Black Rifle Coffee Q2 2024 slides: Revenue flat, margins expand significantly

Introduction & Market Context

Black Rifle Coffee Company (NASDAQ:BRCC) presented its second quarter 2024 results on August 8, 2024, highlighting significant margin expansion and profitability improvements despite flat revenue. The veteran-founded coffee company reported continued growth in its wholesale channel while expanding its retail partnerships across major chains. The presentation came as the company navigates a competitive specialty coffee market while diversifying its product offerings.

Quarterly Performance Highlights

Black Rifle Coffee reported mixed financial results for Q2 2024, with net revenue remaining flat at $89.0 million, representing a 3% year-over-year decrease. However, the company achieved substantial improvements in profitability metrics, with gross margin expanding to 41.9% compared to 35.0% in the same period last year.

As shown in the following quarterly highlights chart, the company delivered significant improvements across key financial metrics:

Adjusted EBITDA showed remarkable improvement, reaching $8.5 million, up $8.4 million year-over-year. Free Cash Flow also experienced a dramatic turnaround, reaching $1.0 million compared to negative $30.0 million in Q2 2023, representing a $31.0 million improvement.

The company’s quarterly financial summary further illustrates these trends:

Strategic Initiatives

Retail Expansion

Black Rifle Coffee continues to expand its retail presence through partnerships with major chains including Kroger, Meijer, Walmart, and Sam’s Club. The company reported that it is outpacing category growth in the Food, Drug, and Mass (FDM) channel, with its All Commodity Volume (ACV) showing consistent gains.

The following chart demonstrates the company’s retail expansion and ACV growth:

In the Ready-to-Drink (RTD) segment, Black Rifle has maintained its market share while continuing to build distribution. The company’s RTD share has grown from 1.90% in Q1 2022 to 3.24% in Q2 2024, with ACV increasing from 41.8 to 46.8 over the same period.

New Product Launch: Black Rifle Energy

One of the most significant announcements in the presentation was the company’s expansion into the energy drink category with Black Rifle Energy™, scheduled to launch in January 2025. The new product line will feature four zero-sugar flavors: Freedom Punch, Wild Frost, Ranger Berry, and Project Mango.

As shown in the product launch slide, the company is positioning the new energy drinks as a clean, mission-driven alternative in the energy drink market:

Chris Mondzelewski, President and CEO, expressed enthusiasm about the launch: "I am incredibly excited about today’s earlier announcement regarding the launch of Black Rifle Energy™. At Black Rifle we build our brand first... we are extremely proud of the share growth in our premium coffee business, and we’re equally proud to expand our product offerings to serve more customers during more drinking occasions."

E-commerce Optimization

Black Rifle Coffee continues to leverage its digital roots, reporting over 201,000 subscribers on its e-commerce platform. The company noted a 12% increase in Average Order Value (AOV) for new subscribers compared to its legacy platform, along with improvements in Lifetime Value (LTV) and units per subscriber.

The following slide highlights the company’s e-commerce initiatives:

Detailed Financial Analysis

Gross Margin Expansion

A standout achievement in Q2 2024 was Black Rifle’s gross margin expansion to 41.9%, exceeding the company’s 40%+ target. This represents a 680 basis point improvement from 35.0% in Q2 2023. The company attributed this growth to productivity initiatives, favorable mix shifts, and trade investment optimization.

The following chart illustrates the company’s gross margin trajectory:

EBITDA Improvement

Black Rifle Coffee achieved its third consecutive quarter with an Adjusted EBITDA margin above 9%, reaching 9.5% in Q2 2024 compared to just 0.2% in Q2 2023. The company cited several factors contributing to this improvement, including focused margin initiatives, reduced reliance on external consultants, optimized product mix, and aligned headcount.

Forward-Looking Statements

Black Rifle Coffee updated its 2024 outlook, projecting revenue between $385 million and $415 million, representing potential growth between -3% and 5% compared to 2023. The company expects gross margin to range from 39% to 42%, with Adjusted EBITDA between $32 million and $42 million. Additionally, Black Rifle is targeting an 80% Free Cash Flow conversion rate.

The following slide details the company’s updated guidance for 2024:

It’s worth noting that this outlook contrasts with the company’s more recent performance. According to an earnings report for Q2 2025, Black Rifle experienced a 7% year-over-year revenue increase to $94.8 million, but saw its gross margin decline to 33.9%, down 790 basis points year-over-year. This suggests the company may have faced challenges maintaining the margin improvements highlighted in the Q2 2024 presentation.

Conclusion

Black Rifle Coffee’s Q2 2024 results demonstrated the company’s ability to significantly improve profitability metrics despite flat revenue. The expansion into the energy drink category represents a strategic move to diversify its product portfolio and reach new consumers. While the wholesale channel showed healthy growth, the company continues to optimize its direct-to-consumer business. Investors will likely be watching closely to see if Black Rifle can maintain its margin improvements while returning to revenue growth in future quarters.

Full presentation:

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