Press Releases

Waterloo Brewing Third Quarter EBITDA grows +7.4% to $4.3M

KITCHENER, ON, Dec. 9, 2021 /CNW/ -

Third Quarter Highlights:

  • Net revenue increased 17.8% to $26.9 million, up from $22.8 million in the prior year.
  • Gross margin of 22.2% was slightly better than the prior year; incremental co-manufacturing in the period helped to improve performance.
  • Selling, Marketing and Administration expenses were $3.4 million, up from $2.6 million in the prior year.
  • EBITDA* increased 7.4% to $4.3 million, compared to $4.0 million in the prior year.
  • The Board of Directors approved a quarterly dividend, $0.0304/share, an increase of 10%, payable January 28, 2022, to shareholders of record as of January 14, 2022. The dividend is classified as an eligible dividend.

Year-to-Date Highlights:

  • Net revenue increased 34.3% to $83.6 million, up from $62.2 million in the prior year.
  • Gross Margin of 26.5 % was slightly improved versus 26.1% in the prior year.
  • Selling, Marketing, and Administration expenses were $11.9 million, up from $8.9 million in the prior year.
  • EBITDA* increased 30.4% to $15.6 million, compared to $11.9 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 third quarter of fiscal 2022 which ended on October 31, 2021. Waterloo Brewing reported EBITDA* of $4.3 million, an increase of $0.3 million or 7.4% over the prior year, on net revenue of $26.9 million. Net revenue increased by $4.1 million or 17.8% from the third quarter of fiscal 2021.

"I am encouraged with our third quarter results. Despite industry-wide beer category softness, supply chain challenges and inflationary cost pressures, we continue to deliver top line growth to the business. Our co-manufacturing business continues to exhibit healthy growth and we are expecting to close the year off on a strong note," said George Croft, President and Chief Executive Officer of Waterloo Brewing.

The total volume of the Company's owner brand products was flat versus the year prior compared to an industry volume decline of 4.2% in the third quarter of fiscal 2022. LandShark® continues to perform exceedingly well with growth of 49% during the third quarter. In-case promotions are attracting new consumers to the premium brand and fueling the growth of the new LandShark® Seltzer brands, which were introduced in the first quarter of fiscal 2022

The Company faced inflationary cost pressures on key input materials and supply chain challenges related to the COVID-19 pandemic but was still able to maintain a 22% gross margin in the third quarter and grow overall production volume.

"In order to minimize our supply chain risk, our team has been proactively securing supply of critical materials as well as locking in pricing on key contracts in anticipation of rising input costs in the coming year," said Russell Tabata, Chief Operating Officer at Waterloo Brewing.

Waterloo Brewing's board of directors has approved a quarterly dividend at $0.0304/share; an increase of 10% from last quarter. The dividend is payable on January 28, 2022, to shareholders of record as of January 14, 2022.

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)

October 31, 2021

October 25, 2020

October 31, 2021

October 25, 2020






Net income

$

738

$

965

$

4,792

$

2,891






Add (deduct):





Income tax expense

268

432

1,681

1,258

Gain on misappropriated funds



(900)

-

Depreciation and amortization

2,491

1,963

7,475

5,587

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

(15)

6

(37)

221

Share-based payments

275

203

685

568

Finance costs

577

466

1,885

1,420






Subtotal

3,596

3,070

10,789

9,054






EBITDA *

4,334

4,035

15,581

11,945

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


October 31, 2021

January 31, 2021




ASSETS



Current assets



Accounts receivable

$

8,461,797

$

9,871,061

Inventories

20,752,375

14,344,496

Prepaid expenses

974,847

729,260


30,189,019

24,944,817

Non-current assets



Property, plant and equipment

51,057,843

46,630,107

Right-of-use assets

30,643,401

26,936,861

Intangible assets

14,892,935

15,002,826

Construction deposits

679,973

1,949,074


97,274,152

90,518,868

TOTAL ASSETS

127,463,171

115,463,685




LIABILITIES AND EQUITY



Current liabilities



Bank indebtedness

9,768,417

3,366,489

Accounts payable and accrued liabilities

18,503,458

21,341,335

Current portion of lease liabilities

7,260,426

3,282,080

Non-revolving demand loans

-

25,896,379

Current portion of long-term debt

5,282,206

510,275


40,814,507

54,396,558

Non-current liabilities



Provisions

1,066,421

1,019,962

Lease liabilities

20,946,616

21,522,379

Long-term debt

23,163,237

1,367,930

Deferred income tax liability

5,143,600

3,462,495


50,319,874

27,372,766

TOTAL LIABILITIES

91,134,381

81,769,324

Equity



Share capital

40,300,067

39,546,216

Share-based payments reserves

2,290,613

2,245,415

Deficit

(6,261,890)

(8,097,270)

TOTAL EQUITY

36,328,790

33,694,361




TOTAL LIABILITIES AND EQUITY

$

127,463,171

$

115,463,685

STATEMENTS OF COMPREHENSIVE INCOME
For the quarters and fiscal year-to date periods ended October 31, 2021 and October 25, 2020
(Not audited or reviewed by the Company's external auditor)


Quarter ended

Fiscal year-to-date ended


 October 31, 2021

October 25, 2020

 October 31, 2021

October 25, 2020






Revenue

$

26,878,165

$

22,824,769

$

83,564,020

$

62,240,746

Cost of sales

20,918,137

17,836,211

61,448,475

45,969,697

Gross profit

5,960,028

4,988,558

22,115,545

16,271,049






Selling, marketing and administration expenses

3,363,501

2,609,776

11,897,668

8,871,482

Other expenses

1,028,806

510,195

2,796,730

1,609,892

Finance costs

576,828

465,720

1,884,712

1,420,140

Gain on misappropriated funds, net

-

-

(899,647)

-

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





and right-of-use assets

(14,902)

6,128

(37,389)

220,533

Income before tax

1,005,795

1,396,739

6,473,471

4,149,002






Income tax expense

267,649

431,634

1,681,105

1,258,119

Net income and comprehensive









income

$

738,146

$

965,105

$

4,792,366

$

2,890,883











Basic earnings per share

$

0.02

$

0.03

$

0.13

$

0.08

Diluted earnings per share

$

0.02

$

0.03

$

0.13

$

0.08

STATEMENTS OF CASH FLOWS
For the quarters and fiscal year-to-date periods ended October 31, 2021 and October 25, 2020
(Not audited or reviewed by the Company's external auditor)


Quarter ended

Fiscal year-to-date ended


 October 31, 2021

October 25, 2020

 October 31, 2021

October 25, 2020






Operating activities





Net income

$

738,146

$

965,105

$

4,792,366

$

2,890,883

Adjustments for:





Income tax expense

267,649

431,634

1,681,105

1,258,119

Finance costs

576,828

465,720

1,884,712

1,420,140

Depreciation and amortization of property, plant and





equipment, right-of-use assets and intangibles

2,490,806

1,963,432

7,475,000

5,587,401

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





right-of-use assets

(14,902)

6,128

(37,389)

220,533

Share-based payments

275,228

202,792

684,616

567,976

Change in non-cash working capital related to operations

(1,754,639)

(13,003,152)

(8,019,483)

332,173

Less:





Interest paid

(577,315)

(440,933)

(1,897,011)

(1,319,741)

Cash provided by (used in) operating activities

2,001,801

(9,409,274)

6,563,916

10,957,484






Investing activities





Purchase of property, plant and equipment

(2,056,111)

(3,765,744)

(9,943,507)

(10,836,188)

Construction deposit paid

(448,737)

(1,171,450)

(679,973)

(2,452,930)

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

15,090

-

38,989

2,538

Purchase of intangible assets

(1,313)

(2,045)

(46,777)

(25,145)

Cash used in investing activities

(2,491,071)

(4,939,239)

(10,631,268)

(13,311,725)






Financing activities





Increase in bank indebtedness

881,037

2,113,211

6,401,928

1,330,134

Issuance of long-term debt, net of fees

-

5,000,000

4,536,234

7,041,549

Increase to obligation under finance lease

2,656,846

-

2,656,846

-

Repayment of long-term debt

(1,231,564)

(778,999)

(3,869,213)

(1,886,520)

Repayment of obligation under finance lease

(829,864)

(552,267)

(2,815,891)

(1,985,534)

Dividends paid

(987,186)

-

(2,956,986)

(1,846,271)

Issuance of shares, net of fees

-

-

115,943

-

Shares repurchased and cancelled, including fees

-

(36,664)

-

(377,057)

Stock option costs

-

-

(10,809)

-

Proceeds from stock option exercise

-

-

9,299

77,940

Cash generated from financing activities

489,270

5,745,281

4,067,352

2,354,241






Net increase in cash

-

(8,603,232)

-

-






Cash, beginning of period

-

8,603,232

-

-

Cash, end of period

$

-

$

-

$

-

$

-






Non-cash investing and financing activities:





Acquisition of assets under lease

$

3,991,554

$

88,557

$

6,268,994

$

321,900

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 January 28, 2022, 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.

SOURCE Waterloo Brewing Ltd.

For further information: Enida Zaimi, Chief Financial Officer, (519) 742-2732 x106, E-mail: info@waterloobrewing.com

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