Waterloo Brewing First Quarter EBITDA grows +52.4% to $3.2M

KITCHENER, ON, May 27, 2021 /CNW/ -

First Quarter Highlights:

• Net revenue increased 51.5% to $22.5 million, up from $14.8 million in the prior year.
• Gross margin decreased slightly to 22.2%, compared to 24.9% the prior year, a result of the last outsourced production early in the fiscal year.
• Selling, Marketing, and Administration expenses were $3.6 million, up from $2.8 million in the prior year.
• EBITDA* increased 52.4% to $3.2 million, compared to $2.1 million in the prior year.
• The Board of Directors approved the quarterly dividend, $0.0276/share, payable August 4, 2021, to shareholders of record as of July 21, 2021. The dividend is classified as an eligible dividend.

Waterloo Brewing Ltd. ("Waterloo Brewing" or the "Company") (TSX: WBR), Ontario's first craft brewery, announced financial results for the first quarter of fiscal 2022 which ended on May 2, 2021. Waterloo Brewing reported EBITDA of $3.2 million, an increase of $1.1 million or 52.4% on net revenue of $22.5 million. Net revenue increased by $7.7 million or 51.5% from the first quarter of fiscal 2021.

"We are happy with our strong start to the year and our record first quarter results," said George Croft, President and Chief Executive Officer of Waterloo Brewing. "Our owner brands' volume continues to grow at double-digits and our co-manufacturing of high-value global beverage brands more than doubled.  We are growing in all sales channels and significantly outpacing the balance of the industry."

The total volume of products sold by Waterloo Brewing in the quarter increased +57%, with every brand in the portfolio experiencing year-over-year growth for the eighth-straight quarter. Laker growth is at 8%, LandShark® growth is at 83%, Waterloo growth is at 32%, and Seagram delivered 40% growth. Gross margin performance temporarily declined in the quarter due to pandemic-related issues and the last outsourced production that occurred prior to the ramp-up of new internal production capacity in April. Waterloo Brewing anticipates delivering margin improvements for the balance of the year.

Late in the quarter, Waterloo Brewing launched Waterloo Watermelon and Tart Cherry Radlers, LandShark Seltzer and Seagram Island Time Coconut Lime. The Company believes these new launches continue to demonstrate innovation and leadership within the category.  Steady progress is being made to improve brand support to better position brands for long-term sustainable growth.  Waterloo Brewing is confident in the ability to innovate and build strong brands that complement the current portfolio and help support the mission of long-term profitable growth.

"As the COVID-19 pandemic slowly winds down, our primary focus continues to be on operating our brewery and our business safely and working hard to continue to innovate and meet customer demand," Croft added. 

"To support hospitality workers and help the on-premises channel recover from the devastating impact of the pandemic, Waterloo Brewing will be selling kegs and tall cans of its most popular brands at a significantly reduced price to pubs and restaurants in Ontario. We are thankful to our outstanding team of coworkers and retailers for their continued diligence which has allowed us to continue to operate and help grow our business during this most difficult time." 

Waterloo Brewing has taken various steps to ensure the capacity is there to support this accelerating growth, including the installation of a state-of-the-art can line which has increased annual canning capacity by 750 thousand hectoliters to 1.2 million hectoliters. Waterloo Brewing continues to work hard on its supply chain with the goal of making the integrated supply chain more efficient, reducing costs, and increasing flexibility. Waterloo Brewing expects to complete all this work in the second quarter of F2022, while continuing to invest in capacity to take advantage of the fast-growing owner brands and co-manufacturing business. While the industry remains competitive, Waterloo Brewing is optimistic for continued growth of the current brand portfolio, innovations, and co-manufacturing business.

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, 2021.

Reconciliation of Net Earnings to EBITDA*
	Quarter ended (unaudited)
(in thousands of dollars)	May 2, 2021		April 26, 2020
Net income	$	(101)	$	(295)
Add (deduct):
Income tax expense	(36)		(126)
Depreciation and amortization	2,350		1,736
Loss (gain) on disposal of property, plant & equipment and right-of-use assets	(17)		218
Share-based payments	139		169
Finance costs	911		428
Subtotal	3,347		2,425
EBITDA ^*	3,246		2,130

STATEMENTS OF FINANCIAL POSITION
As at May 2, 2021 and January 31, 2021
(Not audited or reviewed by the Company's external auditor)

	May 2, 2021		January 31, 2021
ASSETS
Current assets
Accounts receivable	$	11,960,452	$	9,871,061
Inventories	18,801,565		14,344,496
Prepaid expenses	982,986		729,260
	31,745,003		24,944,817
Non-current assets
Property, plant and equipment	51,846,951		46,630,107
Right-of-use assets	27,810,657		26,936,861
Intangible assets	14,992,102		15,002,826
Construction deposits	830,657		1,949,074
	95,480,367		90,518,868
TOTAL ASSETS	127,225,370		115,463,685
LIABILITIES AND EQUITY
Current liabilities
Bank indebtedness	8,028,390		3,366,489
Accounts payable and accrued liabilities	25,852,128		21,341,335
Current portion of lease liabilities	3,313,002		3,282,080
Non-revolving demand loans	28,152,216		25,896,379
Current portion of long-term debt	427,747		510,275
	65,773,483		54,396,558
Non-current liabilities
Provisions	1,035,539		1,019,962
Lease liabilities	21,918,859		21,522,379
Long-term debt	1,243,248		1,367,930
Deferred income tax liability	3,426,101		3,462,495
	27,623,747		27,372,766
TOTAL LIABILITIES	93,397,230		81,769,324
Equity
Share capital	39,953,562		39,546,216
Share-based payments reserves	2,072,547		2,245,415
Deficit	(8,197,969)		(8,097,270)
TOTAL EQUITY	33,828,140		33,694,361
COMMITMENTS
TOTAL LIABILITIES AND EQUITY	$	127,225,370	$	115,463,685

STATEMENTS OF COMPREHENSIVE INCOME
For the quarters ended May 2, 2021 and April 26, 2020
(Not audited or reviewed by the Company's external auditor)

	May 2, 2021		April 26, 2020
Revenue	$	22,484,185	$	14,842,478
Cost of sales	17,487,382		11,145,445
Gross profit	4,996,803		3,697,033
Selling, marketing and administration expenses	3,596,069		2,839,249
Other expenses	643,787		632,819
Finance costs	911,249		428,444
Loss (gain) on disposal of property, plant and
equipment and right-of-use assets	(17,209)		218,063
Loss before tax	(137,093)		(421,542)
Income tax recovery	(36,394)		(126,462)
Net loss and comprehensive
loss for the quarter	$	(100,699)	$	(295,080)
Basic loss per share	$	-	$	(0.01)
Diluted loss per share	$	-	$	(0.01)

STATEMENTS OF CASH FLOWS
For the quarters ended May 2, 2021 and April 26, 2020
(Not audited or reviewed by the Company's external auditor)

	Quarter ended
	May 2, 2021		April 26, 2020
Operating activities
Net loss	$	(100,699)	$	(295,080)
Adjustments for:
Income tax recovery	(36,394)		(126,462)
Finance costs	911,249		428,444
Depreciation and amortization of property, plant and
equipment, right-of-use assets and intangibles	2,349,979		1,735,679
Loss (gain) on disposal of property, plant and equipment and
right-of-use assets	(17,209)		218,063
Share-based payments	139,166		169,472
Change in non-cash working capital	(2,500,083)		1,743,519
Less:
Interest paid	(682,679)		(413,954)
Cash provided by operating activities	63,330		3,459,681
Investing activities
Purchase of property, plant and equipment	(4,913,073)		(3,363,659)
Construction deposit paid	(830,657)		(744,046)
Proceeds from sale of right-of-use assets, net	17,916		-
Purchase of intangible assets	(42,297)		(30,812)
Cash used in investing activities	(5,768,111)		(4,138,517)
Financing activities
Increase in bank indebtedness	4,661,901		253,680
Issuance of non-revolving demand loans	3,362,543		2,041,549
Repayment of non-revolving demand loans	(1,106,705)		(432,921)
Repayment of long-term debt	(209,513)		(114,786)
Repayment of lease liabilities	(1,098,757)		(881,060)
Issuance of shares, net of fees	86,013		-
Shares repurchased and cancelled, including fees	-		(187,626)
Proceeds from stock option exercise	9,299		-
Cash generated from financing activities	5,704,781		678,836
Net increase/(decrease) in cash	-		-
Cash, beginning of year	-		-
Cash, end of year	$	-	$	-
Non-cash investing activities:
Acquisition of assets under lease	$	1,532,415	$	3,818

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. 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, gain (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 J. Birch, Chief Financial Officer, [phone], E-mail: [email protected]

Related Links

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