E-Malt.com News article: Canada, ON: Brick Brewing announces third quarter results

Brick Brewing Co. Limited, the largest Canadian-owned brewery in Ontario, released on December, 6 its financial results for the third quarter ended October 28, 2012 for its fiscal year 2013.

"We are committed to growing the Seagram and Waterloo premium trademarks. In our primary market of Ontario, these brands demonstrated exceptional counter sales growth of 44% and 30% respectively in Q3", said Mr. Croft. "In the upcoming quarters, we will be increasing our marketing budgets dedicated to these brands. Over the past year, we have worked on redesign and repositioning these brands for growth, and believe that the time is now to focus our energy on increasing consumer awareness and brand trial."

"Brick Brewing experienced some challenges in the quarter, but we believe that the circumstances are unique and non-recurring."

"We experienced an unexpected reduction in co-pack volume, caused by a co-pack supply chain issue beyond Brick's control. The supply chain issue resulted in a shortfall of approximately 10,000 hectolitres versus Brick's forecast. The issue has been resolved and production has resumed in Q4", noted Mr. Croft. "We anticipate recovering some of the co-pack shortfall in the current fiscal year, as we help our co-pack partner replenish trade inventory."

"Shipments of Laker products declined by 7% in the quarter. Industry volume declined by 2.3% in the quarter and our competitors responded by aggressively discounting National mainstream brands. We witnessed abnormal and sustained price reductions on leading national brands", said Mr. Croft. "We believe that this pricing activity was intended to reverse declining industry volumes. Despite this effort, industry volumes continue to trend lower and the NHL lockout is compounding these results. Subsequent to Q3, the prices for leading National brands have increased to a normal level above value beer prices, creating more predictable results for the Laker family."

"We have worked consistently on improving the 'fit and finish' of our products, and creating a meaningful point of difference. Most recently, we announced the introduction of 12-pack bottles of Laker Lager, Light and Ice incorporating a free tall can in each case, which we believe is the best beer offer in Ontario," remarked Mr. Croft. "Laker continues to play an important role in our business and our goal is to be recognized as the 'Champion of Beer Value' by Ontario beer drinkers. Taking into consideration the current pricing environment and 12-pack introduction, we expect Laker brand performance to recover to a level that is consistent with the broader industry."

"I am proud that our Company has become so resilient and adaptive to tough industry situations we face from time to time," noted Mr. Croft. "Although the financial performance is below our expectations, the responses to challenges within the quarter exemplify the culture at Brick Brewing, and I believe that the passion of all team members will ensure continued sustainable success," continued Mr. Croft.

Net revenues for the third quarter of fiscal 2013 were C$7.5 mln compared to C$7.9 mln in the third quarter of fiscal 2012.

Gross profit percentage for the quarter decreased to 18.7% from 24.9% in the prior year comparable quarter. The shortfall in co-pack volume was a key driver for this reduction. Additionally, the Company's fixed costs as a percentage of net revenue increased due to lower sales volumes.

EBITDA* for the third quarter ended October 28, 2012 was C$0.3 mln compared to EBITDA* in the third quarter of fiscal 2012 of C$0.7 mln.

Net revenues to date for fiscal 2013 were C$27.7 mln compared to C$26.7 mln for the first three quarters of fiscal 2012.

Gross profit percentage for the first three quarters of fiscal 2013 increased to 26.9% from 24.8% in the prior year comparable period.

EBITDA* for the three quarters ended October 28, 2012 was C$3.8 mln compared to EBITDA* for the first three quarters of fiscal 2012 of C$3.2 mln.

Brick Brewing is Ontario's largest Canadian-owned and Canadian-based publicly held brewery. 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 brand premium craft beers with other popular brands such as Laker, Red Baron, Red Cap and Formosa Springs Draft. In March 2011, Brick purchased the Canadian rights to the Seagram Coolers and now produces, sells, markets and distributes Seagram Coolers across Canada.

* EBITDA represents earnings before interest, income taxes, depreciation and amortization.


07 December, 2012