Brick Brewing Reports Third Quarter EBITDA of $1.4M and Year-to-date EBITDA of $3.6M

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Dec 11, 2014, 06:00 ET

Third Quarter F2015 Highlights:

Net Revenues for the third quarter of fiscal 2015 were $9.3 million compared to $9.6 million in the third quarter of fiscal 2014.
Gross profit margin for the quarter finished at 26.6%, down from 31.6% in the third quarter of fiscal 2014. Year-to-date gross margin is 27.1%, up from 26.1% prior year.
Selling, Marketing and Administration ("SM&A") expenses were $1.9 million, up nominally from $1.8 million in the prior year.
EBITDA* for the third quarter of fiscal 2015 of $1.4 million compared to EBITDA in the third quarter of fiscal 2014 of $1.9 million. Year-to-date EBITDA is $3.6 million, up from $3.2 million prior year.

KITCHENER, ON, Dec. 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 third quarter of its 2015 fiscal year. Net revenues were $9.3 million for the third quarter while EBITDA for the third quarter was $1.4 million. Year-to-date, EBITDA was $3.6 million, vs $3.2 million for the prior year.

Waterloo craft brands performed well, posting volume growth exceeding 50%. Waterloo growth was broad based, with the introduction of Waterloo Grapefruit Radler being supported by growth in the core product offerings - Dark, IPA, Pilsner and Amber- as well as the Summer seasonal mix pack. Seagram vodka cooler volume was negatively impacted by discontinued product listings in the LCBO, however both Seagram cider and Seagram malt-based coolers generated strong growth in the quarter. Laker volume declined in the quarter, driven by a Laker 12 pack launch promotion in the prior year that did not repeat and an overall decline in industry volume. Additionally, the quarter benefited from strong year-over-year improvement in co-pack production. Gross margin in the quarter was impacted primarily by shifts in product mix and higher costs of brewing materials. Through the first three quarters, gross margin % has improved to 27.1% vs. 26.1% in the comparable period for the prior year.

George Croft, Brick Brewing's President and Chief Executive Officer noted, "We're very pleased with the results we're reporting today, particularly in Waterloo craft. Our focus on driving growth in this important and growing category is paying dividends. Also, last year's results were somewhat volatile quarter to quarter, and this year we expected a return to more normalized quarterly performance. This is what we've seen, with Q3 results reflecting a more traditional seasonal decline coming out of the peak summer months. The exceptional growth in our Waterloo craft premium brands, along with improvement in pricing, the attention to cost control and operating efficiency, all contributed to our strong year-to-date performance."

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)		October 26, 2014		October 27, 2013		October 26, 2014		October 27, 2013

Net income		$	609	$	683	$	848	$	280

Add (deduct):
	Income tax expense		164		227		251		89
	Depreciation and amortization		888		789		2,424		2,272
	Loss (gain) on disposal of property, plant and equipment		(446)		-		(439)		(15)
	Share-based payments		29		45		92		146
	Finance costs		111		148		415		475
Subtotal			746		1,209		2,743		2,967

EBITDA*			1,355		1,892		3,591		3,247

STATEMENTS OF COMPREHENSIVE INCOME
For the periods ended October 26, 2014 and October 27, 2013
(Not audited or reviewed by the Company's external auditor)

	Quarter ended				Fiscal year-to-date ended
	October 26, 2014		October 27, 2013		October 26, 2014		October 27, 2013

Revenue	$	9,261,324	$	9,561,744	$	27,215,971	$	29,718,744
Cost of sales	6,801,951		6,537,642		19,842,343		21,947,508
Gross profit	2,459,373		3,024,102		7,373,628		7,771,236
Selling, marketing and administration expenses	1,896,213		1,771,749		5,902,189		6,433,112
Other expenses	125,385		194,208		397,139		494,091
Finance costs	110,791		147,882		414,552		474,812
Gain on disposal of property, plant and equipment	(446,329)		-		(438,984)		-
Income before tax	773,313		910,263		1,098,732		369,221

Income tax expense	164,400		227,000		251,155		89,000
Net income and comprehensive income for the period	$	608,913	$	683,263	$	847,577	$	280,221


Basic earnings per share	$	0.02	$	0.02	$	0.02	$	0.01
Diluted earnings per share	$	0.02	$	0.02	$	0.02	$	0.01

STATEMENTS OF FINANCIAL POSITION
As at October 26, 2014 and January 31, 2014
(Not audited or reviewed by the Company's external auditor)

		October 26, 2014		January 31, 2014

ASSETS
	Non-current assets
	Property, plant and equipment	$	15,520,382	$	15,449,248
	Intangible assets	15,049,173		14,752,855
	Deferred income tax assets	2,297,577		2,548,732
		32,867,132		32,750,835

	Current assets
	Cash	2,695,180		-
	Accounts receivable	6,659,810		5,865,024
	Inventories	3,788,221		3,951,436
	Assets held for sale	-		3,406,400
	Prepaid expenses	416,270		395,559
		13,559,481		13,618,419

TOTAL ASSETS		46,426,613		46,369,254

LIABILITIES AND EQUITY
	Equity
	Share capital	39,393,721		38,955,236
	Share-based payments reserves	1,046,386		1,060,533
	Deficit	(6,654,967)		(7,502,544)
	TOTAL EQUITY	33,785,140		32,513,225

	Non-current liabilities
	Provisions	302,697		289,083
	Obligation under finance lease	1,003,382		-
	Long-term debt and promissory note	3,020,438		4,265,018
		4,326,517		4,554,101

	Current liabilities
	Bank indebtedness	-		1,694,178
	Accounts payable and accrued liabilities	6,165,756		6,050,679
	Current portion of obligation under finance lease	37,162		-
	Current portion of long-term debt and promissory note	2,112,038		1,557,071
		8,314,956		9,301,928

TOTAL LIABILITIES		12,641,473		13,856,029

COMMITMENTS

TOTAL LIABILITIES AND EQUITY		$	46,426,613	$	46,369,254

STATEMENTS OF CASH FLOWS
For the periods ended October 26, 2014 and October 27, 2013
(Not audited or reviewed by the Company's external auditor)

		Quarter ended				Fiscal year-to-date ended
		October 26, 2014		October 27, 2013		October 26, 2014		October 27, 2013

Operating activities
	Net income	$	608,913	$	683,263	$	847,577	$	280,221
	Adjustments for:
	Income tax expense	164,400		227,000		251,155		89,000
	Finance costs	110,791		147,882		414,552		474,812
	Depreciation and amortization of property, plant and equipment and intangibles	887,535		789,426		2,424,065		2,271,642
	Gain on disposal of property, plant and equipment	(446,329)		-		(438,984)		(15,093)
	Share-based payments	29,167		44,538		92,353		146,341
	Change in non-cash working capital related to operations	965,214		(1,699,060)		(112,012)		(1,835,966)
	Less:
	Interest paid	(62,036)		(128,579)		(325,729)		(403,742)
Cash provided by operating activities		2,257,655		64,469		3,152,977		1,007,215

Investing activities
	Purchase of property, plant and equipment	(1,332,332)		(478,855)		(2,489,044)		(2,452,931)
	Proceeds from sale of property, plant and equipment, net	3,356,397		-		3,356,397		203,000
	Purchase of intangible assets	(4,198)		(1,447)		(309,818)		(261,883)
Cash provided by (used in) investing activities		2,019,867		(480,302)		557,535		(2,511,814)

Financing activities
	Increase/(decrease) in bank indebtedness	(2,380,392)		1,934,615		(1,694,178)		(379,599)
	Increase in obligation under finance lease	1,040,544		-		1,040,544		-
	Issuance of long-term debt	-		-		-		1,185,912
	Repayment of long-term debt	(242,494)		(1,609,806)		(693,683)		(2,120,837)
	Issuance of shares	-		810		6,985		17,010
	Proceeds from stock option exercise	-		-		325,000		-
	Proceeds from warrants, net	-		(12,388)		-		2,802,113
Cash provided by (used in) financing activities		(1,582,342)		313,231		(1,015,332)		1,504,599

Net increase / (decrease) in cash		2,695,180		(102,602)		2,695,180		-

Cash, beginning of period		-		102,602		-		-

Cash, end of period		$	2,695,180	$	-	$	2,695,180	$	-

Additional Information

For further details the Company's complete management discussion and analysis (MD&A) and financial statements for the quarter ended October 26, 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