Dutch Bros Inc
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
BROS$33.77-2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001866581-24-000217
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001866581-24-000306
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 165 previous paragraphs and 162 current paragraphs.
106 unchanged; 45 reworded; 10 added; 11 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 29 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
Overview
Current report
Minimum Wage Increases
Current report
1 Re-opening of a shop that was temporarily closed in 2021.
Current report
7 Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures” in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Current report
The sum of the items listed above was offset by leverage from revenue growth, driving selling, general and administrative expenses to 17.0% of revenue, a year-over-year improvement of 210 bps .
Current report
The sum of the items listed above was offset by leverage from revenue growth, driving selling, general and administrative expenses to 17.3% of revenue, a year-over-year improvement of 350 bps.
Current report
Working capital management.
Current report
Proceeds from our 2023 follow-on offering.
Current report
Payoff of our net revolving credit facility in 2023.
Current report
+Delayed draw term loan advance in 2024.
Removed paragraphs (11)
Previous report
Overview and Highlights
Previous report
Key Highlights
Previous report
•Opened our 900th shop during the quarter.
Previous report
•Signed lease for new permanent office campus in Arizona.
Previous report
•Raised $2.5 million in partnership with the Dutch Bros Foundation for the Muscular Dystrophy Association from our annual Drink One for Dane fundraiser.
Previous report
Inflation and Minimum Wage Increases
Previous report
6 Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures” in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Previous report
The summation of the dollar impacts of the latter four items above would have decreased selling, general and administrative expenses by 50 bps to be 20.2% of revenue. However, leverage from revenue growth reduces that percentage by 230 bps to be 17.9% of revenue.
Previous report
The summation of the impact of the latter four items above would have decreased selling, general and administrative expenses by 90 bps to be 20.9% of revenue. However, leverage from revenue growth reduced that percentage by 350 bps to be 17.4% of revenue.
Previous report
Working capital management and efficiencies with new shop openings.
Previous report
The delayed draw term loan advance under our 2022 Credit Facility.
Reworded paragraphs (45)
Previous wording
As of June 30, 2024, we had 912 company-operated and franchised shops in 18 states, an increase of approximately 21.0% from the same period in the prior year. For the three months ended June 30, 2024, we generated $324.9 million of revenue, $22.2 million of net income, and $0.12 earnings per diluted share. We have two reportable operating segments: Company-operated shops and Franchising and other.
Current wording
As of September 30, 2024, we had 950 company-operated and franchised shops in 18 states, an increase of approximately 19.6% from the same period in the prior year. For the three months ended September 30, 2024, we generated $338.2 million of revenue, $21.7 million of net income, and $0.11 earnings per diluted share. We have two reportable operating segments: Company-operated shops and Franchising and other.
Previous wording
As a retailer that is dependent upon consumer discretionary spending, our results of operations are sensitive to changes in macroeconomic conditions. Inflation or a continued economic downturn may have a material adverse effect on our business, financial condition or results of operations. Our customers may have or in the future may have less money available for discretionary purchases and may reduce or stop their purchases of our products.
Current wording
As a retailer that is dependent upon consumer discretionary spending, our results of operations are sensitive to changes in macroeconomic conditions. Inflation may have a material adverse effect on our business, financial condition or results of operations. Our customers may have or in the future may have less money available for discretionary purchases and may reduce or stop their purchases of our products.
Previous wording
On a macro level, conditions (including bank failures and other events affecting financial institutions, increased interest rates, and the impacts of the Russia-Ukraine and Israel-Hamas wars) have created significant uncertainty in the global economy. While we are not able to fully predict the potential impacts of these conditions, we do not currently believe any potential impacts of these macroeconomic conditions would be material to our business.
Current wording
On a macro level, conditions (including changes in interest rates, inflation, bank failures and other events affecting financial institutions, the impacts of the Russia-Ukraine and Israel-Hamas wars, and the United States presidential election) have created significant uncertainty in the global economy. While we are not able to fully predict the potential impacts of these conditions, we do not currently believe any potential impacts of these macroeconomic conditions would be material to our business.
Previous wording
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.
Current wording
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.
Previous wording
2 Same shop sales reflect 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. 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.
Current wording
3 Same shop sales reflect 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.
Previous wording
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 franchise partners. 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.
Current wording
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 franchise partners. 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.
Previous wording
4 Company-operated and franchise shop operating weeks are calculated based on the number of operating days for the shop base and dividing by 7. Our shop base is defined as shops opened as of the period end date. 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.
Current wording
5 Company-operated and franchise shop operating weeks are calculated based on the number of operating days for the shop base and dividing by 7. Our shop base is defined as shops opened as of the period end date. 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.
Previous wording
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.
Current wording
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.
Previous wording
+$66.6 million from company-operated shops not yet in the comparable shop base.
Current wording
+$64.9 million from company-operated shops not yet in the comparable shop base.
Previous wording
$7.7 million from increase in same shop sales in the comparable shop base.
Current wording
$7.0 million from increase in same shop sales in the comparable shop base.
Previous wording
$124.5 million from company-operated shops not yet in the comparable shop base.
Current wording
$191.1 million from company-operated shops not yet in the comparable shop base.
Previous wording
$24.7 million from an increase in same shop sales in the comparable shop base.
Current wording
$29.9 million from an increase in same shop sales in the comparable shop base.
Previous wording
1 The comparable same shop bases were 396 and 276 for the three months ended June 30, 2024 and 2023, respectively, and 370 and 246 for the six months ended June 30, 2024 and 2023, respectively. The comparable same shop bases include mature shops, which we define as open longer than 15 months.
Current wording
1 The comparable same shop bases were 438 and 310 for the three months ended September 30, 2024 and 2023, respectively, and 370 and 246 for the nine months ended September 30, 2024 and 2023, respectively. The comparable same shop bases include mature shops, which we define as open longer than 15 months.
Previous wording
The increase in pre-opening costs was primarily driven by opening a lower proportion of shops in existing markets, including increased travel for setup and training teams and lease expense related to unopened shops, in the three and six months ended June 30, 2024 as compared to the same period in 2023.
Current wording
The increase in pre-opening costs was primarily driven by opening a lower proportion of shops in existing markets, including increased travel for setup and training teams and lease expense related to unopened shops, in the nine months ended September 30, 2024 as compared to the same period in 2023.
Previous wording
Three and Six Months Ended June 30, 2024 v. 2023
Current wording
Three and Nine Months Ended September 30, 2024 v. 2023
Previous wording
$0.5 million primarily from products sold to franchisees, net of costs and adjustments.
Current wording
+$2.1 million primarily from products sold to franchisees, net of costs and adjustments.
Previous wording
$1.1 million from shop weeks, driven by shop openings during the period.
Current wording
$1.2 million from shop weeks, driven by shop openings during the period.
Previous wording
+$0.5 million from same shop sales.
Current wording
+$0.2 million from same shop sales.
Previous wording
$2.2 million from shop weeks, driven by shop openings during the period.
Current wording
$3.5 million from shop weeks, driven by shop openings during the period.
Previous wording
+$1.9 million from same shop sales.
Current wording
+$2.1 million from same shop sales.
Previous wording
$2.4 million primarily from products sold to franchisees, net of costs and adjustments.
Current wording
$0.3 million primarily from products sold to franchisees, net of costs and adjustments.
Previous wording
+$8.3 million from investments in human capital, processes, and systems to support our revenue growth.
Current wording
+$9.9 million from investments in human capital, processes, and systems to support our revenue growth.
Previous wording
+$6.7 million or 210 bps from organization realignment and restructuring costs.
Current wording
+$4.2 million or 120 bps from organization realignment and restructuring costs.
Previous wording
$7.1 million or 220 bps from lower equity-based compensation charges.
Current wording
$7.0 million or 210 bps from lower equity-based compensation charges.
Previous wording
+$12.3 million from investments in human capital, processes, and systems to support our revenue growth.
Current wording
+$22.1 million from investments in human capital, processes, and systems to support our revenue growth.
Previous wording
+$9.3 million or 160 bps from organization realignment and restructuring costs.
Current wording
+$13.5 million or 140 bps from organization realignment and restructuring costs.
Previous wording
-$14.4 million or 240 bps from lower equity-based compensation charges.
Current wording
-$21.4 million or 230 bps from lower equity-based compensation charges.
Previous wording
-$2.0 million or 60 bps from lower expense for certain legal disputes.
Current wording
$2.0 million or 20 bps from lower expense for certain legal disputes.
Previous wording
The decrease in other income, net was primarily driven by remeasurement gains in the prior period related to the TRAs liability compared to none in the current period, partially offset by gain on sale of the Company airplane to our Co-Founder.
Current wording
The increase in other income (expense), net was primarily driven by the gain on sale of the Company hangar and related equipment to our Co-Founder, and remeasurement losses in the prior period related to the TRAs liability compared to none in the current period.
Previous wording
The increase in other income, net was primarily driven by higher remeasurement gains in the current period related to the TRAs liability.
Current wording
The increase in other income (expense), net was primarily driven by higher remeasurement gains in the current period related to the TRAs liability and the gain on sale of the Company airplane and hangar.
Previous wording
The increase in tax expense was primarily driven by changes in state earnings mix, and its impact on deferred taxes.
Current wording
The increase in tax expense was primarily driven by increased current year pre-tax income, changes in state earnings mix, and its impact on deferred taxes.
Previous wording
We had cash and cash equivalents of $260.9 million and $133.5 million as of June 30, 2024 and December 31, 2023, respectively.
Current wording
We had cash and cash equivalents of $281.1 million and $133.5 million as of September 30, 2024 and December 31, 2023, respectively.
Previous wording
For the six months ended June 30, 2024, our principal sources of liquidity were cash flows from our delayed draw term loan facility and operations. Our principal uses of liquidity for the six months ended June 30, 2024 were to fund our new shop builds and other working capital needs.
Current wording
For the nine months ended September 30, 2024, our principal sources of liquidity were cash flows from operations and our delayed draw term loan facility. Our principal uses of liquidity for the nine months ended September 30, 2024 were to fund our new shop builds, our new Texas roasting facility, and other working capital needs.
Previous wording
Higher net income as a result of year-over-year shop growth and leverage of general and administrative costs.
Current wording
Higher net income as a result of year-over-year shop growth and leverage of selling, general and administrative costs.
Previous wording
+Investment in capital expenditures as a result of new company-operated shop openings.
Current wording
+Investment in capital expenditures related to new company-operated shop openings.
Previous wording
The increase in financing activities cash flows was primarily driven by:
Current wording
The decrease in financing activities cash flows was primarily driven by:
Previous wording
We believe that proceeds from our 2022 Credit Facility and cash provided by operating activities are adequate to fund our debt service requirements, lease obligations, and working capital obligations for at least the next 12 months.
Current wording
We believe that cash provided by operating activities and proceeds from our 2022 Credit Facility are adequate to fund our debt service requirements, lease obligations, cash distributions required by the OpCo LLC Agreement and the TRAs, and working capital obligations for at least the next 12 months.
Previous wording
As of June 30, 2024, cash requirements for the following items have materially changed from our Annual Report on Form 10-K for the year ended December 31, 2023:
Current wording
As of September 30, 2024, cash requirements for the following items have materially changed from our 2023 Form 10-K:
Previous wording
•Operating lease liabilities — increased approximately $158 million from newly commenced leases.
Current wording
•Operating lease liabilities — increased approximately $197 million from newly commenced leases.
Previous wording
•Debt obligations — increased approximately $145 million on a net basis primarily due to the proceeds from the delayed draw term loan under our 2022 Credit Facility.
Current wording
•Debt obligations — increased approximately $142 million on a net basis primarily due to the proceeds from the delayed draw term loan under our 2022 Credit Facility.
Showing the first 40 of 45 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The decrease in pre-opening costs was primarily driven by opening a higher proportion of shops in existing markets, which do not require as much support, in the three months ended September 30, 2024 as compared to the same period in 2023.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Three and Six Months Ended June 30, 2024 v. 2023
Previous report — wording carried elsewhere
+$0.5 million or 20 bps from expenses related to equity offerings.
Previous report — wording carried elsewhere
$2.0 million or 30 bps from lower expense for certain legal disputes.