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DRVN - Driven Brands Holdings Inc News Story

$28.12 0.2  0.7%

Last Trade - 07/05/21

Sector
Consumer Defensives
Size
Large Cap
Market Cap £3.37bn
Enterprise Value £4.28bn
Revenue £829.7m
Position in Universe 1460th / 6858

Driven Brands Holdings Inc. Reports Fourth Quarter and Fiscal Year 2020 Results

Wed 10th March, 2021 12:00pm
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CHARLOTTE, N.C., March 10, 2021 (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 26,
2020.

For the fourth quarter, system-wide sales were $935.1 million, an increase of
24% versus the prior year, with 36% net store growth and a decline in
same-store sales of 3.4%. Revenue was $288.5 million, an increase of 58%
versus the prior year. Loss per share was $(0.06) for the fourth quarter,
while adjusted earnings per share(2) was $0.01.

For fiscal year 2020, system-wide sales were $3.4 billion, an increase of 16%
versus the prior year, with 36% net store growth and a decline in same-store
sales of 5.6%. Revenue was $904.2 million, an increase of 51% versus the prior
year. Loss per share was $(0.04) for the fiscal year, while adjusted earnings
per share(2) was $0.42.

“Our fourth quarter results are a testament to the strength and diversity of
the Driven Brands portfolio and the hard work the team has demonstrated
throughout 2020,” said Jonathan Fitzpatrick, president and chief executive
officer. “Our employees and franchisees continued to adapt to the
ever-changing needs of the past year, meeting our expectations and delivering
industry-leading results.

“Given our scale, the significant whitespace in this fragmented and
needs-based industry, and our robust cash generation, I am confident that we
are well positioned for growth in 2021 and to maximize long-term value for all
of our stakeholders.”

Fourth Quarter Highlights
* The Company added 42 net new stores during the quarter, with the addition of
23 stores in the Maintenance segment, 13 stores in the Car Wash segment, and 6
stores in the Paint, Collision, and Glass segment.  
* Same-store sales declined 3.4% for the quarter. Same-store sales increased
in the Maintenance and Platform Services segments, while same-store sales
declined in the Paint, Collision, and Glass segment as roadways were less
congested due to the COVID-19 pandemic, which resulted in fewer accidents and
therefore fewer collision repairs. This compares with consolidated same-store
sales growth of 5.4% in the fourth quarter of 2019.
* Revenue increased 58% versus the prior year, primarily driven by the
acquisition of International Car Wash Group (“ICWG”) in the third quarter
of 2020, which added 939 stores to the portfolio.
* The Company recorded a net loss in the fourth quarter of $(7.5) million.
* Adjusted Net Income(1) was $1.6 million, an increase of 3% versus the prior
year.
* Adjusted EBITDA(3) was $65.9 million, more than double that of the prior
year.
Key Fourth Quarter 2020 Performance Indicators by Segment

                              System-wide Sales          Store Count     Same-Store Sales      Revenue              Segment Adjusted EBITDA (4)         
                              (in millions)                                                    (in millions)        (in millions)                       
 Maintenance                  $        247.8             1,394           1.2        %          $      111.0         $           32.2                    
 Car Wash                     88.0                       952             N/A*                  90.5                 25.4                                
 Paint, Collision, and Glass  537.2                      1,682           (7.3       )%         44.4                 16.2                                
 Platform Services            62.1                       199             9.5        %          32.8                 12.7                                
 Corporate / Other                     N/A               N/A             N/A                   9.8                                                      
 Total                        $        935.1             4,227           (3.4       )%         $      288.5                                             

(*Car Wash will not be included in same-store sales until the one-year
anniversary of the ICWG acquisition in the third quarter of 2021.)

Capital and Liquidity
The Company ended the fourth quarter with $188.4 million in cash, cash
equivalents, and restricted cash, as well as $155.8 million of undrawn
capacity on its revolving credit facilities.

In January 2021, the Company sold 31.8 million shares of its common stock in
its initial public offering and received net proceeds of $651.6 million. Those
proceeds, together with cash on hand, were used to repay $721.9 million of
outstanding debt assumed in the ICWG acquisition. The remaining long-term debt
portfolio totals $1.5 billion, and has a weighted average fixed annual
interest rate of 4.0% and a weighted average remaining term of six years.

In February 2021, the Company’s underwriters exercised their over-allotment
option to purchase 4.8 million additional shares of common stock. The Company
received net proceeds of $99.2 million, and used $43.0 million of such
proceeds to purchase 2.1 million shares of common stock from existing
stockholders. The Company intends to use the remaining net proceeds of $56.2
million for general corporate purposes.

Guidance

Long-term Targets
The following long-term targets reflect the Company’s expectations through
2024:
* Same-store sales: Low-single-digit growth
* Revenue: Low-double-digit growth
* Adjusted EBITDA(3): Low-double-digit growth
* Adjusted Net Income(1): Mid-to-high teens growth
Fiscal Year 2021
The Company is providing the following guidance for the fiscal year ending
December 25, 2021:
* Net Store Growth:
• Maintenance: 80 to 90 stores; driven by roughly equal parts franchise and
company-operated store growth;
• Car Wash: 20 to 30 stores; driven primarily by company-operated store
growth; and
• Paint, Collision, and Glass: 60 to 70 stores; driven by franchise store
growth.
* Positive same-store sales growth
* Adjusted EBITDA(3) as a percentage of revenue of approximately 23%,
consistent with fiscal year 2020.
Conference Call
Driven Brands will host a conference call to discuss fourth quarter and fiscal
year 2020 results and its guidance for fiscal year 2021 today, Wednesday,
March 10, 2021 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
(https://www.globenewswire.com/Tracker?data=mjoMy8JDLWtKzZXbWIsPSTDkANa_RtHMVY6pfENQUa-N16ZkDpgiVdvCcvkcIqygvTdGWghXb6hUCWeAjUsKJR-cDqppnqdGUL7lPH4WrVhQ8b0eVY0Mlfp1IPSuLl6A).
A replay of the call will be available until April 27, 2021.

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 4,200
locations across 15 countries, and services over 50 million vehicles annually.
Driven Brands’ network generates more than $900 million in revenue from
more than $3 billion in system-wide sales.

Contacts

 Shareholder/Analyst inquiries: Rachel Webb rachel.webb@drivenbrands.com (704) 644-8125    Media inquiries: media@drivenbrands.com (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 final prospectus filed with the Securities
and Exchange Commission on January 19, 2021 pursuant to Rule 424(b) under the
Securities Act of 1933, as amended, 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 Income(1), Adjusted Earnings Per Share(2), Adjusted EBITDA(3) and
Acquisition Adjusted EBITDA(5). 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 Net Income(1) and Adjusted EBITDA(3). 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 Net Income(1) or
Adjusted EBITDA(3) 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.

___________
(1) “Adjusted Net Income” is calculated by eliminating from net income the
adjustments described for Adjusted EBITDA, amortization related to acquired
intangible assets and the tax effect of the adjustments. Please refer to
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.
(5) “Acquisition Adjusted EBITDA” represents Adjusted EBITDA for the
applicable period as adjusted to give effect to management’s estimates of a
full period of Adjusted EBITDA from any businesses acquired in such period as
if such acquisitions had been completed on the first day of such period.
Please refer to Non-GAAP reconciliation tables 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 26, 2020            December 28, 2019          December 26, 2020            December 28, 2019        
 Revenue:                                                                                                                                                                     
 Franchise royalties and fees                                   $       22,912               $       24,285             $       117,126              $       111,170          
 Company-operated store sales                                   165,928                      93,980                     489,267                      329,110                  
 Independently-operated store sales                             36,598                       —                          67,193                       —                        
 Advertising contributions                                      17,243                       29,478                     59,672                       66,270                   
 Supply and other revenue                                       45,827                       34,957                     170,942                      93,723                   
 Total revenue                                                  288,508                      182,700                    904,200                      600,273                  
 Operating expenses:                                                                                                                                                          
 Company-operated store expenses                                103,575                      63,607                     305,908                      223,683                  
 Independently-operated store expenses                          23,056                       —                          41,051                       —                        
 Advertising expenses                                           19,560                       32,987                     61,989                       69,779                   
 Supply and other expenses                                      23,213                       18,018                     93,380                       53,005                   
 Selling, general and administrative expenses                   65,170                       43,785                     218,277                      142,249                  
 Acquisition costs                                              2,395                        7,303                      15,682                       11,595                   
 Store opening costs                                            1,007                        2,862                      2,928                        5,721                    
 Depreciation and amortization                                  29,458                       8,992                      62,114                       24,220                   
 Asset impairment charges                                       1,410                        —                          8,142                        —                        
 Total operating expenses                                       268,844                      177,554                    809,471                      530,252                  
 Operating income                                               19,664                       5,146                      94,729                       70,021                   
 Other income (expense), net:                                                                                                                                                 
 Interest expense, net                                          (30,673         )            (17,023          )         (95,646          )           (56,846          )       
 Gain of foreign currency transactions, net                     13,618                       —                          13,563                       —                        
 Loss on debt extinguishment                                    (4,817          )            (595             )         (5,490           )           (595             )       
 Total other expenses, net                                      (21,872         )            (17,618          )         (87,573          )           (57,441          )       
 Income (loss) before taxes                                     (2,208          )            (12,472          )         7,156                        12,580                   
 Income tax expense (benefit)                                   5,263                        (1,887           )         11,372                       4,830                    
 Net income (loss)                                              (7,471          )            (10,585          )         (4,216           )           7,750                    
 Net income (loss) attributable to non-controlling interests    17                           19                         (17              )           19                       
 Net income (loss) attributable to Driven Brands Holdings Inc.  $       (7,488  )            $       (10,604  )         $       (4,199   )           $       7,731            
                                                                                                                                                                              
 Earnings (loss) per share ((1))                                                                                                                                              
 Basic and diluted                                              $       (0.06   )            $       (0.12    )         $       (0.04    )           $       0.09             
                                                                                                                                                                              
 Weighted average shares outstanding ((1))                                                                                                                                    
 Basic and diluted                                              127,256                      88,990                     104,318                      88,990                   
                                                                                                                                                                              

((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 26, 2020            December 28, 2019          
 Assets                                                                                                                                     
 Current assets:                                                                                                                            
 Cash and cash equivalents                                                          $       172,611              $       34,935             
 Restricted cash                                                                    15,827                       —                          
 Accounts and notes receivable, net                                                 84,805                       74,131                     
 Inventory                                                                          43,039                       26,149                     
 Prepaid and other assets                                                           25,071                       14,491                     
 Income tax receivable                                                              5,924                        4,607                      
 Advertising fund assets, restricted                                                27,276                       31,011                    
 Total current assets                                                               374,553                      185,324                    
 Notes receivable, net                                                              3,828                        7,178                      
 Property and equipment, net                                                        827,392                      134,381                    
 Operating lease right-of-use assets                                                884,927                      —                          
 Deferred commissions                                                               8,661                        6,721                      
 Intangibles, net                                                                   829,308                      672,017                    
 Goodwill                                                                           1,727,351                    870,619                    
 Total assets                                                                       $       4,656,020            $       1,876,240          
 Liabilities and shareholders'/members’ equity                                                                                              
 Current liabilities:                                                                                                                       
 Accounts payable                                                                   $       67,802               $       58,917             
 Accrued expenses and other liabilities                                             190,867                      66,035                     
 Income taxes payable                                                               6,383                        —                          
 Current portion of long-term debt                                                  22,988                       13,050                     
 Advertising fund liabilities                                                       18,276                       20,825                     
 Total current liabilities                                                          306,316                      158,827                    
 Long-term debt, net                                                                2,102,219                    1,301,913                  
 Operating lease liabilities                                                        818,001                      —                          
 Deferred tax liabilities                                                           249,043                      111,355                    
 Deferred revenue                                                                   20,757                       14,267                     
 Accrued expenses and other long-term liabilities                                   53,324                       —                          
 Total liabilities                                                                  3,549,660                    1,586,362                  
 Shareholders'/Members’ equity                                                      1,087,712                    284,788                    
 Accumulated other comprehensive income                                             16,528                       3,626                      
 Total shareholders'/members’ equity attributable to Driven Brands Holdings Inc.    1,104,240                    288,414                    
 Non-controlling interests                                                          2,120                        1,464                      
 Total shareholders'/members’ equity                                                1,106,360                    289,878                    
 Total liabilities and shareholders'/members’ equity                                $       4,656,020            $       1,876,240          
                                                                                                                                            



DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                                                                                         Fiscal year ended                                     
 (in thousands)                                                                                                          December 26, 2020             December 28, 2019       
 Net income (loss)                                                                                                       $       (4,216   )            $       7,750           
 Adjustments to reconcile net income (loss) to net cash provided by operating activities:                                                                                      
 Depreciation and amortization                                                                                           62,114                        24,220                  
 Noncash lease cost                                                                                                      38,232                        —                       
 Gain on foreign denominated transactions                                                                                (23,245          )            —                       
 Bad debt expense                                                                                                        7,059                         1,685                   
 Asset impairment costs                                                                                                  8,142                         —                       
 Amortization of deferred financing costs and bond discounts                                                             10,890                        3,682                   
 Loss on derivatives not designated as hedges                                                                            10,033                        —                       
 Provision for deferred income taxes                                                                                     5,989                         3,169                   
 Loss on extinguishment of debt                                                                                          5,490                         595                     
 Other, net                                                                                                              1,408                         1,757                   
 Changes in assets and liabilities:                                                                                                                                            
 Accounts and notes receivable, net                                                                                      (11,782          )            (7,173          )       
 Inventory                                                                                                               (2,904           )            (5,452          )       
 Prepaid and other assets                                                                                                (5,658           )            (2,313          )       
 Advertising fund assets and liabilities, restricted                                                                     (369             )            6,492                   
 Deferred commissions                                                                                                    (1,927           )            (1,958          )       
 Deferred revenue                                                                                                        6,278                         2,524                   
 Accounts payable                                                                                                        (6,778           )            13,849                  
 Accrued expenses and other liabilities                                                                                  15,956                        (7,617          )       
 Income tax receivable                                                                                                   3,734                         162                     
 Operating lease liabilities                                                                                             (34,448          )            —                       
 Cash provided by operating activities                                                                                   83,998                        41,372                  
 Cash flows from investing activities:                                                                                                                                         
 Capital expenditures                                                                                                    (52,459          )            (28,230         )       
 Cash used in business acquisitions, net of cash acquired                                                                (105,031         )            (454,193        )       
 Proceeds from sale-leaseback transactions                                                                               100,174                       —                       
 Cash used in investing activities                                                                                       (57,316          )            (482,423        )       
 Cash flows from financing activities:                                                                                                                                         
 Payment of contingent consideration related to acquisitions                                                             (2,783           )            —                       
 Payment of debt issuance cost                                                                                           (22,932          )            (14,056         )       
 Proceeds from the issuance of long-term debt                                                                            625,000                       575,000                 
 Repayment of long-term debt                                                                                             (448,213         )            (10,988         )       
 Repayments of revolving lines of credit and short-term debt                                                             (432,800         )            59,499                  
 Proceeds from revolving lines of credit and short-term debt                                                             391,301                       —                       
 Repayment of principal portion of finance lease liability                                                               (595             )            —                       
 Distribution to Driven Investor LLC                                                                                     —                             (163,000        )       
 Contributions                                                                                                           —                             75                      
 Proceeds from failed sale-leaseback transactions                                                                        5,633                         —                       
 Proceeds from issuance of equity shares                                                                                 2,000                         —                       
 Other, net                                                                                                              2,032                         —                       
 Cash provided by financing activities                                                                                   118,643                       446,530                 
 Effect of exchange rate changes on cash                                                                                 4,456                         (120            )       
 Net change in cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted         149,781                       5,359                   
 Cash and cash equivalents, beginning of period                                                                          34,935                        37,530                  
 Cash included in advertising fund assets, restricted, beginning of period                                               23,091                        15,137                  
 Restricted cash, beginning of period                                                                                    —                             —                       
 Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, beginning of period  58,026                        52,667                  
 Cash and cash equivalents, end of period                                                                                172,611                       34,935                  
 Cash included in advertising fund assets, restricted, end of period                                                     19,369                        23,091                  
 Restricted cash, end of period                                                                                          15,827                        —                       
 Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, end of period        $       207,807               $       58,026          
                                                                                                                                                                               



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 26, 2020             December 28, 2019              December 26, 2020           December 28, 2019       
 Net income (loss)                                                $       (7,471  )             $       (10,585  )             $       (4,216  )           $       7,750           
 Acquisition related costs ((a))                                  2,395                         8,205                          15,682                      12,497                  
 Non-core items and project costs, net ((b))                      6,962                         1,259                          6,036                       6,644                   
 Sponsor management fees ((c))                                    543                           538                            5,900                       2,496                   
 Straight-line rent adjustment ((d))                              4,026                         (143             )             7,150                       2,172                   
 Equity-based compensation expense ((e))                          815                           298                            1,323                       1,195                   
 Foreign currency transaction gain, net ((f))                     (13,618         )             —                              (13,563         )           —                       
 Bad debt expense ((g))                                           359                           —                              3,201                       —                       
 Asset impairment and closed store expenses ((h))                 1,690                         —                              9,311                       —                       
 Loss on debt extinguishment ((i))                                4,817                         595                            5,490                       595                     
 Amortization related to acquired intangible assets ((k))         5,507                         3,814                          17,200                      11,314                  
 Provision for uncertain tax positions ((l))                      (696            )             —                              2,114                       —                       
 Valuation allowance for deferred tax asset ((m))                 668                           —                              668                         —                       
 Adjusted net income before tax impact of adjustments             5,997                         3,981                          56,296                      44,663                  
 Tax impact of adjustments ((n))                                  (4,429          )             (2,459           )             (12,890         )           (8,046          )       
 Adjusted net income                                              1,568                         1,522                          43,406                      36,617                  
 Net income (loss) attributable to non-controlling interest       17                            19                             (17             )           19                      
 Adjusted net income attributable to Driven Brands Holdings Inc.  $       1,551                 $       1,503                  $       43,423              $       36,598          
                                                                                                                                                                                   
 Adjusted earnings per share ((1))                                                                                                                                                 
 Basic and diluted                                                $       0.01                  $       0.02                   $       0.42                $       0.41            
                                                                                                                                                                                   
 Weighted average shares outstanding ((1))                                                                                                                                         
 Basic and diluted                                                127,256                       88,990                         104,318                     88,990                  
                                                                                                                                                                                   

((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 and Acquisition Adjusted EBITDA                                                                                                                      
                                                                                                                                                                      
                                                   Three Months Ended                                           Year Ended                                            
 (in thousands)                                    December 26, 2020             December 28, 2019              December 26, 2020            December 28, 2019        
 Net income (loss)                                 $       (7,471  )             $       (10,585  )             $       (4,216   )           $       7,750            
 Income tax expense (benefit)                      5,263                         (1,887           )             11,372                       4,830                    
 Interest expense, net                             30,673                        17,023                         95,646                       56,846                   
 Depreciation and amortization                     29,458                        8,992                          62,114                       24,220                   
 EBITDA                                            57,923                        13,543                         164,916                      93,646                   
 Acquisition related costs ((a))                   2,395                         8,205                          15,682                       12,497                   
 Non-core items and project costs, net ((b))       6,962                         1,259                          6,036                        6,644                    
 Sponsor management fees ((c))                     543                           538                            5,900                        2,496                    
 Straight-line rent adjustment ((d))               4,026                         (143             )             7,150                        2,172                    
 Equity-based compensation expense ((e))           815                           298                            1,323                        1,195                    
 Foreign currency transaction gain, net ((f))      (13,618         )             —                              (13,563          )           —                        
 Bad debt expense ((g))                            359                           —                              3,201                        —                        
 Asset impairment and closed store expenses ((h))  1,690                         —                              9,311                        —                        
 Loss on debt extinguishment ((i))                 4,817                         595                            5,490                        595                      
 Adjusted EBITDA                                   $       65,912                $       24,295                 205,446                      $       119,245          
 EBITDA adjustments related to acquisitions ((j))                                                               63,690                                                
 Acquisition Adjusted EBITDA                                                                                    $       269,136                                       
                                                                                                                                                                      
1. 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.
2. 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.
3. Includes management fees paid to Roark Capital Management, LLC.
4. 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.
5. Represents non-cash equity-based compensation expense.
6. Represents foreign currency transaction gains, net that primarily related
to the remeasurement of our intercompany loans. These gains are slightly
offset by unrealized losses on remeasurement of cross currency swaps.
7. Represents bad debt expense related to uncollectible receivables outside of
normal operations.
8. Relates to 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.
9. Represents the write-off of debt issuance costs and prepayment penalties
associated with early termination of debt.
10. Represents our estimate of our anticipated annual operating results,
including, without limitation, our estimates of the contribution of businesses
acquired in 2020 if such acquisitions had occurred on the first day of the
fiscal year.
11. Consists of amortization related to acquired intangible assets as
reflected within depreciation and amortization in the consolidated statements
of operations.
12. Represents uncertain tax positions recorded for prior year Canadian tax
positions, inclusive of interest and penalties.
13. Represents the establishment of a valuation allowance for certain deferred
tax assets negatively impacted by strategic transactions.
14. 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 26, 2020            December 28, 2019         December 26, 2020            December 28, 2019        
 Segment Adjusted EBITDA:                                                                                                               
 Maintenance               $       32,185               $       19,342            $       114,764              $       81,732           
 Car Wash                  25,398                       —                         43,137                       —                        
 Paint, Collision & Glass  16,157                       15,072                    66,276                       60,444                   
 Platform Services         12,668                       6,991                     49,408                       26,413                   
 Corporate and other       (19,489         )            (14,248         )         (65,211          )           (43,623          )       
 Store opening costs       (1,007          )            (2,862          )         (2,928           )           (5,721           )       
 Adjusted EBITDA           $       65,912               $       24,295            $       205,446              $       119,245          
                                                                                                                                        

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GlobeNewswire, Inc. 2021
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