SOURCE: BRICK BREWING CO. LIMITED

Brick Brewing Co. Limited

December 10, 2015 06:00 ET

Brick Brewing Reports Third Quarter EBITDA of $1.5M

KITCHENER, ON--(Marketwired - December 10, 2015) -

Highlights:

  • Net Revenue for the third quarter was $9.8 million compared to $9.3 million in the third quarter of fiscal 2015.
  • Gross profit margin for the quarter was 25.7% (27.2% excluding 1x costs), compared to 26.6% in prior year.
  • Selling, Marketing and Administration ("SM&A") of $1.8 million, down from the prior year at $1.9 million.
  • EBITDA* for the quarter increased to $1.5 million ($1.6M excluding one time costs) compared to EBITDA* in the third quarter of fiscal 2015 of $1.4 million.
  • The Board of Directors approved introduction of a quarterly dividend, $0.012/share, payable January 15, 2016 to shareholders of record as of January 1, 2016. The dividend is classified as an eligible dividend.

Brick Brewing Co. Limited ("Brick" or the "Company") (TSX: BRB), Ontario's largest Canadian-owned brewery, today released results for the third quarter ended October 25, 2015.

Net Revenues for the third quarter of fiscal 2016 grew to $9.8 million, up from $9.3 million in the third quarter of fiscal 2015. Excluding the impact of $147 thousand in one-time costs related to the Kitchener expansion, gross margins for the quarter were 27.2% versus 26.6% in Q3 of the prior year. Continued improvements to product mix coupled with success in cost reduction initiatives mitigated the impact of a soft pricing environment. EBITDA for the third quarter of fiscal 2016 improved to $1.5 million, and $1.6 million excluding one time costs, compared to $1.4 million in the third quarter of fiscal 2015.

"Competitive pricing pressure in the quarter impacted our Laker brand, as international brewers had National brands at deep discount pricing for much of the quarter. Our ability to generate EBITDA growth in this environment is a testament to the strength of our Waterloo craft premium brand, to our diversified business model, and to the investments we've made to ensure we can compete effectively with the large international brewers." noted George Croft, President and CEO. "Our craft premium Waterloo brand grew 37% and is up over 30% year to date. This is prior to introduction of beer into the grocery channel which is expected to arrive on shelves in the next few months. Seagram had a strong quarter as well, with volume up over 7%, led by double digit growth in both vodka based coolers and cider."

During the quarter Brick incurred $147 thousand in one time costs associated with the now complete Kitchener expansion project, bringing year to date one-time costs to $349 thousand. Chief Operating Officer Russell Tabata noted, "The efficiency and performance of the new brewhouse is right in line with our expectations. The improvements we're seeing in energy, materials, and distribution are essential to our ability to compete effectively over the long term."

Given the strong operating and financial performance, Brick is also announcing today the introduction of a quarterly dividend, $0.012/share, payable on January 15 to shareholders of record as of January 1, 2016. The dividend is an eligible dividend. Chief Financial Officer Sean Byrne explained, "Both management and the board felt the time was right to begin to return cash directly to our shareholders. The Company's financial position is strong and our investments in recent years are generating the expected returns. Dividend introduction is entirely in line with our commitment to deliver value to our shareholders."

Croft added, "With a quarter to go, the positive changes in The Beer Store soon to be realized, and the introduction of beer into grocery underway, we feel we are well positioned for a strong finish to 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, 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)  October 25, 2015   October 26, 2014   October 25, 2015   October 26, 2014  
   
Net income $ 492  $ 609  $ 1,102  $ 848  
   
Add (deduct):                     
 Income tax expense   141    164    377    251  
 Depreciation and amortization   881    888    2,263    2,424  
 Gain on disposal of property, plant and equipment   (197 )  (446 )  (197 )  (439 )
 Share-based payments   31    29    94    92  
 Finance costs   122    111    357    415  
Subtotal   978    746    2,894    2,743  
   
EBITDA*   1,470    1,355    3,996    3,591  
           
           
STATEMENTS OF COMPREHENSIVE INCOME  
For the quarters ended October 25, 2015 and October 26, 2014  
(Not audited or reviewed by the Company's external auditor)  
   
   
  Quarter ended  Fiscal year-to-date ended  
  October 25, 2015  October 26, 2014  October 25, 2015  October 26, 2014  
   
   
Revenue $ 9,829,613  $ 9,261,324  $ 28,573,912  $ 27,215,971  
Cost of sales   7,302,829    6,801,951    20,850,298    19,842,343  
Gross profit   2,526,784    2,459,373    7,723,614    7,373,628  
   
Selling, marketing and administration expenses   1,828,723    1,896,213    5,649,363    5,902,189  
Other expenses   140,642    125,385    435,259    397,139  
Finance costs   121,779    110,791    357,011    414,552  
Gain on disposal of property, plant and equipment   (196,912 )  (446,329 )  (196,912 )  (438,984 )
Income before tax   632,552    773,313    1,478,893    1,098,732  
   
Income tax expense   141,082    164,400    376,839    251,155  
Net income and comprehensive income for the period $ 491,470  $ 608,913  $ 1,102,054  $ 847,577  
   
   
   
Basic earnings per share $ 0.01  $ 0.02  $ 0.03  $ 0.02  
Diluted earnings per share $ 0.01  $ 0.02  $ 0.03  $ 0.02  
       
       
STATEMENTS OF FINANCIAL POSITION  
As at October 25, 2015 and January 31, 2015  
(Not audited or reviewed by the Company's external auditor)  
   
    October 25, 2015    January 31, 2015  
ASSETS           
 Non-current assets           
  Property, plant and equipment $ 21,982,467  $ 15,582,051  
  Intangible assets   15,376,731    15,114,247  
  Deferred income tax assets   1,544,322    1,921,161  
  Construction deposit   -    1,478,220  
    38,903,520    34,095,679  
 Current assets           
  Cash   390,554    594,976  
  Accounts receivable   7,606,839    6,492,461  
  Inventories   3,332,040    3,400,821  
  Prepaid expenses   455,765    350,154  
    11,785,198    10,838,412  
   
TOTAL ASSETS   50,688,718  $ 44,934,091  
   
LIABILITIES AND EQUITY           
 Equity           
  Share capital   39,263,500    39,413,636  
  Share-based payments reserves   1,152,366    1,075,554  
  Deficit   (5,005,421 )  (6,107,475 )
 TOTAL EQUITY   35,410,445    34,381,715  
   
 Non-current liabilities           
  Provisions   320,849    307,235  
  Obligation under finance lease   4,742,989    1,266,996  
  Long-term debt   1,751,597    2,642,676  
    6,815,435    4,216,907  
   
 Current liabilities           
  Accounts payable and accrued liabilities   6,348,935    4,665,784  
  Current portion of obligation under finance lease   706,962    46,925  
  Current portion of long-term debt   1,406,941    1,622,760  
    8,462,838    6,335,469  
   
TOTAL LIABILITIES   15,278,273    10,552,376  
COMMITMENTS           
   
TOTAL LIABILITIES AND EQUITY $ 50,688,718  $ 44,934,091  
             
             
STATEMENTS OF CASH FLOWS  
For the quarters ended October 25, 2015 and October 26, 2014  
(Not audited or reviewed by the Company's external auditor)  
   
   
  Quarter ended  Fiscal year-to-date ended  
   
    October 25, 2015    October 26, 2014    October 25, 2015    October 26, 2014  
   
Operating activities                     
 Net income $ 491,470  $ 608,913  $ 1,102,054  $ 847,577  
 Adjustments for:                     
  Income tax expense   141,082    164,400    376,839    251,155  
  Finance costs   121,779    110,791    357,011    414,552  
  Depreciation and amortization of property, plant and                     
  equipment and intangibles   881,271    887,535    2,263,243    2,424,065  
  Gain on disposal of property, plant and equipment   (196,912 )  (446,329 )  (196,912 )  (438,984 )
  Share-based payments   30,527    29,167    94,448    92,353  
  Change in non-cash working capital related to operations   1,681,820    965,214    591,094    (112,012 )
 Less:                     
  Interest paid   (214,730 )  (62,036 )  (325,861 )  (325,729 )
Cash provided by operating activities   2,936,307    2,257,655    4,261,916    3,152,977  
   
Investing activities                     
 Purchase of property, plant and equipment   (831,658 )  (291,788 )  (2,151,101 )  (1,448,500 )
 Construction deposit paid   (111,293 )  -    (936,595 )  -  
 Proceeds from sale of property, plant and equipment, net   322,490    3,356,397    322,490    3,356,397  
 Purchase of intangible assets   (15,692 )  (4,198 )  (277,784 )  (309,818 )
Cash provided by (used in) investing activities   (636,153 )  3,060,411    (3,042,990 )  1,598,079  
   
Financing activities                     
 Decrease in bank indebtedness   (1,351,117 )  (2,380,392 )  -    (1,694,178 )
 Repayment of long-term debt   (355,042 )  (242,494 )  (1,122,835 )  (693,683 )
 Repayment of obligation under finance lease   (132,741 )       (132,741 )     
 Issuance of shares, net of fees   4,750    -    9,975    6,985  
 Shares repurchased and cancelled, including fees   (76,353 )  -    (178,651 )  -  
 Proceeds from stock option exercise   904    -    904    325,000  
Cash used in financing activities   (1,909,599 )  (2,622,886 )  (1,423,348 )  (2,055,876 )
   
Net increase/(decrease) in cash   390,554    2,695,180    (204,422 )  2,695,180  
   
Cash, beginning of period   -    -    594,976    -  
   
Cash, end of period $ 390,554  $ 2,695,180  $ 390,554  $ 2,695,180  
   
Non-cash investing and financing activities:                     
   
  Acquisition of assets under finance lease $ 805,878  $ 1,040,544  $ 4,208,021  $ 1,040,544  

For further details the Company's complete management discussion and analysis (MD&A) and financial statements for the quarter ended October 25, 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 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 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 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 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