Castle Brands Inc, 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, 2013.
Operating highlights for the quarter ended December 31, 2013 were:
• Net sales increased 28% to $13.6 million as compared to $10.6 million for the comparable prior-year period.
• Loss from operations improved 75.0% to a loss of $(0.1) million, compared to a loss of $(0.4) million in the comparable prior-year period.
• Company recorded positive quarterly EBITDA, as adjusted, with a gain of $0.2 million, compared to a loss of ($0.1) million in the comparable prior-year period.
• Very strong growth of the Jefferson's bourbons and rye and the Irish whiskies led to a 74.2% increase in whiskey revenues from the prior-year period.
• Gosling's Rum continued its strong growth trend with revenues up 12.9% from the prior-year period.
• Gosling's Stormy Ginger Beer case sales increased 79.4% to approximately 99,000 cases compared to approximately 55,000 cases in the prior-year period.
"Our core brands, including Gosling's, Jefferson's and our Irish whiskies, continue to show very strong growth, far above industry averages. We expect this growth to continue, fostered by the work of our Strategic Planning Committee. As in prior periods, significant top line growth, coupled with our ability to contain expenses, resulted in continued improvement in EBITDA, as adjusted. We expect these trends to continue as we work to build the value of our brands," said Richard J. Lampen, President and Chief Executive Officer of Castle Brands.
"It is important to note that the net loss attributable to common shareholders of $2.6 million was primarily due to $2.3 million of non-cash charges, most of which related to the change in fair value of warrant liability. Due to our increased stock price and volume, the Company will no longer be subject to these changes for warrant valuation in future periods. Moreover, in February, certain warrant holders exercised their warrants, resulting in $2.3 million of new cash for the Company. Also, our increased stock price and volume allowed us to force the conversion in February 2014 of our preferred stock into common stock, which will simplify our capital structure and eliminate the effect of the 10% preferred stock dividend on net income attributable to common shareholders in future periods," Mr. Lampen added.
"The continued success of Jefferson's brings with it requirements for aged bulk bourbon, raw materials and finished goods inventory to meet growing demand. In October, the Company placed over $2 million of 5% junior notes, which are convertible into common stock at $0.90 per share. We are using these funds, along with the proceeds from the recent warrant exercises, to expand our bourbon inventories and support the growth of our other core brands," said John Glover, Chief Operating Officer of Castle Brands. "It is also very encouraging to see the continued dramatic increase in sales of Gosling's Stormy Ginger Beer, as this bodes well for the Dark 'n Stormy® cocktail, an important driver of Gosling's sales," Mr. Glover added.
In the third quarter of fiscal 2014, the Company had net sales of $13.6 million, a 28% increase from net sales of $10.6 million in the comparable prior-year period. Loss from operations was ($0.1) million in the third quarter of fiscal 2014, an improvement of 75.0% from a loss of ($0.4) million for the prior-year period. Including a $1.4 million non-cash charge for the change in fair value of warrant liability and $0.9 million of other non-cash charges, the Company had a net loss attributable to common shareholders of ($2.6) million, or $(0.02) per basic and diluted share, in the third quarter of fiscal 2014, as compared to a net loss attributable to common shareholders of ($0.8) million, or $(0.01) per basic and diluted share, including a $0.1 million non-cash gain on the change in fair value of warrant liability, in the prior-year period.
EBITDA, as adjusted, for the third quarter of fiscal 2014 improved to a gain of $0.2 million, compared to a loss of ($0.1) million in the comparable prior-year period.
For the nine months ended December 31, 2013, the Company had net sales of $35.7 million, a 16.4% increase from $30.6 million in the prior-year period. Loss from operations was ($0.8) million for the nine months ended December 31, 2013, an improvement of 55.2% from a loss of ($1.7) million for the comparable fiscal 2013 period. Including a $5.4 million non-cash charge for the change in fair value of warrant liability and $2.1 million of other non-cash charges, the Company had a net loss attributable to common shareholders of ($8.7) million, or $(0.08) per basic and diluted share, in the first nine months of fiscal 2014, compared to a net loss attributable to common shareholders of ($2.9) million or $(0.03) per basic and diluted share, including a $0.2 million non-cash gain on the change in fair value of warrant liability, in the comparable fiscal 2013 period.
EBITDA, as adjusted, for the first nine months of fiscal 2014 turned positive to a gain of $0.01 million, compared to a loss of ($0.7) million for the prior-year period.
