Brick Brewing reports financial results for the third quarter, with EBITDA
improvement of $1.2 million
WATERLOO, ON,
"The success of Waterloo Dark and Red Baron brands continued into the third quarter inspiring the launch of two new products, Red Baron Lime and Red Baron Light," said
The experience of this past year has made it clear that the increase in the Minimum Retail Price of beer has reduced the price gap between the value segment and mainstream beer prices and put significant downward pressure on the Laker brand. The Laker brand must undergo a transformation to stem the decline and the Company is in the midst of a strategic review of the brand with a focus on all facets of the marketing mix.
"Management is constantly seeking opportunities to reduce costs. During the third quarter, the Company signed a distribution outsourcing agreement with Ryder to reduce shipping costs by approximately
Financial highlights for the quarter include:
- Net revenue has remained flat compared to the third quarter of fiscal
2009 and grew 4.0% on a year-to-date basis
- Gross profit percentage has increased to 26.1% for the first nine
months of fiscal 2010 versus 17.7% in the comparable period
- EBITDA for the third quarter of fiscal 2010 and nine months ending
October 31, 2009 of $0.7 million and $3.2 million respectively,
representing an increase of $1.2 million (258%), and $2.7 million
(588%) from the same periods last year
- Net income of $0.2 million in the third quarter, compared to a loss
of $0.6 million last year
- Net income of $1.1 million for the first nine months of fiscal 2010
compared to a loss of $0.7 million last year
"I am very proud of Brick's progress in fiscal 2010 and look forward to
conveying results for the balance of fiscal 2010 and onward," said George
Croft.
Brick Brewing Co. Limited
Consolidated Balance Sheet
(unaudited)
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October 31, January 31,
2009 2009
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(Restated -
note 1)
Assets
Current assets:
Cash $ - $ 209,291
Accounts receivable 2,432,405 2,096,781
Inventories 5,903,751 5,309,474
Prepaid expenses 396,752 507,518
Future income taxes 522,338 522,338
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9,255,246 8,645,402
Property, plant and equipment 13,995,855 13,522,720
Trademarks and listing fees 5,870,279 5,401,314
Deferred costs 77,424 108,067
Other assets 27,500 50,000
Future income taxes 72,640 626,103
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$ 29,298,944 $ 28,353,606
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Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness $ 1,291,915 $ -
Accounts payable and accrued liabilities 3,511,484 3,846,187
Current portion of long-term debt 874,450 924,000
Current portion of obligations under
capital lease 134,758 419,282
Deferred grants - 270,758
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5,812,607 5,460,227
Long-term debt 1,251,800 2,067,900
Obligations under capital lease 184,511 -
Shareholders' equity:
Share capital 34,655,890 34,657,984
Contributed surplus 766,544 673,593
Deficit (13,372,408) (14,506,098)
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22,050,026 20,825,479
Contingencies
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$ 29,298,944 $ 28,353,606
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(1) As a result of adopting CICA Handbook Section 3064, the Company has
adjusted the opening retained earnings in the comparative consolidated
balance sheet by $182,080 (net of tax) to write off pre-production costs
that are no longer permitted to be deferred. Deferred costs and future
income taxes, as at January 31, 2009, were reduced by $261,153 and
$79,073 respectively. The amounts presented in the consolidated statement
of income (loss) and deficit for the third quarter of fiscal 2009 and the
nine months ended October 31, 2008 were adjusted as follows: amortization
expense has been reduced by $29 thousand and $87 thousand, and the
opening deficit has been adjusted by $203,555 and $261,589 respectively.
Brick Brewing Co. Limited
Consolidated Statement of Income (Loss) and Deficit
(unaudited)
Three Months Ended Nine Months Ended
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October 31, October 31, October 31, October 31,
2009 2008 2009 2008
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(Restated - (Restated -
note 1) note 1)
Gross revenue $ 15,717,895 $ 16,501,409 $ 51,141,174 $ 51,543,872
Less production
taxes and
distribution
fees (8,437,835) (9,206,408) (26,903,965) (28,238,614)
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Net revenue 7,280,060 7,295,001 24,237,209 23,305,258
Cost of sales 5,491,103 6,519,480 17,914,082 19,174,897
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Gross profit 1,788,957 775,521 6,323,127 4,130,361
Selling, marketing
and
administration 1,067,183 887,783 3,122,059 3,187,421
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Earnings before
the undernoted 721,774 (112,262) 3,201,068 942,940
Other income
(expense):
Depreciation and
amortization (328,187) (397,839) (1,382,990) (1,190,308)
Interest on
long-term debt (34,610) (92,226) (111,511) (285,854)
Other income
(expense) 85 829 1,206 (713)
Severance costs (4,856) (296,475) (20,620) (497,278)
Equity earnings
on long-term
investment - (46,875) - 17,339
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(367,568) (832,586) (1,513,915) (1,956,814)
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Income (loss) before
income taxes 354,206 (944,848) 1,687,153 (1,013,874)
Future income tax
provision (recovery) 112,690 (297,679) 553,463 (318,614)
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Net income and
comprehensive
income 241,516 (647,169) 1,133,690 (695,260)
Deficit, beginning
of period (13,613,924) (6,958,365) (14,506,098) (6,852,240)
Cumulative effect
of adopting new
accounting
policies, net of
tax - (203,555) - (261,589)
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Deficit, beginning
of period
restated (13,613,924) (7,161,920) (14,506,098) (7,113,829)
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Deficit, end
of period $(13,372,408) $ (7,809,089) $(13,372,408) $ (7,809,089)
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Net earnings
per share:
Basic $ 0.01 $ (0.03) $ 0.04 $ (0.04)
Diluted $ 0.01 $ (0.03) $ 0.04 $ (0.04)
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Brick Brewing Co. Limited
Consolidated Statement of Cash Flows
(unaudited)
Three Months Ended Nine Months Ended
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October 31, October 31, October 31, October 31,
2009 2008 2009 2008
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(Restated - (Restated -
note 1) note 1)
Cash provided by
(used in):
Operations:
Income (loss)
for the period $ 241,516 $ (647,169) $ 1,133,690 $ (695,260)
Items not
involving cash:
Amortization
of property,
plant and
equipment,
deferred costs
and other
assets 335,688 403,290 1,405,491 1,196,985
Stock based
compensation 38,721 28,794 87,657 72,323
Equity earnings
on long-term
investment - 46,875 - (17,339)
Future income
tax provision
(recovery) 112,690 (297,679) 553,463 (318,614)
Change in non-cash
operating working
capital (35,951) 1,003,560 (1,424,599) 915,616
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692,664 537,671 1,755,702 1,153,711
Financing:
Increase (decrease)
in bank
indebtedness 211,668 (2,516,144) 1,291,915 (2,628,879)
Repayment of
long-term debt (408,150) (403,650) (865,650) (852,750)
Repayment of
obligation under
capital lease (34,032) (31,321) (100,013) (105,875)
Issue of capital
stock (net of fees) - 2,582,346 3,200 2,643,176
Stock options
exercised - 54,750 - 306,750
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(230,514) (314,019) 329,452 (637,578)
Investing:
Purchase of
property, plant
and equipment,
listing fees
and deferred
assets (462,150) (223,652) (2,294,445) (516,133)
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(462,150) (223,652) (2,294,445) (516,133)
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Net decrease in cash - - (209,291) -
Cash, beginning
of period - - 209,291 -
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Cash, end of
period $ - $ - $ - $ -
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These statements should be read in conjunction with the audited annual financial statements of the Company.
Additional Information
For further details the Company's management discussion and analysis (MD&A) and financial statements for the quarter ended
About Brick Brewing
Brick Brewing Co. Limited 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. The Company, founded in 1984, was the first craft brewery to start up in Ontario, and is credited with pioneering the present day craft brewing renaissance in
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
* EBITDA is a non-GAAP earnings measure, therefore it does not have any
standardized meaning prescribed by Canadian generally accepted accounting
principles 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.
%SEDAR: 00003334E
For further information: George Croft, President & CEO, Tel: (519) 576-9519 x. 247, e-mail: [email protected]
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