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Received From : Roland Brown
Date : Mon 11/24/1997 14:52:01.23
E Mail Addr : rbrown@ridgefield-ct.com
Subject : Brick Brewing (Canadian stock trading at 7.5x next year's earnings)
For any of you interested investors out there, take a look
at Brick Brewing Company listed as BRB on the Toronto
Exchange, currently trading at C$3.00.
I've been accumulating the stock for a couple of years at prices
between C$1.60 and C$3.00 and I'm looking for it to double
to C$6.00 over the next year and hit C$10.00 the following year.
They have a number of deals brewing that are coming to a head
in the form of much higher profits. BRB should earn C$0.20
per share in the y/e Feb'98 and C$0.40 in the y/e Feb'99.
This explosive earnings growth combined with several other
planned acquisitions and brewing capacity expansion should
justify a C$10.00 stock price within 2 years.
Although this is not my normal "10 times your money" type
of pick, it is as close to a "no lose" as any stock I know of.
On a shorter term, several analysts reports and a favorable
interview with Jim Brickman, President are expected
imminently. Then, earnings of appx C$0.07 are expected
to be announced in early December.
Some BRB Highlights:
-Ever increasing contract brewing buisiness from Molson
-Ever increasing contract brewing business from Miller in the US
-Full use of Miller's US distribution system in the US,
and Miller's California distributor is a large shareholder
-16% owned by Molson, prospect of a takeover
-Excellent demand for their craft beers, including the highly
profitable Andechs brand (it sells for C$10 per 6pack)
-A "hidden" value in the huge aquifer at Algonquin. Look for
them to become a supplier of private label bottled water
-Expansion of brewing capacity both by construction and acquisitions
-Expected acquisition of Upper Canada Brewing
-Joint brewing arrangement with Cellis (owned by Miller)
Company info:
BRB - Brick Brewing Co Ltd
Shares issued: 7,651,586 Exchanges: Toronto
01/01/97 working cap ($1,853,000.00)
Address: 181 King St S Waterloo ON N2J 1P7
Phone 519 576 9100
I've included the last years' news releases fyi:
Mutual Life exercises options for additional 285,714 common shares; 6mo
results
Brick Brewing Company Ltd
BRB
Shares issued 7651586
1997-09-12 close $2.5
Monday Sep 15 1997
Mr Jim Brickman reports
The Mutual Life Assurance Company of Canada has elected to increase its stake
in the company, exercising an option to acquire an additional 285,714 common
shares of Brick Brewing.
Mutual Life previously purchased the options along with Brick Brewing common
shares in a private placement in September 1992. After the exercise of its options,
Mutual Life now holds 642,856 common shares of Brick Brewing, representing
6.2% of the total outstanding common shares. Mutual Life continues to be
represented on Brick Brewing's board of directors.
Mr Brickman also reports
Net income for the six months was $404,000 or $0.040 per share versus a loss of
$123,000 or $0.026 per share one year ago. Sales for the period increased 71%
to $8.7 million compared to $5.1 million for the same period last year. Operating
income before depreciation was $720,000 as compared to $108,000 last year, a
cash flow improvement of 566%.
Recent sales growth is the result of increasing popularity of the company's original
core brands coupled with the full integration during the summer of its recent brand
family acquisitions, Conners and Laker. Among other things, this strong
performance confirms Brick's ability to weather summer price wars by the major
breweries - something it attributes to its portfolio of wide ranging styles of beer,
and the higher brand loyalty of its target markets.
In July, Brick completed the acquisition of the Northern Algonquin Brewing
Company, including the Algonquin and Formosa Springs brands as well as its first
class brewing facility and famous aquifer. This acquisition - expected to be
reflected in the third quarter - effectively doubles Brick's brewing capacity
enabling the Waterloo-based brewer to capitalize on current growth initiatives and
other new volume opportunities. As the market warrants, the company can
substantially increase its brewing capacity at a relatively low cost in the future.
The acceptance of Brick's recently released Benedictine beer Andechs, which
was launched in bottles this July, far exceeded introductory sales expectations.
Initial inventories into Brewers Retail were quickly depleted, resulting in an out of
stock position of almost six weeks. New supply to meet pent-up demand will be
back in stores later this month.
Subsequent to the end of the quarter, Brick announced a new brewing alliance
with The Celis Brewery of Austin, Texas adding a fourth international beer brand
to be brewed under licence by the Waterloo brewer. Last week, the company
announced that its Brick Premium Lager and Fix Hellas Beer have each been
awarded gold medals for quality from the prestigious Monde Selection
International Institute. Brick Brewing now has 17 such medals, more than any
other craft brewer in North America.
HIGHLIGHTS
Six months ended July 31
1997 1996
Revenues ($ millions) $8.7 $5.1
Volume (hl) 39,000 24,000
Operating income $720,000 $108,000
Net income (loss) $404,000 ($122,800)
Earnings (loss)
per share $0.040 ($0.026)
Post/Bloomberg say revenue should double
Brick Brewing Company Ltd
BRB
Shares issued 7651586
1997-09-10 close $2.35
Thursday Sep 11 1997
The Financial Post reports in a Bloomberg dispatch in its Thursday edition that
Brick Brewing expects its fiscal 1998 revenue to more than double because of
recent acquisitions of small beer makers and licensing agreements with other
brewers. The purchase of rivals like Algonquin Brewing and brewing pacts could
boost revenue to more than $20 million in the year ending January 30, according
to Jim Brickman, president and chief executive of the Waterloo, Ontario-based
company. Brick shares, which closed at $2.45 on Wednesday, have climbed 32
per-cent this year, compared with the Toronto Stock Exchange 300 composite
index's 14 per-cent rise. Mr Brickman says the acquisitions have come together
smoothly and Brick is looking forward to a good year. Brick's brand portfolio will
expand to include Celis White Beer. With the addition of more brewing capacity
this year, Mr Brickman says that Brick can attract more partners looking to
penetrate the Ontario market.
CP says Brick gets cloudy, spicy and fruity Belgian beer
Brick Brewing Company Ltd
BRB
Shares issued 7651586
1997-09-10 close $2.35
Thursday Sep 11 1997
The Vancouver Sun reports in a Canadian Press dispatch in its Thursday edition
that Brick Brewing of Ontario is teaming up with Celis Brewery, an Austin, Texas,
microbrewer that makes Belgian-style beers. Financial terms were not disclosed.
Celis is owned by American brewing giant Miller Brewing. The deal gives Brick
the right to produce and sell Celis White, a wheat beer which was developed by
Celis after its founders moved to Texas from Belgium in 1991. The beer is
distinguished by its cloudiness and slightly spicy and fruity taste.
Algonquin acquisition completed
Brick Brewing Company Ltd
BRB
Shares issued 7651586
1997-07-07 close $2.39
Wednesday Jul 9 1997
Ms Freda Colbourne reports
Brick has completed its acquisition of The Northern Algonquin Brewing Company
of Formosa, Ontario, for $6,000,000 and 200,000 shares.
The acquisition includes the historic Formosa Brewery established in 1870 which
sits above the famous Formosa Springs aquifer, along with all of the
Algonquin/Formosa brands and trademarks.
First quarter results
Brick Brewing Company Ltd
BRB
Shares issued 7651586
1997-06-20 close $2.35
Monday Jun 23 1997
Ms Freda Colbourne reports
Sales revenue increased 62% to $3.4 million compared to $2.1 million for the
same period last year. Net income also increased during the period to $41,100
compared to a $80,700 loss in the first quarter of fiscal 1997. Operating income
before depreciation was $178,800 as compared to $32,800 last year, a cash flow
improvement of 445%.
Brick's increase in revenue and profit was as a result of several initiatives that have
just begun to be reflected in the first quarter, such as the addition of the Conners
brands of beer, the increased volume from the production of OV Splits for the US
market, and the addition of the popular Laker brands of beer. The introduction of
Waterloo Dark in bottles last summer has also proven to be a success.
During the quarter, Brick announced its intent to acquire the Algonquin Brewing
Company of Formosa, Ontario. The acquisition, expected to be completed in the
second quarter, will double the capacity of the Waterloo-based brewer, enabling
it to capitalize on current new volume opportunities, and significantly enhance its
ability to attract new brewing initiatives.
In May 1997, Brick completed its purchase of the Laker brands, a popular price
line of beers.
In June, 1997 Brick completed its previously announced offering through Loewen,
Ondaatje, McCutcheon Limited. Brick Brewing has filed a final prospectus with
the Ontario Securities Commission and each special warrant previously sold has
been exercised for one share and a half warrant of Brick Brewing.
The proceeds will be used to finance its planned capital expenditures, for the
repayment of debt and for the payment of costs associated with Brick Brewing's
previous purchases of the Laker beer brands and the Conners Brewery trade
marks.
Special warrant financing closed
Brick Brewing Company Ltd
BRB
Shares issued 7651586
1997-06-17 close $2.35
Wednesday Jun 18 1997
Mr Jim Brickman reports
The company has completed its previously announced offering through Loewen,
Ondaatje, McCutcheon. Brick has filed a final prospectus with the Ontario
Securities Commission and each special warrant previously sold has been
exercised for one share and a half warrant.
The proceeds of the offering will be used by to finance its planned capital
expenditures, for the repayment of debt and for the payment of costs associated
with Brick's previous purchases of the Laker beer brands from Molson Breweries
and the Conners Brewery trade marks.
Year end results
Brick Brewing Company Ltd
BRB
Shares issued 7651586
1997-05-30 close $2.35
Friday May 30 1997
Mr James Brickman reviews the company
During this period of transition, fiscal 1997 sales remained steady at $10.2 million.
While the company is reporting a net loss of $721,581 or $0.14 per share for the
year ended January 31 1997, it does represent an improvement of 15.5% over
the previous year's net loss of $854,011 or $0.18 per share on sales of
$10,181,000. This improvement comes despite an increase in raw materials and a
cool summer peak period.
Early in fiscal year 1997, the company introduced Waterloo Dark in bottles, and
now it has become one of Brick's most popular brands.
In July, the company commenced contract brewing and packaging of the Molson's
Old Vienna 6.5 oz split bottle for the US market. This additional business
represents both new volume and packaging opportunities while assisting in the
absorption of fixed costs. It has also fostered a good relationship with the Miller
Brewing Company which the US split business is channelled through.
In December, the company purchased the trademarks and other rights for the
Conners family of beer brands from Conners Brewery in St Catharines. This
initiative has broadened the company's scope of premium crafted brands to
include a new group of ales that will compliment its primarily current lager style
beer portfolio.
In the past few months, the company has continued its growth strategy with the
addition of the famous Andechs brand to its portfolio. Brick was chosen by the
Benedictine monks of the Kloster Andechs monastery of Bavaria, to be entrusted
with their secret 500 year old recipe as the exclusive brewer of Andechs beer
outside of Germany.
Brick recently completed the purchase from Molson of the trademarks and other
rights and interests in the Laker Brands for exclusive use in Canada. As part of the
consideration for the purchase, Molson was issued 1,500,000 shares at $2.20
and was granted an option to maintain its share holding at 19% of the company.
The company completed a $2 million offering last December. Subsequent to this,
the company is currently in the process of finalizing an additional $4 million
offering, which is expected to close in June.
In April 1997 the company announced its intention to purchase the Northern
Algonquin Brewing Company, including the Algonquin and Formosa Springs
brands. This proposed acquisition would add to Brick a first class brewing facility
in Formosa, Ontario, which would immediately double Brick's current brewing
capacity for other planned volume initiatives. Located directly beneath the
Formosa Brewery is the famous water aquifer of Formosa Springs.
The board was strengthened this past year by the appointment of Mr Ronald L.
Fowler, a significant shareholder, who brings considerable expertise in the beer
business. His beverage organization, headquartered in San Diego, California, is
one of Miller Brewing Company's largest US distributors and, through its
numerous operating entities, also distributes leading US craft beers.
The financial position of the company as of January 31 1997 reflects a working
capital deficit of $1,853,393 compared to a deficit of $455,501 for the financial
year ended January 31 1996. The main reason for the increased deficit is an
$853,656 increase in the current portion of the long-term debt, which the
company intends to repay or renegotiate on or before the October 1997 due date.
Increased bank indebtedness of $210,721 together with increased accounts
payable related to the Conners brands purchased and additional volume growth in
the latter part of the year explain most of the change in the working capital.
Total debt increased by $582,084 to $3,877,398 as of January 31 1997,
compared to $3,295,314 for the financial year ended January 31 1996, whereas
total assets of the company increased by $1,981,882 to $6,527,954 from
$4,546,072 during the same period.
STATEMENT OF EARNINGS
Year ended January 31
1997 1996
Sales $10,194,525 $10,181,080
----------- -----------
Cost of goods
sold
Materials,
labour, over-
head and
distribution 4,661,957 4,300,299
Production
taxes 3,170,459 3,317,903
----------- -----------
7,832,416 7,618,202
----------- -----------
Gross margin 2,362,109 2,562,878
----------- -----------
Expenses and
other income
Selling,
marketing and
admin 2,424,761 2,696,700
Writedown of
non-standard
bottle inventory 72,055 84,000
Depreciation
and amortization 420,816 439,818
Recovery on
settlement of
filtration
litigation - (10,000)
Interest on
long-term debt 143,818 153,421
Other interest 22,240 52,950
----------- -----------
3,083,690 3,416,889
----------- -----------
Earnings (loss)
for the year $ (721,581) $ (854,011)
=========== ===========
Earnings (loss)
per share $(0.14) $(0.18)
Purchase of Laker Brands completed
Brick Brewing Company Ltd
BRB
Shares issued 4773115
1997-05-08 close $2.2
Monday May 12 1997
Mr Jim Brickman reports
Brick Brewing has completed its acquisition of the Laker family of beer brands
from Molson Breweries.
Brick will make cash payments to Molson over a period of up to four years, and
issue common shares of Brick Brewing to Molson at $2.20 per share, up to a
maximum of 19% of Brick's outstanding shares. Brick has been brewing and
selling Laker beer under an interim licencing agreement since February 1997.
The completed acquisition of the Laker brands is the latest in series of initiatives
which dramatically expand Brick's capacity and volumes. In December 1996, the
company acquired the Conners brands and trademarks. In February 1997, Brick
announced it had secured the worldwide exclusive rights to brew and distribute
the centuries-old Andechs brand. Last month, Brick announced its intention to
purchase the assets of Algonquin Brewing, including the Algonquin and Formosa
Springs brands, and the Formosa Brewery.
Laker brands include Laker Premium Lager, Laker Premium Light, Laker Ice,
Laker Premium Strong, and Laker Premium Dry. Brick's brand portfolio includes
Brick Premium Lager, Brick Amber Dry, Waterloo Dark, Red Baron, and Red
Cap Ale. Brick also produces Old Vienna for the US market under licence for
Molson.
Post says Molson deals brewing
Brick Brewing Company Ltd
BRB
Shares issued 4773115
1997-04-18 close $2.3
Monday Apr 21 1997
Also The Molson Companies Ltd Cl A (MOL.A)
The Financial Post reports in its Saturday edition that Molson Companies is
returning to its brewing roots and is about to close a deal giving it up to 19
per-cent of craft brewer Brick Brewing. Reporter Barbara Shecter says the
brewing giant, which four years ago gave up control of its brewing arm, is also
rumoured to be negotiating to buy back 20 per-cent from Miller Brewing. Neither
Molson nor Miller would confirm the negotiations, but some analysts say the two
companies are only held up on price. Research Capital analyst Jacques Kavafian
says that he frankly was expecting the news any day now. Molson owns 40
per-cent of its brewing operations and another 40 per-cent is held by Foster's
Brewing Group of Australia. Speculation about Molson's plans to regain control of
its brewing operations ignited after Molson Breweries' $100 million payout last
week to Adolph Coors for breaching a contract to brew Coors Light. Mr
Kavafian says that Molson is likely willing to pay $220 million for the 20 per-cent
stake, which must be offered to Foster's first.
Post says craft brewing sector consolidates
Brick Brewing Company Ltd
BRB
Shares issued 4773115
1997-04-18 close $2.3
Monday Apr 21 1997
Also Upper Canada Brewing Company Ltd (The) (UCB)
The Financial Post reports in its Saturday edition that a fresh indication of a
shakeout in the brewing world came on Friday when Brick Brewing said it will
buy craft brewing rival Northern Algonquin Brewing. Reporter Barbara Shecter
says that Brick, which has been on the acquisition trail, will pay $6 million in cash
plus $400,000 in shares for Algonquin. The Algonquin acquisition nearly doubles
Brick's brewing capacity to about 225,000 hectolitres. Each hectolitre is the
equivalent of 12 cases of 24 bottles. Brick chief executive Jim Brickman says he
hopes to double that capacity in the next 12 months. His brewery will still be
smaller than competitor Sleeman Breweries of Guelph, Ontario, but will surpass
Upper Canada Brewing. Upper Canada is now seen as a takeover target after it
said this month that it will adopt a shareholder rights plan. Mr Brickman says that
Brick has no plans to take a run at Upper Canada. The Alqonquin acquisition will
be financed in part by a special warrants issue valued at $4 million.
Globe says Northern Algonquin Brewing Co to be acquired
Brick Brewing Company Ltd
BRB
Shares issued 4773115
1997-04-18 close $2.3
Monday Apr 21 1997
The Globe and Mail reports in its Saturday, April 19, edition that Brick Brewing
Co Ltd is buying Northern Algonquin Brewing Company Ltd in a deal that will
double the brewer's sales and capacity. The Globe's Casey Mahood writes that
Brick said Friday it has signed a letter of intent to buy Algonquin for $6 million
cash and 200,000 of its shares. The acquisition is also part of a consolidation
drive that analysts and industry executives have been expecting in Ontario, similar
to one under way in the United States where there is a large number of specialty
beers. The purchase of Algonquin will add such brands as Algonquin Black & Tan
and Formosa Springs Bottled Draft. The deal also includes a brewery supplied by
spring water in Formosa, about 150 kilometres northwest of Toronto.
Algonquin Brewing Company to be acquired
Brick Brewing Company Ltd
BRB
Shares issued 4773115
1997-04-17 close $2
Friday Apr 18 1997
Mr Jim Brickman reports
The company's board of directors has approved the signing of a letter of intent to
purchase The Northern Algonquin Brewing Company of Formosa, Ontario, for
$6,000,000 and 200,000 shares. This acquisition will enable the company to
continue with its aggressive growth strategy as one of Canada's pre-eminent craft
brewers.
Under the terms of the proposed agreement, Brick will acquire the Formosa
Brewery in Formosa, Ontario, site of the historic Formosa Springs, in addition to
all of the Algonquin and Formosa Springs beer brands.
The additional capacity at the Formosa Brewery will enable Brick to capitalize on
current new volume initiatives, significantly enhance its ability to attract new
brewing alliances, and enable it to continue to brew quality beers for Ontario beer
drinkers.
In December 1996, Brick began its aggressive growth strategy with the acquisition
of the Conners brands and trademarks. Two months later, the company
announced that it would acquire the Laker family of brands from Molson
Breweries. In February, Brick announced it had secured the worldwide exclusive
rights to brew and distribute Andechs beer, an internationally renowned beer
created by the Benedictine monks of Kloster Andechs, Germany.
The Algonquin Brewing Company's major brands include Algonquin Special
Reserve Dark Ale, Algonquin Black & Tan, Algonquin Country Lager, Algonquin
Honey Brown Lager, Algonquin Royal Amber Lager, Formosa Springs Bottled
Draft, Formosa Springs Draft Light, and Formosa Springs Bavarian Style Bock.
The transaction is subject to regulatory approval and to the execution of a formal
agreement of purchase and sale expected to be completed in the coming weeks.
$2m special warrant financing closed
Brick Brewing Company Ltd
BRB
Shares issued 4773115
1997-03-20 close $2.1
Friday Mar 21 1997
Mr James Brickman reports
The company has closed the offering by private placement through Loewen,
Ondaatje reported in Stockwatch February 17 1997. The closing was for two
million special warrants, which were sold to institutional purchasers at $2.00. Each
special warrant will be exercisable for one share and a half warrant to be issued
under a planned prospectus to be filed in Ontario. Each whole warrant will be
exercisable for 12 months following closing by the holder to acquire an additional
share at $2.50. The proceeds will be used to finance the company's planned
capital expenditures for the further expansion of its existing facilities and to
improve its working capital position.
Brick Brewing Company Ltd -
2m special warrant private placement
Brick Brewing Company Ltd
BRB
Shares issued 4773115
1997-02-13 close $2.05
Monday Feb 17 1997
Mr James Brickman reports
The company has entered into an agreement with Loewen, Ondaatje,
McCutcheon for a proposed offering by private placement of up to 2,000,000
special warrants at $2.00. Each special warrant will be exercisable for one share
of Brick Brewing to be issued under a planned prospectus to be filed in Ontario
and any other required provinces. The private placement of special warrants is
expected to close on or about February 28 1997 and is subject to shareholder
approval. The proceeds will be used by Brick Brewing to finance its planned
capital expenditures for the further expansion of its existing facilities and improve
its working capital position.
Exclusive licencing agreement for Andechs beer
Brick Brewing Company Ltd
BRB
Shares issued 4773115
1997-02-11 close $2.1
Wednesday Feb 12 1997
Mr James Brickman reports
The Benedictine monks of Kloster Andechs, Germany have been brewing the
famous Andechs Beer for over 500 years.
Brick Brewing of Waterloo has been chosen as the only brewer in the world to
have the exclusive rights to brew and distribute Andechs beer outside of Germany.
Andechs Special Hell beer will be launched at a special ceremony at the
Kitchener-Waterloo Concordia Club, home of Oktoberfest.
The partnership between the Benedictine monastery and Brick was facilitated by
Ms Heinke Martens of the Toronto-based Alfa Group. Ms Martens sought a
brewer with a tradition of quality and integrity and settled, after an extensive
search, upon Brick Brewery, which has won more international awards for its
products than any other craft brewery in Canada. The company's president and
the brewmaster personally spearheaded the effort to ensure the Canadian brew
will be as true and memorable as the original beer produced at Kloster Andechs.
Andechs Special Hell lager will be available in six-packs through LCBO stores,
Beer Store outlets and through fine restaurants, cafes and hotels in Ontario.
Money received through this licencing arrangement will be used by the Benedictine
monks to assist with the educational and social service programs each abbey
provides its individual communities.
Post says Molson did Brick deal as a friendly move
Brick Brewing Company Ltd
BRB
Shares issued 4773115
1997-02-03 close $2
Tuesday Feb 4 1997
See The Molson Companies Ltd Cl A (MOL.A) In the News
The Financial Post reports in its Tuesday edition that only a few months after
buying five Laker beer brands, Molson's brewing unit has signed a letter of intent
to sell them to Brick Brewing. Reporter Barbara Shecter says the deal, disclosed
on Monday, will give Molson up to 19 per-cent of Brick's shares. Brick will also
pay Molson cash instalments over four years, which Brick chief executive James
Brickman describes as not significant. Molson's stake will be issued from Brick's
treasury at a value of $2.20 a share, giving the 19 per-cent stake a value of
roughly $2.5 million, according to Mr Brickman. The deal is subject to regulatory
approval and the executive of a formal agreement. Brick shares closed unchanged
at $2 on Monday. Molson has owned the Laker beer group since November,
when it bought the brands from Lakeport Brewing, which was being spun off from
private label soft-drink maker Cott Corp. One analyst says that Molson likely
bought the Laker brands to put them in "friendly hands," making sure that they did
not go to chief rival Labatt Brewing.
Laker brands bought from Molson
Brick Brewing Company Ltd
BRB
Shares issued 4773115
1997-01-31 close $2
Monday Feb 3 1997
Also The Molson Companies Ltd Cl A (MOL.A)
Mr James Brickman of Brick Brewing Company reports
The board of directors of Brick Brewing Company has approved the signing of a
letter of intent with Molson Breweries whereby Brick Brewing will acquire from
Molson the rights and interests in the Laker family of beer brands for exclusive use
in Canada. The Laker brands include Laker Lager, Laker Light, Laker Ice, Laker
Strong and Laker Dry.
These brands represent a significant volume increase to Brick and will further
broaden its brand portfolio. This added thru-put and other initiatives will require it
to expand its available capacity once again.
The consideration for the acquisition of the Laker