Q4 2021 Driven Brands Holdings Inc Earnings Call
Kind of over a 150 sites for car wash from just zero 15 months ago.
In 2021, we added 114 car wash locations in the United States bring.
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 Carwash and we'll 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 our AGM 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 Carwash businesses. It has a simple and differentiated operating model a simple menu simple building and strong unit level economics.
<unk> of approximately $1 million mid 20% four wall EBITDA margins and cash on cash returns. We're excited about because of the low initial investment.
AGM is a business, where we can leverage our growth blueprint and significantly accelerate our presence in this segment.
And our thesis on the grass 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.
They are a tailwind 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've learned a lot about the glass operating model since we entered the Canadian market in 2019 and.
And Michael Macaluso, and his team are hitting the ground running on a locking the opportunity we underwrote with this business.
The new unit team is already building a robust pipeline like we have with car, Washington 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 has 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 process and systems for unit growth and that is why we're so bullish for the future.
In total we plan to spend about $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 Carwash 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 from our powerful franchise machine.
Between company and franchise stores our pipeline currently sits at over 1200 locations.
We have also budgeted capital to invest into the existing U S car wash store base.
We will be investing in store remodels and upgrades and we will continue to invest in having one national Carwash brand take five carwash.
As always we will continue to be acquisitive and you can expect additional growth capital to be deployed into Carwash and glass.
Now pulling everything together into 2022 guidance and our longer term outlook.
We're bullish on 2022 and confident in achieving our guidance for adjusted EBITDA of $465 million.
We feel good about the momentum in our business 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 on M&A is very strong.
The digital and data unlock is underway nothing as models, but it will absolutely provide upside.
Our scale gives us a competitive advantage, which continues to expand and compounds.
The industry is still dealing with some noise around COVID-19 vehicle miles traveled inflation and supply chain like in 2021. However.
That doesn't change our overarching confidence in our business model and our ability to consistently deliver growth in cash.
A 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.
And we're believers in this long term plan because.
We are a compound grower.
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'll now turn it over to Tiffany for a deeper dive into the Q4 financials and 2022 guidance Stephanie.
Thanks, Jonathan and good morning, everyone.
Fiscal 2021 results are a testament to the power driven brand.
Our scale and integrated platform.
Growing business with a diverse needs based service offering delivered very attractive margin.
For the year, we posted one $5 billion in revenue and drove adjusted EBITDA of $362 million.
76% increase over the prior year.
Adjusted EBITDA margin reached 25% approximately 200 basis points of expansion from fiscal 2020 and.
And we delivered adjusted EPS of <unk> 88.
This is the result of four and a half billion dollars systemwide sales with 17% same store sales growth and 6% net store growth.
Adjusting for Jive in style in both the current and prior year period, we added 247 net new stores in fiscal 2021.
We are proud of the entire team who continue to adapt to an ever changing landscape exceeding our expectation and delivering industry leading results.
We delivered on our commitments this year, both organically and Inorganically and we exceeded the first year of our IPO model by nearly 30%.
By all accounts driving brand had a great year.
Now diving into our fourth quarter results specifically.
System wide sales were $1 $2 billion from which we generated $392 million of revenue.
Adjusted EBITDA was $85 million.
And adjusted EPS was <unk> 18.
Another top to bottom.
We delivered a strong outcome, despite continued supply chain disruption and inflationary pressure as well as yet another COVID-19 variant.
Now, let me break things down a bit more.
System wide sales growth in the quarter was driven by same store sales growth as well as the addition of new stores.
We have tremendous white space to continue growing our store count and a 300 plus billion highly fragmented industry.
As Jonathan discussed are for.
Franchise company Greenfield and M&A pipelines are all robot.
We are aggressively growing our footprint.
In the fourth quarter, we added 102 net new stores as they continue to move them to opportunity in the quick lube and Carwash businesses.
We're in the process of selling the Jive and cloud business, which is the mobile reconditioning. There has for both the interior and exterior of vehicles.
In fiscal 2021 driving style generated approximately 250000 of revenue.
This business is not core to our strategy and we are actively marketing it.
As a result, it is considered held for sale and has been excluded from our ending store count.
Same store sales growth was 16% for the quarter with relatively consistent performance across the three months.
Once again outpaced the industry across all business segments, continuing to gain market share.
And our same store sales were comprised of positive car count and average ticket.
Car count was driven by our best in class marketing and customer experience and average ticket continued to benefit from the increasing complexity of vehicle as well as our ability to pass through the cost of inflation.
Now remember we are approximately 80% franchised so not all segments contribute to revenue proportionately.
For example, <unk> with over half of systemwide sales this quarter, but only about 15% of revenue because it's effectively all franchise with lower average royalty rate.
Maintenance and Carlos our Mexico franchise and company operated.
We'll begin approximately 40% and 30% of revenue respectively.
As always this is provided on our Instagram, which is posted on our Investor Relations website.
When you put unit growth and same store sales growth in the blender and accounts our franchise mix our reported revenue in the quarter was $392 million, an increase of 36% versus the prior year.
From an expense perspective, we continue to carefully manage site level expenses across the portfolio.
In fact prudent expense management together with strong sales volume fell four wall margin of 38% at company operated stores.
And it does stop SG&A as a percentage of revenue was 20% in the quarter over 400 basis points of improvement versus last year.
This resulted in adjusted EBITDA of $85 million for the quarter, an increase of 29% versus the prior year.
Adjusted EBITDA margin was 22% 100 basis points lower than last year as a result of the mix of our business.
The maintenance in potash segment contributed more of the EBITDA dollars this year versus last.
Depreciation and amortization expense was $34 million.
This increase versus the prior year was primarily attributable to the growth in company operated stores.
And interest expense was $24 million in the quarter.
This decrease versus the prior year was primarily attributable to lower average interest cost on outstanding debt.
For the fourth quarter, we delivered adjusted net income of $31 million and adjusted EPS of <unk> 18.
You can find a reconciliation of adjusted net income adjusted EPS and adjusted EBITDA in todays release.
Now a bit more color on our fourth quarter results by segment.
The maintenance segment posted positive same store sales of 26%.
Maintenance continues to benefit from more targeted digital marketing, which led to an increase in car count from both new and repeat customers in the quarter.
We were able to pass along the price increase while maintaining our premium oil mix, which drove average ticket.
From a profitability perspective segment, adjusted EBITDA margin year over year with flat however.
However margin contracted in the third quarter to the fourth quarter due to a combination of product cost increases in excess of retail price increases.
And alternative supply costs incurred to mitigate oil supply constraints.
The overall impact was approximately 200 basis points.
By Q4, we have largely overcome the effects of the national Labor shortage, which has provided a margin benefit in Q2 and Q3 as we ran leaner on labor than intended.
The car wash segment posted positive same store sales of 6%.
Flashfloods subscriptions have increased to 50% of sales and the number of Black card members grew by an additional 31000 in the fourth quarter.
This is up nearly 800 basis points or 200000 members since the acquisition in August of 2020.
This is a great recurring revenue stream that provides a level of predictability to this business.
Non wash sub revenue per wash continues to increase as well.
Results of a simplified menu board and the focus that our teams are placed and improved selling techniques.
As Jonathan discussed we are testing the rebranding in some of our car wash location to the trusted take five brand name.
This test will help determine the go forward brand strategy, sorry, Goulet Carwash business.
We will undertake some form nationally to a large proportion of the estate means that there could be a noncash impairment charge in a future period of up to $130 million associated with the write offs of intangible asset for any retired brand will.
We'll be sure to keep you updated on our progress.
The paint colors and glass segment posted positive same store sales of 11%.
We added over 650 direct repair programs with insurance carriers this year.
The recovery in the Canadian business continues.
Some accounts, where the industry continue to grow and our shops have consistently outpaced the industry.
We are optimistic about what that means for fiscal 2022.
We're also excited to expand our glass offering into the view that with the acquisition of auto glass now.
Glass repairs are growing as a percentage of auto repairs and repair complexity is increasing data the necessary calibration.
This provides yet another exciting avenue for growth leveraging our proven playbook.
And finally, the platform services segment posted positive same store sales of 35%.
Platform services as this segment most exposed to supply chain pressures and as you well know every aspect of the supply chain is challenged right now.
For manufacturing to the port to tracking.
We ended the fourth quarter was $523 million in cash and cash equivalents, we have leveraged our scale and leadership in the industry to turn this into a strength and differentiator for driven.
We contract with multiple suppliers, while most of our competitors, 80% of the industry that as independent operators.
On just one primary supplier.
We leveraged the strength of our balance sheet to place orders earlier.
And we have the team dedicated to relationship management and ensuring we keep close watch on every step of the supply chain.
This is translated into more inventory in stock at one 800 radiator than many of our competitors and customers have been willing to pay a premium trading continued record sales levels within the quarter.
Yeah.
We were pleased with our strong operating performance in the quarter, which resulted in significant cash generation that allowed us to further invest in the business.
That cash generation together with our revolving credit facility and access to the debt capital market is important for our strategic growth plan.
And as we've consistently stated investing in our business and growing our footprint is our number one priority.
In December we closed on a $500 million term loan.
The proceeds from the issuance will be used for general corporate purposes, including acquisitions.
We had $397 million.
Undrawn capacity on our revolving credit facility.
Resulting in total liquidity of $920 million.
Our net leverage ratio at the end of the fourth quarter was four four times.
Pro forma for the AVN acquisition, our net leverage ratio was four seven times.
You can find the reconciliation of our net leverage ratio post them on our Investor Relations website.
We intend to continue using our balance sheet to capitalize on our substantial white space and a 300 plus billion dollar consolidating industry.
Now looking ahead at fiscal 2022.
Disposable personal income is forecasted to be flat.
Well ahead of 2019 and.
<unk> is expected to continue its recovery despite a near term blip from the latest Covid variance.
As a result demand for our needs based services are expected to be strong in fiscal 2022 in fact, so far in the first quarter. We are pleased with our performance.
As laid out in this morning's earnings release, we expect mid single digit same store sales growth on a consolidated basis with fiscal 2022.
Driven by continued industry tailwind as well as the strength of our scale and sophistication when it comes to our key Differentiators are commercial partnership and our marketing capability, which include cross marketing opportunity.
And we expect to open approximately 225 net new stores across the portfolio, which is all organic growth.
Our cloud quickly and franchise is strong.
Greenfield development continues.
We spent the past year building out our Carwash Greenfield pipeline and we're excited about glass expansion in the U S.
We expect to deliver revenue of approximately one 9 billion and adjusted EBITDA of approximately $465 million.
Which should result in adjusted EPS of approximately $1 <unk>.
Based on 167 million weighted average shares outstanding.
We are guiding adjusted EBITA margin rate flat to fiscal 2021.
While we were successfully able to navigate to the inflationary environment last year and expanded margin. We think it's prudent to approach fiscal 2022 cautiously.
Given the widespread inflationary pressure that we're lapping.
And that is expected to continue most of the year.
Want to ensure that we continue to drive growth in core count while managing our margin.
Now there are just a few other items commence initial model fiscal 2022.
First we anticipate depreciation and amortization of approximately $135 million.
Second interest expense is expected to be approximately $100 million and.
And lastly, our effective tax rate is expected to be approximately 30%.
Also keep in mind that fiscal 2022 is a 53 week year the.
The impact of the extra week is expected to yield approximately $16 million in revenue.
$4 million, and adjusted EBITDA, and <unk> and adjusted EPS.
And finally, because we were a new public company last year, and there was significant volatility associated with year over year comparison.
We updated our guidance every quarter rolling in HD and updating our outlook for the year.
Our expectation for this year is a bit different.
We shared our annual guidance today and.
And we don't expect to update it again until the end of Q2.
At that time were rolling all M&A activity for the first six months of the year plus organic performance to date.
And we will share our latest forecast for the second half of the year.
We believe this is a transparent and very reasonable approach for fiscal 2022.
In closing, we expect the strength of this portfolio to continue to deliver best in class results.
We are focused on our proven formula with a platform that has scaled and diversified.
Our formula is simple, we add new stores, we grow same store sales and we deliver stable margins.
This results in significant cash flow generation that we can reinvest in the business.
We look forward to speaking with you again in late April when we release, our first quarter results.
And operator, we'd now like to open up the call for questions.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
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.
Yeah.
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've guided for revenue above consensus by about 18% EBITDA in the high single digits versus consensus and EPS also up a bit versus consensus and it kind of 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, David Thanks for the question.
I appreciate your thoughts on.
The year that we just ended I appreciate your congratulations there so listen on guidance I would say.
We are excited about 2022, we think we've got a lot of nice.
Tailwind heading into the year certainly industry tailwind continue our businesses are performing strong.
We did some <unk>.
Difficult M&A in 2021, that's going to provide some benefit in 2022 as well so.
By all accounts the consumers are in great shape as I said in my scripted remarks disposable personal income is flat, but well ahead of 2019 BMT is going to continue to recover in fact are forecasted for the MTV up 6%. So by all accounts nice healthy environment for us to operate in.
As we think about the profile of the <unk>.
The P&L and the flow through what I would tell you is obviously when you think about it.
Adjusted EBITDA of 465, that's 28% growth versus 2021, 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 Carwash and now the glass business.
So thats $135 million interest is up.
We'll be $100 million, where we've issued two rounds of debt in 2021, we're getting nice favorable rates. The good news about favorable rate and building a war chest that we can deploy that capital to continue to grow our business. So we will deploy that capital this year.
And we got.
Great pipeline of M&A built to be able to deploy that capital. So there should be M&A coming.
To offset that interest cost that's not modeled in our 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.
So it looks like the Carwash sensor sales of plus 6% were below what the street with banking, which was up mid teens and we recognize we don't have a lot of visibility into the compare and how the segment did 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 business.
And on an underlying to your basis kind of how does the same store sales evolved from the third to fourth quarter.
Thanks, Jackie as Jonathan I'll take a shot at that we're not going to sort of bifurcate the international in view of the U S market, but what I will tell you as I said in my remarks, we're a little over a year into the car wash business.
We brought a phenomenal leader on in Q4 late Q3 early Q4.
We're working on a bunch of stuff. We're building scale in terms of unit counts building scale in terms of the pipeline for Greenfield growth and.
6% was a reasonable performance in Q4 as I said I'm pleased with it but I believe there is a ton of incremental upside so.
Early in the journey and we expect that John and the team will continue to deliver deliver even better results as we March forward, but we don't bifurcate the either the two year stack or the split between international and domestic.
Thanks, so much.
Your next question comes from the line of Christopher <unk> with Jpmorgan. Your line is open.
Hi, Good morning, It's Christian <unk> on for Chris Thanks for taking my question.
Piggyback on the Carwash business.
Comps came in a bit short of expectations, but EBITDA came in a bit better actually I think post towards the last quarter. There were some concerns around labor pressures. The company operated stores. So I guess could you just help us qualitatively think about.
Flow through within the car wash segment.
How to think about that labor model going forward.
Yes, great great comment and look.
Like I said 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 car Wash Express tunnel Carwash 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 three or four or five people much easier to staff that fully versus the business that may have 10, 15 20 people. So we.
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 sort of overall labor challenges in the market.
Got it that's really helpful color and then just on the on the mid single digit guide next year, how are you thinking about the different segments.
I think it's fair to expect that division to outperform just given the recovery in collision miles, but are there any other notable call out.
Help us think about segment level comp.
Comps next year.
Sure, Yes, so 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 the year in total as we expect the segments to perform in generally a pretty tight range. So no real outperformance by any one segment, we think they'll outperform somewhere around 200 basis points of each other so all segments are performing well today.
<unk>, 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 are up in Canada.
That bodes well for that particular segment in 2022, so everything should perform well everything around 200 basis points, each other and 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 can do one with Bank of America. Your line is open.
Hi.
Particularly.
I'd like to ask about whether you see a wide disparity in regional trends in any of your business segments, this quarter and in which region outperformed the company average and English one underperforming.
Hey, John Good question.
We don't actually breakdown sort of regional staff at all but I'll give you. This color right I mean, you can.
We track vehicle miles traveled we track we track congestion miles literally on a state by state basis. So you can imagine the places that have been sort of open for business longer over the course of 2021 places like Florida Places like Texas sort of generally the southeast are typically trending maybe a little bit little bit higher a little.
Better than some of the places in the northeast and the Midwest markets like Canada has been a little more locked down and then other markets. So I don't I don't think theres anything radically different than what you'd be reading about for other businesses in terms of where people are out and about moving driving sort of.
More normal life and some of the areas that are still a little bit.
We're a little bit shutdown in Q4, you also had the COVID-19 variance.
Developed in Q4, so that sort of exacerbated some of those issues, but I would say generally the.
The southern states, probably a little bit outperforming some of the northern states.
Got it that's helpful. And then just take patients and glass still have a fair amount of recovery before it gets back to where you would have expected to operate pre COVID-19 and I could collision rates stay below historical average levels driven that.
A large portion of the working population do not community as quickly as they were pre COVID-19 .
Yes, we're seeing vehicle miles traveled and congestion miles specifically your churn.
The biggest drivers there in that business, but we're seeing sort of sequential growth in that business literally quarter on quarter, continuing to see that as we exit 2021.
So I think that.
We have a sort of an ability to look at sort of work in progress. If you like which is the amount of vehicles on our lots and that seems to be pretty pretty good right. Now. So I think it's as vehicle miles traveled continue to return to normal that business will continue to.
Continued to strengthen but.
It's in pretty good shape, I would say right now, but definitely upside as BMT returns to more normal rates 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.
I guess the question 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.
I guess I would call it the price component of higher ticket that's been dependent.
<unk>.
The operational dynamics of Upselling or what have you.
So if you could give us some clarity I guess 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 kind of narrow in at this point or is that gap, so feel pretty pronounced.
Hey, Sharon I'll take that first part of your question and then Jonathan can handle the second half so let's talk about inflation for just a minute and really where we're somewhat insulated from the inflationary impact as we think about our franchise brands that predominantly your question relates to our company owned quickly business and then the company owned <unk>.
Watch business.
I haven't seen a whole lot of inflation outside of wages and the carwash business in the in the maintenance business. We are seeing some inflation in supply costs predominantly in oil in my prepared remarks, I talked about them in particular in the fourth quarter. Some cost increases that we have to take that resulted in some retail price increases so generally what I would say as it experienced mid single.
Double digit inflation year to date between oil and wages.
In our business.
In the fourth quarter was a bit more pronounced it was about double digit in the fourth quarter. So if you think about ticket and the impact of inflation on ticket I would say it was more mix in the first three quarters of the year driving ticket. It is a bit more price in the fourth quarter just based on the way that the year played out.
That's right that's kind of what that's how I'd answer the first part of your question and then I'll turn the second part of your question Jonathan.
Hey, Sharon good morning on the supply chain advantages and whether whether theyre going to diminish on the contrary, Sharon I think theyre going to expand and compound over time right. So remember 80% of this industry is small chains and independents, so their supply chain capabilities.
Completely dependent on third parties right, we control our own destiny, our ability to work with our vendors because of the size of our purchasing because of our willingness to use our balance sheet or willingness to order well ahead of others, our ability to understand price elasticity and pass that onto the customer are vastly either free.
<unk> store models, which are sort of insulated to driven from an inflationary perspective or our company operated models, which are highly labor efficient all of that sort of generates the ability to have highly efficient unit level economics, and then supported by this massive supply chain capabilities. So actually I think it continues to grow and scale in them.
Important as we look forward.
Thank you.
Your next question comes from the line of Chris <unk> with Stifel. Your line is open.
Thanks, Good morning, guys.
The car wash unit guidance, I think culture, 845, Greenfields, which is a strong number for a single year's growth more than double I think a lot of your peers. So how is the company supporting its greenfield development and will new builds be primarily infill in existing markets.
Hey, Chris Jonathan.
Look we have a track record of building lots of Greenfield locations right. So.
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 our 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 driven we don't need to build up.
Capability, we're able to just expand that capability.
So we feel really good about that number and hopefully that number growing in 'twenty, three and 'twenty four and beyond right. So you have to have the people processes and systems in order to build a pipeline and then obviously execute on the openings. The construction of the project management et cetera in terms of infill or not.
Of course, there is a lot of white space in the 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.
Literally there is no.
Massive amount of white space, So I think youll 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 Carwash 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, we're upgrading equipment to provide more premium wash performance could be used to attract.
More people.
Yes, I think it's a great question, Chris I think look the subscription revenue component is an amazing part of that business in.
As you think broadly in life right first started 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 sort of move up the product mix spectrum from lower priced washes to more premium priced washes because maybe there is a.
Ceramic.
Option or a higher end option. So that that's sort of one P mix management. If you like the second is 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 five quick lube brands, which obviously, we're inviting them to come to a car wash brands. So thats, an ability to drive sort of incremental trial.
Within our business. So we think Thats super important as we continue to capture data from our customers that come to a car wash the ability for them to refer to other.
Other friends and family members, that's really important. So we think there is kind of unbelievable opportunity to grow both top line through.
New customer acquisition, and then obviously sort of menu menu mix management as people sort of.
Move up the.
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. So it's combination of those sort of three things.
Thank you.
Your next question comes from the line of Karen short with Barclays. Your line is open.
Hi, Thanks, very much I wanted to just ask a couple of questions on cadence and puts and takes throughout the year with respect to your guidance. So.
Maybe a little color on how you think you've obviously commented on comps by segments within a pretty narrow range, but any color you could give on comps by quarter, just because there I think will be some pretty meaningful volatility and then I'd ask the same question is just about EBITDA margin by segment, if there's anything to call out from them.
Puts and takes perspective.
Hey, Gary Yes. Thank you. Thanks for the question so listen in terms of quarterly expectation.
I'll give you two statements and probably less segment specific anymore, just sort of big picture, but here's how I would 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.
Really the recovery was just starting to take hold rate vaccines hadn't really gotten going deep.
People weren't really very mobile yet until our first quarter compare is is it 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 that 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 look similar as we think about building for that 25% for 2022.
Well, it's not segment specific I think that sort of 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 them a potential write down that dollar amount that $130 million, maybe just a little color on how.
How you got that number and how youre thinking about that from a timing perspective.
Yes, Karen is a little bit of additional color for you. So.
Listen we bought the international Carwash group in August of 2020, and when we bought international Carwash Group there were a variety of brands in the portfolio that came with that acquisition and there were values attributed to those trademarks that are sitting on the balance sheet as we think about what the brand strategy should V go.
Forward for the U S. Carwash business, we're sort of leaning into this idea that take five carwash could be the primary brand going forward and we're doing some work right now that we're testing it in a couple of markets.
As we consolidate and convert some of those old legacy brands to take by Carwash and we're testing it with some of our new Greenfield build.
It proves to be successful the way that we think that it will and the precise measurement looks.
Up to par up to our expectation that we will likely make the decision to make that our national brand in mobile and in a pretty significant way when we do that the value of some of those old trademarks that were on the balance sheet at pretty significant values and marked as indefinite life.
What has to be written down and were written off.
And when that decision is made and it will likely be some time towards the middle of this year, we will have to take some amount of impairment that a number that I gave today with up to $130 million.
<unk> up to it could be slightly less than that but we wanted to make sure that everybody is tracking that and understood what that number could be so there was no surprise later this year.
Okay, great. Thanks, very much that was helpful.
Youre welcome.
And as a reminder to ask a question. Please press star one on your telephone keypad again Thats Star one.
Our last question comes from the line of Peter Keith with Piper Sandler Your line is open.
Hey, 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 Chief Digital and data officer has there been any big.
Realizations are unlocks that you're finding as you leverage that big data Lake.
Hey, Peter good morning.
Yes look I think.
Over the course of this year, we will get into more sort of.
Details around metrics coming out of that data and digital unlock I think where we're working through a bunch of stuff there, but the opportunity is really really big I think I think it comes from a couple of places Peter though if you think about making sure that we are.
Promoting our brands.
Appropriately with different customers that live in the same trade area. So if you're a quick lube customer, let's make sure you're invited to our car wash and vice versa. Our tour other brands, so really that sort of cross promoting.
Activity is something that we continue continue to work against and execute on and over the course of this year. We will give you more specifics in terms of the success the cost of doing that and the returns I think the second piece is around the if you like.
Digital the digital landscape, Peter which is really about making sure that we make it as easy and seamless as possible for our customers to do business with one or more of our brands right. So you could be thinking about.
How do we connect our different brand offerings in our market to our customer and make sure that that digital experience is flawless and easy for them to connect with multiple multiple of our brands I think the last thing is again as we think about the carwash rebranding that we're testing.
As we think about the glass business that we are now in we have this unbelievable.
Platform, where we're capturing.
About 900000, new customer.
The information about new customers on a quarterly basis, we've got over 20 million unique customers.
I don't think anyone else in our industry has that so we have that process build so really it's now taking that really strong platform and leveraging against both the digital and the cross promotion. So intentionally didn't talk about it too much at this time, we're saving that for another call later on the year, but we will give you a lot more detail in terms of what's been done.
And the return profile associated with that.
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 the AGN and really unlock more revenue opportunity versus the $85 $5 million. It did last year.
Yes, 100% I said it I said it in my remarks, Peter I think there is like three obvious things, where we're leaning into already one is that retail customer base that we have today 20 $20 million plus you need customers a lot of our customers from our other brands are in the same markets as our new AGM locations. So that's an obvious unlock the <unk>.
As we have incredibly deep and important partnerships with our insurance carriers and we've obviously had lots of conversations with them and we think that.
They are very eager to see if they can do more business with them in the glass space just like they do in the collision space and then the third component is what we call fleet business. So you think about our large fleet customers.
They have large fleets of vehicles and they have glass needs and where it tried and trusted partner for them. So we think those three levers alone provide really interesting opportunity for that class of business.
Okay sounds great. Thanks, so much and congrats on the good year.
Thanks Peter.
I will now turn the call back over to Mr. Fitzpatrick.
Thanks to me and I appreciate everyone dialing in this morning, just to reiterate we are delighted with two with Q4 with fiscal 2021 overall more importantly were pumped about what 2022 is shaping up to be and again are $850 million by end of 2026. So thank you all look forward to talking to you in Q2.
<unk>.
This concludes today's conference call you may now disconnect.
Yes.
Yes.
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