brrc-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 001-41275

BRC Inc.

(Exact name of registrant as specified in its charter)


Delaware						87-3277812
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1144 S. 500 W

Salt Lake City, UT 84101

(Address of principal executive office, zip code)

(801) 874-1189

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.0001 par value	BRCC	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2024, the registrant had (i) 70,639,046 shares of Class A common stock, par value $0.0001 per share (the "Class A Common Stock") and, (ii) 141,884,845 shares of Class B common stock, par value $0.0001 per share (the "Class B Common Stock") outstanding.

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		Page
Forward-Looking Statements		1

Part I - Financial Information
Item 1	Financial Statements (unaudited)	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Stockholders' Equity (Deficit)	5
	Consolidated Statements of Cash Flows	6
	Index for Notes to Consolidated Financial Statements	8
	Notes to Consolidated Financial Statements	9
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4	Controls and Procedures	40

Part II - Other Information
Item 1	Legal Proceedings	42
Item 1A	Risk Factors	42
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3	Defaults Upon Senior Securities	42
Item 4	Mine Safety Disclosures	42
Item 5	Other Information	42
Item 6	Exhibits	43

Signatures		44

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this "Quarterly Report") includes statements that express the Company’s opinions, expectations, hopes, beliefs, plans, intentions, objectives, strategies, assumptions or projections regarding future events or future results of operations or financial condition and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements appear in a number of places throughout this Quarterly Report and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the launch of Black Rifle Energy™, the Company's financial condition, liquidity, prospects, growth, strategies, future market conditions and 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 of the Company. Such forward-looking statements are based on information available as of the date of this Quarterly Report and management's expectations, beliefs and forecasts concerning future events impacting the Company. 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 manage 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 a 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 ("DTC") revenue channel;

•Loss of one or more of our 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 shops ("Outposts"), including any 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;

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•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 (the “2023 Form 10-K”) including those set forth under “Item 1A. Risk Factors” included therein.

The forward-looking statements contained in this Quarterly Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under “Item 1A. Risk Factors” in our 2023 Form 10-K. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We do 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.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

BRC Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and par value amounts)

(unaudited)


	June 30,		December 31,
	2024		2023
	(unaudited)		(audited)
Assets
Current assets:
Cash and cash equivalents	$	9,642	$	12,448
Restricted cash	315		1,465
Accounts receivable, net	25,923		25,207
Inventories, net	44,793		56,465
Prepaid expenses and other current assets	18,696		12,153
Total current assets	99,369		107,738
Property, plant and equipment, net	65,384		68,326
Operating lease, right-of-use asset	31,680		36,214
Identifiable intangibles, net	388		418
Other	33,061		23,080
Total assets	$	229,882	$	235,776
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	34,162	$	33,564
Accrued liabilities	37,072		34,911
Deferred revenue and gift card liability	5,592		11,030
Current maturities of long-term debt, net	14,037		2,297
Current operating lease liability	2,198		2,249
Current maturities of finance lease obligations	29		58
Total current liabilities	93,090		84,109
Non-current liabilities:
Long-term debt, net	52,450		68,683
Finance lease obligations, net of current maturities	25		23
Operating lease liability	31,743		35,929
Other non-current liabilities	420		524
Total non-current liabilities	84,638		105,159
Total liabilities	177,728		189,268
Commitments and Contingencies (Note 14)
Stockholders’ equity:
Preferred Stock, $0.0001 par value, 1,000,000 shares authorized; no shares issued or outstanding as of June 30, 2024 and December 31, 2023, respectively	—		—
Class A Common Stock, $0.0001 par value, 2,500,000,000 shares authorized; 69,955,628 and 65,637,806 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	7		6
Class B Common Stock, $0.0001 par value, 300,000,000 shares authorized; 142,568,263 and 146,484,989 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	14		15
Class C Common Stock, $0.0001 par value, 1,500,000 shares authorized; no shares issued or outstanding as of June 30, 2024 and December 31, 2023, respectively	—		—
Additional paid in capital	135,288		133,728
Accumulated deficit	(120,412)		(120,478)
Total BRC Inc.'s stockholders' equity	14,897		13,271
Non-controlling interests	37,257		33,237
Total stockholders' equity	52,154		46,508
Total liabilities and stockholders' equity	$	229,882	$	235,776

See notes to unaudited consolidated financial statements.

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BRC Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue, net	$	89,017	$	91,947	$	187,409	$	175,437
Cost of goods sold	51,758		59,741		107,966		115,720
Gross profit	37,259		32,206		79,443		59,717
Operating expenses
Marketing and advertising	7,411		7,013		15,020		14,157
Salaries, wages and benefits	17,610		18,356		32,871		38,180
General and administrative	10,949		19,296		26,294		37,054
Other operating expense, net	311		1,202		324		1,202
Total operating expenses	36,281		45,867		74,509		90,593
Operating income (loss)	978		(13,661)		4,934		(30,876)

Non-operating income (expenses)
Interest expense, net	(2,301)		(791)		(4,352)		(1,114)
Other income (expense), net	—		(156)		—		117
Total non-operating expenses	(2,301)		(947)		(4,352)		(997)
Income (loss) before income taxes	(1,323)		(14,608)		582		(31,873)
Income tax expense	51		57		100		113
Net income (loss)	$	(1,374)	$	(14,665)	$	482	$	(31,986)
Less: Net income (loss) attributable to non-controlling interest	(892)		(10,437)		415		(22,958)
Net income (loss) attributable to BRC Inc.	$	(482)	$

SEC Form 10-Q filed by BRC Inc.