For Immediate Release
July 30, 2020 — Calgary, Alberta — Big Rock Brewery Inc. (TSX: BR) (“Big Rock” or the “Corporation“) today announced its financial results for the three and six months ended June 30, 2020.
“Big Rock achieved 510% EBITDA growth, compared to the same period in 2019, and cash flow from operations of $2.8 million in the second quarter of 2020. Despite the challenges faced related to the COVID-19 pandemic, including a significant loss in bar, restaurant and event revenue, we are extremely pleased with the success of the business and the resilience of our employee base through these uncertain times,” said President & CEO Wayne Arsenault, “Since the beginning of the pandemic, we have prioritized and implemented extraordinary measures to protect the safety of our employees, customers and consumers. Through commitment to these principles, we reported an excellent second quarter and believe we are well positioned to continue to find success in the quarters to come.”
As at June 30, 2020, the Corporation was undrawn on its operating credit facility of $5 million and $3.1 million drawn on its $6 million term facility with its lender.
“Although the Corporation faced significant financial challenges in 2019 and the uncertain economic circumstances presented by COVID-19 in 2020, as a result of the continued support of our lender, partners and provincial and federal governments, along with strong working capital and cost structure management, we are pleased with the current financial position of the Corporation,” said Chief Financial Officer Don Sewell.
For the three months ended June 30, 2020, compared to the three months ended June 30, 2019, the Corporation reported
For the six months ended June 30, 2020 compared to the six months ended June 30, 2019, the Corporation reported:
Despite the continued market headwinds experienced in the beer category in Canada, the Corporation achieved a $1.7 million increase in EBITDA in the second quarter of 2020 compared to the same period in 2019 and continues to see a strong contribution from its contract manufacturing business. The significant improvement in the Corporation’s EBITDA in the quarter can be attributed to the following:
The loss of keg sales related to COVID-19 put the performance of Big Rock’s Signature series of beers under significant pressure, along with continued decline in beer consumption trend in Canada.
The Corporation experienced several manufacturing issues during the second quarter of 2020 that have since been remediated. Given the downtime for capital expenditure in March as a result of the rapid onset of COVID-19 along with manufacturing issues experienced by the Corporation at the beginning of April, the Corporation struggled to build adequate inventory to meet shifting consumer demand. In conjunction with significant returns in expired kegs due to COVID-19, the Corporation realized a $1.2 million charge due to obsolete and damaged inventories during the second quarter. The Corporation’s manufacturing issues were fully remediated in April and all COVID-19 related inventory charges were fully incurred during the second quarter. Big Rock is confident that existing inventory levels, production planning and local procurement are well positioned to meet consumer demand.
Despite sales volumes declining by 2,207 hl (5%) to 46,693 hl and the manufacturing and inventory issues experienced in the second quarter of 2020, Big Rock reported net income of $0.6 million or $0.08 per common share, compared to a net income of $0.3 million or $0.04 per common share in the same period of 2019.
Summary of Results Three months ended June 30 Six months ended June 30
|$000, except hl and per share amounts||2020||2019||2020||2019|
|Sales volumes (hl) (1)||46,693||48,900||83,183||83,875|
|Gross revenue||$ 16,810||$ 20,502||$ 29,443||$ 34,143|
|Operating income (loss)||1,062||(495)||133||(2,724)|
|Net income (loss)||570||297||(322)||(1,424)|
|Income (loss) per share (basic and diluted)||$ (0.08)||$ 0.04||$ (0.05)||$ (0.20)|
|$ per hl|
|Cost of sales||$151.95||$189.08||$155.69||$185.90|
(1)Excludes contract manufacturing volumes due to the nature of the agreements.
(2)Non-GAAP measure. See “Non-GAPP Measures”.
The unaudited consolidated financial statements and Management’s Discussion and Analysis for the three and six months ended June 30, 2020 dated July 30, 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.
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 year ended June 30, 2020.
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
For further information, please contact:
Wayne Arsenault, President & Chief Executive Officer, or Don Sewell, Chief Financial Officer:
Phone: (403) 720-3239
Fax: (403) 720-3641