WBR Waterloo Brewing Ltd

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.

• 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.

STATEMENTS OF FINANCIAL POSITION
As at May 1, 2022 and January 31, 2022
(Not audited or reviewed by the Company's external auditor)

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)

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)

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.

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.