Canada, ON: Waterloo Brewing announces Q1 financial results
Waterloo Brewing Ltd., Ontario's first craft brewery, announced financial results for the first quarter of fiscal 2023 which ended on May 1, 2022.
First Quarter Highlights:
Net revenue decreased 5.5% to C$21.2 million, down from C$22.5 million in the prior year
Gross margin decreased to 18.6%, compared to 22.2% the prior year
Selling, marketing and administration expenses were C$3.5 million, compared to C$3.6 million in the prior year
EBITDA decreased 19.4% to C$2.6 million, compared to C$3.2 million in the prior year
The Board of Directors approved the quarterly dividend, $0.0304/share, payable August 3, 2022, to shareholders of record as of July 20, 2022. The dividend is classified as an eligible dividend.
Waterloo Brewing's sales have been negatively impacted by unfavourable industry trends. The overall industry-wide beer volumes decreased by approximately 7.9% in the quarter versus the prior year, with Waterloo Brewing's total volume of products sold decreasing by 5.7% in the quarter versus the prior year - indicating that the company continues to grow market share within Ontario. Despite industry trends, Waterloo Brewing's portfolio continues to outperform competition at both LCBO and grocery stores.
Waterloo Brewing's premium better-for-you products continue to outpace the industry; LandShark® branded sales volume increased 13.3% during the first quarter versus the prior year. The company continues to remain focused on product innovation and development in this category.
Co-manufacturing customers that supply raw materials to the company were impacted by supply chain delays, which resulted in a shift of contract volumes into the second quarter, and beyond. In spite of the volume shift, Waterloo Brewing was able to secure new co-manufacturing partnerships that will continue to support growth.
Gross margin performance declined in the quarter due to inflationary cost pressures, supply chain challenges and increased operational fixed costs. Waterloo Brewing anticipates delivering margin improvements for the balance of the year as a result of new product launches, continued investments into owner brands and new co-manufacturing partners. The Company will continue to implement selective product price increases that are expected to partially offset inflationary pressures.
"With a decline in net revenue and EBITDA in the quarter, we are determined to perform strong in the coming quarters," said George Croft, President and Chief Executive Officer of Waterloo Brewing. "Our owner brand volume declined less than the industry overall, signalling strong performance from our owner brand portfolio. We continue to navigate supply chain difficulties and inflationary cost pressures. We are confident in our ability to proactively manage the situation by securing supply of critical materials, managing supplier relationships, and realizing overhead and labour cost efficiencies as the volume increases in the upcoming quarters."
Late in the quarter, Waterloo Brewing launched a new LandShark® Seltzer flavour, Passionfruit Strawberry as well as a new Radler, Waterloo Field Berry Radler. The company also released a new Seagram malt-based Seltzer, available in a variety of flavours. The company believes these new launches continue to demonstrate both leadership within the category and the confidence to innovate and build strong brands that complement the current portfolio. Ultimately, this will help to support the mission of long-term profitable growth.
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