Company to Host Conference Call at
5:00pm ET Today
PORTLAND, Ore., Aug. 11,
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 second quarter 2022 financial results for the
period ended June 30, 2022.
Second Quarter 2022 Highlights:
- Digitally printed over 1.5 million cans since operations
began at the end of April
- Improved EBITDA by $0.3
million from prior year second quarter
- Raised $1.0 million in
during the quarter with proceeds used to purchase cans for the
digital can printer
- Improved spirits gross profit over $1.5 million for the quarter from bulk wholesale
activities
- Fully repaid Live Oak Debt Facility of $1.9 million
"We built on the progress made in Q1 and expect to continue to
improve results through the balance of the year," said Geoffrey Gwin, Eastside's CEO.
Financial Results
Gross sales for the three months ending June 30, 2022 increased to $5.1 million from $3.6
million for the three months ending June 30, 2021 with record realized prices from
bulk spirits sales, offset by Craft C+P sales. Sales of
spirits during the quarter benefitted from the bulk sale of 651
barrels of TN whiskey and bourbon for gross proceeds of
$2.6 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+P
including the relocation of the business, insourcing by customers,
increased competition and the beginning of the Company's new
digital can printing business.
Gross profit for the three months ending June 30, 2022 increased to $1.5 million from $0.9
million for the three months ending June 30, 2021. Gross margin increased to 30% for
the three months ending June 30, 2022
from 26% for the three months ending June
30, 2021 primarily due to an improvement in Spirits margins,
offset by lower margins for Craft C+P. Spirits margins
increased due to high realized prices of bulk whiskey and bourbon
and carryforward from Q4 2021 price increases. Craft C+P margins
were lower due to reduced sales and higher expenses as the Company
transitioned to its new digital can printing business and higher
supply chain costs.
Operating costs for the three months ending June 30, 2022 increased to $2.6 million from $2.3
million for the three months ending June 30, 2021 due to entering into a lease
management agreement and realizing a loss on its vehicles.
Sales and marketing expenses were flat, and general and
administrative expenses slightly increased from the prior year
quarter due to higher rent from the Company's newly leased
warehouses, offset by reduced headcount.
Net loss for the three months ending June
30, 2022 was $(1.8) million
and for the three months ending June 30,
2021, net loss including discontinued operations was
$(1.8) 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 $(0.4) million for the
three months ending June 30, 2022 and
$(0.7) million for the three months
ending June 30, 2021. (See
description of adjusted EBIDTA in "Use of Non-GAAP Measures"
below.)
During the second quarter, the Company delivered 7,431 cases of
spirits. Of that total, Portland Potato Vodka represented
over 4,400 cases as the brand did not grow distribution outside of
Oregon. The Company shipped 1,730 and 933 cases of Azuñia and
Burnside, respectively. The following table details cases delivered
during the three and six months ending June
30, 2022 and 2021:
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
9 Liter
Cases
|
2022
|
2021
|
Change
|
%
|
|
2022
|
2021
|
Change
|
%
|
Azuñia
|
1,730
|
3,237
|
(1,507)
|
-47 %
|
|
3,789
|
6,147
|
(2,358)
|
-38 %
|
Burnside
|
933
|
1,184
|
(251)
|
-21 %
|
|
1,938
|
2,209
|
(271)
|
-12 %
|
Hue-Hue
|
138
|
81
|
57
|
70 %
|
|
222
|
202
|
20
|
10 %
|
Portland Potato
Vodka
|
4,457
|
4,682
|
(225)
|
-5 %
|
|
8,758
|
9,346
|
(588)
|
-6 %
|
Eastside
Brands
|
171
|
46
|
125
|
272 %
|
|
239
|
46
|
193
|
419 %
|
Legacy
Brands
|
2
|
97
|
(95)
|
-98 %
|
|
13
|
272
|
(259)
|
-95 %
|
|
7,431
|
9,327
|
(1,896)
|
-20 %
|
|
14,959
|
18,222
|
(3,263)
|
-18 %
|
The Company ended the quarter with $0.9
million in borrowings under its FIB credit facilities and
reported cash of $1.0 million.
During the quarter, the Company paid down $2.0 million of debt on both facilities.
During the first half of 2022, the Company entered into a
loan of $3.0 million to fund working
capital. Subsequent to the second quarter of 2022, the
Company amended and restated the aforementioned loan to increase
the line of credit to $3.5
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.
Second Quarter 2022 Conference Call Details
Date and Time: Monday, August 11,
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 #1330708. 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 June 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
June 30, 2022 and
December 31, 2021
Dollars in
thousands, except share and per share
|
|
|
June 30,
2022
|
December 31,
2021
|
Assets
|
(Unaudited)
|
|
Cash
|
$1,023
|
$3,276
|
Trade receivables,
net
|
1,253
|
1,446
|
Inventories
|
5,231
|
6,510
|
Prepaid expenses and
current assets
|
749
|
2,873
|
Total current
assets
|
8,256
|
14,105
|
Property and equipment,
net
|
6,470
|
2,163
|
Right-of-use
assets
|
3,219
|
3,211
|
Intangible assets,
net
|
13,418
|
13,624
|
Other assets,
net
|
411
|
457
|
Total
Assets
|
$31,774
|
$33,560
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
Accounts
payable
|
$1,565
|
$1,265
|
Accrued
liabilities
|
1,406
|
833
|
Deferred
revenue
|
22
|
-
|
Current portion of
secured credit facilities, net of debt issuance costs
|
3,108
|
5,725
|
Note payable, related
party, net of debt issuance costs
|
1,904
|
-
|
Current portion of
notes payable
|
931
|
894
|
Current portion of
lease liabilities
|
1,024
|
781
|
Total current
liabilities
|
9,960
|
9,498
|
Lease liabilities, net
of current portion
|
2,383
|
2,498
|
Note payable, related
party
|
92
|
92
|
Notes payable, net of
current portion
|
7,749
|
8,073
|
Total
liabilities
|
20,184
|
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
|
|
|
June 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 June 30, 2022 and
December 31, 2021
|
-
|
-
|
Additional paid-in
capital
|
74,092
|
72,003
|
Accumulated
deficit
|
(62,504)
|
(58,605)
|
Total stockholders'
equity
|
11,590
|
13,399
|
Total Liabilities and
Stockholders' Equity
|
$31,774
|
$33,560
|
Eastside Distilling,
Inc. and Subsidiaries
Consolidated
Statements of Operations
For the Three and
Six Months Ended June 30, 2022 and 2021
(Dollars and shares
in thousands, except per share amounts)
(Unaudited)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2022
|
2021
|
|
2022
|
2021
|
|
Sales
|
$5,123
|
$3,618
|
|
$8,903
|
$6,861
|
|
Less customer programs
and excise taxes
|
266
|
173
|
|
306
|
268
|
|
Net sales
|
4,857
|
3,445
|
|
8,597
|
6,593
|
|
Cost of
sales
|
3,405
|
2,536
|
|
6,198
|
5,141
|
|
Gross
profit
|
1,452
|
909
|
|
2,399
|
1,452
|
|
Operating
expenses:
|
|
|
|
|
|
|
Sales and marketing
expenses
|
729
|
697
|
|
1,376
|
1,554
|
|
General and
administrative expenses
|
1,748
|
1,605
|
|
3,678
|
3,529
|
|
Loss on disposal of
property and equipment
|
101
|
-
|
|
101
|
61
|
|
Total operating
expenses
|
2,578
|
2,302
|
|
5,155
|
5,144
|
|
Loss from
operations
|
(1,126)
|
(1,393)
|
|
(2,756)
|
(3,692)
|
|
Other income (expense),
net
|
|
|
|
|
|
|
Interest
expense
|
(762)
|
(345)
|
|
(1,168)
|
(471)
|
|
Other
income
|
100
|
17
|
|
100
|
2,217
|
|
Total other
income (expense), net
|
(662)
|
(328)
|
|
(1,068)
|
1,746
|
|
Loss before income
taxes
|
(1,788)
|
(1,721)
|
|
(3,824)
|
(1,946)
|
|
Provision for income
taxes
|
-
|
-
|
|
-
|
-
|
|
Net loss from
continuing operations
|
(1,788)
|
(1,721)
|
|
(3,824)
|
(1,946)
|
|
Net income (loss) from
discontinued operations
|
-
|
(47)
|
|
-
|
3,886
|
|
Net income
(loss)
|
(1,788)
|
(1,768)
|
|
(3,824)
|
1,940
|
|
Preferred stock
dividends
|
(36)
|
-
|
|
(75)
|
-
|
|
Net income (loss)
attributable to common shareholders
|
$(1,824)
|
$(1,768)
|
|
$(3,899)
|
$1,940
|
|
Basic net income (loss)
per common share
|
$(0.12)
|
$(0.14)
|
|
$(0.26)
|
$0.17
|
Diluted net income
(loss) per common share
|
$(0.12)
|
$(0.14)
|
|
$(0.26)
|
$0.13
|
Basic weighted average
common shares outstanding
|
15,270
|
12,262
|
|
15,090
|
11,683
|
Diluted weighted
average common shares outstanding
|
15,270
|
12,262
|
|
15,090
|
14,401
|
|
|
|
|
|
|
|
|
|
|
|
|
Eastside Distilling,
Inc. and Subsidiaries
For the Three and
Six Months Ended June 30, 2022 and 2021
(Dollars in
thousands)
(Unaudited)
|
|
Segments:
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
Spirits
|
|
|
|
|
|
Sales
|
$ 3,694
|
$ 1,478
|
|
$ 6,398
|
$ 2,812
|
Net sales
|
3,528
|
1,305
|
|
6,192
|
2,544
|
Cost of
sales
|
1,707
|
1,028
|
|
3,389
|
2,082
|
Gross profit
|
1,821
|
277
|
|
2,803
|
462
|
Total operating
expenses
|
1,292
|
1,318
|
|
2,561
|
3,013
|
Net income
(loss)
|
(223)
|
(1,406)
|
|
(905)
|
2,707
|
|
|
|
|
|
|
Craft
C+P
|
|
|
|
|
|
Sales
|
$ 1,429
|
$ 2,140
|
|
$ 2,505
|
$ 4,049
|
Net sales
|
1,329
|
2,140
|
|
2,405
|
4,049
|
Cost of
sales
|
1,698
|
1,508
|
|
2,809
|
3,059
|
Gross profit
|
(369)
|
632
|
|
(404)
|
990
|
Total operating
expenses
|
1,286
|
984
|
|
2,594
|
2,131
|
Net loss
|
(1,565)
|
(362)
|
|
(2,919)
|
(767)
|
|
|
EBITDA
Reconciliation:
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
Net income
(loss)
|
$(1,788)
|
$(1,768)
|
|
$(3,824)
|
$1,940
|
Add:
|
|
|
|
|
|
Interest
expense
|
762
|
345
|
|
1,168
|
471
|
Depreciation and
amortization
|
423
|
306
|
|
686
|
606
|
EBITDA
|
(603)
|
(1,117)
|
|
(1,970)
|
3,017
|
Loss on disposal of
property and equipment
|
101
|
-
|
|
101
|
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
|
-
|
171
|
|
-
|
176
|
One-time professional
fees
|
-
|
66
|
|
-
|
343
|
Stock
compensation
|
145
|
174
|
|
520
|
409
|
Adjusted
EBITDA
|
$ (357)
|
$ (706)
|
|
$(1,349)
|
$(2,089)
|
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SOURCE Eastside Distilling, Inc.