SOURCE: BRICK BREWING CO. LIMITED

Brick Brewing Co. Limited

September 09, 2016 06:00 ET

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") (TSX: BRB), 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