Driven Brands Holdings Inc.

Speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the number two. Thank you. I will now turn the call over to Joel Arnau, Senior Vice President of Finance. Joel, you may begin your conference.

Good morning and welcome to Driven Brands' fourth quarter and 2023 earnings conference call. The earnings release and the 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 and fiscal year 2023. Before we begin our remarks, I'd like to remind you that management will refer to certain non-GAAP financial measures. You can find the reconciliations to the most directly comparable GAAP financial measures on the company's investor relations website and in its filings with the Securities and Exchange Commission. In the course of this call, we may also make forward-looking statements in regards to our current plans, beliefs, and expectations. These statements are not guarantees of 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 the results and events contemplated by these forward-looking statements. Please see our earnings release and our filings with the Securities and Exchange Commission for more information. Today's prepared remarks will be followed by a question and answer session. We ask you to limit yourself to one question and one follow-up. Now, I'll turn it over to my partner, Jonathan.

Good morning. We appreciate everyone joining us to discuss Driven Brands' fourth quarter and full year 2023 financial results. I want to acknowledge the hard work and strong execution by our more than 10,000 Driven Brands team members and our amazing franchisees. for how they continued to navigate an extremely dynamic macroeconomic environment. Now, it's been several months since we last communicated, and I'm pleased to report that we delivered on our latest guidance for Q4 and fiscal year 2023. Let me review some of our fiscal year 2023 highlights before turning it over to Danny, who will discuss our operating segments, and Gary, who will detail our fourth quarter financial results and full year 2024 outlook. For fiscal year 2023, we delivered 13% revenue growth versus prior year, supported by 7% same store sales growth and 4% net store growth, achieving adjusted diluted EPS of 93 cents. We continue to be pleased by the performance of our take five oil change and franchise businesses, all being key contributors to fiscal year 2023 growth. I want to take a few moments to speak about one of the key drivers of our performance, Take 5 Oil Change. We have grown this business from less than 60 solely company-operated locations in 2016 to over 1,000 locations today, comprised of approximately 65% company stores and approximately 35% franchise stores. Looking back on some 2023 milestones for Take 5 Oil Change, we celebrated our 1,000th store opening, our 300th franchise store opening, and we exceeded $1 billion in annual system-wide sales, all while maintaining an industry-leading net promoter score of approximately 77%. Take 5 Oil Change system-wide sales grew by 26% year over year. driven by 14% same-store sales and 18% unit growth. We opened 98 franchise locations and 59 company locations in fiscal year 2023. Now looking ahead, between company and franchise stores, we have a pipeline of over 1,000 stores expected to open in the coming years, approximately 75% of which will be franchised. Some additional highlights for Driven in 2023 include building out our U.S. Glass platform and strong performance from our asset-light, high-margin franchise businesses. Additionally, our fleet team delivered our best-ever year with approximately $470 million of system-wide sales. Now, our total commercial business represents approximately 50% of total system-wide sales, when you include sales from our insurance partners in glass, collision and paint. Commercial sales are incredibly important to Driven because our franchisees like the business and the sales are predictable and sticky. This is a great balance to our retail sales. Now turning to 2024. January was a challenging month with sales being impacted by multiple storms, flooding, and freezing temperatures across many of our markets. And we estimate this could negatively impact performance in Q1. However, we don't see this having a material impact on the full year. We have made and continue to make progress to improve the underperformance in our U.S. car wash and U.S. glass businesses. Now let me give you an update on our full car wash segment. The headline is that we improved margins from approximately 17% in Q3 to over 23% in Q4. This approximate 600 basis point improvement was primarily from our U.S. operations. This is the result of great work from Danny, who has been focusing on the U.S. and continued performance from Tracy and our international team. As mentioned on our previous earnings call, we have stopped all growth capital and will not open new US car wash stores until we determine the base business is performing up to our expectations. Additionally, the team is making good progress on divesting any pipeline properties we owned when we made this decision. And we expect that during fiscal year 2024, we will likely see a meaningful return of capital from selling these pipeline sites. Now switching to US Glass. As of today, the integration of all the acquisitions is behind us. The team is now focused on improving performance and positioning for future growth. And Danny will provide further color in his remarks. Now my focus for 2024 is delivering our guidance, reducing debt, and finally, active portfolio management, which means making sure that Driven has the right assets to execute on our short, medium, and longer term goals. In conclusion, 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 hand it over to Danny, our Chief Operating Officer, to discuss our key business segments.