Brick Brewing Reports Third Quarter EBITDA, ex one-time costs, of $1.8M

 

Third Quarter Highlights:

  • Net revenue increased to $11.7 million, from $11.1 million in the prior year.

  • Gross margin fell to 26.7%, and 28.1% excluding one-time costs, compared to 34.2% prior year.

  • Selling, Marketing and Administration (“SM&A”) expenses were $2.2 million down slightly from $2.3 million in the prior year.

  • EBITDA* of $1.7 million, and $1.8 million excluding one-time cost, compared to $2.0 million prior year.

  • The Board of Directors approved in increase to the quarterly dividend, to $0.02/share, payable January 23, 2018 to shareholders of record as of January 9, 2018. The dividend is classified as an eligible dividend.

Year to Date Highlights:

  • Net revenue increased to $39.1 million, from $34.6 million in the prior year.

  • Gross margin was 28.6%, and 30.8% ex one-time costs, compared to 35.5% prior year.

  • Selling, Marketing and Administration (“SM&A”) expenses increased slightly, to $7.0 million, vs. $6.9 million prior year.

  • EBITDA* was $6.4 million and $7.2 million ex one-time cost, compared to $7.1 million in the prior year.

KITCHENER, Ontario, Dec. 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 third quarter ended October 29, 2017. Brick reported EBITDA excluding one-time costs of $1.8 million on net revenue of $11.7 million.

George Croft, Brick President and Chief Executive Officer commented, “While we are pleased with the market performance of our brands, it is clear that our margin and EBITDA results in the third quarter fell short. Commercially, the beer category was challenged by a cool, wet summer, one which drove industry volume lower. Despite the category volume declines, Laker grew 4% in the quarter, Waterloo was up 9%. The LandShark and Margaritaville family grew 27%, so the consumer facing result is positive. That said, internally, we faced some operating challenges in Q3.”

“Early in the quarter we completed as planned the installation of capital equipment associated with our Kitchener expansion and final phase of our supply chain consolidation project,” commented Russell Tabata, Brick’s Chief Operating Officer.  “The ramp up and commissioning of this equipment and the transition of production from our Formosa facility took until the end of Q3 to complete successfully.  As of the end of October, the new equipment is operating consistently at our targeted rates and we fully expect the operating performance of the facility to return to traditional performance and cost levels moving forward.”

Brick’s board of directors has also approved an increase to the quarterly dividend, to $0.02/share.  The dividend is payable January 23, 2018 to shareholders of record as of January 9, 2018.

Croft added, “Now that we have the Kitchener brewery operating at targeted levels and have fully consolidated our supply chain footprint, we are working hard to bring the year to a strong finish in the fourth quarter.  Our single source operating facility provides us with the optimal supply chain structure and we are on track to deliver the $600 thousand in annual cost savings related to this project and a return to historic margin levels.  We are now well positioned to compete in the competitive Canadian beer market and to serve our customers for the long term.”

  
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 29, 2017October 30, 2016October 29, 2017October 30, 2016 
      
Net income$   387  $  854$   2,293  $  3,277 
      
Add (deduct):     
Income tax expense   156     291   857     1,067 
Depreciation and amortization   927     753   2,650     2,240 
Gain on disposal of property, plant and equipment   (26)   -   (26)   - 
Share-based payments   93     44   206     105 
Finance costs   145     103   380     386 
Subtotal   1,295     1,191   4,067     3,798 
      
EBITDA*   1,682     2,045   6,360     7,075 
      

 

STATEMENTS OF COMPREHENSIVE INCOME
Quarters ended October 29, 2017 and October 30, 2016

      
  Quarter ended  Fiscal year-to-date ended  
  October 29, 2017 October 30, 2016 October 29, 2017 October 30, 2016 
      
Revenue$   11,671,466 $  11,106,289$   39,055,280 $  34,636,967 
Cost of sales   8,557,904    7,302,657   27,894,803    22,317,110 
Gross profit   3,113,562    3,803,632   11,160,477    12,319,857 
Selling, marketing and administration expenses   2,238,472    2,349,468   7,047,895    6,938,887 
Other expenses   186,903    205,192   581,850    650,592 
Finance costs   145,552    103,043   380,259    385,595 
Income before tax   542,635    1,145,929   3,150,473    4,344,783 
Income tax expense   155,620    291,495   857,022    1,067,360 
Net income and comprehensive income $   387,015 $  854,434$   2,293,451 $  3,277,423 
      
      
Basic earnings per share$  0.01$  0.02$  0.06$  0.09 
Diluted earnings per share$  0.01$  0.02$  0.06$  0.09 
      

 

STATEMENTS OF FINANCIAL POSITION
As at October 29, 2017 and January 31, 2017

   
 October 29, 2017January 31, 2017
   
ASSETS  
Non-current assets  
Property, plant and equipment$   26,544,791  $  21,709,425 
Intangible assets   15,346,157     15,499,186 
Construction deposits   370,327     2,462,328 
    42,261,275     39,670,939 
   
Current assets  
Cash   2,732,844     2,831,959 
Accounts receivable   8,438,511     7,035,714 
Inventories   4,668,227     5,619,329 
Prepaid expenses   608,301     593,180 
    16,447,883     16,080,182 
TOTAL ASSETS   58,709,158     55,751,121 
   
LIABILITIES AND EQUITY  
Equity  
Share capital   39,682,236     39,651,096 
Share-based payments reserves   929,970     943,565 
Deficit   (2,151,529)   (2,758,560)
TOTAL EQUITY   38,460,677     37,836,101 
   
Non-current liabilities  
Provisions   532,158     411,599 
Obligation under finance lease   3,207,131     3,781,855 
Long-term debt    6,350,428     2,498,580 
Deferred income tax liability   939,411     82,389 
    11,029,128     6,774,423 
   
Current liabilities  
Accounts payable and accrued liabilities   7,127,674     9,655,405 
Current portion of obligation under finance lease   762,694     741,297 
Current portion of long-term debt   1,328,985     743,895 
    9,219,353     11,140,597 
TOTAL LIABILITIES   20,248,481     17,915,020 
   
   
TOTAL LIABILITIES AND EQUITY$   58,709,158  $  55,751,121 
   


STATEMENTS OF CASH FLOWS
Quarters ended October 29, 2017 and October 30, 2016

   
  Quarter ended  Fiscal year-to-date ended 
  October 29, 2017 October 30, 2016 October 29, 2017  October 30, 2016 
     
Operating activities    
Net income$   387,015  $  854,434 $   2,293,451  $  3,277,423 
Adjustments for:    
Income tax expense    155,620     291,495    857,022     1,067,360 
Finance costs   145,552     103,043    380,259     385,595 
Depreciation and amortization of property, plant and
  equipment and intangibles
   927,290     753,154    2,650,282     2,240,006 
Gain on sale of property, plant and equipment   (26,418)   -    (26,418)   -  
Share-based payments   92,824     44,157    205,784     105,100 
Change in non-cash working capital related to operations   2,006,426     56,623    (3,403,830)   (2,320,224)
Less:    
Interest paid   (142,232)   (103,603)   (342,439)   (308,583)
Cash provided by operating activities   3,546,077     1,999,303    2,614,111     4,446,677 
     
Investing activities    
Purchase of property, plant and equipment   (1,254,226)   (579,491)   (7,123,641)   (1,681,420)
Construction deposit paid   -     (940,000)   -     (940,000)
Proceeds from sale of property, plant and equipment   2,566,598     -    2,566,598     -  
Purchase of intangible assets   (486)   (18,339)   (197,551)   (85,972)
Cash provided by (used in) investing activities   1,311,886     (1,537,831)   (4,754,594)   (2,707,392)
     
Financing activities    
Decrease in bank indebtedness   (1,050,335)   -    -     - 
Issuance of long-term debt   -     -    5,163,067     2,000,000 
Repayment of long-term debt   (328,338)   (180,321)   (693,713)   (1,411,762)
Repayment of obligation under finance lease   (186,194)   (179,263)   (553,327)   (532,728)
Dividends paid   (563,882)   (421,320)   (1,686,420)   (1,261,021)
Issuance of shares, net of fees   3,631     2,490    9,342     10,458 
Shares repurchased and cancelled, including fees   -     (3,883)   (322,629)   (54,197)
Proceeds from stock option exercise   -     138,850    125,048     174,677 
Cash provided by (used in) financing activities   (2,125,118)   (643,447)   2,041,368     (1,074,573)
     
Net increase/(decrease) in cash   2,732,844     (181,975)   (99,115)   664,712 
     
Cash, beginning of the period   -     1,240,332    2,831,959     393,645 
Cash, end of the period$   2,732,844  $  1,058,357 $   2,732,844  $  1,058,357 
     

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