Driven Brands Holdings Inc.

This call is being recorded on Tuesday, August 5th, 2025. I would now like to turn the call over to Joel Arnao. Please go ahead.

Good morning and welcome to Driven Brands second quarter 2025 earnings conference call. The earnings release and the net leverage ratio reconciliation are available for download on our website at .drivenbrands.com. On the call today with me are Danny Rivera, President and Chief Executive Officer, and Mike Diamond, Executive Vice President and Chief Financial Officer. In a moment, Danny and Mike 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 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. During 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 results in events contemplated by these forward-looking statements. Please find the earnings release and our filings with the Securities and Exchange Commission for more information. Today's prepared remarks will be followed by a -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, Danny.

Good morning. Thank you for joining us today to discuss Driven Brands' second quarter 2025 financial results. I want to begin by thanking the more than 7,500 Driven Brands team members and franchise partners whose hard work and execution continue to drive results in a dynamic macro environment. One of my first actions as CEO was to hit the road on a listening tour, visiting many of our offices and shops across the country to hear directly from our team. I wanted to solidify what's working, where we can improve, and how we shape the next chapter of Driven Brands together. That effort continued with our annual Talent Week, where Driven senior leaders came together to review key roles, invest in leadership development, and hold open conversations about Driven, our talent, and our future. What came through loud and clear in every location and every conversation is that we have an incredible team. I left both the tour and Talent Week more energized than ever about our future. We have the right people, the right model, and the right momentum to win. Shifting gears to our second quarter results. Driven Brands grew revenue by 6% and delivered adjusted EBITDA of $143 million. Systemwide sales increased 3%, supported by 184 net new stores over the last 12 months and 52 additions this quarter alone. Same store sales rose 1.7%, marking our 18th consecutive quarter of positive same store sales. We remain focused on our key priorities, delivering consistent growth fueled by Take 5, generating strong free cash flow from our franchise brands, and executing on our deleveraging plan to create long-term shareholder value. Take 5 oil change once again led the way with industry-leading growth, inclusive of 10% EBITDA growth year over year, 169 net new stores over the past 12 months and 41 for the quarter, and same store sales of 7%, marking our 20th consecutive quarter of same store sales growth. Take 5 is the home of the -your-car 10-minute oil change. Our unique operating model, paired with the passion and consistency of our team members franchisees, continues to deliver net promoter scores in the high 70s, resulting in strong customer loyalty. As we continue to open over 150 new locations annually, many in new markets, brand awareness and customer trial continues to grow, and those first-time visitors become repeat customers. We're also seeing meaningful contribution from our non-oil change revenue, which accounted for more than 20% of Take 5 sales for the quarter, driven by continued strong attachment rates. As part of our strategy to grow non-oil change revenue and expand our service offerings, we began piloting differential service, the replacement of a vehicle's differential fluid last year. Today, that service is fully rolled out across all company-owned locations and roughly half of our franchise locations, with full rollout expected by the end of Q3. This brings our total number of non-oil services to six, all designed to fit seamlessly within our fast, friendly, simple -your-car model. Importantly, our attachment rates and net promoter scores remain strong, underscoring the trust customers place in us to deliver more in every visit. As we continue to execute, we're unlocking greater value for our customers and greater productivity from every lane. Our franchise and international car wash segments, home to iconic brands like Minike, Mako, and Carstar, continue to be high-margin, strong free cash flow generators, allowing us to reinvest in the growth engine that is Take 5. Our franchise segment generated $45 million in adjusted EBITDA for the quarter, with adjusted EBITDA margins of 61%. We continue to see -over-year softness in both our collision business and Mako. In collision, the broader industry remains under pressure, but we're encouraged by Driven's continued market share gains. Mako showed sequential improvement this quarter, though it remains down versus prior year, due primarily to a pullback in discretionary spending among lower-income consumers. While we're pleased with our market share gains in collision and Mako's -over-quarter progress, we anticipate ongoing softness in both for the remainder of the year. Meanwhile, IMO, our international car wash business, continues to deliver strong top and bottom-line performance, with same-source sales for the quarter of 19%, adjusted EBITDA of $27 million, and adjusted EBITDA margins of 37%. Similar to our comments in Q1, we are thrilled with the performance of our car wash segment, but expect the performance to moderate in the back half of the year. We remain committed and laser-focused on reducing leverage to three times by the end of 2026. Importantly, we recently monetized a seller note from our U.S. car wash transaction for $113 million. While Mike will provide the details shortly, this move allowed us to fully retire our term loan and pay down our revolver, reducing net leverage to 3.9 times on a pro forma basis. We first outlined our deleveraging goal at our investor day in late 2023, and since the end of that year, we've paid down just under $700 million of debt, reducing net leverage from five times to 3.9 times. I'm pleased with the steady progress we're making and remain fully committed to reaching three times by the end of 2026. While the tariff environment remains fluid, we've seen no material change to our tariff posture since our Q1 update. Driven remains well-positioned, and we continue to believe that our diversified sourcing strategy power, supported by the nondiscretionary, low-frequency nature of our services, will enable us to manage any foreseeable risk. I'd summarize my remarks today as follows. First, we delivered a strong second quarter across same-store sales, revenue, adjusted EBITDA, and adjusted EPS. Second, Take 5 continues to deliver industry-leading growth. Third, our franchise and car wash segments remain reliable sources of strong free cash flow. And finally, we remain on track and committed to reducing leverage to three times by the end of 2026. I want to sincerely thank our thousands of employees and franchise partners for their continued dedication and hard work. Despite a dynamic environment, I remain confident in our team and ability to execute. With that, I'll turn it over to my partner and Driven CFO, Mike.

Thank you, Danny, and good morning, everyone. Q2 2025 was yet another strong quarter for Driven, marked by consistent execution, strong sales growth in our Take 5 oil change business, and continued debt paydown helped in part by the completion of the sale of our U.S. car wash business. As a reminder, with the divestiture of our U.S. car wash business, the results for that business are included in discontinued operations and are not included in financial details provided today, unless otherwise noted. Driven recorded its 18th consecutive quarter of same-store sales growth, increasing 1.7 percent in Q2. We added 52 net units in Q2, as continued strength in our Take 5 segment was supplemented by unit growth in our franchise brand segment. System-wide sales for the company grew 3.1 percent in Q2 to $1.6 billion. Total revenue for Q2 was $551 million, an increase of 6.2 percent -over-year. Q2 operating expenses increased $84.2 million -over-year. Key drivers of this increase include an increase in company and independently operated store of $17.8 million, driven by higher sales volumes and more stores in Q2 of 2025 versus Q2 of 2024. An increase in SG&A of $63.3 million, approximately $49.7 million of this increase, is excluded from adjusted EBITDA, driven by a loss from the seller note receivable, increases in cloud computing amortization, and losses from the sale or disposal of fixed assets. The remaining $14 million increase in SG&A is driven primarily by ongoing investments in growth initiatives and the normalization of certain reserves. Operating income for Q2 was $38.1 million. Adjusted EBITDA for Q2 was $143.2 million, roughly $0.2 million below Q2 last year. As a reminder, Q2 of this year comes without the benefit of PHB, which we divested in August 2024, but the results of which are still included in Q2 2024 results. Adjusted EBITDA margin for Q2 was 26%, a decrease of roughly 160 basis points versus Q2 last year, as sales growth was offset by the aforementioned increases in store expenses and SG&A. Net interest expense for Q2 was $31.4 million, down $0.5 million from Q2 last year. Income tax expense for the quarter was $7.1 million. Net income from continuing operations for the quarter was $11.8 million. Adjusted net income from continuing operations for the quarter was $59.1 million. Adjusted diluted EPS from continuing operations for Q2 was 36 cents, a decrease of 1 cent versus Q2 last year, driven by lapping Q2 2024 earnings from PHB. Q2 performance for each of our segments include Take 5 oil change, which represents approximately 75% of Driven's overall adjusted EBITDA, had another strong quarter, with same store sales increasing .6% and revenue growth of 14.7%. Danny mentioned earlier the rollout of our differential fluid service system wide, and this expanded service offering was one of several contributors to the continued strong sales performance. Revenue from our non-oil change services continues to grow, now comprising over 20% of Take 5's total system wide sales, and we continue to see expansion in the penetration of premium oils, which account for approximately 90% of our oil changes. Adjusted EBITDA for the quarter was $108.2 million, reflecting growth of .9% compared to Q2 2024. Adjusted EBITDA margin was 35.6%. We opened 41 net new units in the quarter, of which 24 were company operated stores, and 17 were franchise operated. Franchise brands reported a .5% decline in same store sales, representing a sequential improvement from Q1 of this year, despite continued pressure in our most discretionary business, Mako, and ongoing softness in the broader collision industry. Segment revenue decreased $6.4 million, or 7.9%, driven by same store sales and lapping one-time fees from last year. The segment maintained its strong position as a key cash generator in our portfolio, delivering a Q2 adjusted EBITDA margin of 60.9%. Adjusted EBITDA was $45.4 million, down $8.8 million from the prior year, reflecting both the revenue decrease and higher G&A costs. We continue to grow our footprint, adding 13 net new units in the quarter. Our car wash segment, representing our international car wash business, had another record quarter, with same store sales growth of 19.4%. Similar to trends we experienced last quarter, this performance was driven by improved operations, expanded service offerings, and more favorable weather relative to a year ago. Adjusted EBITDA increased $5.1 million to $27.3 million. Adjusted EBITDA margin increased 120 basis points to 37.2%. As we discussed last quarter, on April 10th, we closed the sale of our U.S. car wash business for gross cash proceeds of $255 million and a seller note of $130 million. On July 25th, we monetized the seller note for $113 million. We applied these net proceeds to fully retire our term loan and pay down our revolving credit facility by approximately $65 million. This transaction closed after the quarter closed, and therefore our Q2 balance sheet reflects a note for $113 million. Turning to the remainder of our liquidity, leverage, and cash flow performance for Q2, our cash flow statement shows a consolidated view of cash flows for Q2, inclusive of our discontinued operations. Net capital expenditures for the quarter were $48.5 million, consisting of $62.6 million in gross capex offset by $14.1 million in sale leaseback proceeds. Proceeds from assets held for sale in Q2 generated an additional $4.1 million of cash. As a reminder, we have now sold through a majority of our assets held for sale and would expect to generate a modest amount of proceeds through the rest of 2025. Free cash flow for the quarter, defined as operating cash flow less net capital expenditures, was $31.9 million, driven by strong operating performance. Strong cash generation, combined with the sale of our U.S. car wash business, enabled us to advance our deleveraging priorities, reducing debt by approximately $265 million during the quarter. Our net leverage stood at 4.1 times net debt to adjust the EBITDA quarter end. When adjusting for the seller note sale and subsequent debt reduction, our pro forma net leverage improves to 3.9 times. As of today, our revolving credit facility has a balance of $100 and $10 million and represents the only non-securitized debt we have outstanding. Year to date, we have repaid approximately $445 million of debt. Our debt is now 94% fixed rate with a weighted average rate of 4.6%. One final note on debt. You will see on our balance sheet an increase in current portion of long-term debt related to our class 2019-1 securitized notes that have an anticipated repayment date of April 2026. Given the nature of the securitized debt market, it is common to refinance these notes closer to the repayment date and we are confident in our ability to refinance. As a reminder, we also have revolving credit facility and variable funding note capacity of approximately $700 million, which is available to us in the unlikely event we are unable to refinance the 2019 notes. Our Q2 performance demonstrates meaningful progress on our key financial priorities, generating solid free cash flow, systematically reducing leverage and further strengthening our balance sheet. With the successful monetization of the seller note and subsequent debt reduction, we've simplified our capital structure and enhanced our financial flexibility for the year. Now I would like to spend a little bit of time on the current operating environment and provide an update on our full year outlook. As Danny mentioned earlier, the driven portfolio benefits from providing generally nondiscretionary services for an asset, a person's transportation that is essential for their livelihood. While declining consumer sentiment has the potential to adversely impact our performance, our business model remains resilient overall. We saw this resilience play out in Q2 with strong, albeit moderated growth in take five and sequential improvement in our franchise brand segment, despite some limited pullback from our lowest income consumers and ongoing challenges in the end markets of our franchise brand segment. As mentioned, last quarter we believe we are well positioned for any potential tariff impacts thanks to our strong supply chain team and geographically diversified supply chain. As we enter the back half of the year, we reiterate our fiscal 2025 outlook as follows. Revenue of 2.05 to 2.15 billion dollars. Adjusted EBITDA of 520 to 550 million dollars. Adjusted diluted EPS from continuing operations of $1.15 to $1.25. Same store sales of 1 to 3%. We believe we are appropriately cautious for the remainder of the year. We expect take five growth to continue to moderate as it grows over a larger base, our car wash segment to face pressure from July's significantly unsettled weather conditions, and ongoing headwinds in the end markets of our franchise brand segment. This caution now leads us to anticipate the second half will represent approximately 50% of our full year revenue and adjusted EBITDA. We expect a more tempered third quarter waiting given the timing and nature of the headwinds we've described, leading to a more balanced second half distribution. As for other important operating metrics, we reiterate net store growth between 175 and 200 units. Net capital expenditures between 6.5 and .5% of revenue. For taxes, we now estimate an effective annual tax rate of 28 to 30% driven by earnings in our tax jurisdiction car wash segment. For interest expense, the sale of the U.S. car wash seller note will remove the benefit of non-cash pick interest in the back half of the year, offset in part by cash interest savings from additional debt pay down. We now expect full year interest expense between $130 to $135 million. We believe the strength of the driven platform was on full display during the first half of 2025, demonstrating the resilience and earnings power of our business model. Looking ahead, we remain focused on achieving our net leverage target of three times by the end of 2026, with the majority of our free cash flow earmarked for reducing outstanding debt on the revolver. With that, I will turn it over to the operator, and we are happy to take your questions.

Thank you so much. Ladies and gentlemen, we'll now begin the question and answer session. Should you have a question, please press star followed by one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to remove your hand from the queue, please press star followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. Just a moment for your first question. And your first question comes from Simeon Gutman with Morgan Stanley. Please go ahead.

Hi, this is Zach on Simeon. Thanks for taking our question. Can you dive a little deeper into the traffic versus ticket side within Take 5 specifically? And are you seeing anything to call out with respect to deferrals or anything of that nature?

Yeah, hey, Zach. This is Danny. Thanks for the question. Look, we don't really disaggregate traffic versus ticket. What I would say is, first and foremost, we're really happy with the comps we saw with Take 5, right? 7% comps for the quarter on top of last quarter, we had really nice comps as well. So really happy there. We're happy to see, you know, both sides of the equation are doing what we want them to do in terms of traffic and check. Non-oil change revenue continues to be a nice driver of the business for us. We continue to see attachment rates in the mid to high 40s. Obviously, we just introduced our differential service, which we like what we're seeing there. It's very early innings. But at the end of the day, we continue to see good attachment rates. We continue to see our NPS scores quite high. And we're able to continue to deliver on the promise to our consumer about to our consumers of a stay in your car 10 minute oil change. So overall, again, we don't disaggregate the numbers, but I'd say we're very happy with the with the comps for the quarter.

Got it. And then just a quick follow up on the profitability side of that segment. Is there anything you can give us in terms of puts and takes for for the take five margin in the back half of the year?

Yes, I mean, I think stepping back for a second in general, we feel very pleased with it with the mid 30s margin that we saw in Q2. If you look at the history of this, even even back to 24, there's always going to be some quarter over quarter variability that that's natural and expected. Similar to what we saw in the past quarter, you know, there was some increase in maintenance and new store opening costs as we continue to invest behind this fleet and make sure that we're putting the best foot forward for our customers. But if you take a step back and think just overall on an annual basis, you know, mid 30s for the full year, we feel we feel positive about that. We feel that's a realistic number and feel really good with where overall the margins coming in.

Thanks. Good luck.

Thank

you.

Your next question comes from Justin Clipper with Baird. Please go ahead.

Hey, good morning, everyone. Thanks for taking the questions. Just to follow up there, Mike, on the on the mid 30s margin for take five on a full year basis. Do you guys think that's effectively the ceiling for the business as you're in aggressive unit growth mode? Or is there still upward migration over time as the mix of units shifts to more franchise? And then obviously you have this this immature store base that will begin to kind of ramp up the profitability curve.

Yeah, no, I get the question, Justin. Good to talk to you. I'm not sure I want to prognosticate more than, you know, kind of what we're looking at for the for the current quarter. Obviously, there's some movements in the model as you think about shifting to franchise, which is definitely, you know, a higher flow through on the royalty, but has a little bit different economics as you think through the oil charges there. I would just reiterate in general, we feel really good with the mid 30s. You know, we think we've got a sustainable economic model for take five. Danny mentioned the strength of the overall same store sales. We still have a long pipeline of unit growth, both corporate and franchise that over time should shift to a more franchise weighting. And if we can continue to print these out at, you know, at the anywhere near the comps we're looking at with with good unit growth, we feel like this business has a really good long runway for growth.

Got it. Okay, that makes sense. And then on the car wash business, I know the competitive landscape is much less intense relative to what you faced in the US. And we've had some favorable weather trends, but how much of the strength, you know, the past four quarters has been, in your opinion, internal initiatives and just how are you thinking about,

you know,

comping these comps in the back of the year? I think you're cycling like a plus 27 in four Q. Do you expect to be able to grow on top of that? Or should we be thinking that you give some back as you cycle over this strong performance?

Yeah, absolutely. There's a little bit to unpack there. So let me try to tick through them. I think one in general, the dynamics are different in that market, right? We are the market leader in both the UK and Germany, at least in the UK, there really aren't tunnel car washes that exist. And so it does give us a strong competitive advantage. I believe the answer to your other question is both. The team is doing a really good job operating on the ground, you know, highlighting the benefits that the IMO system brings to customers, strong relationships with our independent operators. And we have benefited from weather over the last four quarters. And so it will be challenging to grow on the strong growth rates we had on Q3 and Q4 of last year. Some of that is remarks. July was quite rainy in Northern Europe. And even the best operated car wash struggles a little bit with rain. So I do think we will see a meaningful moderation in that business in the back half of the year, just given some of the weather we've seen as well as some of the laps we have.

All right. Thanks for the call, guys. Best of luck. Thanks,

everyone. Your next question comes from Seth Sigmund with Barclays. Please go ahead.

Great. Thanks. Hey, everybody. Nice quarter. I wanted to focus on the non-oil change services that accounted for over 20% of sales. Do you have a view on where that can go? And how do you think about the profitability implications from that?

Yeah. Hey, Seth. This is Danny. That's a great question, Luke. So non-oil change revenue for us, to your point, has been a nice growth driver for the recent past. As we think about the ceiling, I would say, look, we don't think that we have a near-term ceiling. We've got company-operated stores and franchise stores with attachment rates well into the 60s. Our average, if you look across the entire system, is mid to high 40s and growing. So not only do we think that we can grow attachment rates just in terms of the existing mix that we have, we're also introducing new products. Obviously, we just talked about our differential service, which we just introduced and we've rolled out. That's obviously going to help us grow non-oil change revenue here into the foreseeable and we're not limited in terms of that's not the only new service that we can provide over time. When we acquired the business back in 2016, we had four ancillary services that we sold. We called them Big Four. Sitting here today, we've now got Big Six and we'll continue to grow that over time. So I don't see a near-term ceiling in terms of where non-oil change revenue can go. As far as the margin profile, I'll answer that question -a-vis the new service that we introduced, the differentials. Whenever we look at a new service, we're basically looking to check kind of two boxes. It has to fit the model both from an operating perspective and from a financial perspective. From an operations perspective, what we're looking for is our commitment to our customers and what has made Take 5 successful is we deliver an amazing -your-car 10-minute experience. So any new service we introduce has to check that box with differentials. It does and we're able to continue to finish oil changes within the 10-minute window and we continue to have really nice NPS scores, at least in the early innings here that we're in. The second piece is financially, it has to make sense. These are our gross margins in that business. When it comes to differentials, the nice thing there is that that product from a gross margin perspective is accretive to the basket that we have. So all in all, we feel good about the very high ceiling, let's say, with non-oil change revenue. Okay, great. That's very helpful.

And then my follow-up question is on the glass business. It's sort of tucked in there. It's hard to see, but it did seem to accelerate a lot this quarter. Can you maybe just update us on that? And I'm curious, does it face the same headwinds as collision and paint or do you feel like you can grow through that just given that it's so early and you have a market share opportunity? Thanks so much.

Yeah. Look, when it comes to the glass business, I think we have to remind ourselves, we've put that business into our corporate and other segment, a very intentional move on our part, obviously, as we're incubating that business. I would say, look, we got into that space because we really like the industry. Nothing's changed in that underlying thesis. We think it's a great industry. It's got great white space. It's fragmented, great unit-level economics, margins are good. So that industry continues to make a lot of sense for us. As far as the progress we're seeing with the business, I'm happy with the progress, but again, it's early evenings. That business was always a multi-year strategy for us. We remain focused on growing the top line, like we've said in past quarters, and as it continues to improve, we'll share more with it. But right now, we're incubating that business.

Okay, great. Thanks, Danny.

Your next question comes from Brian McNamara with Canaccord. Please go ahead.

Good morning. This is Madison Cowan and on for Brian. Thanks for taking your question. You earlier mentioned industry softness and collision, but given that industry is being needs-based, could you provide any additional color on that? Thanks.

Yeah. Hey, Madison. So to your point, I mean, the collision industry has been down for a few quarters now that, you know, there's other public competitors out there that have talked about that. If you look at estimates, they're down in the high single digits. There's two main reasons for that. Number one is just claim avoidance. So at the end of the day, the consumer in that space has been hit pretty hard with inflation, premiums are up, deductibles are up, and so there's a lot of claim avoidance going on right now. The second one that drives that industry is total loss rates. So total loss rates are at pretty high mark right now. Both of those things in the blender is going to lead to high single digit estimates being down year over year. We're not immune to that. We're obviously in the industry. The really nice thing from our perspective is while the industry overall is down, we continue to take market share. We've been taking market share the entire year based on all the industry reporting that we see. So we think our model is unique. We have a franchise business there. Our franchisees are fantastic. They're doing a great job taking care of our carriers and end consumer. We think we're very well positioned whenever the industry normalizes. I think we're in a good spot.

Great. Not to beat a dead horse, I know somebody asked earlier about Ticket, but how much upside do you think could still remain there or do you need to lean more on increasing car service per day? Have you seen any evidence of material oil change by consumers? Thanks.

Sure. I wouldn't say we've seen a material change in terms of frequency. As far as the ceiling, maybe the better way to answer this question is if you look at the space generally, we offer six ancillary service sitting here today. One of those is brand new. We just started rolling out differentials. If you look at the space, folks offer a lot more services than we do. So there's plenty of room for us to continue to add services over time. We will add services over time. As I mentioned, when I started with the business, we had four services. Today we have six. So not only can we grow the services, and there's a marketplace out there where you can kind of see what other folks have done, but just if you look at our attachment rates with the existing services, again, we're in the mid to high 40s and growing. We've got stores that are in the mid to high 60s. So we think that there's plenty of ceiling to go here.

Thanks so much.

Sure. Your next question comes from Chris O'Cole with Stifle. Please go ahead.

Thanks. Good morning, guys. Danny, can you describe some of the findings you learned on your listening tour regarding the Take 5 business? I'm just wondering if there's any opportunities to provide new support or systems to help kind of fuel that growth for franchisees?

Yeah. Hey, Chris. Thank you, Chris. Great question. Look, I would say honestly, not so much in terms of findings. I mean, again, I'm not new to the business. I'm a new CEO, but I've been with Take 5 for 12 years now. So for me, the road tour was more about being out there, meeting folks. Obviously, my title is different. And so there's a different slant to the questions that I get, and there's a different slant to the conversation. It was more about solidifying what I thought I knew and making sure that I was a CEO on the face of the company. And it's really important I get out there. Whenever I go to the field, Chris, it really crystallizes for me what the priorities are and what's important. And at the end of the day, the important thing is our employees are super important, making sure that we're taking care of them and the commitments we've made to our customers and our franchisees is very important. In terms of continued growth with Take 5, I mean, look, Take 5 is a juggernaut, as Mike's called it historically. It continues to grow extremely well. And honestly, it doesn't matter how you want to slice that business. It's kind of growing across the board. You can slice it franchise or corporate. Both are doing really nicely. If you look at vintages, and we don't divulge the vintages, but internally, the mature vintages are doing great. New vintages are doing great. So we'll continue to lean in there. We're committed to continuing to grow 150 plus units per year. And we see no reason that that continue for the foreseeable future. So we feel really good about the business.

And then Mike, can you describe the financial condition of the franchisees that operate Monakee, Mako and Carstar? I'm just wondering, is the average franchisee seeing a decline in their profits year over year, given the comp performance? And it's hard for us to see, but are you seeing a meaningful number of closures in any of those brands?

Yeah, sure, Chris. I think in general, we feel really good with the overall health of the franchise system. Like any franchise system, there are some who are performing better than others. But in general, we stay close to each of the brands and each of the franchisees in there. And so think in general, despite some of the top line pressures we've seen in a couple of our brands, we feel pretty good overall. We'll continue to keep an eye on that. And you know, and operate as we need to. I think obviously there have been some closures. We have one big closure in one big exit in the system in Q1 of this year, but we obviously came back and we're net positive in Q2. So I think in general, it's full speed ahead and just continue to work on that brand and keep working through any challenges we may see.

Hey, Chris, and just I'll double down on something here. I mean, just by way of reminder for folks, if you look at these businesses, these are really mature, iconic businesses. I mean, Mynike and Mako have been around for more than 50 years. These businesses have seen all sorts of economics ups and downs. So they are great businesses, very mature, and they're going to be around here for a long time to come.

Okay, great. Thanks, guys.

Your next question comes from Peter Keith with Piper Sandler. Please go ahead.

Peter, if you're speaking, you're on mute.

I am on mute. Sorry about that. There you are. Good morning. Good morning. I'm just looking at the full company EBITDA. So it was flat to just slightly down on a year on year basis. And I was wondering if you could just kind of highlight the headwinds to EBITDA. And then looking forward, looks like the guidance implies for the back half some EBITDA growth. So maybe what changes in the back half versus those Q2 pressures?

Yeah, I mean, I think the first and foremost is PHVTRA. So PHVTRA was in our results for 2024 and not in 2025. We sold that business in mid August. And so Q1, Q2, we have a little bit of a headwind there as it relates to EBITDA. In addition, we talked about some of the quarter over quarter variability on margins, particularly as it relates to take five. And that obviously moved against us a little bit in Q1 and Q2. But we feel really good about where that business is trending overall. But on a pure dollars basis, the answer is PHVTRA. But other than that, we feel good about our guidance and where we see the rest of the year coming in relative to that range.

Okay. And maybe I'll hone in on the franchise brands, EBITDA, where the total EBITDA dollars did come down by a decent amount. And I think you had flagged some G&A investments. Maybe could you expand upon what that is within the franchise business? And then is that an investment activity that's going to now continue for the next couple of quarters?

Yeah, let me take a step back because I think one of the drivers of that is the delta between the same store sales and the revenue growth. And that, I think, honestly explains more of the overall G&A hit. And like any franchise business, while same store sales is the top line, you're always going to have some one-time fees that come in, either development fees or termination. And this quarter just happened to be one of these quarters where we didn't have many of those fees. And we were lapping a quarter last year where we had a lot of those. And so that actually is part of the big gap between the same store sales performance and the EBITDA performance. The secondary, as I mentioned, was some G&A investments. As you run a franchise system with several different brands, there are needs to invest in things like technology improvements and etc. to make sure we are a good franchisor for our franchisees. We've had some of those investments so far this year. I would expect those to wane as we move through the rest of the year. But we will continue to do what we need to do to be a good franchisor for our franchisees. Okay, thank you.

Your next question comes from Robby Omez with Bank of America. Please go ahead.

Oh, hey, Danny and Mike. Actually, just a quick follow up on the last question. Should we expect franchise brand comps to remain negative in the back half? Yeah,

I mean, I think we haven't given, obviously, a specific number. We were pleased with the performance in Q2 and that it was better than Q1. As you probably heard from both Danny and me, the end markets of several of the brands in that segment, both Mako and Collision, are under some pressure. And so we'll continue to work hard and fight hard, but we acknowledge that discretionary component of Mako is under some pressure. And then, as I think Danny even gave some more detail earlier in the Q&A, there are some factors related to the Collision industry that are going to continue to weigh on that part of the business for the foreseeable future. So, we're going to continue to fight the good fight. We were obviously pleased with the sequential improvement we saw in Q2 relative to Q1. Our overall one to three reiteration of the guide incorporates a multitude of ranges of things that could happen in the back half of the year. And we'll continue to keep our eye on what we can do to help drive that segment forward.

Thanks. And just, is there anything competitively going on in that segment that is new or different than competition in the past?

I wouldn't say there's anything tremendously new, Robbie. I mean, at the end of the day, Collision, that industry has been, that industry for a while, obviously, there's some headwinds right now. If you went back a few years ago, the industry was in a better place. Right now, there's some headwinds. I wouldn't say there's new competitive dynamics per se. Same thing with Mako. The predominant service that we provide there is we paint folks' car. There's some new technology in that space, but I'd say overall the services are the same. And then, other big business in that segment is Minike. Minike is doing quite well to repair and maintenance. So, you're talking about bigger services on the repair and, sorry, the mechanical side, so brakes, shocks, struts, AC, stuff like that. But the short answer is I wouldn't say there's tremendously new dynamics going on in these industries.

Got it. Thanks so much.

Your next question comes from Mark Jordan with Goldman Sachs. Please go ahead.

Hey, thank you for taking my question. Just looking at Take-Five store growth year to date, only slightly below the prior year, but the mix is much more towards company-operated. I guess, what's driving the slower franchise growth year to date, and how should we think about growth and mix for the second half of the year?

Yeah, I would say if you look within the year, that's pretty typical, which is the corporate stores were able to get those open and operating pretty early in the year. Franchise stores, and I'm not now speaking just driven, but all of my experience in franchise systems both now and before that, franchise stores tend to come near the back in the later half of the year. So, I think if you look at the breakdown right now, it skews more corporate. When you look at the end of the year, the end of the year will skew more franchisee. Overall, this year, it's going to be roughly kind of a 50-50 mix. Ballpark, we're looking at. Over time, we expect that mix to shift more towards franchisees, given the robustness of the pipeline we have there. But I wouldn't read too much into the fact that so far this year, we've opened more corporate than franchise. That's just the nature of the calendar in a franchise system.

Okay, perfect. Thank you. And then, I'm just staying on take five. Can you talk about how comps kind of progressed through the quarter? And I know you might not get into -to-month detail, but was performance fairly consistent there? And then, maybe quarter to date, are you seeing any changes?

Yeah, I mean, I would say in general, fairly consistent. We don't break down quarter to quarter trends. Obviously, there was a little bit of weather late May, early June in Texas, where we have a meaningful presence. So, Texas weather can have a little bit of an influence. But I would say in general for Q2, it was fairly consistent across the quarter. Look, I don't know if I want to say anything in addition to what we've already said in the prepared remarks as it relates to, you know, we continue to think that business moderates over time as it grows over a larger base. You know, there is some softness in general across all of our industries on the lower income consumer. We feel good about the one to three percent that we reiterated and take five is honestly, you know, an important part of that.

Great. Thank you very much.

Your next question comes from Mike Albeneze with benchmark. Please go ahead.

Yeah. Hey, good morning, guys. Thanks for taking my question. Could you just comment on what your franchisees are seeing in the labor market? I'm just thinking, right, any wage pressures, what you're seeing on retention and then, you know, ability to hire, I guess, particularly in take five where you're expecting to grow Unicom pretty significantly. Thanks.

Yeah. Hey, Mike, this is Danny. Look, I'll start with take five. I'd say the labor market there, the important thing first and foremost is when you look at take five in that industry, we're not hiring certified technicians, right? So this isn't a skilled labor force, quote unquote, right? These folks don't come with certifications ahead of time. We're hiring from a pretty broad base of folks and we're training them on how to do the old changes to take five way. And that model works really well for us. So I'd say there haven't been any, you know, structural changes to that or any industry wide changes to that here recently. If you look at the franchise businesses, all the franchise businesses there, you're talking about certified technicians, whether it's body technicians on the Mako side or whether it's, you know, tax repair, maintenance tax on the Minike side. That's a different labor pool for sure. But the beautiful thing and part of the reason why we're in the franchise business in those industries is that franchisees know how to manage that population, right? So these are owner operators, boots on the ground. They take care of their employees. A lot of those employees have been with their owners, with the owners of the businesses for many, many years. So our franchisees are quite adept at managing that labor force and they do a fantastic job. I don't know that recently there's been any material changes to that.

That's helpful. I guess just one follow up to that. I'm thinking on the take five side here. Could you give us a sense of what retention typically looks like?

We don't publicly divulge retention numbers.

All right. Thank you.

Thank you.

Your next question comes from William Stoudinger with BMO Capital Market. Please go ahead.

Hey, good morning, guys. Another strong quarter for take five. So can you maybe just talk about the competitive dynamic for that business and any market share gains you've observed?

Sure. I mean, look, take five is it just continues to do a great job. So as far as the competitive dynamic, I mean, we are, I talk about it all the time, we're the home of the stay in your car, 10 minute oil change. What we've seen with that business is that the consumer just loves the service that we provide, right? They want to go get their car taken care of. They want to stay in their car. They want it to be a 10 minute fast, simple experience. And we're able to deliver that pretty consistently. It's a very lucrative business from a financial perspective, hence all the support and all the interest that we have from our franchisees. And our franchisees have, you know, a ton of interest in growing and they continue to grow across the country. So we feel really good about the business. We feel good about how we go to market in that business, both from a operational perspective, and then also just marketing and how we're talking to the consumer. So yeah, just a great business for us. Okay.

And then with the 150 annual store opening target, I think you mentioned for take five, just what new markets are you targeting for those openings?

Thanks. Sure. So we talk about 150 plus. And as far as new markets, I mean, look, so if you pulled up a map, we've basically sold most of the licenses across the entire country with some spots here and there where we still have some licenses up for sale. So as far as growth, I wouldn't say so much that we're targeting specific locations. We're growing across the country. We've got franchisees throughout the country that are growing most, if not all of the markets. From a company owned perspective, there were much more disciplined in terms of we hand elected a handful of markets back in 2016, 17 kind of timeframe markets like Texas and Florida, just to name two there from a company owned perspective, we're very disciplined about growing within those markets. We go very deep in those markets. We've got a great leadership team and structure. And so we're pretty disciplined about our growth on the corporate own side. And then, like I said, on the franchise side, we're growing across the country with a great group of partners. Okay, thanks, guys.

Your next question comes from Christian Carlino with JP Morgan, please go ahead.

Hi, good morning. Thanks for taking our question. To follow up on an earlier question, could you talk about what you're seeing in terms of consumer behavior? And I know you mentioned quick loop frequency hasn't changed and the collision softness isn't new, but has there been any notable change in the second quarter, given all the tariff news and general uncertainty? And just given the full impact of tariffs hasn't hit the consumer's wallet yet, does the guide assume any further softening in the consumer backdrop?

So I'll answer the first half of that and I'll hand it over to Mike for the guidance question. I mean, look, outside of the comments that we've already made, I'm not sure that there's anything material happening within the industry, right? So on the quick loop side, we're not seeing any material changes to frequencies, that business, like we said, we're very happy with the 7% comp in Q2. We're happy generally with the comp that we've been seeing in that business for a long time now, 20th consecutive quarter of positive same-source sales. So I'd say the Take 5 business continues to grow and is a solid growth engine for us. As far as the other markets that we operate in, I mean, I've already mentioned some of the comments on collision and what's happening in industry. That industry has been around a long time. So sitting here today, it's a little bit soft. I'm sure that that will change over time. And again, I believe that we're well positioned in that space and we continue to take share. When it comes to Mako, I've mentioned a little bit of the softness there, the fact that that business is more discretionary in nature and maybe a little bit more exposed to the low-income consumer cohort. But again, Mako's over 50 years a very mature business. And so that business has also seen many economic cycles. So outside of what we've already mentioned, Christian, I'm not sure that there's anything material to talk about. I would

just add that I think the reiteration of the guide does reflect some of that uncertainty we see in the broader macroeconomic economy. I think to the extent the low-income consumer comes back and we see some of those end markets start to perform a little bit better, we start to approach the top end of the range to the extent that the lower-income consumer softens even more and those end markets become a little more compressed. We're down near the low end of the range. But in general, we think we've captured those possibilities with the range we reiterated today.

Got it. That's helpful. And could you talk about the competitive landscape in Take 5? Just given the attractive business model, have you started to see more private equity money flow into the space? And if not, how would you diagnose why not? And I guess similarly, to the extent this occurred over the past few years, are you seeing maybe some platforms starting to bring some assets to market?

This is Danny. So Christian, I'd say in the quick loop space, that space has been pretty steady in terms of entrance for some time now. We're not seeing a remarkable change in that. The reasons why not, I mean, there's probably a bunch of thousands of locations across the country with the kinds of manual processes that you have to put in place at the kind of margins that we do. So it's easy to rattle off some of the numbers that we rattle off. But in terms of being able to do that at scale, that's actually quite difficult and it's harder than it looks maybe. So again, there's a bunch of reasons, but I'd say generally speaking, that industry from an entrant perspective has been pretty stable.

Got it. Thank you very much. Thanks, Christian.

Ladies and gentlemen, as there are no further questions at this time, this marks the conclusion of today's conference call. Thank you so much for your participation. You may now disconnect.