NEW YORK, Nov. 17, 2014 /PRNewswire/ -- Castle Brands
Inc. (NYSE MKT: ROX), a developer and international marketer of
premium and super-premium branded spirits, today reported financial
results for the three and six month periods ended September 30, 2014.
Operating highlights for the quarter ended September 30, 2014:
- Net sales increased 14.8% to $13.4
million as compared to $11.7
million for the comparable prior-year period.
- Continued strong growth of Jefferson's bourbons and Irish whiskey led to
a 36.8% increase in whiskey revenues from the comparable prior-year
period.
- Gosling's Stormy Ginger Beer
case sales increased 72% to approximately 192,000 cases from
approximately 112,000 from the comparable prior-year period.
- Net loss improved to ($0.9)
million as compared to ($4.1)
million in the comparable prior-year period.
- EBITDA, as adjusted, improved by 11.1% to $141,000 compared to a $127,000 in the comparable prior-year
period.
- The Company's revolving credit facility capacity was increased
from $8 million to $12 million, the maturity date was extended and
the interest rate was reduced.
- Additional aged bourbon was purchased to support increased
growth of Jefferson's
"In addition to strong continued organic growth, we improved our
margins, decreased G&A as a percent of revenue, significantly
reduced net loss and showed positive EBITDA, as adjusted. We expect
these trends of substantial growth and improving financial
performance to continue over the balance of the fiscal year. We
also improved our capital structure by repaying all $1,250,000 of our Junior Notes (11% interest)
with cash generated by the exercise of warrants and increased
availability under our revolving credit facility (6.25% interest),"
stated Richard J. Lampen, President
and Chief Executive Officer of Castle Brands.
"In the second quarter, we used recently purchased aged bourbon
reserves to support increased sales of Jefferson's and Jefferson's Reserve, expand our Jefferson's barrel program, accelerate our
Jefferson's Ocean Aged at Sea
program and position us to re-issue Jefferson's Chef's Collaboration. Just as we
are expanding our offerings under the Jefferson's umbrella, we are also expanding
our Irish whiskey offerings. We have initiated a Knappogue barrel
program and plan to add additional offerings under our Knappogue
and Clontarf labels. These initiatives, both with Jefferson and our Irish whiskeys, should
provide additional growth for our whiskey sales," said John Glover, Chief Operating Officer of Castle
Brands.
"Sales of Gosling's Stormy Ginger
Beer increased 72% to 192,000 cases in the second quarter of
fiscal 2015, an indication of the success of the Dark 'n
Stormy® cocktail, an important driver of Gosling's sales.
Trailing twelve month sales of Stormy
Ginger Beer were approximately 570,000 cases, which equates
to over 13 million cans each prominently displaying the Gosling's
logo. These ginger beer sales help build Gosling's visibility and
prominence as a brand," Mr. Glover added.
In the second quarter of fiscal 2015, the Company had net sales
of $13.4 million, a 14.8% increase
from net sales of $11.7 million in
the comparable prior-year period. Net loss was ($0.9) million in the second quarter of fiscal
2015 compared to a net loss of ($4.1)
million in the comparable prior-year period. Net loss
attributable to common shareholders was ($1.1) million, or ($0.01) per basic and diluted share, in the
second quarter of fiscal 2015, as compared to ($4.6) million, or ($0.04) per basic and diluted share, in the
prior-year period.
EBITDA, as adjusted, for the second quarter of fiscal 2015
improved to $141,000 as compared to
$127,000 for the comparable
prior-year period.
For the six months ended September
30, 2014, the Company had net sales of $25.4 million, a 14.9% increase from net sales of
$22.1 million in the comparable
prior-year period. Net loss was ($2.1)
million for the six months ended September 30, 2014, as compared to a net
loss of ($5.2) million in the
comparable prior-year period. Net loss attributable to common
shareholders was ($2.6) million, or
($0.02) per basic and diluted share,
for the six months ended September 30,
2014, as compared to ($6.1)
million, or ($0.06) per basic
and diluted share, in the prior-year period.
EBITDA, as adjusted, for the first six months of fiscal 2015
improved to $89,000 as compared to a
loss of ($32,000) 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 operating income (loss) or net
income (loss) as a measure of operating performance. Earnings
before interest, taxes, depreciation and amortization, or EBITDA,
adjusted for allowance for doubtful accounts, other (income)
expense, net, stock-based compensation expense, loss from
equity investment in non-consolidated affiliate, foreign exchange
loss, net change in fair value of warrant liability, net income
attributable to non-controlling interests and dividend to preferred
shareholders is a key metric the Company uses in evaluating its
financial performance on a consistent basis across various periods.
EBITDA 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 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 allowances for doubtful accounts and obsolete
inventory, are due to changes in valuation, such as the effects of
changes in foreign exchange or fair value of warrant liability, 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. Reconciliation of net
loss to EBITDA, as adjusted, is presented below.
About Castle Brands
Castle Brands is a developer and international marketer of
premium beverage alcohol brands including: Gosling's
Rum®, Jefferson's®, Jefferson's Presidential SelectTM
and Jefferson's
Reserve® Bourbon, Jefferson's® Rye Whiskey, Knappogue
Castle Whiskey®, Clontarf® Irish Whiskey,
Pallini® Limoncello, Boru® Vodka and
Brady's® Irish Cream. 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, related 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," "expects," "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, 2014 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,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Sales, net*
|
|
$
|
13,381,704
|
|
$
|
11,659,707
|
|
$
|
25,363,903
|
|
$
|
22,078,324
|
|
Cost of
sales*
|
|
|
8,498,031
|
|
|
7,475,352
|
|
|
15,933,576
|
|
|
13,975,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
4,883,673
|
|
|
4,184,355
|
|
|
9,430,327
|
|
|
8,102,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expense
|
|
|
3,591,823
|
|
|
2,933,150
|
|
|
6,831,149
|
|
|
5,828,533
|
|
General and
administrative expense
|
|
|
1,368,317
|
|
|
1,244,459
|
|
|
2,978,933
|
|
|
2,510,064
|
|
Depreciation and
amortization
|
|
|
215,873
|
|
|
214,638
|
|
|
431,971
|
|
|
427,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
|
(292,340)
|
|
|
(207,892)
|
|
|
(811,726)
|
|
|
(663,540)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense),
net
|
|
|
64
|
|
|
(174)
|
|
|
17,006
|
|
|
(174)
|
|
Loss from equity
investment in non-
consolidated affiliate
|
|
|
--
|
|
|
(17,956)
|
|
|
--
|
|
|
(24,077)
|
|
Foreign exchange
loss
|
|
|
(29,011)
|
|
|
(171,863)
|
|
|
(265,458)
|
|
|
(111,523)
|
|
Interest expense,
net
|
|
|
(288,215)
|
|
|
(268,480)
|
|
|
(576,857)
|
|
|
(497,299)
|
|
Net change in fair
value of warrant liability
|
|
|
--
|
|
|
(3,519,164)
|
|
|
--
|
|
|
(3,966,415)
|
|
Income tax (expense)
benefit, net
|
|
|
(259,962)
|
|
|
37,038
|
|
|
(422,924)
|
|
|
74,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(869,464)
|
|
|
(4,148,491)
|
|
|
(2,059,959)
|
|
|
(5,188,952)
|
|
Net income attributable
to noncontrolling
interests
|
|
|
(211,049)
|
|
|
(278,044)
|
|
|
(516,385)
|
|
|
(530,416)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to controlling interests
|
|
|
(1,080,513)
|
|
|
(4,426,535)
|
|
|
(2,576,344)
|
|
|
(5,719,368)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend to preferred
shareholders
|
|
|
--
|
|
|
(187,978)
|
|
|
--
|
|
|
(377,910)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to common shareholders
|
|
$
|
(1,080,513)
|
|
$
|
(4,614,513)
|
|
$
|
(2,576,344)
|
|
$
|
(6,097,278)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share, basic and
diluted,
attributable to common shareholders
|
|
$
|
(0.01)
|
|
$
|
(0.04)
|
|
$
|
(0.02)
|
|
$
|
(0.06)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
used in computation,
basic and diluted, attributable to common
shareholders
|
|
|
155,189,679
|
|
|
110,459,802
|
|
|
154,562,875
|
|
|
109,944,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Sales, net and Cost
of sales include excise taxes of $1,574,437 and $1,588,959 for the
three months ended September 30, 2014 and 2013, respectively, and
$3,058,951 and $3,013,179 for the six months ended September 30,
2014 and 2013, respectively.
|
CASTLE BRANDS INC.
AND SUBSIDIARIES
|
Reconciliation of
net loss to EBITDA, as adjusted
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Six months ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Net loss attributable
to common shareholders
|
|
$
|
(1,080,513)
|
|
$
|
(4,614,513)
|
|
$
|
(2,576,344)
|
|
$
|
(6,097,278)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
288,215
|
|
|
268,480
|
|
|
576,857
|
|
|
497,299
|
|
Income tax expense
(benefit), net
|
|
|
259,962
|
|
|
(37,038)
|
|
|
422,924
|
|
|
(74,076)
|
|
Depreciation and
amortization
|
|
|
215,873
|
|
|
214,638
|
|
|
431,971
|
|
|
427,762
|
|
EBITDA
(loss)
|
|
|
(316,463)
|
|
|
(4,168,433)
|
|
|
(1,144,592)
|
|
|
(5,246,293)
|
|
Allowance for doubtful
accounts
|
|
|
9,000
|
|
|
15,312
|
|
|
68,000
|
|
|
25,812
|
|
Stock-based
compensation expense
|
|
|
208,808
|
|
|
105,216
|
|
|
400,264
|
|
|
177,749
|
|
Other (income)
expense, net
|
|
|
(64)
|
|
|
174
|
|
|
(17,006)
|
|
|
174
|
|
Loss from equity
investment in non-consolidated affiliate
|
|
|
--
|
|
|
17,956
|
|
|
--
|
|
|
24,077
|
|
Foreign exchange
loss
|
|
|
29,011
|
|
|
171,863
|
|
|
265,458
|
|
|
111,523
|
|
Net change in fair
value of warrant liability
|
|
|
--
|
|
|
3,519,164
|
|
|
--
|
|
|
3,966,415
|
|
Net income
attributable to noncontrolling interests
|
|
|
211,049
|
|
|
278,044
|
|
|
516,385
|
|
|
530,416
|
|
Dividend to preferred
shareholders
|
|
|
--
|
|
|
187,978
|
|
|
--
|
|
|
377,910
|
|
EBITDA, as
adjusted
|
|
|
141,341
|
|
|
127,274
|
|
|
88,509
|
|
|
(32,217)
|
|
Castle Brands Inc.
Investor Relations, 646-356-0200
info@castlebrandsinc.com
www.castlebrandsinc.com
SOURCE Castle Brands Inc.