BRCC - Earnings call transcript Q1 2024

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Operator

Greetings, and welcome to the Black Rifle Coffee Company First Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.It is now my pleasure to introduce your host, Tanner Doss, Vice President of Investor Relations.Thank you, Tanner.

You may begin.

Tanner Doss

Good morning, everyone. Thank you for joining Black Rifle Coffee Company's conference call to discuss our first quarter 2024 financial results, which were released yesterday and can be found on our website at ir.blackriflecoffee.com.Before we start, I would like to remind you of the company's safe harbor language, which I'm sure you're all familiar with. may statements management underlying guidance call, assumptions. today's make including forward-looking and On

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

business, I'd and non-GAAP adjusted of EBITDA Coffee comments, related these release with discussion to Reconciliations measures in to over call SEC.This website.Now on also Company.Mondz? as our also in Investor Rifle measures will the EBITDA if Chris like the we're to most noted. comparable are non-GAAP call provided now our website, investor X of we adjusted further For EBITDA. Slide the to our included furnished CEO to earnings Whenever unless to our previous the turn we of turn please otherwise the risks measures filings financial such Black SEC, our to presentation contain referring see they're refer to the you Mondzelewski, in please could on available Relations GAAP

Chris Mondzelewski

Tanner, Evan refer Executive our which we Hafer, me of our Kadenacy, discussed a our today of business. throughout We've presentation find will call, can meeting, and investor our to to on turn Slide is that our X. provided the management and and Steve we Chairman, everyone.Joining you Founder good website.Please last holistic Thanks, Financial Chief Officer. morning, In importance the

and fantastic demonstrated already loyalty. growth driving have we We industry-leading mission, consumer have phenomenal and a brand

Over profitable challenged as business management the our organization and X past well. months, build a the to team have I

in deliver record business, and chance core had In any dedication of proud what difficulty not the to expense we QX, have doing, all succeeding. be to has organization. stretched prouder While cash team to years we colleagues team I lost on continuing After I've the the the other their resources are control.I'm goes our achieve industry-leading it growth, beyond and profitability of me not delivered our to CPG while could is and XX flow, continuing margin, margin growth. our but say we lead. industry-leading

the announce to of focus our we on every also impact drives core Dr us company throughout to success.On are top testament like and an to business certain dedication serving brand our Our mission community the industry. achievements, partnership we excited Partnering of and to Black with will that drive are our our Rifle continue growing Keurig is Pepper. team's the with KDP efforts our the iconic our beverage day, a

innovate a greater channels their now to question-and-answer active across we agreement drive business announced ability of across responders review partnership licensing this As financial Steve performance our and sector through session. discuss to give first business our the only our was before allows are and currently veterans, military, into long-term back, best-in-class CPG and with are current the our accelerate also for not will KDP.We of becoming entered our manufacturing single-serve access way us a And we've pods but brand. CPG on few weeks to a new us portfolio, growth well to in duty supporting will our the not serving. the profitability our detail. continue call mission of families.I In turn, the over trends the units the for will to turning success within then

a rapid $XX.X leverage improving business, and discuss growth wholesale with continued that of as compared it, moment.Turning key result driven Please lowering will focus flip detail expenses. channel X. to to and operating This to by profitability year. Net the growth Slide For our in last our adjusted our our metrics. within which we was operational the on XX%.We remarkable up to in prior set performed as year, material revenue up to of against Steve the revenue, million increase wholesale a over quarter, from XX% the EBITDA results highlights. was our is profitability inflection first significant strongly continue have in well records, more XX%

the FDM continue coffee Based and this XX% X to total XX market. will and success, to XXXX. on as rollout believe end ACV the through be increase As FDM the expect currently significantly fully We we of we additional of will in have the mentioned to the QX, earlier, leverage deployed K-Cups up before, we is market. we And grew year.Our broader partners said to in bringing end we the XX%. in added by to of

FDM out-of-home companies believe trend to space. the in impacted helped which we being X. turn one premium during from year last commented especially in-home, consumers America.Please believe our seeing the Slide As fastest-growing the season, have positively in migrating earnings This is continuing, by is has coffee started is others and the coffee become of us business coffee we drinking to premium

such with channels brand addition exclusive foodservice. our we on business KDP which also allows to shortly exposed to as In continue expanding Slide enter our partnership to on are us we expand a RTD will be to base.Turning the to available FDM customer awareness vast the Further, X. as within keurig.com, channel, will broader

We industry season the and that continue continue to we growth, the reset expect RTD to by the Xx category outpace trend. spring

cost strides Most from all manufacturers RTD optimizing notably, we've made focusing reduced and the we focused the of thrilled has hard benefits with supply the provider. year, lowest improving our very the they've last beginning team our our are on business margin highest our the the on to our work X, we RTD been to progress and business. chain. X we in done.First, made, of Over reap I'm product have quality

addressed past, barter transactions. we've inventory Second, mentioned the excess through in our finished as we've goods

sharp planning We minimize excess to a our focus core inventory through risk on business continue will and SKUs. high-velocity

done the year.Finally, working improve hubs best with others, to consumer team our network warehouse we increasing most to last to logistics walks our the many X distributors network in improvements to rest ensure X of demand. in X, basis among through we equate region which that Slide are points that changes, down our channel. additional given improvements Third, importantly, impressive with main incredible product the continue to our DTC has centralizing versus year.Moving can job and through quarter-over-quarter, RTD our an improving XXX margins, to distribution a phasing These meet

enhancements many website to made year, business. start particularly the have at improvements off, in paying the early We that our are indicators of there our subscription the are and

up accounts. subscriber As migration, some which part resulted consolidating the in cleaned of our we list,

So there be from high drop-off in level, appears a to subscribers. a

encouraging, optimize we DTC will XX. average to results result.Turn relative Slide this to business new the year we see that subscribers' the With as subscription value features our and increased stabilize believe we're the order XX% experience. that These are new site seeing experience, a past

outpost our As highlighted remain last on a tactical pause quarter, we within business.

of this to on advantage plans. taking outposts are our capital pause strategic sharpen investment We

As opportunities part high and of meeting that for will stores improvements the return beyond all us scale the internal to our exercise contracts efficiency, economics, XXXX. rapidly especially position in are this thresholds. in unit scouring and operational we're optimizing not Ultimately,

promised, expect by the investors longer-term view our XX. give on As the to a end year.Moving of we Slide of to outpost strategy

the Black they commemorate Americans call, and On closer mission. the developing communities highlight X efforts commemorate custom and harrowing to experience culminate battlefields. for event of anniversary of hundreds embody And serve demand who we to service, marines, we're long-form Rifle, initiative top Evan served. training content battle.On all founders at the To we and stand from our than jump remembrance each I ever, our of of our event soldiers, More XXth allow the mentioned to BRCC the commemorate survivors the buy this, for are friends era our stand thousands will our honorary of have date. with core always, of respect. getting a sailors, and that told brands that various values this something. of through last airmen those in appropriate was the Florida that June will in over of military for our D-Day, to bravery hallowed and a of Founder-led stories As This of an

individuals historic by by hope audience a this sense commemorate shared connect community.Now and stories foster purpose and who our will reaffirming to within not sacrifices made solidarity of preserving deeper commitment perseverance. also with and but a our our turning the served, sharing results. our and on of honoring We We by courage Steve? level to the only brave to event financial

Steve Kadenacy

XX. to focus really gain QX, In excellence on pay off, our you, Slide to turn saw we Mondz.Please operational continued momentum. Thank profitability as

the Our margin initiatives productivity last XXX to propelled basis team's and pricing and points our mix FDM in logistics. freight shifts from benefited also we basis high-end added adding margin dedication quarter. benefiting kicked that to forward, from XXX the strategic Supply towards quarter-over-quarter.We efficiencies us particularly last chain year points gross business, off initiatives has

we financials. our more That but additional gross increased business, even that, our change predictability this growth quarter in boost straight I exceeded in improvements achieved our significant to of line, as first our headcount this through gross revenue we boosting the up income to million at a increased This conditions to This With change fell a of SG&A by the XX% and $X.X Slide with a improvements, QX million our goal.Shifting noting margin, guidance in loyalty dropped increasing reduced to EBITDA growth and channel. we FDM. cost XX.X% the the for Below we ago.Turning still expected to the Top quarter, our best in Slide the million, margin made revenue reliance the our QX, substantial compared driven that wholesale in year would. program, to and XX. practices reflect X%. time without our from $XX.X year's reached was business the we to $X.X a primarily from loss a in quarters by our With last just XX.X% gross FDM margin few our to reducing we've towards these With our $X.X goal aligning XX% reserve. revenue the the SG&A gross in overall of saw quarter year the and worth quarter, of terms loyalty It's of was our to consultants event said, of profitability, gross on in milestone. also from forecast. DTC provide XX. line of margin to external adjusted from performance a are positive program million, before initiatives margin ago.Turning shift XX% plus Net long-range resulted we align

top revenue $XXX to $XXX to While the million XX% gross be at expect XX%. million, margin we are we maintaining our to of end of of our targets range

super quarter's range from flow worth profitability expect we conversion.Although are full-year as of the that are of we $XX million your are $XX million we expect $XX still it's the guidance, to some should our repeat are year, $XX another free models. providing and respect EBITDA not million. of strong in profitability to the proud to cash that there to that build reserve cash, not in do increasing We loyalty release. levels With QX million, XX% Additionally, benefits up while consider remainder QX expect not for noting may you we quarterly you

in our EBITDA Our in X the exceptionally to to summary, next and to shareholders for ago, an we proving the X mission revenue an which new continue that indicated of ramping compensation on for QX.In in to QX. to reinvesting we to communities.With given focus at turn, marketing first QX see and we serving a revenue advertising QX, expense but compared and be as I'll improving our the flow, company. opens expect and strong our as this This profitability inflection and and we true operator QX the responder quarter the we our Q&A quarters. EBITDA increases growth, quarters business growth. converts sequential Consequently, lastly, lower cash our was in kick was the in then and in call ramp that, for to And see fulfilling the are up opportunities expect point expect profitable pass in, veteran results bit that session. performance, business consistently

Operator

[Operator Michael Instructions] with from is question Baker Davidson. Our first D.A.

Michael Baker

FDM what was within within the could are what little doors into the Walmart the percent Is adding Where dig of above?And growth to -- wholesale going away customer? increasing new partners? business bit retail growth? Is in doors? the remind business it shelf that wanted a increasing And as how it drivers from that is FDM you all part much maybe of those the it of then I to business, you us guys. quarter, as partners? a your is those that, diversify Great biggest space forward as Is expectation XXXX? Is Okay. more. it

Chris Mondzelewski

Michael. Thanks, Yes.

it. address can let me others I build. Let kind of

drove think that of from? your growth. pieces X you taking of come of the areas piece All significant FDM did outlined, growth all I the where different first question, the reasonably

I we across at many on, top so expand last sit expansion. about to half Obviously, very lot banners as distribution continue of think and a bit quarter. a example. that, during customer X banners a footprint banners, the be we get played key a We those the with existing back in country. quite all that's coming talked new talked within customer but XX% we now.On That Albertsons we banners last ACV we did an time did expansion store their time to through clear, new a more about in of add and role. the incremental being but stores year, coming within There's the -- large

continue within actually to probably most new you as called have you piece, at than out, you're now excited year. well the Walmart, talking obviously, bringing smaller, you we a then know, is, albeit of about increase do we which over full look add I'm success, banner continue if as a distribution final that, been to the in Walmart, we've about distribution So when altogether.And as

lapped very happy So, we very initial kind that. yet of growth, we're see that and to distribution. And we've continue about strong

mentioned, take but Only to think you are we shelf. with on about I you did reset continue last talking items recall expanding September, us we space? share. shelf So, significant within may that, add And the windows, we

advantages of the of I So, business, from FDM standpoint of percentages huge right now.And it guidance expansion, as XX good then we we mean, beginning closer the just towards course, rough reaping the so And percentage And that is end or would that. felt because overall around your about did on the to then that get our that we're time piece were final of that we be a last year, we an year, XX%. to last expect plus. mention of the XX% we this business

That into go end coffee we what be XX%, number is will As in 'XX, play closer overall said to representation their category. distribution. role the FDM to in want of we they we probably closer to full which up

with them. change to of they that will #X the Walmart really one they're selling things They're coffee. to while clear, be and customer. the we to fact So continue we good partnership is started our love really big great at about a will with And it, percentage, in be continue we the

Operator

next George Our is ROTH question with Kelly from Partners. Capital

George Kelly

rate we medium-term of with If curious, RTD if But if what term look medium over in guidance. context you're could of sure specific Maybe FDM start and I'm your about I'm could not growth. a for just a of we is sort both at growth businesses, in kind you about to thinking not in question looking assume both? about your the growth just growth provide how reasonable those. I'm

Steve Kadenacy

math -- from I of FDM to on coming the you do relative the some market, about growth to the both. this all not talked includes But We're or which own We've kind your mean, going I ACV specifically, FDM. that is our goals think year guide market George. wholesale can relative

we're So, spending of quarters' Colorado some changed consolidations we to And refining think then in our deployed and to and end network.We increase the X expect that you and map than XXXX, our quarter see a year couple fully relative of dispersion somewhat time over distribution of by of RTD, be that California. a did can distributors period. normal time, this I

either network own to but we partnering. or existing our efficient growing we're distributor have So, expand getting plans work, to distributor also that with our by more network,

to not range do the but as a end we include pieces a is little these to of X relative of on details come because with plans will that year binary that longer-term wholesale, plan retail more bit longer the plan back towards well. our also that. So, But more of only

George Kelly

Understood.

You're saying to plan year? that, that's something publicly this later you release

Steve Kadenacy

our that core refining than we the our so tactical FDM using with even to something because to fully do of plans longer-range refine because in our has And will year. retail, FDM end that fuel by really it strategy deployed core to in be pause more expect Yes. -- well, really pause tactical the next is

George Kelly

questions. then And any there secondly, on kind the if EBITDA? then X do is that Curious Walmart could Steve, on back you change accounting modeling provide share? And quick you mentioned, Okay. that impact your of of EBITDA loyalty Or that? you out

Steve Kadenacy

change, On was sorry? the one, -- latter which accounting it

George Kelly

mentioned You XQ.... that the program, loyalty

Steve Kadenacy

revenue into was flowed EBITDA. in It line. straight it's to No, the recognized and bottom

George Kelly

Okay.

Chris Mondzelewski

grow And right is share on we our Walmart your X.X and grew -- question, at to continue now. we XX%,

Operator

Needham is next from with Company. & Our Instructions] question McGinley Matt [Operator

Matthew McGinley

also get change is But You the margin revenue the of that, think you the benefit below despite I you in was your that full-year had some goes generating transactions. goes I'm what a DTC benefit? XX%, mix first from at just X the gross you out a wondering kept you quarter. but first a like some your called else the that I margin end in guidance that margin point away XX%, pushes then for away. there did quarter? is same gross or release gross benefit clearly lower Or fantastic know quarter to what improvement, XX% that in But barter

Steve Kadenacy

we've efficiently quite cautious. to X the really business to metrics. $XX the months, relative a Well, XX% end We've over guided upper frankly, -- of efficiency We've We're of a year that quarter. all to most XX% number million, say, tightened our Right to being I XX%. ago. quarter we guidance on would there of quicker. Matt. last with really running EBITDA X months $XX seen above million adjusted the quite now, we're We great Thanks, that and of had X range. got a

and gross invest we what exceed to on that completely being expectations. take do we going make sure to at that recognize business, that's to we your question. back the cautious This and super to line. the margin do we But going probably doesn't we're in effort, bottom say need particularly we're directed constantly can However,

Chris Mondzelewski

the bit that our need -- decisions able as a changes also of play we the some RTD even planning, just a think business that to on There put on out. in But I of have I that cost that to we detail to it slides are, place make point was really plays how consolidating but Those illustrate for build To driven mean, very that planning of I place. quarters improvement led P&L, chain, total the as little to some supply pleased think we're recall that's the that. we resources things us obviously by are we occurrences. significantly the gives inventory margin opportunity. to out, of drive of released what to fundamental chain. does Steve's good we ability may in There's in we've on kind that play our is control, how that presentation about about real.And out, clear about see X, X in lot point, great talked one-time ago, and lot supply out also of in as been the is you the the out better business, and putting far some we Steve Steve's a it called clear that. might most

we And to but in brand of are make we premium obviously, are. price able sure can building customer the So talked bit We're That's make we've what now driving a have not additional reason, distribution, super there. a great looks heavy investment again, to little get with conservatism there new not quite which promotion. we a going can want we to business, many off make still to on just to for We're take already, that that that customers bit what as really other investments about, we be we're order start. into a be like. we

Matthew McGinley

show Keurig does to? line on? efficiencies? what deliver that co-packers partnership guess, that provide Pepper for that provide can't for the to be I know for time -- top And time the will access will take you that But your give that, Dr up. And it. that You the and you does channel some operating what how accelerate Got current over

Chris Mondzelewski

away levels great then have that. the I market our other it. Their chain, to I capabilities but quality think, it higher as no is ability this Yes. call first this the very efficiency. to And puts distribution I of second scaled There's like to the is out ones the keep and I into brand details pods that, cetera, consolidate go they're sales. us ability at the incremental about, the the you They're one agreed -- advantages highest astounding. with technology. such that consistently us we've us proud beginning supply level.The great across an best talked the as X even There's super well. all mean, other really, we the But the et the incredible premium a being down third, to able like not historically, at won't from piece in product gives is best invented drive actually shelf in simpler, just cut some we business. on ability to standpoint, Rifle, that has aren't this. manufacturer And helps a way is the doing distributed Black that that for produce of put the They that. blew to things

maybe that well. a to I also of in lot business as earlier, our you or own website. us gives access of have us their can they -- process specific So, against, that keurig.com, to find all that still the coffee opportunities.I necessarily want sales products, this So the a would done a because us And have plan then access mentioned that They yes, this down it we help there about building are out when areas one don't office, mentioned hotels, build to don't but Dr right? channels club. you of with their any Pepper, we're on we gives pin of some job building Keurig force think to customers the of want with to fantastic

Operator

the There are to to queue. no Christopher for would questions closing Mondzelewski back comments. any hand like I over further in the call

Chris Mondzelewski

Yes.

I'll So, the I to like call way it. close traditionally the that do

this think up the we end us important I period most in out. of hold quarter that lot by year quarter. at quarter Memorial this maybe call Black the I come Day, against which I'll for the We as is is, of a just Rifle. guess, sacred ways a end calling we

that that, we notice will promote. not holiday that is You'll a

not only anything. We of We will be do believe that a is something should day that remembrance.

I workforce. lives So, out have their weekend.Certainly, to here, I call a in in guess, talk Memorial on everybody Day, military. better people lot all since just on please over you lost for that the the all years XX% a who of chance to won't in combat, I'll know of us We have reflect now that

in improvements So, on progress that be business been towards continue what to we've the that will and the to with other putting we've that's our focusing made. we're we press weekend. than we're going resources thrilled But the that,

Steve Kadenacy

Thank you.

Operator

This concludes today's conference.

You may lines at for this participation. disconnect time. you Thank your your

BRC (BRCC) 9 May 242024 Q1 Earnings call transcript