CALGARY, March 14, 2019 /CNW/ - Big Rock Brewery Inc. (TSX: BR) ("Big Rock" or the "Corporation") today announced its financial results for the three months and the year ended December 30, 2018.
"Big Rock grew net revenue and gross profit by 5% and 10%, respectively" said President & CEO Wayne Arsenault. "Significant improvements were made across our business in 2018, resulting in an increase in year-over-year EBITDA by 118% to $4.2 million. As previously announced in the fourth quarter, we closed the amended transaction with Fireweed Brewing Corp. ("Fireweed") and have since installed the brewing assets purchased as part of the transaction in our Vancouver brewery. We anticipate that the increased capacity and productivity of our Vancouver brewery as result of the production and sale of popular product offerings from Fireweed such as Shaftsbury and several of its Tree Brewing brands will make a strong contribution to our profitability in 2019."
For the three months ended December 30, 2018, compared to the fourth quarter of 2017, the Corporation:
- increased net revenue by 8%, from $11.1 million to $12.0 million;
- reported earnings before interest, taxes, depreciation and amortization ("EBITDA") of $1.1 million compared to $623 thousand;
- reported operating income of $216 thousand, compared to an operating income of $33 thousand;
- reduced its net loss to $80 thousand from $141 thousand; and
- provided cash flow from operating activities of $4.6 million, compared to cash flow from operating activities of $3.0 million.
For the year ended December 30, 2018, compared to 2017, the Corporation:
- increased net revenue by 5%, from $46.6 million to $48.7 million;
- reported EBITDA of $4.2 million compared to $1.9 million;
- reported operating income of $931 thousand, compared to an operating loss of $1.0 million;
- reported net income of $360 thousand, compared to a net loss of $1.0 million;
- provided cash flow from operating activities of $4.6 million compared to cash flow from operating activities of $1.4 million; and
- Paid down bank debt and capital leases by $641 thousand to $5.8 million from $6.4 million and currently have a net debt to last twelve months EBITDA of less than one versus 3.2 at fiscal year end last year.
Despite competitive pressures in the Canadian beer market place, Big Rock reported significant improvement in its results for the fourth quarter and the year ended December 30, 2018, compared to the comparative periods in 2017. The Corporation increased its sales volumes in the fourth quarter of 2018 (versus the same quarter of 2017), by working closely with large volume ordering customers. In the second half of 2018, the Corporation's pursuit of contract brewing revenues more than fulfilled that of the discontinued sales volumes of select value brands, with the Corporation's fourth quarter revenue up approximately 8% versus the fourth quarter of 2017 and 5% versus the prior year. Additionally, gross profit margin improved in the fourth quarter and the year ended December 30, 2018 to 40% and 43% compared to 38% and 41% reported in the fourth quarter and the year ended December 30, 2017. These improvements reflect the impact of upward pricing adjustments throughout 2018, while realizing cost savings through cost-focused projects and initiatives undertaken throughout the year.
The Corporation continues to search for initiatives that will improve its asset utilization at its Calgary, Vancouver and Etobicoke breweries. During the fourth quarter of 2018, the Corporation closed an amended asset purchase and licensing transaction with Fireweed, which allowed the Corporation to expand its brewing capacity in Vancouver, in addition to providing the Corporation with a new revenue stream from the production and sale of Fireweed trademarked products in British Columbia and Alberta.
The Corporation's packaged product revenues increased in 2018, particularly in Alberta and British Columbia. These increases were led by volume growth in contract manufacturing and Rock Creek Cider brands, in addition to popular brands such as Pilsner, Midnight Rhapsody and Honey Brown. Additionally, a reduction in the Alberta provincial mark-up for cider volumes helped the growth in cider net revenues in 2018.
On November 26, 2018, the Alberta government announced the cancellation of the Alberta Small Brewers Development grant program and a graduated mark-up system for Alberta producers of less than 50,000 hl per year, effective December 15, 2018. The Corporation continues to work with the Alberta government on establishing a new mark-up structure that promotes growth and long-term stability for Alberta craft brewers and in the interim has requested financial support for its 2019 growth plans.
Summary of Results
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The audited annual consolidated financial statements and Management's Discussion and Analysis for the three months and year ended December 30, 2018, dated March 13, 2019 can be viewed on Big Rock's website at www.bigrockbeer.com and on SEDAR at 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 9, 2019 at 2:00 pm (Mountain Standard Time) at the Big Rock Brewery, 5555 â 76 Ave S.E., Calgary, Alberta.
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:
- supply and demand of Big Rock's products;
- the impact of recent changes in Alberta mark-up rates and any further changes in the future;
- expectations with respect to Alberta government financial support; and
- Big Rock's expectations with respect to future operations, results and growth.
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; and
- the Corporation's ongoing discussions with the Alberta Government with respect to the mark-up and grant program will be successful in improving the mark-up and grant programs applicable to the Corporation.
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 reduce the net mark-up rate in Alberta; and
- the inability to grow demand for Big Rock's products.
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 â Bitter, Porter and Traditional Ale â 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, four ciders (Rock Creek Cider® series) and custom-crafted private label products keep us at the forefront of the craft beer revolution and still proudly contesting the beer 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.