BRC Inc. — Earnings Call Q3 2026

Operator: Greetings, and welcome to the Black Rifle Coffee Third Quarter 26 Earnings Call. At this time, all As a reminder, this conference is being recorded. Is now my pleasure to introduce your host, Matthew Robert McGinley, Vice President, Investor Relations. Matthew Robert McGinley: Thank you. Operator: You may begin. Matthew Robert McGinley: Good morning, everyone, and thank you for joining Black Rifle Coffee Company's Third Quarter 26 Financial Results Conference Call. We released our results yesterday in the earnings release and related materials are available on our Investor Relations website at ir.blackriflecoffee.com. Before we begin, I would like to remind you of the company's Safe Harbor provisions regarding forward-looking statements. During today's call, management may make forward-looking statements, including guidance and the underlying assumptions. These statements are based on expectations that involve risks and uncertainties and could cause results to differ materially. For a discussion of these risks, refer to our filings with the SEC. Additionally, this call will include non GAAP financial measures such as adjusted EBITDA, Whenever we refer to EBITDA, we mean adjusted EBITDA unless otherwise noted. Reconciliations of non GAAP financial measures to the most directly comparable GAAP measures included in our earnings release, which was furnished to the SEC is available on our Investor Relations website as well as in the investor presentation available there. Now please refer to the presentation and turn to Slide 4. I would now like to turn the call over to Christopher Mondzelewski, CEO of Black Rifle Coffee Company. Christopher Mondzelewski: Thanks, Matthew. Good morning, everyone. Joining me today are Evan Hafer, our executive chairman Matthew Amigh, our Chief Financial Officer and Matthew McGinley, our Head of Investor Relations. Through the first 9 months of 2026, we have continued to make meaningful progress in growing our core coffee business strengthening the Black Rifle brand. Revenue is up 14% year over year and in the third quarter we delivered growth in both our wholesale and direct-to-consumer businesses. We are encouraged by these results but we also recognize that we have a significant opportunity ahead of us to translate the strength of our brand and the growth of our core coffee business into higher profitability and stronger cash flow. that is really the focus of Project CORE, which we launched during the third quarter. I will come back to that in a few minutes, but first, we will walk through the quarter. Turn to Slide 6. Our packaged coffee business continued to gain share in the third quarter. Growth was driven by expanded distribution and broad based strength across our retail partners. Even as we began to lap the pricing actions we took in 2025. Looking at the Nielsen data, Black Rifle Packaged Coffee sales grew 19.4% in the quarter, roughly 10x the category's 2% growth rate. Looking at the trailing 52 weeks, our retail sales increased 28.9% nearly 3x the category's 9.7% growth. We are seeing that outperformance translate directly into market share gains, across Nielsen's total US multi outlet universe, our bag coffee share increased approximately 65 basis points year over year to 3.4%, while our pod share grew nearly 30 basis points to 2.2%. Turn to Slide 7. We continue to expand our retail distribution in the third quarter. Packaged coffee distribution reached 58.7% ACV across the total US multi outlet channel, up more than 4.5 percentage points from a year ago, approximately 2 percentage points from the second quarter. In grocery specifically, distribution increased more than 6 percentage points year over year to 54%. But importantly, we are not just adding new stores. Also expanding our presence within the stores we already have. that is consistent with our land and expand strategy. Grocery stores carrying Black Rifle now stock approximately 6 of our items on average. Compared with just over 5 a year ago. And we believe there is further opportunity to expand that shelf presence as our products continue to earn their place at retail. Slide 8, Beyond distribution, we are also seeing strong underlying volume growth, Over the latest 52 weeks, our Packaged Coffee unit sales increased 12.8%, while all but 1 of the other leading national brands we compete against experienced unit declines. An important distinction. We are growing because consumers are buying more Black Rifle coffee. Not simply because they are paying more for it. In a category where overall volumes remain under pressure, that is a meaningful point of differentiation for our retail partners. Turn to Slide 9, please. Our direct to consumer business delivered its fourth consecutive quarter of growth, also continuing to evolve our strategy around the distinct roles our different digital channels play. Third party marketplaces, are our fastest growing channel, allowing us to reach consumers on the platforms where they are already shopping. At the same time, blackriflecoffee.com remains the home for our subscriptions. Exclusive products and most loyal customers. We see these channels as complementary. Marketplaces help us broaden our reach, while our owned platform supports retention and repeat purchase. Ultimately, our focus is on growing the overall DTC business, while maintaining pricing discipline and improving profitability over time. Move to slide 10. Our largest mass retail customer is a great example of what Black Rifle can achieve as we build distribution and expand our assortment. We hold nearly 10% share in bagged coffee, and approximately 5% in pods at that customer. Compare that with less than a 2% share in either format across the largest online marketplace in grocery, and you can see where the opportunity is ahead for us. These are substantial markets, the largest online marketplace and our largest mass retail customer each represent more than $4 billion in annual Packaged Coffee sales grocery represents another $6.8 billion Now the opportunity is not identical across these channels. Marketplaces and mass retail are more heavily weighted toward pods, with online purchases skewing toward larger pack sizes. Grocery, on the other hand, has a more balanced mix of bags and pods. Strategy is to tailor our assortment to those different purchasing patterns, while continuing to build distribution expand our shelf presence. Slide 11. In ready to drink coffee, Black Rifle has established a significant national presence. We remain the No. 3 brand in single-serve RTD coffee with distribution of approximately 53% ACV. That said, category conditions remain challenging. Over the past 52 weeks, single-serve RTD coffee category sales declined 4%, while Black Rifles RTD retail sales declined 7%. Our focus now is on generating stronger returns from the foundation we have built. That means concentrating our investments on our strongest customers and products, improving productivity across our existing distribution and lowering our cost to serve. And this is a good example of the more disciplined approach we are taking to investment and resource allocation across the company. Which brings me to Project CORE. Turn to Slide 12, please. Project CORE is our multiyear initiative to sharpen our focus on Black Rifle core coffee business and brand. The objective is straightforward. Improve profitability and earnings quality, simplify our operations and reduce the capital intensity of our business. At the center of this work is a very clear understanding of who we are. Black Rifle is a mission driven brand first premium coffee company and our goal is to combine the strength of that brand with best in class execution. We have organized Project CORE around 5 strategies aligned with the 3 priorities you see on the slide. First, media and mission remain our engine for building consumer demand. We are bringing greater rigor to measuring how those investments translate into retail sales. Second, we are focused on winning in grocery and mass retail, customer by customer. Third, we are building our presence on the digital shelf, by third-party marketplaces while blackriflecoffee.com remains the home for our subscribers and most loyal customers. Fourth, we are taking a more integrated approach to managing pricing, trade spending product costs and overhead with the goal of building a business where earnings grow faster than revenue. And fifth, we are simplifying operations outside our core business. Those operations need to justify their place in the portfolio. If they cannot, we will look to partner or exit them. Across all 5 strategies, we are applying a simple test to every initiative. Does it grow demand for the brand, improve margins free up capital or reduce asset intensity? 've already begun taking meaningful action. That includes the planned sale of our Manchester roasting facility, the restructuring currently underway in our outpost business and the divestiture of a noncore brand. Matthew Amigh will walk through those actions in more detail shortly. But I want to emphasize 1 important point. Our increased focus on profitability does not diminish our ambition for growth. Project CORE is about making sure we capture more of the value growth creates. Before I turn the call over to Matthew, I want to spend a moment on something that is been central to Black Rifle since the very beginning. Our mission. And that commitment was on full display again this quarter. We supported 10 charitable events and initiatives contributed more than $590 thousand to organizations serving veterans active duty military personnel, first responders, and their families and delivered more than 4.3 thousand bags of coffee to 45 military units around the world. To commemorate the 20 fifth anniversary of September 11th, we partnered with the Gary Sinise Foundation to deliver 300 appreciation packages to New York City fire stations. We also joined the major Brent Taylor Foundation to bring 30 Gold Star families together for a weekend of remembrance. And we delivered 1 thousand appreciation gifts to service members, caregivers, and medical staff at Walter Reed. Behind every 1 of these efforts are people who have dedicated their lives to serving others, and families who have made sacrifices that too often go unseen. We owe them a tremendous debt of gratitude. And having the opportunity to give something back is 1 of the most meaningful parts of what we do at Black Rifle. With that, I will turn it over to Matthew. Matthew Amigh: Thank you, Monz. I will begin my remarks on slide 14. Third quarter net revenue increased 7.3% year over year to $108 million, reflecting growth in both wholesale and direct to consumer. Wholesale revenue increased 8.1% driven by our entry into the dollar channel earlier this year where pack size innovation opened new distribution across 19 thousand doors. As well as continued distribution gains in grocery where revenue grew by more than 50% year over year, including chain wide distribution at a large Texas based regional grocer. Direct to consumer revenue increased 8.5% year over year led by a approximately 65% growth in third-party marketplaces, partially offset by lower subscription revenue and the divestiture of a noncore brand, Excluding the divested brand, D2C revenue increased 12.3%. Turning to slide 15. Third quarter gross margin was 37.1%, up 25 basis points year over year. Gross margin included 325 basis points, or $3.5 million, a benefit from the refund previously paid tariffs. As expected, pricing and coffee cost inflation had a neutral impact on the quarter. Productivity gains, including lower fulfillment costs from our logistics transition, helped offset the mix impact of growth in lower margin channels particularly third-party marketplaces. We also increased trade investment with key retail partners including a promotional program at a key customer. And higher freight rates and fuel costs weighed on margins by 80 basis points. Our 2026 green coffee requirements are fully covered and we now have secured more than 90% of our expected 2027 volume and prices below those contracted for 2026. Providing greater visibility into our cost position heading into next year. Looking ahead, our focus remains on improving the profitability of our sales mix, increase the effectiveness of trade spending and continuing to reduce our production fulfillment and freight costs. This focus is not an episodic event, but rather a systematic and repeatable process to find productivity savings to fuel growth and cash generation. Moving down the P&L to slide 16. Third quarter operating expenses were $47.6 million compared to $36.6 million in the prior year period. The increase was primarily attributable to $11.7 million of noncash impairment charges associated with Project CORE. Excluding depreciation and amortization and the items reflected in our adjusted EBITDA reconciliation, operating expenses increased approximately $1.2 million, or 4.1%, to $31 million. that is below our 7.3% revenue growth. And as a percentage of revenue, adjusted operating expenses declined approximately 90 basis points year over year to 28.7%. Most of this increase reflected investment in building the brand, Marketing expense increased 18% to $10.3 million or 9.5% of revenue compared to 8.6% a year ago. The increase was driven by higher investment in performance media to support sales along with content production, influencer programs, and agency support including programming around America's 250th anniversary. On a year to date basis, marketing remains below last year's level as a percentage of revenue at 9.6% compared with 10.4% as marketing efficiency improves through disciplined marketing mix optimization. Adjusted EBITDA increased 12.3% to $9.5 million from $8.4 million in the prior year with adjusted EBITDA margin expanding 40 basis points to 8.8%. Turning to the balance sheet. We ended the quarter with $9.2 million of cash and $35 million of debt outstanding with no borrowings under our revolving credit facility and approximately $50 million of available capacity. Net leverage was approximately 0.8x trailing 12 month adjusted EBITDA Year to date, we generated $8.8 million of free cash flow compared with a $4.1 million use in the prior year period. This approximately $13 million year over year improvement was driven primarily by higher profitability, lower capital expenditures, and reduced inventory balances. Our balance sheet and available liquidity provide the financial flexibility to continue investing in the business while executing the initiatives under Project CORE. On August 21, we completed a 1-for-10 reverse stock split of our class a and class b common stock. A proactive step to provide a meaningful cushion above the New York Stock Exchanges minimum bid price requirement and broaden our appeal to institutional investors, some of whom have policies that limit the investment in lower priced shares. All share and per share amounts have been adjusted to reflect the split for all periods presented. Before turning to our outlook, I want to build upon Monz's discussion of Project CORE by highlighting 3 significant actions we have taken and what they mean for Black Rifle Each meets the test he described by improving margins, reducing asset intensity, or freeing up capital. First, we signed a definitive agreement to sell Manchester, Tennessee roasting facility to Cascade Coffee a long standing manufacturing partner. For $10 million in cash at closing, and $7 million seller note due in 12 months. We will apply $8.6 million of the $10 million in cash proceeds to the term loan, which further reduces net leverage heading into year end. Cascade will assume operations and retain the facility's employees, allowing us to reduce our manufacturing footprint and capital requirements while maintaining an experienced workforce in a facility that can deliver the quality our customers expect. We also secured a long term supply agreement with Cascade at improved tolling rates, So consolidating production with them is expected to lower our production costs and improve our working capital beginning in 2027. Together with the sale proceeds and the reduction in working capital, this is an asset light move that improves both the balance sheet and the P&L. Second, we are restructuring our outpost business closing 12 company operated locations and retaining 5. Going forward, we expect growth in this business to come primarily through franchising. Allowing us to expand our presence with significantly lower capital requirements. Third, we completed the divestiture of a noncore brand sold primarily through direct to consumer channels which generated approximately $6.5 million of revenue over the trailing 12 months. The brand divestiture and outpost closures are expected to create a revenue headwind of $3 million in the fourth quarter compared to last year. Once completed, the outpost closures are expected to reduce annualized revenue by approximately $8 million to $10 million, while improving profitability by eliminating losses at underperforming locations. These actions also result in a leaner organization. We exited the third quarter with approximately 425 employees, and expect approximately 62 by early 27 a reduction of nearly 40%. Largely reflecting the transition of Manchester employees to Cascade and the outpost closures. For perspective, we had 918 employees at the end of 22, our first year as a public company. So the expected level of approximately 260 would be more than 70% lower as we transition to a simpler more profitable, and asset light operating model. Moving to the outlook on slide 18. We are reaffirming our 2026 outlook of at least 8% revenue growth or approximately $430 million and at least 35% adjusted EBITDA growth or approximately $29 million. Through the first 9 months, revenue has increased 14%, and adjusted EBITDA has nearly doubled. For the fourth quarter, the floor of our guidance implies revenue of at least $106 million compared with $113 million last year. That comparison includes 2 items. Approximately $5 million in liquidation revenue in last year's fourth quarter that we do not expect to repeat at that level, and approximately $3 million of revenue headwind this year from a recent divestiture and the planned outpost closures. Adjusting for these items, even the floor of our guidance implies a modest year-over-year growth, reflecting continued momentum in our core coffee business. On gross margin, we continue to expect full year results within our guidance range of 34% to 36%. Through September, gross margin was 34.8%. For the fourth quarter, we now expect gross margin of approximately 34% compared with approximately 36% when we spoke in August. The change primarily reflects increased trade investment with key retail partners during holiday periods and higher transportation costs. Our retail velocity has been strong this year, and this investment is designed to build on that and position us to earn additional shelf space as we head into 2027. We expect continued fulfillment efficiencies to partially offset these factors. The third quarter tariff refund was not included in our August outlook, and helps offset these higher costs, supporting our reaffirmed full year guidance. For adjusted EBITDA, the floor of our full year guidance implies fourth quarter results of approximately $6 million compared with at least $8.3 million implied in August. The reduction primarily reflects the increased trade investment and transportation costs I just described. As planned, holiday marketing will be our highest quarterly spend of the year. Looking ahead, these 3 actions under project core represents significant steps towards a simpler, more profitable, and less capital-intensive Black Rifle. Our ambition is not simply to grow revenue. It is to translate that growth into stronger margins higher profitability, and substantially greater cash flow generation. We look forward to sharing our 2027 outlook on our fourth quarter earnings call. Operator, we are now ready for the Q&A session. Operator: Thank you. We will now be conducting a question and answer session. Our first question comes from the line of Michael Baker with D. A. Davidson. Please proceed with your question. Michael Baker: Okay. Thanks. So sounds like, correct me if I am wrong, you are deemphasizing ready to drink, no mention of energy. Drinks on the call or even think of the slides. So clearly, just focus on the core coffee business I guess my question is, how does that change the long term opportunity for the company? If you could, could I ask how does it change the sort of earnings algorithm? what is a reasonable growth rate expectation and long term margin expectations surely the outlook has to have changed by deemphasizing these businesses. Christopher Mondzelewski: Michael, it is Christopher. Thanks for the question. I will begin answering it at a strategic level and I am going kick it over to Matthew, who will give you as many numbers as he is comfortable sharing. Yeah. I think. Look. We talked about Project CORE. I am gonna double down on, you know, that for us strategically is around focus on pods and bags. That has always been the core of our business. And as we have been talking about over the last couple of years, we continue to funnel our investment against what we continue to believe is the tailwind component of the market for us both from a growth as well as a profitability standpoint. And that is in fact pods and bags. We are having incredible success with that. Through the quarter, we again saw close to 20% growth overall higher on bags. Pods was still 3x the category. We are the only brand out there. We are 1 of only 2 brands out there that are growing units while also driving pricing still So the reality is, you know, we feel great about that part of our business. The RTD coffee business has been challenged as a category. We have talked about that. There are significant headwinds. In that category. We are absolutely not giving up on that business. but we are being smart about our investment profile. We are going to continue to put our dollars where we see the highest return And in the background, we continue to work on initiatives that we believe could be key to us growing that component of the business, but doing it in a smart way where we can do it profitably. And make sure that we are, you know, taking care of the overall mix of the business. From an energy standpoint, that is an innovation we pushed out a couple of years ago. Clearly, we are very excited about it as you would with any major innovation initiative. And, yeah, we have had some challenges, and we talked pretty openly about the fact that we have reduced the geography of that. We have had some successes and we certainly had some areas that, you know, need significant improvement as well. And as such, you know, we have been careful to tailor our dollars against that component of the business that we believe is appropriate to its size, which is obviously significantly smaller than any of the other components of our business on the coffee side. As far as long term outlook, we are not in a position right now to give long term guidance. We may be here in the future. Does it change our perspective Certainly. But again, you know, as we go back to project core, this is about building a sustainable growth engine on coffee first and foremost. that is $14 billion coffee as measured by Nielsen. Those are only Nielsen channels. So it is actually bigger than that. But $14 billion, we are a, you know, 3.2% share in bags. We have a 2.7% share in pods. We have significant room for improvement or growth, I should say. In that category as we think about our long term ambition. We have talked about land and expand and how we are going to drive it behind that. Is about not only distribution increases, but velocity increases, which we have already been demonstrating as we have been growing the distribution. So we believe there is significant long term growth potential behind that alone And then, yes, I think as the cold business, as we are able to smartly make those investments in the cold side of our business, that will play a role as well. Then most importantly, Michael, we are gonna do that in a very profitable way. that it is going to generate significant free cash flow back into the business and allow that whole engine to continue to work for us. Matthew Amigh: Okay. Michael, I just had add to what Monz said about Project CORE. When it comes down to, we are going to improve profitability and earnings quality for sure, simplify the operations and improve free cash flow and make this business asset light. And I think you can see that in some of the moves we announced today. You know, as Monz mentioned, we are not gonna guide 2027 today. We will wait till the Q4 call to do that. But what I can say about it is, you know, when you go up there several building blocks that we already know about 2027. As I mentioned a little bit ago, we have about 90% of our coverage for 2027 already locked in at prices lower than 2026. We are feeling good about that. As always mentioned, the team is putting a great effort right now on productivity saving and, we are beginning to see those really come through. And a piece of that would be the sale of Manchester. You know, that is that is gonna work out as a lowing tolling rate going forward under a long term agreement. So we have a we have good building blocks on the gross margin side. You know, what I can say is, again, it is it is about if expanding the margin and EBITDA as well as free cash flow, and you can expect that from us in 2027. Michael Baker: Fair enough. Can I ask 1 other question? So I think the both for the third quarter and the full year, the profitability would have been below where you had, talked about in the past, if not for the tariff refund, I think some things have changed, like higher transportation costs, perhaps, perhaps you are leaning more into marketing, spending some of that tariff money back or with the trade promotions. But if you could sort of talk to us about what has changed, You know, you are the positive from the tariffs, but presumably, there are offsets, somewhere else such that, you know, they even out and the guidance has not changed even with that benefit. Matthew Amigh: Yeah. You know, I will start to conversation on that, Mike. Or the answer to your question on that, Michael, is we are really happy with the way the year is playing out right now. Year to date revenue is up about 14%. Free cash flow went from a consumption of $4 million to generating $8 million so like almost a $13 million change in free cash flow year over year. And adjusted EBIT at almost $24 million year to date, it is nearly doubled. So we are we are, we are very pleased with the way year is playing out. Now Q3, I will just be direct on this. Yeah. We would have been we would have been under what we framed up if was not for the tariffs, but that is based upon 1 big decision that we made, which was, hey. We are going to spend some of that back in promotion at our key accounts on very effective promotion. that is gonna put us in a very good position with velocities as we exit the year as we get ready for the line reviews with our key accounts, and we are going to expect more distribution gains. So we are we are spending some of that back on promotion to strengthen our position in 2027. And you know, when it comes down to the other driver, I think you can talk about it a few minutes ago, it is gonna be freight and fuel. Right? So the driver capacity out there is a real capacity issue with drivers, and that is coming through in lane rate. We are seeing that clearly. And then we did not anticipate that the, war would continue on and the price of diesel will be over $6, and we are adjusting for that as well. And you will see that in the Q4 outlook that we have. Now we are we are holding the year. It at least 8% growth, on that revenue, which about 430 million. But keep in mind, that includes us having a $3.5 million headwind from the closure of the outpost as well as the divestiture. So in essence, that really is a raise. If you take in account those adjustments. And then when it comes to the bottom line, we are feeling we are feeling good about the you know, at least 35% growth at $29 million. And again, the reason you are not gonna see that pop in Q4 EBITDA is simply the fact that we are gonna run a little bit harder promotion to strengthen our position for 2027, and then the fuel and lane rate cost. Michael Baker: Yeah. It makes sense to reinvest the tariffs. Thanks, Appreciate the color, and we will turn it over to someone else. Thanks, Michael. Thanks, Michael. Operator: Thank you. Our next question comes from the line of Eric Deslauriers with Craig-Hallum. Please proceed with your question. Analyst: Hi, guys. Thanks for taking my question. And congrats on the continued market share gains and the announced Project CORE here. So most of my questions, just focusing on Project CORE. If you can provide a bit more color on the sort of integrated approach to trade spend here. Just kind of give us a bit more detail on what to expect from that front? Christopher Mondzelewski: Yeah. I will kick it off, Matthew. I can jump in. So thanks for the question, Eric. I think this is something we are very excited about. On Project CORE, this is really the first that we are talking about it publicly. That is something that we have been driving internally already for some time. it is been producing the focus that I talked about on the last question from Michael. There are 5 elements to it They are all quite simple and that is to me what makes the best strategies. It starts with for media and mission for us, brand and mission. That is number 1 for us. The brand is everything to any successful premium CPG business, but particularly for us at Black Rifle as a life lifestyle brand. We have seen that brand carry us. To significant gains across the market, and that will always be our number 1 priority. The ability to invest and make that most efficient Winning center store is the second element of Project CORE. Center store, then, we are defining that as pods and bags. I just talked about, that is gonna be the lion's share of our investment. it is, again, $14 billion category. We have a growing but small share and we believe that we can significantly grow that share over the next few years. The third is digital shelf. So again, we have talked very much about how we look at our DTC business as 1 combined digital shelf to the consumer. Whether they are buying off of our site, whether they are buying off of Amazon, walmart.com, target.com or any retailer site, That is a decision the consumer is gonna make They are deciding that they would like to buy digitally. They would like to have that product, you know, delivered to them in some form. And we are going to be omnipresent in our ability to support that. We are not gonna tell the consumer how to shop. But we are going to be there for the consumer at a very strong value. And again, we have had a lot of with this. We continue to grow our DTC business with this approach. And we have added profitability to the business with this approach. Number 4 is gonna be focused on margin and earnings. Matthew will elaborate a bit on that. Again, he is been talking about this now. Quarter after quarter. We will continue to edge our margin in a positive direction for the overall business in a healthy way where we are still investing back to drive growth. And then on an earnings front, we will continue to optimize the overall remit of the business. We have done a good job, I think of controlling our G&A costs. Line items that kind of fall below the line of the P&L and we will continue to do that to ensure really strong cash conversion off of those earnings as well. And then finally, the component that is wrapped into all of it is simplify the noncore. And, again, for those of you who have been following our business, you understand that, you know, we do run a multi leg business. We have multiple components out there, and we are always, you know, going to be innovating with our business, but we need to be very careful. That we are always putting our investments against where we see those strongest returns. So you heard us talk about our Manchester facility and a partnership that is a great example of where we get a win scenario. We get product produced an exceptionally high quality We do it in a way where, you know, that does not become a cash constraint on our P&L. And, you know, the outpost closure, just another example again, know, We still view outpost as a significant way to build our brand in the future but we are gonna be smart We are gonna make sure that items like that do not become a drag on the P&L that would then limit our investment back into what we define as the core which again are the bags, the pods component of our business. Matthew, you wanna build on that at all? Matthew Amigh: Yeah. Eric, it comes down to, you know, outside the 5 principles that Mon's walked you through. It comes down to a very simple filter we put on each of these actions that we plan on doing. Number 1, hey. Does it lift margin? Number 2, does it make us asset light? Number 3, does it free up capital? And, does it protect our fast our growth brand? Right? So it. Does it protect our core business? So these 3 actions you see that a filter pass on each of those. So with the outpost restructuring, we are gonna close down 12 of the company operated outposts and another 8 undeveloped sites we are going to exit those as well that we have sitting on the books. Now we are gonna keep the best 5 as Monz mentioned. We will create a model for what we wanna franchise out in the future, and build the growth out for a franchise model, which is obviously a lot less capital-intensive. When it comes to Manchester, it really is a win opportunity for us, and we took advantage of it. And not only will we get $17 million in proceeds, $10 million upfront and $7 million you know, 12 months out at the anniversary date. But you know, Cascade is a long term supplier of, black rifle. They care about quality as much as we do. They are gonna take on all the employees at Manchester, so they are gonna get an experienced workforce that knows what we expect out of the brand. And, you know, over time, this is gonna give us a cost advantage, you know, when it comes to the tolling fees, which step down over time. We are we are very pleased with that. And then finally, the divestiture of the D2C brand which was you know, just a distraction. Right? So we are we are taking a brand that really did not drive much on the top line and nothing on the bottom line. We are we are jettisoning that and, making this business simpler. But again as I said to Michael a little bit ago, these are all gonna play through, margin accretion, EBIT accretion, and you know, free cash flow accretion as well. So you will see this reflected when we guide for 2027. At the Q4 call. Analyst: that is all very helpful. I appreciate that extra color there. And then just higher level, I mean, I know that, know, you guys are gonna give 2027 guidance on the next call, but overall, how should we think about the amount of savings that you expect from Project CORE here If you can break that down between COGS and OpEx, that would be helpful. And then just higher level, I mean, I have heard you guys comment just recently here on you know, continuing to sort of edge up margin. So, you know, presumably not all this is going to be reinvested, but can you just kind of talk guess, more philosophically on how to think about sort of reinvesting the savings from Project CORE versus letting those basically fall to margin expansion? And then to the extent that you will be reinvesting, should we be thinking of that as mostly in the promotion and trade spend that you have kind of called out for Q3 and Q4 here? Christopher Mondzelewski: Hey, Eric. I will let Matthew address some of the numbers you are asking for. Really quickly though, do want to and you kind of closed this in the second part of your question. And I appreciate that, which is that this is more than just cost savings for us. This is really about growth. We are a growth company and we are a growth company within what we have defined as the core of our business. Again, the pods and bags and, you know, again, we have we have we have walked through the numbers and how we have driven that up to now. Is our land and expand strategy that we will continue to drive and then the ability to lift the velocities of our items in market through smart marketing. And we need to have the fuel for And that is what Project CORE is all about is ensuring that we have every penny available to us to reinvest while still delivering a significantly profitable business with significant cash flow for the capital needs that we need. Going forward And so again, it is 2 parts for sure for us focused on both the top and the bottom line of the business. But Matt, I will let you decide where you want to elaborate on numbers Yeah. Matthew Amigh: Eric, I do not want to sound cagey on the project core opportunities at all, but there are some things that we are still working through which is you know, there will be a capacity expansion project going into the Manchester facility by Cascade. We are still working on the timing of when we will start to realize some of those savings. But what I can say when we think about how to think about 2027, we do know that we. We are locked completely for 2026 on green coffee pricing. We have over 90% locked in for next year as I mentioned. it is lower than the cost structure with it we see this year when it comes to green coffee pricing. So we are feeling great about that. Now the outpost closure will generate not so much gross margin benefit, but when you look at the lease expense and the G&A that goes against it, for the labor, it is gonna be accretive at the EBITDA level. So we will see some accretion come through for the outpost closures. Those closure dates vary, and we are working through that right now. Many of them closed down in 2026, but some stretch out into 2027. So we are working on that timing. Know, look. We will we will definitely lap the third party tariff. Or excuse me, the third quarter tariff. Benefit that we have seen. So, you know, we do not consider that to be a run rate change in our cost structure at all. We are not assuming any pricing in 2027. You know, the pricing is has already settled in from the 2 actions we took in 2025. Again, think back to what project core means. We are gonna we are gonna grow earnings faster than to grow revenue. And you will see an increase in margin and EBITDA and EBITDA margin free cash flow as we plan out 2027. Analyst: that is all helpful. Thank you very much for taking my question. Sure. Operator: Thank you. Our next question comes from the line of Joe Feldman with Telsey Advisory Group. Your line is now live. Analyst: Yeah. Hey, guys. Thanks, Allen, for signing this morning. Wanted to ask with regard to the project court, how are you guys in incorporating technology to generate productivity? And are there other opportunities? I think you touched on maybe a little bit of a reduction in headcount down the road, but could you share a little more color on, I guess, technology's role in that? Matthew Amigh: So the biggest thing, Joe, I would frame for you is that, when we became a public company a couple years ago, we had over 900 employees. We expect to end this year at around 425, and after Project CORE is done we expect to be down to about 262. So, you know, a lot of that is just getting a lean organization and focusing on what is actually driving the top line. But, you know, we. We are incorporating technology and everything that we do, and we kind of rethink every position. As we refocus and, you know, or positioning for this next phase of our growth, which is gonna have a few top line impacts next year from the divestitures that we are seeing. Analyst: But you know, remember that, you know, the EBITDA, the. Christopher Mondzelewski: At the end of the day, the expectation here is that we are going to have EBITDA growth that is substantially higher than what we see for revenue growth. That is a lot that goes into that, but 1 of those things is technology, and we are incorporating all those things into power view in the future of this company. I think, Joe, just to build on that, you know, we see you know, to be honest with you, know, what Matthew said is true. We see technology as an enabler for growth. that is the way we look at it. You know, some of the stuff we do is proprietary. I am not gonna go into the details of You know, whether we are ahead or behind the market when it comes to utilization of AI, etcetera, I do not know. We are not too concerned about that. What we are concerned about is how is it enabling us to drive our growth model on more accelerated basis. And I will tell you, again, if you follow our business, I know all of you do. I know you do, Joe. You know, when it comes to our marketing, we absolutely take advantage of all of the leading edge elements of technology and putting together our brand positioning, how we look at that. And then, you know, as you can imagine, even some of the more traditional parts of the business, we have begun to utilize that as well. But again, we do it through a growth We do not look at it as necessarily optimization of the business. Yes. Those things happen naturally. But frankly, that is the easier part. The harder part I think and what we believe in, Matthew and I challenging ourselves to say, how do we use this technology to put ourselves in a position where we be able to sustainably outgrow the market across, you know, our pods and bags business. that is really helpful guys. Thank you. Analyst: And then maybe just a follow-up. I wanted to drill down a little bit into the non core Was that 1 business that we were selling off? Is that is that it? Like, are there other areas like it I think it was kinda touched on earlier by Mike. But is it, like, ready to drink or energy? Like, are those noncore that could go away? Matthew Amigh: Hey, Joe. This is Matthew. So the D2C business that we divested was a very non core brand called Grounds and Hounds. So it was not aligned with the brand messaging of Black Rifle. Like I said before, it is pretty much a distraction. Did not generate much well, any EBITDA at all. So, yes, that was a very, deliberate decision that we made. When it comes to the other product lines that we have, you know, they are they are still massive If you think about the RTD business and roughly a 4.1% share in the market right now we are number 3 in market. So the focus there would be more of, improving the margin of the business and improving the really the cost to get the product to market. So that is where we will focus on that business going forward. But everything in the business we are looking at through the filters that Monz described earlier. And, we will use that discipline to evaluate each and every product line. Christopher Mondzelewski: Just to build on that, you know, because it is a great point you are making. No. It does not mean just it does not mean that anything that is noncore is gonna be unwound, but by no means does it mean that. It does, however, mean we are going to focus investment significantly towards the core components of our business. We also potentially, we will revise what the core looks like over time. You know, again, right now, you know, the category is challenged within cold coffee and we have some work to do as Matthew said, on that business to ensure that we have got the right level of profitability. And that we have got the growth ideas that we believe can help to turn that category. As we do that work in the background, over the next couple of years, that very well could, you know, change our point of view on where that plays you know within core overall. So again there are elements of the business that are going to be clear decisions for us to unwind like Matthew talked about with Grounds and Hounds. But that does not mean. Know, it is it is a classic portfolio approach. And, you know, just because something is not core in your portfolio does not necessarily mean that it will not be part of your business. Analyst: that is great. that is really helpful, guys. Thank you so much. Good luck with the fourth quarter. Thank you. Thanks, Joe. Operator: Thank you. Ladies and gentlemen, this concludes our question and answer session. I will turn the floor back to management for any final comments. Christopher Mondzelewski: Well, I appreciate the questions. Overall, we are building on our progress that we have made. Strengthening the business, we are improving profitability and generating cash flow. And we believe we will continue to accelerate that as we go into 2027. We will As Matt said, we will give you guidance on that as we go into the next quarter call. Project CORE, we are exciting to talk about that for the first time. it is about accelerating the growth of our coffee business and using the stronger foundation to drive further earnings and cash generation for us going forward. We will reinvest behind the opportunities that we believe have the greatest potential for this business overall. So, we appreciate everybody's interest in the business, and we will talk to you next quarter. Operator: And this concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.