Brick Brewing Announces Second Quarter Results, Including EBITDA* of $1.8 Million

Brick beer brands deliver growth of 7.1% as industry declines 1.7% in the quarter

WATERLOO, ON, Sept. 7, 2011 /CNW/ - 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 second quarter ended July 31, 2011.

"Our core beer portfolio continued to deliver strong growth in the second quarter.  The Laker trademark, which is our largest brand family, grew 18.6% year over year," said George Croft, President and CEO.

"The Seagram Blends integration is substantially complete and we are ready to turn our focus to growth, applying the same rigor and discipline that helped Brick achieve success within its beer portfolio.  Profitability of the Seagram portfolio has met our expectations," said Croft. "Consumers will start to see new product innovation as early as December 2011," added Mr. Croft.

Financial highlights are as follows:

  • Net revenues for the second quarter of fiscal 2012 were $10.7 million compared to $9.1 million in the second quarter of fiscal 2011.
  • Sales volumes for Brick beer brands increased by 7.1% compared to the second quarter of fiscal 2011.  Brick drove this sales growth through a period of intense price competition between its largest competitors.
  • Gross profit percentage declined slightly from 30.4% to 27.7%.
    • In the second quarter the Company continued to prepare for a Global Food Safety certification, and incurred $0.1 million of incremental maintenance costs.  Once completed, Brick will be the first Canadian brewer with this distinction.
    • Continued growth of cans (64.9% in the quarter and 92.2% year to date), resulted in a shift of product mix.  Brick generates a lower margin on can sales as compared to bottles, due to the relative speed of production and aluminum costs.
  • EBITDA* for the period ended July 31, 2011 was $1.8 million, with a net income of $0.8 million.

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 first quarter ended May 1, 2011 Management Discussion & Analysis ("MD&A") and interim 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 Canadian GAAP. Certain prior year amounts in the following financial statements have been adjusted to conform to IFRS.

Reconciliation of Net Earnings to Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)*
     
(in thousands of dollars) Second quarter ended Fiscal year-to-date ended
  July 31, 2011 August 1, 2010 July 31, 2011 August 1, 2010
         
         
Net income  $ 803  $ 929  $ 669  $ 1,044
         
Add:        
  Deferred income tax expense 250 392 193 472
  Amortization 607 635 1,225 1,270
  Interest expense 186 58 349 93
Subtotal 1,043 1,085 1,767 1,835
         
EBITDA* 1,846 2,014 2,436 2,879

 

STATEMENT OF COMPREHENSIVE INCOME

For the periods ended July 31, 2011 and August 1, 2010
(Not audited or reviewed by the Company's external auditor)

  Quarter ended   Fiscal year-to-date ended
     July 31, 2011     August 1, 2010      July 31, 2011      August 1, 2010 
                       
Revenue $ 10,706,289   $ 9,111,170   $ 18,838,892   $ 16,082,314
Cost of sales   7,738,855     6,345,351     14,189,320     11,777,624
Gross profit   2,967,434     2,765,819     4,649,572     4,304,690
Selling, marketing and administration expenses   1,636,287     1,295,253     3,201,012     2,559,895
Other expenses   91,708     91,269     237,403     135,719
Finance costs, net   186,157     58,397     349,154     93,166
Income before tax   1,053,282     1,320,900     862,003     1,515,910
                       
Deferred income tax expense   250,000     392,000     193,000     472,000
Income for the period   803,282     928,900     669,003     1,043,910
                       
Total comprehensive income for the period $ 803,282   $ 928,900   $ 669,003   $ 1,043,910
                       
Basic earnings per share   0.03     0.03     0.02     0.04
Diluted earnings per share   0.03     0.03     0.02     0.04

 

STATEMENT OF FINANCIAL POSITION

As at July 31, 2011, January 31, 2011 and February 1, 2010
(Not audited or reviewed by the Company's external auditor)

 

July 31, 2011


  January 31, 2011
     Date of
Transition
to IFRS
February 1, 2010
                 
ASSETS                
  Non-current assets                
    Property, plant and equipment $ 18,212,726   $ 18,372,020   $ 17,637,515
    Intangible assets   13,838,978     6,062,187     5,731,954
    Other assets   65,000     45,000     188,871
    Deferred income tax assets   2,680,000     2,873,000     1,600,000
    34,796,704     27,352,207     25,158,340
                 
  Current assets                
    Accounts receivable   8,682,262     4,519,591     2,357,069
    Inventories   4,075,018     3,885,240     3,470,263
    Prepaid expenses   428,232     321,899     412,351
    13,185,512     8,726,730     6,239,683
TOTAL ASSETS   47,982,216     36,078,937     31,398,023
                 
LIABILITIES AND EQUITY                
  Equity                
    Share capital   34,624,528     34,598,668     34,678,264
    Share-based payments reserves   951,071     933,323     845,113
    Deficit   (8,112,361)     (8,781,364)     (11,525,275)
  TOTAL EQUITY   27,463,238     26,750,627     23,998,102
                   
  Non-current liabilities                
    Provisions   176,403     170,908     160,581
    Long-term debt and promissory note   6,517,513     3,026,731     1,158,395
    Obligations under finance leases   12,365     24,650     138,106
    6,706,281     3,222,289     1,457,082
                   
  Current liabilities                
    Bank indebtedness   2,650,990     371,543     1,792,406
    Accounts payable and accrued liabilities   9,819,010     4,948,039     3,187,915
    Current portion of long-term debt and promissory note   1,318,206     624,000     816,100
    Current portion of obligations under finance leases   24,491     162,439     146,418
    13,812,697     6,106,021     5,942,839
                     
TOTAL LIABILITIES   20,518,978     9,328,310     7,399,921
                     
TOTAL LIABILITIES AND EQUITY $ 47,982,216   $ 36,078,937   $ 31,398,023

 

STATEMENT OF CASH FLOWS

For the period ended July 31, 2011 and August 1, 2010
(Not audited or reviewed by the Company's external auditor)

  Quarter ended   Fiscal year-to-date ended
      July 31, 2011     August 1, 2010
    July 31, 2011     August 1, 2010
Operating activities                        
  Income for the period   $ 803,282   $ 928,900   $ 669,003   $ 1,043,910
  Adjustments for:                        
    Deferred income tax expense     250,000     392,000     193,000     472,000
    Finance costs, excluding accretion     183,410     55,815     343,659     88,003
    Notional interest representing accretion     2,747     2,582     5,495     5,163
    Depreciation and amortization of property, plant and
    equipment and intangibles
    607,182     635,158     1,224,795     1,270,317
    Share-based payments     9,912     22,054     22,608     44,106
    Change in non-cash working capital related to operations     34,599     (3,234,119)     376,210     (1,667,828)
  Less:                        
    Interest paid     (172,206)     (53,068)     (268,474)     (85,155)
Cash provided by/(used in) operating activities     1,718,926     (1,250,678)     2,566,296     1,170,516
                         
Investing activities                        
  Purchase of property, plant and equipment     (522,247)     (576,632)     (1,046,668)     (2,023,891)
  Decrease/(increase) of other assets     15,000     12,127     (20,000)     104,604
  Purchase of intangible assets     (170,011)     (71,548)     (5,395,624)     (100,936)
Cash used in investing activities     (677,258)     (636,053)     (6,462,292)     (2,020,223)
                         
Financing activities                        
  Increase/(decrease) in bank indebtedness     (846,054)     591,509     2,279,447     (345,457)
  Decrease in obligations under finance leases     (6,073)     (42,269)     (150,233)     (83,977)
  Proceeds from long-term debt     -     1,487,491     5,800,000     1,487,491
  Repayment of mortgage payable - Roynat Inc.     -     -     (3,680,037)     -
  Payment of financing costs     -     -     (184,640)     -
  Repayment of long-term debt     (189,541)     (150,000)     (189,541)     (208,350)
  Stock options and warrants exercised     -     -     21,000     -
Cash provided by/(used in) financing activities     (1,041,668)     1,886,731     3,895,996     849,707
                         
Net increase/(decrease) in cash     -     -     -     -
                         
Cash, beginning of period     -     -     -     -
                         
Cash, end of period     -     -     -     -
                         
Non-cash investing and financing activities:                        
                             
    Acquisition of intangible assets satisfied                        
      by the issuance of a promissory note payable     -     -     2,400,000     -
    Obligation under capital lease     -     -     -     73,321

 

Additional Information

For further details the Company's management discussion and analysis (MD&A) and unaudited consolidated financial statements for the quarter ended July 31, 2011 will be available on the investor section of the Brick Brewing website at www.brickbeer.com. 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 Brewing Co. Limited 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. The Company, founded in 1984, was the first craft brewery to start up in Ontario, and is credited with pioneering the present day craft brewing renaissance in Canada. The Company has complemented its Waterloo family of premium craft beers with other popular brands such as Laker, Red Baron, Red Cap and Formosa Springs Draft. 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 September 7, 2011 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, 2012 ("fiscal 2012") 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 decrease; 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 September 7, 2011 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

For further information:

George Croft, President and CEO, Tel: (519) 576-9519 Ext.247; E-mail: info@brickbeer.com

Profil de l'entreprise

Brick Brewing Co. Limited

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