US: Castle Brands sinks deeper into red despite Q1 sales lift

By | 15 August 2013

  • Q1 net losses widen 47% to US$1.5m
  • Net sales grow 7% to $10.4m
  • Operating profits narrow 39% to $455,648
  • Adjusted EBITDA improves 55% to $200,000 loss
Castle Brands continues to post losses

Castle Brands continues to post losses

Castle Brands has widened its Q1 losses despite an upturn in sales and a narrower operating loss.

Net losses rose by 47% to US$1.5m in the three months to the end of June, the New York-based company said yesterday (14 August). Net sales climbed by 7% to $10.4m over the same period while operating losses narrowed by 39% to $455,648.

Most of the losses were caused by a heavier net change in fair value of warrant liability, which widened from a $91,328 loss in Q1 last year to a $447,251 loss in the past quarter.

Castle Brand's president and CEO, Richard Lampen, remained optimistic, saying: “Our core brands continue to show very strong growth... growth of our core brands, coupled with our ability to trim G&A (general & administrative expenses), resulted in further improvement in our EBITDA, as adjusted. We expect this trend to continue in the current fiscal year.”

The numbers mirrored Castle's full-year results last month, when a withdrawal from support for its wine brands saw losses worsen despite a rise in overall sales.

In yesterday's results, sales of Gosling's rum rose 20% to around 28,000 cases sold in the US in the quarter, while “strong growth” of the Jefferson's Bourbons and rye led to a 26% jump in whiskey sales, the company said.

Gosling's Stormy Ginger Beer case sales increased 50% to around 104,000 because of the “growing popularity” of Castle Brands' trademarked cocktail, the Dark 'n Stormy, the company said.

Castle Brands said it has launched a strategic review committee to help improve the company's growth. The committee will be lead by Sergio Zyman, the former Coca-Cola Co CMO, who joined Castle Brands' board of directors this year.

Castle Brand's share price closed down 0.3% in trading on the New York Stock Exchange yesterday.

To read the company's official statement, click here.

Expert analysis

Castle Brands Inc. (ROX) - Financial and Strategic SWOT Analysis Review

Castle Brands Inc. (Castle) is a company that operates in alcohol industry. It undertakes the development and global marketing of premium branded spirits in rum, whiskey, liqueurs, vodka, tequila and wine categories. The company’s premium spirit brands include Betts & Scholl, Tequila Tierras, Brady´s Irish Cream, Gozio Amaretto, Travis Hasse's Original Pie Liqueurs, Celtic Crossing Liqueur, Clontarf Irish Whiskey, Knappogue Castle Whiskey, Boru Vodka, Gosling's Rum, Jefferson's and Pallini Liqueurs. Castle distributes its products in US states and the District of Columbia; in international markets such as Ireland, Great Britain, Northern Ireland, Germany, Canada, France, Italy, Sweden and the Duty Free markets; and in a number of other countries in continental Europe. It is headquartered in New York, the US.

Sectors: Company results, Spirits, Wine

Companies: Castle, Coca-Cola Co

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