NEW YORK, Feb. 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 nine months ended December 31, 2017.
Operating highlights for the three and nine months ended
December 31, 2017:
- Net sales increased 31.5% to $24.1
million for the third quarter of fiscal 2018, as compared to
$18.3 million for the comparable
prior-year period, and increased 20.4% to $65.8 million for the first nine months of fiscal
2018, as compared to $54.7 million
for the comparable prior-year period.
- Total gross profit increased 26.2% to $9.7 million for the third quarter of fiscal
2018, as compared to $7.7 million for
the comparable prior-year period, and increased 21.2% to
$26.8 million for the first nine
months of fiscal 2018, as compared to $22.1
million for the comparable prior-year period.
- Income from operations increased 84.2% to $1.6 million for the third quarter of fiscal
2018, as compared to $0.9 million for
the comparable prior-year period, and increased 179.5% to
$2.8 million for the first nine
months of fiscal 2018, as compared to $1.0
million for the comparable prior-year period.
- Whiskey revenues increased 28.9% for the first nine months of
fiscal 2018 from the comparable prior-year period due to continued
strong growth of Jefferson's and
the Irish whiskies, and the addition of the Arran scotch whiskey
portfolio.
- Goslings Stormy Ginger Beer case
sales increased 34.2% to approximately 1,342,000 cases in the first
nine months of fiscal 2018 from approximately 1,000,000 cases in
the comparable prior-year period.
- Castle Brands expects to benefit from substantially lower
federal excise taxes 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 1,500 barrels of aged bourbon in the
quarter to support the continued growth of Jefferson's.
"We are again reporting strong sales growth of our lead brands,
including Jefferson's whiskeys,
our Irish whiskeys and Goslings Stormy Ginger Beer. This resulted
in solid growth in both revenue and gross profits, and a 179.5%
increase in income from operations for the first nine months of
fiscal 2018 to a record level of $2.8
million and a 61.1% increase in EBITDA, as adjusted, for the
first nine months of fiscal 2018 to a record level of $5.0 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.
"In December 2017, January 2018 and February
2018, certain holders of our 5% Subordinated Convertible
Notes, including certain officers, directors and principal
shareholders, converted such Convertible Notes into 1,785,556
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.
"The combination of our new fill whiskey programs and
opportunistic purchases of aged whiskey, enabled us to build
substantial reserves of aged bourbon to support continued strong
growth of our Jefferson's brand. We released an exclusive,
limited-edition Jefferson's
Presidential Select bourbon in the third quarter and plan to expand
our Jefferson's wine finishes
program in the coming months. We are also releasing 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 both Goslings Stormy Ginger
Beer and Goslings Black Seal Rum. Ginger beer sales for
the 12 months ended December 31, 2017
exceeded 1.7 million cases, making Goslings Stormy Ginger Beer the
best-selling premium ginger beer in America. We are very pleased
with the success of our first nine months at Walmart, and look
forward to continuing the overall growth of the brand," Mr. Glover
added.
For the Three and Nine Months Ended December 31, 2017
In the third quarter of fiscal 2018, the Company had net sales
of $24.1 million, a 31.5% increase
from net sales of $18.3 million in
the comparable prior-year period. This sales growth was primarily
driven by the U.S. sales growth of Jefferson's whiskeys, Goslings rums, Goslings
Stormy Ginger Beer and certain liqueur brands. Income from
operations was $1.6 million, an 84.2%
increase from income from operations of $0.9
million in the comparable prior-year period. Net income was
$0.7 million in the third quarter of
fiscal 2018 compared to net income of $0.9
million in the comparable prior-year period, with interest
expense, net, increasing to ($1.0)
million in the third quarter of fiscal 2018, as compared to
($0.3) million in the comparable
prior-year period. Net income attributable to common shareholders
was $0.5 million, or $0.00 per basic and diluted share, in the third
quarter of fiscal 2018, as compared to $0.4
million, or $0.00 per basic
and diluted share, in the comparable prior-year period.
EBITDA, as adjusted, for the third quarter of fiscal 2018
increased 49.0% to $2.3 million as
compared to $1.6 million for the
comparable prior-year period.
For the nine months ended December 31,
2017, the Company had net sales of $65.8 million, a 20.4% increase from net sales of
$54.7 million in the comparable
prior-year period. Income from operations was $2.8 million, a 179.5% increase from income from
operations of $1.0 million in the
comparable prior-year period. Net income was $0.1 million for the nine months ended
December 31, 2017, as compared to a
net loss of ($0.2) million in the
comparable prior-year period, even though interest expense, net,
increased to ($2.8) million in the
nine months ended December 31, 2017,
as compared to ($1.0) million in the
comparable prior-year period. Net loss attributable to common
shareholders was ($0.5) million, or
($0.00) per basic and diluted share,
for the nine months ended December 31,
2017, as compared to ($1.0)
million, or ($0.01) per basic
and diluted share, in the comparable prior-year period.
EBITDA, as adjusted, for the nine months ended December 31, 2017 increased 61.1% to $5.0 million as compared to $3.1 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 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, 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
December 31,
|
|
|
Nine months ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Sales,
net*
|
|
$
|
24,079,623
|
|
|
$
|
18,309,539
|
|
|
$
|
65,826,060
|
|
|
$
|
54,688,255
|
|
Cost of
sales*
|
|
|
14,401,686
|
|
|
|
10,639,299
|
|
|
|
39,026,255
|
|
|
|
32,574,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
9,677,937
|
|
|
|
7,670,240
|
|
|
|
26,799,805
|
|
|
|
22,113,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expense
|
|
|
5,438,815
|
|
|
|
4,642,419
|
|
|
|
16,394,222
|
|
|
|
14,304,931
|
|
General and
administrative expense
|
|
|
2,458,528
|
|
|
|
1,922,675
|
|
|
|
7,020,407
|
|
|
|
6,053,569
|
|
Depreciation and
amortization
|
|
|
208,388
|
|
|
|
251,410
|
|
|
|
599,623
|
|
|
|
758,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
1,572,206
|
|
|
|
853,736
|
|
|
|
2,785,553
|
|
|
|
996,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense), net
|
|
|
931
|
|
|
|
(70)
|
|
|
|
872
|
|
|
|
(403)
|
|
(Loss) income from
equity
investment in non-consolidated
affiliate
|
|
|
(20,806)
|
|
|
|
26,362
|
|
|
|
50,789
|
|
|
|
49,682
|
|
Foreign exchange gain
(loss)
|
|
|
25,204
|
|
|
|
68,720
|
|
|
|
(7,104)
|
|
|
|
145,208
|
|
Interest expense,
net
|
|
|
(976,017)
|
|
|
|
(330,165)
|
|
|
|
(2,769,440)
|
|
|
|
(969,294)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
provision for income
taxes
|
|
|
601,518
|
|
|
|
618,583
|
|
|
|
60,670
|
|
|
|
221,801
|
|
Income tax benefit
(expense), net
|
|
|
63,085
|
|
|
|
273,781
|
|
|
|
19,337
|
|
|
|
(414,994)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
664,603
|
|
|
|
892,364
|
|
|
|
80,007
|
|
|
|
(193,193)
|
|
Net income
attributable to
noncontrolling interests
|
|
|
(199,023)
|
|
|
|
(469,798)
|
|
|
|
(562,505)
|
|
|
|
(850,770)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to
common shareholders
|
|
$
|
465,580
|
|
|
$
|
422,566
|
|
|
$
|
(482,498)
|
|
|
$
|
(1,043,963)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
common share,
basic, attributable to common
shareholders
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
(0.00)
|
|
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in
computation, basic, attributable to
common shareholders
|
|
|
163,470,150
|
|
|
|
160,963,862
|
|
|
|
163,249,687
|
|
|
|
160,728,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
common share,
diluted, attributable to common
shareholders
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
(0.00)
|
|
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in
computation, diluted, attributable to
common shareholders
|
|
|
171,121,927
|
|
|
|
165,245,935
|
|
|
|
163,249,687
|
|
|
|
160,728,918
|
|
|
|
* Sales, net and Cost
of sales include excise taxes of $1,938,739 and $1,646,486 for the
three months ended December 31, 2017 and 2016, respectively, and
$5,338,124 and $5,275,187 for the nine months ended December 31,
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
|
|
|
Nine months
ended
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Net Income (loss)
attributable to common
shareholders
|
|
$
|
465,580
|
|
|
$
|
422,566
|
|
|
$
|
(482,498)
|
|
|
$
|
(1,043,963)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
976,017
|
|
|
|
330,165
|
|
|
|
2,769,440
|
|
|
|
969,294
|
|
Income tax (benefit)
expense, net
|
|
|
(63,085)
|
|
|
|
(273,781)
|
|
|
|
(19,337)
|
|
|
|
414,994
|
|
Depreciation and
amortization
|
|
|
208,388
|
|
|
|
251,410
|
|
|
|
599,623
|
|
|
|
758,507
|
|
EBITDA
income
|
|
|
1,586,899
|
|
|
|
730,360
|
|
|
|
2,867,228
|
|
|
|
1,098,833
|
|
Allowance for
doubtful accounts
|
|
|
14,100
|
|
|
|
11,550
|
|
|
|
44,912
|
|
|
|
34,650
|
|
Allowance for
obsolete inventory
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
100,000
|
|
|
|
150,000
|
|
Stock-based
compensation expense
|
|
|
504,490
|
|
|
|
409,511
|
|
|
|
1,484,386
|
|
|
|
1,172,008
|
|
Other (income)
expense, net
|
|
|
(931)
|
|
|
|
70
|
|
|
|
(872)
|
|
|
|
403
|
|
Loss (income) from
equity investments
in non-consolidated affiliate
|
|
|
20,806
|
|
|
|
(26,362)
|
|
|
|
(50,789)
|
|
|
|
(49,682)
|
|
Foreign exchange
(gain) loss
|
|
|
(25,204)
|
|
|
|
(68,720)
|
|
|
|
7,104
|
|
|
|
(145,209)
|
|
Net income
attributable to noncontrolling
interests
|
|
|
199,023
|
|
|
|
469,798
|
|
|
|
562,505
|
|
|
|
850,770
|
|
EBITDA, as
adjusted
|
|
$
|
2,349,183
|
|
|
$
|
1,576,207
|
|
|
$
|
5,014,474
|
|
|
$
|
3,111,773
|
|
Castle Brands Inc.
Investor Relations, 646-356-0200
info@castlebrandsinc.com
www.castlebrandsinc.com
View original
content:http://www.prnewswire.com/news-releases/castle-brands-announces-fiscal-2018-third-quarter-results-300596201.html
SOURCE Castle Brands Inc.