BRCC - Earnings call transcript Q4 2023

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Operator

Greetings. Welcome to the Black Rifle Coffee Company Fourth Quarter 2023 Earnings Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Tanner Doss, Vice President of Investor Relations.

You may begin.

Tanner Doss

Good morning, everyone. on Black quarter Company's were XXXX and be joining discuss call released for ir.blackriflecoffee.com. can fourth at our financial found you Rifle conference Coffee to yesterday Thank website our results which

Before we remind the On you're Safe underlying company's including today's sure like call, language, I'm make familiar assumptions. you guidance forward-looking which statements of harbor all I start, would to with. management may and

actual results statements based cause uncertainties expectations that involve that and differ are risks to Forward-looking on materially. could

these included For related to see measures and investor referring further comparable call our our GAAP our financial the most EBITDA. in they're non-GAAP to previous contain in This EBITDA our adjusted measures comments, measures to EBITDA to also also of Reconciliations we're SEC. Wherever adjusted the are the discussion risks website. to business, we such as release unless earnings filings furnished please with will otherwise refer non-GAAP on SEC, available of noted. the

if in CEO provided Company. the to Relations over presentation Slide Black the now Mondzelewski, Coffee you of X to website. I'd call Rifle we our Investor Chris on turn Mondz? that could Now to like turn please

Chris Mondzelewski

Tanner, good everyone. morning, Thanks, and

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within Drink X, a Slide similar story To RTD. success showing to Turning Ready we're or

we been taking has stable significantly, XX% in slightly share market down year. category the to XXXX, of points basis on the XX While grew

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momentum to bagged similar advantage rounds, and our coffee RTD our will country in We expect of by be to most of this present we and take products the XXXX.

will in Steve heavily our strategic optimization. focus this his about business will talk cost we Additionally, more model RTD through on section.

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the and behavior business, down back reality Before trends the to broader discussing step in The our across market. useful post-COVID, is note is the is board. to the DTC it direct consumer DTC of that well. critical And change because It's to to are in consumers back making as stores. significant the shifted we buy. patterns locations consumer strides Post-COVID, time. absolutely be okay over Consumer where that's wants into those purchasing

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reiterate over to to want Before proud of by a Steve I team. brand how dives gelled into financial detail the I about our pursuit leadership be has the continue of really the common new I purpose attracts more and year. amazed in last our am results, our team talent

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Steve Kadenacy

we I fruit of bearing against Rifle to team Mondz. enhancing With this we investor another behind towards financials. In say finance are returns, made key all building the focus On progress significant XX. quarter told XX turn year, our took business can these our that on include you of on team. last objectives excellence Black days critical data-centered initiatives. execution operational that Thanks, call, I progress joining when plan, the and driving of the our world-class improving we a in decision-making, our And X goals. Please the our have us, last Slide

ago. we're key our XXX The rightsized than year to focused starting headcount market our with is result these on company that a First, activities. we fewer the the headcount year opportunities and

a the operating by those spend approach. reduced our professional more growth area reduced and analytical particularly also expenditures its effectiveness we marketing and fees, improving businesses significantly, to our Second, of deploying in outside by highest dollars allocating

was but first Third, focused rightsized action been future. us the resulted to writedowns the for significant This with, ensure the positioned oversupply had future. now dealt of inventory well during action we we and XXXX QX, that non-cash in in are created half took for it's

execution turn levels decrease optimal Our that of demand, been the improve in inventory inventory a us across initiatives our improvements XX. to of have several the expecting $XX.X efficiency bit we're in driven initiatives improving inventory which levels issues on the into all a supply Drilling as nearing margin we're took These I'll QX. Fourth, are now the reduced drill continued Slide hold. now established more. Please down initiatives, gross business, margin, gross million, to as cleanup from we healthy XX% strong by our behind We're we take care QX. and facets to chain.

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the to Turning quarter.

encouraging by in a and The million increased strong revenue of XX%. cost are XX% evident are savings the total Our to $XXX.X initiatives the results channel QX. wholesale with growing

revenue our expansive. our expect in $XX.X sequentially is and in and highest the of to XX. is strong This beyond. Please compared XX.X% EBITDA profitability we million I XX% have quarter achieved, of prior SG&A Our turn Slide adjusted year to continue adjusted EBITDA to annually and and the both represented XXXX

our million to XX%, points, basis XXX the adjusted from loss $XX million. year, margin $XX is and revenue up improved positive is adjusted a of For gross EBITDA up

the In long-term we million our terms ended in of debt. and balance in cash million sheet, with quarter $XX.X $XX

you to reached to point cash business in pertaining turn previously discussed, Slide have outlook. inflection throughout XXXX details forecasting are significant excited we continued improvements and We're an XXXX. Please and we As to now flow in give XX. more the

million adjusted million, comments $XX And gross XX%, free flow conversion $XXX XX% $XXX our and EBITDA million. $XX to between on guidance. between be be EBITDA. A and expect of margins to to between revenue expect be million We few adjusted and of cash XX% we

$XX.X $XXX growth a of to our revenue million includes from revenue X% high in the noting While by to million million XXXX $XXX approximately revenue reduction same million million guidance, in is barter RTD it's of transaction. included which of our to rate the XX%, impacts worth negatively inventory as right end size The $X.X revenue that transactions barter to transaction compared barter $XXX.X X%. from one-time at XXXX

mission flow expected are to double to flow. To cashflow shareholders And to robust and the our profitability that, in low we business year our of quarter, markedly pass the the to growing we Our of just session. XXXX. summarize, communities driving Operational efficiencies The see better the and in revenue profitably range ever, we're the real more profitability sequential improvements and the than responder end new cash operator completed. while for growth first veteran adjusted This in and fulfill profit. the I'll for be are invest and cash EBITDA is continue us here. each the Q&A to EBITDA improvements serving adjusted time foreseeable our acceleration for over future. With will the opportunities, call of first enable guiding

Operator

Group. Vora [Operator Telsey with question line comes first the from Instructions] Sarang of Our

Sarang Vora

great can and help for about this first in little question, on you about staying and quarter, My of explain was 'XX. transaction on Chris quarter? It kind outlook job bit advertising profits the a the and Steve us fourth barter services. managing the

just know then one So the you brand from after And transpired. in that. of more curious that? it then 'XX services advertising have benefits And awareness how to question help will I guys and

Steve Kadenacy

and question of did to just similar barter the then robust. we basically down the we QX, the inventory This is is intent it and How first Steve. The they our ultimately, Mondz. the transaction it to we dollars. is write -- at were sell give RTD in of I'll Sarang. more that And us take that was first the and of in future less Sure, part in flip the one it discount, a works half. able built return had of it them the over that we success to marketing transaction

are already platforms those all running up and across We dollars. using marketing

to well. And and off you So after is going that, it's we'll forward, of QX. transactions working we benefit bit quite flow a second the in give more And expect half of barter those Mondz. on cash the our entirely. I'll that be really

Chris Mondzelewski

one outgrew on significantly, talked build the fantastic had, we but forecasting to just reminder, I in we that, a I'd as think issue. that category RTD, had as note, I year we had think We thing a about.

for barter which What and a plan a into situation. do so as convert inventory difficult advertising take us, way dollars, fantastic 'XX that we to now the And able been something was into of with transaction we've our to able anyway. big been we've moved part is them credits deal have was a is to those

to not continue We about, bring done in talked have media. are had leaned brand the additional the a to social on to a on is brand that we of audiences. we as heavily the So Advertising ton something mission past.

able We are add but social component well. pressing the as media, advertising now been still we have on to

way, a us a a from actually value creation perfect in So standpoint. the credits were fit for

Sarang Vora

you And question 'XX I will it inbuilt continue to you innovation, you sales Like store that for into FDM understand is that on And new accounts grow? to outlook the plans have provide about it or that? the guidance, into sales what 'XX is is RTD As guidance? any like, you the can like us those in outlook. XX%, well have one help the accounts last, number talk of as When then outlook? the built can X%

Chris Mondzelewski

I for I'll 'XX a think so to minute. -- step back

X-year been things could to and that for out 'XX exceptionally plan did imagine, we thinking country. And full an about as that have distribution results. want of largest management scale, was us period. I trajectory year business for thinking to operate optimally a prove It the at we as would to really first in we over we're discussed, very the with think you full those full well. us. the in as We're we've a as customer proud of this the exciting to value kind chance for about, create team, we really year was how market

So going across the opportunity there's set talking us 'XX. to in what goal to as One is, bagged be looks we've is end the different whether national 'XX, that. what about almost or to by our the full pods, of scale. business, our like RTD And Black of Rifle the roll about, start to to is retailers country, in a to product coffee, the talked to up gives that do we're really couple at the aspects continue all you're

to And So methodical to do going through rollout that's that a ways be partnerships. to going for or us. we're either consider internally

all options table. So on the are

For us, it's really important.

So with need We the business. rate, do growth premium the super that we to this way. very build it's right a important

So retailers, super as to fashion coffee. be we Rifle new do a to premium in as roll positioned believe going will we that a Black we're where

exceptionally our to high retailers As deliver to to also of first our end with ourselves that. us, on level be have customers an partners, done as well as service, pride we our have our able both consumers. We

are don't need We We have to lose to Our NPS in category. thirdly, be money. And the about, we that. to make scores, value. ever we've tops as to talked want deliver able

And expense as themselves. our to of movement proud margins process start increasing so to controls our very as well able we're do the been we've what of the on

really great to plan business, very in proud the allows we just things able to methodical so And together, a building be know put that we're all above but segments, a talked so us as about do it all a category but in growth of fashion the we business. I We're we're number. building not significantly we're the our

Sarang Vora

growth see and to balance profits good of It's together. a

Operator

Raymond Altobello Our next of the from line Joe question comes with James.

Joseph Altobello

percentage in the from outlook expecting guess a I revenue couple your are of had first, the I revenue what as 'XX channel of terms well. wholesale questions growth? you on of

Steve Kadenacy

level, focus the at the We but didn't Joe, right significant within primary now. channel. That's wholesale guide growth segment our

Joseph Altobello

idea that accounts? coming of like of much same-store what is new in Any how might sort from sales And look channel?

Steve Kadenacy

Yes.

level Joe. of detail, We haven't that given

Joseph Altobello

between cash question CapEx? $XX net maybe us conversion that about would flow income, million. working you down XX% guess the to I imply guide, break Could the on $XX free and of D&A, Second capital, million that EBITDA, help

Steve Kadenacy

I you our the the inventory tailwinds the year. give big high Well, tail mean -- I'll the Joe. mean I are obviously big reduction level, during

the tailwind cash-free effectively would other transaction, that gives tailwinds. be us big barter and which we is The Those advertising. the have marketing

Joseph Altobello

this in thought I inventory, an that said on in sort another we level of So 'XX? reduction but should point, inventory was you the expect optimal inventory at at

Steve Kadenacy

have put expect Yes, we it there side, we I bit in some in the think do to the it -- come on comes a final net down but quarter. in, reserves we that

reduction of year. tailwind would net purely you'll the So during see show the there's that than a bit a more on

Joseph Altobello

And how barter the cash much flow year? coming this is from transaction

Steve Kadenacy

about -- we probably didn't I -- $X million. don't it's

Joseph Altobello

And last apologize. for me, I one

of $XX transaction? related The other the asset million, to that is barter

Steve Kadenacy

Yes.

Operator

line Our comes of Instructions] Kelly ROTH [Operator George with next MKM. question the from

George Kelly

for So is your the margin gross first guidance. one you on

I'm on listed margin there's initiatives gross a a respect the a understand fiscal margin love of more the don't more, year could higher And way And help know I bunch RTD will the give I I'm of of would -- margin reason in curious And through And RTD, is, in improvement benefit forward? side. mentioned, anticipate X what that I if you you're especially business also kind structural any gross RTD to to detail. significantly to gross having side. curious little that now RTD for sort think, going you going quantify primary margin. You especially just the do if you with But learn on different I 'XX. that but

Steve Kadenacy

during the basis, a goes Yes. Why oversupply Mondz can unadjusted core significantly gross away. add don't an the has hit been I year. had by margin There's few question that margin. impacting pretty That our take things and we the the gross On color?

natural XX plus. into is total revenue side business our the the the margin, in of FDM is shift Second high

to -- CPG on of team just is logistics to supply out. our you're it chain. And and Third, give to on margin maybe side. and market refining is that talk always improvement. And the going us hand side being part I'll are side Those the Mondz the all business over RTD good things significant a combined manufacturing to is working this about the squeeze hard very

Chris Mondzelewski

I not Steve there's to I'm said. bit little think think is to build going going I'll you But what tell I a on give. I'm what ton just detail of a

what of there when the last XX and business been SKUs about a while XX operational in think couple right when on the us X is we've sitting coffee, total, RTD. years, RTD, launch X -- now the done for have with and the think top I of some we're you again, challenges is now of top you key in the market

So we we the now that across core scale have portfolio have. significant

So driving I periods about SKUs. down And couple as you to core our SKUs go of X SKUs. in X distribution we wanting recall, team X behind those our core allows a to ago, core chain supply optimize those have talked simplify those against the now Having really hard us to sales scale approach that.

chain. cost into different going volume for the optimization across that through the ways in allows SKUs, without those moving different us the more elements we're supply So details, when clearly, of

works component that's So grocery all regards about very business start for in a healthy talked And then how we right? big well to to it. And to in a you what We're that. the it's to past just me, component the about is, think believe our going mix, when is of push business. for mix total continue the we've about other

on RTD hard coffee within to the to thing center as do great well. going to as is be store continue that, business is margin. same going a that Our tailwind. We're XX-plus a push And we

are We're mix for So a higher we positive to specifics continue alluded will we expand it to But ensure and not I've drive doing ability say, we suffice business to the bit manner already on a future, share to us that. we innovation. are a that as the in to ready where creating in margin.

George Kelly

everywhere you that X an the you sales products then innovation carry what's I could, said with to do curious some last year-end business. smaller as but at working think in guessing I'm margin on quick for these lower in to could there of And 'XX, profile, by opportunity curious FDM margin? to will I help maybe then secondly, will the is with going there partners? growth just that -- these drive I'm ones, launching retail And FDM smaller continued are think that. And accounts, existing help distributors if I expand, if you a new

Chris Mondzelewski

that. Yes. No, address let me

think first innovation piece, absolutely. yes, on I the

We every will year. bring innovation

really critical in within component any a coffee, it's for consumers to certainly really always space, competing consumer new but in category the goods packaged think experiences. where are I looking

to of to in as home. that super of had new one help success now coffee really, that have the is aisles. And so mimics having doing do continue that we Rifle reinvent their in them with well the business many market, to to and for ways, Black we're we're want premium retailers reasons out-of-home conversations the in the experience consumers X.X in who about in So initial years a are we has our our retailers some what can

And drive really fashion do will we a to that in a that. way. We And high-margin we believe innovation able do where can our super I in to we're previous question, -- maintaining to then of which on continue tie around continue the your comment additional the brand. on to a profile back is that the premium point I'll made customers. profile That

We will that. commensurate distribution roll do to being our to able

So absolutely, ourselves we're degrade not going to allow to margins.

right. You're

there components things make can have into for that We're think in up we deliver we service where smaller to always way are sure I strong set that go different can't maintain the those going of increase customers. obviously, distribution the we customers But my even profiles market roll we in majority or FDM margin reason the there's we no well. have as mind that as a now.

Operator

of Blair. with William Jon line the from Andersen comes question next Our

Jon Andersen

I just partner. start largest wanted with your to on FDM in

a represented the us could in of in where year of you've segments terms now bit you more been now. And you being than a if then kind filling all in give assortment and out are the detail Just more on aisle. there in

would And so a the of kind there helpful. year been kind kind is now on any part how there you've comping of core be assortment that in color of of the

Chris Mondzelewski

start let kind just So summarization. of quick me with a

year first that of and were we proud how mentioned our I think customer. largest I

to, to detail are continue to is here guess, of where now. second. the in summarize way build we the best I'll your get question momentum We I a

by to of advance I Well, mean a statistics. do think what number on we I that? continue

look you we bagged brand if in at now #X So it coffee. total total across the are business, ground the

-- brand We you And some point number total in are premium made, where coffee total. And bottom #X there segments to playing. look total are in should play going lower #X the to be The we're brand we bagged. we're at sorry, it's is why versus the you that's to I'm represented. #X the believe not when a a continue super as overall the line we,

are are of segments we would to higher less that to that present. products in But what going there into roll super believe premium be would So at be level It and the mean do to we is higher compete us. a we doesn't those that rather market the the brand coffee should out continue interesting segments. some never segments

bagged there. a we've very And proud very which only we that the grow. #X we've canister been strong fact We're business. we've proud again, So built, the We business, of do coffee business to SKU of have X that have in the built pods. continues

far. And which something to within opportunity been So going continue to How in we I and we've think share there we at their do is be help categories, now. the will then, that partners segments again, us, our is yes, build so that our continue evaluate. phenomenal to really compete for to we retail some the of build momentum

rapidly. share of So we concentrate example now We're a segment, in would growing that into. cold went be but that the That's small brew concentrate. a XX very an

to the obviously, far. able that, well. ball develop we we've segments on do evaluate as eye pleased thus with coffee very continue what those So to as We'll in on been other we're had and our

Steve Kadenacy

a add on the to characteristics just maybe well. on as of the we're break the rest And that, of FDM little we seeing bit market into as and end similar velocity sales

the a resonating. XXXX. of the of a product And is is result, so course basis customer quite our the on during sales diversification And really as significant

Jon Andersen

That kind my of question. was next be going to follow-up

made on. significant you In strides you business, mean RTD I from that a So about inventory you've where an tag appreciate perspective. little the are? talk bit obviously, I could

you XX got perspective? you of You've terms levels figure, at margin SKUs an you high from but some is where business that in are and And to to down asking you pull a road. to just think the top relative as absolute gross Where business? top performing be levers for very mentioned. plan part Not XX pull improve of the margins the can what it that or of should that in the

Chris Mondzelewski

made I'd strides start enormous we've by So forward. saying

that, in that have we So about 'XX, overall margin about feel planned the the and role we've of a we in So far. for made think huge the lot business improvements plays RTD a improvements right? great what as you thus

we As right I though, I discussed, no, as now mean a pleased done. we're where not necessarily are landing with not we're final spot.

under we've calls differently. in structure simply think the things compete discussed say, previous than, coffee. Those is also center of a I RTD one margin operates different categories store

So that. understand we

that to is Our a a build be, positioned the super margin as should higher structure of that end we goal be at market. the will believe premium we able brand,

what X that. working that to I there's components to we And reiterate, towards that. so with again, And said is just before, are

to alone. first a to only to RTD as about well our foremost, do I about but when talked partners. going To we We this. the partners, have that have operate it's we our a not about further are consider forward. And build existing to this that do great We can of talked all distribution we we're and partners. to we looking at right? work business, areas of just some us we as manufacturing have continue continue we you what margin Again, that innovation, components what to the on the think think go brand, margin that we're will of allow and have products profile not

those And market always supply the ways really the of we elements well. considering most so the ultimately entire as we're can value all create in partner for What are in a overall that we way chain. the that

Steve Kadenacy

volume look RTD, creates well. And stating obvious, but as ACV that's of at kind when you XX% our margin around the for of

a take as kind as expand that poised category the that regard we we're poised we're faster our So we're distribution coffee well. ACV than through significantly margin expansion of to that that growing in whole the the as fact RTD of given that

Jon Andersen

or kind you cash just 'XX, free And allocation cash inflect on positive any in in flow of then of use kind kind as of of thoughts capital general?

Steve Kadenacy

have tactical We significantly category stores, for don't the because expenditure on previously. CapEx lower largest was the put year, pause have we capital which during the significant us

CapEx somewhere routine maintenance year, we more be And that's So -- significantly during to expect the lower. around $X million, would CapEx. that's I say

to until allocate be long-range determine our grow flow capital cash primarily flow the again. our in interest expect free rate cash and plans that to lower delever we that how to the -- So it would we

Operator

I'll the have CEO, question-and-answer back end we turn the for remarks. of Mondzelewski, call session. over to And Chris closing the reached now

Chris Mondzelewski

you, on Yes. just want the Yes, mention closing. Thank piece to everyone. I

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raise correctly, order the our of goes that be the States absolutely money, that it is a population, veterans involved fans it many segment if United show our a proves and on around we're to a do want engagement. make to we who us impact to And So to help. we In that consumers the impact people brand had this have in. massive of going to be able that. And need in the kind to it proposition and many, incredible responders involved and to get first

your for We a thanks, great much day. And engagement everyone, appreciate everyone, questions. have and it. very So

Operator

today's may Thank disconnect you for your line your and concludes at time. this participation. you conference, And this

BRC (BRCC) 7 Mar 242023 Q4 Earnings call transcript