Driven Brands delivered a first quarter that surpassed Wall Street’s expectations, with management attributing the outperformance to robust expansion in the Take 5 Oil Change business and a disciplined focus on non-discretionary automotive services. CEO Jonathan Fitzpatrick highlighted that Take 5 achieved its 19th consecutive quarter of positive same-store sales, while the company’s broader growth was supported by steady new store openings and a diversified service mix. The recent sale of the U.S. Car Wash business allowed Driven Brands to intensify its focus on core offerings and accelerate debt reduction. COO Danny Rivera noted, “Even in uncertain times, customers depend on their vehicles to live their lives and care for their families.”
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Driven Brands (DRVN) Q1 CY2025 Highlights:
- Revenue: $516.2 million vs analyst estimates of $502.3 million (7.1% year-on-year growth, 2.8% beat)
- Adjusted EPS: $0.27 vs analyst estimates of $0.24 (12.9% beat)
- Adjusted EBITDA: $125.1 million vs analyst estimates of $122.5 million (24.2% margin, 2.2% beat)
- The company reconfirmed its revenue guidance for the full year of $2.1 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $1.20 at the midpoint
- EBITDA guidance for the full year is $535 million at the midpoint, below analyst estimates of $542.3 million
- Operating Margin: 11.9%, in line with the same quarter last year
- Locations: 4,797 at quarter end, up from 4,620 in the same quarter last year
- Same-Store Sales were flat year on year, in line with the same quarter last year
- Market Capitalization: $2.97 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Driven Brands’s Q1 Earnings Call
- Simeon Gutman (Morgan Stanley) asked about Take 5’s margin dynamics and whether margin could improve if same-store sales slow. CFO Michael Diamond replied that while there was some pressure from repair and rent costs, the team is effectively managing expenses and remains confident in continued strong performance.
- Justin Kleber (Baird) questioned the outlook for same-store sales and the drivers behind expected acceleration in the second half of the year. Diamond stated that while they are not providing quarterly guidance, easier comparisons and stabilization in discretionary segments should support stronger performance later in the year.
- Seth Sigman (Barclays) inquired about progress in the glass business and international car wash segment. COO Danny Rivera emphasized that glass remains a long-term strategic focus, with recent growth driven by new insurance and commercial accounts, while the international car wash business benefited from both underlying strength and favorable weather.
- Chris O’Cull (Stifel) asked why franchise unit growth for Take 5 was slower in the quarter and about potential impacts of tariffs on new store build costs. Rivera explained that Q1 is seasonally lighter for franchise openings, while Diamond noted that there has been no significant impact from tariffs on capital expenditures so far.
- Peter Keith (Piper Sandler) pressed for insight into Maaco’s discretionary nature and whether the segment could recover in the second half. Rivera clarified that Maaco’s paint-oriented services are more sensitive to consumer confidence, but the brand has longevity and management has plans to address recent softness.
Catalysts in Upcoming Quarters
Looking ahead, our analysts will be monitoring (1) the pace of new store openings and same-store sales trends at Take 5, (2) signs of margin stabilization as investments in growth and cost controls play out, and (3) the recovery trajectory of the Franchise segment, particularly Maaco’s performance amid discretionary spending pressures. We will also watch for updates on tariff impacts and any material changes in consumer demand across service categories.
Driven Brands currently trades at $18.07, up from $17.33 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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