Press Releases

Brick Brewing Reports Second Quarter EBITDA, ex one-time costs, of $3.0M

Second Quarter Highlights:

  • Net revenue increased to $15.9 million, from $14.0 million in the prior year.
  • Gross margin was 28.7%, and 31.1% excluding one-time costs, compared to 37% prior year.
  • Selling, Marketing and Administration (“SM&A”) expenses were flat with prior year, at $2.7 million.
  • EBITDA* of $2.6 million, and $3.0 million excluding one-time cost, compared to $3.1 million prior year.
  • The Board of Directors re-affirmed the quarterly dividend, $0.016/share, payable October 24, 2017 to shareholders of record as of October 10, 2017. The dividend is classified as an eligible dividend.

First Half Highlights:

  • Net revenue increased to $27.4 million, from $23.5 million in the prior year.
  • Gross margin was 29.4%, and 31.9% ex one-time costs, compared to 36.2% prior year.
  • Selling, Marketing and Administration (“SM&A”) expenses increased slightly, to $4.8 million, vs. $4.6 million prior year.
  • EBITDA* was $4.7 million and $5.4 million ex one-time cost, up from $5.0 million in the prior year.

KITCHENER, Ontario, Sept. 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 second quarter ended July 30, 2017. Brick reported EBITDA, excluding one-time costs, of $3.0 million on net revenue of $15.9 million.

“Recent months have been characterized by cool, wet weather, which served to push total Ontario beer volume 8% lower vs. prior year. Against that backdrop, our ability to grow our branded volume is noteworthy. Laker achieved 8% volume growth in the quarter, while Waterloo was up 16%. The LandShark® and Margaritaville® family grew 29%, with the Margaritaville® cooler launch in the LCBO very well received by consumers,” noted George Croft, Brick’s President and Chief Executive Officer.

Margins were pressured in the quarter due to increases in fees at The Beer Store, federal excise and Ontario beer tax, as well as product mix, with a shift in mix towards co-pack volumes. “Co-pack is a key part of our business model,” commented Russell Tabata, Brick’s Chief Operating Officer. “Co-pack volume allows us to utilize available capacity to generate incremental returns, as well as serving to diversify the business model.” Co-pack revenue in the quarter grew by 24%, to $3.2 million.

During the quarter Brick recorded one-time cost of $381 thousand ($700 thousand year-to-date). These costs are associated with the Formosa exit, primarily severance costs.

Brick’s board of directors has also re-affirmed the quarterly dividend, at $0.016/share.  The dividend is payable October 24, 2017 to shareholders of record as of October 10, 2017.

Croft added, “With the recent completion of the Kitchener expansion project, we are now able to realize the optimum operating footprint – a single source, highly efficient facility with full capabilities. The project was completed on time and on budget. The expansion coupled with the move from two sites to one will generate annual recurring savings of $600 thousand.  In addition, the sale of the Formosa facility was finalized and the transaction closed on September 6, 2017.  The strength of our brands, the diversity we enjoy as a result of our co-pack business, along with the optimized footprint positions us well to compete in the future. We are committed to continuing to grow our business. This is our priority in the second half of fiscal 2018.”

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 30, 2017 July 31, 2016 July 30, 2017 July 31, 2016    
             
Net income $    1,120 $   1,635 $    1,907 $   2,423    
             
Add (deduct):            
Income tax expense     395     438     701     776    
Depreciation and amortization     906     820     1,723     1,486    
Share-based payments     70     34     113     61    
Finance costs     135     164     235     283    
Subtotal     1,506     1,456     2,772     2,606    
             
EBITDA*     2,626     3,091     4,679     5,029    
             

STATEMENTS OF COMPREHENSIVE INCOME
Quarters ended July 30, 2017 and July 31, 2016

   Quarter ended   Fiscal year-to-date ended 
   July 30, 2017  July 31, 2016  July 30, 2017  July 31, 2016
         
Revenue $    15,903,344 $   14,010,744 $    27,383,814 $   23,530,678
Cost of sales      11,341,500     8,826,721     19,336,899     15,014,453
Gross profit     4,561,844     5,184,023     8,046,915     8,516,225
                 
Selling, marketing and administration expenses     2,691,116     2,708,217     4,809,423     4,589,419
Other expenses     221,370     238,980     394,947     445,400
Finance costs     134,238     164,190     234,707     282,552
Income before tax     1,515,120     2,072,636     2,607,838     3,198,854
                 
Income tax expense     395,441     438,000     701,402     775,865
Net income and comprehensive
  income 
$    1,119,679 $   1,634,636 $    1,906,436 $   2,422,989
         
         
Basic earnings per share $   0.03 $   0.05 $   0.05 $   0.07
Diluted earnings per share $   0.03 $   0.05 $   0.05 $   0.07
         

STATEMENTS OF FINANCIAL POSITION
As at July 30, 2017 and January 31, 2017 

  July 30, 2017   January 31, 2017
     
ASSETS    
Non-current assets    
Property, plant and equipment $    28,186,839   $   21,709,425  
Intangible assets     15,567,708       15,499,186  
Construction deposits     351,752       2,462,328  
      44,106,299       39,670,939  
     
Current assets    
Cash     -        2,831,959  
Accounts receivable     12,004,245       7,035,714  
Inventories     4,730,738       5,619,329  
Prepaid expenses     1,033,201       593,180  
      17,768,184       16,080,182  
TOTAL ASSETS     61,874,483       55,751,121  
     
LIABILITIES AND EQUITY    
Equity    
Share capital     39,662,042       39,651,096  
Share-based payments reserves     853,709       943,565  
Deficit     (1,974,662 )     (2,758,560 )
TOTAL EQUITY     38,541,089       37,836,101  
     
Non-current liabilities    
Provisions     522,596       411,599  
Obligation under finance lease     3,400,525       3,781,855  
Long-term debt      6,686,525       2,498,580  
Deferred income tax liability      783,791       82,389  
      11,393,437       6,774,423  
     
Current liabilities    
Bank indebtedness     1,050,335       -   
Accounts payable and accrued liabilities     8,815,657       9,655,405  
Current portion of obligation under finance lease     755,494       741,297  
Current portion of long-term debt     1,318,471       743,895  
      11,939,957       11,140,597  
TOTAL LIABILITIES     23,333,394       17,915,020  
     
TOTAL LIABILITIES AND EQUITY $    61,874,483   $   55,751,121  
     

STATEMENTS OF CASH FLOWS
Quarters ended July 30, 2017 and July 31, 2016

   Quarter ended   Fiscal year-to-date ended 
   July 30, 2017  July 31, 2016  July 30, 2017   July 31, 2016 
         
Operating activities        
Net income $    1,119,679   $   1,634,636   $    1,906,436   $   2,422,989  
Adjustments for:        
Income tax expense      395,441       438,000       701,402       775,865  
Finance costs     134,238       164,190       234,707       282,552  
Depreciation and amortization of property, plant and 
  equipment and intangibles
    906,393       820,084       1,722,993       1,486,852  
Share-based payments     69,856       34,184       112,960       60,943  
Change in non-cash working capital related to operations     (2,685,301 )     (1,536,856 )     (5,400,606 )     (2,376,846 )
Less:        
Interest paid     (102,106 )     (100,859 )     (209,857 )     (204,980 )
Cash provided by (used in) operating activities     (161,800 )     1,453,379       (931,965 )     2,447,375  
         
Investing activities        
Purchase of property, plant and equipment     (2,873,520 )     (486,211 )     (5,869,415 )     (1,101,929 )
Purchase of intangible assets     (6,915 )     (1,613 )     (197,065 )     (67,633 )
Cash used in investing activities     (2,880,435 )     (487,824 )     (6,066,480 )     (1,169,562 )
         
Financing activities        
Increase in bank indebtedness     1,050,335       -       1,050,335       -  
Issuance of long-term debt     3,163,067       -       5,163,067       2,000,000  
Repayment of long-term debt     (181,614 )     (593,055 )     (365,375 )     (1,231,441 )
Repayment of obligation under finance lease     (184,438 )     (177,571 )     (367,133 )     (353,465 )
Dividends paid     (1,122,538 )     (839,701 )     (1,122,538 )     (839,701 )
Issuance of shares, net of fees     538       -       5,711       7,968  
Shares repurchased and cancelled, including fees     -       (49,259 )     (322,629 )     (50,314 )
Proceeds from stock option exercise     60,274       31,893       125,048       35,827  
Cash provided by (used in) financing activities     2,785,624       (1,627,693 )     4,166,486       (431,126 )
         
Net increase/(decrease) in cash     (256,611 )     (662,138 )     (2,831,959 )     846,687  
         
Cash, beginning of the period     256,611       1,902,470       2,831,959       393,645  
Cash, end of the period $    -   $   1,240,332   $    -   $   1,240,332  
                         

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