Driven Brands Holdings Inc. (DRVN) Earnings Call Transcript & Summary

All right. Great. Thanks, everybody. So up next in today's agenda, we have Driven Brands. And with us, I'm very happy to have Jonathan Fitzpatrick and Kristy Moser in Investor Relations. And I think, Jonathan, you had a couple of prepared remarks you wanted to give. So I'll give you the stage.

Yes. Thanks, Liz. Thanks for having us. Just a quick sort of snapshot of Driven Brands. So we're automotive aftermarket services, operating in needs-based category, $350 billion sort of growing addressable market. We've been delivering really solid sort of double-digit top and bottom line growth since we went public about 2 years ago. We have quadrupled EBITDA since 2019. We've got 4 main business lines in our company. We've got some more mature franchise businesses that are very high cash flow-generating businesses, which then we reinvest into our core growth priorities, which are Quick Lube car wash and glass. We've got a unique set of shared services that provide a bunch of network benefits across our business, whether that's our data and marketing, our procurement capabilities and then, obviously, our growth capabilities, whether that's more franchise stores, M&A or organic stores. So anyway, thrilled to be with you here today and a quick opening.

Great. Thanks. So you have a pretty diverse suite of brands that service vehicles from collision to oil change to car wash. And I guess unlike the auto parts retail industry that did see a big increase in demand during the pandemic following distribution of stimulus payments, auto service was pretty negatively impacted. So just do you feel like the U.S. auto service industry is back to normal yet?

Well, we were impacted very short term when we had sort of the initial outbreak of the pandemic in that sort of late Q1 of 2020. We were back to basically 0% same-store sales by the start of Q3. So we bounced back very quickly. I think what's important to understand for our business and our customers is our core customer has an average household income of $70,000. So our core customer was driving and using their vehicle over the last 2 to 3 years. We also saw that VMT, which is vehicle miles traveled, which is probably the biggest leading indicator for our business, was positive 1% in 2022, and the forecast is for low single-digit growth in 2023. So again, we look at sort of the needs-based categories that we're in, our household customer in that sort of $70,000 range. They were driving using their vehicles for the last number of years. And then what you have to remember about the automotive aftermarket category is it's highly fragmented. So we're the largest player in the category with almost 5,000 locations. We serviced 70 million vehicles last year. And 80% of our competition would be sort of small chains and independents. So you've got this massive growing industry that's primarily made up of sort of less sophisticated players or certainly people that don't have our scale and sophistication. So certainly, short-term impact with the pandemic and the business has been ripping really since then. So we feel really good about where we are.

Great. What do you think were the biggest changes to your business or the most profound learnings that really came out of the last 3 years?

Yes, lots of things to think through there. I would say, one, is scale matters. So when we had disruption to the supply chain over the last number of years, it's basically moderated now to, I would say, almost back to prepandemic levels. The power of our scale in terms of our vendor partnerships, our ability to secure product at the best price in terms and conditions to keep our stores stocked, both franchise and company stores, that was a huge benefit, and that sort of scale power continues to grow. I think the other thing that was amazing is the unit-level economics within our business, whether it's our Quick Lube business or other categories, we continue to expand our pipeline, both in terms of the number of stores that we're opening and the pipeline of stores that we have visibility into. So sitting here today, we've got 1,600 stores in our pipeline with about 35% of those which -- what we would call site secured or better. So we've got 3- to 4-year visibility into unit growth, which last year, we delivered almost 400 net new units. And this year, we've guided to almost 400 on an organic basis. So I think we're seeing continued growth in terms of the unit count and then the benefits of scale.

Great. And you talked about driving activity kind of recovering. It was up 1% last year, expected to be up mid -- low single digits this year. But are there regions of the country or income brackets where you're seeing trends diverging meaningfully, like either some areas just slower than others? Or like what does that look like for you?

Yes. Look, I think the lower-end consumer is feeling the impact of the inflationary environment probably more than most, no surprise there. We still delivered 14% same-store sales growth in 2022 across our portfolio. I think we see a little bit of softness with that lower-end consumer. But again, I go back to our consumers are not doing Zoom calls. They're not working from their basements for the last 3 years. They're out and about using their vehicles. Vehicle miles traveled is back. So I think we see a little bit of softness there, but overall, the health of the business feels really good.

Got it. And then you mentioned $70,000 average household income of your consumer. What's the typical age of that vehicle for your average customer?

Yes. Well, first of all, if you look at the overall car parc, we call it, in the United States, there's about 285 million vehicles on the road today. Just a side bar, less than 3% of those are fully electric vehicles. We'll probably come back to that. Within that car parc of 285 million vehicles, the average age of the vehicle that has now surpassed 12 years, so that average age has been growing for the last decade or so, driven by the fact that cars are made better, so they last longer. So when you look at that average age of the vehicle, our average age of vehicle within our portfolio is in that sort of 5 to 7, 5 to 8 category. We typically are dealing with vehicles that are in their second ownership cycle. We're not targeting those vehicles in the first 3 years. They're typically getting serviced or maintained at dealerships. We're very much in that, sort of, older car and second ownership cycle.

Got it. And does that vary between the brands at all under the Driven Brands umbrella? Or is it pretty similar?

There's slight nuances, Liz, but for the most part, I would say that older vehicle, let's say, 5 to 8 years of age, higher mileage, obviously, more expensive to maintain. Obviously, we think about sort of the new and used car environment right now, people are holding on to their vehicles because of the inventory and pricing challenges on the used and new car prices and then, again, our household income in that $70,000 range, which is typically the core customer that's really using the vehicle and has been using it for the last 3 years.

Okay. So your average like car wash customer is probably pretty similar to your average oil change customer.

Pretty similar. We've got some nuances there, but we've got this incredible data ecosystem where we have close to 30 million unique customers in our data ecosystem today. We capture a very rich vein of information from our customers as they come through our shops and our businesses. In automotive aftermarket, it's very typical for a customer to give you their name, their address, their contact information. We get that with the vast majority of our customers. We also then scan the vein and get the service history and the mileage on the vehicle. We then take that data and enrich it through third parties. So got very good understanding of who our customer is by category and by segment based on that sort of data access that we have.

And I would imagine that's a pretty powerful tool and one of the reasons why scale matters so much in the auto service industry.

Yes, it's huge. And if you look at last year, we drove about 4% of our -- or about 8% of our retail traffic, and revenue came through our direct-to-consumer marketing. So we've got a very powerful customized direct-to-consumer marketing, CRM engine that's continuing to expand and then, as we look forward, the ability to take a customer, let's say, that comes through a Quick Lube shop and have them invited to use our car wash or our glass businesses. So that ability to cross brand and cross promote through that data ecosystem is pretty exciting for us.

Great. Kind of going back to this -- the idea about miles driven and how your customers have been changing some of their habits, right? I guess I'll share a stat from a survey that we run every quarter, and we published the latest one this morning. So 41% of our survey respondents were still working the majority of their week from home last quarter. This quarter, that came down to 35%. We've seen a pretty dramatic shift in return to work from our survey work but definitely not back to like the 10% that was prepandemic of people working the majority of their week from home. So I guess do you feel like if we don't ever get back to that prepandemic level, is that a structural headwind for the industry or just kind of starting at a different base?

Yes. Look, I think even in our company, we're 3 days required in the office starting in January, and I think a lot of companies have moved to at least some sort of hybrid structure. New York is probably a little bit 4 to 5 days a week. So I think you're seeing that. I do think that when people are at home, they're still driving, so it's not like they're at home and not ever driving. So I think we will end up at sort of an equilibrium where it's probably a 3- to 4-day office week. So that's number one. Number two is when we look at that household income that we target that we sort of own today, which is that $70,000 household income, those folks are generally not sitting at home doing Zoom calls and sipping lattes in their basements. So it's a pretty different customer set. And again, those folks need their vehicles working properly to carry out their lives. So I think even if we settle in at sort of 10% or 15% stay at home, I think it has a de minimis impact on our category.

Great. And then I wanted to touch on gas prices a bit. We've seen some pretty big fluctuations since the -- we hosted you guys at the same conference in New York last year. And there are some other inflationary pressures that we'll get into more in a bit. But I mean what have you been able to observe about how your -- the different parts of your business are either sensitive or not sensitive to gas prices?

So when we've looked over history, typically sort of $5 a gallon gas prices where we start to see some behavioral change in people driving, and it's not necessarily on their daily commute. It's on those longer trips perhaps. So when we saw the $5 this time last year, we did see a slight decline in demand but like de minimis. That was offset by the cost of airline travel. So people were looking at the price of airline tickets, and they were saying, "I'll drive from my summer trip or my road trip." So that was sort of offset. We believe that it's really at a sustained over $5 a gallon where you would see some possible erosion of consumer demand. But the other metric that we look at, which is probably more relevant for us or has a higher correlation is this vehicle miles traveled. So even if you look at that short-term $5 a gallon this time last year, vehicle miles traveled still grew by 1% in 2022 and is forecasted to grow by sort of low single digits this year. So it's a contributing factor, but it's not the defining factor.

Got it. And then I want to talk about the competitive environment a bit. Just how much market share do you think you have today in the various business lines you're in? And then how much do you think is realistically available to Driven Brands in the next decade?

So we're at about 4,900 locations today. We've grown that unit count really nicely over the last sort of 5 years. As I mentioned earlier, our pipeline is 1,600 units sitting here today that will open ratably over sort of the next 3 to 4 years. We still believe in the North American market. There's white space to get at least 12,000 units. So you could argue 2.5 or 3x where we are today. Again, because of this highly fragmented industry, do I think the total number of Quick Lube shops as an example in the U.S. is going to grow? I think it's probably de minimis growth in that, but it's really our ability to take down market share through either new stores or acquisitions. So we feel really good about our 12,000-unit white space target over the sort of medium to long term. And the pipeline and our unit growth certainly supports that aspiration.

Great. And you touched on acquisitions. I mean Driven has been an acquirer in the past, both sort of small tuck-in businesses and larger transformative deals. So as a public company, valuations have generally kind of moderated a bit in the last year. Have private valuations followed suit? Is it a more attractive acquisition market?

Yes. And don't get me started on the public company valuations. What I would say is that in the categories that we've been acquiring, so let's start with -- in Quick Lube, we did our acquisitions really back in 2017, 2018, and now we've been building stores, either company or franchise, for the last 3 years. This year, we've guided to about 50 new company stores in Quick Lube and more than double that with franchise. So there's really no acquisition on the Quick Lube side. In the car wash side, I think everyone saw the -- some of the multiple frothiness, let's just say, over the last 24 months. I think that has significantly moderated. We're seeing processes just get busted now because people are not willing to pay those multiples and, obviously, the debt markets are pretty tight. So the other thing that we're seeing is the snowball effect in car wash. So you had a lot of individual entrepreneurs or small business folks that were opening stores and they had multiple buyers willing to pay sort of double the price of CapEx that they put in. That's starting to essentially dissipate right now. So I think we're seeing a return to normality within the car wash multiples. I think there's a lot of folks that got into the business over the last couple of years and are probably over their skis a little bit. So we're -- we've got a nice war chest of capital, and we'll remain opportunistic given when those opportunities come along. And then lastly, in glass, 2022 was a year where we built out our North America glass -- auto glass platform. We did about 10 acquisitions last year. We've built a really nice sort of base platform in the glass business. We've now got 200 locations, close to 1,000 mobile vans. We now can hit more than 20% of the U.S. consumer base from a glass repair perspective. So I think we've already said that we're migrating towards a greenfield strategy with glass. There's still some opportunistic things there. But the good news is multiples are down, but we really are executing our strategy, which is get into a category, build scale through M&A and then migrate to greenfield growth with opportunistic M&A, and that's what we're doing.

Got it. And what does the typical Driven Brands acquisition look like in terms of EV, the EBITDA multiple and what kind of synergies you can typically achieve in the first 1 to 3 years?

So look, every acquisition that we've done, and we've done about 100 acquisitions over the last 7 to 8 years, some super large and lots of small tuck-ins, but we really ask ourselves 2 questions with every acquisition. Number one, will that asset be better as part of Driven Brands? And secondly, will driven be better off with that asset? So that's the overriding principle we think about. We've been very disciplined in that most of our acquisitions have been in a single-digit LTM multiple. That's not a pro forma 2-year adjusted crazy multiple. That's sort of an LTM basis. In all cases, we get significant synergies, probably 2 to 3 turns of synergies that we get when we acquire the business. Sometimes, that's through procurement or supply chain. In many cases, it's about tweaking or improving the operating model. And then obviously, it's layering on our data and marketing capabilities. So you can think about historically single digit on an LTM basis with 2 to 3 turns of multiple expansion once that business is fully integrated into the network. So that's kind of how we think about historical M&A.

Great. And then I mean that acquisition engine is pretty powerful, but the environment has gotten a little competitive for some of these highly covered -- highly coveted assets and properties. So I mean what is -- what has the shift looked like in terms of greenfield growth? And how flexible are you in terms of capital deployment between acquisitions and greenfields?

So we don't ever budget for acquisitions. Obviously, we have a phenomenal M&A team, and that's sort of very much part of our DNA. It's not episodic. We've been doing it for many, many years. So we have a target list of things that we're interested in acquiring, and we sort of work through that list. In terms of greenfield, if you look at the 3 growth businesses, Quick Lube, car wash and glass, Quick Lube, we migrated from M&A to organic growth sort of in 2019, and that's what we've been doing. We literally do no M&A in Quick Lube anymore. And within that organic growth, it's sort of 2.5 to 1 franchise versus company. And that's a proven strategy that's been highly successful for us in that business. The car wash, we got into the car wash business in late 2020. We bought about 200 company-owned units in the United States. We wanted to build scale there. So we added about of 125 to 150 units through acquisition. We were disciplined in the multiples we paid. We paid single-digit LTM multiples for those businesses because we were buying smaller versus larger platforms. And then last year, if you looked at, we still did some M&A, but we opened, I think, 35 greenfield stores last year because we had to build out the pipeline. Our guidance for this year is to open at least 65 new greenfield car washes, and that's the full process from identifying the trade area, finding the real estate and then building the car wash. And we'll remain opportunistic on M&A within car wash, but really, the focus now is on greenfield. And then lastly, in glass, as I talked about, we did about 10 acquisitions last year. It's a highly fragmented space. So once you get below sort of chain #20, you're into very small businesses. So I think we've guided to about 120 or so new glass units this year, so we're already shifting into that organic growth within the -- sorry, the glass space. So we have these deep capabilities both on the M&A side and the team that has unbelievable access to finding the right real estate at the right price and then obviously executing in terms of the build process.

Kind of going back to your customer group for a minute. Just how price-sensitive does that customer tend to be? And then what's driven competitive strategy in businesses like car wash or oil change where the frequency of visit higher than sort of typical auto service?

Yes. Look, I think the price sensitivity depends on how needs-based the service is. So if you look at our Quick Lube business, for example, so about 650 company-owned stores in the United States. We took price 3 times last year, really to balance the inflationary pressures with both supply chain and labor. Every time we took price, we pause, we look at what happens to the consumer feedback. Our NPS scores, our Net Promoter Scores, which are top 2 box, the most important metric for us, stayed flat post price increases. So I think we're very cautious about when we take price. However, we have no intention to reverse pricing. So if we look at sort of 2023 and beyond, we think we'll hold on to those prices. Our franchisees are phenomenal entrepreneurs. They are people who live and operate their businesses every day. They manage their business to what's in the cigar box at the end of every week. They are very good at taking price. We don't control what franchisees do from a pricing perspective, but our franchisees are very conscious around their cost bases and what they need to do to manage that. So I think we remain very thoughtful and deliberate when we take price. I think there is elasticity in this business. You never want to get past that point where you're diluting traffic or demand. So I think it's -- there is science in terms of how much you take and then there's art in terms of watching and monitoring what the consumer reaction is. This year, we will continue to be thoughtful around what are the inflationary pressures and what price we need to take. I think it's important though is to understand across all categories in automotive, the check has been growing over the last decade. And why is that check growing naturally? It's because of the cost to maintain and service those vehicles. So if you take collision, for example, if anyone's had a rear fender bender in this room over the last couple of years, that's going to be $3,000, $4,000, $5,000, depending on the amount of ADAS or accidents avoidance equipment on the vehicle. You no longer have the ability to repair that. It's typically replaced, so that cost goes up. Our average check in our collision business is $3,500. That's grown by $1,000 naturally over the last decade. If you look at our Quick Lube business, we now deliver. About 85% of our customers buy premium oil. We determine premium oil is either semi or full synthetic. Why is that? Because they're older vehicles with higher mileage on it and, typically, every vehicle since about 2015 has, from an OE perspective, asked for at least a semi synthetic. So there's a natural progression there in the price. If you look at our glass business, which we've been in for 14, 15 months, you've got the standard glass replacement, and that's sort of grown a little bit from an inflationary perspective. But we've got this calibration service now. So if you have a windshield that's been replaced in the last couple of years, most vehicles now have a forward-facing camera mounted on that front windshield. That is literally the central nervous system for accident avoidance. And now you've got to calibrate, which is typically a $300 incremental check -- part of the check. So you're seeing sort of natural growth there. So this is an interesting industry that as we look forward the next 10 years, I think there'll be really healthy organic growth in the check just based on what we're fixing.

I think the one thing that I would add there is, from a competitive landscape perspective, we're well positioned in the marketplace to add significant value to our customers. We're not leading the way in terms of price, but we're also deserving -- delivering a great value. So we're not kind of on the economic end of the spectrum either. And when you look at the competitive landscape on things like inflation and pricing, it's remained relatively rational and have been moving pretty consistently together, which I think is important. And looking through past cycles, that -- those price increases, as Jonathan mentioned, have been very sticky. And I think a lot of that has to do with the competition and remaining rational as you look forward to being able to generate additional margin as those cost input prices potentially come down.

Right. Yes, that actually raises a question, which I think has come up in a lot of my conversations with investors and probably does in yours as well, just about -- you mentioned the increasing complexity of vehicles. And I think there's an assumption that electric vehicles are simpler. Yes, they have a different drivetrain that -- yes, there's no engine. But how are you thinking about how that shift impacts your business? And are they even actually less complex?

It's awesome and, if you think about this industry, the only significant change in the last 50 or 100 years. So we fully embrace the change. A couple of things to think about. One is I mentioned the $285 million car parc in the United States, about 3% are fully electric today. A typical -- a good year for new car sales is sort of 18 million new vehicles. I'm guessing most people in this room can do the math on 280 million vehicles divided by 18 million vehicles, if you assumed every new vehicle was EV, how long it's going to take for that car parc to transition. So that's sort of just an actual data set that people sometimes get lost in a bit of the broad way and don't actually look at the hard numbers. In terms of how we think about EV, a couple of things. Two of the largest platform builds that we've done in the last couple of years were car wash. So we did that in late 2020. part of the underwriting there was car wash washes all types of vehicles, so it's diesel F-150s to Teslas. They all come through our car wash. So that's a sort of EV-neutral business. The second business we acquired was -- or have built out is our glass business, and same thing, glass needs to be replaced or repaired on all vehicle types. So that was strategic sort of thinking about landscape may change over the next couple of decades. Our internal analysis, which is pretty conservative, things that our Quick Lube business, which is, in theory, the most exposed to this, is going to continue to grow minimally through the late 2030s. That is an unbelievable business with phenomenal unit-level economics. We have consistently taken down great real estate in that business. And we're watching very closely what's happening with the vehicles, with EV vehicles, what services do they need, what products do they need. If and when the time comes to add incremental services or products to our Quick Lube business, we will. And Driven has a great case study on this. We have a brand called Meineke, which was founded in 1972. It was a pure muffler shop or exhaust shop when it was first founded. And over time, it's migrated now to a total car care company, with less than 8% of its sales coming from exhaust. So the change will happen. We welcome the change. I think it's going to happen probably at a slightly slower pace than people think, but we're excited about the change and the opportunity to add those incremental products and services when we need to.

Great. So I guess I wanted to focus a little bit on people because they're -- obviously, we talked about inflationary pressure on things like parts and fluids and whatnot. But then there are also cost pressures on your cost of labor, wages and benefits. So how are you planning for labor costs this year? And is that growth pace more accelerated than usual? Or is it starting to moderate somewhat?

Yes. We've got close to 12,000 employees at Driven Brands. So I'm very aware of the labor line on my P&L. It definitely has increased, if you look at sort of over the last 3 years. We definitely saw moderation kicking in, in the second half of 2022. And I think we're still seeing loosening of the labor market, if you like, Liz, for one of a better description. I don't think we'll see the labor rate inflation that we saw in '21, in '22 and in '23. We've talked about pricing. So we're very conscious about taking price to make sure we manage that. A couple of things that are unique to Driven Brands from our labor pool. Every employee at Driven Brands participates in variable compensation. So we are massive believers in variable compensation for performance. So you're a Quick Lube technician or a car wash attendant, you have a base hourly rate, plus you have the opportunity to make incremental bonus based on KPIs that matter to us. So we are big believers in variable compensation at all levels in the organization. That's very attractive. Secondly is we have -- when you think about our labor pool, and we're sort of in that $13 to $16, $17 an hour for a lot of the folks that work in our stores, our hours of operation are pretty attractive. So we're typically sort of 8 to 6, 5 or 6 days a week, so people get nights off and weekends off, and that is attractive. We've got a lot of people that have a passion around the automobiles. So they sort of like working in and around cars. And then what's pretty cool for us is we are growing our businesses pretty rapidly. So if you take our Quick Lube business, we've got 650 company stores in the United States. Over 80% of those managers were promoted from within. So that's pretty cool. So you can come into 1 of our businesses, you can come in making $13, $15 an hour as a lube technician, you can get promoted quickly. We've always got new stores coming online. And within 2 to 3 years, you can be making a base salary of $45,000 to $50,000, with 25% to 30% variable compensation. So those factors sort of, I think, position us better than most in terms of that labor environment, not immune to it, but I think we're in pretty good shape.

Great. And then I'll squeeze in one more, and then I'll open it up to the audience here. I guess just also on the cost line of questioning. Where are you seeing costs getting more favorable, if anywhere? And are there opportunities in areas like rent or advertising to achieve savings?

Advertising, I haven't seen a big reduction in advertising costs. Rent is definitely on new stores, both the price of new real estate, if we're acquiring it or long-term leases has definitely plateaued, I would say, and we're starting to see a little bit of softness there. Labor, we've talked about. If you look at some input costs for us, so we have -- we're a very large buyer of oil. So we buy about north of 10 million gallons of oil a year. We're ultimately indexed to the price of crude, if you like. We expect to see some positive tailwinds in terms of our price of oil this year. If you look at some of the other products, whether it's our paints that we use in the collision and paint businesses, petroleum is a big part of that. So I think we'll see some moderation in costs there. That's really going to impact our franchisees' P&L. If you look at products that we bring in from overseas, obviously, people know that shipping costs are now at or below prepandemic levels. So that sort of $15,000 per container is back down now to sort of $2,000, $3,000, $4,000 per container. So that has a flow-through effect for both our company stores and our franchisees. So I think we're starting to see moderation across almost all the categories that we deal with.

And I think the one other thing that's really important for Driven Brands is the fact that we get a lot of leverage on our growth. So if you look back over the last couple of years, we've expanded margins by several hundred basis points, driven by the fact that we're growing so swiftly and we're able to drop a lot of that growth to the bottom line through leveraging our shared services.

Great. So with that, I'm going to open it up to the audience. If anyone has a question, feel free to raise your hand. We'll get a mic to you.

You have a lot of growth already factored in with the existing categories and the stores planned. But I'm just wondering with all the data you're collecting on the consumers -- or is there anything in the development pipeline that's leading you to think about other categories within the car ownership that could be targeted for expansion, i.e., in tires or something of that nature?

Yes. Look, we're -- we added 2 new segments over the last 2.5 years with car wash and glass. When we think about a new segment, there are several questions we ask ourselves. What is the underlying growth characteristics of that segment? What's the total addressable market? For Driven Brands today, I would use a number like if we're going to get into a segment, can it be at least $200 million of EBITDA? So that's sort of not an exact number but sort of we think about that sort of scale. Driven Brands today generates about a 25% consolidated EBITDA margin. So when we look at tires, which is a great example, it's a very large total addressable market. It probably has some EV resilience to it because car tires are likely to be consumed at a faster rate with EV. However, when you look at the best tire retailers on the planet, they're generating high-teens EBITDA margins, and it's very capital intensive and very labor intensive. So we do look at all these categories, and we're constantly sort of evaluating if there is a new segment for us. So -- but there's definitely a decision process that we think through.

Great. And I'll squeeze one more in since we have some time. I guess, top priorities for this year and how you're thinking about long-term investments in what could arguably be sort of a challenging year if a recession does play out as many economists are forecasting. How are you thinking about where you really want to focus your energy on this year?

Yes. I mean, look, we've delivered for 10 years, obviously, and then the last couple of years that we've been public. So I think we sort of beat and raised almost every quarter. Our focus is continuing to execute on the core strategy, which is growing our priorities, which is Quick Lube, car wash and glass, supported by those more mature, highly cash flow-generative businesses. Two other things that we're highly focused on. One is unlocking this wallet share opportunity with our data ecosystem. We do have an Analyst Day in May. We'll jump into that, Liz. Our Investor Day in May, we'll jump into that more. And then we just launched this procurement platform called Driven Advantage, which is pretty incredible. So we've got about $46 million in 2022 of EBITDA that comes directly from procurement benefits. So that's providing procurement opportunities for our franchisees to buy everything that they need through us. We make a rebate or a spread on that. We've launched a new platform which we're pretty excited on. And we think that, over time, that procurement opportunity, if it was broadly $50 million in 2022, we think that has pretty massive incremental growth opportunities as we look forward the next few years. So continuing to lean into wallet share and then really leveraging the network benefits out of the procurement opportunity.

Great. Any other questions from the audience? If not, I've got one more. Okay. Last one for me is just about interest expense as one line item that -- where costs have increased, I guess, more than the company's planning assumptions originally. So how are you thinking about leverage at this point?

It's funny a year ago, you weren't asking these questions, but anyway, we're talking about it now. So a couple of thoughts. So 80% of our debt structure is long-term fixed, sub-4%. So we feel very good about that. We've got about 20% in floating. Obviously, the interest rates are higher than when we took out that term loan a year or so ago. We've operated at mid-4s leverage rate. And as we think about the current conditions, I think we will -- as we grow EBITDA, we'll organically delever. So we expect that to continue to happen. We shored up our balance sheet last year. So we've got a ton of dry powder to do everything we need from a capital perspective this year. So I think we're in good shape. Obviously, I think folks are probing and prodding a little bit more there, but we don't have a need to go back to the capital debt markets this year. We've got more than enough capital to fund our pretty aggressive growth plans for 2023. So I think we're in pretty good shape. And so I'd say we're in good shape.

Great. All right. Well, unless there are any other questions in the audience, I think we'll wrap it up. Thank you so much.

Thank you. Thank you, Liz.

Thanks, Liz.