SOURCE: BRICK BREWING CO. LIMITED

Brick Brewing Co. Limited

December 09, 2016 06:00 ET

Brick Brewing Reports Third Quarter EBITDA of $2.0M

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

Third Quarter Highlights:

  • Net Revenue for the third quarter increased to $11.1 million compared to $9.8 million in the third quarter of fiscal 2016.
  • Gross profit margin for the quarter was 34.3%, an increase from 25.7% in prior year.
  • Selling, Marketing and Administration ("SM&A") of $2.3 million, compared to prior year at $1.8 million.
  • EBITDA* for the quarter increased to $2.0 million compared to EBITDA* in the third quarter of fiscal 2016 of $1.5 million.
  • The Board of Directors approved an increase to the quarterly dividend, to $0.016/share, payable January 24, 2017 to shareholders of record as of January 10, 2017. The dividend is classified as an eligible dividend

Year to Date Highlights:

  • Net revenue increased to $34.6 million, from $28.6 million in the prior year.
  • Gross margin improved to 35.6% from 27.0% prior year.
  • Selling, Marketing and Administration ("SM&A") expenses increased to $6.9 million from $5.6 million.
  • EBITDA* improved to $7.1 million year to date, up from $4.0 million in the prior year.

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 30, 2016.

Net Revenues for the third quarter of fiscal 2017 grew to $11.1 million, up from $9.8 million in the third quarter of fiscal 2016. Gross margins for the quarter increased to 34.3% versus 25.7% in Q3 of the prior year. Margin expansion was supported by volume growth, improved product mix, strong pricing, as well as overall cost reductions in operations. EBITDA for the third quarter of fiscal 2017 improved to $2.0 million, reflecting a continuation of the strong results reported in the first half of the year.

"This was, by any measure, another tremendous quarter for Brick Brewing," noted George Croft, President and CEO. "We're reporting double digit growth in branded volume, co-pack revenue and net sales. We've been able to expand margins, increase the investment in our brands, and still deliver over 30% growth in EBITDA. Our Laker brand posted 13% volume growth while LandShark continued to resonate with consumers. Our Waterloo brand declined modestly in the quarter, due to channel inventory reductions . Counter sales for Waterloo remained strong, and are consistent with our year to date growth, up 14% vs prior year. We have been successful in growing market share, and the strong response we've enjoyed from our consumers has allowed us to outperform the category."

As a result of the strength in operating and financial performance, Brick is also announcing today an increase in the quarterly dividend, to $0.016/share, up from $0.012/share. The dividend is payable January 24 to shareholders of record as of January 10, 2017. The dividend is an eligible dividend. Chief Financial Officer Sean Byrne commented, "The increase in the dividend is simply a continuation of our commitment to deliver value to shareholders. We believe it also speaks volumes about our ability to both invest in growing our business while at the same time increasing returns to shareholders."

Croft added, "Although we are enormously pleased with our results to date, we are taking nothing for granted. We will continue to focus on executional excellence, and will be working hard to ensure a strong finish for 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, 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)  October 30, 2016  October 25, 2015   October 30, 2016  October 25, 2015  
                    
Net income  $854  $492   $3,277  $1,102  
                    
Add (deduct):                   
 Income tax expense   291   141    1,067   377  
 Depreciation and amortization   753   881    2,240   2,263  
 Gain on disposal of property, plant and equipment   -   (197 )  -   (197 )
 Share-based payments   44   31    105   94  
 Finance costs   103   122    386   357  
Subtotal   1,191   978    3,798   2,894  
                    
EBITDA*   2,045   1,470    7,075   3,996  
           
                

STATEMENTS OF COMPREHENSIVE INCOME
 
For the quarters ended October 30, 2016 and October 25, 2015 
(Not audited or reviewed by the Company's external auditor) 
                
                
   Quarter ended   Fiscal year-to-date ended  
   October 30, 2016  October 25, 2015   October 30, 2016  October 25, 2015  
                    
Revenue  $11,106,289  $9,829,613   $34,636,967  $28,573,912  
Cost of sales   7,302,657   7,302,829    22,317,110   20,850,298  
Gross profit   3,803,632   2,526,784    12,319,857   7,723,614  
Selling, marketing and administration expenses   2,349,468   1,828,723    6,938,887   5,649,363  
Other expenses   205,192   140,642    650,592   435,259  
Finance costs   103,043   121,779    385,595   357,011  
Gain on disposal of property,plant and equipment   -   (196,912 )      (196,912 )
Income before tax   1,145,929   632,552    4,344,783   1,478,893  
Income tax expense   291,495   141,082    1,067,360   376,839  
Net income and comprehensive income  $854,434  $491,470   $3,277,423  $1,102,054  
                    
                    
Basic earnings per share   0.02  $0.01    0.09  $0.03  
Diluted earnings per share   0.02  $0.01    0.09  $0.03  
       
       
          
STATEMENTS OF FINANCIAL POSITION         
As at October 30, 2016 and January 31, 2016         
(Not audited or reviewed by the Company's external auditor)      
       
       
   October 30, 2016   January 31, 2016  
            
ASSETS           
 Non-current assets           
  Property, plant and equipment  $21,442,784   $21,986,070  
  Intangible assets   15,446,064    15,375,392  
  Equipment Deposits   940,000    -  
  Deferred income tax assets   195,409    1,262,769  
    38,024,257    38,624,231  
            
 Current assets           
  Cash   1,058,357    393,645  
  Accounts receivable   8,064,326    6,176,421  
  Inventories   4,923,030    3,291,529  
  Prepaid expenses   700,243    354,650  
    14,745,956    10,216,245  
TOTAL ASSETS   52,770,213    48,840,476  
            
LIABILITIES AND EQUITY           
 Equity           
  Share capital   39,784,425    39,526,573  
  Share-based payments reserves   910,387    932,200  
  Deficit   (2,916,793 )  (4,933,195 )
 TOTAL EQUITY   37,778,019    35,525,579  
            
 Non-current liabilities           
  Provisions   405,836    388,548  
  Obligation under finance lease   3,969,824    4,523,152  
  Long-term debt   2,690,640    1,548,584  
    7,066,300    6,460,284  
            
 Current liabilities           
  Accounts payable and accrued liabilities   6,454,797    4,908,722  
  Current portion of obligation under finance lease   734,299    713,699  
  Current portion of long-term debt   736,798    1,232,192  
    7,925,894    6,854,613  
TOTAL LIABILITIES   14,992,194    13,314,897  
            
COMMITMENTS           
            
TOTAL LIABILITIES AND EQUITY  $52,770,213   $48,840,476  
             
             
             
STATEMENTS OF CASH FLOW  
For the quarters ended October 30, 2016 and October 25, 2015 
(Not audited or reviewed by the Company's external auditor) 
             
   Quarter ended   Fiscal year-to-date ended  
   October 30, 2016   October 25, 2015   October 30, 2016   October 25, 2015  
                      
Operating activities                     
 Net income  $854,434   $491,470   $3,277,423   $1,102,054  
 Adjustments for:                     
  Income tax expense   291,495    141,082    1,067,360    376,839  
  Finance costs   103,043    121,779    385,595    357,011  
Depreciation and amortization of property, plant and equipment and intangibles   753,154    881,271    2,240,006    2,263,243  
Gain on disposal of property, plant and equipment   -    (196,912 )  -    (196,912 )
  Share-based payments   44,157    30,527    105,100    94,448  
  Change in non-cash working capital related to operations   56,623    1,681,820    (2,320,224 )  591,094  
 Less:                     
  Interest paid   (103,603 )  (214,730 )  (308,583 )  (325,861 )
Cash provided by operating activities   1,999,303    2,936,307    4,446,677    4,261,916  
                      
Investing activities                     
 Purchase of property, plant and equipment   (579,491 )  (831,658 )  (1,681,420 )  (2,151,101 )
 Equipment deposit paid   (940,000 )  (111,293 )  (940,000 )  (936,595 )
 Proceeds from sale of property, plant and equipment, net   -    322,490    -    322,490  
 Purchase of intangible assets   (18,339 )  (15,692 )  (85,972 )  (277,784 )
Cash used in investing activities   (1,537,831 )  (636,153 )  (2,707,392 )  (3,042,990 )
                      
Financing activities                     
 Increase in bank indebtedness   -    (1,351,117 )  -    -  
 Issuance of long-term debt   -    -    2,000,000    -  
 Repayment of long-term debt   (180,321 )  (355,042 )  (1,411,762 )  (1,122,835 )
 Repayment of obligation under finance lease   (179,263 )  (132,741 )  (532,728 )  (132,741 )
 Dividends paid   (421,320 )  -    (1,261,021 )  -  
 Issuance of shares, net of fees   2,490    4,750    10,458    9,975  
 Shares repurchased and cancelled, including fees   (3,883 )  (76,353 )  (54,197 )  (178,651 )
 Proceeds from stock option exercise   138,850    904    174,677    904  
Cash used in financing activities   (643,447 )  (1,909,599 )  (1,074,573 )  (1,423,348 )
                      
Net increase/(decrease) in cash   (181,975 )  390,554    664,712    (204,422 )
                      
Cash, beginning of the period   1,240,332    -    393,645    594,976  
Cash, end of the period  $1,058,357   $390,554   $1,058,357   $390,554  
                      
Non-cash investing and financing activities:                     
 Acquisition of assets under finance lease  $-   $805,878   $-   $4,208,021  

1. The purchase of property, plant and equipment excludes assets held under finance lease

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

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