Driven Brands Holdings Inc. Reports Fourth Quarter and Fiscal Year 2021 Results

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

*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

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)

(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)

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (UNAUDITED)

(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)

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 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.
7. Represents bad debt expense (recovery) related to uncollectible receivables outside of normal operations.
8. 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.
9. Represents the write-off of debt issuance costs and prepayment penalties associated with early termination of debt.
10. Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the consolidated statements of operations.
11. Represents uncertain tax positions recorded for prior year Canadian tax positions, inclusive of interest and penalties.
12. Represents the establishment of a valuation allowance for certain deferred tax assets negatively impacted by strategic transactions.
13. 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)

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

ADDITIONAL INFORMATION ON KEY PERFORMANCE INDICATORS (UNAUDITED)

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.