Big Rock

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For Immediate Release


March 11, 2021 — Calgary, Alberta — Big Rock Brewery Inc. (TSX: BR) (“Big Rock” or the
“Corporation”) today announced its financial results for the three months and year ended December 30, 2020.

2020 Q4 Management Discussion Analysis
2020 Q4 Consolidated Financial Statements

“We are pleased to report continued positive financial and operational results, with fourth quarter and fiscal year EBITDA (defined herein) of $0.5 million and $5.1 million or an improvement of $1.1 million and $6.2 million, respectively,” said President & CEO Wayne Arsenault. “Despite the immense challenges presented by the COVID-19 pandemic, our annual results demonstrate our organization’s ability to successfully adapt to change. We were able to successfully pivot the business in a timely manner to capitalize on opportunities through our wholesale channels while limiting our downside exposure to our retail on-premise channels being restricted or closed throughout most of the year. In addition, the Corporation was able to successfully expand its product offerings into the rapidly growing ready-to-drink (“RTD”) market which not only compensated for the decline in on-premise volumes, but positions the Corporation for growth in this emerging category in 2021 and beyond. As the Corporation exits a challenging 2020 with its best results in seven years, the Corporation’s turnaround strategy has been validated and is now shifting to growth beginning with the recently announced $8.8 million capital plan and credit facility expansion where Big Rock plans to leverage its strong financial position toward accelerating growth in 2022.”

Financial Highlights
For the three months ended December 30, 2020, compared to the three months ended December 30, 2019, the Corporation reported:
• net revenue increased by 8.1%, from $9.5 million to $10.3 million;
• sales volumes increased 5.6% from 37,361 hl to 39,446 hl;
• earnings before interest, taxes, depreciation and amortization (“EBITDA”) increased by $1.1 million, to $0.5 million;
• net loss of $1.4 million versus a net loss of $1.3 million which was primarily driven by a non-cash impairment of its Ontario assets of $1.5 million; and
• operating loss of $1.8 million, compared to an operating loss of $1.6 million.

For the year ended December 30, 2020 compared to the year ended December 30, 2019, the Corporation reported:

• net revenue increased 3.1%, from $42.7 million to $44.0 million;
• sales volumes increased 1,433 hl, from 171,563 hl to 172,996 hl;
• positive EBITDA of $5.1 million compared to negative EBITDA of $1.1 million;
• a reduction in current and long-term debt of $2.0 million as the Corporation continued to focus on using its cash flow to pay down debt;
• net loss decreased to $0.7 million from a net loss of $2.9 million, an improvement of $2.2 million despite the impact of the $1.5 million impairment recorded during the fourth quarter;
• operating loss of $0.1 million compared to an operating loss of $5.1 million;
• keg sales volumes decreased by 55% related to on-premise closures due to COVID-19;
• damage and obsolete inventories increased from $0.8 million to $2.1 million; and

• receipt of $0.9 million in government assistance under the Canada Emergency Wage Subsidy Program.

As at December 30, 2020, the Corporation had a cash balance of $0.3 million, was undrawn on its operating credit facility of $5 million and was $2.9 million drawn on its $6 million term facility, affording Big Rock significant financial flexibility. Subsequent to the Corporation’s 2020 fiscal year-end, the Corporation announced the expansion of its credit facilities to a total of $16 million to support its 2021 strategic capital plan.

Operating Highlights
In 2020, the Corporation achieved a $6.2 million increase in EBITDA to $5.1 million, as compared to 2019. Several trends from the second quarter of 2020 continued during the second half of the year with the strongest contributions to the improvement in the Corporation’s EBITDA in the year being attributed to the following:

• contract manufacturing volumes and sales of the Corporation’s license brands more than doubled in comparison to 2019;
• continued growth in value offerings including Alberta Genuine Draft and private label brands;
• significant reductions in selling expenses as a result of cost cutting initiatives implemented by the Corporation during the second quarter of 2019, in addition to a material loss of on-premise sales which typically have a greater proportion of selling expenses attached; and
• the resurgence in the Corporation’s gross profit primarily driven by the Alberta Gaming, Liquor and Cannabis Commission’s (“AGLC”) amendment of the beer mark-up policy in September 2019.

The loss of keg sales related to COVID-19 continued to put the performance of Big Rock’s Signature series of beers under pressure, along with a continued declining trend in beer consumption in Canada.

The Corporation experienced several manufacturing issues during the second and third quarters of 2020, some related to COVID-19 and others not which resulted in the Corporation realizing $2.1 million in damaged and obsolete inventories of which $1.6 million was due to these internal manufacturing issues. In addition to the impact on cost, these manufacturing issues also contributed to an increase in ‘stock- outs’ which is consistent with other brewers’ experiences during the COVID-19 pandemic. These manufacturing issues were remediated in the fourth quarter of 2020. Furthermore, the Corporation expects the recently announced capital expenditures in 2021 to significantly reduce such manufacturing issues going forward. \

Despite manufacturing and inventory challenges experienced in 2020, Big Rock reported net loss of $0.7 million or $0.10 per common share, compared to a net loss of $2.9 million or $0.42 per common share in 2019. The net loss in 2020 is due to a one-time, non-cash impairment related to the Corporation’s Ontario assets as a result of the suspension of its brewing and packaging operations in Ontario due to market conditions. EBITDA during the year of 2020 was $5.1 million representing an increase of 582% over prior year. The strong year can be attributed to the cost restructuring completed in 2019, the AGLC beer mark- up amendment in September 2019 and the significant reduction in sales and marketing expenses as a result of the government restrictions related to COVID-19 impacting trade marketing, events and sponsorships. Given the resurgence in the Corporation’s gross profit margins, its improved cost structure and its strong financial position and local procurement, management believes it is well positioned to respond to shifting consumer patterns and achieve growth through these extraordinary times.

Summary of Results

Three months ended December 30                                 Year ended December 30     Year ended December 30
$000, except hl and per share amounts                         2020      2019                            2020       2019
Sales volumes (hl) ⁽¹⁾                                                           39,446  37,361                          172,996  171,563

Gross revenue                                                                    $13,691  $12,892                       $60,964  $65,116

Net revenue                                                                           10,308  9,539                           43,984    42,653

Cost of sales                                                                           6,993   7,511                              27,499    30,317

EDITDA ⁽²⁾                                                                             504      (645)                             5,118       (1.062)

Operating loss                                                                      (1,779)  (1,615)                          (134)       (1,062)

Net loss                                                                                 (1,372)  (1,297)                          (666)       (2,922)

Loss per share (basic & diluted)                                   $(0.20)   (0.19)                         $(0.10)       (0.42)

$ per hl
Net revenue                                                                       $261.32   $255.32                    $254.25     $248.61
Cost of sales                                                                       $177.28   $201.04                    $158.96     $176.71
⁽¹⁾ Excludes contract manufacturing volumes due to the nature of the agreements.
⁽²⁾ Non-GAAP measure. See “Non-GAAP Measures”.

The 2021 $8.8 million capital plan and credit facility expansion announced on February 9, 2021 are the key initial steps in the execution of Big Rock’s long-term growth strategy defined by the following three phases: ‘Gear up’, ‘Fill up’ and ‘Drink up’. This strategy supports the Corporation’s vision to become Canada’s largest independent brewer. Big Rock looks forward to providing an update on the 2021 capital plan following the release of its first-quarter results in early May 2021.

A complete discussion of the Corporation’s vision and strategy is included in the 2020 Management’s Discussion and Analysis and investor presentation available on the Corporations website at or on SEDAR at

Additional Information

The audited consolidated financial statements and Management’s Discussion and Analysis for the year ended December 30, 2020 dated March 11, 2021, can be viewed on Big Rock’s website at and on SEDAR at 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 13, 2021 at 2:00 p.m. (Mountain Standard Time). Further details of the Annual Meeting will follow in due course.

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. The calculation of EBITDA is a non-GAAP measure, whose nearest GAAP measure is net income, or net loss as applicable, with the reconciliation between the two as follows:


Thee months ended December 30     Year ended December 30

($000)                                                                     2020      2019                            2020       2019

Net loss                                                                  $(1,372)  $(1,297)                   $(666)     $(2,922)

Interest                                                                      115           90                             506          401

Taxes                                                                        (514)         (272)                        38            (1,866)

Depreciation and                                                    775            834                        3,740         3,325

amortization Impairment of property,             1,500        —–                         1,500          —–

plant and equipment

EBITDA                                                                  $504        $(645)                    $5,118           $(1,062)

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:

• Big Rock’s business plans, outlook and strategy;
• the Corporation’s expectations regarding COVID-19 and the duration of the impacts thereof and challenges and opportunities presented thereby;
• the Corporation’s 2021 capital plan, including the results and focus thereof;
• Big Rock’s expectations with respect to its ability to achieve growth;
• Big Rock’s ability to remediate manufacturing issues going forward; and
• Big Rock’s expectations with respect to its future financial position and its ability to take advantage of future opportunities.

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;
• Big Rock’s ongoing projects to remediate its manufacturing issues will be successful; and
• that the duration and extent of the COVID-19 pandemic will not be long-term.

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:

• delays in implementation of the 2021 capital program and failure to realize the benefits of the same;
• the inability to grow demand for Big Rock’s products;
• the worldwide economic and social impact of the COVID-19 pandemic; and
• the duration and extent of the COVID-19 pandemic.

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

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

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