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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 26, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-39898

https://cdn.kscope.io/7a7b845e6dfd619155a0b7352226faca-drvn-20210626_g1.jpg

Driven Brands Holdings Inc.
(Exact name of Registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)
47-3595252
(I.R.S. Employer Identification No.)
440 South Church Street, Suite 700
Charlotte, North Carolina
(Address of principal executive offices)
28202
(Zip Code)
Registrant’s telephone number, including area code: (704) 377-8855

Title of each class
Common Stock, $0.01 par value
Trading Symbol
DRVN
Name of each exchange on which registered
The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Accelerated filer
Small reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

As of August 4, 2021, the Registrant had 167,369,010 shares of Common Stock outstanding.



Driven Brands Holdings Inc.
Table of Contents
Page
PART I. FINANCIAL INFORMATION
PART II. OTHER INFORMATION



Forward-Looking Statements

This Quarterly Report on Form 10-Q 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 Quarterly Report, 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 26, 2020, 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.




Part I - Financial Information
Item 1. Financial Statements (Unaudited)
DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months endedSix months ended
(in thousands, except per share amounts)June 26, 2021June 27, 2020June 26, 2021June 27, 2020
Revenue:
Franchise royalties and fees$37,873 $28,282 $68,287 $57,694 
Company-operated store sales206,198 87,660 390,053 182,551 
Independently-operated store sales56,379  112,542  
Advertising fund contributions19,648 12,619 36,903 27,502 
Supply and other revenue54,730 39,262 96,462 80,183 
Total revenue374,828 167,823 704,247 347,930 
Operating expenses:
Company-operated store expenses123,820 53,373 236,575 116,665 
Independently-operated store expenses30,792  61,900  
Advertising fund expenses19,648 12,619 36,903 27,502 
Supply and other expenses29,598 21,295 52,087 44,354 
Selling, general and administrative expenses77,935 45,456 146,984 96,521 
Acquisition costs389 1,016 2,038 1,211 
Store opening costs405 627 694 1,802 
Depreciation and amortization26,423 8,636 50,275 16,435 
Asset impairment charges2,178 3,499 3,431 6,411 
Total operating expenses311,188 146,521 590,887 310,901 
Operating income63,640 21,302 113,360 37,029 
Other expenses, net:
Interest expense, net16,612 17,863 34,702 35,379 
(Gain) / loss on foreign currency transactions, net(5,229)(1,194)5,282 2,285 
Loss on debt extinguishment78  45,576  
Total other expenses, net11,461 16,669 85,560 37,664 
Net income (loss) before taxes52,179 4,633 27,800 (635)
Income tax expense17,011 1,542 12,565 221 
Net income (loss)35,168 3,091 15,235 (856)
Net (loss) income attributable to non-controlling interests(36)33 (30)(66)
Net income (loss) attributable to Driven Brands Holdings Inc.$35,204 $3,058 $15,265 $(790)
Earnings (loss) per share(1):
Basic$0.21 $0.03 $0.09 $(0.01)
Diluted$0.21 $0.03 $0.09 $(0.01)
Weighted average shares outstanding(1):
Basic162,626 88,990 158,727 88,990 
Diluted 166,512 88,990 162,271 88,990 
(1) Shares and earnings (loss) per share for 2020 have been adjusted to reflect an implied 88,990-for-one stock split that became effective on January 14, 2021. See Note 1 for additional information.

The accompanying notes are an integral part of these condensed consolidated financial statements.
3



DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
Three months endedSix months ended
(in thousands)June 26, 2021June 27, 2020June 26, 2021June 27, 2020
Net income (loss)$35,168 $3,091 $15,235 $(856)
Other comprehensive income (loss):
   Foreign currency translation adjustment11,411 4,521 2,168 (11,246)
   Unrealized gain from cash flow hedges, net of tax  30  
   Actuarial gain of defined benefit pension plan, net of tax  128  
Other comprehensive income (loss), net11,411 4,521 2,326 (11,246)
Total comprehensive income (loss)46,579 7,612 17,561 (12,102)
Comprehensive income (loss) attributable to non-controlling interests(1)8 39(131)
Comprehensive income (loss) attributable to Driven Brands Holdings Inc.$46,580 $7,604 $17,522 $(11,971)

The accompanying notes are an integral part of these condensed consolidated financial statements.
4


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)June 26, 2021 (Unaudited)December 26, 2020
Assets
Current assets:
Cash and cash equivalents$147,257 $172,611 
Restricted cash 159 15,827 
Accounts and notes receivable, net106,846 84,805 
Inventory41,899 43,039 
Prepaid and other assets28,166 25,070 
Income tax receivable1,038 3,055 
Advertising fund assets, restricted40,084 29,276 
Assets held for sale990  
Total current assets366,439 373,683 
Notes receivable, net3,594 3,828 
Property and equipment, net938,194 827,392 
Operating lease right-of-use assets906,066 884,927 
Deferred commissions9,508 8,661 
Intangibles, net827,357 829,308 
Goodwill1,768,244 1,727,351 
Total assets$4,819,402 $4,655,150 
Liabilities and shareholders' equity
Current liabilities:
Accounts payable$79,238 $67,802 
Accrued expenses and other liabilities198,939 190,867 
Income tax payable 3,644 3,513 
Current portion of long term debt17,793 22,988 
Advertising fund liabilities32,047 20,276 
Total current liabilities331,661 305,446 
Long-term debt, net1,503,957 2,102,219 
Deferred tax liability253,507 249,043 
Operating lease liabilities844,809 818,001 
Income tax receivable liability155,970  
Deferred revenue23,837 20,757 
Long-term accrued expenses and other liabilities33,719 53,324 
Total liabilities3,147,460 3,548,790 
Common stock, $0.01 par value, 900 million shares authorized at June 26, 2021 and December 26, 2020, respectively; 167 million and 89 million shares issued and outstanding at June 26, 2021 and December 26, 2020, respectively(1)
1,674 565 
Additional paid-in capital1,603,095 1,055,172 
Retained earnings47,240 31,975 
Accumulated other comprehensive income18,854 16,528 
Total shareholders’ equity attributable to Driven Brands Holdings Inc.1,670,863 1,104,240 
Non-controlling interests1,079 2,120 
Total shareholders' equity1,671,942 1,106,360 
Total liabilities and shareholders' equity$4,819,402 $4,655,150 
(1) Common stock at December 26, 2020 has been adjusted to reflect an implied 88,990-for-one stock split that became effective on January 14, 2021. See Note 1 for additional information.
The accompanying notes are an integral part of these condensed consolidated financial statements.
5


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’/MEMBERS’ EQUITY (Unaudited)
in thousandsCommon stockAdditional paid-in capitalRetained earningsAccumulated other
comprehensive
income (loss)
Non-controlling
interests
Total shareholders'/members' equity
Balance as of December 26, 2020$565 $1,055,172 $31,975 $16,528 $2,120 $1,106,360 
Net income (loss)— — (19,939)— 7 (19,932)
Other comprehensive income (loss)— — — (9,085)— (9,085)
Equity-based compensation expense— 983 — — — 983 
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions1,082 660,418 — — — 661,500 
Common stock issued upon underwriter's exercise of over-allotment48 99,177 — — — 99,225 
Repurchase of common stock(21)(42,956)— — — (42,977)
Exercise of stock options— 25 — — — 25 
Establishment of income tax receivable liability— (155,970)— — — (155,970)
IPO fees— (14,757)— — — (14,757)
Other—  — — (63)(63)
Balance as of March 27, 2021$1,674 $1,602,092 $12,036 $7,443 $2,064 $1,625,309 
Net income (loss)35,204 (36)35,168 
Other comprehensive income (loss)11,412 (1)11,411 
Equity-based compensation expense1,028 1,028 
At Pac divestiture(948)(948)
Other(25)(1)(26)
Balance at June 26, 2021$1,674 $1,603,095 $47,240 $18,854 $1,079 $1,671,942 
Balance as of December 28, 2019565 242,240 41,983 3,626 1,464 289,878 
Cumulative effect of ASU 2016-02 adoption— — (4,012)— — (4,012)
Cumulative effect of ASU 2016-13 adoption— — (1,797)— — (1,797)
Balance as of December 29, 2019565 242,240 36,174 3,626 1,464 284,069 
Net income (loss)— — (790)— (66)(856)
Other comprehensive income (loss)— — — (11,115)(131)(11,246)
Equity-based compensation expense— 690 — — — 690 
Balance at June 27, 2020$565 $242,930 $35,384 $(7,489)$1,267 $272,657 

The accompanying notes are an integral part of these condensed consolidated financial statements.
6

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Six months ended
(in thousands)June 26, 2021June 27, 2020
Net income (loss)$15,235 $(856)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization50,275 16,435 
Non-cash lease cost37,938 17,412 
Gain on foreign denominated transactions5,707 2,285 
Loss on derivatives not designed as hedges(425) 
Bad debt expense1,739 4,351 
Asset impairment costs3,431 6,411 
Amortization of deferred financing costs and bond discounts3,619 2,573 
Benefit (provision) for deferred income taxes4,742 (1,471)
Loss on extinguishment of debt45,576  
Other, net1,375 1,365 
Changes in assets and liabilities:
Accounts and notes receivable, net(24,174)(26,134)
Inventory(396)(577)
Prepaid and other assets(20,885)(9,665)
Advertising fund assets and liabilities, restricted12,548 3,835 
Deferred commissions(809)(1,614)
Deferred revenue2,994 (2,780)
Accounts payable3,860 11,696 
Accrued expenses and other liabilities9,707 349 
Income tax receivable3,665 4,051 
Operating lease liabilities(31,034)(14,109)
Cash provided by operating activities124,688 13,557 
Cash flows from investing activities:
Capital expenditures(46,222)(24,920)
Cash used in business acquisitions, net of cash acquired(205,556)(28,490)
Proceeds from sale-leaseback transactions49,166  
Proceeds from sale of company-operated stores 5,775  
Cash used in investing activities(196,837)(53,410)
Cash flows from financing activities:
Payment of contingent consideration related to acquisitions (1,783)
Payment of debt extinguishment and issuance costs(2,408)(2,421)
Repayment of long-term debt(712,649)(12,809)
Proceeds from revolving lines of credit and short-term debt213,800 79,501 
Repayments of revolving lines of credit and short-term debt(152,800) 
Repayment of principal portion of finance lease liability(1,127)(117)
Proceeds from initial public offering, net of underwriting discounts661,500  
Net proceeds from underwriters' exercise of over-allotment option99,225  
Repurchases of common stock(43,040) 
Payment for termination of interest rate swaps(21,826) 
Other, net152  
Cash provided by financing activities40,827 62,371 
Effect of exchange rate changes on cash1,813 (337)
Net change in cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted(29,509)22,181 
7


Cash and cash equivalents, beginning of period172,611 34,935 
Cash included in advertising fund assets, restricted, beginning of period19,369 23,091 
Restricted cash, beginning of period15,827  
Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, beginning of period207,807 58,026 
Cash and cash equivalents, end of period147,257 67,617 
Cash included in advertising fund assets, restricted, end of period30,882 12,590 
Restricted cash, end of period159  
Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, end of period$178,298 $80,207 
Supplemental cash flow disclosures - non-cash items:
Accrued capital expenditures $5,772 $2,434 
Supplemental cash flow disclosures - cash paid for:
Interest $38,966 $32,517 
Income taxes 5,531 649 

The accompanying notes are an integral part of these condensed consolidated financial statements.
8


DRIVEN BRANDS HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Note 1—Description of Business
Description of Business
Driven Brands Holdings Inc., together with its subsidiaries (collectively, the “Company”), is a Delaware corporation and is the parent holding company of Driven Brands, Inc. and Shine Holdco (UK) Limited (collectively, “Driven Brands”). Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of more than 4,300 franchised, independently-operated, and company-operated locations across 49 U.S. states and 14 other countries. The Company has a portfolio of highly recognized brands, including Take 5 Oil Change®, Meineke Car Care Centers®, MAACO®, CARSTAR®, and 1-800-Radiator & A/C® that compete in the automotive services industry. Approximately 82% of the Company’s locations are franchised or independently-operated.

Initial Public Offering
On January 14, 2021, the Company completed an initial public offering (the “IPO”) of approximately 32 million shares of common stock at $22 per share. On February 10, 2021, the Company’s underwriters exercised their over-allotment option to purchase approximately 5 million additional shares of common stock. The Company received total proceeds of $761 million from these transactions, net of the underwriting discounts and commissions.

The Company used the proceeds from the IPO, along with cash on hand, to fully repay the First Lien Term Loan, Second Lien Term Loan, and revolving credit facility assumed as part of the acquisition of International Car Wash Group (“ICWG”) in 2020 (collectively, the “Car Wash Senior Credit Facilities”), which totaled $725 million with interest and fees. The Company recognized a $46 million loss on debt extinguishment related to this settlement, primarily related to the write-off of unamortized discount. The Company cancelled the interest rate and cross currency swaps associated with these debt agreements as part of the settlement. The Company also used $43 million in proceeds to purchase approximately 2 million shares of common stock from certain of our existing shareholders.

Income Tax Receivable Agreement
The Company expects to be able to utilize certain tax benefits which are related to periods prior to the effective date of the Company’s IPO and are attributed to current and former shareholders. The Company previously entered into an income tax receivable agreement which provides our pre-IPO shareholders with the right to receive payment of 85% of the amount of cash savings, if any, in U.S. and Canadian federal, state, local and provincial income tax that the Company will actually realize. The income tax receivable agreement is effective as of the date of the Company’s IPO, and the Company has recorded a liability of $156 million as of June 26, 2021, which is recorded under long-term liabilities as the income tax receivable liability on the condensed consolidated balance sheet.

Stock Split
On January 14, 2021, the Company’s shareholders approved an amendment to the Company’s certificate of incorporation (the "Amendment") to effect an implied 88,990-for-one stock split of shares of the Company’s outstanding common stock. In addition, the Amendment increased the number of authorized shares of the Company's stock from 10,000 shares to 1 billion shares (900 million shares of common stock and 100 million shares of preferred stock). All share and per-share data in the condensed consolidated financial statements and footnotes has been retroactively adjusted to reflect the stock split for all periods presented. The Company does not have any shares of preferred stock outstanding.

Note 2— Summary of Significant Accounting Policies

Fiscal Year
The Company operates and reports financial information on a 52- or 53-week year with the fiscal year ending on the last Saturday in December and fiscal quarters ending on the 13th Saturday of each quarter (or 14th Saturday when applicable with respect to the fourth fiscal quarter). The three and six months ended June 26, 2021 and June 27, 2020, each consist of 13 and 26 weeks, respectively.

9


In August 2020, the Company acquired ICWG, which is currently consolidated based on a calendar month that ended on June 30, 2021. See Note 3 for additional discussion regarding the acquisition of ICWG.

Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of results of operations, balance sheet, cash flows, and shareholders’ equity for the periods presented have been reflected. The adjustments include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Certain amounts in the 2020 condensed consolidated financial statements have been reclassified to conform to the 2021 presentation. In the Company's consolidated statements of operations, $1 million and $2 million for the three and six months ended June 27, 2020, respectively, of franchise royalties and fees within the Platform Services segment has been reclassified to supply and other revenue to conform to the current year presentation.

These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended December 26, 2020. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The results of operations for the three and six months ended June 26, 2021 may not be indicative of the results to be expected for any other interim period or the year ending December 25, 2021.

Use of Estimates    
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the related notes to the condensed consolidated financial statements. Estimates are based upon historical factors, current circumstances and the experience and judgment of the Company’s management. Management evaluates its estimates and assumptions on an ongoing basis and may employ outside experts to assist in its evaluations. Changes in such estimates, based on more accurate future information, or different assumptions or conditions, may affect amounts reported in future periods.

Deferred IPO costs
Costs incurred that are directly related to the IPO, such as legal and accounting fees, registration fees, printing expenses, and other similar fees and expenses, totaling $9 million were capitalized and included within prepaid and other assets as of December 26, 2020. Upon completion of the IPO, the Company reclassified these costs, as well as an additional $6 million of IPO costs incurred during the six months ended June 26, 2021, to additional paid-in-capital.

Fair Value of Financial Instruments
Financial assets and liabilities are categorized, based on the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to the quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. Observable market data, when available, is required to be used in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

The Company classifies and discloses assets and liabilities carried at fair value in one of the following three categories:

Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity as the ability to access at the measurement date;
Level 2: Inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; or
Level 3: Inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

10


Financial assets and liabilities measured at fair value on a recurring basis as of June 26, 2021 and December 26, 2020 are summarized as follows:

Items Measured at Fair Value at June 26, 2021
(in thousands)Level 1Level 2Total
Mutual fund investments held in rabbi trust$980 $ $980 
Derivative liabilities$ $(3,098)$(3,098)

Items Measured at Fair Value at December 26, 2020
(in thousands)Level 1Level 2Total
Mutual fund investments held in rabbi trust$704 $ $704 
Derivative assets not designated as hedging instruments 227 227 
Total assets measured at fair value on a recurring basis$704 $227 $931 
Derivative liabilities designated as hedging instruments$ $(9,561)$(9,561)
Derivative liabilities not designated as hedging instruments (12,197)(12,197)
Total derivative liabilities$ $(21,758)$(21,758)

The fair value of the Company’s derivative instruments are derived from valuation models, which use observable inputs such as quoted market prices, interest rates and forward yield curves.

The carrying value and estimated fair value of total long-term debt were as follows:

June 26, 2021December 26, 2020
(in thousands)Carrying valueEstimated fair valueCarrying valueEstimated fair value
Long-term debt$1,521,750 $1,589,090 $2,125,207 $2,169,597 

Accumulated Other Comprehensive Income (Loss)
The following tables present changes, net of tax, in each component of accumulated other comprehensive income (loss).

Three months ended June 26, 2021
(in thousands)Foreign currency translation adjustmentCash flow hedgesDefined benefit pension planAccumulated other comprehensive income
Balance at March 27, 2021 $7,591 $(57)$(91)$7,443 
     Net change11,411   11,411 
Balance at June 26, 2021
$19,002 $(57)$(91)$18,854 

11


Three months ended June 27, 2020
(in thousands)Foreign currency translation adjustmentCash flow hedgesDefined benefit pension planAccumulated other comprehensive income (loss)
Balance at March 28, 2020$(12,141)$ $ $(12,141)
     Net change4,652   4,652 
Balance at June 27, 2020
$(7,489)$ $ $(7,489)

Six months ended June 26, 2021
(in thousands)Foreign currency translation adjustmentCash flow hedgesDefined benefit pension planAccumulated other comprehensive income
Balance at December 26, 2020$16,834 $(87)$(219)$16,528 
     Net change2,168 30 128 2,326 
Balance at June 26, 2021
$19,002 $(57)$(91)$18,854 

Six months ended June 27, 2020
(in thousands)Foreign currency translation adjustmentCash flow hedgesDefined benefit pension planAccumulated other comprehensive income (loss)
Balance at December 28, 2019
$3,626 $ $ $3,626 
     Net change(11,115)  (11,115)
Balance at June 27, 2020
$(7,489)$ $ $(7,489)

Recently Adopted Accounting Standards
In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, as part of its initiative to reduce complexity in accounting standards. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and improve consistency by clarifying and amending existing guidance. The Company adopted the ASU on December 27, 2020, and the adoption did not have a material impact on our consolidated financial statements.
Note 3—Acquisitions and Dispositions
The Company strategically acquires companies in order to increase its footprint and offer products and services that diversify its existing offerings. These acquisitions are accounted for as business combinations using the acquisition method, whereby the purchase price is allocated to the assets acquired and liabilities assumed, based on their estimated fair values at the date of the acquisition.

2021 Acquisitions

During the six months ended June 26, 2021, the Company completed 13 acquisitions in the Car Wash segment, representing 30 car wash sites, each individually immaterial (the “2021 Car Wash Acquisitions”). The aggregate cash consideration paid for these acquisitions, net of cash acquired and liabilities assumed, was approximately $200 million.
12



A preliminary estimate of assets acquired and liabilities assumed for the 2021 Car Wash Acquisitions is as follows:
(in thousands)
Assets:
Cash$63 
Right of use assets2,611 
Prepaid rent16 
Land and improvements23,125 
Building104,725 
Equipment22,526 
Net deferred tax assets648 
Assets held for sale990 
Assets acquired154,704 
Liabilities:
Prepaid liability227 
Deferred revenue46 
Lease liability2,595 
Liabilities assumed2,868 
Net assets acquired151,836 
Total consideration199,971 
Goodwill$48,135 

We also acquired separately identifiable intangible assets which are not presented above until the valuation is finalized. All goodwill was allocated to the Car Wash segment and all is deductible for income tax purposes.

In addition, during the six months ended June 26, 2021, the Company completed the acquisition of three maintenance sites, each individually immaterial, which are included within the Company’s Maintenance segment (the “2021 Maintenance Acquisitions”). The aggregate cash consideration paid for these acquisitions, net of cash acquired and liabilities assumed, was $6 million.

A preliminary estimate of assets acquired and liabilities assumed for the 2021 Maintenance Acquisitions is as follows:
(in thousands)
Assets:
Land and improvements$575 
Building725 
Equipment700 
Construction in progress3,511 
Assets acquired5,511 
Liabilities:
Lease liability20 
Liabilities assumed20 
Net assets acquired5,491 
Total consideration5,637 
Goodwill$146 



13



2021 Dispositions
On April 27, 2021, the Company disposed of its 70% owned subsidiary, At-Pac Auto Parts Inc., for consideration of $2 million. A loss of less than $1 million was recognized within selling, general, and administrative expenses during the three and six months ended June 26, 2021 as a result of the sale. In addition, noncontrolling interest of $1 million was derecognized.

2020 Acquisitions

Acquisition of International Car Wash Group
On August 3, 2020, the Company completed the acquisition of Shine Holdco (UK) Limited, the holding company of ICWG, to expand on its service offerings by entering into the car wash business (the “ICWG Acquisition”). The ICWG Acquisition resulted in the Company acquiring 940 car wash centers in 14 countries across the United States, Europe, and Australia. The following table presents an updated estimate of the purchase price allocation for the ICWG Acquisition:
(in thousands, except shares)August 3, 2020
Assets:
Cash$37,011 
Accounts and notes receivable2,591 
Inventory12,761 
Fixed assets692,486 
Operating lease right-of-use assets479,787 
Definite-lived intangibles5,972 
Indefinite-lived intangibles165,730 
Other assets7,476 
Total assets acquired1,403,814 
Liabilities:
Accounts payable13,435 
Long-term debt656,684 
Deferred income tax liability133,776 
Operating lease liabilities476,216 
Derivative liabilities12,714 
Other liabilities82,394 
Total liabilities assumed1,375,219 
Net assets acquired28,595 
Non-controlling interest acquired400 
Total consideration paid (39,169,857 common shares)(1)
809,000 
Goodwill$780,805 
(1) Common shares issued as consideration have been adjusted to reflect an implied 88,990-for-one stock split that became effective on January 14, 2021. See Note 1 for additional information.

The preliminary fair value of the equity consideration was determined based on an estimated enterprise value using a market approach and income approach as of the purchase date, reduced by borrowings assumed. The Company updated its purchase accounting estimates during the three months ended March 27, 2021 related to the deferred tax liability and, as a result, reduced goodwill related to the ICWG Acquisition by approximately $1 million.

Acquisition of Fix Auto

On April 20, 2020, the Company acquired 100% of the outstanding equity of Fix Auto USA (“Fix Auto”), a franchisor and operator of collision repair centers, for $29 million, net of cash received of approximately $2 million. This acquisition resulted in the Company acquiring 150 franchised locations and 10 company-operated locations and increased the Company’s collision services footprint.
14




The assets acquired and liabilities assumed from Fix Auto are as follows:

(in thousands)April 20, 2020
Assets:
Cash$2,020 
Accounts and notes receivable, net2,317 
Inventory414 
Prepaid and other assets293 
Operating lease right-of-use assets7,520 
Fixed assets1,023 
Definite-lived intangibles15,200 
Assets acquired28,787 
Liabilities:
Accounts payable1,835 
Accrued expenses and other liabilities2,919 
Operating lease liability7,520 
Income taxes payable673 
Deferred income tax liability3,770 
Liabilities assumed16,717 
Net assets acquired12,070 
Total consideration31,460 
Goodwill$19,390 

A summary of total consideration for Fix Auto is as follows:

(in thousands)
Cash$28,517 
Fair value of contingent consideration2,943