Opened 38 New Systemwide Shops in Q2
2023
Quarterly Revenue Increased 34% to $250
million
Announces Leadership Transition
Updates 2023 Guidance
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 second quarter ended June 30, 2023.
Joth Ricci, Chief Executive Officer of Dutch Bros, stated, “In
Q2, we delivered 34% year over year revenue growth, driven by new
shop openings and 3.8% systemwide same shop sales growth. Within
the quarter, we continued to see meaningful company-operated shop
margin expansion, driven by significant labor efficiency
improvement. This speaks to the benefit of our company-operated
model as we were able to effect changes across our shops and then
directly benefit from those changes. In Q2, we continued to see
general and administrative leverage, which taken together with our
growing shop margins, demonstrates our commitment to profitable
growth.”
He continued, “In Q2, we executed against our traffic-driving
initiatives, which underpinned 580 basis points of sequential same
shop sales growth quarter-over-quarter. We are encouraged by
customer response to these initiatives, and are excited to welcome
new Chief Marketing Officer, Tana Davila, to build upon this
momentum.”
He concluded, “I am very proud of the team for what they have
accomplished, and I am encouraged by the strength of the underlying
business. Our people pipeline and systems are as strong as ever -
we have a deep and growing bench of qualified operator candidates
and low, and further improving, employee turnover. We continue to
see meaningful expansion in shop profitability and leverage in
general and administrative costs as we scale our business. We
continue to keep a close eye on our costs, particularly those
related to new shop development, which we are working diligently to
mitigate. Taken together, this gives us confidence to remain
committed to our long-term new shop growth plan.”
Executive Leadership Transition and Succession
The Board of Directors approved a plan to transition Christine
Barone, who has served as the Company’s President since February
2023, into the role of Chief Executive Officer effective January 1,
2024. The remainder of 2023 will serve as a transitional period for
both leaders.
Travis Boersma, Co-founder and Executive Chairman, said, "Joth
has been a true partner and will forever be part of the Dutch Bros
family. I'm thankful for the work he's done helping us transition
from a small, regional business to one on the national stage. He's
been key in helping us grow and nurture our people-first culture so
we can continue to be a force for good in every community we serve.
I'm confident in the foundation he's created and I'm grateful for
the years he's dedicated to Dutch Bros and our crews."
Boersma added, "Christine is perfectly suited to take on the
President and CEO role at Dutch Bros. Since joining us in February,
she's become an integral part of this organization, demonstrating
her passion and ability to affect positive change in our business.
She has the experience and knowledge to help us scale, as well as a
true passion for people. I'm confident she is the best leader to
help us in our next phase."
Ricci stated, “It has been my great honor to serve as CEO and
I’m so proud of all this team has accomplished. Dutch Bros is a
strong, healthy business with a very special culture and long
runway of growth ahead. I feel very fortunate to have been a part
of its success for more than five years.”
Ricci added, “In setting the stage for the next phase of scaling
the company, Christine has demonstrated her abilities and deep
industry knowledge and experience. Over the last six months, she
has immersed herself in our business and culture, and her impact
has been felt immediately and decisively, notably in our real
estate strategy, data analytics and marketing. Having played a key
part in shaping our priorities and action plans moving forward, I
am confident the time is right for me to pass the baton to
Christine.”
Second Quarter 2023 Highlights
- Opened 38 new shops, bringing total shop count to 754 as
of June 30, 2023, a 25.0% increase from June 30, 2022. Of these 38
new shops opened across 8 states, 35 were company-operated. All of
these new shops continue to be led by existing or newly-promoted
regional operators.
- Total revenues grew 34.1% to $249.9 million as compared
to $186.4 million in the same period of 2022.
- System same shop sales2 increased 3.8%, 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
1.6%, as compared to the same period of 2022.
- Company-operated shop revenues increased 37.7% to $221.0
million, as compared to $160.5 million in the same period of
2022.
- Company-operated shop gross profit was $52.1 million as
compared to $31.2 million in the same period of 2022. In the second
quarter of 2023, company-operated shop gross margin, which includes
150bps of pre-opening expenses, improved to 23.6%, a year-over-year
increase of 420bps.
- Company-operated shop contribution1, a non-GAAP
financial measure, grew 69.2% to $66.9 million as compared to $39.5
million in the same period of 2022. In the second quarter of 2023,
company-operated shop contribution margin, which includes 150bps of
pre-opening expense, improved to 30.3%, a year-over-year increase
of 570 bps.
- Selling, general, and administrative expenses were $51.7
million (20.7% of revenue) as compared to $42.3 million (22.7% of
revenue) in the same period of 2022.
- Adjusted selling, general, and administrative expenses1,
a non-GAAP financial measure, were $39.3 million (15.7% of revenue)
as compared to $31.9 million (17.1% of revenue) in the same period
of 2022.
- Net income (loss) was $9.7 million as compared to $(1.8)
million in the same period of 2022.
- Adjusted EBITDA1, a non-GAAP financial measure, grew
103.0% to $48.6 million as compared to $23.9 million in the same
period of 2022.
- Adjusted net income1, a non-GAAP financial measure, was
$20.9 million as compared to $8.7 million in the same period of
2022.
- Net income (loss) per share of Class A and Class D common
stock - diluted was $0.05 as compared to $(0.02) per share in
the same period of 2022.
- Adjusted net income per fully exchanged share of diluted
common stock1, a non-GAAP financial measure, was $0.13 as
compared to $0.05 in the same period of 2022.
Outlook
Dutch Bros is providing the following guidance for the year
2023:
- Total system shop openings in 2023 are expected to
remain at least 150, of which at least 130 shops will be
company-operated.
- Total revenues are projected to be at the lower end of
the previously communicated range of $950 million to $1 billion,
which reflects current new shop AUV trends of approximately $1.7
million, partially offset by improved traffic trends and Q3 pricing
actions.
- Same shop sales2 growth is estimated to remain in the
low single digits.
- Adjusted EBITDA3 is now estimated to be between $135
million and $140 million, up from at least $125 million. This
reflects stronger than expected year-to-date profitability trends,
partially offset by revised revenue expectations and increased
levels of investment in support of key priorities.
- Capital expenditures are estimated to be in the range of
$225 million to $250 million, which includes approximately $15
million to $20 million in spending in 2023 for our new roasting
facility projected to open in 2024.
____________________
1
Reconciliation of GAAP to
non-GAAP results is provided in the section “Non-GAAP Financial
Measures”.
2
Same shop sales is defined in the
section “Select Financial Metrics”.
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 second quarter ended June 30,
2023.
Event: Second Quarter 2023 Conference Call and
Webcast
Date: Tuesday, August 8, 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 754 locations across 14 states as of
June 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 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 June 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 June
30,
Six Months Ended June
30,
(in thousands, except per share amounts;
unaudited)
2023
2022
2023
2022
REVENUES
Company-operated shops
$
220,952
$
160,512
$
394,116
$
290,699
Franchising and other
28,927
25,869
53,030
47,838
Total revenues
249,879
186,381
447,146
338,537
COSTS AND EXPENSES
Cost of sales
178,636
141,370
330,159
262,537
Selling, general and administrative
51,662
42,342
97,638
87,556
Total costs and expenses
230,298
183,712
427,797
350,093
INCOME (LOSS) FROM OPERATIONS
19,581
2,669
19,349
(11,556
)
OTHER EXPENSE
Interest expense, net
(9,058
)
(3,596
)
(16,944
)
(6,085
)
Other income
1,039
61
2,346
282
Total other expense
(8,019
)
(3,535
)
(14,598
)
(5,803
)
INCOME (LOSS) BEFORE INCOME TAXES
11,562
(866
)
4,751
(17,359
)
Income tax expense
1,851
885
4,431
671
NET INCOME (LOSS)
$
9,711
$
(1,751
)
$
320
$
(18,030
)
Less: Net income (loss) attributable to
non-controlling interests
6,959
(845
)
1,410
(12,177
)
NET INCOME (LOSS) ATTRIBUTABLE TO DUTCH
BROS INC.
$
2,752
$
(906
)
$
(1,090
)
$
(5,853
)
Net income (loss) per share of Class A and
Class D common stock:
Basic
$
0.05
$
(0.02
)
$
(0.02
)
$
(0.12
)
Diluted
$
0.05
$
(0.02
)
$
(0.02
)
$
(0.12
)
Weighted-average shares of Class A and
Class D common stock outstanding:
Basic
56,734
50,926
56,699
49,500
Diluted
57,428
50,926
56,699
49,500
DUTCH BROS INC.
Segment Financials
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands; unaudited)
2023
2022
2023
2022
Revenues:
Company-operated shops
$
220,952
$
160,512
$
394,116
$
290,699
Franchising and other
28,927
25,869
53,030
47,838
Total revenues
249,879
186,381
447,146
338,537
Cost of Sales:
Company-operated shops
168,873
129,294
313,165
242,842
Franchising and other
9,763
12,076
16,994
19,695
Total cost of sales
178,636
141,370
330,159
262,537
Segment gross profit:
Company-operated shops
52,079
31,218
80,951
47,857
Franchising and other
19,164
13,793
36,036
28,143
Total gross profit
71,243
45,011
116,987
76,000
Depreciation and amortization:
Company-operated shops
14,799
8,307
27,800
15,447
Franchising and other
1,297
1,520
2,658
2,862
All other
420
712
837
1,412
Total depreciation and amortization
16,516
10,539
31,295
19,721
Segment contribution:
Company-operated shops
66,878
39,525
108,751
63,304
Franchising and other
20,461
15,313
38,694
31,005
Total segment contribution
87,339
54,838
147,445
94,309
Selling, general and administrative
(51,662
)
(42,342
)
(97,638
)
(87,556
)
Interest expense, net
(9,058
)
(3,596
)
(16,944
)
(6,085
)
Other income
1,039
61
2,346
282
Income (loss) before income taxes
$
11,562
$
(866
)
$
4,751
$
(17,359
)
DUTCH BROS INC.
Company-Operated Shop Results
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(in thousands; unaudited)
$
%
$
%
$
%
$
%
Company-operated shops revenue
220,952
100.0
160,512
100.0
394,116
100.0
290,699
100.0
Beverage, food and packaging costs
59,433
26.8
43,548
27.1
108,385
27.6
79,170
27.2
Labor costs
58,735
26.6
47,240
29.4
107,284
27.2
89,001
30.6
Occupancy and other costs
32,642
14.8
26,621
16.6
63,201
16.0
49,624
17.1
Pre-opening costs
3,264
1.5
3,578
2.2
6,495
1.6
9,600
3.3
Depreciation and amortization
14,799
6.7
8,307
5.2
27,800
7.1
15,447
5.3
Company-operated shop costs and
expenses
168,873
76.4
129,294
80.6
313,165
79.5
242,842
83.5
Company-operated shops gross profit
52,079
23.6
31,218
19.4
80,951
20.5
47,857
16.5
Company-operated shops contribution 1
66,878
30.3
39,525
24.6
108,751
27.6
63,304
21.8
____________________
1
Reconciliation of GAAP to
non-GAAP results is provided in the section “Non-GAAP Financial
Measures”.
DUTCH BROS INC.
Summary Cash Flows Data
Six Months Ended June
30,
(in thousands; unaudited)
2023
2022
Net cash provided by operating
activities
$
45,843
$
16,713
Net cash used in investing activities
(102,058
)
(88,633
)
Net cash provided by financing
activities
59,754
74,707
Net increase in cash and cash
equivalents
$
3,539
$
2,787
Cash and cash equivalents at beginning of
period
20,178
18,506
Cash and cash equivalents at end of
period
$
23,717
$
21,293
DUTCH BROS INC.
Condensed Consolidated Balance
Sheets
(in thousands; unaudited)
June 30, 2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents
$
23,717
$
20,178
Accounts receivable, net
9,379
11,966
Inventories, net
47,608
39,229
Prepaid expenses and other current
assets
14,115
10,949
Total current assets
94,819
82,322
Property and equipment, net
446,565
365,468
Finance lease right-of-use assets, net
332,790
247,943
Operating lease right-of-use assets,
net
177,605
169,302
Intangibles, net
7,035
8,804
Goodwill
21,629
21,629
Deferred income tax assets, net
284,777
288,765
Other long-term assets
3,060
2,127
Total assets
$
1,368,280
$
1,186,360
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
24,648
$
21,270
Accrued liabilities
35,872
27,452
Other current liabilities
7,511
7,860
Deferred revenue
22,300
25,335
Line of credit
181,090
110,865
Current portion of finance lease
liabilities
9,867
7,971
Current portion of operating lease
liabilities
9,612
9,317
Current portion of long-term debt
3,238
2,609
Total current liabilities
294,138
212,679
Deferred revenue, net of current
portion
5,956
6,119
Tax receivable agreements liability, net
of current portion
218,768
220,923
Finance lease liabilities, net of current
portion
315,385
237,130
Operating lease liabilities, net of
current portion
169,444
161,228
Long-term debt, net of current portion
94,506
96,297
Other long-term liabilities
8
8
Total liabilities
1,098,205
934,384
Equity:
Common stock
2
2
Additional paid in capital
152,900
145,613
Accumulated other comprehensive income
905
813
Accumulated deficit
(18,400
)
(17,310
)
Total stockholders' equity attributable to
Dutch Bros Inc.
135,407
129,118
Non-controlling interests
134,668
122,858
Total equity
270,075
251,976
Total liabilities and equity
$
1,368,280
$
1,186,360
DUTCH BROS INC.
Select Financial Metrics
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands, except number of shops
data; unaudited)
2023
2022
2023
2022
Shop count, beginning of period
Company-operated
438
310
396
271
Franchised
278
262
275
267
716
572
671
538
Company-operated new openings
35
26
77
60
Franchised new openings
3
5
6
5
Acquisition of franchise shops
—
—
—
5
Shop count, end of period
Company-operated
473
336
473
336
Franchised
281
267
281
267
Total shop count
754
603
754
603
Systemwide AUV 1
N/A
N/A
$
1,928
$
1,900
Company-operated shops AUV 1
N/A
N/A
$
1,880
$
1,862
Systemwide same shop sales 2, 3
3.8
%
(3.3
)%
1.1
%
1.0
%
Company-operated same shop sales 2
1.6
%
(4.3
)%
(0.8
)%
0.3
%
Systemwide sales 3
$
375,216
$
297,403
$
677,998
$
551,968
Company-operated operating weeks 4
5,854
4,148
11,176
7,912
Franchising and other operating weeks
4
3,632
3,415
7,178
6,778
Dutch Rewards member registrations 5
573
496
1,067
985
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(in thousands; unaudited)
$
%
$
%
$
%
$
%
Company-operated shop revenues
220,952
100.0
160,512
100.0
394,116
100.0
290,699
100.0
Company-operated gross profit
52,079
23.6
31,218
19.4
80,951
20.5
47,857
16.5
Company-operated shop contribution 6
66,878
30.3
39,525
24.6
108,751
27.6
63,304
21.8
Selling, general, and administrative
expenses
51,662
20.7
42,342
22.7
97,638
21.8
87,556
25.9
Adjusted selling, general, and
administrative expenses 6
39,338
15.7
31,896
17.1
75,994
17.0
63,576
18.8
Net income (loss)
9,711
3.9
(1,751
)
(0.9
)
320
0.1
(18,030
)
(5.3
)
Adjusted EBITDA 6
48,599
19.4
23,939
12.8
72,479
16.2
33,601
9.9
____________________
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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Systemwide shop base
538
440
503
414
Company-operated shop base
276
193
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”.
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, 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, estimated expense related to
certain legal disputes, 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 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 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,
estimated expense related to certain legal disputes, 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.
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 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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(in thousands; unaudited)
$
%
$
%
$
%
$
%
Company-operated shop gross
profit
52,079
23.6
31,218
19.4
80,951
20.5
47,857
16.5
Depreciation and amortization
14,799
6.7
8,307
5.2
27,800
7.1
15,447
5.3
Company-operated shop
contribution
66,878
30.3
39,525
24.6
108,751
27.6
63,304
21.8
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(in thousands; unaudited)
$
%
$
%
$
%
$
%
Net income (loss)
9,711
3.9
(1,751
)
(0.9
)
320
0.1
(18,030
)
(5.3
)
Depreciation and amortization
16,516
6.7
10,539
5.7
31,295
7.0
19,721
5.8
Interest expense, net
9,058
3.6
3,596
1.9
16,944
3.8
6,085
1.8
Income tax expense
1,851
0.7
885
0.5
4,431
1.0
671
0.2
EBITDA
37,136
14.9
13,269
7.1
52,990
11.9
8,447
2.5
Equity-based compensation
10,149
4.1
10,446
5.6
19,319
4.3
20,346
6.0
COVID-19: “thank you pay” and catastrophic
leave
—
—
224
0.1
—
—
1,174
0.3
COVID-19: prepaid costs not utilized
—
—
—
—
—
—
1,200
0.4
Milestone events
—
—
—
—
—
—
2,434
0.7
Executives transition costs
225
0.1
—
—
375
0.1
—
—
TRAs remeasurements
(861
)
(0.5
)
—
—
(2,155
)
(0.5
)
—
—
Legal proceedings
1,950
0.8
—
—
1,950
0.4
—
—
Adjusted EBITDA
48,599
19.4
23,939
12.8
72,479
16.2
33,601
9.9
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(in thousands; unaudited)
$
%
$
%
$
%
$
%
Selling, general, and administrative
1
51,662
20.7
42,342
22.7
97,638
21.8
87,556
25.9
Equity-based compensation
(10,149
)
(4.1
)
(10,446
)
(5.6
)
(19,319
)
(4.3
)
(20,346
)
(6.0
)
COVID-19: prepaid costs not utilized
—
—
—
—
—
—
(1,200
)
(0.4
)
Milestone events
—
—
—
—
—
—
(2,434
)
(0.7
)
Executives transition costs
(225
)
(0.1
)
—
—
(375
)
(0.1
)
—
—
Legal proceedings
(1,950
)
(0.8
)
—
—
(1,950
)
(0.4
)
—
—
Adjusted selling, general, and
administrative
39,338
15.7
31,896
17.1
75,994
17.0
63,576
18.8
Three Months Ended June
30,
(in thousands; unaudited)
2023
2022
Net income (loss)
$
9,711
$
(1,751
)
Equity-based compensation
10,149
10,446
COVID-19: “thank you pay” and catastrophic
leave
—
224
Executives transition costs
225
—
TRAs remeasurements
(861
)
—
Legal proceedings
1,950
—
Income tax effects
(284
)
(215
)
Adjusted net income
$
20,890
$
8,704
____________________
1
Selling, general, and
administrative expenses include depreciation and amortization.
Three Months Ended June
30,
(in thousands, except per share amounts;
unaudited)
2023
2022
Weighted-average shares of Class A and
Class D common stock outstanding - basic
56,734
50,926
Dilutive effects of RSAs
694
—
Weighted-average shares of Class A and
Class D common stock outstanding - diluted
57,428
50,926
Dilutive effects of RSUs
2
1,530
Assumed exchange of weighted-average Class
B and Class C shares of common stock
105,756
110,085
Adjusted fully exchanged
weighted-average shares of common stock outstanding -
diluted
163,186
162,541
Net income (loss) per share of Class A
and Class D common stock - diluted
$
0.05
$
(0.02
)
Controlling and non-controlling interest
adjustments
0.02
0.01
Equity-based compensation
0.06
0.06
COVID-19: “thank you pay” and catastrophic
leave
—
—
Executives transition costs
—
—
TRAs remeasurements
(0.01
)
—
Legal proceedings
0.01
—
Income tax effects
—
—
Adjusted net income per fully exchanged
share of diluted common stock
$
0.13
$
0.05
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808264223/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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