NEW YORK–(BUSINESS WIRE)–Today, prominent investor rights law firm Bernstein Litowitz Berger & Grossmann LLP (“BLB&G”) filed a class action lawsuit in the U.S. District Court for the Western District of North Carolina alleging violations of the federal securities laws by Driven Brands Holdings Inc. (“Driven” or the “Company”) and certain of the Company’s current and former senior executives (collectively, “Defendants”). The action is brought on behalf of all purchasers of Driven common stock between October 27, 2021, and August 1, 2023, inclusive (the “Class Period”).
BLB&G filed this action on behalf of its client, Genesee County Employees’ Retirement System, and the case is captioned Genesee County Employees’ Retirement System v. Driven Brands Holdings Inc., No. 23-cv-00895 (W.D.N.C.). The complaint is based on an extensive investigation and a careful evaluation of the merits of this case. A copy of the complaint is available on BLB&G’s website by clicking here.
Driven’s Alleged Fraud
Driven is the largest automotive services company in North America. Through its portfolio of brands, Driven provides customers with a range of automotive needs, including paint, collision, glass, oil change, maintenance, and car wash. Those brands include, among others: Take 5 Oil Change®, Take 5 Car Wash®, Meineke Car Care Centers®, MAACO®, CARSTAR ®, 1-800-Radiator & A/C ®, and Auto Glass Now®. The Company operates through four reportable business segments: Maintenance; Car Wash; Paint, Collision and Glass; and Platform Services.
Driven’s acquisition of existing businesses in the automotive services industry, and its integration of those businesses, has been a core component of the Company’s growth strategy. Over the last several years, Driven expanded its operations to offer car washes and extended its reach in the auto glass market. In August 2020, Driven acquired International Car Wash Group, the world’s largest car wash company by location count. In late December 2021, Driven acquired Auto Glass Now, through which Driven expanded its auto glass business into the U.S. market. Through a series of subsequent acquisitions, Driven quickly became the second-largest auto glass repair business in North America.
The complaint alleges that, throughout the Class Period, Defendants made numerous materially false and misleading statements and omissions that fall into two categories: (i) statements concerning Driven’s ability to efficiently and effectively integrate a high volume of acquired businesses, including statements related to the status of integrating its U.S. auto glass businesses; and (ii) statements concerning the performance and competitive position of Driven’s car wash business segment. Specifically, throughout the Class Period, Defendants repeatedly touted Driven’s ability to execute and integrate acquisitions as a “core strength,” and assured investors that it had made “significant progress” integrating the auto glass businesses it had acquired. The Company also represented that the large scale of its car wash business served as a “competitive moat” that would preserve Driven’s competitive position. While Driven acknowledged some “softness” in customer demand for its car wash business segment, the Company downplayed that issue and pointed investors to the growth of its car wash subscriptions, which Driven labeled as the “Holy Grail” in the car wash business.
In truth, Driven was several quarters behind on integrating its auto glass businesses, and the Company’s car wash business was faltering and more exposed to a decline in demand from retail customers than Defendants represented to investors. As a result, the Company’s statements concerning its business and prospects, including its fiscal year 2023 financial guidance, were materially misleading and/or lacked a reasonable basis.
The truth began to emerge on May 8, 2023, when Driven revealed that, on May 4, 2023, the Company’s former Chief Financial Officer, Defendant Tiffany L. Mason (“Mason”), had abruptly left the Company under unusual circumstances. Mason’s exit came just one day after Driven reported its financial results for the first quarter of 2023.
Then, on August 2, 2023, Driven reported earnings for the second quarter of 2023 that missed expectations, including disappointing results for its Paint, Collision and Glass business segment as well as its Car Wash segment. With respect to its auto glass business, the Company admitted that it was at least “several quarters” behind on its integration of the businesses it had acquired. In addition, regarding Driven’s Car Wash segment, the Company disclosed that increased exposure to “intensified competitive intrusion” negatively impacted demand from Driven’s high-margin retail car wash customers. As a result of delays in Driven’s integration of its acquired auto glass businesses and the faltering performance of its car wash businesses, the Company slashed its full-year earnings guidance for fiscal 2023, despite having reaffirmed that guidance a little over two months earlier. These disclosures caused the price of Driven common stock to decline by $10.63 per share, or 41%.
If you wish to serve as Lead Plaintiff for the Class, you must file a motion with the Court no later than February 20, 2024, which is the first business day on which the U.S. District Court for the Western District of North Carolina is open that is 60 days after the publication date of December 22, 2023. Any member of the proposed Class may seek to serve as Lead Plaintiff through counsel of their choice, or may choose to do nothing and remain a member of the proposed Class.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact Scott R. Foglietta of BLB&G at 212-554-1903, or via e-mail at [email protected].
BLB&G is widely recognized worldwide as a leading law firm advising institutional investors on issues related to corporate governance, shareholder rights, and securities litigation. Since its founding in 1983, BLB&G has built an international reputation for excellence and integrity and pioneered the use of the litigation process to achieve precedent-setting governance reforms. Unique among its peers, BLB&G has obtained several of the largest and most significant securities recoveries in history, recovering over $40 billion on behalf of defrauded investors. More information about the firm can be found online at www.blbglaw.com.
Scott R. Foglietta
Bernstein Litowitz Berger & Grossmann LLP
1251 Avenue of the Americas, 44th Floor
New York, New York 10020