NEW YORK, Nov. 9, 2016 /PRNewswire/ -- Castle Brands
Inc. (NYSE MKT: ROX), a developer and international marketer of
premium and super-premium branded spirits, today reported financial
results for the three and six month periods ended September 30, 2016.
Operating highlights for the quarter ended September 30, 2016:
- Net sales increased 5.9% to $19.6
million for the second quarter of fiscal 2017, as compared
to $18.5 million for the comparable
prior-year period.
- Total gross profit increased 9.5% to $7.7 million, as compared to $7.1 million for the comparable prior-year
period.
- Continued strong growth of Jefferson's bourbons and the Irish whiskies
led to a 19.2% increase in whiskey revenues from the comparable
prior-year period.
- In addition to continuing its new fill programs, the Company
purchased an additional 1,800 barrels of aged bourbon to support
the continued growth of Jefferson's.
- Goslings Stormy Ginger Beer case
sales increased 10.8% to approximately 360,000 cases from
approximately 325,000 in the comparable prior-year period.
"Continued strong growth of our more profitable brands, such as
Jefferson's and our Irish
whiskeys, resulted in solid revenue growth and even greater growth
in gross profit. This allowed us to increase income from
operations, reduce net loss and increase EBITDA, as adjusted. We
expect these trends of increasing sales and improving financial
performance to continue over the balance of the fiscal year and
beyond," stated Richard J. Lampen,
President and Chief Executive Officer of Castle
Brands.
"In the quarter, our additional purchases of aged bourbon
reserves, coupled with the continuation of our two long-term new
fill programs, put us in a solid position to support continued
sales growth of our Jefferson's
bourbon portfolio. We plan to expand our wine finishes program and
introduce several other new Jefferson's expressions over the balance of
the fiscal year. We also increased our Irish whiskey offerings and
expanded our barrel program for Knappogue Castle Whiskey," said
John Glover, Chief Operating Officer
of Castle Brands.
"The growing popularity of ginger beer cocktails, including
Goslings' trademarked "Dark 'n Stormy"® cocktail, has been
an important growth driver of Goslings "Stormy Ginger Beer." Ginger beer sales for
the 12 months ended September 30,
2016 exceeded 1.2 million cases, making "Stormy Ginger Beer" the best-selling premium
ginger beer in America. We are also increasing the prominence of
the Goslings brand through our sponsorship of the 35th
America's Cup. The America's Cup has become an extreme sport and
millions of viewers are following this very high-profile event.
Europe and the United States hosted races in 2015 and
2016 and AC35 will culminate with the Challenger Playoffs and
Finals in Bermuda in 2017.
Goslings will have far more visibility and global reach than ever
before with an enormous audience that goes well beyond the
demographics of the sailing world," Mr. Glover added.
For the Three and Six Months Ended September 30, 2016
In the second quarter of fiscal 2017, the Company had net sales
of $19.6 million, a 5.9% increase
from net sales of $18.5 million in
the comparable prior-year period. This sales growth was primarily
driven by the U.S. sales growth of Jefferson's bourbons and Goslings Stormy
Ginger Beer. Net loss was ($0.5)
million in the second quarter of fiscal 2017 compared to a
net loss of ($0.7) million in the
comparable prior-year period. Net loss attributable to common
shareholders was ($0.7) million, or
($0.00) per basic and diluted share,
in the second quarter of fiscal 2017, as compared to ($1.0) million, or ($0.01) per basic and diluted share, in the
prior-year period.
EBITDA, as adjusted, for the second quarter of fiscal 2017
improved to $1.0 million as compared
to $0.9 million for the comparable
prior-year period.
For the six months ended September 30,
2016, the Company had net sales of $36.4 million, a 3.8% increase from net sales of
$35.0 million in the comparable
prior-year period. Net loss was ($1.1)
million for the six months ended September 30, 2016, as compared to a net loss of
($1.5) million in the comparable
prior-year period. Net loss attributable to common shareholders was
($1.5) million, or ($0.01) per basic and diluted share, for the six
months ended September 30, 2016, as
compared to ($2.1) million, or
($0.01) per basic and diluted share,
in the prior-year period.
EBITDA, as adjusted, for the six months ended September 30, 2016 was $1.5 million and $1.5
million for the comparable prior-year period.
Non-GAAP Financial Measures
Within the information above, Castle Brands provides information
regarding EBITDA, as adjusted, which is not a recognized term under
GAAP (Generally Accepted Accounting Principles) and does not
purport to be an alternative to income (loss) from operations or
net income (loss) as a measure of operating performance. Earnings
before interest, taxes, depreciation and amortization, or EBITDA,
adjusted for allowances for doubtful accounts and obsolete
inventory, stock-based compensation expense, other expense
(income), net, income from equity investment in
non-consolidated affiliate, foreign exchange and net income
attributable to noncontrolling interests is a key metric the
Company uses in evaluating its financial performance on a
consistent basis across various periods. EBITDA, as adjusted, is
considered a non-GAAP financial measure as defined by Regulation G
promulgated by the SEC under the Securities Act of 1933, as
amended. Due to the significance of non-cash and non-recurring
items, EBITDA, as adjusted, enables the Company's Board of
Directors and management to monitor and evaluate the business on a
consistent basis. The Company uses EBITDA, as adjusted, as a
primary measure, among others, to analyze and evaluate financial
and strategic planning decisions regarding future operating
investments and allocation of capital resources. The Company
believes that EBITDA, as adjusted, eliminates items that are not
indicative of its core operating performance or are based on
management's estimates, such as allowance accounts, are due to
changes in valuation, such as the effects of changes in foreign
exchange, or do not involve a cash outlay, such as stock-based
compensation expense. EBITDA, as adjusted, should be considered in
addition to, rather than as a substitute for, income from
operations, net income and cash flows from operating activities. A
reconciliation of net loss attributable to common shareholders to
EBITDA, as adjusted, is presented below.
About Castle Brands
Castle Brands is a developer and international marketer of
premium and super-premium beverage alcohol brands including:
Jefferson's®,
Jefferson's Presidential
Select™, Jefferson's
Reserve®, Jefferson's
Ocean Aged at Sea Bourbon, Jefferson's Wine Finish Collection and
Jefferson's Wood Experiments,
Goslings® Rums, Knappogue Castle Whiskey®,
Clontarf® Irish Whiskey, Pallini® Limoncello,
Boru® Vodka and Brady's® Irish Cream.
Additional information concerning the Company is available on the
Company's website, www.castlebrandsinc.com.
Forward Looking Statements
This press release includes statements of our expectations,
intentions, plans and beliefs that constitute "forward looking
statements" within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934 and
are intended to come within the safe harbor protection provided by
those sections. These statements, which involve risks and
uncertainties, relate to the discussion of our business strategies
and our expectations concerning future operations, margins, sales,
new products and brands, potential joint ventures, potential
acquisitions, expenses, profitability, liquidity and capital
resources and to analyses and other information that are based on
forecasts of future results and estimates of amounts not yet
determinable. You can identify these and other forward-looking
statements by the use of such words as "may," "will," "should,"
"expects," "intends," "plans," "anticipates," "believes," "thinks,"
"estimates," "seeks," "predicts," "could," "projects,"
"potential" and other similar terms and phrases, including
references to assumptions. These forward looking statements are
made based on expectations and beliefs concerning future events
affecting us and are subject to uncertainties, risks and factors
relating to our operations and business environments, all of which
are difficult to predict and many of which are beyond our control,
that could cause our actual results to differ materially from those
matters expressed or implied by these forward looking statements.
These risks include our history of losses and expectation of
further losses, our ability to expand our operations in both new
and existing markets, our ability to develop or acquire new brands,
our relationships with distributors, the success of our marketing
activities, the effect of competition in our industry and economic
and political conditions generally, including the current economic
environment and markets. More information about these and other
factors are described under the caption "Risk Factors" in Castle
Brands' Annual Report on Form 10-K for the year ended March 31, 2016, as amended, and other reports we
file with the Securities and Exchange Commission. When
considering these forward looking statements, you should keep in
mind the cautionary statements in this press release and the
reports we file with the Securities and Exchange Commission. New
risks and uncertainties arise from time to time, and we cannot
predict those events or how they may affect us. We assume no
obligation to update any forward looking statements after the date
of this press release as a result of new information, future events
or developments, except as required by the federal securities
laws.
CASTLE BRANDS INC.
AND SUBSIDIARIES
Condensed
Consolidated Statements of Operations
(Unaudited)
|
|
|
Three months ended September 30,
|
|
Six months ended September 30,
|
|
2016
|
2015
|
|
2016
|
2015
|
Sales,
net*
|
$19,627,791
|
$18,536,509
|
|
$36,378,716
|
$35,049,588
|
Cost of
sales*
|
11,900,531
|
11,480,107
|
|
21,935,341
|
21,365,872
|
|
|
|
|
|
|
Gross
profit
|
7,727,260
|
7,056,402
|
|
14,443,375
|
13,683,716
|
|
|
|
|
|
|
Selling
expense
|
5,031,597
|
4,941,213
|
|
9,662,512
|
9,293,158
|
General and
administrative expense
|
2,140,659
|
1,691,332
|
|
4,130,894
|
3,757,423
|
Depreciation and
amortization
|
253,463
|
233,069
|
|
507,097
|
461,325
|
|
|
|
|
|
|
Income from
operations
|
301,541
|
190,788
|
|
142,872
|
171,810
|
|
|
|
|
|
|
Other (expense)
income, net
|
(27)
|
600
|
|
(333)
|
(221)
|
Income from equity
investment in non-consolidated affiliate
|
18,837
|
4,513
|
|
23,320
|
4,513
|
Foreign exchange
(loss) gain
|
(3,375)
|
(40,360)
|
|
76,488
|
(89,579)
|
Interest expense,
net
|
(328,868)
|
(257,636)
|
|
(639,129)
|
(514,800)
|
|
|
|
|
|
|
Loss before provision
for income taxes
|
(11,892)
|
(102,095)
|
|
(396,782)
|
(428,277)
|
Income tax expense,
net
|
(477,962)
|
(579,962)
|
|
(688,775)
|
(1,103,924)
|
|
|
|
|
|
|
Net loss
|
(489,854)
|
(652,0570
|
|
(1,085,557)
|
(1,532,201)
|
Net income
attributable to noncontrolling interests
|
(210,856)
|
(329,214)
|
|
(380,972)
|
(602,732)
|
|
|
|
|
|
|
Net loss attributable
to common shareholders
|
$(700,710)
|
$(1,011,271)
|
|
$(1,466,529)
|
$(2,134,933)
|
|
|
|
|
|
|
Net loss per common
share, basic and diluted, attributable to common
shareholders
|
$(0.00)
|
$(0.01)
|
|
$(0.01)
|
$(0.01)
|
|
|
|
|
|
|
Weighted average
shares used in computation, basic and diluted, attributable to
common shareholders
|
160,698,696
|
159,774,811
|
|
160,610,804
|
158,661,309
|
* Sales, net and Cost of sales include excise taxes of
$1,912,740 and $1,919,019 for the three months ended
September 30, 2016 and 2015,
respectively, and $3,628,701 and
$3,687,999 for the six months ended
September 30, 2016 and 2015,
respectively.
CASTLE BRANDS INC.
AND SUBSIDIARIES
Reconciliation of
net loss to EBITDA, as adjusted
(Unaudited)
|
|
|
Three months ended September 30,
|
|
Six months ended September 30,
|
|
2016
|
2015
|
|
2016
|
2015
|
Net loss attributable
to common shareholders
|
$(700,710)
|
$(1,011,271)
|
|
$(1,466,529)
|
$(2,134,933)
|
Adjustments:
|
|
|
|
|
|
Interest expense,
net
|
328,868
|
257,636
|
|
639,129
|
514,800
|
Income tax expense,
net
|
477,962
|
579,962
|
|
688,775
|
1,103,924
|
Depreciation and
amortization
|
253,463
|
233,069
|
|
507,097
|
461,325
|
EBITDA income
(loss)
|
359,583
|
59,396
|
|
368,472
|
(54,884)
|
Allowance for doubtful
accounts
|
11,550
|
9,000
|
|
23,100
|
43,000
|
Allowance for obsolete
inventory
|
50,000
|
--
|
|
100,000
|
100,000
|
Stock-based
compensation expense
|
410,097
|
458,450
|
|
762,497
|
698,390
|
Other expense
(income), net
|
27
|
(600)
|
|
333
|
221
|
Income from equity
investments in non-consolidated affiliate
|
(18,837)
|
(4,513)
|
|
(23,320)
|
(4,513)
|
Foreign exchange loss
(gain)
|
3,375
|
40,360
|
|
(76,488)
|
89,579
|
Net income
attributable to noncontrolling interests
|
210,856
|
329,214
|
|
380,972
|
602,732
|
EBITDA, as
adjusted
|
1,026,651
|
891,307
|
|
1,535,566
|
1,474,525
|
Castle Brands Inc.
Investor Relations, 646-356-0200
info@castlebrandsinc.com
www.castlebrandsinc.com
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visit:http://www.prnewswire.com/news-releases/castle-brands-announces-fiscal-2017-second-quarter-results-300359950.html
SOURCE Castle Brands Inc.