Net Revenue Increases 39% in Q2 2023 to
$91.9 million, Led by Wholesale Growth of 109%
Achieves Positive Adjusted EBITDA for the
Second Quarter, Reaffirms Profitability for the Full Year
Launches Second National Grocery Customer
and Two Additional Regional Grocery Chains
Refinances Credit Facility Adding Additional
Liquidity
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 second
quarter of fiscal year 2023.
“The Black Rifle Coffee Company brand has never been stronger,”
said BRCC Founder and Chief Executive Officer Evan Hafer.
“Maintaining an authentic connection with our customers has and
always will be core to Black Rifle's mission. This unique
connection with our customers is why we are growing distribution
and new customers across both our FDM and convenience store
channels. Our brand is resonating across the country, in cities and
small towns alike and we are gaining distribution and doors to meet
our customers where they shop every day. Additionally, our aided
brand awareness has jumped by almost 10 percentage points, to 28%
since 2022. We still have a long way to go, but we continue to
remain focused on building a lasting brand that will be around for
generations.”
“As we alluded to last quarter, we are pleased to announce we
are shipping bagged coffee and k-cups to our second national
grocery chain as well as two regional chains. We have a strong
pipeline of additional retailers and expect our FDM business to
continue to gain distribution and share for the next few years. In
addition, as of the end of the second quarter, BRCC's RTD coffee
was available in over 82,000 doors as we are making progress on our
2023 goal of having our RTD products available in 100,000
doors.”
Second Quarter 2023 Financial
Details
- Net revenue of $91.9 million was an increase of 39%
year-over-year.
- Gross profit increased year-over-year to $32.2 million
representing a 35.0% gross margin.
- Net loss of $14.7 million
- Adjusted EBITDA (non-GAAP) of $0.1 million, a sequential
improvement from $(5.1) million in the first quarter of 2023 and a
year over year improvement from $(10.5) million for the three
months ending June 2022.
Year-to-Date 2023 Financial
Details
- Net revenue of $175.4 million was an increase of 33%
year-over-year.
- Gross profit increased year-over-year to $59.7 million
representing a 34.0% gross margin.
- Net loss of $32.0 million
- Adjusted EBITDA (non-GAAP) of $(5.1) million, a year over year
improvement from $(16.8) million for the six months ending June
2022.
Second Quarter 2023
Results
Second quarter 2023 revenue increased 38.5% to $91.9 million
from $66.4 million in the second quarter of 2022. Wholesale revenue
increased 108.6% to $50.0 million in the second quarter of 2023
from $24.0 million in the second quarter of 2022.
Direct-to-Consumer ("DTC") revenue decreased 6.4% to $34.6 million
in the second quarter of 2023 from $37.0 million during the second
quarter of 2022. Outpost revenue increased 35.3% to $7.4 million in
the second quarter of 2023 from $5.4 million in the second quarter
of 2022. The Wholesale channel performance was primarily driven by
entry into FDM and growth in our RTD product. In addition, RTD
product sales increased through national distributors and retail
accounts from 67,000 doors to 82,000 doors in the second quarter
2023. The DTC performance was primarily due to decreased marketing
spend and the decision to redirect investments to other faster
growing areas of the business as we continue to experience elevated
DTC customer acquisition costs. The Outpost channel performance was
driven by an increase in our company-owned store count, which
increased to seventeen in the second quarter of 2023 from ten
company-owned outposts in the second quarter of 2022.
Gross profit increased to $32.2 million in the second quarter of
2023 from $22.6 million in the second quarter of 2022, an increase
of 42.8% year to year. The increase in gross profit was driven
primarily by higher sales volume. Gross margin increased 100 basis
points to 35.0% from 34.0% for the second quarter of 2022. Gross
margin improved primarily due to favorable product mix shift, as
coffee and rounds sold into FDM customers has higher gross margin
as compared to other channels.
Marketing expenses decreased 22.3% to $7.0 million in the second
quarter of 2023 from $9.0 million in the second quarter of 2022. As
a percentage of revenue, marketing expenses decreased 600 basis
points to 7.6% in the second quarter of 2023 versus 13.6% in the
second quarter of 2022. This decrease was due to reductions in
lower-returning advertising platforms, partially offset by
increased costs incurred in connection with the expansion of
existing partnerships. In addition, marketing and advertising spend
has been favorably impacted by channel mix with revenue growth
primarily coming from the Wholesale channel, which requires lower
marketing spend than DTC.
Salaries, wages and benefits increased 18.1% to $18.4 million in
the second quarter of 2023 from $15.5 million in the second quarter
of 2022. As a percentage of revenue, salaries, wages and benefits
decreased 350 basis points to 20.0% in the second quarter of 2023
as compared to 23.4% for the second quarter of 2022. The increase
in salaries, wages and benefits was due to an increase in employee
headcount to support our significant sales growth and investment in
new stores opened and existing channels as we continue to build out
additional revenue streams and expand product lines, as well as,
$0.4 million in severance payments related to some reductions in
headcount across the company.
General and administrative (G&A) expenses increased 30.1% to
$19.3 million in the second quarter of 2023 from $14.8 million in
the second quarter of 2022. As a percentage of revenue, G&A
decreased 140 basis points to 21.0% in the second quarter of 2023
compared to 22.3% in the second quarter of 2022. The increase was
primarily due to continued legal fees related to non-routine legal
matters arising from the Business Combination in 2022.
Net loss for the second quarter of 2023 was $14.7 million and
Adjusted EBITDA was $0.1 million. This compares to net loss of
$45.1 million and Adjusted EBITDA of $(10.5) million in the second
quarter of 2022.
Refinancing of Credit
Facility
After the end of the quarter, BRCC refinanced the Company’s
credit facility to provide expanded liquidity to continue to
support the growth of the business. The facility consists of an ABL
Credit Agreement and a Term Loan Credit Agreement, which
collectively provide aggregate borrowing capacity of up to $125
million through 2028. These facilities have allowed us to repay
most of our existing indebtedness and will provide us with
additional liquidity and a long term capital structure. A detailed
summary, as well as the full text of the ABL Credit Agreement and
Term Loan Credit Agreement are filed as Exhibits 10.1 and 10.2 to
our Current Report on Form 8-K filed concurrently with this
release, and the foregoing summary is qualified in all respects by
the full text of such documents.
Financial Outlook
BRC Inc. provides annual guidance based on current market
conditions and expectations for revenue, gross margin and Adjusted
EBITDA, which is a non-GAAP financial measure. We expect 2023
results to be within the previously issued guidance range but at
the lower end of the range across all three metrics, representing
low to mid 30% revenue growth, continued improvement in Gross
Margin and Adjusted EBITDA profitability. We expect to see
sequential improvements in Gross Margins and Adjusted EBITDA in
both Q3 and Q4. While the impact of new FDM distribution will be
minimal on 2023 results due to timing and reset cadence, we expect
these launches and additional planned launches to continue to
propel strong growth and improving profitability throughout
2024.
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.
Conference Call
A conference call to discuss the Company’s second quarter
results is scheduled for August 10, 2023, at 4:30 p.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 ir.blackriflecoffee.com. For those unable to
participate in the conference call, a replay will be available
after the conclusion of the call through August 17, 2023. 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 13740009.
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 forward-looking statements about BRC
Inc. and its industry that involve substantial risks and
uncertainties. All statements other than statements of historical
fact contained in this press release, including statement’s
regarding the Company’s intentions, beliefs or current expectations
concerning, among other things, the Company’s financial condition,
liquidity, prospects, growth, strategies, future market conditions,
developments in the capital and credit markets and expected future
financial performance, as well as any information concerning
possible or assumed future results of operations, are
forward-looking statements. In some cases, you can identify
forward-looking statements because they contain words such as
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intends,” “may,” “might,” “plan,” “possible,” “potential,”
“predict,” “project,” “should,” “will,” “would” and similar
expressions, but the absence of these words does not mean that a
statement is not forward-looking. The events and circumstances
reflected in the Company’s forward-looking statements may not be
achieved or occur and actual results could differ materially from
those projected in the forward-looking statements. Factors that may
cause such forward-looking statements to differ from actual results
include, but are not limited to: competition and our ability to
grow and manage growth sustainably and retain our key employees;
failure to achieve profitability; negative publicity affecting our
brand and reputation, or the reputation of key employees, which may
adversely affect 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 affect 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 to retail partners and end users, including as a result
of production defaults, or issues, including due to failures by one
or more of our co-manufacturers, affecting the quality of our
products, which may adversely affect our brand; decrease in success
of the direct to consumer revenue channel; loss of one or more
co-manufacturers, or delays, quality, or other production issues,
including labor-related production issues at any of our
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, including as a result
of ongoing supply chain disruptions, or our failure to effectively
manage such third parties; changes in the market for high-quality
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 Black Rifle Coffee Outposts, including
failure to timely proceed through permitting and other development
processes, or the failure of any new or existing Outposts to
generate sufficient sales; 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 or
otherwise; 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 franchises; failure to raise
additional capital to develop the business; risks related to supply
chain disruptions; risks related to unionization of employees;
failure to comply with federal state and local laws and
regulations; inability to maintain the listing of our Class A
Common Stock on the New York Stock Exchange; and other risks and
uncertainties indicated in our Annual Report on Form 10-K for the
year ended December 31, 2022 filed with the Securities and Exchange
Commission (the “SEC”) on March 15, 2023 including those set forth
under “Item 1A. Risk Factors” included therein, as well as in our
other filings with the SEC. Such forward-looking statements are
based on information available as of the date of this press release
and the Company’s current beliefs and expectations concerning
future developments and their effects on the Company. Because
forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified, you
should not place undue reliance on these forward-looking statements
as predications of future events. Although the Company believes
that it has a reasonable basis for each forward-looking statement
contained in this press release, the Company cannot guarantee that
the future results, growth, performance or events or circumstances
reflected in these forward-looking statements will be achieved or
occur at all. These forward-looking statement speak only as of the
date of this press release. The Company does not undertake any
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as may be required under applicable securities laws.
BRC Inc.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except share
and per share amounts)
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenue, net
$
91,947
$
66,365
$
175,437
$
132,201
Cost of goods sold
59,741
43,809
115,720
86,432
Gross profit
32,206
22,556
59,717
45,769
Operating expenses
Marketing and advertising
7,013
9,026
14,157
17,177
Salaries, wages and benefits
18,356
15,539
38,180
31,557
General and administrative
19,296
14,831
37,054
29,718
Impairment on assets held for sale
1,202
—
1,202
—
Total operating expenses
45,867
39,396
90,593
78,452
Operating loss
(13,661
)
(16,840
)
(30,876
)
(32,683
)
Non-operating income (expense)
Interest expense, net
(791
)
(176
)
(1,114
)
(666
)
Other income (expense), net
(156
)
(56
)
117
293
Change in fair value of earn-out
liability
—
(38,553
)
—
(209,651
)
Change in fair value of warrant
liability
—
5,435
—
(56,675
)
Change in fair value of derivative
liability
—
5,172
—
(2,335
)
Total non-operating expenses
(947
)
(28,178
)
(997
)
(269,034
)
Loss before income taxes
(14,608
)
(45,018
)
(31,873
)
(301,717
)
Income tax expense
57
67
113
195
Net loss
$
(14,665
)
$
(45,085
)
$
(31,986
)
$
(301,912
)
Less: Net loss attributable to
non-controlling interest
(10,437
)
(34,330
)
(22,958
)
(228,236
)
Net loss attributable to BRC
Inc.
$
(4,228
)
$
(10,755
)
$
(9,028
)
$
(73,676
)
Net loss per share attributable to
Class A Common Stock(1)
Basic and diluted
$
(0.07
)
$
(0.22
)
$
(0.15
)
$
(1.49
)
Weighted-average shares of Class A
common stock outstanding(1)
Basic and diluted
58,741,717
49,771,104
58,607,290
47,789,909
(1) For the six months ended June 30,
2022, net loss per share of Class A Common Stock and
weighted-average shares of Class A Common Stock outstanding is
representative of the period from February 9, 2022 through June 30,
2022, the period following the Business Combination. Shares of
Class B Common Stock do not participate in the earnings or losses
of the Company and are therefore not participating securities. As
such, separate presentation of basic and diluted loss per share of
Class B Common Stock under the two-class method has not been
presented.
BRC Inc.
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
and par value amounts)
June 30,
December 31,
2023
2022
(unaudited)
(audited)
Assets
Current assets:
Cash and cash equivalents
$
19,782
$
38,990
Accounts receivable, net
24,395
22,337
Inventories, net
109,720
77,183
Prepaid expenses and other current
assets
8,848
6,783
Assets held for sale
4,043
—
Total current assets
166,788
145,293
Property, plant and equipment, net
63,533
59,451
Operating lease, right-of-use asset
33,969
20,050
Identifiable intangibles, net
397
225
Other
298
315
Total assets
264,985
225,334
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
37,497
12,429
Accrued liabilities
31,617
36,660
Deferred revenue and gift card
liability
10,075
9,505
Current maturities of long-term debt,
net
2,083
2,143
Current operating lease liability
1,964
1,360
Current maturities of finance lease
obligations
95
95
Current liabilities related to assets held
for sale
2,151
—
Total current liabilities
85,482
62,192
Non-current liabilities:
Long-term debt, net
75,795
47,017
Finance lease obligations, net of current
maturities
171
221
Operating lease liability
33,631
19,466
Other non-current liabilities
602
502
Total non-current liabilities
110,199
67,206
Total liabilities
195,681
129,398
Commitments and Contingencies
Stockholders' equity:
Preferred stock, $0.0001 par value,
1,000,000 shares authorized; no shares issued and outstanding
—
—
Class A common stock, $0.0001 par value,
2,500,000,000 shares authorized; 60,750,253 shares issued and
outstanding as of June 30, 2023
5
5
Class B common stock, $0.0001 par value,
300,000,000 shares authorized; 151,044,097 shares issued and
outstanding as of June 30, 2023
16
16
Class C common stock, $0.0001 par value,
1,500,000 shares authorized; no shares issued or outstanding as of
June 30, 2023
—
—
Additional paid in capital
134,953
129,508
Accumulated deficit
(112,761
)
(103,733
)
Total BRC Inc.'s stockholders' equity
22,213
25,796
Non-controlling interests
47,091
70,140
Total stockholders' equity
69,304
95,936
Total liabilities and stockholders'
equity
$
264,985
$
225,334
BRC Inc.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands,
unaudited)
Six Months Ended June
30,
2023
2022
Operating activities
Net loss
$
(31,986
)
$
(301,912
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
3,352
2,015
Equity-based compensation
5,049
3,238
Non-employee equity-based compensation
—
739
Amortization of debt issuance costs
52
261
Loss on sale of assets
128
—
Impairment on assets held for sale
1,202
—
Change in fair value of earn-out
liability
—
209,651
Change in fair value of warrant
liability
—
56,675
Change in fair value of derivative
liability
—
2,335
Changes in operating assets and
liabilities:
Accounts receivable, net
(2,058
)
(6,243
)
Inventories, net
(32,537
)
(5,711
)
Prepaid expenses and other assets
(2,248
)
(4,635
)
Accounts payable
22,112
(8,922
)
Accrued liabilities
(5,043
)
(3,105
)
Deferred revenue and gift card
liability
570
676
Operating lease liability
850
257
Other liabilities
100
145
Net cash used in operating activities
(40,457
)
(54,536
)
Investing activities
Purchases of property, plant and
equipment
(10,009
)
(9,400
)
Proceeds from sale of equipment
186
—
Net cash used in investing activities
(9,823
)
(9,400
)
Financing activities
Proceeds from issuance of long-term debt,
net of cash paid for debt issuance costs of $34 as of June 30, 2023
and $— as of June 30, 2022
199,000
7,597
Repayment of long-term debt
(167,783
)
(23,617
)
Financing lease obligations
(50
)
13
Repayment of promissory note
(400
)
—
Redemption of common units
305
—
Distribution and redemption of Series A
preferred equity
—
(127,853
)
Proceeds from Business Combination,
including PIPE investment
—
337,957
Payment of Business Combination costs
—
(31,638
)
Redemption of Class A and Class B
units
—
(20,145
)
Redemption of incentive units
—
(3,627
)
Net cash provided by financing
activities
31,072
138,687
Net increase (decrease) in cash and cash
equivalents
(19,208
)
74,751
Beginning cash and cash equivalents
38,990
18,334
Ending cash and cash equivalents
$
19,782
$
93,085
BRC Inc.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (CONTINUED)
(in thousands,
unaudited)
Six Months Ended June
30,
2023
2022
Non-cash operating activities
Recognition of right-of-use operating
lease assets
$
13,919
$
10,392
Non-cash investing and financing
activities
Accrued capital expenditures
2,956
23
Series A preferred exchange for PIPE
shares
—
26,203
Series A preferred equity amortization
—
5,390
Supplemental cash flow
information
Cash paid for income taxes
422
233
Cash paid for interest
$
1,324
$
531
KEY OPERATING AND FINANCIAL
METRICS
(unaudited)
Revenue by Sales Channel
(in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Wholesale
$
50,010
$
23,971
$
90,007
$
45,926
Direct to Consumer
34,586
36,962
71,366
75,294
Outpost
7,351
5,432
14,064
10,981
Total net sales
$
91,947
$
66,365
$
175,437
$
132,201
Key Operational Metrics
Six Months Ended June
30,
2023
2022
Wholesale Doors
8,770
3,730
RTD Doors
82,410
66,770
DTC Subscribers
239,500
287,800
Outposts
Company-owned stores
17
10
Franchise stores
14
10
Total Outposts
31
20
Non-GAAP Financial Measures To evaluate the performance
of our business, we rely on both our results of operations recorded
in accordance with generally accepted accounting principles in the
United States ("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 also present EBITDA excluding non-cash
fair value adjustments relating to the remeasurement of earn-out
and derivative liabilities upon vesting events and the
remeasurement of a warrant liability upon redemption of warrants.
We define Adjusted EBITDA as EBITDA excluding non-cash fair value
adjustments, as adjusted for equity-based compensation, system
implementation costs, transaction expenses, executive recruiting,
severance, relocation and sign-on bonus, write-off of site
development costs, strategic initiative related costs, non-routine
legal expenses, RTD start-up production issue, impairment for
assets held for sale, contract termination costs, and restructuring
advisory fees and other costs. Investors should note that,
beginning with results for the quarter ended December 31, 2022, we
have modified the presentation of Adjusted EBITDA to no longer
exclude Outpost pre-opening expenses, and beginning with the
results for the quarter ended June 30, 2023, we have modified the
presentation of Adjusted EBITDA to no longer exclude (i) expenses
associated with certain legal expenses we have determined are no
longer non-routine and (ii) cash expenses associated with RTD
start-up and production issues.. To conform to the current period’s
presentation, we have excluded Outpost pre-opening expenses, the
aforementioned legal expenses, and cash expenses associated with
RTD start-up and production issues when presenting Adjusted EBITDA
for the three and six months ended June 30, 2023 and the three and
six months ended June 30, 2022. This change decreased Adjusted
EBITDA for the three and six months ended June 30, 2022 by $0.1
million and $0.2 million, respectively. When used in conjunction
with GAAP financial measures, we believe that EBITDA and Adjusted
EBITDA are useful supplemental measures of operating performance
because these measures facilitate 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 do 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 loss, the most directly comparable GAAP
measure, to EBITDA and Adjusted EBITDA is set forth below:
Reconciliation of Net Loss to Adjusted
EBITDA
(amounts in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net loss
$
(14,665
)
$
(45,085
)
$
(31,986
)
$
(301,912
)
Interest expense
791
176
1,114
666
Tax expense
57
67
113
195
Depreciation and amortization
1,633
1,027
3,352
2,015
EBITDA
$
(12,184
)
$
(43,815
)
$
(27,407
)
$
(299,036
)
Non-cash fair value adjustments
Change in fair value of earn-out liability
expense(1)
—
38,553
—
209,651
Change in fair value of warrant liability
expense(2)
—
(5,435
)
—
56,675
Change in fair value of derivative
liability(3)
—
(5,172
)
—
2,335
EBITDA, excluding non-cash fair value
adjustments
$
(12,184
)
$
(15,869
)
$
(27,407
)
$
(30,375
)
Equity-based compensation(4)
2,543
1,363
5,049
3,977
System implementation costs(5)
1,171
276
1,862
528
Transaction expenses(6)
—
37
—
1,020
Executive recruiting, relocation and
sign-on bonus(7)
758
1,338
1,067
1,657
Write-off of site development costs(8)
277
—
1,062
—
Strategic initiative related costs(9)
282
1,709
1,505
5,259
Non-routine legal expense(10)
3,240
458
4,246
458
RTD start-up and production issues(11)
595
—
2,394
—
Impairment for assets held for
sale(12)
1,202
—
1,202
—
Contract termination costs(13)
188
—
730
—
Restructuring fees and related
costs(14)
2,075
210
3,209
697
Adjusted EBITDA
$
147
$
(10,478
)
$
(5,081
)
$
(16,779
)
(1)
Represents the non-cash expense recognized
to remeasure the earn-out liability to fair value upon vesting
events. The change in fair value was a result of the increase of
the closing price of our publicly traded common stock subsequent to
the closing of our business combination.
(2)
Represents non-cash expense recognized to
remeasure the warrant liability to fair value upon redemption. The
change in fair value was a result of the increase of the closing
price of our publicly traded common stock subsequent to the closing
of our business combination.
(3)
Represents non-cash expense recognized to
remeasure the derivative liability to fair value upon the vesting
event. The change in fair value was a result of the increase of the
closing price of our publicly traded common stock subsequent to the
closing of our business combination.
(4)
Represents the non-cash expense related to
our equity-based compensation arrangements for employees,
directors, consultants and wholesale channel partner.
(5)
Represents non-capitalizable costs
associated with the implementation of our enterprise-wide resource
planning (ERP) system.
(6)
Represents expenses related to becoming a
public company such as public company readiness, consulting and
other fees that are not related to core operations.
(7)
Represents nonrecurring payments made for
executive recruitment, relocation, and sign-on bonuses.
(8)
Represents the write-off of development
costs for abandoned retail locations.
(9)
Represents nonrecurring third-party
consulting costs related to the planning and execution of our
growth and productivity strategic initiatives.
(10)
Represents legal costs and fees incurred
in connection with certain non-routine legal disputes consisting of
certain claims relating to deSPAC warrants and a commercial dispute
with a former consultant resulting from the Company in-housing
certain activities.
(11)
Represents nonrecurring, non-cash costs
and expense incurred as a result of our RTD start-up and production
issue.
(12)
Represents the adjustment recorded to
recognize assets held for sale at their estimate net realizable
value less estimated cost to sell.
(13)
Represents nonrecurring costs incurred for
early termination of software and service contracts.
(14)
Represents restructuring advisory fees,
severance, and other related costs (previously included in footnote
(7) and footnote (9).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230810859269/en/
Investors Tanner Doss: IR@BlackRifleCoffee.com ICR for
BRCC: BlackrifleIR@icrinc.com
BRC (NYSE:BRCC)
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BRC (NYSE:BRCC)
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