Brick Brewing reports fiscal 2012 annual results, including EBITDA* of $3.8 million

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Apr 26, 2012, 12:57 ET

KITCHENER, ON, April 26, 2012 /PRNewswire/ - Brick Brewing Co. Limited ("Brick" or the "Company") (TSX: BRB), Ontario's largest Canadian-owned and Canadian-based publicly held brewery, today released its financial results for the fourth quarter and year ended January 31, 2012.

"A rigorous attention to the management of our costs, and the extraordinary daily effort of our entire staff to make our operation as productive as possible, produced tremendous results in the past fiscal year and will be invaluable assets for the growth of our business" declared George Croft, President and CEO. "Today, because of the concerted and collective effort of our team here at Brick Brewing, we've established a record of sustained profitability and volume growth."

"Growth of our beer brands of 11.9% outpaced the industry which declined by 2%" continued Mr. Croft. "Our beer business is enjoying great momentum having outperformed the industry for the last seven quarters. The Laker family has been our main growth engine through this period and, bolstered by even greater promotional support in this upcoming year, is poised to gain further momentum."

Several important strategies were introduced in 2012 that have produced, and will continue to produce, strong results for the business:

					Cost conscience culture - we have established a culture that constantly seeks out opportunities to save the Company money and we plan to deliver $500 thousand in improved operating performance and $500 thousand in procurement related cost savings in fiscal 2013.
					Re-establish craft brewing leadership - Brick Brewing was the original Ontario craft brewer. A renewed focus on our premium Waterloo Brewing Co. family of craft beers will take advantage of shifting consumer preferences and strengthen our company's overall profit position.
					Opportunistic volume growth - significant, focused promotion of Laker beers will continue to make it the best beer news in Ontario for those consumers looking for great value. A transformation of the Seagram trademark we purchased in March of last year reversed significant decline and is now growing versus the prior year in the all-important Ontario market. The growth is driven by extraordinary retail execution and the launch of several great new products including: Seagram 2012, Seagram Cider, Seagram Iced Lemon Tea and Seagram Still Lemonade.

"Our greatest accomplishment, however, is our resilience and unwavering commitment to deliver results. Though the beer market may be experiencing per capita consumption declines, though input cost pressures continue to rise and though we lost funding from the Ontario Craft Brewers Opportunity Fund, we grew the business by earning the purchases and loyalties of more consumers. Those are the results that measure the character of our Company, as much as they contribute to a healthier bottom line."

Financial highlights are as follows:

Net revenues for the fourth quarter and year end of fiscal 2012 were $7.3 million and $34.1 million respectively compared to $6.9 million and $30.1 million respectively in the fourth quarter and year end of fiscal 2011.
Gross profit percentage for fiscal 2012 increased from 23.2% to 23.4%.
EBITDA* for the fourth quarter and year ended January 31, 2012 was $0.6 million and $3.8M respectively. EBITDA* for the fourth quarter and year ended January 31, 2011 was $0.4 million and $4.3M respectively. Year end January 31, 2011 results include support from the Ontario Craft Brewers Opportunity Fund which the Company no longer received during the year ended January 31, 2012. The incentive was equal to $1.2 million on a year-to-date basis in the previous fiscal period.

On February 1, 2011, the Company adopted International Financial Reporting Standards ("IFRS") for Canadian publicly accountable enterprises. Prior to the adoption of IFRS, the Company followed Canadian Generally Accepted Accounting Principles ("GAAP"). While IFRS has many similarities to Canadian GAAP, some of the Company's accounting policies have changed as a result of its transition to IFRS. The most significant accounting policy changes that have had an impact on the results of operations are discussed within the applicable sections of the Company's annual Management Discussion & Analysis ("MD&A") and annual Financial Statements filed on SEDAR.

The following financial statements should be read in conjunction with the audited annual financial statements of the Company prepared under IFRS.

Reconciliation of Net Earnings to Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)*

		Fiscal year ended
(in thousands of dollars)		January 31, 2012		January 31, 2011

Net income		$	657	$	2,744

Add:
	Income tax expense/(recovery)		16		(1,273)
	Depreciation and amortization		2,366		2,541
	Finance costs		744		307
Subtotal			3,126		1,575

EBITDA*			3,783		4,319

STATEMENT OF COMPREHENSIVE INCOME
Years ended January 31, 2012 and 2011

	January 31, 2012			January 31, 2011

Revenue	$	34,077,705	$	30,105,521
Cost of sales		26,091,149		23,110,090
Gross profit		7,986,556		6,995,431

Selling, marketing and administration expenses		6,078,003		4,887,123
Other expenses		492,142		331,159
Finance costs		743,823		306,238
Income before tax		672,588		1,470,911

Income tax expense/(recovery)		16,000		(1,273,000)
Net income		656,588		2,743,911

Total comprehensive income for the period	$	656,588	$	2,743,911


Basic earnings per share	$	0.02	$	0.10
Diluted earnings per share	$	0.02	$	0.09

STATEMENT OF FINANCIAL POSITION
As at January 31, 2012, January 31, 2011 and February 1, 2010

			January 31, 2012		January 31, 2011		Date of Transition to IFRS February 1, 2010

ASSETS
	Non-current assets
		Property, plant and equipment	$	17,753,175	$	18,372,020	$	17,637,515
		Intangible assets		13,829,158		6,062,187		5,731,954
		Other assets		35,000		45,000		188,871
		Deferred income tax assets		2,857,000		2,873,000		1,600,000
				34,474,333		27,352,207		25,158,340

Current assets
		Accounts receivable		4,585,333		4,519,591		2,357,069
		Inventories		3,961,542		3,885,240		3,470,263
		Prepaid expenses		299,919		321,899		412,351
				8,846,794		8,726,730		6,239,683
TOTAL ASSETS				43,321,127		36,078,937		31,398,023

LIABILITIES AND EQUITY
	Equity
		Share capital		34,653,027		34,598,668		34,678,264
		Share-based payments reserves		969,893		933,323		845,113
		Deficit		(8,124,776)		(8,781,364)		(11,525,275)
	TOTAL EQUITY			27,498,144		26,750,627		23,998,102

	Non-current liabilities
		Provisions		181,898		170,908		160,581
		Long-term debt and promissory note		5,890,379		3,026,731		1,158,395
		Obligations under finance leases		-		24,650		138,106
				6,072,277		3,222,289		1,457,082

	Current liabilities
		Bank indebtedness		1,999,482		371,543		1,792,406
		Accounts payable and accrued liabilities		6,245,305		4,948,039		3,187,915
		Current portion of long-term debt and promissory note		1,481,269		624,000		816,100
		Current portion of obligations under finance leases		24,650		162,439		146,418
				9,750,706		6,106,021		5,942,839
TOTAL LIABILITIES				15,822,983		9,328,310		7,399,921

COMMITMENTS

TOTAL LIABILITIES AND EQUITY			$	43,321,127	$	36,078,937	$	31,398,023

STATEMENT OF CASH FLOWS
Years ended January 31, 2012 and 2011

			January 31, 2012		January 31, 2011
Operating activities
	Net income		$	656,588	$	2,743,911
	Adjustments for:
		Income tax expense/(recovery)		16,000		(1,273,000)
		Finance costs		743,823		306,238
		Depreciation and amortization of property, plant and equipment and intangibles		2,365,974		2,540,632
		Loss on disposal of property, plant and equipment		34,549		186,461
		Impairment of intangible assets		-		50,000
		Share-based payments		41,430		88,210
		Change in non-cash working capital related to operations		1,135,076		(696,977)
	Less:
		Interest paid		(550,136)		(181,986)
Cash provided by operating activities				4,443,304		3,763,489

Investing activities
	Purchase of property, plant and equipment			(1,780,012)		(3,425,460)
	Proceeds from sale of property, plant and equipment			36,000		-
	Purchase of intangible assets			(5,404,637)		(416,371)
Cash used in investing activities				(7,148,649)		(3,841,831)

Financing activities
	Increase/(decrease) in bank indebtedness			1,627,939		(1,420,863)
	Decrease in obligations under finance leases			(162,439)		(97,435)
	Issuance of long-term debt			6,220,000		1,715,284
	Repayment of mortgage payable - Roynat Inc.			(3,680,037)		-
	Payment of financing costs			(190,757)		-
	Repayment of long-term debt			(1,158,860)		(39,048)
	Change in share capital, net of fees			28,499		(80,296)
	Stock options exercised			21,000		700
Cash provided by financing activities				2,705,345		78,342

Net increase/(decrease) in cash				-		-

Cash, beginning of year				-		-
Cash, end of year				-		-

Non-cash investing and financing activities:
		Acquisition of intangible assets satisfied by the issuance of a promissory note payable		2,400,000		-

Additional Information

For further details the Company's complete management discussion and analysis (MD&A) and financial statements for the year ended January 31, 2012 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 brand which it has now relaunched as Seagram Blends. Brick trades on the TSX under the symbol BRB. Visit us at www.brickbeer.com.

Forward-Looking Statements

Except for the historical information contained herein, the discussion in this press release contains certain forward-looking statements that involve risks and uncertainties, such as statements of the Company's plans, objectives, strategies, expectations and intentions and include, for example, the statements concerning expected volumes, operating efficiencies and costs. 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. These forward-looking statements are not guarantees and reflect the Company's views as of April 25, 2012 with respect to future events. Future events 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, including the statements regarding expected volumes, operating efficiencies and costs are based on, among other things, the following material factors and assumptions: sales volumes in the fiscal year ending January 31, 2013 ("fiscal 2013") will increase; no material changes in consumer preferences; brewing, blending, and packaging efficiencies will improve; the cost of input materials for brewing and blending will increase; the cost of packaging materials will decrease; competitive activity from other manufacturers will continue; no material change to the regulatory environment in which the Company operates and no material supply, cost or quality control issues with vendors. Readers are urged to consider the foregoing factors and assumptions when reading the forward-looking statements and, for more information regarding the risks, uncertainties and assumptions that could cause the Company's actual financial results to differ from the forward-looking statements, to also refer to the remainder of the discussion in this press release, the Company's annual information form and various other public filings as and when released by the Company. The forward-looking statements included in this press release are made only as of April 25, 2012 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. 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