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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 March 26, 2022
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/14e91e2840cc3981e5101eab34d39819-drvn-20220326_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
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☐
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 May 2, 2022, the Registrant had 167,507,521 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 25, 2021, and in this Quarterly Report 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.

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
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended
(in thousands, except per share amounts)March 26, 2022March 27, 2021
Revenue:
Franchise royalties and fees$37,888 $30,414 
Company-operated store sales292,391 183,855 
Independently-operated store sales63,089 56,163 
Advertising fund contributions19,698 17,255 
Supply and other revenue55,257 41,733 
Total revenue468,323 329,420 
Operating expenses:
Company-operated store expenses177,867 112,756 
Independently-operated store expenses33,299 31,108 
Advertising fund expenses19,698 17,255 
Supply and other expenses32,774 22,489 
Selling, general and administrative expenses92,220 69,050 
Acquisition costs4,318 1,646 
Store opening costs506 289 
Depreciation and amortization33,023 23,852 
Asset impairment charges and lease terminations898 1,253 
Total operating expenses394,603 279,698 
Operating income73,720 49,722 
Other expenses, net:
Interest expense, net25,353 18,091 
Net loss on foreign currency transactions971 10,511 
Loss on debt extinguishment 45,498 
Total other expenses, net26,324 74,100 
Net income (loss) before taxes47,396 (24,378)
Income tax expense (benefit)12,968 (4,446)
Net income (loss)34,428 (19,932)
Net (loss) income attributable to non-controlling interests(15)7 
Net income (loss) attributable to Driven Brands Holdings Inc.$34,443 $(19,939)
Earnings per share:
Basic$0.21 $(0.13)
Diluted$0.20 $(0.13)
Weighted average shares outstanding:
Basic162,762 154,827 
Diluted 166,748 154,827 
The accompanying notes are an integral part of these consolidated financial statements.
3



DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
Three months ended
(in thousands)March 26, 2022March 27, 2021
Net income (loss)$34,428 $(19,932)
Other comprehensive income (loss):
   Foreign currency translation adjustment(5,574)(9,243)
   Unrealized gain from cash flow hedges, net of tax132 30 
   Defined benefit pension plan actuarial gain, net of tax 128 
Other comprehensive loss, net(5,442)(9,085)
Total comprehensive income (loss)28,986 (29,017)
Comprehensive income (loss) attributable to non-controlling interests(2)41 
Comprehensive income (loss) attributable to Driven Brands Holdings Inc.$28,988 $(29,058)
The accompanying notes are an integral part of these consolidated financial statements.
4


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
March 26, 2022December 25, 2021
Assets(Unaudited)
Current assets:
Cash and cash equivalents$270,681 $523,414 
Restricted cash 792 792 
Accounts and notes receivable, net133,809 117,903 
Inventory48,883 46,990 
Prepaid and other assets24,640 24,326 
Income tax receivable5,070 6,867 
Advertising fund assets, restricted51,281 45,360 
Assets held for sale3,275 3,275 
Total current assets538,431 768,927 
Notes receivable, net8,918 3,182 
Property and equipment, net1,384,770 1,350,984 
Operating lease right-of-use assets1,026,537 995,625 
Deferred commissions10,623 10,567 
Intangibles, net862,761 816,183 
Goodwill2,044,594 1,910,392 
Deferred tax assets1,477 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 liabilities241,730 297,620 
Income tax payable20,642 11,054 
Current portion of long term debt22,969 26,044 
Income tax receivable liability24,255 24,255 
Advertising fund liabilities29,022 26,441 
Total current liabilities424,086 468,447 
Long-term debt2,358,379 2,356,320 
Deferred tax liabilities256,535 257,067 
Operating lease liabilities961,182 931,604 
Income tax receivable liability131,715 131,715 
Deferred revenue39,541 37,576 
Long-term accrued expenses and other liabilities28,181 29,398 
Total liabilities4,199,619 4,212,127 
Common stock, $0.01 par value, 900 million shares authorized and 167 million shares issued at March 26, 2022 and December 25, 2021.
1,675 1,674 
Additional paid-in capital1,610,585 1,605,890 
Retained earnings76,050 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 interests665 1,099 
Total shareholders' equity1,678,492 1,645,242 
Total liabilities and shareholders' equity$5,878,111 $5,857,369 
    
The accompanying notes are an integral part of these consolidated financial statements.
5


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
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 28, 2020
$565 $1,055,172 $31,975 $16,528 $2,120 $1,106,360 
Net income (loss)— — (19,939)— 7 (19,932)
Other comprehensive 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 
Balance as of December 25, 2021
$1,674 $1,605,890 $41,607 $(5,028)$1,099 $1,645,242 
Net income (loss)— — 34,443 — $(15)34,428 
Other comprehensive income (loss)— — — (5,455)13 (5,442)
Equity-based compensation expense— 2,618 — — — 2,618 
Stock issued related to Employee Stock Purchase Plan1 2,091 — — — 2,092 
Tax withholding on stock option exercises— (14)— — — (14)
Divestiture of Denmark car wash operations— — — — (432)(432)
Balance as of March 26, 2022
$1,675 $1,610,585 $76,050 $(10,483)$665 $1,678,492 
The accompanying notes are an integral part of these consolidated financial statements.
6


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

Three months ended
(in thousands)March 26, 2022March 27, 2021
Net income (loss)$34,428 $(19,932)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization33,023 23,852 
Non-cash lease cost17,002 20,028 
Loss on foreign denominated transactions970 13,000 
Gain on foreign currency derivative (2,489)
Bad debt expense372 657 
Asset impairment costs898 1,253 
Amortization of deferred financing costs and bond discounts2,224 2,139 
Benefit (provision) for deferred income taxes132 (8,018)
Loss on extinguishment of debt 45,498 
Other, net1,597 (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 assets397 (8,184)
Advertising fund assets and liabilities, restricted(1,204)2,621 
Deferred commissions(39)(573)
Deferred revenue455 1,551 
Accounts payable509 638 
Accrued expenses and other liabilities(61,624)(6,451)
Income tax receivable11,476 3,061 
Operating lease liabilities(8,666)(15,758)
Cash provided by operating activities9,040 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 transactions37,781 41,023 
Proceeds from sale of company-operated stores 4,481 
Proceeds from disposition of car wash operations1,577  
Proceeds from disposal of property and equipment803  
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)
Effect of exchange rate changes on cash(592)650 
7


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 period523,414 172,611 
Cash included in advertising fund assets, restricted, beginning of period38,586 19,369 
Restricted cash, beginning of period792 15,827 
Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, beginning of period562,792 207,807 
Cash and cash equivalents, end of period270,681 175,371 
Cash included in advertising fund assets, restricted, end of period40,716 21,160 
Restricted cash, end of period792 10,133 
Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, end of period$312,189 $206,664 
Supplemental cash flow disclosures - non-cash items:
Accrued capital expenditures, end of period$2,940 $3,804 
Supplemental cash flow disclosures - cash paid for:
Interest $24,238 $16,424 
Income taxes $321 $1,373 

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


DRIVEN BRANDS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


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 4,500 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 78% of the Company’s locations are franchised or independently-operated.

Initial Public Offering and Secondary Offering in 2021
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 term loans 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 $45 million loss on debt extinguishment for three months ended March 27, 2021 related to this settlement, primarily related to the write-off of the 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.

On August 2, 2021, the Company filed a Registration Statement on Form S-1 for a secondary offering of approximately 12 million shares of common stock at $29.50 per share by certain of the Company’s stockholders, Driven Equity LLC and RC IV Cayman ICW Holdings LLC, each of which is a related party of Roark Capital Management, LLC. The Company did not sell any common stock in the offering and did not receive any proceeds from the offering. On September 8, 2021, the underwriters for the secondary offering exercised a portion of their over-allotment option and purchased 881,393 additional shares of common stock. The Company did not receive any proceeds from the exercise of the over-allotment option.

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. The Company has recorded a total liability of $156 million as of March 26, 2022 and December 25, 2021, of which $24 million and $132 million are recorded under current and non-current liabilities, respectively.

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 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.

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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 months ended March 26, 2022 and March 27, 2021, each consist of 13 weeks. The Car Wash segment is currently consolidated based on a calendar month end.

Basis of Presentation
The unaudited 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, the unaudited interim financial data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results of operations, balance sheet, cash flows and shareholders’ equity for the interim periods presented. The adjustments include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

These interim consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended December 25, 2021. 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 months ended March 26, 2022 may not be indicative of the results to be expected for any other interim period or the year ending December 31, 2022.

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 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 three months ended March 27, 2021 to Additional paid-in capital within the statement of Shareholders’/members’ equity.

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 has 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 March 26, 2022 and December 25, 2021 are summarized as follows:

Items Measured at Fair Value at March 26, 2022
(in thousands)Level 1Level 2Total
Mutual fund investments held in rabbi trust$918 $ $918 
Foreign currency derivative liabilities not designated as hedging instruments$ $372 $372 
Foreign currency derivative liabilities designated as hedging instruments$ $1,756 $1,756 

Items Measured at Fair Value at December 25, 2021
(in thousands)Level 1Level 2Total
Mutual fund investments held in rabbi trust$976 $ $976 
Foreign Currency derivative liabilities designated as hedging instruments$ $536 $536 

The fair value of the Company’s foreign currency derivative instruments are derived from valuation models, which use Level 2 observable inputs such as quoted market prices, interest rates and forward yield curves. Derivative liabilities are included in long-term accrued expenses and other liabilities in the Consolidated Balance Sheet.

The carrying values of cash, restricted cash, and receivables included in the Consolidated Balance Sheet approximate their fair value. The fair value of long-term debt is estimated based on Level 2 inputs using discounted cash flows and market-based expectations for interest rates, credit risk and contractual terms of the debt agreements.

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

March 26, 2022December 25, 2021
(in thousands)Carrying valueEstimated fair valueCarrying valueEstimated fair value
Long-term debt$2,381,348 $2,378,479 $2,382,364 $2,411,987 

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

Three months ended March 26, 2022
(in thousands)Foreign currency translation adjustmentCash flow hedgesDefined benefit pension planAccumulated other comprehensive loss
Balance at December 25, 2021
$(4,183)$(758)$(87)$(5,028)
     Net change(5,587)132  (5,455)
Balance at March 26, 2022
$(9,770)$(626)$(87)$(10,483)

11


Three months ended March 27, 2021
(in thousands)Foreign currency translation adjustmentCash flow hedgesDefined benefit pension planAccumulated other comprehensive income
Balance at December 28, 2020
$16,834 $(87)$(219)$16,528 
     Net change(9,243)30 128 (9,085)
Balance at March 27, 2021
$7,591 $(57)$(91)$7,443 

Recently Issued Accounting Standards
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates and, particularly, the risk of cessation of LIBOR, regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This guidance is effective immediately and the amendments may be applied prospectively through December 31, 2022. The Company is evaluating the impact of adopting this new accounting guidance and does not believe it will have a material impact on the Company’s consolidated financial statements.
Note 3—Acquisitions and Dispositions
The Company strategically acquires companies and assets in order to increase its footprint and offer products and services that diversify its existing offerings. These acquisitions are accounted for as either business combinations or asset acquisitions, whereby the purchase price is allocated to the assets acquired and liabilities assumed, based on their fair values as of the date of the acquisition.

2022 Acquisitions

The Company completed 4 acquisitions in the Car Wash segment during the three months ended March 26, 2022, representing 6 sites, each individually immaterial, which were deemed to be business combinations. The aggregate cash consideration for these acquisitions, net of cash acquired and liabilities assumed, was approximately $43.5 million.

Also, the Company completed one acquisition in the Maintenance segment during the three months ended March 26, 2022, representing one site, which was deemed to be a business combination. The aggregate cash consideration for this acquisition, net of cash acquired and liabilities assumed, was $1.5 million.
In addition, on December 30, 2021 the Company acquired Auto Glass Now® (“AGN”) which was deemed to be a business combination. AGN had 79 sites at the time of the Company’s acquisition. and is included within the Company’s Paint, Collision & Glass (“PC&G”) segment. AGN has over 20 years of experience in auto glass repair, replacement, and calibration and expands the Company’s auto glass offering into the U.S. The aggregate cash consideration for this acquisition, net of cash acquired and liabilities assumed, was $170.6 million.

12


The provisional amounts for assets acquired and liabilities assumed for the 2022 acquisitions are as follows:
(in thousands)Cash Wash SegmentMaintenance Segment
Paint Collision & Glass Segment (AGN)
Total
Assets:
Cash$13 $ $7 $20 
Prepaid assets  327 327 
Land and building28,290 1,025 23 29,338 
Equipment4,350 50 921 5,321 
Operating lease right of use asset  10,693 10,693 
Intangibles, net  49,000 49,000 
Deferred tax asset252 43  295 
Assets acquired32,905 1,118 60,971 94,994 
Liabilities:
Accrued liabilities30   30 
Operating lease liabilities  10,003 10,003 
Total liabilities assumed30  10,003 10,033 
Net assets acquired32,875 1,118 50,968 84,961 
Total consideration43,483 1,548 170,636 215,667 
Goodwill$10,608 $430 $119,668 $130,706 

Goodwill represents the excess of the consideration paid over the fair value of net assets acquired and includes the expected benefit of synergies within the existing segments and intangible assets that do not qualify for separate recognition. Goodwill, which was allocated to the Car wash, Maintenance and Paint Collision & Glass segments, is substantially all deductible for income tax purposes.

The following table presents financial information regarding the AGN acquisition included in our consolidated statements of operations from the date of acquisition through March 26, 2022 under the column “AGN actual from acquisition date.” The following table presents supplemental unaudited pro-forma information as if the AGN acquisition had occurred at the beginning of 2021. The pro-forma information does not necessarily reflect the results of operations that would have occurred had the AGN acquisition occurred at the beginning of 2021. Cost savings are also not reflected in the unaudited pro-forma amounts for the three months ended March 27, 2021.
Three months ended March 26, 2022Three months ended March 27, 2021
(in thousands)AGN actual from acquisition dateDriven Brands Holdings Consolidated Proforma
Revenue$20,081 $349,808 
Net income attributable to Driven Brands Holdings Inc.$2,049 $(14,575)

Deferred Consideration and Transaction Costs

Included in the total consideration amounts above for the Car Wash and Maintenance acquisitions in 2022 was $1 million of consideration not paid on the closing date. The Company had $14 million of deferred consideration related to 2022 and 2021 acquisitions at March 26, 2022. The Company had $23 million of deferred consideration related to 2021 acquisitions at December 25, 2021. The Company paid $10 million of deferred consideration related to 2022 and 2021 acquisitions during the three months ended March 26, 2022. Deferred consideration is typically paid six months to one-year after the acquisition closing date once all conditions related to representations, warranties and indemnification under the purchase agreement have been satisfied.

The Company incurred approximately $2 million of transaction costs during the three months ended March 26, 2022 related to 2022 acquisitions.

13


2022 Disposition
On March 16, 2022, the Company disposed of its 75% owned subsidiary, IMO Denmark ApS, for consideration of $2 million. As a result of the sale, a $1 million loss was recognized within selling, general, and administrative expenses during the three months ended March 26, 2022. Also, a noncontrolling interest of less than $1 million was derecognized.

2021 Acquisitions

2021 Car Wash Segment

The Company completed 38 acquisitions in the Car Wash segment, representing 110 car wash sites, (the “2021 Car Wash Acquisitions”), which were deemed to be business combinations, during the year ended December 25, 2021. The aggregate cash consideration for these acquisitions, net of cash acquired and liabilities assumed, was $732 million.

On October 27, 2021, the Car Wash segment acquired Magic Tunnel Car Wash, which was comprised of 16 sites for total consideration of $88 million. On July 14, 2021, the Car Wash segment acquired Frank’s Car Wash, which was comprised of 18 sites for total consideration of $107 million. On May 20, 2021, the Car Wash segment acquired Racer Classic Car Wash, which was comprised of 10 sites for total consideration of $65 million.

The provisional amounts for assets acquired and liabilities assumed for the 2021 Car Wash Acquisitions are as follows:
(in thousands)Magic Tunnel Car WashFranks Car Wash ExpressRacer Classic Car WashAll OtherTotal Car Wash
Assets:
Cash$26 $38 $18 $165 $247 
Right of use assets  2,587 12,277 14,864 
Land and improvements13,020 10,790 6,920 45,455 76,185 
Building48,380 48,570 31,490 270,155 398,595 
Equipment13,800 7,377 5,698 59,578 86,453 
Inventory  311  311 
Intangibles, net700 800 550  2,050 
Deferred tax assets 94  1,596 1,690 
Assets held for sale   996 996 
Assets acquired75,926 67,669 47,574 390,222 581,391 
Liabilities:
Accrued liability 50 155 304 509 
Lease liability  2,687 12,277 14,964 
Deferred tax liabilities  758  758 
Liabilities assumed 50 3,600 12,581 16,231 
Net assets acquired75,926 67,619 43,974 377,641 565,160 
Total consideration88,026 106,558 64,843 472,721 732,148 
Goodwill$12,100 $38,939 $20,869 $95,080 $166,988 

Goodwill which was allocated to the Car Wash segment is substantially all deductible for income tax purposes.

The following table presents financial information regarding the 2021 Cash Wash Acquisitions operations included in our consolidated statements of operations from the date of acquisition through December 25, 2021 under the column “Actual from acquisition date in 2021.” The following table presents supplemental unaudited pro-forma information as if the 2021 Car Wash Acquisitions had occurred at the beginning of 2020. The pro-forma information does not necessarily reflect the results of operations that would have occurred had the 2021 Car Wash Acquisitions occurred at the beginning of 2020. Cost savings are also not reflected in the unaudited pro-forma amounts for the year ended December 25, 2021 and December 26, 2020, respectively.
14


Actual from
acquisition
date in 2021
Pro-forma for year ended
(in thousands)December 25, 2021December 26, 2020
Revenue$48,648 $1,613,479 $1,026,012 
Net income attributable to Driven Brands Holdings Inc.$11,693 $47,272 $20,558 

2021 Maintenance Segment

During the year ended December 25, 2021, the Company also completed 8 acquisitions in the Maintenance segment representing 13 maintenance sites, each individually immaterial (the “2021 Maintenance Acquisitions”), which were deemed to be business combinations. The aggregate cash consideration for these acquisitions, net of cash acquired and liabilities assumed, was $37 million.

The provisional amounts for assets acquired and liabilities assumed for the 2021 Maintenance Acquisitions are as follows:
(in thousands)
Assets:
Cash$2 
Land and improvements4,425 
Building13,220 
Equipment1,450 
Inventory200 
Deferred tax assets90 
Asset held for sale3,275 
 22,662 
Liabilities:
Prepaid liability52 
Liabilities assumed52 
Net assets acquired22,610 
Total consideration37,271 
Goodwill$14,661 
2021 Paint Collision & Glass Segment

During the year ended December 25, 2021, the Company completed two acquisitions in its Paint, Collision & Glass segment (the “2021 PC&G Acquisitions”) representing 12 collision sites, each individually immaterial, which were deemed to be business combinations. The aggregate cash consideration for these acquisitions, net of cash acquired and liabilities assumed, was $33 million.

15


The provisional amounts for assets acquired and liabilities assumed for the 2021 PC&G Acquisitions are as follows:
(in thousands)
Assets:
Right of use asset$7,672 
Equipment1,512 
Inventory107 
Intangibles, net6,707 
Assets acquired15,998 
Liabilities:
Accrued liability5 
Lease liability7,664 
Off-market lease component99 
Liabilities assumed7,768 
Net assets acquired8,230 
Total consideration32,972 
Goodwill$24,742 

In addition, during the twelve months ended December 25, 2021, the Company completed 11 acquisitions composed of one site each, each individually immaterial, each of which were deemed to be asset acquisitions as the fair value of assets acquired is substantially all land and buildings. Two of these acquisitions were included in the Car Wash segment and nine were included in the Maintenance segment. The aggregate consideration paid for the Car Wash acquisitions and Maintenance assets acquisitions was $9 million and $7 million, respectively.

Deferred Consideration and Transaction Costs

Included in the total consideration amounts above for the Car Wash and Maintenance acquisitions in 2021 was $24 million of consideration not paid on the closing date. The Company had $23 million of deferred consideration related to 2021 and 2020 acquisitions at December 25, 2021. The Company had $5 million of deferred consideration related to 2020 acquisitions at December 26, 2020. The Company paid $6 million of deferred consideration related to 2021 and 2020 and prior acquisitions during the year ended December 25, 2021. Deferred consideration is typically paid six months to one-year after the acquisition closing date once all conditions under the purchase agreement have been satisfied.

The Company incurred approximately $3 million of transaction costs during the year ended December 25, 2021 related to 2021 acquisitions.