Driven Brands Holdings Inc (DRVN) Q4 2024 Earnings Call Highlights: Navigating Growth Amid ...

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Wed, Feb 26, 2025, 12:07 AM 4 min read

Q4 2024 Revenue: $564 million, up 2% year-over-year.
Q4 2024 Adjusted EBITDA: $130.7 million.
Q4 2024 Diluted Adjusted EPS: $0.30.
Fiscal Year 2024 Revenue: $2.3 billion.
Fiscal Year 2024 Adjusted EBITDA: $553 million, up 7% year-over-year.
Fiscal Year 2024 Diluted Adjusted EPS: $1.14.
Same Store Sales Growth Q4 2024: 2.9%.
Same Store Sales Growth Fiscal Year 2024: 1.3%.
Net New Stores Q4 2024: 70.
Net New Stores Fiscal Year 2024: 191.
Take 5 Oil Change Q4 2024 Same Store Sales Growth: 9.2%.
Take 5 Oil Change Fiscal Year 2024 Same Store Sales Growth: 6.8%.
Take 5 Oil Change Revenue Growth Fiscal Year 2024: 16%.
Take 5 Oil Change EBITDA Growth Fiscal Year 2024: 21%.
Debt Paydown Fiscal Year 2024: $248 million.
Net Leverage Q4 2024: 4.4 times net debt to adjusted EBITDA.
Q4 2024 Operating Income: Negative $318.8 million.
Q4 2024 Net Loss: Negative $312 million.
Fiscal Year 2024 Net Loss: Negative $292.5 million.
Fiscal Year 2024 Adjusted Net Income: $186.3 million.
Fiscal Year 2024 Adjusted Diluted EPS: $1.14.
Fiscal Year 2024 System Sales Growth: 3.6% to $6.5 billion.
Fiscal Year 2024 Operating Expenses: Declined 17% to $2.5 billion.

Warning! GuruFocus has detected 10 Warning Signs with DRVN.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Driven Brands Holdings Inc (NASDAQ:DRVN) reported its 16th consecutive quarter of positive same-store sales growth, with a 2.9% increase in Q4 2024.
The company achieved a revenue of $564 million in Q4 2024, up 2% from the previous year, supported by 70 net new stores.
Take 5 oil change, a key growth driver, reported 9.2% same-store sales growth in Q4 2024 and opened 61 new stores, contributing to a total of 174 net new stores for the fiscal year.
Driven Brands Holdings Inc (NASDAQ:DRVN) successfully reduced its net leverage to 4.4 times net debt to adjusted EBITDA by the end of Q4 2024.
The company entered into a definitive agreement to sell its US car wash business, which is expected to close in Q2 2025, as part of its active portfolio management strategy.

Negative Points

Driven Brands Holdings Inc (NASDAQ:DRVN) reported a net loss of $312 million for Q4 2024, primarily due to asset impairments related to the US car wash segment.
Operating income declined significantly to negative $318.8 million in Q4 2024, driven by increased asset impairments and higher SG&A expenses.
The ongoing inflationary environment is expected to continue pressuring consumer spending in 2025, particularly affecting lower-income households.
The company's guidance for 2025 reflects a cautious outlook, with expected revenue between $2.05 billion to $2.15 billion and adjusted EBITDA between $520 million to $550 million.
Driven Brands Holdings Inc (NASDAQ:DRVN) anticipates a more normalized level of same-store sales growth for Take 5 oil change in 2025, indicating potential moderation from the strong growth seen in Q4 2024.

Q & A Highlights

Q: Can you provide more details on the 2025 adjusted EBITDA growth expectations, especially considering the sale of the US car wash business? A: Michael Diamond, CFO, explained that the US car wash business contributed approximately $50 million to adjusted EBITDA. The growth in 2025 will primarily be driven by the Take 5 oil change business, which is expected to continue its strong performance with a robust unit pipeline and franchisee engagement.

Q: What is the expected impact of the US car wash business sale on leverage and the company's financial strategy? A: Michael Diamond, CFO, stated that the sale is expected to be largely leverage-neutral due to the structure of the transaction. The company plans to use proceeds to pay down debt and continue its strategy of systematic deleveraging, aiming for a net leverage target of 3 times by the end of 2026.

Q: How is the Take 5 oil change business performing, and what are the expectations for its growth in 2025? A: Daniel Rivera, COO, highlighted that Take 5 achieved its 18th consecutive quarter of positive same-store sales growth, with a strong performance in Q4 2024. The focus will be on new unit growth, enhancing ticket sales through non-oil change services, and optimizing the cost structure to sustain long-term success.

Q: What are the plans for the Auto Glass Now (AGN) business, and why is it not broken out as a separate segment? A: Michael Diamond, CFO, explained that AGN is currently incubated within the corporate and other segments due to its size and the nature of its business. The focus is on growing the business, particularly through insurance and commercial partnerships, before considering it as a standalone segment.

Q: Can you elaborate on the marketing initiatives for Take 5 and their impact on growth? A: Daniel Rivera, COO, described a two-part marketing strategy for Take 5, involving broad reach brand campaigns and data-driven local campaigns. This approach has been effective in driving customer acquisition and retention, contributing to sequential growth in transactions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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