UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of Earliest Event Reported):
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February 17, 2015
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Castle Brands Inc.
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(Exact name of registrant as specified in its charter)
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Florida
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001-32849
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41-2103550
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(State or other jurisdiction
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_____________
(Commission
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(I.R.S. Employer
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of incorporation)
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File Number)
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Identification No.)
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122 East 42nd Street, Suite 4700, New York, New York
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10168
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(Address of principal executive offices)
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(Zip Code)
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Registrants telephone number, including area code:
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(646) 356-0200
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Not Applicable
______________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On February 17, 2015, Castle Brands Inc. issued a press release announcing financial results for the three and nine months ended December 31, 2014. A copy of the press release is attached hereto as Exhibit 99.1.
The information included herein and in Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 ("Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
99.1 Press release dated February 17, 2015.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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Castle Brands Inc.
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February 17, 2015
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By:
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/s/ Alfred J. Small
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Name: Alfred J. Small
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Title: SVP, CFO, Treas. & Secretary
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Exhibit Index
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Exhibit No.
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Description
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99.1
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Press release dated February 17, 2015.
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Castle Brands Announces Fiscal 2015 Third Quarter Results
Net Sales Increase 17% Driven by Continued Strong Growth of Whiskeys and
Goslings Stormy Ginger Beer
NEW YORK February 17, 2015 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 nine month periods ended December 31, 2014.
Operating highlights for the quarter ended December 31, 2014:
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Net sales increased 17% to $15.9 million as compared to $13.6 million for the
prior-year period. |
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Total gross profit increased 24% to $6.0 million as compared to $4.8 million
for the prior-year period. |
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Income from operations improved to $0.2 million as compared to a loss of
($0.1) million in the prior-year period. |
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Whiskey revenues increased 43% from the prior-year period due to continued
strong performance of Jeffersons bourbons and Knappogue and Clontarf Irish whiskeys. |
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Goslings Stormy Ginger Beer case sales increased 65% to approximately 163,000
cases from approximately 99,000 in the prior-year period. |
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EBITDA, as adjusted, improved by 276% to approximately $0.6 million as
compared to approximately $0.2 million in the prior-year period. |
During the quarter, we continued to drive sales of our more profitable brands. This resulted in
strong revenue growth, improved margins, decreased G&A as a percent of revenue, significantly
reduced net loss and increased EBITDA, as adjusted. We expect these trends and improving financial
performance to continue, stated Richard J. Lampen, President and Chief Executive Officer of Castle
Brands.
We used our aged bourbon reserves to support increased sales of Jeffersons and Jeffersons
Reserve, grow our Jeffersons barrel program, and expand our Jeffersons Ocean Aged at Sea program.
Our whiskey portfolio has also benefitted from additions to our Irish whiskey offerings. We have
initiated a Knappogue barrel program and plan to add additional expressions under our Knappogue and
Clontarf labels. These initiatives should drive additional whiskey sales growth, said John Glover,
Chief Operating Officer of Castle Brands.
Sales of Goslings Stormy Ginger Beer increased 65% to 163,000 cases in the third quarter of
fiscal 2015, an indication of the growing prominence of the Goslings brand. Growth of the overall
brand recognition should stimulate demand in core markets and provide opportunities for expansion
to new markets, Mr. Glover added.
In the third quarter of fiscal 2015, the Company had net sales of $15.9 million, a 17.4% increase
from net sales of $13.6 million in the comparable prior-year period. Net loss attributable to
controlling interests was ($0.6) million in the third quarter of fiscal 2015 compared to ($2.4)
million in the comparable prior-year period. Net loss attributable to common shareholders was
($0.6) million, or ($0.00) per basic and diluted share, in the third quarter of fiscal 2015, as
compared to ($2.6) million, or ($0.02) per basic and diluted share, in the prior-year period.
EBITDA, as adjusted, for the third quarter of fiscal 2015 improved to $0.6 million as compared to
$0.2 million for the comparable prior-year period.
For the nine months ended December 31, 2014, the Company had net sales of $41.3 million, a 15.8%
increase from net sales of $35.7 million in the comparable prior-year period. Net loss attributable
to controlling interests was ($3.2) million for the nine months ended December 31, 2014, as
compared to ($8.1) million in the comparable prior-year period. Net loss attributable to common
shareholders was ($3.2) million, or ($0.02) per basic and diluted share, for the nine months ended
December 31, 2014, as compared to ($8.7) million, or ($0.08) per basic and diluted share, in the
prior-year period.
EBITDA, as adjusted, for the nine months ended December 31, 2014 improved to $0.7 million as
compared to $0.2 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 allowance for doubtful accounts, stock-based compensation expense, other (income)
expense, net, loss from equity investment in non-consolidated affiliate, foreign exchange (gain)
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, 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 Companys 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 managements estimates, such as allowance accounts, 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. 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 beverage
alcohol brands including: Goslings Rum®, Jeffersons®, Jeffersons
Presidential SelectTM, Jeffersons Reserve® and Ocean Aged at Sea Bourbon,
Jeffersons® Rye Whiskey, Knappogue Castle Whiskey®, Clontarf®
Irish Whiskey, Pallini® Limoncello, Boru® Vodka and Bradys® Irish
Cream. Additional information concerning the Company is available on the Companys 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, 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.
1
CASTLE BRANDS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
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Three months ended December 31, |
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Nine months ended December 31, |
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2014 |
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2013 |
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2014 |
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2013 |
Sales, net* |
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$ |
15,936,514 |
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$ |
13,579,289 |
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$ |
41,300,417 |
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$ |
35,657,613 |
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Cost of sales* |
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9,941,654 |
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8,731,204 |
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25,875,230 |
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22,706,709 |
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Gross profit |
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5,994,860 |
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4,848,085 |
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15,425,187 |
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12,950,904 |
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Selling expense |
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4,034,964 |
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3,368,324 |
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10,866,113 |
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9,196,857 |
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General and administrative expense |
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1,565,380 |
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1,373,157 |
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4,544,313 |
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3,883,221 |
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Depreciation and amortization |
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237,652 |
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217,002 |
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669,623 |
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644,764 |
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Income (loss) from operations |
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156,864 |
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(110,398 |
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(654,862 |
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(773,938 |
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Other (expense) income, net |
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(208 |
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(480 |
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16,798 |
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(654 |
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Loss from equity investment in non-
consolidated affiliate |
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(428,598 |
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(452,675 |
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Foreign exchange gain (loss) |
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57,879 |
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50,709 |
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(207,579 |
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(60,814 |
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Interest expense, net |
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(267,459 |
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(281,732 |
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(844,316 |
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(779,031 |
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Net change in fair value of warrant liability |
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(1,426,179 |
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(5,392,594 |
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Income tax (expense) benefit, net |
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(258,962 |
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37,038 |
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(681,886 |
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111,114 |
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Net loss |
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(311,886 |
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(2,159,640 |
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(2,371,845 |
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(7,348,592 |
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Net income attributable to noncontrolling
interests |
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(279,110 |
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(210,833 |
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(795,495 |
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(741,249 |
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Net loss attributable to controlling interests |
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(590,996 |
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(2,370,473 |
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(3,167,340 |
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(8,089,841 |
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Dividend to preferred shareholders |
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(192,678 |
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(570,588 |
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Net loss attributable to common shareholders |
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$ |
(590,996 |
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$ |
(2,563,151 |
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$ |
(3,167,340 |
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$ |
(8,660,429 |
) |
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Net loss per common share, basic and diluted,
attributable to common shareholders |
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$ |
(0.00 |
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$ |
(0.02 |
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$ |
(0.02 |
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$ |
(0.08 |
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Weighted average shares used in computation,
basic and diluted, attributable to common
shareholders |
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155,838,146 |
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112,150,634 |
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154,989,569 |
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110,682,714 |
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Sales, net and Cost of sales include excise taxes of $1,677,886 and $1,664,018 for the three
months ended December 31, 2014 and 2013, respectively, and $4,736,838 and $4,677,198 for the nine
months ended December 31, 2014 and 2013, respectively.
2
CASTLE BRANDS INC. AND SUBSIDIARIES
Reconciliation of net loss attributable to common shareholders to EBITDA, as adjusted
(Unaudited)
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Three months ended |
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Nine months ended |
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December 31, |
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December 31, |
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2014 |
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2013 |
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2014 |
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2013 |
Net loss attributable to common shareholders |
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$ |
(590,996 |
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$ |
(2,563,151 |
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$ |
(3,167,340 |
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$ |
(8,660,429 |
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Adjustments: |
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Interest expense, net |
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267,459 |
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281,732 |
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844,316 |
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779,031 |
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Income tax expense (benefit), net |
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258,962 |
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(37,038 |
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681,886 |
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(111,114 |
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Depreciation and amortization |
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237,652 |
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217,002 |
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669,623 |
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644,764 |
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EBITDA income (loss) |
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173,077 |
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(2,101,455 |
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(971,515 |
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(7,347,748 |
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Allowance for doubtful accounts |
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9,000 |
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10,500 |
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77,000 |
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36,312 |
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Stock-based compensation expense |
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206,553 |
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103,636 |
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606,817 |
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281,385 |
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Other (income) expense, net |
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208 |
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480 |
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(16,798 |
) |
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654 |
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Loss from equity investment in non-consolidated
affiliate |
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428,598 |
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452,675 |
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Foreign exchange (gain) loss |
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(57,879 |
) |
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(50,709 |
) |
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207,579 |
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60,814 |
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Net change in fair value of warrant liability |
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1,426,179 |
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5,392,594 |
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Net income attributable to noncontrolling interests |
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279,110 |
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210,833 |
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795,495 |
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741,249 |
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Dividend to preferred shareholders |
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192,678 |
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570,588 |
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EBITDA, as adjusted |
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$ |
610,069 |
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$ |
220,740 |
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$ |
698,578 |
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$ |
188,523 |
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# # #
Castle Brands Inc.
Investor Relations, 646-356-0200
info@castlebrandsinc.com
www.castlebrandsinc.com
3
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