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Enter Symbol
or Name
USA
CA



Big Rock Brewery Inc
Symbol BR
Shares Issued 6,875,928
Close 2016-05-05 C$ 5.00
Market Cap C$ 34,379,640
Recent Sedar Documents

Big Rock Brewery loses $782,000 in Q1

2016-05-05 19:11 ET - News Release

Mr. Robert Sartor reports

BIG ROCK BREWERY INC. ANNOUNCES FIRST QUARTER FINANCIAL RESULTS

Big Rock Brewery Inc. has released its financial results for the first quarter ended March 31, 2016.

The corporation reported an increase in sales volumes of 24 per cent to 42,143 hectolitres for the first quarter of 2016 as compared with 33,980 hl for the same period in 2015. The reported operating loss was $1,118,000 for the three months ended March 31, 2016, compared with an operating loss of $831,000 for the same period in 2015, while net loss was $782,000 for the first quarter of 2016 as compared with $624,000 for the same quarter in 2015.

For the three months ended March 31, 2016, Big Rock increased volumes and gross profit nationally, including in Alberta, the region where the fierce competition in the craft beer industry has been most keenly felt. This is mainly due to the success of new private label beers, which were launched late last year. These products more closely align with the tastes of contemporary drinkers, together with the rebranding of AGD, Big Rock's most approachable lager.

The enthusiastic response to the rebranding and relaunching of these lower-priced products has compressed average margins. Additionally, margins in Alberta remain under sustained pressure as a result of two changes to markup rates in 2015, which combined represented a 20.5-per-cent increase in Alberta Gaming and Liquor Commission markup rates as compared with the previous year. This increased beer and cider costs to consumers, which hampered Big Rock's ability to implement a planned price increase to cover rising input costs.

Despite the economic conditions and increased government markup rates, wholesale revenue for the three months ended March 31, 2016, was 21 per cent higher than the same quarter in 2015. Retail revenue for the first quarter of 2016 was 579 per cent higher than the first quarter of 2015, primarily due to the opening of Big Rock Urban in April, 2015.

Big Rock Urban, based in downtown Vancouver, is the corporation's newest brew pub and brewery operation, which has been well received by local craft consumers. As Big Rock Urban is still developing its beer portfolio, it is not yet selling at full capacity and therefore has a higher per-unit cost of sales and higher selling and marketing costs to increase awareness.

Big Rock's Ontario expansions continue to progress, with construction actively under way at the Etobicoke brewery site, while the Liberty Village brew pub continues through the permitting and preconstruction stages. Sales volumes grew 139 per cent in Ontario as the corporation engaged in awareness-building promotional activity. Despite a shift in market demand to bottles and tall cans from higher-margin kegs, gross profit for Ontario sales was double the first quarter amount for 2015.

Big Rock's chief executive officer, Robert Sartor, commented: "First quarter volume growth was strong and was our fourth-consecutive quarter of growth after a period of painful contraction as we rebuilt the Big Rock brand. While bottom-line results for the quarter were below our expectations, one-time charges of $200,000 for severance as we began a reorganization of our plant operations, and a significant $226,000 non-cash charge for stock-based compensation (compared to a recovery of $104,000 last year) due to volatility in the share price impacted results. Sales growth in our two focus markets of B.C. and Ontario was impressive, with B.C. up 95 per cent and Ontario up 139 per cent. The second quarter is off to a good start with April sales up 19 per cent against April, 2015."

                   SUMMARY OF RESULTS
         ($000s except hl and per hl amounts)

                                   Three months ended March 31,
                                            2016          2015 
        
Sales volumes (hl)                        42,143        33,980       
Net revenue                               $9,044        $7,137        
Operating profit (loss)                   (1,118)         (831)        
Net income (loss)                           (782)         (624)        
Per hl net revenue                        214.60        210.04       
Per hl cost of sales                      129.53        109.95  
                                         -------       -------     

Financial and operating highlights:

  • Volume and revenue growth occurred in Big Rock's three main markets, Alberta, British Columbia and Ontario; Big Rock expanded distribution of the successful Vancouver-developed Citradelic IPA to national availability and launched a bourbon barrel-aged porter.
  • Big Rock also launched a new permanent cider and a new cider variety pack.
  • In Vancouver, the corporation introduced three new limited-time beers.

Additional information

The financial statements and management's discussion and analysis dated May 5, 2016, can be viewed on Big Rock's website and on SEDAR under Big Rock Brewery Inc.

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