EX-99.1 2 d408899dex991.htm EX-99.1 EX-99.1
LOGO       Exhibit 99.1

Driven Brands Holdings Inc. Reports Strong Third Quarter Results; Raises Full Year Guidance Reflecting Outperformance

Revenue Increased 39% Powered by 12% Same-Store Sales and Net Store Growth

Operating Profit Increased by 50% Enabled by Significant Operating Leverage

Guidance Increase Reflects Powerful Customer Value Proposition and Resilient Needs-Based Industry

Charlotte, N.C. (October 26, 2022) - Driven Brands Holdings Inc. (NASDAQ: DRVN) (“Driven Brands” or the “Company”) today reported financial results for the third quarter ended September 24, 2022.

For the third quarter, revenue increased 39% versus the prior year to $516.6 million. System-wide sales increased 22% versus the prior year to $1.5 billion, with 9% net store growth and an increase in consolidated same-store sales of 11.9%.

Net Income increased 16% versus the prior year to $38.4 million or $0.23 per diluted share in the third quarter.

Adjusted Net Income1 increased 26% to $55.0 million or $0.32 per diluted share2.

“We continue to have solid momentum entering the fourth quarter, building on our strong performance year-to-date. We are growing, taking share and generating cash, leveraging our proven playbook for growth with a robust pipeline of franchise and greenfield openings,” said Jonathan Fitzpatrick, President and CEO.

“The benefits of our scale and breadth of our offering deepen our competitive moat and differentiate our business, driving unit expansion, same store sales growth, and cost savings. Our continued execution combined with the strength of our business model gives us confidence that we are on track to meet or exceed our long-term plan.”

Third Quarter Highlights

Comparisons are third quarter of 2022 ended September 24, 2022 versus third quarter of 2021 ended September 25, 2021 unless otherwise noted

 

   

Revenue increased 39% to $516.6 million, driven by same-store sales and net store growth.

 

   

Consolidated same-store sales increased 11.9%.

 

   

The Company added 101 net new stores during the quarter.

 

   

Net Income increased 16% to $38.4 million.

 

   

Adjusted Net Income1 increased 26% to $55.0 million.

 

   

Adjusted EBITDA3 increased 32% to $129.4 million.

 

1


Third 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

   $ 411.4        1,597        14.4   $ 200.8      $ 68.8  

Car Wash

     138.7        1,086        (9.0 )%      140.3        39.1  

Paint, Collision & Glass

     781.2        1,822        15.7     113.3        38.9  

Platform Services

     130.8        202        8.7     52.0        19.8  

Corporate / Other

     N/A        N/A        N/A       10.2     
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 1,462.1        4,707        11.9   $ 516.6     
  

 

 

    

 

 

    

 

 

   

 

 

    

*Car Wash same-store sales declined 9.0% in the third quarter. Foreign exchange rate movement had a 560 basis point negative impact. The impact of foreign exchange rate movement on the remaining segments was not significant.

Capital and Liquidity

The Company ended the third quarter with total liquidity of $287.6 million, consisting of $190.4 million in cash and cash equivalents, and $97.2 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility.

Subsequent to the end of the quarter, the Company closed on a $365 million whole business securitization transaction. Proceeds from the offering were used for general corporate purposes, including the repayment of the revolving credit facilities creating capacity to invest in continued growth.

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 third quarter of 2022, while keeping fourth quarter expectations unchanged. The following guidance reflects the Company’s current expectations for the fiscal year ending December 31, 2022:

 

   

Revenue of approximately $2.0 billion.

 

   

Adjusted EBITDA5 of approximately $503 million.

 

   

Adjusted earnings per share5 of approximately $1.21.

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 EBITDA5 and approximately $0.02 in Adjusted Earnings Per Share5.

The Company also expects:

 

   

Low-double-digit same-store sales growth.

 

   

Net store growth of approximately 370:

 

   

Maintenance: approximately 135 stores of which 75% will be franchised and 25% will be Company-operated

 

2


   

Car Wash: approximately 45 stores which will be Company-operated

 

   

Paint, Collision & Glass: approximately 190 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 third quarter 2022 results today, Wednesday, October 26, 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 February 21, 2023.

About Driven Brands

Driven Brands, headquartered in Charlotte, NC, is the largest automotive services company in North America, providing a range of consumer and commercial automotive needs, including paint, collision, glass, vehicle repair, oil change, maintenance and car wash. Driven Brands is the parent company of some of North America’s leading automotive service businesses including Take 5 Oil Change®, Take 5 Car Wash®, Meineke Car Care Centers®, Maaco®, 1-800-Radiator & A/C®, Auto Glass Now®, and CARSTAR®. Driven Brands has more than 4,700 locations across 15 countries, and services over 50 million vehicles annually. Driven Brands’ network generates approximately $1.9 billion in annual revenue from more than $5.3 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

 

3


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, our Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2022, and in our other filings with the Securities and Exchange Commission, which are available on its website at www.sec.gov. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Forward-looking statements represent our estimates and assumptions only as of the date on which they are made, and we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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 Share5 and Adjusted EBITDA5. 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

 

4


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 EBITDA5 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.

5

We have not reconciled Adjusted EBITDA and Adjusted Earnings Per Share outlook to the most comparable GAAP outlook because it is not possible to do so without unreasonable efforts due to the uncertainty and potential variability of reconciling items, which are dependent on future events and often outside of management’s control and which could be significant. Because such items cannot be reasonably predicted with the level of precision required, we are unable to provide outlook for the comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA and Adjusted EPS are made in a manner consistent with the relevant definitions and assumptions noted herein.

 

5


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

     Three months ended     Nine months ended  
(in thousands, except per share amounts)    September 24,
2022
     September 25,
2021
    September 24,
2022
    September 25,
2021
 

Revenue:

         

Franchise royalties and fees

   $ 45,562      $ 38,953     $ 128,300     $ 107,240  

Company-operated store sales

     341,211        213,755       957,487       603,808  

Independently-operated store sales

     40,469        47,941       158,500       160,483  

Advertising contributions

     22,018        19,762       63,807       56,665  

Supply and other revenue

     67,334        50,737       185,447       147,199  
  

 

 

    

 

 

   

 

 

   

 

 

 

Total revenue

     516,594        371,148       1,493,541       1,075,395  
  

 

 

    

 

 

   

 

 

   

 

 

 

Operating expenses:

         

Company-operated store expenses

     209,562        130,520       580,368       367,095  

Independently-operated store expenses

     23,254        27,764       85,396       89,664  

Advertising expenses

     22,018        19,762       63,807       56,665  

Supply and other expenses

     41,042        28,330       109,616       80,417  

Selling, general and administrative expenses

     82,460        71,565       272,657       218,549  

Acquisition costs

     2,325        636       9,981       2,674  

Store opening costs

     753        666       1,925       1,360  

Depreciation and amortization

     36,518        28,447       107,628       78,722  

Trade name impairment

     —          —         125,450       —    

Asset impairment charges and lease terminations

     2,894        (270     2,910       3,161  
  

 

 

    

 

 

   

 

 

   

 

 

 

Total operating expenses

     420,826        307,420       1,359,738       898,307  
  

 

 

    

 

 

   

 

 

   

 

 

 

Operating income

     95,768        63,728       133,803       177,088  
  

 

 

    

 

 

   

 

 

   

 

 

 

Other expenses, net:

         

Interest expense, net

     27,323        17,688       78,946       52,390  

Loss on foreign currency transactions, net

     15,582        1,074       30,490       6,356  

Loss on debt extinguishment

     —          —         —         45,576  
  

 

 

    

 

 

   

 

 

   

 

 

 

Total other expenses, net

     42,905        18,762       109,436       104,322  
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income before taxes

     52,863        44,966       24,367       72,766  

Income tax expense

     14,472        11,880       8,592       24,445  
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income

     38,391        33,086       15,775       48,321  

Net loss attributable to non-controlling interests

   $ —        $ (38     (15     (68
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income attributable to Driven Brands Holdings Inc.

   $ 38,391      $ 33,124     $ 15,790     $ 48,389  
  

 

 

    

 

 

   

 

 

   

 

 

 

Earnings per share(1):

         

Basic

   $ 0.23      $ 0.20     $ 0.10     $ 0.30  
  

 

 

    

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.23      $ 0.19     $ 0.09     $ 0.29  
  

 

 

    

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

         

Basic

     162,760        162,635       162,768       160,030  

Diluted

     166,831        166,630       166,663       163,968  

 

6


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

(in thousands)    September 24,
2022
    December 25, 2021  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 190,373     $ 523,414  

Restricted cash

     792       792  

Accounts and notes receivable, net

     156,194       117,903  

Inventory

     62,569       46,990  

Prepaid and other assets

     53,456       24,326  

Income tax receivable

     5,070       6,867  

Advertising fund assets, restricted

     53,233       45,360  

Assets held for sale

     —         3,275  
  

 

 

   

 

 

 

Total current assets

     521,687       768,927  

Notes receivable, net

     6,636       3,182  

Property and equipment, net

     1,693,353       1,350,984  

Operating lease right-of-use assets

     1,089,693       995,625  

Deferred commissions

     9,607       10,567  

Intangibles, net

     717,959       816,183  

Goodwill

     2,082,572       1,910,392  

Deferred tax assets

     1,165       1,509  
  

 

 

   

 

 

 

Total assets

   $ 6,122,672     $ 5,857,369  
  

 

 

   

 

 

 

Liabilities and shareholders’ equity

    

Current liabilities:

    

Accounts payable

   $ 79,392     $ 83,033  

Accrued expenses and other liabilities

     266,223       297,620  

Income taxes payable

     48,264       11,054  

Current portion of long-term debt

     23,836       26,044  

Income tax receivable liability

     24,255       24,255  

Advertising fund liabilities

     26,738       26,441  
  

 

 

   

 

 

 

Total current liabilities

     468,708       468,447  

Long-term debt, net

     2,656,520       2,356,320  

Deferred tax liability

     211,554       257,067  

Operating lease liabilities

     1,024,694       931,604  

Income tax receivable liability

     131,715       131,715  

Deferred revenue

     42,024       37,576  

Accrued expenses and other long-term liabilities

     22,505       29,398  
  

 

 

   

 

 

 

Total liabilities

     4,557,720       4,212,127  

Common stock

     1,677       1,674  

Additional paid-in capital

     1,620,480       1,605,890  

Retained earnings

     57,397       41,607  

Accumulated other comprehensive loss

     (115,233     (5,028
  

 

 

   

 

 

 

Total shareholders’ equity attributable to Driven Brands Holdings Inc.

     1,564,321       1,644,143  
  

 

 

   

 

 

 

Non-controlling interests

     631       1,099  
  

 

 

   

 

 

 

Total shareholders’ equity

     1,564,952       1,645,242  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 6,122,672     $ 5,857,369  
  

 

 

   

 

 

 

 

7


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

     Nine months ended  
(in thousands)    September 24,
2022
    September 25,
2021
 

Net income

   $ 15,775     $ 48,321  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     107,628       78,722  

Trade name impairment

     125,450       —    

Non-cash lease cost

     65,075       56,563  

Loss on foreign denominated transactions

     30,490       9,301  

Gain on foreign currency derivatives

     —         (2,945

Bad debt expense

     1,011       2,535  

Asset impairment costs

     2,910       3,161  

Amortization of deferred financing costs and bond discounts

     6,807       5,139  

Benefit (provision) for deferred income taxes

     (38,216     15,898  

Loss on extinguishment of debt

     —         45,576  

Other, net

     312       4,257  

Changes in assets and liabilities, net of acquisitions:

    

Accounts and notes receivable, net

     (44,063     (28,787

Inventory

     (17,898     (3,279

Prepaid and other assets

     850       (18,414

Advertising fund assets and liabilities, restricted

     (4,612     5,818  

Deferred commissions

     917       (1,205

Deferred revenue

     2,222       3,983  

Accounts payable

     (12,321     (3,903

Accrued expenses and other liabilities

     (59,844     25,595  

Income tax receivable

     37,931       (320

Operating lease liabilities

     (52,772     (47,821
  

 

 

   

 

 

 

Cash provided by operating activities

     167,652       198,195  
  

 

 

   

 

 

 

Cash flows from investing activities:

       —    

Capital expenditures

     (276,222     (93,627

Cash used in business acquisitions, net of cash acquired

     (652,085     (442,488

Proceeds from sale-leaseback transactions

     150,112       66,391  

Proceeds from sale of company-operated stores

     —         1,532  

Proceeds from disposition of Denmark car wash operation

     1,551       —    

Proceeds from disposal of property and equipment

     4,876       5,471  
  

 

 

   

 

 

 

Cash used in investing activities

     (771,768     (462,721
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Payment of debt extinguishment and issuance costs

     —         (2,153

Repayment of long-term debt

     (15,772     (716,542

Proceeds from revolving lines of credit and short-term debt

     300,000       441,800  

Repayments of revolving lines of credit and short-term debt

     —         (212,800

Repayment of principal portion of finance lease liability

     (2,229     (1,760

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

 

8


Stock option exercises

     651       339  

Other, net

     (70     102  
  

 

 

   

 

 

 

Cash provided by financing activities

     282,580       204,845  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     (7,705     (2,285

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

     (329,241     (61,966

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

     190,373       115,365  

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

     42,386       30,341  

Restricted cash, end of period

     792       135  
  

 

 

   

 

 

 

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

   $ 233,551     $ 145,841  
  

 

 

   

 

 

 

 

9


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (UNAUDITED)

Adjusted Net Income and Adjusted Earnings Per Share

 

     Three months ended     Nine months ended  
(in thousands, except per share amounts)    September 24,
2022
    September 25,
2021
    September 24,
2022
    September 25,
2021
 

Net income

   $ 38,391     $ 33,086     $ 15,775     $ 48,321  

Acquisition related costs(a)

     2,325       636       9,981       2,674  

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

     851       1,357       3,436       3,910  

Straight-line rent adjustment(c)

     3,220       2,548       11,530       8,391  

Equity-based compensation expense(d)

     5,308       933       12,159       2,944  

Foreign currency transaction loss, net(e)

     15,582       1,074       30,490       6,356  

Bad debt recovery(f)

     (449     —         (449     —    

Trade name impairment(g)

     —         —         125,450       —    

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

     (14,186     313       (20,248     3,005  

Loss on debt extinguishment(i)

     —         —         —         45,576  

Amortization related to acquired intangible assets(j)

     7,212       4,665       18,284       13,875  

Provision for uncertain tax positions(k)

     —         (251     76       (251
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income before tax impact of adjustments

     58,254       44,361       206,484       134,801  

Tax impact of adjustments(l)

     (3,290     (886     (44,086     (18,968
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

     54,964       43,475       162,398       115,833  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to non-controlling interest

     —         (38     (15     (68
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income attributable to Driven Brands Holdings Inc.

   $ 54,964     $ 43,513     $ 162,413     $ 115,901  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings per share

        

Basic(1)

   $ 0.33     $ 0.26     $ 0.98     $ 0.71  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted(1)

   $ 0.32     $ 0.26     $ 0.96     $ 0.69  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding

        

Basic

     162,760       162,635       162,768       160,030  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     166,831       166,630       166,663       163,968  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(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 $1.2 million and $3.4 million for the three and nine months ended September 24, 2022, respectively, and adjusted net income attributable to participating securities used in the diluted earnings per share calculation was $1.0 million and $3.1 million for the three and nine months ended September 24, 2022, respectively.

 

10


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (UNAUDITED)

Net Income to Adjusted EBITDA Reconciliation

 

     Three months ended      Nine months ended  
(in thousands)    September 24,
2022
    September 25,
2021
     September 24,
2022
    September 25,
2021
 

Net income

     38,391     $ 33,086      $ 15,775     $ 48,321  

Income tax expense

     14,472       11,880        8,592       24,445  

Interest expense, net

     27,323       17,688        78,946       52,390  

Depreciation and amortization

     36,518       28,447        107,628       78,722  
  

 

 

   

 

 

    

 

 

   

 

 

 

EBITDA

     116,704       91,101        210,941       203,878  
  

 

 

   

 

 

    

 

 

   

 

 

 

Acquisition related costs(a)

     2,325       636        9,981       2,674  

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

     851       1,357        3,436       3,910  

Straight-line rent adjustment(c)

     3,220       2,548        11,530       8,391  

Equity-based compensation expense(d)

     5,308       933        12,159       2,944  

Foreign currency transaction loss, net(e)

     15,582       1,074        30,490       6,356  

Bad debt recovery(f)

     (449     —          (449     —    

Trade name impairment(g)

     —         —          125,450       —    

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

     (14,186     313        (20,248     3,005  

Loss on debt extinguishment(i)

     —         —          —         45,576  
  

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 129,355     $ 97,962      $ 383,290     $ 276,734  
  

 

 

   

 

 

    

 

 

   

 

 

 

 

a.

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.

b.

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

c.

Consists of the non-cash portion of rent expense, which reflects the extent to which our straight-line rent expense recognized under U.S. GAAP exceeds or is less than our cash rent payments.

d.

Represents non-cash equity-based compensation expense.

e.

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

f.

Represents the recovery of previously uncollectible receivables outside of normal operations

g.

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

h.

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.

i.

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

j.

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

k.

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

 

11


l.

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.

 

12


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

ADJUSTED EBITDA AND SEGMENT ADJUSTED EBITDA RECONCILIATION (UNAUDITED)

 

     Three months ended     Nine months ended  
(in thousands)    September 24,
2022
    September 25,
2021
    September 24,
2022
    September 25,
2021
 

Segment Adjusted EBITDA:

        

Maintenance

   $ 68,763     $ 47,894     $ 185,324     $ 132,895  

Car Wash

     39,098       37,999       148,495       115,223  

Paint, Collision & Glass

     38,919       22,039       100,847       61,534  

Platform Services

     19,765       16,254       54,471       44,864  

Corporate and other

     (36,437     (25,558     (103,922     (76,422

Store opening costs

     (753     (666     (1,925     (1,360
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 129,355     $ 97,962     $ 383,290     $ 276,734  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

13


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

ADDITIONAL INFORMATION ON KEY PERFORMANCE INDICATORS (UNAUDITED)

 

     Three months ended September 24, 2022  
(in thousands)    Maintenance      Car Wash      Paint,
Collision &
Glass
     Platform
Services
     Total  

System-wide Store sales

              

Franchise stores

   $ 239,290      $ —          711,816      $ 129,320      $ 1,080,426  

Company-operated stores

     172,162        98,235        69,413        1,431        341,241  

Independently operated Stores

     —          40,469        —          —          40,469  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total System-wide Sales

   $ 411,452      $ 138,704      $ 781,229      $ 130,751      $ 1,462,136  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Store Count (in whole numbers)

              

Franchise stores

     1,023        —          1,625        201        2,849  

Company-operated stores

     574        369        197        1        1,141  

Independently operated Stores

     —          717        —          —          717  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Store Count

     1,597        1,086        1,822        202        4,707  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     Three months ended September 25, 2021  
(in thousands)    Maintenance      Car Wash      Paint,
Collision &
Glass
     Platform
Services
     Total  

System-wide Store sales

              

Franchise stores

   $ 208,218      $ —        $ 607,579      $ 118,825      $ 934,622  

Company-operated stores

     125,561        74,105      $ 12,723      $ 1,465        213,854  

Independently operated Stores

     —          47,941        —          —          47,941  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total System-wide Sales

   $ 333,779      $ 122,046      $ 620,302      $ 120,290      $ 1,196,417  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Store Count (in whole numbers)

              

Franchise stores

     992        —          1,617        200        2,809  

Company-operated stores

     514        286        30        1        831  

Independently operated Stores

     —          732        —          —          732  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Store Count

     1,506        1,018        1,647        201        4,372  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

62 Drive N Style stores are included in the Maintenance store count for the three months ended September 25, 2021 as previously reported, but none are included in store count for the three months ended September 24, 2022 as they are held for sale.

 

14


     Nine months ended September 24, 2022  
(in thousands)    Maintenance      Car Wash      Paint,
Collision &
Glass
     Platform
Services
     Total  

System-wide Store sales

              

Franchise stores

   $ 670,079      $ —        $ 2,003,401      $ 348,890      $ 3,022,370  

Company-operated stores

     497,638        294,526        161,531        3,975        957,670  

Independently operated Stores

     —          158,500        —          —          158,500  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total System-wide Sales

   $ 1,167,717      $ 453,026      $ 2,164,932      $ 352,865      $ 4,138,540  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Store Count (in whole numbers)

              

Franchise stores

     1,023        —          1,625        201        2,849  

Company-operated stores

     574        369        197        1        1,141  

Independently operated Stores

     —          717        —          —          717  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Store Count

     1,597        1,086        1,822        202        4,707  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     Nine months ended September 25, 2021  
(in thousands)    Maintenance      Car Wash      Paint,
Collision &
Glass
     Platform
Services
     Total  

System-wide Store sales

              

Franchise stores

   $ 567,155      $ —        $ 1,722,641      $ 303,209      $ 2,593,005  

Company-operated stores

     365,735        196,858        37,672      $ 3,911        604,176  

Independently operated Stores

     —          160,483        —          —          160,483  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total System-wide Sales

   $ 932,890      $ 357,341      $ 1,760,313      $ 307,120      $ 3,357,664  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Store Count (in whole numbers)

              

Franchise stores

     992        —          1,617        200        2,809  

Company-operated stores

     514        286        30        1        831  

Independently operated Stores

     —          732        —          —          732  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Store Count

     1,506        1,018        1,647        201        4,372  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

62 Drive N Style stores are included in the Maintenance store count for the nine months ended September 25, 2021 as previously reported, but none are included in store count for the nine months ended September 24, 2022 as they are held for sale.

 

15