NEW YORK, Nov. 9, 2017 /PRNewswire/ -- Castle Brands Inc.
(NYSE American: ROX), a developer and international marketer of
premium and super-premium drinks brands, today reported financial
results for the three and six months ended September 30, 2017.
Operating highlights for the three and six months ended
September 30, 2017:
- Net sales increased 14.8% to $41.7
million for the first six months of fiscal 2018, as compared
to $36.4 million for the comparable
prior-year period, with net sales increasing 6.5% to $20.9 million for the second quarter of fiscal
2018, as compared to $19.6 million
for the comparable prior-year period.
- Total gross profit increased 18.5% to $17.1 million for the first six months of fiscal
2018, as compared to $14.4 million
for the comparable prior-year period, and increased 10.6% to
$8.5 million for the second quarter
of fiscal 2018, as compared to $7.7
million for the comparable prior-year period.
- Income from operations increased to $1.2
million for the first six months of fiscal 2018 as compared
to $0.1 million for the comparable
prior-year period, with income from operations increasing to
$1.2 million for the second quarter
of fiscal 2018, as compared to $0.3
million for the comparable prior-year period.
- Continued strong growth of Jefferson's bourbons and the Irish whiskies
and the addition of the Arran scotch whiskey portfolio, led to a
21.0% increase in whiskey revenues for the first six months of
fiscal 2018 from the comparable prior-year period.
- Goslings Stormy Ginger Beer case
sales increased 37.2% to approximately 907,000 cases in the first
six months of fiscal 2018 from approximately 660,000 in the
comparable prior-year period.
- In addition to continuing its new fill programs, the Company
purchased an additional 770 barrels of aged bourbon in the quarter
to support the continued growth of Jefferson's.
"We are again reporting strong growth of our lead brands, such
as Jefferson's, our Irish whiskeys
and Goslings "Stormy Ginger
Beer." This resulted in solid revenue growth and even
greater growth in gross profit, allowing 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.
"The acquisition in October of an additional 5.0% stake in
Copperhead Distillery Company, the owner of the Kentucky Artisan
Distillery, the home of Jefferson's, demonstrates our continued
commitment to our Jefferson's brand. Further, by expanding our
credit facility with our existing lender, we believe we have
positioned ourselves to support the continued growth of our entire
portfolio," Mr. Lampen added.
"The combination of our new fill whiskey program, coupled with
opportunistic purchases of aged whiskies, enables us to build
substantial reserves of aged bourbon to support continued strong
growth of our Jefferson's brand. We released a limited-edition
Jefferson's Presidential Select in
the second quarter and plan to expand our wine finishes program in
the coming months. We are also preparing the launch of the next
voyages of our Jefferson's Ocean
Aged at Sea® bourbon, including Cask Strength and a "Wheated"
Ocean," said John Glover, Executive
Vice President and Chief Operating Officer of Castle Brands.
"The continued 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,
2017 exceeded 1.6 million cases, making "Stormy Ginger Beer" the best-selling premium
ginger beer in America. We are very pleased with the success of our
first six months at Walmart, and look forward to continuing the
overall growth of the brand," Mr. Glover added.
For the Three and Six Months Ended September 30, 2017
In the second quarter of fiscal 2018, the Company had net sales
of $20.9 million, a 6.5% increase
from net sales of $19.6 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 income was $0.3
million in the second quarter of fiscal 2018 compared to a
net loss of ($0.5) million in the
comparable prior-year period. Net loss attributable to common
shareholders was ($0.0) million, or
($0.00) per basic and diluted share,
in the second quarter of fiscal 2018, as compared to ($0.7) million, or ($0.00) per basic and diluted share, in the
prior-year period.
EBITDA, as adjusted, for the second quarter of fiscal 2018
improved to $1.9 million as compared
to $1.0 million for the comparable
prior-year period.
For the six months ended September 30,
2017, the Company had net sales of $41.7 million, a 14.8% increase from net sales of
$36.4 million in the comparable
prior-year period. Net loss was ($0.6)
million for the six months ended September 30, 2017, as compared to a net loss of
($1.1) million in the comparable
prior-year period. Net loss attributable to common shareholders was
($0.9) million, or ($0.01) per basic and diluted share, for the six
months ended September 30, 2017, as
compared to ($1.5) million, or
($0.01) per basic and diluted share,
in the prior-year period.
EBITDA, as adjusted, for the six months ended September 30, 2017 improved to $2.7 million as compared to $1.6 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 brands including: Jefferson's®, Jefferson's Presidential SelectTM,
Jefferson's Reserve®,
Jefferson's Ocean Aged at Sea
Bourbon, Jefferson's Wine Finish
Collection and Jefferson's Wood
Experiments, Goslings® Rums, Goslings®
Stormy Ginger Beer, Knappogue Castle
Whiskey®, Clontarf® Irish Whiskey,
Pallini® Limoncello, Boru® Vodka,
Brady's® Irish Cream, The Arran Malt® Single
Malt Scotch Whisky, The Robert Burns Scotch Whisky and Machrie Moor
Scotch Whisky. 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, 2017, 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,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Sales,
net*
|
|
$
|
20,894,150
|
|
|
$
|
19,627,791
|
|
|
$
|
41,746,437
|
|
|
$
|
36,378,716
|
|
Cost of
sales*
|
|
|
12,350,901
|
|
|
|
11,900,531
|
|
|
|
24,624,569
|
|
|
|
21,935,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
8,543,249
|
|
|
|
7,727,260
|
|
|
|
17,121,868
|
|
|
|
14,443,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expense
|
|
|
4,899,208
|
|
|
|
5,031,597
|
|
|
|
10,955,407
|
|
|
|
9,662,512
|
|
General and
administrative expense
|
|
|
2,298,882
|
|
|
|
2,140,659
|
|
|
|
4,561,879
|
|
|
|
4,130,894
|
|
Depreciation and
amortization
|
|
|
186,283
|
|
|
|
253,463
|
|
|
|
391,235
|
|
|
|
507,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
1,158,876
|
|
|
|
301,541
|
|
|
|
1,213,347
|
|
|
|
142,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense,
net
|
|
|
(59)
|
|
|
|
(27)
|
|
|
|
(59)
|
|
|
|
(333)
|
|
Income from equity
investment in non-consolidated affiliate
|
|
|
29,846
|
|
|
|
18,837
|
|
|
|
71,595
|
|
|
|
23,320
|
|
Foreign exchange gain
(loss)
|
|
|
18,853
|
|
|
|
(3,375)
|
|
|
|
(32,308)
|
|
|
|
76,488
|
|
Interest expense,
net
|
|
|
(901,559)
|
|
|
|
(328,868)
|
|
|
|
(1,793,423)
|
|
|
|
(639,129)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
provision for income taxes
|
|
|
305,957
|
|
|
|
(11,892)
|
|
|
|
(540,848)
|
|
|
|
(396,782)
|
|
Income tax expense,
net
|
|
|
(25,335)
|
|
|
|
(477,962)
|
|
|
|
(43,748)
|
|
|
|
(688,775)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
280,622
|
|
|
|
(489,854)
|
|
|
|
(584,596)
|
|
|
|
(1,085,557)
|
|
Net income
attributable to noncontrolling interests
|
|
|
(282,303)
|
|
|
|
(210,856)
|
|
|
|
(363,482)
|
|
|
|
(380,972)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to common shareholders
|
|
$
|
(1,681)
|
|
|
$
|
(700,710)
|
|
|
$
|
(948,078)
|
|
|
$
|
(1,466,529)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share, basic and diluted, attributable to common
shareholders
|
|
$
|
(0.00)
|
|
|
$
|
(0.00)
|
|
|
$
|
(0.01)
|
|
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in computation, basic and diluted, attributable to
common shareholders
|
|
|
163,209,562
|
|
|
|
160,698,696
|
|
|
|
163,138,853
|
|
|
|
160,610,804
|
|
|
* Sales, net and Cost
of sales include excise taxes of $1,759,630 and $1,912,740 for the
three months ended September
30, 2017 and 2016, respectively, and $3,399,385 and $3,628,701 for
the six months ended September 30, 2017 and 2016,
respectively.
|
CASTLE BRANDS INC.
AND SUBSIDIARIES
|
Reconciliation of
net loss attributable to common shareholders to EBITDA, as
adjusted
|
(Unaudited)
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Net loss attributable
to common shareholders
|
|
$
|
(1,681)
|
|
|
$
|
(700,710)
|
|
|
$
|
(948,078)
|
|
|
$
|
(1,466,529)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
901,559
|
|
|
|
328,868
|
|
|
|
1,793,423
|
|
|
|
639,129
|
|
Income tax expense,
net
|
|
|
25,335
|
|
|
|
477,962
|
|
|
|
43,748
|
|
|
|
688,775
|
|
Depreciation and
amortization
|
|
|
186,283
|
|
|
|
253,463
|
|
|
|
391,235
|
|
|
|
507,097
|
|
EBITDA
income
|
|
|
1,111,496
|
|
|
|
359,583
|
|
|
|
1,280,329
|
|
|
|
368,472
|
|
Allowance for doubtful
accounts
|
|
|
16,712
|
|
|
|
11,550
|
|
|
|
30,812
|
|
|
|
23,100
|
|
Allowance for obsolete
inventory
|
|
|
--
|
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
100,000
|
|
Stock-based
compensation expense
|
|
|
504,490
|
|
|
|
410,097
|
|
|
|
979,816
|
|
|
|
762,497
|
|
Other expense,
net
|
|
|
59
|
|
|
|
27
|
|
|
|
59
|
|
|
|
333
|
|
Income from equity
investments in non- consolidated
affiliate
|
|
|
(29,846)
|
|
|
|
(18,837)
|
|
|
|
(71,595)
|
|
|
|
(23,320)
|
|
Foreign exchange loss
(gain)
|
|
|
(18,853)
|
|
|
|
3,375
|
|
|
|
32,308
|
|
|
|
(76,488)
|
|
Net income attributable
to noncontrolling interests
|
|
|
282,303
|
|
|
|
210,856
|
|
|
|
363,482
|
|
|
|
380,972
|
|
EBITDA, as
adjusted
|
|
$
|
1,866,362
|
|
|
$
|
1,026,651
|
|
|
$
|
2,665,210
|
|
|
$
|
1,535,566
|
|
Castle Brands Inc.
Investor Relations, 646-356-0200
info@castlebrandsinc.com
www.castlebrandsinc.com
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SOURCE Castle Brands Inc.