Market Overview

Big Rock Brewery Inc. Announces Q1 2020 Financial Results and Provides COVID-19 Update


CALGARY, May 5, 2020 /CNW/ - Big Rock Brewery Inc. (TSX:BR) ("Big Rock" or the "Corporation") today announced its financial results for the three month period ended March 31, 2020. 

"Big Rock achieved 4% growth in sales volumes in Q1 2020 versus Q1 2019 and experienced an 8% increase in our gross margins, year-over-year, to 34% for the first quarter," said President & CEO Wayne Arsenault, "Although beer sales continue to be under significant pressure from new market entrants and substantial growth in the Ready-to-Drink ("RTD") alcoholic beverage category, I believe our diverse portfolio of product offerings and unique manufacturing footprint allows us to be flexible and competitive in volatile economic environments and ever-changing consumer trends. While a significant portion of our sales volume growth in the quarter was driven by the sales of lower margin products, I am pleased with the momentum our business has been regaining following a difficult 2019."

During the quarter, the Alberta Gaming, Liquor and Cannabis Commission (the "AGLC") announced several amendments to its liquor manufacturing policies, to allow manufacturers, including the Corporation, to pursue growth opportunities in the cider and RTD categories without impacting the profitability of their beer businesses.

"I commend the AGLC and the Government of Alberta for making the necessary amendments to provide Alberta manufacturers the opportunity to meaningfully participate in high growth beverage alcohol categories and to pursue growth profitability, beginning with the amendment of the AGLC beer mark-up policy in September of 2019 and most recently with the amendments to the liquor manufacturing policies that limited growth in the cider and RTD categories," said Mr. Arsenault.

Since early March, the scale and magnitude of COVID-19 has increased significantly in Canada, resulting in major government-imposed restrictions on society to protect the overall health and safety of the population.

"The COVID-19 pandemic has resulted in unprecedented challenges for governments, societies and businesses across Canada and globally. The health and safety of our employees, customers, consumers and communities has been and continues to be our top priority at Big Rock," said Mr. Arsenault, "I am proud of the urgency, agility and resiliency that our employee base has demonstrated and the results of the actions taken to ensure the health and well-being of our people. The temporary closures of our retail and restaurant locations in March was an unfortunate but necessary step taken to protect the overall health of society. This pandemic has presented us with new and ever-changing challenges, however, I believe our strong financial position, the breadth of our portfolio of brands, the support of our partners and governments and the commitment of our employees will ultimately demonstrate the resiliency of our company to see through this social and economic crisis. Despite the social distancing and societal restrictions, we will continue to find ways to engage with and support our consumers, customers and communities through this difficult time."

Financial Highlights

For the three month period ended March 31, 2020, as compared to the same period in 2019, the Corporation reported:

  • sales volumes increased by 4.3%, from 34,975 hectolitres to 36,490 hectolitres;
  • net revenue increased by 3.5%, from $8.6 million to $8.9 million;
  • positive earnings before interest, taxes, depreciation and amortization ("EBITDA") of $0.1 million as compared to negative EBITDA of $1.4 million;
  • an operating loss of $0.9 million, compared to an operating loss of $2.2 million;
  • decrease in net loss to $0.9 million from $1.7 million; and
  • cash flow provided from operating activities of $0.2 million, compared to cash flow used in operating activities of $1.2 million.

Operating Highlights

Despite the continued market headwinds experienced in the beer category in Canada, the Corporation achieved 4% growth in sales volumes in Q1 2020 versus Q1 2019 and continues to see a strong contribution from its contract manufacturing business. The growth in sales volumes in the quarter can be attributed to strong performance from the following:

  • growth from the Corporation's Rock Creek cider series, primarily Dry Apple Cider, Rock Creek Rose Cider and the recent successful launch of Rock Creek Dry Light Apple Cider;
  • growth in Bow Valley Lager and the successful re-launch of Bow Valley Strong;
  • increased sales of the Corporation's licensed products, driven by its Cottage Springs vodka soda offerings in Alberta and British Columbia; and
  • growth in the Corporation's private label business.

Big Rock's higher margin Signature series of beers continued to show underperformance in Q1 2020. The Corporation experienced a rebound in its gross margins in Q1 2020 primarily driven by the AGLC beer mark-up policy amendment in September 2019. Additionally, given the high operating leverage of its business model and its Calgary facility being shut down for two weeks in March for capital expenditure and initial production curtailments due to COVID-19 uncertainty, going forward, management believes the Corporation can achieve growth in its gross margins greater than its Q1 2020 results once the COVID-19 pandemic passes.

Big Rock reported a net loss of $0.9 million for the first quarter of 2020 compared to a net loss of $1.7 million in the first quarter of 2019, despite gross revenue declining by $1.0 million (7%) to $12.6 million in the first quarter of 2020. Big Rock's operating loss of $0.9 million, for the quarter ended March 31, 2020 decreased by $1.3 million (59%), compared to an operating loss of $2.2 million during the same period in 2019, driven by the AGLC beer mark-up policy amendment in September 2019 and management's continued focus on cost structure following the cost cutting initiatives implemented during the second quarter of 2019.

Summary of Results

Three months ended March 31

$000, except sales volumes and per share amounts



Sales volumes (hl) (1)



Gross revenue





Net revenue






Operating loss



Net loss



Net loss per share





$ per hl

Net revenue





Cost of sales





Excludes contract manufacturing volumes due to the nature of the agreements.

COVID-19 Update

Since the rapid onset of the COVID-19 pandemic in March, the Corporation has been impacted with a considerable level of uncertainty, volatility and overall risk during this unprecedented time. The health and safety of Big Rock's employees, customers, consumers and community have been and will continue to be the Corporation's first priority. The commitment and ingenuity of its employee base in navigating the new and ever-changing challenges that the COVID-19 pandemic has provided has been outstanding and despite the negative financial implications this environment has caused, management believes the non-cyclicality and resiliency of the Corporation's business model, its current financial position, and the support of its partners will carry the business through this social and economic crisis and ensure the safety and well-being of its employees.

Operations Update

The Corporation took immediate action in implementing extensive policies and procedures to protect its employees across all departments. In its production, packaging and warehousing facilities, Big Rock has implemented heightened measures including but not limited to the use of non-surgical masks and gloves, segregation of departments and facility use, enhanced quality control measures, restricted access to or suspension of all third party visits to its locations, daily communication and evaluation of recent developments and continued development of internal policies consistent with appropriate government healthcare body policies. In mid-March, the majority of non-manufacturing and distribution employees were transitioned and continue to work from home, indefinitely. Despite the temporary closure of all of its retail, restaurant and tap room locations, Big Rock has continued to support its customers and consumers through the production, sales and distribution of its high quality products while maintaining the majority of its employee base, in addition to its strong health benefit programs to support their health and well-being.

Liquidity Update

Despite the significant revenue decline of its on-premise business, management is confident that the Corporation's off-premise business, the support of its credit providers and the potential support of government programs will allow the Corporation to sustain its financial position and thrive if and when the economy rebounds. Management continues to monitor and evaluate sales, cash flow, government programs and new information and developments and has established preliminary business continuity plans should business risks heighten. However, Big Rock has not been forced to implement any major organizational changes thus far. The Corporation has received a three-month principal and interest payment deferral from its credit providers in addition to relief on lease payments from some of its lessors at retail and restaurant locations. The Corporation has $11 million in total credit facilities made up of a $5 million operating facility and a $6 million term facility of which an aggregate of $4.9 million was drawn at March 31, 2020. The Corporation's sole lender has expressed continued support of its business given the Corporation's current financial position, continued operations and strong working capital management through such uncertain times.

Annual General Meeting Update

Big Rock reminds shareholders that this year, out of an abundance of caution, to proactively deal with the unprecedented public health impact of COVID-19, and to mitigate risks to the health and safety of Big Rock's communities, shareholders, employees and other stakeholders, Big Rock will be holding its annual general meeting on May 14, 2020 at 2:00 p.m. (Calgary Time) (the "Meeting") in a virtual-only format, which will be conducted via live audio webcast at

Shareholders will not be able to attend the Meeting in person. Shareholders will have an equal opportunity to participate at the Meeting online regardless of their geographic location. At the Meeting, shareholders will have the opportunity to ask questions and vote "real time" on a number of important matters, provided they are connected to the internet and comply with all of the requirements set out in Big Rock's management information circular dated April 7, 2020 (the "Circular").

Registered shareholders and duly appointed proxyholders can participate at the Meeting by clicking "I have a login" and entering a Username and Password before the start of the Meeting.

  • For Registered Shareholders, the Username is the 15-digit control number located on your form of proxy or in the email notification you received from Computershare Trust Company of Canada ("Computershare") and the password is "bigrock2020".
  • For duly appointed proxyholders, Computershare will provide the proxyholder with a Username after the voting deadline has passed. The Password to the Meeting is "bigrock2020".

Non-registered (or beneficial) shareholders who have not duly appointed themselves as proxyholder may attend the Meeting as guests, but will not have the ability to vote virtually or ask questions through the live audio webcast. A shareholder who wishes to appoint a person other than the management nominees identified on the form of proxy (including a non-registered shareholder who wishes to appoint themselves to attend) must carefully follow the instructions in the Circular and on the accompanying form of proxy. These instructions include the additional step of registering such proxyholder with Computershare at after submitting the form of proxy.

Big Rock urges shareholders to carefully read the instructions and further details set forth in the Circular and form of proxy, copies of which are filed on Big Rock's profile at

Additional Information

The unaudited consolidated financial statements and Management's Discussion and Analysis for the three months ended March 31, 2020, dated May 5, 2020, can be viewed on Big Rock's website at and on SEDAR at under Big Rock Brewery Inc. 


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 "EBITDA". This financial measure does 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.  EBITDA is calculated by adding back to net income, interest, income taxes, depreciation and amortization. For more information, please see Management's Discussion and Analysis for the three months and year ended December 30, 2019.

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:

  • supply and demand of Big Rock's products;
  • Big Rock's expectations with respect to its flexibility and competitive position;
  • the impact of recent amendments to the AGLC beer mark-up rates in Alberta and any further changes in the future;
  • the impact of recent amendments to the AGLC's liquor manufacturing policies and any further
  • changes in the future;
  • Big Rock's expectations with respect to the Corporation's evaluation of growth opportunities and plans with respect to the same;
  • Big Rock's expectations with respect to growth in its gross margins once the COVID-19 pandemic passes;
  • Big Rock's expectations with respect to its ability to continue its business through the COVID-19 pandemic and ensure the safety and well-being of its employees; and
  • Big Rock's expectations with respect to its future financial position.

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

  • volumes in the current fiscal year will remain constant or will increase;
  • input costs for brewing and packaging materials will not materially increase or decrease;
  • 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; and
  • that the duration and extent of the COVID-19 pandemic will not be long-term.

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 contained herein include the risk factors set out in the Corporation's annual information form and also include, but are not limited to:

  • the inability to maintain the current AGLC beer mark-up policy in Alberta;
  • the inability to maintain the current AGLC mark-up rates applicable to RTD beverages in Alberta;
  • the inability to grow demand for Big Rock's products;
  • the worldwide economic and social impact of COVID-19; and
  • the duration and extent of the COVID-19 pandemic.

Readers are cautioned that the foregoing list of assumptions and risk factors is not exhaustive. The forward-looking information and statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking information and statements 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

SOURCE Big Rock Brewery Inc.

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