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Eastside Distilling Reports Fourth Quarter 2022 Financial Results

Release: March 31, 2023

PORTLAND, Ore., March 31, 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 artisan products around premium spirits, digital can printing, co-packing and mobile filling, reported fourth quarter and year end 2022 financial results for the period ended December 31, 2022.

Fourth Quarter 2022 Highlights:
  • Raised $5.2 million of cash during the quarter and $0.3 million subsequent to year-end; proceeds used to fund working capital
  • Significant reduction in operating costs
  • Improved spirits gross sales over 50% for the year despite challenging business environment

"We made substantial progress in improving our business and are reaching news milestones in digital printing, while we continue to implement key restructuring initiatives in our spirits business. I expect meaningful improvements in our performance in 2023," said Geoffrey Gwin, Eastside's CEO.

Financial Results

Gross sales for the year ending December 31, 2022 increased to $14.3 million from $12.9 million for the year ending December 31, 2021 due to the sale of nearly 1,450 barrels for gross proceeds of $4.4 million. Craft C+P sales decreased due to competitive pressure in the legacy mobile canning business. In addition, anticipated sales from digital printing did not materialize fast enough to offset the decline in mobile canning. 

Gross profit for the year ending December 31, 2022 decreased to $2.4 million from $2.9 million for the year ending December 31, 2021. Gross margin was 18% for the year ending December 31, 2022 as the Company continues to ramp up digital printing. Spirits margins increased primarily due to excess bulk spirits sales.

Operating costs for the year ending December 31, 2022 decreased to $9.1 million from $9.8 million for the year ending December 31, 2021 primarily related to decreased professional fees and compensation, partially offset by increased rent as the Company entered into additional leases to support new business initiatives.

Net loss for the year ending December 31, 2022 increased to $16.4 million from $2.2 million for the year ending December 31, 2021. The Company reported adjusted EBITDA of $(4.4) million and $(4.8) million for the years ending December 31, 2022 and 2021, respectively. (See description of adjusted EBIDTA in "Use of Non-GAAP Measures" below.)

During the fourth quarter, the Company delivered 8,014 cases of spirits. Of that total, Portland Potato Vodka represented 5,000 cases. Azuñia volumes continue to cycle higher volumes from last year—volumes that were not profitable and Burnside's volume was not enough to offset the successful 2021 holiday programming. The following table details cases delivered during the quarters and years ending December 31, 2022 and 2021:

 

Three Months Ended
December 31,

   

Twelve Months Ended
December 31,

 

9 Liter Cases

2022

2021

Change

%

 

2022

2021

Change

%

Azuñia

1,784

2,032

(248)

-12 %

 

6,920

11,491

(4,571)

-40 %

Burnside

1,039

1,299

(260)

-20 %

 

3,756

4,615

(859)

-19 %

Hue-Hue

101

109

(8)

-7 %

 

378

368

10

3 %

Portland Potato Vodka

4,967

4,721

246

5 %

 

18,911

19,094

(183)

-1 %

Eastside Brands

123

203

(80)

-39 %

 

453

345

108

31 %

Legacy Brands

-

24

(24)

-100 %

 

14

386

(372)

-96 %

 

8,014

8,388

(374)

-4 %

 

30,432

36,299

(5,867)

-16 %

 

The Company ended the quarter with cash of $0.7 million. During the quarter, the Company raised $5.2 million and paid down $3.7 million of debt.

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.

Fourth Quarter 2022 Conference Call Details

Date and Time: Friday, March 31, 2023 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.

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 #6918006. 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, 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 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-K for the period ended December 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

December 31, 2022 and 2021

Dollars in thousands, except share and per share

 
   
   

2022

   

2021

 
                 

Assets

               

Cash

 

$

723

   

$

3,276

 

Trade receivables, net

   

876

     

1,446

 

Inventories

   

4,442

     

6,510

 

Prepaid expenses and current assets

   

579

     

2,873

 

Total current assets

   

6,620

     

14,105

 

Property and equipment, net

   

5,741

     

2,163

 

Right-of-use assets

   

2,988

     

3,211

 

Intangible assets, net

   

5,758

     

13,624

 

Other assets, net

   

369

     

457

 

Total Assets

 

$

21,476

   

$

33,560

 
                 

Liabilities and Stockholders' Equity

               

Accounts payable

 

$

1,728

   

$

1,265

 

Accrued liabilities

   

1,509

     

833

 

Deferred revenue

   

18

     

-

 

Current portion of secured credit facilities, net of debt issuance
costs

   

3,442

     

5,725

 

Note payable, related party

   

4,598

     

-

 

Current portion of notes payable

   

-

     

894

 

Current portion of lease liabilities

   

991

     

781

 

Other current liability, related party

   

725

     

-

 

Total current liabilities

   

13,011

     

9,498

 

Lease liabilities, net of current portion

   

2,140

     

2,498

 

Note payable, related party

   

92

     

92

 

Notes payable, net of current portion

   

7,749

     

8,073

 

Total liabilities

   

22,992

     

20,161

 

Stockholders' equity:

               

Common stock, $0.0001 par value; 35,000,000 shares authorized;
16,199,269 and 14,791,449 shares issued and outstanding as of
December 31, 2022 and 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 December 31,
2022 and 2021

   

-

     

-

 

Additional paid-in capital

   

73,503

     

72,003

 

Accumulated deficit

   

(75,021)

     

(58,605)

 

Total stockholders' equity (deficit)

   

(1,516)

     

13,399

 

Total Liabilities and Stockholders' Equity

 

$

21,476

   

$

33,560

 
 

Eastside Distilling, Inc. and Subsidiaries

Consolidated Statements of Operations

For the Three and Twelve Months Ended December 31, 2022 and 2021

(Dollars and shares in thousands, except per share amounts)

       
 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

2022

2021

 

2022

2021

           

Sales

$2,360

$2,752

 

$14,327

$12,890

Less customer programs and excise taxes

51

158

 

444

496

Net sales

2,309

2,594

 

13,883

12,394

Cost of sales

2,457

1,996

 

11,442

9,484

Gross profit

(148)

598

 

2,441

2,910

Operating expenses:

         

Sales and marketing expenses

547

527

 

2,625

2,614

General and administrative expenses

1,291

1,772

 

6,407

6,777

(Gain) loss on disposal of property and
equipment

(43)

(2)

 

58

419

Total operating expenses

1,795

2,297

 

9,090

9,810

Loss from operations

(1,943)

(1,699)

 

(6,649)

(6,900)

Other income (expense), net

         

Interest expense

(240)

(369)

 

(2,216)

(1,254)

Impairment loss

(7,453)

-

 

(7,453)

-

Other income (expense)

(73)

(142)

 

52

2,100

 Total other income (expense), net

(7,766)

(511)

 

(9,617)

846

Loss before income taxes

(9,709)

(2,210)

 

(16,266)

(6,054)

Provision for income taxes

-

-

 

-

-

Net loss from continuing operations

(9,709)

(2,210)

 

(16,266)

(6,054)

Net income (loss) from discontinued
operations

-

(11)

 

-

3,858

Net loss

(9,709)

(2,221)

 

(16,266)

(2,196)

Preferred stock dividends

(37)

(27)

 

(150)

(27)

Deemed dividend-debt extinguishment

-

-

 

-

(2,288)

Net loss attributable to common shareholders

$(9,746)

$(2,248)

 

$(16,416)

$(4,511)

 

 EPS:

     
 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

2022

2021

 

2022

2021

Basic and diluted net loss per common share

$(0.62)

$(0.16)

 

$(1.07)

$(0.35)

Basic and diluted weighted average common
shares outstanding

15,705

14,496

 

15,337

12,708

 

Eastside Distilling, Inc. and Subsidiaries

For the Three and Twelve Months Ended December 31, 2022 and 2021

(Dollars in thousands)

Segments:

     
 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

2022

2021

 

2022

2021

Spirits

         

Sales

$ 1,115

$ 1,368

 

$ 8,701

$ 5,672

Net sales

1,064

1,210

 

8,357

5,176

Cost of sales

925

754

 

5,101

3,743

Gross profit

139

456

 

3,256

1,433

Total operating expenses

901

1,271

 

4,496

5,634

Net income (loss)

(8,520)

(1,324)

 

(10,917)

155

           

Craft C+P

         

Sales

$ 1,245

$ 1,384

 

$ 5,626

$ 7,218

Net sales

1,245

1,384

 

5,526

7,218

Cost of sales

1,532

1,242

 

6,341

5,741

Gross profit

(287)

142

 

(815)

1,477

Total operating expenses

894

1,026

 

4,594

4,176

Net loss

(1,189)

(897)

 

(5,349)

(2,351)

 

EBITDA Reconciliation:

     
 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

2022

2021

 

2022

2021

Net income (loss)

$(9,709)

$(2,221)

 

$(16,266)

$(2,196)

Add:

         

Interest expense

240

369

 

2,216

1,254

Depreciation and amortization

416

334

 

1,520

1,237

 EBITDA

(9,053)

(1,518)

 

(12,530)

295

     (Gain) loss on disposal of
property and equipment

(43)

(2)

 

58

419

     Impairment loss

7,453

-

 

7,453

-

     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)

     Stock compensation

17

44

 

663

621

Adjusted EBITDA

$(1,626)

$(1,476)

 

$(4,356)

$(4,760)

 

SOURCE Eastside Distilling, Inc.

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