Big Rock Brewery Inc. Announces Second Quarter Financial Results

CALGARY, Aug. 4, 2016 /CNW/ - Big Rock Brewery Inc. (TSX: BR) ("Big Rock" or the "Corporation") announced its financial results today for the three and six months ended June 30, 2016. 

The Corporation reported an increase in sales volumes of 14% to 57,084 hectolitres ("hl") for the second quarter of 2016 as compared to 50,051 hl for the same period in 2015, the fifth consecutive quarter of volume growth. Wholesale revenue increased by $1.2 million to $11.7 million for the same period. The reported operating profit was $656 thousand for the three months ended June 30, 2016, compared to an operating loss of $304 thousand for the same period in 2015, while net income was $382 thousand for the second quarter of 2016 as compared to a net loss of $473 thousand for the second quarter in 2015.

Big Rock's CEO, Robert Sartor, commented, "We continue to see strong volume growth which has translated into bottom-line growth for the second quarter of well over $900 thousand compared to the same period last year. However, while we are pleased with the return to profitability, we know we can do more."

Big Rock grew volumes and gross profit in Alberta, the Company's largest market and the province with the greatest competition in Canada, while at the same time keeping selling expenses below the same periods in 2015. Several new products were successfully launched or relaunched in the quarter, including Mosaic Lager and Purple Gas. These join the successful new products launched earlier in the year, including Citradelic single-hop IPA and a new Rock Creek Peach Cider. Additionally, new and rebranded private label beers, launched late last year, and AGD, Big Rock's most approachable lager continued to see strong consumer demand.

The enthusiastic response to the rebranding and relaunching of these lower-priced products has compressed average margins, which also remain under sustained pressure as a result of two changes to markup rates in 2015 which combined represented a 20.5% increase in Alberta Gaming and Liquor Commission ("AGLC") markup rates as compared to the previous year. Subsequent changes announced on July 12 and July 28, 2016 will replace Alberta's graduated mark-up rate with a flat rate of $1.25 per litre plus a new grant program for Alberta breweries that will be administered by Alberta Agriculture and Forestry. These changes are due to take effect on August 5, 2016. Although the combined impact of the flat mark-up rate and the grant program is expected to result in an effective net rate that is slightly higher on average than the graduated rate which has applied to Big Rock's business in Alberta, the longer-term implications are being assessed.

In British Columbia, Big Rock's Vancouver brewery increased volumes for the three months ended June 30, 2016 by 77%. Big Rock's Ontario expansion continues to progress, with construction activity underway at the Etobicoke brewery site which is expected to open during the third quarter of 2016. The Liberty Village brewpub has now entered the construction stage is expected to open in the fourth quarter of 2016.

Robert Sartor noted, "Our brewpub in Vancouver has proven itself to be an engine of innovation, providing us with two exciting new national brands, Citradelic IPA and Mosaic Lager, barely a year after opening our doors. Now we have to focus on bringing the brewpub out of its startup phase and into full profitability."

Summary of Results


Three months ended

June 30

Six months ended

June 30

$ thousands (unless otherwise stated)

2016

2015

2016

2015

Sales volumes (hl)

57,084

50,051

99,228

84,032

Net revenue

12,291

11,105

21,335

18,242

Operating profit (loss)

656

(304)

(462)

(1,135)

Net income (loss)

382

(473)

(400)

(1,097)

Per hl net wholesale revenue

205.77

210.43

204.52

209.40

Per hl wholesale cost of sales

109.96

114.70

113.23

112.39

 

Financial and Operating Highlights

  • Volume, revenue, and gross profit growth occurred in Big Rock's largest market, Alberta, with the launch, or relaunch, of Purple Gas and the Vancouver-developed Mosaic Lager, together with continued growth of Citradelic and Rock Creek Peach Cider launched in the first quarter;

  • In addition to the new products launched in the second quarter, Big Rock expects to release limited-edition products from Calgary, Vancouver, and Etobicoke, during the remainder of 2016;

Additional Information

The Financial Statements and Management's Discussion and Analysis dated August 4, 2016 can be viewed on Big Rock's website at http://bigrockbeer.com/sites/default/files/2016q2.pdf and on SEDAR at sedar.com under Big Rock Brewery Inc.

Forward-Looking Information

Certain statements contained in this News Release constitute forward-looking statements. These statements relate to future events or Big Rock's future performance. All statements, other than statements of historical fact, may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "plans", "expects", "intends" and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Big Rock believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this News Release not be unduly relied upon by investors as actual results may vary materially from such forward-looking statements. These statements speak only as of the date of this News Release and are expressly qualified, in their entirety, by this cautionary statement.

In particular, this News Release contains forward-looking statements pertaining to the following:

  • the number of additional limited edition products to be released;

  • the combined impact of the flat mark-up rate and the grant program on Big Rock's business in Alberta;

  • the success of new products and initiatives in the future; and

  • the timing of new products and initiatives and the extent to which they will provide incremental sales volumes and improve profitability.

With respect to the forward-looking statements listed above and contained in this News Release, management has made assumptions regarding, among other things:

  • new products and services introduced will result in incremental sales volumes; and

  • permitting and other construction activities will be able to be secured and/or completed within expected timeframes.

Some of the risks which could affect future results and could cause results to differ materially from those expressed in the forward-looking information and statements contained herein include, but are not limited to:

  • the inability to secure the requisite regulatory approvals to market the full production of the new facilities in Toronto within the timeframe indicated; and

  • the inability to secure and complete construction services for the new facility within the timeframe indicated.

Readers are cautioned that the foregoing list of assumptions and risk factors is not exhaustive.  The forward-looking information and statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking information and statements included in this News Release are made as of the date hereof and Big Rock does not undertake any obligation to publicly update such forward-looking information and statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws.

About Big Rock Brewery Inc.

Big Rock Brewery Inc. produces premium, all-natural craft beers. Big Rock has a broad family of permanent ales and lagers, the Rock Creek Cider® series of craft ciders and an ongoing selection of seasonal and cutting-edge, small-batch brews. Big Rock brews in Calgary, Alberta and Vancouver, British Columbia.

For more information on Big Rock Brewery visit bigrockbeer.com

SOURCE Big Rock Brewery Inc.

Image with caption: "Big Rock Brewery Inc. (CNW Group/Big Rock Brewery Inc.)". Image available at: http://photos.newswire.ca/images/download/20160804_C1041_PHOTO_EN_747991.jpg

For further information: Robert Sartor, President and Chief Executive Officer, or Barbara Feit, Chief Financial Officer: Phone: (403) 720 3239, Fax: (403) 720 3641, investors@bigrockbeer.com

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