Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 30, 2024 | May 06, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 30, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-39898 | |
Entity Registrant Name | Driven Brands Holdings Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-3595252 | |
Entity Address, Address Line One | 440 South Church Street | |
Entity Address, Address Line Two | Suite 700 | |
Entity Address, City or Town | Charlotte | |
Entity Address, State or Province | NC | |
Entity Address, Postal Zip Code | 28202 | |
City Area Code | 704 | |
Local Phone Number | 377-8855 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | DRVN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 164,079,785 | |
Entity Central Index Key | 0001804745 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-28 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Net revenue: | ||
Total net revenue | $ 572,226 | $ 562,467 |
Operating Expenses: | ||
Selling, general, and administrative expenses | 116,402 | 112,328 |
Acquisition related costs | 1,794 | 1,847 |
Store opening costs | 1,263 | 1,025 |
Depreciation and amortization | 43,229 | 38,198 |
Asset impairment charges and lease terminations | 19,326 | 167 |
Total operating expenses | 513,708 | 485,281 |
Operating income | 58,518 | 77,186 |
Other expenses, net: | ||
Interest expense, net | 43,772 | 38,141 |
Loss (gain) on foreign currency transactions | 4,321 | (1,675) |
Other expense, net | 48,093 | 36,466 |
Income before taxes | 10,425 | 40,720 |
Income tax expense | 6,164 | 10,971 |
Net income | 4,261 | 29,749 |
Net income attributable to non-controlling interest | 0 | 0 |
Net income attributable to Driven Brands Holdings Inc. | $ 4,261 | $ 29,749 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.03 | $ 0.18 |
Diluted (in dollars per share) | $ 0.03 | $ 0.17 |
Weighted average shares outstanding | ||
Basic (in shares) | 159,631 | 162,784 |
Diluted (in shares) | 160,604 | 166,874 |
Franchise royalties and fees | ||
Net revenue: | ||
Total net revenue | $ 45,045 | $ 43,515 |
Company-operated store sales | ||
Net revenue: | ||
Total net revenue | 374,456 | 376,066 |
Operating Expenses: | ||
Operating expenses | 242,053 | 243,409 |
Independently-operated store sales | ||
Net revenue: | ||
Total net revenue | 53,047 | 52,532 |
Operating Expenses: | ||
Operating expenses | 29,355 | 29,364 |
Advertising contributions | ||
Net revenue: | ||
Total net revenue | 24,070 | 21,677 |
Operating Expenses: | ||
Operating expenses | 24,070 | 21,677 |
Supply and other revenue | ||
Net revenue: | ||
Total net revenue | 75,608 | 68,677 |
Operating Expenses: | ||
Operating expenses | $ 36,216 | $ 37,266 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 4,261 | $ 29,749 |
Other comprehensive (loss) income: | ||
Foreign currency translation adjustments | (15,907) | 11,351 |
Unrealized loss from cash flow hedges, net of tax expense (benefit) of $15 and ($2), respectively | (617) | (200) |
Actuarial (loss) gain of defined pension plan, net of tax expense of $0 and $0, respectively | (8) | 16 |
Other comprehensive (loss) income, net | (16,532) | 11,167 |
Total comprehensive (loss) income | (12,271) | 40,916 |
Comprehensive loss attributable to non-controlling interests | 0 | (1) |
Comprehensive (loss) income attributable to Driven Brands Holdings Inc. | $ (12,271) | $ 40,917 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Statement of Comprehensive Income [Abstract] | ||
Unrealized (loss) gain from cash flow hedges, net of tax (benefit) expense | $ 15 | $ (2) |
Actuarial (loss) gain of defined pension plan, net of tax expense | $ 0 | $ 0 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Mar. 30, 2024 | Dec. 30, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 165,513 | $ 176,522 |
Restricted cash | 657 | 657 |
Accounts and notes receivable, net | 165,992 | 151,259 |
Inventory | 82,875 | 83,171 |
Prepaid and other assets | 49,901 | 46,714 |
Income tax receivable | 7,337 | 15,928 |
Assets held for sale | 290,818 | 301,229 |
Advertising fund assets, restricted | 52,711 | 45,627 |
Total current assets | 815,804 | 821,107 |
Other assets | 90,175 | 56,565 |
Property and equipment, net | 1,425,882 | 1,438,496 |
Operating lease right-of-use assets | 1,383,400 | 1,389,316 |
Deferred commissions | 6,643 | 6,312 |
Intangibles, net | 729,354 | 739,402 |
Goodwill | 1,435,618 | 1,455,946 |
Deferred tax assets | 3,453 | 3,660 |
Total assets | 5,890,329 | 5,910,804 |
Current liabilities: | ||
Accounts payable | 82,843 | 67,526 |
Accrued expenses and other liabilities | 246,522 | 242,171 |
Income tax payable | 2,022 | 5,404 |
Current portion of long-term debt | 33,020 | 32,673 |
Income tax receivable liability | 41,437 | 56,001 |
Advertising fund liabilities | 33,208 | 23,392 |
Total current liabilities | 439,052 | 427,167 |
Long-term debt | 2,905,033 | 2,910,812 |
Deferred tax liabilities | 149,931 | 154,742 |
Operating lease liabilities | 1,319,936 | 1,332,519 |
Income tax receivable liability | 108,215 | 117,915 |
Deferred revenue | 32,159 | 30,507 |
Long-term accrued expenses and other liabilities | 29,187 | 30,419 |
Total liabilities | 4,983,513 | 5,004,081 |
Commitments and contingencies (Note 12) | ||
Preferred Stock $0.01 par value; 100,000,000 shares authorized; none issued or outstanding | 0 | 0 |
Common stock, $0.01 par value, 900,000,000 shares authorized: and 164,079,581 and 163,965,231 shares outstanding; respectively | 1,641 | 1,640 |
Additional paid-in capital | 1,664,764 | 1,652,401 |
Accumulated deficit | (705,826) | (710,087) |
Accumulated other comprehensive loss | (54,407) | (37,875) |
Total shareholders’ equity attributable to Driven Brands Holdings Inc. | 906,172 | 906,079 |
Non-controlling interests | 644 | 644 |
Total shareholders' equity | 906,816 | 906,723 |
Total liabilities and shareholders' equity | $ 5,890,329 | $ 5,910,804 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 30, 2024 | Dec. 30, 2023 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 900,000,000 | 900,000,000 |
Common stock, shares outstanding (in shares) | 164,079,581 | 163,965,231 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’/MEMBERS’ EQUITY (Unaudited) - USD ($) $ in Thousands | Total | Common stock | Additional paid-in capital | (Accumulated deficit) retained earnings | Accumulated other comprehensive loss | Non-controlling interests |
Beginning balance (in shares) at Dec. 31, 2022 | 167,404,047 | |||||
Beginning balance at Dec. 31, 2022 | $ 1,674 | $ 1,628,904 | $ 84,795 | $ (62,435) | $ 631 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock issued relating to Employee Stock Purchase Plan (in shares) | 26,358 | |||||
Stock issued relating to Employee Stock Purchase Plan | 612 | |||||
Shares issued for exercise/vesting of equity-based compensation awards (in shares) | 130,044 | |||||
Shares issued for exercise/vesting of equity-based compensation awards | $ 1 | |||||
Equity-based compensation expense | 2,564 | |||||
Exercise of stock options | 1,380 | |||||
Other comprehensive (loss) income | $ 11,167 | 11,168 | (1) | |||
Net income | 29,749 | 29,749 | ||||
Ending balance (in shares) at Apr. 01, 2023 | 167,560,449 | |||||
Ending balance at Apr. 01, 2023 | $ 1,699,042 | $ 1,675 | 1,633,460 | 114,544 | (51,267) | 630 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Preferred stock (in shares) | 0 | |||||
Preferred stock | $ 0 | |||||
Preferred stock (in shares) | 0 | |||||
Beginning balance (in shares) at Dec. 30, 2023 | 163,965,231 | 163,965,231 | ||||
Beginning balance at Dec. 30, 2023 | $ 906,723 | $ 1,640 | 1,652,401 | (710,087) | (37,875) | 644 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock issued relating to Employee Stock Purchase Plan (in shares) | 43,764 | |||||
Stock issued relating to Employee Stock Purchase Plan | 502 | |||||
Shares issued for exercise/vesting of equity-based compensation awards (in shares) | 170,172 | |||||
Shares issued for exercise/vesting of equity-based compensation awards | $ 2 | |||||
Forfeiture of restricted stock awards (in shares) | (99,586) | |||||
Forfeiture of restricted stock awards | $ (1) | |||||
Equity-based compensation expense | 11,861 | |||||
Other comprehensive (loss) income | (16,532) | (16,532) | ||||
Net income | $ 4,261 | 4,261 | ||||
Ending balance (in shares) at Mar. 30, 2024 | 164,079,581 | 164,079,581 | ||||
Ending balance at Mar. 30, 2024 | $ 906,816 | $ 1,641 | $ 1,664,764 | $ (705,826) | $ (54,407) | $ 644 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Preferred stock (in shares) | 0 | |||||
Preferred stock | $ 0 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’/MEMBERS’ EQUITY (Unaudited) (Parenthetical) - $ / shares | Mar. 30, 2024 | Dec. 30, 2023 |
Statement of Stockholders' Equity [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Statement of Cash Flows [Abstract] | ||
Net income | $ 4,261 | $ 29,749 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 43,229 | 38,198 |
Equity-based compensation expense | 11,861 | 2,564 |
Loss on foreign denominated transactions | 7,574 | 161 |
Gain on foreign currency derivatives | (3,253) | (1,836) |
Loss (gain) on sale and disposal of businesses, fixed assets, and sale-leaseback transactions | (12,913) | 1,671 |
Reclassification of interest rate hedge to income | (519) | (519) |
Bad debt expense | 2,070 | 82 |
Asset impairment charges and lease terminations | 19,326 | 167 |
Amortization of deferred financing costs and bond discounts | 1,954 | 1,850 |
Amortization of cloud computing | 1,345 | 0 |
(Benefit) provision for deferred income taxes | (2,807) | 4,650 |
Other, net | 10,669 | 4,043 |
Changes in assets and liabilities, net of acquisitions: | ||
Accounts and notes receivable, net | (17,351) | (44,084) |
Inventory | (1,005) | (5,473) |
Prepaid and other assets | (4,270) | (13,867) |
Advertising fund assets and liabilities, restricted | 7,650 | 906 |
Other assets | (33,300) | (7,382) |
Deferred commissions | (331) | 455 |
Deferred revenue | 1,659 | 161 |
Accounts payable | 14,165 | 25,597 |
Accrued expenses and other liabilities | 6,293 | (960) |
Income tax receivable | 3,976 | 659 |
Cash provided by operating activities | 60,283 | 36,792 |
Cash flows from investing activities: | ||
Capital expenditures | (89,483) | (169,155) |
Cash used in business acquisitions, net of cash acquired | (2,024) | (29,307) |
Proceeds from sale-leaseback transactions | 4,550 | 16,772 |
Proceeds from sale or disposal of businesses and fixed assets | 52,677 | 0 |
Cash used in investing activities | (34,280) | (181,690) |
Cash flows from financing activities: | ||
Repayment of long-term debt | (7,616) | (7,002) |
Proceeds from revolving lines of credit and short-term debt | 46,000 | 140,000 |
Repayment of revolving lines of credit and short-term debt | (46,000) | (25,000) |
Repayment of principal portion of finance lease liability | (886) | (854) |
Payment of Tax Receivable Agreement | (24,718) | 0 |
Stock option exercises | 0 | 1,380 |
Other, net | 0 | (32) |
Cash (used in) provided by financing activities | (33,220) | 108,492 |
Effect of exchange rate changes on cash | 1,133 | 2,392 |
Net change in cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted | (6,084) | (34,014) |
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, restricted, beginning of period | 215,716 | 260,773 |
Cash and cash equivalents, end of period | 165,513 | 190,841 |
Cash included in advertising fund assets, restricted, end of period | 43,462 | 35,126 |
Restricted cash, end of period | 657 | 792 |
Cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted, end of period | 209,632 | 226,759 |
Supplemental cash flow disclosures - non-cash items: | ||
Capital expenditures included in accrued expenses and other liabilities | 24,060 | 39,534 |
Deferred consideration included in accrued expenses and other liabilities | 2,955 | 19,069 |
Supplemental cash flow disclosures - cash paid for: | ||
Interest | 41,784 | 37,942 |
Income taxes | $ 3,721 | $ 5,671 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Description of Business Driven Brands Holdings Inc. together with its subsidiaries (collectively, the “Company”) is a Delaware corporation and is the parent holding company of Driven Brands, Inc. and Shine Holdco (UK) Limited (collectively, “Driven Brands”). Driven Brands is the largest automotive services company in North America with a growing and highly-franchised base of more than 5,000 franchised, independently-operated, and company-operated locations across 49 U.S. states and 13 other countries. The Company has a portfolio of highly recognized brands, including Take 5 Oil Change ® , Take 5 Car Wash ® , Meineke Car Care Centers ® , MAACO ® , CARSTAR ® , Auto Glass Now ® , and 1-800-Radiator & A/C ® that compete in the automotive services industry. Tax Receivable Agreement |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 30, 2024 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Fiscal Year The Company operates and reports financial information on a 52- or 53-week year with the fiscal year ending on the last Saturday in December and fiscal quarters ending on the 13th Saturday of each quarter (or 14th Saturday when applicable with respect to the fourth fiscal quarter). The three months ended March 30, 2024 and April 1, 2023 each consisted of 13 weeks, respectively. The Car Wash segment is consolidated based on a calendar month end. Basis of Presentation The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, the unaudited interim financial data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results of operations, balance sheet, cash flows, and shareholders’/members’ equity for the interim periods presented. The adjustments include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended December 30, 2023. Certain information and note disclosures normally included in the unaudited financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The results of operations for the three months ended March 30, 2024 may not be indicative of the results to be expected for any other interim period or the year ending December 28, 2024. The three months ended March 30, 2024 includes an adjustment to the unaudited consolidated balance sheet and consolidated statement of operations that originated in the prior year. The adjustment decreased both current assets and selling, general, and administrative expenses by $3.7 million. The Company evaluated the materiality of the adjustment on prior period financial statements, recorded the adjustment in the current period, and concluded the effect of the adjustment was immaterial to both the current and prior financial statements. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and the related notes to the consolidated financial statements. Significant items that are subject to estimates and assumptions include, but are not limited to, valuation of intangible assets and goodwill; income taxes; allowances for credit losses; valuation of derivatives; self-insurance claims; and equity-based compensation. Management evaluates its estimates on an ongoing basis and may employ outside experts to assist in its evaluations. Changes in such estimates, based on historical experience, current conditions, and various other additional information, may affect amounts reported in future periods. Actual results could differ due to uncertainty inherent in the nature of these estimates. Fair Value of Financial Instruments Financial assets and liabilities are categorized, based on the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to the quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. Observable market data, when available, is required to be used in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. The Company classifies and discloses assets and liabilities carried at fair value in one of the following three categories: Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; or Level 3: Unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. Financial assets and liabilities measured at fair value on a recurring basis as of March 30, 2024 and December 30, 2023 are summarized as follows: Items Measured at Fair Value at March 30, 2024 (in thousands) Level 1 Level 2 Total Derivative assets, recorded in other assets — 2,077 2,077 Derivative liabilities, recorded in accrued expenses and other liabilities — 174 174 Items Measured at Fair Value at December 30, 2023 (in thousands) Level 1 Level 2 Total Derivative assets, recorded in other assets — 285 285 Derivative liabilities, recorded in accrued expenses and other liabilities — 493 493 The carrying value and estimated fair value of total long-term debt were as follows: March 30, 2024 December 30, 2023 (in thousands) Carrying value Estimated fair value Carrying value Estimated fair value Long-term debt $ 2,970,070 $ 2,824,358 $ 2,977,996 $ 2,800,011 Recently Issued Accounting Standards In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures. The standard enhances segment disclosure requirements of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) to assist in understanding how segment expenses and operating results are evaluated. The new standard does not change the definition or aggregation of operating segments. The standard also expands the interim disclosure requirements on a retrospective basis. This ASU is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. This ASU improves the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the tax rate reconciliation as well as disaggregation of income taxes paid by jurisdiction. This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 3 Months Ended |
Mar. 30, 2024 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures The Company strategically acquires companies and assets to increase its footprint and offer products and services that diversify its existing offerings, primarily through asset purchase agreements. These acquisitions are accounted for as business combinations using the acquisition method, whereby the purchase price is allocated to the assets acquired and liabilities assumed, based on their fair values as of the date of the acquisition with the remaining amount recorded in goodwill. 2024 Acquisitions The Company completed one acquisition within the Maintenance segment and one acquisition in the international car wash business within the Car Wash segment representing two sites and one site, respectively, for an aggregate total cash consideration, net of cash acquired of less than $2 million. 2023 Acquisitions The Company completed two acquisitions within the Maintenance segment during the three months ended April 1, 2023, representing two sites. The aggregate cash consideration for these acquisitions, net of cash acquired and liabilities assumed, was approximately $2 million. The Company completed one acquisition within the Car Wash segment during the three months ended April 1, 2023, representing one site. The aggregate cash consideration for this acquisition, net of cash acquired and liabilities assumed, was approximately $11 million. The Company estimated the fair value of acquired assets and liabilities as of the date of acquisition based on information currently available. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period. The provisional amounts for assets acquired and liabilities assumed for the 2023 acquisitions are as follows: 2023 Maintenance Segment (in thousands) Maintenance Assets: Operating lease right-of-use assets $ 658 Property and equipment, net 1,655 Assets acquired 2,313 Liabilities: Accrued expenses and other liabilities 17 Operating lease liabilities 641 Total liabilities assumed 658 Cash consideration, net of cash acquired 2,255 Deferred consideration 95 Total consideration, net of cash acquired $ 2,350 Goodwill $ 695 2023 Car Wash Segment (in thousands) Car Wash Assets: Property and equipment, net $ 8,270 Assets acquired 8,270 Cash consideration, net of cash acquired 10,994 Total consideration, net of cash acquired $ 10,994 Goodwill $ 2,724 Goodwill represents the excess of the consideration paid over the fair value of net assets acquired and includes the expected benefit of synergies within the existing segments and intangible assets that do not qualify for separate recognition. Goodwill, which was allocated to the Maintenance and Car Wash segments, is substantially all deductible for income tax purposes. Deferred Consideration and Transaction Costs Deferred consideration is typically paid six months to one-year after the acquisition closing date once all conditions under the purchase agreement have been satisfied. The Company had $3 million and $19 million of deferred consideration related to acquisitions as of March 30, 2024 and April 1, 2023, respectively. The Company paid less than $1 million and $16 million of deferred consideration related to prior acquisitions during the three months ended March 30, 2024 and April 1, 2023, respectively. Deferred consideration is recorded within investing activities at the time of payment. The Company incurred less than $1 million of transaction costs during each of the three months ended March 30, 2024 and April 1, 2023. Divestitures |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 30, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers The Company records contract assets for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year and if such costs are material. Commission expenses, a primary cost associated with the sale of franchise licenses, are amortized to selling, general, and administrative expenses in the unaudited consolidated statements of operations ratably over the life of the associated franchise agreement. Capitalized costs to obtain a contract as of March 30, 2024 and December 30, 2023 were $7 million and $6 million, respectively, and are presented within deferred commissions on the consolidated balance sheets. The Company recognized less than $1 million of costs during the three months ended March 30, 2024 and April 1, 2023, respectively, that were recorded as a contract asset at the beginning of the periods. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 30, 2024 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company’s worldwide operations are comprised of the following reportable segments: Maintenance, Car Wash, Paint, Collision & Glass, and Platform Services. In addition to the reportable segments, the Company’s consolidated financial results include “Corporate and Other” activity. Corporate and Other incurs costs related to the advertising revenu es and expenses and shared service costs, which are related to finance, IT, human resources, legal, supply chain, and other support services. Corporate and Other activity includes the adjustments necessary to eliminate certain intercompany transactions, namely sales by the Platform Services segment to the Paint, Collision & Glass and Maintenance segments. Segment results for the three months ended March 30, 2024 and April 1, 2023 are as follows: Three months ended March 30, 2024 (in thousands) Maintenance Car Wash Paint, Platform Services Corporate Total Franchise royalties and fees $ 14,454 $ — $ 24,632 $ 5,959 $ — $ 45,045 Company-operated store sales 220,871 90,227 62,509 849 — 374,456 Independently-operated store sales — 53,047 — — — 53,047 Advertising fund contributions — — — — 24,070 24,070 Supply and other revenue 26,388 1,448 19,247 47,018 (18,493) 75,608 Total net revenue $ 261,713 $ 144,722 $ 106,388 $ 53,826 $ 5,577 $ 572,226 Segment Adjusted EBITDA $ 91,436 $ 29,134 $ 30,820 $ 19,871 $ (38,980) $ 132,281 Three months ended April 1, 2023 (in thousands) Maintenance Car Wash Paint, Platform Corporate Total Franchise royalties and fees $ 12,443 $ — $ 24,298 $ 6,774 $ — $ 43,515 Company-operated store sales 195,260 102,446 77,479 881 — 376,066 Independently-operated store sales — 52,532 — — — 52,532 Advertising fund contributions — — — — 21,677 21,677 Supply and other revenue 19,965 2,002 19,026 44,378 (16,694) 68,677 Total net revenue $ 227,668 $ 156,980 $ 120,803 $ 52,033 $ 4,983 $ 562,467 Segment Adjusted EBITDA $ 72,233 $ 41,048 $ 35,450 $ 17,008 $ (41,251) $ 124,488 The reconciliations of Income before taxes to Segment Adjusted EBITDA for the three months ended March 30, 2024 and April 1, 2023 are as follows: Three Months Ended (in thousands) March 30, 2024 April 1, 2023 Income before taxes $ 10,425 $ 40,720 Depreciation and amortization 43,229 38,198 Interest expense, net 43,772 38,141 Acquisition related costs (a) 1,794 1,847 Non-core items and project costs, net (b) 4,711 1,824 Store opening costs 1,263 1,025 Cloud computing amortization (c) 1,345 — Equity-based compensation expense (d) 11,861 2,564 Foreign currency transaction (gain) loss, net (e) 4,321 (1,675) Asset sale leaseback (gain) loss, impairment and closed store expenses (f) 9,560 1,844 Segment Adjusted EBITDA $ 132,281 $ 124,488 (a) Consists of acquisition costs as reflected within the unaudited 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. (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. (c) Includes non-cash amortization expenses relating cloud computing arrangements. (d) Represents non-cash equity-based compensation expense. (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. (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, and lease exit costs and other costs associated with stores that were closed prior to the respective lease termination dates. Refer to Note 6 for additional information. |
Assets Held For Sale
Assets Held For Sale | 3 Months Ended |
Mar. 30, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Assets Held For Sale | Assets Held For Sale During 2023, management performed an initial 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 strategic 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 the transfer of assets from property and equipment to assets held for sale during the third quarter of 2023. The changes in assets held for sale were as follows: (in thousands) Balance at December 30, 2023 $ 301,229 Additions 38,892 Impairments (18,347) Sales and disposals (30,956) Balance at March 30, 2024 $ 290,818 During the three months ending March 30, 2024, management continued to enhance properties included within held for sale resulting in additions of $39 million. Management evaluated the fair value for all assets included within held for sale, which resulted in an impairment of $18 million for the three months ended March 30, 2024. In addition, during the three months ended March 30, 2024, the Company sold 13 locations resulting in a net gain of $6 million. The Company will continue to evaluate the fair value of assets held for sale, which may result in additional impairments based on unfavorable market or other economical factors in the future. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 30, 2024 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt The Company’s long-term debt obligations consist of the following: (in thousands) March 30, 2024 December 30, 2023 Series 2018-1 Securitization Senior Notes, Class A-2 $ 258,500 $ 259,188 Series 2019-1 Securitization Senior Notes, Class A-2 284,250 285,000 Series 2019-2 Securitization Senior Notes, Class A-2 262,625 263,313 Series 2020-1 Securitization Senior Notes, Class A-2 168,438 168,875 Series 2020-2 Securitization Senior Notes, Class A-2 435,375 436,500 Series 2021-1 Securitization Senior Notes, Class A-2 438,750 439,875 Series 2022-1 Securitization Senior Notes, Class A-2 359,525 360,438 Term Loan Facility 490,000 491,250 Revolving Credit Facility 248,000 248,000 Other debt (a) 24,607 25,557 Total debt 2,970,070 2,977,996 Less: unamortized debt issuance costs (32,017) (34,511) Less: current portion of long-term debt (33,020) (32,673) Total long-term debt, net $ 2,905,033 $ 2,910,812 (a) Consists primarily of finance lease obligations. Series 2019-3 Variable Funding Securitization Senior Notes In December 2019, Driven Brands Funding, LLC (the “Issuer”) issued Series 2019-3 Variable Funding Senior Notes, Class A-1 (the “2019 VFN”) in the revolving amount of $115 million. The 2019 VFN have a final legal maturity date in January 2050. The commitment under the 2019 VFN was set to expire in July 2022, with the option of three one-year extensions. In July 2023, the Company exercised the second of three one-year extension options. The 2019 VFN are secured by substantially all assets of the Issuer and are guaranteed by the Securitization Entities. As of July 1, 2023, borrowings incur interest at the Base Rate plus an applicable margin or Secured Overnight Financing Rate (“SOFR”) plus an applicable term adjustment. No amounts were outstanding under the 2019 VFN as of March 30, 2024 and no borrowings or repayments were made during the three months ended March 30, 2024. As of March 30, 2024, there were $25 million of outstanding letters of credit which reduced the borrowing availability under the 2019 VFN. Driven Holdings Revolving Credit Facility In May 2021, Driven Holdings, LLC, (the “Borrower”) a Delaware limited liability company and indirect wholly-owned subsidiary of Driven Brands Holdings Inc., entered into a credit agreement to secure a revolving line of credit with a group of financial institutions (the “Revolving Credit Facility”), which provides for an aggregate amount of up to $300 million, and has a maturity date in May 2026 (the “Credit Agreement”). On June 2, 2023, the Credit Agreement was amended pursuant to which as of July 1, 2023, borrowings will incur interest at the Base Rate plus an applicable margin or SOFR plus an applicable term adjustment. The Revolving Credit Facility also includes periodic commitment fees based on the available unused balance and a quarterly administrative fee. There was $248 million outstanding on the Revolving Credit Facility as of March 30, 2024 with $46 million of borrowings and $46 million of repayments made during the three months ended March 30, 2024. The Company’s debt agreements are subject to certain quantitative and qualitative covenants. As of March 30, 2024, the Company and its subsidiaries were in material compliance with such covenants. |
Leases
Leases | 3 Months Ended |
Mar. 30, 2024 | |
Leases [Abstract] | |
Leases | Leases During the three months ended March 30, 2024, the Company sold three maintenance properties in various locations throughout the U. S. for a total of $4 million. During the three months ended April 1, 2023, the Company sold one maintenance and five car wash properties in various locations throughout the U.S. for a total of $17 million. Concurrently with the closing of these sales, the Company entered into various operating lease agreements pursuant to which the Company leased back the properties. These lease agreements each have an initial term of 20 years. The Company does not include option periods in its determination of the lease term unless renewals are deemed reasonably certain to be exercised. The Company recorded an operating lease right-of-use asset and operating lease liability of $3 million and $3 million, respectively, as of March 30, 2024, and $10 million and $10 million, respectively, as of April 1, 2023 related to these lease arrangements. The company recorded gains of less than $1 million and $3 million for the three months ended March 30, 2024 and April 1, 2023, respectively. Supplemental cash flow information related to the Company’s lease arrangements for the three months ended March 30, 2024 and April 1, 2023, respectively, was as follows: Three Months Ended (in thousands) March 30, 2024 April 1, 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 42,362 $ 29,558 Operating cash flows used in finance leases 51 475 Financing cash flows used in finance leases 98 529 |
Leases | Leases During the three months ended March 30, 2024, the Company sold three maintenance properties in various locations throughout the U. S. for a total of $4 million. During the three months ended April 1, 2023, the Company sold one maintenance and five car wash properties in various locations throughout the U.S. for a total of $17 million. Concurrently with the closing of these sales, the Company entered into various operating lease agreements pursuant to which the Company leased back the properties. These lease agreements each have an initial term of 20 years. The Company does not include option periods in its determination of the lease term unless renewals are deemed reasonably certain to be exercised. The Company recorded an operating lease right-of-use asset and operating lease liability of $3 million and $3 million, respectively, as of March 30, 2024, and $10 million and $10 million, respectively, as of April 1, 2023 related to these lease arrangements. The company recorded gains of less than $1 million and $3 million for the three months ended March 30, 2024 and April 1, 2023, respectively. Supplemental cash flow information related to the Company’s lease arrangements for the three months ended March 30, 2024 and April 1, 2023, respectively, was as follows: Three Months Ended (in thousands) March 30, 2024 April 1, 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 42,362 $ 29,558 Operating cash flows used in finance leases 51 475 Financing cash flows used in finance leases 98 529 |
Equity-based Compensation
Equity-based Compensation | 3 Months Ended |
Mar. 30, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Equity-based Compensation | Equity-based Compensation The Company granted new awards during the three months ended March 30, 2024, consisting of 932,323 restricted stock units (“RSUs”) and 1,056,570 performance stock units (“PSUs”). Awards are eligible to vest provided that the employee remains in continuous service on each vesting date. The RSUs vest ratably each year on the anniversary date generally over a two or three year period. The PSUs vest after a three-year performance period. The number of PSUs that vest is contingent on the Company achieving certain performance goals, one being a performance condition and the other being a market condition. The number of PSU shares that vest may range from 0% to 200% of the original grant, based upon the level of performance. Certain awards are considered probable of meeting vesting requirements, and therefore, the Company has started recognizing expense. For both RSUs and PSUs, if the grantee’s continuous service terminates for any reason, the grantee shall forfeit all right, title, and interest in any unvested units as of the termination date. The fair value of the total RSUs, performance-based PSUs, and market-based PSUs granted during the three months ended March 30, 2024 were $12.9 million, $8.6 million, and $8.1 million, respectively. The Company based the fair value of the RSUs and performance-based PSUs on the Company’s stock price on the grant date. The range of assumptions used for issued PSUs with a market condition valued using the Monte Carlo model were as follows: Three Months Ended March 30, 2024 April 1, 2023 Annual dividend yield —% —% Expected term (years) 2.8 2.8 Risk-free interest rate 4.5% 4.51% Expected volatility 49.2% 38.8% Correlation to the index peer group 49.2% 60.2% The Company recorded $12 million and $3 million of equity-based compensation expense during the three months ended March 30, 2024 and April 1, 2023, respectively, within selling, general, and administrative expenses on the unaudited consolidated statements of operations. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 30, 2024 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The Company calculates basic and diluted earnings per share using the two-class method. The following table sets forth the computation of basic and diluted earnings per share attributable to common shareholders: Three Months Ended (in thousands, except per share amounts) March 30, 2024 April 1, 2023 Basic earnings per share: Net income attributable to Driven Brands Holdings Inc. $ 4,261 29,749 Less: Net income attributable to participating securities, basic 90 626 Net income after participating securities, basic 4,171 29,123 Weighted-average common shares outstanding 159,631 162,784 Basic earnings per share $ 0.03 $ 0.18 Three Months Ended (in thousands, except per share amounts) March 30, 2024 April 1, 2023 Diluted earnings per share: Net income attributable to Driven Brands Holdings Inc. $ 4,261 $ 29,749 Less: Net income attributable to participating securities, diluted 17 559 Net income after participating securities, diluted $ 4,244 $ 29,190 Weighted-average common shares outstanding 159,631 162,784 Dilutive effect of share-based awards 973 4,090 Weighted-average common shares outstanding, as adjusted 160,604 166,874 Diluted earnings per share $ 0.03 $ 0.17 Basic earnings per share is computed by dividing the net income attributable to Driven Brands Holdings Inc. by the weighted-average number of common shares outstanding for the period. In addition, the Company’s participating securities are related to certain restricted stock awards issued to Section 16 officers which include non-forfeitable dividend rights. The Company has 2,067,468 and 5,351,252 shares of performance awards that are contingent on performance conditions which have not yet been met and therefore have been excluded from the computation of weighted average shares for the three months ended March 30, 2024 and April 1, 2023, respectively. The following securities were not included in the computation of diluted shares outstanding because the effect would be antidilutive: Three Months Ended Number of securities (in thousands) March 30, 2024 April 1, 2023 Restricted stock units 458 41 Stock Options 1,740 2,003 Total 2,198 2,044 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 30, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s tax provision is comprised of the most recent estimated annual effective tax rate applied to year-to-date ordinary income before taxes. The tax impacts of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are recorded discretely in the interim period in which they occur. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 30, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We are subject to various lawsuits, administrative proceedings, audits, and claims. Some of these lawsuits purport to be class actions and/or seek substantial damages. We are required to record an accrual for litigation loss contingencies that are both probable and reasonably estimable. Management regularly assesses our insurance deductibles, analyzes litigation information with our attorneys, and evaluates our loss experience in connection with pending legal proceedings. We record our best estimate of a loss when the loss is considered probable and the amount of such loss can be reasonably estimated. When a loss is probable and there is a range of estimated loss with no best estimate within the range, we record the minimum estimated liability related to the lawsuit or claim. As additional information becomes available, we reassess the potential liability and revise our accruals, if necessary. Legal fees and expenses associated with the defense of all of our litigation are expensed as such fees and expenses are incurred. Because of uncertainties related to the resolution of lawsuits and claims, the ultimate outcome may differ materially from our estimates. Genesee County Employees’ Retirement System v. Driven Brands Holdings Inc., et al. – On December 22, 2023, Genesee County Employees’ Retirement System filed a putative class action lawsuit in the U.S. District Court for the Western District of North Carolina (the “Court”) against the Company as well as a current and a former Company executive (the “Individual Defendants”) alleging violations of Section 10(b) and Rule 10b-5 of the Exchange Act by the Company, as well as violations of Section 20(a) of the Exchange Act by the Individual Defendants. Genesee County Employees’ Retirement System, Oakland County Employees’ Retirement System, and Oakland County Voluntary Employees’ Beneficiary Association (collectively the “Michigan Funds”) have moved for appointment as lead plaintiffs and for Bernstein Litowitz Berger & Grossmann LLP to be appointed as lead counsel for the purported class. The Michigan Funds purport to represent a class of stockholders who purchased Company shares between October 27, 2021 and August 1, 2023. On March 5, 2024, the Michigan Funds filed a notice of unopposed motion asking the Court to grant their prior motion to appoint them as lead plaintiffs. The Court has yet to rule on the unopposed motion. The Company disputes the allegations of wrongdoing and intends to vigorously defend against the action. No assessment as to the likelihood or range of any potential adverse outcome has been made as of the date of this filing. Other than the matter described above, as of March 30, 2024, there are no current proceedings or litigation matters involving the Company or its property that we believe would have a material adverse effect on our consolidated financial position or cash flows, although they could have a material adverse effect on our operating results for a particular reporting period. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Pay vs Performance Disclosure | ||
Net income attributable to Driven Brands Holdings Inc. | $ 4,261 | $ 29,749 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 30, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 30, 2024 | |
Accounting Policies [Abstract] | |
Fiscal Year | Fiscal Year The Company operates and reports financial information on a 52- or 53-week year with the fiscal year ending on the last Saturday in December and fiscal quarters ending on the 13th Saturday of each quarter (or 14th Saturday when applicable with respect to the fourth fiscal quarter). The three months ended March 30, 2024 and April 1, 2023 each consisted of 13 weeks, respectively. The Car Wash segment is consolidated based on a calendar month end. |
Basis of Presentation | Basis of Presentation The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, the unaudited interim financial data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results of operations, balance sheet, cash flows, and shareholders’/members’ equity for the interim periods presented. The adjustments include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended December 30, 2023. Certain information and note disclosures normally included in the unaudited financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The results of operations for the three months ended March 30, 2024 may not be indicative of the results to be expected for any other interim period or the year ending December 28, 2024. The three months ended March 30, 2024 includes an adjustment to the unaudited consolidated balance sheet and consolidated statement of operations that originated in the prior year. The adjustment decreased both current assets and selling, general, and administrative expenses by $3.7 million. The Company evaluated the materiality of the adjustment on prior period financial statements, recorded the adjustment in the current period, and concluded the effect of the adjustment was immaterial to both the current and prior financial statements. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and the related notes to the consolidated financial statements. Significant items that are subject to estimates and assumptions include, but are not limited to, valuation of intangible assets and goodwill; income taxes; allowances for credit losses; valuation of derivatives; self-insurance claims; and equity-based compensation. Management evaluates its estimates on an ongoing basis and may employ outside experts to assist in its evaluations. Changes in such estimates, based on historical experience, current conditions, and various other additional information, may affect amounts reported in future periods. Actual results could differ due to uncertainty inherent in the nature of these estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Financial assets and liabilities are categorized, based on the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to the quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. Observable market data, when available, is required to be used in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. The Company classifies and discloses assets and liabilities carried at fair value in one of the following three categories: Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; or Level 3: Unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures. The standard enhances segment disclosure requirements of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) to assist in understanding how segment expenses and operating results are evaluated. The new standard does not change the definition or aggregation of operating segments. The standard also expands the interim disclosure requirements on a retrospective basis. This ASU is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. This ASU improves the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the tax rate reconciliation as well as disaggregation of income taxes paid by jurisdiction. This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 30, 2024 | |
Accounting Policies [Abstract] | |
Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | Financial assets and liabilities measured at fair value on a recurring basis as of March 30, 2024 and December 30, 2023 are summarized as follows: Items Measured at Fair Value at March 30, 2024 (in thousands) Level 1 Level 2 Total Derivative assets, recorded in other assets — 2,077 2,077 Derivative liabilities, recorded in accrued expenses and other liabilities — 174 174 Items Measured at Fair Value at December 30, 2023 (in thousands) Level 1 Level 2 Total Derivative assets, recorded in other assets — 285 285 Derivative liabilities, recorded in accrued expenses and other liabilities — 493 493 |
Schedule of Carrying Value and Estimated Fair Value of Total Long-Term Debt | The carrying value and estimated fair value of total long-term debt were as follows: March 30, 2024 December 30, 2023 (in thousands) Carrying value Estimated fair value Carrying value Estimated fair value Long-term debt $ 2,970,070 $ 2,824,358 $ 2,977,996 $ 2,800,011 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 3 Months Ended |
Mar. 30, 2024 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Estimated Purchase Price Allocation | The provisional amounts for assets acquired and liabilities assumed for the 2023 acquisitions are as follows: 2023 Maintenance Segment (in thousands) Maintenance Assets: Operating lease right-of-use assets $ 658 Property and equipment, net 1,655 Assets acquired 2,313 Liabilities: Accrued expenses and other liabilities 17 Operating lease liabilities 641 Total liabilities assumed 658 Cash consideration, net of cash acquired 2,255 Deferred consideration 95 Total consideration, net of cash acquired $ 2,350 Goodwill $ 695 2023 Car Wash Segment (in thousands) Car Wash Assets: Property and equipment, net $ 8,270 Assets acquired 8,270 Cash consideration, net of cash acquired 10,994 Total consideration, net of cash acquired $ 10,994 Goodwill $ 2,724 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 30, 2024 | |
Segment Reporting [Abstract] | |
Schedule of Segment Results | Segment results for the three months ended March 30, 2024 and April 1, 2023 are as follows: Three months ended March 30, 2024 (in thousands) Maintenance Car Wash Paint, Platform Services Corporate Total Franchise royalties and fees $ 14,454 $ — $ 24,632 $ 5,959 $ — $ 45,045 Company-operated store sales 220,871 90,227 62,509 849 — 374,456 Independently-operated store sales — 53,047 — — — 53,047 Advertising fund contributions — — — — 24,070 24,070 Supply and other revenue 26,388 1,448 19,247 47,018 (18,493) 75,608 Total net revenue $ 261,713 $ 144,722 $ 106,388 $ 53,826 $ 5,577 $ 572,226 Segment Adjusted EBITDA $ 91,436 $ 29,134 $ 30,820 $ 19,871 $ (38,980) $ 132,281 Three months ended April 1, 2023 (in thousands) Maintenance Car Wash Paint, Platform Corporate Total Franchise royalties and fees $ 12,443 $ — $ 24,298 $ 6,774 $ — $ 43,515 Company-operated store sales 195,260 102,446 77,479 881 — 376,066 Independently-operated store sales — 52,532 — — — 52,532 Advertising fund contributions — — — — 21,677 21,677 Supply and other revenue 19,965 2,002 19,026 44,378 (16,694) 68,677 Total net revenue $ 227,668 $ 156,980 $ 120,803 $ 52,033 $ 4,983 $ 562,467 Segment Adjusted EBITDA $ 72,233 $ 41,048 $ 35,450 $ 17,008 $ (41,251) $ 124,488 |
Schedule of Reconciliation of Segment Adjusted EBITDA to income Before Taxes | The reconciliations of Income before taxes to Segment Adjusted EBITDA for the three months ended March 30, 2024 and April 1, 2023 are as follows: Three Months Ended (in thousands) March 30, 2024 April 1, 2023 Income before taxes $ 10,425 $ 40,720 Depreciation and amortization 43,229 38,198 Interest expense, net 43,772 38,141 Acquisition related costs (a) 1,794 1,847 Non-core items and project costs, net (b) 4,711 1,824 Store opening costs 1,263 1,025 Cloud computing amortization (c) 1,345 — Equity-based compensation expense (d) 11,861 2,564 Foreign currency transaction (gain) loss, net (e) 4,321 (1,675) Asset sale leaseback (gain) loss, impairment and closed store expenses (f) 9,560 1,844 Segment Adjusted EBITDA $ 132,281 $ 124,488 (a) Consists of acquisition costs as reflected within the unaudited 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. (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. (c) Includes non-cash amortization expenses relating cloud computing arrangements. (d) Represents non-cash equity-based compensation expense. (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. (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, and lease exit costs and other costs associated with stores that were closed prior to the respective lease termination dates. Refer to Note 6 for additional information. |
Assets Held For Sale (Tables)
Assets Held For Sale (Tables) | 3 Months Ended |
Mar. 30, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Assets Held-for-Sale | The changes in assets held for sale were as follows: (in thousands) Balance at December 30, 2023 $ 301,229 Additions 38,892 Impairments (18,347) Sales and disposals (30,956) Balance at March 30, 2024 $ 290,818 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 30, 2024 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt Obligations | The Company’s long-term debt obligations consist of the following: (in thousands) March 30, 2024 December 30, 2023 Series 2018-1 Securitization Senior Notes, Class A-2 $ 258,500 $ 259,188 Series 2019-1 Securitization Senior Notes, Class A-2 284,250 285,000 Series 2019-2 Securitization Senior Notes, Class A-2 262,625 263,313 Series 2020-1 Securitization Senior Notes, Class A-2 168,438 168,875 Series 2020-2 Securitization Senior Notes, Class A-2 435,375 436,500 Series 2021-1 Securitization Senior Notes, Class A-2 438,750 439,875 Series 2022-1 Securitization Senior Notes, Class A-2 359,525 360,438 Term Loan Facility 490,000 491,250 Revolving Credit Facility 248,000 248,000 Other debt (a) 24,607 25,557 Total debt 2,970,070 2,977,996 Less: unamortized debt issuance costs (32,017) (34,511) Less: current portion of long-term debt (33,020) (32,673) Total long-term debt, net $ 2,905,033 $ 2,910,812 (a) |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 30, 2024 | |
Leases [Abstract] | |
Schedule of Cash Flow Related to Lease Arrangements | Supplemental cash flow information related to the Company’s lease arrangements for the three months ended March 30, 2024 and April 1, 2023, respectively, was as follows: Three Months Ended (in thousands) March 30, 2024 April 1, 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 42,362 $ 29,558 Operating cash flows used in finance leases 51 475 Financing cash flows used in finance leases 98 529 |
Equity-based Compensation (Tabl
Equity-based Compensation (Tables) | 3 Months Ended |
Mar. 30, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Valuation Assumptions | The range of assumptions used for issued PSUs with a market condition valued using the Monte Carlo model were as follows: Three Months Ended March 30, 2024 April 1, 2023 Annual dividend yield —% —% Expected term (years) 2.8 2.8 Risk-free interest rate 4.5% 4.51% Expected volatility 49.2% 38.8% Correlation to the index peer group 49.2% 60.2% |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 30, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Earnings (Loss) Per Share Attributable to Common Shareholders | The following table sets forth the computation of basic and diluted earnings per share attributable to common shareholders: Three Months Ended (in thousands, except per share amounts) March 30, 2024 April 1, 2023 Basic earnings per share: Net income attributable to Driven Brands Holdings Inc. $ 4,261 29,749 Less: Net income attributable to participating securities, basic 90 626 Net income after participating securities, basic 4,171 29,123 Weighted-average common shares outstanding 159,631 162,784 Basic earnings per share $ 0.03 $ 0.18 Three Months Ended (in thousands, except per share amounts) March 30, 2024 April 1, 2023 Diluted earnings per share: Net income attributable to Driven Brands Holdings Inc. $ 4,261 $ 29,749 Less: Net income attributable to participating securities, diluted 17 559 Net income after participating securities, diluted $ 4,244 $ 29,190 Weighted-average common shares outstanding 159,631 162,784 Dilutive effect of share-based awards 973 4,090 Weighted-average common shares outstanding, as adjusted 160,604 166,874 Diluted earnings per share $ 0.03 $ 0.17 |
Schedule of Antidilutive Shares | The following securities were not included in the computation of diluted shares outstanding because the effect would be antidilutive: Three Months Ended Number of securities (in thousands) March 30, 2024 April 1, 2023 Restricted stock units 458 41 Stock Options 1,740 2,003 Total 2,198 2,044 |
Description of Business (Detail
Description of Business (Details) $ in Thousands | Mar. 30, 2024 USD ($) country state franchise_location | Jan. 31, 2024 USD ($) | Dec. 30, 2023 USD ($) | Jan. 14, 2021 |
Subsidiary, Sale of Stock [Line Items] | ||||
Number of locations franchised, independently-operated, and company-operated | franchise_location | 5,000 | |||
Number of states in which entity operates | state | 49 | |||
Number of countries across europe in which entity operates | country | 13 | |||
Income tax receivable liability, current | $ 41,437 | $ 56,001 | ||
Income tax receivable liability, noncurrent | $ 108,215 | $ 117,915 | ||
Initial payment | $ 25,000 | |||
Pre-IPO Stockholders | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Income taxes receivable (as a percent) | 0.85 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 30, 2024 | Apr. 01, 2023 | Dec. 30, 2023 | |
Subsidiary, Sale of Stock [Line Items] | |||
Selling, general, and administrative expenses | $ (116,402) | $ (112,328) | |
Current assets | (815,804) | $ (821,107) | |
Revision of Prior Period, Adjustment | |||
Subsidiary, Sale of Stock [Line Items] | |||
Selling, general, and administrative expenses | 3,700 | ||
Current assets | $ 3,700 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Mar. 30, 2024 | Dec. 30, 2023 |
Other assets | ||
Subsidiary, Sale of Stock [Line Items] | ||
Derivative asset | $ 2,077 | $ 285 |
Other Noncurrent Liabilities | ||
Subsidiary, Sale of Stock [Line Items] | ||
Derivative liabilities, recorded in accrued expenses and other liabilities | 174 | 493 |
Level 1 | Other assets | ||
Subsidiary, Sale of Stock [Line Items] | ||
Derivative asset | 0 | 0 |
Level 1 | Other Noncurrent Liabilities | ||
Subsidiary, Sale of Stock [Line Items] | ||
Derivative liabilities, recorded in accrued expenses and other liabilities | 0 | 0 |
Level 2 | Other assets | ||
Subsidiary, Sale of Stock [Line Items] | ||
Derivative asset | 2,077 | 285 |
Level 2 | Other Noncurrent Liabilities | ||
Subsidiary, Sale of Stock [Line Items] | ||
Derivative liabilities, recorded in accrued expenses and other liabilities | $ 174 | $ 493 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Carrying Value and Estimated Fair Value of Total Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 30, 2024 | Dec. 30, 2023 |
Carrying value | ||
Subsidiary, Sale of Stock [Line Items] | ||
Long-term debt | $ 2,970,070 | $ 2,977,996 |
Estimated fair value | ||
Subsidiary, Sale of Stock [Line Items] | ||
Long-term debt | $ 2,824,358 | $ 2,800,011 |
Acquisitions and Divestitures -
Acquisitions and Divestitures - Narrative (Details) $ in Thousands | 3 Months Ended | ||
Mar. 30, 2024 USD ($) maintenance_site store acquisition | Apr. 01, 2023 USD ($) acquisition car_wash_site maintenance_site | Dec. 30, 2023 USD ($) | |
Business Acquisition [Line Items] | |||
Cash used in business acquisitions, net of cash acquired | $ 2,024 | $ 29,307 | |
Acquisition related costs | 1,794 | 1,847 | |
Total consideration | 4,000 | $ 17,000 | |
Net gain on sale | $ 1,000 | $ 3,000 | |
Disposal Group, Disposed of by Sale, Not Discontinued Operations | CARSTAR Franchise | |||
Business Acquisition [Line Items] | |||
Number of stores sold | store | 9 | ||
Total consideration | $ 18,000 | ||
Goodwill | 9,000 | ||
Net gain on sale | $ 6,000 | ||
Maximum | |||
Business Acquisition [Line Items] | |||
Deferred consideration payment period | 1 year | ||
2024 Acquisitions | Maintenance | |||
Business Acquisition [Line Items] | |||
Number of businesses acquired | acquisition | 1 | ||
Number of maintenance sites | maintenance_site | 2 | ||
Cash used in business acquisitions, net of cash acquired | $ 2,000 | ||
2024 Acquisitions | Car Wash | |||
Business Acquisition [Line Items] | |||
Number of businesses acquired | acquisition | 1 | ||
Number of maintenance sites | maintenance_site | 1 | ||
2023 Acquisitions | Maintenance | |||
Business Acquisition [Line Items] | |||
Number of businesses acquired | acquisition | 2 | ||
Number of maintenance sites | maintenance_site | 2 | ||
Cash used in business acquisitions, net of cash acquired | $ 2,000 | ||
2023 Acquisitions | Car Wash | |||
Business Acquisition [Line Items] | |||
Number of businesses acquired | acquisition | 1 | ||
Cash used in business acquisitions, net of cash acquired | $ 11,000 | ||
Number of car wash sites | car_wash_site | 1 | ||
2022 and 2021 Acquisitions | |||
Business Acquisition [Line Items] | |||
Consideration liability | $ 3,000 | $ 19,000 | |
Payment of contingent consideration related to acquisitions | 1,000 | 16,000 | |
Business Acquisition | |||
Business Acquisition [Line Items] | |||
Acquisition related costs | $ 1,000 | $ 1,000 |
Acquisitions and Divestitures_2
Acquisitions and Divestitures - Schedule of Estimated Purchase Price Allocation (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 30, 2024 | Apr. 01, 2023 | Dec. 30, 2023 | |
Liabilities: | |||
Cash consideration, net of cash acquired | $ 2,024 | $ 29,307 | |
Goodwill | $ 1,435,618 | $ 1,455,946 | |
Maintenance | |||
Assets: | |||
Operating lease right-of-use assets | 658 | ||
Property and equipment, net | 1,655 | ||
Assets acquired | 2,313 | ||
Liabilities: | |||
Accrued expenses and other liabilities | 17 | ||
Operating lease liabilities | 641 | ||
Total liabilities assumed | 658 | ||
Cash consideration, net of cash acquired | 2,255 | ||
Deferred consideration | 95 | ||
Total consideration, net of cash acquired | 2,350 | ||
Goodwill | 695 | ||
Car Wash | |||
Assets: | |||
Property and equipment, net | 8,270 | ||
Assets acquired | 8,270 | ||
Liabilities: | |||
Cash consideration, net of cash acquired | 10,994 | ||
Total consideration, net of cash acquired | 10,994 | ||
Goodwill | $ 2,724 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 30, 2024 | Apr. 01, 2023 | Dec. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |||
Capitalized costs to obtain a contract | $ 7 | $ 6 | |
Contract assets | 1 | $ 1 | |
Contract liabilities | 32 | $ 31 | |
Revenue recognized (less than) | $ 1 | $ 1 |
Segment Information - Schedule
Segment Information - Schedule of Segment Results (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Segment Reporting Information [Line Items] | ||
Total net revenue | $ 572,226 | $ 562,467 |
Franchise royalties and fees | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 45,045 | 43,515 |
Company-operated store sales | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 374,456 | 376,066 |
Independently-operated store sales | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 53,047 | 52,532 |
Advertising fund contributions | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 24,070 | 21,677 |
Supply and other revenue | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 75,608 | 68,677 |
Operating Segments | Maintenance | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 261,713 | 227,668 |
Segment Adjusted EBITDA | 91,436 | 72,233 |
Operating Segments | Maintenance | Franchise royalties and fees | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 14,454 | 12,443 |
Operating Segments | Maintenance | Company-operated store sales | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 220,871 | 195,260 |
Operating Segments | Maintenance | Independently-operated store sales | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 0 | 0 |
Operating Segments | Maintenance | Advertising fund contributions | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 0 | 0 |
Operating Segments | Maintenance | Supply and other revenue | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 26,388 | 19,965 |
Operating Segments | Car Wash | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 144,722 | 156,980 |
Segment Adjusted EBITDA | 29,134 | 41,048 |
Operating Segments | Car Wash | Franchise royalties and fees | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 0 | 0 |
Operating Segments | Car Wash | Company-operated store sales | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 90,227 | 102,446 |
Operating Segments | Car Wash | Independently-operated store sales | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 53,047 | 52,532 |
Operating Segments | Car Wash | Advertising fund contributions | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 0 | 0 |
Operating Segments | Car Wash | Supply and other revenue | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 1,448 | 2,002 |
Operating Segments | Paint, Collision & Glass | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 106,388 | 120,803 |
Segment Adjusted EBITDA | 30,820 | 35,450 |
Operating Segments | Paint, Collision & Glass | Franchise royalties and fees | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 24,632 | 24,298 |
Operating Segments | Paint, Collision & Glass | Company-operated store sales | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 62,509 | 77,479 |
Operating Segments | Paint, Collision & Glass | Independently-operated store sales | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 0 | 0 |
Operating Segments | Paint, Collision & Glass | Advertising fund contributions | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 0 | 0 |
Operating Segments | Paint, Collision & Glass | Supply and other revenue | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 19,247 | 19,026 |
Operating Segments | Platform Services | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 53,826 | 52,033 |
Segment Adjusted EBITDA | 19,871 | 17,008 |
Operating Segments | Platform Services | Franchise royalties and fees | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 5,959 | 6,774 |
Operating Segments | Platform Services | Company-operated store sales | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 849 | 881 |
Operating Segments | Platform Services | Independently-operated store sales | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 0 | 0 |
Operating Segments | Platform Services | Advertising fund contributions | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 0 | 0 |
Operating Segments | Platform Services | Supply and other revenue | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 47,018 | 44,378 |
Corporate and Other | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 5,577 | 4,983 |
Segment Adjusted EBITDA | (38,980) | (41,251) |
Corporate and Other | Franchise royalties and fees | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 0 | 0 |
Corporate and Other | Company-operated store sales | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 0 | 0 |
Corporate and Other | Independently-operated store sales | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 0 | 0 |
Corporate and Other | Advertising fund contributions | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | 24,070 | 21,677 |
Corporate and Other | Supply and other revenue | ||
Segment Reporting Information [Line Items] | ||
Total net revenue | (18,493) | (16,694) |
Segment Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Segment Adjusted EBITDA | $ 132,281 | $ 124,488 |
Segment Information - Schedul_2
Segment Information - Schedule of Reconciliation of Segment Adjusted EBITDA to Income Before Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Segment Reporting Information [Line Items] | ||
Income before taxes | $ 10,425 | $ 40,720 |
Depreciation and amortization | 43,229 | 38,198 |
Interest expense, net | 43,772 | 38,141 |
Acquisition related costs | 1,794 | 1,847 |
Store opening costs | 1,263 | 1,025 |
Amortization of cloud computing | 1,345 | 0 |
Segment Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Acquisition related costs | 1,794 | 1,847 |
Non-core items and project costs, net | 4,711 | 1,824 |
Store opening costs | 1,263 | 1,025 |
Amortization of cloud computing | 1,345 | 0 |
Equity-based compensation expense | 11,861 | 2,564 |
Foreign currency transaction (gain) loss, net | 4,321 | (1,675) |
Asset sale leaseback (gain) loss, impairment and closed store expenses | 9,560 | 1,844 |
Segment Adjusted EBITDA | $ 132,281 | $ 124,488 |
Assets Held For Sale - Narrativ
Assets Held For Sale - Narrative (Details) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 USD ($) store location | Apr. 01, 2023 USD ($) | |
Schedule of Equity Method Investments [Line Items] | ||
Number of stores closed | store | 29 | |
Additions | $ 38,892 | |
Impairments | (18,347) | |
Net gain on sale | $ 1,000 | $ 3,000 |
Discontinued Operations, Held-for-Sale or Disposed of by Sale | ||
Schedule of Equity Method Investments [Line Items] | ||
Number of location | location | 13 | |
Net gain on sale | $ 6,000 |
Assets Held For Sale - Schedule
Assets Held For Sale - Schedule of Assets Held-for-Sale (Details) $ in Thousands | 3 Months Ended |
Mar. 30, 2024 USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 301,229 |
Additions | 38,892 |
Impairments | (18,347) |
Sales and disposals | (30,956) |
Ending balance | $ 290,818 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Mar. 30, 2024 | Dec. 30, 2023 |
Debt Instrument [Line Items] | ||
Total debt | $ 2,970,070 | $ 2,977,996 |
Less: unamortized debt issuance costs | (32,017) | (34,511) |
Less: current portion of long-term debt | (33,020) | (32,673) |
Total long-term debt, net | 2,905,033 | 2,910,812 |
Senior notes | Series 2018-1 Securitization Senior Notes, Class A-2 | ||
Debt Instrument [Line Items] | ||
Total debt | 258,500 | 259,188 |
Senior notes | Series 2019-1 Securitization Senior Notes, Class A-2 | ||
Debt Instrument [Line Items] | ||
Total debt | 284,250 | 285,000 |
Senior notes | Series 2019-2 Securitization Senior Notes, Class A-2 | ||
Debt Instrument [Line Items] | ||
Total debt | 262,625 | 263,313 |
Senior notes | Series 2020-1 Securitization Senior Notes, Class A-2 | ||
Debt Instrument [Line Items] | ||
Total debt | 168,438 | 168,875 |
Senior notes | Series 2020-2 Securitization Senior Notes, Class A-2 | ||
Debt Instrument [Line Items] | ||
Total debt | 435,375 | 436,500 |
Senior notes | Series 2021-1 Securitization Senior Notes, Class A-2 | ||
Debt Instrument [Line Items] | ||
Total debt | 438,750 | 439,875 |
Senior notes | Series 2022-1 Securitization Senior Notes, Class A-2 | ||
Debt Instrument [Line Items] | ||
Total debt | 359,525 | 360,438 |
Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Total debt | 490,000 | 491,250 |
Revolving Credit Facility | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Total debt | 248,000 | 248,000 |
Other debt | ||
Debt Instrument [Line Items] | ||
Total debt | $ 24,607 | $ 25,557 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) | 1 Months Ended | 3 Months Ended | |||
Dec. 31, 2019 USD ($) extension_option | Mar. 30, 2024 USD ($) | Apr. 01, 2023 USD ($) | Dec. 30, 2023 USD ($) | May 31, 2021 USD ($) | |
Debt Instrument [Line Items] | |||||
Total debt | $ 2,970,070,000 | $ 2,977,996,000 | |||
Proceeds from revolving lines of credit and short-term debt | 46,000,000 | $ 140,000,000 | |||
Repayment of revolving lines of credit and short-term debt | (46,000,000) | $ (25,000,000) | |||
Series 2019-3 Variable Funding Senior Notes, Class A-1 | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 115,000,000 | ||||
Number of extension options | extension_option | 3 | ||||
Extension period (in years) | 1 year | ||||
Outstanding debt | 0 | ||||
Borrowings or repayments of debt | 0 | ||||
Outstanding letters of credit | $ 25,000,000 | ||||
Revolving Credit Facility | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 300,000,000 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Thousands | 3 Months Ended | ||||
Mar. 30, 2024 USD ($) maintenance_site | Apr. 01, 2023 USD ($) | Dec. 30, 2023 USD ($) | Dec. 30, 2023 maintenance_site | Dec. 30, 2023 car_wash_site | |
Lessee, Lease, Description [Line Items] | |||||
Number cash wash properties sold | 3 | 1 | 5 | ||
Total consideration | $ 4,000 | $ 17,000 | |||
Operating lease right-of-use assets | 1,383,400 | 1,389,316 | |||
Net gain on sale | 1,000 | $ 3,000 | |||
March 2021 Operating Lease Agreements | |||||
Lessee, Lease, Description [Line Items] | |||||
Operating lease right-of-use assets | 3,000 | 10,000 | |||
Operating lease liability | $ 3,000 | $ 10,000 | |||
Maximum | March 2021 Operating Lease Agreements | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term (in years) | 20 years |
Leases - Cash Flows Related to
Leases - Cash Flows Related to Lease Arrangements (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows used in operating leases | $ 42,362 | $ 29,558 |
Operating cash flows used in finance leases | 51 | 475 |
Financing cash flows used in finance leases | $ 98 | $ 529 |
Equity-based Compensation - Nar
Equity-based Compensation - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | $ 11,861 | $ 2,564 |
Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of granted new awards (in shares) | 932,323 | |
Grant-date fair value of PSUs granted | $ 12,900 | |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of granted new awards (in shares) | 1,056,570 | |
Award vesting period (in years) | 3 years | |
Performance Shares | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting rights (as a percent) | 0% | |
Performance Shares | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting rights (as a percent) | 200% | |
Restricted stock award, performance based PSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grant-date fair value of PSUs granted | $ 8,600 | |
Restricted stock award, market-based PSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grant-date fair value of PSUs granted | $ 8,100 |
Equity-based Compensation - Sch
Equity-based Compensation - Schedule of Valuation Assumptions (Details) - Performance stock units | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Annual dividend yield | 0% | 0% |
Expected term (years) | 2 years 9 months 18 days | 2 years 9 months 18 days |
Risk-free interest rate | 4.50% | 4.51% |
Expected volatility | 49.20% | 38.80% |
Correlation to the index peer group | 49.20% | 60.20% |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Basic and Diluted Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Basic earnings per share: | ||
Net income attributable to Driven Brands Holdings Inc. | $ 4,261 | $ 29,749 |
Less: Net income attributable to participating securities, basic | 90 | 626 |
Net income after participating securities, basic | $ 4,171 | $ 29,123 |
Weighted-average common shares outstanding (in shares) | 159,631 | 162,784 |
Basic earnings per share (in dollars per share) | $ 0.03 | $ 0.18 |
Diluted earnings per share: | ||
Net income attributable to Driven Brands Holdings Inc. | $ 4,261 | $ 29,749 |
Less: Net income attributable to participating securities, diluted | 17 | 559 |
Net income after participating securities, diluted | $ 4,244 | $ 29,190 |
Weighted-average common shares outstanding (in shares) | 159,631 | 162,784 |
Dilutive effect of share-based awards (in shares) | 973 | 4,090 |
Weighted-average common shares outstanding, as adjusted (in shares) | 160,604 | 166,874 |
Diluted earnings per share (in dollars per share) | $ 0.03 | $ 0.17 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares | 3 Months Ended | |
Mar. 30, 2024 | Mar. 26, 2022 | |
Earnings Per Share [Abstract] | ||
Performance awards contingent on performance conditions which have not been met yet (in shares) | 2,067,468 | 5,351,252 |
Earnings Per Share - Schedule_2
Earnings Per Share - Schedule of Antidilutive Shares (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 2,198 | 2,044 |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 458 | 41 |
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 1,740 | 2,003 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2024 | Apr. 01, 2023 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense | $ 6,164 | $ 10,971 |
Effective income tax rate | 59.10% | 26.90% |