CALGARY, AB, March 14, 2022 /CNW/ - Big Rock Brewery
Inc. (TSX: BR) ("Big Rock" or the
"Corporation") today announced its financial results
for the three months and year ended December
30, 2021.
"The Corporation experienced a challenging fourth quarter in
2021 due to continued inflationary cost pressures and soft demand
that significantly impacted the business." said President
& CEO Wayne Arsenault. "While
navigating these pressures, our focus in the fourth quarter was to
continue to deliver the 2021 capital expansion plan on budget and
to grow our volume base through new co-packing agreements. We
progressed on these initiatives by securing a new 3-year co-pack
agreement with an existing partner that triples their previous
minimum commitment for incremental revenue of $3 million per annum in December of 2021. The
2021 capital expansion plan spending continued to remain within
budget. Despite the market trend of declining beer consumption
year-over-year both nationally and provincially, Big Rock was able
to offset these trends with growth that outpaced the industry in
the "Ready-to-Drink" ("RTD") category and as a result, the
Corporation saw year over year growth in net revenue. The "Gear Up"
portion of the Corporation's strategy has been substantially
completed and Big Rock is primed to leverage the new can line and
pasteurizer to support continued growth in it's co-packing business
while simultaneously leveraging the recently-completed IT
transformation related to procurement and planning processes to
better manage costs and raw material inputs."
Financial Summary
For the three months ended December 30,
2021, compared to the three months ended December 30, 2020, the Corporation reported:
- sales volumes down 13% to 34,430 hectolitres ("hl")
compared to 39,446 hl;
- net revenue decreased to $8.7
million from $10.3
million;
- operating loss increased 65% to $2.9 million compared to $1.8 million;
- net loss increased to $3.8
million from $1.4 million;
and
- Adjusted EBITDA (see "Non-GAAP Measures") down to
negative $2.0 million from
$0.6 million.
For the year ended December 30,
2021, compared to the year ended December 30, 2020, the Corporation reported:
- sales volumes down 5% to 163,631 hl from 172,996 hl;
- net revenue up 5% to $46.0
million from $44.0 million;
- operating loss increased to $2.0
million from $0.1
million;
- net loss increased to $3.3
million from $0.7
million;
- Adjusted EBITDA decreased from $5.9
million to $2.1 million;
- capital spending of $8.3 million
of the total $9.5 million 2021
capital program; and
- $10.3 million drawn on total
credit facilities of $16
million.
Fourth Quarter Summary
Several trends from the third quarter of 2021 continued during
the fourth quarter of the year with the strongest challenges to the
Corporation's fourth quarter 2021 results attributed to the
following:
- soft demand from co-packing partners due to higher than
historical inventory levels in the fall and winter months;
- continued higher than anticipated delivery and distribution
costs related to global supply chain disruptions and related cost
pressures;
- continued cost increases and lead times observed in certain raw
ingredient and material procurement; and
- market trends of declining beer consumption have contributed to
a continued decline in the Corporation's sales volumes, however, at
a rate of decline that is consistent with the industry's national
average and below Alberta's
provincial average decline.
- Losses on non-core assets dispositions of $0.9 million and impairment loss of $0.9 million on co-packing customer receivables
also contributed to the increase in net loss during the fourth
quarter
The Corporation completed the commissioning of the new can line,
pasteurizer, and other equipment enhancements that will support
increased packaging formats for in-house, partner, and co-pack
volumes. Big Rock also completed a substantial portion of the IT
Digital Transformation of the 2021 capex plan in the fourth quarter
of 2021, with some small carryover into 2022, and this will provide
additional insight into raw material and ingredient costs as well
as procurement process, in addition to labour and production
efficiency. Management believes that the IT Digital Transformation
spending in combination with the new can line, pasteurizer, and
other equipment enhancements will enable the Corporation to
efficiently deliver on a growing volume base driven by an
increasing emphasis on its co-pack business.
Summary of Results
$000, except hl and
per share amounts
|
Three months
ended
December 30
|
Year ended
December 30
|
|
2021
|
2020
|
2021
|
2020
|
Sales volumes
(hl)(1)
|
34,430
|
39,446
|
163,631
|
172,996
|
Gross
revenue
|
12,135
|
13,691
|
63,033
|
60,964
|
Net
revenue
|
8,711
|
10,308
|
45,982
|
43,984
|
Cost of
sales
|
7,317
|
6,993
|
31,160
|
27,499
|
Operating
loss
|
(2,932)
|
(1,779)
|
(2,011)
|
(134)
|
Adjusted
EBITDA(2)
|
(1,954)
|
634
|
2,148
|
5,850
|
Net loss
|
(3,825)
|
(1,372)
|
(3,257)
|
(666)
|
Loss per share (basic
& diluted)
|
$
|
(0.55)
|
$
|
(0.19)
|
$
|
(0.47)
|
$
|
(0.10)
|
$ per
hl
|
|
|
|
|
Net
revenue
|
$
|
253.00
|
$
|
255.32
|
$
|
281.01
|
$
|
254.25
|
Cost of
sales
|
$
|
212.52
|
$
|
201.04
|
$
|
190.43
|
$
|
158.96
|
|
|
(1)
|
Excludes contract
manufacturing volumes due to the nature of the
agreements.
|
(2)
|
Non-GAAP measure. See
"Non-GAAP Measures".
|
Additional Information
The audited consolidated financial statements and Management's
Discussion and Analysis for the year ended December 30, 2021 dated March 14, 2022, can be viewed on Big Rock's
website at www.bigrockbeer.com and on SEDAR at www.sedar.com under
Big Rock Brewery Inc.
Big Rock is also pleased to announce that the Annual Meeting of
Big Rock shareholders will be held on May
18, 2022 at 2:00 p.m. (Mountain
Standard Time). Further details of the Annual Meeting will
follow in due course.
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 December 30
|
Year
ended December 30
|
|
2021
|
2020
|
Change
|
2021
|
2020
|
Change
|
Net loss
|
(3,825)
|
(1,372)
|
(2,453)
|
(3,257)
|
(666)
|
(2,591)
|
Addback:
|
|
|
|
|
|
|
Interest
|
122
|
115
|
7
|
443
|
506
|
(63)
|
Income tax expense
(recovery)
|
(1,115)
|
(514)
|
(601)
|
(819)
|
38
|
(857)
|
Depreciation and
amortization
|
831
|
775
|
56
|
3,335
|
3,740
|
(405)
|
Impairment of
property, plant and equipment
|
—
|
1,500
|
(1,500)
|
—
|
1,500
|
(1,500)
|
Impairment on
co-packing customer receivables
|
930
|
—
|
930
|
930
|
—
|
930
|
Share-based
payments
|
145
|
130
|
15
|
802
|
732
|
70
|
Loss on dispositions –
net
|
922
|
—
|
922
|
767
|
—
|
767
|
Loss (gain) on
extinguishment of liabilities
|
36
|
—
|
36
|
(53)
|
—
|
(53)
|
Adjusted
EBITDA(1)
|
(1,954)
|
634
|
$
(2,588)
|
2,148
|
5,850
|
(3,702)
|
|
|
(1)
|
Non-GAAP
measure. See "Non-GAAP Measures".
|
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. The Corporation does not undertake any obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, unless
required by law.
In particular, this news release contains forward-looking
statements pertaining to the following:
- the anticipated incremental revenue to be derived from Big
Rock's 3-year co-pack agreement;
- anticipated market trends;
- that Big Rock is primed to leverage its new can line and
pasteurizer to support continued growth in its co-packing
business;
- that Big Rock is primed to leverage its recently completed IT
transformation related to procurement and planning processes to
better manage costs and raw material inputs;
- the anticipated benefits to be provided by Big Rock's new can
line, pasteurizer and other equipment enhancements;
- that Big Rock's IT Digital Transformation will provide
additional insight into raw material and ingredient costs as well
as procurement process, in addition to labour and production
efficiency;
- Big Rock's expectation that its IT Digital Transformation
spending in combination with the new can line, pasteurizer, and
other equipment enhancements will enable it to efficiently deliver
on a growing volume base driven by an increasing emphasis on its
co-pack business;
- Big Rock's ability to grow volume through co-packing
agreements; and
- the anticipated timing of Big Rock's Annual Meeting of the
shareholders and that further details in connection therewith will
follow in due course.
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;
- that Big Rock's new can line and pasteurizer will support
continued growth in its co-packing business;
- that Big Rock's recently completed IT transformation will allow
Big Rock to better manage costs and raw material inputs;
- that Big Rock's new can line, pasteurizer and other equipment
enhancements will support increased packaging formats for in-house,
partner and co-pack volumes; 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 incremental revenue to be derived from Big Rock's 3-year
co-pack agreement will be less than anticipated;
- that Big Rock's new can line and pasteurizer will not support
continued growth in its co-packing business;
- that Big Rock's recently completed IT transformation will not
allow Big Rock to better manage costs and raw material inputs;
- that Big Rock's new can line, pasteurizer and other equipment
enhancements will not support increased packaging formats for
in-house, partner and co-pack volumes;
- that Big Rock's IT Digital Transformation will not provide
additional insight into raw material and ingredient costs or
procurement process;
- that Big Rock's IT Digital Transformation will not provide
labour and production efficiency;
- that Big Rock's IT Digital Transformation spending in
combination with the new can line, pasteurizer, and other equipment
enhancements will not enable it to efficiently deliver on a growing
volume base driven by an increasing emphasis on its co-pack
business;
- the worldwide economic and social impact of the COVID-19
pandemic; and
- the duration and extent of the COVID-19 pandemic.
This press release contains information that may be considered a
financial outlook under applicable securities laws about the
Corporation's potential financial position, including, but not
limited to, the anticipated incremental revenue to be derived from
the Corporation's 3-year co-pack agreement, all of which are
subject to numerous assumptions, risk factors, limitations and
qualifications, including those set forth in the above paragraphs.
The actual results of operations of the Corporation and the
resulting financial results will vary from the amounts set forth in
this press release and such variations may be material. This
information has been provided for illustration only and with
respect to future periods are based on budgets and forecasts that
are speculative and are subject to a variety of contingencies and
may not be appropriate for other purposes. Accordingly, these
estimates are not to be relied upon as indicative of future
results. Except as required by applicable securities laws, the
Corporation undertakes no obligation to update such financial
outlook. The financial outlook contained in this press release was
made as of the date of this press release and was provided for the
purpose of providing further information about the Corporation's
potential future business operations. Readers are cautioned that
the financial outlook contained in this press release is not
conclusive and is subject to change.
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.