Canada, AB: Big Rock Brewery Inc. announces nine-month and third-quarter financial results
Big Rock Brewery Inc. announced on October 31 its financial results for the three and nine months ended September 30, 2019.
"As the former Alberta beer mark-up policy persisted through the majority of the third quarter, our margins continued to be under significant pressure in Alberta , however, given the significant operating cost reductions we implemented in the second quarter of 2019, we reported EBITDA (as defined below) of C$0.6 million and a significant margin improvement year-over-year when normalized for the new Alberta beer mark-up framework which came into effect in September," said President & CEO Wayne Arsenault .
As previously announced, the Government of Alberta and the Alberta Gaming, Liquor and Cannabis agency (the "AGLC") amended the mark-up policy for Alberta beer sales, effective September 13, 2019 , which significantly reduced the Corporation's Alberta beer mark-up rate back to a rate in-line with what the Corporation was subject to in 2018.
"Despite the significant regulatory headwinds faced through the majority of 2019 to-date, we managed to navigate the last two quarters at a much lower cost structure while still preserving our ability to pursue our long term strategy once a resolution was reached," said President & CEO Wayne Arsenault . "Now that the policy has been amended and is in effect we believe the Big Rock business, being a pioneer of the Canadian craft brewing industry, has been restored. We look forward to evaluating long term, sustainable growth opportunities through utilization of our production, sales and distribution footprint in Canada moving forward."
Financial Highlights
For the three months ended September 30, 2019, compared to the three months ended September 30, 2018 , Big Rock reported:
• a decrease in gross revenue by C$0.7 million (4%) to C$18.1 million from C$18.8 million;
• net revenue of C$11.2 million , compared to C$13.8 million , on sales volumes of 50,327 hectolitres ("hl"), compared to 55,741 hl;
• earnings before interest, tax, depreciation and amortization ("EBITDA") of C$0.6 million , compared to C$1.6 million;
• an operating loss of C$0.8 million, compared to an operating profit of C$0.7 million;
• a net loss of C$0.2 million, compared to a net income of C$0.6 million; and
• cash flow used in operations of C$0.9 million , compared to C$0.4 million .
For the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, Big Rock reported:
• an increase in gross revenue by C$1.9 million (4%) to C$52.2 million from C$50.3 million;
• net revenue of C$33.1 million, compared to C$36.8 million, on sales volumes of 134,202 hl compared to 152,564 hl;
• negative EBITDA of C$0.4 million, compared to positive EBITDA of C$3.1 million;
• an operating loss of C$3.5 million, compared to an operating profit of C$0.7 million;
• a net loss of C$1.6 million, compared to a net income of C$0.4 million; and
• cash flow used in operations of C$2.5 million, compared to cash flow provided by operations of C$nil.
Operating Highlights
During the third quarter of 2019, Big Rock continued to experience year-over-year sales volume declines, especially from its value brands, as a result of overall market pressures and the significant price increases the Corporation was forced to implement in late 2018 and early 2019 as a result of the regulatory headwinds. Despite this loss in sales volume, the corporation has been successful in mitigating asset utilization declines through the pursuit of and continued growth in contract manufacturing volumes. Additionally, the corporation has been pleased with the early performance of many of the new products it has brought to market in 2019, including its Rock Creek Rosé Cider, Jackrabbit Light Lager, Big Rock Craft Lager and Cottage Springs Vodka Sodas, which it licensed in Alberta and British Columbia at the beginning of April 2019 .
Big Rock reported a net loss of C$0.2 million and C$1.6 million, respectively, for the three and nine months ended September 30, 2019 as compared to a net income of C$0.6 million and C$0.4 million, respectively, for the same periods in 2018. Big Rock's operating loss of C$0.8 million and C$3.5 million for the three and nine months ended September 30, 2019, increased by C$1.5 million and C$4.2 million, compared to operating income of C$0.7 million and C$0.7 million for the same periods in the prior year as a result of the increase in the Alberta beer tax for the Corporation in late 2018. Management estimates the loss in net revenue as a result of the late 2018 Alberta beer mark-up change to be C$2.2 million and C$6.4 million for the three and nine months ended September 30, 2019, respectively.
02 November, 2019
