Company to Host Conference Call at
5:00pm ET Today
PORTLAND, Ore., Nov. 14,
2022 /PRNewswire/ -- Eastside Distilling, Inc.
(NASDAQ: EAST) ("Eastside" or the
"Company"), a consumer-focused beverage company that builds craft
inspired experiential brands and high-quality artisan products
around premium spirits, digital can printing, co-packing and mobile
filling, reported third quarter 2022 financial results for the
period ended September 30, 2022.
Third Quarter 2022 Highlights:
- Digitally printed over 4 million cans since operations began
at the end of April through October
- Improved YTD gross sales over $1.8
million from prior year
- Adjusted EBITDA improved over the prior year
- Raised $4.5 million subsequent
to quarter-end with proceeds used to repay $3.3 million of short term debt
- Repaid nearly $7.0 million of
debt through October 2022
"We made substantial progress in digital printing and continued
to implement key restructuring initiatives in our spirits business.
I am proud of the team and see stronger results as we finish the
year," said Geoffrey Gwin,
Eastside's CEO.
Financial Results
Gross sales for the three months ending September 30, 2022 decreased to $3.1 million from $3.3
million for the three months ending September 30, 2021. Sales decreased due to
lower spirits sales from Azuñia volume related to a reduction in
discounting, a price increase in 2021 and two large one-time
inventory purchases in 2021; offset by increased Craft C+P sales
from its new digital can printer.
Gross profit for the three months ending September 30, 2022 decreased to $0.2 million from $0.9
million for the three months ending September 30, 2021. Gross margin was 6% for the
three months ending September 30, as
the Company continues to ramp up digital printing. Spirits
margins decreased primarily due lower to Azuñia Tequila sales
volume and product mix.
Operating costs for the three months ending September 30, 2022 decreased to $2.1 million from $2.4
million for the three months ending September 30, 2021.
Net loss for the three months ending September 30, 2022 increased to $(2.7) million from $(1.9)
million for the three months ending September 30, 2021. The Company reported
adjusted EBITDA of $(1.1) million for
the three months ending September 30,
2022 and $(0.6) million for
the three months ending September 30,
2021. (See description of adjusted EBIDTA in "Use of
Non-GAAP Measures" below.)
The Company continued to make progress adding customers and
increasing sales at its digital can printing business. Craft
C+P has grown its digital printing customer base by 106% vs the
prior quarter ended June 30, 2022 and
is now serving more than 70 customers as of September 30, 2022. Craft C+P has seen
sequential improvement of its digital can volumes each month of the
quarter. This trend continues into the fourth quarter.
Sales and gross margins are expected to continue to improve at
Craft C+P through the balance of the year.
During the third quarter, the Company delivered 7,459 cases of
spirits. Of that total, Portland Potato Vodka represented
5,200 cases. Azuñia volumes continue to cycle higher volumes from
last year—volumes that were not profitable and one-time sales of
Burnside. The following table details cases delivered during the
three and nine months ending September 30,
2022 and 2021:
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
9 Liter
Cases
|
2022
|
2021
|
Variance
|
|
2022
|
2021
|
Variance
|
|
Azuñia
|
1,347
|
3,316
|
(1,969)
|
|
5,136
|
9,463
|
(4,327)
|
|
Burnside
|
779
|
1,109
|
(330)
|
|
2,717
|
3,318
|
(601)
|
|
Hue-Hue
|
55
|
57
|
(2)
|
|
277
|
259
|
18
|
|
Portland Potato
Vodka
|
5,186
|
5,057
|
129
|
|
13,944
|
14,403
|
(459)
|
|
Eastside
Brands
|
91
|
96
|
(5)
|
|
330
|
142
|
188
|
|
Legacy
Brands
|
1
|
90
|
(89)
|
|
14
|
362
|
(348)
|
|
7,459
|
9,725
|
(2,266)
|
|
22,418
|
27,947
|
(5,529)
|
The Company ended the quarter with cash of $0.4 million. During the quarter, the
Company paid down $0.5 million of
debt. Subsequent to the third quarter of 2022, the Company
raised $4.5 million and repaid
$3.3 million.
The Company will give further updates on its earnings
conference call.
Use of Non-GAAP Measures
Eastside Distilling's management evaluates and makes operating
decisions using various financial metrics. In addition to the
Company's GAAP results, management also considers the non-GAAP
measure of adjusted EBITDA as a supplement to GAAP results.
Management believes this non-GAAP measure provides useful
information about the Company's operating results and assists
investors in comparing the Company's performance across reporting
periods on a consistent basis by excluding items that it does not
believe are indicative of its core operating performance.
The Company defines adjusted EBITDA as earnings before interest,
taxes, depreciation and amortization, stock-based compensation, and
other one-time items. The table below provides a reconciliation of
this non-GAAP financial measure with the most directly comparable
GAAP financial measure.
Third Quarter 2022 Conference Call Details
Date and Time: Monday, November
14, 2022 at 5:00pm ET
Call-in Information: Interested parties can access the
conference call by dialing (844) 889-4332 or (412) 717-9595.
Live Webcast Information: Interested parties can access
the conference call via a live Internet webcast, which is available
in the Conference Calls section of the Company's website at
https://www.eastsidedistilling.com/conference-calls.
Presentation Information: Slides relating to this
earnings release can be found on the Company's website in the
Events and Presentations section of the Investor page at
https://www.eastsidedistilling.com/events-and-presentations
Replay: A teleconference replay of the call will be
available for three days at (877) 344-7529 or (412) 317-0088,
replay access code #6979338. A webcast replay will be available in
the Conference Calls section of the Company's website at
https://www.eastsidedistilling.com/conference-calls for 90
days.
About Eastside Distilling
Eastside Distilling, Inc. (NASDAQ: EAST) has been producing
high-quality, award-winning craft spirits in Portland, Oregon, since 2008. The Company is
distinguished by its highly decorated product lineup that includes
Azuñia Tequilas®, Burnside Whiskeys®, Hue-Hue Coffee Rum®, and
Portland Potato Vodkas®. All Eastside spirits are crafted from natural
ingredients for quality and taste. Eastside's Craft Canning + Printing subsidiary
is one of the Northwest's leading independent mobile canning
businesses and recently began digital can printing and co-packing
through its recent asset acquisition.
Important Cautions Regarding Forward-Looking
Statements
Certain matters discussed in this press release may be
forward-looking statements that reflect our expectations or
anticipations rather than historical fact. Such matters involve
risks and uncertainties that may cause actual results to differ
materially, including the following: changes in economic
conditions, general competitive factors, the impact of COVID-19 and
related business disruption, the Company's ongoing financing
requirements and ability to achieve financing, acceptance of the
Company's products in the market, the Company's success in
obtaining new customers, the Company's ability to execute its
business model and strategic plans, and other risks and related
information described from time to time in the Company's filings
with the Securities and Exchange Commission ("SEC"). A detailed
discussion of the most significant risks can be found in the "Risk
Factors" section of the Company's Annual Report on Form 10-K. The
Company assumes no obligation to update the cautionary information
in this press release.
Financial Summary Tables
The following financial information should be read in
conjunction with the unaudited financial statements and
accompanying notes filed by the Company with the Securities and
Exchange Commission on Form 10-Q for the period ended September 30, 2022, which can be viewed at
www.sec.gov and in the investor relations section of the Company's
website at www.eastsidedistilling.com/investors.
|
Eastside Distilling,
Inc. and Subsidiaries
Consolidated Balance
Sheets
September 30, 2022
and December 31, 2021
Dollars in
thousands, except share and per share
|
|
|
September 30,
2022
|
December 31,
2021
|
|
Assets
|
(Unaudited)
|
|
|
Cash
|
$432
|
$3,276
|
|
Trade receivables,
net
|
913
|
1,446
|
|
Inventories
|
4,975
|
6,510
|
|
Prepaid expenses and
current assets
|
725
|
2,873
|
|
Total current
assets
|
7,045
|
14,105
|
|
Property and equipment,
net
|
6,168
|
2,163
|
|
Right-of-use
assets
|
3,016
|
3,211
|
|
Intangible assets,
net
|
13,314
|
13,624
|
|
Other assets,
net
|
383
|
457
|
|
Total
Assets
|
$29,926
|
$33,560
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Accounts
payable
|
$2,144
|
$1,265
|
|
Accrued
liabilities
|
1,732
|
833
|
|
Deferred
revenue
|
62
|
-
|
|
Current portion of
secured credit facilities, net of debt issuance costs
|
3,316
|
5,725
|
|
Note payable, related
party, net of debt issuance costs
|
2,455
|
-
|
|
Current portion of
notes payable
|
217
|
894
|
|
Current portion of
lease liabilities
|
1,023
|
781
|
|
Total current
liabilities
|
10,949
|
9,498
|
|
Lease liabilities, net
of current portion
|
2,181
|
2,498
|
|
Note payable, related
party
|
92
|
92
|
|
Notes payable, net of
current portion
|
7,749
|
8,073
|
|
Total
liabilities
|
20,971
|
20,161
|
|
Stockholders'
equity:
|
|
|
|
Common stock, $0.0001
par value; 35,000,000 shares authorized;
15,446,694 and
14,791,449 shares issued and outstanding as of
|
|
|
September 30, 2022 and
December 31, 2021, respectively
|
2
|
1
|
|
Preferred stock,
$0.0001 par value; 100,000,000 shares authorized;
2,500,000
shares issued and outstanding as
of
both
September 30, 2022 and December 31, 2021
|
-
|
-
|
|
Additional paid-in
capital
|
74,228
|
72,003
|
|
Accumulated
deficit
|
(65,275)
|
(58,605)
|
|
Total stockholders'
equity
|
8,955
|
13,399
|
|
Total Liabilities and
Stockholders' Equity
|
$29,926
|
$33,560
|
|
Eastside Distilling,
Inc. and Subsidiaries
Consolidated
Statements of Operations
For the Three and
Nine Months Ended September 30, 2022 and 2021
(Dollars and shares
in thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2022
|
2021
|
|
2022
|
2021
|
|
|
Sales
|
$3,064
|
$3,277
|
|
$11,967
|
$10,138
|
|
|
Less customer programs
and excise taxes
|
87
|
70
|
|
393
|
338
|
|
|
Net sales
|
2,977
|
3,207
|
|
11,574
|
9,800
|
|
|
Cost of
sales
|
2,787
|
2,347
|
|
8,985
|
7,488
|
|
|
Gross
profit
|
190
|
860
|
|
2,589
|
2,312
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Sales and marketing
expenses
|
702
|
533
|
|
2,078
|
2,087
|
|
|
General and
administrative expenses
|
1,438
|
1,471
|
|
5,116
|
5,000
|
|
|
Loss on disposal of
property and equipment
|
-
|
360
|
|
101
|
421
|
|
|
Total operating
expenses
|
2,140
|
2,364
|
|
7,295
|
7,508
|
|
|
Loss from
operations
|
(1,950)
|
(1,504)
|
|
(4,706)
|
(5,196)
|
|
|
Other income (expense),
net
|
|
|
|
|
|
|
|
Interest
expense
|
(808)
|
(414)
|
|
(1,976)
|
(885)
|
|
|
Other
income
|
25
|
25
|
|
125
|
2,242
|
|
|
Total other
income (expense), net
|
(783)
|
(389)
|
|
(1,851)
|
1,357
|
|
|
Loss before income
taxes
|
(2,733)
|
(1,893)
|
|
(6,557)
|
(3,839)
|
|
|
Provision for income
taxes
|
-
|
-
|
|
-
|
-
|
|
|
Net loss from
continuing operations
|
(2,733)
|
(1,893)
|
|
(6,557)
|
(3,839)
|
|
|
Net income (loss) from
discontinued operations
|
-
|
(17)
|
|
-
|
3,869
|
|
|
Net income
(loss)
|
(2,733)
|
(1,910)
|
|
(6,557)
|
30
|
|
|
Preferred stock
dividends
|
(38)
|
-
|
|
(113)
|
-
|
|
|
Deemed dividend-warrant
price protection-revaluation adjustment
|
-
|
(2,288)
|
|
-
|
(2,288)
|
|
|
Net loss attributable
to common shareholders
|
$(2,771)
|
$(4,198)
|
|
$(6,670)
|
$(2,258)
|
|
|
Basic net loss per
common share
|
$(0.18)
|
$(0.32)
|
|
$(0.44)
|
$(0.19)
|
|
|
Diluted net loss per
common share
|
$(0.18)
|
$(0.32)
|
|
$(0.44)
|
$(0.19)
|
|
|
Basic weighted average
common shares outstanding
|
15,447
|
13,055
|
|
15,210
|
12,145
|
|
|
Diluted weighted
average common shares outstanding
|
15,447
|
13,055
|
|
15,210
|
12,145
|
|
|
|
|
|
|
|
|
|
Eastside Distilling,
Inc. and Subsidiaries
For the Three and
Nine Months Ended June 30, 2022 and 2021
(Dollars in
thousands)
(Unaudited)
|
|
|
|
|
|
Segments:
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
|
Spirits
|
|
|
|
|
|
|
Sales
|
$ 1,188
|
$ 1,492
|
|
$7,586
|
$ 4,304
|
|
Net sales
|
1,101
|
1,422
|
|
7,293
|
3,966
|
|
Cost of
sales
|
787
|
907
|
|
4,176
|
2,989
|
|
Gross profit
|
314
|
515
|
|
3,117
|
977
|
|
Total operating
expenses
|
1,034
|
1,345
|
|
3,595
|
4,358
|
|
Net income
(loss)
|
(1,492)
|
(1,223)
|
|
(2,397)
|
1,484
|
|
|
|
|
|
|
|
Craft
C+P
|
|
|
|
|
|
|
Sales
|
$1,876
|
$ 1,785
|
|
$4,381
|
$ 5,834
|
|
Net sales
|
1,876
|
1,785
|
|
4,281
|
5,834
|
|
Cost of
sales
|
2,000
|
1,440
|
|
4,809
|
4,499
|
|
Gross profit
|
(124)
|
345
|
|
(528)
|
1,335
|
|
Total operating
expenses
|
1,106
|
1,019
|
|
3,700
|
3,150
|
|
Net loss
|
(1,241)
|
(687)
|
|
(4,160)
|
(1,454)
|
|
EBITDA
Reconciliation:
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
|
Net income
(loss)
|
$(2,733)
|
$(1,910)
|
|
$(6,557)
|
$30
|
|
Add:
|
|
|
|
|
|
|
Interest
expense
|
808
|
414
|
|
1,976
|
885
|
|
Depreciation and
amortization
|
418
|
297
|
|
1,104
|
903
|
|
EBITDA
|
(1,507)
|
(1,199)
|
|
(3,477)
|
1,818
|
|
Loss on disposal of
property and equipment
|
-
|
360
|
|
101
|
421
|
|
Gain on termination of
license agreement
|
-
|
-
|
|
-
|
(2,850)
|
|
Forgiveness of debt -
PPP
|
-
|
-
|
|
-
|
(1,448)
|
|
Remeasurement of
deferred consideration
|
-
|
-
|
|
-
|
(750)
|
|
Gain on disposal of
offsite inventory
|
-
|
-
|
|
-
|
(1,047)
|
|
Severance
payments
|
-
|
-
|
|
-
|
176
|
|
One-time professional
fees
|
-
|
60
|
|
-
|
403
|
|
Stock
compensation
|
304
|
168
|
|
824
|
577
|
|
Prior accounts written
off
|
104
|
-
|
|
104
|
-
|
|
Adjusted
EBITDA
|
$(1,099)
|
$ (611)
|
|
$(2,448)
|
$(2,700)
|
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SOURCE Eastside Distilling, Inc.