E-Malt.com News article: Canada: Brick Brewing reports fifth straight record quarterly performance

Brick Brewing Co. Limited released on June 7 its fifth straight record quarterly financial result for the first quarter ended April 30, 2005. "We are delighted to report that our sales momentum continues into our new fiscal year at a record pace," said Jim Brickman, Executive Chairman and Founder. "What is even more gratifying, is we accomplished this under extremely competitive pricing conditions and during a historically softer selling period," he added.

First Quarter Financial Highlights

Net revenue for the first quarter ended April 30, 2005 increased to C$7.0 million compared to $4.0 million for the same period last year, an increase of 75%. Net beer revenues doubled to $6.8 million over the first quarter last year, primarily as a result of growth in the Company's value and mainstream beer brands, coupled with the PC(R) brands in Ontario and Quebec that launched in the second quarter of last year. Beer volumes grew by 137% in the quarter, compared to the same quarter last year.

Net income was a record for the quarter of C$752 thousand compared to C$149 thousand in the first quarter last year, an improvement of C$603 thousand. This quarterly result eclipses the annual profitability for Brick in eight of the last ten years.

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 132% to C$1.0 million in the first quarter, compared to C$451 thousand for the same quarter last year.

Cost of goods on a per unit basis for beer has decreased 14% in the first quarter compared to last year. These cost reductions are attributable to the higher volumes and efficiencies in both production and distribution.

First Quarter Financial Review

During the first quarter the Company's beer volumes increased 137% overall. The Company's mainstream brand volumes grew by 228% as the Company executed two successful programs. The first was a Red Cap price promotion at a buck a stubby, followed by the introduction of Formosa Springs in a 28 pack size priced at $29.95 plus deposit. Laker continued its positioning as the everyday BUCK A BEER(TM) and volumes increased again by 121% in the quarter over the same quarter last year. The licensed brands for Big Rock and PC(R) also grew in the quarter compared to the same period last year. The Company's premium brands declined 5% due to limited promotional support while management continued to review the potential marketing strategies.

In the first quarter the Company made a long-term investment in the Laker brand family. Laker brands received a new packaging design and Laker Lager was introduced to consumers in a convenient 24 pack size. The brand volumes continued to show growth despite intense competitive promotional activity in the value category. Favourable industry pricing versus the prior quarter in the value category increased deep value price points from $23.70 per case of 24 bottles to $26.40 per case for most of the quarter, substantially improving margins.

On April 15, the Company entered into a long-term lease agreement for a new building in Kitchener, Ontario. The building will be used to consolidate the Company's existing warehousing. The Company also plans to wash returnable glass bottles in this facility. The Company anticipates this will reduce variable costs by $700 thousand annually at current volumes. The Company expects to take occupancy by October 1, 2005.

On February 1, subsequent to year end, the Company invested in its sales agency, Direct Cellars. This investment affords Brick greater influence over the sales policies of Direct Cellars and better positions Brick to leverage its sales force in the licensee and LCBO channels moving forward.

Doug Berchtold, President and CEO said: "The continued strong growth in revenues and earnings is a direct result of our renewed strategic focus coupled with consumer demand for better value, a trend which is reshaping the Ontario beer market. Brick has successfully positioned itself to continue to benefit from this transition".

Brick Brewing Co. Limited is a regional brewer of award winning premium quality beers. The Company, founded by Jim Brickman in 1984, was the first craft brewery to start up in Ontario, and is credited with pioneering the present day craft brewing renaissance in Canada. Brick has complemented its successful line of premium craft beers with other popular brands such as Laker, Red Cap and Formosa Springs Draft. Brick trades on the TSX under the symbol BRB.

09 June, 2005