Big Rock Brewery Income Trust
TSX : BR.UN

Big Rock Brewery Income Trust
BIG ROCK BREWERY LTD.

BIG ROCK BREWERY LTD.

May 03, 2007 14:37 ET

Big Rock Brewery Income Trust Announces 1st Quarter Results

CALGARY, ALBERTA--(CCNMatthews - May 3, 2007) - Big Rock Brewery Income Trust (the "Trust") (TSX:BR.UN) is pleased to report to Unitholders its unaudited consolidated financial results for the three month period ended March 31, 2007. These results reflect the consolidated operations of the Trust, Big Rock Brewery Ltd. and its wholly owned subsidiary Pine Creek Brewing Company Ltd.

Quarterly Summary:

The 2007 1st quarter operating results were marginally higher than in 2006 but a non-cash $328,600 charge for unit based compensation resulted in a slightly lower consolidated net income of $834,972 compared to $1,063,870 in 2006. The strong results in 2007 are even more impressive considering 2006 Q1 results were the highest for any Q1 to date.

During the quarter, Big Rock's strategy of targeted marketing continued to benefit the bottom line. Net sales for the period were in line with the same period in 2006 while focus was placed on reducing selling expenses. Big Rock curtailed sales promotions based on giveaway incentives to purchase products.

In April, Big Rock launched its first new beer since 2003. XO Lager is a pilsner style lager with a light body and golden color. It has a long-lasting creamy head and a full rich flavor. Its clean, crisp, well-defined finish is due to the finest Saaz hops from the Czech Republic - the country where the pilsner style originated. "XO" refers to the extra aging time in Big Rock's lagering cellars required to enhance its unique characteristics and distinctive flavour. This new pilsner will compete with the finest premium imports but has the competitive advantage of freshness. A planned advertising program will accompany the launch over the summer months.

Financial Highlights for the three month period ended March 31, 2007 compared with the same period for 2006 are as follows:

Net income was $834,972 compared to $1,063,870. Net income would have increased year over year but for the $328,600 unit based compensation charge.

Net income per unit decreased to $0.14 for the quarter compared to $0.18 in the same quarter last year. During the quarter the number of Trust Units outstanding decreased by 7,104 units to 5,999,370 units as a result of the exercise of 4,300 options offset by the repurchase and cancellation by the Trust of 11,404 units pursuant to a Normal Course Issuer bid.

Unitholder cash distributions declared were $1,978,847 or $0.33 per unit (2006 - $1,982,967 or $0.33 per unit).

Sales revenue decreased $247,402 (3%) to $8,072,300 from $8,319,702. The reduction in sales revenue resulted from a decrease in volume that in large measure was offset by a greater portion of sales being made in Alberta and an increase in the ratio of premium beer sales to value beer sales.

Cost of sales was relatively flat quarter over quarter at $3,309,396 (2006 - $3,299,341). Cost of sales increased despite a decrease in sales volume reflecting slightly higher cost structures.

Selling expenses decreased by $620,485 (25%) to $1,823,693 compared to $2,444,178 in the same quarter last year. Beginning part-way through 2006, Big Rock curtailed marketing and sales programs that provide "giveaways" as incentives to purchase premium beer. Management continues to selectively reinvest in sales and marketing programs that target premium beer consumers.

General and administrative expense increased by $613,286 (75%) to $1,435,543 during the quarter compared to $822,257 in the same quarter last year. The increase arose primarily from one-time consulting fees and the aforementioned unit based compensation charge.

The income tax provision for the quarter was $146,752 compared to an expense of $182,594 in the same quarter last year, and is comprised of $72,000 in current income tax expense and $74,752 in future income tax expense.

Selected Financial information follows:



Big Rock Brewery Income Trust
Consolidated Balance Sheets
(unaudited)


31-Mar-07 31-Dec-06
Assets
Current
Cash and cash equivalents $ 2,582,981 $ 4,336,830
Accounts receivable 2,296,546 3,233,671
Inventories 3,868,178 3,710,427
Prepaid expenses 217,029 273,100
------------ ------------
8,964,734 11,554,028

Property, plant and equipment 30,448,177 30,171,939
Deferred charges and other assets 419,025 444,762

------------ ------------
Total assets $39,831,936 $42,170,729
------------ ------------
------------ ------------

Liabilities and Unitholders' Equity
Current
Accounts payable and accrued liabilities 1,961,442 2,819,987
Income tax payable 262,130 896,004
Distributions payable 659,911 660,692
Liability for unit appreciation rights 15,884 -
------------ ------------
2,899,367 4,376,683

Future income taxes 7,501,514 7,426,762

------------ ------------
Total liabilities 10,400,881 11,803,445

Unitholders' equity
Trust unitholders capital 18,290,718 18,282,507
Contributed surplus 667,481 345,948
Undistributed income 10,472,856 11,738,829

------------ ------------
Total Unitholders' equity 29,431,055 30,367,284

------------ ------------
Total Liabilities and Unitholders' equity $39,831,936 $42,170,729
------------ ------------
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Big Rock Brewery Income Trust
Consolidated Statements of Operations & Undistributed Income
(unaudited)

For the three months ended
March 31
2007 2006
------------ ------------
Revenue
Net Sales $8,072,300 $8,319,702

Cost of sales 3,309,396 3,299,341

Gross profit 4,762,904 5,020,361

Expenses
Selling 1,823,693 2,444,178
General & administrative 1,435,543 822,257
Interest 1,130 -
Amortization 520,814 507,462
------------ ------------

3,781,180 3,773,897

Income before income taxes 981,724 1,246,464

Current income tax expense 72,000 223,228
Future income tax expense (recovery) 74,752 (40,634)
------------ ------------
146,752 182,594
------------ ------------

Net income and comprehensive income for the period 834,972 1,063,870

Undistributed income, beginning of period 11,738,829 11,670,413
Cash distributions (1,978,847) (1,982,967)
Excess consideration paid on unit repurchase (122,098) -

------------ ------------

Undistributed income, end of period $10,472,856 $10,751,316
------------ ------------
------------ ------------

Net income per unit
Basic $ 0.14 $ 0.18
Diluted $ 0.14 $ 0.18



Big Rock Brewery Income Trust
Consolidated Statements of Cash Flow
(unaudited)

For the three months ended
March 31
2007 2006
------------ ------------

Operating Activities
Net income for the period $834,972 $1,063,870
Items not affecting cash:
Amortization 520,814 507,462
Unit based compensation 339,117 -
Future income taxes (recovery) 74,752 (40,634)
------------ ------------
1,769,655 1,530,698

Net change in non-cash working
capital relating to operating activities (656,974) 1,263,649

------------ ------------
Cash provided by operating activities 1,112,681 2,794,347

Financing Activities
Distribution payments (1,979,628) (1,981,600)
Unit repurchase (160,066) -
Cash received on exercise of options 44,479 118,791

------------ ------------
Cash used in financing activities (2,095,215) (1,862,809)

Investing Activities
Additions to capital assets (797,052) (783,287)
Deferred charges and other assets 25,737 111,012
------------ ------------
(771,315) (672,275)

Net increase (decrease) in cash (1,753,849) 259,263

Cash and cash equivalents, beginning of period 4,336,830 5,722,465

------------ ------------
Cash and cash equivalents, end of period $2,582,981 $5,981,728
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Big Rock is a regional producer and marketer of craft beers, headquartered in Calgary, Alberta, Canada. Big Rock's products are available in draught, bottles and cans. The Company also produces or distributes cider and cooler products. Big Rock products are marketed in seven provinces and three territories in Canada.

Contact Information

  • Big Rock Brewery Ltd.
    Ken Barbet
    President & CEO
    (403) 720-3239
    or
    Big Rock Brewery Ltd.
    Tim Duffin, C.A.
    Chief Financial Officer
    (403) 720-4473