Dutch Bros Inc. Reports Fourth Quarter and Fiscal Year 2022 Financial Results

By: Alexis Rubinstein, Managing Editor - Coffee Network

Fri, 24 Feb 2023, 15:07

Alexis Rubinstein

Managing Editor

CoffeeNetwork (New York) - 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 fourth quarter and year ended December 31, 2022.

Joth Ricci, Chief Executive Officer of Dutch Bros Inc., stated, “In 2022, we delivered another strong year of growth with revenue increasing almost 50% to $739.0 million, driven by 133 new shop openings systemwide. For the third consecutive year, we have exceeded our new shop development targets, doubling our shop count since March 2019, despite unprecedented disruption to communities and the economy. These results are a testament to our team’s ongoing ability to execute our proven strategy. As we continue on our 30+ year growth journey, we’re entering 2023 in a position to build market share, supported by our strong people development and new shop pipelines.”

He added, “This year, we are targeting 150 new systemwide shops, which will enable us to achieve our five-year goal of 800 systemwide shops by year-end. Additionally, we expect to be within striking distance of $1 billion in revenue in 2023 and 1,000 systemwide shops by the first half of 2025, creating jobs and opportunities for our employees and the communities in which we serve.”

Fourth Quarter 2022 Highlights:

Opened 30 new shops, 26 of which were company-operated, across 11 states.
Total revenues grew 44.1% to $201.8 million6 as compared to $140.1 million in the same period of 2021.
System same shop sales declined (0.6)%, 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 2021 and grew 15.2% on a 3-year stacked basis. Company-operated same shop sales declined (2.1)%, inclusive of the impact of our fortressing strategy, as compared to the same period of 2021 and grew 16.2% on a 3-year stacked basis3.
Company-operated shop revenues increased 53.7% to $175.5 million6, as compared to $114.2 million in the same period of 2021.
Company-operated shop gross profit was $38.8 million as compared to $16.6 million4 in the same period of 2021. In the fourth quarter of 2022, company-operated shop gross margins, which includes 220bps of pre-opening expenses and 210bps of Dutch Rewards loyalty app breakage related to 20216, improved to 22.1%. Year-over-year, company-operated shop gross margins increased 760bps.
Company-operated shop contribution5, a non-GAAP financial measure, grew 129.2% to $50.0 million as compared to $21.8 million in the same period of 2021. In the fourth quarter of 2022, company-operated shop contribution margins, which includes 220bps of pre-opening expenses and 210bps of Dutch Rewards loyalty app breakage related to 20216, improved to 28.5%. Year-over-year, company-operated shop margins increased 940 bps.
Selling, general, and administrative expenses were $50.6 million (25.1% of revenue) as compared to $41.4 million4 (29.5% of revenue) in the same period of 2021.
Adjusted selling, general, and administrative expenses5, a non-GAAP financial measure, were $38.1 million (18.9% of revenue) as compared to $28.1 million4 (20.1% of revenue) in the same period of 2021.
Net loss was $(2.8) million6 as compared to $(8.2) million in the same period of 2021.
Adjusted EBITDA5, a non-GAAP financial measure, grew 115.7% to $29.8 million as compared to $13.8 million4 in the same period of 2021.
Adjusted net income5, a non-GAAP financial measure, was $4.8 million as compared to $5.1 million in the same period of 2021.
Net loss per share of Class A and Class D common stock - diluted was $(0.01) as compared to net loss per share of $(0.03) in the same period of 2021.
Adjusted net income per fully exchanged share of common stock, a non-GAAP financial measure, was $0.036 as compared to $0.03 in the same period of 2021.

Full Year 2022 Highlights:

Opened 133 new shops, 120 of which were company-operated, across 11 states.
Total revenues grew 48.4% to $739.0 million as compared to $497.9 million in 2021.
System same shop sales grew 1.0%, inclusive of the impact of our fortressing strategy, which results in sales being transferred from existing shops to new ones, as compared to 2021 and 11.4% on a 3-year stacked basis. Company-operated same shop sales grew 0.6%, inclusive of the impact of our fortressing strategy, as compared to 2021 and 10.4% on a 3-year stacked basis.
Company-operated shop revenues increased 58.4% to $639.7 million, as compared to $403.7 million in 2021.
Company-operated shop gross profit was $121.3 million as compared to $86.7 million in 2021. In 2022, company-operated shop gross margins, which includes 280bps of pre-opening expenses and 50bps of Dutch Rewards loyalty app breakage related to 20216, improved to 19.0%. Year-over-year, company-operated shop gross margins decreased 250 bps.
Company-operated shop contribution, a non-GAAP financial measure, grew 53.1% to $157.6 million as compared to $103.0 million in 2021. In 2022, company-operated shop contribution margins, which includes 280bps of pre-opening expenses and 50bps of Dutch Rewards loyalty app breakage related to 20216, improved to 24.6%. Year-over-year, company-operated shop margins decreased 90 bps.
Selling, general, and administrative expenses were $183.5 million (24.8% of revenue) as compared to $264.5 million4 (53.1% of revenue) in 2021.
Adjusted selling, general, and administrative expenses were $136.4 million (18.5% of revenue) as compared to $96.5 million (19.4% of revenue) in 2021.
Net loss was $(19.3) million as compared to $(117.9) million4 in 2021.
Adjusted EBITDA, a non-GAAP financial measure, increased 8.4% to $91.2 million as compared to $84.1 million in 2021.
Adjusted net income, a non-GAAP financial measure, was $25.2 million as compared to $51.4 million in 2021.
Net loss per share of Class A and Class D common stock - diluted was $(0.09) as compared to $(0.28) in 2021.
Adjusted net income per fully exchanged share of common stock, a non-GAAP financial measure, was $0.166 as compared to $0.32 in 2021.

Outlook

Dutch Bros is providing the following full-year 2023 outlook:

Total system shop openings in 2023 are expected to be at least 150, of which at least 130 shops will be company-operated.
Total revenues are projected to be between $950 million and $1 billion.
Same shop sales growth is estimated to be in the low single digits. At this point we have no plans to take additional menu pricing in 2023. We expect low-single digits growth from pricing to roll-over into 2023 from menu pricing taken in 2022.
Adjusted EBITDA is estimated to be approximately $125 million. This includes approximately $8 million in labor investments related to wage increases in federal minimum wage markets and approximately $11 million in mandated wage increases in markets that do not adhere to the federal minimum wage standard. This Adjusted EBITDA estimate includes our present assumption around no menu price increases in 2023.
Capital expenditures are estimated to be in the range of $225 million to $250 million, which includes approximately $15 million to $20 million for our new roasting facility projected to open in 2024.

Alexis Rubinstein

Coffee

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