Brick Brewing announces third quarter results, including EBITDA* of $0.7 million

 

Brick beer brands deliver growth of 11.1%, outpacing industry by 10.8% in the quarter

WATERLOO, ON, Dec. 8, 2011 /CNW/ - Brick Brewing Co. Limited ("Brick" or the "Company") (TSX: BRB), Ontario's largest Canadian-owned and Canadian-based publicly held brewery, today released its financial results for the third quarter ended October 30, 2011.

"We continue to invest in our brands to deliver top line growth", said George Croft, President and CEO.  "Selling and marketing strategies for our beer brands resulted in exceptional volume growth and we outpaced the industry by 10.8%".

"Our beer brands have outperformed the broader industry for six consecutive quarters and this sustained effort has allowed Brick to move from the fifth largest brewer in Ontario by volume, to number four", continued Mr. Croft.  "Great momentum on our Laker trademark has propelled us to this new market share position, which provides additional promotional opportunities at The Beer Store for fiscal 2013".

"Market conditions have remained challenging and input cost pressures continue.  We are focused on minimizing the impact of these variables through consistent improvement in production processes and related efficiency", said Mr. Croft.

Financial highlights are as follows:

  • Net revenues for the third quarter of fiscal 2012 were $7.9 million compared to $7.1 million in the third quarter of fiscal 2011.

  • Gross profit percentage increased from 23.1% to 24.9%.

  • EBITDA* for the period ended October 30, 2011 was $0.7 million.  EBITDA* for the period ended October 31, 2010 was $1.1 million, which included a government incentive of $0.3 million.  The Company is no longer receiving this benefit, which was equal to $1.0 million on a year-to-date basis in the previous fiscal period.

On February 1, 2011, the Company adopted International Financial Reporting Standards ("IFRS") for Canadian publicly accountable enterprises.  Prior to the adoption of IFRS, the Company followed Canadian Generally Accepted Accounting Principles ("GAAP").  While IFRS has many similarities to Canadian GAAP, some of the Company's accounting policies have changed as a result of its transition to IFRS.  The most significant accounting policy changes that have had an impact on the results of operations are discussed within the applicable sections of the Company's first quarter ended May 1, 2011 Management Discussion & Analysis ("MD&A") and interim Financial Statements filed on SEDAR.

The following financial statements should be read in conjunction with the audited annual financial statements of the Company prepared under Canadian GAAP. Certain prior year amounts in the following financial statements have been adjusted to conform to IFRS.

Reconciliation of Net Earnings to Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)*

(in thousands of dollars) Quarter ended Fiscal year-to-date ended
  October 30, 2011 October 31, 2010 October 30, 2011 October 31, 2010
Net income $ 85 $ 230 $ 754 $ 1,274
Add:        
  Deferred income tax expense 17 128 210 600
  Amortization 464 635 1,688 1,905
  Interest expense 157 59 507 152
Subtotal 638 822 2,405 2,657
                   
EBITDA* 723 1,052 3,159 3,931

 

STATEMENT OF COMPREHENSIVE INCOME
For the periods ended October 30, 2011 and October 31, 2010
(Not audited or reviewed by the Company's external auditor)

    Quarter ended   Fiscal year-to-date ended
    October 30, 2011   October 31, 2010   October 30, 2011   October 31, 2010
Revenue $ 7,902,057 $ 7,112,063 $ 26,740,949 $ 23,194,377
Cost of sales   5,931,061   5,466,743   20,120,381   17,244,367
Gross profit   1,970,996   1,645,320   6,620,568   5,950,010
Selling, marketing and administration expenses   1,597,785   1,117,110   4,798,797   3,677,005
Other expenses   114,112   110,973   351,515   246,692
Finance costs, net   157,498   59,021   506,652   152,187
Income before tax   101,601   358,216   963,604   1,874,126
                 
Deferred income tax expense   17,000   128,000   210,000   600,000
Income for the period   84,601   230,216   753,604   1,274,126
                 
Total comprehensive income for the period $ 84,601 $ 230,216 $ 753,604 $ 1,274,126
                 
                 
                 
Basic earnings per share $ - $ 0.01 $ 0.03 $ 0.05
Diluted earnings per share $ - $ 0.01 $ 0.02 $ 0.04

 

STATEMENT OF FINANCIAL POSITION
As at October 30, 2011, January 31, 2011 and February 1, 2010
(Not audited or reviewed by the Company's external auditor)

      Date of Transition
  October 30, 2011 January 31, 2011 to IFRS
February 1, 2010
ASSETS      
  Non-current assets      
    Property, plant and equipment $ 18,059,347 $ 18,372,020 $ 17,637,515
    Intangible assets 13,834,510 6,062,187 5,731,954
    Other assets 50,000 45,000 188,871
    Deferred income tax assets 2,663,000 2,873,000 1,600,000
  34,606,857 27,352,207 25,158,340
  Current assets      
    Accounts receivable 6,625,098 4,519,591 2,357,069
    Inventories 4,182,965 3,885,240 3,470,263
    Prepaid expenses 294,462 321,899 412,351
  11,102,525 8,726,730 6,239,683
TOTAL ASSETS 45,709,382 36,078,937 31,398,023
LIABILITIES AND EQUITY      
  Equity      
    Share capital 34,624,528 34,598,668 34,678,264
    Share-based payments reserves 960,879 933,323 845,113
    Deficit (8,027,760) (8,781,364) (11,525,275)
  TOTAL EQUITY 27,557,647 26,750,627 23,998,102
  Non-current liabilities      
    Provisions 179,150 170,908 160,581
    Long-term debt and promissory note 6,334,654 3,026,731 1,158,395
    Obligations under finance leases 8,252 24,650 138,106
  6,522,056 3,222,289 1,457,082
  Current liabilities      
    Bank indebtedness 2,594,657 371,543 1,792,406
    Accounts payable and accrued liabilities 7,686,193 4,948,039 3,187,915
    Current portion of long-term debt and promissory note 1,324,285 624,000 816,100
    Current portion of obligations under finance leases 24,544 162,439 146,418
  11,629,679 6,106,021 5,942,839
TOTAL LIABILITIES 18,151,735 9,328,310 7,399,921
TOTAL LIABILITIES AND EQUITY $ 45,709,382 $ 36,078,937 $ 31,398,023

 

STATEMENT OF CASH FLOWS
For the period ended October 30, 2011 and October 31, 2010
(Not audited or reviewed by the Company's external auditor)

      Quarter Ended Fiscal year-to-date ended
  October 30, 2011 October 31, 2010 October 30, 2011 October 31, 2010
Operating activities        
  Income for the period $ 84,601 $ 230,216 $ 753,604 $ 1,274,126
  Adjustments for:        
    Deferred income tax expense 17,000 128,000 210,000 600,000
    Finance costs, excluding accretion 154,751 61,647 498,410 149,650
    Notional interest representing accretion 2,747 (2,626) 8,242 2,537
    Depreciation and amortization of property, plant and equipment and intangibles 463,562 635,158 1,688,357 1,905,475
    Share-based payments 9,808 22,052 32,416 66,158
    Change in non-cash working capital related to operations (74,931) (124,320) 301,279 (1,792,150)
  Less:        
    Interest paid (123,050) (60,134) (391,524) (145,289)
Cash provided by operating activities 534,488 889,993 3,100,784 2,060,507
Investing activities        
  Purchase of property, plant and equipment (300,766) (612,322) (1,347,434) (2,636,213)
  Decrease/(increase) of other assets 15,000 84,267 (5,000) 188,871
  Purchase of intangible assets (4,949) (93,746) (5,400,573) (194,682)
Cash used in investing activities (290,715) (621,801) (6,753,007) (2,642,024)
Financing activities        
  Increase/(decrease) in bank indebtedness (56,333) (202,990) 2,223,114 (548,447)
  Decrease in obligations under finance leases (4,060) (42,993) (154,293) (126,970)
  Proceeds from long-term debt - 227,793 5,800,000 1,715,284
  Repayment of mortgage payable - Roynat Inc. - - (3,680,037) -
  Payment of financing costs - - (184,640) -
  Repayment of long-term debt (183,380) (150,000) (372,921) (358,350)
  Change in share capital, net of fees - (100,000) - (100,000)
  Stock options exercised - - 21,000 -
Cash provided by/(used in) financing activities (243,773) (268,190) 3,652,223 581,517
Net increase/(decrease) in cash - - - -
Cash, beginning of period - - - -
Cash, end of period - - - -
Non-cash investing and financing activities:        
  Acquisition of intangible assets satisfied by the issuance of a promissory note payable  - - 2,400,000   -
  Obligation under capital lease  - - - 73,321

 

Additional Information

For further details the Company's management discussion and analysis (MD&A) and unaudited consolidated financial statements for the quarter ended October 30, 2011 will be available on the investor section of the Brick Brewing website at www.brickbeer.com. 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 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. The Company has complemented its Waterloo family of 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 www.brickbeer.com

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 December 7, 2011 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: sales volumes in the fiscal year ending January 31, 2012 ("fiscal 2012") will increase; no material changes in consumer preferences; brewing, blending, and packaging efficiencies will improve; the cost of input materials for brewing and blending will decrease; the cost of packaging materials will decrease; competitive activity from other manufacturers 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 remainder of the discussion in this press release, the Company's annual information form and various other public filings as and when released by the Company.  The forward-looking statements included in this press release are made only as of December 7, 2011 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-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. 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.

 

 

 

 

George Croft, President and CEO, Tel: (519) 742-2732 Ext.127; E-mail: info@brickbeer.com