Dutch Bros Inc. Announces Third Quarter 2022 Financial Results

November 09, 2022 at 16:05 PM EST

Opened a Record 38 Shops, Revenues Increased 53% Year-over-Year to $198.6 Million

Raises Annual Guidance for Total Revenues

Targets 150 New Shop Openings for 2023; Reaching 800 Shops by the End of Next Year

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 third quarter ended September 30, 2022.

Joth Ricci, Chief Executive Officer and President of Dutch Bros Inc., stated, “We continue to execute our growth strategy, leveraging our strong team to open new shops and our proven operational playbook and loyalty program to engage and connect with new and existing customers. In the third quarter, we opened a record 38 shops, grew our revenue by more than 50%, and once again expanded our company-operated shop gross margins quarter-over-quarter. For perspective, we opened almost as many shops this quarter as we did during the entire year of 2019 and have opened at least 30 shops in 5 consecutive quarters. Dutch Bros’ portability and brand acceptance remains impressive as we grow from west to east across the country. Our 2020 and 2021 classes of new shops are generating annualized volumes that are approximately 10% higher than our system average and are exhibiting predictable and consistent sales performance and upward margin progression.”

He added, “Our new shops are fueling revenue growth, which increased 53.0% year-over-year to $198.6 million. Company-operated shop gross margins improved in the third quarter to 20.0%, 60bps higher than the second quarter and 720bps higher than the first quarter. During the quarter, we took pricing actions to partially combat inflationary pressures and benefited from operational improvements as well as the increased weighting of newer, higher-margin shops in our portfolio. We are now raising our annual revenue guidance based upon the performance of our new shops and our strong pipeline and remain confident in our expectation to generate at least $90.0 million in adjusted EBITDA¹ this year.”

He concluded, “We expect to cap off our first full year as a public company by reaching our 2022 development target of at least 130 new shops. Based upon the availability of capable field leaders currently in our people development system and the total number of committed sites in our pipeline, we are targeting at least 150 new shop openings for 2023. This would enable us to reach 800 shops by the end of 2023, a goal we made as a private company five years ago when we had just 328 shops.”

Third Quarter 2022 Highlights:

Opened 38 new shops, 34 of which were company-operated, across 11 states. The shops opened in the third quarter of 2022 achieved an annualized AUV of $1.9 million.
Total revenues grew 53.0% to $198.6 million as compared to $129.8 million in the same period of 2021.
System same shop sales² grew 1.7% as compared to the same period in 2021 and 11.4% on a 3-year stacked basis³. Included in the current period result is the positive benefit of effective aggregate pricing of approximately 9.1% taken in the last four quarters along with headwinds from sales transferred from existing shops to new shops of approximately 1.5%. Company-operated same shop sales grew 1.0% as compared to the same period of 2021 and 8.2% on a 3-year stacked basis³.
Company-operated shop revenues increased 59.7% to $173.5 million as compared to $108.7 million in the same period of 2021.
Company-operated shop gross profit was $34.7 million as compared to $23.1 million⁴ in the same period of 2021. In the third quarter of 2022, company-operated shop gross margins, which includes 260bps of pre-opening expenses, improved to 20.0%. This is a 60bps increase from the second quarter 2022 and a 720bps increase from the first quarter of 2022. Year-over-year, company-operated shop gross margins decreased 130bps.
Company-operated shop contribution⁵, a non-GAAP financial measure, grew 61.8% to $44.3 million as compared to $27.4 million⁴ in the same period of 2021. In the third quarter of 2022, company-operated shop contribution margins, which includes 260bps of pre-opening expenses, improved to 25.6%. Year-over-year, company-operated shop margins increased 40 bps.
Selling, general, and administrative expenses were $45.4 million (22.8% of revenue) as compared to $153.7 million⁴ (118.4% of revenue) in the same period of 2021.
Adjusted selling, general, and administrative expenses⁵ were $34.7 million (17.5% of revenue) as compared to $24.2 million⁴ (18.6% of revenue) in the same period of 2021.
Net income was $1.6 million as compared to a net loss of $(116.8) million⁴ in the same period of 2021.
Adjusted EBITDA⁵, a non-GAAP financial measure, grew 32.8% to $27.8 million as compared to $21.0 million⁴ in the same period of 2021
Adjusted net income⁵, a non-GAAP financial measure, was $14.3 million as compared to $11.4 million⁴ in the same period of 2021.
Net income per share of Class A and Class D common stock - diluted was $0.03 as compared to net loss per share of $(0.24) in the same period of 2021.
Adjusted net income per fully exchanged share of common stock⁵, a non-GAAP financial measure, was $0.09 as compared to $0.07 in the same period of 2021

Outlook

Dutch Bros is raising guidance for total revenues and reaffirming other elements of its full-year 2022 outlook.

Total system shop openings in 2022 are expected to be at least 130, of which at least 110 shops will be company-operated. In 2023, total system shop openings are expected to be at least 150.
Total revenues are now projected to be at least $725 million.
Same shop sales² growth is estimated to be approximately flat.
Adjusted EBITDA¹ 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		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.
²		Same shop sales is defined in the section “Select Financial Metrics”.
³		3-Year Stack is calculated as current quarter same shop sales growth plus the sum of the same shop sales growth from the same period of the prior two years. Same shop sales data is based on different shop bases for each time period.
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”.

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 third quarter ended September 30, 2022.

Event: Third Quarter 2022 Conference Call and Webcast

Date: Wednesday, November 9, 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 641 locations across 14 states as of September 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, 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 general economic conditions, commodity inflation, increased labor costs, disruptions in our supply chain, ability to hire and retain employees, the evolving COVID-19 pandemic, 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 September 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 September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts; unaudited)	2022			2021 ¹			2022			2021 ¹
REVENUES
Company-operated shops	$	173,501		$	108,661		$	464,200		$	289,548
Franchising and other		25,147			21,142			72,985			68,248
Total revenues		198,648			129,803			537,185			357,796

COSTS AND EXPENSES
Cost of sales		148,092			90,779			410,629			238,754
Selling, general and administrative		45,378			153,700			132,934			223,174
Total costs and expenses		193,470			244,479			543,563			461,928

INCOME (LOSS) FROM OPERATIONS		5,178			(114,676	)		(6,378	)		(104,132	)

OTHER EXPENSE
Interest expense, net		(5,011	)		(2,393	)		(11,096	)		(5,248	)
Other expense, net		(1,944	)		(1,041	)		(1,662	)		(1,099	)
Total other expense		(6,955	)		(3,434	)		(12,758	)		(6,347	)

LOSS BEFORE INCOME TAXES		(1,777	)		(118,110	)		(19,136	)		(110,479	)
Income tax benefit		(3,371	)		(1,280	)		(2,700	)		(716	)
NET INCOME (LOSS)	$	1,594		$	(116,830	)	$	(16,436	)	$	(109,763	)
Less: Net loss attributable to Dutch Bros OpCo prior to the Reorganization Transactions		—			(74,441	)		—			(67,374	)
Less: Net loss attributable to non-controlling interests		(169	)		(31,312	)		(12,346	)		(31,312	)
NET INCOME (LOSS) ATTRIBUTABLE TO DUTCH BROS INC.	$	1,763		$	(11,077	)	$	(4,090	)	$	(11,077	)
Net income (loss) per share of Class A and Class D common stock ²:
Basic	$	0.03		$	(0.24	)	$	(0.08	)	$	(0.24	)
Diluted	$	0.03		$	(0.24	)	$	(0.08	)	$	(0.24	)
Weighted-average shares of Class A and Class D common stock outstanding:
Basic		53,118		$	45,807			50,719		$	45,807
Diluted		54,418		$	45,807			50,719		$	45,807

_________________
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 nine months ended September 30, 2021, respectively.

	Decrease in cost of sales of $0.3 million and $1.1 million Decrease in selling, general and administrative of less than $0.1 million and $0.4 million Decrease in total costs and expenses of $0.3 million and $1.5 million Increase in income from operations of $0.3 million and $1.5 million Increase in income before income taxes of $0.3 million and $1.5 million Increase in net income of $0.3 million and $1.5 million Increase in net income attributable to Dutch Bros OpCo prior to the Reorganization Transactions of $1.2 million Increase in net income attributable to non-controlling interests of $0.2 million Increase in net income attributable to Dutch Bros Inc of less than $0.1 million
²	Basic and diluted net income (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 September 30,						Nine Months Ended September 30,
(in thousands; unaudited)	2022			2021 ¹			2022			2021 ¹
Revenues:
Company-operated shops	$	173,501		$	108,661		$	464,200		$	289,548
Franchising and other		25,147			21,142			72,985			68,248
Total revenues		198,648			129,803			537,185			357,796
Cost of Sales:
Company-operated shops		138,781			85,550			381,623			219,407
Franchising and other		9,311			5,229			29,006			19,347
Total cost of sales		148,092			90,779			410,629			238,754
Segment gross profit:
Company-operated shops		34,720			23,111			82,577			70,141
Franchising and other		15,836			15,913			43,979			48,901
Total gross profit		50,556			39,024			126,556			119,042
Selling, general and administrative		(45,378	)		(153,700	)		(132,934	)		(223,174	)
Interest expense, net		(5,011	)		(2,393	)		(11,096	)		(5,248	)
Other expense, net		(1,944	)		(1,041	)		(1,662	)		(1,099	)
Loss before income taxes	$	(1,777	)	$	(118,110	)	$	(19,136	)	$	(110,479	)
Depreciation and amortization:
Company-operated shops	$	9,624		$	4,294		$	25,071		$	11,038
Franchising and other		1,478			1,703			4,340			4,728
All other		708			699			2,120			1,961
Total depreciation and amortization	$	11,810		$	6,696		$	31,531		$	17,727

_________________
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 nine months ended September 30, 2021, respectively.

	Decrease in company-operated shops cost of sales of $0.3 million and $1.1 million Decrease in total cost of sales of $0.3 million and $1.1 million Increase in company-operated shops gross profit of $0.3 million and $1.1 million Increase in total gross profit of $0.3 million and $1.1 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 $0.3 million and $1.5 million

DUTCH BROS INC.
Company-Operated Shop Results

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021 ¹		2022		2021 ¹
(in thousands; unaudited)	$	%	$	%	$	%	$	%
Company-operated shops revenue	173,501	100.0	108,661	100.0	464,200	100.0	289,548	100.0

Beverage, food and packaging costs	47,092	27.1	27,846	25.6	126,262	27.2	71,564	24.7
Labor costs	49,000	28.3	33,307	30.7	138,001	29.8	87,695	30.3
Occupancy and other costs	28,517	16.4	17,041	15.7	78,141	16.8	42,484	14.7
Pre-opening costs	4,548	2.6	3,062	2.8	14,148	3.0	6,626	2.3
Depreciation and amortization	9,624	5.6	4,294	3.9	25,071	5.4	11,038	3.8
Company-operated shops gross profit	34,720	20.0	23,111	21.3	82,577	17.8	70,141	24.2
Company-operated shops contribution ²	44,344	25.6	27,405	25.2	107,648	23.2	81,179	28.0

_________________
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 nine months ended September 30, 2021, respectively.

	Decrease in company-operated shops labor costs of $0.3 million and $1.1 million Increase in company-operated shops gross profit of $0.3 million and $1.1 million Increase in company-operated shops contribution of $0.3 million and $1.1 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

	Nine Months Ended September 30,
(in thousands; unaudited)	2022			2021
Net cash flows provided by operating activities	$	42,768		$	72,304
Net cash flows used in investing activities		(139,411	)		(76,781	)
Net cash provided by (used in) financing activities		112,704			(1,300	)
Net increase (decrease) in cash	$	16,061		$	(5,777	)
Cash and cash equivalents at beginning of period		18,506			31,640
Cash and cash equivalents at end of period	$	34,567		$	25,863


DUTCH BROS INC.
Condensed Consolidated Balance Sheets

(in thousands; unaudited)	September 30, 2022			December 31, 2021 ¹
ASSETS
Current assets:
Cash and cash equivalents	$	34,567		$	18,506
Accounts receivable, net		14,415			10,644
Inventories, net		33,713			23,345
Prepaid expenses and other current assets		11,110			8,796
Total current assets		93,805			61,291
Property and equipment, net		327,600			301,998
Finance lease right-of-use assets, net		214,903			—
Operating lease right-of-use assets, net		165,682			—
Intangibles, net		9,826			11,103
Goodwill		21,629			18,715
Deferred income tax assets, net		293,108			159,031
Other long-term assets		2,704			1,562
Total assets	$	1,129,257		$	553,700
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	26,973		$	20,440
Accrued liabilities		22,850			20,970
Other current liabilities		6,446			6,471
Deferred revenue		28,829			22,807
Line of credit		85,752			64,104
Current portion of tax receivable agreements liability		450			450
Current portion of finance lease obligations		7,004			3,389
Current portion of operating lease obligations		9,462			—
Current portion of long-term debt		2,608			103
Total current liabilities		190,374			138,734
Deferred revenue, net of current portion		5,118			5,030
Tax receivable agreements liability, net of current portion		225,849			109,283
Finance lease obligations, net of current portion		209,257			79,588
Operating lease obligations, net of current portion		157,319			—
Long-term debt, net of current portion		96,879			3,503
Deferred rent		—			3,153
Other long-term liabilities		659			680
Total liabilities		885,455			339,971
Equity:
Common stock		2			2
Additional paid in capital		141,480			107,193
Accumulated other comprehensive income		848			—
Accumulated deficit		(16,647	)		(12,679	)
Total stockholders' equity attributable to Dutch Bros Inc. / members’ equity		125,683			94,516
Non-controlling interests		118,119			119,213
Total equity		243,802			213,729
Total liabilities and equity	$	1,129,257		$	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 September 30,						Nine Months Ended September 30,
(in thousands, except number of shops data; unaudited)	2022			2021 ¹			2022			2021 ¹
Shop count, beginning of period
Company-operated		336			207			271			182
Franchised		267			264			267			259
		603			471			538			441
Company-operated new openings		34			30			94			52
Franchised new openings		4			3			9			11
Acquisition of franchise shops		—			4			5			7
Shop count, end of period
Company-operated		370			241			370			241
Franchised		271			262			271			262
Total shop count		641			503			641			503

Average unit volume (AUV) ²		N/A			N/A		$	1,917		$	1,808
Company-operated shops		N/A			N/A		$	1,875		$	1,699

Same shop sales growth ^{3, 5}		1.7	%		7.3	%		1.4	%		8.0	%
Company-operated shops		1.0	%		4.7	%		1.1	%		8.3	%

Company-operated shop revenues	$	173,501		$	108,661		$	464,200		$	289,548
Company-operated gross profit	$	34,720		$	23,111		$	82,577		$	70,141
Company-operated shop contribution ⁴	$	44,344		$	27,405		$	107,648		$	81,179
Company-operated shop gross profit as a % of company-operated shop revenue		20.0	%		21.3	%		17.8	%		24.2	%
Company-operated shop contribution as a % of company-operated shop revenues ⁴		25.6	%		25.2	%		23.2	%		28.0	%

Net income (loss)	$	1,594		$	(116,830	)	$	(16,436	)	$	(109,763	)
Adjusted EBITDA ⁴	$	27,830		$	20,955		$	61,431		$	70,339
Net income (loss) as % of revenue		0.8	%		(90.0	) %		(3.1	) %		(30.7	) %
Adjusted EBITDA as % of revenue ⁴		14.0	%		16.1	%		11.4	%		19.7	%

Systemwide sales ⁵	$	312,961		$	241,254		$	864,929		$	673,297
Dutch Rewards member registrations ⁶		566			509			1,551			2,738

___________
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 nine months ended September 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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Systemwide shop base		452		384		414		354
Company-operated shop base		203		145		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 our system’s overall 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 and donations associated with equity offerings, COVID-19: “Thank You” pay and catastrophic leave expenses, COVID-19: prepaid costs not utilized, costs incurred for company-wide milestone events, and loss on the remeasurement of the liability related to the TRAs.