Press Releases

Brick Brewing Reports Third Quarter EBITDA of $2.0M

KITCHENER, ON--(Marketwired - December 09, 2016) -

Third Quarter Highlights:

  • Net Revenue for the third quarter increased to $11.1 million compared to $9.8 million in the third quarter of fiscal 2016.
  • Gross profit margin for the quarter was 34.3%, an increase from 25.7% in prior year.
  • Selling, Marketing and Administration ("SM&A") of $2.3 million, compared to prior year at $1.8 million.
  • EBITDA* for the quarter increased to $2.0 million compared to EBITDA* in the third quarter of fiscal 2016 of $1.5 million.
  • The Board of Directors approved an increase to the quarterly dividend, to $0.016/share, payable January 24, 2017 to shareholders of record as of January 10, 2017. The dividend is classified as an eligible dividend

Year to Date Highlights:

  • Net revenue increased to $34.6 million, from $28.6 million in the prior year.
  • Gross margin improved to 35.6% from 27.0% prior year.
  • Selling, Marketing and Administration ("SM&A") expenses increased to $6.9 million from $5.6 million.
  • EBITDA* improved to $7.1 million year to date, up from $4.0 million in the prior year.

Brick Brewing Co. Limited ("Brick" or the "Company") (TSXBRB), Ontario's largest Canadian-owned brewery, today released results for the third quarter ended October 30, 2016.

Net Revenues for the third quarter of fiscal 2017 grew to $11.1 million, up from $9.8 million in the third quarter of fiscal 2016. Gross margins for the quarter increased to 34.3% versus 25.7% in Q3 of the prior year. Margin expansion was supported by volume growth, improved product mix, strong pricing, as well as overall cost reductions in operations. EBITDA for the third quarter of fiscal 2017 improved to $2.0 million, reflecting a continuation of the strong results reported in the first half of the year.

"This was, by any measure, another tremendous quarter for Brick Brewing," noted George Croft, President and CEO. "We're reporting double digit growth in branded volume, co-pack revenue and net sales. We've been able to expand margins, increase the investment in our brands, and still deliver over 30% growth in EBITDA. Our Laker brand posted 13% volume growth while LandShark continued to resonate with consumers. Our Waterloo brand declined modestly in the quarter, due to channel inventory reductions . Counter sales for Waterloo remained strong, and are consistent with our year to date growth, up 14% vs prior year. We have been successful in growing market share, and the strong response we've enjoyed from our consumers has allowed us to outperform the category."

As a result of the strength in operating and financial performance, Brick is also announcing today an increase in the quarterly dividend, to $0.016/share, up from $0.012/share. The dividend is payable January 24 to shareholders of record as of January 10, 2017. The dividend is an eligible dividend. Chief Financial Officer Sean Byrne commented, "The increase in the dividend is simply a continuation of our commitment to deliver value to shareholders. We believe it also speaks volumes about our ability to both invest in growing our business while at the same time increasing returns to shareholders."

Croft added, "Although we are enormously pleased with our results to date, we are taking nothing for granted. We will continue to focus on executional excellence, and will be working hard to ensure a strong finish for the year."

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, 2016.

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 30, 2016   October 25, 2015     October 30, 2016   October 25, 2015  
                             
Net income   $ 854   $ 492     $ 3,277   $ 1,102  
                             
Add (deduct):                            
  Income tax expense     291     141       1,067     377  
  Depreciation and amortization     753     881       2,240     2,263  
  Gain on disposal of property, plant and equipment     -     (197 )     -     (197 )
  Share-based payments     44     31       105     94  
  Finance costs     103     122       386     357  
Subtotal     1,191     978       3,798     2,894  
                             
EBITDA*     2,045     1,470       7,075     3,996  
                     
                     

STATEMENTS OF COMPREHENSIVE INCOME
 
For the quarters ended October 30, 2016 and October 25, 2015  
(Not audited or reviewed by the Company's external auditor)  
                     
                     
    Quarter ended     Fiscal year-to-date ended  
    October 30, 2016   October 25, 2015     October 30, 2016   October 25, 2015  
                             
Revenue   $ 11,106,289   $ 9,829,613     $ 34,636,967   $ 28,573,912  
Cost of sales     7,302,657     7,302,829       22,317,110     20,850,298  
Gross profit     3,803,632     2,526,784       12,319,857     7,723,614  
Selling, marketing and administration expenses     2,349,468     1,828,723       6,938,887     5,649,363  
Other expenses     205,192     140,642       650,592     435,259  
Finance costs     103,043     121,779       385,595     357,011  
Gain on disposal of property,plant and equipment     -     (196,912 )           (196,912 )
Income before tax     1,145,929     632,552       4,344,783     1,478,893  
Income tax expense     291,495     141,082       1,067,360     376,839  
Net income and comprehensive income   $ 854,434   $ 491,470     $ 3,277,423   $ 1,102,054  
                             
                             
Basic earnings per share     0.02   $ 0.01       0.09   $ 0.03  
Diluted earnings per share     0.02   $ 0.01       0.09   $ 0.03  
             
             
             
STATEMENTS OF FINANCIAL POSITION            
As at October 30, 2016 and January 31, 2016            
(Not audited or reviewed by the Company's external auditor)            
             
             
    October 30, 2016     January 31, 2016  
                 
ASSETS                
  Non-current assets                
    Property, plant and equipment   $ 21,442,784     $ 21,986,070  
    Intangible assets     15,446,064       15,375,392  
    Equipment Deposits     940,000       -  
    Deferred income tax assets     195,409       1,262,769  
      38,024,257       38,624,231  
                 
  Current assets                
    Cash     1,058,357       393,645  
    Accounts receivable     8,064,326       6,176,421  
    Inventories     4,923,030       3,291,529  
    Prepaid expenses     700,243       354,650  
      14,745,956       10,216,245  
TOTAL ASSETS     52,770,213       48,840,476  
                 
LIABILITIES AND EQUITY                
  Equity                
    Share capital     39,784,425       39,526,573  
    Share-based payments reserves     910,387       932,200  
    Deficit     (2,916,793 )     (4,933,195 )
  TOTAL EQUITY     37,778,019       35,525,579  
                 
  Non-current liabilities                
    Provisions     405,836       388,548  
    Obligation under finance lease     3,969,824       4,523,152  
    Long-term debt     2,690,640       1,548,584  
      7,066,300       6,460,284  
                 
  Current liabilities                
    Accounts payable and accrued liabilities     6,454,797       4,908,722  
    Current portion of obligation under finance lease     734,299       713,699  
    Current portion of long-term debt     736,798       1,232,192  
      7,925,894       6,854,613  
TOTAL LIABILITIES     14,992,194       13,314,897  
                 
COMMITMENTS                
                 
TOTAL LIABILITIES AND EQUITY   $ 52,770,213     $ 48,840,476  
                         
                         
                         
STATEMENTS OF CASH FLOW  
For the quarters ended October 30, 2016 and October 25, 2015  
(Not audited or reviewed by the Company's external auditor)  
                         
    Quarter ended     Fiscal year-to-date ended  
    October 30, 2016     October 25, 2015     October 30, 2016     October 25, 2015  
                                 
Operating activities                                
  Net income   $ 854,434     $ 491,470     $ 3,277,423     $ 1,102,054  
  Adjustments for:                                
    Income tax expense     291,495       141,082       1,067,360       376,839  
    Finance costs     103,043       121,779       385,595       357,011  
Depreciation and amortization of property, plant and equipment and intangibles     753,154       881,271       2,240,006       2,263,243  
Gain on disposal of property, plant and equipment     -       (196,912 )     -       (196,912 )
    Share-based payments     44,157       30,527       105,100       94,448  
    Change in non-cash working capital related to operations     56,623       1,681,820       (2,320,224 )     591,094  
  Less:                                
    Interest paid     (103,603 )     (214,730 )     (308,583 )     (325,861 )
Cash provided by operating activities     1,999,303       2,936,307       4,446,677       4,261,916  
                                 
Investing activities                                
  Purchase of property, plant and equipment     (579,491 )     (831,658 )     (1,681,420 )     (2,151,101 )
  Equipment deposit paid     (940,000 )     (111,293 )     (940,000 )     (936,595 )
  Proceeds from sale of property, plant and equipment, net     -       322,490       -       322,490  
  Purchase of intangible assets     (18,339 )     (15,692 )     (85,972 )     (277,784 )
Cash used in investing activities     (1,537,831 )     (636,153 )     (2,707,392 )     (3,042,990 )
                                 
Financing activities                                
  Increase in bank indebtedness     -       (1,351,117 )     -       -  
  Issuance of long-term debt     -       -       2,000,000       -  
  Repayment of long-term debt     (180,321 )     (355,042 )     (1,411,762 )     (1,122,835 )
  Repayment of obligation under finance lease     (179,263 )     (132,741 )     (532,728 )     (132,741 )
  Dividends paid     (421,320 )     -       (1,261,021 )     -  
  Issuance of shares, net of fees     2,490       4,750       10,458       9,975  
  Shares repurchased and cancelled, including fees     (3,883 )     (76,353 )     (54,197 )     (178,651 )
  Proceeds from stock option exercise     138,850       904       174,677       904  
Cash used in financing activities     (643,447 )     (1,909,599 )     (1,074,573 )     (1,423,348 )
                                 
Net increase/(decrease) in cash     (181,975 )     390,554       664,712       (204,422 )
                                 
Cash, beginning of the period     1,240,332       -       393,645       594,976  
Cash, end of the period   $ 1,058,357     $ 390,554     $ 1,058,357     $ 390,554  
                                 
Non-cash investing and financing activities:                                
  Acquisition of assets under finance lease   $ -     $ 805,878     $ -     $ 4,208,021  

1. The purchase of property, plant and equipment excludes assets held under finance lease

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