BRC Inc.’s EBITDA Outlook and Coffee Pricing Signals Clash in Q2 2026 Earnings Call

Date of Call: Aug 4, 2026

Financials Results

• Revenue: Net revenue increased 13% compared to the prior year period
• Gross Margin: Expanded approximately 15 basis points year-over-year to 34.1%

Guidance:

• Revenue for 2026 expected to be at least 8% growth or approximately $430M.
• Adjusted EBITDA for 2026 expected to be at least 35% growth or approximately $29M.
• 2026 gross margin expected in the range of 34%-36%, compared with 34.6% in 2025.
• Q3 revenue expected to grow at least 5% year-over-year to approximately $106M.
• Q3 Adjusted EBITDA expected to be approximately $7M.
• Q4 revenue expected to be modestly below prior year period due to lapping $5M in liquidation sales.
• Q3 and Q4 gross margin expected to approach 36%.

Business Commentary:

Revenue and Profitability Growth:

• Black Rifle Coffee reported a 13% increase in net revenue for the second quarter compared to the prior year period, with wholesale revenue up 15% and direct-to-consumer revenue increasing 14%.
• The growth was driven by pricing, distribution gains, and strong performance in both mass merchant and grocery channels.

Packaged Coffee Performance:

• Nielsen reported that Black Rifle packaged coffee sales grew 28.2% in the last quarter, nearly three times the category’s 9.9% growth rate, with a 32.5% increase in retail sales over the latest 52 weeks.
• This performance was attributed to expanded retail distribution, pricing strategies, and strong direct-to-consumer engagement.

Gross Margin Improvement:

• The company's gross margin expanded by 15 basis points year-over-year to 34.1%, marking the first improvement in over four quarters.
• This was due to a cleaner inventory position, productivity improvements, and a favorable mix, despite higher coffee costs.

Direct-to-Consumer Business Growth:

• Black Rifle's direct-to-consumer revenue increased 13.6% year-over-year, marking the third consecutive quarter of growth.
• The growth was supported by a successful transition to a new e-commerce platform, increased third-party marketplace sales, and improved subscriber stability.

Strategic Focus and Cost Management:

• The company reported a 21% decline in total operating expenses year-over-year, primarily due to lower legal and professional costs, and a reduction in general and administrative expenses.
• This strategic cost management, combined with disciplined investment behind growth opportunities, contributed to a significant increase in Adjusted EBITDA by more than 160% to $6.3 million.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated 'We delivered a strong quarter. Revenue grew 13%, profit increased 164%, gross margin improved, free cash flow has swung more than $20 million.' Also noted 'Our margin trajectory has turned this quarter, which is big, and we’re gonna continue to build off of that. Sharper focus is converting growth into earnings and cash, and we see that working. As we enter the second half, we’re confident.'

Q&A:

• Question from Michael Baker (D.A. Davidson): Talk about EBITDA impact in back half, do we not grow EBITDA at all after being up 3X in first half?
  Response: Management projects ~35% EBITDA growth for full year, with Q3 ~$7M and Q4 at least ~$8.3M, implying a year-over-year decline in back half due to tougher comps, higher bonus accruals, and increased marketing spend.

• Question from Michael Baker (D.A. Davidson): At what price are you locked in on coffee for 2026 and 2027?
  Response: 2026 locked at $2.95 per pound; 2027 has 50% coverage locked at $2.65 per pound.

• Question from Sarang Vora (Telsey Advisory Group): Is gross margin the biggest opportunity for margin expansion in future?
  Response: Yes, gross margin is a primary driver for future expansion, supported by mix shift to packaged coffee and wholesale, trade efficiency, supply chain productivity, and operating leverage.

• Question from Sarang Vora (Telsey Advisory Group): Can you provide color on marketplace business (customers, fulfillment, margin, ramp)?
  Response: Marketplace includes third-party platforms; uses third-party fulfillment (slower but cheaper). Blackriflecoffee.com was re-architected for scalability and lower cost, driving stabilization. Overall, marketplace is under-penetrated with significant opportunity.

• Question from Sarang Vora (Telsey Advisory Group): Update on Black Rifle Energy plans and ACV ramp?
  Response: Energy strategy remains focused and selective; majority of investment stays on hot coffee. ACV is ~21% and stable; priority is building productivity within existing doors and expanding where performance supports investment.

• Question from Eric Des Lauriers (Craig-Hallum): How do you view white space opportunity between online marketplace and grocery?
  Response: Opportunity exists in both; grocery offers share gains via land and expand (ACV mid-50s, items per account mid-single digits). Marketplace is under-penetrated with similar category size, offering potential to catch up on share.

• Question from Eric Des Lauriers (Craig-Hallum): What is near-term prospect for further distribution gains?
  Response: Expect distribution to continue growing; conversations ongoing with retailers, but no public guidance until deals are secured. Pipeline fills and customer reset windows will influence timing.

Contradiction Point 1

EBITDA Growth Expectations

Contradiction on whether EBITDA will grow in the second half of the year.

What are your thoughts on the recent earnings report? - Michael Baker (D.A. Davidson)

2026Q2: While second-half EBITDA is lower year-over-year, this reflects... Comps are tougher due to cycling $5M of non-recurring liquidation revenue in Q4 2025. - Matt Amigh(CFO)

What factors might impact EBITDA in the back half of the year, and do you expect any growth following the 3X increase in the first half? - Michael Baker (D.A. Davidson & Co., Research Division)

2026Q1: The Q1 adjusted EBITDA beat included a $5M timing benefit, a $1.4M fuel cost risk, and a $2.3M one-time extract write-down, which collectively resulted in a ~$1M net increase to the EBITDA guidance raise. - Matt Amigh(CFO)

Contradiction Point 2

Coffee Pricing Coverage Outlook

Contradiction on the future direction of coffee price coverage commitments.

Michael Baker (D.A. Davidson) - Michael Baker (D.A. Davidson)

2026Q2: For 2026, the company is locked in at $2.95 per pound. For 2027, they have 50% coverage locked in at $2.65 per pound. - Matt Amigh(CFO)

What are the locked-in prices for coffee in 2026 and 2027, and what was the average price paid in 2025? - Sarang Vora (Telsey Advisory Group LLC)

2026Q1: Marketing spend as a percentage of sales is expected to be relatively consistent year-over-year, but total dollars will increase. - Matt Amigh(CFO)

Contradiction Point 3

Approach to Distribution Expansion and Retailer Assortments

Shift from aggressively expanding shelf presence to a more cautious, profitable focus.

"What were the key factors contributing to the company's revenue growth in Q3?" - Eric Des Lauriers (Craig-Hallum)

2026Q2: The land and expand strategy focuses on deals that are profitable for both parties and protect the brand's premium positioning. - Chris Mondzelewski(CEO)

What is the near-term outlook for distribution gains and the cadence of potential future increases? - Sarang Vora (Telsey Advisory Group LLC)

2025Q4: The 'land and expand' strategy is working well... Shelf presence has tripled since entering grocery three years ago. - Chris Mondzelewski(CEO)

Contradiction Point 4

Black Rifle Energy Business Focus and Strategy

Shift from a regional, learning-focused launch to a strategy of focusing investment on the core coffee business.

Sarang Vora (Telsey Advisory Group) - Sarang Vora (Telsey Advisory Group)

2026Q2: The majority of investment will continue to go to the highly profitable hot coffee business. Energy is seen as a future growth angle. - Chris Mondzelewski(CEO)

Can you update us on the plans for Black Rifle Energy this year and next, as well as the progress on ACV ramping? - Sarang Vora (Telsey Advisory Group LLC)

2025Q4: Key to the 2026 plan is a continued regional focus... The strategy prioritizes strong execution, marketing optimization, and scaling responsibly without significantly increasing ACV at high cost. - Chris Mondzelewski(CEO)

Contradiction Point 5

2026 Q4 EBITDA Guidance and Full-Year EBITDA Growth Outlook

Contradiction on the growth trajectory for EBITDA in the second half of 2026.

Michael Baker (D.A. Davidson) - Michael Baker (D.A. Davidson)

2026Q2: The projected ~35% year-over-year Adjusted EBITDA growth results in ~$29M for 2026. First-half EBITDA was ~$13.6M, implying Q3 at least $7M and Q4 at least $8.3M. While second-half EBITDA is lower year-over-year... - Matt Amigh(CFO)

What factors could impact EBITDA in the back half of the year, and is it realistic to expect no EBITDA growth in H2 following a 3X increase in H1? - Michael Baker (D.A. Davidson & Co.)

2025Q3: For Q4, ... adjusted EBITDA ~$8.4M. - Matthew Amigh(CFO)