BIG ROCK BREWERY ANNOUNCES THIRD QUARTER 2023 RESULTS: CONTINUED IMPROVEMENT IN OPERATING INCOME AND ADJUSTED EARNINGS

CALGARY, AB, Nov. 14, 2023 /CNW/ - Big Rock Brewery Inc. (TSX: BR) ("Big Rock" or the "Corporation") today announced its financial results for the three and nine months ended September 30, 2023.

Financial Summary

For the three months ended September 30, 2023, compared to the three months ended September 30, 2022, the Corporation reported:

• net revenue of $11.6 million, down 3% from $11.9 million;
• adjusted earnings before interest, taxes, depreciation, and amortization ("Adjusted EBITDA ") of $1.0 million, up from $0.1 million (Adjusted EBITDA is a non-GAAP financial measure, see "Non-GAAP Measures");
• sales volumes, exclusive of co-packing volumes, of 44,451 hectolitres ("hl") down 6% compared to 47,154 hl;
• operating income of $0.06 million compared to a loss of $1.1 million; and
• net loss of $0.2 million, down from $1.1 million.

For the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, the Corporation reported:

• total net revenue of $34.7 million, down 5% from $36.6 million;
• Adjusted EBITDA increased $2.8 million, representing an improvement from $0.1 million versus the comparative period previous year;
• sales volumes, exclusive of co-packing volumes, of 121,889 hl down 1% from 122,842 hl;
• an operating loss of $0.05 million compared to a loss $3.1 million;
• a net loss of $0.8 million, reduced by 73% from $2.9 million; and
• a net working capital improvement of $3.3 million on a year-over-year basis (net working capital is a capital management measure, please see "Non-GAAP Measures").

"With the continued outstanding effort from our people we are pleased to announce the significant improvements in the Company's financial performance during the third quarter," noted Interim President and Chief Executive Officer Stephen Giblin.  "In addition to the $2.8 million improvement in Adjusted EBITDA over the prior period last year, we have continued to invest in our sales, marketing and product innovations. The first launch from our new innovation effort is, "Pacer" our non-alcohol beer, and the initial results are beyond our expectations.  With more innovations on the way and a strong sales and marketing team in place we expect continued improvement in Big Rock's financial results." 

On March 31, 2022, the Corporation amended the terms of its existing credit agreement with its lender which encompass both the Operating Facility of $6 million and the Term Debt of $10 million. At September 30, 2023, the Corporation had $2.0 million available on its Operating Facility.  During the quarter the Corporation extended the maturity of its Second Lien Financing facility ($4.3 million) to June 30, 2024.

Summary of Results

(1)     Excludes contract manufacturing volumes due to the nature of the agreements. (2)     Non-GAAP measure. See "Non-GAAP Measures".

Outlook & Strategy

Big Rock's long-term growth strategy is to maximize the utilization of its capacity and capital investments to drive growth in volume, improve productivity and lower operating costs. With greater operational efficiencies and utilization of capacity, the Corporation aims to gain market share and "premiumize" its branded portfolio. Innovation and co-creation of new products with the Corporation's strategic partners will increase market demand and further enable the Corporation to gain market share. Big Rock has embarked on a strategy of, where possible, balancing production and sales between quarters which allows for a reduction of operating costs. This strategy supports Big Rock's vision to become Canada's largest independent brewer.

Big Rock is continuing to focus on product innovation and development in the premium category to better align with trends in consumer demand. As part of this initiative, during early Q4 the Company introduced a new non-alcoholic beverage, "Pacer" to satisfy market demands.

During the quarter Big Rock managed to increase Adjusted EBITDA ten-fold, despite a shortfall in co-packing volumes. Profitability increased on a quarter-over-quarter basis versus the prior year, largely the result of cost-savings initiatives and alignment of certain financial assets with fair value.  

Additional Information

The interim condensed consolidated financial statements and Management's Discussion and Analysis for the three and nine months ended September 30, 2023 dated November 14, 2023, can be viewed on Big Rock's website at www.bigrockbeer.com and on SEDAR at www.sedar.com under Big Rock Brewery Inc.

Non-GAAP Measures

The Corporation uses certain financial measures referred to in this press release to quantify its results that are not prescribed by Generally Accepted Accounting Principles. This press release contains the term "Adjusted EBITDA" and "net working capital". These financial measures do not have a standardized meaning under the Corporation's Generally Accepted Accounting Principles and therefore may not be comparable to similar measures presented by other issuers. The calculation of EBITDA is a non-GAAP measure, whose nearest GAAP measure is net income, or net loss as applicable, with the reconciliation between the two as follows:

Net working capital is a capital management measure that is defined as current assets less accounts payable, accrued liabilities, and current portion of debt. This measure allows the Corporation to monitor its liquidity in relation to the bank covenants and cash resources available at any time.

Forward-Looking Information

Certain statements contained in this news release constitute forward-looking statements. These statements relate to future events or Big Rock's future performance. All statements, other than statements of historical fact, may be forward-looking statements. Forward-looking information are not facts, but only predictions and generally can be identified by the use of statements that include words or phrases such as, "anticipate", "believe", "continue", "could", "estimate", "expect", "intend", "likely" "may", "project", "predict", "propose", "potential", "might", "plan", "seek", "should", "targeting", "will", and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Big Rock believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon by readers, as actual results may vary materially from such forward-looking statements. These statements speak only as of the date of this news release and are expressly qualified, in their entirety, by this cautionary statement.

In particular, this news release contains forward-looking statements pertaining to the following:

• Big Rock's business plans, outlook and strategy, including expectations regarding continued innovations and improvements in Big Rock's financial results;
• Big Rock's long-term growth strategy and the anticipated benefits to be derived therefrom;
• Big Rock's aim to gain market share and "premiumize" its branded portfolio;
• Big Rock's expectations that innovation and co-creation of new products with its strategic partners will increase market demand and further enable the Corporation to gain market share;
• Big Rock's focus on continued product innovation and development in the premium category;
• the Corporations plan to balance production and sales between quarters, providing the opportunity to reduce operating costs;
• Big Rock's vision to become Canada's largest independent brewer; and
• the Corporation's emphasis on product innovation and plan to invest in its salesforce.

With respect to the forward-looking statements listed above and FOFI (as defined below) and contained in this news release, management has made assumptions regarding, among other things:

• Big Rock's ability to continue as a going concern;
• that Big Rock's long-term growth strategy will support it in becoming Canada's largest independent brewer;
• volumes in the current fiscal year will remain constant or will increase;
• there will be no material change to the regulatory environment in which Big Rock operates;
• there will be no material supply issues with Big Rock's vendors;
• seasonal fluctuations in demand;
• that innovation and co-creation of new products with Big Rock's strategic partners will increase market demand and further enable the Corporation to gain market share; and
• Big Rock's ability to extend its lending arrangements and recapitalize, if necessary.

Some of the risks which could affect future results and could cause results to differ materially from those expressed in the forward-looking information and statements and FOFI contained herein include the risk factors set out in the Corporation's annual information form and also include, but are not limited to:

• that the year-over-year growth in Big Rock's co-packing arrangements may be less than anticipated;
• the inability to grow demand for Big Rock's products;
• the risk that Big Rock may not have an increase in market demand or market share;
• the risk that Big Rock may not realize the benefits of increased co-pack production;
• the risk that Big Rock may not have sufficient cash flows to cover forecasted expenses or return to profitability; and
• the risk that Big Rock may not be in compliance with its financial covenants.

Any financial outlook or future oriented financial information (in each case "FOFI") contained in this news release regarding prospective financial position, including, but not limited to: expectations regarding improvement in Big Rock's financial results;  Big Rock's long-term growth strategy and the anticipated benefits to be derived therefrom; the Corporations plan to balance production and sales between quarters, providing the opportunity to reduce operating costs;  is based on reasonable assumptions about future events, including those described above, based on an assessment by management of the relevant information that is currently available. The actual results will likely vary from the amounts set forth herein and such variations may be material. Readers are cautioned that any such FOFI contained herein should not be used for purposes other than those for which it is disclosed herein. Such information was made as of the date of this news release and the Corporation disclaims any intention or obligation to update or revise any such information, whether as a result of new information, future events, or otherwise, unless required pursuant to applicable law.

Readers are cautioned that the foregoing list of assumptions and risk factors is not exhaustive. The forward-looking information and statements and FOFI contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking information and statements and FOFI included in this news release are made as of the date hereof and Big Rock does not undertake any obligation to publicly update such forward-looking information and statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.

About Big Rock Brewery Inc.

In 1985, Ed McNally founded Big Rock to contest the time's beer trends. Three bold, European-inspired offerings – Bitter, Porter and Traditional Ale – forged an industry at a time heavy on easy drinking lagers and light on flavour. Today, our extensive portfolio of signature beers, ongoing seasonal offerings, six ciders (Rock Creek Cider® series), custom-crafted private label products and other notable, licensed alcoholic beverages keeps us at the forefront of the craft beer revolution and still proudly contesting the beer and alcoholic beverage trends of today. Big Rock has brewing operations in Calgary, Alberta, Vancouver, British Columbia, and Toronto, Ontario. Big Rock trades on the TSX under the symbol "BR". For more information on Big Rock visit www.bigrockbeer.com

SOURCE Big Rock Brewery Inc.

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