Driven Brands Holdings Inc
For the period ended Dec 28, 2024. Filed Feb 26, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 26, 2025
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-K
Period ended 2023-12-30; filed 2024-02-28.
0001804745-24-000005
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-28; filed 2025-02-26.
0001804745-25-000010
Item 7. 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 183 previous paragraphs and 176 current paragraphs.
83 unchanged; 50 reworded; 41 added; 49 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 13 previous and 14 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 (41)
Current report
Although we have continued to experience total Company same store sales growth for 16 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, including hurricanes.
Current report
During the fourth quarter of 2024, the Company performed a step one quantitative impairment analysis of the U.S. Car Wash long-lived assets. Based on the results of our impairment analysis, we concluded the carrying value of the U.S. Car Wash long-lived assets exceeded the fair value and an impairment charge of $325 million was recorded.
Current report
•Net Loss decreased $452 million to $292 million or $1.82 loss per diluted share in the current year compared to $745 million or $4.53 loss per diluted share in the prior year period, primarily relating to improved operating margins within our Maintenance, Platform Services and Paint, Collision & Glass segments, net new store growth, same store sales growth, and a goodwill impairment charge lapping in the prior year, partially offset by increased employee related benefit costs, including performance-based and share-based compensation expense, reduced margins within the Car Wash segment, a lower tax benefit, an unfavorable impact from foreign exchange, increased loss on disposal or sale of assets, and increased asset impairment charges in the current period.
Current report
Adjusted Net Loss/Adjusted Earnings per Share
Current report
(d) Represents non-cash share-based compensation expense.
Current report
(g) Represents charges incurred related to the Company’s partial repayment of Senior Secured Notes in conjunction with the sale of its Canadian distribution business.
Current report
Net Loss
Current report
•net new store openings, primarily within the Maintenance segment;
Current report
•operating margin improvements within the Maintenance, Paint, Collision & Glass, and Platform Services segments; and
Current report
•increased payroll and employee benefit costs, including performance-based compensation and $33 million of additional share-based compensation expense primarily relating to the modification of pre-IPO awards in the fourth quarter of 2023;
Current report
•decreased tax benefit of $78 million, primarily relating to goodwill impairment charges in the prior year;
Current report
•an unfavorable impact from foreign exchange of $23 million compared to the prior year;
Current report
•non-cash asset impairment charges of $389 million in the current period, which primarily related to our step one quantitative analysis of long-lived assets as well as assets held for sale and right-of-use assets at closed stores in the current period compared to $133 million in the prior year period, which related to Car Wash fixed assets and right-of-use assets at closed stores and assets held for sale; and
Current report
•net new store openings, primarily within the Maintenance segment; and
Current report
•operating margin improvements within the Maintenance, Paint, Collision & Glass, and Platform Services segments.
Current report
•increased payroll and employee benefit costs, including performance-based compensation; and
Current report
•net new store openings, primarily within the Maintenance segment; and
Current report
•operating margin improvements within the Maintenance, Paint, Collision & Glass, and Platform Services segments.
Current report
•increased payroll and employee benefit costs, including performance-based compensation; and
Current report
Franchise royalties and fees decreased less than $2 million, or 1%, primarily due to a decrease in average royalty rates within the Paint, Collision & Glass segment and decreased franchise system-wide sales within the Platform Services segment, partially offset by an increase in franchise system-wide sales of $191 million, or 4%, driven by franchise same store sales growth within the Paint, Collision & Glass and Maintenance segments and the addition of 143 net new franchised stores.
Current report
Company-operated store expenses decreased $11 million, or 1%, primarily due to lower inventory costs and labor efficiency, partially offset by increased rent and property related expenses.
Current report
Supply and other expenses decreased $19 million, or 12%, primarily related to the sale of our Canadian distribution business in the current year.
Current report
Selling, general, and administrative expenses increased $93 million, or 20%, primarily due to increased payroll and employee benefit costs, including performance-based compensation and $33 million of additional share-based compensation expense primarily relating to the modification of pre-IPO awards in the fourth quarter of 2023, loss on the sale or disposal of assets and businesses of $36 million compared to $5 million in the prior year, and increased cloud computing amortization.
Current report
Depreciation and amortization expense increased $5 million, or 3%, due to additional fixed assets, primarily related to Take 5 Oil site development.
Current report
Asset impairment charges and lease terminations increased by $256 million for the year ended December 28, 2024 compared to the year ended December 30, 2023. During the year ended December 28, 2024, impairment charges were primarily related to our U.S. Car Wash step one quantitative analysis of long-lived assets as well as assets held for sale and right-of-use assets at closed stores in the current period. During the year ended December 30, 2023, impairment charges were primarily related to U.S. Car Wash fixed assets and right-of-use assets at closed stores and assets held for sale. For more information, refer to Note 7 in our consolidated financial statements included within this Form 10-K.
Current report
Interest expense, net decreased $7 million, or 4%, primarily due to net debt reduction of $250 million in the current year, primarily relating to the Term loan and Revolving Credit Facility, interest income earned in the current year, and reduced interest related to the Tax Receivable Agreement, partially offset by increased interest and costs associated with the 2024-1 Senior Notes.
Current report
Foreign Currency Transactions Loss (Gain), Net
Current report
Loss on Debt Extinguishment
Current report
Represents charges incurred related to the Company’s partial repayment of Senior Secured Notes in conjunction with the sale of its Canadian distribution business.
Current report
Income Tax Benefit
Current report
Maintenance Adjusted EBITDA increased $60 million, or 19%, primarily due to net new store growth, same store sales growth, cost management, and operational leverage.
Current report
Car Wash segment net revenue decreased $11 million, or 2%, driven primarily by a $27 million, or 7%, decrease in company-operated store sales due to the full year impact in 2024 relating to stores closed during the fourth quarter of 2023 and a decrease in same store sales primarily relating to lower volume. Independently-operated store sales increased $16 million primarily due to an increase in same store sales as a result of new product offerings and improved price realization.
Current report
Car Wash Adjusted EBITDA decreased by $11 million, or 9%, primarily driven by decreased same store sales within company-operated stores, partially offset by positive same store sales within the independently-operated stores and improved inventory cost management.
Current report
Paint, Collision & Glass net revenue decreased $76 million, or 15%, for the year ended December 28, 2024, primarily driven by a decrease in company-operated store sales of $65 million, or 21%, primarily driven by revenue associated with nine company-operated stores that were sold to a franchisee in the current year as well as decreased volume associated with company-operated stores. Franchise royalties and fees decreased $6 million, or 6%, primarily due to a decrease in average royalty rates, partially offset by a $126 million, or 4%, increase in franchise system-wide sales generated by same store sales growth.
Current report
Paint, Collision & Glass Adjusted EBITDA decreased $6 million, or 4%, primarily due to Adjusted EBITDA associated with the nine company-operated stores sold to a franchisee in the current year as well as decreased volume associated with company-operated stores, partially offset by an improvement in operating margin.
Current report
Platform Services net revenue decreased $8 million, or 4%, primarily due to the sale of our Canadian distribution business, partially offset by supply sales relating to total company system-wide sales increases in the current year.
Current report
Platform Services Adjusted EBITDA increased $3 million, or 4%, primarily driven by cost management.
Current report
In July 2024, the Company issued $275 million of 2024-1 Senior Notes as well as replaced the 2019 VFN with a $400 million 2024 VFN. Proceeds from the 2024-1 Senior Notes were primarily used to repay the Company’s 2018-1 Senior Notes. See Note 8 to our consolidated financial statements for additional information regarding the Company’s debt.
Current report
On February 24, 2025, the Company entered into a definitive agreement to sell its U.S. Car Wash business to Express Wash Operations, LLC dba Whistle Express Car Wash (the “Buyer”). The aggregate purchase price is $385 million, subject to customary adjustments for cash, indebtedness, working capital, and transaction expenses. Under the terms of the agreement, the Buyer has agreed to pay the Company $255 million in cash and deliver to the Company an interest-bearing seller note in the principal amount of $130 million, subject to customary adjustments. The transition is subject to customary closing conditions.
Current report
The Company performed a qualitative assessment of indefinite-lived trade names as of September 29, 2024, which is the date of our annual impairment test, as it was not more-likely-than-not an impairment existed.
Showing the first 40 of 41 passages. Open the source sections for the rest.
Removed paragraphs (49)
Previous report
During the third quarter of 2023, management initiated a strategic review of the U.S. car wash operations, which included, but was not limited to, an evaluation of the following: store performance, the competitive landscape, revenue and expense optimization opportunities, and capital requirements. As a result of this review, management approved the closure of 29 stores, halted the opening of new company-operated stores, and began marketing property and equipment for sale that will not be utilized by the Company. These actions resulted in impairment charges of $122 million relating to U.S. Car Wash property and equipment and right-of-use assets during the year ended December 30, 2023. As of December 30, 2023, the Company has reclassified $301 million of assets from property and equipment to assets held for sale on the consolidated balance sheet.
Previous report
As a result of the evaluation performed above, as well as other qualitative and quantitative factors, including a decline in the stock price during 2023, management determined a triggering event had occurred requiring an interim step one quantitative analysis of the Company’s goodwill and indefinite lived intangible assets during the third quarter of 2023. Based on the results of our interim impairment analysis, we concluded the carrying value of the U.S. Car Wash reporting unit exceeded its fair value, and we recorded a full goodwill impairment charge of $851 million during the third quarter of 2023. The Company performed its annual impairment analysis as of the first day of the fourth quarter and no additional impairments were recorded.
Previous report
During the fourth quarter of 2023, management evaluated price/mix metrics for U.S. car wash locations and adjusted product offerings to improve retail customer revenue as well as executed cost saving measures to ensure detergent, water usage, and labor optimization. In addition, as part of management’s review of the U.S. glass business integration, management performed a store footprint analysis, which included redundant locations within a market, and closed 22 U.S. glass stores, reduced labor headcount, and implemented technology to improve customer experience and conversion. Costs associated with store closures were not material due to the asset-light nature of this business.
Previous report
•Net Loss of $745 million or $4.53 loss per diluted share in the current year compared to Net Income of $43 million or $0.25 earnings per diluted share in the prior year period, primarily relating to impairment charges and related tax benefits recorded in the current period.
Previous report
(1) Platform Services same store sales metrics were removed as a Key Performance Indicator as sales included within the calculation represented an insignificant portion of Platform Services total sales.
Previous report
(d) Represents non-cash equity-based compensation expense.
Previous report
(f)Represents the recovery of previously uncollectible receivables outside of normal operations.
Previous report
(g) Relates to goodwill impairment charges within the Car Wash segment. Refer to Note 7 in our consolidated financial statements for additional information.
Previous report
(h) Certain indefinite-lived Car Wash trade names were impaired as the Company elected to discontinue their use. Refer to Note 7 in our consolidated financial statements for additional information.
Previous report
Net Income
Previous report
•increased interest expense of $50 million, primarily relating to a higher variable interest rate on the Term Loan Facility in the current period, the full-year impact of interest relating to borrowings under the Series 2022-1 Class A-2 Securitization Senior Notes issued in the fourth quarter of 2022, and increased borrowings on the Revolving Credit Facility;
Previous report
•increased depreciation and amortization expenses of $28 million relating to capital expenditures and new store openings during 2023.
Previous report
These decreases were partially offset by:
Previous report
•a $125 million non-cash intangible impairment charge related to the change in intended use of certain existing Car Wash trade names migrating to the Take 5 Car Wash brand in the prior period;
Previous report
•a decrease in tax expense of $128 million;
Previous report
•reduced losses for foreign exchange of $20 million; and
Previous report
•increases related to same store sales growth, primarily within the Maintenance segment, organic store count growth, and unit growth from acquisitions during 2023.
Previous report
•increased interest expense of $50 million, primarily relating to a higher variable interest rate on the Term Loan Facility in the current period, the full-year impact of interest relating to borrowings under the Series 2022-1 Class A-2 Securitization Senior Notes issued in the fourth quarter of 2022, and increased borrowings on the Revolving Credit Facility;
Previous report
•decreased operating margins within the Car Wash segment; and
Previous report
•increased depreciation expenses of $26 million relating to capital expenditures and new store openings during 2023.
Previous report
The decreases were partially offset by:
Previous report
•increases related to same store sales growth, primarily within the Maintenance segment, organic store count growth, and unit growth from acquisitions in the trailing twelve month period.
Previous report
•increases related to same store sales growth, primarily within the Maintenance segment, organic store count growth, and unit growth from acquisitions in the trailing twelve month period.
Previous report
Franchise royalties and fees increased $19 million, or 11%, primarily due to same store sales growth and net increase of 104 franchised stores. Franchised system-wide sales increased $474 million, or 12%.
Previous report
Company-operated store expenses increased $192 million, or 24%, primarily due to increased operations relating to 83 net company-operated stores added during 2023 as well as increased operating costs primarily relating to increased labor costs and rent expense at properties converted to leases through sale leasebacks in the prior year.
Previous report
Supply and other expenses increased $13 million, or 9%, due to an increase in supply and other revenue.
Previous report
Acquisition Related Costs
Previous report
Acquisition related costs decreased $2 million, or 14%, due to decreased acquisition activity in the current year compared to the prior year.
Previous report
Store Opening Costs
Previous report
Store opening costs increased by $3 million, or 103%, primarily due to costs associated with converting stores from U.S. glass acquisitions to the AGN brand and costs associated with opening new Take 5 Oil, U.S. glass, and U.S. car wash company-operated stores.
Previous report
Depreciation and amortization expense increased $28 million, or 19%, 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 and amortization for stores opened and intangibles acquired during 2022.
Previous report
Trade Name Impairment Charges
Previous report
During the year ended December 31, 2022, the Company made the strategic decision to rebrand the majority of its U.S. car wash locations to operate under the name “Take 5 Car Wash”, and therefore discontinuing the use of certain Car Wash trade names that had indefinite lives. As a result, the Company recognized a $125 million non-cash impairment charge. For more information, refer to Note 7 in our consolidated financial statements included within this Form 10-K.
Previous report
Asset impairment charges and lease terminations increased by $127 million. During the year ended December 30, 2023, the Company recorded impairment charges primarily related to property and equipment and right-of-use assets for the 29 stores management approved for closure, underperforming stores, and impairments relating to assets held for sale or abandoned within the Car Wash segment. During the year ended December 31, 2022, the Company recorded impairment charges relating to certain property and equipment and operating lease right-of-use assets at closed locations. For more information, refer to Note 7 in our consolidated financial statements included within this Form 10-K.
Previous report
Interest expense, net increased $50 million, or 44%, primarily relating to a higher variable interest rate on the Term Loan Facility in the current period, the full-year impact of interest relating to borrowings under the Series 2022-1 Class A-2 Securitization Senior Notes issued in the fourth quarter of 2022, and increased borrowings on the Revolving Credit Facility.
Previous report
(Gain) Loss on Foreign Currency Transactions, Net
Previous report
Income Tax (Benefit) Expense
Previous report
Maintenance Segment Adjusted EBITDA increased $71 million, or 27%, primarily due to revenue growth, cost management, and operational leverage utilizing our efficient labor model at company-operated locations.
Previous report
Car Wash segment net revenue increased $5 million, or 1%, driven primarily by a $5 million increase in company-operated store sales from the addition of 32 new company-operated stores in the current year and continued ramp for stores acquired or opened in the prior year, which was partially offset by a decrease in same store sales and store closures predominately in the fourth quarter of 2023. Independently-operated store sales increased $1 million due to an increase in same store sales for independently-operated stores and positive impacts from foreign exchange. Supply and other revenue decreased $1 million due to decreased vending sales.
Previous report
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, as well as political disruptions in our international locations resulting in increased costs and reduced operational results. We perform site reviews to evaluate operational efficiencies and these reviews could result in future impairment charges.
Showing the first 40 of 49 passages. Open the source sections for the rest.
Reworded paragraphs (50)
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 Annual Report. We operate on a 52 or 53-week fiscal year, which ends on the last Saturday in December. The twelve months ended December 30, 2023 and December 31, 2022 were 52 and 53 week periods, respectively.
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 Annual Report. We operate on a 52-or 53-week fiscal year, which ends on the last Saturday in December. The twelve months ended December 28, 2024 and December 30, 2023 were both 52 week periods.
Previous wording
Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of approximately 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 $2.3 billion during the year ended December 30, 2023, an increase of 13% compared to the prior year, and system wide sales of approximately $6.3 billion during the year ended December 30, 2023, an increase of 12% 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 approximately 5,200 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 $2.3 billion during the year ended December 28, 2024, an increase of 2% compared to the prior year, and system-wide sales of approximately $6.5 billion during the year ended December 28, 2024, an increase of 4% from the prior year.
Previous wording
•Net revenue increased 13% to $2.3 billion, driven by same store sales and net store growth.
Current wording
•Net revenue increased 2% to $2.3 billion, driven by company-operated store revenue, primarily due to net new store growth and same store sales growth.
Previous wording
•Consolidated same store sales increased 7%.
Current wording
•Consolidated same store sales increased 1.3%.
Previous wording
•Net new stores were 183 for 2023.
Current wording
•Net new stores were 191 for 2024.
Previous wording
•Adjusted Net Income (non-GAAP) decreased 28% to $142 million or $0.85 per diluted share. The decrease was primarily due to decreased Segment Adjusted EBITDA within our Car Wash segment as well as increased interest and depreciation expense, partially offset by increased Segment Adjusted EBITDA within our Maintenance, Paint, Collision & Glass, and Platform Services segments.
Current wording
•Adjusted Net Income (non-GAAP) increased 31% to $186 million or $1.14 per diluted share. The increase was primarily due to improved operating margins within our Maintenance, Platform Services and Paint, Collision & Glass segments, net new store growth, and same store sales growth, partially offset by increased employee related benefit costs, including performance-based compensation, and reduced margins within the Car Wash segment.
Previous wording
•Adjusted EBITDA (non-GAAP) increased 4% to $517 million. The increase was primarily due to increased Segment Adjusted EBITDA within our Maintenance, Paint, Collision & Glass, and Platform Services segments, partially offset by decreased Segment Adjusted EBITDA within our Car Wash segment.
Current wording
•Adjusted EBITDA (non-GAAP) increased 7% to $553 million. The increase was primarily due to improved operating margins within our Maintenance, Platform Services and Paint, Collision & Glass segments, net new store growth, and same store sales growth, partially offset by increased employee related benefit costs, including performance-based compensation, and 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 10 in our consolidated financial statements for a reconciliation of income before taxes to Segment Adjusted EBITDA for the years ended December 30, 2023 and December 31, 2022.
Current wording
Adjusted EBITDA. We define 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. Adjusted EBITDA is a supplemental measure of operating performance of our segments and may not be comparable to similar measures reported by other companies. 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 9 in our consolidated financial statements for a reconciliation of income (loss) before taxes to Adjusted EBITDA for the years ended December 28, 2024 and December 30, 2023.
Previous wording
The following table sets forth our key performance indicators for the year ended December 30, 2023 and December 31, 2022:
Current wording
The following table sets forth our key performance indicators for the years ended December 28, 2024 and December 30, 2023:
Previous wording
The following table provides a reconciliation of Net (Loss) Income to Adjusted Net Income and Adjusted Earnings per Share:
Current wording
The following table provides a reconciliation of Net Loss to Adjusted Net Income and Adjusted Earnings per Share:
Previous wording
The following table provides a reconciliation of Net (Loss) Income to Adjusted EBITDA:
Current wording
The following table provides a reconciliation of Net Loss to Adjusted EBITDA:
Previous wording
(a) Consists of acquisition costs as reflected within the consolidated statements of operations, including legal, consulting and other fees, and expenses incurred in connection with acquisitions completed during the applicable period, as well as inventory rationalization expenses incurred in connection with acquisitions. We expect to incur similar costs in connection with other acquisitions in the future and, under U.S. GAAP, such costs relating to acquisitions are expensed as incurred and not capitalized.
Current wording
(a) Consists of acquisition costs as reflected within the consolidated statements of operations, including legal, consulting and other fees, and expenses incurred in connection with acquisitions completed during the applicable period, as well as inventory rationalization expenses incurred in connection with acquisitions. We expect to incur similar costs in connection with other acquisitions in the future and, under GAAP, such costs relating to acquisitions are expensed as incurred and not capitalized.
Previous wording
(b) Consists of discrete items and project costs, including third party consulting and professional fees associated with strategic transformation initiatives as well as non-recurring payroll-related costs. A $15 million change in estimate related to the Tax Receivable Agreement that we entered into at the IPO related to the filing of our 2021 tax returns was recorded in the fourth quarter of 2022.
Current wording
(b) Consists of discrete items and project costs, including third party consulting and professional fees associated with strategic transformation initiatives as well as non-recurring payroll-related costs.
Previous wording
(e)Represents foreign currency transaction (gains) losses, net that primarily related to the remeasurement of our intercompany loans as well as unrealized gains and losses on remeasurement of cross currency swaps and forward contracts.
Current wording
(e)Represents foreign currency transaction (gains) losses, net that primarily related to the remeasurement of our intercompany loans as well as gains and losses on cross currency swaps and forward contracts.
Previous wording
(i) Relates to (gains) losses, net on sale leasebacks, impairment of certain fixed assets and operating lease right-of-use assets related to closed and underperforming locations, assets held for sale, and lease exit costs and other costs associated with stores that were closed prior to the respective lease termination dates. Refer to Note 7 in our consolidated financial statements for additional information.
Current wording
(f) Relates to (gains) losses, net on sale leasebacks, impairment of certain fixed assets and operating lease right-of-use assets related to closed and underperforming locations, assets held for sale, lease exit costs and other costs associated with stores that were closed prior to the respective lease termination dates, as well as goodwill impairment within the Car Wash segment. Refer to Note 7 for additional information.
Previous wording
(j)Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the consolidated statements of operations.
Current wording
(h)Consists of amortization related to acquired intangible assets as reflected within depreciation and amortization in the consolidated statement of operations.
Previous wording
(k)Represents amounts recorded for uncertain tax positions, inclusive of interest and penalties.
Current wording
(i)Represents amounts recorded for uncertain tax positions, inclusive of interest and penalties.
Previous wording
(l)Represents valuation allowances on income tax carryforwards in certain domestic and foreign jurisdictions that are not more likely than not to be realized.
Current wording
(j)Represents valuation allowances on income tax carryforwards in certain domestic jurisdictions that are not more likely than not to be realized.
Previous wording
(m) Represents the tax impact of adjustments associated with the reconciling items between Net Loss (Income) and Adjusted Net Income, excluding the provision for uncertain tax positions. To determine the tax impact of the deductible reconciling items, we utilized statutory income tax rates ranging from 9% to 36% depending upon the tax attributes of each adjustment and the applicable jurisdiction.
Current wording
(k)Represents the tax impact of adjustments associated with the reconciling items between net income (loss) 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 36% depending upon the tax attributes of each adjustment and the applicable jurisdiction.
Previous wording
We recognized a net loss of $745 million, or $4.53 loss per diluted share for the year ended December 30, 2023, compared to a net income of $43 million, or $0.25 earnings per diluted share for the year ended December 31, 2022. The decrease of $788 million was primarily due to the following:
Current wording
We recognized a net loss of $292 million, or $1.82 loss per diluted share, for the year ended December 28, 2024, compared to a net loss of $745 million, or $4.53 loss per diluted share, for the year ended December 30, 2023. The improvement of approximately $452 million was primarily due to the following:
Previous wording
•a non-cash goodwill impairment charge of $851 million included in the Car Wash segment as well as $133 million of consolidated asset impairment charges, primarily relating to Car Wash assets for the 29 approved store closures, underperforming stores, and assets held for sale in the current period;
Current wording
•a non-cash goodwill impairment charge in the prior year period of $851 million.
Previous wording
Selling, general and administrative expenses increased $60 million, or 16%, primarily due to a loss on sale or disposals of fixed assets of approximately $5 million in the current period compared to a gain of $35 million in the prior year, relating to sale leaseback transactions as well as a gain on the sale of CARSTAR company-operated stores in the prior year. In addition, the Company incurred higher marketing expenses and infrastructure costs in the current year. These increases were partially offset by a $15 million charge for change in estimate for the Tax Receivable Agreement in the prior year, as well as reduced employee related benefits and professional fees in the current year.
Current wording
These increases were partially offset by:
Previous wording
•a loss on sale or disposals of fixed assets of approximately $5 million during the year ended December 30, 2023 compared to a gain of $35 million during the year ended December 31, 2022, primarily relating to sale leaseback transactions and a gain on the sale of CARSTAR company-operated stores in the prior year;
Current wording
•a net loss of $36 million in the current period primarily comprised of a loss on sale and disposals of fixed assets in our Car Wash business as well as gains on the sale of assets held for sale, compared to a loss on sale or disposals of fixed assets of approximately $5 million during the year ended December 30, 2023.
Previous wording
Adjusted net income was $142 million for the year ended December 30, 2023, a decrease of $54 million, compared to $197 million for the year ended December 31, 2022. This decrease was primarily due to the following:
Current wording
Adjusted net income was $186 million for the year ended December 28, 2024 compared to $142 million for the year ended December 30, 2023. This increase of $44 million was primarily due to the following:
Previous wording
•decreased operating margins within the Car Wash segment; and
Current wording
•decreased operating margins within the Car Wash segment.
Previous wording
Adjusted EBITDA was $517 million for the year ended December 30, 2023, an increase of $18 million, compared to $499 million for the year ended December 31, 2022. The increase in Adjusted EBITDA was primarily due to:
Current wording
Adjusted EBITDA was $553 million for the year ended December 28, 2024 compared to $517 million for the year ended December 30, 2023. The increase of $36 million was primarily due to:
Previous wording
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 consolidated statements of operations.
Current wording
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 consolidated statements of operations. Certain percentages presented have been rounded to the nearest number, therefore, totals may not equal the sum of the line items in the tables below.
Previous wording
Company-operated store sales increased $202 million, or 15%, of which approximately $116 million, $82 million, and $5 million related to the Maintenance, Paint, Collision & Glass, and Car Wash segments, respectively. The sales increase in the Maintenance segment was primarily due to same store sales growth and 59 net new company-operated stores. The sales increase in the Paint, Collision & Glass segment was primarily from new store growth in the current year as well as continued ramp for stores acquired in the prior year, partially offset by a decrease in sales relating to company-operated CARSTAR stores sold in 2022. The sales increase in the Car Wash segment was primarily driven by the addition of new company-operated stores through acquisitions and greenfield openings in the current year and continued ramp for stores acquired or opened in the prior year, which was partially offset by a decrease in same store sales and store closures predominately in the fourth quarter of 2023. In aggregate, the Company added 83 company-operated stores year-over-year.
Current wording
Company-operated store sales increased $19 million, or 1%, of which $111 million related to an increase in the Maintenance segment, partially offset by a decrease of $65 million and $27 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 decrease in the Paint, Collision & Glass sales was primarily driven by revenue associated with the sale of nine company-operated stores to a franchisee in the current year. The decrease in Car Wash sales is primarily due to the full year impact in 2024 relating to stores closed during the fourth quarter of 2023 and a decrease in same store sales primarily relating to lower volume. On a net basis, the Company added 45 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 and a positive impact from foreign exchange.
Current wording
Independently-operated store sales (comprised entirely of sales from the international car wash locations) increased $16 million, or 8%, due to same store sales growth as a result of improved price realization and new product offerings.
Previous wording
Advertising fund contributions increased by $11 million, or 13%, primarily due to an increase in franchise system-wide sales of approximately $474 million, or 12%, from same store sales growth and an additional 104 net new franchise stores. Our franchise agreements typically require the franchisee to pay continuing advertising fund fees based on a percentage of franchisee gross sales.
Current wording
Advertising fund contributions increased by $2 million, or 2%, primarily due to an increase in franchise system-wide sales. Our franchise agreements typically require the franchisee to pay continuing advertising fund fees based on a percentage of the franchisee’s gross sales or a stated fee.
Previous wording
Supply and other revenue increased $38 million, or 15%, 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 remained flat, primarily due to growth in product and service revenue within the Maintenance segment as a result of an increase in system-wide sales and net store growth, partially offset by the sale of our Canadian distribution business in the current year.
Previous wording
Independently-operated store expenses (comprised entirely of expenses from the international car wash locations) increased $1 million, or 1%, primarily due to increased supplies expense.
Current wording
Independently-operated store expenses (comprised entirely of expenses from the international car wash locations) increased $12 million, or 11%, primarily due to variable costs associated with the increase in sales.
Previous wording
Advertising fund expenses increased $9 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 by $4 million, or 4%, 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
During the year ended December 30, 2023, a goodwill impairment charge of $851 million was recorded directly attributable to our Car Wash segment. For more information, refer to Note 7 in our consolidated financial statements included within this Form 10-K.
Current wording
Goodwill impairment charge of $851 million in the year ended December 30, 2023 is directly attributable to our Car Wash segment. For more information, refer to Note 7 in our consolidated financial statements included in this 10-K.
Previous wording
The gain on foreign currency transactions for the year ended December 30, 2023 was primarily comprised of transaction gains in our foreign operations of $2 million and a gain on foreign currency hedges of $1 million. The loss on foreign currency transactions for the year ended December 31, 2022 was comprised of a $16 million net remeasurement loss on our non U.S. dollar entities, including third party long-term debt and intercompany notes.
Current wording
The foreign currency transaction loss for the year ended December 28, 2024 was primarily comprised of transaction remeasurement losses in our foreign operations of $29 million, partially offset by a gain on foreign currency hedges of $9 million. The foreign currency transaction gain for the year ended December 30, 2023 was primarily comprised of transaction remeasurement gains in our foreign operations of $2 million and a gain on foreign currency hedges of $1 million.
Previous wording
Income tax benefit was $103 million for the year ended December 30, 2023 compared to an income tax expense of $25 million for the year ended December 31, 2022. The effective income tax rate for the year ended December 30, 2023 was 12.1% compared to 36.8% for the year ended December 31, 2022. The net decrease in income tax expense and effective tax rate was primarily driven by impairments recorded during the year ended December 30, 2023.
Current wording
Income tax benefit was $25 million for the year ended December 28, 2024 compared to $103 million for the year ended December 30, 2023. The effective tax rate for the year ended December 28, 2024 was 7.9% primarily driven by the recognition of valuation allowances on income tax carryforwards in certain domestic jurisdictions that are not more likely than not to be realized, non-deductible share-based compensation and state taxes related to pre-tax income compared to 12.1% for the year ended December 30, 2023.
Previous wording
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, equity compensation, loss on debt extinguishment, cloud computing amortization, and certain non-recurring, non-core, infrequent or unusual charges. Shared services costs are not allocated to these segments and are included in Corporate and Other. Segment Adjusted EBITDA may not be comparable to similarly titled metrics of other companies due to differences in methods of calculation.
Current wording
We assess the performance of our segments based on 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 closure costs, equity compensation, loss on debt extinguishment, cloud computing amortization, and certain non-recurring, non-core, infrequent or unusual charges. Shared services costs are not allocated to these segments and are included in Corporate and Other. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies due to differences in methods of calculation.
Previous wording
Maintenance net revenue increased $161 million, or 20%, driven primarily by a $116 million increase in company-operated store sales from same store sales growth and 59 net new company-operated stores. Supply and other revenue increased by $33 million, or 53%, primarily due to higher system-wide sales from franchised stores. Franchise royalties and fees increased by $11 million, or 25%, primarily due to the $167 million, or 18%, increase in franchised system-wide sales from same store sales growth and 82 net new franchise stores.
Current wording
Maintenance net revenue increased $144 million, or 15%, driven primarily by a $111 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 $28 million, or 30%, primarily due to higher system-wide sales. Franchise royalties and fees increased by $5 million, or 8%, primarily due to a $93 million, or 9%, increase in franchise system-wide sales from same store sales growth and 108 net new franchise stores.
Previous wording
Cash flow from operations, supplemented with our long-term borrowings and revolving credit facilities, have been sufficient to fund our operations while allowing us to make strategic investments to grow our business. We believe that our sources of liquidity and capital resources will be adequate to fund our operations, acquisitions, company-operated store development, other general corporate needs, and the additional expenses we expect to incur for at least the next twelve months. We expect to continue to have access to the capital markets at acceptable terms. However, this could be adversely affected by many factors including macroeconomic factors, a downgrade of our credit rating, or a deterioration of certain financial ratios.
Current wording
Cash flow from operations, supplemented with our long-term borrowings and revolving credit facilities, has been sufficient to fund our operations while allowing us to make strategic investments to grow our business. We believe that our sources of liquidity and capital resources will be adequate to fund our operations, acquisitions, company-operated store development, other general corporate needs, and the additional expenses we expect to incur for at least the next twelve months. We expect to continue to have access to the capital markets at acceptable terms. However, this could be adversely affected by many factors including macroeconomic factors, a downgrade of our credit rating, or a deterioration of certain financial ratios.
Previous wording
At December 30, 2023, the Company had total liquidity of $319 million, which included $177 million in cash and cash equivalents and $91 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 December 28, 2024, the Company had total liquidity of $649 million, which included $170 million in cash and cash equivalents and $374 million and $105 million of undrawn capacity on its 2024 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.
Showing the first 40 of 50 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
The increase was partially offset by:
Current report — wording carried from elsewhere
•decreased operating margins within the Car Wash segment.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Adjusted Net Income /Adjusted Earnings per Share