Driven Brands Holdings Inc. (DRVN) came out with quarterly earnings of $0.23 per share, beating the Zacks Consensus Estimate of $0.20 per share. This compares to earnings of $0.25 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 15%. A quarter ago, it was expected that this company would post earnings of $0.18 per share when it actually produced earnings of $0.19, delivering a surprise of 5.56%.Over the last four quarters, the ...

Exhibit 99.1 Driven Brands Holdings Inc. Reports First Quarter 2024 Results —Achieved 13 consecutive quarters of same store sales growth— —Maintenance segment delivered 5% same store sales growth driven by 7% in Take 5 Oil Change— --Net Income of $4 million and Adjusted EBITDA of $131 million— —Announces CFO transition— —Reaffirms Fiscal Year 2024 Outlook— The Company ended the first quarter with total liquidity of $308.0 million consisting of $165.5 million in cash and cash equivalents and $142.5 million o ...

CHARLOTTE, N.C., March 5, 2024 /PRNewswire/ -- Driven Brands Holdings Inc. (NASDAQ: DRVN) ("Driven Brands" or the "Company") today announced that it will participate in the Bank of America 2024 Consumer & Retail Conference in Miami. The Company will participate in a fireside chat that is scheduled to begin at 1:50 p.m. EDT on Tuesday, March 12, 2024. The fireside chat will be webcast live from the Company's Investor Relations website at investors.drivenbrands.com on the Events & Presentations page. It will ...

PART I [Business Overview](index=5&type=section&id=Item%201.%20Business) Driven Brands Holdings Inc. is North America's largest automotive services company, operating approximately 5,000 franchised locations across diverse automotive services, achieving significant net revenue and system-wide sales in 2023 through expansion and sales growth [Company Overview](index=5&type=section&id=Overview) Driven Brands Holdings Inc. is North America's largest automotive services company, with approximately 5,000 locations offering a wide range of automotive services, achieving significant net revenue and system-wide sales in 2023 - The company operates approximately **5,000 locations** in North America, offering services including paint, collision, glass, repair, oil change, and car wash[13](index=13&type=chunk) 2023 Fiscal Year Financial Performance | Metric | Amount (USD) | | :--- | :--- | | Net Revenue | $2.3 billion | | System-Wide Sales | $6.3 billion | [Our Business (by Segment)](index=5&type=section&id=Our%20Business) The company's business is divided into four segments: Maintenance, Car Wash, Paint/Collision/Glass, and Platform Services, each featuring well-known brands and unique operating models that collectively form a diversified automotive service platform [Maintenance Services](index=5&type=section&id=Maintenance) The Maintenance segment, primarily comprising Take 5 Oil Change and Meineke brands, operated 1,786 locations as of December 30, 2023, offering oil changes, routine maintenance, and parts repair and replacement services - The Maintenance segment's main brands are Take 5 Oil Change and Meineke, with a total of **1,786 locations** as of December 30, 2023[16](index=16&type=chunk) - Take 5 Oil Change provides efficient drive-thru oil change services, operating **355 franchised** and **652 company-operated locations**[17](index=17&type=chunk) - Meineke offers comprehensive automotive maintenance services, with **779 100% franchised locations**[18](index=18&type=chunk) [Car Wash Services](index=5&type=section&id=Car%20Wash) The company is the world's largest conveyorized car wash operator, with 1,108 locations as of December 30, 2023, primarily operating under the IMO brand in Europe and Australia, and Take 5 Car Wash in the U.S - The Car Wash segment had **1,108 locations** as of December 30, 2023, making it the world's largest conveyorized car wash company[19](index=19&type=chunk) - International operations are primarily under the IMO brand, while U.S. operations are mainly under the Take 5 Car Wash brand[20](index=20&type=chunk)[21](index=21&type=chunk) - In 2023, approximately **60% of U.S. domestic car wash revenue** came from subscription membership programs, an increase from 50% in the prior year[21](index=21&type=chunk) [Paint, Collision & Glass Services](index=6&type=section&id=Paint,%20Collision%20%26%20Glass) The Paint, Collision & Glass segment, including brands like CARSTAR, ABRA, Fix Auto, Maaco, Uniban, and Auto Glass Now (AGN), operated 1,888 locations as of December 30, 2023, providing comprehensive paint, collision repair, and automotive glass services - The Paint, Collision & Glass segment's main brands include CARSTAR, ABRA, Fix Auto, Maaco, Uniban, and AGN, with a total of **1,888 locations** as of December 30, 2023[22](index=22&type=chunk) - Maaco provides paint services, operating **392 franchised locations**[23](index=23&type=chunk) - CARSTAR, ABRA, and Fix Auto form North America's largest franchised collision repair network, with **1,028 locations**[24](index=24&type=chunk) - Uniban and AGN provide glass repair services, operating **237 franchised** and **231 company-operated locations** as of December 30, 2023, making them the second-largest automotive glass service provider in the U.S[25](index=25&type=chunk) [Platform Services](index=6&type=section&id=Platform%20Services) The Platform Services segment, encompassing businesses like 1-800 Radiator, PH, Spire Supply, Driven Advantage, and Automotive Training Institute (ATI), supports the company's brands through procurement, distribution, and training services, driving organic growth and acquisition opportunities - The Platform Services segment provides procurement, distribution, and training services to support the growth of the company's brands[26](index=26&type=chunk) - 1-800 Radiator is one of the largest franchised automotive parts distributors, with **206 locations**, leveraging proprietary algorithmic sourcing technology[27](index=27&type=chunk) - The Driven Advantage e-commerce platform, launched in 2023, offers a customized procurement experience and, with Spire Supply, provides attractive pricing and operational simplification for franchisees[29](index=29&type=chunk) - ATI offers financial and operational training services, serving as a potential source for future franchise development and acquisitions[31](index=31&type=chunk) [Growing Our Brands](index=7&type=section&id=Growing%20Our%20Brands) The company achieves strong growth and market share expansion through same-store sales growth and new unit growth, including organic expansion and targeted acquisitions, leveraging its diversified platform, shared service capabilities, and data analytics engine - The company drives growth through **same-store sales growth** and **new unit growth**, both organic and through acquisitions[32](index=32&type=chunk) - Shared service capabilities and a data analytics engine are utilized to optimize marketing, customer targeting, store operations, and site selection[34](index=34&type=chunk)[35](index=35&type=chunk) [New Unit Growth](index=7&type=section&id=New%20Unit%20Growth) The company achieves continuous unit growth in the highly fragmented North American market through greenfield development of company-operated stores, acquisitions, and franchise expansion, with approximately 1,300 new franchised units under agreement as of December 30, 2023 - The company achieves new unit growth through greenfield development, acquisitions, and franchise expansion, particularly in the Take 5 Oil business and the U.S. glass market[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) - As of December 30, 2023, agreements were in place to open approximately **1,300 new franchised units**, providing visibility for future growth[39](index=39&type=chunk) [Same Store Sales Growth](index=8&type=section&id=Same%20Store%20Sales%20Growth) The company has achieved positive same-store sales growth in 15 of the past 16 years, primarily driven by enhanced commercial and insurance partnerships, expanded car wash subscription programs, data analytics for marketing and pricing optimization, and leveraging platform scale and procurement advantages - The company has achieved **positive same-store sales growth** in 15 of the past 16 years[40](index=40&type=chunk) - Growth is driven by commercial and insurance partnerships, car wash subscription programs (accounting for approximately **60% of domestic car wash revenue in 2023**), data analytics for marketing and pricing optimization, and procurement advantages[40](index=40&type=chunk) [Company-Operated Store Strategy](index=8&type=section&id=Company-Operated%20Store%20Strategy) The company-operated store strategy focuses on executing simple operating models to enhance efficiency and profitability through standardized practices and cross-brand operating models, expanding through greenfield development, acquisitions, and remodels - The company-operated store strategy enhances efficiency and reduces operating costs through standardized operating models and cross-brand procurement strategies[40](index=40&type=chunk) - The company expands its company-operated store footprint through greenfield development, acquisitions, and remodels[40](index=40&type=chunk) [Franchising Strategy](index=9&type=section&id=Franchising%20Strategy) The company's franchising strategy aims to expand its brand footprint in a capital-efficient manner by attracting and retaining franchisees through attractive unit economics, national brand recognition, strong customer relationships, and shared service capabilities - The franchising strategy aims to expand brand footprint in a capital-efficient manner, attracting franchisees through appealing unit economics, brand recognition, and shared service capabilities[41](index=41&type=chunk) - As of December 30, 2023, the company had agreements to open approximately **1,300 new franchised units**[41](index=41&type=chunk) - Franchise agreements typically include an initial license fee, ongoing royalties (based on a percentage of sales), and marketing fund contributions[43](index=43&type=chunk) [Independent Operator Agreements](index=9&type=section&id=Independent%20Operator%20Agreements) The company utilizes an independent operator model for its car wash businesses outside the U.S., where third parties manage on-site labor and receive commissions based on a percentage of car wash revenue, with agreements outlining commissions, service terms, and intellectual property protection - Car wash businesses outside the U.S. operate under an independent operator model, where third parties manage on-site labor and receive commissions[46](index=46&type=chunk) - Agreements cover commission payments, other service terms, confidential information, intellectual property, and customer data protection[46](index=46&type=chunk) [Marketing Strategy](index=9&type=section&id=Marketing%20Strategy) The company's marketing strategy emphasizes demand-based services and value propositions across its brands, utilizing data-driven practices through CRM, social and digital media, TV, print, and radio advertising to attract and retain customers - The marketing strategy highlights brand services and value propositions through various channels including CRM, social and digital media, TV, print, and radio advertising[47](index=47&type=chunk)[49](index=49&type=chunk) - In 2023, the company invested approximately **$159 million** in marketing[40](index=40&type=chunk) [Industry Overview and Competition](index=9&type=section&id=Industry%20Overview%20and%20Competition) The company competes in a highly fragmented automotive services and parts distribution market against a diverse range of international, national, regional, and local repair shops, oil change centers, car washes, paint and collision repair shops, glass repair shops, automotive dealerships, and parts suppliers - The company competes in a highly fragmented automotive services and parts distribution market against diverse competitors[50](index=50&type=chunk)[51](index=51&type=chunk) - Key competitive factors include scale, geographic coverage, brand recognition, service pricing, speed and quality, and customer satisfaction[51](index=51&type=chunk) [Government Regulations and Other Regulatory Matters](index=10&type=section&id=Government%20Regulations%20and%20Other%20Regulatory%20Matters) The company's operations are subject to federal, state, local, and provincial laws and regulations across North America, Europe, and Australia, covering consumer protection, occupational licensing, environmental protection, data privacy, labor and employment, and taxation - Company operations are subject to multi-national and multi-level laws and regulations, including consumer protection, environmental, data privacy, and labor and employment[53](index=53&type=chunk) - As a franchisor, the company is regulated by the Federal Trade Commission and various state franchise laws, requiring extensive disclosures to prospective franchisees[54](index=54&type=chunk) [Employees and Human Capital Resources](index=10&type=section&id=Employees%20and%20Human%20Capital%20Resources) As of December 30, 2023, the company employed approximately 10,600 full-time employees, with about 8,800 working in company-operated locations, none of whom are covered by collective bargaining agreements Employee Count | Metric | Count | | :--- | :--- | | Full-time employees as of December 30, 2023 | Approximately 10,600 | | Company-operated location employees | Approximately 8,800 | - The company attracts, retains, and motivates employees through equity incentives and cash performance bonus plans, emphasizing performance orientation[56](index=56&type=chunk) - Employees of franchised locations and independently operated car washes are not employees of Driven Brands[57](index=57&type=chunk) [Intellectual Property](index=10&type=section&id=Intellectual%20Property) The company's trademarks, service marks, and trade names are crucial to its marketing and business operations, owning or having rights to use numerous registered marks including ABRA, CARSTAR, DrivenBrands, IMO, MAACO, Meineke Car Care Centers, PH Vitres D'Autos, Spire Supply, Take 5 Oil Change, Take 5 Car Wash, Uniban, Auto Glass Now, and 1-800-Radiator & A/C - The company owns or has rights to use numerous registered trademarks, which are essential for marketing and business operations[58](index=58&type=chunk) [Seasonality](index=10&type=section&id=Seasonality) Seasonal variations, including adverse weather, impact demand for the company's automotive repair and maintenance services, car washes, and products, potentially leading to reduced driving mileage in winter months or delayed vehicle maintenance - Seasonal changes and adverse weather affect demand for automotive repair, maintenance, and car wash services[59](index=59&type=chunk)[60](index=60&type=chunk) [Additional Information](index=11&type=section&id=Additional%20Information) The company provides free access to its SEC filings, including annual reports, quarterly reports, current reports, and proxy statements, through its official website, with investors also able to access financial and other important information and register for email alerts - The company provides SEC filings via its website www.drivenbrands.com, and investors can access financial information and register for alerts at https://investors.drivenbrands.com[61](index=61&type=chunk)[62](index=62&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) Investing in the company's common stock involves high risks, including increased competition, changing consumer preferences, rising operating costs, advancements in automotive technology, reliance on key suppliers, and inadequate intellectual property protection - Investing in the company's common stock involves **high risks**, which could adversely affect operating results, financial condition, and reputation[63](index=63&type=chunk) - Key risks include competition, changing consumer preferences, rising operating costs, automotive technology advancements, supplier dependence, expansion plans, debt burden, intellectual property, information system security, regulatory compliance, and franchisee reliance[64](index=64&type=chunk) [Summary of Risk Factors](index=12&type=section&id=Summary%20of%20Risk%20Factors) The company's business faces multiple risks and uncertainties, including market competition, evolving consumer preferences, rising operating costs, automotive technology advancements, reliance on key suppliers, and the execution of expansion plans - The company's business faces multiple risks, including competition, consumer preferences, operating costs, automotive technology, suppliers, expansion plans, debt, intellectual property, information system security, regulatory compliance, and franchisee financial performance[64](index=64&type=chunk) [Risks Relating to Our Business](index=13&type=section&id=Risks%20Relating%20to%20Our%20Business) The company's business faces multiple risks, including intense competition in the automotive aftermarket, the impact of changing consumer preferences and economic conditions on demand, and the potential for rising operating costs - The automotive aftermarket is highly competitive, potentially impacting the company's business and operating results[65](index=65&type=chunk)[66](index=66&type=chunk) - Consumer preferences, economic conditions, automotive technology advancements, rising energy prices, and weather changes may affect demand for products and services[67](index=67&type=chunk)[70](index=70&type=chunk) - Rising operating costs, including labor, commodity costs, and interest rates, along with high inflation, could adversely affect profitability[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - Reliance on key suppliers, supply chain disruptions, tariffs, and geopolitical uncertainties may increase supply costs and impact business[79](index=79&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[87](index=87&type=chunk)[89](index=89&type=chunk) - Failure to successfully expand into new markets, inherent risks of acquisitions and dispositions, and a high debt burden could hinder growth and increase financial risk[94](index=94&type=chunk)[100](index=100&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) - Business seasonality, geographic concentration, and international operation risks may lead to sales and profit fluctuations[105](index=105&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) [Risks Related to Intellectual Property and Technology](index=24&type=section&id=Risks%20Related%20to%20Intellectual%20Property%20and%20Technology) The company relies on intellectual property to protect its brands but may not establish trademark rights in all operating countries, and intellectual property litigation is costly - The company relies on intellectual property to protect its brands but may not establish trademark rights in all operating countries, and intellectual property litigation is costly[139](index=139&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - Failure by franchisees to adhere to quality and trademark usage standards could harm brand reputation[143](index=143&type=chunk) - The company may face third-party infringement claims or challenges to intellectual property validity, leading to costs and operational disruptions[144](index=144&type=chunk)[145](index=145&type=chunk) - Heavy reliance on information systems and technology, including third-party and open-source software, along with cybersecurity incidents and evolving privacy regulations, could lead to operational disruptions, data breaches, increased costs, and reputational damage[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[151](index=151&type=chunk)[153](index=153&type=chunk)[156](index=156&type=chunk)[159](index=159&type=chunk) [Risks Relating to the Franchisees](index=28&type=section&id=Risks%20Relating%20to%20the%20Franchisees) The company heavily relies on the operational and financial success of its franchisees, whose defaults, non-compliance with standards, unwillingness to support marketing initiatives, or inability to obtain financing could adversely affect the company's revenue, brand reputation, and financial condition - The company heavily relies on the operational and financial success of its franchisees, whose defaults or non-compliance with standards could harm the company's business and brand[160](index=160&type=chunk)[170](index=170&type=chunk) - Termination or non-renewal of franchise agreements may result in reduced franchise payments or additional expenses[163](index=163&type=chunk)[164](index=164&type=chunk) - Franchisees may face challenges in developing and constructing locations, including financing, site selection, and compliance issues[169](index=169&type=chunk) [Risks Related to our Indebtedness](index=29&type=section&id=Risks%20Related%20to%20our%20Indebtedness) The company carries a substantial amount of debt, totaling approximately $3 billion outstanding as of December 30, 2023, which may limit access to additional financing, dedicate a significant portion of cash flow to debt service, and increase vulnerability to adverse economic conditions 2023 Debt Situation | Metric | Amount (USD) | | :--- | :--- | | Total outstanding debt as of December 30, 2023 | Approximately $3 billion | - High debt levels may limit the company's ability to obtain additional financing, dedicate a significant portion of cash flow to debt service, and increase vulnerability to adverse economic conditions[174](index=174&type=chunk) - Debt agreements contain restrictive covenants, such as debt service coverage ratios and financial maintenance covenants, whose violation could lead to default and cash flow restrictions[176](index=176&type=chunk)[182](index=182&type=chunk) [Risks Related to Ownership of Our Common Stock](index=31&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) The company's common stock price may fluctuate significantly due to various factors, including operating and financial performance, market reactions, competitor actions, economic conditions, and analyst expectations - The company's common stock price may fluctuate significantly due to operating performance, market reactions, competition, economic conditions, and analyst expectations[183](index=183&type=chunk) - As a holding company, the company relies on subsidiary dividends to meet its obligations, and subsidiary debt agreements may restrict dividend capacity[186](index=186&type=chunk) - The company is required to make substantial payments under the Tax Receivable Agreement, with estimated future payments totaling **$160 million to $180 million**, which may accelerate upon tax adjustments or change of control[187](index=187&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk) - Major shareholders, holding approximately **62% of common stock** as of February 26, 2024, exert significant influence over the company, potentially affecting director elections and major corporate transactions[197](index=197&type=chunk) - As a "controlled company," the company is exempt from certain Nasdaq corporate governance requirements, potentially leading to insufficient shareholder protection[199](index=199&type=chunk) - The company's certificate of incorporation and Delaware law may deter or prevent acquisitions and include provisions waiving certain corporate opportunities, potentially affecting shareholders' ability to receive a premium[200](index=200&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[207](index=207&type=chunk) [Unresolved Staff Comments](index=36&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments in this report [Cybersecurity](index=36&type=section&id=Item%201C.%20Cybersecurity) The company has established a cybersecurity program designed to protect company and customer information from cyber threats, implemented and monitored by a team led by the Chief Information Security Officer (CISO), and overseen by the Board of Directors and its Audit Committee - The company has established a cybersecurity program aimed at protecting information from cyber threats[211](index=211&type=chunk) - The cybersecurity team, led by the Chief Information Security Officer (CISO), is responsible for implementing, monitoring, and maintaining cybersecurity and data protection practices[212](index=212&type=chunk) - The Board of Directors and its Audit Committee oversee the company's enterprise risk management process, including cybersecurity risk management[213](index=213&type=chunk) - The company employs a defense-in-depth approach and has a cybersecurity incident response plan (IRP) to investigate, contain, document, and mitigate incidents[214](index=214&type=chunk)[215](index=215&type=chunk) [Properties](index=37&type=section&id=Item%202.%20Properties) As of December 30, 2023, the company operated 4,988 company-operated, franchised, and independently operated locations, owning 175 company-operated and 99 independently operated locations, and leasing 1,110 company-operated locations, 618 independently operated locations, 22 distribution centers, and 15 offices and training centers Locations and Properties as of December 30, 2023 | Type | Count | | :--- | :--- | | Total Locations | 4,988 | | Company-Operated Locations (Owned) | 175 | | Independently Operated Locations (Owned) | 99 | | Company-Operated Locations (Leased) | 1,110 | | Independently Operated Locations (Leased) | 618 | | Distribution Centers (Leased) | 22 | | Offices and Training Centers (Leased) | 15 | [Legal Proceedings](index=37&type=section&id=Item%203.%20Legal%20Proceedings) This information is provided in Note 19 to the financial statements in Form 10-K - Legal proceedings information is contained in Note 19 to the financial statements[218](index=218&type=chunk) [Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=38&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock has been listed on the Nasdaq Global Select Market since its initial public offering on January 14, 2021, with 53 record holders as of February 26, 2024, and no current plans to pay cash dividends in the foreseeable future - The company's common stock has been listed on the Nasdaq Global Select Market under the ticker "DRVN" since January 14, 2021[222](index=222&type=chunk) [Market Information](index=38&type=section&id=Market%20Information) The company's common stock has been listed on the Nasdaq Global Select Market under the ticker symbol "DRVN" since its initial public offering on January 14, 2021 - The company's common stock has been listed on the Nasdaq Global Select Market under the ticker "DRVN" since January 14, 2021[222](index=222&type=chunk) [Holders](index=38&type=section&id=Holders) As of February 26, 2024, the company's common stock had 53 record holders Shareholder Count as of February 26, 2024 | Metric | Count | | :--- | :--- | | Number of record shareholders | 53 | [Stock Performance Graph](index=38&type=section&id=Stock%20Performance%20Graph) The company provides a comparative chart of cumulative total shareholder return for its common stock against the S&P Midcap 400 Index and the S&P Retailing Industry Group Index from January 15, 2021, to December 30, 2023, indicating underperformance against both benchmarks during this period Cumulative Total Shareholder Return (January 15, 2021 = $100) | Date | Driven Brands Holdings Inc. ($) | S&P Midcap 400 Index ($) | S&P Retailing Industry Group Index ($) | | :--- | :--- | :--- | :--- | | 1/15/21 | 100.00 | 100.00 | 100.00 | | 12/30/23 | 53.41 | 120.14 | 112.64 | [Dividend policy](index=39&type=section&id=Dividend%20policy) The company currently does not intend to pay cash dividends in the foreseeable future, with future dividend decisions subject to the Board of Directors' discretion and various financial factors - The company currently does not intend to pay cash dividends in the foreseeable future[226](index=226&type=chunk) - Future dividend decisions will depend on the Board's discretion, considering factors such as earnings, cash flow, capital requirements, debt levels, and legal restrictions[226](index=226&type=chunk) [Reserved](index=39&type=section&id=Item%206.%20Reserved) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses Driven Brands Holdings Inc.'s financial condition and operating results as of December 30, 2023, highlighting a 13% net revenue growth and 12% system-wide sales growth in 2023, but also a net loss of $745 million due to $122 million in asset impairment and $851 million in goodwill impairment from a strategic review of U.S. car wash operations 2023 Fiscal Year Key Financial Overview | Metric | 2023 (million USD) | 2022 (million USD) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | 2,300 | 2,033 | +13% | | System-Wide Sales | 6,300 | 5,600 | +12% | | Net Income/(Loss) | (745) | 43 | -1823% | | Adjusted Net Income | 142 | 197 | -28% | | Adjusted EBITDA | 517 | 499 | +4% | - In 2023, the company conducted a strategic review of its U.S. car wash business, resulting in **$122 million in asset impairment** and **$851 million in goodwill impairment**, leading to the closure of 29 locations and a halt in new company-operated store openings[231](index=231&type=chunk)[232](index=232&type=chunk) [Overview](index=40&type=section&id=Overview) Driven Brands Holdings Inc., North America's largest automotive services company, achieved a 13% net revenue growth to $2.3 billion and a 12% system-wide sales growth to $6.3 billion in 2023, despite recording $122 million in asset impairment and $851 million in goodwill impairment due to a strategic review of its U.S. car wash business 2023 Fiscal Year Financial Overview | Metric | Amount (USD) | | :--- | :--- | | Net Revenue | $2.3 billion (13% growth) | | System-Wide Sales | $6.3 billion (12% growth) | - In the third quarter of 2023, the company's strategic review of its U.S. car wash business resulted in **$122 million in asset impairment** and **$851 million in goodwill impairment**[231](index=231&type=chunk)[232](index=232&type=chunk) - Management approved the closure of **29 U.S. car wash locations**, halted new store openings, and closed **22 U.S. glass locations**[231](index=231&type=chunk)[233](index=233&type=chunk) [2023 Highlights and Key Performance Indicators](index=40&type=section&id=2023%20Highlights%20and%20Key%20Performance%20Indicators) In 2023, the company's net revenue grew by 13% to $2.3 billion, with same-store sales increasing by 7%, but it reported a net loss of $745 million due to impairment charges, a significant decline from the prior year's net income of $43 million 2023 Key Performance Indicators | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $2.3 billion | - | 13% growth | | Consolidated Same-Store Sales | 7% | - | 7% growth | | Net New Units | 183 | - | - | | Net Income/(Loss) | ($745 million) | $43 million | Net Loss | | Adjusted Net Income | $142 million | $197 million | 28% decrease | | Adjusted EBITDA | $517 million | $499 million | 4% growth | [Key Performance Indicators (Detailed Table)](index=41&type=section&id=Key%20Performance%20Indicators) The company utilizes system-wide sales, unit count, and same-store sales as key metrics to evaluate business and segment performance, with total system-wide sales reaching $6.28 billion and total units at 4,988 in 2023, alongside a 7.4% consolidated same-store sales growth - Key performance indicators include system-wide sales, unit count, and same-store sales, used to evaluate business and segment performance[236](index=236&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk) 2023 and 2022 Key Performance Indicators | Metric | 2023 (thousand USD) | 2022 (thousand USD) | | :--- | :--- | :--- | | **System-Wide Sales** | | | | Maintenance | 1,899,813 | 1,616,100 | | Car Wash | 591,752 | 585,659 | | Paint, Collision & Glass | 3,389,565 | 2,958,971 | | Platform Services | 402,598 | 445,726 | | **Total System-Wide Sales** | **6,283,728** | **5,606,456** | | **Unit Count** | | | | Maintenance | 1,786 | 1,645 | | Car Wash | 1,108 | 1,111 | | Paint, Collision & Glass | 1,888 | 1,846 | | Platform Services | 206 | 203 | | **Total Unit Count** | **4,988** | **4,805** | | **Same-Store Sales (%)** | | | | Maintenance | 9.2% | 16.1% | | Car Wash | (5.6%) | (3.9%) | | Paint, Collision & Glass | 11.4% | 17.1% | | **Total Consolidated Same-Store Sales** | **7.4%** | **14.1%** | | **Segment Adjusted EBITDA** | | | | Maintenance | 329,498 | 258,470 | | Car Wash | 128,996 | 175,326 | | Paint, Collision & Glass | 140,569 | 134,818 | | Platform Services | 80,492 | 72,383 | | **Adjusted EBITDA as a % of Net Revenue** | | | | Maintenance | 34.3% | 32.3% | | Car Wash | 21.6% | 29.6% | | Paint, Collision & Glass | 28.1% | 32.8% | | Platform Services | 37.3% | 36.9% | | **Total Consolidated** | **22.4%** | **24.5%** | [Reconciliation of Non-GAAP Financial Information](index=43&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Information) The company uses non-GAAP financial measures such as Adjusted Net Income and Adjusted EBITDA to supplement GAAP financial statements, providing additional useful information for financial performance and management decision-making, calculated by adjusting GAAP net income for specific items like acquisition-related costs and impairment charges - The company uses non-GAAP financial measures like Adjusted Net Income and Adjusted EBITDA to provide additional financial performance information and aid management decisions[242](index=242&type=chunk)[243](index=243&type=chunk) Reconciliation of Net (Loss) Income to Adjusted Net Income and Adjusted Diluted Earnings Per Share | Metric (thousand USD, except per share data) | December 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Net (Loss) Income | (744,962) | 43,173 | | Adjusted Net Income | 142,461 | 196,782 | | Diluted Earnings Per Share | (4.53) | 0.25 | | Adjusted Diluted Earnings Per Share | 0.85 | 1.16 | Reconciliation of Net (Loss) Income to Adjusted EBITDA | Metric (thousand USD) | December 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Net (Loss) Income | (744,962) | 43,173 | | EBITDA | (508,159) | 329,592 | | Adjusted EBITDA | 516,887 | 498,806 | [Results of Operations for the Year Ended December 30, 2023 Compared to the Year Ended December 31, 2022](index=47&type=section&id=Results%20of%20Operations%20for%20the%20Year%20Ended%20December%2030,%202023%20Compared%20to%20the%20Year%20Ended%20December%2031,%202022) In 2023, the company reported a net loss of $745 million, a significant decrease from a net income of $43 million in 2022, primarily due to an $851 million goodwill impairment and $133 million in asset impairment Comparison of Net Revenue, 2023 vs. 2022 (thousand USD) | Revenue Category | December 30, 2023 | % of Net Revenue | December 31, 2022 | % of Net Revenue | | :--- | :--- | :--- | :--- | :--- | | Royalty and Fee Revenue | 190,367 | 8.3% | 171,734 | 8.5% | | Company-Operated Store Sales | 1,526,353 | 66.2% | 1,324,408 | 65.1% | | Independently Operated Store Sales | 196,395 | 8.5% | 195,157 | 9.6% | | Advertising Fund Contributions | 98,850 | 4.3% | 87,750 | 4.3% | | Supply and Other Revenue | 292,064 | 12.7% | 254,145 | 12.5% | | **Total Net Revenue** | **2,304,029** | **100.0%** | **2,033,194** | **100.0%** | Comparison of Operating Expenses, 2023 vs. 2022 (thousand USD) | Expense Category | December 30, 2023 | % of Net Revenue | December 31, 2022 | % of Net Revenue | | :--- | :--- | :--- | :--- | :--- | | Company-Operated Store Expenses | 1,004,472 | 43.6% | 812,262 | 40.0% | | Independently Operated Store Expenses | 109,078 | 4.7% | 107,940 | 5.3% | | Advertising Expenses | 97,290 | 4.2% | 87,986 | 4.3% | | Supply and Other Expenses | 158,436 | 6.9% | 145,481 | 7.2% | | Selling, General and Administrative Expenses | 443,112 | 19.2% | 383,478 | 18.9% | | Acquisition-Related Costs | 13,174 | 0.6% | 15,304 | 0.8% | | Store Opening Costs | 5,831 | 0.3% | 2,878 | 0.1% | | Depreciation and Amortization | 175,296 | 7.6% | 147,156 | 7.2% | | Goodwill Impairment | 850,970 | 36.9% | — | 0.0% | | Trade Name Impairment | — | 0.0% | 125,450 | 6.2% | | Asset Impairment and Lease Terminations | 132,903 | 5.8% | 5,655 | 0.3% | | **Total Operating Expenses** | **2,990,562** | **129.8%** | **1,833,590** | **90.2%** | Comparison of Interest Expense, 2023 vs. 2022 (thousand USD) | Metric | December 30, 2023 | % of Net Revenue | December 31, 2022 | % of Net Revenue | | :--- | :--- | :--- | :--- | :--- | | Net Interest Expense | 164,196 | 7.1% | 114,096 | 5.6% | Comparison of Income Tax (Benefit) Expense, 2023 vs. 2022 (thousand USD) | Metric | December 30, 2023 | % of Net Revenue | December 31, 2022 | % of Net Revenue | | :--- | :--- | :--- | :--- | :--- | | Income Tax (Benefit) Expense | (102,689) | (4.5%) | 25,167 | 1.2% | [Segment Results of Operations for the Year Ended December 30, 2023 Compared to the Year Ended December 31, 2022](index=51&type=section&id=Segment%20Results%20of%20Operations%20for%20the%20Year%20Ended%20December%2030,%202023%20Compared%20to%20the%20Year%20Ended%20December%2031,%202022) In 2023, the Maintenance segment saw a 20% net revenue increase and a 27% adjusted EBITDA growth, driven by same-store sales and new unit openings, while the Car Wash segment's net revenue grew 1% but adjusted EBITDA declined 26% due to lower same-store sales and increased operating costs Comparison of Segment Net Revenue and Adjusted EBITDA, 2023 vs. 2022 (thousand USD) | Segment | 2023 Net Revenue | 2022 Net Revenue | Net Revenue Change (%) | 2023 Adjusted EBITDA | 2022 Adjusted EBITDA | EBITDA Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Maintenance | 960,400 | 799,862 | +20% | 329,498 | 258,470 | +27% | | Car Wash | 597,744 | 592,720 | +1% | 128,996 | 175,326 | -26% | | Paint, Collision & Glass | 500,374 | 410,664 | +22% | 140,569 | 134,818 | +4% | | Platform Services | 216,004 | 196,373 | +10% | 80,492 | 72,383 | +11% | - The Car Wash segment faced soft demand, increased competition, and unfavorable weather patterns, leading to a decline in same-store sales and potential future impairments[281](index=281&type=chunk) - The U.S. glass business within the Paint, Collision & Glass segment experienced slower-than-expected integration, resulting in lower-than-anticipated revenue and cost efficiencies, leading to the closure of **22 locations**[286](index=286&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=55&type=section&id=Financial%20Condition,%20Liquidity%20and%20Capital%20Resources) As of December 30, 2023, the company's total liquidity was $319 million, comprising $177 million in cash and cash equivalents, and $91 million and $52 million in undrawn credit facilities, with existing liquidity expected to meet operational, acquisition, and capital expenditure needs for the next 12 months Liquidity as of December 30, 2023 (million USD) | Metric | Amount | | :--- | :--- | | Total Liquidity | 319 | | Cash and Cash Equivalents | 177 | | 2019 VFN Undrawn Capacity | 91 | | Revolving Credit Facility Undrawn Capacity | 52 | Cash Flow Comparison, 2023 vs. 2022 (thousand USD) | Cash Flow Category | December 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | 235,167 | 197,176 | | Net cash used in investing activities | (451,407) | (840,280) | | Net cash provided by financing activities | 170,699 | 343,368 | | Effect of exchange rate changes | 484 | (2,283) | | **Net change in cash, cash equivalents, etc.** | **(45,057)** | **(302,019)** | - The company expects existing liquidity to be sufficient to meet operational, acquisition, and capital expenditure needs for the next **12 months**[292](index=292&type=chunk) - The company has approximately **$3 billion in long-term debt** and interest obligations, along with **$2.2 billion in operating lease commitments**[296](index=296&type=chunk) - The company expects to pay **$160 million to $180 million** to pre-IPO shareholders under the Tax Receivable Agreement, with **$25 million** paid in January 2024[299](index=299&type=chunk) [Critical Accounting Policies and Estimates](index=57&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company relies on several critical accounting policies and estimates in preparing its financial statements, including impairment assessments for goodwill and other indefinite-lived intangible assets, asset valuations in business combinations, long-lived asset impairment tests, income tax calculations, and lease accounting - Goodwill and indefinite-lived intangible assets (primarily trade names) are assessed for impairment annually or more frequently if impairment indicators arise[305](index=305&type=chunk)[306](index=306&type=chunk) - In the third quarter of 2023, goodwill for the U.S. Car Wash reporting unit was fully impaired by **$851 million**[308](index=308&type=chunk) - In business combinations, acquired assets and liabilities are measured at fair value, with significant judgment required for intangible asset valuations[314](index=314&type=chunk) - Impairment tests for long-lived assets and finite-lived intangible assets are based on estimated future cash flows, involving assumptions about sales, cash flows, and discount rates[315](index=315&type=chunk)[316](index=316&type=chunk) - Income tax accounting involves estimates for deferred tax assets and liabilities, effective tax rates, and uncertain tax positions[317](index=317&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk) - In lease accounting, determining lease terms and incremental borrowing rates requires management judgment[322](index=322&type=chunk)[323](index=323&type=chunk) - Fair value estimation for equity-based compensation uses the Black-Scholes model, involving assumptions about expected life, risk-free interest rates, and volatility[326](index=326&type=chunk)[327](index=327&type=chunk) [Application of New Accounting Standards](index=61&type=section&id=Application%20of%20New%20Accounting%20Standards) The company is evaluating the impact of ASU 2023-07 (Improvements to Reportable Segment Disclosures) and ASU 2023-09 (Improvements to Income Tax Disclosures) on future financial statements and related disclosures, while ASU 2020-04 (Reference Rate Reform) became effective on July 1, 2023, converting LIBOR loans to SOFR without significant impact - ASU 2020-04 (Reference Rate Reform) became effective on July 1, 2023, converting LIBOR loans to SOFR without significant impact[330](index=330&type=chunk)[338](index=338&type=chunk) - The company is evaluating the impact of ASU 2023-07 (Improvements to Reportable Segment Disclosures) and ASU 2023-09 (Improvements to Income Tax Disclosures) on future financial statements and disclosures[339](index=339&type=chunk)[340](index=340&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk, commodity risk, and foreign currency risk, with interest rate risk primarily from floating-rate debt, where a 1% change would result in a $7 million change in interest expense - The company faces interest rate risk, commodity risk, and foreign currency risk[331](index=331&type=chunk) - Interest rate risk primarily stems from floating-rate debt; as of December 30, 2023, a **1% change in interest rates** would result in a **$7 million change in interest expense**[333](index=333&type=chunk) - Commodity risk is mitigated through contract negotiations and cost pass-through, while foreign currency risk is hedged with cross-currency interest rate swaps and forward contracts[336](index=336&type=chunk)[337](index=337&type=chunk) - Inflation did not significantly impact the company's results in 2023 but could have an adverse effect in the future[338](index=338&type=chunk) [Financial Statements, Supplementary Data, and Reports of Independent Registered Public Accounting Firms](index=62&type=section&id=Item%208.%20Financial%20Statements,%20Supplementary%20Data,%20and%20Reports%20of%20Independent%20Registered%20Public%20Accounting%20Firms) This section contains the company's consolidated financial statements as of December 30, 2023, and December 31, 2022, including statements of operations, comprehensive income (loss), balance sheets, shareholders'/members' equity, and cash flows, along with related notes and independent registered public accounting firms' audit reports - This section contains the company's consolidated financial statements and notes as of December 30, 2023, and December 31, 2022[339](index=339&type=chunk) - Independent registered public accounting firms (PricewaterhouseCoopers LLP and GRANT THORNTON LLP) issued audit opinions on the financial statements and internal control effectiveness[342](index=342&type=chunk)[343](index=343&type=chunk)[357](index=357&type=chunk) - Key audit matters highlighted in the reports include goodwill impairment assessments, specifically for the Maintenance-Repair, U.S. Car Wash, and International Car Wash reporting units[351](index=351&type=chunk) [Index to Consolidated Financial Statements](index=62&type=section&id=Index%20to%20Consolidated%20Financial%20Statements) This index lists the company's consolidated financial statements and their accompanying notes, along with the reports of independent registered public accounting firms - The index includes consolidated statements of operations, comprehensive income (loss), balance sheets, shareholders'/members' equity, cash flows, and notes to the financial statements[339](index=339&type=chunk) [Report of Independent Registered Public Accounting Firm (PCAOB ID 238)](index=63&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20(PCAOB%20ID%20238)) PricewaterhouseCoopers LLP issued an unqualified opinion on the company's consolidated financial statements as of December 30, 2023, and December 31, 2022, and on the effectiveness of internal control over financial reporting as of December 30, 2023, noting that management excluded 11 businesses acquired in 2023 from its internal control assessment - PricewaterhouseCoopers LLP issued an unqualified opinion on the company's consolidated financial statements and internal control effectiveness[343](index=343&type=chunk) - Management and the auditor excluded the internal control assessment and audit of **11 businesses acquired in 2023**[347](index=347&type=chunk) - Key audit matters include goodwill impairment assessments for the Maintenance-Repair, U.S. Car Wash, and International Car Wash reporting units[351](index=351&type=chunk) [Report of Independent Registered Public Accounting Firm (PCAOB ID 248)](index=65&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20(PCAOB%20ID%20248)) GRANT THORNTON LLP issued an unqualified opinion on the company's consolidated statements of operations, comprehensive income (loss), shareholders'/members' equity, and cash flows for the period ended December 25, 2021 - GRANT THORNTON LLP issued an unqualified opinion on the company's financial statements for the period ended December 25, 2021[357](index=357&type=chunk) [Consolidated Statements of Operations for the Years Ended December 30, 2023, December 31, 2022, and December 25, 2021](index=66&type=section&id=Consolidated%20Statements%20of%20Operations%20for%20the%20Years%20Ended%20December%2030,%202023,%20December%2031,%202022,%20and%20December%2025,%202021) The consolidated statements of operations show that in 2023, the company's net revenue was $2.304 billion, but it incurred a net loss of $745 million due to an $851 million goodwill impairment and $133 million in asset impairment, compared to a net income of $43 million in 2022 Summary of Consolidated Statements of Operations (thousand USD) | Metric | December 30, 2023 | December 31, 2022 | December 25, 2021 | | :--- | :--- | :--- | :--- | | Total Net Revenue | 2,304,029 | 2,033,194 | 1,467,280 | | Total Operating Expenses | 2,990,562 | 1,833,590 | 1,290,215 | | Operating (Loss) Income | (686,533) | 199,604 | 177,065 | | Net (Loss) Income | (744,962) | 43,173 | 9,536 | | Diluted (Loss) Earnings Per Share | (4.53) | 0.25 | 0.06 | [Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 30, 2023, December 31, 2022, and December 25, 2021](index=67&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20for%20the%20Years%20Ended%20December%2030,%202023,%20December%2031,%202022,%20and%20December%25252025,%202021) The consolidated statements of comprehensive income (loss) show a comprehensive loss of $720 million in 2023, primarily due to the net loss, partially offset by gains from foreign currency translation adjustments, with comprehensive losses also recorded in 2022 and 2021 Summary of Consolidated Statements of Comprehensive Income (Loss) (thousand USD) | Metric | December 30, 2023 | December 31, 2022 | December 25, 2021 | | :--- | :--- | :--- | :--- | | Net (Loss) Income | (744,962) | 43,173 | 9,536 | | Other Comprehensive Income (Loss), Net of Tax | 24,573 | (57,428) | (21,533) | | **Total Comprehensive Loss** | **(720,389)** | **(14,255)** | **(11,997)** | [Consolidated Balance Sheets as of December 30, 2023 and December 31, 2022](index=68&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20December%2030,%202023%20and%20December%2031,%202022) The consolidated balance sheets show total assets of $5.911 billion as of December 30, 2023, a decrease from $6.500 billion at the end of 2022, primarily due to goodwill impairment and asset reclassification to assets held for sale, with total liabilities at $5.004 billion and total shareholders' equity at $907 million Summary of Consolidated Balance Sheets (thousand USD) | Metric | December 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | 5,910,804 | 6,499,898 | | Cash and Cash Equivalents | 176,522 | 227,110 | | Assets Held for Sale | 301,229 | — | | Goodwill | 1,455,946 | 2,277,065 | | Total Liabilities | 5,004,081 | 4,846,329 | | Long-Term Debt | 2,910,812 | 2,705,281 | | Total Shareholders' Equity | 906,723 | 1,653,569 | [Consolidated Statements of Shareholders' / Members' Equity for the Years Ended December 30, 2023, December 31, 2022, and December 25, 2021](index=69&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20/%20Members'%20Equity%20for%20the%20Years%20Ended%20December%2030,%202023,%20December%2031,%202022,%20and%20December%2025,%202021) The consolidated statements of shareholders' / members' equity show total shareholders' equity of $907 million as of December 30, 2023, a significant decrease from $1.654 billion at the end of 2022, primarily due to a net loss of $745 million and $50 million in stock repurchases Summary of Consolidated Statements of Shareholders' / Members' Equity (thousand USD) | Metric | December 30, 2023 | December 31, 2022 | December 25, 2021 | | :--- | :--- | :--- | :--- | | Common Stock | 1,640 | 1,674 | 1,674 | | Additional Paid-in Capital | 1,652,401 | 1,628,904 | 1,605,890 | | Retained (Deficit) Earnings | (710,087) | 84,795 | 41,607 | | Accumulated Other Comprehensive Loss | (37,875) | (62,435) | (5,028) | | Noncontrolling Interests | 644 | 631 | 1,099 | | **Total Shareholders' Equity** | **906,723** | **1,653,569** | **1,645,242** | - In 2023, the company repurchased approximately **$50 million of common stock**[369](index=369&type=chunk) [Consolidated Statements of Cash Flows for the Years Ended December 30, 2023, December 31, 2022, and December 25, 2021](index=70&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Years%20Ended%20December%2030,%202023,%20December%2031,%202022,%20and%20December%2025,%202021) The consolidated statements of cash flows show that in 2023, operating activities provided $235 million in cash, investing activities used $451 million, and financing activities provided $171 million, reflecting an increase in operating cash flow and a decrease in cash used in investing and financing activities compared to 2022 Summary of Consolidated Statements of Cash Flows (thousand USD) | Cash Flow Category | December 30, 2023 | December 31, 2022 | December 25, 2021 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | 235,167 | 197,176 | 283,827 | | Net cash used in investing activities | (451,407) | (840,280) | (814,936) | | Net cash provided by financing activities | 170,699 | 343,368 | 885,536 | | Net change in cash, cash equivalents, etc. | (45,057) | (302,019) | 354,985 | [Notes to the Consolidated Financial Statements](index=72&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed notes to the company's consolidated financial statements, covering business description, significant accounting policies, acquisitions and dispositions, accounts receivable, property and equipment, goodwill and intangible assets, asset impairment, revenue from customer contracts, long-term debt, segment information, leases, derivatives, related-party transactions, employee benefit plans, shareholders' equity, equity agreements and incentive plans, earnings per share, income taxes, and commitments and contingencies [Note 1—Description of Business](index=72&type=section&id=Note%201%E2%80%94Description%20of%20Business) Driven Brands Holdings Inc. is North America's largest automotive services company, operating approximately 5,000 locations under various well-known brands, which completed its initial public offering (IPO) in January 2021 to repay debt - Driven Brands is North America's largest automotive services company, with approximately **5,000 locations** and multiple well-known brands[375](index=375&type=chunk) - The company completed its IPO in January 2021, raising **$761 million** to repay debt and repurchase stock[376](index=376&type=chunk)[377](index=377&type=chunk) - The company entered into a Tax Receivable Agreement with pre-IPO shareholders, with estimated future payments of **$160 million to $180 million**, and **$25 million** paid in January 2024[380](index=380&type=chunk)[191](index=191&type=chunk) - A **88,990-for-1 stock split** was implemented in January 2021, along with an increase in authorized share capital[381](index=381&type=chunk) [Note 2— Summary of Significant Accounting Policies](index=73&type=section&id=Note%202%E2%80%94%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the significant accounting policies used in preparing the company's consolidated financial statements, including fiscal year, basis of presentation, use of estimates, cash and cash equivalents, restricted cash, accounts receivable, inventory, property and equipment, leases, long-lived asset impairment, goodwill and indefinite-lived intangible assets, revenue recognition, and fair value of financial instruments - The company operates on a **52 or 53-week fiscal year**, ending on the last Saturday in December[382](index=382&type=chunk) - Financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and include management's estimates and assumptions regarding valuations, income taxes, and credit losses[383](index=383&type=chunk)[385](index=385&type=chunk) - Restricted cash primarily includes franchisee advertising funds and collateral for letters of credit[387](index=387&type=chunk) - Goodwill and indefinite-lived intangible assets are tested for impairment annually, or more frequently if impairment indicators arise, primarily using income and market approaches for valuation[402](index=402&type=chunk)[403](index=403&type=chunk) - Finite-lived intangible assets are amortized on a straight-line basis and tested for recoverability if impairment indicators arise[408](index=408&type=chunk) - In 2023, the company reclassified **$301 million in assets** from property and equipment to assets held for sale[410](index=410&type=chunk) - Revenue recognition policies cover royalties, company-operated store sales, independently operated store sales, advertising contributions, and supply and other revenue[413](index=413&type=chunk)[414](index=414&type=chunk)[416](index=416&type=chunk)[417](index=417&type=chunk)[419](index=419&type=chunk) - The company uses derivative financial instruments to hedge interest rate and foreign currency risks, not for speculative purposes[412](index=412&type=chunk) - The company is evaluating the impact of ASU 2023-07 and ASU 2023-09 on future financial statements and disclosures[339](index=339&type=chunk)[340](index=340&type=chunk) [Note 3—Acquisitions and Dispositions](index=80&type=section&id=Note%203%E2%80%94Acquisitions%20and%20Dispositions) The company expands its business scope and product offerings through strategic acquisitions, completing 11 acquisitions in 2023 across the Maintenance, Car Wash, and Paint/Collision/Glass segments for a total cash consideration of approximately $30 million 2023 Acquisitions Overview (thousand USD) | Segment | Number of Acquisitions | Net Cash Consideration | | :--- | :--- | :--- | | Maintenance | 6 | 8,108 | | Car Wash | 3 | 15,293 | | Paint, Collision & Glass | 2 | 4,947 | | **Total** | **11** | **28,348** | 2022 Acquisitions Overview (thousand USD) | Segment | Number of Acquisitions | Net Cash Consideration | | :--- | :--- | :--- | | Car Wash | 22 | 350,000 | | Maintenance | 6 | 25,000 | | Paint, Collision & Glass | 10 | 406,000 | | **Total** | **38** | **781,000** | - In 2022, the company disposed of CARSTAR franchised locations, recognizing a **$12 million gain**[463](index=463&type=chunk) [Note 4—Accounts and Notes Receivable, Net](index=86&type=section&id=Note%204%E2%80%94Accounts%20and%20Notes%20Receivable,%20Net) As of December 30, 2023, the company's total accounts and notes receivable amounted to $163 million, with an allowance for credit losses of $12 million, and net bad debt expense of $1.9 million in 2023 Accounts and Notes Receivable, Net (thousand USD) | Metric | December 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total current accounts and notes receivable | 163,000 | 198,000 | | Current allowance for credit losses | 12,000 | 18,000 | | Total non-current notes receivable | 4,000 | 4,000 | | Non-current allowance for credit losses | <1,000 | 1,000 | Changes in Allowance for Credit Losses (thousand USD) | Metric | Amount | | :--- | :--- | | Balance as of December 31, 2022 | 19,606 | | Bad debt expense, net | 1,938 | | Write-offs of uncollectible receivables | (9,612) | | **Balance as of December 30, 2023** | **11,932** | [Note 5—Property and Equipment](index=87&type=section&id=Note%205%E2%80%94Property%20and%20Equipment) As of December 30, 2023, the company's net property and equipment totaled $1.438 billion, a decrease from $1.546 billion at the end of 2022, primarily due to the reclassification of $301 million in assets to assets held for sale Property and Equipment, Net (thousand USD) | Category | December 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Buildings | 644,692 | 641,520 | | Land | 138,240 | 127,613 | | Machinery and Equipment | 482,132 | 375,595 | | Construction in Progress | 129,075 | 313,821 | | **Total Property and Equipment, Net** | **1,438,496** | **1,545,738** | - In 2023, the company reclassified **$301 million in assets** from property and equipment to assets held for sale[467](index=467&type=chunk) Depreciation Expense (thousand USD) | Year | Amount | | :--- | :--- | | 2023 | 147,000 | | 2022 | 120,000 | | 2021 | 91,000 | [Note 6—Goodwill and Other Intangible Assets](index=87&type=section&id=Note%206%E2%80%94Goodwill%20and%20Other%20Intangible%20Assets) As of December 30, 2023, the company's goodwill balance was $1.456 billion, a significant decrease from $2.277 billion at the end of 2022, primarily due to an $851 million goodwill impairment recorded in the Car Wash segment Changes in Goodwill (thousand USD) | Segment | Balance as of December 31, 2022 | 2023 Impairment | Balance as of December 30, 2023 | | :--- | :--- | :--- | :--- | | Maintenance | 477,408 | — | 482,025 | | Car Wash | 1,051,606 | (850,970) | 217,440 | | Paint, Collision & Glass | 594,512 | — | 602,031 | | Platform Services | 153,539 | — | 154,450 | | **Total** | **2,277,065** | **(850,970)** | **1,455,946** | Intangible Assets, Net (thousand USD) | Category | Net Carrying Amount as of December 30, 2023 | Net Carrying Amount as of December 31, 2022 | | :--- | :--- | :--- | | Finite-lived amortizable intangible assets | 277,009 | 303,759 | | Indefinite-lived intangible assets (trade names) | 462,393 | 462,144 | | **Total** | **739,402** | **765,903** | Amortization Expense (thousand USD) | Year | Amount | | :--- | :--- | | 2023 | 29,000 | | 2022 | 27,000 | | 2021 | 19,000 | [Note 7—Asset Impairment Charges](index=88&type=section&id=Note%207%E2%80%94Asset%20Impairment%20Charges) In 2023, following a strategic review of its U.S. car wash business, the company recorded $122 million in impairment charges for property and equipment and right-of-use assets, reclassifying $301 million in assets to assets held for sale - In 2023, following a strategic review of its U.S. car wash business, the company recorded **$122 million in impairment charges** for property and equipment and right-of-use assets, and reclassified **$301 million in assets** to assets held for sale[471](index=471&type=chunk)[472](index=472&type=chunk) - In 2023, the U.S. Car Wash reporting unit recorded a **full goodwill impairment of $851 million**[473](index=473&type=chunk) - In 2022, the company recorded a **$125 million trade name impairment** due to the decision to rebrand most U.S. car wash locations to "Take 5 Car Wash," discontinuing the use of certain indefinite-lived trade names[475](index=475&type=chunk) [Note 8— Revenue from Contracts with Customers](index=89&type=section&id=Note%208%E2%80%94%20Revenue%20from%20Contracts%20with%20Customers) The company records contract assets to reflect incremental costs of obtaining customer contracts, totaling $6 million as of December 30, 2023, while contract liabilities, primarily deferred franchise and development fees, amounted to $31 million Contract Assets and Liabilities (thousand USD) | Metric | December 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Capitalized contract acquisition costs (deferred commissions) | 6,000 | 7,000 | | Contract liabilities (deferred revenue) | 31,000 | 29,000 | - In 2023, the company recognized **$4 million in revenue** related to contract liabilities[478](index=478&type=chunk) [Note 9—Long-term Debt](index=90&type=section&id=Note%209%E2%80%94Long-term%20Debt) As of December 30, 2023, the company's total long-term debt amounted to $2.978 billion, primarily comprising seven series of securitized senior notes, a revolving credit facility, and term loans, with all debt covenants in compliance Long-Term Debt Composition (thousand USD) | Debt Type | December 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Securitized Senior Notes (Seven Series) | 2,253,189 | 2,296,089 | | Revolving Credit Facility | 248,000 | — | | Term Loans | 491,250 | 496,250 | | Other Debt (primarily finance leases) | 25,557 | 51,836 | | **Total Debt** | **2,977,996** | **2,784,175** | | Less: Debt Issuance Costs | (34,511) | (45,908) | | Less: Current Portion of Long-Term Debt | (32,673) | (32,986) | | **Long-Term Debt, Net** | **2,910,812** | **2,705,281** | Future Debt Repayment Schedule (thousand USD) | Year | Amount | | :--- | :--- | | 2024 | 32,673 | | 2025 | 285,437 | | 2026 | 807,432 | | 2027 | 529,472 | | 2028 | 1,313,350 | | Thereafter | 9,632 | | **Total Future Repayments** | **2,977,996** | - As of December 30, 2023, the company was in compliance with all covenants in its debt agreements[496](index=496&type=chunk) [Note 10—Segment Information](index=92&type=section&id=Note%2010%E2%80%94Segment%20Information) The company's business is organized into four reportable segments: Maintenance, Car Wash, Paint/Collision/Glass, and Platform Services, with management assessing segment performance based on Adjusted EBITDA - The company has four reportable segments: Maintenance, Car Wash, Paint/Collision/Glass, and Platform Services[498](index=498&type=chunk) 2023 Segment Net Revenue and Adjusted EBITDA (thousand USD) | Segment | Net Revenue | Adjusted EBITDA | | :--- | :--- | :--- | | Maintenance | 960,400 | 329,498 | | Car Wash | 597,744 | 128,996 | | Paint, Collision & Glass | 500,374 | 140,569 | | Platform Services | 216,004 | 80,492 | | Corporate and Other | 29,507 | (156,837) | | **Total** | **2,304,029** | **522,718** | Total Net Revenue by Geographic Area (thousand USD) | Region | December 30, 2023 | | :--- | :--- | | United States | 1,967,635 | | Canada | 134,038 | | Rest of World | 202,356 | | **Total** | **2,304,029** | Capital Expenditures by Segment (thousand USD) | Segment | 2023 | | :--- | :--- | | Maintenance | 112,701 | | Car Wash | 438,367 | | Paint, Collision & Glass | 14,089 | | Platform Ser

Financial Data and Key Metrics Changes - For fiscal year 2023, the company achieved 13% revenue growth compared to the prior year, supported by 7% same-store sales growth and 4% net store growth, with adjusted diluted EPS of $0.93 [9][36] - System-wide sales for the year were $6.3 billion, up 12.1% year-over-year, driven by the addition of 183 net new stores and 7.4% same-store sales growth [36] - Reported revenue for the year was $2.3 billion, an increase of 13.3%, with adjusted EBITDA of $535.1 million, reflecting a 4.2% increase [36][41] - In Q4 2023, system-wide sales were $1.5 billion, representing a 3% increase from the prior year, with reported revenue of $554 million, an increase of 2.6% [43] Business Line Data and Key Metrics Changes - Take 5 Oil Change delivered over 9% revenue growth in Q4, with same-store sales growth of about 7% and adjusted EBITDA growth of almost 14% [19] - The Car Wash segment experienced a same-store sales decline of 3.3% in Q4, with total segment revenue decreasing by 1% [46] - The Platform Services segment saw revenue increase by 5.6% year-over-year, with adjusted EBITDA margin decreasing to 36.7% from 37.6% in Q4 2022 [47] Market Data and Key Metrics Changes - The company noted that January 2024 sales were impacted by multiple storms, flooding, and freezing temperatures across many markets, which could negatively affect Q1 performance [13] - The US Glass business integration is complete, and the focus is now on improving performance and positioning for future growth [15][96] Company Strategy and Development Direction - The company aims to focus on delivering guidance, reducing debt, and active portfolio management to ensure the right assets are in place for short, medium, and long-term goals [15] - The company has a pipeline of over 1,000 stores expected to open in the coming years, with approximately 75% of those being franchised [11] - The company plans to hold off on opening new US Car Wash stores until the base business meets performance expectations [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the overall health of retail customers, noting no significant stress observed in the US consumer market [121] - The company expects same-store sales growth of 3% to 5% for 2024, primarily driven by the maintenance segment, with net store growth of approximately 205 to 220 stores [49] - Management anticipates that adjusted EBITDA will peak in Q2 and then decline sequentially throughout the remainder of the year [59] Other Important Information - The company will no longer add back straight-line rent to arrive at adjusted EBITDA, which will impact the reported figures moving forward [31] - The company expects to generate approximately $235 million in cash flow from operating activities, an increase of 19.3% compared to 2022 [42] Q&A Session Summary Question: Can you break down the 2024 EBITDA guidance? - Management indicated that most growth is expected from the maintenance segment, with US Car Wash and US Glass also contributing as the year progresses [64] Question: What is the expected capital from monetizing the Car Wash pipeline? - Management expects to generate north of $100 million from divesting pipeline sites throughout the year [67] Question: Can you elaborate on the maintenance segment's profitability? - Management highlighted effective labor management and commodity cost control as key drivers of profitability in the maintenance segment [72] Question: What is the outlook for the Car Wash segment? - Management is focused on maintaining variable cost structure improvements and driving predictable revenue in 2024 [86] Question: How is membership penetration tracking in the Car Wash business? - Management reported growth in membership and is focused on optimizing the membership structure for better performance [94] Question: What is the path forward for the Glass segment? - Management is optimistic about growth in retail, commercial, and insurance sides of the Glass business, particularly with regional insurance opportunities [96]

Driven Brands Holdings Inc. (DRVN) reported $553.68 million in revenue for the quarter ended December 2023, representing a year-over-year increase of 2.6%. EPS of $0.19 for the same period compares to $0.25 a year ago.The reported revenue represents a surprise of -2.26% over the Zacks Consensus Estimate of $566.46 million. With the consensus EPS estimate being $0.18, the EPS surprise was +5.56%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expec ...

Driven Brands Holdings Inc. (DRVN) came out with quarterly earnings of $0.19 per share, beating the Zacks Consensus Estimate of $0.18 per share. This compares to earnings of $0.25 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 5.56%. A quarter ago, it was expected that this company would post earnings of $0.19 per share when it actually produced earnings of $0.20, delivering a surprise of 5.26%.Over the last four quarters, th ...

Exhibit 99.1 Driven Brands Holdings Inc. Reports Fourth Quarter and Fiscal Year 2023 Results For the fiscal year, Driven Brands delivered revenue of $2.3 billion, up 13% versus the prior year. System-wide sales were $6.3 billion, up 12% versus the prior year driven by 7% same-store sales growth and 4% net store growth. The Company added 183 net new stores during fiscal 2023. During the fiscal year, the Company recognized an $851.0 million non-cash goodwill impairment in the Car Wash segment as well as $132. ...

CHARLOTTE, N.C., Feb. 6, 2024 /PRNewswire/ -- Driven Brands Holdings Inc. (NASDAQ: DRVN) will release its fourth quarter and year-end 2023 earnings before the market opens on Thursday, February 22, 2024. Following the release, management will host a conference call at 8:30 a.m. ET to review the company's financial and operating performance. The conference call will be available via live webcast on Driven Brands' Investor Relations webpage at investors.drivenbrands.com. An archived replay of the conference c ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited consolidated financial statements, management's discussion, market risk, and controls [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents unaudited consolidated financial statements, including operations, balance sheets, cash flows, and detailed notes [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net loss or income over specific periods | Metric (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 24, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 24, 2022 | | :---------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total Revenue | $581,034 | $516,594 | $1,750,352 | $1,493,541 | | Total Operating Expenses| $1,487,891 | $420,826 | $2,482,430 | $1,359,738 | | Operating (Loss) Income | $(906,857) | $95,768 | $(732,078) | $133,803 | | Net (Loss) Income | $(799,311) | $38,391 | $(731,813) | $15,775 | | Basic EPS | $(4.82) | $0.23 | $(4.40) | $0.10 | | Diluted EPS | $(4.83) | $0.23 | $(4.41) | $0.09 | - The company reported a significant **net loss of $799.3 million** for the three months ended **September 30, 2023**, compared to a **net income of $38.4 million** in the prior year, primarily due to a **goodwill impairment charge of $851.0 million** and **asset impairment charges of $111.2 million**[12](index=12&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This statement presents net income or loss and other comprehensive income or loss components | Metric (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 24, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 24, 2022 | | :---------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net (loss) income | $(799,311) | $38,391 | $(731,813) | $15,775 | | Other comprehensive loss, net | $(26,351) | $(62,452) | $(8,801) | $(110,226) | | Total comprehensive loss| $(825,662) | $(24,061) | $(740,614) | $(94,451) | - Total comprehensive loss for the three months ended **September 30, 2023**, was **$-825.7 million**, significantly higher than **$-24.1 million** in the prior year, mainly due to the **net loss**[13](index=13&type=chunk) [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric (in thousands) | September 30, 2023 | December 31, 2022 | | :---------------------- | :----------------- | :---------------- | | Total current assets | $857,771 | $571,410 | | Total assets | $5,887,794 | $6,499,898 | | Total current liabilities | $475,334 | $505,418 | | Total liabilities | $5,006,867 | $4,846,329 | | Total shareholders' equity | $880,927 | $1,653,569 | - **Total assets decreased** from **$6.5 billion** at **December 31, 2022**, to **$5.9 billion** at **September 30, 2023**, primarily due to a significant reduction in goodwill from **$2.3 billion** to **$1.4 billion**[16](index=16&type=chunk) - **Assets held for sale increased** to **$271.0 million** as of **September 30, 2023**, from zero at **December 31, 2022**, reflecting the strategic review of U.S. **car wash operations**[16](index=16&type=chunk) [Consolidated Statements of Shareholders'/Members' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders'%2FMembers'%20Equity) This statement details changes in equity, including common stock, retained earnings, and comprehensive loss | Metric (in thousands) | Sep 30, 2023 (3 Months) | Sep 24, 2022 (3 Months) | Sep 30, 2023 (9 Months) | Sep 24, 2022 (9 Months) | | :---------------------- | :---------------------- | :---------------------- | :---------------------- | :---------------------- | | Common stock, end of period | $1,639 | $1,674 | $1,639 | $1,674 | | Additional paid-in capital, end of period | $1,646,831 | $1,620,480 | $1,646,831 | $1,620,480 | | Retained (deficit) earnings, end of period | $(696,938) | $57,397 | $(696,938) | $57,397 | | Accumulated other comprehensive loss, end of period | $(71,236) | $(115,233) | $(71,236) | $(115,233) | | Total shareholders' equity, end of period | $880,927 | $1,564,949 | $880,927 | $1,564,949 | - **Retained earnings shifted** from a positive balance of **$84.8 million** at the beginning of the nine-month period to a deficit of **$-696.9 million** by **September 30, 2023**, primarily due to the **net loss** incurred[19](index=19&type=chunk) - The company **repurchased 3,601,694 shares** of common stock for approximately **$50.0 million** during the nine months ended **September 30, 2023**[19](index=19&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash inflows and outflows from operating, investing, and financing activities | Metric (in thousands) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 24, 2022 | | :---------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $212,033 | $167,652 | | Net cash used in investing activities | $(361,207) | $(771,768) | | Net cash provided by financing activities | $147,850 | $282,580 | | Net change in cash, cash equivalents, restricted cash, and cash included in advertising fund assets, restricted | $(959) | $(329,241) | - **Net cash provided by operating activities increased** by **$44.4 million** to **$212.0 million** for the nine months ended **September 30, 2023**, compared to the prior year, despite a **net loss**, due to non-cash adjustments like **goodwill impairment**[22](index=22&type=chunk) - **Net cash used in investing activities significantly decreased** by **$410.6 million** to **$361.2 million**, primarily due to a **$598.0 million** decrease in cash paid for acquisitions, partially offset by a **$206.0 million** increase in capital expenditures[22](index=22&type=chunk) [Notes to the Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the consolidated financial statements [Note 1—Description of Business](index=11&type=section&id=Note%201%E2%80%94Description%20of%20Business) Describes the company's business operations, brands, and geographic presence in the automotive services industry - **Driven Brands Holdings Inc.** is North America's largest automotive services company, operating **approximately 5,000** franchised, independently-operated, and company-operated locations across **49 U.S. states** and **13 other countries**[26](index=26&type=chunk) - The company's portfolio includes recognized brands such as Take 5 Oil Change, Take 5 Car Wash, Meineke Car Care Centers, MAACO, CARSTAR, Auto Glass Now, and 1-800-Radiator & A/C[26](index=26&type=chunk) - **Approximately 74%** of the company's locations are franchised or independently-operated[26](index=26&type=chunk) [Note 2— Summary of Significant Accounting Policies](index=11&type=section&id=Note%202%E2%80%94%20Summary%20of%20Significant%20Accounting%20Policies) Outlines the key accounting principles and methods used in preparing the financial statements - The company operates on a 52- or 53-week fiscal year, with fiscal quarters ending on the 13th or 14th Saturday[28](index=28&type=chunk) - Financial statements are prepared in accordance with U.S. GAAP for interim financial information, including normal recurring adjustments[29](index=29&type=chunk) - The company transitioned its LIBOR-based loans to the Secured Overnight Financing Rate (SOFR) on **July 1, 2023**, which did not have a material impact[39](index=39&type=chunk) [Note 3—Acquisitions and Dispositions](index=13&type=section&id=Note%203%E2%80%94Acquisitions%20and%20Dispositions) Details the company's acquisition activities and any significant dispositions during the reporting period - In the nine months ended **September 30, 2023**, the company completed **ten acquisitions** across its **Maintenance (5 sites)**, **Car Wash (4 sites)**, and **Paint, Collision & Glass (2 sites)** segments[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) | Segment | Sites Acquired | Aggregate Cash Consideration (in millions) | | :-------- | :------------- | :--------------------------------------- | | Maintenance | 5 | ~$8 | | Car Wash | 4 | ~$15 | | Paint, Collision & Glass | 2 | ~$6 | - Goodwill from these acquisitions was allocated to the **Car Wash**, **Maintenance**, and **Paint, Collision & Glass** segments and is substantially deductible for income tax purposes[48](index=48&type=chunk) [Note 4— Revenue from Contracts with Customers](index=15&type=section&id=Note%204%E2%80%94%20Revenue%20from%20Contracts%20with%20Customers) Explains the company's revenue recognition policies and contract-related balances - Capitalized costs to obtain contracts (deferred commissions) were **$6.0 million** as of **September 30, 2023**, down from **$7.0 million** at **December 31, 2022**[53](index=53&type=chunk) - Contract liabilities (deferred revenue) were **$31.0 million** as of **September 30, 2023**, up from **$29.0 million** at **December 31, 2022**[54](index=54&type=chunk) - The company recognized **$4.0 million** of revenue relating to contract liabilities during the nine months ended **September 30, 2023**[54](index=54&type=chunk) [Note 5—Segment Information](index=15&type=section&id=Note%205%E2%80%94Segment%20Information) Provides financial data and performance metrics for the company's distinct operating segments - The company operates in **four reportable segments**: **Maintenance**, **Car Wash**, **Paint, Collision & Glass**, and **Platform Services**[55](index=55&type=chunk) | Segment (in thousands) | Total Revenue (3 Months Ended Sep 30, 2023) | Segment Adjusted EBITDA (3 Months Ended Sep 30, 2023) | | :----------------------- | :------------------------------------------ | :---------------------------------------------------- | | Maintenance | $244,359 | $86,493 | | Car Wash | $142,813 | $24,429 | | Paint, Collision & Glass | $129,414 | $32,763 | | Platform Services | $55,934 | $22,417 | | Corporate and Other | $8,514 | $(37,487) | | Total | $581,034 | $128,615 | | Segment (in thousands) | Total Revenue (9 Months Ended Sep 30, 2023) | Segment Adjusted EBITDA (9 Months Ended Sep 30, 2023) | | :----------------------- | :------------------------------------------ | :---------------------------------------------------- | | Maintenance | $714,354 | $245,232 | | Car Wash | $464,548 | $112,001 | | Paint, Collision & Glass | $383,375 | $109,724 | | Platform Services | $165,305 | $61,984 | | Corporate and Other | $22,770 | $(119,088) | | Total | $1,750,352 | $409,853 | [Note 6 — Asset Impairment Charges](index=18&type=section&id=Note%206%20%E2%80%94%20Asset%20Impairment%20Charges) Details significant impairment charges recognized on goodwill and other assets during the period - During **Q3 2023**, management's strategic review of U.S. **car wash operations** led to the approval of **29 store closures**, halting new company-operated store openings, and marketing property for sale[60](index=60&type=chunk) - These actions resulted in **$111.0 million** in **impairment charges** for property and equipment and right-of-use assets, and the transfer of **$271.0 million** of assets to 'assets held for sale'[60](index=60&type=chunk) - A full **goodwill impairment charge of $851.0 million** was recorded for the U.S. **Car Wash** reporting unit due to its carrying value exceeding fair value, triggered by the strategic review and a decline in stock price[61](index=61&type=chunk) [Note 7 — Long-Term Debt](index=19&type=section&id=Note%207%20%E2%80%94%20Long-Term%20Debt) Provides information on the company's long-term debt obligations, including changes and terms | Debt Type (in thousands) | September 30, 2023 | December 31, 2022 | | :----------------------- | :----------------- | :---------------- | | Total debt | $2,945,675 | $2,784,175 | | Less: unamortized debt issuance costs | $(36,747) | $(45,908) | | Less: current portion of long-term debt | $(31,869) | $(32,986) | | Total long-term debt, net | $2,877,059 | $2,705,281 | - **Total debt increased** by **$161.5 million** to **$2.9 billion** as of **September 30, 2023**, compared to **December 31, 2022**[64](index=64&type=chunk) - The company exercised the first of three one-year extension options for the 2019 VFN in **July 2023**, with no amounts outstanding as of **September 30, 2023**, but **$25.0 million** in outstanding letters of credit[65](index=65&type=chunk) [Note 8 — Leases](index=19&type=section&id=Note%208%20%E2%80%94%20Leases) Details the company's lease arrangements, including right-of-use assets, liabilities, and related transactions - During the nine months ended **September 30, 2023**, the company sold **48 properties** (**10 maintenance**, **38 car wash**) for **$171.0 million**, resulting in a **$25.0 million** net gain, and leased them back with initial terms of 16-20 years[68](index=68&type=chunk) - Operating lease right-of-use assets and liabilities of **$132.0 million** were recorded for these new lease arrangements[69](index=69&type=chunk) - The company **impaired $62.0 million** of right-of-use assets related to **28 leased stores** approved for closure or underperforming during **Q3 2023**[71](index=71&type=chunk) [Note 9 — Shareholders' Equity](index=20&type=section&id=Note%209%20%E2%80%94%20Shareholders'%20Equity) Describes changes in shareholders' equity, including share repurchases and capital transactions - In **August 2023**, the Board authorized a **$50.0 million share repurchase program**, which was completed by **September 30, 2023**[72](index=72&type=chunk) - The company **repurchased 3,601,694 shares** of common stock at an average price of **$13.87 per share**[72](index=72&type=chunk) [Note 10 — Equity-based Compensation](index=20&type=section&id=Note%2010%20%E2%80%94%20Equity-based%20Compensation) Details the company's equity-based compensation plans, grants, and related expenses - During the nine months ended **September 30, 2023**, the company granted **388,878 Restricted Stock Units (RSUs)** and **647,359 Performance Stock Units (PSUs)**[73](index=73&type=chunk) - **Equity-based compensation expense** was **$3.0 million** for the three months and **$10.0 million** for the nine months ended **September 30, 2023**[76](index=76&type=chunk) [Note 11—(Loss) Earnings Per Share](index=21&type=section&id=Note%2011%E2%80%94(Loss)%20Earnings%20Per%20Share) Presents the calculation of basic and diluted earnings per share, including factors affecting dilution | Metric (in thousands, except per share) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 24, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 24, 2022 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Basic (loss) earnings per share | $(4.82) | $0.23 | $(4.40) | $0.10 | | Diluted (loss) earnings per share | $(4.83) | $0.23 | $(4.41) | $0.09 | | Weighted-average common shares outstanding (Basic) | 162,398 | 162,760 | 162,698 | 162,768 | | Weighted-average common shares outstanding (Diluted) | 162,398 | 166,831 | 162,698 | 166,663 | - Due to **net losses** from operations for the three and nine months ended **September 30, 2023**, no potentially dilutive securities were included in the diluted EPS computation as their inclusion would be antidilutive[79](index=79&type=chunk) [Note 12—Income Taxes](index=22&type=section&id=Note%2012%E2%80%94Income%20Taxes) Provides information on income tax expense or benefit, effective tax rates, and deferred tax balances | Metric (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 24, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 24, 2022 | | :---------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Income tax (benefit) expense | $(151,818) | $14,472 | $(120,572) | $8,592 | | Effective income tax rate | 16.0% | 27.4% | 14.1% | 35.3% | - The company recorded an **income tax benefit of $151.8 million** for the three months and **$120.6 million** for the nine months ended **September 30, 2023**, primarily driven by the significant **impairment charges**[81](index=81&type=chunk)[82](index=82&type=chunk) [Note 13—Subsequent Events](index=22&type=section&id=Note%2013%E2%80%94Subsequent%20Events) Discloses significant events that occurred after the balance sheet date but before financial statement issuance - On **October 30, 2023**, the company converted **2,438,643 options** and **2,963,829 restricted stock awards**, originally tied to sponsor returns, into time-based awards vesting on **April 30, 2025**[83](index=83&type=chunk) - The **fair value** of these modified options and restricted stock awards was approximately **$10.0 million** and **$33.0 million**, respectively, with compensation expense to be recognized ratably over the vesting period[83](index=83&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis of financial condition, results of operations, and key performance indicators [Overview](index=23&type=section&id=Overview) Provides a high-level summary of the company's business, market position, and strategic initiatives - **Driven Brands** is the largest automotive services company in North America with **approximately 5,000 locations**, offering a wide range of consumer and commercial automotive needs[86](index=86&type=chunk) | Metric (in millions) | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2023 | | :--------------------- | :-------------------------- | :-------------------------- | | Revenue | **$581.0 million** (Up 12% **YoY**) | **$1.8 billion** (Up 17% **YoY**) | | System-wide sales | **$1.6 billion** (Up 10% **YoY**) | **$4.8 billion** (Up 15% **YoY**) | - A strategic review of U.S. **car wash operations** led to the closure of **29 stores**, a halt in new company-operated store openings, and **$111.0 million** in **asset impairment charges**, along with an **$851.0 million goodwill impairment charge** for the U.S. **Car Wash** reporting unit[87](index=87&type=chunk)[88](index=88&type=chunk) [Q3 2023 Three Months Ended Highlights and Key Performance Indicators](index=23&type=section&id=Q3%202023%20Three%20Months%20Ended%20Highlights%20and%20Key%20Performance%20Indicators) Summarizes key financial highlights and performance indicators for the three months ended September 30, 2023 | Metric | Q3 2023 (YoY Change) | | :------- | :------------------- | | Revenue | +12% to $581 million | | Consolidated Same-Store Sales | +6% | | Net New Stores | +55 | | Net Loss | $799 million (vs. $38 million Net Income prior year) | | Adjusted Net Income (non-GAAP) | -39% to $34 million | | Adjusted EBITDA (non-GAAP) | -2% to $127 million | - The **net loss** was primarily due to **impairment charges**, while **Adjusted Net Income** and **Adjusted EBITDA decreased** due to reduced margins in **Car Wash** and **Paint, Collision & Glass** segments, partially offset by improvements in **Maintenance** and **Platform Services**[89](index=89&type=chunk) [Q3 2023 Nine Months Ended Highlights and Key Performance Indicators](index=24&type=section&id=Q3%202023%20Nine%20Months%20Ended%20Highlights%20and%20Key%20Performance%20Indicators) Summarizes key financial highlights and performance indicators for the nine months ended September 30, 2023 | Metric | 9 Months Ended Sep 30, 2023 (YoY Change) | | :------- | :--------------------------------------- | | Revenue | +17% to $1,750 million | | Consolidated Same-Store Sales | +9% | | Net New Stores | +188 | | Net Loss | $732 million (vs. $16 million Net Income prior year) | | Adjusted Net Income (non-GAAP) | -23% to $125 million | | Adjusted EBITDA (non-GAAP) | +6% to $406 million | - The **net loss** for the nine-month period was primarily driven by **impairment charges**. **Adjusted EBITDA increased** due to improved margins in **Maintenance** and **Platform Services**, despite decreased margins in **Car Wash** and **Paint, Collision & Glass**[94](index=94&type=chunk) [Key Performance Indicators](index=24&type=section&id=Key%20Performance%20Indicators) Presents key metrics used to evaluate the company's operational and financial performance - Key measures include **System-wide sales**, **Store count**, **Same store sales**, and **Segment Adjusted EBITDA**, used to assess business health and segment performance[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) | KPI | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 24, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 24, 2022 | | :---------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total System-Wide Sales | $1,609,039 | $1,462,106 | $4,771,016 | $4,138,357 | | Total Store Count | 4,993 | 4,707 | 4,993 | 4,707 | | Total Same Store Sales % | 6.4% | 11.9% | 8.6% | 14.7% | | Total Segment Adjusted EBITDA | $128,615 | $130,108 | $409,853 | $385,215 | - **Car Wash segment** experienced **negative same store sales** of **(4.0%)** for the three months and **(6.7%)** for the nine months ended **September 30, 2023**, a significant decline from the prior year[95](index=95&type=chunk) [Reconciliation of Non-GAAP Financial Information](index=26&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Information) Reconciles non-GAAP financial measures to their most directly comparable GAAP financial measures - **Non-GAAP financial measures** like **Adjusted Net Income** and **Adjusted EBITDA** are used to provide additional insights into financial performance, excluding certain non-recurring or non-cash items[96](index=96&type=chunk)[98](index=98&type=chunk)[100](index=100&type=chunk) | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 24, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 24, 2022 | | :---------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net (loss) income | $(799,311) | $38,391 | $(731,813) | $15,775 | | Adjusted net income | $33,720 | $54,964 | $125,203 | $162,413 | | Adjusted EBITDA | $127,243 | $129,355 | $406,079 | $383,290 | - **Adjusted Net Income decreased** by **39%** for the three months and **23%** for the nine months ended **September 30, 2023**, primarily due to decreased margins in **Car Wash** and **Paint, Collision & Glass**, and increased interest and depreciation expenses[89](index=89&type=chunk)[94](index=94&type=chunk) [Results of Operations for the Three Months Ended September 30, 2023 Compared to the Three Months Ended September 24, 2022](index=29&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20September%2030,%202023%20Compared%20to%20the%20Three%20Months%20Ended%20September%2024,%202022) Net loss of $799 million due to impairment charges, with decreased Adjusted Net Income and EBITDA from reduced margins and higher expenses - **Net loss of $799.3 million** (or **$4.83 diluted EPS**) in **Q3 2023**, compared to **net income of $38.4 million** (or **$0.23 diluted EPS**) in **Q3 2022**, driven by **$851.0 million goodwill impairment** and **$111.2 million asset impairment charges**[105](index=105&type=chunk) - **Adjusted net income decreased** by **$21.0 million** to **$33.7 million**, and **Adjusted EBITDA decreased** by **$2.0 million** to **$127.2 million**, mainly due to reduced operating margins in **Car Wash** and **Paint, Collision & Glass**, and higher interest and depreciation expenses[106](index=106&type=chunk)[107](index=107&type=chunk) [Revenue](index=29&type=section&id=Revenue) Analyzes revenue streams, growth drivers, and changes in sales composition | Revenue Type (in thousands) | Sep 30, 2023 | % of Net Revenues | Sep 24, 2022 | % of Net Revenues | | :-------------------------- | :----------- | :---------------- | :----------- | :---------------- | | Franchise royalties and fees | $47,362 | 8.1% | $45,562 | 8.8% | | Company-operated store sales | $389,041 | 67.0% | $341,211 | 66.1% | | Independently-operated store sales | $43,582 | 7.5% | $40,469 | 7.8% | | Advertising fund contributions | $27,121 | 4.7% | $22,018 | 4.3% | | Supply and other revenue | $73,928 | 12.7% | $67,334 | 13.0% | | Total revenue | $581,034 | 100.0% | $516,594 | 100.0% | - **Total revenue increased** by **$64.0 million** (**12%**) to **$581.0 million**, driven by a **14%** increase in **company-operated store sales** and a **4%** increase in **franchise royalties and fees**[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - **Company-operated store sales increased** by **$48.0 million**, with **Maintenance** and **Paint, Collision & Glass** segments contributing **$32.0 million** and **$16.0 million**, respectively, while **Car Wash** sales remained flat despite new store additions due to decreased **same-store sales**[111](index=111&type=chunk) [Operating Expenses](index=31&type=section&id=Operating%20Expenses) Details the components of operating expenses and their impact on profitability | Expense Type (in thousands) | Sep 30, 2023 | % of Net Revenues | Sep 24, 2022 | % of Net Revenues | | :-------------------------- | :----------- | :---------------- | :----------- | :---------------- | | Company-operated store expenses | $262,282 | 45.1% | $209,562 | 40.6% | | Selling, general, and administrative expenses | $123,012 | 21.2% | $82,460 | 16.0% | | Depreciation and amortization | $45,639 | 7.9% | $36,518 | 7.1% | | Goodwill impairment | $850,970 | 146.5% | $0 | 0.0% | | Asset impairment charges and lease terminations | $111,239 | 19.1% | $2,894 | 0.6% | | Total operating expenses | $1,487,891 | 256.1% | $420,826 | 81.5% | - **Total operating expenses surged** by **$1.1 billion**, primarily due to the **$851.0 million goodwill impairment** and **$108.0 million** increase in **asset impairment charges** related to the **Car Wash segment**[116](index=116&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) - **Selling, general and administrative expenses increased** by **$41.0 million** (**49%**), partly due to a **$14.0 million** loss on sale/disposal of fixed assets in the current period versus a **$17.0 million** gain in the prior year[121](index=121&type=chunk) [Interest Expense, Net](index=32&type=section&id=Interest%20Expense,%20Net) Discusses net interest expense, including factors influencing its changes | Metric (in thousands) | Sep 30, 2023 | % of Net Revenues | Sep 24, 2022 | % of Net Revenues | | :---------------------- | :----------- | :---------------- | :----------- | :---------------- | | Interest expense, net | $41,292 | 7.1% | $27,323 | 5.3% | - **Net interest expense increased** by **$14.0 million** (**51%**) to **$41.3 million**, driven by higher variable interest rates on the Term Loan Facility and borrowings under the Series 2022-1 Class A-2 Securitization Senior Notes[127](index=127&type=chunk) [Loss on Foreign Currency Transactions, Net](index=32&type=section&id=Loss%20on%20Foreign%20Currency%20Transactions,%20Net) Reports net gains or losses from foreign currency transactions and hedging activities | Metric (in thousands) | Sep 30, 2023 | % of Net Revenues | Sep 24, 2022 | % of Net Revenues | | :---------------------- | :----------- | :---------------- | :----------- | :---------------- | | Loss on foreign currency transactions, net | $2,980 | 0.5% | $15,582 | 3.0% | - **Net loss on foreign currency transactions decreased** by **$12.6 million** to **$3.0 million**, primarily due to lower transaction losses in foreign operations and gains on foreign currency hedges[128](index=128&type=chunk) [Income Tax (Benefit) Expense](index=32&type=section&id=Income%20Tax%20(Benefit)%20Expense) Analyzes income tax expense or benefit and the effective tax rate | Metric (in thousands) | Sep 30, 2023 | % of Net Revenues | Sep 24, 2022 | % of Net Revenues | | :---------------------- | :----------- | :---------------- | :----------- | :---------------- | | Income tax (benefit) expense | $(151,818) | (26.1%) | $14,472 | 2.8% | - The company recorded an **income tax benefit of $151.8 million**, a decrease of **$166.0 million** from the prior year's expense, with the **effective tax rate** falling to **16.0%** from **27.4%**, primarily due to the **impairment charges**[129](index=129&type=chunk) [Results of Operations for the Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 24, 2022](index=33&type=section&id=Results%20of%20Operations%20for%20the%20Nine%20Months%20Ended%20September%2030,%202023%20Compared%20to%20the%20Nine%20Months%20Ended%20September%2024,%202022) Net loss of $732 million driven by impairment charges, with decreased Adjusted Net Income and increased Adjusted EBITDA from mixed segment performance - **Net loss of $731.8 million** (or **$4.41 diluted EPS**) for the nine months ended **September 30, 2023**, compared to **net income of $15.8 million** (or **$0.09 diluted EPS**) in the prior year, primarily due to **$851.0 million goodwill impairment** and **$117.5 million asset impairment charges**[130](index=130&type=chunk) - **Adjusted net income decreased** by **$37.0 million** to **$125.2 million**, while **Adjusted EBITDA increased** by **$23.0 million** to **$406.1 million**, driven by revenue growth and improved margins in **Maintenance** and **Platform Services**, partially offset by declines in **Car Wash** and **Paint, Collision & Glass**[131](index=131&type=chunk)[132](index=132&type=chunk) [Revenue](index=33&type=section&id=Revenue) Analyzes revenue streams, growth drivers, and changes in sales composition | Revenue Type (in thousands) | Sep 30, 2023 | % of Net Revenues | Sep 24, 2022 | % of Net Revenues | | :-------------------------- | :----------- | :---------------- | :----------- | :---------------- | | Franchise royalties and fees | $140,682 | 8.0% | $128,300 | 8.6% | | Company-operated store sales | $1,159,685 | 66.3% | $957,487 | 64.1% | | Independently-operated store sales | $157,647 | 9.0% | $158,500 | 10.6% | | Advertising fund contributions | $73,547 | 4.2% | $63,807 | 4.3% | | Supply and other revenue | $218,791 | 12.5% | $185,447 | 12.4% | | Total revenue | $1,750,352 | 100.0% | $1,493,541 | 100.0% | - **Total revenue increased** by **$257.0 million** (**17%**) to **$1.8 billion**, driven by a **$202.0 million** (**21%**) increase in **company-operated store sales** and a **$12.0 million** (**10%**) increase in **franchise royalties and fees**[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - **Company-operated store sales** growth was led by **Maintenance** (**$108.0 million**) and **Paint, Collision & Glass** (**$87.0 million**), while **Car Wash** sales increased by **$8.0 million** despite a decrease in **same-store sales**[136](index=136&type=chunk)[137](index=137&type=chunk) [Operating Expenses](index=34&type=section&id=Operating%20Expenses) Details the components of operating expenses and their impact on profitability | Expense Type (in thousands) | Sep 30, 2023 | % of Net Revenues | Sep 24, 2022 | % of Net Revenues | | :-------------------------- | :----------- | :---------------- | :----------- | :---------------- | | Company-operated store expenses | $762,731 | 43.6% | $580,368 | 38.9% | | Selling, general, and administrative expenses | $332,155 | 19.0% | $272,657 | 18.3% | | Depreciation and amortization | $129,256 | 7.4% | $107,628 | 7.2% | | Goodwill impairment | $850,970 | 48.6% | $0 | 0.0% | | Trade name impairment charges | $0 | 0.0% | $125,450 | 8.4% | | Asset impairment charges | $117,450 | 6.7% | $2,910 | 0.2% | | Total operating expenses | $2,482,430 | 141.8% | $1,359,738 | 91.0% | - **Total operating expenses increased** by **$1.1 billion**, primarily due to the **$851.0 million goodwill impairment** and **$115.0 million** increase in **asset impairment charges**, partially offset by the absence of the **$125.0 million** trade name impairment from the prior year[141](index=141&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) - **Selling, general and administrative expenses increased** by **$59.0 million** (**22%**), partly due to a **$2.0 million** loss on sale/disposal of fixed assets in the current period versus a **$23.0 million** gain in the prior year[146](index=146&type=chunk) [Interest Expense, Net](index=35&type=section&id=Interest%20Expense,%20Net) Discusses net interest expense, including factors influencing its changes | Metric (in thousands) | Sep 30, 2023 | % of Net Revenues | Sep 24, 2022 | % of Net Revenues | | :---------------------- | :----------- | :---------------- | :----------- | :---------------- | | Interest expense, net | $120,304 | 6.9% | $78,946 | 5.3% | - **Net interest expense increased** by **$41.0 million** (**52%**) to **$120.3 million**, driven by higher variable interest rates on the Term Loan Facility and borrowings under the Series 2022-1 Class A-2 Securitization Senior Notes[153](index=153&type=chunk) [Loss on Foreign Currency Transactions, Net](index=36&type=section&id=Loss%20on%20Foreign%20Currency%20Transactions,%20Net) Reports net gains or losses from foreign currency transactions and hedging activities | Metric (in thousands) | Sep 30, 2023 | % of Net Revenues | Sep 24, 2022 | % of Net Revenues | | :---------------------- | :----------- | :---------------- | :----------- | :---------------- | | Loss on foreign currency transactions, net | $3 | 0.0% | $30,490 | 2.0% | - **Net loss on foreign currency transactions significantly decreased** by **$30.5 million** to **$3.0 thousand**, primarily due to lower net remeasurement losses on non-U.S. dollar entities and gains on foreign currency hedges[154](index=154&type=chunk) [Income Tax (Benefit) Expense](index=36&type=section&id=Income%20Tax%20(Benefit)%20Expense) Analyzes income tax expense or benefit and the effective tax rate | Metric (in thousands) | Sep 30, 2023 | % of Net Revenues | Sep 24, 2022 | % of Net Revenues | | :---------------------- | :----------- | :---------------- | :----------- | :---------------- | | Income tax (benefit) expense | $(120,572) | (6.9%) | $8,592 | 0.6% | - The company recorded an **income tax benefit of $120.6 million**, a decrease of **$129.0 million** from the prior year's expense, with the **effective tax rate** falling to **14.1%** from **35.3%**, primarily due to the increased **impairment charges**[155](index=155&type=chunk) [Segment Results of Operations for the Three Months Ended September 30, 2023 Compared to the Three Months Ended September 24, 2022](index=37&type=section&id=Segment%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20September%2030,%202023%20Compared%20to%20the%20Three%20Months%20Ended%20September%2024,%202022) Segment performance analysis for Q3 2023, highlighting mixed results with growth in Maintenance and Platform Services, and declines in Car Wash and PC&G [Maintenance](index=37&type=section&id=Maintenance) Details the financial performance of the Maintenance segment, including revenue and Adjusted EBITDA | Metric (in thousands) | Sep 30, 2023 | Sep 24, 2022 | Change (YoY) | | :---------------------- | :----------- | :----------- | :----------- | | Total revenue | $244,359 | $200,822 | +22% | | Segment Adjusted EBITDA | $86,493 | $68,763 | +26% | | System-Wide Sales | $502,482 | $411,452 | +22.1% | | Same Store Sales % | 9.1% | 14.4% | -5.3 pp | - **Maintenance segment revenue increased** by **$44.0 million** (**22%**), driven by a **25%** increase in franchised **system-wide sales** and a **19%** increase in **company-operated store sales**, both benefiting from **same-store sales** growth and new store additions[158](index=158&type=chunk) - **Segment Adjusted EBITDA increased** by **$18.0 million** (**26%**), attributed to revenue growth, cost management, and operational leverage from an efficient labor model[159](index=159&type=chunk) [Car Wash](index=38&type=section&id=Car%20Wash) Details the financial performance of the Car Wash segment, including revenue and Adjusted EBITDA | Metric (in thousands) | Sep 30, 2023 | Sep 24, 2022 | Change (YoY) | | :---------------------- | :----------- | :----------- | :----------- | | Total revenue | $142,813 | $140,303 | +2% | | Segment Adjusted EBITDA | $24,429 | $39,098 | -38% | | System-Wide Sales | $141,714 | $138,704 | +2.2% | | Same Store Sales % | (4.0%) | (9.0%) | +5.0 pp | - **Car Wash segment revenue increased** by **$3.0 million** (**2%**), driven by new company-operated stores and favorable foreign exchange, but partially offset by decreased **same-store sales** in company-operated stores[161](index=161&type=chunk) - **Segment Adjusted EBITDA decreased** by **$15.0 million** (**38%**), primarily due to decreased **same-store sales**, increased operating costs (rent, supplies, utilities), and higher labor costs for new stores[164](index=164&type=chunk) - **U.S. Car Wash locations faced softening retail demand, increased competitive pressures, and negative weather patterns**, contributing to **negative same-store sales**[162](index=162&type=chunk) [Paint, Collision & Glass](index=39&type=section&id=Paint,%20Collision%20%26%20Glass) Details the financial performance of the Paint, Collision & Glass segment, including revenue and Adjusted EBITDA | Metric (in thousands) | Sep 30, 2023 | Sep 24, 2022 | Change (YoY) | | :---------------------- | :----------- | :----------- | :----------- | | Total revenue | $129,414 | $113,220 | +14% | | Segment Adjusted EBITDA | $32,763 | $38,919 | -16% | | System-Wide Sales | $845,644 | $781,199 | +8.2% | | Same Store Sales % | 8.6% | 15.7% | -7.1 pp | - **Paint, Collision & Glass revenue increased** by **$16.0 million** (**14%**), primarily from U.S. glass acquisitions, despite flat franchise royalties and fees[166](index=166&type=chunk) - **Segment Adjusted EBITDA decreased** by **$6.0 million** (**16%**), mainly due to higher employee-related costs and reduced volume in company-operated stores, despite revenue growth[168](index=168&type=chunk) - **Integration of U.S. glass acquisitions has taken longer than planned**, resulting in lower-than-expected revenue and cost efficiencies[167](index=167&type=chunk) [Platform Services](index=40&type=section&id=Platform%20Services) Details the financial performance of the Platform Services segment, including revenue and Adjusted EBITDA | Metric (in thousands) | Sep 30, 2023 | Sep 24, 2022 | Change (YoY) | | :---------------------- | :----------- | :----------- | :----------- | | Total revenue | $55,934 | $51,999 | +8% | | Segment Adjusted EBITDA | $22,417 | $19,765 | +13% | | System-Wide Sales | $119,199 | $130,751 | -8.8% | | Same Store Sales % | (4.6%) | 8.7% | -13.3 pp | - **Platform Services revenue increased** by **$4.0 million** (**8%**), driven by increased total company **system-wide sales** and new product offerings[170](index=170&type=chunk) - **Segment Adjusted EBITDA increased** by **$3.0 million** (**13%**), primarily due to revenue growth, cost management, and operational leverage[171](index=171&type=chunk) [Segment Results of Operations for the Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 24, 2022](index=41&type=section&id=Segment%20Results%20of%20Operations%20for%20the%20Nine%20Months%20Ended%20September%2030,%202023%20Compared%20to%20the%20Nine%20Months%20Ended%20September%2024,%202022) Segment performance analysis for the nine months ended September 30, 2023, showing varied results across Maintenance, Car Wash, PC&G, and Platform Services [Maintenance](index=41&type=section&id=Maintenance) Details the financial performance of the Maintenance segment, including revenue and Adjusted EBITDA | Metric (in thousands) | Sep 30, 2023 | Sep 24, 2022 | Change (YoY) | | :---------------------- | :----------- | :----------- | :----------- | | Total revenue | $714,354 | $573,869 | +24% | | Segment Adjusted EBITDA | $245,232 | $185,324 | +32% | | System-Wide Sales | $1,429,049 | $1,167,717 | +22.4% | | Same Store Sales % | 10.8% | 16.0% | -5.2 pp | - **Maintenance segment revenue increased** by **$140.0 million** (**24%**), driven by a **$108.0 million** increase in **company-operated store sales** and a **$24.0 million** increase in supply and other revenue[174](index=174&type=chunk) - **Segment Adjusted EBITDA increased** by **$60.0 million** (**32%**), primarily due to revenue growth, cost management, and operational leverage from an efficient labor model[175](index=175&type=chunk) [Car Wash](index=42&type=section&id=Car%20Wash) Details the financial performance of the Car Wash segment, including revenue and Adjusted EBITDA | Metric (in thousands) | Sep 30, 2023 | Sep 24, 2022 | Change (YoY) | | :---------------------- | :----------- | :----------- | :----------- | | Total revenue | $464,548 | $458,157 | +1% | | Segment Adjusted EBITDA | $112,001 | $148,495 | -25% | | System-Wide Sales | $459,840 | $453,026 | +1.5% | | Same Store Sales % | (6.7%) | (1.8%) | -4.9 pp | - **Car Wash segment revenue increased** by **$6.0 million** (**1%**), driven by **49 net new company-operated stores**, but partially offset by a **6.7%** decrease in **same-store sales**[176](index=176&type=chunk) - **Segment Adjusted EBITDA decreased** by **$36.0 million** (**25%**), primarily due to decreased **same-store sales**, increased company-operated store costs (employee compensation, rent, supplies, utilities)[179](index=179&type=chunk) - **U.S. Car Wash locations continued to face softening retail demand, increased competitive pressures, and negative weather patterns**, contributing to **negative same-store sales**[177](index=177&type=chunk) [Paint, Collision & Glass](index=43&type=section&id=Paint,%20Collision%20%26%20Glass) Details the financial performance of the Paint, Collision & Glass segment, including revenue and Adjusted EBITDA | Metric (in thousands) | Sep 30, 2023 | Sep 24, 2022 | Change (YoY) | | :---------------------- | :----------- | :----------- | :----------- | | Total revenue | $383,375 | $287,950 | +33% | | Segment Adjusted EBITDA | $109,724 | $100,847 | +9% | | System-Wide Sales | $2,554,216 | $2,164,749 | +18.0% | | Same Store Sales % | 13.3% | 17.5% | -4.2 pp | - **Paint, Collision & Glass revenue increased** by **$95.0 million** (**33%**), primarily from a **$87.0 million** (**54%**) increase in company-operated store revenue due to U.S. glass acquisitions[180](index=180&type=chunk) - **Segment Adjusted EBITDA increased** by **$9.0 million** (**9%**), driven by revenue growth from acquisitions and **same-store sales**, despite higher employee-related costs and reduced volume[182](index=182&type=chunk) - **Integration of U.S. glass acquisitions continued to take longer than planned**, resulting in lower-than-expected revenue and cost efficiencies[181](index=181&type=chunk) [Platform Services](index=44&type=section&id=Platform%20Services) Details the financial performance of the Platform Services segment, including revenue and Adjusted EBITDA | Metric (in thousands) | Sep 30, 2023 | Sep 24, 2022 | Change (YoY) | | :---------------------- | :----------- | :----------- | :----------- | | Total revenue | $165,305 | $148,368 | +11% | | Segment Adjusted EBITDA | $61,984 | $54,471 | +14% | | System-Wide Sales | $327,911 | $352,865 | -7.1% | | Same Store Sales % | (7.2%) | 14.9% | -22.1 pp | - **Platform Services revenue increased** by **$17.0 million** (**11%**), primarily due to an increase in total company **system-wide sales** and increased product purchases[184](index=184&type=chunk) - **Segment Adjusted EBITDA increased** by **$8.0 million** (**14%**), primarily due to revenue growth, cost management, and operational leverage[185](index=185&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=45&type=section&id=Financial%20Condition,%20Liquidity%20and%20Capital%20Resources) Discusses the company's financial position, liquidity, and capital management strategies - The company had **total liquidity of $387.0 million** as of **September 30, 2023**, including **$211.0 million** in cash and cash equivalents, and **$91.0 million** and **$85.0 million** of undrawn capacity on its 2019 VFN and Revolving Credit Facility, respectively[189](index=189&type=chunk) - **Net cash provided by operating activities increased** to **$212.0 million** for the nine months ended **September 30, 2023**, from **$167.7 million** in the prior year, despite higher net working capital[191](index=191&type=chunk) - **Net cash used in investing activities decreased significantly** to **$361.2 million** from **$771.8 million**, primarily due to a **$598.0 million** decrease in cash paid for acquisitions, partially offset by a **$206.0 million** increase in capital expenditures[192](index=192&type=chunk) [Critical Accounting Policies and Estimates](index=46&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Highlights key accounting policies and estimates requiring significant management judgment - The company's critical accounting policies include the **impairment of goodwill and other indefinite-lived intangible assets**, which are evaluated throughout the year for **impairment** indicators[198](index=198&type=chunk) - An **interim quantitative assessment of goodwill** as of **September 30, 2023**, resulted in a **full impairment charge to the U.S. Car Wash reporting unit**[201](index=201&type=chunk) - The **fair value of International Car Wash and Maintenance-Repair reporting units exceeded their carrying amounts by approximately 6% each**, with **sensitivity to a 1% increase in discount rate potentially causing impairments of $19.0 million and $11.0 million**, respectively[201](index=201&type=chunk)[202](index=202&type=chunk) [Application of New Accounting Standards](index=47&type=section&id=Application%20of%20New%20Accounting%20Standards) Summarizes the impact and application of recently issued accounting standards - The company refers to Note 2 of the consolidated unaudited financial statements for a discussion of recently issued accounting standards applicable to the Company[206](index=206&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk were reported compared to the prior fiscal year's Annual Report on Form 10-K - **No material changes in the company's market risk** were reported compared to the disclosures in the **Annual Report on Form 10-K** for the fiscal year ended **December 31, 2022**[207](index=207&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with no material changes in internal control over financial reporting during the quarter - Management, with CEO and CFO participation, concluded that **disclosure controls and procedures were designed effectively** as of **September 30, 2023**, providing reasonable assurance[209](index=209&type=chunk) - **No material changes in internal control over financial reporting** occurred during the quarter ended **September 30, 2023**[210](index=210&type=chunk) [PART II. OTHER INFORMATION](index=48&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional disclosures on legal proceedings, risk factors, equity sales, and other relevant information [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company faces various legal proceedings in the ordinary course of business, with no current expectation of material adverse impact - The company is subject to **various lawsuits, administrative proceedings, audits, and claims**, including potential class actions, arising in the ordinary course of business[212](index=212&type=chunk) - Management accrues for probable and reasonably estimable litigation loss contingencies and does not currently believe any existing legal proceedings will have a **no material adverse impact**[212](index=212&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) Refers to the Annual Report on Form 10-K for a comprehensive discussion of risk factors that could adversely affect the company - For a discussion of **risk factors**, readers are referred to Part I, Item 1A '**Risk Factors**' in the **Annual Report on Form 10-K** for the fiscal year ended **December 31, 2022**[213](index=213&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company completed its $50 million share repurchase program, repurchasing 3.6 million shares at an average price of $13.87 | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :-------------------------- | :----------------------------- | :--------------------------- | | August 6, 2023-September 2, 2023 | 1,004,836 | $14.76 | | September 3, 2023-September 30, 2023 | 2,596,858 | $13.53 | | Total | 3,601,694 | $13.87 | - The company **completed its $50.0 million share repurchase program**, authorized in August 2023, by **September 30, 2023**[214](index=214&type=chunk) [Item 3. Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the reporting period - **No defaults upon senior securities** were reported[215](index=215&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - **No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements** during the three months ended **September 30, 2023**[216](index=216&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including CEO/CFO certifications and XBRL documents - Exhibits include **certifications from the Chief Executive Officer and Chief Financial Officer** pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[217](index=217&type=chunk) - **XBRL Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents**, along with the **Cover Page Interactive Data File**, are also filed as exhibits[217](index=217&type=chunk)