November 5, 2015 Calgary, Alberta—Big Rock Brewery Inc. (TSX: BR) (“Big Rock” or the "Corporation") announced its financial results today for the three and nine months ended September 30, 2015.
The Corporation reported an increase in sales volumes of 14% to 55,132 hectolitres (“hl”) for the third quarter of 2015 as compared to 48,376 hl for the same period in 2014. The reported operating profit was $104 thousand for the three months ended September 30, 2015, compared to $1,017 thousand for the same period in 2014, while net income was $76 thousand for the third quarter of 2015 as compared to $764 thousand for the third quarter in 2014.
In Alberta, Big Rock’s principal market, and the region subject to the fiercest competition, Big Rock grew volumes and gross profit, while at the same time keeping selling expenses below the same periods in 2014. Recently rebranded and relaunched products, including AGD, Big Rock’s most approachable lager, continued to see an enthusiastic response from consumers. These products are in the value-priced category and as a result per-hectolitre margins were compressed.
Margins in Alberta remain under sustained pressure. A 27.5% increase in Alberta Gaming and Liquor Commission (“AGLC”) markup rates early in the year increased beer costs to consumers and hampered Big Rock’s ability to implement a planned price increase to cover rising input costs. The Corporation has not introduced a general price increase in Alberta since November 2012. In October, AGLC introduced another change in markup rates. The immediate effect of this change was a partial rollback of the previous increase applicable to Big Rock but the longer-term effect is still being assessed by the Corporation.
In Vancouver, Big Rock Urban, the Corporation’s newest brewpub and brewery operation, has been well-received by local craft consumers. CEO Robert Sartor remarked, “It’s absolutely critical to the success of our new regional ventures that they resonate with the craft community. Winning two awards at the recent BC Beer Awards, including first place in the amber/brown ale category for Hollow Tree and being named one of the best new Craft Breweries by The Georgia Straight show that we are on the right path. Now we can build on this initial success, grow our stable of BC-made beers, and start translating consumer satisfaction into positive cashflow.” As Big Rock Urban is still developing its beer portfolio it is not yet selling at full capacity and therefore has a higher per-unit cost of sales and higher selling and marketing costs to increase awareness. Additionally, the BC market has also embraced the relaunch of AGD which has contributed towards strong sales volumes but has reduced average margins.
Big Rock’s Ontario expansions continue to progress through the initial planning and pre-permitting stages. Sales volumes grew in Ontario as the Corporation engaged in awareness-building promotional activity, including ‘pop-up’ parties at the site of the new brewpub. This promotional activity did have a negative impact on current period results for the region.
Financial and Operating Highlights
Volume growth occurred in Big Rock’s two largest markets, Alberta and BC, with the launch of two new permanent beers and four seasonal beers. Additionally, Big Rock launched a limited edition 30th anniversary pack to commemorate the original three beers. AGD and certain private label products continued to see strong growth following comprehensive rebranding;
In addition to the new products launched in the quarter, Big Rock expects to release six new Calgary-brewed products during the remainder of 2015;
Big Rock also expects to launch from its new Vancouver brewery several permanent and a variety of seasonal beers brewed specifically for the BC market during the remainder of 2015.
The Financial Statements and Management’s Discussion and Analysis dated November 5, 2015 can be viewed on Big Rock’s website at http://bigrockbeer.com/sites/default/files/2015q3.pdf and on SEDAR at sedar.com under Big Rock Brewery Inc.
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 statements are often, but not always, identified by the use of words such as “plans”, “expects”, “intends” 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 not be unduly relied upon by investors 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:
the number of additional products to be released and the timing of any such releases;
the success of new products and initiatives in the future; and
the timing of new products and initiatives and the extent to which they will provide incremental sales volumes and improve profitability.
With respect to the forward-looking statements listed above and contained in this News Release, management has made assumptions regarding, among other things:
new products and services introduced will result in incremental sales volumes; and
permitting and other construction activities will be able to be secured and/or completed within expected timeframes.
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, but are not limited to:
the inability to secure the requisite regulatory approvals to market the full production of the new facilities in Toronto within the timeframe indicated; and
the inability to secure and complete construction services for the new Toronto facilities within the timeframe indicated.
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.
Big Rock Brewery Inc. produces premium, all-natural craft beers. Big Rock has a broad family of permanent ales and lagers, the Rock Creek Cider® series of craft ciders, and an ongoing selection of seasonal beers released through the Brewmaster’s Limited Edition.
For more information on Big Rock Brewery visit bigrockbeer.com
For further information, please contact:
Robert Sartor, President and Chief Executive Officer, or Barbara Feit, Chief Financial Officer:
Phone: (403) 720 3239
Fax: (403) 720 3641