Press Releases

Waterloo Brewing Second Quarter EBITDA grows +38.4% to $8.0M

KITCHENER, ON, Sept. 2, 2021 /CNW/ -

Second Quarter Highlights:

  • Net revenue increased 39.2% to $34.2 million, up from $24.6 million the year prior.
  • Gross margin improved to 32.6%, compared to 30.9% the prior year; this is a result of increased co-manufacturing, as well as cost reductions.
  • Selling, Marketing and Administration expenses were $4.9 million, up from $3.4 million in the year prior.
  • EBITDA* increased 38.4% to $8.0 million, compared to $5.8 million in the year prior.
  • The Board of Directors approved a quarterly dividend, $0.0276/share, payable October 29, 2021, to shareholders of record as of October 15, 2021. The dividend is classified as an eligible dividend.

First Half Highlights:

  • Net revenue increased 43.8% to $56.7 million up from $39.4 million in the year prior.
  • Gross Margin was flat at 28.5% compared to the year prior.
  • Selling, Marketing, and Administration expenses were $8.5 million up from $6.3 million prior year.
  • EBITDA* increased 42.2% to $11.2 million, compared to $7.9 million in the prior year.

Waterloo Brewing Ltd. ("Waterloo Brewing" or the "Company") (TSX: WBR), Ontario's first craft brewery, announced financial results for the second quarter of fiscal 2022 which ended on August 1, 2021. Waterloo Brewing reported EBITDA* of $8.0 million, an increase of $2.2 million or 38.4% over the prior year, on net revenue of $34.2 million. Net revenue increased by $9.6 million or 39.2% from the second quarter of fiscal 2021.

"The results of our second quarter are a testament to our team's hard work," said George Croft, President and Chief Executive Officer of Waterloo Brewing. "With the commissioning of our second canning line now complete, we have begun to fill our capacity. Revenue from our co-manufacturing business increased by 128%, to $17.1 million, during the second quarter compared to the same quarter in fiscal 2021."

The total volume of the Company's products decreased 3.3% during the quarter, slightly ahead of the industry's decline of 4.9%. LandShark® performed strong with growth of 38% during the second quarter due to the continued success of the 24-pack in-case promotions, as well as growth of the LandShark® seltzers, which were introduced last quarter.

The industry sales through The Beer Store were down 9.1% during the quarter compared to the second quarter of fiscal 2021. Owner brand beer sales were also negatively impacted by transition issues with ramp-up of TBS's new Caledon warehouse.

Seagram Island Time Coconut Lime, and Seagram White Peach cider, launched at the end of the first quarter, and are proving to be quite popular, contributing to a 4% growth of the Seagram portfolio during the quarter.

Gross margin improved to 32.6% in the quarter with the new canning line operational and no longer being required to outsource production, as well as margin improvements from the increase in co-manufacturing. While the shortage of aluminum cans within the beverage industry continues to put pressure on the Company's cost of materials, due to sourcing some cans from international partners, the Company expects to continue to show margin improvements during the balance of the year.

Waterloo Brewing's board of directors has approved a quarterly dividend at $0.0276/share. The dividend is payable on October 29, 2021, to shareholders of record as of October 15, 2021.

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, 2021.

Reconciliation of Net Earnings to EBITDA*


 Quarter ended 

 Fiscal year-to-date ended 

(in thousands of dollars)

August 1, 2021

July 26, 2020

August 1, 2021

July 26, 2020






Net income

$

4,155

$

2,221

$

4,054

$

1,926






Add (deduct):





Income tax expense

1,450

953

1,414

827

Gain on misappropriated funds

(900)

-

(900)

-

Depreciation and amortization

2,634

1,889

4,984

3,626

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

(5)

(4)

(22)

214

Share-based payments

270

196

409

365

Finance costs

397

526

1,308

954






Subtotal

3,846

3,560

7,193

5,986






EBITDA *

8,001

5,781

11,247

7,912

STATEMENTS OF FINANCIAL POSITION
As at August 1, 2021 and January 31, 2021
(Not audited or reviewed by the Company's external auditor)


August 1, 2021

January 31, 2021

ASSETS



Current assets



Accounts receivable

$

15,527,018

$

9,871,061

Inventories

21,562,020

14,344,496

Prepaid expenses

1,039,287

729,260


38,128,325

24,944,817

Non-current assets



Property, plant and equipment

53,091,757

46,630,107

Right-of-use assets

27,682,901

26,936,861

Intangible assets

14,943,460

15,002,826

Construction deposits

231,236

1,949,074


95,949,354

90,518,868

TOTAL ASSETS

134,077,679

115,463,685




LIABILITIES AND EQUITY



Current liabilities



Bank indebtedness

8,887,380

3,366,489

Accounts payable and accrued liabilities

28,213,374

21,341,335

Current portion of lease liabilities

3,519,491

3,282,080

Non-revolving demand loans

-

25,896,379

Current portion of long-term debt

5,240,681

510,275


45,860,926

54,396,558

Non-current liabilities



Provisions

1,050,935

1,019,962

Lease liabilities

21,550,937

21,522,379

Long-term debt 

24,436,327

1,367,930

Deferred income tax liability

4,875,952

3,462,495


51,914,151

27,372,766

TOTAL LIABILITIES

97,775,077

81,769,324

Equity



Share capital

40,231,228

39,546,216

Share-based payments reserves

2,084,224

2,245,415

Deficit

(6,012,850)

(8,097,270)

TOTAL EQUITY

36,302,602

33,694,361




TOTAL LIABILITIES AND EQUITY

$

134,077,679

$

115,463,685

STATEMENTS OF COMPREHENSIVE INCOME
For the quarters and fiscal year-to date periods ended August 1, 2021 and July 26, 2020
(Not audited or reviewed by the Company's external auditor)


 Quarter ended 

 Fiscal year-to-date ended 


 August 1, 2021 

July 26, 2020

 August 1, 2021 

July 26, 2020






Revenue

$

34,201,669

$

24,573,498

$

56,685,854

$

39,415,977

Cost of sales

23,042,956

16,988,040

40,530,338

28,133,486

Gross profit

11,158,713

7,585,458

16,155,516

11,282,491

Selling, marketing and administration expenses

4,938,097

3,422,457

8,534,167

6,261,706

Other expenses

1,124,135

466,877

1,767,923

1,099,697

Finance costs

396,635

525,975

1,307,884

954,420

Gain on misappropriated funds, net

(899,647)

-

(899,647)

-

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





and right-of-use assets

(5,277)

(3,658)

(22,487)

214,405

Income before tax

5,604,770

3,173,807

5,467,676

2,752,263

Income tax expense

1,449,850

952,949

1,413,456

826,485

Net income and comprehensive income

$

4,154,920

$

2,220,858

$

4,054,220

$

1,925,778











Basic earnings per share

$

0.11

$

0.06

$

0.11

$

0.05

Diluted earnings per share

$

0.11

$

0.06

$

0.11

$

0.05

STATEMENTS OF CASH FLOWS
For the quarters and fiscal year-to-date periods ended August 1, 2021 and July 26,2020
(Not audited or reviewed by the Company's external auditor)


 Quarter ended

 Fiscal year-to-date ended


 August 1, 2021 

July 26, 2020

 August 1, 2021 

July 26, 2020






Operating activities





Net income

$

4,154,920

$

2,220,858

$

4,054,220

$

1,925,778

Adjustments for:





Income tax expense

1,449,850

952,949

1,413,456

826,485

Finance costs

396,635

525,975

1,307,884

954,420

Depreciation and amortization of property, plant and





equipment, right-of-use assets and intangibles

2,634,216

1,888,290

4,984,194

3,623,969

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





right-of-use assets

(5,277)

(3,658)

(22,486)

214,405

Share-based payments

270,222

195,712

409,388

365,184

Change in non-cash working capital related to operations

(3,764,764)

11,600,805

(6,264,846)

13,335,325

Less:





Interest paid

(637,018)

(464,854)

(1,319,696)

(878,808)

Cash provided by operating activities

4,498,784

16,916,077

4,562,114

20,366,758






Investing activities





Purchase of property, plant and equipment

(2,304,316)

(2,947,759)

(7,887,396)

(7,055,464)

Construction deposit paid

(70,586)

(1,296,460)

(231,236)

(1,296,460)

Proceeds from sale of right-of-use assets, net

5,983

2,538

23,899

2,538

Purchase of intangible assets

(3,167)

(1,287)

(45,464)

(23,100)

Cash used in investing activities

(2,372,086)

(4,242,968)

(8,140,197)

(8,372,486)






Financing activities





Increase (decrease) in bank indebtedness

858,990

(1,036,758)

5,520,891

(783,077)

Issuance of long-term debt, net of fees

1,173,691

-

4,536,234

2,041,549

Repayment of long-term debt

(1,321,431)

(559,814)

(2,637,649)

(1,107,521)

Repayment of obligation under finance lease

(887,269)

(552,207)

(1,986,026)

(1,433,267)

Dividends paid

(1,969,800)

(1,846,271)

(1,969,800)

(1,846,271)

Issuance of shares, net of fees

29,930

-

115,943

-

Shares repurchased and cancelled, including fees

-

(152,767)

-

(340,393)

Stock option costs

(10,809)

-

(10,809)

-

Proceeds from stock option exercise

-

77,940

9,299

77,940

Cash generated from (used in) financing activities

(2,126,698)

(4,069,877)

3,578,083

(3,391,040)






Net increase in cash

-

8,603,232

-

8,603,232






Cash, beginning of period

-

-

-

-










Cash, end of period

$

-

$

8,603,232

$

-

$

8,603,232






Non-cash investing and financing activities:





Acquisition of assets under lease 

$

745,025

$

233,343

$

2,277,440

$

233,343

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. 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, including but not limited to the anticipated quarterly dividend payment date of October 29, 2021, 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 (loss) on disposal of property, plant, and equipment and right-of-use assets, gain on misappropriated funds, 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 Logo (CNW Group/Waterloo Brewing Ltd.)

SOURCE Waterloo Brewing Ltd.

For further information: George H. Croft, Chief Executive Officer, (519) 498-9908, E-mail: info@waterloobrewing.com