Dutch Bros Inc. Reports Third Quarter 2024 Financial Results
Achieves $338 million in Revenues in Quarter, a 28% Increase Year-over-Year
Completes Mobile Order Capability Rollout
Raises Revenue and Adjusted EBITDA Guidance
GRANTS PASS, Ore. - November 6, 2024 - 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 third quarter ended September 30, 2024.
Christine Barone, Chief Executive Officer and President of Dutch Bros, stated, “We delivered exceptional performance in the third quarter as we executed our strategic and operational initiatives. We believe our brand is resonating with customers, as we had the highest same shop transaction growth quarter in two years, outside of the impact of Leap Day. In the third quarter we delivered a 28% revenue increase and systemwide same shop sales growth of 2.7%, which exceeded our expectations.”
Barone continued, “We believe our refined real estate strategy is working, as we are seeing strong new shop productivity as we have shifted our development focus and elevated our site selection process. We continue to demonstrate remarkable consistency in our shop opening cadence with 38 shop openings in the third quarter. We are making major investments in our development and construction teams and our 2025 pipeline is strong, positioning us to accelerate new shop growth.”
Barone concluded, "In the quarter, we accelerated our mobile order rollout, achieving 90% system and 96% company-operated shop coverage as of September 30th. We have received great feedback from broistas and customers and we believe we are beginning to see the impacts on our business.”
Third Quarter 2024 Highlights
•Opened 38 new shops, 33 of which were company-operated, across 11 states.
•Total revenues grew 27.9% to $338.2 million as compared to $264.5 million in the same period of 2023.
•System same shop sales1 and transactions increased 2.7% and 0.8%, respectively, relative to the same period in 2023. Company-operated same shop sales1 and transactions increased 4.0% and 2.4%, respectively, relative to the same period of 2023.
•Company-operated shop revenues increased 30.4% to $308.3 million, as compared to $236.5 million in the same period of 2023.
•Company-operated shop gross profit was $68.4 million as compared to $57.0 million in the same period of 2023. In the third quarter of 2024, company-operated shop gross margin, which includes 120 bps of pre-opening costs, was 22.2%, a year-over-year decrease of 190 bps.
•Company-operated shop contribution2, a non-GAAP financial measure, grew 23.9% to $90.8 million as compared to $73.3 million in the same period of 2023. In the third quarter of 2024, company-operated shop contribution margin, which includes 120 bps of pre-opening costs, was 29.5%, a year-over-year decrease of 150 bps.
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•Selling, general, and administrative expenses were $57.5 million (17.0% of revenue) as compared to $50.5 million (19.1% of revenue) in the same period of 2023.
•Adjusted selling, general, and administrative expenses2, a non-GAAP financial measure, were $50.3 million (14.9% of revenue) as compared to $40.2 million (15.2% of revenue) in the same period of 2023.
•Net income was $21.7 million as compared to $13.4 million in the same period of 2023.
•Adjusted EBITDA2, a non-GAAP financial measure, grew 20.3% to $63.8 million as compared to $53.0 million in the same period of 2023.
•Adjusted net income2, a non-GAAP financial measure, was $27.7 million as compared to $22.4 million in the same period of 2023.
•Net income per share of Class A and Class D common stock - diluted was $0.11 as compared to $0.07 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 $0.16 as compared to $0.14 in the same period of 2023.
Revised 2024 Outlook
•Total revenues are now projected to be between $1.255 billion and $1.260 billion, up from the prior range of $1.215 billion to $1.230 billion.
•Total system shop openings in 2024 are now expected to be 150, consistent with the previously communicated outlook at the lower end of 150 to 165. Capital expenditures are estimated to be between $245 million to $265 million, down from the prior range of $270 million to $290 million.
•Same shop sales1 growth for 2024 is expected to be approximately 4.25%, from low single digits previously. Same shop sales1 growth for the fourth quarter of 2024 is expected to be between 1% and 2%.
•Adjusted SG&A3 is estimated to be between $195 million and $200 million, from $190 million to $200 million previously.
•Adjusted EBITDA3 is now estimated to be between $215 million and $220 million, up from the prior range of $200 million to $210 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.
Dutch Bros Inc.| Earnings Release | 2
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 third quarter ended September 30, 2024.
Event: Third Quarter 2024 Conference Call and Webcast
Date: Wednesday, November 6, 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 950 locations across 18 states as of September 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.
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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, the success of Dutch Bros’ mobile order capabilities and expansion of such capabilities, 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,” “project,” “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 and technological advancements, 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 September 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.
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DUTCH BROS INC.
Condensed Consolidated Statements of Operations
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands, except per share amounts; unaudited)
2024
2023
2024
2023
REVENUES
Company-operated shops
$
308,295
$
236,472
$
851,648
$
630,588
Franchising and other
29,917
28,035
86,581
81,065
Total revenues
338,212
264,507
938,229
711,653
COSTS AND EXPENSES
Cost of sales
248,161
189,323
686,048
519,482
Selling, general and administrative
57,536
50,490
161,866
148,128
Total costs and expenses
305,697
239,813
847,914
667,610
INCOME FROM OPERATIONS
32,515
24,694
90,315
44,043
OTHER EXPENSE
Interest expense, net
(6,869)
(9,325)
(20,259)
(26,269)
Other income (expense), net
764
(140)
7,357
2,206
Total other expense
(6,105)
(9,465)
(12,902)
(24,063)
INCOME BEFORE INCOME TAXES
26,410
15,229
77,413
19,980
Income tax expense
4,698
1,828
17,330
6,259
NET INCOME
$
21,712
$
13,401
$
60,083
$
13,721
Less: Net income attributable to non-controlling interests
9,068
9,191
28,437
10,601
NET INCOME ATTRIBUTABLE TO DUTCH BROS INC.
$
12,644
$
4,210
$
31,646
$
3,120
Net income per share of Class A and Class D common stock:
Basic
$
0.11
$
0.07
$
0.32
$
0.05
Diluted
$
0.11
$
0.07
$
0.32
$
0.05
Weighted-average shares of Class A and Class D common stock outstanding:
Basic
113,819
59,366
99,756
57,598
Diluted
114,252
60,214
100,070
57,598
Dutch Bros Inc.| Earnings Release | 5
DUTCH BROS INC.
Segment Financials
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands; unaudited)
2024
2023
2024
2023
Revenues:
Company-operated shops
$
308,295
$
236,472
$
851,648
$
630,588
Franchising and other
29,917
28,035
86,581
81,065
Total revenues
338,212
264,507
938,229
711,653
Cost of Sales:
Company-operated shops
239,918
179,480
658,950
492,645
Franchising and other
8,243
9,843
27,098
26,837
Total cost of sales
248,161
189,323
686,048
519,482
Segment gross profit:
Company-operated shops
68,377
56,992
192,698
137,943
Franchising and other
21,674
18,192
59,483
54,228
Total gross profit
90,051
75,184
252,181
192,171
Depreciation and amortization:
Company-operated shops
22,470
16,332
63,202
44,132
Franchising and other
1,022
1,371
3,394
4,029
All other ¹
389
413
888
1,250
Total depreciation and amortization
23,881
18,116
67,484
49,411
Segment contribution:
Company-operated shops
90,847
73,324
255,900
182,075
Franchising and other
22,696
19,563
62,877
58,257
Total segment contribution
113,543
92,887
318,777
240,332
Selling, general and administrative
(57,536)
(50,490)
(161,866)
(148,128)
Interest expense, net
(6,869)
(9,325)
(20,259)
(26,269)
Other income (expense), net
764
(140)
7,357
2,206
Income before income taxes
$
26,410
$
15,229
$
77,413
$
19,980
__________________
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.| Earnings Release | 6
DUTCH BROS INC.
Company-Operated Shop Results
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
(in thousands; unaudited)
$
%
$
%
$
%
$
%
Company-operated shops revenue
308,295
100.0
236,472
100.0
851,648
100.0
630,588
100.0
Beverage, food and packaging costs
78,060
25.3
61,317
25.9
216,923
25.5
169,702
26.8
Labor costs
85,144
27.6
61,521
26.0
230,807
27.1
168,805
26.8
Occupancy and other costs
50,693
16.4
36,126
15.3
136,466
16.0
99,327
15.8
Pre-opening costs
3,551
1.2
4,184
1.8
11,552
1.4
10,679
1.7
Depreciation and amortization
22,470
7.3
16,332
6.9
63,202
7.4
44,132
7.0
Company-operated shop costs and expenses
239,918
77.8
179,480
75.9
658,950
77.4
492,645
78.1
Company-operated shops gross profit
68,377
22.2
56,992
24.1
192,698
22.6
137,943
21.9
Company-operated shops contribution 1
90,847
29.5
73,324
31.0
255,900
30.0
182,075
28.9
_________________
1 Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures”.
DUTCH BROS INC.
Summary Cash Flows Data
Nine Months Ended September 30,
(in thousands; unaudited)
2024
2023
Net cash provided by operating activities
$
184,195
$
94,906
Net cash used in investing activities
(169,363)
(167,461)
Net cash provided by financing activities
132,757
202,163
Net increase in cash and cash equivalents
$
147,589
$
129,608
Cash and cash equivalents at beginning of period
133,545
20,178
Cash and cash equivalents at end of period
$
281,134
$
149,786
Dutch Bros Inc.| Earnings Release | 7
DUTCH BROS INC.
Condensed Consolidated Balance Sheets
(in thousands; unaudited)
September 30, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
281,134
$
133,545
Accounts receivable, net
10,362
9,124
Inventories, net
38,381
46,953
Prepaid expenses and other current assets
12,168
15,637
Total current assets
342,045
205,259
Property and equipment, net
662,759
542,440
Finance lease right-of-use assets, net
377,561
382,734
Operating lease right-of-use assets, net
301,896
199,673
Intangibles, net
3,455
5,415
Goodwill
21,629
21,629
Deferred income tax assets, net
718,543
402,995
Other long-term assets
3,628
3,865
Total assets
$
2,431,516
$
1,764,010
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
31,880
$
29,957
Accrued compensation and benefits
39,106
31,405
Other accrued liabilities
26,162
15,770
Other current liabilities
5,962
6,423
Deferred revenue
35,738
30,349
Current portion of finance lease liabilities
12,845
9,482
Current portion of operating lease liabilities
12,987
10,239
Current portion of long-term debt
15,746
4,491
Total current liabilities
180,426
138,116
Deferred revenue, net of current portion
6,367
6,676
Finance lease liabilities, net of current portion
369,206
367,775
Operating lease liabilities, net of current portion
293,474
191,419
Long-term debt, net of current portion
224,361
93,175
Tax receivable agreements liability
605,003
290,920
Other long-term liabilities
8
8
Total liabilities
1,678,845
1,088,089
Equity:
Common stock
1
2
Additional paid in capital
506,785
379,391
Accumulated other comprehensive income
310
544
Retained earnings (accumulated deficit)
16,054
(15,592)
Total stockholders' equity attributable to Dutch Bros Inc.
523,150
364,345
Non-controlling interests
229,521
311,576
Total equity
752,671
675,921
Total liabilities and equity
$
2,431,516
$
1,764,010
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DUTCH BROS INC.
Select Financial Metrics
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands, except number of shops data; unaudited)
2024
2023
2024
2023
Shop count, beginning of period
Company-operated
612
473
542
396
Franchised
300
281
289
275
912
754
831
671
Company-operated new openings
33
37
103
114
Franchised new openings
5
2
16
8
Re-openings 1
—
1
—
1
Shop count, end of period
Company-operated
645
510
645
510
Franchised
305
284
305
284
Total shop count
950
794
950
794
Systemwide AUV 2
N/A
N/A
$
2,004
$
1,950
Company-operated shops AUV 2
N/A
N/A
$
1,921
$
1,901
Systemwide same shop sales 3, 4
2.7
%
4.0
%
5.2
%
2.1
%
Ticket
1.9
%
9.5
%
5.6
%
7.6
%
Transactions
0.8
%
(5.5)
%
(0.4)
%
(5.5)
%
Company-operated same shop sales 3
4.0
%
2.8
%
6.3
%
0.5
%
Ticket
1.6
%
9.1
%
5.3
%
7.6
%
Transactions
2.4
%
(6.3)
%
1.0
%
(7.1)
%
Systemwide sales 4
$
478,765
$
391,286
$
1,342,750
$
1,069,284
Company-operated operating weeks 5
8,212
6,400
23,195
17,576
Franchising and other operating weeks 5
3,955
3,703
11,576
10,881
Dutch Rewards transactions as a percentage of total transactions 6
67.2
%
63.1
%
66.8
%
64.2
%
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
(in thousands; unaudited)
$
%
$
%
$
%
$
%
Company-operated shop revenues
308,295
100.0
236,472
100.0
851,648
100.0
630,588
100.0
Company-operated gross profit
68,377
22.2
56,992
24.1
192,698
22.6
137,943
21.9
Company-operated shop contribution 7
90,847
29.5
73,324
31.0
255,900
30.0
182,075
28.9
Selling, general, and administrative expenses
57,536
17.0
50,490
19.1
161,866
17.3
148,128
20.8
Adjusted selling, general, and administrative expenses 7
50,268
14.9
40,154
15.2
138,321
14.7
115,311
16.2
Net income
21,712
6.4
13,401
5.1
60,083
6.4
13,721
1.9
Adjusted EBITDA 7
63,762
18.9
53,008
20.0
181,461
19.3
125,487
17.6
Dutch Bros Inc.| Earnings Release | 9
___________
1 Re-opening of a shop that was temporarily closed in 2021.
2 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.
3 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. Same shop sales can be impacted by changes in customer transaction counts and by changes in the per-ticket amounts. 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 September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Systemwide shop base
716
572
641
503
Company-operated shop base
438
310
370
246
4 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.
5 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.
6 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.
7 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.
Dutch Bros Inc.| Earnings Release | 10
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.
Dutch Bros Inc.| Earnings Release | 11
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 all of the Dutch Bros OpCo Class A common units not held by Dutch Bros Inc. for Dutch Bros Inc. Class A 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 exchange of all of the outstanding Dutch Bros OpCo Class A common units not held by Dutch Bros Inc. for Dutch Bros Inc. Class A 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 the outstanding Dutch Bros OpCo Class A common units not held by Dutch Bros Inc. for Dutch Bros Inc. Class A 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.
Dutch Bros Inc.| Earnings Release | 12
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 our airplane, hangar and related equipment 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. This initiative resulted in realignment activities that occurred in 2023, and restructuring activities that commenced in 2024, and are expected to continue for at least the next year. Given this strategic initiative's magnitude and scope, we do not expect such costs will recur in the foreseeable future, and do not consider such costs reflective of the ongoing costs necessary to operate our 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 LLC interests for shares of Class A common stock
Weighted-average of all outstanding Dutch Bros OpCo Class A common units not held by Dutch Bros Inc. that are assumed to be exchanged for Dutch Bros Inc. Class A common stock.
Controlling and non-controlling interest adjustments
Adjustments 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 all outstanding Dutch Bros OpCo Class A common units not held by Dutch Bros Inc. for Dutch Bros Inc. Class A 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 September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
(in thousands; unaudited)
$
%
$
%
$
%
$
%
Company-operated shop gross profit
68,377
22.2
56,992
24.1
192,698
22.6
137,943
21.9
Depreciation and amortization
22,470
7.3
16,332
6.9
63,202
7.4
44,132
7.0
Company-operated shop contribution
90,847
29.5
73,324
31.0
255,900
30.0
182,075
28.9
Dutch Bros Inc.| Earnings Release | 13
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
(in thousands; unaudited)
$
%
$
%
$
%
$
%
Net income
21,712
6.4
13,401
5.1
60,083
6.4
13,721
1.9
Depreciation and amortization
23,881
7.1
18,116
6.8
67,484
7.2
49,411
6.9
Interest expense, net
6,869
2.0
9,325
3.5
20,259
2.2
26,269
3.7
Income tax expense
4,698
1.4
1,828
0.7
17,330
1.8
6,259
0.9
EBITDA
57,160
16.9
42,670
16.1
165,156
17.6
95,660
13.4
Equity-based compensation
2,961
0.9
9,698
3.7
8,220
0.8
29,017
4.0
Expenses associated with equity offerings
—
—
—
—
1,489
0.2
—
—
Executive transitions
—
—
225
0.1
75
—
600
0.1
TRAs remeasurements
—
—
415
0.1
(5,687)
(0.6)
(1,740)
(0.2)
Legal proceedings
—
—
—
—
—
—
1,950
0.3
Sale of Aircraft
(550)
(0.2)
—
—
(1,302)
(0.1)
—
—
Organization realignment and restructuring:
Employee-related costs
3,998
1.2
—
—
13,287
1.4
—
—
Other costs
193
0.1
—
—
223
—
—
—
Total organization realignment and restructuring
4,191
1.3
—
—
13,510
1.4
—
—
Adjusted EBITDA
63,762
18.9
53,008
20.0
181,461
19.3
125,487
17.6
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
(in thousands; unaudited)
$
%
$
%
$
%
$
%
Selling, general, and administrative
57,536
17.0
50,490
19.1
161,866
17.3
148,128
20.8
Depreciation and amortization
(389)
—
(413)
(0.1)
(888)
(0.2)
(1,250)
(0.2)
Equity-based compensation
(2,688)
(0.8)
(9,698)
(3.7)
(7,583)
(0.8)
(29,017)
(4.0)
Expenses associated with equity offerings
—
—
—
—
(1,489)
(0.2)
—
—
Executive transitions
—
—
(225)
(0.1)
(75)
—
(600)
(0.1)
Legal proceedings
—
—
—
—
—
—
(1,950)
(0.3)
Organization realignment and restructuring:
Employee-related costs
(3,998)
(1.2)
—
—
(13,287)
(1.4)
—
—
Other costs
(193)
(0.1)
—
—
(223)
—
—
—
Total organization realignment and restructuring
(4,191)
(1.3)
—
—
(13,510)
(1.4)
—
—
Adjusted selling, general, and administrative
50,268
14.9
40,154
15.2
138,321
14.7
115,311
16.2
Dutch Bros Inc.| Earnings Release | 14
Three Months Ended September 30,
(in thousands; unaudited)
2024
2023
Net income
$
21,712
$
13,401
Equity-based compensation
2,961
9,698
Executive transitions
—
225
TRAs remeasurements
—
415
Sale of Aircraft
(550)
—
Organization realignment and restructuring:
Employee-related costs
3,998
—
Other costs
193
—
Subtotal: Organization realignment and restructuring
4,191
—
Income tax effects
(652)
(1,327)
Adjusted net income
$
27,662
$
22,412
Three Months Ended September 30,
(in thousands, except per share amounts; unaudited)
2024
2023
Weighted-average shares of Class A and Class D common stock outstanding - basic
113,819
59,366
Dilutive effects of restricted stock awards and units
433
848
Weighted-average shares of Class A and Class D common stock outstanding - diluted
114,252
60,214
Assumed exchange of weighted-average Dutch Bros OpCo Class A common units for shares of Dutch Bros Inc. Class A common stock
63,369
105,756
Adjusted fully exchanged weighted-average shares of common stock outstanding - diluted
177,621
165,970
Net income per share of Class A and Class D common stock - diluted
$
0.11
$
0.07
Controlling and non-controlling interest adjustments
0.01
0.02
Equity-based compensation
0.02
0.06
Executive transitions
—
—
TRAs remeasurements
—
—
Sale of Aircraft
—
—
Organization realignment and restructuring:
Employee-related costs
0.02
—
Other costs
—
—
Subtotal: Organization realignment and restructuring
0.02
—
Income tax effects
—
(0.01)
Adjusted net income per fully exchanged share of diluted common stock
Dutch Bros Inc.| Earnings Release | 1
