Press Releases

Waterloo Brewing delivers Third Quarter EBITDA of $4.0M up +19% from prior year

Third Quarter Highlights:

  • Net revenue for the third quarter increased +40.2% to $22.8 million compared to $16.3 million in the prior year.
  • Gross profit margin for the third quarter declined to 21.9% versus 31.5% in the prior year.
  • Selling, Marketing, and Administration expenses were $2.6 million, down from $3.4 million prior year.
  • EBITDA* for the third quarter increased +18.7% to $4.0 million compared to $3.4 million in the prior year, excluding one-time costs.
  • The Board of Directors approved a 5% increase to the quarterly dividend to $0.0276/share, payable January 29, 2021, to shareholders of record as of January 15, 2021. The dividend is classified as an eligible dividend.

Year-to-Date Highlights:

  • Net revenue increased +36.2% to $62.2 million, from $45.7 million in the prior year.
  • Gross profit margin declined to 26.1% vs 29.7% in the prior year.
  • Selling, Marketing, and Administration expenses were $8.9 million, down from $9.3 million prior year.
  • EBITDA* for the nine months improved by 38.4% to $11.9 million, up from $8.6 million in the prior year, excluding one-time costs.

KITCHENER, ON, Dec. 10, 2020 /CNW/ - Waterloo Brewing Ltd. ("Waterloo Brewing" or the "Company") (TSX: WBR), Ontario's first craft brewery, announced financial results for the third quarter ending October 25, 2020.

Net revenue grew +40.2% to $22.8 million, and EBITDA grew +18.7% to $4.0 million for the third quarter of fiscal 2020. Gross profit margin declined in the third quarter to 21.9%.

"We are pleased with our performance in the third quarter, posting revenue growth of +40.2% and EBITDA growth of +18.7% compared to the previous year," stated George Croft, President, and CEO, Waterloo Brewing. "The strength of our brands is particularly evident in all retail channels where growth on our Laker family is +5%, Landshark +16%, and Waterloo Craft +16%.  The grocery channel continues to expand during the COVID pandemic and pushed our third quarter growth to +51% in this channel."

"The challenges of last nine months presented a number of new obstacles for us, as it did for many other businesses. This included the increased cost and availability of aluminum cans, the associated cost of COVID related to keeping our employees safe, and the need to outsource some owner brand production to meet demand in advance of new operating capital being commissioned. We met each challenge head-on and we never lost sight of our goals or the path we set out on early in the year. We continue to execute our strategy that allows us to drive growth now and into the future,". added Croft.

"To support this rate of growth we invested $13.4 million of capital in capacity and capabilities, which are not yet fully installed," continued Croft. "Most importantly, the installation of our new can line is on track for completion in Spring 2021 and will add 750 thousand hectoliters per year of incremental capacity.  Over the last few months, demand for our brands and co-manufacturing outstripped our can line capacity.  Prior to the completion of the new can line in Spring 2021, we are using outsourced production solutions in the interim to allow us to continue to grow both our owner brand and co-manufacturing businesses".

As a result of the strength in operating and financial performance, Waterloo Brewing is announcing a 5% increase in the quarterly dividend, to $0.02756 share, up from $0.02625/share. The dividend is payable January 29, 2021, to shareholders of record as of January 15, 2021. "The increase in the dividend is simply our commitment to deliver value to shareholders. We believe in our ability to deliver sustainable results and increasing shareholder return supports our long-term goals," said David Birch, Chief Financial Officer.

"Our business has solid momentum, and that momentum continues to build," added Croft. "Strong brands, clear choices, and a group of the most resilient people have us set up to deliver another record-setting year for Waterloo Brewing."

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, 2020.

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 25, 2020

October 27, 2019

October 25, 2020

October 27, 2019






Net income

$

965

$

588

$

2,891

$

1,433






Add (deduct):





Income tax expense

432

341

1,258

688

Depreciation and amortization

1,963

1,577

5,587

4,399

Loss (gain) on disposal of property, plant & equipment and right-of-use assets

6

(14)

221

(28)

Share-based payments

203

276

568

626

Finance costs

466

452

1,420

1,132

Subtotal

3,070

2,632

9,054

6,817






EBITDA *

4,035

3,220

11,945

8,250

STATEMENTS OF COMPREHENSIVE INCOME


 Quarter ended

 Fiscal year-to-date ended


 October 25, 2020

October 27, 2019

 October 25, 2020

October 27, 2019






Revenue

$

22,824,769

$

16,283,899

$

62,240,746

$

45,683,062

Cost of sales

17,836,211

11,151,543

45,969,697

32,095,705

Gross profit

4,988,558

5,132,356

16,271,049

13,587,357






Selling, marketing and administration expenses

2,609,776

3,384,260

8,871,482

9,283,721

Other expenses

510,195

380,446

1,609,892

1,078,167

Finance costs

465,720

452,288

1,420,140

1,132,549

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





and right-of-use assets

6,128

(14,035)

220,533

(28,248)

Income before tax

1,396,739

929,397

4,149,002

2,121,168






Income tax expense

431,634

340,988

1,258,119

687,834

Net income and comprehensive









income

$

965,105

$

588,409

$

2,890,883

$

1,433,334











Basic earnings per share

$

0.03

$

0.02

$

0.08

$

0.04

Diluted earnings per share

$

0.03

$

0.02

$

0.08

$

0.04

STATEMENTS OF FINANCIAL POSITION


 Quarter ended


October 25, 2020

January 31, 2020

ASSETS



Current assets



Accounts receivable

10,207,927

$

4,976,226

Inventories

13,734,922

10,482,912

Prepaid expenses

688,924

787,448


24,631,773

16,246,586

Non-current assets



Property, plant and equipment

40,616,118

32,808,678

Right-of-use assets

26,572,923

27,840,996

Intangible assets

15,057,026

15,184,333

Construction deposits

2,452,930

1,050,425


84,698,997

76,884,432

TOTAL ASSETS

109,330,770

93,131,018




LIABILITIES AND EQUITY






Current liabilities



Bank indebtedness

2,113,211

783,077

Accounts payable and accrued liabilities

21,673,864

12,909,771

Dividends payable

926,124

-

Current portion of lease liabilities

2,632,742

2,869,733

Current portion of long-term debt

3,809,735

2,946,038


31,155,676

2,946,038

Non-current liabilities



Provisions

1,004,478

958,025

Lease liabilities

21,788,368

23,226,137

Long-term debt

17,641,332

13,342,788

Deferred income tax liability

3,467,066

2,208,947


43,901,244

39,735,897

TOTAL LIABILITIES

75,056,920

59,244,516

Equity



Share capital

39,260,522

39,126,283

Share-based payments reserves

2,243,291

2,108,671

Deficit

(7,229,963)

(7,348,452)

TOTAL EQUITY

34,273,850

33,886,502




COMMITMENTS






TOTAL LIABILITIES AND EQUITY

$

109,330,770

$

93,131,018

STATEMENTS OF CASH FLOWS


 Quarter ended

 Fiscal year-to-date ended


 October 25, 2020

October 27, 2019

 October 25, 2020

October 27, 2019






Operating activities





Net income

$

965,105

$

588,409

$

2,890,883

$

1,433,334

Adjustments for:





Income tax expense

431,634

340,988

1,258,119

687,834

Finance costs

465,720

452,288

1,420,140

1,132,549

Depreciation and amortization of property, plant and





equipment, right-of-use assets and intangibles

1,963,432

1,576,833

5,587,401

4,398,808

Loss (gain) on disposal of right-of-use assets

6,128

(14,035)

220,533

(28,248)

Share-based payments

202,792

275,334

567,976

625,963

Change in non-cash working capital related to operations

(13,003,152)

655,636

332,173

5,338,618

Less:





Interest paid

(440,933)

(357,234)

(1,319,741)

(945,703)

Cash provided by operating activities

(9,409,274)

3,518,219

10,957,484

12,643,155






Investing activities





Purchase of property, plant and equipment, net of reimbursements

(3,765,744)

(2,170,156)

(10,836,188)

(4,980,311)

Construction deposit paid

(1,171,450)

(221,223)

(2,452,930)

(270,704)

Proceeds from sale of right-of-use assets

-

17,692

2,538

31,736

Purchase of intangible assets

(2,045)

(10,744)

(25,145)

(134,565)

Cash generated from (used in) investing activities

(4,939,239)

(2,384,431)

(13,311,725)

(5,353,844)






Financing activities





Increase (decrease) in bank indebtedness

2,113,211

-

1,330,134

(1,887,253)

Issuance of long-term debt, net of fees

5,000,000

-

7,041,549

-

Repayment of long-term debt

(778,999)

(469,117)

(1,886,520)

(1,369,445)

Repayment of obligation under finance lease

(552,267)

(357,295)

(1,985,534)

(981,525)

Dividends paid

-

(884,727)

(1,846,271)

(1,769,256)

Issuance of shares, net of fees

-

4,440

-

5,920

Shares repurchased and cancelled, including fees

(36,664)

(290,523)

(377,057)

(770,591)

Proceeds from stock option exercise

-

-

77,940

59,779

Cash used in financing activities

5,745,281

(1,997,222)

2,354,241

(6,729,540)






Net increase (decrease) in cash

(8,603,232)

(863,434)

-

559,770






Cash, beginning of period

8,603,232

1,423,204

-

-










Cash, end of period

$

-

$

559,770

$

-

$

559,770






Non-cash investing and financing activities:





Acquisition of assets under lease

$

88,557

$

12,600,547

$

321,900

$

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 right-of-use assets, 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.

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

SOURCE Waterloo Brewing Ltd.

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