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.
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
"It's been a challenging year for the industry," said George Croft, President and Chief Executive Officer of
Subsequent to the third quarter,
"Our goal will always remain the same: make great quality beer for an affordable price," Croft said.
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
Reconciliation of Net Earnings (loss) to EBITDA* | ||||
Quarter ended (unaudited) | Fiscal year-to-date ended (unaudited) | |||
(in thousands of dollars) | ||||
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
(Not audited or reviewed by the Company's external auditor)
October 30, 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
(Not audited or reviewed by the Company's external auditor)
Quarter ended | Fiscal year-to-date ended | ||||
October 30, 2022 | 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, | (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
(Not audited or reviewed by the Company's external auditor)
Quarter ended | Fiscal year-to-date ended | ||||
October 30, 2022 | October 30, 2022 | ||||
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 | 2,914,397 | 2,490,806 | 8,882,083 | 7,475,000 | |
Gain on disposal of property, plant and equipment | (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 | 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
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
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