CHARLOTTE, N.C. — Driven Brands Holdings Inc., franchisor of the Meineke Car Care, Take 5 Oil Change and other auto repair businesses, is preparing to go public.
The Charlotte-based company filed an initial public-offering (IPO) declaration on Dec. 22, but has as yet not published the number of shares it expects to offer nor an offering price.
The firm has applied to list its stock on the Nasdaq Global Select Market ("NASDAQ") under the symbol "DRVN."
Following the completion of this offering and related transactions, Driven Brands said its existing principal stockholders will continue to own a majority of the firm's voting power. Under the corporate governance rules for NASDAQ-listed companies, Driven Brands will be considered a "controlled company" and will be exempt from certain corporate governance requirements of such rules.
The firm's principal stockholders are Driven Equity L.L.C. and RC IV Cayman ICW Holdings L.L.C., both of which are controlled indirect subsidiaries of Roark Capital Partners III LP ("Roark Capital Partners III") and Roark Capital Partners IV Cayman AIV LP ("Roark Capital Partners IV"), respectively.
The management team at Driven Brands comprises:
- Jonathan Fitzpatrick, president, CEO and board director, positions he has held since July 2012.
- Tiffany Mason as executive vice president and CFO, positions she has held since March 2020
- Scott O'Melia, executive vice president, general counsel and secretary, positions he has held since May 2020.
- Daniel Rivera, executive vice president and group president, maintenance, covering the Meineke and Take 5 brands. He joined Driven Brands in 2012.
Driven Brands considers itself the largest automotive services company in North America with 4,185 locations in 49 U.S. states and 14 countries outside the U.S. Of the 4,185 outlets, Driven Brands owns 66 and lists 98 as "independently-operated" store locations.
The firm claims to have agreements to open more than 500 additional franchised units.
During the nine months ended Sept. 26, the company generated $616 million in revenue from $2.4 billion in systemwide sales, which equates to roughly 1% of the total automotive aftermarket maintenance business in the U.S. and 4% of the collision, paint and glass repair sector.
In its IPO prospectus, Driven Brands laid out a growth strategy that includes:
- Growth through new franchised and company-operated locations. Driven Brands said it believes there is "ample whitespace" in existing and adjacent markets in North America for continued unit growth through new franchised store openings, new company-operated store openings and "tuck-in" acquisitions.
- Same-store sales growth: The firm states is "well-positioned" to continue same-store sales growth by expanding commercial partnerships, growing the subscription car wash revenue model and leveraging data analytics to optimize marketing, product offerings and pricing.
- Enhance margins through "procurement initiatives" and strengthening platform services.
- Pursue accretive M&A in existing and new service categories. The firm said it believes it has "significant runway" to execute a proven acquisition strategy within the highly fragmented automotive services industry.
In addition, Driven Brands said it provides a breadth of "high-quality and high-frequency" services to a wide range of customers who rely on their cars in all economic environments to get to work and in many other aspects of their daily lives.
"Our 'asset-light' business model generates consistent recurring revenue and strong operating margins, and requires limited maintenance capital expenditures," the firm said. "Our significant free-cash-flow generation and capital-efficient growth results in meaningful shareholder value creation."
The firm added that its "diversified platform of needs-based service offerings" has delivered 12 consecutive years of positive same-store sales growth.
Atlanta-based Roark Capital acquired Driven Brands in early 2015, from Harvest Partners L.P. for an undisclosed price.
Since then, the company has:
• Increased its total store count to 3,106 from 2,306 at a CAGR of 8%;
• Increased revenue to $600 million from $168 million at a CAGR of 37%;
• Doubled systemwide sales to $2.9 billion from $1.4 billion, at a CAGR of 19%;
• Grew same store sales at an average annual rate of 4.2%;
• Increased net income to $8 million from $3 million;
• Doubled adjusted EBITDA to $119 million from $53 million, at a CAGR of 22%