Brampton Brick Reports Results for the First Quarter Ended March 31, 2013

BRAMPTON, ONTARIO--(Marketwired - May 7, 2013) -

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

Brampton Brick Limited (TSX:BBL.A) today reported a loss of $2,574, or $0.24 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, 2013 compared to a loss of $2,793, or $0.26 per share, in 2012. The aggregate weighted average number of Class A shares and Class B shares outstanding for the first quarter of 2013 was 10,940,354 and 10,936,554 for the same period in 2012.

DISCUSSION OF OPERATIONS

Revenues for the first quarter were $12,889 compared to $15,995 in 2012. The decrease of 19.4% was primarily due to lower shipments in the Masonry Products business segment. Revenues of the highly seasonal Landscape Products business segment were also lower in the first quarter of this year. Unfavourable weather conditions negatively impacted shipments for both business segments compared to the first quarter of 2012.

Cost of sales for the quarter amounted to $11,774, compared to $14,843 in 2012. The reduction in cost of sales reflected the impact of the lower sales volumes, as well as higher production volumes and related efficiencies. First quarter repair and maintenance were higher than in the comparable period of 2012 for the landscape and concrete masonry products.

Selling expenses decreased to $1,785 in the first quarter from $1,861 in the prior period. In the first quarter of 2012, higher selling expenses included advertising and marketing expenditures to promote new products introduced in 2011 and to expand the Company's geographic market profile. The decrease in the first quarter of 2013 from 2012 was offset, in part, by the Company's ongoing investment program to upgrade its information systems and enhance its customer support capabilities.

For the first quarter of 2013, an impairment loss of $158 relating to the loan receivable from Universal Resource Recovery Inc. ("Universal"), the Company's 50/50 joint venture, was recognized. There was no impairment loss recognized for the Universal loan in the comparable 2012 condensed interim consolidated financial statements.

For the quarter ended March 31, 2013, the operating loss increased moderately to $2,384 from $2,287 in 2012.

Finance costs of $666 declined for the first quarter of 2013 compared to $912 for the same period in 2012. The decrease in interest expense was due to the repayment of the Company's subordinated secured debentures, which bore an effective interest rate of 11.89%. The redemption of these debentures was funded from the Company's operating credit facility bearing interest at prevailing banker's acceptance rates, plus a credit spread of 2%. In addition, lower long term debt balances outstanding during the first quarter of 2013 also contributed to the decline in interest expense. Scheduled principal payments totaling $2,500 on the long term debt were made in the second half of 2012. This debt bears an effective interest rate of 8.40%.

A net recovery of income taxes of $474 was recorded for the first quarter of 2013 compared to a net recovery of $404 in 2012. The income tax recovery in both periods relates to the pre-tax losses of the Company's Canadian operations. 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 $12,312 for the quarter ended March 31, 2013 compared to $14,793 for the same period in 2012. The decrease in volumes was due to unfavourable weather conditions in the first quarter of 2013 compared to milder conditions in the same quarter of 2012.

Higher plant capacity utilization during the first quarter of the current year compared to the prior period resulted in lower per unit production costs. While higher production levels and lower shipments increased inventory volumes, the expected catch-up in construction activity should bring inventory levels back in line by this summer.

Operating income for the quarter ended March 31, 2013 was $6 compared to operating loss of $399 for the same quarter in 2012.

LANDSCAPE PRODUCTS

The Landscape Products business segment incurred an operating loss of $2,232 on revenues of $577 for the three month period ended March 31, 2013 compared to an operating loss of $1,888 on revenues of $1,202 for the comparable period in 2012. The decline in operating results was due to a decrease in sales volumes combined with equipment overhaul expenses and new equipment commissioning costs. Historically, the significant majority of planned equipment maintenance is scheduled during the winter months.

CASH FLOWS

Cash flow used for operating activities totaled $4,768 for the period ended March 31, 2013 compared to $1,944 for the same period in the prior year. Significantly higher inventory levels contributed to the increase in cash used for operations in 2013.

Cash utilized for purchases of property, plant and equipment totaled $774 for the quarter, compared to $843 in 2012.

Short term loans advanced to Universal totaled $475 during the quarter compared to $500 in the comparative prior period.

FINANCIAL CONDITION

The Company's Masonry Products and Landscape Products business segments are seasonal in nature. The Landscape Products business is affected by seasonality 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, 2013, bank operating advances were $16,662. This represented an increase of $6,227 from the amount outstanding at December 31, 2012. The increase in bank operating advances was utilized to meet working capital requirements, capital expenditures and repayments of finance lease obligations in the first quarter of 2013. Trade payables totaled $12,088 at March 31, 2013 compared to $11,675 at December 31, 2012. Trade and other receivables and inventories totaled $10,548 and $27,078, respectively, at March 31, 2013 compared to $10,832 and $22,287, respectively, at December 31, 2012.

The ratio of total liabilities to shareholders' equity was 0.55:1 at March 31, 2013 compared to 0.50:1 at December 31, 2012. The increase in this ratio from December 2012 to March 2013 was primarily due to the increase in bank operating advances, as noted above and lower retained earnings resulting from the loss incurred for the three month period ended March 31, 2013. Partially offsetting these factors was a notable increase in the foreign currency translation amount for the quarter over the corresponding quarter in 2012. This amount is reported in Accumulated other comprehensive loss in the condensed interim consolidated financial statements and arose due to the weakening of the Canadian dollar in relation to the US dollar in the first quarter in 2013.

As at March 31, 2013, working capital was $5,652, representing a working capital ratio of 1.16:1. Comparable figures for working capital and the working capital ratio at December 31, 2012 were $7,325 and 1.25:1, respectively. The decline from December 31, 2012 is primarily due to the increase in bank operating advances as at March 31, 2013. Cash and cash equivalents totaled $980 at March 31, 2013 compared to $1,412 at December 31, 2012.

The Company's credit facility provides for borrowings up to $22,000 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 agreement also contains certain financial covenants. As at March 31, 2013, the Company is in compliance with all of its financial covenants.

As at March 31, 2013, the margin borrowing limit was $19,360, with utilization of $16,914 and was comprised of: a $8,900 banker's acceptance, 90 day note; a current account overdraft balance of $7,762; and outstanding letters of credit of $252.

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, 2013 and anticipates that it will maintain compliance throughout the year.

FORWARD-LOOKING STATEMENTS

Certain statements contained herein constitute "forward-looking statements". All statements that are not historical facts are forward-looking statements, including, among others, statements regarding the expected repayment of the short-term loan receivable from Universal, forecasts of sufficient cash flows from operations and other sources of financing, anticipated compliance with financial covenants under debt agreements, anticipated sales of masonry and landscape products, and other statements regarding future plans, objectives, results, business outlook and financial performance. There can be no assurance that such forward-looking statements will prove to be accurate.

Such forward-looking statements are based on information currently available to management, and are based on assumptions and analyses made by management in light of its experience and its perception of historical trends, current conditions and expected future developments, including, among others, assumptions regarding pricing, weather and seasonal expectations, production efficiency, and there being no significant disruptions affecting operations or other material adverse changes.

Such forward-looking statements also involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others: changes in economic conditions, including the demand for the Company's primary products and the level of new home, commercial and other construction; large fluctuations in production levels; fluctuations in energy prices and other production costs; changes in transportation costs; foreign currency exchange and interest rate fluctuations; legislative and regulatory developments; as well as those assumptions, risks, uncertainties and other factors identified and discussed above under "Risks and Uncertainties" in the 2012 annual MD&A included in the Company's 2012 Annual Report and those identified and reported in the Company's other public filings (including the Annual Information Form for the year ended December 31, 2012), which may be accessed at www.sedar.com.

The forward-looking information contained herein is made as of the date hereof. Other than as specifically required by law, the Company undertakes no obligation to update or revise any forward- looking information, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on 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.

SELECTED FINANCIAL INFORMATION
(unaudited) (in thousands of Canadian dollars)
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS				March 31 2013			December 31 2012
ASSETS
Current assets
	Cash and cash equivalents		$	980			$	1,412
	Trade and other receivables			10,548				10,832
	Inventories			27,078				22,287
	Loan receivable			1,709				1,392
	Other assets			870				575
				41,185				36,498
Non-current assets
	Property, plant and equipment			168,796				168,848
Total assets			$	209,981			$	205,346
LIABILITIES
Current liabilities
	Bank operating advances		$	16,662			$	10,435
	Trade payables			12,088				11,675
	Income taxes payable			1,750				2,110
	Current portion of debt			2,940				2,928
	Decommissioning provisions			50				50
	Other liabilities			2,043				1,975
				35,533				29,173
Non-current liabilities
	Non-current portion of debt			23,444				23,554
	Decommissioning provisions			2,241				2,219
	Deferred tax liabilities			13,312				13,427
Total liabilities			$	74,530			$	68,373
EQUITY
Equity attributable to shareholders of Brampton Brick Limited
	Share capital		$	33,711			$	33,711
	Contributed surplus			1,968				1,895
	Accumulated other comprehensive loss			(1,676	)			(2,655	)
	Retained earnings			101,436				104,010
			$	135,439			$	136,961
Non-controlling interests				12				12
Total equity			$	135,451			$	136,973
Total liabilities and equity			$	209,981			$	205,346

SELECTED FINANCIAL INFORMATION
(unaudited) (in thousands of Canadian dollars, except per share amounts)
CONDENSED INTERIM CONSOLIDATED STATEMENTS			Three months ended March 31
OF COMPREHENSIVE INCOME (LOSS)				2013				2012
Revenues			$	12,889			$	15,995
Cost of sales				11,774				14,843
Selling expenses				1,785				1,861
General and administrative expenses				1,558				1,574
Gain on disposal of property, plant and equipment				(5	)			-
Other expense				3				4
Impairment loss on loan receivable				158				-
				15,273				18,282
Operating loss				(2,384	)			(2,287	)
Finance (expense) income
	Finance costs			(666	)			(912	)
	Finance income			2				2
				(664	)			(910	)
Loss before income taxes				(3,048	)			(3,197	)
Recovery of income taxes
	Current			358				-
	Deferred			116				404
				474				404
Loss for the period			$	(2,574	)		$	(2,793	)
Net income (loss) attributable to:
	Shareholders of Brampton Brick Limited		$	(2,574	)		$	(2,794	)
	Non-controlling interests			-				1
Loss for the period			$	(2,574	)		$	(2,793	)
Other comprehensive income (loss)
	Items that may be reclassified subsequently to profit or loss:
	Foreign currency translation		$	979			$	(938	)
Total comprehensive loss for the period			$	(1,595	)		$	(3,731	)
Total comprehensive income (loss) attributable to:
	Shareholders of Brampton Brick Limited		$	(1,595	)		$	(3,732	)
	Non-controlling interests			-				1
Total comprehensive loss for the period			$	(1,595	)		$	(3,731	)
Loss per Class A and Class B share attributable to shareholders of Brampton Brick Limited			$	(0.24	)		$	(0.26	)
Weighted average Class A and Class B shares outstanding (000's)				10,940				10,937

SELECTED FINANCIAL INFORMATION
(unaudited) (in thousands of Canadian dollars)
CONDENSED INTERIM CONSOLIDATED STATEMENTS				Three months ended March 31
OF CASH FLOWS					2013				2012
Cash provided by (used for)
Operating activities
	Loss for the period			$	(2,574	)		$	(2,793	)
	Items not affecting cash and cash equivalents
		Depreciation			1,765				1,744
		Current taxes			(358	)			-
		Deferred taxes			(116	)			(404	)
		Gain on disposal of property, plant and equipment			(5	)			-
		Unrealized foreign currency exchange (gain) loss			(1	)			24
		Impairment loss on loan receivable			158				-
		Net interest expense			665				911
		Other			73				41
					(393	)			(477	)
	Changes in non-cash items
		Trade and other receivables			289				(2,145	)
		Inventories			(4,785	)			285
		Other assets			(290	)			(177	)
		Trade payables			387				(67	)
		Other liabilities			27				641
					(4,372	)			(1,463	)
	Income tax payments made				(3	)			(3	)
	Payments for decommissioning of assets				-				(1	)
Cash used for operating activities					(4,768	)			(1,944	)
Investing activities
	Purchase of property, plant and equipment				(774	)			(843	)
	Loan advances paid to Universal Resource Recovery Inc.				(475	)			(500	)
	Proceeds from disposal of property, plant and equipment				5				-
Cash used for investment activities					(1,244	)			(1,343	)
Financing activities
	Increase in bank operating advances				6,227				4,232
	Payment of term loans				(16	)			(75	)
	Interest paid				(607	)			(839	)
	Payments on obligations under finance leases				(107	)			(110	)
	Payment of dividends by subsidiary to non-controlling interests				-				(75	)
Cash provided by financing activities					5,497				3,133
Foreign exchange on cash held in foreign currency					83				(3	)
Decrease in cash and cash equivalents					(432	)			(157	)
Cash and cash equivalents at the beginning of the period					1,412				1,180
Cash and cash equivalents at the end of the period				$	980			$	1,023

SELECTED FINANCIAL INFORMATION
(unaudited) (in thousands of Canadian dollars)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
			Attributable to shareholders of Brampton Brick Limited
									Accumulated
									Other											Non-
			Share			Contributed			Comprehensive			Retained								controlling			Total
			Capital			Surplus			Income (Loss)			Earnings				Total				interests			Equity
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 income (loss) 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
Balance - January 1, 2013			$	33,711		$	1,895		$	(2,655	)	$	104,010			$	136,961			$	12		$	136,973
	Loss for the period			-			-			-			(2,574	)			(2,574	)			-			(2,574	)
	Other comprehensive income (net of taxes, $nil)			-			-			979			-				979				-			979
Comprehensive income (loss) for the period				-			-			979			(2,574	)			(1,595	)			-			(1,595	)
	Share-based compensation			-			73			-			-				73				-			73
Balance - March 31, 2013			$	33,711		$	1,968		$	(1,676	)	$	101,436			$	135,439			$	12		$	135,451