Canada, ON: Brick Brewing Co. releases Q2 and H1 financial results

Brick Brewing Co. Limited, Ontario’s largest Canadian-owned brewery, on September 8 released financial results for the second quarter ended July 30, 2017. Brick reported EBITDA, excluding one-time costs, of C$3.0 million on net revenue of C$15.9 million.

“Recent months have been characterized by cool, wet weather, which served to push total Ontario beer volume 8% lower vs. prior year. Against that backdrop, our ability to grow our branded volume is noteworthy. Laker achieved 8% volume growth in the quarter, while Waterloo was up 16%. The LandShark® and Margaritaville® family grew 29%, with the Margaritaville® cooler launch in the LCBO very well received by consumers,” noted George Croft, Brick’s President and Chief Executive Officer.

Margins were pressured in the quarter due to increases in fees at The Beer Store, federal excise and Ontario beer tax, as well as product mix, with a shift in mix towards co-pack volumes. “Co-pack is a key part of our business model,” commented Russell Tabata, Brick’s Chief Operating Officer. “Co-pack volume allows us to utilize available capacity to generate incremental returns, as well as serving to diversify the business model.” Co-pack revenue in the quarter grew by 24%, to C$3.2 million.

During the quarter Brick recorded one-time cost of C$381 thousand (C$700 thousand year-to-date). These costs are associated with the Formosa exit, primarily severance costs.

Brick’s board of directors has also re-affirmed the quarterly dividend, at C$0.016/share. The dividend is payable October 24, 2017 to shareholders of record as of October 10, 2017.

Croft added, “With the recent completion of the Kitchener expansion project, we are now able to realize the optimum operating footprint – a single source, highly efficient facility with full capabilities. The project was completed on time and on budget. The expansion coupled with the move from two sites to one will generate annual recurring savings of C$600 thousand. In addition, the sale of the Formosa facility was finalized and the transaction closed on September 6, 2017. The strength of our brands, the diversity we enjoy as a result of our co-pack business, along with the optimized footprint positions us well to compete in the future. We are committed to continuing to grow our business. This is our priority in the second half of fiscal 2018.”

Second Quarter Highlights:

Net revenue increased to C$15.9 million, from $14.0 million in the prior year.

Gross margin was 28.7%, and 31.1% excluding one-time costs, compared to 37% prior year.

Selling, Marketing and Administration (“SM&A”) expenses were flat with prior year, at C$2.7 million.

EBITDA of C$2.6 million, and C$3.0 million excluding one-time cost, compared to C$3.1 million prior year.

The Board of Directors re-affirmed the quarterly dividend, C$0.016/share, payable October 24, 2017 to shareholders of record as of October 10, 2017. The dividend is classified as an eligible dividend.

First Half Highlights:

Net revenue increased to C$27.4 million, from C$23.5 million in the prior year.

Gross margin was 29.4%, and 31.9% ex one-time costs, compared to 36.2% prior year.

Selling, Marketing and Administration (“SM&A”) expenses increased slightly, to C$4.8 million, vs. C$4.6 million prior year.

EBITDA was C$4.7 million and C$5.4 million ex one-time cost, up from C$5.0 million in the prior year.

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