Highlights
- Announces Q4 launch of Black Rifle Energy™ RTD, offering a
clean energy alternative for national distribution in FY25
featuring BRCC's one-of-a-kind designs
- Wholesale revenue grew 8% compared to Q2 2023 while net
revenue decreased 3% in Q2 2024 to $89.0 million
- Adjusted EBITDA of $8.5 million and Net Loss of $1.4
million, an increase of $8.4 million and $13.3 million, compared to
Adjusted EBITDA of $0.1 million and a Net Loss of $14.7 million in
Q2 2023
- Reiterates full year adjusted EBITDA guidance of $32 million
to $42 million
BRC Inc. (NYSE: BRCC, the "Company"), the
rapidly-growing, mission-driven premium coffee company creating
long-term shareholder value through innovative brand strategy that
elevates the service community, today announced financial results
for the second quarter of fiscal year 2024.
“I am pleased with BRCC's continued delivery of healthy
profitability and above average market growth. Our disciplined
execution and increased margin have enabled investment in new
initiatives and product innovation, and, in that spirit, I am
incredibly excited about today's earlier announcement regarding the
launch of Black Rifle Energy™. At Black Rifle we build our brand
first … we are extremely proud of the share growth in our premium
coffee business, and we’re equally proud to expand our product
offerings to serve more customers during more drinking occasions.
Our incredible associates have built an offering in the energy
category that stays true to Black Rifle values and is complementary
to our coffee offerings," said BRCC Chief Executive Officer Chris
Mondzelewski. “At Black Rifle, our mission to support the Veteran
and first responder community remains front and center as we drive
the strong financial performance of our business.”
“The second quarter results exemplify our continued focus on
operational excellence. We have driven a dramatic improvement in
profitability across a host of metrics including gross margin,
adjusted EBITDA, Net Income and Free Cash Flow.” said BRCC Chief
Financial Officer Steve Kadenacy. “While our headline growth in the
quarter did not meet our expectations, business development efforts
in our wholesale business continue to gain steam and will drive
material growth over the next 12-18 months. We continue to expect
our coffee products to be in almost every significant grocery chain
by the end of 2025 despite delayed refreshes at a few of these
chains muting near-term revenue growth in the quarter."
Second Quarter 2024 Financial
Highlights (in millions, except % data)
Quarter To Date
Comparisons
2024
2023
$ Change
% Change
Net Revenue
$
89.0
$
91.9
$
(2.9
)
(3
)%
Gross Profit
$
37.2
$
32.2
$
5.0
16
%
Gross Margin
41.9
%
35.0
%
Net Income (Loss)
$
(1.4
)
$
(14.7
)
$
13.3
Adjusted EBITDA
$
8.5
$
0.1
$
8.4
Second Quarter 2024
Results
Second quarter 2024 revenue decreased 3.2% to $89.0 million from
$91.9 million in the second quarter of 2023. Wholesale revenue
increased 7.6% to $53.8 million in the second quarter of 2024 from
$50.0 million in the second quarter of 2023. Direct-to-Consumer
("DTC") revenue decreased 13.3% to $30.0 million in the second
quarter of 2024 from $34.6 million during the second quarter of
2023. Revenue from Black Rifle Coffee shops ("Outposts") decreased
28.4% to $5.3 million in the second quarter of 2024 from $7.4
million in the second 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. In addition, RTD product sales increased through
national distributors and retail accounts as our All Commodity
Volume ("ACV") percentage increased 530 basis points to 46.8%. 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. In addition, we have
paused Outpost expansion and have shifted our efforts to work on
store fundamentals in preparation for the implementation of our
longer-term strategic growth plan.
Gross profit increased to $37.2 million in the second quarter of
2024 from $32.2 million in the second quarter of 2023, an increase
of 15.5% year over year, with gross margin increasing 680 basis
points to 41.9% from 35.0% for the second quarter of 2023, driven
by product mix shift, productivity improvements in our RTD
products, decreasing warehousing costs, and lower green coffee
costs.
Marketing expenses increased 5.7% to $7.4 million in the second
quarter of 2024 from $7.0 million in the second quarter of 2023. As
a percentage of revenue, marketing expenses increased 70 basis
points to 8.3% in the second quarter of 2024 as compared to 7.6% in
the second quarter of 2023 as marketing and advertising spend has
been favorably impacted by channel mix with revenue more heavily
weighted to the Wholesale channel, partly offset by our expansion
of partnerships, including our engagement with UFC.
Salaries, wages and benefits expenses decreased 4.3% to $17.6
million in the second quarter of 2024 from $18.4 million in the
second quarter of 2023. As a percentage of revenue, salaries, wages
and benefits expenses decreased 20 basis points to 19.8% in the
second quarter of 2024 as compared to 20.0% for the second quarter
of 2023. The decrease in salaries, wages and benefits expense was
primarily due to lower compensation costs driven by reductions in
headcount during 2023 for which we realized the full benefit in the
first quarter of 2024.
General and administrative ("G&A") expenses decreased 43.5%
to $10.9 million in the second quarter of 2024 from $19.3 million
in the second quarter of 2023. As a percentage of revenue, G&A
decreased 880 basis points to 12.2% in the second quarter of 2024
as compared to 21.0% in the second quarter of 2023, was 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 second quarter of 2024 was $1.4 million and
Adjusted EBITDA was $8.5 million. This compares to net loss of
$14.7 million and Adjusted EBITDA of $0.1 million in the second
quarter of 2023.
Financial Outlook
BRC Inc. provides guidance based on current market conditions
and expectations for revenue, gross margin and adjusted EBITDA,
which is a non-GAAP financial measure.
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
$
430.0
$
460.0
$
385.0
$
415.0
Growth
31
%
9
%
16
%
(3
)%
5
%
Gross Margin
31.7
%
37
%
40
%
39
%
42
%
Adj. EBITDA
$
13.3
$
32.0
$
42.0
$
32.0
$
42.0
Free Cash Flow Conversion
80%
80%
(1) A barter transaction favorably impacted Net Revenue in 2023
by $28.9 million and projected Net Revenue in 2024 by $11.9
million. Excluding the impact of the barter transaction reduces
revenue growth from 2022 to 2023 by 10% and increases projected Net
Revenue growth in 2024 by 5%.
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 second quarter
results is scheduled for August 8, 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 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 August 15, 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
13747286.
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 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 June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Revenue, net
$
89,017
$
91,947
$
187,409
$
175,437
Cost of goods sold
51,758
59,741
107,966
115,720
Gross profit
37,259
32,206
79,443
59,717
Operating expenses
Marketing and advertising
7,411
7,013
15,020
14,157
Salaries, wages and benefits
17,610
18,356
32,871
38,180
General and administrative
10,949
19,296
26,294
37,054
Other operating expense, net
311
1,202
324
1,202
Total operating expenses
36,281
45,867
74,509
90,593
Operating income (loss)
978
(13,661
)
4,934
(30,876
)
Non-operating income (expenses)
Interest expense, net
(2,301
)
(791
)
(4,352
)
(1,114
)
Other income (expense), net
—
(156
)
—
117
Total non-operating expenses
(2,301
)
(947
)
(4,352
)
(997
)
Income (loss) before income
taxes
(1,323
)
(14,608
)
582
(31,873
)
Income tax expense
51
57
100
113
Net income (loss)
$
(1,374
)
$
(14,665
)
$
482
$
(31,986
)
Less: Net income (loss) attributable to
non-controlling interest
(892
)
(10,437
)
415
(22,958
)
Net income (loss) attributable to BRC
Inc.
$
(482
)
$
(4,228
)
$
67
$
(9,028
)
Net income (loss) per share
attributable to Class A Common Stock
Basic and diluted
$
(0.01
)
$
(0.07
)
$
—
$
(0.15
)
Weighted-average shares of Class A
Common Stock outstanding
Basic
68,209,081
58,741,717
67,260,724
58,607,290
Diluted
68,209,081
58,741,717
68,333,260
58,607,290
BRC Inc. CONSOLIDATED
BALANCE SHEETS (in thousands, except share and par value
amounts)
June 30,
December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
9,642
$
12,448
Restricted cash
315
1,465
Accounts receivable, net
25,923
25,207
Inventories, net
44,793
56,465
Prepaid expenses and other current
assets
18,696
12,153
Total current assets
99,369
107,738
Property, plant and equipment, net
65,384
68,326
Operating lease, right-of-use asset
31,680
36,214
Identifiable intangibles, net
388
418
Other
33,061
23,080
Total assets
$
229,882
$
235,776
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
34,162
$
33,564
Accrued liabilities
37,072
34,911
Deferred revenue and gift card
liability
5,592
11,030
Current maturities of long-term debt,
net
14,037
2,297
Current operating lease liability
2,198
2,249
Current maturities of finance lease
obligations
29
58
Total current liabilities
93,090
84,109
Non-current liabilities:
Long-term debt, net
52,450
68,683
Finance lease obligations, net of current
maturities
25
23
Operating lease liability
31,743
35,929
Other non-current liabilities
420
524
Total non-current liabilities
84,638
105,159
Total liabilities
177,728
189,268
Stockholders’ equity:
Preferred Stock, $0.0001 par value,
1,000,000 shares authorized; no shares issued and outstanding as of
June 30, 2024 and December 31, 2023, respectively
—
—
Class A Common Stock, $0.0001 par value,
2,500,000,000 shares authorized; 69,955,628 and 65,637,806 shares
issued and outstanding as of June 30, 2024 and December 31, 2023,
respectively
7
6
Class B Common Stock, $0.0001 par value,
300,000,000 shares authorized; 142,568,263 and 146,484,989 shares
issued and outstanding as of June 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
June 30, 2024 and December 31, 2023, respectively
—
—
Additional paid in capital
135,288
133,728
Accumulated deficit
(120,412
)
(120,478
)
Total BRC Inc.'s stockholders' equity
14,897
13,271
Non-controlling interests
37,257
33,237
Total stockholders' equity
52,154
46,508
Total liabilities and stockholders'
equity
$
229,882
$
235,776
BRC Inc. CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands)
Six Months Ended June
30,
2024
2023
Operating activities
Net income (loss)
$
482
$
(31,986
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
4,797
3,352
Equity-based compensation
5,257
5,049
Amortization of debt issuance costs
605
52
Loss on disposal of assets
881
128
Paid-in-kind interest
1,559
—
Other
151
1,202
Changes in operating assets and
liabilities:
Accounts receivable, net
2,036
(2,058
)
Inventories, net
(232
)
(32,537
)
Prepaid expenses and other assets
(4,778
)
(2,248
)
Accounts payable
2,010
22,112
Accrued liabilities
(1,203
)
(5,043
)
Deferred revenue and gift card
liability
(5,438
)
570
Operating lease liability
411
850
Other liabilities
674
100
Net cash provided by (used in) operating
activities
7,212
(40,457
)
Investing activities
Purchases of property, plant and
equipment
(4,869
)
(10,009
)
Proceeds from sale of property and
equipment
892
186
Net cash used in investing activities
(3,977
)
(9,823
)
Financing activities
Proceeds from issuance of long-term debt,
net of discount
111,601
199,034
Debt issuance costs paid
(164
)
(34
)
Repayment of long-term debt
(118,472
)
(167,783
)
Financing lease obligations
(27
)
(50
)
Repayment of promissory note
(400
)
(400
)
Issuance of stock from the Employee Stock
Purchase Plan
258
305
Proceeds from exercise of stock
options
13
—
Net cash (used in) provided by financing
activities
(7,191
)
31,072
Net increase (decrease) in cash, cash
equivalents and restricted cash
(3,956
)
(19,208
)
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
$
9,642
$
19,782
Restricted cash, end of period
$
315
$
—
BRC Inc. CONSOLIDATED
STATEMENTS OF CASH FLOWS (CONTINUED) (in thousands)
Six Months Ended June
30,
2024
2023
Non-cash operating activities
(Derecognition) Recognition of
right-of-use operating lease assets
$
(3,448
)
$
13,919
Recognition of revenue for inventory
exchanged for prepaid advertising
$
11,904
$
—
Recognition of receivable from inventory
purchase commitment
$
3,000
$
—
Non-cash investing and financing
activities
Property and equipment purchased but not
yet paid
$
445
$
2,956
Supplemental cash flow
information
Cash paid for income taxes
$
345
$
422
Cash paid for interest
$
3,567
$
1,324
KEY OPERATING AND FINANCIAL METRICS
Revenue by Sales Channel
(in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Wholesale
$
53,761
$
50,010
$
114,189
$
90,007
Direct to Consumer
29,970
34,586
62,584
71,366
Outpost
5,286
7,351
10,636
14,064
Total net sales
$
89,017
$
91,947
$
187,409
$
175,437
Key Operational Metrics
June 30,
2024
2023
FDM ACV %
40.0
%
30.1
%
RTD ACV %
46.8
%
41.5
%
DTC Subscribers
201,200
239,500
Outposts
Company-owned stores
18
17
Franchise stores
18
14
Total Outposts
36
31
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,
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 quarter
and year ended June 30, 2024 and the quarter and year ended June
30, 2023.
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 plus proceeds from sale
of property and equipment. 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 June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net income (loss)
$
(1,374
)
$
(14,665
)
$
482
$
(31,986
)
Interest expense
2,301
791
4,352
1,114
Tax expense
51
57
100
113
Depreciation and amortization
2,384
1,633
4,797
3,352
EBITDA
$
3,362
$
(12,184
)
$
9,731
$
(27,407
)
Equity-based compensation(1)
3,305
2,543
5,257
5,049
System implementation costs(2)
140
1,171
520
1,862
Executive recruiting, relocation and
sign-on bonus(3)
278
758
279
1,067
Write-off of site development costs(4)
1,041
277
2,222
1,062
Strategic initiative related costs(5)
—
282
—
1,505
Non-routine legal expense(6)
(327
)
3,240
2,044
4,246
RTD start-up and production issues(7)
—
595
—
2,394
Contract termination costs(8)
—
188
—
730
Restructuring fees and related
costs(9)
—
2,075
266
3,209
RTD transformation costs(10)
651
—
2,260
—
Impairment for assets held for
sale(11)
—
1,202
—
1,202
Adjusted EBITDA
$
8,450
$
147
$
22,579
$
(5,081
)
(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 nonrecurring payments made for
executive recruitment, relocation, and sign-on bonuses.
(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 (previously included in footnote
(3) and footnote (5)).
(10)
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.
(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 June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net cash provided by (used in) operating
activities
$
2,298
$
(25,063
)
$
7,212
$
(40,457
)
Capital expenditures
(2,151
)
(5,107
)
(4,869
)
(10,009
)
Proceeds from sale of property and
equipment
851
186
892
186
Free Cash Flow
$
998
$
(29,984
)
$
3,235
$
(50,280
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807030143/en/
Investor Contacts: Jason Martini: IR@BlackRifleCoffee.com
ICR for BRCC: BlackrifleIR@icrinc.com
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