CALGARY, AB, Nov. 2, 2021 /CNW/ - Big Rock Brewery Inc.
(TSX: BR) ("Big Rock" or the "Corporation") today
announced its financial results for the three and nine months ended
September 30, 2021.
Financial Highlights
For the three months ended September 30,
2021, compared to the three months ended September 30, 2020, the Corporation reported:
- sales volumes down 6% to 47,367 hectolitres ("hl")
compared to 50,367 hl;
- net revenue increased to $13.0
million from $12.8
million;
- operating income down 73% to $0.4
million compared to $1.5
million;
- Adjusted EBITDA (See "Non-GAAP Measures") down 52% to
$1.3 million from $2.7 million;
- net income down 77% to $0.2
million ($0.03 per share) from
$1.0 million ($0.15 per share); and
- the acquisition from Fireweed Brewing Corp. ("Fireweed")
of all of its licenses, trademarks and related intellectual
property in exchange for the settlement of the Corporation's
corresponding license obligation, which was a cash payment of
$0.5 million, resulting in a
$0.1 million gain on the
extinguishment of such obligation.
For the nine months ended September 30,
2021, compared to the nine months ended September 30, 2020, the Corporation reported:
- sales volumes down 3% to 129,201 hl from 133,550 hl;
- net revenue up 11% to $37.2
million from $33.7
million;
- operating income down 44% to $0.9
million compared to $1.6
million;
- Adjusted EBITDA down 22% to $4.1
million from $5.2
million;
- net income down to $0.6 million
from $0.7 million;
- capital spending of $5.4 million
of the total $9.5 million 2021
capital program; and
- $8.0 million drawn on total
credit facilities available of $16
million.
Although the Corporation's sales volumes are in decline, the
year-to-date rate of decline is consistent with the beer industry's
national average and below Alberta's provincial average decline. In
addition, the Corporation's year-over-year growth in the
"Ready-to-Drink" category ("RTD") is currently outpacing the
overall industry growth. Licensed and partner brands have continued
to provide additional exposure to the RTD category that continues
to grow nationally, and the Corporation has had success in adapting
to meet this noticeable shift in market demand.
Although net revenue on both a quarter-over-quarter and
year-over-year basis has increased, higher than anticipated costs
have contributed to the overall declines to operating income,
Adjusted EBITDA and net income. Global supply chain disruptions
have been the primary driver behind higher market prices impacting
utilities, delivery and distribution costs as well as certain raw
ingredient and material costs. These supply disruptions have also
impacted lead times on the delivery of certain production inputs
which has contributed to operating inefficiencies. In
addition, the Corporation experienced higher than anticipated
labour costs in the Calgary
facilities as the strategic capital plan is being completed and the
business is in a transition phase to position itself for
significant growth in production and packaging volumes. In order to
stabilize margins going forward into 2022, the Corporation is
taking measures to manage potential future cost volatility by
securing cost certainty through contract renegotiations,
operational efficiency projects, increasing our supplier network,
hedging and other cost mitigation strategies.
"Despite overall market trends pointing to a decline in beer
sales, Big Rock continues to grow net revenue through its
year-over-year growth in its co-packing business and continued
expansion into the RTD category through innovation and strategic
partnerships," said President & CEO Wayne Arsenault. "While we expect continued
pressure on costs moving into the fourth quarter, we remain focused
on executing our 2021 capital expansion plan, which remains on
budget, and growing volume through new co-packing agreements
enabled by our new packaging capabilities."
"Softened demand due largely to ongoing COVID-19 restrictions
and a rising-cost environment have placed pressure on our margins,"
said Chief Financial Officer, Don
Sewell. "We expect that this theme will carry into the
fourth quarter, however, we are confident in our ability to manage
through it. Despite these pressures in the latter half of fiscal
2021, we believe the increased throughput expected in 2022 has the
Corporation in a strong position to begin realizing the returns of
its growth plan."
Summary of Results
$000, except hl and
per share amounts
|
Three months
ended
September 30
|
Nine months ended
September 30
|
|
2021
|
2020
|
2021
|
2020
|
Sales volumes
(hl)1
|
47,367
|
50,367
|
129,201
|
133,550
|
Gross
revenue
|
$
17,969
|
$
17,830
|
$
50,898
|
$
47,273
|
Net
revenue
|
12,982
|
12,822
|
37,271
|
33,676
|
Cost of
sales
|
8,444
|
7,555
|
23,843
|
20,506
|
Operating
income
|
354
|
1,512
|
921
|
1,645
|
Adjusted
EBITDA2
|
1,325
|
2,695
|
4,092
|
5,216
|
Net income
|
237
|
1,028
|
568
|
706
|
Income per share
(basic)
|
$
0.03
|
$
0.15
|
$
0.08
|
$
0.10
|
Income per share
(diluted)
|
$
0.03
|
$
0.14
|
$
0.08
|
$
0.10
|
$ per
hl
|
|
|
|
|
Net
revenue
|
$
274.07
|
$
254.41
|
$
288.47
|
$
252.16
|
Cost of
sales
|
$
178.27
|
$
150.00
|
$
184.54
|
$
153.55
|
1
|
Excludes contract
manufacturing volumes due to the nature of the
agreements.
|
2
|
Non-GAAP measure. See
"Non-GAAP Measures".
|
Additional Information
The unaudited consolidated financial statements and Management's
Discussion and Analysis for the three and nine months ended
September 30, 2021 dated November 2, 2021, can be viewed on Big Rock's
website at www.bigrockbeer.com and on SEDAR at www.sedar.com under
Big Rock Brewery Inc.
NON-GAAP MEASURES
The Corporation uses certain financial measures referred to in
this press release to quantify its results that are not prescribed
by Generally Accepted Accounting Principles. This press release
contains the term "Adjusted EBITDA". This financial measure does
not have a standardized meaning under the Corporation's Generally
Accepted Accounting Principles and therefore may not be comparable
to similar measures presented by other issuers. The calculation of
Adjusted EBITDA is a non-GAAP measure, whose nearest GAAP measure
is net income, or net loss as applicable, with the reconciliation
between the two as follows:
($000, except where
indicated)
|
Three months
ended
September
30
|
Nine months
ended
September
30
|
|
2021
|
2020
|
Change
|
2021
|
2020
|
Change
|
Net income
(loss)
|
$
237
|
$
1,028
|
(719)
|
$
568
|
$
706
|
(138)
|
Addback:
|
|
|
|
|
|
|
Interest
|
104
|
111
|
(7)
|
321
|
391
|
(70)
|
Taxes
|
115
|
375
|
(260)
|
296
|
552
|
(256)
|
Depreciation
and amortization
|
829
|
978
|
(149)
|
2,504
|
2,965
|
(461)
|
Share based
payments
|
151
|
203
|
(52)
|
657
|
602
|
55
|
Gain on
disposal of assets
|
(12)
|
—
|
(12)
|
(155)
|
—
|
(155)
|
Gain on
extinguishment of license obligation
|
(99)
|
—
|
(99)
|
(99)
|
—
|
(99)
|
Adjusted
EBITDA
|
$
1,325
|
$
2,695
|
(1,370)
|
$
4,092
|
$ 5,216
|
(1,124)
|
Forward-Looking Information
Certain statements contained in this news release constitute
forward-looking statements. These statements relate to future
events or Big Rock's future performance. All statements, other than
statements of historical fact, may be forward-looking statements.
Forward-looking information are not facts, but only predictions and
generally can be identified by the use of statements that include
words or phrases such as, "anticipate", "believe", "continue",
"could", "estimate", "expect", "intend", "likely" "may",
"project", "predict", "propose", "potential", "might", "plan",
"seek", "should", "targeting", "will", and similar
expressions. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking statements. Big Rock believes that the expectations
reflected in those forward-looking statements are reasonable but no
assurance can be given that these expectations will prove to be
correct and such forward-looking statements included in this news
release should not be unduly relied upon by readers, as actual
results may vary materially from such forward-looking statements.
These statements speak only as of the date of this news release and
are expressly qualified, in their entirety, by this cautionary
statement.
In particular, this news release contains forward-looking
statements pertaining to the following:
- the anticipated benefits to be provided by Big Rock's capital
expansion plan, including increased capacity and capabilities, and
the anticipated timing thereof;
- Big Rock's ability to grow volume through co-packing
agreements;
- that Big Rock is in a strong position to begin realizing the
returns of its growth plan; and
- the supply and demand of Big Rock's products.
With respect to the forward-looking statements listed above and
contained in this news release, management has made assumptions
regarding, among other things:
- volumes in the current fiscal year will remain constant or will
increase;
- input costs for brewing and packaging materials will not
materially increase or decrease;
- there will be no material change to the regulatory environment
in which Big Rock operates;
- there will be no material supply issues with Big Rock's
vendors;
- that Big Rock will be able to use its new production capacity
and increase volume with co-packing agreements; and
- that the duration and extent of the COVID-19 pandemic will not
be long-term.
Some of the risks which could affect future results and could
cause results to differ materially from those expressed in the
forward-looking information and statements contained herein include
the risk factors set out in the Corporation's annual information
form and also include, but are not limited to:
- the inability to maintain the current AGLC beer mark-up policy
in Alberta;
- the inability to maintain the current AGLC mark-up rates
applicable to "Ready-to-Drink" beverages in Alberta;
- the inability to grow demand for Big Rock's products;
- the inability to fill its production capacity and grow volume
with co-packing agreements;
- the inability to remediate manufacturing issues as they
arise;
- the worldwide economic and social impact of the COVID-19
pandemic; and
- the duration and extent of the COVID-19 pandemic.
Readers are cautioned that the foregoing list of assumptions and
risk factors is not exhaustive. The forward-looking information and
statements contained herein are expressly qualified in their
entirety by this cautionary statement. The forward-looking
information and statements included in this news release are made
as of the date hereof and Big Rock does not undertake any
obligation to publicly update such forward-looking information and
statements to reflect new information, subsequent events or
otherwise unless so required by applicable securities laws.
About Big Rock Brewery Inc.
In 1985, Ed McNally founded Big
Rock to contest the time's beer trends. Three bold,
European-inspired offerings – Bitter, Porter and Traditional Ale –
forged an industry at a time heavy on easy drinking lagers and
light on flavour. Today, our extensive portfolio of signature
beers, ongoing seasonal offerings, six ciders (Rock Creek
Cider® series), custom-crafted private label products
and other notable, licensed alcoholic beverages keeps us at the
forefront of the craft beer revolution and still proudly contesting
the beer and alcoholic beverage trends of today. Big Rock has
brewing operations in Calgary,
Alberta, Vancouver, British
Columbia, and Toronto,
Ontario. Big Rock trades on the TSX under the symbol "BR".
For more information on Big Rock visit
www.bigrockbeer.com
SOURCE Big Rock Brewery Inc.