Impact of Strategic Divestitures and Store Closures on Revenue and Unit Sales
Approximately $200 million in revenue was impacted due to divestitures and dealership closures since Q2 2024.
Divested stores in the U.K. and U.S. contributed to a reduction of about 2,000 new vehicle units and 4,400 used vehicle units.
The mini brand transfer to agency impacted new unit sales by approximately 1,300 units, with a total unit sales decline of about 17 units quarter-over-quarter.
Adjusted EBITDA was $143 million, slightly below Q2 2024 by $0.2 million, with an adjusted EBITDA margin of 26%, down 160 basis points year-over-year.
Debt was reduced by approximately $265 million in the quarter, with net leverage at 4.1x, improving to 3.9x pro forma after seller note monetization.
Driven Brands grew revenue by 6% in Q2 2025, with system-wide sales increasing 3% supported by 184 net new stores over the last 12 months and 52 additions in the quarter.
Franchise segment generated $45 million in adjusted EBITDA with a margin of 61%, despite softness in collision and Maaco businesses.
Free cash flow was $31.9 million, supported by strong operating performance and asset sales.
International Car Wash segment had 19% same-store sales growth and $27 million adjusted EBITDA with a 37% margin.
Net income from continuing operations was $11.8 million, with adjusted net income of $59.1 million and adjusted diluted EPS of $0.36, down $0.01 from prior year due to divestiture impacts.
Net interest expense was $31.4 million, slightly down from prior year, and income tax expense was $7.1 million.
Operating expenses increased by $84.2 million year-over-year driven by higher store expenses, SG&A increases including losses from seller note receivable and investments in growth initiatives.
Take 5 Oil Change delivered 10% adjusted EBITDA growth year-over-year, with same-store sales up 7% and 41 net new stores added in the quarter.
Adjusted EPS was $0.40, down year-over-year but ahead of consensus expectations.
Dealer inventory is down 17% year-over-year excluding snowmobiles, with healthier levels across most product categories.
Generated approximately $320 million in operating cash flow and $290 million in free cash flow, highest Q2 operating cash flow since 2020.
Gross margin declined due to mix and promotions, with warranty costs lower due to quality focus.
Margins were pressured by negative mix, incentive compensation, and elevated promotions, but operational efficiencies and quality initiatives are improving results.
Off-Road sales declined 8%, On Road sales down 1%, and Marine sales up 16%.
Recognized a noncash goodwill impairment charge related to On Road segment due to continued decline in financial performance.
Second quarter adjusted sales declined 6%, primarily due to planned shipment reductions and elevated promotional activity.
Shipments were down just 4%, better than expectations in April, with retail flat year-over-year and share gains across every segment.
Adjusted EBITDA increased by 190 basis points to 12%, with Nissens contributing significantly to profit gains.
Capital expenditures totaled $19.3 million, including $7 million for the new distribution center, with net debt at $577.8 million and leverage ratio at 3.2x EBITDA.
Cash used in operations improved to $5.9 million from $10.1 million last year, despite higher tariff cash costs.
Engineered Solutions sales declined 8.3% due to softness in end markets, with adjusted EBITDA at 10%, down from last year but still healthy.
Nissens contributed $90.5 million in net sales and $16.3 million in adjusted EBITDA, outperforming expectations with an 18% EBITDA margin.
Standard Motor Products reported a 26.7% increase in consolidated sales for Q2 2025, driven largely by the acquisition of Nissens, with legacy business up 3.5%.
Temperature Control sales increased 5.5%, with adjusted EBITDA margin rising to 16.1% due to higher sales volumes and improved operating expenses.
Vehicle Control segment sales rose 6.9% with adjusted EBITDA margin improving to 10.7%, driven by higher sales and lower factoring expenses despite tariff cost pressures.
Year-to-date sales increased 25.8%, or 4.1% excluding Nissens, with adjusted EBITDA margin up 250 basis points and non-GAAP diluted EPS up 47.9%.
Adjusted diluted EPS declined to $1.17 from $1.71 in the prior year quarter.
Adjusted EBITDA decreased to $56.2 million from $67 million year-over-year.
Adjusted free cash flow for the first six months of 2025 was $48.7 million, down from $52.9 million in the same period last year.
Applebee's reported a 4.9% increase in comp sales with positive traffic growth, the first positive traffic since Q1 2023.
Company-owned portfolio showed solid progress with comp sales improving over Q1 and performing near system average.
Consolidated total revenues increased 11.9% to $230.8 million in Q2 2025 compared to $206.3 million in Q2 2024, driven primarily by increased company restaurant sales.
IHOP posted a negative 2.3% comp sales but showed sequential improvement from Q1 and achieved second consecutive quarter of traffic outperformance relative to Black Box.
Adjusted EBITDA loss was $3.1 million compared to a positive $0.1 million in the prior year period.
Ended the quarter with $19.8 million in cash and increased revolver capacity to manage near-term uncertainty.
GAAP net loss widened to $12.7 million from $8.7 million, impacted by lower gross margin, higher marketing costs, one-time advisory fees, and restructuring costs.
Gross profit increased 3% to $49.8 million, with gross margin declining slightly to 32.8% from 33.5% due to product mix and tariff impacts.
Inventory increased to $94 million from $90 million, reflecting proactive stocking to improve supply chain continuity.
Reported revenue of $151.9 million, up 5% from $144.3 million in the prior year quarter, driven by growth in e-commerce and offline channels.
Dafinchi
