Achieves $325 million in Revenues inQuarter, a 30% Increase Year-over-Year
36 New Shop Openings During Quarter,Surpasses 900th Shop Milestone
Raises Revenue and Adj. EBITDAGuidance
Dutch Bros Inc. (NYSE: BROS; “Dutch Bros” or the “Company”), oneof the fastest-growing brands in the quick service beverageindustry in the United States by location count, today reportedfinancial results for the second quarter ended June 30, 2024.
Christine Barone, Chief Executive Officer and President of DutchBros, stated, “Our quarterly performance demonstrates the longrunway ahead for Dutch Bros as we once again delivered strongtop-line and profitability growth. Revenue rose 30%, including a4.1% increase in system same-shop sales, and was underpinned byexcellent margin flow through. With strong results 2024 to datedespite the volatile consumer backdrop and expectations for arobust second half to the year, we are pleased to be raising ourannual guidance.”
Barone continued, “The traffic-driving initiatives that we beganimplementing in 2023 are continuing to drive our business momentum.Approximately 67% of all transactions during the second quartercame through Dutch Rewards members, as our enhanced app is enablingus to efficiently and effectively connect with our loyal customers.We are also seeing phenomenal traction driving awareness in newmarkets through paid advertising and plan to further invest in thisopportunity.”
Barone concluded, “We also continued with successful new shopopenings and our mobile order roll-out. We added 36 shops in thesecond quarter, marking the 12th consecutive quarter of 30 or morenew shop openings. As of June 30th, we had 38 shops in Arizona,California, and Texas with mobile order capabilities and have sinceexpanded the rollout to approximately 200 shops as of the end ofJuly. We are increasingly optimistic that we will have mobile ordercapabilities 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 comparedto $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 ourfortressing strategy, where some sales are being transferred fromexisting shops to new shops. Company-operated same shop salesincreased 5.2%, relative to the same period of 2023.
- Company-operated shop revenues increased 33.6% to $295.3million, as compared to $221.0 million in the same period of2023.
- Company-operated shop gross profit was $70.0 million ascompared to $52.1 million in the same period of 2023. In the secondquarter of 2024, company-operated shop gross margin, which includes150bps of pre-opening costs, was 23.7%, a year-over-year increaseof 10bps.
- Company-operated shop contribution2, anon-GAAP financial measure, grew 36.1% to $91.1 million as comparedto $66.9 million in the same period of 2023. In the second quarterof 2024, company-operated shop contribution margin, which includes150bps of pre-opening costs, was 30.8%, a year-over-year increaseof 50 bps.
- Selling, general, and administrative expenses were $58.1million (17.9% of revenue) as compared to $51.7 million (20.7% ofrevenue) in the same period of 2023.
- Adjusted selling, general, and administrativeexpenses2, a non-GAAP financial measure, were $47.6million (14.6% of revenue) as compared to $38.9 million (15.6% ofrevenue) in the same period of 2023.
- Net income was $22.2 million as compared to $9.7 millionin the same period of 2023.
- Adjusted EBITDA2, a non-GAAP financialmeasure, grew 34.1% to $65.2 million as compared to $48.6 millionin the same period of 2023.
- Adjusted net income2, a non-GAAP financialmeasure, was $31.2 million as compared to $20.9 million in the sameperiod 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 sameperiod of 2023.
- Adjusted net income per fully exchanged share of dilutedcommon 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 $1.215billion and $1.230 billion, up from the prior range of $1.20billion and $1.215 billion.
- Same shop sales growth is expected to remain in the lowsingle digits.
- Adjusted EBITDA3 is now estimated to bebetween $200 million and $210 million, up from the prior range of$195 million to $205 million and Adjusted SG&A3 isestimated to be between $190 million and $200 million, up from theprior range of $183 million and $189 million.
- Total system shop openings in 2024 are now expected tobe at the lower end of the previously communicated range of 150 to165.
- Capital Expenditures are estimated to be between $270million to $290 million from the prior range of $280 million to$320 million.
_________________ | ||
1 | Same shop sales is defined in thesection “Select Financial Metrics”. | |
2 | Reconciliation of GAAP tonon-GAAP results is provided in the section “Non-GAAP FinancialMeasures”. | |
3 | We have not reconciled guidancefor Adjusted EBITDA or Adjusted SG&A to the corresponding GAAPfinancial measure because we do not provide guidance for thevarious reconciling items. We are unable to provide guidance forthese reconciling items because we cannot determine their probablesignificance, as certain items are outside of our control andcannot be reasonably predicted due to the fact that these itemscould vary significantly from period to period. Accordingly,reconciliation to the corresponding GAAP financial measure is notavailable without unreasonable effort. |
Conference Call and Webcast Today
Christine Barone, Chief Executive Officer and President, andJosh Guenser, Chief Financial Officer, will host a conference calland webcast today at 5:00 p.m. Eastern Time (ET) to discussfinancial results for the second quarter ended June 30, 2024.
Event: Second Quarter 2024 Conference Call andWebcast
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 callhas concluded. We will also publish earnings presentation slidesrelated to these financial results on our websitehttps://investors.dutchbros.com under “Events &Presentations”.
About Dutch Bros Inc.
Dutch Bros Inc. (NYSE: BROS) is a high growth operator andfranchisor of drive-thru shops that focus on serving high QUALITY,hand-crafted beverages with unparalleled SPEED and superiorSERVICE. Founded in 1992 by brothers Dane and Travis Boersma, DutchBros began with a double-head espresso machine and a pushcart inGrants Pass, Oregon. While espresso-based beverages are still atthe core of what we do, Dutch Bros now offers a wide variety ofunique, customizable cold and hot beverages that delight a broadarray of customers. We believe Dutch Bros is more than just theproducts we serve—we are dedicated to making a massive differencein the lives of our employees, customers and communities. Thiscombination of hand-crafted and high-quality beverages, our uniquedrive-thru experience and our community-driven, people-firstculture has allowed us to successfully open new shops and continueto share the “Dutch Luv” at 912 locations across 18 states as ofJune 30, 2024.
To learn more about Dutch Bros, visit www.dutchbros.com, followDutch Bros Coffee on Instagram, Facebook, X, and TikTok, anddownload the Dutch Bros app to earn points and score rewards!
Dutch Bros, our Windmill logo, Dutch Bros. BlueRebel, 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 inthis Earnings Release are the property of their respective owners.Solely for convenience, the trademarks and trade names in thisEarnings Release may be referred to without the ® and ™ symbols,but such references should not be construed as any indicator thattheir respective owners will not assert their rights thereto.
Forward-Looking Statements
In addition to historical information, this release contains anumber of “forward-looking statements” as defined in the PrivateSecurities Litigation Reform Act of 1995. Forward-lookingstatements include, without limitation, information andexpectations regarding Dutch Bros’ leadership transitions,estimated capital expenditures, Dutch Bros’ possible or assumedfuture results of operations, including guidance for 2024, new shopopenings, business strategies, and potential growth opportunities.These statements are based on Dutch Bros’ current expectations andbeliefs, as well as a number of assumptions concerning futureevents. When used in this press release, the words “estimates,”“projected,” “expects,” “should,” “guidance,” and variations ofthese words or similar expressions (or the negative versions ofsuch words or expressions) are intended to identify forward-lookingstatements. Such forward-looking statements are subject to knownand unknown risks, uncertainties, assumptions and other importantfactors, many of which are outside Dutch Bros’ control that couldcause actual results to differ materially from the resultsdiscussed in the forward-looking statements, including thoserelated to current expectations regarding Dutch Bros’ leadershipperformance, the effectiveness of our marketing initiatives,general economic conditions, commodity inflation, increased laborcosts, disruptions in our supply chain, ability to hire and retainemployees, and other risks, including those described under theheading “Risk Factors” in our Annual Report on Form 10-K for theyear ended December 31, 2023 filed with the SEC on February 23,2024, and in our future reports to be filed with the SEC, includingour Quarterly Report on Form 10-Q for the three months ended June30, 2024. Forward-looking statements contained in this pressrelease are made as of this date, and Dutch Bros undertakes no dutyto update such information except as required under applicablelaw.
DUTCH BROS INC. Condensed Consolidated Statementsof Operations | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
(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 tonon-controlling interests | 10,216 | 6,959 | 19,369 | 1,410 | ||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO DUTCHBROS INC. | $ | 11,940 | $ | 2,752 | $ | 19,002 | $ | (1,090 | ) | |||||||
Net income (loss) per share of Class A andClass 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 andClass 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 | Six Months Ended | |||||||||||||||
(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 andamortization is included in selling, general and administrativeexpenses and is not part of the segment contributioncalculations. |
DUTCH BROS INC. Company-Operated Shop Results | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
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 andexpenses | 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 contribution1 | 91,054 | 30.8 | 66,878 | 30.3 | 165,053 | 30.4 | 108,751 | 27.6 |
_________________ | ||
1 | Reconciliation of GAAP tonon-GAAP results is provided in the section “Non-GAAP FinancialMeasures”. |
DUTCH BROS INC. Summary Cash Flows Data | ||||||||
Six Months Ended | ||||||||
(in thousands; unaudited) | 2024 | 2023 | ||||||
Net cash provided by operatingactivities | $ | 100,729 | $ | 45,843 | ||||
Net cash used in investing activities | (113,240 | ) | (102,058 | ) | ||||
Net cash provided by financingactivities | 139,888 | 59,754 | ||||||
Net increase in cash and cashequivalents | $ | 127,377 | $ | 3,539 | ||||
Cash and cash equivalents at beginning ofperiod | 133,545 | 20,178 | ||||||
Cash and cash equivalents at end ofperiod | $ | 260,922 | $ | 23,717 |
DUTCH BROS INC. Condensed Consolidated BalanceSheets | |||||||
(in thousands; unaudited) | June 30, | December 31, | |||||
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 currentassets | 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 leaseliabilities | 11,927 | 9,482 | |||||
Current portion of operating leaseliabilities | 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 currentportion | 7,115 | 6,676 | |||||
Finance lease liabilities, net of currentportion | 370,412 | 367,775 | |||||
Operating lease liabilities, net ofcurrent 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 (accumulateddeficit) | 3,410 | (15,592 | ) | ||||
Total stockholders' equity attributable toDutch 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 | Six Months Ended | |||||||||||||||
(in thousands, except number of shopsdata; 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 AUV1 | 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 sales2 | 5.2 | % | 1.6 | % | 7.8 | % | (0.8 | )% | ||||||||
Systemwide sales 3 | $ | 466,432 | $ | 375,216 | $ | 863,985 | $ | 677,998 | ||||||||
Company-operated operating weeks4 | 7,709 | 5,854 | 14,983 | 11,176 | ||||||||||||
Franchising and other operating weeks4 | 3,842 | 3,632 | 7,621 | 7,178 | ||||||||||||
Dutch Rewards transactions as a percentageof total transactions 5 | 66.7 | % | 64.6 | % | 66.6 | % | 64.8 | % |
Three Months Ended | Six Months Ended | |||||||||||||||
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 contribution6 | 91,054 | 30.8 | 66,878 | 30.3 | 165,053 | 30.4 | 108,751 | 27.6 | ||||||||
Selling, general, and administrativeexpenses | 58,097 | 17.9 | 51,662 | 20.7 | 104,330 | 17.4 | 97,638 | 21.8 | ||||||||
Adjusted selling, general, andadministrative 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 thenet sales for any trailing twelve-month period for systemwide andcompany-operated shops that have been open a minimum of 15 months.AUVs are calculated by dividing the systemwide and company-operatedshop net sales by the total number of systemwide andcompany-operated shops, respectively. Management uses this metricas an indicator of shop growth and future expectations of maturelocations. | |
2 | Same shop sales reflects thechange in year-over-year sales for the comparable shop base, whichwe define as shops open for 15 complete months or longer as of thefirst day of the reporting period. Management uses this metric asan indicator of shop growth and future expansion strategy. Thenumber of shops included in the systemwide and company-operatedcomparable bases for the respective periods are presented in thefollowing table. |
Three Months Ended June30, | Six Months Ended June30, | |||||||
2024 | 2023 | 2024 | 2023 | |||||
Systemwide shop base | 671 | 538 | 641 | 503 | ||||
Company-operated shop base | 396 | 276 | 370 | 246 |
3 | Systemwide sales and systemwidesame shop sales are operating measures that include sales atcompany-operated shops and sales at franchised shops during thecomparable periods presented. Franchise sales represent sales atall franchise shops and are revenues to our franchisees. We do notrecord franchise sales as revenues; however, our royalty revenuesand advertising fund contributions are calculated based on apercentage of franchise sales. As these metrics include salesreported to us by our non-consolidated franchise partners, thesemetrics should be considered as a supplement to, not a substitutefor, our results as reported under GAAP. Management uses thesemetrics as indicators of our system’s overall financial health,growth and future expansion prospects. | |
4 | Company-operated and franchiseshops operating weeks are calculated based on the number operatingdays for the shop base and dividing by 7. Our shop base is definedas shops opened as of the end date of the periods presented. Theoperating weeks calculations reflect re-acquired franchises through2022. Management uses these metrics as indicators of our system’soverall financial health, growth and future expansionprospects. | |
5 | Dutch Rewards is ourdigitally-based rewards program available exclusively through theDutch Rewards app. Management uses this metric as an indicator ofcustomer loyalty adoption of our Dutch Rewards app and futurepromotional plans. | |
6 | Reconciliation of GAAP tonon-GAAP results is provided in the section “Non-GAAP FinancialMeasures”. |
Non-GAAP Financial Measures
In addition to disclosing financial results in accordance withU.S. GAAP, this release contains references to the non-GAAPfinancial measures below. We believe these non-GAAP financialmeasures provide investors with useful supplemental informationabout our operating performance, enable comparison of financialtrends and results between periods where certain items may varyindependent of business performance, and allow for greatertransparency with respect to key metrics used by management inoperating our business and measuring our performance.
Our non-GAAP financial measures reflect adjustments based on oneor more of the following items, as well as the related income taxeffects where applicable. Income tax effects have been calculatedbased on the combined total non-GAAP adjustments using our totaleffective tax rate. These non-GAAP financial measures should not beconsidered a substitute for, or superior to, financial measurescalculated in accordance with U.S. GAAP, and the financial resultscalculated in accordance with U.S. GAAP and reconciliations fromthese results should be carefully evaluated.
Company-operated shop contribution (in dollars and as apercentage of revenue)
Definition and/or calculation
Company-operated segment gross profit, before company-operatedshop depreciation and amortization. Company-operated shopcontribution in dollars (as defined), taken as a percentage ofcompany-operated shop revenue.
Usefulness to management andinvestors
This non-GAAP measure is used by our management in makingperformance decisions without the impact of non-cash depreciationand amortization charges. This is a standard metric used across ourindustry by investors.
EBITDA, Adjusted EBITDA (in dollars and as a percentage ofrevenue)
EBITDA — definition and/orcalculation
Net income before interest expense (net of interest income),income tax expense, and depreciation and amortization expense.
Adjusted EBITDA — definition and/orcalculation
Defined as EBITDA (as defined above), excluding equity-basedcompensation, expenses associated with equity offerings, executivetransitions, (gain) loss on the remeasurement of the liabilityrelated to the TRAs, legal proceedings, sale of aircraft, andorganization realignment and restructuring costs.
Adjusted EBITDA in dollars (as defined), taken as a percentageof total revenue.
Usefulness to management andinvestors
These non-GAAP measures are supplemental operating performancemeasures we believe facilitate comparisons to historicalperformance and competitors’ operating results. We believe thesenon-GAAP measures presented provide investors with a supplementalview of our operating performance that facilitates analysis andcomparisons of our ongoing business operations because they excludeitems that may not be indicative of our ongoing operatingperformance.
Adjusted selling, general, and administrative (in dollarsand as a percentage of revenue)
Definition and/or calculation
Selling, general, and administrative expenses, excludingdepreciation and amortization, equity-based compensation expense,expenses associated with equity offerings, executive transitions,legal proceedings, and organization realignment and restructuringcosts.
Adjusted selling, general, and administrative in dollars (asdefined), taken as a percentage of total revenue.
Usefulness to management andinvestors
This non-GAAP measure is used as a supplemental measure ofoperating performance that we believe is useful to evaluate ourperformance period over period and relative to our competitors. Webelieve the non-GAAP measure presented provides investors with asupplemental view of our operating performance that facilitatesanalysis and comparisons of our ongoing business operations becauseit excludes items that may not be indicative of our ongoingoperating 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 theTRAs, legal proceedings, sale of aircraft, organization realignmentand restructuring costs, and income tax effects of items excludedfrom net income.
Usefulness to management andinvestors
This non-GAAP measure is used as a supplemental measure ofoperating performance that we believe is useful to evaluate ourperformance period over period and relative to our competitors. Webelieve this measure facilitates a better comparison with othercompanies that have different organizational and tax structures, aswell as comparisons period over period.
Adjusted fully exchanged weighted-average shares ofdiluted common stock outstanding
Definition and/or calculation
Weighted-average shares of Class A and Class D common stockoutstanding - basic with addition of dilutive impacts of restrictedstock awards and units, as well as the assumed exchange of theweighted-average shares of Class B and Class C common stock.
Usefulness to management andinvestors
This non-GAAP measure is used as a supplemental measure ofoperating performance that we believe is useful to evaluate ourperformance period over period and relative to our competitors. Byadding in the assumed full exchange of all of our outstanding ClassB and Class C common stock, we believe this measure facilitates abetter comparison with other companies that have differentorganizational and tax structures, as well as comparisons periodover period.
Adjusted net income per fully exchanged share of dilutedcommon 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 compensationexpense, expenses associated with equity offerings, executivestransition costs, (gain) loss on the remeasurement of the liabilityrelated to the TRAs, legal proceedings, sale of aircraft,organization realignment and restructuring costs, income taxeffects of items excluded from net income, and removal of per shareimpacts of controlling and non-controlling interests.
Usefulness to management andinvestors
This non-GAAP measure is used as a supplemental measure ofoperating performance that we believe is useful to evaluate ourperformance period over period and relative to our competitors. Byassuming the full exchange of all of our outstanding Class B andClass C common stock and related net income adjustments, we believethis measure facilitates a better comparison with other companiesthat have different organizational and tax structures, as well ascomparisons period over period.
Non-GAAP adjustments
Below are the definitions of the non-GAAP adjustments that areused in the calculation of our non-GAAP measures, as describedabove.
Equity-based compensation
Non-cash expenses related to the grant and vesting of stockawards, including restricted stock awards and restricted stockunits in Dutch Bros Inc. to certain eligible employees.
Expenses associated with equityofferings
Costs incurred as a result of our equity offerings, includingsecondary offerings by TSG Consumer Partners, L.P. and certain ofits affiliates. These costs include, but are not limited to, legalfees, consulting fees, tax fees, and accounting fees.
Executive transitions
Employee severance and related benefit costs, as well as sign-onbonus(es) for several executive level transitions occurring in 2022and 2023, and amortized through the first quarter of 2024.
TRAs remeasurements
(Gain) loss impacts related to adjustments of our TRAsliabilities.
Legal proceedings
Loss accrual related to certain legal disputes.
Sale of aircraft
Gain impact related to the sale of the Company airplane to ourCo-Founder.
Organization realignment andrestructuring
Fees and costs, including consulting, employee-related and othercosts, in connection with our comprehensive initiative to developand implement a long-term strategy involving changes to ourorganizational structure to support our growth, and the resultingrealignment activities that have occurred in 2023 and 2024, and areexpected to continue for at least the next year. Given thisstrategic initiative's magnitude and scope, the Company does notexpect such costs will recur in the foreseeable future. The Companydoes not consider such costs reflective of the ongoing costsnecessary to operate its business.
Dilutive effects of restricted stockawards and units
Addition of incremental shares of restricted stock awards andunits calculated under the treasury stock method, when they aredilutive for the calculation of weighted-average shares on anon-GAAP basis.
Assumed exchange of weighted-average ClassB and Class C shares of common stock
Weighted-average shares of Class B and Class C common stock thatare assumed to be exchanged for Class A common stock.
Removal of per share impacts ofcontrolling and non-controlling interests
Removal of the net income allocated to controlling andnon-controlling interests to align the numerator of the net incomeper share to the denominator, which assumes the full exchange ofshares of Class B and Class C common stock.
Supplemental Reconciliations of GAAP Actuals to Non-GAAPActuals
Following are the reconciliations of the most comparable GAAPfinancial measure to non-GAAP financial measure. These non-GAAPfinancial measures should not be considered a substitute for, orsuperior to, financial measures calculated in accordance with U.S.GAAP, and the reconciliations from U.S. GAAP to Non-GAAP measuresshould be carefully evaluated. Please refer to "Non-GAAP FinancialMeasures" in this release for a detailed explanation of theadjustments made to the comparable U.S. GAAP measures, the waysmanagement uses the non-GAAP measures, and the reasons whymanagement believes the non-GAAP measures provide usefulinformation for investors.
Three Months Ended June30, | Six Months Ended June30, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
(in thousands; unaudited) | $ | % | $ | % | $ | % | $ | % | ||||||||
Company-operated shop grossprofit | 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 shopcontribution | 91,054 | 30.8 | 66,878 | 30.3 | 165,053 | 30.4 | 108,751 | 27.6 |
Three Months Ended June30, | Six Months Ended June30, | |||||||||||||||||||||||
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 equityofferings | 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 andrestructuring: | ||||||||||||||||||||||||
Employee-related costs | 6,664 | 2.1 | — | — | 9,289 | 1.5 | — | — | ||||||||||||||||
Other costs | 30 | — | — | — | 30 | — | — | — | ||||||||||||||||
Total organization realignment andrestructuring | 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 June30, | Six Months Ended June30, | |||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||
(in thousands; unaudited) | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||
Selling, general, andadministrative | 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 equityofferings | (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 andrestructuring: | ||||||||||||||||||||||||
Employee-related costs | (6,664 | ) | (2.1 | ) | — | — | (9,289 | ) | (1.5 | ) | — | — | ||||||||||||
Other costs | (30 | ) | — | — | — | (30 | ) | — | — | — | ||||||||||||||
Total organization realignment andrestructuring | (6,694 | ) | (2.1 | ) | — | — | (9,319 | ) | (1.5 | ) | — | — | ||||||||||||
Adjusted selling, general, andadministrative | 47,584 | 14.6 | 38,918 | 15.6 | 88,053 | 14.7 | 75,157 | 16.8 |
Three Months Ended June30, | ||||||||
(in thousands; unaudited) | 2024 | 2023 | ||||||
Net income | $ | 22,156 | $ | 9,711 | ||||
Equity-based compensation | 3,326 | 10,149 | ||||||
Expenses associated with equityofferings | 528 | — | ||||||
Executive transitions | — | 225 | ||||||
TRAs remeasurements | — | (861 | ) | |||||
Legal proceedings | — | 1,950 | ||||||
Sale of aircraft | (752 | ) | — | |||||
Organization realignment andrestructuring: | ||||||||
Employee-related costs | 6,664 | — | ||||||
Other costs | 30 | — | ||||||
Subtotal: Organization realignment andrestructuring | 6,694 | — | ||||||
Income tax effects | (770 | ) | (284 | ) | ||||
Adjusted net income | $ | 31,182 | $ | 20,890 |
Three Months Ended June30, | |||||||
(in thousands, except per share amounts;unaudited) | 2024 | 2023 | |||||
Weighted-average shares of Class A andClass D common stock outstanding - basic | 101,965 | 56,734 | |||||
Dilutive effects of restricted stockawards and units | 391 | 694 | |||||
Weighted-average shares of Class A andClass D common stock outstanding - diluted | 102,356 | 57,428 | |||||
Assumed exchange of weighted-average ClassB and Class C shares of common stock | 63,828 | 105,756 | |||||
Adjusted fully exchangedweighted-average shares of common stock outstanding -diluted | 166,184 | 163,184 | |||||
Net income per share of Class A andClass D common stock - diluted | $ | 0.12 | $ | 0.05 | |||
Controlling and non-controlling interestadjustments | 0.01 | 0.02 | |||||
Equity-based compensation | 0.02 | 0.06 | |||||
Expenses associated with equityofferings | — | — | |||||
Executive transitions | — | — | |||||
TRAs remeasurements | — | (0.01 | ) | ||||
Legal proceedings | — | 0.01 | |||||
Sale of aircraft | — | — | |||||
Organization realignment andrestructuring: | |||||||
Employee-related costs | 0.04 | — | |||||
Other costs | — | — | |||||
Subtotal: Organization realignment andrestructuring | 0.04 | — | |||||
Income tax effects | — | — | |||||
Adjusted net income per fully exchangedshare of diluted common stock | $ | 0.19 | $ | 0.13 |
View sourceversion 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
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