--Revenue increased 19% powered by 8%
same-store sales growth and 7% net store growth--
--Net
Income increased to $38 million vs a
Net Loss of $57 million in prior
year--
-- Adjusted EBITDA1 increased 12% to
$151 million--
--Updates
Full Year 2023 Guidance--
CHARLOTTE, N.C., Aug. 2, 2023
/PRNewswire/ -- Driven Brands Holdings Inc. (NASDAQ: DRVN) ("Driven
Brands" or the "Company") today reported financial results for the
second quarter ended July 1, 2023.
For the second quarter, Driven Brands delivered revenue of
$606.9 million, up 19 percent versus
the prior year. System-wide sales were $1.7
billion, up 18 percent versus the prior year driven by 8
percent same-store sales growth and 7 percent net store growth. The
company added 74 new stores in the quarter.
Net Income increased to $37.7
million or $0.22 per diluted
share versus a Net Loss in the prior year. Adjusted Net
Income1 decreased 18 percent to $49.1 million or $0.29 per diluted share1, and Adjusted
EBITDA1 increased 12 percent to $151.0 million. Cash provided by operating
activities for the six months ended July 1, 2023, was
$114.6 million compared to
$75.4 million in the prior year.
"The power of our portfolio approach continues to be evident, as
our needs-based businesses helped us deliver a solid quarter
despite the performance of our Car Wash segment, which has been
impacted by softer consumer demand, and our U.S. glass business,
which has been impacted by integration delays. While we continued
to deliver positive same-store sales growth and net store growth in
both the quarter and the first half, we are updating our full-year
guidance to reflect these weaker than anticipated performances,"
said Jonathan Fitzpatrick, President
and Chief Executive Officer. "I remain confident in Driven's mid-
and long-term strategy and in achieving our long-term Adjusted
EBITDA target of at least $850
million by the end of 2026."
|
Second Quarter 2023
Key Performance Indicators by Segment
|
|
System-wide
Sales
(in
millions)
|
Store
Count
|
Same-Store
Sales
|
Revenue
(in
millions)
|
Segment
Adjusted
EBITDA1
(in
millions)
|
|
Maintenance
|
$
484.6
|
1,694
|
10.2 %
|
$
242.3
|
$
85.8
|
|
Car
Wash
|
163.2
|
1,131
|
(4.0) %
|
164.8
|
43.3
|
|
Paint, Collision
& Glass
|
892.5
|
1,905
|
12.2 %
|
133.2
|
41.2
|
|
Platform
Services
|
118.7
|
208
|
(11.3) %
|
57.3
|
22.5
|
|
Corporate /
Other
|
N/A
|
N/A
|
N/A
|
9.3
|
|
|
Total
|
$
1,659.0
|
4,938
|
7.6 %
|
$
606.9
|
Capital and Liquidity
The Company ended the second quarter with total liquidity of
$492.6 million consisting of
$212.1 million in cash and cash
equivalents, and $280.5 million of
undrawn capacity on its variable funding securitization senior
notes and revolving credit facility. This does not include the
additional $135.0 million Series 2022
Class A-1 Notes that expand its variable funding note borrowing
capacity when the Company elects to exercise it, assuming certain
conditions continue to be met.
Fiscal Year 2023 Guidance
Based on weaker than anticipated performance in the Car Wash
segment and U.S. glass business, the Company is updating its
guidance for fiscal year 2023.
|
Prior
Guidance
|
Updated
Guidance
|
|
Revenue
|
$2.35
billion
|
$2.30
billion
|
|
Adjusted
EBITDA1
|
$590 million
|
$535 million
|
|
Adjusted
EPS1
|
$1.21
|
$0.92
|
|
|
Note: The Company has
not included future M&A in its guidance for fiscal year
2023.
|
|
____________
|
|
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 2023 results today, Wednesday,
August 2, 2023, at 8:30am 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
until October 31, 2023.
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 4,900 locations across 14 countries, and services over 70
million vehicles annually. Driven Brands' network generates
approximately $2.2 billion in annual
revenue from more than $6.1 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,
plans, objectives of management, 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; and (iv) 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 31, 2022 and 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.
Forward-looking statements represent our estimates and
assumptions only as of the date on which they are made, and we
undertake no obligation to update or review publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
|
DRIVEN BRANDS
HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
|
|
Three months
ended
|
|
Six months
ended
|
|
(in thousands,
except per share amounts)
|
July 1,
2023
|
|
June 25,
2022
|
|
July 1,
2023
|
|
June 25,
2022
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Franchise royalties
and fees
|
$
49,805
|
|
$
44,850
|
|
$
93,320
|
|
$
82,738
|
|
Company-operated store
sales
|
394,578
|
|
323,885
|
|
770,644
|
|
616,276
|
|
Independently-operated
store sales
|
61,533
|
|
54,942
|
|
114,065
|
|
118,031
|
|
Advertising
contributions
|
24,749
|
|
22,091
|
|
46,426
|
|
41,789
|
|
Supply and other
revenue
|
76,186
|
|
62,856
|
|
144,863
|
|
118,113
|
|
Total
revenue
|
606,851
|
|
508,624
|
|
1,169,318
|
|
976,947
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Company-operated store
expenses
|
257,040
|
|
192,939
|
|
500,449
|
|
370,806
|
|
Independently-operated
store expenses
|
31,958
|
|
28,843
|
|
61,322
|
|
62,142
|
|
Advertising
expenses
|
24,749
|
|
22,091
|
|
46,426
|
|
41,789
|
|
Supply and other
expenses
|
42,106
|
|
35,800
|
|
79,372
|
|
68,574
|
|
Selling, general and
administrative expenses
|
96,815
|
|
97,977
|
|
209,143
|
|
190,197
|
|
Acquisition
costs
|
3,750
|
|
3,338
|
|
5,597
|
|
7,656
|
|
Store opening
costs
|
1,377
|
|
666
|
|
2,402
|
|
1,172
|
|
Depreciation and
amortization
|
45,419
|
|
38,087
|
|
83,617
|
|
71,110
|
|
Trade name
impairment
|
—
|
|
125,450
|
|
—
|
|
125,450
|
|
Asset impairment
charges and lease terminations
|
6,044
|
|
(882)
|
|
6,211
|
|
16
|
|
Total operating
expenses
|
509,258
|
|
544,309
|
|
994,539
|
|
938,912
|
|
Operating income
(loss)
|
97,593
|
|
(35,685)
|
|
174,779
|
|
38,035
|
|
Other expenses,
net:
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
40,871
|
|
26,270
|
|
79,012
|
|
51,623
|
|
(Gain) loss on foreign
currency transactions, net
|
(1,302)
|
|
13,937
|
|
(2,977)
|
|
14,908
|
|
Total other
expenses, net
|
39,569
|
|
40,207
|
|
76,035
|
|
66,531
|
|
Net income (loss)
before taxes
|
58,024
|
|
(75,892)
|
|
98,744
|
|
(28,496)
|
|
Income tax
expense
|
20,275
|
|
(18,848)
|
|
31,246
|
|
(5,880)
|
|
Net income
(loss)
|
37,749
|
|
(57,044)
|
|
67,498
|
|
(22,616)
|
|
Net income (loss)
attributable to non-controlling interests
|
—
|
|
—
|
|
—
|
|
(15)
|
|
Net income (loss)
attributable to Driven Brands Holdings Inc.
|
$
37,749
|
|
$
(57,044)
|
|
$
67,498
|
|
$
(22,601)
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
0.23
|
|
$
(0.34)
|
|
$
0.41
|
|
$
(0.14)
|
|
Diluted
|
$
0.22
|
|
$
(0.34)
|
|
$
0.40
|
|
$
(0.14)
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
162,911
|
|
162,781
|
|
162,848
|
|
162,772
|
|
Diluted
|
166,888
|
|
162,781
|
|
166,882
|
|
162,772
|
|
DRIVEN BRANDS
HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
|
|
|
|
(in thousands,
except share and per share amounts)
|
July 1,
2023
|
|
December 31,
2022
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
212,123
|
|
$
227,110
|
|
Restricted
cash
|
657
|
|
792
|
|
Accounts and notes
receivable, net
|
200,377
|
|
179,888
|
|
Inventory
|
83,036
|
|
72,040
|
|
Prepaid and other
assets
|
52,353
|
|
40,084
|
|
Income tax
receivable
|
14,344
|
|
15,075
|
|
Advertising fund
assets, restricted
|
51,210
|
|
36,421
|
|
Total current
assets
|
614,100
|
|
571,410
|
|
Other assets
|
36,923
|
|
30,561
|
|
Property and equipment,
net
|
1,677,804
|
|
1,545,738
|
|
Operating lease
right-of-use assets
|
1,449,708
|
|
1,299,189
|
|
Deferred
commissions
|
6,400
|
|
7,121
|
|
Intangibles,
net
|
755,990
|
|
765,903
|
|
Goodwill
|
2,299,953
|
|
2,277,065
|
|
Deferred tax
assets
|
3,030
|
|
2,911
|
|
Total
assets
|
$
6,843,908
|
|
$
6,499,898
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
81,751
|
|
$
60,606
|
|
Accrued expenses and
other liabilities
|
311,352
|
|
317,318
|
|
Income tax
payable
|
3,145
|
|
4,454
|
|
Current portion of
long-term debt
|
32,044
|
|
32,986
|
|
Income tax receivable
liability
|
53,781
|
|
53,328
|
|
Advertising fund
liabilities
|
36,910
|
|
36,726
|
|
Total current
liabilities
|
518,983
|
|
505,418
|
|
Long-term
debt
|
2,779,511
|
|
2,705,281
|
|
Deferred tax
liabilities
|
297,884
|
|
276,749
|
|
Operating lease
liabilities
|
1,320,670
|
|
1,177,501
|
|
Income tax receivable
liability
|
117,915
|
|
117,915
|
|
Deferred
revenue
|
31,132
|
|
30,046
|
|
Long-term accrued
expenses and other liabilities
|
30,155
|
|
33,419
|
|
Total
liabilities
|
5,096,250
|
|
4,846,329
|
|
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 167,366,561
and 167,404,047 shares
outstanding; respectively
|
1,674
|
|
1,674
|
|
Additional paid-in
capital
|
1,637,945
|
|
1,628,904
|
|
Retained
earnings
|
152,293
|
|
84,795
|
|
Accumulated other
comprehensive loss
|
(44,898)
|
|
(62,435)
|
|
Total shareholders'
equity attributable to Driven Brands Holdings Inc.
|
1,747,014
|
|
1,652,938
|
|
Non-controlling
interests
|
644
|
|
631
|
|
Total shareholders'
equity
|
1,747,658
|
|
1,653,569
|
|
Total liabilities
and shareholders' equity
|
$
6,843,908
|
|
$
6,499,898
|
|
DRIVEN BRANDS
HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
|
|
|
Six Months
Ended
|
|
(in
thousands)
|
July 1,
2023
|
|
June 25,
2022
|
|
Net income
(loss)
|
$
67,498
|
|
$
(22,616)
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
83,617
|
|
71,110
|
|
Trade name
impairment
|
—
|
|
125,450
|
|
Equity-based
compensation expense
|
7,049
|
|
6,851
|
|
(Gain) loss on foreign
denominated transactions
|
(1,723)
|
|
14,908
|
|
(Gain) loss on foreign
currency derivatives
|
(1,254)
|
|
—
|
|
Loss (gain) on sale of
businesses, fixed assets, and sale-leaseback
transactions
|
(12,230)
|
|
(9,059)
|
|
Amortization of
interest rate hedge
|
(1,039)
|
|
—
|
|
Bad debt
expense
|
602
|
|
936
|
|
Asset impairment
costs
|
6,211
|
|
16
|
|
Amortization of
deferred financing costs and bond discounts
|
4,343
|
|
4,565
|
|
Provision (benefit) for
deferred income taxes
|
18,812
|
|
(31,908)
|
|
Other, net
|
9,641
|
|
9,681
|
|
Changes in assets
and liabilities, net of acquisitions:
|
|
|
|
|
Accounts and notes
receivable, net
|
(30,373)
|
|
(59,579)
|
|
Inventory
|
(11,108)
|
|
(6,899)
|
|
Prepaid and other
assets
|
(7,894)
|
|
(19,082)
|
|
Advertising fund assets
and liabilities, restricted
|
(8,768)
|
|
(1,321)
|
|
Other Assets
|
(25,456)
|
|
(1,882)
|
|
Deferred
commissions
|
330
|
|
(178)
|
|
Deferred
revenue
|
1,585
|
|
497
|
|
Accounts
payable
|
16,231
|
|
20,209
|
|
Accrued expenses and
other liabilities
|
(1,171)
|
|
(45,950)
|
|
Income tax
receivable
|
(320)
|
|
19,640
|
|
Cash provided by
operating activities
|
114,583
|
|
75,389
|
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(320,071)
|
|
(148,763)
|
|
Cash used in business
acquisitions, net of cash acquired
|
(44,868)
|
|
(394,388)
|
|
Proceeds from
sale-leaseback transactions
|
143,622
|
|
56,083
|
|
Proceeds from sale or
disposal of businesses and fixed assets
|
217
|
|
2,183
|
|
Cash used in
investing activities
|
(221,100)
|
|
(484,885)
|
|
Cash flows from
financing activities:
|
|
|
|
|
Repayment of long-term
debt
|
(13,961)
|
|
(9,682)
|
|
Proceeds from revolving
lines of credit and short-term debt
|
230,000
|
|
105,000
|
|
Repayments of revolving
lines of credit and short-term debt
|
(120,000)
|
|
—
|
|
Repayment of principal
portion of finance lease liability
|
(1,889)
|
|
(1,156)
|
|
Stock option
exercises
|
1,758
|
|
—
|
|
Other, net
|
(64)
|
|
152
|
|
Cash provided by
financing activities
|
95,128
|
|
94,314
|
|
Effect of exchange rate
changes on cash
|
2,087
|
|
(4,454)
|
|
Net change in cash,
cash equivalents, restricted cash, and cash included in advertising
fund
assets,
restricted
|
(9,302)
|
|
(319,636)
|
|
Cash and cash
equivalents, beginning of period
|
227,110
|
|
523,414
|
|
Cash included in
advertising fund assets, restricted, beginning of period
|
32,871
|
|
38,586
|
|
Restricted cash,
beginning of period
|
792
|
|
792
|
|
Cash, cash
equivalents, restricted cash, and cash included in advertising fund
assets,
restricted, beginning of period
|
260,773
|
|
562,792
|
|
Cash and cash
equivalents, end of period
|
212,123
|
|
197,853
|
|
Cash included in
advertising fund assets, restricted, end of period
|
38,691
|
|
44,511
|
|
Restricted cash, end of
period
|
657
|
|
792
|
|
Cash, cash
equivalents, restricted cash, and cash included in advertising fund
assets,
restricted, end of
period
|
$
251,471
|
|
$
243,156
|
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 Guidance
Driven Brands includes Adjusted EBITDA and Adjusted EPS in the
Company's Fiscal Year 2023 Guidance. Adjusted EBITDA and Adjusted
EPS are non-GAAP financial measures and have not been reconciled to
the most comparable GAAP outlook 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 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 attributable to Driven Brands Holdings Inc.
("Adjusted Net Income") and Adjusted diluted earnings per share
attributable to Driven Brands common stockholders ("Adjusted
Earnings Per Share") 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 Earnings Per Share 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
July 1, 2023, compared to the three
and six months ended June 25,
2022.
|
Net Income (Loss) to
Adjusted Net Income and Adjusted Earnings Per Share
(Unaudited)
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
(in thousands,
except per share amounts)
|
July 1,
2023
|
|
June 25,
2022
|
|
July 1,
2023
|
|
June 25,
2022
|
|
Net income
(loss)
|
$
37,749
|
|
$
(57,044)
|
|
$
67,498
|
|
$
(22,616)
|
|
Acquisition related
costs(a)
|
3,750
|
|
3,338
|
|
5,597
|
|
7,656
|
|
Non-core items and
project costs, net(b)
|
2,803
|
|
1,719
|
|
4,627
|
|
2,585
|
|
Straight-line rent
adjustment(c)
|
4,638
|
|
4,217
|
|
9,003
|
|
8,310
|
|
Equity-based
compensation expense(d)
|
4,485
|
|
4,233
|
|
7,049
|
|
6,851
|
|
Foreign currency
transaction (gain) loss,
net(e)
|
(1,302)
|
|
13,937
|
|
(2,977)
|
|
14,908
|
|
Trade name
impairment(f)
|
—
|
|
125,450
|
|
—
|
|
125,450
|
|
Asset sale leaseback
loss (gain),
impairment and closed
store expenses(g)
|
(7,680)
|
|
(5,938)
|
|
(5,836)
|
|
(6,062)
|
|
Amortization related to
acquired
intangible
assets(h)
|
8,276
|
|
5,930
|
|
14,312
|
|
11,072
|
|
Provision for uncertain
tax positions(i)
|
—
|
|
—
|
|
—
|
|
76
|
|
Adjusted net income
before tax impact of
adjustments
|
52,719
|
|
95,842
|
|
99,273
|
|
148,230
|
|
Tax impact of
adjustments(j)
|
(3,577)
|
|
(36,184)
|
|
(7,790)
|
|
(40,796)
|
|
Adjusted net
income
|
49,142
|
|
59,658
|
|
91,483
|
|
107,434
|
|
Net loss attributable
to non-controlling
interest
|
—
|
|
—
|
|
—
|
|
(15)
|
|
Adjusted Net Income
attributable to
Driven Brands
Holdings Inc.
|
$
49,142
|
|
$
59,658
|
|
$
91,483
|
|
$
107,419
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings Per
Share
|
|
|
|
|
|
|
|
|
Basic1
|
$
0.30
|
|
$
0.36
|
|
$
0.55
|
|
$
0.65
|
|
Diluted1
|
$
0.29
|
|
$
0.35
|
|
$
0.54
|
|
$
0.63
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
|
|
|
|
|
|
|
Basic
|
162,911
|
|
162,781
|
|
162,848
|
|
162,772
|
|
Diluted
|
166,888
|
|
166,659
|
|
166,882
|
|
166,692
|
|
|
(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 July 1, 2023, respectively, and
Adjusted Net Income
attributable to participating securities used in the diluted
earnings per share calculation was $1 million and
$2 million for the
three and six months ended July 1, 2023, respectively.
|
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 31, 2022,
filed with the SEC on March 1, 2023,
for additional information on Adjusted EBITDA. The tables below
reflect the calculation of Adjusted EBITDA for the three and six
months ended July 1, 2023, compared
to the three and six months ended June 25,
2022.
|
Net Income (Loss) to
Adjusted EBITDA Reconciliation (Unaudited)
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
(in
thousands)
|
July 1,
2023
|
|
June 25,
2022
|
|
July 1,
2023
|
|
June 25,
2022
|
|
Net income
(loss)
|
$
37,749
|
|
$
(57,044)
|
|
$
67,498
|
|
$
(22,616)
|
|
Income tax expense
(benefit)
|
20,275
|
|
(18,848)
|
|
31,246
|
|
(5,880)
|
|
Interest expense,
net
|
40,871
|
|
26,270
|
|
79,012
|
|
51,623
|
|
Depreciation and
amortization
|
45,419
|
|
38,087
|
|
83,617
|
|
71,110
|
|
EBITDA
|
144,314
|
|
(11,535)
|
|
261,373
|
|
94,237
|
|
Acquisition related
costs(a)
|
3,750
|
|
3,338
|
|
5,597
|
|
7,656
|
|
Non-core items and
project costs, net(b)
|
2,803
|
|
1,719
|
|
4,627
|
|
2,585
|
|
Straight-line rent
adjustment(c)
|
4,638
|
|
4,217
|
|
9,003
|
|
8,310
|
|
Equity-based
compensation expense(d)
|
4,485
|
|
4,233
|
|
7,049
|
|
6,851
|
|
Foreign currency
transaction (gain) loss,
net(e)
|
(1,302)
|
|
13,937
|
|
(2,977)
|
|
14,908
|
|
Trade name
impairment(f)
|
—
|
|
125,450
|
|
—
|
|
125,450
|
|
Asset impairment and
closed store
expenses(g)
|
(7,680)
|
|
(5,938)
|
|
(5,836)
|
|
(6,062)
|
|
Adjusted
EBITDA
|
$
151,008
|
|
$
135,421
|
|
$
278,836
|
|
$
253,935
|
|
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)
|
Consists of the
non-cash portion of rent expense, which reflects the extent to
which our straight-line rent expense
recognized under U.S.
GAAP exceeds or is less than our cash rent payments.
|
|
|
|
(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,
which are partially offset by unrealized gains and losses on
remeasurement of cross currency
swaps and forward
contracts.
|
|
|
|
(f)
|
Relates to an
impairment of certain Car Wash trade names as the Company elected
to discontinue their use.
|
|
|
|
(g)
|
Relates to (gains)
losses, net on sale leasebacks, impairment of certain fixed assets
and operating lease right-of-use
assets related to
closed locations, and lease exit costs and other costs associated
with stores that were closed prior
to the respective lease
termination dates.
|
|
|
|
(h)
|
Consists of
amortization related to acquired intangible assets as reflected
within depreciation and amortization in the
unaudited consolidated
statements of operations.
|
|
|
|
(i)
|
Represents uncertain
tax positions recorded for tax positions, inclusive of interest and
penalties.
|
|
|
|
(j)
|
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)
|
July 1,
2023
|
|
June 25,
2022
|
|
July 1,
2023
|
|
June 25,
2022
|
|
Segment Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
Maintenance
|
$
85,753
|
|
$
64,076
|
|
$
158,739
|
|
$
116,561
|
|
Car Wash
|
43,263
|
|
53,677
|
|
87,572
|
|
109,397
|
|
Paint, Collision &
Glass
|
41,249
|
|
32,916
|
|
76,961
|
|
61,928
|
|
Platform
Services
|
22,537
|
|
20,541
|
|
39,567
|
|
34,706
|
|
Corporate and
other
|
(40,417)
|
|
(35,205)
|
|
(81,601)
|
|
(67,485)
|
|
Store opening
costs
|
(1,377)
|
|
(666)
|
|
(2,402)
|
|
(1,172)
|
|
Adjusted
EBITDA
|
$
151,008
|
|
$
135,339
|
|
$
278,836
|
|
$
253,935
|
|
DRIVEN BRANDS
HOLDINGS INC. AND SUBSIDIARIES
ADDITIONAL
INFORMATION ON KEY PERFORMANCE INDICATORS
(UNAUDITED)
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 25, 2022
|
|
(in
thousands)
|
|
Maintenance
|
|
Car
Wash
|
|
Paint,
Collision
&
Glass
|
|
Platform
Services
|
|
Total
|
|
System-wide
Sales
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
stores
|
|
$
230,505
|
|
$
—
|
|
$
672,616
|
|
$
129,928
|
|
$
1,033,049
|
|
Company-operated
stores
|
|
168,648
|
|
101,796
|
|
52,049
|
|
1,392
|
|
323,885
|
|
Independently operated
Stores
|
|
—
|
|
54,942
|
|
—
|
|
—
|
|
54,942
|
|
Total System-wide
Sales
|
|
$
399,153
|
|
$
156,738
|
|
$
724,665
|
|
$
131,320
|
|
$
1,411,876
|
|
|
|
|
|
|
|
|
|
|
|
|
Store Count (in
whole numbers)
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
stores
|
|
1,001
|
|
—
|
|
1,611
|
|
201
|
|
2,813
|
|
Company-operated
stores
|
|
558
|
|
356
|
|
160
|
|
1
|
|
1,075
|
|
Independently operated
Stores
|
|
—
|
|
718
|
|
—
|
|
—
|
|
718
|
|
Total Store
Count
|
|
1,559
|
|
1,074
|
|
1,771
|
|
202
|
|
4,606
|
|
DRIVEN BRANDS
HOLDINGS INC. AND SUBSIDIARIES
ADDITIONAL
INFORMATION ON KEY PERFORMANCE INDICATORS
(UNAUDITED)
|
|
|
|
Six months ended
July 1, 2023
|
|
(in
thousands)
|
|
Maintenance
|
|
Car
Wash
|
|
Paint,
Collision
&
Glass
|
|
Platform
Services
|
|
Total
|
|
System-wide Store
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 25, 2022
|
|
(in
thousands)
|
|
Maintenance
|
|
Car
Wash
|
|
Paint,
Collision
&
Glass
|
|
Platform
Services
|
|
Total
|
|
System-wide Store
sales
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
stores
|
|
$
430,789
|
|
$
—
|
|
$
1,291,585
|
|
$
219,570
|
|
$
1,941,944
|
|
Company-operated
stores
|
|
325,476
|
|
196,291
|
|
91,965
|
|
$
2,544
|
|
616,276
|
|
Independently operated
Stores
|
|
—
|
|
118,031
|
|
—
|
|
—
|
|
118,031
|
|
Total System-wide
Sales
|
|
$
756,265
|
|
$
314,322
|
|
$
1,383,550
|
|
$
222,114
|
|
$
2,676,251
|
|
|
|
|
|
|
|
|
|
|
|
|
Store Count (in
whole numbers)
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
stores
|
|
1,001
|
|
—
|
|
1,611
|
|
201
|
|
2,813
|
|
Company-operated
stores
|
|
558
|
|
356
|
|
160
|
|
1
|
|
1,075
|
|
Independently operated
Stores
|
|
—
|
|
718
|
|
—
|
|
—
|
|
718
|
|
Total Store
Count
|
|
1,559
|
|
1,074
|
|
1,771
|
|
202
|
|
4,606
|
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multimedia:https://www.prnewswire.com/news-releases/driven-brands-holdings-inc-reports-second-quarter-results-301891097.html
SOURCE Driven Brands