Driven Brands Holdings Inc. — Call Transcript 2026

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 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 are 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 its 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 shareholder value. 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, 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. 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 2Q, 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. Yeah, look, we continue to see a bit of moderation with two very specific groups of customers. It's newer customers and more value-oriented customers. We mentioned this for the first time last earning call a few weeks ago. Honestly, nothing's changed from a trends perspective. Things are pretty stable on that front. I think importantly to the second half of your question, when we look at our core customer and when we look frankly across all other customer types, what we're seeing is resilience, right? Ultimately, check is up, attachment rates are up, premiumization is up. I'd summarize it as generally speaking, we're seeing a resilient consumer with a bit of moderation across 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 go intra-quarter numbers. What I'd say is it was a solid start to the year for Take 5, right? 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 ARO and traffic perspective, like I said, we don't break it out. The material gain there is really on the ARO side. We continue to see improvement in check, improvement in attachment rates. Our NPS scores remain in the high 70s, so not only are we delivering the services on the checks side of the equation, but we're doing so in a way where customers are happy. Strong start to the year for Take 5. Perfect. Thank you very much. Your next question comes from the line of Phillip Blee of William Blair. Your line is open. 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 around now that insurance premiums are entering into deflationary territory? How you're thinking about maybe some pent-up demand in that segment or what could be the key unlock to really stabilize that segment going forward? Yeah. Hey, Phillip. A few different things. I'd say, to your point, we're happy it's a solid start to the quarter, 1% comps is good. As we iterated in our prepared remarks, we're expecting some moderation for the segment towards the back half of the year. The underlying story, so to speak, really hasn't changed a whole lot. If you look underlying Franchise Brands, we've got three main businesses. Maaco has been soft. It was soft tail end of last year. That softness has persisted, so to speak, into Q1 of this year, although we are seeing a bit of improvement on the retail side of that business. Meineke has been strong for some time now. That strength was evident in 2025, and that momentum has carried forward into Q1. The change really sequentially quarter-over-quarter was really collision. Q1, we saw the industry pick up a little bit from where it was in Q4. We continue to outperform the general industry anywhere between 100 to 300 basis points. That really hasn't changed into Q1, and we don't expect that to change here anytime soon. As we look at the collision industry for the entire year of 2026, what we're really expecting is a year of stabilization, not so much a year of bounce back. We expect the industry to moderate towards the back half of the year, and in turn, the overall then the segment will tend to moderate into the back half of the year. I always like to go back to, so that's loosely speaking, how things are shaking out for Franchise Brands, but important to remember, for us, Franchise Brands is all about cash. As we think about the framework of growth and cash, I love it when we post a 1% comp quarter, obviously, but at the end of the day, what I love more is 60% margins, and irrespective of the moderation of the top line into the back half of the year, we continue to expect really strong margins 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. This is Mike. 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 important milestone. I'll respond to the one part of your question. I don't think there's any sort of deferred CapEx or anything we need to go into to catch up. The good news is we have many different ways we can go. We have very high return, predictable investments in our Take 5 infrastructure with opportunities to grow there. There's also possibility of returning cash to shareholders. I think our debt is fixed rate and fairly low. I'm not sure once we get to 3x if there's a ton of appetite to delever significantly further. It's something that we're obviously focused on right now. The main focus in the short term is getting down to that 3x. In the background, we're working on what that plan is, and as we get closer to the end of the year, we'll be in a position to communicate. Excellent. Thank you, guys. Your next question comes from the line of Simeon Gutman of Morgan Stanley. Your line is open. 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? Yeah, there's a couple of different things that go into that. Morning, Skylar. I would say, first of all, there's a little bit of seasonality in our business. If you think about Q2 and Q3, historically, have a little bit more sales as that's peak driving season. That's going to be offset by some of our restatement costs. If you think about the commentary we gave on the prepared remarks, we expect restatement costs to be higher in Q2, just given the fact that it's a full three months. We've got, obviously, the K and the Q. We've got whole business securitization financials. There's a little bit of puts and takes. I think there is an ability to leverage off of our fixed costs, particularly as we move into Q3 and see higher sales in Q3 and what is a seasonally high time. My job, our job, is to make sure we get the restatement and the remediation plan right. We will spend the dollars necessary there to make sure we get that plan right. That's a little bit of the yin and yang of that equation. 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. Yeah, I'll take that one. Look, I think what you're getting at is promotional activity. The way that we've thought about promotions historically, look, we've never shied away from it. It's an arrow in the quiver, so to speak. It's something that we've used surgically over time, depending on certain use cases. When I think about some of the moderation that we're seeing right now, we're talking about moderation with two very specific groups of customers that are very readily identifiable. That sounds like a use case where the arrow, so to speak, of surgical promotions tends to make sense. So we will continue to use the tools at our disposal. I wouldn't take that as any kind of a broad shift in pricing strategy or anything like that. We don't go to market as a low-cost alternative or anything. There's no strategic shift that we're contemplating, just using surgical promotional activities where it makes sense. Okay. Thank you. Your next question comes from the line of Mike Albanese of Benchmark StoneX. Your line is open. 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? Hey, Mike, good morning. I think I'd say a couple of things on SG&A. The first is I'd ground you on how we think about SG&A across our business. We think the best metric for SG&A, particularly for a multi-business platform such as ours, is as a percentage of system sales, right? We do that because that best normalizes for differences in ownership between company-operated and franchise, as well as the different royalty rates we may receive across our different franchise portfolio. When you look at it through that lens and you exclude restatement costs, actually, it came down this quarter year-over-year. We think we're doing a decent job of managing that to help us support our growth. I think to the second part, and probably the crux of your question, Danny and I will always try to operate as efficiently as possible while supporting future growth. I think there is absolutely an opportunity to continue to leverage the fixed costs we have as our various businesses continue to grow. Danny and I will also challenge ourselves to make sure we're being as efficient as possible 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? Yeah, I think we feel comfortable excluding restatement costs for where we are right now. That puts me roughly at 7.8% of system sales. There's obviously, as I mentioned, a little bit of seasonality as you think about it from Q2s and Q3s tend to have a little bit higher sales, and we still have fixed costs there. I think for now, that's where we think we are. As I've just mentioned, I think there's always opportunity to better leverage our fixed costs as well as try to continue to be more efficient. Got it. Thank you. That was helpful. Thanks, Mike. Your next question comes from the line of Craig Kennison of Baird. Your line is open. 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? Hey there, Craig. It's a great question. Look, I'll answer the second part first. We do, in fact, capture more customer pay. That's been a growing part of our business here, and we're uniquely positioned as Driven Brands when you think about the Maaco side of the portfolio. If you have a customer that doesn't want to go to insurance, let's say they get into a light fender bender, and they don't want to pay or risk their premiums going up or something like that, and they may want to come out of pocket, Maaco is a very real alternative there. Maaco features a lot of customer pay, frankly. We're somewhat uniquely positioned to capture that side of the work. As far as why do we expect the moderation of the industry, that's just based on the data that we're seeing. We saw sequential improvement Q1 over Q4, but as we look at the data that's available, if we look at just what's happening with inflation in the country and some of the most recent numbers, our expectation, again, is that 2026 is a year of stabilization over 2025, not so much a bounce back year. We expect a bit of moderation going 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. Look, one of the really nice things about our business compared to some of our competitors in that space is that we've got a franchise model, so we've got owner-operators on the ground. Having owners on the ground covers all manner of sin, and those folks are very cognizant of not just delivering an amazing experience for the customers and for our carriers, but also they're very cognizant of making sure that they're taking the appropriate steps to maximize profitability. Thank you. Our pleasure. Your next question comes from the line of Peter Keith of Piper Sandler. Your line is open. Good morning. This is Sarah Morin. I'm for Peter Keith. Thanks for taking our question. First, just 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? Hey, Sarah. It's Danny. It's a great question. I'd say, number one, part of the benefit of Driven Brands is we're a portfolio. We've got a nice platform. Some of the services that we provide are at the platform level. We have the benefit of we pool money together, we create a world-class capability. CRM happens to be one of those areas where we've got one CRM platform that's leveraged across all of the brands. It's one of those areas where the synergies of Driven Brands tends to really shine, where some of our smaller brands probably wouldn't be able to, on their own, afford a solution like the one that we have in our CRM engine at the platform level. We've been using that engine for a long time now to drive frequency, to drive repeat business. It's different, obviously, by business. We've got a collection of use cases, let's say, on the Take 5 side. Some of the more basic ones are going to be your typical oil change reminders. Where we will remind customers that they're due for an oil change. We do have proprietary algorithms in that CRM engine as far as how we do those reminders, when we do those reminders, and it's not a one-size-fits-all, but it's a fairly complicated set of algorithms to try to personalize that as much as possible. We've got different journeys on the Meineke side, let's say. We've got different journeys on the Maaco side. The really neat thing is we have a very sophisticated platform that we leverage across all of the businesses. 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'm not sure that I can provide anything more than I've already provided. As I think about it, again, 2026, year of stabilization over 2025, sequential improvement Q1 over Q4. We expect the overall industry to moderate a bit into the back half of the year. Importantly for us, we've historically outperformed the industry anywhere between 100 to 300 basis points. We continue to do so in Q1. We expect that to continue into the back half of the year. Given that collision for us is part of our Franchise Brands segment, we expect to continue to see really strong margins on that side of the business, which is ultimately the important part, filling in the cash part of the growth and cash framework for Driven Brands. Okay. Thank you. Your next question comes from the line of Tristan Thomas-Martin of BMO Capital Markets. Your line is open. Hey, good morning. I was just curious, you called out moderation of traffic, right? Lower income and newer customers. Are they deferring oil changes or they maybe trying to do it themselves? Any color there would be appreciated. Just really quick, weakness on the under $50,000 household income. How does that compare to your core customer? What's their household income? Thank you. Hey there. I guess a couple different things there. We are calling out some moderation traffic. I just want to be specific. It's specifically with those two groups of customers. As I mentioned a second ago, when we look at our core customer, which is going to have a higher household income, I'm not going to get into a ton of specifics as to exactly where we price things at, it's certainly more than $50,000. We're seeing overall resilience across the board in all groups other than really those two very specific groups. What we're seeing ultimately is a bit more churn out of those groups than anything else. If the question is, are we seeing intervals go up? No. Oil change intervals have been stable for some time now. We haven't really seen any material change to oil change intervals for some time, that's not what we're seeing today. This is not a elongation, so to speak, of when customers are coming in. What we're seeing is with two very specific types of customers, a bit more churn. Great. Thank you. Yep. 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.

Speaker 6: 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. Thank you for standing by. thank you for standing by My name is Jael, and I will be your conference operator today. 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. 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. all lines have been placed on mute to prevent any background noise After the speakers' remarks, there will be a question-and-answer session. 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 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. if you would like to withdraw your question simply press star one again I would now like to turn the conference over to Steve Alexander, Investor Relations. You may begin. I would now like to turn the conference over to Steve Alexander, Investor Relations. i would now like to turn the conference over to steve alexander investor relations You may begin. you may begin

Speaker 10: 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. Good morning. good morning Welcome to Driven Brands' first quarter 2026 earnings conference call. 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. 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. 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. 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. 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. 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. During this call, we will also make forward-looking statements regarding our current plans, beliefs, and expectations. 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. 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. 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. 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. we ask that you limit yourself to one question and one follow-up Now, I'll turn the call over to Danny. Now, I'll turn the call over to Danny. now i'll turn the call over to danny

Speaker 2: 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. Good morning, and thank you for joining us to discuss Driven Brands' 2026 first quarter results. 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. 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%. 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. 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. 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. 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. 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 are 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. We also continue to make progress enhancing our finance and accounting capabilities, strengthening processes, and improving controls. 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. 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. 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. 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. 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 are facing greater pressure from inflation and higher living costs. 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 are 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. 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. The essential nature of our services, combined with secular industry tailwinds, reinforces our confidence in the business. 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. 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 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. 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. 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. Turning to Take 5 Oil Change. 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%. 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. 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. 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. 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. 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. 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. Our franchise segment once again delivered robust profitability, generating adjusted EBITDA margins of 60%, while growing same-store sales 1% during the quarter. 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. 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. 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%. 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. 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 its 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 shareholder value. 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. I'll close with three key takeaways. i'll close with three key takeaways First, Take 5 continues to validate our long-term investment thesis. first take 5 continues to validate our long-term investment thesis The business is delivering strong growth, expanding margins, and remains early in its runway toward more than 2,500 locations. the business is delivering strong growth expanding margins and remains early in its 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. 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 shareholder value. 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 shareholder value 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. 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. 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. With that, I'll turn it over to my partner and Driven CFO, Mike. with that i'll turn it over to my partner and driven cfo mike

Speaker 5: 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. Thank you, Danny, and good morning, everyone. 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. 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. 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. 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. 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. 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. 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. Total revenue for Q1 was $484.4 million, an increase of 8.2% year-over-year. 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. 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. 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. 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. 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. 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, 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. Q1 operating income increased $12.7 million to $67.4 million, driven primarily by the increase in revenue. 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 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. 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. 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. 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. income tax expense for the quarter was $9.4 million Net income from continuing operations for the quarter was $23.8 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 net income from continuing operations for the quarter was $49 million Adjusted diluted EPS for Q1 was $0.30. adjusted diluted eps for q1 was $0.30 Q1 performance for each of our segments include Take 5, 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. q1 performance for each of our segments include take 5 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. 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. 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%. 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. 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. 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. 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. adjusted ebitda increased $0.6 million to $5.9 million Turning to cash flow and leverage. turning to cash flow and leverage Our cash flow statement shows a consolidated view of cash flows inclusive of discontinued operations. 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 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. 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. 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. 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. 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. 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. adjusted diluted eps of $1.15 to $1.25 Same-store sales of flat to 2%. 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. Net store growth between 160 and 190 units. net store growth between 160 and 190 units Net capital expenditures of approximately 6.5% of revenue. net capital expenditures of approximately 6.5% of revenue Free cash flow between $125 million and $145 million. 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. as we approach the end of q2 we want to provide a few notes on q2 performance Sales. sales We expect moderation across all of our brands in Q2. 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 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. 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. restatement costs We expect restatement costs to exceed $15 million in Q2. 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. 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. 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. importantly these costs are non-recurring in nature and do not reflect the underlying earnings power of the business Adjusted EBITDA. adjusted ebitda As a result, we expect adjusted EBITDA margins to be pressured relative to Q1's 21.5%. 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. 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. 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. 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. With that, I will now turn it over to the operator and we are happy to take your questions. with that i will now turn it over to the operator and we are happy to take your questions

Speaker 6: 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. Thank you. thank you The floor is now open for questions. 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 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 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. 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. 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 first question comes from the line of mark jordan of goldman sachs Your line is open. your line is open

Speaker 3: 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 2Q, and if there's anything you can talk about in your other demographics outside of the new customers and the lower income customers? Hey, good morning. hey good morning Thank you very much for taking my question. 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 2Q, and if there's anything you can talk about in your other demographics outside of the new customers and the lower income customers? 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 2q and if there's anything you can talk about in your other demographics outside of the new customers and the lower income customers

Speaker 2: Yeah. Hey, Mark, it's Danny. Yeah, look, we continue to see a bit of moderation with two very specific groups of customers. It's newer customers and more value-oriented customers. We mentioned this for the first time last earning call a few weeks ago. Honestly, nothing's changed from a trends perspective. Things are pretty stable on that front. I think importantly to the second half of your question, when we look at our core customer and when we look frankly across all other customer types, what we're seeing is resilience, right? Ultimately, check is up, attachment rates are up, premiumization is up. I'd summarize it as generally speaking, we're seeing a resilient consumer with a bit of moderation across two specific groups. Yeah. yeah Hey, Mark, it's Danny. hey mark it's danny Yeah, look, we continue to see a bit of moderation with two very specific groups of customers. yeah look we continue to see a bit of moderation with two very specific groups of customers It's newer customers and more value-oriented customers. it's newer customers and more value-oriented customers We mentioned this for the first time last earning call a few weeks ago. we mentioned this for the first time last earning call a few weeks ago Honestly, nothing's changed from a trends perspective. honestly nothing's changed from a trends perspective Things are pretty stable on that front. things are pretty stable on that front I think importantly to the second half of your question, when we look at our core customer and when we look frankly across all other customer types, what we're seeing is resilience, right? i think importantly to the second half of your question when we look at our core customer and when we look frankly across all other customer types what we're seeing is resilience right Ultimately, check is up, attachment rates are up, premiumization is up. ultimately check is up attachment rates are up premiumization is up I'd summarize it as generally speaking, we're seeing a resilient consumer with a bit of moderation across two specific groups. i'd summarize it as generally speaking we're seeing a resilient consumer with a bit of moderation across two specific groups

Speaker 3: 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? Okay, perfect. okay perfect If I could just follow on the 1Q comp and maybe how it trended for Take 5 throughout the quarter. 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? i don't know if you'd be willing to give it but how ticket and traffic contributed for the quarter as well

Speaker 2: We typically don't break out the sales tree and we don't go intra-quarter numbers. What I'd say is it was a solid start to the year for Take 5, right? 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 ARO and traffic perspective, like I said, we don't break it out. The material gain there is really on the ARO side. We continue to see improvement in check, improvement in attachment rates. Our NPS scores remain in the high 70s, so not only are we delivering the services on the checks side of the equation, but we're doing so in a way where customers are happy. Strong start to the year for Take 5. We typically don't break out the sales tree and we don't go intra-quarter numbers. we typically don't break out the sales tree and we don't go intra-quarter numbers What I'd say is it was a solid start to the year for Take 5, right? 4.5% comps for the quarter, 12.5% on a two-year basis. what i'd say is it was a solid start to the year for take 5 right 4.5% comps for the quarter 12.5% on a two-year basis We continue to see that business grow and do well. we continue to see that business grow and do well From an ARO and traffic perspective, like I said, we don't break it out. from an aro and traffic perspective like i said we don't break it out The material gain there is really on the ARO side. the material gain there is really on the aro side We continue to see improvement in check, improvement in attachment rates. we continue to see improvement in check improvement in attachment rates Our NPS scores remain in the high 70s, so not only are we delivering the services on the checks side of the equation, but we're doing so in a way where customers are happy. our nps scores remain in the high 70s so not only are we delivering the services on the checks side of the equation but we're doing so in a way where customers are happy Strong start to the year for Take 5. strong start to the year for take 5

Speaker 3: Perfect. Thank you very much. Perfect. perfect Thank you very much. thank you very much

Speaker 6: Your next question comes from the line of Phillip Blee of William Blair. Your line is open. Your next question comes from the line of Phillip Blee of William Blair. your next question comes from the line of phillip blee of william blair Your line is open. your line is open

Speaker 7: 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 around now that insurance premiums are entering into deflationary territory? How you're 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, guys. hey guys Question. question Franchise Brands comps inflected positive this quarter. 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? 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 around now that insurance premiums are entering into deflationary territory? have you seen any reprieve at all around now that insurance premiums are entering into deflationary territory How you're thinking about maybe some pent-up demand in that segment or what could be the key unlock to really stabilize that segment going forward? how you're thinking about maybe some pent-up demand in that segment or what could be the key unlock to really stabilize that segment going forward

Speaker 2: Yeah. Hey, Phillip. A few different things. I'd say, to your point, we're happy it's a solid start to the quarter, 1% comps is good. As we iterated in our prepared remarks, we're expecting some moderation for the segment towards the back half of the year. The underlying story, so to speak, really hasn't changed a whole lot. If you look underlying Franchise Brands, we've got three main businesses. Maaco has been soft. It was soft tail end of last year. That softness has persisted, so to speak, into Q1 of this year, although we are seeing a bit of improvement on the retail side of that business. Meineke has been strong for some time now. That strength was evident in 2025, and that momentum has carried forward into Q1. The change really sequentially quarter-over-quarter was really collision. Yeah. yeah Hey, Phillip. hey phillip A few different things. a few different things I'd say, to your point, we're happy it's a solid start to the quarter, 1% comps is good. i'd say to your point we're happy it's a solid start to the quarter 1% comps is good As we iterated in our prepared remarks, we're expecting some moderation for the segment towards the back half of the year. as we iterated in our prepared remarks we're expecting some moderation for the segment towards the back half of the year The underlying story, so to speak, really hasn't changed a whole lot. the underlying story so to speak really hasn't changed a whole lot If you look underlying Franchise Brands, we've got three main businesses. if you look underlying franchise brands we've got three main businesses Maaco has been soft. maaco has been soft It was soft tail end of last year. it was soft tail end of last year That softness has persisted, so to speak, into Q1 of this year, although we are seeing a bit of improvement on the retail side of that business. that softness has persisted so to speak into q1 of this year although we are seeing a bit of improvement on the retail side of that business Meineke has been strong for some time now. meineke has been strong for some time now That strength was evident in 2025, and that momentum has carried forward into Q1. that strength was evident in 2025 and that momentum has carried forward into q1 The change really sequentially quarter-over-quarter was really collision. the change really sequentially quarter-over-quarter was really collision Q1, we saw the industry pick up a little bit from where it was in Q4. We continue to outperform the general industry anywhere between 100 to 300 basis points. That really hasn't changed into Q1, and we don't expect that to change here anytime soon. As we look at the collision industry for the entire year of 2026, what we're really expecting is a year of stabilization, not so much a year of bounce back. We expect the industry to moderate towards the back half of the year, and in turn, the overall then the segment will tend to moderate into the back half of the year. I always like to go back to, so that's loosely speaking, how things are shaking out for Franchise Brands, but important to remember, for us, Franchise Brands is all about cash. Q1, we saw the industry pick up a little bit from where it was in Q4. q1 we saw the industry pick up a little bit from where it was in q4 We continue to outperform the general industry anywhere between 100 to 300 basis points. we continue to outperform the general industry anywhere between 100 to 300 basis points That really hasn't changed into Q1, and we don't expect that to change here anytime soon. that really hasn't changed into q1 and we don't expect that to change here anytime soon As we look at the collision industry for the entire year of 2026, what we're really expecting is a year of stabilization, not so much a year of bounce back. as we look at the collision industry for the entire year of 2026 what we're really expecting is a year of stabilization not so much a year of bounce back We expect the industry to moderate towards the back half of the year, and in turn, the overall then the segment will tend to moderate into the back half of the year. we expect the industry to moderate towards the back half of the year and in turn the overall then the segment will tend to moderate into the back half of the year I always like to go back to, so that's loosely speaking, how things are shaking out for Franchise Brands, but important to remember, for us, Franchise Brands is all about cash. i always like to go back to so that's loosely speaking how things are shaking out for franchise brands but important to remember for us franchise brands is all about cash As we think about the framework of growth and cash, I love it when we post a 1% comp quarter, obviously, but at the end of the day, what I love more is 60% margins, and irrespective of the moderation of the top line into the back half of the year, we continue to expect really strong margins from that segment. As we think about the framework of growth and cash, I love it when we post a 1% comp quarter, obviously, but at the end of the day, what I love more is 60% margins, and irrespective of the moderation of the top line into the back half of the year, we continue to expect really strong margins from that segment. as we think about the framework of growth and cash i love it when we post a 1% comp quarter obviously but at the end of the day what i love more is 60% margins and irrespective of the moderation of the top line into the back half of the year we continue to expect really strong margins from that segment

Speaker 7: 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. Okay, great. okay great That's excellent. that's excellent Speaking of cash, you reiterated your target to reach that 3x net leverage point by year-end. 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? 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? 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. thank you

Speaker 5: Hey, Phillip. This is Mike. 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 important milestone. I'll respond to the one part of your question. I don't think there's any sort of deferred CapEx or anything we need to go into to catch up. The good news is we have many different ways we can go. We have very high return, predictable investments in our Take 5 infrastructure with opportunities to grow there. There's also possibility of returning cash to shareholders. I think our debt is fixed rate and fairly low. I'm not sure once we get to 3x if there's a ton of appetite to delever significantly further. It's something that we're obviously focused on right now. Hey, Phillip . hey phillip This is Mike. this is mike I'll take that one. i'll take that one We have stated historically that we are continuing to evaluate our options once we get down to 3x . 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 important milestone. for now the focus remains on getting to that important milestone I'll respond to the one part of your question. i'll respond to the one part of your question I don't think there's any sort of deferred CapEx or anything we need to go into to catch up. i don't think there's any sort of deferred capex or anything we need to go into to catch up The good news is we have many different ways we can go. the good news is we have many different ways we can go We have very high return, predictable investments in our Take 5 infrastructure with opportunities to grow there. we have very high return predictable investments in our take 5 infrastructure with opportunities to grow there There's also possibility of returning cash to shareholders. there's also possibility of returning cash to shareholders I think our debt is fixed rate and fairly low. i think our debt is fixed rate and fairly low I'm not sure once we get to 3x if there's a ton of appetite to delever significantly further. i'm not sure once we get to 3x if there's a ton of appetite to delever significantly further It's something that we're obviously focused on right now. it's something that we're obviously focused on right now The main focus in the short term is getting down to that 3x. In the background, we're working on what that plan is, and as we get closer to the end of the year, we'll be in a position to communicate. The main focus in the short term is getting down to that 3x . the main focus in the short term is getting down to that 3x In the background, we're working on what that plan is, and as we get closer to the end of the year, we'll be in a position to communicate. in the background we're working on what that plan is and as we get closer to the end of the year we'll be in a position to communicate

Speaker 7: Excellent. Thank you, guys. Excellent. excellent Thank you, guys. thank you guys

Speaker 6: Your next question comes from the line of Simeon Gutman of Morgan Stanley. Your line is open. Your next question comes from the line of Simeon Gutman of Morgan Stanley. your next question comes from the line of simeon gutman of morgan stanley Your line is open. your line is open

Speaker 9: 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? Hey, good morning. hey good morning This is Skylar Tennant on for Simeon Gutman. this is skylar tennant on for simeon gutman Thanks for taking our question. 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? 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

Speaker 5: Yeah, there's a couple of different things that go into that. Morning, Skylar. I would say, first of all, there's a little bit of seasonality in our business. If you think about Q2 and Q3, historically, have a little bit more sales as that's peak driving season. That's going to be offset by some of our restatement costs. If you think about the commentary we gave on the prepared remarks, we expect restatement costs to be higher in Q2, just given the fact that it's a full three months. We've got, obviously, the K and the Q. We've got whole business securitization financials. There's a little bit of puts and takes. I think there is an ability to leverage off of our fixed costs, particularly as we move into Q3 and see higher sales in Q3 and what is a seasonally high time. Yeah, there's a couple of different things that go into that. yeah there's a couple of different things that go into that Morning, Skylar. morning skylar I would say, first of all, there's a little bit of seasonality in our business. i would say first of all there's a little bit of seasonality in our business If you think about Q2 and Q3, historically, have a little bit more sales as that's peak driving season. if you think about q2 and q3 historically have a little bit more sales as that's peak driving season That's going to be offset by some of our restatement costs. that's going to be offset by some of our restatement costs If you think about the commentary we gave on the prepared remarks, we expect restatement costs to be higher in Q2, just given the fact that it's a full three months. if you think about the commentary we gave on the prepared remarks we expect restatement costs to be higher in q2 just given the fact that it's a full three months We've got, obviously, the K and the Q. we've got obviously the k and the q We've got whole business securitization financials. we've got whole business securitization financials There's a little bit of puts and takes. there's a little bit of puts and takes I think there is an ability to leverage off of our fixed costs, particularly as we move into Q3 and see higher sales in Q3 and what is a seasonally high time. i think there is an ability to leverage off of our fixed costs particularly as we move into q3 and see higher sales in q3 and what is a seasonally high time My job, our job, is to make sure we get the restatement and the remediation plan right. We will spend the dollars necessary there to make sure we get that plan right. That's a little bit of the yin and yang of that equation. My job, our job, is to make sure we get the restatement and the remediation plan right. my job our job is to make sure we get the restatement and the remediation plan right We will spend the dollars necessary there to make sure we get that plan right. we will spend the dollars necessary there to make sure we get that plan right That's a little bit of the yin and yang of that equation. that's a little bit of the yin and yang of that equation

Speaker 9: 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. Okay, great. okay great Thanks. 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? 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. thank you

Speaker 2: Yeah, I'll take that one. Look, I think what you're getting at is promotional activity. The way that we've thought about promotions historically, look, we've never shied away from it. It's an arrow in the quiver, so to speak. It's something that we've used surgically over time, depending on certain use cases. When I think about some of the moderation that we're seeing right now, we're talking about moderation with two very specific groups of customers that are very readily identifiable. That sounds like a use case where the arrow, so to speak, of surgical promotions tends to make sense. So we will continue to use the tools at our disposal. Yeah, I'll take that one. yeah i'll take that one Look, I think what you're getting at is promotional activity. look i think what you're getting at is promotional activity The way that we've thought about promotions historically, look, we've never shied away from it. the way that we've thought about promotions historically look we've never shied away from it It's an arrow in the quiver, so to speak. it's an arrow in the quiver so to speak It's something that we've used surgically over time, depending on certain use cases. it's something that we've used surgically over time depending on certain use cases When I think about some of the moderation that we're seeing right now, we're talking about moderation with two very specific groups of customers that are very readily identifiable. when i think about some of the moderation that we're seeing right now we're talking about moderation with two very specific groups of customers that are very readily identifiable That sounds like a use case where the arrow, so to speak, of surgical promotions tends to make sense. that sounds like a use case where the arrow so to speak of surgical promotions tends to make sense So we will continue to use the tools at our disposal. so we will continue to use the tools at our disposal I wouldn't take that as any kind of a broad shift in pricing strategy or anything like that. We don't go to market as a low-cost alternative or anything. There's no strategic shift that we're contemplating, just using surgical promotional activities where it makes sense. I wouldn't take that as any kind of a broad shift in pricing strategy or anything like that. i wouldn't take that as any kind of a broad shift in pricing strategy or anything like that We don't go to market as a low-cost alternative or anything. we don't go to market as a low-cost alternative or anything There's no strategic shift that we're contemplating, just using surgical promotional activities where it makes sense. there's no strategic shift that we're contemplating just using surgical promotional activities where it makes sense

Speaker 9: Okay. Thank you. Okay. okay Thank you. thank you

Speaker 6: Your next question comes from the line of Mike Albanese of Benchmark StoneX. Your line is open. Your next question comes from the line of Mike Albanese of Benchmark StoneX. your next question comes from the line of mike albanese of benchmark stonex Your line is open. your line is open

Speaker 4: 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? Hey, thanks. hey thanks Good morning, guys. good morning guys Thanks for taking my question. 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? 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

Speaker 5: Hey, Mike, good morning. I think I'd say a couple of things on SG&A. The first is I'd ground you on how we think about SG&A across our business. We think the best metric for SG&A, particularly for a multi-business platform such as ours, is as a percentage of system sales, right? We do that because that best normalizes for differences in ownership between company-operated and franchise, as well as the different royalty rates we may receive across our different franchise portfolio. When you look at it through that lens and you exclude restatement costs, actually, it came down this quarter year-over-year. We think we're doing a decent job of managing that to help us support our growth. Hey, Mike, good morning. hey mike good morning I think I'd say a couple of things on SG&A. i think i'd say a couple of things on sg&a The first is I'd ground you on how we think about SG&A across our business. the first is i'd ground you on how we think about sg&a across our business We think the best metric for SG&A, particularly for a multi-business platform such as ours, is as a percentage of system sales, right? we think the best metric for sg&a particularly for a multi-business platform such as ours is as a percentage of system sales right We do that because that best normalizes for differences in ownership between company-operated and franchise, as well as the different royalty rates we may receive across our different franchise portfolio. we do that because that best normalizes for differences in ownership between company-operated and franchise as well as the different royalty rates we may receive across our different franchise portfolio When you look at it through that lens and you exclude restatement costs, actually, it came down this quarter year-over-year. when you look at it through that lens and you exclude restatement costs actually it came down this quarter year-over-year We think we're doing a decent job of managing that to help us support our growth. we think we're doing a decent job of managing that to help us support our growth I think to the second part, and probably the crux of your question, Danny and I will always try to operate as efficiently as possible while supporting future growth. I think there is absolutely an opportunity to continue to leverage the fixed costs we have as our various businesses continue to grow. Danny and I will also challenge ourselves to make sure we're being as efficient as possible with the dollars we spend. I think to the second part, and probably the crux of your question, Danny and I will always try to operate as efficiently as possible while supporting future growth. i think to the second part and probably the crux of your question danny and i will always try to operate as efficiently as possible while supporting future growth I think there is absolutely an opportunity to continue to leverage the fixed costs we have as our various businesses continue to grow. i think there is absolutely an opportunity to continue to leverage the fixed costs we have as our various businesses continue to grow Danny and I will also challenge ourselves to make sure we're being as efficient as possible with the dollars we spend. danny and i will also challenge ourselves to make sure we're being as efficient as possible with the dollars we spend

Speaker 4: 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? Got it. got it That's helpful. that's helpful Thank you. 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? 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? how can i think about quantifying that

Speaker 5: Yeah, I think we feel comfortable excluding restatement costs for where we are right now. That puts me roughly at 7.8% of system sales. There's obviously, as I mentioned, a little bit of seasonality as you think about it from Q2s and Q3s tend to have a little bit higher sales, and we still have fixed costs there. I think for now, that's where we think we are. As I've just mentioned, I think there's always opportunity to better leverage our fixed costs as well as try to continue to be more efficient. Yeah, I think we feel comfortable excluding restatement costs for where we are right now. yeah i think we feel comfortable excluding restatement costs for where we are right now That puts me roughly at 7.8% of system sales. that puts me roughly at 7.8% of system sales There's obviously, as I mentioned, a little bit of seasonality as you think about it from Q2s and Q3s tend to have a little bit higher sales, and we still have fixed costs there. there's obviously as i mentioned a little bit of seasonality as you think about it from q2s and q3s tend to have a little bit higher sales and we still have fixed costs there I think for now, that's where we think we are. i think for now that's where we think we are As I've just mentioned, I think there's always opportunity to better leverage our fixed costs as well as try to continue to be more efficient. as i've just mentioned i think there's always opportunity to better leverage our fixed costs as well as try to continue to be more efficient

Speaker 4: Got it. Thank you. That was helpful. Got it. got it Thank you. thank you That was helpful. that was helpful

Speaker 5: Thanks, Mike. Thanks, Mike. thanks mike

Speaker 6: Your next question comes from the line of Craig Kennison of Baird. Your line is open. Your next question comes from the line of Craig Kennison of Baird. your next question comes from the line of craig kennison of baird Your line is open. your line is open

Speaker 1: 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? Hey, good morning. hey good morning Thanks for taking my question. thanks for taking my question I wanted to follow up on your earlier comments in the collision market. 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? 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

Speaker 2: Hey there, Craig. It's a great question. Look, I'll answer the second part first. We do, in fact, capture more customer pay. That's been a growing part of our business here, and we're uniquely positioned as Driven Brands when you think about the Maaco side of the portfolio. If you have a customer that doesn't want to go to insurance, let's say they get into a light fender bender, and they don't want to pay or risk their premiums going up or something like that, and they may want to come out of pocket, Maaco is a very real alternative there. Maaco features a lot of customer pay, frankly. We're somewhat uniquely positioned to capture that side of the work. As far as why do we expect the moderation of the industry, that's just based on the data that we're seeing. Hey there, Craig. hey there craig It's a great question. it's a great question Look, I'll answer the second part first. look i'll answer the second part first We do, in fact, capture more customer pay. we do in fact capture more customer pay That's been a growing part of our business here, and we're uniquely positioned as Driven Brands when you think about the Maaco side of the portfolio. that's been a growing part of our business here and we're uniquely positioned as driven brands when you think about the maaco side of the portfolio If you have a customer that doesn't want to go to insurance, let's say they get into a light fender bender, and they don't want to pay or risk their premiums going up or something like that, and they may want to come out of pocket, Maaco is a very real alternative there. if you have a customer that doesn't want to go to insurance let's say they get into a light fender bender and they don't want to pay or risk their premiums going up or something like that and they may want to come out of pocket maaco is a very real alternative there Maaco features a lot of customer pay, frankly. maaco features a lot of customer pay frankly We're somewhat uniquely positioned to capture that side of the work. we're somewhat uniquely positioned to capture that side of the work As far as why do we expect the moderation of the industry, that's just based on the data that we're seeing. as far as why do we expect the moderation of the industry that's just based on the data that we're seeing We saw sequential improvement Q1 over Q4, but as we look at the data that's available, if we look at just what's happening with inflation in the country and some of the most recent numbers, our expectation, again, is that 2026 is a year of stabilization over 2025, not so much a bounce back year. We expect a bit of moderation going into the back half of the year. We saw sequential improvement Q1 over Q4, but as we look at the data that's available, if we look at just what's happening with inflation in the country and some of the most recent numbers, our expectation, again, is that 2026 is a year of stabilization over 2025, not so much a bounce back year. we saw sequential improvement q1 over q4 but as we look at the data that's available if we look at just what's happening with inflation in the country and some of the most recent numbers our expectation again is that 2026 is a year of stabilization over 2025 not so much a bounce back year We expect a bit of moderation going into the back half of the year. we expect a bit of moderation going into the back half of the year

Speaker 1: 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? Thank you. 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? 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

Speaker 2: We do. Look, one of the really nice things about our business compared to some of our competitors in that space is that we've got a franchise model, so we've got owner-operators on the ground. Having owners on the ground covers all manner of sin, and those folks are very cognizant of not just delivering an amazing experience for the customers and for our carriers, but also they're very cognizant of making sure that they're taking the appropriate steps to maximize profitability. We do. we do Look, one of the really nice things about our business compared to some of our competitors in that space is that we've got a franchise model, so we've got owner-operators on the ground. look one of the really nice things about our business compared to some of our competitors in that space is that we've got a franchise model so we've got owner-operators on the ground Having owners on the ground covers all manner of sin, and those folks are very cognizant of not just delivering an amazing experience for the customers and for our carriers, but also they're very cognizant of making sure that they're taking the appropriate steps to maximize profitability. having owners on the ground covers all manner of sin and those folks are very cognizant of not just delivering an amazing experience for the customers and for our carriers but also they're very cognizant of making sure that they're taking the appropriate steps to maximize profitability

Speaker 1: Thank you. Thank you. thank you

Speaker 2: Our pleasure. Our pleasure. our pleasure

Speaker 6: Your next question comes from the line of Peter Keith of Piper Sandler. Your line is open. Your next question comes from the line of Peter Keith of Piper Sandler. your next question comes from the line of peter keith of piper sandler Your line is open. your line is open

Speaker 8: Good morning. This is Sarah Morin. I'm for Peter Keith. Thanks for taking our question. First, just 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? Good morning. good morning This is Sarah Morin. this is sarah morin I'm for Peter Keith. i'm for peter keith Thanks for taking our question. thanks for taking our question First, just 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? first just 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

Speaker 2: Hey, Sarah. It's Danny. It's a great question. I'd say, number one, part of the benefit of Driven Brands is we're a portfolio. We've got a nice platform. Some of the services that we provide are at the platform level. We have the benefit of we pool money together, we create a world-class capability. CRM happens to be one of those areas where we've got one CRM platform that's leveraged across all of the brands. It's one of those areas where the synergies of Driven Brands tends to really shine, where some of our smaller brands probably wouldn't be able to, on their own, afford a solution like the one that we have in our CRM engine at the platform level. We've been using that engine for a long time now to drive frequency, to drive repeat business. It's different, obviously, by business. Hey, Sarah. hey sarah It's Danny. it's danny It's a great question. it's a great question I'd say, number one, part of the benefit of Driven Brands is we're a portfolio. i'd say number one part of the benefit of driven brands is we're a portfolio We've got a nice platform. we've got a nice platform Some of the services that we provide are at the platform level. some of the services that we provide are at the platform level We have the benefit of we pool money together, we create a world-class capability. we have the benefit of we pool money together we create a world-class capability CRM happens to be one of those areas where we've got one CRM platform that's leveraged across all of the brands. crm happens to be one of those areas where we've got one crm platform that's leveraged across all of the brands It's one of those areas where the synergies of Driven Brands tends to really shine, where some of our smaller brands probably wouldn't be able to, on their own, afford a solution like the one that we have in our CRM engine at the platform level. it's one of those areas where the synergies of driven brands tends to really shine where some of our smaller brands probably wouldn't be able to on their own afford a solution like the one that we have in our crm engine at the platform level We've been using that engine for a long time now to drive frequency, to drive repeat business. we've been using that engine for a long time now to drive frequency to drive repeat business It's different, obviously, by business. it's different obviously by business We've got a collection of use cases, let's say, on the Take 5 side. Some of the more basic ones are going to be your typical oil change reminders. Where we will remind customers that they're due for an oil change. We do have proprietary algorithms in that CRM engine as far as how we do those reminders, when we do those reminders, and it's not a one-size-fits-all, but it's a fairly complicated set of algorithms to try to personalize that as much as possible. We've got different journeys on the Meineke side, let's say. We've got different journeys on the Maaco side. The really neat thing is we have a very sophisticated platform that we leverage across all of the businesses. We've got a collection of use cases, let's say, on the Take 5 side. we've got a collection of use cases let's say on the take 5 side Some of the more basic ones are going to be your typical oil change reminders. Where we will remind customers that they're due for an oil change. some of the more basic ones are going to be your typical oil change reminders. where we will remind customers that they're due for an oil change We do have proprietary algorithms in that CRM engine as far as how we do those reminders, when we do those reminders, and it's not a one-size-fits-all, but it's a fairly complicated set of algorithms to try to personalize that as much as possible. we do have proprietary algorithms in that crm engine as far as how we do those reminders when we do those reminders and it's not a one-size-fits-all but it's a fairly complicated set of algorithms to try to personalize that as much as possible We've got different journeys on the Meineke side, let's say. we've got different journeys on the meineke side let's say We've got different journeys on the Maaco side. we've got different journeys on the maaco side The really neat thing is we have a very sophisticated platform that we leverage across all of the businesses. the really neat thing is we have a very sophisticated platform that we leverage across all of the businesses

Speaker 8: 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? Okay, thanks. okay thanks Just on the collision segment, we're hearing of improved transaction activity, but industry ticket kind of remaining more flat. 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? is there any update you can provide on the collision landscape

Speaker 2: I'm not sure that I can provide anything more than I've already provided. As I think about it, again, 2026, year of stabilization over 2025, sequential improvement Q1 over Q4. We expect the overall industry to moderate a bit into the back half of the year. Importantly for us, we've historically outperformed the industry anywhere between 100 to 300 basis points. We continue to do so in Q1. We expect that to continue into the back half of the year. Given that collision for us is part of our Franchise Brands segment, we expect to continue to see really strong margins on that side of the business, which is ultimately the important part, filling in the cash part of the growth and cash framework for Driven Brands. I'm not sure that I can provide anything more than I've already provided. i'm not sure that i can provide anything more than i've already provided As I think about it, again, 2026, year of stabilization over 2025, sequential improvement Q1 over Q4. as i think about it again 2026 year of stabilization over 2025 sequential improvement q1 over q4 We expect the overall industry to moderate a bit into the back half of the year. we expect the overall industry to moderate a bit into the back half of the year Importantly for us, we've historically outperformed the industry anywhere between 100 to 300 basis points. importantly for us we've historically outperformed the industry anywhere between 100 to 300 basis points We continue to do so in Q1. we continue to do so in q1 We expect that to continue into the back half of the year. we expect that to continue into the back half of the year Given that collision for us is part of our Franchise Brands segment, we expect to continue to see really strong margins on that side of the business, which is ultimately the important part, filling in the cash part of the growth and cash framework for Driven Brands. given that collision for us is part of our franchise brands segment we expect to continue to see really strong margins on that side of the business which is ultimately the important part filling in the cash part of the growth and cash framework for driven brands

Speaker 8: Okay. Thank you. Okay. okay Thank you. thank you

Speaker 6: Your next question comes from the line of Tristan Thomas-Martin of BMO Capital Markets. Your line is open. Your next question comes from the line of Tristan Thomas-Martin of BMO Capital Markets. your next question comes from the line of tristan thomas-martin of bmo capital markets Your line is open. your line is open

Speaker 11: Hey, good morning. I was just curious, you called out moderation of traffic, right? Lower income and newer customers. Are they deferring oil changes or they maybe trying to do it themselves? Any color there would be appreciated. Just really quick, weakness on the under $50,000 household income. How does that compare to your core customer? What's their household income? Thank you. Hey, good morning. hey good morning I was just curious, you called out moderation of traffic, right? i was just curious you called out moderation of traffic right Lower income and newer customers. lower income and newer customers Are they deferring oil changes or they maybe trying to do it themselves? are they deferring oil changes or they maybe trying to do it themselves Any color there would be appreciated. any color there would be appreciated Just really quick, weakness on the under $50,000 household income. just really quick weakness on the under $50,000 household income How does that compare to your core customer? how does that compare to your core customer What's their household income? what's their household income Thank you. thank you

Speaker 2: Hey there. I guess a couple different things there. We are calling out some moderation traffic. I just want to be specific. It's specifically with those two groups of customers. As I mentioned a second ago, when we look at our core customer, which is going to have a higher household income, I'm not going to get into a ton of specifics as to exactly where we price things at, it's certainly more than $50,000. We're seeing overall resilience across the board in all groups other than really those two very specific groups. What we're seeing ultimately is a bit more churn out of those groups than anything else. If the question is, are we seeing intervals go up? No. Oil change intervals have been stable for some time now. Hey there. hey there I guess a couple different things there. i guess a couple different things there We are calling out some moderation traffic. we are calling out some moderation traffic I just want to be specific. i just want to be specific It's specifically with those two groups of customers. it's specifically with those two groups of customers As I mentioned a second ago, when we look at our core customer, which is going to have a higher household income, I'm not going to get into a ton of specifics as to exactly where we price things at, it's certainly more than $50,000. as i mentioned a second ago when we look at our core customer which is going to have a higher household income i'm not going to get into a ton of specifics as to exactly where we price things at it's certainly more than $50,000 We're seeing overall resilience across the board in all groups other than really those two very specific groups. we're seeing overall resilience across the board in all groups other than really those two very specific groups What we're seeing ultimately is a bit more churn out of those groups than anything else. what we're seeing ultimately is a bit more churn out of those groups than anything else If the question is, are we seeing intervals go up? if the question is are we seeing intervals go up No. no Oil change intervals have been stable for some time now. oil change intervals have been stable for some time now We haven't really seen any material change to oil change intervals for some time, that's not what we're seeing today. This is not a elongation, so to speak, of when customers are coming in. What we're seeing is with two very specific types of customers, a bit more churn. We haven't really seen any material change to oil change intervals for some time, that's not what we're seeing today. we haven't really seen any material change to oil change intervals for some time that's not what we're seeing today This is not a elongation, so to speak, of when customers are coming in. this is not a elongation so to speak of when customers are coming in What we're seeing is with two very specific types of customers, a bit more churn. what we're seeing is with two very specific types of customers a bit more churn

Speaker 11: Great. Thank you. Great. great Thank you. thank you

Speaker 2: Yep. Yep. yep

Speaker 6: 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. With no further questions, that concludes our Q&A session and also today's conference call. with no further questions that concludes our q&a session and also today's conference call Thank you for your participation. thank you for your participation You may now disconnect. you may now disconnect