PORTLAND, Ore., Nov. 12, 2020 /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 and
ready-to-drink "RTD" craft cocktails, reported third quarter 2020
financial results for the period ended September 30, 2020.
Third Quarter 2020 Highlights vs. Same Year-Ago
Quarter
- Signed an LOI on the exit of Redneck Riviera Business
- Increased sales despite challenging business environment
- Continued sequential improvement in EBITDA
"The results for the third quarter reflect the continued path to
reduce negative cash flow while investing in growth," said
Paul Block, Eastside's CEO. "Despite the COVID pandemic,
the tide continues to rise for spirits consumption and Craft
Canning. As we continue to bring leadership, strategy and strong
tactical execution to Eastside, we
believe we can capture a disproportionate share of market and
continue to accelerate topline growth."
Financial Results
Revenues in the third quarter increased +7.0% to $4.8 million from $4.5
million in the year-ago quarter. This was primarily due to
increases in canning revenue driven by the continued shift of craft
breweries toward canning and away from kegs. Gross profit in the
third quarter declined –5.3% to $1.6
million compared to $1.7
million in the year-ago quarter due to changes in margin mix
in spirits and reinvestment in Craft Canning to meet the increased
demand.
Total operating expenses in the third quarter declined -37.5% to
$3.1 million from $5.0 million in the year-ago quarter.
This reduction is due to lower marketing spending, reduced
legal and professional fees, and lower rent and insurance expenses
partially offset by higher non-cash depreciation and amortization
expenses.
Net loss including discontinued operations in the third quarter
was ($1.8) million or ($0.17) per share compared to ($3.5) million or ($0.38) per share in the year-ago quarter.
EBITDA improved to ($0.7) million
compared to ($2.4) million in the
year-ago quarter and increased +$0.2 million sequentially from last
quarter.
The Company's cash used in operations was ($2.8) million in the first nine months of 2020
compared to ($7.9) million in the
comparable year-ago period, an improvement of $5.1 million. The Company's cash balance at
end of the third quarter was $1.0
million, an increase of +233.3% compared to $0.3 million in the year ago quarter.
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. The
table below provides a reconciliation of this non-GAAP financial
measure with the most directly comparable GAAP financial
measure.
Conference Call
The Company will hold a conference call today to discuss these
results.
Date and Time: Thursday, November
12, 2020 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.
Replay: A teleconference replay of the call will be
available for three days at (877) 344-7529 or (412) 317-0088,
confirmation #10149818. 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
Redneck Riviera Whiskey® with companion brands Granny Rich
Reserve® and Howdy Dew! ®, 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 + Bottling subsidiary
is one of the Northwest's leading independent spirit bottlers and
ready-to-drink canners.
Important Cautions Regarding Forward-Looking
Statements
Certain matters discussed in this press release may be
forward-looking statements. 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 any financing, acceptance of the Company's
products in the market; the Company's success in obtaining new
customers; the Company's success in product development; the
Company's ability to execute its business model and strategic
plans; the Company's success in integrating acquired entities and
assets, and all the risks and related information described from
time to time in the Company's filings with the Securities and
Exchange Commission ("SEC"), including the financial statements and
related information contained in the Company's Annual Report on
Form 10-K and interim Quarterly Reports on Form 10-Q. Examples of
forward-looking statements in this release may include statements
related to our strategic focus, product verticals, anticipated
revenue and profitability, our ability to reduce operating or other
expenses, the anticipated demand from the craft beer industry, the
effects of COVID-19, including the impact on sales, and the success
of initiatives implemented to address the business disruption
resulting from COVID-19 and earnings guidance for the third quarter
of 2020. The Company assumes no obligation to update the cautionary
information in this 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, 2020, and which can be viewed at
www.sec.gov and in the investor relations section of the Company's
website at www.eastsidedistilling.com.
Eastside
Distilling, Inc. and Subsidiaries
|
Consolidated
Balance Sheets
|
September 30, 2020
and December 31, 2019
|
|
|
|
|
|
September 30,
2020
|
|
December 31,
2019
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash
|
$
959,126
|
|
$
342,678
|
Trade
receivables
|
1,312,578
|
|
1,324,333
|
Inventories
|
10,325,191
|
|
12,331,133
|
Prepaid expenses and
current assets
|
604,358
|
|
397,083
|
Current assets from
discontinued operations
|
-
|
|
74,892
|
Total current
assets
|
13,201,253
|
|
14,470,119
|
Property and
equipment, net
|
3,366,831
|
|
4,687,469
|
Right of use
asset
|
1,361,188
|
|
577,856
|
Intangible assets,
net
|
14,141,556
|
|
14,674,790
|
Goodwill
|
28,182
|
|
28,182
|
Other
assets
|
787,008
|
|
1,165,581
|
Non-current assets
from discontinued operations
|
106,665
|
|
261,866
|
Total
Assets
|
$
32,992,683
|
|
$
35,865,863
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
1,981,171
|
|
$
2,881,185
|
Accrued
liabilities
|
820,028
|
|
888,296
|
Deferred
revenue
|
315,775
|
|
-
|
Secured trade credit
facility, net of debt issuance costs
|
6,381,475
|
|
-
|
Deferred Consideration
for Azuñia acquisition (current)
|
15,451,500
|
|
-
|
Other current
liabilities
|
250,000
|
|
-
|
Current portion of
notes payable
|
4,010,887
|
|
1,819,172
|
Current portion of
lease liability
|
540,852
|
|
423,671
|
Current liabilities of
discontinued operations
|
17,255
|
|
125,278
|
Total current
liabilities
|
29,768,943
|
|
6,137,602
|
Lease Liability -
less current portion
|
883,905
|
|
274,863
|
Secured trade credit
facility, net of debt issuance costs
|
-
|
|
2,961,566
|
Deferred
Consideration for Azuñia acquisition (long term)
|
-
|
|
15,451,500
|
Notes payable - less
current portion and debt discount
|
1,347,219
|
|
3,594,254
|
Non-current
liabilities od discontinued operations
|
78,658
|
|
112,760
|
Total
liabilities
|
32,078,725
|
|
28,532,545
|
|
|
|
|
Commitments and
contingencies (Note 12)
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
Common stock, $0.0001
par value; 15,000,000 shares authorized;
|
|
|
|
10,149,252 and
9,675,028 shares issued and outstanding at
|
|
|
|
September 30, 2020 and
December 31, 2019, respectively
|
1,014
|
|
967
|
Additional paid-in
capital
|
52,609,016
|
|
51,566,438
|
Accumulated
deficit
|
(51,696,072)
|
|
(44,234,087)
|
Total Stockholders'
Equity
|
913,958
|
|
7,333,318
|
Total Liabilities
and Stockholders' Equity
|
$
32,992,683
|
|
$
35,865,863
|
Eastside
Distilling, Inc. and Subsidiaries
|
Consolidated
Statements of Operations
|
For the Three and
Nine Months Ended September 30, 2020 and 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30, 2020
|
|
September
30, 2019
|
|
September
30, 2020
|
|
September
30, 2019
|
Sales
|
|
$
4,825,323
|
|
$
4,509,522
|
|
$
12,861,894
|
|
$
11,973,314
|
Less excise taxes,
customer programs
and incentives
|
|
327,105
|
|
223,014
|
|
966,644
|
|
591,828
|
Net sales
|
|
4,498,218
|
|
4,286,508
|
|
11,895,250
|
|
11,381,486
|
Cost of
sales
|
|
2,899,005
|
|
2,597,023
|
|
7,855,679
|
|
7,189,264
|
Gross
profit
|
|
1,599,213
|
|
1,689,485
|
|
4,039,571
|
|
4,192,222
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Advertising,
promotional and selling
expenses
|
|
890,151
|
|
1,819,412
|
|
3,733,926
|
|
4,372,641
|
General and
administrative expenses
|
|
2,366,307
|
|
3,224,038
|
|
6,851,577
|
|
8,595,051
|
Gain on disposal of
property and
equipment
|
|
(111,410)
|
|
(14,104)
|
|
(130,546)
|
|
(14,104)
|
Total operating
expenses
|
|
3,145,048
|
|
5,029,346
|
|
10,454,957
|
|
12,953,588
|
Loss from
operations
|
|
(1,545,835)
|
|
(3,339,861)
|
|
(6,415,386)
|
|
(8,761,366)
|
Other income
(expense), net
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(247,354)
|
|
(113,287)
|
|
(874,729)
|
|
(338,599)
|
Other
income
|
|
36,745
|
|
58
|
|
36,745
|
|
852
|
Total
other expense, net
|
|
(210,609)
|
|
(113,229)
|
|
(837,984)
|
|
(337,747)
|
Loss before income
taxes
|
|
(1,756,444)
|
|
(3,453,090)
|
|
(7,253,370)
|
|
(9,099,113)
|
Provision for income
taxes
|
|
-
|
|
-
|
|
-
|
|
|
Loss from
continuing operations
|
|
(1,756,444)
|
|
(3,453,090)
|
|
(7,253,370)
|
|
(9,099,113)
|
|
|
|
|
|
|
|
|
|
Loss from
Discontinued operations
|
|
(10,577)
|
|
(91,209)
|
|
(208,615)
|
|
(337,112)
|
|
|
|
|
|
|
|
|
|
Net loss
attributable to Eastside
Distilling, Inc. common shareholders
|
|
$
(1,767,021)
|
|
$
(3,544,299)
|
|
$
(7,461,985)
|
|
$
(9,436,225)
|
|
|
|
|
|
|
|
|
|
Basic and diluted
net loss per
common share
|
|
$
(0.17)
|
|
$
(0.38)
|
|
$
(0.75)
|
|
$
(1.03)
|
|
|
|
|
|
|
|
|
|
Basic and diluted
weighted average
common shares outstanding
|
|
10,103,936
|
|
9,255,347
|
|
9,947,208
|
|
9,155,397
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
September
30
|
|
September
30
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
$
(1,767,021)
|
|
$
(3,544,299)
|
|
$
(7,461,985)
|
|
$
(9,436,225)
|
|
Add:
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
247,354
|
|
113,287
|
|
874,729
|
|
338,599
|
|
|
Loss (gain) on
disposal of property
and equipment
|
(111,410)
|
|
(14,104)
|
|
(130,546)
|
|
(14,104)
|
|
|
Loss from
discontinued operations
|
10,577
|
|
91,209
|
|
208,615
|
|
337,112
|
|
|
Stock-based
compensation
|
312,732
|
|
544,878
|
|
1,114,651
|
|
1,311,993
|
|
|
Depreciation and
amortization
|
588,680
|
|
433,492
|
|
1,858,146
|
|
1,092,486
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
(719,088)
|
|
$
(2,375,537)
|
|
$
(3,536,390)
|
|
$
(6,370,139)
|
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content:http://www.prnewswire.com/news-releases/eastside-distilling-reports-third-quarter-2020-financial-results-301172364.html
SOURCE Eastside Distilling, Inc.