Driven Brands : Fourth Quarter 2024 Q4 Earnings Release

Published: 2025-02-25 07:21:06 ET DRVN

Driven Brands Holdings Inc. Reports Fourth Quarter and Fiscal Year

2024 Results

--Fiscal 2024 Revenue increased 2% powered by 1% same store sales growth and 4% net store growth--

--16th consecutive quarter of same store sales growth--

--Take 5 Oil Change delivers full year revenue growth of 16% and same store sales growth of 7%--

--Announces definitive agreement to sell U.S. car wash business--

--Announces CEO transition--

--Issues fiscal year 2025 outlook excluding U.S. car wash--

Charlotte, N.C. (February 25, 2025) - Driven Brands Holdings Inc. (NASDAQ: DRVN) ("Driven Brands" or the "Company") today reported financial results for the fourth quarter and fiscal year ending December 28, 2024.

For fiscal year 2024, Driven Brands delivered revenue of $2.3 billion, an increase of 2% versus the prior year. System-wide sales increased 4% to $6.5 billion, driven by a 1% increase in same-store sales and 4% increase in store count.

Net loss for fiscal 2024 was $292 million or $1.82 loss per diluted share versus a net loss of $745 million or $4.53 loss per diluted share in the prior year. Adjusted Net Income1 was $186 million or $1.14 per diluted share versus $142 million or $0.85 per diluted share in the prior year. Adjusted EBITDA1 was $553 million, up 7% versus the prior year.

"Fiscal year 2024 was a year of growth and strong execution for Driven Brands, led by our flagship brand Take 5 Oil Change. We are proud of the results, as we delivered Adjusted EBITDA and same store sales in line with our full-year outlook, while also achieving our full-year leverage target. These results are directly attributable to more than 10,000 Driven Brands team members and franchisees who consistently deliver an exceptional customer experience," said Jonathan Fitzpatrick, President and Chief Executive Officer.

"Looking ahead to 2025 our focus is clear: delivering on our outlook, reducing debt and active portfolio management," Fitzpatrick concluded.

Sale of U.S. Car Wash Business

In a separate release today, Driven Brands announced that it has entered into a definitive agreement to sell its U.S. car wash business to Express Wash Operations, LLC dba Whistle Express Car Wash.

Fourth Quarter 2024 Highlights

For the fourth quarter, Driven Brands delivered revenue of $564 million, up 2% versus the prior year. Systemwide sales were $1.6 billion, up 5% versus the prior year primarily driven by 3% same store sales growth and 191 net new units.

Net loss for the fourth quarter was $312 million or $1.94 loss per diluted share versus a net loss of $13 million or $0.08 loss per diluted share in the prior year. Adjusted Net Income1 was $48 million or $0.30 per diluted

share versus $28 million or $0.17 per diluted share in the prior year. Adjusted EBITDA1 was $131 million, up 5% versus the prior year.

Fiscal Year 2024 Key Performance Indicators by Segment

System-wide Sales

Store Count

Same-Store

Revenue

Adjusted EBITDA

(in millions)

Sales2

(in millions)

Maintenance

2,104.0

1,960

4.5 %

1,104.1

385.9

Car Wash

580.6

1,102

(0.9) %

587.2

117.1

Paint, Collision & Glass

3,450.7

1,912

0.8 %

424.6

133.5

Platform Services

374.2

205

N/A

207.5

83.9

Corporate / Other

N/A

16.1

(167.7)

Total

6,509.3

5,179

1.3 %

2,339.6

552.7

Fourth Quarter 2024 Key Performance Indicators by Segment

System-wide Sales

Store Count

Same-Store

Revenue

Adjusted EBITDA

(in millions)

Sales2

(in millions)

Maintenance

532.9

1,960

6.0

286.3

98.3

Car Wash

141.4

1,102

7.9

143.4

28.7

Paint, Collision & Glass

849.2

1,912

1.0

97.3

33.0

Platform Services

72.2

205

N/A

40.2

16.3

Corporate / Other

N/A

(3.1)

(45.6)

Total

1,595.6

5,179

2.9 %

564.1

130.7

Capital and Liquidity

The Company ended the fourth quarter with total liquidity of $648.7 million consisting of $170.0 million in cash and cash equivalents and $478.7 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility. This did not include the additional $135.0 million Series 2022 Class A-1 Notes that expand the Company's variable funding note borrowing capacity if the Company elects to exercise them, assuming certain conditions continue to be met.

Fiscal Year 2025 Outlook

The following guidance reflects the Company's expectations for fiscal year 2025 ending December 27, 2025.

2025 Outlook excluding

2024 Results

U.S. car wash business

Revenue

$2.34 billion

~$2.05 - $2.15 billion

Adjusted EBITDA1

$552.7 million

~$520 - $550 million

Adjusted EPS1

$1.14

~$1.15 - $1.25

The Company also expects:

Note: 2025 Outlook excludes the impact of any potential M&A and divestitures other than the sale of the U.S. car wash business.

Chief Executive Officer Transition

In a separate release today, the Company announced that the Board has appointed Daniel Rivera as the Company's President and Chief Executive Officer ("CEO") effective as of May 9, 2025. The Board has also appointed Mr. Rivera to serve on the Board following his appointment as President and CEO. Mr. Fitzpatrick will remain on the Board and has been appointed as Non-Executive Chair as of May 9, 2025, and has also agreed to serve as a Special Advisor to Mr. Rivera for the remainder of 2025 to ensure a smooth transition. Neal Aronson, the current Chairman of the Board, will continue to serve as a director.

Re-segmentation

In the first quarter of 2025, the Company changed its operating segments, which will result in a change to its reportable segments. As a result, and as it will report in its first quarter 2025 Quarterly Report on Form 10-Q filing, the Company will have the following reportable segments: Take 5, Franchise Brands, International Car Wash, and Corporate and Other.

The Take 5 segment will be comprised primarily of both our company and franchise-operated Take 5 Oil Change business.

The Franchise Brands segment will be comprised of the Company's portfolio of franchised brands, which include CARSTAR, Meineke, Maaco, 1-800 Radiator, along with other smaller brands. The Franchise Brands segment will be over 99% franchised.

The International Car Wash segment will be comprised of our remaining car wash business based outside of North America.

The Corporate and Other segment will be comprised of our U.S. glass businesses, including the retail, commercial, and insurance components of this business, and the Company's Third Party Administrator services, along with certain corporate shared services costs.

In mid-March, the Company plans to issue a recast of fiscal 2024 quarters to assist in the analysis of fiscal 2025 results on its Investor Relations website.

Conference Call

Driven Brands will host a conference call to discuss fourth quarter and fiscal year 2024 results today, Tuesday, February 25, at 8:30 a.m. ET. The call will be available by webcast and can be accessed by visiting Driven Brands' Investor Relations website at investors.drivenbrands.com. A replay of the call will be available for at least three months.

About Driven Brands

Driven Brands™, headquartered in Charlotte, NC, is the largest automotive services company in North America, providing a range of consumer and commercial automotive services, including paint, collision, glass, vehicle repair, oil change, maintenance and car wash. Driven Brands is the parent company of some of North America's leading automotive service businesses including Take 5 Oil Change®, Take 5 Car Wash®, Meineke Car Care Centers®, Maaco®, 1-800-Radiator & A/C®, Auto Glass Now®, and CARSTAR®. Driven Brands has approximately 5,200 locations across 13 countries, and services approximately 70 million vehicles annually. Driven Brands' network generates approximately $2.3 billion in annual revenue from approximately

$6.5 billion in system-wide sales.

Disclosure Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "likely," "may," "plan," "possible," "potential," "predict," "project," "should," "target," "will," "would" and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this Press Release, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, trends, plans, objectives of management, impact of accounting standards and outlook, impairments, and expected market growth are forward-looking statements. In particular, forward-looking statements include, among other things, statements relating to: (i) the completion of the sale of our U.S. Car Wash business, including the purchaser's ability to obtain the required financing; (ii) our ability to realize the value of the note received in connection with the sale of the U.S. Car Wash business; (iii) potential post-closing obligations and liabilities we may have following the sale of our U.S. Car Wash business; (iv) our strategy, outlook and growth prospects; (v) our operational and financial targets and dividend policy; (vi) general economic trends and trends in the industry and markets; (vii) the risks and costs associated with the integration of, and our ability to integrate, our stores and business units successfully; (viii) the proper application of generally accepted accounting principles, which are highly complex and involve many subjective assumptions, estimates, and judgments and (ix) the competitive environment in which we operate. Forward-looking statements are not based on historical facts, but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions, and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. It is not possible to predict or identify all such risks. These risks include, but are not limited to, the risk factors that are described under the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023 as well as in our other filings with the Securities and Exchange Commission, which are available on its website at www.sec.gov. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Contacts

Shareholder/Analyst inquiries: Dawn Francfort

ICR, Inc. [email protected] (203) 682-8200

Media inquiries: Taylor Blanchard [email protected] (704) 644-8129

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended

Year Ended

(in thousands, except per share amounts)

December 28,

December 30,

December 28,

December 30,

2024

2023

2024

2023

Net Revenue:

Franchise royalties and fees

44,085

49,685

188,634

190,367

Company-operated store sales

387,663

366,668

1,544,932

1,526,353

Independently-operated store sales

49,110

38,748

212,396

196,395

Advertising contributions

25,512

25,303

101,316

98,850

Supply and other revenue

57,747

73,273

292,310

292,064

Total net revenue

564,117

553,677

2,339,588

2,304,029

Operating Expenses:

Company-operated store expenses

254,790

241,741

993,090

1,004,472

Independently-operated store expenses

30,632

21,983

121,325

109,078

Advertising expenses

25,813

23,743

101,617

97,290

Supply and other expenses

27,098

40,248

139,658

158,436

Selling, general, and administrative expenses

162,346

118,924

554,775

462,117

Depreciation and amortization

48,893

46,040

180,112

175,296

Goodwill impairment

850,970

Asset impairment charges and lease terminations

333,308

15,453

389,242

132,903

Total operating expenses

882,880

508,132

2,479,819

2,990,562

Operating (loss) income

(318,763)

45,545

(140,231)

(686,533)

Other expenses, net:

Interest expense, net

37,719

43,892

156,964

164,196

Foreign currency transaction loss (gain), net

14,472

(3,081)

20,239

(3,078)

Loss on debt extinguishment

205

Other expense, net

52,191

40,811

177,408

161,118

(Loss) income before taxes

(370,954)

4,734

(317,639)

(847,651)

Income tax (benefit) expense

(58,985)

17,883

(25,143)

(102,689)

Net loss

(311,969)

(13,149)

(292,496)

(744,962)

Loss per share:

Basic

(1.91)

(0.08)

(1.79)

(4.50)

Diluted

(1.94)

(0.08)

(1.82)

(4.53)

Weighted average shares outstanding

Basic

160,424

159,573

160,319

161,917

Diluted

160,424

159,573

160,319

161,917

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share amounts)

December 28, 2024

December 30, 2023

Assets

Current assets:

Cash and cash equivalents

169,954

176,522

Restricted cash

358

657

Accounts and notes receivable, net

179,609

151,259

Inventory

67,527

83,171

Prepaid and other assets

42,271

46,714

Income tax receivable

13,706

15,928

Assets held for sale

134,297

301,229

Advertising fund assets, restricted

49,716

45,627

Total current assets

657,438

821,107

Other assets

125,422

56,565

Property and equipment, net

1,024,168

1,438,496

Operating lease right-of-use assets

1,370,355

1,389,316

Deferred commissions

7,246

6,312

Intangibles, net

665,896

739,402

Goodwill

1,403,056

1,455,946

Deferred tax assets

8,206

3,660

Total assets

5,261,787

5,910,804

Liabilities and shareholders' equity

Current liabilities:

Accounts payable

95,260

67,526

Accrued expenses and other liabilities

253,880

242,171

Income tax payable

6,860

5,404

Current portion of long-term debt

33,189

32,673

Income tax receivable liability

22,676

56,001

Advertising fund liabilities

22,030

23,392

Total current liabilities

433,895

427,167

Long-term debt

2,660,355

2,910,812

Deferred tax liabilities

87,485

154,742

Operating lease liabilities

1,303,033

1,332,519

Income tax receivable liability

110,935

117,915

Deferred revenue

31,314

30,507

Long-term accrued expenses and other liabilities

27,436

30,419

Total liabilities

4,654,453

5,004,081

Preferred Stock $0.01 par value; 100,000,000 shares authorized; none issued or outstanding

Common stock, $0.01 par value, 900,000,000 shares authorized: and 163,842,248 and

1,638

1,640

163,965,231 shares outstanding; respectively

Additional paid-in capital

1,699,851

1,652,401

Accumulated deficit

(1,002,583)

(710,087)

Accumulated other comprehensive loss

(91,572)

(37,875)

Total shareholders' equity attributable to Driven Brands Holdings Inc.

607,334

906,079

Non-controlling interests

644

Total shareholders' equity

607,334

906,723

Total liabilities and shareholders' equity

5,261,787

5,910,804

DRIVEN BRANDS HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Year Ended

(in thousands)

December 28,

December 30,

2024

2023

Net loss

(292,496)

(744,962)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

180,112

175,296

Goodwill impairment

850,970

Share-based compensation expense

48,139

15,300

Loss (gain) on foreign denominated transactions

29,413

(2,022)

Gain on foreign currency derivatives

(9,174)

(1,056)

Loss on sale and disposal of businesses, fixed assets, and sale-leaseback transactions

35,722

4,909

Reclassification of interest rate hedge to income

(2,094)

(2,077)

Bad debt expense

6,672

1,938

Asset impairment charges and lease terminations

389,242

132,903

Amortization of deferred financing costs and bond discounts

9,759

10,307

Amortization of cloud computing

8,270

1,923

Provision for deferred income taxes

(66,594)

(125,804)

Loss on extinguishment of debt

205

Other, net

(22,648)

22,320

Changes in assets and liabilities, net of acquisitions:

Accounts and notes receivable, net

(48,190)

13,561

Inventory

2,618

(11,731)

Prepaid and other assets

3,467

(6,877)

Advertising fund assets and liabilities, restricted

(5,031)

(16,861)

Other assets

(85,491)

(39,814)

Deferred commissions

934

418

Deferred revenue

832

1,937

Accounts payable

29,397

7,390

Accrued expenses and other liabilities

17,588

(52,854)

Income tax receivable

10,795

Cash provided by operating activities

241,447

235,167

Cash flows from investing activities:

Capital expenditures

(288,504)

(596,478)

Cash used in business acquisitions, net of cash acquired

(2,990)

(59,574)

Proceeds from sale leaseback transactions

51,371

194,658

Proceeds from sale or disposal of businesses and fixed assets

299,142

9,987

Cash provided by (used in) investing activities

59,019

(451,407)

Cash flows from financing activities:

Payment of debt extinguishment and issuance costs

(9,646)

Proceeds from the issuance of long-term debt

274,794

Repayment of long-term debt

(465,443)

(27,971)

Proceeds from revolving lines of credit and short-term debt

46,000

378,000

Repayment of revolving lines of credit and short-term debt

(104,000)

(130,000)

Repayment of principal portion of finance lease liability

(3,931)

(5,165)

Payment of Tax Receivable Agreement

(38,374)

Acquisition of non-controlling interest

(644)

Share repurchases

(49,956)

Tax obligations for share-based compensation

(1,593)

Stock option exercises

6,117

Other, net

(326)

Cash (used in) provided by financing activities

(302,837)

170,699

Effect of exchange rate changes on cash

(4,103)

484

Net change in cash, cash equivalents, restricted cash, and cash included in advertising fund

(6,474)

(45,057)

assets, restricted

Cash and cash equivalents, beginning of period

176,522

227,110

Cash included in advertising fund assets, restricted, beginning of period

38,537

32,871

Restricted cash, beginning of period

657

792

Cash, cash equivalents, restricted cash, and cash included in advertising fund assets,

215,716

260,773

restricted, beginning of period

Cash and cash equivalents, end of period

169,954

176,522

Cash included in advertising fund assets, restricted, end of period

38,930

38,537

Restricted cash, end of period

358

657

Cash, cash equivalents, restricted cash, and cash included in advertising fund assets,

209,242

215,716

restricted, end of period

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

The following information provides definitions and reconciliations of the non-GAAP financial measures presented in this earnings release to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The Company has provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this earnings release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this earnings release. The non-GAAP financial measures in this earnings release may differ from similarly titled measures used by other companies.

Non-GAAP Financial Measures in Outlook

Driven Brands includes Adjusted Earnings Before Interest, Tax, Depreciation and Amortization ("Adjusted EBITDA") and Adjusted Earnings per Share ("Adjusted EPS") in the Company's Fiscal Year 2025 Outlook. Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures and have not been reconciled to the most comparable GAAP financial measures because it is not possible to do so without unreasonable efforts due to the uncertainty and potential variability of reconciling items, which are dependent on future events and often outside of management's control and which could be significant. Because such items cannot be reasonably predicted with the level of precision required, we are unable to provide an outlook for the comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA and Adjusted EPS are made in a manner consistent with the relevant definitions and assumptions noted herein and in our filings with the SEC.

Adjusted Net Income and Adjusted Earnings Per Share

Adjusted Net Income and Adjusted EPS are considered non-GAAP financial measures under the SEC's rules because they exclude certain amounts included in the net income attributable to Driven Brands common stockholders and diluted earnings per share attributable to Driven Brands common stockholders calculated in accordance with GAAP. Management believes that Adjusted Net Income and Adjusted EPS are meaningful measures to share with investors because they facilitate comparison of the current period performance with that of the comparable prior period. In addition, Adjusted Net Income and Adjusted EPS afford investors a view of what management considers to be Driven Brands' core earnings performance as well as the ability to make a more informed assessment of such earnings performance with that of the prior period.

The tables below reflect the calculation of Adjusted Net Income and Adjusted Earnings Per Share for the three months and year ended December 28, 2024, compared to the three months and year ended December 30, 2023.

Disclaimer

Driven Brands Holdings Inc. published this content on February 25, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on February 25, 2025 at 12:20:08.524.