Driven Brands Holdings Inc
For the period ended Jun 29, 2024. Filed Aug 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 29, 2024 · Filed Aug 8, 2024
DRVN$11.89-1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-30; filed 2024-05-08.
0001804745-24-000015
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-29; filed 2024-08-08.
0001804745-24-000020
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 128 previous paragraphs and 213 current paragraphs.
69 unchanged; 45 reworded; 84 added; 10 removed; 4 previous and 15 current paragraphs rearranged.
Tables are not compared: 13 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (84)
Current report
Although we have continued to experience total Company same store sales growth for 14 consecutive quarters through our diversified customer base and service offerings, we have experienced and expect to continue experiencing softening demand across several of our segments, primarily as a result of inflationary pressures, increased competition, industry dynamics, and negative weather patterns.
Current report
•Net revenue increased 1% to $612 million, driven by higher product and service revenue due to an increase in system-wide sales and net new store growth.
Current report
•The Company added 45 net new stores during the quarter.
Current report
•Net Income decreased $8 million to $30 million or $0.18 per diluted share, primarily relating to increased payroll and employee benefit costs, impairment charges, and reduced gains recognized relating to decreased sale leaseback activity in the current period, partially offset by lower interest expense and income tax expense.
Current report
•Adjusted Net Income (non-GAAP) increased 27% to $58 million or $0.35 per diluted share. The increase was primarily due to margin improvements across the Maintenance, Paint, Collision & Glass, and Platform Services segments as well as decreased interest expense.
Current report
•Adjusted EBITDA (non-GAAP) increased 4% to $152 million. The increase was primarily due to margin improvements across the Maintenance, Paint, Collision & Glass, and Platform Services segments.
Current report
Q2 2024 Six Months Ended Highlights and Key Performance Indicators
Current report
•Net revenue increased 1% to $1,184 million, driven by higher product and service revenue due to an increase in system-wide sales and net new store growth.
Current report
•The Company added 65 net new stores during the first six months of 2024.
Current report
•Net Income decreased $33 million to $34 million or $0.21 per diluted share, primarily relating to impairment charges, increased employee related benefit costs, including share-based compensation expense, and lower operating margins within the Car Wash segment, partially offset by lower income tax expense and improved operating margins within the Maintenance, Platform Services, and Paint, Collision & Glass segments.
Current report
(d) Represents non-cash share-based compensation expense.
Current report
•non-cash impairment charges of $12 million relating to assets held for sale in the current period compared to $6 million in the prior year period, primarily related to certain property and equipment and operating lease right-of-use assets at closed and underperforming locations;
Current report
•a gain primarily relating assets held for sale and sale leaseback transactions of approximately $3 million during the three months ended June 29, 2024 compared to a gain of $14 million during the three months ended July 1, 2023 primarily relating to sale leaseback transactions;
Current report
•increased payroll and employee benefit costs, including $6 million of additional share-based compensation expense primarily relating to the modification of pre-IPO awards in the fourth quarter of 2023; and
Current report
•decreased interest expense of $9 million, primarily due to reduced interest associated with the Tax Receivable Agreement and interest income;
Current report
Adjusted net income was $58 million, or $0.35 per diluted share, for the three months ended June 29, 2024 compared to $46 million, or $0.27 per diluted share, for the three months ended July 1, 2023. This increase of $12 million was primarily due to the following:
Current report
•decreased interest expense of $9 million, primarily due to reduced interest associated with the Tax Receivable Agreement and interest income; and
Current report
•increased payroll and employee benefit costs; and
Current report
The increase was partially offset by:
Current report
•increased payroll and employee benefit costs; and
Current report
•decreased operating margins within the Car Wash segments.
Current report
Franchise royalties and fees remained flat primarily due to increased franchise royalty and fees revenue within the Maintenance segment as a result of a $26 million, or 9%, increase in franchised system-wide sales from same store sales growth and 93 net new franchise stores, offset by decreased franchise and royalty fees revenue within the Paint, Collision & Glass segment due to a $12 million, or 1%, decrease in franchise system-wide sales.
Current report
Company-operated store sales remained flat primarily due to an increase of $25 million within the Maintenance segment, offset by decreases of $19 million and $6 million related to the Paint, Collision & Glass and Car Wash segments, respectively. The sales increase in the Maintenance segment was primarily due to same store sales growth and 66 net new company-operated stores. The sales decrease in the Paint, Collision & Glass segment was primarily associated with the sale of nine company-operated stores to a franchisee in the current year as well as decreased same store sales due to reduced volume within the U.S. glass business. The decrease in Car Wash sales is primarily due to the net reduction of 27 company-operated stores during the prior 12 months and a decrease in same store sales primarily relating to lower volume. In total, the Company added 24 company-operated stores year-over-year.
Current report
Supply and other revenue increased $5 million, or 7%, primarily from growth in product and service revenue within the Maintenance and Platform Services segments as a result of an increase in system-wide sales and net store growth.
Current report
Independently-operated store expenses, which are entirely related to the Car Wash segment, remained flat due to reduced variable costs associated with the decrease in volume and a favorable impact from foreign exchange offset by increased rent and property charges.
Current report
Supply and other expenses decreased $2 million, or 4%, due to inventory and payroll cost savings in the current period.
Current report
Selling, general and administrative expenses increased $24 million, or 25%, primarily due to the reduction in gains recognized in the current period compared to the prior period. The Company recognized a gain relating to assets held for sale and sale leaseback transactions of approximately $3 million during the three months ended June 29, 2024 compared to a gain of $14 million during the three months ended July 1, 2023, primarily relating to sale leaseback transactions. In addition, payroll and employee benefit costs, including $6 million of additional share-based compensation expense primarily relating to the modification of pre-IPO awards in the fourth quarter of 2023, increased in the current period.
Current report
Store opening costs decreased by less than $1 million, primarily associated with Take 5 Oil Change (“Take 5 Oil) new store openings in the current period compared with store opening costs associated with our U.S. glass business in the prior period.
Current report
Depreciation and amortization expense decreased $1 million, or 2%, due to finite-lived intangible assets that fully amortized during the prior 12 months.
Current report
Interest expense, net decreased $9 million, or 22%, primarily due to reduced interest expense associated with the Tax Receivable Agreement and interest income in the current period.
Current report
Foreign Currency Transaction Loss (Gain), Net
Current report
The foreign currency transaction loss for the three months ended June 29, 2024 was primarily comprised of transaction losses in our foreign operations of $2 million, partially offset by a gain of less than $2 million on foreign currency hedges. The foreign currency transaction gain for the three months ended July 1, 2023 was comprised of transaction gains in our foreign operations of $2 million, partially offset by a loss of less than $1 million on foreign currency hedges.
Current report
Results of Operations for the Six Months Ended June 29, 2024 Compared to the Six Months Ended July 1, 2023
Current report
Net Income
Current report
We recognized net income of $34 million, or $0.21 per diluted share, for the six months ended June 29, 2024, compared to $67 million, or $0.40 per diluted share, for the six months ended July 1, 2023. The decrease of approximately $33 million was primarily due to the following:
Current report
•increased payroll and employee benefit costs, including $16 million of additional share-based compensation expense primarily relating to the modification of pre-IPO awards in the fourth quarter of 2023;
Current report
•increased marketing expenditures;
Current report
•decreased tax expense of $7 million;
Current report
•decreased interest expense, net, of $3 million, primarily due to reduced interest associated with the Tax Receivable Agreement and interest income; and
Current report
Adjusted Net Income
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Removed paragraphs (10)
Previous report
•Net revenue increased 2% to $572 million, driven by same store sales and net store growth.
Previous report
•The Company added 20 net new stores in the quarter.
Previous report
•Net Income decreased 86% to $4 million or $0.03 per diluted share in the current year, primarily relating to impairment charges, increased equity-based compensation expense, depreciation and amortization and interest expenses as well as an unfavorable impact from foreign exchange, partially offset by gains primarily from the sale of a business, assets held for sale, and favorable lease terminations.
Previous report
(d) Represents non-cash equity-based compensation expense.
Previous report
•increased interest expense of $6 million, primarily due to increased borrowings and higher variable rates on the Revolving Credit Facility;
Previous report
•increased interest expense of $6 million, primarily due to increased borrowings and higher variable rates on the Revolving Credit Facility;
Previous report
Independently-operated store expenses (comprised entirely of expenses from the international car wash locations) remained flat period over period as a result of cost management.
Previous report
Depreciation and amortization expense increased $5 million, or 13%, due to additional fixed assets and finite-lived intangible assets recognized in conjunction with recent acquisitions and higher capital expenditures, primarily related to oil change and car wash site development, as well as full year depreciation for store openings that occurred in the prior 12 months.
Previous report
Interest expense, net increased $6 million, or 15%, primarily due to increased borrowings and higher variable rates on the Revolving Credit Facility.
Previous report
Paint, Collision & Glass Segment Adjusted EBITDA decreased $5 million, or 13%, primarily due to decreased volume associated with company-operated stores and decreased operating margins, partially offset by total segment same store sales growth.
Reworded paragraphs (45)
Previous wording
The following discussion and analysis for Driven Brands Holdings Inc. and Subsidiaries (“Driven Brands,” “the Company,” “we,” “us,” or “our”) should be read in conjunction with our consolidated financial statements and the related notes to our consolidated financial statements included elsewhere in this quarterly report. We operate on a 52 or 53-week fiscal year, which ends on the last Saturday in December. The three months ended March 30, 2024 and April 1, 2023 were both 13 week periods.
Current wording
The following discussion and analysis for Driven Brands Holdings Inc. and Subsidiaries (“Driven Brands,” “the Company,” “we,” “us,” or “our”) should be read in conjunction with our consolidated financial statements and the related notes to our consolidated financial statements included elsewhere in this quarterly report. We operate on a 52 or 53-week fiscal year, which ends on the last Saturday in December. The three months ended June 29, 2024 and July 1, 2023 were both 13 weeks periods. The six months ended June 29, 2024 and July 1, 2023 were both 26 week periods.
Previous wording
Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of more than 5,000 locations across 49 U.S. states and 13 other countries. Our scaled, diversified platform fulfills an extensive range of core retail and commercial automotive needs, including paint, collision, glass, and repair services, as well as a variety of high-frequency services, such as oil changes and car washes. We have continued to grow our base of consistent recurring revenue by adding new franchised and company-operated stores and same store sales growth. Driven Brands generated net revenue of approximately $572 million during the three months ended March 30, 2024, an increase of 2% compared to the prior year, and system-wide sales of approximately $1.6 billion during the three months ended March 30, 2024, an increase of 7% from the prior year.
Current wording
Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of more than 5,000 locations across 49 U.S. states and 13 other countries. Our scaled, diversified platform fulfills an extensive range of core retail and commercial automotive needs, including paint, collision, glass, and repair services, as well as a variety of high-frequency services, such as oil changes and car washes.
Previous wording
Q1 2024 Highlights and Key Performance Indicators
Current wording
Q2 2024 Three Months Ended Highlights and Key Performance Indicators
Previous wording
•Consolidated same store sales increased 0.7%.
Current wording
•Consolidated same store sales increased less than 1%.
Previous wording
•Adjusted Net Income (non-GAAP) decreased 3% to $38 million or $0.23 per diluted share. The decrease was primarily due to decreased Segment Adjusted EBITDA within our Car Wash and Paint, Collision & Glass segments as well as increased interest and depreciation expense, partially offset by increased Segment Adjusted EBITDA within our Maintenance and Platform Services segments.
Current wording
•Adjusted Net Income (non-GAAP) increased 13% to $96 million or $0.59 per diluted share. The increase was primarily due to margin improvements within our Maintenance, Platform Services, and Paint, Collision & Glass segments as well as decreased interest expense, partially offset by increased depreciation expense and reduced margins within the Car Wash segment.
Previous wording
•Adjusted EBITDA (non-GAAP) increased 6% to $131 million. The increase was primarily due to increased Segment Adjusted EBITDA within our Maintenance and Platform Services segments, partially offset by decreased Segment Adjusted EBITDA within our Car Wash and Paint, Collision & Glass segments.
Current wording
•Adjusted EBITDA (non-GAAP) increased 5% to $283 million. The increase was primarily due to improved margins within our Maintenance, Platform Services, and Paint, Collision & Glass segments, partially offset by reduced margins within the Car Wash segment.
Previous wording
Segment Adjusted EBITDA. We define Segment Adjusted EBITDA as earnings before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition-related costs, equity compensation, loss on debt extinguishment, foreign currency transaction related gains or losses, store opening costs, cloud computing amortization, and certain non-recurring and non-core, infrequent or unusual charges. 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. Segment Adjusted EBITDA is a performance metric utilized by our Chief Operating Decision Maker to allocate resources to and assess performance of our segments. Refer to Note 5 in our consolidated financial statements for a reconciliation of income before taxes to Segment Adjusted EBITDA for the three months ended March 30, 2024 and April 1, 2023.
Current wording
Segment Adjusted EBITDA. We define Segment Adjusted EBITDA as earnings before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition-related costs, equity compensation, loss on debt extinguishment, foreign currency transaction related gains or losses, store opening costs, cloud computing amortization, and certain non-recurring and non-core, infrequent or unusual charges. 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. Segment Adjusted EBITDA is a performance metric utilized by our Chief Operating Decision Maker to allocate resources to and assess performance of our segments. Refer to Note 5 in our consolidated financial statements for a reconciliation of income before taxes to Segment Adjusted EBITDA for the three and six months ended June 29, 2024 and July 1, 2023.
Previous wording
The following table sets forth our key performance indicators for the three months ended March 30, 2024 and April 1, 2023:
Current wording
The following table sets forth our key performance indicators for the three and six months ended June 29, 2024 and July 1, 2023:
Previous wording
We recognized net income of $4 million, or $0.03 per diluted share, for the three months ended March 30, 2024, compared to $30 million, or $0.17 per diluted share, for the three months ended April 1, 2023. The decrease of approximately $25 million was primarily due to the following:
Current wording
We recognized net income of $30 million, or $0.18 per diluted share, for the three months ended June 29, 2024 compared to $38 million, or $0.22 per diluted share, for the three months ended July 1, 2023. The decrease of approximately $8 million was primarily due to the following:
Previous wording
•a decrease in tax expense of $5 million; and
Current wording
•a decrease in tax expense of $2 million; and
Previous wording
Adjusted EBITDA was $131 million for the three months ended March 30, 2024, an increase of $8 million, compared to $123 million for the three months ended April 1, 2023. The increase in Adjusted EBITDA was primarily due to:
Current wording
Adjusted EBITDA was $152 million for the three months ended June 29, 2024 compared to $146 million for the three months ended July 1, 2023. The increase of $6 million in Adjusted EBITDA was primarily due to:
Previous wording
Company-operated store expenses decreased $1 million, or 1%, primarily due to the decreased company-operated store sales, partially offset by increased rent expense at properties converted to leases through sale leasebacks that occured during the prior 12 months.
Current wording
Company-operated store expenses decreased $3 million, or 1%, primarily due to decreased company-operated store sales resulting in reduced variable costs, partially offset by increased rent expense at properties converted to leases through sale leasebacks that occurred during the prior 12 months.
Previous wording
Asset impairment charges and lease terminations increased by $19 million. During the three months ended March 30, 2024, the Company recorded impairment charges primarily related to assets held for sale. For more information, refer to Note 6 in our consolidated financial statements included within this Form 10-Q.
Current wording
Asset impairment charges and lease terminations increased $6 million for the three months ended June 29, 2024 compared to the three months ended July 1, 2023. During the three months ended June 29, 2024, the Company recorded impairment charges primarily related to assets held for sale. For more information, refer to Note 6 in our consolidated financial statements included within this Form 10-Q. During the three months ended July 1, 2023, asset impairment charges primarily related to certain property and equipment and operating lease right-of-use assets at closed and underperforming locations.
Previous wording
Income tax expense was $6 million for the three months ended March 30, 2024 compared to $11 million for the three months ended April 1, 2023. The effective income tax rate for the three months ended March 30, 2024 was 59.1% compared to 26.9% for the three months ended April 1, 2023. The effective tax rate for the three months ended March 30, 2024 was primarily driven by the asset impairment charges and the non-deductible equity-based compensation expense. The effective tax rate for three months ended April 1, 2023 was driven by the inclusion of foreign disregarded entity losses.
Current wording
Income tax expense was $18 million for the three months ended June 29, 2024 compared to $20 million for the three months ended July 1, 2023. The effective income tax rate for the three months ended June 29, 2024 was 37.2% compared to 34.9% for the three months ended July 1, 2023. The net decrease in income tax expense and increase in effective tax rate for the three months ended June 29, 2024 was primarily driven by asset impairment charges and non-deductible share-based compensation expense.
Previous wording
•non-cash impairment charges of $19 million, primarily relating to assets held for sale in the current period;
Current wording
•non-cash impairment charges of $32 million, primarily relating to assets held for sale in the current period compared to $6 million in the prior year period primarily related to certain property and equipment and operating lease right-of-use assets at closed and underperforming locations;
Previous wording
•unfavorable impact from foreign exchange of $6 million;
Current wording
•unfavorable impact from foreign exchange of $8 million;
Previous wording
•increased depreciation and amortization expenses of $5 million relating to capital expenditures and new store openings that occurred in the prior 12 months; and
Current wording
•increased depreciation and amortization expenses of $4 million relating to capital expenditures and new store openings that occurred in the prior 12 months; and
Previous wording
•a gain primarily relating to the sale of a business, assets held for sale, and favorable lease terminations of approximately $13 million during the three months ended March 30, 2024 compared to a loss of $2 million during the three months ended April 1, 2023;
Current wording
•a gain primarily relating to the sale of a business, assets held for sale, and favorable lease terminations of approximately $16 million during the six months ended June 29, 2024 compared to a gain relating to sale leaseback transactions of $12 million during the six months ended July 1, 2023;
Previous wording
Adjusted net income was $38 million for the three months ended March 30, 2024, a decrease of $1 million, compared to $39 million for the three months ended April 1, 2023. This decrease was primarily due to the following:
Current wording
Adjusted net income was $96 million for the six months ended June 29, 2024 compared to $85 million for the six months ended July 1, 2023. This increase of $11 million was primarily due to the following:
Previous wording
Franchise royalties and fees increased $2 million, or 4%, primarily due to same store sales growth and a net increase of 94 franchised stores. Franchised system-wide sales increased $101 million, or 9%.
Current wording
Franchise royalties and fees increased $2 million, or 2%, primarily due to same store sales growth and a net increase of 87 franchised stores, partially offset by a decrease in average royalty rates primarily within the Paint, Collision & Glass segment. Franchised system-wide sales increased $112 million, or 5%.
Previous wording
Company-operated store sales decreased $2 million, or less than 1%, of which approximately $15 million and $12 million related to a decrease in the Paint, Collision & Glass and Car Wash segments, respectively, partially offset by an increase of $26 million in the Maintenance segment. The sales decrease in the Paint, Collision & Glass segment was primarily driven by revenue associated with the sale of nine company-operated stores to a franchisee in the current period as well as decreased volume within the U.S. glass business. The sales decrease in the Car Wash segment primarily related to reduced volume resulting in decreased same store sales. The sales increase in the Maintenance segment was primarily due to same store sales growth and 62 net new company-operated stores. In aggregate, the Company added a net 48 company-operated stores year-over-year.
Current wording
Company-operated store sales decreased $2 million, or less than 1%, of which approximately $34 million and $19 million related to a decrease in the Paint, Collision & Glass and Car Wash segments, respectively, partially offset by an increase of $51 million in the Maintenance segment. The sales decrease in the Paint, Collision & Glass segment was primarily driven by revenue associated with the sale of nine company-operated stores to a franchisee in the current period as well as decreased volume within the U.S. glass business. The decrease in Car Wash sales is primarily due to the net reduction of 27 company-operated stores during the prior 12 months and a decrease in same store sales primarily relating to lower volume. The sales increase in the Maintenance segment was primarily due to same store sales growth and 66 net new company-operated stores. In aggregate, the Company added a net 24 company-operated stores year-over-year.
Previous wording
Independently-operated store sales (comprised entirely of sales from the international car wash locations) increased $1 million, or 1%, primarily due to an increase in same store sales, partially offset by a negative impact from foreign exchange.
Current wording
Independently-operated store sales (comprised entirely of sales from the international car wash locations) decreased $1 million, or less than 1%, primarily due to a decrease in same store sales due to lower volume, partially offset by a favorable impact from foreign exchange.
Previous wording
Advertising fund contributions increased by $2 million, or 11%, primarily due to an increase in franchise system-wide sales of approximately $101 million, or 9%, from same store sales growth and an additional 94 net new franchise stores. Our franchise agreements typically require the franchisee to pay continuing advertising fund fees based on a percentage of the franchisee’s gross sales.
Current wording
Advertising fund contributions increased by $3 million, or 6%, primarily due to an increase in franchise system-wide sales of approximately $112 million, or 5%, from same store sales growth and an additional 87 net new franchise stores. Our franchise agreements typically require the franchisee to pay continuing advertising fund fees based on a percentage of the franchisee’s gross sales.
Previous wording
Supply and other revenue increased $7 million, or 10%, primarily due to growth in product and service revenue within the Maintenance and Platform Services segments as a result of an increase in system-wide sales.
Current wording
Supply and other revenue increased $12 million, or 9%, primarily due to growth in product and service revenue within the Maintenance and Platform Services segments as a result of an increase in system-wide sales and net store growth.
Previous wording
Advertising fund expenses increased $2 million, or 11%, which is commensurate with the increase to advertising fund contributions during the period. Advertising fund expenses generally trend consistent with advertising fund contributions.
Current wording
Advertising fund expenses increased $3 million, or 6%, which is commensurate with the increase to advertising fund contributions during the period. Advertising fund expenses generally trend consistent with advertising fund contributions.
Previous wording
Supply and other expenses decreased $1 million, or 3%, due to decreased product costs associated with supply and other revenue.
Current wording
Supply and other expenses decreased $3 million, or 3%, due to decreased product and payroll costs associated with supply and other revenue.
Previous wording
Selling, general, and administrative expenses increased $4 million, or 4%, primarily due to increased equity-based compensation expense resulting from modifications of certain stock awards in the fourth quarter of 2023 as well as increased third party and marketing expenditures. These expenses were partially offset by a gain primarily relating to the sale of a business, assets held for sale, and favorable lease terminations of approximately $13 million during the three months ended March 30, 2024 compared to a loss of $2 million during the three months ended April 1, 2023. During the three months ended March 30, 2024 the company recorded a gain of $6 million from the sale of nine company-operated stores to a franchisee, a gain of $6 million for assets held for sale, and favorable lease terminations of $6 million on previously impaired ROU assets, offset by $5 million of loss from disposals in the current period.
Current wording
Selling, general, and administrative expenses increased $28 million, or 14%, primarily due to payroll and employee benefit costs, including $16 million of additional share-based compensation expense primarily relating to the modification of pre-IPO awards in the fourth quarter of 2023 as well as increased marketing expenditures. These expenses were partially offset by a gain primarily relating to the sale of a business, assets held for sale, and favorable lease terminations of approximately $16 million during the six months ended June 29, 2024 compared to a gain relating to sale leaseback transactions of $12 million during the six months ended July 1, 2023.
Previous wording
Acquisition related costs decreased less than $1 million due to decreased acquisition activity in the current year compared to the prior year.
Current wording
Acquisition related costs decreased $4 million, or 63%, due to decreased acquisition activity in the current year compared to the prior year.
Previous wording
Store opening costs remained flat primarily as the Company continues to open company-operated stores, primarily associated with Take 5 Oil new store openings and brand conversions of previously acquired locations.
Current wording
Store opening costs remained flat primarily as the Company continues to open Take 5 Oil company-operated stores as well as brand conversions of previously acquired locations.
Previous wording
The loss on foreign currency transactions for the three months ended March 30, 2024 was primarily comprised of transaction losses in our foreign operations of $7 million, partially offset by a gain on foreign currency hedges of $3 million. The gain on foreign currency transactions for the three months ended April 1, 2023 was primarily comprised of a $2 million unrealized gain on foreign currency hedges that are not designated as hedging instruments.
Current wording
The foreign currency transaction loss for the six months ended June 29, 2024 was primarily comprised of transaction losses in our foreign operations of $10 million, partially offset by a gain on foreign currency hedges of $5 million. The foreign currency transaction gain for the six months ended July 1, 2023 was primarily comprised of transaction gains of $2 million as well as a gain on foreign currency hedges of $1 million.
Previous wording
Maintenance Segment Adjusted EBITDA increased $19 million, or 27%, primarily due to revenue growth, cost management, and operational leverage utilizing our efficient labor model at company-operated locations.
Current wording
Maintenance Segment Adjusted EBITDA increased $18 million, or 21%, primarily due to revenue growth, cost management, and operational leverage.
Previous wording
Car Wash is comprised of car wash sites throughout the U.S., Europe, and Australia with varying geographical, economical, and political factors, which could impact the results of the business. Our U.S. Car Wash locations have experienced softening demand, increased competitive pressures, and negative weather patterns, which have contributed to negative same store sales. We perform site reviews to evaluate operational efficiencies and these reviews could result in future impairment charges.
Current wording
Car Wash is comprised of car wash sites throughout the U.S., Europe, and Australia with varying geographical, economical, and political factors, which could impact the results of the business. Our U.S. Car Wash locations have experienced softening demand, increased competitive pressures, and negative weather patterns, which have contributed to negative same store sales and could result in future asset impairment charges.
Previous wording
Car Wash Segment Adjusted EBITDA decreased by $12 million, or 29%, primarily driven by decreased same store sales within company-operated stores and increased rent as a result of sale-leaseback transactions in the trailing 12 months.
Current wording
Car Wash Segment Adjusted EBITDA decreased by $6 million, or 15%, primarily driven by decreased same store sales within company-operated stores and increased costs relating to marketing expenditures and rent associated with sale leaseback transactions during the prior 12 months.
Previous wording
Maintenance net revenue increased $34 million, or 15%, driven primarily by a $26 million increase in company-operated store sales from same store sales growth and 62 net new company-operated stores. Supply and other revenue increased by $6 million, or 32%, primarily due to higher system-wide sales. Franchise royalties and fees increased by $2 million, or 16%, primarily due to a $32 million, or 13%, increase in franchised system-wide sales from same store sales growth and 86 net new franchise stores.
Current wording
Maintenance net revenue increased $70 million, or 15%, driven primarily by a $51 million increase in company-operated store sales from same store sales growth and 66 net new company-operated stores. Supply and other revenue increased by $14 million, or 34%, primarily due to higher system-wide sales. Franchise royalties and fees increased by $5 million, or 17%, primarily due to a $58 million, or 11%, increase in franchised system-wide sales from same store sales growth and 93 net new franchise stores.
Previous wording
Car Wash segment net revenue decreased $12 million, or 8%, driven primarily by a $12 million decrease in company-operated store sales from the net reduction of 12 company-operated stores in the trailing 12 months and a decrease in same store sales primarily relating to lower volume. Independently-operated store sales increased $1 million due to an increase in same store sales for independently-operated stores and a favorable impact from foreign exchange. Supply and other revenue decreased $1 million due to reduced vending sales.
Current wording
Car Wash segment net revenue decreased $20 million, or 6%, driven primarily by a $19 million, or 9%, decrease in company-operated store sales from the net reduction of 27 company-operated stores during the prior 12 months and a decrease in same store sales primarily relating to lower volume. Independently-operated store sales decreased $1 million due to a decrease in same store sales for independently-operated stores.
Previous wording
Paint, Collision & Glass net revenue decreased $14 million, or 12%, for the three months ended March 30, 2024, as compared to the three months ended April 1, 2023. Company-operated store sales decreased $15 million, or 19%, primarily driven by revenue associated with the sale of nine company-operated stores to a franchisee in the current period as well as decreased volume within the U.S. glass business. Franchise royalties and fees increased less than $1 million, or 1%, primarily due to an $81 million, or 11%, increase in franchise system-wide sales generated by same store sales growth, partially offset by a decrease in average royalty rates.
Current wording
Paint, Collision & Glass net revenue decreased $36 million, or 14%, for the six months ended June 29, 2024, as compared to the six months ended July 1, 2023. Company-operated store sales decreased $34 million, or 21%, primarily driven by revenue associated with the sale of nine company-operated stores to a franchisee in the current period as well as decreased same store sales due to reduced volume within the U.S. glass business. Franchise royalties and fees decreased $2 million, or 3%, primarily due to a decrease in average royalty rates, partially offset by a $69 million, or 4%, increase in franchise system-wide sales generated by same store sales growth.
Previous wording
Platform Services net revenue increased $2 million, or 3%, driven primarily by an increase in total Company system-wide sales of $1.6 billion in the current year compared to $1.5 billion in the prior year, which resulted in increased product purchases from franchisees and company-operated stores.
Current wording
Platform Services net revenue increased $6 million, or 5%, driven primarily by an increase in total Company system-wide sales of $3.3 billion in the current year compared to $3.2 billion in the prior year, which resulted in increased product purchases by franchisees and company-operated stores.
Previous wording
Platform Services Segment Adjusted EBITDA increased $3 million, or 17%, primarily driven by a combination of revenue growth and cost management.
Current wording
Platform Services Segment Adjusted EBITDA increased $6 million, or 14%, primarily driven by a combination of revenue growth and cost management.
Previous wording
At March 30, 2024, the Company had total liquidity of $308 million, which included $166 million in cash and cash equivalents and $90 million and $52 million of undrawn capacity on its 2019 VFN and Revolving Credit Facility, respectively. This does not include the additional $135 million Series 2022-1 Class A-1 Notes that expand our variable funding note borrowing capacity when the company elects to exercise it, assuming certain conditions continue to be met.
Current wording
At June 29, 2024, the Company had total liquidity of $316 million, which included $149 million in cash and cash equivalents and $90 million and $77 million of undrawn capacity on its 2019 VFN and Revolving Credit Facility, respectively. This does not include the additional $135 million Series 2022-1 Class A-1 Notes that expand our variable funding note borrowing capacity when the company elects to exercise it, assuming certain conditions continue to be met.
Previous wording
The following table illustrates the main components of our cash flows for the three months ended March 30, 2024 and April 1, 2023:
Current wording
The following table illustrates the main components of our cash flows for the six months ended June 29, 2024 and July 1, 2023:
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Current report — wording carried from elsewhere
We have continued to grow our base of consistent recurring revenue by adding new franchised and company-operated stores and same store sales growth. Driven Brands generated net revenue of approximately $612 million and $1.2 billion during the three and six months ended June 29, 2024, respectively, an increase of 1% compared to the prior year comparative periods, and system-wide sales of approximately $1.7 billion and $3.3 billion during the three and six months ended June 29, 2024, respectively, an increase of 1% and 3% from the prior year comparative periods.
Current report — wording carried from elsewhere
(as compared to same period in the prior year, unless otherwise noted)
Current report — wording carried from elsewhere
•Consolidated same store sales increased less than 1%.
Current report — wording carried from elsewhere
To facilitate the review of our results of operations, the following tables set forth our financial results for the periods indicated. All information is derived from the unaudited Consolidated Statements of Operations. Certain percentages presented in this section have been rounded, therefore, totals may not equal the sum of the line items in the tables below.
Current report — wording carried from elsewhere
Independently-operated store sales (comprised entirely of sales from the international car wash locations) decreased by $1 million, or 2%, primarily due to decreased volume and unfavorable impacts from foreign exchange.
Current report — wording carried from elsewhere
Advertising fund contributions increased by less than 1%, primarily due to an increase in franchise system-wide sales of approximately 1%, from same store sales growth and net franchise store growth. Our franchise agreements typically require the franchisee to pay continuing advertising fund fees based on a percentage of franchisee gross sales.
Current report — wording carried from elsewhere
Advertising fund expenses increased less than 1%, which is commensurate to the increase in advertising fund contributions during the period. Advertising fund expenses generally trend consistent with advertising fund contributions.
Current report — wording carried from elsewhere
Acquisition related costs decreased $3 million, or 93%, primarily due to decreased acquisition activity in the current period.
Current report — wording carried from elsewhere
These decreases were partially offset by:
Current report — wording carried from elsewhere
The increases were partially offset by:
Current report — wording carried from elsewhere
Company-operated store expenses decreased $4 million, or 1%, primarily due to the decreased company-operated store sales resulting in reduced variable costs and margin improvements primarily within the Maintenance segment, partially offset by increased rent expense at properties converted to leases through sale leasebacks that occurred during the prior 12 months.
Current report — wording carried from elsewhere
Asset Impairment Charges and Lease Terminations
Current report — wording carried from elsewhere
We assess the performance of our segments based on Segment Adjusted EBITDA, which is defined as earnings before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for acquisition-related costs, store opening and closure costs, straight-line rent, equity compensation, loss on debt extinguishment, cloud computing amortization, and certain non-recurring, non-core, infrequent or unusual charges. In addition, shared services costs are not allocated to these segments and are included in Corporate and Other. Segment Adjusted EBITDA is a supplemental measure of the operating performance of our segments and may not be comparable to similar measures reported by other companies.
Current report — wording carried from elsewhere
Platform Services Segment Adjusted EBITDA increased $3 million, or 12%, primarily driven by revenue growth, cost management, and operational leverage.
Current report — wording carried from elsewhere
Car Wash is comprised of car wash sites throughout the U.S., Europe, and Australia with varying geographical, economical, and political factors, which could impact the results of the business. Our U.S. Car Wash locations have experienced softening demand, increased competitive pressures, and negative weather patterns, which have contributed to negative same store sales and could result in future asset impairment charges.
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Previous report — wording carried elsewhere
•increased depreciation expenses of $5 million relating to capital expenditures and new store openings that occurred in the prior 12 months; and
Previous report — wording carried elsewhere
The decreases were partially offset by:
Previous report — wording carried elsewhere
Loss (Gain) on Foreign Currency Transactions, Net
Previous report — wording carried elsewhere
We expect to be able to utilize certain tax benefits which are related to periods prior to the effective date of the Company’s initial public offering, which we therefore attribute to our existing shareholders. We expect that these tax benefits