NEW YORK, Nov. 8, 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 and six months ended September 30, 2018.
Operating highlights for the three and six months ended
September 30, 2018:
- Net sales increased 11.2% to $46.4
million for the first six months of fiscal 2019, as compared
to $41.7 million for the comparable
prior-year period, with net sales increasing 11.6% to $23.3 million for the second quarter of fiscal
2019, as compared to $20.9 million
for the comparable prior-year period.
- Total gross profit increased 7.5% to $18.4 million for the first six months of fiscal
2019, as compared to $17.1 million
for the comparable prior-year period, and increased 7.0% to
$9.1 million for the second quarter
of fiscal 2019, as compared to $8.5
million for the comparable prior-year period.
- Income from operations increased to $1.7
million for the first six months of fiscal 2019 as compared
to $1.2 million for the comparable
prior-year period, with income from operations of $1.0 million for the second quarter of fiscal
2019, as compared to $1.2 million for
the comparable prior-year period.
- Continued strong growth of Jefferson's bourbons and the Irish whiskies
led to a 32.0% increase in whiskey revenues for the first six
months of fiscal 2019 from the comparable prior-year period.
- Goslings Stormy Ginger Beer case
sales surpassed 1,850,000 cases sold on a rolling twelve-month
basis, a 13.2% increase over the comparable prior twelve-month
period.
- Castle Brands expects to benefit from substantially lower
federal excise taxes, which will lower Cost of Sales and increase
Gross Profit in future periods, as a result of provisions in the
newly enacted Craft Beverage Act.
- In addition to continuing its new fill programs, the Company
purchased an additional $7.5 million
of bourbon in the six-month period to support the continued growth
of Jefferson's.
"We are again reporting strong sales growth of our lead brands,
including Jefferson's bourbons,
our Irish whiskies and Goslings Stormy Ginger Beer. This resulted
in solid growth in both revenue and gross profit, and a 42.8%
increase in income from operations for the first six months of
fiscal 2019 to a record level of $1.7
million and a 25.7% increase in EBITDA, as adjusted, for the
first six months of fiscal 2019 to a record level of $3.4 million. 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 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, such as Jefferson's Ocean Aged at Sea and wine
finishes. Our whiskey portfolio also benefitted from the continued
growth of our Irish whiskies, especially Knappogue Castle Whiskey.
We expect strong growth in whiskey sales to continue," 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,
2018 exceeded 1.8 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 of fiscal 2019, and look forward to continuing the
overall growth of the brand in Walmart and other grocery chains,"
Mr. Glover added.
For the Three and Six Months Ended September 30, 2018
In the second quarter of fiscal 2019, the Company had net sales
of $23.3 million, an 11.6% increase
from net sales of $20.9 million in
the comparable prior-year period. This sales growth was primarily
driven by the U.S. sales growth of Jefferson's bourbons, Knappogue Castle Irish
whiskey, Goslings Stormy Ginger Beer and certain of the Company's
liqueurs. Net loss was ($0.0) million
in the second quarter of fiscal 2019 compared to net income of
$0.3 million in the comparable
prior-year period. Net loss attributable to common shareholders was
($0.2) million, or ($0.00) per basic and diluted share, in the
second quarter of fiscal 2019, as compared to ($0.0) million, or ($0.00) per basic and diluted share, in the
prior-year period.
EBITDA, as adjusted, for the second quarter of fiscal 2019
decreased to $1.8 million as compared
to $1.9 million for the comparable
prior-year period.
For the six months ended September 30,
2018, the Company had net sales of $46.4 million, an 11.2% increase from net sales
of $41.7 million in the comparable
prior-year period. Net loss was ($0.3)
million for the six months ended September 30, 2018, as compared to a net loss of
($0.6) 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, 2018, as
compared to ($0.9) million, or
($0.01) per basic and diluted share,
in the prior-year period.
EBITDA, as adjusted, for the six months ended September 30, 2018 improved to $3.4 million as compared to $2.7 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 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 Select™,
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, 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,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Sales,
net*
|
|
$
|
23,310,163
|
|
|
$
|
20,894,150
|
|
|
$
|
46,414,551
|
|
|
$
|
41,746,437
|
|
Cost of
sales*
|
|
|
14,170,668
|
|
|
|
12,350,901
|
|
|
|
28,015,504
|
|
|
|
24,624,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
9,139,495
|
|
|
|
8,543,249
|
|
|
|
18,399,047
|
|
|
|
17,121,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expense
|
|
|
5,322,430
|
|
|
|
4,899,208
|
|
|
|
11,144,320
|
|
|
|
10,955,407
|
|
General and
administrative expense
|
|
|
2,564,246
|
|
|
|
2,298,882
|
|
|
|
5,081,512
|
|
|
|
4,561,879
|
|
Depreciation and
amortization
|
|
|
204,380
|
|
|
|
186,283
|
|
|
|
440,172
|
|
|
|
391,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
1,048,439
|
|
|
|
1,158,876
|
|
|
|
1,733,043
|
|
|
|
1,213,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense,
net
|
|
|
(8,506)
|
|
|
|
(59)
|
|
|
|
(8,911)
|
|
|
|
(59)
|
|
Income from equity
investment in non-
consolidated affiliate
|
|
|
55,113
|
|
|
|
29,846
|
|
|
|
89,141
|
|
|
|
71,595
|
|
Foreign exchange gain
(loss)
|
|
|
2,918
|
|
|
|
18,853
|
|
|
|
47,382
|
|
|
|
(32,308)
|
|
Interest expense,
net
|
|
|
(1,099,505)
|
|
|
|
(901,559)
|
|
|
|
(2,151,447)
|
|
|
|
(1,793,423)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
provision for income
taxes
|
|
|
(1,541)
|
|
|
|
305,957
|
|
|
|
(290,792)
|
|
|
|
(540,848)
|
|
Income tax benefit
(expense), net
|
|
|
217
|
|
|
|
(25,335)
|
|
|
|
(17,898)
|
|
|
|
(43,748)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
|
(1,324)
|
|
|
|
280,622
|
|
|
|
(308,690)
|
|
|
|
(584,596)
|
|
Net income
attributable to noncontrolling
interests
|
|
|
(214,812)
|
|
|
|
(282,303)
|
|
|
|
(598,153)
|
|
|
|
(363,482)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to common shareholders
|
|
$
|
(216,136)
|
|
|
$
|
(1,681)
|
|
|
$
|
(906,843)
|
|
|
$
|
(948,078)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
166,497,681
|
|
|
|
163,209,562
|
|
|
|
166,011,668
|
|
|
|
163,138,853
|
|
|
* Sales, net and Cost
of sales include excise taxes of $1,752,916 and $1,759,630 for the
three months ended September 30, 2018 and 2017, respectively, and
$3,587,170 and $3,399,385 for the six months ended September 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
|
|
|
Six months
ended
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Net loss attributable
to common shareholders
|
|
$
|
(216,136)
|
|
|
$
|
(1,681)
|
|
|
$
|
(906,843)
|
|
|
$
|
(948,078)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
1,099,505
|
|
|
|
901,559
|
|
|
|
2,151,447
|
|
|
|
1,793,423
|
|
Income tax expense,
net
|
|
|
(217)
|
|
|
|
25,335
|
|
|
|
17,898
|
|
|
|
43,748
|
|
Depreciation and
amortization
|
|
|
204,380
|
|
|
|
186,283
|
|
|
|
440,172
|
|
|
|
391,235
|
|
EBITDA
income
|
|
|
1,087,532
|
|
|
|
1,111,496
|
|
|
|
1,702,674
|
|
|
|
1,280,328
|
|
Allowance for
doubtful accounts
|
|
|
14,559
|
|
|
|
16,712
|
|
|
|
29,118
|
|
|
|
30,812
|
|
Allowance for
obsolete inventory
|
|
|
80,000
|
|
|
|
—
|
|
|
|
160,000
|
|
|
|
50,000
|
|
Stock-based
compensation expense
|
|
|
497,219
|
|
|
|
504,490
|
|
|
|
987,704
|
|
|
|
979,816
|
|
Other expense,
net
|
|
|
8,506
|
|
|
|
59
|
|
|
|
8,911
|
|
|
|
59
|
|
Income from equity
investments in non-
consolidated affiliate
|
|
|
(55,113)
|
|
|
|
(29,846)
|
|
|
|
(89,141)
|
|
|
|
(71,595)
|
|
Foreign exchange loss
(gain)
|
|
|
(2,918)
|
|
|
|
(18,853)
|
|
|
|
(47,382)
|
|
|
|
32,308
|
|
Net income
attributable to noncontrolling interests
|
|
|
214,812
|
|
|
|
282,303
|
|
|
|
598,153
|
|
|
|
363,482
|
|
EBITDA, as
adjusted
|
|
$
|
1,844,597
|
|
|
$
|
1,866,361
|
|
|
$
|
3,350,037
|
|
|
$
|
2,665,210
|
|
Castle Brands Inc.
Investor Relations, 646-356-0200
info@castlebrandsinc.com
www.castlebrandsinc.com
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SOURCE Castle Brands Inc.