Brick Brewing Reports Second Quarter EBITDA of $3.1M
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E-mailKITCHENER, ON -- (Marketwired) -- 09/09/16 --
Second Quarter Highlights:
- Net revenue increased to $14.0 million, from $11.0 million in the prior year.
- Gross margin improved to 37.0% from prior year of 28.1% (and 29.8% prior year excluding 1x cost).
- Selling, Marketing and Administration ("SM&A") expenses increased to $2.7 million from $2.0 million.
- EBITDA* improved to $3.1 million in the quarter, up from $1.7 million in prior year.
- The Board of Directors approved the quarterly dividend, $0.012/share, payable October 25, 2016 to shareholders of record as of October 11, 2016. The dividend is classified as an eligible dividend.
First Half Highlights:
- Net revenue increased to $23.5 million, from $18.7 million in the prior year.
- Gross margin improved to 36.2% from prior year of 27.7% (and 28.8% prior year excluding 1x cost).
- Selling, Marketing and Administration ("SM&A") expenses increased to $4.6 million from $3.8 million.
- EBITDA* improved to $5.0 million year to date, up from $2.5 million in the prior year.
Brick Brewing Co. Limited ("Brick" or the "Company") (TSX: BRB), Ontario's largest Canadian-owned brewery, today released financial results for the second quarter ended July 31, 2016. Brick reported EBITDA of $3.1 million on net revenue of $14.0 million.
"In the second quarter we continued to focus on building a stronger, broader and more premium brand portfolio, which included incremental sales and marketing investments. The second quarter saw continued strong momentum in our Laker brand with volume up 14% vs prior year, while Waterloo volume grew by 20%. The commercial launch of LandShark has been an unprecedented success. The response from consumers has been simply tremendous. As a result of the initial strong performance of LandShark in The Beer Store, we have expanded distribution late in the second quarter to both LCBO and grocery channel in Ontario," said George Croft, Brick President and Chief Executive Officer.
"Seagram volume softened in the quarter driven by reduced channel inventory and intense competition in the cooler and cider categories. The recent regulatory change in the province to allow the sale of cider in grocery stores will be positive for the brand going forward," Croft added.
Branded volume growth, strength in co-pack production, favorable pricing and improved efficiencies in the Kitchener location associated with last year's capital expansion all contributed to the strong margin improvement, with gross margin in the quarter of 37.0%, vs. 28.1% prior year.
Brick's board of directors has also approved the quarterly dividend, at $0.012/share. The October payment will mark the fourth consecutive quarter for the dividend, since introduction in December 2015.
"As we move into the second half of our year we are pushing hard to continue to deliver improving results," noted Croft. "Laker, Waterloo, LandShark are all performing well, our co-pack business is strong, and we remain disciplined in our approach to improving our cost structure. The second round of grocery store licenses will be awarded this fall bringing the total number of stores to approximately 130 from the existing 60, and we will continue to work with grocery accounts to secure listings and support for our premium brands."
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)*
Fiscal year-to-date
Quarter ended ended
-----------------------------------------------
July 31, July 26, July 31, July 26,
(in thousands of dollars) 2016 2015 2016 2015
----------------------------------------------------------------------------
Net income $ 1,635 $ 580 $ 2,423 $ 610
Add (deduct):
Income tax expense
(recovery) 438 218 776 236
Depreciation and
amortization 820 699 1,486 1,382
Share-based payments 34 34 61 64
Finance costs 164 123 283 235
----------------------------------------------------------------------------
Subtotal 1,456 1,074 2,606 1,917
EBITDA* 3,091 1,654 5,029 2,527
----------------------------------------------------------------------------
STATEMENTS OF COMPREHENSIVE INCOME
For the quarters ended July 31, 2016 and July 26, 2015
(Not audited or reviewed by the Company's external auditor)
Fiscal year-to-date
Quarter ended ended
-----------------------------------------------
July 31, July 26, July 31, July 26,
2016 2015 2016 2015
----------------------------------------------------------------------------
Revenue $14,010,744 $11,037,366 $23,530,678 $18,744,299
Cost of sales 8,826,721 7,932,292 15,014,453 13,547,469
----------------------------------------------------------------------------
Gross profit 5,184,023 3,105,074 8,516,225 5,196,830
----------------------------------------------------------------------------
Selling, marketing and
administration expenses 2,708,217 2,046,195 4,589,419 3,820,640
Other expenses 238,980 137,496 445,400 294,617
Finance costs 164,190 123,630 282,552 235,232
----------------------------------------------------------------------------
Income before tax 2,072,636 797,753 3,198,854 846,341
----------------------------------------------------------------------------
Income tax expense 438,000 217,947 775,865 235,757
----------------------------------------------------------------------------
Net income and comprehensive
income for the quarter $ 1,634,636 $ 579,806 $ 2,422,989 $ 610,584
----------------------------------------------------------------------------
Basic earnings per share 0.05 $ 0.02 $ 0.07 $ 0.02
Diluted earnings per share 0.05 $ 0.02 $ 0.07 $ 0.02
----------------------------------------------------------------------------
STATEMENTS OF FINANCIAL POSITION
As at July 31, 2016 and January 31, 2016
(Not audited or reviewed by the Company's external auditor)
July 31, January 31,
2016 2016
----------------------------------------------------------------------------
ASSETS
Non-current assets
Property, plant and equipment $21,611,347 $21,986,070
Intangible assets 15,432,825 15,375,392
Deferred income tax assets 486,904 1,262,769
----------------------------------------------------------------------------
37,531,076 38,624,231
----------------------------------------------------------------------------
Current assets
Cash 1,240,332 393,645
Accounts receivable 10,172,232 6,176,421
Inventories 4,651,502 3,291,529
Prepaid expenses 776,471 354,650
----------------------------------------------------------------------------
16,840,537 10,216,245
----------------------------------------------------------------------------
TOTAL ASSETS 54,371,613 48,840,476
----------------------------------------------------------------------------
LIABILITIES AND EQUITY
Equity
Share capital 39,586,229 39,526,573
Share-based payments reserves 926,969 932,201
Deficit (3,349,907) (4,933,195)
----------------------------------------------------------------------------
TOTAL EQUITY 37,163,291 35,525,579
----------------------------------------------------------------------------
Non-current liabilities
Provisions 400,075 388,548
Obligation under finance lease 4,156,019 4,523,152
Long-term debt 2,877,493 1,548,584
----------------------------------------------------------------------------
7,433,587 6,460,284
----------------------------------------------------------------------------
Current liabilities
Accounts payable and accrued liabilities 8,317,557 4,908,722
Current portion of obligation under finance
lease 727,367 713,699
Current portion of long-term debt 729,811 1,232,192
----------------------------------------------------------------------------
9,774,735 6,854,613
----------------------------------------------------------------------------
TOTAL LIABILITIES 17,208,322 13,314,897
----------------------------------------------------------------------------
COMMITMENTS
TOTAL LIABILITIES AND EQUITY $54,371,613 $48,840,476
----------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
For the quarters ended July 31, 2016 and July 26, 2015
(Not audited or reviewed by the Company's external auditor)
Quarter ended Fiscal year-to-date ended
---------------------------------------------------
July 31, July 26, July 31, July 26,
2016 2015 2016 2015
----------------------------------------------------------------------------
Operating activities
Net income $ 1,634,636 $ 579,806 $ 2,422,989 $ 610,584
Adjustments for:
Income tax expense 438,000 217,947 775,865 235,757
Finance costs 164,190 123,630 282,552 235,232
Depreciation and
amortization of
property, plant and
equipment and
intangibles 820,084 699,288 1,486,852 1,381,972
Share-based payments 34,184 34,395 60,943 63,921
Change in non-cash
working capital
related to
operations (1,536,856) (1,772,396) (2,376,846) (1,090,724)
----------------------------------------------------------------------------
Less:
Interest paid (100,859) (17,286) (204,980) (111,133)
----------------------------------------------------------------------------
Cash provided by (used
in) operating
activities 1,453,379 (134,616) 2,447,375 1,325,609
Investing activities
Purchase of property,
plant and equipment (486,211) (766,784) (1,101,929) (1,319,445)
Construction deposit
paid - (205,119) - (825,302)
Purchase (refund) of
intangible assets (1,613) 15,737 (67,633) (262,090)
----------------------------------------------------------------------------
Cash used in investing
activities (487,824) (956,166) (1,169,562) (2,406,837)
Financing activities
Increase in bank
indebtedness - 1,351,117 - 1,351,117
Issuance of long-term
debt - - 2,000,000 -
Repayment of long-term
debt (593,055) (544,691) (1,231,441) (767,793)
Repayment of
obligation under
finance lease (177,571) - (353,465) -
Dividends paid (839,701) - (839,701) -
Issuance of shares,
net of fees - - 7,968 5,225
Shares repurchased and
cancelled, including
fees (49,259) (83,817) (50,314) (102,298)
Proceeds from stock
option exercise 31,893 - 35,827 -
----------------------------------------------------------------------------
Cash provided by (used
in) financing
activities (1,627,693) 722,609 (431,126) 486,251
Net increase/(decrease)
in cash (662,138) (368,172) 846,687 (594,976)
Cash, beginning of the
period 1,902,470 368,172 393,645 594,976
----------------------------------------------------------------------------
Cash, end of the period $ 1,240,332 $ - $ 1,240,332 $ -
----------------------------------------------------------------------------
Non-cash investing and
financing activities:
Acquisition of assets
under finance lease $ - $ 963,093 $ - $ 3,402,145
----------------------------------------------------------------------------
1. The purchase of property, plant and equipment excludes assets held under
finance lease
Additional Information
Further details on the Company's complete management discussion and analysis (MD&A) and financial statements for the quarter ended July 31, 2016 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 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.
Contact InformationFor further information:Sean ByrneChief Financial Officer(519) 742-2732 Ext.132E-mail: [email protected]
Source: Brick Brewing Co. Limited
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