The Brick Group updates operational and financial turnaround

    
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EDMONTON , Sept. 21 /CNW/ - (TSX: BRK.UN)- The Brick Group Income Fund (the "Brick Group") today updated the progress it is making on the financial and operational turnaround initiatives that were implemented following its second quarter.

While the following figures should be considered preliminary and subject to change as the Brick Group's third quarter results have not yet been finalized, the Brick Group advises that:

    
    -   July consolidated sales and operating revenue was $100.1 million,
        which is the first time in 2009 that monthly consolidated sales and
        operating revenue have exceeded $100 million
    -   August consolidated sales and operating revenue of $109.8 million
        generated a positive adjusted EBITDA and a positive net income. This
        is a reversal of the negative trend experienced in the first half of
        2009, where adjusted EBITDA was negative $8.7 million, and where
        there was a net loss of $31.9 million prior to including after tax
        non cash goodwill and brand intangible asset impairment charges of
        $143.8 million
    -   September consolidated sales and operating revenues are expected to
        be between $117.0 million and $122.0 million
    -   At the end of August, clearance inventories had been reduced by 27%
        and regular inventory available for sale had increased by 25%, both
        compared to the end of June, 2009.
    

"I am extremely pleased with the progress we are making during our third quarter," said Bill Gregson , President and Chief Executive Officer of the Brick Group. "Our comparative sales trend has improved over recent months, and we were profitable in the month of August. Our turnaround is well underway and we expect that most of the major operational initiatives we identified in early August will be substantially complete by the end of September."

"We are seeing the benefits from increasing the number of sales people in our showrooms and returning our marketing and advertising to a normal level. Process changes to realign purchasing and supply chain activities are supporting better inventory management that is improving our cash position, improving our in-stock positions and contributing to the improved sales trend. We will continue building on these benefits throughout the remainder of 2009," said Mr. Gregson .

Negotiations with key suppliers have been supported by the $25-million letter of credit arrangement with Fairfax Financial which was put in place in August, 2009 under the existing $130-million asset-based loan facility with GE Capital ("GE Facility"). Supplier credit extensions combined with improved results have resulted in improved liquidity. The Brick Group has also experienced a significant reduction in amounts payable to its supplier base in the first half of 2009, and as at August 31, 2009 was borrowing $44.6 million under its GE Facility, with unused borrowing availability of $31.7 million . This availability gives the Brick Group the flexibility to ensure that all inventory required to maximize sales and bottom line results can be purchased.

About the Brick Group

The Brick Group, together with its subsidiaries, is one of Canada's largest volume retailers of household furniture, mattresses, appliances and home electronics, operating under five banners: The Brick, United Furniture Warehouse, The Brick Superstore, The Brick Mattress Store, and Urban Brick. In addition, through its corporate sales division, the Brick Group services the subdivision, condominium, and high-rise builder market. The Brick Group's retail operations are located in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec , Prince Edward Island , Nova Scotia, New Brunswick , and the Yukon Territory.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of applicable Canadian securities laws, including (but not limited to) statements about the Brick's consolidated sales and operating revenue, consolidated EBITDA, consolidated net income/ loss, and sales and operating revenue for the third quarter of 2009, the financial flexibility and capital resources necessary to manage the business in the current economic environment, and similar statements concerning anticipated future events, results, circumstances, performance or expectations, that reflect management's current expectations and are based on information currently available to management of the Brick and its subsidiaries. The words "may", "will", "should", "believe", "expect", "plan", "anticipate", "intend", "estimate", "predict", "potential", "continue" or the negative of these terms, or other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters, identify forward-looking matters. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Brick to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements. The Brick undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable law.

Non-GAAP Financial Measures

References to "adjusted EBITDA" are to earnings before interest, income taxes and amortization, adjusted to remove the impact of purchase accounting. Management of the Brick Group believes that adjusted EBITDA is a useful financial measure as it represents a starting point in the determination of cash available for distribution to unitholders. Adjusted EBITDA is not an earnings measure recognized by GAAP and does not have standardized meanings prescribed by GAAP. Therefore, adjusted EBITDA may not be comparable to similar measures presented by other issuers. Investors are cautioned that adjusted EBITDA should not be construed as an alternative to net income as determined in accordance with GAAP, as an indicator of performance or to cash flows from operating, investing and financing activities as measures of liquidity and cash flows.

For further information: Bill Gregson, President and CEO, The Brick Group, [phone], [email protected]; Nick Bobrow, CA, Chief Financial Officer, The Brick Group, [phone], [email protected]