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Castle Brands Inc.
, a developer and international marketer of
premium and super-premium branded spirits and wine, today announced that the
Company sent the following annual letter to its shareholders from the Chairman
of the Board, Mark E. Andrews, III, and the Company's President and Chief
Executive Officer, Richard J. Lampen:
Dear Fellow Shareholder,
We are pleased to announce that our fiscal year ended March 31, 2012 was very
positive for Castle Brands. During the year, we continued to grow our most
profitable brands, contained our SG&A expenses and significantly improved our
financial flexibility.
For fiscal 2012, we reported total case sales (excluding ginger beer) of
333,529, a 9% increase in total case sales compared to the previous year.
Because this growth came primarily from our higher value and higher margin
brands such as Gosling's Rum, Jefferson's Bourbons and our Irish whiskeys,
revenue increased 11% to $35.5 million and gross margin increased over 12% to
$12.5 million.
While sales increased 11% for the year, our total SG&A expenses actually
decreased 1%. We have a strong sales force and management team, which should
allow us to continue to increase sales substantially without corresponding
increases to costs. This ability to scale our business led to significantly
stronger bottom line performance, with a 40% improvement in our EBITDA, as
adjusted. We believe these trends will allow us to become solidly profitable
and build substantial shareholder value.
Sales of Jefferson's Bourbons increased dramatically during the year. We also
introduced Jefferson's Rye. We believe Jefferson's growth is still in its
early stages, with significant untapped market opportunities. During the year,
we completely renegotiated our supply agreements for our Irish whiskey brands,
Knappogue Castle and Clontarf. Irish whiskey is a rapidly growing category
with relatively less competition than other spirits categories, because there
are currently only three distilleries in Ireland producing whiskey. We feel
that we now have the supply in place to meet our aggressive growth targets
over the years ahead for these profitable brands. We also launched an exciting
extension to our Gosling Rum brand, a ready-to-drink “Dark ‘n Stormy”
cocktail, which we believe will add to that brand's growth.
Another very positive development during the year was the establishment of a
$5 million working capital credit facility with a substantial asset-based
lender. The combination of significantly improved EBITDA, as adjusted, and the
new credit facility gives us greater liquidity, which we believe will allow us
to become profitable without further equity infusions. Subsequent to year-end
and in support of our growth, we were able to increase the facility to $7
million, giving us greater flexibility to take advantage of opportunities as
they arise.
As we look ahead, we remain focused on maintaining this momentum in our
business and on reaching our goals of becoming solidly profitable and building
shareholder value.
Thank you for your ongoing support.
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