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