Driven Brands will bring on a new CEO in May and sell its U.S. car wash business following 2024’s focus on paying off debt, growing revenue, and restructuring its business segments.

The changes were discussed during the company’s Q4 earnings call on Feb. 25.

“To better reflect how we view the business, we will adopt a more simplified segment structure for reporting starting in Q1 of 2025,” said Jonathan Fitzpatrick, Driven Brands president, CEO and director. “Firstly, our flagship growth driver, Take 5 Oil Change, will now be a standalone segment. Secondly, we are consolidating our stable, predictable, high-margin, cash-generating franchise businesses into one segment. This includes our portfolio of needs-based franchise brands such as Meineke, Maaco, CARSTAR, 1-800[-Radiator], all scaled players in their respective categories. This is the core of Driven’s business model.

“Finally, we are moving our early-stage glass businesses, which operate in the retail, commercial, and insurance spaces under the Auto Glass Now banner, into our ‘corporate’ and ‘other’ segment. We will continue to manage these smaller lines of business until they reach the scale to become a standalone segment.”

Driven Brands earned $564 million, up 2% compared to 2023, in Q4, which Fitzpatrick said was supported by 70 net new stores and 2.9% same-store sales growth.

The company also sold $160 million of its assets by the end of Q3, plus $48 million in Q4, he said.

“We are now more than 75% through this process and are confident we will complete this initiative in 2025,” Fitzpatrick said. “As I have previously mentioned, reducing our overall leverage remains one of our primary objectives.

“Take 5 Oil Change is our No. 1 priority, and we are hyper-focused on continuing to drive unit growth, franchise mix, same-store sales, revenue, and profits over the next five years.”

Daniel Rivera, Driven Brands executive vice president and chief operating officer, added that the company’s paint, collision, and glass segment earned $97.3 million in Q4 despite a 7% decline in industry-wide collision repair estimates.

“Our collision business continued to gain market share as evidenced by the segment same-store sales increasing 1% for the quarter,” he said. “This success is largely due to our expanding direct repair program partnerships across more than 1,900 locations in the U.S. and Canada. Our company-owned U.S. glass businesses under the Auto Glass Now banner made continued progress in their multi-year strategy.

“In Q4, we delivered sequential growth in same-store sales as we remain focused on expanding our relationships with regional insurance carriers and major commercial partners, both of which experienced growth during the quarter. We remain optimistic with the momentum in this emerging business… We remain confident in our long-term strategy and are well-positioned for continued profitable growth in 2025.”

During the Q&A portion of the earnings call, Fitzpatrick elaborated that overall industry claims being down is likely macro-driven, with cost pressures on lower-end consumers.

“Certainly, insurance premiums have more than doubled over the last four to five years, so I think we see some reticence from our customers to actually file claims but we’re incredibly pleased with our franchise performance and expect that trend to continue,” he said.

Chief Financial Officer Michael Diamond noted that Driven anticipates another year of growth across its portfolio based on its “market leadership and disciplined cost management,” resulting in total revenue of $2.05 billion to $2.15 billion.

“We recognize there continues to be a lot of uncertainty related to the macro environment, including ongoing inflationary pressures on consumer spending and the potential impact of tariffs,” he said. “While we believe the non-discretionary nature of our business model and the flexibility of our supply chain provide us with a solid foundation, we want to take a prudent approach to our outlook.”

Fitzpatrick also noted that, this year and beyond, Driven isn’t planning any significant merger and acquisition activity.

Following Q1, on May 9, Fitzpatrick told investors he’ll step down as CEO and turn the helm over to Rivera. Rivera will also join the company’s board of directors “as part of a very robust multi-year succession planning process,” Fitzpatrick said. A press release adds he will also serve as Driven’s president. Rivera will take on the new roles on May 9.

“Danny has been my partner for 13 years, and I know he’ll be a great CEO,” Fitzpatrick said. “I’d also like to acknowledge our terrific CFO, Mike Diamond, who has made such a measurable impact in the time he’s been with Driven. Finally, I’m excited to be staying on the board as chair and look forward to continuing to support Danny in his well-deserved new role and the future growth of Driven.”

Fitzpatrick has also agreed to serve as a senior advisor for the rest of this year. Neal Aronson, the current board chairman, will continue to serve as a director.

Rivera joined Driven as chief information officer in October 2012. Since then, he has served as Meineke brand president, Take 5 Oil Change president, group president of the maintenance segment, and most recently, as COO. Before coming to Driven, he held leadership roles at AutoNation, Burger King Corp., and General Electric.

“I am honored to be appointed as the next CEO of Driven Brands,” said Rivera, in the release. “When I joined the company 12 years ago, I was inspired by our talented team, leading brands, loyal customers, and the strength of our platform. My conviction in this business and the opportunities that lie ahead have only grown since then. I look forward to continuing to build on our momentum and drive profitable growth.”

Driven noted that, in connection with the CEO transition, the board will be expanded to 11 directors.

Driven also announced last week that it plans to sell its U.S. car wash business to Express Wash Operations, LLC (doing business as Whistle Express Car Wash) for $385 million. Fitzpatrick said the sale will likely close during Q2.

“This transaction will enable Driven Brands to reduce debt and enhance our focus on our growing Take 5 Oil Change brand and our stable, cash-generating franchise brands,” said Fitzpatrick, in a press release. “This decision follows a deliberate and thoughtful strategic review of value-maximizing options for the U.S. car wash business, and we are confident it will better position the company to execute on our strategic initiatives and deliver long-term value to our shareholders.”

Cash proceeds from the transaction will be primarily be used to pay down debt as Driven Brands works to achieve 3x or less net leverage by the end of 2026, according to the release.

Under the terms of the agreement, Whistle has agreed to pay Driven $255 million in cash and deliver to Driven an interest-bearing seller note in the principal amount of $130 million, subject to customary adjustments, the release states.

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