GRANTS PASS, Ore. - Dutch Bros Inc. (NYSE:BROS), the operator and franchisor of drive-thru coffee shops, announced today that certain selling stockholders affiliated with TSG Consumer Partners, L.P. are commencing a registered underwritten public offering of 8,762,700 shares of its Class A common stock. The sale will be conducted pursuant to a registration statement on Form S-3 with the Securities and Exchange Commission (SEC).
In a concurrent private transaction, these stockholders also plan to distribute securities convertible into 723,813 shares of Common Stock to some of their indirect members who chose not to participate in the public offering. These securities will be bound by lock-up restrictions as detailed in the prospectus supplement.
Dutch Bros will not be offering any new shares nor will it receive any proceeds from this sale, but it will bear the costs associated with the sale, except for any underwriting discounts and commissions.
The company also disclosed that upon completion of the offering, Sean Sullivan, the director nominated by the selling stockholders, is expected to resign from the board. Furthermore, the selling stockholders will relinquish their right to designate a director to Dutch Bros' board, and the stockholders agreement will terminate.
Following the offering, the outstanding shares of Dutch Bros' Class C and Class D common stock will represent less than 5% of the total outstanding common stock. Consequently, the voting power of Class C common stock will be reduced to one vote per share, and Class D common stock will convert into an equal number of shares of Common Stock.
BofA Securities and Jefferies are the joint book-running managers for the offering. The shares may be sold on the New York Stock Exchange, over-the-counter, or through other transactions at market prices or negotiated prices, subject to the underwriters' discretion.
This offering is based on a shelf registration statement that became effective upon filing. Prospective investors are advised to read the prospectus supplement, the accompanying prospectus, and other relevant documents filed with the SEC before investing.
In other recent news, Dutch Bros Inc. has been making significant strides in its financial performance and market expansion. The company reported robust growth in its first quarter of 2024, with a 39% rise in year-over-year revenue, reaching $275 million, and a substantial 120% increase in adjusted EBITDA to $53 million. These results were driven by successful product launches and the addition of 45 new locations, expanding Dutch Bros' presence to 17 states.
TD Cowen, an analyst firm, has revised its outlook on Dutch Bros, upgrading the company's stock from a Hold to a Buy rating. The firm also raised the price target for Dutch Bros' shares from $33.00 to $46.00, reflecting a more optimistic view of the company's financial prospects. This upgrade is based on the firm's analysis of Dutch Bros' unit economics and same-store sales growth projections for 2024 and 2025.
In addition to financial growth, Dutch Bros has been successful in enhancing customer engagement through its Dutch Rewards program, which accounted for 66% of transactions in the first quarter. These recent developments highlight Dutch Bros' ability to effectively navigate the market and deliver on its growth potential.
InvestingPro Insights
In light of Dutch Bros Inc.'s (NYSE:BROS) recent announcement regarding the registered underwritten public offering of shares by selling stockholders, a look at the company's financials and market performance offers a deeper understanding of its current position. According to InvestingPro data, Dutch Bros boasts a market capitalization of $5.57 billion, highlighting its significant size in the drive-thru coffee shop sector.
InvestingPro Tips suggest that analysts are optimistic about Dutch Bros' prospects, expecting net income and sales growth in the current year. This optimism is reflected in the robust revenue growth of 33.09% over the last twelve months as of Q1 2024. Additionally, the company's stock has experienced a substantial return over the last week, with an 8.27% price total return, and a notable 25.56% return over the last three months. These figures underscore the company's strong market performance in the short term.
Despite these positive indicators, it's worth noting that Dutch Bros is trading at a high earnings multiple with a P/E ratio of 204.72 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at 268.05. This suggests a premium valuation, which could be a point of consideration for investors evaluating the company's stock in relation to its earnings.
For those interested in further analysis and additional InvestingPro Tips on Dutch Bros, including insights on the company's debt levels, valuation multiples, and stock price volatility, visit https://www.investing.com/pro/BROS. There are 17 more tips available, which can be accessed with an additional 10% off a yearly or biyearly Pro and Pro+ subscription using the coupon code PRONEWS24.
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