Surpassed 500 shops, Company-owned shops revenue expands 62.9%
Reiterates long-term potential of at least 4,000 shops nationwide
Dutch Bros Inc. (NYSE: BROS), 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, 2021. We also provided our fourth quarter 2021 financial outlook and our preliminary outlook for 2022 new shop openings.
Joth Ricci, Chief Executive Officer and President of Dutch Bros Inc., stated, “We are very pleased with the strength of our third quarter and year-to-date results which are exceeding the optimistic set of expectations we established going into 2021. While we are excited to have recently begun our journey as a public company, we are already focused on a clear set of growth-minded objectives that make Dutch Bros a national brand. This includes expanding what is already a strong pipeline of homegrown regional operators and combining that with a disciplined, people-led growth strategy that creates the potential for at least 4,000 shops nationwide. As we open new stores in both existing and new markets, we will provide our customers with unique drive-thru experiences based upon Speed, Quality and Service while solidifying our strong commitment to communities.”
Third Quarter 2021 Highlights:
- Surpassed 500 operating shops with our Hutto, Texas opening (Northeast of Austin).
- Opened 33 new shops, of which 30 were company-operated
- Total revenues grew 49.8% to $129.8 million as compared to the same period last year.
- Company-operated shops revenues increased 62.9% to $108.7 million as compared to $66.7 million in the same period last year.
- System same shop sales grew 7.3% in the third quarter and 10.7% on a two-year basis. Company-operated same shop sales grew 4.7% in the third quarter and 10.1% on a two-year basis.
- Company-operated shop gross profit grew 18.0% to $22.8 million as compared to $19.3 million in the same period last year. Company-operated contribution1, excluding pre-opening and COVID costs grew 23.8% to $27.1 million as compared to $21.9 million in the same period last year.
- Net income (loss) was $(117.1) million, or $(0.15) per diluted share as compared to $6.7 million in the same period last year. In the third quarter of 2021, we recognized $124.8 million of non-cash equity-based compensation related to our initial public offering.
- Adjusted net income1 was $11.0 million, or $0.23 per diluted share, as compared to $16.2 million in the same period last year.
- Adjusted EBITDA1 decreased 2.6% to $20.6 million as compared to $21.2 million in the same period last year. The decrease was primarily due to abnormally low systemwide discounts last year during the initial COVID-19 pandemic outbreak.
Initial Public Offering
On September 17, 2021, we successfully closed our initial public offering ("IPO") of 24,210,526 shares of Class A common stock, including the exercise in full of the underwriters’ option to purchase 3,157,894 additional shares, at a price to the public of $23.00 per share. Proceeds from the IPO were approximately $556.8 million, before deducting underwriting discounts and commissions and other offering expenses.
Our Class A common stock began trading on The New York Stock Exchange (“NYSE”) under the symbol “BROS” on September 15, 2021.
Outlook
For the fourth quarter, we are providing the following outlook:
- Total system shop openings are expected to be at least 30.
- Total revenue is projected to be in the range of $125.0 million - $128.0 million.
- Same shop sales are estimated in the mid single-digits.
- Adjusted EBITDA2 is projected to be in the range of $12.5 million - $13.5 million.
For the year 2022, we are providing the following preliminary outlook for new shop openings:
- Total system shop openings are expected to be at least 112.
Conference Call and Webcast Today
Joth Ricci, Chief Executive Officer and President, and Charles Jemley, Chief Financial Officer, will host a conference call and webcast to discuss financial results for the third quarter ended September 30, 2021 today at 5:00 p.m. Eastern Time (ET).
Event: Third Quarter 2021 Conference Call and Webcast
Date: Wednesday, November 10, 2021
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 (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 more than 500 locations across 11 states as of September 30, 2021.
To learn more about Dutch Bros, visit www.dutchbros.com, follow Dutch Bros Coffee on Instagram, Facebook, Twitter, & TikTok, and download the Dutch Bros app to earn points and score rewards!
Forward-Looking Statements
In addition to historical information, this release may contain 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, new shop openings, business strategies, competitive position, industry environment, potential growth opportunities and the effects of regulation. 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,” “anticipates,” “should,” “future,” “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 the evolving COVID-19 pandemic, disruptions in our supply chain, ability to hire and retain employees; and other risks, including those described under the heading “Risk Factors” in our final prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, dated September 16, 2021 and in our future reports to be filed with the SEC, including our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021. 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
1 Adjusted net income, Adjusted EBITDA, and Company-operated shop contribution are non-GAAP financial measures frequently used by analysts, investors and other interested parties to evaluate companies in our industry. However, our non-GAAP financial measures are not necessarily comparable to similarly titled captions of other companies due to different methods of calculation. Please see definitions and the reconciliation of these non-GAAP financial measures accompanying this release.
2We 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.
DUTCH BROS INC. Condensed Consolidated Statements of Operations |
||||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands, except per share amounts; unaudited) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
REVENUES |
|
|
|
|
|
|
|
|
||||||||
Company-operated stores |
|
$ |
108,661 |
|
|
$ |
66,695 |
|
|
$ |
289,548 |
|
|
$ |
175,767 |
|
Franchising and other |
|
21,142 |
|
|
19,963 |
|
|
68,248 |
|
|
61,750 |
|
||||
Total revenues |
|
129,803 |
|
|
86,658 |
|
|
357,796 |
|
|
237,517 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
COSTS AND EXPENSES |
|
|
|
|
|
|
|
|
||||||||
Cost of sales |
|
91,060 |
|
|
52,502 |
|
|
239,869 |
|
|
147,431 |
|
||||
Selling, general and administrative |
|
153,727 |
|
|
26,197 |
|
|
223,595 |
|
|
74,497 |
|
||||
Total costs and expenses |
|
244,787 |
|
|
78,699 |
|
|
463,464 |
|
|
221,928 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
INCOME (LOSS) FROM OPERATIONS |
|
(114,984 |
) |
|
7,959 |
|
|
(105,668 |
) |
|
15,589 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
OTHER EXPENSE |
|
|
|
|
|
|
|
|
||||||||
Interest expense, net |
|
(2,393 |
) |
|
(950 |
) |
|
(5,248 |
) |
|
(2,650 |
) |
||||
Other expense, net |
|
(1,041 |
) |
|
(353 |
) |
|
(1,099 |
) |
|
(669 |
) |
||||
Total other expense |
|
(3,434 |
) |
|
(1,303 |
) |
|
(6,347 |
) |
|
(3,319 |
) |
||||
|
|
|
|
|
|
|
|
|
||||||||
INCOME (LOSS) BEFORE INCOME TAXES |
|
(118,418 |
) |
|
6,656 |
|
|
(112,015 |
) |
|
12,270 |
|
||||
Income tax expense (benefit) |
|
(1,280 |
) |
|
— |
|
|
(716 |
) |
|
338 |
|
||||
NET INCOME (LOSS) |
|
$ |
(117,138 |
) |
|
$ |
6,656 |
|
|
$ |
(111,299 |
) |
|
$ |
11,932 |
|
Less: Net loss attributable to Dutch Bros OpCo prior to the Reorganization Transactions |
|
(74,441 |
) |
|
— |
|
|
(68,602 |
) |
|
— |
|
||||
Less: Net loss attributable to non-controlling interests |
|
(35,959 |
) |
|
— |
|
|
(35,959 |
) |
|
— |
|
||||
NET INCOME (LOSS) ATTRIBUTABLE TO DUTCH BROS INC. |
|
$ |
(6,738 |
) |
|
$ |
6,656 |
|
|
$ |
(6,738 |
) |
|
$ |
11,932 |
|
Net loss per share of Class A and Class D common stock: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
$ |
(0.15 |
) |
|
N/A |
|
$ |
(0.15 |
) |
|
N/A |
||||
Diluted |
|
$ |
(0.15 |
) |
|
N/A |
|
$ |
(0.15 |
) |
|
N/A |
||||
Weighted-average shares of Class A and Class D common stock outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
44,991 |
|
|
N/A |
|
44,991 |
|
|
N/A |
||||||
Diluted |
|
47,232 |
|
|
N/A |
|
47,232 |
|
|
N/A |
||||||
DUTCH BROS INC. Segment Financials |
||||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands; unaudited) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
||||||||
Company-operated shops |
|
$ |
108,661 |
|
|
$ |
66,695 |
|
|
$ |
289,548 |
|
|
$ |
175,767 |
|
Franchising and other |
|
21,142 |
|
|
19,963 |
|
|
68,248 |
|
|
61,750 |
|
||||
Total revenues |
|
129,803 |
|
|
86,658 |
|
|
357,796 |
|
|
237,517 |
|
||||
Cost of Sales: |
|
|
|
|
|
|
|
|
||||||||
Company-operated shops |
|
85,853 |
|
|
47,374 |
|
|
220,510 |
|
|
129,392 |
|
||||
Franchising and other |
|
5,207 |
|
|
5,128 |
|
|
19,359 |
|
|
18,039 |
|
||||
Total cost of sales |
|
91,060 |
|
|
52,502 |
|
|
239,869 |
|
|
147,431 |
|
||||
Segment profit: |
|
|
|
|
|
|
|
|
||||||||
Company-operated shops |
|
22,808 |
|
|
19,321 |
|
|
69,038 |
|
|
46,375 |
|
||||
Franchising and other |
|
15,935 |
|
|
14,835 |
|
|
48,889 |
|
|
43,711 |
|
||||
Total gross profit |
|
38,743 |
|
|
34,156 |
|
|
117,927 |
|
|
90,086 |
|
||||
Selling, general and administrative |
|
(153,727 |
) |
|
(26,197 |
) |
|
(223,595 |
) |
|
(74,497 |
) |
||||
Interest expense, net |
|
(2,393 |
) |
|
(950 |
) |
|
(5,248 |
) |
|
(2,650 |
) |
||||
Other expense, net |
|
(1,041 |
) |
|
(353 |
) |
|
(1,099 |
) |
|
(669 |
) |
||||
Income (loss) before income taxes |
|
$ |
(118,418 |
) |
|
$ |
6,656 |
|
|
$ |
(112,015 |
) |
|
$ |
12,270 |
|
Depreciation and amortization: |
|
|
|
|
|
|
|
|
||||||||
Company-operated shops |
|
$ |
4,294 |
|
|
$ |
2,564 |
|
|
$ |
11,038 |
|
|
$ |
6,907 |
|
Franchising and other |
|
1,703 |
|
|
1,156 |
|
|
4,728 |
|
|
3,129 |
|
||||
All other |
|
699 |
|
|
347 |
|
|
1,961 |
|
|
1,120 |
|
||||
Total depreciation and amortization |
|
$ |
6,696 |
|
|
$ |
4,067 |
|
|
$ |
17,727 |
|
|
$ |
11,156 |
|
DUTCH BROS INC. Company-Operated Shop Results |
||||||||||||||||||||||||
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||||||||||||
(in thousands; unaudited) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||||||||||
|
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
||||||||
Company-operated shop revenue |
|
108,661 |
|
|
100.0 |
|
|
66,695 |
|
|
100.0 |
|
|
289,548 |
|
|
100.0 |
|
|
175,767 |
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Beverage, food and packaging costs |
|
27,846 |
|
25.6 |
|
|
14,618 |
|
|
21.9 |
|
|
71,564 |
|
|
24.7 |
|
|
39,047 |
|
|
22.2 |
|
|
Labor costs |
|
33,610 |
|
30.9 |
|
|
18,800 |
|
|
28.2 |
|
|
88,798 |
|
|
30.7 |
|
|
51,205 |
|
|
29.1 |
|
|
Occupancy and other costs |
|
17,041 |
|
15.7 |
|
|
9,789 |
|
|
14.7 |
|
|
42,484 |
|
|
14.7 |
|
|
26,549 |
|
|
15.1 |
|
|
Pre-opening costs |
|
3,062 |
|
2.8 |
|
|
1,603 |
|
|
2.4 |
|
|
6,626 |
|
|
2.3 |
|
|
5,684 |
|
|
3.2 |
|
|
Depreciation |
|
4,294 |
|
4.0 |
|
|
2,564 |
|
|
3.8 |
|
|
11,038 |
|
|
3.8 |
|
|
6,907 |
|
|
3.9 |
|
|
Company-operated shop gross profit |
|
22,808 |
|
21.0 |
|
|
19,321 |
|
|
29.0 |
|
|
69,038 |
|
|
23.8 |
|
|
46,375 |
|
|
26.4 |
|
|
Company-operated shop contribution 1 |
|
27,102 |
|
24.9 |
|
|
21,885 |
|
|
32.8 |
|
|
80,076 |
|
|
27.7 |
|
|
53,282 |
|
|
30.3 |
|
|
1 |
Reconciliation of GAAP to non-GAAP results are provided below in the “Reconciliation of GAAP Financial Metrics to Non-GAAP” section of this press release. |
DUTCH BROS INC. Summary Cash Flows Data |
||||||||
|
|
Nine Months Ended September 30, |
||||||
(in thousands; unaudited) |
|
2021 |
|
2020 |
||||
Net cash flows provided by operating activities |
|
$ |
72,304 |
|
|
$ |
42,664 |
|
Net cash flows used in investing activities |
|
(76,781 |
) |
|
(25,488 |
) |
||
Net cash provided by (used in) financing activities |
|
(1,300 |
) |
|
4,694 |
|
||
Net increase (decrease) in cash |
|
$ |
(5,777 |
) |
|
$ |
21,870 |
|
Cash and cash equivalents at beginning of period |
|
31,640 |
|
|
15,584 |
|
||
Cash and cash equivalents at end of period |
|
$ |
25,863 |
|
|
$ |
37,454 |
|
DUTCH BROS INC. Condensed Consolidated Balance Sheets |
||||||||
|
|
As of |
||||||
(in thousands; unaudited) |
|
September 30, 2021 |
|
December 31, 2020 |
||||
ASSETS |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
25,863 |
|
|
$ |
31,640 |
|
Accounts receivable, net |
|
11,019 |
|
|
10,837 |
|
||
Inventory |
|
18,494 |
|
|
15,580 |
|
||
Prepaid expenses and other current assets |
|
7,152 |
|
|
5,015 |
|
||
Total current assets |
|
62,528 |
|
|
63,072 |
|
||
Property and equipment, net |
|
250,110 |
|
|
165,423 |
|
||
Intangibles, net |
|
12,054 |
|
|
11,323 |
|
||
Goodwill |
|
18,715 |
|
|
18,075 |
|
||
Deferred income tax asset |
|
158,663 |
|
|
— |
|
||
Other long-term assets |
|
1,562 |
|
|
1,766 |
|
||
Total assets |
|
$ |
503,632 |
|
|
$ |
259,659 |
|
LIABILITIES AND EQUITY |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
24,605 |
|
|
$ |
16,092 |
|
Accrued expenses |
|
17,924 |
|
|
10,036 |
|
||
Other current liabilities |
|
5,041 |
|
|
1,429 |
|
||
Deferred revenue |
|
17,177 |
|
|
11,192 |
|
||
Line of credit |
|
34,053 |
|
|
15,000 |
|
||
Current portion of capital lease obligations |
|
3,060 |
|
|
2,331 |
|
||
Current portion of long-term debt |
|
101 |
|
|
3,788 |
|
||
Total current liabilities |
|
101,961 |
|
|
59,868 |
|
||
Deferred revenue, net of current portion |
|
4,378 |
|
|
4,746 |
|
||
Tax receivable agreements liability, net of current portion |
|
109,733 |
|
|
— |
|
||
Capital lease obligations, net of current portion |
|
72,348 |
|
|
49,637 |
|
||
Long-term debt, net of current portion |
|
2,035 |
|
|
24,367 |
|
||
Profits interest liability |
|
— |
|
|
41,845 |
|
||
Deferred rent |
|
2,983 |
|
|
2,740 |
|
||
Other long-term liabilities |
|
572 |
|
|
466 |
|
||
Total liabilities |
|
294,010 |
|
|
183,669 |
|
||
Equity: |
|
|
|
|
||||
Members’ equity |
|
— |
|
|
75,990 |
|
||
Common stock |
|
2 |
|
|
— |
|
||
Additional paid in capital |
|
101,614 |
|
|
— |
|
||
Retained earnings (deficit) |
|
(6,738 |
) |
|
— |
|
||
Total stockholders' equity attributable to Dutch Bros Inc. / members’ equity |
|
94,878 |
|
|
75,990 |
|
||
Non-controlling interests |
|
114,744 |
|
|
— |
|
||
Total equity |
|
209,622 |
|
|
75,990 |
|
||
Total liabilities and equity |
|
$ |
503,632 |
|
|
$ |
259,659 |
|
DUTCH BROS INC. Select Financial Metrics |
||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
(in thousands, except number of shops data; unaudited) |
|
2021 |
2020 |
|
2021 |
|
2020 |
|||||
Shop count, beginning of period |
|
|
|
|
|
|
|
|||||
Company-operated |
|
207 |
|
146 |
|
|
182 |
|
|
118 |
|
|
Franchised |
|
264 |
|
255 |
|
|
259 |
|
|
252 |
|
|
|
|
471 |
|
401 |
|
|
441 |
|
|
370 |
|
|
Company-operated new openings |
|
30 |
|
11 |
|
|
52 |
|
|
39 |
|
|
Franchised new openings |
|
3 |
|
3 |
|
|
11 |
|
|
7 |
|
|
Ownership transfers |
|
4 |
|
— |
|
|
7 |
|
|
— |
|
|
Closures 1 |
|
(1 |
) |
— |
|
|
(1 |
) |
|
(1 |
) |
|
Shop count, end of period |
|
|
|
|
|
|
|
|||||
Company-operated |
|
241 |
|
157 |
|
|
241 |
|
|
157 |
|
|
Franchised |
|
262 |
|
258 |
|
|
262 |
|
|
258 |
|
|
Total shop count |
|
503 |
|
415 |
|
|
503 |
|
|
415 |
|
|
|
|
|
|
|
|
|
|
|||||
Average unit volume (AUV) 2 |
|
N/A |
|
N/A |
|
|
1,808 |
|
|
1,653 |
|
|
Company-operated shops |
|
N/A |
|
N/A |
|
|
1,699 |
|
|
1,462 |
|
|
|
|
|
|
|
|
|
|
|||||
Same shop sales growth |
|
7.3 |
% |
2.4 |
% |
|
8.0 |
% |
|
0.6 |
% |
|
Company-operated shops |
|
4.7 |
% |
2.5 |
% |
|
8.3 |
% |
|
(0.5 |
)% |
|
|
|
|
|
|
|
|
|
|||||
Company-operated shop revenue |
|
108,661 |
|
66,695 |
|
|
289,548 |
|
|
175,767 |
|
|
Company-operated gross profit 3 |
|
22,808 |
|
19,321 |
|
|
69,038 |
|
|
46,375 |
|
|
Company-operated shop contribution 3 |
|
27,102 |
|
21,885 |
|
|
80,076 |
|
|
53,282 |
|
|
% of company-operated shop revenue |
|
24.9 |
% |
32.8 |
% |
|
27.7 |
% |
|
30.3 |
% |
|
|
|
|
|
|
|
|
|
|||||
Net income (loss) 3 |
|
(117,138 |
) |
6,656 |
|
|
(111,299 |
) |
|
11,932 |
|
|
Adjusted EBITDA 3 |
|
20,647 |
|
21,195 |
|
|
68,803 |
|
|
56,720 |
|
|
% of revenue |
|
15.9 |
% |
24.5 |
% |
|
19.2 |
% |
|
23.9 |
% |
|
|
|
|
|
|
|
|
|
|||||
Systemwide sales 4 |
|
241,254 |
|
182,094 |
|
|
673,297 |
|
|
511,866 |
|
|
Dutch Rewards member activations 5 |
|
509 |
|
— |
|
|
2,738 |
|
|
— |
|
|
___________
1 |
Represents a temporary shop closure in 2021 and a permanent shop closure in 2020. |
|
|
2 |
At Dutch Bros we track systemwide and company-operated shop AUVs. AUVs for any trailing twelve-month period consist of the net sales of systemwide and company-operated shops, respectively, for all shops that have been open for the entire 15-month measurement period. AUVs are calculated by dividing the total net sales by the total number of systemwide and company-operated shops, respectively, that were open for 15 months at the time of AUV calculation. |
|
|
3 |
Reconciliation of GAAP to non-GAAP results is provided in “Non-GAAP Financial Metrics” section. |
|
|
4 |
Systemwide sales and systemwide same shop sales include company-operated shop revenue and sales at franchised shops during the comparable periods noted. 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. |
|
|
5 |
Dutch Rewards, a digitally-based rewards program available exclusively through the Dutch Rewards app, was launched February 2021. As such, there is no information for the comparable periods of 2020. |
Use of Non-GAAP Financial Results
In addition to U.S. GAAP results, this press release contains non-GAAP financial results, including adjusted net income, EBITDA and Adjusted EBITDA. We use these non-GAAP measures to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. In addition to our results determined in accordance with GAAP, we believe that providing these non-GAAP financial measures are useful to our investors as they present an informative supplemental view of our results from period to period by removing the effect of non-recurring items.
However, the non-GAAP financial measures presented herein are specific to us and may not be comparable to similar measures disclosed by other companies because of differing methods used by other companies in calculating them. These measures are also not intended to be measures of free cash flow for management’s discretionary use, as they do not reflect tax payments, debt service requirements and certain other cash costs that may recur in the future, including, among other things, cash requirements for working capital needs. Management compensates for these limitations by relying on our GAAP results in addition to using these non-GAAP financial measures. The non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
Company-operated shop contribution
Company-operated shop contribution, a non-GAAP financial measure, is defined as net sales less beverage, food and packaging costs, labor, occupancy and other costs, and pre-opening costs. Company-operated shop contribution is included in this press release because it is a key metric used by management and our board of directors to assess our financial performance, frequently used by analysts, investors and other interested parties to evaluate companies in our industry.
EBITDA and Adjusted EBITDA
We define EBITDA, a non-GAAP financial measure, as GAAP net income (loss) adjusted for interest income or expense, income tax expense (benefit) and other income or expense, depreciation and amortization. Additionally, we define Adjusted EBITDA, a non-GAAP financial measure, as EBITDA adjusted for equity-based compensation, expenses related to public or private offerings, pandemic-related costs, and other non-recurring items as determined by management. EBITDA and Adjusted EBITDA are included in this press release because they are key metrics used by management and our board of directors to assess our financial performance, frequently used by analysts, investors, and other interested parties to evaluate companies in our industry.
Adjusted Net Income
We define Adjusted Net Income, a non-GAAP financial measure, as GAAP net income (loss) adjusted for equity-based compensation, expenses related to public or private offerings, pandemic-related costs, and other non-recurring items as determined by management, net of income tax effects. Adjusted Net Income is included in this press release because it is a key metric used by management and our board of directors to assess our financial performance, and is frequently used by analysts, investors, and other interested parties to evaluate companies in our industry.
Following are the reconciliations of the most comparable GAAP metric to non-GAAP metrics presented:
DUTCH BROS INC. Reconciliation of GAAP Financial Metrics to Non-GAAP
|
||||||||||||||||||||||||||||
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||||||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||||||||||||||
(in thousands; unaudited) |
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
||||||||||||
Company-operated shop gross profit |
|
$ |
22,808 |
|
|
21.0 |
|
|
$ |
19,321 |
|
|
29.0 |
|
|
$ |
69,038 |
|
|
23.8 |
|
|
$ |
46,375 |
|
|
26.4 |
|
Depreciation |
|
4,294 |
|
|
4.0 |
|
|
2,564 |
|
|
3.8 |
|
|
11,038 |
|
|
3.8 |
|
|
6,907 |
|
|
3.9 |
|
||||
Company-operated shop contribution |
|
$ |
27,102 |
|
|
24.9 |
|
|
$ |
21,885 |
|
|
32.8 |
|
|
$ |
80,076 |
|
|
27.7 |
|
|
$ |
53,282 |
|
|
30.3 |
|
Reconciliation of net income (loss) to EBITDA and adjusted EBITDA
|
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||||||||
(in thousands; unaudited) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||||
Net income (loss) |
|
$ |
(117,138 |
) |
|
$ | 6,656 |
|
|
$ |
(111,299 |
) |
|
$ | 11,932 |
|
|||
Depreciation and amortization |
|
6,696 |
|
|
4,067 |
|
|
17,727 |
|
|
11,156 |
|
|||||||
Interest expense, net |
|
2,393 |
|
|
950 |
|
|
5,248 |
|
|
2,650 |
|
|||||||
Income tax expense (benefit) |
|
(1,280 |
) |
|
— |
|
|
(716 |
) |
|
|
338 |
|
||||||
EBITDA |
|
$ |
(109,329 |
) |
|
$ | 11,673 |
|
|
$ |
(89,040 |
) |
|
$ | 26,076 |
|
|||
Equity-based compensation 1 |
124,779 |
|
|
9,815 |
|
|
147,761 |
|
|
23,372 |
|
||||||||
Expenses associated with equity offering 2 |
3,332 |
|
|
— |
|
|
5,661 |
|
|
— |
|
||||||||
Donation associated with equity offering 3 |
1,392 |
|
|
— |
|
|
1,392 |
|
|
— |
|
||||||||
COVID-19: "thank you” pay and catastrophic leave 4 |
473 |
|
|
218 |
|
|
3,029 |
|
|
3,242 |
|
||||||||
COVID-19: royalty abatement 5 |
— |
|
|
— |
|
|
— |
|
|
1,400 |
|
||||||||
COVID-19: first responder donation 6 |
— |
|
|
— |
|
|
— |
|
|
2,000 |
|
||||||||
Dutch Rewards transition 7 |
— |
|
|
(1,250 |
) |
|
— |
|
|
(1,292 |
) |
||||||||
Dutchwear merchandising adjustment 8 |
— |
|
|
739 |
|
|
— |
|
|
1,922 |
|
||||||||
Adjusted EBITDA |
$ | 20,647 |
|
$ |
21,195 |
|
$ |
68,803 |
|
|
$ |
|
56,720 |
|
|||||
Adjusted EBITDA margin 9 |
|
15.9 |
% |
24.5 |
% |
|
19.2 |
% |
|
|
23.9 |
% |
|||||||
___________
1 |
Represents 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 Profits Interest Units in Dutch Bros OpCo to certain employees. These awards are accounted for in accordance with guidance prescribed for accounting for share-based compensation. |
|
|
2 |
Represents costs incurred as a result of our IPO. These costs include legal fees, consulting fees, tax and accounting fees, and payroll taxes related to the grant and vesting of stock awards for certain employees. |
|
|
3 |
As part of our IPO, we made a one-time donation to the Dutch Bros Foundation. This donation is separate from other donations to the Dutch Bros Foundation that we may periodically make. |
|
|
4 |
Represents 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. All COVID-19-related protocols, including catastrophic leave, will remain in effect until the end of the COVID-19 pandemic as determined by the appropriate government agency. |
|
|
5 |
In April 2020, we permitted franchise partners to skip one month of royalty payments to support their cash flow needs. We discontinued this support one month later in May 2020. |
|
|
6 |
During 2020, we made specific donations to the First Responders First organization to support the acquisition and distribution of personal protective equipment for first responders. |
|
|
7 |
We recorded a benefit related to our transition from a paper-based stamp card loyalty program to our current app-based loyalty rewards program. |
|
|
8 |
During 2020, we incurred a series of one-time costs associated with the strategic decision to exit our internal merchandising business related to Dutch-branded goods such as mugs and cups. These costs include write-off and disposal of obsolete inventory and severance for staff dedicated to in-house support services related to our Dutchwear business. |
|
|
9 |
Calculated as a percentage of total revenue. |
Reconciliation of net income (loss) to adjusted net income
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in thousands; unaudited) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Net income (loss) |
|
$ |
(117,138 |
) |
|
$ |
6,656 |
|
|
$ |
(111,299 |
) |
|
$ |
11,932 |
|
Equity-based compensation 1 |
|
124,779 |
|
|
9,815 |
|
|
147,761 |
|
|
23,372 |
|
||||
Expenses associated with equity offering 2 |
|
3,332 |
|
|
— |
|
|
5,661 |
|
|
— |
|
||||
Donation associated with equity offering 3 |
|
1,392 |
|
|
— |
|
|
1,392 |
|
|
— |
|
||||
COVID-19: "thank you pay" and catastrophic leave 4 |
|
473 |
|
|
218 |
|
|
3,029 |
|
|
3,242 |
|
||||
COVID-19: royalty abatement 5 |
|
— |
|
|
— |
|
|
— |
|
|
1,400 |
|
||||
COVID-19: first responder donation 6 |
|
— |
|
|
— |
|
|
— |
|
|
2,000 |
|
||||
Dutch Rewards transition 7 |
|
— |
|
|
(1,250 |
) |
|
— |
|
|
(1,292 |
) |
||||
Dutchwear merchandising adjustment 8 |
|
— |
|
|
739 |
|
|
— |
|
|
1,922 |
|
||||
Income tax effects |
|
(1,793 |
) |
|
— |
|
|
(1,793 |
) |
|
— |
|
||||
Adjusted net income |
|
$ |
11,045 |
|
|
$ |
16,178 |
|
|
$ |
44,751 |
|
|
$ |
42,576 |
|
___________
1 |
Represents non-cash expenses related to the grant and vesting of stock awards, restricted stock awards and restricted stock units in Dutch Bros PubCo and/or Profits Interest Units in Dutch Bros OpCo to certain employees. These awards are accounted for in accordance with guidance prescribed for accounting for share-based compensation. |
|
|
2 |
Represents costs incurred as a result of our IPO. These costs include legal fees, consulting fees, tax and accounting fees, and payroll taxes related to the grant and vesting of stock awards for certain employees. |
|
|
3 |
As part of our IPO, we made a donation to the Dutch Bros Foundation. This donation is separate from other donations to the Dutch Bros Foundation that we may periodically make. |
|
|
4 |
Represents 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. All COVID-19-related protocols, including catastrophic leave, will remain in effect until the end of the COVID-19 pandemic as determined by the appropriate government agency. |
|
|
5 |
In April 2020, we permitted franchise partners to skip one month of royalty payments to support their cash flow needs. We discontinued this support one month later in May 2020. |
|
|
6 |
During 2020, we made specific donations to the First Responders First organization to support the acquisition and distribution of personal protective equipment for first responders. |
|
|
7 |
We recorded a benefit related to our transition from a paper-based stamp card loyalty program to our current app-based loyalty rewards program. |
|
|
8 |
During 2020, we incurred a series of one-time costs associated with the strategic decision to exit our internal merchandising business related to Dutch-branded goods such as mugs and cups. These costs include write-off and disposal of obsolete inventory and severance for staff dedicated to in-house support services related to our Dutchwear business. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20211110006314/en/
Contacts
For Investor Relations inquiries:
Raphael Gross
ICR
(203) 682-8253
investors@dutchbros.com
For Media Relations inquiries:
Jessical Liddell
ICR
(203) 682-8208
jessica.liddell@icrinc.com
