PORTLAND, Ore., May 13, 2021 /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 2021 financial results for the
period ended March 31, 2021.
First Quarter 2021 Highlights:
- Consolidated top line sales growth in Q1 of +4% despite Covid
pandemic
- Fully diluted EPS of $0.31
- Executed on improvements in structural cost reduction to
operating expenses
- Significantly improved liquidity while refinancing near-term
maturities
"The results for the first quarter reflect continued operating
improvement of the Company as we continue to build a sustainable
growth strategy that capitalizes on the fast-growing craft spirits
and canning businesses. All metrics are moving in the right
direction and we made good progress in the quarter," said
Paul Block, Eastside's CEO.
Financial Results
Gross sales for the three months ending March 31, 2021 increased 4% to $3.2 million from $3.1
million for the three months ending March 31, 2020. This was primarily driven by
increases in canning sales and services, which has benefited from a
shift in consumer preferences to consume alcohol at home rather
than at on-premise locations. Gross profit for the three months
ending March 31, 2021 increased 3% to
$0.75 million from $0.73 million for the three months ending
March 31, 2020.
Total operating expenses for the three months ending
March 31, 2021 declined 17% to
$3.0 million from $3.7 million for the three months ending
March 31, 2020. This reduction
was due to lower non-cash depreciation and amortization expenses,
and stock-based compensation.
Net income including discontinued operations for the three
months ending March 31, 2021 was
$3.7 million, or $0.33 per share, compared to a loss of
$(3.5) million, or ($0.36) per share, for the three months ending
March 31, 2020. Adjusted EBITDA
improved to $(1.2) million for the
three months ending March 31, 2021
compared to $(2.1) million for the
three months ending March 31, 2020.
The Company accounted for the Redneck Riviera License Termination
and closing of its retail tasting rooms as part of discontinued
operations in its 2021 Form 10-Q filing.
During the first quarter, the Company delivered 8,913 cases of
spirits, excluding Redneck Riviera. Of that total, Portland Potato
Vodka ("PPV") represented over 4,500 cases as the PPV brand
continues to accelerate the expansion of its distribution outside
of Oregon. The Company shipped 2,921 and 1,026 cases of
Azuñia and Burnside, respectively. The Azuñia brand continues
to be affected by the shut-down of on-premise accounts in the West.
The following table details cases delivered during the three months
ending March 31, 2021:
9L
Cases
|
Q1
2021
|
Q1
2020
|
Azuñia
|
2,921
|
3,297
|
Burnside
|
1,026
|
1,195
|
Hue-Hue
|
121
|
154
|
PPV
|
4,669
|
4,539
|
Legacy
Brands
|
175
|
552
|
9L Case
Volume
|
8,913
|
9,737
|
The Company ended the quarter with $4.3
million in borrowings under its Live Oak and FIB credit
facilities and reported cash of $2.0
million. The Company has achieved substantial progress
on improving its cash position and reducing debt. On
February 5, 2021, the Company
terminated its Redneck Riviera license agreement and sold certain
raw materials and finished goods, reducing debt and raising
cash. In addition, the Company has received complete
forgiveness of its loan under the Paycheck Protection Program of
$1.4 million. Finally, the
Company issued the initial portion of the Azuñia Earnout in stock
at a weighted average price of $4.67
per share.
Subsequent to the first quarter, the Company finalized a
security purchase agreement with accredited investors for their
purchase of up to $3.3 million of
principal amount of 6% secured convertible promissory notes of the
Company that are convertible into shares with an initial conversion
price of $2.20 per
share. Additionally, the Company issued the final portion of
the Azuñia Earnout in stock at a price of $1.82 per share.
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.
Conference Call
The Company will hold a conference call today to discuss these
results.
Date and Time: Thursday, May 13,
2021 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 #10156295. 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 + 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 second
quarter of 2021. 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 March 31, 2021, and 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
|
Condensed
Consolidated Balance Sheets
|
March 31, 2021 and
December 31, 2020
|
Dollars in
thousands, except share and per share
|
|
|
March 31,
2021
|
December 31,
2020
|
Assets
|
(Unaudited)
|
|
Current
assets:
|
|
|
Cash
|
$ 2,014
|
$836
|
Trade receivables,
net
|
999
|
694
|
Inventories
|
6,155
|
6,728
|
Prepaid expenses and
current assets
|
716
|
750
|
Current assets held
for sale
|
-
|
3,833
|
Total current
assets
|
9,884
|
12,841
|
Property and
equipment, net
|
2,792
|
3,109
|
Right-of-use
assets
|
1,139
|
1,270
|
Intangible assets,
net
|
13,935
|
14,038
|
Other assets,
net
|
264
|
285
|
Non-current assets
held for sale
|
95
|
189
|
Total
Assets
|
$ 28,109
|
$ 31,732
|
|
|
|
Liabilities and
Stockholders' Equity (Deficit)
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$ 1,465
|
$ 1,864
|
Accrued
liabilities
|
1,106
|
1,452
|
Deferred
revenue
|
23
|
23
|
Secured trade credit
facility, net of debt issuance costs
|
2,967
|
6,405
|
Current portion of
deferred consideration for Azuñia acquisition
|
-
|
15,452
|
Other current
liabilities, related party
|
-
|
700
|
Current portion of
notes payable
|
3,359
|
3,830
|
Current portion of
lease liabilities
|
454
|
515
|
Current liabilities
held for sale
|
19
|
18
|
Total current
liabilities
|
9,393
|
30,259
|
Lease liabilities,
net of current portion
|
741
|
817
|
Deferred
consideration for Azuñia acquisition
|
9,084
|
-
|
Notes payable, net of
current portion and debt discount
|
513
|
1,693
|
Non-current
liabilities held for sale
|
63
|
71
|
Total
liabilities
|
19,794
|
32,840
|
Eastside
Distilling, Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
March 31, 2021 and
December 31, 2020
|
Dollars in
thousands, except share and per share
|
|
|
March 31,
2021
|
December 31,
2020
|
|
(Unaudited)
|
|
Stockholders' equity
(deficit):
|
|
|
Common stock, $0.0001
par value; 15,000,000 shares authorized; 11,637,413 and 10,382,015 shares issued and
outstanding as of March 31, 2021
and December 31, 2020, respectively
|
1
|
1
|
Additional paid-in
capital
|
58,700
|
52,985
|
Accumulated
deficit
|
(50,386)
|
(54,094)
|
Total Stockholders'
Equity (Deficit)
|
8,315
|
(1,108)
|
Total Liabilities
and Stockholders' Equity (Deficit)
|
$ 28,109
|
$ 31,732
|
Eastside
Distilling, Inc. and Subsidiaries
|
Consolidated
Statements of Operations
|
For the Three
Months Ended March 31, 2021 and 2020
|
(Dollars in
thousands, except per share)
|
Unaudited
|
|
|
Three Months Ended
March 31,
|
|
2021
|
2020
|
Sales
|
$3,243
|
$3,133
|
Less customer
programs and excise taxes
|
176
|
221
|
Net sales
|
3,067
|
2,912
|
Cost of
sales
|
2,318
|
2,187
|
Gross
profit
|
749
|
725
|
Operating
expenses:
|
|
|
Sales and marketing
expenses
|
776
|
1,513
|
General and
administrative expenses
|
2,211
|
2,156
|
Loss on disposal of
property and equipment
|
61
|
1
|
Total operating
expenses
|
3,048
|
3,670
|
Loss from
operations
|
(2,299)
|
(2,945)
|
Other income
(expense), net
|
|
|
Interest
expense
|
(126)
|
(304)
|
Other
income
|
2,200
|
-
|
Total
other income (expense), net
|
2,074
|
(304)
|
Loss before income
taxes
|
(225)
|
(3,249)
|
Provision for income
taxes
|
-
|
-
|
Net loss from
continuing operations
|
(225)
|
(3,249)
|
Net income (loss)
from discontinued operations
|
3,933
|
(259)
|
Net income
(loss)
|
$3,708
|
$(3,508)
|
Basic net income
(loss) per common share
|
$0.33
|
$(0.36)
|
Diluted net income
(loss) per common share
|
$0.31
|
$(0.36)
|
Basic weighted
average common shares outstanding
|
11,089
|
9,755
|
Diluted weighted
average common shares outstanding
|
11,981
|
9,755
|
|
|
|
Three Months Ended
March 31,
|
|
2021
|
2020
|
Net income
(loss)
|
$3,708
|
$(3,508)
|
Add:
|
|
|
Interest
expense
|
126
|
304
|
Depreciation and
amortization
|
300
|
645
|
EBITDA
|
4,134
|
(2,559)
|
Loss on disposal of
property and equipment
|
61
|
1
|
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
|
-
|
Q1 2021 inventory
valuation
|
164
|
-
|
One-time professional
fees
|
277
|
-
|
Stock
compensation
|
235
|
498
|
Adjusted
EBITDA
|
$(1,219)
|
$(2,060)
|
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SOURCE Eastside Distilling, Inc.