Brick Brewing announces second quarter results, including EBITDA* of $2.3 million

KITCHENER, ON, Sept. 12, 2012 /CNW/ - Brick Brewing Co. Limited ("Brick" or the "Company") (TSX: BRB), the largest Canadian-owned brewery in Ontario, today released its financial results for the second quarter ended July 29, 2012 for its fiscal year 2013.

"In the second quarter we achieved a combination of increased revenue and further cost reduction, which translated into EBITDA* growth of 25%.  On a year-to-date basis, EBITDA* has improved by 44%," said George Croft, President and CEO.

"Brick beer brands declined by 4.7% during the quarter in comparison to an industry decline of 1.5%", continued Mr. Croft. "Overall price increases coupled with growth of the Waterloo and Seagram premium brands, contributed to a net revenue improvement of 7.3%."

"The Company experienced demand for canned product in excess of production capacity in the second quarter.  We estimate that total sales volume would have been 3% higher without this production constraint.  Our can line project will address this shortfall and is expected to be fully commissioned in Q1 of fiscal 2014", noted Mr. Croft.

"We have realized $0.6 million of operating cost reductions so far in fiscal 2013 and expect to deliver our full year commitment of $1 million.  Our team is committed to constantly improving cost per unit, despite commodity price pressures," said Mr. Croft.

Financial highlights are as follows:

• Net revenues for the second quarter of fiscal 2013 were $11.5 million compared to $10.7 million in the second quarter of fiscal 2012.
• Gross profit percentage for the quarter increased to 33.2% from 27.7% in the prior year comparable quarter.
• EBITDA* for the second quarter ended July 29, 2012 was $2.3 million compared to EBITDA* in the second quarter of fiscal 2012 of $1.8 million.

The following financial information should be read in conjunction with the audited annual financial statements of the Company prepared under IFRS for the year ended January 31, 2012.

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

							Quarter ended								Fiscal year-to-date ended
(in thousands of dollars)								July 29, 2012				July 31, 2011				July 29, 2012				July 31, 2011
Net income							$	1,112			$	803			$	1,454			$	669
Add:
	Income tax expense							391				250				516				193
	Depreciation and amortization							640				607				1,263				1,225
	Finance costs							162				186				275				349
Subtotal								1,193				1,043				2,054				1,767
EBITDA*								2,305				1,846				3,508				2,436

 

STATEMENT OF COMPREHENSIVE INCOME
For the periods ended July 29, 2012 and July 31, 2011
(Not audited or reviewed by the Company's external auditor)

				Quarter ended								Fiscal year-to-date ended
					July 29, 2012				July 31, 2011				July 29, 2012				July 31, 2011
Revenue				$	11,486,863			$	10,706,289			$	20,112,826			$	18,838,892
Cost of sales					7,676,398				7,738,855				14,079,137				14,189,320
Gross profit					3,810,465				2,967,434				6,033,689				4,649,572
Selling, marketing and administration expenses					2,026,031				1,636,287				3,574,016				3,201,012
Other expenses					119,281				91,708				214,851				237,403
Finance costs					162,280				186,157				274,925				349,154
Income before tax					1,502,873				1,053,282				1,969,897				862,003
Income tax expense					390,457				250,000				515,957				193,000
Net income and comprehensive income  for the period				$	1,112,416			$	803,282			$	1,453,940			$	669,003
Basic earnings per share				$	0.04			$	0.03			$	0.05			$	0.02
Diluted earnings per share				$	0.04			$	0.03			$	0.05			$	0.02

STATEMENT OF FINANCIAL POSITION
As at July 29, 2012 and January 31, 2012
(Not audited or reviewed by the Company's external auditor)

								July 29, 2012				January 31, 2012
ASSETS
	Non-current assets
		Property, plant and equipment				$		17,674,432			$	17,753,175
		Intangible assets						14,064,264				13,829,158
		Other assets						254,190				35,000
		Deferred income tax assets						2,344,000				2,857,000
								34,336,886				34,474,333
	Current assets
		Accounts receivable						7,667,027				4,585,333
		Inventories						4,743,144				3,961,542
		Prepaid expenses						386,771				299,919
								12,796,942				8,846,794
TOTAL ASSETS								47,133,828				43,321,127
LIABILITIES AND EQUITY
	Equity
		Share capital						34,655,402				34,653,027
		Share-based payments reserves						1,044,144				969,893
		Deficit						(6,670,836)				(8,124,776)
TOTAL EQUITY								29,028,710				27,498,144
	Non-current liabilities
		Provisions						187,747				181,898
		Long-term debt and promissory note						5,478,962				5,890,379
								5,666,709				6,072,277
	Current liabilities
		Bank indebtedness						2,716,037				1,999,482
		Accounts payable and accrued liabilities						8,250,963				6,245,305
		Current portion of long-term debt and promissory note						1,456,991				1,481,269
		Obligations under finance leases						14,418				24,650
								12,438,409				9,750,706
TOTAL LIABILITIES								18,105,118				15,822,983
COMMITMENTS
TOTAL LIABILITIES AND EQUITY						$		47,133,828			$	43,321,127

STATEMENT OF CASH FLOWS
For the periods ended July 29, 2012 and July 31, 2011
(Not audited or reviewed by the Company's external auditor)

						Quarter ended								Fiscal year-to-date ended
							July 29, 2012				July 31, 2011				July 29, 2012				July 31, 2011
Operating activities
	Net income					$	1,112,416			$	803,282			$	1,453,940			$	669,003
	Adjustments for:
		Income tax expense					390,457				250,000				515,957				193,000
		Finance costs					162,280				186,157				274,925				349,154
		Depreciation and amortization of property, plant and equipment and intangibles					639,858				607,182				1,262,476				1,224,795
		Share-based payments					68,864				9,912				74,251				22,608
		Change in non-cash working capital related to operations					(1,259,741)				39,596				(2,220,117)				295,195
	Less:
		Interest paid					(120,919)				(162,203)				(234,004)				(207,459)
Cash provided by operating activities							993,215				1,733,926				1,127,428				2,546,296
Investing activities
		Purchase of property, plant and equipment					(351,100)				(522,247)				(1,164,901)				(1,046,668)
		Purchase of intangible assets					(168,774)				(170,011)				(253,938)				(5,395,624)
Cash used in investing activities							(519,874)				(692,258)				(1,418,839)				(6,442,292)
Financing activities
	Increase/(decrease) in bank indebtedness						(257,796)				(846,054)				716,555				2,279,447
	Decrease in obligations under finance leases						(6,146)				(6,073)				(10,232)				(150,233)
	Issuance of long-term debt						-				-				-				5,800,000
	Repayment of mortgage payable - Roynat Inc.						-				-				-				(3,680,037)
	Payment of financing costs						-				-				-				(184,640)
	Repayment of long-term debt						(209,399)				(189,541)				(417,287)				(189,541)
	Change in share capital						-				-				2,375				-
	Stock options exercised						-				-				-				21,000
Cash provided by/(used in) financing activities							(473,341)				(1,041,668)				291,411				3,895,996
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

Additional Information

For further details the Company's complete management discussion and analysis (MD&A) and financial statements for the quarter ended July 29, 2012 will be available on the investor section of the Brick Brewing website at www.brickbeer.com. This and 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 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 and is officially certified under British Retail Consortium (BRC) Global Standards for Food Safety, 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 brand premium craft beers with other popular brands such as Laker, Red Baron, Red Cap and Formosa Springs Draft.  In March 2011, Brick purchased the Canadian rights to Seagram Coolers and now produces, sells, markets and distributes Seagram Coolers across Canada.  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 September 11, 2012 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, 2013 ("fiscal 2013") 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 increase; 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 September 11, 2012 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. 

 

 

SOURCE: Brick Brewing Co. Limited

George Croft, President and CEO, Tel: [phone] Ext.147; E-mail: [email protected]