Brick Brewing Reports Third Quarter EBITDA of $2.8M, +55% from prior year

Third Quarter Highlights:

• Net revenue for the third quarter increased to $14.2 million compared to $11.7 million in the prior year (+21.3%).
• Gross profit margins for the quarter increased to 28.1% versus 26.5% in quarter 3 of the prior year.
• Selling, Marketing and Administration (“SM&A”) of $2.22 million, compared to prior year at $2.24 million.
• EBITDA* for the quarter increased by $1.0 million or 55% to $2.8 million compared to EBITDA* in the third quarter of fiscal 2017 of $1.8 million, excluding one-time costs.
• The Board of Directors approved an increase to the quarterly dividend, to $0.025/share, payable January 29, 2019 to shareholders of record as of January 15, 2019. The dividend is classified as an eligible dividend.

Year to Date Highlights:

• Net revenue increased to $41.3 million, from $39.1 million in the prior year, excluding the impact of The Beer Store’s (“TBS”) consignment-based system (+5.6%).
• TBS, the Company’s largest customer, moved from buy/sell to consignment-based system resulting in a one-time gross profit decrease of $2.2 million.
• Gross profit margin has rebounded from the first quarter softness to deliver 27.8% versus 28.5% prior year.
• Selling, Marketing and Administration (“SM&A”) expenses increased slightly to $7.2 million from $7.0 million.
• EBITDA* improved slightly to $7.25 million year to date, up from $7.23 million in the prior year, excluding one-time costs of TBS consignment-based change.
• Brick Brewing recently announced its strategic direction to produce cannabis-infused beverages for itself and others in 2019.

KITCHENER, Ontario, Dec. 06, 2018 (GLOBE NEWSWIRE) -- Brick Brewing Co. Limited ("Brick" or the "Company") (TSX: BRB), Ontario’s largest Canadian-owned brewery, today released results for the third quarter ended October 28, 2018.

Net revenues for the third quarter of fiscal 2019 grew to $14.2 million, up from $11.7 million in the third quarter of fiscal 2018. Gross profit margins for the quarter increased to 28.1% versus 26.5% in Q3 of the prior year. Margin expansion was supported by strong pricing, enhanced product mix as well as overall cost reductions in operations. EBITDA for the third quarter of fiscal 2019 improved to $2.8 million, reflecting an acceleration of strong results in fiscal 2019.

“This was a tremendous quarter for Brick Brewing,” noted George Croft, President and CEO. “We’re reporting double digit revenue and EBITDA growth. We’ve been able to expand margins, increase the investment in our brands, and still deliver 55% growth in EBITDA. Our Laker brand posted 4% volume growth and our LandShark brand continued to resonate with consumers and grew 6% in the quarter. Our Waterloo brands declined 8% in the face of craft beer proliferation and strong competitive category pressure.  The Waterloo brand will benefit considerably from our recently announced small batch brewery and taproom where we can showcase our new expertly crafted innovated products. Overall, the beer industry saw a decline of 5.9% versus prior year.  In comparison, our owned beer business grew 2% versus prior year, for the quarterly comparison. We have been successful in growing market share, and the strong response we’ve enjoyed from our consumers has allowed us to outperform the category.”

As a result of the strength in operating and financial performance, Brick is also announcing today a 25% increase in the quarterly dividend, to $0.025/share, up from $0.020/share. The dividend is payable January 29, 2019 to shareholders of record as of January 15, 2019.  “The increase in the dividend is simply a continuation of our commitment to deliver value to shareholders. We believe in our ability to both invest in growing our business while at the same time increasing returns to shareholders,” commented David Birch, Chief Financial Officer.

Croft added, “Although we are pleased with our Q3 results, we will continue to focus on execution and will be working hard to ensure a strong finish for the year.  Additionally, we are excited about our recently announced strategic direction to engage in the new and developing cannabis-infused beverage category and its impact on our future business.”

The following financial information should be read in conjunction with the audited annual financial statements of the Company prepared under IFRS for the year ended January 31, 2018.

Reconciliation of Net Earnings to Earnings Before Interest Taxes Depreciation and Amortization, and Share Based Payments (EBITDA)*
	Quarter ended					Fiscal year-to-date ended
(in thousands of dollars)	October 28, 2018		October 29, 2017			October 28, 20181		October 29, 2017
Net income	$	1,025	$	387		$	604	$	2,293
Add (deduct):
Income tax expense		395		156			233		857
Depreciation and amortization		1,101		927			3,178		2,650
Loss on disposal of property, plant and equipment		-		(26	)		251		(26	)
Share-based payments		132		93			334		206
Finance costs		151		145			348		380
Subtotal		1,779		1,295			4,344		4,067
EBITDA*		2,804		1,682			4,948		6,360

STATEMENTS OF COMPREHENSIVE INCOME
Quarters ended October 28, 2018 and October 29, 2017 

		Quarter ended				Fiscal year-to-date ended
		October 28, 2018		October 29, 2017		October 28, 20181		October 29, 2017
Revenue		$	14,169,490	$	11,671,466	$	37,745,557	$	39,055,280
Cost of sales			10,185,405		8,557,904		28,538,993		27,894,803
Gross profit			3,984,085		3,113,562		9,206,564		11,160,477
Selling, marketing and administration expenses			2,224,770		2,238,472		7,153,180		7,047,895
Other expenses			187,763		186,903		616,205		581,850
Finance costs			151,411		145,552		348,484		380,259
Loss on disposal of property, plant and equipment			-		-		251,405		-
Income before tax			1,420,141		542,635		837,290		3,150,473
Income tax expense			395,281		155,620		233,320		857,022
Net income and comprehensive income		$	1,024,860	$	387,015	$	603,970	$	2,293,451
Basic earnings per share		$	0.03	$	0.01	$	0.02	$	0.06
Diluted earnings per share		$	0.03	$	0.01	$	0.02	$	0.06

STATEMENTS OF FINANCIAL POSITION
As at October 28, 2018 and January 31, 2018 

		October 28, 2018			January 31, 2018
ASSETS
Non-current assets
Property, plant and equipment		$	28,847,782		$	27,119,488
Intangible assets			15,300,407			15,381,578
Construction deposits			409,025			323,255
			44,557,214			42,824,321
Current assets
Cash			1,074,152			-
Accounts receivable			4,188,773			6,999,212
Inventories			8,609,220			7,891,364
Prepaid expenses			1,024,292			613,710
			14,896,437			15,504,286
TOTAL ASSETS			59,453,651			58,328,607
LIABILITIES AND EQUITY
Equity
Share capital			40,095,357			39,747,525
Share-based payments reserves			1,190,119			1,026,667
Deficit			(4,067,748	)		(2,547,746	)
TOTAL EQUITY			37,217,728			38,226,446
Non-current liabilities
Provisions			546,859			538,376
Obligation under finance lease			2,414,945			3,011,893
Long-term debt			7,220,095			6,019,245
Deferred income tax liability			1,359,784			1,126,464
			11,541,683			10,695,978
Current liabilities
Bank indebtedness			-			787,843
Accounts payable and accrued liabilities			8,278,399			6,516,382
Current portion of obligation under finance lease			792,186			769,962
Current portion of long-term debt			1,623,655			1,331,996
			10,694,240			9,406,183
TOTAL LIABILITIES			22,235,923			20,102,161
TOTAL LIABILITIES AND EQUITY		$	59,453,651		$	58,328,607

STATEMENTS OF CASH FLOWS
Quarters ended October 28, 2018 and October 29, 2017 

		Quarter ended						Fiscal year-to-date ended
		October 28, 2018			October 29, 2017			October 28, 2018			October 29, 2017
Operating activities
Net income		$	1,024,860		$	387,015		$	603,970		$	2,293,451
Adjustments for:
Income tax expense			395,281			155,620			233,320			857,022
Finance costs			151,411			145,552			348,484			380,259
Depreciation and amortization of property, plant and   equipment and intangibles			1,100,576			927,290			3,178,450			2,650,282
Loss on disposal of property, plant and equipment			-			(26,418	)		251,405			(26,418	)
Share-based payments			132,083			92,824			334,475			205,784
Change in non-cash working capital related to operations			(1,875,576	)		2,006,426			3,499,070			(3,403,830	)
Less:
Interest paid			(145,927	)		(142,232	)		(386,780	)		(342,439	)
Cash provided by operating activities			782,708			3,546,077			8,062,394			2,614,111
Investing activities
Purchase of property, plant and equipment			(886,648	)		(1,254,226	)		(4,968,523	)		(7,123,641	)
Construction deposit paid			(151,069	)		-			(409,025	)		-
Proceeds from sale of property, plant and equipment			-			2,566,598			280,000			2,566,598
Purchase of intangible assets			(23,501	)		(486	)		(65,200	)		(197,551	)
Cash provided by (used in) investing activities			(1,061,218	)		1,311,885			(5,162,748	)		(4,754,594	)
Financing activities
Decrease in bank indebtedness			-			(1,050,335	)		(787,843	)		-
Issuance of long-term debt			-			-			2,600,000			5,163,067
Repayment of long-term debt			(419,008	)		(328,338	)		(1,115,763	)		(693,713	)
Repayment of obligation under finance lease			(193,395	)		(186,194	)		(574,724	)		(553,327	)
Dividends paid			(709,363	)		(563,882	)		(2,123,972	)		(1,686,420	)
Issuance of shares, net of fees			-			3,631			-			9,342
Shares repurchased and cancelled, including fees			-			-			-			(322,629	)
Stock option costs			-			-			(18,510	)		-
Proceeds from stock option exercise			1,077			-			195,319			125,048
Cash provided by (used in) financing activities			(1,320,689	)		(2,125,118	)		(1,825,493	)		2,041,368
Net increase/(decrease) in cash			(1,599,200	)		2,732,844			1,074,152			(99,115	)
Cash, beginning of the period			2,673,352			-			-			2,831,959
Cash, end of the period		$	1,074,152		$	2,732,844		$	1,074,152		$	2,732,844

About Brick Brewing

Brick is Ontario's largest Canadian-owned brewery. The Company is a regional brewer of award-winning premium quality and value beers and is officially certified under the Global Food Safety Standard, one of the highest and most internationally recognized standards for safe food production. Founded in 1984, Brick Brewing Co. 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 premium craft beers with the popular Laker brand.  In 2011, Brick purchased the Canadian rights to Seagram Coolers and in 2015, secured the exclusive Canadian rights to both LandShark® and Margaritaville®. In addition, Brick utilizes its leading-edge brewing, blending and packaging capabilities to provide an extensive array of contract manufacturing services in beer, coolers and ciders. 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 Corporation 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 included in this press release are made only at the date of this press release and, except as required by applicable securities laws, the Corporation does not undertake to publicly update such forward-looking statements to reflect new information, future events or otherwise.

* EBITDA is a non-IFRS earnings measure, therefore it does not have any standardized meaning prescribed by International Financial Reporting Standards and may not be similar to measures presented by other companies. EBITDA represents earnings before interest, income taxes, depreciation and amortization, gain on disposal of property, plant, and equipment, and share based payments. 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.

Contact Information
For further information:
David Birch, Chief Financial Officer
(519) 742-2732 Ext.106
E-mail: info@brickbeer.com