Sign In  |  Register  |  About San Rafael  |  Contact Us

San Rafael, CA
September 01, 2020 1:37pm
7-Day Forecast | Traffic
  • Search Hotels in San Rafael

  • CHECK-IN:
  • CHECK-OUT:
  • ROOMS:

Dutch Bros Inc. Reports Second Quarter 2023 Financial Results

Opened 38 New Systemwide Shops in Q2 2023

Quarterly Revenue Increased 34% to $250 million

Announces Leadership Transition

Updates 2023 Guidance

Dutch Bros Inc. (NYSE: BROS; “Dutch Bros” or the “Company”), one of the fastest-growing brands in the food service and restaurant industry in the United States by location count, today reported financial results for the second quarter ended June 30, 2023.

Joth Ricci, Chief Executive Officer of Dutch Bros, stated, “In Q2, we delivered 34% year over year revenue growth, driven by new shop openings and 3.8% systemwide same shop sales growth. Within the quarter, we continued to see meaningful company-operated shop margin expansion, driven by significant labor efficiency improvement. This speaks to the benefit of our company-operated model as we were able to effect changes across our shops and then directly benefit from those changes. In Q2, we continued to see general and administrative leverage, which taken together with our growing shop margins, demonstrates our commitment to profitable growth.”

He continued, “In Q2, we executed against our traffic-driving initiatives, which underpinned 580 basis points of sequential same shop sales growth quarter-over-quarter. We are encouraged by customer response to these initiatives, and are excited to welcome new Chief Marketing Officer, Tana Davila, to build upon this momentum.”

He concluded, “I am very proud of the team for what they have accomplished, and I am encouraged by the strength of the underlying business. Our people pipeline and systems are as strong as ever - we have a deep and growing bench of qualified operator candidates and low, and further improving, employee turnover. We continue to see meaningful expansion in shop profitability and leverage in general and administrative costs as we scale our business. We continue to keep a close eye on our costs, particularly those related to new shop development, which we are working diligently to mitigate. Taken together, this gives us confidence to remain committed to our long-term new shop growth plan.”

Executive Leadership Transition and Succession

The Board of Directors approved a plan to transition Christine Barone, who has served as the Company’s President since February 2023, into the role of Chief Executive Officer effective January 1, 2024. The remainder of 2023 will serve as a transitional period for both leaders.

Travis Boersma, Co-founder and Executive Chairman, said, "Joth has been a true partner and will forever be part of the Dutch Bros family. I'm thankful for the work he's done helping us transition from a small, regional business to one on the national stage. He's been key in helping us grow and nurture our people-first culture so we can continue to be a force for good in every community we serve. I'm confident in the foundation he's created and I'm grateful for the years he's dedicated to Dutch Bros and our crews."

Boersma added, "Christine is perfectly suited to take on the President and CEO role at Dutch Bros. Since joining us in February, she's become an integral part of this organization, demonstrating her passion and ability to affect positive change in our business. She has the experience and knowledge to help us scale, as well as a true passion for people. I'm confident she is the best leader to help us in our next phase."

Ricci stated, “It has been my great honor to serve as CEO and I’m so proud of all this team has accomplished. Dutch Bros is a strong, healthy business with a very special culture and long runway of growth ahead. I feel very fortunate to have been a part of its success for more than five years.”

Ricci added, “In setting the stage for the next phase of scaling the company, Christine has demonstrated her abilities and deep industry knowledge and experience. Over the last six months, she has immersed herself in our business and culture, and her impact has been felt immediately and decisively, notably in our real estate strategy, data analytics and marketing. Having played a key part in shaping our priorities and action plans moving forward, I am confident the time is right for me to pass the baton to Christine.”

Second Quarter 2023 Highlights

  • Opened 38 new shops, bringing total shop count to 754 as of June 30, 2023, a 25.0% increase from June 30, 2022. Of these 38 new shops opened across 8 states, 35 were company-operated. All of these new shops continue to be led by existing or newly-promoted regional operators.
  • Total revenues grew 34.1% to $249.9 million as compared to $186.4 million in the same period of 2022.
  • System same shop sales2 increased 3.8%, inclusive of the impact of our fortressing strategy, which results in sales being transferred from existing shops to new ones, as compared to the same period in 2022. Company-operated same shop sales increased 1.6%, as compared to the same period of 2022.
  • Company-operated shop revenues increased 37.7% to $221.0 million, as compared to $160.5 million in the same period of 2022.
  • Company-operated shop gross profit was $52.1 million as compared to $31.2 million in the same period of 2022. In the second quarter of 2023, company-operated shop gross margin, which includes 150bps of pre-opening expenses, improved to 23.6%, a year-over-year increase of 420bps.
  • Company-operated shop contribution1, a non-GAAP financial measure, grew 69.2% to $66.9 million as compared to $39.5 million in the same period of 2022. In the second quarter of 2023, company-operated shop contribution margin, which includes 150bps of pre-opening expense, improved to 30.3%, a year-over-year increase of 570 bps.
  • Selling, general, and administrative expenses were $51.7 million (20.7% of revenue) as compared to $42.3 million (22.7% of revenue) in the same period of 2022.
  • Adjusted selling, general, and administrative expenses1, a non-GAAP financial measure, were $39.3 million (15.7% of revenue) as compared to $31.9 million (17.1% of revenue) in the same period of 2022.
  • Net income (loss) was $9.7 million as compared to $(1.8) million in the same period of 2022.
  • Adjusted EBITDA1, a non-GAAP financial measure, grew 103.0% to $48.6 million as compared to $23.9 million in the same period of 2022.
  • Adjusted net income1, a non-GAAP financial measure, was $20.9 million as compared to $8.7 million in the same period of 2022.
  • Net income (loss) per share of Class A and Class D common stock - diluted was $0.05 as compared to $(0.02) per share in the same period of 2022.
  • Adjusted net income per fully exchanged share of diluted common stock1, a non-GAAP financial measure, was $0.13 as compared to $0.05 in the same period of 2022.

Outlook

Dutch Bros is providing the following guidance for the year 2023:

  • Total system shop openings in 2023 are expected to remain at least 150, of which at least 130 shops will be company-operated.
  • Total revenues are projected to be at the lower end of the previously communicated range of $950 million to $1 billion, which reflects current new shop AUV trends of approximately $1.7 million, partially offset by improved traffic trends and Q3 pricing actions.
  • Same shop sales2 growth is estimated to remain in the low single digits.
  • Adjusted EBITDA3 is now estimated to be between $135 million and $140 million, up from at least $125 million. This reflects stronger than expected year-to-date profitability trends, partially offset by revised revenue expectations and increased levels of investment in support of key priorities.
  • Capital expenditures are estimated to be in the range of $225 million to $250 million, which includes approximately $15 million to $20 million in spending in 2023 for our new roasting facility projected to open in 2024.
____________________

1

Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures”.

2

Same shop sales is defined in the section “Select Financial Metrics”.

3

We have not reconciled guidance for Adjusted EBITDA to the corresponding GAAP financial measure because we do not provide guidance for the various reconciling items. We are unable to provide guidance for these reconciling items because we cannot determine their probable significance, as certain items are outside of our control and cannot be reasonably predicted due to the fact that these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measure is not available without unreasonable effort.

 

Conference Call and Webcast Today

Joth Ricci, Chief Executive Officer, Christine Barone, President, and Charles Jemley, Chief Financial Officer, will host a conference call and webcast today at 5:00 p.m. Eastern Time (ET) to discuss financial results for the second quarter ended June 30, 2023.

Event: Second Quarter 2023 Conference Call and Webcast

Date: Tuesday, August 8, 2023

Time: 5:00 p.m. ET

Dial In: 1-201-493-6779

Webcast: https://investors.dutchbros.com under “Events & Presentations”.

The webcast will be archived shortly after the conference call has concluded. We will also publish earnings presentation slides related to these financial results on our website https://investors.dutchbros.com under “Events & Presentations”.

About Dutch Bros Inc.

Dutch Bros Inc. (NYSE: BROS) is a high growth operator and franchisor of drive-thru shops that focus on serving high QUALITY, hand-crafted beverages with unparalleled SPEED and superior SERVICE. Founded in 1992 by brothers Dane and Travis Boersma, Dutch Bros began with a double-head espresso machine and a pushcart in Grants Pass, Oregon. While espresso-based beverages are still at the core of what we do, Dutch Bros now offers a wide variety of unique, customizable cold and hot beverages that delight a broad array of customers. We believe Dutch Bros is more than just the products we serve—we are dedicated to making a massive difference in the lives of our employees, customers and communities. This combination of hand-crafted and high-quality beverages, our unique drive-thru experience and our community-driven, people-first culture has allowed us to successfully open new shops and continue to share the “Dutch Luv” at 754 locations across 14 states as of June 30, 2023.

To learn more about Dutch Bros, visit www.dutchbros.com, follow Dutch Bros Coffee on Instagram, Facebook, Twitter, and TikTok, and download the Dutch Bros app to earn points and score rewards!

Dutch Bros, our Windmill logo, Dutch Bros. Blue Rebel, and our other registered and common law trade names, trademarks and service marks are the property of Dutch Bros Inc. All other trademarks, trade names and service marks appearing in this Earnings Release are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Earnings Release may be referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert their rights thereto.

Forward-Looking Statements

In addition to historical information, this release contains a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, information concerning Dutch Bros’ possible or assumed future results of operations, including guidance for 2023, new shop openings, business strategies, and potential growth opportunities. These statements are based on Dutch Bros’ current expectations and beliefs, as well as a number of assumptions concerning future events. When used in this press release, the words “estimates,” “projected,” “expects,” “should,” “guidance,” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside Dutch Bros’ control that could cause actual results to differ materially from the results discussed in the forward-looking statements, including those related to general economic conditions, commodity inflation, increased labor costs, disruptions in our supply chain, ability to hire and retain employees, and other risks, including those described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 27, 2023, and in our future reports to be filed with the SEC, including our Quarterly Report on Form 10-Q for the period ended June 30, 2023. Forward-looking statements contained in this press release are made as of this date, and Dutch Bros undertakes no duty to update such information except as required under applicable law.

 

DUTCH BROS INC.

Condensed Consolidated Statements of Operations

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

(in thousands, except per share amounts; unaudited)

 

2023

 

2022

 

2023

 

2022

REVENUES

 

 

 

 

 

 

 

 

Company-operated shops

 

$

220,952

 

 

$

160,512

 

 

$

394,116

 

 

$

290,699

 

Franchising and other

 

 

28,927

 

 

 

25,869

 

 

 

53,030

 

 

 

47,838

 

Total revenues

 

 

249,879

 

 

 

186,381

 

 

 

447,146

 

 

 

338,537

 

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES

 

 

 

 

 

 

 

 

Cost of sales

 

 

178,636

 

 

 

141,370

 

 

 

330,159

 

 

 

262,537

 

Selling, general and administrative

 

 

51,662

 

 

 

42,342

 

 

 

97,638

 

 

 

87,556

 

Total costs and expenses

 

 

230,298

 

 

 

183,712

 

 

 

427,797

 

 

 

350,093

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS

 

 

19,581

 

 

 

2,669

 

 

 

19,349

 

 

 

(11,556

)

 

 

 

 

 

 

 

 

 

OTHER EXPENSE

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(9,058

)

 

 

(3,596

)

 

 

(16,944

)

 

 

(6,085

)

Other income

 

 

1,039

 

 

 

61

 

 

 

2,346

 

 

 

282

 

Total other expense

 

 

(8,019

)

 

 

(3,535

)

 

 

(14,598

)

 

 

(5,803

)

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

 

 

11,562

 

 

 

(866

)

 

 

4,751

 

 

 

(17,359

)

Income tax expense

 

 

1,851

 

 

 

885

 

 

 

4,431

 

 

 

671

 

NET INCOME (LOSS)

 

$

9,711

 

 

$

(1,751

)

 

$

320

 

 

$

(18,030

)

Less: Net income (loss) attributable to non-controlling interests

 

 

6,959

 

 

 

(845

)

 

 

1,410

 

 

 

(12,177

)

NET INCOME (LOSS) ATTRIBUTABLE TO DUTCH BROS INC.

 

$

2,752

 

 

$

(906

)

 

$

(1,090

)

 

$

(5,853

)

Net income (loss) per share of Class A and Class D common stock:

 

 

 

 

 

 

 

 

Basic

 

$

0.05

 

 

$

(0.02

)

 

$

(0.02

)

 

$

(0.12

)

Diluted

 

$

0.05

 

 

$

(0.02

)

 

$

(0.02

)

 

$

(0.12

)

Weighted-average shares of Class A and Class D common stock outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

56,734

 

 

 

50,926

 

 

 

56,699

 

 

 

49,500

 

Diluted

 

 

57,428

 

 

 

50,926

 

 

 

56,699

 

 

 

49,500

 

 

DUTCH BROS INC.

Segment Financials

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

(in thousands; unaudited)

 

2023

 

2022

 

2023

 

2022

Revenues:

 

 

 

 

 

 

 

 

Company-operated shops

 

$

220,952

 

 

$

160,512

 

 

$

394,116

 

 

$

290,699

 

Franchising and other

 

 

28,927

 

 

 

25,869

 

 

 

53,030

 

 

 

47,838

 

Total revenues

 

 

249,879

 

 

 

186,381

 

 

 

447,146

 

 

 

338,537

 

Cost of Sales:

 

 

 

 

 

 

 

 

Company-operated shops

 

 

168,873

 

 

 

129,294

 

 

 

313,165

 

 

 

242,842

 

Franchising and other

 

 

9,763

 

 

 

12,076

 

 

 

16,994

 

 

 

19,695

 

Total cost of sales

 

 

178,636

 

 

 

141,370

 

 

 

330,159

 

 

 

262,537

 

Segment gross profit:

 

 

 

 

 

 

 

 

Company-operated shops

 

 

52,079

 

 

 

31,218

 

 

 

80,951

 

 

 

47,857

 

Franchising and other

 

 

19,164

 

 

 

13,793

 

 

 

36,036

 

 

 

28,143

 

Total gross profit

 

 

71,243

 

 

 

45,011

 

 

 

116,987

 

 

 

76,000

 

Depreciation and amortization:

 

 

 

 

 

 

 

 

Company-operated shops

 

 

14,799

 

 

 

8,307

 

 

 

27,800

 

 

 

15,447

 

Franchising and other

 

 

1,297

 

 

 

1,520

 

 

 

2,658

 

 

 

2,862

 

All other

 

 

420

 

 

 

712

 

 

 

837

 

 

 

1,412

 

Total depreciation and amortization

 

 

16,516

 

 

 

10,539

 

 

 

31,295

 

 

 

19,721

 

Segment contribution:

 

 

 

 

 

 

 

 

Company-operated shops

 

 

66,878

 

 

 

39,525

 

 

 

108,751

 

 

 

63,304

 

Franchising and other

 

 

20,461

 

 

 

15,313

 

 

 

38,694

 

 

 

31,005

 

Total segment contribution

 

 

87,339

 

 

 

54,838

 

 

 

147,445

 

 

 

94,309

 

Selling, general and administrative

 

 

(51,662

)

 

 

(42,342

)

 

 

(97,638

)

 

 

(87,556

)

Interest expense, net

 

 

(9,058

)

 

 

(3,596

)

 

 

(16,944

)

 

 

(6,085

)

Other income

 

 

1,039

 

 

 

61

 

 

 

2,346

 

 

 

282

 

Income (loss) before income taxes

 

$

11,562

 

 

$

(866

)

 

$

4,751

 

 

$

(17,359

)

 

DUTCH BROS INC.

Company-Operated Shop Results

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

2022

 

2023

 

2022

(in thousands; unaudited)

 

$

 

%

 

$

 

%

 

$

 

%

 

$

 

%

Company-operated shops revenue

 

220,952

 

100.0

 

160,512

 

100.0

 

394,116

 

100.0

 

290,699

 

100.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beverage, food and packaging costs

 

59,433

 

26.8

 

43,548

 

27.1

 

108,385

 

27.6

 

79,170

 

27.2

Labor costs

 

58,735

 

26.6

 

47,240

 

29.4

 

107,284

 

27.2

 

89,001

 

30.6

Occupancy and other costs

 

32,642

 

14.8

 

26,621

 

16.6

 

63,201

 

16.0

 

49,624

 

17.1

Pre-opening costs

 

3,264

 

1.5

 

3,578

 

2.2

 

6,495

 

1.6

 

9,600

 

3.3

Depreciation and amortization

 

14,799

 

6.7

 

8,307

 

5.2

 

27,800

 

7.1

 

15,447

 

5.3

Company-operated shop costs and expenses

 

168,873

 

76.4

 

129,294

 

80.6

 

313,165

 

79.5

 

242,842

 

83.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company-operated shops gross profit

 

52,079

 

23.6

 

31,218

 

19.4

 

80,951

 

20.5

 

47,857

 

16.5

Company-operated shops contribution 1

 

66,878

 

30.3

 

39,525

 

24.6

 

108,751

 

27.6

 

63,304

 

21.8

____________________

1

Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures”.

 

DUTCH BROS INC.

Summary Cash Flows Data

 

 

 

Six Months Ended

June 30,

(in thousands; unaudited)

 

2023

 

2022

Net cash provided by operating activities

 

$

45,843

 

 

$

16,713

 

Net cash used in investing activities

 

 

(102,058

)

 

 

(88,633

)

Net cash provided by financing activities

 

 

59,754

 

 

 

74,707

 

Net increase in cash and cash equivalents

 

$

3,539

 

 

$

2,787

 

Cash and cash equivalents at beginning of period

 

 

20,178

 

 

 

18,506

 

Cash and cash equivalents at end of period

 

$

23,717

 

 

$

21,293

 

 

DUTCH BROS INC.

Condensed Consolidated Balance Sheets

 

(in thousands; unaudited)

 

June 30,

2023

 

December 31,

2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

23,717

 

 

$

20,178

 

Accounts receivable, net

 

 

9,379

 

 

 

11,966

 

Inventories, net

 

 

47,608

 

 

 

39,229

 

Prepaid expenses and other current assets

 

 

14,115

 

 

 

10,949

 

Total current assets

 

 

94,819

 

 

 

82,322

 

Property and equipment, net

 

 

446,565

 

 

 

365,468

 

Finance lease right-of-use assets, net

 

 

332,790

 

 

 

247,943

 

Operating lease right-of-use assets, net

 

 

177,605

 

 

 

169,302

 

Intangibles, net

 

 

7,035

 

 

 

8,804

 

Goodwill

 

 

21,629

 

 

 

21,629

 

Deferred income tax assets, net

 

 

284,777

 

 

 

288,765

 

Other long-term assets

 

 

3,060

 

 

 

2,127

 

Total assets

 

$

1,368,280

 

 

$

1,186,360

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

24,648

 

 

$

21,270

 

Accrued liabilities

 

 

35,872

 

 

 

27,452

 

Other current liabilities

 

 

7,511

 

 

 

7,860

 

Deferred revenue

 

 

22,300

 

 

 

25,335

 

Line of credit

 

 

181,090

 

 

 

110,865

 

Current portion of finance lease liabilities

 

 

9,867

 

 

 

7,971

 

Current portion of operating lease liabilities

 

 

9,612

 

 

 

9,317

 

Current portion of long-term debt

 

 

3,238

 

 

 

2,609

 

Total current liabilities

 

 

294,138

 

 

 

212,679

 

Deferred revenue, net of current portion

 

 

5,956

 

 

 

6,119

 

Tax receivable agreements liability, net of current portion

 

 

218,768

 

 

 

220,923

 

Finance lease liabilities, net of current portion

 

 

315,385

 

 

 

237,130

 

Operating lease liabilities, net of current portion

 

 

169,444

 

 

 

161,228

 

Long-term debt, net of current portion

 

 

94,506

 

 

 

96,297

 

Other long-term liabilities

 

 

8

 

 

 

8

 

Total liabilities

 

 

1,098,205

 

 

 

934,384

 

Equity:

 

 

 

 

Common stock

 

 

2

 

 

 

2

 

Additional paid in capital

 

 

152,900

 

 

 

145,613

 

Accumulated other comprehensive income

 

 

905

 

 

 

813

 

Accumulated deficit

 

 

(18,400

)

 

 

(17,310

)

Total stockholders' equity attributable to Dutch Bros Inc.

 

 

135,407

 

 

 

129,118

 

Non-controlling interests

 

 

134,668

 

 

 

122,858

 

Total equity

 

 

270,075

 

 

 

251,976

 

Total liabilities and equity

 

$

1,368,280

 

 

$

1,186,360

 

 

DUTCH BROS INC.

Select Financial Metrics

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

(in thousands, except number of shops data; unaudited)

 

2023

 

2022

 

2023

 

2022

Shop count, beginning of period

 

 

 

 

 

 

 

 

Company-operated

 

 

438

 

 

 

310

 

 

 

396

 

 

 

271

 

Franchised

 

 

278

 

 

 

262

 

 

 

275

 

 

 

267

 

 

 

 

716

 

 

 

572

 

 

 

671

 

 

 

538

 

Company-operated new openings

 

 

35

 

 

 

26

 

 

 

77

 

 

 

60

 

Franchised new openings

 

 

3

 

 

 

5

 

 

 

6

 

 

 

5

 

Acquisition of franchise shops

 

 

 

 

 

 

 

 

 

 

 

5

 

Shop count, end of period

 

 

 

 

 

 

 

 

Company-operated

 

 

473

 

 

 

336

 

 

 

473

 

 

 

336

 

Franchised

 

 

281

 

 

 

267

 

 

 

281

 

 

 

267

 

Total shop count

 

 

754

 

 

 

603

 

 

 

754

 

 

 

603

 

 

 

 

 

 

 

 

 

 

Systemwide AUV 1

 

 

N/A

 

 

 

N/A

 

 

$

1,928

 

 

$

1,900

 

Company-operated shops AUV 1

 

 

N/A

 

 

 

N/A

 

 

$

1,880

 

 

$

1,862

 

 

 

 

 

 

 

 

 

 

Systemwide same shop sales 2, 3

 

 

3.8

%

 

 

(3.3

)%

 

 

1.1

%

 

 

1.0

%

Company-operated same shop sales 2

 

 

1.6

%

 

 

(4.3

)%

 

 

(0.8

)%

 

 

0.3

%

 

 

 

 

 

 

 

 

 

Systemwide sales 3

 

$

375,216

 

 

$

297,403

 

 

$

677,998

 

 

$

551,968

 

Company-operated operating weeks 4

 

 

5,854

 

 

 

4,148

 

 

 

11,176

 

 

 

7,912

 

Franchising and other operating weeks 4

 

 

3,632

 

 

 

3,415

 

 

 

7,178

 

 

 

6,778

 

Dutch Rewards member registrations 5

 

 

573

 

 

 

496

 

 

 

1,067

 

 

 

985

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

2022

 

2023

 

2022

(in thousands; unaudited)

 

$

 

%

 

$

 

%

 

$

 

%

 

$

 

%

Company-operated shop revenues

 

220,952

 

100.0

 

160,512

 

 

100.0

 

 

394,116

 

100.0

 

290,699

 

 

100.0

 

Company-operated gross profit

 

52,079

 

23.6

 

31,218

 

 

19.4

 

 

80,951

 

20.5

 

47,857

 

 

16.5

 

Company-operated shop contribution 6

 

66,878

 

30.3

 

39,525

 

 

24.6

 

 

108,751

 

27.6

 

63,304

 

 

21.8

 

Selling, general, and administrative expenses

 

51,662

 

20.7

 

42,342

 

 

22.7

 

 

97,638

 

21.8

 

87,556

 

 

25.9

 

Adjusted selling, general, and administrative expenses 6

 

39,338

 

15.7

 

31,896

 

 

17.1

 

 

75,994

 

17.0

 

63,576

 

 

18.8

 

Net income (loss)

 

9,711

 

3.9

 

(1,751

)

 

(0.9

)

 

320

 

0.1

 

(18,030

)

 

(5.3

)

Adjusted EBITDA 6

 

48,599

 

19.4

 

23,939

 

 

12.8

 

 

72,479

 

16.2

 

33,601

 

 

9.9

 

____________________

1

AUVs are determined based on the net sales for any trailing twelve-month period for systemwide and company-operated shops that have been open a minimum of 15 months. AUVs are calculated by dividing the systemwide and company-operated shop net sales by the total number of systemwide and company-operated shops, respectively. Management uses this metric as an indicator of shop growth and future expectations of mature locations.

 

2

Same shop sales reflects the change in year-over-year sales for the comparable shop base, which we define as shops open for 15 complete months or longer. Management uses this metric as an indicator of shop growth and future expansion strategy. The number of shops included in the systemwide and company-operated comparable bases for the respective periods are presented in the following table.

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

2022

 

2023

 

2022

Systemwide shop base

 

538

 

440

 

503

 

414

Company-operated shop base

 

276

 

193

 

246

 

173

3

Systemwide sales and systemwide same shop sales are operating measures that include sales at company-operated shops and sales at franchised shops during the comparable periods presented. Franchise sales represent sales at all franchise shops and are revenues to our franchisees. We do not record franchise sales as revenues; however, our royalty revenues and advertising fund contributions are calculated based on a percentage of franchise sales. As these metrics include sales reported to us by our non-consolidated franchise partners, these metrics should be considered as a supplement to, not a substitute for, our results as reported under GAAP. Management uses these metrics as indicators of our system’s overall financial health, growth and future expansion prospects.

 

4

Company-operated and franchise shops operating weeks are calculated based on the number operating days for the shop base and dividing by 7. Our shop base is defined as shops opened as of the end date of the periods presented. The operating weeks calculations reflect re-acquired franchises through 2022. Management uses these metrics as indicators of our system’s overall financial health, growth and future expansion prospects.

 

5

Dutch Rewards is our digitally-based rewards program available exclusively through the Dutch Rewards app. Management uses this metric as an indicator of customer loyalty adoption of our Dutch Rewards app and future promotional plans.

 

6

Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures”.

 

Non-GAAP Financial Measures

In addition to disclosing financial results in accordance with U.S. GAAP, this release contains references to the non-GAAP financial measures below. We believe these non-GAAP financial measures provide investors with useful supplemental information about our operating performance, enable comparison of financial trends and results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business and measuring our performance.

Our non-GAAP financial measures reflect adjustments based on one or more of the following items, as well as the related income tax effects where applicable. Income tax effects have been calculated based on the combined total non-GAAP adjustments using our total effective tax rate. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP, and the financial results calculated in accordance with U.S. GAAP and reconciliations from these results should be carefully evaluated.

Company-operated shop contribution (in dollars and as a percentage of revenue)

Definition and/or calculation

Company-operated segment gross profit, before company-operated shop depreciation and amortization. Company-operated shop contribution in dollars (as defined), taken as a percentage of company-operated shop revenue.

Usefulness to management and investors

This non-GAAP measure is used by our management in making performance decisions without the impact of non-cash depreciation and amortization charges. This is a standard metric used across the industry by our investors.

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

EBITDA — definition and/or calculation

Net income (loss) before interest expense (net of interest income), income tax expense, and depreciation and amortization expense.

Adjusted EBITDA — definition and/or calculation

Defined as EBITDA (as defined above), excluding equity-based compensation, COVID-19: “Thank You” pay and catastrophic leave expenses, COVID-19: prepaid costs not utilized, costs incurred for company-wide milestone events, executives transition costs, (gain) loss on the remeasurement of the liability related to the TRAs, and estimated expense related to certain legal disputes.

Usefulness to management and investors

These non-GAAP measures are supplemental operating performance measures we believe facilitate comparisons to historical performance and competitors’ operating results. We believe these non-GAAP measures presented provide investors with a supplemental view of our operating performance that facilitates analysis and comparisons of our ongoing business operations because they exclude items that may not be indicative of our ongoing operating performance.

Adjusted selling, general, and administrative (in dollars and as a percentage of revenue)

Definition and/or calculation

Selling, general, and administrative expenses, excluding equity-based compensation expense, COVID-19: prepaid costs not utilized, costs incurred for company-wide milestone events, executive transitions costs, and estimated expense related to certain legal disputes.

Usefulness to management and investors

This non-GAAP measure is used as a supplemental measure of operating performance that we believe is useful to evaluate our performance period over period and relative to our competitors. We believe the non-GAAP measure presented provides investors with a supplemental view of our operating performance that facilitates analysis and comparisons of our ongoing business operations because it excludes items that may not be indicative of our ongoing operating performance.

Adjusted net income

Definition and/or calculation

Net income (loss), excluding equity-based compensation expense, COVID-19: “thank you” pay and catastrophic leave expenses, executives transition costs, (gain) loss on the remeasurement of the liability related to the TRAs, estimated expense related to certain legal disputes, and income tax effects of items excluded from net income (loss).

Usefulness to management and investors

This non-GAAP measure is used as a supplemental measure of operating performance that we believe is useful to evaluate our performance period over period and relative to our competitors. We believe this measure facilitates a better comparison with other companies that have different organizational and tax structures, as well as comparisons period over period.

Adjusted fully exchanged weighted-average shares of diluted common stock outstanding

Definition and/or calculation

Weighted-average shares of Class A and Class D common stock outstanding - basic with addition of dilutive impacts of RSAs and RSUs, as well as the assumed exchange of the weighted-average shares of Class B and Class C common stock.

Usefulness to management and investors

This non-GAAP measure is used as a supplemental measure of operating performance that we believe is useful to evaluate our performance period over period and relative to our competitors. By adding in the assumed full exchange of all of our outstanding Class B and Class C common stock, we believe this measure facilitates a better comparison with other companies that have different organizational and tax structures, as well as comparisons period over period.

Adjusted net income per fully exchanged share of diluted common stock

Definition and/or calculation

Net income (loss) per share of Class A and Class D common stock - diluted, excluding per share impacts of equity-based compensation expense, COVID-19: “thank you” pay and catastrophic leave expenses, COVID-19: prepaid costs not utilized, costs incurred for company-wide milestone events, executives transition costs, estimated expense related to certain legal disputes, income tax effects of items excluded from net income (loss), and removal of per share impacts of controlling and non-controlling interests.

Usefulness to management and investors

This non-GAAP measure is used as a supplemental measure of operating performance that we believe is useful to evaluate our performance period over period and relative to our competitors. By assuming the full exchange of all of our outstanding Class B and Class C common stock and related net income (loss) adjustments, we believe this measure facilitates a better comparison with other companies that have different organizational and tax structures, as well as comparisons period over period.

Non-GAAP adjustments

Below are the definitions of the non-GAAP adjustments that are used in the calculation of our non-GAAP measures, as described above.

Equity-based compensation

Non-cash expenses related to the grant and vesting of stock awards, restricted stock awards and restricted stock units in Dutch Bros Inc. and/or Profit Interest Units in Dutch Bros OpCo1 to certain eligible employees.

COVID-19: “thank you” pay and catastrophic leave

Costs related to two separate programs established to support employees during the COVID-19 pandemic. We implemented an hourly wage supplement program for shop employees who continued to work while their state or county was under a stay at home order or similar lockdown requirement. This program lasted in various markets until April 2021. We also established a catastrophic leave policy that provided paid leave to employees who were required to quarantine due to in-shop exposures and could not work their regular hours.

COVID-19: Prepaid costs not utilized

Costs related to the write-off of previously prepaid expenses for the development of a virtual corporate engagement platform built in response to the health restrictions of the COVID-19 pandemic. The platform was developed as a substitute for in person engagement practices used pre-pandemic. The platform has been determined ineffective, particularly as we shift back to in-person events with the easing of restrictions related to the COVID-19 pandemic.

Milestone events

Costs incurred for company-wide events to celebrate 30 years of serving high QUALITY, hand-crafted beverages with unparalleled SPEED and superior SERVICE to our customers.

Executives transition costs

Employee severance and related benefit costs, as well as sign-on bonus(es) for several executive level transitions occurring in 2022 and 2023.

TRAs remeasurements

(Gain) loss impacts on condensed consolidated statements of operations related to adjustments of our TRAs liabilities.

Legal proceedings

Estimated loss accrual related to certain legal disputes.

Dilutive effects of RSAs and RSUs

Addition of incremental shares of RSAs and RSUs calculated under the treasury stock method, when they are dilutive for the calculation of weighted-average shares on a non-GAAP basis.

Assumed exchange of weighted-average Class B and Class C shares of common stock

Weighted-average shares of Class B and C common stock that are assumed to be exchanged for Class A common stock.

Removal of allocation for controlling and non-controlling interests

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

____________________

1

Dutch Bros OpCo refers to Dutch Mafia, LLC, a Delaware limited liability company, and a direct subsidiary of Dutch Bros Inc.

 

Supplemental Reconciliations of GAAP Actuals to Non-GAAP Actuals

Following are the reconciliations of the most comparable GAAP financial measure to non-GAAP financial measure. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP, and the reconciliations from U.S. GAAP to Non-GAAP actuals should be carefully evaluated. Please refer to "Explanation of Non-GAAP Financial Measures" in this release for a detailed explanation of the adjustments made to the comparable U.S. GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

2022

 

2023

 

2022

(in thousands; unaudited)

 

$

 

%

 

$

 

%

 

$

 

%

 

$

 

%

Company-operated shop gross profit

 

52,079

 

23.6

 

31,218

 

19.4

 

80,951

 

20.5

 

47,857

 

16.5

Depreciation and amortization

 

14,799

 

6.7

 

8,307

 

5.2

 

27,800

 

7.1

 

15,447

 

5.3

Company-operated shop contribution

 

66,878

 

30.3

 

39,525

 

24.6

 

108,751

 

27.6

 

63,304

 

21.8

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

2022

 

2023

 

2022

(in thousands; unaudited)

 

$

 

%

 

$

 

%

 

$

 

%

 

$

 

%

Net income (loss)

 

9,711

 

 

3.9

 

 

(1,751

)

 

(0.9

)

 

320

 

 

0.1

 

 

(18,030

)

 

(5.3

)

Depreciation and amortization

 

16,516

 

 

6.7

 

 

10,539

 

 

5.7

 

 

31,295

 

 

7.0

 

 

19,721

 

 

5.8

 

Interest expense, net

 

9,058

 

 

3.6

 

 

3,596

 

 

1.9

 

 

16,944

 

 

3.8

 

 

6,085

 

 

1.8

 

Income tax expense

 

1,851

 

 

0.7

 

 

885

 

 

0.5

 

 

4,431

 

 

1.0

 

 

671

 

 

0.2

 

EBITDA

 

37,136

 

 

14.9

 

 

13,269

 

 

7.1

 

 

52,990

 

 

11.9

 

 

8,447

 

 

2.5

 

Equity-based compensation

 

10,149

 

 

4.1

 

 

10,446

 

 

5.6

 

 

19,319

 

 

4.3

 

 

20,346

 

 

6.0

 

COVID-19: “thank you pay” and catastrophic leave

 

 

 

 

 

224

 

 

0.1

 

 

 

 

 

 

1,174

 

 

0.3

 

COVID-19: prepaid costs not utilized

 

 

 

 

 

 

 

 

 

 

 

 

 

1,200

 

 

0.4

 

Milestone events

 

 

 

 

 

 

 

 

 

 

 

 

 

2,434

 

 

0.7

 

Executives transition costs

 

225

 

 

0.1

 

 

 

 

 

 

375

 

 

0.1

 

 

 

 

 

TRAs remeasurements

 

(861

)

 

(0.5

)

 

 

 

 

 

(2,155

)

 

(0.5

)

 

 

 

 

Legal proceedings

 

1,950

 

 

0.8

 

 

 

 

 

 

1,950

 

 

0.4

 

 

 

 

 

Adjusted EBITDA

 

48,599

 

 

19.4

 

 

23,939

 

 

12.8

 

 

72,479

 

 

16.2

 

 

33,601

 

 

9.9

 

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

2022

 

2023

 

2022

(in thousands; unaudited)

 

$

 

%

 

$

 

%

 

$

 

%

 

$

 

%

Selling, general, and administrative 1

 

51,662

 

 

20.7

 

 

42,342

 

 

22.7

 

 

97,638

 

 

21.8

 

 

87,556

 

 

25.9

 

Equity-based compensation

 

(10,149

)

 

(4.1

)

 

(10,446

)

 

(5.6

)

 

(19,319

)

 

(4.3

)

 

(20,346

)

 

(6.0

)

COVID-19: prepaid costs not utilized

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,200

)

 

(0.4

)

Milestone events

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,434

)

 

(0.7

)

Executives transition costs

 

(225

)

 

(0.1

)

 

 

 

 

 

(375

)

 

(0.1

)

 

 

 

 

Legal proceedings

 

(1,950

)

 

(0.8

)

 

 

 

 

 

(1,950

)

 

(0.4

)

 

 

 

 

Adjusted selling, general, and administrative

 

39,338

 

 

15.7

 

 

31,896

 

 

17.1

 

 

75,994

 

 

17.0

 

 

63,576

 

 

18.8

 

 

 

 

Three Months Ended

June 30,

(in thousands; unaudited)

 

2023

 

2022

Net income (loss)

 

$

9,711

 

 

$

(1,751

)

Equity-based compensation

 

 

10,149

 

 

 

10,446

 

COVID-19: “thank you pay” and catastrophic leave

 

 

 

 

 

224

 

Executives transition costs

 

 

225

 

 

 

 

TRAs remeasurements

 

 

(861

)

 

 

 

Legal proceedings

 

 

1,950

 

 

 

 

Income tax effects

 

 

(284

)

 

 

(215

)

Adjusted net income

 

$

20,890

 

 

$

8,704

 

____________________

1

Selling, general, and administrative expenses include depreciation and amortization.

 

 

 

Three Months Ended

June 30,

(in thousands, except per share amounts; unaudited)

 

2023

 

2022

Weighted-average shares of Class A and Class D common stock outstanding - basic

 

 

56,734

 

 

 

50,926

 

Dilutive effects of RSAs

 

 

694

 

 

 

 

Weighted-average shares of Class A and Class D common stock outstanding - diluted

 

 

57,428

 

 

 

50,926

 

Dilutive effects of RSUs

 

 

2

 

 

 

1,530

 

Assumed exchange of weighted-average Class B and Class C shares of common stock

 

 

105,756

 

 

 

110,085

 

Adjusted fully exchanged weighted-average shares of common stock outstanding - diluted

 

 

163,186

 

 

 

162,541

 

 

 

 

 

 

Net income (loss) per share of Class A and Class D common stock - diluted

 

$

0.05

 

 

$

(0.02

)

Controlling and non-controlling interest adjustments

 

 

0.02

 

 

 

0.01

 

Equity-based compensation

 

 

0.06

 

 

 

0.06

 

COVID-19: “thank you pay” and catastrophic leave

 

 

 

 

 

 

Executives transition costs

 

 

 

 

 

 

TRAs remeasurements

 

 

(0.01

)

 

 

 

Legal proceedings

 

 

0.01

 

 

 

 

Income tax effects

 

 

 

 

 

 

Adjusted net income per fully exchanged share of diluted common stock

 

$

0.13

 

 

$

0.05

 

 

Contacts

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
 
 
Copyright © 2010-2020 SanRafael.com & California Media Partners, LLC. All rights reserved.