Brick Brewing Reports Second Quarter EBITDA of $3.1M

KITCHENER, ON--(Marketwired - September 09, 2016) -

Second Quarter Highlights:

• Net revenue increased to $14.0 million, from $11.0 million in the prior year.

• Gross margin improved to 37.0% from prior year of 28.1% (and 29.8% prior year excluding 1x cost).

• Selling, Marketing and Administration ("SM&A") expenses increased to $2.7 million from $2.0 million.

• EBITDA* improved to $3.1 million in the quarter, up from $1.7 million in prior year.

• The Board of Directors approved the quarterly dividend, $0.012/share, payable October 25, 2016 to shareholders of record as of October 11, 2016. The dividend is classified as an eligible dividend.

First Half Highlights:

• Net revenue increased to $23.5 million, from $18.7 million in the prior year.

• Gross margin improved to 36.2% from prior year of 27.7% (and 28.8% prior year excluding 1x cost).

• Selling, Marketing and Administration ("SM&A") expenses increased to $4.6 million from $3.8 million.

• EBITDA* improved to $5.0 million year to date, up from $2.5 million in the prior year.

Brick Brewing Co. Limited ("Brick" or the "Company") (BRB.TO), Ontario's largest Canadian-owned brewery, today released financial results for the second quarter ended July 31, 2016. Brick reported EBITDA of $3.1 million on net revenue of $14.0 million.

"In the second quarter we continued to focus on building a stronger, broader and more premium brand portfolio, which included incremental sales and marketing investments. The second quarter saw continued strong momentum in our Laker brand with volume up 14% vs prior year, while Waterloo volume grew by 20%. The commercial launch of LandShark has been an unprecedented success. The response from consumers has been simply tremendous. As a result of the initial strong performance of LandShark in The Beer Store, we have expanded distribution late in the second quarter to both LCBO and grocery channel in Ontario," said George Croft, Brick President and Chief Executive Officer.

"Seagram volume softened in the quarter driven by reduced channel inventory and intense competition in the cooler and cider categories. The recent regulatory change in the province to allow the sale of cider in grocery stores will be positive for the brand going forward," Croft added.

Branded volume growth, strength in co-pack production, favorable pricing and improved efficiencies in the Kitchener location associated with last year's capital expansion all contributed to the strong margin improvement, with gross margin in the quarter of 37.0%, vs. 28.1% prior year.

Brick's board of directors has also approved the quarterly dividend, at $0.012/share. The October payment will mark the fourth consecutive quarter for the dividend, since introduction in December 2015.

"As we move into the second half of our year we are pushing hard to continue to deliver improving results," noted Croft. "Laker, Waterloo, LandShark are all performing well, our co-pack business is strong, and we remain disciplined in our approach to improving our cost structure. The second round of grocery store licenses will be awarded this fall bringing the total number of stores to approximately 130 from the existing 60, and we will continue to work with grocery accounts to secure listings and support for our premium brands."

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, 2016.

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)			July 31, 2016			July 26, 2015			July 31, 2016			July 26, 2015
Net income			$	1,635		$	580		$	2,423		$	610
Add (deduct):
	Income tax expense (recovery)			438			218			776			236
	Depreciation and amortization			820			699			1,486			1,382
	Share-based payments			34			34			61			64
	Finance costs			164			123			283			235
Subtotal				1,456			1,074			2,606			1,917
EBITDA*				3,091			1,654			5,029			2,527

STATEMENTS OF COMPREHENSIVE INCOME
For the quarters ended July 31, 2016 and July 26, 2015
(Not audited or reviewed by the Company's external auditor)
		Quarter ended						Fiscal year-to-date ended
		July 31, 2016			July 26, 2015			July 31, 2016			July 26, 2015
Revenue		$	14,010,744		$	11,037,366		$	23,530,678		$	18,744,299
Cost of sales			8,826,721			7,932,292			15,014,453			13,547,469
Gross profit			5,184,023			3,105,074			8,516,225			5,196,830
Selling, marketing and administration expenses			2,708,217			2,046,195			4,589,419			3,820,640
Other expenses			238,980			137,496			445,400			294,617
Finance costs			164,190			123,630			282,552			235,232
Income before tax			2,072,636			797,753			3,198,854			846,341
Income tax expense			438,000			217,947			775,865			235,757
Net income and comprehensive income for the quarter		$	1,634,636		$	579,806		$	2,422,989		$	610,584
Basic earnings per share			0.05		$	0.02		$	0.07		$	0.02
Diluted earnings per share			0.05		$	0.02		$	0.07		$	0.02

STATEMENTS OF FINANCIAL POSITION
As at July 31, 2016 and January 31, 2016
(Not audited or reviewed by the Company's external auditor)
				July 31, 2016				January 31, 2016
ASSETS
	Non-current assets
		Property, plant and equipment		$	21,611,347			$	21,986,070
		Intangible assets			15,432,825				15,375,392
		Deferred income tax assets			486,904				1,262,769
					37,531,076				38,624,231
	Current assets
		Cash			1,240,332				393,645
		Accounts receivable			10,172,232				6,176,421
		Inventories			4,651,502				3,291,529
		Prepaid expenses			776,471				354,650
					16,840,537				10,216,245
TOTAL ASSETS					54,371,613				48,840,476
LIABILITIES AND EQUITY
	Equity
		Share capital			39,586,229				39,526,573
		Share-based payments reserves			926,969				932,201
		Deficit			(3,349,907	)			(4,933,195	)
	TOTAL EQUITY				37,163,291				35,525,579
	Non-current liabilities
		Provisions			400,075				388,548
		Obligation under finance lease			4,156,019				4,523,152
		Long-term debt			2,877,493				1,548,584
					7,433,587				6,460,284
	Current liabilities
		Accounts payable and accrued liabilities			8,317,557				4,908,722
		Current portion of obligation under finance lease			727,367				713,699
		Current portion of long-term debt			729,811				1,232,192
					9,774,735				6,854,613
TOTAL LIABILITIES					17,208,322				13,314,897
COMMITMENTS
TOTAL LIABILITIES AND EQUITY				$	54,371,613			$	48,840,476

STATEMENTS OF CASH FLOWS
For the quarters ended July 31, 2016 and July 26, 2015
(Not audited or reviewed by the Company's external auditor)
				Quarter ended								Fiscal year-to-date ended
				July 31, 2016				July 26, 2015				July 31, 2016				July 26, 2015
Operating activities
	Net income			$	1,634,636			$	579,806			$	2,422,989			$	610,584
	Adjustments for:
		Income tax expense			438,000				217,947				775,865				235,757
		Finance costs			164,190				123,630				282,552				235,232
Depreciation and amortization of property, plant and equipment and intangibles					820,084				699,288				1,486,852				1,381,972
		Share-based payments			34,184				34,395				60,943				63,921
		Change in non-cash working capital related to operations			(1,536,856	)			(1,772,396	)			(2,376,846	)			(1,090,724	)
	Less:
		Interest paid			(100,859	)			(17,286	)			(204,980	)			(111,133	)
Cash provided by (used in) operating activities					1,453,379				(134,616	)			2,447,375				1,325,609
Investing activities
	Purchase of property, plant and equipment				(486,211	)			(766,784	)			(1,101,929	)			(1,319,445	)
	Construction deposit paid				-				(205,119	)			-				(825,302	)
	Purchase (refund) of intangible assets				(1,613	)			15,737				(67,633	)			(262,090	)
Cash used in investing activities					(487,824	)			(956,166	)			(1,169,562	)			(2,406,837	)
Financing activities
	Increase in bank indebtedness				-				1,351,117				-				1,351,117
	Issuance of long-term debt				-				-				2,000,000				-
	Repayment of long-term debt				(593,055	)			(544,691	)			(1,231,441	)			(767,793	)
	Repayment of obligation under finance lease				(177,571	)			-				(353,465	)			-
	Dividends paid				(839,701	)			-				(839,701	)			-
	Issuance of shares, net of fees				-				-				7,968				5,225
	Shares repurchased and cancelled, including fees				(49,259	)			(83,817	)			(50,314	)			(102,298	)
	Proceeds from stock option exercise				31,893				-				35,827				-
Cash provided by (used in) financing activities					(1,627,693	)			722,609				(431,126	)			486,251
Net increase/(decrease) in cash					(662,138	)			(368,172	)			846,687				(594,976	)
Cash, beginning of the period					1,902,470				368,172				393,645				594,976
Cash, end of the period				$	1,240,332			$	-			$	1,240,332			$	-
Non-cash investing and financing activities:
	Acquisition of assets under finance lease			$	-			$	963,093			$	-			$	3,402,145

1. The purchase of property, plant and equipment excludes assets held under finance lease

Additional Information

Further details on the Company's complete management discussion and analysis (MD&A) and financial statements for the quarter ended July 31, 2016 will be available on the investor section of the Brick Brewing website at www.brickbeer.com. This and additional information relating to the Company, including its Annual Information Form, is or will be available on the Company's website and on SEDAR at www.sedar.com.

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.