BRCC - Fundamentals, Financials, History, and Analysis
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Black Rifle Coffee Company (BRCC) is a veteran-founded, mission-driven premium coffee and lifestyle brand that has been steadily carving out a unique space in the highly competitive beverage industry. With its unwavering commitment to supporting active-duty military, veterans, and first responders, BRCC has built a loyal customer base and a strong brand identity that sets it apart from its competitors.

Company Background and Evolution

Founded in 2014 by U.S. Army veteran Evan Hafer, BRCC has undergone a remarkable transformation over the past decade. What began as a small coffee roasting operation in a garage has now blossomed into a widely recognized and nationally distributed brand, with a diversified product portfolio and a multi-channel business model. Hafer started the company with a one-pound coffee roaster in his garage, where he personally roasted, packaged, and shipped coffee directly to consumers. In the early years, the company focused on building its direct-to-consumer (DTC) business through its e-commerce website, which allowed Black Rifle Coffee to quickly establish itself as a recognizable beverage brand in the United States by engaging directly with customers and gaining valuable customer insights.

Financials

In 2024, BRCC reported total revenue of $391.49 million, a slight 1.0% decline compared to the previous year. However, the company achieved a significant improvement in its profitability, with adjusted EBITDA more than tripling to $39.3 million, up from $12.8 million in 2023. This impressive financial performance was driven by the company's strategic focus on operational efficiency, supply chain optimization, and disciplined capital allocation.

BRCC's net income for 2024 was -$7.65 million, with operating cash flow of $11.31 million and free cash flow of $2.64 million. The company generated positive cash flow from operations and free cash flow in 2024, with an improvement of over $55 million compared to 2023. In the most recent quarter (Q4 2024), revenue was $105.88 million, with a net income of -$2.48 million and a year-over-year revenue decline of 11.5%.

The company's liquidity position includes a debt-to-equity ratio of 2.56, cash holdings of $6.81 million, and an available credit line of $25.54 million under the $75 million ABL Facility, after a $5 million reduction required before the Availability Block Release Date.

Business Model and Revenue Channels

BRCC's business model is structured around three primary channels: Wholesale, Direct-to-Consumer (DTC), and Outposts (company-owned and franchised retail locations). In 2024, the Wholesale channel accounted for 63% of the company's total revenue, up from 57% in the prior year, reflecting BRCC's successful efforts to expand its distribution footprint in the food, drug, and mass (FDM) retail market.

The Wholesale channel saw significant growth in 2024, with revenue increasing 9% to $245.04 million compared to $225.06 million in 2023. This growth was primarily driven by continued expansion of packaged coffee in the FDM retail market and the launch of Black Rifle Energy. However, revenue recognized from a barter transaction, where the company exchanged finished goods inventory for prepaid advertising credits, decreased by $5 million.

The company's DTC channel, which includes its e-commerce platform and subscription-based Coffee Club, contributed 32% of revenue in 2024, down from 36% in 2023. DTC revenue declined 14% in 2024 to $123.78 million, down from $143.23 million in 2023. This decline was primarily due to a strategic shift in marketing investments towards the higher-growth Wholesale channel, as well as shifts in consumer purchasing behavior towards brick-and-mortar retail. The decrease was partially offset by a $6.5 million increase in revenue due to a change in the company's loyalty rewards program policy that resulted in more points expiring.

The Outpost channel, which includes company-owned and franchised retail locations, accounted for 6% of revenue in 2024, down from 7% in the previous year. Outpost revenue decreased 17% to $22.67 million in 2024 compared to $27.33 million in 2023. The decline was primarily driven by lower transaction volumes and reduced foot traffic at existing Outpost retail locations. While the company has temporarily slowed its Outpost expansion to focus on its Wholesale and DTC initiatives, it remains an important part of BRCC's long-term strategy, providing a physical manifestation of the brand and a compelling customer experience. The company opened its first company-operated Outpost retail location in San Antonio, Texas, in 2020, offering a reimagined coffee shop experience featuring freshly brewed coffee, Black Rifle Coffee merchandise, and a welcoming environment for community connection. By 2024, the company had expanded to operate a total of 18 company-owned Outposts and 19 franchised locations across 10 states.

Product Innovation and Expansion

One of the most notable developments in 2024 was the successful launch of BRCC's new energy drink product, Black Rifle Energy™. Introduced in late 2024, the energy drink quickly gained distribution in thousands of retail locations, leveraging BRCC's partnership with Keurig Dr Pepper (KDP) for manufacturing and distribution. The company is optimistic about the growth potential of the energy drink category, which represents a significant addressable market and diversification opportunity beyond BRCC's core coffee business. The Energy drink launch is expected to be a significant contributor to growth in 2025, with a distribution goal of 20% to 30% ACV by the end of the year.

Distribution and Market Penetration

In addition to its product innovation, BRCC has also been proactive in expanding its distribution footprint in the Wholesale channel. By the end of 2024, the company's packaged coffee products had achieved 48.6% All Commodity Volume (ACV) distribution in the FDM market, up from 37.1% in the prior year. Similarly, BRCC's ready-to-drink coffee products reached 47.2% ACV, an increase of 3.8 percentage points compared to 2023. These distribution gains, coupled with velocity growth in existing retail accounts, have been instrumental in driving the company's Wholesale revenue performance.

Future Outlook and Strategic Initiatives

Looking ahead, BRCC remains focused on executing its strategic initiatives to drive long-term growth and profitability. For 2025, the company expects revenue to be in the range of $395 million to $425 million, implying up to 9% growth at the top end. BRCC anticipates gross margin to be in the 37% to 39% range in 2025, compared to 41.2% in 2024. The primary headwinds include a 2.5 percentage point reduction from green coffee inflation, a 1.5 point headwind from recycling the release of loyalty reserves, and a 1 point impact from trade investments for the Energy launch.

The company expects to generate $20 million to $30 million in adjusted EBITDA in 2025, compared to $39.3 million in 2024. This decline is mostly driven by the changes in gross profit. BRCC expects marketing and compensation expense to be modestly higher in 2025 compared to 2024, but with efficiency offsets elsewhere.

While the company faces various risks, including competition, supply chain disruptions, and the potential for changing consumer preferences, BRCC's strong brand equity, diversified business model, and commitment to its mission-driven approach position it well for future success. The company's ability to navigate these challenges and capitalize on emerging opportunities will be crucial in determining its long-term trajectory.

Corporate Structure and Public Listing

In 2022, Black Rifle Coffee completed a business combination with SilverBox, becoming a public company under the name BRC Inc. This transition was accounted for as a reverse acquisition, with Authentic Brands, the parent company of Black Rifle Coffee, becoming a subsidiary of BRC Inc. The business combination provided additional capital to support the company's growth initiatives, including expanding its wholesale distribution and launching new product categories such as ready-to-drink (RTD) coffee and energy drinks. Despite challenges from the COVID-19 pandemic and supply chain disruptions, BRC Inc. has navigated these obstacles and continued to grow its brand presence and product offerings over the past few years.

Industry Trends

The U.S. coffee market is estimated to be $12 billion in size, while the energy drink market is over $20 billion. BRCC has been able to grow its market share in both categories, despite some overall category declines. The company expects the energy drink category to be a key driver of future growth.

Conclusion

Overall, BRCC has demonstrated a remarkable ability to adapt and thrive in the dynamic beverage industry. With its strategic vision, operational excellence, and unwavering dedication to its core values, the company is well-positioned to continue its growth trajectory and solidify its position as a leading player in the premium coffee and energy drink markets. The company's focus on strengthening its core business, improving operational efficiency, and expanding into new product categories like energy drinks sets a strong foundation for future growth. While facing challenges in its DTC channel, BRCC's success in the Wholesale channel and its commitment to its mission-driven approach continue to drive the company forward.

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