Core Viewpoint - Black Rifle Coffee Company has appointed Melvin Landis to its Board of Directors, effective September 15, 2025, highlighting the company's commitment to leadership in the consumer products and beverages sector [1]. Company Summary - Black Rifle Coffee Company is a veteran-founded and mission-driven premium coffee and beverage company [1]. - The appointment of Melvin Landis is seen as a strategic move to enhance the company's leadership experience in the consumer products and beverages industry [1].

Core Insights - British shoppers increased their spending in August, driven by favorable summer weather and heightened demand for food, furniture, and back-to-school computers [1] - The rise in spending was partially influenced by higher food prices, indicating inflationary pressures in the market [1] Spending Trends - The increase in consumer spending reflects a broader trend of recovery in the retail sector, particularly in categories such as food and home goods [1] - The demand for back-to-school items suggests a seasonal boost in retail activity, which may benefit companies in the education and technology sectors [1] Economic Indicators - The data indicates a positive shift in consumer confidence, which could lead to sustained growth in retail spending if the trend continues [1] - The impact of weather on spending patterns highlights the importance of external factors in consumer behavior and retail performance [1]

Financial Data and Key Metrics Changes - In Q2 2025, net revenue increased by 7% year over year, primarily driven by growth in the wholesale segment [20] - Adjusted EBITDA declined by $5.1 million year over year, totaling $2.4 million for the quarter [23] - Gross margin was 33.9%, reflecting a 790 basis point reduction compared to the prior year, primarily due to green coffee inflation and trade pricing impacts [22][26] Business Line Data and Key Metrics Changes - The wholesale segment, which includes packaged coffee and ready-to-drink beverages, grew by 14% year over year, with a 21% increase when excluding non-recurring revenue from the prior year [20] - Direct-to-consumer (DTC) revenue was 8% lower year over year, but showed slight positive growth when adjusted for prior year loyalty rewards accrual changes [21] - The Outpost segment grew revenue by 11.3%, driven by higher franchise fees and increased average order value [21] Market Data and Key Metrics Changes - Nielsen data indicated a modest decline in unit volume for the U.S. coffee category, while Black Rifle Coffee Company outperformed the category with a 32% sales growth and a 29% increase in unit volume [6][7] - The ready-to-drink coffee business delivered 7% sales growth in a category that declined by 4%, with Black Rifle's unit volume up by 9% [12] - The energy drink segment reached over 15,000 retail locations, achieving 23% ACV [14] Company Strategy and Development Direction - The company is focused on long-term growth by expanding its footprint with key retail partners and investing in critical capabilities [5] - A land and expand strategy is being employed to increase shelf space and product assortment in grocery and mass retailers [9] - The company aims to maintain brand authenticity and community engagement, particularly with service members and veterans [16][96] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macro cost environment but expressed confidence in the company's ability to navigate changes and position for long-term growth [5] - The company anticipates a sequential increase in revenue and EBITDA in the second half of the year, driven by distribution gains and marketing investments [24][80] - Full-year revenue guidance is maintained at $395 million to $425 million, with expectations of finishing towards the lower end of the range due to prior year revenue headwinds [24] Other Important Information - The company raised $40.25 million in gross proceeds through an equity offering to support the rollout of the energy portfolio and strengthen its balance sheet [28] - The Salt Lake property is currently held for sale as the company seeks a facility more suitable for its current size [62] Q&A Session Summary Question: What are the key drivers for the three-year outlook? - Management indicated that all aspects of the business are growing, including packaged coffee, ready-to-drink, and energy segments, contributing to the long-term growth outlook [34][36] Question: Why did Walmart sales decline year over year? - Management explained that internal sales can fluctuate due to timing of shipments and noted a lost item last year that impacted sales, but takeaway growth remains strong [38][40] Question: How will the company drive higher market share in the RTD segment? - Management emphasized that increasing ACV is a leading indicator for future sales and that they are investing in sales force enhancements to drive share growth [46][49] Question: What are the expectations for pricing in the back half of the year? - Management confirmed that pricing actions were executed in May, which will impact the market in the upcoming quarters [58] Question: What is the strategy for the energy drink rollout? - Management stated that the rollout is disciplined, focusing on limited geographies and national customers, with plans for expansion based on initial successes [66][90]

Second Quarter 2025 Financial Highlights - Net revenue reached $948 million, a 65% increase year-over-year, representing a $58 million rise[13] - Wholesale revenue increased by 141% year-over-year, reaching $613 million, or a 210% increase excluding barter, amounting to $76 million and $106 million respectively[13] - Gross margin was 339%, compared to 419% in Q2 2024[13] - Adjusted EBITDA was $24 million, a decrease of $51 million year-over-year[13] Channel Performance - DTC revenue decreased by 78% year-over-year in Q2 2025, but increased by 03% excluding the impact of loyalty point expirations in Q2 2024[18,22] - Black Rifle Ready to Drink Coffee remains a Top-3 brand in Q2 2025[23] - Black Rifle Energy achieved approximately 23% ACV with distribution in 15200 doors, including 2800 Walmart locations (~66% Walmart ACV), 8900 convenience stores (~7% Convenience Store ACV), and 3250 grocery stores (~12% Grocery Store ACV)[27] Financial Outlook - The company projects net revenues between $395 million and $425 million for 2025, representing a 1% to 9% growth[40] - Gross margin is expected to be in the range of 35% to 37%[40] - Adjusted EBITDA is projected to be between $20 million and $30 million[41]

Core Viewpoint - BRC Inc. reported a quarterly loss of $0.07 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.03, indicating a significant earnings surprise of -133.33% [1] Financial Performance - The company posted revenues of $94.84 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 2.75% and showing an increase from $89.02 million in the same quarter last year [2] - Over the last four quarters, BRC Inc. has surpassed consensus EPS estimates two times and topped revenue estimates three times [2] Stock Performance - BRC Inc. shares have declined approximately 48.3% since the beginning of the year, contrasting with the S&P 500's gain of 6.1% [3] - The current Zacks Rank for BRC Inc. is 4 (Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.01 on revenues of $108.13 million, and for the current fiscal year, it is -$0.04 on revenues of $407.1 million [7] - The trend of estimate revisions for BRC Inc. was unfavorable prior to the earnings release, which may impact future stock movements [5][6] Industry Context - The Consumer Products - Staples industry, to which BRC Inc. belongs, is currently ranked in the top 39% of over 250 Zacks industries, suggesting a relatively strong industry performance [8]

[Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements, noting they are based on current expectations and involve risks that could cause actual results to differ - Forward-looking statements are based on current expectations and beliefs, but actual results may differ due to various risks and uncertainties[7](index=7&type=chunk)[9](index=9&type=chunk) - Key risk factors include competition, ability to manage growth, retain employees, financial performance, brand perception, supply chain management, and regulatory compliance[7](index=7&type=chunk)[10](index=10&type=chunk) [Part I - Financial Information](index=8&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) This section presents BRC Inc.'s unaudited consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, with detailed notes [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets show BRC Inc.'s financial position as of June 30, 2025, and December 31, 2024, highlighting changes in assets, liabilities, and stockholders' equity Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Cash and cash equivalents | $4,304 | $6,810 | $(2,506) | -36.8% | | Total current assets | $106,242 | $95,471 | $10,771 | 11.3% | | Total assets | $225,253 | $227,382 | $(2,129) | -0.9% | | Total current liabilities | $82,106 | $75,218 | $6,888 | 9.2% | | Total liabilities | $189,603 | $177,886 | $11,717 | 6.6% | | Total stockholders' equity | $35,650 | $49,496 | $(13,846) | -28.0% | - Assets held for sale increased from **$0 to $4,294 thousand**, indicating a reclassification of property for sale[13](index=13&type=chunk) - Inventories, net increased by **$5,935 thousand (13.9%)** from **$42,647 thousand to $48,582 thousand**[13](index=13&type=chunk) [Consolidated Statements of Operations](index=10&type=section&id=Consolidated%20Statements%20of%20Operations) The Consolidated Statements of Operations detail the company's revenues, costs, and expenses, leading to net income or loss for the three and six months ended June 30, 2025 and 2024 Metric (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Revenue, net | $94,837 | $89,017 | $5,820 | 6.5% | | Cost of goods sold | $62,664 | $51,758 | $10,906 | 21.1% | | Gross profit | $32,173 | $37,259 | $(5,086) | -13.6% | | Operating income (loss) | $(12,624) | $978 | $(13,602) | -1390.8% | | Net income (loss) | $(14,512) | $(1,374) | $(13,138) | -956.2% | | Net income (loss) attributable to BRC Inc. | $(5,329) | $(482) | $(4,847) | -1005.6% | | Basic and diluted EPS | $(0.07) | $(0.01) | $(0.06) | -600.0% | Metric (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Revenue, net | $184,812 | $187,409 | $(2,597) | -1.4% | | Cost of goods sold | $120,165 | $107,966 | $12,199 | 11.3% | | Gross profit | $64,647 | $79,443 | $(14,796) | -18.6% | | Operating income (loss) | $(18,056) | $4,934 | $(22,990) | -466.0% | | Net income (loss) | $(22,357) | $482 | $(22,839) | -4738.4% | | Net income (loss) attributable to BRC Inc. | $(8,216) | $67 | $(8,283) | -12362.7% | | Basic and diluted EPS | $(0.10) | $0.00 | $(0.10) | - | [Consolidated Statements of Stockholders' Equity](index=12&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) The Consolidated Statements of Stockholders' Equity present changes in equity components for BRC Inc. and non-controlling interests for the six months ended June 30, 2025 and 2024 - Total stockholders' equity decreased from **$49,496 thousand** at January 1, 2025, to **$35,650 thousand** at June 30, 2025, primarily due to net losses attributable to BRC Inc. and non-controlling interests[19](index=19&type=chunk) - Equity-based compensation contributed **$2,591 thousand** and **$2,740 thousand** for the three months ended March 31, 2025, and June 30, 2025, respectively[19](index=19&type=chunk) - Net loss attributable to BRC Inc. was **$(2,888) thousand** for the quarter ended March 31, 2025, and **$(5,329) thousand** for the quarter ended June 30, 2025[19](index=19&type=chunk) [Consolidated Statements of Cash Flows](index=13&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The Consolidated Statements of Cash Flows summarize cash generated from or used in operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Cash Flow Activity (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Operating activities | $(7,464) | $7,212 | $(14,676) | -203.5% | | Investing activities | $(2,147) | $(3,977) | $1,830 | -46.0% | | Financing activities | $7,105 | $(7,191) | $14,296 | 198.8% | | Net decrease in cash, cash equivalents and restricted cash | $(2,506) | $(3,956) | $1,450 | -36.7% | | Cash and cash equivalents, end of period | $4,304 | $9,642 | $(5,338) | -55.4% | - Net cash used in operating activities significantly increased by **$14.7 million**, primarily due to a net loss of **$22.4 million** in 2025 compared to net income of **$0.5 million** in 2024[21](index=21&type=chunk)[198](index=198&type=chunk) - Net cash provided by financing activities increased by **$14.3 million**, driven by a net increase in ABL facility borrowings and **$1.0 million** from a legal settlement[21](index=21&type=chunk)[200](index=200&type=chunk) [Index for Notes to Consolidated Financial Statements](index=15&type=section&id=Index%20for%20Notes%20to%20Consolidated%20Financial%20Statements) This section provides an index to the detailed notes accompanying the consolidated financial statements, outlining the specific topics covered in each note [Notes to Consolidated Financial Statements](index=16&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed information and explanations regarding accounting policies, financial statement line items, and other relevant disclosures for BRC Inc.'s consolidated financial statements [Note 1. Organization and Nature of Business](index=16&type=section&id=Note%201.%20Organization%20and%20Nature%20of%20Business) This note describes BRC Inc.'s formation as a Delaware public benefit corporation, the Business Combination, and its core business of purchasing, roasting, and selling coffee and related products - BRC Inc. operates as a Delaware public benefit corporation, with Authentic Brands as its solely managed subsidiary[30](index=30&type=chunk)[31](index=31&type=chunk) - The company's business involves purchasing, roasting, and selling high-quality coffee, coffee accessories, energy drinks, and branded apparel through online channels and business networks, including the Black Rifle Coffee Company (BRCC) brand[31](index=31&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=16&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note details significant accounting policies, including basis of presentation, revenue recognition, inventory valuation, property, plant and equipment, leases, income taxes, and equity-based compensation - Revenue is disaggregated by sales channel: Wholesale, Direct-to-Consumer (DTC), and Outpost[51](index=51&type=chunk) Revenue by Sales Channel (in thousands) | Channel | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Wholesale | $61,316 | $53,761 | $118,107 | $114,189 | | DTC | $27,640 | $29,970 | $55,361 | $62,584 | | Outpost | $5,881 | $5,286 | $11,344 | $10,636 | | **Total** | **$94,837** | **$89,017** | **$184,812** | **$187,409** | - The company adopted ASU 2023-09, 'Improvements to Income Tax Disclosures,' effective January 1, 2025, and is evaluating ASU 2024-03, 'Disaggregation of Income Statement Expenses,' effective for fiscal years beginning after December 15, 2026[86](index=86&type=chunk)[87](index=87&type=chunk) - A change in the Loyalty Program policy in March 2024, regarding point expiration, resulted in a reduction to deferred revenue liability and an increase to DTC Channel revenue of **$1,754 thousand** and **$5,115 thousand** for the three and six months ended June 30, 2024, respectively[44](index=44&type=chunk) [Note 3. Inventories, Net](index=27&type=section&id=Note%203.%20Inventories,%20Net) This note provides a breakdown of the company's inventory components, including coffee, energy drinks, apparel, and other merchandise, as of June 30, 2025, and December 31, 2024 Inventories, Net (in thousands) | Inventory Type | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Unroasted Coffee | $5,399 | $3,180 | | Finished Goods Coffee | $16,810 | $16,502 | | Ready-to-Drink (raw) | $5,576 | $10,206 | | Ready-to-Drink (finished) | $15,813 | $9,545 | | Apparel and other | $4,984 | $3,214 | | **Total Inventories** | **$48,582** | **$42,647** | - Total inventories, net increased by **$5,935 thousand (13.9%)** from December 31, 2024, to June 30, 2025, primarily driven by increases in unroasted coffee and finished goods for Ready-to-Drink products[88](index=88&type=chunk) [Note 4. Property, Plant and Equipment, Net](index=27&type=section&id=Note%204.%20Property,%20Plant%20and%20Equipment,%20Net) This note details the composition of property, plant, and equipment, net, and reports the reclassification of an office property to assets held for sale during Q2 2025 Property, Plant and Equipment, Net (in thousands) | Asset Category | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Building and leasehold improvements | $24,110 | $27,429 | | Machinery and equipment | $20,033 | $19,946 | | Computer equipment and software | $19,132 | $17,814 | | Furniture and fixtures | $2,937 | $2,949 | | Land | $110 | $1,547 | | Vehicles | $762 | $762 | | Construction in progress | $10,336 | $10,925 | | **Gross PP&E** | **$77,420** | **$81,372** | | Less: accumulated depreciation | $(28,069) | $(22,168) | | **Total PP&E, net** | **$49,351** | **$59,204** | - An office property in Salt Lake City, Utah, with a net carrying value of **$4,294 thousand**, was reclassified to 'Assets held for sale' as of June 30, 2025, with the sale expected to close by September 15, 2025, for **$5,350 thousand**[91](index=91&type=chunk) - Total depreciation expense for internal use software was **$4,059 thousand** for the six months ended June 30, 2025, a significant increase from **$2,003 thousand** in the prior year period[89](index=89&type=chunk) [Note 5. Other Assets](index=28&type=section&id=Note%205.%20Other%20Assets) This note details the company's prepaid advertising credits, which are non-cash consideration received in exchange for finished goods and apparel inventory - Prepaid advertising credits totaled **$48,661 thousand** as of June 30, 2025, with **$5,040 thousand** classified as current and **$43,621 thousand** as non-current[92](index=92&type=chunk) - Revenue recognized from shipments of inventory in exchange for prepaid advertising decreased significantly to **$406 thousand** for the six months ended June 30, 2025, from **$11,904 thousand** in the prior year period[93](index=93&type=chunk) [Note 6. Accrued Liabilities](index=28&type=section&id=Note%206.%20Accrued%20Liabilities) This note provides a detailed breakdown of accrued liabilities, including significant increases in accrued contingencies and other accrued expenses Accrued Liabilities (in thousands) | Accrued Liability | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Accrued contingencies | $8,325 | $0 | | Accrued compensation and benefits | $4,645 | $5,873 | | Accrued professional fees | $4,359 | $3,014 | | Deferred purchase incentive | $2,403 | $2,264 | | Accrued inventory purchases | $1,868 | $2,175 | | Accrued marketing | $1,701 | $4,180 | | Accrued freight | $1,516 | $478 | | Accrued sales and other taxes | $971 | $1,164 | | Accrued interest | $796 | $61 | | Credit card liabilities | $400 | $780 | | Other accrued expenses | $11,364 | $7,911 | | **Total Accrued Liabilities** | **$38,348** | **$27,900** | - Total accrued liabilities increased by **$10,448 thousand (37.4%)** from December 31, 2024, to June 30, 2025, primarily due to the recognition of **$8,325 thousand** in accrued contingencies[94](index=94&type=chunk) [Note 7. Deferred Revenue and Gift Card Liability](index=29&type=section&id=Note%207.%20Deferred%20Revenue%20and%20Gift%20Card%20Liability) This note outlines changes in deferred revenue, gift card liability, and loyalty program balances for the three and six months ended June 30, 2025 and 2024 Deferred Revenue and Gift Card Liability (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Balance at beginning of period | $3,814 | $7,562 | $3,918 | $11,030 | | Sales of gift cards | $108 | $145 | $433 | $451 | | Redemption of gift cards | $(157) | $(121) | $(552) | $(491) | | Increase from deferral of revenue | $1,738 | $2,056 | $1,738 | $2,056 | | Decrease from revenue recognition | $(1,760) | $(2,297) | $(1,784) | $(2,832) | | Loyalty Program points earned | $342 | $608 | $660 | $1,329 | | Loyalty Program points redeemed/expired | $(315) | $(2,361) | $(643) | $(5,951) | | **Balance at end of period** | **$3,770** | **$5,592** | **$3,770** | **$5,592** | - The balance of deferred revenue and gift card liability decreased from **$5,592 thousand** at June 30, 2024, to **$3,770 thousand** at June 30, 2025, primarily due to a significant reduction in Loyalty Program points redeemed/expired in 2025 compared to 2024[95](index=95&type=chunk) [Note 8. Long-Term Debt](index=29&type=section&id=Note%208.%20Long-Term%20Debt) This note details the company's credit facilities, including the ABL Facility and Term Loan Facility, and notes payable, outlining their terms, maturities, and outstanding balances Long-Term Debt (in thousands) | Debt Component | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Term Loan Facility | $39,500 | $40,000 | | ABL Facility | $37,032 | $28,853 | | Notes payable | $1,047 | $1,446 | | **Total principal** | **$77,579** | **$70,299** | | Less: debt issuance costs and OID | $(4,914) | $(5,225) | | **Long-term debt, net** | **$72,665** | **$65,074** | - Total principal debt increased by **$7,280 thousand (10.4%)** from December 31, 2024, to June 30, 2025, primarily due to an increase in the ABL Facility balance[96](index=96&type=chunk) - The ABL Facility has an aggregate principal amount of up to **$75,000 thousand**, with **$13,912 thousand** available borrowings as of June 30, 2025, while the Term Loan Facility has an aggregate principal amount of **$40,000 thousand**[97](index=97&type=chunk)[98](index=98&type=chunk)[102](index=102&type=chunk) Future Contractual Maturities of Credit Facilities (in thousands) | Year | Amount | | :---------------- | :----- | | Remainder of 2025 | $1,147 | | 2026 | $2,400 | | 2027 | $2,000 | | 2028 | $2,000 | | 2029 | $70,032 | | **Total** | **$77,579** | [Note 9. Stockholders' Equity](index=32&type=section&id=Note%209.%20Stockholders'%20Equity) This note describes the company's capital structure, including Class A, Class B, and Class C Common Stock, Preferred Stock, and Common Units, along with their respective voting and economic rights, and details non-controlling interests - BRC Inc.'s authorized capital stock includes **2,500,000,000 shares** of Class A Common Stock, **300,000,000 shares** of Class B Common Stock, **1,500,000 shares** of Class C Common Stock, and **1,000,000 shares** of Preferred Stock[109](index=109&type=chunk) - Class A and Class B Common Stock holders are entitled to one vote per share, while Class C Common Stock has no voting rights, and only Class A Common Stock holders are entitled to dividends[110](index=110&type=chunk) - As of June 30, 2025, BRC Inc.'s ownership percentage in Authentic Brands was **36.5%**, with non-controlling interests holding **63.5%**[116](index=116&type=chunk) - On July 16, 2025, the Company closed an underwritten offering of **28,000,000 shares** of Class A Common Stock, plus an additional **4,200,000 shares** from the underwriter's option, at **$1.25 per share**[117](index=117&type=chunk) [Note 10. Equity-Based Compensation](index=34&type=section&id=Note%2010.%20Equity-Based%20Compensation) This note details the company's equity incentive plans, including Incentive Units, Stock Options, RSUs, PSUs, and ESPP, along with their valuation assumptions and activity Equity-Based Compensation Activity (Six Months Ended June 30) | Award Type | Outstanding at Jan 1, 2025 | Granted | Forfeited | Vested/Exercised | Outstanding at June 30, 2025 | | :--------- | :------------------------- | :------ | :-------- | :--------------- | :--------------------------- | | Stock Options | 5,424,411 | 3,760,948 | (1,189,691) | - | 7,995,668 | | RSUs | 2,232,952 | 3,808,610 | (867,187) | (715,258) | 4,459,117 | | PSUs | 8,462,412 | - | - | - | 8,462,412 | - Total unrecognized equity compensation expense for stock options was **$8,255 thousand** and for RSUs was **$9,195 thousand** as of June 30, 2025, both to be recognized over approximately two years[124](index=124&type=chunk)[125](index=125&type=chunk) - The company issued **100,626 shares** under its ESPP for **$183 thousand** during the six-month offering period ending March 8, 2025[128](index=128&type=chunk) [Note 11. Defined Contribution Plan](index=37&type=section&id=Note%2011.%20Defined%20Contribution%20Plan) This note provides information on the company's matching contributions to its voluntary qualified defined contribution plan for eligible employees Company Matching Contributions (in thousands) | Period | 2025 | 2024 | | :------------------------ | :----- | :----- | | Three Months Ended June 30 | $219 | $413 | | Six Months Ended June 30 | $430 | $617 | - Company matching contributions decreased by **$194 thousand (47.0%)** for the three months and **$187 thousand (30.3%)** for the six months ended June 30, 2025, compared to the prior year[129](index=129&type=chunk) [Note 12. Income Taxes](index=37&type=section&id=Note%2012.%20Income%20Taxes) This note explains the company's income tax structure, including its status as a managing member of Authentic Brands, and discusses the effective tax rate, tax examinations, and valuation allowances against deferred tax assets - BRC Inc. consolidates Authentic Brands, which is taxed as a partnership, except for one subsidiary, and is subject to U.S. federal and state income taxes on its allocable share of Authentic Brands' income/loss[130](index=130&type=chunk) - The company has recorded a valuation allowance against deferred tax assets due to significant uncertainty regarding their realization, primarily stemming from a limited operating history and historical losses[133](index=133&type=chunk) - The IRS has commenced an examination of Authentic Brands' U.S. income tax return for 2021, expected to conclude within the next twelve months[131](index=131&type=chunk) [Note 13. Net Income (Loss) Per Share](index=38&type=section&id=Note%2013.%20Net%20Income%20(Loss)%20Per%20Share) This note details the computation of basic and diluted net income (loss) per share for Class A Common Stock, including the treatment of potentially dilutive securities Net Income (Loss) Per Share Attributable to Class A Common Stock | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to BRC Inc. (in thousands) | $(5,329) | $(482) | $(8,216) | $67 | | Weighted-average shares of Class A Common Stock outstanding - Basic | 79,146,003 | 68,209,081 | 78,780,708 | 67,260,724 | | Weighted-average shares of Class A Common Stock outstanding - Diluted | 79,146,003 | 68,209,081 | 78,780,708 | 68,333,260 | | Basic and diluted EPS | $(0.07) | $(0.01) | $(0.10) | $0.00 | - Potentially dilutive securities, including stock options, Common Units, RSUs, PSUs, and Incentive Units, were excluded from diluted EPS calculations for periods of net loss as their inclusion would be antidilutive[134](index=134&type=chunk)[135](index=135&type=chunk) [Note 14. Commitments and Contingencies](index=39&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) This note outlines the company's purchase agreements, legal proceedings, and potential tax liabilities, including details on ongoing lawsuits and recent settlements Future Minimum Purchase Commitments (in thousands) | Year | Amount | | :---------------- | :----- | | Remainder of 2025 | $12,185 | | 2026 | $30,018 | | 2027 | $32,427 | | 2028 | $15,141 | | 2029 | $14,934 | | **Total** | **$104,705** | - The company settled a lawsuit with Tang Capital Partners, LP for **$8,250 thousand** on July 21, 2025, and a lawsuit with Alta Partners, LLC for **$1,000 thousand** cash payment from Alta and issuance of **2,300,100 shares** of Class A Common Stock on June 20, 2025[141](index=141&type=chunk)[144](index=144&type=chunk) - Accrued contingencies of **$8,325 thousand** were recognized as of June 30, 2025, related to legal matters[94](index=94&type=chunk) [Note 15. Operational Improvement Plan](index=41&type=section&id=Note%2015.%20Operational%20Improvement%20Plan) This note describes the Operational Improvement Plan implemented in Q2 2025 to reduce costs and improve efficiency, including workforce reductions and associated severance costs - The Operational Improvement Plan, initiated in Q2 2025, involved a reduction of approximately **48 employees**, incurring **$2,149 thousand** in severance costs[146](index=146&type=chunk)[147](index=147&type=chunk) - As of June 30, 2025, **$1,586 thousand** in severance costs were accrued, expected to be fully paid by Q1 2026[147](index=147&type=chunk)[148](index=148&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, discussing key trends, recent developments, and a detailed comparison of financial results [Overview](index=41&type=section&id=Overview) This overview introduces Black Rifle Coffee Company as a Veteran-founded premium coffee, energy drink, and media company operating through Wholesale, DTC, and Outpost channels - Black Rifle Coffee Company is a Veteran-founded and led premium coffee, energy drink, and media company[150](index=150&type=chunk) - The company operates through three primary channels: Wholesale, Direct-to-Consumer (DTC), and Outposts[150](index=150&type=chunk) - The Business Combination in February 2022 was accounted for as a reverse acquisition and recapitalization of Authentic Brands, with SilverBox treated as the acquired company[151](index=151&type=chunk) [Trends](index=42&type=section&id=Trends) This section highlights key trends affecting the company's business within its sales channels, noting growth in Wholesale, slowing decline in DTC, and stabilization in Outpost revenue - Wholesale channel revenue increased due to new customers, expansion in the Food, Drug, and Mass (FDM) market, and new product launches like Black Rifle Energy[155](index=155&type=chunk) - DTC channel revenue decline is slowing, with strategic initiatives focused on optimizing customer acquisition, enhancing retention, and improving channel efficiency[155](index=155&type=chunk) - Outpost channel revenue is stabilizing, with efforts to improve transaction volumes and average order values, but limited growth is anticipated in 2025 due to reallocation of investments and potential closure of underperforming locations[155](index=155&type=chunk) [Recent Developments](index=42&type=section&id=Recent%20Developments) This section details recent significant events, including the implementation of an Operational Improvement Plan and a public offering of Class A Common Stock - An Operational Improvement Plan was implemented in Q2 2025 to reduce costs and improve efficiency, with an estimated cost of **$2.1 million** in severance and anticipated annualized savings of **$6.5 million**[152](index=152&type=chunk) - On July 18, 2025, the company closed an underwritten offering of **28,000,000 shares** of Class A Common Stock, plus an additional **4,200,000 shares** from the underwriter's option, at **$1.25 per share**[153](index=153&type=chunk) [Key Factors Affecting Our Performance](index=42&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) This section outlines critical factors influencing the company's performance, such as brand awareness, customer acquisition and retention, product line expansion, and supply chain management - Maintaining and growing brand awareness and loyalty is crucial, with a focus on refining marketing strategy through streaming advertising, social media, and targeted digital advertising[154](index=154&type=chunk) - Key performance drivers include expanding the Wholesale customer base, acquiring and retaining customers at a reasonable cost, driving repeat purchases, and continuously expanding the product line with new innovations[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) - Effective supply chain management, including sourcing green coffee beans from diverse countries and maintaining quality control, is vital for meeting future demand[160](index=160&type=chunk) [Components of Our Results of Operations](index=43&type=section&id=Components%20of%20Our%20Results%20of%20Operations) This section defines the key components of the company's results of operations: Revenue, net; Cost of goods sold; Operating expenses; and Interest expense - Revenue, net, includes product sales through various platforms, adjusted for returns, discounts, and loyalty rewards[161](index=161&type=chunk) - Cost of goods sold comprises raw material, labor, shipping, handling, fulfillment, credit card fees, and royalty fees[162](index=162&type=chunk) - Operating expenses include marketing and advertising, salaries, wages and benefits, and general and administrative costs[163](index=163&type=chunk) - Interest expense covers interest on borrowings, amortization of debt discounts, and deferred financing costs[164](index=164&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) This section provides a detailed comparative analysis of the company's financial performance for the three and six months ended June 30, 2025, versus 2024 [Comparison of the three months ended June 30, 2025 to the three months ended June 30, 2024](index=45&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030%2C%202025%20to%20the%20three%20months%20ended%20June%2030%2C%202024) For the three months ended June 30, 2025, net revenue increased by **7%** to **$94.8 million**, while gross profit decreased by **14%** due to higher costs and loyalty program changes, and operating expenses rose by **23%** Key Financials (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | $ Change | % Change | | :---------------------- | :-------- | :-------- | :-------- | :------- | | Revenue, net | $94,837 | $89,017 | $5,820 | 7% | | Cost of goods sold | $62,664 | $51,758 | $10,906 | 21% | | Gross profit | $32,173 | $37,259 | $(5,086) | (14)% | | Gross margin | 34% | 42% | - | - | | Total operating expenses | $44,797 | $36,281 | $8,516 | 23% | - Wholesale channel revenue increased by **$7.6 million (14%)**, driven by Energy revenue, packaged coffee distribution, and online retailer sales, partially offset by a **$3.0 million** decrease from barter transactions[168](index=168&type=chunk) - DTC channel revenue decreased by **$2.3 million (8%)**, primarily due to a **$1.8 million** decrease in loyalty rewards accrual and lower customer acquisition[169](index=169&type=chunk) - Marketing and advertising expenses increased by **$2.4 million (32%)**, supporting new partnerships, research, shopper marketing, and the Black Rifle Energy launch[174](index=174&type=chunk) - Other operating expense, net, increased by **$4.6 million (1,484%)**, mainly due to a **$4.7 million** increase in legal contingencies[177](index=177&type=chunk) [Comparison of the six months ended June 30, 2025 to the six months ended June 30, 2024](index=47&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030%2C%202025%20to%20the%20six%20months%20ended%20June%2030%2C%202024) For the six months ended June 30, 2025, net revenue slightly decreased by **1%** to **$184.8 million**, with gross profit declining by **19%**, and operating expenses increasing by **11%**, resulting in a net loss Key Financials (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | $ Change | % Change | | :---------------------- | :-------- | :-------- | :-------- | :------- | | Revenue, net | $184,812 | $187,409 | $(2,597) | (1)% | | Cost of goods sold | $120,165 | $107,966 | $12,199 | 11% | | Gross profit | $64,647 | $79,443 | $(14,796) | (19)% | | Gross margin | 35% | 42% | - | - | | Total operating expenses | $82,703 | $74,509 | $8,194 | 11% | - Wholesale channel revenue increased by **$3.9 million (3%)**, driven by Black Rifle Energy launch and expanded distribution, offset by an **$11.5 million** decrease from barter transactions[180](index=180&type=chunk) - DTC channel revenue decreased by **$7.2 million (12%)**, primarily due to a **$5.1 million** decrease in loyalty rewards accrual and lower customer acquisition[181](index=181&type=chunk) - Marketing and advertising expenses increased by **$6.1 million (40%)**, supporting partnerships, research, shopper marketing, and the Black Rifle Energy launch[186](index=186&type=chunk) - Other operating expense, net, increased by **$5.8 million (1,801%)**, mainly due to a **$4.7 million** increase in legal contingencies[189](index=189&type=chunk) [Components of Our Non-Operating Expenses](index=49&type=section&id=Components%20of%20Our%20Non-Operating%20Expenses) This section analyzes changes in non-operating expenses, specifically interest expense, for the three and six months ended June 30, 2025, compared to 2024 Interest Expense, Net (in thousands) | Period | 2025 | 2024 | $ Change | % Change | | :------------------------ | :-------- | :-------- | :-------- | :------- | | Three Months Ended June 30 | $(1,844) | $(2,301) | $(457) | (20)% | | Six Months Ended June 30 | $(4,213) | $(4,352) | $(139) | (3)% | - Interest expense, net, decreased by **$0.5 million (20%)** for the three months and **$0.1 million (3%)** for the six months ended June 30, 2025, primarily due to debt refinancing in Q4 2024[190](index=190&type=chunk)[193](index=193&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity position, primary sources and uses of cash, cash flow activities, and future commitments, including capital expenditures - As of June 30, 2025, cash and cash equivalents were **$4.3 million**, working capital was **$24.1 million**, and available borrowings under credit facilities were **$13.9 million**[195](index=195&type=chunk) - The company believes current liquidity sources are sufficient for working capital and commitments for at least the next twelve months[195](index=195&type=chunk) - Net cash used in operating activities was **$7.5 million** for the six months ended June 30, 2025, a **$14.7 million** decrease from the prior year, primarily due to a net loss[198](index=198&type=chunk) - Net cash provided by financing activities increased by **$14.3 million** to **$7.1 million**, driven by increased ABL facility borrowings and a legal settlement[200](index=200&type=chunk) Future Commitments (in thousands) | Commitment Type | Remainder of 2025 | 2026 | 2027 | 2028 | 2029 | Beyond 2029 | | :---------------- | :---------------- | :-------- | :-------- | :-------- | :-------- | :---------- | | Purchase Agreements | $12,185 | $30,018 | $32,427 | $15,141 | $14,934 | - | | Operating Leases | $3,900 | - | - | - | - | $35,400 | [Critical Accounting Estimates](index=53&type=section&id=Critical%20Accounting%20Estimates) This section states that there have been no material changes to the company's significant accounting policies or critical accounting estimates during the three months ended June 30, 2025 - No material changes to significant accounting policies or critical accounting estimates occurred during the three months ended June 30, 2025[205](index=205&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily focusing on interest rate risk associated with its variable-rate debt facilities - The company's Term Loan Facility and ABL Facility bear variable interest rates tied to a reference rate or term SOFR plus a margin[206](index=206&type=chunk) - As of June 30, 2025, outstanding variable rate debt included **$39.5 million** on the Term Loan Facility and **$37.0 million** on the ABL Facility[206](index=206&type=chunk) - A hypothetical **5%** increase in interest rates on outstanding variable rate borrowings would result in approximately **$3.8 million** in additional annual interest expense[206](index=206&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures and confirms no material changes in internal control over financial reporting - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of June 30, 2025[207](index=207&type=chunk) - There were no material changes in internal control over financial reporting during the three months ended June 30, 2025[208](index=208&type=chunk) [Part II - Other Information](index=55&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 14, 'Commitments and Contingencies,' for detailed information regarding the company's involvement in various legal proceedings - Information on legal proceedings is provided in Note 14, 'Commitments and Contingencies,' of the consolidated financial statements[210](index=210&type=chunk) [Item 1A. Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) This section highlights new or updated risk factors, specifically concerning changes in U.S. trade policies and the potential impact of the Operational Improvement Plan - Changes in U.S. trade policies, including tariffs on coffee beans, may adversely impact the business by increasing product costs and reducing demand[212](index=212&type=chunk)[213](index=213&type=chunk) - The Operational Improvement Plan, involving an **8.7%** workforce reduction, may not yield intended efficiencies, could strain resources, negatively impact morale, and slow strategic execution[214](index=214&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there are no unregistered sales of equity securities or use of proceeds to report for the period - This item is not applicable for the reporting period[215](index=215&type=chunk) [Item 3. Defaults Upon Senior Securities](index=55&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there are no defaults upon senior securities to report for the period - This item is not applicable for the reporting period[216](index=216&type=chunk) [Item 4. Mine Safety Disclosures](index=57&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that there are no mine safety disclosures applicable to the company - This item is not applicable for the reporting period[218](index=218&type=chunk) [Item 5. Other Information](index=57&type=section&id=Item%205.%20Other%20Information) This section reports on Rule 10b5-1 Trading Plans, indicating that no directors or Section 16 officers adopted or terminated such arrangements during the three months ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[219](index=219&type=chunk) [Item 6. Exhibits](index=58&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including organizational documents, credit agreements, settlement agreements, and certifications - Exhibits include amended and restated certificates of incorporation and by-laws, amendments to financing and credit agreements, a settlement and release agreement with Alta Partners, LLC, and certifications from the Principal Executive and Financial Officers[220](index=220&type=chunk) [Signatures](index=59&type=section&id=Signatures) This section contains the required signatures of the registrant's authorized officers, including the Chief Executive Officer and Chief Financial Officer, certifying the filing of the report - The report is signed by Christopher Mondzelewski, Chief Executive Officer, and Matthew Amigh, Chief Financial Officer, on August 4, 2025[225](index=225&type=chunk)

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) BRC Inc. reported mixed Q2 2025 results with revenue growth driven by wholesale, but significant declines in gross profit and adjusted EBITDA, while reaffirming full-year guidance and securing equity funding [CEO & CFO Commentary](index=1&type=section&id=CEO%20%26%20CFO%20Commentary) BRC Inc.'s CEO highlighted strong distribution and brand growth, particularly Black Rifle Energy's momentum, while the CFO noted profitability challenges from coffee inflation are being mitigated by strategic investments and equity financing - CEO Chris Mondzelewski highlighted strong Q2 performance with robust **distribution growth** and expanded **shelf coverage**, driven by packaged and ready-to-drink coffee, and encouraging national expansion of **Black Rifle Energy**[4](index=4&type=chunk) - CFO Matt Amigh noted that despite recent profitability challenges from **coffee inflation**, the company is mitigating pressures through strategic investments and a recent equity issuance, which is expected to reduce net debt and lower annual interest expenses by over **$2 million**[4](index=4&type=chunk) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) BRC Inc. achieved **6.5% revenue growth** in Q2 2025, primarily from wholesale, but faced significant declines in gross profit and adjusted EBITDA, with an expanded net loss, while reaffirming full-year guidance and securing equity funding | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | Change (Million USD) | Change (%) | | :--- | :---: | :---: | :---: | :---: | | Net Revenue | 94.8 | 89.0 | 5.8 | 6.5% | | Gross Profit | 32.2 | 37.3 | (5.1) | (13.7)% | | Gross Margin | 33.9% | 41.9% | - | - | | Net Loss | (14.5) | (1.4) | (13.1) | - | | Adjusted EBITDA | 2.4 | 7.5 | (5.1) | (68.3)% | - Revenue increased **6.5% year-over-year**, primarily driven by a **14.1% growth in wholesale revenue**[6](index=6&type=chunk) - In Q2 2025, packaged coffee All-Commodity Volume (ACV) penetration increased by **14.9 percentage points to 56.6%**, and Ready-to-Drink (RTD) coffee ACV penetration increased by **6.1 percentage points to 53.5%**; Black Rifle Energy™ ACV reached **22.5%**, up **1.7 percentage points** from the prior quarter[6](index=6&type=chunk) - Net loss was **$14.5 million**, an increase of **$13.1 million** compared to a **$1.4 million** net loss in Q2 2024; Adjusted EBITDA was **$2.4 million**, a **$5.1 million** decrease from **$7.5 million** in Q2 2024[6](index=6&type=chunk) - The company reaffirmed its full-year revenue, gross margin, and adjusted EBITDA guidance[6](index=6&type=chunk) - Subsequent to quarter-end, the company raised **$40.25 million** in gross proceeds through an equity offering[6](index=6&type=chunk) [Second Quarter 2025 Detailed Results](index=2&type=section&id=Second%20Quarter%202025%20Detailed%20Results) BRC Inc.'s Q2 2025 saw net revenue growth driven by wholesale, offset by DTC declines, while gross profit and margin decreased due to inflation and trade adjustments, and operating expenses increased due to marketing and G&A [Net Revenue by Channel](index=2&type=section&id=Net%20Revenue%20by%20Channel) Q2 2025 net revenue grew **6.5% to $94.8 million**, driven by **14.1% wholesale growth** from distribution and Black Rifle Energy sales, while DTC revenue declined **7.8%** due to loyalty policy changes and advertising reallocation, and Outposts revenue increased **11.3%** from franchise fees and higher average order values - Net revenue increased **6.5% to $94.8 million** in Q2 2025, compared to **$89.0 million** in Q2 2024[7](index=7&type=chunk) - Wholesale revenue increased **14.1% to $61.3 million**, primarily driven by distribution growth, increased sales volume to food and mass retailers, and Black Rifle Energy sales, partially offset by a **$3.0 million** net reduction in barter transaction revenue[7](index=7&type=chunk) - Direct-to-Consumer (DTC) revenue decreased **7.8% to $27.6 million**, primarily due to reduced accruals from loyalty rewards policy changes in Q2 2024 and a strategic reallocation of advertising spend to higher-return business areas, leading to lower customer acquisition[8](index=8&type=chunk) - Black Rifle Coffee Outposts revenue increased **11.3% to $5.9 million**, primarily driven by increased franchise fees and higher average order values at company-operated stores[8](index=8&type=chunk) [Gross Profit and Margin](index=2&type=section&id=Gross%20Profit%20and%20Margin) Q2 2025 gross profit decreased **13.7% to $32.2 million**, with gross margin declining **790 basis points to 33.9%**, primarily due to raw coffee inflation, higher trade and pricing adjustments, and loyalty program changes, partially offset by productivity gains and a favorable product mix - Gross profit decreased to **$32.2 million** in Q2 2025, compared to **$37.3 million** in Q2 2024, a **13.7% year-over-year decline**[9](index=9&type=chunk) - Gross margin decreased by **790 basis points to 33.9%**, compared to **41.9%** in Q2 2024[9](index=9&type=chunk) - The decline was primarily due to **raw coffee inflation**, higher trade and pricing adjustments, and the impact of loyalty rewards program changes, partially offset by productivity improvements and a favorable product mix[9](index=9&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) In Q2 2025, marketing expenses significantly increased due to advertising and content creation investments, while salaries, wages, and benefits decreased due to reduced headcount, and G&A expenses rose sharply from professional services (litigation-related) and capitalized software depreciation [Marketing Expenses](index=2&type=section&id=Marketing%20Expenses) Q2 2025 marketing expenses increased **31.8% year-over-year to $9.8 million**, rising **200 basis points to 10.3% of revenue**, primarily due to increased investment in advertising, shopper marketing, and content creation - Marketing expenses increased **31.8% to $9.8 million**, compared to **$7.4 million** in Q2 2024[10](index=10&type=chunk) - As a percentage of revenue, marketing expenses increased by **200 basis points to 10.3%**[10](index=10&type=chunk) - The increase was primarily driven by greater investments in advertising placements, shopper marketing, and content creation[10](index=10&type=chunk) [Salaries, Wages, and Benefits Expenses](index=2&type=section&id=Salaries%2C%20Wages%2C%20and%20Benefits%20Expenses) Q2 2025 salaries, wages, and benefits expenses decreased **10.3% year-over-year to $15.8 million**, falling **310 basis points to 16.7% of revenue**, primarily due to reduced headcount - Salaries, wages, and benefits expenses decreased **10.3% to $15.8 million**, compared to **$17.6 million** in Q2 2024[11](index=11&type=chunk) - As a percentage of revenue, salaries, wages, and benefits expenses decreased by **310 basis points to 16.7%**[11](index=11&type=chunk) - The decrease was due to lower salaries and wages resulting from a reduced headcount compared to Q2 2024[11](index=11&type=chunk) [General and Administrative (G&A) Expenses](index=2&type=section&id=General%20and%20Administrative%20%28G%26A%29%20Expenses) Q2 2025 G&A expenses increased **30.7% year-over-year to $14.3 million**, rising **280 basis points to 15.1% of revenue**, primarily due to increased professional services (litigation-related) and capitalized software depreciation - G&A expenses increased **30.7% to $14.3 million**, compared to **$10.9 million** in Q2 2024[12](index=12&type=chunk) - As a percentage of revenue, G&A expenses increased by **280 basis points to 15.1%**[12](index=12&type=chunk) - The increase was primarily driven by higher professional services fees, mainly related to litigation, and increased depreciation of capitalized software investments[12](index=12&type=chunk) [Net Loss and Adjusted EBITDA for Second Quarter 2025](index=2&type=section&id=Net%20Loss%20and%20Adjusted%20EBITDA%20for%20Second%20Quarter%202025) In Q2 2025, the company's net loss expanded to **$14.5 million**, compared to **$1.4 million** in Q2 2024, and adjusted EBITDA decreased from **$7.5 million** to **$2.4 million** over the same period - Net loss for Q2 2025 was **$14.5 million**, and Adjusted EBITDA was **$2.4 million**[13](index=13&type=chunk) - In comparison, net loss for Q2 2024 was **$1.4 million**, and Adjusted EBITDA was **$7.5 million**[13](index=13&type=chunk) [Financial Outlook](index=3&type=section&id=Financial%20Outlook) BRC Inc. reaffirmed its full-year 2025 financial guidance, projecting net revenue between **$395 million and $425 million**, gross margin between **35% and 37%**, and adjusted EBITDA between **$20 million and $30 million**, while cautioning that actual results may differ significantly from these forward-looking statements | Metric | FY 2024 Actual (Million USD) | FY 2025 Guidance (Million USD) | | :--- | :---: | :---: | | Net Revenue | 391.5 | 395.0 - 425.0 | | Growth | (1)% | 1% - 9% | | Gross Margin | 41.2% | 35% - 37% | | Adjusted EBITDA | 37.1 | 20.0 - 30.0 | - In 2024, a barter transaction favorably impacted net revenue by **$23.9 million**, and a change in BRCC's loyalty program points policy increased net revenue by **$6.5 million**[15](index=15&type=chunk) - The guidance provided constitutes forward-looking statements, and actual results may differ materially[16](index=16&type=chunk) [Company Information](index=3&type=section&id=Company%20Information) This section provides details on BRC Inc.'s upcoming Q2 earnings conference call, an overview of the veteran-founded Black Rifle Coffee Company, and investor contact information [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) The company will host a conference call on August 5, 2025, at 8:30 AM ET to discuss Q2 results, with participation available via phone or the investor relations website, where a replay will also be provided - The company will host a conference call on **August 5, 2025, at 8:30 AM ET** to discuss Q2 results[18](index=18&type=chunk) - To participate, dial **(877) 407-0609 (U.S.)** or **(201) 689-8541 (International)**[18](index=18&type=chunk) - A live webcast of the conference call will be available on the investor relations page at **ir.blackriflecoffee.com**, with a replay available until **August 12, 2025**[18](index=18&type=chunk) [About BRC Inc.](index=3&type=section&id=About%20BRC%20Inc.) Black Rifle Coffee Company (BRCC) is a veteran-founded premium coffee and lifestyle brand established in 2014, dedicated to serving those who love America and supporting military, veterans, and first responders - Black Rifle Coffee Company (BRCC) is a **veteran-founded premium coffee company and lifestyle brand**[19](index=19&type=chunk) - Founded in **2014** by Green Beret Evan Hafer, the company is committed to supporting **veterans, active-duty military, first responders, and the American lifestyle**[19](index=19&type=chunk) [Investor Relations](index=3&type=section&id=Investor%20Relations) Investor contact information for BRC Inc. is provided, including email addresses for Matt McGinley and ICR for BRCC - Investor contacts: **Matt McGinley (IR@BlackRifleCoffee.com)** and **ICR for BRCC (BlackrifleIR@icrinc.com)**[21](index=21&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This press release contains numerous forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially, including factors like competition, growth management, supply chain disruptions, and commodity price volatility - This press release contains forward-looking statements regarding the company and its industry, involving significant risks and uncertainties[22](index=22&type=chunk) - Factors that could cause actual results to differ materially include competition, growth management, key employee retention, limited operating history, rapid growth management challenges, capital raising ability, long-term profitability, debt management, maximizing barter transaction asset value, negative publicity, brand perception maintenance, changes in consumer spending, marketing activities, DTC channel performance decline, wholesale distribution management, supply chain operations, loss of co-manufacturers, supply chain disruptions, commodity market fluctuations, changes in costs and availability, new store openings, lease obligations, franchisee capabilities, customer experience, food safety, market expansion, legal compliance, risk of employee unionization, cybersecurity threats, and other risks and uncertainties disclosed in SEC filings[23](index=23&type=chunk) - The company undertakes no obligation to update or revise any forward-looking statements, except as required by applicable securities laws[23](index=23&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents BRC Inc.'s consolidated statements of operations, balance sheets, and cash flows for the specified periods, detailing financial performance, position, and liquidity [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) This section provides BRC Inc.'s consolidated statements of operations for the three and six months ended June 30, 2025 and 2024, detailing net revenue, cost of goods sold, gross profit, operating expenses, operating income/loss, non-operating expenses, income/loss before taxes, and net income/loss attributable to BRC Inc | Metric (Thousand USD) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :---: | :---: | :---: | :---: | | Net Revenue | 94,837 | 89,017 | 184,812 | 187,409 | | Cost of Goods Sold | 62,664 | 51,758 | 120,165 | 107,966 | | Gross Profit | 32,173 | 37,259 | 64,647 | 79,443 | | Total Operating Expenses | 44,797 | 36,281 | 82,703 | 74,509 | | Operating Income (Loss) | (12,624) | 978 | (18,056) | 4,934 | | Income (Loss) Before Taxes | (14,468) | (1,323) | (22,269) | 582 | | Net Income (Loss) | (14,512) | (1,374) | (22,357) | 482 | | Net Income (Loss) Attributable to BRC Inc. | (5,329) | (482) | (8,216) | 67 | | Net Income (Loss) Per Share (Basic and Diluted) | (0.07) | (0.01) | (0.10) | — | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This section presents BRC Inc.'s consolidated balance sheets as of June 30, 2025, and December 31, 2024, detailing the company's assets (cash, receivables, inventory, fixed assets), liabilities (payables, accrued liabilities, long-term debt), and stockholders' equity | Metric (Thousand USD) | June 30, 2025 | December 31, 2024 | | :--- | :---: | :---: | | **ASSETS** | | | | Cash and Cash Equivalents | 4,304 | 6,810 | | Accounts Receivable, Net | 29,554 | 33,604 | | Inventories, Net | 48,582 | 42,647 | | Total Current Assets | 106,242 | 95,471 | | Property, Plant and Equipment, Net | 49,351 | 59,204 | | Total Assets | 225,253 | 227,382 | | **LIABILITIES AND STOCKHOLDERS’ EQUITY** | | | | Accounts Payable | 34,919 | 38,817 | | Accrued Liabilities | 38,348 | 27,900 | | Total Current Liabilities | 82,106 | 75,218 | | Long-Term Debt, Net | 70,118 | 63,027 | | Total Liabilities | 189,603 | 177,886 | | Stockholders’ Equity Attributable to BRC Inc. | 10,101 | 13,174 | | Total Stockholders’ Equity | 35,650 | 49,496 | | Total Liabilities and Stockholders’ Equity | 225,253 | 227,382 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section provides BRC Inc.'s consolidated statements of cash flows for the six months ended June 30, 2025 and 2024, detailing cash flows from operating, investing, and financing activities, along with non-cash operating activities and supplemental cash flow information | Metric (Thousand USD) | H1 2025 | H1 2024 | | :--- | :---: | :---: | | **Operating Activities** | | | | Net Income (Loss) | (22,357) | 482 | | Net Cash Provided by (Used in) Operating Activities | (7,464) | 7,212 | | **Investing Activities** | | | | Net Cash Used in Investing Activities | (2,147) | (3,977) | | **Financing Activities** | | | | Net Cash Provided by (Used in) Financing Activities | 7,105 | (7,191) | | Net Decrease in Cash and Cash Equivalents | (2,506) | (3,956) | | Cash and Cash Equivalents at End of Period | 4,304 | 9,642 | | Non-Cash Operating Activities (Thousand USD) | H1 2025 | H1 2024 | | :--- | :---: | :---: | | Revenue recognized from inventory exchanged for prepaid advertising | 406 | 11,904 | | Increase in insurance receivable due to legal settlement | 2,500 | — | | Income taxes paid | 334 | 345 | | Interest paid | 1,822 | 3,567 | [Key Operating and Financial Metrics](index=9&type=section&id=Key%20Operating%20and%20Financial%20Metrics) This section presents BRC Inc.'s revenue breakdown by sales channel and key operational metrics, including ACV penetration, DTC subscribers, and Outposts store count, for the specified periods [Revenue by Sales Channel](index=9&type=section&id=Revenue%20by%20Sales%20Channel) This section provides BRC Inc.'s revenue data by sales channel for the three and six months ended June 30, 2025 and 2024, including net sales from wholesale, direct-to-consumer (DTC), and Outpost stores | Sales Channel (Thousand USD) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :---: | :---: | :---: | :---: | | Wholesale | 61,316 | 53,761 | 118,107 | 114,189 | | Direct-to-Consumer (DTC) | 27,640 | 29,970 | 55,361 | 62,584 | | Outpost | 5,881 | 5,286 | 11,344 | 10,636 | | **Total Net Sales** | **94,837** | **89,017** | **184,812** | **187,409** | [Key Operational Metrics](index=9&type=section&id=Key%20Operational%20Metrics) This section lists BRC Inc.'s key operational metrics as of June 30, 2025 and 2024, including FDM ACV%, RTD ACV%, DTC subscriber count, and total company and franchised Outposts store count | Metric | June 30, 2025 | June 30, 2024 | | :--- | :---: | :---: | | FDM ACV % | 56.6 % | 41.7 % | | RTD ACV % | 53.5 % | 47.4 % | | DTC Subscribers | 175,500 | 201,200 | | Total Outposts | 37 | 36 | | - Company-owned Outposts | 17 | 18 | | - Franchised Outposts | 20 | 18 | - FDM ACV% increased from **41.7%** as of June 30, 2024, to **56.6%** as of June 30, 2025[38](index=38&type=chunk) - RTD ACV% increased from **47.4%** as of June 30, 2024, to **53.5%** as of June 30, 2025[38](index=38&type=chunk) - DTC subscribers decreased from **201,200** as of June 30, 2024, to **175,500** as of June 30, 2025[38](index=38&type=chunk) - Total Outposts increased from **36** as of June 30, 2024, to **37** as of June 30, 2025, with company-owned Outposts decreasing by **1** and franchised Outposts increasing by **2**[38](index=38&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=10&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section defines BRC Inc.'s non-GAAP financial measures (EBITDA and Adjusted EBITDA), outlines their limitations, and provides a detailed reconciliation to GAAP net income (loss) [Definition and Limitations of Non-GAAP Financial Measures](index=10&type=section&id=Definition%20and%20Limitations%20of%20Non-GAAP%20Financial%20Measures) BRC Inc. uses non-GAAP EBITDA and Adjusted EBITDA to assess business performance and liquidity, which are not GAAP compliant, have limitations, and should not replace GAAP reporting, as they do not reflect cash requirements for working capital, debt, taxes, or capital expenditures - EBITDA is defined as net income (loss) before interest expense, income tax expense, depreciation, and amortization[41](index=41&type=chunk) - Adjusted EBITDA further adjusts EBITDA for stock-based compensation, system implementation costs, outpost development cost write-offs, non-routine legal fees, and restructuring and related costs[41](index=41&type=chunk) - Effective with Q1 2025 results, the company modified its Adjusted EBITDA presentation to no longer exclude RTD transformation costs and executive search fees, which reduced Adjusted EBITDA by **$0.9 million** and **$2.5 million** for the three and six months ended June 30, 2024, respectively[41](index=41&type=chunk) - EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as substitutes for GAAP reporting, as they do not reflect cash requirements for working capital, debt interest or principal payments, income taxes, historical or future capital expenditures, and stock-based compensation, while a non-cash expense, is an important component of employee incentives[42](index=42&type=chunk) [Reconciliation of Net Income (Loss) to Adjusted EBITDA](index=11&type=section&id=Reconciliation%20of%20Net%20Income%20%28Loss%29%20to%20Adjusted%20EBITDA) This section provides a detailed reconciliation of BRC Inc.'s net income (loss) to EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024, listing adjustments such as interest expense, taxes, depreciation, stock-based compensation, and non-routine legal fees | Metric (Thousand USD) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :---: | :---: | :---: | :---: | | Net Income (Loss) | (14,512) | (1,374) | (22,357) | 482 | | Interest expense | 1,844 | 2,301 | 4,213 | 4,352 | | Income tax expense | 44 | 51 | 88 | 100 | | Depreciation and amortization | 3,960 | 2,384 | 6,536 | 4,797 | | **EBITDA** | **(8,664)** | **3,362** | **(11,520)** | **9,731** | | Stock-based compensation | 2,741 | 3,305 | 5,331 | 5,257 | | System implementation costs | — | 140 | — | 520 | | Outpost development cost write-offs | (14) | 1,041 | 811 | 2,222 | | Non-routine legal fees | 6,172 | (327) | 6,510 | 2,044 | | Restructuring and related costs | 2,149 | — | 2,149 | 266 | | **Adjusted EBITDA** | **2,384** | **7,521** | **3,281** | **20,040** |

Company Overview - BRC Inc. (NYSE: BRCC) is currently expanding its retail distribution while facing challenges in direct-to-consumer sales and margin performance [1] - The company has recently launched an energy drink line in collaboration with Keurig [1] Investment Insights - The investment philosophy focuses on identifying mispriced securities by analyzing the underlying drivers of a company's financials, often revealed through a DCF model valuation [1] - This approach allows for a flexible investment strategy that encompasses various stock prospects, assessing the risk-to-reward ratio [1]

Group 1 - Black Rifle Coffee Company (BRC Inc.) held its Q1 2025 earnings conference call on May 6, 2025, at 8:30 AM ET [1] - The call was hosted by Matthew McGinley, Vice President of Investor Relations, and included key company executives [1][2] - The financial results for Q1 2025 were released prior to the call, and related materials are available on the company's Investor Relations website [3] Group 2 - The conference call included a Safe Harbor statement regarding forward-looking statements, highlighting the risks and uncertainties involved [4] - Non-GAAP financial measures, such as adjusted EBITDA, were discussed during the call, with reconciliations provided in the earnings release [5]

Financial Data and Key Metrics Changes - First quarter revenue declined by 9% year over year, primarily due to $8.5 million in barter transactions and a $3.4 million benefit from a change in loyalty rewards accruals in the previous year. Excluding these items, revenue increased by 4% [18] - Adjusted EBITDA declined by $11.6 million compared to the first quarter of last year, totaling approximately $1 million in Q1 2025 [21] - Gross margin decreased by 680 basis points to 36% of sales, impacted by increased trade investment, green coffee inflation, and changes in loyalty rewards [20] Business Line Data and Key Metrics Changes - The wholesale segment, primarily selling packaged coffee and ready-to-drink beverages, declined by 6% year over year. Excluding non-recurring revenue from the previous year, sales in this segment grew by 9% [18] - Direct-to-consumer (DTC) revenue declined by 15% in the first quarter, but adjusted for last year's loyalty reserve, the decline was closer to 5% [19] - The Outpost segment grew revenue by 2%, driven by higher franchise revenue and increased average order value [19] Market Data and Key Metrics Changes - In the U.S. Food, Drug, and Mass channels, the coffee category declined in unit volume during the first quarter, but Black Rifle Coffee Company achieved 21% sales growth, significantly outperforming the category's 4% increase [8] - The ready-to-drink coffee business saw first-quarter sales up 7% in a category that declined by 6% [12] - Distribution in grocery increased by 25 percentage points year over year to reach 45% [9] Company Strategy and Development Direction - The company is focused on long-term growth by scaling the brand, deepening retail partnerships, and ensuring effective investment in the business [6] - The launch of Black Rifle Energy is a key initiative, with plans to expand distribution and marketing efforts in priority markets [14] - The company is committed to cost reduction and efficiency initiatives, aiming for annualized cost savings of $8 million to $10 million [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging operating environment but expressed confidence in the company's positioning and operational progress [28] - The impact of tariffs and green coffee inflation was highlighted, with an estimated $5 million impact on EBITDA in 2025 [24] - The company maintains its full-year revenue guidance of $395 million to $425 million, expecting sequential growth throughout the year [22] Other Important Information - The company continues to make monetary and product donations to military units and first responder organizations, emphasizing its mission-driven approach [15] - The company has implemented a price increase to offset rising green coffee prices, which have more than doubled since early 2024 [25] Q&A Session Summary Question: How does the business react to an economic slowdown? - Management noted that during economic slowdowns, consumers tend to shift from coffee shops to at-home coffee, which can benefit premium brands like Black Rifle [32] Question: What is the outlook on guidance and gross margin changes? - Management explained that increased trade spending and coffee inflation have impacted gross margin, but they expect to manage these challenges effectively [35][36] Question: Can you share early feedback on the energy drink launch? - Management reported positive early feedback on the energy drink launch, with distribution already reaching over 20% of the market [40][41] Question: What strategies are being implemented to stabilize the DTC business? - Management is focusing on improving conversion rates, particularly through the mobile app, while reallocating resources towards wholesale and energy initiatives [51][53] Question: How is pricing being managed in relation to competitors? - Management indicated that pricing actions are being taken carefully to remain competitive while also considering the elasticity of demand [59] Question: What is the status of hedging for coffee purchases? - Management stated that they are approximately 95% hedged for 2025, which positions them better than competitors who are less hedged [61]