CALGARY, May 29, 2019 /CNW/ - Big Rock Brewery Inc. (TSX: BR) ("Big Rock" or the "Corporation"), today announced it has undertaken significant cost-cutting measures, including reductions to the Corporation's workforce, in response to the persisting regulatory environment for brewers of its size in Alberta.
The 104% increase in the net Alberta beer mark-up (provincial tax) imposed on Big Rock by the previous Government of Alberta in late 2018 (being a 160% increase since 2016) has forced the Corporation's senior management to take immediate cost-cutting measures as the increase in the tax on Big Rock's beer in Alberta has eroded the profitability achieved by Big Rock in 2018.
Big Rock, an Alberta-based brewer and employer, has proudly supported local jobs and community events while contributing to the Alberta economy as a significant local purchaser and reliable taxpayer in the province for 34 years. If the current provincial tax framework for beer in Alberta persists through year-end of fiscal 2019, Big Rock's net Alberta provincial liquor tax charges of $10.7 million for fiscal 2018 are estimated to increase to greater than $21 million for fiscal 2019 (based on 2018 Alberta sales volumes).
Under the direction of President & CEO Wayne Arsenault and CFO Don Sewell, the Corporation undertook an extensive evaluation of all aspects of Big Rock's business and financial results. The evaluation identified several cost-cutting measures that will allow the Corporation to remain competitive, support anticipated growth and drive long-term value for shareholders. These measures are being implemented to reduce the Corporation's operating expenses and focus spending on growth and profitability. Management is committed to maintaining and continuing to support its relationships with customers, consumers, employees, shareholders and other stakeholders, while returning the business to profitability in this current regulatory environment.
The cost-cutting measures undertaken by the Corporation include certain one-time restructuring costs. The Corporation expects to benefit from these measures by realizing lower operating costs beginning in the 3rd quarter of fiscal year 2019.
"Our ultimate goal is to allocate our resources in a manner that will ensure the success of the future business and maximizes shareholder value," commented Wayne Arsenault, President & CEO. "We are creating a sustainable business model by accessing new ways to grow revenues, reduce expenses and improve margins, despite the current tax regime and regulatory environment for beer in Alberta. This process can be painful, and we recognize that personnel reductions are difficult for our employees, their families and the community. We value the dedicated team at Big Rock for working hard towards this goal. We will continue to work with the new Government of Alberta to establish a positive regulatory environment for small brewers in the province that is predictable, stable and supports growth."
About Big Rock Brewery Inc.
In 1985, Ed McNally founded Big Rock to contest the time's beer trends. Three bold, European-inspired offerings – Bitter, Porter and Traditional Ale – forged an industry at a time heavy on easy drinking lagers and light on flavour. Today, our extensive portfolio of signature beers, ongoing seasonal offerings, four ciders (Rock Creek Cider® series) and custom-crafted private label products keep us at the forefront of the craft beer revolution and still proudly contesting the beer trends of today. With brewing operations in Calgary, Alberta, Vancouver, British Columbia, and Toronto, Ontario, and sales in five Canadian provinces and two territories, Big Rock has been a significant supporter of local Canadian breweries and communities for over 33 years. Big Rock trades on the TSX under the symbol "BR".
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 information are not facts, but only predictions and generally can be identified by the use of statements that include words or phrases such as, "anticipate", "believe", "continue", "could", "estimate", "expect", "intend", "likely" "may", "project", "predict", "propose", "potential", "might", "plan", "seek", "should", "targeting", "will", 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 should 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 Corporation's expectation regarding the impact of the cost-cutting measures, including, but not limited to, that the cost eliminations will allow the Corporation to remain competitive, support anticipated growth and drive long-term value for shareholders;
estimates of the Corporation's Alberta provincial liquor tax charges for fiscal 2019;
the extent and result of the Corporation's discussions with the Government of Alberta; and
the Corporation's business plan and expected revenue.
With respect to forward-looking statements listed above and contained in this news release, Big Rock has made assumptions regarding, among other things, the following:
volumes in the current fiscal year will remain constant or will increase;
input costs for brewing and packaging materials will remain constant or will not significantly increase or decrease;
there will be no material negative change to the regulatory environment, including the mark-up and grant rates, in which Big Rock operates;
there will be no supply issues with Big Rock's vendors; and
the Corporation's ongoing discussions with the Alberta Government with respect to the mark-up, grant program and treatment of craft brewers in the province.
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 of the Corporation to execute on its business plan, including, but not limited to, realizing on the intended benefits of the cost cutting measures; and
the inability to continue to grow demand for Big Rock's products.
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 so required by applicable securities laws.
SOURCE Big Rock Brewery Inc.
For further information: Wayne Arsenault, President & Chief Executive Officer, or Don Sewell, Chief Financial Officer: Phone: (403) 720-3239, Fax: (403) 720-3641, Email: [email protected]