Q1 2025 BRC Inc Earnings Call
Greetings and welcome to Black Rifle Coffee Company first quarter 2025 earnings conference call.
At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
Speaker Change: It is now my pleasure to introduce your host, Matthew McGinley, Vice President and Investor Relations. Thank you, please go ahead.
Matthew McGinley: Good morning, everyone, and thank you for joining Black Rifle Coffee Company's first quarter 2025 financial results conference call.
Matthew McGinley: We released our results yesterday and the press release and related materials are available on our investor relations website at ir blackriflecoffee.com Before we begin I would like to remind you of the company's safe harbor statement regarding forward-looking statements
Matthew McGinley: During today's call, management may make forward-looking statements, including guidance in the underlying assumptions These statements are based on expectations that involve risks and uncertainties which could cause actual result to differ materially [inaudible]
Matthew McGinley: For a further discussion of these risks, please refer to our previous filings with the SEC.
Matthew McGinley: Additionally, this call will include non-GAAP financial measures such as adjusted EBITDA. Whenever we refer to EBITDA, we may adjust to EBITDA unless otherwise noted.
Matthew McGinley: Reconciliation of Don GAAP measures to the most directly comparable GAAP measures are included in our earnings release, which was furnished to the SEC and is available on our Investor Relations website. Now, please refer to the presentation on our Investor Relations website in turn to slide 4.
Chris Mondzelewski: I would now like to turn the call over to Chris Mondzelewski, CEO of Black Rifle Coffee Company Mondze, thanks Matt, good morning everyone. Joining me today are Evan Hafer, our Executive Chairman, Steve Kadenacy, our Chief Financial Officer, and Matt McGinley, our Head of Investor Relations.
Chris Mondzelewski: When we held our last quarterly call, we discussed the work completed in 2024 to strengthen our business foundation, streamlining operations, investing in infrastructure, and building a more agile, efficient organization.
Chris Mondzelewski: These efforts have made us more adaptive to navigate an evolving operating environment, and we are confident in our positioning for 2025 and beyond.
Chris Mondzelewski: Our first quarter financial results were in line with expectations and consistent with our full year plan.
Chris Mondzelewski: While we did not anticipate tariffs or a potentially more challenging macro backdrop to start the year, we have built flexibility into our structure to respond effectively to any potential shifts in external conditions.
Chris Mondzelewski: Looking ahead, our focus remains on positioning the business for long-term growth. We're scaling the brand, deepening our partnerships at retail, and making sure every dollar we invest in the business is working hard for us.
Chris Mondzelewski: That means leaning into what's already working in core categories while also breaking new ground with initiatives like to launch a Black Rifle energy.
Moving to Slide Six [inaudible]
Chris Mondzelewski: In the US Food Drug and Mass channels, Nielsen data shows the coffee category declined in unit volume during the first quarter, but overall sales remained positive due to pricing actions taken by sellers across the category.
Chris Mondzelewski: Black Rifle took no pricing actions during the period, but still delivered 21% sales growth, well ahead of the category's 4% increase.
Chris Mondzelewski: We expect to build on this momentum throughout 2025 through new retail partnerships and expanded shelf presents with existing customers.
Moving to Slide 7 [inaudible]
Chris Mondzelewski: Our Direct to Consumer Channel remains a key part of the business with over 180,000 active subscribers generating two-thirds of the segments revenue. It gives us direct access to loyal customers, valuable insights, and a platform to test new products.
but also ensuring brand access where retail distribution is limited.
Chris Mondzelewski: We've made meaningful updates to improve both the subscription and non-subscription experience.
Chris Mondzelewski: Recent upgrades to our website and mobile app have improved functionality, while streamlined onboarding, such as simplified id.me verification and automatic promo application has made it easier to subscribe.
Chris Mondzelewski: For our Coffee Club members, we've launched a new brand portal offering exclusive partner perks, expanded the subscriber store with BRCC gear only available to active members and are introducing prepaid subscription options.
On the back end, we've shifted to more data-driven merchandising [inaudible]
to Guide Product Assortment, Inventory Planning, and SKU Optimization.
while staying true to our roots through founder-led product development.
Chris Mondzelewski: Like many subscription-based DTC businesses, we felt the impact of consumers shifting toward retail purchases, especially as our products have become more widely available in stores.
Chris Mondzelewski: DTC revenue declined 15% in the quarter, though adjusting for last year's loyalty reserve the decline was closer to 5%
Slide 8
Chris Mondzelewski: Our ready-to-drink coffee business continues to outperform the category. With first quarter sales up 7% in a category that declined 6%.
according to Nielsen.
Chris Mondzelewski: We've maintained our standing as the third largest RTD coffee brand in the U.S. with distribution and only half of the available markets. We see significant runway ahead and are using the operational experience we've gained to support our new energy platform.
Slide 9 [inaudible]
We launched Black Rifle Energy into retail in January
Chris Mondzelewski: And while it was only on shelves for a portion of the quarter, were encouraged by the early traction By the end of the first quarter the product was available in nearly 12,000 retail locations reaching 21% ACV
Chris Mondzelewski: Through our partnership with Courage Doctor Pepper, we have access to a National Direct Store Delivery Network covering 180,000 doors.
Chris Mondzelewski: Over the next two years, we expect to continue expanding our footprint in a disciplined way with a near-term focus on 12 priority markets. We will ramp up energy-specific marketing spend to support awareness and trial, particularly in the convenience channel.
Chris Mondzelewski: Our decision to enter the energy category was backed by consumer data showing that 58% of our coffee customers also purchase energy drinks.
Chris Mondzelewski: While it's a competitive category, it represents a significant addressable market over 20 billion in annual sales. We're pleased with the early momentum and believe this launch lays the foundation for a long-term growth in a high-value category.
Speaker Change: Before I turn it over to Steve for a deeper dive on the numbers, I want to take a moment to talk about something core to who we are, not just as a business but as a brand with a mission.
Speaker Change: In the first quarter, we continued making monetary and product donations to military units and first responder organizations across the US and around the world.
Speaker Change: That included firehouses, police departments, and deployed units stationed in both expected and unexpected locations. Places where a refreshing beverage or great cup of coffee can make a real difference.
Speaker Change: We're proud to carry this mission forward into the second quarter with support planned for more than a dozen events in ongoing outreach to those who serve. These efforts are side projects. They're fundamental to how we define success. [inaudible]
Speaker Change: We're building more than a beverage company. We're building a community that stands behind the people who serve. Whether it's a no-notice deployment or a fire crew running on fumes, our message is simple. You're not alone. We're with you every step of the way.
Speaker Change: That commitment is what sets Black Rifle apart. It's what drives loyalty from our customers and pride from our team, many of whom have worn the uniform themselves. This mission is not an initiative it's a core part of our identity and it continues to guide everything we do. With that, I'll turn it over to Steve.
Thank you, Mons. I'll start with slide 11.
Steve: 1st quarter revenue declined 9% compared to the prior year, primarily due to the impact of 8.5 million and barter transactions and a $3.4 million benefit from a change in loyalty rewards of the rules in the 1st quarter of 2024. Excluding these items, 1st quarter revenue increased 4%
Steve: New distribution and expanded shelf presence drove a four-fold increase in sales to FDM retailers compared to the prior year
Steve: Sales to our largest retail customer grew 3% over the same period. Revenue in our direct to consumer segment declined 15% in the first quarter, excluding the $3.4 million impact from the loyalty rewards accrual changed in the prior year the decline was 5%.
Steve: This was driven by increased retail availability of Black Rifle products, a broader shift in consumer behavior away from direct to consumer channels, and our deliberate reallocation of resources towards wholesale.
Steve: Our outpost segment grew revenue by 2% driven by higher franchise revenue and continued growth in the average order value from bundling and improved merchandising.
Speaker Change: Slide 12. Gross Margin declined 680 basis points in the first quarter to 36% of sales.
Speaker Change: These pressures were partially offset by nearly 400 basis points of benefit from productivity gains and favorable product mix.
Slide 13.
Speaker Change: As we suggested in our guidance in March, we expect to generate limited EBITDA in the first half of the year, reflecting the impact of non-recurring revenue in the prior year, the timing of trading and advertising, and revenue gains that are expected to build throughout the year.
Speaker Change: As a result, adjusted EBITDA decline by 11.6 million compared to the first quarter of last year, reaching approximately 1 million in the first quarter of 2025.
Speaker Change: As a result, salaries, wages and benefits declined 11% due to reduction in headcount, while GNA expenses fell 23% year over year driven by lower professional services spend and reductions in corporate infrastructure.
Page 15
Speaker Change: We are maintaining our full year revenue guidance of 395 to 425 million and continue to expect that the first quarter will represent the low point for revenue.
Speaker Change: with Sequential Growth throughout the year. This ramp will be supported by ongoing distribution gains in both package coffee and energy, along with targeted marketing and trade investments to drive awareness and repeat purchases.
Speaker Change: As a reminder, 30.4 million in revenue from 2024 will not repeat. We cycled 11.8 million of that non-recurring revenue in the first quarter and expect an additional $5.8 million impact in the second quarter.
Speaker Change: While we remain confident in the three-year outlook, we outlined in January and in the 2025 opera game plans shared in March, our previous guidance did not contemplate tariffs. Virtually all coffee consumed in the US is imported.
Speaker Change: To help frame the potential impact, we estimate that roughly one-third of our cost of goods sold is tied to imports. The majority of this is green coffee or coffee extracts, with a smaller portion related to packaging, apparel and merchandise.
Speaker Change: Most of our coffee is sourced from Central America, Brazil, and Columbia in the middle of the night.
Speaker Change: While the situation remains fluid, we currently estimate the impact of terrorists under the existing framework will be approximately $5 million to EBITDAW in 2025.
Speaker Change: We are taking proactive steps to protect gross margin and are accelerating initiatives to enhance productivity across our supply chain.
Speaker Change: Even before terrorists were introduced, prices for high-quality Aravika Coffee, more than doubled since the beginning of 2024.
Speaker Change: So this pricing decision was not made lightly. We expect a modest top-line benefit from pricing in the second half of 2025, which will provide a partial offset to the inflationary pressure we are experiencing from green coffee.
Speaker Change: We now expect gross margin to be in the 35 to 37% range compared to our prior estimate of 37 to 39.
Speaker Change: Key drivers of the outlook compared to prior year results include at least a 300 basis point impact from green coffee inflation, net up pricing with the incremental pressure due to higher production volume requiring more purchases at spot rates.
Speaker Change: A 250 basis point impact from trade investment behind energy and a more normalized promotional cadence.
Speaker Change: At least a 100 basis point impact from tariffs was nearly all of that expected in the second half of the year These pressures are expected to be partially offset by at least a 200 basis point benefit from productivity initiatives and a more favorable product mix [inaudible]
Speaker Change: While terrorists and green coffee inflation create near-term uncertainty, we remain focused on positioning the business for long-term success.
Speaker Change: Our cost reduction and efficiency initiatives over the past two years have significantly improved margins and cash flow, enabling us to reinvest in the brand and expand into the energy category this year.
Speaker Change: As part of that effort, we have reviewed our entire cost space and our confident we will achieve 8 to 10 million annualized cost savings by streamlining operations and driving continuous improvement.
Speaker Change: As a direct result of operating expense reductions and additional supply chain productivity, we are maintaining our previous EBITDA guidance of 20 to 30 million.
Speaker Change: To help with modeling, we expect gross margin to be 1 to 2 points lower in the second quarter than the 36% rate in the first quarter with sequential improvement in the second half as the benefits of pricing and productivity begin to take hold.
Speaker Change: We maintain focus on driving operating leverage by tightening managing gross margins and expenses, ensuring that we can scale efficiently while supporting the long-term growth and resilience of the business.
Speaker Change: We remain confident in our ability to deliver both top line growth and adjusted EVA's in line with the three-year plan we laid out in January . Operator, we are now ready for Q&A.
Thank you, the floor is now open for questions.
Speaker Change: If you would like to ask a question, please press star one on your telephone keypad at this time A confirmation tunnel indicate your line is in the question queue You may press star two if you would like to remove your question from the queue
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We do ask that you please them yourself to one question and one follow up. Again, that's star one to register a question at this time. Today's first question is coming from Michael Baker of DA Davidson. Please go ahead.
Mr. Baker, your line is five, please make sure-
Make sure your phone is not on mute. [inaudible]
Got it. Sorry, was on mute.
Speaker Change: If things get tough for the consumer, you get a little bit more, you know...
Transcripts provided by Transcription Outsourcing, LLC.
[inaudible]
Speaker Change: Yeah, thanks Michael. Great question. I think you nailed a component of it already, but just to elaborate a bit on that we've seen this a number of times in the business when the economy slows down what you said is true. We do see a shift of consumers that move from coffee shop.
Speaker Change: to at-home coffee. And in that case, those are coffee heads that want a high-quality product. They tend to shift to super premium brands, and we see a tailwind around that. We obviously do have coffee shops, but that's a very small percentage of our portfolio overall versus other brands in the category.
Speaker Change: So, we feel great about that. As far as, you know, the category then within grocery, yes, some of the lower price brands are doing well, but overall the category is doing very well. You know, a lot of that is on the back of some of the price increases.
Speaker Change: But even on a unit standpoint, there's reasonable stabilization in the category even given some of these price increases and for us you know We're seeing our units up 34% across the market in Q1 so we feel great about just a number of Black Rifle products that are being taken home
Speaker Change: Okay, thank you, that makes sense. My most severe question on the
Speaker Change: I'll work on the guidance. A couple of changes, particularly in gross margin, the trade spend and normal promotion, that's now going to be a 250 basis point hit. I think last quarter you talked about it being a 150 basis point hit, so are you spending?
Speaker Change: More now than you had originally anticipated and if so, why?
Speaker Change: We're really driving the the energy launch on the trade side, although we did have some
Speaker Change: We don't expect it to be quite as significant over the course of the full year, but it was an impact in the quarter. And then obviously coffee inflation is a significant piece of that because of the higher volumes that we're deriving. We actually had to go out into the spot markets.
Speaker Change: versus utilizing the contracts that we have already in place at lower prices, so that drove some of it. And then we have in that gross margin full year outlook, we've got some indication in there around tariffs.
Speaker Change: which actually should push us to below the midpoint of our EBITDA range. If those do materialize, we think we can make up and keep within the range given our actions within the business to be more efficient and more productive, but those tariffs are another element of it.
Speaker Change: Right, but specific to the 2.5 point impact from trade spending and normal promotional cadence again, I think that was 150 in the fourth quarter report that that's due to the, you know, trying to drive driving some trial from lower pricing, is that right?
Correct.
Got it. Thank you.
Speaker Change: Thank you. The next question is coming from Sarang Vora of Telsea Advisory Group. Please go ahead.
Sarang Vora: Thank you for taking the question. My first question is the energy drink. I mean very good launch in the last three months on the energy side. Can you share any early feedbacks? I know you talked about positive and the ramp is strong but any early feedbacks on like you know.
Speaker Change: Pricing, Taste, Flavor, Distribution that positively surprised you and anything that you feel like you can change as the year goes by.
Sarang Vora: Hi Sarang, thanks for the question. So far we feel great about the launch.
Speaker Change: It is early days. We're not in a position to be able to talk to some of the specific numbers around.
Speaker Change: How we're doing in any particular retailer, we're just not far enough into the season yet.
Speaker Change: and deep enough into the distribution. But we are ahead of our expectations as I mentioned in the prepared comments on. Thank you.
Distribution at over 20% of the market already. [inaudible]
Speaker Change: Just as a reminder, the way we're doing this strategically, so we do have our largest customer in distribution.
there will be other food customers and distribution.
Speaker Change: and then we're focusing from a convenience standpoint in 12 key markets.
Speaker Change: which we're working hand in hand with, Kareg Dr. Pepper on, not only the regional or national customers in those markets, which can be tracked, but many of the sea stores in those markets are what we call up and down the street or UDS.
Unknown Executive, Stephen Kadenacy, Christopher Mondzelewski
Speaker Change: You know, non-quantitative feedback is that, you know, the product is selling well. Marketing programs are just now turning on in those markets.
Speaker Change: You'll start to see them across those 12 markets. Some of the programs obviously will be national, particularly in our own media and then you asked on product, we feel good about the product. We're tracking this very closely.
Speaker Change: We went after, we talked about this, we went after a very clean, flavor profile to match the clean ingredients that we're using in Black Rifle Energy, so we're not putting a lot of the same...
Speaker Change: and chemicals that are in other products into our product. And with that clean product delivery, we're getting a very, very good feedback on a clean crisp flavor profile. So again, you know, meeting what we intended, but long way to go.
Speaker Change: That's great. You know, I love the product, so that's good to hear. You know, Steve, there's a question on, you know, your second half guidance.
Speaker Change: and, you know, obviously, the savings went up in the back half of about 8 to 10 million. Can you share some of the incremental cost saving initiatives or buckets that, you know, gives you a greater confidence in achieving the EBITDA range? Thanks.
Speaker Change: I think that just kind of comes with the territory for us. I don't want to get into specifics of the eight to ten specifically, we will give you
Speaker Change: More details on that as we go, but it's it's kind of across the board in terms of the business largely positioning us so that we can be agile and nimble going forward and continue to scale off a low base we're already scaling.
Speaker Change: Off of our salaries and wages and FGNA costs in general from the prior year, we just think we can do it even better.
That's great, good luck. Thank you.
Thank you, the next lesson.
Glenn West: Is coming from Glend West, a William Blair, please go ahead. [inaudible]
Speaker Change: Hey guys, Glenn West, Stepanand for Jon Andersen. I was hoping to touch on the DTC business quickly. I know in the past we've kind of been talking about approaching a stabilization there, and then you know I was down 5% adjusting for those loyalty reserves.
Speaker Change: I guess I'm curious kind of what strategies are being implemented, you know, kind of further prevent the decline and ultimately get to a more stabilization there in light of kind of the reallocated investment and ad spend away from there.
Yeah, thanks Glenn for the question. So...
Speaker Change: As you've called out, this is a part of our business that it declined last year. We know we've talked about how our consumers are
Speaker Change: Shifting from a behavioral standpoint to vying in wholesale, either brick and mortar wholesale or digital wholesale we feel great about you know the growth as I talked about we got 34% you know unit increase 24% revenue increase
on the wholesale side of our coffee business. [inaudible]
for D.T.C.
Speaker Change: The idea for us is to create stabilization, which we feel like we've been able to do in Q1, so as you mentioned, 5% after you adjust for the loyalty points decline.
Speaker Change: And that is with less dollars going into that business, you know, as you would expect, we are shifting our spending
Speaker Change: towards our energy launch, towards the continued support of our great coffee business in pods and bags, and of course our RTD coffee business, where we're number three in the market right now. With DTC there's less spending which means you're going to have less folks coming in the front.
Unknown Executive, Stephen Kadenacy, Christopher Mondzelewski
Speaker Change: We've been able to really increase our conversion numbers significantly so that even with
We are seeing the full stabilization.
Speaker Change: of our subscription business. And those are our most valuable consumers. We love all of our consumers, but those that want to subscribe with us of course.
Speaker Change: for subscribers in order to be able to upset that. And we expect the stabilization to continue through the rest of the year.
Speaker Change: Thank you, you have such a helpful color. Allah passed on there.
Speaker Change: Thank you. The next question is coming from George Kelly of Roth's Capital Partners. Please go ahead.
Thank you everybody. Thanks for taking my questions.
Speaker Change: So a couple different topics I wanted to cover, the first is just on Gross Margin [inaudible]
I was hoping you could [inaudible]
Speaker Change: Give a little more detail on the pricing that you took, how much was it when did you take it? And then secondly,
How long?
Speaker Change: or I guess how the forward green coffee buying that you have under contract, how far does that get you? And how should we think high level about 2026? And I know it's a long time for now.
Speaker Change: Yep, no great questions on the pricing side so we're a challenger brand so we do not lead on the pricing side so our comment and the prepared comments.
Speaker Change: is about the future and we plan to take pricing going forward. That will largely hit towards the end of second quarter and into the third and fourth quarter. We're very meticulous about how we do that. We're looking at the prices of the brands that we're challenging.
Speaker Change: We want to stay competitive to them, so it really varies depending on whether you're buying a bad coffee ground or pods.
We tend to be at a premium. [inaudible]
so that we are not putting ourselves [inaudible]
Speaker Change: 25. We're happy about that on average our competitors based on our understanding and speaking with folks out there in the coffee market are about 90 days out so we're in a better position.
Speaker Change: Even though there's a 40% increase relative to where we were last year, our competitors are looking at, you know, over 100% increase relative to where they were last year.
Speaker Change: Environment to try and understand. We look at that on a quarter by quarter basis and future contracts are priced on a quarter by quarter basis.
You're generally seeing...
Speaker Change: We'll be to get hedged against whatever plan we put in place and whatever guidance we give the street rather than taking risk in similar to how our price now.
Speaker Change: So right now where we certainly are sharing at higher coffee prices out in 2026 but we continue to look at that on an active basis and we'll limit that risk as we go.
Speaker Change: Okay, that was helpful. Thank you. And then second question from me on your FDM business.
Speaker Change: You gave a lot of numbers that I just had a hard time keeping up with so I guess that the most I was hoping to let you could revisit or expand on.
Speaker Change: FDM partners outside of that large customer. And I think it was huge, but I maybe missed that. So, just if you could give a little bit more about volume and price about both your largest and the smaller partners there too. That would be great. Thank you.
Speaker Change: Yeah, in general, it is volume and price. We don't get into the details of both at a customer level, but you're right. Our largest customer was up 3% net of all of that.
Speaker Change: and you are also correct that we have had aggressive pricing in that customer.
Speaker Change: against our competitors, and that is paid off. And that's the results of that 3% increase. And the rest of FDM, I believe the number we said was we were up 400% in the rest of grocery, and that's largely through the ACV games, distribution games that we've had year over year.
Speaker Change: Think, you know, just to build on Steve's comment, you know, when we look at...
Speaker Change: Our delivery, the number I mentioned earlier in the questions was, for the total market, if I look at all the customers combined, our coffee business was up 24%.
Speaker Change: And, you know, for a brand in our position, you know, we feel great about that. You know, to Steve's point we did sharpen the price in a number of customers promotionally. Obviously, you know, we're taking, we talked about the base price increase that we're taking on the business that doesn't mean that we won't sharpen up promotion prices in order to be able to drive trial and you know, you know, you know, you know, you know,
Speaker Change: We feel great about the effectiveness of that, given the 34% increase in units, that's 34% more units being trialed by our consumers. We believe in our product quality, so when that happens, that allows us to build a long-term business.
Speaker Change: and yes, just to further elaborate on Walmart where we feel great about our partnership, they've been
Speaker Change: There with us, you know, since day one, fantastic partners to us. As Steve said, we don't talk in detail about specific numbers, but suffice to say, you know, based off of
What continues to be category-leading? No.
Speaker Change: Numbers that we have driven year after year with our largest customer.
Speaker Change: We have great plans in place for the back part of the year to continue to be able to increase our expansion of the business, not only through our coffee business but as we've talked about in energy as well.
Okay, appreciate the color, thanks.
Shun.
Speaker Change: Thank you. The next question is coming from Joseph Altobello of Raymond James. Please go ahead.
Speaker Change: Thank you morning, this is Martin on for Joe. I just want to touch on the pricing and sort of the guide for sales because that hasn't moved at all but you did mention that you took up pricing
Speaker Change: and that it could provide a modest tailwind to H. So just trying to engage with that originally contemplated in the guidance and with that sort of imply maybe lower volumes in a second half or should we take away that maybe we should just have more confidence in the upper side of that range.
Speaker Change: I think there's puts and takes as you go through the year.
Speaker Change: We were always contemplating a potential price increase. We didn't give specifics on what was within that range. But yeah, the put is the pricing on the revenue side, and you could have some elasticity in that number, but we're taking all of that into account without getting into specifics.
Okay, great. Thank you.
Whoa!
Speaker Change: Thank you. The next question is coming from Daniel Biolsi of Hedge I. Please go ahead.
Daniel Biose: How much of the 510 basis points of trade and price investment was due to the energy drinks sliding fees and what was related, if any, to the packaged coffee.
Speaker Change: Traden Slotting would be almost entirely the energy side of the business.
and the supporting piece that's particular for
Sorry, you're you're coming in a bit muffled [inaudible]
Speaker Change: I'm sorry, and that's related to the flooding fee for the energy drinks, watch.
correct
Speaker Change: And then what is the lag on importing the coffee beans to being sold at the 90 days you were talking about?
Speaker Change: No, the 90 days was where our competitors seemed to be hedged out. We're hedged out almost entirely for the full year, based on our discussions with folks within the community of forward purchase contracts.
Speaker Change: When did we start? How long did it take for the tariffs before it started running for a year? Cost of good sold.
Speaker Change: 3rd quarter is our expectation. We could see a little bit of it in a second but we expect that to primarily be into the third quarter.
Thank you.
You're welcome.
Speaker Change: Thank you, at this time I'd like to turn the floor back over to management for an additional or closing comments.
Speaker Change: Yeah, thanks everyone for the great questions. I will just, you know, summarize very quickly. You know, tough operating environment right now. We feel great about where...
Speaker Change: All three segments, all three large segments we operate in, ground coffee.
Speaker Change: Pods and RTD coffee. We feel great about our expansion into energy. We're going to talk a lot about that next quarter, as we have more metrics coming out of the season, but feel like we're off to a great start. And then finally, you know, we have a lot of focus.
Speaker Change: on the cross side of our business, which is something that Steve, myself, the rest of our management team have really been focused on from day one, so this isn't new for us and really given that.
Speaker Change: Infrastructure and thinking that we've had in the business since day one, we feel very well positioned to be able to take on these additional challenges cost wise that have come our way. So excited about the results and look forward to talking to you next quote.
Speaker Change: Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines or bulk off the webcast at this time and enjoy the rest of your day.
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