BRC Inc.

Greetings and welcome to the Black Rifle Coffee Company third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone would require operator assistance, 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, Matt McGinley, Vice President of Investor Relations. Thank you. You may begin.

Good morning, everyone, and thank you for joining Black Rifle Coffee Company's third 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, Matt Ami, our chief financial officer, and Matt McGinley, our head of investor relations. The third quarter was another solid step forward for Black Rifle. Our team did an outstanding job executing against our priorities, driving strong commercial performance maintaining cost discipline, and positioning the business for sustainable, profitable growth. We continue to see encouraging momentum across both the wholesale and direct-to-consumer channels as our brand gains traction with new customers and deepens its connections with existing ones. As we move to the fourth quarter and into 2026, our focus remains clear, driving strong on-shelf execution as we expand our physical presence, maintaining costs effectively to enable reinvestment and growth initiatives, and continuing to build a scalable platform for long-term success. We're broadening distribution, driving stronger velocities with key retail partners, and advancing our product lineup to keep the brand fresh and relevant. The team's execution this quarter reflects a company that's more agile, more focused, and more confident in its ability to perform, even in a challenging cost environment. We're proud of the progress we've made and optimistic about the opportunities ahead. Move to slide six, please. In the third quarter, Nielsen data showed continued strength in the U.S. coffee category within food drug mass, growing 13.2% as higher shelf pricing to offset commodity inflation flowed through. Black Rifle once again outperformed the market, with sales up 36.7% year over year, nearly triple the category's growth rate. Our land and expand strategy continues to prove effective. We start with a focused set of SKUs to demonstrate performance and earn additional shelf space as we build retailer confidence. In grocery, ACV increased six points year over year to 48%. In total, ACV across all tract channels increased nine points to 54%. Even with a 70% increase in average items carried, velocity in grocery improved more than 7%, highlighting the brand's strength with consumers. This combination of faster terms and expanding distribution is translating into stronger partnerships and continued shelf gains. Move to slide seven. Across the category, most of the dollar growth is being driven by price increases. In contrast, Black Rifle's growth is coming from almost entirely unit gains, which are up more than 20% year to date. This reflects real consumer demand, not price inflation. The brand continues to win new households, drive repeat purchases, and gain share at retail. As we expand distribution and sustain velocity, we're driving durable volume-led growth that supports long-term brand health. Slide eight. Our direct-to-consumer business remains an important part of our omnichannel strategy, deepening customer relationships, strengthening brand loyalty, and providing valuable insights that guide how we engage with consumers across every channel. It also allows us to test new offerings. refine messaging, and stay closely connected to our most engaged fans. Through both our own site and digital retail partners, Black Rifle products remain easily accessible to customers who prefer the convenience of home delivery. While most of our recent top line growth has come from retail distribution and velocity gains, we're encouraged by the continued stabilization of our digital channels this quarter. Sales in our direct-to-consumer segment declined 4% year-over-year in the third quarter. However, after adjusting for the prior year benefit related to our loyalty reserve and the timing shift of promotion, results were slightly positive compared to last year. We also saw meaningful gains through leading third party marketplaces, where awareness of the brand and repeat rates continue to build. Beyond top line growth, we've made steady progress improving the overall customer experience. Website and mobile updates have enhanced navigation and checkout speed, while backend improvements support smarter merchandising and more efficient SKU management. Within our subscription platform, we're adding new functionality and greater flexibility for members, including prepaid options, exclusive offers, and a refreshed brand portal that highlights partner benefits and members only gear. These ongoing upgrades reflect our focus on building a digital ecosystem that not only drives sales, but deepens brand loyalty, and supports the broader omni-channel strategy. Slide nine. The ready-to-drink coffee category continued to face headwinds in the third quarter, particularly within the convenience channel. While category sales declined 3.1%, our performance remained resilient, down just 0.6% overall, reflecting solid execution and strong brand loyalty. In grocery, sales grew 18%, partially offsetting the softness seen in C-stores. Even in a challenging environment, we're gaining ground. BlackRifle remains the third largest RTD coffee brand in the US, and we expanded our ACV by seven points year over year to 53%. That growth underscores the confidence our retail partners have in the brand and our proven ability to perform on shelf. We're still in the early stages of unlocking the full RTD opportunity with roughly half the category yet to be reached. Slide 10. BlackRifle Energy continues to expand its footprint. now available in nearly 20,000 retail locations and reaching approximately 22% ACV. Distribution growth has been disciplined and targeted, guided by learnings from early markets. The energy drink category remains one of the largest and fastest moving segments in beverages, and roughly two-thirds of the category sales come from convenience stores. That channel remains a primary focus for expansion, as Black Rifle Energy currently has its lowest penetration there, and meaningful white space ahead. Our approach remains deliberate, focused on building awareness, driving new consumer trial, and earning shelf space through performance rather than overextension. We're encouraged by the early traction and see meaningful opportunity for the brand to expand reach and contribution within our broader beverage portfolio in 2026. Before I hand it off to Matt, I want to pause and reflect on what makes this company special. I'm incredibly proud of the progress we're making across the business, and just as proud of the way our team continues to live out our mission every day. As we approach Veterans Day, it's a time to honor the men and women who have served our country and to recognize the many ways our team continues to serve them in return. This year, we're working with Born Primitive and Forgive Co. to help forgive up to $25 million in medical debt for more than 10,000 veterans. One in five veterans carries medical debt in collections, compared to about 13% of the general population. That burden often leads to financial stress and housing insecurity, and this effort is about lifting that weight and giving back to those who have served. Whether it's helping rebuild communities after a flood, supporting warriors in crisis, or rallying around causes like suicide prevention, Black Rifle is driven by our mission to veterans. I'm proud of what this team has achieved and excited about the road ahead.