Press Releases

Waterloo Brewing Ltd. Reports Third Quarter EBITDA of $3.4M, excluding one-time costs

Third Quarter Highlights:

  • Net revenue increased 14.9% to $16.3 million up from $14.2 million in the prior year.
  • Gross margin improved to 32.6%, compared to 28.1% in the prior year, excluding one-time costs.
  • Selling, Marketing, and Administration ("SM&A") expenses were $3.4 million up from $2.2 million prior year.
  • EBITDA* increased 21.2% to $3.4 million, compared to $2.8 million prior year, excluding one-time costs.
  • The Board of Directors approved an increase to the quarterly dividend to $0.02625/share, payable January 29, 2020, to shareholders of record as of January 15, 2020. The dividend is classified as an eligible dividend.

Year-to-date Highlights:

  • Net revenue increased 10.5% to $45.7 million up from $41.3 million in the prior year, excluding one-time costs.
  • Gross Margin improved to 30.6%, compared to 27.8% in the prior year, excluding one-time costs.
  • Selling, Marketing, and Administration ("SM&A") expenses were $9.3 million up from $7.2 million prior year.
  • EBITDA* increased 19.2% to $8.6 million, compared to $7.2 million in the prior year, excluding one-time costs.

KITCHENER, ON, Dec. 4, 2019 /CNW/ - Waterloo Brewing Ltd. ("Waterloo" or the "Company") (TSX: WBR), Ontario's largest Canadian-owned brewery, today released results for the third quarter ended October 27, 2019.

Waterloo Brewing Ltd. (CNW Group/Waterloo Brewing Ltd.)

Net revenues for the third quarter of fiscal 2020 grew to $16.3 million, up from $14.2 million in the third quarter of fiscal 2019. Gross margin for the quarter increased to 32.6% versus 28.1% in Q3 of the prior year. Margin expansion was supported by pricing, enhanced co-pack volume as well as overall cost reductions in operations. EBITDA for the third quarter improved to $3.4 million, reflecting an acceleration of strong results in fiscal 2020.

"We are extremely pleased with our third-quarter results. We have outstanding momentum in all of our key sales categories and are reporting 15% growth in revenue and 21% growth in EBITDA" noted George Croft, President, and CEO. "Our Laker brand posted 27% volume growth and our LandShark brand continued to find new consumers and grew volume 28% in the quarter. Our Waterloo brand volume improved 7% in the face of craft beer proliferation and strong competitive category pressure.  Overall, our Owner Brand volumes grew 27% in the quarter, exceptional performance considering that the overall beer industry saw a decline of 3.5% versus the prior year".

As a result of the strength in operating and financial performance, Waterloo Brewing is announcing a 5% increase in the quarterly dividend, to $0.02625/share, up from $0.025/share. The dividend is payable January 29, 2020, to shareholders of record as of January 15, 2020. "The increase in the dividend is consistent with our commitment to deliver value to shareholders.  While we have made a significant capital investment in the last 12 months, we strongly believe in our ability to deliver long term sustainable results through these investments in support of our long-term goals and objectives" said David Birch, Chief Financial Officer.

Croft added, "Our goal is to finish the fiscal year strong and continue the momentum into next year.  All indicators are giving us reasons to be very optimistic about the bright future ahead."

The following financial information should be read in conjunction with the audited annual financial statements of the Company prepared under IFRS for the year ended January 31, 2019.

Reconciliation of Net Earnings to Earnings Before Interest Taxes Depreciation and Amortization, and Share Based Payments (EBITDA)*





 Quarter ended 

 Fiscal year-to-date ended 

(in thousands of dollars)

October 27, 20191

October 28, 2018

October 27, 20191

October 28, 20182






Net income

$

588

$

1,025

$

1,433

$

604






Add (deduct):





Income tax provision

341

395

688

233

Depreciation and amortization

1,577

1,101

4,399

3,178

Gain (loss) on disposal of property, plant & equipment and





right-of-use assets

(14)

-

(28)

251

Share-based payments

276

132

626

334

Finance costs

452

151

1,133

348

Subtotal

2,632

1,779

6,818

4,344






EBITDA *

3,220

2,804

8,251

4,948



1.

As a result of the adoption of IFRS 16 effective February 1, 2019, for the quarter and fiscal year-to-date periods ended October 28, 2019, respectively, EBITDA* increased by approximately $0.2 million and $0.7 million, depreciation and amortization increased by $0.2 million and $0.5 million, and finance costs increased by $0.2 million and $0.4 million.



2.

As a result of a one-time adjustment during the quarter ended April 29, 2018, associated with TBS' change to a consignment basis, net income decreased by $1.6 million and EBITDA* decreased by $2.2 million.

 

STATEMENTS OF COMPREHENSIVE INCOME

Quarters ended October 27, 2019 and October 28, 2018



 Quarter ended 

 Fiscal year-to-date ended 



 October 27, 2019 

October 28, 2018

 October 27, 2019 

October 28, 2018







Revenue


$

16,283,899

$

14,169,490

$

45,683,062

$

37,745,557

Cost of sales


11,151,543

10,185,405

32,095,705

28,538,993

Gross profit


5,132,356

3,984,085

13,587,357

9,206,564

Selling, marketing and administration expenses


3,384,260

2,224,770

9,283,721

7,153,180

Other expenses


380,446

187,763

1,078,167

616,205

Finance costs


452,288

151,411

1,132,549

348,484

Loss (gain) on disposal of property, plant and






equipment and right-of-use assets


(14,035)

-

(28,248)

251,405

Income before tax


929,397

1,420,141

2,121,168

837,290







Income tax expense


340,988

395,281

687,834

233,320

Net income and comprehensive










income


$

588,409

$

1,024,860

$

1,433,334

$

603,970













Basic earnings per share


$

0.02

$

0.03

$

0.04

$

0.02

Diluted earnings per share


$

0.02

$

0.03

$

0.04

$

-

 

STATEMENTS OF FINANCIAL POSITION

Quarters ended October 27, 2019 and January 31, 2019



October 27, 2019

January 31, 2019

ASSETS




Current assets




Cash


$

559,770

$

-

Accounts receivable


5,204,701

4,851,774

Inventories


10,004,804

10,316,767

Prepaid expenses


766,724

562,756



16,535,999

15,731,297

Non-current assets




Property, plant and equipment


27,980,457

24,645,925

Right-of-use assets


27,584,808

4,747,572

Intangible assets


15,237,503

15,253,736

Construction deposits


270,704

1,386,464



71,073,472

46,033,697

TOTAL ASSETS


87,609,471

61,764,994





LIABILITIES AND EQUITY




Current liabilities




Bank indebtedness


-

1,887,253

Accounts payable and accrued liabilities


13,031,683

7,303,233

Dividends payable


882,512

-

Current portion of lease liabilities


2,011,735

799,736

Current portion of long-term debt


1,907,145

1,859,922



17,833,075

11,850,144

Non-current liabilities




Provisions


709,610

553,535

Lease liabilities


23,953,133

2,212,157

Long-term debt 


7,012,529

8,420,927

Deferred income tax liability


2,359,003

1,671,576



34,034,275

12,858,195

TOTAL LIABILITIES


51,867,350

24,708,339

Equity




Share capital


39,373,547

40,001,097

Share-based payments reserves


1,856,602

1,325,150

Deficit


(5,488,028)

(4,269,592)

TOTAL EQUITY


35,742,121

37,056,655





COMMITMENTS




SUBSEQUENT EVENT








TOTAL LIABILITIES AND EQUITY


$

87,609,471

$

61,764,994

 

STATEMENTS OF CASH FLOWS

Quarters ended October 27, 2019 and October 28, 2018



 Quarter ended 

 Fiscal year-to-date ended 



 October 27, 2019 

October 28, 2018

 October 27, 2019 

October 28, 2018







Operating activities






Net income


$

588,409

$

1,024,860

$

1,433,334

$

603,970

Adjustments for:






Income tax expense


340,988

395,281

687,834

233,320

Finance costs


452,288

151,411

1,132,549

348,484

Depreciation and amortization of property, plant and






equipment, right-of-use assets and intangibles


1,576,833

1,100,576

4,398,808

3,178,450

Loss (gain) on disposal of property, plant and equipment and






right-of-use assets


(14,035)

-

(28,248)

251,405

Share-based payments


275,334

132,083

625,963

334,475

Change in non-cash working capital related to operations


655,636

(1,875,576)

5,338,618

3,499,070

Less:






Interest paid


(357,234)

(145,927)

(945,703)

(386,780)

Cash provided by operating activities


3,518,219

782,708

12,643,155

8,062,394







Investing activities






Purchase of property, plant and equipment, net of reimbursements


(2,170,156)

(886,648)

(4,980,311)

(4,968,523)

Construction deposit paid


(221,223)

(151,069)

(270,704)

(409,025)

Proceeds from sale of property, plant and equipment, net


-

-

-

280,000

Proceeds from sale of right-of-use assets


17,692

-

31,736

-

Purchase of intangible assets


(10,744)

(23,501)

(134,565)

(65,200)

Cash used in investing activities


(2,384,431)

(1,061,218)

(5,353,844)

(5,162,748)







Financing activities






Decrease in bank indebtedness


-

-

(1,887,253)

(787,843)

Issuance of long-term debt, net of fees


-

-

-

2,600,000

Repayment of long-term debt


(469,117)

(419,008)

(1,369,445)

(1,115,763)

Repayment of obligation under finance lease


(357,295)

(193,395)

(981,525)

(574,724)

Dividends paid


(884,727)

(709,363)

(1,769,256)

(2,123,972)

Issuance of shares, net of fees


4,440

-

5,920

-

Shares repurchased and cancelled, including fees


(290,523)

-

(770,591)

-

Stock option costs


-

-

(17,169)

(18,510)

Proceeds from stock option exercise


-

1,077

59,779

195,319

Cash used in financing activities


(1,997,222)

(1,320,689)

(6,729,540)

(1,825,493)







Net increase/(decrease) in cash


(863,434)

(1,599,200)

559,770

1,074,152







Cash, beginning of period


1,423,204

2,673,352

-

-











Cash, end of period


$

559,770

$

1,074,152

$

559,770

$

1,074,152







Non-cash investing and financing activities:






Acquisition of assets under lease 


$

12,600,547

$

-

$

12,600,547

$

-

 

About Waterloo Brewing

Waterloo Brewing is Ontario's largest Canadian-owned brewery. The Company is a regional brewer of award-winning premium quality and value beers and is officially certified under the Global Food Safety Standard, one of the highest and most internationally recognized standards for safe food production. Founded in 1984, Waterloo Brewing Ltd. (formerly Brick Brewing Co. Limited) was the first craft brewery to start up in Ontario and is credited with pioneering the present-day craft brewing renaissance in Canada. Waterloo Brewing has complemented its Waterloo premium craft beers with the popular Laker brand.  In 2011, Waterloo Brewing purchased the Canadian rights to Seagram Coolers and in 2015, secured the exclusive Canadian rights to both LandShark and Margaritaville. In addition, Waterloo Brewing utilizes its leading-edge brewing, blending and packaging capabilities to provide an extensive array of contract manufacturing services in beer, coolers, and ciders. Waterloo Brewing trades on the TSX under the symbol WBR. Visit us at www.WaterlooBrewing.com.

Forward-Looking Statements

All statements in this press release that do not directly and exclusively relate to historical facts constitute forward-looking statements as of the date of this press release. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "anticipate", "seek", "plan", "believe" or "continue" or the negatives of these terms or variations of them or similar terminology. Although the Company believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, undue reliance should not be placed on these forward-looking statements, which are not guarantees and are subject to certain risks, uncertainties, and assumptions, which may cause actual performance and financial results to differ materially from such forward-looking statements. The forward-looking statements included in this press release are made only at the date of this press release and, except as required by applicable securities laws, the Company does not undertake to publicly update such forward-looking statements to reflect new information, future events or otherwise.

* EBITDA is a non-IFRS earnings measure, therefore it does not have any standardized meaning prescribed by International Financial Reporting Standards and may not be similar to measures presented by other companies. EBITDA represents earnings before interest, income taxes, depreciation, and amortization, gain or loss on disposal of property, plant, and equipment, and share-based payments. Management uses this measurement to evaluate the operating results of the Company. This measure is also important to management since it is used by the Company's lenders to evaluate the ongoing cash-generating capability of the Company and therefore the amounts those lenders are willing to lend to the Company. Investors find EBITDA to be useful information because it provides a measure of the Company's operating performance.

SOURCE Waterloo Brewing Ltd.

For further information: David J Birch, Chief Financial Officer, (519) 742-2732 Ext. 106, E-mail: info@waterloobrewing.com