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By Ian Gilson, PhD, CFA
READ THE FULL EAST RESEARCH REPORT
Eastside Distilling (EAST) announced its year end 2018 results on March 28, 2019.
For the full year gross sales increased from $3.8 million to $7.2 million, net sales from $2.6 million to $6.1 million. The net loss increased from $5.3 million to $9.0 million. Net sales for the 4Q18 increased 144% with branded product shipment up 135% driven by Redneck Riviera Whisky, RRW, which was 47% of total branded shipments.
The growth in Redneck Riviera Whiskey is unprecedented in the craft spirits business and with the replenishment cycle just beginning we expect growth to continue through 2019. The whiskey is now available in Albertsons, Kroger, Costco and Walmart as well as many regional chains. A larger size bottle will be available this year as well as a RTD (Ready To Drink) version.
The 4Q18 included sales of unwanted inventory at breakeven prices, which depressed margins but freed up cash, and this will benefit gross margins in 2019. We expect margins to improve as the year progresses.
Eastside has started selling RTD drinks within Oregon, including one with hemp derived CBD extract (a white solid nor a dark brown liquid).
In Jan. 2019 Eastside purchased Craft Canning LLC, Craft had 2018 revenue of $6.0 million and was profitable. The merger of the two operations will more than double net sales and both the canning operations of Eastside and Craft will be integrated. Craft is a mobile operator, moving to can at a customer's site but some customers can use Eastside's facilities.
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