Company to Host Conference Call at
5:00 pm ET Today
PORTLAND, Ore., Nov. 14,
2023 /PRNewswire/ -- Eastside Distilling, Inc.
(NASDAQ: EAST) ("Eastside" or the
"Company"), a consumer-focused beverage company that builds craft
inspired experiential brands and high-quality artisanal products
around premium spirits, digital can printing, co-packing and mobile
filling, reported third quarter 2023 financial results for the
period ended September 30, 2023.
Third Quarter 2023 Highlights:
- Company completed a debt to equity conversion lowering debt by
$6.5 million
- Company increased shareholders' equity by $4.2 million to $2.7
million
- Craft C+P realized a 377% increase in gross profit from the
prior-year third quarter
- Craft C+P printed over 4.5 million cans in the quarter
- Spirits made incremental progress cutting operating losses from
the prior-year third quarter
"The Company made progress improving operations across both of
its businesses," said Geoffrey Gwin, Eastside's CEO. "With recent sequential
increases in digital can sales, Craft has become the preeminent
decorated digital can provider in the Pacific Northwest. At the
same time, our spirits business has made more progress in reaching
our goal of profitability than we expected at this point in the
year."
Financial Results
Gross sales for both the three months ending September 30, 2023 and 2022 were flat at
$3.1 million, as growth in digital
can printing was offset by lower mobile canning and spirits
sales.
Gross profit for the three months ending September 30, 2023 increased to $0.5 million from $0.2
million for the three months ending September 30, 2022. Gross margin was 17% for the
three months ending September 30,
2023 and 6% for the three months ending September 30, 2022. Craft margins increased
sequentially as digital can printing volumes improved through the
quarter.
Operating costs for the three months ending September 30, 2023 decreased to $1.2 million from $2.1
million for the three months ending September 30, 2022 primarily due to decreased
headcount, professional fees and sponsorship costs. The Company has
undertaken a broad restructuring in spirits which has lowered sales
and realigned investment to focus on the most profitable spirits
brands and regions.
Net loss for the three months ending September 30, 2023 decreased to $2.2 million from $2.7
million, which included $1.3
million resulting from the conversion of debt to equity
during the three months ending September 30,
2023. The Company reported adjusted EBITDA of $(0.4) million and $(1.4)
million for the three months ending September 30, 2023 and 2022, respectively. (See
description of adjusted EBIDTA in "Use of Non-GAAP Measures"
below.)
During the nine months ending September
30, 2023, the Company sold 276,167 shares of common stock in
at-the-market public placements, with the proceeds used primarily
to fund the operations of its digital can printing business.
Balance Sheet
On September 29, 2023, the Company
entered into a Debt Satisfaction Agreement with its four principal
lenders. The Company issued 296,722 shares of common stock and
200,000 shares of Series C Preferred Stock to a special purpose
vehicle owned by the lenders. In exchange, the Company's debts to
the lenders were reduced by a total of $6.5
million. The debt-equity exchange returned the Company's
shareholders' equity into compliance with Nasdaq listing
standards.
Reverse Stock Split
The Company effected a 1-for-20 reverse common stock split on
May 12, 2023. All share quantities
and per share information in this earnings release have been
adjusted to give effect to this reverse stock split.
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 final table below provides a
reconciliation of this non-GAAP financial measure with the most
directly comparable GAAP financial measure.
Third Quarter 2023 Conference Call Details
Date and Time: Tuesday, November
14, 2023 at 5:00 pm 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 #6454584. 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 highest quality and taste. Eastside's Craft Canning + Printing subsidiary
is one of the Northwest's leading independent mobile canning,
co-packing and digital can printing businesses.
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 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, as
supplemented in the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 2023. 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, 2023, 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 Dollars in thousands, except share and per
share
|
|
|
|
September 30,
2023
|
|
|
December 31,
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
358
|
|
|
$
|
723
|
|
Trade receivables,
net
|
|
|
1,089
|
|
|
|
876
|
|
Inventories
|
|
|
3,563
|
|
|
|
4,442
|
|
Prepaid expenses and
other current assets
|
|
|
739
|
|
|
|
579
|
|
Total current
assets
|
|
|
5,749
|
|
|
|
6,620
|
|
Property and equipment,
net
|
|
|
4,995
|
|
|
|
5,741
|
|
Right-of-use
assets
|
|
|
2,237
|
|
|
|
2,988
|
|
Intangible assets,
net
|
|
|
5,473
|
|
|
|
5,758
|
|
Other assets,
net
|
|
|
326
|
|
|
|
369
|
|
Total
Assets
|
|
$
|
18,780
|
|
|
$
|
21,476
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity (Deficit)
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
1,958
|
|
|
$
|
1,728
|
|
Accrued
liabilities
|
|
|
709
|
|
|
|
1,509
|
|
Deferred
revenue
|
|
|
53
|
|
|
|
18
|
|
Current portion of
secured credit facilities, net of debt issuance
costs
|
|
|
-
|
|
|
|
3,442
|
|
Current portion of note
payable, related party
|
|
|
92
|
|
|
|
4,598
|
|
Current portion of
notes payable
|
|
|
486
|
|
|
|
-
|
|
Current portion of
lease liabilities
|
|
|
719
|
|
|
|
991
|
|
Other current
liability, related party
|
|
|
-
|
|
|
|
725
|
|
Total current
liabilities
|
|
|
4,017
|
|
|
|
13,011
|
|
Lease liabilities, net
of current portion
|
|
|
1,634
|
|
|
|
2,140
|
|
Secured credit
facilities, related party
|
|
|
2,639
|
|
|
|
-
|
|
Secured credit
facilities, net of debt issuance costs
|
|
|
319
|
|
|
|
-
|
|
Note payable, related
party
|
|
|
-
|
|
|
|
92
|
|
Notes payable, net of
current portion
|
|
|
7,517
|
|
|
|
7,749
|
|
Total
liabilities
|
|
|
16,126
|
|
|
|
22,992
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
(deficit):
|
|
|
|
|
|
|
|
|
Common stock, $0.0001
par value; 1,750,000 shares authorized;
1,538,407 and 809,963 shares issued and outstanding as of
September 30, 2023 and December 31, 2022, respectively
|
|
|
-
|
|
|
|
-
|
|
Preferred stock,
$0.0001 par value; 100,000,000 shares authorized;
2,500,000 Series B shares issued and outstanding as of both
September 30, 2023 and December 31, 2022
|
|
|
-
|
|
|
|
-
|
|
Preferred stock,
$0.0001 par value; 240,000 shares authorized;
200,000 Series C shares issued and outstanding as of September
30, 2023 and 0 issued and outstanding as of December 31,
2022
|
|
|
-
|
|
|
|
-
|
|
Additional paid-in
capital
|
|
|
83,185
|
|
|
|
73,505
|
|
Accumulated
deficit
|
|
|
(80,531)
|
|
|
|
(75,021)
|
|
Total stockholders'
equity (deficit)
|
|
|
2,654
|
|
|
|
(1,516)
|
|
Total Liabilities
and Stockholders' Equity (Deficit)
|
|
$
|
18,780
|
|
|
$
|
21,476
|
|
Eastside Distilling,
Inc. and Subsidiaries For the Three and Nine Months Ended
September 30, 2023 and 2022 (Dollars and shares in
thousands, except per share
amounts) (Unaudited)
|
|
Consolidated
Statements of Operations:
|
|
|
|
Three Months
Ended September
30,
|
|
|
Nine Months
Ended September
30,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
3,081
|
|
|
$
|
3,064
|
|
|
$
|
8,717
|
|
|
$
|
11,967
|
|
Less customer programs
and excise taxes
|
|
|
98
|
|
|
|
87
|
|
|
|
220
|
|
|
|
393
|
|
Net sales
|
|
|
2,983
|
|
|
|
2,977
|
|
|
|
8,497
|
|
|
|
11,574
|
|
Cost of
sales
|
|
|
2,471
|
|
|
|
2,787
|
|
|
|
7,318
|
|
|
|
8,985
|
|
Gross profit
|
|
|
512
|
|
|
|
190
|
|
|
|
1,179
|
|
|
|
2,589
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
expenses
|
|
|
381
|
|
|
|
702
|
|
|
|
1,261
|
|
|
|
2,078
|
|
General and
administrative expenses
|
|
|
832
|
|
|
|
1,438
|
|
|
|
3,390
|
|
|
|
5,116
|
|
(Gain) loss on disposal
of property and
equipment
|
|
|
(39)
|
|
|
|
-
|
|
|
|
(168)
|
|
|
|
101
|
|
Total operating
expenses
|
|
|
1,174
|
|
|
|
2,140
|
|
|
|
4,483
|
|
|
|
7,295
|
|
Loss from
operations
|
|
|
(662)
|
|
|
|
(1,950)
|
|
|
|
(3,304)
|
|
|
|
(4,706)
|
|
Other income (expense),
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(207)
|
|
|
|
(808)
|
|
|
|
(862)
|
|
|
|
(1,976)
|
|
Loss on debt to equity
conversion
|
|
|
(1,321)
|
|
|
|
-
|
|
|
|
(1,321)
|
|
|
|
-
|
|
Other income
|
|
|
34
|
|
|
|
25
|
|
|
|
90
|
|
|
|
125
|
|
Total other income
(expense), net
|
|
|
(1,494)
|
|
|
|
(783)
|
|
|
|
(2,093)
|
|
|
|
(1,851)
|
|
Loss before income
taxes
|
|
|
(2,156)
|
|
|
|
(2,733)
|
|
|
|
(5,397)
|
|
|
|
(6,557)
|
|
Provision for income
taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
|
(2,156)
|
|
|
|
(2,733)
|
|
|
|
(5,397)
|
|
|
|
(6,557)
|
|
Preferred stock
dividends
|
|
|
(38)
|
|
|
|
(38)
|
|
|
|
(113)
|
|
|
|
(113)
|
|
Net loss attributable
to common
shareholders
|
|
$
|
(2,194)
|
|
|
$
|
(2,771)
|
|
|
$
|
(5,510)
|
|
|
$
|
(6,670)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net loss per
common share
|
|
$
|
(2.00)
|
|
|
$
|
(3.59)
|
|
|
$
|
(5.93)
|
|
|
$
|
(8.76)
|
|
Basic weighted average
common shares
outstanding
|
|
|
1,097
|
|
|
|
772
|
|
|
|
929
|
|
|
|
761
|
|
Eastside Distilling,
Inc. and Subsidiaries For the Three and Nine Months Ended
September 30, 2023 and 2022 (Dollars in
thousands)
|
|
Segments:
|
|
|
|
Three Months
Ended September
30,
|
|
|
Nine Months
Ended September
30,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Craft
C+P
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
2,232
|
|
|
$
|
1,876
|
|
|
$
|
3,405
|
|
|
$
|
2,505
|
|
Net sales
|
|
|
2,177
|
|
|
|
1,876
|
|
|
|
3,381
|
|
|
|
2,405
|
|
Cost of
sales
|
|
|
1,833
|
|
|
|
2,000
|
|
|
|
3,545
|
|
|
|
2,809
|
|
Gross profit
|
|
|
344
|
|
|
|
(124)
|
|
|
|
(164)
|
|
|
|
(404)
|
|
Total operating
expenses
|
|
|
699
|
|
|
|
866
|
|
|
|
1,314
|
|
|
|
1,947
|
|
Net loss
|
|
$
|
(350)
|
|
|
$
|
(1,001)
|
|
|
$
|
(1,462)
|
|
|
$
|
(2,272)
|
|
Gross margin
|
|
|
16
|
%
|
|
|
-7
|
%
|
|
|
-5
|
%
|
|
|
-17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spirits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
849
|
|
|
$
|
1,188
|
|
|
$
|
3,080
|
|
|
$
|
7,586
|
|
Net sales
|
|
|
806
|
|
|
|
1,101
|
|
|
|
2,939
|
|
|
|
7,293
|
|
Cost of
sales
|
|
|
638
|
|
|
|
787
|
|
|
|
1,940
|
|
|
|
4,176
|
|
Gross profit
|
|
|
168
|
|
|
|
314
|
|
|
|
999
|
|
|
|
3,117
|
|
Total operating
expenses
|
|
|
303
|
|
|
|
616
|
|
|
|
1,183
|
|
|
|
1,963
|
|
Net income
(loss)
|
|
$
|
(110)
|
|
|
$
|
(278)
|
|
|
$
|
(127)
|
|
|
$
|
1,179
|
|
Gross margin
|
|
|
21
|
%
|
|
|
29
|
%
|
|
|
34
|
%
|
|
|
43
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
|
$
|
172
|
|
|
$
|
658
|
|
|
$
|
1,287
|
|
|
$
|
2,519
|
|
Net loss
|
|
$
|
(1,696)
|
|
|
$
|
(1,454)
|
|
|
$
|
(3,458)
|
|
|
$
|
(4,463)
|
|
|
Adjusted EBITDA
Reconciliation:
|
|
|
|
Three Months
Ended September
30,
|
|
|
Nine Months
Ended September
30,
|
|
|
|
|
2023
|
|
|
|
2022
|
|
|
|
2023
|
|
|
|
2022
|
|
Net loss
|
|
$
|
(2,156)
|
|
|
$
|
(2,733)
|
|
|
$
|
(5,397)
|
|
|
$
|
(6,557)
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
207
|
|
|
|
808
|
|
|
|
862
|
|
|
|
1,976
|
|
Depreciation and
amortization
|
|
|
305
|
|
|
|
418
|
|
|
|
1,122
|
|
|
|
1,104
|
|
EBITDA
|
|
|
(1,644)
|
|
|
|
(1,507)
|
|
|
|
(3,416)
|
|
|
|
(3,477)
|
|
(Gain) loss on disposal
of property and
equipment
|
|
|
(39)
|
|
|
|
-
|
|
|
|
(168)
|
|
|
|
101
|
|
Loss on debt to equity
conversion
|
|
|
1,321
|
|
|
|
-
|
|
|
|
1,321
|
|
|
|
-
|
|
Stock
compensation
|
|
|
(68)
|
|
|
|
126
|
|
|
|
98
|
|
|
|
646
|
|
Adjusted
EBITDA
|
|
$
|
(430)
|
|
|
$
|
(1,381)
|
|
|
$
|
(2s,162)
|
|
|
$
|
(2,730)
|
|
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SOURCE Eastside Distilling, Inc.