Dutch bros inc. announces second quarter 2022 financial results
Grants pass, ore.--(business wire)--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 second quarter ended june 30, 2022. joth ricci, chief executive officer and president of dutch bros inc., stated, “we surpassed two major brand milestones during the second quarter: opening our 600th shop and exceeding $1 billion in systemwide sales2 on a trailing twelve-month basis. these milestones demonstrate the strength of our people-first culture and our new shop development pipeline. we have opened 65 shops in the first half of 2022 and are on track for at least 130 shop openings for the full year. our newest shops are exhibiting predictable and consistent sales and upward margin progression, while our 2020 and 2021 classes are generating annualized volumes that are 10% higher than our system average. as we pursue strategic growth from west to east, dutch bros’ portability and brand acceptance have been outstanding.” he added, “like many of our peers, the macro-economic environment is impacting various aspects of our business, and our company-operated shop margins continue to be pressured by record inflation in the second quarter. that said, our team accelerated efforts to increase productivity in the middle of our p&l, and we took a 3% price increase in the second quarter. these actions contributed to 630bps of sequential improvement in company-operated shop margins from 18.3% to 24.6% when compared to the first quarter of 2022. we are evaluating further menu pricing action as needed in the back half of the year.” he concluded, “we celebrated our annual drink one for dane fundraiser on may 20, and it was the second-largest day by transaction-count in our history. in 2022 we raised $2.3 million, and since 2018, we have raised over $8.3 million. we are upholding our mission to contribute to communities, making a massive difference, one cup at a time.” second quarter 2022 highlights: opened 31 new shops across 9 states. the shops opened in q2 ended the quarter with an annualized auv of $2.1 million, exceeding our expectations. total revenues grew 44.2% to $186.4 million as compared to $129.2 million in the same period of 2021. company-operated shop revenues increased 55.9% to $160.5 million as compared to $103.0 million in the same period of 2021. system same shop sales3 declined (3.3)% but grew 6.9% vs. 2019. included in this result is a positive benefit of aggregate pricing of approximately 5.3% taken since november 2021 and headwinds from sales transfer from existing to new units of approximately 1.4%. company-operated same shop sales declined (4.3)% but grew 4.3% vs. 2019. july system same-store sales stabilized, declining only (0.9)% with incremental traffic improvement. company-operated shop gross profit was $31.2 million as compared to $29.5 million4 in the same period of 2021. company-operated shop contribution5, a non-gaap financial measure, grew 20.0% to $39.5 million as compared to $32.9 million4 in the same period of 2021. in the second quarter, company-operated shop margins improved 630bps from 18.3% to 24.6% when compared to the first quarter of 2022. net loss was $(1.8) million as compared to net income of $11.9 million4 in the same period of 2021. for the second quarter of 2022, we recognized $10.4 million of non-cash equity-based compensation. adjusted ebitda5, a non-gaap financial measure, was $23.9 million as compared to $30.7 million4 in the same period of 2021, which is reflective of inflationary pressures. adjusted net income5, a non-gaap financial measure, was $8.7 million as compared to $22.7 million4 in the same period of 2021. net loss per share of class a and class d common stock - diluted was $(0.02) and adjusted net income per fully exchanged share of common stock5, a non-gaap financial measure, was $0.05. outlook dutch bros is affirming its full-year 2022 outlook: total system shop openings are expected to be at least 130, of which at least 110 shops will be company-operated. total revenues are now projected to be at least $715 million. same shop sales3 growth is estimated to be approximately flat. adjusted ebitda6 is estimated to be at least $90 million. capital expenditures are estimated to be in the range of $175 million to $200 million, which includes approximately $15 million to $20 million for our new roasting facility that we project will open in late 2023 / early 2024. _________________ 1 trailing-twelve months are the results for the past twelve consecutive months ended on june 30, 2022. 2 definition of systemwide sales is provided in the section “select financial metrics”. 3 same shop sales is defined in the section “select financial metrics”. 4 the company’s historical results have been revised to reflect an immaterial error correction related to employee sick leave accrual. for additional information, see sections “condensed consolidated statements of operations”, “company-operated shop results”, and “supplemental reconciliation of gaap actuals to non-gaap actuals” 5 reconciliation of gaap to non-gaap results is provided in the section “non-gaap financial measures”. 6 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 and 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 second quarter ended june 30, 2022. event: second quarter 2022 conference call and webcast date: wednesday, august 10, 2022 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 603 locations across 14 states as of june 30, 2022. 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, drink one for dane, 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 guidance for 2022, new shop openings, business strategies, potential growth opportunities and the effects of current market conditions. 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, 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, 2021 filed with the sec on march 11, 2022, our quarterly report on form 10-q for the period ended june 30, 2022 to be filed with the sec, and in our future reports to be filed with the sec. 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 june 30, six months ended june 30, (in thousands, except per share amounts; unaudited) 2022 2021 ¹ 2022 2021 ¹ revenues company-operated shops $ 160,512 $ 102,970 $ 290,699 $ 180,887 franchising and other 25,869 26,238 47,838 47,106 total revenues 186,381 129,208 338,537 227,993 costs and expenses cost of sales 141,370 81,467 262,537 147,975 selling, general and administrative 42,342 33,488 87,556 69,474 total costs and expenses 183,712 114,955 350,093 217,449 income (loss) from operations 2,669 14,253 (11,556 ) 10,544 other expense interest expense, net (3,596 ) (1,838 ) (6,085 ) (2,855 ) other income (expense), net 61 (5 ) 282 (58 ) total other expense (3,535 ) (1,843 ) (5,803 ) (2,913 ) income (loss) before income taxes (866 ) 12,410 (17,359 ) 7,631 income tax expense 885 521 671 564 net income (loss) $ (1,751 ) $ 11,889 $ (18,030 ) $ 7,067 less: net income attributable to dutch bros opco prior to the reorganization transactions — 11,889 — 7,067 less: net loss attributable to non-controlling interests (845 ) — (12,177 ) — net loss attributable to dutch bros inc. $ (906 ) $ — $ (5,853 ) $ — net loss per share of class a and class d common stock 2: basic $ (0.02 ) n/a $ (0.12 ) n/a diluted $ (0.02 ) n/a $ (0.12 ) n/a weighted-average shares of class a and class d common stock outstanding: basic 50,926 n/a 49,500 n/a diluted 50,926 n/a 49,500 n/a _________________ 1 the company identified an immaterial error related to the accrual of employee sick leave and the application of asc 710, compensation - general, which resulted in corrections to prior period reported amounts within the condensed consolidated statement of operations with impacted line items presented below for the three and six months ended june 30, 2021, respectively. decrease in cost of sales of $0.4 million and $0.8 million decrease in selling, general and administrative of less than $0.1 million and $0.4 million decrease in total costs and expenses of $0.4 million and $1.2 million increase in income from operations of $0.4 million and $1.2 million increase in income before income taxes of $0.4 million and $1.2 million increase in net income of $0.4 million and $1.2 million increase in net income attributable to dutch bros opco prior to the reorganization transactions of $0.4 million and $1.2 million 2 basic and diluted net loss per share of class a and class d common stock are applicable only for periods subsequent to september 14, 2021, which is the effective date of the company’s reorganization transactions and ipo. dutch bros inc. segment financials three months ended june 30, six months ended june 30, (in thousands; unaudited) 2022 2021 ¹ 2022 2021 ¹ revenues: company-operated shops $ 160,512 $ 102,970 $ 290,699 $ 180,887 franchising and other 25,869 26,238 47,838 47,106 total revenues 186,381 129,208 338,537 227,993 cost of sales: company-operated shops 129,294 73,518 242,842 133,857 franchising and other 12,076 7,949 19,695 14,118 total cost of sales 141,370 81,467 262,537 147,975 segment gross profit: company-operated shops 31,218 29,452 47,857 47,030 franchising and other 13,793 18,289 28,143 32,988 total gross profit 45,011 47,741 76,000 80,018 selling, general and administrative (42,342 ) (33,488 ) (87,556 ) (69,474 ) interest expense, net (3,596 ) (1,838 ) (6,085 ) (2,855 ) other income (expense), net 61 (5 ) 282 (58 ) income (loss) before income taxes $ (866 ) $ 12,410 $ (17,359 ) $ 7,631 depreciation and amortization: company-operated shops $ 8,307 $ 3,473 $ 15,447 $ 6,744 franchising and other 1,520 1,532 2,862 3,025 all other 712 676 1,412 1,262 total depreciation and amortization $ 10,539 $ 5,681 $ 19,721 $ 11,031 _________________ 1 the company identified an immaterial error related to the accrual of employee sick leave and the application of asc 710, compensation - general, which resulted in corrections to prior period reported amounts within segment financials with impacted line items presented below for the three and six months ended june 30, 2021, respectively. decrease in company-operated shops cost of sales of $0.4 million and $0.8 million decrease in total cost of sales of $0.4 million and $0.8 million increase in company-operated shops gross profit of $0.4 million and $0.8 million increase in total gross profit of $0.4 million and $0.8 million decrease in selling, general and administrative expenses of less than $0.1 million and $0.4 million increase in income before income taxes of $0.4 million and $1.2 million dutch bros inc. company-operated shop results three months ended june 30, six months ended june 30, 2022 2021 ¹ 2022 2021 ¹ (in thousands; unaudited) $ % $ % $ % $ % company-operated shops revenue 160,512 100.0 102,970 100.0 290,699 100.0 180,887 100.0 beverage, food and packaging costs 43,548 27.1 25,520 24.8 79,170 27.2 43,718 24.2 labor costs 47,240 29.4 29,048 28.2 89,001 30.6 54,388 30.1 occupancy and other costs 26,621 16.6 13,642 13.2 49,624 17.1 25,443 14.1 pre-opening costs 3,578 2.2 1,835 1.8 9,600 3.3 3,564 2.0 depreciation and amortization 8,307 5.2 3,473 3.4 15,447 5.3 6,744 3.7 company-operated shops gross profit 31,218 19.4 29,452 28.6 47,857 16.5 47,030 26.0 company-operated shops contribution 2 39,525 24.6 32,925 32.0 63,304 21.8 53,774 29.7 _________________ 1 the company identified an immaterial error related to the accrual of employee sick leave and the application of asc 710, compensation - general, which resulted in corrections to prior period reported amounts within the company-operated shop segment with the impacted line items are presented below for the three and six months ended june 30, 2021, respectively. decrease in company-operated shops labor costs of $0.4 million and $0.8 million increase in company-operated shops gross profit of $0.4 million and $0.8 million increase in company-operated shops contribution of $0.4 million and $0.8 million 2 reconciliation of gaap to non-gaap results is provided in the section “non-gaap financial measures”. dutch bros inc. summary cash flows data six months ended june 30, (in thousands; unaudited) 2022 2021 net cash flows provided by operating activities $ 16,713 $ 56,199 net cash flows used in investing activities (88,633 ) (36,386 ) net cash provided by (used in) financing activities 74,707 (31,876 ) net increase (decrease) in cash $ 2,787 $ (12,063 ) cash and cash equivalents at beginning of period 18,506 31,640 cash and cash equivalents at end of period $ 21,293 $ 19,577 dutch bros inc. condensed consolidated balance sheets (in thousands; unaudited) june 30, 2022 december 31, 2021 ¹ assets current assets: cash and cash equivalents $ 21,293 $ 18,506 accounts receivable, net 14,070 10,644 inventories, net 32,854 23,345 prepaid expenses and other current assets 7,050 8,796 total current assets 75,267 61,291 property and equipment, net 290,721 301,998 finance lease right-of-use assets, net 167,220 — operating lease right-of-use assets, net 159,680 — intangibles, net 10,881 11,103 goodwill 21,629 18,715 deferred income tax assets, net 223,336 159,031 other long-term assets 801 1,562 total assets $ 949,535 $ 553,700 liabilities and equity current liabilities: accounts payable $ 22,511 $ 20,440 accrued liabilities 20,849 20,970 other current liabilities 6,106 6,471 deferred revenue 26,966 22,807 line of credit 45,640 64,104 current portion of tax receivable agreements liability 450 450 current portion of finance lease obligations 5,340 3,389 current portion of operating lease obligations 9,042 — current portion of long-term debt 2,606 103 total current liabilities 139,510 138,734 deferred revenue, net of current portion 4,690 5,030 tax receivable agreements liability, net of current portion 164,460 109,283 finance lease obligations, net of current portion 167,236 79,588 operating lease obligations, net of current portion 152,277 — long-term debt, net of current portion 97,461 3,503 deferred rent — 3,153 other long-term liabilities 664 680 total liabilities 726,298 339,971 equity: common stock 2 2 additional paid in capital 126,538 107,193 accumulated other comprehensive income 145 — accumulated deficit (18,146 ) (12,679 ) total stockholders' equity attributable to dutch bros inc. / members’ equity 108,539 94,516 non-controlling interests 114,698 119,213 total equity 223,237 213,729 total liabilities and equity $ 949,535 $ 553,700 _______________ 1 the company identified an immaterial error related to the accrual of employee sick leave and the application of asc 710, compensation - general, which resulted in corrections to prior period reported amounts within the consolidated balance sheet as of december 31, 2021 with impacted line items presented below. decrease in accrued liabilities of $3.5 million decrease in total current liabilities of $3.5 million decrease in total liabilities of $3.5 million increase in additional paid in capital of $0.8 million decrease in accumulated deficit of $0.2 million increase in total stockholders’ equity attributable to dutch bros inc. / members’ equity of $1.0 million increase in non-controlling interests of $2.5 million increase in total equity of $3.5 million dutch bros inc. select financial metrics three months ended june 30, six months ended june 30, (in thousands, except number of shops data; unaudited) 2022 2021 ¹ 2022 2021 ¹ shop count, beginning of period company-operated 310 191 271 182 franchised 262 262 267 259 572 453 538 441 company-operated new openings 26 13 60 22 franchised new openings 5 5 5 8 acquisition of franchise shops — 3 5 3 shop count, end of period company-operated 336 207 336 207 franchised 267 264 267 264 total shop count 603 471 603 471 average unit volume (auv) 2 n/a n/a $ 1,900 $ 1,766 company-operated shops n/a n/a $ 1,862 $ 1,654 same shop sales growth (decline) 3, 5 (3.3 )% 9.0 % 1.0 % 8.0 % company-operated shops (4.3 )% 10.0 % 0.3 % 9.0 % company-operated shop revenues $ 160,512 $ 102,970 $ 290,699 $ 180,887 company-operated gross profit $ 31,218 $ 29,452 $ 47,857 $ 47,030 company-operated shop contribution 4 $ 39,525 $ 32,925 $ 63,304 $ 53,774 company-operated shop gross profit as a % of company-operated shop revenue 19.4 % 28.6 % 16.5 % 26.0 % company-operated shop contribution as a % of company-operated shop revenues 4 24.6 % 32.0 % 21.8 % 29.7 % net income (loss) $ (1,751 ) $ 11,889 $ (18,030 ) $ 7,067 adjusted ebitda 4 $ 23,939 $ 30,699 $ 33,601 $ 49,384 net income (loss) as % of revenue (0.9 )% 9.2 % (5.3 )% 3.1 % adjusted ebitda as % of revenue 4 12.8 % 23.8 % 9.9 % 21.7 % systemwide sales 5 $ 297,403 $ 241,566 $ 551,968 $ 432,043 dutch rewards member registrations 6 496 674 985 2,229 ___________ 1 the company identified an immaterial error related to the accrual of employee sick leave and the application of asc 710, compensation - general, which resulted in corrections to prior period reported amounts within the condensed consolidated statement of operations, segment financials, company-operated shop segment financial results, and non-gaap results for the three and six months ended june 30, 2021 with impacted line items presented below. net income prior period adjustment details are provided in the section “condensed consolidated statements of operations”. company-operated segment gross profit and segment contribution prior period adjustment details are provided in the sections “segment financials” and “company-operated shop results”. adjusted ebitda prior period adjustment details are provided in the section “non-gaap financial measures”. 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 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. 3 same shop sales growth (decline) 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 june 30, six months ended june 30, 2022 2021 2022 2021 systemwide shop base 440 368 414 355 company-operated shop base 193 130 173 120 4 reconciliation of gaap to non-gaap results is provided in the section “non-gaap financial measures”. 5 systemwide sales and systemwide same shop sales include company-operated shop revenue 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 overall dutch bros locations financial health, growth and future expansion prospects. 6 dutch rewards, a digitally-based rewards program available exclusively through the dutch rewards app, was launched february 2021. management uses this metric as an indicator of customer loyalty adoption of our dutch rewards app and future promotional plans. 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. 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 taxes expense (benefit), and depreciation and amortization expense. adjusted ebitda — definition and/or calculation defined as ebitda (as defined above), excluding equity-based compensation, expenses associated with equity offerings, covid-19: “thank you” pay and catastrophic leave expenses, covid-19: prepaid costs not utilized, and costs incurred for company-wide milestone events. adjusted ebitda margin — definition and/or calculation defined as adjusted ebitda (as defined above), taken as a percentage of total revenue. 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 the 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 net income definition and/or calculation net income (loss), excluding equity-based compensation expense, expenses associated with equity offering, covid-19: “thank you” pay and catastrophic leave expenses, covid-19: prepaid costs not utilized, costs incurred for company-wide milestone events, 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, 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 per share of class a and class d common stock – diluted, excluding per share impacts of equity-based compensation expense, expenses associated with equity offering, covid-19: “thank you” pay and catastrophic leave expenses, covid-19: prepaid costs not utilized, costs incurred for company-wide milestone events, 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 these measures facilitate 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 pubco1 and/or profit interest units in dutch bros opco2 to certain eligible employees. expenses associated with equity offerings costs incurred as a result of our stock offerings. 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. 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. 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. 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. dilutive effects of rsas addition of incremental shares of rsas calculated under the treasury stock method, when they are dilutive for the calculation of weighted-average shares - diluted on a non-gaap basis, but not on a gaap basis. assumed exchange of weighted-average class b and class c shares of common stock weighted-average shares of class b and 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. ___________ 1 dutch bros pubco refers to dutch bros inc., a delaware corporation, in which its class a common stock is publicly traded on the new york stock exchange under the symbol “bros”. 2 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 june 30, six months ended june 30, 2022 2021 ¹ 2022 2021 ¹ (in thousands; unaudited) $ % $ % $ % $ % company-operated shop gross profit 31,218 19.4 29,452 28.6 47,857 16.5 47,030 26.0 depreciation and amortization 8,307 5.2 3,473 3.4 15,447 5.3 6,744 3.7 company-operated shop contribution 39,525 24.6 32,925 32.0 63,304 21.8 53,774 29.7 _________________ 1 the company’s historical results for the three and six months ended june 30, 2021 have been revised to reflect an immaterial error correction related to employee sick leave accrual. for additional information, see section “company-operated shop results”. three months ended june 30, six months ended june 30, 2022 2021 ¹ 2022 2021 ¹ (in thousands; unaudited) $ % $ % $ % $ % net income (loss) (1,751 ) (0.9 ) 11,889 9.2 (18,030 ) (5.3 ) 7,067 3.1 depreciation and amortization 10,539 5.7 5,681 4.4 19,721 5.8 11,031 4.8 interest expense, net 3,596 1.9 1,838 1.4 6,085 1.8 2,855 1.3 income tax expense 885 0.5 521 0.4 671 0.2 564 0.2 ebitda 13,269 7.1 19,929 15.4 8,447 2.5 21,517 9.4 equity-based compensation 10,446 5.6 8,332 6.4 20,346 6.0 22,982 10.1 expenses associated with equity offerings — — 2,253 1.7 — — 2,329 1.0 covid-19: “thank you pay” and catastrophic leave 224 0.1 185 0.1 1,174 0.3 2,556 1.1 covid-19: prepaid costs not utilized — — — — 1,200 0.4 — — milestone events — — — — 2,434 0.7 — — adjusted ebitda 23,939 12.8 30,699 23.8 33,601 9.9 49,384 21.7 three months ended june 30, (in thousands; unaudited) 2022 2021 ¹ net income (loss) $ (1,751 ) $ 11,889 equity-based compensation 10,446 8,332 expenses associated with equity offerings — 2,253 covid-19: “thank you pay” and catastrophic leave 224 185 covid-19: prepaid costs not utilized — — income tax effects (215 ) — adjusted net income $ 8,704 $ 22,659 _________________ 1 the company identified an immaterial error related to the accrual of employee sick leave and the application of asc 710, compensation - general, which resulted in corrections to prior period reported amounts within the condensed consolidated statements of operations and non-gaap results for the three and six months ended june 30, 2021 with impacted line items presented below. increase in net income of $0.4 million and $1.2 million increase in ebitda of $0.4 million and $1.2 million increase in adjusted ebitda of $0.4 million and $1.2 million increase in adjusted net income of $0.4 million three months ended june 30, (in thousands, except per share amounts; unaudited) 2022 ¹ 2021 weighted-average shares of class a and class d common stock outstanding - diluted 50,926 n/a dilutive effects of rsas 1,530 n/a assumed exchange of weighted-average class b and class c shares of common stock 110,085 n/a adjusted fully exchanged weighted-average shares of common stock outstanding - diluted 162,541 n/a net loss per share of class a and class d common stock - diluted $ (0.02 ) n/a controlling and non-controlling interest adjustments 0.01 n/a equity-based compensation 0.06 n/a expenses associated with equity offerings — n/a covid-19: “thank you pay” and catastrophic leave — n/a income tax effects — n/a adjusted net income per fully exchanged share of common stock $ 0.05 n/a _________________ 1 weighted-average shares, net loss per share, and related adjustments on a diluted basis are applicable only for the periods subsequent to september 14, 2021, which is the effective date of the company’s reorganization transactions and ipo. as such there is no comparative information for 2021 periods presented.
