Delivers Strong Same-Store Sales and Net Store Growth
Reports Robust Operating Income and Earnings per Share Growth
Provides Fiscal 2022 Guidance
CHARLOTTE, N.C., Feb. 16, 2022 (GLOBE NEWSWIRE) -- Driven Brands Holdings Inc. (NASDAQ: DRVN) (“Driven Brands” or “the Company”) today reported financial results for the fourth quarter and fiscal year ended December 25, 2021.
For the fourth quarter, revenue was $391.9 million, an increase of 36% versus the prior year. System-wide sales were $1.2 billion, an increase of 26% versus the prior year, with 6% net store growth and an increase in consolidated same-store sales of 16.4%.
The $(0.23) loss per diluted share in the fourth quarter was driven by a $56 million one-time transaction expense associated with the acquisition of Auto Glass Now (“AGN”), which closed on December 30, 2021.
Adjusted earnings per diluted share2 was $0.18 for the fourth quarter.
For fiscal year 2021, revenue was $1.5 billion, an increase of 62% versus the prior year. System-wide sales were $4.5 billion, an increase of 35% versus the prior year, with 6% net store growth and an increase in consolidated same-store sales of 17.1%.
Earnings per diluted share was $0.06 for the fiscal year.
Adjusted earnings per diluted share2 was $0.88 for the fiscal year.
“Our results are a testament to the strength and diversity of the Driven Brands portfolio and the hard work the team has demonstrated throughout 2021,” said Jonathan Fitzpatrick, president and chief executive officer. “Our employees and franchisees continued to adapt to an ever-changing landscape, exceeding our expectations and delivering industry-leading results.
“We are pleased to release our fiscal 2022 guidance5 of approximately $465 million of Adjusted EBITDA. With our scale, the significant whitespace in this fragmented and needs-based industry, and our robust cash generation, we are well positioned to maximize long-term value for all of our stakeholders.”
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5 See Disclosure Regarding Non-GAAP Financial Measures
Fourth Quarter Highlights
- Revenue increased 36% versus the prior year, driven by same-store sales growth and net store growth.
- Consolidated same-store sales increased 16.4% for the quarter and all segments posted positive same-store sales.
- The Company added 102 net new stores during the quarter.
- The Company recorded a net loss in the fourth quarter of $(38.8) million, driven by a $56 million one-time transaction expense associated with the acquisition of AGN.
- Adjusted Net Income1 was $31.2 million.
- Adjusted EBITDA3 was $85.0 million.
Fourth Quarter 2021 Key Performance Indicators by Segment
| System-wide Sales (in millions) | Store Count* | Same-Store Sales | Revenue (in millions) | Segment Adjusted EBITDA4 (in millions) | |||||
| Maintenance | $ | 330.8 | 1,505 | 25.7 | % | $ | 159.5 | $ | 46.2 |
| Car Wash | 124.0 | 1,058 | 6.2 | % | 125.3 | 37.8 | |||
| Paint, Collision & Glass | 643.4 | 1,648 | 11.4 | % | 59.6 | 21.2 | |||
| Platform Services | 84.0 | 201 | 35.2 | % | 40.3 | 12.1 | |||
| Corporate / Other | N/A | N/A | N/A | 7.2 | |||||
| Total | $ | 1,182.2 | 4,412 | 16.4 | % | $ | 391.9 | ||
*Drive N Style is currently held for sale. As a result, 62 stores have been removed from Maintenance store count. Net store growth percentages reflect this change in both current and prior year periods.
Capital and Liquidity
During the fourth quarter, the Company closed on a $500 million term loan. The proceeds from this issuance will be used for general corporate purposes, including acquisitions.
The Company ended the fourth quarter with total liquidity of $920.6 million, which included $523.4 million in cash and cash equivalents and $397.2 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility.
Fiscal Year 2022 Guidance
The Company is providing the following guidance5 for the fiscal year ending December 31, 2022:
- Revenue of approximately $1.9 billion.
- Adjusted EBITDA3 of approximately $465 million.
- Adjusted Earnings per Share2 of approximately $1.04.
The above guidance includes the impact of the 79 acquired AGN stores and the impact of the 53rd week in fiscal year 2022. The impact of the extra week is expected to yield approximately $16 million in revenue, $4 million in Adjusted EBITDA3 and approximately $0.02 in Adjusted Earnings Per Share2.
The Company also expects:
- Mid-single-digit same-store sales growth.
- Net store growth of approximately 225:
- Maintenance: approximately 145 stores of which 65% will be franchised and 35% will be company-operated
- Car Wash: approximately 45 stores which will be company-operated
- Paint, Collision & Glass: approximately 35 stores which will be company-operated.
The Company has not included future M&A in its guidance for fiscal year 2022.
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5 See Disclosure Regarding Non-GAAP Financial Measures
Conference Call
Driven Brands will host a conference call to discuss fourth quarter and fiscal year 2021 results and its guidance for fiscal year 2022 today, Wednesday, February 16, 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 April 26, 2022.
About Driven Brands
Driven Brands™, headquartered in Charlotte, NC, is the largest automotive services company in North America, providing a range of consumer and commercial automotive needs, including paint, collision, glass, vehicle repair, oil change, maintenance and car wash. Driven Brands is the parent company of some of North America’s leading automotive service businesses including Take 5 Oil Change®, Meineke Car Care Centers®, Maaco®, 1-800-Radiator & A/C®, and CARSTAR®. Driven Brands has more than 4,400 locations across 15 countries, and services over 50 million vehicles annually. Driven Brands’ network generates more than $1 billion in revenue from more than $4 billion in system-wide sales.
Contacts
| Shareholder/Analyst inquiries: | Media inquiries: |
| Rachel Webb | Taylor Blanchard |
| rachel.webb@drivenbrands.com | taylor.blanchard@drivenbrands.com |
| (704) 644-8125 | (704) 644-8129 |
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 26, 2020, as supplemented by the “Risk Factors” section in our Quarterly Report on Form 10-Q for the quarter ended September 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 reconciliations at the end of 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.
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1 “Adjusted Net Income” is calculated by eliminating from net income (loss) the adjustments described for Adjusted EBITDA, amortization related to acquired intangible assets and the tax effect of the adjustments. Please refer to Non-GAAP reconciliation 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 Non-GAAP reconciliation 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 Non-GAAP reconciliation 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 reconciliation to Adjusted EBITDA located in the financial supplement in this release.
DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| Three Months Ended | Year Ended | |||||||||||||||
| (in thousands, except per share amounts) | December 25, 2021 | December 26, 2020 | December 25, 2021 | December 26, 2020 | ||||||||||||
| Revenue: | ||||||||||||||||
| Franchise royalties and fees | $ | 37,173 | $ | 22,912 | $ | 144,413 | $ | 117,126 | ||||||||
| Company-operated store sales | 239,838 | 165,928 | 843,646 | 489,267 | ||||||||||||
| Independently-operated store sales | 43,763 | 36,598 | 204,246 | 67,193 | ||||||||||||
| Advertising contributions | 18,934 | 17,243 | 75,599 | 59,672 | ||||||||||||
| Supply and other revenue | 52,177 | 45,827 | 199,376 | 170,942 | ||||||||||||
| Total revenue | 391,885 | 288,508 | 1,467,280 | 904,200 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Company-operated store expenses | 148,742 | 103,575 | 515,837 | 305,908 | ||||||||||||
| Independently-operated store expenses | 24,451 | 23,056 | 114,115 | 41,051 | ||||||||||||
| Advertising expenses | 18,100 | 19,560 | 74,765 | 61,989 | ||||||||||||
| Supply and other expenses | 31,901 | 23,213 | 112,318 | 93,380 | ||||||||||||
| Selling, general and administrative expenses | 73,714 | 65,170 | 292,263 | 218,277 | ||||||||||||
| Acquisition costs | 59,712 | 2,395 | 62,386 | 15,682 | ||||||||||||
| Store opening costs | 1,137 | 1,007 | 2,497 | 2,928 | ||||||||||||
| Depreciation and amortization | 34,055 | 29,458 | 112,777 | 62,114 | ||||||||||||
| Asset impairment charges | 96 | 1,410 | 3,257 | 8,142 | ||||||||||||
| Total operating expenses | 391,908 | 268,844 | 1,290,215 | 809,471 | ||||||||||||
| Operating income (loss) | (23 | ) | 19,664 | 177,065 | 94,729 | |||||||||||
| Other income (expense), net: | ||||||||||||||||
| Interest expense, net | 23,524 | 30,673 | 75,914 | 95,646 | ||||||||||||
| Loss (gain) on foreign currency transactions, net | 14,327 | (13,618 | ) | 20,683 | (13,563 | ) | ||||||||||
| Loss on debt extinguishment | — | 4,817 | 45,576 | 5,490 | ||||||||||||
| Total other expenses, net | 37,851 | 21,872 | 142,173 | 87,573 | ||||||||||||
| Income (loss) before taxes | (37,874 | ) | (2,208 | ) | 34,892 | 7,156 | ||||||||||
| Income tax expense | 911 | 5,263 | 25,356 | 11,372 | ||||||||||||
| Net income (loss) | (38,785 | ) | (7,471 | ) | 9,536 | (4,216 | ) | |||||||||
| Net income (loss) attributable to non-controlling interests | (28 | ) | 17 | (96 | ) | (17 | ) | |||||||||
| Net income (loss) attributable to Driven Brands Holdings Inc. | $ | (38,757 | ) | $ | (7,488 | ) | $ | 9,632 | $ | (4,199 | ) | |||||
| Earnings (loss) per share(1) | ||||||||||||||||
| Basic | $ | (0.23 | ) | $ | (0.06 | ) | $ | 0.06 | $ | (0.04 | ) | |||||
| Diluted | $ | (0.23 | ) | $ | (0.06 | ) | $ | 0.06 | $ | (0.04 | ) | |||||
| Weighted average shares outstanding(1) | ||||||||||||||||
| Basic | 162,646 | 127,256 | 160,684 | 104,318 | ||||||||||||
| Diluted | 162,646 | 127,256 | 164,644 | 104,318 | ||||||||||||
(1) Share and per share amounts have been adjusted to reflect an implied 88,990-for-one stock split that became effective on January 14, 2021.
DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| (in thousands) | December 25, 2021 | December 26, 2020 | ||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 523,414 | $ | 172,611 | ||
| Restricted cash | 792 | 15,827 | ||||
| Accounts and notes receivable, net | 117,903 | 84,805 | ||||
| Inventory | 46,990 | 43,039 | ||||
| Prepaid and other assets | 24,326 | 25,070 | ||||
| Income tax receivable | 1,539 | 3,055 | ||||
| Assets held for sale | 3,275 | — | ||||
| Advertising fund assets, restricted | 45,360 | 29,276 | ||||
| Total current assets | 763,599 | 373,683 | ||||
| Notes receivable, net | 3,182 | 3,828 | ||||
| Property and equipment, net | 1,350,984 | 827,392 | ||||
| Operating lease right-of-use assets | 995,625 | 884,927 | ||||
| Deferred commissions | 10,567 | 8,661 | ||||
| Intangibles, net | 816,183 | 829,308 | ||||
| Goodwill | 1,910,392 | 1,727,351 | ||||
| Total assets | $ | 5,850,532 | $ | 4,655,150 | ||
| Liabilities and shareholders' equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 83,033 | $ | 67,802 | ||
| Accrued expenses and other liabilities | 297,620 | 190,867 | ||||
| Income taxes payable | 5,726 | 3,513 | ||||
| Current portion of long-term debt | 23,040 | 22,988 | ||||
| Advertising fund liabilities | 26,441 | 20,276 | ||||
| Total current liabilities | 435,860 | 305,446 | ||||
| Long-term debt, net | 2,359,324 | 2,102,219 | ||||
| Operating lease liabilities | 931,604 | 818,001 | ||||
| Deferred tax liabilities | 255,558 | 249,043 | ||||
| Deferred revenue | 37,576 | 20,757 | ||||
| Income tax receivable liability | 155,970 | — | ||||
| Long-term accrued expenses and other liabilities | 29,398 | 53,324 | ||||
| Total liabilities | 4,205,290 | 3,548,790 | ||||
| Common stock | 1,674 | 565 | ||||
| Additional paid-in capital | 1,605,890 | 1,055,172 | ||||
| Retained earnings | 41,607 | 31,975 | ||||
| Accumulated other comprehensive income (loss) | (5,028 | ) | 16,528 | |||
| Total shareholders' equity attributable to Driven Brands Holdings Inc. | 1,644,143 | 1,104,240 | ||||
| Non-controlling interests | 1,099 | 2,120 | ||||
| Total shareholders' equity | 1,645,242 | 1,106,360 | ||||
| Total liabilities and shareholders' equity | $ | 5,850,532 | $ | 4,655,150 | ||
DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Fiscal year ended | |||||||
| (in thousands) | December 25, 2021 | December 26, 2020 | |||||
| Net income (loss) | $ | 9,536 | $ | (4,216 | ) | ||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 112,777 | 62,114 | |||||
| Noncash lease cost | 70,143 | 49,348 | |||||
| Loss (gain) on foreign denominated transactions | 25,324 | (23,245 | ) | ||||
| Bad debt expense | 1,854 | 7,059 | |||||
| Asset impairment costs | 3,257 | 8,142 | |||||
| Amortization of deferred financing costs and bond discounts | 7,002 | 10,890 | |||||
| Loss (gain) on foreign currency derivative | (4,642 | ) | 10,033 | ||||
| Provision for deferred income taxes | 9,866 | 3,936 | |||||
| Loss on extinguishment of debt | 45,576 | 5,490 | |||||
| Other, net | (9,235 | ) | 1,408 | ||||
| Changes in assets and liabilities: | |||||||
| Accounts and notes receivable, net | (35,912 | ) | (11,782 | ) | |||
| Inventory | (5,723 | ) | (2,904 | ) | |||
| Prepaid and other assets | (30,260 | ) | (5,658 | ) | |||
| Advertising fund assets and liabilities, restricted | 9,386 | (369 | ) | ||||
| Deferred commissions | (1,899 | ) | (1,927 | ) | |||
| Deferred revenue | 6,678 | 6,278 | |||||
| Accounts payable | 6,905 | (4,454 | ) | ||||
| Accrued expenses and other liabilities | 119,051 | 15,956 | |||||
| Income tax receivable | 4,466 | 3,734 | |||||
| Operating lease liabilities | (60,323 | ) | (45,847 | ) | |||
| Cash provided by operating activities | 283,827 | 83,986 | |||||
| Cash flows from investing activities: | |||||||
| Capital expenditures | (160,760 | ) | (52,459 | ) | |||
| Cash used in business acquisitions, net of cash acquired | (800,829 | ) | (105,031 | ) | |||
| Proceeds from sale-leaseback transactions | 144,134 | 100,174 | |||||
| Proceeds from disposition of business | 1,529 | — | |||||
| Proceeds from disposal of fixed assets | 990 | — | |||||
| Cash used in investing activities | (814,936 | ) | (57,316 | ) | |||
| Cash flows from financing activities: | |||||||
| Payment of contingent consideration related to acquisitions | — | (2,783 | ) | ||||
| Payment of debt issuance cost | (19,756 | ) | (22,932 | ) | |||
| Proceeds from the issuance of long-term debt | 950,000 | 625,000 | |||||
| Repayment of long-term debt | (721,500 | ) | (448,213 | ) | |||
| Proceeds from revolving lines of credit and short-term debt | 526,800 | 391,301 | |||||
| Repayments of revolving lines of credit and short-term debt | (544,800 | ) | (432,800 | ) | |||
| Repayment of principal portion of finance lease liability | (2,199 | ) | (595 | ) | |||
| Proceeds from failed sale-leaseback transactions | 538 | 5,633 | |||||
| Proceeds from initial public offering, net of underwriting discounts | 661,500 | — | |||||
| Net proceeds from follow-on public offering | 99,225 | — | |||||
| Repurchases of common stock | (43,040 | ) | — | ||||
| Proceeds from stock option exercises | 505 | — | |||||
| Payments for termination of interest rate swaps | (21,826 | ) | — | ||||
| Proceeds from issuance of equity shares | — | 2,609 | |||||
| Other, net | 89 | 1,423 | |||||
| Cash provided by financing activities | 885,536 | 118,643 | |||||
| Effect of exchange rate changes on cash | 558 | 4,468 | |||||
| Net change in cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted | 354,985 | 149,781 | |||||
| Cash and cash equivalents, beginning of period | 172,611 | 34,935 | |||||
| Cash included in advertising fund assets, restricted, beginning of period | 19,369 | 23,091 | |||||
| Restricted cash, beginning of period | 15,827 | — | |||||
| Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, beginning of period | 207,807 | 58,026 | |||||
| Cash and cash equivalents, end of period | 523,414 | 172,611 | |||||
| Cash included in advertising fund assets, restricted, end of period | 38,586 | 19,369 | |||||
| Restricted cash, end of period | 792 | 15,827 | |||||
| Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, end of period | $ | 562,792 | $ | 207,807 | |||
DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (UNAUDITED)
| Adjusted Net Income/Adjusted Earnings Per Share | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| (in thousands, except per share amounts) | December 25, 2021 | December 26, 2020 | December 25, 2021 | December 26, 2020 | ||||||||||||
| Net income (loss) | $ | (38,785 | ) | $ | (7,471 | ) | $ | 9,536 | $ | (4,216 | ) | |||||
| Acquisition related costs(a) | 59,712 | 2,395 | 62,386 | 15,682 | ||||||||||||
| Non-core items and project costs, net(b) | 1,746 | 6,962 | 5,656 | 6,036 | ||||||||||||
| Sponsor management fees(c) | — | 543 | — | 5,900 | ||||||||||||
| Straight-line rent adjustment(d) | 3,228 | 4,026 | 11,619 | 7,150 | ||||||||||||
| Equity-based compensation expense(e) | 1,357 | 815 | 4,301 | 1,323 | ||||||||||||
| Foreign currency transaction loss (gain), net(f) | 14,327 | (13,618 | ) | 20,683 | (13,563 | ) | ||||||||||
| Bad debt expense (recovery)(g) | (3,183 | ) | 359 | (3,183 | ) | 3,201 | ||||||||||
| Asset sale leaseback (gain) loss, impairment and closed store expenses(h) | (11,940 | ) | 1,690 | (8,935 | ) | 9,311 | ||||||||||
| Loss on debt extinguishment(i) | — | 4,817 | 45,576 | 5,490 | ||||||||||||
| Amortization related to acquired intangible assets(j) | 4,676 | 5,507 | 18,551 | 17,200 | ||||||||||||
| Provision for uncertain tax positions(k) | (62 | ) | (696 | ) | (313 | ) | 2,114 | |||||||||
| Valuation allowance for deferred tax asset(l) | 4,400 | 668 | 4,400 | 668 | ||||||||||||
| Adjusted net income before tax impact of adjustments | 35,476 | 5,997 | 170,277 | 56,296 | ||||||||||||
| Tax impact of adjustments(m) | (4,314 | ) | (4,429 | ) | (23,282 | ) | (12,890 | ) | ||||||||
| Adjusted net income | 31,162 | 1,568 | 146,995 | 43,406 | ||||||||||||
| Net income (loss) attributable to non-controlling interest | (28 | ) | 17 | (96 | ) | (17 | ) | |||||||||
| Adjusted net income attributable to Driven Brands Holdings Inc. | $ | 31,190 | $ | 1,551 | $ | 147,091 | $ | 43,423 | ||||||||
| Adjusted earnings per share(1) | ||||||||||||||||
| Basic | $ | 0.19 | $ | 0.01 | $ | 0.90 | $ | 0.42 | ||||||||
| Diluted | 0.18 | 0.01 | 0.88 | 0.42 | ||||||||||||
| Weighted average shares outstanding(1) | ||||||||||||||||
| Basic | 162,646 | 127,256 | 160,684 | 104,318 | ||||||||||||
| Diluted | 166,671 | 127,256 | 164,644 | 104,318 | ||||||||||||
(1) Share and per share amounts have been adjusted to reflect an implied 88,990-for-one stock split that became effective on January 14, 2021.
DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (UNAUDITED)
| Adjusted EBITDA | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| (in thousands) | December 25, 2021 | December 26, 2020 | December 25, 2021 | December 26, 2020 | ||||||||||||
| Net income (loss) | $ | (38,785 | ) | $ | (7,471 | ) | $ | 9,536 | $ | (4,216 | ) | |||||
| Income tax expense (benefit) | 911 | 5,263 | 25,356 | 11,372 | ||||||||||||
| Interest expense, net | 23,524 | 30,673 | 75,914 | 95,646 | ||||||||||||
| Depreciation and amortization | 34,055 | 29,458 | 112,777 | 62,114 | ||||||||||||
| EBITDA | 19,705 | 57,923 | 223,583 | 164,916 | ||||||||||||
| Acquisition related costs(a) | 59,712 | 2,395 | 62,386 | 15,682 | ||||||||||||
| Non-core items and project costs, net(b) | 1,746 | 6,962 | 5,656 | 6,036 | ||||||||||||
| Sponsor management fees(c) | — | 543 | — | 5,900 | ||||||||||||
| Straight-line rent adjustment(d) | 3,228 | 4,026 | 11,619 | 7,150 | ||||||||||||
| Equity-based compensation expense(e) | 1,357 | 815 | 4,301 | 1,323 | ||||||||||||
| Foreign currency transaction loss (gain), net(f) | 14,327 | (13,618 | ) | 20,683 | (13,563 | ) | ||||||||||
| Bad debt expense (recovery)(g) | (3,183 | ) | 359 | (3,183 | ) | 3,201 | ||||||||||
| Asset sale leaseback (gain) loss, impairment and closed store expenses(h) | (11,940 | ) | 1,690 | (8,935 | ) | 9,311 | ||||||||||
| Loss on debt extinguishment(i) | — | 4,817 | 45,576 | 5,490 | ||||||||||||
| Adjusted EBITDA | $ | 84,952 | $ | 65,912 | $ | 361,686 | $ | 205,446 | ||||||||
- 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.
- Consists of discrete items and project costs, including (i) third-party consulting and professional fees associated with strategic transformation initiatives, (ii) wage subsidies received directly attributable to the COVID-19 pandemic and (iii) other miscellaneous expenses, including non-capitalizable expenses relating to the Company’s initial public offering and other strategic transactions.
- Includes management fees paid to Roark Capital Management, LLC.
- 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.
- Represents non-cash equity-based compensation expense.
- Represents foreign currency transaction loss (gains), net that primarily related to the remeasurement of our intercompany loans which are partially offset by unrealized loss (gains) on remeasurement of cross currency swaps.
- Represents bad debt expense (recovery) related to uncollectible receivables outside of normal operations.
- Relates to (gain) loss on sale leasebacks, the discontinuation of the use of the Pro Oil trade name as those locations were transitioned to the Take 5 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 their respective lease termination dates.
- Represents the write-off of debt issuance costs and prepayment penalties associated with early termination of debt.
- Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the consolidated statements of operations.
- Represents uncertain tax positions recorded for prior year Canadian tax positions, inclusive of interest and penalties.
- Represents the establishment of a valuation allowance for certain deferred tax assets negatively impacted by strategic transactions.
- 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 38%, 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 | Year Ended | |||||||||||||||
| (in thousands) | December 25, 2021 | December 26, 2020 | December 25, 2021 | December 26, 2020 | ||||||||||||
| Segment Adjusted EBITDA: | ||||||||||||||||
| Maintenance | $ | 46,178 | $ | 32,185 | $ | 179,073 | $ | 114,764 | ||||||||
| Car Wash | 37,841 | 25,398 | 153,064 | 43,137 | ||||||||||||
| Paint, Collision & Glass | 21,197 | 16,157 | 82,731 | 66,276 | ||||||||||||
| Platform Services | 12,090 | 12,668 | 56,954 | 49,408 | ||||||||||||
| Corporate and other | (31,217 | ) | (19,489 | ) | (107,639 | ) | (65,211 | ) | ||||||||
| Store opening costs | (1,137 | ) | (1,007 | ) | (2,497 | ) | (2,928 | ) | ||||||||
| Adjusted EBITDA | $ | 84,952 | $ | 65,912 | $ | 361,686 | $ | 205,446 | ||||||||
DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
ADDITIONAL INFORMATION ON KEY PERFORMANCE INDICATORS (UNAUDITED)
| Three Months Ended December 25, 2021 | |||||||||||||||
| (in thousands) | Maintenance | Car Wash | Paint, Collision & Glass | Platform Services | Total | ||||||||||
| System-wide Sales | |||||||||||||||
| Franchise stores | $ | 192,769 | $ | — | 622,649 | $ | 82,922 | $ | 898,340 | ||||||
| Company-operated stores | 138,000 | 80,260 | 20,746 | 1,126 | 240,132 | ||||||||||
| Independently-operated stores | — | 43,763 | — | — | 43,763 | ||||||||||
| Total System-wide Sales | $ | 330,769 | $ | 124,023 | $ | 643,395 | $ | 84,048 | $ | 1,182,235 | |||||
| Store Count (in whole numbers) | |||||||||||||||
| Franchise stores | 962 | — | 1,608 | 200 | 2,770 | ||||||||||
| Company-operated stores | 543 | 330 | 40 | 1 | 914 | ||||||||||
| Independently-operated stores | — | 728 | — | — | 728 | ||||||||||
| Total Store Count | 1,505 | 1,058 | 1,648 | 201 | 4,412 | ||||||||||
| Three Months Ended December 26, 2020 | |||||||||||||||
| (in thousands) | Maintenance | Car Wash | Paint, Collision & Glass | Platform Services | Total | ||||||||||
| System-wide Sales | |||||||||||||||
| Franchise stores | $ | 149,836 | $ | — | $ | 521,456 | $ | 61,234 | $ | 732,526 | |||||
| Company-operated stores | 97,927 | 51,383 | $ | 15,788 | $ | 935 | 166,033 | ||||||||
| Independently-operated stores | — | 36,598 | — | — | 36,598 | ||||||||||
| Total System-wide Sales | $ | 247,763 | $ | 87,981 | $ | 537,244 | $ | 62,169 | $ | 935,157 | |||||
| Store Count (in whole numbers) | |||||||||||||||
| Franchise stores | 903 | — | 1,652 | 198 | 2,753 | ||||||||||
| Company-operated stores | 491 | 216 | 30 | 1 | 738 | ||||||||||
| Independently-operated stores | — | 736 | — | — | 736 | ||||||||||
| Total Store Count | 1,394 | 952 | 1,682 | 199 | 4,227 | ||||||||||
The 62 Drive N Style stores are included in the Maintenance store count for the three months ended December 26, 2020 as previously reported, but are not included in store count for the three months ended December 25, 2021 as they are held for sale.
