Driven Brands Swings to Profit on Strong Sales, Car Wash Divestiture

Ticker: DRVN · Form: 10-Q · Filed: Nov 5, 2025 · CIK: 1804745

Sentiment: bullish

Topics: Automotive Services, Earnings Beat, Divestiture, Revenue Growth, Debt Reduction, Franchise Business, Net Income Surge

Related Tickers: DRVN, ABG, MBU

TL;DR

**DRVN is back in the black, ditching car washes to focus on core auto services, and the numbers look good.**

AI Summary

Driven Brands Holdings Inc. (DRVN) reported a significant turnaround in its financial performance for the three and nine months ended September 27, 2025. Net income for the three months surged to $60.86 million, a substantial improvement from a net loss of $14.95 million in the prior-year period. For the nine months, net income reached $113.93 million, up from $19.47 million in the same period last year. Total net revenue increased by 6.6% to $535.68 million for the three months, and by 6.6% to $1.60 billion for the nine months, driven primarily by a 10.9% increase in company-operated store sales to $331.26 million for the quarter. Operating income for the three months rose to $61.94 million from $49.64 million, while for the nine months, it decreased to $161.31 million from $207.79 million. The company completed the sale of its U.S. Car Wash business on April 10, 2025, which is now classified as discontinued operations, contributing a gain of $37.37 million on sale, net of tax, for the nine months ended September 27, 2025. Interest expense, net, saw a notable reduction to $23.60 million for the three months, down from $43.67 million, and to $91.50 million for the nine months, down from $119.24 million. The company also reported a significant income tax benefit of $21.66 million for the three months, compared to an expense of $16.47 million in the prior year.

Why It Matters

This 10-Q filing reveals a strong financial rebound for Driven Brands, largely fueled by increased company-operated store sales and a strategic divestiture. For investors, the significant jump in net income and reduced interest expense signals improved profitability and financial health, potentially making DRVN a more attractive investment compared to competitors still grappling with higher interest rates. Employees may see increased job security and potential for growth as the company streamlines its operations and focuses on core automotive services. Customers could benefit from a more focused service offering and potentially enhanced service quality as the company optimizes its brand portfolio. The broader market will observe how this strategic shift impacts the competitive landscape in the automotive services sector, particularly as DRVN sheds its Car Wash segment to concentrate on its other recognized brands like Take 5 Oil Change and Meineke Car Care Centers.

Risk Assessment

Risk Level: medium — While net income improved significantly, the operating income for the nine months ended September 27, 2025, decreased to $161.31 million from $207.79 million in the prior year, indicating potential underlying operational challenges despite revenue growth. Additionally, the company's total liabilities remain substantial at $3.36 billion, with long-term debt at $1.94 billion, which could pose a risk if interest rates rise or cash flow tightens, even with the recent reduction in interest expense.

Analyst Insight

Investors should consider DRVN's strategic shift to core automotive services as a positive, but closely monitor operating income trends excluding the impact of discontinued operations. The reduction in interest expense is a tailwind, but the substantial long-term debt warrants attention. A 'hold' position is advisable, with a focus on future earnings calls for clarity on sustained operational improvements and debt management strategies.

Financial Highlights

revenue
$1.60B
operating Margin
10.1%
total Debt
$1.94B
net Income
$113.93M
eps
$0.69
revenue Growth
+6.6%

Revenue Breakdown

SegmentRevenueGrowth
Franchise royalties and fees$144.71M+0.1%
Company-operated store sales$978.67M+10.6%
Independently-operated store sales$189.84M+16.3%
Advertising contributions$80.25M+5.8%
Supply and other revenue$209.36M-10.7%

Key Numbers

Key Players & Entities

FAQ

What were Driven Brands Holdings Inc.'s net income figures for the recent quarter and nine-month period?

Driven Brands Holdings Inc. reported a net income of $60.86 million for the three months ended September 27, 2025, a substantial improvement from a net loss of $14.95 million in the prior-year period. For the nine months, net income reached $113.93 million, up from $19.47 million in the same period last year.

How did the sale of the U.S. Car Wash business impact DRVN's financials?

The sale of the U.S. Car Wash business, completed on April 10, 2025, resulted in a gain on sale of discontinued operations, net of tax, of $37.37 million for the nine months ended September 27, 2025. This significantly contributed to the overall net income for the period.

What was the trend in Driven Brands' total net revenue?

Driven Brands' total net revenue increased by 6.6% to $535.68 million for the three months ended September 27, 2025, compared to $502.34 million in the prior year. For the nine months, total net revenue grew by 6.6% to $1.60 billion, up from $1.50 billion.

Did Driven Brands reduce its interest expense in the recent period?

Yes, Driven Brands significantly reduced its interest expense, net, to $23.60 million for the three months ended September 27, 2025, down from $43.67 million in the prior-year period. For the nine months, interest expense, net, decreased to $91.50 million from $119.24 million.

What is the current outstanding share count for Driven Brands Holdings Inc.?

As of November 3, 2025, Driven Brands Holdings Inc. had 164,454,218 shares of Common Stock outstanding.

How did company-operated store sales contribute to revenue growth for DRVN?

Company-operated store sales were a primary driver of revenue growth, increasing by 10.9% to $331.26 million for the three months ended September 27, 2025, compared to $298.80 million in the same period last year.

What is the purpose of the Tax Receivable Agreement mentioned in the filing?

The Tax Receivable Agreement provides Driven Brands' pre-IPO shareholders with the right to receive 85% of the cash savings in U.S. and Canadian federal, state, local, and provincial income tax that the company actually realizes or divests, related to tax benefits from periods prior to the company's IPO.

What was the change in operating income for Driven Brands for the nine-month period?

Operating income for Driven Brands decreased to $161.31 million for the nine months ended September 27, 2025, from $207.79 million in the prior-year period, despite an increase in total net revenue.

What are some of the key brands under Driven Brands Holdings Inc.?

Driven Brands Holdings Inc. has a portfolio of highly recognized brands including Take 5 Oil Change, Meineke Car Care Centers, MAACO, CARSTAR, AutoGlassNow, IMO, and 1-800-Radiator & A/C.

What was the total cash provided by operating activities for Driven Brands for the nine months?

For the nine months ended September 27, 2025, cash provided by operating activities for Driven Brands was $234.75 million, an increase from $208.51 million in the prior-year period.

Risk Factors

Industry Context

Driven Brands operates as the largest automotive services company in North America, with a diversified portfolio of brands like Take 5 Oil Change, Meineke, and MAACO. The industry is characterized by intense competition from independent shops, dealerships, and other national chains. Key trends include increasing demand for specialized services, the growing complexity of vehicle maintenance, and the adoption of technology for customer convenience and operational efficiency.

Regulatory Implications

The company faces regulatory scrutiny related to franchise practices, labor laws, and environmental standards across its various service lines. Compliance with evolving franchise disclosure requirements and consumer protection laws is critical. Changes in automotive repair regulations or emissions standards could also necessitate investments in new equipment or training.

What Investors Should Do

  1. Monitor debt reduction progress and interest coverage ratios.
  2. Analyze the sustainability of company-operated store sales growth.
  3. Evaluate the impact of the Tax Receivable Agreement on future cash flows.
  4. Assess the performance of the remaining business segments post-divestiture.

Key Dates

Glossary

Discontinued Operations
A component of a business that the company has disposed of or plans to dispose of, and whose cash flows can be separately identified. Its results are reported separately on the income statement. (The sale of the U.S. Car Wash business is classified here, impacting net income with a gain of $37.37 million.)
Company-operated store sales
Revenue generated from stores that are directly owned and managed by Driven Brands. (This segment saw a significant 10.9% increase to $331.26 million for the quarter, acting as a primary driver of overall revenue growth.)
Independently-operated store sales
Revenue generated from stores that are franchised and operated by third-party franchisees. (This segment showed strong growth of 16.3% for the nine months, indicating healthy performance across the franchise network.)
Tax Receivable Agreement (TRA)
An agreement where a company agrees to pay a portion of the tax benefits it realizes from certain tax attributes (like those from pre-IPO shareholders) to those shareholders. (The company has a TRA liability of $134 million ($23M current, $111M non-current) as of September 27, 2025, representing potential future cash outflows.)
Operating income
A measure of a company's profit after deducting operating expenses from its revenue, before accounting for interest and taxes. (While up for the quarter ($61.94M), it decreased for the nine months ($161.31M), suggesting potential pressure on operational efficiency despite revenue growth.)
Interest expense, net
The cost incurred by a company for borrowed funds, minus any interest income earned. (A significant reduction from $43.67 million to $23.60 million for the quarter and $119.24 million to $91.50 million for the nine months, positively impacting net income.)
Income tax benefit
A reduction in a company's income tax liability, often due to tax credits, deductions, or changes in tax laws. (The company reported a $21.66 million benefit for the quarter, a reversal from a $16.47 million expense in the prior year, boosting net income.)
Weighted average shares outstanding
The number of shares outstanding over a period, adjusted for the time new shares were issued. Used in EPS calculations. (Basic shares outstanding increased to 163.90 million for the quarter, impacting earnings per share calculations.)

Year-Over-Year Comparison

Driven Brands Holdings Inc. has demonstrated a significant financial recovery compared to the prior year's comparable period. Total net revenue increased by 6.6% to $1.60 billion for the nine months ended September 27, 2025, driven by a strong 10.9% rise in company-operated store sales. Most notably, net income swung from a $14.95 million loss to a $60.86 million profit for the quarter and from $19.47 million to $113.93 million for the nine months. This turnaround is supported by a substantial reduction in interest expense, down by $20.07 million for the quarter and $27.74 million for the nine months, and a significant income tax benefit of $21.66 million compared to an expense in the prior year. However, operating income for the nine months decreased to $161.31 million from $207.79 million, indicating some operational pressures despite overall revenue growth.

Filing Stats: 4,496 words · 18 min read · ~15 pages · Grade level 17 · Accepted 2025-11-05 17:13:33

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) 3 Consolidated Statements of Operations 3 Consolidated Statements of Comprehensive Income (Loss) 4 Consolidated Balance Sheets 5 Consolidated Statements of Shareholders' Equity 6 Consolidated Statements of Cash Flows 8 Notes to the Consolidated Financial Statements 10

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 27

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 49

Controls and Procedures

Item 4. Controls and Procedures 49

. OTHER INFORMATION

PART II . OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 50

Risk Factors

Item 1A. Risk Factors 50

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 50

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 50

Other Information

Item 5. Other Information 50

Exhibits

Item 6. Exhibits 51

Forward-Looking Statements

Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "likely," "may," "plan," "possible," "potential," "predict," "project," "should," "target," "will," "would" and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, trends, plans, objectives of management, impact of accounting standards and guidance, impairments, and expected market growth are forward-looking statements. In particular, forward-looking statements include, among other things, statements relating to: (i) potential post-closing obligations and liabilities relating to the sale of our U.S. Car Wash business; (ii) the current geopolitical environment, including the impact, both direct and indirect, of government actions, such as proposed and enacted tariffs and governmental shutdowns; (iii) our strategy, outlook, and growth prospects; (iv) our operational and financial targets and dividend policy; (v) general economic trends and trends in the industry and markets; (vi) the risks and costs associated with the integration of, and or ability to integrate, our stores and business units successfully; (vii) the proper application of generally accepted accounting principles, which are highly complex and involve many subjective assumptions, estimates, and judgments; and (viii) the competitive environment in which we operate. Forward-looking statements are not based on historical facts but instead represent our current expectations and assumptions regard

FINANCIAL INFORMATION

Part I. FINANCIAL INFORMATION

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Nine Months Ended (in thousands, except per share amounts) September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Net revenue: Franchise royalties and fees $ 50,824 $ 49,475 $ 144,714 $ 144,549 Company-operated store sales 331,259 298,798 978,670 884,944 Independently-operated store sales 51,410 49,959 189,841 163,286 Advertising contributions 27,883 26,823 80,249 75,804 Supply and other revenue 74,308 77,284 209,361 234,544 Total net revenue 535,684 502,339 1,602,835 1,503,127 Operating Expenses: Company-operated store expenses 193,129 177,510 565,391 525,529 Independently-operated store expenses 30,178 29,382 104,713 90,693 Advertising expenses 27,884 26,823 80,249 75,804 Supply and other expenses 42,552 35,779 116,939 112,531 Selling, general, and administrative expenses 145,177 149,789 471,347 393,418 Depreciation and amortization 34,828 33,418 102,883 97,358 Total operating expenses 473,748 452,701 1,441,522 1,295,333 Operating income 61,936 49,638 161,313 207,794 Other expenses, net: Interest expense, net 23,603 43,674 91,496 119,241 Foreign currency transaction (gain) loss, net ( 5,419 ) 765 ( 17,406 ) 5,767 Loss on debt extinguishment 4,549 205 4,549 205 Other expenses, net 22,733 44,644 78,639 125,213 Income before taxes from continuing operations 39,203 4,994 82,674 82,581 Income tax (benefit) expense ( 21,659 ) 16,474 ( 7,487 ) 45,292 Net income (loss) from continuing operations $ 60,862 $ ( 11,480 ) $ 90,161 $ 37,289 Gain on sale of discontinued operations, net of tax — — 37,367 — Net loss from discontinued operations, net of tax — ( 3,467 ) ( 13,596 ) ( 17,816 ) Net income (loss) $ 60,862 $ ( 14,947 ) $ 113,932 $ 19,473 Basic earnings (loss) per share: Continuing Operations $ 0.37 $ ( 0.07 ) $ 0.55 $ 0.23 Discontinued Operations — ( 0.02 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1— Description of Business Description of Business Driven Brands Holdings Inc. is a Delaware corporation and is the parent holding company of Driven Brands, Inc. and Shine Holdco (UK) Limited (collectively with its subsidiaries, "Driven Brands" or the "Company"). Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of approximately 4,900 franchised, independently-operated, and company-operated locations across 49 states in the U.S. and 13 other countries. The Company has a portfolio of highly recognized brands, including Take 5 Oil Change , Meineke Car Care Centers , MAACO , CARSTAR , AutoGlassNow , IMO , and 1-800-Radiator & A/C that compete in the automotive services industry. Tax Receivable Agreement The Company expects to be able to utilize certain tax benefits which are related to periods prior to the effective date of the Company's IPO and are attributed to our pre-IPO shareholders. The Company previously entered into a Tax Receivable Agreement which provides our pre-IPO shareholders with the right to receive payment of 85 % of the amount of cash savings, if any, in U.S. and Canadian federal, state, local, and provincial income tax that the Company will actually realize or divests. The Tax Receivable Agreement was effective as of the date of the Company's IPO. The Company recorded a current income tax receivable liability of $ 23 million as of September 27, 2025 and December 28, 2024, respectively, and a non-current income tax receivable liability of $ 111 million as of September 27, 2025 and December 28, 2024, respectively, on the consolidated balance sheets. We made payments of approximately $ 38 million under the Tax Receivable Agreement in the nine months ended September 28, 2024. No payments were made during the nine months ended September 27, 2025. Note 2— Summary of Significant Accounting Policies Fiscal Year The Company o

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