Driven Brands Holdings Inc. (DRVN)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following discussion and analysis for Driven Brands Holdings Inc. and its subsidiaries (“Driven Brands,” “the Company,” “we,” “us,” or “our”) should be read in conjunction with our consolidated financial statements and the related notes to our consolidated financial statements included elsewhere in this Quarterly Report. We operate on a 52-or 53-week fiscal year, which ends on the last Saturday in December. The three and six months ended June 27, 2026 and June 28, 2025, were both 13 and 26 week periods, respectively.

Overview

Description of Business

Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of over 4,300 locations across 49 U.S. states and Canada. Our scaled, diversified platform fulfills an extensive range of core retail and commercial automotive needs, including oil change, paint, collision, glass, and repair services. We have continued to consistently grow our revenue through same store sales growth and adding new franchised and company-operated stores. Driven Brands generated net revenue of approximately $507 million and $992 million during the three and six months ended June 27, 2026, respectively, an increase of 7%, respectively, compared to the prior year and system-wide sales of approximately $1.6 billion and $3.2 billion during the three and six months ended June 27, 2026, respectively, an increase of 5%, respectively, from the prior year.

The broader operating environment in which we conduct our business is subject to a number of macroeconomic and industry-specific factors that may affect our performance, including inflationary pressures, increased competition, industry and macroeconomic dynamics, tariffs, global conflicts, including the conflict in the Middle East, and negative weather patterns. We have experienced softening demand within certain of our businesses, primarily as a result of inflationary pressures, which have weighed on spending particularly by lower-income consumers. We believe these factors could adversely affect our net revenue, same store sales, and Adjusted EBITDA throughout the remainder of 2026. For a discussion of the effects of these factors on our segments, see “Segment Results of Operations.”

Restatement of Previously Issued Consolidated Financial Statements

As previously disclosed and as described in Note 3 - Restatement of Previously Issued Consolidated Financial Statements included in Item 1, certain financial information as of and for the three and six months ended June 28, 2025 was previously restated (the "Restatement"). Part I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations has been updated to reflect the effects of the Restatement of our consolidated financial statements. We incurred $12 million and $21 million in non-recurring costs related to the Restatement during the three and six months ended June 27, 2026, respectively. We expect to continue to incur non-recurring costs in connection with the Restatement and our related remediation efforts throughout the remainder of 2026, including in connection with the completion of audit procedures relating to the financial statements of our securitization subsidiaries. See Note 6 to our consolidated financial statements.

Resegmentation

In the fourth quarter of 2025, as a result of the announcement of the sale of its International Car Wash (“ICW”) business and the related results reflected within discontinued operations, the Company re-evaluated its operating segments, which resulted in a change to the reportable segments. The Company now has the following reportable segments: Take 5, Franchise Brands, and Auto Glass Now. Prior period information has been recast to reflect the current reportable segments.

Discontinued Operations

As previously disclosed in the Company’s Annual Report, in April 2025, the Company sold the U.S. Car Wash business and in November 2025 the Company entered into a definitive agreement to sell ICW to Neptune Acquisition Bidco Limited. On January 27, 2026, the Company completed the sale of ICW for an aggregate purchase price of €411 million, or approximately $490 million.

The net assets and operations of these disposal groups each met the criteria to be classified as discontinued operations and are reported as such in all periods presented. Unless otherwise noted, the discussion throughout Part I Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q, including the various metrics cited, excludes the U.S. Car Wash and ICW businesses and pertains only to our continuing operations. For information on discontinued operations, refer to Note 2 and Note 12 to our consolidated financial statements.

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Q2 2026 Three Months Ended June 27, 2026 Highlights and Key Performance Indicators

(as compared to same period in the prior year, unless otherwise noted)

Net Revenue

Net revenue was $507 million for the three months ended June 27, 2026 compared to $475 million for the three months ended June 28, 2025. The increase of $32 million was primarily due to the following:

•same store sales growth within all segments;

•net store growth within the Take 5 and Franchise Brands segments; and

•increased supply sales, primarily associated with Take 5 franchised store growth.

Net Income From Continuing Operations

We recognized net income from continuing operations of $37 million, or $0.23 per diluted share, for the three months ended June 27, 2026, compared to $16 million, or $0.10 per diluted share, for the three months ended June 28, 2025. The increase of approximately $21 million was primarily due to the following:

•same store sales growth within all segments;

•net store growth within the Take 5 and Franchise Brands segments;

•increased supply sales, primarily associated with Take 5 franchised store growth;

•decreased fixed asset losses and asset impairments of $35 million primarily relating to U.S. Car Wash assets that were not included in the divestiture of the U.S. Car Wash business;

•reduced share-based compensation of $6 million primarily associated with pre-IPO awards that vested in the second quarter of 2025; and

•decreased interest expense of $10 million associated with decreased borrowings in the current year.

These factors were partially offset by:

•increased professional fees, primarily due to $12 million of non-recurring fees associated with the Restatement and remediation plan;

•increased foreign currency transaction losses of $1 million in the current quarter compared to gains of $9 million in the prior year quarter; and

•increased variable costs directly associated with sales growth in the period.

Adjusted Net Income

Adjusted Net Income was $48 million for the three months ended June 27, 2026 compared to $49 million for the three months ended June 28, 2025. This decrease of approximately $1 million was primarily due to the following:

•increased professional fees, primarily due to $12 million of non-recurring fees associated with the Restatement and remediation plan; and

•increased variable costs directly associated with sales growth in the period.

These factors were partially offset by:

•same store sales growth within all segments;

•net store growth within the Take 5 and Franchise Brands segments;

•decreased interest expense of $10 million associated with decreased borrowings in the current year; and

•increased supply sales, primarily associated with Take 5 franchised store growth.

Adjusted EBITDA

Adjusted EBITDA was $107 million for the three months ended June 27, 2026 compared to $115 million for the three months ended June 28, 2025. The decrease of approximately $8 million was primarily due to:

•increased professional fees, primarily due to $12 million of non-recurring fees associated with the Restatement and remediation plan; and

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•increased variable costs directly associated with sales growth in the period.

These factors were partially offset by:

•same store sales growth within all segments;

•net store growth within the Take 5 and Franchise Brands segments; and

•increased supply sales, primarily associated with Take 5 franchised store growth.

Other Key Performance Indicators

•Consolidated same store sales increased by 1.4%.

•Consolidated system-wide sales increased $76 million, or 5%.

•The Company added 192 net new stores during the trailing twelve months.

Q2 2026 Six Months Ended June 27, 2026 Highlights and Key Performance Indicators

(as compared to same period in the prior year, unless otherwise noted)

Net Revenue

Net revenue was $992 million for the six months ended June 27, 2026 compared to $923 million for the six months ended June 28, 2025. The increase of $69 million was primarily due to the following:

•same store sales growth within all segments;

•net store growth within the Take 5 and Franchise Brands segments; and

•increased supply sales, primarily associated with Take 5 franchised store growth.

Net Income From Continuing Operations

We recognized net income from continuing operations of $61 million, or $0.37 per diluted share, for the six months ended June 27, 2026, compared to $30 million, or $0.18 per diluted share, for the six months ended June 28, 2025. The increase of approximately $31 million was primarily due to the following:

•same store sales growth within all segments;

•net store growth within the Take 5 and Franchise Brands segments;

•decreased interest expense of $23 million associated with decreased borrowings in the current year;

•increased supply sales, primarily associated with Take 5 franchised store growth;

•decreased fixed asset losses and asset impairments of $43 million primarily relating to U.S. Car Wash assets that were not included in the divestiture of the U.S. Car Wash business; and

•reduced share-based compensation of $11 million primarily associated with pre-IPO awards that vested in the second quarter of 2025.

These factors were partially offset by:

•increased professional fees, primarily due to $21 million of non-recurring fees associated with the Restatement and remediation plan;

•increased variable costs directly associated with sales growth in the period;

•increased foreign currency transaction losses of $10 million in the current year compared to gains of $9 million in the prior year; and

•increased cloud computing amortization of $5 million related to additional cloud computing arrangements placed in service during the trailing 12 months.

Adjusted Net Income

Adjusted Net Income was $97 million for the six months ended June 27, 2026 compared to $88 million for the six months ended June 28, 2025. This increase of approximately $10 million was primarily due to the following:

•same store sales growth within all segments;

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•net store growth within the Take 5 and Franchise Brands segments;

•decreased interest expense of $23 million associated with decreased borrowings in the current year; and

•increased supply sales, primarily associated with Take 5 franchised store growth.

These factors were partially offset by:

•increased professional fees, primarily due to $21 million of non-recurring fees associated with the Restatement and remediation plan; and

•increased variable costs directly associated with sales growth in the period.

Adjusted EBITDA

Adjusted EBITDA was $211 million for the six months ended June 27, 2026 compared to $217 million for the six months ended June 28, 2025. The decrease of approximately $6 million was primarily due to:

•increased professional fees, primarily due to $21 million of non-recurring fees associated with the Restatement and remediation plan; and

•increased variable costs directly associated with sales growth in the period.

These factors were partially offset by:

•same store sales growth within all segments;

•net store growth within the

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following discussion and analysis for Driven Brands Holdings Inc. and Subsidiaries (“Driven Brands,” “the Company,” “we,” “us,” or “our”) should be read in conjunction with our consolidated financial statements and the related notes to our consolidated financial statements included elsewhere in this Annual Report. We operate on a 52- or 53-week fiscal year, which ends on the last Saturday in December. The twelve months ended December 27, 2025, December 28, 2024, and December 30, 2023 were all 52 week periods.

Overview

Description of Business

Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of over 4,200 locations across 49 states in the U.S. and Canada. Our scaled, diversified platform fulfills an extensive range of core retail and commercial automotive needs, including oil change, paint, collision, glass, and repair services. We have continued to consistently grow our revenue through same store sales growth and adding new franchised and company-operated stores. Driven Brands generated net revenue of approximately $1.9 billion during the year ended December 27, 2025, an increase of 6% compared to the prior year, and system-wide sales of approximately $6.1 billion during the year ended December 27, 2025, an increase of 3% from the prior year.

The broader operating environment in which we conduct our business is subject to a number of macroeconomic and industry-specific factors that may affect our performance. We have experienced softening demand within certain businesses, primarily as a result of inflationary pressures, increased competition, industry and macroeconomic dynamics, possible future tariffs, global conflicts, and negative weather patterns. We believe the impact of inflation on consumer demand and our cost structure could be significant in 2026.

Restatement of Previously Issued Consolidated Financial Statements

We have restated our previously issued audited consolidated financial statements for fiscal years 2024 and 2023 contained in the 2024 Form 10-K. Refer to the Explanatory Note preceding Item 1, Business, Note 3, Restatement of Previously Issued Consolidated Financial Statements and Note 19, Restatement and Recast of Quarterly Financial Information (Unaudited), included in Item 8 for background on the restatement, the fiscal periods impacted, control considerations, and other information.

In addition, we have restated certain previously reported financial information for fiscal years 2024 and 2023 in this Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations as well as the Company’s unaudited interim financial statements for each of the quarterly and year-to-date periods for the periods ended September 27, 2025, June 28, 2025 and March 29, 2025, and the respective comparative periods.

In connection with the preparation of our financial statements for the fiscal year ended December 27, 2025, we identified multiple material weaknesses in our internal control over financial reporting as further described in Item 9A. As a result, we have concluded that our internal controls were not effective as of December 27, 2025. We are taking steps to remediate these weaknesses, including enhancing our control environment and implementing additional review procedures.

Adjustments made as a result of the Restatement impacted financial results for fiscal years 2023 and 2024 and the first three quarters of fiscal year 2025. The impact of the Restatement on net income in 2023, 2024, and through the end of the third quarter of 2025 were reductions of $54 million, $5 million, and $5 million, respectively and reductions of $57 million, $12 million, and $8 million on Adjusted EBITDA in 2023, 2024 and through the end of the third quarter of 2025, respectively. An overview of the primary impacts from the restatement adjustments on the financial results is set forth below.

•Cash adjustments: The impact of the errors relating to cash adjustments to the consolidated statement of operations for fiscal year 2024 is an increase to selling, general, and administrative expenses of $4 million. The impact of the errors to the consolidated statement of operations for fiscal year 2023 is a decrease to company-operated store sales of $6 million and a $1 million increase to selling, general, and administrative expenses. The impact of the errors to the consolidated balance sheet as of December 28, 2024 is a decrease to cash and cash equivalents of $28 million. The errors further affect the opening and closing cash balances and operating cash flows in the consolidated statements of cash flows for fiscal years 2024 and 2023.

•Accounts payable adjustments: The impact of the errors caused by incorrect journal entries associated with the roll-out of the Company's DrivenAdvantage business resulted in $7 million of accounts payable adjustments to the

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consolidated balance sheet as of December 28, 2024, with a corresponding increase to company-operated store expenses for fiscal year 2023 (collectively, these errors are referred to herein as the “Accounts Payable Adjustments”).

•Accounts receivable adjustments: The impact of the errors relating to accounts receivable adjustments to the consolidated statement of operations for fiscal year 2023 is a $9 million increase to selling, general, and administrative expenses and a $3 million decrease to supply and other revenue. The impact of the errors to the consolidated statement of operations for fiscal year 2024 is a $2 million decrease to company-operated store sales, a $2 million decrease to supply and other revenue, and a $1 million increase to selling, general and administrative expenses. The impact of the errors to the consolidated balance sheet as of December 28, 2024 is a decrease to accounts receivable of $26 million.

•Other adjustments: The Company has also identified certain other errors, which have been reflected in the tables in Note 3.

Errors associated with the restatement impacted certain financial information on a year-over-year basis, however, unless otherwise noted, the discussion below will not address the financial statement impacts of the Restatement errors.

Details of the impact of the restatement on the Company's consolidated financial statements are provided in Note 3 and details of the impact of the restatement on the Company's unaudited interim condensed consolidated financial statements are provided in Note 19 within the Notes to Financial Statements included in Item 8 of this Form 10-K.

Resegmentation

In the first quarter of 2025, the Company reorganized its operating segments to simplify its reporting structure, align with the Company’s current business model, and increase transparency for our investors, which resulted in a change to our reportable segments. As a result, the Company had the following reportable segments: Take 5, Franchise Brands, and Car Wash. Then, in the fourth quarter of 2025, as a result of the announcement of the sale of our International Car Wash (“ICW”) business and the related results reflected within our discontinued operations, the Company re-evaluated its operating segments, which resulted in another change to the reportable segments. As of the fourth quarter of 2025, the Company now has the following reportable segments: Take 5, Franchise Brands, and Auto Glass Now. Prior period information has been recast to reflect the current reportable segments.

Discontinued Operations

As previously disclosed in the Company’s 2024 Form 10-K, on February 24, 2025, the Company entered into a definitive agreement to sell its U.S. Car Wash business to Express Wash Operations, LLC dba Whistle Express Car Wash (the “Buyer”) for an aggregate purchase price of $385 million, subject to customary adjustments. Under the terms of the agreement, the Buyer agreed to pay the Company $255 million in cash and deliver to the Company an interest-bearing seller note (“Seller Note”) evidencing a loan of $130 million. The transaction was completed on April 10, 2025. In July 2025, the Company sold the Seller Note for $113 million.

On November 27, 2025, the Company entered into a definitive agreement to sell its ICW business to Neptune Acquisition Bidco Limited. On January 27, 2026, the Company completed the sale of ICW for an aggregate purchase price of €411 million, or $490 million.

The net assets and operations of these disposal groups each met the criteria to be classified as discontinued operations and are reported as such in all periods presented. Unless otherwise noted, the discussion throughout Part II Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K, including the various metrics cited, excludes the U.S. Car Wash and ICW businesses and pertains only to our continuing operations. Certain financial activity related to the U.S. Car Wash business, including results from stores closed in 2023 and 2024 and certain assets held for sale, is included in continuing operations within Corporate and Other results. For information on discontinued operations, refer to Note 2 and Note 18 to our consolidated financial statements.

2025 Highlights and Key Performance Indicators

(as compared to same period in the prior year, unless otherwise noted)

Net Revenue

Net revenue was $1.9 billion for the year ended December 27, 2025 compared to $1.8 billion for the year ended December 28, 2024. The increase of $110 million was primarily due to the following:

•same store sales growth of 7.9% and 6.2% within the Auto Glass Now and Take 5 segments, respectively; and

•175 net store growth, primarily within the Take 5 segment.

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These factors were partially offset by:

•the absence of $45 million of revenue in 2025 from our Canadian distribution business, which we sold in the third quarter of 2024; and

•decline in same store sales of 1.1% within the Franchise Brands segment.

Net Income From Continuing Operations

We recognized net income from continuing operations of $132 million, or $0.80 per diluted share, for the year ended December 27, 2025, compared to less than $1 million, or $— per diluted share, for the year ended December 28, 2024. The increase of approximately $132 million was primarily due to the following:

•same store sales growth of 7.9% and 6.2% within the Auto Glass Now and Take 5 segments, respectively;

•175 net store growth, primarily within the Take 5 segment;

•decreased interest expense of $36 million, primarily relating to the full repayment of the Term Loan Facility and decreased borrowings on the Revolving Credit Facility;

•the net release of a valuation allowance for deferred tax assets which includes the release of a valuation allowance of $37 million that incorporates the impact from the enactment of the One Big Beautiful Bill Act (“OBBBA”);

•a positive impact from foreign exchange of $32 million;

•decreased asset impairment charges of $28 million; and

•reduced share-based compensation expense of $19 million, primarily associated with pre-IPO awards that fully vested in the second quarter of fiscal year 2025.

These factors were partially offset by:

•the absence of net income in 2025 from our Canadian distribution business, which we sold in the third quarter of 2024;

•decline in same store sales of 1.1% within the Franchise Brands segment;

•increased costs directly associated with sales growth in the period;

•increased expenses related to new store openings and repair and maintenance charges;

•legal expenses primarily associated with legal matters disclosed in Note 17;

•increased net losses on the sale or disposal of assets;

•a $17 million loss on fair value of Seller Note assumed from the sale of the U.S. Car Wash business;

•increased allowance for credit losses of $10 million relating to aged accounts receivables;

•increased pr

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