$DRVN Cruising through the Driven Brands thesis | Kyle Mowery GrizzlyRock Capital

Driven Brands ($DRVN) puked on a February accounting restatement. Kyle Mowery (GrizzlyRock Capital) walks through why Take 5 remains a crown jewel and could be worth the entire EV of the company (making the franchise and autoglass businesses a free option). We also dig into how the April and May 8-Ks took the scary left-tail risks off the table, why Roark Capital (65% owner) might run a sale process later this year, and the bear case (corporate cost bloat, weakness in the non-Take-5 brands).disclaimer: Andrew is long DRVNKyle's late 2024 DRVN podcast: https://www.yetanothervalueblog.com/p/grizzlyrock-capitals-kyle-mowery?utm_source=publication-search[00:00:00] Intro and disclosures[00:03:23] What is Driven Brands today[00:05:14] Why the car wash divestiture sold so cheap[00:09:19] Why Take 5 is the crown jewel[00:11:15] EV risk and the US ICE car park[00:13:21] Franchisee demand and unit growth[00:15:31] Take 5 vs. Valvoline[00:18:13] The addbacks problem[00:20:57] Inside the accounting restatement[00:23:22] The cash adjustment[00:28:50] The ATI revenue recognition issue[00:30:12] Reading the April and May 8-Ks[00:32:40] Debating adjusted EBITDA[00:34:55] Corporate cost bloat[00:37:54] Is this fraud? No[00:39:49] Weakness in the non-Take-5 brands[00:43:45] Sum-of-the-parts: Take 5 covers the debt[00:46:30] Why public markets misprice the franchise brands[00:48:04] Durability of franchise cash flows[00:50:14] Timing the resolution[00:53:26] Roark Capital's strategic options[00:57:40] Labor Day or Halloween?[01:00:00] Capital cycle stories Kyle's watching[01:03:02] Chinese supply pressure on industrialsLinks:Yet Another Value Blog - https://www.yetanothervalueblog.comSee our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimerProduction and editing by The Podcast Consultant - https://thepodcastconsultant.com/