Press Releases

Brick Brewing Reports Third Quarter EBITDA, ex one-time costs, of $1.8M

Third Quarter Highlights:

  • Net revenue increased to $11.7 million, from $11.1 million in the prior year.
     
  • Gross margin fell to 26.7%, and 28.1% excluding one-time costs, compared to 34.2% prior year.
     
  • Selling, Marketing and Administration (“SM&A”) expenses were $2.2 million down slightly from $2.3 million in the prior year.
     
  • EBITDA* of $1.7 million, and $1.8 million excluding one-time cost, compared to $2.0 million prior year.
     
  • The Board of Directors approved in increase to the quarterly dividend, to $0.02/share, payable January 23, 2018 to shareholders of record as of January 9, 2018. The dividend is classified as an eligible dividend.

Year to Date Highlights:

  • Net revenue increased to $39.1 million, from $34.6 million in the prior year.
     
  • Gross margin was 28.6%, and 30.8% ex one-time costs, compared to 35.5% prior year.
     
  • Selling, Marketing and Administration (“SM&A”) expenses increased slightly, to $7.0 million, vs. $6.9 million prior year.
     
  • EBITDA* was $6.4 million and $7.2 million ex one-time cost, compared to $7.1 million in the prior year.

KITCHENER, Ontario, Dec. 08, 2017 (GLOBE NEWSWIRE) -- Brick Brewing Co. Limited (“Brick” or the “Company”) (TSX:BRB), Ontario’s largest Canadian-owned brewery, today released financial results for the third quarter ended October 29, 2017. Brick reported EBITDA excluding one-time costs of $1.8 million on net revenue of $11.7 million.

George Croft, Brick President and Chief Executive Officer commented, “While we are pleased with the market performance of our brands, it is clear that our margin and EBITDA results in the third quarter fell short. Commercially, the beer category was challenged by a cool, wet summer, one which drove industry volume lower. Despite the category volume declines, Laker grew 4% in the quarter, Waterloo was up 9%. The LandShark and Margaritaville family grew 27%, so the consumer facing result is positive. That said, internally, we faced some operating challenges in Q3.”

“Early in the quarter we completed as planned the installation of capital equipment associated with our Kitchener expansion and final phase of our supply chain consolidation project,” commented Russell Tabata, Brick’s Chief Operating Officer.  “The ramp up and commissioning of this equipment and the transition of production from our Formosa facility took until the end of Q3 to complete successfully.  As of the end of October, the new equipment is operating consistently at our targeted rates and we fully expect the operating performance of the facility to return to traditional performance and cost levels moving forward.”

Brick’s board of directors has also approved an increase to the quarterly dividend, to $0.02/share.  The dividend is payable January 23, 2018 to shareholders of record as of January 9, 2018.

Croft added, “Now that we have the Kitchener brewery operating at targeted levels and have fully consolidated our supply chain footprint, we are working hard to bring the year to a strong finish in the fourth quarter.  Our single source operating facility provides us with the optimal supply chain structure and we are on track to deliver the $600 thousand in annual cost savings related to this project and a return to historic margin levels.  We are now well positioned to compete in the competitive Canadian beer market and to serve our customers for the long term.”

   
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 29, 2017 October 30, 2016 October 29, 2017 October 30, 2016  
           
Net income $    387   $   854 $    2,293   $   3,277  
           
Add (deduct):          
Income tax expense     156       291     857       1,067  
Depreciation and amortization     927       753     2,650       2,240  
Gain on disposal of property, plant and equipment     (26 )     -     (26 )     -  
Share-based payments     93       44     206       105  
Finance costs     145       103     380       386  
Subtotal     1,295       1,191     4,067       3,798  
           
EBITDA*     1,682       2,045     6,360       7,075  
           

 

STATEMENTS OF COMPREHENSIVE INCOME
Quarters ended October 29, 2017 and October 30, 2016

           
   Quarter ended   Fiscal year-to-date ended   
   October 29, 2017  October 30, 2016  October 29, 2017  October 30, 2016  
           
Revenue $    11,671,466 $   11,106,289 $    39,055,280 $   34,636,967  
Cost of sales     8,557,904     7,302,657     27,894,803     22,317,110  
Gross profit     3,113,562     3,803,632     11,160,477     12,319,857  
Selling, marketing and administration expenses     2,238,472     2,349,468     7,047,895     6,938,887  
Other expenses     186,903     205,192     581,850     650,592  
Finance costs     145,552     103,043     380,259     385,595  
Income before tax     542,635     1,145,929     3,150,473     4,344,783  
Income tax expense     155,620     291,495     857,022     1,067,360  
Net income and comprehensive income  $    387,015 $   854,434 $    2,293,451 $   3,277,423  
           
           
Basic earnings per share $   0.01 $   0.02 $   0.06 $   0.09  
Diluted earnings per share $   0.01 $   0.02 $   0.06 $   0.09  
           

 

STATEMENTS OF FINANCIAL POSITION
As at October 29, 2017 and January 31, 2017

     
  October 29, 2017 January 31, 2017
     
ASSETS    
Non-current assets    
Property, plant and equipment $    26,544,791   $   21,709,425  
Intangible assets     15,346,157       15,499,186  
Construction deposits     370,327       2,462,328  
      42,261,275       39,670,939  
     
Current assets    
Cash     2,732,844       2,831,959  
Accounts receivable     8,438,511       7,035,714  
Inventories     4,668,227       5,619,329  
Prepaid expenses     608,301       593,180  
      16,447,883       16,080,182  
TOTAL ASSETS     58,709,158       55,751,121  
     
LIABILITIES AND EQUITY    
Equity    
Share capital     39,682,236       39,651,096  
Share-based payments reserves     929,970       943,565  
Deficit     (2,151,529 )     (2,758,560 )
TOTAL EQUITY     38,460,677       37,836,101  
     
Non-current liabilities    
Provisions     532,158       411,599  
Obligation under finance lease     3,207,131       3,781,855  
Long-term debt      6,350,428       2,498,580  
Deferred income tax liability     939,411       82,389  
      11,029,128       6,774,423  
     
Current liabilities    
Accounts payable and accrued liabilities     7,127,674       9,655,405  
Current portion of obligation under finance lease     762,694       741,297  
Current portion of long-term debt     1,328,985       743,895  
      9,219,353       11,140,597  
TOTAL LIABILITIES     20,248,481       17,915,020  
     
     
TOTAL LIABILITIES AND EQUITY $    58,709,158   $   55,751,121  
     

 

STATEMENTS OF CASH FLOWS
Quarters ended October 29, 2017 and October 30, 2016

     
   Quarter ended   Fiscal year-to-date ended 
   October 29, 2017  October 30, 2016  October 29, 2017   October 30, 2016 
         
Operating activities        
Net income $    387,015   $   854,434   $    2,293,451   $   3,277,423  
Adjustments for:        
Income tax expense      155,620       291,495       857,022       1,067,360  
Finance costs     145,552       103,043       380,259       385,595  
Depreciation and amortization of property, plant and 
  equipment and intangibles
    927,290       753,154       2,650,282       2,240,006  
Gain on sale of property, plant and equipment     (26,418 )     -       (26,418 )     -   
Share-based payments     92,824       44,157       205,784       105,100  
Change in non-cash working capital related to operations     2,006,426       56,623       (3,403,830 )     (2,320,224 )
Less:        
Interest paid     (142,232 )     (103,603 )     (342,439 )     (308,583 )
Cash provided by operating activities     3,546,077       1,999,303       2,614,111       4,446,677  
         
Investing activities        
Purchase of property, plant and equipment     (1,254,226 )     (579,491 )     (7,123,641 )     (1,681,420 )
Construction deposit paid     -       (940,000 )     -       (940,000 )
Proceeds from sale of property, plant and equipment     2,566,598       -       2,566,598       -   
Purchase of intangible assets     (486 )     (18,339 )     (197,551 )     (85,972 )
Cash provided by (used in) investing activities     1,311,886       (1,537,831 )     (4,754,594 )     (2,707,392 )
         
Financing activities        
Decrease in bank indebtedness     (1,050,335 )     -       -       -  
Issuance of long-term debt     -       -       5,163,067       2,000,000  
Repayment of long-term debt     (328,338 )     (180,321 )     (693,713 )     (1,411,762 )
Repayment of obligation under finance lease     (186,194 )     (179,263 )     (553,327 )     (532,728 )
Dividends paid     (563,882 )     (421,320 )     (1,686,420 )     (1,261,021 )
Issuance of shares, net of fees     3,631       2,490       9,342       10,458  
Shares repurchased and cancelled, including fees     -       (3,883 )     (322,629 )     (54,197 )
Proceeds from stock option exercise     -       138,850       125,048       174,677  
Cash provided by (used in) financing activities     (2,125,118 )     (643,447 )     2,041,368       (1,074,573 )
         
Net increase/(decrease) in cash     2,732,844       (181,975 )     (99,115 )     664,712  
         
Cash, beginning of the period     -       1,240,332       2,831,959       393,645  
Cash, end of the period $    2,732,844   $   1,058,357   $    2,732,844   $   1,058,357  
         

About Brick Brewing

Brick 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, Brick Brewing Co. was the first craft brewery to start up in Ontario, and is credited with pioneering the present day craft brewing renaissance in Canada. Brick has complemented its Waterloo premium craft beers with the popular Laker brand.  In 2011, Brick purchased the Canadian rights to Seagram Coolers and in 2015, secured the exclusive Canadian rights to both LandShark and Margaritaville. In addition, Brick utilizes its leading edge brewing, blending and packaging capabilities to provide an extensive array of contract manufacturing services in beer, coolers and ciders. Brick trades on the TSX under the symbol BRB. Visit us at www.brickbeer.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 Corporation 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 Corporation 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 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.

Contact Information
For further information:
Sean Byrne, Chief Financial Officer
(519) 742-2732 Ext. 132
E-mail: info@brickbeer.com