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BRC Inc. Reports Third Quarter 2024 Financial Results

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BRC Inc. (NYSE: BRCC) reported Q3 2024 financial results with consolidated net revenue decreasing 2.3% to $98.2 million. Wholesale revenue grew 3.5% to $63.7 million, while Direct-to-Consumer revenue declined 11.4% to $29.0 million. The company reported a net loss of $1.4 million, improving from a $10.7 million loss in Q3 2023. Gross margin increased significantly to 42.1% from 33.9%. The company announced plans to launch Black Rifle Energy™ RTD in Q4 through a partnership with Keurig Dr Pepper for national distribution in FY25. The company increased its midpoint guidance for Gross Margin and adjusted EBITDA while narrowing full-year revenue range.

BRC Inc. (NYSE: BRCC) ha riportato i risultati finanziari del terzo trimestre del 2024, con un fatturato netto consolidato in diminuzione del 2,3% a 98,2 milioni di dollari. I ricavi all'ingrosso sono aumentati del 3,5% a 63,7 milioni di dollari, mentre i ricavi diretti al consumatore sono diminuiti dell'11,4% a 29,0 milioni di dollari. L'azienda ha registrato una perdita netta di 1,4 milioni di dollari, migliorando rispetto a una perdita di 10,7 milioni di dollari nel terzo trimestre del 2023. Il margine lordo è aumentato significativamente al 42,1% rispetto al 33,9%. L'azienda ha annunciato piani per lanciare Black Rifle Energy™ RTD nel quarto trimestre attraverso una partnership con Keurig Dr Pepper per la distribuzione nazionale nel FY25. L'azienda ha aumentato la propria previsione mediana per il margine lordo e l'EBITDA rettificato, mentre ha ristretto l'intervallo di fatturato per l'intero anno.

BRC Inc. (NYSE: BRCC) reportó los resultados financieros del tercer trimestre de 2024, con ingresos netos consolidados que disminuyeron un 2.3% a 98.2 millones de dólares. Los ingresos mayoristas crecieron un 3.5% a 63.7 millones de dólares, mientras que los ingresos directos al consumidor cayeron un 11.4% a 29.0 millones de dólares. La empresa reportó una pérdida neta de 1.4 millones de dólares, mejorando desde una pérdida de 10.7 millones de dólares en el tercer trimestre de 2023. El margen bruto aumentó significativamente al 42.1% desde el 33.9%. La empresa anunció planes para lanzar Black Rifle Energy™ RTD en el cuarto trimestre a través de una asociación con Keurig Dr Pepper para la distribución nacional en el FY25. La empresa aumentó su guía media para el margen bruto y EBITDA ajustado mientras estrechaba el rango de ingresos para todo el año.

BRC Inc. (NYSE: BRCC)는 2024년 3분기 재무 결과를 발표했으며, 연결 순매출은 2.3% 감소하여 9,820만 달러에 이르렀습니다. 도매 수익은 3.5% 증가하여 6,370만 달러에 도달했으나, 소비자 직접 판매 수익은 11.4% 감소하여 2,900만 달러에 그쳤습니다. 회사는 140만 달러의 순손실을 보고했으며, 이는 2023년 3분기의 1,070만 달러 손실에서 개선된 수치입니다. 총 마진은 33.9%에서 42.1%로 크게 증가했습니다. 회사는 FY25의 전국 유통을 위한 Keurig Dr Pepper와의 파트너십을 통해 4분기에 Black Rifle Energy™ RTD를 출시할 계획을 발표했습니다. 회사는 총 연간 매출 범위를 좁히면서 총 마진과 조정된 EBITDA에 대한 중간 가이드를 상향 조정했습니다.

BRC Inc. (NYSE: BRCC) a annoncé les résultats financiers du troisième trimestre 2024, avec un chiffre d'affaires net consolidé en baisse de 2,3 % à 98,2 millions de dollars. Les revenus de gros ont augmenté de 3,5 % pour atteindre 63,7 millions de dollars, tandis que les revenus directs aux consommateurs ont chuté de 11,4 % à 29,0 millions de dollars. La société a enregistré une perte nette de 1,4 million de dollars, s'améliorant par rapport à une perte de 10,7 millions de dollars au troisième trimestre 2023. La marge brute a considérablement augmenté, passant de 33,9 % à 42,1 %. L'entreprise a annoncé des projets de lancement de Black Rifle Energy™ RTD au quatrième trimestre grâce à un partenariat avec Keurig Dr Pepper pour la distribution nationale en FY25. L'entreprise a également augmenté sa prévision médiane pour la marge brute et l'EBITDA ajusté, tout en réduisant l'intervalle de revenus pour l'année entière.

BRC Inc. (NYSE: BRCC) hat die finanziellen Ergebnisse für das 3. Quartal 2024 veröffentlicht, wobei der konsolidierte Nettoumsatz um 2,3% auf 98,2 Millionen Dollar fiel. Die Umsätze im Großhandel stiegen um 3,5% auf 63,7 Millionen Dollar, während die Umsätze im Direktvertrieb um 11,4% auf 29,0 Millionen Dollar zurückgingen. Das Unternehmen berichtete von einem Nettoverlust von 1,4 Millionen Dollar, was eine Verbesserung gegenüber einem Verlust von 10,7 Millionen Dollar im 3. Quartal 2023 darstellt. Der Bruttomarge stieg erheblich von 33,9% auf 42,1%. Das Unternehmen kündigte Pläne an, Black Rifle Energy™ RTD im 4. Quartal über eine Partnerschaft mit Keurig Dr Pepper für die nationale Distribution im FY25 einzuführen. Zudem erhöhte das Unternehmen seine Midpoint-Prognose für den Bruttomarge und das angepasste EBITDA, während der Umsatzbereich für das gesamte Jahr eingegrenzt wurde.

Positive
  • Gross profit increased 21.4% to $41.3 million with margin expanding 820 basis points to 42.1%
  • Net loss improved by $9.3 million to $1.4 million from $10.7 million in Q3 2023
  • Wholesale revenue grew 3.5% to $63.7 million
  • G&A expenses decreased 36.7% to $12.3 million
  • RTD product ACV percentage increased 530 basis points to 47.3%
Negative
  • Consolidated net revenue decreased 2.3% to $98.2 million
  • Direct-to-Consumer revenue declined 11.4% to $29.0 million
  • Outpost revenue decreased 11.4% to $5.5 million
  • Marketing expenses increased 22.4% to $10.1 million
  • Salaries, wages and benefits expenses increased 19% to $16.5 million

Insights

The Q3 results show a mixed performance with some positive developments in profitability despite revenue challenges. The gross margin improvement of 820 basis points to 42.1% and reduction in net loss from $10.7M to $1.4M demonstrate improved operational efficiency. Key positives include:

  • Wholesale channel growth of 3.5% and RTD product expansion
  • Significant G&A cost reduction of 36.7%
  • Strategic partnership with KDP for energy drink distribution

However, concerns include DTC revenue decline of 11.4% and increased marketing expenses. The updated guidance narrowing revenue expectations to $390-395M while raising EBITDA guidance suggests management's focus on profitability over top-line growth.

The strategic pivot into the energy drink market through the Black Rifle Energy™ launch represents a significant market opportunity. The partnership with KDP provides immediate access to national distribution infrastructure, critical for competing in the $19B US energy drink market. Current RTD performance shows promise with ACV increasing 530 basis points to 47.3%. The company's expansion plans targeting presence in most major grocery chains by 2025 demonstrates ambitious but achievable growth potential. However, the declining DTC channel performance requires attention as it traditionally offers higher margins.

Highlights

  • Wholesale revenue grew 3.5% compared to Q3 2023 while consolidated net revenue decreased 2.3% in Q3 2024 to $98.2 million.
  • Adjusted EBITDA of $7.1 million and Net Loss of $1.4 million, an increase of $0.9 million compared to Adjusted EBITDA of $6.2 million in Q3 2023 and an improvement of $9.3 million from Net Loss of $10.7 million in Q3 2023.
  • Increased midpoint guidance for Gross Margin and adjusted EBITDA, while narrowing the full-year revenue range.
  • Black Rifle Energy™ RTD will launch in Q4, offering a clean energy option with BRCC's unique designs, supported by national distribution through our partnership with Keurig Dr Pepper (KDP) for FY25.

SALT LAKE CITY, Utah--(BUSINESS WIRE)-- BRC Inc. (NYSE: BRCC, the "Company"), a Veteran-founded, mission-driven premium beverage company, today announced financial results for the third quarter of fiscal year 2024.

“The Black Rifle brand continues to perform well, and I’m proud of our progress in gaining market share and improving profitability this quarter,” said BRCC Chief Executive Officer Chris Mondzelewski. “This momentum enables us to invest in key growth areas, including the upcoming Q4 launch of Black Rifle Energy™ - a significant addition to our portfolio that expands consumption opportunities and complements our coffee offerings. This quarter, we also announced a strategic partnership with Keurig Dr Pepper (KDP) for the manufacture and distribution of Black Rifle Energy™, positioning us for accelerated growth and a successful national rollout in 2025. As we grow, our mission to support Veterans remains central, ensuring that our success continues to create meaningful impact in the communities we serve.”

“We’ve made meaningful improvements across several key financial metrics this year, including gross margin, adjusted EBITDA, net income, and free cash flow,” said BRCC Chief Financial Officer Steve Kadenacy. “Our third-quarter performance showcases our continued focus on improving operational excellence. Our Wholesale business continues to gain momentum, laying the foundation for growth across multiple product categories and channels over the coming years. We remain on track to have our coffee products in most major grocery chains by the end of 2025, and we are confident that the rollout of our energy drink will open new market opportunities and further accelerate our growth.”

Third Quarter 2024 Financial Highlights (in millions, except % data)

 

Quarter To Date Comparisons

 

 

2024

 

 

2023

 

$ Change

% Change

Net Revenue

$

98.2

 

$

100.5

 

$

(2.3

)

(2

)%

Gross Profit

$

41.3

 

$

34.1

 

$

7.2

 

21

%

Gross Margin

 

42.1

%

 

33.9

%

 

 

 

 

 

 

 

Net Loss

$

(1.4

)

$

(10.7

)

$

9.3

 

 

Adjusted EBITDA

$

7.1

 

$

6.2

 

$

0.9

 

 

 

Third Quarter 2024 Results

Third quarter 2024 revenue decreased 2.3% to $98.2 million from $100.5 million in the third quarter of 2023. Wholesale revenue increased 3.5% to $63.7 million in the third quarter of 2024 from $61.5 million in the third quarter of 2023. Direct-to-Consumer ("DTC") revenue decreased 11.4% to $29.0 million in the third quarter of 2024 from $32.8 million during the third quarter of 2023. Revenue from Black Rifle Coffee shops ("Outposts") decreased 11.4% to $5.5 million in the third quarter of 2024 from $6.2 million in the third quarter of 2023. The Wholesale channel performance was primarily driven by continued penetration into the Food, Drug and Mass (“FDM”) market and growth in our Ready-to-Drink (“RTD”) product. RTD product sales increased through national distributors and retail accounts as our All Commodity Volume ("ACV") percentage increased 530 basis points to 47.3%. The decrease in DTC performance was primarily due to lower customer acquisition as we strategically shifted advertising spend to other areas of the business with higher returns. Outpost revenue decreased due to lower transaction volumes.

Gross profit increased to $41.3 million in the third quarter of 2024 from $34.1 million in the third quarter of 2023, an increase of 21.4% year over year, with gross margin increasing 820 basis points to 42.1% from 33.9% for the third quarter of 2023, driven by product mix shift, productivity improvements in our RTD products, lowering warehousing costs, and favorable changes in inventory reserves.

Marketing expenses increased 22.4% to $10.1 million in the third quarter of 2024 from $8.3 million in the third quarter of 2023. As a percentage of revenue, marketing expenses increased 210 basis points to 10.3% in the third quarter of 2024 as compared to 8.2% in the third quarter of 2023 as due to our expansion of partnerships, including our engagement with UFC, higher advertising spend, incremental shopper marketing, and an increase in trade promotions.

Salaries, wages and benefits expenses increased 19.0% to $16.5 million in the third quarter of 2024 from $13.9 million in the third quarter of 2023. As a percentage of revenue, salaries, wages and benefits expenses increased 300 basis points to 16.9% in the third quarter of 2024 as compared to 13.8% for the third quarter of 2023. The increase was related to a reduction in incentive compensation in the third quarter of 2023.

General and administrative ("G&A") expenses decreased 36.7% to $12.3 million in the third quarter of 2024 from $19.5 million in the third quarter of 2023. As a percentage of revenue, G&A decreased 680 basis points to 12.5% in the third quarter of 2024 as compared to 19.4% in the third quarter of 2023 due to reductions in our corporate infrastructure and support that were inefficient or duplicative, including professional services, information technology, and office space.

Net loss for the third quarter of 2024 was $1.4 million and Adjusted EBITDA was $7.1 million. This compares to net loss of $10.7 million and Adjusted EBITDA of $6.2 million in the third quarter of 2023.

Financial Outlook

BRC Inc. provides guidance based on current market conditions and expectations for revenue, gross margin, adjusted EBITDA, and free cash flow. Adjusted EBITDA and free cash flow are non-GAAP financial measures.

For the full-year fiscal 2024, the Company updated its previous guidance as follows:

 

FY2023

 

FY2024 Guidance (prev. reported)

 

FY2024 Guidance (Updated)

 

Actual

 

Low

High

 

Low

High

Net Revenue (1)

$

395.6

 

 

$

385.0

 

$

415.0

 

 

$

390.0

 

$

395.0

 

Growth

 

31

%

 

 

(3

)%

 

5

%

 

 

(1

)%

 

 

Gross Margin

 

32

%

 

 

39

%

 

42

%

 

 

40

%

 

42

%

 

 

 

 

 

 

 

 

Adj. EBITDA

$

13.3

 

 

$

32.0

 

$

42.0

 

 

$

35.0

 

$

40.0

 

Free Cash Flow Conversion

 

 

80%

 

FCF positive for year

(1) A barter transaction favorably impacted Net Revenue in 2023 by $28.9 million and projected Net Revenue in 2024 by $15.2 million. Excluding the impact of the barter transaction reduces revenue growth from 2022 to 2023 by 10%.

The guidance provided above constitutes forward-looking statements and actual results may differ materially. Refer to the “Forward-Looking Statements” safe harbor section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

We have not reconciled forward-looking (i) Adjusted EBITDA to its most directly comparable GAAP measure, net income (loss), or (ii) Free Cash Flow Conversion to its most directly comparable GAAP measure, net cash provided by (used in) operating activities, in each case in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. We cannot predict with reasonable certainty the ultimate outcome of certain components of such reconciliations, including market-related assumptions that are not within our control, or others that may arise, without unreasonable effort. For these reasons, we are unable to assess the probable significance of the unavailable information, which could materially impact the amount of future net income (loss) and net cash provided by operating activities. See “Non-GAAP Financial Measures” for additional important information regarding Adjusted EBITDA and Free Cash Flow Conversion.

Conference Call

A conference call to discuss the Company’s third quarter results is scheduled for November 5, 2024, at 8:30 a.m. ET. Those who wish to participate in the call may do so by dialing (877) 407-0609 or (201) 689-8541 for international callers. A webcast of the call will be available on the investor relation's page of the Company’s website at ir.blackriflecoffee.com. For those unable to attend the conference call, a replay will be available after the conclusion of the call through November 12, 2024. The U.S. toll-free replay dial-in number is (877) 660-6853, and the international replay dial-in number is (201) 612-7415. The replay passcode is 13749067.

About BRC Inc.

Black Rifle Coffee Company (BRCC) is a Veteran-founded coffee company serving premium coffee to people who love America. Founded in 2014 by Green Beret Evan Hafer, Black Rifle develops their explosive roast profiles with the same mission focus they learned while serving in the military. BRCC is committed to supporting Veterans, active-duty military, first responders and the American way of life.

To learn more, visit www.blackriflecoffee.com, subscribe to the BRCC newsletter, or follow along on social media.

Forward-Looking Statements

This press release contains forward-looking statements about the Company and its industry that involve substantial risks and uncertainties. All statements other than statements of historical fact contained in this press release, including statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the launch of Black Rifle Energy™, the Company’s financial condition, liquidity, prospects, growth, strategies, future market conditions, developments in the capital and credit markets and expected future financial performance, as well as any information concerning possible or assumed future results of operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions, but the absence of these words does not mean that a statement is not forward-looking.

The events and circumstances reflected in the Company’s forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Factors that may cause such forward-looking statements to differ from actual results include, but are not limited to: competition and our ability to grow and manage growth sustainably and retain our key employees; failure to achieve sustained profitability; negative publicity affecting our brand and reputation, or the reputation of key employees; failure to manage our debt obligations; failure to effectively launch new products, including Black Rifle Energy™; failure to effectively make use of assets received under bartering transactions; failure by us to maintain our message as a supportive member of the Veteran and military communities and any other factors which may negatively affect the perception of our brand; our limited operating history, which may make it difficult to successfully execute our strategic initiatives and accurately evaluate future risks and challenges; failed marketing campaigns, which may cause us to incur costs without attracting new customers or realizing higher revenue; failure to attract new customers or retain existing customers; risks related to the use of social media platforms, including dependence on third-party platforms; failure to provide high-quality customer experience to retail partners and end users, including as a result of production defaults, or issues, including due to failures by one or more of our co-manufacturers, affecting the quality of our products, which may adversely affect our brand; decrease in success of the direct to consumer revenue channel; loss of one or more co-manufacturers, or delays, quality, or other production issues, including labor-related production issues at any of our co-manufacturers; failure to manage our supply chain, and accurately forecast our raw material and co-manufacturing requirements to support our needs; failure to effectively manage or distribute our products through our Wholesale business partners, especially our key Wholesale business partners; failure by third parties involved in the supply chain of coffee, store supplies or merchandise to produce or deliver products, including as a result of ongoing supply chain disruptions, or our failure to effectively manage such third parties; changes in the market for high-quality coffee beans and other commodities; fluctuations in costs and availability of real estate, labor, raw materials, equipment, transportation or shipping; failure to successfully compete with other producers and retailers of coffee; failure to successfully open new Black Rifle Coffee shops ("Outposts"), including failure to timely proceed through permitting and other development processes, or the failure of any new or existing Outposts to generate sufficient sales; failure to properly manage our rapid growth, inventory needs, and relationships with various business partners; failure to protect against software or hardware vulnerabilities; failure to build brand recognition using our intellectual properties or otherwise; shifts in consumer spending, lack of interest in new products or changes in brand perception upon evolving consumer preferences and tastes; failure to adequately maintain food safety or quality and comply with food safety regulations; failure to successfully integrate into new domestic and international markets; risks related to leasing space subject to long-term non-cancelable leases and with respect to real property; failure of our franchise partners to successfully manage their franchises; failure to raise additional capital to develop the business; risks related to supply chain disruptions; risks related to unionization of employees; failure to comply with federal state and local laws and regulations, or failure to prevail in civil litigation matters; and other risks and uncertainties indicated in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2024 including those set forth under “Item 1A. Risk Factors” included therein, as well as in our other filings with the SEC. Such forward-looking statements are based on information available as of the date of this press release and the Company’s current beliefs and expectations concerning future developments and their effects on the Company. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not place undue reliance on these forward-looking statements as predictions of future events. Although the Company believes that it has a reasonable basis for each forward-looking statement contained in this press release, the Company cannot guarantee that the future results, growth, performance or events or circumstances reflected in these forward-looking statements will be achieved or occur at all. These forward-looking statement speak only as of the date of this press release. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

BRC Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)

 
 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenue, net

$

98,204

 

 

$

100,536

 

 

$

285,613

 

 

$

275,974

 

Cost of goods sold

 

56,856

 

 

 

66,477

 

 

 

164,822

 

 

 

182,197

 

Gross profit

 

41,348

 

 

 

34,059

 

 

 

120,791

 

 

 

93,777

 

Operating expenses

 

 

 

 

 

 

 

Marketing and advertising

 

10,109

 

 

 

8,260

 

 

 

25,129

 

 

 

22,418

 

Salaries, wages and benefits

 

16,548

 

 

 

13,907

 

 

 

49,419

 

 

 

52,087

 

General and administrative

 

12,324

 

 

 

19,474

 

 

 

38,619

 

 

 

56,529

 

Other operating expense (income), net

 

1,261

 

 

 

(596

)

 

 

1,584

 

 

 

734

 

Total operating expenses

 

40,242

 

 

 

41,045

 

 

 

114,751

 

 

 

131,768

 

Operating income (loss)

 

1,106

 

 

 

(6,986

)

 

 

6,040

 

 

 

(37,991

)

 

 

 

 

 

 

 

 

Non-operating expenses

 

 

 

 

 

 

 

Interest expense, net

 

(2,453

)

 

 

(3,544

)

 

 

(6,805

)

 

 

(4,658

)

Other (expense) income, net

 

 

 

 

(108

)

 

 

 

 

 

138

 

Total non-operating expenses

 

(2,453

)

 

 

(3,652

)

 

 

(6,805

)

 

 

(4,520

)

Loss before income taxes

 

(1,347

)

 

 

(10,638

)

 

 

(765

)

 

 

(42,511

)

Income tax expense

 

50

 

 

 

56

 

 

 

151

 

 

 

169

 

Net loss

$

(1,397

)

 

$

(10,694

)

 

$

(916

)

 

$

(42,680

)

Less: Net loss attributable to non-controlling interest

 

(862

)

 

 

(7,462

)

 

 

(446

)

 

 

(30,420

)

Net loss attributable to BRC Inc.

$

(535

)

 

$

(3,232

)

 

$

(470

)

 

$

(12,260

)

 

 

 

 

 

 

 

 

Net loss per share attributable to Class A Common Stock

 

 

 

 

 

 

 

Basic and diluted

$

(0.01

)

 

$

(0.05

)

 

$

(0.01

)

 

$

(0.21

)

 

 

 

 

 

 

 

 

Weighted-average shares of Class A Common Stock outstanding

 

 

 

 

 

 

 

Basic and diluted

 

72,154,931

 

 

 

61,964,157

 

 

 

68,904,034

 

 

 

59,738,542

 

 

BRC Inc.

CONSOLIDATED BALANCE SHEETS
(in thousands, except share and par value amounts)

 
 

 

September 30,

 

December 31,

 

 

2024

 

 

 

2023

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

7,336

 

 

$

12,448

 

Restricted cash

 

315

 

 

 

1,465

 

Accounts receivable, net

 

28,884

 

 

 

25,207

 

Inventories, net

 

50,210

 

 

 

56,465

 

Prepaid expenses and other current assets

 

16,243

 

 

 

12,153

 

Total current assets

 

102,988

 

 

 

107,738

 

Property, plant and equipment, net

 

64,670

 

 

 

68,326

 

Operating lease, right-of-use asset

 

29,293

 

 

 

36,214

 

Identifiable intangibles, net

 

373

 

 

 

418

 

Other

 

36,340

 

 

 

23,080

 

Total assets

$

233,664

 

 

$

235,776

 

Liabilities and stockholders' equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

31,227

 

 

$

33,564

 

Accrued liabilities

 

36,412

 

 

 

34,911

 

Deferred revenue and gift card liability

 

4,869

 

 

 

11,030

 

Current maturities of long-term debt

 

15,866

 

 

 

2,297

 

Current operating lease liability

 

2,195

 

 

 

2,249

 

Current maturities of finance lease obligations

 

19

 

 

 

58

 

Total current liabilities

 

90,588

 

 

 

84,109

 

Non-current liabilities:

 

 

 

Long-term debt, net

 

49,034

 

 

 

68,683

 

Finance lease obligations, net of current maturities

 

 

 

 

23

 

Operating lease liability

 

29,336

 

 

 

35,929

 

Other non-current liabilities

 

11,141

 

 

 

524

 

Total non-current liabilities

 

89,511

 

 

 

105,159

 

Total liabilities

 

180,099

 

 

 

189,268

 

 

 

 

 

Stockholders' equity:

 

 

 

Preferred Stock, $0.0001 par value, 1,000,000 shares authorized; no shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

 

 

 

 

 

Class A Common Stock, $0.0001 par value, 2,500,000,000 shares authorized; 77,265,412 and 65,637,806 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

 

8

 

 

 

6

 

Class B Common Stock, $0.0001 par value, 300,000,000 shares authorized; 135,473,335 and 146,484,989 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

 

14

 

 

 

15

 

Class C Common Stock, $0.0001 par value, 1,500,000 shares authorized; no shares issued or outstanding as of September 30, 2024 and December 31, 2023, respectively

 

 

 

 

 

Additional paid in capital

 

135,453

 

 

 

133,728

 

Accumulated deficit

 

(120,947

)

 

 

(120,478

)

Total BRC Inc.'s stockholders' equity

 

14,528

 

 

 

13,271

 

Non-controlling interests

 

39,037

 

 

 

33,237

 

Total stockholders' equity

 

53,565

 

 

 

46,508

 

Total liabilities and stockholders' equity

$

233,664

 

 

$

235,776

 

BRC Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 
 

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

Operating activities

 

 

 

Net loss

$

(916

)

 

$

(42,680

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization

 

7,458

 

 

 

5,354

 

Equity-based compensation

 

7,862

 

 

 

5,645

 

Amortization of debt issuance costs

 

908

 

 

 

260

 

Loss on disposal of assets

 

1,236

 

 

 

3,622

 

Paid-in-kind interest

 

2,014

 

 

 

 

Other

 

30

 

 

 

252

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

 

(3,960

)

 

 

(2,284

)

Inventories, net

 

(8,965

)

 

 

(14,190

)

Prepaid expenses and other assets

 

(2,289

)

 

 

(7,374

)

Accounts payable

 

(1,010

)

 

 

12,629

 

Accrued liabilities

 

1,081

 

 

 

(3,285

)

Deferred revenue and gift card liability

 

(6,161

)

 

 

655

 

Operating lease liability

 

462

 

 

 

915

 

Other liabilities

 

11,395

 

 

 

122

 

Net cash provided by (used in) operating activities

 

9,145

 

 

 

(40,359

)

Investing activities

 

 

 

Purchases of property, plant and equipment

 

(7,007

)

 

 

(18,872

)

Proceeds from sale of property and equipment

 

911

 

 

 

5,576

 

Net cash used in investing activities

 

(6,096

)

 

 

(13,296

)

Financing activities

 

 

 

Proceeds from issuance of long-term debt, net of discount

 

206,182

 

 

 

294,501

 

Debt issuance costs paid

 

(164

)

 

 

(3,876

)

Repayment of long-term debt

 

(214,751

)

 

 

(267,381

)

Financing lease obligations

 

(62

)

 

 

(73

)

Repayment of promissory note

 

(1,047

)

 

 

(1,047

)

Issuance of stock from the Employee Stock Purchase Plan

 

518

 

 

 

673

 

Proceeds from exercise of stock options

 

13

 

 

 

 

Net cash (used in) provided by financing activities

 

(9,311

)

 

 

22,797

 

Net decrease in cash, cash equivalents and restricted cash

 

(6,262

)

 

 

(30,858

)

Cash and cash equivalents, beginning of period

 

12,448

 

 

 

38,990

 

Restricted cash, beginning of period

 

1,465

 

 

 

 

Cash and cash equivalents, end of period

$

7,336

 

 

$

6,667

 

Restricted cash, end of period

$

315

 

 

$

1,465

 

 

 

 

 

BRC Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(in thousands)

 
 

 

Nine Months Ended September 30,

 

 

2024

 

 

2023

Non-cash operating activities

 

 

 

(Derecognition) Recognition of right-of-use operating lease assets

$

(5,363

)

 

$

15,913

Recognition of revenue for inventory exchanged for prepaid advertising

$

15,220

 

 

$

7,480

 

 

 

 

Non-cash investing and financing activities

 

 

 

Property and equipment purchased but not yet paid

$

530

 

 

$

3,349

 

 

 

 

Supplemental cash flow information

 

 

 

Cash paid for income taxes

$

385

 

 

$

665

Cash paid for interest

$

5,372

 

 

$

2,591

 

KEY OPERATING AND FINANCIAL METRICS

Revenue by Sales Channel

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

Wholesale

$

63,655

 

$

61,527

 

$

177,844

 

$

151,534

Direct to Consumer

 

29,044

 

 

32,794

 

 

91,628

 

 

104,160

Outpost

 

5,505

 

 

6,215

 

 

16,141

 

 

20,280

Total net sales

$

98,204

 

$

100,536

 

$

285,613

 

$

275,974

 

Key Operational Metrics

 

 

 

 

September 30,

 

2024

 

2023

FDM ACV %

47.2

%

 

34.1

%

RTD ACV %

47.3

%

 

42.0

%

DTC Subscribers

194,000

 

 

230,300

 

Outposts

 

 

 

Company-owned stores

18

 

 

17

 

Franchise stores

19

 

 

17

 

Total Outposts

37

 

 

34

 

 

Non-GAAP Financial Measures

To evaluate the performance of our business, we rely on both our results of operations recorded in accordance with generally accepted accounting principles in the United States ("GAAP") and certain non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Free Cash Flow Conversion, and Free Cash Flow. These measures, as defined below, are not defined or calculated under principles, standards or rules that comprise GAAP. Accordingly, the non-GAAP financial measures we use and refer to should not be viewed as a substitute for performance measures derived in accordance with GAAP or as a substitute for a measure of liquidity. Our definitions of EBITDA, Adjusted EBITDA, Free Cash Flow Conversion, and Free Cash Flow described below are specific to our business and you should not assume that they are comparable to similarly titled financial measures of other companies. We define EBITDA as net income (loss) before interest, tax expense, depreciation and amortization expense. We define Adjusted EBITDA, as adjusted for equity-based compensation, system implementation costs, executive, recruiting, relocation and sign-on bonus, write-off of site development costs, strategic initiative related costs, non-routine legal expenses, RTD start-up production issues, contract termination costs, restructuring fees and related costs, RTD transformation costs, and impairment for assets held for sale.

When used in conjunction with GAAP financial measures, we believe that EBITDA and Adjusted EBITDA are useful supplemental measures of operating performance and liquidity because these measures facilitate comparisons of historical performance by excluding non-cash items such as equity-based payments and other amounts not directly attributable to our primary operations, such as the impact of system implementation, acquisitions, disposals, litigation and settlements. Adjusted EBITDA is also a key metric used internally by our management to evaluate performance and develop internal budgets and forecasts. EBITDA and Adjusted EBITDA have limitations as an analytical tool and should not be considered in isolation or as a substitute for analyzing our results as reported under GAAP and may not provide a complete understanding of our operating results as a whole. Some of these limitations are (i) they do not reflect changes in, or cash requirements for, our working capital needs, (ii) they do not reflect our interest expense or the cash requirements necessary to service interest or principal payments on our debt, (iii) they do not reflect our tax expense or the cash requirements to pay our taxes, (iv) they do not reflect historical capital expenditures or future requirements for capital expenditures or contractual commitments, (v) although equity-based compensation expenses are non-cash charges, we rely on equity compensation to compensate and incentivize employees, directors and certain consultants, and we may continue to do so in the future and (vi) although depreciation, amortization and impairments are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these non-GAAP measures do not reflect any cash requirements for such replacements.

Free Cash Flow is a non-GAAP liquidity measure used by investors, financial analysts and management to help evaluate the Company's ability to generate cash to pursue opportunities that enhance shareholder value. We define Free Cash Flow as net cash provided by (used in) operating activities less cash outflows for purchases of property, plant and equipment. We revised our definition of Free Cash Flow from the definition used in the second quarter of 2024, which was net cash provided by (used in) operating activities less cash outflows for purchases of property, plant and equipment plus proceeds from sale of property and equipment. We believe our updated definition ensures a more accurate reflection of ongoing operational performance by excluding asset sales which are non-recurring and could distort the sustainability of cash flow generation. The impact of the change in our definition of Free Cash Flow reduces Free Cash Flow by the amount of cash inflows due to the sale of assets.

We believe the presentation of Free Cash Flow is relevant and useful for investors because it measures cash generated internally that is available to service debt and fund inorganic growth or acquisitions. Free Cash Flow is the cash flow from operations after payment of capital expenditures that we can use to invest in our business and meet our current and future financing needs.

We define Free Cash Flow Conversion as Free Cash Flow divided by Adjusted EBITDA. We believe that Free Cash Flow Conversion is useful to the users of our financial statements as it is a measure of the Company's long-term cash flow generating capacity.

Free Cash Flow and Free Cash Flow Conversion are limited due to the fact that these are not measures of residual cash flow available for discretionary expenditures due to the payments required for debt service and other financing activities.

A reconciliation of net income (loss), the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA is set forth below:

Reconciliation of Net Income (Loss) to Adjusted EBITDA

 

 

 

 

(amounts in thousands)

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net loss

$

(1,397

)

 

$

(10,694

)

 

$

(916

)

 

$

(42,680

)

Interest expense

 

2,453

 

 

 

3,544

 

 

 

6,805

 

 

 

4,658

 

Tax expense

 

50

 

 

 

56

 

 

 

151

 

 

 

169

 

Depreciation and amortization

 

2,661

 

 

 

2,002

 

 

 

7,458

 

 

 

5,354

 

EBITDA

$

3,767

 

 

$

(5,092

)

 

$

13,498

 

 

$

(32,499

)

Equity-based compensation(1)

 

2,605

 

 

 

596

 

 

 

7,862

 

 

 

5,645

 

System implementation costs(2)

 

 

 

 

1,195

 

 

 

520

 

 

 

3,057

 

Executive recruiting, relocation and sign-on bonus(3)

 

 

 

 

477

 

 

 

279

 

 

 

1,544

 

Write-off of site development costs(4)

 

441

 

 

 

1,430

 

 

 

2,663

 

 

 

2,492

 

Strategic initiative related costs(5)

 

 

 

 

 

 

 

 

 

 

1,505

 

Non-routine legal expense(6)

 

291

 

 

 

3,134

 

 

 

2,335

 

 

 

7,381

 

RTD start-up and production issues(7)

 

 

 

 

 

 

 

 

 

 

2,394

 

Contract termination costs(8)

 

 

 

 

 

 

 

 

 

 

730

 

Restructuring fees and related costs(9)

 

 

 

 

1,911

 

 

 

266

 

 

 

5,120

 

RTD transformation costs(10)

 

 

 

 

3,649

 

 

 

2,260

 

 

 

3,649

 

(Gain) Loss on assets held for sale(11)

 

 

 

 

(1,097

)

 

 

 

 

 

105

 

Adjusted EBITDA

$

7,104

 

 

$

6,203

 

 

$

29,683

 

 

$

1,123

 

(1)

Represents the non-cash expense related to our equity-based compensation arrangements for employees, directors, consultants and a Wholesale channel partner.

(2)

Represents non-capitalizable costs associated with the implementation of our enterprise-wide systems.

(3)

Represents payments made for executive recruitment, relocation, and sign-on bonuses connected with RTD transformation.

(4)

Represents the write-off of development costs for abandoned retail locations.

(5)

Represents nonrecurring third-party consulting costs related to the planning and execution of our growth and productivity strategic initiatives.

(6)

Represents legal costs and fees incurred in connection with certain non-routine legal disputes consisting of certain claims relating to deSPAC warrants and a commercial dispute with a former consultant resulting from the Company in-housing certain activities.

(7)

Represents nonrecurring, non-cash costs and expense incurred as a result of our RTD start-up and production issue.

(8)

Represents nonrecurring costs incurred for early termination of software and service contracts.

(9)

Represents restructuring advisory fees, severance, and other related costs associated with RTD transformation.

(10)

Represents non-recurring, non-cash or non-operational costs associated with the transformation of our RTD business (excluding those reported separately in (3) and (9) including loss on write-off of RTD inventory, discounts recognized on non-cash transactions, and other non-cash costs to transform our RTD business.

(11)

Represents the adjustment recorded to recognize assets held for sale at their estimate net realizable value less estimated cost to sell.

 

A reconciliation of net cash provided by (used in) operating activities, a GAAP measure, to free cash flow, a non-GAAP measure is set forth below:

Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow

(amounts in thousands)

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net cash provided by (used in) operating activities

$

1,933

 

 

$

98

 

 

$

9,145

 

 

$

(40,359

)

Capital expenditures

 

(2,138

)

 

 

(8,863

)

 

 

(7,007

)

 

 

(18,872

)

Free Cash Flow

$

(205

)

 

$

(8,765

)

 

$

2,138

 

 

$

(59,231

)

 

Investor Contacts:

Matt McGinley: IR@BlackRifleCoffee.com

ICR for BRCC: BlackrifleIR@icrinc.com

Source: BRC Inc.

FAQ

What was BRC's (BRCC) revenue performance in Q3 2024?

BRC's consolidated net revenue decreased 2.3% to $98.2 million in Q3 2024, with Wholesale revenue growing 3.5% to $63.7 million while Direct-to-Consumer revenue declined 11.4% to $29.0 million.

How did BRCC's gross margin perform in Q3 2024?

BRCC's gross margin increased significantly by 820 basis points to 42.1% from 33.9% in Q3 2023, driven by product mix shift, productivity improvements in RTD products, lower warehousing costs, and favorable inventory reserves.

What is BRCC's partnership with Keurig Dr Pepper about?

BRCC announced a strategic partnership with Keurig Dr Pepper (KDP) for the manufacture and distribution of Black Rifle Energy™ RTD, positioning the company for national rollout in 2025.

What is BRCC's updated financial guidance for FY2024?

BRCC updated its FY2024 guidance with net revenue between $390-395 million, gross margin between 40-42%, and adjusted EBITDA between $35-40 million.

BRC Inc.

NYSE:BRCC

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