KITCHENER, ON, June 2, 2022
/CNW/ - Waterloo Brewing Ltd. ("Waterloo Brewing" or the
"Company") (TSX: WBR), Ontario's
first craft brewery, announced financial results for the first
quarter of fiscal 2023 which ended on May 1,
2022.
First Quarter
Highlights:
- Net revenue decreased 5.5% to $21.2
million, down from $22.5
million in the prior year
- Gross margin decreased to 18.6%, compared to 22.2% the prior
year
- Selling, marketing and administration expenses were
$3.5 million, compared to
$3.6 million in the prior year
- EBITDA* decreased 19.4% to $2.6
million, compared to $3.2
million in the prior year
- The Board of Directors approved the quarterly dividend,
$0.0304/share, payable August 3, 2022, to shareholders of record as of
July 20, 2022. The dividend is
classified as an eligible dividend.
Waterloo Brewing's sales have been negatively impacted by
unfavourable industry trends. The overall industry-wide beer
volumes decreased by approximately 7.9% in the quarter versus the
prior year, with Waterloo Brewing's total volume of products sold
decreasing by 5.7% in the quarter versus the prior year –
indicating that the Company continues to grow market share within
Ontario. Despite industry trends,
Waterloo Brewing's portfolio continues to outperform competition at
both LCBO and grocery stores.
Waterloo Brewing's premium better-for-you products continue to
outpace the industry; LandShark® branded sales volume increased
13.3% during the first quarter versus the prior year. The Company
continues to remain focused on product innovation and development
in this category.
Co-manufacturing customers that supply raw materials to the
Company were impacted by supply chain delays, which resulted in a
shift of contract volumes into the second quarter, and beyond. In
spite of the volume shift, Waterloo Brewing was able to secure new
co-manufacturing partnerships that will continue to support
growth.
Gross margin performance declined in the quarter due to
inflationary cost pressures, supply chain challenges and increased
operational fixed costs. Waterloo Brewing anticipates delivering
margin improvements for the balance of the year as a result of new
product launches, continued investments into owner brands and new
co-manufacturing partners. The Company will continue to implement
selective product price increases that are expected to partially
offset inflationary pressures.
"With a decline in net revenue and EBITDA in the quarter, we are
determined to perform strong in the coming quarters," said
George Croft, President and Chief
Executive Officer of Waterloo Brewing. "Our owner brand volume
declined less than the industry overall, signalling strong
performance from our owner brand portfolio. We continue to
navigate supply chain difficulties and inflationary cost pressures.
We are confident in our ability to proactively manage the situation
by securing supply of critical materials, managing supplier
relationships, and realizing overhead and labour cost efficiencies
as the volume increases in the upcoming quarters."
Late in the quarter, Waterloo Brewing launched a new LandShark®
Seltzer flavour, Passionfruit Strawberry as well as a new Radler,
Waterloo Field Berry Radler. The Company also released a new
Seagram malt-based Seltzer, available in a variety of flavours. The
Company believes these new launches continue to demonstrate both
leadership within the category and the confidence to innovate and
build strong brands that complement the current portfolio.
Ultimately, this will help to support the mission of long-term
profitable growth.
The following financial information should be read in
conjunction with the audited annual financial statements of the
Company prepared under IFRS for the year ended January 31, 2022.
|
|
|
|
|
|
Reconciliation of
Net Loss to EBITDA*
|
|
Quarter ended
(unaudited)
|
(in thousands of
dollars)
|
May 1,
2022
|
May 2, 2021
|
|
|
|
Net loss
|
$
(984)
|
$
(101)
|
|
|
|
Add
(deduct):
|
|
|
Income tax
recovery
|
(365)
|
(36)
|
Depreciation and
amortization
|
3,004
|
2,350
|
Gain on disposal of
right-of-use assets
|
-
|
(17)
|
Share-based
payments
|
206
|
139
|
Finance
costs
|
706
|
672
|
Unrealized gain on
foreign exchange contracts
|
49
|
239
|
Subtotal
|
3,600
|
3,347
|
|
|
|
EBITDA
*
|
2,616
|
3,246
|
STATEMENTS OF FINANCIAL POSITION
As at May 1, 2022 and January
31, 2022
(Not audited or reviewed by the Company's
external auditor)
|
May 1,
2022
|
January 31,
2022
|
|
|
|
ASSETS
|
|
|
Current
assets
|
|
|
Accounts receivable and
contract assets
|
13,246,821
|
15,526,799
|
Inventories
|
21,706,204
|
15,841,135
|
Prepaid
expenses
|
1,185,635
|
754,088
|
|
36,138,660
|
32,122,022
|
Non-current
assets
|
|
|
Property, plant and
equipment
|
52,577,972
|
51,930,553
|
Right-of-use
assets
|
31,233,464
|
32,067,772
|
Intangible
assets
|
15,269,648
|
14,846,687
|
Construction
deposits
|
253,730
|
466,818
|
|
99,334,814
|
99,311,830
|
TOTAL
ASSETS
|
135,473,474
|
131,433,852
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
Current
liabilities
|
|
|
Bank
indebtedness
|
12,611,780
|
16,861,218
|
Accounts payable and
accrued liabilities
|
26,275,263
|
14,062,415
|
Current portion of
lease liabilities
|
3,675,596
|
4,134,584
|
Current portion of
long-term debt
|
5,369,647
|
5,327,821
|
|
47,932,286
|
40,386,038
|
Non-current
liabilities
|
|
|
Provisions
|
1,230,151
|
1,211,324
|
Lease
liabilities
|
24,436,870
|
25,535,180
|
Long-term
debt
|
20,457,799
|
21,751,775
|
Deferred income tax
liability
|
5,460,653
|
5,825,398
|
|
51,585,473
|
54,323,677
|
TOTAL
LIABILITIES
|
99,517,759
|
94,709,715
|
Equity
|
|
|
Share
capital
|
40,635,371
|
40,618,496
|
Share-based payments
reserves
|
2,646,084
|
2,447,275
|
Deficit
|
(7,325,740)
|
(6,341,634)
|
TOTAL
EQUITY
|
35,955,715
|
36,724,137
|
|
|
|
COMMITMENTS
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND EQUITY
|
$
135,473,474
|
$
131,433,852
|
STATEMENTS OF COMPREHENSIVE INCOME
For the quarters
ended May 1, 2022 and May 2, 2021
(Not audited or reviewed by
the Company's external auditor)
|
|
|
|
Quarter
ended
|
|
May 1,
2022
|
May 2, 2021
|
|
|
|
Revenue
|
$
21,244,649
|
$
22,484,185
|
Cost of
sales
|
17,284,728
|
17,487,382
|
Gross
profit
|
3,959,921
|
4,996,803
|
Selling, marketing and
administration expenses
|
3,515,632
|
3,596,069
|
Other
expenses
|
1,087,896
|
882,378
|
Finance
costs
|
705,734
|
672,658
|
Gain on disposal of
right-of-use assets
|
(490)
|
(17,209)
|
Income before
tax
|
(1,348,851)
|
(137,093)
|
Income tax
recovery
|
(364,745)
|
(36,394)
|
Net loss and
comprehensive
loss for the period
|
$
(984,106)
|
$
(100,699)
|
|
|
|
|
|
|
Basic loss per
share
|
$
(0.03)
|
$
-
|
Diluted loss per
share
|
$
(0.03)
|
$
-
|
STATEMENTS OF CASH FLOWS
For the quarters ended
May 1, 2022 and May 2, 2021
(Not audited or reviewed by
the Company's external auditor)
Cash Flow
Statements
|
|
|
|
Quarter
ended
|
|
May 1,
2022
|
May 2, 2021
|
|
|
|
Operating
activities
|
|
|
Net loss
|
$
(984,106)
|
$
(100,699)
|
Adjustments
for:
|
|
|
Income tax
recovery
|
(364,745)
|
(36,394)
|
Finance
costs
|
705,734
|
672,658
|
Depreciation and
amortization of property, plant and
equipment, right-of-use assets and
intangibles
|
3,004,378
|
2,349,979
|
Gain on disposal of
right-of-use assets
|
(490)
|
(17,209)
|
Share-based
payments
|
205,535
|
139,166
|
Change in non-cash
working capital
|
7,237,971
|
(2,261,492)
|
Less:
|
|
|
Interest
paid
|
(671,503)
|
(682,679)
|
Cash provided by
operating activities
|
9,132,774
|
63,330
|
|
|
|
Investing
activities
|
|
|
Purchase of property,
plant and equipment
|
(1,401,227)
|
(4,913,073)
|
Construction deposit
paid
|
-
|
(830,657)
|
Proceeds from sale of
right-of-use assets, net
|
1,033
|
17,916
|
Purchase of intangible
assets
|
(480,021)
|
(42,297)
|
Cash used in
investing activities
|
(1,880,215)
|
(5,768,111)
|
|
|
|
Financing
activities
|
|
|
Increase (decrease) in
bank indebtedness
|
(4,249,438)
|
4,661,901
|
Issuance of
non-revolving demand loans
|
-
|
3,362,543
|
Repayment of long-term
debt
|
(1,252,150)
|
(209,513)
|
Repayment of
non-revolving demand loans
|
-
|
(1,106,705)
|
Repayment of lease
liabilities
|
(1,761,120)
|
(1,098,757)
|
Issuance of
shares
|
10,149
|
86,013
|
Proceeds from stock
option exercise, net of costs
|
-
|
9,299
|
Cash generated
(used) from financing activities
|
(7,252,559)
|
5,704,781
|
|
|
|
Net
increase/(decrease) in cash
|
-
|
-
|
|
|
|
Cash, beginning of
period
|
-
|
-
|
Cash, end of
period
|
$
-
|
$
-
|
Non-cash investing
activities:
|
|
|
Acquisition of assets
under lease
|
$
205,710
|
$
1,532,415
|
About Waterloo Brewing
Waterloo Brewing is Ontario's
largest Canadian-owned brewery. The Company is a regional brewer of
award-winning premium quality and value beers and is officially
certified under the Global Food Safety Standard, one of the highest
and most internationally recognized standards for safe food
production. Founded in 1984, Waterloo Brewing Ltd. was the first
craft brewery to start up in Ontario and is credited with pioneering the
present-day craft brewing renaissance in Canada. Waterloo Brewing has complemented its
Waterloo premium craft beers with the popular Laker brand. In 2011,
Waterloo Brewing purchased the Canadian rights to Seagram Coolers
and in 2015, secured the exclusive Canadian rights to both
LandShark® and Margaritaville®. In addition, Waterloo Brewing
utilizes its leading-edge brewing, blending, and packaging
capabilities to provide an extensive array of contract
manufacturing services in beer, coolers, and ciders. Waterloo
Brewing trades on the TSX under the symbol WBR. Visit us at
www.WaterlooBrewing.com.
Forward-Looking
Statements
All statements in this press release that do not directly and
exclusively relate to historical facts constitute forward-looking
statements as of the date of this press release. Forward-looking
statements generally can be identified by the use of
forward-looking terminology such as "may", "will", "expect",
"intend", "anticipate", "seek", "plan", "believe" or "continue" or
the negatives of these terms or variations of them or similar
terminology. Although the Company believes that the expectations
and assumptions reflected in these forward-looking statements are
reasonable, undue reliance should not be placed on these
forward-looking statements, which are not guarantees and are
subject to certain risks, uncertainties, and assumptions, which may
cause actual performance and financial results to differ materially
from such forward-looking statements. The forward-looking
statements included in this press release are made only at the date
of this press release and, except as required by applicable
securities laws, the Company does not undertake to publicly update
such forward-looking statements to reflect new information, future
events or otherwise.
* EBITDA is a non-IFRS earnings measure, therefore it does not
have any standardized meaning prescribed by International Financial
Reporting Standards and may not be similar to measures presented by
other companies. EBITDA represents earnings before interest, income
taxes, depreciation, and amortization, gain(loss) on disposal of
property, plant, and equipment and right-of-use assets, and
share-based payments. Management uses this measurement to evaluate
the operating results of the Company. This measure is also
important to management since it is used by the Company's lenders
to evaluate the ongoing cash-generating capability of the Company
and therefore the amounts those lenders are willing to lend to the
Company. Investors find EBITDA to be useful information because it
provides a measure of the Company's operating performance.
SOURCE Waterloo Brewing Ltd.