Castle Brands Inc (ROX) filed Quarterly Report for the period ended 2009-09-30.
CASTLE BRANDS INC., 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 Boru Vodka, Gosling's Rum, Sea Wynde Rum, Tierras Tequila, Knappogue Castle Whiskey, Clontarf Irish Whiskey, Jefferson's and Jefferson's Reserve Bourbon, Sam Houston Bourbon, Celtic Crossing Liqueur, Pallini Limoncello, Raspicello and Peachcello and Brady's Irish Cream. Castle Brands Inc has a market cap of $33.27 million; its shares were traded at around $0.33 with and P/S ratio of 1.27.
Highlight of Business Operations:
Net sales. Net sales increased 17.2% to $8.7 million for the three months ended September 30, 2009 when compared to $7.4 million for the three months ended September 30, 2008. Our U.S. case sales as a percentage of total case sales increased to 78.0% during the three months ended September 30, 2009 as compared to 67.6% during the comparable prior year period. U.S. net sales increased to $7.7 million for the three months ended September 30, 2009 from $5.7 million for the comparable prior year period, including $0.2 million in revenue from sales of our Tierras Tequila (launched in February 2009) and $0.4 million in revenue from sales of our Jefferson’s Presidential Select bourbon (launched in August 2009). The growth in U.S. sales reflects the momentum across most of our portfolio.
Gross profit. Gross profit increased 26.1% to $3.0 million during the three months ended September 30, 2009 from $2.3 million during the comparable prior year period, while our gross margin increased to 34.0% during the three months ended September 30, 2009 compared to 31.6% for the comparable prior year period. During the three months ended September 30, 2009 and 2008, we recorded reversals of our allowance for obsolete and slow moving inventory of $0.1 million and $0.03 million, respectively. We recorded these reversals as we were able to sell certain goods included in the allowance recorded during previous fiscal years. We recorded the reversals as a decrease in cost of sales. Absent the reversal of the allowance, our gross profit was $2.9 million and $2.3 million during the three months ended September 30, 2009 and 2008, respectively, and our gross margin was 33.3% and 31.3% during the three months ended September 30, 2009 and 2008, respectively.
Selling expense. Selling expense decreased 37.6% to $2.4 million for the three months ended September 30, 2009 from $3.9 million for the comparable prior year period. This decrease in selling expense was attributable to our continued cost containment efforts, including a decrease in advertising, marketing and promotion expense of $0.8 million for the three months ended September 30, 2009 compared to the comparable prior year period. We also reduced sales and marketing staff in both our domestic and international operations, resulting in a decrease of employee expense, including salaries, related benefits and travel and entertainment, of $0.8 million for the three months ended September 30, 2009 against the comparable prior year period. As a result of our continued cost containment efforts, selling expense as a percentage of net sales decreased to 27.8% for the three months ended September 30, 2009 as compared to 52.1% for the comparable prior year period.
General and administrative expense. General and administrative expense decreased 35.9% to $1.4 million for the three months ended September 30, 2009 when compared to $2.1 million for the comparable prior year period. General and administrative staff reductions resulted in a decrease of employee expense, including salaries, related benefits and travel and entertainment, of $0.5 million in the current period against the comparable prior year period. A decrease of $0.1 million in occupancy and related costs was due to our ongoing cost containment efforts. As a result, general and administrative expense as a percentage of net sales decreased to 15.8% for the three months ended September 30, 2009 as compared to 28.9% for comparable prior year period.
Net loss attributable to common stockholders. As a result of the net effects of the foregoing, net loss attributable to common stockholders for the three months ended September 30, 2009 improved 92.3% to ($0.5) million from ($6.1) million for the three months ended September 30, 2008. Net loss per common share, basic and diluted, was ($0.00) per share for the three-month period ended September 30, 2009 as compared to ($0.39) per share for the comparable prior-year period. Net loss per common share basic and diluted was positively affected by the increase in common shares outstanding resulting from the common stock issued in connection with the October 2008 series A preferred stock transaction and the issuance of common stock in connection with the September 2009 Betts & Scholl acquisition.
Net sales. Net sales increased 9.3% to $14.6 million for the six months ended September 30, 2009 as compared to $13.3 million for the six months ended September 30, 2008. Our U.S. case sales as a percentage of total case sales increased to 77.9% during the six months ended September 30, 2009 as compared to 69.8% during the comparable prior year period. U.S. net sales increased to $12.7 million for the six months ended September 30, 2009 from $10.4 million for the comparable prior year period, including $0.4 million in revenue from sales of Tierras Tequila and $0.4 million in revenue from sales of Jefferson’s Presidential Select bourbon. The growth in U.S. sales reflects the momentum of most of our portfolio in the U.S., particularly for Gosling’s rums.
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