Driven Brands Holdings Inc. on Oct. 26 reported financial results for the third quarter ended Sept. 24.
For the third quarter, revenue increased 39% versus the prior year to $516.6 million. System-wide sales increased 22% versus the prior year to $1.5 billion, with 9% net store growth and an increase in consolidated same-store sales of 11.9%.
Net income increased 16% versus the prior year to $38.4 million or $0.23 per diluted share in the third quarter.
Adjusted net income increased 26% to $55.0 million or $0.32 per diluted share.
"We continue to have solid momentum entering the fourth quarter, building on our strong performance year-to-date. We are growing, taking share and generating cash, leveraging our proven playbook for growth with a robust pipeline of franchise and greenfield openings," said Jonathan Fitzpatrick, president and CEO.
"The benefits of our scale and breadth of our offering deepen our competitive moat and differentiate our business, driving unit expansion, same store sales growth and cost savings," Fitzpatrick said. "Our continued execution combined with the strength of our business model gives us confidence that we are on track to meet or exceed our long-term plan."
Third Quarter Highlights
Comparisons are third quarter of 2022 ended Sept. 24 versus third quarter of 2021 ended Sept. 25, 2021, unless otherwise noted:
- Revenue increased 39% to $516.6 million, driven by same-store sales and net store growth.
- Consolidated same-store sales increased 11.9%.
- The company added 101 net new stores during the quarter.
- Net income increased 16% to $38.4 million.
- Adjusted net income increased 26% to $55.0 million.
- Adjusted EBITDA increased 32% to $129.4 million.
Capital and Liquidity
The company ended the third quarter with total liquidity of $287.6 million, consisting of $190.4 million in cash and cash equivalents, and $97.2 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility.
Subsequent to the end of the quarter, the company closed on a $365 million whole business securitization transaction. Proceeds from the offering were used for general corporate purposes, including the repayment of the revolving credit facilities creating capacity to invest in continued growth.
Fiscal Year 2022 Guidance
The company has raised its guidance for the fiscal year to account for its strong operating performance and M&A activity in the third quarter of 2022, while keeping fourth quarter expectations unchanged. The following guidance reflects the company's current expectations for the fiscal year ending Dec. 31:
- Revenue of approximately $2.0 billion.
- Adjusted EBITDA of approximately $503 million.
- Adjusted earnings per share of approximately $1.21.
The above guidance includes the impact of the 53rd week in fiscal year 2022. The impact of the extra week is expected to yield approximately $25 million in revenue, $5 million in adjusted EBITDA and approximately $0.02 in adjusted earnings per share.
The company also expects:
- Low-double-digit same-store sales growth.
- Net store growth of approximately 370:
- Maintenance: approximately 135 stores of which 75% will be franchised and 25% will be company-operated
- Car Wash: approximately 45 stores which will be company-operated
- Paint, Collision & Glass: approximately 190 stores of which 5% will be franchised and 95% will be company-operated.
The company has not included future M&A in its guidance for fiscal year 2022.
Source: Driven Brands
Abby Andrews