NEW YORK, June 14, 2018 /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 quarter and fiscal year ended
March 31, 2018.
Operating highlights for the fiscal year ended March 31, 2018:
- Net sales increased 16.3% to a record $89.9 million for fiscal 2018, as compared to
$77.3 million in the prior fiscal
year.
- Total gross profit increased 14.2% to $36.2 million, as compared to $31.7 million for the prior fiscal year.
- Net income from operations increased 120.2% to $4.2 million, as compared to $1.9 million for the prior fiscal year.
- Whiskey revenues increased 19.7% for fiscal 2018 from the
prior-year due to continued strong growth of Jefferson's bourbons and the Irish whiskies,
and the addition of the Arran scotch whiskey portfolio.
- Sales of Goslings Stormy Ginger Beer increased 32.7% to
$26.5 million from $20.0 million in the prior year, with over
250,000 cases in first-year sales at Walmart.
- Castle Brands expects to enjoy higher margins as a result of
substantially lower federal excise taxes in future periods due to
provisions in the newly enacted Craft Beverage Act.
"We are again reporting strong sales growth of our lead brands,
including Jefferson's bourbon, our
Irish whiskeys and Goslings Stormy Ginger Beer. This resulted in
solid growth in revenue and gross profits, and a 120.2% increase in
income from operations for fiscal 2018 to a record level of
$4.2 million and a 41.9% increase in
EBITDA, as adjusted, for fiscal 2018 to a record level of
$7.4 million. We expect these trends
of increasing sales and improving financial performance to
continue," stated Richard J. Lampen,
President and Chief Executive Officer of Castle
Brands.
"In fiscal 2018, holders of our 5% Subordinated Convertible
Notes, including certain officers, directors and principal
shareholders, converted such notes into 1,813,334 shares of common
stock pursuant to the terms of the Convertible Notes. These
conversions demonstrate the continued commitment and confidence of
these stakeholders in the long-term outlook for Castle Brands," Mr.
Lampen added. "Further, in April
2018, we extended our $20.0
million Subordinated Note to September 2020, and expanded our Ares credit
facility to $23.0 million,
strengthening our ability to fund our continued growth."
"During the year we added to our substantial reserves of aged
and new-fill bourbon to support the continued strong growth of our
Jefferson's brand, by acquiring $7.9
million in high-quality bourbon. We continue to expand our
in-demand, ultra-premium Jefferson's expressions, including
Jefferson's wine finishes,
additional voyages of Jefferson's
Ocean Aged at Sea bourbon, including Cask Strength and a "Wheated"
Ocean" and our Jefferson's Reserve
Old Rum Cask Finish Bourbon," said John
Glover, Executive Vice President and Chief Operating Officer
of Castle Brands, adding, "We continue to find new and exciting
opportunities for additional, inventive expressions."
"The continued growing popularity of ginger beer cocktails,
including Goslings' trademarked "Dark 'n Stormy"® cocktail, has
been an important growth driver of our Goslings Stormy Ginger Beer.
Ginger beer sales for fiscal 2018 exceeded 1.8 million cases,
making Goslings Stormy Ginger Beer the best-selling premium ginger
beer in America. The strong success of our first year at Walmart
has led to opportunities at several other large retailers,
including Target, and we look forward to continuing the overall
growth of the brand," Mr. Glover added.
In the fourth quarter of fiscal 2018, the Company had net sales
of $24.1 million, a 6.6% increase
from net sales of $22.6 million in
the comparable prior-year period. Net income from operations
increased 55.1% to $1.4 million as
compared to $0.9 million in the
comparable prior year period. Net loss attributable to common
shareholders was ($0.3) million, or
($0.00) per basic and diluted share,
in the fourth quarter of fiscal 2018, as compared to net income of
$0.2 million, or $0.00 per basic and diluted share, in the
prior-year period.
EBITDA, as adjusted, for the fourth quarter of fiscal 2018
improved to $2.3 million as compared
to $2.1 million for the comparable
prior-year period.
The Company had net sales of $89.9
million for fiscal 2018, an increase of 16.3% from net sales
of $77.3 million in fiscal 2017. This
sales growth was driven by U.S. sales growth of our whiskey
portfolio, Goslings Stormy Ginger Beer and certain liqueur brands.
Net loss attributable to common shareholders was ($0.8) million, or ($0.01) per basic and diluted share in fiscal
2018, as compared to net loss of ($0.9)
million, or ($0.01) per basic
and diluted share, in the prior-year.
EBITDA, as adjusted, for fiscal 2018 improved to $7.4 million as compared to $5.2 million for the prior-year.
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, transaction fees,
other expense (income), net, income from equity investment in
non-consolidated affiliate, foreign exchange loss (income) 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, 2018 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
|
|
|
Three Months Ended March 31,
(unaudited)
|
Twelve Months Ended March 31,
|
|
2018
|
2017
|
2018
|
2017
|
Sales,
net*
|
$
24,071,457
|
$
22,580,876
|
$
89,897,517
|
$
77,269,131
|
Cost of
sales*
|
14,664,310
|
12,994,134
|
53,690,565
|
45,568,774
|
|
|
|
|
|
Gross profit
|
9,407,147
|
9,586,742
|
36,206,952
|
31,700,357
|
|
|
|
|
|
Selling
expense
|
5,386,273
|
5,817,559
|
21,780,495
|
20,122,490
|
General and
administrative expense
|
2,402,438
|
2,589,206
|
9,422,845
|
8,642,775
|
Depreciation and
amortization
|
209,772
|
271,586
|
809,395
|
1,030,093
|
|
|
|
|
|
Income from
operations
|
1,408,664
|
908,391
|
4,194,217
|
1,904,999
|
|
|
|
|
|
Other expense,
net
|
(1,087)
|
(10,257)
|
(215)
|
(10,660)
|
Income from equity
investment in
non-consolidated affiliate
|
37,040
|
1,748
|
87,829
|
51,430
|
Foreign exchange (loss)
gain
|
(70,021)
|
(61,502)
|
(77,125)
|
83,706
|
Interest expense,
net
|
(1,024,704)
|
(365,947)
|
(3,794,144)
|
(1,335,241)
|
|
|
|
|
|
Income before provision
for income
taxes
|
349,892
|
472,433
|
410,562
|
694,234
|
Income tax (expense)
benefit, net
|
(159,707)
|
227,292
|
(140,370)
|
(187,702)
|
|
|
|
|
|
Net income
|
190,185
|
699,725
|
270,192
|
506,532
|
Net (income)
attributable to
noncontrolling interests
|
(526,619)
|
(508,375)
|
(1,089,124)
|
(1,359,145)
|
|
|
|
|
|
Net (loss) income
attributable to
common shareholders
|
$
(336,434)
|
$
191,350
|
$
(818,932)
|
$
(852,613)
|
|
|
|
|
|
Net (loss) income per
common share,
basic, common shareholders
|
(0.00)
|
0.00
|
(0.01)
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
common share,
diluted, common
shareholders
|
(0.00)
|
0.00
|
(0.01)
|
(0.01)
|
|
|
|
|
|
Weighted average shares
used in
computation, basic, attributable
to
common shareholders
|
164,899,255
|
161,065,685
|
163,661,927
|
160,811,957
|
|
|
|
|
|
Weighted average shares
used in
computation, diluted,
attributable
to common shareholders
|
164,899,255
|
167,181,479
|
163,661,927
|
160,811,957
|
|
*Sales, net and Cost
of sales include excise taxes of $7,648,626 and $7,645,789 for the
years ended March 31, 2018 and 2017, respectively.
|
CASTLE BRANDS INC.
AND SUBSIDIARIES
|
Reconciliation of
net loss attributable to common shareholders to EBITDA, as
adjusted
|
(Unaudited)
|
|
|
Three months ended
|
Twelve
months ended
|
|
March
31,
|
March
31,
|
|
2018
|
2017
|
2018
|
2017
|
Net income (loss)
attributable to common shareholders
|
$
336,434
|
$
191,350
|
$(818,934)
|
$(852,613)
|
Adjustments:
|
|
|
|
|
Interest expense,
net
|
1,024,702
|
365,947
|
3,794,144
|
1,335,241
|
Income tax expense
(benefit), net
|
159,707
|
(227,292)
|
140,370
|
187,702
|
Depreciation and
amortization
|
209,772
|
271,586
|
809,395
|
1,030,093
|
EBITDA, attributable to
common shareholders
|
1,057,747
|
601,591
|
3,924,975
|
1,700,423
|
Allowance for
doubtful accounts
|
14,100
|
88,550
|
59,012
|
123,200
|
Allowance for
obsolete inventory
|
276,611
|
90,000
|
376,611
|
240,000
|
Stock-based
compensation expense
|
490,439
|
405,986
|
1,974,745
|
1,577,994
|
Transaction
fees
|
-
|
346,704
|
-
|
346,704
|
Other expense,
net
|
1,087
|
10,257
|
215
|
10,660
|
Income from equity
investment in non-consolidated affiliate
|
(37,040)
|
(1,748)
|
(87,829)
|
(51,430)
|
Foreign exchange loss
(income)
|
70,025
|
61,502
|
77,127
|
(83,707)
|
Net income
attributable to noncontrolling interests
|
526,619
|
508,375
|
1,089,124
|
1,359,145
|
EBITDA, as
adjusted
|
$2,399,588
|
$2,111,217
|
$7,404,980
|
$5,222,989
|
Castle Brands Inc.
Investor Relations, 646-356-0200
info@castlebrandsinc.com
www.castlebrandsinc.com
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SOURCE Castle Brands Inc.