On November 1, 2023, Driven Brands Holdings Inc (DRVN, Financial) released its financial results for the third quarter ended September 30, 2023. The company reported a 12% increase in revenue, reaching $581.0 million, driven by 6% same-store sales growth and 6% net store growth. However, due to an $851 million non-cash goodwill impairment in the Car Wash segment and $111 million in non-cash asset impairment charges and lease terminations, the company experienced a net loss of $799.3 million.
Financial Performance
Despite the net loss, Driven Brands added 55 net new stores in the quarter and saw a 10% increase in system-wide sales, reaching $1.6 billion. Adjusted Net Income decreased by 39% to $33.7 million, and Adjusted EBITDA decreased by 2% to $127.2 million. However, cash provided by operating activities for the nine months ended September 30, 2023, increased by 26% to $212.0 million compared to $167.7 million in the prior year.
Company's Commentary
This quarter, we continued to see meaningful growth and strong operational performance across our portfolio excluding our US Car Wash and Glass businesses. I’m delighted to report we recently opened our 300th franchised Take 5 Oil Change location and I’m looking forward to celebrating our 1,000th location in the fourth quarter,” said Jonathan Fitzpatrick, President and Chief Executive Officer.
Financial Outlook
Despite the challenges faced in the third quarter, Driven Brands reaffirms its financial outlook for fiscal year 2023, expecting revenue to be around $2.30 billion, Adjusted EBITDA to be around $535 million, and Adjusted EPS to be around $0.92.
Key Performance Indicators
The Maintenance segment reported $502.5 million in system-wide sales, with a same-store sales growth of 9.1%. The Car Wash segment, however, experienced a 4.0% decrease in same-store sales, reporting $141.7 million in system-wide sales. The Paint, Collision & Glass segment reported $845.6 million in system-wide sales, with a same-store sales growth of 8.6%.
Capital and Liquidity
Driven Brands ended the third quarter with total liquidity of $386.8 million, consisting of $211.3 million in cash and cash equivalents, and $175.5 million of undrawn capacity on its variable funding securitization senior notes and revolving credit facility.
Share Repurchase Program
During the third quarter, the company repurchased 3,601,694 shares of its common stock for approximately $50 million at an average price of $13.87, completing the repurchase authorization approved by the Board of Directors in August 2023.
Explore the complete 8-K earnings release (here) from Driven Brands Holdings Inc for further details.
