Brick Brewing reports first quarter results



    WATERLOO, ON, June 12 /CNW/ - Brick Brewing Co. Limited (TSX:BRB)
Ontario's largest Canadian-owned and Canadian-based publicly held brewery
today released its first quarter financial results for the quarter ended
April 30, 2007.

    First Quarter Financial Highlights

    Gross revenues for the first quarter of fiscal 2008 were $15.6 million as
compared to $16.1 million a decrease of 2.9%.
    Net revenues for the first quarter of fiscal 2008 were $6.9 million
compared to $7.7 million in the first quarter of fiscal 2007, a decrease of
10.3%, due primarily to increased production taxes paid compared to the same
period last year. These increased production taxes negatively impacted net
revenues by $326 thousand in increased marginal production taxes compared to
the same quarter last year. These increased per unit production taxes are due
to the Company no longer benefiting from the Ontario small brewer tax
reduction in fiscal 2008. The Ontario small brewer tax reduction reduced
provincial taxes payable for the Company by a total of $2.6 million in fiscal
2007.
    In the quarter, the Company's overall beer volumes decreased by 6% over
the same period last year. A portion of the lower volumes related to less
price promotion activity in the recent quarter when compared with Fiscal 2007.
However, one of the causes for the decrease in sales volume was difficulties
encountered by Brick in implementing marketing initiatives at The Beer Store.
The decrease was partially offset by a strong increase in volume through the
LCBO channel.
    An earnings before interest, taxes, depreciation and amortization
(EBITDA) was a loss of $771 thousand compared to $630 thousand in the same
quarter last year.
    For the first quarter ended April 30, 2007, Brick recorded a net loss of
$898 thousand compared to net earnings of $126 thousand for the same period
last year. Recovery of future income taxes was $448 thousand in the first
quarter this year compared to a future income expense of $65 thousand in the
same period last year.
    "One of the causes for the decrease in sales volume were difficulties
encountered by Brick in implementing marketing initiatives at The Beer Store,"
said Doug Berchtold, President and CEO. "We intend to continue to take all
necessary steps to maintain the competitiveness of our products at TBS, and
have developed a number of marketing and selling strategies for that purpose."

    Cost of Goods Sold

    Cost of goods sold was $6.0 million for the first quarter ended April 30,
2007, up from $5.4 million last year. The per unit cost of producing and
distributing beer increased by 16% or $841 thousand in the aggregate in the
quarter compared to the same quarter last year.
    "Cost of goods sold in the first quarter of fiscal 2008 reflects higher
material and other input costs of $198 thousand compared to last year,"
Berchtold stated. "These higher costs were primarily for aluminum cans and
brewing and packaging materials. We are taking efficiency measures to offset
these increased costs by consolidating packaging activities into the Kitchener
facility, increasing the selling price on certain products and re-sourcing
certain inputs."
    The Company experienced increased per unit variable manufacturing costs
of $334 thousand in the first quarter this year compared to the same period
last year. During the quarter the Company packaged all beer in the Kitchener
facility. This transition of remaining SKUs from Formosa added complexity to
the Kitchener packaging line. The Company anticipates a reduction in these
costs as efficiencies continue to improve.
    Subsequent to the first quarter the Company implemented a series of
targeted cost reductions to seek to reduce selling, marketing and
administration expenses by approximately $1.5 million over the balance of
fiscal 2008.

    Announcements

    During and subsequent to end of the quarter, Brick announced several
developments to enhance its business operations and to examine its future
structure. The Company augmented its sales agency business through its
affiliate Direct Cellars Beverage Co. (DCB), which completed three new
representation agreements during the quarter. The new brands to be represented
are expected to add significantly to DCB's sales in the short term, with the
potential for significant longer-term growth. Subsequent to the end of the
quarter, the Company announced an addition to its growing contract brewing
business with a multi-year agreement to brew Tiger Malt non-alcoholic beer for
the Canadian market for Banks Brewing (Barbados) Limited.
    In addition, Brick has previously announced the commencement of a review
of strategic alternatives available to the Company to enhance shareholder
value, including, but not limited to, offers to acquire shares or assets of
the Company, a recapitalization review or some form of business combination.
Berchtold stated, "This review is ongoing. While the review is comprehensive
there can be no assurance that the review will result in any specific
strategic or financial transaction being completed and no timetable has been
set for the completion of the review." The Company will make a public
announcement at the appropriate time.

    
                          Brick Brewing Co. Limited
                     Statements of Earnings and Deficit
                                 (unaudited)
                                  ($ 000's)

                                                         Three Months Ended

    -------------------------------------------------------------------------
                                                         April 30,  April 30,
                                                             2007       2006

    Gross Revenue                                       $  15,635  $  16,095
      Less: Production taxes & distribution fees           (8,763)    (8,440)
    -------------------------------------------------------------------------
    Net Revenue                                             6,872      7,654

    Cost of goods sold                                      5,951      5,418

    -------------------------------------------------------------------------
    Gross margin                                              921      2,236

    Expenses:
      Selling, marketing and administration                 1,693      1,606

    -------------------------------------------------------------------------
    Earnings/(loss) before the undernoted                    (771)       630

    Other expenses:
      Amortization                                           (450)      (352)
      Interest on long-term debt                             (101)       (71)
      Other interest income                                    10          9
      Equity earnings/(loss) of long term investment          (32)       (26)
    -------------------------------------------------------------------------
                                                             (573)      (440)

    -------------------------------------------------------------------------
    Earnings/(loss) before provision for income taxes      (1,344)       190

    Future income tax expense/(recovery)                     (446)        65

    -------------------------------------------------------------------------
    Net earnings/(loss)                                      (898)       126

    Deficit, beginning of the period                       (4,158)    (5,949)

    Impact of change in accounting policy for
     deferred financing charges                              (103)         -

    -------------------------------------------------------------------------
    Deficit, end of period                              $  (5,160) $  (5,823)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings/(loss) per share:
      Basic                                             $   (0.04) $    0.01
      Diluted                                               (0.04)      0.01
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                          Brick Brewing Co. Limited
                               Balance Sheets
                                 (unaudited)
                                  ($ 000's)

    -------------------------------------------------------------------------
                                                        April 30, January 31,
                                                            2007        2007
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Cash                                              $     388  $      54
      Accounts receivable                                   2,567      2,590
      Inventories                                           8,121      8,382
      Future income taxes                                      92         80
      Prepaid expenses                                        813        487
      -----------------------------------------------------------------------
      Total current assets                                 11,981     11,593

    Property, plant and equipment                          17,686     17,687
    Long term investment                                       47         79
    Trademarks and listing fees                             5,407      5,407
    Deferred costs                                            460        638
    Other assets                                              235        243
    Future income taxes                                     2,187      1,705

    -------------------------------------------------------------------------
                                                        $  38,003  $  37,352
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Trade accounts payable and accrued liabilities    $   5,622  $   3,912
      Current portion of long-term debt                       890        890
      Current portion of obligations under capital
       lease                                                  206        204
      -----------------------------------------------------------------------
      Total current liabilities                             6,719      5,006

    Long-term debt                                          3,899      3,899
    Obligations under capital lease                           474        557

    Shareholders' equity:
      Share capital                                        31,504     31,504
      Contributed surplus                                     568        545
      Deficit                                              (5,160)    (4,158)
      -----------------------------------------------------------------------
      Total shareholders' equity                           26,912     27,890

    -------------------------------------------------------------------------
                                                        $  38,003  $  37,352
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                          Brick Brewing Co. Limited
                           Statements of Cash Flows
                                 (unaudited)
                                  ($ 000's)

                                                         Three Months Ended

    -------------------------------------------------------------------------
                                                         April 30,  April 30,
                                                             2007       2006
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
      Earnings/(loss) for the period                    $    (898) $     126
      Items not involving cash:
        Amortization                                          450        352
        Stock based compensation                               23          -
        Equity (earnings)/loss of long term investment         32         26
        Future income taxes/(recovery)                       (482)        64
      Change in non-cash operating working capital          1,709        (18)
    -------------------------------------------------------------------------
                                                              834        550

    Financing:
      Repayment of obligation under long term debt              -        (42)
      Repayment of obligation under capital lease             (81)       (26)
      Issuance of long term debt                                -      2,750
      Issue of capital stock, net of costs                      -        371
    -------------------------------------------------------------------------
                                                              (81)     3,053

    Investments:
      Acquisition of property, plant and
       equipment and listing fees                            (419)    (1,794)
      Pre-operating costs                                       -       (403)
      Other assets                                              -          -
      Long term investments                                     -          -
      -----------------------------------------------------------------------
                                                             (419)    (2,197)

    -------------------------------------------------------------------------
    Net increase in cash                                      335      1,406

    Cash, beginning of period                                  54        507

    -------------------------------------------------------------------------
    Cash, end of period                                 $     388  $   1,913
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Additional Information

    For further details the Company's MD&A and financial statements for the
quarter ended April 30, 2007 will be available on the investor section of the
Brick website at www.brickbeer.com. Additional information relating to the
Company, including its Annual Information Form is available there and on SEDAR
at www.sedar.com.

    Quarterly Conference Call Notification

    Please note that the Company's quarterly conference call with analysts,
media and interested participants will take place at 11:00 am EDT, June 12,
2007. The number to call to participate in the teleconference is (416)
915-9608 or toll free 1-866-214-7077. To ensure your participation, please
call in about five minutes before the start of the call. For those unable to
participate, a taped rebroadcast will be available on the investor section of
the Brick website at www.brickbeer.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 by Jim
Brickman 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.
Brick has complemented its J. R. Brickman Founder's Series and Waterloo Dark
premium craft beers with other popular brands such as Laker, Red Cap and
Formosa Springs Draft. 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. These forward-looking statements include, among
others, the statements concerning plant, packaging and other capacity
improvements, product demand, marketing and sales opportunities, volume growth
and market share, distribution and customer service improvements, reduced
variable costs and improvements in earnings and margin. These forward-looking
statements are not guarantees and are based on management's expectations
concerning, among other things, improvements in product distribution and
customer service that improved operating efficiencies will be realized and
that product demand will continue to grow. Although the Company believes these
forward-looking statements are based on information and assumptions which are
reasonable there are a number of material factors and assumptions which could
cause actual results to vary materially from current expectations, including,
among other things production delays, additional or duplicative costs,
operational or distribution issues, reduced marketing or sales opportunities
or reduced product demand. The forward-looking statements included in this
press release are made only at the date of this press release and the Company
does not undertake to publicly update these forward-looking statements to
reflect new information, future events or otherwise.

    %SEDAR: 00003334E




For further information:

For further information: Doug Berchtold, President and CEO, Tel: (519)
576-9100 ext. 247; Jim Brickman, Executive Chairman/Founder, Tel: (519)
576-9100 ext. 232; E-mail: finance@brickbeer.com

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Brick Brewing Co. Limited

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