8-K
false 0001804745 0001804745 2022-07-27 2022-07-27

 

 

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): July 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 July 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 June 25, 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 July 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: July 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 Second Quarter Results

Delivers Strong Same-Store Sales and Net Store Growth

Reports Robust Operating Income Growth

Raises Fiscal Year 2022 Guidance

Charlotte, N.C. (July 27, 2022) - Driven Brands Holdings Inc. (NASDAQ: DRVN) (“Driven Brands” or the “Company”) today reported financial results for the second quarter ended June 25, 2022.

For the second quarter, revenue was $508.6 million, an increase of 36% versus the prior year. System-wide sales were $1.4 billion, an increase of 22% versus the prior year, with 7% net store growth and an increase in consolidated same-store sales of 13.2% .

The $(0.34) loss per diluted share in the second quarter was driven by a $125.5 million one-time non-cash impairment charge related to intangible assets as a result of the Company’s decision to re-brand its U.S. car wash business.

Adjusted earnings per diluted share2 was $0.35.

“We delivered strong results in the second quarter. These results are a testament to the resilience of our needs-based service offering and our ability to drive sustainable growth and cash flow leveraging a proven playbook,” said Jonathan Fitzpatrick, president and CEO.

“We have significant momentum across our business capitalizing on the benefits of our scale, the quality of our offerings, the strength of our brands, our best-in-category data and marketing capabilities, and our ability to generate robust cash flow. We are delivering against our Dream Big plan of at least $850 million of adjusted EBITDA by the end of 2026, demonstrating our ability to drive significant shareholder value over time.”

Second Quarter Highlights

 

   

Revenue increased 36% versus the prior year, driven by same-store sales and net store growth.

 

   

Consolidated same-store sales increased 13.2% for the quarter.

 

   

The Company added 80 net new stores during the quarter.

 

   

The Company recorded a net loss in the second quarter of $(57.0) million, driven by a $125.5 million one-time non-cash impairment charge related to intangible assets as a result of the Company’s decision to re-brand its U.S. car wash business.

 

   

Adjusted Net Income1 was $59.7 million.

 

   

Adjusted EBITDA3 was $135.4 million.

 

1


Second 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

   $ 399.2        1,559        15.0   $ 194.3      $ 64.1  

Car Wash

     156.7        1,074        (2.7%) / 2.6 %*      158.6        53.7  

Paint, Collision & Glass

     724.7        1,771        16.1     95.4        32.9  

Platform Services

     131.3        202        11.8     53.2        20.5  

Corporate / Other

     N/A        N/A        N/A       7.1     
  

 

 

    

 

 

    

 

 

   

 

 

    

Total

   $ 1,411.9        4,606        13.2   $ 508.6     
  

 

 

    

 

 

    

 

 

   

 

 

    

 

*

Car Wash same-store sales declined 2.7% in the second quarter. Foreign exchange rate movement had a significant impact. Excluding the impact of foreign exchange, Car Wash same-store sales increased 2.6% . The impact of foreign exchange rate movement on the remaining segments was not significant.

Capital and Liquidity

The Company ended the second quarter with total liquidity of $488.2 million, consisting of $197.9 million in cash and cash equivalents, and $290.3 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility.

Fiscal Year 2022 Guidance

The Company has raised its guidance for the fiscal year to account for its strong operating performance and M&A activity in the first half of 2022, as well as an updated outlook for the remainder of the year. The following guidance reflects the Company’s current expectations for the fiscal year ending December 31, 2022:

 

   

Revenue of approximately $2.0 billion.

 

   

Adjusted EBITDA3 of approximately $495 million.

 

   

Adjusted earnings per diluted share2 of approximately $1.17.

The above guidance includes the impact of the 53rd week in fiscal year 2022. The impact of the extra week is expected to yield approximately $25 million in revenue, $5 million in Adjusted EBITDA3 and approximately $0.02 in Adjusted Earnings Per Share2.

The Company also expects:

 

   

Low-double-digit same-store sales growth.

 

   

Net store growth of approximately 340:

 

   

Maintenance: approximately 140 stores of which 70% will be franchised and 30% will be company-operated

 

   

Car Wash: approximately 40 stores which will be company-operated

 

   

Paint, Collision & Glass: approximately 160 stores of which 5% will be franchised and 95% will be company-operated.

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

 

2


Conference Call

Driven Brands will host a conference call to discuss second quarter 2022 results today, Wednesday, July 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 October 25, 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 $1.7 billion in annual revenue from more than $5.0 billion in system-wide sales.

 

Contacts   
Shareholder/Analyst inquiries:    Media inquiries:
Kristy Moser    Taylor Blanchard
kristy.moser@drivenbrands.com    taylor.blanchard@drivenbrands.com
(980) 229-9450    (704) 644-8129

 

3


Disclosure Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this press release, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management, and expected market growth are forward-looking statements. In particular, forward-looking statements include, among other things, statements relating to: (i) our strategy, outlook and growth prospects; (ii) our operational and financial targets and dividend policy; (iii) general economic trends and trends in the industry and markets; and (iv) the competitive environment in which we operate. Forward-looking statements are not based on historical facts but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions, and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. It is not possible to predict or identify all such risks. These risks include, but are not limited to, the risk factors that are described under the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 25, 2021 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     Six months ended  
(in thousands, except per share amounts)    June 25, 2022     June 26, 2021     June 25, 2022     June 26, 2021  

Revenue:

        

Franchise royalties and fees

   $ 44,850     $ 37,873     $ 82,738     $ 68,287  

Company-operated store sales

     323,885       206,198       616,276       390,053  

Independently-operated store sales

     54,942       56,379       118,031       112,542  

Advertising contributions

     22,091       19,648       41,789       36,903  

Supply and other revenue

     62,856       54,730       118,113       96,462  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     508,624       374,828       976,947       704,247  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Company-operated store expenses

     192,939       123,820       370,806       236,575  

Independently-operated store expenses

     28,843       30,792       62,142       61,900  

Advertising expenses

     22,091       19,648       41,789       36,903  

Supply and other expenses

     35,800       29,598       68,574       52,087  

Selling, general and administrative expenses

     97,977       77,935       190,197       146,984  

Acquisition costs

     3,338       389       7,656       2,038  

Store opening costs

     666       405       1,172       694  

Depreciation and amortization

     38,087       26,423       71,110       50,275  

Trade name impairment

     125,450       —         125,450       —    

Asset impairment charges and lease terminations

     (882     2,178       16       3,431  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     544,309       311,188       938,912       590,887  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (35,685     63,640       38,035       113,360  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other expenses, net:

        

Interest expense, net

     26,270       16,612       51,623       34,702  

Loss on foreign currency transactions, net

     13,937       (5,229     14,908       5,282  

Loss on debt extinguishment

     —         78       —         45,576  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expenses, net

     40,207       11,461       66,531       85,560  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) before taxes

     (75,892     52,179       (28,496     27,800  

Income tax expense

     (18,848     17,011       (5,880     12,565  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (57,044     35,168       (22,616     15,235  

Net income (loss) attributable to non-controlling interests

   $ —       $ (36     (15     (30
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ (57,044   $ 35,204     $ (22,601   $ 15,265  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share(1):

        

Basic

   $ (0.34   $ 0.21     $ (0.14   $ 0.09  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.34   $ 0.21     $ (0.14   $ 0.09  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

        

Basic

     162,781       162,626       162,772       158,727  

Diluted

     162,781       166,512       162,772       162,271  

 

6


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

(in thousands)    June 25, 2022     December 25, 2021  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 197,853     $ 523,414  

Restricted cash

     792       792  

Accounts and notes receivable, net

     178,201       117,903  

Inventory

     53,124       46,990  

Prepaid and other assets

     47,964       24,326  

Income tax receivable

     5,070       6,867  

Advertising fund assets, restricted

     55,596       45,360  

Assets held for sale

     3,275       3,275  
  

 

 

   

 

 

 

Total current assets

     541,875       768,927  

Notes receivable, net

     5,092       3,182  

Property and equipment, net

     1,481,064       1,350,984  

Operating lease right-of-use assets

     1,031,731       995,625  

Deferred commissions

     10,738       10,567  

Intangibles, net

     733,469       816,183  

Goodwill

     2,108,002       1,910,392  

Deferred tax assets

     1,360       1,509  
  

 

 

   

 

 

 

Total assets

   $ 5,913,331     $ 5,857,369  
  

 

 

   

 

 

 

Liabilities and shareholders’ equity

    

Current liabilities:

    

Accounts payable

   $ 115,424     $ 83,033  

Accrued expenses and other liabilities

     253,742       297,620  

Income taxes payable

     30,021       11,054  

Current portion of long-term debt

     23,590       26,044  

Income tax receivable liability

     24,255       24,255  

Advertising fund liabilities

     30,264       26,441  
  

 

 

   

 

 

 

Total current liabilities

     477,296       468,447  

Long-term debt, net

     2,464,909       2,356,320  

Deferred tax liability

     223,336       257,067  

Operating lease liabilities

     969,598       931,604  

Income tax receivable liability

     131,715       131,715  

Deferred revenue

     39,829       37,576  

Accrued expenses and other long-term liabilities

     23,188       29,398  
  

 

 

   

 

 

 

Total liabilities

     4,329,871       4,212,127  

Common stock

     1,677       1,674  

Additional paid-in capital

     1,614,927       1,605,890  

Retained earnings

     19,006       41,607  

Accumulated other comprehensive loss

     (52,796     (5,028
  

 

 

   

 

 

 

Total shareholders’ equity attributable to Driven Brands Holdings Inc.

     1,582,814       1,644,143  
  

 

 

   

 

 

 

Non-controlling interests

     646       1,099  
  

 

 

   

 

 

 

Total shareholders’ equity

     1,583,460       1,645,242  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 5,913,331     $ 5,857,369  
  

 

 

   

 

 

 

 

7


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

     Six months ended  
(in thousands)    June 25, 2022     June 26, 2021  

Net income (loss)

   $ (22,616   $ 15,235  

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

    

Depreciation and amortization

     71,110       50,275  

Trade name impairment

     125,450       —    

Non-cash lease cost

     35,049       37,938  

Loss on foreign denominated transactions

     14,908       5,707  

Gain on derivatives not designed as hedges

     —         (425

Bad debt expense

     936       1,739  

Asset impairment costs

     16       3,431  

Amortization of deferred financing costs and bond discounts

     4,565       3,619  

Benefit (provision) for deferred income taxes

     (31,908     4,742  

Loss on extinguishment of debt

     —         45,576  

Other, net

     (1,925     1,375  

Changes in assets and liabilities, net of acquisitions:

    

Accounts and notes receivable, net

     (61,461     (24,174

Inventory

     (6,899     (396

Prepaid and other assets

     (19,082     (20,885

Advertising fund assets and liabilities, restricted

     (1,321     12,548  

Deferred commissions

     (178     (809

Deferred revenue

     497       2,994  

Accounts payable

     20,209       3,860  

Accrued expenses and other liabilities

     (45,950     9,707  

Income tax receivable

     19,640       3,665  

Operating lease liabilities

     (25,651     (31,034
  

 

 

   

 

 

 

Cash provided by operating activities

     75,389       124,688  
  

 

 

   

 

 

 

Cash flows from investing activities:

       —    

Capital expenditures

     (148,763     (46,222

Cash used in business acquisitions, net of cash acquired

     (394,388     (205,556

Proceeds from sale-leaseback transactions

     56,083       49,166  

Proceeds from sale of company-operated stores

     —         5,775  

Proceeds from disposition of Denmark car wash operation

     1,551       —    

Proceeds from disposal of property and equipment

     632       —    
  

 

 

   

 

 

 

Cash used in investing activities

     (484,885     (196,837
  

 

 

   

 

 

 

 

8


Cash flows from financing activities:

    

Payment of debt extinguishment and issuance costs

     —         (2,408

Repayment of long-term debt

     (9,682     (712,649

Proceeds from revolving lines of credit and short-term debt

     105,000       213,800  

Repayments of revolving lines of credit and short-term debt

     —         (152,800

Repayment of principal portion of finance lease liability

     (1,156     (1,127

Proceeds from initial public offering, net of underwriting discounts

     —         661,500  

Net proceeds from underwriters’ exercise of over-allotment option

     —         99,225  

Repurchases of common stock

     —         (43,040

Payment for termination of interest rate swaps

     —         (21,826

Stock option exercises

     188       —    

Other, net

     (36     152  
  

 

 

   

 

 

 

Cash provided by financing activities

     94,314       40,827  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     (4,454     1,813  

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

     (319,636     (29,509

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

     197,853       147,257  

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

     44,511       30,882  

Restricted cash, end of period

     792       159  
  

 

 

   

 

 

 

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

   $ 243,156     $ 178,298  
  

 

 

   

 

 

 

 

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     Six months ended  
(in thousands, except per share amounts)    June 25, 2022     June 26, 2021     June 25, 2022     June 26, 2021  

Net income (loss)

   $ (57,044   $ 35,168     $ (22,616   $ 15,235  

Acquisition related costs(a)

     3,338       389       7,656       2,038  

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

     1,719       2,522       2,585       2,553  

Straight-line rent adjustment(c)

     4,217       3,358       8,310       5,843  

Equity-based compensation expense(d)

     4,233       1,028       6,851       2,011  

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

     13,937       (5,229     14,908       5,282  

Trade name impairment(f)

     125,450       —         125,450       —    

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

     (5,938     3,478       (6,062     2,692  

Loss on debt extinguishment(h)

     —         78       —         45,576  

Amortization related to acquired intangible assets(i)

     5,930       5,558       11,072       9,210  

Provision for uncertain tax positions(j)

     —         —         76       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income before tax impact of adjustments

     95,842       46,350       148,230       90,440  

Tax impact of adjustments(k)

     (36,184     (4,441     (40,796     (18,082
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

     59,658       41,909       107,434       72,358  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income attributable to non-controlling interest

     —         (36     (15     (30
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income attributable to Driven Brands Holdings Inc.

   $ 59,658     $ 41,945     $ 107,449     $ 72,388  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings per share

        

Basic(1)

   $ 0.36     $ 0.25     $ 0.65     $ 0.45  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted(1)

   $ 0.35     $ 0.25     $ 0.63     $ 0.44  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding

        

Basic

     162,781       162,626       162,772       158,727  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     166,659       166,512       166,692       162,271  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(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 $1.3 million and $2.6 million for the three and six months ended June 25, 2022, respectively, and adjusted net income attributable to participating securities used in the diluted earnings per share calculation was $1.1 million and $2.3 million for the three and six months ended June 25, 2022, 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     Six months ended  
(in thousands)    June 25, 2022     June 26, 2021     June 25, 2022     June 26, 2021  

Net income (loss)

     (57,044   $ 35,168     $ (22,616   $ 15,235  

Income tax expense

     (18,848     17,011       (5,880     12,565  

Interest expense, net

     26,270       16,612       51,623       34,702  

Depreciation and amortization

     38,087       26,423       71,110       50,275  
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     (11,535     95,214       94,237       112,777  
  

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition related costs(a)

     3,338       389       7,656       2,038  

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

     1,719       2,522       2,585       2,553  

Straight-line rent adjustment(c)

     4,217       3,358       8,310       5,843  

Equity-based compensation expense(d)

     4,233       1,028       6,851       2,011  

Foreign currency transaction loss, net(e)

     13,937       (5,229     14,908       5,282  

Trade name impairment(f)

     125,450       —         125,450       —    

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

     (5,938     3,478       (6,062     2,692  

Loss on debt extinguishment(h)

     —         78       —         45,576  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 135,421     $ 100,838     $ 253,935     $ 178,772  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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

g.

Relates to (gain) loss on sale leasebacks, the discontinuation of the use of a trade name, as well as impairment of certain fixed assets and operating lease right-of-use assets related to closed locations. Also represents lease exit costs and other costs associated with stores that were closed prior to the respective lease termination dates.

h.

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

i.

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

j.

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

k.

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     Six months ended  
(in thousands)    June 25, 2022     June 26, 2021     June 25, 2022     June 26, 2021  

Segment Adjusted EBITDA:

        

Maintenance

   $ 64,076     $ 44,561     $ 116,561     $ 85,001  

Car Wash

     53,677       43,069       109,397       77,224  

Paint, Collision & Glass

     32,916       21,856       61,928       39,495  

Platform Services

     20,541       17,602       34,706       28,610  

Corporate and other

     (35,123     (25,845     (67,485     (50,864

Store opening costs

     (666     (405     (1,172     (694
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 135,421     $ 100,838     $ 253,935     $ 178,772  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

12


DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

ADDITIONAL INFORMATION ON KEY PERFORMANCE INDICATORS (UNAUDITED)

 

     Three months ended June 25, 2022  
(in thousands)    Maintenance      Car Wash      Paint,
Collision &
Glass
     Platform
Services
     Total  

System-wide Store sales

              

Franchise stores

   $ 230,505      $ —          672,616      $ 129,928      $ 1,033,049  

Company-operated stores

     168,648        101,796        52,120        1,392        323,956  

Independently operated Stores

     —          54,942        —          —          54,942  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total System-wide Sales

   $ 399,153      $ 156,738      $ 724,736      $ 131,320      $ 1,411,947  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Store Count (in whole numbers)

              

Franchise stores

     1,001        —          1,611        201        2,813  

Company-operated stores

     558        356        160        1        1,075  

Independently operated Stores

     —          718        —          —          718  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Store Count

     1,559        1,074        1,771        202        4,606  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     Three months ended June 26, 2021  
(in thousands)    Maintenance      Car Wash      Paint,
Collision &
Glass
     Platform
Services
     Total  

System-wide Store sales

              

Franchise stores

   $ 195,083      $ —        $ 584,559      $ 116,010      $ 895,652  

Company-operated stores

     126,107        65,704      $ 13,019      $ 1,463        206,293  

Independently operated Stores

     —          56,379        —          —          56,379  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total System-wide Sales

   $ 321,190      $ 122,083      $ 597,578      $ 117,473      $ 1,158,324  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Store Count (in whole numbers)

              

Franchise stores

     981        —          1,622        199        2,802  

Company-operated stores

     504        246        33        1        784  

Independently operated Stores

     —          733        —          —          733  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Store Count

     1,485        979        1,655        200        4,319  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

62 Drive N Style stores are included in the Maintenance store count for the three months ended June 26, 2021 as previously reported, but none are included in store count for the three months ended June 25, 2022 as they are held for sale.

 

13


     Six months ended June 25, 2022  
(in thousands)    Maintenance      Car Wash      Paint,
Collision &
Glass
     Platform
Services
     Total  

System-wide Store sales

              

Franchise stores

   $ 430,789      $ —        $ 1,291,585      $ 219,570      $ 1,941,944  

Company-operated stores

     325,476        196,291        92,118        2,544        616,429  

Independently operated Stores

     —          118,031        —          —          118,031  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total System-wide Sales

   $ 756,265      $ 314,322      $ 1,383,703      $ 222,114      $ 2,676,404  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Store Count (in whole numbers)

              

Franchise stores

     1,001        —          1,611        201        2,813  

Company-operated stores

     558        356        160        1        1,075  

Independently operated Stores

     —          718        —          —          718  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Store Count

     1,559        1,074        1,771        202        4,606  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     Six months ended June 26, 2021  
(in thousands)    Maintenance      Car Wash      Paint,
Collision &
Glass
     Platform
Services
     Total  

System-wide Store sales

              

Franchise stores

   $ 358,937      $ —        $ 1,115,062      $ 184,384      $ 1,658,383  

Company-operated stores

     240,174        122,753        24,949      $ 2,446        390,322  

Independently operated Stores

     —          112,542        —          —          112,542  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total System-wide Sales

   $ 599,111      $ 235,295      $ 1,140,011      $ 186,830      $ 2,161,247  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Store Count (in whole numbers)

              

Franchise stores

     981        —          1,622        199        2,802  

Company-operated stores

     504        246        33        1        784  

Independently operated Stores

     —          733        —          —          733  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Store Count

     1,485        979        1,655        200        4,319  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

62 Drive N Style stores are included in the Maintenance store count for the six months ended June 26, 2021 as previously reported, but none are included in store count for the six months ended June 25, 2022 as they are held for sale.

EX-99.2

Exhibit 99.2

 

LOGO

DrivenBrands Q2 | 2022 2nd Quarter Highlights $508.6M Revenue ($57.0M) Net Loss ($0.34) Earnings Per Share $59.7M Adjusted Net Income $0.35 Adjusted Earnings Per Share $135.4M Adjusted EBITDA System-wide sales $1.41B Segment Performance Same Store Sales 15.0% (2.7%)/2.6%* 16.1% 11.8% 13.2% Maintenance Car Wash* Paint, Collision & Glass Platform Services DB Total * Excluding the impact of foreign exchange, Car Wash same-store sales increased 2.6%. 51% 10% 28% 11% % of System-wide sales 19% 10% 39% 32% % of Revenue 19% 12% 38% 31% % of Segment Adjusted EBITDA Maintenance Car Wash Paint, Collision & Glass Platform Services Net Store Growth +28 +11 +41 – DB +80 Maintenance Car Wash Paint, Collision & Glass Platform Services DB Total Long-Term Targets Low Single-Digit % Low Double-Digit % Low Double-Digit % Mid-to-High Teens % Same-store Sales Revenue Adjusted EBITDA Adjusted Net Income. This document contains Non-GAAP financial measures. For full financial data and Non-GAAP reconciliations, please refer to the associated press release dated July 27, 2022, available at investors.driven.bands.com. This document may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are not based on historical facts but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions. For risks and other factors that may cause actual results to differ materially from expectations, refer 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.