NEW YORK, Aug. 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 months ended June 30, 2017.
Operating highlights for the quarter ended June 30, 2017:
- Net sales increased 24.5% to $20.9
million for the first quarter of fiscal year 2018, as
compared to $16.8 million for the
comparable prior-year period.
- Total gross profit increased 27.7% to $8.6 million, as compared to $6.7 million for the comparable prior-year
period.
- Sales of Jefferson's bourbons
were up 18.3% to 15,600 cases, as compared to 13,200 cases in the
comparable prior-year period.
- Sales of Goslings Stormy Ginger Beer increased 51.8% to 457,000
cases from 301,000 cases in the comparable prior-year period.
- Beginning in March 2017, Goslings
Stormy Ginger Beer was added to the mixer section in approximately
4,500 Walmart stores in the U.S.
- Sales of Irish whiskey were up 32.3% to 10,500 cases, as
compared to 7,900 cases in the comparable prior-year period.
- During the first quarter, the Company continued its new fill
bourbon programs to support future growth of the Jefferson's brands.
"Continued strong growth of our more profitable brands, such as
Jefferson's and our Irish
whiskeys, coupled with significantly increased sales of ginger
beer, resulted in record first quarter revenues. Strong revenue
growth, and even greater growth in gross profit, led to EBITDA, as
adjusted, improving by 57.0% to $0.8
million. We expect that these growth trends and improving
financial performance will continue," stated Richard J. Lampen, President and Chief Executive
Officer of Castle Brands.
"The acquisition of an additional 20.1% stake in our
Gosling-Castle Partners (GCP) subsidiary on March 29, 2017 was a very important milestone for
Castle Brands. This transaction increased Castle Brands' ownership
of GCP to 80.1%, which enables it to be consolidated for tax
purposes. This is allowing us to use our substantial NOLs to offset
GCP's growing net income," Mr. Lampen added.
"We used our aged bourbon reserves to support increased sales of
Jefferson's and its more expensive
brand extensions, such as Jefferson's Ocean Aged at Sea and wine
finishes. We also continue to add innovative expressions to
increase sales and enhance the Jefferson's brand. Jefferson's is now one of the top five selling
premium small batch bourbons and the only leading small batch brand
not owned by a major spirits company," said John Glover, Chief Operating Officer of Castle
Brands.
"Our whiskey portfolio also benefitted from additions to our
Irish whiskey offerings, the launch of the Arran Scotch Whiskies
and the barrel program for Knappogue Castle Whiskey. We expect
strong growth in whiskey sales to continue. We were pleased that we
began a new fill program to supplement our overall Irish whiskey
supply agreements to support future growth. Goslings Stormy Ginger Beer also continues to grow
rapidly, benefitting from distribution in approximately 4,500
Walmart stores and many other off-premise and on-premise
locations," Mr. Glover added.
In the first quarter of fiscal 2018, the Company had net sales
of $20.9 million, a 24.5% increase
from net sales of $16.8 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,
in the first quarter of fiscal 2018, as compared to a loss of
($0.8) million, or ($0.00) per basic and diluted share, in the
prior-year period.
EBITDA, as adjusted, for the first quarter of fiscal 2018 was
$0.8 million as compared to
$0.5 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, transaction fees,
other expense (income), net, income from equity investment in
non-consolidated affiliate, foreign exchange and net income (loss)
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 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
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
Sales,
net*
|
|
$
|
20,852,287
|
|
|
$
|
16,750,925
|
|
Cost of
sales*
|
|
|
12,273,668
|
|
|
|
10,034,810
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
8,578,619
|
|
|
|
6,716,115
|
|
|
|
|
|
|
|
|
|
|
Selling
expense
|
|
|
6,056,199
|
|
|
|
4,630,915
|
|
General and
administrative expense
|
|
|
2,262,997
|
|
|
|
1,990,235
|
|
Depreciation and
amortization
|
|
|
204,952
|
|
|
|
253,634
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
|
|
54,471
|
|
|
|
(158,669)
|
|
|
|
|
|
|
|
|
|
|
Other expense,
net
|
|
|
--
|
|
|
|
(306)
|
|
Income from equity
investment in non-consolidated affiliate
|
|
|
41,749
|
|
|
|
4,483
|
|
Foreign exchange
(loss) gain
|
|
|
(51,161)
|
|
|
|
79,863
|
|
Interest expense,
net
|
|
|
(891,864)
|
|
|
|
(310,261)
|
|
|
|
|
|
|
|
|
|
|
Loss before provision
for income taxes
|
|
|
(846,805)
|
|
|
|
(384,890)
|
|
Income tax expense,
net
|
|
|
(18,413)
|
|
|
|
(210,813)
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(865,218)
|
|
|
|
(595,703)
|
|
Net income
attributable to noncontrolling interests
|
|
|
(81,177)
|
|
|
|
(170,116)
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to common shareholders
|
|
$
|
(946,395)
|
|
|
$
|
(765,819)
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share, basic and diluted, attributable to common
shareholders
|
|
$
|
(0.01)
|
|
|
$
|
(0.00)
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in computation, basic and diluted, attributable to
common shareholders
|
|
|
163,072,642
|
|
|
|
160,521,947
|
|
|
|
|
** Sales, net and
Cost of sales include excise taxes of $1,639,755 and $1,715,961 for
the three months ended June 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
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
Net loss attributable
to common shareholders
|
|
$
|
(946,395)
|
|
|
$
|
(765,819)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
891,864
|
|
|
|
310,261
|
|
Income tax expense,
net
|
|
|
18,413
|
|
|
|
210,813
|
|
Depreciation and
amortization
|
|
|
204,952
|
|
|
|
253,634
|
|
EBITDA
|
|
|
168,834
|
|
|
|
8,889
|
|
Allowance for
doubtful accounts
|
|
|
14,100
|
|
|
|
11,550
|
|
Allowance for
obsolete inventory
|
|
|
50,000
|
|
|
|
50,000
|
|
Stock-based
compensation expense
|
|
|
475,326
|
|
|
|
352,400
|
|
Other expense,
net
|
|
|
—
|
|
|
|
306
|
|
Income from equity
investment in non-consolidated affiliate
|
|
|
(41,749)
|
|
|
|
(4,483)
|
|
Foreign exchange loss
(gain)
|
|
|
51,161
|
|
|
|
(79,863)
|
|
Net income
attributable to noncontrolling interests
|
|
|
81,177
|
|
|
|
170,116
|
|
EBITDA, as
adjusted
|
|
$
|
798,849
|
|
|
$
|
508,915
|
|
Castle Brands Inc.
Investor Relations, 646-356-0200
info@castlebrandsinc.com
www.castlebrandsinc.com
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SOURCE Castle Brands Inc.