Form 8-K
false 0001804745 0001804745 2022-04-27 2022-04-27

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): April 27, 2022

 

 

DRIVEN BRANDS HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-39898   47-3595252
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (I.R.S. Employer
Identification No.)

440 South Church Street, Suite 700

Charlotte, North Carolina 28202

(Address of principal executive offices) (Zip Code)

(704) 377-8855

(Registrant’s Telephone Number, Including Area Code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading
Symbol

 

Name of each exchange
on which registered

Common Stock, $0.01 par value   DRVN   The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Act of 1934 (§ 240.12b-2 of this chapter).

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. ☐

 

 

 


Item 2.02.

Results of Operations and Financial Condition

On April 27, 2022, Driven Brands Holdings Inc. (the “Company”) issued a press release and related infographic, furnished as Exhibits 99.1 and 99.2, respectively, and incorporated herein by reference, announcing the Company’s financial results for the quarter ended March 26, 2022.

The information provided pursuant to Item 2.02, including the exhibits attached hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit
No.

  

Description

99.1    Press release dated April 27, 2022
99.2    Infographic
104    Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  DRIVEN BRANDS HOLDINGS INC.
Date: April 27, 2022   By:  

/s/ Scott O’Melia

  Name:   Scott O’Melia
  Title:   Executive Vice President, General Counsel and Secretary
EX-99.1

Exhibit 99.1

 

LOGO

Driven Brands Holdings Inc. Reports First Quarter Results

Delivers Strong Same-Store Sales and Net Store Growth

Reports Robust Operating Income and Earnings Per Share Growth

Charlotte, N.C. (April 27, 2022) - Driven Brands Holdings Inc. (NASDAQ: DRVN) (“Driven Brands” or the “Company”) today reported financial results for the first quarter ended March 26, 2022.

For the first quarter, revenue was $468.3 million, an increase of 42% versus the prior year. System-wide sales were $1.3 billion, an increase of 26% versus the prior year, with 8% net store growth and an increase in consolidated same-store sales of 15.6%.

Earnings per diluted share was $0.20 for the first quarter.

Adjusted earnings per diluted share2 was $0.28, an increase of 47% versus the prior year.

“Driven Brands posted strong first quarter results despite a challenging macroeconomic landscape. Our scale and sophistication allowed us to navigate continued supply chain challenges and an accelerating inflationary environment. This scale and sophistication, coupled with our proven playbook for growth, allowed us to once again outperform expectations,” said Jonathan Fitzpatrick, president and CEO. “This would not be possible without the hard work of the entire team, from our employees to franchisees. Their relentless focus on operational excellence delivered quality results,” Fitzpatrick added.

“We continue to be enthusiastic about fiscal 2022. With our scale, the significant whitespace in this fragmented and needs-based industry, and our robust cash generation engine, our business model remains well-positioned to maximize long-term value for all of our stakeholders.”

First Quarter Highlights

 

   

Revenue increased 42% versus the prior year, driven by same-store sales and net store growth.

 

   

Consolidated same-store sales increased 15.6% for the quarter, and all segments posted positive same-store sales.

 

   

The Company added 114 net new stores during the quarter.

 

   

Net income in the first quarter was $34.4 million.

 

   

Adjusted Net Income1 was $47.8 million, an increase of 57% versus the prior year.

 

   

Adjusted EBITDA3 was $118.5 million, an increase of 52% versus the prior year.

 

1


First 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

   $ 357.1        1,531        19.2   $ 178.7      $ 52.5  

Car Wash

     157.6        1,063        6.6     159.3        55.7  

Paint, Collision & Glass

     659.0        1,730        13.7     79.4        29.0  

Platform Services

     90.8        202        30.9     43.2        14.2  

Corporate / Other

     N/A        N/A        N/A       7.7     
  

 

 

    

 

 

    

 

 

   

 

 

    

Total

   $ 1,264.5        4,526        15.6   $ 468.3     
  

 

 

    

 

 

    

 

 

   

 

 

    

Capital and Liquidity

The Company ended the first quarter with total liquidity of $667.9 million, consisting of $270.7 million in cash and cash equivalents, and $397.2 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility.

Fiscal Year 2022 Guidance

The Company provided the following guidance5 for the fiscal year ending December 31, 2022 on February 16, 2022 and will provide updated guidance in connection with the release of its second quarter results:

 

   

Revenue of approximately $1.9 billion.

 

   

Adjusted EBITDA3 of approximately $465 million.

 

   

Adjusted Earnings per Share2 of approximately $1.04.

The above guidance includes the impact of the 79 acquired Auto Glass Now stores and the 53rd week in fiscal year 2022. The impact of the extra week is expected to yield approximately $16 million in revenue, $4 million in Adjusted EBITDA3 and approximately $0.02 in Adjusted Earnings Per Share2.

The Company also expects:

 

   

Mid-single-digit same-store sales growth.

 

   

Net store growth of approximately 225:

 

   

Maintenance: approximately 145 stores of which 65% will be franchised and 35% will be company-operated

 

   

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

 

   

Paint, Collision & Glass: approximately 35 stores which will be company-operated.

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

 

 

5

See Disclosure Regarding Non-GAAP Financial Measures

 

2


Conference Call

Driven Brands will host a conference call to discuss first quarter 2022 results today, Wednesday, April 27, 2022 at 9:00am ET. The call will be available by webcast and can be accessed by visiting Driven Brands’ Investor Relations website at investors.drivenbrands.com. A replay of the call will be available until July 26, 2022.

About Driven Brands

Driven Brands, headquartered in Charlotte, NC, is the largest automotive services company in North America, providing a range of consumer and commercial automotive needs, including paint, collision, glass, vehicle repair, oil change, maintenance and car wash. Driven Brands is the parent company of some of North America’s leading automotive service businesses including Take 5 Oil Change®, Meineke Car Care Centers®, Maaco®, 1-800-Radiator & A/C®, and CARSTAR®. Driven Brands has more than 4,500 locations across 15 countries, and services over 50 million vehicles annually. Driven Brands’ network generates more than $1.6 billion in annual revenue from more than $4.7 billion in system-wide sales.

Contacts

 

Shareholder/Analyst inquiries:    Media inquiries:
Rachel Webb    Taylor Blanchard
rachel.webb@drivenbrands.com    taylor.blanchard@drivenbrands.com
(704) 644-8125    (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 and in our other filings with the Securities and Exchange Commission, which are available on its website at www.sec.gov. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

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

Disclosure Regarding Non-GAAP Financial Measures

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

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

 

4


 

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


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

     Three months ended  
(in thousands, except per share amounts)    March 26,
2022
    March 27,
2021
 

Revenue:

    

Franchise royalties and fees

   $ 37,888     $ 30,414  

Company-operated store sales

     292,391       183,855  

Independently-operated store sales

     63,089       56,163  

Advertising contributions

     19,698       17,255  

Supply and other revenue

     55,257       41,733  
  

 

 

   

 

 

 

Total revenue

     468,323       329,420  
  

 

 

   

 

 

 

Operating expenses:

    

Company-operated store expenses

     177,867       112,756  

Independently-operated store expenses

     33,299       31,108  

Advertising expenses

     19,698       17,255  

Supply and other expenses

     32,774       22,489  

Selling, general and administrative expenses

     92,220       69,050  

Acquisition costs

     4,318       1,646  

Store opening costs

     506       289  

Depreciation and amortization

     33,023       23,852  

Asset impairment charges and lease terminations

     898       1,253  
  

 

 

   

 

 

 

Total operating expenses

     394,603       279,698  
  

 

 

   

 

 

 

Operating income

     73,720       49,722  
  

 

 

   

 

 

 

Other expenses, net:

    

Interest expense, net

     25,353       18,091  

Loss on foreign currency transactions, net

     971       10,511  

Loss on debt extinguishment

     —         45,498  
  

 

 

   

 

 

 

Total other expenses, net

     26,324       74,100  
  

 

 

   

 

 

 

Net income (loss) before taxes

     47,396       (24,378

Income tax expense (benefit)

     12,968       (4,446
  

 

 

   

 

 

 

Net income (loss)

   $ 34,428     $ (19,932

Net income (loss) attributable to non-controlling interests

   $ (15   $ 7  
  

 

 

   

 

 

 

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

   $ 34,443     $ (19,939
  

 

 

   

 

 

 

Earnings per share(1):

    

Basic

   $ 0.21     $ (0.13
  

 

 

   

 

 

 

Diluted

   $ 0.20     $ (0.13
  

 

 

   

 

 

 

Weighted average shares outstanding(1):

    

Basic

     162,762       154,827  

Diluted

     166,748       154,827  

 

6


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

(in thousands)    March 26, 2022     December 25, 2021  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 270,681     $ 523,414  

Restricted cash

     792       792  

Accounts and notes receivable, net

     133,809       117,903  

Inventory

     48,883       46,990  

Prepaid and other assets

     24,640       24,326  

Income tax receivable

     5,070       6,867  

Advertising fund assets, restricted

     51,281       45,360  

Assets held for sale

     3,275       3,275  
  

 

 

   

 

 

 

Total current assets

     538,431       768,927  

Notes receivable, net

     8,918       3,182  

Property and equipment, net

     1,384,770       1,350,984  

Operating lease right-of-use assets

     1,026,537       995,625  

Deferred commissions

     10,623       10,567  

Intangibles, net

     862,761       816,183  

Goodwill

     2,044,594       1,910,392  

Deferred tax assets

     1,477       1,509  
  

 

 

   

 

 

 

Total assets

   $ 5,878,111     $ 5,857,369  
  

 

 

   

 

 

 

Liabilities and shareholders’ equity

    

Current liabilities:

    

Accounts payable

   $ 85,468     $ 83,033  

Accrued expenses and other liabilities

     241,730       297,620  

Income taxes payable

     20,642       11,054  

Current portion of long-term debt

     22,969       26,044  

Income tax receivable liability

     24,255       24,255  

Advertising fund liabilities

     29,022       26,441  
  

 

 

   

 

 

 

Total current liabilities

     424,086       468,447  

Long-term debt, net

     2,358,379       2,356,320  

Deferred tax liability

     256,535       257,067  

Operating lease liabilities

     961,182       931,604  

Income tax receivable liability

     131,715       131,715  

Deferred revenue

     39,541       37,576  

Accrued expenses and other long-term liabilities

     28,181       29,398  
  

 

 

   

 

 

 

Total liabilities

     4,199,619       4,212,127  

Common stock

     1,675       1,674  

Additional paid-in capital

     1,610,585       1,605,890  

Retained earnings

     76,050       41,607  

Accumulated other comprehensive loss

     (10,483     (5,028
  

 

 

   

 

 

 

Total shareholders’ equity attributable to Driven Brands Holdings Inc.

     1,677,827       1,644,143  
  

 

 

   

 

 

 

Non-controlling interests

     665       1,099  
  

 

 

   

 

 

 

Total shareholders’ equity

     1,678,492       1,645,242  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 5,878,111     $ 5,857,369  
  

 

 

   

 

 

 

 

7


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

     Three months ended  
(in thousands)    March 26, 2022     March 27, 2021  

Net income (loss)

   $ 34,428     $ (19,932

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

    

Depreciation and amortization

     33,023       23,852  

Non-cash lease cost

     17,002       20,028  

Loss on foreign denominated transactions

     970       13,000  

Gain on derivatives not designed as hedges

     —         (2,489

Bad debt expense

     372       657  

Asset impairment costs

     898       1,253  

Amortization of deferred financing costs and bond discounts

     2,224       2,139  

Benefit (provision) for deferred income taxes

     132       (8,018

Loss on extinguishment of debt

     —         45,498  

Other, net

     1,597       (749

Changes in assets and liabilities, net of acquisitions:

    

Accounts and notes receivable, net

     (21,123     (19,693

Inventory

     (1,787     135  

Prepaid and other assets

     397       (8,184

Advertising fund assets and liabilities, restricted

     (1,204     2,621  

Deferred commissions

     (39     (573

Deferred revenue

     455       1,551  

Accounts payable

     509       638  

Accrued expenses and other liabilities

     (61,624     (6,451

Income tax receivable

     11,476       3,061  

Operating lease liabilities

     (8,666     (15,758
  

 

 

   

 

 

 

Cash provided by operating activities

     9,040       32,586  
  

 

 

   

 

 

 

Cash flows from investing activities:

       —    

Capital expenditures

     (68,967     (23,280

Cash used in business acquisitions, net of cash acquired

     (224,526     (26,732

Proceeds from sale-leaseback transactions

     37,781       41,023  

Proceeds from sale of company-operated stores

     —         4,481  

Proceeds from disposition of Denmark car wash operation

     1,577       —    

Proceeds from disposal of property and equipment

     803       —    
  

 

 

   

 

 

 

Cash used in investing activities

     (253,332     (4,508
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Repayment of long-term debt

     (4,820     (707,384

Proceeds from revolving lines of credit and short-term debt

     —         114,800  

Repayments of revolving lines of credit and short-term debt

     —         (132,800

Repayment of principal portion of finance lease liability

     (879     (409

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

     —         (42,977

Payment for termination of interest rate swaps

     —         (21,826

Other, net

     (20     —    
  

 

 

   

 

 

 

Cash provided by financing activities

     (5,719     (29,871
  

 

 

   

 

 

 

 

8


Effect of exchange rate changes on cash

     (592     650  

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

     (250,603     (1,143

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

     270,681       175,371  

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

     40,716       21,160  

Restricted cash, end of period

     792       10,133  
  

 

 

   

 

 

 

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

   $ 312,189     $ 206,664  
  

 

 

   

 

 

 

 

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  
(in thousands, except per share amounts)    March 26,
2022
    March 27,
2021
 

Net income (loss)

   $ 34,428     $ (19,932

Acquisition related costs(a)

     4,318       1,646  

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

     866       32  

Straight-line rent adjustment(c)

     4,093       2,485  

Equity-based compensation expense(d)

     2,618       983  

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

     971       10,511  

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

     (124     (786

Loss on debt extinguishment(g)

     —         45,498  

Amortization related to acquired intangible assets(h)

     5,142       3,652  

Provision for uncertain tax positions(i)

     76       —    
  

 

 

   

 

 

 

Adjusted net income before tax impact of adjustments

     52,388       44,089  

Tax impact of adjustments(j)

     (4,612     (13,641
  

 

 

   

 

 

 

Adjusted net income

     47,776       30,448  
  

 

 

   

 

 

 

Net (loss) income attributable to non-controlling interest

     (15     7  
  

 

 

   

 

 

 

Adjusted net income attributable to Driven Brands Holdings Inc.

   $ 47,791     $ 30,441  
  

 

 

   

 

 

 

Adjusted earnings per share

    

Basic(1)

   $ 0.29     $ 0.19  
  

 

 

   

 

 

 

Diluted(1)

   $ 0.28     $ 0.19  
  

 

 

   

 

 

 

Weighted average shares outstanding

    

Basic

     162,762       154,827  
  

 

 

   

 

 

 

Diluted

     166,748       158,761  
  

 

 

   

 

 

 

 

(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 $1.0 million and $0.7 million for the three months ended March 26, 2022 and March 27, 2021, respectively, and adjusted net income attributable to participating securities used in the diluted earnings per share calculation was $0.9 million and $0.7 million for the three months ended March 26, 2022 and March 27, 2021, respectively.

 

10


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (UNAUDITED)

Net Income (Loss) to Adjusted EBITDA Reconciliation

 

     Three months ended  
(in thousands)    March 26, 2022     March 27, 2021  

Net income (loss)

     34,428     $ (19,932

Income tax expense

     12,968       (4,446

Interest expense, net

     25,353       18,091  

Depreciation and amortization

     33,023       23,852  
  

 

 

   

 

 

 

EBITDA

     105,772       17,565  
  

 

 

   

 

 

 

Acquisition related costs(a)

     4,318       1,646  

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

     866       32  

Straight-line rent adjustment(c)

     4,093       2,485  

Equity-based compensation expense(d)

     2,618       983  

Foreign currency transaction loss, net(e)

     971       10,511  

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

     (124     (786

Loss on debt extinguishment(g)

     —         45,498  
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 118,514     $ 77,934  
  

 

 

   

 

 

 

 

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.

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 irrespective lease termination dates.

g.

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

h.

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

i.

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

j.

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.

 

11


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

ADJUSTED EBITDA AND SEGMENT ADJUSTED EBITDA RECONCILIATION (UNAUDITED)

 

     Three months ended  
(in thousands)    March 26,
2022
    March 27,
2021
 

Segment Adjusted EBITDA:

    

Maintenance

   $ 52,485     $ 40,440  

Car Wash

     55,720       34,155  

Paint, Collision & Glass

     29,012       17,639  

Platform Services

     14,165       11,008  

Corporate and other

     (32,362     (25,019

Store opening costs

     (506     (289
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 118,514     $ 77,934  
  

 

 

   

 

 

 

 

12


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

ADDITIONAL INFORMATION ON KEY PERFORMANCE INDICATORS (UNAUDITED)

 

     Three months ended March 26, 2022  
(in thousands)    Maintenance      Car Wash      Paint,
Collision &
Glass
     Platform
Services
     Total  

System-wide Store sales

              

Franchise stores

   $ 200,284      $ —          619,063      $ 89,643      $ 908,990  

Company-operated stores

     156,828        94,495        39,904        1,151        292,378  

Independently operated Stores

     —          63,089        —          —          63,089  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total System-wide Sales

   $ 357,112      $ 157,584      $ 658,967      $ 90,794      $ 1,264,457  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Store Count (in whole numbers)

              

Franchise stores

     982        —          1,611        201        2,794  

Company-operated stores

     549        341        119        1        1,010  

Independently operated Stores

     —          722        —          —          722  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Store Count

     1,531        1,063        1,730        202        4,526  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     Three months ended March 27, 2021  
(in thousands)    Maintenance      Car Wash      Paint,
Collision &
Glass
     Platform
Services
     Total  

System-wide Store sales

              

Franchise stores

   $ 163,817      $ —        $ 530,503      $ 68,373      $ 762,693  

Company-operated stores

     114,067        57,048      $ 11,930      $ 983        184,028  

Independently operated Stores

     —          56,163        —          —          56,163  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total System-wide Sales

   $ 277,884      $ 113,211      $ 542,433      $ 69,356      $ 1,002,884  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Store Count (in whole numbers)

              

Franchise stores

     975        —          1,594        197        2,766  

Company-operated stores

     495        220        33        1        749  

Independently operated Stores

     —          734        —          —          734  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Store Count

     1,470        954        1,627        198        4,249  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

62 Drive N Style stores are included in the Maintenance store count for the three months ended March 27, 2021 as previously reported, but none are included in store count for the three months ended March 26, 2022 as they are held for sale.

 

13

EX-99.2

Exhibit 99.2

 

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