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Eastside Distilling, Inc. (EAST) SEC Filing 10-Q Quarterly Report for the period ending Thursday, March 31, 2022

Eastside Distilling, Inc.

CIK: 1534708 Ticker: EAST

 

Exhibit 99.1

 

Eastside Distilling Reports First Quarter 2022 Financial Results

 

Company to Host Conference Call at 5:00pm ET Today

 

PORTLAND, Oregon, 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 
   (Unaudited)     
Assets          
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 
   (Unaudited)     
Stockholders’ equity:          
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)

 

INVESTOR RELATIONS CONTACT: Amy Brassard, (503) 542-7420, ir@eastsidedistilling.com

 

This information is being distributed to you by: Eastside Distilling, Inc.

 

2321 NE Argyle Street, Unit D, Portland, Oregon 97211

 

 

 


The following information was filed by Eastside Distilling, Inc. (EAST) on Monday, May 16, 2022 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Eastside Distilling, Inc.'s 10-Q Quarterly Report:

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Cover
Consolidated Balance Sheets
Consolidated Balance Sheets (Parenthetical)
Consolidated Statements Of Cash Flows (Unaudited)
Consolidated Statements Of Operations (Unaudited)
Business Segment Information
Business Segment Information (Details Narrative)
Business Segment Information (Tables)
Commitments And Contingencies
Description Of Business
Discontinued Operations
Discontinued Operations (Details Narrative)
Discontinued Operations (Tables)
Intangible Assets
Intangible Assets (Details Narrative)
Intangible Assets (Tables)
Inventories
Inventories (Tables)
Leases
Leases (Details Narrative)
Leases (Tables)
Liquidity
Liquidity (Details Narrative)
Net Income (Loss) Per Common Share
Net Income (Loss) Per Common Share (Details Narrative)
Notes Payable
Notes Payable (Details Narrative)
Notes Payable (Tables)
Other Assets
Other Assets (Details Narrative)
Other Assets (Tables)
Prepaid Expenses And Current Assets
Prepaid Expenses And Current Assets (Tables)
Property And Equipment
Property And Equipment (Details Narrative)
Property And Equipment (Tables)
Related Party Transactions
Related Party Transactions (Details Narrative)
Schedule Of Discontinued Retail Operations (Details)
Schedule Of Intangible Assets (Details)
Schedule Of Inventories (Details)
Schedule Of Maturities Of Operating Lease Liabilities (Details)
Schedule Of Maturities On Notes Payable (Details)
Schedule Of Maturities On Notes Payable (Details) (Parenthetical)
Schedule Of Notes Payable (Details)
Schedule Of Notes Payable (Details) (Parenthetical)
Schedule Of Other Assets (Details)
Schedule Of Prepaid Expenses And Current Assets (Details)
Schedule Of Property And Equipment (Details)
Schedule Of Segment Information (Details)
Schedule Of Stockholders??? Equity (Details)
Schedule Of Weighted-Average Assumptions For New Warrants (Details)
Secured Credit Facilities
Secured Credit Facilities (Details Narrative)
Stockholders??? Equity
Stockholders??? Equity (Details Narrative)
Stockholders??? Equity (Tables)
Subsequent Events
Subsequent Events (Details Narrative)
Summary Of Significant Accounting Policies
Summary Of Significant Accounting Policies (Details Narrative)
Summary Of Significant Accounting Policies (Policies)
Summary Of Stock Option Activity (Details)
Summary Of Warrants Activity (Details)

Material Contracts, Statements, Certifications & more

Eastside Distilling, Inc. provided additional information to their SEC Filing as exhibits

Ticker: EAST
CIK: 1534708
Form Type: 10-Q Quarterly Report
Accession Number: 0001493152-22-013785
Submitted to the SEC: Mon May 16 2022 4:11:45 PM EST
Accepted by the SEC: Mon May 16 2022
Period: Thursday, March 31, 2022
Industry: Beverages

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