Financial Highlights
- Net Revenue increased 28% in Q4 2023 to $119.7 million,
driven by Wholesale growth of 79% versus Q4 of 2022
- Outpaced category growth by over 18x within the FDM coffee
category and 4x within RTD category
- Profitability sequentially improved in Q4 2023; Adjusted
EBITDA of $12.1 million and a Net Loss of $14.0 million compared to
Adjusted EBITDA Loss of $11.4 million and a Net Loss of $20.0
million a year ago
- Continued acceleration of profit and cash flow expected in
2024 with guidance issued for Adjusted EBITDA of $27.0 million to
$40.0 million with Free Cash Flow conversion of ~80% of Adjusted
EBITDA
BRC Inc. (NYSE: BRCC), the rapidly-growing,
mission-driven premium coffee company creating long-term
shareholder value through innovative brand strategy that elevates
the service community, today announced financial results for the
fourth quarter of fiscal year 2023.
“Black Rifle continues to build momentum as a brand, as an
efficient, well-run company, and most importantly, in its ability
to impact the veteran and first responder community. We are one of
the fastest growing brands in the coffee category, with bagged
coffee growing at 18x the category and RTD coffee 4x the category,”
said BRCC Chief Executive Officer Chris Mondzelewski. “Our brand
awareness is now 29%, a 400bps increase since this past summer (Q3
2023), and we continue to have the #1 Net Promoter Score among
coffee brands. Additionally, we continue to find ways to generate
efficiency in our business, driving faster decision making and a
stronger bottom line. Above all, Black Rifle continues to press our
mission forward to serve the veteran and first responder community.
Our Veterans Day partnership with the UFC and Hunter Seven
Foundation raised over $250,000 in one weekend for Veterans
battling cancer. I am honored to have the opportunity to lead this
proud organization.”
“BRCC has reached an inflection point, driven by a renewed focus
on efficiency and effectiveness, giving us confidence in our first
full-year guidance of positive profit and free cash flow,” said
BRCC Chief Financial Officer Steve Kadenacy. “Our strong
performance during the past fiscal year demonstrates our commitment
to excellence at every level of the company. We’ve further refined
operations to serve our greater vision for the company – a vision
that will allow us to strengthen and grow the business while
creating value for our customers, partners, and investors.”
Fourth Quarter 2023 Financial
Highlights (in millions, except % data)
Quarter To Date
Comparisons
Year To Date
Comparisons
2023
2022
$ Change
% Change
2023
2022
$ Change
% Change
Net Revenue
$
119.7
$
93.6
$
26.1
28%
$
395.6
$
301.3
$
94.3
31%
Gross Profit
$
31.7
$
29.5
$
2.2
7%
$
125.4
$
99.2
$
26.2
26%
Gross Margin
26.5
%
31.5
%
31.7
%
32.9
%
Net Loss
$
(14.0
)
$
(20.0
)
$
6.0
$
(56.7
)
$
(338.0
)
$
281.3
Adjusted EBITDA
$
12.1
$
(11.4
)
$
23.5
$
13.3
$
(34.0
)
$
47.3
Fourth Quarter 2023
Results
Fourth quarter 2023 revenue increased 27.8% to $119.7 million
from $93.6 million in the fourth quarter of 2022. Wholesale revenue
increased 78.5% to $73.5 million in the fourth quarter of 2023 from
$41.2 million in the fourth quarter of 2022. Direct-to-Consumer
("DTC") revenue decreased 14.4% to $39.1 million in the fourth
quarter of 2023 from $45.6 million during the fourth quarter of
2022. Outpost revenue increased 3.9% to $7.1 million in the fourth
quarter of 2023 from $6.8 million in the fourth quarter of 2022.
The Wholesale channel performance was primarily driven by entry
into Food, Drug and Mass (“FDM”) market and growth in our
Ready-to-Drink (“RTD”) product and included $28.9 million
attributable to a barter transaction in which we received
advertising services in exchange for our RTD product. In addition,
RTD product sales increased through national distributors and
retail accounts as our All Commodity Volume percentage increased
480 basis points to 43.4% and our total doors increased 41.8%
versus the fourth quarter of 2022. The DTC performance was
primarily due to lower customer acquisition as we strategically
shifted advertising spend to other areas with higher returns. The
Outpost channel performance was driven by an increase in our
company-owned store count, which increased to eighteen in the
fourth quarter of 2023 from fifteen company-owned outposts in the
fourth quarter of 2022.
Gross profit increased to $31.7 million in the fourth quarter of
2023 from $29.5 million in the fourth quarter of 2022, an increase
of 7.5% year to year, with gross margin decreasing 500 basis points
to 26.5% from 31.5% for the fourth quarter of 2022, driven by
product mix shift, as RTD has lower margins than bagged coffee, an
increase in our inventory reserve as a result of excess RTD
inventory, and inflation in raw materials and finished goods.
Marketing expenses decreased 38.3% to $8.4 million in the fourth
quarter of 2023 from $13.6 million in the fourth quarter of 2022.
As a percentage of revenue, marketing expenses decreased 750 basis
points to 7.0% in the fourth quarter of 2023 as compared to 14.5%
in the fourth quarter of 2022 as 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, partly offset by an increase in marketing
fees related to a strategic partnership.
Salaries, wages and benefits expenses increased 12.4% to $19.0
million in the fourth quarter of 2023 from $16.9 million in the
fourth quarter of 2022. As a percentage of revenue, salaries, wages
and benefits expenses decreased 220 basis points to 15.9% in the
fourth quarter of 2023 as compared to 18.0% for the fourth quarter
of 2022. The decrease in salaries, wages and benefits expense was
driven by a reduction in headcount as well as a result of a change
in estimate for a discretionary payroll accrual and a decrease in
stock compensation expense, partially offset by severance expense
incurred during the quarter.
General and administrative ("G&A") expenses decreased 18.3%
to $15.1 million in the fourth quarter of 2023 from $18.5 million
in the fourth quarter of 2022. As a percentage of revenue, G&A
decreased 710 basis points to 12.6% in the fourth quarter of 2023
as compared to 19.7% in the fourth quarter of 2022, benefiting from
continued revenue growth and scale efficiencies. G&A expenses
included $2.9 million of legal fees related to non-routine legal
matters arising from the Business Combination in 2022, which
continued from the previous quarter.
Net loss for the fourth quarter of 2023 was $14.0 million and
Adjusted EBITDA was $12.1 million. This compares to net loss of
$20.0 million and Adjusted EBITDA loss of $11.4 million in the
fourth quarter of 2022.
Financial Outlook
BRC Inc. provides guidance based on current market conditions
and expectations for revenue, gross margin and adjusted EBITDA,
which is a non-GAAP financial measure.
For the Full-year fiscal 2024, the Company expects:
FY2023
FY2024 Guidance
Actual
Low
High
Net Revenue(1)
$
395.6
$
430.0
$
460.0
Growth
31
%
9
%
16
%
Gross Margin
31.7
%
37
%
40
%
Adj. EBITDA
$
13.3
$
27.0
$
40.0
Free Cash Flow
80% Flow Through
(1) A barter transaction favorably impacted Net Revenue in 2023
by $28.9 million and projected Net Revenue in 2024 by an estimated
$6.5 million. Excluding the impact of the barter transaction
reduces revenue growth from 2022 to 2023 by 10% and increases
projected Net Revenue growth in 2024 by 6% - 8%.
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), in
reliance on the unreasonable efforts exception provided under Item
10(e)(1)(i)(B) of Regulation S-K. 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 fourth quarter
results is scheduled for March 7, 2024, at 8:30 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 ir.blackriflecoffee.com. For those unable to participate
in the conference call, a replay will be available after the
conclusion of the call through March 14, 2024. 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
13744386.
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, visit www.blackriflecoffee.com, subscribe to the
BRCC newsletter, or follow along on social media.
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 sustained profitability; negative publicity
affecting our brand and reputation, or the reputation of key
employees; failure to manager our debt obligations; failure to
effectively make use of assets received under bartering
transactions; 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 manage our supply
chain, and accurately forecast our raw material and
co-manufacturing requirements to support our needs; failure to
effectively manage or distribute our products through our Wholesale
business partners, especially our key 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; 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, inventory needs, 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, or failure to prevail
in civil litigation matters; and other risks and uncertainties
indicated in our Annual Report on Form 10-K for the year ended
December 31, 2023 filed with the Securities and Exchange Commission
(the “SEC”) on March 6, 2024 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)
Quarter Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Revenue, net
$
119,650
$
93,618
$
395,623
$
301,313
Cost of goods sold
87,978
64,153
270,175
202,134
Gross profit
31,672
29,465
125,448
99,179
Operating expenses
Marketing and advertising
8,377
13,578
30,794
38,169
Salaries, wages and benefits
18,967
16,881
71,054
64,286
General and administrative
15,085
18,467
71,613
64,486
Other operating expense, net
1,464
—
2,198
—
Total operating expenses
43,893
48,926
175,659
166,941
Operating loss
(12,221
)
(19,461
)
(50,211
)
(67,762
)
Non-operating income (expenses)
Interest expense, net
(1,672
)
(457
)
(6,330
)
(1,593
)
Other income (expense), net
(127
)
(11
)
10
339
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
)
Total non-operating expenses
(1,799
)
(468
)
(6,320
)
(269,915
)
Loss before income taxes
(14,020
)
(19,929
)
(56,531
)
(337,677
)
Income tax expense
16
101
185
367
Net loss
$
(14,036
)
$
(20,030
)
(56,716
)
(338,044
)
Less: Net loss attributable to
non-controlling interest
(9,551
)
(14,842
)
(39,971
)
(255,138
)
Net loss attributable to BRC
Inc.
$
(4,485
)
$
(5,188
)
$
(16,745
)
$
(82,906
)
Net loss per share attributable to
Class A Common Stock(1)
Basic and diluted
$
(0.07
)
(0.09
)
$
(0.27
)
$
(1.62
)
Weighted-average shares of Class A
Common Stock outstanding(1)
Basic and diluted
64,474,349
54,814,919
60,932,225
51,246,632
(1) For the year ended December 31, 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 December 31, 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)
December 31,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
12,448
$
38,990
Restricted cash
1,465
—
Accounts receivable, net
25,207
22,337
Inventories, net
56,465
77,183
Prepaid expenses and other current
assets
12,153
6,783
Total current assets
107,738
145,293
Property, plant and equipment, net
68,326
59,451
Operating lease, right-of-use asset
36,214
20,050
Identifiable intangibles, net
418
225
Other
23,080
315
Total assets
235,776
225,334
Liabilities and Shareholders'
Equity/(Deficit)
Current liabilities:
Accounts payable
$
33,564
$
12,429
Accrued liabilities
34,911
36,660
Deferred revenue and gift card
liability
11,030
9,505
Current maturities of long-term debt,
net
2,297
2,143
Current operating lease liability
2,249
1,360
Current maturities of finance lease
obligations
58
95
Total current liabilities
84,109
62,192
Non-current liabilities:
Long-term debt, net
68,683
47,017
Finance lease obligations, net of current
maturities
23
221
Operating lease liability
35,929
19,466
Other non-current liabilities
524
502
Total non-current liabilities
105,159
67,206
Total liabilities
189,268
129,398
Stockholders' equity/members' deficit:
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; 65,637,806 and 57,661,274 shares
issued and outstanding as of December 31, 2023 and 2022,
respectively
6
5
Class B Common Stock, $0.0001 par value,
300,000,000 shares authorized; 146,484,989 and 153,899,025 shares
issued and outstanding as of December 31, 2023 and 2022,
respectively
15
16
Class C Common Stock, $0.0001 par value,
1,500,000 shares authorized; no shares issued or outstanding as of
December 31, 2023 and 2022
—
—
Additional paid in capital
133,728
129,508
Accumulated deficit
(120,478
)
(103,733
)
Total BRC Inc.'s stockholders' equity
13,271
25,796
Non-controlling interests
33,237
70,140
Total stockholders' equity
46,508
95,936
Total liabilities and stockholders'
equity
$
235,776
$
225,334
BRC Inc. CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands)
Year Ended December
31,
2023
2022
Operating activities
Net loss
$
(56,716
)
$
(338,044
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
7,263
4,383
Equity-based compensation
6,974
6,079
Amortization of debt issuance costs
549
317
Loss on disposal of assets
4,763
—
Other
311
849
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
(2,766
)
(14,895
)
Inventories, net
(8,183
)
(56,311
)
Prepaid expenses and other assets
654
(184
)
Accounts payable
21,557
(6,146
)
Accrued liabilities
(1,811
)
15,986
Deferred revenue and gift card
liability
1,525
2,171
Operating lease liability
891
776
Other liabilities
22
168
Net cash used in operating activities
(24,967
)
(116,190
)
Investing activities
Purchases of property, plant and
equipment
(27,220
)
(30,404
)
Proceeds from sale of property and
equipment
5,712
—
Net cash used in investing activities
(21,508
)
(30,404
)
Financing activities
Proceeds from issuance of long-term debt,
net of discount
294,508
51,593
Debt issuance costs paid
(4,333
)
(279
)
Repayment of long-term debt
(268,230
)
(38,761
)
Financing lease obligations
(173
)
3
Repayment of promissory note
(1,047
)
—
Issuance of stock from the Employee Stock
Purchase Plan
673
—
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
shares
—
(20,145
)
Redemption of incentive units
—
(3,627
)
Net cash provided by financing
activities
21,398
167,250
Net increase (decrease) in cash, cash
equivalents, and restricted cash
(25,077
)
20,656
Cash and cash equivalents, beginning of
period
38,990
18,334
Restricted cash, beginning of period
—
—
Cash and cash equivalents, end of
period
$
12,448
$
38,990
Restricted cash, end of period
$
1,465
$
—
BRC Inc. CONSOLIDATED
STATEMENTS OF CASH FLOWS (CONTINUED) (in thousands)
Year Ended December
31,
2023
2022
Non-cash operating activities
Recognition of right-of-use operating
lease assets
$
18,547
$
20,050
Recognition of revenue for inventory
exchanged for prepaid advertising
$
28,901
$
—
Non-cash investing and financing
activities
Property and equipment purchased but not
yet paid
1,857
2,279
Series A preferred equity exchange for
PIPE shares
—
26,203
Series A preferred equity amortization
—
5,390
Supplemental cash flow
information
Cash paid for income taxes
$
562
$
277
Cash paid for interest
$
4,483
$
1,279
KEY OPERATING AND FINANCIAL
METRICS
Revenue by Sales Channel
(in thousands)
Quarter Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Wholesale
$
73,525
$
41,187
$
225,059
$
119,360
Direct to Consumer
39,072
45,645
143,232
159,022
Outpost
7,053
6,786
27,332
22,931
Total net sales
$
119,650
$
93,618
$
395,623
$
301,313
Key Operational Metrics
December 31,
2023
2022
Wholesale Doors
12,200
10,690
RTD Doors
86,840
61,230
DTC Subscribers
225,800
270,000
Outposts
Company-owned stores
18
15
Franchise stores
18
11
Total Outposts
36
26
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,
tax expense, 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, relocation and sign-on bonus, write-off of site
development costs, strategic initiative related costs, non-routine
legal expenses, RTD start-up production issues, (Gain) loss on
assets held for sale, contract termination costs, restructuring
fees and related costs, RTD transformation costs, and loss on
impairment of assets. 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 quarter
and year ended December 31, 2023 and the quarter and year ended
December 31, 2022. This change decreased Adjusted EBITDA for the
quarter and year ended December 31, 2022 by $0.5 million and $1.1
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,
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)
Quarter Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net loss
$
(14,036
)
(20,030
)
$
(56,716
)
(338,044
)
Interest expense
1,672
457
6,330
1,593
Tax expense
16
101
185
367
Depreciation and amortization
1,909
1,328
7,263
4,383
EBITDA
$
(10,439
)
$
(18,144
)
$
(42,938
)
$
(331,701
)
Non-cash fair value adjustments
Change in fair value of earn-out liability
expense(1)
—
—
—
209,651
Change in fair value of warrant liability
expense(2)
—
—
—
56,675
Change in fair value of derivative
liability(3)
—
—
—
2,335
EBITDA, excluding non-cash fair value
adjustments
$
(10,439
)
$
(18,144
)
$
(42,938
)
$
(63,040
)
Equity-based compensation(4)
1,329
1,496
6,974
6,929
System implementation costs(5)
484
318
3,541
723
Transaction expenses(6)
—
—
—
1,020
Executive recruiting, relocation and
sign-on bonus(7)
(29
)
876
1,515
3,757
Write-off of site development costs(8)
341
730
2,833
1,055
Strategic initiative related costs(9)
—
629
1,505
7,760
Non-routine legal expense(10)
2,909
781
10,290
1,866
RTD start-up and production issues(11)
—
1,769
2,394
5,205
(Gain) Loss on assets held for
sale(12)
—
—
105
—
Contract termination costs(13)
—
125
730
683
Restructuring fees and related
costs(14)
1,692
—
6,812
—
RTD transformation costs(15)
15,268
—
18,917
—
Loss on impairment of assets
592
—
592
—
Adjusted EBITDA
$
12,147
$
(11,420
)
$
13,270
$
(34,042
)
(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 impairments on assets held
for sale, net of (gain) loss on sale of assets held for sale.
(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)).
(15)
Represents non-recurring, non-cash or
non-operational costs associated with the transformation of our RTD
business including loss on write-off of RTD inventory, discounts
recognized on non-cash transactions, and other non-cash costs to
transform our RTD business.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240306814008/en/
Investor Contacts: 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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