Veteran-owned coffee retailer and café chain Black Rifle Coffee Company (BRCC) reported notable improvements in its profitability for the third quarter of 2024. The company achieved significant gains in gross profit while managing to reduce operational expenses. For the three-month period ending September 30, 2024, BRCC posted a 21% year-on-year increase in gross profit, reaching $41.3 million. Despite reporting a net loss of $1.4 million for the quarter, the result marked a substantial improvement compared to the net loss of $10.7 million recorded in the same period the previous year.
The improved profitability was largely driven by a reduction in administrative and warehouse costs, which has been part of the company’s ongoing efforts to streamline operations. As a result, BRCC’s management is optimistic about the company’s financial trajectory moving forward.
Wholesale Growth Continues to Drive Success
A key driver of BRCC’s growth over the past two years has been its wholesale channel, which now accounts for 65% of the company’s total revenue. In the third quarter, sales from the wholesale segment increased by 3.5% to $63.7 million, a positive indicator of the company’s expanding market presence.
However, despite the strong performance from wholesale, total revenues for the quarter decreased by 2% year-on-year, totaling $98.2 million. This decline was mainly attributed to lower performance in BRCC’s direct-to-consumer (DTC) and coffee shop segments. Both segments saw an 11% decrease in sales compared to the same period last year. BRCC operates 37 locations following the opening of a new store in the third quarter, indicating its continued commitment to expanding its retail footprint.
Chris Mondzelewski, CEO of BRCC, expressed pride in the company’s ongoing performance, emphasizing the gains made in market share and profitability. “The Black Rifle brand continues to perform well, and I’m proud of our progress in gaining market share and improving profitability this quarter,” Mondzelewski stated.
Strategic Focus on Operational Efficiency
In a call to shareholders, BRCC’s Chief Financial Officer, Steve Kadenacy, highlighted the company’s strategic direction, noting the focus on enhancing operational excellence. “Our third-quarter performance showcases our continued focus on improving operational excellence,” said Kadenacy. This operational efficiency has been a core aspect of BRCC’s strategy to optimize its business model and drive sustainable growth. The wholesale business, in particular, has shown solid momentum, with Kadenacy emphasizing the potential for growth in multiple product categories and channels in the years ahead.
BRCC’s wholesale distribution network has continued to expand, securing key partnerships with major retailers. Currently, the company’s products are available in major grocery chains including Walmart, Albertsons, Kroger, and Meijer. These distribution deals have played a critical role in positioning BRCC as a leading brand in the coffee market.
Looking ahead, Kadenacy set an ambitious goal for the business to have its coffee products available in “most major grocery chains by the end of 2025.” This goal underscores BRCC’s long-term growth strategy, which centers on expanding its retail presence and ensuring widespread availability of its products.
Expanding Product Offerings and Revenue Expectations
In addition to its wholesale and retail growth, BRCC is also looking to diversify its product offerings. The company plans to launch a new range of ready-to-drink (RTD) beverages in the fourth quarter, a move aimed at broadening its appeal to a wider consumer base. This new product line, called Black Rifle Energy, will be supported by a national distribution agreement with Keurig Dr Pepper, a leading U.S. coffee and soft beverages group. The partnership with Keurig Dr Pepper is expected to help propel the RTD beverages to a wider market, further boosting BRCC’s revenue streams.
The company is optimistic about its future financial performance and expects a strong finish to the year. For the full year 2024, BRCC anticipates total revenues will fall between $385 million and $415 million, alongside an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $32 million to $42 million. This would represent a significant improvement compared to BRCC’s performance in 2023, when it reported sales of $395.6 million and an adjusted EBITDA of $13.3 million.
A Strong Path Forward for BRCC
As Black Rifle Coffee Company moves into the final quarter of 2024, it finds itself in a strong position to capitalize on both its established success in the wholesale market and its new ventures into the ready-to-drink beverage sector. The company’s ability to trim costs while driving revenue growth has positioned it well for the future, with a clear strategy for expanding its market share and operational footprint.
The veteran-owned brand, which has made its mark in the coffee industry with a focus on quality products and a strong connection to its community, continues to refine its business model in the face of an evolving retail landscape. With the support of major distribution partnerships and a forward-looking product expansion strategy, BRCC’s prospects for continued growth and profitability remain robust.
The company’s leadership remains confident in its trajectory, with CEO Mondzelewski and CFO Kadenacy both emphasizing their commitment to enhancing the brand’s presence and operational efficiency. As BRCC moves toward its goal of broadening its distribution footprint and diversifying its product lineup, it will likely remain a key player in the competitive coffee industry, poised for further success in the years to come.
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