Brick Brewing delivers $0.4M EBITDA

Supported Brands Deliver Volume Growth.

KITCHENER, ON, Sept. 12, 2013 /CNW/ - Brick Brewing Co. Limited ("Brick" or the "Company") (TSX:BRB), the largest Canadian-owned and Canadian-based publicly held brewery in Ontario, today released its financial results for the second quarter of its 2014 fiscal year. The Company's key brands, its growth pillars for the future, performed well in the quarter with Laker volume up 11%, Waterloo up 22% and Seagram coolers and ciders up 5% from the same period last year. The volume gains were achieved amidst a beer category that experienced declines of approximately 5%-6% over the same period, driven by cool summer weather.

Net Revenues for the second quarter of fiscal 2014 were $11.4 million compared to $11.5 million in the second quarter of fiscal 2013. The impact of higher volumes was eroded by sales mix and pricing pressure from large brewers' nationally supported brands. Gross profit for the quarter declined to 21.4% in the second quarter of fiscal 2014, from 33.2% in Q2 of the prior year, the result of a shift in package size mix as well as higher operating cost to support free can-in-case promotional activity. EBITDA for the second quarter of fiscal 2014 decreased to $0.4 million compared to EBITDA of $2.4 million in the second quarter of fiscal 2013. Increased advertising behind Laker, Waterloo and Seagram, coupled with a free can-in-case promotion to support the launch of Laker 12-pack bottles were drivers to the EBITDA result.

"We have made clear and thoughtful choices for this Company's future and the game plan is playing out" stated George Croft, President and CEO. "Waterloo and Seagram are higher margin offerings that compete in key growth segments - craft beer, ciders and coolers. Investing in these brands was central to the volume growth we've seen year-to-date. As well, a strong and stable Laker business is the foundation of our business. Our Laker 12-pack free can-in-case was successful in driving awareness and trial. We maintain our focus on costs, and these efforts will pay dividends. We continue to work to deliver improved pricing and margins. Despite challenging financial results for the second quarter and year to date, as a shareholder I'm confident in our ability to deliver improved performance in the second half of fiscal 2014."

Financial highlights are as follows:

• Net Revenues for the second quarter of fiscal 2014 were $11.4 million compared to $11.5 million in the second quarter of fiscal 2013.
  
  
• Gross profit margin for the quarter declined to 21.4% from 33.2% in Q2 of fiscal 2013, with higher costs of goods driven by product launch promotions.
  
  
• Selling, Marketing and Administration ("SM&A") expenses increased to $2.7 million from $2.0 million in the prior year, driven by brand support for Laker, Waterloo & Seagram.
  
  
• EBITDA* for the second quarter of fiscal 2014 decreased to $0.4 million compared to EBITDA* in the second quarter of fiscal 2013 of $2.4 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, 2013.

Reconciliation of Net Earnings to Earnings Before Interest, Taxes, Depreciation and Amortization, Gain/Loss on Disposal of Property, Plant and Equipment, and Share Based Payments (EBITDA)*

			Quarter ended						Fiscal year-to-date ended
(in thousands of dollars)				July 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
Net income (loss)			$	(458)		$	1,112		$	(403)		$	1,454
Add (deduct):
	Income tax expense (recovery)			(158)			391			(138)			516
	Depreciation and amortization			762			640			1,482			1,263
	Loss (gain) on disposal of property, plant and equipment			31			-			(15)			-
	Share based payment			49			69			102			74
	Finance costs			164			162			327			275
Subtotal				848			1,262			1,758			2,128
EBITDA*				390			2,374			1,355			3,582

 

STATEMENTS OF COMPREHENSIVE INCOME
For the periods ended July 28, 2013 and July 29, 2012
(Not audited or reviewed by the Company's external auditor)

		Quarter ended						Fiscal year-to-date ended
			July 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
Revenue		$	11,372,254		$	11,486,863		$	20,157,000		$	20,112,826
Cost of sales			8,938,854			7,676,398			15,409,866			14,079,137
Gross profit			2,433,400			3,810,465			4,747,134			6,033,689
Selling, marketing and administration expenses			2,741,593			2,026,031			4,661,363			3,574,016
Other expenses			143,637			119,281			299,883			214,851
Finance costs			164,396			162,280			326,930			274,925
Income (loss) before tax			(616,226)			1,502,873			(541,042)			1,969,897
Income tax expense (recovery)			(158,000)			390,457			(138,000)			515,957
Net income (loss) and comprehensive   income (loss) for the period		$	(458,226)		$	1,112,416		$	(403,042)		$	1,453,940
Basic earnings (loss) per share		$	(0.01)		$	0.04		$	(0.01)		$	0.05
Diluted earnings (loss) per share		$	(0.01)		$	0.04		$	(0.01)		$	0.05

 

STATEMENTS OF FINANCIAL POSITION
As at July 28, 2013 and January 31, 2013
(Not audited or reviewed by the Company's external auditor)

					July 28, 2013			January 31, 2013
ASSETS
	Non-current assets
		Property, plant and equipment		$	19,413,555		$	19,109,603
		Intangible assets			14,520,048			14,259,612
		Other assets			45,000			25,000
		Deferred income tax assets			2,671,925			2,533,925
					36,650,528			35,928,140
	Current assets
		Cash			102,602			-
		Accounts receivable			8,174,463			5,187,785
		Inventories			3,816,495			4,013,375
		Prepaid expenses			468,242			296,180
					12,561,802			9,497,340
TOTAL ASSETS					49,212,330			45,425,480
LIABILITIES AND EQUITY
	Equity
		Share capital			38,953,043			35,895,873
		Share-based payments reserves			967,748			1,092,414
		Deficit			(7,798,785)			(7,395,743)
	TOTAL EQUITY				32,122,006			29,592,544
	Non-current liabilities
		Provisions			335,999			326,646
		Long-term debt and promissory note			6,507,153			6,078,719
					6,843,152			6,405,365
	Current liabilities
		Bank indebtedness			-			2,310,809
		Accounts payable and accrued liabilities			8,344,746			5,461,292
		Current portion of long-term debt and promissory note			1,902,426			1,655,470
					10,247,172			9,427,571
TOTAL LIABILITIES					17,090,324			15,832,936
COMMITMENTS
TOTAL LIABILITIES AND EQUITY				$	49,212,330		$	45,425,480

 

STATEMENTS OF CASH FLOWS
For the periods ended July 28, 2013 and July 29, 2012
(Not audited or reviewed by the Company's external auditor)

				Quarter ended						Fiscal year-to-date ended
					July 28, 2013			July 29, 2012			July 28, 2013			July 29, 2012
Operating activities
	Net income (loss)			$	(458,226)		$	1,112,416		$	(403,042)		$	1,453,940
	Adjustments for:
		Income tax expense (recovery)			(158,000)			390,457			(138,000)			515,957
		Finance costs			164,396			162,280			326,930			274,925
		Depreciation and amortization of property, plant and equipment and intangibles			762,270			639,858			1,482,216			1,262,476
		Loss (gain) on disposal of property, plant and equipment			30,933			-			(15,092)			-
		Share-based payments			48,634			68,864			101,803			74,251
		Change in non-cash working capital related to operations			(371,010)			(1,259,741)			(136,906)			(2,220,117)
	Less:
		Interest paid			(151,270)			(120,919)			(275,163)			(234,004)
Cash provided by (used in) operating activities					(132,273)			993,215			942,746			1,127,428
Investing activities
		Purchase of property, plant and equipment			(764,698)			(351,100)			(1,974,076)			(1,164,901)
		Proceeds from sale of property, plant and equipment			140,000			-			203,000			-
		Purchase of intangible assets			(121,392)			(168,774)			(260,436)			(253,938)
Cash used in investing activities					(746,090)			(519,874)			(2,031,512)			(1,418,839)
Financing activities
		Increase/(decrease) in bank indebtedness			(2,047,074)			(257,796)			(2,314,214)			716,555
		Decrease in obligation under financial lease			-			(6,146)			-			(10,232)
		Issuance of long-term debt			500,000			-			1,185,912			-
		Repayment of long-term debt			(296,462)			(209,399)			(511,031)			(417,287)
		Change in share capital			-			-			-			2,375
		Proceeds from warrants, net			2,824,501			-			2,814,501			-
		Issurance of shares, net of fees			-			-			16,200			-
Cash provided by/(used in) financing activities					980,965			(473,341)			1,191,368			291,411
Net increase/(decrease) in cash					102,602			-			102,602			-
Cash, beginning of period					-			-			-			-
Cash, end of period				$	102,602		$	-		$	102,602		$	-

 

Additional Information

For further details the Company's complete management discussion and analysis (MD&A) and financial statements for the quarter ended July 28, 2013 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 the 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, EBITDA, demand, 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, 2013 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, EBITDA, demand, 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, 2014 ("fiscal 2014") 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, 2013 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, 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.

 

 

 

SOURCE: Brick Brewing Co. Limited

Sean Byrne, Chief Financial Officer, Tel: [phone] Ext.132; E-mail: [email protected]