Brick Brewing reports Second Quarter EBITDA of $1.6M
Highlights:
- Volume in the Waterloo trademark for the second quarter achieved growth of 39% versus the second quarter of fiscal 2014.
- Net Revenues for the second quarter of fiscal 2015 were $10.4 million compared to $11.4 million in the second quarter of fiscal 2014, the result of cooler weather which resulted in category softness, and no repeat of the Laker trademark 12 pack promotional launch from the prior year.
- Gross profit margin for the quarter increased to 31.4%, up from 21.4% in Q2 of fiscal 2014, reflecting targeted efforts to enhance margin expansion and profitability, including lowered costs, and improved product mix , especially within the craft premium category.
- Selling, Marketing and Administration ("SM&A") expenses declined to $2.3 million from $2.7 million in the prior year, as one-time promotional costs in F14 did not repeat this year.
- EBITDA* for the second quarter of fiscal 2015 grew to $1.6 million compared to EBITDA in the second quarter of fiscal 2014 of $0.4 million.
- Brick has previously announced that it has entered into a definitive agreement for the sale of its King Street property in Waterloo for $4 million. The sale is expected to close in Brick's fiscal third quarter.
KITCHENER, ON, Sept. 11, 2014 /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 2015 fiscal year.
Net Revenues for the second quarter of fiscal 2015 were $10.4 million compared to $11.4 million in the second quarter of fiscal 2014. Gross profit for the quarter improved to 31.4% in the second quarter of fiscal 2015, compared to 21.4% in Q2 of the prior year. The improved margins are driven by the non-repeat of promotional costs to support Laker 12 pack bottles in the prior year, coupled with lower operating costs, improving premium product mix and favorable pricing. EBITDA for the second quarter of fiscal 2015 came in at $1.6 million compared to EBITDA of $0.4 million in the second quarter of fiscal 2014.
"The success we've seen in the Waterloo trademark is very encouraging. Waterloo craft premium brands grew by 39% with strength in our core portfolio, our seasonal mix-pack launch, and the new Waterloo Radler, which has been the hit of the summer. Seagram volume was down in the quarter, driven by reduced listings at the LCBO and the absence of a cider mix pack versus year ago. The Seagram malt based offerings at The Beer Store have done very well and we're also pleased with the introduction of Seagram malt based products in the important Quebec market. The Laker trademark is showing year-on-year volume decline, however Brick is seeing improved profitability, both in absolute dollars and margins. When you bring together the pieces - no one-time promotional costs, significant growth in the premium Waterloo trademark and lowered operating cost, it all came together to allow us to put up a strong EBITDA result." stated George Croft, President and CEO.
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, 2014.
| Reconciliation of Net Earnings to Earnings Before Interest Taxes Depreciation and Amortization, and Share Based Payments (EBITDA)* | ||||
| Quarter ended | Fiscal year ended | |||
| (in thousands of dollars) | July 27, 2014 | July 28, 2013 | July 27, 2014 | July 28, 2013 |
| Net income (loss) | $ 445 | $ (458) | $ 239 | $ (403) |
| Add (deduct): | ||||
| Income tax expense (recovery) | 163 | (158) | 86 | (138) |
| Depreciation and amortization | 772 | 762 | 1,537 | 1,482 |
| Loss (gain) on disposal of property, plant and equipment | - | 31 | 7 | (15) |
| Share-based payments | 14 | 49 | 63 | 102 |
| Finance costs | 183 | 164 | 304 | 327 |
| Subtotal | 1,132 | 848 | 1,997 | 1,758 |
| EBITDA* | 1,577 | 390 | 2,236 | 1,355 |
STATEMENTS OF COMPREHENSIVE INCOME
For the periods ended July 27, 2014 and July 28, 2013
(Not audited or reviewed by the Company's external auditor)
| Quarter ended | Fiscal year-to-date ended | |||||
| July 27, 2014 | July 28, 2013 | July 27, 2014 | July 28, 2013 | |||
| Revenue | $ | 10,417,240 | $ 11,372,254 | $ 17,954,647 | $ 20,157,000 | |
| Cost of sales | 7,142,789 | 8,938,854 | 13,047,737 | 15,409,866 | ||
| Gross profit | 3,274,451 | 2,433,400 | 4,906,910 | 4,747,134 | ||
| Selling, marketing and administration expenses | 2,307,515 | 2,741,593 | 4,005,976 | 4,661,363 | ||
| Other expenses | 174,965 | 143,637 | 271,754 | 299,883 | ||
| Finance costs | 183,318 | 164,396 | 303,761 | 326,930 | ||
| Income (loss) before tax | 608,653 | (616,226) | 325,419 | (541,042) | ||
| Income tax expense (recovery) | 163,200 | (158,000) | 86,755 | (138,000) | ||
| Net income (loss) and comprehensive income (loss) for the period |
$ | 445,453 | $ (458,226) | $ 238,664 | $ (403,042) | |
| Basic earnings (loss) per share | $ | 0.01 | $ (0.01) | $ 0.01 | $ (0.01) | |
| Diluted earnings (loss) per share | $ | 0.01 | $ (0.01) | $ 0.01 | $ (0.01) | |
STATEMENTS OF FINANCIAL POSITION
As at July 27, 2014 and January 31, 2014
(Not audited or reviewed by the Company's external auditor)
| July 27, 2014 |
January 31, 2014 |
|
| ASSETS | ||
| Non-current assets | ||
| Property, plant and equipment | $ 15,071,085 | $ 15,449,248 |
| Intangible assets | 15,049,475 | 14,752,855 |
| Deferred income tax assets | 2,461,977 | 2,548,732 |
| 32,582,537 | 32,750,835 | |
| Current assets | ||
| Accounts receivable | 8,023,597 | 5,865,024 |
| Inventories | 4,046,258 | 3,951,436 |
| Assets held for sale | 3,410,069 | 3,406,400 |
| Prepaid expenses | 736,979 | 395,559 |
| 16,216,903 | 13,618,419 | |
| TOTAL ASSETS | 48,799,440 | 46,369,254 |
| LIABILITIES AND EQUITY | ||
| Equity | ||
| Share capital | 39,393,721 | 38,955,236 |
| Share-based payments reserves | 1,017,219 | 1,060,533 |
| Deficit | (7,263,880) | (7,502,544) |
| TOTAL EQUITY | 33,147,060 | 32,513,225 |
| Non-current liabilities | ||
| Provisions | 298,159 | 289,083 |
| Long-term debt and promissory note | 3,340,510 | 4,265,018 |
| 3,638,669 | 4,554,101 | |
| Current liabilities | ||
| Bank indebtedness | 2,380,392 | 1,694,178 |
| Accounts payable and accrued liabilities | 7,600,181 | 6,050,679 |
| Current portion of long-term debt and promissory note | 2,033,138 | 1,557,071 |
| 12,013,711 | 9,301,928 | |
| TOTAL LIABILITIES | 15,652,380 | 13,856,029 |
| COMMITMENTS | ||
| TOTAL LIABILITIES AND EQUITY | $ 48,799,440 | $ 46,369,254 |
STATEMENTS OF CASH FLOWS
For the periods ended July 27, 2014 and July 28, 2013
(Not audited or reviewed by the Company's external auditor)
| Quarter ended | Fiscal year-to-date ended | ||||
| July 27, 2014 | July 28, 2013 | July 27, 2014 | July 28, 2013 | ||
| Operating activities | |||||
| Net income (loss) | $ 445,453 | $ (458,226) | $ 238,664 | $ (403,042) | |
| Adjustments for: | |||||
| Income tax expense (recovery) | 163,200 | (158,000) | 86,755 | (138,000) | |
| Finance costs | 183,318 | 164,396 | 303,761 | 326,930 | |
| Depreciation and amortization of property, plant and equipment and intangibles |
772,003 | 762,270 | 1,536,530 | 1,482,216 | |
| Loss (gain) on disposal of property, plant and equipment | - | 30,933 | 7,345 | (15,092) | |
| Share-based payments | 13,862 | 48,634 | 63,186 | 101,803 | |
| Change in non-cash working capital related to operations | 462,719 | (371,011) | (1,077,226) | (136,906) | |
| Less: | |||||
| Interest paid | (169,646) | (151,269) | (263,693) | (275,163) | |
| Cash provided by (used in) operating activities | 1,870,909 | (132,273) | 895,322 | 942,746 | |
| Investing activities | |||||
| Purchase of property, plant and equipment | (499,024) | (764,698) | (1,156,712) | (1,974,076) | |
| Proceeds from sale of property, plant and equipment | - | 140,000 | - | 203,000 | |
| Purchase of intangible assets | (159,831) | (121,392) | (305,620) | (260,436) | |
| Cash used in investing activities | (658,855) | (746,090) | (1,462,332) | (2,031,512) | |
| Financing activities | |||||
| Increase/(decrease) in bank indebtedness | (1,297,461) | (2,047,074) | 686,214 | (2,314,214) | |
| Issuance of long-term debt | - | 500,000 | - | 1,185,912 | |
| Repayment of long-term debt | (239,593) | (296,462) | (451,189) | (511,031) | |
| Issuance of shares | - | 10,000 | 6,985 | 16,200 | |
| Proceeds from stock option exercise | 325,000 | - | 325,000 | - | |
| Proceeds from warrants, net | - | 2,814,501 | - | 2,814,501 | |
| Cash provided by (used in) financing activities | (1,212,054) | 980,965 | 567,010 | 1,191,368 | |
| Net increase 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 27, 2014 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 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 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
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: Brick Brewing Co. Limited
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