Dutch Bros Inc. Reports Second Quarter 2023 Financial Results
- 34% YoY revenue growth in Q2 2023
- 38 new shops opened
- Company-operated shop gross profit improved to 23.6%, a YoY increase of 420bps
- Adjusted EBITDA grew 103% to $48.6 million
- None.
Opened 38 New Systemwide Shops in Q2 2023
Quarterly Revenue Increased
Announces Leadership Transition
Updates 2023 Guidance
Joth Ricci, Chief Executive Officer of Dutch Bros, stated, “In Q2, we delivered
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 $186.4 million -
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 increased1.6% , as compared to the same period of 2022. -
Company-operated shop revenues increased
37.7% to$221.0 million $160.5 million -
Company-operated shop gross profit was
$52.1 million $31.2 million 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 $39.5 million 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 $(1.8) million -
Adjusted EBITDA1, a non-GAAP financial measure, grew
103.0% to$48.6 million $23.9 million -
Adjusted net income1, a non-GAAP financial measure, was
$20.9 million $8.7 million -
Net income (loss) per share of Class A and Class D common stock - diluted was
$0.05 $(0.02) -
Adjusted net income per fully exchanged share of diluted common stock1, a non-GAAP financial measure, was
$0.13 $0.05
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 $1 billion $1.7 million - Same shop sales2 growth is estimated to remain in the low single digits.
-
Adjusted EBITDA3 is now estimated to be between
$135 million $140 million $125 million -
Capital expenditures are estimated to be in the range of
$225 million $250 million $15 million $20 million
| ____________________ | ||
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
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
|
|
Six Months Ended
|
||||||||||||
(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
|
|
Six Months Ended
|
||||||||||||
(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
|
|
Six Months Ended
|
||||||||||||
|
|
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
|
||||||
(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,
|
|
December 31,
|
||||
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
|
|
Six Months Ended
|
||||||||||||
(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
|
|
Six Months Ended
|
||||||||||||||||
|
|
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
|
|
Six Months Ended
|
||||
|
|
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
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
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 |
|
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
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
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
|
|
Six Months Ended
|
||||||||||||||||||||
|
|
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
|
|
Six Months Ended
|
||||||||||||||||||||
|
|
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
|
||||||
(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
|
||||||
(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
Source: Dutch Bros Inc.
