KITCHENER, ON–(Marketwired – December 09, 2016) –
Third Quarter Highlights:
- Net Revenue for the third quarter increased to $11.1 million compared to $9.8 million in the third quarter of fiscal 2016.
- Gross profit margin for the quarter was 34.3%, an increase from 25.7% in prior year.
- Selling, Marketing and Administration (“SM&A”) of $2.3 million, compared to prior year at $1.8 million.
- EBITDA* for the quarter increased to $2.0 million compared to EBITDA* in the third quarter of fiscal 2016 of $1.5 million.
- The Board of Directors approved an increase to the quarterly dividend, to $0.016/share, payable January 24, 2017 to shareholders of record as of January 10, 2017. The dividend is classified as an eligible dividend
Year to Date Highlights:
- Net revenue increased to $34.6 million, from $28.6 million in the prior year.
- Gross margin improved to 35.6% from 27.0% prior year.
- Selling, Marketing and Administration (“SM&A”) expenses increased to $6.9 million from $5.6 million.
- EBITDA* improved to $7.1 million year to date, up from $4.0 million in the prior year.
Brick Brewing Co. Limited (“Brick” or the “Company”) (TSX: BRB), Ontario’s largest Canadian-owned brewery, today released results for the third quarter ended October 30, 2016.
Net Revenues for the third quarter of fiscal 2017 grew to $11.1 million, up from $9.8 million in the third quarter of fiscal 2016. Gross margins for the quarter increased to 34.3% versus 25.7% in Q3 of the prior year. Margin expansion was supported by volume growth, improved product mix, strong pricing, as well as overall cost reductions in operations. EBITDA for the third quarter of fiscal 2017 improved to $2.0 million, reflecting a continuation of the strong results reported in the first half of the year.
“This was, by any measure, another tremendous quarter for Brick Brewing,” noted George Croft, President and CEO. “We’re reporting double digit growth in branded volume, co-pack revenue and net sales. We’ve been able to expand margins, increase the investment in our brands, and still deliver over 30% growth in EBITDA. Our Laker brand posted 13% volume growth while LandShark continued to resonate with consumers. Our Waterloo brand declined modestly in the quarter, due to channel inventory reductions . Counter sales for Waterloo remained strong, and are consistent with our year to date growth, up 14% vs prior year. We have been successful in growing market share, and the strong response we’ve enjoyed from our consumers has allowed us to outperform the category.”
As a result of the strength in operating and financial performance, Brick is also announcing today an increase in the quarterly dividend, to $0.016/share, up from $0.012/share. The dividend is payable January 24 to shareholders of record as of January 10, 2017. The dividend is an eligible dividend. Chief Financial Officer Sean Byrne commented, “The increase in the dividend is simply a continuation of our commitment to deliver value to shareholders. We believe it also speaks volumes about our ability to both invest in growing our business while at the same time increasing returns to shareholders.”
Croft added, “Although we are enormously pleased with our results to date, we are taking nothing for granted. We will continue to focus on executional excellence, and will be working hard to ensure a strong finish for the year.”
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, 2016.
| Reconciliation of Net Earnings to Earnings Before Interest Taxes Depreciation and Amortization, and Share Based Payments (EBITDA)* | |||||||||||||||
| Quarter ended | Fiscal year-to-date ended | ||||||||||||||
| (in thousands of dollars) | October 30, 2016 | October 25, 2015 | October 30, 2016 | October 25, 2015 | |||||||||||
| Net income | $ | 854 | $ | 492 | $ | 3,277 | $ | 1,102 | |||||||
| Add (deduct): | |||||||||||||||
| Income tax expense | 291 | 141 | 1,067 | 377 | |||||||||||
| Depreciation and amortization | 753 | 881 | 2,240 | 2,263 | |||||||||||
| Gain on disposal of property, plant and equipment | – | (197 | ) | – | (197 | ) | |||||||||
| Share-based payments | 44 | 31 | 105 | 94 | |||||||||||
| Finance costs | 103 | 122 | 386 | 357 | |||||||||||
| Subtotal | 1,191 | 978 | 3,798 | 2,894 | |||||||||||
| EBITDA* | 2,045 | 1,470 | 7,075 | 3,996 | |||||||||||
| STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||||
| For the quarters ended October 30, 2016 and October 25, 2015 | ||||||||||||||
| (Not audited or reviewed by the Company’s external auditor) | ||||||||||||||
| Quarter ended | Fiscal year-to-date ended | |||||||||||||
| October 30, 2016 | October 25, 2015 | October 30, 2016 | October 25, 2015 | |||||||||||
| Revenue | $ | 11,106,289 | $ | 9,829,613 | $ | 34,636,967 | $ | 28,573,912 | ||||||
| Cost of sales | 7,302,657 | 7,302,829 | 22,317,110 | 20,850,298 | ||||||||||
| Gross profit | 3,803,632 | 2,526,784 | 12,319,857 | 7,723,614 | ||||||||||
| Selling, marketing and administration expenses | 2,349,468 | 1,828,723 | 6,938,887 | 5,649,363 | ||||||||||
| Other expenses | 205,192 | 140,642 | 650,592 | 435,259 | ||||||||||
| Finance costs | 103,043 | 121,779 | 385,595 | 357,011 | ||||||||||
| Gain on disposal of property,plant and equipment | – | (196,912 | ) | (196,912 | ) | |||||||||
| Income before tax | 1,145,929 | 632,552 | 4,344,783 | 1,478,893 | ||||||||||
| Income tax expense | 291,495 | 141,082 | 1,067,360 | 376,839 | ||||||||||
| Net income and comprehensive income | $ | 854,434 | $ | 491,470 | $ | 3,277,423 | $ | 1,102,054 | ||||||
| Basic earnings per share | 0.02 | $ | 0.01 | 0.09 | $ | 0.03 | ||||||||
| Diluted earnings per share | 0.02 | $ | 0.01 | 0.09 | $ | 0.03 | ||||||||
| STATEMENTS OF FINANCIAL POSITION | ||||||||||
| As at October 30, 2016 and January 31, 2016 | ||||||||||
| (Not audited or reviewed by the Company’s external auditor) | ||||||||||
| October 30, 2016 | January 31, 2016 | |||||||||
| ASSETS | ||||||||||
| Non-current assets | ||||||||||
| Property, plant and equipment | $ | 21,442,784 | $ | 21,986,070 | ||||||
| Intangible assets | 15,446,064 | 15,375,392 | ||||||||
| Equipment Deposits | 940,000 | – | ||||||||
| Deferred income tax assets | 195,409 | 1,262,769 | ||||||||
| 38,024,257 | 38,624,231 | |||||||||
| Current assets | ||||||||||
| Cash | 1,058,357 | 393,645 | ||||||||
| Accounts receivable | 8,064,326 | 6,176,421 | ||||||||
| Inventories | 4,923,030 | 3,291,529 | ||||||||
| Prepaid expenses | 700,243 | 354,650 | ||||||||
| 14,745,956 | 10,216,245 | |||||||||
| TOTAL ASSETS | 52,770,213 | 48,840,476 | ||||||||
| LIABILITIES AND EQUITY | ||||||||||
| Equity | ||||||||||
| Share capital | 39,784,425 | 39,526,573 | ||||||||
| Share-based payments reserves | 910,387 | 932,200 | ||||||||
| Deficit | (2,916,793 | ) | (4,933,195 | ) | ||||||
| TOTAL EQUITY | 37,778,019 | 35,525,579 | ||||||||
| Non-current liabilities | ||||||||||
| Provisions | 405,836 | 388,548 | ||||||||
| Obligation under finance lease | 3,969,824 | 4,523,152 | ||||||||
| Long-term debt | 2,690,640 | 1,548,584 | ||||||||
| 7,066,300 | 6,460,284 | |||||||||
| Current liabilities | ||||||||||
| Accounts payable and accrued liabilities | 6,454,797 | 4,908,722 | ||||||||
| Current portion of obligation under finance lease | 734,299 | 713,699 | ||||||||
| Current portion of long-term debt | 736,798 | 1,232,192 | ||||||||
| 7,925,894 | 6,854,613 | |||||||||
| TOTAL LIABILITIES | 14,992,194 | 13,314,897 | ||||||||
| COMMITMENTS | ||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 52,770,213 | $ | 48,840,476 | ||||||
| STATEMENTS OF CASH FLOW | ||||||||||||||||||
| For the quarters ended October 30, 2016 and October 25, 2015 | ||||||||||||||||||
| (Not audited or reviewed by the Company’s external auditor) | ||||||||||||||||||
| Quarter ended | Fiscal year-to-date ended | |||||||||||||||||
| October 30, 2016 | October 25, 2015 | October 30, 2016 | October 25, 2015 | |||||||||||||||
| Operating activities | ||||||||||||||||||
| Net income | $ | 854,434 | $ | 491,470 | $ | 3,277,423 | $ | 1,102,054 | ||||||||||
| Adjustments for: | ||||||||||||||||||
| Income tax expense | 291,495 | 141,082 | 1,067,360 | 376,839 | ||||||||||||||
| Finance costs | 103,043 | 121,779 | 385,595 | 357,011 | ||||||||||||||
| Depreciation and amortization of property, plant and equipment and intangibles | 753,154 | 881,271 | 2,240,006 | 2,263,243 | ||||||||||||||
| Gain on disposal of property, plant and equipment | – | (196,912 | ) | – | (196,912 | ) | ||||||||||||
| Share-based payments | 44,157 | 30,527 | 105,100 | 94,448 | ||||||||||||||
| Change in non-cash working capital related to operations | 56,623 | 1,681,820 | (2,320,224 | ) | 591,094 | |||||||||||||
| Less: | ||||||||||||||||||
| Interest paid | (103,603 | ) | (214,730 | ) | (308,583 | ) | (325,861 | ) | ||||||||||
| Cash provided by operating activities | 1,999,303 | 2,936,307 | 4,446,677 | 4,261,916 | ||||||||||||||
| Investing activities | ||||||||||||||||||
| Purchase of property, plant and equipment | (579,491 | ) | (831,658 | ) | (1,681,420 | ) | (2,151,101 | ) | ||||||||||
| Equipment deposit paid | (940,000 | ) | (111,293 | ) | (940,000 | ) | (936,595 | ) | ||||||||||
| Proceeds from sale of property, plant and equipment, net | – | 322,490 | – | 322,490 | ||||||||||||||
| Purchase of intangible assets | (18,339 | ) | (15,692 | ) | (85,972 | ) | (277,784 | ) | ||||||||||
| Cash used in investing activities | (1,537,831 | ) | (636,153 | ) | (2,707,392 | ) | (3,042,990 | ) | ||||||||||
| Financing activities | ||||||||||||||||||
| Increase in bank indebtedness | – | (1,351,117 | ) | – | – | |||||||||||||
| Issuance of long-term debt | – | – | 2,000,000 | – | ||||||||||||||
| Repayment of long-term debt | (180,321 | ) | (355,042 | ) | (1,411,762 | ) | (1,122,835 | ) | ||||||||||
| Repayment of obligation under finance lease | (179,263 | ) | (132,741 | ) | (532,728 | ) | (132,741 | ) | ||||||||||
| Dividends paid | (421,320 | ) | – | (1,261,021 | ) | – | ||||||||||||
| Issuance of shares, net of fees | 2,490 | 4,750 | 10,458 | 9,975 | ||||||||||||||
| Shares repurchased and cancelled, including fees | (3,883 | ) | (76,353 | ) | (54,197 | ) | (178,651 | ) | ||||||||||
| Proceeds from stock option exercise | 138,850 | 904 | 174,677 | 904 | ||||||||||||||
| Cash used in financing activities | (643,447 | ) | (1,909,599 | ) | (1,074,573 | ) | (1,423,348 | ) | ||||||||||
| Net increase/(decrease) in cash | (181,975 | ) | 390,554 | 664,712 | (204,422 | ) | ||||||||||||
| Cash, beginning of the period | 1,240,332 | – | 393,645 | 594,976 | ||||||||||||||
| Cash, end of the period | $ | 1,058,357 | $ | 390,554 | $ | 1,058,357 | $ | 390,554 | ||||||||||
| Non-cash investing and financing activities: | ||||||||||||||||||
| Acquisition of assets under finance lease | $ | – | $ | 805,878 | $ | – | $ | 4,208,021 | ||||||||||
1. The purchase of property, plant and equipment excludes assets held under finance lease
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 the Global Food Safety Standard, 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 premium craft beers with the popular Laker brand. In 2011, Brick purchased the Canadian rights to Seagram Coolers and in 2015, secured the exclusive Canadian rights to both LandShark and Margaritaville. In addition, Brick utilizes its leading edge brewing, blending and packaging capabilities to provide an extensive array of contract manufacturing services in beer, coolers and ciders. 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 Corporation 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 Corporation 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.
For further information:
Sean Byrne
Chief Financial Officer
(519) 742-2732 Ext.132
E-mail: info@brickbeer.com