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Eastside Reports Third Quarter 2019 Financial Results

PORTLAND, Ore., Nov. 14, 2019 /PRNewswire/ -- Eastside Distilling, Inc. (NASDAQ: 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. (NASDAQ: 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)
                   

 

SOURCE Eastside Distilling, Inc.

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