DRVN Driven Brands Holdings Inc

--14th consecutive quarter of same store sales growth--

--Take 5 Oil Change delivers 19% year-over-year unit growth and 6% same-store sales growth--

--Net Income of $30 million and Adjusted EBITDA of $152 million--

--CFO Appointment Announced--

Driven Brands Holdings Inc. (NASDAQ: DRVN) (“Driven Brands” or the “Company”) today reported financial results for the second quarter ending June 29, 2024.

For the second quarter, Driven Brands delivered revenue of $612 million, up 1% versus the prior year. System-wide sales were $1.7 billion, up 1% versus the prior year primarily driven by 0.5% same store sales growth and 115 net new units.

Net Income was $30.2 million or $0.18 per diluted share versus $37.7 million or $0.22 per diluted share in the prior year. Adjusted Net Income1 was $58.0 million or $0.35 per diluted share versus $45.7 million or $0.27 per diluted share in the prior year. Adjusted EBITDA1 was $152.2 million, up 4% versus the prior year.

“We are proud to report that the Driven platform delivered its 14th straight quarter of same store sales growth. Take 5 Oil Change led the charge once again this quarter, with revenue growth of 16% underpinned by 6% same store sales growth and 19% year-over-year unit growth,” said Jonathan Fitzpatrick, President and Chief Executive Officer.

“We are pleased with our first half performance, driven by our essential non-discretionary businesses. Looking ahead, our key priorities remain continuing to achieve strong financial results, reducing debt with free cash flow, and actively managing our portfolio,” Fitzpatrick concluded.

Second Quarter 2024 Key Performance Indicators by Segment

 

System-wide Sales (in millions)

Store Count

Same-Store Sales

Revenue (in millions)

Segment Adjusted EBITDA (in millions)

Maintenance

$

535.4

1,853

4.3

%

$

277.9

$

102.9

Car Wash

 

155.5

1,108

(4.1

)%

 

156.9

 

33.8

Paint, Collision & Glass

 

862.2

1,887

(0.5

)%

 

112.0

 

35.2

Platform Services

 

115.8

205

N/A

 

 

61.2

 

25.3

Corporate / Other

 

N/A

N/A

N/A

 

 

3.5

 

Total

$

1,668.8

5,053

0.5

%

$

611.6

Capital and Liquidity

The Company ended the second quarter with total liquidity of $316.1 million consisting of $148.8 million in cash and cash equivalents and $167.3 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility. This did not include the additional $135.0 million Series 2022 Class A-1 Notes that expand the Company’s variable funding note borrowing capacity if the Company elects to exercise them, assuming certain conditions continue to be met.

On July 29, 2024, the Company closed an offering by certain of its subsidiaries for $275.0 million in Series 2024 Class A-2 senior notes and $400.0 million in variable funding securitization senior notes, which were undrawn at closing. The 2024 variable funding notes replaced the $115.0 million Series 2019-3 variable funding notes, increasing total liquidity and undrawn capacity by $285.0 million.

Michael Diamond Appointed as Chief Financial Officer of Driven Brands Holdings Inc.

In a separate release today, the Company announced that it appointed Michael Diamond as the Chief Financial Officer (CFO), effective August 9, 2024. Mr. Diamond joins the Company from The Michaels Companies where he served as the CFO since 2020. He has extensive financial and multi-unit retail experience. Joel Arnao, who has served as interim CFO since May 2024, will remain with the Company and continue in his role as Senior Vice President, FP&A, Investor Relations, and Treasury.

Fiscal Year 2024 Outlook

The Company updates its financial outlook for fiscal year 2024:

 

Original Outlook

Current Range Expectations

Revenue

~$2.35 - $2.45 billion

Low-end

Adjusted EBITDA1

~$535 - $565 million

Mid - to High-end

Adjusted EPS1

~$0.88 - $1.00

High-end

The Company also expects:

• Same-store sales growth of 1% to 3% from the original outlook of 3% to 5%

• Net store growth of approximately 205 to 220 consistent with the original outlook

Note: The Company has not included potential future M&A in its outlook for fiscal year 2024.

__________

1 Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are non-GAAP financial measures. See “Reconciliation of Non-GAAP Financial Measures” for additional information on non-GAAP financial measures and a reconciliation to the most comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA and Adjusted EPS are made in a manner consistent with the relevant definitions and assumptions noted herein.

Conference Call

Driven Brands will host a conference call to discuss second quarter 2024 results today, Thursday, August 1, 2024, at 8:30 a.m. ET. The call will be available by webcast and can be accessed by visiting Driven Brands’ Investor Relations website at investors.drivenbrands.com. A replay of the call will be available for at least three months.

About Driven Brands

Driven Brands™, headquartered in Charlotte, NC, is the largest automotive services company in North America, providing a range of consumer and commercial automotive needs, including paint, collision, glass, vehicle repair, oil change, maintenance and car wash. Driven Brands is the parent company of some of North America’s leading automotive service businesses including Take 5 Oil Change®, Take 5 Car Wash®, Meineke Car Care Centers®, Maaco®, 1-800-Radiator & A/C®, Auto Glass Now®, and CARSTAR®. Driven Brands has more than 5,000 locations across 13 countries, and services approximately 70 million vehicles annually. Driven Brands’ network generates approximately $2.3 billion in annual revenue from approximately $6.4 billion in system-wide sales.

Disclosure Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this Press Release, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, trends, plans, objectives of management, impact of accounting standards and outlook, impairments, and expected market growth are forward-looking statements. In particular, forward-looking statements include, among other things, statements relating to: (i) our strategy, outlook and growth prospects; (ii) our operational and financial targets and dividend policy; (iii) general economic trends and trends in the industry and markets; (iv) the risks and costs associated with the integration of, and our ability to integrate, our stores and business units successfully; (v) the proper application of generally accepted accounting principles, which are highly complex and involve many subjective assumptions, estimates, and judgments and (vi) the competitive environment in which we operate. Forward-looking statements are not based on historical facts, but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions, and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. It is not possible to predict or identify all such risks. These risks include, but are not limited to, the risk factors that are described under the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023 as well as in our other filings with the Securities and Exchange Commission, which are available on its website at www.sec.gov. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

 

 

Three Months Ended

 

Six Months Ended

(in thousands, except per share amounts)

 

June 29, 2024

 

July 1, 2023

 

June 29, 2024

 

July 1, 2023

Net Revenue:

 

 

 

 

 

 

 

 

Franchise royalties and fees

 

$

50,029

 

$

49,805

 

 

$

95,074

 

$

93,320

 

Company-operated store sales

 

 

394,681

 

 

394,578

 

 

 

769,137

 

 

770,644

 

Independently-operated store sales

 

 

60,280

 

 

61,533

 

 

 

113,327

 

 

114,065

 

Advertising contributions

 

 

24,911

 

 

24,749

 

 

 

48,981

 

 

46,426

 

Supply and other revenue

 

 

81,665

 

 

76,186

 

 

 

157,273

 

 

144,863

 

Total net revenue

 

 

611,566

 

 

606,851

 

 

 

1,183,792

 

 

1,169,318

 

Operating Expenses:

 

 

 

 

 

 

 

 

Company-operated store expenses

 

 

254,174

 

 

257,040

 

 

 

496,227

 

 

500,449

 

Independently-operated store expenses

 

 

31,956

 

 

31,958

 

 

 

61,311

 

 

61,322

 

Advertising expenses

 

 

24,911

 

 

24,749

 

 

 

48,981

 

 

46,426

 

Supply and other expenses

 

 

40,554

 

 

42,106

 

 

 

76,770

 

 

79,372

 

Selling, general, and administrative expenses

 

 

121,123

 

 

96,815

 

 

 

237,525

 

 

209,143

 

Acquisition related costs

 

 

271

 

 

3,750

 

 

 

2,065

 

 

5,597

 

Store opening costs

 

 

940

 

 

1,377

 

 

 

2,203

 

 

2,402

 

Depreciation and amortization

 

 

44,633

 

 

45,419

 

 

 

87,862

 

 

83,617

 

Asset impairment charges and lease terminations

 

 

12,497

 

 

6,044

 

 

 

31,823

 

 

6,211

 

Total operating expenses

 

 

531,059

 

 

509,258

 

 

 

1,044,767

 

994,539

 

Operating income

 

 

80,507

 

 

97,593

 

 

 

139,025

 

 

174,779

 

Other expenses, net:

 

 

 

 

 

 

 

 

Interest expense, net

 

 

31,796

 

 

40,871

 

 

 

75,568

 

 

79,012

 

Foreign currency transaction loss (gain), net

 

 

681

 

 

(1,302

)

 

 

5,002

 

 

(2,977

)

Other expense, net

 

 

32,477

 

 

39,569

 

 

 

80,570

 

 

76,035

 

Income before taxes

 

 

48,030

 

 

58,024

 

 

 

58,455

 

 

98,744

 

Income tax expense

 

 

17,871

 

 

20,275

 

 

 

24,035

 

 

31,246

 

Net income

 

 

30,159

 

 

37,749

 

 

 

34,420

 

 

67,498

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.18

 

$

0.23

 

 

$

0.21

 

$

0.41

 

Diluted

 

$

0.18

 

$

0.22

 

 

$

0.21

 

$

0.40

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

159,795

 

 

162,911

 

 

 

159,713

 

 

162,848

 

Diluted

 

 

160,765

 

 

166,888

 

 

 

160,683

 

 

166,882

 

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

(in thousands, except share and per share amounts)

 

June 29, 2024

 

December 30, 2023

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

148,814

 

 

$

176,522

 

Restricted cash

 

 

4,414

 

 

 

657

 

Accounts and notes receivable, net

 

 

195,327

 

 

 

151,259

 

Inventory

 

 

70,527

 

 

 

83,171

 

Prepaid and other assets

 

 

44,426

 

 

 

46,714

 

Income tax receivable

 

 

13,893

 

 

 

15,928

 

Assets held for sale

 

 

237,183

 

 

 

301,229

 

Advertising fund assets, restricted

 

 

43,039

 

 

 

45,627

 

Total current assets

 

 

757,623

 

 

 

821,107

 

Other assets

 

 

103,746

 

 

 

56,565

 

Property and equipment, net

 

 

1,422,961

 

 

 

1,438,496

 

Operating lease right-of-use assets

 

 

1,378,264

 

 

 

1,389,316

 

Deferred commissions

 

 

6,740

 

 

 

6,312

 

Intangibles, net

 

 

721,691

 

 

 

739,402

 

Goodwill

 

 

1,431,555

 

 

 

1,455,946

 

Deferred tax assets

 

 

3,627

 

 

 

3,660

 

Total assets

 

$

5,826,207

 

 

$

5,910,804

 

Liabilities and shareholders' equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

72,118

 

 

$

67,526

 

Accrued expenses and other liabilities

 

 

236,586

 

 

 

242,171

 

Income tax payable

 

 

2,053

 

 

 

5,404

 

Current portion of long-term debt

 

 

33,332

 

 

 

32,673

 

Income tax receivable liability

 

 

—

 

 

 

56,001

 

Advertising fund liabilities

 

 

15,115

 

 

 

23,392

 

Total current liabilities

 

 

359,204

 

 

 

427,167

 

Long-term debt

 

 

2,855,823

 

 

 

2,910,812

 

Deferred tax liabilities

 

 

157,271

 

 

 

154,742

 

Operating lease liabilities

 

 

1,317,342

 

 

 

1,332,519

 

Income tax receivable liability

 

 

133,623

 

 

 

117,915

 

Deferred revenue

 

 

31,472

 

 

 

30,507

 

Long-term accrued expenses and other liabilities

 

 

28,682

 

 

 

30,419

 

Total liabilities

 

 

4,883,417

 

 

 

5,004,081

 

Preferred Stock $0.01 par value; 100,000,000 shares authorized; none issued or outstanding

 

 

—

 

 

 

—

 

Common stock, $0.01 par value, 900,000,000 shares authorized: and 164,082,430 and 163,965,231 shares outstanding; respectively

 

 

1,641

 

 

 

1,640

 

Additional paid-in capital

 

 

1,674,766

 

 

 

1,652,401

 

Accumulated deficit

 

 

(675,667

)

 

 

(710,087

)

Accumulated other comprehensive loss

 

 

(57,950

)

 

 

(37,875

)

Total shareholders’ equity attributable to Driven Brands Holdings Inc.

 

 

942,790

 

 

 

906,079

 

Non-controlling interests

 

 

—

 

 

 

644

 

Total shareholders' equity

 

 

942,790

 

 

 

906,723

 

Total liabilities and shareholders' equity

 

$

5,826,207

 

 

$

5,910,804

 

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

Six Months Ended

(in thousands)

 

June 29, 2024

 

July 1, 2023

Net income

 

$

34,420

 

 

$

67,498

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

87,862

 

 

 

83,617

 

Equity-based compensation expense

 

 

22,843

 

 

 

7,049

 

Loss (gain) on foreign denominated transactions

 

 

9,923

 

 

 

(1,723

)

Gain on foreign currency derivatives

 

 

(4,921

)

 

 

(1,254

)

Gain on sale and disposal of businesses, fixed assets, and sale-leaseback transactions

 

 

(16,359

)

 

 

(12,230

)

Reclassification of interest rate hedge to income

 

 

(1,044

)

 

 

(1,039

)

Bad debt expense

 

 

1,738

 

 

 

602

 

Asset impairment charges and lease terminations

 

 

31,823

 

 

 

6,211

 

Amortization of deferred financing costs and bond discounts

 

 

4,933

 

 

 

4,343

 

Amortization of cloud computing

 

 

2,414

 

 

 

—

 

Provision for deferred income taxes

 

 

5,036

 

 

 

18,812

 

Other, net

 

 

7,322

 

 

 

9,641

 

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

Accounts and notes receivable, net

 

 

(47,245

)

 

 

(30,373

)

Inventory

 

 

11,310

 

 

 

(11,108

)

Prepaid and other assets

 

 

7,986

 

 

 

(7,894

)

Advertising fund assets and liabilities, restricted

 

 

(12,220

)

 

 

(8,768

)

Other assets

 

 

(47,699

)

 

 

(25,456

)

Deferred commissions

 

 

(428

)

 

 

330

 

Deferred revenue

 

 

971

 

 

 

1,585

 

Accounts payable

 

 

3,968

 

 

 

16,231

 

Accrued expenses and other liabilities

 

 

8,022

 

 

 

(1,171

)

Income tax receivable

 

 

(3,431

)

 

 

(320

)

Cash provided by operating activities

 

 

107,224

 

 

 

114,583

 

Cash flows from investing activities:

 

 

 

 

Capital expenditures

 

 

(155,920

)

 

 

(320,071

)

Cash used in business acquisitions, net of cash acquired

 

 

(2,759

)

 

 

(44,868

)

Proceeds from sale-leaseback transactions

 

 

11,808

 

 

 

143,622

 

Proceeds from sale or disposal of businesses and fixed assets

 

 

112,845

 

 

 

217

 

Cash used in investing activities

 

 

(34,026

)

 

 

(221,100

)

Cash flows from financing activities:

 

 

 

 

Payment of debt extinguishment and issuance costs

 

 

(871

)

 

 

—

 

Repayment of long-term debt

 

 

(34,005

)

 

 

(13,961

)

Proceeds from revolving lines of credit and short-term debt

 

 

46,000

 

 

 

230,000

 

Repayments of revolving lines of credit and short-term debt

 

 

(71,000

)

 

 

(120,000

)

Repayment of principal portion of finance lease liability

 

 

(2,199

)

 

 

(1,889

)

Payment of Tax Receivable Agreement

 

 

(38,362

)

 

 

—

 

Acquisition of non-controlling interest

 

 

(644

)

 

 

—

 

Purchase of common stock

 

 

(2

)

 

 

(716

)

Tax obligations for share-based compensation

 

 

(980

)

 

 

—

 

Stock option exercises

 

 

—

 

 

 

1,758

 

Other, net

 

 

—

 

 

 

(64

)

Cash (used in) provided by financing activities

 

 

(102,063

)

 

 

95,128

 

Effect of exchange rate changes on cash

 

 

(1,615

)

 

 

2,087

 

Net change in cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted

 

 

(30,480

)

 

 

(9,302

)

Cash and cash equivalents, beginning of period

 

 

176,522

 

 

 

227,110

 

Cash included in advertising fund assets, restricted, beginning of period

 

 

38,537

 

 

 

32,871

 

Restricted cash, beginning of period

 

 

657

 

 

 

792

 

Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, beginning of period

 

 

215,716

 

 

 

260,773

 

Cash and cash equivalents, end of period

 

 

148,814

 

 

 

212,123

 

Cash included in advertising fund assets, restricted, end of period

 

 

32,008

 

 

 

38,691

 

Restricted cash, end of period

 

 

4,414

 

 

 

657

 

Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, end of period

 

$

185,236

 

 

$

251,471

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

The following information provides definitions and reconciliations of the non-GAAP financial measures presented in this earnings release to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The Company has provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this earnings release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this earnings release. The non-GAAP financial measures in this earnings release may differ from similarly titled measures used by other companies.

Non-GAAP Financial Measures in Outlook

Driven Brands includes Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (“Adjusted EBITDA”) and Adjusted Earnings per Share (“Adjusted EPS”) in the Company’s Fiscal Year 2024 Outlook. Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures and have not been reconciled to the most comparable GAAP financial measures because it is not possible to do so without unreasonable efforts due to the uncertainty and potential variability of reconciling items, which are dependent on future events and often outside of management’s control and which could be significant. Because such items cannot be reasonably predicted with the level of precision required, we are unable to provide an outlook for the comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA and Adjusted EPS are made in a manner consistent with the relevant definitions and assumptions noted herein and in our filings with the SEC.

Adjusted Net Income and Adjusted Earnings Per Share

Adjusted Net Income and Adjusted EPS are considered non-GAAP financial measures under the SEC’s rules because they exclude certain amounts included in the net income attributable to Driven Brands common stockholders and diluted earnings per share attributable to Driven Brands common stockholders calculated in accordance with GAAP. Management believes that Adjusted Net Income and Adjusted EPS are meaningful measures to share with investors because they facilitate comparison of the current period performance with that of the comparable prior period. In addition, Adjusted Net Income and Adjusted EPS afford investors a view of what management considers to be Driven Brands’ core earnings performance as well as the ability to make a more informed assessment of such earnings performance with that of the prior period.

The tables below reflect the calculation of Adjusted Net Income and Adjusted Earnings Per Share for the three and six months ended June 29, 2024, compared to the three and six months ended July 1, 2023.

Net Income to Adjusted Net Income and Adjusted Earnings Per Share (Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

(in thousands, except per share data)

 

June 29, 2024

 

July 1, 2023

 

June 29, 2024

 

July 1, 2023

Net income

 

$

30,159

 

 

$

37,749

 

 

$

34,420

 

 

$

67,498

 

Acquisition related costs(a)

 

 

271

 

 

 

3,750

 

 

 

2,065

 

 

 

5,597

 

Non-core items and project costs, net(b)

 

 

5,126

 

 

 

2,803

 

 

 

9,837

 

 

 

4,627

 

Cloud computing amortization(c)

 

 

1,069

 

 

 

—

 

 

 

2,414

 

 

 

—

 

Equity-based compensation expense(d)

 

 

10,982

 

 

 

4,485

 

 

 

22,843

 

 

 

7,049

 

Foreign currency transaction loss (gain), net(e)

 

 

681

 

 

 

(1,302

)

 

 

5,002

 

 

 

(2,977

)

Asset sale leaseback (gain) loss, impairment and closed store expenses(f)

 

 

9,630

 

 

 

(7,680

)

 

 

19,190

 

 

 

(5,836

)

Amortization related to acquired intangible assets(g)

 

 

6,528

 

 

 

8,276

 

 

 

13,548

 

 

 

14,312

 

Valuation allowance for deferred tax asset(h)

 

 

121

 

 

 

—

 

 

 

1,255

 

 

 

—

 

Adjusted net income before tax impact of adjustments

 

 

64,567

 

 

 

48,081

 

 

 

110,574

 

 

 

90,270

 

Tax impact of adjustments(i)

 

 

(6,558

)

 

 

(2,378

)

 

 

(14,443

)

 

 

(5,463

)

Adjusted net income

 

 

58,009

 

 

 

45,703

 

 

 

96,131

 

 

 

84,807

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

Basic

 

$

0.18

 

 

$

0.23

 

 

$

0.21

 

 

$

0.41

 

Diluted

 

$

0.18

 

 

$

0.22

 

 

$

0.21

 

 

$

0.40

 

 

 

 

 

 

 

 

 

 

Adjusted earnings per share(1)

 

 

 

 

 

 

 

 

Basic

 

$

0.36

 

 

$

0.27

 

 

$

0.59

 

 

$

0.51

 

Diluted

 

$

0.35

 

 

$

0.27

 

 

$

0.59

 

 

$

0.50

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

159,795

 

 

 

162,911

 

 

 

159,713

 

 

 

162,848

 

Diluted

 

 

160,765

 

 

 

166,888

 

 

 

160,683

 

 

 

166,882

 

(1)

 

Adjusted Earnings Per Share is calculated under the two-class method. Under the two-class method, adjusted earnings per share is calculated using adjusted net income attributable to common shares, which is derived by reducing adjusted net income by the amount attributable to participating securities. Adjusted Net Income attributable to participating securities used in the basic earnings per share calculation was $1 million and $2 million for the three and six months ended June 29, 2024, respectively.  Adjusted Net Income attributable to participating securities used in the diluted earnings per share calculations was $1 million and $2 million for the three and six months ended July 1, 2023.

Adjusted EBITDA

Adjusted EBITDA is considered a non-GAAP financial measure under the Securities and Exchange Commission’s (“SEC”) rules because it excludes certain amounts included in net income calculated in accordance with GAAP. Management believes that Adjusted EBITDA is a meaningful measure to share with investors because it facilitates comparison of the current period performance with that of the comparable prior period. In addition, Adjusted EBITDA affords investors a view of what management considers to be Driven Brand’s core operating performance as well as the ability to make a more informed assessment of such operating performance as compared with that of the prior period.

Please see the company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023, filed with the SEC on February 28, 2024, for additional information on Adjusted EBITDA. The tables below reflect the calculation of Adjusted EBITDA for the three and six months ended June 29, 2024, compared to the three and six months ended July 1, 2023.

Net Income to Adjusted EBITDA Reconciliation (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

(in thousands)

 

June 29, 2024

 

July 1, 2023

 

June 29, 2024

 

July 1, 2023

Net income

 

$

30,159

 

$

37,749

 

 

$

34,420

 

$

67,498

 

Income tax expense

 

 

17,871

 

 

20,275

 

 

 

24,035

 

 

31,246

 

Interest expense, net

 

 

31,796

 

 

40,871

 

 

 

75,568

 

 

79,012

 

Depreciation and amortization

 

 

44,633

 

 

45,419

 

 

 

87,862

 

 

83,617

 

EBITDA

 

 

124,459

 

 

144,314

 

 

 

221,885

 

 

261,373

 

Acquisition related costs(a)

 

 

271

 

 

3,750

 

 

 

2,065

 

 

5,597

 

Non-core items and project costs, net(b)

 

 

5,126

 

 

2,803

 

 

 

9,837

 

 

4,627

 

Cloud computing amortization(c)

 

 

1,069

 

 

—

 

 

 

2,414

 

 

—

 

Equity-based compensation expense(d)

 

 

10,982

 

 

4,485

 

 

 

22,843

 

 

7,049

 

Foreign currency transaction loss (gain), net(e)

 

 

681

 

 

(1,302

)

 

 

5,002

 

 

(2,977

)

Asset sale leaseback (gain) loss, impairment and closed store expenses(f)

 

 

9,630

 

 

(7,680

)

 

 

19,190

 

 

(5,836

)

Adjusted EBITDA

 

$

152,218

 

$

146,370

 

 

$

283,236

 

$

269,833

 

Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share Footnotes

(a)

 

Consists of acquisition costs as reflected within the unaudited consolidated statements of operations, including legal, consulting and other fees, and expenses incurred in connection with acquisitions completed during the applicable period, as well as inventory rationalization expenses incurred in connection with acquisitions. We expect to incur similar costs in connection with other acquisitions in the future and, under U.S. GAAP, such costs relating to acquisitions are expensed as incurred and not capitalized.

(b)

 

Consists of discrete items and project costs, including third party consulting and professional fees associated with strategic transformation initiatives as well as non-recurring payroll-related costs.

(c)

 

Includes non-cash amortization expenses relating to cloud computing arrangements.

(d)

 

Represents non-cash equity-based compensation expense.

(e)

 

Represents foreign currency transaction (gains) losses, net that primarily related to the remeasurement of our intercompany loans as well as gains and losses on cross currency swaps and forward contracts.

(f)

 

Relates to (gains) losses, net on sale leasebacks, impairment of certain fixed assets and operating lease right-of-use assets related to closed and underperforming locations, assets held for sale, and lease exit costs and other costs associated with stores that were closed prior to the respective lease termination dates.

(g)

 

Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the unaudited consolidated statement of operations.

(h)

 

Represents valuation allowances on income tax carryforwards in certain domestic jurisdictions that are not more likely than not to be realized.

(i)

 

Represents the tax impact of adjustments associated with the reconciling items between net income and Adjusted Net Income, excluding the provision for uncertain tax positions. To determine the tax impact of the deductible reconciling items, we utilized statutory income tax rates ranging from 9% to 36% depending upon the tax attributes of each adjustment and the applicable jurisdiction.

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

ADJUSTED EBITDA AND SEGMENT ADJUSTED EBITDA RECONCILIATION (UNAUDITED)

   

 

 

Three Months Ended

 

Six Months Ended

(in thousands)

 

June 29, 2024

 

July 1, 2023

 

June 29, 2024

 

July 1, 2023

Segment Adjusted EBITDA:

 

 

 

 

 

 

 

 

Maintenance

 

$

102,935

 

 

$

84,812

 

 

$

194,371

 

 

$

157,045

 

Car Wash

 

 

33,772

 

 

 

39,761

 

 

 

62,906

 

 

 

80,809

 

Paint, Collision & Glass

 

 

35,172

 

 

 

41,057

 

 

 

65,992

 

 

 

76,507

 

Platform Services

 

 

25,311

 

 

 

22,519

 

 

 

45,182

 

 

 

39,527

 

Corporate and other

 

 

(44,032

)

 

 

(40,402

)

 

 

(83,012

)

 

 

(81,653

)

Store opening costs

 

 

(940

)

 

 

(1,377

)

 

 

(2,203

)

 

 

(2,402

)

Adjusted EBITDA

 

$

152,218

 

 

$

146,370

 

 

$

283,236

 

 

$

269,833

 

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

ADDITIONAL INFORMATION ON KEY PERFORMANCE INDICATORS (UNAUDITED)

 

 

 

Three Months Ended June 29, 2024

(in thousands)

 

Maintenance

 

Car Wash

 

Paint, Collision & Glass

 

Platform Services

 

Total

System-wide Sales

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

$

304,563

 

$

—

 

$

794,633

 

$

114,649

 

$

1,213,845

Company-operated stores

 

 

230,809

 

 

95,211

 

 

67,523

 

 

1,138

 

 

394,681

Independently operated stores

 

 

—

 

 

60,280

 

 

—

 

 

—

 

 

60,280

Total System-wide Sales

 

$

535,372

 

$

155,491

 

$

862,156

 

$

115,787

 

$

1,668,806

 

 

 

 

 

 

 

 

 

 

 

Store Count (in whole numbers)

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

 

1,177

 

 

—

 

 

1,654

 

 

204

 

 

3,035

Company-operated stores

 

 

676

 

 

388

 

 

233

 

 

1

 

 

1,298

Independently operated stores

 

 

—

 

 

720

 

 

—

 

 

—

 

 

720

Total Store Count

 

 

1,853

 

 

1,108

 

 

1,887

 

 

205

 

 

5,053

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended July 1, 2023

(in thousands)

 

Maintenance

 

Car Wash

 

Paint, Collision & Glass

 

Platform Services

 

Total

System-wide Sales

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

$

278,951

 

$

—

 

$

806,420

 

$

117,548

 

$

1,202,919

Company-operated stores

 

 

205,673

 

 

101,615

 

 

86,110

 

 

1,180

 

 

394,578

Independently operated stores

 

 

—

 

 

61,533

 

 

—

 

 

—

 

 

61,533

Total System-wide Sales

 

$

484,624

 

$

163,148

 

$

892,530

 

$

118,728

 

$

1,659,030

 

 

 

 

 

 

 

 

 

 

 

Store Count (in whole numbers)

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

 

1,084

 

 

—

 

 

1,657

 

 

207

 

 

2,948

Company-operated stores

 

 

610

 

 

415

 

 

248

 

 

1

 

 

1,274

Independently operated stores

 

 

—

 

 

716

 

 

—

 

 

—

 

 

716

Total Store Count

 

 

1,694

 

 

1,131

 

 

1,905

 

 

208

 

 

4,938

 

 

Six Months Ended June 29, 2024

(in thousands)

 

Maintenance

 

Car Wash

 

Paint, Collision & Glass

 

Platform Services

 

Total

System-wide Sales

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

$

583,424

 

$

—

 

$

1,614,248

 

$

191,801

 

$

2,389,473

Company-operated stores

 

 

451,680

 

 

185,438

 

 

130,032

 

 

1,987

 

 

769,137

Independently operated stores

 

 

—

 

 

113,327

 

 

—

 

 

—

 

 

113,327

Total System-wide Sales

 

$

1,035,104

 

$

298,765

 

$

1,744,280

 

$

193,788

 

$

3,271,937

 

 

 

 

 

 

 

 

 

 

 

Store Count (in whole numbers)

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

 

1,177

 

 

—

 

 

1,654

 

 

204

 

 

3,035

Company-operated stores

 

 

676

 

 

388

 

 

233

 

 

1

 

 

1,298

Independently operated stores

 

 

—

 

 

720

 

 

—

 

 

—

 

 

720

Total Store Count

 

 

1,853

 

 

1,108

 

 

1,887

 

 

205

 

 

5,053

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended July 1, 2023

(in thousands)

 

Maintenance

 

Car Wash

 

Paint, Collision & Glass

 

Platform Services

 

Total

System-wide Sales

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

$

525,634

 

$

—

 

$

1,544,983

 

$

206,651

 

$

2,277,268

Company-operated stores

 

 

400,933

 

 

204,061

 

 

163,589

 

$

2,061

 

 

770,644

Independently operated stores

 

 

—

 

 

114,065

 

 

—

 

 

—

 

 

114,065

Total System-wide Sales

 

$

926,567

 

$

318,126

 

$

1,708,572

 

$

208,712

 

$

3,161,977

 

 

 

 

 

 

 

 

 

 

 

Store Count (in whole numbers)

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

 

1,084

 

 

—

 

 

1,657

 

 

207

 

 

2,948

Company-operated stores

 

 

610

 

 

415

 

 

248

 

 

1

 

 

1,274

Independently operated stores

 

 

—

 

 

716

 

 

—

 

 

—

 

 

716

Total Store Count

 

 

1,694

 

 

1,131

 

 

1,905

 

 

208

 

 

4,938

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240801081200/en/

Shareholder/Analyst inquiries: Dawn Francfort ICR, Inc. investors@drivenbrands.com (203) 682-8200

Media inquiries: Taylor Blanchard taylor.blanchard@drivenbrands.com (704) 644-8129