SOURCE: BRICK BREWING CO. LIMITED

Brick Brewing Co. Limited

September 10, 2015 06:00 ET

Brick Brewing Reports Second Quarter EBITDA of $1.7M

KITCHENER, ON--(Marketwired - September 10, 2015) - Brick Brewing Co. Limited (TSX: BRB)

Highlights:

  • Net Revenue for the second quarter was $11.0 million compared to $10.4 million in the second quarter of fiscal 2015.
  • Gross profit margin for the quarter was 28.1% (29.8% excluding 1x costs), compared to 31.4% in the prior year.
  • Selling, Marketing and Administration ("SM&A") of $2.0 million, down from the prior year at $2.3 million.
  • EBITDA* for the second quarter of fiscal 2016 increased to $1.7 million compared to EBITDA* in the second quarter of fiscal 2015 of $1.6 million.

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 26, 2015.

Net Revenues for the second quarter of fiscal 2016 grew to $11.0 million, up from $10.4 million in the second quarter of fiscal 2015. Excluding the impact of one-time costs related to the Kitchener expansion, gross margins for the quarter were 29.8% versus 31.4% in Q2 of the prior year. Continued improvements to product mix coupled with improved pricing mitigated the margin impact of Laker volume declines. EBITDA for the second quarter of fiscal 2016 improved to $1.7 million, and $1.8 million excluding one time costs, compared to $1.6 million in the second quarter of fiscal 2015.

"Our second quarter and year to date results represent another strong performance for Brick Brewing. Industry conditions have been challenging and summer weather through the end of July was disappointing. Pricing pressure from mainstream brands impacted the value category, including our Laker brand. In the face of those headwinds, our results are all the more impressive," noted George Croft, President and CEO. "Our craft premium Waterloo brand delivered volume growth of 37%. Consumers are showing their support for Waterloo, both in our core offerings of Dark, IPA, Pilsner and Amber, as well as our Grapefruit and Lemonade Radlers. Seagram cider posted strong growth as well, with volume more than double prior year. The cool start to the summer negatively impacted the cooler category, including both Seagram malt and vodka based products. Our ability to grow the top line and EBITDA in these difficult conditions is a testament to the strength of our operating model."

During the second quarter, Brick completed the expansion project in Kitchener, incurring $180 thousand in one time expenses. "Overall, the project has gone very much as we expected. We were able to overcome the bulk of the delays and costs associated with mid-winter construction, and the commissioning of the new brewhouse is now complete. We had expected this to take until October, so early completion will allow us to begin to realize the projected cost savings immediately," said Russell Tabata, Chief Operating Officer.

Croft added, "At the half way mark, we're very pleased with where we are. With the new brewhouse complete and set to deliver savings, the strength of our product offering, and the pending expansion into Ontario grocery, we're excited about the second half."

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, 2015.

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 26, 2015    July 27, 2014  July 26, 2015  July 27, 2014
Net income  $580  $445  $610  $239
             
Add (deduct):                
 Income tax expense (recovery)   218   163   236   86
 Depreciation and amortization   699   772   1,382   1,537
 Loss on disposal of property, plant and equipment   -   -   -   7
 Share-based payments   34   14   64   63
 Finance costs   123   183   235   304
Subtotal   1,074   1,132   1,917   1,997
             
EBITDA*   1,654   1,577   2,527   2,236
             
             
 
STATEMENTS OF COMPREHENSIVE INCOME
For the quarters ended July 26, 2015 and July 27, 2014
(Not audited or reviewed by the Company's external auditor)
 
 
 
   Quarter ended  Fiscal year-to-date ended
   July 26, 2015  July 27, 2014  July 26, 2015  July 27, 2014
         
Revenue  $11,037,366  $10,417,240  $18,744,299  $17,954,647
Cost of sales   7,932,292   7,142,789   13,547,469   13,040,392
Gross profit   3,105,074   3,274,451   5,196,830   4,914,255
             
Selling, marketing and administration expenses   2,046,195   2,307,515   3,820,640   4,005,976
Other expenses   137,496   174,965   294,617   271,754
Finance costs   123,630   183,318   235,232   303,761
Loss on disposal of property, plant and equipment   -   -   -   7,345
Income before tax   797,753   608,653   846,341   325,419
             
Income tax expense   217,947   163,200   235,757   86,755
Net income and comprehensive                
income for the period  $579,806  $445,453  $610,584  $238,664
             
Basic earnings per share  $0.02  $0.01  $0.02  $0.01
Diluted earnings per share  $0.02  $0.01  $0.02  $0.01
             
             
  
STATEMENTS OF FINANCIAL POSITION  
As at July 26, 2015 and January 31, 2015  
(Not audited or reviewed by the Company's external auditor)  
   
   
   July 26, 2015   January 31, 2015  
ASSETS           
 Non-current assets           
  Property, plant and equipment  $18,931,869   $15,582,051  
  Intangible assets   15,366,137    15,114,247  
  Deferred income tax assets   1,685,404    1,921,161  
  Construction deposit   2,303,522    1,478,220  
    38,286,932    34,095,679  
 Current assets           
  Cash   -    594,976  
  Accounts receivable   8,700,592    6,492,461  
  Inventories   4,298,362    3,400,821  
  Prepaid expenses   625,120    350,154  
    13,624,074    10,838,412  
TOTAL ASSETS   51,911,006   $44,934,091  
         
LIABILITIES AND EQUITY           
 Equity           
  Share capital   39,333,962    39,413,636  
  Share-based payments reserves   1,122,076    1,075,554  
  Deficit   (5,496,891 )  (6,107,475 )
 TOTAL EQUITY   34,959,147    34,381,715  
          
 Non-current liabilities           
  Provisions   316,313    307,235  
  Obligation under finance lease   4,265,016    1,266,996  
  Long-term debt   2,105,815    2,642,676  
    6,687,144    4,216,907  
 Current liabilities           
  Bank Indebtedness   1,351,117    -  
  Accounts payable and accrued liabilities   7,001,392    4,665,784  
  Current portion of obligation under finance lease   511,802    46,925  
  Current portion of long-term debt   1,400,404    1,622,760  
    10,264,715    6,335,469  
TOTAL LIABILITIES   16,951,859    10,552,376  
         
TOTAL LIABILITIES AND EQUITY  $51,911,006   $44,934,091  
         
         
  
STATEMENTS OF CASH FLOWS  
For the quarters ended July 26, 2015 and July 27, 2014  
(Not audited or reviewed by the Company's external auditor)  
   
   
   
   Quarter ended   Fiscal year-to-date ended  
   
   July 26, 2015     July 27, 2014     July 26, 2015     July 27, 2014  
Operating activities                        
 Net income  $579,806   $ 445,453   $ 610,584   $ 238,664  
 Adjustments for:                        
  Income tax expense   217,947     163,200     235,757     86,755  
  Finance costs   123,630     183,318     235,232     303,761  
  Depreciation and amortization of property, plant and                        
  equipment and intangibles   699,288     772,003     1,381,972     1,536,530  
  Loss on disposal of property, plant and equipment   -     -     -     7,345  
  Share-based payments   34,395     13,862     63,921     63,186  
  Change in non-cash working capital related to operations   (1,772,396 )   462,719     (1,090,724 )   (1,077,226 )
 Less:                        
  Interest paid   (17,286 )   (169,646 )   (111,133 )   (263,693 )
Cash provided by (used in) operating activities   (134,616 )   1,870,909     1,325,609     895,322  
                 
Investing activities                        
 Purchase of property, plant and equipment   (766,784 )   (499,024 )   (1,319,445 )   (1,156,712 )
 Construction deposit paid   (205,119 )   -     (825,302 )   -  
 Refund (purchase) of intangible assets   15,737     (159,831 )   (262,090 )   (305,620 )
Cash used in investing activities   (956,166 )   (658,855 )   (2,406,837 )   (1,462,332 )
                 
Financing activities                        
 Increase (decrease) in bank indebtedness   1,351,117     (1,297,461 )   1,351,117     686,214  
 Repayment of long-term debt   (544,691 )   (239,593 )   (767,793 )   (451,189 )
 Issuance of shares, net of fees   -     -     5,225     6,985  
 Shares repurchased and cancelled, including fees   (83,817 )   -     (102,298 )   -  
 Proceeds from stock option exercise   -     325,000     -     325,000  
Cash provided by (used in) financing activities   722,609     (1,212,054 )   486,251     567,010  
                 
Net increase/(decrease) in cash   (368,172 )   -     (594,976 )   -  
                 
Cash, beginning of period   368,172     -     594,976     -  
                 
Cash, end of period  $-   $ -   $ -   $ -  
                 
Non-cash investing and financing activities:                        
                 
 Acquisition of assets under finance lease  $963,093   $ -   $ 3,402,145   $ -  
                 
                 

Additional Information

For further details the Company's complete management discussion and analysis (MD&A) and financial statements for the quarter ended July 26, 2015 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 the largest Canadian-owned brewery in Ontario. The Company is a regional brewer of award-winning premium quality and value beers and is officially certified under British Retail Consortium (BRC) Global Standards for Food Safety, 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 brand premium craft beers with other popular brands such as Laker, Red Baron, Red Cap and Formosa Springs Draft. In March 2011, Brick purchased the Canadian rights to the Seagram Coolers and now produces, sells, markets and distributes Seagram Coolers across Canada. 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 t he 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