管理層發言
Thank you for standing by. My name is Jael, and I will be your conference operator today. At this time, I would like to welcome everyone to the Driven Brands First Quarter 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. I would now like to turn the conference over to your host, Steve Alexander, Investor Relations. You may begin.
Good morning. Welcome to Driven Brands' first quarter 2026 earnings conference call. The earnings release and net leverage ratio reconciliation are available for download on our website at investors.drivenbrands.com. On the call with me today are Danny Rivera, President and Chief Executive Officer, and Mike Diamond, Executive Vice President and Chief Financial Officer. In a moment, Danny and Mike will walk you through our financial and operating performance for the quarter. Before we begin our remarks, I would like to remind you that management will refer to certain non-GAAP financial measures. You can find the reconciliations to the most directly comparable GAAP financial measures on the company's investor relations website and in its filings with the Securities and Exchange Commission. During this call, we will also make forward-looking statements regarding our current plans, beliefs, and expectations.
These statements are not guarantees of future performance and are subject to a number of risks and uncertainties and other factors that could cause actual results and events to differ materially from results and events contemplated by these forward-looking statements. Please see our earnings release and our filings with the Securities and Exchange Commission for more information. Today's prepared remarks will be followed by a question-and-answer session. We ask that you limit yourself to one question and one follow-up. Now, I'll turn the call over to Danny.
Good morning, and thank you for joining us to discuss Driven Brands' 2026 first quarter results. Q1 was a solid quarter for Driven as we continued to execute our growth and cash strategy. For the quarter, we grew system-wide sales 6%, revenue 8%, same-store sales 2%, and adjusted EBITDA 2%, while delivering adjusted EBITDA margins of 21.5%. The quarter was highlighted by Take 5 Oil Change's 23rd consecutive quarter of same-store sales growth, improvement from our franchise segment, and further progress reducing net leverage. We remain focused on reducing net leverage and strengthening our financial foundation. Net leverage finished the quarter at 3.2x, and we remain on track to achieve our target of 3x by year-end. Our priority remains reaching that target first, after which we intend to provide investors with a clear framework for our long-term capital allocation priorities. We also continue to make progress enhancing our finance and accounting capabilities, strengthening processes, and improving controls.
While there is more work ahead, we are building a stronger and more scalable foundation to support the next chapter of growth at Driven Brands. The automotive aftermarket remains one of the most resilient corners of the consumer economy. We continue to benefit from long-term industry trends, including an aging vehicle fleet, a growing car park, increasing vehicle complexity, and consumers keeping vehicles longer. Overall demand remains healthy across our businesses. Within Take 5, we are monitoring some moderation in traffic among newer customers and more value-oriented customers, particularly households earning less than $50,000 annually or those facing greater pressure from inflation and higher living costs. However, our core customer base remains resilient, and we continue to see strong average check, healthy premium mix, and solid attachment rates. The essential nature of our services, combined with secular industry tailwinds, reinforces our confidence in the business.
Before turning to Take 5, I'd like to highlight an important investment we recently made to strengthen our management team and long-term capabilities. Bart LaCount has recently joined Driven Brands as our Chief Marketing Officer, a newly created position demonstrating our commitment to building marketing into a core enterprise capability. Bart brings more than 20 years of marketing and brand-building experience from leading consumer brands, including PepsiCo and Restaurant Brands International, where he led marketing for Popeyes. We have centralized marketing leadership under Bart to build a more integrated, data-driven, and scalable marketing organization that can accelerate growth, improve customer acquisition efficiency, strengthen customer retention, and enhance the value of our brands. Turning to Take 5 Oil Change. Take 5 delivered another strong quarter, growing system-wide sales 14%, revenue 10%, same-store sales 4.5%, 12.5% on a two-year basis, and adjusted EBITDA by 14%, while expanding margins year-over-year by 120 basis points, resulting in adjusted EBITDA margins of 33.9%.
We believe Take 5's performance continues to reflect the strength of its differentiated customer experience. Our stay-in-your-car model, combined with a fast, friendly, and simple service experience, continues to resonate with consumers. Strong operational execution, premiumization, increasing attachment rates, and disciplined marketing further support customer acquisition, retention, and profitable growth. Take 5 also remains early in its growth journey. With approximately 1,400 locations today and a path to more than 2,500 locations over time, we continue to see substantial white space opportunity ahead. Importantly, we also continue to see attractive unit level economics and returns on new store investments across both company and franchise development. Our franchise segment once again delivered robust profitability, generating adjusted EBITDA margins of 60%, while growing same-store sales 1% during the quarter.
Results continue to be led by Meineke, with same-store sales for the segment sequentially improving from the fourth quarter. We expect Franchise Brands to continue generating strong margins and cash flow throughout 2026, although we anticipate same-store sales for the segment to moderate from our first quarter results. Auto Glass Now also delivered a strong quarter, growing revenue 6%, same-store sales 7%, adjusted EBITDA 12%, while expanding margins 40 basis points to 9.4%. We continue to see significant long-term growth opportunity as we expand carrier relationships, grow market share, and leverage the scale we've built across the platform. I'll close with three key takeaways. First, Take 5 continues to validate our long-term investment thesis. The business is delivering strong growth, expanding margins, and remains early in the runway toward more than 2,500 locations. Second, we remain on track to achieve our target of 3x net leverage by year-end, while continuing to strengthen the company's financial foundation.
Third, we will remain disciplined allocators of capital and active managers of our portfolio, concentrating our resources on our highest growth, highest return opportunities to create long-term value for our shareholders. Based on our first quarter performance, we are reiterating our full year 2026 guidance of revenue of $1.95 billion to $2.05 billion, adjusted EBITDA of $430 million to $460 million, same-store sales of flat to 2%, and 160 to 190 net new units. I want to sincerely thank our team and our franchise partners for their continued commitment, execution, and support. With that, I'll turn it over to my partner and Driven CFO, Mike.
Thank you, Danny, and good morning, everyone. I want to begin with an update on our progress toward remediating the material weaknesses in our internal control over financial reporting. As a reminder, this is a multi-quarter process. However, our team has made meaningful early progress executing against detailed remediation work plans for each material weakness, and we remain committed to strengthening our control environment as we move forward. Turning to our financial results, a reminder that with the divestiture of both our U.S. and international car wash businesses, the results for those businesses are included in discontinued operations and are not included in quarterly financial details provided today, unless otherwise noted. For Q1, Driven recorded same-store sales growth of 2.1% and added 29 net new units. System-wide sales for the company grew 5.8% in Q1 to $1.6 billion. Total revenue for Q1 was $484.4 million, an increase of 8.2% year-over-year.
Q1 operating expenses increased $24.1 million year-over-year, driven primarily by $8.1 million in higher company-operated store expenses from higher sales in more stores, and $9.1 million in non-recurring restatement costs, which were below our initial expectations. Based on a detailed review of the timing of restatement work performed, we saw some restatement costs shift from Q1 to Q2 versus initial expectations. We still anticipate the full year non-recurring restatement costs to be between $35 million and $45 million. SG&A for Q1 was $131.8 million or 8.4% of system-wide sales. Excluding the Q1 restatement costs, SG&A declined $1.9 million year-over-year and was 7.8% of system-wide sales, in line with our expectations as a growing multi-business platform with both franchise and company operations. Q1 operating income increased $12.7 million to $67.4 million, driven primarily by the increase in revenue.
Adjusted EBITDA increased 1.7% to $104.1 million for the quarter. Adjusted EBITDA margin for Q1 was 21.5%, a decrease of roughly 140 basis points versus Q1 2025. Excluding restatement costs, adjusted EBITDA margin would have grown approximately 50 basis points. Interest expense declined $12.8 million to $23.5 million, driven primarily by ongoing debt paydown. Income tax expense for the quarter was $9.4 million. Net income from continuing operations for the quarter was $23.8 million. Adjusted net income from continuing operations for the quarter was $49 million. Adjusted diluted EPS for Q1 was $0.30. Q1 performance for each of our segments include Take 5, which grew same-store sales 4.5% in Q1 and added 29 net new units in the quarter, continuing to execute against its pipeline of both franchise and corporate new units. Adjusted EBITDA grew 13.6% to $109.5 million, driven by sales growth and the lapping of a roughly $4.5 million inventory valuation charge in Q1 of 2025, stemming from our restatement.
Adjusting for the inventory valuation charge, Take 5 adjusted EBITDA grew roughly 8.5%. Franchise Brands reported a 0.9% increase in same-store sales. Revenue declined $0.4 million, driven by the sale of our two remaining company-operated collision locations. Adjusted EBITDA was $41.4 million in Q1, a decrease of $1.5 million, driven by increased technology costs and select investments in people to drive future growth. Auto Glass Now reported same-store sales growth of 7.2% in Q1, as we saw sequential growth across our retail, commercial, and insurance business. Adjusted EBITDA increased $0.6 million to $5.9 million. Turning to cash flow and leverage. Our cash flow statement shows a consolidated view of cash flows inclusive of discontinued operations. Net capital expenditures for Q1 were $26.9 million, a decrease of $32.2 million, primarily driven by the lapping of CapEx from our divested car wash businesses.
Q1 free cash flow, defined as operating cash flow less net capital expenditures, was $30.3 million, an increase of $13 million from Q1 2025. We ended the quarter at 3.2x net leverage and remain on track to achieve our target of 3x by year-end with strong cash flow generation. Today, we are reiterating our full year 2026 outlook that was previously shared on May 19th. As a reminder, we continue to expect revenue of $1.95 billion to $2.05 billion, adjusted EBITDA $430 million to $460 million, which includes between $35 million and $45 million of estimated non-recurring restatement costs that we do not intend to add back to adjusted EBITDA in 2026. Adjusted diluted EPS of $1.15 to $1.25. Same-store sales of flat to 2%. Net store growth between 160 and 190 units. Net capital expenditures of approximately 6.5% of revenue. Free cash flow between $125 million and $145 million. As we approach the end of Q2, we want to provide a few notes on Q2 performance.
Sales, we expect moderation across all of our brands in Q2. We expect Q2 Take 5 same-store sales growth in the mid 3% range, which would represent approximately 10% on a two-year stack, reflecting the moderation from newer customers and lower income households. We expect Franchise Brands same-store sales to moderate as compared to the 0.9% growth in Q1, given the uneven nature of recovery for both Maaco and collision. Restatement costs, we expect restatement costs to exceed $15 million in Q2. The increase from Q1 is driven by a full three months of restatement work in the quarter, including the filing of both our 10-K and Q1 10-Q, work on our restated financials for our whole business securitization, ongoing remediation of our internal controls, and associated legal costs. Importantly, these costs are non-recurring in nature and do not reflect the underlying earnings power of the business.
Adjusted EBITDA, as a result, we expect adjusted EBITDA margins to be pressured relative to Q1's 21.5%. To summarize, we had solid Q1 with same-store sales growth across all three of our segments and grew adjusted EBITDA in Q1 despite non-recurring restatement costs. However, we recognize the macro pressures consumers are facing and are appropriately cautious in Q2 given the top-line moderation we are seeing across both Take 5 and Franchise Brands. Importantly, we remain on track to deliver our full year outlook, which was constructed to reflect a broad range of macro scenarios. With that, I will now turn it over to the operator and we are happy to take your questions.
分析師問答
Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. We do request for today's session that you please limit yourself to one question and one follow-up, and queue back up for any follow-up questions if time permits. Your first question comes from the line of Mark Jordan of Goldman Sachs. Your line is open.
Hey, good morning. Thank you very much for taking my question. Can you just talk a little bit more about the moderation you're seeing in traffic from some of your customers, and I guess how it's trending during Q2, and if there's anything you can talk about in your other demographics outside of the new customers and the lower income customers?
Yeah. Hey, Mark, it's Danny. We continue to see a bit of moderation with two very specific groups of customers: newer customers and more value-oriented customers. We mentioned this for the first time on our last earnings call a few weeks ago. Nothing has materially changed from a trends perspective; things are pretty stable on that front. Importantly, when we look at our core customer and across other customer types, what we're seeing is resilience. Check is up, attachment rates are up, and premiumization is up. Generally speaking, we're seeing a resilient consumer with a bit of moderation across those two specific groups.
Okay, perfect. If I could just follow on the 1Q comp and maybe how it trended for Take 5 throughout the quarter. I don't know if you'd be willing to give it, but how ticket and traffic contributed for the quarter as well?
We typically don't break out the sales tree and we don't provide intra-quarter numbers. What I'd say is it was a solid start to the year for Take 5: 4.5% comps for the quarter, 12.5% on a two-year basis. We continue to see that business grow and do well. From an average repair order and traffic perspective, we don't break those out. The material gain was really on the ARO side. We continue to see improvement in check and attachment rates. Our NPS scores remain in the high 70s, so not only are we delivering services that increase check, but we're doing so in a way where customers are satisfied. A strong start to the year for Take 5.
Perfect. Thank you very much.
Hey, guys. Question. Franchise Brands comps inflected positive this quarter. Can you maybe talk a bit about how sustainable that is and what you're seeing more specifically in the collision space? Have you seen any reprieve at all now that insurance premiums are entering into deflationary territory? How are you thinking about maybe some pent-up demand in that segment or what could be the key unlock to really stabilize that segment going forward?
Hey, Phillip. A few points. We're happy with the solid start to the quarter—1% comps is good. As we noted in our prepared remarks, we expect some moderation for the segment toward the back half of the year. Underlying Franchise Brands has three main businesses. Maaco has been soft; that softness persisted into Q1, though we are seeing a bit of improvement on the retail side. Meineke has been strong and that momentum continued into Q1. The sequential change quarter-over-quarter was really driven by collision. In Q1, we saw the industry pick up a little from Q4. We continue to outperform the general industry by anywhere between 100 to 300 basis points. That remained the case in Q1 and we don't expect that to change soon. For the collision industry in 2026, we're expecting a year of stabilization, not a bounce back. We expect the industry to moderate toward the back half of the year, and the segment will tend to moderate with it. Importantly, Franchise Brands is all about cash. While it's great to post a 1% comp quarter, what matters more is the segment's profitability—60% margins—and irrespective of top-line moderation into the back half of the year, we expect strong margins and cash flow from that segment.
Okay, great. That's excellent. Speaking of cash, you reiterated your target to reach that 3x net leverage point by year-end. After you've hit your target, can you just talk a bit more about your plans for free cash flow? Are there areas of the business that you need to catch up or that maybe need a bit more investment, more debt paydown on the horizon, or is there some shareholder returns that you're thinking about? Thank you.
Hey, Phillip. I'll take that one. We have stated historically that we are continuing to evaluate our options once we get down to 3x. For now, the focus remains on getting to that milestone. I don't think there's any deferred capex we need to catch up on. The good news is we have many different ways to deploy cash. We have very high-return, predictable investments in our Take 5 infrastructure with opportunities to grow there. There's also the possibility of returning cash to shareholders. Our debt is fixed rate and fairly low. I'm not sure once we get to 3x there's a strong appetite to delever significantly further, but it's something we're focused on. The main focus in the short term is getting down to 3x. In the background, we're working on what the plan looks like, and as we get closer to year-end, we'll be in a position to communicate it.
Excellent. Thank you, guys.
Hey, good morning. This is Skylar Tennant on for Simeon Gutman. Thanks for taking our question. First, on the trajectory of EBITDA margins for the rest of the year, is there upside possibility, and what are some of the puts and takes that you're anticipating?
Morning, Skylar. There are a couple of factors. There's seasonality; Q2 and Q3 historically have more sales as that's peak driving season, which could help margins, but that will be offset by restatement costs—particularly in Q2 where we'll have full three months of work, including the 10-K and Q1 10-Q filings and whole business securitization financials. There are puts and takes. There is the ability to leverage fixed costs as we move into Q3 with higher sales. Our priority is to get the restatement and remediation right, and we will spend what is necessary to do that. That's the balance between short-term pressure and longer-term operating leverage.
Okay, great. Thanks. Then given some of the softer trends you're seeing in traffic on the Take 5 side, can you talk about how you might be thinking about pricing and how much flexibility that you have there without necessarily impacting demand? Thank you.
I'll take that. When you refer to pricing, I think you're getting at promotional activity. Historically, we've used promotions surgically depending on the use case. For the moderation we're seeing now, which is identified to two specific customer groups, targeted promotions can be an appropriate tool. We will continue to use the tools at our disposal in a measured way. There is no broad strategic shift in pricing; we don't go to market as a low-cost alternative. We'll use surgical promotional activities where it makes sense.
Hey, thanks. Good morning, guys. Thanks for taking my question. Just excluding restatement costs, now that we're emerging with a cleaner portfolio and I guess more sales visibility, do you see opportunities to reduce G&A, or is your expectation more to lever it from here as you grow?
Good morning. A couple of things on SG&A. We think the best metric for SG&A, particularly for a multi-business platform, is SG&A as a percentage of system sales. That normalizes for differences between company-operated and franchise and different royalty rates. Excluding restatement costs, SG&A came down this quarter year-over-year and was in line with expectations. Danny and I will operate as efficiently as possible while supporting future growth. There is opportunity to continue to leverage fixed costs as our businesses grow, and we'll challenge ourselves to be more efficient with the dollars we spend.
Got it. That's helpful. Thank you. In terms of the metric percentage of system sales, do you want to put a figure behind that, or can I take the last quarter and run rate it? How can I think about quantifying that?
We feel comfortable excluding restatement costs for where we are right now. That puts SG&A roughly at 7.8% of system sales. There is some seasonality—Q2 and Q3 tend to have higher sales—so fixed costs will be spread differently across the year. For now, 7.8% is the number we're comfortable with, and there's always opportunity to better leverage fixed costs and continue to be more efficient.
Got it. Thank you. That was helpful.
Hey, good morning. Thanks for taking my question. I wanted to follow up on your earlier comments in the collision market. I guess, why do you expect trends to moderate in the second half, and is there anything you can do to capture more customer pay opportunities while the insurance side of the business is soft?
Great question. On the second part first: yes, we capture customer-pay work and that's been a growing part of our business. We're well positioned, particularly with Maaco, to capture customer-pay work for customers who prefer to pay out of pocket rather than go through insurance for minor damage. Maaco features a lot of customer-pay work and is uniquely positioned to capture that demand. As to why we expect moderation: it's based on the data we are seeing. We saw sequential improvement Q1 over Q4, but looking at broader indicators such as inflation and recent economic trends, our expectation is that 2026 will be a year of stabilization versus 2025—not a strong bounce back. Therefore, we expect some moderation into the back half of the year.
Thank you. Do you have any ability to push harder on alternative parts in order to lower repair costs and maybe make a dent in that trend?
We do. One advantage of our franchise model is having owner-operators on the ground who are focused on delivering an excellent customer experience while also maximizing profitability. Those owners are conscious of taking the appropriate steps to manage repair costs, including sourcing alternatives when appropriate. That local ownership model helps us drive better outcomes on both customer satisfaction and profitability.
Good morning. This is Sarah Morin for Peter Keith. Thanks for taking our question. First, regarding the CRM database, given the breadth of your customer data across the segments, what is the current strategy for utilizing the database as a marketing engine for Take 5?
Great question. One benefit of Driven Brands is that we operate as a portfolio with platform-level capabilities. We have a single CRM platform leveraged across brands, which is a capability some smaller brands could not afford on their own. We use that engine to drive frequency and repeat business, and it's customized by business. On the Take 5 side, basic use cases include oil change reminders. We have proprietary algorithms for when and how to remind customers—it's not one-size-fits-all. There are different journeys for Meineke, Maaco, and other brands, and the CRM is a sophisticated platform we leverage across the portfolio to drive retention and acquisition.
Okay, thanks. Just on the collision segment, we're hearing of improved transaction activity, but industry ticket kind of remaining more flat. Is there any update you can provide on the collision landscape?
I don't have much more to add beyond what I shared earlier. Again, we saw sequential improvement Q1 over Q4. We expect 2026 to be a year of stabilization, and the industry may moderate into the back half of the year. Importantly, we historically outperform the industry by 100 to 300 basis points and expect that to continue. Given that collision is part of our Franchise Brands segment, we expect to continue to see strong margins and cash generation, which is the priority within our growth-and-cash framework.
Hey, good morning. I was just curious—you're calling out moderation of traffic among lower income and newer customers. Are they deferring oil changes or maybe trying to do it themselves? Any color there would be appreciated. Also, how does the under $50,000 household income group compare to your core customer in terms of household income?
A couple of clarifications. The moderation is specific to the two groups we've identified—newer customers and lower-income households. Our core customer has a higher household income than the under $50,000 group; I won't provide exact pricing specifics. We're seeing resilience across all other customer groups. This moderation is not driven by elongation of service intervals; oil change intervals have been stable. What we're seeing is a bit more churn within those two groups, not that customers are extending intervals or doing services themselves.
With no further questions, that concludes our Q&A session and also today's conference call. Thank you for your participation. You may now disconnect.