Press Releases

Brick Brewing Reports Second Quarter EBITDA of $3.1M

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

Second Quarter Highlights:

  • Net revenue increased to $14.0 million, from $11.0 million in the prior year.
  • Gross margin improved to 37.0% from prior year of 28.1% (and 29.8% prior year excluding 1x cost).
  • Selling, Marketing and Administration ("SM&A") expenses increased to $2.7 million from $2.0 million.
  • EBITDA* improved to $3.1 million in the quarter, up from $1.7 million in prior year.
  • The Board of Directors approved the quarterly dividend, $0.012/share, payable October 25, 2016 to shareholders of record as of October 11, 2016. The dividend is classified as an eligible dividend.

First Half Highlights:

  • Net revenue increased to $23.5 million, from $18.7 million in the prior year.
  • Gross margin improved to 36.2% from prior year of 27.7% (and 28.8% prior year excluding 1x cost).
  • Selling, Marketing and Administration ("SM&A") expenses increased to $4.6 million from $3.8 million.
  • EBITDA* improved to $5.0 million year to date, up from $2.5 million in the prior year.

Brick Brewing Co. Limited ("Brick" or the "Company") (TSXBRB), Ontario's largest Canadian-owned brewery, today released financial results for the second quarter ended July 31, 2016. Brick reported EBITDA of $3.1 million on net revenue of $14.0 million.

"In the second quarter we continued to focus on building a stronger, broader and more premium brand portfolio, which included incremental sales and marketing investments. The second quarter saw continued strong momentum in our Laker brand with volume up 14% vs prior year, while Waterloo volume grew by 20%. The commercial launch of LandShark has been an unprecedented success. The response from consumers has been simply tremendous. As a result of the initial strong performance of LandShark in The Beer Store, we have expanded distribution late in the second quarter to both LCBO and grocery channel in Ontario," said George Croft, Brick President and Chief Executive Officer.

"Seagram volume softened in the quarter driven by reduced channel inventory and intense competition in the cooler and cider categories. The recent regulatory change in the province to allow the sale of cider in grocery stores will be positive for the brand going forward," Croft added.

Branded volume growth, strength in co-pack production, favorable pricing and improved efficiencies in the Kitchener location associated with last year's capital expansion all contributed to the strong margin improvement, with gross margin in the quarter of 37.0%, vs. 28.1% prior year.

Brick's board of directors has also approved the quarterly dividend, at $0.012/share. The October payment will mark the fourth consecutive quarter for the dividend, since introduction in December 2015.

"As we move into the second half of our year we are pushing hard to continue to deliver improving results," noted Croft. "Laker, Waterloo, LandShark are all performing well, our co-pack business is strong, and we remain disciplined in our approach to improving our cost structure. The second round of grocery store licenses will be awarded this fall bringing the total number of stores to approximately 130 from the existing 60, and we will continue to work with grocery accounts to secure listings and support for our premium brands."

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)   July 31, 2016   July 26, 2015   July 31, 2016   July 26, 2015
                 
Net income   $ 1,635   $ 580   $ 2,423   $ 610
                         
Add (deduct):                        
  Income tax expense (recovery)     438     218     776     236
  Depreciation and amortization     820     699     1,486     1,382
  Share-based payments     34     34     61     64
  Finance costs     164     123     283     235
Subtotal     1,456     1,074     2,606     1,917
                         
EBITDA*     3,091     1,654     5,029     2,527
                         
STATEMENTS OF COMPREHENSIVE INCOME
For the quarters ended July 31, 2016 and July 26, 2015
(Not audited or reviewed by the Company's external auditor)
                 
    Quarter ended   Fiscal year-to-date ended
    July 31, 2016   July 26, 2015   July 31, 2016   July 26, 2015
                 
Revenue   $ 14,010,744   $ 11,037,366   $ 23,530,678   $ 18,744,299
Cost of sales     8,826,721     7,932,292     15,014,453     13,547,469
Gross profit     5,184,023     3,105,074     8,516,225     5,196,830
                         
Selling, marketing and administration expenses     2,708,217     2,046,195     4,589,419     3,820,640
Other expenses     238,980     137,496     445,400     294,617
Finance costs     164,190     123,630     282,552     235,232
Income before tax     2,072,636     797,753     3,198,854     846,341
                         
Income tax expense     438,000     217,947     775,865     235,757
Net income and comprehensive income for the quarter   $ 1,634,636   $ 579,806   $ 2,422,989   $ 610,584
                         
                         
Basic earnings per share     0.05   $ 0.02   $ 0.07   $ 0.02
Diluted earnings per share     0.05   $ 0.02   $ 0.07   $ 0.02
                         
STATEMENTS OF FINANCIAL POSITION
As at July 31, 2016 and January 31, 2016
(Not audited or reviewed by the Company's external auditor)
         
    July 31, 2016   January 31, 2016
         
ASSETS        
  Non-current assets        
    Property, plant and equipment   $ 21,611,347     $ 21,986,070  
    Intangible assets     15,432,825       15,375,392  
    Deferred income tax assets     486,904       1,262,769  
      37,531,076       38,624,231  
                 
  Current assets                
    Cash     1,240,332       393,645  
    Accounts receivable     10,172,232       6,176,421  
    Inventories     4,651,502       3,291,529  
    Prepaid expenses     776,471       354,650  
      16,840,537       10,216,245  
                 
TOTAL ASSETS     54,371,613       48,840,476  
                 
LIABILITIES AND EQUITY                
  Equity                
    Share capital     39,586,229       39,526,573  
    Share-based payments reserves     926,969       932,201  
    Deficit     (3,349,907 )     (4,933,195 )
  TOTAL EQUITY     37,163,291       35,525,579  
                 
  Non-current liabilities                
    Provisions     400,075       388,548  
    Obligation under finance lease     4,156,019       4,523,152  
    Long-term debt     2,877,493       1,548,584  
      7,433,587       6,460,284  
                 
  Current liabilities                
    Accounts payable and accrued liabilities     8,317,557       4,908,722  
    Current portion of obligation under finance lease     727,367       713,699  
    Current portion of long-term debt     729,811       1,232,192  
      9,774,735       6,854,613  
                 
TOTAL LIABILITIES     17,208,322       13,314,897  
                 
COMMITMENTS                
                 
TOTAL LIABILITIES AND EQUITY   $ 54,371,613     $ 48,840,476  
                 
STATEMENTS OF CASH FLOWS
For the quarters ended July 31, 2016 and July 26, 2015
(Not audited or reviewed by the Company's external auditor)
         
    Quarter ended   Fiscal year-to-date ended
    July 31, 2016   July 26, 2015   July 31, 2016   July 26, 2015
                 
Operating activities                
  Net income   $ 1,634,636     $ 579,806     $ 2,422,989     $ 610,584  
  Adjustments for:                                
    Income tax expense     438,000       217,947       775,865       235,757  
    Finance costs     164,190       123,630       282,552       235,232  
Depreciation and amortization of property, plant and equipment and intangibles     820,084       699,288       1,486,852       1,381,972  
    Share-based payments     34,184       34,395       60,943       63,921  
    Change in non-cash working capital related to operations     (1,536,856 )     (1,772,396 )     (2,376,846 )     (1,090,724 )
  Less:                                
    Interest paid     (100,859 )     (17,286 )     (204,980 )     (111,133 )
Cash provided by (used in) operating activities     1,453,379       (134,616 )     2,447,375       1,325,609  
                                 
Investing activities                                
  Purchase of property, plant and equipment     (486,211 )     (766,784 )     (1,101,929 )     (1,319,445 )
  Construction deposit paid     -       (205,119 )     -       (825,302 )
  Purchase (refund) of intangible assets     (1,613 )     15,737       (67,633 )     (262,090 )
Cash used in investing activities     (487,824 )     (956,166 )     (1,169,562 )     (2,406,837 )
                                 
Financing activities                                
  Increase in bank indebtedness     -       1,351,117       -       1,351,117  
  Issuance of long-term debt     -       -       2,000,000       -  
  Repayment of long-term debt     (593,055 )     (544,691 )     (1,231,441 )     (767,793 )
  Repayment of obligation under finance lease     (177,571 )     -       (353,465 )     -  
  Dividends paid     (839,701 )     -       (839,701 )     -  
  Issuance of shares, net of fees     -       -       7,968       5,225  
  Shares repurchased and cancelled, including fees     (49,259 )     (83,817 )     (50,314 )     (102,298 )
  Proceeds from stock option exercise     31,893       -       35,827       -  
Cash provided by (used in) financing activities     (1,627,693 )     722,609       (431,126 )     486,251  
                                 
Net increase/(decrease) in cash     (662,138 )     (368,172 )     846,687       (594,976 )
                                 
Cash, beginning of the period     1,902,470       368,172       393,645       594,976  
                                 
Cash, end of the period   $ 1,240,332     $ -     $ 1,240,332     $ -  
                                 
Non-cash investing and financing activities:                                
                                 
  Acquisition of assets under finance lease   $ -     $ 963,093     $ -     $ 3,402,145  
1. The purchase of property, plant and equipment excludes assets held under finance lease
 

Additional Information

Further details on the Company's complete management discussion and analysis (MD&A) and financial statements for the quarter ended July 31, 2016 will be available on the investor section of the Brick Brewing website at www.brickbeer.com. This and additional information relating to the Company, including its Annual Information Form, is or will be available on the Company's website and on SEDAR at www.sedar.com.

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:

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