BRC Inc. (NYSE:BRCC) Q4 2022 Earnings Call Transcript

Toby Johnson: Yes, absolutely.

Tom Davin: And I can add to that, which is we’re really focused on delivering an exceptional service to the customer, not only from the Walmart perspective or a grocery customer, but really servicing them at the top priority. So we really have to focus on making this not only excellent but in the top category of excellence. So when we look at how this business continues to grow, we have to build a business that’s going to be around for 100 years. We don’t want to make mistakes that we’re going to scale into. So we’ve really got to focus on how important this is and really focus on the customer delivery.

Michael Baker: Okay. I think I get it. If I could ask one more quick one. Just again, the reason why the number of RTD doors went down by 9,000 versus the third quarter 10-Q, explain that again? And why that’s not – shouldn’t be a concern or it doesn’t show a loss of customer?

Tom Davin: Toby?

Toby Johnson: Yes. So we were working with a retailer with 18,000 doors. There’s a certain number of them. I’ll let you extrapolate which ones that could be. That retailer, we executed a test with them in Q2 and Q3 of last year. So you see those that 18,000 doors reflected in the number. The timing of that test was planned for that window. And then those doors came out of our Q4 numbers. We are currently shipping to that retailer for ongoing distribution this month. So those doors will be reflected and recaptured. Our target that we had set for the year was 100,000 doors. We feel very confident in our ability to hit that target and exceed it in 2023.

Michael Baker: So if we were to see the 1Q, 10-Q, it will have those doors back in, in other words, plus others, plus more?

Gregory Iverson: Yes, Michael, this is Greg. I think depending on the timing of the load-in at the actual stores, but certainly by Q2, you should expect to see them fully in there. And just adding to what Toby said, this is something that we expected and we had planned on, probably just something we should have telegraphed a little bit more since it does look like a big number, a big decline, which is misleading.

Michael Baker: Fair enough. Okay. I’ll pass it on. Thank you.

Gregory Iverson: Thanks, Mike.

Operator: Our next question comes from the line of Bill Chappell with Truist Securities. Please proceed with your question.

Bill Chappell: Yeah, thanks. Good afternoon.

Evan Hefer: Hey, Bill.

Bill Chappell: Just kind of want to ask, I guess, a similar type question on the top line guidance. If I was to annualized fourth quarter revenue of $93 million, and that is basically the midpoint of your guidance assumes 12% top line growth. And if you got an 8% price increase, that basically assumes 5% volume growth. I know that’s oversimplifying it, but maybe help me understand how that’s not the way to look at it? Because it seems like that’s how – and does – are we implying that first quarter revenue will be down sequentially pretty meaningful and then build back up? Thanks.

Gregory Iverson: Yes, Bill, this is Greg. I can take those, and I’m sure Tom and Toby can add in as well. But on the first one, if we just talk about price specifically. So you won’t see the full 8% roll through in pricing. And that’s because as we just went into Walmart in September. So we haven’t taken a price increase in that line item. So the actual price increase on a year-over-year basis, when you look at it across all the channels is closer to 4% to 5% for the fourth quarter. It should be a little bit more than that as we go into Q1 because we did take some additional price increases that we discussed a little bit earlier on the call. And then confirming what you said earlier, which is that we will see a sequential step down in revenue from Q4 to Q1.