Brick Brewing Reports Second Quarter Results



    WATERLOO, ON, Sept. 9 /CNW/ - Brick Brewing Co. Limited (TSX: BRB),
Ontario's largest Canadian-owned and Canadian-based publicly held brewery,
today released its financial results for the second quarter and six months
ended July 31, 2008.
    The results of the second quarter of fiscal 2009 for Brick Brewing
produced EBITDA(*) (Earnings before interest, income taxes, depreciation and
amortization) of $454 thousand, compared with $942 thousand in the same period
last year. This reduction in EBITDA(*) was the result of higher commodity/input
costs and reduced volumes when compared to last year.
    "Rising commodity costs continue to be a challenge and have reduced our
earnings by $372 thousand in the quarter," said George Croft, President and
CEO of Brick Brewing. "We must continue to streamline our operations and seek
to eliminate all non-strategic costs in the organization to offset these
increased input costs," he added.
    Net revenues in the second quarter decreased by 9.9% to $8.7 million, as
compared to $9.6 million in the same period last year, due primarily to a
decline in beer volumes. The rainiest summer on record in Ontario was
responsible for an overall industry volume decline during this period.
Aggressive price promotion activity by foreign-owned competitors has also
contributed to the volume decline.
    In the second quarter this year the Company incurred $201 thousand in
severance costs in an effort to restructure its operations and streamline
senior management. A new management team was appointed in the quarter.
    As previously announced in the quarter, the Company will transition from
the operating activities of Direct Cellars Beverage Co. The development of a
Brick dedicated sales organization is the first step in launching a new 'Go To
Market Strategy' for the organization.
    On September 2, 2008 the Company announced that it will be representing
brands for Palm Breweries, Belgium's largest independent brewer. These
international brands will complement Brick's craft brewed premium brands.
    "In order to seek to deliver sustainable profitable growth, Brick will
focus on the following strategic pillars: build a dominant owner brand
portfolio within the value and premium segments, focus investment on the
biggest opportunities, win within the most profitable channels and geographic
markets, build a high performance, disciplined and winning organization and
optimize our operating assets," Croft added. "In the quarter we began to
execute on all of these important targets".
    Subsequent to the end of the quarter the Company announced that it has
settled its lawsuit against The Beer Store. The parties have reached an
agreement that will provide the Company with continued access to the Industry
Standard Bottle and entitle it to continue to use non-standard bottles,
subject to certain conditions, for certain specified products.

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

                                  Three Months Ended       Six Months Ended

    -------------------------------------------------------------------------
                                 July 31,    July 31,    July 31,    July 31,
                                    2008        2007        2008        2007

    Gross Revenue               $ 19,447    $ 22,009    $ 35,042    $ 37,644
      Less:  Production taxes
       & distribution fees       (10,771)    (12,384)    (19,032)    (21,148)
    -------------------------------------------------------------------------
    Net Revenue                    8,675       9,625      16,010      16,496


    Cost of goods sold             6,747       7,013      12,690      12,963

    -------------------------------------------------------------------------
    Gross margin                   1,929       2,612       3,321       3,533

    Expenses:
      Selling, marketing and
       administration              1,274       1,670       2,302       3,362
      Severance costs                201           -         201           -
    -------------------------------------------------------------------------
                                   1,475       1,670       2,503       3,362

    -------------------------------------------------------------------------
    Earnings/(loss) before
     the undernoted                  454         942         818         171

    Other income/(expenses):
      Amortization                  (429)       (442)       (851)       (892)
      Interest on long-term
       debt                          (91)       (110)       (194)       (211)
      Other interest income           18          13          35          23
      Equity loss of long term
       investment                     69          44          64          12
    -------------------------------------------------------------------------
                                    (433)       (495)       (945)     (1,068)

    -------------------------------------------------------------------------
    Loss before provision for
     income taxes                     21         447        (127)       (897)

    Future income tax
     expense/(recovery)               20         164         (21)       (283)

    -------------------------------------------------------------------------
    Net earnings/(loss)                1         283        (106)       (615)

    Deficit, beginning of
     the period                   (6,960)     (5,160)     (6,852)     (4,158)

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

    -------------------------------------------------------------------------
    Deficit, end of period      $ (6,958)   $ (4,876)   $ (6,958)   $ (4,876)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings/(loss)
     per share:
      Basic                     $   0.00    $   0.01    $  (0.00)   $  (0.03)
      Diluted                       0.00        0.01    $  (0.00)      (0.03)
    -------------------------------------------------------------------------


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

    -------------------------------------------------------------------------
                                                         July 31, January 31,
                                                            2008        2008
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Accounts receivable                               $  3,829    $  2,571
      Inventories                                          7,181       6,200
      Future income taxes                                     64          55
      Prepaid expenses                                       678         510
      -----------------------------------------------------------------------
      Total current assets                                11,752       9,335

    Property, plant and equipment                         17,504      18,067
    Long term investment                                     170         106
    Trademarks and listing fees                            5,451       5,430
    Deferred costs                                           381         384
    Other assets                                             198         213
    Future income taxes                                    2,075       2,063

    -------------------------------------------------------------------------
                                                        $ 37,530    $ 35,596
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Bank indebtedness                                 $  2,678    $  2,791
      Trade accounts payable and accrued liabilities       5,358       3,038
      Current portion of long-term debt                      915         907
      Current portion of obligations under
       capital lease                                         129         138
      -----------------------------------------------------------------------
      Total current liabilities                            9,081       6,874

    Long-term debt                                         2,534       2,992
    Obligations under capital lease                          353         419

    Shareholders' equity:
      Share capital                                       31,969      31,539
      Contributed surplus                                    551         624
      Deficit                                             (6,958)     (6,852)
      -----------------------------------------------------------------------
      Total shareholders' equity                          25,562      25,311

    -------------------------------------------------------------------------
                                                        $ 37,530    $ 35,596
    -------------------------------------------------------------------------


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

                                  Three Months Ended       Six Months Ended

    -------------------------------------------------------------------------
                                 July 31,    July 31,    July 31,    July 31,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
      Earnings/(loss)
       for the period           $      1    $    283    $   (106)   $   (615)
      Items not involving cash:
        Amortization                 417         442         851         892
        Amortization of other
         assets                        8           -          15           -
        Stock based
         compensation                 28          23          44          47
        Equity (earnings)/loss
         of long term investment     (69)        (44)        (64)        (12)
        Future income
         taxes/(recovery)             20         164         (21)       (318)
      Change in non-cash
       operating working capital    (566)     (1,562)       (102)        147
    -------------------------------------------------------------------------
                                    (161)       (694)        616         141

    Financing:
      Increase/(decrease) in
       bank indebtedness               -           -           -           -
      Repayment of long term
       debt                         (399)       (441)       (449)       (441)
      Repayment of obligation
       under capital lease           (31)        (20)        (75)       (101)
      Issue of capital stock,
       net of costs                   51          23         313          23
      -----------------------------------------------------------------------
                                    (379)       (439)       (211)       (520)

    Investments:
      Acquisition of property,
       plant and equipment and
       listing fees                 (212)       (355)       (292)       (774)
      -----------------------------------------------------------------------
                                    (212)       (355)       (292)       (774)
                                                               -           -
    -------------------------------------------------------------------------
    Net increase/(decrease)
     in cash                        (751)     (1,487)        113      (1,153)

    Cash/(bank indebtedness),
     beginning of period          (1,927)        388      (2,791)         54

    -------------------------------------------------------------------------
    Cash/(bank indebtedness),
     end of period              $ (2,678)   $ (1,099)   $ (2,678)   $ (1,099)
    -------------------------------------------------------------------------

    These statements should be read in conjunction with the audited annual
financial statements of the Company.

    Additional Information

    For further details the Company's management discussion and analysis
(MD&A) and financial statements for the quarter ended July 31, 2008 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.

    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. 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, 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, including the
statements regarding expected volumes, operating efficiencies and costs are
based on, among other things, the following material factors and assumptions:
volumes in the current fiscal year ending January 31, 2009 ("fiscal 2009")
will be reduced from last year, no material changes in consumer preferences,
operating efficiencies at the packaging and warehousing facility in Kitchener,
Ontario will continue to be realized, input costs for brewing and packaging
materials will continue to be higher than last year, 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 Company's MD&A, annual
information form and various other public filings. 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
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 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.

    %SEDAR: 00003334E




For further information:

For further information: Graydon Moore, Chief Financial Officer, Tel:
(519) 576-9100 Ext. 222, E-mail: finance@brickbeer.com; Jim Brickman,
Executive Chairman/Founder, Tel: (519) 576-9100 Ext. 232; George H. Croft,
President & CEO, Tel: (519) 576-9100 Ext. 247

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Brick Brewing Co. Limited

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