false 0001804745 0001804745 2023-08-02 2023-08-02

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): August 2, 2023

 

 

DRIVEN BRANDS HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-39898   47-3595252

(State or other jurisdiction

of incorporation)

  

(Commission

File Number)

  

(I.R.S. Employer

Identification No.)

440 South Church Street, Suite 700

Charlotte, North Carolina 28202

(Address of principal executive offices) (Zip Code)

(704) 377-8855

(Registrant’s Telephone Number, Including Area Code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading

Symbol

  

Name of each exchange

on which registered

Common Stock, $0.01 par value   DRVN   The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 2.02. Results of Operations and Financial Condition

On August 2, 2023, Driven Brands Holdings Inc. (the “Company”) issued a press release, furnished as Exhibit 99.1, and incorporated herein by reference, announcing the Company’s financial results for the quarter ended July 1, 2023.

The information provided pursuant to Item 2.02, including the exhibit attached hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit
No.		   

Description

99.1    Press release dated August 2, 2023
104    Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    DRIVEN BRANDS HOLDINGS INC.
Date: August 2, 2023     By:  

/s/ Scott O’Melia

    Name:   Scott O’Melia
    Title:   Executive Vice President, General Counsel and Secretary

Exhibit 99.1

 

LOGO

Driven Brands Holdings Inc. Reports Second Quarter Results

—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. (August 2, 2023) - 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     
  

 

 

     

 

 

     

 

 

    

 

 

     

 

1

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.

 

2

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

 

3

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.

Contacts

Shareholder/Analyst inquiries:

Dawn Francfort

ICR, Inc.

investors@drivenbrands.com

(203) 682-8200

Media inquiries:

Taylor Blanchard

taylor.blanchard@drivenbrands.com

(704) 644-8129

 

4

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  

 

5

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  
  

 

 

    

 

 

  

 

6

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  
  

 

 

    

 

 

  

 

7

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.

 

8

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.

 

9

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.

 

10

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  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

11

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.

 

12

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  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

13

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  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

14

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  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

15

v3.23.2
Document and Entity Information
Aug. 02, 2023
Cover [Abstract]  
Amendment Flag false
Entity Central Index Key 0001804745
Document Type 8-K
Document Period End Date Aug. 02, 2023
Entity Registrant Name DRIVEN BRANDS HOLDINGS INC.
Entity Incorporation State Country Code DE
Entity File Number 001-39898
Entity Tax Identification Number 47-3595252
Entity Address, Address Line One 440 South Church Street
Entity Address, Address Line Two Suite 700
Entity Address, City or Town Charlotte
Entity Address, State or Province NC
Entity Address, Postal Zip Code 28202
City Area Code (704)
Local Phone Number 377-8855
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common Stock, $0.01 par value
Trading Symbol DRVN
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
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