Driven Brands franchise division is ‘all about cash;’ company encourages alternative parts use

Driven Brands President and CEO Danny Rivera told investors during the company’s Q1 earnings call that the company is “all about cash” when it comes to its Franchise Brands Division, and uses alternative parts to reduce vehicle repair costs.

Investors were reminded during the call of Driven Brands’ non-compliance with Nasdaq Listing Rule 5250(c)(1) due to the delayed filing of its quarterly report on Form 10-Q for the period ended March 28, 2026, and that a remedy was in the works.

The company also reported on the call that quarterly revenue was up 8% to $484.4 million compared to Q1 2025.

In Q1, Rivera said Driven Brands saw the industry pick up some from Q4.

“We continue to outperform the general industry anywhere between 100 to 300 basis points,” he said. “That really hasn’t changed into Q1, and we don’t expect that to change here anytime soon. As we look at the collision industry for the entire year of 2026, what we’re really expecting is a year of stabilization, not so much a year of bounceback. We expect the industry to moderate towards the back half of the year, and in turn, the segment will tend to moderate into the back half of the year. …for us, Franchise Brands is all about cash.

“As we think about the framework of growth and cash, I love it when we post a 1% comp quarter, obviously, but at the end of the day, what I love more is 60% margins, and irrespective of the moderation of the top line into the back half of the year, we continue to expect really strong margins from that segment.”

An investor asked whether there has been any reprieve from insurance premiums “entering into deflationary territory,” specifically, how Driven Brands is considering handling possible pent-up demand in that segment.

“We’re happy it’s a solid start to the quarter; 1% comps is good,” Rivera responded. “As we iterated in our prepared remarks, we’re expecting some moderation for the segment towards the back half of the year. The underlying story, so to speak, really hasn’t changed a whole lot.

“If you look at underlying Franchise Brands, we’ve got three main businesses. Maaco has been soft. It was softtail at the end of last year. That softness has persisted into Q1 of this year, although we are seeing a bit of improvement on the retail side of that business. Meineke has been strong for some time now. That strength was evident in 2025, and that momentum has carried forward into Q1. The change sequentially quarter-over-quarter was really collision.”

Rivera was also asked why Driven Brands expects industry trends to moderate in the second half of the year, and whether there is anything the company could do to capture more customer pay opportunities to offset the insurance side of the business being “soft.”

Rivera said Driven Brands already captures more customer pay.

“That’s been a growing part of our business here, and we’re uniquely positioned as Driven Brands when you think about the Maaco side of the portfolio,” he said. “If you have a customer that doesn’t want to go to insurance, let’s say they get into a light fender bender, and they don’t want to pay or risk their premiums going up or something like that, and they may want to come out of pocket — Maaco is a very real alternative there. Maaco features a lot of customer pay, frankly. We’re somewhat uniquely positioned to capture that side of the work. As far as why do we expect the moderation of the industry, that’s just based on the data that we’re seeing.

“We saw sequential improvement Q1 over Q4, but as we look at the data that’s available, if we look at just what’s happening with inflation in the country and some of the most recent numbers, our expectation, again, is that 2026 is a year of stabilization over 2025, not so much a bounce back year. We expect a bit of moderation going into the back half of the year.”

The investor followed with: “Do you have any ability to push harder on alternative parts in order to lower repair costs and maybe make a dent in that trend?”

“We do,” Rivera said. “One of the really nice things about our business compared to some of our competitors in that space is that we’ve got a franchise model, so we’ve got owner-operators on the ground. Having owners on the ground covers all manner of sin, and those folks are very cognizant of not just delivering an amazing experience for the customers and for our carriers, but also they’re very cognizant of making sure that they’re taking the appropriate steps to maximize profitability.”

The company ended the quarter with a net leverage ratio of 3.2-times Adjusted EBITDA and total liquidity of $804 million consisting of $133 million in cash and cash equivalents and $671 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility, not including an additional $135 million 2022-1 Securitization Senior Notes. Driven Brands says the notes will expand its variable funding note borrowing capacity if it elects to exercise them.

Driven Brands discussed its reported material errors and restatement during its delayed 2025 Q4 earnings call held May 19, and later disclosed delayed reporting on June 5.

A press release sent out ahead of its Q1 earnings call states that Driven Brands “believes that, upon such filing, it will regain compliance.”

Also in Q1, revenue declined by $400,000, driven by the sale of the company’s two remaining company-operated collision locations, according to Executive Vice President and Chief Financial Officer Mike Diamond.

“We expect Franchise Brands [division] same-store sales to moderate as compared to the 0.9% growth in Q1, given the uneven nature of recovery for both Maaco and Collision,” he said.

Investors were told that overall system-wide sales increased 6% to $1.6 billion, driven by a 2% increase in same-store sales and a 5%
increase in store count versus the prior year.

Lookout for the rest of 2026 is as follows, according to what Driven Brands shared via press release and during its Q1 earnings call:

Fiscal year 2026 adjusted EBITDA and adjusted diluted EPS outlook continue to include $35 million to $45 million in restatement-related, non-recurring costs, according to the release.

“The company continues to expect fiscal 2026 same-store sales growth in the range of flat to 2%; and net store growth of approximately 160 to 190,” the release states. “The company continues to expect to generate between $125 million and $145 million of free cash flow in fiscal year 2026.”

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Featured image: Danny Rivera, Driven Brands

Featured photo, infographic, and chart provided by Driven Brands