Okay, I think we can get started. Thanks for joining us. We're here with Driven Brands. Today, we have with us Jonathan Fitzpatrick, President and Chief Executive Officer, Mike Diamond, Executive Vice President and Chief Financial Officer, and Danny Rivera, Executive Vice President and Chief Operating Officer. Thanks for joining us today. Yeah, good to be here. Most of our conversations over the last two days have been focused on the consumer. We started out talking about the consumer, and you're in a pretty defensive industry, so it's a little bit different. But we wondered if you could talk about what you're seeing, you know, with your consumer trends. Are you seeing any deferral at any of your businesses? And is there any business in particular that might be feeling a little bit more pressure than others? Yeah, sure. Yeah, I mean, I think in general, trends have, you know, have been steady. We obviously won't talk in specifics on inter-quarter trends. You know, we mentioned at the Q2 call, there was, you know, some friction we're seeing a little bit on the collision side. But, you know, that's driven as much by increasing, you know, inflation in the insurance rates. I think in general, you know, the power of the Driven platform is its defensibility and the fact that customers need oil changes, they need to get their cars fixed. And, you know, Danny and team have done such a great job operating, that we've really been able to, you know, keep the trains on the tracks and keep plugging along. So maybe we could talk a little bit about your different businesses. It might take us a little while to get through them all. But with Take Five, and we'll start there, Take Five has been a really strong performer, and it's set to be one of the company's main growth drivers going forward. Can you talk about what you're seeing for the growth potential there, both in the near term and the long term, and what the growth looks like in terms of company-operated and franchise stores? Sure. You want me to take that? You start, yeah. Yeah, absolutely. So look, I'd start with, whenever we talk about Take Five, I think you got to start with the unit economics of the business, right? Mm-hmm. So this is a business that, you know, Jonathan's been doing this for 25 years. I've been doing this for close to 20 years. It is a phenomenal business, right? And we've been able to take a business that we bought back in 2016 with 40 units and replicate that. Now we've got 1,000 units. We think we have a track record or a path to get to 2,000 units, and we've been able to scale that business and grow it very predictably. So I think for that business, it starts there. As far as the trajectory of the business, you know, so just mentioned, we see a path to 2,000 units, right? We've said pretty openly, we're gonna open about roughly 150 units a year. About 50 of those are gonna be company-owned units. About a 100 of those will be franchise units. Just rough numbers, right? And if you tumble the math, you know, you can kind of do the math on how many years it would take to get to 2000 units. So nothing's changed as far as any of that. Our conviction with that business is still great. It continues to produce very predictable, great, financial numbers. And if you look at the unit economics of the business in terms of opening new units and the ROI on that business, it's just phenomenal no matter how you look at it. So, I think it's got a really healthy road ahead of it. How are you approaching the franchise partners? How many do you currently have, the average number of locations? Yep. Are they getting bigger over time? Yeah, it's a great question, so we have roughly about 60, let's call them active franchise partners. The franchising business, so we have, sitting here today, visibility to about, call it 1,000 locations, right? And when it comes to franchising, if you think about the typical franchisee that we have, first off, they're amazing people or groups of people. Generally speaking, they have experience in either other multi-unit concepts, so it could be hotels, it could be QSR, etc. They typically have expertise with development, real estate construction, so they know this world, they know how to develop locations. When we, you know, bring on a franchisee, typically, we're looking at a 10-unit deal. So we don't do onesie-twosie deals, and we also don't like the whole too big to fail kind of concept, right? So you're gonna see we're very intentional with how we pick out franchisees, the size of the initial development agreements, and then we scale that over time. So we have some franchisees that are on their second or third development agreement at this point because they've had so much success with the Take Five business, and they love the model. And so that's been working for us now since 2017 when we opened our first franchise location, and see no reason why it would stop. When we think about the industry, it's quite fragmented, and I think some would argue maybe a little saturated just 'cause you have everyone from local mechanics to auto dealers offering to change your oil. So could you maybe talk about the opportunity that exists? We talked about the units that you expect to grow, but why you have license to grow, what's behind the expansion, and what makes the qualities Take Five Oil Change attractive or differentiated to customers versus everyone else? Yeah, it's an amazing question. So I think when it comes Take Five Oil Change, it starts with, we have a very specific and simple go-to-market proposition and why consumers like us. We're fast, friendly, and simple, right? It's as simple as that, right? So you can come to Take Five, you're gonna get your oil change done in ten minutes, you're gonna stay in your car, it's all menu-based services. There's no heavy selling. So if you know, in the automotive industry, there's a bit of a trust factor that happens, right? You're talking about 50, 60 years of maybe folks selling more than they should and stuff like that. So our approach to that, it's a very simple business. It's almost like a QSR experience. You come in, there's a menu. These are the five services we sell. Everything that we sell is show and tell, and we start every single transaction with a free bottle of water. So in a world where you have a consumer that is maybe expecting a certain type of experience, when they come in, before I've asked you for a penny, you have a free bottle of water, you're in and out in 10 minutes, and you haven't been oversold anything, it makes a huge difference. And we see that difference not just in our NPS scores, so we enjoy kind of high 70% NPS scores, and we see it in our repeat rates. So it is great proposition vis-a-vis the consumer. They reward us the way that I said, through NPS scores and repeat rates. If we think about the competition, to your point, so there is a lot of mom and pop, so you can think of it maybe a couple different slices, right? So you have your national competitors. Some of them are here today. Think quite highly of those folks. They do an amazing job. You've got some regional competitors that are starting to crop up a little bit, that are trying to mimic some of the things that we've been successful with. You know, they're trying, and that's okay, c ompetition's a healthy thing. I think we have a better mousetrap, and we have better real estate than anybody out there, and that pays dividends for us moving forward. And then you've got some scaled operators that are maybe more classic repair and maintenance. Historically, those folks will get into the oil change business more as a means to do other work. So it's not so much that they're interested in doing an oil change for a customer, it's they're interested in, I'll call it a loss leader, even though maybe that's the wrong terminology, but they're interested in the loss leader to do your brakes, to do your tires, stuff like that. And we will win all day long vis-a-vis those competitors, 'cause at the end of the day, the consumer doesn't wanna be in a dirty lobby for two hours talking about tires, right? They just want their oil change done in 10 minutes. So I think that's some of the reasons why consumers tend to [inaudible] We tend to enjoy very high repeat rates. Mm-hmm. Mm-hmm. If we can maybe move on to car wash. The U.S. car wash business is undergoing a turnaround. I wondered if you could maybe walk us all the way back to the acquisition, and talk to us about what attracted you to the business in the first place, why this particular asset, and just highlight some of the recent challenges that you're trying to work through. Yeah, I'll take that one, Kate. The, we made the acquisition back in summer of 2020, and I think the car wash category in the United States has changed quite a bit over the last four years. I think we've seen significant competitive intensity, so we've probably added in the express tunnel car wash category approximately three thousand new units over that timeframe. So I think that's a big change from what we've seen. We've seen a massive infusion of institutional capital into the space, so you now have probably 20 platforms with institutional capital behind it, all sort of vying for a lot of the same trade areas, a lot of the same real estate. I think that, you know, what has changed obviously over the last 12- 18 months is a little bit of the macro pressure on the consumer. This was the first business that we've owned that was more discretionary than others, and I think we've seen that sort of flow through some of the underperformance in the business for us. I think Danny and the team have done a nice job stabilizing that business. We're focused on growing our membership count, our membership revenue. Ultimately, this business is still impacted by weather. I don't like being in the weather business, but that's the truth, so until we get that revenue subscription to a high enough amount to sort of offset the volatility of the weather, I think we're still gonna have some lumpiness in the performance. So I think what we've said publicly, you know, starting about a year ago, is we won't be putting growth capital back into that asset class for Driven. We have, when we think about our three-year EBITDA growth targets, you know, 2/3 of that growth was gonna come from our oil change business. We still feel great about that. The other 1/3 was gonna come from our glass and our procurement businesses. We feel great about that. We had not modeled any upside into the U.S. car wash business. I think what we are working through now, Mike and myself, and the board, is, you know, what is our long-term view on the U.S. car wash business within Driven Brands? And, you know, we're very optimistic that we can have a definitive decision on that before the end of the calendar year. And would that include the international, or is the international kind of a separate thought? Yeah, it's a separate business. We acquired both when we acquired the asset in 2020. The European business is a terrific business, run by one of our best executives, Tracy Gallen, who lives in the U.K. It's an independently operated model, so it's sort of franchise-like. It's been very consistent, stable, predictable business, very, very high cash flow generative. So you know, I think our focus is on the underperforming U.S. car wash business and what we do with that, and then once we get clarity on that, we'll sort of, you know, figure out what we wanna do long term with the international business. And I think you've gotten the question before, that you have tried to rebrand the car wash business with the Take Five brand. What is the status of the rebranding, and how does that impact any decision that you make with regards to the asset? Yeah, we are 95% finished with rebranding our U.S. car wash stores to Take Five Car Wash. That made a lot of sense in terms of a lot of those stores are in the same trade areas and markets as our Take Five Oil Change business. That will not be a decision point in terms of whether we decide to stay in or out of that asset class. So, it was the right decision. Still think it was the right decision, but it won't be a determinant in what we do with the business on a go-forward basis. Moving on to Auto Glass, which is a newer business for you. The integration of Auto Glass Now, the platform now seems to be behind us. How should we think about the potential for this platform to scale longer term, and what can we see over the next year? Yeah, our underwriting thesis with our glass entrance into the glass business is very much intact. This is a really large category, north of $5 billion. There's a magnificent leader in this space, everyone knows the jingle. They've done a really magnificent job over the last 20 years. What we saw as the opportunity was there was a massive fragmentation below that one dominant player, that probably has somewhere around 35%-40% market share, highly concentrated in that insurance payer segment. We in our collision business do $2 billion worth of insurance collision work every year, so we have deep relationships with our insurance partners. There's a really big commercial opportunity. When I mean commercial is rental car, fleet management companies, other large owners of fleets. Those are deep relationships that we have already. And then there's a retail component. So, you know, we did 13 acquisitions to get scale. We did that about 18 months ago. We did have a more challenging integration period than we probably expected. That's behind us now. We're now excited about growing top-line revenue in that business and sort of building out that platform and hitting our underwriting thesis, and sort of pleased with the progress so far this year. For incremental growth for this business, would you consider M&A still, or would you look more towards greenfields? I think we were highly acquisitive with 13 acquisitions Yeah. in about, you know, about an 18 month period. I don't think there's a need to do incremental M&A because we've built a pretty scaled platform at this point. You know, as we think about future unit growth, it will be a combination of de novo openings. And then the other thing that's very important in this category is mobile capabilities. Mm-hmm. You know, we can add capacity to our business without opening bricks-and-mortar stores, but by adding more mobile capabilities. I think it'll be more organic greenfield or mobile expansion versus, you know, future M&A in the space. And then just to drill down a little bit on the actual business of auto glass, how does the average ticket and attachment rates work, for the business, and how does it vary by customer type? And what are the KPIs required with regards to winning the insurance volumes? You want me take that? Yeah, so maybe the best way to start is to think about the types of customers that we have. There's essentially three types of customers. You have insurance business, you have commercial business, and then you have retail business, and then within the insurance business, not to overcomplicate things, but there's three levels there as well. Mm-hmm. So you have national insurance, regional insurance, and let's call it local insurance. The ARO, what we would call ARO, average repair order, the check profile of those businesses are all slightly different. Easiest way to think about it is insurance business is the most profitable for us, has the best margins. Next would come commercial, and then after that would come retail. So as far as... That, that's loosely, from a profile perspective, how it looks. As far as building up the check, so basically, it starts with make, model, year of the car. You then source the glass. The glass is gonna be specific to the make and model that you're talking about. There's something in the industry called NAGS. Think of it as basically a book value of what a job should cost for a certain make, model, year type of work. And then you price off of NAGS. So you can price at NAGS, you can discount off of NAGS, but it basically starts with, what car are we talking about? Which piece of glass are we talking about? What pricing structure do you want to have vis-a-vis NAGS? And then from there, really, the next knock on is gonna be calibration. So, for those of you that don't know, so I think it's 2018, if memory serves, from 2018 forward, every vehicle behind that front windshield has a camera. That camera handles the safety systems in the vehicle. So when you switch out the glass, you have to recalibrate that camera. So that's a natural kind of tailwind in the industry. And so that's the secondary piece to pricing out the job, so to speak. If we could maybe move on to the legacy franchise businesses, Meineke, Maaco, CARSTAR, 1-800-Radiator, businesses that you've talked to that have steady performance and strong EBITDA margins. How do you view these brands in your overall portfolio, and how should we think about the businesses and their contribution to growth and profitability over the long term? Mike's recently joined as our CFO, and one of his first observations was, we should be thinking about re-segmenting how we report the business to the outside world. Take Five Oil Change is a crown jewel within our portfolio and probably doesn't get the full spotlight that it deserves in our current reporting structure. Mm-hmm. I think, you know, we will be most likely Take Five Oil Change as a standalone entity or standalone segment starting in 2025. I think that'll allow people to really understand the power and the velocity of the earnings growth in that business. The question around the franchise businesses, Kate, is we have great businesses that you mentioned. They are very predictable, stable businesses, generally deliver, you know, a 2%-4% same-store sales. There's nice, moderate unit growth there. But really what they are is a collection of phenomenal cash flow businesses. So when you put all those together, you've got EBITDA margins in that, you know, segment, which would be north of 60%. That is the stable, predictable cash flow that we generate, which then we can reallocate into growth opportunities, whether that's Take Five or, or other things. So as part of this segmentation work that Mike's leading, you know, it's highly likely next year that we will consolidate those franchise businesses into one segment, where people can understand, you know, the stability, the predictability, and the cash flow of those businesses as one segment. So great businesses, we love them. They're 100% franchised, obviously, very asset light. I think they're probably a little bit misunderstood in terms of the cash flow generation that they provide to the Driven platform. And just what about M&A overall? I mean, would you be interested in looking towards other verticals within autos? And then again, you know, for each of the segments, how do you think about M&A? We've done a lot of M&A since I joined in 2012. So, you know, we've built a lot of these platforms with some level of M&A along the way. I think we've hit scale in almost all of the platforms that we operate in now. So, you know, we don't see M&A as a need to continue to grow those, you know, individual segments or platforms that we have. I think we'll always be opportunistic. If there's things that are interesting for us, we'll look at it. We generally get a look at all the assets that trade in this, in this auto space. But we have the luxury today of having multiple growth levers in our business, so we don't need to necessarily add more through M&A. We also think about if we were gonna enter a new category, you know, can that category provide the, you know, the, the qualities that we look for? So can it be franchised? What does the margin look like? What is the labor profile of that business? What is the white space? So and can it be meaningful to Driven that's gonna print, you know, north of $500 million of EBITDA this year? So I think we're very comfortable with where we are, but I think over time, you know, we'll continue to be opportunistic if things arise. You know, with regards to leverage, it's been elevated, but you've stated that you've been comfortable at, you know, a certain level. Just how are you rethinking leverage? How has it trended in the last few quarters, and what is your targeted level? Yeah, I mean, I think we've been pretty public that our goal is to get down to four and a half times net leverage by the end of this year, and three times by the end of 2026. And that's, you know, that's a, that's a priority for us. It's one of the things I'm focused on, how we make sure that the, that the cash we generate does a couple of things. I think first and foremost, as Jonathan and Danny both mentioned, Take Five really is a crown jewel. It has bone-crushing unit economics. And, you know, I, I bragged to my, my former friends at Yum! You know, you think, you think Taco Bell has great economics? Just read the FDD of Take Five. Like, this thing is an investable proposition, and so how can we find ways to continue, in a disciplined manner, to facilitate that growth? But the second big priority is figuring out how we continue to deleverage, right? We have strong cash flow. You know, Jonathan mentioned the franchise businesses that continue to spit off a lot of cash. Right now, we're north of where we want to be, and so we need to make sure we are disciplined and focused and get it back to a world in which we're all, both internally and externally, comfortable with what that number looks like. And at that point, we can then have the next level of conversation around what that means from a capital deployment perspective. And Mike, I would ask, you know, you talked a little bit about the segment reporting and your observation there, and we just talked about leverage. Just as being new to the role, what have been maybe some of your other observations, or what from your background or experience, I think if I remember correctly, there is some restaurant background in your experience that you're, you know, bringing to Driven Brands? Yeah, I could, boy, I could probably use the rest of the 13 minutes with that because I've got so many thoughts. So I think, first of all, it's exciting and fun to be back in multi-location franchisee. And no disrespect to my friends still at Michaels, but there's just an urgency and a passion, and a partnership that comes with the franchisee system, that it's just it brings an intensity to it, but it's fun and exciting. There's just a lot going on that's really fun to tackle. I joined for a couple of reasons. I mean, I think one, like, it is fun to be in my role, where capital allocation is as focused on how you prioritize growth as it is, how do you manage a shrinking pie? And so it's just a little. You know, I spent yesterday talking with our head of real estate around you know the growth models and how we think about new unit locations, which is another passion of mine, and making sure that we are again appropriately disciplined, but making sure that I, as the CFO, don't choke off growth for what truly is a fantastic business model in our Take Five. We generate a lot of cash, and we've got to figure out how we can continue to be efficient with that cash, support growth, and delever. I mean, I think that to the other side, it's not really a negative because. Or if it is, it's one I kind of came in knowing: it's a complex business. We've got a lot going on. This is not Yum!, where I'm from, where it was pretty, you know, Taco Bell, Pizza Hut, KFC, and while there's a lot under the covers there, it's pretty easy. We've got a lot going on, and so I think finding a way, nothing, nothing will overcome performance, and so, you know, thankfully, we've got Danny and the team who do a fantastic job continuing to execute on that. But how can we continue to find a way to shine a bright light on the Take Five business, to effectively manage and, you know, and, and nurture/just kind of, you know, have the, the franchisee business there that spits off cash, and then incubate some of the other businesses? You know, the, the, the glass business, the Driven Advantage, which I think really just demonstrates the red thread we have across, you know, all of our various brands. How can we continue to bring that to this audience here and just demonstrate the various levers we have to continue to drive that profitable, you know, cash flow, efficient growth? I think, Kate, underpinning all of that, Mike also sees that the business is undervalued by at least three times, and he can make an enormous amount of money based on his stock that he got when he joined the company. So, that's The way you said it, I mean, Maslow's basic hierarchy of needs, answer there as well. Well, you, Mike, you didn't mention Driven Advantage, and I do have that on my list of questions. I wondered if you could, or whoever would like to, maybe just explain what Driven Advantage is, how scaled you've been able to, How big you've been able to scale it, since its introduction, and what do you see the opportunity for, for Driven Advantage? Yeah. You should take that first. Yeah. So maybe the starting point is, if you want to be a good franchisor, you want to introduce value to your franchisees, and one of the ways that a good franchisor will introduce value is by helping with savings, right? So procurement being one of those things. So if you're going to buy widgets, whether it's pens or oil or four post lifts or anything else, you want to centralize that purchasing power so you can, you know, get the benefits, number one, to your corporate locations, and then number two, pass those savings along to the franchisees. So Driven's been doing that for a long time. What Driven Advantage does is it brings us kind of into the twenty-first century, where you've got this Amazon-like experience, and I use that term, you know, very loosely, right? But it's a great experience. And if you're a franchisee or if you're one of our corporate locations and you want to buy anything to run your business, you can go into this Driven Advantage platform, and you can buy it. And you can rest assured that, number one, the pricing you're going to get is way better than anything you could do yourself. And number two, it's dead simple. I mean, it's search, you know, create your list, buy, and you're off to the races. And it gives us really neat power on the corporate side of things as well. So for example, in our corporate businesses, if we talk about Take Five, you can actually go in there and create a curated list of what they're allowed to purchase, right? So if you need a pen, you can buy this pen. You can't buy the $12 pen, right? You can buy the $0.40 pen, 'cause that's what you need to run an oil change. So it gives us flexibility to run our corporate locations better, and it gives our franchisees the ability to very simply buy anything that they need to run their shops and do it at a cost-effective price. So that's all been done. What we're looking at now is this platform that we've built, and Jonathan had the vision for some years ago, is interesting outside of the Driven portfolio as well, right? So we've got certain players that we don't have to, can't get into specifics as to who right now, but people in the automotive industry that don't want to get into building out an SAP marketplace platform and everything else, but they want the benefits of scale, and they want the benefits of price that we get, and they want the simplicity. And so we think that there could be a marketplace outside of Driven, and we're exploring those options now. Okay, thank you. And then, just in the last few minutes, I wanted to make sure, It's an investor question that we get a fair amount, and I haven't heard you guys speak about it recently. So just curious about how you sound about this potential risk, but around EVs. And I know you have part of Auto Glass Now, I think, was a way to maybe diversify yourself a little bit from any kind of risk of EVs. But how are you thinking about it now that we've kind of come out of a really interesting period with low SAR, maybe more hybrid than EV? How are you thinking about that as a risk? I'll start. I think it's quite comical to look back over the last four or five years and look at the narrative on EV. You know, five years ago, the entire world was going to EV in the next three to five years. I think what we've seen is the rich people who wanted to buy EVs, for the most part, bought the EVs, and now we've seen that, you know, stabilize and, quite frankly, moderate. I think we're. I think it was Ford this week announced they're pulling their, you know, big EV platform, and they're moving that to hybrid. So I think the hype was way overdone, you know, four or five years ago. I think we're now seeing the reality that I think the car park will slowly evolve over time. I don't think anyone's quite sure if it'll be EV or hybrid or something else. You know, we have one business, I suppose, which is Take Five, which Take Five Oil Change, which you could argue is, you know, directly exposed to an EV transition. If you take the most conservative approach and think that every new vehicle sold, you know, is going to be an electric vehicle, we're not seeing any impact to our business until the late 2030s. So I think we're watching closely. We're not sort of buying into the hype. I think it'll take time, but we don't see any risk to our business for, you know, the late 2030s based on the current trajectory of the industry. And should the world go to more of a hybrid model where EV is de minimis, there's no exposure Take Five Oil Change, right? So hybrids still need oil changes, so you're back to kind of square one. You know, if we're thinking about your consumer, I think, Jonathan, you had talked at a certain point within the last year that car prices being where they were were just most of Middle America, I don't think could even afford it. How do you see, I guess, just that evolving over the next year, and what do you think it means for a more maintenance business like yours? Yeah. The average American household with a $60,000 household income, it's pretty difficult to buy a new car these days. So I think that just the price of new vehicles. So I think we're seeing vehicles, you know, being driven that are older. I think we've now breached 12 years in the average life. Higher mileage, older vehicles, more maintenance, so I don't see that changing dramatically, you know, over the next couple of years. I think we've seen a little bit of noise with the total loss rates with used cars come down. That's had a small impact on the collision business, but look, there's 280 million vehicles on the road in the United States today. The average age is 12 years. The mileage continues to grow, so I think just, you know, on a macro basis, feels really good to be in the automotive space for the next decade plus. Okay. With that, we'll end our conversation. Thank you so much for joining us. Awesome. Thank you. Thank you, Kate. Thank you.