Brick Brewing Reports Fiscal 2011 Annual Results including $3.7 Million EBITDA*

WATERLOO, ON, April 20 /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 fourth quarter and year ended January 31, 2011.

"Shareholders will once again be pleased with outstanding results for a second consecutive year. We made a commitment to deliver growth and profitability and have certainly made good on our promise", said George Croft, President and Chief Executive Officer. "In fiscal 2010, the Company realized its first profitable year since fiscal 2007, but our work did not end there. In fiscal 2011, we increased EBITDA by 23% with an annual EBITDA of $3.7 million."

"We successfully reversed the volume decline of our Brick brands, which increased by 4.5% in fiscal 2011 versus a year ago", said Mr. Croft. "Further, the Company experienced a strong turn around in the sales of its canned products. In fiscal 2011, canned beer sales volume had impressive volume growth of 97.0% compared to a decline of 20.5% in fiscal 2010".

Mr Croft continued, "We set a mandate to fill up our excess capacity of over 200,000 hectolitres. In fiscal 2011, we signed agreements to distribute Brick brands in the North-eastern United States, Atlantic Canada and British Columbia. We also had two new co-packaging customers engage us to produce and package their products. We will continue to focus on this goal during fiscal 2012."

"On March 16, 2011, Brick purchased the Canadian rights to the Seagram Coolers brand from Corby Distilleries Limited. Seagram Coolers have a strong presence and reputation across Canada and are a valuable addition to Brick, which has demonstrated leadership in co-packing ready to drink coolers since the 1990s. The Seagram Coolers brands complement and expand Brick's portfolio and will strongly position us for growth in both the beer and cooler categories. We're now able to satisfy a broader range of customers with a wider range of selection in taste and profile for those discerning drinkers. During the first year of integration, we anticipate the Seagram Brands to contribute $1 million of EBITDA."

The following is a summary of the financial highlights for the fiscal year ended January 31, 2011:

    <<
    Years ended January 31
    (in thousands of dollars except per share amounts)

                                                        2011            2010
    -------------------------------------------------------------------------

    Income Statement
    Net revenue                                       30,106          29,916
    -------------------------------------------------------------------------
    Gross profit                                       8,685           7,184
    -------------------------------------------------------------------------
    EBITDA*                                          3,727           3,049
    -------------------------------------------------------------------------
    Net income before income taxes                     1,596             895
    -------------------------------------------------------------------------
    Net income                                         2,949           1,347
    -------------------------------------------------------------------------
    Diluted earnings per share                          0.10            0.05
    -------------------------------------------------------------------------

    Balance Sheet
    Total assets                                      34,720          29,643
    -------------------------------------------------------------------------
    Shareholders' equity                              25,392          22,404
    -------------------------------------------------------------------------

    Operational Metrics
    Gross margin                                       28.8%           24.0%
    -------------------------------------------------------------------------
    EBITDA as a % of net revenue                       12.4%           10.2%
    -------------------------------------------------------------------------
    >>

Annual Financial Highlights

Net revenues for fiscal 2011 were $30.1 million, an increase of $0.2 million from fiscal 2010. Gross revenues increased 2.3% to $64.7 million for fiscal 2011, compared to $63.2 million for fiscal 2010.

The sales volumes of Brick Brands increased by 4.5% during fiscal 2011 compared to a decline of 5.0% in fiscal 2010.

Canned beer sales volumes exhibited exceptional growth of 97% during fiscal 2011, compared to a decline of 20.5% in fiscal 2010.

Laker brands increased by 11.1% during fiscal 2011, compared to a decline of 20.5% in fiscal 2010.

The volume of co-pack business increased by 6.5% in fiscal 2011 compared to a decrease of 7.5% in fiscal 2010. Excluding the PC(R) trademark, sales volumes for co-pack business increased by 41.4% during fiscal 2011.

Cost of sales was $21.4 million for fiscal 2011; a decrease of $1.3 million from the prior year. Cost of sales represented 71.1% of net revenue in fiscal 2011 compared to 76% in the prior year.

The improvement in the Company's margin is a direct result of cost cutting initiatives undertaken by senior management. Efforts to reduce the Company's environmental footprint continue to deliver significant and sustainable reductions in the consumption of water used in production; reductions of effluent discharged to municipal sewer systems; and reductions of raw material losses.

In fiscal 2011, selling, marketing and administration expenses totalled $4.9 million; an increase of $0.9 million from the previous year. Increased marketing expenditures and management bonuses of $0.5 million were primary drivers of this increase.

Fourth Quarter Highlights

During the fourth quarter of fiscal 2011 gross revenues were $14.3 million, as compared to $12.1 million in the same period last year, an increase of 18.2%. Net revenues for the fourth quarter of fiscal 2011 were $6.9 million compared to $5.7 million in the fourth quarter last year, an increase of 21.0%. Net revenues are calculated by deducting from gross revenues, the costs of distribution fees paid to The Beer Store and the Liquor Control Board of Ontario and production taxes.

Revenue growth was primarily due to the volume growth of the Laker Family, particularly with respect to cans which grew 135% in the fourth quarter compared to the same period in fiscal 2010. Volume of bottled Laker products grew 19.6% in the fourth quarter.

The Red Baron Family brand decreased by 9.9% in the fourth quarter of fiscal 2011 compared to an increase of 214% in the same period of fiscal 2010.

In the fourth quarter of fiscal 2011, Brick beer volumes increased by 14.7% over the same period last year compared to an industry decline of 1.8%. In the fourth quarter of fiscal 2010, beer volumes declined by 7%.

Gross revenues for the fourth quarter of fiscal 2011 included revenues of $0.7 million from co-pack activities, which is consistent with the same period in fiscal 2010.

Selling, marketing and administration activities costs were $1.2 million in the fourth quarter of fiscal 2011 compared to $0.9 million in the fourth quarter of fiscal 2010 mainly driven by increased bonus expense.

There was a recovery of $2.0 million of future income taxes during the fourth quarter in comparison to a recovery of $1.0 million in the fourth quarter of fiscal 2010. The recovery is due to a reduction in the valuation allowance as a result of management's expectations of continued profitability.

EBITDA* was $0.3 million in the fourth quarter of fiscal 2011, compared to a loss of $0.1 million in the fourth quarter of fiscal 2010.

Fiscal 2012 Outlook

Fiscal 2011 was another year of continuous improvement within all areas of the business. The Company's future growth and profitability will depend on management's ability to "fix, fill and optimize".

"We will strive towards minimizing costs and exceeding shareholder expectations", added Mr. Croft. "Our focus will be to continue to undertake projects that have an overarching strategic alignment with our fix, fill and optimize mandate. This will be of paramount importance during the year ahead".

The statements below should be read in conjunction with the audited annual financial statements of the Company. Certain prior year amounts have been reclassified to conform to the current year's presentation format.

    <<
                          Brick Brewing Co. Limited
                         Consolidated Balance Sheet


                                                        2011            2010
    -------------------------------------------------------------------------

    Assets
    Current assets:
      Accounts receivable                      $   4,519,591       2,357,069
      Inventories                                  5,292,747       5,251,714
      Prepaid expenses                               321,899         412,351
      Future income taxes                            720,000         566,000
    -------------------------------------------------------------------------
                                                  10,854,237       8,587,134

    Property, plant and equipment                 15,525,802      14,101,122
    Intangible assets                              6,062,187       5,731,954
    Other assets                                      45,000         188,871
    Future income taxes                            2,233,000       1,034,000
    -------------------------------------------------------------------------
                                               $  34,720,226   $  29,643,081
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Bank indebtedness                        $     371,543   $   1,792,406
      Accounts payable and accrued liabilities     5,118,947       3,187,915
      Current portion of long-term debt              624,000         816,100
      Current portion of obligations under
       capital lease                                 162,439         146,418
    -------------------------------------------------------------------------
                                                   6,276,929       5,942,839

    Long-term debt                                 3,026,731       1,158,395
    Obligations under capital lease                   24,650         138,106

    Shareholders' equity:
      Share capital                               34,598,668      34,678,264
      Contributed surplus                            891,160         772,455
    Deficit                                      (10,097,912)    (13,046,978)
    -------------------------------------------------------------------------
                                                  25,391,916      22,403,741
    Commitments
    Contingencies
    Subsequent events
    -------------------------------------------------------------------------
                                               $  34,720,226   $  29,643,081
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                          Brick Brewing Co. Limited
                Consolidated Statement of Income and Deficit


                                                        2011            2010
    -------------------------------------------------------------------------

    Gross revenue                              $  64,732,543   $  63,277,345
      Less production taxes and
       distribution fees                         (34,627,022)    (33,360,935)
    -------------------------------------------------------------------------
    Net revenue                                   30,105,521      29,916,410

    Cost of sales                                 21,420,037      22,732,433

    -------------------------------------------------------------------------
    Gross profit                                   8,685,484       7,183,977

    Selling, marketing and administration          4,917,618       4,041,627

    -------------------------------------------------------------------------
    Earnings before the undernoted                 3,767,866       3,142,350

    Other expenses:
      Depreciation and amortization                1,774,829       1,794,487
      Impairment of intangible assets                 50,000         194,280
      Interest on long-term debt and
       capital leases                                148,340         137,409
      Amortization of financing fees                 113,100          19,035
      Other                                           44,798          32,518
      Severance costs                                 40,733          69,501
    -------------------------------------------------------------------------
                                                   2,171,800       2,247,230

    -------------------------------------------------------------------------
    Net income before recovery of income taxes     1,596,066         895,120

    Future income tax recovery                    (1,353,000)       (451,560)
    -------------------------------------------------------------------------
    Net income and comprehensive income            2,949,066       1,346,680

    Deficit, beginning of period                 (13,046,978)    (14,506,098)
    Cumulative effect of adopting
     new accounting
     policies, net of tax                                  -         112,440
    -------------------------------------------------------------------------
    Deficit, beginning of period restated        (13,046,978)    (14,393,658)
    -------------------------------------------------------------------------
    Deficit, end of period                     $ (10,097,912)  $ (13,046,978)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings per share:
      Basic                                    $        0.10   $        0.05
      Diluted                                  $        0.10   $        0.05
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                          Brick Brewing Co. Limited
                    Consolidated Statement of Cash Flows


                                                        2011            2010
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
      Net income                               $   2,949,066   $   1,346,680
      Items not involving cash:
        Amortization of property, plant and
         equipment, intangibles and
         other assets                              1,862,940       1,802,587
        Impairment of intangible assets               50,000         194,280
        Stock based compensation                     118,705          98,862
        Notional interest representing accretion      10,326               -
        Future income tax recovery                (1,353,000)       (451,560)
    Change in non-cash operating working capital    (192,397)     (1,036,392)
    -------------------------------------------------------------------------
                                                   3,445,640       1,954,457
    Financing:
      Increase/(decrease) in bank indebtedness    (1,420,863)      1,792,406
      Increase/(repayment) of long-term debt       1,676,236        (904,965)
      Repayment of obligation under capital lease    (97,435)       (134,758)
      Change in capital stock (net of fees)          (80,296)         20,280
      Stock options exercised                            700               -
    -------------------------------------------------------------------------
                                                      78,342         772,963
    Investing:
      Purchase of property, plant and equipment,
       and other assets                           (3,107,610)     (2,411,793)
      Purchase of intangible assets                 (416,372)       (524,918)
    -------------------------------------------------------------------------
                                                  (3,523,982)     (2,936,711)

    -------------------------------------------------------------------------
    Net decrease in cash                                   -        (209,291)

    Cash, beginning of period                              -         209,291

    -------------------------------------------------------------------------
    Cash, end of period                                    -               -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flow information:
      Cash paid for interest                   $     181,986   $     147,608
    -------------------------------------------------------------------------
    >>

Additional Information

For further details, the Company's complete MD&A and consolidated financial statements for the year ended January 31, 2011 will be available on the investor section of the Company's 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 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 Information

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 April 20, 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 and packaging efficiencies will improve, input costs for brewing materials will decrease, the cost of packaging materials will decrease, competitive activity from other brewers 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 discussion in the MD&A, the Company's annual information form and various other public filings. The forward-looking statements included in this press release are made only as of April 20, 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-GAAP earnings measure, therefore it does not have any standardized meaning prescribed by Canadian generally accepted accounting principles or 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

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Brick Brewing Co. Limited

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