brrc-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 001-41275

BRC Inc.

(Exact name of registrant as specified in its charter)


Delaware						87-3277812
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1144 S. 500 W

Salt Lake City, UT 84101

(Address of principal executive office, zip code)

(801) 874-1189

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.0001 par value	BRCC	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 1, 2024, the registrant had (i) 67,313,454 shares of Class A common stock, par value $0.0001 per share (the "Class A Common Stock") and, (ii) 145,001,430 shares of Class B common stock, par value $0.0001 per share (the "Class B Common Stock") outstanding.


		Page
Forward-Looking Statements		1

Part I - Financial Information
Item 1	Financial Statements (unaudited)	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Stockholders' Equity (Deficit)	5
	Consolidated Statements of Cash Flows	6
	Index for Notes to Consolidated Financial Statements	8
	Notes to Consolidated Financial Statements	9
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4	Controls and Procedures	36

Part II - Other Information
Item 1	Legal Proceedings	36
Item 1A	Risk Factors	36
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3	Defaults Upon Senior Securities	36
Item 4	Mine Safety Disclosures	37
Item 5	Other Information	37
Item 6	Exhibits	37

Signatures		38


	March 31,		December 31,
	2024		2023
	(unaudited)		(audited)
Assets
Current assets:
Cash and cash equivalents	$	3,997	$	12,448
Restricted cash	1,465		1,465
Accounts receivable, net	24,774		25,207
Inventories, net	50,383		56,465
Prepaid expenses and other current assets	16,279		12,153
Total current assets	96,898		107,738
Property, plant and equipment, net	66,169		68,326
Operating lease, right-of-use asset	33,686		36,214
Identifiable intangibles, net	403		418
Other	30,025		23,080
Total assets	$	227,181	$	235,776
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	39,593	$	33,564
Accrued liabilities	31,425		34,911
Deferred revenue and gift card liability	7,562		11,030
Current maturities of long-term debt, net	9,779		2,297
Current operating lease liability	2,212		2,249
Current maturities of finance lease obligations	56		58
Total current liabilities	90,627		84,109
Non-current liabilities:
Long-term debt, net	51,728		68,683
Finance lease obligations, net of current maturities	45		23
Operating lease liability	33,751		35,929
Other non-current liabilities	494		524
Total non-current liabilities	86,018		105,159
Total liabilities	176,645		189,268
Commitments and Contingencies (Note 14)
Stockholders’ equity:
Preferred Stock, $0.0001 par value, 1,000,000 shares authorized; no shares issued or outstanding as of March 31, 2024 and December 31, 2023, respectively	—		—
Class A Common Stock, $0.0001 par value, 2,500,000,000 shares authorized; 67,134,997 and 65,637,806 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively	6		6
Class B Common Stock, $0.0001 par value, 300,000,000 shares authorized; 145,079,865 and 146,484,989 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively	15		15
Class C Common Stock, $0.0001 par value, 1,500,000 shares authorized; no shares issued or outstanding as of March 31, 2024 and December 31, 2023, respectively	—		—
Additional paid in capital	134,519		133,728
Accumulated deficit	(119,930)		(120,478)
Total BRC Inc.'s stockholders' equity	14,610		13,271
Non-controlling interests	35,926		33,237
Total stockholders' equity	50,536		46,508
Total liabilities and stockholders' equity	$	227,181	$	235,776


	Three Months Ended March 31,
	2024		2023
Revenue, net	$	98,392	$	83,490
Cost of goods sold	56,207		55,979
Gross profit	42,185		27,511
Operating expenses
Marketing and advertising	7,609		7,144
Salaries, wages and benefits	15,261		19,824
General and administrative	15,346		17,758
Other operating expense, net	14		—
Total operating expenses	38,230		44,726
Operating income (loss)	3,955		(17,215)

Non-operating income (expenses)
Interest expense, net	(2,051)		(323)
Other income, net	—		273
Total non-operating expenses	(2,051)		(50)
Income (loss) before income taxes	1,904		(17,265)
Income tax expense	49		56
Net income (loss)	$	1,855	$	(17,321)
Less: Net income (loss) attributable to non-controlling interest	1,307		(12,521)
Net income (loss) attributable to BRC Inc.	$	548	$	(4,800)

Net income (loss) per share attributable to Class A Common Stock
Basic and diluted	$	0.01	$	(0.08)

Weighted-average shares of Class A Common Stock outstanding
Basic	66,312,366		58,159,223
Diluted	66,597,626		58,159,223


	Shares
	Class A Common Stock	Class B Common Stock	Class C Common Stock	Class A Common Stock		Class B Common Stock		Class C Common Stock		Additional Paid-In Capital		Accumulated Deficit		Non-Controlling Interest		Total Stockholders' Equity (Deficit)
Balance at January 1, 2023	57,661,274	153,899,025	—	$	5	$	16	$	—	$	129,508	$	(103,733)	$	70,140	$	95,936
Equity-based compensation	—	—	—	—		—		—		2,287		—		219		2,506
Common Unit redemption	742,583	(742,583)	—	—		—		—		299		—		(299)		—
Employee stock purchase plan	59,521	—	—	—		—		—		305		—		—		305
Net loss	—	—	—	—		—		—		—		(4,800)		(12,521)		(17,321)
Balance at March 31, 2023	58,463,378	153,156,442	—	$	5	$	16	$	—	$	132,399	$	(108,533)	$	57,539	$	81,426

Balance at January 1, 2024	65,637,806	146,484,989	—	$	6	$	15	$	—	$	133,728	$	(120,478)	$	33,237	$	46,508
Equity-based compensation	—	—	—	—		—		—		612		—		1,340		1,952
Common Unit redemption	1,405,124	(1,405,124)	—	—		—		—		(42)		—		42		—
Employee stock purchase plan	63,832	—	—	—		—		—		251		—		—		251
Vesting of stock awards, net of shares withheld for taxes	28,235	—	—	—		—		—		(30)		—		—		(30)
Net income	—	—	—	—		—		—		—		548		1,307		1,855
Balance at March 31, 2024	67,134,997	145,079,865	—	$	6	$	15	$	—	$	134,519	$	(119,930)	$	35,926	$	50,536


BRC Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(in thousands)
(unaudited)
	Three Months Ended March 31,
	2024		2023
Non-cash operating activities
(Derecognition) Recognition of right-of-use operating lease assets	$	(1,955)	$	5,786
Recognition of revenue for inventory exchanged for prepaid advertising	8,487		—

Non-cash investing and financing activities
Property and equipment purchased but not yet paid	622		967

Supplemental cash flow information
Cash paid for income taxes	$	58	$	179
Cash paid for interest	$	1,816	$	492


Note 1	Organization and Nature of Business	9
Note 2	Summary of Significant Accounting Policies	9
Note 3	Inventories, Net	17
Note 4	Property, Plant and Equipment, Net	18
Note 5	Other Assets	18
Note 6	Accrued Liabilities	18
Note 7	Deferred Revenue and Gift Card Liability	19
Note 8	Long-Term Debt	19
Note 9	Stockholders' Equity	22
Note 10	Equity-Based Compensation	23
Note 11	Defined Contribution Plan	25
Note 12	Income Taxes	25
Note 13	Net Income (Loss ) Per Share	26
Note 14	Commitments and Contingencies	27


	Estimated Useful Lives
Land	—
Building and Leasehold improvements	5	—	39 years
Computer equipment and software	3 years
Machinery and equipment	5	—	15 years
Vehicles	5 years


	Three Months Ended March 31,
	2024		2023
Wholesale	$	60,428	$	39,997
Direct to Consumer	32,614		36,780
Outpost	5,350		6,713
Total net sales	$	98,392	$	83,490


	March 31,		December 31,
	2024		2023
Coffee:
Unroasted	$	3,487	$	4,248
Finished Goods	13,145		10,515
Ready-to-Drink (raw materials)	16,124		14,652
Ready-to-Drink (finished goods)	13,088		21,600
Apparel and other merchandise	4,539		5,450
Total inventories, net	$	50,383	$	56,465