Driven Brands Holdings Inc., the parent company of Auto Glass Now, has updated its capital allocation priorities to accelerate growth and drive long-term shareholder returns.
“The strength of Driven Brand’s growth and cash framework has been on full display over the last several years as Driven reduced its net leverage from 5x at the end of 2023 to an expected 3x at the end of Q3 2026, reaching our 3x target a full quarter ahead of plan,” says Danny Rivera, president and CEO. “We are entering a new phase focused on deploying capital to support growth, maintaining financial flexibility and enhancing shareholder value. Today’s announcement provides investors with greater clarity regarding the framework that will guide our capital allocation decisions going forward.”
Driven Brands ’s updated capital allocation priorities include:
- Continuing to invest in Take 5 growth, leveraging its proven operating model, strong four-wall economics and compelling cash-on-cash returns. This growth will come through units in new and existing markets and may include acquisitions where attractive;
- Setting a long-term net leverage target of 2-3 x net debt to adjusted EBITDA. This range balances financial flexibility, investment capacity and efficient use of capital while maintaining a strong balance sheet; and
- Returning capital to shareholders, beginning with a $100M share repurchase authorization. This amount represents approximately 5% of Driven Brand’s market capitalization.
“Driven’s free cash flow profile and balance sheet create a strong foundation for the company to execute its capital allocation priorities,” says Mike Diamond, executive vice president and chief financial officer.
Speaking of the company’s Auto Glass Now segment during the Goldman Sachs Global Consumer and Retail Conference on Sept. 15, Rivera discussed long-term growth and opportunities for the brand.
“If we were having this conversation five years ago, we would not even be in the industry. We went from no position in glass to fairly quickly building up a number two position. So, sitting here today, we are the second biggest operator in North America, which is fantastic.”
Rivera added that they continue to see growth, but it’s not expected to be linear right now.
“For us, this is really about the long term, and the long term is ultimately that we want to get into the national insurer carrier business. We would love to earn our fair share of that business. And when we do, you are going to see a nice unit step change in the business, both from an EBITDA dollars perspective and also from a margin perspective.”
