Brampton Brick Reports Results for the First Quarter Ended March 31, 2012

BRAMPTON, ONTARIO--(Marketwire - May 8, 2012) -

(All amounts are stated in thousands of Canadian dollars, except per share amounts.)

Brampton Brick Limited (TSX:BBL.A) today reported a loss of $2,793, or $0.26 per Class A Subordinate Voting share ("Class A share") and Class B Multiple Voting Share ("Class B share"), for the first quarter ended March 31, 2012 compared to a loss of $4,425, or $0.40 per share, in 2011. The aggregate weighted average number of Class A shares and Class B shares outstanding was 10,936,554 in both periods.

DISCUSSION OF OPERATIONS

Revenues for the quarter were $15,995 compared to $10,616 in 2011. The increase of 50.7%, or $5,379 was primarily due to significantly higher shipments in the Masonry Products business segment. Revenues of the highly seasonal Landscape Products business segment were slightly higher by $326 over the first quarter in 2011.

Cost of sales for the quarter amounted to $14,843, compared to $10,715 in 2011. The increase in cost of sales was caused by higher sales volumes, and included higher delivery expenses as a result of the increase in shipments. Overall, cost of sales increased by 38.5%, whereas revenue increased by 50.7%, from the prior period.

Selling expenses decreased to $1,861 in the first quarter from $2,001 in the prior period. In the first quarter of 2011, selling expenses included increased advertising and marketing expenditures to support the introduction of new products and to expand the Company's market profile.

General and administrative expenses increased by $143 from the prior year primarily due to non-recurring employment related expenses.

Operating results were positively impacted by the improvement in revenues which reduced the operating loss for the quarter ended March 31, 2012 to $2,287 from $3,561 in 2011.

Finance costs for the first quarter of 2012 remained in line with 2011. Lower interest expense on lower debt balances outstanding during the quarter ended March 31, 2012, due to principal repayments made in the second half of 2011, was offset by a gain of $210 on the interest rate swap recorded in the first quarter of 2011. The Company settled the interest rate swap contract on October 3, 2011 for $1,459.

A net recovery of income taxes of $404 was recorded for the first quarter of 2012 compared to a net recovery of $767 in 2011. The deferred income tax recovery of $404 in 2012 relates to the pre-tax loss of the Company's Canadian operations that can be applied against taxable income in future years. In 2011, a current tax recovery of $849 was recorded on non-capital losses pertaining to the Company's Canadian operations which were carried back to prior taxation years. The Company has not recorded a deferred tax asset with respect to the potential future income tax benefit pertaining to the losses incurred by its U.S. operations.

A more detailed discussion with respect to each operating business segment follows:

MASONRY PRODUCTS

Revenues of the Masonry Products business segment were $14,793 for the quarter ended March 31, 2012 compared to $9,740 for the same period in 2011.

Favourable weather conditions resulted in significantly higher shipments of masonry products. In addition, the sale of new products, including concrete block which were introduced into the Ontario market in April 2011, generated incremental revenues.

The higher revenues were partially offset by higher cost of sales, including increased delivery costs attributable to a greater number of shipments. The operating loss for the quarter improved to $399 from $996 for the same quarter in 2011.

LANDSCAPE PRODUCTS

The Landscape Products business segment incurred an operating loss of $1,888 on revenues of $1,202 for the three month period ended March 31, 2012 compared to operating loss of $2,565 on revenues of $876 for the comparable period in 2011. The improvement in operating results was due to higher sales volumes. Historically, the level of activity in this business segment is lowest during the winter months. While the mild weather conditions in the first quarter spurred growth in the Masonry Products business segment, this business segment does not generally pick up sales activity until well into the second quarter.

Other

Universal Resource Recovery Inc. ("Universal"), of which the Company maintains a 50% ownership position, did not operate in the first quarter as commercial operations have been suspended since June 2011. As of January 1, 2012, management of Universal is committed to an active program to locate a buyer for the sale of assets held in Universal. Universal is accounted for using the equity method of accounting and therefore the condensed interim consolidated balance sheet presentation is not impacted by the assets held for sale in Universal.

The impairment analysis that was completed at December 31, 2011 resulted in the investment in Universal being written down in the Company's consolidated balance sheet to zero. An impairment analysis was performed at March 31, 2012 from which it was concluded that the investment should remain at zero in the Company's condensed interim consolidated balance sheet. The Company's share of unrecognized losses increased to $1,946 as a result of its share of Universal's losses of $155 for the first quarter of 2012. These unrecognized losses are recognized only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the joint venture. There were no such obligations or payments made as at March 31, 2012.

CASH FLOWS

Cash flow used for operating activities totaled $1,944 for the period ended March 31, 2012 compared to $4,430 for the same period in the prior year. The improvement in operating results and lower working capital requirements contributed to the decline in cash used for operations in 2012.

Cash utilized for purchases of property, plant and equipment totaled $843 in the quarter, compared to $1,057, in 2011. In 2011, the Company spent $420 on property, plant and equipment related to new product development.

Long-term advances towards the investment in Universal during the first quarter of 2011 were $975. Advances to Universal totaled $500 during the current quarter and have been recorded as loans receivable at March 31, 2012 as Universal's assets are now classified by Universal's management as 'Non-current assets held for sale'. These assets are expected to be sold and the receivables to be repaid within twelve months.

FINANCIAL CONDITION

The Company's Masonry Products and Landscape Products business segments are seasonal in nature. The Landscape Products business is affected to a greater degree than the Masonry Products business. As a result of this seasonality, operating results are impacted accordingly and cash requirements are generally expected to increase through the first half of the year and decline through the second half of the year.

As at March 31, 2012, bank operating advances were $9,379. This represented an increase of $4,232 from the amount outstanding at December 31, 2011. The increase in bank operating advances was utilized to meet working capital requirements, capital expenditures and repayments of debt and finance lease obligations in the first quarter of 2012. Trade payables totaled $9,338 at March 31, 2012 compared to $9,026 at December 31, 2011.

The ratio of total liabilities to shareholders' equity was 0.56:1 at March 31, 2012 compared to 0.51:1 at December 31, 2011. The increase in this ratio from December 2011 to March 2012 was primarily due to the increase in bank operating advances, as noted above, lower retained earnings resulting from the loss incurred for the three month period ended March 31, 2012 and the impact of an increase in foreign currency translation loss in Accumulated other comprehensive loss due to the strengthening of the Canadian dollar in the first quarter of 2012.

As at March 31, 2012, working capital was $1,246, representing a working capital ratio of 1.04:1. Comparable figures for working capital and the working capital ratio at December 31, 2011 were $13,137 and 1.65:1, respectively. The decline from December 31, 2011 is due to the inclusion in current liabilities of the Company's subordinated debentures amounting to $8,886, which mature in February 2013. Cash and cash equivalents totaled $1,023 at March 31, 2012 compared to $1,180 at December 31, 2011.

On October 4, 2011, the Company concluded new arrangements with a Canadian bank to provide its operating credit requirements. The new facility provides for borrowings up to $20,000 based on margin formulae for trade receivables and inventories, less priority claims and the mark-to-market exposure on swap contracts, if applicable. It is a demand facility secured primarily by trade receivables and inventories of the Company's Masonry Products and Landscape Products business segments in Canada and the U.S. The new agreement also contains certain financial covenants. As at March 31, 2012 the borrowing base was $17,696 and the utilization was $9,603, including $9,379 for bank operating advances and $224 for outstanding letters of credit.

The Company expects that future cash flows from operations, cash and cash equivalents on hand and the unutilized balance of its operating credit facility will be sufficient to satisfy its obligations as they become due.

The Company was in compliance with all financial covenants under its debt agreement as at March 31, 2012 and anticipates that it will maintain compliance throughout the year.

Certain statements contained herein constitute "forward-looking statements". Such forward-looking statements involve known and unknown risks, uncertainties and other factors, including, but not limited to, those identified under "Risks and Uncertainties" in the Company's 2011 Annual Report, which may cause actual results, performance or achievements of the Company to be materially different from any future result, performance or achievements expressed or implied by such forward- looking statements.

Brampton Brick is Canada's second largest manufacturer of clay brick, serving markets in Ontario, Quebec and the Northeast and Midwestern United States from its brick manufacturing plants located in Brampton, Ontario and near Terre Haute, Indiana. To complement the clay brick product line, the Company also manufactures a range of concrete masonry products, including stone veneer products marketed under the Stoneworks^™ trade name and concrete brick and block. Concrete interlocking paving stones, retaining walls, garden walls and enviro products are manufactured in Markham, Milton and Brampton, Ontario and Wixom, Michigan. These products are sold to markets in Ontario, Quebec, Michigan, New York, Pennsylvania, Ohio, Kentucky, Illinois and Indiana under the Oaks^™ trade name. Products are used for residential construction and for industrial, commercial, and institutional building projects. The Company also holds a 50% joint-venture interest in Universal Resource Recovery Inc., which is a waste composting facility located in Welland, Ontario.

Selected Financial Information

(unaudited) (in thousands of Canadian dollars)

		March 31			December 31
CONDENSED INTERIM CONSOLIDATED BALANCE SHEET		2012			2011
ASSETS
Current assets
	Cash and cash equivalents	$	1,023		$	1,180
	Trade and other receivables		12,096			9,964
	Inventories		20,404			20,805
	Income taxes recoverable		744			744
	Loans receivable		500			-
	Other assets		772			597
			35,539			33,290
Non-current assets
Property, plant and equipment			171,388			172,629
Total assets		$	206,927		$	205,919
LIABILITIES
Current liabilities
	Bank operating advances	$	9,379		$	5,147
	Trade payables		9,338			9,026
	Income taxes payable		826			829
	Current portion of debt		12,108			3,091
	Decommissioning provisions		49			50
	Other liabilities		2,593			2,010
			34,293			20,153
Non-current liabilities
Non-current portion of debt			26,128			35,166
Decommissioning provisions			950			950
Deferred income tax liabilities			12,759			13,163
Total liabilities		$	74,130		$	69,432
EQUITY
Equity attributable to owners of the parent
	Share capital	$	33,689		$	33,689
	Contributed surplus		1,842			1,801
	Accumulated other comprehensive loss		(2,478	)		(1,540	)
	Retained earnings		99,733			102,527
		$	132,786		$	136,477
Non-controlling interests			11			10
Total equity		$	132,797		$	136,487
Total liabilities and equity		$	206,927		$	205,919

Selected Financial Information

(unaudited) (in thousands of Canadian dollars, except per share amounts)

		Three months ended March 31
CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)		2012			2011
Revenues		$	15,995		$	10,616
Cost of sales			14,843			10,715
Selling expenses			1,861			2,001
General and administrative expenses			1,574			1,431
Other expense			4			30
			18,282			14,177
Operating loss			(2,287	)		(3,561	)
Finance (expense) income
	Finance costs		(912	)		(919	)
	Finance income		2			2
			(910	)		(917	)
Share of loss from investment in Universal Resource Recovery Inc.			-			(714	)
Loss before income taxes			(3,197	)		(5,192	)
Recovery of (provision for) income taxes
	Current		-			849
	Deferred		404			(82	)
			404			767
Loss for the period		$	(2,793	)	$	(4,425	)
Net income (loss) attributable to:
	Owners of the parent	$	(2,794	)	$	(4,425	)
	Non-controlling interests		1			-
Loss for the period		$	(2,793	)	$	(4,425	)
Other comprehensive loss
	Foreign currency translation	$	(938	)	$	(1,150	)
Total comprehensive loss for the period		$	(3,731	)	$	(5,575	)
Total comprehensive income (loss) attributable to:
	Owners of the parent	$	(3,732	)	$	(5,575	)
	Non-controlling interests		1			-
Total comprehensive loss for the period		$	(3,731	)	$	(5,575	)
Loss per Class A and Class B share		$	(0.26	)	$	(0.40	)
Weighted average Class A and Class B shares outstanding (000's)			10,937			10,937

Selected Financial Information

(unaudited) (in thousands of Canadian dollars)

			Three months ended March 31
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS			2012			2011
Cash provided by (used for)
Operating activities
	Loss for the period		$	(2,793	)	$	(4,425	)
	Items not affecting cash and cash equivalents
		Depreciation		1,744			1,717
		Current income taxes		-			(849	)
		Deferred income taxes		(404	)		82
		Unrealized foreign currency exchange loss		24			31
		Gain on derivative financial instrument		-			(210	)
		Net interest expense		911			1,129
		Share of loss in investment in Universal Resource Recovery Inc.		-			714
		Other		41			57
				(477	)		(1,754	)
Changes in non-cash items
		Trade and other receivables		(2,145	)		(2,015	)
		Inventories		285			(2,074	)
		Other assets		(177	)		(171	)
		Trade payables		(67	)		1,299
		Income tax credits applied		(3	)		(1	)
		Other liabilities		641			286
				(1,466	)		(2,676	)
	Payments for decommissioning of assets			(1	)		-
Cash used for operating activities				(1,944	)		(4,430	)
Investing activities
	Purchase of property, plant and equipment			(843	)		(1,057	)
	Advances to Universal Resource Recovery Inc.			-			(975	)
	Loans receivable			(500	)		-
Cash used for investment activities				(1,343	)		(2,032	)
Financing activities
	Increase in bank operating advances			4,232			6,610
	Repayment of debt			(75	)		(77	)
	Interest paid on term loans and bank operating advances			(839	)		(1,068	)
	Payments on obligations under finance leases			(110	)		(94	)
	Payment of dividends by subsidiary to non-controlling interests			(75	)		-
Cash provided by financing activities				3,133			5,371
Foreign exchange on cash held in foreign currency				(3	)		1
Decrease in cash and cash equivalents				(157	)		(1,090	)
Cash and cash equivalents at the beginning of the period				1,180			5,383
Cash and cash equivalents at the end of the period			$	1,023		$	4,293

Selected Financial Information

(unaudited) (in thousands of Canadian dollars)

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

		Attributable to owners of the parent
		Share Capital			Contributed Surplus		Accumulated Other Comprehensive Loss			Retained Earnings			Total			Non- controlling interest		Total Equity
Balance - January 1, 2011		$	33,689		$	1,658	$	(2,616	)	$	112,506		$	145,237		$	112	$	145,349
	Loss for the period		-			-		-			(4,425	)		(4,425	)		-		(4,425	)
	Other comprehensive loss (net of taxes, $nil)		-			-		(1,150	)		-			(1,150	)		-		(1,150	)
Comprehensive loss for the period			-			-		(1,150	)		(4,425	)		(5,575	)		-		(5,575	)
	Share-based compensation		-			57		-			-			57			-		57
Balance - March 31, 2011		$	33,689		$	1,715	$	(3,766	)	$	108,081		$	139,719		$	112	$	139,831
Balance - January 1, 2012		$	33,689		$	1,801	$	(1,540	)	$	102,527		$	136,477		$	10	$	136,487
	(Loss) income for the period		-			-		-			(2,794	)		(2,794	)		1		(2,793	)
	Other comprehensive loss (net of taxes $nil)		-			-		(938	)		-			(938	)		-		(938	)
Comprehensive (loss) income for the period			-			-		(938	)		(2,794	)		(3,732	)		1		(3,731	)
	Share-based compensation		-			41		-			-			41			-		41
Balance - March 31, 2012		$	33,689		$	1,842	$	(2,478	)	$	99,733		$	132,786		$	11	$	132,797