Driven Brands

Driven Brand’s CEO boasted that “Our supply chain capabilities that keep us in stock and allow us to take share and price when others cannot.” “Jonathan Fitzpatrick — President and Chief Executive Officer: Our supply chain capabilities that keep us in stock and allow us to take share and price when others cannot. Our scale, which is growing, is a sustainable and increasingly significant competitive advantage in our highly fragmented industry. Over the long term, Driven has and will consistently deliver organic, double-digit revenue growth and double-digit adjusted EBITDA growth. That, together with our asset-light business model, means we generate a ton of cash.” (Driven Brands Holdings Q1 2022 Earnings Call, 4/27/2022)

Driven Brand’s CEO told analysts “Driven provides needs-based services…sOur businesses performed well because of the nondiscretionary aspect of maintaining an automobile.”“Jonathan Fitzpatrick — President and Chief Executive Officer: Most importantly, Driven provides needs-based services. Our businesses performed well because of the nondiscretionary aspect of maintaining an automobile. Our core customer has been driving and will continue to drive even with elevated gas prices. Our core customers are also benefiting from higher wages. (Driven Brands Holdings Q1 2022 Earnings Call, 4/27/2022)

Driven Brand’s CEO: “We offer nondiscretionary needs-based services. This means even as prices rise, consumers continue to get their vehicles repaired, maintained, washed and they’re all changed, and it will be very low on the list of services that are downsized when spending is squeezed.” “Jonathan Fitzpatrick — President and Chief Executive Officer: Our ability to leverage data analytics, to order in advance, leverage our scale, our balance sheet, strategic supplier partnerships and preferred vendor status means that we are taking share when others don’t have product. The last element of the inflation equation is retail pricing. We offer nondiscretionary needs-based services. This means even as prices rise, consumers continue to get their vehicles repaired, maintained, washed and they’re all changed, and it will be very low on the list of services that are downsized when spending is squeezed. (Driven Brands Holdings Q1 2022 Earnings Call, 4/27/2022)

Driven Brand’s CEO: “ The ability to pass on small percentage increases has been proven for nondiscretionary needs-based services.” “Jonathan Fitzpatrick — President and Chief Executive Officer: We continually evaluate our prices at our company stores to both protect our margins while still providing value to our customers. We have done this strategically over the past 18 months in our company Take 5 locations. And we have not seen any material negative impact to traffic or customer satisfaction. We will continue to manage price prudently to protect margins and ensure customers continue visiting our locations. Our franchisees, who manage their own pricing, are extremely adept at understanding how, when and where to take price. This is the ownership mentality at work. Our average check is $842 across the Driven portfolio, as low as $10 for car wash and as high as $3,500 for collision. The ability to pass on small percentage increases has been proven for nondiscretionary needs-based services.” (Driven Brands Holdings Q1 2022 Earnings Call, 4/27/2022)

Driven Brand’s CFO noted “average ticket benefited from pricing actions as a result of inflation as well as the increase in complexity of vehicles.” “Tiffany Mason — Executive Vice President and Chief Financial Officer: Same-store sales growth was 16% for the quarter. We posted double-digit comps each month of the quarter despite the surge of the Omicron variant in January and rising gas prices in March. And we once again outpaced the industry across all business segments. Our same-store sales grew through a combination of car count and average ticket increases. We continued to experience positive car count as a result of our best-in-class marketing and customer experience. And average ticket benefited from pricing actions as a result of inflation as well as the increase in complexity of vehicles. Now remember, we are approximately 80% franchised so not all segments contribute to revenue proportionately.” (Driven Brands Holdings Q1 2022 Earnings Call, 4/27/2022)

Driven Brand’s CFO: “we have passed along a series of retail price increases while maintaining our premium oil mix, driving an increase in average ticket.” “Tiffany Mason — Executive Vice President and Chief Financial Officer: Maintenance continues to benefit from more targeted digital marketing, and we have passed along a series of retail price increases while maintaining our premium oil mix, driving an increase in average ticket. In the first quarter, we also had a 30% attachment rate of ancillary products such as wiper blades, cabin air filters and cooling exchange, also contributing to a higher average ticket. The car wash segment posted positive same-store sales of 7%. The number of wash club members grew by an additional 100,000 in the first quarter, equating to approximately 50% of sales. (Driven Brands Holdings Q1 2022 Earnings Call, 4/27/2022)

Driven Brand’s CFO: “The positive ticket is driven by two things. It’s driven by inflation and our ability to pass along price to the consumer… our higher average ticket and our needs-based services, that affords us the ability to pass along any inflation we’re seeing.”“Tiffany Mason — Executive Vice President and Chief Financial Officer: So we saw positive car count, as I said in my scripted remarks. Positive car count as well as positive ticket overall for the business. Certainly, our — just given the current environment, our performance is skewed more toward tickets today than it is to car count, but we are seeing good momentum in both. The positive ticket is driven by two things. It’s driven by inflation and our ability to pass along price to the consumer. I think Jonathan and I both today spoke about the fact that with the — our higher average ticket and our needs-based services, that affords us the ability to pass along any inflation we’re seeing, and we’re doing that as we need to manage our costs as well as continue to drive — balancing that to continue to drive traffic. So we are also thus seeing the increased complexity of vehicles also to continue to drive ticket up. And I gave a statistic in my comments today about 30% attachment rates, specifically in our maintenance business, which is driving ticket as well. So all of those factors are driving our performance. If you just zero in on ticket for a minute, though, I would say it’s — if you’re thinking about mix versus price, it is in Q1 more driven by price than mix. Relative to the comps across the year, I think I said when we gave guidance last quarter, we expect the first half to be stronger than the second half just because compares are easier in the first half than the second. That’s still true today.” (Driven Brands Holdings Q1 2022 Earnings Call, 4/27/2022)