DRVN - Earnings call 3 2023 | Driven Brands Holdings Inc.

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Operator

Good morning. My name is Lara, and I will be your conference operator today. At this time, I would like to welcome everyone to the Driven Brands Q3 2023 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn the call over to Joel Arnao, SVP of Finance. your begin may you conference. Joel,

Joel Arnao

download welcome Good XXXX ratio Brands' at for Quarter Driven Conference morning, reconciliation Call. available leverage and Earnings the The Third and website to earnings our on are investors.drivenbrands.com. release

you a the Gary Vice President Chief our Fitzpatrick, the Financial President through Vice and and Executive are and will Officer; In Executive and Chief Rivera, Chief today Operating operating me moment, Danny Gary and On and performance call President quarter. Jonathan walk Jonathan, with Danny Officer; Ferrera, financial Officer. Executive for

to Before certain you we begin our remarks, measures. financial management I'd to like refer remind will that non-GAAP

You on with Commission. Securities the to the and the financial company's can Investor and these measures filings GAAP Relations reconciliations its most Exchange directly find website comparable in

we future of These subject for remarks results and and forward-looking beliefs may by make cause course current these results information. to question-and-answer could events Securities that from for forward-looking expectations. to regards and number the risks this guarantees statements performance our not also and in During and uncertainties to with of other plans, release factors Exchange a are materially statements prepared followed session. our are differ by the and Commission events our Today's filings Please contemplated and will see statements. be and earnings more a actual call,

to question one and one yourself follow-up. limit to you ask will We

Now I'll turn to it over Jonathan. partner, my

Jonathan Fitzpatrick

us appreciate joining Results. Third everyone to we XXXX Thanks, for Driven and discuss Financial Joel, Quarter Brands'

and franchisees how navigate dynamic work than Driven by macroeconomic more to always, Now XX,XXX amazing an and the to for members strong team environment. I as execution continue extremely hard want acknowledge they Brands our our

value and our to of in platform you you left and commitment event that you unlocking to a of our true chance I the Investor with our the to the the business. were many of hope sure a had we shared insights the power better Driven I'm that understanding Day valuable September. of attend

our cash competitive as benefits, creates enhancing generating and robust platform flow. many our Now such advantages, diversification

making Driven's performance and improvement actions Glass pace progress have Car accelerate We with taken the on we of are businesses. the U.S. and continue Wash act to urgency in to to our improve

We outlined position, Officer our disciplined on and U.S. made Chief Car strategy, changes return through shared plan portfolio created the a Wash multiyear deployment a Operating to capital management. Glass leadership and and our strategic U.S. maximize investments within

our returns for We steady-state returns with and have at over valuation mirror time. that see runway results reinvestment a platform generates we're exceptional high long our motivated to a incredibly

third let Wash review Take turning Car Oil who some Now Change, and discuss Danny, our me of it over Glass. X quarter highlights will before to

XXXX will year Next, quarter detail our Gary results outlook. third full and

X% diluted the sales X.X% and $X.XX adjusted growth year, we of For supported by growth versus store quarter, achieving share. same-store per EPS growth, XX% prior delivered revenue net

We to by continued Quick metrics. to performance All quarter's and key of this all the businesses growth. Lube franchise contributors being be across our pleased our

all on Now and Danny, I days. aspects last spent those in over of will the laser-focused of U.S. have detail lot business. me he an reviewing discuss more shortly. and U.S. opportunities Gary you operational business a update time is give let on Wash the Car our Danny carwash XX

had years which negative competitive were estate significant had real than sales detailed we wash our on these Generally, began locations XX average negative and traffic close in after more XX On old, an car locations to locations, LTM suboptimal EBITDA Now same-store had and review U.S. in contribution. QX. QX, basis, decided intrusion. these and

these closing will in Consequently, benefit small XX some we locations. see for QX loss-making

locations. pipeline our car new for reviewing wash actively are we Additionally,

base business our open this we Now new stores until capital determine performing. in with to not and to commitment is the line all stop is

to X quarters, next capital that see X sites. from pipeline will expect return over likely selling we the of these a We

making on and XXXX us. Gary And U.S. integration U.S. the previously, will the getting to as update behind progress I openings several likely Glass on impact provide We Wash steady this an store shortly. business fiscal Car quarters. will the take are have said

Oil a As for to generation U.S. and our which getting on Wash deploying set will free up our the capital, integration reminder, a and focus behind cash to open using Change disciplined pay be This Glass a X the down generally for guidance excess a strategy stores, XXXX to primarily short-term company U.S. is used Car focus cash for improving debt. very XXXX. flow Take strong flow company us, challenges business, deliver means the free

I to Danny is performance. responsible Gary for reiterate Now for and creation one and improve steps of have Chief Driven's role important taken Operating capital responsible several are Officer the is allocation. as to want the segments. I The an that operating strategy we all

for opportunities revenue And and day-to-day segment. growth making, my the on Maintenance Simply been finding XX ultimately Driven. for profits. P&Ls. has at put, responsible is recently, years as he delivering served our and the decision of executing Danny owns partner he most segment-level, and Danny President

So it our over to me Danny, Officer, to hand let our discuss Operating key business that, segments. with Chief

Daniel Rivera

Thanks, Jonathan.

met Meineke, of those a I our President Before segment. not team met, for for part leadership me Take over Oil Driven Maintenance been period, decade. begin, Day. Change you the I of President let Group have of Investor of of and introduce President of a Throughout X I've you many But our I that been I've myself. at

they realizes that While Jonathan on capital capital we job and Gary allocation, ensure underwrote. and focus allocated strategy returns the it's my have to the

deliver time turn and them take on our over high-growth predictable into engines which results. enables operating playbook, acquired Driven am that to businesses focused scalable executing and I

over years. of our Driven's operating and the developed businesses, implemented franchise. has playbook been across it all both We've XX company past

continual improvement. chapters, has and all process and chapters important people, upon playbook which brand another. are Those The several of positioning, build culture, include one

at with both Car that change, Change X X the Take Now. and repeating business, Glass Auto same our very our successful Take are mature Wash We Oil has growth been playbook most

Take Oil Change, Car levers: With Driven's that Auto discuss primary and X X background, me X Now. let Wash Take Glass growth

quarter, Change, Oil franchise sales same-store company both XX%. strong continued acquisition customer This of delivered and and drive X locations, to Take

We stay oil scores XX repeat increasing our in your continue outpace brand differentiated as and NPS to model minute with car quartile the builds change competition recognition top rates.

Further, than at XX% pipeline we our over robust XXX franchise footprint and remains grew year-over-year, more our units.

our forward. expect footprint growth franchise to asset-light drive moving We growth store

about their the course, and, returns Our performance generating. franchisees remain excited stores the of of they're

franchise opened QX, our celebrating we I'm be also we our openings store locations. in XXXth X,XXX will and excited just that recently

to Let's Wash Car business. switch our over now

intrusion. volumes challenging softer Car are macro retail U.S. for discretionary and driven experiencing our segment, We the Wash continued in competitive by business environment a most

Wash However, our well despite to business challenging in International perform Europe. conditions Car continues

business. Jonathan Car mentioned, have leaning operational As I been Wash the in into U.S. opportunities

the following some taken. The actions we have of that are

a marketing, made including changes of leadership change I've First, a operations series changes, and President. in in

have our how their management also our priorities. I are and to processes those teams changes made against priorities structured,

improve priorities immediate the to at Our to twofolds: are be margins. best basics the and

and our equipment being our that to and delivering KPIs operating, handful we're reducing on due customers. and days failure, a to winning we're we're best processes fast, must-win ensure focused Regarding delight promise of friendly convenient we're we're on basics, open and in of downtime operational the the order

approach operational financial have identify Regarding to opportunities for performance. we implemented data-driven better and improving a margins,

taking example, to reducing disciplined marketing For strategy, discounting on customers. approach are we ensure while to our a attracting we promotional more long-term our focusing are efforts

wash QX, out enabling in strategy offer. implementing improved that begin We we us are pricing are capture better rolling will an that levels also of the value different to

an margins. particularly taking obtain implementing a and operational variable and from we Finally, variable close operational at look identifying perspective, are costs proper outliers to help guardrails costs,

of that with we along closing gives improve XX actions, quarters. can locations, business confidence several over the the unprofitable These the next me

to the loyalty our As are Take Day, program initially I X and that at Change excited mentioned out Car X roll we Wash. Rewards, on Investor new focus Take will Oil also

program will this of in year. We new this testing QX be

subscription platform and Car Oil across Oil offer a Wash. Take both new X Change X a combo will Our Take subscription Change and

coupled also to loyalty businesses. frequency both will program drive a subscriptions Our with be designed across

an growth. Lastly, important let's component our of U.S. Glass business, cover our longer-term

Investor on businesses up of series the we resulted of call XXXX. in Glass XX integrating our Glass make ultimately challenges the These business. underperformance have that our Jonathan in the we acquired encountered business last challenges earnings a As and have at mentioned U.S. Day, integration

also quarters We several to that it take get said challenges. will these through

with continuing and to are these integration to QX goal progress, rearview in XXXX of largely mirror. challenges the is We exit our make

plan on the we QX centralizing of of with point-of-sale our fully progress the center, of out made we all rolled the in completed we new are call centralized the of Some we've of integration and rollout completed XXXX. new purchasing the product process our system, include: by being rollout

and our of platform. all have locations employees capabilities one are More calibration now payroll and benefits XX% than on

We decision the unit have sure the to slow in base make performing new that business we also XXXX the growth is levels in made expect. QX down to at and

as work Glass of forward our integration up extremely U.S. put bullish business on look strong a remain and we We to XXXX behind mountains us.

similarities performing similarly. at playbook our Change Wash should we Take mentioned Glass as driven Investor as be have Oil in many X I confident I business, and to we the Day, and As clear, not Car such, the happen it have our Oil is It Take cemented, our will in and have priorities successfully execute. to the have place team X proven been with business. but Change overnight, vision am

the role Gary. created turn with best will partner, Change to forward that, business Take I X spreading Driven. those as my and taking newly throughout success And look methodically results COO, to those Oil our it practices over and my In of I now

Gary Ferrera

remainder Thanks, our financial I as outlook performance is you on shaping growth future. quarter Danny, our share cash capital of focus will flow, well and third and the Today, how disciplined our year and for everyone. with strategic the allocation welcome, as

On had top QX XXXX. a line quarter consolidated versus basis, of growth another strong we

the net system-wide sales a store growth. year driven prior sales by reached This same-store billion, in X% $X.X a increase representing X% was XX% growth period. from and a increase Our

XX%. Maintenance increase was $XXX Collision growth followed segment into Glass for by & by This translated of revenue reported our segment. This led quarter primarily our million, the Paint of an over

attributable decline Wash of XX% the million $X million and last of directly quarter margin or Adjusted revenue impact This driven Wash EBITDA rent to PC&G adjusted slight Car Car from in being increased year. resulting EBITDA the was by revenue the the same segment leasebacks. $XXX versus and decline million expense is approximately with on or of sale XX% in $XXX

as and the experienced Maintenance prior well expansion significant the margin year. the adjusted in Both in as EBITDA Platform growth Services quarter segment versus

focus our now performance segment. on I'll by

sales of largest with growth the We are X% positive segment. pleased same-store our Maintenance, in

continues which prior impressive was grew perform company-owned both segment Oil business an and this This over strongly driven X across from by XX% franchise Revenue Take primarily locations. the to our year our Change period.

we've before, to tailwinds, mentioned a car vehicle including aging tech trusted complexity As industry increased brands. flight drive an average and and park

Take Oil as to from car these saw trends we continues another Change quarter trends. benefit of count X positive

EBITDA top for almost line Maintenance due operational increased points drove million $XX margin versus versus adjusted QX QX performance adjusted This focus XXXX. a as over to strong in segment EBITDA efficiency. continued of XXX on XXXX from segment an as by XX% flow-through increase basis well over

driven In in XX% experienced decreased of the in international Wash versus sales was Total increased the $XX period. EBITDA operation. versus decline entirely prior adjusted decline QX our of segment in segment, a margin revenue, in adjusted Wash Wash U.S. by including the Car X%. Car segment EBITDA This our million. approximately Car X% to same-store a business quarter we decline resulting The XXXX, XX% year

experienced to ramping soft primarily of locations, and increased the demand portion costs due during business XX higher XX with the fixed U.S. competition. associated the while experiencing The last new costs stores including months, opened retail the

rent be increased earlier, QX As of can I versus activity fixed $X approximately mentioned expense from costs these XXXX. sale-leaseback million attributed to

growth performance & achieved making the significant stores operational of growth revenue same-store we X% XX%. are sales business. Collision Glass positive segment In U.S. and improve Paint, We and and closing Wash our to of underperforming segment, improvements our financial of Car

EBITDA decreased resulting QX in from XXXX, margin However, a EBITDA. $X in in decline segment adjusted to adjusted XX% XX% million

quarter. business The this year prior U.S. decrease delivered Collision drove Paint as & increases Glass over the

mentioned Glass Danny and he through the team U.S. integration his to related XX As working are the acquisition. previously, issues

segment, Services over X% from saw less the QX in year down X-XXX-Radiator X% sequential improvement Revenue our than XX% In to QX. negative in period. prior Platform increased

about only comprises this X-XXX-Radiator reminder, for a As revenue of the XX% segment.

EBITDA Platform increased resulting year $XX margin Services in in from the XX% to adjusted adjusted segment million. EBITDA period, XX% of prior

adjusted below I components key Now focus some will EBITDA. on

reflecting quarter, a million and Depreciation million totaled in an $X increase expense company-operated increase due count. prior in $XX the mainly store amortization year, the from to

XXXX, increase with total and higher a well due variable debt XXXX loan reached Additionally, QX term increase by $XX levels, an as issuance million our $XX as to our on million, primarily are in tranches driven interest rates. from securitization expense revolver, debt QX only which by our interest outstanding in

quarter noncash in Car Net QX income impairments approximately goodwill third loss $XX the the million net was versus of $XXX U.S. for in million. to our $XXX XXXX. Wash Due asset of business and million

the During XX, Wash conducted we September quarter operations. an our of Car review XXXX, ended in-depth U.S.

assessing potential in growth understanding revenue expense and environment, competitive stores patterns underperforming local This opportunities review for new their focused identifying store optimization. on and

close a XX stores. decided As result we this of to analysis,

won't and have results recognize and $XXX we property, the be Due in assets. in with the began we quarter, also million the closures during impairment of charges of actions totaling our these QX. assets review on put of course to utilizing. stores equipment These a to new our decided selling initiated right-of-use process and associated pause noncash opening We've

and reporting its unit analysis, determined we light that interest of the the U.S. value. Car surpassed rates these Wash using In higher of in value within cash current our Wash discounted Car our flow carrying segment current market factors

Consequently, $XXX of noncash registered million. a impairment charge we goodwill

XX% months an $XXX the the was the adjusted period. resulting million, Cash quarter, million million from net of from for year increase the $XXX quarter for versus for from Adjusted of $X.XX diluted prior activities $XX period. $X.XX EPS income flow year the prior in X operating was in

third our credit undrawn variable liquidity, comprising and of notes revolving quarter, cash the had securitization the million of and $XXX capacity facility. along funding equivalents, we million At $XXX end $XXX in our in senior cash million on with

company's of if be liquidity variable conditions could account specific utilized for discretion to notes, which $XXX does the be additional met. million continue not Our the funding at

continuously provides This liquidity, executing cash strong our along with operations, generate flows from plan. long-term in to flexibility growth our ability us

the may view you recognizing announced $XX August, an shares authorization, As opportunity advantageous million recall, in to level. a we what purchase we as share repurchase at

for X.Xx the the X.Xx ratio We is our net X.X and This leverage shares the retired impacted under for quarter. quarter by it in versus completed million now during and the XXXX. quarter repurchases X.Xx just QX

on cash deleveraging generating Investor recent flow we are stated we XXXX. As Day, extremely our in focused and excess in

over at that is an of a As reminder, portion of rate a revolving approximately of The and rate total with credit XX% with loan our debt is debt fixed interest approximately made interest X.X%. the facility structure blended X.X%. remainder up of term

I XXXX year financial turn to our outlook. will full now fiscal

revenue of reaffirming on call are that and adjusted outlook of earnings billion, EBITDA the approximately of second $X.XX. provided $XXX EPS approximately adjusted our We we of approximately quarter million $X.X

and Paint also guidance Car We Wash to & continue our U.S. by This Glass U.S. in growth weakness sales in strength expect businesses, X% Maintenance, to same-store of Collision partially offset X%. continued our reflects businesses.

Investor cash we made was Therefore, on decision driving to unit flow. are very our the in from during growth discussed earlier slow we disciplined what growth we focused and provided new As the year. Day,

now to expecting We and approximate U.S. XXX XXX versus fewer driven unit new outlook new units units primarily businesses. XXXX our growth Wash of original in by Glass U.S. units, Car our are

matters. up wrap accounting-related wanted couple a to of I with

sponsor vesting time-based from vesting XX% pre-IPO owned based First, stock. of the in after on outstanding than equity sponsor converted of we less returns certain our was the achievement QX, certain the that

we approximately over period. QX vesting million This approximately ratably $XX noncash including XXth compensation the in in a recognize charge $X which conversion stock XXXX. of results will expense million, month

on to we from and transferred to assets million the Second, of related property for amounting sale. U.S. our balance earmarked sheet $XXX equipment Car assets Wash to our business, review

organization operator In Q&A. set take the I you back ourselves and can moment driving all for concludes quarter for this the that prepared closing, your for a operational time just the the XXXX. thank on remarks. during commitments for will of efficiencies being wanted strong to on I deliver to it a our now to the the our That remainder teams laser-focused for year over across so morning. up turn all Thank we

Operator

of Baird. first from [Operator comes question Benedict line Our Peter Instructions] from the

Peter Benedict

First the Dan, you think Wash the about expand you just on that, a pricing that. you one, around Car maybe of car you're wash new folks? talked structure, Car there? business, business. Any mentioned sourced a number That's tiers Can outside? question. I from of maybe curious first related the to is that, thinking about? number And clarity Wash, leadership a oil new operate of U.S. Just kind Anybody change my it's than on internally in your to how an views different that

Daniel Rivera

that. Peter, thank question. Appreciate you the for

So and improved margins. Part operations we to And our of ultimately, look, pricing, the value packages, I and and of those team we more from are as focus to yes, think both related pricing. margins consumers. across of is first kind the capture on around our a of wash changes, focused lead packages improving will our all super question on vis-a-vis, our

and we is we believe and going As did but of us, leadership over for businesses businesses. over they're of very to also seller a there's are and to individual the it our from to there leadership be Car our operationally, helpful bring lot is And Lube and it to retail Quick changes, certainly Ultimately, business. X that, in far business, similarities, Car lot ultimately, us business. brought different, when as a Wash changes a our we operations, them -- think an operator who leadership comes people our individual there's that Wash --

Peter Benedict

down Car segment those bottom XQ about improvement margins, saying in in is think least XX quarter? on now XQ. on openings we were the there? and Wash lot on just fourth in obviously -- How Wash mean, of terms you next PC&G new just the should margins And think the just should Okay. I for sequentially I units. get some so maybe is maybe, year, level And Wash then a that for we Gary, year at mean, Car Car next the then set the you I segment X,

Gary Ferrera

Yes.

of into I've say the because see when put improvement -- over question already never obviously, the margin QX. go but margins is the slight answer it you we've from quarter, forgotten me right, because can XX, which numbers first guidance if Let But us. you the bottom, next part I'm in have as means our we plan a you'd the jinx with is, hit the out,

And between so to a how guide his up don't get obviously, lot team the short that's segments, mix doing we with that. of going But work to Danny to try to there. margins is

think where we line. will I top it the translate more into on out So come

Jonathan Fitzpatrick

Yes, here actively can in sell. or of Pete, sort pipeline Yes, the Jonathan on working what openings. through we're we locations our exit

number we of the XX% XX% definitely sort we'll So, at lower than gave we update progress Day that the a work the I throughout will but year, the think likely gave. lower, in be but Investor here,

Operator

the Barclays. comes from question next Your line Sigman of Seth from

Seth Sigman

focus to the Maintenance business. on wanted I

out industry. gave you know Quick the think I messages rest us maintenance like been of here. seem very the the happening some I does mixed comp it strong. nicely there there you're Lube, across in have pretty outperforming the the but What's XX% is business?

perspective? then you're one the follow-up. seeing I from and So consumer of just maintenance a have perspective And what any rest more on

Jonathan Fitzpatrick

of any more of that maintenance again, Yes, Take our not balance a Oil X major segment. The our in it's franchise very changes to Seth, that represents seeing But look, segment. business. business steady, Oil sort Change trend Jonathan. Meineke continues perform Change is XX% which of over is XX% is than Meineke business, we're pure and Take and X

key it. that's driver the So in

Seth Sigman

room from seen perspective, you've and nice the Perfect. And just couple improvement a ceiling? you in there the you of starting last year-over-year, big maybe margin here. perspective to Can both step-up fact, segment. more Maintenance the on then the that's a to And in do about of quarter-over-quarter reach profitability quarters, Or drivers there's feel a just some like and still go? whether talk

Jonathan Fitzpatrick

is the businesses our positive in I've has growth, sales involved at about ARR same-store talked that X one we [ check Investor Take with. like look, We've traffic. rate big executed our business. this growth ] multiunit of team that also Oil or Seth, greatest We've Change of attachment Day, the significant with been phenomenally ever well got business X The natural items. Yes, got

when still is stores the ] they likelihood to are in and obviously, [ XXs, sort which incredibly X the are Mo we've all scores that growth, are high of efforts top the NPS contributing new then ramping team to that XXX. proud obviously, and hit Our team significant a box refer. sales got of the So same-store And they and of doing there. amount that we're

So Oil segment, continued maintenance Change. we in expect to X with growth see that specifically Take

Seth Sigman

on progress. congrats And the

Operator

next of Your Stanley. Morgan comes Gutman question line Simeon from from the

Simeon Gutman

I focus minute. Wash on wanted for a Car to

So you lower feels talk about margins it Can margins the prior. are bit bit even we which versus time deleverage. are where sales stabilize. And a like obviously, it's today, beyond little in confidence a frame in your

we points think XX I margins. of to have lower XX

that how separate and or sales, weaker you margin? do rent other the between things within So miscellaneous higher out

Jonathan Fitzpatrick

the to that has P&L demand Investor ramp Wash of that Simeon. sale We've year tend margin basis. Look, than dilutive as get less margins stores intrusion managing go-forward to what cycle. are sure business before. dramatically the the nothing of margin we therefore, We of XX headwinds We've make I terms of $X-plus talked they to on this and that U.S. million Danny at we've their in are been along focused competitive a changed Car also macro also from which consumer ramping year. got business that with incremental Day. on the sort approximately pressure leaseback seen in about we're middle part on the that's old, about has have spoken really do from think sort and X they of be expense

Wash margin that we'll quarters control. and again improvement next can working we several we're on really the that hard we are that we can business, over things see Car that think in I optimistic control, on the So the things

Simeon Gutman

And the things, yourselves, may acquisitions, both terms don't what's and take and think it respecting getting ahead not the then pace terms or a business, ask couple right. some just the I business in streamlining move a of, time in of could of time, of some on time progress, mentioned but of the outlook revenue I know, Danny these Glass of profit normalization of I realistic to but frame curious up frame, what the then again, of the margin and that ramp rate into for

Jonathan Fitzpatrick

We for fully and are on integration, and business thesis The stores an for I powerful the this conviction to be got look But underwriting in economics player. on We've Brands retail very really insurance has changed our dealing will with very the I required in ourselves unit around issues there. customers, Glass self-inflicted for The There opportunity that. repeat, accountable execution back, is to the at new a United business. Simeon us in getting our ability the opportunity stepping open will business. States, customers the be we capital nothing, execute and nothing long-term be when hold large-scale Driven into commercial the to grow attractive.

of has of as next exit QX challenges optimism Danny said, these business. majority this us to we around terms nothing our as have year. long-term in So of we hope changed the And integration behind

bullish the this for Glass So we really, business. remain long-term really opportunities on

Operator

America. of Your of the Suzuki next Bank question comes from from line Liz

Elizabeth Lane

the on Wash Car business. follow-up a Just

in are versus comp of that stores what Can the you're XX the closing? have U.S. quantify comp mentioned terms us then underperforming the additionally, that the operations You you better help than performing Car looked U.S. little like, international growth And a the would excluding international? Wash U.S. that in

Jonathan Fitzpatrick

I Tracy year team really Look, challenging the sort first in and quarters delivered just continuing and competitive expect tell within proud sort generally and the just strong. some European in doesn't to Liz, team European business to subsegments there really sort solid natures comps the dissect it's finish of for That of is Wash. of the forces sort all, Car good deliver of U.S. conditions results has you within first European the business, them will don't the Jonathan. congratulate have fairly very has. of a Yes. the and X the we but I'll really year that that, of economic the landscape different of Liz, Europe. of

In would going not to Wash stores stop stores, but were terms age XX U.S. of the close Car so I those closures, terms stores in there, of in of -- XX Liz, we're store QX, and years we're on traffic -- and EBITDA. had up the negative close negative a average, those basis sales, same-store vast competitors also of them to majority LTM proximity one of an Every within on stores. them had open negative therefore,

But As benefit I year. on those mentioned, XXXX. some and not financials small we'll see disclosing benefit, next in the full we'll specific we're have year of QX But full benefit the in and nominal in QX, reap a nominal this benefit we'll closures amount. it's, again,

Elizabeth Lane

behavior in competitive Like just the environment seeing it competitors? where chains? what last sector? couple And larger really think you smaller as more? of you coming you've the quarters do the are been has changed that actors seeing Car the you on about Is talking And in any bad it are in competitive from Wash, Understood. of irrational

Jonathan Fitzpatrick

competitors' share Yes. Look, actors. any I fighting bad of call in wouldn't We're all for my the our market.

I this we it from changed has, X think into what's a dynamic Liz competitive late in in industry as happened over perspective, for industry now our least got from been first XXXX. this at back we've years, when

mentioned I've think XX. that before almost have now we I

in -- is Car with we've of number sort platforms institutional exact them. Wash the XX think "platform" I capital behind reported

to have XXXX as a the and last that's that 'XX. continue, So we've We just opened units is into X years. look number what likely pretty we new seen seismic shift over in of do think although that moderate the

years the I Wash we've space ago. a competition think than did got we X, lot more X So U.S. just within Car

of that don't any wouldn't I see I my competitors' call bad actors. dramatically So but changing,

Operator

next comes from line from the question McShane Your of Kate Goldman Sachs.

Katharine McShane

the At business about you context of asset double especially that still expectations EBITDA XXXX. you're Wash growth to for in how more than outlined Is the next the adjusted Investor Car sales? thinking in the Day, year,

Jonathan Fitzpatrick

look, Kate, not has guidance XXXX narrative nothing we're give Investor but from Jonathan. point, in this going changed to Yes, Day. our at obviously the

to what So guidance reaffirm not I going we're said Day, XXXX can give but at we Investor just yet.

Katharine McShane

And if third we just what seeing you what in with on follow-up wash. or car Okay. for We the subscription saw just you're in talk Car could growth then the subscription if about growth also you a question Wash. wondered ask quarter could

Jonathan Fitzpatrick

Yes. we've been very net Kate. what QX, there, Trends seen similar in have growth We've to seen similar over past. pretty membership the

looking and the has is discount appropriately economic are those of Danny activity some that in to value I and so members those doing the been levels. think discounting the on and what looking really memberships promotional at of drive lifetime based what at is new past used

have is growth I one seen the that strategy? working net of customers think and member But membership through things for Both still discounting is retail we're the pricing we what in QX. So side. on the right promotion

that, on we come see to but did in more growth So net members.

Operator

Your of Horvers JPMorgan. next from from line question comes Christopher the

Christian Carlino

markets at wondering, cross there any And marketing reads Chris. Car where Christian the early any closings Wash Quick -- on particular It's Car the just Wash for are the locations Carlino in? are were Lube? concentrated the We from

Jonathan Fitzpatrick

one over-concentrated. no Yes, it's where market Chris, Jonathan. there's well we're

typically as mentioned, I of we were purchased -- our They August that legacy the XX some assets of XXXX. years were some in old. those of of Some back assets

markets, one market some -- you probably the in a particular. there's see in the not it, little call I'll of but So over-indexing Southeast

be the getting point rolling we'll sort start and reporting test to platform Danny we rollout, So to quarters in X updating progress running. through full out. one. that be certainly as we hopefully, year. and That will will and that's team on Data forward test excited go that about on next And QX. as We're the the loyalty up data point look number of # and that

Christian Carlino

Got before deferral is see then helpful. it. And about earlier you some talking clarify That's into pressure question, back. nondiscretionary even just the a see The are maintenance. parts deferred snap recession an -- retailers you to services, and it's of on things macro a

of consumer? Any clearly reads gaining are signs but any there You're into share, this? the

Jonathan Fitzpatrick

U.S., Wash the business Other than Chris. less discretionary sort our Car in of

business maintenance businesses continuing the And performing obviously, As good to the are generate is of well. very Gary exceptionally mentioned rest returns. our earlier, franchise

outside say, Glass, in at we trajectory would a deferring the are integration seeing of I not challenges this wash change U.S. terms consumer U.S. self-inflicted and in car with point service. So time, of

Operator

from comes Sandler. Peter Keith of the Piper question next Your from line

Peter Keith

I And just charge think was Car about talking you've of but about certainly down goodwill DCF taken your seems that like to more Wash. on ], million $XXX trying long-term that it segment. value the were you [

think opportunity investors, there here So drive the growth with of we I that write-down? how guess as type should to about real

Gary Ferrera

Peter. Yes,

Day, long-term Investor Car for entire our call at Wash on much So as we said U.S. that not guidance including by U.S. of driven the that we gave we to Car Wash. be company, and expect said did that

term. space do coming you take so multiples And impairment we to it out. down over on think the to. anything not don't in It's the come your I the when do that's longer sector believing and and we math, when that what the kicks in when rates where model higher got interest just out put we analysis, you about that's said

Jonathan Fitzpatrick

nothing to changed Jonathan. still up a Peter, would be has Wash. multiyear our very say in. sector terms of I good and strategy with in Car very just We it's And it's U.S. think follow

what deploying However, level deserves today, business capital we've we performing and until I'll base Investor the believe a got capital. will Day, not that stated business state it we incremental again we is it incremental to at that be into

the control we come we Danny optimistic that the to Car incredibly Wash So to in control there. back U.S. and obviously, and things that point business, incremental capital. it to can deserves it can we're we're more hard get working And team that his that

Peter Keith

want segment. pivot Okay. over to I to then PC&G And the Very good.

did is but growth by nearly strong, comp sequentially step down X points. the So

you could So collision, comp that's base. I hear if have was unpack do guessing I'm in little trends particularly business bit the help wondering And about strong some rolled of very now your you ticket that a growth. with we because Glass into

Or are that comping negative? the driven So you've is Glass it what's the slowdown acquired that businesses overall?

Jonathan Fitzpatrick

of Look, business, P&C very very business. right the to The comp that coming very well. pleased Glass negative said the [ our theme set strong Yes. from start seeing only similar right, the collision partners demand PC&G the subsegments think that with at set in our is U.S. some are we're We're insurance mentioned segment our the call, is Peter, the now. which what you I in (sic) businesses And into those PC&G is performing Gary are space. you're of ]

Our focus is primarily the QX. getting us the that integration in of challenges behind rearview mirror end by

soft beauty parts with to not that Driven kind one working business which right top think now, business, of is our Brands revenue, parts got despite having spots the the of we're is point. line deliver So pleased growth but of still all able EBITDA I at of we're many X very we've

and XXXX about U.S. excited we're us. challenges So the getting behind Glass

Operator

Chris next line from Your from of Stifel. question the O'Cull comes

Christopher O'Cull

its if assets the use sale? And how the locations many sells debt that are are to maybe company Gary, held agreements included under what of in proceeds? million the requirements First, assets, for $XXX

Gary Ferrera

Yes.

obviously, So debt is structure our multifaceted.

in Car loan. much fall So term very tied Wash is different different U.S. things to buckets. the

it's process debt I corporate make. here So we general but sale pay is the specific, to thought mean, depending we'll purposes, every it use down not like overly or either

on So covenant light it's term loan. very that

Jonathan Fitzpatrick

just I and up, are open Chris. would not vast of follow -- None that of majority stores. those pipeline And operating the

have to from no is the proceeds obligations go where pipeline. there sale terms debt of in of the So would

just to So that. confirm

Christopher O'Cull

how were there million? $XXX many Okay. And then that locations in

Gary Ferrera

XXX. Over

Christopher O'Cull

the trend reduce problems and you fewer Okay. changes, And for on seem mentioned improving expecting promotions some the line. to you Are at pricing margin comp then would Danny, Car weaken to margin? create to you and promotions Wash focusing improve the which the try with as top

Daniel Rivera

of comes we're that We're both the my just prepared making and the those. sales. and like the of Car tied improving mentioned to of I'll series ultimately, focused being the improving question. on don't discussed that Look, thanks and improving We margins Wash reiterate, it Chris, And a the declining business, in we sure to that business we're I remarks. on. things focused just see drive So focused when margins. operations I for said, on operations

Operator

further questions to Mr. no turn remarks. are call There at this Fitzpatrick, back Jonathan any over time. I CEO, like closing now for to would the

Jonathan Fitzpatrick

I really strong everyone, then delivering just XXXX and you XXXX. for today. setting on our And a that obviously up joining guidance a Thanks, focus us and is short-term appreciate Driven reminder

you our on to all. thank We earnings you So forward talking look call. to QX

Operator

We that and this you Ladies day. for thank gentlemen, you a for conference today. your please participating Thank disconnect ask and concludes you, call lovely sir. your Have lines.

Driven Brands (DRVN) 1 Nov 232023 Q3 Earnings call transcript