Driven Brands (DRVN) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $612 million, up 1% year-over-year, with system-wide sales at $1.7 billion and 14 consecutive quarters of positive same-store sales; Take 5 Oil Change led with 19% unit growth and 6% same-store sales growth.

• Adjusted EBITDA was $152.2 million (+4% YoY), and adjusted diluted EPS was $0.35; adjusted net income rose to $58 million, while net income declined to $30.2 million due to higher costs and impairment charges.

• Take 5 Oil Change and franchise businesses were key contributors, with Take 5 achieving 16 consecutive quarters of positive same-store sales and 22% EBITDA growth year-over-year.

• The company is focused on delivering its 2024 outlook, reducing leverage, and active portfolio management, including divesting U.S. Car Wash assets and appointing Michael Diamond as CFO effective August 9, 2024.

Financial highlights

• Revenue increased 0.8% to $611.6 million; adjusted EBITDA rose 4% to $152.2 million; adjusted EBITDA margin expanded to 24.9%.

• Net income was $30.2 million, down from $37.7 million in Q2 2023; adjusted net income was $58 million.

• Maintenance segment system-wide sales grew 10.5% to $535 million, with 4.3% same-store sales growth and 159 new stores.

• Car wash segment same-store sales declined 4.1% due to retail softness and weather; membership count grew by over 200,000 year-to-date.

• Platform services sales grew 6.8% to $61.2 million, with adjusted EBITDA up 12.4% and margin at 41.3%.

Outlook and guidance

• Full-year same-store sales growth outlook revised to 1%-3% (from 3%-5%) due to softness in car wash and collision segments.

• Revenue expected at the lower end of $2.35-$2.45 billion; adjusted EBITDA expected at mid to upper end of $535-$565 million.

• Adjusted diluted EPS expected at the higher end of $0.88-$1.00; net store growth reaffirmed at 205-220 stores.

• Q3 revenue growth projected in low single digits, adjusted EBITDA growth in low double digits year-over-year.