Driven Brands at Baird Conference: Strategic Shift to Take Five

On Tuesday, June 3, 2025, Driven Brands (NYSE:DRVN) participated in the Baird Global Consumer, Technology & Services Conference. The company outlined its strategic focus on the Take Five brand, emphasizing its growth potential and operational strengths. While highlighting the positive trajectory of Take Five, the company also addressed challenges such as the CEO transition and its deleveraging strategy.

Key Takeaways

• Take Five is identified as the primary growth engine, with plans for significant expansion.
• Driven Brands aims to reach a 3x net leverage target by the end of 2026.
• The company is shifting focus from car washes to prioritize Take Five.
• The CEO transition from Jonathan to Danny is expected to enhance operational focus.
• The company sees limited tariff exposure due to strategic sourcing.

Financial Results

• Same Store Sales: Take Five’s same-store sales increased by 8% in Q1.
• Unit Economics (Take Five):

- Build cost ranges from $1.1 million to $1.5 million per location.

- Franchisees see a cash-on-cash return of approximately 30%.

- Margins are in the mid-30s.

• CapEx: Guided to 6.5% to 7.5% of sales for the year.
• Adjusted EBITDA: Projected between $520 million and $550 million for the year.
• Debt and Leverage: Aiming for 3x net leverage by end of 2026.
• Non-Oil Change Revenue: Accounts for about 20% of total revenue.
• Premiumization: Premium oil mix is around 90%, with semi-synthetic blends dominating.

Operational Updates

• Take Five Expansion:

- A pipeline of 1,000 units, with 175-200 new units expected this year.

- Transitioning to a 50/50 corporate/franchise mix for new openings, moving towards a 2/3 franchise, 1/3 corporate split.

• Franchise Business: Generates substantial cash flow and builds B2B relationships.
• Glass Business (AGN): Focus on securing insurance relationships and improving operations.
• Driven Advantage: Leverages purchasing power for economies of scale.
• Car Wash Business: International operations in the UK and Germany are stable.

Future Outlook

• Take Five Growth: Continued comp growth expected through the year, with stable transaction numbers.
• CapEx Allocation: Half of CapEx is dedicated to Take Five growth, with a decrease as the U.S. car wash business is no longer owned.
• Deleveraging: Committed to reaching 3x net leverage by 2026.
• Glass Business (AGN): Continued focus on insurance partnerships.
• Driven Advantage: Potential expansion to external customers.

Q&A Highlights

• Tariffs: Limited exposure due to non-discretionary services and strategic sourcing.
• International Car Wash: Stability due to market leadership in the UK and Germany.
• Free Cash Flow: Indicated as healthy, though not explicitly detailed.
• Deleveraging: Driven by strong cash flow.
• Misunderstood Aspect: The strength and uniqueness of the Take Five business.

Driven Brands’ strategic focus on Take Five and its financial targets were thoroughly discussed during the conference. Readers can refer to the full transcript for more detailed insights.

Full transcript - Baird Global Consumer, Technology & Services Conference 2025:

Justin Klabur, Analyst, Baird: Everyone, my name is Justin Klabur. I cover retail consumer products and services here at Baird. Pleased to introduce our next session with Driven Brands. For those of you not familiar with the company, Driven is the largest automotive services platform in North America, just around 4,800 locations today. They provide needs based essential services such as oil chains, maintenance, paint, collision and glass work.

Roughly 80% of those locations are either franchised or independently operated. The company recently divested its U. S. Car wash business, which I’m sure we’ll talk about. That removed the most capital intensive, most discretionary piece of the portfolio.

So the free cash flow in the business is at an inflection point and that’s helping the company delever. With us from the company today, to my immediate left, is CFO Mike Diamond, who joined in August of last year. And we also have Joel Arnaud, who leads FP and A, Treasury and IR. So thank you both for being here today.

Mike Diamond, CFO, Driven Brands: Thank you. Mike,

Justin Klabur, Analyst, Baird: maybe a question for you since you are newer to the CFO seat. Just your path to the company, what attracted you to the role? And then what are some of the key deliverables you’ve been focused on since you took over the role?

Mike Diamond, CFO, Driven Brands: Yeah, so great to see everybody. Thank you for being here. Prior to my time at Driven, I spent a little over four years at Michaels public and then private, and then six years at Yum! Working mainly with Pizza Hut. And so a lot of experience with the franchise system and different franchise brands and engaging in the roles of franchisor.

What attracted me to Driven was really threefold. Think, one, you look specifically at Take Five and the trajectory that Take Five is on, it’s in this magical little place in the retail growth curve where it can put a lot of new units in the ground, still see a lot of good comp growth and having, I want to say this chair, having been in more established slower growing brands to really be part of something that is making fun capital allocation decisions on how to appropriately accelerate growth was really exciting. I think second, the end markets that Driven plays in are are really quite attractive. You know, as we think about all the economic uncertainty over the last even just several months, if not several quarters, to be in a nondiscretionary space around transportation that is fairly well protected from some of the storms that can buffet the overall economy. It was really an interesting place to be in.

And then third, it’s a company, set aside Take Five for a second, that is growing. And I thought with my experience as a franchisor, both good and bad, seeing positives and negatives, I thought I could bring something too driven, particularly given what I thought was a path to drive significant equity growth in the business. And so what have I been focused on? I mean, I think you can probably hear the red thread there. One is growth.

How do we make sure we allocate capital in a way that helps facilitate that growth while also deleveraging the balance sheet? How do we continue to act as more of a franchisor of choice, both across our franchise brands as well as our Take Five business, which is more corporate now, but will continue to grow from a franchise perspective? And then third, value creation. You talked about the sale of the car wash business. We continue to delever.

We resegmented our business at the end of the year to help drive what we think is a greater clarity on the key rock star of our business, which is the Take five business. And so continuing to find a way to drive growth as a franchisor of choice ultimately to help unlock what I think is the latent valuation power of the business.

Justin Klabur, Analyst, Baird: That’s a great overview. We’re to touch a lot on Take five. But before we get there, let’s just also thirty seconds on the CEO transition just as investors think about continuity in the C suite. What, if anything, is really changing now that Danny has taken over for Jonathan? I think it’s been right around a month since he assumed the CEO role.

Mike Diamond, CFO, Driven Brands: Yeah. I mean, I would say not a lot in the right ways. So Danny is great. Jonathan was great. Danny obviously brings a different operational focused energy given his previous role as COO.

As I mentioned on the call, and I’ll just reiterate it here, I was aware that a transition would happen at some point. They weren’t able to tell me when, etcetera. So like I spent a ton of time with Danny during my interview process nine months ago to make sure I knew not only the old guy, but the new guy. Danny and I get along very well. And so I think in reality, a lot of what you’re going to see is a continuation on the broader macro strategy.

Given Danny’s experience in operations, including with our brands, I think he’s dialing up intensity a little bit on, I don’t want say day to day operations, but like making sure each of the brands we have can operate to the best of their abilities and then figuring out how that ladders up into the broader strategy. But I’ve really enjoyed working with Danny. I think I’ve already talked to him two or three times today. He’s which is good. All good.

And so it’s a really good working relationship.

Justin Klabur, Analyst, Baird: Okay. Let’s talk about Take Five. So we think that’s the growth engine of Driven, really the crown jewel of the portfolio. Maybe bigger picture, the Quick Lubes space, it’s fairly fragmented, but there are some well known scaled players in the business. So why is Take Five winning?

If you look at the last quarter, for example, right, your same store sales were up 8%. Like why does that business win? Why does that consumer choose Take5?

Mike Diamond, CFO, Driven Brands: Yes. So I mean just for context for those who may be new to our space, Take5 is one of three large national players in the oil change space. We have a little over 1,300 ish units and growing quite considerably, both from a new unit perspective and a top line perspective. I think what sets us apart is, and Danny says this better than I, we are the only national stay in your car 10 oil change with an NPS score above 70. And so I think there’s a couple of pieces there that are important to highlight.

We’re national. We have wide distribution. Our roots are in kind of the Sunbelt. But as we’ve continued to grow, we expand further and further north. Stay in your car ten minute.

We are a convenience play. When there’s a lot of different demands on your time, we are able to get you in and get you out. There are many different drivers of value, but time is one of them. And so while we are also, I believe, competitively priced, we are a convenience play. And then a 70 NPS.

As much as I’d like it, no one gets really excited that they have to go to do an oil change. But the fact that we are able to get you in and get you out and do so in a way that leaves customers satisfied, I think is one of the things that helps build the demand for us. The second thing is we’re slightly smaller than our other two competitors. And so as we are able to plop down these boxes, and it’s what I mentioned in that magical part of the retail growth curve, right? Being able to continue to take a business model that is incredibly profitable, incredibly successful, and incredibly resonates with consumers and then continue to add more and more of them puts us in that right place of the growth curve.

Justin Klabur, Analyst, Baird: So you said just around 1,300 units, about 40% of those are franchised today. How should we think about the unit growth trajectory over the next three to five years? How much visibility do you have into that pipeline? And then maybe the mix of how that pipeline looks between corporate owned stores versus franchise?

Mike Diamond, CFO, Driven Brands: Yes. So we mentioned this on, I think, most of our calls. Our pipeline is about 1,000 units today. We’ve got line of sight to, I would say, like actual dirt for about a third of those already. Our outlook for this year that we gave last quarter was 175 to 200 total units of which Take five encompasses a significant majority of that.

To your point, sixtyforty corporate to franchise in the ground. As we go forward, we are opening over the next couple of years probably more fiftyfifty corporate to franchise. Over time, the number we open will evolve towards more two thirds, one third franchisee to corporate. And as you think about the line of sight we have over the next several years, we expect that portfolio to probably start to look more fifty-fifty over the coming years as we open more franchise to corporate. We will continue to open corporate stores.

I get this question sometimes. The underlying economics are just so strong. It is a sub to three year payback for these assets. Part of what I spend a lot of my time at night is making sure I’m not choking off growth to take five just because the underlying economics are fantastic, the best I’ve worked with. And so it’s just, a great business model to be in.

I want to grow franchise. I believe in the power of the franchise model. But man, we’ve got some sites that just make a

Justin Klabur, Analyst, Baird: lot of sense for us to use our own capital to build. And so let’s maybe double click on unit economics just a bit here. So you wouldn’t be seeing demand from your franchise partners to open more units if these unit economics weren’t as compelling as you just described. So maybe just level set the audience what the net investment looks like, how these stores open up, ramp and then from a franchisee perspective, what does the cash on cash return profile look like?

Joel Arnaud, FP and A, Treasury and IR, Driven Brands: Thank you, Justin. So from an investment standpoint, the cost of a build, depending on location, is between 1.1 and $1.5 Usually, a three year ramp for us that you start to see with margins in the mid-30s, cash on cash return about 30% for the investor well.

Justin Klabur, Analyst, Baird: Okay. Alluded to the comp trajectory about 7% in 2024, ’8 percent in 1Q. How do you guys just think about the normalized comp algorithm for this business? How does that break down between transactions versus what are some very visible average ticket growth drivers?

Joel Arnaud, FP and A, Treasury and IR, Driven Brands: The way that we look at it candidly is a little bit of growth is coming from both, right, for both ticket The comp growth itself has been pretty steady. And as we’ve kind of given guide for Take Five, expect it to kind of continue as we go through the rest of the year. And then we’ll kind of normalize as we get to ’26 and beyond.

Mike Diamond, CFO, Driven Brands: The only other thing I would add is tickets sometimes can be viewed as a bad word, particularly as we kind of are in this inflationarypost inflationary, potentially reinflationary environment. Ticket can mean price, but at least in my old QSR days, it can mean basket as well. And part of what we’re using to drive ticket is an increase in services. So it’s not just adding $1 or $5 to every oil change. We have a series of services, oil filters, wipers, differential fluid, and I’m going to miss one and get made fun of for it.

But like that we’re able to service customers in addition to the oil change. And so part of what you’re seeing when we do grow ticket is not just extracting a premium to pay, it’s continuing to deliver on that convenience and service aspect that helps us provide additional services for higher ticket. Does that Mike, where does

Justin Klabur, Analyst, Baird: that non oil change revenue penetration sit today? What do the attach rates look like? How variable are those across the chain? Just as we think about the growth in non oil change revenue, how much is just driving that attach rate up versus maybe layering in additional services over time?

Joel Arnaud, FP and A, Treasury and IR, Driven Brands: Yes. So the non oil change revenue is about 20%. As Mike said, it helps with adding some to the ticket. Varies, I think, from store to store in terms of the attach rate, certainly, there’s still a lot of growth there for us. And I feel like there’s a lot of headroom and will help kind of help fuel growth in Take Five as we go forward.

Justin Klabur, Analyst, Baird: Okay. I want to talk about premiumization as well as it relates to average ticket. How much of a structural tail and we often get the question, are you starting to hit a ceiling in terms of how high you can drive your premium oil mix? I think it sits around 90% today. So maybe dissect that 90% between semi synthetic versus fully synthetic blends.

Joel Arnaud, FP and A, Treasury and IR, Driven Brands: Yes. So if you kind of think about it, premiumization is at 90% and it’s continued to be there in the last several quarters. The reality is we expect that to continue to kind of stay there and stabilize. The semi synthetic growth is the bulk of the premiumization. And as cars are getting older and the need to go to a full synthetic oil starts to continue to build the business case, we’ll start to see a trade up and expect that to kind of continue growth as we go forward.

Justin Klabur, Analyst, Baird: Okay. And then maybe on the transaction side of the business, do you have a sense for where you’re sourcing new customers from? Because I think many investors view this as a zero sum game amongst you QuickLube players. But in reality, the industry is much larger than just QuickLube. So do you have a sense for when you’re taking share, it from the dealer network?

Is it from the full service maintenance and repair shops? Like how do you source those new customers?

Mike Diamond, CFO, Driven Brands: Yes. I mean, you mentioned, there’s a lot of people who provide oil change. We believe we are the most convenient and therefore provide the best value. I would say at this point, more of the share is coming from the mom and pops out there. There are still a lot of them and they are giving a lot of share as a donor.

From a dealership perspective, the life cycle of a car tends to be you own a car in the first couple of years, you trust your dealer with it. And then as the car ages, you’re more willing to go to a quick lube. So I would like to tell you that we compete aggressively with dealers. But I think in reality, while I’ll always take your business, if you’re currently taking it to a dealer, in reality, you’ll probably get to a point where the dealer either you’ve bought the package and now the package is expired or the car gets a little older and you’re not willing to drive the extra thirty minutes to get to your dealer and so you’re just going to take it to the place down the shop. I think what is important to me is we think we can coexist significantly with our other national peers in the space.

There are a ton of oil changes out there. There are a lot of oil changes that aren’t currently serviced by us and our two other national competitors. And so we still think there’s a long runway for growth.

Justin Klabur, Analyst, Baird: And then you mentioned the margin profile of this business. So not only is it high growth, it’s also high margin, mid-30s EBITDA margins. Just what’s the room for expansion longer term? And maybe touch on there was a little bit of a margin dip in the first quarter. What was the driver of that?

And just how are you thinking about the margin profile of the business?

Joel Arnaud, FP and A, Treasury and IR, Driven Brands: Yes. Growth is a bit of a balance for us coming from company owned and franchised. We expect for the full year that margins will stay consistent to what we’ve seen in the past. From a growth standpoint, I think Mike is always demanding more margin for the business. And it’s a healthy balance between the conversations we’re having with the operations teams.

And so I think from that standpoint, there are always going be some trade offs. Certainly, there was a little bit of a dip. And as we talked in Q1 earnings call, we had a little bit of headwind with some G and A and some rent that came through, but some of that was just some timing as well. But like I said, we expect it to kind of be consistent throughout the rest of

Justin Klabur, Analyst, Baird: the year. And let’s shift gears and talk about the franchise businesses. Obviously, a portfolio of more mature but highly cash generative businesses. Just what role does this segment play within the overall driven portfolio?

Mike Diamond, CFO, Driven Brands: Yes. I mean, I think you hit the nail on the head. Cash flow generation is, to me, the key aspect of this. You think about the amount of EBITDA we generate out of that business with fairly modest capital needs, it is a significant cash flow engine for us. And as we think about wanting to continue to invest in growth for Take Five as well as to continuing to delever our balance sheet, the franchise brands are really critical.

Think the second probably under heralded aspect is we build a lot of our relationships with fleet and insurance companies based on our franchise brands. And it’s those types of relationships that then help us if we want to talk about glass from an insurance perspective or growth in our fleet business and take five, which is still an opportunity. It’s that relationship we have, insurers have certain requirements. And it’s not just showing up at the door of one of property casualty guys and saying, hey, let me just send you to the shop. Quite frankly, in some of our franchise brands, it’s our relationship with the insurers that caused some of the independents or mom and pops to want to join our company because they know that with our banners, they get better access to that.

And so I view it as stability. It’s probably the bond like aspect of investing in Driven. If Take Five is the growth, and you know, AGN is our call option on future growth, the franchise brands gives us that stability and our cash flow that we’re going to use to help fund future growth as well as help us delever the balance sheet.

Justin Klabur, Analyst, Baird: Well, since you mentioned AGN, we’ll talk a little bit about that. Maybe I’ll lump the question in two kind of longer term growth drivers, one being glass, but also maybe just touch on driven advantage, is kind of the marketplace procurement engine of the business. Again, earlier stage growth vehicle,

Mike Diamond, CFO, Driven Brands: So let’s start with glass. We continue to believe that glass is a really exciting end market for us, for us to be in and where we have a right to play. We mentioned some of the insurance relationships that we already have. They know what Driven can deliver across the other brands that we offer. And so when we are knocking on the door, participating in their processes, we are able to have credibility.

It’s not just a, hey, I’m Mike Diamond, I fix your windshield? We’re able to talk about all of the various franchise brands and the relationships we’ve built. It’s got a strong incumbent who does a fantastic job. We don’t believe that we can displace them. We just believe that there exists a right to have a second national competitor.

We have national distribution there. But it’s a I don’t say it’s a choppy business, but RFPs for insurance companies come up every couple of years. We need to work through that. We need to get our operations and continue to improve it. And so I feel really good about that.

I think we have a good way to go and a way to be successful. What I would tell you for this audience as well is we don’t have to be successful in AGN immediately to unlock value given the rest of the strength of our portfolio. Driven advantage is, I would say, two things. At its core, the origin of Driven Advantage is a way to leverage the purchasing power of Driven for both our corporate and franchise owned stores. And so immediately, it’s a sexy branding of an internal procurement function that enables both our stores as well as our franchise stores to leverage us.

As you think about it, we believe it has growth opportunity going forward to let others who aren’t currently part of the driven platform to take advantage of our scale. That does require a different set of skills that we’re continuing to work on. But again, I would say it’s nothing but an upside. As it stands today, we continue to benefit from the economies of scale and we’ll continue to add new products and providers to the platform. And it gives us the ability to continue to talk to people who aren’t necessarily in the driven platform and leverage our buying power and the ability to sell those products further.

Okay. Let’s move to maybe some

Justin Klabur, Analyst, Baird: of the financial discussion here and we’ll talk about tariffs, everyone’s favorite topic. Maybe just remind the audience your exposure to tariffs, what the mitigation playbook looks like at Driven?

Mike Diamond, CFO, Driven Brands: I haven’t checked the news this morning, so I’m not sure if I’m out of date. But I would say, in general, our exposure to tariffs is modest for a couple of different reasons. First, let’s start from the demand side. As we’ve talked about in the past, nondiscretionary category, you know, people need their cars. And in fact, even in times of economic uncertainty, their car oftentimes become that much more important, whether it’s a downshift in vacations to more driving vacations or just you’re worried about making money, you need your car to get to your job.

And so we feel good from where we’re located from a demand perspective about the ability of Driven to continue to service very effective nondiscretionary categories. From a supply side, it’s obviously more nuanced. There’s a couple of things I would call out. Oil, driven by market dynamics, largely tariff exempt. The price of oil goes up or goes down.

That is largely independent of tariffs. And to the extent there is macroeconomic uncertainty, oil prices tend to reflect that as well. Much of our product is either domestic or sourced from Mexico and Canada. Domestic, you don’t have to worry about as much. Mexico and Canada is a party to USMCA and therefore is largely tariffed exempt.

For some of the products, we are modestly exposed to tariffs and we’re actively working on mitigation strategies. We are not really single sourced on any specific product. And to the extent there are some products where we are exposed, we have alternative sources of supply that we are either actively or already have moved supply out of, I guess, now potentially higher tariff impact. I don’t think they’re technically applied now for most of this. In general, the takeaway though is modest exposure, strong demand markets just given the protection of nondiscretionary and an ability to leverage some of the existing tariff exempt infrastructure around USMCA to maintain those protections.

Good.

Justin Klabur, Analyst, Baird: Yeah, it’s nice to have pricing power too.

Mike Diamond, CFO, Driven Brands: Absolutely.

Justin Klabur, Analyst, Baird: So question from the audience just around you still have an international car wash business. Why has that been more stable than the domestic business? And just what’s the role that that business plays in the overall portfolio?

Mike Diamond, CFO, Driven Brands: Yeah. No, I was actually in London last week meeting the team. It’s a really well run business and they do a really good job. I think that the biggest differential is they are the market leaders. And so unlike the domestic business in which there were somewhere between half a dozen to a dozen competitors each trying to get in, we have clear market leadership in The UK in which there really isn’t a second player and Germany in which there are players, but they’re not nearly at our size.

We’re also the market leader in some of our other countries we’re in, although our scale there is smaller as well. So it’s not worth talking about as much. So I think one is we have clear market leadership and there therefore hasn’t been this race to try to supplant us because the gap between us and everybody else is big enough that it’s a pretty big thing to bite off. The second is the model is a little different. So we run an independent operator model.

It is franchise like. We still are responsible for the upkeep of the asset. But the independent operator is a non employee who runs the site, is there day in and day out, and managing the customer relationship. So it looks a little bit more franchised. I think that’s a benefit for two reasons.

One is it places responsibility for the experience and the operations in the hand of a local entrepreneurial focus. The second is the economic profile just looks a little bit better for It feels a little bit more franchise like in the margins than running 300 corporate owned domestic car wash business.

Justin Klabur, Analyst, Baird: Okay. So I mentioned earlier that the CapEx, capital intensity of the business is declining fairly dramatically. You’re guiding this year 6.5% to 7% of sales, which is maybe 150,000,000 1 hundred and 70 5 million dollars What’s kind of the right go forward run rate for CapEx? How do you break that down between growth versus maintenance versus maybe corporate IT type of initiatives? Yeah, well three things.

Mike Diamond, CFO, Driven Brands: I think it’s 6.5 to 7.5. So keep me honest, I don’t want you to shortchange me on that extra 50 bps. I think, so second, at a kind of we don’t provide direction beyond this year, but we own The U. S. Car wash business for a quarter in 2025 and we won’t.

So it will probably is realistic to expect it to come down a little bit more as we won’t have that business next year. The way I think about the total quantum of spend is I break it down into three buckets. Half of that CapEx is supporting Take Five growth, building new locations, getting them in the ground, continuing to support what we think is a really strong growth engine. So that’s, I think, an important lever for us. And as I’ve said, making sure I maintain my dual commitments of delevering and continuing to invest in growth, allocating enough capital so that we can take advantage of our growth position and not you know, I don’t want to lose the momentum we have right now to continue to grow that.

The second is what I would call the normal corporate CapEx to both maintain an ERP system. We need laptops for people. We need to make sure we have appropriate information security as well as some of the growth investments needed for our franchise brand. It is not zero CapEx. You know, if you wanted to go today and get a paint job with Mako, you would go to our website and have an OET, an online estimator tool that requires some investment from a technology perspective.

We need to get vans for AGN. We need to have an online estimator tool for AGN so that our glass business, if you went to SafeLight and you went to us, we could continue to deliver that experience. That’s about a quarter of our CapEx spend. I would say the normal corporate running of a corporate business as well as modest franchisee other brand growth to make sure we continue to be relevant and fulfill our commitments as a franchisor to our franchisees. The remaining quarter maintenance CapEx.

We still have over a thousand company owned stores. I have been at brands where they take the spigot off of maintenance CapEx and they start to show the wear for it. And CapEx deferred is still CapEx you have to pay. Given where we are in the growth curve, we are very focused on making sure these assets are our best foot forward, continue to drive NPS for our customers, lean into the convenience aspect. And so we got to make sure we keep up the upkeep.

Justin Klabur, Analyst, Baird: Another question from the audience. Just as we think about adjusted EBITDA guidance this year, 5.2 to $5.5 how do you think about the free cash flow conversion? What’s the outlook for free cash flow for this year?

Mike Diamond, CFO, Driven Brands: Yes. And I get this question a lot and we haven’t explicitly provided free cash flow outlook, but I’ll try to give you some of the building blocks, right? So adjusted EBITDA $520,000,000 to $550,000,000 there’s always some cash expenses that get added back. So you got to deduct that a little bit just from some of the add backs within the and you can see it in the adjusted EBITDA table and get a pretty good sense of which ones are cash. We mentioned CapEx, right, 6.5 to 7.5%.

Cash interest, please look at whatever I said in the Q1 earnings, I’ll get this directionally right, but exactly wrong. Call it $140 ish million of cash interest. Our interest expense will be lower because now that we’ve sold the car wash business and have the seller note, there will be PIK interest that offsets that. But there’s about $140 ish million there. We’ve got some cash taxes, you know, not a lot, but some.

The interest shield helps, some NOLs help as well, but we will pay a little bit of that. But if you think about it, so you’ve got the $500 plus million of EBITDA, a little bit of deduct for the adjustments, CapEx, interest. There’s still a healthy amount of free cash flow flowing through this business. And we’re really plowing that into just a couple of different things. One is, again, continuing to grow Take five.

And two is continuing to maintain our commitments on the deleveraging point, three times net leverage by the end of twenty twenty six and just making sure we land that plane.

Justin Klabur, Analyst, Baird: And then just on that the path of deleveraging, so probably a year ago you were close to five times. Think we have you pro form a for the car wash sale around four times, so you’re making good progress. I mean is there anything, I guess, out of model that would accelerate the deleveraging path? Or is it really just using any more assets held for sale on the balance sheet that you still are planning to monetize? Or is it really just taking the free cash flow and using that for debt pay down?

Mike Diamond, CFO, Driven Brands: I’ll answer it two different ways. We don’t need anything else to get to the three times by the end of the year. So you’re not going to see us immediately try to fire sale stuff just to get down there. I think there are a couple of things. We still have some assets held for sale.

I think in our last quarterly earnings we said we’re roughly 80% of the way through selling our assets held for sale. So there are still double digit but not triple digit I guess sorry, nine digit versus whatever, like somewhere in the twenty million to fifty million dollars range of assets held for sale that we may have is kind of within that 20% remaining of what we’ve sold. There is the seller note we’ve got from the Car Wash deal that will go on our balance sheet as a note receivable at the present value. We think it’s not a bad, you know, it’s good money, it’s good interest. But you know, but potentially we could monetize that if we wanted to.

But the most important thing is underlying cash flow is strong. We continue to see EBITDA growth and we see a path to the three times leverage with just kind of operating our business and hitting our marks.

Justin Klabur, Analyst, Baird: All right. Within the last minute, Mike or Joel, just what do you think is the most misunderstood or underappreciated part of the driven story as we sit here today?

Joel Arnaud, FP and A, Treasury and IR, Driven Brands: Well, five, take five, take five. I mean we’ve talked a lot about it as the growth engine. We have changed how we report publicly, right, to make the comparable and really kind of see the growth of that. When you look at just the overall portfolio for us, I mean, Take Five has really been the growth engine. And I don’t think that we’ve quite gotten the perspective from investors yet that just how strong and how unique and how really awesome that business is that we’ve built over the

Mike Diamond, CFO, Driven Brands: last I mean, I don’t disagree. I agree. But I want to just reiterate kind of what I said earlier around how I think about driven because I think it does reinforce the power of Take Five as well. Like I view our story as equity bond option, right?

So take five is the equity value of the company. I actually think it probably at this point explains all of where we currently are and that’s fine. But we owe it to you guys to continue to operate and demonstrate that we can hit our marks. I think we’ve got the franchise business, which not only gives us access to the relationships and the red thread of some of this B2B that is helpful across the rest of the portfolio, but it is a really good stable cash flow generation to support the balance sheet and future growth. And then you’ve got the call option on our AGN business, right, which I think doesn’t like is not reflected in current value, doesn’t have to be, but is the potential for future upside.

I think we can continue to drive significant growth just from the Take five business alone, but we’ve got other levers here to help us continue to grow.

Justin Klabur, Analyst, Baird: That’s a great place to end it. So, join me in thanking Mike and Joel, Driven.

Joel Arnaud, FP and A, Treasury and IR, Driven Brands: Thanks, guys.

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