On August 7, 2024, BRC Inc (BRCC, Financial) released its 8-K filing detailing the financial results for the second quarter of fiscal year 2024. BRC Inc, a veteran-controlled company known for its premium coffee, content, and merchandise, serves active military, veterans, and first responders through its omnichannel distribution strategy.
Performance Overview
For Q2 2024, BRC Inc reported a net revenue of $89.0 million, a 3% decrease from $91.9 million in Q2 2023. This revenue figure fell short of the analyst estimate of $113.45 million. Despite the revenue decline, the company achieved significant improvements in profitability metrics. Adjusted EBITDA rose to $8.5 million from $0.1 million in Q2 2023, and the net loss narrowed to $1.4 million from $14.7 million in the same period last year.
Revenue Breakdown
Wholesale revenue grew by 8% to $53.8 million, driven by increased penetration in the Food, Drug, and Mass (FDM) market and growth in Ready-to-Drink (RTD) products. However, Direct-to-Consumer (DTC) revenue declined by 13% to $30.0 million, and revenue from Black Rifle Coffee shops ("Outposts") fell by 28% to $5.3 million. The decrease in DTC revenue was attributed to lower customer acquisition as advertising spend was strategically shifted to other areas with higher returns.
Financial Achievements
Gross profit increased by 16% to $37.2 million, with gross margin improving to 41.9% from 35.0% in Q2 2023. This improvement was driven by a favorable product mix, productivity enhancements in RTD products, and lower warehousing and green coffee costs. Marketing expenses rose by 6% to $7.4 million, while general and administrative expenses decreased by 44% to $10.9 million, reflecting reductions in corporate infrastructure and support costs.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Net Revenue | $89.0 million | $91.9 million | -3% |
| Gross Profit | $37.2 million | $32.2 million | 16% |
| Gross Margin | 41.9% | 35.0% | 690 bps |
| Net Income (Loss) | $(1.4) million | $(14.7) million | N/A |
| Adjusted EBITDA | $8.5 million | $0.1 million | N/A |
Commentary and Analysis
“I am pleased with BRCC's continued delivery of healthy profitability and above average market growth. Our disciplined execution and increased margin have enabled investment in new initiatives and product innovation,” said BRCC Chief Executive Officer Chris Mondzelewski.
“The second quarter results exemplify our continued focus on operational excellence. We have driven a dramatic improvement in profitability across a host of metrics including gross margin, adjusted EBITDA, Net Income and Free Cash Flow,” said BRCC Chief Financial Officer Steve Kadenacy.
Financial Outlook
BRC Inc reiterated its full-year adjusted EBITDA guidance of $32 million to $42 million. However, the company updated its net revenue guidance for FY 2024 to a range of $385 million to $415 million, down from the previous range of $430 million to $460 million. This adjustment reflects the challenges in achieving near-term revenue growth due to delayed refreshes at some grocery chains.
For more detailed insights and the complete financial statements, please refer to the 8-K filing.
Explore the complete 8-K earnings release (here) from BRC Inc for further details.
