Driven Brands Holdings Inc. Reports Second Quarter Results

·23 min read
Driven Brands Holdings Inc.
Driven Brands Holdings Inc.

Delivers Strong Same-Store Sales and Net Store Growth

Reports Robust Operating Income Growth

Raises Fiscal Year 2022 Guidance

CHARLOTTE, N.C., July 27, 2022 (GLOBE NEWSWIRE) -- Driven Brands Holdings Inc. (NASDAQ: DRVN) (“Driven Brands” or the “Company”) today reported financial results for the second quarter ended June 25, 2022.

For the second quarter, revenue was $508.6 million, an increase of 36% versus the prior year. System-wide sales were $1.4 billion, an increase of 22% versus the prior year, with 7% net store growth and an increase in consolidated same-store sales of 13.2%.

The $(0.34) loss per diluted share in the second quarter was driven by a $125.5 million one-time non-cash impairment charge related to intangible assets as a result of the Company’s decision to re-brand its U.S. car wash business.

Adjusted earnings per diluted share2 was $0.35.

“We delivered strong results in the second quarter. These results are a testament to the resilience of our needs-based service offering and our ability to drive sustainable growth and cash flow leveraging a proven playbook,” said Jonathan Fitzpatrick, president and CEO.

“We have significant momentum across our business capitalizing on the benefits of our scale, the quality of our offerings, the strength of our brands, our best-in-category data and marketing capabilities, and our ability to generate robust cash flow. We are delivering against our Dream Big plan of at least $850 million of adjusted EBITDA by the end of 2026, demonstrating our ability to drive significant shareholder value over time.”

Second Quarter Highlights

  • Revenue increased 36% versus the prior year, driven by same-store sales and net store growth.

  • Consolidated same-store sales increased 13.2% for the quarter.

  • The Company added 80 net new stores during the quarter.

  • The Company recorded a net loss in the second quarter of $(57.0) million, driven by a $125.5 million one-time non-cash impairment charge related to intangible assets as a result of the Company’s decision to re-brand its U.S. car wash business.

  • Adjusted Net Income1 was $59.7 million.

  • Adjusted EBITDA3 was $135.4 million.

Second Quarter 2022 Key Performance Indicators by Segment

 

System-wide Sales (in millions)

Store Count

Same-Store Sales

Revenue
(in millions)

Segment Adjusted EBITDA4
(in millions)

Maintenance

$

399.2

1,559

15.0%

$

194.3

$

64.1

Car Wash

 

156.7

1,074

(2.7%) / 2.6%*

 

158.6

 

53.7

Paint, Collision & Glass

 

724.7

1,771

16.1%

 

95.4

 

32.9

Platform Services

 

131.3

202

11.8%

 

53.2

 

20.5

Corporate / Other

N/A 

N/A 

N/A 

 

7.1

 

Total

 $

1,411.9 

4,606 

13.2

$

508.6 

*Car Wash same-store sales declined 2.7% in the second quarter. Foreign exchange rate movement had a significant impact. Excluding the impact of foreign exchange, Car Wash same-store sales increased 2.6%. The impact of foreign exchange rate movement on the remaining segments was not significant.

Capital and Liquidity

The Company ended the second quarter with total liquidity of $488.2 million, consisting of $197.9 million in cash and cash equivalents, and $290.3 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility.

Fiscal Year 2022 Guidance

The Company has raised its guidance for the fiscal year to account for its strong operating performance and M&A activity in the first half of 2022, as well as an updated outlook for the remainder of the year. The following guidance reflects the Company’s current expectations for the fiscal year ending December 31, 2022:

  • Revenue of approximately $2.0 billion.

  • Adjusted EBITDA3 of approximately $495 million.

  • Adjusted earnings per diluted share2 of approximately $1.17.

The above guidance includes the impact of the 53rd week in fiscal year 2022. The impact of the extra week is expected to yield approximately $25 million in revenue, $5 million in Adjusted EBITDA3 and approximately $0.02 in Adjusted Earnings Per Share2.

The Company also expects:

  • Low-double-digit same-store sales growth.

  • Net store growth of approximately 340:

    • Maintenance: approximately 140 stores of which 70% will be franchised and 30% will be company-operated

    • Car Wash: approximately 40 stores which will be company-operated

    • Paint, Collision & Glass: approximately 160 stores of which 5% will be franchised and 95% will be company-operated.

The Company has not included future M&A in its guidance for fiscal year 2022.                                                                                                               

Conference Call

Driven Brands will host a conference call to discuss second quarter 2022 results today, Wednesday, July 27, 2022 at 9:00am 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 25, 2022.

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®, Meineke Car Care Centers®, Maaco®, 1-800-Radiator & A/C®, and CARSTAR®. Driven Brands has more than 4,500 locations across 15 countries, and services over 50 million vehicles annually. Driven Brands’ network generates more than $1.7 billion in annual revenue from more than $5.0 billion in system-wide sales.

Contacts

Shareholder/Analyst inquiries:

 

 

Media inquiries:

Kristy Moser

 

 

Taylor Blanchard

kristy.moser@drivenbrands.com

 

 

taylor.blanchard@drivenbrands.com

(980) 229-9450

 

 

(704) 644-8129


Disclosure Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this press release, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management, and expected market growth are forward-looking statements. In particular, forward-looking statements include, among other things, statements relating to: (i) our strategy, outlook and growth prospects; (ii) our operational and financial targets and dividend policy; (iii) general economic trends and trends in the industry and markets; and (iv) the competitive environment in which we operate. Forward-looking statements are not based on historical facts but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions, and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. It is not possible to predict or identify all such risks. These risks include, but are not limited to, the risk factors that are described under the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 25, 2021 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.

Disclosure Regarding Non-GAAP Financial Measures

In addition to the financial measures presented in this release in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company has included certain non-GAAP financial measures in this release, including Adjusted Net Income1, Adjusted Earnings Per Share2, and Adjusted EBITDA3. Management believes these non-GAAP financial measures are useful because they enable management, investors, and others to assess the operating performance of the Company and its segments. Please refer to the Reconciliation of Non-GAAP Financial Information tables located in the financial supplement in this release.

This release includes forward-looking guidance for certain non-GAAP financial measures, including Adjusted Earnings Per Share2 and Adjusted EBITDA3. These measures will differ from net income, determined in accordance with GAAP, in ways similar to those described in the Reconciliation of Non-GAAP Financial Information tables in this release. We do not provide guidance for net income, determined in accordance with GAAP, or a reconciliation of guidance for Adjusted EBITDA3 to the most directly comparable GAAP measure because the Company is not able to predict with reasonable certainty the amount or nature of all items that will be included in net income.

___________
1 “Adjusted Net Income” is calculated by eliminating from net income the adjustments described for Adjusted EBITDA, amortization related to acquired intangible assets and the tax effect of the adjustments. Please refer to Reconciliation of Non-GAAP Information tables located in the financial supplement in this release.
2 “Adjusted Earnings Per Share” represents Adjusted Net Income divided by weighted average shares (basic and diluted). Please refer to Reconciliation of Non-GAAP Information tables located in the financial supplement in this release.
3 “Adjusted EBITDA” represents earnings before interest expense, income tax expense, and depreciation and amortization, with further adjustments for acquisition-related costs, straight-line rent, equity compensation, loss on debt extinguishment and certain non-recurring, non-core, infrequent or unusual charges. Please refer to Reconciliation of Non-GAAP Information tables located in the financial supplement in this release.
4 “Segment Adjusted EBITDA” is defined as Adjusted EBITDA with a further adjustment for store opening costs. Corporate & Other costs are not allocated across segments. Segment Adjusted EBITDA is a supplemental measure of operating performance of our segments and may not be comparable to similar measures reported by other companies. Please refer to Adjusted EBITDA and Segment Adjusted EBITDA Reconciliation located in the financial supplement in this release.


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

 

Three months ended

 

Six months ended

(in thousands, except per share amounts)

 

June 25, 2022

 

June 26, 2021

 

June 25, 2022

June 26, 2021

Revenue:

 

 

 

 

 

 

 

Franchise royalties and fees

 

$

44,850

 

$

37,873

 

 

$

82,738

 

$

68,287

 

Company-operated store sales

 

 

323,885

 

 

206,198

 

 

 

616,276

 

 

390,053

 

Independently-operated store sales

 

 

54,942

 

 

56,379

 

 

 

118,031

 

 

112,542

 

Advertising contributions

 

 

22,091

 

 

19,648

 

 

 

41,789

 

 

36,903

 

Supply and other revenue

 

 

62,856

 

 

54,730

 

 

 

118,113

 

 

96,462

 

Total revenue

 

 

508,624

 

 

374,828

 

 

 

976,947

 

 

704,247

 

Operating expenses:

 

 

 

 

 

 

 

Company-operated store expenses

 

 

192,939

 

 

123,820

 

 

 

370,806

 

 

236,575

 

Independently-operated store expenses

 

 

28,843

 

 

30,792

 

 

 

62,142

 

 

61,900

 

Advertising expenses

 

 

22,091

 

 

19,648

 

 

 

41,789

 

 

36,903

 

Supply and other expenses

 

 

35,800

 

 

29,598

 

 

 

68,574

 

 

52,087

 

Selling, general and administrative expenses

 

 

97,977

 

 

77,935

 

 

 

190,197

 

 

146,984

 

Acquisition costs

 

 

3,338

 

 

389

 

 

 

7,656

 

 

2,038

 

Store opening costs

 

 

666

 

 

405

 

 

 

1,172

 

 

694

 

Depreciation and amortization

 

 

38,087

 

 

26,423

 

 

 

71,110

 

 

50,275

 

Trade name impairment

 

 

125,450

 

 

 

 

 

125,450

 

 

 

Asset impairment charges and lease terminations

 

 

(882

)

 

2,178

 

 

 

16

 

 

3,431

 

Total operating expenses

 

 

544,309

 

 

311,188

 

 

 

938,912

 

 

590,887

 

Operating income (loss)

 

 

(35,685

)

 

63,640

 

 

 

38,035

 

 

113,360

 

Other expenses, net:

 

 

 

 

 

 

 

Interest expense, net

 

 

26,270

 

 

16,612

 

 

 

51,623

 

 

34,702

 

Loss on foreign currency transactions, net

 

 

13,937

 

 

(5,229)

 

 

 

14,908

 

 

5,282

 

Loss on debt extinguishment

 

 

 

 

78

 

 

 

 

 

45,576

 

Total other expenses, net

 

 

40,207

 

 

11,461

 

 

 

66,531

 

 

85,560

 

Net income (loss) before taxes

 

 

(75,892

)

 

52,179

 

 

 

(28,496)

 

 

27,800

 

Income tax expense

 

 

(18,848

)

 

17,011

 

 

 

(5,880)

 

 

12,565

 

Net income (loss)

 

 

(57,044

)

 

35,168

 

 

 

(22,616)

 

 

15,235

 

Net income (loss) attributable to non-controlling interests

 

$

 

$

(36)

 

 

 

(15)

 

 

(30)

 

Net income (loss) attributable to Driven Brands Holdings Inc.

 

$

(57,044

)

$

35,204

 

 

$

(22,601)

 

$

15,265

 

 

 

 

 

 

 

 

 

Earnings (loss) per share(1):

 

 

 

 

 

 

 

Basic

 

$

(0.34

)

$

0.21

 

 

$

(0.14)

 

$

0.09

 

Diluted

 

$

(0.34

)

$

0.21

 

 

$

(0.14)

 

$

0.09

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

162,781

 

 

162,626

 

 

 

162,772

 

 

158,727

 

Diluted

 

 

162,781

 

 

166,512

 

 

 

162,772

 

 

162,271

 


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

June 25, 2022

 

December 25, 2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

197,853

 

 

$

523,414

 

Restricted cash

 

792

 

 

 

792

 

Accounts and notes receivable, net

 

178,201

 

 

 

117,903

 

Inventory

 

53,124

 

 

 

46,990

 

Prepaid and other assets

 

47,964

 

 

 

24,326

 

Income tax receivable

 

5,070

 

 

 

6,867

 

Advertising fund assets, restricted

 

55,596

 

 

 

45,360

 

Assets held for sale

 

3,275

 

 

 

3,275

 

Total current assets

 

541,875

 

 

 

768,927

 

Notes receivable, net

 

5,092

 

 

 

3,182

 

Property and equipment, net

 

1,481,064

 

 

 

1,350,984

 

Operating lease right-of-use assets

 

1,031,731

 

 

 

995,625

 

Deferred commissions

 

10,738

 

 

 

10,567

 

Intangibles, net

 

733,469

 

 

 

816,183

 

Goodwill

 

2,108,002

 

 

 

1,910,392

 

Deferred tax assets

 

1,360

 

 

 

1,509

 

Total assets

$

5,913,331

 

 

$

5,857,369

 

Liabilities and shareholders' equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

115,424

 

 

$

83,033

 

Accrued expenses and other liabilities

 

253,742

 

 

 

297,620

 

Income taxes payable

 

30,021

 

 

 

11,054

 

Current portion of long-term debt

 

23,590

 

 

 

26,044

 

Income tax receivable liability

 

24,255

 

 

 

24,255

 

Advertising fund liabilities

 

30,264

 

 

 

26,441

 

Total current liabilities

 

477,296

 

 

 

468,447

 

Long-term debt, net

 

2,464,909

 

 

 

2,356,320

 

Deferred tax liability

 

223,336

 

 

 

257,067

 

Operating lease liabilities

 

969,598

 

 

 

931,604

 

Income tax receivable liability

 

131,715

 

 

 

131,715

 

Deferred revenue

 

39,829

 

 

 

37,576

 

Accrued expenses and other long-term liabilities

 

23,188

 

 

 

29,398

 

Total liabilities

 

4,329,871

 

 

 

4,212,127

 

Common stock

 

1,677

 

 

 

1,674

 

Additional paid-in capital

 

1,614,927

 

 

 

1,605,890

 

Retained earnings

 

19,006

 

 

 

41,607

 

Accumulated other comprehensive loss

 

(52,796)

 

 

 

(5,028)

 

Total shareholders' equity attributable to Driven Brands Holdings Inc.

 

1,582,814

 

 

 

1,644,143

 

Non-controlling interests

 

646

 

 

 

1,099

 

Total shareholders' equity

 

1,583,460

 

 

 

1,645,242

 

Total liabilities and shareholders' equity

$

5,913,331

 

 

$

5,857,369

 


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

Six months ended

(in thousands)

June 25, 2022

 

June 26, 2021

Net income (loss)

$

                       (22,616

)

 

$

15,235

 

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

 

 

 

Depreciation and amortization

 

71,110

 

 

 

50,275

 

Trade name impairment

 

125,450

 

 

 

 

Non-cash lease cost

 

35,049

 

 

 

37,938

 

Loss on foreign denominated transactions

 

14,908

 

 

 

5,707

 

Gain on derivatives not designed as hedges

 

 

 

 

(425

)

Bad debt expense

 

936

 

 

 

1,739

 

Asset impairment costs

 

16

 

 

 

3,431

 

Amortization of deferred financing costs and bond discounts

 

4,565

 

 

 

3,619

 

Benefit (provision) for deferred income taxes

 

(31,908

)

 

 

4,742

 

Loss on extinguishment of debt

 

 

 

 

45,576

 

Other, net

 

(1,925

)

 

 

1,375

 

Changes in assets and liabilities, net of acquisitions:

 

 

 

Accounts and notes receivable, net

 

(61,461

)

 

 

(24,174

)

Inventory

 

(6,899

)

 

 

(396

)

Prepaid and other assets

 

(19,082

)

 

 

(20,885

)

Advertising fund assets and liabilities, restricted

 

(1,321

)

 

 

12,548

 

Deferred commissions

 

(178

)

 

 

(809

)

Deferred revenue

 

497

 

 

 

2,994

 

Accounts payable

 

20,209

 

 

 

3,860

 

Accrued expenses and other liabilities

 

(45,950

)

 

 

9,707

 

Income tax receivable

 

19,640

 

 

 

3,665

 

Operating lease liabilities

 

(25,651

)

 

 

(31,034

)

Cash provided by operating activities

 

75,389

 

 

 

124,688

 

Cash flows from investing activities:

 

 

 

 

Capital expenditures

 

(148,763

)

 

 

(46,222

)

Cash used in business acquisitions, net of cash acquired

 

(394,388

)

 

 

(205,556

)

Proceeds from sale-leaseback transactions

 

56,083

 

 

 

49,166

 

Proceeds from sale of company-operated stores

 

 

 

 

5,775

 

Proceeds from disposition of Denmark car wash operation

 

1,551

 

 

 

 

Proceeds from disposal of property and equipment

 

632

 

 

 

 

Cash used in investing activities

 

(484,885

)

 

 

(196,837

)

Cash flows from financing activities:

 

 

 

Payment of debt extinguishment and issuance costs

 

 

 

 

(2,408

)

Repayment of long-term debt

 

(9,682

)

 

 

(712,649

)

Proceeds from revolving lines of credit and short-term debt

 

105,000

 

 

 

213,800

 

Repayments of revolving lines of credit and short-term debt

 

 

 

 

(152,800

)

Repayment of principal portion of finance lease liability

 

(1,156

)

 

 

(1,127

)

Proceeds from initial public offering, net of underwriting discounts

 

 

 

 

661,500

 

Net proceeds from underwriters' exercise of over-allotment option

 

 

 

 

99,225

 

Repurchases of common stock

 

 

 

 

(43,040

)

Payment for termination of interest rate swaps

 

 

 

 

(21,826

)

Stock option exercises

 

188

 

 

 

 

Other, net

 

(36

)

 

 

152

 

Cash provided by financing activities

 

94,314

 

 

 

40,827

 

Effect of exchange rate changes on cash

 

(4,454

)

 

 

1,813

 

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

 

(319,636

)

 

 

(29,509

)

Cash and cash equivalents, beginning of period

 

523,414

 

 

 

172,611

 

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

 

38,586

 

 

 

19,369

 

Restricted cash, beginning of period

 

792

 

 

 

15,827

 

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

 

562,792

 

 

 

207,807

 

Cash and cash equivalents, end of period

 

197,853

 

 

 

147,257

 

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

 

44,511

 

 

 

30,882

 

Restricted cash, end of period

 

792

 

 

 

159

 

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

$

243,156

 

 

$

178,298

 


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (UNAUDITED)

Adjusted Net Income and Adjusted Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

(in thousands, except per share amounts)

 

June 25, 2022

 

June 26, 2021

 

June 25, 2022

 

June 26, 2021

 

Net income (loss)

 

$

(57,044)

 

 

$

35,168

 

 

$

(22,616)

 

 

$

15,235

 

 

Acquisition related costs(a)

 

 

3,338

 

 

 

389

 

 

 

7,656

 

 

 

2,038

 

 

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

 

 

1,719

 

 

 

2,522

 

 

 

2,585

 

 

 

2,553

 

 

Straight-line rent adjustment(c)

 

 

4,217

 

 

 

3,358

 

 

 

8,310

 

 

 

5,843

 

 

Equity-based compensation expense(d)

 

 

4,233

 

 

 

1,028

 

 

 

6,851

 

 

 

2,011

 

 

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

 

 

13,937

 

 

 

(5,229)

 

 

 

14,908

 

 

 

5,282

 

 

Trade name impairment(f)

 

 

125,450

 

 

 

 

 

 

125,450

 

 

 

 

 

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

 

 

(5,938)

 

 

 

3,478

 

 

 

(6,062)

 

 

 

2,692

 

 

Loss on debt extinguishment(h)

 

 

 

 

 

78

 

 

 

 

 

 

45,576

 

 

Amortization related to acquired intangible assets(i)

 

 

5,930

 

 

 

5,558

 

 

 

11,072

 

 

 

9,210

 

 

Provision for uncertain tax positions(j)

 

 

 

 

 

 

 

 

76

 

 

 

 

 

Adjusted net income before tax impact of adjustments

 

 

95,842

 

 

 

46,350

 

 

 

148,230

 

 

 

90,440

 

 

Tax impact of adjustments(k)

 

 

(36,184)

 

 

 

(4,441)

 

 

 

(40,796)

 

 

 

(18,082)

 

 

Adjusted net income

 

 

59,658

 

 

 

41,909

 

 

 

107,434

 

 

 

72,358

 

 

Net (loss) income attributable to non-controlling interest

 

 

 

 

 

(36)

 

 

 

(15)

 

 

 

(30)

 

 

Adjusted net income attributable to Driven Brands Holdings Inc.

 

$

59,658

 

 

$

41,945

 

 

$

107,449

 

 

$

72,388

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings per share

 

 

 

 

 

 

 

 

 

Basic(1)

 

$

0.36

 

 

$

0.25

 

 

$

0.65

 

 

$

0.45

 

 

Diluted(1)

 

$

0.35

 

 

$

0.25

 

 

$

0.63

 

 

$

0.44

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

Basic

 

 

162,781

 

 

 

162,626

 

 

 

162,772

 

 

 

158,727

 

 

Diluted

 

 

166,659

 

 

 

166,512

 

 

 

166,692

 

 

 

162,271

 

 

(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 $1.3 million and $2.6 million for the three and six months ended June 25, 2022, respectively, and adjusted net income attributable to participating securities used in the diluted earnings per share calculation was $1.1 million and $2.3 million for the three and six months ended June 25, 2022, respectively.


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (UNAUDITED)

Net Income (loss) to Adjusted EBITDA Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

(in thousands)

 

June 25, 2022

 

June 26, 2021

 

June 25, 2022

 

June 26, 2021

Net income (loss)

 

 

(57,044)

 

 

$

35,168

 

 

$

(22,616)

 

 

$

15,235

Income tax expense

 

 

(18,848)

 

 

 

17,011

 

 

 

(5,880)

 

 

 

12,565

Interest expense, net

 

 

26,270

 

 

 

16,612

 

 

 

51,623

 

 

 

34,702

Depreciation and amortization

 

 

38,087

 

 

 

26,423

 

 

 

71,110

 

 

 

50,275

EBITDA

 

 

(11,535)

 

 

 

95,214

 

 

 

94,237

 

 

 

112,777

Acquisition related costs(a)

 

 

3,338

 

 

 

389

 

 

 

7,656

 

 

 

2,038

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

 

 

1,719

 

 

 

2,522

 

 

 

2,585

 

 

 

2,553

Straight-line rent adjustment(c)

 

 

4,217

 

 

 

3,358

 

 

 

8,310

 

 

 

5,843

Equity-based compensation expense(d)

 

 

4,233

 

 

 

1,028

 

 

 

6,851

 

 

 

2,011

Foreign currency transaction loss, net(e)

 

 

13,937

 

 

 

(5,229)

 

 

 

14,908

 

 

 

5,282

Trade name impairment(f)

 

 

125,450

 

 

 

 

 

 

125,450

 

 

 

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

 

 

(5,938)

 

 

 

3,478

 

 

 

(6,062)

 

 

 

2,692

Loss on debt extinguishment(h)

 

 

 

 

 

78

 

 

 

 

 

 

45,576

Adjusted EBITDA

 

$

135,421

 

 

$

100,838

 

 

$

253,935

 

 

$

178,772

  1. Consists of acquisition costs as reflected within the consolidated statement 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.

  2. Consists of discrete items and project costs, including (i) third-party consulting and professional fees associated with strategic transformation initiatives, and (ii) other miscellaneous expenses, including non-capitalizable expenses relating to the Company’s initial public offering and other strategic transactions

  3. 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.

  4. Represents non-cash equity-based compensation expense.

  5. Represents foreign currency transaction gains/losses, net that primarily related to the remeasurement of our intercompany loans. These losses are partially offset by unrealized gains/losses on remeasurement of cross currency swaps and forward contracts.

  6. Relates to an impairment of certain Car Wash trade names as the Company elected to discontinue their use.

  7. Relates to (gain) loss on sale leasebacks, the discontinuation of the use of a trade name, as well as impairment of certain fixed assets and operating lease right-of-use assets related to closed locations. Also represents lease exit costs and other costs associated with stores that were closed prior to the respective lease termination dates.

  8. Represents the write-off of debt issuance costs associated with early termination of debt.

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

  10. Represents uncertain tax positions recorded for tax positions, inclusive of interest and penalties.

  11. 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 and valuation allowance for certain deferred tax assets. To determine the tax impact of the deductible reconciling items, we utilized statutory income tax rates ranging from 9% to 36%, depending upon the tax attributes of each adjustment and the applicable jurisdiction.

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

ADJUSTED EBITDA AND SEGMENT ADJUSTED EBITDA RECONCILIATION (UNAUDITED)

 

 

Three months ended

 

Six months ended

(in thousands)

 

June 25, 2022

 

June 26, 2021

 

June 25, 2022

 

June 26, 2021

Segment Adjusted EBITDA:

 

 

 

 

 

 

 

 

Maintenance

 

$

64,076

 

 

$

44,561

 

 

$

116,561

 

 

$

85,001

 

Car Wash

 

 

53,677

 

 

 

43,069

 

 

 

109,397

 

 

 

77,224

 

Paint, Collision & Glass

 

 

32,916

 

 

 

21,856

 

 

 

61,928

 

 

 

39,495

 

Platform Services

 

 

20,541

 

 

 

17,602

 

 

 

34,706

 

 

 

28,610

 

Corporate and other

 

 

(35,123)

 

 

 

(25,845)

 

 

 

(67,485)

 

 

 

(50,864)

 

Store opening costs

 

 

(666)

 

 

 

(405)

 

 

 

(1,172)

 

 

 

(694)

 

Adjusted EBITDA

 

$

135,421

 

 

$

100,838

 

 

$

253,935

 

 

$

178,772

 


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

ADDITIONAL INFORMATION ON KEY PERFORMANCE INDICATORS (UNAUDITED)

 

 

Three months ended June 25, 2022

(in thousands)

 

Maintenance

 

Car Wash

 

Paint,
Collision &
Glass

 

Platform
Services

 

Total

System-wide Store sales

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

$

230,505

 

$

 

 

672,616

 

$

129,928

 

$

1,033,049

Company-operated stores

 

 

168,648

 

 

101,796

 

 

52,120

 

 

1,392

 

 

323,956

Independently operated Stores

 

 

 

 

54,942

 

 

 

 

 

 

54,942

Total System-wide Sales

 

$

399,153

 

$

156,738

 

$

724,736

 

$

131,320

 

$

1,411,947

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended June 26, 2021

(in thousands)

 

Maintenance

 

Car Wash

 

Paint,
Collision &
Glass

 

Platform
Services

 

Total

System-wide Store sales

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

$

195,083

 

$

 

$

584,559

 

$

116,010

 

$

895,652

Company-operated stores

 

 

126,107

 

 

65,704

 

$

13,019

 

$

1,463

 

 

206,293

Independently operated Stores

 

 

 

 

56,379

 

 

 

 

 

 

56,379

Total System-wide Sales

 

$

321,190

 

$

122,083

 

$

597,578

 

$

117,473

 

$

1,158,324

 

 

 

 

 

 

 

 

 

 

 

Store Count (in whole numbers)

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

 

981

 

 

 

 

1,622

 

 

199

 

 

2,802

Company-operated stores

 

 

504

 

 

246

 

 

33

 

 

1

 

 

784

Independently operated Stores

 

 

 

 

733

 

 

 

 

 

 

733

Total Store Count

 

 

1,485

 

 

979

 

 

1,655

 

 

200

 

 

4,319

62 Drive N Style stores are included in the Maintenance store count for the three months ended June 26, 2021 as previously reported, but none are included in store count for the three months ended June 25, 2022 as they are held for sale.


 

 

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

 

 

92,118

 

 

2,544

 

 

616,429

Independently operated Stores

 

 

 

 

118,031

 

 

 

 

 

 

118,031

Total System-wide Sales

 

$

756,265

 

$

314,322

 

$

1,383,703

 

$

222,114

 

$

2,676,404

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 26, 2021

(in thousands)

 

Maintenance

 

Car Wash

 

Paint,
Collision &
Glass

 

Platform
Services

 

Total

System-wide Store sales

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

$

358,937

 

$

 

$

1,115,062

 

$

184,384

 

$

1,658,383

Company-operated stores

 

 

240,174

 

 

122,753

 

 

24,949

 

$

2,446

 

 

390,322

Independently operated Stores

 

 

 

 

112,542

 

 

 

 

 

 

112,542

Total System-wide Sales

 

$

599,111

 

$

235,295

 

$

1,140,011

 

$

186,830

 

$

2,161,247

 

 

 

 

 

 

 

 

 

 

 

Store Count (in whole numbers)

 

 

 

 

 

 

 

 

 

 

Franchise stores

 

 

981

 

 

 

 

1,622

 

 

199

 

 

2,802

Company-operated stores

 

 

504

 

 

246

 

 

33

 

 

1

 

 

784

Independently operated Stores

 

 

 

 

733

 

 

 

 

 

 

733

Total Store Count

 

 

1,485

 

 

979

 

 

1,655

 

 

200

 

 

4,319

62 Drive N Style stores are included in the Maintenance store count for the six months ended June 26, 2021 as previously reported, but none are included in store count for the six months ended June 25, 2022 as they are held for sale.