Brick Brewing reports financial results for the second quarter, with EBITDA of $1.3 million and net income of $461 thousand
Wed Sep 9, 8:39 PMWATERLOO, ON, Sept. 9 /CNW/ - Brick Brewing Co. Limited (TSX: BRB.TO), Ontario's largest Canadian-owned and Canadian-based publicly held brewery, today released its financial results for the second quarter of fiscal 2010.
"The emerging story for this year is the overwhelming success of Red Baron and organizational change that is tangible", said George Croft, President & CEO. "Great things are happening at Brick and I am pleased to report encouraging results."
Packaged volume of Red Baron increased dramatically in the quarter, a continuation of first quarter success. The new management team has demonstrated brand building capability through the success of Red Baron. This growth has reduced the Company's reliance on the Laker brand. Despite a very challenging competitive environment, Brick brands have kept pace with the industry. Brick's total brand volume declined by 1.5% on a year-to-date basis versus an industry decline of 1.4% in the same period.
Financial highlights for the quarter include:
- Net revenue growth of 7.4% compared to the second quarter of
fiscal 2009 and 5.9% on a year-to-date basis;
- Gross profit percentage has increased to 26.7% for the first six
months of fiscal 2010 versus 21.0% in the comparable period of
fiscal 2009;
- EBITDA* for the second quarter and first six months of fiscal
2010 of $1.30 million and $2.46 million, respectively,
representing an increase of $767 thousand (141.8%), and $1.5
million (169.0%);
- Net income of $461 thousand in the second quarter, compared to $30
thousand last year; and
- Net income of $892 thousand for the first six months of fiscal
2010 compared to a loss of $48 thousand in the same period last
year.
The Company continues to make great strides in aligning itself with the
strategic pillars:
- Building a strong owner brand portfolio in both the value and premium
beer segments
Waterloo Dark and Waterloo Wheat brands have continued to grow (79% in the
quarter). Red Baron is exceeding management's expectations and the initial
reaction to Red Baron Lime is exciting.
- Focusing our investments against the biggest opportunities that drive
revenue growth or deliver sustainable cost reduction
The Company is positioned to deliver the $2 million of cost savings that was previously announced. Gross profit percentage has increased by 5.7% for the year-to-date. Despite incurring additional legal costs, the selling, marketing and administrative expenses have declined by $244 thousand so far this year. Severance costs have declined by $186 thousand to-date in fiscal 2010.
- Growing in the most profitable channels and geographic markets
In order to maximize margin, the Company needs to focus its energy and resources. Brick no longer delivers product directly to licensees, but instead uses The Beer Store ("TBS") system to meet the on-premise demand. The highest selling skus are sold primarily through the TBS channel, which has lower distribution fees than the LCBO. Red Baron Lime is currently distributed exclusively to TBS locations.
- Optimizing the Company's operating assets
The Company's new Chief Technical Officer, Russell Tabata has hit the ground running. He has spent the last few months visiting all facilities and reviewing our long-term capital requirements. The Company will be formalizing a long-term capital plan as part of the fiscal 2011 budget process.
- Building a high performance, disciplined, winning organization that is
fully committed to excellence in execution
In June, the Company welcomed three new members to its Board of Directors. Each of the new members comes with unique and valuable experience in the areas of finance/accounting, law, and brewery operations. Many thanks go to Ted Hastings, Perry Dellelce, and Larry Macauley for joining the Brick team at this exciting point in the Company's history.
"I share with you my enthusiasm resulting from a great start to fiscal 2010 and look forward to conveying results for the balance of 2010", said Mr. Croft.
Brick Brewing Co. Limited
Consolidated Balance Sheet
(unaudited)
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July 31, January 31,
2009 2009
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(Restated
- note 1)
Assets
Current assets:
Cash $ - $ 209,291
Accounts receivable 3,498,658 2,096,781
Inventories 6,579,367 5,309,474
Prepaid expenses 482,038 507,518
Future income taxes 522,338 522,338
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11,082,401 8,645,402
Property, plant and equipment 14,051,765 13,522,720
Trademarks and listing fees 5,669,953 5,401,314
Deferred costs 87,876 108,067
Other assets 35,000 50,000
Future income taxes 185,329 626,103
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31,112,324 28,353,606
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Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness $ 1,080,247 $ -
Accounts payable and accrued liabilities 5,374,587 3,846,187
Current portion of long-term debt 928,500 924,000
Current portion of obligations
under capital lease 134,758 419,282
Deferred grants - 270,758
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7,518,092 5,460,227
Long-term debt 1,824,443 2,067,900
Shareholders' equity:
Share capital 34,655,890 34,657,984
Contributed surplus 727,823 673,593
Deficit (13,613,924) (14,506,098)
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21,769,789 20,825,479
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$ 31,112,324 $ 28,353,606
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(1) As a result of adopting CICA Handbook Section 3064, the Company has
adjusted the opening retained earnings in the comparative
consolidated balance sheet by $182,080 (net of tax) to write off pre-
production costs that are no longer permitted to be deferred.
Deferred costs and future income taxes, as at January 31, 2009, were
reduced by $261,153 and $79,073 respectively. The amounts presented
in the consolidated statement of income (loss) and deficit for the
second quarter of fiscal 2009 and the six months ended July 31, 2008
were adjusted as follows: amortization expense has been reduced by
$29 thousand and $58 thousand, and the opening deficit has been
adjusted by $232,572 and $261,589 respectively.
Brick Brewing Co. Limited
Consolidated Statement of Income (Loss) and Deficit
(unaudited)
Three Months Ended Six Months Ended
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July 31, July 31, July 31, July 31,
2009 2008 2009 2008
-------------------------------------------------------------------------
(Restated (Restated
- note 1) - note 1)
Gross revenue $ 19,656,483 $ 19,446,623 $ 35,423,279 $ 35,042,463
Less production
taxes and
distribution
fees (10,340,453) (10,771,183) (18,466,130) (19,032,206)
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Net revenue 9,316,030 8,675,440 16,957,149 16,010,257
Cost of sales 6,803,743 6,728,593 12,422,979 12,655,417
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Gross profit 2,512,287 1,946,847 4,534,170 3,354,840
Selling,
marketing and
administration 1,188,433 1,273,721 2,054,876 2,299,638
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Earnings before
the undernoted 1,323,854 673,126 2,479,294 1,055,202
Other
income (expense):
Depreciation
and amortization (589,816) (400,101) (1,054,803) (792,469)
Interest on
long-term debt (35,046) (91,453) (76,901) (193,628)
Other
income (expense) - 376 1,121 (1,542)
Severance costs (15,764) (200,803) (15,764) (200,803)
Equity earnings on
long-term
investment - 68,982 - 64,214
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(640,626) (622,999) (1,146,347) (1,124,228)
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Income (loss)
before income
taxes 683,228 50,127 1,332,947 (69,026)
Future income
tax provision
(recovery) 222,413 19,692 440,773 (20,935)
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Net income and
comprehensive
income 460,815 30,435 892,174 (48,091)
Deficit, beginning
of period (14,074,739) (6,959,783) (14,506,098) (6,852,240)
Cumulative effect
of adopting new
accounting
policies, net
of tax - (232,572) - (261,589)
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Deficit,
beginning of
period restated (14,074,739) (7,192,355) (14,506,098) (7,113,829)
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Deficit,
end of period (13,613,924) (7,161,920) (13,613,924) (7,161,920)
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Net earnings per share:
Basic 0.02 0.00 0.03 0.00
Diluted 0.02 0.00 0.03 0.00
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Brick Brewing Co. Limited
Consolidated Statement of Cash Flows
(unaudited)
Three Months Ended Six Months Ended
-------------------------------------------------------------------------
July 31, July 31, July 31, July 31,
2009 2008 2009 2008
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(Restated (Restated
- note 1) - note 1)
Cash provided by
(used in):
Operations:
Income (loss)
for the period 460,815 30,435 892,174 (48,091)
Items not
involving cash:
Amortization
of property,
plant and
equipment,
deferred
costs and
other assets 597,316 395,876 1,069,803 807,469
Stock based
compensation 24,142 28,248 48,936 43,529
Equity earnings
on long-term
investment - (68,982) - (64,214)
Future income
tax provision
(recovery) 222,413 19,692 440,773 (20,935)
Change in
non-cash
operating
working capital (946,300) (566,092) (1,388,648) (101,718)
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358,386 (160,823) 1,063,038 616,040
Financing:
Increase (decrease)
in bank
indebtedness 903,406 751,486 1,080,247 (112,735)
Repayment of
long-term debt (185,107) (399,450) (238,957) (449,100)
Repayment of
obligation under
capital lease (251,875) (30,678) (284,524) (74,554)
Issue of capital
stock (net of fees) - 51,100 3,200 60,830
Stock options
exercised - - - 252,000
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466,424 372,458 559,966 (323,559)
Investing:
Purchase of property,
plant and equipment,
listing fees and
deferred assets (824,810) (211,635) (1,832,295) (292,481)
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(824,810) (211,635) (1,832,295) (292,481)
-------------------------------------------------------------------------
Net decrease in cash - - (209,291) -
Cash, beginning
of period - - 209,291 -
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Cash, end of period - - - -
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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, 2009 will be available on the investor section of the Brick Brewing 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 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 Waterloo brand premium craft beers with other popular brands such as Laker, Red Baron, Red Cap and Formosa Springs Draft. Brick trades on the TSX under the symbol BRB. Visit us at www.brickbeer.com.
FORWARD-LOOKING STATEMENTS
Except for the historical information contained herein, the discussion in this press release contains certain forward-looking statements that involve risks and uncertainties, such as statements of the Company's plans, objectives, strategies, expectations and intentions and include, for example, the statements concerning expected volumes, operating efficiencies and costs. 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. These forward-looking statements are not guarantees and reflect the Company's views as of September 8, 2009 with respect to future events. Future events 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 fiscal year ending January 31, 2010 ("fiscal 2010") will decline, no material changes in consumer preferences, brewing and packaging efficiencies will improve, input costs for brewing materials will decrease, the cost of packaging materials will decrease, 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, the Company's annual information form and various other public filings. The forward-looking statements included in this press release are made only as of September 8, 2009 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.
ContactsGeorge Croft
President & CEO
Tel: (519) 576-9519 x. 247
e-mail: info@brickbeer.com
158.94 (1.43%)
