Brick Brewing reports first quarter F2010 financial results, with EBITDA of $1.16 million


WATERLOO, ON, June 8 /CNW/ - Brick Brewing Co. Limited (TSX: BRB), Ontario's largest Canadian-owned and Canadian-based publicly held brewery, today released its financial results for the first quarter of fiscal 2010. "With fiscal 2009 behind us, we are focusing on the future of Brick Brewery," said George Croft, President & CEO. "The positive results for the first quarter of fiscal 2010 demonstrate how the Company will benefit from the significant and sustainable cost reductions made in fiscal 2009." Financial highlights for the quarter include: - Net revenue growth of 3.2% compared to the first quarter of fiscal 2009; - Gross profit percentage has increased to 25.8% versus 19.2% in the comparable period of fiscal 2009; - EBITDA(*) of $1.16 million, representing an increase of $781 thousand, or 208.8%; and - Net income of $431 thousand, compared to a loss of $79 thousand in the first quarter last year. The Company has made great strides in aligning itself with the following strategic pillars: - Building a strong owner brand portfolio in both the value and premium beer segments During the first quarter, the re-launch of the Red Baron brand coupled with aggressive marketing support resulted in significant growth, with Red Baron volumes increasing by almost ten times as compared to Q1 2009. The Company's premium Waterloo brands experienced a volume increase of 34%. The Laker Family brands underperformed this quarter, however the Company is focused on marketing and sales initiatives designed to improve Laker volumes. - Focusing our investments against the biggest opportunities that drive revenue growth or deliver sustainable cost reduction Throughout the last half of fiscal 2009, several cost reduction measures were implemented. Brick is saving money on salaries and wages, packaging materials, as well as warehousing and distribution charges. The Company has invested in a new canning line, which will further reduce costs. The Company is positioned to deliver the $2 million of cost savings that was previously announced. - Growing in the most profitable channels and geographic markets The Company has been fully participating in various activities and programming available through The Beer Store such as lobby displays and in-store tastings. New pack-sizes were also launched during the first quarter to add more variety to meet consumer preferences. Increased radio and outdoor advertising, along with the above initiatives, resulted in growth amongst the Company's premium brands. The Company has benefited from the Ontario Craft Brewer's Opportunity Fund and expects to receive further funding in the second or third quarter of fiscal 2010. - Optimizing the Company's operating assets During periods of peak demand, the Company will continue to use its Formosa facility for supplemental brewing. Efficiency gains were achieved at the Waterloo and Kitchener facilities. - Building a high performance, disciplined, winning organization that is fully committed to excellence in execution Brick has hired talented, professional individuals, at all levels, possessing the knowledge and experience to drive the Company to profitability. The recent addition of Russell Tabata as Brick's Chief Technical Officer will provide continued focus and leadership in the following functional areas; brewing, quality, logistics, engineering, packaging, procurement and maintenance. "I share with you my enthusiasm over a great start to fiscal 2010 and look forward to conveying results for the second quarter of 2010," said Mr. Croft. Brick Brewing Co. Limited Consolidated Balance Sheet (unaudited) ------------------------------------------------------------------------- April 30, 2009 January 31, 2009 ------------------------------------------------------------------------- (Restated(1)) Assets Current assets: Cash $ - $ 209,291 Accounts receivable 3,036,024 2,096,781 Inventories 5,916,918 5,309,474 Prepaid expenses 481,497 507,518 Future income taxes 522,338 522,338 ------------------------------------------------------------------------- 9,956,777 8,645,402 Property, plant and equipment 13,799,265 13,522,720 Trademarks and listing fees 5,677,006 5,401,314 Deferred costs 98,328 108,067 Other assets 42,500 50,000 Future income taxes 407,743 626,103 ------------------------------------------------------------------------- 29,981,619 28,353,606 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities: Bank indebtedness $ 176,841 $ - Accounts payable and accrued liabilities 5,195,263 3,846,187 Current portion of long-term debt 928,500 924,000 Current portion of obligations under capital lease 386,633 419,282 Deferred grants - 270,758 ------------------------------------------------------------------------- 6,687,237 5,460,227 Long-term debt 2,009,550 2,067,900 Shareholders' equity: Share capital 34,661,184 34,657,984 Contributed surplus 698,387 673,593 Deficit (14,074,739) (14,506,098) ------------------------------------------------------------------------- 21,284,832 20,825,479 Commitments ------------------------------------------------------------------------- $ 29,981,619 $ 28,353,606 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) As a result of adopting CICA Handbook Section 3064, the Company has adjusted the opening retained earnings in the comparative consolidated financial statements by $182,080 (net of tax) to write off pre-production costs that are no longer permitted to be deferred. Deferred costs and future income taxes, as at January 31, 2009, were reduced by $261,153 and $79,073 respectively. Amortization expense presented in the consolidated income statement for the first quarter of fiscal 2009 has been reduced by $29 thousand. Brick Brewing Co. Limited Consolidated Statement of Income (Loss) and Deficit (unaudited) Three Months Ended ------------------------------------------------------------------------- April 30, 2009 April 30, 2008 ------------------------------------------------------------------------- (Restated) Gross revenue $ 15,697,444 $ 15,595,840 Less production taxes and distribution fees (8,125,677) (8,261,023) ------------------------------------------------------------------------- Net revenue 7,571,767 7,334,817 Cost of sales 5,619,236 5,926,824 ------------------------------------------------------------------------- Gross profit 1,952,531 1,407,993 Selling, marketing and administration 797,091 1,025,917 ------------------------------------------------------------------------- Earnings before the undernoted 1,155,440 382,076 Other expense: Depreciation and amortization (464,987) (392,368) Interest on long-term debt (41,855) (102,175) Other income (expense) 1,121 (1,918) Equity loss of long-term investment - (4,768) ------------------------------------------------------------------------- (505,721) (501,229) ------------------------------------------------------------------------- Income (loss) before income taxes 649,719 (119,153) Future income tax expense (recovery) 218,360 (40,627) ------------------------------------------------------------------------- Net income (loss) and comprehensive income (loss) 431,359 (78,526) Deficit, beginning of period (14,506,098) (6,852,240) Cumulative effect of adopting new accounting policies, net of tax - (261,589) ------------------------------------------------------------------------- Deficit, beginning of period restated (14,506,098) (7,113,829) ------------------------------------------------------------------------- Deficit, end of period (14,074,739) (7,192,355) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net income (loss) per share: Basic 0.02 (0.00) Diluted 0.02 (0.00) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Brick Brewing Co. Limited Consolidated Statement of Cash Flows (unaudited) Three Months Ended ------------------------------------------------------------------------- April 30, 2009 April 30, 2008 ------------------------------------------------------------------------- (Restated) Cash provided by (used in): Operations: Income (loss) for the period 431,359 (78,526) Items not involving cash: Amortization of property, plant and equipment, deferred costs and other assets 472,487 397,817 Stock based compensation 24,794 15,281 Equity loss on long-term investment - 4,767 Future income tax provision (recovery) 218,360 (31,776) Change in non-cash operating working capital (442,348) 469,302 ------------------------------------------------------------------------- 704,652 776,865 Financing: Increase (decrease) in bank indebtedness 176,841 (864,223) Repayment of long-term debt (53,850) (49,650) Repayment of obligation under capital lease (32,649) (43,876) Issue of capital stock (net of fees) 3,200 9,730 Stock options exercised - 252,000 ------------------------------------------------------------------------- 93,542 (696,019) Investing: Purchase of property, plant and equipment, listing fees and deferred assets (1,007,485) (80,846) ------------------------------------------------------------------------- (1,007,485) (80,846) ------------------------------------------------------------------------- Net increase (decrease) in cash (209,291) - Cash, beginning of period 209,291 - ------------------------------------------------------------------------- Cash, end of period - - ------------------------------------------------------------------------- ------------------------------------------------------------------------- These statements should be read in conjunction with the audited annual financial statements of the Company. Additional Information For further details the Company's management discussion and analysis (MD&A) and financial statements for the quarter ended April 30, 2009 will be available on the investor section of the Brick Brewing website at Additional information relating to the Company, including its Annual Information Form, is available there and on SEDAR at About Brick Brewing Brick Brewing Co. Limited 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. The Company, founded in 1984, 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. Brick trades on the TSX under the symbol BRB. Visit us at FORWARD-LOOKING STATEMENTS Except for the historical information contained herein, the discussion in this press release contains certain forward-looking statements that involve risks and uncertainties, such as statements of the Company's plans, objectives, strategies, expectations and intentions and include, for example, the statements concerning expected volumes, operating efficiencies and costs. 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 Company 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. These forward-looking statements are not guarantees and reflect the Company's views as of June 8, 2009 with respect to future events. Future events 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, including the statements regarding expected volumes, operating efficiencies and costs are based on, among other things, the following material factors and assumptions: volumes in the fiscal year ending January 31, 2010 ("fiscal 2010") will increase, no material changes in consumer preferences, brewing and packaging efficiencies will improve, input costs for brewing materials will decrease, the cost of packaging materials will increase, competitive activity from other brewers will continue, no material change to the regulatory environment in which the Company operates and no material supply, cost or quality control issues with vendors. Readers are urged to consider the foregoing factors and assumptions when reading the forward-looking statements and, for more information regarding the risks, uncertainties and assumptions that could cause the Company's actual financial results to differ from the forward-looking statements, to also refer to the Company's MD&A, the Company's annual information form and various other public filings. The forward-looking statements included in this MD&A are made only as of June 8, 2009 and, except as required by applicable securities laws, the Company does not undertake to publicly update such forward-looking statements to reflect new information, future events or otherwise. (*) EBITDA is a non-GAAP earnings measure, therefore it does not have any standardized meaning prescribed by Canadian generally accepted accounting principles and may not be similar to measures presented by other companies. EBITDA represents earnings before interest, income taxes, depreciation and amortization. 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. %SEDAR: 00003334E
For further information: George H. Croft, President and CEO, Tel: (519)
576-9519 Ext. 247, E-mail: