Brick Brewing Delivers Strong Third Quarter Growth, Net Sales up 27%, EBITDA of $1.9M vs. $0.4M Prior Year

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Dec 12, 2013, 06:00 ET

Third Quarter F2014 Highlights:

Net Revenues for the third quarter of fiscal 2014 were $9.6 million compared to $7.5 million in the third quarter of fiscal 2013.
Gross profit margin for the quarter increased to 31.6% from 18.7% in Q3 of fiscal 2013. Gross margin percentage improvement is driven by improved pricing, favorable product mix, cost control efforts, and overall efficiency on increasing volumes. Prior year Q3 was negatively impacted by a one-time supply chain disruption, impacting co-pack volume.
Selling, Marketing and Administration ("SM&A") expenses increased nominally, to $1.8 million from $1.7 million in the prior year, driven by brand support for Waterloo, Seagram and Laker.
EBITDA* for the third quarter of fiscal 2014 increased to $1.9 million compared to EBITDA* in the third quarter of fiscal 2013 of $0.4 million.

KITCHENER, ON, Dec. 12, 2013 /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 financial results for the third quarter of its 2014 fiscal year. Net revenues of $9.6 million for the third quarter represented 27% growth versus the previous year. EBITDA for the third quarter of $1.9 million was up from $0.4 million last year.

The Company continued to invest in its core supported brands and achieved double-digit volume improvement in the third quarter. Within the above premium craft portfolio, Waterloo volumes increased 29%. Seagram cooler and cider volumes increased by 51% as consumers continue to look for more natural quality offerings. Laker volumes in the quarter improved versus year ago driven by aggressive promotional activity in the second quarter. Additionally, the quarter benefited from strong year-over-year improvement in co-pack production.

Brick Brewing's President and Chief Executive Officer George Croft said, "Overall, we're very pleased with the results we're reporting today. In an environment where the overall beer category volume was largely flat in the third quarter, we've been able to show growth in our supported brands while also significantly improving our EBITDA performance. This is a testament to our focus on the category segments with higher growth and margin - premium craft beer as well as coolers and ciders. We did experience volatility in our earnings from second to third quarter, the result of the timing of our brand support activities. Moving forward, we would expect to return to more normalized quarterly performance. We continue to focus on execution, cost control and improved efficiency, all of which were central to the results we're reporting."

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, 2013.


Reconciliation of Net Earnings to Earnings Before Interest, Taxes, Depreciation and Amortization, Gain/Loss on Disposal of Property, Plant and Equipment, and Share Based Payments (EBITDA)*

		Quarter ended				Fiscal year-to-date ended
(in thousands of dollars)			October 27, 2013		October 28, 2012		October 27, 2013		October 28, 2012

Net income (loss)		$	683	$	(416)	$	280	$	1,038

Add (deduct):
	Income tax expense (recovery)		227		(95)		89		421
	Depreciation and amortization		789		678		2,272		1,940
	Gain on disposal of property, plant and equipment		-		-		(15)		-
	Share based payment		45		68		146		143
	Finance costs		148		151		475		426
Subtotal			1,209		802		2,967		2,930

EBITDA*			1,892		386		3,247		3,968


STATEMENTS OF COMPREHENSIVE INCOME For the periods ended October 27, 2013 and October 28, 2012 (Not audited or reviewed by the Company's external auditor)

		Quarter ended				Fiscal year-to-date ended
		October 27, 2013		October 28, 2012		October 27, 2013		October 28, 2012

Revenue		$	9,561,744	$	7,539,336	$	29,718,744	$	27,652,162
Cost of sales			6,537,642		6,129,816		21,947,508		20,208,953
Gross profit			3,024,102		1,409,520		7,771,236		7,443,209

Selling, marketing and administration expenses			1,771,749		1,665,282		6,433,112		5,239,298
Other expenses			194,208		103,835		494,091		318,686
Finance costs			147,882		151,470		474,812		426,395
Income (loss) before tax			910,263		(511,067)		369,221		1,458,830

Income tax expense (recovery)			227,000		(94,815)		89,000		421,142
Net income (loss) and comprehensive
	income (loss) for the period	$	683,263	$	(416,252)	$	280,221	$	1,037,688


Basic earnings (loss) per share		$	0.02	$	(0.01)	$	0.01	$	0.04
Diluted earnings (loss) per share		$	0.02	$	(0.01)	$	0.01	$	0.03


STATEMENTS OF FINANCIAL POSITION As at October 27, 2013 and January 31, 2013 (Not audited or reviewed by the Company's external auditor)

				October 27, 2013		January 31, 2013

ASSETS
	Non-current assets
		Property, plant and equipment	$	19,109,013	$	19,109,603
		Intangible assets		14,515,467		14,259,612
		Other assets		30,000		25,000
		Deferred income tax assets		2,444,925		2,533,925
				36,099,405		35,928,140
	Current assets
		Accounts receivable		6,908,710		5,187,785
		Inventories		4,236,101		4,013,375
		Prepaid expenses		296,950		296,180
				11,441,761		9,497,340
TOTAL ASSETS				47,541,166		45,425,480

LIABILITIES AND EQUITY
	Equity
		Share capital		38,941,465		35,895,873
		Share-based payments reserves		1,012,286		1,092,414
		Deficit		(7,115,522)		(7,395,743)
	TOTAL EQUITY			32,838,229		29,592,544

	Non-current liabilities
		Provisions		340,676		326,646
		Long-term debt and promissory note		4,892,526		6,078,719
				5,233,202		6,405,365

	Current liabilities
		Bank indebtedness		1,934,615		2,310,809
		Accounts payable and accrued liabilities		5,620,514		5,461,292
		Current portion of long-term debt and promissory note		1,914,606		1,655,470
				9,469,735		9,427,571
TOTAL LIABILITIES				14,702,937		15,832,936

COMMITMENTS

TOTAL LIABILITIES AND EQUITY			$	47,541,166	$	45,425,480


STATEMENTS OF CASH FLOWS For the periods ended October 27, 2013 and October 28, 2012 (Not audited or reviewed by the Company's external auditor)

			Quarter ended				Fiscal year-to-date ended
				October 27, 2013		October 28, 2012		October 27, 2013		October 28, 2012
Operating activities
	Net income (loss)		$	683,263	$	(416,252)	$	280,221	$	1,037,688
	Adjustments for:
		Income tax expense (recovery)		227,000		(94,815)		89,000		421,142
		Finance costs		147,882		151,470		474,812		426,395
		Depreciation and amortization of property, plant and equipment and intangibles		789,426		677,846		2,271,642		1,940,322
		Loss (gain) on disposal of property, plant and equipment		-		-		(15,093)		-
		Share-based payments		44,538		68,864		146,341		142,129
		Change in non-cash working capital related to operations		(1,699,060)		458,587		(1,835,966)		(1,761,530)
	Less:
		Interest paid		(128,579)		(115,799)		(403,742)		(349,803)
Cash provided by operating activities				64,469		728,915		1,007,215		1,856,343

Investing activities
	Purchase of property, plant and equipment			(478,855)		(697,670)		(2,452,931)		(1,862,571)
	Proceeds from sale of property, plant and equipment			-		-		203,000		-
	Purchase of intangible assets			(1,447)		(225)		(261,883)		(254,163)
Cash used in investing activities				(480,302)		(697,895)		(2,511,814)		(2,116,734)

Financing activities
	Increase/(decrease) in bank indebtedness			1,934,615		(136,279)		(379,599)		580,276
	Decrease in obligation under financial lease			-		(6,166)		-		(16,398)
	Issuance of long-term debt			-		321,884		1,185,912		321,884
	Repayment of long-term debt			(1,609,806)		(210,459)		(2,120,837)		(627,746)
	Change in share capital			-		-		-		2,375
	Proceeds from warrants			-		-		2,827,615		-
	Share issue costs paid			(12,388)		-		(25,502)		-
	Issurance of shares			810		-		17,010		-
Cash provided by/(used in) financing activities				313,231		(31,020)		1,504,599		260,391

Net increase/(decrease) in cash				(102,602)		-		-		-

Cash, beginning of period				102,602		-		-		-
Cash, end of period			$	-	$	-	$	-	$	-

Additional Information

For further details the Company's complete management discussion and analysis (MD&A) and financial statements for the quarter ended October 27, 2013 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 and Canadian-based publicly held 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 the 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.

* 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