Castle Brands reports a loss of $870,895 in the second quarter, up from $690,707 a year earlier. Sales eased 2% to $22.6 million from $23.1 million.
“The lower revenue in the first quarter was largely the result of the timing of shipments, particularly of Jefferson’s,” said Richard J. Lampen, President and Chief Executive Officer. “We expect that strong growth in the balance of fiscal 2020 of key brands, such as Jefferson’s and Goslings Stormy Ginger Beer, will result in overall growth in revenue, gross profit, income from operations and EBITDA, as adjusted.”
“The balance sheet recapitalization and expansion of our revolving credit facility with our lender in July was a major turning point for Castle Brands. It recognizes the value of our bourbon inventory, substantially lowers our overall interest expense, and provides significantly increased liquidity and financial flexibility,” he added.
“As an indication of Jefferson’s growing popularity, our next voyage of Wheated Jefferson’s Ocean Aged at Sea has been fully allocated while still at sea. We will use our aged bourbon reserves to support increased sales of Jefferson’s and its more expensive brand extensions, such as Jefferson’s Ocean Aged at Sea and wine finishes,” said John Glover, Executive Vice President and Chief Operating Officer, adding:
“We also continue to add innovative expressions to drive sales and enhance the Jefferson’s brand. Our goal for fiscal 2020 is to sell 100,000 cases of Jefferson’s, which is one of the top five selling premium small batch bourbons. Moreover, Jefferson’s is the only leading small batch brand to command an average price greater than $50 per bottle and the only leading small batch bourbon not owned by a major spirits company,”
“The growing popularity of ginger beer cocktails has been an important growth driver for Goslings Stormy Ginger Beer. It is now the best-selling premium ginger beer in America. The continued success of Goslings Stormy Ginger Beer gives us the opportunity to expand the line and add flavor extensions and other mixers, and to expand distribution and placements on retail shelves. Goslings Stormy Ginger Beer is now entering its third year in the mixer section of all of the approximately 4,500 Walmart stores in the United States and is a leader in that section,” Glover said.
Alfred J. Small, Senior VP/Chief Financial Officer, added:
“In addition to continued sales growth and containment of expenses, we expect that three other factors will contribute to improved financial performance in fiscal 2020. First, our new debt structure should result in approximately $1.5 million in interest savings. Second, we expect to begin using our bourbon new-fill, which has matured, and which should substantially reduce our COGS and increase Jefferson’s brand contribution. Third, we expect to benefit from reduced federal excise tax expense by over $1 million because of the recently enacted Craft Beverage Modernization and Tax Reform Act.”