Brick Brewing Announces Record EBITDA of $4.6M for Fiscal 2014

Highlights:

  • Net Revenues for the full year were $37.7 million, up 7% vs $35.3 million for fiscal 2013.
  • Full year gross margin improved to 26.1% from 24.4% in fiscal 2013.  Improved margins are the result of improved pricing, favorable product mix, cost control efforts, and efficiency gains on increasing volumes.
  • Selling, Marketing and Administration ("SM&A") expenses increased to $7.8 million in fiscal 2014, up from $7.0 million in fiscal 2013, the result of investment to support Waterloo, Seagram and Laker brands.
  • Fiscal 2014 EBITDA* increased 15% to $4.6 million compared to EBITDA* reported for fiscal 2013 of $4.0 million.
  • Company intends to sell land and building in Waterloo, expand in Kitchener.

KITCHENER, ON, April 17, 2014 /CNW/ - Brick Brewing Co. Limited ("Brick" or the "Company") (TSX: BRB), the largest Canadian-owned brewery in Ontario, today released financial results for the fourth quarter and year ended January 31, 2014. Brick posted record annual EBITDA of $4.6 million on net revenue of $37.7 million. Note that fiscal 2014 results include the impact of a $0.7 million correction to Ontario beer tax expense.

"We put up a great result in fiscal 2014. Our team was successful in growing revenues and volumes, especially in our premium Waterloo and Seagram brands. The growth in premium brands coupled with our continued focus on cost reductions allowed us to expand margins, overcome the impact of the beer tax correction and still post record EBITDA." said George Croft, President and CEO at Brick.

In fiscal 2014 Brick increased marketing support for its proprietary brands - Laker, Waterloo and Seagram. The combination of new product introductions, and increased advertising and promotions, including free can-in-case, generated volume growth across the brand portfolio. Laker volume for the year grew by 4.5%, benefitting from the launch of Laker 12 pack bottles earlier in the year.  Product launches in both ciders and malt-based coolers under the Seagram brand drove volume 4.8% higher, a strong result considering that fourth quarter of fiscal 2013 included volume from the initial launch of malt-based coolers.  Expansion of Waterloo's seasonal mix-pack offering led to volume growth of 35.3% in fiscal 2014.

Going further, Mr. Croft added, "We feel we have a winning formula and the results bear that out: an improving product mix with higher growth in premium categories, a relentless determination to drive cost out of the business, a commitment to support and build our proprietary brands, and the discipline to manage the business to deliver the growth our shareholders expect and deserve."

Brick is also announcing today its intent to sell its land and building on King Street in Waterloo.  Management expects to complete a sale of the property within fiscal 2015. Through a combination of sale proceeds and debt, the Company intends to invest in its operations at its Kitchener location.  "Expansion in Kitchener would allow us to simplify our operating footprint and deliver meaningful recurring cost savings," noted Russell Tabata, Chief Operating Officer at Brick, "as well as allowing us to remain competitive and invest in our brands." Brick expects to begin to realize cost savings on the Kitchener expansion once the project is complete, targeted in fiscal 2016.

The following financial information 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, and Share Based Payments (EBITDA)*

     Fiscal year ended 
(in thousands of dollars)   January 31, 2014   January 31, 2013
         
Net income $   525 $   351
         
Add:        
  Income tax expense   201   234
  Depreciation and amortization   2,966   2,593
  Share-based payments   195   168
  Finance costs   692   667
Subtotal   4,054   3,662
         
EBITDA*   4,579   4,013


STATEMENTS OF COMPREHENSIVE INCOME
Years ended January 31, 2014 and 2013

       January 31, 2014      January 31, 2013
             
Revenue   $   37,673,606   $   35,294,967
Cost of sales     27,857,161     26,674,244
Gross profit     9,816,445     8,620,723
Selling, marketing and administration expenses     7,770,727     6,971,418
Other expenses     626,887     397,693
Finance costs     692,156     666,579
Income before tax     726,675     585,033
             
Income tax expense     201,476     234,000
Net income and comprehensive
   income for the period
  $   525,199   $   351,033
             
             
Basic earnings per share   $   0.02   $   0.01
Diluted earnings per share   $   0.02   $   0.01


STATEMENTS OF FINANCIAL POSITION
As at January 31, 2014 and 2013

      January 31, 2014     January 31, 2013 
             
ASSETS            
  Non-current assets            
    Property, plant and equipment   $    15,449,248     19,109,603
    Intangible assets     14,752,855     14,259,612
    Other assets     -     25,000
    Deferred income tax assets     2,548,732     2,746,925
      32,750,835     36,141,140
             
  Current assets            
    Accounts receivable     5,865,024     5,187,785
    Inventories     3,951,436     4,013,375
    Assets held for sale     3,406,400     -
    Prepaid expenses     395,559     296,180
      13,618,419     9,497,340
TOTAL ASSETS     46,369,254     45,638,480
             
LIABILITIES AND EQUITY            
  Equity            
    Share capital     38,955,236     35,895,873
    Share-based payments reserves     1,060,533     1,092,414
    Deficit     (7,502,544)     (8,027,743)
  TOTAL EQUITY     32,513,225     28,960,544
             
  Non-current liabilities            
    Provisions     289,083     326,646
    Long-term debt and promissory note     4,265,018     6,078,719
      4,554,101     6,405,365
             
  Current liabilities            
    Bank indebtedness     1,694,178     2,310,809
    Accounts payable and accrued liabilities     6,050,679     6,306,292
    Current portion of long-term debt and promissory note     1,557,071     1,655,470
      9,301,928     10,272,571
TOTAL LIABILITIES     13,856,029     16,677,936
             
COMMITMENTS            
             
TOTAL LIABILITIES AND EQUITY    $   46,369,254    $   45,638,480

 

STATEMENTS OF CASH FLOWS
Years ended January 31, 2014 and 2013

       January 31, 2014       January 31, 2013 
             
Operating activities            
  Net income   $    525,199   $   351,033
  Adjustments for:            
    Income tax expense     201,476     234,000
    Finance costs     692,156     666,579
    Depreciation and amortization of property, plant and
equipment and intangibles
    2,995,060     2,570,596
    Loss (gain) on disposal of property, plant and equipment     (29,331)     22,660
    Share-based payments     194,588     167,646
    Change in non-cash working capital related to operations     (979,470)     (903,726)
  Less:            
    Interest paid     (595,734)     (581,843)
Cash provided by operating activities     3,003,944     2,526,945
             
Investing activities            
  Purchase of property, plant and equipment     (2,982,916)     (3,917,277)
  Proceeds from sale of property, plant and equipment     206,500     5,260
  Purchase of intangible assets     (503,772)     (468,121)
Cash used in investing activities     (3,280,188)     (4,380,138)
             
Financing activities            
  Increase/(decrease) in bank indebtedness     (620,036)     297,709
  Decrease in obligation under financial lease     -     (24,650)
  Issuance of long-term debt     1,578,543     1,834,938
  Repayment of long-term debt     (3,515,157)     (1,452,525)
  Issuance of shares     30,781     16,938
  Proceeds from warrants, net     2,802,113     1,180,783
Cash provided by financing activities     276,244     1,853,193
             
Net increase/(decrease) in cash     -     -
             
Cash, beginning of period     -     -
                 
Cash, end of period     -   $   -

Additional Information

For further details the Company's complete management discussion and analysis (MD&A) and financial statements for the year ended January 31, 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 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.

 

SOURCE Brick Brewing Co. Limited

For further information:

Sean Byrne, Chief Financial Officer, Tel: (519) 742-2732 Ext.132; E-mail: info@brickbeer.com