Dutch Bros Inc. Reports Second Quarter 2024 Financial Results

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

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

 

 

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