Brick Brewing Reports Third Quarter EBITDA of $2.0M

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

Third Quarter Highlights:

• Net Revenue for the third quarter increased to $11.1 million compared to $9.8 million in the third quarter of fiscal 2016.

• Gross profit margin for the quarter was 34.3%, an increase from 25.7% in prior year.

• Selling, Marketing and Administration ("SM&A") of $2.3 million, compared to prior year at $1.8 million.

• EBITDA* for the quarter increased to $2.0 million compared to EBITDA* in the third quarter of fiscal 2016 of $1.5 million.

• The Board of Directors approved an increase to the quarterly dividend, to $0.016/share, payable January 24, 2017 to shareholders of record as of January 10, 2017. The dividend is classified as an eligible dividend

Year to Date Highlights:

• Net revenue increased to $34.6 million, from $28.6 million in the prior year.

• Gross margin improved to 35.6% from 27.0% prior year.

• Selling, Marketing and Administration ("SM&A") expenses increased to $6.9 million from $5.6 million.

• EBITDA* improved to $7.1 million year to date, up from $4.0 million in the prior year.

Brick Brewing Co. Limited ("Brick" or the "Company") (BRB.TO), Ontario's largest Canadian-owned brewery, today released results for the third quarter ended October 30, 2016.

Net Revenues for the third quarter of fiscal 2017 grew to $11.1 million, up from $9.8 million in the third quarter of fiscal 2016. Gross margins for the quarter increased to 34.3% versus 25.7% in Q3 of the prior year. Margin expansion was supported by volume growth, improved product mix, strong pricing, as well as overall cost reductions in operations. EBITDA for the third quarter of fiscal 2017 improved to $2.0 million, reflecting a continuation of the strong results reported in the first half of the year.

"This was, by any measure, another tremendous quarter for Brick Brewing," noted George Croft, President and CEO. "We're reporting double digit growth in branded volume, co-pack revenue and net sales. We've been able to expand margins, increase the investment in our brands, and still deliver over 30% growth in EBITDA. Our Laker brand posted 13% volume growth while LandShark continued to resonate with consumers. Our Waterloo brand declined modestly in the quarter, due to channel inventory reductions . Counter sales for Waterloo remained strong, and are consistent with our year to date growth, up 14% vs prior year. 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 an increase in the quarterly dividend, to $0.016/share, up from $0.012/share. The dividend is payable January 24 to shareholders of record as of January 10, 2017. The dividend is an eligible dividend. Chief Financial Officer Sean Byrne commented, "The increase in the dividend is simply a continuation of our commitment to deliver value to shareholders. We believe it also speaks volumes about our ability to both invest in growing our business while at the same time increasing returns to shareholders."

Croft added, "Although we are enormously pleased with our results to date, we are taking nothing for granted. We will continue to focus on executional excellence, and will be working hard to ensure a strong finish for the year."

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)			October 30, 2016			October 25, 2015				October 30, 2016			October 25, 2015
Net income			$	854		$	492			$	3,277		$	1,102
Add (deduct):
	Income tax expense			291			141				1,067			377
	Depreciation and amortization			753			881				2,240			2,263
	Gain on disposal of property, plant and equipment			-			(197	)			-			(197	)
	Share-based payments			44			31				105			94
	Finance costs			103			122				386			357
Subtotal				1,191			978				3,798			2,894
EBITDA*				2,045			1,470				7,075			3,996

STATEMENTS OF COMPREHENSIVE INCOME
For the quarters ended October 30, 2016 and October 25, 2015
(Not audited or reviewed by the Company's external auditor)
		Quarter ended							Fiscal year-to-date ended
		October 30, 2016			October 25, 2015				October 30, 2016			October 25, 2015
Revenue		$	11,106,289		$	9,829,613			$	34,636,967		$	28,573,912
Cost of sales			7,302,657			7,302,829				22,317,110			20,850,298
Gross profit			3,803,632			2,526,784				12,319,857			7,723,614
Selling, marketing and administration expenses			2,349,468			1,828,723				6,938,887			5,649,363
Other expenses			205,192			140,642				650,592			435,259
Finance costs			103,043			121,779				385,595			357,011
Gain on disposal of property,plant and equipment			-			(196,912	)						(196,912	)
Income before tax			1,145,929			632,552				4,344,783			1,478,893
Income tax expense			291,495			141,082				1,067,360			376,839
Net income and comprehensive income		$	854,434		$	491,470			$	3,277,423		$	1,102,054
Basic earnings per share			0.02		$	0.01				0.09		$	0.03
Diluted earnings per share			0.02		$	0.01				0.09		$	0.03

STATEMENTS OF FINANCIAL POSITION
As at October 30, 2016 and January 31, 2016
(Not audited or reviewed by the Company's external auditor)
				October 30, 2016				January 31, 2016
ASSETS
	Non-current assets
		Property, plant and equipment		$	21,442,784			$	21,986,070
		Intangible assets			15,446,064				15,375,392
		Equipment Deposits			940,000				-
		Deferred income tax assets			195,409				1,262,769
					38,024,257				38,624,231
	Current assets
		Cash			1,058,357				393,645
		Accounts receivable			8,064,326				6,176,421
		Inventories			4,923,030				3,291,529
		Prepaid expenses			700,243				354,650
					14,745,956				10,216,245
TOTAL ASSETS					52,770,213				48,840,476
LIABILITIES AND EQUITY
	Equity
		Share capital			39,784,425				39,526,573
		Share-based payments reserves			910,387				932,200
		Deficit			(2,916,793	)			(4,933,195	)
	TOTAL EQUITY				37,778,019				35,525,579
	Non-current liabilities
		Provisions			405,836				388,548
		Obligation under finance lease			3,969,824				4,523,152
		Long-term debt			2,690,640				1,548,584
					7,066,300				6,460,284
	Current liabilities
		Accounts payable and accrued liabilities			6,454,797				4,908,722
		Current portion of obligation under finance lease			734,299				713,699
		Current portion of long-term debt			736,798				1,232,192
					7,925,894				6,854,613
TOTAL LIABILITIES					14,992,194				13,314,897
COMMITMENTS
TOTAL LIABILITIES AND EQUITY				$	52,770,213			$	48,840,476

STATEMENTS OF CASH FLOW
For the quarters ended October 30, 2016 and October 25, 2015
(Not audited or reviewed by the Company's external auditor)
				Quarter ended								Fiscal year-to-date ended
				October 30, 2016				October 25, 2015				October 30, 2016				October 25, 2015
Operating activities
	Net income			$	854,434			$	491,470			$	3,277,423			$	1,102,054
	Adjustments for:
		Income tax expense			291,495				141,082				1,067,360				376,839
		Finance costs			103,043				121,779				385,595				357,011
Depreciation and amortization of property, plant and equipment and intangibles					753,154				881,271				2,240,006				2,263,243
Gain on disposal of property, plant and equipment					-				(196,912	)			-				(196,912	)
		Share-based payments			44,157				30,527				105,100				94,448
		Change in non-cash working capital related to operations			56,623				1,681,820				(2,320,224	)			591,094
	Less:
		Interest paid			(103,603	)			(214,730	)			(308,583	)			(325,861	)
Cash provided by operating activities					1,999,303				2,936,307				4,446,677				4,261,916
Investing activities
	Purchase of property, plant and equipment				(579,491	)			(831,658	)			(1,681,420	)			(2,151,101	)
	Equipment deposit paid				(940,000	)			(111,293	)			(940,000	)			(936,595	)
	Proceeds from sale of property, plant and equipment, net				-				322,490				-				322,490
	Purchase of intangible assets				(18,339	)			(15,692	)			(85,972	)			(277,784	)
Cash used in investing activities					(1,537,831	)			(636,153	)			(2,707,392	)			(3,042,990	)
Financing activities
	Increase in bank indebtedness				-				(1,351,117	)			-				-
	Issuance of long-term debt				-				-				2,000,000				-
	Repayment of long-term debt				(180,321	)			(355,042	)			(1,411,762	)			(1,122,835	)
	Repayment of obligation under finance lease				(179,263	)			(132,741	)			(532,728	)			(132,741	)
	Dividends paid				(421,320	)			-				(1,261,021	)			-
	Issuance of shares, net of fees				2,490				4,750				10,458				9,975
	Shares repurchased and cancelled, including fees				(3,883	)			(76,353	)			(54,197	)			(178,651	)
	Proceeds from stock option exercise				138,850				904				174,677				904
Cash used in financing activities					(643,447	)			(1,909,599	)			(1,074,573	)			(1,423,348	)
Net increase/(decrease) in cash					(181,975	)			390,554				664,712				(204,422	)
Cash, beginning of the period					1,240,332				-				393,645				594,976
Cash, end of the period				$	1,058,357			$	390,554			$	1,058,357			$	390,554
Non-cash investing and financing activities:
	Acquisition of assets under finance lease			$	-			$	805,878			$	-			$	4,208,021

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

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.