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Black Rifle Coffee continued to breach the headwinds of sluggish RTD coffee category in Q3 with continued volume growth and share gains while offering a more measured assessment of its newer energy drink line undertaken in partnership with Keurig Dr Pepper. Among innovation in store: line of cold-brewed canned coffees as BRC aims to penetrate more niches within cold-coffee space. Net revenue edged up 2.6% to $100.7 mil as BRC "delivered meaningful distribution growth in both packaged coffee and our ready-to-drink product lines this year, reinforcing the strength of our brand and positioning us well as we build a true multi-category beverage platform," per prexy/CEO Chris Mondzelewski. "Black Rifle is gaining share across every category where we compete." Its packaged coffee offerings grew sales by 28.5% in YTD Nielsens, outdistanced only by Bustelo (+30.5%) as Starbucks edged up just 4.5%, Dunkin' was flat and Peet's was off 2.8%. On RTD side, as #3 US player now, it's fastest unit-growth brand, Chris noted. Co showed scans indicating it's up YTD in 4-5% range at time broader category is off by that amount.But gross margin took a hit, narrowing to 36.9% from 41.3% with rising coffee bean costs and tariffs among the key culprits. To counter these higher costs, BRC took a round of pricing in Q3 and is taking another round now in Q4. It also axed headcount by 19% at cost of $800K in severance costs. So in this case, at least, Trump tariffs don't seem to be creating jobs. Execs said they've got 50% of green coffee locked into price hedges next year. Operating income stayed in the black, $518K, albeit narrower than $1.1 mil it scored a year earlier, reflecting what CFO Matt Amigh termed "solid operational and financial discipline that delivered meaningful improvement in underlying profitability compared to the first half of the year." As CEO Monz reinforced to investors, he's keeping his eye on the prize for publicly traded cos these days, "sustainable profitable growth." Co is keeping to its projection of doing $395 mil for full year, at lower end of range that extends as high as $425 mil. Gross margin should come in at least 35% vs 41.2% in full-year 2024.By key channel, wholesale biz scored 5.3% gain to $67 mil and now reps two-thirds of overall biz. Sales gains aren't only attributable to ACV gains: velocity grew by 7%+ in period, Monz reported. And it wasn't just on price hikes, he stressed. DTC biz with which co started declined 4.1% to $27.8 mil as co moderates its spending on customer acquisition. Adjusting for year-earlier promo, it would have been slightly positive. Network of cafes dubbed Outposts rose 6% to $5.8 mil as co stood pat at 37 units for now. As it operates the units, it's getting better handle on bundling deals and other revenue-growing activities, BRC brass assured.Among key indicators offered by BRC today, as of end of qtr its coffee line enjoyed 54.1% ACV in food/drug/mass channels, up 9.1 pts from year-earlier, per Nielsen data, while its RTDs enjoyed 53.3% ACV in AOC + convenience channel, up 7.3 pts. Recall that the RTDs continue to move thru indie channel, primarily via beer distributors. Among other metrics, as co continues to moderate spend on DTC channel, subscription base had declined to 165,500 from 194,000 users.On innovation side, RTD line will add Cold Brew subline in Just Black and Vanilla versions, the latter just 25 calories, to strong initial response from retailers who've been pitched, Monz reported. Also coming is Double Espresso in Mocha and Salty Caramel versions. He promised more edgy innovation ahead. "We're at the point where, yes, we participate, but we need to be leaders," he declared.Energy Adds Grape, Tiger Strike, but Continues to Take It a Step at a Time Launched in partnership with KDP, energy line is in 19,725 retail doors by now for 22% ACV. Slide in deck showed that it's got 68% ACV in 3,050 locations of Walmart, BRC's launch partner for CPG biz, and in 12,175 c-store doors for 7% ACV. But Monz commentary stopped short of being effusive about initial performance. "Pleased," is how he described view. Line has experienced "success in many of our markets, learned lessons in other markets" and will build off those lessons thru deliberate expansion next year. He wasn't ready yet to say how far brand will move beyond inaugural 12 up & down street markets. "Careful steps forward," he promised, without taking eye off co's "incredible coffee business." On innovation front, energy line is adding energy mainstay flavor Grape as well as Tiger Strike LTO timed for summer celebrations of nation's 250th anniversary.More Milestones in Legal Wrangling with SEI On legal front, recall that BRC scored quick success in coffee RTDs thanks to efforts of outside consultant, Strategy & Execution Inc, that developed and launched brand before entering litigation over what SEI said was BRC's unwillingness to honor commit for full royalty that explosive takeup of brand warranted. Per 10-Q filing, BRC said that the legal combatants held mediation session on Oct 13 that did not reach a settlement, followed by Oct 23 ruling by Fifth Circuit Court affirming judgment of district court granting BRC's motion to dismiss suit and denying SEI&#39;s motion for leave to amend complaint.BRC Droplets In keeping with its founding mandate to support military veterans and first responders, BRC is teaming with Primitive and with ForgiveCo to raise $25 mil to clear veterans' burden of medical debt . . . CFO Amigh reminded listeners that BRC was able to clear away a lot of debt with equity offering in Jul that pulled in gross proceeds of $42.5 mil.

Black Rifle Scores Continued Gains in Coffee in Q3 While Managing Energy Addition Carefully; Sales Edge Up 2.6%

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