Beat Expectations for Net Revenue,
Increasing 42% in 2021 to $233 million
Increases Full Year 2022 Revenue Outlook to
$315 million
BRC Inc. (NYSE: BRCC), a rapidly growing and
mission-driven premium coffee company founded to support Veterans,
active-duty military, first responders and serve a broad customer
base by connecting consumers with great coffee and a unique brand
experience, today announced financial results for the fourth
quarter and full year 2021.
“Growing customer enthusiasm for our coffee and mission
continues to drive strong results as we increase brand awareness.
People overwhelmingly want to buy from companies who share their
values, and BRCC’s mission is one everyone can get behind,” said
BRCC Founder and CEO Evan Hafer. “In the fourth quarter, we reached
important milestones, placing BRCC ready-to-drink products in over
42,000 doors; and opening our sixteenth retail Outpost. This growth
is important as we begin our journey as a public company, and it is
essential to increasing our support for the Veteran, active-duty
military, and first responder communities who are essential to
everything we do at Black Rifle.”
“Prior to our offering, we were constrained in terms of capital,
capacity and leadership talent. The public listing completed on Feb
9th addresses our capital constraint by adding $150 million to our
balance sheet. Our RTD capacity situation is improving as we are in
advanced discussions with several co-manufacturers that will enable
us to address product demand that is currently unmet. We’ve also
added new senior leaders to help us maximize our opportunities in
the wholesale and outpost channels. We are more confident than ever
in our ability to grow this business for the long term.”
Recent Business
Highlights
- Direct to Consumer (DTC) subscribers ended the year at 287,300,
a 14% increase from 2020
- Ready to Drink (RTD) doors grew 300% to 42,370 from 10,600 in
2020
- Wholesale doors ended 2021 at 2,630, an increase of 127% from
2020
- Ended the year with 16 Outposts, eight company-owned and eight
franchised
Fourth Quarter 2021 Financial
Details
- Net revenue of $71.8 million, an increase of 19.9%
year-over-year
- Gross profit increased 3.0% to $24.7 million or 34.3% of net
revenue
- Net loss of $4.6 million
- Adjusted EBITDA (non-GAAP) of ($0.3) million
Full Year 2021 Financial
Details
- Net revenue of $233.1 million, an increase of 42.2%
year-over-year
- Gross profit increased 29.2% to $89.7 million or 38.5% of net
revenue
- Net loss of $13.8 million
- Adjusted EBITDA (non-GAAP) of $0.8 million
Fourth Quarter 2021
Results
Fourth quarter 2021 revenue increased 19.9% to $71.8 million
from $59.9 million the fourth quarter of 2020. Direct to Consumer
revenue increased 2.9% to $49.6 million compared to $48.3 million
in the fourth quarter of 2020. Wholesale revenue increased 74.0% to
$17.2 million compared to $9.9 million in the fourth quarter of
2020, and our Outpost revenue increased 181.1% to $5.1 million
versus $1.8 million in the fourth quarter of 2020. The
year-over-year growth in revenue was primarily driven by the
continued growth in our Wholesale revenue channel due to expanding
points of distribution and strong retail velocities in addition to
the opening of four company owned outposts in Q4 of 2021.
Gross profit increased 3.0% to $24.7 million compared to $24.0
million in the fourth quarter of 2020. Gross margins decreased 570
basis points to 34.3% from 40.0% million for the fourth quarter of
2020. The decrease in gross profit was due to inflationary
pressures on product and shipping costs (not yet offset by price
increases) as well as product mix shift from our higher margin DTC
channel into our Wholesale channel, which is principally comprised
of sales of RTD.
Marketing expenses increased 5.8% to $11.1 million from $10.5
million in the fourth quarter of 2020. This increase was driven by
increased ad spend to increase brand awareness as well as increased
costs for inhouse production of content. As a percentage of
revenue, marketing decreased 206 bps to 15.4% versus 17.5% in the
fourth quarter of 2020.
Salaries, wages and benefits increased 9.9% to $9.0 million from
$8.2 million in the fourth quarter of 2020, primarily due to the
building out of the management teams within the outpost and
wholesale channels. As a percentage of revenue, salaries, wages and
benefits decreased 115bps to 12.5% as compared to 13.7% for the
fourth quarter of 2020.
G&A expenses increased 120.5% to $8.7 million compared to
$3.9 million in the fourth quarter of 2020. This increase is due
primarily to increased technology costs and professional services.
As a percentage of revenue, G&A increased 550 basis points to
12.1% compared to 6.6% in the fourth quarter of 2020.
In the fourth quarter of 2021, we had a net loss of $4.6 million
and an adjusted EBITDA of ($0.3) million. In the fourth quarter of
2020, net income was $1 million and adjusted EBITDA was $2.5
million.
Financial Outlook
BRC Inc. provides guidance based on current market conditions
and expectations for revenue, adjusted EBITDA, which is a non-GAAP
financial measure, and new outpost openings.
For the full-year fiscal 2022, the Company expects:
- Net revenue of $315 million
- Positive Adjusted EBITDA
- 15 – 20 New Company-owned Outposts
The guidance provided above constitutes forward-looking
statements and actual results may differ materially. Refer to the
“Forward-Looking Statements” safe harbor section below for
information on the factors that could cause our actual results to
differ materially from these forward-looking statements.
We have not reconciled forward-looking Adjusted EBITDA to its
most directly comparable GAAP measure, net income (loss), because
we cannot predict with reasonable certainty the ultimate outcome of
certain components of such reconciliations, including
market-related assumptions that are not within our control, or
others that may arise, without unreasonable effort. For these
reasons, we are unable to assess the probable significance of the
unavailable information, which could materially impact the amount
of future net loss. See “Non-GAAP Financial Measures” for
additional important information regarding Adjusted EBITDA.
A reconciliation of Adjusted EBITDA, a non-GAAP measure, to net
loss, its most comparable financial measure under generally
accepted accounting principles in the United States (“GAAP”),
together with additional information about Adjusted EBITDA, has
been provided below under the heading “Non-GAAP Financial
Measures.”
Conference Call
A conference call to discuss the Company’s fourth quarter and
full year 2021 results is scheduled for March 16, 2022, at 8:00
a.m. ET. Those who wish to participate in the call may do so by
dialing (877) 407-0609 or (201) 689-8541 for international callers.
A webcast of the call will be available on the investor relations
page of the Company’s website at Black Rifle Coffee Company (BRCC).
For those unable to participate in the conference call, a replay
will be available after the conclusion of the call on March 16,
2022 through March 23, 2022. The U.S. toll-free replay dial-in
number is (877) 660-6853, and the international replay dial-in
number is (201) 612-7415. The replay passcode is 13727120.
About BRC Inc.
Black Rifle Coffee Company (BRCC) is a veteran-founded coffee
company serving premium coffee to people who love America. Founded
in 2014 by Green Beret Evan Hafer, Black Rifle develops their
explosive roast profiles with the same mission focus they learned
while serving in the military. BRCC is committed to supporting
veterans, active-duty military, first responders and the American
way of life.
To learn more about BRCC, visit www.blackriflecoffee.com, follow
BRCC on social media, or subscribe to Coffee or Die Magazine's
daily newsletter at https://coffeeordie.com/presscheck-signup.
Forward-Looking Statements
This press release contains management’s current intentions and
expectations for the future, all of which are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements include statements about the Company’s
expectations, beliefs, plans, objectives, intentions, assumptions
and other statements that are not historical facts. The words
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intends,” “may,” “might,” “plan,” “possible,” “potential,”
“predict,” “project,” “should,” “will,” “would” and similar
expressions may identify forward-looking statements, but the
absence of these words does not mean that a statement is not
forward-looking. Actual results may differ materially due to
various factors. The following include some but not all of the
factors that could cause actual results or events to differ
materially from those anticipated, including failure to recognize
the anticipated benefits of the business combination, which may be
affected by, among other things, competition and our ability to
grow and manage growth profitably and retain our key employees;
negative publicity impacting our brand and reputation, which may
adversely impact our operating results; failure by us to maintain
our message as a supportive member of the veteran and military
communities and any other factors which may negatively impact the
perception of our brand; our limited operating history, which may
make it difficult to successfully execute our strategic initiatives
and accurately evaluate future risks and challenges; failed
marketing campaigns, which may cause us to incur costs without
attracting new customers or realizing higher revenue; failure to
attract new customers or retain existing customers; risks related
to the use of social media platforms, including dependence on
third-party platforms; failure to provide high-quality customer
experience, which may impact our brand; decrease in success of the
direct to consumer revenue channel; loss of one or more of
co-manufacturers; failure to effectively manage or distribute our
products through our wholesale business partners; failure by third
parties involved in the supply chain of coffee, store supplies or
merchandise to produce or deliver products; changes in the market
for high-quality Arabica coffee beans and other commodities;
fluctuations in costs and availability of real estate, labor, raw
materials, equipment, transportation or shipping; loss of
confidential data from customers and employees, which may subject
us to litigation, liability or reputational damage; failure to
successfully compete with other producers and retailers of coffee;
failure to successfully open new retail coffee shops; failure to
properly manage our rapid growth and relationships with various
business partners; failure to protect against software or hardware
vulnerabilities; failure to build brand recognition using our
intellectual properties; shifts in consumer spending, lack of
interest in new products or changes in brand perception upon
evolving consumer preferences and tastes; failure to adequately
maintain food safety or quality and comply with food safety
regulations; failure to successfully integrate into new domestic
and international markets; risks related to leasing space subject
to long-term non-cancelable leases and with respect to real
property; failure of our franchise partners to successfully manage
their franchise; failure to raise additional capital to develop the
business; risks related to the COVID-19 pandemic, including supply
chain disruptions; the loss of one or more of our executive
officers and other key employees; failure to hire and retain
qualified employees; failure to meet our goal of hiring 10,000
veterans; risks related to unionization of employees; failure to
comply with federal state and local laws and regulations; and
inability to maintain the listing of our Class A Common Stock on
the New York Stock Exchange. For additional information about the
factors that could cause actual results to differ materially from
forward-looking statements, please see the Company's documents
filed or to be filed with the Securities and Exchange Commission,
including the current reports on Form 8-K filed and the annual
report on Form 10-K to be filed. You should not place undue
reliance on forward-looking statements, which speak only as of the
date of this release. Except as is required by law, the Company
expressly disclaims any obligation to publicly release any
revisions to forward-looking statements to reflect events after the
date of this release.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands,
unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
2020
2021
2020
Revenue, net
$71,848
$59,906
$233,101
$163,909
Cost of goods sold
47,169
35,935
143,414
94,500
Gross profit
24,679
23,971
89,687
69,409
Operating expenses
Marketing and advertising
11,068
10,461
36,358
25,513
Salaries, wages and benefits
8,991
8,185
38,746
24,194
General and administrative
8,689
3,940
26,162
13,922
Total operating expenses
28,748
22,586
101,266
63,629
Income (loss) from operations
(4,069)
1,385
(11,579)
5,780
Other income (expense):
Interest expense
(443)
(233)
(2,033)
(1,047)
Other income (expense), net
(50)
(132)
(55)
(227)
Total other (expense), net
(493)
(365)
(2,088)
(1,274)
Earnings (loss) before income taxes
(4,562)
1,020
(13,667)
4,506
State income tax expense
45
44
178
185
Net income (loss)
$(4,607)
$976
$(13,845)
$4,321
CONSOLIDATED BALANCE
SHEETS1
(in thousands,
unaudited)
December 31,
2021
December 31,
2020
Assets
Current assets:
Cash and cash equivalents
$18,334
$35,232
Accounts receivable, net
7,442
3,629
Inventories
20,872
16,041
Prepaid expenses and other current
assets
6,377
2,186
Total current assets
53,025
57,088
Property and equipment, net
31,114
14,714
Identifiable intangibles, net
167
191
Restricted Cash
--
400
Other
2,776
149
Total Assets
$87,082
$72,542
Liabilities and members’
deficit
Current liabilities:
Accounts payable
$17,387
$11,527
Accrued liabilities
22,233
16,063
Deferred revenue and gift card
liability
7,334
4,615
Current maturities of long-term debt,
net
11,979
866
Current maturities of capital lease
obligations
85
469
Total current liabilities
59,018
33,540
Non-current liabilities:
Long-term debt, net
22,712
12,170
Capital lease obligations, net of current
maturities
228
727
Other non-current liabilities
334
--
Total non-current liabilities
23,274
12,897
Total liabilities
82,292
46,437
Series A preferred equity, less issuance
costs (151,406 and 150,000 units authorized, issued and outstanding
as of December 31, 2021 and 2020, respectively)
154,281
128,983
Members’ deficit (18,769 Class A units and
73,890 Class B units authorized, issued and outstanding as of
December 31, 2021 and 2020)
(149,491)
(102,878)
Total liabilities, Series A preferred
units and members’ deficit
$87,082
$72,542
(1)
This balance sheet is for
Authentic Brands for the period ending 12/31/2021. This is
pre-close of the transaction with Silver Box Engaged Merger Corp II
and does not include any proceeds from the transaction close on
2/9/2022.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands,
unaudited)
Twelve Months Ended December
31,
2021
2020
Operating activities
Net Income (loss)
$(13,845)
$4,321
Adjustments to reconcile net income (loss)
to net cash used in operating
Depreciation and amortization
2,895
1,375
Equity-based compensation
3,204
1,929
Non-employee equity-based compensation
1,492
1,384
Amortization of debt issuance costs
358
133
Loss on extinguishment of debt
726
--
Bad debt expense (recovery)
(51)
195
Loss from equity method investment
--
52
Loss on disposal/sale of property and
equipment
70
--
Changes in operating assets and
liabilities:
Accounts receivable, net
(3,761)
(2,956)
Inventories
(4,831)
(10,897)
Prepaid expenses and other assets
(5,283)
(1,054)
Accounts payable
4,646
7,032
Accrued liabilities
3,659
6,425
Accrued sales tax
(23)
292
Deferred revenue and gift card
liability
2,719
3,315
Other liabilities
334
--
Net cash provided by (used in) operating
activities
(7,691)
11,546
Investing activities
Purchase of property and equipment
$(19,287)
$(9,760)
Net cash used in investing activities
(19,287)
(9,760)
Financing activities
Proceeds from issuance of long-term debt,
net of cash paid for debt issuance costs of $338 and $591 in 2021
and 2020
$38,402
$16,436
Repayment of long-term debt
(20,058)
(7,333)
Repayment of and restricted cash for
capital lease obligations
(1,663)
(451)
Issuance of Series A preferred equity, net
of cash paid for issuance costs of $4,897
--
145,103
Payment of Series A preferred
dividends
(7,001)
--
Repurchase of member units
--
(125,000)
Repayment of notes receivable from
members
--
56
Net Cash provided by provided by financing
activities
9,680
28,811
Net increase in cash, cash equivalents,
and restricted cash
(17,298)
30,597
Beginning cash, cash equivalents, and
restricted cash
35,632
5,035
Ending cash, cash equivalents, and
restricted cash
$18,334
$35,632
CONSOLIDATED STATEMENTS OF
CASH FLOWS (CONTINUED)
(in thousands,
unaudited)
Twelve Months Ended December
31,
2021
2020
Non-Cash operating activities
Accrued other assets
$750
$--
Deferred transaction costs
1,214
--
Non-cash investing and financing
activities
Issuance of Series A preferred unit
dividend
$1,406
$--
Accrued Series A preferred equity
distribution and related discount
27,510
870
Capital expenditures financing through
credit facilities and capital leases
--
6,430
Accrued capital expenditures
803
140
Supplemental cash flow
information
Cash paid for state income taxes
$147
$114
Cash paid for interest
$719
$1,007
KEY OPERATING AND FINANCIAL
METRICS
(unaudited)
Key Operational Metrics
Twelve Months Ended December
31,
2021
2020
DTC Subscribers (thousands)
287,300
252,100
Wholesale Doors
2,630
1,160
RTD Doors
42,370
10,600
Outposts
16
4
Company-owned stores
8
1
Franchise stores
8
3
Revenue by Sales Channel
Three Months Ended December
31,
Twelve Months Ended December
31,
(sales in thousands)
2021
2020
2021
2020
Revenue by Sales
Channel
Direct to Consumer
$49,643
$48,251
$165,299
$137,724
Wholesale
17,153
9,858
55,761
23,351
Outpost
5,052
1,797
12,041
2,834
Total net revenue
$71,848
$59,906
$233,101
$163,909
Non-GAAP Financial Measures
To evaluate the performance of our business, we rely on both our
results of operations recorded in accordance with GAAP and certain
non-GAAP financial measures, including EBITDA and Adjusted EBITDA.
These measures, as defined below, are not defined or calculated
under principles, standards or rules that comprise GAAP.
Accordingly, the non-GAAP financial measures we use and refer to
should not be viewed as a substitute for performance measures
derived in accordance with GAAP or as a substitute for a measure of
liquidity. Our definitions of EBITDA and Adjusted EBITDA described
below are specific to our business and you should not assume that
they are comparable to similarly titled financial measures of other
companies. We define EBITDA as net income (loss) before interest,
state income taxes, depreciation and amortization expense. We
define Adjusted EBITDA as EBITDA, as adjusted for equity-based
compensation, system implementation costs, transaction expenses,
executive recruiting, severance and sign-on bonus, write-off of
site development costs and outpost pre-opening expenses. When used
in conjunction with GAAP financial measures, we believe that EBITDA
and Adjusted EBITDA are useful supplemental measures of operating
performance because it facilitates comparisons of historical
performance by excluding non-cash items such as equity-based
payments and other amounts not directly attributable to our primary
operations, such as the impact of system implementation,
acquisitions, disposals, executive searches, executive severance,
non-routine investigations, litigation and settlements. Adjusted
EBITDA is also a key metric used internally by our management to
evaluate performance and develop internal budgets and forecasts.
EBITDA and Adjusted EBITDA have limitations as an analytical tool
and should not be considered in isolation or as a substitute for
analyzing our results as reported under GAAP and may not provide a
complete understanding of our operating results as a whole. Some of
these limitations are (i) they do not reflect changes in, or cash
requirements for, our working capital needs, (ii) they not reflect
our interest expense or the cash requirements necessary to service
interest or principal payments on our debt, (iii) they do not
reflect our tax expense or the cash requirements to pay our taxes,
(iv) they do not reflect historical capital expenditures or future
requirements for capital expenditures or contractual commitments,
(v) although equity-based compensation expenses are non-cash
charges, we rely on equity compensation to compensate and
incentivize employees, directors and certain consultants, and we
may continue to do so in the future and (vi) although depreciation,
amortization and impairments are non-cash charges, the assets being
depreciated and amortized will often have to be replaced in the
future, and these non-GAAP measures do not reflect any cash
requirements for such replacements.
A reconciliation of net income, the most directly comparable
GAAP measure, to EBITDA and Adjusted EBITDA is set forth below:
Three Months Ended December
31,
Twelve Months Ended December
31,
(in thousands)
2021
2020
2021
2020
Net Income (loss)
$(4,607)
$976
$(13,845)
$4,321
Interest Expense
443
233
2,033
1,047
Tax Expense
45
44
178
185
Depreciation and amortization
895
390
2,895
1,375
EBITDA
$(3,224)
$1,643
$(8,739)
$6,928
Equity-based compensation (1)
$934
$663
$4,696
$3,313
System implementation costs (2)
355
52
801
556
Transaction expenses (3)
357
108
1,042
575
Executive recruiting, severance and
sign-on bonus (4)
286
--
1,626
357
Write-off of site development costs
(5)
429
--
429
--
Outpost pre-opening expenses (6)
585
--
913
166
Adjusted EBITDA
$(278)
$2,466
$768
$11,895
(1)
Represents the non-cash expense
of our equity-based compensation arrangements for employees,
directors, consultants and wholesale channel partner.
(2)
Represents costs associated with
the implementation of our enterprise-wide resource planning (ERP)
system.
(3)
Represents expenses related to
our business combination and our 2020 preferred equity raise such
as legal, accounting, consulting and other fees.
(4)
Represents nonrecurring payments
made for executive recruitment and severance that do not represent
or relate to operations of core business functions.
(5)
Represents write-off of direct
costs incurred related to planned Outpost locations where
development efforts were subsequently abandoned.
(6)
Represent costs incurred prior to
the opening of an Outpost including labor, rent and utilities,
travel and lodging costs, legal fees and training expenses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220316005306/en/
Investor Contact Tanner Doss: IR@BlackRifleCoffee.com ICR
for BRCC: BlackrifleIR@icrinc.com Media Contact TrailRunner
International for BRCC: Pat Shortridge, (651) 491-6764;
pats@trailrunnerint.com
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