Driven Brands Hldgs Q1 2026 Earnings Call: Complete Transcript

On Thursday, Driven Brands Hldgs (NASDAQ:DRVN) discussed first-quarter financial results during its earnings call. The full transcript is provided below. Benzinga APIs provide real-time access to earnings call transcripts and financial data. Visit https://www.benzinga.com/apis/ to learn more. The full earnings call is available at https://events.q4inc.com/attendee/362081124 Summary Driven Brands Holdings reported a 6% growth in system-wide sales, 8% growth in revenue, and 2% growth in same-store sales for Q1 2026. The company achieved an adjusted EBITDA margin of 21.5% and aims to reduce net leverage to 3 times by year-end. Take 5 oil change showed strong performance with a 14% increase in system-wide sales and plans to expand to over 2,500 locations. The company reiterated its full-year 2026 guidance with expected revenue of $1.95 to $2.05 billion and adjusted EBITDA of $430 to $460 million. Driven Brands appointed Bart Lecount as Chief Marketing Officer to enhance marketing capabilities. The automotive aftermarket remains resilient, though there is a moderation in traffic among newer and value-oriented customers. Management continues to focus on reducing net leverage and strengthening financial foundations. Franchise brands achieved a 60% adjusted EBITDA margin, with Meineke driving strong same-store sales. Auto Glass Now reported a 7% increase in same-store sales with plans to expand carrier relationships. The company faces potential moderation in sales growth due to macroeconomic pressures but remains confident in achieving full-year targets. Full Transcript JL (Operator) Thank you for standing by. My name is JL and I will be your conference operator today. At this time I would like to welcome everyone to the Driven Brands first quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press Star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press Star one again. We'd now like to turn the conference over to Steve Alexander Investor Relations. You may begin. Steve Alexander (Investor Relations) Good Morning. Welcome to Driven Brands Hldgs first quarter 2026 earnings conference call. The earnings release and Net Leverage ratio reconciliation are available for download on our website@investors.drivenbrands.com on the call with me today are Danny Rivera, President and Chief Executive Officer and Mike Diamond, Executive Vice President and Chief Financial Officer. In a moment, Danny and Mike will walk you through our financial and operating performance for the quarter. Before we begin our remarks, I would like to remind you that management will refer to certain non GAAP financial measures you can find the reconciliations to. The most directly comparable GAAP financial measures are on the Company's investor relations website and in its filings with the securities and Exchange Commission. During this call we will also make forward looking statements regarding our current plans, beliefs and expectations. These statements are not guarantees of future performance and are subject to a number of risks and uncertainties and other factors that could cause actual results and events to differ materially from results and events contemplated by these forward looking statements. Please see our earnings release and our filings with the securities and Exchange Commission for more information. Today's prepared remarks will be followed by question and answer session. We ask that you limit yourself to one question and one follow up. Now I'll turn the call over to Danny. Danny R. Rivera — Chief Executive Officer Good morning and thank you for joining us to discuss Driven Brands 2026 First Quarter Results. Q1 was a solid quarter for Driven as we continued to execute our growth and cash strategy for the quarter. We grew system wide sales 6%, revenue 8%, same store sales 2% and adjusted EBITDA 2% while delivering adjusted EBITDA margins of 21.5%. The quarter was highlighted by take five oil changes, 23rd consecutive quarter of same store sales growth, improvement from our franchise segment and further progress reducing Net leverage. We remain focused on reducing net leverage and strengthening our financial foundation. Net Leverage finished the quarter at 3.2 times and we remain on track to achieve our target of three times by year end. Our priority remains reaching that target first, after which we intend to provide investors with a clear framework for our long term capital allocation priorities. We also continue to make progress enhancing our finance and accounting capabilities, strengthening processes and improving controls. While there is more work ahead, we are building a stronger and more scalable foundation to support the next chapter of growth at Driven Brands. The automotive aftermarket remains one of the most resilient corners of the consumer economy. We continue to benefit from long term industry trends including an aging vehicle fleet, a growing car park, increasing vehicle complexity and consumers keeping vehicles longer. Overall demand remains healthy across our businesses. Within Take Five, we are monitoring some moderation in traffic among newer customers and more value oriented customers, particularly households earning less than $50,000 annually or facing greater pressure from inflation and higher living costs. However, our core customer base remains resilient and we continue to see strong average check, healthy premium mix and solid attachment rates. The essential nature of our services combined with secular industry tailwinds reinforces our confidence in the business. Before turning to Take Five, I'd like to highlight an important investment we recently made to strengthen our management team and long term capabilities. Bart Lecount has recently joined Driven Brands as our Chief Marketing Officer, a newly created position demonstrating our commitment to building marketing into a core enterprise capability. Bart brings more than 20 years of marketing and brand building experience from leading consumer brands including PepsiCo and Restaurant Brands International where he led marketing for Popeyes. We have centralized marketing leadership under BART to build a more integrated, data driven and scalable marketing organization that can accelerate growth, improve customer acquisition efficiency, strengthen customer retention and enhance the value of our brands. Turning to Take 5 oil change Take 5 delivered another strong quarter growing system wide sales 14% revenue 10% same store sales 4.5% 12.5% on a two year basis and adjusted EBITDA by 14% while expanding margins year over year by 120 basis points resulting in adjusted EBITDA margins of 33.9%. We believe Take 5's performance continues to reflect the strength of its differentiated customer experience. Our stay in your car model combined with a fast, friendly and simple service experience continues to resonate with consumers. Strong operational execution, premiumization, increasing attachment rates and disciplined marketing further support customer acquisition, retention and profitable growth. Take Five also remains early in its growth journey. With approximately 1400 locations today and a path to more than 2,500 locations over time, we continue to see substantial white space opportunity ahead. Importantly, we also continue to see attractive unit level economics and returns on new store investments across both company and franchise development. Our franchise segment once again delivered robust profitability, generating adjusted ebitda margins of 60% while growing same store sales 1% during the quarter. Results continue to be led by Meineke, with same store sales for the segment sequentially improving from the fourth quarter. We expect franchise brands to continue generating strong margins and cash flow throughout 2026, although we anticipate same store sales for the segment to moderate from our first quarter results. Auto Glass now also delivered a strong quarter, growing revenue 6% same store sales 7% adjusted EBITDA 12% while expanding margins 40 basis points to 9.4%. We continue to see significant long term growth opportunity as we expand carrier relationships, grow market share and leverage the scale we've built across the platform close with three key takeaways. First, Take five continues to validate our long term investment thesis. The business is delivering strong growth, expanding margins and remains early in its Runway toward more than 2,500 locations. Second, we remain on track to achieve our target of three times net leverage by year end while continuing to strengthen the company's financial foundation. Third, we will remain disciplined allocators of capital and active managers of our portfolio, concentrating our resources on our highest growth, highest return opportunities to create long term shareholder value. Based on our first quarter performance, we are reiterating our full year 2026 guidance of revenue of 1.95 to $2.05 billion adjusted EBITDA of 430 to $460 million same store sales of flat to 2% and 160 to 190 net new units. I want to sincerely thank our team and our franchise partners for their continued commitment, execution and support. With that I'll turn it over to my partner and driven CFO Mike. Mike Diamond — Chief Financial Officer Thank you Danny and good morning everyone. I want to begin with an update on our progress toward remediating the material weaknesses in our internal control over financial reporting. As a reminder, this is a multi quarter process. However, our team has made meaningful early progress executing against detailed remediation work plans for each material weakness and we remain committed to strengthening our control environment as we move forward. Turning to our financial results, a reminder that with the divestiture of both our US and international car wash businesses, the results for those businesses are included in discontinued operations and and are not included in quarterly financial details provided today unless Otherwise noted. For Q1 Driven recorded same store sales growth of 2.1% and added 29 net new units. System wide sales for the company grew 5.8% in Q1 to $1.6 billion. Total revenue for Q1 was $484.4 million, an increase of 8.2% year over year. Q1 operating expenses increased $24.1 million year over year, Driven primarily by $8.1 million in higher company operated store expenses from higher sales in more stores and $9.1 million in non recurring restatement costs which were below our initial expectations. Based on a detailed review of the timing of restatement work performed, we saw some restatement cost shift from Q1 to Q2 versus initial expectations. We still anticipate the full year non recurring restatement costs to be between 35 and $45 million. SG&A for Q1 was $131.8 million or 8.4% of system wide sales excluding the Q1 restatement costs. SG&A declined $1.9 million year over year and was 7.8% of system wide sales in line with our expectations as a growing multi business platform with both franchise and company operations. Q1 operating income increased $12.7 million to $67.4 million, Driven primarily by the increase in revenue. Adjusted EBITDA increased 1.7% to $104.1 million for the quarter. Adjusted EBITDA margin for Q1 was 21.5%, a decrease of roughly 140 basis points versus Q1 2025. Excluding restatement costs, adjusted EBITDA margin would have grown approximately 50 basis points. Interest expense declined $12.8 million to $23.5 million, Driven primarily by ongoing debt paydown. Income tax expense for the quarter was $9.4 million. Net income from continuing operations for the quarter was $23.8 million. Adjusted net income from continuing operations for the quarter was $49 million. Adjusted diluted EPS for Q1 was $0.30. Q1 performance for each of our segments include Take 5 grew same store sales 4.5% in Q1 and added 29 net new units in the quarter, continuing to execute against its pipeline of both franchise and corporate new units. Adjusted EBITDA grew 13.6% to $109.5 million, Driven by sales growth and the lapping of a roughly $4.5 million inventory valuation charge in Q1 of 2025 stemming from our restatement. Adjusting for the inventory valuation charge, take five Adjusted EBITDA grew roughly eight and a half percent. Franchise Brands reported a 0.9% increase in same store sales. Revenue declined $0.4 million Driven by the sale of our two remaining company operated collision locations. Adjusted EBITDA was $41.4 million in Q1, a decrease of $1.5 million Driven by increased technology costs and select investments in people to drive future growth. Auto Glass now reported same store sales growth of 7.2% in Q1 as we saw sequential growth across our retail, commercial and insurance business. Adjusted EBITDA increased $0.6 million to $5.9 million. Turning to cash flow and leverage, our cash flow statement shows a consolidated view of cash flows inclusive of discontinued operations. Net Capital expenditures for Q1 were $26.9 million, a decrease of $32.2 million primarily Driven by the lapping of CapEx from our divested car wash businesses. Q1 free cash flow defined as operating cash flow less net capital expenditures was $30.3 million, an increase of $13 million from Q1 2025. We ended the quarter at 3.2 times net leverage and remain on track to achieve our target of three times by year end with strong cash flow generation. Today we are reiterating our full year 2026 outlook that was previously shared on May 19th. As a reminder, we continue to expect revenue of 1.95 to $2.05 billion adjusted EBITDA 430 to $460 million, which includes between 35 and $45 million of estimated non recurring restatement costs that that we do not intend to add Back to adjusted EBITDA in 2026 adjusted diluted EPS of $1.15 to $1.25 same store sales of flat to 2% net store growth between 160 and 190 units net capital expenditures of approximately 6.5% of revenue free cash flow between 125 and $145 million. As we approach the end of Q2, we want to provide a few notes on Q2 performance. Sales we expect moderation across all of our brands in Q2. We expect Q2 take 5 same store sales growth in the mid 3% range which would represent approximately 10% on a 2 year stack. Reflecting the moderation from newer customers and lower income households, we expect franchise brand same store sales to moderate as compared to the 0.9% growth in Q1 compared to given the even nature of recovery for both MAKO and collision restatement costs, we expect restatement costs to exceed $15 million in Q2. The increase from Q1 is Driven by a full three months of restatement work in the quarter, including the filing of both our 10K and Q1 10Q work on our restated financials for our whole business securitization, ongoing remediation of our internal controls and associated legal costs. Importantly, these costs are nonrecurring in nature and do not reflect the underlying earnings power of the business Adjusted EBITDA As a result, we expect adjusted EBITDA margins to be pressured relative to Q1's 21.5%. To summarize, we had solid Q1 with same store sales growth across all three of our segments and grew adjusted EBITDA in Q1 despite nonrecurring restatement costs. However, we recognize the macro pressures consumers are facing and are appropriately cautious in Q2 given the top line moderation we are seeing across both Take five and Franchise brands. Importantly, we remain on track to deliver our full year outlook which was constructed to reflect a broad range of macro scenarios. With that, I will now turn it over to the operator and we are happy to take your questions. JL (Operator) Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question,, please press Star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press Star one again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. We do request for today's session that you please limit yourself to one question and one follow up and queue back up for any follow up questions if time permits. Your first question comes from the line of Mark Jordan of Goldman Sachs. Your line is open. Mark Jordan (Equity Analyst) Hey, good morning. Thank you very much for taking my question. Can you just talk a little bit more about the moderation you're seeing in traffic from some of your customers and you know, I guess how it's trending during 2Q. And if there's anything you can talk about in your other demographics outside of the new customers and the lower income Danny R. Rivera — Chief Executive Officer customers yeah, hey Mark, it's Danny. So yeah, look we continue to see a bit of moderation with two very specific groups of customers. So it's newer customers and more value oriented customers. We mentioned this for the first time last earning call a few weeks ago. Honestly, nothing's changed from a trends perspective, things are pretty stable on that front. I think importantly to the second half of your question, when we look at our core customer, when we look frankly across all other customer types, what we're seeing is resilience, right? So ultimately check is up, attachment rates are up Premiumization is up. So I'd summarize it as generally speaking, we're seeing a resilient consumer with a bit of moderation across two specific groups. Mark Jordan (Equity Analyst) Okay, perfect. And if I could just follow on, you know, on the 1Q comp and maybe how it trended for take five throughout the quarter and you know, I don't know if you'd be willing to give it but how ticket and traffic contributed for the quarter as well. Danny R. Rivera — Chief Executive Officer Yeah, we typically don't, don't break out the sales tree and we don't go intra company or intra quarter numbers. But look, what I'd say is it was a solid start to the year for take five. Right. So 4.5% comps for the quarter, 12.5% on a two year basis. We continue to see that business grow and do well ultimately from an aero and traffic perspective. Like I said, we don't break it out. But I mean look, the material gain there is really on the arrow side. We continue to see improvement in check improvement in attachment rates. Our NPS scores remain in the high 70s. So not only are we delivering the services on the kind of check side of the equation, but we're doing so in a way where customers are happy. So strong start to the year for Take five. Mark Jordan (Equity Analyst) Perfect. Thank you very much. JL (Operator) Your next question comes from the line of Philip Blee of William Blair. Your line is open. Philip Blee (Equity Analyst) Hey guys, question. So franchise brands comps inflected positive this quarter. Can you maybe talk a bit about how sustainable that is and then what you're seeing more specifically in the collision space. Have you seen any reprieve at all around now that insurance premiums are entering into deflationary territory then how you're thinking about maybe some pent up demand in that segment or what could be the key unlock to really stabilize that segment going forward? Yeah. Hey Philip, a few different things I'd say to your point. We're happy it's a solid start to the quarter. 1% comps is good. As we iterated in our prepared remarks, we're expecting some moderation for the segment towards the back half of the year. Year. The underlying kind of story, so to speak really hasn't changed a whole lot. So if you look underlying franchise brands, we've got three kind of main businesses. Mako has been soft, it was soft tail end of last year. That softness has consisted or has persisted so to speak 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 really sequentially, quarter over quarter was really collision. So Q1 we saw the industry pick up a little bit from where it was in Q4. We continue to outperform the general industry anywhere between 100 to 300 basis points. That really hasn't changed into Q1 and we don't expect that to change here anytime soon. But 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 bounce back. So we expect the industry to moderate towards the back half of the year and in turn the overall then the segment will tend to moderate into the back half of the year. I always like to go back to. So that's, you know, loosely speaking how things are shaking out for franchise brands. But important to remember for us, franchise brands is all about cash. So as we think about the framework of growth in 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, into the back half of the year, we continue to expect really strong margins from that, from that segment. Okay, great. That, that's excellent. And then speaking of cash, so you reiterated your target to reach a three times then leverage point by the year or by year end. So after you hit your target, can you just talk a bit more about your plans for free cash flow? Are there areas of the business that you need to catch up or that maybe need a bit more investment, more debt pay down on the horizon or is there some shareholder returns that you're thinking about? Thank you. Mike Diamond — Chief Financial Officer Hey Phil, this is Mike. I'll take that one. You know, we have stated historically that we are continuing to evaluate our options once we get down to three times. For now the focus remains on getting to that important milestone. I'll respond to the one part of your question. I don't think there's any sort of deferred capex or anything we need to go into to catch up. The good news is we have many different ways we can go. We have very high return, predictable investments in our Take 5 infrastructure with opportunities to grow there. There's also possibility of returning cash to shareholders. I think our debt is fixed rate and fairly low. So I'm not sure once we get to three times if there's a ton of appetite to delever significantly further. But it's something that we're obviously focused on focused on right now. The main focus in the short term is getting down to that three times. But in the background we're working on what that plan is. And as we get closer to the end of the year, we'll be in a position to communicate. Philip Blee (Equity Analyst) Excellent. Thank you guys. JL (Operator) Your next question comes from line of Simeon Gutman of Morgan Stanley. Your line is open. Skylar Lieutenant Hey, good morning. This is Skylar Lieutenant on for Simeon Gutman. Thanks for taking our question first on the trajectory of EBITDA margins for the rest of the year and is there upside possibility and what are some of the puts and takes that you're anticipating? Mike Diamond — Chief Financial Officer Yeah, I mean there's a couple of different things that go into that morning, Skyler. I would say first of all, there's a little bit of seasonality in our business. And so, you know, if you think about Q2 and Q3 historically have a little bit more sales as that's peak driving season. That's going to be offset by some of our restatement costs. And so if you think about the commentary we gave on the prepared remarks, we expect restatement costs to be higher in Q2 just given the fact that it's a full three months. We've got obviously the K and the Q, we've got whole business securitization financials. So there's a little bit of puts and takes. I think there is an ability to leverage off of our fixed costs, particularly as we move into Q3 and see higher sales in Q3 and what is a seasonal be high time. But my job, our job is to make sure we get the restatement and the remediation plan right. And so we will spend the dollars necessary there to make sure we get that plan right. So that's, I mean, that's a little bit of the yin and yang of that equation. Skylar Lieutenant Okay, great. Thanks. And then given some of the softer trends you're seeing in traffic on the Take five side, can you talk about how you might be thinking about pricing and how much flexibility that you have there without necessarily impacting demand? Thank you. Danny R. Rivera — Chief Executive Officer Yeah, I'll take that one. I mean, look, I think what you're getting at is promotional activity the way that we've thought about promotions historically. I mean, look, we've never shied away from it. It's an arrow in the quiver, so to speak. It's something that we've used surgically over time, depending on certain use cases. When I think about some of the moderation that we're seeing right now we're talking about moderation with two very specific groups of customers that are very readily identifiable. That sounds like a use case where, you know, the arrow, so to speak, of surgical promotions tends to make sense. And so, you know, we will continue to use the tools at our disposal. I wouldn't take that as any kind of a broad shift in pricing strategy or anything like that. We don't go to market as a low cost alternative or anything. So there's no strategic shift that we're contemplating, just, you know, using surgical promotional activities where it makes sense. Skylar Lieutenant Okay, thank you. JL (Operator) Your next question comes from line of Mike Albanese of benchmark Stonex. Your line is open. Mike Albanese Hey, thanks. Good morning guys. Thanks for taking my question. Just, you know, excluding restatement costs and now that we're emerging with a, you know, a cleaner portfolio and I guess more sales visibility, you know, have you. Do you see opportunities to reduce GNA or is your expectation more to, you know, leverage from here as you grow? Mike Diamond — Chief Financial Officer Yeah. Hey, Mike, good morning. So I think I'd say a couple of things on sga. The first is I'd ground you on how we think about SG&A across our business. And we think the best metric for SG&A, particularly for a multi business platform such as ours, is as a percentage of system sales. Right. And that we do that because that best normalizes for differences in ownership between company operated and franchise, as well as the different royalty rates we may receive across our different franchise portfolio. And when you look at it through that lens and you exclude restatement costs, you know, you actually it came down this quarter, year over year. And so we think we're doing a decent job of managing that to help us support our growth. I think to the second part and probably the crux of your question, Danny and I will always try to operate as efficiently as possible while supporting future growth. And so I, I think there is absolutely an opportunity to continue to leverage the fixed costs we have as our various businesses continue to grow. And Danny and I will also, you know, challenge ourselves to make sure we're being as efficient as possible with the dollars we spend. Mike Albanese Got it. That's helpful. Thank you. In terms of the metric percentage of system sales, do you want to put a figure behind that or can I kind of take the, you know, last quarter and run rated? I mean, how can I think about quantifying that? Mike Diamond — Chief Financial Officer Yeah, I mean, I think we feel comfortable excluding restatement costs for where we are right now. That puts me roughly at 7.8% of system sales. There's obviously, as I mentioned, a little bit of seasonality as you think about it, from, you know, Qs and Q3s tend to have a little bit higher sales and we still have fixed costs there. So, you know, I think for now that's where we think we are. As I just mentioned, I think there's always opportunity to better leverage our fixed costs as well as try to, you know, continue to be more efficient. Mike Albanese Got it. Thank you. That was helpful. Mike Diamond — Chief Financial Officer Thanks, Mike. JL (Operator) Your next question. Your next question comes from line of. Craig Kennison of Baird. Your line is open. Craig Kennison (Equity Analyst) Hey, good morning. Thanks for taking my question. I wanted to follow up on your earlier comments. In the collision market, I guess why do you expect trends to moderate in the second half and is there anything you can do to capture more customer pay opportunities while the insurance side of the business is soft? Danny R. Rivera — Chief Executive Officer Hey there, Craig. So it's a great question. I mean, look, I'll answer the second part first. We do in fact capture 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 Mako side of the portfolio, if you have a customer that doesn't want to go to insurance, let's say they get into like 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, Mako is a very real alternative there. So Mako features a lot of customer pay, frankly. So 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, some of the most recent numbers, our expectation again is that that 2026 is a year of stabilization over 2025, not so much a bounce back year. And so we expect a bit of moderation going into the back half of the year. Craig Kennison (Equity Analyst) Thank you. And 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. I mean, look, 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. Thank you. Danny R. Rivera — Chief Executive Officer Our pleasure. JL (Operator) Your next question comes from the line of Peter Keith of Piper Sandler. Your line is open. Sarah Moore Good morning, this is Sarah Moore and I'm for Peter Keith. Thanks for taking your question first. Just regarding the CRM database, given the breadth of your customer data across the segments, what is the current strategy for utilizing the database as a marketing engine for Take five? Danny R. Rivera — Chief Executive Officer Hey Sarah, it's Danny. It's a great question. So I'd say number one part of the benefit of Driven Brands is we're a portfolio. We've got a nice platform and some of the services that we provide are at the platform level. So we have the benefit of we pool money together, we create a world class capability. CRM happens to be one of those areas where we've got one CRM platform that's leveraged across all of the brands. So it's one of those areas where the synergies of Driven brands tends to really shine. Where some of our smaller brands probably wouldn't be able to on their own afford a solution like the one that we have in our CRM engine at the platform level. We've been using that engine for a long time now to drive frequency, to drive repeat business. It's different obviously by business. So we've got a collection of use cases, let's say on the Take five side. Some of the more basic ones are going to be your typical oil change reminders where we will remind customers that they're due for an oil change. We do have proprietary algorithms in that CRM engine as far as how we do those reminders when we do those reminders and it's not, it's not a one size fits all, but it's a fairly complicated set of algorithms to try to personalize that as much as possible. We've got different journeys on the Meinekey side, let's say we've got different journeys on the Mako side. So the really neat thing is we have a very sophisticated platform that we leverage across all of the businesses. Sarah Moore Okay, thanks. And then just on the collision segment, we're hearing of improved transaction activity, but industry ticket kind of remaining more flat. Is there any update you can provide on the collision landscape? Danny R. Rivera — Chief Executive Officer I'm not sure that I can provide anything more than I've already provided. I mean, as I think about it again, 2026 year of stabilization over 2025 sequential improvement Q1 over Q4. We expect the overall industry to moderate a bit into the back half of the year. Importantly for us, you know, we've historically outperformed the industry anywhere between 100 to 300 basis points. We continue to do so in Q1. We expect that to continue into the back half of the year year. And given that collision for us as part of our franchise brand segment, we expect to continue to see really strong margins on that side of the business, which is ultimately the important part, you know, filling in the cash part of the growth and cash framework for driven brands. Sarah Moore Okay, thank you. JL (Operator) Your next question comes from the line of Tristan Thomas Martin of BMO Capital Markets. Your line is open. Hey, good morning. Tristan Thomas Martin (Equity Analyst) I was just curious. You called up moderation of traffic, right? Lower income and then newer customers. Is that just. Are they deferring oil changes or they may be trying to do it themselves? Any color there would be appreciated. And just really quick weakness on the under 50,000 household income. How does that compare to your core customer? What's their household income? Thank you. Danny R. Rivera — Chief Executive Officer Hey there. So I guess a couple different things there. We are calling out some moderation traffic. I just want to be specific specifically with those two groups of customers. As I mentioned a second ago, when we look at our core customer, which is going to have a higher household income, and I'm not going to get into in a ton of specifics as to exactly where we price things at, but it's certainly more than, you know, $50,000. We're seeing overall resilience across the board in all groups. Other than really those two very specific groups, what we're seeing ultimately is a bit more churn out of those groups than anything else. So if the question is are we seeing intervals go up? No. Oil change intervals have been stable for some time now. We haven't really seen any material change to oil change intervals for some time. And that's not what we're seeing today. This is not a elongation, so to speak, of when customers are coming in. What we're seeing is with two very specific types of customers, a bit more churn. Tristan Thomas Martin (Equity Analyst) Great. Thank you. JL (Operator) With no further questions, that concludes our Q and A session and also today's conference call. Thank you for your participation. You may now disconnect. Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.