ブラック・ライフル・コーヒー（BRCC）2026年第3四半期決算説明会：プロジェクト・コアと業績予想

ブラックライフル・コーヒー・カンパニー（NYSE: BRCC）は、パッケージコーヒーの流通拡大ならびに卸売およびD2C（直販）チャネルでの成長に支えられ、2026年第3四半期の売上高と調整後EBITDAが増加したと発表しました。経営陣は通期見通しを据え置く一方で、業務の簡素化、資本集約度の低減、キャッシュ創出の改善を目指す「プロジェクト・コア（Project Core）」を立ち上げました。

要点

• 第3四半期の売上高（純売上高）は前年同期比7.3%増の1億800万ドルとなりました。卸売売上高は8.1%増加し、D2C売上高は8.5%増加しました。
• 調整後EBITDAは12.3%増の950万ドルとなり、調整後EBITDAマージンは約40ベーシスポイント拡大して8.8%となりました。
• 粗利益率は37.1%に達し、これには325ベーシスポイントの押し上げ要因となった350万ドルの関税払い戻しが含まれています。一方、貨物輸送費および燃料費の上昇により、マージンは80ベーシスポイント押し下げられました。
• ニールセンのデータによると、当四半期におけるブラックライフルのパッケージコーヒーの小売売上高は19.4%増加し、同カテゴリー全体の成長率2%を大きく上回りました。袋入りコーヒーのシェアは約65ベーシスポイント拡大して3.4%となりました。
• 経営陣は、売上高が少なくとも8%増加して約4億3000万ドルに達し、調整後EBITDAが少なくとも35%増加して約2900万ドルに達するという2026年通期の見通しを再確認しました。
• 「プロジェクト・コア」には、マンチェスターの焙煎工場の売却、直営店舗「アウトポスト（Outposts）」12店舗の閉鎖、および「グラウンズ＆ハウンズ（Grounds & Hounds）」の事業売却が含まれます。経営陣はこれらの施策によりマージンが改善し、資本要件が低下し、フリーキャッシュフローが強化されると期待しています。

主要財務データ

事業および業績動向

パッケージコーヒーが引き続き最大の成長推進力となりました。ニールセンのデータによると、当四半期の小売売上高の伸び率は19.4%で、カテゴリー全体の2%という伸び率の約10倍に達しました。直近52週間において、ブラックライフルの小売売上高は28.9%増加し、カテゴリー全体の成長率9.7%を上回りました。

袋入りコーヒーの市場シェアは前年同期比で約65ベーシスポイント上昇して3.4%となり、ポッド型コーヒーのシェアは30ベーシスポイント近く上昇して2.2%となりました。米国全土のマルチアウトレットチャネルにおけるパッケージコーヒーのACV配荷率は58.7%に達し、前年から4.5ポイント以上上昇しました。食品スーパーにおける配荷率は6ポイント以上上昇して54%となりました。

また、同社は直近52週間におけるパッケージコーヒーの販売数量が12.8%増加したと発表しました。経営陣は、これが単なる価格改定ではなく潜在的な消費者需要を反映したものであると説明しました。

D2C部門は4四半期連続の成長を記録しました。デジタルチャネルの中ではサードパーティマーケットプレイスが最も急速に成長した一方、blackriflecoffee.comはサブスクリプション、限定商品、およびロイヤルカスタマーへの注力を維持しました。サブスクリプション売上高の減少と「グラウンズ＆ハウンズ」の事業売却が、マーケットプレイスの成長を一部相殺しました。

RTD（缶・ペットボトル入り飲料）コーヒー市場は引き続き圧迫されました。ブラックライフルは、約53%のACV配荷率を維持し、シングルサーブRTDコーヒーブランドとして第3位のポジションを維持しました。しかし、過去52週間でカテゴリー全体の売上が4%減少したのに対し、ブラックライフルのRTD小売売上高は7%減少しました。経営陣は、提供コストを削減しながら、より強力な顧客層および製品への投資を集中させる計画です。

プロジェクト・コア

「プロジェクト・コア」は、パッケージコーヒー（特に袋入りおよびポッド型）を中心とした数カ年計画の取り組みです。その目的は、収益性と利益の質の向上、業務の簡素化、およびアセットインテンシティ（資産集約度）の削減です。

ブラックライフルは、テネシー州マンチェスターの焙煎工場をカスケード・コーヒー（Cascade Coffee）に売却することに合意しました。売却条件は取引完了時の現金1000万ドルおよび12ヶ月期限の売主ローン（セラーノート）700万ドルです。同社は初期手取金のうち860万ドルをタームローンの返済に充てる計画です。カスケードとの長期供給契約により、2027年以降、製造コストの低減と運転資本の改善が見込まれています。

同社はまた、直営店舗「アウトポスト」12店舗を閉鎖し、5店舗を存続させる予定で、今後の展開は主にフランチャイズに依存する見込みです。店舗閉鎖により、年間売上高は約800万ドルから1000万ドル減少するものの、業績不振店舗における赤字は解消される見込みです。

ブラックライフルは、直近12ヶ月で約650万ドルの売上高を上げたもののEBITDAへの貢献が乏しかった非コアのD2Cブランド「グラウンズ＆ハウンズ」の売却を完了しました。この売却と「アウトポスト」の閉鎖により、第4四半期の売上高には約300万ドルの減収要因が生じる見込みです。

第3四半期末時点の従業員数は約425名であり、マンチェスター工場の従業員のカスケードへの移籍やアウトポストの閉鎖により、2027年初頭までに約260名に減少する見込みです。

業績見通し（ガイダンス）

経営陣は2026年通期の見通しを据え置きました。

• 売上高成長率は少なくとも8%（売上高約4億3000万ドルに相当）。
• 調整後EBITDA成長率は少なくとも35%（約2900万ドルに相当）。
• 通期の粗利益率は34%から36%の間。

ガイダンスの下限は、前年同期の1億1300万ドルに対し、第4四半期の売上高が少なくとも1億600万ドルとなることを示唆しています。前年同期との比較においては、同規模での再発が見込まれない前年同期の在庫処分布分約500万ドルと、事業売却およびアウトポスト閉鎖による約300万ドルの減収要因が含まれています。

経営陣は現在、第4四半期の粗利益率を約34%と予想しており、8月時点で示された約36%の見通しから低下しました。この変更は、ホリデーシーズンの販促投資の増加と輸送コストの上昇を反映したものです。

調整後EBITDAガイダンスの下限は、従来示されていた少なくとも830万ドルに対し、第4四半期について約600万ドルを示唆しています。経営陣は下方修正の理由として、プロモーション費用の増加、輸送コストの上昇、および計画されているホリデーマーケティング費用を挙げています。

2027年に向けて、同社は予想されるコーヒー生豆調達量の90%以上を2026年の契約価格を下回る水準で確保しました。経営陣は2027年の正式なガイダンスを提供しなかったものの、マージンとフリーキャッシュフローの向上に伴い、利益は売上高よりも高いペースで拡大すると予想していると述べました。

リスクと注視すべき事項

• 第3四半期の粗利益率は350万ドルの関税払い戻しによって押し上げられましたが、経営陣はこれをコスト構造の継続的な改善とはみなしていません。
• 運賃の上昇、ドライバー不足、および燃料費の高騰がマージンを圧迫し、第4四半期の調整後EBITDA見通しを引き下げる要因となっています。
• 販促費の増加は、店頭での販売スピードや将来的な棚スペース獲得を支援する可能性がありますが、短期的には収益性とトレードオフの関係となります。
• RTDカテゴリー全体の売上およびブラックライフルのRTD売上は引き続き減少傾向にあり、製品の経済性の改善と配送コストの削減が求められています。
• サードパーティマーケットプレイス経由の成長は、これらのチャネルのマージンが低いため、好ましくないチャネルミックス効果をもたらします。
• マンチェスター工場の取引およびアウトポストの構造改革によるコスト削減の創出時期には不確実性が残っており、一部の店舗閉鎖は2027年までずれ込む見込みです。

アナリスト質疑応答の要点

アナリストの質問は、袋入りおよびポッド型コーヒーへの注力がブラックライフルの長期的な成長機会を制約しないかという点に集中しました。経営陣は、RTDコーヒーやエナジードリンク製品を放棄するわけではないが、最も高い成長性と収益性を提供する事業に投資を傾注すると説明しました。なお、長期的な財務目標は示されませんでした。

「プロジェクト・コア」によるコスト削減について、経営陣は本取り組みが再投資とマージン拡大の両方の原資となることを強調しました。コーヒー生豆コストの低下、受託製造レートの改善、および赤字店舗「アウトポスト」の解消が2027年の収益性を支えると予想されていますが、詳細なガイダンスは第4四半期決算発表まで保留されました。

経営陣はまた、マーケティングや業務全般にテクノロジーが組み込まれていると述べました。単なるコスト削減ツールとして扱うのではなく、袋入りおよびポッド型コーヒーにおける持続可能な成長を加速させるためにテクノロジーを活用することに重点が置かれています。

非コア資産に関して、経営陣は「グラウンズ＆ハウンズ」の売却がパッケージコーヒー以外の全事業を売却することを意味するわけではないと説明しました。RTDコーヒーは引き続きポートフォリオに残りますが、今後の投資判断はマージン構造、提供コスト、および成長の可能性に依存します。

決算説明会トランスクリプト全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Greetings, and welcome to the Black Rifle Coffee Third Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Matthew McGinley, Vice President, Investor Relations. Thank you. You may begin.

Matthew McGinley

Good morning, everyone, and thank you for joining Black Rifle Coffee Company's Third Quarter 2026 Financial Results Conference Call. We released our results yesterday, and the earnings release and related materials are available on our Investor Relations website at ir.blackriflecoffee.com.

Before we begin, I would like to remind you of the company's safe harbor provisions regarding forward-looking statements. During today's call, management may make forward-looking statements, including guidance and the underlying assumptions. These statements are based on expectations that involve risks and uncertainties and could cause actual results to differ materially. For a discussion of these risks, please refer to our filings with the SEC.

Additionally, this call will include non-GAAP financial measures such as adjusted EBITDA. Whenever we refer to EBITDA, we mean adjusted EBITDA unless otherwise noted. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in our earnings release, which was furnished to the SEC and is available on our Investor Relations website as well as in the investor presentation available there.

Now please refer to the presentation and turn to Slide 4. I would now like to turn the call over to Chris Mondzelewski, CEO of Black Rifle Coffee Company. Mons?

Chris Mondzelewski

Thanks, Matt. Good morning, everyone. Joining me today are Evan Hafer, our Executive Chairman; Matt Amigh, our Chief Financial Officer; and Matt McGinley, our Head of Investor Relations.

Through the first 9 months of 2026, we've continued to make meaningful progress in growing our core coffee business and strengthening the Black Rifle brand. Revenue is up 14% year-over-year. And in the third quarter, we delivered growth in both our wholesale and direct-to-consumer businesses.

We're encouraged by these results, but we also recognize that we have a significant opportunity ahead of us to translate the strength of our brand and the growth of our core coffee business into higher profitability and stronger cash flow. That's really the focus of Project Core, which we launched during the third quarter. I'll come back to that in a few minutes, but first, we'll walk through the quarter.

Turn to Slide 6. Our packaged coffee business continued to gain share in the third quarter. Growth was driven by expanded distribution and broad-based strength across our retail partners even as we began to lap the pricing actions we took in 2025.

Looking at the Nielsen data, Black Rifle packaged coffee sales grew 19.4% in the quarter, roughly 10x the category's 2% growth rate. And looking at the trailing 52 weeks, our retail sales increased 28.9%, nearly 3x the category's 9.7% growth.

We're seeing that outperformance translate directly into market share gains. Across Nielsen's total U.S. multi-outlet universe, our bagged coffee share increased approximately 65 basis points year-over-year to 3.4%, while our pod share grew nearly 30 basis points to 2.2%.

Turning to Slide 7. We continue to expand our retail distribution in the third quarter. Packaged coffee distribution reached 58.7% ACV across the total U.S. multi-outlet channel, up more than 4.5 points from a year ago and approximately 2 points from the second quarter.

In grocery specifically, distribution increased more than 6 points year-over-year to 54%. But importantly, we're not just adding new stores. We're also expanding our presence within the stores we already have. That's consistent with our land-and-expand strategy.

Grocery stores carrying Black Rifle now stock approximately 6 of our items on average compared with just over 5 a year ago. And we believe there's further opportunity to expand that shelf presence as our products continue to earn their place at retail.

Slide 8. Beyond distribution, we're also seeing strong underlying volume growth. Over the latest 52 weeks, our packaged coffee unit sales increased 12.8%, while all but one of the other leading national brands we benchmark against experienced unit declines. That's an important distinction. We're growing because consumers are buying more Black Rifle coffee, not simply because they're paying more for it. And in a category where overall volumes remain under pressure, that's a meaningful point of differentiation for our retail partners.

Turn to Slide 9, please. Our direct-to-consumer business delivered its fourth consecutive quarter of growth. We're also continuing to evolve our strategy around the distinct roles that our different digital channels play. Third-party marketplaces are our fastest-growing channel, allowing us to reach consumers on the platforms where they're already shopping.

At the same time, blackrifle.com remains the home for our subscriptions, exclusive products and most loyal customers. We see these channels as complementary. Marketplaces help us broaden our reach while our owned platform supports retention and repeat purchase. Ultimately, our focus is on growing the overall DTC business while maintaining pricing discipline and improving profitability over time.

Move to Slide 10. Our largest mass retail customer is a great example of what Black Rifle can achieve as we build distribution and expand our assortment. Today, we hold nearly 10% share in bagged coffee and approximately 5% in pods at that customer. Compare that with less than 2% share in either format across the largest online marketplace in grocery, and you can see where the opportunity is ahead for us.

These are substantial markets. The largest online marketplace and our largest mass retail customer each represent more than $4 billion in annual packaged coffee sales, while grocery represents another $6.8 billion.

Now the opportunity isn't identical across these channels. Marketplaces and mass retail are more heavily weighted toward pods with online purchases skewing towards larger pack sizes. Grocery, on the other hand, has a more balanced mix of bags and pods. Our strategy is to tailor our assortment to those different purchasing patterns while continuing to build distribution and expand our shelf presence.

Slide 11. In ready-to-drink coffee, Black Rifle has established a significant national presence. We remain the #3 brand in single-serve RTD coffee with distribution of approximately 53% ACV. That said, category conditions remain challenging. Over the past 52 weeks, single-serve RTD coffee category sales declined 4%, while Black Rifle RTD retail sales declined 7%.

Our focus now is on generating stronger returns from the foundation we've built. That means concentrating our investments on our strongest customers and products, improving productivity across our existing distribution and lowering our cost to serve. And this is a good example of the more disciplined approach we're taking to investment and resource allocation across the company, which brings me to Project Core.

Turn to Slide 12, please. Project Core is our multiyear initiative to sharpen our focus on Black Rifle's core coffee business and brand. The objective is straightforward: improve profitability and earnings quality, simplify our operations and reduce the capital intensity of our business. At the center of this work is a very clear understanding of who we are. Black Rifle is a mission-driven brand-first premium coffee company, and our goal is to combine the strength of that brand with best-in-class execution.

We've organized Project Core around 5 strategies aligned to the 3 priorities you see on the slide. First, media and mission remain our engine for building consumer demand. We're bringing greater rigor to measuring how those investments translate into retail sales. Second, we're focused on winning in grocery and mass retail customer by customer.

Third, we're building our presence on the digital shelf led by third-party marketplaces, while blackriflecoffee.com remains the home for our subscribers and most loyal customers. Fourth, we're taking a more integrated approach to managing pricing, trade spending, product costs and overhead with the goal of building a business where earnings grow faster than revenue. And fifth, we're simplifying operations outside our core business.

Those operations need to justify their place in the portfolio. If they can't, we'll look to partner or exit them. Across all 5 strategies, we're applying a simple test to every initiative. Does it grow demand for the brand, improve margins, free up capital or reduce asset intensity. We've already begun taking meaningful action.

That includes the planned sale of our Manchester roasting facility, the restructuring currently underway in our Outpost business and the divestiture of a noncore brand. Matthew Amigh will walk through those actions in more detail shortly.

But I want to emphasize one important point. Our increased focus on profitability does not diminish our ambition for growth. Project Core is about making sure we capture more of the value that growth creates.

Before I turn the call over to Matt, I want to spend a moment on something that's been central to Black Rifle since the very beginning, our mission. And that commitment was on full display again this quarter. We supported 10 charitable events and initiatives, contributed more than $590,000 to organizations serving veterans, active duty military personnel, first responders and their families and delivered more than 4,300 bags of coffee to 45 military units around the world.

To commemorate the 25th anniversary of September 11, we partnered with the Gary Sinise Foundation to deliver 300 appreciation packages to New York City fire stations. We also joined the Major Brent Taylor Foundation to bring 30 Gold Star families together for a weekend of remembrance. And we delivered 1,000 appreciation gifts to service members, caregivers and medical staff at Walter Reed.

Behind every one of these efforts are people who have dedicated their lives to serving others and families who have made sacrifices that too often go unseen. We owe them a tremendous debt of gratitude. And having the opportunity to give something back is one of the most meaningful parts of what we do at Black Rifle.

With that, I'll turn it over to Matt.

Matthew Amigh

Thank you, Mons. I'll begin my remarks on Slide 14. Third quarter net revenue increased 7.3% year-over-year to $108 million, reflecting growth in both wholesale and direct-to-consumer.

Wholesale revenue increased 8.1%, driven by our entry into the dollar channel earlier this year, where pack size innovation opened new distribution across 19,000 doors as well as continued distribution gains in grocery, where revenue grew by more than 50% year-over-year, including chain-wide distribution at a large Texas-based regional grocer.

Direct-to-consumer revenue increased 8.5% year-over-year, led by approximately 65% growth in third-party marketplaces, partially offset by lower subscription revenue and the divestiture of a noncore brand. Excluding the divested brand, D2C revenue increased 12.3%.

Turning to Slide 15. Third quarter gross margin was 37.1%, up 25 basis points year-over-year. Gross margin included 325 basis points or $3.5 million, a benefit from the refund of previously paid tariffs. As expected, pricing and coffee cost inflation had a neutral impact on the quarter.

Productivity gains, including lower fulfillment costs from our logistics transition, helped offset the mix impact of growth in lower-margin channels, particularly third-party marketplaces. We also increased trade investment with key retail partners, including a promotional program at a key customer and higher freight rates and fuel costs weighed on margins by 80 basis points.

Our 2026 green coffee requirements are fully covered, and we now have secured more than 90% of our expected 2027 volume at prices below those contracted for 2026, providing greater visibility into our cost position heading into the next year. Looking ahead, our focus remains on improving the profitability of our sales mix, increasing the effectiveness of trade spending and continuing to reduce our production, fulfillment and freight costs. This focus is not an episodic event, but rather a systematic and repeatable process to drive productivity savings to fuel growth and cash generation.

Moving down the P&L on Slide 16. Third quarter operating expenses were $47.6 million compared to $36.6 million in the prior year period. The increase was primarily attributable to $11.7 million of noncash impairment charges associated with Project Core.

Excluding depreciation and amortization and the items reflected in our adjusted EBITDA reconciliation, operating expenses increased approximately $1.2 million or 4.1% to $31 million. That's below our 7.3% revenue growth. And as a percentage of revenue, adjusted operating expenses declined approximately 90 basis points year-over-year to 28.7%.

Most of this increase reflected continued investment in building the brand. Marketing expense increased 18% to $10.3 million or 9.5% of revenue compared to 8.6% a year ago. The increase was driven by higher investment in performance media to support sales, along with content production, influencer programs and agency support, including programming around America's 250th anniversary.

On a year-to-date basis, marketing remains below last year's level as a percentage of revenue at 9.6% compared with 10.4% as marketing efficiency improves through disciplined marketing mix optimization. Adjusted EBITDA increased 12.3% to $9.5 million from $8.4 million in the prior year, with adjusted EBITDA margin expanding approximately 40 basis points to 8.8%.

Turning to the balance sheet. We ended the quarter with $9.2 million of cash and $35 million of debt outstanding with no borrowings under our revolving credit facility and approximately $50 million of available capacity. Net leverage was approximately 0.8x trailing 12-month adjusted EBITDA.

Year-to-date, we generated $8.8 million of free cash flow compared with a $4.1 million use in the prior year period. This approximately $13 million year-over-year improvement was driven primarily by higher profitability, lower capital expenditures and reduced inventory balances.

Our balance sheet and available liquidity provide the financial flexibility to continue investing in the business while executing the initiatives under Project Core.

On August 21, we completed a 1-for 10 reverse stock split of our Class A and Class B common stock, a proactive step to provide a meaningful cushion above the New York Stock Exchange's minimum bid price requirement and broaden our appeal to institutional investors, some of whom have policies that limit the investment in lower-priced shares. All share and per share amounts have been adjusted to reflect the split for all periods presented.

Before turning to our outlook, I want to build upon Mons's discussion of Project Core by highlighting 3 significant actions we have taken and what they mean for Black Rifle financially. Each meets the test he described by improving margins, reducing asset intensity or freeing up capital.

First, we signed a definitive agreement to sell our Manchester, Tennessee roasting facility to Cascade Coffee, a long-standing manufacturing partner for $10 million in cash at closing and a $7 million seller note due in 12 months. We will apply $8.6 million of the $10 million in cash proceeds to the term loan, which further reduces net leverage heading into year-end.

Cascade will assume operations and retain the facility's employees, allowing us to reduce our manufacturing footprint and capital requirements while maintaining an experienced workforce in a facility that can deliver the quality our customers expect. We also secured a long-term supply agreement with Cascade at improved tolling rates. So consolidating production with them is expected to lower our production costs and improve our working capital beginning in 2027.

Together with the sale proceeds and the reduction in working capital, this is an asset-light move that improves both the balance sheet and the P&L.

Second, we are restructuring our Outpost business, closing 12 company-operated locations and retaining 5. Going forward, we expect growth in this business to come primarily through franchising, allowing us to expand our presence with significant lower capital requirements. Third, we completed the divestiture of a noncore brand sold primarily through direct-to-consumer channels, which generated approximately $6.5 million of revenue over the trailing 12 months.

The brand divestiture and outpost closures are expected to create a revenue headwind of approximately $3 million in the fourth quarter compared to last year. Once completed, the outpost closures are expected to reduce annualized revenue by approximately $8 million to $10 million, while improving profitability by eliminating losses at underperforming locations. These actions also result in a leaner organization.

We exited the third quarter with approximately 425 employees and expect approximately 260 by early 2027, a reduction of nearly 40%, largely reflecting the transition of Manchester employees to Cascade and the Outpost closures. For perspective, we had 918 employees at the end of 2022, our first year as a public company. So the expected level of approximately $260 million would be more than 70% lower as we transition to a simpler, more profitable and asset-light operating model.

Moving to the outlook on Slide 18. We are reaffirming our 2026 outlook of at least 8% revenue growth or approximately $430 million and at least 35% adjusted EBITDA growth or approximately $29 million. Through the first 9 months, revenue has increased 14% and adjusted EBITDA has nearly doubled.

For the fourth quarter, the floor of our guidance implies revenue of at least $106 million compared with $113 million last year. That comparison includes 2 items. approximately $5 million in liquidation revenue in last year's fourth quarter that we don't expect to repeat at that level and approximately $3 million of revenue headwind this year from a recent divestiture and the planned outpost closures. Adjusting for these items, even the floor of our guidance implies a modest year-over-year growth, reflecting continued momentum in our core coffee business.

On gross margin, we continue to expect full year results within our guidance range of 34% to 36%. Through September, gross margin was 34.8%. For the fourth quarter, we now expect gross margin of approximately 34% compared with approximately 36% when we spoke in August. The change primarily reflects increased trade investment with key retail partners during holiday periods and higher transportation costs.

Our retail velocity has been strong this year, and this investment is designed to build on that momentum and position us to earn additional shelf space as we head into 2027. We expect continued fulfillment efficiencies to partially offset these factors. The third quarter tariff refund was not included in our August outlook and helps offset these higher costs, supporting our reaffirmed full year guidance.

For adjusted EBITDA, the floor of our full year guidance implies fourth quarter results of approximately $6 million compared with at least $8.3 million implied in August. The reduction primarily reflects the increased trade investment and transportation costs I just described. As planned, holiday marketing will be our highest quarterly spend of the year.

Looking ahead, these 3 actions under Project Core represent significant steps towards a simpler, more profitable and less capital-intense Black Rifle. Our ambition is not simply to grow revenue. It is to translate that growth into stronger margins, higher profitability and substantially greater cash flow generation. We look forward to sharing our 2027 outlook on our fourth quarter earnings call.

Operator, we are now ready for the Q&A session.

Operator

[Operator Instructions] Our first question comes from the line of Michael Baker with D.A. Davidson.

質疑応答

Michael Baker

Okay. So it sounds like, correct me if I'm wrong, you're deemphasizing ready-to-drink. No mention of energy drinks on the call or I even think of the slides. So clearly, just focus on the core coffee business. I guess my question is, how does that change the long-term opportunity for the company? If you could, could I ask how does it change the sort of earnings algorithm? What's a reasonable growth rate expectation and long-term margin expectation? Surely, the outlook has to have changed by deemphasizing these businesses.

Chris Mondzelewski

Michael, it's Chris. Thanks for the question. I'll begin answering it at a strategic level, and then I'm going to kick it over to Matt, who will give you as many numbers as he's comfortable sharing.

Yes, I think, look, we talked about Project Core. I'm going to double down on that for us strategically is around focus on pods and bags. That has always been the core of our business. And as we've been talking about over the last couple of years, we continue to funnel our investment against what we continue to believe is the tailwind component of the market for us, both from a growth as well as a profitability standpoint. And that is, in fact, pods and bags. And we're having incredible success with that.

Through the quarter, we again saw close to 20% growth overall, higher on bags. Pods was still 3x the category. We're the only brand out there. We're 1 of only 2 brands out there that are growing units while also driving pricing still. So the reality is we feel great about that part of our business.

The RTD coffee business has been challenged as a category. We've talked about that. There are significant headwinds in that category. We are absolutely not giving up on that business, but we are being smart about our investment profile. We're going to continue to put our dollars where we see the highest return. And in the background, we continue to work on initiatives that we believe could be key to us growing that component of the business, but doing it in a smart way where we can do it profitably and make sure that we're taking care of the overall mix of the business.

From an energy standpoint, that's an innovation we pushed out a couple of years ago. Clearly, we are very excited about it as you would with any major innovation initiative. And yes, we've had some challenges. And we talked pretty openly about the fact that we have reduced the geography of that. We've had some successes, and we've certainly had some areas that need significant improvement as well. And as such, we have been careful to tailor our dollars against that component of the business that we believe is appropriate to its size, which is obviously significantly smaller than any of the other components of our business on the coffee side.

As far as long-term outlook, we're not in a position right now to give long-term guidance. We may be here in the future. Does it change our perspective, certainly. But again, as you go back to Project Core, this is about building a sustainable growth engine on coffee, first and foremost. That's a $14 billion coffee as measured by Nielsen. Those are only Nielsen channels. So it's actually bigger than that.

But $14 billion, we're $3.2 billion in bags. We're $2.7 billion in pods. We have significant room for improvement or growth, I should say, in that category as we think about our long-term ambition. We've talked about land and expand and how we're going to drive it behind that, which is about not only distribution increases, but velocity increases, which we've already been demonstrating as we've been growing the distribution. So we believe there is significant long-term growth potential behind that alone.

And then yes, I think as the cold business, as we're able to smartly make those investments in the cold side of our business, that will play a role as well. And then most importantly, Michael, we're going to do that in a very profitable way. That is going to generate significant free cash flow back into the business and allow that whole engine to continue to work for us.

Matthew Amigh

Okay. Michael, I just -- I'd add to what Mons said about Project Core. When it comes down to -- we're going to improve profitability and earnings quality for sure, simplify the operations and improve free cash flow and make this business asset-light. And I think you can see that in some of the moves we announced today.

As Mons mentioned, we're not going to guide '27 today. We'll wait to the Q4 call to do that. But what I can say about it is when you look, there are several building blocks that we already know about '27. As I mentioned a little bit ago, we have about 90% of our coverage for 2027 already locked in at prices lower than 2026. So we're feeling good about that.

And as always mentioned, the team is putting a great effort right now on productivity savings and we're beginning to see those really come through. And a piece of that would be the sale of Manchester. That's going to work out as a low toll rate going forward under a long-term agreement. So we have good building blocks on the gross margin side.

What I can say is, again, it's about expanding the margin and EBITDA as well as free cash flow, and you can expect that from us in 2027.

Michael Baker

Fair enough. Can I ask one other question? So I think the -- both for the third quarter and the full year, the profitability would have been below where you had talked about in the past, if not for the tariff refund. I think some things have changed like higher transportation costs perhaps, perhaps you're leaning more into marketing, spending some of that tariff money back or at least the trade promotions.

But if you could sort of talk to us about what has changed? You get the positive from the tariff, but presumably, there are offsets somewhere else such that the even out and the guidance hasn't changed even with that benefit.

Matthew Amigh

Yes. I'll start the conversation on that, Michael, the answer to your question on that, Michael, is we're really happy with the way the year is playing out right now. Year-to-date revenue is up about 14%. Free cash flow went from a consumption of $4 million to generating $8 million. It's like almost a $13 million change in free cash flow year-over-year. And adjusted EBITDA at almost $24 million year-to-date is nearly doubled. So we're like -- we're very pleased with the way the year is playing out.

Now Q3, I'll just be direct on this. Yes, we would have been under what we framed up if it wasn't for the tariffs, but that's based on one big decision that we made, which was, hey, we're going to spend some of that back in promotion at our key accounts on very effective promotion. That's going to put us in a very good position with velocities as we exit the year as we get ready for the line reviews with our key accounts, and we're going to expect more distribution gains. So we're spending some of that back on promotion to strengthen our position in '27.

And when it comes down to the other driver, I think we talked about it a few minutes ago, it's going to be freight and fuel, right? So the driver capacity out there is a real capacity issue with drivers, and that's coming through in lane rate. We're seeing that clearly. And then we did anticipate that the war would continue on and the price of diesel will be over $6, and we're adjusting for that as well. And you'll see that in the Q4 outlook that we have.

Now we are holding the year at, at least 8% growth on net revenue, which is about $430 million. But keep in mind, that includes us having a $3.5 million headwind from the closure of the outpost as well as the divestiture. So in essence, that really is a raise if you take into account those adjustments. And then when it comes to the bottom line, we're feeling good about the at least 35% growth and around $29 million.

And again, the reason you're not going to see that pop in Q4 EBITDA is simply the fact that we're going to run a little bit harder on promotion to strengthen our position for '27 and then the fuel and lane rate costs.

Michael Baker

Makes sense to reinvest the tariffs.

Operator

Our next question comes from the line of Eric Des Lauriers with Craig-Hallum.

Eric Des Lauriers

On the continued market share gains and the announced Project Core here. So most of my questions is just kind of focusing on Project Core. Wondering if you can provide a bit more color on the sort of integrated approach to trade spend here. Can you just kind of give us a bit more detail on what to expect from that front?

Chris Mondzelewski

Yes, I'll kick it off. Matt can jump in. So thanks for the question, Eric. I think this is something we're very excited about. Project Core, this is really the first that we're talking about it publicly. That is something that we've been driving internally already for some time. It's been producing the focus that I talked about on the last question from Michael.

There are 5 elements to it. They're all quite simple, and that's to me what makes the best strategies. It starts with for media and mission for us, brand and mission. That is #1 for us. The brand is everything to any successful premium CPG business, but particularly for us at Black Rifle is a lifestyle brand. We've seen that brand carry us to significant gains across the market, and that will always be our #1 priority, the ability to invest and make that most efficient.

Win center store is the second element of Project Core. Center store then we are defining that as pods and bags. I just talked about, that is going to be the lion's share of our investment. It's, again, a $14 billion category. We have a growing but small share, and we believe that we can significantly grow that share over the next few years.

The third is digital shelf. So again, we've talked very much about how we look at our DTC business as one combined digital shelf to the consumer, whether they're buying off of our site, whether they're buying off of Amazon, walmart.com, target.com, any retailer site, that is a decision the consumer is going to make. They're deciding that they would like to buy digitally.

They'd like to have that product delivered to them in some form. And we are going to be omnipresent in our ability to support that. We're not going to tell the consumer how to shop, but we are going to be there for the consumer at a very strong value. And again, we've had a lot of success with this. We've continued to grow our DTC business with this approach and we've added profitability to the business with this approach.

Number four is going to be focused on margin and earnings. Matt will elaborate a bit on that. Again, he's been talking about this now quarter after quarter. We will continue to edge our margin in a positive direction for the overall business in a healthy way, where we're still investing back to drive growth.

And then on an earnings front, we will continue to optimize the overall remit of the business. We've done a good job, I think, of controlling our G&A costs line items that kind of fall below the P&L, and we will continue to do that to ensure a really strong cash conversion off of those earnings as well.

And then finally, the component that's wrapped into all of it is simplify the noncore. And again, for those of you who have been following our business, you understand that we do run a multi-leg business. We have multiple components out there, and we're always going to be innovating with our business, but we need to be very careful that we are always putting our investments against where we see those strongest returns.

So you heard us talk about our Manchester facility and a partnership. That's a great example of where we get a win-win scenario. We get product produced in exceptionally high quality, and we do it in a way where that doesn't become a cash constraint on our P&L. And the Outpost closure, just another example again.

We still view Outpost as a significant way to build our brand in the future, but we're going to be smart about it. We're going to make sure that items like that do not become a drag on the P&L that would then limit our investment back into what we define as the core, which again, are the bags, the pods component of our business. Matt, do you want to build on that at all?

Matthew Amigh

Yes, Eric, it comes down to -- outside the 5 principles that Mons walked you through, it comes down to a very simple filter we put on each of these actions that we plan on going. Number one, hey, does it lift margin? Number two, does it make us asset-light? Number three, does it free up capital? And does it protect our growth brand, right? So does it protect our core business.

So these 3 actions, you see that a filter pass on each of those. So with the Outpost restructuring, we're going to close down 12 of the company-operated Outposts and another 8 undeveloped sites, we're going to exit those as well that we have sitting on the books.

Now we're going to keep the best 5, as Mons mentioned, we'll create a model for what we want to franchise out in the future, and we'll build the growth out through a franchise model, which is obviously a lot more -- less capital intense.

When it comes to Manchester, it really is a win-win opportunity for us, and we took advantage of it and not only will we get $17 million in proceeds, $10 million upfront and $7 million 12 months out at the anniversary date. But Cascade is a long-term supplier of Black Rifle. They care about quality as much as we do. They're going to take on all the employees at Manchester. So they're going to get an experienced workforce that knows what we expect out of the brand. And over time, this is going to give us a cost advantage when it comes to tolling fees, which step down over time, and we're very pleased with that.

And then finally, the divestiture of the D2C brand, which was just a distraction, right? So we're taking a brand that really didn't drive much on the top line and nothing on the bottom line. We're jettisoning that and making this business simpler. But again, as I said to Michael a little bit ago, these are all going to play through margin accretion, EBITDA accretion and free cash flow accretion as well. So you'll see this reflected when we guide for 2027 at the Q4 call.

Eric Des Lauriers

That's all very helpful. I appreciate that extra color there. And then just higher level, I mean, I know that you guys are going to give '27 guidance on the next call. But overall, how should we think about the amount of savings that you expect from Project Core here? If you can break that down between COGS and OpEx, that would be helpful.

And then just higher level, I mean, I've heard you guys comment just recently here on continuing to sort of edge up margin. So presumably, not all of this is going to be reinvested. But can you just kind of talk, I guess, more philosophically on how to think about sort of reinvesting the savings from Project Core versus letting those basically fall to margin expansion?

And then to the extent that you will be reinvesting, should we be thinking of that as mostly in the promotion and trade spend that you've kind of called out for Q3 and Q4 here?

Chris Mondzelewski

Eric, I'll let Matt address some of the numbers you're asking for. Really quickly, though, I do want to emphasize, and you kind of closed this in the second part of your question, and I appreciate that, which is that this is more than just cost savings for us. This is really about growth.

We are a growth company, and we are a growth company within what we have defined as the core of our business, again, the pods and the bags. And again, we walked through the numbers and how we've driven that up to now is our land and expand strategy that we will continue to drive and then the ability to lift the velocities of our items in market through smart marketing.

And we need to have the fuel for that. And that is what Project Core is all about is ensuring that we have every penny available to us to reinvest while still delivering a significantly profitable business with significant cash flow for the capital needs that we need going forward. And so again, it's 2 parts for sure, for us, focused on both the top and the bottom line of the business. But Matt, I'll let you decide where you want to elaborate on the numbers there.

Matthew Amigh

Yes. And Eric, I don't want to sound cagey on the Project Core opportunities at all. But there are some things that we're still working through, which is there will be a capacity expansion project going into the Manchester facility by Cascade. We're still working on the timing of when we'll start to realize some of those savings.

But what I can say, like when we think about how to think about 2027, we do know that we were locked completely for 2026 on green coffee pricing. We have over 90% locked in for next year, as I mentioned, it's lower than the cost structure that we see this year when it comes to green coffee pricing. So we're feeling great about that.

Now the Outpost closure will generate not so much gross margin benefit, but when you look at the lease expense and the G&A that goes against it for the labor, it's going to be accretive at the EBITDA level. So we'll see some accretion come through for the Outpost closures. Those closure dates vary, and we're working through that right now. Many of them closed down in 2026. but some stretch out into 2027. So we're working on that timing.

Look, we'll definitely lap the third-party tariff -- or excuse me, the third quarter tariff benefit that we've seen. So we don't consider that to be a run rate change in our cost structure at all. We're not assuming any pricing in 2027. The pricing has already settled in from the 2 actions we took in 2025. But again, think back to what Project Core means. We're going to grow earnings faster than we grow revenue. And you will see an increase in margin and EBITDA and EBITDA margin, free cash flow as we plan out 2027.

Operator

Our next question comes from the line of Joe Feldman with Telsey Advisory Group.

Joseph Feldman

I wanted to ask with regard to the Project Core, how are you guys incorporating technology to generate productivity? And are there other opportunities? I think you touched on maybe a little bit of a reduction in headcount down the road, but could you share a little more color on, I guess, technology's role in that?

Matthew Amigh

The biggest thing, Joe, I'd frame for you is that when we became a public company a couple of years ago, we had over 900 employees. We expect to end this year at around 425. And after Project Core is done, we expect to be down to about 260. So a lot of that is just getting a lean organization and focusing on what's actually driving the top line.

But we're incorporating technology into everything that we do, and we kind of rethink every position as we refocus and are positioning for this next phase of our growth, which is going to have a few top line impact next year from the divestitures that we're seeing.

But remember that the EBITDA at end state, the expectation here is that we're going to have EBITDA growth that's substantially higher than what we see for revenue growth. There's a lot that goes into that, but one of those things is technology, and we're incorporating all those things into how we're viewing the future of this company.

Chris Mondzelewski

I think, Joe, just to build on that, we see -- and to be with you, what Matt said is true. We see technology as an enabler for growth. That's the way we look at it. Some of the stuff we do is proprietary. I'm not going to go into the details of it. Whether we're ahead or below -- behind the market when it comes to utilization of AI, et cetera, I don't know. We're not too concerned about that. What we're concerned about is how is it enabling us to drive our growth model on a more accelerated basis.

And I will tell you, again, if you follow our business, I know all of you do, I know you do, Joe when it comes to our marketing, we absolutely take advantage of all of the leading-edge elements of technology and putting together our brand positioning, how we look at that. And then as you can imagine, even for some of the more traditional parts of the business, we've begun to utilize that as well. But again, we do it through a growth lens. We don't look at it as necessarily optimization of the business. Yes, those things happen naturally. But frankly, that's the easier part.

The harder part, I think, and what we believe in, Matt and I is challenging ourselves to say, how do we use this technology to put ourselves in a position where we will be able to sustainably outgrow the market across our pods and bags business.

Joseph Feldman

That's really helpful, guys. And then maybe just a follow-up. I wanted to drill down a little bit into the noncore. Was that one business that we were selling off? Is that it? Like are there other areas like I think it was kind of touched on earlier by Mike, but is it like ready-to-drink or energy? Like are those noncore that could go away?

Matthew Amigh

Joe, this is Matt. So the D2C business that we divested was a very noncore brand called Grounds & Hounds. So it wasn't aligned with the brand messaging of Black Rifle. Like I said before, it's pretty much a distraction, didn't generate much any EBITDA at all. So that was a very deliberate decision that we made.

When it comes to the other product lines that we have, they're still massive. If you think about the RTD business and roughly a 4.1 share in the marketplace right now, we're #3 in market. So the focus there would be more of improving the margin of the business and improving really the cost to get the product to market. So that's where we'll focus on that business going forward.

But everything in the business, we're looking at through the filters that Mons described earlier, and we'll use that discipline to evaluate each and every product line.

Chris Mondzelewski

Just to build on that, because it's a great point you're making. No, it does not mean just -- it does not mean that anything that is noncore is going to be unwound. But by no means does it mean that. It does, however, mean we're going to focus investment significantly towards the core components of our business.

We also potentially will revise what the core looks like over time. Again, right now, the category is challenged within cold coffee. And we have some work to do, as Matt said, on that business to ensure that we've got the right level of profitability and that we've got the growth ideas that we believe can help to turn that category. As we do that work in the background over the next couple of years, that very well could change our point of view on where that plays within core overall.

So again, there are elements of the business that are going to be clear decisions for us to unwind, like Matt talked about with Grounds & Hounds, but it does not mean -- it's a classic portfolio approach. And just because something isn't core in your portfolio does not necessarily mean that it won't be part of your business.

Operator

And ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to management for any final comments.

Chris Mondzelewski

All right. Well, I appreciate the questions. Overall, we're building on our progress that we've made, strengthening the business. We're improving profitability and generating cash flow. And we believe we'll continue to accelerate that as we go into '27. We'll give -- as Matt said, we'll give you guidance on that as we go into the next quarter call.

Project Core, it was exciting to talk about that for the first time. It's about accelerating the growth of our coffee business and using the stronger foundation to drive further earnings and cash generation for us going forward. We will reinvest behind the opportunities that we believe have the greatest potential for this business overall. So again, we appreciate everybody's interest in the business, and we will talk to you next quarter.

Operator

And this concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.