Dutch Bros (BROS) earnings report for the 3rd quarter of their 2021 fiscal year
Category: Dutch Bros (BROS)
Date: 11 November 2021 Stock Price of Dutch Bros (BROS): $62.30 Market Capital of Dutch Bros (BROS): $1.93 billion We take a look at the 3rd quarter earnings report of their 2021 fiscal year of Dutch Bros (BROS), a high growth operator and franchisor of drive-thru shops that focus on serving high QUALITY, hand-crafted beverages. For the quarter the group reported revenue of $129 million and net loss of -$6.7 million.
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- Joth Ricci, Chief Executive Officer and President of Dutch Bros Inc. - 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."
About Dutch Bros
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.
Overview of Dutch Bros 3rd quarter 2021 earnings report
- 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 EBITDA 1 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.
Dutch Bros (BROS) management commentary on their 3rd quarter 2021 earnings
GRANTS PASS, Ore.--(BUSINESS WIRE)-- 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.”
Outlook
For the fourth quarter, we are providing the following outlook:
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.”
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 EBITDA 2 is projected to be in the range of $12.5 million - $13.5 million.
- Total system shop openings are expected to be at least 112.
Dutch Bros (BROS) stock price chart since its listing
The image below shows the stock price history of Dutch Bros (BROS) since its listing. And its been a very good time for Dutch Bros stockholders. Since its listing the stock of Dutch Bros has increased by a whopping 246%.
The stock of Dutch Bros is trading at a lot closer to its 52 week high than it is to its 52 week low, which to us is a clear indication that the short term sentiment and momentum of Dutch Bros stock is positive at this point in time,
The stock of Dutch Bros is trading at a lot closer to its 52 week high than it is to its 52 week low, which to us is a clear indication that the short term sentiment and momentum of Dutch Bros stock is positive at this point in time,
Dutch Bros (BROS) stock valuation
So what do we value Dutch Bros (BROS) stock at after the release of their latest earnings report? Based on Dutch Bros latest earnings report our valuation models provides a target price (full value price) for Dutch Bros at $43.50 a stock. We therefore believe that the stock of Dutch Bros is overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $43.50 therefore we believe a good entry point into Dutch Bros stock is at $39.20 or below.
Since Dutch Bros (BROS) is trading at well above our suggested entry price we rate the stock of Dutch Bros as a SELL
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $43.50 therefore we believe a good entry point into Dutch Bros stock is at $39.20 or below.
Since Dutch Bros (BROS) is trading at well above our suggested entry price we rate the stock of Dutch Bros as a SELL
Next earnings release of Dutch Bros (BROS)
It is expected that Dutch Bros (BROS) will publish their 4th quarter 2021 earnings report in late February 2021