Driven Brands Announces the Sale of its Canadian Distribution Business

Rhea-AI Summary

Driven Brands Holdings Inc. (NASDAQ: DRVN) has announced the sale of its Canadian distribution business, primarily operated under the PH Vitres d'Auto brand, to PGW Auto Glass. The transaction, effective August 31, 2024, is expected to have minimal impact on the company's fiscal year 2024 outlook. Net proceeds will be used to pay down debt. The sale aligns with Driven Brands' active portfolio management strategy and is anticipated to be margin rate accretive. The Canadian distribution business was part of the Company's Platform Services segment. Driven Brands will provide further details and update its full-year outlook during the Q3 earnings call.

Positive

• Sale proceeds will be used to reduce debt
• Transaction expected to be margin rate accretive
• Aligns with active portfolio management strategy

Negative

• Minimal impact on fiscal year 2024 outlook
• Divestment of a business unit

Insights

Financial Analyst

The sale of Driven Brands' Canadian distribution business, while strategically aligned with the company's portfolio management approach, appears to have minimal financial impact. The decision to use proceeds for debt reduction is prudent, potentially improving the company's balance sheet. However, the effect on the 2024 outlook suggests this isn't a game-changing move. The undisclosed transaction value makes it challenging to assess the deal's true financial merits. The margin rate accretion mentioned is a positive, albeit likely modest, given the overall impact characterization. Investors should view this as a minor optimization rather than a significant value driver.

Market Research Analyst

This divestiture reflects Driven Brands' strategic focus on core operations and market positioning. By selling the Canadian distribution business, the company is likely streamlining its operations to concentrate on higher-growth or more strategic segments. The buyer, PGW Auto Glass, being a leading distributor, suggests a good fit for the divested unit. This move could potentially enhance Driven Brands' competitive position in its primary markets. However, the minimal impact on financials indicates this isn't a major shift in the company's overall market strategy. Investors should monitor how this aligns with Driven Brands' long-term growth plans and market expansion strategies in the automotive services sector.

CHARLOTTE, N.C.--(BUSINESS WIRE)-- Driven Brands Holdings Inc. (NASDAQ: DRVN) ("Driven Brands" or the "Company"), the largest automotive services company in North America, today announced the sale of its Canadian distribution business, primarily operated under the PH Vitres d’Auto brand (“PH”), to PGW Auto Glass, a leading North American glass distributor, effective August 31, 2024. Terms of the transaction are not being disclosed.

The Canadian distribution business was reported in the Company’s Platform Services segment. Net proceeds from the transaction generally will be used to pay down debt. The sale is expected to have minimal impact on the Company’s fiscal year 2024 outlook. The Company will provide further details on its third quarter earnings call.

“I want to thank Richard Jutras, President of PH, and the entire team at PH for being great partners over the last five years. We are confident that the business will continue to perform well under its new ownership,” said Jonathan Fitzpatrick, President and Chief Executive Officer.

Mike Diamond, EVP and Chief Financial Officer added, “Driven Brands is committed to our active portfolio management strategy. Although the sale of PH will have limited impact on the Company’s financials, this transaction will reduce debt and be margin rate accretive. We will provide further details and update our full-year outlook based on the disposition during our Q3 earnings call.”

About Driven Brands

Driven Brands™, headquartered in Charlotte, NC, is the largest automotive services company in North America, providing a range of consumer and commercial automotive needs, including paint, collision, glass, vehicle repair, oil change, maintenance and car wash. Driven Brands is the parent company of some of North America's leading automotive service businesses including Take 5 Oil Change®, Take 5 Car Wash®, Meineke Car Care Centers®, Maaco®, 1-800-Radiator & A/C®, Auto Glass Now®, and CARSTAR®. Driven Brands has more than 5,000 locations across 13 countries, and services over 70 million vehicles annually. Driven Brands' network generates approximately $2.3 billion in annual revenue from more than $6.4 billion in system-wide sales.

Disclosure Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this Press Release, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, trends, plans, objectives of management, impact of accounting standards and outlook, impairments, and expected market growth are forward-looking statements. In particular, forward-looking statements include, among other things, statements relating to: (i) our strategy, outlook and growth prospects; (ii) our operational and financial targets and dividend policy; (iii) general economic trends and trends in the industry and markets; (iv) the risks and costs associated with the integration of, and our ability to integrate, our stores and business units successfully; (v) the proper application of generally accepted accounting principles, which are highly complex and involve many subjective assumptions, estimates, and judgments; and (vi) the competitive environment in which we operate. Forward-looking statements are not based on historical facts, but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions, and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. It is not possible to predict or identify all such risks. These risks include, but are not limited to, the risk factors that are described under the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023, as well as in our other filings with the Securities and Exchange Commission, which are available on its website at www.sec.gov. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240903190661/en/

Shareholder/Analyst inquiries:

Dawn Francfort

ICR, Inc.

investors@drivenbrands.com

(203) 682-8200



Media inquiries:

Taylor Blanchard

taylor.blanchard@drivenbrands.com

(704) 644-8129

Source: Driven Brands

FAQ

What business did Driven Brands (DRVN) sell?

Driven Brands (DRVN) sold its Canadian distribution business, primarily operated under the PH Vitres d'Auto brand, to PGW Auto Glass.

When will the sale of Driven Brands' (DRVN) Canadian distribution business be effective?

The sale of Driven Brands' (DRVN) Canadian distribution business will be effective August 31, 2024.

How will Driven Brands (DRVN) use the proceeds from the sale of its Canadian distribution business?

Driven Brands (DRVN) will generally use the net proceeds from the sale to pay down debt.

What impact will the sale have on Driven Brands' (DRVN) fiscal year 2024 outlook?

The sale is expected to have minimal impact on Driven Brands' (DRVN) fiscal year 2024 outlook.