Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Driven Brands Holdings Inc. Reports First Quarter 2024 Results By: Driven Brands via Business Wire May 02, 2024 at 07:15 AM EDT --Achieved 13 consecutive quarters of same store sales growth-- --Maintenance segment delivered 5% same store sales growth driven by 7% in Take 5 Oil Change-- --Net Income of $4 million and Adjusted EBITDA of $131 million-- --Announces CFO transition-- --Reaffirms Fiscal Year 2024 Outlook-- Driven Brands Holdings Inc. (NASDAQ: DRVN) (“Driven Brands” or the “Company”) today reported financial results for the first quarter ending March 30, 2024. For the first quarter, Driven Brands delivered revenue of $572 million, up 2% versus the prior year. System-wide sales were $1.6 billion, up 7% versus the prior year primarily driven by 0.7% same store sales growth and 144 net new units. Net Income was $4.3 million or $0.03 per diluted share versus $29.7 million or $0.17 per diluted share in the prior year. Adjusted Net Income1 was $38.1 million or $0.23 per diluted share versus $39.1 million or $0.23 per diluted share in the prior year. Adjusted EBITDA1 was $131.0 million up 6% versus the prior year. Cash provided by operating activities increased $23.5 million or 64% to $60.3 million compared to $36.8 million in the prior year. “We are pleased with our strong performance in the first quarter of 2024. The Maintenance segment once again delivered exceptional results, largely driven by Take 5 Oil Change, which saw same store sales growth of 7%. We increased total company revenue, managed expenses and achieved our 13th consecutive quarter of same store sales growth,” said Jonathan Fitzpatrick, President and Chief Executive Officer. “Looking ahead to the remainder of 2024, we are confident in our full-year outlook and committed to prudently deploying capital and paying down debt,” Fitzpatrick concluded. First Quarter 2024 Key Performance Indicators by Segment System-wide Sales (in millions) Store Count Same-Store Sales Revenue (in millions) Segment Adjusted EBITDA (in millions) Maintenance $ 499.7 1,814 4.8 % $ 261.7 $ 91.4 Car Wash 143.3 1,106 (7.4 )% 144.7 29.1 Paint, Collision & Glass 882.1 1,883 1.3 % 106.4 30.8 Platform Services 78.0 205 N/A 53.8 19.9 Corporate / Other N/A N/A N/A 5.6 Total $ 1,603.1 5,008 0.7 % $ 572.2 Capital and Liquidity The Company ended the first quarter with total liquidity of $308.0 million consisting of $165.5 million in cash and cash equivalents and $142.5 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility. This does not include the additional $135.0 million Series 2022 Class A-1 Notes that expand the Company’s variable funding note borrowing capacity when the Company elects to exercise them, assuming certain conditions continue to be met. CFO Transition Driven Brands also announced today that Gary W. Ferrera, Chief Financial Officer, will step down to pursue a professional opportunity at a privately held company and move back to Colorado, where his family is located. Mr. Ferrera’s resignation will be effective after the filing of the Company’s quarterly report on Form 10-Q for the first quarter of 2024. Driven Brands has initiated a comprehensive search with the assistance of a leading executive recruitment firm to identify Mr. Ferrera’s successor. Effective upon Mr. Ferrera’s departure, Joel Arnao, Senior Vice President of FP&A, Treasury and Investor Relations, has been appointed as interim Chief Financial Officer, and Michael Beland, Senior Vice President and Chief Accounting Officer, has been designated as principal financial officer. Mr. Ferrera will be available to support transitional needs following his departure. Mr. Fitzpatrick added, “We appreciate Gary’s contributions to Driven Brands, which have been additive to our collective efforts to position the business for long-term value creation. The Driven Brands board and management team extend our sincere thanks to Gary and wish him well in his next chapter. Driven Brands is fortunate to have a strong bench of talent, and we appreciate that Joel and Michael have agreed to take on additional responsibilities while we undertake our CFO search. Joel and Michael are prominent members of our financial team and have a deep understanding of our business, strategy and operations. I am confident this will be a seamless transition for our stakeholders.” Mr. Ferrera’s resignation does not reflect any disagreement with the Company on any matter relating to the Company’s operations, policies or practices, or any issues regarding the Company’s accounting policies or practices. Fiscal Year 2024 Outlook The Company reaffirms its financial outlook for fiscal year 2024: 2024 Outlook Revenue ~$2.35 - $2.45 billion Adjusted EBITDA1 ~$535 - $565 million Adjusted EPS1 ~$0.88 - $1.00 Note: The Company has not included potential future M&A in its outlook for fiscal year 2024. ___________ 1 Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are non-GAAP financial measures. See “Reconciliation of Non-GAAP Financial Measures” for additional information on non-GAAP financial measures and a reconciliation to the most comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA and Adjusted EPS are made in a manner consistent with the relevant definitions and assumptions noted herein. Conference Call Driven Brands will host a conference call to discuss first quarter 2024 results today, Thursday, May 2, 2024, at 8:30 a.m. ET. The call will be available by webcast and can be accessed by visiting Driven Brands’ Investor Relations website at investors.drivenbrands.com. A replay of the call will be available for at least three months. About Driven Brands Driven 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®, Take 5 Car Wash®, Meineke Car Care Centers®, Maaco®, 1-800-Radiator & A/C®, Auto Glass Now®, and CARSTAR®. Driven Brands has more than 5,000 locations across 13 countries, and services approximately 70 million vehicles annually. Driven Brands’ network generates approximately $2.3 billion in annual revenue from approximately $6.4 billion in system-wide sales. Disclosure Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this Press Release, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, trends, plans, objectives of management, impact of accounting standards and outlook, impairments, and expected market growth are forward-looking statements. In particular, forward-looking statements include, among other things, statements relating to: (i) our strategy, outlook and growth prospects; (ii) our operational and financial targets and dividend policy; (iii) general economic trends and trends in the industry and markets; (iv) the risks and costs associated with the integration of, and our ability to integrate, our stores and business units successfully; (v) the proper application of generally accepted accounting principles, which are highly complex and involve many subjective assumptions, estimates, and judgments and (vi) the competitive environment in which we operate. Forward-looking statements are not based on historical facts, but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions, and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. It is not possible to predict or identify all such risks. These risks include, but are not limited to, the risk factors that are described under the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023 as well as in our other filings with the Securities and Exchange Commission, which are available on its website at www.sec.gov. Given these uncertainties, you should not place undue reliance on these forward-looking statements. DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended (in thousands, except per share amounts) March 30, 2024 April 1, 2023 Revenue: Franchise royalties and fees $ 45,045 $ 43,515 Company-operated store sales 374,456 376,066 Independently-operated store sales 53,047 52,532 Advertising contributions 24,070 21,677 Supply and other revenue 75,608 68,677 Total net revenue 572,226 562,467 Operating Expenses: Company-operated store expenses 242,053 243,409 Independently-operated store expenses 29,355 29,364 Advertising expenses 24,070 21,677 Supply and other expenses 36,216 37,266 Selling, general, and administrative expenses 116,402 112,328 Acquisition related costs 1,794 1,847 Store opening costs 1,263 1,025 Depreciation and amortization 43,229 38,198 Asset impairment charges and lease terminations 19,326 167 Total operating expenses 513,708 485,281 Operating income 58,518 77,186 Other expenses, net: Interest expense, net 43,772 38,141 Loss (gain) on foreign currency transactions 4,321 (1,675 ) Other expense, net 48,093 36,466 Income before taxes 10,425 40,720 Income tax expense 6,164 10,971 Net income 4,261 29,749 Net income attributable to non-controlling interest — — Net income attributable to Driven Brands Holdings Inc. $ 4,261 $ 29,749 Earnings per share: Basic $ 0.03 $ 0.18 Diluted $ 0.03 $ 0.17 Weighted average shares outstanding Basic 159,631 162,784 Diluted 160,604 166,874 DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share and per share amounts) March 30, 2024 December 30, 2023 Assets Current assets: Cash and cash equivalents $ 165,513 $ 176,522 Restricted cash 657 657 Accounts and notes receivable, net 165,992 151,259 Inventory 82,875 83,171 Prepaid and other assets 49,901 46,714 Income tax receivable 7,337 15,928 Assets held for sale 290,818 301,229 Advertising fund assets, restricted 52,711 45,627 Total current assets 815,804 821,107 Other assets 90,175 56,565 Property and equipment, net 1,425,882 1,438,496 Operating lease right-of-use assets 1,383,400 1,389,316 Deferred commissions 6,643 6,312 Intangibles, net 729,354 739,402 Goodwill 1,435,618 1,455,946 Deferred tax assets 3,453 3,660 Total assets $ 5,890,329 $ 5,910,804 Liabilities and shareholders' equity Current liabilities: Accounts payable $ 82,843 $ 67,526 Accrued expenses and other liabilities 246,522 242,171 Income tax payable 2,022 5,404 Current portion of long-term debt 33,020 32,673 Income tax receivable liability 41,437 56,001 Advertising fund liabilities 33,208 23,392 Total current liabilities 439,052 427,167 Long-term debt 2,905,033 2,910,812 Deferred tax liabilities 149,931 154,742 Operating lease liabilities 1,319,936 1,332,519 Income tax receivable liability 108,215 117,915 Deferred revenue 32,159 30,507 Long-term accrued expenses and other liabilities 29,187 30,419 Total liabilities 4,983,513 5,004,081 Preferred Stock $0.01 par value; 100,000,000 shares authorized; none issued or outstanding — — Common stock, $0.01 par value, 900,000,000 shares authorized: and 164,079,581 and 163,965,231 shares outstanding; respectively 1,641 1,640 Additional paid-in capital 1,664,764 1,652,401 Retained (deficit) earnings (705,826 ) (710,087 ) Accumulated other comprehensive loss (54,407 ) (37,875 ) Total shareholders’ equity attributable to Driven Brands Holdings Inc. 906,172 906,079 Non-controlling interests 644 644 Total shareholders' equity 906,816 906,723 Total liabilities and shareholders' equity $ 5,890,329 $ 5,910,804 DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended (in thousands) March 30, 2024 April 1, 2023 Net income $ 4,261 $ 29,749 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 43,229 38,198 Equity-based compensation expense 11,861 2,564 Loss on foreign denominated transactions 7,574 161 Gain on foreign currency derivatives (3,253 ) (1,836 ) (Gain) loss on sale and disposal of businesses, fixed assets, and sale-leaseback transactions (12,913 ) 1,671 Reclassification of interest rate hedge to income (519 ) (519 ) Bad debt expense 2,070 82 Asset impairment costs 19,326 167 Amortization of deferred financing costs and bond discounts 1,954 1,850 Amortization of cloud computing 1,345 — Benefit for deferred income taxes (2,807 ) 4,650 Other, net 10,669 4,043 Changes in assets and liabilities, net of acquisitions: Accounts and notes receivable, net (17,351 ) (44,084 ) Inventory (1,005 ) (5,473 ) Prepaid and other assets (4,270 ) (13,867 ) Advertising fund assets and liabilities, restricted 7,650 906 Other Assets (33,300 ) (7,382 ) Deferred commissions (331 ) 455 Deferred revenue 1,659 161 Accounts payable 14,165 25,597 Accrued expenses and other liabilities 6,293 (960 ) Income tax receivable 3,976 659 Cash provided by operating activities 60,283 36,792 Cash flows from investing activities: Capital expenditures (89,483 ) (169,155 ) Cash used in business acquisitions, net of cash acquired (2,024 ) (29,307 ) Proceeds from sale-leaseback transactions 4,550 16,772 Proceeds from sale or disposal of businesses and fixed assets 52,677 — Cash used in investing activities (34,280 ) (181,690 ) Cash flows from financing activities: Repayment of long-term debt (7,616 ) (7,002 ) Proceeds from revolving lines of credit and short-term debt 46,000 140,000 Repayments of revolving lines of credit and short-term debt (46,000 ) (25,000 ) Payment of Tax Receivable Agreement (24,718 ) — Repayment of principal portion of finance lease liability (886 ) (854 ) Stock option exercises — 1,380 Other, net — (32 ) Cash (used in) provided by financing activities (33,220 ) 108,492 Effect of exchange rate changes on cash 1,133 2,392 Net change in cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted (6,084 ) (34,014 ) Cash and cash equivalents, beginning of period 176,522 227,110 Cash included in advertising fund assets, restricted, beginning of period 38,537 32,871 Restricted cash, beginning of period 657 792 Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, beginning of period 215,716 260,773 Cash and cash equivalents, end of period 165,513 190,841 Cash included in advertising fund assets, restricted, end of period 43,462 35,126 Restricted cash, end of period 657 792 Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, end of period $ 209,632 $ 226,759 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES The following information provides definitions and reconciliations of the non-GAAP financial measures presented in this earnings release to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The Company has provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this earnings release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this earnings release. The non-GAAP financial measures in this earnings release may differ from similarly titled measures used by other companies. Non-GAAP Financial Measures in Outlook Driven Brands includes Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (“Adjusted EBITDA”) and Adjusted Earnings per Share (“Adjusted EPS”) in the Company’s Fiscal Year 2024 Outlook. Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures and have not been reconciled to the most comparable GAAP financial measures because it is not possible to do so without unreasonable efforts due to the uncertainty and potential variability of reconciling items, which are dependent on future events and often outside of management’s control and which could be significant. Because such items cannot be reasonably predicted with the level of precision required, we are unable to provide an outlook for the comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA and Adjusted EPS are made in a manner consistent with the relevant definitions and assumptions noted herein and in our filings with the SEC. Adjusted Net Income and Adjusted Earnings Per Share Adjusted Net Income and Adjusted EPS are considered non-GAAP financial measures under the SEC’s rules because they exclude certain amounts included in the net income attributable to Driven Brands common stockholders and diluted earnings per share attributable to Driven Brands common stockholders calculated in accordance with GAAP. Management believes that Adjusted Net Income and Adjusted EPS are meaningful measures to share with investors because they facilitate comparison of the current period performance with that of the comparable prior period. In addition, Adjusted Net Income and Adjusted EPS afford investors a view of what management considers to be Driven Brands’ core earnings performance as well as the ability to make a more informed assessment of such earnings performance with that of the prior period. The tables below reflect the calculation of Adjusted Net Income and Adjusted Earnings Per Share for the three months ended March 30, 2024, compared to the three months ended April 1, 2023. Net Income to Adjusted Net Income and Adjusted Earnings Per Share (Unaudited) Three Months Ended (in thousands, except per share data) March 30, 2024 April 1, 2023 Net income $ 4,261 $ 29,749 Acquisition related costs(a) 1,794 1,847 Non-core items and project costs, net(b) 4,711 1,824 Cloud computing amortization(c) 1,345 — Equity-based compensation expense(d) 11,861 2,564 Foreign currency transaction loss (gain), net(e) 4,321 (1,675 ) Asset sale leaseback (gain) loss, impairment and closed store expenses(f) 9,560 1,844 Amortization related to acquired intangible assets(g) 7,020 6,036 Valuation allowance for deferred tax asset(h) 1,134 — Adjusted net income before tax impact of adjustments 46,007 42,189 Tax impact of adjustments(i) (7,885 ) (3,085 ) Adjusted net income 38,122 39,104 Net income attributable to non-controlling interest — — Adjusted net income attributable to Driven Brands Holdings Inc. $ 38,122 $ 39,104 Earnings per share Basic $ 0.03 $ 0.18 Diluted $ 0.03 $ 0.17 Adjusted earnings per share(1) Basic $ 0.23 $ 0.24 Diluted $ 0.23 $ 0.23 Weighted average shares outstanding for Net Income Basic 159,631 162,784 Diluted 160,604 166,874 (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 and diluted earnings per share calculation was less than $1 million for the three months ended March 30, 2024 and April 1, 2023. Adjusted EBITDA Adjusted EBITDA is considered a non-GAAP financial measure under the Securities and Exchange Commission’s (“SEC”) rules because it excludes certain amounts included in net income calculated in accordance with GAAP. Management believes that Adjusted EBITDA is a meaningful measure to share with investors because it facilitates comparison of the current period performance with that of the comparable prior period. In addition, Adjusted EBITDA affords investors a view of what management considers to be Driven Brand’s core operating performance as well as the ability to make a more informed assessment of such operating performance as compared with that of the prior period. Please see the company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023, filed with the SEC on February 28, 2024, for additional information on Adjusted EBITDA. The tables below reflect the calculation of Adjusted EBITDA for the three months ended March 30, 2024, compared to the three months ended April 1, 2023. Net Income to Adjusted EBITDA Reconciliation (Unaudited) Three Months Ended (in thousands) March 30, 2024 April 1, 2023 Net income $ 4,261 $ 29,749 Income tax expense 6,164 10,971 Interest expense, net 43,772 38,141 Depreciation and amortization 43,229 38,198 EBITDA 97,426 117,059 Acquisition related costs(a) 1,794 1,847 Non-core items and project costs, net(b) 4,711 1,824 Cloud computing amortization(c) 1,345 — Equity-based compensation expense(d) 11,861 2,564 Foreign currency transaction loss (gain), net(e) 4,321 (1,675 ) Asset sale leaseback (gain) loss, impairment and closed store expenses(f) 9,560 1,844 Adjusted EBITDA $ 131,018 $ 123,463 Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share Footnotes (a) Consists of acquisition costs as reflected within the consolidated statements of operations, including legal, consulting and other fees, and expenses incurred in connection with acquisitions completed during the applicable period, as well as inventory rationalization expenses incurred in connection with acquisitions. We expect to incur similar costs in connection with other acquisitions in the future and, under U.S. GAAP, such costs relating to acquisitions are expensed as incurred and not capitalized. (b) Consists of discrete items and project costs, including third party consulting and professional fees associated with strategic transformation initiatives as well as non-recurring payroll-related costs. (c) Includes non-cash amortization expenses relating to cloud computing arrangements. (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 as well as gains and losses on cross currency swaps and forward contracts. (f) Relates to (gains) losses, net on sale leasebacks, impairment of certain fixed assets and operating lease right-of-use assets related to closed and underperforming locations, assets held for sale, and lease exit costs and other costs associated with stores that were closed prior to the respective lease termination dates. (g) Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the unaudited consolidated statement of operations. (h) Represents valuation allowances on income tax carryforwards in certain domestic jurisdictions that are not more likely than not to be realized. (i) Represents the tax impact of adjustments associated with the reconciling items between net income and Adjusted Net Income, excluding the provision for uncertain tax positions. To determine the tax impact of the deductible reconciling items, we utilized statutory income tax rates ranging from 9% to 36% depending upon the tax attributes of each adjustment and the applicable jurisdiction. DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES ADJUSTED EBITDA AND SEGMENT ADJUSTED EBITDA RECONCILIATION (UNAUDITED) Three Months Ended (in thousands) March 30, 2024 April 1, 2023 Segment Adjusted EBITDA: Maintenance $ 91,436 $ 72,233 Car Wash 29,134 41,048 Paint, Collision & Glass 30,820 35,450 Platform Services 19,871 17,008 Corporate and other (38,980 ) (41,251 ) Store opening costs (1,263 ) (1,025 ) Adjusted EBITDA $ 131,018 $ 123,463 DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES ADDITIONAL INFORMATION ON KEY PERFORMANCE INDICATORS (UNAUDITED) Three Months Ended March 30, 2024 (in thousands) Maintenance Car Wash Paint, Collision & Glass Platform Services Total System-wide Sales Franchise stores $ 278,861 $ — $ 819,615 $ 77,152 $ 1,175,628 Company-operated stores 220,871 90,227 62,509 849 374,456 Independently operated stores — 53,047 — — 53,047 Total System-wide Sales $ 499,732 $ 143,274 $ 882,124 $ 78,001 $ 1,603,131 Store Count (in whole numbers) Franchise stores 1,153 — 1,650 204 3,007 Company-operated stores 661 388 233 1 1,283 Independently operated stores — 718 — — 718 Total Store Count 1,814 1,106 1,883 205 5,008 Three Months Ended April 1, 2023 (in thousands) Maintenance Car Wash Paint, Collision & Glass Platform Services Total System-wide Sales Franchise stores $ 246,683 $ — $ 738,563 $ 89,103 $ 1,074,349 Company-operated stores 195,260 102,446 77,479 881 376,066 Independently operated stores — 52,532 — — 52,532 Total System-wide Sales $ 441,943 $ 154,978 $ 816,042 $ 89,984 $ 1,502,947 Store Count (in whole numbers) Franchise stores 1,067 — 1,642 204 2,913 Company-operated stores 599 400 235 1 1,235 Independently operated stores — 716 — — 716 Total Store Count 1,666 1,116 1,877 205 4,864 View source version on businesswire.com: https://www.businesswire.com/news/home/20240502248037/en/Contacts Shareholder/Analyst inquiries: Dawn Francfort ICR, Inc. investors@drivenbrands.com (203) 682-8200 Media inquiries: Taylor Blanchard taylor.blanchard@drivenbrands.com (704) 644-8129 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Driven Brands Holdings Inc. Reports First Quarter 2024 Results By: Driven Brands via Business Wire May 02, 2024 at 07:15 AM EDT --Achieved 13 consecutive quarters of same store sales growth-- --Maintenance segment delivered 5% same store sales growth driven by 7% in Take 5 Oil Change-- --Net Income of $4 million and Adjusted EBITDA of $131 million-- --Announces CFO transition-- --Reaffirms Fiscal Year 2024 Outlook-- Driven Brands Holdings Inc. (NASDAQ: DRVN) (“Driven Brands” or the “Company”) today reported financial results for the first quarter ending March 30, 2024. For the first quarter, Driven Brands delivered revenue of $572 million, up 2% versus the prior year. System-wide sales were $1.6 billion, up 7% versus the prior year primarily driven by 0.7% same store sales growth and 144 net new units. Net Income was $4.3 million or $0.03 per diluted share versus $29.7 million or $0.17 per diluted share in the prior year. Adjusted Net Income1 was $38.1 million or $0.23 per diluted share versus $39.1 million or $0.23 per diluted share in the prior year. Adjusted EBITDA1 was $131.0 million up 6% versus the prior year. Cash provided by operating activities increased $23.5 million or 64% to $60.3 million compared to $36.8 million in the prior year. “We are pleased with our strong performance in the first quarter of 2024. The Maintenance segment once again delivered exceptional results, largely driven by Take 5 Oil Change, which saw same store sales growth of 7%. We increased total company revenue, managed expenses and achieved our 13th consecutive quarter of same store sales growth,” said Jonathan Fitzpatrick, President and Chief Executive Officer. “Looking ahead to the remainder of 2024, we are confident in our full-year outlook and committed to prudently deploying capital and paying down debt,” Fitzpatrick concluded. First Quarter 2024 Key Performance Indicators by Segment System-wide Sales (in millions) Store Count Same-Store Sales Revenue (in millions) Segment Adjusted EBITDA (in millions) Maintenance $ 499.7 1,814 4.8 % $ 261.7 $ 91.4 Car Wash 143.3 1,106 (7.4 )% 144.7 29.1 Paint, Collision & Glass 882.1 1,883 1.3 % 106.4 30.8 Platform Services 78.0 205 N/A 53.8 19.9 Corporate / Other N/A N/A N/A 5.6 Total $ 1,603.1 5,008 0.7 % $ 572.2 Capital and Liquidity The Company ended the first quarter with total liquidity of $308.0 million consisting of $165.5 million in cash and cash equivalents and $142.5 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility. This does not include the additional $135.0 million Series 2022 Class A-1 Notes that expand the Company’s variable funding note borrowing capacity when the Company elects to exercise them, assuming certain conditions continue to be met. CFO Transition Driven Brands also announced today that Gary W. Ferrera, Chief Financial Officer, will step down to pursue a professional opportunity at a privately held company and move back to Colorado, where his family is located. Mr. Ferrera’s resignation will be effective after the filing of the Company’s quarterly report on Form 10-Q for the first quarter of 2024. Driven Brands has initiated a comprehensive search with the assistance of a leading executive recruitment firm to identify Mr. Ferrera’s successor. Effective upon Mr. Ferrera’s departure, Joel Arnao, Senior Vice President of FP&A, Treasury and Investor Relations, has been appointed as interim Chief Financial Officer, and Michael Beland, Senior Vice President and Chief Accounting Officer, has been designated as principal financial officer. Mr. Ferrera will be available to support transitional needs following his departure. Mr. Fitzpatrick added, “We appreciate Gary’s contributions to Driven Brands, which have been additive to our collective efforts to position the business for long-term value creation. The Driven Brands board and management team extend our sincere thanks to Gary and wish him well in his next chapter. Driven Brands is fortunate to have a strong bench of talent, and we appreciate that Joel and Michael have agreed to take on additional responsibilities while we undertake our CFO search. Joel and Michael are prominent members of our financial team and have a deep understanding of our business, strategy and operations. I am confident this will be a seamless transition for our stakeholders.” Mr. Ferrera’s resignation does not reflect any disagreement with the Company on any matter relating to the Company’s operations, policies or practices, or any issues regarding the Company’s accounting policies or practices. Fiscal Year 2024 Outlook The Company reaffirms its financial outlook for fiscal year 2024: 2024 Outlook Revenue ~$2.35 - $2.45 billion Adjusted EBITDA1 ~$535 - $565 million Adjusted EPS1 ~$0.88 - $1.00 Note: The Company has not included potential future M&A in its outlook for fiscal year 2024. ___________ 1 Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are non-GAAP financial measures. See “Reconciliation of Non-GAAP Financial Measures” for additional information on non-GAAP financial measures and a reconciliation to the most comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA and Adjusted EPS are made in a manner consistent with the relevant definitions and assumptions noted herein. Conference Call Driven Brands will host a conference call to discuss first quarter 2024 results today, Thursday, May 2, 2024, at 8:30 a.m. ET. The call will be available by webcast and can be accessed by visiting Driven Brands’ Investor Relations website at investors.drivenbrands.com. A replay of the call will be available for at least three months. About Driven Brands Driven 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®, Take 5 Car Wash®, Meineke Car Care Centers®, Maaco®, 1-800-Radiator & A/C®, Auto Glass Now®, and CARSTAR®. Driven Brands has more than 5,000 locations across 13 countries, and services approximately 70 million vehicles annually. Driven Brands’ network generates approximately $2.3 billion in annual revenue from approximately $6.4 billion in system-wide sales. Disclosure Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this Press Release, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, trends, plans, objectives of management, impact of accounting standards and outlook, impairments, and expected market growth are forward-looking statements. In particular, forward-looking statements include, among other things, statements relating to: (i) our strategy, outlook and growth prospects; (ii) our operational and financial targets and dividend policy; (iii) general economic trends and trends in the industry and markets; (iv) the risks and costs associated with the integration of, and our ability to integrate, our stores and business units successfully; (v) the proper application of generally accepted accounting principles, which are highly complex and involve many subjective assumptions, estimates, and judgments and (vi) the competitive environment in which we operate. Forward-looking statements are not based on historical facts, but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions, and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. It is not possible to predict or identify all such risks. These risks include, but are not limited to, the risk factors that are described under the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023 as well as in our other filings with the Securities and Exchange Commission, which are available on its website at www.sec.gov. Given these uncertainties, you should not place undue reliance on these forward-looking statements. DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended (in thousands, except per share amounts) March 30, 2024 April 1, 2023 Revenue: Franchise royalties and fees $ 45,045 $ 43,515 Company-operated store sales 374,456 376,066 Independently-operated store sales 53,047 52,532 Advertising contributions 24,070 21,677 Supply and other revenue 75,608 68,677 Total net revenue 572,226 562,467 Operating Expenses: Company-operated store expenses 242,053 243,409 Independently-operated store expenses 29,355 29,364 Advertising expenses 24,070 21,677 Supply and other expenses 36,216 37,266 Selling, general, and administrative expenses 116,402 112,328 Acquisition related costs 1,794 1,847 Store opening costs 1,263 1,025 Depreciation and amortization 43,229 38,198 Asset impairment charges and lease terminations 19,326 167 Total operating expenses 513,708 485,281 Operating income 58,518 77,186 Other expenses, net: Interest expense, net 43,772 38,141 Loss (gain) on foreign currency transactions 4,321 (1,675 ) Other expense, net 48,093 36,466 Income before taxes 10,425 40,720 Income tax expense 6,164 10,971 Net income 4,261 29,749 Net income attributable to non-controlling interest — — Net income attributable to Driven Brands Holdings Inc. $ 4,261 $ 29,749 Earnings per share: Basic $ 0.03 $ 0.18 Diluted $ 0.03 $ 0.17 Weighted average shares outstanding Basic 159,631 162,784 Diluted 160,604 166,874 DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share and per share amounts) March 30, 2024 December 30, 2023 Assets Current assets: Cash and cash equivalents $ 165,513 $ 176,522 Restricted cash 657 657 Accounts and notes receivable, net 165,992 151,259 Inventory 82,875 83,171 Prepaid and other assets 49,901 46,714 Income tax receivable 7,337 15,928 Assets held for sale 290,818 301,229 Advertising fund assets, restricted 52,711 45,627 Total current assets 815,804 821,107 Other assets 90,175 56,565 Property and equipment, net 1,425,882 1,438,496 Operating lease right-of-use assets 1,383,400 1,389,316 Deferred commissions 6,643 6,312 Intangibles, net 729,354 739,402 Goodwill 1,435,618 1,455,946 Deferred tax assets 3,453 3,660 Total assets $ 5,890,329 $ 5,910,804 Liabilities and shareholders' equity Current liabilities: Accounts payable $ 82,843 $ 67,526 Accrued expenses and other liabilities 246,522 242,171 Income tax payable 2,022 5,404 Current portion of long-term debt 33,020 32,673 Income tax receivable liability 41,437 56,001 Advertising fund liabilities 33,208 23,392 Total current liabilities 439,052 427,167 Long-term debt 2,905,033 2,910,812 Deferred tax liabilities 149,931 154,742 Operating lease liabilities 1,319,936 1,332,519 Income tax receivable liability 108,215 117,915 Deferred revenue 32,159 30,507 Long-term accrued expenses and other liabilities 29,187 30,419 Total liabilities 4,983,513 5,004,081 Preferred Stock $0.01 par value; 100,000,000 shares authorized; none issued or outstanding — — Common stock, $0.01 par value, 900,000,000 shares authorized: and 164,079,581 and 163,965,231 shares outstanding; respectively 1,641 1,640 Additional paid-in capital 1,664,764 1,652,401 Retained (deficit) earnings (705,826 ) (710,087 ) Accumulated other comprehensive loss (54,407 ) (37,875 ) Total shareholders’ equity attributable to Driven Brands Holdings Inc. 906,172 906,079 Non-controlling interests 644 644 Total shareholders' equity 906,816 906,723 Total liabilities and shareholders' equity $ 5,890,329 $ 5,910,804 DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended (in thousands) March 30, 2024 April 1, 2023 Net income $ 4,261 $ 29,749 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 43,229 38,198 Equity-based compensation expense 11,861 2,564 Loss on foreign denominated transactions 7,574 161 Gain on foreign currency derivatives (3,253 ) (1,836 ) (Gain) loss on sale and disposal of businesses, fixed assets, and sale-leaseback transactions (12,913 ) 1,671 Reclassification of interest rate hedge to income (519 ) (519 ) Bad debt expense 2,070 82 Asset impairment costs 19,326 167 Amortization of deferred financing costs and bond discounts 1,954 1,850 Amortization of cloud computing 1,345 — Benefit for deferred income taxes (2,807 ) 4,650 Other, net 10,669 4,043 Changes in assets and liabilities, net of acquisitions: Accounts and notes receivable, net (17,351 ) (44,084 ) Inventory (1,005 ) (5,473 ) Prepaid and other assets (4,270 ) (13,867 ) Advertising fund assets and liabilities, restricted 7,650 906 Other Assets (33,300 ) (7,382 ) Deferred commissions (331 ) 455 Deferred revenue 1,659 161 Accounts payable 14,165 25,597 Accrued expenses and other liabilities 6,293 (960 ) Income tax receivable 3,976 659 Cash provided by operating activities 60,283 36,792 Cash flows from investing activities: Capital expenditures (89,483 ) (169,155 ) Cash used in business acquisitions, net of cash acquired (2,024 ) (29,307 ) Proceeds from sale-leaseback transactions 4,550 16,772 Proceeds from sale or disposal of businesses and fixed assets 52,677 — Cash used in investing activities (34,280 ) (181,690 ) Cash flows from financing activities: Repayment of long-term debt (7,616 ) (7,002 ) Proceeds from revolving lines of credit and short-term debt 46,000 140,000 Repayments of revolving lines of credit and short-term debt (46,000 ) (25,000 ) Payment of Tax Receivable Agreement (24,718 ) — Repayment of principal portion of finance lease liability (886 ) (854 ) Stock option exercises — 1,380 Other, net — (32 ) Cash (used in) provided by financing activities (33,220 ) 108,492 Effect of exchange rate changes on cash 1,133 2,392 Net change in cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted (6,084 ) (34,014 ) Cash and cash equivalents, beginning of period 176,522 227,110 Cash included in advertising fund assets, restricted, beginning of period 38,537 32,871 Restricted cash, beginning of period 657 792 Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, beginning of period 215,716 260,773 Cash and cash equivalents, end of period 165,513 190,841 Cash included in advertising fund assets, restricted, end of period 43,462 35,126 Restricted cash, end of period 657 792 Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, end of period $ 209,632 $ 226,759 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES The following information provides definitions and reconciliations of the non-GAAP financial measures presented in this earnings release to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The Company has provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this earnings release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this earnings release. The non-GAAP financial measures in this earnings release may differ from similarly titled measures used by other companies. Non-GAAP Financial Measures in Outlook Driven Brands includes Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (“Adjusted EBITDA”) and Adjusted Earnings per Share (“Adjusted EPS”) in the Company’s Fiscal Year 2024 Outlook. Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures and have not been reconciled to the most comparable GAAP financial measures because it is not possible to do so without unreasonable efforts due to the uncertainty and potential variability of reconciling items, which are dependent on future events and often outside of management’s control and which could be significant. Because such items cannot be reasonably predicted with the level of precision required, we are unable to provide an outlook for the comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA and Adjusted EPS are made in a manner consistent with the relevant definitions and assumptions noted herein and in our filings with the SEC. Adjusted Net Income and Adjusted Earnings Per Share Adjusted Net Income and Adjusted EPS are considered non-GAAP financial measures under the SEC’s rules because they exclude certain amounts included in the net income attributable to Driven Brands common stockholders and diluted earnings per share attributable to Driven Brands common stockholders calculated in accordance with GAAP. Management believes that Adjusted Net Income and Adjusted EPS are meaningful measures to share with investors because they facilitate comparison of the current period performance with that of the comparable prior period. In addition, Adjusted Net Income and Adjusted EPS afford investors a view of what management considers to be Driven Brands’ core earnings performance as well as the ability to make a more informed assessment of such earnings performance with that of the prior period. The tables below reflect the calculation of Adjusted Net Income and Adjusted Earnings Per Share for the three months ended March 30, 2024, compared to the three months ended April 1, 2023. Net Income to Adjusted Net Income and Adjusted Earnings Per Share (Unaudited) Three Months Ended (in thousands, except per share data) March 30, 2024 April 1, 2023 Net income $ 4,261 $ 29,749 Acquisition related costs(a) 1,794 1,847 Non-core items and project costs, net(b) 4,711 1,824 Cloud computing amortization(c) 1,345 — Equity-based compensation expense(d) 11,861 2,564 Foreign currency transaction loss (gain), net(e) 4,321 (1,675 ) Asset sale leaseback (gain) loss, impairment and closed store expenses(f) 9,560 1,844 Amortization related to acquired intangible assets(g) 7,020 6,036 Valuation allowance for deferred tax asset(h) 1,134 — Adjusted net income before tax impact of adjustments 46,007 42,189 Tax impact of adjustments(i) (7,885 ) (3,085 ) Adjusted net income 38,122 39,104 Net income attributable to non-controlling interest — — Adjusted net income attributable to Driven Brands Holdings Inc. $ 38,122 $ 39,104 Earnings per share Basic $ 0.03 $ 0.18 Diluted $ 0.03 $ 0.17 Adjusted earnings per share(1) Basic $ 0.23 $ 0.24 Diluted $ 0.23 $ 0.23 Weighted average shares outstanding for Net Income Basic 159,631 162,784 Diluted 160,604 166,874 (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 and diluted earnings per share calculation was less than $1 million for the three months ended March 30, 2024 and April 1, 2023. Adjusted EBITDA Adjusted EBITDA is considered a non-GAAP financial measure under the Securities and Exchange Commission’s (“SEC”) rules because it excludes certain amounts included in net income calculated in accordance with GAAP. Management believes that Adjusted EBITDA is a meaningful measure to share with investors because it facilitates comparison of the current period performance with that of the comparable prior period. In addition, Adjusted EBITDA affords investors a view of what management considers to be Driven Brand’s core operating performance as well as the ability to make a more informed assessment of such operating performance as compared with that of the prior period. Please see the company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023, filed with the SEC on February 28, 2024, for additional information on Adjusted EBITDA. The tables below reflect the calculation of Adjusted EBITDA for the three months ended March 30, 2024, compared to the three months ended April 1, 2023. Net Income to Adjusted EBITDA Reconciliation (Unaudited) Three Months Ended (in thousands) March 30, 2024 April 1, 2023 Net income $ 4,261 $ 29,749 Income tax expense 6,164 10,971 Interest expense, net 43,772 38,141 Depreciation and amortization 43,229 38,198 EBITDA 97,426 117,059 Acquisition related costs(a) 1,794 1,847 Non-core items and project costs, net(b) 4,711 1,824 Cloud computing amortization(c) 1,345 — Equity-based compensation expense(d) 11,861 2,564 Foreign currency transaction loss (gain), net(e) 4,321 (1,675 ) Asset sale leaseback (gain) loss, impairment and closed store expenses(f) 9,560 1,844 Adjusted EBITDA $ 131,018 $ 123,463 Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share Footnotes (a) Consists of acquisition costs as reflected within the consolidated statements of operations, including legal, consulting and other fees, and expenses incurred in connection with acquisitions completed during the applicable period, as well as inventory rationalization expenses incurred in connection with acquisitions. We expect to incur similar costs in connection with other acquisitions in the future and, under U.S. GAAP, such costs relating to acquisitions are expensed as incurred and not capitalized. (b) Consists of discrete items and project costs, including third party consulting and professional fees associated with strategic transformation initiatives as well as non-recurring payroll-related costs. (c) Includes non-cash amortization expenses relating to cloud computing arrangements. (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 as well as gains and losses on cross currency swaps and forward contracts. (f) Relates to (gains) losses, net on sale leasebacks, impairment of certain fixed assets and operating lease right-of-use assets related to closed and underperforming locations, assets held for sale, and lease exit costs and other costs associated with stores that were closed prior to the respective lease termination dates. (g) Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the unaudited consolidated statement of operations. (h) Represents valuation allowances on income tax carryforwards in certain domestic jurisdictions that are not more likely than not to be realized. (i) Represents the tax impact of adjustments associated with the reconciling items between net income and Adjusted Net Income, excluding the provision for uncertain tax positions. To determine the tax impact of the deductible reconciling items, we utilized statutory income tax rates ranging from 9% to 36% depending upon the tax attributes of each adjustment and the applicable jurisdiction. DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES ADJUSTED EBITDA AND SEGMENT ADJUSTED EBITDA RECONCILIATION (UNAUDITED) Three Months Ended (in thousands) March 30, 2024 April 1, 2023 Segment Adjusted EBITDA: Maintenance $ 91,436 $ 72,233 Car Wash 29,134 41,048 Paint, Collision & Glass 30,820 35,450 Platform Services 19,871 17,008 Corporate and other (38,980 ) (41,251 ) Store opening costs (1,263 ) (1,025 ) Adjusted EBITDA $ 131,018 $ 123,463 DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES ADDITIONAL INFORMATION ON KEY PERFORMANCE INDICATORS (UNAUDITED) Three Months Ended March 30, 2024 (in thousands) Maintenance Car Wash Paint, Collision & Glass Platform Services Total System-wide Sales Franchise stores $ 278,861 $ — $ 819,615 $ 77,152 $ 1,175,628 Company-operated stores 220,871 90,227 62,509 849 374,456 Independently operated stores — 53,047 — — 53,047 Total System-wide Sales $ 499,732 $ 143,274 $ 882,124 $ 78,001 $ 1,603,131 Store Count (in whole numbers) Franchise stores 1,153 — 1,650 204 3,007 Company-operated stores 661 388 233 1 1,283 Independently operated stores — 718 — — 718 Total Store Count 1,814 1,106 1,883 205 5,008 Three Months Ended April 1, 2023 (in thousands) Maintenance Car Wash Paint, Collision & Glass Platform Services Total System-wide Sales Franchise stores $ 246,683 $ — $ 738,563 $ 89,103 $ 1,074,349 Company-operated stores 195,260 102,446 77,479 881 376,066 Independently operated stores — 52,532 — — 52,532 Total System-wide Sales $ 441,943 $ 154,978 $ 816,042 $ 89,984 $ 1,502,947 Store Count (in whole numbers) Franchise stores 1,067 — 1,642 204 2,913 Company-operated stores 599 400 235 1 1,235 Independently operated stores — 716 — — 716 Total Store Count 1,666 1,116 1,877 205 4,864 View source version on businesswire.com: https://www.businesswire.com/news/home/20240502248037/en/Contacts Shareholder/Analyst inquiries: Dawn Francfort ICR, Inc. investors@drivenbrands.com (203) 682-8200 Media inquiries: Taylor Blanchard taylor.blanchard@drivenbrands.com (704) 644-8129
--Achieved 13 consecutive quarters of same store sales growth-- --Maintenance segment delivered 5% same store sales growth driven by 7% in Take 5 Oil Change-- --Net Income of $4 million and Adjusted EBITDA of $131 million-- --Announces CFO transition-- --Reaffirms Fiscal Year 2024 Outlook--
Driven Brands Holdings Inc. (NASDAQ: DRVN) (“Driven Brands” or the “Company”) today reported financial results for the first quarter ending March 30, 2024. For the first quarter, Driven Brands delivered revenue of $572 million, up 2% versus the prior year. System-wide sales were $1.6 billion, up 7% versus the prior year primarily driven by 0.7% same store sales growth and 144 net new units. Net Income was $4.3 million or $0.03 per diluted share versus $29.7 million or $0.17 per diluted share in the prior year. Adjusted Net Income1 was $38.1 million or $0.23 per diluted share versus $39.1 million or $0.23 per diluted share in the prior year. Adjusted EBITDA1 was $131.0 million up 6% versus the prior year. Cash provided by operating activities increased $23.5 million or 64% to $60.3 million compared to $36.8 million in the prior year. “We are pleased with our strong performance in the first quarter of 2024. The Maintenance segment once again delivered exceptional results, largely driven by Take 5 Oil Change, which saw same store sales growth of 7%. We increased total company revenue, managed expenses and achieved our 13th consecutive quarter of same store sales growth,” said Jonathan Fitzpatrick, President and Chief Executive Officer. “Looking ahead to the remainder of 2024, we are confident in our full-year outlook and committed to prudently deploying capital and paying down debt,” Fitzpatrick concluded. First Quarter 2024 Key Performance Indicators by Segment System-wide Sales (in millions) Store Count Same-Store Sales Revenue (in millions) Segment Adjusted EBITDA (in millions) Maintenance $ 499.7 1,814 4.8 % $ 261.7 $ 91.4 Car Wash 143.3 1,106 (7.4 )% 144.7 29.1 Paint, Collision & Glass 882.1 1,883 1.3 % 106.4 30.8 Platform Services 78.0 205 N/A 53.8 19.9 Corporate / Other N/A N/A N/A 5.6 Total $ 1,603.1 5,008 0.7 % $ 572.2 Capital and Liquidity The Company ended the first quarter with total liquidity of $308.0 million consisting of $165.5 million in cash and cash equivalents and $142.5 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility. This does not include the additional $135.0 million Series 2022 Class A-1 Notes that expand the Company’s variable funding note borrowing capacity when the Company elects to exercise them, assuming certain conditions continue to be met. CFO Transition Driven Brands also announced today that Gary W. Ferrera, Chief Financial Officer, will step down to pursue a professional opportunity at a privately held company and move back to Colorado, where his family is located. Mr. Ferrera’s resignation will be effective after the filing of the Company’s quarterly report on Form 10-Q for the first quarter of 2024. Driven Brands has initiated a comprehensive search with the assistance of a leading executive recruitment firm to identify Mr. Ferrera’s successor. Effective upon Mr. Ferrera’s departure, Joel Arnao, Senior Vice President of FP&A, Treasury and Investor Relations, has been appointed as interim Chief Financial Officer, and Michael Beland, Senior Vice President and Chief Accounting Officer, has been designated as principal financial officer. Mr. Ferrera will be available to support transitional needs following his departure. Mr. Fitzpatrick added, “We appreciate Gary’s contributions to Driven Brands, which have been additive to our collective efforts to position the business for long-term value creation. The Driven Brands board and management team extend our sincere thanks to Gary and wish him well in his next chapter. Driven Brands is fortunate to have a strong bench of talent, and we appreciate that Joel and Michael have agreed to take on additional responsibilities while we undertake our CFO search. Joel and Michael are prominent members of our financial team and have a deep understanding of our business, strategy and operations. I am confident this will be a seamless transition for our stakeholders.” Mr. Ferrera’s resignation does not reflect any disagreement with the Company on any matter relating to the Company’s operations, policies or practices, or any issues regarding the Company’s accounting policies or practices. Fiscal Year 2024 Outlook The Company reaffirms its financial outlook for fiscal year 2024: 2024 Outlook Revenue ~$2.35 - $2.45 billion Adjusted EBITDA1 ~$535 - $565 million Adjusted EPS1 ~$0.88 - $1.00 Note: The Company has not included potential future M&A in its outlook for fiscal year 2024. ___________ 1 Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are non-GAAP financial measures. See “Reconciliation of Non-GAAP Financial Measures” for additional information on non-GAAP financial measures and a reconciliation to the most comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA and Adjusted EPS are made in a manner consistent with the relevant definitions and assumptions noted herein. Conference Call Driven Brands will host a conference call to discuss first quarter 2024 results today, Thursday, May 2, 2024, at 8:30 a.m. ET. The call will be available by webcast and can be accessed by visiting Driven Brands’ Investor Relations website at investors.drivenbrands.com. A replay of the call will be available for at least three months. About Driven Brands Driven 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®, Take 5 Car Wash®, Meineke Car Care Centers®, Maaco®, 1-800-Radiator & A/C®, Auto Glass Now®, and CARSTAR®. Driven Brands has more than 5,000 locations across 13 countries, and services approximately 70 million vehicles annually. Driven Brands’ network generates approximately $2.3 billion in annual revenue from approximately $6.4 billion in system-wide sales. Disclosure Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this Press Release, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, trends, plans, objectives of management, impact of accounting standards and outlook, impairments, and expected market growth are forward-looking statements. In particular, forward-looking statements include, among other things, statements relating to: (i) our strategy, outlook and growth prospects; (ii) our operational and financial targets and dividend policy; (iii) general economic trends and trends in the industry and markets; (iv) the risks and costs associated with the integration of, and our ability to integrate, our stores and business units successfully; (v) the proper application of generally accepted accounting principles, which are highly complex and involve many subjective assumptions, estimates, and judgments and (vi) the competitive environment in which we operate. Forward-looking statements are not based on historical facts, but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions, and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. It is not possible to predict or identify all such risks. These risks include, but are not limited to, the risk factors that are described under the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023 as well as in our other filings with the Securities and Exchange Commission, which are available on its website at www.sec.gov. Given these uncertainties, you should not place undue reliance on these forward-looking statements. DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended (in thousands, except per share amounts) March 30, 2024 April 1, 2023 Revenue: Franchise royalties and fees $ 45,045 $ 43,515 Company-operated store sales 374,456 376,066 Independently-operated store sales 53,047 52,532 Advertising contributions 24,070 21,677 Supply and other revenue 75,608 68,677 Total net revenue 572,226 562,467 Operating Expenses: Company-operated store expenses 242,053 243,409 Independently-operated store expenses 29,355 29,364 Advertising expenses 24,070 21,677 Supply and other expenses 36,216 37,266 Selling, general, and administrative expenses 116,402 112,328 Acquisition related costs 1,794 1,847 Store opening costs 1,263 1,025 Depreciation and amortization 43,229 38,198 Asset impairment charges and lease terminations 19,326 167 Total operating expenses 513,708 485,281 Operating income 58,518 77,186 Other expenses, net: Interest expense, net 43,772 38,141 Loss (gain) on foreign currency transactions 4,321 (1,675 ) Other expense, net 48,093 36,466 Income before taxes 10,425 40,720 Income tax expense 6,164 10,971 Net income 4,261 29,749 Net income attributable to non-controlling interest — — Net income attributable to Driven Brands Holdings Inc. $ 4,261 $ 29,749 Earnings per share: Basic $ 0.03 $ 0.18 Diluted $ 0.03 $ 0.17 Weighted average shares outstanding Basic 159,631 162,784 Diluted 160,604 166,874 DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share and per share amounts) March 30, 2024 December 30, 2023 Assets Current assets: Cash and cash equivalents $ 165,513 $ 176,522 Restricted cash 657 657 Accounts and notes receivable, net 165,992 151,259 Inventory 82,875 83,171 Prepaid and other assets 49,901 46,714 Income tax receivable 7,337 15,928 Assets held for sale 290,818 301,229 Advertising fund assets, restricted 52,711 45,627 Total current assets 815,804 821,107 Other assets 90,175 56,565 Property and equipment, net 1,425,882 1,438,496 Operating lease right-of-use assets 1,383,400 1,389,316 Deferred commissions 6,643 6,312 Intangibles, net 729,354 739,402 Goodwill 1,435,618 1,455,946 Deferred tax assets 3,453 3,660 Total assets $ 5,890,329 $ 5,910,804 Liabilities and shareholders' equity Current liabilities: Accounts payable $ 82,843 $ 67,526 Accrued expenses and other liabilities 246,522 242,171 Income tax payable 2,022 5,404 Current portion of long-term debt 33,020 32,673 Income tax receivable liability 41,437 56,001 Advertising fund liabilities 33,208 23,392 Total current liabilities 439,052 427,167 Long-term debt 2,905,033 2,910,812 Deferred tax liabilities 149,931 154,742 Operating lease liabilities 1,319,936 1,332,519 Income tax receivable liability 108,215 117,915 Deferred revenue 32,159 30,507 Long-term accrued expenses and other liabilities 29,187 30,419 Total liabilities 4,983,513 5,004,081 Preferred Stock $0.01 par value; 100,000,000 shares authorized; none issued or outstanding — — Common stock, $0.01 par value, 900,000,000 shares authorized: and 164,079,581 and 163,965,231 shares outstanding; respectively 1,641 1,640 Additional paid-in capital 1,664,764 1,652,401 Retained (deficit) earnings (705,826 ) (710,087 ) Accumulated other comprehensive loss (54,407 ) (37,875 ) Total shareholders’ equity attributable to Driven Brands Holdings Inc. 906,172 906,079 Non-controlling interests 644 644 Total shareholders' equity 906,816 906,723 Total liabilities and shareholders' equity $ 5,890,329 $ 5,910,804 DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended (in thousands) March 30, 2024 April 1, 2023 Net income $ 4,261 $ 29,749 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 43,229 38,198 Equity-based compensation expense 11,861 2,564 Loss on foreign denominated transactions 7,574 161 Gain on foreign currency derivatives (3,253 ) (1,836 ) (Gain) loss on sale and disposal of businesses, fixed assets, and sale-leaseback transactions (12,913 ) 1,671 Reclassification of interest rate hedge to income (519 ) (519 ) Bad debt expense 2,070 82 Asset impairment costs 19,326 167 Amortization of deferred financing costs and bond discounts 1,954 1,850 Amortization of cloud computing 1,345 — Benefit for deferred income taxes (2,807 ) 4,650 Other, net 10,669 4,043 Changes in assets and liabilities, net of acquisitions: Accounts and notes receivable, net (17,351 ) (44,084 ) Inventory (1,005 ) (5,473 ) Prepaid and other assets (4,270 ) (13,867 ) Advertising fund assets and liabilities, restricted 7,650 906 Other Assets (33,300 ) (7,382 ) Deferred commissions (331 ) 455 Deferred revenue 1,659 161 Accounts payable 14,165 25,597 Accrued expenses and other liabilities 6,293 (960 ) Income tax receivable 3,976 659 Cash provided by operating activities 60,283 36,792 Cash flows from investing activities: Capital expenditures (89,483 ) (169,155 ) Cash used in business acquisitions, net of cash acquired (2,024 ) (29,307 ) Proceeds from sale-leaseback transactions 4,550 16,772 Proceeds from sale or disposal of businesses and fixed assets 52,677 — Cash used in investing activities (34,280 ) (181,690 ) Cash flows from financing activities: Repayment of long-term debt (7,616 ) (7,002 ) Proceeds from revolving lines of credit and short-term debt 46,000 140,000 Repayments of revolving lines of credit and short-term debt (46,000 ) (25,000 ) Payment of Tax Receivable Agreement (24,718 ) — Repayment of principal portion of finance lease liability (886 ) (854 ) Stock option exercises — 1,380 Other, net — (32 ) Cash (used in) provided by financing activities (33,220 ) 108,492 Effect of exchange rate changes on cash 1,133 2,392 Net change in cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted (6,084 ) (34,014 ) Cash and cash equivalents, beginning of period 176,522 227,110 Cash included in advertising fund assets, restricted, beginning of period 38,537 32,871 Restricted cash, beginning of period 657 792 Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, beginning of period 215,716 260,773 Cash and cash equivalents, end of period 165,513 190,841 Cash included in advertising fund assets, restricted, end of period 43,462 35,126 Restricted cash, end of period 657 792 Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, end of period $ 209,632 $ 226,759 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES The following information provides definitions and reconciliations of the non-GAAP financial measures presented in this earnings release to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The Company has provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this earnings release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this earnings release. The non-GAAP financial measures in this earnings release may differ from similarly titled measures used by other companies. Non-GAAP Financial Measures in Outlook Driven Brands includes Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (“Adjusted EBITDA”) and Adjusted Earnings per Share (“Adjusted EPS”) in the Company’s Fiscal Year 2024 Outlook. Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures and have not been reconciled to the most comparable GAAP financial measures because it is not possible to do so without unreasonable efforts due to the uncertainty and potential variability of reconciling items, which are dependent on future events and often outside of management’s control and which could be significant. Because such items cannot be reasonably predicted with the level of precision required, we are unable to provide an outlook for the comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA and Adjusted EPS are made in a manner consistent with the relevant definitions and assumptions noted herein and in our filings with the SEC. Adjusted Net Income and Adjusted Earnings Per Share Adjusted Net Income and Adjusted EPS are considered non-GAAP financial measures under the SEC’s rules because they exclude certain amounts included in the net income attributable to Driven Brands common stockholders and diluted earnings per share attributable to Driven Brands common stockholders calculated in accordance with GAAP. Management believes that Adjusted Net Income and Adjusted EPS are meaningful measures to share with investors because they facilitate comparison of the current period performance with that of the comparable prior period. In addition, Adjusted Net Income and Adjusted EPS afford investors a view of what management considers to be Driven Brands’ core earnings performance as well as the ability to make a more informed assessment of such earnings performance with that of the prior period. The tables below reflect the calculation of Adjusted Net Income and Adjusted Earnings Per Share for the three months ended March 30, 2024, compared to the three months ended April 1, 2023. Net Income to Adjusted Net Income and Adjusted Earnings Per Share (Unaudited) Three Months Ended (in thousands, except per share data) March 30, 2024 April 1, 2023 Net income $ 4,261 $ 29,749 Acquisition related costs(a) 1,794 1,847 Non-core items and project costs, net(b) 4,711 1,824 Cloud computing amortization(c) 1,345 — Equity-based compensation expense(d) 11,861 2,564 Foreign currency transaction loss (gain), net(e) 4,321 (1,675 ) Asset sale leaseback (gain) loss, impairment and closed store expenses(f) 9,560 1,844 Amortization related to acquired intangible assets(g) 7,020 6,036 Valuation allowance for deferred tax asset(h) 1,134 — Adjusted net income before tax impact of adjustments 46,007 42,189 Tax impact of adjustments(i) (7,885 ) (3,085 ) Adjusted net income 38,122 39,104 Net income attributable to non-controlling interest — — Adjusted net income attributable to Driven Brands Holdings Inc. $ 38,122 $ 39,104 Earnings per share Basic $ 0.03 $ 0.18 Diluted $ 0.03 $ 0.17 Adjusted earnings per share(1) Basic $ 0.23 $ 0.24 Diluted $ 0.23 $ 0.23 Weighted average shares outstanding for Net Income Basic 159,631 162,784 Diluted 160,604 166,874 (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 and diluted earnings per share calculation was less than $1 million for the three months ended March 30, 2024 and April 1, 2023. Adjusted EBITDA Adjusted EBITDA is considered a non-GAAP financial measure under the Securities and Exchange Commission’s (“SEC”) rules because it excludes certain amounts included in net income calculated in accordance with GAAP. Management believes that Adjusted EBITDA is a meaningful measure to share with investors because it facilitates comparison of the current period performance with that of the comparable prior period. In addition, Adjusted EBITDA affords investors a view of what management considers to be Driven Brand’s core operating performance as well as the ability to make a more informed assessment of such operating performance as compared with that of the prior period. Please see the company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023, filed with the SEC on February 28, 2024, for additional information on Adjusted EBITDA. The tables below reflect the calculation of Adjusted EBITDA for the three months ended March 30, 2024, compared to the three months ended April 1, 2023. Net Income to Adjusted EBITDA Reconciliation (Unaudited) Three Months Ended (in thousands) March 30, 2024 April 1, 2023 Net income $ 4,261 $ 29,749 Income tax expense 6,164 10,971 Interest expense, net 43,772 38,141 Depreciation and amortization 43,229 38,198 EBITDA 97,426 117,059 Acquisition related costs(a) 1,794 1,847 Non-core items and project costs, net(b) 4,711 1,824 Cloud computing amortization(c) 1,345 — Equity-based compensation expense(d) 11,861 2,564 Foreign currency transaction loss (gain), net(e) 4,321 (1,675 ) Asset sale leaseback (gain) loss, impairment and closed store expenses(f) 9,560 1,844 Adjusted EBITDA $ 131,018 $ 123,463 Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share Footnotes (a) Consists of acquisition costs as reflected within the consolidated statements of operations, including legal, consulting and other fees, and expenses incurred in connection with acquisitions completed during the applicable period, as well as inventory rationalization expenses incurred in connection with acquisitions. We expect to incur similar costs in connection with other acquisitions in the future and, under U.S. GAAP, such costs relating to acquisitions are expensed as incurred and not capitalized. (b) Consists of discrete items and project costs, including third party consulting and professional fees associated with strategic transformation initiatives as well as non-recurring payroll-related costs. (c) Includes non-cash amortization expenses relating to cloud computing arrangements. (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 as well as gains and losses on cross currency swaps and forward contracts. (f) Relates to (gains) losses, net on sale leasebacks, impairment of certain fixed assets and operating lease right-of-use assets related to closed and underperforming locations, assets held for sale, and lease exit costs and other costs associated with stores that were closed prior to the respective lease termination dates. (g) Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the unaudited consolidated statement of operations. (h) Represents valuation allowances on income tax carryforwards in certain domestic jurisdictions that are not more likely than not to be realized. (i) Represents the tax impact of adjustments associated with the reconciling items between net income and Adjusted Net Income, excluding the provision for uncertain tax positions. To determine the tax impact of the deductible reconciling items, we utilized statutory income tax rates ranging from 9% to 36% depending upon the tax attributes of each adjustment and the applicable jurisdiction. DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES ADJUSTED EBITDA AND SEGMENT ADJUSTED EBITDA RECONCILIATION (UNAUDITED) Three Months Ended (in thousands) March 30, 2024 April 1, 2023 Segment Adjusted EBITDA: Maintenance $ 91,436 $ 72,233 Car Wash 29,134 41,048 Paint, Collision & Glass 30,820 35,450 Platform Services 19,871 17,008 Corporate and other (38,980 ) (41,251 ) Store opening costs (1,263 ) (1,025 ) Adjusted EBITDA $ 131,018 $ 123,463 DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES ADDITIONAL INFORMATION ON KEY PERFORMANCE INDICATORS (UNAUDITED) Three Months Ended March 30, 2024 (in thousands) Maintenance Car Wash Paint, Collision & Glass Platform Services Total System-wide Sales Franchise stores $ 278,861 $ — $ 819,615 $ 77,152 $ 1,175,628 Company-operated stores 220,871 90,227 62,509 849 374,456 Independently operated stores — 53,047 — — 53,047 Total System-wide Sales $ 499,732 $ 143,274 $ 882,124 $ 78,001 $ 1,603,131 Store Count (in whole numbers) Franchise stores 1,153 — 1,650 204 3,007 Company-operated stores 661 388 233 1 1,283 Independently operated stores — 718 — — 718 Total Store Count 1,814 1,106 1,883 205 5,008 Three Months Ended April 1, 2023 (in thousands) Maintenance Car Wash Paint, Collision & Glass Platform Services Total System-wide Sales Franchise stores $ 246,683 $ — $ 738,563 $ 89,103 $ 1,074,349 Company-operated stores 195,260 102,446 77,479 881 376,066 Independently operated stores — 52,532 — — 52,532 Total System-wide Sales $ 441,943 $ 154,978 $ 816,042 $ 89,984 $ 1,502,947 Store Count (in whole numbers) Franchise stores 1,067 — 1,642 204 2,913 Company-operated stores 599 400 235 1 1,235 Independently operated stores — 716 — — 716 Total Store Count 1,666 1,116 1,877 205 4,864 View source version on businesswire.com: https://www.businesswire.com/news/home/20240502248037/en/
Shareholder/Analyst inquiries: Dawn Francfort ICR, Inc. investors@drivenbrands.com (203) 682-8200 Media inquiries: Taylor Blanchard taylor.blanchard@drivenbrands.com (704) 644-8129