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 months ended March 28, 2026 and March 29, 2025, were both 13 week periods.

Current wording

The following discussion and analysis for Driven Brands Holdings Inc. and its 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 27, 2026 and June 28, 2025, were both 13 and 26 week periods, respectively.

Previous wording

Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of over 4,200 locations across 49 U.S. states and Canada. Our scaled, diversified platform fulfills an extensive range of core retail and commercial automotive needs, including oil change, paint, collision, glass, and repair services. We have continued to consistently grow our revenue through same store sales growth and adding new franchised and company-operated stores. Driven Brands generated net revenue of approximately $484 million during the three months ended March 28, 2026, an increase of 8% compared to the prior year and system-wide sales of approximately $1.6 billion during the three months ended March 28, 2026, an increase of 6% from the prior year.

Current wording

Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of over 4,300 locations across 49 U.S. states and Canada. Our scaled, diversified platform fulfills an extensive range of core retail and commercial automotive needs, including oil change, paint, collision, glass, and repair services. We have continued to consistently grow our revenue through same store sales growth and adding new franchised and company-operated stores. Driven Brands generated net revenue of approximately $507 million and $992 million during the three and six months ended June 27, 2026, respectively, an increase of 7%, respectively, compared to the prior year and system-wide sales of approximately $1.6 billion and $3.2 billion during the three and six months ended June 27, 2026, respectively, an increase of 5%, respectively, from the prior year.

Previous wording

The broader operating environment in which we conduct our business is subject to a number of macroeconomic and industry-specific factors that may affect our performance. We have experienced softening demand within certain businesses, primarily as a result of inflationary pressures, increased competition, industry and macroeconomic dynamics, possible future tariffs, global conflicts, and negative weather patterns. We believe the impact of inflation on consumer demand and our cost structure could be significant throughout the remainder of 2026.

Current wording

The broader operating environment in which we conduct our business is subject to a number of macroeconomic and industry-specific factors that may affect our performance, including inflationary pressures, increased competition, industry and macroeconomic dynamics, tariffs, global conflicts, including the conflict in the Middle East, and negative weather patterns. We have experienced softening demand within certain of our businesses, primarily as a result of inflationary pressures, which have weighed on spending particularly by lower-income consumers. We believe these factors could adversely affect our net revenue, same store sales, and Adjusted EBITDA throughout the remainder of 2026. For a discussion of the effects of these factors on our segments, see “Segment Results of Operations.”

Previous wording

As described in Note 3 -Restatement of Previously Issued Consolidated Financial Statements included in Item 1, certain financial information as of and for the three months ended March 29, 2025 was previously restated (the "Restatement"). Part I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations has been updated to reflect the effects of the Restatement of our consolidated financial statements. We incurred $9 million in non-recurring costs related to the Restatement during the three months ended March 28, 2026.

Current wording

As previously disclosed and as described in Note 3 -Restatement of Previously Issued Consolidated Financial Statements included in Item 1, certain financial information as of and for the three and six months ended June 28, 2025 was previously restated (the "Restatement"). Part I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations has been updated to reflect the effects of the Restatement of our consolidated financial statements. We incurred $12 million and $21 million in non-recurring costs related to the Restatement during the three and six months ended June 27, 2026, respectively. We expect to continue to incur non-recurring costs in connection with the Restatement and our related remediation efforts throughout the remainder of 2026, including in connection with the completion of audit procedures relating to the financial statements of our securitization subsidiaries. See Note 6 to our consolidated financial statements.

Previous wording

Q1 2026 Highlights and Key Performance Indicators

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Q2 2026 Three Months Ended June 27, 2026 Highlights and Key Performance Indicators

Previous wording

We recognized net income from continuing operations of $24 million, or $0.14 per diluted share, for the three months ended March 28, 2026, compared to $14 million, or $0.08 per diluted share, for the three months ended March 29, 2025. The increase of approximately $10 million was primarily due to the following:

Current wording

We recognized net income from continuing operations of $37 million, or $0.23 per diluted share, for the three months ended June 27, 2026, compared to $16 million, or $0.10 per diluted share, for the three months ended June 28, 2025. The increase of approximately $21 million was primarily due to the following:

Previous wording

•reduced share-based compensation of $6 million primarily associated with pre-IPO awards that vested in the second quarter of 2025.

Current wording

•reduced share-based compensation of $6 million primarily associated with pre-IPO awards that vested in the second quarter of 2025; and

Previous wording

•increased foreign currency transaction losses of $9 million;

Current wording

•increased foreign currency transaction losses of $1 million in the current quarter compared to gains of $9 million in the prior year quarter; and

Previous wording

Adjusted Net Income was $49 million for the three months ended March 28, 2026 compared to $39 million for the three months ended March 29, 2025. This increase of approximately $10 million was primarily due to the following:

Current wording

Adjusted Net Income was $48 million for the three months ended June 27, 2026 compared to $49 million for the three months ended June 28, 2025. This decrease of approximately $1 million was primarily due to the following:

Previous wording

•Consolidated same store sales increased by 2.1%.

Current wording

•Consolidated same store sales increased by 1.4%.

Previous wording

•Consolidated system-wide sales increased $86 million.

Current wording

•Consolidated system-wide sales increased $76 million, or 5%.

Previous wording

•The Company added 202 net new stores during the trailing twelve months.

Current wording

•The Company added 192 net new stores during the trailing twelve months.

Previous wording

Supply and other revenue increased $8 million, or 12%, primarily due to increased supply sales primarily associated with Take 5 franchised store growth.

Current wording

•increased supply sales, primarily associated with Take 5 franchised store growth;

Previous wording

•decreased fixed asset losses and asset impairments of $9 million primarily relating to U.S. Car Wash assets that were not included in the disposal group in the prior year; and

Current wording

•decreased fixed asset losses and asset impairments of $43 million primarily relating to U.S. Car Wash assets that were not included in the divestiture of the U.S. Car Wash business; and

Previous wording

•increased cloud computing amortization of $3 million related to additional cloud computing arrangements placed in service during the trailing 12 months.

Current wording

•increased cloud computing amortization of $5 million related to additional cloud computing arrangements placed in service during the trailing 12 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, cloud computing amortization, share-based compensation, loss on debt extinguishment, foreign currency transaction related gains or losses, 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 months ended March 28, 2026 and March 29, 2025.

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, cloud computing amortization, share-based compensation, loss on debt extinguishment, foreign currency transaction related gains or losses, 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 27, 2026 and June 28, 2025.

Previous wording

The following table sets forth our key performance indicators for the three months ended March 28, 2026 and March 29, 2025:

Current wording

The following table sets forth our key performance indicators for the three and six months ended June 27, 2026 and June 28, 2025:

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 and non-ordinary course legal settlements.

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 reserves and settlements.

Previous wording

(f)Consists of the following items (i) asset impairments, (ii) (gains) losses, net on sale leasebacks, disposal of assets, including assets held for sale, or sale of business; and (iii) closed store expenses.

Current wording

(f)Consists of the following items (i) asset impairments, (ii) losses, net on sale leasebacks, disposal of assets, including assets held for sale, or sale of business; and (iii) closed store expenses.

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

(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 21% to 26.5% depending upon the tax attributes of each adjustment and the applicable jurisdiction.

Previous wording

Franchise royalties and fees increased by $3 million, or 6%, primarily due to increased franchise system-wide sales of $63 million, which was primarily driven by 123 net new franchised stores as well as same store sales growth for both Take 5 and Franchise Brands.

Current wording

Franchise royalties and fees increased by $2 million, or 5%, primarily due to increased franchise system-wide sales of $56 million, which was primarily driven by 109 net new franchised stores as well as same store sales growth for both Take 5 and Franchise Brands.

Previous wording

Advertising fund contributions increased by $4 million, or 14%, primarily due to increased franchise system-wide sales of $63 million including system-wide sales from 123 net new franchised stores. Our franchise agreements typically require the franchisee to pay continuing advertising fund fees based on a percentage of gross sales or a stated fee.

Current wording

Advertising fund contributions increased by $3 million, or 11%, primarily due to increased franchise system-wide sales of $56 million primarily as a result of 109 net new franchised stores and same store sales growth. Our franchise agreements typically require the franchisee to pay continuing advertising fund fees based on a percentage of gross sales or a stated fee.

Previous wording

Company-operated store expenses increased $8 million, or 4%, primarily related to store-related costs associated with 79 net new Take 5 company-operated stores as well as variable costs associated with increased Take 5 and Auto Glass Now company-operated store sales during the current period.

Current wording

Company-operated store expenses increased $16 million, or 8%, primarily related to store-related costs associated with 93 net new Take 5 company-operated stores as well as variable costs associated with increased Take 5 and Auto Glass Now company-operated store sales during the current period.

Previous wording

Advertising fund expenses increased by $4 million, or 14%, which is commensurate with the increase to advertising fund contributions during the period. Advertising fund expenses generally trend consistent with advertising fund contributions.

Current wording

Advertising fund expenses increased by $3 million, or 11%, which is commensurate with the increase to advertising fund contributions during the period. Advertising fund expenses generally trend consistent with advertising fund contributions.

Previous wording

Supply and other expenses increased $4 million, or 12%, primarily due to costs associated with the increased Take 5 supply revenue.

Current wording

Supply and other expenses increased $5 million, or 12%, primarily due to costs associated with the increased Take 5 supply revenue.

Previous wording

Depreciation and amortization expense increased $1 million, or 5%, primarily due to 79 net new Take 5 company-operated stores.

Current wording

Depreciation and amortization expense increased $3 million, or 16%, primarily due to 93 net new Take 5 company-operated stores.

Previous wording

Interest expense, net decreased $13 million, or 35%, driven by the full repayment of the Company’s Term Loan Facility in the third quarter of 2025, decreased borrowings on the Revolving Credit Facility, and repayments of securitized senior notes.

Current wording

Interest expense, net decreased $10 million, or 33%, driven by repayments of securitized senior notes, decreased borrowings on the Revolving Credit Facility, and the full repayment of the Company’s Term Loan Facility in the third quarter of 2025.

Previous wording

The foreign currency transaction loss for the three months ended March 28, 2026 was primarily comprised of transaction losses of $4 million in our foreign operations and a loss on foreign currency hedges of $5 million. The foreign currency transaction gain for the three months ended March 29, 2025 was primarily comprised of transaction gains in our foreign operations of less than $1 million and a gain on foreign currency hedges of less than $1 million.

Current wording

The foreign currency transaction loss for the three months ended June 27, 2026 was primarily comprised of transaction losses of approximately $3 million in our foreign operations, offset by a gain on foreign currency hedges of approximately $2 million. The foreign currency transaction gain for the three months ended June 28, 2025 was primarily comprised of transaction gains in our foreign operations of approximately $13 million, offset by a loss on foreign currency hedges of approximately $4 million.

Previous wording

Income tax expense was $9 million for the three months ended March 28, 2026 compared to an income tax expense of $5 million for the three months ended March 29, 2025. The effective income tax rate for both periods is greater than the U.S. federal statutory rate of 21% primarily due to non-deductible share-based compensation and U.S. state and local income taxes.

Current wording

Income tax expense was $14 million for the three months ended June 27, 2026 compared to an income tax expense of $8 million for the three months ended June 28, 2025. The effective income tax rate for both periods is greater than the U.S. federal statutory rate of 21% primarily due to non-deductible share-based compensation and U.S. state and local income taxes.

Previous wording

Company-operated store sales increased $23 million, or 7%, which was primarily driven by 79 net new Take 5 company-operated store openings as well as Take 5 and Auto Glass Now same store sales growth.

Current wording

Company-operated store sales increased $42 million, or 7%, which was primarily driven by 93 net new Take 5 company-operated store openings as well as Take 5 and Auto Glass Now same store sales growth.

Previous wording

Selling, general, and administrative expenses increased $7 million, or 6%, due to $9 million in non-recurring fees associated with the Restatement and remediation plan, increased cloud computing amortization of $3 million, as well as increased advertising expenses and IT costs associated with total company growth in the current period. These increases were partially offset by a decrease in fixed asset losses and asset impairments of $9 million relating to U.S. Car Wash assets that were not included in the disposal group in the prior year as well as a reduction of share-based compensation expenses of $6 million primarily associated with pre-IPO awards that vested in the second quarter of 2025.

Current wording

Selling, general and administrative expenses decreased $14 million, or 5%, due to a decrease in fixed asset losses and asset impairments of $43 million relating to U.S. Car Wash assets that were not included in the divestiture of the U.S. Car Wash business, as well as a reduction of share-based compensation expenses of $11 million primarily associated with pre-IPO awards that vested in the second quarter of 2025. These decreases were partially offset by an increase of $21 million in non-recurring fees associated with the Restatement and remediation plan, increased cloud computing amortization of $5 million, as well as increased advertising expenses and IT costs associated with total company growth in the current period.

Previous wording

Loss on debt extinguishment for the three months ended March 28, 2026 related to the Company’s partial repayment of the 2020-1 Senior Notes and full repayment of the 2019-2 Senior Notes.

Current wording

Loss on debt extinguishment for the six months ended June 27, 2026 related to the Company’s partial repayment of the 2020-1 Senior Notes and full repayment of the 2019-2 Senior Notes.

Previous wording

We assess the performance of our segments based on Adjusted EBITDA, which is defined 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. Shared services costs are not allocated to these segments and are included in Corporate and Other. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies due to differences in methods of calculation.

Current wording

We assess the performance of our segments based on Adjusted EBITDA, which is defined as earnings from continuing operations before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition related costs, share-based 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. Shared services costs are not allocated to these segments and are included in Corporate and Other. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies due to differences in methods of calculation. Certain percentages presented in this section have been rounded, therefore, totals may not equal the sum of the line items in the tables below.

Previous wording

Take 5 net revenue increased $28 million, or 10%, driven primarily by a $21 million increase in company-operated store sales from same store sales growth and 91 net new company-operated stores. In addition, supply and other revenue increased by $5 million, or 14%, primarily due to higher franchise system-wide sales. Franchise royalties and fees increased by $2 million, or 28%, primarily due to a $33 million, or 24%, increase in franchise system-wide sales from same store sales growth and 77 net new franchised stores.

Current wording

Take 5 net revenue increased $31 million, or 10%, driven primarily by a $20 million increase in company-operated store sales from same store sales growth and 93 net new company-operated stores. In addition, supply and other revenue increased by $9 million, or 24%, primarily due to higher franchise system-wide sales. Franchise royalties and fees increased by $2 million, or 23%, commensurate with the increase in franchise system-wide sales from same store sales growth and store growth of franchised stores.

Previous wording

Take 5 Adjusted EBITDA increased $13 million, or 14%, primarily driven by net revenue due to net store growth and same store sales growth, partially offset by variable costs directly associated with the increased company-operated store sales.

Current wording

Take 5 Adjusted EBITDA increased $8 million, or 8%, primarily driven by net revenue due to net store growth and same store sales growth, partially offset by variable costs directly associated with the increased company-operated store sales.

Previous wording

Franchise Brands Adjusted EBITDA decreased $2 million, or 4%, primarily due to increased general and administrative charges and decreased net revenue.

Current wording

Franchise Brands Adjusted EBITDA decreased $2 million, or 5%, primarily driven by increased technology costs.

Previous wording

Auto Glass Now net revenue increased $4 million, or 6%, driven primarily by same store sales growth.

Current wording

Auto Glass Now net revenue increased $2 million, or 2%, driven primarily by same store sales growth.

Previous wording

Franchise Brands net revenue decreased less than $1 million, or 1%, driven by the sale of two company-operated stores to a franchisee in the current period, partially offset by an increase in franchise system-wide sales of $30 million, or 3% which resulted in increased supply revenue and franchised royalties and fees.

Current wording

Franchise Brands net revenue decreased $4 million, or 3%, driven by the sale of two company-operated stores to a franchisee in the first quarter of 2026, as well as a decrease in supply and other revenue, partially offset by an increase in franchise system-wide sales.

Previous wording

At March 28, 2026, the Company had total liquidity of $804 million consisting of $133 million in cash and cash equivalents and $671 million of undrawn capacity on its variable funding securitization senior notes and Revolving Credit Facility. This does not include the additional $135 million 2022-1 Securitization Senior Notes that would expand the Company’s variable funding note borrowing capacity if the Company elects to exercise them, assuming certain conditions continue to be met.

Current wording

At June 27, 2026, the Company had total liquidity of $855 million consisting of $184 million in cash and cash equivalents and $671 million of undrawn capacity on its variable funding securitization senior notes and Revolving Credit Facility. This does not include the additional $135 million 2022-1 Securitization Senior Notes that would expand the Company’s variable funding note borrowing capacity if the Company elects to exercise them, assuming certain conditions continue to be met.

Previous wording

The following table illustrates the main components of our cash flows for the three months ended March 28, 2026 and March 29, 2025:

Current wording

The following table illustrates the main components of our cash flows for the six months ended June 27, 2026 and June 28, 2025: