E-Malt.com News article: 3246

Canada: Brick Brewing Co. Limited released on September 12 record financial results for the second quarter ended July 31, 2004. The company announced Gross Sales for the second quarter of 2004 increased to $11.5 million compared to $7.3 million for the same period last year, an increase of 57%. Net beer revenues increased 240% to $6.3 million primarily as a result of growth in value and mainstream beer brands coupled with the launch of the PC brands in Ontario and Quebec in the second quarter. Net income was a record $832 thousand compared to $554 thousand in the second quarter last year, an improvement of $278 thousand or 50%.

"I am very encouraged by our results to date, particularly in light of a rather dismal summer selling period for the industry as a whole," said Jim Brickman, Executive Chairman and Founder. "Our earlier initiatives on several fronts are clearly beginning to provide increasing momentum. It's a nice feeling," he added.

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased to $1.188 million in the second quarter compared to $891 thousand from the same quarter last year, an increase of 33%. Gross margin increased to $2.6 million compared to $1.9 million in the same quarter last year; an increase of 34%. This increase is due to the unit gross margins for the Company's growing beer portfolio being significantly larger than the per unit gross margins attained from co-packing other products.

During the quarter volumes from co-packing were down by 86% versus the same period last year. Some of the co-pack business was lost due to the erosion of volume experienced by these non-owned brands, while some was intentionally eliminated due to the superior margins afforded by the new value beer focus.

Recently the Company announced that it had successfully refinanced and increased the authorized amount of its operating line. The Company now complies with all its lending covenants. In August the Company announced that it had reached an agreement to obtain new term financing from Roynat Capital. This facility will provide the Company with financing to repay its existing term lender and supplemental financing to invest in its manufacturing operations to reduce its operating cost per hectolitre.

Effective September 1, 2004 the Company has entered into a sales agency agreement with Big Rock Brewery of Calgary, Alberta where Brick will sell and represent Big Rock's brands in Ontario. This affords Brick supplemental margins beyond previously announced joint ventures with Big Rock.

Doug Berchtold President and CEO added, "We anticipated that the new strategies being implemented would provide improved efficiencies from increased beer volumes and would favorably impact our financial results. The Company is well positioned to seize upside volume potential. We are encouraged by the strength of the results for this quarter and are confident that these strategic changes underway at Brick will produce sustained growth in margins and income in future quarters."


15 September, 2004