Dutch Bros Inc. Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

Dutch Bros reported strong financial results for Q2 2024, with $325 million in revenues, marking a 30% YoY increase.

The company opened 36 new shops, surpassing the 900th shop milestone. Same-shop sales grew by 4.1%, while company-operated shop revenues rose 33.6% to $295.3 million. Net income reached $22.2 million, up from $9.7 million in Q2 2023, and adjusted EBITDA increased by 34.1% to $65.2 million.

CEO Christine Barone highlighted the success of traffic-driving initiatives and mobile order roll-out. Dutch Bros also raised its 2024 revenue guidance to between $1.215 billion and $1.230 billion.

Positive

• Total revenues grew 30% to $324.9 million.
• Opened 36 new shops, surpassing 900th shop milestone.
• Net income rose to $22.2 million, compared to $9.7 million in Q2 2023.
• Adjusted EBITDA increased 34.1% to $65.2 million.
• Raised 2024 revenue guidance to $1.215-$1.230 billion.

Negative

• None.

Insights

Financial Analyst

Dutch Bros' Q2 2024 results showcase robust growth and operational efficiency. Revenue surged 30% YoY to $324.9 million, driven by a 4.1% increase in system same-shop sales and 36 new shop openings. The company's expansion strategy remains on track, with 12 consecutive quarters of 30+ new shop openings.

Profitability metrics are equally impressive. Company-operated shop gross margin improved by 10bps to 23.7%, while contribution margin expanded 50bps to 30.8%. Adjusted EBITDA grew 34.1% to $65.2 million, indicating strong operational leverage.

The revised 2024 outlook reflects management's confidence, with revenue guidance raised to $1.215-$1.230 billion and Adjusted EBITDA to $200-$210 million. However, investors should note the slight reduction in expected shop openings, now at the lower end of the 150-165 range.

Market Research Analyst

Dutch Bros' performance demonstrates its resilience in a challenging consumer environment. The 4.1% system same-shop sales growth, despite potential cannibalization from new openings, indicates strong brand loyalty and effective marketing strategies.

The company's focus on customer engagement through its rewards program is paying off, with 67% of transactions coming from Dutch Rewards members. This high engagement rate provides valuable data for personalized marketing and helps drive repeat visits.

The expansion of mobile order capabilities, now in approximately 200 shops, is a strategic move to enhance customer convenience and potentially increase order frequency. The plan to roll out mobile ordering to a majority of shops by year-end could be a significant driver for future growth, aligning with consumer preferences for digital ordering.

Tech Expert

Dutch Bros' technology investments are yielding positive results. The enhanced app and Dutch Rewards program are driving customer engagement, with 67% of transactions coming from rewards members. This high adoption rate not only fosters loyalty but also provides valuable data for personalized marketing and menu optimization.

The accelerated rollout of mobile ordering capabilities is a strategic move. Expanding from 38 shops in Q2 to approximately 200 by July-end demonstrates the company's agility in tech implementation. The goal to have mobile ordering in most shops by year-end could significantly enhance operational efficiency and customer convenience, potentially driving higher order frequency and average ticket size.

However, investors should monitor the impact of these tech investments on SG&A expenses, which have increased year-over-year, albeit at a slower rate than revenue growth.

Achieves $325 million in Revenues in Quarter, a 30% Increase Year-over-Year

36 New Shop Openings During Quarter, Surpasses 900th Shop Milestone

Raises Revenue and Adj. EBITDA Guidance

GRANTS PASS, Ore.--(BUSINESS WIRE)-- Dutch Bros Inc. (NYSE: BROS; “Dutch Bros” or the “Company”), one of the fastest-growing brands in the quick service beverage industry in the United States by location count, today reported financial results for the second quarter ended June 30, 2024.

Christine Barone, Chief Executive Officer and President of Dutch Bros, stated, “Our quarterly performance demonstrates the long runway ahead for Dutch Bros as we once again delivered strong top-line and profitability growth. Revenue rose 30%, including a 4.1% increase in system same-shop sales, and was underpinned by excellent margin flow through. With strong results 2024 to date despite the volatile consumer backdrop and expectations for a robust second half to the year, we are pleased to be raising our annual guidance.”

Barone continued, “The traffic-driving initiatives that we began implementing in 2023 are continuing to drive our business momentum. Approximately 67% of all transactions during the second quarter came through Dutch Rewards members, as our enhanced app is enabling us to efficiently and effectively connect with our loyal customers. We are also seeing phenomenal traction driving awareness in new markets through paid advertising and plan to further invest in this opportunity.”

Barone concluded, “We also continued with successful new shop openings and our mobile order roll-out. We added 36 shops in the second quarter, marking the 12th consecutive quarter of 30 or more new shop openings. As of June 30th, we had 38 shops in Arizona, California, and Texas with mobile order capabilities and have since expanded the rollout to approximately 200 shops as of the end of July. We are increasingly optimistic that we will have mobile order capabilities in a majority of our shops by year-end.”

Second Quarter 2024 Highlights

• Opened 36 new shops, 30 of which were company-operated, across 13 states.
• Total revenues grew 30.0% to $324.9 million as compared to $249.9 million in the same period of 2023.
• System same shop sales¹ increased 4.1% relative to the same period in 2023, inclusive of the impact of our fortressing strategy, where some sales are being transferred from existing shops to new shops. Company-operated same shop sales increased 5.2%, relative to the same period of 2023.
• Company-operated shop revenues increased 33.6% to $295.3 million, as compared to $221.0 million in the same period of 2023.
• Company-operated shop gross profit was $70.0 million as compared to $52.1 million in the same period of 2023. In the second quarter of 2024, company-operated shop gross margin, which includes 150bps of pre-opening costs, was 23.7%, a year-over-year increase of 10bps.
• Company-operated shop contribution², a non-GAAP financial measure, grew 36.1% to $91.1 million as compared to $66.9 million in the same period of 2023. In the second quarter of 2024, company-operated shop contribution margin, which includes 150bps of pre-opening costs, was 30.8%, a year-over-year increase of 50 bps.
• Selling, general, and administrative expenses were $58.1 million (17.9% of revenue) as compared to $51.7 million (20.7% of revenue) in the same period of 2023.
• Adjusted selling, general, and administrative expenses², a non-GAAP financial measure, were $47.6 million (14.6% of revenue) as compared to $38.9 million (15.6% of revenue) in the same period of 2023.
• Net income was $22.2 million as compared to $9.7 million in the same period of 2023.
• Adjusted EBITDA², a non-GAAP financial measure, grew 34.1% to $65.2 million as compared to $48.6 million in the same period of 2023.
• Adjusted net income², a non-GAAP financial measure, was $31.2 million as compared to $20.9 million in the same period of 2023.
• Net income per share of Class A and Class D common stock - diluted was $0.12 as compared to $0.05 per share in the same period of 2023.
• Adjusted net income per fully exchanged share of diluted common stock², a non-GAAP financial measure, was $0.19 as compared to $0.13 in the same period of 2023.

Revised 2024 Outlook

• Total revenues are now projected to be between $1.215 billion and $1.230 billion, up from the prior range of $1.20 billion and $1.215 billion.
• Same shop sales growth is expected to remain in the low single digits.
• Adjusted EBITDA³ is now estimated to be between $200 million and $210 million, up from the prior range of $195 million to $205 million and Adjusted SG&A³ is estimated to be between $190 million and $200 million, up from the prior range of $183 million and $189 million.
• Total system shop openings in 2024 are now expected to be at the lower end of the previously communicated range of 150 to 165.
• Capital Expenditures are estimated to be between $270 million to $290 million from the prior range of $280 million to $320 million.

_________________
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 or Adjusted SG&A 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, reconciliation to the corresponding GAAP financial measure is not available without unreasonable effort.

Conference Call and Webcast Today

Christine Barone, Chief Executive Officer and President, and Josh Guenser, 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, 2024.

Event: Second Quarter 2024 Conference Call and Webcast

Date: Wednesday, August 7, 2024

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 912 locations across 18 states as of June 30, 2024.

To learn more about Dutch Bros, visit www.dutchbros.com, follow Dutch Bros Coffee on Instagram, Facebook, X, 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 and expectations regarding Dutch Bros’ leadership transitions, estimated capital expenditures, Dutch Bros’ possible or assumed future results of operations, including guidance for 2024, 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 current expectations regarding Dutch Bros’ leadership performance, the effectiveness of our marketing initiatives, 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, 2023 filed with the SEC on February 23, 2024, and in our future reports to be filed with the SEC, including our Quarterly Report on Form 10-Q for the three months ended June 30, 2024. 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)		2024				2023				2024				2023
REVENUES
Company-operated shops		$	295,268			$	220,952			$	543,353			$	394,116
Franchising and other			29,650				28,927				56,664				53,030
Total revenues			324,918				249,879				600,017				447,146
COSTS AND EXPENSES
Cost of sales			234,637				178,636				437,887				330,159
Selling, general and administrative			58,097				51,662				104,330				97,638
Total costs and expenses			292,734				230,298				542,217				427,797
INCOME FROM OPERATIONS			32,184				19,581				57,800				19,349
OTHER EXPENSE
Interest expense, net			(6,997	)			(9,058	)			(13,390	)			(16,944	)
Other income, net			829				1,039				6,593				2,346
Total other expense			(6,168	)			(8,019	)			(6,797	)			(14,598	)
INCOME BEFORE INCOME TAXES			26,016				11,562				51,003				4,751
Income tax expense			3,860				1,851				12,632				4,431
NET INCOME		$	22,156			$	9,711			$	38,371			$	320
Less: Net income attributable to non-controlling interests			10,216				6,959				19,369				1,410
NET INCOME (LOSS) ATTRIBUTABLE TO DUTCH BROS INC.		$	11,940			$	2,752			$	19,002			$	(1,090	)
Net income (loss) per share of Class A and Class D common stock:
Basic		$	0.12			$	0.05			$	0.21			$	(0.02	)
Diluted		$	0.12			$	0.05			$	0.20			$	(0.02	)
Weighted-average shares of Class A and Class D common stock outstanding:
Basic			101,965				56,734				92,647				56,699
Diluted			102,356				57,428				93,049				56,699

DUTCH BROS INC. Segment Financials
		Three Months Ended June 30,								Six Months Ended June 30,
(in thousands; unaudited)		2024				2023				2024				2023
Revenues:
Company-operated shops		$	295,268			$	220,952			$	543,353			$	394,116
Franchising and other			29,650				28,927				56,664				53,030
Total revenues			324,918				249,879				600,017				447,146
Cost of Sales:
Company-operated shops			225,252				168,873				419,032				313,165
Franchising and other			9,385				9,763				18,855				16,994
Total cost of sales			234,637				178,636				437,887				330,159
Segment gross profit:
Company-operated shops			70,016				52,079				124,321				80,951
Franchising and other			20,265				19,164				37,809				36,036
Total gross profit			90,281				71,243				162,130				116,987
Depreciation and amortization:
Company-operated shops			21,038				14,799				40,732				27,800
Franchising and other			1,077				1,297				2,372				2,658
All other ¹			235				420				499				837
Total depreciation and amortization			22,350				16,516				43,603				31,295
Segment contribution:
Company-operated shops			91,054				66,878				165,053				108,751
Franchising and other			21,342				20,461				40,181				38,694
Total segment contribution			112,396				87,339				205,234				147,445
Selling, general and administrative			(58,097	)			(51,662	)			(104,330	)			(97,638	)
Interest expense, net			(6,997	)			(9,058	)			(13,390	)			(16,944	)
Other income, net			829				1,039				6,593				2,346
Income before income taxes		$	26,016			$	11,562			$	51,003			$	4,751

_________________
1		All other depreciation and amortization is included in selling, general and administrative expenses and is not part of the segment contribution calculations.

DUTCH BROS INC. Company-Operated Shop Results
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
(in thousands; unaudited)		$		%		$		%		$		%		$		%
Company-operated shops revenue		295,268		100.0		220,952		100.0		543,353		100.0		394,116		100.0
Beverage, food and packaging costs		75,147		25.5		59,433		26.8		138,863		25.5		108,385		27.6
Labor costs		80,236		27.2		58,735		26.6		145,663		26.8		107,284		27.2
Occupancy and other costs		44,277		15.0		32,642		14.8		85,773		15.8		63,201		16.0
Pre-opening costs		4,554		1.5		3,264		1.5		8,001		1.5		6,495		1.6
Depreciation and amortization		21,038		7.1		14,799		6.7		40,732		7.5		27,800		7.1
Company-operated shop costs and expenses		225,252		76.3		168,873		76.4		419,032		77.1		313,165		79.5
Company-operated shops gross profit		70,016		23.7		52,079		23.6		124,321		22.9		80,951		20.5
Company-operated shops contribution 1		91,054		30.8		66,878		30.3		165,053		30.4		108,751		27.6

_________________
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)		2024				2023
Net cash provided by operating activities		$	100,729			$	45,843
Net cash used in investing activities			(113,240	)			(102,058	)
Net cash provided by financing activities			139,888				59,754
Net increase in cash and cash equivalents		$	127,377			$	3,539
Cash and cash equivalents at beginning of period			133,545				20,178
Cash and cash equivalents at end of period		$	260,922			$	23,717

DUTCH BROS INC. Condensed Consolidated Balance Sheets
(in thousands; unaudited)		June 30, 2024			December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents		$	260,922		$	133,545
Accounts receivable, net			12,338			9,124
Inventories, net			46,651			46,953
Prepaid expenses and other current assets			14,700			15,637
Total current assets			334,611			205,259
Property and equipment, net			627,500			542,440
Finance lease right-of-use assets, net			380,999			382,734
Operating lease right-of-use assets, net			282,838			199,673
Intangibles, net			3,963			5,415
Goodwill			21,629			21,629
Deferred income tax assets, net			721,691			402,995
Other long-term assets			4,055			3,865
Total assets		$	2,377,286		$	1,764,010
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	36,092		$	29,957
Accrued compensation and benefits			31,842			31,405
Other accrued liabilities			19,293			15,770
Other current liabilities			5,873			6,423
Deferred revenue			31,405			30,349
Current portion of finance lease liabilities			11,927			9,482
Current portion of operating lease liabilities			2,483			10,239
Current portion of long-term debt			14,182			4,491
Total current liabilities			153,097			138,116
Deferred revenue, net of current portion			7,115			6,676
Finance lease liabilities, net of current portion			370,412			367,775
Operating lease liabilities, net of current portion			282,873			191,419
Long-term debt, net of current portion			228,966			93,175
Tax receivable agreements liability			605,003			290,920
Other long-term liabilities			8			8
Total liabilities			1,647,474			1,088,089
Equity:
Common stock			1			2
Additional paid in capital			504,657			379,391
Accumulated other comprehensive income			1,072			544
Retained earnings (accumulated deficit)			3,410			(15,592	)
Total stockholders' equity attributable to Dutch Bros Inc.			509,140			364,345
Non-controlling interests			220,672			311,576
Total equity			729,812			675,921
Total liabilities and equity		$	2,377,286		$	1,764,010

DUTCH BROS INC. Select Financial Metrics
		Three Months Ended June 30,								Six Months Ended June 30,
(in thousands, except number of shops data; unaudited)		2024				2023				2024				2023
Shop count, beginning of period
Company-operated			582				438				542				396
Franchised			294				278				289				275
			876				716				831				671
Company-operated new openings			30				35				70				77
Franchised new openings			6				3				11				6
Shop count, end of period
Company-operated			612				473				612				473
Franchised			300				281				300				281
Total shop count			912				754				912				754
Systemwide AUV 1			N/A				N/A			$	2,005			$	1,928
Company-operated shops AUV 1			N/A				N/A			$	1,923			$	1,880
Systemwide same shop sales 2, 3			4.1	%			3.8	%			6.8	%			1.1	%
Company-operated same shop sales 2			5.2	%			1.6	%			7.8	%			(0.8	)%
Systemwide sales 3		$	466,432			$	375,216			$	863,985			$	677,998
Company-operated operating weeks 4			7,709				5,854				14,983				11,176
Franchising and other operating weeks 4			3,842				3,632				7,621				7,178
Dutch Rewards transactions as a percentage of total transactions 5			66.7	%			64.6	%			66.6	%			64.8	%

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
(in thousands; unaudited)		$		%		$		%		$		%		$		%
Company-operated shop revenues		295,268		100.0		220,952		100.0		543,353		100.0		394,116		100.0
Company-operated gross profit		70,016		23.7		52,079		23.6		124,321		22.9		80,951		20.5
Company-operated shop contribution 6		91,054		30.8		66,878		30.3		165,053		30.4		108,751		27.6
Selling, general, and administrative expenses		58,097		17.9		51,662		20.7		104,330		17.4		97,638		21.8
Adjusted selling, general, and administrative expenses 6		47,584		14.6		38,918		15.6		88,053		14.7		75,157		16.8
Net income		22,156		6.8		9,711		3.9		38,371		6.4		320		0.1
Adjusted EBITDA 6		65,159		20.1		48,599		19.4		117,699		19.6		72,479		16.2

___________
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 as of the first day of the reporting period. 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,
		2024		2023		2024		2023
Systemwide shop base		671		538		641		503
Company-operated shop base		396		276		370		246

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 our industry by investors.

EBITDA, Adjusted EBITDA (in dollars and as a percentage of revenue)

EBITDA — definition and/or calculation

Net income 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, expenses associated with equity offerings, executive transitions, (gain) loss on the remeasurement of the liability related to the TRAs, legal proceedings, sale of aircraft, and organization realignment and restructuring costs.

Adjusted EBITDA in dollars (as defined), taken as a percentage of total revenue.

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 depreciation and amortization, equity-based compensation expense, expenses associated with equity offerings, executive transitions, legal proceedings, and organization realignment and restructuring costs.

Adjusted selling, general, and administrative in dollars (as defined), taken as a percentage of total revenue.

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, excluding equity-based compensation expense, expenses associated with equity offerings, executive transitions, (gain) loss on the remeasurement of the liability related to the TRAs, legal proceedings, sale of aircraft, organization realignment and restructuring costs, and income tax effects of items excluded from net income.

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 restricted stock awards and units, 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 per share of Class A and Class D common stock - diluted, excluding per share impacts of equity-based compensation expense, expenses associated with equity offerings, executives transition costs, (gain) loss on the remeasurement of the liability related to the TRAs, legal proceedings, sale of aircraft, organization realignment and restructuring costs, income tax effects of items excluded from net income, 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 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, including restricted stock awards and restricted stock units in Dutch Bros Inc. to certain eligible employees.

Expenses associated with equity offerings

Costs incurred as a result of our equity offerings, including secondary offerings by TSG Consumer Partners, L.P. and certain of its affiliates. These costs include, but are not limited to, legal fees, consulting fees, tax fees, and accounting fees.

Executive transitions

Employee severance and related benefit costs, as well as sign-on bonus(es) for several executive level transitions occurring in 2022 and 2023, and amortized through the first quarter of 2024.

TRAs remeasurements

(Gain) loss impacts related to adjustments of our TRAs liabilities.

Legal proceedings

Loss accrual related to certain legal disputes.

Sale of aircraft

Gain impact related to the sale of the Company airplane to our Co-Founder.

Organization realignment and restructuring

Fees and costs, including consulting, employee-related and other costs, in connection with our comprehensive initiative to develop and implement a long-term strategy involving changes to our organizational structure to support our growth, and the resulting realignment activities that have occurred in 2023 and 2024, and are expected to continue for at least the next year. Given this strategic initiative's magnitude and scope, the Company does not expect such costs will recur in the foreseeable future. The Company does not consider such costs reflective of the ongoing costs necessary to operate its business.

Dilutive effects of restricted stock awards and units

Addition of incremental shares of restricted stock awards and units 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 per share impacts of controlling and non-controlling interests

Removal of the net income allocated to controlling and non-controlling interests to align the numerator of the net income per share to the denominator, which assumes the full exchange of shares of Class B and Class C common stock.

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 measures should be carefully evaluated. Please refer to "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,
		2024				2023				2024				2023
(in thousands; unaudited)		$		%		$		%		$		%		$		%
Company-operated shop gross profit		70,016		23.7		52,079		23.6		124,321		22.9		80,951		20.5
Depreciation and amortization		21,038		7.1		14,799		6.7		40,732		7.5		27,800		7.1
Company-operated shop contribution		91,054		30.8		66,878		30.3		165,053		30.4		108,751		27.6

		Three Months Ended June 30,												Six Months Ended June 30,
		2024						2023						2024						2023
(in thousands; unaudited)		$			%			$			%			$			%			$			%
Net income		22,156			6.8			9,711			3.9			38,371			6.4			320			0.1
Depreciation and amortization		22,350			6.9			16,516			6.7			43,603			7.3			31,295			7.0
Interest expense, net		6,997			2.2			9,058			3.6			13,390			2.2			16,944			3.8
Income tax expense		3,860			1.1			1,851			0.7			12,632			2.1			4,431			1.0
EBITDA		55,363			17.0			37,136			14.9			107,996			18.0			52,990			11.9
Equity-based compensation		3,326			1.0			10,149			4.1			5,259			0.9			19,319			4.3
Expenses associated with equity offerings		528			0.2			—			—			1,489			0.2			—			—
Executive transitions		—			—			225			0.1			75			—			375			0.1
TRAs remeasurements		—			—			(861	)		(0.5	)		(5,687	)		(0.9	)		(2,155	)		(0.5	)
Legal proceedings		—			—			1,950			0.8			—			—			1,950			0.4
Sale of aircraft		(752	)		(0.2	)		—			—			(752	)		(0.1	)		—			—
Organization realignment and restructuring:
Employee-related costs		6,664			2.1			—			—			9,289			1.5			—			—
Other costs		30			—			—			—			30			—			—			—
Total organization realignment and restructuring		6,694			2.1			—			—			9,319			1.5			—			—
Adjusted EBITDA		65,159			20.1			48,599			19.4			117,699			19.6			72,479			16.2

		Three Months Ended June 30,												Six Months Ended June 30,
		2024						2023						2024						2023
(in thousands; unaudited)		$			%			$			%			$			%			$			%
Selling, general, and administrative		58,097			17.9			51,662			20.7			104,330			17.4			97,638			21.8
Depreciation and amortization		(235	)		(0.1	)		(420	)		(0.1	)		(499	)		(0.1	)		(837	)		(0.2	)
Equity-based compensation		(3,056	)		(0.9	)		(10,149	)		(4.1	)		(4,895	)		(0.9	)		(19,319	)		(4.3	)
Expenses associated with equity offerings		(528	)		(0.2	)		—			—			(1,489	)		(0.2	)		—			—
Executive transitions		—			—			(225	)		(0.1	)		(75	)		—			(375	)		(0.1	)
Legal proceedings		—			—			(1,950	)		(0.8	)		—			—			(1,950	)		(0.4	)
Organization realignment and restructuring:
Employee-related costs		(6,664	)		(2.1	)		—			—			(9,289	)		(1.5	)		—			—
Other costs		(30	)		—			—			—			(30	)		—			—			—
Total organization realignment and restructuring		(6,694	)		(2.1	)		—			—			(9,319	)		(1.5	)		—			—
Adjusted selling, general, and administrative		47,584			14.6			38,918			15.6			88,053			14.7			75,157			16.8

		Three Months Ended June 30,
(in thousands; unaudited)		2024				2023
Net income		$	22,156			$	9,711
Equity-based compensation			3,326				10,149
Expenses associated with equity offerings			528				—
Executive transitions			—				225
TRAs remeasurements			—				(861	)
Legal proceedings			—				1,950
Sale of aircraft			(752	)			—
Organization realignment and restructuring:
Employee-related costs			6,664				—
Other costs			30				—
Subtotal: Organization realignment and restructuring			6,694				—
Income tax effects			(770	)			(284	)
Adjusted net income		$	31,182			$	20,890

		Three Months Ended June 30,
(in thousands, except per share amounts; unaudited)		2024			2023
Weighted-average shares of Class A and Class D common stock outstanding - basic			101,965			56,734
Dilutive effects of restricted stock awards and units			391			694
Weighted-average shares of Class A and Class D common stock outstanding - diluted			102,356			57,428
Assumed exchange of weighted-average Class B and Class C shares of common stock			63,828			105,756
Adjusted fully exchanged weighted-average shares of common stock outstanding - diluted			166,184			163,184
Net income per share of Class A and Class D common stock - diluted		$	0.12		$	0.05
Controlling and non-controlling interest adjustments			0.01			0.02
Equity-based compensation			0.02			0.06
Expenses associated with equity offerings			—			—
Executive transitions			—			—
TRAs remeasurements			—			(0.01	)
Legal proceedings			—			0.01
Sale of aircraft			—			—
Organization realignment and restructuring:
Employee-related costs			0.04			—
Other costs			—			—
Subtotal: Organization realignment and restructuring			0.04			—
Income tax effects			—			—
Adjusted net income per fully exchanged share of diluted common stock		$	0.19		$	0.13

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240807966434/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.

FAQ

What were Dutch Bros Q2 2024 revenues?

Dutch Bros reported Q2 2024 revenues of $324.9 million, marking a 30% year-over-year increase.

How many new shops did Dutch Bros open in Q2 2024?

Dutch Bros opened 36 new shops in Q2 2024, surpassing the 900th shop milestone.

What is Dutch Bros updated revenue guidance for 2024?

Dutch Bros raised its 2024 revenue guidance to between $1.215 billion and $1.230 billion.

What was the net income for Dutch Bros in Q2 2024?

Dutch Bros reported a net income of $22.2 million for Q2 2024, up from $9.7 million in Q2 2023.

What was Dutch Bros adjusted EBITDA for Q2 2024?

Dutch Bros reported an adjusted EBITDA of $65.2 million for Q2 2024, a 34.1% increase year-over-year.