New York, Aug 14, 2008 - Castle Brands Inc., an emerging international importer and marketer of premium spirits, today reported financial results for its fiscal 2009 first quarter ended June 30, 2008.
Fiscal 2009 First Quarter Highlights
-- Operating loss reduced by $0.7 million
-- Average revenue per case increased 15.4%;
-- Total U.S. case sales up 9%;
-- Total revenue increased 5% to $5.9 million
-- Case volume sales of 67,309
As a result of focused efforts on the Company's more profitable brands and markets, as well as continued cost control measures, the loss from operations improved 16% or $0.7 million to ($3.8) million for the three-months ended June 30, 2008 from ($4.5) million in the comparable prior year period.
U.S. case sales increased 9% to 48,937 nine liter cases in the first quarter of fiscal 2009, primarily reflecting strong sales of Gosling's Rum and Pallini Limoncello. U.S. case sales accounted for 73% of total case sales, up from 60% in fiscal first quarter 2008. International case sales declined 38% in the quarter to 18,732 cases as a result of a transition to a new distributor in the Republic of Ireland. Reflecting the decrease in international case sales, global case sales in the first quarter were down 9% to 67,309 nine liter cases.
Donald L. Marsh, Castle Brands' President and Chief Operating Officer, commented, "Our first quarter results are in line with our plan to focus our sales and marketing efforts on our most profitable brands. We continue to aggressively cut and control costs and expect to continue to promote efficiency in the company as we concentrate on our goal of achieving profitability. The narrowing of the Company's net loss in the quarter indicates we are making progress towards the goal of becoming profitable." Mr. Marsh added, "Our brands continue to perform well in the U.S. market and last year's restructuring of our international operations should begin to have a positive impact on volume in the coming quarters. We are confident that changes we have implemented will continue to have a positive effect on the financial performance of the Company."
Review of the Quarter
For the first quarter, Castle Brands reported net sales of $5.9 million, representing a 5% increase over the prior year quarter. Gross profit for the first quarter declined 9% to $1.9 million from $2.1 million in the prior year quarter. The gross margin in the quarter was 32.9%, down from 37.7% in the same period of the prior year, primarily reflecting higher cost of sales due to increased raw material costs and the effects of a weakening U.S. dollar against the euro.
Selling expense for the quarter decreased 19% to $3.4 million from $4.2 million in the prior year quarter, primarily due to restructuring efforts implemented during the past nine months and a decrease in advertising, marketing and promotional expenses. Selling expenses as a percentage of revenue were 58% in the first quarter, down from 75% in the comparable period in the prior year.
General and administrative (G&A) expenses were flat in the first quarter at $2.1 million. As a percentage of revenue G&A expenses decreased to 35% in the quarter, compared to 37% for the comparable period in the prior year.
Balance Sheet
Cash and equivalents, together with short-term investments, totaled $2.8 million at June 30, 2008.
More about Castle Brands Inc.
Castle Brands is an emerging developer and international marketer of premium branded spirits within five growing categories of the spirits industry: vodka, rum, tequila, whiskey and liqueurs/cordials. Castle Brands' portfolio includes, Gosling's Rum(R), Pallini(R) Limoncello(TM), Raspicello(TM) and Peachcello(TM), Tierras Tequila, Knappogue Castle Whiskey(R), Clontarf(R) Irish Whiskey, Jefferson's(TM) and Jefferson's Reserve(R) Bourbon, Sam Houston(R) Bourbon, Boru(R) Vodka, Celtic Crossing(R) Liqueur, Sea Wynde(R) Rum and Brady's(R) Irish Cream.