Aegis takes another step to become a
consolidator of great brands
TORONTO, Nov. 7, 2022
/CNW/ - Today, Aegis Brands Inc. (TSX: AEG) has reported financial
results for the third quarter ended September 25th, 2022.
Highlights
- Aegis to acquire St. Louis Bar and Grill for $50,000,000
- The St. Louis Transaction will close shortly after the special
meeting of the shareholders to be held on November 17th
- Aegis' Loss for the quarter was $2,544,000 or $(0.10) per share compared to a loss of
$2,780,000 or $(0.12) per share last year on the continuing
operations of the business
- Aegis' year to date Net Loss was $6,874,000 compared to $5,783,000 last year
- Bridgehead's EBITDA for the quarter was a loss of $116,000 compared to a gain of $606,000 last year primarily due to the timing of
subsidies received in 2021
Bridgehead
Total revenue in the third quarter
at Bridgehead increased from $2,864,000 last year to $3,373,000 which represents a 17.7% increase.
Same coffeehouse sales increased by 16.9% mainly due to increased
customer traffic and some menu price increases. Total coffeehouse
sales increased from $2,457,000 to
$2,952,000 or 20.1% due to the
increase in same coffeehouse sales and the successful operations of
the newest location at Carlton University.
Year to date, the coffeehouse sales were $7,748,000 compared to $6,029,000 in the prior year, representing an
increase of $1,719,000 or 28.5%. Same
coffeehouse sales were also up by 22.8% year to date.
The leadership team at Bridgehead is excited to welcome
back the people of Ottawa as they
make their return to pre-pandemic life. The coffeehouses are
expanding their ability to serve their products by launching a new
and improved off-premise catering service for nearby offices and
event centres. Digitally enabled, this service will provide
incremental sales with limited incremental labour for the existing
coffeehouse locations.
"Although the sales are going in the right direction and picking
up momentum, the Bridgehead team has also been finding new revenue
sources within our coffeehouses. Initiatives such as off-premise
catering and local vendor pop-ups within the stores have been
introduced to supplement the top line sales. The downtown
Ottawa traffic is still greatly
reduced compared to 2019 and will continue to be until the federal
government workers return to the office on a more regular basis,"
said Steven Pelton, President and
CEO of Aegis Brands.
The wholesale channel continues to improve and gain momentum
with sales of $287,000 and
$937,000 in the quarter and year to
date respectively. This represents a 22.1% increase over 2021. The
brand is now selling at 136 grocery stores throughout Ontario compared to less than 60 this time
last year. The brand continues to believe that wholesale will be a
significant revenue and profit driver as Bridgehead becomes a
mainstay in the coffee aisle throughout the province and beyond in
the coming years.
St. Louis
Acquisition to close after November
17th shareholder meeting
On September 29th,
2022, Aegis entered into definitive agreement to acquire St. Louis
Bar and Grill® for total consideration of $50,000,000. St. Louis is a Toronto based franchised casual dining bar
& grill company, operating in 74 locations across 5
provinces. Founded in Toronto in 1992, St.
Louis is recognized for its signature wings, ribs, and
garlic dill sauce. St. Louis'
neighbourhood restaurants offer exceptionally friendly service in a
fun, casual sports bar & grill setting.
This transaction is aligned with Aegis' long-term business
strategy to grow into the premier consolidator of Canadian food and
beverage brands.
- The St. Louis brand was established in 1992 and strong brand
recognition has been built over 30 years
- Operations possess robust unit economics for franchisees,
generating +21% cash-on-cash returns and ~20% 4-wall EBITDA margins
(before royalty, management fees and advertising fund
payments)
- Run rate same store sales since pandemic restrictions lifted
are +1% to 2019 levels, and +38% over 2021
- Strong profitability and cash flow profiles, touting ~48%
corporate-level EBITDA margins (2023E)
- Highly visible pipeline for expansion, with +50% new store
growth projected over the next 3 years
"St. Louis provides a strong
foundation for Aegis as our first acquisition coming out of the
pandemic. The brand was built on a commitment to franchisee
profitability and as a result has successfully grown throughout its
30-year history. We intend to continue the commitment and expect to
grow St. Louis throughout
Canada and beyond," said Pelton.
Financing
The company raised approximately $58,000,000 to fund the purchase of St. Louis and provide some working capital.
The $58,000,000 was comprised of
senior debt through Canadian Western Bank Franchise Finance (CWB),
and the issuance of convertible debt and common shares.
Aegis Brands Inc.
With the acquisition of St.
Louis and the progress of Bridgehead, the transformation of
Aegis is well underway. Aegis is eager to continue to grow these
brands in both traditional bricks and mortar locations as well as
through new business channels such as wholesale, ecommerce and
other non-traditional locations. Additionally, Aegis will continue
to look for complimentary, accretive acquisition opportunities to
add to the family of great brands.
Forward Looking Statements
Certain information contained in this news release are not
statements of historical fact and are "forward-looking"
statements. Forward-looking statements relate to future
events or future performance and reflect management's expectations
or beliefs regarding future events and include, but are not limited
to, statements regarding the Company's expectations with respect to
the issuance of the Subscription Receipts, completion of the
Acquisition and the use of proceeds from the Offering.
In certain cases, forward-looking statements can be identified
by the use of words such as "plans", "expects" or "does not
expect", "is expected", "outlook", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or statements that certain actions, events or results "may",
"could", "would", "might" or "will be taken", "occur" or "be
achieved" or the negative of these terms or comparable terminology.
By their very nature forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements.
In making the forward-looking statements in this news release,
the Company has applied certain factors and assumptions that are
based on information currently available to the Company as well as
the Company's current beliefs and assumptions. These factors as
well as the risk factors detailed from time to time in the
Company's interim and annual financial statements and management's
discussion and analysis of those statements, all of which are filed
and available for review on SEDAR at www.sedar.com. Although the
Company has attempted to identify important factors that could
cause actual actions, events or results to differ materially from
those described in forward-looking statements, there may be other
factors that cause actions, events or results not to be as
anticipated, estimated or intended, many of which are beyond the
Company's ability to control or predict. There can be no assurance
that forward-looking statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements and all
forward-looking statements in this news release are qualified by
these cautionary statements.
The forward-looking statements in this press release are made as
of the date it was issued and Aegis does not undertake any
obligation to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable
law.
SOURCE Aegis Brands Inc.