Le Lézard
Classified in: Transportation, Business
Subjects: ERN, ERP

Driven Brands Holdings Inc. Reports Fourth Quarter and Fiscal Year 2023 Results


--Fiscal 2023 revenue increased 13% powered by 7% same-store sales growth and 4% net store growth--
--Achieved 12 consecutive quarters of same store sales growth--
--Issues fiscal year 2024 financial outlook--

CHARLOTTE, N.C., Feb. 22, 2024 /PRNewswire/ -- Driven Brands Holdings Inc. (NASDAQ: DRVN) ("Driven Brands" or the "Company") today reported financial results for the fourth quarter and fiscal year ended December 30, 2023.

Fiscal Year 2023 Highlights

For the fiscal year, Driven Brands delivered revenue of $2.3 billion, up 13% versus the prior year. System-wide sales were $6.3 billion, up 12% versus the prior year driven by 7% same-store sales growth and 4% net store growth. The Company added 183 net new stores during fiscal 2023.

During the fiscal year, the Company recognized an $851.0 million non-cash goodwill impairment in the Car Wash segment as well as $132.9 million in non-cash asset impairment charges and lease terminations. These drove a Net Loss of $745.0 million or a Net Loss of $4.53 per diluted share versus Net Income of $43.2 million or Net Income of $0.25 per diluted share in the prior year. Adjusted Net Income1 was $155.9 million and Adjusted EPS1 was $0.93, a decrease of 25% and 24%, respectively from the prior year. Adjusted EBITDA1 was $535.1 million, up 4% versus the prior year. Cash provided by operating activities increased 19% to $235.2 million compared to $197.2 million in the prior year.

"We are happy to announce that we delivered on our updated 2023 outlook for all financial metrics, while also pivoting our strategy and adapting to the dynamic market. In the fourth quarter, our performance was driven by strong execution in our Maintenance segment, specifically in our industry-leading Take 5 Oil Change business, and we're encouraged by the progress made in our U.S. Glass and U.S. Car Wash businesses," said Jonathan Fitzpatrick, President and Chief Executive Officer.

"Our goals in the second half of 2023 were to deliver on our full-year outlook and set ourselves up for a successful 2024, and we did just that. In 2024, we are focused on accelerating growth, reducing debt, and making sure that Driven has the right assets to execute on both our short- and long-term goals," Fitzpatrick concluded.

Fourth Quarter 2023 Highlights

For the fourth quarter, Driven Brands delivered revenue of $553.7 million, up 3% versus the prior year. System-wide sales were $1.5 billion, up 3% versus the prior year driven by 4% same-store sales growth. Net Loss was $13.1 million or a Net Loss of $0.08 per diluted share versus Net Income of $27.4 million, or $0.16 per diluted share in the prior year. Adjusted Net Income was $30.7 million and Adjusted EPS was $0.19, a decrease of 27% and 24%, respectively from the prior year. Adjusted EBITDA was $129.0 million, down 1% versus the prior year.  

Fiscal Year 2023 Key Performance Indicators by Segment


System-wide Sales
(in millions)

Store Count

Same-Store
Sales

Revenue

(in millions)

Segment Adjusted
EBITDA1

(in millions)

Maintenance

$                       1,899.8

1,786

9.2 %

$                  960.4

$                          332.8

Car Wash

591.8

1,108

(5.6) %

597.7

143.0

Paint, Collision & Glass

3,389.6

1,888

11.4 %

500.4

141.5

Platform Services2

402.6

206

N/A

216.0

80.6

Corporate / Other

N/A   

N/A   

N/A

29.5


Total

$                       6,283.7

4,988

7.4 %

$              2,304.0

 

Fourth Quarter 2023 Key Performance Indicators by Segment


System-wide Sales
(in millions)

Store Count

Same-Store
Sales

Revenue

(in millions)

Segment Adjusted
EBITDA1

(in millions)

Maintenance

$                          470.8

1,786

4.7 %

$                  246.0

$                            87.5

Car Wash

131.9

1,108

(3.3) %

133.2

31.0

Paint, Collision & Glass

835.3

1,888

6.4 %

117.0

31.7

Platform Services2

74.7

206

N/A

50.7

18.6

Corporate / Other

N/A   

N/A   

N/A

6.7


Total

$                       1,512.7

4,988

3.9 %

$                  553.7

 

Capital and Liquidity

The Company ended the fourth quarter with total liquidity of $319.0 million consisting of $176.5 million in cash and cash equivalents and $142.5 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility. This does not include the additional $135.0 million Series 2022 Class A-1 Notes that expand the Company's variable funding note borrowing capacity when the Company elects to exercise them, assuming certain conditions continue to be met.

Fiscal Year 2024 Outlook

Beginning in fiscal 2024, the Company changed its definitions for Adjusted Net Income, Adjusted EPS, and Adjusted EBITDA. Specifically, the Company will no longer include straight-line rent adjustments in its non-GAAP adjustments.  See "Reconciliation of Non-GAAP Financial Measures" below for additional details of these changes and a reconciliation of the definitions prior to fiscal 2024 to allow for like-for-like comparisons to the new definitions for all periods presented.

The table below sets forth the Company's fiscal year 2023 results and 2024 outlook using the revised methodology to calculate Adjusted EBITDA, and Adjusted EPS.


2023 Results

2024 Outlook

Revenue

$2.30 billion

~$2.35 - $2.45 billion

Adjusted EBITDA1

$516.9 million

~$535 - $565 million

Adjusted EPS1

$0.85

~$0.88 - $1.00

 

The Company also expects:

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

___________

1 Adjusted Net Income, Adjusted EPS, and Adjusted EBITDA are non-GAAP financial measures. Beginning in fiscal 2024, the company has made certain changes to how it defines these metrics that impact the comparability to prior periods. See "Reconciliation of Non-GAAP Financial Measures" for additional information on changes to these non-GAAP financial measures, a reconciliation to the most comparable GAAP measures, and a reconciliation between the differences in metric definitions for all periods presented. Forward-looking estimates of Adjusted EBITDA and Adjusted EPS are made in a manner consistent with the relevant definitions and assumptions noted herein.

2 Platform Services same store sales were removed as a Key Performance Indicator as sales included within the calculation represented less than 20% of Platform Services revenue.

Conference Call

Driven Brands will host a conference call to discuss fourth quarter and year-end 2023 results today, Thursday, February 22, 2024, at 8:30 a.m. ET. The call will be available by webcast and can be accessed by visiting Driven Brands' Investor Relations website at investors.drivenbrands.com. A replay of the call will be available for at least three months.

About Driven Brands

Driven Brandstm, headquartered in Charlotte, NC, is the largest automotive services company in North America, providing a range of consumer and commercial automotive needs, including paint, collision, glass, vehicle repair, oil change, maintenance and car wash. Driven Brands is the parent company of some of North America's leading automotive service businesses including       Take 5 Oil Change®, Take 5 Car Wash®, Meineke Car Care Centers®, Maaco®, 1-800-Radiator & A/C®, Auto Glass Now®, and CARSTAR®. Driven Brands has approximately 5,000 locations across 13 countries, and services over 70 million vehicles annually. Driven Brands' network generates approximately $2.3 billion in annual revenue from approximately $6.3 billion in system-wide sales.

Disclosure Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "likely," "may," "plan," "possible," "potential," "predict," "project," "should," "target," "will," "would" and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this Press Release, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, trends, plans, objectives of management, impact of accounting standards and outlook, impairments, and expected market growth are forward-looking statements. In particular, forward-looking statements include, among other things, statements relating to: (i) our strategy, outlook and growth prospects; (ii) our operational and financial targets and dividend policy; (iii) general economic trends and trends in the industry and markets; (iv) the risks and costs associated with the integration of, and our ability to integrate, our stores and business units successfully to achieve anticipated synergies; (v) the proper application of generally accepted accounting principles, which are highly complex and involve many subjective assumptions, estimates, and judgments and (vi) the competitive environment in which we operate. Forward-looking statements are not based on historical facts, but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions, and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. It is not possible to predict or identify all such risks. These risks include, but are not limited to, the risk factors that are described under the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 as well as in our other filings with the Securities and Exchange Commission, which are available on its website at www.sec.gov. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

 

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



Three Months Ended


Year Ended

(in thousands, except per share amounts)

December 30,
2023


December 31,
2022


December 30,

2023


December 31,
2022

Revenue:








Franchise royalties and fees

$             49,685


$             43,434


$           190,367


$           171,734

Company-operated store sales

366,668


366,921


1,526,353


1,324,408

Independently-operated store sales

38,748


36,657


196,395


195,157

Advertising contributions

25,303


23,943


98,850


87,750

Supply and other revenue

73,273


68,698


292,064


254,145

Total revenue

553,677


539,653


2,304,029


2,033,194

Operating Expenses:








Company-operated store expenses

241,741


231,894


1,004,472


812,262

Independently-operated store expenses

21,983


22,544


109,078


107,940

Advertising expenses

23,743


24,179


97,290


87,986

Supply and other expenses

40,248


35,865


158,436


145,481

Selling, general, and administrative expenses

110,957


110,821


443,112


383,478

Acquisition related costs

5,910


5,323


13,174


15,304

Store opening costs

2,057


953


5,831


2,878

Depreciation and amortization

46,040


39,528


175,296


147,156

Goodwill impairment

?


?


850,970


?

Trade name impairment

?


?


?


125,450

Asset impairment charges and lease terminations

15,453


2,745


132,903


5,655

Total operating expenses

508,132


473,852


2,990,562


1,833,590

Operating (loss) income

45,545


65,801


(686,533)


199,604

Other expenses, net:








Interest expense, net

43,892


35,150


164,196


114,096

(Gain) loss on foreign currency transactions

(3,081)


(13,322)


(3,078)


17,168

Other expense, net

40,811


21,828


161,118


131,264

(Loss) income before taxes

4,734


43,973


(847,651)


68,340

Income tax (benefit) expense

17,883


16,575


(102,689)


25,167

Net (loss) income

(13,149)


27,398


(744,962)


43,173

Net loss attributable to non-controlling interest

?


?


?


(15)

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

$            (13,149)


$             27,398


$         (744,962)


$             43,188









(Loss) earnings per share:








Basic

$                (0.08)


$                  0.16


$                (4.50)


$                  0.26

Diluted

$                (0.08)


$                  0.16


$                (4.53)


$                  0.25

Weighted average shares outstanding








Basic

159,573


162,744


161,917


162,762

Diluted

159,573


166,810


161,917


166,743

 

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)


(in thousands, except share and per share amounts)

December 30, 2023


December 31,
2022

Assets




Current assets:




Cash and cash equivalents

$                    176,522


$                 227,110

Restricted cash

657


792

Accounts and notes receivable, net

151,259


179,888

Inventory

83,171


72,040

Prepaid and other assets

46,714


40,084

Income tax receivable

15,928


15,075

Assets held for sale

301,229


?

Advertising fund assets, restricted

45,627


36,421

Total current assets

821,107


571,410

Other assets

56,565


30,561

Property and equipment, net

1,438,496


1,545,738

Operating lease right-of-use assets

1,389,316


1,299,189

Deferred commissions

6,312


7,121

Intangibles, net

739,402


765,903

Goodwill

1,455,946


2,277,065

Deferred tax assets

3,660


2,911

Total assets

$                 5,910,804


$              6,499,898

Liabilities and shareholders' equity




Current liabilities:




Accounts payable

$                      67,526


$                   60,606

Accrued expenses and other liabilities

242,171


317,318

Income tax payable

5,404


4,454

Current portion of long-term debt

32,673


32,986

Income tax receivable liability

56,001


53,328

Advertising fund liabilities

23,392


36,726

Total current liabilities

427,167


505,418

Long-term debt

2,910,812


2,705,281

Deferred tax liabilities

154,742


276,749

Operating lease liabilities

1,332,519


1,177,501

Income tax receivable liability

117,915


117,915

Deferred revenue

30,507


30,046

Long-term accrued expenses and other liabilities

30,419


33,419

Total liabilities

5,004,081


4,846,329

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

?


?

Common stock, $0.01 par value, 900,000,000 shares authorized: and 163,965,231 and
167,404,047 shares outstanding; respectively

1,640


1,674

Additional paid-in capital

1,652,401


1,628,904

Retained (deficit) earnings

(710,087)


84,795

Accumulated other comprehensive loss

(37,875)


(62,435)

Total shareholders' equity attributable to Driven Brands Holdings Inc.

906,079


1,652,938

Non-controlling interests

644


631

Total shareholders' equity

906,723


1,653,569

Total liabilities and shareholders' equity

$                 5,910,804


$              6,499,898

 

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



Year Ended

(in thousands)

Year ended
December 30, 2023


Year ended
December 31, 2022

Net (loss) income

$            (744,962)


$                43,173

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




Depreciation and amortization

175,296


147,156

Goodwill impairment

850,970


?

Trade name impairment

?


125,450

Equity-based compensation expense

15,300


20,583

(Gain) loss on foreign denominated transactions

(2,022)


17,147

(Gain) loss on foreign currency derivatives

(1,056)


21

Loss (gain) on sale and disposal of businesses, fixed assets, and sale-leaseback transactions

4,909


(34,854)

Reclassification of interest rate hedge to income

(2,077)


(542)

Bad debt expense

1,938


5,777

Asset impairment costs

132,903


5,655

Amortization of deferred financing costs and bond discounts

10,307


8,450

Benefit for deferred income taxes

(125,804)


20,567

Other, net

24,243


(21)

Changes in assets and liabilities, net of acquisitions:




Accounts and notes receivable, net

13,561


(58,837)

Inventory

(11,731)


(22,712)

Prepaid and other assets

(6,877)


(30,418)

Advertising fund assets and liabilities, restricted

(16,861)


12,698

Other Assets

(39,814)


(23,378)

Deferred commissions

418


3,407

Deferred revenue

1,937


1,925

Accounts payable

7,390


(34,634)

Accrued expenses and other liabilities

(52,854)


2,898

Income tax receivable

53


(12,335)

Cash provided by operating activities

235,167


197,176

Cash flows from investing activities:




Capital expenditures

(596,478)


(436,205)

Cash used in business acquisitions, net of cash acquired

(59,574)


(763,061)

Proceeds from sale-leaseback transactions

194,658


333,798

Proceeds from sale or disposal of businesses and fixed assets

9,987


25,188

Cash used in investing activities

(451,407)


(840,280)

Cash flows from financing activities:




Payment of debt extinguishment and issuance costs

?


(7,172)

Proceeds from the issuance of long-term debt

?


365,000

Repayment of long-term debt

(27,971)


(23,912)

Proceeds from revolving lines of credit and short-term debt

378,000


435,000

Repayments of revolving lines of credit and short-term debt

(130,000)


(435,000)

Repayment of principal portion of finance lease liability

(5,165)


(3,369)

Share repurchases

(49,956)


?

Purchase of equity securities

(224)


?

Proceeds from the termination of interest rate swap

?


10,870

Stock option exercises

6,117


340

Other, net

(102)


1,611

Cash provided by financing activities

170,699


343,368

Effect of exchange rate changes on cash

484


(2,283)

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

(45,057)


(302,019)

Cash and cash equivalents, beginning of period

227,110


523,414

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

32,871


38,586

Restricted cash, beginning of period

792


792

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

260,773


562,792

Cash and cash equivalents, end of period

176,522


227,110

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

38,537


32,871

Restricted cash, end of period

657


792

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

$              215,716


$              260,773

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

Non-GAAP Financial Measures in Outlook

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

Changes in Non-GAAP Definitions and Fiscal 2024 Outlook

Beginning in fiscal 2024, the Company has made certain changes to its definitions for Adjusted net income attributable to Driven Brands Holdings Inc. ("Adjusted Net Income"), Adjusted EPS, and Adjusted EBITDA, that impact the comparability of the metrics to prior periods. Specifically, the Company will no longer include straight-line rent adjustments in its non-GAAP adjustments. Accordingly, the Company's 2024 Adjusted EBITDA and Adjusted EPS outlook reflects the Company's updated definition of Adjusted EBITDA and Adjusted EPS. See "Reconciliation of Non-GAAP Financial Measures" below for a reconciliation of the definitions prior to fiscal 2024 to allow for like-for-like comparisons to the new definitions for all periods presented.

Adjusted Net Income and Adjusted Earnings Per Share

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

The tables below reflect the calculation of Adjusted Net Income and Adjusted Earnings Per Share for the three months and year ended December 30, 2023, compared to the three months and year ended December 31, 2022.

 

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







Three months ended


Year Ended

(in thousands, except per share amounts)

December 30,
2023


December 31,
2022


December 30,
2023


December 31,
2022

Net (loss) income

$             (13,149)


$                27,398


$            (744,962)


$                43,173

Acquisition related costs(a)

5,910


5,323


13,174


15,304

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

1,230


16,805


7,343


20,241

Straight-line rent adjustment(c)

4,022


3,435


18,218


14,965

Cloud computing amortization(d)

932


?


1,923


?

Equity-based compensation expense(e)

5,570


8,424


15,300


20,583

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

(3,081)


(13,322)


(3,078)


17,168

Bad debt recovery(g)

?


?


?


(449)

Goodwill impairment(h)

?


?


850,970


?

Trade name impairment(i)

?


?


?


125,450

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

19,777


(8,835)


139,414


(29,083)

Amortization related to acquired intangible
assets(k)

5,192


8,775


28,756


27,059

Provision for uncertain tax positions(l)

(354)


(224)


(354)


(148)

Valuation allowance for deferred tax asset(m)

17,729


3,051


17,729


3,051

Adjusted net income before tax impact of
adjustments

43,778


50,830


344,433


257,314

Tax impact of adjustments(n)

(13,092)


(8,641)


(188,544)


(49,437)

Adjusted net income

30,686


42,189


155,889


207,877

Net loss attributable to non-controlling
interest

?


?


?


(15)

Adjusted Net Income attributable to
Driven Brands Holdings Inc., as defined
through fiscal 2023

$              30,686


$                42,189


$              155,889


$              207,892

Straight-line rent adjustment(c)

$               (4,022)


$                (3,435)


$              (18,218)


$              (14,965)

Income tax effect of above item

$                 1,121


$                  1,043


$                  4,790


$                  3,870

Adjusted Net Income attributable to
Driven Brands Holdings Inc., as defined
beginning fiscal 2024

$              27,785


$                39,797


$              142,461


$              196,797









Adjusted Earnings Per Share, as defined
through fiscal 2023








Basic1

$                   0.19


$                     0.25


$                     0.94


$                     1.25

Diluted1

$                   0.19


$                     0.25


$                     0.93


$                     1.22









Adjusted Earnings Per Share, as defined
beginning fiscal 2024








Basic1

$                   0.17


$                     0.24


$                     0.86


$                     1.18

Diluted1

$                   0.17


$                     0.23


$                     0.85


$                     1.16









Weighted average shares outstanding








Basic

159,573


162,744


161,917


162,762

Diluted

161,361


166,810


164,100


166,743

 

(1)

Adjusted Earnings Per Share is calculated under the two-class method. Under the two-class method, adjusted earnings per share is calculated using adjusted net income attributable to common shares, which is derived by reducing adjusted net income by the amount attributable to participating securities. Adjusted Net Income attributable to participating securities used in the basic earnings per share calculation was less than $1 million and $3 million for the three months and year ended December 30, 2023, respectively, and Adjusted Net Income attributable to participating securities used in the diluted earnings per share calculation was less than $1 million and $2 million for the three months and year ended December 30, 2023, respectively.

 

Adjusted EBITDA

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

Please see the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 1, 2023, for additional information on Adjusted EBITDA. The tables below reflect the calculation of Adjusted EBITDA for the three months and year ended December 30, 2023, compared to the three months and year ended December 31, 2022.

 

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










Three months ended


Year Ended

(in thousands)

December 30,
2023


December 31,
2022


December 30,
2023


December 31,
2022

Net (loss) income

$              (13,149)


$                27,398


$            (744,962)


$                43,173

Income tax (benefit) expense

17,883


16,575


(102,689)


25,167

Interest expense, net

43,892


35,150


164,196


114,096

Depreciation and amortization

46,040


39,528


175,296


147,156

EBITDA

94,666


118,651


(508,159)


329,592

Acquisition related costs(a)

5,910


5,323


13,174


15,304

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

1,230


16,805


7,343


20,241

Straight-line rent adjustment(c)

4,022


3,435


18,218


14,965

Cloud computing amortization(d)

932


?


1,923


?

Equity-based compensation expense(e)

5,570


8,424


15,300


20,583

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

(3,081)


(13,322)


(3,078)


17,168

Bad debt recovery(g)

?


?


?


(449)

Goodwill impairment(h)

?


?


850,970


?

Trade name impairment(i)

?


?


?


125,450

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

19,777


(8,835)


139,414


(29,083)

Adjusted EBITDA, as defined through fiscal
2023

$              129,026


$              130,481


$              535,105


$              513,771

Straight-line rent adjustment(c)

$                (4,022)


$                (3,435)


$              (18,218)


$              (14,965)

Adjusted EBITDA, as defined beginning
fiscal 2024

$              125,004


$              127,046


$              516,887


$              498,806

 

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

(a)

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



(b)

Consists of discrete items and project costs, including third party consulting and professional fees associated with strategic transformation initiatives as well as non-recurring payroll-related costs. A $15 million change in estimate related to the Tax Receivable Agreement that we entered into at the IPO related to the filing of our 2021 tax returns was recorded in the fourth quarter of 2022.



(c)

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



(d)

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



(e)

 Represents non-cash equity-based compensation expense.



(f)

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



(g)

Represents the recovery of previously uncollectible receivables outside of normal operations.



(h)

 Relates to goodwill impairment charges within the Car Wash segment.



(i)

Certain indefinite-lived Car Wash trade names were impaired as the Company elected to discontinue their use.



(j)

 Relates to (gains) losses, net on sale leasebacks, impairment of certain fixed assets and operating lease right-of-use assets related to closed and underperforming locations, assets held for sale, and lease exit costs and other costs associated with stores that were closed prior to the respective lease termination dates.



(k)

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



(l)

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



(m)

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



(n) 

Represents the tax impact of adjustments associated with the reconciling items between net income and Adjusted Net Income, excluding the provision for uncertain tax positions. To determine the tax impact of the deductible reconciling items, we utilized statutory income tax rates ranging from 9% to 36% depending upon the tax attributes of each adjustment and the applicable jurisdiction.

 

 

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

ADJUSTED EBITDA AND SEGMENT ADJUSTED EBITDA RECONCILIATION (UNAUDITED)



Three months ended


Year Ended

(in thousands)

December 30,
2023


December 31,
2022


December 30,
2023


December 31,
2022

Segment Adjusted EBITDA: 








Maintenance

$             87,549


$             77,284


$           332,781


$           262,608

Car Wash

31,042


36,222


143,043


184,717

Paint, Collision & Glass

31,745


34,600


141,469


135,447

Platform Services

18,586


18,067


80,570


72,538

Corporate and other

(37,839)


(34,739)


(156,927)


(138,661)

Store opening costs

(2,057)


(953)


(5,831)


(2,878)

     Adjusted EBITDA, as defined through
fiscal 2023

$           129,026


$           130,481


$           535,105


$           513,771




Three months ended


Year Ended

(in thousands)

December 30,
2023


December 31,
2022


December 30,
2023


December 31,
2022

Segment Adjusted EBITDA:   








Maintenance

$             86,969


$             76,433


$           329,498


$           258,470

Car Wash

27,694


33,824


128,996


175,326

Paint, Collision & Glass

31,519


34,474


140,569


134,818

Platform Services

18,569


18,034


80,492


72,383

Corporate and other

(37,690)


(34,766)


(156,837)


(139,313)

Store opening costs

(2,057)


(953)


(5,831)


(2,878)

     Adjusted EBITDA, as defined beginning        
fiscal 2024(1)

$           125,004


$           127,046


$           516,887


$           498,806

 

(1) For the three months ended April 1, 2023; July 1, 2023; and September 30, 2023, the Adjusted EBITDA, as defined beginning fiscal 2024, would have been $123,463; $146,370; and $122,049, respectively.

 

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

ADDITIONAL INFORMATION ON KEY PERFORMANCE INDICATORS (UNAUDITED)




Three months ended December 30, 2023

(in thousands)


Maintenance


Car Wash


Paint,

Collision &

Glass


Platform

Services


Total

System-wide Sales











Franchise stores


$        266,801


$                  ?


$        766,717


$          73,778


$    1,107,296

Company-operated stores


203,963


93,164


68,632


909


366,668

Independently operated stores


?


38,748


?


?


38,748

Total System-wide Sales


$        470,764


$        131,912


$        835,349


$          74,687


$    1,512,712












Store Count (in whole numbers)











Franchise stores


1,134


?


1,647


205


2,986

Company-operated stores


652


391


241


1


1,285

Independently operated stores


?


717


?


?


717

Total Store Count


1,786


1,108


1,888


206


4,988















Three months ended December 31, 2022

(in thousands)


Maintenance


Car Wash


Paint,

Collision &

Glass


Platform

Services


Total

System-wide Sales











Franchise stores


$        253,074


$                  ?


$        719,646


$          91,801


$    1,064,521

Company-operated stores


195,309


95,976


74,576


1,060


366,921

Independently operated stores


?


36,657


?


?


36,657

Total System-wide Sales


$        448,383


$        132,633


$        794,222


$          92,861


$    1,468,099












Store Count (in whole numbers)











Franchise stores


1,052


?


1,628


202


2,882

Company-operated stores


593


390


218


1


1,202

Independently operated stores


?


721


?


?


721

Total Store Count


1,645


1,111


1,846


203


4,805

 

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

ADDITIONAL INFORMATION ON KEY PERFORMANCE INDICATORS (UNAUDITED)




Year ended December 30, 2023

(in thousands)


Maintenance


Car Wash


Paint,

Collision &

Glass


Platform

Services


Total

System-wide Sales











Franchise stores


$    1,090,457


$             ?


$    3,072,137


$        398,386


$    4,560,980

Company-operated stores


809,356


395,357


317,428


4,212


1,526,353

Independently operated stores


?


196,395


?


?


196,395

Total System-wide Sales


$    1,899,813


$        591,752


$    3,389,565


$        402,598


$    6,283,728












Store Count (in whole numbers)











Franchise stores


1,134


?


1,647


205


2,986

Company-operated stores


652


391


241


1


1,285

Independently operated stores


?


717


?


?


717

Total Store Count


1,786


1,108


1,888


206


4,988















Year ended December 31, 2022

(in thousands)


Maintenance


Car Wash


Paint,

Collision &

Glass


Platform

Services


Total

System-wide Sales











Franchise stores


$        923,153


$                  ?


$    2,723,047


$        440,691


$    4,086,891

Company-operated stores


692,947


390,502


235,924


$            5,035


1,324,408

Independently operated stores


?


195,157


?


?


195,157

Total System-wide Sales


$    1,616,100


$        585,659


$    2,958,971


$        445,726


$    5,606,456












Store Count (in whole numbers)











Franchise stores


1,052


?


1,628


202


2,882

Company-operated stores


593


390


218


1


1,202

Independently operated stores


?


721


?


?


721

Total Store Count


1,645


1,111


1,846


203


4,805

 

SOURCE Driven Brands


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