Eastside Distilling Reports Third Quarter 2020 Financial Results
Company to Host Conference Call at 5:00pm ET Today
PORTLAND, Ore., Nov. 12, 2020 /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 third quarter 2020 financial results for the period ended September 30, 2020.
Third Quarter 2020 Highlights vs. Same Year-Ago Quarter
- Signed an LOI on the exit of Redneck Riviera Business
- Increased sales despite challenging business environment
- Continued sequential improvement in EBITDA
"The results for the third quarter reflect the continued path to reduce negative cash flow while investing in growth," said Paul Block, Eastside's CEO. "Despite the COVID pandemic, the tide continues to rise for spirits consumption and Craft Canning. As we continue to bring leadership, strategy and strong tactical execution to Eastside, we believe we can capture a disproportionate share of market and continue to accelerate topline growth."
Financial Results
Revenues in the third quarter increased +7.0% to $4.8 million from $4.5 million in the year-ago quarter. This was primarily due to increases in canning revenue driven by the continued shift of craft breweries toward canning and away from kegs. Gross profit in the third quarter declined –5.3% to $1.6 million compared to $1.7 million in the year-ago quarter due to changes in margin mix in spirits and reinvestment in Craft Canning to meet the increased demand.
Total operating expenses in the third quarter declined -37.5% to $3.1 million from $5.0 million in the year-ago quarter. This reduction is due to lower marketing spending, reduced legal and professional fees, and lower rent and insurance expenses partially offset by higher non-cash depreciation and amortization expenses.
Net loss including discontinued operations in the third quarter was ($1.8) million or ($0.17) per share compared to ($3.5) million or ($0.38) per share in the year-ago quarter.
EBITDA improved to ($0.7) million compared to ($2.4) million in the year-ago quarter and increased +$0.2 million sequentially from last quarter.
The Company's cash used in operations was ($2.8) million in the first nine months of 2020 compared to ($7.9) million in the comparable year-ago period, an improvement of $5.1 million. The Company's cash balance at end of the third quarter was $1.0 million, an increase of +233.3% compared to $0.3 million in the year ago quarter.
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. 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, November 12, 2020 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 #10149818. 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 Redneck Riviera Whiskey® with companion brands Granny Rich Reserve® and Howdy Dew! ®, 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 third quarter of 2020. The Company assumes no obligation to update the cautionary information in this 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, 2020, and which can be viewed at www.sec.gov and in the investor relations section of the Company's website at www.eastsidedistilling.com.
Eastside Distilling, Inc. and Subsidiaries | |||
Consolidated Balance Sheets | |||
September 30, 2020 and December 31, 2019 | |||
September 30, 2020 | December 31, 2019 | ||
Assets | |||
Current assets: | |||
Cash | $ 959,126 | $ 342,678 | |
Trade receivables | 1,312,578 | 1,324,333 | |
Inventories | 10,325,191 | 12,331,133 | |
Prepaid expenses and current assets | 604,358 | 397,083 | |
Current assets from discontinued operations | - | 74,892 | |
Total current assets | 13,201,253 | 14,470,119 | |
Property and equipment, net | 3,366,831 | 4,687,469 | |
Right of use asset | 1,361,188 | 577,856 | |
Intangible assets, net | 14,141,556 | 14,674,790 | |
Goodwill | 28,182 | 28,182 | |
Other assets | 787,008 | 1,165,581 | |
Non-current assets from discontinued operations | 106,665 | 261,866 | |
Total Assets | $ 32,992,683 | $ 35,865,863 | |
Liabilities and Stockholders' Equity | |||
Current liabilities: | |||
Accounts payable | $ 1,981,171 | $ 2,881,185 | |
Accrued liabilities | 820,028 | 888,296 | |
Deferred revenue | 315,775 | - | |
Secured trade credit facility, net of debt issuance costs | 6,381,475 | - | |
Deferred Consideration for Azuñia acquisition (current) | 15,451,500 | - | |
Other current liabilities | 250,000 | - | |
Current portion of notes payable | 4,010,887 | 1,819,172 | |
Current portion of lease liability | 540,852 | 423,671 | |
Current liabilities of discontinued operations | 17,255 | 125,278 | |
Total current liabilities | 29,768,943 | 6,137,602 | |
Lease Liability - less current portion | 883,905 | 274,863 | |
Secured trade credit facility, net of debt issuance costs | - | 2,961,566 | |
Deferred Consideration for Azuñia acquisition (long term) | - | 15,451,500 | |
Notes payable - less current portion and debt discount | 1,347,219 | 3,594,254 | |
Non-current liabilities od discontinued operations | 78,658 | 112,760 | |
Total liabilities | 32,078,725 | 28,532,545 | |
Commitments and contingencies (Note 12) | |||
Stockholders' equity: | |||
Common stock, $0.0001 par value; 15,000,000 shares authorized; | |||
10,149,252 and 9,675,028 shares issued and outstanding at | |||
September 30, 2020 and December 31, 2019, respectively | 1,014 | 967 | |
Additional paid-in capital | 52,609,016 | 51,566,438 | |
Accumulated deficit | (51,696,072) | (44,234,087) | |
Total Stockholders' Equity | 913,958 | 7,333,318 | |
Total Liabilities and Stockholders' Equity | $ 32,992,683 | $ 35,865,863 | |
Eastside Distilling, Inc. and Subsidiaries | ||||||||
Consolidated Statements of Operations | ||||||||
For the Three and Nine Months Ended September 30, 2020 and 2019 | ||||||||
Three Months Ended | Nine Months Ended | |||||||
September | September | September | September | |||||
Sales | $ 4,825,323 | $ 4,509,522 | $ 12,861,894 | $ 11,973,314 | ||||
Less excise taxes, customer programs | 327,105 | 223,014 | 966,644 | 591,828 | ||||
Net sales | 4,498,218 | 4,286,508 | 11,895,250 | 11,381,486 | ||||
Cost of sales | 2,899,005 | 2,597,023 | 7,855,679 | 7,189,264 | ||||
Gross profit | 1,599,213 | 1,689,485 | 4,039,571 | 4,192,222 | ||||
Operating expenses: | ||||||||
Advertising, promotional and selling | 890,151 | 1,819,412 | 3,733,926 | 4,372,641 | ||||
General and administrative expenses | 2,366,307 | 3,224,038 | 6,851,577 | 8,595,051 | ||||
Gain on disposal of property and | (111,410) | (14,104) | (130,546) | (14,104) | ||||
Total operating expenses | 3,145,048 | 5,029,346 | 10,454,957 | 12,953,588 | ||||
Loss from operations | (1,545,835) | (3,339,861) | (6,415,386) | (8,761,366) | ||||
Other income (expense), net | ||||||||
Interest expense | (247,354) | (113,287) | (874,729) | (338,599) | ||||
Other income | 36,745 | 58 | 36,745 | 852 | ||||
Total other expense, net | (210,609) | (113,229) | (837,984) | (337,747) | ||||
Loss before income taxes | (1,756,444) | (3,453,090) | (7,253,370) | (9,099,113) | ||||
Provision for income taxes | - | - | - | |||||
Loss from continuing operations | (1,756,444) | (3,453,090) | (7,253,370) | (9,099,113) | ||||
Loss from Discontinued operations | (10,577) | (91,209) | (208,615) | (337,112) | ||||
Net loss attributable to Eastside | $ (1,767,021) | $ (3,544,299) | $ (7,461,985) | $ (9,436,225) | ||||
Basic and diluted net loss per | $ (0.17) | $ (0.38) | $ (0.75) | $ (1.03) | ||||
Basic and diluted weighted average | 10,103,936 | 9,255,347 | 9,947,208 | 9,155,397 | ||||
Three Months Ended | Nine Months Ended | ||||||||
September 30 | September 30 | ||||||||
2020 | 2019 | 2020 | 2019 | ||||||
Net Loss | $ (1,767,021) | $ (3,544,299) | $ (7,461,985) | $ (9,436,225) | |||||
Add: | |||||||||
Interest Expense | 247,354 | 113,287 | 874,729 | 338,599 | |||||
Loss (gain) on disposal of property | (111,410) | (14,104) | (130,546) | (14,104) | |||||
Loss from discontinued operations | 10,577 | 91,209 | 208,615 | 337,112 | |||||
Stock-based compensation | 312,732 | 544,878 | 1,114,651 | 1,311,993 | |||||
Depreciation and amortization | 588,680 | 433,492 | 1,858,146 | 1,092,486 | |||||
Adjusted EBITDA | $ (719,088) | $ (2,375,537) | $ (3,536,390) | $ (6,370,139) | |||||
SOURCE Eastside Distilling, Inc.
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