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BRC Inc. (BRCC)·Q3 2025 Earnings Summary

Executive Summary

  • Modest top-line growth with sequential margin improvement: Q3 revenue was $100.7M (+2.6% Y/Y) and gross margin rose to 36.9% from ~35% in 1H; Adjusted EBITDA improved to $8.4M (+18.6% Y/Y) despite commodity and tariff headwinds .
  • Guidance set to the floor of prior ranges: FY25 now “at least” $395M revenue, “at least” 35% gross margin, “at least” $20M Adjusted EBITDA; Q4 implied revenue ≈$110M with gross margin nearer 35% given promotions and tariffs .
  • Mix drivers: Wholesale grew 5% Y/Y to $67.0M on velocity/distribution; DTC -4% Y/Y (timing shift of ~$1M to Q4), Outpost +6% Y/Y; Packaged coffee and RTD ACV expanded to 54.1% and 53.3% respectively (both +~7–9 pts Y/Y) .
  • Estimates: Revenue slightly missed S&P Global consensus by ~$0.6M; S&P “Primary EPS” beat (positive vs small loss expected). FY25 consensus revenue ~$395.5M aligns with “at least $395M” guidance floor, implying limited estimate resets near-term (see Estimates Context) [GetEstimates]* .
  • Stock reaction catalysts: Sequential gross margin recovery, visible Q4 step-up, and expanding distribution; offsets include persistent green coffee inflation/tariffs and higher trade investment, with 2026 hedging only ~50% locked so far .

What Went Well and What Went Wrong

What Went Well

  • Share gains and distribution expansion: Packaged coffee ACV to 54.1% (+9.1 pts Y/Y) and RTD ACV to 53.3% (+7.3 pts Y/Y); wholesale revenue +5.3% Y/Y to $67.0M on velocity and door/item gains .
  • Sequential margin improvement and cost control: Q3 gross margin 36.9% vs ~35% in 1H; operating expenses declined $3.6M (-9%) Y/Y with marketing -14% and salaries/benefits -13% (headcount -19% Y/Y) .
  • Management tone/confidence: “We’re growing share in every segment… strongest unit growth player… significant distribution room,” and reiterated 10–15% CAGR revenue through 2027 and margin approaching ~40% by 2027 .

What Went Wrong

  • Gross margin pressure Y/Y: 36.9% vs 42.1% (-520 bps) on increased trade investment (-390 bps) and green coffee/tariffs (-300 bps), partly offset by productivity/mix (~+170 bps) .
  • DTC softness and timing: DTC revenue -4.1% Y/Y; ~$1M of promotions shifted from Q3 into Q4; underlying DTC slightly positive after adjustments, but subscriber base declined to 165.5K (-14.7% Y/Y) .
  • Tariffs/coffee inflation to persist: Management expects Q4 gross margin closer to ~35% (promotions and higher-cost inventory), and 2026 planning assumes no external cost relief; only ~50% of 2026 green coffee needs hedged .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Net Revenue ($M)98.2 90.0 94.8 100.7
Gross Margin (%)42.1% 36.1% 33.9% 36.9%
Net Income (Loss) ($M)(1.4) (7.8) (14.5) (1.2)
Adjusted EBITDA ($M)7.1 0.9 2.4 8.4
Q3 2025 vs S&P Global ConsensusConsensusActualSurprise
Revenue ($M)101.3*100.7 -0.6*
Primary EPS ($)-0.01*0.0404*+0.0504*

Values with asterisks (*) retrieved from S&P Global.

Segment revenue

Segment ($M)Q3 2024Q1 2025Q2 2025Q3 2025
Wholesale63.7 56.8 61.3 67.0
Direct-to-Consumer29.0 27.7 27.6 27.8
Outpost5.5 5.5 5.9 5.8

Key KPIs and distribution

KPIQ3 2024Q1 2025Q2 2025Q3 2025
Packaged Coffee ACV (%)45.0 50.2 56.6 54.1
RTD Coffee ACV (%)46.0 47.9 53.5 53.3
DTC Subscribers (K)194.0 181.9 175.5 165.5
Energy ACV (%)—21.0 (end-Q1) 22.5 ~22 (nearly 20k doors)

Additional context (qualitative): RTD category fell 3.1% in Q3; BRCC RTD down only 0.6% overall and +18% in grocery; BRCC remains #3 U.S. RTD brand .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueFY 2025$395–$425M At least $395M Language shifted to floor; effectively below prior midpoint
Gross MarginFY 202535%–37% At least 35% Floor reiterated; below prior midpoint
Adjusted EBITDAFY 2025$20–$30M At least $20M Floor reiterated; below prior midpoint
Revenue cadenceQ4 2025—≈$110M implied to reach FY floor New color
Gross Margin cadenceQ4 2025—Near ~35% due to promos/tariffs New color
Cost savings (Op Improvement Plan)2H 2025$8–$10M annualized (initiated Q2) Reiterated $8–$10M 2H realization Maintained

Drivers and assumptions: ~300 bps headwind from green coffee (net of pricing), ~250 bps from higher trade/promotions, ≥100 bps from import duties; partially offset by ≥200 bps productivity/mix .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Tariffs & green coffee inflationTariffs added; coffee prices >2x since early 2024; GM guide cut to 35–37% GM 33.9%; headwinds quantified; FY GM to 35–37% Q3 GM 36.9%; Q4 margin nearer 35%; assume no relief into 2026 Headwinds persist; managed with pricing/productivity
Distribution & ACVPackaged ACV 50.2%, RTD 47.9% Packaged 56.6%, RTD 53.5% Packaged 54.1%, RTD 53.3% Sustained high ACV; minor Q3 packaged normalization
DTC stabilizationDTC -15% Y/Y; improving conversion; subscriptions focus DTC -7.8% Y/Y; slightly positive ex-loyalty DTC -4.1% Y/Y; +slight ex timing/loyalty; ~$1M promo shifted to Q4 Stabilizing with tactical changes; seasonal Q4 lift expected
Energy rolloutLaunch; 21% ACV; focus on 12 markets via KDP 22.5% ACV; disciplined rollout; CMA supports 2026 ~22% ACV; ~20k doors; careful 2026 expansion, flavor innovation Disciplined, targeted growth; building proof points
Marketing mix/ROIIncreased spend; owned media/partners (UFC) Higher marketing in Q2; shift to working dollars Marketing -14% Y/Y; more working media; partnerships (UFC, Cowboys) Rebalanced toward ROI; leverage partnerships
Channel mix & RTDRTD outperformed category in Q1 RTD +7% vs category -4% RTD -0.6% overall; +18% grocery; #3 brand maintained RTD resilient despite category softness
Long-term targets10–15% revenue CAGR; margin rebuild Reaffirmed long-term plan Confidence “more than ever” in 10–15% to 2027; margins approaching ~40% by 2027 LT plan reiterated with confidence

Management Commentary

  • CEO: “We’re growing share in every segment of the business… the strongest unit growth player right now in the U.S. in coffee, and we still have significant distribution room” .
  • CFO: “We expect to finish the year with at least $395 million in revenue and at least 35% gross margin and at least $20 million in adjusted EBITDA… Q4 revenue about $110 million… Q4 gross margins… similar to the first half” .
  • On RTD/energy: “Black Rifle remains the third-largest RTD coffee brand… Energy now in nearly 20,000 retail locations and ~22% ACV” .
  • On headwinds: “Green coffee… at all-time highs… We will continue to see the tariffs and the green coffee inflation” .
  • On marketing/brand: “We have grown awareness every quarter over the last three years… partnerships with the UFC, Dallas Cowboys… maniacal focus on returns” .

Q&A Highlights

  • Guidance tone and cadence clarified: No change to ranges but guiding to the lower end; explicit Q4 revenue ≈$110M and similar EBITDA to Q3 (~$8.4M) to hit FY floors .
  • Cost/margin levers: Pricing actions in Q3 and Q4, $8–$10M annualized cost savings in 2H, but gross margin headwinds from trade investment/tariffs persist; Q4 margin near ~35% .
  • 2026 hedging and cost outlook: ~50% of 2026 green coffee needs locked; planning assumes no relief in coffee/tariff costs .
  • Energy strategy: 2026 expansion to remain targeted; flavor innovation (e.g., grape, limited “Tiger Strike” for 250th anniversary) and focus on cold distribution where “cold is sold” .
  • Channel performance nuance: DTC slightly positive ex timing/loyalty; ~$1M promotion shifted to Q4; wholesale continues to lead with distribution and velocity gains .

Estimates Context

PeriodMetricS&P Global ConsensusActual/GuideBeat/Miss
Q3 2025Revenue ($M)101.3*100.7 -0.6*
Q3 2025Primary EPS ($)-0.01*0.0404*+0.0504*
Q4 2025Revenue ($M)110.0*≈110.0 implied ≈in line*
FY 2025Revenue ($M)395.5*≥395.0 guide ≈in line*
FY 2025EBITDA ($M)20.23*≥20.0 guide ≈in line*

Values with asterisks (*) retrieved from S&P Global.

Implications: Slight Q3 revenue miss offset by positive Primary EPS; FY25 consensus already embeds the company’s stated floors, limiting near-term estimate risk. Mix/margin commentary (Q4 margin nearer 35%) may cap FY margin upside; FY EBITDA floor supports stability .

Key Takeaways for Investors

  • Distribution-led growth continues; packaged and RTD ACV remain above 50%, sustaining share gains and underpinning wholesale momentum into Q4 and 2026 .
  • Margin trajectory improved sequentially; expect a seasonal/promotional step-down in Q4 gross margin toward ~35%, but pricing and productivity should aid 2026 rebuild .
  • Energy is a controlled option: proof points in ~20k doors and ~22% ACV with disciplined 2026 rollout; watch cold distribution expansion and flavor innovation to drive velocities .
  • DTC stabilization with improved conversion and subscription focus, plus ~$1M promo timing tailwind into Q4; subscriber base still declining Y/Y .
  • Cost risks remain from green coffee and tariffs; only ~50% of 2026 coffee needs hedged—monitor commodity path and hedging updates for 2026 margin outlook .
  • FY25 “at least” floors de-risk the year; Q4 revenue implies execution visibility. Upside potential ties to further distribution gains, energy velocities, and productivity outperformance .
  • Near-term trading setup: sequential GM improvement evidence supportive; any signs of better-than-expected Q4 margin or energy sell-through could be incremental positives, while additional coffee/tariff shocks or elevated trade spend would be risks .

Values with asterisks (*) retrieved from S&P Global.