DRVN Driven Brands Holdings Inc

--15th consecutive quarter of same store sales growth--

--Take 5 Oil Change delivers 15% revenue growth and 5% same store sales growth--

--Net Loss of $15 million and Adjusted EBITDA of $139 million--

--Re-affirms FY24 Revenue, Adj. EBITDA and Adj. EPS outlook excluding disposition--

Driven Brands Holdings Inc. (NASDAQ: DRVN) (“Driven Brands” or the “Company”) today reported financial results for the third quarter ending September 28, 2024.

For the third quarter, Driven Brands delivered revenue of $592 million, up 2% versus the prior year. System-wide sales were $1.6 billion, up 2% versus the prior year primarily driven by 1.1% same store sales growth and 56 net new units.

Net loss was $14.9 million or $0.09 per diluted share versus a net loss of $799.3 million or $4.83 per diluted share in the prior year. Adjusted Net Income1 was $41.8 million or $0.26 per diluted share versus $29.9 million or $0.18 per diluted share in the prior year. Adjusted EBITDA1 was $138.8 million, up 14% versus the prior year.

“We are proud to report our 15th consecutive quarter of same store sales growth, a testament to the reliable one-two punch of Take 5 Oil Change and our stable franchise businesses. In particular, Take 5 Oil Change continues to execute at a high level, and we anticipate continued growth supported by our robust unit pipeline. Our performance was further supplemented by the steady results of our legacy franchise brands,” said Jonathan Fitzpatrick, President and Chief Executive Officer.

“We have achieved our net leverage target of 4.5x ahead of schedule and remain committed to further deleveraging. In the remainder of the year, we look to continue our momentum by delivering our financial outlook and positioning Driven for continued growth.” Fitzpatrick concluded.

Third Quarter 2024 Key Performance Indicators by Segment

 

System-wide Sales (in millions)

Store Count

Same-Store Sales2

Revenue (in millions)

Segment Adjusted EBITDA (in millions)

Maintenance

$ 535.9

1,899

3.0 %

$ 278.2

$ 96.7

Car Wash

140.4

1,107

1.8 %

142.2

25.6

Paint, Collision & Glass

857.2

1,897

1.3 %

109.0

34.7

Platform Services

108.2

206

N/A

52.2

22.5

Corporate / Other

N/A

N/A

N/A

10.1

 

Total

$ 1,641.8

5,109

1.1 %

$ 591.7

Capital and Liquidity

The Company ended the third quarter with total liquidity of $655.3 million consisting of $204.2 million in cash and cash equivalents and $451.1 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility. This did not include the additional $135.0 million Series 2022 Class A-1 Notes that expand the Company’s variable funding note borrowing capacity if the Company elects to exercise them, assuming certain conditions continue to be met.

Fiscal Year 2024 Outlook

The Company is re-affirming its prior outlook; the following reflects the impact of sale of our Canadian distribution business, which is expected to reduce full-year revenue by approximately $18 million and adjusted EBITDA by approximately $6 million.

 

Original Outlook

Outlook Adjusted for Disposition

Current Range Expectations

Revenue

~$2.35 - $2.45 billion

~$2.33 - $2.43 billion

Low-end

Adjusted EBITDA1

~$535 - $565 million

~$529 - $559 million

Mid - to High-end

Adjusted EPS1

~$0.88 - $1.00

~$0.88 - $1.00

High-end

The Company also expects:

• Same-store sales growth of 1% to 3%

• Net store growth of approximately 205 to 220

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

________________

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

 

2 The Company does not provide same store sales results for the Platform Services segment because it only applied to the 1-800-Radiator brand which is not a representative indicator of the segment’s performance. 1-800-Radiator’s same store sales performance is included in the Company’s overall same store sales results.

Conference Call

Driven Brands will host a conference call to discuss third quarter 2024 results today, Thursday, October 31, 2024, at 8:30 a.m. ET. The call will be available by webcast and can be accessed by visiting Driven Brands’ Investor Relations website at investors.drivenbrands.com. A replay of the call will be available for at least three months.

About Driven Brands

Driven Brands™, headquartered in Charlotte, NC, is the largest automotive services company in North America, providing a range of consumer and commercial automotive needs, including paint, collision, glass, vehicle repair, oil change, maintenance and car wash. Driven Brands is the parent company of some of North America’s leading automotive service businesses including Take 5 Oil Change®, Take 5 Car Wash®, Meineke Car Care Centers®, Maaco®, 1-800-Radiator & A/C®, Auto Glass Now®, and CARSTAR®. Driven Brands has more than 5,100 locations across 14 countries, and services approximately 70 million vehicles annually. Driven Brands’ network generates approximately $2.3 billion in annual revenue from approximately $6.4 billion in system-wide sales.

Disclosure Regarding Forward-Looking Statements

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

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

 

Three Months Ended

 

Nine Months Ended

(in thousands, except per share amounts)

September 28, 2024

 

September 30, 2023

 

September 28, 2024

 

September 30, 2023

Net Revenue:

 

 

 

 

 

 

 

Franchise royalties and fees

$

49,475

 

 

$

47,362

 

 

$

144,549

 

$

140,682

 

Company-operated store sales

 

388,132

 

 

 

389,041

 

 

 

1,157,269

 

 

1,159,685

 

Independently-operated store sales

 

49,959

 

 

 

43,582

 

 

 

163,286

 

 

157,647

 

Advertising contributions

 

26,823

 

 

 

27,121

 

 

 

75,804

 

 

73,547

 

Supply and other revenue

 

77,290

 

 

 

73,928

 

 

 

234,563

 

 

218,791

 

Total net revenue

 

591,679

 

 

 

581,034

 

 

 

1,775,471

 

 

1,750,352

 

Operating Expenses:

 

 

 

 

 

 

 

Company-operated store expenses

 

242,073

 

 

 

262,282

 

 

 

738,300

 

 

762,731

 

Independently-operated store expenses

 

29,382

 

 

 

25,773

 

 

 

90,693

 

 

87,095

 

Advertising expenses

 

26,823

 

 

 

27,121

 

 

 

75,804

 

 

73,547

 

Supply and other expenses

 

35,790

 

 

 

38,816

 

 

 

112,560

 

 

118,188

 

Selling, general, and administrative expenses

 

149,766

 

 

 

123,012

 

 

 

387,291

 

 

332,155

 

Acquisition related costs

 

(606

)

 

 

1,667

 

 

 

1,459

 

 

7,264

 

Store opening costs

 

1,476

 

 

 

1,372

 

 

 

3,679

 

 

3,774

 

Depreciation and amortization

 

43,357

 

 

 

45,639

 

 

 

131,219

 

 

129,256

 

Goodwill impairment

 

—

 

 

 

850,970

 

 

 

—

 

 

850,970

 

Asset impairment charges and lease terminations

 

24,111

 

 

 

111,239

 

 

 

55,934

 

 

117,450

 

Total operating expenses

 

552,172

 

 

 

1,487,891

 

 

 

1,596,939

 

 

2,482,430

 

Operating income (loss)

 

39,507

 

 

 

(906,857

)

 

 

178,532

 

 

(732,078

)

Other expenses, net:

 

 

 

 

 

 

 

Interest expense, net

 

43,677

 

 

 

41,292

 

 

 

119,245

 

 

120,304

 

Foreign currency transaction loss, net

 

765

 

 

 

2,980

 

 

 

5,767

 

 

3

 

Loss on debt extinguishment

 

205

 

 

 

—

 

 

 

205

 

 

—

 

Other expense, net

 

44,647

 

 

 

44,272

 

 

 

125,217

 

 

120,307

 

Income (loss) before taxes

 

(5,140

)

 

 

(951,129

)

 

 

53,315

 

 

(852,385

)

Income tax expense (benefit)

 

9,807

 

 

 

(151,818

)

 

 

33,842

 

 

(120,572

)

Net (loss) income

 

(14,947

)

 

 

(799,311

)

 

 

19,473

 

 

(731,813

)

 

 

 

 

 

 

 

 

(Loss) Earnings per share:

 

 

 

 

 

 

 

Basic

$

(0.09

)

 

$

(4.82

)

 

$

0.12

 

$

(4.40

)

Diluted

$

(0.09

)

 

$

(4.83

)

 

$

0.12

 

$

(4.41

)

Weighted average shares outstanding

 

 

 

 

 

 

 

Basic

 

159,804

 

 

 

162,398

 

 

 

159,743

 

 

162,698

 

Diluted

 

159,804

 

 

 

162,398

 

 

 

160,713

 

 

162,698

 

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

(in thousands, except share and per share amounts)

September 28, 2024

 

December 30, 2023

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

204,181

 

 

$

176,522

 

Restricted cash

 

4,414

 

 

 

657

 

Accounts and notes receivable, net

 

171,887

 

 

 

151,259

 

Inventory

 

69,857

 

 

 

83,171

 

Prepaid and other assets

 

37,483

 

 

 

46,714

 

Income tax receivable

 

18,429

 

 

 

15,928

 

Assets held for sale

 

185,985

 

 

 

301,229

 

Advertising fund assets, restricted

 

54,939

 

 

 

45,627

 

Total current assets

 

747,175

 

 

 

821,107

 

Other assets

 

116,046

 

 

 

56,565

 

Property and equipment, net

 

1,418,352

 

 

 

1,438,496

 

Operating lease right-of-use assets

 

1,362,917

 

 

 

1,389,316

 

Deferred commissions

 

6,955

 

 

 

6,312

 

Intangibles, net

 

677,277

 

 

 

739,402

 

Goodwill

 

1,427,467

 

 

 

1,455,946

 

Deferred tax assets

 

3,627

 

 

 

3,660

 

Total assets

$

5,759,816

 

 

$

5,910,804

 

Liabilities and shareholders' equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

78,759

 

 

$

67,526

 

Accrued expenses and other liabilities

 

254,341

 

 

 

242,171

 

Income tax payable

 

1,016

 

 

 

5,404

 

Current portion of long-term debt

 

32,872

 

 

 

32,673

 

Income tax receivable liability

 

—

 

 

 

56,001

 

Advertising fund liabilities

 

26,668

 

 

 

23,392

 

Total current liabilities

 

393,656

 

 

 

427,167

 

Long-term debt

 

2,732,572

 

 

 

2,910,812

 

Deferred tax liabilities

 

164,713

 

 

 

154,742

 

Operating lease liabilities

 

1,311,895

 

 

 

1,332,519

 

Income tax receivable liability

 

133,611

 

 

 

117,915

 

Deferred revenue

 

31,750

 

 

 

30,507

 

Long-term accrued expenses and other liabilities

 

28,812

 

 

 

30,419

 

Total liabilities

 

4,797,009

 

 

 

5,004,081

 

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

 

—

 

 

 

—

 

Common stock, $0.01 par value, 900,000,000 shares authorized: and 164,113,794 and 163,965,231 shares outstanding; respectively

 

1,641

 

 

 

1,640

 

Additional paid-in capital

 

1,687,948

 

 

 

1,652,401

 

Accumulated deficit

 

(690,614

)

 

 

(710,087

)

Accumulated other comprehensive loss

 

(36,168

)

 

 

(37,875

)

Total shareholders’ equity attributable to Driven Brands Holdings Inc.

 

962,807

 

 

 

906,079

 

Non-controlling interests

 

—

 

 

 

644

 

Total shareholders' equity

 

962,807

 

 

 

906,723

 

Total liabilities and shareholders' equity

$

5,759,816

 

 

$

5,910,804

 

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

Nine Months Ended

(in thousands)

September 28, 2024

 

September 30, 2023

Net income (loss)

$

19,473

 

 

$

(731,813

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

131,219

 

 

 

129,256

 

Goodwill impairment

 

—

 

 

 

850,970

 

Equity-based compensation expense

 

35,641

 

 

 

9,730

 

Loss on foreign denominated transactions

 

8,744

 

 

 

3,706

 

Gain on foreign currency derivatives

 

(2,977

)

 

 

(3,704

)

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

 

(4,102

)

 

 

1,730

 

Reclassification of interest rate hedge to income

 

(1,560

)

 

 

(1,358

)

Bad debt expense

 

5,759

 

 

 

1,244

 

Asset impairment charges and lease terminations

 

55,934

 

 

 

117,450

 

Amortization of deferred financing costs and bond discounts

 

5,877

 

 

 

6,287

 

Amortization of cloud computing

 

3,436

 

 

 

991

 

Provision for deferred income taxes

 

13,571

 

 

 

(134,266

)

Loss on extinguishment of debt

 

205

 

 

 

—

 

Other, net

 

(19,489

)

 

 

23,441

 

Changes in assets and liabilities, net of acquisitions:

 

 

 

Accounts and notes receivable, net

 

(37,752

)

 

 

2,464

 

Inventory

 

1,337

 

 

 

(12,531

)

Prepaid and other assets

 

7,648

 

 

 

(3,909

)

Advertising fund assets and liabilities, restricted

 

(4,209

)

 

 

(10,923

)

Other assets

 

(63,015

)

 

 

(29,210

)

Deferred commissions

 

642

 

 

 

658

 

Deferred revenue

 

1,248

 

 

 

1,961

 

Accounts payable

 

11,504

 

 

 

24,913

 

Accrued expenses and other liabilities

 

13,754

 

 

 

(29,442

)

Income tax receivable

 

(8,234

)

 

 

(5,612

)

Cash provided by operating activities

 

174,654

 

 

 

212,033

 

Cash flows from investing activities:

 

 

 

Capital expenditures

 

(185,453

)

 

 

(482,633

)

Cash used in business acquisitions, net of cash acquired

 

(2,759

)

 

 

(53,641

)

Proceeds from sale leaseback transactions

 

17,944

 

 

 

172,230

 

Proceeds from sale or disposal of businesses and fixed assets

 

255,548

 

 

 

2,837

 

Cash provided by (used in) investing activities

 

85,280

 

 

 

(361,207

)

Cash flows from financing activities:

 

 

 

Payment of debt extinguishment and issuance costs

 

(9,646

)

 

 

—

 

Proceeds from the issuance of long-term debt

 

274,794

 

 

 

—

 

Repayment of long-term debt

 

(422,492

)

 

 

(20,969

)

Proceeds from revolving lines of credit and short-term debt

 

46,000

 

 

 

335,000

 

Repayments of revolving lines of credit and short-term debt

 

(71,000

)

 

 

(120,000

)

Repayment of principal portion of finance lease liability

 

(4,301

)

 

 

(2,020

)

Payment of Tax Receivable Agreement

 

(38,374

)

 

 

—

 

Acquisition of non-controlling interest

 

(644

)

 

 

—

 

Share repurchases

 

—

 

 

 

(49,956

)

Tax obligations for share-based compensation

 

(998

)

 

 

—

 

Stock option exercises

 

—

 

 

 

6,117

 

Other, net

 

—

 

 

 

(322

)

Cash (used in) provided by financing activities

 

(226,661

)

 

 

147,850

 

Effect of exchange rate changes on cash

 

71

 

 

 

365

 

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

 

33,344

 

 

 

(959

)

Cash and cash equivalents, beginning of period

 

176,522

 

 

 

227,110

 

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

 

38,537

 

 

 

32,871

 

Restricted cash, beginning of period

 

657

 

 

 

792

 

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

 

215,716

 

 

 

260,773

 

Cash and cash equivalents, end of period

 

204,181

 

 

 

211,280

 

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

 

40,465

 

 

 

47,877

 

Restricted cash, end of period

 

4,414

 

 

 

657

 

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

$

249,060

 

 

$

259,814

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

Non-GAAP Financial Measures in Outlook

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

Adjusted Net Income and Adjusted Earnings Per Share

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

The tables below reflect the calculation of Adjusted Net Income and Adjusted Earnings Per Share for the three and nine months ended September 28, 2024, compared to the three and nine months ended September 30, 2023.

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

 

Three Months Ended

 

Nine Months Ended

(in thousands, except per share data)

September 28, 2024

 

September 30, 2023

 

September 28, 2024

 

September 30, 2023

Net (loss) income

$

(14,947

)

 

$

(799,311

)

 

$

19,473

 

 

$

(731,813

)

Acquisition related costs(a)

 

(606

)

 

 

1,667

 

 

 

1,459

 

 

 

7,264

 

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

 

6,426

 

 

 

1,486

 

 

 

16,263

 

 

 

6,113

 

Cloud computing amortization(c)

 

1,022

 

 

 

991

 

 

 

3,436

 

 

 

991

 

Share-based compensation expense(d)

 

12,798

 

 

 

2,681

 

 

 

35,641

 

 

 

9,730

 

Foreign currency transaction loss , net(e)

 

765

 

 

 

2,980

 

 

 

5,767

 

 

 

3

 

Goodwill impairment(f)

 

—

 

 

 

850,970

 

 

 

—

 

 

 

850,970

 

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

 

36,275

 

 

 

125,473

 

 

 

55,465

 

 

 

119,637

 

Loss on debt extinguishment (h)

 

205

 

 

 

—

 

 

 

205

 

 

 

—

 

Amortization related to acquired intangible assets(i)

 

5,980

 

 

 

9,252

 

 

 

19,528

 

 

 

23,564

 

Valuation allowance for deferred tax asset(j)

 

7,941

 

 

 

—

 

 

 

9,196

 

 

 

—

 

Adjusted net income before tax impact of adjustments

 

55,859

 

 

 

196,189

 

 

 

166,433

 

 

 

286,459

 

Tax impact of adjustments(k)

 

(14,100

)

 

 

(166,320

)

 

 

(28,543

)

 

 

(171,783

)

Adjusted net income

 

41,759

 

 

 

29,869

 

 

 

137,890

 

 

 

114,676

 

 

 

 

 

 

 

 

 

(Loss) earnings per share

 

 

 

 

 

 

 

Basic

$

(0.09

)

 

$

(4.82

)

 

$

0.12

 

 

$

(4.40

)

Diluted

$

(0.09

)

 

$

(4.83

)

 

$

0.12

 

 

$

(4.41

)

 

 

 

 

 

 

 

 

Adjusted earnings per share(1)

 

 

 

 

 

 

 

Basic

$

0.27

 

 

$

0.18

 

 

$

0.84

 

 

$

0.69

 

Diluted

$

0.26

 

 

$

0.18

 

 

$

0.84

 

 

$

0.68

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

Basic

 

159,804

 

 

 

162,398

 

 

 

159,743

 

 

 

162,698

 

Diluted

 

159,804

 

 

 

162,398

 

 

 

160,713

 

 

 

162,698

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding for Adjusted Net Income

 

 

 

 

 

 

 

Basic

 

159,804

 

 

 

162,398

 

 

 

159,743

 

 

 

162,698

 

Diluted

 

161,113

 

 

 

165,850

 

 

 

160,713

 

 

 

166,557

 

 

 

 

 

 

 

 

 

(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 $3 million for the three and nine months ended September 28, 2024, respectively. Adjusted Net Income attributable to participating securities used in the diluted earnings per share calculations was $1 million and $2 million for the three and nine months ended September 30, 2023.

Adjusted EBITDA

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

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

Net (Loss) Income to Adjusted EBITDA Reconciliation (Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

(in thousands)

September 28, 2024

 

September 30, 2023

 

September 28, 2024

 

September 30, 2023

Net (loss) income

$

(14,947

)

 

$

(799,311

)

 

$

19,473

 

$

(731,813

)

Income tax expense (benefit)

 

9,807

 

 

 

(151,818

)

 

 

33,842

 

 

(120,572

)

Interest expense, net

 

43,677

 

 

 

41,292

 

 

 

119,245

 

 

120,304

 

Depreciation and amortization

 

43,357

 

 

 

45,639

 

 

 

131,219

 

 

129,256

 

EBITDA

 

81,894

 

 

 

(864,198

)

 

 

303,779

 

 

(602,825

)

Acquisition related costs(a)

 

(606

)

 

 

1,667

 

 

 

1,459

 

 

7,264

 

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

 

6,426

 

 

 

1,486

 

 

 

16,263

 

 

6,113

 

Cloud computing amortization(c)

 

1,022

 

 

 

991

 

 

 

3,436

 

 

991

 

Share-based compensation expense(d)

 

12,798

 

 

 

2,681

 

 

 

35,641

 

 

9,730

 

Foreign currency transaction loss, net(e)

 

765

 

 

 

2,980

 

 

 

5,767

 

 

3

 

Goodwill impairment(f)

 

—

 

 

 

850,970

 

 

 

—

 

 

850,970

 

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

 

36,275

 

 

 

125,473

 

 

 

55,465

 

 

119,637

 

Loss on debt extinguishment (h)

$

205

 

 

 

—

 

 

 

205

 

 

—

 

Adjusted EBITDA

$

138,779

 

 

$

122,050

 

 

$

422,015

 

$

391,883

 

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

(a)

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

(b)

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

(c)

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

(d)

Represents non-cash shared-based compensation expense.

(e)

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

(f)

Relates to a goodwill impairment within the Car Wash segment.

(g)

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.

(h)

Represents charges incurred related to the Company’s partial repayment of Senior Secured Notes in conjunction with the sale of its Canadian distribution business.

(i)

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

(j)

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

(k)

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

 

Nine Months Ended

(in thousands)

September 28, 2024

 

September 30, 2023

 

September 28, 2024

 

September 30, 2023

Segment Adjusted EBITDA:

 

 

 

 

 

 

 

Maintenance

$

96,666

 

 

$

85,483

 

 

$

291,037

 

 

$

242,528

 

Car Wash

 

25,563

 

 

 

20,494

 

 

 

88,469

 

 

 

101,303

 

Paint, Collision & Glass

 

34,703

 

 

 

32,545

 

 

 

100,695

 

 

 

109,052

 

Platform Services

 

22,467

 

 

 

22,396

 

 

 

67,649

 

 

 

61,923

 

Corporate and other

 

(39,144

)

 

 

(37,497

)

 

 

(122,156

)

 

 

(119,149

)

Store opening costs

 

(1,476

)

 

 

(1,372

)

 

 

(3,679

)

 

 

(3,774

)

Adjusted EBITDA

$

138,779

 

 

$

122,049

 

 

$

422,015

 

 

$

391,883

 

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

ADDITIONAL INFORMATION ON KEY PERFORMANCE INDICATORS (UNAUDITED)

 

 

Three Months Ended September 28, 2024

(in thousands)

Maintenance

 

Car Wash

 

Paint, Collision & Glass

 

Platform Services

 

Total

System-wide Sales

 

 

 

 

 

 

 

 

 

Franchise stores

$

304,892

 

$

—

 

$

791,830

 

$

106,943

 

$

1,203,665

Company-operated stores

 

231,050

 

 

90,451

 

 

65,380

 

 

1,251

 

 

388,132

Independently operated stores

 

—

 

 

49,959

 

 

—

 

 

—

 

 

49,959

Total System-wide Sales

$

535,942

 

$

140,410

 

$

857,210

 

$

108,194

 

$

1,641,756

 

 

 

 

 

 

 

 

 

 

Store Count (in whole numbers)

 

 

 

 

 

 

 

 

 

Franchise stores

 

1,204

 

 

—

 

 

1,669

 

 

205

 

 

3,078

Company-operated stores

 

695

 

 

388

 

 

228

 

 

1

 

 

1,312

Independently operated stores

 

—

 

 

719

 

 

—

 

 

—

 

 

719

Total Store Count

 

1,899

 

 

1,107

 

 

1,897

 

 

206

 

 

5,109

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2023

(in thousands)

Maintenance

 

Car Wash

 

Paint, Collision & Glass

 

Platform Services

 

Total

System-wide Sales

 

 

 

 

 

 

 

 

 

Franchise stores

$

298,022

 

$

—

 

$

760,437

 

$

117,957

 

$

1,176,416

Company-operated stores

 

204,460

 

 

98,132

 

 

85,207

 

 

1,242

 

 

389,041

Independently operated stores

 

—

 

 

43,582

 

 

—

 

 

—

 

 

43,582

Total System-wide Sales

$

502,482

 

$

141,714

 

$

845,644

 

$

119,199

 

$

1,609,039

 

 

 

 

 

 

 

 

 

 

Store Count (in whole numbers)

 

 

 

 

 

 

 

 

 

Franchise stores

 

1,108

 

 

—

 

 

1,662

 

 

207

 

 

2,977

Company-operated stores

 

624

 

 

418

 

 

258

 

 

1

 

 

1,301

Independently operated stores

 

—

 

 

715

 

 

—

 

 

—

 

 

715

Total Store Count

 

1,732

 

 

1,133

 

 

1,920

 

 

208

 

 

4,993

 

 

Nine Months Ended September 28, 2024

(in thousands)

 

Maintenance

 

Car Wash

 

Paint, Collision & Glass

 

Platform Services

 

Total

System-wide Sales

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

$

888,316

 

$

—

 

$

2,406,078

 

$

298,744

 

$

3,593,138

Company-operated stores

 

 

682,730

 

 

275,889

 

 

195,412

 

 

3,238

 

 

1,157,269

Independently operated stores

 

 

—

 

 

163,286

 

 

—

 

 

—

 

 

163,286

Total System-wide Sales

 

$

1,571,046

 

$

439,175

 

$

2,601,490

 

$

301,982

 

$

4,913,693

 

 

 

 

 

 

 

 

 

 

 

Store Count (in whole numbers)

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

 

1,204

 

 

—

 

 

1,669

 

 

205

 

 

3,078

Company-operated stores

 

 

695

 

 

388

 

 

228

 

 

1

 

 

1,312

Independently operated stores

 

 

—

 

 

719

 

 

—

 

 

—

 

 

719

Total Store Count

 

 

1,899

 

 

1,107

 

 

1,897

 

 

206

 

 

5,109

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2023

(in thousands)

 

Maintenance

 

Car Wash

 

Paint, Collision & Glass

 

Platform Services

 

Total

System-wide Sales

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

$

823,656

 

$

—

 

$

2,305,420

 

$

324,608

 

$

3,453,684

Company-operated stores

 

 

605,393

 

 

302,193

 

 

248,796

 

$

3,303

 

 

1,159,685

Independently operated stores

 

 

—

 

 

157,647

 

 

—

 

 

—

 

 

157,647

Total System-wide Sales

 

$

1,429,049

 

$

459,840

 

$

2,554,216

 

$

327,911

 

$

4,771,016

 

 

 

 

 

 

 

 

 

 

 

Store Count (in whole numbers)

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

 

1,108

 

 

—

 

 

1,662

 

 

207

 

 

2,977

Company-operated stores

 

 

624

 

 

418

 

 

258

 

 

1

 

 

1,301

Independently operated stores

 

 

—

 

 

715

 

 

—

 

 

—

 

 

715

Total Store Count

 

 

1,732

 

 

1,133

 

 

1,920

 

 

208

 

 

4,993

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241031804831/en/

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

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