Waterloo Brewing Reports First Quarter EBITDA of $2.1M up 28.8% versus prior year

First Quarter Highlights:

• Net revenue increased 20.2% to $14.8 million, up from $12.3 million in the prior year.
• Gross margin improved to 24.9%, compared to 21.1% the prior year.
• Selling, Marketing, and Administration expenses were $2.8 million, up from $2.1 million prior year.
• EBITDA* increased 28.8% to $2.1 million, compared to $1.7 million prior year.
• The Board of Directors approved the quarterly dividend, $0.02625/share, payable July 30, 2020, to shareholders of record as of July 16, 2020. The dividend is classified as an eligible dividend.

KITCHENER, ON, May 28, 2020 /CNW/ - Waterloo Brewing Ltd. ("Waterloo Brewing" or the "Company") (TSX: WBR), Ontario's first craft brewery, announced financial results for the first quarter ended April 26, 2020. Waterloo Brewing reported EBITDA of $2.1 million on net revenue of $14.8 million.

"The resilience of our business and our employees during this time of extraordinary challenge has been very reassuring and is an abundant source of pride and appreciation," said George Croft, President, and CEO, Waterloo Brewing. "We are extremely grateful to everyone here at Waterloo Brewing who has gone the extra mile to keep our brewery running. While this challenge is far from over, the tenacity, determination, and compassion to execute with excellence give us the confidence we need to triumph in the months ahead."

"As a business that is fortunate to remain strong and expand during this crisis we are also doing our best to increase our presence in and contribution to our hometown of Kitchener-Waterloo," continued Croft. "We teamed with some local distillers to create hand sanitizer for our friends and neighbours in K-W and we've increased our corporate giving to the local healthcare community. Perhaps most importantly, we're doing our absolute best to keep a large group of people gainfully employed in the safest environment we can create."

The total volume of products sold by Waterloo Brewing in the past quarter increased +23%, with every brand in the portfolio experiencing year-over-year growth. In spite of the growth in volume, Waterloo Brewing is experiencing  supply chain issues due to the effects of the COVID-19 pandemic. As a result, the Company is actively managing production constraints affecting its own brands as well as those of its contract manufacturing  customers.

Waterloo Brewing's board of directors has approved the quarterly dividend at $0.02625/share. The dividend is payable on July 30, 2020, to shareholders of record as of July 16, 2020.

Reconciliation of Net Earnings to Earnings Before Interest Taxes Depreciation and Amortization, and Share Based Payments (EBITDA)*
	Quarter ended
(in thousands of dollars)	April 26, 2020		April 28, 2019 ^1
Net income	$	(295)	$	(107)
Add (deduct):
Income tax recovery	(126)		-
Depreciation and amortization	1,736		1,434
Gain (loss) on disposal of property, plant & equipment and right-of-use assets	218		(13)
Share-based payments	169		76
Finance costs	428		264
Subtotal	2,425		1,761
EBITDA ^*	2,130		1,654

1	As a result of adoption of IFRS 16 effective February 1, 2019, EBITDA* increased by approximately $0.2 million, depreciation and amortization increased by $0.2 million, and finance costs increased by $0.1 million.

STATEMENTS OF COMPREHENSIVE INCOME

	Quarter ended
	April 26, 2020		April 28, 2019
Revenue	$	14,842,478	$	12,342,879
Cost of sales	11,145,445		9,735,693
Gross profit	3,697,033		2,607,186
Selling, marketing and administration expenses	2,839,249		2,073,214
Other expenses	632,819		390,188
Finance costs	428,444		263,793
Loss (gain) on disposal of property, plant and equipment	218,063		(13,080)
Loss before tax	(421,542)		(106,929)
Income tax recovery	(126,462)		-
Net loss and comprehensive
loss for the quarter	$	(295,080)	$	(106,929)
Basic loss per share	$	(0.01)	$	-
Diluted loss per share	$	(0.01)	$	-

 STATEMENTS OF FINANCIAL POSITION

	Quarter ended
	April 26, 2020		January 31, 2020
ASSETS
Current assets
Accounts receivable	$	8,048,845	$	4,976,226
Inventories	12,330,354		10,482,912
Prepaid expenses	747,475		787,448
	21,126,674		16,246,586
Non-current assets
Property, plant and equipment	35,826,293		32,808,678
Right-of-use assets	27,336,865		27,840,996
Intangible assets	15,165,822		15,184,333
Construction deposits	744,046		1,050,425
	79,073,026		76,884,432
TOTAL ASSETS	100,199,700		93,131,018
LIABILITIES AND EQUITY
Current liabilities
Bank indebtedness	1,036,758		783,077
Accounts payable and accrued liabilities	19,529,778		12,909,771
Current portion of lease liabilities	2,544,474		2,869,733
Current portion of long-term debt	3,266,806		2,946,038
	26,377,816		19,508,619
Non-current liabilities
Provisions	973,510		958,025
Lease liabilities	22,674,154		23,226,137
Long-term debt	14,518,468		13,342,788
Deferred income tax liability	2,082,484		2,208,947
	40,248,616		39,735,897
TOTAL LIABILITIES	66,626,432		59,244,516
Equity
Share capital	38,938,657		39,126,283
Share-based payments reserves	2,278,143		2,108,671
Deficit	(7,643,532)		(7,348,452)
TOTAL EQUITY	33,573,268		33,886,502
COMMITMENTS
TOTAL LIABILITIES AND EQUITY	$	100,199,700	$	93,131,018

 STATEMENTS OF CASH FLOWS

	Quarter ended
	April 26, 2020		April 28, 2019
Operating activities
Net loss	$	(295,080)	$	(106,929)
Adjustments for:
Income tax recovery	(126,462)		-
Finance costs	428,444		263,793
Depreciation and amortization of property, plant and
equipment, right-of-use assets and intangibles	1,735,679		1,433,815
Loss (gain) on disposal of property, plant and equipment	218,063		(13,080)
Share-based payments	169,472		76,524
Change in non-cash working capital related to operations	1,743,519		3,622,806
Less:
Interest paid	(413,954)		(290,179)
Cash provided by operating activities	3,459,681		4,986,750
Investing activities
Purchase of property, plant and equipment	(3,363,659)		(2,836,254)
Construction deposit paid	(744,046)		(79,457)
Proceeds from sale of property, plant and equipment, net	-		13,080
Purchase of intangible assets	(30,812)		(113,841)
Cash used in investing activities	(4,138,517)		(3,016,472)
Financing activities
Increase (decrease) in bank indebtedness	253,680		(941,357)
Issuance of long-term debt, net of fees	2,041,549		-
Repayment of long-term debt	(547,707)		(434,795)
Repayment of lease liabilities	(881,060)		(308,510)
Issuance of shares, net of fees	-		1,480
Shares repurchased and cancelled, including fees	(187,626)		(289,676)
Proceeds from stock option exercise	-		2,580
Cash generated from (used in) financing activities	678,836		(1,970,278)
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, 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 Waterloo Brewing Ltd.

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

Related Links

www.waterloobrewing.com