Company to Host Conference Call at
5:00pm ET Today
PORTLAND, Ore., May 16, 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 and ready-to-drink "RTD" craft cocktails, reported
first quarter 2022 financial results for the period ended
March 31, 2022.
First Quarter 2022 Highlights:
- Raised $2.0 million in
incremental working capital financing during the quarter and
$1.2 million subsequent to
quarter-end; the proceeds will primarily be used to fund the 3-year
strategic growth initiatives
- Improved spirits gross profit over $0.8
million for the quarter, partially offset by weak first
quarter sales of Azuñia
- Continued reduction in operating costs of $0.3 million from prior year first quarter
- Paid down $0.9 million under the
Live Oak Debt Facility
"We made tangible progress on multiple fronts in Q1 with key
investments in both Craft C+B and our spirits business," said
Geoffrey Gwin, Eastside's CEO. "We expect to build on these
results as we progress through the year."
Financial Results
Gross sales for the three months ending March 31, 2022 increased to $3.8 million from $3.2
million for the three months ending March 31, 2021 with record realized prices from
bulk wholesale activities, offset by Craft C+B sales. Sales
of spirits during the quarter benefitted from the bulk sale of 798
barrels of 95% rye whiskey ranging in age from three-year-old to
eight-year-old for gross proceeds of $1.5
million. This was partially offset by lower Azuñia volume
resulting from cycling deep discounting to chains in the prior
year. Portland Potato Vodka was soft as velocity per store
declined, however, the impact to revenue almost entirely offset by
a Q4 2021 price increase. A number of trends affected sales
at Craft C+B including the relocation of the business, insourcing
by customers and increased competition.
Gross profit for the three months ending March 31, 2022 increased to $0.9 million from $0.5
million for the three months ending March 31, 2021. Gross margin increased to 25% for
the three months ending March 31,
2022 from 17% for the three months ending March 31, 2021 primarily due to an improvement in
Spirits margins, offset by lower margins for Craft C+B.
Spirits margins increased due to high realized prices of wholesale
whiskey and carryforward from Q4 2021 price increases. Craft C+B
margins were lower due to reduced sales and higher expenses as the
Company transitioned to its new printing operation and higher
supply chain costs.
The Company continued to make improvements in lowering operating
expenses, which declined for the three months ending March 31, 2022 to $2.6
million from $2.8 million for
the three months ending March 31,
2021. This reduction was due to lower compensation and
marketing spend.
Net loss for the three months ending March 31, 2022 was $(2.0)
million and for the three months ending March 31, 2021 net income including discontinued
operations was $3.7 million.
The Company accounted for the Redneck Riviera License Termination
and closing of its retail tasting room as part of discontinued
operations in its 2021 Form 10-Q filing. The Company reported
adjusted EBITDA of $(1.0) million for
the three months ending March 31,
2022 and $(1.4) million for
the three months ending March 31,
2021. (See description of adjusted EBIDTA in "Use of
Non-GAAP Measures" below.)
During the first quarter, the Company delivered 7,527 cases of
spirits. Of that total, Portland Potato Vodka represented
over 4,300 cases as the brand did not grow distribution outside of
Oregon. The Company shipped 2,059 and 1,005 cases of Azuñia
and Burnside, respectively. The following table details cases
delivered during the three months ending March 31, 2022 and 2021:
9L
Cases
|
2022
|
2021
|
Change
|
%
|
Azuñia
|
2,059
|
2,921
|
(862)
|
-30%
|
Burnside
|
1,005
|
1,026
|
(22)
|
-2%
|
Hue-Hue
|
84
|
121
|
(37)
|
-31%
|
PPV
|
4,301
|
4,669
|
(368)
|
-8%
|
Eastside
Brands
|
68
|
-
|
68
|
N/A
|
Legacy
Brands
|
11
|
175
|
(164)
|
-94%
|
|
7,527
|
8,913
|
(1,385)
|
-16%
|
The Company ended the quarter with $3.0
million in borrowings under its Live Oak and FIB credit
facilities and reported cash of $2.6
million. During the quarter, the Company paid down
$0.9 million of debt on both
facilities. During the first quarter of 2022, the Company
entered into a loan of $2.0 million
plus an additional, conditional $1.0
million to expand the availability of capital for continued
growth investments in working capital and to further its three-year
strategic plan.
Subsequent to quarter-end, the Company drew the remaining
$1.0 million available on the
aforementioned loan to fund working capital.
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.
First Quarter 2022 Conference Call Details
Date and Time: Monday, May 16,
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.
Replay: A teleconference replay of the call will be
available for three days at (877) 344-7529 or (412) 317-0088,
confirmation #1678739. 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 Vodka®. 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 digital can printer
and ready-to-drink canners.
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 audited financial statements and accompanying
notes filed by the Company with the Securities and Exchange
Commission on Form 10-Q for the period ended March 31, 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
|
March 31, 2022 and
December 31, 2021
|
Dollars in
thousands, except share and per share
|
|
|
March 31,
2022
|
December 31,
2021
|
Assets
|
(Unaudited)
|
|
Current
assets:
|
|
|
Cash
|
$2,606
|
$3,276
|
Trade receivables, net
|
1,255
|
1,446
|
Inventories
|
6,085
|
6,510
|
Prepaid expenses and current assets
|
5,070
|
2,873
|
Total current assets
|
15,016
|
14,105
|
Property and equipment,
net
|
2,151
|
2,163
|
Right-of-use
assets
|
3,302
|
3,211
|
Intangible assets,
net
|
13,521
|
13,624
|
Other assets,
net
|
424
|
457
|
Total Assets
|
$34,414
|
$33,560
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
Current
liabilities:
|
|
|
Accounts payable
|
$2,367
|
$1,265
|
Accrued liabilities
|
1,037
|
833
|
Current portion of secured credit facilities, net of debt
issuance costs
|
4,992
|
5,725
|
Note payable, related party, net of debt issuance
costs
|
1,075
|
-
|
Current portion of notes payable
|
744
|
894
|
Current portion of lease liabilities
|
964
|
781
|
Total current
liabilities
|
11,179
|
9,498
|
Lease liabilities, net
of current portion
|
2,524
|
2,498
|
Note payable, related
party
|
92
|
92
|
Notes payable, net of
current portion
|
8,018
|
8,073
|
Total liabilities
|
21,813
|
20,161
|
Eastside Distilling,
Inc. and Subsidiaries
|
Consolidated Balance
Sheets (continued)
|
March 31, 2022 and
December 31, 2021
|
Dollars in
thousands, except share and per share
|
|
|
March 31,
2022
|
December 31,
2021
|
Stockholders'
equity:
|
(Unaudited)
|
|
Common stock, $0.0001
par value; 35,000,000 shares authorized;
|
|
|
15,085,824 and 14,791,449
shares issued and outstanding as of
|
|
|
March 31, 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 March 31, 2022 and
December 31, 2021
|
-
|
-
|
Additional paid-in
capital
|
73,278
|
72,003
|
Accumulated
deficit
|
(60,679)
|
(58,605)
|
Total stockholders'
equity
|
12,601
|
13,399
|
Total Liabilities and
Stockholders' Equity
|
$34,414
|
$33,560
|
Consolidated
Statements of Operations
|
For the Three Months
Ended March 31, 2022 and 2021
|
Dollars and shares
in thousands, except per share
|
(Unaudited)
|
|
|
2022
|
2021
|
Sales
|
$3,780
|
$3,243
|
Less customer programs
and excise taxes
|
40
|
95
|
Net
sales
|
3,740
|
3,148
|
Cost of
sales
|
2,793
|
2,605
|
Gross profit
|
947
|
543
|
Operating
expenses:
|
|
|
Sales and marketing expenses
|
647
|
857
|
General and administrative expenses
|
1,930
|
1,924
|
Loss on disposal of property and
equipment
|
-
|
61
|
Total operating
expenses
|
2,577
|
2,842
|
Loss from
operations
|
(1,630)
|
(2,299)
|
Other income (expense),
net
|
|
|
Interest expense
|
(406)
|
(126)
|
Other income
|
-
|
2,200
|
Total other income (expense), net
|
(406)
|
2,074
|
Loss before income
taxes
|
(2,036)
|
(225)
|
Provision for income
taxes
|
-
|
-
|
Net loss from
continuing operations
|
(2,036)
|
(225)
|
Net income from
discontinued operations
|
-
|
3,933
|
Net loss
|
(2,036)
|
3,708
|
Preferred stock
dividends
|
(38)
|
-
|
Net income (loss)
attributable to common
shareholders
|
$(2,074)
|
$3,708
|
|
Eastside Distilling,
Inc. and Subsidiaries
|
|
For the Three Months
Ended March 31, 2022 and 2021
|
|
Dollars and shares
in thousands, except per share
|
|
(Unaudited)
|
EPS:
|
|
|
|
2022
|
2021
|
|
|
Basic net income (loss)
per common share
|
$(0.14)
|
$0.33
|
|
|
Diluted net income
(loss) per common share
|
$(0.14)
|
$0.31
|
|
|
Basic weighted average
common shares outstanding
|
14,901
|
11,089
|
|
|
Diluted weighted
average common shares
outstanding
|
14,901
|
11,981
|
|
Segments:
|
|
|
|
2022
|
2021
|
|
2022
|
2021
|
|
|
|
Spirits
|
|
Craft
C+B
|
|
|
Sales
|
$2,704
|
$1,334
|
|
$1,076
|
$ 1,909
|
|
|
Net sales
|
2,664
|
1,239
|
|
1,076
|
1,909
|
|
|
Cost of
sales
|
1,682
|
1,054
|
|
1,111
|
1,551
|
|
|
Gross profit
|
982
|
185
|
|
(35)
|
358
|
|
|
Total operating
expenses
|
1,269
|
1,695
|
|
1,308
|
1,147
|
|
|
Net income
(loss)
|
(682)
|
4,113
|
|
(1,354)
|
(405)
|
|
|
EBITDA
|
$(245)
|
$ 4,303
|
|
$(1,122)
|
$ (169)
|
|
|
|
|
|
|
|
|
|
EBITDA
Reconciliation:
|
|
|
|
|
|
|
|
|
2022
|
2021
|
|
|
|
|
|
|
Net
income (loss)
|
$(2,036)
|
$3,708
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
|
Interest expense
|
406
|
126
|
|
|
|
|
|
|
Depreciation and amortization
|
263
|
300
|
|
|
|
|
|
|
EBITDA
|
(1,367)
|
4,134
|
|
|
|
|
|
|
Loss on disposal of property and equipment
|
-
|
61
|
|
|
|
|
|
|
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
|
-
|
5
|
|
|
|
|
|
|
One-time professional fees
|
-
|
277
|
|
|
|
|
|
|
Stock compensation
|
375
|
235
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$ (992)
|
$ (1,383)
|
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SOURCE Eastside Distilling, Inc.