NEW YORK, Aug. 9, 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 three months ended June 30, 2018.
Operating highlights for the quarter ended June 30, 2018:
- Net sales increased 10.8% to $23.1
million for the first quarter of fiscal year 2019, as
compared to $20.9 million for the
comparable prior-year period.
- Gross profit increased 7.9% to $9.3
million from $8.6 million for
the comparable prior-year period.
- Income from operations increased to $0.6
million, as compared to $0.1
million for the comparable prior year period.
- Sales of Jefferson's bourbons
increased 48.0% to $7.8 million, as
compared to $5.3 million 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
and its Irish whiskey portfolio.
"Continued strong growth of our more profitable brands, such as
Jefferson's and our Irish
whiskeys, resulted in solid growth in revenue, gross profit, income
from operations and EBITDA, as adjusted, which grew 88.5% to
$1.5 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.
"To support continued aggressive growth of our Jefferson's bourbons, we continued our
new-fill programs. During the first quarter we purchased an
additional $4.1 million of bourbon
and expect to continue to increase our stock of aging bourbon
through open market purchases and our two new-fill programs," 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, with trailing twelve month sales
exceeding 80,000 cases, is one of the top five selling premium
small batch bourbons. Moreover, Jefferson's is the only leading small batch
brand to sell more than 50,000 cases annually at an average price
greater than $50 per bottle and the
only leading small batch bourbon not owned by a major spirits
company," said John Glover,
Executive Vice President and Chief Operating Officer of Castle
Brands.
"Additional aged offerings and the barrel program for Knappogue
Castle Whiskey contributed to strong Irish whiskey sales in the
period. We expect strong growth in Irish whiskey sales to continue
as we continue to apply the successful programs that we use to
market Jefferson's to our Irish
whiskey portfolio. Our access to aged Irish whiskey supplies
allowed us to produce Knappogue 14 Year Old, 16 Year Old and 21
Year Old to augment sales of our core Knappogue 12 Year Old. Much
as with the higher end expressions of Jefferson's, this is allowing us to raise the
average price of our Knappogue whiskeys. We continued our new fill
program to supplement our overall Irish whiskey supplies to support
future growth," Mr. Glover added.
In the first quarter of fiscal 2019, the Company had net sales
of $23.1 million, a 10.8% increase
from net sales of $20.9 million in
the comparable prior-year period. Net loss attributable to common
shareholders was ($0.8) million, or
($0.00) per basic and diluted share,
in the first quarter of fiscal 2019, as compared to a loss of
($0.9) million, or ($0.1) per basic and diluted share, in the
prior-year period.
EBITDA, as adjusted, for the first quarter of fiscal 2019 was
$1.5 million as compared to
$0.8 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 loss (gain) 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
|
(Unaudited)
|
|
|
|
Three months ended
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
Sales,
net*
|
|
$
|
23,104,388
|
|
|
$
|
20,852,287
|
|
Cost of
sales*
|
|
|
13,844,836
|
|
|
|
12,273,668
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
9,259,552
|
|
|
|
8,578,619
|
|
|
|
|
|
|
|
|
|
|
Selling
expense
|
|
|
5,821,890
|
|
|
|
6,056,199
|
|
General and
administrative expense
|
|
|
2,517,266
|
|
|
|
2,262,997
|
|
Depreciation and
amortization
|
|
|
235,792
|
|
|
|
204,952
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
684,604
|
|
|
|
54,471
|
|
|
|
|
|
|
|
|
|
|
Other expense,
net
|
|
|
(405)
|
|
|
|
—
|
|
Income from equity
investment in non-consolidated affiliate
|
|
|
34,028
|
|
|
|
41,749
|
|
Foreign exchange gain
(loss)
|
|
|
44,464
|
|
|
|
(51,161)
|
|
Interest expense,
net
|
|
|
(1,051,942)
|
|
|
|
(891,864)
|
|
|
|
|
|
|
|
|
|
|
Loss before provision
for income taxes
|
|
|
(289,251)
|
|
|
|
(846,805)
|
|
Income tax expense,
net
|
|
|
(18,115)
|
|
|
|
(18,413)
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(307,366)
|
|
|
|
(865,218)
|
|
Net income
attributable to noncontrolling interests
|
|
|
(383,341)
|
|
|
|
(81,177)
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to common shareholders
|
|
$
|
(690,707)
|
|
|
$
|
(946,395)
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share, basic and diluted, attributable to common
shareholders
|
|
$
|
(0.00)
|
|
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in computation, basic and diluted, attributable to
common shareholders
|
|
|
165,520,314
|
|
|
|
163,072,642
|
|
|
* Sales, net and Cost
of sales include excise taxes of $1,834,254 and $1,639,755 for the
three months ended June 30, 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
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
Net loss attributable
to common shareholders
|
|
$
|
(690,707)
|
|
|
$
|
(946,395)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
1,051,942
|
|
|
|
891,864
|
|
Income tax expense,
net
|
|
|
18,115
|
|
|
|
18,413
|
|
Depreciation and
amortization
|
|
|
235,792
|
|
|
|
204,952
|
|
EBITDA
|
|
|
615,142
|
|
|
|
168,834
|
|
Allowance for
doubtful accounts
|
|
|
14,559
|
|
|
|
14,100
|
|
Allowance for
obsolete inventory
|
|
|
80,000
|
|
|
|
50,000
|
|
Stock-based
compensation expense
|
|
|
490,485
|
|
|
|
475,326
|
|
Other expense,
net
|
|
|
405
|
|
|
|
—
|
|
Income from equity
investment in non-consolidated affiliate
|
|
|
(34,028)
|
|
|
|
(41,749)
|
|
Foreign exchange
(gain) loss
|
|
|
(44,464)
|
|
|
|
51,161
|
|
Net income
attributable to noncontrolling interests
|
|
|
383,341
|
|
|
|
81,177
|
|
EBITDA, as
adjusted
|
|
$
|
1,505,440
|
|
|
$
|
798,849
|
|
Castle Brands Inc.
Investor Relations, 646-356-0200
info@castlebrandsinc.com
www.castlebrandsinc.com
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SOURCE Castle Brands Inc.