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What were the key takeaways from Driven Brands's earnings call?

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What factors drove the changes in Driven Brands's revenue and profit?

- **Revenue Growth**: Q3 revenue up 7% YoY, driven by Take 5's 6.8% same-store sales growth and 13.5% revenue expansion.
- **Store Expansion**: 170 new Take 5 locations expected in 2025, with 900 franchise pipeline sites.
- **Non-Oil Services**: 25% of Take 5 sales from non-oil services, attachment rates rising to low-50s.
- **Leverage Reduction**: Net leverage down to 3.8x, targeting 3x by end-2026.
- **Q4 Caution**: Narrowed full-year guidance due to macroeconomic risks, expecting Q4 same-store sales at 1%-3% low end.
- **Collision Resilience**: Franchise segment EBITDA margins 66%, IMO car wash up 4% YoY despite weather challenges.

**【CEO Summary Section】**
- **Strong Q3 Performance**: Revenue grew 7% YoY, with system-wide sales up 5% and same-store sales rising 3%. Take 5 Oil Change delivered 6.8% same-store sales growth and 13.5% revenue growth.
- **Store Expansion**: Opened 38 net new stores in Q3, with 170 new Take 5 locations expected for 2025. Franchise pipeline includes 900 potential sites, 1/3 of which are secured.
- **Non-Oil Change Growth**: Non-oil services account for 25% of Take 5 sales, with attachment rates increasing to low-50s from mid-40s. Differential fluid service rollout shows strong margins and customer feedback.
- **Franchise & Car Wash Strength**: Franchise segment EBITDA margins improved to 66%, while IMO car wash segment grew 4% YoY with 28% margins.
- **Macroeconomic Caution**: Narrowed full-year guidance due to government shutdown risks, expecting Q4 same-store sales at the low end of 1%-3% range.
- **Organizational Changes**: Appointed Mo Khalid as COO and Tim Austin as Take 5 President to drive operational rigor and growth.

**【CFO Financial Commentary】**
- **Financial Highlights**: Q3 revenue $535.7M (+6.6% YoY), adjusted EBITDA $136.3M (+15% YoY). Take 5 contributed 75% of EBITDA with $107.3M, up 15% YoY.
- **Leverage Reduction**: Net leverage dropped to 3.8x, down from 4.1x in Q2, with $171M debt reduction. Target 3x by end-2026.
- **Cash Flow**: Free cash flow $51.9M, used to pay down debt and refinance $500M securitized notes to extend maturity and reduce interest costs.
- **Full-Year Guidance**: Revenue $2.1B-$2.12B, EBITDA $525M-$535M, EPS $1.23-$1.28. CapEx near high end of 6.5%-7.5% of revenue range.

**【Q&A Key Highlights】**
- **Take 5 Unit Growth**: 170+ new units expected annually, with franchisees on 2nd/3rd area development agreements. Media mix model optimizes ad spend for higher ROI.
- **Franchise Segment**: Sequential improvement in Maaco and CARSTAR, but ongoing headwinds. Collision repair program trends reflect industry-wide claim avoidance and total loss rates.
- **Macroeconomic Impact**: Q4 choppiness due to government shutdown and consumer uncertainty, but Take 5 remains resilient with 10-minute oil change model.
- **Labor Market**: Stable hiring and retention across segments, with no significant cost pressures.
- **Collision Industry**: Driven collision businesses take share despite industry-wide estimate declines, driven by service quality and franchisee support.

Driven Brands Holdings Inc. (DRVN) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

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Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

DRVN

DRVN fundamentals

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