Driven Brands talks material errors and restatement during Q4 earnings call
Driven Brands discussed reported material errors and restatement during its delayed 2025 Q4 earnings call held May 19.
“During our 2025 year-end closing process, we identified three issues requiring further review related to lease accounting, Auto Glass Now cash accounting, and expense mischaracterization with Driven Advantage, each related to prior periods,” said Daniel Rivera, Driven Brands CEO, president, and director. “As we review these matters further, we determined that there were material errors requiring the restatement of prior financial statements. We engaged our Audit Committee, external auditors, and outside advisers to conduct a comprehensive review of our previously issued financial statements.”
Rivera said the review identified additional items requiring adjustment. This included revenue reduction of $12 million in 2023, $4 million in 2024, and $5 million in 2025. EBITA adjustments included $57 million in 2023, $12 million in 2024, and $8 million in 2025.
A majority of the issues are from 2023, 2022, and prior, he said. He added that the company expanded two new verticals, car wash and glass, and launched a new digital solution for Driven Advantage during this time period.
“While the underlying issues are varied, they can be grouped into 2 primary drivers,” Rivera said. First, the pace and complexity of growth outstripped the scale and maturity of certain back-office people, processes, and controls. Second, as the business grew in scale and complexity, we recognized the need for a more integrated and scalable ERP [enterprise resource planning] environment, which led to the decision in 2023 to consolidate multiple ERPs to Oracle, with the system going live in mid-2024.”
Rivera said the issues were identified because Driven Brands strengthened both its team and systems, including a new CFO in 2024 Q4, a new chief accounting officer, and other key roles.
“Driven today is focused on core businesses that we know well and have operated for many years,” he said. “This has been a challenging but important process, and it has increased our confidence in the team and systems we now have in place. We identified the issues, restated the financial statements, and are strengthening our controls.”
He added that in 2025, the company paid down $545 million in debt. In 2026, the company sold its International Car Wash business and used proceeds to pay down more than $470 million of additional debt.
Full revenue grew 6.3% in 2025 to about $1.9 billion with an adjusted EBITDA of $449 million. System-wide sales increased 2.7%, supported by 175 net new stores, Rivera said.
“Driven Brands today is a simpler, more focused company centered on nondiscretionary automotive services in North America that generate scalable growth and sustainable cash flow,” he said.
Michael Diamond, Driven Brands’ CFO and executive vice president, said that the majority of the overstatement was the result of 12 acquisitions from different ERP systems.
“Lease-related, right-of-use assets and right-of-use liabilities were understated dating back to at least 2023, primarily driven by incorrect lease details in our lease database,” Diamond said. “As part of our year-end close process, we undertook a thorough review of our existing leases and have been implementing process improvements to better monitor new and modified leases.”
Certain costs were also misclassified between company-operated store expenses and supply and other expenses in 2023 and 2024, he said.
When the company launched its new digital platform, Driven Advantage, an internal marketplace in 2023, technology integrations between the new ordering platform and the prior ERP were incorrectly established.
“This issue was largely addressed with the rollout of Oracle in mid-2024,” Diamond said. “But during this restatement, we identified incorrect manual journal entries that were made in 2023. The impact of these incorrect entries resulted in an understatement of accounts payable. Correcting this understatement increased COGS for Take 5 in 2023.”
A retesting of accounts identified historical balances that should have been reserved in 2023, duplicated accounts receivable (AR) amounts as part of the Oracle transition, and misapplication of certain credit balances, he said.
Total revenue for Q4 was $460.1 million, an increase of 7.7% year over year, he said. The operating expense also decreased $29.5 million year-over-year. He added that operating income increased $62.4 million to $79.2 million in Q4.
According to The Motley Fool, ADW Capital Management acquired 4,000,000 shares of Driven Brands earlier this month.
“The estimated value of the trade was approximately $56.31 million, calculated using the average closing price for the quarter,” the article states. “At quarter-end, the position was valued at $50.44 million, reflecting both the purchase and price movement.”
AWD proposed to acquire outstanding shares of Driven Brands’ common stock for $18 per share in cash in an open letter it published in early May.
The proposal represented a 41% premium over the closing price of $12.74 per share at the time the letter was written. It added that this was 42% premium over the 30-day volume-weighted average price of $12.69.
ADW’s proposal comes at the deadline that looms for investors to file lead plaintiff applications in a class action suit against Driven Brands. Those who purchased, or otherwise acquired company shares between May 3, 2023, and Feb. 24, 2026, and have losses in excess of $100,000 have until today to file the application.
In February, Driven Brands reported material errors in the company’s previously issued consolidated financial statements for fiscal years 2023 and 2024.
As a result, the company delayed the filing of its annual report on Form 10-K and the first three quarters of 2025.
The price of Driven Brands’ shares fell nearly 40% from a close of $16.61 on Feb. 24 to $9.99 on Feb. 25 at opening.
ADW’s open letter states that it previously sent a letter on March 26 to Driven Brands, and has since increased its position, now owning approximately 3.7% of the company’s common stock.
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