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:
"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 | Nine Months Ended | ||||||
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 | Nine Months Ended | |||||
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 | Nine Months Ended | ||||
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 | Nine Months Ended | ||||
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.