Shares of Driven Brands Holdings declined more than 20% Thursday after the car repair and services company reported first-quarter profit of $4.3 million, well below analysts’ expectations of $28.5 million.
While shares slumped, CEO Jonathan Fitzpatrick said, “We are pleased with our strong performance in the first quarter of 2024. The maintenance segment once again delivered exceptional results, largely driven by Take 5 Oil Change, which saw same store sales growth of 7%. We increased total company revenue, managed expenses and achieved our 13th consecutive quarter of same store sales growth.”
Charlotte-based Driven Brands owns or franchises 5,008 locations under such names as Take 5 Oil Change, Meineke Car Care Centers, Maaco and 1-800-Radiator & A/C. It operates in 13 countries and services about 70 million vehicles a year.
The company had revenue of $572 million in the quarter, a 2% increase from a year earlier. Net income of $4.3 million, compared with $29.7 million last year.
While its oil-change business is growing Fitzpatrick said its U.S. car wash business had lower revenue because of weak demand, weather factors and strong competition. The company doesn’t plan to add car-wash units in the U.S..
Driven Brands also said Joel Arnao was named interim CFO, succeeding Gary Ferrera, who has held the job since May 2023. Michael Beland, the chief accounting officer, was appointed the principal financial officer. Ferrara is leaving to rejoin his family in Colorado and his departure doesn’t reflect a disagreement with the company, according to a release.
The company’s shares declined 20.2%, or $2.97, to $11.69 in Thursday trading. Shares have traded between $10.60 and $30.75 in the past year.
CEO Fitzpatrick’s total compensation for 2023 was $29.1 million, including stock awards of $22.4 million and stock options of $5.3 million, according to the company’s most recent proxy statement.
That compares with total comp of $6.8 million in 2022 and $14.8 million in 2021. About 2.7 million stock options granted to Fitzpatrick in 2021 have exercise prices of $22 and $30.63, with expiration dates in 2031. He has been the company’s CEO since 2012.
Atlanta-based Roark Capital controls 61% of Driven Brands’ shares.