Driven Brands Holdings Inc.

Good morning. My name is Lara, and I will be your conference operator today. At this time, I would like to welcome everyone to the Driven Brands Q3 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by the number two. Thank you. I would now like to turn the call over to Joel Arnell, SVP of Finance. Joel, you may begin your conference.

Good morning and welcome to Driven Brands' third quarter 2023 earnings conference call. The earnings relief and leverage ratio reconciliation are available for download on our website at investors.drivenbrands.com. On the call today with me are Jonathan Fitzpatrick, President and Chief Executive Officer, Danny Rivera, Executive Vice President and Chief Operating Officer, and Gary Ferreira, Executive Vice President and Chief Financial Officer. In a moment, Jonathan, Danny, and Gary will walk you through our financial and operating performance for the quarter. Before we begin our remarks, I'd like to remind you that management will refer to certain non-GAAP financial measures. You can find these reconciliations to the most directly comparable GAAP financial measures on the company's investor relations website and in its filings with the Securities Exchange Commission. During the course of this call, we may also make forward-looking statements in regard to our current plans, beliefs, and expectations. These statements are not guaranteed for future performance and are subject to a number of risks and uncertainties and other factors that could cause actual results and events to differ materially from results and events contemplated by these forward-looking statements. We see our earnings release and our filings with the Securities and Exchange Commission for more information. Today's prepared remarks will be followed by question and answer sessions. We will ask you to limit yourself to one question and one follow-up. Now, I'll turn it over to my partner, Jonathan.

Thanks, Joel, and we appreciate everyone for joining us to discuss Driven Brands' third quarter 2023 financial results. Now, as always, I want to acknowledge the hard work and strong execution by our more than 11,000 Driven Brands team members and our amazing franchisees for how they continue to navigate an extremely dynamic macroeconomic environment. I'm sure that many of you had a chance to attend our investor day in September. I hope the insights we shared were valuable to you and that you left the event with a better understanding of the power of the driven platform and our commitment to unlocking the true value of our business. Now, our platform creates many benefits, such as enhancing our competitive advantages, diversification, and generating robust cash flow. We are making progress on the actions we have taken to improve Driven's performance and continue to act with urgency to accelerate the pace of improvement in our car wash and U.S. glass businesses. We outlined a multi-year strategy, created a chief operating officer position, made leadership changes within U.S. glass and U.S. car wash, and shared our strategic plan to maximize the return on our investments through disciplined capital deployment and portfolio management. We have a platform that generates high steady state returns with a long runway for reinvestment at exceptional returns. And we're incredibly motivated to see our valuation mirror our results over time. Now let me review some of our third quarter highlights before turning it over to Danny, who will discuss take five oil change, car wash and glass, Next, Gary will detail our third quarter results and full year 2023 outlook. For the quarter, we delivered 12% revenue growth versus prior year, supported by 6.4% same-store sales growth and 6% net store growth, achieving adjusted diluted EPS of $0.20 per share. We continue to be pleased by the performance of our quick lube, and our franchise businesses across all metrics, all being key contributors to this quarter's growth. Now, let me give you an update on our U.S. car wash business. Danny, Gary, and I have spent a lot of time reviewing all aspects of the U.S. car wash business over the last 90 days. Danny is laser focused on operational opportunities, and he will discuss those in more detail shortly. Now, after our detailed review in Q3, we decided to close 29 U.S. car wash locations, which began in Q4. Generally, these locations were on average more than 13 years old, had suboptimal real estate, and had significant competitive intrusion. On an LTM basis, these locations had negative same-store sales and traffic and negative EBITDA contributions. Consequently, we will see some small benefit in Q4 for closing these 29 loss-making locations. Additionally, we are actively reviewing our pipeline for new car wash locations. Now, this is in line with our commitment to stop all capital and not to open new stores until we determine the base businesses performing. We expect that over the next two to three quarters, we will likely see a return of capital from selling these pipeline sites. We are making steady progress on the U.S. car wash business and getting the U.S. glass integration behind us. And as I have said previously, this will likely take several quarters. Gary will provide an update on the impact to fiscal 2023 store openings shortly. Now, as a reminder, our short-term focus is to deliver our guidance for 2023 and set the company up for a strong 2024. This means improving the U.S. car wash business, getting the U.S. glass integration challenges behind us, a very disciplined strategy for deploying capital, which will primarily be used to open Take-5 oil change company stores, a focus on free cash flow generation, and generally using excess free cash flow to pay down debt. Now, I want to reiterate that we have taken several steps to improve Driven's performance. Gary and I are responsible for strategy and capital allocation. The creation of the Chief Operating Officer role is an important one, as Danny is responsible for all the operating segments. Simply put, he owns the P&Ls. Danny is responsible for the day-to-day decision-making, finding and executing on growth opportunities, and ultimately, delivering segment-level revenue and profits. Danny has been my partner for 10 years at Driven, and most recently, he served as president of our maintenance segment. So with that, let me hand it over to Danny, our chief operating officer, to discuss our key business segments.