Third Quarter Highlights:
- Net revenue of $26.2 million,
decreased from $26.9 million in the
prior year.
- Gross profit of $5.4M, decrease
from $6.0 million in the prior
year.
- Selling, marketing and administration expenses of $3.2 million, reduced from $3.4 million in the prior year.
- EBITDA* of $4.4 million,
increased from $4.3 million in the
prior year.
Year-to-Date Highlights:
- Net revenue of $76.9 million,
decreased from $83.6 million in the
prior year.
- Gross profit of $16.2 million,
decreased from $22.1 million in the
prior year.
- Selling, marketing and administration expenses of $10.7 million, reduced from $11.9 million the prior year.
- EBITDA* of $12.0 million,
decreased from $15.6 million in the
prior year.
KITCHENER, ON, Dec. 14,
2022 /CNW/ - Waterloo Brewing Ltd. ("Waterloo
Brewing" or the "Company") (TSX: WBR),
Ontario's first craft brewery,
announced financial results for the third quarter of fiscal 2023
which ended on October 30, 2022.
Waterloo Brewing reported EBITDA* for the third quarter of fiscal
2023 of $4.4 million, on net revenue
of $26.2 million.
Owner brand sales volume in the quarter grew by 3.2%, while the
industry as a whole, was down by 4.3%. Volumes of the domestic
mainstream Laker brand increased by 10.6% versus the prior years.
As noted in the previous quarter, the Company is continuing to see
consumers trade-down as a result of ongoing inflationary pressures
which have contributed to the growth of the Laker brand.
This shift, however, has negatively impacted the Company's
premium beer brands and ready-to-drink products which is putting
pressure on gross margin. Consistent with industry trends,
LandShark® volumes declined by 7.5% primarily due to softened
demand for the Landshark® seltzers. LandShark® beer was flat to the
same period last year, but has still grown 5% on a year-to-date
basis.
Supply chain issues continued in the quarter and resulted in
contract volumes shifting to the fourth quarter of the fiscal year.
This represented the majority of the overall decline in net
revenue. However, the Company recently announced the renewal of two
strategic co-manufacturing partners which will result in
approximately $18 million of combined
revenue over the extended term of these contracts.
"It's been a challenging year for the industry,"
said George Croft, President and Chief Executive Officer of
Waterloo Brewing. "I am proud of how the team has pushed through
these ongoing issues and am confident we will finish this fiscal
year strong."
Subsequent to the third quarter, Waterloo Brewing increased the
price of their single serve 473ml Laker cans. This change was
consistent with the balance of the industry and will have a
significant and positive impact on gross margin in the fourth
quarter.
"Our goal will always remain the same: make great quality beer
for an affordable price," Croft said.
Waterloo Brewing also announced today by separate press release
that it has entered into a definitive arrangement agreement (the
"Arrangement Agreement") with Carlsberg Group
("Carlsberg") pursuant to which Carlsberg has agreed to
acquire all of the issued and outstanding shares of Waterloo
Brewing ("Waterloo Brewing Shares"), by way of a
statutory plan of arrangement under the Business Corporations
Act (Ontario)
("Transaction"). Under the terms of the Arrangement
Agreement, holders of Waterloo Brewing Shares ("Waterloo
Brewing Shareholders") will receive C$4.00 in cash for each Waterloo Brewing Share
held ("Consideration"), which implies an aggregate equity
value for Waterloo Brewing, of approximately C$144 million, on a fully diluted, in-the-money,
treasury method basis and an enterprise value of C$217 million. The total offer Consideration also
represents an implied TEV/LTM EBITDA multiple of 12.4x, based on
Waterloo's third quarter results ending October 30, 2022. In connection with the
Transaction, the parties agreed that last dividend paid to Waterloo
Brewing Shareholders was on November 2,
2022. Please refer to the separate press release for more
details regarding the Transaction.
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 Earnings (loss) to EBITDA*
|
|
|
|
|
|
Quarter ended
(unaudited)
|
Fiscal
year-to-date ended (unaudited)
|
|
(in thousands of
dollars)
|
October 30,
2022
|
October 31,
2021
|
October 30,
2022
|
October 31,
2021
|
|
|
|
|
|
|
Net income
(loss)
|
$
194
|
$
738
|
$
(61)
|
$
4,792
|
|
|
|
|
|
|
Add
(deduct):
|
|
|
|
|
|
Income tax recovery
(provision)
|
85
|
268
|
(26)
|
1,681
|
|
Gain on misappropriated
funds
|
-
|
-
|
-
|
(900)
|
|
Depreciation and
amortization
|
2,914
|
2,491
|
8,882
|
7,475
|
|
(Gain) loss on disposal
of property, plant and equipment, and right-of-use
assets
|
(2)
|
(37)
|
130
|
(86)
|
|
Share-based
payments
|
302
|
275
|
810
|
685
|
|
Finance
costs
|
862
|
599
|
2,313
|
1,933
|
|
|
|
|
|
|
Subtotal
|
4,161
|
3,596
|
12,109
|
10,788
|
|
|
|
|
|
|
EBITDA *
|
4,355
|
4,334
|
12,048
|
15,581
|
STATEMENTS OF FINANCIAL POSITION
As at October 30, 2022 and January 31, 2022
(Not audited or reviewed
by the Company's external auditor)
|
October 30,
2022
|
January 31,
2022
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Accounts receivable and
contract assets
|
$
19,164,840
|
$
15,526,799
|
|
Inventories
|
16,984,167
|
15,841,135
|
|
Prepaid
expenses
|
1,017,760
|
754,088
|
|
37,166,767
|
32,122,022
|
|
Non-current
assets
|
|
|
|
Property, plant and
equipment
|
49,009,377
|
51,930,553
|
|
Right-of-use
assets
|
31,293,999
|
32,067,772
|
|
Intangible
assets
|
15,159,359
|
14,846,687
|
|
Construction
deposits
|
61,266
|
466,818
|
|
95,524,001
|
99,311,830
|
|
TOTAL
ASSETS
|
132,690,768
|
131,433,852
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Bank
indebtedness
|
14,868,607
|
16,861,218
|
|
Accounts payable and
accrued liabilities
|
19,086,652
|
14,062,415
|
|
Dividends
payable
|
1,091,871
|
-
|
|
Current portion of
lease liabilities
|
3,677,799
|
4,134,584
|
|
Current portion of
long-term debt
|
6,386,223
|
5,327,821
|
|
45,111,152
|
40,386,038
|
|
Non-current
liabilities
|
|
|
|
Provisions
|
1,267,804
|
1,211,324
|
|
Lease
liabilities
|
24,680,153
|
25,535,180
|
|
Long-term
debt
|
21,598,485
|
21,751,775
|
|
Deferred income tax
liability
|
5,799,146
|
5,825,398
|
|
53,345,588
|
54,323,677
|
|
TOTAL
LIABILITIES
|
98,456,740
|
94,709,715
|
|
Equity
|
|
|
|
Share
capital
|
40,717,681
|
40,618,496
|
|
Share-based payments
reserves
|
3,192,856
|
2,447,275
|
|
Deficit
|
(9,676,509)
|
(6,341,634)
|
|
TOTAL
EQUITY
|
34,234,028
|
36,724,137
|
|
|
|
|
SUBSEQUENT
EVENT
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND EQUITY
|
$
132,690,768
|
$
131,433,852
|
STATEMENTS OF COMPREHENSIVE INCOME
For the quarters ended
October 30, 2022 and October 31, 2021
(Not audited or reviewed
by the Company's external auditor)
|
|
Quarter
ended
|
Fiscal
year-to-date ended
|
|
|
October 30,
2022
|
October 31,
2021
|
October 30,
2022
|
October 31,
2021
|
|
|
|
|
|
|
|
Revenue
|
|
$
26,155,387
|
$
26,878,165
|
$
76,897,638
|
$
83,564,020
|
|
Cost of
sales
|
|
20,797,437
|
20,918,137
|
60,745,309
|
61,448,475
|
|
Gross
profit
|
|
5,357,950
|
5,960,028
|
16,152,329
|
22,115,545
|
|
Selling, marketing and
administration expenses
|
|
3,193,144
|
3,363,501
|
10,748,676
|
11,897,668
|
|
Other
expenses
|
|
1,025,991
|
1,006,133
|
3,181,964
|
2,747,732
|
|
Finance
costs
|
|
861,542
|
599,501
|
2,313,179
|
1,933,708
|
|
Gain on misappropriated
funds, net
|
|
-
|
-
|
-
|
(899,646)
|
|
Gain on disposal of
property, plant and equipment,
and right-of-use assets
|
|
(1,500)
|
(14,902)
|
(4,967)
|
(37,388)
|
|
Income (loss) before
tax
|
|
278,773
|
1,005,795
|
(86,524)
|
6,473,471
|
|
Income tax expense
(recovery)
|
|
84,587
|
267,649
|
(26,250)
|
1,681,105
|
|
Net income (loss)
and comprehensive income (loss)
|
|
$
194,186
|
$
738,146
|
$
(60,274)
|
$
4,792,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
0.01
|
$
0.02
|
$
-
|
$
0.13
|
|
Diluted earnings per
share
|
|
$
0.01
|
$
0.02
|
$
-
|
$
0.13
|
STATEMENTS OF CASH FLOWS
For the quarters ended
October 30, 2022 and October 31, 2021
(Not audited or reviewed
by the Company's external auditor)
|
|
Quarter
ended
|
Fiscal
year-to-date ended
|
|
|
October 30,
2022
|
October 31,
2021
|
October 30,
2022
|
October 31,
2021
|
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
194,186
|
$
738,146
|
$
(60,274)
|
$
4,792,366
|
|
Adjustments
for:
|
|
|
|
|
|
|
Income tax expense
(recovery)
|
|
84,587
|
267,649
|
(26,250)
|
1,681,105
|
|
Finance
costs
|
|
861,542
|
599,501
|
2,313,179
|
1,933,708
|
|
Depreciation and
amortization of property, plant and
equipment, right-of-use assets and
intangibles
|
|
2,914,397
|
2,490,806
|
8,882,083
|
7,475,000
|
|
Gain on disposal of
property, plant and equipment
and right-of-use assets
|
|
(1,500)
|
(14,902)
|
(4,967)
|
(37,388)
|
|
Share-based
payments
|
|
302,149
|
275,228
|
809,834
|
684,616
|
|
Change in non-cash
working capital
|
|
(91,965)
|
(1,777,312)
|
(136,394)
|
(8,068,479)
|
|
Less:
|
|
|
|
|
|
|
Interest
paid
|
|
(828,815)
|
(577,315)
|
(2,186,945)
|
(1,897,011)
|
|
Cash provided by
operating activities
|
|
3,434,581
|
2,001,801
|
9,590,266
|
6,563,917
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(134,026)
|
(2,056,111)
|
(2,123,746)
|
(9,943,507)
|
|
Construction deposit
paid
|
|
-
|
(448,737)
|
-
|
(679,973)
|
|
Proceeds from sale of
property, plant and equipment, and
right-of-use assets, net
|
|
1,500
|
15,090
|
6,084
|
38,989
|
|
Purchase of intangible
assets
|
|
(3,372)
|
(1,313)
|
(486,312)
|
(46,777)
|
|
Cash used in
investing activities
|
|
(135,898)
|
(2,491,071)
|
(2,603,974)
|
(10,631,268)
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
Increase (decrease) in
bank indebtedness
|
|
194,183
|
881,037
|
(1,992,611)
|
6,401,928
|
|
Issuance of long-term
debt
|
|
-
|
-
|
5,000,000
|
4,536,234
|
|
Increase to obligation
under finance lease
|
|
-
|
2,656,846
|
-
|
2,656,846
|
|
Repayment of long-term
debt
|
|
(1,503,236)
|
(1,231,564)
|
(4,094,888)
|
(3,869,213)
|
|
Repayment of lease
liabilities
|
|
(897,924)
|
(829,864)
|
(3,750,995)
|
(2,815,891)
|
|
Dividends
paid
|
|
(1,091,706)
|
(987,186)
|
(2,182,730)
|
(2,956,986)
|
|
Issuance of shares, net
of fees
|
|
-
|
-
|
34,932
|
115,943
|
|
Stock option
costs
|
|
-
|
-
|
-
|
(10,809)
|
|
Proceeds from stock
option exercise, net of costs
|
|
-
|
-
|
-
|
9,299
|
|
Cash generated from
(used in) financing activities
|
|
(3,298,683)
|
489,270
|
(6,986,292)
|
4,067,351
|
|
|
|
|
|
|
|
Net increase in
cash
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
Cash, beginning of
period
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
Cash, end of
period
|
|
$
-
|
$
-
|
$
-
|
$
-
|
|
|
|
|
|
|
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of assets
under lease
|
|
$
1,066,908
|
$
3,991,554
|
$
2,442,634
|
$
6,268,994
|
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, gain on
misappropriated funds, 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.