BRC Inc.

Previous wording

Black Rifle Coffee Company is a Veteran-founded and led premium coffee, energy drink, and media company operating through one reportable segment that comprises three primary channels: Wholesale, DTC, and Outposts. Founded in 2014 by U.S. Army Veteran Evan Hafer, Black Rifle Coffee began with a one-pound coffee roaster in a garage, where Hafer personally roasted, packaged, and shipped coffee directly to consumers. Today, the company has grown into a widely recognized and nationally distributed brand steadfast in its commitment to supporting active-duty military, Veterans, first responders, and all who love America.

Current wording

Black Rifle Coffee Company is a Veteran-founded and led premium coffee, and energy drink company operating through one reportable segment composed of three primary channels: Wholesale, DTC, and Outposts. We leverage in-house media and content creation to support brand awareness, customer engagement, and community building. Founded in 2014 by U.S. Army Veteran Evan Hafer, Black Rifle Coffee began with a one-pound coffee roaster in a garage, where Mr. Hafer personally roasted, packaged, and shipped coffee directly to consumers. Today, we have grown into a widely recognized and nationally distributed brand steadfast in its commitment to supporting active-duty military, Veterans, first responders, and all who love America.

Previous wording

•Wholesale channel revenue increased as we added new customers and continued to expand our presence in the Food, Drug, and Mass ("FDM") market. We expect further revenue growth in this channel as we invest in customer acquisition, new product launches, including our Black Rifle Energy product line, and distribution expansion in the FDM market.

Current wording

•Wholesale channel revenue continues to increase as we add new customers and expand our shelf presence in the Food, Drug, and Mass ("FDM") market. We expect continued revenue growth in this channel as we invest to increase brand awareness, efficient promotional activity at-shelf, new product launches, and expanded distribution in the FDM market.

Previous wording

•DTC channel revenue decline is slowing as we execute our strategic initiatives to optimize customer acquisition, enhance retention, and provide our customers with a personalized and engaging shopping experience through targeted content and tailored product offerings on our website. Additionally, we are increasing our focus on investment on major 3rd Party Ecommerce Marketplaces because of changing consumer trends.

Current wording

•DTC channel revenue has grown as we continue to optimize customer acquisition, enhance retention, and provide our customers with a personalized and engaging shopping experience through targeted content and tailored product offerings on our website. Additionally, we are increasing our investment in major third-party ecommerce marketplaces in response to changing consumer purchasing behavior.

Previous wording

•Outpost channel revenue is stabilizing as we focus on improving transaction volumes and average order values through customer retention programs and tailored product offerings. In 2025, we anticipate limited growth in this channel as we reallocate investments to other channels while we work to improve profitability through operational and strategic changes, which may include closing underperforming Outposts.

Current wording

•Outpost channel revenue is stabilizing as we focus on improving transaction volumes and average order values through customer retention programs and tailored product offerings. In 2026, we expect consistent performance in this channel as we reallocate investments to other channels while seeking to improve profitability through operational and strategic changes, which may include the closure of underperforming Outposts.

Previous wording

During the second quarter of 2025, management implemented the Operational Improvement Plan to reduce costs and improve efficiency of certain company-wide functions. This plan was extended in the third quarter of 2025 as a result of a move of our corporate headquarters and the change in our third party logistics provider. We estimate the cost of this plan will be approximately $3.6 million which is related to severance and transition costs all of which have been incurred as of September 30, 2025. We estimate that the costs savings as a result of this plan will be more than $8.6 million on an annualized run rate basis. As of September 30, 2025, we have realized approximately $3.1 million of these savings.

Current wording

During the second quarter of 2025, management implemented the Operational Improvement Plan to reduce costs and improve the efficiency of certain company-wide functions. This plan was extended in the third quarter of 2025 as a result of the relocation of our corporate headquarters and a change in our third-party logistics provider. The cost of this plan was approximately $6.6 million consisting of severance and transition costs, substantially all of which have been incurred as of March 31, 2026. We estimate that the costs savings as a result of this plan will exceed $11.4 million on an annualized run rate basis. As of March 31, 2026, we have realized approximately $8.4 million of these savings.

Previous wording

Maintaining and growing brand awareness and loyalty is critical to our success. We believe we have developed an efficient marketing strategy that enhances brand awareness and drives consumer engagement. Consumer appreciation of our brands is primarily reflected in our sales across our three channels. We expect to continue to refine and develop our brand strategy utilizing reach-based formats such as streaming advertising and other select avenues. In addition, we will leverage our social media presence and employ targeted digital advertising to expand the reach of our brand.

Current wording

Maintaining and growing brand awareness and loyalty is critical to our success. We believe we have developed an effective marketing strategy that enhances brand awareness and drives consumer engagement, leading to conversion and repeat purchases. Consumer appreciation of our brand, enhanced by our mission to give back to the veteran and first responder communities, is primarily reflected in our sales across our three channels. We intend to continue to refine and develop our brand strategy utilizing reach-based formats such as streaming advertising and other select marketing channels. In addition, we will leverage our social media presence and employ targeted digital advertising to expand the reach of our brand.

Previous wording

We continue to expand our customer base through our Wholesale channel, with our products now available in a growing number of physical retail locations. Wholesale customers include large national retailers, regional retailers, distributors, and dealers, reflecting our increases in market presence and distribution reach.

Current wording

We continue to expand our customer base through our Wholesale channel, with our products now available in a growing number of physical retail locations. Wholesale customers include large national retailers, regional retailers, distributors, and dealers, reflecting increased market presence and distribution reach.

Previous wording

We believe that consistently acquiring and retaining customers at a reasonable cost will be a key driver of our future performance. We continue to build brand awareness and reach new consumers by investing in existing and new channels and markets. Our expertise in digital creative and engagement provides a distinct advantage in attracting, converting, and retaining our consumers. We remain focused on measuring and optimizing marketing performance to ensure that our advertising spend is both effective and efficient, while managing customer acquisition costs and maximizing returns on marketing investments.

Current wording

We believe that consistently acquiring and retaining customers at a reasonable cost will be a key driver of our future performance. We continue to build brand awareness and reach new consumers by investing in existing and new channels and markets. Our capabilities in digital marketing and consumer engagement provide a competitive advantage in attracting, converting, and retaining our consumers. We remain focused on measuring and optimizing marketing performance to ensure that our advertising spend is efficient, while managing customer acquisition costs and maximizing returns on marketing investments.

Previous wording

We gain substantial economic value from repeat users of our products who consistently re-order our products. The pace of our growth rate will be affected by the repeat usage dynamics of existing and newly acquired customers.

Current wording

We gain substantial economic value from repeat users of our products who consistently re-order our products. The pace of our growth rate may be affected by the repeat purchase behavior among our existing and newly acquired customers.

Previous wording

Our goal is to continue to expand our product line over time to increase our growth opportunity and reduce product-specific risks through diversification into multiple products each designed around daily use. Our pace of growth will be partially affected by the cadence and magnitude of new product launches over time. We believe that it is important to our business that we continue innovating with new products and flavors.

Current wording

Our goal is to continue to expand our product line over time to increase our growth opportunities and reduce product-specific risks through diversification into multiple products intended for regular consumer use. Our pace of growth will be partially affected by the timing and scale of new product launches. We believe that it is important to our business to continue to innovate with new products and flavors.

Previous wording

Our ability to grow and meet future demand will be affected by our ability to properly plan for and source inventory from a variety of suppliers and co-manufacturers located inside and outside the United States. The majority of our green coffee beans come from Colombia, Brazil, and Nicaragua, and since 2020, we have also sourced green coffee beans from over ten countries in Latin America, Africa, and Asia to diversify our supply chain and offer our customers specialty and limited-time-only roasts. Quality control is also a critically important part of our manufacturing and supply chain operations. 100% of our coffee is roasted in the United States. Our licensed, Coffee Quality Institute-certified grader and former Green Beret, leads cupping, grading, scoring, and sourcing of our coffees. We also must effectively manage our co-manufacturers and suppliers.

Current wording

Our ability to grow and meet future demand will be affected by our ability to properly plan for and source inventory from a variety of suppliers and co-manufacturers located inside and outside the United States. The majority of our green coffee beans come from Colombia, Brazil, and Nicaragua, and since 2020, we have also sourced green coffee beans from more than ten additional countries in Latin America, Africa, and Asia to diversify our supply chain and offer our customers specialty and limited-time-only roasts. Quality control is a critical component of our manufacturing and supply chain operations. All of our bagged coffee is roasted in the United States. Our licensed, Coffee Quality Institute-certified grader and former Green Beret, oversees cupping, grading, scoring, and sourcing of our coffees. We also must effectively manage our co-manufacturers and suppliers.

Previous wording

Operating expenses consist of marketing and advertising expenses related to brand marketing campaigns through various online platforms, including email, digital, website, social media, search engine optimization, as well as performance marketing efforts including retargeting, paid search and product advertisements, as well as social media advertisements and sponsorships. Operating expenses also consist of salaries, wages, and benefits of payroll and payroll related expenses for labor not directly related to producing our products. Payroll expenses include both fixed and variable compensation. Variable compensation includes bonuses and equity-based compensation. General and administrative costs include other professional fees and services, and general corporate infrastructure expenses, including utilities and depreciation and amortization.

Current wording

Operating expenses consist of marketing and advertising expenses related to brand marketing campaigns through various online platforms, including email, digital, website, social media, search engine optimization, as well as performance marketing efforts including retargeting, paid search and product advertisements, as well as social media advertisements and sponsorships. Operating expenses also consist of salaries, wages, and benefits and payroll related expenses for labor not directly related to producing our products. Payroll expenses include both fixed and variable compensation. Variable compensation includes bonuses and equity-based compensation. General and administrative costs include other professional fees and services, and general corporate infrastructure expenses, including utilities and depreciation and amortization.

Previous wording

This discussion and analysis pertains to comparisons of material changes on the consolidated financial statements for three and nine months ended September 30, 2025 and 2024. The following table represents the selected results of operations for BRC Inc. for the periods indicated (dollars in thousands, unaudited):

Current wording

This discussion and analysis pertains to comparisons of material changes on the consolidated financial statements for three months ended March 31, 2026 and 2025. The following table represents the selected results of operations for BRC Inc. for the periods indicated (dollars in thousands, unaudited):

Previous wording

Net revenue for our Wholesale channel for the three months ended September 30, 2025, increased $3.4 million, or 5%, to $67.0 million as compared to $63.7 million for the corresponding period in 2024. The increase was primarily driven by an increase in Energy revenue in 2025, growth in packaged coffee distribution and SKU expansion at FDM retailers. This increase was partially offset by a $2.3 million decrease in sales from barter transactions in the third quarter of 2024, whereby finished goods inventory was exchanged for prepaid advertising credits.

Current wording

Net revenue for our Wholesale channel for the three months ended March 31, 2026, increased $17.9 million, or 32%, to $74.7 million as compared to $56.8 million for the corresponding period in 2025. The increase was primarily driven by expanded packaged coffee distribution and SKU expansion at FDM retailers, as well as contributions from Black Rifle Energy.

Previous wording

Net revenue for our Outpost channel for the three months ended September 30, 2025, increased $0.3 million, or 6%, to $5.8 million as compared to $5.5 million for the corresponding period in 2024. The increase was primarily driven by higher franchise fees and increased average order values, supported by efforts to drive add-on and bundled purchases through company-owned retail stores.

Current wording

Net revenue for our Outpost channel for the three months ended March 31, 2026, decreased $0.7 million, or 12%, to $4.8 million as compared to $5.5 million for the corresponding period in 2025. The decrease was primarily driven by softness in volume and average order values.

Previous wording

Cost of goods sold for the nine months ended September 30, 2025 increased $18.9 million, or 11%, to $183.7 million as compared to $164.8 million for the corresponding period in 2024. Gross margin decreased to 36% for the nine months ended September 30, 2025 as compared to 42% for the corresponding period in 2024. The decrease in gross margin was driven by the decrease in revenue as a result of the decrease in the accrual for loyalty reward points in 2024. The decline also reflected higher inflationary costs, primarily in coffee bean prices and shipping cost. In addition, we have increased investments in trade and promotions, partially offset by productivity improvements and favorable mix.

Current wording

Cost of goods sold for the three months ended March 31, 2026 increased $15.6 million, or 27%, to $73.1 million as compared to $57.5 million for the corresponding period in 2025. Gross margin decreased to 33% for the three months ended March 31, 2026 as compared to 36% for the corresponding period in 2025. The decrease in gross margin was primarily attributable to higher costs, driven by inflation. Gross margin was further impacted by an increase in the reserve for excess and obsolete inventory. These decreases were partially offset by pricing actions and productivity gains.

Previous wording

Other operating expense, net for the three months ended September 30, 2025 decreased $0.7 million, or 53%, to $0.6 million as compared to $1.3 million for the corresponding period in 2024. The decrease was primarily related to a decrease in site termination costs for our Outpost locations.

Current wording

Other operating expense, net for the three months ended March 31, 2026 decreased approximately $0.9 million, or 69%, to $0.4 million as compared to $1.2 million for the corresponding period in 2025. The decrease was primarily related to a lease termination that was recorded in the first quarter of 2025.

Previous wording

Interest expense, net for the three months ended September 30, 2025 decreased $0.7 million, or 30%, to $1.7 million as compared to $2.5 million for the corresponding period in 2024. The decrease was primarily due to the decrease in the average balance of the ABL Facility during the third quarter of 2025.

Current wording

Interest expense, net for the three months ended March 31, 2026 decreased approximately $1.1 million, or 48%, to $1.2 million as compared to $2.4 million for the corresponding period in 2025. The decrease was primarily driven by a lower average outstanding balance of the ABL Facility during the first quarter of 2026 compared to the corresponding period in 2025.

Previous wording

Our principal use of cash is to support the growth of our business, including increasing working capital requirements related to inventories, accounts receivable, and general and administrative expenses. Furthermore, we use cash to fund our debt service commitments, capital equipment acquisitions, and other growth-related needs.

Current wording

Our principal use of cash is to support the growth of our business, including increasing working capital requirements related to inventories, accounts receivable, and general and administrative expenses. We also use cash to fund our debt service commitments, capital equipment acquisitions, and other growth-related needs.

Previous wording

Our primary sources of cash are (1) cash on hand, (2) cash provided by operating activities, and (3) net borrowings from our credit facilities. As of September 30, 2025, our cash and cash equivalents was $9.5 million, our working capital was $27.3 million, and under our credit facilities, we had $49.3 million of available borrowings. Our ability to draw from the credit facilities is subject to a borrowing base and other covenants. There are no defaults or events of default at this time and the Company is in compliance with all covenants. We believe that these sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments in the ordinary course of business and under the current market conditions for at least the next twelve months.

Current wording

Our primary sources of cash are (1) cash on hand, (2) cash provided by operating activities, and (3) net borrowings from our credit facilities. As of March 31, 2026, our cash and cash equivalents were approximately $10.0 million, our working capital was $29.6 million, and under our credit facilities, we had $52.5 million of available borrowings. Our ability to draw from the credit facilities is subject to a borrowing base and other covenants. As of March 31, 2026, we are in compliance with our covenants under the credit facilities, and there are no defaults or events of default. We believe that these sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments in the ordinary course of business and under the current market conditions for at least the next twelve months.

Previous wording

On July 18, 2025, we closed the Offering and issued 28,000,000 shares of Class A Common Stock and an additional 4,200,000 shares of Class A Common Stock as a result of the exercise in full of the underwriter's option, for total net proceeds of $37.4 million.

Current wording

On July 18, 2025, we closed a public offering and issued 28,000,000 shares of Class A Common Stock and an additional 4,200,000 shares of Class A Common Stock as a result of the full exercise of the underwriter's option, for total net proceeds of $37.3 million.

Previous wording

Net cash used in operating activities was $1.1 million for the nine months ended September 30, 2025, compared to net cash provided by operating activities of $9.1 million for the corresponding period in 2024. The total decrease of $10.2 million in net cash provided by operating activities was primarily due to net loss of $23.6 million for the nine months ended September 30, 2025 compared to net loss of $0.9 million for nine months ended September 30, 2024.

Current wording

Net cash provided by operating activities was $6.8 million for the three months ended March 31, 2026, compared to net cash used in operating activities of $4.1 million for the corresponding period in 2025. The total increase of $10.9 million in net cash provided by operating activities was primarily due to increased net income and working capital improvements.

Previous wording

Net cash used in investing activities was $2.9 million for the nine months ended September 30, 2025, compared to net cash used in investing activities of $6.1 million for the corresponding period in 2024. The $3.2 million decrease in net cash used in investing activities was primarily due to reduced capital expenditure projects for our Outpost locations, roasting facilities and information technology.

Current wording

Net cash used in investing activities was $0.6 million for the three months ended March 31, 2026, compared to net cash used in investing activities of $1.2 million for the corresponding period in 2025. The $0.5 million decrease in net cash used in investing activities was primarily due to lower capital expenditures, including reduced investment in our Outpost locations, roasting facilities, and information technology.

Previous wording

Net cash provided by financing activities was $6.6 million for the nine months ended September 30, 2025, compared to net cash used in financing activities of $9.3 million for the corresponding period in 2024. The $15.9 million increase in net cash provided by financing activities was primarily due to $37.4 million of net proceeds received from the public offering in the third quarter of fiscal year 2025 and $1.0 million of net proceeds from shares issued for legal settlement, offset by a net decrease of $30.8 million on long-term debt, primarily due to repayment of our ABL facility.

Current wording

Net cash used in financing activities was $0.5 million for the three months ended March 31, 2026, compared to net cash provided by financing activities of $2.4 million for the corresponding period in 2025. The $2.9 million decrease in net cash provided by financing activities was primarily due to $2.7 million of net proceeds from long-term debt, primarily related to draws on our ABL Facility, in the prior year period.

Previous wording

The Company has entered into several manufacturing and purchase agreements to purchase coffee products from third-party suppliers. The minimum purchase amounts are based on quantity and in the aggregate will be approximately $7.0 million for the remainder of 2025; $30.0 million for 2026; and $32.4 million for 2027. See Note 14, Commitments and Contingencies to the consolidated financial statements included in Item 1 of Part I of this Quarterly Report for information regarding such manufacturing and purchase agreements.

Current wording

The Company has entered into several manufacturing and purchase agreements to purchase coffee products from third-party suppliers. The minimum purchase amounts are based on quantity and in the aggregate will be approximately $26.5 million for the remainder of 2026; $32.4 million for 2027; $15.1 million for 2028; and $14.9 million for 2029. See Note 9, Commitments and Contingencies to the consolidated financial statements included in Item 1 of Part I of this Quarterly Report for information regarding such manufacturing and purchase agreements.

Previous wording

Liabilities relating to operating leases that have commenced as of September 30, 2025 have been reported on the consolidated balance sheets as "Operating lease liabilities". Payments on leases are expected to be approximately $3.7 million in the next twelve months, and approximately $32.2 million beyond twelve months through 2043.

Current wording

Liabilities relating to operating leases that have commenced as of March 31, 2026 have been reported on the consolidated balance sheets as "Operating lease liabilities". Payments on leases are expected to be approximately $3.7 million in the next twelve months, and approximately $30.4 million beyond twelve months through 2043.

Previous wording

Future capital requirements will vary materially from period to period and will depend on factors such as adding additional roasting capacity, expansion of our corporate and information technology infrastructure relating to growth initiatives and expansion and growth by opening additional Company-operated Outposts. We currently expect to fund our material capital requirements with borrowings from our credit facilities, but we may also seek additional debt or equity financing.

Current wording

Future capital requirements will vary materially from period to period and will depend on factors such as the addition of roasting capacity and the expansion of our corporate and information technology infrastructure to support changes in the Company. We currently expect to fund our material capital requirements with borrowings from our credit facilities, but we may also seek additional debt or equity financing.

Previous wording

Our significant accounting policies and critical accounting estimates are described in Note 2 to the audited consolidated financial statements for the year ended December 31, 2024 included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 3, 2025. There have been no material changes to our significant accounting policies or critical accounting estimates during the three months ended September 30, 2025.

Current wording

Our significant accounting estimates are discussed in Note 2, Summary of Significant Accounting Policies to the audited consolidated financial statements for the year ended December 31, 2025 included in Part II, Item 8 of our Annual Report on Form 10-K, filed with the SEC on March 2, 2026.