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    DRVN
    Earnings call· Jun 2026(Q2 FY26)

    Driven Brands Holdings Q2 FY26 earnings call DRVN

    Aug 6, 2026 Source

    Executive summary

    Driven Brands Q2 FY26 — Strong Take 5 Growth and Balance Sheet Strengthening Amidst Cautious Outlook

    Driven Brands reported solid Q2 FY26 results, driven by robust growth in its Take 5 segment and consistent cash generation from Franchise Brands, while reducing net leverage. The company maintains a cautious outlook for the second half of the year due to ongoing pressure on lower-income consumers and energy market volatility, expecting full-year results at the lower end of its guidance. Management remains focused on disciplined execution and capital allocation to enhance shareholder value.

    Highlights

    5

    • System-wide sales grew 5% to $1.6 billion in Q2 FY26.

    • Revenue grew 7% to $507 million in Q2 FY26.

    • Net leverage reduced to 3.1x by the end of Q2 FY26.

    • Take 5 delivered its 24th consecutive quarter of same-store sales growth, up 3.6% in Q2 FY26.

    • Total footprint grew 5% to more than 4,300 locations, adding 192 net new stores over the last 12 months.

    Concerns

    4

    • Lower-income households remain under significant pressure, impacting consumer demand.

    • Renewed Middle East conflict driving oil price volatility and higher gas prices.

    • Restatement costs expected at the top end of the $35 million to $45 million range for FY26.

    • Auto Glass Now Adjusted EBITDA decreased $6.6 million to $3.5 million in Q2 FY26 due to out-of-period costs.

    Guidance & targets

    10
    CategoryTargetConfidence
    Revenue
    $1.95 billion to $2.05 billion
    high materiality
    Medium
    Same-store sales
    flat to 2%
    high materiality
    Medium
    Net new unit growth
    160 to 190 units
    medium materiality
    Medium
    Adjusted EBITDA
    $430 million to $460 million
    high materiality
    Medium
    Adjusted diluted EPS
    $1.15 to $1.25
    high materiality
    Medium
    Net capital expenditures
    approximately 6.5% of revenue
    medium materiality
    Medium
    Free cash flow
    $125 million and $145 million
    high materiality
    Medium
    Net leverage
    3x
    high materiality
    High
    Take 5 annual unit openings
    150 or more units annually
    medium materiality
    High
    Take 5 total locations
    more than 2,500 total locations
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Take 5
    Delivered its 24th consecutive quarter of same-store sales growth. Adjusted EBITDA grew 7.8%. Margins decreased roughly 70 bps due to inflation and store operating expenses. New unit pipeline remains robust.
    Adjusted EBITDA: $114.9MNet new units: 50Total locations: >1,400Net Promoter Scores: mid-70sNon-oil change services % of sales: almost 30%New unit pipeline: approx. 800 locationsPipeline site secured: >1/3
    		—Same-store sales up 3.6%, System-wide sales up 13%—Adjusted EBITDA margin 34%
    Franchise Brands
    Generated reliable, high-margin cash flow. Revenue decline driven by sale of 2 company-operated collision locations. Adjusted EBITDA decreased $2.4M due to increased technology costs and investments in people. Meineke showed continued strength, while Maaco remained under pressure.
    Adjusted EBITDA: $41.2MCollision industry outperformance: 200 bps
    		Declined $3.4MSame-store sales up 0.5%—Adjusted EBITDA margin 59%
    Auto Glass Now
    Made steady progress in its incubation period. Adjusted EBITDA was significantly impacted by approximately $4 million in out-of-period costs related to balance sheet cleanup from 2024 and prior. Long-term growth runway seen in the fragmented glass market.
    Adjusted EBITDA decrease: $6.6M (due to out-of-period costs)
    		—Same-store sales up 2.6%—Adjusted EBITDA $3.5M

    Operational metrics

    18
    System-wide sales
    $1.6Bup 5% YoY
    Q2 FY26

    Total system-wide sales for the quarter.

    Total footprint
    >4,300up 5% YoY
    Q2 FY26

    Total number of locations at quarter end.

    Net new stores
    192
    last 12 months

    Net new stores added over the past 12 months.

    Adjusted EBITDA (excluding restatement costs)
    $118.8Mup 3.4% YoY
    Q2 FY26

    Adjusted EBITDA excluding the impact of nonrecurring restatement costs.

    Operating expenses increase
    $6.2MYoY
    Q2 FY26

    Increase in operating expenses driven by higher sales, more stores, restatement costs, and out-of-period costs.

    Nonrecurring restatement costs
    $11.8M
    Q2 FY26

    Costs incurred for restatement work, expected to shift into Q3 for audit completion.

    Out-of-period costs
    approx. $4M
    Q2 FY26

    Costs related to balance sheet cleanup from 2024 and prior, impacting Auto Glass Now segment.

    Year-to-date restatement costs
    $20.9M
    YTD Q2 FY26

    Total restatement costs incurred year-to-date.

    SG&A (excluding restatement costs)
    7.2%
    Q2 FY26

    SG&A as a percentage of system-wide sales, excluding restatement costs.

    Interest expense
    $20.8Mdown $10.4M YoY
    Q2 FY26

    Interest expense driven primarily by ongoing debt paydown.

    Income tax expense
    $13.8M
    Q2 FY26

    Income tax expense for the quarter.

    Net capital expenditures
    $31Mdown $11.7M YoY
    Q2 FY26

    Decrease primarily driven by lapping of CapEx from divested Car Wash businesses.

    Net leverage
    3.1x
    Q2 FY26

    Net leverage ratio at the end of the quarter.

    Take 5 premium mix
    low 90s
    Q2 FY26

    Premium mix for Take 5 services.

    Take 5 attachments
    high 50s
    Q2 FY26

    Attachment rates for Take 5 services.

    Take 5 net new units opened
    50
    Q2 FY26

    Net new Take 5 units opened in the quarter.

    Take 5 franchised units opened
    24
    Q2 FY26

    Franchised Take 5 units opened in the quarter.

    Collision industry outperformance
    100 to 300
    Q2 FY26

    Outperformance of the company's collision business compared to the overall industry.

    Industry KPIs

    7
    MetricValueDetails
    EPS$0.29USD
    Revenue$507.4MUSD
    Net income$37.3MUSD
    Market share—
    Sg a OPEX ratio8%% of system-wide sales
    Adjusted EBITDA ebita$107MUSD
    Operating income EBIT$73.1MUSD

    Deals & partnerships

    2
    US and international car wash businessesDivestiture of car wash businesses

    The results for these businesses are included in discontinued operations and are not included in quarterly financial details provided today unless otherwise noted.

    Company-operated collision locationsSale of two company-operated collision locations

    Revenue in the Franchise Brands segment declined $3.4 million, driven primarily by the sale of our 2 remaining company-operated collision locations.

    Risks & headwinds

    5
    K-shaped consumer economyH2 FY26

    Lower-income households under significant pressure; moderation among newer customers and lower-income consumers.

    Mitigation: Approaching the back half of the year with caution and a disciplined focus on execution; surgical promotions targeting value-motivated groups.

    Middle East conflict and oil price volatilityH2 FY26

    Driving volatility in oil prices and supply, pushing gas prices higher.

    Mitigation: Take 5's scale, strong supplier relationships, diversified supply chain, and seasoned procurement team; taking modest disciplined price increases to offset rising input costs.

    Inflation in store operating expensesQ2 FY26, ongoing

    Adjusted EBITDA margin for Take 5 decreased roughly 70 bps YoY in Q2 FY26.

    Mitigation: Expects Take 5 to continue to be a mid-30s EBITDA margin segment; no immediate need for additional price increases to offset this.

    Restatement costsQ2 FY26, Q3 FY26 (audit completion)

    $11.8 million in Q2 FY26; $20.9 million year-to-date; expected at top end of $35 million to $45 million range for FY26.

    Mitigation: Viewed as nonrecurring in nature and not reflective of underlying earnings power; audit work on whole business securitization financials to be completed in Q3.

    Out-of-period costsQ2 FY26

    Approximately $4 million in Q2 FY26, impacting Auto Glass Now Adjusted EBITDA.

    Mitigation: Committed to doing things right and being transparent with the charge; relates to balance sheet cleanup from 2024 and prior.

    What to watch in Q3 FY26

    5

    Net leverage ratio

    by year-end 2026
    Current3.1x
    Target3.0x

    Why it matters

    Achieving the 3x net leverage target is a key financial commitment and will inform future capital allocation plans.

    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.

    Q&A highlights

    5

    What is the impact of rising oil costs on the business, and how is the company responding with pricing?

    Danny Rivera confirmed seeing cost increases in Q2 and expected in H2 due to the Middle East conflict. He stated that Take 5's scale and supplier relationships are an advantage. The company took modest price increases in late Q2 and expects to continue to do so, aiming to preserve gross margin dollars.

    “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.”

    asked by Craig Kennison · answered by Daniel Rivera

    2 min read6 chapters

    Detailed Narrative

    01

    Take 5 Performance and Growth Strategy

    Take 5 continued its strong performance with 3.6% same-store sales growth and 13% system-wide sales growth, marking its 24th consecutive quarter of positive comps. The segment opened 50 net new locations, contributing to over 175 new stores in the past 12 months, and has a robust pipeline of approximately 800 units towards a long-term goal of over 2,500 locations. Non-oil change services represented almost 30% of Take 5 sales, demonstrating diversification beyond core offerings.

    02

    Franchise Brands as Cash Generator

    The Franchise Brands segment, including Meineke, Maaco, and CARSTAR, delivered 0.5% same-store sales growth and strong adjusted EBITDA margins of 59%. Meineke showed continued strength, while Maaco, a more discretionary brand, remained under pressure due to lower-income consumer trends. This segment consistently provides high-margin cash flow, which is crucial for funding the company's growth initiatives.

    03

    Auto Glass Now Progress and Long-Term Opportunity

    Auto Glass Now achieved 2.6% same-store sales growth, making steady progress in its incubation period. Despite a temporary decrease in Adjusted EBITDA due to $4 million in out-of-period📎 costs, the company sees a significant long-term growth runway in the fragmented automotive glass market. Management aims to expand across retail, commercial, and insurance channels, with the business expected to grow from a low double-digit margin baseline.

    04

    Consumer Economy and Macro Headwinds

    The company is navigating a K-shaped consumer economy, with lower-income households facing significant pressure, leading to moderation in spending among newer and lower-income customers. Renewed Middle East conflict has also driven oil price volatility and higher gas prices, directly impacting consumer demand and necessitating a cautious approach for the back half of 2026. Management is implementing disciplined execution and surgical promotions to mitigate these impacts.

    05

    Capital Allocation and Balance Sheet Strength

    Driven Brands reduced its net leverage to 3.1x and remains committed to achieving its target of 3x net leverage by year-end 2026 through strong cash flow generation. Management emphasized disciplined capital allocation, prioritizing funding Take 5 growth and further strengthening the balance sheet. Future capital allocation plans, including potential shareholder-friendly actions, will be communicated upon reaching the leverage target.

    06

    Rejection of Activist Proposal

    The Board unanimously rejected an acquisition proposal, deeming it highly conditional, significantly undervaluing Driven, and not in the best interest of shareholders. Management reiterated confidence in its long-term value creation opportunities through disciplined execution of its growth and cash strategy, capital allocation, and flawless execution. The company views active portfolio management as a lever to generate long-term shareholder value.

    AI-generated summary of the company’s earnings call. Not investment advice.