Dutch Bros Inc.

Greetings and welcome to the Dutch Bros Inc. Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press Start and Zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paddy Warren, Director of IR and Corporate Development. Please go ahead.

Thank you. Good afternoon and welcome. I'm joined by Joth Rickey, CEO, Christine Barone, President, and Charlie Jimley, CFO. We issued our earnings press release for the quarter ended September 30, 2023, after the market closed today. The earnings press release, along with a supplemental information deck, have been posted to our investor relations website at investors.dutchbros.com. Please be aware that all statements in our prepared remarks and in response to your questions, other than those of historical facts, are forward-looking statements and are subject to risks, uncertainties, 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 will also reference non-GAAP financial measures on today's call. As a reminder, non-GAAP 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 would now like to turn the call over to Josh.

Thank you, Patty. Good afternoon, everyone. By all accounts, Q3 was a fantastic quarter. We are extremely pleased with our unit openings, same-shop sales, revenue, and profitability results. We opened 39 new shops and system same-shop sales grew 4%. We delivered record performance since our IPO across both our top and bottom line with $265 million in revenue and $53 million in adjusted EBITDA, reflecting increases of 33% and 91% respectively year over year. It was also a strategically important quarter for the liquidity flexibility of the company. We upsized our credit facility by $150 million and executed a follow-on equity offering that we believe positions our balance sheet for a long runway of growth. Dutch Bros will continue to confidently pursue high-quality investments in new shops in the past 4,000. I'm very proud of the team for what they accomplished, and I'm more encouraged than ever by the strength of the underlying business. This is the last time I'll be on this call as CEO. When I joined our co-founder, Travis Boersma, and the Dutch Bros team in 2018, it was clear to me that there was something special about this company and brand. In September of 2018, we laid out five key initiatives that would guide us through the next five years. With 317 shops, we set a goal to reach 800 shops by the end of 2023. We use data to inform better decision-making, to execute a disciplined brand strategy, to utilize and leverage technology to improve customer experience, and to add new talent to our experience team. At the center of it all, we set the goal of continued connection with the communities we serve. Over the subsequent five years, we have accomplished each and every one of those goals while managing through a series of events It challenged our teams and made us better in the long run. The success of those initiatives is evident, and we've reached several important milestones. I am pleased to announce that in October, we opened our 800th shop, a testament to the team's discipline and the capacity we have created in the business. As of September 30, more than 22,000 people are employed at the shops across our system. Since 2019, we've also increased our AUVs by almost 20% and opened nine new states demonstrating that the Dutch Bros brand resonates far beyond our home markets. In Q2 of 2022, we surpassed a billion dollars in trailing 12-month system-wide sales, a milestone that few beverage-focused brands have ever achieved. Notably, we've generated this exceptional top-line growth while further improving our margins. Our company-operated shop contribution margins have expanded considerably, and we're approximately 31 percent in Q3. We achieved another milestone in the quarter by opening our 500th company-operated shop, representing 38% more shops at the end of Q3 compared to a year earlier. To put this in perspective, we started 2018 with just 37 company-operated shops. This is really incredible. And we've been able to develop the systems and capacity to scale this segment quickly and profitably. Through all of the changes and progress we've made over these past five years, it is important to remember that we're growing in order to share opportunities for our crews, brighten our customers' days, and bring connection to our communities. We do this while recognizing the responsibility to build long-term shareholder value. Finally, I'm pleased with the stability at the leadership level of this company. Trav's continued involvement, combined with decades of experience from internal leaders and franchisees, matched with fresh perspectives from new additions to the team, provides Dutch Bros an amazing foundation upon which to build. The list is long, but to everyone who has been involved in this journey over the last five-plus years, I want to say thank you. Our incoming CEO, Christine Barone, recognizes the power of this brand and has immersed herself in the business since coming on board in February. She is a fabulous leader and brings Dutch Bros the experience necessary to take us on the next phase of our journey. I couldn't be more excited for her and for the company. And now for the last time, I will turn it over to Christine for some remarks.