Castle Brands Board (ROX)

[FUNMAN]

ROX's Fantastic 10K Review - $8,748,617 4th Q Net profit. 4th Q EPS 5¢. (See page 62 - 1st time ever that ROX included this section in the 10K).

Full Year EPS GAAP Black 3¢.

First thoughts on the record setting profitable Q and first ever profitable year. It's going to take a lot more digging to understand how this huge profit occurred. Please add your insights.

Net income (loss) per common share, diluted, attributable to common shareholders - 2019 year end - $0.03

https://www.sec.gov/Archives/edgar/data/1311538/000149315219009240/form10-k.htm




WOW - Net income (loss) attributable to common shareholders. As a result of the net effects of the foregoing, net income attributable to common shareholders was $5.7 million for the year ended March 31, 2019 as compared to a net loss of ($0.8) million for the prior fiscal year. Net income per common share, basic and diluted, was $0.03 per share for the year ended March 31, 2019 as compared to net loss per common share, basic and diluted, of ($0.01) per share for the year ended March 31, 2018.



O/S:

169,157,673 - 3-31-2019

169,022,496 - 12-31-2018

135,177 O/S increase



As of June 8, 2019, our executive officers, directors and principal shareholders beneficially owned approximately 42% of our common stock.


Regarding all of those people who think mysterious shares keep showing up for sale by the company and or insiders, "they have a lot of splainning to do.



"Inventory increased by $10+ million YoY

Inventories ... 2019 year end - 44,232,340

2018-12-31 ... 43,164,250

Inventory increased ... $1,068,090 ... QoQ on top of ROX pulling inventory for this Q.



Total Assets ... 2019 - $84,980,566 ... 2018 - $60,333,360 


Advertising expenses actually went down this year:

Advertising - Advertising and marketing costs are expensed when the advertising first appears in its respective medium. Advertising expense, which is included in selling expense, was $4,987,720, $5,013,523 and $4,486,796 for the years ended March 31, 2019, 2018 and 2017, respectively.



This has to be BBCo:
We have entered into another supply agreement with a bourbon distiller, which provides for the production of newly distilled bourbon whiskey through December 31, 2019, subject to automatic annual renewals. Under this agreement, the distiller provides us with an agreed upon amount of original proof gallons of newly distilled bourbon whiskey, subject to certain annual adjustments. We are not obligated to pay the distiller for any product not yet received.



Gross profit ... 39.2% for the year includes last Q's gross profit of 36.1% ... . that means the 4th Q's Gross profit rose to 41.7%.


Gross profit.
Gross profit increased 3.8% to $37.6 million for the year ended March 31, 2019 from $36.2 million for the prior fiscal year, while gross margin decreased to 39.2% for the year ended March 31, 2019 as compared to 40.3% for the prior fiscal year. The decrease in gross margin was primarily due to a temporary increase in aggregate costs of our bulk bourbon in the current period and to the impact of the release of high margin specialty releases of our Jefferson’s bourbon in the prior fiscal year. We expect gross margin will improve over the long-term as our lower-cost new-fill bourbon ages and becomes available for use across all of our Jefferson’s expressions. Gross profit was positively impacted by a rebate of $1.0 million on excise taxes recognized under the Craft Beverage Modernization and Tax Reform Act of 2017 in the fiscal year ended March 31, 2019, and we expect a similar benefit in our next fiscal year. The timing and amount of such future rebates remains subject to the review and approval of the U.S. Customs and Border Protection Agency. During the year ended March 31, 2019, we recorded additions to allowance for obsolete and slow-moving inventory of $0.5 million. We recorded this write-off and allowance on both raw materials and finished goods, primarily in connection with label and packaging changes made to certain brands, as well as certain cost estimates and variances. The net charge has been recorded as an increase to cost of sales  in the relevant period. EBITDA, as adjusted ... 2019 - 7,839,572 ... 2018 - 7,413,980 ... 2017 - $5,222,989



This means that the disaster that was the 3rd Q which pulled down EBITDA, this shows that  the 4th Q was outrageously great.



Selling expense.
Selling expense increased 2.7% to $22.4 million for the year ended March 31, 2019 from $21.8 million for the prior fiscal year, primarily due to a $0.8 million increase in employee costs and a $0.5 million increase in shipping costs, partially offset by a $0.6 million decrease in advertising, marketing and promotion expense related to the timing of certain sales and marketing programs, including Goslings’ sponsorship of the 35th America’s Cup, in the prior fiscal year. Selling expense as a percentage of net sales decreased to 23.3% for the year ended March 31, 2019 as compared to 24.2% for the prior fiscal year due to increased revenues in the current period. General and administrative expense. General and administrative expense increased 16.4% to $11.0 million for the year ended March 31, 2019 from $9.4 million for the prior fiscal year, primarily due to a one-time $1.0 million increase in professional fees in the quarter ended December 31, 2018 and a $0.7 million increase in employee costs. General and administrative expense as a percentage of net sales increased to 11.4% for the year ended March 31, 2019 as compared to 10.5% for the prior fiscal year.


I don't get this:
Income from operations. As a result of the foregoing, we had income from operations of $3.7 million for the year ended March 31, 2019 as compared to income from operations of $4.2 million for the prior fiscal year. As a result of our focus on our stronger growth markets and better performing brands, and expected growth from our existing brands, we anticipate improved results of operations in the near term as compared to prior years, although there is no assurance that we will attain such results.


This reflects the increased credit facility borrowing which is collateralized by the inventory.            


Interest expense, net.
We had interest expense, net of ($4.6) million for the year ended March 31, 2019 as compared to ($3.8) million for the prior fiscal year due to balances outstanding under our credit facilities and long-term debt. Due to the expected borrowings under our credit facilities to finance additional purchases of aged whiskies in support of the growth of our Jefferson’s bourbons and other working capital needs, we expect interest expense, net to increase in the near term as compared to prior years, although we continue to evaluate alternative financing options.


Net sales.
Net sales increased 16.3% to $89.9 million for the year ended March 31, 2018, as compared to $77.3 million for the prior fiscal year, primarily due to U.S. sales growth of our whiskey portfolio, Goslings Stormy Ginger Beer and certain liqueur brands, partially offset by decreases in vodka and rum sales. For the year ended March 31, 2018, sales of our Goslings Stormy Ginger Beer increased 32.7% to $26.5 million.

The launch of Arran whiskeys during the year ended March 31, 2018 contributed $1.2 million in sales.

We continue to focus on our faster growing brands and markets, both in the U.S. and internationally.

This includes the 1-time $1-million professional fee expense last Q. 


General and administrative expense.
General and administrative expense increased 9.1% to $9.4 million for the year ended March 31, 2018 from $8.6 million for the prior fiscal year, primarily due to a $0.3 million increase in professional fees and a $0.5 million increase in compensation costs. General and administrative expense as a percentage of net sales decreased to 10.5% for the year ended March 31, 2018 as compared to 11.2% for the prior fiscal year.


See how much more inventory is being set aside and how cash is being used:



During the year ended March 31, 2019, net cash used in operating activities was $8.5 million, consisting primarily of a $10.2 million increase in inventory, a $3.5 million increase in accounts receivable, a $2.0 million increase in prepaid expenses and other current assets and a net loss of $0.6 million. These uses of cash were partially offset by a $5.0 million increase in accounts payable and accrued expenses, stock-based compensation expense of $2.0 million and depreciation and amortization expense of $0.6 million. During the year ended March 31, 2018, net cash used in operating activities was $5.6 million, consisting primarily of a $5.8 million increase in inventory, a $2.1 million decrease in accounts payable and accrued expenses and a $1.7 million increase in accounts receivable. These uses of cash were partially offset by $0.5 million in net income, a $0.6 million increase in due to related parties, stock based compensation expense of $2.0 million, and depreciation and amortization expense of $0.8 million. During the year ended March 31, 2017, net cash used in operating activities was $1.7 million, consisting primarily of a $4.3 million increase in inventory, a $2.1 million increase in prepaid expenses and a $1.2 million increase in accounts receivable. These uses of cash were partially offset by $0.5 million in net income, a $2.2 million increase in accounts payable and accrued expenses, stock based compensation expense of $1.6 million, a $0.8 million increase in due to related parties and depreciation and amortization expense of $1.0 million.