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Eastside Reports Third Quarter 2019 Financial Results

PORTLAND, Ore., Nov. 14, 2019 /PRNewswire/ -- Eastside Distilling, Inc. (EAST) reported third quarter 2019 financial results for the period ended September 30, 2019.

Financial Results
Gross sales were $4.7 million, an increase of 179% compared to $1.7 million in Q3 2018, and up 12% sequentially compared to $4.3 million in Q2 2019.


 Q3 2019 


Q2 2019


Q3 2018


 Amount 


 Amount 

Change


 Amount 

Change

Total Gross Sales

$  4,746,815


$  4,252,415

12%


$  1,698,848

179%









Branded and Retail Sales

$  2,357,546


$  1,529,413

54%


$  1,243,693

90%









National Platform

$  1,458,488


$     614,888

137%


$     554,757

163%









Oregon

$     899,058


$     914,525

-2%


$     688,936

30%









Co-Packing Services

$  2,389,269


$  2,723,002

-12%


$     455,155

425%


The operations of Azuñia, which were acquired on September 12, 2019, contributed $232,571 in gross sales during the abbreviated quarter. 

Gross margins on net sales improved to 40% during Q3 2019 compared to 38% in Q2 2019, and flat compared to 40% in the year ago third quarter. Operating expenses of $5.2 million were up compared to $4.3 million in Q2 2019 and compared to $2.7 million in Q3 2018.

The Company incurred approximately $420,000 of expenses during Q3 2019 pertaining to legal and other acquisition related expenses associated with the Azuñia transaction and board-related matters.

Adjusted EBITDA (see attached table) during Q3 2019 was $(2.4) million, which compared to $(2.0) million in Q2 2019 and $(1.4) million in Q3 2018.  Excluding the one-time expenses pertaining to legal and other acquisition related expenses associated with the Azuñia transaction and board-related matters, Adjusted EBITDA would have been approximately $(2.0) million.

Net loss was $(3.5) million during Q3 2019 compared to a net loss of $(2.9) million in Q2 2019 and $(2.6) million in Q3 2018.

Case Volume (9-Liter Equivalent)


 Q3 2019 


Q2 2019


Q3 2018


 Amount 


 Amount 

Change


 Amount 

Change

Total Branded Case Volume

18,710


11,697

60%


8,991

108%









Redneck Riviera Case Volume

10,577


4,271

148%


3,547

198%

Management Commentary

"We delivered strong third quarter case count and revenues. Demand for our products in off-premise distribution channels is strong," said Lawrence Firestone CEO. "We closed the acquisition of Azuñia just before the quarter end and are excited to integrate these great organic tequila products into our lineup as this will continue to add to our growth story going forward."

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. Management believes this non-GAAP measure provides useful information about the Company's operating results.

The Company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, stock-based compensation and the newly implemented lease accounting. 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: 5:00pm ET (2:00pm PT) on Thursday, November 14, 2019

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 Investor Relations section of the Company's website at https://www.eastsidedistilling.com/investors/.

Replay: A teleconference replay of the call will be available for three days at (877) 344-7529 or (412) 317-0088, confirmation #10136838. A webcast replay will be available in the Investor Relations section of the Company's website at https://www.eastsidedistilling.com/investors/ for 90 days.

About Eastside Distilling
Eastside Distilling, Inc. (EAST), founded in 2008, has developed, matured, perfected or acquired, then launched many award-winning spirits, while evolving to meet the growing demand for quality products and services associated with the burgeoning craft and premium beverage trade. The Company's portfolio includes Redneck Riviera Whiskey, a partnership with John Rich, the multi-platinum country-music artist and one-half of the award-winning duo Big & Rich, the Quercus Garryana barrel-finished Burnside Whiskey family, Azuñia Organic Tequilas, Hue-Hue Cold Brewed Coffee Rum, Portland Mule canned cocktails, Outlandish CBD Seltzers and Tonics, and others. The Company is honored to give a percentage of sales proceeds on Redneck Riviera products to Folds of Honor, a charitable foundation that awards scholarships to spouses and children of fallen veterans. In addition to the Company's branded products, the Company has strategically enhanced its capabilities to bring new and trending products to the market, including its Craft Canning + Bottling subsidiary, which is one of the Northwest's leading independent spirit bottlers and ready-to-drink canners. For more information visit: www.eastsidedistilling.com or follow the Company on Twitter and Facebook.

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; 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 release of new products and entering into RTD and CBD markets, growth prospects, receipt of future authorizations or anticipated revenues, our expected success in integrating acquired entities and assets, including expected co-packing sales momentum and production efficiencies associated with the acquisition of CC+B, and our strategic focus, product verticals, and expected financial performance and profitability. 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 November 14, 2019 on Form 10-Q for the period ended September 30, 2019, 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, 2019 and December 31, 2018






September 30, 2019


December 31, 2018

Assets




Current assets:




Cash

$        446,983


$  10,642,877

Trade receivables

2,126,665


1,064,078

Inventories

12,257,883


11,017,459

Prepaid expenses and current assets

609,306


765,146

Total current assets

15,440,837


23,489,560

Property and equipment, net

5,608,920


1,758,130

Right of use asset

899,483


-

Intangible assets, net

14,648,543


285,676

Goodwill

28,182


28,182

Other assets

1,111,900


796,260

Total Assets

$    37,737,865


$  26,357,808





Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable

$     1,872,016


$    1,984,690

Accrued liabilities

801,329


386,166

Deferred revenue

968


1,728

Current portion of notes payable

558,912


-

Current portion of lease liability

624,564



Total current liabilities

3,857,789


2,372,584

Lease Liability - less current portion

425,775


-

Secured trade credit facility, net of debt issuance costs

2,952,413


2,934,106

Deferred Consideration for Azunia acquisition  (Long Term)

12,781,092



Notes payable - less current portion and debt discount

3,924,762


2,300,000

Total liabilities

23,941,831


7,606,690





Commitments and contingencies (Note 10)








Stockholders' equity:




Common stock, $0.0001 par value; 15,000,000 shares authorized; 9,516,581 and 8,764,085 shares issued and outstanding at Sept 30, 2019 and December 31, 2018, respectively 

951


876

Additional paid-in capital

50,557,291


45,888,872

Stock payable

-


-

Accumulated deficit

(36,762,208)


(27,138,630)

Total Eastside Distilling, Inc. Stockholders' Equity

13,796,034


18,751,118

Noncontrolling interests

-


-

Total Stockholders' Equity

13,796,034


18,751,118

Total Liabilities and Stockholders' Equity

$    37,737,865


$  26,357,808





 

Eastside Distilling, Inc. and Subsidiaries

Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2019 and 2018













Three Months Ended


Nine Months Ended



Sept 30, 2019


Sept 30, 2018


Sept 30, 2019


Sept 30, 2018

Sales


$   4,746,815


$ 1,698,848


$  12,684,930


$   4,787,097

Less excise taxes, customer programs and incentives


311,975


209,801


858,613


553,030

Net sales


4,434,840


1,489,047


11,826,317


4,234,067

Cost of sales


2,668,211


886,828


7,402,749


2,278,119

Gross profit


1,766,629


602,219


4,423,568


1,955,948

Operating expenses:









Advertising, promotional and selling expenses


1,824,893


1,128,593


4,394,311


2,838,417

General and administrative expenses


3,386,910


1,559,833


9,141,839


4,267,831

Loss on disposal of property and equipment


(14,104)


-


(14,104)


-

Total operating expenses


5,197,699


2,688,426


13,522,046


7,106,248

Loss from operations


(3,431,070)


(2,086,207)


(9,098,478)


(5,150,300)

Other income (expense), net









Interest expense


(113,287)


(540,250)


(338,599)


(703,903)

Other income (expense)


58


-


852


2,700

   Total other expense, net


(113,229)


(540,250)


(337,747)


(701,203)

Loss before income taxes


(3,544,299)


(2,626,457)


(9,436,225)


(5,851,503)

Provision for income taxes


-


-


-


-

Net loss


(3,544,299)


(2,626,457)


(9,436,225)


(5,851,503)










Dividends on convertible preferred stock


-


-


-


-

Income (loss) attributable to noncontrolling interests


-


(534)


-


(637)










Net loss attributable to Eastside Distilling, Inc. common shareholders


$  (3,544,299)


$(2,626,991)


$   (9,436,225)


$  (5,852,140)










Basic and diluted net loss per common share


$          (0.38)


$        (0.42)


$              (1.03)


$             (1.07)










Basic and diluted weighted average common shares outstanding


9,255,347


6,256,459


9,155,397


5,462,070










 














Three Months Ended


Nine Months Ended




September 30


September 30




2019


2018


2019


2018











Net Loss

$ (3,544,299)


$ (2,626,457)


$ (9,436,225)


$ (5,851,503)


Add:










Interest Expense

113,287


540,250


338,599


703,903



Loss on disposal of property and equipment

-


-


-


-



Provision for Income taxes

-


-


-


-



Purchase accounting adjustments

-


-


-


-



Stock-based compensation

147,403


334,913


510,674


986,193



Stock issued for services

397,475


259,993


801,319


456,071



Depreciation and amortization

445,703


103,223


1,130,912


262,168











Adjusted EBITDA

$ (2,440,431)


$ (1,388,078)


$ (6,654,721)


$ (3,443,168)











 

Cision

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