BRC (US:BRCC)2023-05-12 01:24Financial Data and Key Metrics Changes - Total revenue increased by 27% to $83.5 million in Q1 2023, compared to $65.8 million in Q1 2022, driven primarily by the wholesale channel which grew by 82% [13][50] - Gross margin for Q1 was 33%, a decrease of approximately 230 basis points from 35.3% in Q1 2022, attributed to rising costs of coffee and RTD raw materials [51] - Adjusted EBITDA loss improved to $5.1 million in Q1 2023 from a loss of $6.3 million a year ago, indicating progress towards profitability [53] Business Line Data and Key Metrics Changes - Revenue from the wholesale channel reached $40 million, up 82% from $21.9 million in Q1 2022, marking it as the largest revenue driver for the quarter [50][116] - Revenue from Outposts increased by 21% to $6.7 million, driven by an increase in company-owned store count to 16 [14] - Direct-To-Consumer revenue decreased by 4% to $36.8 million, primarily due to reduced digital advertising spend [29] Market Data and Key Metrics Changes - The company maintained a market share of 3.8% in the overall Walmart coffee segment, achieving significant growth without prior marketing or promotion [47][36] - Ready-To-Drink (RTD) percent ACV more than doubled to 38.5% from 15.5% a year ago, driven by the addition of 16,000 incremental doors [120] Company Strategy and Development Direction - The company is shifting focus from maximizing growth to profit and capital-efficient growth, particularly emphasizing the food, drug, and mass (FDM) channel [8][25] - Plans to enter one or more new FDM accounts in the second half of 2023, aligning with Walmart's reset windows [117] - The company aims to optimize marketing spend to enhance growth across all channels, including Direct-To-Consumer [12][57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to changing economic conditions and maintain growth [8][24] - The company reaffirmed its full-year outlook of revenue between $400 million to $440 million, with gross margin targets of 36% to 37.5% and positive adjusted EBITDA of $5 million to $20 million [54][119] Other Important Information - The company has committed to supporting the veteran community through various initiatives, including donations from product sales [10][23] - The addition of a new Chief Marketing Officer is expected to enhance marketing strategies and drive growth [12][112] Q&A Session Summary Question: What are the top priorities for the new Chief Marketing Officer? - The focus will be on aligning the omnichannel business with marketing initiatives and optimizing marketing dollars to reach the customer base effectively [55][57] Question: How is the company deepening its relationship with Walmart? - Increased marketing efforts are planned to drive awareness and trial, including the first end cap promotion at Walmart [40][41] Question: What is the outlook for inventory levels by the end of the year? - Inventory levels are expected to normalize in the third and fourth quarters as sales volumes ramp up [69] Question: Can you provide an update on market share growth at Walmart? - The company has maintained a 3.8% market share and is optimistic about driving trial and awareness through promotional efforts [36][64] Question: What is the expected impact of the RTD promotion on gross margins? - The promotion will have some negative impact on Q2 gross margins, but is expected to drive customer trial and market share [32][58]