DRVN's Strategic Pivot: Car Wash for Sale as Company Pursues Deleveraging Goals

Driven Brands Holdings Inc. (DRVN) has taken a significant step in reshaping its capital structure by agreeing to offload its international car wash operations to Franchise Equity Partners. The transaction, valued at 406 million euros, represents a notable shift in the company’s portfolio strategy as it concentrates resources on its core North American automotive dealership operations.

Deal Structure and Timeline

Under the terms of the agreement, Franchise Equity Partners will acquire IMO (the international car wash business) based on its balance sheet position as of June 30, 2025. The transaction is slated for completion during the first quarter of 2026, providing DRVN with a clear timeline for this strategic divestiture.

Debt Reduction and Financial Benefits

The divestiture carries substantial implications for DRVN’s balance sheet optimization. According to Mike Diamond, Chief Financial Officer, the proceeds from this sale will primarily address the company’s leverage concerns. The transaction is projected to reduce pro forma leverage by approximately 0.3x, bringing the organization closer to its stated goal of achieving 3x net leverage by year-end 2026.

Revenue generated from the car wash for sale initiative will be directed toward debt reduction and other general corporate needs, reinforcing management’s commitment to financial discipline.

Updated Fiscal 2025 Guidance

Given the planned disposition, DRVN has recalibrated its financial expectations for fiscal 2025. The company will now report the car wash segment’s results as discontinued operations beginning in Q4 2025.

Revised guidance reflects:

• Revenue projection: $1.85 billion to $1.87 billion (adjusted from prior $2.1 billion to $2.12 billion range)
• Adjusted EBITDA: $445 million to $455 million (compared to previous guidance of $525 million to $535 million)
• Adjusted Diluted EPS from continuing operations: $1.18 to $1.23 on a preliminary basis (versus prior range of $1.23 to $1.28)

The company maintains its expectation for net store growth of approximately 175 to 200 locations, suggesting confidence in its core dealership business momentum despite the portfolio adjustment.

Market Response

On Monday, DRVN shares reflected modest pressure, closing at $14.13 on the Nasdaq, representing a 3.29% decline for the session.