Good morning and welcome to Driven Brand's Fourth Quarter 2021 Earnings Conference Call. My name is Tamiya, and I will be your operator today. As a reminder, this call is being recorded. Joining the call this morning are Jonathan Fitzpatrick, President and Chief Executive Officer; Tiffany Mason, Executive Vice President and Chief Financial Officer; and Rachel Webb, Vice President of Investor Relations. During today's call, management will refer to certain non-GAAP financial measures. You can find the reconciliation to the most directly comparable GAAP financial measures on the company's Investor Relations website and in its filings with the Securities and Exchange Commission. Please be advised that during the course of this call, management may also make forward-looking statements that reflect expectations for the future. These statements are based on current information, and actual results may differ materially from these expectations. Factors that may cause actual results to differ materially from expectations are detailed in the company's SEC filings, including the Form 8-K filed today containing the company's earnings release. Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures can also be found in the company SEC filings and the earnings release available on the Investor Relations website. Today's prepared remarks will be followed by a question-and-answer session. We ask that you limit yourself to one question and one follow-up. I will now turn the call over to Jonathan. Please go ahead, sir.

Thank you. And good morning. We had another great quarter across the board. Our fourth has a public company, and are excited to share the results over the course of today's call, but even more importantly, our guidance for 2022 of adjusted EBITDA of $465 million, an increase of almost 30% over 2021. Driven is the largest automotive services company in North America. Our diversified portfolio of needs-based services provides many levers to grow revenue through same-store sales, units, and M&A, which drive profit growth. Our total addressable market is massive. It's over $300 billion, and yet we have less than 5% share in this highly fragmented industry. We will continue to grow and generate cash because of our core competitive advantages: our multiple levers to open new units; we can build, buy, or franchise; our supply chain capabilities that keep us in stock and allow us to take share and price when others cannot; our scale, which is growing, is a significant and sustainable competitive advantage in our highly fragmented industry. Over the long term, Driven has and will consistently deliver organic double-digit revenue growth and double-digit adjusted EBITDA growth. Now that growth, together with our asset-light business model, means we generate a ton of cash. And our needs-based services and franchise business model helps insulate our profit from the impacts of inflation. We then invest that cash to further accelerate our growth by building new units and layering on acquisitions, which as we have proven, adds massive incremental upside to our model. On our Q3 call, we announced our Dream Big Plan of at least $850 million of adjusted EBITDA by the end of 2026. Exceeding that plan is our primary focus. And we're making great strides already. Driven is growth and cash. Before I jump into 2022 and beyond, I want to take a moment to highlight our Q4 results. As always, all credit goes to our team and our amazing franchisees. Compared to Q4 of 2020, consolidated same-store sales were positive 16%. Revenue increased 36% to $392 million. Adjusted EBITDA increased 29% to $85 million. And adjusted EPS increased to $0.18 from just $0.01 a year ago, another top to bottom beat, our fourth in a row as a public company. For fiscal 2021, we increased revenue 62% to $1.5 billion, an increased adjusted EBITDA 76% to $362 million. And as I take a step back to reflect on the how and why of 2021, so much of this success is attributable to our benefits of scale in this highly fragmented industry. Despite COVID, suppressed vehicle miles traveled, supply chain disruption, and labor challenges, we grew and took share. We had product when others didn't because of our supply chain capabilities, which then allows us to take price to offset commodity and people costs. We staffed our locations. We could market when others didn't have the people or funds to do so. We grew our real estate and licensed pipeline significantly. And we acquired new stores at accretive prices. This is the power of the growing scale and sophistication of Driven Brands in a world where 80% of our competition remains small chains and independents. Scale is truly a compounding, long-term, sustainable competitive advantage, which most of the industry will never achieve. Tiffany will give more detail regarding 2021, but let's turn to our growth plans for 2022. I want to spend time on the three highest growth priorities at Driven, Quick Lube, car wash, and glass. These businesses share several unique characteristics, simple operating models, highly fragmented competition, significant white space in terms of unit growth, and very strong unit level economics. These highest-growth businesses are supported by the rest of our highly cash-generative and asset-light businesses. This is what makes Driven such a powerful engine. Growth and cash. Now let's start with Take 5 Quick Lube. The stay in your car 10-minute oil change. We were attracted to the simple and differentiated operating model, a simple menu, a simple building, and of course, the phenomenal unit level economics, high 30% four-wall EBITDA margins, and approximately 65% cash-on-cash returns. When we acquired the Quick Lube brand in 2016, we have since grown that business more than 13 times, less than 50 units to over 700 with 23% franchised, and system-wide sales from 43 million to over 625 million in 2021. We've grown through same-store sales, new company units, new franchise units, and M&A. The pipeline for Take 5 today sits at over 700 commitments, with the majority being franchised. Like in 2021, in 2022, we will open more franchise locations this year than company-owned. We expect this brand to continue growing aggressively, both in terms of same-store sales and new units. Take 5 Quick Lube is the blueprint we are applying to our newer growth assets, Car Wash and Glass. Now we're just getting started with the Car Wash and like our Quick Lube business, this is a phenomenal, simple operating model with terrific unit level economics, high 30% four-wall EBITDA margins, and cash-on-cash returns of approximately 40%. We love the operating model, subscription revenue component, white space, and the opportunity for massive growth. You can clearly see why we're so excited about this business. As we mentioned last quarter, John Teddy rejoined Driven to run the U.S. business. And over the past 100 days, he has enhanced his leadership team, visited every market, implemented some early action plans, and has developed a long-term strategy and vision for the business. Despite all of these changes, the Car Wash segment delivered 6% same-store sales growth in Q4. And while I'm pleased with this performance, I know there is upside. And I'm eager to see John deliver on those plans over the course of 2022 and beyond. Our development team has done a tremendous job of building a Greenfield pipeline of over 150 sites for car wash from just zero 15 months ago. In 2021, we added 114 car wash locations in the United States, bringing our current total store count to 330, an increase of more than 50% over 2020. And we remain disciplined in a rising price environment. And we've been paying single-digit purchase multiples. In 2022, we will remain acquisitive with car wash and will supplement that with at least 45 Greenfield locations. The future is very promising for our car wash business in terms of same-store sales units, M&A, and profit growth. And now we will apply the same proven playbook to our most recent growth acquisition. We completed the acquisition of Auto Glass Now, or AGN in late December. AGN is a great starting platform for our entry into the U.S. glass market because just like our Quick Lube and Car Wash businesses, it has a simple and differentiated operating model, a simple menu, simple building, and strong unit level economics. AUDs of approximately a million dollars, mid 20% four-wall EBITDA margins and cash on cash returns we are excited about because of the low initial investment. AGN is a business where we can leverage our growth blueprint, and significantly accelerate our presence in this segment. And our thesis on the glass opportunity is simple. This is a $5 billion-plus growing market in North America. It's highly fragmented like all parts of the automotive aftermarket. There are tailwinds with the increasing need for calibration. Glass repair and replacement is required for all vehicle types. We can leverage our existing same-store sales levers, including our 20 million-plus unique retail customers, our deep insurance relationships, and our fleet customers all to grow this business. We learned a lot about the glass operating model since we entered the Canadian market in 2019. And Michael Macaluso and his team are hitting the ground running and unlocking the opportunity we underwrote with this business. The new unit team is already building a robust pipeline like we have with Car Wash and Quick Lube. And as you can imagine, we will be highly acquisitive in this space. We're repeating our proven growth playbook and getting better each time we do it. M&A is a core strength at Driven, and all transactions to date have been accretive to earnings. We make the businesses we acquire better, and they make us better. Glass will be no different. We're excited to continue to reinvest into the business in 2022, we have world-class people processing systems for unit growth and that is why we're so bullish for the future. $275 million in capex in fiscal 2022 with about 90% of that earmarked for growth. Growth capital will be spent on new company units for Quick Lube, for Car Wash, and now Glass. Remember we have plenty of available capital and look forward to growing all three businesses. And we get lots of additional store growth. Between company and franchise stores to over 1200 locations. We have also budgeted capital to invest into the existing U.S. Car Wash store base. We'll be investing in store remodels and upgrades. And we will continue to invest in having one national Car Wash brand, Take 5 Car Wash. As always, we will continue to be acquisitive. And you can expect additional growth capital to be deployed into Car Wash and Glass. Now, pulling everything together into 2022 guidance on our longer-term outlook, we're bullish on 2022 and confident in achieving our guidance for adjusted EBITDA of $465 million because the team and strategy are in place. It's about execution. Our businesses are all performing well, growing, taking share, and generating cash. Our pipeline for unit growth, company, franchise and M&A is the Digital and Data. Nothing is modeled, but it will absolutely provide upside. Our scale gives us a competitive advantage, which continues to expand and compound. The industry is still dealing with some noise around COVID, vehicle miles traveled, inflation, and supply chain like in 2021. However, that doesn't change our overarching confidence in our business model and our growth and cash. Our dream big plan of at least $850 million of adjusted EBITDA by the end of 2026 is very much on track. The team and I are relentlessly focused on beating it. And the addition of the U.S. Glass business simply adds to our conviction. We're believers in this long-term plan because we are accounting compound growers. Our growth is low risk because of our current market share. We are asset light and generate a lot of cash, which we reinvest back into growth. Scale is driving even bigger competitive advantages. Our business model works well in all economic cycles. And finally, we execute and do what we say we're going to do. You can see this very clearly in our 2021 results and our confidence around 2022. Momentum continues to build. Driven is growth and cash. I will now turn it over to Tiffany for a deeper dive into the Q4 financials and 2022 guidance.

Thank you, Jonathan, and good morning, everyone. Our fiscal 2021 results demonstrate the strength of Driven Brands as a large, integrated platform with a diverse range of services that has achieved impressive margins. For the year, we generated $1.5 billion in revenue and achieved adjusted EBITDA of $362 million, marking a 76% increase compared to the previous year. Our adjusted EBITDA margins reached 25%, reflecting a 200 basis point growth from fiscal 2020, along with an adjusted EPS of $0.88. This success was driven by $4.5 billion in system-wide sales, growth in same-store sales, and a 6% increase in net store count. Excluding the driving period, we added 247 new stores in fiscal 2021. We commend our team for their ability to adapt and exceed our expectations despite challenges, delivering leading results in the industry. We fulfilled our commitments this year both organically and inorganically and surpassed the first year of our IPO model by nearly 30%. Overall, Driven Brands had an outstanding year. In the fourth quarter, we reported system-wide sales of $1.2 billion, leading to $392 million in revenue, $85 million in adjusted EBITDA, and an adjusted EPS of $0.18, marking another comprehensive victory. We achieved this strong performance despite ongoing supply chain disruptions, inflation, and the emergence of another COVID variant. In detail, system-wide sales growth in the quarter was attributed to both same-store sales increases and new store openings. We have ample opportunity to expand our store count in this fragmented $300 billion industry. As Jonathan noted, our franchise model, company-operated expansions, and acquisition strategies are all strong, and we are actively broadening our presence. In the fourth quarter, we added 102 net new stores, particularly focusing on growth in the Quick Lube and car wash sectors. We are currently in the process of divesting our drive-in South business, which provided mobile reconditioning services but was not central to our strategy and posted losses. This business is now being marketed for sale and is excluded from our store count. Our same-store sales growth for the quarter was 16%, reflecting consistent performance over the three months and surpassing industry standards across all segments. This growth came from both increased car counts and average transaction values. The rise in car counts was supported by our exceptional marketing and customer experience, while average ticket values benefited from the growing complexity of vehicles and our ability to pass on inflation costs. It's important to note that approximately 80% of our operations are franchised, so not all segments contribute equally to revenue. For instance, the PC&G segment represented over half of our system-wide sales in this quarter, yet only about 15% of revenue due to its franchised nature. The Maintenance and Car Wash segments are split between franchise and company-operated models, contributing around 40% and 30% of our revenue, respectively. We provide additional insights in our infographic available on our Investor Relations website. Taking into account unit growth, same-store sales growth, and our franchise mix, our revenue for the quarter totaled $392 million, reflecting a 36% rise compared to the prior year. On the expense side, we are managing costs carefully across our portfolio. Effective expense management, coupled with strong sales, has propelled our gross margins to 38% at company-operated stores. Moreover, our SG&A expenses as a percentage of revenue stood at 20% in the quarter, showing a 400 basis point improvement year-over-year. This culminated in an adjusted EBITDA of $85 million for the quarter, a 29% increase from the previous year, although our adjusted EBITDA margin decreased to 22%, 100 basis points lower than last year due to changes in segment contributions. Depreciation and amortization expenses rose to $34 million, primarily linked to our growth in company-operated stores, which increased by $4 million this quarter. The decline from last year in these expenses was largely due to lower average interest rates on our outstanding debt. For the fourth quarter, we reported adjusted net income of $31 million and adjusted EPS of $0.18. A reconciliation of adjusted net income, adjusted EPS, and adjusted EBITDA can be found in today’s release. Now, to provide a bit more detail on our fourth-quarter results by segment: the Maintenance segment saw positive same-store sales growth of 26%. It continues to gain from improved digital marketing, which has increased car counts from both new and returning customers. We successfully implemented a price increase while sustaining our premium oil mix, thereby enhancing average ticket values. Although the segment's adjusted EBITDA margin remained flat year-over-year, it did contract from the third to the fourth quarter due to product cost increases that outpaced retail price upticks, along with additional costs incurred to manage oil supply issues, impacting margins by about 200 basis points. By the fourth quarter, we had largely mitigated the effects of the national labor shortage, impacting margins positively in earlier quarters as we operated with a leaner workforce. The Car Wash segment experienced positive same-store sales growth of 6%. Wash club subscriptions rose to comprise 50% of sales, with an additional 31,000 members joining in the fourth quarter, resulting in an overall increase of nearly 800 basis points or 200,000 members since our acquisition in August 2020. This creates a strong recurring revenue stream for the business. Non-wash club revenue per wash also increased, thanks to a simplified menu and enhanced selling techniques from our teams. As Jonathan mentioned, we are testing a rebranding of some car wash locations to the trusted Take 5 brand name, which will inform our branding strategy for car washes in the U.S. Transitioning to the Take 5 brand across a significant number of locations may involve a non-cash impairment charge in a future period of up to $130 million for any retired brands, and we will update you on our progress. The Paint Collision and Glass segment saw positive same-store sales growth of 11%, with the addition of 650 direct repair programs with insurance carriers this year, demonstrating a recovering collision business. Industry estimate counts are rising, and our shops are consistently outperforming industry averages. We are optimistic about the prospects for fiscal 2022 and excited to grow our Glass offerings in the U.S. through the acquisition of Auto Glass Now. Glass repairs are becoming a larger share of auto repairs as their complexity increases due to necessary calibrations, presenting another growth path for us. Lastly, the Platform Services segment experienced positive same-store sales growth of 35%. This segment is the most vulnerable to supply chain pressures. As you know, every part of the supply chain is currently facing challenges, from manufacturing to logistics. We ended the fourth quarter with $523 million in cash and cash equivalents, allowing us to leverage our industry leadership into a competitive advantage. We work with multiple suppliers, while many of our competitors, primarily independent operators, depend on a single supplier. Utilizing our strong balance sheet, we place orders earlier, and our team actively manages supplier relationships to monitor the supply chain closely. This has resulted in higher inventory levels at 1-800-Radiator compared to many competitors, with customers willing to pay a premium, driving record sales during the quarter. We are pleased with our operational performance in the quarter, which generated significant cash, enabling further investment in the business. This cash generation, in conjunction with our revolving credit facilities and access to capital markets, is critical for our strategic growth plans. As we've consistently emphasized, our top priority is to invest in our business and expand our footprint. In December, we closed a $500 million term loan, with proceeds allocated for general corporate use, including acquisitions. We also had $397 million of undrawn capacity on our revolving credit facilities, leading to total liquidity of $920 million. Our net leverage ratio at the end of the fourth quarter was 4.4 times, and pro forma for the AGN acquisition, it was 4.7 times. A reconciliation of our net leverage ratio is available on our Investor Relations website. We plan to continue utilizing our balance sheet to take advantage of opportunities in the consolidating $300 billion industry. Looking ahead to fiscal 2022, we expect disposable personal income to remain flat but still exceed 2019 levels, while vehicle miles traveled is projected to continue recovering despite temporary setbacks from the latest COVID variant. Consequently, we anticipate strong demand for our services in fiscal 2022. So far this quarter, we are satisfied with our performance. As mentioned in this morning's earnings release, we expect mid-single-digit same-store sales growth on a consolidated basis for fiscal 2022, driven by ongoing favorable industry conditions and our strong scale and sophistication. Our competitive advantages include our commercial partnerships and marketing capabilities, including cross-marketing opportunities. We aim to open around 225 net new stores organically. Our Take 5 franchise remains strong, while our Car Wash and Glass expansions are progressing well. We project revenue to be approximately $1.9 billion and adjusted EBITDA to be around $465 million, leading to adjusted EPS of about $1.04 based on a weighted average of 167 million shares outstanding. We expect adjusted EBITDA margins to remain flat compared to fiscal 2021. While we successfully managed inflationary pressures last year and expanded margins, we believe it is wise to approach fiscal 2022 with caution given the anticipated continued inflation throughout the year; our focus will be on driving growth in car counts while managing margins. Additionally, I want to mention a few key points as you forecast fiscal 2022. First, we estimate depreciation and amortization costs will be around $135 million. Second, interest expenses are expected to be approximately $100 million. Lastly, we anticipate an effective tax rate of about 30%. Keep in mind that fiscal 2022 is a 53-week year, which is expected to yield approximately $15 million in revenue, $4 million in adjusted EBITDA, and $0.02 in adjusted EPS. Lastly, as a new public company last year, we experienced significant volatility with year-over-year comparisons, which led us to update our guidance quarterly. For this year, however, we shared our annual guidance today and do not expect to provide updates until the end of Q2. At that point, we will incorporate M&A activity from the first half of the year alongside our organic performance thus far and provide updated forecasts for the latter half of the year. We believe this approach is transparent and reasonable for fiscal 2022. In conclusion, we anticipate that the strength of our portfolio will continue to yield top-tier results. We are committed to our proven approach, leveraging a scaled and diversified platform. Our strategy is straightforward: we add new stores, grow same-store sales, and maintain stable margins. This leads to significant cash flow generation, which we reinvest into the business. We look forward to updating you in late April with our first-quarter results.

At this time, I would like to remind everyone, we'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Simeon Gutman with Morgan Stanley. Your line is open.

Hi. This is actually Jackie Sussman on for Simeon. Thanks so much. Congrats on a good quarter. The first question we wanted to ask was, so you guided for revenue above consensus by about 18%. EBITDA on the high single digits versus consensus and EPS also up a bit versus consensus. And it seems like the revenue dollar upside isn't fully flowing through to the bottom line. Any color on why that is and anything to keep in mind from a flow-through or modeling standpoint? Is there any conservatism you're baking in on EBITDA?

Hi, Jackie, thanks for the question. And I appreciate your thoughts on the year that we just ended. Appreciate the congratulations there. Listen, on guidance, I would say we are excited about 2022. We think we've got a lot of nice tailwinds heading into the year. Certainly, industry tailwinds continue. Our businesses are performing strong. We did some significant M&A in 2021. That's going to provide some benefit in 2022 as well. So by all accounts, the consumer is in great shape. As I said in my scripted remarks, disposable personal income is flat, but well ahead of 2019. VMT is going to continue to recover. In fact, the forecast is for the VMT to be up 6%. So by all accounts, nice, healthy environment for us to operate in. As we think about the profile, or about the P&L and the flow-through, what I would tell you is obviously when you think about adjusted for 465, that's 28% growth versus 2021, it's a nice, healthy growth year-over-year. We do have increased DNA in 2021 as a result of our continued growth of company-operated stores across maintenance, car wash, and now the glass business. So that's a $135 million. Interest is up. Interest will be $100 million where we've issued two rounds of debt in 2021, we're getting nice favorable rate. The good news about favorable rates and building our war chest is that we can deploy that capital to continue to grow our business. So we'll deploy that capital this year. And we've got a great pipeline of M&A built to be able to deploy that capital. So there should be M&A coming to offset that interest costs that's not modeled in our outlook. And then our effective tax rate is 30%. So those are the components that you need to think about that flow through, but we feel great about our guidance for 2022.

Great. Thank you so much. And a quick follow-up. It looks like the Car Wash sensor sales of plus 6% were below what the Street was thinking, which was up mid-teens. And we recognize we don't have a lot of visibility into the compare, and how the segment that a year ago, and the U.S. versus the international mix. Could you provide any more color on the plus 6%? How that looks between the U.S. and international businesses? And on an underlying tier basis, how did the same-store sales evolve from the third to fourth quarter? Thanks.

Thanks, Jackie. It's Jonathan. I'll take a shot at that. We're not going to separate the international and U.S. markets. What I can tell you is that we're a little over a year into the car wash business. We brought on a fantastic leader in late Q3 or early Q4. We're working on several initiatives to increase our unit count and expand our pipeline for new growth. I thought a 6% performance in Q4 was reasonable, and while I'm pleased with it, I believe there is plenty of potential for further growth. We're still in the early stages, and I expect that John and the team will continue to achieve even better results as we move forward. We won't separate the two-year stack or the division between international and domestic.

Thanks so much.

Your next question comes from the line of Christopher Horvers with JPMorgan. Your line is open.

Hi, good morning. It's Christian Carlino on for Chris. Thanks for taking our question. Just to piggyback on the car wash business. Comps came in a bit short of expectations, but EBITDA came in a bit better. Actually, I think post of last quarter, there were some concerns around labor pressures at the company-operated stores, so I guess could you just help us qualitatively think about flow-through within the Car Wash segment and how to think about that labor model going forward?

Yes. Great, great comment. And look, like I said, and I'll reiterate, we're not displeased with 6% for the quarter, right? We were doing a bunch of things in that business and making that business stronger for the future in terms of the labor for that business. One of the reasons the Express tunnel car wash is so attractive to us is because of the efficient labor model. So really machines do the work in that business. When you've got a business that requires 3, 4 or 5 people, it is much easier to staff that fully versus the business that may have 10, 15, or 20 people. So we feel really good about the performance of the business in Q4. Q1, we're pleased with so far. And again, this is a very efficient labor operating model, and we think we're managing really well despite some of the overall labor challenges in the market.

Got it. That's a really helpful color. And then just on the mid-single-digit guide next year, how are you thinking about the different segments? I think it's fair to expect that collision outperformed, just given the recovery in collision miles. But are there any other notable call-outs you'd help us think about segment level comp next year?

Sure. Mid single-digit to your point is what we guided. What I would say about the segment level same-store sales generally, and this is a statement about a year in total is we expect the segments to perform in generally a pretty tight range. So no real outperformance by any one segment. We think they will all perform somewhere around 200 basis points of each other. So all segments are performing well today. Collision, which had a bit of a later start in terms of recovery is performing well. As I said in my prepared remarks today, estimate counts are up. They're up in the U.S., they're up in Canada. We think that bodes well for that particular segment in 2022. So everything should perform well, everything around 200 basis points each other in mid-single-digit comp for the company in total.

Got it. Thanks very much. Everyone, congrats on a great year.

Thank you.

Your next question comes from the line of you, Chan Diwan with Bank of America. Your line is open.

Hi. I'm Liz Suzuki. I'd like to ask about whether you see a wide disparity in regional trends in annual basis segment this quarter, and which region outperform the company's average and which ones underperformed?

Great question, You Chan. While we don't provide a detailed breakdown by region, I can share that we track vehicle miles traveled and congestion on a state-by-state basis. Generally, areas that have been open for business longer during 2021, like Florida and Texas, along with the Southeast, are showing slightly better trends compared to some regions in the Northeast and Midwest. Canada, for instance, has experienced more restrictions than other markets. Overall, the situation aligns with what you might expect from other businesses regarding people's mobility and a return to normalcy compared to regions that remain somewhat restricted in Q4. Additionally, the emergence of the COVID variant in Q4 has intensified some of these challenges, but typically, southern states are performing a bit better than northern states.

Got it. That's helpful. And then does Paint, Collision, and Glass do have a fair amount of recovery before it gets back to where you would have expected to operate pre-COVID? And could collision rate stay below historical given that a large portion of the working population do not as frequently as they were pre-COVID?

Yes. We are seeing vehicle miles traveled and congestion miles as the main factors in that business, and we are experiencing sequential growth, quarter-on-quarter, as we move out of 2021. We also have a good view of our work in progress, which is the number of vehicles on our loss, and that looks promising right now. As vehicle miles traveled continue to return to normal, I believe that business will keep strengthening, and it is currently in good shape. There is definitely potential for growth as vehicle miles traveled normalize throughout 2022.

Okay. Thank you very much.

Your next question comes from the line of Sharon Zackfia with William Blair. Your line is open.

Hi. Good morning. The question on the environment we're in with the supply chain and inflation you've obviously executed really well. I'm curious how much of the comps recently have benefited from I would call it the price component of higher ticket that's independent of the operational dynamics of upselling or what have you. So if you could give us some clarity on the inflation benefit to comps I think that would be helpful. And then as it relates to supply chain and your ability to execute so much better there than a lot of the competition, are you seeing any signs of that advantage narrowing at this point, or is that gap still pretty pronounced?

Sure, Sharon. I'll address the first part of your question, and then Jonathan can respond to the second half. Let’s discuss inflation briefly. We are somewhat protected from inflation's impact concerning our franchise brands. Your question primarily pertains to our company-owned Quick Lube and Car Wash businesses. In the Car Wash business, inflation has been mostly limited to wages. However, in the maintenance sector, we've observed some inflation particularly in oil supply costs. In my earlier comments, I mentioned some cost increases we faced in the fourth quarter that led to higher retail prices. Overall, we've encountered mid-single-digit inflation this year due to oil and wages. In the fourth quarter, it was more significant, reaching around double digits. When considering ticket pricing and the effect of inflation, the first three quarters of the year were driven more by mix, while the fourth quarter saw more price-driven increases based on how the year unfolded. That answers the first part of your question, and now I’ll let Jonathan address the second part.

Hey, Sharon. Good morning. I believe the supply chain advantages will actually expand and compound over time. It's important to consider that 80% of this industry consists of small chains and independents, whose supply chain capabilities rely heavily on third parties. We have the ability to control our own destiny. Our large purchasing power, our readiness to leverage our balance sheet, and our tendency to order in advance allow us to effectively understand price elasticity and pass costs onto customers. This creates highly efficient unit economics, supported by a robust supply chain. Therefore, I foresee these advantages continuing to grow in scale and significance as we move forward.

Thank you.

Your next question comes from the line of Chris O'Cull with Stifel. Your line is open.

Thanks. Good morning, guys. The car wash unit guidance and I think cultrate 45 Greenfields, which is a strong number for a single year's growth, more than doubled, I think, a lot of your peers, so how is the company supporting its Greenfield development? And will new builds be primarily infills in existing markets?

Hey, Chris, Jonathan. Look, we have a track record of building lots of Greenfield locations. I don't know what our competitors are doing, whether it's half or a third of what we're saying, but it starts with building out a real estate pipeline. We bought the business back in August of 2020. There was no Greenfield pipeline. I think we've got about 150 locations in our pipeline today, so that takes people process and systems, which we've had at Driven. We don't need to build up that capability. We're able to just expand that capability. So we feel really good about that number, and hopefully, that number growing in '23 and '24 and beyond. So you have to have the people process and systems in order to build the pipeline. And then obviously execute on the openings and the construction, the project management, etc. In terms of infill or not. Chris, there is a lot of white space in this car wash industry. Obviously, we've got some core markets and we're focused on both white space within those core markets. And then we think there's some opportunities for new markets as well. So it like literally there is some amount of white space, so I think you'll see a combination of infill and some new market locations as well.

Great. And then just a follow-up. I'm curious outside of the obvious lever of increasing Car Wash club subscriptions What are the other primary opportunities you see in the Car Wash business to increase sales at existing locations? Are there certain markets where upgrading equipment to provide more premium wash performance could be used to attract more people?

I think it's a great question, Chris. Look, the subscription revenue component is an amazing part of that business. And as you think broadly in life, we start to getting much more comfortable with subscription revenue models across our lives. But I'll tell you a couple of things that you think about top-line revenue growth. One is product mix, so as people move up the product mix spectrum from lower-priced washes to more premium price washes, because maybe there's a ceramic option or a higher-end option, so that's one PMIX management if you like. The second is, addition of new customers. So we've got these 20 million unique customer database, which is growing. We have a lot of customers that go to our Take 5, Quick Lube brands, which obviously we're inviting them to come to our Car Wash brands. So that's an ability to drive for incremental trial within our business. So we think that's super important as we continue to capture data from our customers that come to our car wash, the ability for them to refer to other friends and family members. That's really important. So we think there's unbelievable opportunity to grow both top-line through new customer acquisition and then, obviously, menu mix management as people move up the menu. And as I noted in my remarks, we are continuing to invest into the existing asset base as well, specifically to upgrade equipment to add maybe incremental components to that equipment package, which then helps drive incremental new customers. It's a combination of those three things.

Thank you.

Your next question comes from the line of Karen Short with Barclays. Your line is open.

Hi. Thank you very much. I wanted to ask a couple of questions regarding your guidance, specifically about the cadence and the factors influencing it throughout the year. Could you provide some insight into how you view comparisons by segment, particularly any information about quarterly comparisons? I believe there may be some significant volatility to consider. Additionally, I would like to ask the same regarding EBITDA margin by segment if there are relevant points to discuss from a perspective of gains and losses.

Hey, Karen, yeah. Thanks for the question. So listen, in terms of quarterly expectations, I'll give you two statements and probably less segments specific and more just big picture. But here's how I think about quarterly expectations across the year. From a same-store sales perspective, I would say first half is expected to be stronger than second half and that's simply due to the fact that first-quarter last year was the weakest quarter because really the recovery was just starting to take hold. Vaccines have really gotten going. People weren't really very mobile yet. And so our first-quarter compare is a bit easier. So just surely because of that, we expect the first half to be stronger than the second half. If you think about adjusted EBITDA margins, what I would tell you is, the profile from Q1 to Q4 in 2021 will look very similar in 2022. So if you think about the way EBITDA margins played out in 2021, that profile looks similar as we think about building to that 25% for 2022. So while it's not segment-specific, I think that general guidance should send you in the right direction as you think about how to model our business.

Okay, thanks. That's helpful. And then you gave a potential write-down net dollar amount, that $130 million. Maybe just a little color on how you got that number and how you're thinking about from a timing perspective?

Yes, Karen. To provide some additional insight, we acquired the International Car Wash Group in August 2020, which included several brands in the portfolio, each with values assigned to their trademarks on our balance sheet. As we plan the brand strategy for the U.S. car wash business, we are considering focusing on Take 5 Car Wash as the primary brand moving forward. We are currently testing this strategy in a few markets as we transition some of the older legacy brands to Take 5 Car Wash and also with some of our new builds. If these tests are successful, as we expect, and the measurements meet our standards, we may decide to adopt it as a national brand and execute a significant rollout. When we make that decision, we will likely need to write down or write off the value of the older trademarks on our balance sheet, which had significant values and were classified as having indefinite lives. This decision is expected to occur around the middle of this year, and we will have to recognize some impairment. The amount I mentioned earlier, up to $130 million, is a potential figure, but it could be somewhat less. We want to ensure everyone is aware of this possibility to avoid surprises later this year.

Okay. Great. Thanks very much. That was helpful.

You're welcome.

Our last question comes from the line of Peter Keith with Piper Sandler. Your line is open.

Thanks. Good morning, everyone. Jonathan, I was hoping you could talk a little bit more about your digital marketing efforts. Where are you finding across the segments the biggest areas of opportunity? And then now that you've had the new position of the Chief Digital and Data Officer, has there been any big realizations or unlocks that you're finding as you leverage that Big Data Lake?

Hey, Peter, good morning. Throughout this year, we'll provide more details on the metrics emerging from our data and digital initiatives. We're navigating several aspects, but the potential is significant. It stems from ensuring we promote our brands effectively to different customers in the same trade area. For example, if someone is a Quick Lube customer, we want to make sure they know about our Car Wash and other brands, facilitating cross-promotional activities that we are actively pursuing. As the year progresses, we will share specific outcomes, costs, and returns related to these efforts. Another important element is enhancing our digital landscape, ensuring that it is as straightforward and seamless as possible for customers to engage with one or more of our brands. This includes connecting our various brand offerings in a market while maintaining a flawless digital experience for customers to interact with multiple brands. Lastly, regarding the car wash rebranding we are testing and our new Glass business, we have an impressive platform where we gather information on approximately 900,000 new customers quarterly, totaling over 20 million unique customers. I believe no one in our industry has such a system in place. We are focused on leveraging this strong platform for both digital initiatives and cross-promotion. We chose not to delve into these details too much this time, as we plan to discuss them further in a future call later this year, where we will provide more information on our activities and the associated returns.

Okay, great. We'll look forward to that. Maybe lastly, so congrats on the Auto Glass acquisition. Maybe you could just break down some of the synergy opportunities. I would think, just given your large insurance relationships, can you apply that to AGN and really unlock more revenue opportunities versus the $85 or so million they did last year?

Absolutely. I mentioned earlier, Peter, that there are three key areas we are already focusing on. First, we have our retail customer base of over 20 million unique customers. Many of these customers from our other brands overlap with the markets of our new AGN locations, which presents a significant opportunity. Second, we have established valuable partnerships, particularly with insurance carriers, and we've had numerous discussions with them. They are very interested in exploring more business in the Glass sector, just as they do in the collision sector. Finally, the third area is our fleet business. Our large fleet customers have substantial vehicle needs, including Glass requirements, and we are a reliable partner for them. We believe these three aspects alone present exciting opportunities for growth in our Glass business.

Okay, sounds great. Thanks so much and congrats on a good year.

Thanks, Peter.

I will now turn the call back over to Mr. Fitzpatrick.

Thanks, Tamiya. And I appreciate everyone dialing in this morning. Just to reiterate, we're delighted with Q4 with fiscal 2021 overall. More importantly, we are pumped about what 2022 is shaping up to be. And again, we all look forward to talking to you in Q2.

This concludes today's conference call. You may now disconnect.