BIG ROCK BREWERY INC. ANNOUNCES FIRST QUARTER 2024 RESULTS AND BOARD CHANGES

CALGARY, AB, May 14, 2024 /CNW/ - Big Rock Brewery Inc. (TSX: BR) ("Big Rock" or the "Corporation") today announces its financial results for the three months ended March 31, 2024, the appointment of Linda A. Thomas and George Croft, as Directors of the Corporation and Alanna McDonald's resignation from the Board of Directors of Big Rock (the "Board").

Financial Summary

For the three months ended March 31, 2024, compared to the three months ended March 31, 2023, the Corporation reported:

• wholesale sales volumes (beer, ready-to-drink beverages and cider) down 4.2% to 32,352 hectolitres ("hl") compared with 33,778 hl;
• net revenue decreased to $8.6 million from $10.5 million as a result of reduced co-packing activity;
• operating loss increased to ($2.3 million) from ($0.1 million);
• net loss increased to ($3.1 million) from ($0.3 million); and
• Adjusted EBITDA decreased to ($1.5 million) from $0.7 million. Adjusted EBITDA is a non-GAAP financial measure, see "Non-GAAP Measures".

Summary of Results

$000, except hl and per share amounts			Three months ended March 31
			2024	2023
Sales volumes (hl)^(1)			32,352	33,778
Gross product revenue			$    11,288	$    13,639
Net revenue			8,582	10,451
Cost of sales			6,845	7,488
Adjusted EBITDA^(2)			(1,473)	701
Operating loss			(2,299)	(144)
Net loss			(3,073)	(255)
Net Loss Per share amount (basic & diluted)			$     (0.44)	$     (0.04)

^(1)	Excludes contract manufacturing/co-packing volumes, due to the nature of the agreements.
^(2)	Non-GAAP measure. See "Non-GAAP Measures".

In 2023 Big Rock embarked on a strategy of, where possible, balancing production and sales between quarters to allow for a reduction of operating costs. Reduced co-packing contract volumes made this difficult during the last half of 2023 carrying through the first quarter of 2024. Management continues to work with co-packing partners for the purpose of introducing volumes and expects to be successful in achieving its objectives by year end. This strategy supports Big Rock's long-term vision to become Canada's largest and most stable independent brewer.

Big Rock remains focused on product innovation and development in the premium alcoholic and non-alcoholic beverage categories to better align with consumer demand. Our non-alcoholic beer, "Pacer,", introduced in the fourth quarter of 2023, continues to exceed expectations. In the first quarter of 2023, our innovation efforts resulted in additions to our premium beer category ("Brightside", a new easy-drinking lager and "Unwinder" a lighter hazy pale ale), a raspberry wheat ale, a series of summer seasonal beers and a tequila-based beverage developed in conjunction with a key co-packing partner. Several other product innovation releases are planned for the balance of 2024.

During the first quarter of 2024, Canadian domestic beer sales volumes were reported down by 3.1%¹ compared with the same period in 2023. Despite outperforming this benchmark during2023, Big Rock's domestic beer volumes in Q1 of 2024 were down  7.1% versus the same quarter in 2023. While beer volumes declined, wholesale revenues from all products (beer, cider, non-alcoholic and ready to drink beverages), exclusive of contract/co-packing revenues, were 2.3% higher than in the same period in 2023, illustrating the results of efforts to align with consumer demand.

During first quarter of 2024, traditionally the second-weakest quarter of the year for the Corporation's financial performance, Big Rock's Adjusted EBITDA was ($1.5 million), representing a shortfall of $2.2 million versus the $0.7 million earned during the same quarter in 2023. The shortfall resulted from the decline in contract/co-packing volumes and was both anticipated and budgeted for. 

During the quarter, Big Rock introduced the following, to strengthen its operations and provide for financial stability:

• on January 8, 2024, David Kinder, a veteran of the beverage industry, was appointed President and Chief Executive Officer of the Corporation, replacing Mr. Stephen Giblin who had taken on the role on an interim basis; and
• in January of 2024, the Corporation announced the addition of a $4.2 million tranche to its existing $4.3 million second lien financing (the "Second Lien Financing") with VN Capital, a principal shareholder of Big Rock.

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¹  Source: Beer Canada's Monthly Domestic Beer Sales statistics accumulated from provincial liquor boards, distributors and brewers (https://beercanada.com/sales-statistics/)

Board Changes

Big Rock is pleased to announce that the following individuals have agreed to join the Board, effective immediately:

Linda Thomas – During her 30-year career, Linda has acquired experience in telecommunications, hardware and software technology, consumer packaged goods, and the regulated beverage alcohol industry (Molson Coors Beverage Company), in companies with annual revenues ranging from $500 million to $80 billion.  Her work in finance, strategy, product management, marketing, sales and logistics has given her valuable insights across the spectrum of core business functions. Linda has led teams ranging from 5 to 150 personnel in territories that range in breadth from Western Canada to worldwide organizations. A resident of Calgary since 1993, Linda has helped organizations achieve success in mature businesses, as well as those experiencing extreme growth and also in decline.

George Croft – With a career that spans more than twenty years in senior management roles in the brewing industry in Canada, George has a deep understanding of the challenges and opportunities within this sector. His tenure as President and CEO of Waterloo Brewing Company was particularly transformative, steering the company from a loss-making position to sustainable profitability, culminating in its acquisition by Carlsberg Group in March 2023. George's experience extends to general management, board governance, leadership and performance management, as well as competitive strategy and execution. He is also well-versed in marketing and sales, and mergers and acquisitions, having held executive leadership roles at Labatt Breweries of Canada and Lakeport Brewing Income Fund. As a Chartered Director and a qualified Management Accountant, George is committed to leveraging his industry knowledge and extensive network to assist clients and boards in achieving their business objectives. Having served on numerous industry boards and recognized as an Ontario Ernst & Young Entrepreneur of the Year finalist, he is equipped to provide strategic insights that drive performance. 

"We are excited at the prospect of Ms. Thomas and Mr. Croft joining our Board," noted President and Chief Executive Officer of the Corporation David Kinder. "Each has roots in Alberta and brings a unique skillset that will help our Board work with and augment Management to grow Big Rock.

Mr. Kinder commented further: "While our performance during the first quarter of 2024 fell short of the strong results of the first quarter of 2023, this was not a surprise to us and our results largely met budget. We continue to work with prospective co-packing partners to improve volumes and put in place arrangements that will allow us to both achieve our 2024 budget and exceed the $2.2 million in Adjusted EBITDA generated during 2023."

Big Rock also announces that Alanna McDonald has resigned from the Board in order to focus on her full-time responsibilities.

Mr. Kinder also noted, "We would like to thank Alanna for her significant contributions to the Board since joining in 2018. Her perspective and insights have been particularly valuable in assisting Big Rock."

Additional Information

The unaudited condensed interim consolidated financial statements of the Corporation and the Corporation's Management Discussion & Analysis for the quarter ended March 31, 2024 dated May 14, 2024, can be viewed on Big Rock's website at www.bigrockbeer.com and on SEDAR+ at www.sedarplus.ca under Big Rock Brewery Inc.

Big Rock is also pleased to announce that the Annual Meeting of Big Rock shareholders is expected to be held on June 12 at 2:00 p.m. (Mountain Standard Time). Further details of the Annual Meeting will follow in due course.

NON-GAAP MEASURES

The Corporation uses certain financial measures referred to in this press release to quantify its results that are not prescribed by Generally Accepted Accounting Principles ("GAAP"). Such financial measures do not have a standardized meaning under GAAP and therefore may not be comparable to similar measures presented by other issuers.

This press release contains the term "Adjusted EBITDA". Adjusted EBITDA is a non-GAAP financial measure that the Corporation uses to measure operating performance and borrowing capacity. The calculation of Adjusted EBITDA is a non-GAAP financial measure, whose nearest GAAP measure is net income, or net loss, as applicable, with the reconciliation between the two as follows:

($000, except where indicated)				Three months ended March 31
				2024	2023	Change
Net loss				$   (3,073)	$   (255)	$ (2,818)
Addback:
Interest				774	463	311
Taxes				—	(237)	237
Depreciation and amortization				827	1,163	(336)
Share based payments				(1)	(221)	220
Gain on dispositions - net				—	(212)	212
Adjusted EBITDA^(1)				$   (1,473)	$     701	$   (2,174)

⁽¹⁾   Non-GAAP measure.  See "Non-GAAP Measures".

Forward-Looking Information

Certain statements contained in this press release constitute forward-looking statements. These statements relate to future events or Big Rock's future performance. All statements, other than statements of historical fact, may be forward-looking statements. Forward-looking information are not facts, but only predictions and generally can be identified by the use of statements that include words or phrases such as, "anticipate", "believe", "continue", "could", "estimate", "expect", "intend", "likely", "may", "project", "predict", "propose", "potential", "might", "plan", "seek", "should", "targeting", "will", and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Big Rock believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon by readers, as actual results may vary materially from such forward-looking statements. These statements speak only as of the date of this press release and are expressly qualified, in their entirety, by this cautionary statement.

In particular, this press release contains forward-looking statements pertaining to the following:

• Big Rock's long-term growth strategy and the anticipated benefits to be derived therefrom;
• Big Rock strategy of balancing production and sales between quarters to allow for a reduction of operating costs;
• Big Rock's expectations that management will continue to work with co-packing partners for the purpose of introducing volumes and its expectation of success in achieving its objectives by year end and that execution of such strategy will supports the long-term vision to become Canada's largest and most stable independent brewer;
• Big Rock's expectation that it will continue to focus on product innovation and development in the premium alcoholic and non-alcoholic beverage categories to better align with consumer demand;
• Big Rock's expectations regarding the non-alcoholic market and its growth, including the performance of its non-alcoholic beer;
• Big Rock's expectations with respect to product innovation releases in 2024;
• Big Rock's expectations regarding the introduction of new Board members and the anticipated benefits therefrom;
• Big Rock's expectations that the Second Lien Financing and certain other corporate changes during the first quarter of 2024 will contribute to strengthened operations and provide financial stability;
• Big Rock's expectation that it will continue to work with prospective co-packing partners to improve contract volumes and put in place arrangements that will allow it to both achieve its 2024 budget and exceed the $2.2 million in Adjusted EBITDA generated during 2023;
• interpretation of and anticipation of market trends;
• Big Rock's business plans, outlook, and strategy; and
• the anticipated date and timing of Big Rock's Annual Meeting of shareholders and Big Rock's expectation that further details in connection therewith will follow in due course.

With respect to the forward-looking statements listed above and contained in this press release, management has made assumptions regarding, among other things:

• volumes in the current fiscal year will remain constant or will increase;
• there will be no material change to the regulatory environment in which Big Rock operates;
• there will be no material supply issues with Big Rock's vendors;
• seasonal fluctuations in demand;
• balancing production and sales between quarters to allow for a reduction of operating costs;
• management's work with co-packers will result in increased volumes and that this will lead to success in achieving its objectives by year end;
• Big Rock's focus on innovation will result in the introduction of new products that will be received well by the market, aligned with market demand;
• the new Board members will be elected at the Annual Meeting of Big Rock shareholders;
• increased co-packing volumes, when achieved, will allow Big Rock to both achieve its 2024 budget and exceed the $2.2 million in Adjusted EBITDA generated during 2023;
• Big Rock can and will execute it business plans and strategies; and
• that continued attention to streamlining production and maximizing return on sales and marketing initiatives for Big Rock's branded, white-label and co-packing businesses will help to improve financial results and improve the health of the Corporation's balance sheet.

Some of the risks which could affect future results and could cause results to differ materially from those expressed in the forward-looking information and statements contained herein include the risk factors set out in the Corporation's annual information form for the year ended December 30, 2023 which is available on SEDAR+ at www.sedarplus.ca and also include, but are not limited to:

• risks related to Big Rock's credit facility with ATB and the Second Lien Financing;
• the inability to grow demand for Big Rock's products;
• the inability to execute its product innovation strategy and to introduce such products in the volumes necessary to fulfil its expectations;
• the risk that Big Rock may not have an increase in market demand or market share;
• the risk that Big Rock may not realize increased co-packing contract volumes or the anticipated benefits of increased co-packing production;
• the risk that continued attention to streamlining production and maximizing return on sales and marketing initiatives for Big Rock's branded, white-label and co-packing businesses, won't help the Corporation continue to improve its financial results and strengthen its balance sheet;
• the risk that Big Rock may not realize operational efficiencies or margin growth;
• the risk that the prospective Board Members are not elected at the Annual Meeting;
• the risk that Big Rock may not have sufficient cash flows to cover forecasted expenses or return to profitability; and
• the risk that Big Rock may not be in compliance with its financial covenants for the next 12 months.

Any financial outlook or future oriented financial information (in each case "FOFI") contained in this press release regarding prospective financial position, including, but not limited to: expectations regarding continued improvement in Big Rock's financial results and the anticipated benefits to be derived therefrom and  Big Rock's long-term growth strategy and the anticipated benefits to be derived therefrom are based on reasonable assumptions about future events, including those described above, based on an assessment by management of the relevant information that is currently available. The actual results will likely vary from the amounts set forth herein and such variations may be material. Readers are cautioned that any such FOFI contained herein should not be used for purposes other than those for which it is disclosed herein. Such information was made as of the date of this press release and the Corporation disclaims any intention or obligation to update or revise any such information, whether as a result of new information, future events, or otherwise, unless required pursuant to applicable law.

Readers are cautioned that the foregoing list of assumptions and risk factors is not exhaustive. The forward-looking information and statements and FOFI contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking information and statements and FOFI included in this press release are made as of the date hereof and Big Rock does not undertake any obligation to publicly update such forward-looking information and statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.

About Big Rock Brewery Inc.

In 1985, Ed McNally founded Big Rock to contest the time's beer trends. Three bold, European-inspired offerings – Bitter, Porter and Traditional Ale – forged an industry at a time heavy on easy drinking lagers and light on flavour. Today, our extensive portfolio of signature beers, ongoing seasonal offerings, six ciders (Rock Creek Cider® series), custom-crafted private label products and other notable, licensed alcoholic beverages keeps us at the forefront of the craft beer revolution and still proudly contesting the beer and alcoholic beverage trends of today. Big Rock has brewing operations in Calgary, Alberta, Vancouver, British Columbia, and Toronto, Ontario. Big Rock trades on the TSX under the symbol "BR". For more information on Big Rock visit www.bigrockbeer.com 

SOURCE Big Rock Brewery Inc.

David Kinder, President & Chief Executive Officer, or Michael Holditch, Interim Chief Financial Officer: Phone: [phone], Fax: [phone], Email: [email protected]