BRC Inc. Q2 FY2025 earnings call

• Business Resilience: Took steps to build a disciplined and resilient organization, navigating macro challenges and outperforming the coffee category.
• Distribution Momentum: Significant gains in grocery, mass merch, club, and rural lifestyle retail; ACV increased in various channels.
• DTC Channel: Stabilized and returned to growth, with updates to website and app improving usability.
• RTD Coffee: Outperformed the category with 7% sales growth, 9% unit volume increase, and expanded ACV.
• Energy Drink: Launched with over 15,000 retail locations, 23% ACV, and positive early traction.
• Purpose-Driven Work: Engaged with communities, supporting military families, first responders, and disaster relief.

Wholesale Segment: Grew 14% year-over-year, adjusted for nonrecurring items, driven by strong performance from Black Rifle Energy and distribution gains in grocery and mass merchandise retailers. Direct-to-Consumer (DTC) Segment: Revenue was 8% lower year-over-year, but excluding a prior year loyalty rewards impact, it increased modestly. Outposts Segment: Grew revenue by 11.3% due to higher franchise fees and increased average order value.

• Revenue: Maintained full-year guidance of $395M to $425M, expecting sequential revenue growth driven by distribution gains and marketing investments.
• Gross Margin: Full-year margin guidance 35% to 37%, expecting improvement in the second half.
• Adjusted EBITDA: Maintained guidance of $20M to $30M, focused on operating leverage and cost savings.
• Equity Offering: Raised $40.25M to retire revolver debt, strengthening balance sheet.

• Macro Costs: Green coffee inflation, trade, pricing, and import duties pose margin pressures.
• Tariffs: Import duties impact gross margins, with full effect expected in the second half.
• Market Competition: Fierce competition in coffee and energy drink categories.

Q: About 3-year outlook and drivers A: Growth from all business segments, ACV expansion, and DTC stabilization Q: Walmart sales and competition A: Timing of shipments and scanner takeaway growth; competition not affecting success due to brand positioning Q: RTD ACV and share growth A: ACV growth as leading indicator, share to increase with distribution and innovation Q: Pricing and club channel A: Pricing action in May; club channel as significant but tested approach Q: Energy rollout and sell-through A: Positive performance in limited geographies, sell-through increasing, CMA to aid next year's rollout