Saturday 13 April 2024
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Dutch Bros posts 2023 revenue of $966M (+31%)

The company opened 159 new shops, 146 of which were company-operated, across 13 states. Total revenues grew 30.7% to $965.8 million as compared to $739.0 million in 2022. System same shop sales1 grew 2.8%, inclusive of the impact of our fortressing strategy, which results in sales being transferred from existing shops to new ones, as compared to 2022. Company-operated same shop sales grew 1.5%, as compared to 2022

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DESCAMEX COFFELOVERS 2024
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GRANTS PASS, Ore., USA – Dutch Bros Inc., 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 fourth quarter and year ended December 31, 2023. Christine Barone, Chief Executive Officer and President of Dutch Bros, stated, “We had an exceptional 2023 and entered 2024 with great momentum.

We continued to drive steady new shop growth, and Q4 marked our 10th consecutive quarter of 30+ new shop openings. In 2023, we opened 159 shops, of which 146 were company-operated.

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Our system AUV reached its highest on record since the IPO, and we delivered a 2.8% increase in system same shop sales growth. These results led to a terrific 2023 where we delivered 31% in annual revenue growth. Early last year, we began a series of traffic-driving initiatives outlined on our Q1 call in May. We saw the impact of these efforts culminate with a 5.0% increase in system same shop sales in Q4, driven by a sequential improvement in customer traffic.”

She continued, “We are optimistic for our next phase of growth. In January, we announced three additions to our leadership team: Sumi Ghosh, incoming President of Operations, Josh Guenser, incoming CFO, and Jess Elmquist, Chief People Officer. The entire team is looking forward to adding the wealth of experience they bring to what already makes Dutch Bros great.”

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She added, “Our leadership team embarked on a project last year to outline how our corporate team can best support our shops as we scale and grow. We recognize the importance of continuing to attract top-notch talent, and we believe adding a significant presence in the Phoenix market positions us to better compete for this talent. We also believe this expansion will enable easier access to our operations as we grow across the United States.”

She concluded, “It is incredible that a single coffee cart in Grants Pass, Oregon has grown over the last 30+ years to over 830 shops across 16 states employing approximately 24,000 people. We are proud of our origin and heritage, and we expect to maintain a significant presence in Southern Oregon, where our roasting, accounting and other functions will continue to be based. Southern Oregon has been a key part of Dutch Bros’ success, and we will remain connected to the region in a meaningful way. ”

Dutch Bros Inc.: Fourth Quarter 2023 Highlights

  • Opened 37 new shops, 32 of which were company-operated, across 10 states.
  • Total revenues grew 25.9% to $254.1 million as compared to $201.8 million in the same period of 2022.
  • System same shop sales1 increased 5.0%, 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 4.6%, as compared to the same period of 2022.
  • Company-operated shop revenues increased 29.5% to $227.4 million, as compared to $175.5 million in the same period of 2022.
  • Company-operated shop gross profit was $42.3 million as compared to $38.8 million in the same period of 2022. In the fourth quarter of 2023, company-operated shop gross margin, which includes 150bps of pre-opening costs, was 18.6%, a year-over-year decrease of 350bps.
  • Company-operated shop contribution2, a non-GAAP financial measure, grew 20.5% to $60.2 million as compared to $50.0 million in the same period of 2022. In the fourth quarter of 2023, company-operated shop contribution margin, which includes 150bps of pre-opening costs, was 26.5%, a year-over-year decrease of 200 bps.
  • Selling, general, and administrative expenses were $56.9 million (22.4% of revenue) as compared to $50.6 million (25.1% of revenue) in the same period of 2022.
  • Adjusted selling, general, and administrative expenses2, a non-GAAP financial measure, were $44.2 million (17.4% of revenue) as compared to $38.1 million (18.9% of revenue) in the same period of 2022.
  • Net loss was $3.8 million as compared to $2.8 million in the same period of 2022.
  • Adjusted EBITDA2, a non-GAAP financial measure, grew 16.2% to $34.6 million as compared to $29.8 million in the same period of 2022.
  • Adjusted net income2, a non-GAAP financial measure, was $7.4 million as compared to $4.8 million in the same period of 2022.
  • Net loss per share of Class A and Class D common stock – diluted was $0.02 as compared to $0.01 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 $0.04 as compared to $0.03 in the same period of 2022.

Full Year 2023 Highlights:

  • Opened 159 new shops, 146 of which were company-operated, across 13 states.
  • Total revenues grew 30.7% to $965.8 million as compared to $739.0 million in 2022.
  • System same shop sales1 grew 2.8%, inclusive of the impact of our fortressing strategy, which results in sales being transferred from existing shops to new ones, as compared to 2022. Company-operated same shop sales grew 1.5%, as compared to 2022.
  • Company-operated shop revenues increased 34.1% to $857.9 million, as compared to $639.7 million in 2022.
  • Company-operated shop gross profit was $180.2 million as compared to $121.3 million in 2022. In 2023, company-operated shop gross margin, which includes 160bps of pre-opening costs, improved to 21.0%, a year-over-year increase of 200 bps.
  • Company-operated shop contribution2, a non-GAAP financial measure, grew 53.7% to $242.3 million as compared to $157.6 million in 2022. In 2023, company-operated shop contribution margin, which includes 160bps of pre-opening costs, improved to 28.2%, a year-over-year increase of 360 bps.
  • Selling, general, and administrative expenses were $205.1 million (21.2% of revenue) as compared to $183.5 million (24.8% of revenue) in 2022.
  • Adjusted selling, general, and administrative expenses2, a non-GAAP financial measure, were $160.7 million (16.6% of revenue) as compared to $136.4 million4 (18.5% of revenue) in 2022.
  • Net income (loss) was $10.0 million as compared to $(19.3) million in 2022.
  • Adjusted EBITDA2, a non-GAAP financial measure, increased 75.5% to $160.1 million as compared to $91.2 million in 2022.
  • Adjusted net income2, a non-GAAP financial measure, was $50.2 million as compared to $25.2 million in 2022.
  • Net income (loss) per share of Class A and Class D common stock – diluted was $0.03 as compared to $(0.09) in 2022.
  • Adjusted net income per fully exchanged share of common stock2, a non-GAAP financial measure, was $0.30 as compared to $0.16 in 2022.

Arizona Support Center Expansion

Dutch Bros is engaging in a large-scale organizational design initiative that will shift certain positions to its Phoenix, Arizona office:

  • As part of this move, the Company estimates approximately 40% of support center staff will be located in Arizona by January 1, 2025. Many of these positions will focus on driving the strategic direction of the Company and assisting day-to-day operations in the field.
  • The Company expects to maintain a significant presence in Southern Oregon, where its roasting, accounting and select other support functions will continue to be based.
  • The Company anticipates this initiative will incur approximately $24 million to $31 million in costs, plus approximately $6 million to $10 million in capital expenditures related to the Arizona office expansion.

Dutch Bros Inc.: Outlook

  • Total system shop openings in 2024 are expected to be in the range of 150 to 165.
  • Total revenues are projected to be between $1.190 billion and $1.205 billion.
  • Same shop sales growth is estimated to be in the low single digits.
  • Adjusted EBITDA3 is estimated to be between $185 million to $195 million and Adjusted SG&A3 is estimated to be between $183 million and $189 million. The expected costs related to our announced support center expansion in Arizona will be excluded from Adjusted EBITDA and Adjusted SG&A. Stock based compensation, which is also excluded from Adjusted EBITDA and Adjusted SG&A, is estimated to be in the range of $12 million to $17 million.
  • Capital Expenditures are estimated to be between $280 million to $320 million, primarily related to new shop construction. This estimate includes approximately $10 million in incremental spend related to our roasting facility, which we expect to open in the middle of 2024, and $6 million to $10 million in capital expenditures related to the Arizona office expansion.

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, reconciliations to the corresponding GAAP financial measure is not available without unreasonable effort.

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