Financial Highlights
- Increased Operational Execution Accelerating Path to
Profitability
- Net Revenue Increased 33% in Q3 2023 to $100.5
million
- Gross Profit Increased 42%
- Wholesale Growth of 91% Year over Year
- Operating Expenses Drop to 41% of Revenue, compared to 52%
in 2022
- Net loss of $10.7 million and Adjusted EBITDA of $6.2
million compared to net loss of $16.1 million and Adjusted EBITDA
loss of $5.8 million a year ago
- Profitability Expected to Continue Accelerating in Fourth
Quarter
BRC Inc. (NYSE: BRCC), a rapidly growing and
mission-driven premium coffee company founded to support veterans,
active-duty military, first responders and serve a broad customer
base by connecting consumers with great coffee and a unique brand
experience, today announced financial results for the third quarter
of fiscal year 2023.
"The Black Rifle Coffee Company brand has never been stronger,”
said BRCC Founder and Chief Executive Officer Evan Hafer. “I am
delighted by the dramatic swing towards profitability of the
company because it signals a new era for BRCC where we have a
self-sustaining business model that drives revenue, profit and
shareholder returns. We are very focused on building a company that
drives both top and bottom line because that enables us to invest
in new opportunities and most importantly, provides us the means to
fulfill our mission of serving the veteran and first responder
communities."
"We are excited about the relationship we are building with
greater numbers of Black Rifle customers and end consumers of our
products", said BRCC President Chris Mondzelewski. "The expansion
to Food, Drug and Mass market has been remarkable with 91%
wholesale growth over the last year. We have done this with a high
level of service and quality - paramount to a super premium brand.
Brand awareness has increased significantly over the past two
quarters and our research shows material opportunity to further
accelerate over the next few years."
"The rigorous focus on operational excellence is also taking
hold at the company", said Steve Kadenacy, BRCC's Chief Financial
Officer, "We are leaving no stone unturned to support the business
by driving a renewed focus on profitability. The results speak for
themselves and we expect our bottom line margin to continue
improving in 2023 and throughout all of 2024. This inflection
enables us to drive more investment into our market opportunities
and enhance our ability to execute on our core mission."
Third
Quarter 2023 Financial Highlights (in millions, except %
data)
Quarter To Date
Comparisons
Year To Date
Comparisons
2023
2022
$ Change
%
Change
2023
2022
$ Change
%
Change
Net Revenue
$
100.5
$
75.5
$
25.0
33 %
$
276.0
$
207.7
$
68.3
33 %
Gross Profit
$
34.1
$
23.9
$
10.2
42 %
$
93.8
$
69.7
$
24.1
35 %
Gross Margin
33.9 %
31.7 %
34.0 %
33.6 %
Net Loss
$
(10.7)
$
(16.1)
$
5.4
$
(42.7)
$
(318.0)
$
275.3
Adjusted EBITDA
$
6.2
$
(5.8)
$
12.0
$
1.1
$
(22.6)
$
23.7
Third Quarter 2023
Results
Third quarter 2023 revenue increased 33.2% to $100.5 million
from $75.5 million in the third quarter of 2022. Wholesale revenue
increased 90.8% to $61.5 million in the third quarter of 2023 from
$32.2 million in the third quarter of 2022. Direct-to-Consumer
("DTC") revenue decreased 13.9% to $32.8 million in the third
quarter of 2023 from $38.1 million during the third quarter of
2022. Outpost revenue increased 20.3% to $6.2 million in the third
quarter of 2023 from $5.2 million in the third quarter of 2022. The
Wholesale channel performance was primarily driven by entry into
FDM and growth in our RTD product. In addition, RTD product sales
increased through national distributors and retail accounts as our
All Commodity Volume percentage increased 465 basis points to 41.9%
and our total doors increased 21.4% versus the third quarter of
2022. The DTC performance was primarily due to decreased marketing
spend and the decision to redirect investments to other faster
growing areas of the business as we continue to experience elevated
DTC customer acquisition costs. The Outpost channel performance was
driven by an increase in our company-owned store count, which
increased to seventeen in the third quarter of 2023 from eleven
company-owned outposts in the third quarter of 2022.
Gross profit increased to $34.1 million in the third quarter of
2023 from $23.9 million in the third quarter of 2022, an increase
of 42.2% year to year, with gross margin increasing 220 basis
points to 33.9% from 31.7% for the third quarter of 2022, driven by
higher sales volume and favorable product mix shift, as coffee and
rounds sold to FDM customers has higher gross margin as compared to
other channels.
Marketing expenses increased 11.4% to $8.3 million in the third
quarter of 2023 from $7.4 million in the third quarter of 2022. As
a percentage of revenue, marketing expenses decreased 160 basis
points to 8.2% in the third quarter of 2023 as compared to 9.8% in
the third quarter of 2022 as marketing and advertising spend has
been favorably impacted by channel mix with revenue growth
primarily coming from the Wholesale channel, which requires lower
marketing spend than DTC, partly offset by an increase in marketing
fees related to a strategic partnership.
Salaries, wages and benefits expenses decreased 12.2% to $13.9
million in the third quarter of 2023 from $15.8 million in the
third quarter of 2022, as part of an ongoing effort to increase our
operating efficiency. As a percentage of revenue, salaries, wages
and benefits expenses decreased 720 basis points to 13.8% in the
third quarter of 2023 as compared to 21.0% for the third quarter of
2022. The decrease in salaries, wages and benefits expenses was
driven by a reduction in headcount as well as a result of a change
in estimate for a discretionary payroll accrual and a decrease in
stock compensation expense, partially offset by severance expense
incurred during the quarter.
General and administrative ("G&A") expenses increased 19.5%
to $19.5 million in the third quarter of 2023 from $16.3 million in
the third quarter of 2022. As a percentage of revenue, G&A
decreased 220 basis points to 19.4% in the third quarter of 2023 as
compared to 21.6% in the third quarter of 2022, benefiting from our
continued revenue growth and scale efficiencies. The increase in
G&A expenses included $3.1 million of legal fees related to
non-routine legal matters arising from the Business Combination in
2022, which continued from the previous quarter.
Net loss for the third quarter of 2023 was $10.7 million and
Adjusted EBITDA was $6.2 million. This compares to net loss of
$16.1 million and Adjusted EBITDA of $(5.8) million in the third
quarter of 2022.
Financial Outlook
BRC Inc. provides annual guidance based on current market
conditions and expectations for revenue, gross margin and Adjusted
EBITDA, which is a non-GAAP financial measure. We expect 2023
results to be within the previously issued guidance range for
revenue and adjusted EBITDA. However, while we expect to see
sequential improvements in Gross Margins and Adjusted EBITDA in Q4
we will not be within the previously issued guidance range for
Gross Margin as a result of nonrecurring non-cash losses incurred
in connection with our plan to right-size our RTD inventory. While
the impact of new FDM distribution will be minimal on 2023 results
due to timing and reset cadence, we expect these launches and
additional planned launches to continue to propel strong growth and
improving profitability throughout 2024.
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 Adjusted EBITDA to its
most directly comparable GAAP measure, net income (loss), because
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 loss. See “Non-GAAP Financial Measures” for
additional important information regarding Adjusted EBITDA.
Conference Call
A conference call to discuss the Company’s third quarter results
is scheduled for November 9, 2023, at 4:30 p.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 relations page of the Company’s
website at ir.blackriflecoffee.com. For those unable to participate
in the conference call, a replay will be available after the
conclusion of the call through November 16, 2023. 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 13740919.
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 BRC
Inc. and its industry that involve substantial risks and
uncertainties. All statements other than statements of historical
fact contained in this press release, including statement’s
regarding the Company’s intentions, beliefs or current expectations
concerning, among other things, 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, which may adversely affect our operating results;
failure to manager our debt obligations; 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 effectively manage or
distribute our products through our 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; loss of
confidential data from customers and employees, which may subject
us to litigation, liability or reputational damage; failure to
successfully compete with other producers and retailers of coffee;
failure to successfully open new Black Rifle Coffee 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 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; inability to maintain
the listing of our Class A Common Stock on the New York Stock
Exchange; and other risks and uncertainties indicated in our Annual
Report on Form 10-K for the year ended December 31, 2022 filed with
the Securities and Exchange Commission (the “SEC”) on March 15,
2023 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 predications 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)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue, net
$
100,536
$
75,494
$
275,974
$
207,695
Cost of goods sold
66,477
51,549
182,197
137,981
Gross profit
34,059
23,945
93,777
69,714
Operating expenses
Marketing and advertising
8,260
7,414
22,418
24,591
Salaries, wages and benefits
13,907
15,848
52,087
47,405
General and administrative
19,474
16,301
56,529
46,019
Other operating (income) expense, net
(596)
—
734
—
Total operating expenses
41,045
39,563
131,768
118,015
Operating loss
(6,986)
(15,618)
(37,991)
(48,301)
Non-operating income (expense)
Interest expense, net
(3,544)
(470)
(4,658)
(1,136)
Other income (expense), net
(108)
57
138
350
Change in fair value of earn-out
liability
—
—
—
(209,651)
Change in fair value of warrant
liability
—
—
—
(56,675)
Change in fair value of derivative
liability
—
—
—
(2,335)
Total non-operating expenses
(3,652)
(413)
(4,520)
(269,447)
Loss before income taxes
(10,638)
(16,031)
(42,511)
(317,748)
Income tax expense
56
71
169
266
Net loss
(10,694)
(16,102)
(42,680)
(318,014)
Less: Net loss attributable to
non-controlling interest
(7,462)
(12,059)
(30,420)
(240,295)
Net loss attributable to BRC
Inc.
$
(3,232)
$
(4,043)
$
(12,260)
$
(77,719)
Net loss per share attributable to
Class A Common Stock(1)
Basic and diluted
$
(0.05)
$
(0.08)
$
(0.21)
$
(1.54)
Weighted-average shares of Class A
Common Stock outstanding(1)
Basic and diluted
61,964,157
53,013,720
59,738,542
49,843,715
(1) For the nine months ended September 30, 2022, net loss per
share of Class A Common Stock and weighted-average shares of Class
A Common Stock outstanding is representative of the period from
February 9, 2022 through September 30, 2022, the period following
the Business Combination. Shares of Class B Common Stock do not
participate in the earnings or losses of the Company and are
therefore not participating securities. As such, separate
presentation of basic and diluted loss per share of Class B Common
Stock under the two-class method has not been presented.
BRC Inc.
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
and par value amounts)
September 30,
2023
December 31,
2022
(unaudited)
(audited)
Assets
Current assets:
Cash and cash equivalents
$
6,667
$
38,990
Restricted cash
1,465
—
Accounts receivable, net
24,621
22,337
Inventories, net
91,373
77,183
Prepaid expenses and other current
assets
13,959
6,783
Total current assets
138,085
145,293
Property, plant and equipment, net
64,883
59,451
Operating lease, right-of-use asset
35,963
20,050
Identifiable intangibles, net
382
225
Other
313
315
Total assets
239,626
225,334
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
26,128
12,429
Accrued liabilities
33,437
36,660
Deferred revenue and gift card
liability
10,160
9,505
Current maturities of long-term debt,
net
1,896
2,143
Current operating lease liability
2,402
1,360
Current maturities of finance lease
obligations
82
95
Total current liabilities
74,105
62,192
Non-current liabilities:
Long-term debt, net
70,094
47,017
Finance lease obligations, net of current
maturities
99
221
Operating lease liability
35,252
19,466
Other non-current liabilities
623
502
Total non-current liabilities
106,068
67,206
Total liabilities
180,173
129,398
Stockholders' equity:
Preferred stock, $0.0001 par value,
1,000,000 shares authorized; no shares issued and outstanding
—
—
Class A Common Stock, $0.0001 par value,
2,500,000,000 shares authorized; 63,641,996 shares issued and
outstanding as of September 30, 2023
5
5
Class B Common Stock, $0.0001 par value,
300,000,000 shares authorized; 148,395,692 shares issued and
outstanding as of September 30, 2023
16
16
Class C Common Stock, $0.0001 par value,
1,500,000 shares authorized; no shares issued or outstanding as of
September 30, 2023
—
—
Additional paid in capital
137,457
129,508
Accumulated deficit
(115,993)
(103,733)
Total BRC Inc.'s stockholders' equity
21,485
25,796
Non-controlling interests
37,968
70,140
Total stockholders' equity
59,453
95,936
Total liabilities and stockholders'
equity
$
239,626
$
225,334
BRC Inc.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands,
unaudited)
Nine Months Ended September
30,
2023
2022
Operating activities
Net loss
$
(42,680)
$
(318,014)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
5,354
3,055
Equity-based compensation
5,645
4,584
Non-employee equity-based compensation
—
849
Amortization of debt issuance costs
260
281
Other
(483)
—
Change in fair value of earn-out
liability
—
209,651
Change in fair value of warrant
liability
—
56,675
Change in fair value of derivative
liability
—
2,335
Changes in operating assets and
liabilities:
Accounts receivable, net
(2,284)
(15,306)
Inventories, net
(14,190)
(20,061)
Prepaid expenses and other assets
(7,374)
(3,110)
Accounts payable
10,350
(12,811)
Accrued liabilities
(3,285)
11,041
Deferred revenue and gift card
liability
655
1,286
Operating lease liability
915
425
Other liabilities
122
149
Net cash used in operating activities
(46,995)
(78,971)
Investing activities
Purchases of property, plant and
equipment
(12,236)
(19,950)
Proceeds from sale of property and
equipment
5,576
—
Net cash used in investing activities
(6,660)
(19,950)
Financing activities
Proceeds from issuance of long-term debt,
net of discount
294,501
21,593
Debt issuance costs paid
(3,876)
(53)
Repayment of long-term debt
(267,381)
(24,467)
Financing lease obligations
(73)
31
Repayment of promissory note
(1,047)
—
Issuance of stock from Employee Stock
Purchase Plan
673
—
Distribution and redemption of Series A
preferred equity
—
(127,853)
Proceeds from Business Combination,
including PIPE investment
—
337,957
Payment of Business Combination costs
—
(31,638)
Redemption of Class A and Class B
units
—
(20,145)
Redemption of incentive units
—
(3,627)
Net cash provided by financing
activities
22,797
151,798
Net increase (decrease) in cash, cash
equivalents, and restricted cash
(30,858)
52,877
Cash and cash equivalents, beginning of
period
38,990
18,334
Restricted cash, beginning of period
—
—
Cash and cash equivalents, end of
period
$
6,667
$
71,211
Restricted cash, end of period
$
1,465
$
—
BRC Inc.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (CONTINUED)
(in thousands,
unaudited)
Nine Months Ended September
30,
2023
2022
Non-cash operating activities
Recognition of right-of-use operating
lease assets
$
15,913
$
14,915
Recognition of revenue for inventory
exchanged for prepaid advertising
7,480
—
Non-cash investing and financing
activities
Property and equipment purchased but not
yet paid
3,349
135
Series A preferred exchange for PIPE
shares
—
26,203
Series A preferred equity amortization
—
5,390
Supplemental cash flow
information
Cash paid for income taxes
$
665
$
255
Cash paid for interest
$
2,591
$
903
KEY OPERATING AND FINANCIAL
METRICS
(unaudited)
Revenue by Sales Channel (in
thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Wholesale
$
61,527
$
32,247
$
151,534
$
78,173
Direct to Consumer
32,794
38,082
104,160
113,376
Outpost
6,215
5,165
20,280
16,146
Total net sales
$
100,536
$
75,494
$
275,974
$
207,695
Key Operational Metrics
September 30,
2023
2022
Wholesale Doors
8,790
8,930
RTD Doors
84,870
69,890
DTC Subscribers
230,300
278,000
Outposts
Company-owned stores
17
11
Franchise stores
17
10
Total Outposts
34
21
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 and Adjusted
EBITDA. 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 and Adjusted EBITDA 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,
state income taxes, depreciation and amortization expense. We also
present EBITDA excluding non-cash fair value adjustments relating
to the remeasurement of earn-out and derivative liabilities upon
vesting events and the remeasurement of a warrant liability upon
redemption of warrants. We define Adjusted EBITDA as EBITDA
excluding non-cash fair value adjustments, as adjusted for
equity-based compensation, system implementation costs, transaction
expenses, write-off of site development costs, strategic initiative
related costs, non-routine legal expenses, RTD start-up production
issue, (Gain) loss on assets held for sale, contract termination
costs, restructuring advisory fees and other costs, and RTD
transformation costs. Investors should note that, beginning with
results for the quarter ended December 31, 2022, we have modified
the presentation of Adjusted EBITDA to no longer exclude Outpost
pre-opening expenses, and beginning with the results for the
quarter ended June 30, 2023, we have modified the presentation of
Adjusted EBITDA to no longer exclude (i) expenses associated with
certain legal expenses we have determined are no longer non-routine
and (ii) cash expenses associated with RTD start-up and production
issues. To conform to the current period’s presentation, we have
excluded Outpost pre-opening expenses, the aforementioned legal
expenses, and cash expenses associated with RTD start-up and
production issues when presenting Adjusted EBITDA for the three and
nine months ended September 30, 2023 and the three and nine months
ended September 30, 2022. This change decreased Adjusted EBITDA for
the three and nine months ended September 30, 2022 by $0.5 million
and $0.7 million, respectively. When used in conjunction with GAAP
financial measures, we believe that EBITDA and Adjusted EBITDA are
useful supplemental measures of operating performance 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.
A reconciliation of net loss, the most directly comparable GAAP
measure, to EBITDA and Adjusted EBITDA is set forth below:
Reconciliation of Net Loss to Adjusted
EBITDA (amounts in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net loss
$
(10,694)
$
(16,102)
$
(42,680)
$
(318,014)
Interest expense
3,544
470
4,658
1,136
Tax expense
56
71
169
266
Depreciation and amortization
2,002
1,039
5,354
3,055
EBITDA
$
(5,092)
$
(14,522)
$
(32,499)
$
(313,557)
Non-cash fair value adjustments
Change in fair value of earn-out liability
expense(1)
—
—
—
209,651
Change in fair value of warrant liability
expense(2)
—
—
—
56,675
Change in fair value of derivative
liability(3)
—
—
—
2,335
EBITDA, excluding non-cash fair value
adjustments
$
(5,092)
$
(14,522)
$
(32,499)
$
(44,896)
Equity-based compensation(4)
596
1,456
5,645
5,433
System implementation costs(5)
1,195
—
3,057
528
Transaction expenses(6)
—
—
—
1,020
Executive recruiting, relocation and
sign-on bonus(7)
477
527
1,544
2,881
Write-off of site development costs(8)
1,430
325
2,492
325
Strategic initiative related costs(9)
—
1,872
1,505
7,131
Non-routine legal expense(10)
3,134
627
7,381
1,085
RTD start-up and production issues(11)
—
3,436
2,394
3,436
(Gain) Loss on assets held for
sale(12)
(1,097)
—
105
—
Contract termination costs(13)
—
435
730
435
Restructuring fees and related
costs(14)
1,911
—
5,120
—
RTD transformation costs(15)
3,649
—
3,649
—
Adjusted EBITDA
$
6,203
$
(5,844)
$
1,123
$
(22,622)
(1) Represents the non-cash expense recognized to remeasure the
earn-out liability to fair value upon vesting events. The change in
fair value was a result of the increase of the closing price of our
publicly traded common stock subsequent to the closing of our
business combination.
(2) Represents non-cash expense recognized to remeasure the
warrant liability to fair value upon redemption. The change in fair
value was a result of the increase of the closing price of our
publicly traded common stock subsequent to the closing of our
business combination.
(3) Represents non-cash expense recognized to remeasure the
derivative liability to fair value upon the vesting event. The
change in fair value was a result of the increase of the closing
price of our publicly traded common stock subsequent to the closing
of our business combination.
(4) Represents the non-cash expense related to our equity-based
compensation arrangements for employees, directors, consultants and
wholesale channel partner.
(5) Represents non-capitalizable costs associated with the
implementation of our enterprise-wide resource planning (ERP)
system.
(6) Represents expenses related to becoming a public company
such as public company readiness, consulting and other fees that
are not related to core operations.
(7) Represents nonrecurring payments made for executive
recruitment, relocation, and sign-on bonuses.
(8) Represents the write-off of development costs for abandoned
retail locations.
(9) Represents nonrecurring third-party consulting costs related
to the planning and execution of our growth and productivity
strategic initiatives.
(10) 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.
(11) Represents nonrecurring, non-cash costs and expense
incurred as a result of our RTD start-up and production issue.
(12) Represents the impairments on assets held for sale, net of
(gain) loss on sale of assets held for sale.
(13) Represents nonrecurring costs incurred for early
termination of software and service contracts.
(14) Represents restructuring advisory fees, severance, and
other related costs (previously included in footnote (7) and
footnote (9)).
(15) Represents non-recurring, non-cash or non-operational costs
associated with the transformation of our RTD business including
loss on write-off of RTD inventory, discounts recognized on
non-cash transactions, and other non-cash costs to transform our
RTD business.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109250547/en/
Investor: Tanner Doss: IR@BlackRifleCoffee.com ICR for
BRCC: BlackrifleIR@icrinc.com
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