Dutch Bros Inc. Reports Third Quarter 2023 Financial Results and Announces Two New Directors

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 third quarter ended September 30, 2023.

Joth Ricci, Chief Executive Officer of Dutch Bros, stated, “By all accounts, Q3 was a fantastic quarter, and we are extremely pleased with our unit openings, same shop sales, revenue, and profitability results. I am very proud of the team for their accomplishments, and I am encouraged by the strength of the underlying business as we execute on our plan. In Q3, we opened 39 shops systemwide and entered two new states: Alabama and Kentucky. Despite a difficult consumer backdrop, we drove a 4.0% increase in systemwide same shop sales and delivered 33% growth in our top-line revenue.”

Ricci continued, “Even as we demonstrate our commitment to profitable growth, it is vital that we continue investing in the business. Our focus will therefore remain on recruiting and retaining top talent and keeping our operations efficient and competitive long-term. This way, we can ensure that our people pipeline and systems stay strong while preserving and amplifying our culture.”

He concluded, “During Q3 in a span of less than 45 days, we executed two transactions, an upgrade of our credit facility and a follow-on equity offering, that unlocked a total of almost $500 million in incremental liquidity and positioned our balance sheet to support a long runway of growth. We intend to continue confidently pursuing high-quality investments in new shops on our path to 4,000.”

Director Appointments

The Company welcomed two new members of the Board of Directors, C. David Cone and Sean Sullivan, who were recently added to fill vacancies on the Board resulting from the resignations of Shelley Broader and Charles Esserman. Mr. Cone will serve on the Audit and Risk Committee.

Mr. Cone served as Chief Financial Officer and Executive Vice President at Taylor Morrison Home Corporation (NYSE: TMHC), a residential homebuilding business and land developer, from October 2012 to December 2021. Prior to that, he held various roles at PetSmart, Inc. from 2003 to 2012, while the company was publicly-listed, most recently as Vice President, Finance Planning and Analysis. Mr. Cone previously served on the board of directors for Urbi Desarrollos Urbanos SAB DE CV. He received a B.A. in Business Economics with an emphasis in Accounting from the University of California at Santa Barbara.

Mr. Sullivan has served as Executive Vice President, Chief Strategy and Legal Officer of The Duckhorn Portfolio, Inc. (NYSE: NAPA), a producer of luxury wines in North America, since February 2019. Prior to that, he served as an attorney at Gibson, Dunn & Crutcher LLP, a multinational law firm, from 2012 to 2019. Mr. Sullivan previously worked as an investment banker at Credit Suisse Group AG. He received a J.D. from Columbia Law School, and a B.A. in Economics and Politics from St. Mary’s College of California.

Third Quarter 2023 Highlights

• Completed follow-on offering of approximately 13.3 million new shares at $26.00 per share, raising approximately $330.1 million net of offering costs and underwriting discounts and commissions.
• Opened 39 new shops, bringing total shop count to 794 as of September 30, 2023, a 23.9% increase from September 30, 2022. Of these 39 new shops opened across 11 states, 37 were company-operated. All of these new shops continue to be led by existing or newly-promoted regional operators.
• Total revenues grew 33.2% to $264.5 million as compared to $198.6 million in the same period of 2022.
• System same shop sales¹ increased 4.0%, 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 2.8%, as compared to the same period of 2022.
• Company-operated shop revenues increased 36.3% to $236.5 million, as compared to $173.5 million in the same period of 2022.
• Company-operated shop gross profit was $57.0 million as compared to $34.7 million in the same period of 2022. In the third quarter of 2023, company-operated shop gross margin, which includes 180bps of pre-opening expenses improved to 24.1%, a year-over-year increase of 410bps.
• Company-operated shop contribution², a non-GAAP financial measure, grew 65.4% to $73.3 million as compared to $44.3 million in the same period of 2022. In the third quarter of 2023, company-operated shop contribution margin, which includes 180bps of pre-opening expense, improved to 31.0%, a year-over-year increase of 540 bps.
• Selling, general, and administrative expenses were $50.5 million (19.1% of revenue) as compared to $45.4 million (22.9% of revenue) in the same period of 2022.
• Adjusted selling, general, and administrative expenses², a non-GAAP financial measure, were $40.6 million (15.3% of revenue) as compared to $34.7 million (17.5% of revenue) in the same period of 2022.
• Net income was $13.4 million as compared to $1.6 million in the same period of 2022.
• Adjusted EBITDA², a non-GAAP financial measure, grew 90.5% to $53.0 million as compared to $27.8 million in the same period of 2022.
• Adjusted net income², a non-GAAP financial measure, was $22.4 million as compared to $14.3 million in the same period of 2022.
• Net income per share of Class A and Class D common stock - diluted was $0.07 as compared to $0.03 per share in the same period of 2022.
• Adjusted net income per fully exchanged share of diluted common stock², a non-GAAP financial measure, was $0.14 as compared to $0.09 in the same period of 2022.

Outlook

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

• Our expectation for total system shop openings in 2023 remains unchanged. We expect to open at least 150 new shops, of which at least 130 will be company-operated.
• Our expectation for capital expenditures remains unchanged, which we expect to be in the range of $225 million to $250 million. This includes approximately $15 million to $20 million in spending in 2023 for a new roasting facility, which is projected to open in 2024.
• Our estimate of system same shop sales growth in the low single digits remains unchanged.
• Our expectation that revenue would be at the lower end of the range of $950 million to $1 billion remains unchanged.
• Given the strength of company-operated shops and continued SG&A leverage, we now estimate Adjusted EBITDA³ will be between $150 million to $155 million, up $15 million from last quarter. This reflects stronger than expected year-to-date profitability in Q3, partially offset by the increased shop labor investments in the range of $1.5 million to $2.0 million as well as certain investments we intend to make in business building activities throughout the fourth quarter.

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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 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 third quarter ended September 30, 2023.

Event: Third Quarter 2023 Conference Call and Webcast

Date: Tuesday, November 7, 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 794 locations across 16 states as of September 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 the effect of increased incremental liquidity on cash runway, 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 September 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 September 30,								Nine Months Ended September 30,
(in thousands, except per share amounts; unaudited)		2023				2022				2023				2022
REVENUES
Company-operated shops		$	236,472			$	173,501			$	630,588			$	464,200
Franchising and other			28,035				25,147				81,065				72,985
Total revenues			264,507				198,648				711,653				537,185
COSTS AND EXPENSES
Cost of sales			189,323				148,092				519,482				410,629
Selling, general and administrative			50,490				45,378				148,128				132,934
Total costs and expenses			239,813				193,470				667,610				543,563
INCOME (LOSS) FROM OPERATIONS			24,694				5,178				44,043				(6,378	)
OTHER EXPENSE
Interest expense, net			(9,325	)			(5,011	)			(26,269	)			(11,096	)
Other income (expense), net			(140	)			(1,944	)			2,206				(1,662	)
Total other expense			(9,465	)			(6,955	)			(24,063	)			(12,758	)
INCOME (LOSS) BEFORE INCOME TAXES			15,229				(1,777	)			19,980				(19,136	)
Income tax expense (benefit)			1,828				(3,371	)			6,259				(2,700	)
NET INCOME (LOSS)		$	13,401			$	1,594			$	13,721			$	(16,436	)
Less: Net income (loss) attributable to non-controlling interests			9,191				(169	)			10,601				(12,346	)
NET INCOME (LOSS) ATTRIBUTABLE TO DUTCH BROS INC.		$	4,210			$	1,763			$	3,120			$	(4,090	)
Net income (loss) per share of Class A and Class D common stock:
Basic		$	0.07			$	0.03			$	0.05			$	(0.08	)
Diluted		$	0.07			$	0.03			$	0.05			$	(0.08	)
Weighted-average shares of Class A and Class D common stock outstanding:
Basic			59,366				53,118				57,598				50,719
Diluted			60,214				54,418				57,598				50,719

DUTCH BROS INC.
Segment Financials
		Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands; unaudited)		2023				2022				2023				2022
Revenues:
Company-operated shops		$	236,472			$	173,501			$	630,588			$	464,200
Franchising and other			28,035				25,147				81,065				72,985
Total revenues			264,507				198,648				711,653				537,185
Cost of Sales:
Company-operated shops			179,480				138,781				492,645				381,623
Franchising and other			9,843				9,311				26,837				29,006
Total cost of sales			189,323				148,092				519,482				410,629
Segment gross profit:
Company-operated shops			56,992				34,720				137,943				82,577
Franchising and other			18,192				15,836				54,228				43,979
Total gross profit			75,184				50,556				192,171				126,556
Depreciation and amortization:
Company-operated shops			16,332				9,624				44,132				25,071
Franchising and other			1,371				1,478				4,029				4,340
All other ¹			413				708				1,250				2,120
Total depreciation and amortization			18,116				11,810				49,411				31,531
Segment contribution:
Company-operated shops			73,324				44,344				182,075				107,648
Franchising and other			19,563				17,314				58,257				48,319
Total segment contribution			92,887				61,658				240,332				155,967
Selling, general and administrative			(50,490	)			(45,378	)			(148,128	)			(132,934	)
Interest expense, net			(9,325	)			(5,011	)			(26,269	)			(11,096	)
Other income (expense), net			(140	)			(1,944	)			2,206				(1,662	)
Income (loss) before income taxes		$	15,229			$	(1,777	)		$	19,980			$	(19,136	)

1

Included in selling, general and administrative expenses and not part of segment contribution calculation.

DUTCH BROS INC.
Company-Operated Shop Results
		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
(in thousands; unaudited)		$		%		$		%		$		%		$		%
Company-operated shops revenue		236,472		100.0		173,501		100.0		630,588		100.0		464,200		100.0
Beverage, food and packaging costs		61,317		25.9		47,092		27.1		169,702		26.8		126,262		27.2
Labor costs		61,521		26.0		49,000		28.3		168,805		26.8		138,001		29.8
Occupancy and other costs		36,126		15.3		28,517		16.4		99,327		15.8		78,141		16.8
Pre-opening costs		4,184		1.8		4,548		2.6		10,679		1.7		14,148		3.0
Depreciation and amortization		16,332		6.9		9,624		5.6		44,132		7.0		25,071		5.4
Company-operated shop costs and expenses		179,480		75.9		138,781		80.0		492,645		78.1		381,623		82.2
Company-operated shops gross profit		56,992		24.1		34,720		20.0		137,943		21.9		82,577		17.8
Company-operated shops contribution 1		73,324		31.0		44,344		25.6		182,075		28.9		107,648		23.2

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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)		2023				2022
Net cash provided by operating activities		$	94,906			$	42,768
Net cash used in investing activities			(167,461	)			(139,411	)
Net cash provided by financing activities			202,163				112,704
Net increase in cash and cash equivalents		$	129,608			$	16,061
Cash and cash equivalents at beginning of period			20,178				18,506
Cash and cash equivalents at end of period		$	149,786			$	34,567

DUTCH BROS INC.
Condensed Consolidated Balance Sheets
(in thousands; unaudited)		September 30, 2023				December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents		$	149,786			$	20,178
Accounts receivable, net			9,136				11,966
Inventories, net			50,296				39,229
Prepaid expenses and other current assets			12,188				10,949
Total current assets			221,406				82,322
Property and equipment, net			498,705				365,468
Finance lease right-of-use assets, net			364,757				247,943
Operating lease right-of-use assets, net			190,864				169,302
Intangibles, net			6,215				8,804
Goodwill			21,629				21,629
Deferred income tax assets, net			330,278				288,765
Other long-term assets			5,176				2,127
Total assets		$	1,639,030			$	1,186,360
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	27,703			$	21,270
Accrued liabilities			40,309				27,452
Other current liabilities			7,621				7,860
Deferred revenue			22,414				25,335
Line of credit			—				110,865
Current portion of finance lease liabilities			9,574				7,971
Current portion of operating lease liabilities			9,326				9,317
Current portion of long-term debt			3,864				2,609
Total current liabilities			120,811				212,679
Deferred revenue, net of current portion			5,524				6,119
Tax receivable agreements liability, net of current portion			219,183				220,923
Finance lease liabilities, net of current portion			347,961				237,130
Operating lease liabilities, net of current portion			182,201				161,228
Long-term debt, net of current portion			92,704				96,297
Other long-term liabilities			8				8
Total liabilities			968,392				934,384
Equity:
Common stock			2				2
Additional paid in capital			344,771				145,613
Accumulated other comprehensive income			1,093				813
Accumulated deficit			(14,190	)			(17,310	)
Total stockholders' equity attributable to Dutch Bros Inc.			331,676				129,118
Non-controlling interests			338,962				122,858
Total equity			670,638				251,976
Total liabilities and equity		$	1,639,030			$	1,186,360

DUTCH BROS INC.
Select Financial Metrics
		Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands, except number of shops data; unaudited)		2023				2022				2023				2022
Shop count, beginning of period
Company-operated			473				336				396				271
Franchised			281				267				275				267
			754				603				671				538
Company-operated new openings			37				34				114				94
Franchised new openings			2				4				8				9
Acquisition of franchise shops			—				—				—				5
Re-openings 7			1				—				1				—
Shop count, end of period
Company-operated			510				370				510				370
Franchised			284				271				284				271
Total shop count			794				641				794				641
Systemwide AUV 1			N/A				N/A			$	1,950			$	1,917
Company-operated shops AUV 1			N/A				N/A			$	1,901			$	1,875
Systemwide same shop sales 2, 3			4.0	%			1.7	%			2.1	%			1.4	%
Company-operated same shop sales 2			2.8	%			1.0	%			0.5	%			1.1	%
Systemwide sales 3		$	391,286			$	312,961			$	1,069,284			$	864,929
Company-operated operating weeks 4			6,400				4,614				17,576				12,526
Franchising and other operating weeks 4			3,703				3,513				10,881				10,291
Dutch Rewards member registrations 5			583				566				1,650				1,551

		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
(in thousands; unaudited)		$		%		$		%		$		%		$		%
Company-operated shop revenues		236,472		100.0		173,501		100.0		630,588		100.0		464,200		100.0
Company-operated gross profit		56,992		24.1		34,720		20.0		137,943		21.9		82,577		17.8
Company-operated shop contribution 6		73,324		31.0		44,344		25.6		182,075		28.9		107,648		23.2
Selling, general, and administrative expenses		50,490		19.1		45,378		22.9		148,128		20.8		132,934		24.8
Adjusted selling, general, and administrative expenses 6		40,567		15.3		34,729		17.5		116,561		16.4		98,305		18.3
Net income (loss)		13,401		5.1		1,594		0.8		13,721		1.9		(16,436)		(3.1)
Adjusted EBITDA 6		53,008		20.0		27,830		14.0		125,487		17.6		61,431		11.4

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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 September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
Systemwide shop base		572		452		503		414
Company-operated shop base		310		203		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”.
7		Re-opening of a shop that was temporarily closed in 2021.

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 (benefit), 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, 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 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, 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. The catastrophic leave program was retired in May 2023.

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 Class 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.

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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 September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
(in thousands; unaudited)		$		%		$		%		$		%		$		%
Company-operated shop gross profit		56,992		24.1		34,720		20.0		137,943		21.9		82,577		17.8
Depreciation and amortization		16,332		6.9		9,624		5.6		44,132		7.0		25,071		5.4
Company-operated shop contribution		73,324		31.0		44,344		25.6		182,075		28.9		107,648		23.2

		Three Months Ended September 30,										Nine Months Ended September 30,
		2023				2022						2023						2022
(in thousands; unaudited)		$		%		$			%			$			%			$			%
Net income (loss)		13,401		5.1		1,594			0.8			13,721			1.9			(16,436	)		(3.1	)
Depreciation and amortization		18,116		6.8		11,810			5.9			49,411			6.9			31,531			5.9
Interest expense, net		9,325		3.5		5,011			2.5			26,269			3.7			11,096			2.1
Income tax expense (benefit)		1,828		0.7		(3,371	)		(1.7	)		6,259			0.9			(2,700	)		(0.5	)
EBITDA		42,670		16.1		15,044			7.6			95,660			13.4			23,491			4.4
Equity-based compensation		9,698		3.7		10,649			5.4			29,017			4.0			30,995			5.8
COVID-19: “thank you pay” and catastrophic leave		—		—		227			0.1			—			—			1,401			0.3
COVID-19: prepaid costs not utilized		—		—		—			—			—			—			1,200			0.2
Milestone events		—		—		—			—			—			—			2,434			0.5
Executives transition costs		225		0.1		—			—			600			0.1			—			—
TRAs remeasurements		415		0.1		1,910			1.0			(1,740	)		(0.2	)		1,910			0.4
Legal proceedings		—		—		—			—			1,950			0.3			—			—
Adjusted EBITDA		53,008		20.0		27,830			14.0			125,487			17.6			61,431			11.4

		Three Months Ended September 30,												Nine Months Ended September 30,
		2023						2022						2023						2022
(in thousands; unaudited)		$			%			$			%			$			%			$			%
Selling, general, and administrative 1		50,490			19.1			45,378			22.9			148,128			20.8			132,934			24.8
Equity-based compensation		(9,698	)		(3.7	)		(10,649	)		(5.4	)		(29,017	)		(4.0	)		(30,995	)		(5.8	)
COVID-19: prepaid costs not utilized		—			—			—			—			—			—			(1,200	)		(0.2	)
Milestone events		—			—			—			—			—			—			(2,434	)		(0.5	)
Executives transition costs		(225	)		(0.1	)		—			—			(600	)		(0.1	)		—			—
Legal proceedings		—			—			—			—			(1,950	)		(0.3	)		—			—
Adjusted selling, general, and administrative		40,567			15.3			34,729			17.5			116,561			16.4			98,305			18.3

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

		Three Months Ended September 30,
(in thousands; unaudited)		2023				2022
Net income		$	13,401			$	1,594
Equity-based compensation			9,698				10,649
COVID-19: “thank you pay” and catastrophic leave			—				227
Executives transition costs			225				—
TRAs remeasurements			415				1,910
Income tax effects			(1,327	)			(115	)
Adjusted net income		$	22,412			$	14,265

		Three Months Ended September 30,
(in thousands, except per share amounts; unaudited)		2023				2022
Weighted-average shares of Class A and Class D common stock outstanding - basic			59,366				53,118
Dilutive effects of RSAs			848				1,300
Weighted-average shares of Class A and Class D common stock outstanding - diluted			60,214				54,418
Assumed exchange of weighted-average Class B and Class C shares of common stock			105,756				107,920
Adjusted fully exchanged weighted-average shares of common stock outstanding - diluted			165,970				162,338
Net income per share of Class A and Class D common stock - diluted		$	0.07			$	0.03
Controlling and non-controlling interest adjustments			0.02				(0.02	)
Equity-based compensation			0.06				0.07
COVID-19: “thank you pay” and catastrophic leave			—				—
Executives transition costs			—				—
TRAs remeasurements			—				0.01
Income tax effects			(0.01	)			—
Adjusted net income per fully exchanged share of diluted common stock		$	0.14			$	0.09

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231107808077/en/

The Dutch Bros Registered (A) Stock at the time of publication of the news with a raise of +0,38 % to 26,70USD on NYSE stock exchange (07. November 2023, 21:56 Uhr).