Q4 2021 BRC Inc. Earnings Call

March 16, 2022

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Greetings and welcome to the Black rightful coffee company fourth quarter and full year 2021 earnings call. At this time, all participants are in a listen only mode.

Operator: Greetings. Welcome to the Black Rifle Coffee Company Q4 and full year 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Tanner Doss, Vice President of Investor Relations. Thank you. You may begin.

Greetings, and welcome to the Black Rifle Coffee Company fourth quarter and full year 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Tanner Doss, Vice President of Investor Relations. Thank you. You may begin.

<unk> and answer session will follow the formal presentation, if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded I would now like to turn the call over to <unk> Vice President of Investor Relations. Thank you you may begin.

Tanner Doss: Good morning, everyone. Thank you for joining Black Rifle Coffee Company's conference call to discuss our 2021 financial results, which were released this morning and can be found on our website at ir.blackriflecoffee.com. With me on the call today is Evan Hafer, Founder and Chief Executive Officer, Tom Davin, Co-Chief Executive Officer, Toby Johnson, Chief Operating Officer, and Greg Iverson, Chief Financial Officer. Before we get started, I would like to remind you of the company's safe harbor language, which I'm sure you are familiar with. On today's call, management may make forward-looking statements, including guidance and underlying assumptions. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For a further discussion of risks related to our business, please see our previous filings with the SEC.

Morning, everyone. Thank you for joining Blackrock for coffee company's conference call to discuss our 2021 financial results, which were released this morning and can be found on our website at IR dot black rightful coffee dot com.

Tanner Doss: With me on the call today is Evan Hafer, Founder and Chief Executive Officer, Tom Davin, Co-Chief Executive Officer, Toby Johnson, Chief Operating Officer, and Greg Iverson, Chief Financial Officer.

With me on the call today is Evan Hafer, founder and Chief Executive Officer, Tom Davin Co Chief Executive Officer, Toby Johnson, Chief operating Officer, and Greg Iverson, Chief Financial Officer.

Tanner Doss: Before we get started, I would like to remind you of the company's Safe Harbor language, which I'm sure you are familiar with.

Before we get started I would like to remind you of the Companys Safe Harbor language, which I'm sure you are familiar with.

Tanner Doss: On today's call, management may make forward-looking statements including guidance and underlying assumptions.

On today's call management may make forward looking statements, including guidance and underlying assumptions.

Tanner Doss: Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially.

Forward looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially.

Tanner Doss: For a further discussion of risks related to our business, please see our previous filings with the SEC.

For a further discussion of risks related to our business. Please see our previous filings with the SEC.

Tanner Doss: This call will also contain non-GAAP financial measures such as adjusted EBITDA and adjusted EBITDA margins. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included on the earnings release furnished to the SEC and also available on our investor website. Now I'd like to turn the call over to Evan Hafer, Founder and Chief Executive Officer of Black Rifle Coffee Company.

Tanner Doss: This call will also contain non-GAAP financial measures such as adjusted EBITDA and adjusted EBITDA margins.

This call will also contain non-GAAP financial measures such as adjusted EBITDA and adjusted EBITDA margins Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included on the earnings release furnished to the SEC and also available on our Investor website.

Tanner Doss: Reconciliations of these non- GAAP measures to the most comparable GAAP measures are included on the earnings released, furnished to the SEC, and also available on our investor website.

Tanner Doss: Now I'd like to turn the call over to Evan Hafer, Founder and Chief Executive Officer of Black Rifle Conference.

Now I'd like to turn the call over to Evan Hafer, founder and Chief Executive Officer of Blackrock will cost the company thinks tenor and good morning, everyone. Let me start by thanking you for joining our first earnings call as a publicly traded company you.

Evan Hafer: Thanks, Tanner, and good morning, everyone. Let me start by thanking you for joining our first earnings call as a publicly traded company. You may have heard me say before, but I think it's worth repeating. I first started Black Rifle Coffee Company as a way of connecting people, honoring the generations of brave men and women that have served and continue to serve this country. I believed it would also be a way to give back to our veterans, both as an employment opportunity and through philanthropy, and with the utmost appreciation to their service. With help from fellow veterans, Mat Best and Jarred Taylor, we generated over $1.3 million in direct-to-consumer sales during our first year of business from my garage, and I was still able to contribute and give back to the veteran community through a nonprofit.

Evan Hafer: Thanks Tanner and good morning everyone. Let me start by thanking you for joining our first earnings call as a publicly traded company.

You May have heard me say before but I think it's worth repeating.

Evan Hafer: I first started Black Rifle Coffee Company as a way of connecting people, honoring the generations of brave men and women that have served and continue to serve this country. I believed it would also be a way to give back to our veterans, both as an employment opportunity and through philanthropy. And with the utmost

I first started back rightful coffee company as a way of connecting people honoring the generations of brave men and women that have served and continue to serve this country. I believed it would also be a way to give back to our veterans, both as an employment opportunity in throughput and therapy and with the utmost depreciation to their service.

With help from fellow veterans, Matt Best in Jared Taylor, we generated over $1.3 million in direct to consumer sales during our first year of business from my garage.

Evan Hafer: With help from fellow veterans, Matt Best and Jared Taylor, we generated over 1.3 million in direct-to-consumer sales during our first year of business from my

Evan Hafer: and I was still able to contribute and give back to the veteran community through a non-profit.

And I was still able to contribute and give back to the veteran community through a nonprofit that commitment to veterans has been central to our mission, including the hundreds of thousands of pounds of coffee, we've donated to the military and first responder units across the United States and the globe in 2020 . One we also donated more than $3 million of value.

Evan Hafer: That commitment to veterans has been central to our mission, including the hundreds of thousands of pounds of coffee we've donated to the military and first responder units across the United States and the globe. In 2021, we also donated more than $3 million in value in coffee to the front lines and over $1.2 million to the veteran and first responder charities. We've also set a bold hiring goal to hire 10,000 veterans to join us in expanding our mission. Our vision for Black Rifle Coffee Company as a public benefit corporation is to become one of the few public companies dedicated to supporting the veteran community by inspiring them to both become entrepreneurs and hiring them to join our team, and serving them through our charitable work.

In coffee to the front lines and over 1.2 million to the veteran and first responder charities. We've also set a bold hiring goal to hire 10000 veterans to join us in expanding our mission our vision for Black Reticle Coffee company as a public benefit Corporation is to become one of the few public companies dedicated to supporting.

Evan Hafer: and over $1.2 million to the Veteran and First Responder charities. We've also set a bold hiring goal to hire 10,000 Veterans.

Evan Hafer: to join us in expanding our mission. Our vision for Black Rifle Coffee Company as a public benefit corporation is to become one of the few public companies dedicated to supporting the veteran community by inspiring them to both become entrepreneurs and hiring them to join our team and serving them through our charitable work. I'm thrilled that we are all here today and look forward to building a great company and delivering strong results.

The veteran community by inspiring them to both become entrepreneurs in hiring them to join our team in serving them through our charitable work I'm thrilled that we are all here today and look forward to building a great company and delivering strong results, let's get right to it and talk about our strong fourth quarter in our fiscal 2021 result.

Evan Hafer: I'm thrilled that we are all here today and look forward to building a great company and delivering strong results. Let's get right to it and talk about our strong Q4 and our fiscal 2021 results. On 10 February, we successfully closed a merger with SilverBox Engaged Merger Corp. I. Marking a significant milestone for the company as we begin to trade on the New York Stock Exchange. This offering enabled us to pay off debt, preferred stock, and add $150 million to our balance sheet, eliminating what had previously been a capital constraint. Everyone who worked to make this contribution a success has my deepest gratitude. With our outstanding management team and our strong board of directors, we are confident that we are ready to capitalize on the significant opportunities we see on the horizon.

Evan Hafer: Let's get right to it and talk about our strong fourth quarter and our fiscal 2021 results.

Evan Hafer: On February 10th, we successfully closed a merger with Silverbox Engaged Merger.

On February 10th we successfully closed our merger with silver box engaged merger Corp.

Evan Hafer: marking a significant milestone for the company as we begin to trade on the NYSE.

Marking a significant milestone for the company as we begin to trade on the New York Stock Exchange. This offering enabled us to pay off debt preferred stock and at $150 million to our balance sheet, eliminating what had previously been a capital constraint.

Evan Hafer: This offering enabled us to pay off debt, preferred stock, and add $150 million to our balance sheet, eliminating what had previously been a capital

Evan Hafer: Everyone who worked to make this contribution a success has my deepest gratitude. With our outstanding management team and our strong board of directors, we are confident that we are ready to capitalize on the significant opportunities we see on the horizon. Our key strategic investment areas include

Everyone, who work to make this contribution of success has my deepest gratitude with our outstanding management team and our strong board of directors. We are confident that we are ready to capitalize on the significant opportunities. We see on the horizon are key strategic investment areas include increasing capacity for roasting premium coffee.

Evan Hafer: Our key strategic investment areas include increasing capacity for roasting premium coffee, fully funding our continued growth of the company in owned Outposts, adding key senior leaders to enhance the capability to execute in existing and planned channels, supporting the veteran active duty military and first responder communities. As you will hear later from the Co-CEO, Tom Davin, and the CFO, Greg Iverson, we have built a mission-driven consumer brand with an incredibly loyal customer base, which has resulted in strong financial performance this past quarter and year. We grew our revenues by over 42% to $233 million, delivered coffee to our 2 millionth direct-to-consumer customer, and significantly added to our Outposts and wholesale doors. We believe we are just getting started to see the significant opportunities for continued growth.

Fully funding our continued growth of the company and owned outposts, adding key senior leaders to enhance the capability to execute in existing and planned channels supporting the veteran active duty military and first responder communities as.

Evan Hafer: Fully funding our continued growth as a company and owned.

Evan Hafer: adding key senior leaders to enhance the capability to execute in existing and planned channels. Supporting the veteran, active duty military, and first responder.

Evan Hafer: As you will hear later from the co-CEO, Tom Davin, and the CFO , Greg Iverson, we have built a mission-driven consumer brand with an incredibly loyal customer base, which has resulted in strong

As you'll hear later from the co CEO , Tom Davin and the CFO , Greg Iverson, we have built a mission driven consumer brand with an incredibly loyal customer base, which has resulted in strong financial performance. This past quarter and year, we grew our revenues by over 42% to $233 million delay.

Evan Hafer: this past quarter and year. We grew our revenues by over 42% to $233 million.

Evan Hafer: delivered coffee to our 2 millionth direct-to-consumer customer, and significantly added to our outposts and wholesalers.

<unk> delivered coffee to our two millionth direct to consumer customer and significantly added to our outposts in wholesale doors. We believe we're just getting started to see the significant opportunities for continued growth while demand for our products has never been stronger our aided brand awareness is still below 20% nationally and only <unk>.

Evan Hafer: We believe we are just getting started to see the significant opportunities for continued

Evan Hafer: While demand for our products has never been stronger, our aided brand awareness is still below 20% nationally and only 17% among the core military and veteran-affiliated audience. To drive awareness and build our community, we will continue to shift our marketing efforts from paid media to owned media through our investments in influencers, brand ambassadors, podcast, sports, and the Spartan Race Series. One example of our new brand ambassador partnerships is with Travis Pastrana, who is one of the best-known action sports athletes in the world. He's a 6-time X Games gold medalist and the founder of Nitro Circus. We are in the process of creating what we refer to as tent-pole content with Travis that will appeal to our core community as well as a much broader global audience. For example, Travis's 2021 Gymkhana video exceeded 47 million views on YouTube.

Evan Hafer: While demand for our products has never been stronger, our aided brand awareness is still below 20% nationally and only 17% among the core military and veteran affiliated audiences.

70%, among our core military and veteran affiliated audience.

Evan Hafer: To drive awareness and build our community, we will continue to shift our marketing efforts from paid media to owned.

To drive awareness and builder community, we will continue to shift our marketing efforts from paid media to earn media to our investments and Influencers brand ambassadors podcast sports and Spartan race series. One example of our new brand Ambassador partnerships is with Travis <unk>, who is one of the best known action sports.

Evan Hafer: to our investments in influencers, brand ambassadors, podcasts, sports, and the Spartan Race.

Evan Hafer: One example of our new brand ambassador partnerships is with Travis Pastrana.

Evan Hafer: who is one of the best-known action sports athlete in the world six times x games gold medalist and the founder of nitro

Athletes in the world He's a six times X games gold medallist and the founder of Nitro Circus.

Evan Hafer: We are in the process of creating what we refer to as tentpole content with Travis that will appeal to our core community as well as a much broader global audience.

We are in the process of creating what we refer to as Tentpole content with Travis that will appeal to our core community as well as a much broader global audience. For example, Travis is 2021 Jim kind of video exceeded 47 million views on Youtube B or C. C will be front and center in the next gymkhana two.

Evan Hafer: For example, Travis's 2021 Gymkhana video exceeded 47 million views on YouTube.

Evan Hafer: BRCC will be front and center in the next Gymkhana to be released later this year.

Evan Hafer: BRCC will be front and center in the next Gymkhana to be released later this year. Another example of owned media is our Coffee or Die blog, where we have full-time writers covering veteran-related topics in the US and abroad. In fact, we have three writers on the ground in the Ukraine right now providing real-time news for Coffee or Die, the only coffee company in the world providing real-time news from the ground with veteran war correspondents. We expect these marketing initiatives to improve our brand awareness and help Black Rifle Coffee meet our 2022 financial goals. I'm excited for the next chapter in the Black Rifle Coffee Company story and all the significant opportunities we have ahead. With that, I'll turn it over to Tom. Go ahead, TD.

Be released later this year. Another example of owned media as our coffee or die block, where we have full time riders covering veteran related topics in the U S and abroad. In fact, we have three riders on the ground in the Ukraine right now providing real time news for copier die the only coffee company in the world providing.

Evan Hafer: Another example of owned media is our Coffee or Die blog, where we have full-time writers covering veteran-related topics in the U.S. and abroad. In fact, we have three writers on the ground in the Ukraine right now providing real-time news for coffee or die.

Evan Hafer: only coffee company in the world, providing real-time news from the ground with veteran war courses.

Real time news from the ground with veteran war correspondents, we expect these marketing initiatives to improve our brand awareness and help black rifle coffee meet our 2022 financial goals I'm excited for the next chapter in the Blackrock for Coffee company story and all the significant opportunities. We have ahead with that I'll turn it over to.

Evan Hafer: We expect these marketing initiatives to improve our brand awareness and help Black Rifle Coffee meet our 2022.

Evan Hafer: I'm excited for the next chapter in the Black Rifle Coffee Company story and all the significant opportunities.

Evan Hafer: With that, I'll turn it over to Tom. Go ahead, T.D. Thanks, Evan, and good morning, everyone. I'll begin by highlighting our fourth quarter financial performance and providing an overview of our key growth initiatives.

Tom go ahead, TD, Thanks, Kevin and good morning, everyone I'll begin by highlighting our fourth quarter financial performance and providing an overview of our key growth initiatives.

Tom Davin: Thanks, Evan, and good morning, everyone. I'll begin by highlighting our Q4 financial performance and providing an overview of our key growth initiatives. Our results for Q4 reflect sustained top-line growth throughout the year. The continued momentum demonstrates that we are uniquely positioned to win in this competitive category as we leverage the Black Rifle Coffee Company brand to serve our passionate customer base and attack the massive coffee market opportunity. I will discuss these competitive strengths in more detail. First, we are a mission-driven lifestyle brand with a loyal customer base. Our mission is core to everything we do and a major driver of our success, engaging and attracting customers, employees, and business partners. Our content creation capability enables us to build a large and growing community who love interacting with our brand on a daily basis.

Tom Davin: Our results for the fourth quarter reflect sustained top-line growth throughout the year. The continued momentum demonstrates that we are uniquely positioned to win in this competitive category as we leverage the Black Rifle Coffee Company brand to serve our passionate customer base and attack the massive coffee market opportunity. I will discuss these competitive strengths

Our results for the fourth quarter reflects sustained top line growth throughout the year.

The continued momentum demonstrates a weird uniquely positioned to win in this competitive category as we leverage the black rifle coffee company brand to serve our passionate customer base and attack the massive coffee market opportunity.

I will discuss these competitive strengths in more detail first we are mission driven lifestyle brand with a loyal customer base. Our mission is core to everything we do and a major driver of our success engaging and attracting customers employees and business partners our content creation.

Tom Davin: First, we are a mission-driven lifestyle brand with a loyal customer.

Tom Davin: Our mission is core to everything we do and a major driver of our success, engaging and attracting customers, employees, and business partners.

Tom Davin: Our content creation capability enables us to build a large and growing community who love interacting with our brand on a daily basis.

<unk> enables us to build a large and growing community, who love interacting with our brand on a daily basis.

Tom Davin: The support for our mission and our premium quality coffee drive exceptional customer retention and affinity for the brand, as evidenced by our category-leading net promoter score of 78. Second, we have a massive market opportunity. The US coffee market is over $45 billion, and we estimate our serviceable addressable market to be $28 billion. This includes 100 million US customers who are aligned with our brand values. Note that our $233 million in revenue last year equates to less than a 1% share of our serviceable addressable market. We are positioned for many years of sustained growth. Third, we have a powerful and proven omni-channel strategy to drive our growth. We are a digitally native coffee and merchandise business that enables us to participate in multiple complementary channels, creating branded experiences that deliver community, premium quality, convenience, and value.

Tom Davin: The support for our mission and our premium quality coffee drive exceptional customer retention and affinity for the brand, as evidenced by our category leading net promoter score of 78.

The support for our mission, our premium quality coffee drive exceptional customer retention and affinity for the brand as evidenced by our category, leading net promoter score of 78.

Tom Davin: Second, we have a massive market opportunity. The U.S. coffee market is over $45 billion, and we estimate our serviceable, addressable market to be $28 billion.

Second we have a massive market opportunity the U S coffee market is over $45 billion, and we estimate our serviceable addressable market to be 28 billion.

Tom Davin: This includes 100 million U.S. customers who are aligned with our brand value.

This includes 100 million U S customers, who are aligned with our brand values note that our $233 million in revenue last year, Kuwait to lessen a 1% share of our serviceable addressable market. So we are positioned for many years of sustained growth.

Tom Davin: Note that our $233 million in revenue last year equates to less than a 1% share of our serviceable, addressable market, so we are positioned for many years of sustained growth.

Third we have a powerful and proven omnichannel strategy to drive our growth.

Tom Davin: Third, we have a powerful and proven omni-channel strategy to drive our growth.

Tom Davin: We're a digitally native coffee and merchandise business that enables us to participate in multiple complimentary channels, creating branded experiences that deliver community, premium quality, convenience, and value. We achieve all of this across three primary channels, direct consumer.

Our digitally native coffee and merchandise business enables us to participate in multiple complementary channels, creating branded experiences that deliver community premium quality convenience and value. We achieve all of this across three primary channels direct consumer.

Tom Davin: We achieve all of this across three primary channels: direct-to-consumer, Outposts, and wholesale channels comprising our unique omni-channel flywheel. Looking forward to our Q1 and beyond, we remain focused on executing our growth initiatives to drive sustainable long-term growth. Prior to our offering, we were constrained in terms of capital, capacity, and leadership talent. As Evan mentioned, the public listing completed on 10 February addresses our capital constraint by adding $150 million to our balance sheet. On the capacity front, constraints have included ready-to-drink coffee capacity and coffee roasting capacity.

Outposts and wholesale channels, comprising our unique omnichannel flywheel looking forward to our first quarter and beyond we remain focused on executing our growth initiatives to drive sustainable long term growth prior to our offering we are constrained in terms of capital capacity and leadership down.

Tom Davin: outposts and wholesale channels comprising our unique omni-channel flywheel. Looking forward to our first quarter and beyond, we remain focused on executing our growth initiatives to drive sustainable, long-term growth.

Tom Davin: Prior to our offering, we were constrained in terms of capital, capacity, and leadership talent. As Evan mentioned, the public listing completed on February 10th addresses our capital constraint by adding $150 million to our balance.

As Evan mentioned the public listing completed on February 10th and dress SAR capital constrained by adding $150 million to our balance sheet on the capacity front constraints are included ready to drink coffee capacity and coffee roasting capacity.

Tom Davin: On the capacity front, constraints have included ready to drink coffee capacity and coffee roasting capacity.

Tom Davin: Ready-to-drink capacity commitments coming into 2022 gave us confidence we could achieve the level of sales we committed to, but did not allow us to fully meet accelerating demand for our ready-to-drink products. We are now in advanced discussions with several co-manufacturers that will enable us to more fully address product demand that is currently unmet. We expect to provide further updates on future earnings calls. Regarding coffee roasting capacity, similarly, we came into the year with enough owned coffee roasting capacity to achieve committed revenue targets, but lacked the ability to ramp up quickly if demand were to materialize with large food, drug, or mass accounts. Through a combination of capital investments in new owned roasting capacity and selected outsourced roasting capacity, we will now be able to respond to new opportunities as they arise.

Tom Davin: Ready to Drink capacity commitments coming into 2022 gave us confidence we could achieve the level of sales we committed to but did not allow us to fully meet accelerating demand for our Ready to Drink product.

Ready to drink capacity commitments coming into 2022 gave us confidence we can achieve the level of sales we committed to but did not allow us to fully meet accelerating demand for ready to drink products. We are now in advanced discussions with several co manufacturers that will enable us to more fully address <unk>.

Tom Davin: We are now in advanced discussions with several co-manufacturers that will enable us to more fully address product demand that is currently unmet.

Tech demand bins currently unmet.

Tom Davin: We expect to provide further updates on future earnings calls.

We expect to provide further updates on future earnings calls.

Tom Davin: Regarding coffee roasting capacity, similarly, we came into the year with enough owned coffee roasting capacity to achieve committed revenue targets, but lack the ability to ramp up quickly if demand were to materialize with large food, drug, or mass accounts.

Gardening coffee roasting capacity. Similarly, we came into the year with enough owned coffee roasting capacity to achieve committed revenue targets, but lack the ability to ramp up quickly if demand were to materialize with large food drug or mass accounts.

Tom Davin: Through a combination of capital investments and new owned roasting capacity and selected outsourced roasting capacity, we will now be able to respond to new opportunities as they arrive.

Through a combination of capital investments in new owned roasting capacity and selected outsource roasting capacity, we will now be able to respond to new opportunities as they arise.

Tom Davin: On the leadership front, we've added key senior leaders, including 10-year Starbucks veteran Heath Nielsen, who's our new Chief Retail Officer, accountable for all outpost development and operations. Addressing these constraints in the areas of capital, capacity, and leadership talent gives us confidence that we will execute our key strategic initiatives.

Tom Davin: On the leadership front, we've added key senior leaders, including 10-year Starbucks veteran, Heath Nielsen, who's our new Chief Retail Officer, accountable for all Outposts development and operations. Addressing these constraints in the areas of capital, capacity, and leadership talent gives us confidence that we will execute our key strategic initiatives. We are in the early stages of a multi-decade growth strategy led by our rapidly expanding community and leveraging our powerful omni-channel platform. Let's review our key drivers of growth, which consist of the following. One, we'll continue growing our direct-to-consumer business. The D2C business has been our core driver of growth to date in the approximately $4 billion US online coffee market. We will achieve predictable growth far into the future, given our more than 287,000 active and growing Coffee Club subscribers and low monthly churn of approximately 3% to 4%.

On the leadership front, we've added key senior leaders, including 10 year, Starbucks veteran Heath Nielsen Who's our new Chief retail officer accountable for all out post development and operations addressing these constraints in the areas of capital capacity and leadership talent gives us confidence that we will execute.

Our key strategic initiatives.

We were in the early stages of a multi decade growth strategy led by our rapidly expanding community and leveraging our powerful omni channel platform, Let's review our key drivers of growth, which consist of the following one will continue growing our direct to consumer business. The D to C business has been our core.

Tom Davin: We are in the early stages of a multi-decade growth strategy led by a rapidly expanding community and leveraging our powerful omni-channel platform. Let's review our key drivers of growth, which consist of the following. One, we'll continue growing our direct-to-consumer business. The D2C business has been our core driver of growth to date in the approximately $4 billion U.S. online coffee market.

Driver of growth today, and the approximately 4 billion dollar U S online coffee market, we will achieve predictable growth far into the future given our more than 287000 active and growing coffee club subscribers and low monthly churn of approximately 3% to 4% as Evan mentioned.

Tom Davin: We will achieve predictable growth far into the future, given our more than 287,000 active and growing Coffee Club subscribers and low monthly churn of approximately 3 to 4 percent.

Tom Davin: As Evan mentioned, our aided brand awareness is still below 20% nationally. This further illustrates that we have meaningful brand-building opportunity where our omni-channel growth model will enhance awareness and drive penetration. Number two, we are expanding our experiential retail strategy to capitalize on the significant opportunity we see ahead due to our superior unit economics and white space for growth. Our Outposts are redefining the brand experience by inviting our community members to engage with us on a personal and daily basis. Our Outposts offer high-margin beverages for immediate consumption, with bagged coffee and merchandise sales that drive average unit volumes, or AUVs, that are among the highest in the coffee and QSR segments. In 2021 last year, we made the decision to further enhance the brand experience by shifting our shop development strategy from primarily conversions to ground-up prototype shop builds whenever possible.

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Tom Davin: Our aided brand awareness is still below 20% nationally. This further illustrates that we have meaningful brand building opportunity where our omni-channel growth model will enhance awareness and drive penetration. Number two, we are expanding our experiential retail strategy to capitalize on the significant opportunity we see ahead due to our superior unit economics and white space for growth.

Our aided brand awareness is still below 20% nationally. This further illustrates that we have meaningful brand building opportunity, where our omnichannel growth model will enhance awareness and drive penetration number two we are expanding our experiential retail strategy to capitalize on the significant opportunity. We see ahead due to our suite.

<unk> unit economics, and white space for growth are.

Tom Davin: Our outposts are redefining the brand experience by inviting our community members to engage with us on a personal and daily basis.

Our outposts are redefining the Brian experience by inviting our community members to engage with us on a personal and daily basis, our outposts offer high margin beverages for immediate consumption with bagged coffee and merchandize sales that drive average unit volumes or a U vs that are among the highest in.

Tom Davin: Our outposts offer high-margin beverages for immediate consumption with bagged coffee and merchandise sales that drive average unit volumes or AUVs that are among the highest in the coffee and QSR segment.

And a coffee and <unk> segments.

Tom Davin: In 2021, last year, we made the decision to further enhance the brand experience by shifting our shop development strategy from primarily conversions to ground-up prototype shop builds whenever possible.

In 2021 last year, we made the decision a further enhanced the brand experience by shifting our shop development strategy from primarily conversions to ground up prototype shop builds whenever possible.

Tom Davin: This strategic shift has delayed our pipeline of new shop openings by several months, though we are excited about the new prototype because it creates a more immersive consumer experience. Beginning in Q2, more than 80% of all new locations will be our redesigned prototype. We are highly confident with our guidance of 15 to 20 new company stores or shops in 2022, compared with seven company-owned outposts in 2021. The majority of our new outpost openings will be in our Q4, with one shop opening during each of Q1, and Q2. More than half of the shops will open in the state of Texas, with our Q1 opening being the first outpost in Houston. Number three, we are rapidly scaling our ready-to-drink business.

This strategic shift has delayed our pipeline of new shop openings by several months, but we're excited about the new prototype because it creates a more immersive consumer experience.

Tom Davin: Beginning in Q2, more than 80% of all new locations will be our redesigned prototype.

Beginning in Q2 more than 80% of all new locations. We are redesigned prototype we are highly confident with our guidance of 15 to 20, New company stores of shops in 2020 two compared with seven company owned outposts in 2021 .

Tom Davin: We are highly confident with our guidance of 15 to 20 new company stores or shops in 2022 compared with seven company owned outposts in 2021.

Tom Davin: The majority of our new outpost openings will be in our fourth quarter with one shop opening during each of Q1 and Q2. More than half of the shops will open in the state of Texas with our Q1 opening being the first outpost in Houston.

The majority of our new outpost openings will be in our fourth quarter with one shop opening during each of Q1 and Q2.

More than half of the shops will open in the state of Texas with our Q1 opening being the first outpost in Houston.

Number three we are rapidly scaling our ready to drink business. This has grown to be a top four brand in convenience stores and just 24 months and this over $4 billion U S. RTD coffee segment at.

Tom Davin: Number three, we are rapidly scaling our ready-to-drink business. This is growing to be a top four brand in convenience stores in just 24 months in this over four billion dollar U.S. RTD coffee segment.

Tom Davin: This is growing to be a top four brand in convenience stores in just 24 months in this over $4 billion US RTD coffee segment. At the end of 2021, our ready-to-drink portfolio, which was comprised of 4 SKUs, was available in more than 42,000 doors or locations across the US. We finished 2021 with less than 25% penetration in convenience stores, but at the same time, we've achieved more than 90% distribution coverage of the US, priming the business for further growth. We plan to build on the momentum in our ready-to-drink business by expanding our points of distribution and adding additional SKUs. We see potential well beyond our 2022 year-end goal of 75,000 doors, given the much larger universe of 375,000 total doors across convenience stores, food, drug, and mass locations.

Tom Davin: At the end of 2021, our Ready to Drink portfolio, which was comprised of four SKUs, was available in more than 42,000 doors or locations across the U.S.

At the end of 2021 a ready to drink portfolio, which was comprised of four skus was available in more than 42000 doors or locations across the U S.

Tom Davin: We finished 2021 with less than 25% penetration in convenience stores.

We finished 2021 with less than 25% penetration in convenience stores, but at the same time, we've achieved more than 90% distribution coverage in the U S. Priming the business for further growth we plan to build on the momentum in our ready to drink business by expanding our points of distribution and adding <unk>.

Tom Davin: but at the same time we've achieved more than 90% distribution coverage in the U.S.

Tom Davin: priming the business for further growth. We plan to build on the momentum in our rated drink business by expanding our points of distribution and adding additional SKUs.

Additional S skus, we see potential well beyond our 2022 year end goal of 75000 doors, given a much larger universe of 375000 total doors cross convenience stores food drug and mass locations.

Tom Davin: We see potential well beyond our 2022 year-end goal of 75,000 doors, given the much larger universe of 375,000 total doors.

Tom Davin: across convenience stores, food, drug, and mass locations.

Tom Davin: We will continue to expand our retail footprint with more than 30 newly secured partnerships that we are activating early this year.

Tom Davin: We will continue to expand our retail footprint with more than 30 newly secured partnerships that we are activating early this year. We plan to build on our portfolio of products from our four SKUs by adding one or two new SKUs during this year, with incremental opportunities longer term. We are also increasing our wholesale partnership distribution in the outdoor, do-it-yourself, and lifestyle retail chains. We are rapidly expanding our retail reach through our unique coffee products and merchandise. These outlets and partnerships emphasize, complement, and highlight our mission while providing us with strong lifestyle branding opportunities. Finally, I'd like to address our pricing outlook. Entering 2022, we are keenly aware of inflationary pressures in our cost of goods sold line, such as the price of green coffee and parcel shipping costs. We anticipate additional cost pressures throughout the year, given the current macroeconomic environment.

We will continue to expand our retail footprint with more than 30 newly secured partnerships that we're activating early this year, we plan to build on our portfolio products Thomas for S. Skus by adding one or two new skus during this year with incremental opportunities longer term.

Tom Davin: We plan to build on our portfolio products from our four SKUs by adding one or two new SKUs during this year with incremental opportunities longer term.

Tom Davin: We're also increasing our wholesale partnership distribution in the outdoor, do-it-yourself, and lifestyle retail.

We're also increasing our wholesale partnership distribution in the outdoor do it yourself and lifestyle retail chains, we are rapidly expanding our retail reach through our unique coffee products and merchandise. These.

Tom Davin: We are rapidly expanding our retail reach through our unique coffee products and merchandise.

Tom Davin: These outlets and partnerships emphasize, compliment, and highlight our mission while providing us with strong lifestyle branding opportunities.

These outlets and partnerships emphasize complement and highlight our mission, while providing us with strong lifestyle branding opportunities.

Finally, I'd like to address our pricing outlook.

Tom Davin: Entering 2022, we are keenly aware of inflationary pressures and our cost of goods sold.

Entering 2022 we are keenly aware of inflationary pressures in our cost of goods sold line such as the price of Green coffee and parcel shipping costs, we anticipate additional cost pressures throughout the year given the current macroeconomic environment.

Tom Davin: such as the price of green coffee and parcel shipping.

Tom Davin: We anticipate additional cost pressures throughout the year given the current macroeconomic environment.

Tom Davin: We have already taken pricing in several key areas, including core coffee products, direct-to-consumer shipping costs, drink pricing, and our outposts.

Tom Davin: We have already taken pricing in several key areas, including core coffee products, direct-to-consumer shipping costs, drink pricing at our Outposts. We've also announced ready-to-drink coffee pricing increases, and we are evaluating additional pricing actions across our portfolio, which we believe are appropriate given our premium positioning. We will seek to always find the right balance between serving our customers while offsetting cost increases. In conclusion, we're in the early years of a multi-decade growth strategy powered by our omni-channel flywheel model. I will now turn the call over to Greg Iverson to discuss our Q4 financial performance in more detail. He will also provide you with an outlook for the balance of 2022.

We have already taken pricing in several key areas, including core coffee products direct to consumer shipping costs drink pricing at our outposts. We've also announced ready to drink coffee pricing increases and we are evaluating additional pricing actions across our portfolio, which we believe are.

Tom Davin: We've also announced ready-to-drink coffee pricing increases, and we are evaluating additional pricing actions across our portfolio, which we believe are appropriate given our premium position.

For it given our premium positioning we will seek to always find the right balance between serving our customers well offsetting cost increases in conclusion. We are in the early years of a multi decade growth strategy powered by our Omnichannel flywheel model.

Tom Davin: We will seek to always find the right balance between serving our customers while offsetting cost increases. In conclusion, we're in the early years of a multi-decade growth strategy powered by our omni-channel flywheel model.

Tom Davin: I will now turn the call over to Greg Iverson to discuss our fourth quarter financial performance in more detail. He will also provide you with an outlook for the balance of 2022.

I'll now turn the call over to Greg Iverson to discuss our fourth quarter financial performance in more detail. He will also provide you with an outlook for the balance of 2022.

Greg Iverson: Thanks, Tom, and good morning, everyone. Today, I will discuss our 2021 Q4 and full year results, briefly touch on our balance sheet following our SPAC merger, and then update you on our fiscal year 2022 outlook. Turning first to our financial results, we are pleased to have delivered solid results in the Q4 and full year 2021 as we continue to make progress across all three of our sales channels. For the Q4, total revenue increased 20% to $71.8 million, compared to $59.9 million in Q4 of last year. For the full year, our total revenue grew by 42% to $233.1 million.

Thanks, Tom and good morning, everyone today, I will discuss our 2021 fourth quarter and full year results briefly touch on our balance sheet. Following our spak merger and then update you on our fiscal year 2022 outlook.

Greg Iverson: Today, I will discuss our 2021 fourth quarter and full year results, briefly touch on our balance sheet following our SPAC merger, and then update you on our fiscal year 2022 outlook.

Greg Iverson: Turning first to our financial results, we are pleased to have delivered solid results in the fourth quarter and full year 2021 as we continue to make progress across all three of our sales.

Turning first to our financial results. We're pleased to have delivered solid results in the fourth quarter and full year 2021 as we continued to make progress across all three of our sales channels for.

Greg Iverson: For the fourth quarter, total revenue increased 20% to $71.8 million compared to $59.9 million in Q4 of last year.

For the fourth quarter total revenue increased 20% to 71.8 million compared to 59.9 million in Q4 of last year.

Greg Iverson: For the full year, our total revenue grew by 42% to $233.1 million.

For the full year, our total revenue grew by 42% to $233 1 million.

Greg Iverson: The meaningful increase in revenue was driven by growth across all three of our sales channels, most notably our wholesale and Outpost channels, which continued their impressive growth in 2021 by 139% and 325% respectively. Now I will give some additional details on our three sales channels. First, our direct-to-consumer revenue increased 3% in Q4 to $49.6 million compared to $48.3 million last year. The slight increase was a result of comping against a prior year period with unprecedented consumer demand when most consumers were stuck at home during the COVID pandemic. To give some context, Q4 2020 direct-to-consumer revenues were up 78% compared to Q4 2019.

The meaningful increase in revenue was driven by growth across all three of our sales channels, most notably our wholesale an outpost channels, which continued their impressive growth in 2020 , one by 139% and 325% respectively.

Greg Iverson: The meaningful increase in revenue was driven by growth across all three of our sales channels, most notably our wholesale and outpost channels, which continued their impressive growth in 2021 by 139% and 325% respectively. Now I will give some additional details.

Now I will give some additional details on our three sales channels.

Greg Iverson: First, our direct consumer revenue increased 3% in the fourth quarter to $49.6 million compared to $48.3 million last quarter.

First our direct to consumer revenue increased 3% in the fourth quarter to $49.6 million compared to $48.3 million last year.

Greg Iverson: The slight increase was a result of comping against a prior year period with unprecedented consumer demand when most consumers were stuck at home during the COVID pandemic.

The slight increase was the result of Comping against a prior year period with unprecedented consumer demand when most consumers were stuck at home during the Covid pandemic.

Greg Iverson: To give some context, Q4 2020 direct-to-consumer revenues were up 78% compared to Q4 2019. For the full year 2021, our direct-to-consumer channel increased by 27.6 million, or 20%, to 165.3 million, due principally to an increase in the number of our Coffee Club subscribers.

To give some context Q4, 'twenty 'twenty direct to consumer revenues were up 78% compared to Q4 2019 for the full year 2021 our direct to consumer channel increased by $27.6 million or 20% to 165.3 million due principally to an <unk>.

Greg Iverson: For the full year 2021, our direct-to-consumer channel increased by $27.6 million or 20% to $165.3 million, due principally to an increase in the number of our Coffee Club subscribers. Our subscriber base grew 14% in 2021 to 287,000 subscribers compared to 252,000 at the end of 2020. Our wholesale revenue increased 74% to $17.2 million in Q4 compared to $9.9 million last year. For the full year 2021, we saw wholesale revenue increase $32.4 million or 139%, bringing our total wholesale revenue to $55.8 million.

Increase in the number of our coffee club subscribers.

Greg Iverson: Our subscriber base grew 14% in 2021 to 287,000 subscribers compared to 252,000 at the end of 2020.

Our subscriber base grew 14% in 2021 to 287000 subscribers compared to 252000 at the end of 'twenty 'twenty, our wholesale revenue increased 74% to 17.2 million in Q4 compared to 9.9 million last year.

Greg Iverson: Our wholesale revenue increased 74% to $17.2 million in Q4 compared to $9.9 million last

Greg Iverson: For the full year 2021, we saw wholesale revenue increase $32.4 million, or 139%, bringing our total wholesale revenue to $55.8 million.

For the full year 2021 we saw wholesale revenue increased $32.4 million or 139%, bringing our total wholesale revenue to 55.8 million.

Greg Iverson: The increase was primarily driven by growth in our RTD product, which ended the year in over 42,000 doors, with all four SKUs ranked in the top 25 in both C-store and food, drug, and mass. Demand for our RTD products is now well above what we will be able to supply with our existing co-manufacturer. Our supply chain team has been working to secure production capacity from several co-manufacturers, and we are close to finalizing terms which we believe will be the foundation for lasting partnerships and scalable increased supply. Before moving to Outposts, I wanna be clear that the committed production from our existing supplier meets the RTD volume assumptions in our 2022 outlook that I will discuss shortly. Any additional production we secure as a result of adding new co-manufacturers will be upside to our 22 outlook.

Greg Iverson: The increase was primarily driven by growth in our RTD product, which ended the year in over 42,000 doors with all four SKUs ranked in the top 25 in both C-Store and Food, Drug and Mass.

The increase was primarily driven by growth in our RTD product, which ended the year in over 42000 doors with all four skus ranked in the top 25 in both C store and food drug and mass does.

Greg Iverson: Demand for our RTD products is now well above what we will be able to supply with our existing co-manufacturers.

Demand for our RTD products is now well above what we will be able to supply with our existing co manufacturer.

Our supply chain team has been working to secure production capacity from several co manufacturers and we are close to finalizing terms, which we believe will be the foundation for lasting partnerships and scalable increased supply.

Greg Iverson: Our supply chain team has been working to secure production capacity from several co-manufacturers, and we are close to finalizing terms which we believe will be the foundation for lasting partnerships and scalable increased supply.

Greg Iverson: Before moving to outposts, I want to be clear that the committed production for our existing supplier meets the RTD volume assumptions in our 2022 outlook that I will discuss shortly.

Before moving to outposts I want to be clear that the committed production for our existing supplier meets the RTD volume assumptions in our 2022 outlook that I will discuss shortly.

Any additional production we secure as a result of adding new co manufacturers will be upside to our 22 outlook.

Greg Iverson: Any additional production we secure as a result of adding new co-manufacturers will be upside to our 22 outlets.

Next I'll discuss outposts, where revenue increased 181% to 5.1 million in Q4 compared to 1.8 million last year outpaced revenue growth throughout 2021 increased 9.2 million or 325% to $12 million compared to 2.8 million for 'twenty 'twenty.

Greg Iverson: Next, I'll discuss Outposts, where revenue increased 181% to $5.1 million in Q4 compared to $1.8 million last year. Outpost revenue growth throughout 2021 increased $9.2 million or 325% to $12 million, compared to $2.8 million for 2020. Throughout 2021, we opened a total of 7 new company-owned stores in Texas, Tennessee, and Utah, bringing our total number of Outposts to 16, with 8 company-owned stores and 8 franchise stores. Overall, demand for our products across all three channels remained robust throughout 2021, and we have continued to see our omni-channel approach pay off with the tremendous growth in our wholesale and Outpost channels.

Greg Iverson: Next I'll discuss Outposts, where revenue increased 181% to $5.1 million in Q4, compared to $1.8 million last year. Outposts revenue growth throughout 2021 increased $9.2 million, or 325% to $12 million, compared to $2.8 million for 2020.

Throughout 2021 we opened a total of seven new company owned stores in Texas, Tennessee, and Utah, bringing our total number of outpost to 16 with eight company owned stores and eight franchise stores.

Greg Iverson: Throughout 2021, we opened a total of seven new company-owned stores in Texas, Tennessee, and Utah, bringing our total number of outposts to 16, with eight company-owned stores and eight franchise stores.

Greg Iverson: Overall, demand for our products across all three channels remained robust throughout 2021, and we have continued to see our omni-channel approach pay off with the tremendous growth in our wholesale and outpost channels.

Overall demand for our products across all three channels remained robust throughout 2021 and we have continued to see our omnichannel approach pay off with the tremendous growth in our wholesale and outpost channels.

Greg Iverson: Throughout 2021, we invested heavily in personnel and corporate infrastructure to ensure that we are well-positioned to capitalize on the demand within all three of our channels and the significant opportunities ahead. Turning to our profitability, our Q4 gross margin was 34.3%, decreasing 570 basis points from 40% in Q4 of last year. For the full year 2021, our gross margins came in at 38.5%, a decrease of 380 basis points from 42.3 in 2020. The decrease was driven by inflationary pressures, as well as product mix shift, as RTD has higher product costs and lower gross margins as compared to bagged coffee in our D2C channel. In addition, shipping costs negatively impacted our Q4 gross margins due to carrier rate increases, including seasonal surcharges.

Greg Iverson: Throughout 2021, we invested heavily in personnel and corporate infrastructure to ensure that we are well positioned to capitalize on the demand within all three of our channels and the significant opportunities ahead.

Throughout 2021 we invested heavily in personnel and corporate infrastructure to ensure that we are well positioned to capitalize on the demand within all three of our channels and the significant opportunities ahead.

Greg Iverson: Turning to our profitability, our Q4 gross margin was 34.3%, decreasing 570 basis points from 40% in Q4 of last year.

Turning to our profitability. Our Q4 gross margin was 34.3% decreasing 570 basis points from 40% in Q4 of last year.

Greg Iverson: For the full year 2021, our gross margins came in at 38.5 percent, a decrease of 380 basis points from 42.3 in 2020.

For the full year 2021 our gross margins came in at 38.5% a decrease of 380 basis points from 42.3 and 'twenty 'twenty.

The decrease was driven by inflationary pressures as well as product mix shift as our T. D has higher product costs and lower gross margins as compared to bag coffee in our D to C channel.

Greg Iverson: The decrease was driven by inflationary pressures as well as product mix shift as RTD has higher product costs and lower gross margins as compared to bad coffee in our D to C channel.

In addition shipping costs negatively impacted our Q4 gross margins due to carrier rate increases, including seasonal surcharges <unk>.

Greg Iverson: In addition, shipping costs negatively impacted our Q4 gross margins due to carrier rate increases, including seasonal surcharges.

Greg Iverson: Additionally, we incurred expedited shipping charges across all sales channels to ensure our products reach customers during the peak holiday season. We have taken action across multiple fronts to combat the cost inflation we are seeing. In Q4, we began working with an internationally recognized operational consulting firm, and with their help, we've identified material cost savings opportunities in freight, sourcing, and packaging. In addition, as Tom mentioned, we are executing plans to take price in line with our competitors across our product portfolio. We implemented some of these price actions in Q1 of 2022 and are phasing in the remaining actions over the coming weeks. You will see the impact of these actions flow through our P&L throughout 2022, and as a result, we expect our margins will improve sequentially throughout the year.

Greg Iverson: Additionally, we incurred expedited shipping charges across all sales channels to ensure our products reach customers during the peak holiday season.

Additionally, we incurred expedited shipping charges across all sales channels to ensure our products reach customers during the peak holiday season.

We have taken action across multiple fronts to combat the cost inflation, we are seeing in.

Greg Iverson: We have taken action across multiple fronts to combat the cost inflation we are seeing.

In Q4, we began working with an internationally recognized operational consulting firm and with their help we've identified material cost savings opportunities in freight sourcing and packaging.

Greg Iverson: In Q4, we began working with an internationally recognized operational consulting firm and with their help, we've identified material cost savings opportunities in freight, sourcing, and packaging.

Greg Iverson: In addition, as Tom mentioned, we are executing plans to take price in line with our competitors across our product portfolio.

In addition, as Tom mentioned, we are executing plans to take price in line with our competitors across our product portfolio.

Greg Iverson: We implemented some of these price actions in Q1 of 2022 and are phasing in the remaining actions over the coming week.

We implemented some of these price actions in Q1 of 2022 and are phasing in the remaining actions over the coming weeks you will see the impact of these actions flow through our P&L throughout 2022 and as a result, we expect our margins will improve sequentially throughout the year.

Greg Iverson: You will see the impact of these actions flow through our P&L throughout 2022, and as a result we expect our margins will improve sequentially throughout the year.

Greg Iverson: As a percentage of sales, our operating expenses during Q4 increased by approximately 230 basis points to 40% as compared to last year.

As a percentage of sales our operating expenses during Q4 increased by approximately 230 basis points to 40% as compared to last year.

Greg Iverson: As a percentage of sales, our operating expenses during Q4 increased by approximately 230 basis points to 40% as compared to last year. For the full year, we saw our operating expenses increase 43.4% of sales, up 460 basis points from 2020. I will walk through the drivers of these increases, beginning with marketing and advertising. For Q4 2021, marketing expenses increased 5.8% to $11.1 million from $10.5 million in Q4 2020. As a percentage of sales, marketing decreased by approximately 210 basis points to 15.4% compared to the same quarter last year.

Greg Iverson: For the full year, we saw our operating expenses increase 43.4% of sales, up 460 basis points from 2020.

For the full year, we saw our operating expenses increased 43.4% of sales up 460 basis points from 2020.

Greg Iverson: I will walk through the drivers of these increases beginning with marketing and advertising.

I will walk through the drivers of these increases beginning with marketing and advertising.

For the fourth quarter of 2021 marketing expenses increased 5.8% to 11.1 million from 10.5 million in the fourth quarter of 'twenty 'twenty.

Greg Iverson: For the fourth quarter of 2021, marketing expenses increased 5.8% to $11.1 million from $10.5 million in the fourth quarter of 2020.

Greg Iverson: As a percentage of sales, marketing decreased by approximately 210 basis points to 15.4% compared to the same quarter last year.

As a percentage of sales and marketing decreased by approximately 210 basis points to 15, 4% compared to the same quarter last year.

Greg Iverson: For the full year 2021, our marketing expenses increased 42.5% to $36.4 million compared to $25.5 million in 2020. The increase was driven by outreach to strengthen our brand awareness, and increase costs with our in-house production of content. Additionally, similar to others, we've seen increased costs and lower effectiveness related to our digital ad spend. Salaries, wages, and benefits expenses for Q4 2021 increased 9.9% to $9 million from $8.2 million in Q4 2020. As a percentage of revenue, it decreased by approximately 120 basis points to 12.5% compared to 13.7% last year. For the year, salaries, wages, and benefits increased 60% to $38.7 million compared to our $24.2 million for 2020.

For the full year 2021 our marketing expenses increased 42.5% to $36 4 million compared to $25.5 million in 'twenty 'twenty the increase.

Greg Iverson: For the full year 2021, our marketing expenses increased 42.5% to $36.4 million compared to $25.5 million in 2020.

Greg Iverson: The increase was driven by outreach to strengthen our brand awareness and increase costs with our in-house production of content.

It was driven by Outreached to strengthen our brand awareness and increased costs with our in house production of content.

Additionally, similar to others, we've seen increased costs and lower effectiveness related to our digital ad spend.

Greg Iverson: Additionally, similar to others, we've seen increased costs and lower effectiveness related to our digital ads.

Greg Iverson: Salaries, wages, and benefits expenses for the fourth quarter of 2021 increased 9.9 percent to $9 million from $8.2 million in the fourth quarter of 2020.

Salaries wages and benefits expenses for the fourth quarter of 2021 increased 9.9% to 9 million from $8 2 million in the fourth quarter of 2020.

Greg Iverson: As a percentage of revenue, it decreased by approximately 120 basis points to 12.5 percent compared to 13.7 percent last year.

As a percentage of revenue it decreased by approximately 120 basis points to 12.5% compared to 13.7% last year.

For the year salaries wages and benefits increased 60% to $38.7 million compared to our $24 2 million for 'twenty 'twenty.

Greg Iverson: For the year, salaries, wages, and benefits increased 60% to $38.7 million compared to our $24.2 million for 2020.

Greg Iverson: The increase was driven by employee headcount to support our significant sales growth.

Greg Iverson: The increase was driven by employee headcount to support our significant sales growth. We've invested heavily in building out our management teams, particularly within our Outposts and wholesale sales channels. Additionally, a large portion of our Outposts cost structure is included in the salaries, wages, and benefits line, as we typically bring on 35 to 40 new employees for each Outpost opening. G&A expenses increased 120.5% to $8.7 million compared to $3.9 million in Q4 2020. As a percentage of revenue, G&A increased by approximately 550 basis points to 12.1% of revenue compared to 6.6% last year. For the full year, G&A increased 88% to $26.2 million compared to $13.9 million for the same period in 2020.

The increase was driven by employee head count to support our significant sales growth.

Greg Iverson: We've invested heavily in building out our management teams, particularly within our outposts and wholesale sales channels.

We've invested heavily in building out our management teams, particularly within our outpost in wholesale sales channels. Additionally.

Greg Iverson: Additionally, a large portion of our outpost cost structure is included in the salaries, wages, and benefits line, as we typically bring on 35 to 40 new employees for each outpost open.

Additionally, a large portion of our outpost cost structure is included in the salaries wages and benefits line as we typically bring on 35 to 40, new employees for each hour post opening G&A expenses increased 120.5% to $8 7 million compared to 3.9 million in the fourth quarter of 2020.

Greg Iverson: G&A expenses increased 120.5% to $8.7 million compared to $3.9 million in the fourth quarter of 2020.

Greg Iverson: As a percentage of revenue, G&A increased by approximately 550 basis points to 12.1% of revenue, compared to 6.6% last year.

As a percentage of revenue G&A increased by approximately 550 basis points to 12, 1% of revenue compared to 6.6% last year.

Greg Iverson: For the full year, GNA increased 88% to 26.2 million compared to 13.9 million for the same period in 2020.

For the full year, G&A increased 88% to $26 2 million compared to 13.9 million for the same period in 2020.

Greg Iverson: This increase was driven by investments in corporate infrastructure, including technology, to support the growth of our business across multiple channels, as well as direct G&A for our new outposts, including occupancy and related expenses.

Greg Iverson: This increase was driven by investments in corporate infrastructure, including technology to support the growth of our business across multiple channels, as well as direct G&A for our new Outposts, including occupancy and related expenses. In addition to the GAAP measures I have just mentioned, adjusted EBITDA is an important profitability measure that we use to manage our business internally. For the quarter, adjusted EBITDA was -$278,000 compared to adjusted EBITDA of $2.5 million in 2020. For the year, we reported $768,000 of adjusted EBITDA compared to $11.9 million a year earlier. This decrease was primarily due to increased spending to scale and rapidly grow our multiple sales channels. Now I'll briefly touch on our pro forma balance sheet following our SPAC merger on 9 February.

This increase was driven by investments in corporate infrastructure, including technology to support the growth of our business across multiple channels as well as direct G&A for a new outposts, including occupancy and related expenses.

In addition to the GAAP measures I have just mentioned adjusted EBITDA is an important profitability measure that we use to manage our business internally.

Greg Iverson: In addition to the GAAP measures I have just mentioned, adjusted EBITDA is an important profitability measure that we use to manage our business internally.

Greg Iverson: For the quarter, Adjusted EBITDA was a loss of $278,000 compared to Adjusted EBITDA of $2.5 million in 2020.

For the quarter adjusted EBITDA was a loss of 278000 compared to adjusted EBITDA of $2.5 million in 2020.

Greg Iverson: For the year, we reported $768,000 of adjusted EBITDA compared to $11.9 million a year earlier. This decrease was primarily due to increased spending to scale and rapidly grow our multiple sales channels.

For the year, we reported 768000 of adjusted EBITDA compared to 11.9 million a year earlier. This decrease was primarily due to increased spending to scale and rapidly grow our multiple sales channels.

Speaker Change: Now I'll briefly touch on our pro forma balance sheet following our SPAC merger on February 9th. As a reminder, we raised $376 million of gross proceeds, providing us $150 million of cash to our balance sheet.

Now I will briefly touch on our pro forma balance sheet. Following our spak merger on February 9th as a reminder, we raised 376 million of gross proceeds providing us $150 million of cash to our balance sheet.

Greg Iverson: As a reminder, we raised $376 million of gross proceeds, providing us $150 million of cash to our balance sheet. These funds will be paramount in helping Black Rifle continue our growth within all three sales channels, but specifically to fund the growth of our company-owned Outposts and increase our coffee roasting capacity. Now I will share more details on our outlook for 2022. For the full year, we expect to generate revenues of $315 million, which is slightly more than we expected when we shared our forecast in Q4 of last year. We also plan on opening between 15 and 20 company-owned Outposts in 2022. Through the implementation of pricing actions as well as productivity initiatives to combat inflationary pressures, we are expecting adjusted EBITDA to be slightly positive in 2022.

Speaker Change: These funds will be paramount in helping Black Rifle continue our growth within all three sales channels, but specifically to fund the growth of our company-owned outposts and increase our coffee roasting capacity. Now, I will share more details on our outlook for 2022.

These funds will be Paramount in helping black rifle continue our growth within all three sales channels, but specifically to fund the growth of our company owned outposts and increase our coffee roasting capacity now I will share more details on our outlook for 2022 .

Speaker Change: For the full year, we expect to generate revenues of $315 million, which is slightly more than we expected when we shared our forecast in Q4 of last year. We also plan on opening between 15 and 20 company-owned outposts in 2022. Through the implementation of pricing actions, as well as productivity initiatives to combat inflationary pressures, we are expecting adjusted EBITDA to be slightly positive in 2022.

For the full year, we expect to generate revenues of $315 million, which is slightly more than we expected when we shared our forecast in Q4 of last year. We also plan on opening between 15 and 20 company owned outposts in 2022 through the implementation of pricing actions as well as productivity initiatives to combat inflationary.

<unk>, we're expecting adjusted EBITDA to be slightly positive in 2022.

While building a highly profitable business is very important to us given the material demand, we're seeing for our brand and its products. We feel it's critical to invest to build the infrastructure and capabilities needed to meet demand.

Greg Iverson: While building a highly profitable business is very important to us, given the material demand we are seeing for our brand and its products, we feel it's critical to invest to build the infrastructure and capabilities needed to meet demand. As such, we are choosing to make investments that will constrain our profitability in the short term. We believe our business model is sound and will result in strong levels of EBITDA and cash flow once our foundation for growth has been built. While we are not providing quarterly guidance, we thought it would be helpful to provide some color on cadence throughout 2022. Specifically, we expect revenue growth to accelerate sequentially every quarter during the year. The three primary drivers of the revenue growth acceleration are, first, the rapid growth in sales of our RTD product in our wholesale channel.

Speaker Change: While building a highly profitable business is very important to us, given the material demand we are seeing for our brand and its products, we feel it's critical to invest to build the infrastructure and capabilities needed to meet demand.

Speaker Change: As such, we are choosing to make investments that will constrain our profitability in the short term. We believe our business model is sound and will result in strong levels of EBITDA and cash flow once our foundation for growth has been built. While we are not providing quarterly guidance, we thought it would be helpful to provide some color on cadence throughout 2022.

As such we are choosing to make investments that will constrain our profitability in the short term. We believe our business model is sound and will result in strong levels of EBITDA and cash flow. Once our foundation for growth has been built while we're not providing quarterly guidance. We thought it would be helpful to provide some color on cadence throughout 2022 specifically.

Speaker Change: And specifically, we expect revenue growth to accelerate sequentially every quarter during the year.

We expect revenue growth to accelerate sequentially every quarter during the year.

Speaker Change: The three primary drivers of the revenue growth acceleration are first, the rapid growth and sales of our RTD product in our wholesale channel.

The three primary drivers of the revenue growth acceleration are first the rapid growth in sales of our arkady product in our wholesale channel second and I'll post opening schedule that is heavily weighted to the back half of the year and especially the fourth quarter and third the phase in of our pricing initiatives on profitability Q.

Speaker Change: Second, an outpost opening schedule that is heavily weighted to the back half of the year, and especially the fourth quarter. And third, the phase-in of our pricing initiatives. On profitability, Q1 gross margin will be comparable to that of Q4 2021.

Greg Iverson: Second, an Outpost opening schedule that is heavily weighted to H2, and especially Q4. Third, the phase-in of our pricing initiatives. On profitability, Q1 gross margin will be comparable to that of Q4 2021. Just like revenue growth, we expect gross margin to improve sequentially each quarter during 2022 as our pricing and productivity and actions increasingly deliver benefits. Similarly, while Q1 2022 Adjusted EBITDA will be negative, we anticipate sequential improvements throughout the year. With that, I will turn the call over to the operator for questions.

<unk> gross margin will be comparable to that of Q4 2021 .

Speaker Change: Just like revenue growth, we expect gross margin to improve sequentially each quarter during 2022 as our pricing and productivity actions increasingly deliver benefits.

Just like revenue growth, we expect gross margin to improve sequentially each quarter during 2022 as our pricing and productivity and actions increasingly deliver benefits.

Speaker Change: Similarly, while Q1 2022 adjusted EBITDA will be negative, we anticipate sequential improvements throughout the year. With that, I will turn the call

Similarly, while Q1 2022 adjusted EBITDA will be negative we anticipate sequential improvements throughout the year.

With that I will turn the call over to the operator for questions.

Thank you we will now be conducting a question and answer session.

Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question and one follow-up question. One moment please while we poll for your questions. Our first question has come from the line of Joe Altobello with Raymond James. Please proceed with your questions.

To ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, we ask that you. Please limit yourself to one question and one follow up question. One moment. Please while we poll for your questions.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start.

Speaker Change: We ask that you please limit yourself to one question and one follow-up question. One moment, please, while we poll for your question.

Our first question is coming from the line of Joe <unk> with Raymond James. Please proceed with your questions.

Speaker Change: Our first questions come from the line of Joe Altobello with Raymond James. Please proceed with your question.

Joe Altobello: Thanks. Hey guys, good morning. Congratulations. First question, not surprisingly, on gross margin and Q4, could you point out for us how much of the weakness was from product and channel mix and how much was from cost inflation?

Joe Altobello: Thanks. Hey, guys. Good morning. Congratulations. First question, not surprisingly on gross margin in Q4. Could you parse out for us how much of the weakness was from product and channel mix, and how much it was from cost inflation?

Hey, guys good morning congratulations.

First question not surprisingly on gross margin in Q4.

Can you parse out for us how much of the weakness was from product and channel mix and how much was from from cost inflation.

Joe Altobello: Yeah, you bet, Joe. It's Greg Iverson. Good morning. Glad to be on our first public company earnings call with you today. But yeah, just breaking down at a high level the significant factors that drove the decrease in our Q4 margin year over year. The first one is inflation, which was the largest in the aggregate. It was about 400 basis points. And that's comprised of both shipping.

Yeah, you bet, Joe its Greg Iverson.

Greg Iverson: Yeah, you bet, Joe. It's Greg Iverson. Good morning. Glad to be on our first public company earnings call with you today. Yeah, just breaking down at a high level the significant factors that drove the decrease in our Q4 margin year over year. The first one is inflation, which was the largest. In the aggregate, it was about 400 basis points, and that's comprised of both shipping increased costs from our RTD, as well as a small increase in our green coffee prices. The second factor is mix, and it netted to about 130 basis points. Keep in mind that our Outpost channel has our highest gross margins, and as we did increase our Outpost sales year over year, we saw some favorable impact on margin.

Good morning glad to be on our first public company earnings call with you today, but yeah, just breaking down at a high level. The significant factors that drove the decrease in our Q4 margin year over year. The first first one is inflation, which was the largest in the aggregate. It was about 400 basis points and that's comprised of.

Both shipping increased costs from our R. A T D as well as a small increase in our green coffee prices.

Joe Altobello: increased costs from our RTD, as well as a small increase in our green coffee prices.

Joe Altobello: The second factor is mix, and it netted to about 130 basis points.

The second factor is as mix and it netted to about 130 basis points, but keep in mind that our outpost channel has our highest gross margins and so as we did increase our output sales year over year, we saw some some favorable impact on margin, but that was more than offset by.

Joe Altobello: So keep in mind that our outpost channel has our highest gross margins, and so as we did increase our outpost sales year over year, we saw some favorable impact on margin, but that was more than offset by a larger increase in our wholesale channel, in particular the Ready to Drink product, which has the lowest gross margin of our products and channels.

Greg Iverson: That was more than offset by a larger increase in our wholesale channel, in particular, the ready-to-drink product, which has the lowest gross margin of our products and channels. Then the third piece is the net of pricing and promo. We did take a little bit of price in Q4 2021 that had a favorable impact in our non-subscription direct consumer business. That favorable pricing was more than offset by increased promotions in Q4 2021 versus 2020. The net of all that price and promo was about 40 basis points.

A larger increase in our wholesale channel in particular, the the rates drink product, which has our lowest gross margin of our products and channels and then the third piece is is the net of pricing and promo we did take a little bit of price in the fourth quarter of 2021 that had a favorable impact in our non.

Joe Altobello: And then the third piece is the net of pricing and promo. We did take a little bit of price in the fourth quarter of 2021 that had a favorable impact in our non-subscription direct consumer business.

Subscription direct to consumer business.

Joe Altobello: But that favorable pricing was more than offset by increased promotions in the fourth quarter of 2021 versus 2020. The net of all that price and promo was about 40 basis points.

But that favorable pricing was more than offset by increased promotions in the fourth quarter of 2021 versus 'twenty 'twenty. The net of all that price and promo was about 40 basis points.

Speaker Change: That's very helpful. And maybe just to follow up on that, can you remind us how much of your cost of goods is green coffee and how much you have hedged at this point for 22?

Joe Altobello: That's very helpful. Maybe just to follow up on that, can you remind us how much of your cost of goods is green coffee and how much you have hedged at this point for 2022?

That's very helpful and maybe just a follow up on that can you remind us how much of your cost of goods is green coffee and how much you have hedged at this point for 'twenty two.

Sure Yeah in terms of the priced a portion of cost of sales that that's a number we we havent given out what we said is that its about its in the single digits in terms of percentage of revenue in terms of coffee hedging just as a reminder, our policy or our practices to hedge about 12 months out so as of <unk>.

Speaker Change: Sure. Yeah, in terms of the price, the portion of cost of sales, that's that's a number we haven't given out. What we've said is that it's about it's it's in the single digits in terms of percentage of revenue.

Greg Iverson: Sure. Yeah, in terms of the price, the portion of cost of sales, that's a number we haven't given out. What we've said is that it's about, it's in the single digits in terms of percentage of revenue. In terms of coffee hedging, just as a reminder, our policy or our practice is to hedge about 12 months out. As of today, we're fully hedged through Q1 of 2023. When we last provided outlook in Q4, at that time we were already fully hedged through the end of 2022. While we'll see a step-up in our coffee prices certainly going into Q1, and then sequential steps up on a go-forward basis, those are at prices that have been hedged now for some time and are still quite a bit lower than the current spot rate from a coffee futures perspective.

Speaker Change: In terms of copy hedging, just as a reminder, our policy or our practice is to hedge about 12 months out. So as of today, we're fully hedged through Q1 of 2023.

<unk>, we're fully hedged through Q1 of 2023.

Speaker Change: When we last provided Outlook in Q4, at that time we were already fully hedged through the end of 2022.

When we last provided outlook in Q4 at that time, we were already fully hedged through the end of 2022 so while we'll see a step up in our coffee prices certainly going into Q1, and then sequential steps up on a go forward basis. Those are at prices that have been hedged now for some time and are still quite a bit low.

Speaker Change: So while we'll see a step up in our coffee prices, certainly going into Q1, and then sequential steps up on a go-forward basis.

Speaker Change: Those are at prices that have been hedged now for some time and are still quite a bit lower than the current spot rate from a coffee futures perspective. Great. Thanks, guys.

Sure then than the current spot rate from a coffee futures perspective.

Great. Thanks, guys. Good luck.

Joe Altobello: Great. Thanks, guys. Good luck.

Operator: Thanks, Joe.

Thanks, Joe.

Greg Iverson: Thanks, Joe.

Tom Davin: Thank you.

Thank you our next questions come from the line of Wendy Nicholson with Citi. Please proceed with your questions.

Speaker Change: Thank you. Our next questions come from the line of Wendy Nicholson with Citi. Please proceed with your questions.

Operator: Thank you. Our next question has come from the line of Wendy Nicholson with Citi. Please proceed with your questions.

Wendy Nicholson: Hi, good morning. I had a couple of questions on the outpost. First question is, did you see any impact in the fourth quarter? I know you had a lot of openings then, but in terms of Omicron and any weakness in sort of in terms of store productivity, and just thinking about that as we sort of build up our model for 2022, as you as you layer in those stores, I know you said they were going to be mostly waited to the very end of the year, but still trying to get a

Hi, good morning.

Wendy Nicholson: Hi. Good morning. I had a couple of questions on the Outposts. First question is, did you see any impact in Q4? I know you had a lot of openings then, but in terms of Omicron and any weakness in sort of, in terms of store productivity, and just thinking about that as we sort of build up our model for 2022 as you, as you layer in those stores. I know you said they were gonna be mostly weighted to the very end of the year, but still trying to get an idea of sequential revenue growth, if you will, for the Outposts channel.

Couple of questions on the outpost.

First question is did you see any impact in the fourth quarter. I know you had a lot of openings then but in terms of omicron and any weakness in sort of in terms of store productivity and just thinking about that as we started to build up our model for 2022 as you as you layer in the stores I know you said they were going to be mostly weighted to the very end of the year.

Trying to get a kind of an.

Wendy Nicholson: an idea of sequential revenue growth, if you will, for the outpost channel.

And idea of sequential revenue growth if you will.

Could you help us channel.

Hey, Wendy Tom Davin, Thanks to her harping on this morning, and asking the question here on our first earnings call. We did not see any impact from OMA crop.

Tom Davin: Hey, Wendy, Tom Davin. Thanks for hopping on this morning and asking the question here on our first earnings call. We did not see any impact from Omicron. We have very strong store openings and good momentum coming into the year.

Speaker Change: Hey, Wendy, Tom Davin, thanks for hopping on this morning and asking the question here on our first earnings call. We did not see any impact from Omicron.

Speaker Change: With very strong store openings and good momentum coming into the air

With very strong store openings and good momentum coming into the year.

Wendy Nicholson: Great. Okay, fantastic. Just on the labor side, you know, I know you said that the, whatever, wages have gone up and so your labor expenses increased a lot, which makes sense. Are you having any issues with labor availability and staffing the stores as you open them?

Speaker Change: Great. OK, fantastic. And just on the labor side, you know, I know you said that the whatever wages have gone up and so your labor expenses increased a lot, which makes sense. Are you having any issues with labor availability and staffing the stores as you open them?

Great, Okay, fantastic and just on the labor side I know you said that that whatever wages have gone up until your labor expenses increased a lot which makes sense.

Are you, having any issues with labor availability and staffing the stores as you open them.

Speaker Change: We are generally not. Given our commitment to hiring veterans, we find anybody who wants to work in a coffee shop, and particularly veterans who work at competitive shops, they're among the first in line when we have now hiring, under construction, coming soon Black Rifle coffee shops. I will say we have to pay a market rate.

We are generally not you know given our commitment to hiring veterans, we find anybody who wants to work in a coffee shop in particularly veterans who work at competitive shops, they're among the first in line. When we have now hiring under construction coming soon black rightful coffee shops, I will say.

Tom Davin: We are generally not. You know, given our commitment to hiring veterans, we find anybody who wants to work in a coffee shop, and particularly veterans who work at competitive shops, they're among the first in line when we have now hiring, under construction, and coming soon Black Rifle Coffee shops. I will say we have to pay a market rate, so it is competitive out there in terms of wage rate, but we're having no issue finding great quality people. Again, part of our value proposition is that we do promote from within, so people know they're signing on to a growth company, and they have opportunities to start as a shift leader or move up to an assistant manager and the like.

We have to pay a market rate.

Speaker Change: So it is competitive out there in terms of wage rate, but we're having no issue finding great quality people. Again, part of our value proposition is that we do promote from within so people know they're signing on to a growth company and they have opportunities to start as a shift leader or move up to an assistant manager and the like.

So it is competitive out there in terms of wage rate, but we are having no issue finding great quality people get part of our value proposition is that we do promote from within so people know, they're signing onto a growth company and they have opportunities to start as the ship later move up to an assistant manager and alike.

Speaker Change: The other thing I'll mention is you remember with our model being about 45% merchandise and bagged coffee sales, we're highly productive because once that product's out there in the retail space on the shelf, there's almost no incremental labor to ring that product up.

Tom Davin: The other thing I'll mention is you remember with our model being about 45% merchandise and bagged coffee sales, we're highly productive because once that product's out there in the retail space on the shelf, there's almost no incremental labor to ring that product up.

The thing I'll mention as you remember with our model being about 45% merchandise and bagged coffee sales were highly productive because once that products out there on the retail space on the shelf there was almost no incremental labor to bring that product up.

Wendy Nicholson: Got it. Yes. Indulge me if you can for just one more on the same Outposts subject. In terms of the change in your prototype, the building up of the stores, that sounds great, and I'm sure they're gonna be fantastic looking. But does that change the unit economics at all? I know you've always said the unit economics you have for the stores are really strong. Does that strategy change that at all? Can you give us a CapEx number maybe for 2022? If you did, I missed it. I'm sorry.

Speaker Change: Got it. Got it. Yes. And indulge me if you can for just one more on that on the same outpost subject.

Got it got it yes.

And indulge me if you can just one more on that on the same.

Our subject.

Speaker Change: In terms of the change in your prototype, the building up of the stores, that sounds great, and I'm sure they're going to be fantastic looking, but does that change the unit economics at all? I know you've always said the unit economics you have for the stores are really, really strong. So, does that strategy change that at all, and can you give us a CapEx number maybe for 2022? If you did, I missed it. I'm sorry.

In terms of the change in your prototype the building up of the stores that sounds great and I'm sure, they're going to be fantastic walking.

But does that change the unit economics at all I know I know, you've always said the unit economics.

So the stores are really really strong so does that strategy change that at all and can you give us a capex number may be for 2022, and if you did I missed it I'm sorry.

Speaker Change: Absolutely, so in terms of the new prototype.

Absolutely so in terms of the new prototype.

Tom Davin: Absolutely. In terms of the new prototype, the CapEx number is the number we've talked about in the Analyst Day presentation, about $1.4 million per store on a build-out, and that includes everything from the dirt up. We're not including the ground lease or the cost to buy the dirt in that. When we put that number together, it was anticipating the new prototype model. Obviously, there is cost inflation out there and labor to build new units and construction costs, but we had anticipated that when we put that number together. We do see significant benefits in terms of the consumer experience, and it's gonna make it a much better place to work for our baristas and our staff. We're super excited to pull those out of the ground. Overall, no change in the unit economics.

Speaker Change: The CAPEX number is the number we've talked about in the Analyst's Day presentation of about $1.4 million.

The Capex number is the number we've talked about in the analyst day presentation of about $1.4 million per store on a build out and that includes everything from the dirt up so we're not including the ground lease or the cost to buy the dirt and that so when we put that number together it was anticipating the new.

Speaker Change: Per store on a build out and that includes everything from the dirt up So we're not including the ground lease or the cost to buy the dirt in that

Speaker Change: So when we put that number together, it was anticipating the new prototype model.

New prototype model.

Speaker Change: Obviously, there is cost inflation out there and labor to build new units and construction costs, but we had anticipated that when we put that number together.

Obviously, there is cost inflation out there in labor to build new units in construction costs, but we had anticipated that when we put that number together, we do see significant benefits in terms of the consumer experience.

Speaker Change: We do see significant benefits in terms of the consumer experience.

Speaker Change: And it's going to make it a much better place to work for our baristas and our staff, so we're super excited to pull those out of the ground, but overall, no change in the unit economics. We do hope to have more upside on the top line in terms of productivity. Terms of.

And it's going to make it a much better place to work for our breweries does on our staff. So we're super excited to pull those out of the ground.

But overall no change in the unit economics, we do hope to have more upside on the topline in terms of productivity.

Tom Davin: We do hope to have more upside on the top line in terms of productivity. In terms of CapEx, Greg, I think the numbers we put out during Analyst Day are still generally good.

Of Capex, Greg I think the numbers, we put out during analyst day are still generally good yep and when he just said Youre right. We did not guide to a capex number for this year, but in our analyst day presentation, we referenced 13 million.

Speaker Change: I think the numbers we put out during Analyst Day are still generally good.

Greg Iverson: Yeah. Wendy just did. You're right, we did not guide to a CapEx number for this year. In our Analyst Day presentation, we referenced $13 million in CapEx that wasn't related to the Outpost build. That's principally for us to expand the capacity and put some automation in place in our Tennessee roasting facility. Our plans are still really unchanged there. We're moving forward and really excited about that initiative. With regard to the remainder of the CapEx, most of it is related to the Outposts. As Tom mentioned, we're tracking at $1.4 million per Outpost build. As you probably saw, we did increase our expectations around new Outpost openings to a range of 15 to 20. With that, we do expect increased CapEx in 2022, but it's just related to incremental Outpost openings.

Speaker Change: Yeah, and when he just said, you're right, we did not guide to a capex number for this year. But in our analyst a presentation we referenced 13 million.

Speaker Change: In capex that wasn't related to the outpost build that's principally for us to expand the capacity and and put some automation in place in our Tennessee roasting facility. Our plans are still really unchanged there. We're moving forward and really excited about that initiative.

And capex that wasn't related to the outpost build that's principally for us to expand the capacity and and put some automation in place in our Tennessee roasting facility. Our plans are still really unchanged there, where we're moving forward and really excited about that initiative with regard to the remainder of the Capex. Most of it is related to the output.

Speaker Change: With regard to the remainder of the CapEx, most of it is related to the outposts. As Tom mentioned, we're tracking at $1.4 million per outpost build. As you probably saw, we did increase our expectations around new outpost openings to a range of 15 to 20. So with that, we do expect increased CapEx in 2022, but it's just related to incremental outpost openings.

As Tom mentioned, we're we're tracking at 1.4 million per outpost build as you probably saw we did increase our expectations around new outpost openings to a range of 15 to 20, so with that we do expect increased capex in 2022 but it is just related to incremental outpost openings.

Speaker Change: Great. Fantastic. Thank you so much and congratulations. I know it's a really exciting time for y'all.

Great Fantastic. Thank you so much and congratulations I know that's a really exciting time for you all.

Operator: Great. Fantastic. Thank you so much, and congratulations. I know it's a really exciting time for y'all.

Wendy Nicholson: Great. Fantastic. Thank you so much, and congratulations. I know it's a really exciting time for y'all.

Thank you Wendy.

Greg Iverson: Thank you, Wendy.

Tom Davin: Thank you, Wendy.

Thank you. Our next question is coming from the line of Mike Baker with da Davidson. Please proceed with your questions.

Operator: Thank you. Our next question comes from the line of Mike Baker with D.A. Davidson. Please proceed with your questions.

Speaker Change: Thank you. Our next question has come from the line of Mike Baker with D.A. Davidson. Please proceed with your question.

Mike Baker: uh... hey thanks guys i wanted to uh... talk with the coffee pricing uh... a little bit as well and so our work shows that not only did you take prices up but competitors did as well from the bag coffee can you talk about uh... if you see any pushback uh... from from consumers uh... either in the back off you or or what you're doing uh... in in the outposts uh... to me coffee is pretty inelastic but if you could just talk about uh... if you're seeing any change in unit demand as prices go up

Mike Baker: Hey, thanks, guys. I wanted to talk about the coffee pricing a little bit as well. Our work shows that not only did you take prices up, but competitors did as well, at least in the bagged coffee. Can you talk about if you're seeing any pushback from consumers either in the bagged coffee or what you're doing in the Outposts? To me, coffee seems pretty inelastic, but if you could just talk about if you're seeing any change in unit demand as prices go up.

Hey, Thanks, guys I wanted to talk about the coffee pricing, a little bit as well and so our work shows that not only did you take prices up but competitors did as well at least on the bagged coffee can you talk about.

If you're seeing any pushback.

From consumers.

Either in the bag coffee or what you're doing in the outposts.

To make coffee seems pretty inelastic, but if you could just talk about if youre seeing any change in unit demand as prices go up.

Mike Baker: Hey, Mike, it's Tom again. So the headline is no, we're not seeing pushback or any elasticity of demand. And just to recap in a little more detail what we've done on pricing. So we took up the MSRP or stated price on bag coffee and what we call rounds or K cups.

Hey, Mike It's Tom again, so the headline is no we're not seeing pushback or any elasticity of demand and just to recap in a little more detail what we've done on pricing. So we took up the MSRP or stated price on bagged coffee in what we call rounds or K Cup by approximately one dollar per batch.

Tom Davin: Hey, Mike, it's Tom again. The headline is no, we're not seeing pushback or any elasticity of demand. Just to recap in a little more detail what we've done on pricing. We took up the MSRP or stated price on bagged coffee in what we call rounds or K-Cups by approximately $1 per bag or box of rounds. That's about 7%, and that was effective across all of our channels, including non-subscription direct-to-consumer. We have not yet taken up pricing on our subscription or Coffee Club, coffee and rounds. We have also taken the pricing up similarly $1 per unit with our B2B accounts. Those you might imagine with some of the bigger accounts, there's a lag between when that price becomes effective.

Mike Baker: by approximately $1 per bag or box of rounds. That's about 7%. And that was effective across all of our channels, including non-subscription, direct consumer.

<unk> or box of rounds, that's about 7% and that was effective across all of our channels, including non subscription direct consumer we have not yet taken up pricing on our subscription or coffee club coffee and rounds. We have also taken the pricing up similarly, a dollar per.

Mike Baker: We have not yet taken up pricing on our subscription or coffee club coffee and rounds We have also taken the pricing up similarly a dollar per unit with our b2b accounts

Unit with our B to B accounts go as you might imagine with some of the bigger accounts, there's a lag between when that price becomes effective also we took a $2 increase on our direct consumer shipping cost from 595 to 795 for orders below the free shipping threshold.

Mike Baker: Though, as you might imagine, with some of the bigger accounts, there's a lag between when that price becomes effective.

Mike Baker: Also, we took a $2 increase on our direct consumer shipping costs.

Tom Davin: Also, we took a $2 increase on our direct-to-consumer shipping cost from $5.95 to $7.95 for orders below the free shipping threshold. In coffee shops, we did take drink pricing up just this week, approximately 9%, which generally matches competitors, including Starbucks in the local neighborhoods where we operate. For ready to drink, Toby Johnson, who's here with us, our COO, she's leading a price increase, that's roughly gonna be about 10% to our convenience and other accounts out there. That'll take effect in Q2, and we'll really see the benefit of that in Q3 and Q4. We do have additional pricing actions underway, but as always, we're trying to balance out taking care of the customer, delivering that premium coffee at a great value while offsetting the cost inflation.

Mike Baker: from $5.95 to $7.95 for orders below the free shipping threshold.

In coffee shops, we did take drink pricing up just this week, approximately 9%, which generally matches competitors, including Starbucks and the local neighborhoods, where we operate and then for ready to drink Toby Johnson, who is here with us our C O L. She's leaving a price increase.

Mike Baker: In coffee shops, we did take drink pricing up just this week, approximately 9%, which generally matches competitors, including Starbucks, in the local neighborhoods where we operate. And then for ready to drink, Toby Johnson, who's here with us, our COO, she's leading a price increase.

Toby Johnson: That's roughly going to be about 10% to our convenience and other accounts out there. That'll take effect in Q2, and we'll really see the benefit of that in Q3 and Q4. We do have additional pricing actions underway, but as always, we're trying to balance out taking care of the customer, delivering that premium coffee at a great value while offsetting the cost inflation.

That's roughly going to be about 10% to our convenience and other accounts out there that will take effect in Q2, and we'll really see the benefit of that in Q3 and Q4, we do have additional pricing actions underway, but as always we're trying to balance out taking care of their customer delivering that premium coffee at a great value.

While offsetting the cost inflation.

Speaker Change: Okay, yeah, that's helpful. And then just, can you talk about, as your prices go up, what's your view on input prices, coffee input prices? Some of the data we look at shows that some of the futures are actually starting to come down a little bit. So I know you have some hedges in place, but it seems like your prices are going up while some of the commodity costs are going down. Can that end up being a gross margin boon?

Okay, Yes, that's helpful and then.

Mike Baker: Okay, yeah. That's helpful. Just can you talk about as your prices go up, what's your view on input prices, coffee input prices? Some of the data we look at shows that some of the futures are actually starting to come down a little bit. I know you have some hedges in place, but you know, it seems like your prices are going up while some of the commodity costs are going down. Can that end up being a gross margin boon at some point?

Can you talk about as your prices go up but what's your view on on.

Input prices coffee input prices some of the data we look at it shows some of the futures are actually starting to come down a little bit. So I know you have some hedges in place, but it seems like your prices are going up while some of the commodity cost going down can cannot end up being a gross margin boon at some point.

Yeah, Mike This is Greg I can address that and I mentioned, just a few minutes ago that where we're hedged now through the end of Q1 of 2023. So in terms of our 22 coffee prices those those were locked in.

Speaker Change: Yeah, Mike, this is Greg. I can address that. And I mentioned just a few minutes ago that we're we're hedged now through the end of Q1 of 2023. So in terms of our 22 coffee prices, those those were locked in.

Greg Iverson: Yeah, Mike, this is Greg Iverson. I can address that. I mentioned just a few minutes ago that we're hedged now through the end of Q1 of 2023. So in terms of our 2022 coffee prices, those were locked in at higher rates than what we saw in 2021, but still quite a bit lower than the current futures. Like you mentioned, the cost of coffee futures have gone down quite a bit since we've seen the war in Ukraine and, you know, increases in oil. There's definitely a lot of volatility within the coffee trading world right now. Just based on our always be buying strategy, I think we're able to

Greg Iverson: at higher rates than what we saw in 2021, but still quite a bit lower than the current futures.

At at higher rates than what we saw in 2020 , one, but still quite a bit lower than than the current futures like you mentioned.

Greg Iverson: The costs of coffee futures have gone down quite a bit since we've seen the war in Ukraine and increases in oil.

The cost of coffee futures have gone down quite a bit since we've seen the war in Ukraine.

And you know increases in oil there's definitely some a lot of volatility within the coffee trading world right now just based on our always be buying strategy, where I think we're able to basically use that volatility to our advantage and continue to lock in some of our position for 2023.

Greg Iverson: a lot of volatility within the coffee trading world right now. Just based on our always be buying strategy, I think we're able to

Greg Iverson: basically use that volatility to our advantage and continue to lock in some of our position for 2023.

Greg Iverson: Basically use that volatility to our advantage and continue to lock in some of our position for 2023 as the price of coffee continues to decline.

Greg Iverson: as the price of coffee continues to decline.

As the price of coffee continues to decline.

It sounds like you guys are playing out well I appreciate the color. Thanks.

Mike Baker: Sounds like you guys are playing it well. Appreciate the color. Thanks.

Speaker Change: Sounds like you guys are playing it well. Appreciate the color. Thanks.

[Company Representative] (Black Rifle Coffee Company): Thanks, Mike.

Tom Davin: Thanks, Mike.

Thanks, Mike Mike.

Evan Hafer: Thanks, Mike.

Greg Iverson: Thanks, Mike.

Speaker Change: Thank you. Our next question has come from the line of Sorong Vora with Kelsey Advisory Group. Please proceed with your question.

Thank you. Our next question is coming from the line of Suraj <unk> with Telsey Advisory Group. Please proceed with your questions.

Operator: Thank you. Our next question has come from the line of Sarang Vora with Telsey Advisory Group. Please proceed with your questions.

Sorong Vora: Thank you. Congratulations on a great quarter. Seems like you guys are brewing a strong growth story.

Sarang Vora: Thank you. Congratulations on a great quarter. Seems like you guys are brewing a strong growth story. You know, my question is on the cost savings, which has an impact on the margins. I feel like you guys mentioned you hired an international firm to evaluate your operations, and you see significant savings in, like, freight, sourcing, and packaging. Can you share some colors on some of these areas, like, you know, where in freight you could see some benefits, or are you changing your sourcing because the coffee has gone up a bit from one region to another region or packaging? Can you share any colors on some of those structural cost saving initiatives? Thank you.

Thank you congratulations on a great quarter seems like you guys are growing a strong growth story.

Sorong Vora: You know, my question is on the on the cost savings, which has an impact on the margins. I feel like you guys mentioned you hired an international firm to evaluate your operations and you see significant savings in like, great sourcing and packaging.

My question is on the on the cost saving which has an impact on the margins.

I feel like you guys mentioned you hired an international firm to evaluate your operations and you see significant savings in like freight sourcing in packaging.

Sorong Vora: Can you share some colors on some of these areas, like, you know, where in freight you could see some benefits, or are you changing your sourcing because the coffee has gone up a bit from one region to another region, or packaging? Can you share any colors on some of those structural cost-saving initiatives?

Can you share some color than some of these.

<unk> like you know bearing trade you could see some benefits or are you changing your sourcing because the coffee has gone up a bit from one region to another region or packaging can you shed any color on some of those structural cost saving initiatives. Thank you.

Sorong Vora: Absolutely. Thank you for the question. This is Toby Johnson, Chief Operating Officer.

Toby Johnson: Absolutely. Thank you for the question. This is Toby Johnson, Chief Operating Officer. As we've brought in the partners that Greg mentioned earlier, we've really looked end to end across our business for the biggest opportunities to increase efficiency and really progress our gross margin story sequentially throughout the year. All the things that you mentioned are in scope, everything from our sourcing and our key areas that affect our business to our 3PL, to our fulfillment, and just generally looking at any pockets of cost and efficiency that we can streamline. Our number one focus remains growth and being very focused on growth and accelerating the business. At the same time, we know it's important to drive that efficiency across the business. Does that answer your question?

Absolutely. Thank you for the question. This is Toby Johnson Chief operating officer. So as we've brought in the partners that Greg mentioned earlier, we've really looked end to end across our business for the biggest opportunities to increase efficiency and really progress our gross margin story sequentially throughout the year.

Toby Johnson: So as we brought in the partners that Greg mentioned earlier, we really looked end-to-end across our business for the biggest opportunities to increase efficiency and really progress our gross margin story sequentially throughout the year. So all the things that you mentioned are in scope. Everything from our sourcing in our key areas that affect our business, to our 3PL, to our fulfillment.

So all of the things that you mentioned are in scope everything from our sourcing and our key areas that affect our business two or three PL onto our fulfillment and just generally and looking at any pockets of cost and efficiency that we can streamline our number one focus remains.

Toby Johnson: And just generally looking at any pockets of cost and efficiency that we can streamline. Our number one focus remains growth and being very focused on growth and accelerating the business. But at the same time, we know it's important to drive that efficiency across the business.

Growth and being very focused on growth and accelerating the business, but at the same time, we know it's important to drive that efficiency across the business.

Does that answer your question yes.

Operator: Yes. Yes, got it. Thank you.

Sarang Vora: Yes. Yes, got it. Thank you.

Got it thank you.

Thank you. Our next question is come from the line of George Kelly with Roth Capital Partners. Please proceed with your questions.

Operator: Thank you. Our next question has come from the line of George Kelly with Roth Capital Partners. Please proceed with your questions.

Speaker Change: Thank you. Our next questions come from the line of George Kelly with the Roth Capital Partners. Please proceed with your questions.

George Kelly: Hi everybody, thanks for taking my questions and congrats on all the momentum.

Hi, everybody. Thanks for taking my questions and congrats on all the momentum.

George Kelly: Hi, everybody. Thanks for taking my questions, and congrats on all the momentum. First question for me is in the RTD business. Just curious, you said that a lot of the demand is being unmet, so can you quantify the level of that imbalance?

George Kelly: So first question for me is in the R2D business, just curious, you said that a lot of the demand is being unmet, so can you quantify the level of that imbalance?

So first question for me is in the RTD business. Just curious you said that a lot of the demand is being unmet so can you quantify.

The level of of that imbalance.

George Kelly: Hi, George, it's Toby again, happy to talk about that. So it's really a good story. We have enough capacity to meet all the commitments that are in our plan. But what we've seen is such support for the products that we have.

Hi, George has told me again I'm happy to talk about that so it's really a good story and we have enough capacity to meet all the commitments that are in our plan, but what we've seen is such support for the products that we have from consumers and from retailers that the unmet demand.

Toby Johnson: Hi, George. It's Toby again. Happy to talk about that. It's really a good story. We have enough capacity to meet all the commitments that are in our plan, but what we've seen is such support for the products that we have from consumers and from retailers, that the unmet demand is really additional opportunity for us to go after. We entered the year actually more than doubling our capacity for RTD. We're looking at additional expansion, and we're in advanced stages of negotiations with additional partners that will help us continue to expand our capacity for ready to drink coffee. It's really taking advantage of the momentum on the brand and continuing to accelerate. It's actually a really good story for the product and for the brand.

George Kelly: from consumers and from retailers, that the unmet demand is really additional opportunity for us to go after. So we entered the year actually more than doubling our capacity for RTD. We're looking at additional expansion. And we're in advanced stages of negotiations with additional partners that will help us continue to expand our capacity for ready to drink coffee.

Israeli additional opportunity for us to go after and so we entered the year actually more than doubling our capacity for our TD and we are looking at additional expansion and we are in advanced stages of negotiations with additional partners that will help us continue to expand.

Our capacity for ready to drink coffee. So it's really taking advantage of the momentum on the brand and continuing to accelerate and so it's actually a really good story for the product and for the brand.

George Kelly: So it's really taking advantage of the momentum on the brand and continuing to accelerate. So it's actually a really good story for the product and for the brand.

Speaker Change: Gotcha, thank you. And then second question just on advertising. So, in your prepared remarks it sounds your strategy and kind of how you think about advertising is shifting a bit so just curious if you could talk more about that.

Got you. Thank you and then second question just on advertising.

George Kelly: Gotcha. Thank you. Then second question, just on advertising. In your prepared remarks, it sounds like your strategy and kinda how you think about advertising is shifting a bit. Just curious if you could talk more about that and what, you know, you've got so much more scale now than you've had in the past, and your balance sheet looks so much different. You know, what does that allow you to now consider?

So in your prepared remarks, it sounds your strategy and kind of how you think about advertising is shifting a bit. So just curious if you could talk more.

Speaker Change: And what you know, you've got so much more scale now than you've had in the past in your balance sheet looks so much different. So, you know, what does that allow you to now consider?

And what you've got so much more scale now than you've had in the past and your balance sheet looks so much different so.

What does that allow you to now consider.

Evan Hafer: Well, this is Evan Hafer. Thank you very much for the question. I think the big pivot point is that we're shifting to an owned media strategy. We've been really moving towards that over the course of the last 8 years. What we've seen is inconsistency or what I would say is platform volatility that disrupts basically our CPM and our CPA average, specifically along the lines of the D to C customer base, whether we're moving it back towards blackriflecoffee.com or we wanna push something through a CPM basis through one of the platforms. What we wanna do is invest more specifically within our influencer strategy, which is why you'll see Travis Pastrana just came on, which he's the largest action sports figure internationally. He's been with Red Bull for 20 years.

Speaker Change: Well, this is Evan Hafer. Thank you very much for the question. So, I think the big pivot point is that we're shifting to an owned media strategy. We've been really moving towards that over the course of the last eight years. What we've seen is

Well this is Evan hafer. Thank you very much for the question. So I think the big pivot point is that we're shifting to owned media strategy, we've been really moving towards that over the course of the last eight years, what we've seen is inconsistency or what I would say is platform volatility that disrupt basically.

Evan Hafer: inconsistency or what I would say is platform volatility that disrupts basically our CPM and our CPA average

Our CPM and our CPA average specifically along the lines of the D to C customer base, whether we're moving it back towards Blackberry for coffee dot com or we want to push something through a CPM basis through one of the platforms. We want to do is invest more specifically within our Influencer strategy, which is why you'll see.

Evan Hafer: specifically along the lines of the D2C customer base, whether we're moving it back towards BlackRiffleCoffee.com or we wanna push something through a CPM basis through one of the platforms.

Evan Hafer: What we want to do is invest more specifically within our influencer strategy, which is why you'll see Travis Pastrana just.

Travis This strata just came on which he said he's that largest action sports figure internationally has been with Red Bull for 20 years, He's a very recognizable name as far as.

Evan Hafer: He's the, he's the largest action sports figure.

Evan Hafer: internationally. He's been with Red Bull for 20 years. He's a very recognizable name as far as

Evan Hafer: He's a very recognizable name as far as both energy and then beverage space and then action sports, which it's a big investment, but Travis has been a really good friend of ours for a long time. The owned media strategy allows us to push traffic back to places like coffeeordie.com, where we have 2 million-plus unique visitors per month, grow our channels, and then interact with our direct subscriptions related to our customer base, so we can grow and sustain our followers, interact with our customer base, and then retarget them specifically with other products that we might be wanting to propel or push a little bit more visibility into. Each and every one of these is directly connected to the omni-channel flywheel that we continue to reference.

Evan Hafer: both energy and beverage space, and then action sports, which is a big investment, but Travis has been a really good friend of ours for a long time.

Both energy and then beverage space and then action sports, which is a big investment, but Travis has been a really good friend of ours for a long time, but the owned media strategy allows us to push traffic back to places like coffee or die Dot com, where we have 2 million plus unique visitors per month.

Evan Hafer: But the owned media strategy allows us to push traffic back to places like coffeeordiet.com where we have

Evan Hafer: 2 million plus unique visitors per month.

Evan Hafer: grow our channels, and then interact with our direct subscriptions related to our customer base. So we can grow and sustain our followers, interact with our customers, and then retarget them specifically with other products.

Grow our channels and then interact with our direct subscriptions related to our customer base. So we can grow and sustain our followers interact with their customers and then and then re target them specifically with other products that we might be wanting to propel or push a little bit more visibility into so each and every one of these is.

Evan Hafer: that we might be wanting to propel or push a little bit more visibility into. So each and every one of these is directly connected to the omni-channel flywheel that we continue to reference. That investment will continue to pay off and it will yield us a greater result as we continue to grow top line over the course of the next 12 to 30 years.

We connected to the Omnichannel flywheel that we continue to reference that investment will continue to pay off and it will yield a greater result, as we continue to grow top line over the course of the next 12 months to 36 months.

Evan Hafer: That investment will continue to pay off, and it'll yield us a greater result as we continue to grow top line over the course of the next 12 to 36 months.

Okay, Great and then just one last question for me.

Speaker Change: Okay, great. And then just one last question for me. The guidance you provided of $315 million, it's about $80 million increase from what you did in 2021. Can you help break down that increase by segment, by DTC, outpost, and wholesale? And I'm just curious, is 2022, is that growth really largely about the RTD?

George Kelly: Okay, great. Just one last question from me. The guidance you provided of $315 million, it's about $80 million dollar increase from what you did in 2021. Can you help break down that increase by segment, by DTC, Outpost, and wholesale? I'm just curious, is this 2022, is that growth really largely about the RTD business?

The guidance you provided.

$315 million.

It's about $80 million increase from what you did in 2021 can you help breakdown that increase by segment by DTC outpost in wholesale and I'm. Just curious is this is 2022 is is that growth really largely about the RTD business.

Speaker Change: Yeah, George, it's Greg Iverson. And as you noted, we didn't provide guidance by revenue channel, but as we think about it, as we think about growth rates going into in the year we're in right now, yes, RTD is absolutely going to be the growth leader during the current year. Our wholesale channel is going to have the highest growth rate.

Yeah, George it's Greg Iverson and.

Greg Iverson: Yeah, George, it's Greg Iverson. As you noted, we didn't provide guidance by revenue channel. As we think about growth rates going into the year we're in right now, yes, RTD is absolutely going to be the growth leader during the current year. It's our wholesale channel is gonna have the highest growth rate, followed by Outposts. We mentioned that we've got a really back-end loaded store opening schedule for 2022. We're gonna have significant growth within the Outposts channel, but that growth rate from a revenue perspective really begins to accelerate into 2023.

As he noted we didn't provide guidance by revenue channel, but as we think about it if you think about growth rates going into <unk> in the year. We're in right now, yes, RTD is absolutely going to be the growth leader during during the current year. It's got our wholesale channel is going to have the highest growth rate followed by outpost.

Speaker Change: Followed by outpost and we mentioned that we've got a really back end loaded.

And we mentioned that we've got a really backend loaded.

Speaker Change: Store opening schedule for for 2022, so we're gonna have significant growth within the outpost channel But that growth rate from a revenue perspective really begins to accelerate into 2023

Our opening schedule for 2022, so we're having significant growth within the outposts channel, but that growth rate from a revenue perspective really begins to accelerate into 2023 and so the the lowest of the growth rates is as you'd expect within our direct to consumer channel, which as a reminder of how the business was was started and founded in.

Speaker Change: And so the lowest of the growth rates is, as you'd expect, within our direct consumer channel, which is a reminder.

Greg Iverson: The lowest of the growth rates is, as you'd expect, within our direct-to-consumer channel, which as a reminder is how the business was started and founded and where we've been operating for since inception.

Speaker Change: how the business was started and founded and where we've been operating for since inception.

And where we've been operating for since inception.

Okay understood. Thank you so much.

George Kelly: Okay. Understood. Thank you so much.

Okay.

Operator: Thank you. Our next question has come from the line of Bill Chappell with Truist Securities. Please proceed with your questions.

Speaker Change: Thank you. Our next question has come from the line of Bill Chappell with Truist Securities. Please proceed with your question.

Our next questions come from the line of Bill Chappell with <unk> Securities. Please proceed with your questions.

Bill Chappell: Thanks, good morning, and welcome to the public world.

Thanks, Good morning, and welcome to the public World.

Bill Chappell: Thanks. Good morning, and welcome to the public world.

Thank you Bill.

Greg Iverson: Thank you, Bill.

Bill Chappell: A couple of questions just on the top line, just kind of for housekeeping, in the raise to $325 million or at least that this year, is that versus your original kind of expectations a couple months ago, is that largely all price or is it kind of the business momentum that's allowing you to raise?

Bill Chappell: A couple questions just on the top line, just kind of for housekeeping. In the raise to $325 million or at least that this year, is that, you know, versus your original kind of expectations a couple months ago, is that largely all price, or is it kind of the business momentum that's allowing you to raise it?

A couple of questions just on the top line does.

For housekeeping and the raise to $325 million or at least that this year is that versus your original kind of expectations of a couple of months ago is that largely all price or is it kind of the business momentum that that's allowing you to raise it.

Speaker Change: Just to clarify, our prior revenue outlook that was in our investor presentation from last year was $311 million. Our raise right now is at $315 million, so it's a relatively modest raise as we go into the year. As Toby mentioned, we've got upside, we think, from a ready-to-drink perspective, but nothing that we've built yet into our baseline revenue outlook.

Your Bill just to just to clarify our prior revenue outlook that was in our investor presentation from last year was 311, our race <unk>.

Greg Iverson: Yeah, Bill, just to clarify, our prior revenue outlook that was in our investor presentation from last year was $311 million. Our raise right now is at $315 million. It's a relatively modest raise as we go into the year. As Toby mentioned, we've got upside we think from a ready-to-drink perspective, but nothing that we've built yet into our baseline revenue outlook.

Right now is at 315 million. So it's a relatively modest raise as we go into the year as Tobi mentioned, we've got upside we think from a ready to drink perspective, but not nothing that we've built yet into our baseline revenue outlook.

But I guess, if you're if you didn't have a say a 5% increase in the prior guidance and you do have it now I'm just trying to understand is it all just hey, now we're reflecting the pricing obviously, there is still more upside there, but but.

Bill Chappell: If you're, if you didn't have, say, a 5% increase in the prior guidance and you do have it now, I'm just trying to understand, is it all just, "Hey, now we're reflecting the pricing"? Obviously, there's still more upside there, but just wanna make sure I'm not missing anything else.

Speaker Change: But I just if you're if you didn't have a say a 5% increase in the prior guidance and you do have it now, I'm just trying to understand is it all just a now we're reflecting the pricing. Obviously, there's still more upside there. But but just want to make sure I'm not missing anything.

Just want to make sure I'm not missing anything.

Yeah.

Greg Iverson: No, I don't think you are. I mean, I guess let's just go back to our 2021 results. We ended 2021 higher than our prior outlook. We were about 4% ahead from a revenue perspective. Our launch point into 2022 was slightly better than our prior outlook, and we've just reflected that in our updated guidance for 2022.

Speaker Change: No, I don't. I don't think you are. I mean, I guess let's just go back to our 2021 results. We ended 2021 higher than our prior outlook. We were about 4% ahead from a revenue perspective. So our, our launch point into 2022 was was slightly better than our prior outlook. And we've just reflected that in our updated guidance for 2022.

I don't think you are I mean, I guess, let's just go back to our 2021 results. We ended 2021 higher than our prior outlook. We were about 4% ahead from a revenue perspective. So our launch point into 2022 was slightly better than our prior outlook and we've just reflected that in our updated guidance for 2022.

Okay and then.

Bill Chappell: Okay. If you permit me kind of a more of a fundamental question, but why, you know, being EBITDA positive, why is that important this year? I mean, you're a growth company, you've got a proven model, you've got so much opportunity to expand. You know, why not push that out even further and step up advertising, marketing, Outpost growth, what have you, and get bigger faster? Just help me understand that, 'cause, yeah, I'm not sure investors are as focused on when you turn to profitable. It's more of it seems to be more of a focus on the opportunity on the top line. Just help me understand that from a fundamental or philosophy standpoint. Thanks.

Speaker Change: Okay. And then, if you permit me, kind of a more of a fundamental question, but why, you know, being EBIDTA positive, why is that?

If you permit me kind of a more of a fundamental question but.

Okay.

Being EBITDA positive.

Why is that important this year.

Speaker Change: I mean, you're a growth company, you've got a proven model, you've got so much opportunity to expand. You know, why not push that out even further and step up advertising, marketing, outpost growth, what have you, and get bigger, faster. Just to help me understand that, because I'm not sure investors are as focused on when you turn to profitable, it's more of.

You're a growth company, you've got a proven model you've got so much opportunity to expand.

Why not push that out even further and step up advertising marketing outflows growth what have you in and get bigger faster.

So help me understand that.

I'm not sure investors are as focused on when you turn to profitable it's more of that it seems to be more of a focus on on the the opportunity on the top line. So just help me understand that from a fundamental philosophy standpoint. Thanks.

Speaker Change: It seems to be more of a focus on the opportunity on the top line. So just help me understand that from a fundamental or philosophy standpoint. Thanks.

Tom Davin: Hey, Bill, it's Tom Daven here. Great question. And again, thanks for being on.

Hey, Bill it's Tom Davin here, Great question and again, thanks for being on so we are focused primarily on growth, but we made a commitment to public investors to that breakeven goal for last year and for current 2022, and we collectively have debated. This you know could we go a lot.

Tom Davin: Hey, Bill, it's Tom Davin here. Great question. Again, thanks for being on. We are focused primarily on growth, but we made a commitment to public investors to that break-even goal for last year and for current 2022, and we collectively have debated this, you know. Could we go a lot faster? We think we have the resources to drive the business and manage the middle of the P&L and hit that adjusted EBITDA break even for the year. It'll be an ongoing debate, but we think we've struck the right balance.

Tom Daven: So we are focused primarily on growth, but we made a commitment to public investors to that breakeven goal for last year and for current 2022. And we collectively have debated this, you know, could we go a lot faster? But we think we have the resources to drive the business and manage the middle of the P&L and hit that adjusted EBITDA breakeven for the year. It'll be an ongoing debate, but we think we've struck the right balance.

Faster, but we think we have the resources to drive the business and manage the middle of the P&L and hit that adjusted EBITDA breakeven for the year it'll be an ongoing debate, but we think we've struck the right balance.

Okay, Yes.

Tom Daven: Yeah, and I'll tackle on that too, by the way, this is Evan, so I think it's not only our firm commitment to, you know, as we look into the future, it's our commitment to

Evan Hafer: Okay.

Bill Chappell: Okay.

Evan Hafer: Yeah. I'll tackle on that too. By the way, this is Evan. I think it's not only our firm commitment to, you know, as we look into the future, it's our commitment to focusing on all aspects of the business. We have to be as we're eight years from my garage, you know, we've been focused on becoming a high growth company, but we also really have to focus on the bottom line and becoming profitable and have a pathway to profitability. When we look at not only the growth story of the company, but we also have to look at how do we become profitable and how do we manage all aspects of the business in great detail. It's both.

Pat on that too by the way this Devin so I think it's not only our firm commitment to you know as we look into the future it's our commitment to.

Evan Hafer: focusing on all aspects of the business. And we have to be, we're eight years from my garage.

Focusing on all aspects of the business and we have to be it's we're eight years from Mike Raj.

Evan Hafer: You know, we've been focused on becoming a high growth company, but we also really have to focus on the bottom line and becoming profitable and have a pathway to profitability. So when we look at not only the growth story of the company, but we also have to look at how do we become profitable and how do we manage all aspects of the business in great detail. So it's both. I want us to be great at a lot of different things, but we have to be a great company.

We've been focused on becoming a high growth company, but we also really have to focus on the bottom line and becoming profitable and have a pathway to profitability.

So when we look at not only the growth story of the company, but we also have to look at how do we become profitable and how do we manage all aspects of the business in great detail. So it's both I want us to be great at at a lot of different things, but we have to be a great company.

Greg Iverson: I want us to be great at a lot of different things, but we have to be a great company.

Evan Hafer: I want us to be great at a lot of different things, but we have to be a great company.

Speaker Change: No, that's very helpful. And if I could squeeze in one more, just on the outpost openings towards the fourth quarter, how much revenue expectation is from that? Is there any risk if they open from October 15th versus December 15th to the model? Or are you largely expecting those to generate revenue in 2023? Thank you.

No that's very helpful and if I could squeeze in one more just on the outflows openings towards the fourth quarter.

Bill Chappell: No, that's very helpful. If I could squeeze in one more just on the Outpost openings towards Q4. You know, how much revenue expectation is from that? I mean, is there any risk if they open from 15 October versus 15 December to the model, or are you largely expecting those to generate revenue in 2023? Thank you.

How much.

Revenue expectation is for Matt I mean is there any risk if they opened from October 15th versus December 15th to the model or are you largely expecting those to generate revenue in 2023. Thank you.

Speaker Change: Yeah, Bill, so obviously it's a game of getting local permits to construct the shop.

Yeah, Bill So obviously, it's a game of getting local permits to construct the shops get them open on time with proper staffing and so forth. We think we've got a very conservative model and the development team, obviously working hand in hand with the operations team that will ultimately run this.

Tom Davin: Yeah, Bill, obviously it's a game of getting local permits to construct the shops, get them open on time with proper staffing and so forth. We think we've got a very conservative model, and the development team obviously working hand in hand with the operations team that will ultimately run the stores. The goal is to get stores open in October in Q4, not December. Because if you open them at the end of the year, obviously you get all the cost and not any of the benefits. We think we've got an aggressive internal plan that more than supports what we put out there in the way of guidance for the external plan.

Speaker Change: get them open on time with proper staffing and so forth. We think we've got a very conservative model and the development team obviously working hand in hand with the operations team that will ultimately run the stores. The goal is to get stores open in October and Q4, not December .

Doors. The goal is to get stores open in October in Q4, not December because if you open them at the end of the year, obviously, you get all the cost and not any of the benefit. So we think we've got an aggressive internal plan that more than supports what we put out there in the way of guidance for the external player.

Speaker Change: Because if you open them at the end of the year, obviously you get all the cost and not any of the benefits. So we think we've got an aggressive internal plan.

Speaker Change: that more than supports what we put out there in the way of guidance for the external plan.

Yeah, and I'll, just add to that to bill.

Greg Iverson: Yeah, I'll just add to that too, Bill. It's an important question because we do have a pretty meaningful sequential step up in our Outpost revenue from Q3 to Q4, just based on those store openings.

Speaker Change: Yeah, and I'll just add to that to bill. It's an important question because we do have a pretty meaningful sequential step up in our outpost revenue from Q3 to Q4, just based on those store openings. And the other thing that's important to call out too is, is we definitely see some seasonality with within our coffee shops.

It's an important question because we do have a pretty meaningful sequential step up in our outpost revenue from Q3 to Q4, just based on those store openings and the other thing that's important to call out too is we definitely see some seasonality with within our coffee shops, particularly during the fourth quarter, which is our seasonal peak period both in term.

Evan Hafer: The other thing that's important to call out too is we definitely see some seasonality within our coffee shops, particularly during Q4, which is our seasonal peak period, both in terms of beverages and then certainly folks coming into our shops to do some holiday shopping, picking up apparel, bagged coffee, and other products.

Greg Iverson: The other thing that's important to call out too is we definitely see some seasonality within our coffee shops, particularly during Q4, which is our seasonal peak period, both in terms of beverages and then certainly folks coming into our shops to do some holiday shopping, picking up apparel, bagged coffee, and other products.

Speaker Change: particularly during the fourth quarter, which is our seasonal peak period, both in terms of

Of beverages, and then certainly folks coming into our shops to do some holiday shopping picking up apparel bagged coffee and other products.

Speaker Change: beverages, and then certainly folks coming into our shops to do some holiday shopping, picking up apparel, bagged coffee, and other products.

Great. Thanks for the color.

Bill Chappell: Great. Thanks for the color.

Speaker Change: Thank you, Bill. Thank you, Bill. Thank you. Our next questions come from the line of Matt Curtis with William Blair. Please proceed with your question.

Thank you Bill Thank you Bill.

Tom Davin: Thank you, Bill.

Evan Hafer: Thank you, Bill.

Operator: Thank you. Our next question has come from the line of Matt Curtis with William Blair. Please proceed with your questions.

Thank you. Our next question is come from the line of Matt Curtis with William Blair. Please proceed with your questions.

Matt Curtis: Hi, good morning, thanks for taking my question. You know, on marketing, you talked about the shift to more owned media going forward. And I'm just curious, is this meant to improve brand awareness primarily with your existing core audience? Or is it really more to help build your brand with groups that may be newer, perhaps to BlackRiver?

Hi, good morning, Thanks for taking my question.

Matt Curtis: Hi. Good morning. Thanks for taking my question. You know, on marketing, you talked about the shift to more owned media going forward. I'm just curious, is this meant to improve brand awareness primarily with your core existing audience, or is it really more to help build your brand with groups that may be newer, perhaps, to Black Rifle?

On marketing you talked about the shift tomorrow.

Are there going forward.

I'm curious is this meant to improve brand awareness, primarily with your core existing core audience.

Or is it really more to help build your brand groups.

Newer perhaps to a black oil.

Evan Hafer: It's actually both. The philosophy behind this is when you're outsourcing all of your media, both from an external, what we'll say, a media production perspective, and then also from a channel perspective, you have less control over how much you're spending, and there's more spend volatility as we look into the future. We're a social media brand, and we're very sophisticated. I would say that we're the most sophisticated coffee company when it comes to marketing and media. As we start to look at what type of investments return a positive ROI, we really looked at our blog, which is a great example of this.

Speaker Change: It's it's actually both so that the philosophy behind this is when you're when you're outsourcing

It's actually both so that the philosophy behind this is one year when youre outsourcing all of your media both from an external what we'll say at media production perspective, and then also from a channel perspective, you have less control over how much you're spending.

Speaker Change: all of your media, both from an external, what we'll say, media production perspective, and then also from a channel perspective, you have less control over how much you're spending, and there's more spend volatility as we look into the future. We're a social media brand, and we're very sophisticated. I would say that we're the most sophisticated coffee company when it comes to marketing and media. So as we start to look at what type of investments return a positive ROI, we really looked at

And there's more spend volatility as we look into the future where social media brand and we're very sophisticated where I would say that we're the most sophisticated coffee company when it comes to your marketing and media. So as we start to look at what type of investments return a positive ROI, we really looked at.

Speaker Change: Our blog is a great example of this. When we looked at coffee or dye.

Our blog.

A great example of this when we looked at coffee or die.

Evan Hafer: When we looked at Coffee or Die, we looked at how much traffic that was driving from a pure cost perspective as far as what's it cost us in SG&A to run Coffee or Die, and then what does it yield us from a direct conversion standpoint from an internal investment from not only CPM, but also conversion on a DTC and then product conversion in other channels. What that did is it gave us a fairly sophisticated and predictable model to look at how do we invest in these things in the future. How do we grow these different aspects of the business? That's something that we've gotten several years of look back on. It's not something that we're just looking into a crystal ball. We've actually got a very detailed perspective in that model.

Speaker Change: We looked at how much traffic that was driving from a pure cost perspective, as far as what's it cost us in SG&A to run a coffee or dye, and then what does it yield us from a direct

We looked at how much traffic that was driving from it from a pure cost perspective as far as what's it cost us in SG&A to run a copier.

Copier Die and then what does it yield us from a direct conversion standpoint from an internal investment from not only CPM, but also conversion on a DTC and then product conversion and other channels. What that did is it gave us.

Speaker Change: conversion standpoint from an internal investment from not only CPM but also conversion on a DTC and then product conversion and other channels. What that did is it gave us a fairly sophisticated and predictable model to look at how do we invest in these things in the future, how do we grow these different aspects of the business.

A fairly sophisticated and predictable model to look at how do we invest in these things in the future how do we grow these different aspects of the business.

Speaker Change: And that's something that we've gotten several years of look back on. It's not something that we're just looking into a crystal ball. We've actually got a very detailed perspective in that model. So we think that we're not only suited to scale that aspect of the business, we're probably the only company in this category as far as beverage and coffee is concerned to do it.

And that's something that we've gotten several years of look back on it is not something that we're just.

Looking into a crystal ball, we've actually got a very detailed perspective in that model.

Evan Hafer: We think that we're not only suited to scale that aspect of the business, we're probably the only company in this category as far as beverage and coffee is concerned to do it.

We think that we're not only suited to scale that aspects of the business that aspect of the business. We're probably the only company in this category as far as the averaging copy is concerned to do it.

Evan Hafer: We think that we're not only suited to scale that aspect of the business, we're probably the only company in this category as far as beverage and coffee is concerned to do it.

Okay got it.

Matt Curtis: Okay. Got it. A last one. Regarding the redesigned Outposts prototype, I'm just curious what you saw in the original design that prompted the change. I mean, was it an issue with throughput or perhaps the look of the stores or something else?

Speaker Change: Okay, got it. And then the last one.

And then the last one.

Speaker Change: Regarding the redesigned outpost prototype, I'm just curious what you saw in the original design that prompted the change. I mean, was it an issue with throughput or perhaps the look of the stores or something else?

Regarding the redesigned opposed prototype I'm just curious what you saw in the original design that prompted the change I mean was it an issue with the throughput there perhaps.

Look of the stores or or something else.

Speaker Change: Yes, so if you recall, our 1st door opened in August of 2020 in San Antonio, Texas, we call it the bitters road store. It's just a monster. But that was a conversion of a failed barbecue restaurant.

Yes. So if you recall our first store opened in August of 2020 in San Antonio, Texas, We call. It the bidders road store.

Tom Davin: Yeah. If you recall, our first store opened in August 2020 in San Antonio, Texas. We call it the Bitters Road store. It's just a monster, but that was a conversion of a failed barbecue restaurant. It was a bit suboptimal, both from the consumer perspective as well as from the team member perspective of, you know, supporting the barista, having the right storage for retail items and the like. From day one, we knew we wanna have a, if you will, fully fleshed out prototype store for us, for our brand partners, which we call our franchisees. Number one benefit is from the moment anybody would see the store from the street, it really screams Black Rifle branding in a full and authentic way.

Just a monster, but that was a conversion of a failed barbecue restaurant sellers a bit suboptimal, both from the consumer perspective, well as from the team member perspective.

Speaker Change: So it was a bit suboptimal, both from the consumer perspective, as well as from the team member's perspective of supporting the barista, having the right storage for retail items, and the like. So from day one, we knew we wanted to have a, if you will, fully fleshed out prototype store for us, for our brand partners, which we call our franchisees.

Supporting the breweries to having the right storage for retail items and the like.

From day, one we knew we wanted to have a if you will fully fleshed out prototype store for us for our brand partners, which we call our franchisees.

Speaker Change: So number one benefit is from the moment anybody would see the store from the street, it really screams Black Rifle branding in a full and authentic way. Then as you flow through, either the drive-through or you come inside to shop in the retail space or get a coffee beverage.

So number one benefit is from the moment anybody would see the store from the street it really screams black rifle branding and a full an authentic way then as you flow through the drive through or you come inside the shop in the retail space or get a coffee beverage.

Tom Davin: As you flow through either the drive-thru or you come inside to shop in the retail space or get a coffee beverage, you get the fully branded experience. At the same time, we optimize back-of-house ergonomics in terms of, you know, measuring footsteps for people to deliver, say, an espresso beverage to the drive-thru or to take care of people at the front counter or to restock the shelves of the retail items. We see tremendous benefit, and it's really just part of the natural evolution of a store fleet. Again, as I mentioned in my prepared remarks, we see 80% of the stores going forward this year being of that new prototype.

You get the fully branded experience and at the same time, we optimize back of house ergonomics in terms of measuring footsteps to our people to deliver say an espresso beverage to the drive thru.

Speaker Change: You get the fully branded experience, and at the same time, we optimize back of house.

Speaker Change: Ergonomics in terms of, you know, measuring footsteps for people to deliver, say, an espresso beverage to the drive-thru or to take care of people at the front counter or to restock the shelves or the retail items. So, we see tremendous benefit and it's really just part of the natural evolution of a store fleet. And again, I mentioned in my prepared remarks, we see 80% of the stores going forward this year being of that new prototype.

Take care of people at the front counter or to restock the shelves of the retail items. So we see tremendous benefit and it's really just part of the natural evolution of the store fleet.

As I mentioned in my prepared remarks, we see 80% of the stores going forward this year being of that new prototype.

Okay got it thanks, very much and good luck.

Matt Curtis: Okay. Got it. Thanks very much and good luck.

Thanks, Matt.

Evan Hafer: Thanks, Matt.

Speaker Change: Thank you. That is all the time we have for questions today. I would now like to turn the call back over to Tom Davin for any closing comments.

Operator: Thank you. That is all the time we have for questions today. I would now like to turn the call back over to Tom Davin for any closing comments.

Thank you that is all the time, we have for questions today I would now like to turn the call back over to Tom Davin for any closing comments.

Well, thank you to everyone for joining our first ever Black rightful coffee company public earnings call. We are we certainly enjoyed the questions. We look forward to the follow up and thank you all for participating this morning.

Tom Davin: Well, thank you to everyone for joining our first ever Black Rifle Coffee Company public earnings call. We certainly enjoyed the questions. We look forward to the follow-up, and thank you all for participating this morning.

Thank you that does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time and enjoy the rest of your day.

Operator: Thank you. That does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Speaker Change: Thank you. That does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Q4 2021 BRC Inc. Earnings Call

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