Waterloo Brewing achieves Record Full-year EBITDA ex one-time costs of $12.0M, up 19% from the Prior Year

Fourth Quarter Highlights:

• Net Revenue for the quarter grew 18.7% to $14.7 million compared to $12.3 million in the prior year.
• Gross Profit Margin for the quarter declined modestly by 2.7% to 29.1% from 31.8% in the prior year - excluding one-time costs.
• Selling, Marketing, and Administration for the quarter increased slightly to $2.6 million, compared to $2.3 million in the prior year
• EBITDA* for the quarter was $3.4 million, a gain of 19%, compared to $2.8 million in the prior year.
• The Board of Directors re-affirmed the quarterly dividend, at $0.02625/share, payable May 29, 2020, to shareholders of record as of May 15, 2020. The dividend is classified as an eligible dividend.

Full Year Highlights:

• Net Revenue increased 12.1% to $60.3 million, from $53.8 million in the prior year - excluding a one-time charge due to The Beer Store's consignment-based change resulting in gross profit decrease of $2.2 million.
• Gross Profit Margin improved to deliver 29.6% compared to 29.1% in the prior year, excluding one-time costs.
• Selling, Marketing, and Administration expenses increased to $11.8 million from $9.5 million in the prior year.
• Reported EBITDA* for the year was $11.6 million ($12.0 million excluding one-time costs, primarily associated with the warehouse expansion). The $12.0 million represents a 19% increase versus prior year $10.1 million.

KITCHENER, ON, April 9, 2020 /CNW/ - Waterloo Brewing Ltd. ("Waterloo Brewing" or the "Company") (TSX: WBR), Ontario's largest Canadian-owned brewery, today released results for the fourth quarter and full-year ended January 31, 2020. Waterloo Brewing posted record annual EBITDA of $12 million on net revenue of $60.3 million. EBITDA for the fourth quarter was up 18.7% from prior year, to $3.4 million.

"Our business has significant momentum and we thank our valued consumers for their continued support," said George Croft, President, and Chief Executive Officer Waterloo Brewing, "From our owner brands to our co-pack business we are extremely pleased with our industry-leading performance and growth in fiscal 2020. In this past fiscal year, we produced a step-change in both the operating and market performance of the business.  In each of the past four quarters, we have been able to deliver growth in both volume and margin which resulted in an outstanding +19% EBITDA growth versus the prior year. As a growing company, in a mature category, that performance is simply remarkable and a testament to the drive and passion of everyone who works here at Waterloo Brewing."

"Our premium portfolio posted volume gains of +24% in fiscal 2020.  Landshark Lager was a tremendous success story driven by the in-case promotions delivering volume in excess of 30,000 hectolitres and growth of +33%. Our new small-batch brewhouse and taproom will showcase uniquely original Waterloo craft beers and become an innovation engine for our Waterloo brand and further its current +6% momentum.  Our flagship Laker brand delivered an astonishing +20% growth versus 2019 thanks to a growing, loyal following of beer drinkers and our Seagram business grew +58% with the launch of our new Island Time Anytime ready-to-drink cocktail.  Co-pack production reported a +4.8% revenue growth in fiscal 2020.  Continued investment in our operational capabilities also brought in new co-pack agreements in 2019 which will deliver an additional $40 million dollars of revenue over the next three years.", added Croft.

"Our company continues to deliver growth," continued Croft. "It's the product of incredibly hard work by the most dedicated group of people I've had the pleasure of working with in my considerable career. The strategic choices we made several years ago are paying significant dividends today, and we have never been more confident in our ability to deliver value and growth to our shareholders."

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, 2020.

Reconciliation of Net Earnings to Earnings Before Interest Taxes Depreciation and Amortization, and Share Based Payments (EBITDA)*

	Fiscal year-to-date ended
(in thousands of dollars)	January 31, 2020^1		January 31, 2019^2
Net income	$	497	$	1,289
Add (deduct):
Income tax provision		538		545
Depreciation and amortization		6,334		4,361
Gain (loss) on disposal of property, plant & equipment and
right-of-use assets		(15)		387
Share-based payments		892		469
Finance costs		1,501		507
Loss of misappropriated funds		1,870		-
Subtotal		11,120		6,269
EBITDA *		11,618		7,558

1.	As a result of the adoption of IFRS 16 effective February 1, 2019, for fiscal 2020, EBITDA* increased by approximately $1.2 million, depreciation and amortization increased by $0.8, and finance costs increased by $0.6 million.
2.	As a result of a non-recurring adjustment during the quarter ended April 29, 2018, associated with TBS' change to a consignment basis, net income decreased by $1.6 million and EBITDA* decreased by $2.2 million.

STATEMENTS OF COMPREHENSIVE INCOME

Fiscal years ended January 31, 2020 and January 31, 2019

	January 31, 2020		January 31, 2019
Revenue	$	60,333,417	$	50,084,490
Cost of sales		42,483,862		37,108,956
Gross profit		17,849,555		12,975,534
Selling, marketing and administration expenses		11,842,088		9,462,821
Other expenses		1,616,977		784,697
Finance costs		1,500,682		506,595
Loss on misappropriated funds, net		1,869,595		-
Loss (gain) on disposal of property, plant and
equipment and right-of-use assets		(15,168)		387,294
Income before tax		1,035,381		1,834,127
Income tax expense		537,779		545,112
Net income and comprehensive income
for the year	$	497,602	$	1,289,015
Basic earnings per share	$	0.01	$	0.04
Diluted earnings per share	$	0.01	$	0.04

STATEMENTS OF FINANCIAL POSITION

Fiscal years ended January 31, 2020 and January 31, 2019

	January 31, 2020		January 31, 2019
ASSETS
Current assets
Accounts receivable		4,976,226		4,851,774
Inventories		10,482,912		10,316,767
Prepaid expenses		787,448		562,756
		16,246,586		15,731,297
Non-current assets
Property, plant and equipment		32,808,678		24,645,925
Right-of-use assets (2019 - Assets held under finance leases)		27,840,996		4,747,572
Intangible assets		15,184,333		15,253,736
Construction deposits		1,050,425		1,386,464
		76,884,432		46,033,697
TOTAL ASSETS		93,131,018		61,764,994
LIABILITIES AND EQUITY
Current liabilities
Bank indebtedness		783,077		1,887,253
Accounts payable and accrued liabilities		12,909,771		7,303,233
Current portion of lease liabilities (2019 - Current portion of      obligation under finance lease)		2,869,733		799,736
Current portion of long-term debt		2,946,038		1,859,922
		19,508,619		11,850,144
Non-current liabilities
Provisions		958,025		553,535
Lease liabilities (2019 - Obligation under finance lease)		23,226,137		2,212,157
Long-term debt		13,342,788		8,420,927
Deferred income tax liability		2,208,947		1,671,576
		39,735,897		12,858,195
TOTAL LIABILITIES		59,244,516		24,708,339
Equity
Share capital		39,126,283		40,001,097
Share-based payments reserves		2,108,671		1,325,150
Deficit		(7,348,452)		(4,269,592)
TOTAL EQUITY		33,886,502		37,056,655
COMMITMENTS
TOTAL LIABILITIES AND EQUITY	$	93,131,018	$	61,764,994

STATEMENTS OF CASH FLOWS

Fiscal years ended January 31, 2020 and January 31, 2019

	January 31, 2020		January 31, 2019
Operating activities
Net income	$	497,602	$	1,289,015
Adjustments for:
Income tax expense		537,779		545,112
Finance costs		1,500,682		506,595
Depreciation and amortization of property, plant and      equipment, right-of-use assets and intangibles		6,334,179		4,360,675
Loss (gain) on disposal of property, plant and equipment and      right-of-use assets		(15,168)		387,293
Share-based payments		892,360		469,506
Change in non-cash working capital related to operations		5,036,143		612,986
Less:
Interest paid		(1,373,019)		(533,553)
Cash provided by operating activities		13,410,558		7,637,629
Investing activities
Purchase of property, plant and equipment		(11,013,763)		(6,931,468)
Construction deposit paid		(1,050,425)		(1,386,464)
Proceeds from sale of property, plant and equipment, net		18,656		430,000
Purchase of intangible assets		(134,624)		(69,412)
Cash used in investing activities		(12,180,156)		(7,957,344)
Financing activities
Increase (decrease) in bank indebtedness		(1,104,176)		1,099,410
Issuance of long-term debt, net of fees		7,961,780		4,476,518
Repayment of long-term debt		(1,964,832)		(1,557,939)
Repayment of obligation under finance lease		(1,563,059)		(769,962)
Dividends paid		(3,576,462)		(3,010,861)
Issuance of shares, net of fees		96,722		53,126
Shares repurchased and cancelled, including fees		(1,125,484)		(146,310)
Stock option costs		(17,169)		(18,510)
Proceeds from stock option exercise		62,278		194,243
Cash generated from (used in) financing activities		(1,230,402)		319,715
Net increase/(decrease) in cash		-		-
Cash, beginning of year		-		-
Cash, end of year	$	-	$	-

About Waterloo Brewing

Waterloo Brewing 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, Waterloo Brewing Ltd. (formerly Brick Brewing Co. Limited) was the first craft brewery to start up in Ontario and is credited with pioneering the present-day craft brewing renaissance in Canada. Waterloo Brewing has complemented its Waterloo premium craft beers with the popular Laker brand.  In 2011, Waterloo Brewing purchased the Canadian rights to Seagram Coolers and in 2015, secured the exclusive Canadian rights to both LandShark and Margaritaville. In addition, Waterloo Brewing utilizes its leading-edge brewing, blending and packaging capabilities to provide an extensive array of contract manufacturing services in beer, coolers, and ciders. Waterloo Brewing trades on the TSX under the symbol WBR. Visit us at www.WaterlooBrewing.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 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, 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 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, loss on misappropriated funds, gain or loss on disposal of property, plant, and equipment and right-of-use assets, 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 Waterloo Brewing Ltd.

David Birch, Chief Financial Officer, [phone], E-mail: [email protected]

Related Links

www.waterloobrewing.com