into Q3 as we complete our audit work on our whole business securitization financials. Year-to-date restatement costs totaled $20.9 million. This increase in operating expenses was offset by a decline in SG&A. SG&A for Q2 was $129.7 million or 8% of system-wide sales. Excluding the Q2 restatement costs, SG&A was 7.2% of system-wide sales, in line with our expectation as a growing multi-business platform with both franchise and company operations. Operating income increased $26 million to $73.1 million in Q2, driven primarily by the increase in revenue. Adjusted EBITDA, which includes restatement costs, decreased $7.9 million to $107 million for the quarter. Excluding restatement costs, adjusted EBITDA increased $3.9 million or 3.4%. Adjusted EBITDA margin for Q2 was 21.1%, a decrease of approximately 300 basis points versus Q2 2025, driven primarily by restatement costs. Interest expense declined $10.4 million to $20.8 million, driven primarily by ongoing debt paydown. Income tax expense for the quarter was $13.8 million. Net income from continuing operations for the quarter was $37.3 million. Adjusted net income from continuing operations for the quarter was $48.2 million. Adjusted diluted EPS for Q2 was $0.29. Q2 performance for each of our segments include: Take 5 grew same-store sales 3.6%, in line with our expectations for Q2 and added 50 net new units in the quarter, of which 24 were franchised units. Adjusted EBITDA grew 7.8% to $114.9 million, driven by sales growth. Adjusted EBITDA margin decreased roughly 70 basis points, driven by inflation and store operating expenses. Franchise Brands reported a 0.5% increase in same-store sales. Revenue declined $3.4 million, driven primarily by the sale of our 2 remaining company-operated collision locations. Adjusted EBITDA was $41.2 million in Q2, a decrease of $2.4 million, driven by increased technology costs and select investments in people to drive future growth. Auto Glass Now reported same-store sales growth of 2.6% in Q2. Adjusted EBITDA decreased $6.6 million to $3.5 million, driven primarily by the out-of-period costs. Turning to cash flow and leverage. Our cash flow statement shows a consolidated view of cash flow, inclusive of discontinued operations. Net capital expenditures for Q2 were $31 million, a decrease of $11.7 million versus Q2 2025, primarily driven by the lapping of CapEx from our divested Car Wash businesses. Q2 free cash flow, defined as operating cash flow less net capital expenditures, was $44.7 million, an increase of $13.2 million from Q2 2025. We ended the quarter at 3.1x net leverage and remain on track to achieve our target of 3x by year-end with strong cash flow generation. As previously stated, we remain committed to achieving 3x net leverage, and we'll communicate our go-forward capital allocation plans at the appropriate time. As we look to the back half of the year, we want to provide our thoughts on current trends and expectations for the rest of 2026. Sales. We expect current trends to continue in the back half of the year. For Take 5, we expect softness from lower income consumers will continue to pressure sales growth. We expect Franchise Brands to continue with flat to modestly positive growth in same-store sales given the ongoing softness in Maaco and modest normalization in collision. Restatement costs. We expect restatement costs to be at the top end of our initial $35 million to $45 million range. We continue to view these costs as nonrecurring in nature and not reflective of the underlying earnings power of the business. Adjusted EBITDA. We are maintaining the range, which contemplates a variety of macroeconomic scenarios. However, as Danny mentioned, we expect to be closer to the low end of the range based on where we stand today. We see ongoing uncertainty from the lower income consumer in the Middle East conflict, restatement costs at the high end of our range and $4 million of out-of-period costs in Q2. As a result, we are approaching the second half of 2026 with caution. Taking those factors into account, we are reiterating our full year 2026 outlook ranges. Revenue of $1.95 billion to $2.05 billion, same-store sales of flat to 2%, net new unit growth of 160 to 190 units, adjusted diluted EPS of $1.15 to $1.25, adjusted EBITDA of $430 million to $460 million, trending as noted toward the low end of the range. In addition, we continue to expect net capital expenditures of approximately 6.5% of revenue and expect to generate between $125 million and $145 million of free cash flow. We are confident in the long-term growth trajectory of our individual brands and the broader Driven platform, but recognize the work ahead to continue building the appropriate financial foundation. With that, I will now turn it over to the operator, and we are happy to take your questions. Operator: [Operator Instructions] Your first question comes from Craig Kennison with Baird. Craig Kennison: I'm wondering what kind of inflationary pressure you are facing with your base oil costs? Daniel Rivera: Craig, this is Danny. Yes. So look, as I mentioned in the prepared remarks, I think the conflict in the Middle East, obviously, is something that's impacting the entire industry. That's not limited to us or to Take 5 specifically. That being said, we think that we're in a pretty good place right now. We've got a lot of scale. We've got great relationships with our supplier partners. So I think we're sitting pretty. From a supply perspective, again, unless there's some kind of near-term significant changes, we think that we'll be able to service our customers, and that's all positive. From a cost perspective, we started to see a bit of cost increases in Q2. We expect that we'll see some cost increases into the back half of the year. From our pricing perspective, franchisees, again, they don't all act as one group, but we saw some franchisees starting to take price early in Q2. From a corporate perspective, we took a bit of price at the back half of Q2, in line with what we've done historically. Historically, when our input costs have gone up due to the limited elasticity that we see with our products, we feel like we're able to pass that price along in the short term, trying to preserve gross margin dollars. So that's what we've done end of Q2. We anticipate that we will do that into the back half of the year as we see our costs go up. Craig Kennison: Very helpful. And then what's the impact do you think on traffic given your sensitivity to the lower-end consumer? Daniel Rivera: Well, I think if I look at kind of Take 5 for a second and I look at what's happened, I mean, we called out that the lower income consumer was moderating in Q1. We're pretty transparent about that early on and that we've seen that moderation continue into Q2. A couple of things to say about that. I would say, number one, I haven't seen it get worse, so it's stabilized there. Number two, when we look at the rest of the customer cohorts, we're seeing resilience. Average check is up. Premium mix for us continues to be in the low 90s. Attachments are into the high 50s. So generally speaking, what I would say is that lower income consumer continues to be moderating, so to speak, but it has stabilized, and we see strength with the rest of our consumer base. Operator: Your next question comes from the line of Simeon Gutman with Morgan Stanley. Simeon Gutman: Okay. Can you hear me okay? Daniel Rivera: We can. Simeon Gutman: Okay. Perfect. My first question is on Take 5. I guess there is a competitor, and I'm sure you're expecting this, and I wanted to ask about relative performance. Do you think there is a price or an inflation component to it or as a comparison issue. Curious -- I mean, the number looks fine and in line. And I guess, looking back at like what has driven the [ 3.5 ] and whether that, I guess, from a transaction perspective versus a pricing perspective, that could accelerate going forward? Daniel Rivera: Yes. I mean, look, I appreciate the question. You're asking, kind of, a competitive thing. And obviously, I think I know where you're going. I think it's important to call out, number one, this isn't a 2-horse race, right? So this is a fairly fragmented market. There's other national operators, there's regional operators, there's local operators, there's dealerships. So based on all the data that we see internally, what I would say is there is a select few operators in North America that are taking share in the quick lube space, and Take 5 is certainly one of them. If I look at the quarter, look, it was a solid quarter, 3.6% comp sales growth, 10% on a 2-year basis, 13% system-wide sales growth. We opened 50 net new units. So all in all, I'd say it's a solid quarter. And in my view anyway, as I think about Take 5 and the role that it plays at Driven Brands as part of the growth in cash framework, really interesting for me is that Take 5 is it's early innings. I mean it's a scaled company, and we're at 1,400 locations, but we've got runway to 2,500 locations. So we've got a lot of runway ahead of us. Simeon Gutman: And then the comment on the inflation and store expenses. What's that related to? Is that a temporal or permanent change? And then does that necessitate further pricing action on your part going forward? Michael Diamond: Yes. Simeon, this is Mike. I would say I'd start off with it's not one specific thing. This is, quite frankly, a little bit of increase across several of the various line items that, when you put it all together, is store expenses. I don't see the need at the moment to take additional price to offset this. So -- this is the first quarter we've mentioned it. We'll obviously keep an eye on it. But I would say, in general, we believe Take 5 can continue to be a mid-30s EBITDA margin segment even with some of the pressures we're seeing. So we saw a little bit of increase on things like store supplies. We've mentioned Brent over the last couple of quarters. But in general, we feel good about our ability to operate the box. Operator: Your next question comes from the line of Mark Jordan with Goldman Sachs. Mark Jordan: Can we dig into a little bit of the Franchise Brands segment? Great to see another quarter of positive same-store sales growth here. It, kind of, sounds like the broader collision repair market under some pressure, but your platform is outperforming. As we think about the setup for the remainder of the year, do you expect this dynamic to persist? And maybe have any view on how the broader market is set up for the remainder of the year? Daniel Rivera: Yes. Mark, I appreciate the question. Look, what I would say is we don't give segment level guidance for the year. Mike and I, obviously, in our prepared remarks, we reiterated our outlook for the full year at the Driven level. So that should give you, kind of, a sense of how we're thinking about the back half of the year. For Franchise Brands, I'd say, look, it was a solid quarter. We're up 0.5% from a comps perspective. I think more importantly, again, if I go back to our driven framework about growth and cash, Franchise Brands for us is all about cash. We want to see really nice margins out of that business, which, again, we saw 59% margins for the quarter. So I think that, that segment is doing exactly what we need to do. I don't want to go too much into detail on each individual business, but maybe I'll give you some headlines. Meineke, strength to strength, had a strong Q1, continued into Q2. Sitting here today, we see no reason to think that Meineke will not have a strong back half to the year. From a Maaco perspective, Maaco has been softer. We expect it to continue to be a bit soft in the back half of the year. That's one of our more discretionary businesses, and it's certainly impacted by what we're seeing with the lower-income consumer. And then to your point around collision, I mean, the overall industry has been soft. What I said, I think, last quarter is that we expect this year to be a year of stabilization versus bounce back. And I think that, that's what's playing out. For our part, we continue to outperform the overall industry anywhere between 100 to 300 basis points depending on any given quarter. So I'd say, generally speaking, those are the headlines for Franchise Brands. Mark Jordan: Perfect. That's excellent color. And then this may have been answered, but I don't know if I got it. Just switching to the Auto Glass Now. EBITDA margin for the quarter was a bit lower than we would have expected. Is there anything to do with seasonality or one-offs in the figure there? Michael Diamond: Yes. As we called out in the prepared remarks, it's largely driven by the one-off we took. So we took roughly $4 million of an out-of-period expense that relates to some balance sheet cleanup from 2024 and prior. We hit it this quarter. We called it out because it's significant to the segment and wanted to make sure that people understand we don't view the $3.5 million number as the run rate earnings power of the business in Q2. That said, as we work through our remediation, we're committed to doing things right and want to be transparent with that charge we took. Operator: Your next question comes from the line of Mike Albanese with Benchmark. Michael Albanese: I just want to take a step back. I have a broader question here. But obviously, a few days ago, you rejected the activist proposal and effectively communicated that you believe the intrinsic value of the overall business is meaningfully higher than where the stock is trading now. So I just want to know if you could explain kind of what operational or financial milestones gives you that confidence or essentially just elaborate on how you came to that conclusion. Daniel Rivera: Yes. Mike, I guess what I would say is, look, let me kind of set the stage here. I mean, to your point, so the Driven Board rejected ADW's acquisition proposal earlier this week, consistent with its fiduciary duties and in consultation with advisers. The Board carefully reviewed and evaluated the proposal. The Board unanimously determined that the proposal was highly conditional and does not provide a credible basis on which to proceed. It also concluded that the proposal significantly undervalued Driven considering its long-term value creation opportunities. And it also concluded that it wasn't in the best interest of Driven nor its shareholders. The Board and the management team remain committed to acting in the best interest of all shareholders and to evaluating opportunities to maximize shareholder value. And ultimately, I think kind of the crux of your question is when we look at the underlying business, our strategy, our long-term value creation opportunities, the Board and the management team continue to believe in our ability to add shareholder value and to disciplined execution of our strategies. Michael Albanese: All right. And just kind of a quick follow-up to that. I mean, as you think about the next several years here, what do you view as the clearest path to kind of closing that valuation gap? Daniel Rivera: Yes. I look at it as -- I think there's really 3 things for us to basically create value, so to speak, right? So I think, number one, we have to deliver on our growth and cash strategy. We've been saying that over and over again. I'll unpack that for a quick second. I think folks on this call know this, but growth is all about Take 5, right? So what do we need from Take 5? We need continued growth. We're going to grow that business 150-plus units a year, which we've been doing for some time now. We want comps to be in the mid-single digits. We want margins to be in the mid-30s. And ultimately, as I said a second ago, we've got a long runway ahead of us, 1,400 locations with 800 units in our pipeline, well on our way to getting to 2,500 locations. So we got to execute growth. Cash is about Franchise Brands. We've talked about that a little bit today, but that's all about just making sure that those mature iconic businesses continue to deliver cash flow and have margins right around that, kind of, 60% mark. So got to execute our strategy. That's number one. Number two, we have to be disciplined from a capital allocation perspective. Let me unpack that. What does that mean? It means 2 things to Mike and I. Number one is we got to fund growth at Take 5. And number two, we got to get our leverage in order. So we've made a ton of progress there. Sitting here today, we're at 3.1x. We're committed to get to 3x. So we got to do those 2 things, growth in cash, disciplined capital allocation. And then I'd say the third thing is no surprises. We have to execute flawlessly, and we have to put our heads down and just do what we say we're going to do. And it's certainly my belief and the management team's belief that if we do those things, we will drive long-term shareholder value. Michael Albanese: Okay. And I'll just follow up with one last quick one here. I mean you're at 3.1x levered, target 3, obviously, steadily approaching that target. Can you just give us some insight on if and how capital allocation kind of priorities change in a delevered environment? Are you considering shareholder-friendly actions, buybacks, strategic transactions or other value-enhancing alternatives? Michael Diamond: Yes. Sure, Mike. I think I've given a similar answer for the last couple of quarters. So I'm not sure I'll break any new ground. I think I'll start with we have been focused on getting to 3x. To Danny's comment about no surprises, doing what we say is important to us. And given that's an important threshold that was set out several years ago, we believe it's important to get to the number, not close to the number, not around the number, but we actually want to get to the number to demonstrate both for our existing shareholders, but also for future shareholders that the power of this cash engine that we have. I've talked about we're going to take a disciplined intellectually honest approach to how we think about capital allocation going forward. There's a lot of different levers we could pull. Some of them could be additional investment in the business as we think about the great 4-wall economics that a Take 5 box look at. Some of them could be return of capital. We're working in partnership with our Board and the rest of management to identify what those strategies can and should be. And as we get to the actual 3x number, we'll be prepared to talk about not only the thoughts, but how we plan to execute that going forward. Operator: [Operator Instructions] Your next question comes from Phillip Blee with William Blair. Phillip Blee: So now that you're breaking out the Glass business, I guess, how should we think about comps for that business? I understood it could be very choppy. But when we think about -- I guess, should we think about some sort of annual target average over the next few years. Similar -- then similar question on the segment's margin structure. How should we think about the evolution there? Michael Diamond: Yes, absolutely. So I'll say a couple of different things. I think, first of all, as we've mentioned pretty consistently, we view this as a business that's an incubation. And so I would not over-index any given quarter, quite frankly, whether it's really good or more modest like it is this quarter. We do not view that growth as linear. As you win new contracts, you could see step changes. But in between those contracts, the goal is just to continue executing against our existing customer base and continuing to find operational efficiencies. You get to margin, and I would again just make sure people are aware of the onetime charge we took this quarter as part of an out-of-period that relates to 2024 and before. And so the $3.5 million we're posting this quarter from an adjusted EBITDA perspective is not representative of what we think the true earnings power of the business is in Q2, but was just our commitment to continue to cleaning things up and calling it out when we see something that we think is significant to the segment in the quarter. From a margin perspective, I think what you've seen so far, which is kind of a low double-digit margin from where we stand today is probably the right baseline from which to grow. The good news is, as we add additional traffic, the marginal flow-through is better than that. And so as we add additional sales, either through continued operational improvement or through new customers, we should be able to continue growing that business from both a dollars and a margin perspective. But I wouldn't get over anchored on that, as we've talked in the past, again, this is an incubation. It is part of the growth strategy, but more of the longer-term growth strategy. The near-term growth and the near-term margin, quite frankly, will be driven by our ability to continue growing Take 5 and the continued near 60% margins of the Franchise Brands business. Phillip Blee: Okay. Very helpful. And then you guys have done a lot of work to simplify the model, optimize the portfolio of brands over the past few years. Can you just share where you are at in that process? Is there room for further optimization cleanup? Would you consider selling off any sort of bigger parts of the business? Or do you feel good about where you're at in the current position? Daniel Rivera: Yes. I appreciate the question, Phillip. Look, I'm not going to give too much detail here for fairly obvious reasons. What I'd say is Mike and I see our job primarily is driving long-term shareholder value. We've said that we're going to be active portfolio managers, and we've, in fact, been active portfolio managers. And we see active portfolio management as a lever to generating long-term shareholder value. So we intend to use the levers and to be disciplined. And if it makes sense, and then we're open to doing that. You shouldn't read into that, that we are not happy with the current portfolio. All we're saying is it is a lever at our disposal. And ultimately, we're trying to drive shareholder value. Operator: Your next question comes from the line of Sarah Morin with Piper Sandler. Sarah Morin: This is Sarah on for Peter Keith. First, are there any updates that you can share around the CRM platform for Take 5? What's working or not working there? And just any color around where you see the biggest opportunities ahead? Daniel Rivera: Sure. So from a CRM perspective, I guess I'd call out CRM is one of those things that it's a platform play for Driven. So one of the nice synergies that Driven is where it makes sense, we leverage our spend. We buy best-in-class tools, and we leverage that across all of our businesses. So the CRM engine is one of those things. CRM is CRM, you don't need a different one for each business. So that's a nice synergistic platform play for us. As it relates -- I'm not going to get into too much nuance here. I mean, we drive significant portions of our traffic across all of our businesses, frankly, due to the first-party data that we have and the CRM capabilities that we have. That manifests itself in simple things like just oil change reminders as an example. We've got a bunch of proprietary algorithms on how we do that, how we notify customers, what we notify them about. So suffice it to say, it's a platform for us, and it works quite well. Sarah Morin: Okay. Great. And then just in terms of Take 5's pricing and promo strategy, have there been any changes there? And then just more broadly, how did promos trend in Q2 relative to prior quarters, both for Driven and the industry? Daniel Rivera: Yes. I'll answer the second question first. So as far as promotions in the second quarter generally, generally speaking, you see elevated levels of promotions in the second quarter. You've got 4th of July on Independence Day, obviously, for the U.S. sitting in there, and that's peak driving season. And so things tend to get a bit more promotional around that period. I would say that, that is normal. That's been true as long as I've been in this industry. So nothing specific to call out there other than more of the same, so to speak. As far as how we're thinking about promotions today in Take 5, promotions for us is a tool in the toolkit. We are not a promotional brand as a foundational matter, but it's something that where and when it makes sense, we deploy it. If I relate it back to that lower income consumer and the moderation that we're seeing, that tends to be a solution that using that tool of promotions makes sense. It is a readily identifiable group of customers that are motivated by value. So that makes sense for us to maybe be surgical in terms of how we think about promotions, targeting those groups and trying to drive top of the funnel activity. So most recently, that's how we're thinking about it as it relates to that lower income consumer. Operator: Your next question comes from the line of Tristan Thomas with BMO. Tristan Thomas-Martin: I just wanted to ask, I don't know if there's any true historical apples-to-apples comparisons. But what have you seen in past kind of inflationary cycles regarding just mix and attachment rate of Take 5? Daniel Rivera: Well, I mean, look, I've been a part of Take 5 for some time now. What I've seen consistently outside of whether it's inflationary cycles or not, what I've seen is growth. So our premium mix has grown since we bought the business in 2016, since I was running the business in 2020. We've consistently grown premium mix. We've consistently grown attachment rates. We've added new services through that period, and we've proven that, that's another lever of growth for us. Most recently with differentials, we introduced the service. We're executing it now, and it's part of our mix. One of the hard things about answering that question, Tristan, is that Take 5 has been in growth mode ever since we bought it. And so it's not, let's say, like a Meineke that's been around for 55 years and is a more mature business. And so you can maybe see some ebbs and flows. Take 5 has been growing as long as I've been a part of it. Tristan Thomas-Martin: Yes. I get that. And then just -- I think you touched on this, but I just wanted to make sure I heard it correctly. Is the goal to manage the gross margin dollars or gross margin rate? Daniel Rivera: Yes. In the short term, what we try to do is manage to gross margin dollars. And that's our way of kind of making sure that we protect both the P&L as much as humanly possible, but also protecting value that we're delivering to the consumer. Over time, what tends to happen is, obviously, costs will come back down. The nature of this industry, again, it's a fairly inelastic product and offering. We typically can hold the pricing that we put in place. So overall, in the long term, you may see some margin expansion. But in the short term, we're preserving dollars. Operator: With no further questions, that concludes our Q&A session. This concludes today's call. Thank you for your participation. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Driven Brands (DRVN) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was characterized by a K-shaped consumer economy where lower-income households remain under significant pressure, leading to moderated demand in discretionary brands like Maaco. Take 5 delivered its 24th consecutive quarter of same-store sales growth, driven by its 'fast and simple' value proposition and a high non-oil change service mix representing almost 30% of sales. The Franchise Brands segment continues to function as a high-margin cash generator, with 59% adjusted EBITDA margins funding the company's broader growth initiatives. Management attributed collision segment outperformance to market share gains, running approximately 200 basis points ahead of a broader industry that remains under pressure. Strategic positioning is focused on a 'growth and cash' framework: scaling Take 5 while harvesting reliable free cash flow from mature franchise networks. Supply chain resilience is supported by scale and long-standing supplier relationships, mitigating near-term risks from Middle East energy market disruptions. The company successfully reduced net leverage to 3.1x, nearing its long-term target of 3x through disciplined debt paydown and divestiture of non-core car wash assets. Full-year 2026 guidance was reiterated but management expects results to trend toward the lower end of the range due to sustained pressure on lower-income consumers. The company assumes continued volatility in oil and input costs, planning modest, disciplined price increases to preserve gross margin dollars in the back half of the year. Take 5 expansion remains a primary driver with a commitment to opening 150 or more units annually toward a long-term goal of 2,500 locations. Full-year 2026 guidance contemplates restatement costs at the top end of the initial $35 million to $45 million range, which management views as nonrecurring in nature. Management maintains a cautious posture for the second half of the year, citing uncertainty regarding Middle East conflict impacts on energy prices and consumer demand. Restatement costs totaled $20.9 million year-to-date, with an additional shift of costs into Q3 related to whole business securitization financials. Auto Glass Now results included a $4 million out-of-period expense related to balance sheet cleanup from 2024 and prior periods. The Board unanimously rejected an unsolicited acquisition proposal from ADW, concluding it significantly undervalued the company's long-term creation opportunities. The divestiture of U.S. and international car wash businesses has transitioned those operations to discontinued status, simplifying the core portfolio focus. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that while costs rose in Q2, they have a track record of passing through modest price increases due to the limited elasticity of their services. The company aims to protect gross margin dollars in the short term and expects potential margin expansion in the long term as costs eventually stabilize. Traffic among lower-income consumers has moderated but stabilized, while other cohorts show resilience with higher average checks and premium service mix. Management is using surgical promotions as a tool to target value-motivated customers and drive top-of-funnel activity without becoming a 'promotional brand'. Management remains committed to reaching the 3x target by year-end before detailing the next phase of capital allocation. Future options include further investment in Take 5's high-return 4-wall economics or returning capital to shareholders, pending Board consultation. The segment is in an 'incubation period' where performance may be uneven; current low double-digit margins are considered a baseline for future growth. Growth in this segment is expected to be non-linear, driven by new contract wins in retail, commercial, and insurance channels.

Interested in Driven Brands Holdings Inc.? Here are five stocks we like better. Q2 results were mixed but positive operationally: Systemwide sales rose 4.9% to $1.6 billion, revenue increased 6.8% to $507.4 million, and consolidated same-store sales grew 1.4%. Adjusted EBITDA declined due to restatement costs, but increased 3.4% excluding those charges. Take 5 Oil Change remained the key growth engine, delivering its 24th consecutive quarter of same-store sales growth, 13% systemwide sales growth, and 50 net new locations. Management cited an approximately 800-unit development pipeline and a long-term goal of more than 2,500 locations. Full-year guidance was reaffirmed but is expected near the low end because of weaker lower-income consumer demand, higher oil-related costs, market uncertainty, and elevated restatement expenses. Leverage improved to 3.1 times, with the company still targeting 3 times by the end of 2026. Top 2 Auto Maintenance Stocks Gearing Up for 2025 Driven Brands (NASDAQ:DRVN) reported second-quarter results marked by positive same-store sales growth across its operating segments, continued expansion at Take 5 Oil Change, and lower leverage, while management said it expects full-year results to trend toward the lower end of its guidance ranges amid pressure on lower-income consumers and higher oil-related input costs. Systemwide sales increased 4.9% year over year to $1.6 billion, while revenue rose 6.8% to $507.4 million. Consolidated same-store sales increased 1.4%, and the company added 42 net new locations during the quarter. Driven Brands ended the period with more than 4,300 locations, up 5% from a year earlier. → 3 Drone Stocks That Should Soar After the Summer Slump 3 Automotive Parts Makers Growing at Double-Digit Rates Adjusted EBITDA declined $7.9 million to $107 million, including restatement costs. Excluding those costs, adjusted EBITDA increased $3.9 million, or 3.4%, according to Chief Financial Officer Mike Diamond. The company reported adjusted diluted earnings per share of $0.29, net income from continuing operations of $37.3 million, and adjusted net income from continuing operations of $48.2 million. Take 5 Oil Change remained the company’s primary growth driver, posting its 24th consecutive quarter of same-store sales growth. Same-store sales at the segment rose 3.6%, while systemwide sales increased 13%. On a two-year basis, Take 5 same-store sales were up 10.2%. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth MarketBeat ‘Stock of the Week’: Driven Brands has road to recovery The segment added 50 net new locations during the quarter, including 24 franchised units, and ended the period with more than 1,400 locations. Take 5 adjusted EBITDA rose 7.8% to $114.9 million, though its adjusted EBITDA margin declined about 70 basis points as inflation and store operating expenses increased. President and Chief Executive Officer Danny Rivera said non-oil-change services represented nearly 30% of Take 5 sales in the quarter. The company’s Net Promoter Score remained in the mid-70s, he said. → Jersey Mike's Serves Fresh Gains After IPO Stumble Driven Brands has an approximately 800-unit pipeline for Take 5, with more than one-third of those sites secured or at a later stage of development. The company continues to target annual openings of at least 150 units and has a long-term goal of more than 2,500 Take 5 locations. Management said consumer demand remained mixed. Rivera said the company continued to see moderation among lower-income customers and newer customers, though the trend had stabilized and had not worsened during the second quarter. He said the rest of the customer base remained resilient, citing higher average checks, premium mix in the low 90% range, and attachment rates in the high 50% range. Higher oil and related input costs are expected to continue into the second half of the year. Rivera said the company began seeing cost increases in the second quarter, while franchisees started taking pricing actions early in the quarter and corporate locations implemented “a bit of price” near the end of the period. Driven Brands intends to use modest price increases as needed to preserve gross-margin dollars while maintaining customer value. The Franchise Brands segment, which includes Meineke, Maaco and CARSTAR, produced same-store sales growth of 0.5% and an adjusted EBITDA margin of 59%. Segment revenue declined $3.4 million, primarily because the company sold its two remaining company-operated collision locations. Adjusted EBITDA declined $2.4 million to $41.2 million, reflecting higher technology costs and investments in personnel. Rivera said Meineke maintained its momentum from the first quarter and that management sees no reason it cannot have a strong second half. Maaco, a more discretionary business, remained under pressure, which management attributed to the challenged lower-income consumer. In collision repair, management said broader industry conditions remained soft, but Driven Brands continued to outperform the industry by roughly 100 to 300 basis points, depending on the quarter. Rivera characterized 2026 as a year of stabilization rather than recovery for collision repair. Auto Glass Now posted 2.6% same-store sales growth. Its adjusted EBITDA fell $6.6 million to $3.5 million, largely due to about $4 million of out-of-period costs related to balance-sheet cleanup from 2024 and earlier. Diamond said the reported quarterly EBITDA figure was not representative of the business’s underlying earnings power. Management described Auto Glass Now as being in an incubation period and said performance could be uneven from quarter to quarter. Diamond said low double-digit margins represent an appropriate baseline for the business, with potential for better incremental flow-through as traffic and sales increase. Operating expenses increased $6.2 million from the prior-year period, reflecting higher costs associated with sales and store growth, $11.8 million of non-recurring restatement costs, and approximately $4 million in out-of-period costs. Year-to-date restatement costs totaled $20.9 million. Diamond said second-quarter restatement costs came in about $3 million below the company’s initial expectations, but the difference is expected to shift into the third quarter as Driven Brands completes audit work on its whole-business securitization financials. The company now expects restatement costs to reach the high end of its initial $35 million to $45 million estimate. Interest expense declined $10.4 million year over year to $20.8 million, primarily due to debt repayment. Free cash flow increased $13.2 million to $44.7 million, while net capital expenditures declined $11.7 million to $31 million, mainly reflecting the absence of capital spending from divested car-wash operations. Driven Brands ended the quarter at 3.1 times net leverage and said it remains on track to reach its target of 3 times by the end of 2026. Diamond said the company would discuss future capital-allocation plans after reaching that threshold, adding that possible options include further investment in the business or returns of capital. Driven Brands reaffirmed its 2026 guidance for revenue of $1.95 billion to $2.05 billion, same-store sales ranging from flat to 2%, and 160 to 190 net new units. It also maintained guidance for adjusted EBITDA of $430 million to $460 million and adjusted diluted EPS of $1.15 to $1.25. However, management said it now expects results to be closer to the lower end of those ranges. The company cited continued uncertainty surrounding lower-income consumers, the Middle East conflict and energy-market volatility, restatement costs expected at the high end of its range, and the second-quarter out-of-period costs. The company continues to expect net capital expenditures of about 6.5% of revenue and free cash flow of $125 million to $145 million for the full year. During the question-and-answer session, Rivera also addressed a recently rejected acquisition proposal from ADW. He said Driven Brands’ board unanimously concluded that the proposal was highly conditional, did not provide a credible basis to proceed, and significantly undervalued the company’s long-term value creation opportunities. Driven Brands Holdings Inc (NASDAQ: DRVN) is a leading North American provider of automotive aftermarket services, operating through a network of franchised and company-owned locations. The company's platform encompasses a diverse portfolio of car care and maintenance brands, including Meineke Car Care Centers, Maaco Collision Repair & Auto Painting, Take 5 Oil Change, and Carstar Collision Repair. Driven Brands delivers a full range of services from routine maintenance and oil changes to collision repair, paint protection, and vehicle customization. Headquartered in Charlotte, North Carolina, Driven Brands serves both individual consumers and commercial clients across the United States and Canada. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Driven Brands Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Driven Brands Holdings Inc (NASDAQ:DRVN) delivered another quarter of positive same-store sales growth across all segments, with consolidated same-store sales up 1.4%. Take 5 continued its strong performance, marking its 24th consecutive quarter of same-store sales growth, with a 3.6% increase and a 10.2% two-year stack. The company reduced net leverage to 3.1 times, on track to achieve its target of 3 times by year-end, strengthening its balance sheet. Franchise Brands segment demonstrated reliable cash generation with strong adjusted EBITDA margins of 59%, led by continued strength at Meineke. The company maintained its full-year 2026 guidance, including revenue of $1.95 billion to $2.05 billion and adjusted EBITDA of $430 million to $460 million, despite a dynamic macro environment. Driven Brands Holdings Inc (NASDAQ:DRVN) faces ongoing pressure from a cash-strapped lower-income consumer segment, which has led to moderation in sales growth, particularly at Take 5. The renewed Middle East conflict has disrupted energy markets, causing oil price volatility and higher gas prices, which weigh on consumer demand and input costs. Adjusted EBITDA for Q2 decreased $7.9 million year-over-year to $107 million, impacted by $11.8 million in nonrecurring restatement costs and $4 million in out-of-period costs. The company expects to trend toward the lower end of its full-year adjusted EBITDA guidance due to continued consumer uncertainty, higher restatement costs, and the Middle East conflict. AutoGlass Now's adjusted EBITDA declined $6.6 million to $3.5 million, driven by out-of-period costs, and the segment's performance remains uneven during its incubation period. Warning! GuruFocus has detected 3 Warning Signs with DRVN. Is DRVN fairly valued? Test your thesis with our free DCF calculator. Q: Can you explain how the Board concluded that the rejected activist proposal undervalued Driven Brands, and what gives you confidence in the intrinsic value of the business?A: Danny Rivera (President and CEO) stated that the Board unanimously rejected ADW's acquisition proposal after careful review, determining it was highly conditional, significantly undervalued the company, and was not in the best interest of shareholders. The confidence stems from the company's long-term value creation opportunities, including the growth strategy for Take 5, the reliable cash generation of franchise brands, and disciplined capital allocation. Rivera emphasized that executing on growth, maintaining disciplined capital allocation, and avoiding surprises are the three key pillars to closing the valuation gap and driving long-term shareholder value. Q: What inflationary pressures are you facing on base oil costs, and how are you managing pricing in response?A: Danny Rivera (President and CEO) acknowledged that the Middle East conflict is impacting the entire industry, but noted Driven Brands' scale and strong supplier relationships position them well from a supply perspective. He confirmed seeing cost increases in Q2 and expecting more in the back half of the year. The company has taken modest, disciplined price increases, with franchisees starting to take price early in Q2 and corporate locations taking price at the end of Q2. Rivera emphasized that due to the limited elasticity of their product, they can pass along price increases to preserve gross margin dollars in the short term. Q: How is the lower-income consumer impacting traffic, and what trends are you seeing across different customer cohorts?A: Danny Rivera (President and CEO) noted that the moderation among lower-income consumers, first called out in Q1, has continued into Q2 but has stabilized and not worsened. He highlighted resilience in other customer cohorts, with average check up, premium mix in the low 90s, and attachments in the high 50s. Rivera stated that the lower-income consumer remains under pressure but the rest of the consumer base shows strength, and the company is using targeted promotions to address the value-seeking lower-income segment. Q: Can you provide more detail on the Take 5 same-store sales performance, particularly regarding competition and the breakdown between transactions and pricing?A: Danny Rivera (President and CEO) addressed competitive dynamics, noting that the quick lube market is fragmented with multiple national, regional, and local operators, and that Take 5 is one of a select few taking share. He highlighted the solid quarter with 3.6% comp growth, 10.2% on a two-year basis, and 13% system-wide sales growth. Rivera emphasized that Take 5 is still in early innings with a runway to 2,500 locations from the current 1,400, and the pipeline remains robust at approximately 800 locations. Q: What drove the increase in store operating expenses at Take 5, and does this necessitate further pricing action?A: Mike Diamond (EVP and CFO) explained that the increase was not from one specific item but rather a slight increase across several line items within store expenses. He stated there is no immediate need to take additional price to offset this, and the company believes Take 5 can continue to deliver mid-30s EBITDA margins. Diamond noted increases in areas like store supplies and mentioned Brent costs, but expressed confidence in the company's ability to operate the box efficiently. Q: How should we think about the AutoGlass Now segment's comps and margin structure, given the choppy performance?A: Mike Diamond (EVP and CFO) reiterated that AutoGlass Now is in its incubation period and performance will be uneven quarter to quarter. He noted the $4 million out-of-period expense related to balance sheet cleanup from 2024 and prior, which distorted the quarter's adjusted EBITDA of $3.5 million. Diamond stated that the low double-digit margin is the right baseline, and as the business adds traffic, marginal flow-through will improve, allowing for growth in both dollars and margin. He cautioned against over-anchoring on any single quarter. Q: What are the expectations for the Franchise Brands segment for the remainder of the year, particularly regarding collision and Mako?A: Danny Rivera (President and CEO) provided segment color without giving formal guidance. He noted Meineke had a strong Q1 and continued into Q2 with no reason to expect a slowdown. Mako, being more discretionary, is expected to remain soft in the back half due to lower-income consumer pressure. For collision, Rivera reiterated that 2026 is a year of stabilization rather than bounce back, with the company outperforming the industry by 100 to 300 basis points. The segment delivered 59% adjusted EBITDA margins, fulfilling its role as a reliable cash generator. Q: How are capital allocation priorities expected to change once the company reaches its 3 times net leverage target?A: Mike Diamond (EVP and CFO) stated that the company is focused on actually reaching the 3 times leverage target, not just getting close, to demonstrate the power of the cash engine. He mentioned taking a disciplined and intellectually honest approach to capital allocation going forward, with levers including additional investment in high-return Take 5 boxes or return of capital. Diamond indicated that the company is working with the board to identify strategies and will communicate plans once the target is achieved. Q: Are there any updates on the CRM platform for Take 5, and what are the biggest opportunities ahead?A: Danny Rivera (President and CEO) described CRM as a platform play across all of Driven Brands, leveraging best-in-class tools and first-party data. He highlighted that CRM drives significant traffic across all businesses through simple reminders and proprietary algorithms. Rivera declined to provide too much nuance but affirmed that the platform works quite well and is a synergistic advantage for the company. Q: How are promotions trending in Q2, and what is the strategy for using promotions going forward?A: Danny Rivera (President and CEO) explained that Q2 typically sees elevated promotional activity due to the 4th of July and peak driving season, which is normal. He stated that Take 5 is not fundamentally a promotional brand but uses promotions as a tool in the toolkit. Given the moderation among lower-income consumers, the company is being surgical with promotions, targeting value-motivated groups to drive top-of-funnel activity. Q: What has been the historical impact of inflationary cycles on non-oil change services and attachment rates at Take 5?A: Danny Rivera (President and CEO) noted that Take For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Driven Brands Holdings Inc. (DRVN) came out with quarterly earnings of $0.29 per share, missing the Zacks Consensus Estimate of $0.3 per share. This compares to earnings of $0.36 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -3.33%. A quarter ago, it was expected that this company would post earnings of $0.25 per share when it actually produced earnings of $0.3, delivering a surprise of +20%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Driven Brands Holdings, which belongs to the Zacks Automotive - Retail and Wholesale - Parts industry, posted revenues of $507.42 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 1.81%. This compares to year-ago revenues of $550.99 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Driven Brands Holdings shares have lost about 1.4% since the beginning of the year versus the S&P 500's gain of 12.8%. While Driven Brands Holdings has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Driven Brands Holdings was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.29 on $518.1 million in revenues for the coming quarter and $1.23 on $2.01 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Automotive - Retail and Wholesale - Parts is currently in the top 21% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Advance Auto Parts (AAP), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 20. This auto parts retailer is expected to post quarterly earnings of $0.81 per share in its upcoming report, which represents a year-over-year change of +17.4%. The consensus EPS estimate for the quarter has been revised 0.6% lower over the last 30 days to the current level. Advance Auto Parts' revenues are expected to be $2.03 billion, up 1.2% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Driven Brands Holdings Inc. (DRVN) : Free Stock Analysis Report Advance Auto Parts, Inc. (AAP) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

--Revenue increases 6.8% to $507.4 million with same store sales growth of 1.4%-- --Take 5 same store sales increase 3.6%; 24th consecutive quarter of growth-- --Net leverage ratio improves to 3.1x Adjusted EBITDA-- --Company reiterates fiscal year 2026 outlook ranges-- CHARLOTTE, N.C., August 06, 2026--(BUSINESS WIRE)--Driven Brands Holdings Inc. (NASDAQ: DRVN) ("Driven Brands" or the "Company") today reported financial results for the second quarter ending June 27, 2026. For the second quarter, Driven Brands delivered revenue of $507.4 million, an increase of 7% versus the prior year. System-wide sales increased 5% to $1.6 billion, driven by a 1% increase in same store sales and 5% increase in store count versus the prior year. Net income from continuing operations was $37.3 million or $0.23 per diluted share versus $16.4 million or $0.10 per diluted share in the prior year. Adjusted Net Income1 was $48.2 million or $0.29 per diluted share versus $48.9 million or $0.30 per diluted share in the prior year. Adjusted EBITDA1, which included $11.8 million of non-recurring, restatement-related costs, was $107.0 million, a decrease of 7% versus the prior year. "Our results this quarter reflect the strength of our diversified, non-discretionary portfolio," said Danny Rivera, President and Chief Executive Officer. "Revenue grew 7%, every segment delivered positive same store sales growth, and Take 5 extended its streak to 24 consecutive quarters of positive same store sales growth, including 3.6% growth this quarter. We also moved closer to our 3x leverage target, ending the quarter at 3.1x." "We are reiterating our full-year 2026 outlook ranges and remain focused on scaling Take 5, generating consistent cash flow, and further reducing leverage. We are operating in a dynamic consumer environment and are managing the business with appropriate discipline. Our resilient portfolio, strong balance sheet, and focus on execution position us well to navigate uncertain market conditions and deliver long-term shareholder value," Rivera concluded. Second Quarter 2026 Key Performance Indicators by Segment Capital and Liquidity The Company ended the quarter with a net leverage ratio of 3.1x Adjusted EBITDA and total liquidity of $855 million consisting of $184 million in cash and cash equivalents and $671 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility. This does not include the additional $135 million 2022-1 Securitization Senior Notes that would expand the Company’s variable funding note borrowing capacity if the Company elects to exercise them, assuming certain conditions continue to be met. Fiscal Year 2026 Outlook The Company reiterates its financial outlook ranges for fiscal year 2026 as follows: The Company expects fiscal year 2026 Adjusted EBITDA1 to be at the low end of its outlook range, reflecting continued uncertainty with lower-income consumers and the conflict in the Middle East, as well as its expectation for the non-recurring, restatement-related costs to come in at the high end of its $35 million to $45 million range. The Company continues to expect fiscal year 2026 same store sales growth in the range of flat to 2%; and net store growth of approximately 160 to 190. The Company continues to expect to generate between $125 million and $145 million of free cash flow2 in fiscal year 2026. Note: 2026 Outlook excludes the impact of any potential M&A and divestitures other than the completed divestiture of the international car wash business. Nasdaq Listing Compliance Following the filing of its Form 10‑Q for the period ended March 28, 2026, the Company received notification from Nasdaq on June 12, 2026, that it had regained compliance with the periodic filing requirements under Listing Rule 5250(c)(1). Conference Call Driven Brands will host a conference call to discuss second quarter 2026 results today, Thursday, August 6, 2026, at 8:30 a.m. ET. The call will be available by webcast and can be accessed by visiting Driven Brands’ Investor Relations website at investors.drivenbrands.com. A replay of the call will be available for at least three months. About Driven Brands Driven Brands™, headquartered in Charlotte, NC, is the largest automotive services company in North America, providing a range of consumer and commercial automotive services, including oil change, paint, collision, glass, vehicle repair, and maintenance. Driven Brands is the parent company of some of North America’s leading automotive service businesses including Take 5 Oil Change®, Meineke Car Care Centers®, Maaco®, 1-800-Radiator & A/C®, Auto Glass Now®, and CARSTAR®. As of the end of fiscal year 2025, Driven Brands had over 4,200 locations across the U.S. and Canada, and services tens of millions of vehicles annually. Driven Brands’ network generated approximately $1.9 billion in annual revenue from approximately $6.1 billion in system-wide sales. Disclosure Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained in this press release, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management, impact of accounting standards and outlook, impairments, and expected market growth are "forward-looking statements" for the purposes of federal and state securities laws, including, among other things, any statements relating to: (i) the current geopolitical environment, including the impact, both direct and indirect, of global conflicts, government actions, such as proposed and enacted tariffs and governmental shutdowns; (ii) our strategy, outlook, and growth prospects; (iii) our operational and financial targets, dividend policy, and capital allocation strategy; (iv) general economic trends and trends in our industry and markets; (v) the risks and costs associated with the integration of, and or ability to integrate, our stores and business units successfully; (vi) our internal control over financial reporting; (vii) the proper application of generally accepted accounting principles in the preparation of our financial statements, which are highly complex and involve many subjective assumptions, estimates, and judgments; and (viii) the competitive environment in which we operate; and (ix) potential post-closing obligations and liabilities relating to the sale of our car wash businesses. Forward-looking statements may include, among others, the words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "likely," "may," "plan," "possible," "potential," "predict," "project," "should," "target," "will," "would" or any other similar words. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results or outcomes could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include the following: our ability to compete with other businesses in the automotive aftermarket industries; advances and changes in automotive technology; changes in consumer preferences, perceptions, and spending patterns; changes in general economic conditions and the geographic concentration of our locations; our ability to timely recruit and retain qualified accounting personnel; the need to rely on third-party service providers, which could result in significant costs; diversion of management’s time, attention and resources from strategic matters due to remediation efforts related to the material weaknesses in our internal control over financial reporting and disclosure controls and procedures; our inability to maintain an effective system of internal controls; our inability to remediate the material weaknesses in our internal control over financial reporting and disclosure controls and procedures or additional material weaknesses or other deficiencies in the future; the restatement of certain of our previously issued consolidated financial statements; the adverse effect of litigation; the risks and uncertainties, as they may be amended from time to time, set forth in our filings with the U.S. Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. There may be other factors not presently known to us or which we currently consider to be immaterial that could cause our actual results to differ materially from those projected in any forward-looking statements we make. Forward-looking statements made in this release speak only as of the date hereof. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law. Given these uncertainties, you should not place undue reliance on these forward-looking statements. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES The following information provides definitions and reconciliations of the non-GAAP financial measures presented in this earnings release to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The Company has provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this earnings release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this earnings release. The non-GAAP financial measures in this earnings release may differ from similarly titled measures used by other companies. Non-GAAP Financial Measures in Outlook Driven Brands includes Adjusted Earnings Before Interest, Tax, Depreciation and Amortization ("Adjusted EBITDA") and Adjusted Earnings per Share ("Adjusted EPS") in the Company’s Fiscal Year 2026 Outlook. Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures and have not been reconciled to the most comparable GAAP financial measures because it is not possible to do so without unreasonable efforts due to the uncertainty and potential variability of reconciling items, which are dependent on future events and often outside of management’s control and which could be significant. Because such items cannot be reasonably predicted with the level of precision required, we are unable to provide an outlook for the comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA and Adjusted EPS are made in a manner consistent with the relevant definitions and assumptions noted herein and in our filings with the SEC. Adjusted Net Income and Adjusted Earnings Per Share Adjusted Net Income and Adjusted EPS are considered non-GAAP financial measures under the SEC’s rules because they exclude certain amounts included in the net income attributable to Driven Brands common stockholders and diluted earnings per share attributable to Driven Brands common stockholders calculated in accordance with GAAP. Management believes that Adjusted Net Income and Adjusted EPS are meaningful measures to share with investors because they facilitate comparison of the current period performance with that of the comparable prior period. In addition, Adjusted Net Income and Adjusted EPS afford investors a view of what management considers to be Driven Brands’ core earnings performance as well as the ability to make a more informed assessment of such earnings performance with that of the prior period. The tables below reflect the calculation of Adjusted Net Income and Adjusted Earnings Per Share for the three and six months ended June 27, 2026, compared to the three and six months ended June 28, 2025. Net Income to Adjusted Net Income and Adjusted Earnings Per Share (Unaudited) Adjusted EBITDA Adjusted EBITDA is considered a non-GAAP financial measure under the Securities and Exchange Commission’s ("SEC") rules because it excludes certain amounts included in net income calculated in accordance with GAAP. Management believes that Adjusted EBITDA is a meaningful measure to share with investors because it facilitates comparison of the current period performance with that of the comparable prior period. In addition, Adjusted EBITDA affords investors a view of what management considers to be Driven Brand’s core operating performance as well as the ability to make a more informed assessment of such operating performance as compared with that of the prior period. Please see the company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2025, filed with the SEC on May 19, 2026, for additional information on Adjusted EBITDA. The tables below reflect the calculation of Adjusted EBITDA for the three and six months ended June 27, 2026, compared to the three and six months ended June 28, 2025. Net Income to Adjusted EBITDA Reconciliation (Unaudited) Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share Footnotes View source version on businesswire.com: https://www.businesswire.com/news/home/20260805067763/en/ Contacts Shareholder/Analyst inquiries: Steve [email protected] (972) 467-6180 Media inquiries: Krista [email protected] (704) 644-8129

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Driven Brands Holdings (DRVN) reported first quarter results that included revenue of US$484.44 million, net income of US$54.83 million, and basic earnings per share of US$0.33. Management reiterated full year 2026 revenue guidance of US$1.95b to US$2.05b. See our latest analysis for Driven Brands Holdings. The Q1 update and reaffirmed 2026 guidance arrived after a strong 90 day share price return of 28.76%, although the stock is still down 20.44% on a 1 year total shareholder return basis. This suggests sentiment has improved recently, while the longer term picture remains weak. If earnings news around Driven Brands has you rethinking your watchlist, it could be worth widening the lens and scanning 20 top founder-led companies With the stock up 28.76% over 90 days but still down 20.44% over 1 year, and trading below the average analyst price target, you have to ask: is Driven Brands undervalued, or is the market already pricing in future growth? At a last close of $13.43 versus a narrative fair value of $17.14, Driven Brands is framed as undervalued, with that view built on detailed growth and margin assumptions. Read the complete narrative. The fair value hinges on how quickly revenue compounds, how far margins expand, and what P/E multiple investors ultimately accept. One set of projections. Very different opinions on how realistic they are. Result: Fair Value of $17.14 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, there are still real pressure points here, including ongoing filing delays, class action lawsuits around past financials, and questions over how electric vehicle adoption could affect core oil change services. Find out about the key risks to this Driven Brands Holdings narrative. With sentiment clearly mixed, the real question is how you weigh the company’s trade offs and timing. Take a closer look at the 4 key rewards and 2 important warning signs If this earnings story has sharpened your thinking, do not stop here. Broaden your watchlist now so you are not late to the next opportunity. Target potential mispricings by scanning companies that screen as attractively valued on quality metrics using the 44 high quality undervalued stocks. Prioritize resilience by focusing on businesses that pair lower risk profiles with dependable financials through the 71 resilient stocks with low risk scores. Hunt for under-the-radar opportunities by reviewing the screener containing 20 high quality undiscovered gems before the crowd pays attention. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include DRVN. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Driven Brands Holdings Inc. DRVN used its first-quarter 2026 earnings call to reinforce a familiar message: Take 5 Oil Change remains the growth engine, while deleveraging and tighter execution remain the near-term priorities.Management also struck a more measured tone on the near term, flagging softer traffic from newer and lower-income customers and warning that second-quarter sales and margins should moderate even as full-year guidance stays intact. President and CEO Daniel Rivera said the first quarter supported the company’s growth-and-cash framework, with Take 5 again leading the portfolio and franchise operations contributing steady profitability. He also reiterated that management’s first capital allocation priority is reducing net leverage to 3x by year-end.The quarter’s reported numbers backed that framing. Revenues rose 8.2% year over year to $484.4 million, surpassing the Zacks Consensus Estimate of $482.8 million by 0.3%. Adjusted EBITDA increased 1.7% to $104.1 million. The company reported adjusted earnings per share of 30 cents, which topped the Zacks Consensus Estimate of 25 cents, delivering a surprise of 20%. Driven Brands Holdings Inc. price-consensus-eps-surprise-chart | Driven Brands Holdings Inc. Quote Take 5 remained the central driver. The business posted 4.5% same-store sales growth, 10% revenue growth and 13.6% adjusted EBITDA growth, with Rivera highlighting premium mix, attachment rates and the stay-in-your-car service model as core advantages. The clearest incremental takeaway from the call was management’s description of softer demand within two customer groups at Take 5: newer customers and more value-oriented households, especially those earning less than $50,000 annually. Rivera said the broader core customer base remains resilient.In Q&A, Goldman Sachs pressed for more detail on whether that softness was spreading. Rivera said trends were stable rather than worsening and pointed to higher average repair orders, stronger attachment rates and premiumization as signs that the broader customer base is still holding up.He added later in the call that the issue is no longer oil change intervals but greater churn among those two customer cohorts. That distinction matters because it frames the challenge as customer retention and targeting rather than a broader shift in service frequency. Rivera described Franchise Brands as a cash generator first, even as the segment posted a modest 0.9% same-store sales gain and 60% adjusted EBITDA margin in the quarter. He said Meineke remained strong, while Maaco stayed soft despite some retail improvement.The more cautious commentary centered on collision repair. In response to William Blair and Piper Sandler, Rivera said industry conditions improved sequentially from the fourth quarter, but management still views 2026 as a year of stabilization rather than a bounce back.He also argued Driven Brands is positioned to outperform the broader collision market by 100 to 300 basis points and can capture more customer-pay work through Maaco when drivers try to avoid insurance claims. CFO Michael Diamond spent much of his prepared remarks on costs tied to the company’s restatement and control remediation work. He said first-quarter operating expenses included $9.1 million of nonrecurring restatement costs, below initial expectations because some work shifted into the second quarter.Those costs are set to rise in the near term. Diamond said second-quarter restatement costs should exceed $15 million, pressuring adjusted EBITDA margin relative to the 21.5% reported in the first quarter, even though the company still expects full-year restatement costs of $35 million to $45 million.Even with that drag, management reiterated 2026 guidance for revenues of $1.95 billion to $2.05 billion, adjusted EBITDA of $430 million to $460 million, adjusted EPS of $1.15 to $1.25, same-store sales from flat to 2% and free cash flow of $125 million to $145 million. The balance sheet remains central to the story. Driven Brands ended the quarter at 3.2x net leverage, and both Rivera and Diamond repeated that reaching 3x by year-end is the immediate focus before laying out a broader long-term capital allocation framework.Asked by William Blair what comes after that milestone, Diamond said the company has multiple options, including continued investment in high-return Take 5 development and the possibility of returning cash to shareholders. He also said there is no catch-up capital spending need weighing on the business.That answer did not commit the company to a single path, but it did show management is preparing for a post-deleveraging playbook instead of signaling more aggressive debt reduction beyond the current target. The overall message coming out of the call was controlled rather than expansive. Rivera emphasized portfolio discipline, cash generation and selective investment, while highlighting a new chief marketing officer as part of a more centralized, data-driven approach to customer acquisition and retention.That tone matched the quarter’s mix of strengths and cautions. Take 5 is still producing the cleanest growth signals, but management used the call to acknowledge macro pressure on parts of the customer base and to prepare investors for a tougher second quarter. DRVN carries a Zacks Rank #4 (Sell), alongside a Value Score of B, Growth Score of A, Momentum Score of F and VGM Score of A. Under the Zacks framework, Style Scores can help separate stocks by value, growth and momentum characteristics, but they are meant to complement, not override, the Zacks Rank. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.That combination points to solid value and growth attributes on paper, but the weak Zacks Rank and Momentum Score argue for caution. Zacks’ own guidance says stocks with a Zacks Rank #4 or #5 (Strong Sell) should not be bought even if Style Scores are favorable, and the rank itself can change as earnings estimate revisions move after the quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Driven Brands Holdings Inc. (DRVN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research