Driven Brands Holdings Inc. Reports Second Quarter 2024 Results

Rhea-AI Summary

Driven Brands Holdings Inc. (NASDAQ: DRVN) reported Q2 2024 results, marking its 14th consecutive quarter of same-store sales growth. Key highlights include:

- Revenue of $612 million, up 1% year-over-year
- System-wide sales of $1.7 billion, up 1%
- Net Income of $30.2 million or $0.18 per diluted share
- Adjusted EBITDA of $152.2 million, up 4%
- Take 5 Oil Change: 16% revenue growth, 6% same-store sales growth, 19% unit growth

The company updated its FY2024 outlook, expecting revenue at the low end of $2.35-$2.45 billion, Adjusted EBITDA in the mid to high end of $535-$565 million, and Adjusted EPS at the high end of $0.88-$1.00. Driven Brands also announced the appointment of Michael Diamond as CFO, effective August 9, 2024.

Positive

• 14th consecutive quarter of same-store sales growth
• Take 5 Oil Change delivered 16% revenue growth and 19% year-over-year unit growth
• Adjusted EBITDA increased 4% to $152.2 million
• Adjusted Net Income grew to $58.0 million or $0.35 per diluted share
• Maintenance segment showed 4.3% same-store sales growth
• Company closed a $275 million offering of senior notes, increasing total liquidity

Negative

• Overall revenue growth slowed to 1% year-over-year
• Net Income decreased from $37.7 million to $30.2 million year-over-year
• Car Wash segment experienced a 4.1% decline in same-store sales
• Paint, Collision & Glass segment saw a 0.5% decrease in same-store sales
• Company lowered its same-store sales growth outlook for FY2024 from 3-5% to 1-3%

Insights

Financial Analyst

Driven Brands' Q2 2024 results paint a picture of steady growth amidst challenging market conditions. The company's 14th consecutive quarter of same-store sales growth is a testament to its resilience and operational efficiency. However, the 1% year-over-year revenue increase to $612 million suggests a slowdown in growth momentum compared to previous quarters.

The standout performer was Take 5 Oil Change, with an impressive 19% year-over-year unit growth and 6% same-store sales growth. This underscores the strength of Driven Brands' maintenance segment in a challenging economic environment. The company's focus on non-discretionary services appears to be paying off, providing a buffer against potential consumer spending pullbacks.

However, the decline in net income from $37.7 million to $30.2 million year-over-year is a concern. This 20% drop in profitability warrants closer examination, especially given the modest revenue growth. The increase in Adjusted EBITDA by 4% to $152.2 million suggests that the company is managing to improve its operational efficiency despite headwinds.

The company's liquidity position looks solid, with $316.1 million in total liquidity. The recent closing of $275 million in senior notes and $400 million in variable funding notes further strengthens its financial flexibility, which could be important for future growth initiatives or weathering potential economic downturns.

Driven Brands' revised outlook for fiscal year 2024, particularly the lowered same-store sales growth expectation from 3-5% to 1-3%, indicates caution about the near-term operating environment. This conservative approach, coupled with the focus on debt reduction and portfolio management, suggests a prudent strategy in uncertain times.

Market Research Analyst

Driven Brands' Q2 results reveal intriguing market dynamics across its diverse portfolio. The maintenance segment, particularly Take 5 Oil Change, is showing robust growth with a 4.3% same-store sales increase. This performance underscores the resilience of essential automotive services in the face of economic pressures, as consumers prioritize vehicle maintenance.

Conversely, the car wash segment's 4.1% decline in same-store sales suggests shifting consumer behavior. This could be attributed to increased price sensitivity or changes in car care habits post-pandemic. The paint, collision and glass segment's slight 0.5% decrease in same-store sales might indicate a normalization of accident rates as driving patterns stabilize.

The company's expansion strategy remains aggressive, with 115 net new units added. This continued growth, even as same-store sales growth moderates, demonstrates confidence in the long-term market potential. However, the revised outlook for fiscal year 2024, particularly the lowered same-store sales growth expectation, hints at anticipated headwinds in consumer spending.

The appointment of Michael Diamond as CFO, with his background in multi-unit retail, suggests a strategic focus on optimizing the company's extensive network of locations. This could be important as Driven Brands navigates a potentially challenging consumer environment.

Overall, Driven Brands' performance reflects broader trends in the automotive aftermarket sector, where essential services are proving more resilient than discretionary ones. The company's diverse portfolio appears to be providing some insulation against market volatility, but careful navigation will be required to maintain growth in a potentially softening consumer environment.

--14^th consecutive quarter of same store sales growth--

--Take 5 Oil Change delivers 19% year-over-year unit growth and 6% same-store sales growth--

--Net Income of $30 million and Adjusted EBITDA of $152 million--

--CFO Appointment Announced--

CHARLOTTE, N.C.--(BUSINESS WIRE)-- Driven Brands Holdings Inc. (NASDAQ: DRVN) (“Driven Brands” or the “Company”) today reported financial results for the second quarter ending June 29, 2024.

For the second quarter, Driven Brands delivered revenue of $612 million, up 1% versus the prior year. System-wide sales were $1.7 billion, up 1% versus the prior year primarily driven by 0.5% same store sales growth and 115 net new units.

Net Income was $30.2 million or $0.18 per diluted share versus $37.7 million or $0.22 per diluted share in the prior year. Adjusted Net Income¹ was $58.0 million or $0.35 per diluted share versus $45.7 million or $0.27 per diluted share in the prior year. Adjusted EBITDA¹ was $152.2 million, up 4% versus the prior year.

“We are proud to report that the Driven platform delivered its 14th straight quarter of same store sales growth. Take 5 Oil Change led the charge once again this quarter, with revenue growth of 16% underpinned by 6% same store sales growth and 19% year-over-year unit growth,” said Jonathan Fitzpatrick, President and Chief Executive Officer.

“We are pleased with our first half performance, driven by our essential non-discretionary businesses. Looking ahead, our key priorities remain continuing to achieve strong financial results, reducing debt with free cash flow, and actively managing our portfolio,” Fitzpatrick concluded.

Second 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	$	535.4	1,853	4.3	%	$	277.9	$	102.9
Car Wash		155.5	1,108	(4.1	)%		156.9		33.8
Paint, Collision & Glass		862.2	1,887	(0.5	)%		112.0		35.2
Platform Services		115.8	205	N/A			61.2		25.3
Corporate / Other		N/A	N/A	N/A			3.5
Total	$	1,668.8	5,053	0.5	%	$	611.6

Capital and Liquidity

The Company ended the second quarter with total liquidity of $316.1 million consisting of $148.8 million in cash and cash equivalents and $167.3 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility. This did not include the additional $135.0 million Series 2022 Class A-1 Notes that expand the Company’s variable funding note borrowing capacity if the Company elects to exercise them, assuming certain conditions continue to be met.

On July 29, 2024, the Company closed an offering by certain of its subsidiaries for $275.0 million in Series 2024 Class A-2 senior notes and $400.0 million in variable funding securitization senior notes, which were undrawn at closing. The 2024 variable funding notes replaced the $115.0 million Series 2019-3 variable funding notes, increasing total liquidity and undrawn capacity by $285.0 million.

Michael Diamond Appointed as Chief Financial Officer of Driven Brands Holdings Inc.

In a separate release today, the Company announced that it appointed Michael Diamond as the Chief Financial Officer (CFO), effective August 9, 2024. Mr. Diamond joins the Company from The Michaels Companies where he served as the CFO since 2020. He has extensive financial and multi-unit retail experience. Joel Arnao, who has served as interim CFO since May 2024, will remain with the Company and continue in his role as Senior Vice President, FP&A, Investor Relations, and Treasury.

Fiscal Year 2024 Outlook

The Company updates its financial outlook for fiscal year 2024:

	Original Outlook	Current Range Expectations
Revenue	~$2.35 - $2.45 billion	Low-end
Adjusted EBITDA1	~$535 - $565 million	Mid - to High-end
Adjusted EPS1	~$0.88 - $1.00	High-end

The Company also expects:

• Same-store sales growth of 1% to 3% from the original outlook of 3% to 5%

• Net store growth of approximately 205 to 220 consistent with the original outlook

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 second quarter 2024 results today, Thursday, August 1, 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							Six Months Ended
(in thousands, except per share amounts)		June 29, 2024			July 1, 2023				June 29, 2024			July 1, 2023
Net Revenue:
Franchise royalties and fees		$	50,029		$	49,805			$	95,074		$	93,320
Company-operated store sales			394,681			394,578				769,137			770,644
Independently-operated store sales			60,280			61,533				113,327			114,065
Advertising contributions			24,911			24,749				48,981			46,426
Supply and other revenue			81,665			76,186				157,273			144,863
Total net revenue			611,566			606,851				1,183,792			1,169,318
Operating Expenses:
Company-operated store expenses			254,174			257,040				496,227			500,449
Independently-operated store expenses			31,956			31,958				61,311			61,322
Advertising expenses			24,911			24,749				48,981			46,426
Supply and other expenses			40,554			42,106				76,770			79,372
Selling, general, and administrative expenses			121,123			96,815				237,525			209,143
Acquisition related costs			271			3,750				2,065			5,597
Store opening costs			940			1,377				2,203			2,402
Depreciation and amortization			44,633			45,419				87,862			83,617
Asset impairment charges and lease terminations			12,497			6,044				31,823			6,211
Total operating expenses			531,059			509,258				1,044,767			994,539
Operating income			80,507			97,593				139,025			174,779
Other expenses, net:
Interest expense, net			31,796			40,871				75,568			79,012
Foreign currency transaction loss (gain), net			681			(1,302	)			5,002			(2,977	)
Other expense, net			32,477			39,569				80,570			76,035
Income before taxes			48,030			58,024				58,455			98,744
Income tax expense			17,871			20,275				24,035			31,246
Net income			30,159			37,749				34,420			67,498
Earnings per share:
Basic		$	0.18		$	0.23			$	0.21		$	0.41
Diluted		$	0.18		$	0.22			$	0.21		$	0.40
Weighted average shares outstanding
Basic			159,795			162,911				159,713			162,848
Diluted			160,765			166,888				160,683			166,882

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share amounts)		June 29, 2024				December 30, 2023
Assets
Current assets:
Cash and cash equivalents		$	148,814			$	176,522
Restricted cash			4,414				657
Accounts and notes receivable, net			195,327				151,259
Inventory			70,527				83,171
Prepaid and other assets			44,426				46,714
Income tax receivable			13,893				15,928
Assets held for sale			237,183				301,229
Advertising fund assets, restricted			43,039				45,627
Total current assets			757,623				821,107
Other assets			103,746				56,565
Property and equipment, net			1,422,961				1,438,496
Operating lease right-of-use assets			1,378,264				1,389,316
Deferred commissions			6,740				6,312
Intangibles, net			721,691				739,402
Goodwill			1,431,555				1,455,946
Deferred tax assets			3,627				3,660
Total assets		$	5,826,207			$	5,910,804
Liabilities and shareholders' equity
Current liabilities:
Accounts payable		$	72,118			$	67,526
Accrued expenses and other liabilities			236,586				242,171
Income tax payable			2,053				5,404
Current portion of long-term debt			33,332				32,673
Income tax receivable liability			—				56,001
Advertising fund liabilities			15,115				23,392
Total current liabilities			359,204				427,167
Long-term debt			2,855,823				2,910,812
Deferred tax liabilities			157,271				154,742
Operating lease liabilities			1,317,342				1,332,519
Income tax receivable liability			133,623				117,915
Deferred revenue			31,472				30,507
Long-term accrued expenses and other liabilities			28,682				30,419
Total liabilities			4,883,417				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 164,082,430 and 163,965,231 shares outstanding; respectively			1,641				1,640
Additional paid-in capital			1,674,766				1,652,401
Accumulated deficit			(675,667	)			(710,087	)
Accumulated other comprehensive loss			(57,950	)			(37,875	)
Total shareholders’ equity attributable to Driven Brands Holdings Inc.			942,790				906,079
Non-controlling interests			—				644
Total shareholders' equity			942,790				906,723
Total liabilities and shareholders' equity		$	5,826,207			$	5,910,804

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
		Six Months Ended
(in thousands)		June 29, 2024				July 1, 2023
Net income		$	34,420			$	67,498
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			87,862				83,617
Equity-based compensation expense			22,843				7,049
Loss (gain) on foreign denominated transactions			9,923				(1,723	)
Gain on foreign currency derivatives			(4,921	)			(1,254	)
Gain on sale and disposal of businesses, fixed assets, and sale-leaseback transactions			(16,359	)			(12,230	)
Reclassification of interest rate hedge to income			(1,044	)			(1,039	)
Bad debt expense			1,738				602
Asset impairment charges and lease terminations			31,823				6,211
Amortization of deferred financing costs and bond discounts			4,933				4,343
Amortization of cloud computing			2,414				—
Provision for deferred income taxes			5,036				18,812
Other, net			7,322				9,641
Changes in assets and liabilities, net of acquisitions:
Accounts and notes receivable, net			(47,245	)			(30,373	)
Inventory			11,310				(11,108	)
Prepaid and other assets			7,986				(7,894	)
Advertising fund assets and liabilities, restricted			(12,220	)			(8,768	)
Other assets			(47,699	)			(25,456	)
Deferred commissions			(428	)			330
Deferred revenue			971				1,585
Accounts payable			3,968				16,231
Accrued expenses and other liabilities			8,022				(1,171	)
Income tax receivable			(3,431	)			(320	)
Cash provided by operating activities			107,224				114,583
Cash flows from investing activities:
Capital expenditures			(155,920	)			(320,071	)
Cash used in business acquisitions, net of cash acquired			(2,759	)			(44,868	)
Proceeds from sale-leaseback transactions			11,808				143,622
Proceeds from sale or disposal of businesses and fixed assets			112,845				217
Cash used in investing activities			(34,026	)			(221,100	)
Cash flows from financing activities:
Payment of debt extinguishment and issuance costs			(871	)			—
Repayment of long-term debt			(34,005	)			(13,961	)
Proceeds from revolving lines of credit and short-term debt			46,000				230,000
Repayments of revolving lines of credit and short-term debt			(71,000	)			(120,000	)
Repayment of principal portion of finance lease liability			(2,199	)			(1,889	)
Payment of Tax Receivable Agreement			(38,362	)			—
Acquisition of non-controlling interest			(644	)			—
Purchase of common stock			(2	)			(716	)
Tax obligations for share-based compensation			(980	)			—
Stock option exercises			—				1,758
Other, net			—				(64	)
Cash (used in) provided by financing activities			(102,063	)			95,128
Effect of exchange rate changes on cash			(1,615	)			2,087
Net change in cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted			(30,480	)			(9,302	)
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			148,814				212,123
Cash included in advertising fund assets, restricted, end of period			32,008				38,691
Restricted cash, end of period			4,414				657
Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, end of period		$	185,236			$	251,471

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 and six months ended June 29, 2024, compared to the three and six months ended July 1, 2023.

Net Income to Adjusted Net Income and Adjusted Earnings Per Share (Unaudited)
		Three Months Ended								Six Months Ended
(in thousands, except per share data)		June 29, 2024				July 1, 2023				June 29, 2024				July 1, 2023
Net income		$	30,159			$	37,749			$	34,420			$	67,498
Acquisition related costs(a)			271				3,750				2,065				5,597
Non-core items and project costs, net(b)			5,126				2,803				9,837				4,627
Cloud computing amortization(c)			1,069				—				2,414				—
Equity-based compensation expense(d)			10,982				4,485				22,843				7,049
Foreign currency transaction loss (gain), net(e)			681				(1,302	)			5,002				(2,977	)
Asset sale leaseback (gain) loss, impairment and closed store expenses(f)			9,630				(7,680	)			19,190				(5,836	)
Amortization related to acquired intangible assets(g)			6,528				8,276				13,548				14,312
Valuation allowance for deferred tax asset(h)			121				—				1,255				—
Adjusted net income before tax impact of adjustments			64,567				48,081				110,574				90,270
Tax impact of adjustments(i)			(6,558	)			(2,378	)			(14,443	)			(5,463	)
Adjusted net income			58,009				45,703				96,131				84,807
Earnings per share
Basic		$	0.18			$	0.23			$	0.21			$	0.41
Diluted		$	0.18			$	0.22			$	0.21			$	0.40
Adjusted earnings per share(1)
Basic		$	0.36			$	0.27			$	0.59			$	0.51
Diluted		$	0.35			$	0.27			$	0.59			$	0.50
Weighted average shares outstanding
Basic			159,795				162,911				159,713				162,848
Diluted			160,765				166,888				160,683				166,882

(1)

Adjusted Earnings Per Share is calculated under the two-class method. Under the two-class method, adjusted earnings per share is calculated using adjusted net income attributable to common shares, which is derived by reducing adjusted net income by the amount attributable to participating securities. Adjusted Net Income attributable to participating securities used in the basic earnings per share calculation was $1 million and $2 million for the three and six months ended June 29, 2024, respectively.  Adjusted Net Income attributable to participating securities used in the diluted earnings per share calculations was $1 million and $2 million for the three and six months ended July 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 and six months ended June 29, 2024, compared to the three and six months ended July 1, 2023.

Net Income to Adjusted EBITDA Reconciliation (Unaudited)

		Three Months Ended							Six Months Ended
(in thousands)		June 29, 2024			July 1, 2023				June 29, 2024			July 1, 2023
Net income		$	30,159		$	37,749			$	34,420		$	67,498
Income tax expense			17,871			20,275				24,035			31,246
Interest expense, net			31,796			40,871				75,568			79,012
Depreciation and amortization			44,633			45,419				87,862			83,617
EBITDA			124,459			144,314				221,885			261,373
Acquisition related costs(a)			271			3,750				2,065			5,597
Non-core items and project costs, net(b)			5,126			2,803				9,837			4,627
Cloud computing amortization(c)			1,069			—				2,414			—
Equity-based compensation expense(d)			10,982			4,485				22,843			7,049
Foreign currency transaction loss (gain), net(e)			681			(1,302	)			5,002			(2,977	)
Asset sale leaseback (gain) loss, impairment and closed store expenses(f)			9,630			(7,680	)			19,190			(5,836	)
Adjusted EBITDA		$	152,218		$	146,370			$	283,236		$	269,833

Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share Footnotes
(a)		Consists of acquisition costs as reflected within the unaudited 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								Six Months Ended
(in thousands)		June 29, 2024				July 1, 2023				June 29, 2024				July 1, 2023
Segment Adjusted EBITDA:
Maintenance		$	102,935			$	84,812			$	194,371			$	157,045
Car Wash			33,772				39,761				62,906				80,809
Paint, Collision & Glass			35,172				41,057				65,992				76,507
Platform Services			25,311				22,519				45,182				39,527
Corporate and other			(44,032	)			(40,402	)			(83,012	)			(81,653	)
Store opening costs			(940	)			(1,377	)			(2,203	)			(2,402	)
Adjusted EBITDA		$	152,218			$	146,370			$	283,236			$	269,833

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES
ADDITIONAL INFORMATION ON KEY PERFORMANCE INDICATORS (UNAUDITED)
		Three Months Ended June 29, 2024
(in thousands)		Maintenance			Car Wash			Paint, Collision & Glass			Platform Services			Total
System-wide Sales
Franchise stores		$	304,563		$	—		$	794,633		$	114,649		$	1,213,845
Company-operated stores			230,809			95,211			67,523			1,138			394,681
Independently operated stores			—			60,280			—			—			60,280
Total System-wide Sales		$	535,372		$	155,491		$	862,156		$	115,787		$	1,668,806
Store Count (in whole numbers)
Franchise stores			1,177			—			1,654			204			3,035
Company-operated stores			676			388			233			1			1,298
Independently operated stores			—			720			—			—			720
Total Store Count			1,853			1,108			1,887			205			5,053
		Three Months Ended July 1, 2023
(in thousands)		Maintenance			Car Wash			Paint, Collision & Glass			Platform Services			Total
System-wide Sales
Franchise stores		$	278,951		$	—		$	806,420		$	117,548		$	1,202,919
Company-operated stores			205,673			101,615			86,110			1,180			394,578
Independently operated stores			—			61,533			—			—			61,533
Total System-wide Sales		$	484,624		$	163,148		$	892,530		$	118,728		$	1,659,030
Store Count (in whole numbers)
Franchise stores			1,084			—			1,657			207			2,948
Company-operated stores			610			415			248			1			1,274
Independently operated stores			—			716			—			—			716
Total Store Count			1,694			1,131			1,905			208			4,938

		Six Months Ended June 29, 2024
(in thousands)		Maintenance			Car Wash			Paint, Collision & Glass			Platform Services			Total
System-wide Sales
Franchise stores		$	583,424		$	—		$	1,614,248		$	191,801		$	2,389,473
Company-operated stores			451,680			185,438			130,032			1,987			769,137
Independently operated stores			—			113,327			—			—			113,327
Total System-wide Sales		$	1,035,104		$	298,765		$	1,744,280		$	193,788		$	3,271,937
Store Count (in whole numbers)
Franchise stores			1,177			—			1,654			204			3,035
Company-operated stores			676			388			233			1			1,298
Independently operated stores			—			720			—			—			720
Total Store Count			1,853			1,108			1,887			205			5,053
		Six Months Ended July 1, 2023
(in thousands)		Maintenance			Car Wash			Paint, Collision & Glass			Platform Services			Total
System-wide Sales
Franchise stores		$	525,634		$	—		$	1,544,983		$	206,651		$	2,277,268
Company-operated stores			400,933			204,061			163,589		$	2,061			770,644
Independently operated stores			—			114,065			—			—			114,065
Total System-wide Sales		$	926,567		$	318,126		$	1,708,572		$	208,712		$	3,161,977
Store Count (in whole numbers)
Franchise stores			1,084			—			1,657			207			2,948
Company-operated stores			610			415			248			1			1,274
Independently operated stores			—			716			—			—			716
Total Store Count			1,694			1,131			1,905			208			4,938

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240801081200/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

Source: Driven Brands

FAQ

What were Driven Brands' (DRVN) Q2 2024 revenue and earnings?

Driven Brands reported Q2 2024 revenue of $612 million, up 1% year-over-year. Net Income was $30.2 million or $0.18 per diluted share, compared to $37.7 million or $0.22 per diluted share in the prior year.

How did Driven Brands' (DRVN) same-store sales perform in Q2 2024?

Driven Brands achieved its 14th consecutive quarter of same-store sales growth, with overall same-store sales increasing by 0.5% in Q2 2024.

What was Take 5 Oil Change's performance for Driven Brands (DRVN) in Q2 2024?

Take 5 Oil Change delivered strong results for Driven Brands in Q2 2024, with 16% revenue growth, 6% same-store sales growth, and 19% year-over-year unit growth.

Has Driven Brands (DRVN) updated its financial outlook for fiscal year 2024?

Yes, Driven Brands updated its FY2024 outlook, expecting revenue at the low end of $2.35-$2.45 billion, Adjusted EBITDA in the mid to high end of $535-$565 million, and Adjusted EPS at the high end of $0.88-$1.00.

Who is the new CFO of Driven Brands (DRVN) and when does he start?

Driven Brands appointed Michael Diamond as the new Chief Financial Officer (CFO), effective August 9, 2024. He joins from The Michaels Companies where he served as CFO since 2020.