BRC Inc. 2026 Q2 Earnings Call

Good morning, everyone. Thank you for joining Black Rifle Coffee Company's second quarter 2026 financial results conference call. We released our results yesterday, and the earnings 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 provisions 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 and could cause actual results to differ materially. For a discussion of these risks, please refer to our 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.

Reconciliations of non-GAAP financial 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 as well as in the investor presentation available there. Please refer to the presentation and turn to slide four. I would now like to turn the call over to Chris Mondzelewski, CEO of Black Rifle Coffee Company.

Monz? Thanks, Matt. Good morning, everyone.

Joining me today are Evan Hafer, our Executive Chairman, Matt Amigh, our Chief Financial Officer, and Matt McGinley, our Head of Investor Relations. Through the first half of 2026, we delivered solid growth, strong profitability, and clear evidence that greater discipline across the business is translating into results. We are allocating resources more deliberately and concentrating our efforts on the customers, channels, and products with the greatest potential to create value. That sharper focus is helping us make decisions faster, direct investment toward the strongest opportunities, and eliminate activity that does not support our most important objectives. We are seeing the impact most clearly in packaged coffee, where expanded retail distribution and strong direct-to-consumer performance are driving growth.

At the same time, tighter cost management, process improvements, and greater accountability are improving the conversion of revenue into earnings and allowing us to operate with greater consistency and control. Our first half results reinforce our confidence in this approach, we will remain focused on the highest return opportunities and on translating strong commercial execution into sustainable, profitable growth. Moving to slide six. In packaged coffee, retail performance remained strong in the second quarter, driven by continued distribution gains, pricing taken to 2025, and broad-based strength across customers and channels. According to Nielsen, Black Rifle packaged coffee sales grew 28.2% in the last quarter, nearly three times the category's 9.9% growth rate. Over the latest 52 weeks, our retail sales increased 32.5%, compared with 12.3% growth for the broader category.

Importantly, bagged coffee velocity reached category-level performance in 2025 and has remained there year-to-date, despite continued distribution expansion and our price premium. That is an important proof point because newly added stores and items typically take time to mature. With distribution and productivity both improving, our bagged coffee share increased 60 basis points year-over-year to 3.3%, while pod share increased 30 basis points to 2.2% across the total market. Turning to slide seven. Our land and expand strategy continues to increase both the reach of the brand and our presence on shelf. During the second quarter, packaged coffee distribution increased by more than two and a half points of ACV year-over-year to 56.5%, reflecting expanded availability across new and existing retail accounts. We are also earning greater shelf presence within the stores that already carry Black Rifle Coffee.

In grocery, the average retail account now carries about 1.3 more Black Rifle Coffee items than it did a year ago, demonstrating our ability to build beyond the initial placements as the brand becomes more established within an account. Together, these results demonstrate the scalability of our land and expand strategy, with growth coming from both broader distribution and deeper assortment within existing customers. Slide eight. Black Rifle's packaged coffee growth reflects strong underlying consumer demand, with meaningful unit growth alongside pricing. Over the latest 52-week period, retail sales increased 32.5%, including 16.6% unit growth, placing Black Rifle among the strongest unit growth performers in the category. That distinction is important because many larger competitors generated most or all of their dollar growth through price increases while units declined. Black Rifle is delivering a more balanced contribution from volume and pricing.

That unit performance demonstrates sustained consumer demand and strengthens our value proposition to retailers by driving category productivity as distribution expands. Turning to slide nine. Our direct-to-consumer business delivered another quarter of solid growth, with revenue increasing 13.6% year-over-year. This marked the third consecutive quarter of growth and our strongest quarterly year-over-year performance in the segment in more than four years. In May, we successfully transitioned blackriflecoffee.com to a more scalable and flexible e-commerce platform. Early results are encouraging, including greater product visibility in online shopping results, improved organic search rankings, and stabilization of our subscriber base in the nearly three months since the conversion. The new platform provides a stronger technology foundation to improve the customer experience and support future growth in our owned channel.

blackriflecoffee.com remains an important part of our DTC model, serving as the core platform for subscriptions, repeat purchases, exclusive offerings, and deeper engagement with our most loyal customers. At the same time, third-party marketplace sales increased 90% as we continued to expand our reach and capture demand on the platforms where consumers increasingly choose to shop. We view marketplaces as an incremental customer acquisition channel that complements rather than replaces blackriflecoffee.com. Slide 10, we show that online marketplaces, mass retail, and grocery are all large channels, but consumers shop them differently. The largest online marketplace and the largest mass retailer are similar in size, each generating about $4 billion in annual packaged coffee sales. Both skew heavily toward pods, but their preferred pack sizes differ meaningfully.

The larger packs purchased online suggest a more planned stock-up or pantry-loading mission, while mass retail appears to serve a more routine household replenishment occasion. Grocery is large at $6.8 billion in annual sales, with a more balanced mix of bags and pods. Within grocery, smaller pod counts suggest more frequent replenishment and greater trial or variety seeking. These differences reinforce the importance of tailoring our assortment and pack architecture to how consumers shop within each channel. At our largest customer, where the brand is most established, sales continue to grow both in-store and online. Combined with our low single-digit share in the largest online marketplace and grocery, that performance highlights the long runway ahead, both within established customers and across large channels where our presence remains underdeveloped. Moving to slide 11. In ready-to-drink coffee, market conditions remain challenging, with the weakness most pronounced in the convenience channel.

Performance has been comparatively stronger in grocery, where we continue to outpace the category. We are directing resources towards the channels, customers, and occasions where consumer takeaway is more resilient and using innovation selectively to support the strongest opportunities. The objective is to improve the quality and economics of the business rather than pursue distribution for its own sake. In energy, we exited the quarter at approximately 21% ACV across more than 22,000 doors, reflecting the distribution build since last year's launch, with the footprint remaining broadly consistent with the first quarter. Our priority is to build productivity within existing doors while expanding selectively where performance supports additional investment. Before I turn it over to Matt, I want to briefly highlight some of the meaningful ways we supported our community during the second quarter.

From April through June, we supported 11 mission-focused events, contributed more than $400,000 to organizations serving veterans, active duty military personnel, first responders and their families, and delivered more than 3,000 bags of coffee to military units deployed around the world. These efforts included veteran recovery and mental wellness programs, events honoring Gold Star families and Medal of Honor recipients, and a centennial celebration for eight World War II veterans who marked their 100th birthday. This Memorial Day, we launched Folded Flag, a new multi-year initiative dedicated to honoring fallen service members, preserving their legacies, and supporting Gold Star families. As part of America's 250th anniversary, we also introduced our Rewarding Patriotism initiative and distributed 1,000 Patriot Forward boxes, recognizing individuals who embody service, patriotism, and leadership in their communities.

Each of these efforts gave us an opportunity to honor service, preserve legacy, and provide meaningful support to the people and families who have sacrificed so much. We are proud of the impact we made during the quarter and look forward to carrying that commitment forward throughout the remainder of the year.