BRC Inc. Reports Third Quarter 2024 Financial Results
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 $10.7 million in Q3
2023.
-- Increased midpoint guidance for Gross Margin and adjusted EBITDA, while
narrowing the full-year revenue range.
-- Black Rifle Energy$(TM)$ 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)--November 04, 2024--
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(TM) - 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(TM), 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
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2024 2023 $ Change % Change
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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:
FY2024 Guidance (prev. FY2024 Guidance
FY2023 reported) (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 80% FCF positive for year
Flow
Conversion
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(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.
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