Dutch Bros Inc.

Thank you for standing by and welcome to the Dutch Bros Inc. second quarter 2023 earnings conference call and webcast. This conference call and webcast are being recorded today, Tuesday, August 8th, 2023 at 5 p.m. Eastern time and will be available for replay shortly after it has concluded. Following the company's presentation, we will open up the lines for questions and instructions to queue up will be provided at that time. I would now like to turn the call over to Patty.

Good afternoon and welcome. I'm joined by Joss Rickey, CEO, Christine Barone, President, and Charlie Gimli, CFO. We issued our earnings press release for the quarter ended June 30, 2023, after the market closed today. The earnings press release, along with the supplemental information deck, have also now been posted to our investor relations website at investors.dutchbros.com. Please be aware that all statements and our prepared remarks and in response to your questions, other than those of historical fact, are forward-looking statements and are subject to risk, uncertainty, and assumptions that may cause actual results to differ materially. They are qualified by the cautionary statements in our earnings press release and the risk factors in our latest SEC filings, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q. We assume no obligation to update any forward-looking statements. We'll also reference non-GAAP financial measures on today's call. As a reminder, non-GAAP financial measures are neither substitutes for nor superior to measures that are prepared under GAAP. Please review the reconciliation of non-GAAP measures to comparable GAAP results in our earnings press release. With that, I'd like to now turn the call over to John.

Thank you, Patty. Good afternoon, everyone. Q2 results demonstrate continued momentum in the business. This is the result of a team's collective ability to take the vision of a long-term growth plan and adapt to a changing environment. Our ability to deliver on new unit growth targets quarter after quarter remains a consistent bright spot. In Q2, we opened 38 new shops across eight states with 83 new shop openings through June 30th. We are more than halfway through our objective of 150 new shops in 2023. This helped propel a 34% increase in revenue year-over-year, including a 580 basis points quarter-over-quarter improvement as same-store sales shifted positive to 3.8%, reflecting better traffic trends. In Q2, approximately 90% of our beverages were served cold. We delivered increased profitability alongside this revenue growth. underscored by a 570 basis points expansion and company-operated shop contribution margin. The second quarter saw shop margins return to seasonally normalized levels as we emerged from the COVID-related inflationary period characterized by 2022 results. Revenue growth, company shop productivity, and disciplined SG&A investments drove almost $49 million in adjusted EBITDA, more than double what we reported in Q2 2022. We are very proud of the team and what it's accomplishing and are encouraged by our underlying strength. As we look ahead, our long-term vision is clear and we remain focused as ever. After five years in working with Trav and team and nearly two years after the IPO, I believe Dutch Bros is a strong, healthy business with a very long runway. As we set the stage for scaling the company, I am pleased to share that Christine Barone will step into the role of President and CEO effective January 1, 2024. I believe Christine is the right person to lead Dutch Bros in its next phase of growth. She is a rare leader with demonstrated abilities in marketing, operations, and finance. Since joining us in February, her impact has been immediate and action has been decisive as she has focused on a real estate strategy, driving traffic, improved data analytics, and overall marketing efforts. We are feeling the impact of her leadership as she executes against the current business and leads the team into 2024 planning and beyond. Over the coming months, I will work side by side with Christine to best position the business for long-term success. We will execute against our plan, driving traffic, optimizing operations, selecting strong sites, and building great shops efficiently. Most important, I'm excited for what this means for the future of Dutch Bros, and I look forward to seeing how Christine's vision and leadership drives our brand towards our goal of 4,000 shops in the next 10 to 15 years. With that, I will turn it over to Christine.