Press Releases

Waterloo Brewing Ltd. Reports Second Quarter EBITDA of $3.6M, excluding one-time costs

Second Quarter Highlights:

  • Net revenue increased 2.7% to $17.0 million up from $16.6 million in the prior year.
  • Gross margin improved to 35.3%, compared to 30.9% the prior year, excluding one-time costs.
  • Selling, Marketing, and Administration ("SM&A") expenses were $3.8 million up from $2.8 million prior year.
  • EBITDA* increased 8.1% to $3.6 million, compared to $3.3 million prior year, excluding one-time costs.
  • The Board of Directors approved the quarterly dividend, $0.025/share, payable October 30, 2019, to shareholders of record as of October 16, 2019. The dividend is classified as an eligible dividend.

First Half Highlights:

  • Net revenue increased 7.6% to $29.4 million up from $27.3 million in the prior year, excluding one-time costs.
  • Gross Margin improved to 29.3%, compared to 27.4% the prior year, excluding one-time costs.
  • Selling, Marketing, and Administration ("SM&A") expenses were $5.9 million up from $4.9 million prior year.
  • EBITDA* increased 18% to $5.2 million, compared to $4.4 million in the prior year, excluding one-time costs.

KITCHENER, ON, Sept. 5, 2019 /CNW/ - Waterloo Brewing Ltd. ("Waterloo Brewing" or the "Company") (TSX: WBR), Ontario's first Craft Brewery, announced financial results for the second quarter ended July 28, 2019. Waterloo Brewing reported EBITDA of $3.6 million on net revenue of $17.0 million.

"We are extremely pleased with our overall second-quarter results.  The incremental investment in our brands resulted in strong volume growth, enhanced revenue, margin expansion, and improved EBITDA performance.  Despite the 3.4% drop in overall Ontario beer industry volume, the Laker family grew 12% and our summer-themed brands LandShark® and Margaritaville® grew 14%", commented George Croft, President, and Chief Executive Officer.

"Our warehouse expansion, cannabis-infused beverage facility, non-alcoholic beer equipment, and new Small Batch Brewhouse / Taphouse are all on schedule and on budget.  We are unbelievably excited about the impacts that these projects will bring to the organization in terms of new capacity, new capabilities, and product innovation", commented Russell Tabata, Chief Operating Officer.

Solid top-line revenue growth of 5.8% delivered positive margin recovery in the second quarter.  Despite the negative pressure caused by competitive pricing and increased taxes, margins have returned to a plus 30% level. "Co-pack continues to be a strong and healthy part of the business and continues to generate incremental cash flow. YTD the business has grown 9.7% and we expect strong growth for the balance of the year," commented George Croft.

Waterloo Brewing's board of directors has approved the quarterly dividend at $0.025/share.  The dividend is payable on October 30, 2019, to shareholders of record as of October 16, 2019.

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)

July 28, 20191

July 29, 2018

July 28, 2019 1

July 29, 20182

         

Net income

$

952

$

1,430

$

845

$

(421)

         

Add (deduct):

       

Income tax provision (recovery)

347

575

347

(162)

Depreciation and amortization

1,388

1,068

2,822

2,078

Gain on disposal of right-of-use assets

(1)

-

(14)

251

Share-based payments

274

120

351

202

Finance costs

416

120

680

197

Subtotal

2,424

1,883

4,186

2,566

         

EBITDA *

3,376

3,313

5,031

2,145

 
   

1.

As a result of the adoption of IFRS 16 effective February 1, 2019, for the quarter and fiscal year-to-date periods ended July 28, 2019, respectively, EBITDA* increased by approximately $0.2 million and $0.5 million, depreciation and amortization increased by $0.2 million and $0.3 million, and finance costs increased by $0.1 million $0.3 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 July 28, 2019 and July 29, 2018

   

 Quarter ended 

 Fiscal year-to-date ended 

   

 July 28, 2019 

July 29, 2018

 July 28, 2019 

July 29, 2018

           

Revenue

 

$

17,014,274

$

16,564,080

$

29,357,153

$

23,576,067

Cost of sales

 

11,208,470

11,442,470

20,944,163

18,353,588

Gross profit

 

5,805,804

5,121,610

8,412,990

5,222,479

Selling, marketing and administration expenses

 

3,784,237

2,810,473

5,857,451

4,928,410

Other expenses

 

307,532

185,855

697,720

428,442

Finance costs

 

416,469

120,486

680,262

197,073

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

 

(1,133)

-

(14,213)

251,405

Income before tax

 

1,298,699

2,004,796

1,191,770

(582,851)

Income tax expense (recovery)

 

346,846

574,539

346,846

(161,961)

Net income and comprehensive 

                 

income (loss)

 

$

951,853

$

1,430,257

$

844,924

$

(420,890)

                   
                   
                   

Basic earnings (loss) per share

 

$

0.02

$

0.04

$

0.02

$

(0.01)

Diluted earnings (loss) per share

 

$

0.02

$

0.04

$

0.02

$

(0.01)

 

STATEMENTS OF FINANCIAL POSITION

Quarters ended July 28, 2019 and January 31, 2019

   

July 28, 2019

January 31, 2019

       

ASSETS

     

Current assets

     

Cash

 

$           1,423,204

$                            -

Accounts receivable

 

6,758,925

4,851,774

Inventories

 

9,634,323

10,316,767

Prepaid expenses

 

878,407

562,756

   

18,694,859

15,731,297

Non-current assets

     

Property, plant and equipment

 

26,855,215

24,645,925

Right-of-use assets

 

20,213,513

4,747,572

Intangible assets

 

15,277,566

15,253,736

Construction deposits

 

49,481

1,386,464

   

62,395,775

46,033,697

TOTAL ASSETS

 

81,090,634

61,764,994

       

LIABILITIES AND EQUITY

     

Current liabilities

     

Bank indebtedness

 

-

1,887,253

Accounts payable and accrued liabilities

 

13,599,501

7,303,233

Dividends payable

 

884,727

-

Current portion of lease liabilities

 

1,728,614

799,736

Current portion of long-term debt

 

1,890,591

1,859,922

   

18,103,433

11,850,144

Non-current liabilities

     

Provisions

 

566,887

553,535

Lease liabilities

 

16,859,476

2,212,157

Long-term debt 

 

7,495,443

8,420,927

Deferred income tax liability

 

2,018,422

1,671,576

   

26,940,228

12,858,195

TOTAL LIABILITIES

 

45,043,661

24,708,339

Equity

     

Share capital

 

39,659,630

40,001,097

Share-based payments reserves

 

1,581,268

1,325,150

Deficit

 

(5,193,925)

(4,269,592)

TOTAL EQUITY

 

36,046,973

37,056,655

       

COMMITMENTS

     
       

TOTAL LIABILITIES AND EQUITY

 

$        81,090,634

$          61,764,994

 

STATEMENTS OF CASH FLOWS

Quarters ended July 28, 2019 and July 29, 2018

   

 Quarter ended 

 Fiscal year-to-date ended 

   

 July 28, 2019 

July 29, 2018

 July 28, 2019 

July 29, 2018

           

Operating activities

         

Net income (loss)

 

$

951,853

$

1,430,257

$

844,924

$

(420,890)

Adjustments for:

         

Income tax expense (recovery)

 

346,846

574,539

346,846

(161,961)

Finance costs

 

416,469

120,486

680,262

197,073

Depreciation and amortization of property, plant and 

 

1,388,160

1,067,788

2,821,975

2,077,874

equipment, right-of-use assets and intangibles

         

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

 

(1,133)

-

(14,213)

251,405

Share-based payments

 

274,105

119,725

350,629

202,392

Change in non-cash working capital related to operations

 

1,060,176

1,817,705

4,682,982

5,374,646

Less:

         

Interest paid

 

(298,290)

(124,424)

(588,469)

(240,853)

Cash provided by operating activities

 

4,138,186

5,006,076

9,124,936

7,279,686

           

Investing activities

         

Purchase of property, plant and equipment, net of reimbursements

 

105,556

(868,060)

(2,810,155)

(2,710,939)

Construction deposit paid

 

(49,481)

(166,353)

(49,481)

(1,628,892)

Proceeds from sale of property, plant and equipment, net

 

-

-

-

280,000

Proceeds from sale of right-of-use assets

 

964

-

14,044

-

Purchase of intangible assets

 

(9,980)

(37,220)

(123,821)

(41,699)

Cash used in investing activities

 

47,059

(1,071,633)

(2,969,413)

(4,101,530)

           

Financing activities

         

Increase (decrease) in bank indebtedness

 

(945,896)

(2,086,280)

(1,887,253)

(787,843)

Issuance of long-term debt, net of fees

 

-

2,600,000

-

2,600,000

Repayment of long-term debt

 

(465,533)

(362,876)

(900,328)

(696,755)

Repayment of obligation under finance lease

 

(315,720)

(191,568)

(624,230)

(381,329)

Dividends paid

 

(884,530)

(1,414,609)

(884,530)

(1,414,609)

Issuance of shares, net of fees

 

-

-

1,480

-

Shares repurchased and cancelled, including fees

 

(190,392)

-

(480,068)

-

Stock option costs

 

(17,169)

-

(17,169)

(18,510)

Proceeds from stock option exercise

 

57,199

194,242

59,779

194,242

Cash generated from financing activities

 

(2,762,041)

(1,261,091)

(4,732,319)

(504,804)

           

Net increase in cash

 

1,423,204

2,673,352

1,423,204

2,673,352

           

Cash, beginning of period

 

-

-

-

-

Cash, end of period

 

$

1,423,204

$

2,673,352

$

1,423,204

$

2,673,352

           

Non-cash investing and financing activities:

         

Acquisition of assets under lease 

 

$

4,859,572

$

-

$

4,859,572

$

-

 

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