Brick Brewing Reports Second Quarter EBITDA, ex one-time costs, of $3.0M

 

Second Quarter Highlights:

  • Net revenue increased to $15.9 million, from $14.0 million in the prior year.
  • Gross margin was 28.7%, and 31.1% excluding one-time costs, compared to 37% prior year.
  • Selling, Marketing and Administration (“SM&A”) expenses were flat with prior year, at $2.7 million.
  • EBITDA* of $2.6 million, and $3.0 million excluding one-time cost, compared to $3.1 million prior year.
  • The Board of Directors re-affirmed the quarterly dividend, $0.016/share, payable October 24, 2017 to shareholders of record as of October 10, 2017. The dividend is classified as an eligible dividend.

First Half Highlights:

  • Net revenue increased to $27.4 million, from $23.5 million in the prior year.
  • Gross margin was 29.4%, and 31.9% ex one-time costs, compared to 36.2% prior year.
  • Selling, Marketing and Administration (“SM&A”) expenses increased slightly, to $4.8 million, vs. $4.6 million prior year.
  • EBITDA* was $4.7 million and $5.4 million ex one-time cost, up from $5.0 million in the prior year.

KITCHENER, Ontario, Sept. 08, 2017 (GLOBE NEWSWIRE) -- Brick Brewing Co. Limited (“Brick” or the “Company”) (TSX:BRB), Ontario’s largest Canadian-owned brewery, today released financial results for the second quarter ended July 30, 2017. Brick reported EBITDA, excluding one-time costs, of $3.0 million on net revenue of $15.9 million.

“Recent months have been characterized by cool, wet weather, which served to push total Ontario beer volume 8% lower vs. prior year. Against that backdrop, our ability to grow our branded volume is noteworthy. Laker achieved 8% volume growth in the quarter, while Waterloo was up 16%. The LandShark® and Margaritaville® family grew 29%, with the Margaritaville® cooler launch in the LCBO very well received by consumers,” noted George Croft, Brick’s President and Chief Executive Officer.

Margins were pressured in the quarter due to increases in fees at The Beer Store, federal excise and Ontario beer tax, as well as product mix, with a shift in mix towards co-pack volumes. “Co-pack is a key part of our business model,” commented Russell Tabata, Brick’s Chief Operating Officer. “Co-pack volume allows us to utilize available capacity to generate incremental returns, as well as serving to diversify the business model.” Co-pack revenue in the quarter grew by 24%, to $3.2 million.

During the quarter Brick recorded one-time cost of $381 thousand ($700 thousand year-to-date). These costs are associated with the Formosa exit, primarily severance costs.

Brick’s board of directors has also re-affirmed the quarterly dividend, at $0.016/share.  The dividend is payable October 24, 2017 to shareholders of record as of October 10, 2017.

Croft added, “With the recent completion of the Kitchener expansion project, we are now able to realize the optimum operating footprint – a single source, highly efficient facility with full capabilities. The project was completed on time and on budget. The expansion coupled with the move from two sites to one will generate annual recurring savings of $600 thousand.  In addition, the sale of the Formosa facility was finalized and the transaction closed on September 6, 2017.  The strength of our brands, the diversity we enjoy as a result of our co-pack business, along with the optimized footprint positions us well to compete in the future. We are committed to continuing to grow our business. This is our priority in the second half of fiscal 2018.”

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)July 30, 2017July 31, 2016July 30, 2017July 31, 2016  
       
Net income$   1,120 $  1,635$   1,907 $  2,423  
       
Add (deduct):      
Income tax expense   395    438   701    776  
Depreciation and amortization   906    820   1,723    1,486  
Share-based payments   70    34   113    61  
Finance costs   135    164   235    283  
Subtotal   1,506    1,456   2,772    2,606  
       
EBITDA*   2,626    3,091   4,679    5,029  
       

STATEMENTS OF COMPREHENSIVE INCOME
Quarters ended July 30, 2017 and July 31, 2016

  Quarter ended  Fiscal year-to-date ended 
  July 30, 2017 July 31, 2016 July 30, 2017 July 31, 2016
     
Revenue$   15,903,344 $  14,010,744$   27,383,814 $  23,530,678
Cost of sales    11,341,500    8,826,721   19,336,899    15,014,453
Gross profit   4,561,844    5,184,023   8,046,915    8,516,225
         
Selling, marketing and administration expenses   2,691,116    2,708,217   4,809,423    4,589,419
Other expenses   221,370    238,980   394,947    445,400
Finance costs   134,238    164,190   234,707    282,552
Income before tax   1,515,120    2,072,636   2,607,838    3,198,854
         
Income tax expense   395,441    438,000   701,402    775,865
Net income and comprehensive
  income 
$   1,119,679 $  1,634,636$   1,906,436 $  2,422,989
     
     
Basic earnings per share$  0.03$  0.05$  0.05$  0.07
Diluted earnings per share$  0.03$  0.05$  0.05$  0.07
     

STATEMENTS OF FINANCIAL POSITION
As at July 30, 2017 and January 31, 2017 

 July 30, 2017  January 31, 2017
   
ASSETS  
Non-current assets  
Property, plant and equipment$   28,186,839  $  21,709,425 
Intangible assets   15,567,708     15,499,186 
Construction deposits   351,752     2,462,328 
    44,106,299     39,670,939 
   
Current assets  
Cash   -      2,831,959 
Accounts receivable   12,004,245     7,035,714 
Inventories   4,730,738     5,619,329 
Prepaid expenses   1,033,201     593,180 
    17,768,184     16,080,182 
TOTAL ASSETS   61,874,483     55,751,121 
   
LIABILITIES AND EQUITY  
Equity  
Share capital   39,662,042     39,651,096 
Share-based payments reserves   853,709     943,565 
Deficit   (1,974,662)   (2,758,560)
TOTAL EQUITY   38,541,089     37,836,101 
   
Non-current liabilities  
Provisions   522,596     411,599 
Obligation under finance lease   3,400,525     3,781,855 
Long-term debt    6,686,525     2,498,580 
Deferred income tax liability    783,791     82,389 
    11,393,437     6,774,423 
   
Current liabilities  
Bank indebtedness   1,050,335     -  
Accounts payable and accrued liabilities   8,815,657     9,655,405 
Current portion of obligation under finance lease   755,494     741,297 
Current portion of long-term debt   1,318,471     743,895 
    11,939,957     11,140,597 
TOTAL LIABILITIES   23,333,394     17,915,020 
   
TOTAL LIABILITIES AND EQUITY$   61,874,483  $  55,751,121 
   

STATEMENTS OF CASH FLOWS
Quarters ended July 30, 2017 and July 31, 2016

  Quarter ended  Fiscal year-to-date ended 
  July 30, 2017 July 31, 2016 July 30, 2017  July 31, 2016 
     
Operating activities    
Net income$   1,119,679  $  1,634,636 $   1,906,436  $  2,422,989 
Adjustments for:    
Income tax expense    395,441     438,000    701,402     775,865 
Finance costs   134,238     164,190    234,707     282,552 
Depreciation and amortization of property, plant and
  equipment and intangibles
   906,393     820,084    1,722,993     1,486,852 
Share-based payments   69,856     34,184    112,960     60,943 
Change in non-cash working capital related to operations   (2,685,301)   (1,536,856)   (5,400,606)   (2,376,846)
Less:    
Interest paid   (102,106)   (100,859)   (209,857)   (204,980)
Cash provided by (used in) operating activities   (161,800)   1,453,379    (931,965)   2,447,375 
     
Investing activities    
Purchase of property, plant and equipment   (2,873,520)   (486,211)   (5,869,415)   (1,101,929)
Purchase of intangible assets   (6,915)   (1,613)   (197,065)   (67,633)
Cash used in investing activities   (2,880,435)   (487,824)   (6,066,480)   (1,169,562)
     
Financing activities    
Increase in bank indebtedness   1,050,335     -    1,050,335     - 
Issuance of long-term debt   3,163,067     -    5,163,067     2,000,000 
Repayment of long-term debt   (181,614)   (593,055)   (365,375)   (1,231,441)
Repayment of obligation under finance lease   (184,438)   (177,571)   (367,133)   (353,465)
Dividends paid   (1,122,538)   (839,701)   (1,122,538)   (839,701)
Issuance of shares, net of fees   538     -    5,711     7,968 
Shares repurchased and cancelled, including fees   -     (49,259)   (322,629)   (50,314)
Proceeds from stock option exercise   60,274     31,893    125,048     35,827 
Cash provided by (used in) financing activities   2,785,624     (1,627,693)   4,166,486     (431,126)
     
Net increase/(decrease) in cash   (256,611)   (662,138)   (2,831,959)   846,687 
     
Cash, beginning of the period   256,611     1,902,470    2,831,959     393,645 
Cash, end of the period$   -  $  1,240,332 $   -  $  1,240,332 
             

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