Driven Brands Holdings Inc.

Previous wording

The following discussion and analysis for Driven Brands Holdings Inc. and Subsidiaries (“Driven Brands,” “the Company,” “we,” “us,” or “our”) should be read in conjunction with our consolidated financial statements and the related notes to our consolidated financial statements included elsewhere in this Quarterly Report. We operate on a 52-or 53-week fiscal year, which ends on the last Saturday in December. The three and six months ended June 28, 2025 and June 29, 2024 were both 13 and 26 week periods, respectively.

Current wording

The following discussion and analysis for Driven Brands Holdings Inc. and Subsidiaries (“Driven Brands,” “the Company,” “we,” “us,” or “our”) should be read in conjunction with our consolidated financial statements and the related notes to our consolidated financial statements included elsewhere in this Quarterly Report. We operate on a 52-or 53-week fiscal year, which ends on the last Saturday in December. The three and nine months ended September 27, 2025 and September 28, 2024 were both 13 and 39 week periods, respectively.

Previous wording

Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of approximately 4,800 locations across 49 states in the U.S. and 13 other countries. Our scaled, diversified platform fulfills an extensive range of core retail and commercial automotive needs, including paint, collision, glass, and repair services, as well as a variety of more frequent services, such as oil changes and car washes. We have continued to grow our base of consistent recurring revenue through same store sales and adding new franchised and company-operated stores. Driven Brands generated net revenue of approximately $551 million and $1.1 billion during the three and six months ended June 28, 2025, respectively, an increase of 6% and 7% compared to the prior year period, and system-wide sales of approximately $1.6 billion and $3.2 billion during the three and six months ended June 28, 2025, respectively, an increase of 3% and 3% compared to the prior year period.

Current wording

Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of approximately 4,900 locations across 49 states in the U.S. and 13 other countries. Our scaled, diversified platform fulfills an extensive range of core retail and commercial automotive needs, including paint, collision, glass, and repair services, as well as a variety of more frequent services, such as oil changes and car washes. We have continued to grow our base of consistent recurring revenue through same store sales and adding new franchised and company-operated stores. Driven Brands generated net revenue of approximately $536 million and $1.6 billion during the three and nine months ended September 27, 2025, respectively, an increase of 7% and 7% compared to the prior year period, and system-wide sales of approximately $1.6 billion and $4.8 billion during the three and nine months ended September 27, 2025, respectively, a respective increase of 5% and 3% compared to the prior year period.

Previous wording

While we have achieved same store sales growth for 18 consecutive quarters, which we attribute to our diversified customer base and service offerings, we have experienced and expect to continue experiencing softening demand across several of our segments, primarily as a result of tariffs, inflationary pressures, increased competition, industry and macroeconomic dynamics, and negative weather patterns.

Current wording

We have experienced and expect to continue experiencing softening demand within certain businesses, primarily as a result of inflationary pressures, increased competition, industry and macroeconomic dynamics, tariffs, and negative weather patterns.

Previous wording

As previously disclosed in the Company’s 2024 Form 10-K, on February 24, 2025, the Company entered into a definitive agreement to sell its U.S. Car Wash business to Express Wash Operations, LLC dba Whistle Express Car Wash (the “Buyer”) for an aggregate purchase price of $385 million, subject to customary adjustments. Under the terms of the agreement, the Buyer agreed to pay the Company $255 million in cash and deliver to the Company an interest-bearing seller note (“Seller Note Receivable”) evidencing a loan of $130 million. The transaction was completed on April 10, 2025. In July 2025, the Company sold the Seller Note Receivable for $113 million.

Current wording

As previously disclosed in the Company’s 2024 Form 10-K, on February 24, 2025, the Company entered into a definitive agreement to sell its U.S. Car Wash business to Express Wash Operations, LLC dba Whistle Express Car Wash (the “Buyer”) for an aggregate purchase price of $385 million, subject to customary adjustments. Under the terms of the agreement, the Buyer agreed to pay the Company $255 million in cash and deliver to the Company an interest-bearing seller note (“Seller Note”) evidencing a loan of $130 million. The transaction was completed on April 10, 2025. In July 2025, the Company sold the Seller Note for $113 million.

Previous wording

We recognized net income from continuing operations of $29 million, or $0.18 per diluted share, for the six months ended June 28, 2025, compared to $49 million, or $0.30 per diluted share, for the six months ended June 29, 2024. The decrease of approximately $20 million was primarily due to the following:

Current wording

We recognized net income from continuing operations of $61 million, or $0.37 per diluted share, for the three months ended September 27, 2025 compared to a net loss of $11 million, or $0.07 loss per diluted share, for the three months ended September 28, 2024. The improvement of approximately $72 million was primarily due to the following:

Previous wording

•Net revenue increased 6% to $551 million, driven by company-operated store sales, primarily due to net new store growth and same store sales growth within our Take 5 segment and independently-operated store sales due to same store sales growth within our Car Wash segment. These increases were partially offset by the absence of supply and other revenue relating to the sale of our Canadian distribution business in the third quarter of 2024 and decreased same store sales within our Franchise Brands segment.

Current wording

•net new store growth within the Take 5 segment;

Previous wording

•losses on the sale or disposal of fixed assets;

Current wording

•decreased net losses on the sale or disposal of fixed assets;

Previous wording

•Consolidated same store sales increased 1.7%.

Current wording

•Consolidated same store sales increased 2.8%.

Previous wording

•The Company added 52 net new stores during the quarter.

Current wording

•The Company added 39 net new stores during the quarter.

Previous wording

Q2 2025 Six Months Ended Highlights and Key Performance Indicators

Current wording

Q3 2025 Nine Months Ended Highlights and Key Performance Indicators

Previous wording

We recognized net income from continuing operations of $12 million, or $0.07 per diluted share, for the three months ended June 28, 2025 compared to $37 million, or $0.22 per diluted share, for the three months ended June 29, 2024. The decrease of approximately $25 million was primarily due to the following:

Current wording

We recognized net income from continuing operations of $90 million, or $0.55 per diluted share, for the nine months ended September 27, 2025, compared to $37 million, or $0.23 per diluted share, for the nine months ended September 28, 2024. The increase of approximately $53 million was primarily due to the following:

Previous wording

•Net income from continuing operations decreased 68% to $12 million or $0.07 per diluted share. The change primarily related to same store sales growth, predominately within the Take 5 and Car Wash segments and net new store growth within the Take 5 segment, partially offset by negative same store sales growth within the Franchise Brands segment and higher selling, general, and administrative costs reflective of the Company’s growth. In addition, increased losses relating to the Seller Note Receivable, sale or disposal of fixed assets, and the absence of earnings relating to the sale of our Canadian distribution business in the third quarter of 2024, partially offset by a positive impact from foreign exchange more than offset increases to our Net income from continuing operations delivered by our underlying business.

Current wording

•a positive impact from foreign exchange.

Previous wording

Adjusted Net Income was $103 million for the six months ended June 28, 2025 compared to $100 million for the six months ended June 29, 2024. This increase of approximately $3 million was primarily due to the following:

Current wording

Adjusted Net Income was $160 million for the nine months ended September 27, 2025 compared to $138 million for the nine months ended September 28, 2024. This increase of approximately $22 million was primarily due to the following:

Previous wording

•Consolidated same store sales increased by 1.2%.

Current wording

•Consolidated same store sales increased by 1.7%.

Previous wording

•The Company added 184 net new stores during the trailing twelve months.

Current wording

•The Company added 167 net new stores during the trailing twelve months.

Previous wording

Adjusted EBITDA —We define Adjusted EBITDA as earnings from continuing operations before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition related costs, equity compensation, loss on debt extinguishment, foreign currency transaction related gains or losses, cloud computing amortization, and certain non-recurring and non-core, infrequent or unusual charges. Adjusted EBITDA is a supplemental measure of operating performance of our segments and may not be comparable to similar measures reported by other companies. Adjusted EBITDA is a performance metric utilized by our Chief Operating Decision Maker to allocate resources to and assess performance of our segments. Refer to Note 4 in our consolidated financial statements for a reconciliation of reportable segment Adjusted EBITDA to income from continuing operations before taxes for the three and six months ended June 28, 2025 and June 29, 2024.

Current wording

Adjusted EBITDA —We define Adjusted EBITDA as earnings from continuing operations before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition related costs, equity compensation, loss on debt extinguishment, foreign currency transaction related gains or losses, cloud computing amortization, and certain non-recurring and non-core, infrequent or unusual charges. Adjusted EBITDA is a supplemental measure of operating performance of our segments and may not be comparable to similar measures reported by other companies. Adjusted EBITDA is a performance metric utilized by our Chief Operating Decision Maker to allocate resources to and assess performance of our segments. Refer to Note 4 in our consolidated financial statements for a reconciliation of reportable segment Adjusted EBITDA to income from continuing operations before taxes for the three and nine months ended September 27, 2025 and September 28, 2024.

Previous wording

The following table sets forth our key performance indicators for the three and six months ended June 28, 2025 and June 29, 2024:

Current wording

The following table sets forth our key performance indicators for the three and nine months ended September 27, 2025 and September 28, 2024:

Previous wording

The following table provides a reconciliation of Net Income from continuing operations to Adjusted Net Income and Adjusted Earnings per Share:

Current wording

The following table provides a reconciliation of Net Income (Loss) from continuing operations to Adjusted Net Income and Adjusted Earnings per Share:

Previous wording

(a) Consists of acquisition costs as reflected within the consolidated statements of operations, including legal, consulting and other fees, and expenses incurred in connection with acquisitions completed during the applicable period, as well as inventory rationalization expenses incurred in connection with acquisitions. As acquisitions occur in the future we expect to incur similar costs and, under U.S. GAAP, such costs relating to acquisitions are expensed as incurred and not capitalized.

Current wording

(a)Consists of acquisition costs as reflected within the consolidated statements of operations, including legal, consulting and other fees, and expenses incurred in connection with acquisitions completed during the applicable period, as well as inventory rationalization expenses incurred in connection with acquisitions. As acquisitions occur in the future, we expect to incur similar costs and, under U.S. GAAP, such costs relating to acquisitions are expensed as incurred and not capitalized.

Previous wording

(b) Consists of discrete items and project costs, including third-party professional costs associated with strategic transformation initiatives as well as non-recurring payroll-related costs.

Current wording

(b)Consists of discrete items and project costs, including third-party professional costs associated with strategic transformation initiatives as well as non-recurring payroll-related costs and non-ordinary course legal settlements.

Previous wording

(d) Represents non-cash share-based compensation expense.

Current wording

(d)Represents non-cash share-based compensation expense.

Previous wording

(e)Represents foreign currency transaction (gains) losses, net that primarily related to the remeasurement of our intercompany loans as well as gains and losses on cross currency swaps and forward contracts.

Current wording

(e)Represents foreign currency transaction (gains) losses, net that primarily related to the remeasurement of our intercompany loans as well as gains and losses on cross currency swaps.

Previous wording

(f) Consists of the following items (i) (gains) losses, net on sale leasebacks, disposal of assets, or sale of business; (ii) net losses (gains) on sale for assets held for sale; (iii) impairment of certain fixed assets and operating lease right-of-use assets related to closed and underperforming locations, lease exit costs and other costs associated with stores that were closed prior to the respective lease termination dates; and (iv) unrealized loss on fair value of the Seller Note Receivable.

Current wording

(f)Consists of the following items (i) (gains) losses, net on sale leasebacks, disposal of assets, or sale of business; (ii) net losses (gains) on sale for assets held for sale; (iii) impairment of certain fixed assets and operating lease right-of-use assets related to closed and underperforming locations, lease exit costs and other costs associated with stores that were closed prior to the respective lease termination dates; and (iv) loss on fair value of the Seller Note.

Previous wording

(g)Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the consolidated statement of operations.

Current wording

(h)Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the consolidated statement of operations.

Previous wording

(h)Represents valuation allowances on income tax carryforwards in certain domestic jurisdictions that are not more likely than not to be realized.

Current wording

(j)Represents valuation allowances on income tax carryforwards in certain jurisdictions that are not more likely than not to be realized.

Previous wording

(i)Represents the tax impact of adjustments associated with the reconciling items between net income from continuing operations and Adjusted Net Income, excluding the provision for uncertain tax positions and valuation allowance for certain deferred tax assets. To determine the tax impact of the deductible reconciling items, we utilized statutory income tax rates ranging from 9% to 36% depending upon the tax attributes of each adjustment and the applicable jurisdiction.

Current wording

(k)Represents the tax impact of adjustments associated with the reconciling items between net income from continuing operations and Adjusted Net Income, excluding the provision for uncertain tax positions and valuation allowance for certain deferred tax assets. To determine the tax impact of the deductible reconciling items, we utilized statutory income tax rates ranging from 9% to 36% depending upon the tax attributes of each adjustment and the applicable jurisdiction.

Previous wording

Independently-operated store sales (comprised entirely of sales from the international car wash locations) increased by $12 million, or 19%, primarily due to same store sales growth as a result of increased volume and improved price realization.

Current wording

Independently-operated store sales (comprised entirely of sales from the Car Wash segment) increased by $1 million, or 3%, primarily due to same store sales growth as a result of improved price realization.

Previous wording

Advertising fund contributions increased $2 million, or 9%, due to franchise system-wide sales mix. Our franchise agreements typically require the franchisee to pay continuing advertising fund fees based on a percentage of franchisee gross sales or a stated fee.

Current wording

Advertising fund contributions increased $1 million, or 4%, due to increased franchise system-wide sales. Our franchise agreements typically require the franchisee to pay continuing advertising fund fees based on a percentage of franchisee gross sales or a stated fee.

Previous wording

Supply and other revenue decreased $12 million, or 15%, primarily due to the inclusion of $18 million of supply and other revenue from our Canadian distribution business in the three months ended June 29, 2024 compared to no revenue in the current quarter as a result of the sale of that business in the third quarter of 2024. The decrease was also due to a decrease in supply revenue within Franchise Brands due to lower volume, partially offset by increased supply revenue within Take 5.

Current wording

Supply and other revenue decreased $3 million, or 4%, primarily due to the absence of supply and other revenue in 2025 from our Canadian distribution business, which was sold in the third quarter of 2024, partially offset by increased supply sales primarily within the Take 5 segment.

Previous wording

Company-operated store expenses increased $24 million, or 7%, primarily due to variable costs associated with increased Take 5 company-operated store sales in the current period as well as store related costs associated with 76 net new company-operated stores in the current period compared to the prior year period.

Current wording

Company-operated store expenses increased $16 million, or 9%, corresponding to variable costs associated with increased Take 5 company-operated store sales in the current period as well as store related costs associated with 82 net new company-operated stores.

Previous wording

Independently-operated store expenses (comprised entirely of expenses from the international car wash locations) increased $6 million, or 19%, primarily related to variable costs associated with the increase in sales.

Current wording

Independently-operated store expenses (comprised entirely of sales from the Car Wash segment) increased $1 million, or 3%, primarily related to variable costs associated with the increase in sales as well as increased rent and utility costs.

Previous wording

Advertising fund expenses increased $2 million, or 9%, which is commensurate to advertising fund contributions during the period. Advertising fund expenses generally trend consistent with advertising fund contributions.

Current wording

Advertising fund expenses increased $1 million, or 4%, which is commensurate to advertising fund contributions during the period. Advertising fund expenses generally trend consistent with advertising fund contributions.

Previous wording

Depreciation and amortization expense increased $2 million, or 6%, primarily relating to 76 net new company-operated stores in the current period compared to the prior year period.

Current wording

Depreciation and amortization expense increased $1 million, or 4%, primarily relating to 82 net new company-operated stores in the current period compared to the prior year period.

Previous wording

The foreign currency transaction gain for the three months ended June 28, 2025 was primarily comprised of $17 million on transaction gains in our foreign operations, partially offset by a loss on foreign currency hedges of $5 million. The foreign currency transaction gain for the three months ended June 29, 2024 was primarily comprised of transaction losses in our foreign operations of over $2 million, partially offset by a gain of less than $2 million on foreign currency hedges.

Current wording

The foreign currency transaction gain for the three months ended September 27, 2025 was primarily comprised of $4 million on transaction gains in our foreign operations and a gain on foreign currency hedges of $1 million. The foreign currency transaction loss for the three months ended September 28, 2024 was primarily comprised of a loss on foreign currency hedges of $2 million, partially offset by a gain of $1 million on transaction gains in our foreign operations.

Previous wording

The effective tax rate for the six months ended June 28, 2025 was 32.6% compared to 37.1% for the six months ended June 29, 2024. The effective income tax rate differs from the U.S. federal statutory rate of 21% primarily due to non-deductible share-based compensation, limitation on interest deduction in certain foreign jurisdictions, state taxes related to pre-tax income, and U.S. tax impacts of its foreign operations.

Current wording

The effective income tax rate in both periods primarily differs from the U.S. federal statutory rate of 21% primarily due to non-deductible share-based compensation, limitation on interest deduction in certain foreign jurisdictions, state taxes related to pre-tax income, and U.S. tax impacts of its foreign operations. The current period includes the release of a valuation allowance of $37 million, which incorporates the impact from the enactment of OBBBA, which increased the Company’s interest expense limitation under Section 163(j).

Previous wording

Independently-operated store sales (comprised entirely of sales from the international car wash locations) increased $25 million, or 22%, primarily due to same store sales growth as a result of increased volume and improved price realization.

Current wording

Independently-operated store sales (comprised entirely of sales from the Car Wash segment) increased $27 million, or 16%, primarily due to same store sales growth as a result of increased volume and improved price realization.

Previous wording

Advertising fund contributions increased by $3 million, or 7%, primarily due to changes in the mix of system-wide sales among franchised brands. Our franchise agreements typically require the franchisee to pay continuing advertising fund fees based on a percentage of the franchisee’s gross sales or a stated fee.

Current wording

Advertising fund contributions increased by $4 million, or 6%, primarily due to increased franchise system-wide sales. Our franchise agreements typically require the franchisee to pay continuing advertising fund fees based on a percentage of franchisee gross sales or a stated fee.

Previous wording

Supply and other revenue decreased $22 million, or 14%, primarily due to the inclusion of $33 million of supply and other revenue from our Canadian distribution business in the six months ended June 29, 2024 compared to no revenue in the current quarter as a result of the sale of that business in the third quarter of 2024 as well as decreased supply revenue within Franchise Brands due to lower volume, partially offset by increased supply revenue within Take 5.

Current wording

Supply and other revenue decreased $25 million, or 11%, primarily due to the absence of supply and other revenue in 2025 from our Canadian distribution business, which was sold in the third quarter of 2024, partially offset by increased supply sales within the Take 5 segment.

Previous wording

Company-operated store expenses increased $12 million, or 7%, primarily due to variable costs associated with increased Take 5 company-operated store sales in the current period as well as store related costs associated with 76 net new company-operated stores in the current period compared to the prior year period.

Current wording

Company-operated store expenses increased $40 million, or 8%, corresponding to variable costs associated with increased Take 5 company-operated store sales in the current period as well as store related costs associated with 82 net new company-operated stores in the current period compared to the prior year period.

Previous wording

Independently-operated store expenses (comprised entirely of expenses from the international car wash locations) increased $13 million, or 22%, primarily related to variable costs associated with the increase in sales.

Current wording

Independently-operated store expenses (comprised entirely of sales from the Car Wash segment) increased $14 million, or 15%, primarily related to variable costs associated with the increase in sales as well as increased rent and utility costs.