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Brick Brewing Delivers Strong Third Quarter Growth, Net Sales up 27%, EBITDA of $1.9M vs. $0.4M Prior Year

Third Quarter F2014 Highlights:

  • Net Revenues for the third quarter of fiscal 2014 were $9.6 million compared to $7.5 million in the third quarter of fiscal 2013.
  • Gross profit margin for the quarter increased to 31.6% from 18.7% in Q3 of fiscal 2013.  Gross margin percentage improvement is driven by improved pricing, favorable product mix, cost control efforts, and overall efficiency on increasing volumes. Prior year Q3 was negatively impacted by a one-time supply chain disruption, impacting co-pack volume.
  • Selling, Marketing and Administration ("SM&A") expenses increased nominally, to $1.8 million from $1.7 million in the prior year, driven by brand support for  Waterloo, Seagram and Laker.
  • EBITDA* for the third quarter of fiscal 2014 increased to $1.9 million compared to EBITDA* in the third quarter of fiscal 2013 of $0.4 million.

KITCHENER, ON, Dec. 12, 2013 /CNW/ - Brick Brewing Co. Limited ("Brick" or the "Company") (TSX: BRB), the largest Canadian-owned and Canadian-based publicly held brewery in Ontario, today released financial results for the third quarter of its 2014 fiscal year. Net revenues of $9.6 million for the third quarter represented 27% growth versus the previous year. EBITDA for the third quarter of $1.9 million was up from $0.4 million last year.

The Company continued to invest in its core supported brands and achieved double-digit volume improvement in the third quarter. Within the above premium craft portfolio, Waterloo volumes increased 29%. Seagram cooler and cider volumes increased by 51% as consumers continue to look for more natural quality offerings. Laker volumes in the quarter improved versus year ago driven by aggressive promotional activity in the second quarter. Additionally, the quarter benefited from strong year-over-year improvement in co-pack production.

Brick Brewing's President and Chief Executive Officer George Croft said, "Overall, we're very pleased with the results we're reporting today. In an environment where the overall beer category volume was largely flat in the third quarter, we've been able to show growth in our supported brands while also significantly improving our EBITDA performance. This is a testament to our focus on the category segments with higher growth and margin - premium craft beer as well as coolers and ciders. We did experience volatility in our earnings from second to third quarter, the result of the timing of our brand support activities. Moving forward, we would expect to return to more normalized quarterly performance. We continue to focus on execution, cost control and improved efficiency, all of which were central to the results we're reporting."

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, 2013.

 
Reconciliation of Net Earnings to Earnings Before Interest, Taxes, Depreciation and Amortization, Gain/Loss
on Disposal of Property, Plant and Equipment, and Share Based Payments (EBITDA)*
       
   Quarter ended  Fiscal year-to-date ended
(in thousands of dollars)   October 27, 2013   October 28, 2012   October 27, 2013   October 28, 2012
                 
Net income (loss) $ 683 $ (416) $ 280 $ 1,038
                 
Add (deduct):                
  Income tax expense (recovery)   227   (95)   89   421
  Depreciation and amortization   789   678   2,272   1,940
  Gain on disposal of property, plant and equipment   -   -   (15)   -
  Share based payment   45   68   146   143
  Finance costs   148   151   475   426
Subtotal   1,209   802   2,967   2,930
                 
EBITDA*   1,892   386   3,247   3,968
                   
             

 

 
STATEMENTS OF COMPREHENSIVE INCOME
For the periods ended October 27, 2013 and October 28, 2012
(Not audited or reviewed by the Company's external auditor)
           
   Quarter ended     Fiscal year-to-date ended 
   October 27, 2013   October 28, 2012     October 27, 2013   October 28, 2012 
                 
Revenue $ 9,561,744 $ 7,539,336   $ 29,718,744 $ 27,652,162
Cost of sales   6,537,642   6,129,816     21,947,508   20,208,953
Gross profit   3,024,102   1,409,520     7,771,236   7,443,209
                   
Selling, marketing and administration expenses   1,771,749   1,665,282     6,433,112   5,239,298
Other expenses   194,208   103,835     494,091   318,686
Finance costs   147,882   151,470     474,812   426,395
Income (loss) before tax   910,263   (511,067)     369,221   1,458,830
                   
Income tax expense (recovery)   227,000   (94,815)     89,000   421,142
Net income (loss) and comprehensive
                 
  income (loss) for the period $ 683,263  $ (416,252)   $ 280,221 $ 1,037,688
                   
                   
Basic earnings (loss) per share $ 0.02 $ (0.01)   $ 0.01 $ 0.04
Diluted earnings (loss) per share $ 0.02 $ (0.01)   $ 0.01 $ 0.03
                     
               

 

 
STATEMENTS OF FINANCIAL POSITION
As at October 27, 2013 and January 31, 2013
(Not audited or reviewed by the Company's external auditor)
         
   
October 27, 2013  
January 31, 2013
         
ASSETS        
  Non-current assets        
    Property, plant and equipment  $ 19,109,013  $ 19,109,603
    Intangible assets   14,515,467   14,259,612
    Other assets   30,000   25,000
    Deferred income tax assets   2,444,925   2,533,925
    36,099,405   35,928,140
  Current assets        
    Accounts receivable   6,908,710   5,187,785
    Inventories   4,236,101   4,013,375
    Prepaid expenses   296,950   296,180
    11,441,761   9,497,340
TOTAL ASSETS   47,541,166   45,425,480
         
LIABILITIES AND EQUITY        
  Equity        
    Share capital   38,941,465   35,895,873
    Share-based payments reserves   1,012,286   1,092,414
    Deficit   (7,115,522)   (7,395,743)
  TOTAL EQUITY   32,838,229   29,592,544
         
  Non-current liabilities        
    Provisions   340,676   326,646
    Long-term debt and promissory note   4,892,526   6,078,719
    5,233,202   6,405,365
         
  Current liabilities        
    Bank indebtedness   1,934,615   2,310,809
    Accounts payable and accrued liabilities   5,620,514   5,461,292
    Current portion of long-term debt and promissory note   1,914,606   1,655,470
    9,469,735   9,427,571
TOTAL LIABILITIES   14,702,937   15,832,936
         
COMMITMENTS        
         
TOTAL LIABILITIES AND EQUITY  $ 47,541,166  $ 45,425,480
             
   

 

 
STATEMENTS OF CASH FLOWS
For the periods ended October 27, 2013 and October 28, 2012
(Not audited or reviewed by the Company's external auditor)
 
  Quarter ended   Fiscal year-to-date ended
    October 27, 2013    October 28, 2012     October 27, 2013   October 28, 2012
Operating activities                  
  Net income (loss) $ 683,263 $ (416,252)   $ 280,221 $ 1,037,688
  Adjustments for:                  
    Income tax expense (recovery)   227,000   (94,815)     89,000   421,142
    Finance costs   147,882   151,470     474,812   426,395
    Depreciation and amortization of property, plant and
equipment and intangibles
  789,426   677,846     2,271,642   1,940,322
    Loss (gain) on disposal of property, plant and equipment   -   -     (15,093)   -
    Share-based payments   44,538   68,864     146,341   142,129
    Change in non-cash working capital related to operations   (1,699,060)   458,587     (1,835,966)   (1,761,530)
  Less:                  
    Interest paid   (128,579)   (115,799)     (403,742)   (349,803)
Cash provided by operating activities   64,469   728,915     1,007,215   1,856,343
                   
Investing activities                  
  Purchase of property, plant and equipment   (478,855)   (697,670)     (2,452,931)   (1,862,571)
  Proceeds from sale of property, plant and equipment   -   -     203,000   -
  Purchase of intangible assets   (1,447)   (225)     (261,883)   (254,163)
Cash used in investing activities   (480,302)   (697,895)     (2,511,814)   (2,116,734)
                   
Financing activities                  
  Increase/(decrease) in bank indebtedness   1,934,615   (136,279)     (379,599)   580,276
  Decrease in obligation under financial lease   -   (6,166)     -   (16,398)
  Issuance of long-term debt   -   321,884     1,185,912   321,884
  Repayment of long-term debt   (1,609,806)   (210,459)     (2,120,837)   (627,746)
  Change in share capital   -   -     -   2,375
  Proceeds from warrants   -   -     2,827,615   -
  Share issue costs paid   (12,388)   -     (25,502)   -
  Issurance of shares   810   -     17,010   -
Cash provided by/(used in) financing activities   313,231   (31,020)     1,504,599   260,391
                   
Net increase/(decrease) in cash   (102,602)   -     -   -
                   
Cash, beginning of period   102,602   -     -   -
Cash, end of period $ - $ -   $ - $ -
                       
                     

 

Additional Information

For further details the Company's complete management discussion and analysis (MD&A) and financial statements for the quarter ended October 27, 2013 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 and Canadian-based publicly held brewery. 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.

* 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.

SOURCE Brick Brewing Co. Limited

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