Canada NewsWire
CALGARY, AB, Nov. 3, 2020
Reports Profitable Third Quarter with EBITDA of $2.5 Million, Up 290% from Third Quarter 2019
CALGARY, AB, Nov. 3, 2020 /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, 2020.
"We are pleased to report continued strong financial and operational results, with third quarter EBITDA (defined herein) of $2.5 million, an increase of 22% compared to the second quarter of 2020 and 290% compared to the same period in 2019. We continue to successfully navigate the challenges related to the COVID-19 pandemic despite the closure of bars, restaurants and events which has resulted in significant losses in our retail revenue which persisted in the summer months," said President & CEO Wayne Arsenault. "the health and safety of our employees, customers and consumers remains our top priority. Through our commitment to these principles, we reported an excellent third quarter and have spent a significant amount of time realigning our long-term strategic plan to ensure success in the years to come."
At September 30, 2020, the Corporation had a cash balance of $1.3 million, was undrawn on its operating credit facility of $5 million and $3.0 million drawn on its $6 million term facility with its sole lender, affording Big Rock significant financial flexibility.
"Despite the significant financial hurdles experienced in prior years, we are very pleased with the strong financial position of the Corporation at the end of the third quarter and are well positioned to be opportunistic going forward," said Chief Financial Officer Don Sewell.
Financial Highlights
For the three months ended September 30, 2020, compared to the three months ended September 30, 2019, the Corporation reported:
For the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, the Corporation reported:
Operating Highlights
In the third quarter of 2020, the Corporation achieved a $1.9 million increase in EBITDA to $2.5 million, as compared to the same period in 2019. Several trends from the second quarter of 2020 continued during the third quarter, with the strongest contributions to the improvement in the Corporation's EBITDA in the quarter being attributed to the following:
The loss of keg sales related to COVID-19 continued to put the performance of Big Rock's Signature series of beers under significant pressure, along with a continued decline in beer consumption trend in Canada.
The Corporation experienced several manufacturing issues during the second quarter, some related to COVID-19 and others not. Although some of these issues were remediated in the third quarter, some manufacturing issues persisted, resulting in the Corporation realizing a $0.4 million charge due to increased waste and damaged inventories. The Corporation has several projects underway to remediate such manufacturing issues going forward as this has not only impacted the cost of sales, but also impacted revenue in the form of 'stock-outs' which is consistent with other brewers' experiences during the COVID-19 pandemic.
Despite manufacturing and inventory challenges experienced in the third quarter of 2020, Big Rock reported net income of $1.0 million or $0.15 per common share, compared to a net loss of $0.2 million or $0.03 per common share in the same period of 2019.
Summary of Results
Three months ended September 30 | Nine months ended September 30 | |||||||
$000, except hl and per share amounts | 2020 | 2019 | 2020 | 2019 | ||||
Sales volumes (hl) (1) | 50,367 | 50,327 | 133,550 | 134,202 | ||||
Gross revenue | $ | 17,830 | $ | 18,081 | $ | 47,273 | $ | 52,224 |
Net revenue | 12,822 | 11,189 | 33,676 | 33,114 | ||||
EBITDA (2) | 2,492 | 639 | 4,614 | (417) | ||||
Operating income (loss) | 1,512 | (761) | 1,645 | (3,485) | ||||
Net income (loss) | 1,028 | (201) | 706 | (1,625) | ||||
Income (loss) per share (basic) | $ | 0.15 | $ | (0.03) | $ | 0.10 | $ | (0.23) |
Income (loss) per share (diluted) | $ | 0.14 | $ | (0.03) | $ | 0.10 | $ | (0.23) |
$ per hl | ||||||||
Net revenue | $254.57 | $222.33 | $252.16 | $246.75 | ||||
Cost of sales | $150.00 | $143.34 | $153.55 | $169.94 |
(1) | Excludes contract manufacturing volumes due to the nature of the agreements. |
(2) | Non-GAAP measure. See "Non-GAPP Measures". |
Additional Information
The unaudited consolidated financial statements and Management's Discussion and Analysis for the three and nine months ended September 30, 2020 dated November 3, 2020, 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 "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. EBITDA is calculated by adding back to net income, interest, income taxes, depreciation and amortization. For more information, please see Management's Discussion and Analysis for the three months and nine months ended September 30, 2020.
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:
With respect to the forward-looking statements listed above and contained in this news release, management has made assumptions regarding, among other things:
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:
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.
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