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Driven Brands Holdings Inc. (DRVN)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $551.0M (+6.2% YoY), Adjusted EBITDA $143.2M (flat YoY), and Adjusted diluted EPS $0.36; both revenue and EPS exceeded Wall Street consensus for Q2 ($540.5M and $0.336, respectively). The FY25 revenue consensus sits near $2.115B* [Values retrieved from S&P Global].
  • Management reaffirmed FY25 guidance: revenue ~$2.05–$2.15B, Adjusted EBITDA ~$520–$550M, Adjusted diluted EPS ~$1.15–$1.25; raised the full‑year interest expense outlook to $130–$135M (from $125–$130M) and tax rate to 28–30% (from 26–27%) .
  • Deleveraging progressed: DRVN sold the U.S. car wash seller note for $113.0M cash on July 25 and paid down the term loan and $65M of revolver; pro forma net leverage fell to 3.9x Adjusted EBITDA .
  • Take 5 Oil Change continued to lead: revenue $304.2M, Adjusted EBITDA $108.2M, same‑store sales +6.6% (20th consecutive quarter of positive comps); corporate noted mid‑30s full‑year margin cadence for Take 5 .

What Went Well and What Went Wrong

What Went Well

  • Take 5 momentum: “Take 5 Oil Change remains at the forefront through industry‑leading growth, achieving its 20th consecutive quarter of same store sales growth” with same‑store sales +6.6%, revenue $304.2M, Adjusted EBITDA $108.2M .
  • Deleveraging and liquidity: Seller note monetization ($113M) reduced debt and set pro forma net leverage at 3.9x; total liquidity at quarter end was $654.8M (cash $166.1M + $488.7M undrawn) .
  • International Car Wash (IMO) strength: same‑store sales +19.4%, Adjusted EBITDA $27.3M, ~37% margin, with favorable weather and strong operations; management expects moderation in H2 .

What Went Wrong

  • Franchise Brands softness: comps −1.5% and revenue down $6.4M YoY; EBITDA down $8.8M, partly from lapping one‑time fees and higher G&A (tech/investments) .
  • Operating expense pressure: Q2 SG&A rose ~$63.3M YoY, including cloud amortization, seller note fair‑value loss, and asset disposals excluded from Adjusted EBITDA; store expenses up with volume/store growth .
  • Collision industry headwinds: elevated claim avoidance and total loss rates driving high‑single‑digit declines in estimates industrywide; DRVN gaining share but anticipates ongoing softness in H2 .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$518.8 $516.2 $551.0
Adjusted EBITDA ($USD Millions)$143.4 $125.1 $143.2
Adjusted Diluted EPS ($USD)$0.37 $0.27 $0.36
Diluted EPS – Continuing Ops ($USD)$0.22 $0.11 $0.07

Q2 2025 vs consensus:

MetricQ2 2025 ActualQ2 2025 Consensus# of Estimates
Revenue ($USD Millions)$551.0 $540.5*12*
Adjusted/Normalized EPS ($USD)$0.36 $0.336*13*
Values retrieved from S&P Global.

Segment breakdown (Q2 2025):

SegmentSame Store Sales (%)Revenue ($USD Millions)Adjusted EBITDA ($USD Millions)
Take 56.6% $304.2 $108.2
Franchise Brands(1.5)% $74.6 $45.4
Car Wash (International)19.4% $73.4 $27.3
Corporate & OtherN/A $98.8 ($37.7)

KPIs (Q2 2025):

KPITake 5Franchise BrandsCar WashCorporate & OtherTotal
System-wide Sales ($USD Millions)$406.6 $1,075.2 $71.8 $71.2 $1,624.8
Store Count1,244 2,673 718 214 4,849
Same Store Sales (%)6.6% (1.5)% 19.4% N/A 1.7%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025~$2.05–$2.15B ~$2.05–$2.15B Maintained
Adjusted EBITDAFY 2025~$520–$550M ~$520–$550M Maintained
Adjusted Diluted EPSFY 2025~$1.15–$1.25 ~$1.15–$1.25 Maintained
Same Store SalesFY 20251%–3% 1%–3% Maintained
Net Store GrowthFY 2025~175–200 ~175–200 Maintained
Interest ExpenseFY 2025$125–$130M $130–$135M Raised
Effective Tax RateFY 202526%–27% 28%–30% Raised
H2 WeightingFY 2025“low 50%” of full-year revenue/EBITDA ~50% H2, tempered Q3 Adjusted cadence

Earnings Call Themes & Trends

TopicQ4 2024Q1 2025Q2 2025Trend
DeleveragingTarget <3x by YE26; net leverage 4.4x; asset sales to fund paydown Proceeds used to retire term loan; debt paid down ~$246M post‑Q1; revolver extended to 2030 Seller note sold, term loan retired, pro forma 3.9x; focus on FCF to revolver; YTD debt repaid ~$445M Accelerating, simplified structure
Take 5 growthQ4 comps +9.2%; 174 net new in FY24; strong premium oil mix Q1 comps +8%; non‑oil services >20% of sales; mid‑30s margin commentary Q2 comps +6.6%; 41 net new in Q2; non‑oil >20%; differential service rollout Still strong, moderating comps over larger base
Franchise BrandsStable cash generator; margins >50% Q1 comps −2.9%; revenue −$4.6M; EBITDA −$3.2M Q2 comps −1.5%; revenue −$6.4M; EBITDA −$8.8M; tech/G&A investments Sequential improvement, but ongoing softness
Car Wash (Int’l)Q4 comps +7.9%; EBITDA $28.7M Q1 comps +26.2%; EBITDA $24.4M Q2 comps +19.4%; EBITDA $27.3M; expect weather-driven moderation Strong, likely moderating in H2
Tariffs/macroCautious stance; FY25 prudence Diversified sourcing; USMCA coverage; pricing power No material change; positioning to manage foreseeable risk Managed risk; prudent outlook
Glass (AGN)Incubating; strategic focus on contracts Growth via insurance/commercial wins; TPA activation timing Early innings; continued top-line focus in Corporate & Other Building gradually

Management Commentary

  • CEO Danny Rivera: “These results demonstrate the power of our diversified platform and our growth and cash playbook… Take 5 Oil Change remains at the forefront through industry‑leading growth, achieving its 20th consecutive quarter of same store sales growth” .
  • CFO Mike Diamond: “Adjusted EBITDA margin for Q2 was 26%, a decrease of roughly 160 basis points versus Q2 last year as sales growth was offset by increases in store expenses and SG&A” .
  • CEO Danny Rivera on deleveraging: “We remain committed and laser focused on reducing leverage to three times by 2026… monetized the seller note for $113M, fully retired our term loan and paid down our revolver… reducing net leverage to 3.9x” .
  • CFO Mike Diamond on outlook: “We reiterate our fiscal 2025 outlook… revenue of $2.05–$2.15 billion, Adjusted EBITDA $520–$550 million, Adjusted diluted EPS $1.15–$1.25… now expect full year interest expense between $130 million to $135 million and an effective annual tax rate of 28% to 30%” .

Q&A Highlights

  • Take 5 margins: Management comfortable with mid‑30s margin for full year; quarter‑to‑quarter variability from repair/maintenance and new store opening costs .
  • Car Wash international: Strength driven by market leadership and operations; expect meaningful moderation in H2 due to weather laps (rainy July) and high prior‑year comps .
  • Non‑oil change services: Attachment rates mid‑to‑high 40s on average, 60s in top stores; differential service rolled out across company‑owned and ~half of franchise locations, accretive gross margin .
  • Collision industry: Headwinds from claim avoidance (higher premiums/deductibles) and elevated total loss rates; DRVN taking market share despite softness .
  • Store mix cadence: Expect roughly 50/50 corporate/franchise in Take 5 by year‑end; franchise openings typically skew to H2 .

Estimates Context

  • Q2 2025 actuals beat consensus on both revenue ($551.0M vs $540.5M*) and Adjusted/Normalized EPS ($0.36 vs $0.336*) with 12–13 estimates*. FY25 revenue consensus is ~$2.116B* [Values retrieved from S&P Global].
  • Implications: Street may raise FY25 EPS and segment-level estimates for Take 5; modest caution warranted for Franchise Brands and International Car Wash moderation signaled by management .

Key Takeaways for Investors

  • Take 5 remains the growth engine (Q2 comps +6.6%, EBITDA +9.9% YoY), supported by premium oils and expanding non‑oil services; expect moderation but sustained momentum .
  • Reaffirmed FY25 guide with raised interest and tax rate assumptions reflects prudence amid macro/tariff uncertainty; cadence now flags a tempered Q3 and balanced H2 .
  • Deleveraging and capital structure simplification are tangible: seller note monetization, term loan retired, pro forma net leverage 3.9x; FCF earmarked to revolver in H2 .
  • Franchise Brands are a high‑margin cash generator but face discretionary and industry headwinds (Maaco, collision); sequential improvement versus Q1, but continued caution in H2 .
  • International Car Wash delivered exceptional comps/margins; management signaled weather-driven moderation, reducing upside risk in H2 .
  • Near‑term trading: Positive reaction bias from headline beats and deleveraging update; balance against H2 moderation commentary and raised tax/interest expense .
  • Medium‑term thesis: Platform resilience (needs‑based services), Take 5 runway (unit growth + service mix), and disciplined deleveraging underpin valuation re‑rating potential as execution continues .

Notes: Values marked with an asterisk were retrieved from S&P Global.