BRC (BRCC) - 2025 Q1 - Quarterly Report

Financial Performance - Revenue for Q1 2025 was $89,974,000, a decrease of 8.6$98,392,000 in Q1 2024[17] - Gross profit for Q1 2025 was $32,472,000, down 23.1$42,185,000 in Q1 2024[17] - Net loss attributable to BRC Inc. for Q1 2025 was $2,888,000, compared to a net income of$548,000 in Q1 2024[17] - Total net sales for the three months ended March 31, 2025, were $89,974,000, a decrease of 8.5$98,392,000 in the same period of 2024[55] - Wholesale revenue decreased to $56,791,000 in Q1 2025 from$60,428,000 in Q1 2024, representing a decline of 10.8%[55] - Direct-to-Consumer (DTC) revenue fell to $27,720,000 in Q1 2025, down 15.0$32,614,000 in Q1 2024[55] - The net income (loss) attributable to Class A Common Stock for Q1 2025 was $(2,888) thousand, a decrease from$548 thousand in Q1 2024, indicating a significant decline[136] - Net revenue for the three months ended March 31, 2025 decreased by $8.4 million, or 9$89.974 million compared to $98.392 million for the same period in 2024[165] - Gross profit for the three months ended March 31, 2025 was$32.472 million, a decrease of $9.713 million, or 23$95,062,000, slightly down from $95,471,000 as of December 31, 2024[14] - Total liabilities increased to$178,705,000 as of March 31, 2025, compared to $177,886,000 as of December 31, 2024[14] - Cash and cash equivalents decreased to$3,902,000 at the end of Q1 2025 from $6,810,000 at the end of 2024[14] - Long-term debt increased to$66,472,000 as of March 31, 2025, from $63,027,000 as of December 31, 2024[14] - The allowance for sales returns and charge backs was$467 million as of March 31, 2025, compared to $560 million as of December 31, 2024[57] - Accounts receivable allowance for doubtful accounts was$626 million as of March 31, 2025, up from $593 million as of December 31, 2024[64] - Inventories, net increased to$50,498 million as of March 31, 2025, from $42,647 million as of December 31, 2024[65] - Property, plant, and equipment, net decreased to$56,645 thousand as of March 31, 2025, down from $59,204 thousand as of December 31, 2024, a decline of 4.3$37,904,000, a slight decrease from $38,230,000 in Q1 2024[17] - Total operating expenses decreased by$0.3 million, or 1%, to $37.904 million, with marketing and advertising expenses increasing by$3.713 million, or 49%[170] - Interest expense increased by $0.319 million, or 16$2.370 million due to higher average debt balances[175] Cash Flow - The company reported a net cash used in operating activities of $4,141,000 for Q1 2025, compared to net cash provided of$4,914,000 in Q1 2024[23] - Net cash used in operating activities was $4.1 million for the three months ended March 31, 2025, a decrease of$9.1 million compared to net cash provided of $4.9 million in the same period of 2024[180] - Net cash used in investing activities was$1.2 million for the three months ended March 31, 2025, a decrease of $1.5 million from$2.7 million in the corresponding period of 2024[181] - Net cash provided by financing activities was $2.4 million for the three months ended March 31, 2025, an increase of$13.1 million compared to net cash used of $10.7 million in the same period of 2024[182] Revenue Recognition and Customer Programs - The company’s revenue recognition follows the ASC 606 standard, ensuring that revenue is recognized when control of the product transfers to the customer[40] - The company’s loyalty program allows customers to earn up to 5$3,361,000 in its DTC channel due to changes in the loyalty program policy regarding expired points[47] - The company’s franchise agreements require ongoing fees based on store revenues, which are recognized as sales occur[49] Future Outlook and Strategy - The company aims to expand its product line to increase growth opportunities and reduce product-specific risks through diversification[156] - The company plans to continue investing in customer acquisition and new product launches to drive revenue growth in the Wholesale channel[151] - Future growth in the Outpost channel is anticipated as the company reallocates investments and improves profitability through operational changes[151] - The company is focused on optimizing marketing performance to manage customer acquisition costs effectively[154] Legal and Tax Matters - The Company is currently involved in various legal disputes, including a lawsuit from Tang Capital seeking $10,535 thousand in compensatory damages[143] - The Company has recorded a valuation allowance against deferred tax assets (DTAs) due to uncertainty regarding their realization[134] - The effective tax rate for the period ended March 31, 2025, differs from the U.S. federal statutory rate primarily due to changes in valuation allowance and non-controlling interest[133] - The Company has accrued$320 thousand related to potential sales and other tax exposure as of March 31, 2025, which is included in "Accrued liabilities" on the consolidated balance sheets[141]