Dutch Bros. stock spills 37% lower after forecast cut due to inflation

Analysts polled by FactSet on average projected adjusted earnings of a penny a share on sales of $145.5 million.

The stock plummeted more than 37% in after-hours trading following the results, though that likely had more to do with the forecast than the first-quarter performance. Executives now expect “at least $90 million” in adjusted Ebitda for the year, after stating a target range of $115 million to $120 million just three months ago.

“We were not immune to the record inflation that surpassed our expectations and pressured margins in our company-operated shops,” Chief Executive Joth Ricci said in a statement. “While we believe these margin impacts may be short term, we have opted to take a more conservative stance regarding adjusted Ebitda for 2022 as we monitor our pricing and the escalating cost environment.”

Executives also reduced their target for same-store sales, a metric that removes performance of new stores, which is especially important for chains growing rapidly like the drive-through coffee franchise. After predicting same-store sales would rise “in the mid-single digits” this year previously, executives chopped that forecast to zero growth at existing stores for 2022.

Dutch Bros. shares sold for $23 in their initial public offering last fall, and have never closed lower than $34.37, their closing price on Wednesday. In after-hours trading Wednesday, shares dipped below the IPO price, to $21.51.