--Fiscal 2023 revenue increased 13% powered by
7% same-store sales growth and 4% net store
growth--
--Achieved 12 consecutive quarters of same store
sales growth--
--Issues fiscal year 2024 financial
outlook--
CHARLOTTE, N.C., Feb. 22,
2024 /PRNewswire/ -- Driven Brands Holdings Inc.
(NASDAQ: DRVN) ("Driven Brands" or the "Company") today reported
financial results for the fourth quarter and fiscal year ended
December 30, 2023.
Fiscal Year 2023 Highlights
For the fiscal year, Driven Brands delivered revenue
of $2.3 billion, up 13% versus the prior year. System-wide
sales were $6.3 billion, up 12%
versus the prior year driven by 7% same-store sales growth and 4%
net store growth. The Company added 183 net new stores during
fiscal 2023.
During the fiscal year, the Company recognized an $851.0 million non-cash goodwill impairment in
the Car Wash segment as well as $132.9
million in non-cash asset impairment charges and lease
terminations. These drove a Net Loss of $745.0 million or a Net Loss of $4.53 per diluted share versus Net Income of
$43.2 million or Net Income of
$0.25 per diluted share in the prior
year. Adjusted Net Income1 was $155.9 million and Adjusted EPS1 was
$0.93, a decrease of 25% and 24%,
respectively from the prior year. Adjusted EBITDA1 was
$535.1 million, up 4% versus the
prior year. Cash provided by operating activities
increased 19% to $235.2 million
compared to $197.2 million in the
prior year.
"We are happy to announce that we delivered on our updated 2023
outlook for all financial metrics, while also pivoting our strategy
and adapting to the dynamic market. In the fourth quarter, our
performance was driven by strong execution in our Maintenance
segment, specifically in our industry-leading Take 5 Oil Change
business, and we're encouraged by the progress made in our U.S.
Glass and U.S. Car Wash businesses," said Jonathan Fitzpatrick, President and Chief
Executive Officer.
"Our goals in the second half of 2023 were to deliver on our
full-year outlook and set ourselves up for a successful 2024, and
we did just that. In 2024, we are focused on accelerating growth,
reducing debt, and making sure that Driven has the right assets to
execute on both our short- and long-term goals," Fitzpatrick
concluded.
Fourth Quarter 2023 Highlights
For the fourth quarter, Driven Brands delivered revenue of
$553.7 million, up 3% versus the
prior year. System-wide sales were $1.5
billion, up 3% versus the prior year driven by 4% same-store
sales growth. Net Loss was $13.1
million or a Net Loss of $0.08
per diluted share versus Net Income of $27.4
million, or $0.16 per diluted
share in the prior year. Adjusted Net Income was $30.7 million and Adjusted EPS was $0.19, a decrease of 27% and 24%, respectively
from the prior year. Adjusted EBITDA was $129.0 million, down 1% versus the prior year.
|
Fiscal Year 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
|
$
1,899.8
|
1,786
|
9.2 %
|
$
960.4
|
$
332.8
|
|
Car
Wash
|
591.8
|
1,108
|
(5.6) %
|
597.7
|
143.0
|
|
Paint, Collision
& Glass
|
3,389.6
|
1,888
|
11.4 %
|
500.4
|
141.5
|
|
Platform
Services2
|
402.6
|
206
|
N/A
|
216.0
|
80.6
|
|
Corporate /
Other
|
N/A
|
N/A
|
N/A
|
29.5
|
|
|
Total
|
$
6,283.7
|
4,988
|
7.4 %
|
$
2,304.0
|
|
Fourth 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
|
$
470.8
|
1,786
|
4.7 %
|
$
246.0
|
$
87.5
|
|
Car
Wash
|
131.9
|
1,108
|
(3.3) %
|
133.2
|
31.0
|
|
Paint, Collision
& Glass
|
835.3
|
1,888
|
6.4 %
|
117.0
|
31.7
|
|
Platform
Services2
|
74.7
|
206
|
N/A
|
50.7
|
18.6
|
|
Corporate /
Other
|
N/A
|
N/A
|
N/A
|
6.7
|
|
|
Total
|
$
1,512.7
|
4,988
|
3.9 %
|
$
553.7
|
Capital and Liquidity
The Company ended the fourth quarter with total liquidity of
$319.0 million consisting of
$176.5 million in cash and cash
equivalents and $142.5 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 the Company's variable funding
note borrowing capacity when the Company elects to exercise them,
assuming certain conditions continue to be met.
Fiscal Year 2024 Outlook
Beginning in fiscal 2024, the Company changed its definitions
for Adjusted Net Income, Adjusted EPS, and Adjusted EBITDA.
Specifically, the Company will no longer include straight-line rent
adjustments in its non-GAAP adjustments. See "Reconciliation
of Non-GAAP Financial Measures" below for additional details of
these changes and a reconciliation of the definitions prior to
fiscal 2024 to allow for like-for-like comparisons to the new
definitions for all periods presented.
The table below sets forth the Company's fiscal year 2023
results and 2024 outlook using the revised methodology to calculate
Adjusted EBITDA, and Adjusted EPS.
|
2023
Results
|
2024
Outlook
|
|
Revenue
|
$2.30
billion
|
~$2.35 - $2.45
billion
|
|
Adjusted
EBITDA1
|
$516.9
million
|
~$535 - $565
million
|
|
Adjusted
EPS1
|
$0.85
|
~$0.88 -
$1.00
|
The Company also expects:
- Same-store sales growth of 3% to 5%
- Net new store growth of approximately 205 to 220
- Maintenance: approximately 165 to 185 stores of which
approximately 65% will be franchise and 35% company-operated
- Car Wash: approximately 5 to 10 stores all from the
international business
- Paint Collision & Glass: approximately 25 to 35 stores of
which approximately 85% will be franchise and 15%
company-operated
The Company has not included future M&A in its outlook for
fiscal year 2024.
___________
1 Adjusted Net Income, Adjusted EPS, and Adjusted
EBITDA are non-GAAP financial measures. Beginning in fiscal 2024,
the company has made certain changes to how it defines these
metrics that impact the comparability to prior periods. See
"Reconciliation of Non-GAAP Financial Measures" for additional
information on changes to these non-GAAP financial measures, a
reconciliation to the most comparable GAAP measures, and a
reconciliation between the differences in metric definitions for
all periods presented. Forward-looking estimates of Adjusted EBITDA
and Adjusted EPS are made in a manner consistent with the relevant
definitions and assumptions noted herein.
2 Platform Services same store sales were
removed as a Key Performance Indicator as sales included within the
calculation represented less than 20% of Platform Services
revenue.
Conference Call
Driven Brands will host a conference call to discuss fourth
quarter and year-end 2023 results today, Thursday, February 22, 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 approximately 5,000
locations across 13 countries, and services over 70 million
vehicles annually. Driven Brands' network generates approximately
$2.3 billion in annual revenue
from approximately $6.3 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 to achieve
anticipated synergies; (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 31, 2022 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
|
|
Year
Ended
|
|
(in thousands,
except per share amounts)
|
December 30,
2023
|
|
December 31,
2022
|
|
December
30,
2023
|
|
December 31,
2022
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Franchise royalties
and fees
|
$
49,685
|
|
$
43,434
|
|
$
190,367
|
|
$
171,734
|
|
Company-operated store
sales
|
366,668
|
|
366,921
|
|
1,526,353
|
|
1,324,408
|
|
Independently-operated
store sales
|
38,748
|
|
36,657
|
|
196,395
|
|
195,157
|
|
Advertising
contributions
|
25,303
|
|
23,943
|
|
98,850
|
|
87,750
|
|
Supply and other
revenue
|
73,273
|
|
68,698
|
|
292,064
|
|
254,145
|
|
Total
revenue
|
553,677
|
|
539,653
|
|
2,304,029
|
|
2,033,194
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
Company-operated store
expenses
|
241,741
|
|
231,894
|
|
1,004,472
|
|
812,262
|
|
Independently-operated
store expenses
|
21,983
|
|
22,544
|
|
109,078
|
|
107,940
|
|
Advertising
expenses
|
23,743
|
|
24,179
|
|
97,290
|
|
87,986
|
|
Supply and other
expenses
|
40,248
|
|
35,865
|
|
158,436
|
|
145,481
|
|
Selling, general, and
administrative expenses
|
110,957
|
|
110,821
|
|
443,112
|
|
383,478
|
|
Acquisition related
costs
|
5,910
|
|
5,323
|
|
13,174
|
|
15,304
|
|
Store opening
costs
|
2,057
|
|
953
|
|
5,831
|
|
2,878
|
|
Depreciation and
amortization
|
46,040
|
|
39,528
|
|
175,296
|
|
147,156
|
|
Goodwill
impairment
|
—
|
|
—
|
|
850,970
|
|
—
|
|
Trade name
impairment
|
—
|
|
—
|
|
—
|
|
125,450
|
|
Asset impairment
charges and lease terminations
|
15,453
|
|
2,745
|
|
132,903
|
|
5,655
|
|
Total operating
expenses
|
508,132
|
|
473,852
|
|
2,990,562
|
|
1,833,590
|
|
Operating (loss)
income
|
45,545
|
|
65,801
|
|
(686,533)
|
|
199,604
|
|
Other expenses,
net:
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
43,892
|
|
35,150
|
|
164,196
|
|
114,096
|
|
(Gain) loss on foreign
currency transactions
|
(3,081)
|
|
(13,322)
|
|
(3,078)
|
|
17,168
|
|
Other expense,
net
|
40,811
|
|
21,828
|
|
161,118
|
|
131,264
|
|
(Loss) income before
taxes
|
4,734
|
|
43,973
|
|
(847,651)
|
|
68,340
|
|
Income tax (benefit)
expense
|
17,883
|
|
16,575
|
|
(102,689)
|
|
25,167
|
|
Net (loss)
income
|
(13,149)
|
|
27,398
|
|
(744,962)
|
|
43,173
|
|
Net loss attributable
to non-controlling interest
|
—
|
|
—
|
|
—
|
|
(15)
|
|
Net (loss) income
attributable to Driven
Brands Holdings Inc.
|
$
(13,149)
|
|
$
27,398
|
|
$
(744,962)
|
|
$
43,188
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
(0.08)
|
|
$
0.16
|
|
$
(4.50)
|
|
$
0.26
|
|
Diluted
|
$
(0.08)
|
|
$
0.16
|
|
$
(4.53)
|
|
$
0.25
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
159,573
|
|
162,744
|
|
161,917
|
|
162,762
|
|
Diluted
|
159,573
|
|
166,810
|
|
161,917
|
|
166,743
|
|
DRIVEN BRANDS
HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
|
|
|
(in thousands,
except share and per share amounts)
|
December 30,
2023
|
|
December 31,
2022
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
176,522
|
|
$
227,110
|
|
Restricted
cash
|
657
|
|
792
|
|
Accounts and notes
receivable, net
|
151,259
|
|
179,888
|
|
Inventory
|
83,171
|
|
72,040
|
|
Prepaid and other
assets
|
46,714
|
|
40,084
|
|
Income tax
receivable
|
15,928
|
|
15,075
|
|
Assets held for
sale
|
301,229
|
|
—
|
|
Advertising fund
assets, restricted
|
45,627
|
|
36,421
|
|
Total current
assets
|
821,107
|
|
571,410
|
|
Other assets
|
56,565
|
|
30,561
|
|
Property and equipment,
net
|
1,438,496
|
|
1,545,738
|
|
Operating lease
right-of-use assets
|
1,389,316
|
|
1,299,189
|
|
Deferred
commissions
|
6,312
|
|
7,121
|
|
Intangibles,
net
|
739,402
|
|
765,903
|
|
Goodwill
|
1,455,946
|
|
2,277,065
|
|
Deferred tax
assets
|
3,660
|
|
2,911
|
|
Total
assets
|
$
5,910,804
|
|
$
6,499,898
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
67,526
|
|
$
60,606
|
|
Accrued expenses and
other liabilities
|
242,171
|
|
317,318
|
|
Income tax
payable
|
5,404
|
|
4,454
|
|
Current portion of
long-term debt
|
32,673
|
|
32,986
|
|
Income tax receivable
liability
|
56,001
|
|
53,328
|
|
Advertising fund
liabilities
|
23,392
|
|
36,726
|
|
Total current
liabilities
|
427,167
|
|
505,418
|
|
Long-term
debt
|
2,910,812
|
|
2,705,281
|
|
Deferred tax
liabilities
|
154,742
|
|
276,749
|
|
Operating lease
liabilities
|
1,332,519
|
|
1,177,501
|
|
Income tax receivable
liability
|
117,915
|
|
117,915
|
|
Deferred
revenue
|
30,507
|
|
30,046
|
|
Long-term accrued
expenses and other liabilities
|
30,419
|
|
33,419
|
|
Total
liabilities
|
5,004,081
|
|
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 163,965,231 and
167,404,047 shares outstanding; respectively
|
1,640
|
|
1,674
|
|
Additional paid-in
capital
|
1,652,401
|
|
1,628,904
|
|
Retained (deficit)
earnings
|
(710,087)
|
|
84,795
|
|
Accumulated other
comprehensive loss
|
(37,875)
|
|
(62,435)
|
|
Total shareholders'
equity attributable to Driven Brands Holdings Inc.
|
906,079
|
|
1,652,938
|
|
Non-controlling
interests
|
644
|
|
631
|
|
Total shareholders'
equity
|
906,723
|
|
1,653,569
|
|
Total liabilities
and shareholders' equity
|
$
5,910,804
|
|
$
6,499,898
|
|
DRIVEN BRANDS
HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
Year
Ended
|
|
(in
thousands)
|
Year ended
December 30, 2023
|
|
Year ended
December 31, 2022
|
|
Net (loss)
income
|
$
(744,962)
|
|
$
43,173
|
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
175,296
|
|
147,156
|
|
Goodwill
impairment
|
850,970
|
|
—
|
|
Trade name
impairment
|
—
|
|
125,450
|
|
Equity-based
compensation expense
|
15,300
|
|
20,583
|
|
(Gain) loss on foreign
denominated transactions
|
(2,022)
|
|
17,147
|
|
(Gain) loss on foreign
currency derivatives
|
(1,056)
|
|
21
|
|
Loss (gain) on sale and
disposal of businesses, fixed assets, and sale-leaseback
transactions
|
4,909
|
|
(34,854)
|
|
Reclassification of
interest rate hedge to income
|
(2,077)
|
|
(542)
|
|
Bad debt
expense
|
1,938
|
|
5,777
|
|
Asset impairment
costs
|
132,903
|
|
5,655
|
|
Amortization of
deferred financing costs and bond discounts
|
10,307
|
|
8,450
|
|
Benefit for deferred
income taxes
|
(125,804)
|
|
20,567
|
|
Other, net
|
24,243
|
|
(21)
|
|
Changes in assets
and liabilities, net of acquisitions:
|
|
|
|
|
Accounts and notes
receivable, net
|
13,561
|
|
(58,837)
|
|
Inventory
|
(11,731)
|
|
(22,712)
|
|
Prepaid and other
assets
|
(6,877)
|
|
(30,418)
|
|
Advertising fund assets
and liabilities, restricted
|
(16,861)
|
|
12,698
|
|
Other Assets
|
(39,814)
|
|
(23,378)
|
|
Deferred
commissions
|
418
|
|
3,407
|
|
Deferred
revenue
|
1,937
|
|
1,925
|
|
Accounts
payable
|
7,390
|
|
(34,634)
|
|
Accrued expenses and
other liabilities
|
(52,854)
|
|
2,898
|
|
Income tax
receivable
|
53
|
|
(12,335)
|
|
Cash provided by
operating activities
|
235,167
|
|
197,176
|
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(596,478)
|
|
(436,205)
|
|
Cash used in business
acquisitions, net of cash acquired
|
(59,574)
|
|
(763,061)
|
|
Proceeds from
sale-leaseback transactions
|
194,658
|
|
333,798
|
|
Proceeds from sale or
disposal of businesses and fixed assets
|
9,987
|
|
25,188
|
|
Cash used in
investing activities
|
(451,407)
|
|
(840,280)
|
|
Cash flows from
financing activities:
|
|
|
|
|
Payment of debt
extinguishment and issuance costs
|
—
|
|
(7,172)
|
|
Proceeds from the
issuance of long-term debt
|
—
|
|
365,000
|
|
Repayment of long-term
debt
|
(27,971)
|
|
(23,912)
|
|
Proceeds from revolving
lines of credit and short-term debt
|
378,000
|
|
435,000
|
|
Repayments of revolving
lines of credit and short-term debt
|
(130,000)
|
|
(435,000)
|
|
Repayment of principal
portion of finance lease liability
|
(5,165)
|
|
(3,369)
|
|
Share
repurchases
|
(49,956)
|
|
—
|
|
Purchase of equity
securities
|
(224)
|
|
—
|
|
Proceeds from the
termination of interest rate swap
|
—
|
|
10,870
|
|
Stock option
exercises
|
6,117
|
|
340
|
|
Other, net
|
(102)
|
|
1,611
|
|
Cash provided by
financing activities
|
170,699
|
|
343,368
|
|
Effect of exchange rate
changes on cash
|
484
|
|
(2,283)
|
|
Net change in cash,
cash equivalents, restricted cash, and cash included in advertising
fund
assets, restricted
|
(45,057)
|
|
(302,019)
|
|
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
|
176,522
|
|
227,110
|
|
Cash included in
advertising fund assets, restricted, end of period
|
38,537
|
|
32,871
|
|
Restricted cash, end of
period
|
657
|
|
792
|
|
Cash, cash
equivalents, restricted cash, and cash included in advertising fund
assets,
restricted, end of period
|
$
215,716
|
|
$
260,773
|
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.
Changes in Non-GAAP Definitions and Fiscal 2024
Outlook
Beginning in fiscal 2024, the Company has made certain changes
to its definitions for Adjusted net income attributable to Driven
Brands Holdings Inc. ("Adjusted Net Income"), Adjusted EPS, and
Adjusted EBITDA, that impact the comparability of the metrics to
prior periods. Specifically, the Company will no longer include
straight-line rent adjustments in its non-GAAP adjustments.
Accordingly, the Company's 2024 Adjusted EBITDA and Adjusted EPS
outlook reflects the Company's updated definition of Adjusted
EBITDA and Adjusted EPS. See "Reconciliation of Non-GAAP Financial
Measures" below for a reconciliation of the definitions prior to
fiscal 2024 to allow for like-for-like comparisons to the new
definitions for all periods presented.
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 months and year ended
December 30, 2023, compared to the three months and year ended
December 31, 2022.
|
Net (Loss) Income to
Adjusted Net Income and Adjusted Earnings Per Share
(Unaudited)
|
|
|
|
|
|
|
Three months
ended
|
|
Year
Ended
|
|
(in thousands,
except per share amounts)
|
December 30,
2023
|
|
December 31,
2022
|
|
December 30,
2023
|
|
December 31,
2022
|
|
Net (loss)
income
|
$
(13,149)
|
|
$
27,398
|
|
$
(744,962)
|
|
$
43,173
|
|
Acquisition related
costs(a)
|
5,910
|
|
5,323
|
|
13,174
|
|
15,304
|
|
Non-core items and
project costs, net(b)
|
1,230
|
|
16,805
|
|
7,343
|
|
20,241
|
|
Straight-line rent
adjustment(c)
|
4,022
|
|
3,435
|
|
18,218
|
|
14,965
|
|
Cloud computing
amortization(d)
|
932
|
|
—
|
|
1,923
|
|
—
|
|
Equity-based
compensation expense(e)
|
5,570
|
|
8,424
|
|
15,300
|
|
20,583
|
|
Foreign currency
transaction (gain) loss,
net(f)
|
(3,081)
|
|
(13,322)
|
|
(3,078)
|
|
17,168
|
|
Bad debt
recovery(g)
|
—
|
|
—
|
|
—
|
|
(449)
|
|
Goodwill
impairment(h)
|
—
|
|
—
|
|
850,970
|
|
—
|
|
Trade name
impairment(i)
|
—
|
|
—
|
|
—
|
|
125,450
|
|
Asset sale leaseback
(gain) loss, impairment
and closed store expenses(j)
|
19,777
|
|
(8,835)
|
|
139,414
|
|
(29,083)
|
|
Amortization related to
acquired intangible
assets(k)
|
5,192
|
|
8,775
|
|
28,756
|
|
27,059
|
|
Provision for uncertain
tax positions(l)
|
(354)
|
|
(224)
|
|
(354)
|
|
(148)
|
|
Valuation allowance for
deferred tax asset(m)
|
17,729
|
|
3,051
|
|
17,729
|
|
3,051
|
|
Adjusted net income
before tax impact of
adjustments
|
43,778
|
|
50,830
|
|
344,433
|
|
257,314
|
|
Tax impact of
adjustments(n)
|
(13,092)
|
|
(8,641)
|
|
(188,544)
|
|
(49,437)
|
|
Adjusted net
income
|
30,686
|
|
42,189
|
|
155,889
|
|
207,877
|
|
Net loss attributable
to non-controlling
interest
|
—
|
|
—
|
|
—
|
|
(15)
|
|
Adjusted Net Income
attributable to
Driven Brands Holdings Inc., as defined
through fiscal 2023
|
$
30,686
|
|
$
42,189
|
|
$
155,889
|
|
$
207,892
|
|
Straight-line rent
adjustment(c)
|
$
(4,022)
|
|
$
(3,435)
|
|
$
(18,218)
|
|
$
(14,965)
|
|
Income tax effect of
above item
|
$
1,121
|
|
$
1,043
|
|
$
4,790
|
|
$
3,870
|
|
Adjusted Net Income
attributable to
Driven Brands Holdings Inc., as defined
beginning fiscal 2024
|
$
27,785
|
|
$
39,797
|
|
$
142,461
|
|
$
196,797
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings Per
Share, as defined
through fiscal 2023
|
|
|
|
|
|
|
|
|
Basic1
|
$
0.19
|
|
$
0.25
|
|
$
0.94
|
|
$
1.25
|
|
Diluted1
|
$
0.19
|
|
$
0.25
|
|
$
0.93
|
|
$
1.22
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings Per
Share, as defined
beginning fiscal 2024
|
|
|
|
|
|
|
|
|
Basic1
|
$
0.17
|
|
$
0.24
|
|
$
0.86
|
|
$
1.18
|
|
Diluted1
|
$
0.17
|
|
$
0.23
|
|
$
0.85
|
|
$
1.16
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
|
|
|
|
|
|
|
Basic
|
159,573
|
|
162,744
|
|
161,917
|
|
162,762
|
|
Diluted
|
161,361
|
|
166,810
|
|
164,100
|
|
166,743
|
|
(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 less than $1 million and $3 million for the three
months and year ended December 30, 2023, respectively, and Adjusted
Net Income attributable to participating securities used in the
diluted earnings per share calculation was less than $1 million and
$2 million for the three months and year ended December 30, 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 months and
year ended December 30, 2023, compared to the three months and
year ended December 31, 2022.
|
Net Income (Loss) to
Adjusted EBITDA Reconciliation (Unaudited)
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Year
Ended
|
|
(in
thousands)
|
December 30,
2023
|
|
December 31,
2022
|
|
December 30,
2023
|
|
December 31,
2022
|
|
Net (loss)
income
|
$
(13,149)
|
|
$
27,398
|
|
$
(744,962)
|
|
$
43,173
|
|
Income tax (benefit)
expense
|
17,883
|
|
16,575
|
|
(102,689)
|
|
25,167
|
|
Interest expense,
net
|
43,892
|
|
35,150
|
|
164,196
|
|
114,096
|
|
Depreciation and
amortization
|
46,040
|
|
39,528
|
|
175,296
|
|
147,156
|
|
EBITDA
|
94,666
|
|
118,651
|
|
(508,159)
|
|
329,592
|
|
Acquisition related
costs(a)
|
5,910
|
|
5,323
|
|
13,174
|
|
15,304
|
|
Non-core items and
project costs, net(b)
|
1,230
|
|
16,805
|
|
7,343
|
|
20,241
|
|
Straight-line rent
adjustment(c)
|
4,022
|
|
3,435
|
|
18,218
|
|
14,965
|
|
Cloud computing
amortization(d)
|
932
|
|
—
|
|
1,923
|
|
—
|
|
Equity-based
compensation expense(e)
|
5,570
|
|
8,424
|
|
15,300
|
|
20,583
|
|
Foreign currency
transaction (gain) loss, net(f)
|
(3,081)
|
|
(13,322)
|
|
(3,078)
|
|
17,168
|
|
Bad debt
recovery(g)
|
—
|
|
—
|
|
—
|
|
(449)
|
|
Goodwill
impairment(h)
|
—
|
|
—
|
|
850,970
|
|
—
|
|
Trade name
impairment(i)
|
—
|
|
—
|
|
—
|
|
125,450
|
|
Asset sale leaseback
(gain) loss, impairment
and closed store expenses(j)
|
19,777
|
|
(8,835)
|
|
139,414
|
|
(29,083)
|
|
Adjusted EBITDA, as
defined through fiscal
2023
|
$
129,026
|
|
$
130,481
|
|
$
535,105
|
|
$
513,771
|
|
Straight-line rent
adjustment(c)
|
$
(4,022)
|
|
$
(3,435)
|
|
$
(18,218)
|
|
$
(14,965)
|
|
Adjusted EBITDA, as
defined beginning
fiscal 2024
|
$
125,004
|
|
$
127,046
|
|
$
516,887
|
|
$
498,806
|
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. A $15
million change in estimate related to the Tax Receivable Agreement
that we entered into at the IPO related to the filing of our 2021
tax returns was recorded in the fourth quarter of 2022.
|
|
|
|
(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)
|
Includes non-cash
amortization expenses relating to the amortization of cloud
computing arrangements.
|
|
|
|
(e)
|
Represents
non-cash equity-based compensation expense.
|
|
|
|
(f)
|
Represents foreign
currency transaction (gains) losses, net that primarily related to
the remeasurement of our intercompany loans as well as unrealized
gains and losses on remeasurement of cross currency swaps and
forward contracts.
|
|
|
|
(g)
|
Represents the recovery
of previously uncollectible receivables outside of normal
operations.
|
|
|
|
(h)
|
Relates to
goodwill impairment charges within the Car Wash segment.
|
|
|
|
(i)
|
Certain
indefinite-lived Car Wash trade names were impaired as the Company
elected to discontinue their use.
|
|
|
|
(j)
|
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.
|
|
|
|
(k)
|
Consists of
amortization related to acquired intangible assets as reflected
within depreciation and amortization in the unaudited consolidated
statements of operations.
|
|
|
|
(l)
|
Represents uncertain
tax positions recorded for tax positions, inclusive of interest and
penalties.
|
|
|
|
(m)
|
Represents valuation
allowances on income tax carryforwards in certain domestic and
foreign jurisdictions that are not more likely than not to be
realized
|
|
|
|
(n)
|
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
|
|
Year
Ended
|
|
(in
thousands)
|
December 30,
2023
|
|
December 31,
2022
|
|
December 30,
2023
|
|
December 31,
2022
|
|
Segment Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
Maintenance
|
$
87,549
|
|
$
77,284
|
|
$
332,781
|
|
$
262,608
|
|
Car Wash
|
31,042
|
|
36,222
|
|
143,043
|
|
184,717
|
|
Paint, Collision &
Glass
|
31,745
|
|
34,600
|
|
141,469
|
|
135,447
|
|
Platform
Services
|
18,586
|
|
18,067
|
|
80,570
|
|
72,538
|
|
Corporate and
other
|
(37,839)
|
|
(34,739)
|
|
(156,927)
|
|
(138,661)
|
|
Store opening
costs
|
(2,057)
|
|
(953)
|
|
(5,831)
|
|
(2,878)
|
|
Adjusted EBITDA, as
defined through
fiscal 2023
|
$
129,026
|
|
$
130,481
|
|
$
535,105
|
|
$
513,771
|
|
|
|
Three months
ended
|
|
Year
Ended
|
|
(in
thousands)
|
December 30,
2023
|
|
December 31,
2022
|
|
December 30,
2023
|
|
December 31,
2022
|
|
Segment Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
Maintenance
|
$
86,969
|
|
$
76,433
|
|
$
329,498
|
|
$
258,470
|
|
Car Wash
|
27,694
|
|
33,824
|
|
128,996
|
|
175,326
|
|
Paint, Collision &
Glass
|
31,519
|
|
34,474
|
|
140,569
|
|
134,818
|
|
Platform
Services
|
18,569
|
|
18,034
|
|
80,492
|
|
72,383
|
|
Corporate and
other
|
(37,690)
|
|
(34,766)
|
|
(156,837)
|
|
(139,313)
|
|
Store opening
costs
|
(2,057)
|
|
(953)
|
|
(5,831)
|
|
(2,878)
|
|
Adjusted EBITDA, as
defined beginning
fiscal 2024(1)
|
$
125,004
|
|
$
127,046
|
|
$
516,887
|
|
$
498,806
|
|
(1) For
the three months ended April 1, 2023; July 1, 2023; and September
30, 2023, the Adjusted EBITDA, as defined beginning fiscal 2024,
would have been $123,463; $146,370; and $122,049,
respectively.
|
|
DRIVEN BRANDS
HOLDINGS INC. AND SUBSIDIARIES
ADDITIONAL
INFORMATION ON KEY PERFORMANCE INDICATORS
(UNAUDITED)
|
|
|
|
Three months ended
December 30, 2023
|
|
(in
thousands)
|
|
Maintenance
|
|
Car
Wash
|
|
Paint,
Collision
&
Glass
|
|
Platform
Services
|
|
Total
|
|
System-wide
Sales
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
stores
|
|
$
266,801
|
|
$
—
|
|
$
766,717
|
|
$
73,778
|
|
$
1,107,296
|
|
Company-operated
stores
|
|
203,963
|
|
93,164
|
|
68,632
|
|
909
|
|
366,668
|
|
Independently operated
stores
|
|
—
|
|
38,748
|
|
—
|
|
—
|
|
38,748
|
|
Total System-wide
Sales
|
|
$
470,764
|
|
$
131,912
|
|
$
835,349
|
|
$
74,687
|
|
$
1,512,712
|
|
|
|
|
|
|
|
|
|
|
|
|
Store Count (in
whole numbers)
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
stores
|
|
1,134
|
|
—
|
|
1,647
|
|
205
|
|
2,986
|
|
Company-operated
stores
|
|
652
|
|
391
|
|
241
|
|
1
|
|
1,285
|
|
Independently operated
stores
|
|
—
|
|
717
|
|
—
|
|
—
|
|
717
|
|
Total Store
Count
|
|
1,786
|
|
1,108
|
|
1,888
|
|
206
|
|
4,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2022
|
|
(in
thousands)
|
|
Maintenance
|
|
Car
Wash
|
|
Paint,
Collision
&
Glass
|
|
Platform
Services
|
|
Total
|
|
System-wide
Sales
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
stores
|
|
$
253,074
|
|
$
—
|
|
$
719,646
|
|
$
91,801
|
|
$
1,064,521
|
|
Company-operated
stores
|
|
195,309
|
|
95,976
|
|
74,576
|
|
1,060
|
|
366,921
|
|
Independently operated
stores
|
|
—
|
|
36,657
|
|
—
|
|
—
|
|
36,657
|
|
Total System-wide
Sales
|
|
$
448,383
|
|
$
132,633
|
|
$
794,222
|
|
$
92,861
|
|
$
1,468,099
|
|
|
|
|
|
|
|
|
|
|
|
|
Store Count (in
whole numbers)
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
stores
|
|
1,052
|
|
—
|
|
1,628
|
|
202
|
|
2,882
|
|
Company-operated
stores
|
|
593
|
|
390
|
|
218
|
|
1
|
|
1,202
|
|
Independently operated
stores
|
|
—
|
|
721
|
|
—
|
|
—
|
|
721
|
|
Total Store
Count
|
|
1,645
|
|
1,111
|
|
1,846
|
|
203
|
|
4,805
|
|
DRIVEN BRANDS
HOLDINGS INC. AND SUBSIDIARIES
ADDITIONAL
INFORMATION ON KEY PERFORMANCE INDICATORS
(UNAUDITED)
|
|
|
|
Year ended December
30, 2023
|
|
(in
thousands)
|
|
Maintenance
|
|
Car
Wash
|
|
Paint,
Collision
&
Glass
|
|
Platform
Services
|
|
Total
|
|
System-wide
Sales
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
stores
|
|
$
1,090,457
|
|
$
—
|
|
$
3,072,137
|
|
$
398,386
|
|
$
4,560,980
|
|
Company-operated
stores
|
|
809,356
|
|
395,357
|
|
317,428
|
|
4,212
|
|
1,526,353
|
|
Independently operated
stores
|
|
—
|
|
196,395
|
|
—
|
|
—
|
|
196,395
|
|
Total System-wide
Sales
|
|
$
1,899,813
|
|
$
591,752
|
|
$
3,389,565
|
|
$
402,598
|
|
$
6,283,728
|
|
|
|
|
|
|
|
|
|
|
|
|
Store Count (in
whole numbers)
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
stores
|
|
1,134
|
|
—
|
|
1,647
|
|
205
|
|
2,986
|
|
Company-operated
stores
|
|
652
|
|
391
|
|
241
|
|
1
|
|
1,285
|
|
Independently operated
stores
|
|
—
|
|
717
|
|
—
|
|
—
|
|
717
|
|
Total Store
Count
|
|
1,786
|
|
1,108
|
|
1,888
|
|
206
|
|
4,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December
31, 2022
|
|
(in
thousands)
|
|
Maintenance
|
|
Car
Wash
|
|
Paint,
Collision
&
Glass
|
|
Platform
Services
|
|
Total
|
|
System-wide
Sales
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
stores
|
|
$
923,153
|
|
$
—
|
|
$
2,723,047
|
|
$
440,691
|
|
$
4,086,891
|
|
Company-operated
stores
|
|
692,947
|
|
390,502
|
|
235,924
|
|
$
5,035
|
|
1,324,408
|
|
Independently operated
stores
|
|
—
|
|
195,157
|
|
—
|
|
—
|
|
195,157
|
|
Total System-wide
Sales
|
|
$
1,616,100
|
|
$
585,659
|
|
$
2,958,971
|
|
$
445,726
|
|
$
5,606,456
|
|
|
|
|
|
|
|
|
|
|
|
|
Store Count (in
whole numbers)
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
stores
|
|
1,052
|
|
—
|
|
1,628
|
|
202
|
|
2,882
|
|
Company-operated
stores
|
|
593
|
|
390
|
|
218
|
|
1
|
|
1,202
|
|
Independently operated
stores
|
|
—
|
|
721
|
|
—
|
|
—
|
|
721
|
|
Total Store
Count
|
|
1,645
|
|
1,111
|
|
1,846
|
|
203
|
|
4,805
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/driven-brands-holdings-inc-reports-fourth-quarter-and-fiscal-year-2023-results-302068134.html
SOURCE Driven Brands