BRC Inc.

Greetings and welcome to Black Rifle Coffee Company first quarter 2025 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Matthew McGinley, Vice President, Investor Relations. Thank you. Please go ahead.

Good morning, everyone, and thank you for joining Black Rifle Coffee Company's first quarter 2025 financial results conference call. We released our results yesterday, and the press release and related materials are available on our investor relations website at ir.blackriflecoffee.com. Before we begin, I would like to remind you of the company's safe harbor statement regarding forward-looking statements. During today's call, management may make forward-looking statements, including guidance and the underlying assumptions. These statements are based on expectations that involve risks and uncertainties, which could cause actual results to differ materially. For a further discussion of these risks, please refer to our previous filings with the SEC. Additionally, this call will include non-GAAP financial measures, such as adjusted EBITDA. Whenever we refer to EBITDA, we mean adjusted EBITDA unless otherwise noted. Reconciliation of non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release, which was furnished to the SEC and is available on our investor relations website. Now, please refer to the presentation on our investor relations website and turn to slide four. I would now like to turn the call over to Chris Monzelewski, CEO of Black Rifle Coffee Company. Monze?

Thanks, Matt. Good morning, everyone. Joining me today are Evan Hafer, our executive chairman, Steve Cadenicy, our chief financial officer, and Matt McGinley, our head of investor relations. When we held our last quarterly call, we discussed the work completed in 2024 to strengthen our business foundation, streamlining operations, investing in infrastructure, and building a more agile, efficient organization. These efforts have made us more adaptive to navigate an evolving operating environment, and we are confident in our positioning for 2025 and beyond. Our first quarter financial results were in line with expectations and consistent with our full-year plan. While we did not anticipate tariffs or a potentially more challenging macro backdrop to start the year, We have built flexibility into our structure to respond effectively to any potential shifts in external conditions. Looking ahead, our focus remains on positioning the business for long-term growth. We're scaling the brand, deepening our partnerships at retail, and making sure every dollar we invest in the business is working hard for us. That means leaning into what's already working in core categories while also breaking new ground with initiatives like the launch of Black Rifle Energy. Moving to slide six. In the U.S. food, drug, and mass channels, Nielsen data shows the coffee category declined in unit volume during the first quarter, but overall sales remained positive due to pricing actions taken by sellers across the category. Black Rifle took no pricing actions during the period, but still delivered 21% sales growth, well ahead of the category's 4% increase. In grocery, our distribution as measured by ACV increased by 25 percentage points year over year to reach 45%. Across all tracked channels combined, ACV rose 12 points to 50%. We expect to build on this momentum throughout 2025 through new retail partnerships and expanded shelf presence with existing customers. Moving to slide seven. Our direct-to-consumer channel remains a key part of the business. With over 180,000 active subscribers, generating two-thirds of the segment's revenue. It gives us direct access to loyal customers, valuable insights, and a platform to test new products, while also ensuring brand access where retail distribution is limited. We've made meaningful updates to improve both the subscription and non-subscription experience. Recent upgrades to our website and mobile app have improved functionality, while streamlined onboarding such as simplified ID.me verification and automatic promo application has made it easier to subscribe. For our coffee club members, we've launched a new brand portal offering exclusive partner perks, expanded the subscriber store with BRCC gear only available to active members, and are introducing prepaid subscription options. On the back end, we've shifted to more data-driven merchandising, to guide product assortment, inventory planning, and SKU optimization, while staying true to our roots through founder-led product development. Like many subscription-based DTC businesses, we felt the impact of consumers shifting toward retail purchases, especially as our products have become more widely available in stores. DTC revenue declined 15% in the quarter, though adjusting for last year's loyalty reserve, the decline was closer to 5%. It's not yet where we want to be, but the actions we've taken are beginning to show encouraging signs of stabilization. Slide eight. Our ready-to-drink coffee business continues to outperform the category, with first quarter sales up 7% and a category that declined 6%, according to Nielsen. This growth underscores the strength of our brand and our ability to drive sales even in a contracting market. We've maintained our standing as the third largest RTD coffee brand in the U.S., with distribution in only half of the available markets. We see significant runway ahead and are using the operational experience we've gained to support our new energy platform. Slide nine. We launched Black Rifle Energy into retail in January. And while it was only on shelves for a portion of the quarter, we're encouraged by the early traction. By the end of the first quarter, the product was available in nearly 12,000 retail locations, reaching 21% ACV. Through our partnership with Keurig Dr. Pepper, we have access to a national direct store delivery network covering 180,000 doors. Over the next two years, we expect to continue expanding our footprint in a disciplined way with a near-term focus on 12 priority markets. We will ramp up energy-specific marketing spend to support awareness and trial, particularly in the convenience channel. Our decision to enter the energy category was backed by consumer data showing that 58% of our coffee customers also purchase energy drinks, with a significant portion of our media audience consuming only energy. While it's a competitive category, it represents a significant addressable market, over $20 billion in annual sales. We're pleased with the early momentum and believe this launch lays the foundation for a long-term growth in a high-value category. Before I turn it over to Steve for a deeper dive on the numbers, I want to take a moment to talk about something core to who we are, not just as a business, but as a brand with a mission. In the first quarter, we continued making monetary and product donations to military units and first responder organizations across the US and around the world. That included firehouses, police departments, and deployed units stationed in both expected and unexpected locations, places where a refreshing beverage or a great cup of coffee can make a real difference. We're proud to carry this mission forward into the second quarter with support planned for more than a dozen events and ongoing outreach to those who serve. These efforts aren't side projects. They're fundamental to how we define success. We're building more than a beverage company. We're building a community that stands behind the people who serve. Whether it's a no-notice deployment or a fire crew running on fumes, our message is simple. You're not alone. We're with you every step of the way. That commitment is what sets Black Rifle apart. It's what drives loyalty from our customers and pride from our team, many of whom have worn the uniform themselves. This mission is not an initiative. It's a core part of our identity, and it continues to guide everything we do. With that, I'll turn it over to Steve.