Opened 39 New Systemwide Shops in Q3
2023
Record Revenue of $265 million, a 33%
Increase Year-over-Year
Updates 2023 Guidance, Increases Range for
Adjusted EBITDA
Dutch Bros Inc. (NYSE: BROS; “Dutch Bros” or the “Company”), one
of the fastest-growing brands in the food service and restaurant
industry in the United States by location count, today reported
financial results for the third quarter ended September 30,
2023.
Joth Ricci, Chief Executive Officer of Dutch Bros, stated, “By
all accounts, Q3 was a fantastic quarter, and we are extremely
pleased with our unit openings, same shop sales, revenue, and
profitability results. I am very proud of the team for their
accomplishments, and I am encouraged by the strength of the
underlying business as we execute on our plan. In Q3, we opened 39
shops systemwide and entered two new states: Alabama and Kentucky.
Despite a difficult consumer backdrop, we drove a 4.0% increase in
systemwide same shop sales and delivered 33% growth in our top-line
revenue.”
Ricci continued, “Even as we demonstrate our commitment to
profitable growth, it is vital that we continue investing in the
business. Our focus will therefore remain on recruiting and
retaining top talent and keeping our operations efficient and
competitive long-term. This way, we can ensure that our people
pipeline and systems stay strong while preserving and amplifying
our culture.”
He concluded, “During Q3 in a span of less than 45 days, we
executed two transactions, an upgrade of our credit facility and a
follow-on equity offering, that unlocked a total of almost $500
million in incremental liquidity and positioned our balance sheet
to support a long runway of growth. We intend to continue
confidently pursuing high-quality investments in new shops on our
path to 4,000.”
Director Appointments
The Company welcomed two new members of the Board of Directors,
C. David Cone and Sean Sullivan, who were recently added to fill
vacancies on the Board resulting from the resignations of Shelley
Broader and Charles Esserman. Mr. Cone will serve on the Audit and
Risk Committee.
Mr. Cone served as Chief Financial Officer and Executive Vice
President at Taylor Morrison Home Corporation (NYSE: TMHC), a
residential homebuilding business and land developer, from October
2012 to December 2021. Prior to that, he held various roles at
PetSmart, Inc. from 2003 to 2012, while the company was
publicly-listed, most recently as Vice President, Finance Planning
and Analysis. Mr. Cone previously served on the board of directors
for Urbi Desarrollos Urbanos SAB DE CV. He received a B.A. in
Business Economics with an emphasis in Accounting from the
University of California at Santa Barbara.
Mr. Sullivan has served as Executive Vice President, Chief
Strategy and Legal Officer of The Duckhorn Portfolio, Inc. (NYSE:
NAPA), a producer of luxury wines in North America, since February
2019. Prior to that, he served as an attorney at Gibson, Dunn &
Crutcher LLP, a multinational law firm, from 2012 to 2019. Mr.
Sullivan previously worked as an investment banker at Credit Suisse
Group AG. He received a J.D. from Columbia Law School, and a B.A.
in Economics and Politics from St. Mary’s College of
California.
Third Quarter 2023 Highlights
- Completed follow-on offering of approximately 13.3
million new shares at $26.00 per share, raising approximately
$330.1 million net of offering costs and underwriting discounts and
commissions.
- Opened 39 new shops, bringing total shop count to 794 as
of September 30, 2023, a 23.9% increase from September 30, 2022. Of
these 39 new shops opened across 11 states, 37 were
company-operated. All of these new shops continue to be led by
existing or newly-promoted regional operators.
- Total revenues grew 33.2% to $264.5 million as compared
to $198.6 million in the same period of 2022.
- System same shop sales1 increased 4.0%, inclusive of the
impact of our fortressing strategy, which results in sales being
transferred from existing shops to new ones, as compared to the
same period in 2022. Company-operated same shop sales increased
2.8%, as compared to the same period of 2022.
- Company-operated shop revenues increased 36.3% to $236.5
million, as compared to $173.5 million in the same period of
2022.
- Company-operated shop gross profit was $57.0 million as
compared to $34.7 million in the same period of 2022. In the third
quarter of 2023, company-operated shop gross margin, which includes
180bps of pre-opening expenses improved to 24.1%, a year-over-year
increase of 410bps.
- Company-operated shop contribution2, a non-GAAP
financial measure, grew 65.4% to $73.3 million as compared to $44.3
million in the same period of 2022. In the third quarter of 2023,
company-operated shop contribution margin, which includes 180bps of
pre-opening expense, improved to 31.0%, a year-over-year increase
of 540 bps.
- Selling, general, and administrative expenses were $50.5
million (19.1% of revenue) as compared to $45.4 million (22.9% of
revenue) in the same period of 2022.
- Adjusted selling, general, and administrative expenses2,
a non-GAAP financial measure, were $40.6 million (15.3% of revenue)
as compared to $34.7 million (17.5% of revenue) in the same period
of 2022.
- Net income was $13.4 million as compared to $1.6 million
in the same period of 2022.
- Adjusted EBITDA2, a non-GAAP financial measure, grew
90.5% to $53.0 million as compared to $27.8 million in the same
period of 2022.
- Adjusted net income2, a non-GAAP financial measure, was
$22.4 million as compared to $14.3 million in the same period of
2022.
- Net income per share of Class A and Class D common stock -
diluted was $0.07 as compared to $0.03 per share in the same
period of 2022.
- Adjusted net income per fully exchanged share of diluted
common stock2, a non-GAAP financial measure, was $0.14 as
compared to $0.09 in the same period of 2022.
Outlook
Dutch Bros is providing the following guidance for the year
2023:
- Our expectation for total system shop openings in 2023 remains
unchanged. We expect to open at least 150 new shops, of which at
least 130 will be company-operated.
- Our expectation for capital expenditures remains unchanged,
which we expect to be in the range of $225 million to $250 million.
This includes approximately $15 million to $20 million in spending
in 2023 for a new roasting facility, which is projected to open in
2024.
- Our estimate of system same shop sales growth in the low single
digits remains unchanged.
- Our expectation that revenue would be at the lower end of the
range of $950 million to $1 billion remains unchanged.
- Given the strength of company-operated shops and continued
SG&A leverage, we now estimate Adjusted EBITDA3 will be between
$150 million to $155 million, up $15 million from last quarter.
This reflects stronger than expected year-to-date profitability in
Q3, partially offset by the increased shop labor investments in the
range of $1.5 million to $2.0 million as well as certain
investments we intend to make in business building activities
throughout the fourth quarter.
_________________
1
Same shop sales is defined in the
section “Select Financial Metrics”.
2
Reconciliation of GAAP to
non-GAAP results is provided in the section “Non-GAAP Financial
Measures”.
3
We have not reconciled guidance
for Adjusted EBITDA to the corresponding GAAP financial measure
because we do not provide guidance for the various reconciling
items. We are unable to provide guidance for these reconciling
items because we cannot determine their probable significance, as
certain items are outside of our control and cannot be reasonably
predicted due to the fact that these items could vary significantly
from period to period. Accordingly, reconciliations to the
corresponding GAAP financial measure is not available without
unreasonable effort.
Conference Call and Webcast Today
Joth Ricci, Chief Executive Officer, Christine Barone,
President, and Charles Jemley, Chief Financial Officer, will host a
conference call and webcast today at 5:00 p.m. Eastern Time (ET) to
discuss financial results for the third quarter ended September 30,
2023.
Event: Third Quarter 2023 Conference Call and Webcast
Date: Tuesday, November 7, 2023
Time: 5:00 p.m. ET
Dial In: 1-201-493-6779
Webcast: https://investors.dutchbros.com under “Events
& Presentations”.
The webcast will be archived shortly after the conference call
has concluded. We will also publish earnings presentation slides
related to these financial results on our website
https://investors.dutchbros.com under “Events &
Presentations”.
About Dutch Bros Inc.
Dutch Bros Inc. (NYSE: BROS) is a high growth operator and
franchisor of drive-thru shops that focus on serving high QUALITY,
hand-crafted beverages with unparalleled SPEED and superior
SERVICE. Founded in 1992 by brothers Dane and Travis Boersma, Dutch
Bros began with a double-head espresso machine and a pushcart in
Grants Pass, Oregon. While espresso-based beverages are still at
the core of what we do, Dutch Bros now offers a wide variety of
unique, customizable cold and hot beverages that delight a broad
array of customers. We believe Dutch Bros is more than just the
products we serve—we are dedicated to making a massive difference
in the lives of our employees, customers and communities. This
combination of hand-crafted and high-quality beverages, our unique
drive-thru experience and our community-driven, people-first
culture has allowed us to successfully open new shops and continue
to share the “Dutch Luv” at 794 locations across 16 states as of
September 30, 2023.
To learn more about Dutch Bros, visit www.dutchbros.com, follow
Dutch Bros Coffee on Instagram, Facebook, Twitter, and TikTok, and
download the Dutch Bros app to earn points and score rewards!
Dutch Bros, our Windmill logo, Dutch Bros. Blue Rebel, and our
other registered and common law trade names, trademarks and service
marks are the property of Dutch Bros Inc. All other trademarks,
trade names and service marks appearing in this Earnings Release
are the property of their respective owners. Solely for
convenience, the trademarks and trade names in this Earnings
Release may be referred to without the ® and ™ symbols, but such
references should not be construed as any indicator that their
respective owners will not assert their rights thereto.
Forward-Looking Statements
In addition to historical information, this release contains a
number of “forward-looking statements” as defined in the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include, without limitation, information concerning
Dutch Bros’ possible or assumed future results of operations,
including the effect of increased incremental liquidity on cash
runway, guidance for 2023, new shop openings, business strategies,
and potential growth opportunities. These statements are based on
Dutch Bros’ current expectations and beliefs, as well as a number
of assumptions concerning future events. When used in this press
release, the words “estimates,” “projected,” “expects,” “should,”
“guidance,” and variations of these words or similar expressions
(or the negative versions of such words or expressions) are
intended to identify forward-looking statements. Such
forward-looking statements are subject to known and unknown risks,
uncertainties, assumptions and other important factors, many of
which are outside Dutch Bros’ control that could cause actual
results to differ materially from the results discussed in the
forward-looking statements, including those related to general
economic conditions, commodity inflation, increased labor costs,
disruptions in our supply chain, ability to hire and retain
employees, and other risks, including those described under the
heading “Risk Factors” in our Annual Report on Form 10-K for the
year ended December 31, 2022 filed with the SEC on February 27,
2023, and in our future reports to be filed with the SEC, including
our Quarterly Report on Form 10-Q for the period ended September
30, 2023. Forward-looking statements contained in this press
release are made as of this date, and Dutch Bros undertakes no duty
to update such information except as required under applicable
law.
DUTCH BROS INC.
Condensed Consolidated Statements
of Operations
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except per share amounts;
unaudited)
2023
2022
2023
2022
REVENUES
Company-operated shops
$
236,472
$
173,501
$
630,588
$
464,200
Franchising and other
28,035
25,147
81,065
72,985
Total revenues
264,507
198,648
711,653
537,185
COSTS AND EXPENSES
Cost of sales
189,323
148,092
519,482
410,629
Selling, general and administrative
50,490
45,378
148,128
132,934
Total costs and expenses
239,813
193,470
667,610
543,563
INCOME (LOSS) FROM OPERATIONS
24,694
5,178
44,043
(6,378
)
OTHER EXPENSE
Interest expense, net
(9,325
)
(5,011
)
(26,269
)
(11,096
)
Other income (expense), net
(140
)
(1,944
)
2,206
(1,662
)
Total other expense
(9,465
)
(6,955
)
(24,063
)
(12,758
)
INCOME (LOSS) BEFORE INCOME TAXES
15,229
(1,777
)
19,980
(19,136
)
Income tax expense (benefit)
1,828
(3,371
)
6,259
(2,700
)
NET INCOME (LOSS)
$
13,401
$
1,594
$
13,721
$
(16,436
)
Less: Net income (loss) attributable to
non-controlling interests
9,191
(169
)
10,601
(12,346
)
NET INCOME (LOSS) ATTRIBUTABLE TO DUTCH
BROS INC.
$
4,210
$
1,763
$
3,120
$
(4,090
)
Net income (loss) per share of Class A and
Class D common stock:
Basic
$
0.07
$
0.03
$
0.05
$
(0.08
)
Diluted
$
0.07
$
0.03
$
0.05
$
(0.08
)
Weighted-average shares of Class A and
Class D common stock outstanding:
Basic
59,366
53,118
57,598
50,719
Diluted
60,214
54,418
57,598
50,719
DUTCH BROS INC.
Segment Financials
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands; unaudited)
2023
2022
2023
2022
Revenues:
Company-operated shops
$
236,472
$
173,501
$
630,588
$
464,200
Franchising and other
28,035
25,147
81,065
72,985
Total revenues
264,507
198,648
711,653
537,185
Cost of Sales:
Company-operated shops
179,480
138,781
492,645
381,623
Franchising and other
9,843
9,311
26,837
29,006
Total cost of sales
189,323
148,092
519,482
410,629
Segment gross profit:
Company-operated shops
56,992
34,720
137,943
82,577
Franchising and other
18,192
15,836
54,228
43,979
Total gross profit
75,184
50,556
192,171
126,556
Depreciation and amortization:
Company-operated shops
16,332
9,624
44,132
25,071
Franchising and other
1,371
1,478
4,029
4,340
All other ¹
413
708
1,250
2,120
Total depreciation and amortization
18,116
11,810
49,411
31,531
Segment contribution:
Company-operated shops
73,324
44,344
182,075
107,648
Franchising and other
19,563
17,314
58,257
48,319
Total segment contribution
92,887
61,658
240,332
155,967
Selling, general and administrative
(50,490
)
(45,378
)
(148,128
)
(132,934
)
Interest expense, net
(9,325
)
(5,011
)
(26,269
)
(11,096
)
Other income (expense), net
(140
)
(1,944
)
2,206
(1,662
)
Income (loss) before income taxes
$
15,229
$
(1,777
)
$
19,980
$
(19,136
)
1
Included in selling, general and
administrative expenses and not part of segment contribution
calculation.
DUTCH BROS INC.
Company-Operated Shop Results
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
(in thousands; unaudited)
$
%
$
%
$
%
$
%
Company-operated shops revenue
236,472
100.0
173,501
100.0
630,588
100.0
464,200
100.0
Beverage, food and packaging costs
61,317
25.9
47,092
27.1
169,702
26.8
126,262
27.2
Labor costs
61,521
26.0
49,000
28.3
168,805
26.8
138,001
29.8
Occupancy and other costs
36,126
15.3
28,517
16.4
99,327
15.8
78,141
16.8
Pre-opening costs
4,184
1.8
4,548
2.6
10,679
1.7
14,148
3.0
Depreciation and amortization
16,332
6.9
9,624
5.6
44,132
7.0
25,071
5.4
Company-operated shop costs and
expenses
179,480
75.9
138,781
80.0
492,645
78.1
381,623
82.2
Company-operated shops gross profit
56,992
24.1
34,720
20.0
137,943
21.9
82,577
17.8
Company-operated shops contribution 1
73,324
31.0
44,344
25.6
182,075
28.9
107,648
23.2
_________________
1
Reconciliation of GAAP to non-GAAP results
is provided in the section “Non-GAAP Financial Measures”.
DUTCH BROS INC.
Summary Cash Flows Data
Nine Months Ended
September 30,
(in thousands; unaudited)
2023
2022
Net cash provided by operating
activities
$
94,906
$
42,768
Net cash used in investing activities
(167,461
)
(139,411
)
Net cash provided by financing
activities
202,163
112,704
Net increase in cash and cash
equivalents
$
129,608
$
16,061
Cash and cash equivalents at beginning of
period
20,178
18,506
Cash and cash equivalents at end of
period
$
149,786
$
34,567
DUTCH BROS INC.
Condensed Consolidated Balance
Sheets
(in thousands; unaudited)
September 30,
2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents
$
149,786
$
20,178
Accounts receivable, net
9,136
11,966
Inventories, net
50,296
39,229
Prepaid expenses and other current
assets
12,188
10,949
Total current assets
221,406
82,322
Property and equipment, net
498,705
365,468
Finance lease right-of-use assets, net
364,757
247,943
Operating lease right-of-use assets,
net
190,864
169,302
Intangibles, net
6,215
8,804
Goodwill
21,629
21,629
Deferred income tax assets, net
330,278
288,765
Other long-term assets
5,176
2,127
Total assets
$
1,639,030
$
1,186,360
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
27,703
$
21,270
Accrued liabilities
40,309
27,452
Other current liabilities
7,621
7,860
Deferred revenue
22,414
25,335
Line of credit
—
110,865
Current portion of finance lease
liabilities
9,574
7,971
Current portion of operating lease
liabilities
9,326
9,317
Current portion of long-term debt
3,864
2,609
Total current liabilities
120,811
212,679
Deferred revenue, net of current
portion
5,524
6,119
Tax receivable agreements liability, net
of current portion
219,183
220,923
Finance lease liabilities, net of current
portion
347,961
237,130
Operating lease liabilities, net of
current portion
182,201
161,228
Long-term debt, net of current portion
92,704
96,297
Other long-term liabilities
8
8
Total liabilities
968,392
934,384
Equity:
Common stock
2
2
Additional paid in capital
344,771
145,613
Accumulated other comprehensive income
1,093
813
Accumulated deficit
(14,190
)
(17,310
)
Total stockholders' equity attributable to
Dutch Bros Inc.
331,676
129,118
Non-controlling interests
338,962
122,858
Total equity
670,638
251,976
Total liabilities and equity
$
1,639,030
$
1,186,360
DUTCH BROS INC.
Select Financial Metrics
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except number of shops
data; unaudited)
2023
2022
2023
2022
Shop count, beginning of period
Company-operated
473
336
396
271
Franchised
281
267
275
267
754
603
671
538
Company-operated new openings
37
34
114
94
Franchised new openings
2
4
8
9
Acquisition of franchise shops
—
—
—
5
Re-openings 7
1
—
1
—
Shop count, end of period
Company-operated
510
370
510
370
Franchised
284
271
284
271
Total shop count
794
641
794
641
Systemwide AUV 1
N/A
N/A
$
1,950
$
1,917
Company-operated shops AUV 1
N/A
N/A
$
1,901
$
1,875
Systemwide same shop sales 2, 3
4.0
%
1.7
%
2.1
%
1.4
%
Company-operated same shop sales 2
2.8
%
1.0
%
0.5
%
1.1
%
Systemwide sales 3
$
391,286
$
312,961
$
1,069,284
$
864,929
Company-operated operating weeks 4
6,400
4,614
17,576
12,526
Franchising and other operating weeks
4
3,703
3,513
10,881
10,291
Dutch Rewards member registrations 5
583
566
1,650
1,551
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
(in thousands; unaudited)
$
%
$
%
$
%
$
%
Company-operated shop revenues
236,472
100.0
173,501
100.0
630,588
100.0
464,200
100.0
Company-operated gross profit
56,992
24.1
34,720
20.0
137,943
21.9
82,577
17.8
Company-operated shop contribution 6
73,324
31.0
44,344
25.6
182,075
28.9
107,648
23.2
Selling, general, and administrative
expenses
50,490
19.1
45,378
22.9
148,128
20.8
132,934
24.8
Adjusted selling, general, and
administrative expenses 6
40,567
15.3
34,729
17.5
116,561
16.4
98,305
18.3
Net income (loss)
13,401
5.1
1,594
0.8
13,721
1.9
(16,436)
(3.1)
Adjusted EBITDA 6
53,008
20.0
27,830
14.0
125,487
17.6
61,431
11.4
___________
1
AUVs are determined based on the net sales
for any trailing twelve-month period for systemwide and
company-operated shops that have been open a minimum of 15 months.
AUVs are calculated by dividing the systemwide and company-operated
shop net sales by the total number of systemwide and
company-operated shops, respectively. Management uses this metric
as an indicator of shop growth and future expectations of mature
locations.
2
Same shop sales reflects the change in
year-over-year sales for the comparable shop base, which we define
as shops open for 15 complete months or longer. Management uses
this metric as an indicator of shop growth and future expansion
strategy. The number of shops included in the systemwide and
company-operated comparable bases for the respective periods are
presented in the following table.
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Systemwide shop base
572
452
503
414
Company-operated shop base
310
203
246
173
3
Systemwide sales and systemwide same shop
sales are operating measures that include sales at company-operated
shops and sales at franchised shops during the comparable periods
presented. Franchise sales represent sales at all franchise shops
and are revenues to our franchisees. We do not record franchise
sales as revenues; however, our royalty revenues and advertising
fund contributions are calculated based on a percentage of
franchise sales. As these metrics include sales reported to us by
our non-consolidated franchise partners, these metrics should be
considered as a supplement to, not a substitute for, our results as
reported under GAAP. Management uses these metrics as indicators of
our system’s overall financial health, growth and future expansion
prospects.
4
Company-operated and franchise shops
operating weeks are calculated based on the number operating days
for the shop base and dividing by 7. Our shop base is defined as
shops opened as of the end date of the periods presented. The
operating weeks calculations reflect re-acquired franchises through
2022. Management uses these metrics as indicators of our system’s
overall financial health, growth and future expansion
prospects.
5
Dutch Rewards is our digitally-based
rewards program available exclusively through the Dutch Rewards
app. Management uses this metric as an indicator of customer
loyalty adoption of our Dutch Rewards app and future promotional
plans.
6
Reconciliation of GAAP to non-GAAP results
is provided in the section “Non-GAAP Financial Measures”.
7
Re-opening of a shop that was temporarily
closed in 2021.
Non-GAAP Financial Measures
In addition to disclosing financial results in accordance with
U.S. GAAP, this release contains references to the non-GAAP
financial measures below. We believe these non-GAAP financial
measures provide investors with useful supplemental information
about our operating performance, enable comparison of financial
trends and results between periods where certain items may vary
independent of business performance, and allow for greater
transparency with respect to key metrics used by management in
operating our business and measuring our performance.
Our non-GAAP financial measures reflect adjustments based on one
or more of the following items, as well as the related income tax
effects where applicable. Income tax effects have been calculated
based on the combined total non-GAAP adjustments using our total
effective tax rate. These non-GAAP financial measures should not be
considered a substitute for, or superior to, financial measures
calculated in accordance with U.S. GAAP, and the financial results
calculated in accordance with U.S. GAAP and reconciliations from
these results should be carefully evaluated.
Company-operated shop contribution (in dollars and as a
percentage of revenue)
Definition and/or calculation
Company-operated segment gross profit, before company-operated
shop depreciation and amortization. Company-operated shop
contribution in dollars (as defined), taken as a percentage of
company-operated shop revenue.
Usefulness to management and
investors
This non-GAAP measure is used by our management in making
performance decisions without the impact of non-cash depreciation
and amortization charges. This is a standard metric used across the
industry by our investors.
EBITDA, Adjusted EBITDA (in dollars and as a percentage of
revenue)
EBITDA — definition and/or
calculation
Net income (loss) before interest expense (net of interest
income), income tax expense (benefit), and depreciation and
amortization expense.
Adjusted EBITDA — definition and/or
calculation
Defined as EBITDA (as defined above), excluding equity-based
compensation, COVID-19: “Thank You” pay and catastrophic leave
expenses, COVID-19: prepaid costs not utilized, costs incurred for
company-wide milestone events, executives transition costs, (gain)
loss on the remeasurement of the liability related to the TRAs, and
estimated expense related to certain legal disputes.
Usefulness to management and
investors
These non-GAAP measures are supplemental operating performance
measures we believe facilitate comparisons to historical
performance and competitors’ operating results. We believe these
non-GAAP measures presented provide investors with a supplemental
view of our operating performance that facilitates analysis and
comparisons of our ongoing business operations because they exclude
items that may not be indicative of our ongoing operating
performance.
Adjusted selling, general, and administrative (in dollars and
as a percentage of revenue)
Definition and/or calculation
Selling, general, and administrative expenses, excluding
equity-based compensation expense, COVID-19: prepaid costs not
utilized, costs incurred for company-wide milestone events,
executive transitions costs, and estimated expense related to
certain legal disputes.
Usefulness to management and
investors
This non-GAAP measure is used as a supplemental measure of
operating performance that we believe is useful to evaluate our
performance period over period and relative to our competitors. We
believe the non-GAAP measure presented provides investors with a
supplemental view of our operating performance that facilitates
analysis and comparisons of our ongoing business operations because
it excludes items that may not be indicative of our ongoing
operating performance.
Adjusted net income
Definition and/or calculation
Net income (loss), excluding equity-based compensation expense,
COVID-19: “thank you” pay and catastrophic leave expenses,
executives transition costs, (gain) loss on the remeasurement of
the liability related to the TRAs, and income tax effects of items
excluded from net income (loss).
Usefulness to management and
investors
This non-GAAP measure is used as a supplemental measure of
operating performance that we believe is useful to evaluate our
performance period over period and relative to our competitors. We
believe this measure facilitates a better comparison with other
companies that have different organizational and tax structures, as
well as comparisons period over period.
Adjusted fully exchanged weighted-average shares of diluted
common stock outstanding
Definition and/or calculation
Weighted-average shares of Class A and Class D common stock
outstanding - basic with addition of dilutive impacts of RSAs and
RSUs, as well as the assumed exchange of the weighted-average
shares of Class B and Class C common stock.
Usefulness to management and
investors
This non-GAAP measure is used a supplemental measure of
operating performance that we believe is useful to evaluate our
performance period over period and relative to our competitors. By
adding in the assumed full exchange of all of our outstanding Class
B and Class C common stock, we believe this measure facilitates a
better comparison with other companies that have different
organizational and tax structures, as well as comparisons period
over period.
Adjusted net income per fully exchanged share of diluted
common stock
Definition and/or calculation
Net income (loss) per share of Class A and Class D common stock
- diluted, excluding per share impacts of equity-based compensation
expense, COVID-19: “thank you” pay and catastrophic leave expenses,
COVID-19: prepaid costs not utilized, costs incurred for
company-wide milestone events, executives transition costs, income
tax effects of items excluded from net income (loss), and removal
of per share impacts of controlling and non-controlling
interests.
Usefulness to management and
investors
This non-GAAP measure is used as a supplemental measure of
operating performance that we believe is useful to evaluate our
performance period over period and relative to our competitors. By
assuming the full exchange of all of our outstanding Class B and
Class C common stock and related net income (loss) adjustments, we
believe this measure facilitates a better comparison with other
companies that have different organizational and tax structures, as
well as comparisons period over period.
Non-GAAP adjustments
Below are the definitions of the non-GAAP adjustments that are
used in the calculation of our non-GAAP measures, as described
above.
Equity-based compensation
Non-cash expenses related to the grant and vesting of stock
awards, restricted stock awards and restricted stock units in Dutch
Bros Inc. and/or Profit Interest Units in Dutch Bros OpCo1 to
certain eligible employees.
COVID-19: “thank you” pay and catastrophic
leave
Costs related to two separate programs established to support
employees during the COVID-19 pandemic. We implemented an hourly
wage supplement program for shop employees who continued to work
while their state or county was under a stay at home order or
similar lockdown requirement. This program lasted in various
markets until April 2021. We also established a catastrophic leave
policy that provided paid leave to employees who were required to
quarantine due to in-shop exposures and could not work their
regular hours. The catastrophic leave program was retired in May
2023.
COVID-19: Prepaid costs not
utilized
Costs related to the write-off of previously prepaid expenses
for the development of a virtual corporate engagement platform
built in response to the health restrictions of the COVID-19
pandemic. The platform was developed as a substitute for in person
engagement practices used pre-pandemic. The platform has been
determined ineffective, particularly as we shift back to in-person
events with the easing of restrictions related to the COVID-19
pandemic.
Milestone events
Costs incurred for company-wide events to celebrate 30 years of
serving high QUALITY, hand-crafted beverages with unparalleled
SPEED and superior SERVICE to our customers.
Executives transition costs
Employee severance and related benefit costs, as well as sign-on
bonus(es) for several executive level transitions occurring in 2022
and 2023.
TRAs remeasurements
(Gain) loss impacts on condensed consolidated statements of
operations related to adjustments of our TRAs liabilities.
Legal proceedings
Estimated loss accrual related to certain legal disputes.
Dilutive effects of RSAs and
RSUs
Addition of incremental shares of RSAs and RSUs calculated under
the treasury stock method, when they are dilutive for the
calculation of weighted-average shares on a non-GAAP basis.
Assumed exchange of weighted-average Class
B and Class C shares of common stock
Weighted-average shares of Class B and Class C common stock that
are assumed to be exchanged for Class A common stock.
Removal of allocation for controlling and
non-controlling interests
Removal of the net income (loss) allocation to controlling and
non-controlling interests to align the numerator of the net income
(loss) per share to the denominator, which assumes the full
exchange of shares of Class B and Class C common stock.
___________
1
Dutch Bros OpCo refers to Dutch Mafia,
LLC, a Delaware limited liability company, and a direct subsidiary
of Dutch Bros Inc.
Supplemental Reconciliations of GAAP Actuals to Non-GAAP
Actuals
Following are the reconciliations of the most comparable GAAP
financial measure to non-GAAP financial measure. These non-GAAP
financial measures should not be considered a substitute for, or
superior to, financial measures calculated in accordance with U.S.
GAAP, and the reconciliations from U.S. GAAP to Non-GAAP actuals
should be carefully evaluated. Please refer to "Explanation of
Non-GAAP Financial Measures" in this release for a detailed
explanation of the adjustments made to the comparable U.S. GAAP
measures, the ways management uses the non-GAAP measures, and the
reasons why management believes the non-GAAP measures provide
useful information for investors.
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(in thousands; unaudited)
$
%
$
%
$
%
$
%
Company-operated shop gross
profit
56,992
24.1
34,720
20.0
137,943
21.9
82,577
17.8
Depreciation and amortization
16,332
6.9
9,624
5.6
44,132
7.0
25,071
5.4
Company-operated shop
contribution
73,324
31.0
44,344
25.6
182,075
28.9
107,648
23.2
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(in thousands; unaudited)
$
%
$
%
$
%
$
%
Net income (loss)
13,401
5.1
1,594
0.8
13,721
1.9
(16,436
)
(3.1
)
Depreciation and amortization
18,116
6.8
11,810
5.9
49,411
6.9
31,531
5.9
Interest expense, net
9,325
3.5
5,011
2.5
26,269
3.7
11,096
2.1
Income tax expense (benefit)
1,828
0.7
(3,371
)
(1.7
)
6,259
0.9
(2,700
)
(0.5
)
EBITDA
42,670
16.1
15,044
7.6
95,660
13.4
23,491
4.4
Equity-based compensation
9,698
3.7
10,649
5.4
29,017
4.0
30,995
5.8
COVID-19: “thank you pay” and catastrophic
leave
—
—
227
0.1
—
—
1,401
0.3
COVID-19: prepaid costs not utilized
—
—
—
—
—
—
1,200
0.2
Milestone events
—
—
—
—
—
—
2,434
0.5
Executives transition costs
225
0.1
—
—
600
0.1
—
—
TRAs remeasurements
415
0.1
1,910
1.0
(1,740
)
(0.2
)
1,910
0.4
Legal proceedings
—
—
—
—
1,950
0.3
—
—
Adjusted EBITDA
53,008
20.0
27,830
14.0
125,487
17.6
61,431
11.4
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(in thousands; unaudited)
$
%
$
%
$
%
$
%
Selling, general, and administrative
1
50,490
19.1
45,378
22.9
148,128
20.8
132,934
24.8
Equity-based compensation
(9,698
)
(3.7
)
(10,649
)
(5.4
)
(29,017
)
(4.0
)
(30,995
)
(5.8
)
COVID-19: prepaid costs not utilized
—
—
—
—
—
—
(1,200
)
(0.2
)
Milestone events
—
—
—
—
—
—
(2,434
)
(0.5
)
Executives transition costs
(225
)
(0.1
)
—
—
(600
)
(0.1
)
—
—
Legal proceedings
—
—
—
—
(1,950
)
(0.3
)
—
—
Adjusted selling, general, and
administrative
40,567
15.3
34,729
17.5
116,561
16.4
98,305
18.3
_________________
1
Selling, general, and administrative
expenses include depreciation and amortization.
Three Months Ended September
30,
(in thousands; unaudited)
2023
2022
Net income
$
13,401
$
1,594
Equity-based compensation
9,698
10,649
COVID-19: “thank you pay” and catastrophic
leave
—
227
Executives transition costs
225
—
TRAs remeasurements
415
1,910
Income tax effects
(1,327
)
(115
)
Adjusted net income
$
22,412
$
14,265
Three Months Ended September
30,
(in thousands, except per share amounts;
unaudited)
2023
2022
Weighted-average shares of Class A and
Class D common stock outstanding - basic
59,366
53,118
Dilutive effects of RSAs
848
1,300
Weighted-average shares of Class A and
Class D common stock outstanding - diluted
60,214
54,418
Assumed exchange of weighted-average Class
B and Class C shares of common stock
105,756
107,920
Adjusted fully exchanged
weighted-average shares of common stock outstanding -
diluted
165,970
162,338
Net income per share of Class A and
Class D common stock - diluted
$
0.07
$
0.03
Controlling and non-controlling interest
adjustments
0.02
(0.02
)
Equity-based compensation
0.06
0.07
COVID-19: “thank you pay” and catastrophic
leave
—
—
Executives transition costs
—
—
TRAs remeasurements
—
0.01
Income tax effects
(0.01
)
—
Adjusted net income per fully exchanged
share of diluted common stock
$
0.14
$
0.09
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231107808077/en/
For Investor Relations inquiries: Raphael Gross ICR (203)
682-8253 investors@dutchbros.com
For Media Relations inquiries: Jessica Liddell ICR (203)
682-8208 jessica.liddell@icrinc.com
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