Eastside Distilling Reports First Quarter 2024 Financial Results
Eastside Distilling (NASDAQ: EAST) reported its Q1 2024 financials. Gross sales fell to $2.5M from $2.9M YoY, mainly due to lower mobile canning and spirits sales. However, digital printing sales surged, achieving a record 4.8 million cans, a 320% increase YoY. Gross profit decreased to $0.2M from $0.6M, with a gross margin drop from 22% to 8%. The Company decreased operating costs by $0.6M due to headcount reduction and lower professional fees. Net loss improved to $1.3M from $1.6M. Adjusted EBITDA also saw an improvement, with Craft and Spirits segments showing better performance. The company continues its restructuring, focusing on profitable spirits brands and regions.
- Digital printing sales increased by 320% YoY, achieving a record 4.8 million cans.
- Operating costs decreased by $0.6 million due to lower headcount and professional fees.
- Net loss improved to $1.3M from $1.6M compared to the previous year.
- Adjusted EBITDA saw improvement, with Craft's EBITDA loss improving to $(0.3)M and Spirits reporting $(0.1)M.
- Gross sales fell to $2.5M from $2.9M YoY.
- Gross profit decreased to $0.2M from $0.6M.
- Gross margin dropped from 22% to 8%.
- Spirits sales were lower due to the non-recurring bulk sale of barrels in 2023.
Insights
Eastside Distilling's financial results for Q1 2024 present a mixed picture. On one hand, the company achieved a significant milestone with its craft digitally printed cans, which saw a +320% increase over the prior year, reaching a quarter-record 4.8 million cans. This suggests strong growth in a segment that could be a key revenue driver moving forward. However, the overall gross sales decreased from
The shrinkage in gross profit and gross margin is notable, with gross profit falling from
The decline in net loss from
The significant growth in digitally printed cans highlights a shift in consumer preferences towards more customized and artisanal product offerings. The +320% increase in printed cans points to a robust demand in the market, possibly driven by a niche consumer base that values bespoke products. This could position Eastside Distilling favorably within the craft beverage market, which continues to see a rise in consumer interest for unique, high-quality products.
However, the decline in spirits sales and the overall contraction in gross sales suggest broader market challenges. The decrease in gross margin is particularly concerning and indicates potential pricing pressures or increased production costs. While the realignment of investment towards more profitable spirits brands and regions appears to be a strategic move, its success will largely depend on the ability of these brands to gain market traction and consumer loyalty.
For retail investors, it is essential to consider the competitive landscape of the craft beverage industry. Increased competition and market saturation could pose challenges to sustained growth. Monitoring the company's market share within the digital can printing segment and the effectiveness of its realignment strategy will be key to evaluating its future performance.
The restructuring efforts highlighted in the report demonstrate a strategic pivot towards optimizing operational efficiency and focusing on core profitable areas. By reducing headcount and professional fees, Eastside Distilling has managed to cut down operational costs significantly. This is a common strategy in turnaround management aimed at stabilizing the company's financials.
The improvement in EBITDA, though still negative, suggests that the company is making progress towards financial stabilization. The focus on higher margin products like digitally printed cans is a strategic move that aligns with current market trends favoring craft and artisanal products. However, the persistent net loss indicates that there is still much work to be done to achieve profitability.
For retail investors, understanding the implications of these strategic changes is crucial. The ability of the management to execute the restructuring plan effectively and drive growth in profitable segments will be key to the company's long-term success. Investors should keep an eye on subsequent quarters to see if these strategic initiatives continue to yield positive results.
Company to Host Conference Call at 5:00 pm ET Monday May 13, 2024
First Quarter 2024 Highlights:
- Craft digitally printed a quarter-record 4.8 million cans representing a +
320% increase over the prior year - Both operating segments made improvements in the quarter over the prior year excluding barrel sales at Spirits
- Company decreased operating costs over
$0.6 million
Financial Results
Gross sales for the three months ending March 31, 2024 decreased to
Gross profit for the three months ending March 31, 2024 decreased to
Operating costs for the three months ending March 31, 2024 decreased to
Net loss for the three months ending March 31, 2024 decreased to
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 final table below provides a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure.
First Quarter 2024 Conference Call Details
Date and Time: Monday, May 13, 2024 at 5:00 pm 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, replay access code #10189029. 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
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 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 audited 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, 2023, 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 March 31, 2024 and December 31, 2023 Dollars in thousands, except share and per share | ||||||||
March 31, 2024 | December 31, 2023 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 336 | $ | 403 | ||||
Trade receivables, net | 673 | 559 | ||||||
Inventories | 3,189 | 3,212 | ||||||
Prepaid expenses and other current assets | 498 | 363 | ||||||
Total current assets | 4,696 | 4,537 | ||||||
Property and equipment, net | 4,571 | 4,768 | ||||||
Right-of-use assets | 2,388 | 2,602 | ||||||
Intangible assets, net | 4,902 | 5,005 | ||||||
Other assets, net | 465 | 568 | ||||||
Total Assets | $ | 17,022 | $ | 17,480 | ||||
Liabilities and Stockholders' Equity (Deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,392 | $ | 2,076 | ||||
Accrued liabilities | 739 | 575 | ||||||
Deferred revenue | 66 | 88 | ||||||
Current portion of secured credit facilities, related party | 2,680 | - | ||||||
Current portion of secured credit facilities, net of debt issuance costs | 364 | - | ||||||
Current portion of notes payable | 8,079 | 486 | ||||||
Current portion of notes payable, related party | 92 | 92 | ||||||
Current portion of lease liabilities | 903 | 888 | ||||||
Other current liability, related party | 587 | - | ||||||
Total current liabilities | 15,902 | 4,205 | ||||||
Lease liabilities, net of current portion | 1,596 | 1,824 | ||||||
Secured credit facilities, related party | - | 2,700 | ||||||
Secured credit facilities, net of debt issuance costs | - | 342 | ||||||
Notes payable, net of current portion | - | 7,556 | ||||||
Total liabilities | 17,498 | 16,627 | ||||||
Stockholders' equity (deficit): | ||||||||
Common stock, | - | - | ||||||
Preferred stock, | - | - | ||||||
Preferred stock, | - | - | ||||||
Additional paid-in capital | 83,561 | 83,559 | ||||||
Accumulated deficit | (84,037) | (82,706) | ||||||
Total stockholders' equity (deficit) | (476) | 853 | ||||||
Total Liabilities and Stockholders' Equity (Deficit) | $ | 17,022 | $ | 17,480 | ||||
Eastside Distilling, Inc. and Subsidiaries For the Three Months Ended March 31, 2024 and 2023 (Dollars and shares in thousands, except per share amounts) (Unaudited)
| ||||||||
Consolidated Statements of Operations: | ||||||||
2024 | 2023 | |||||||
Sales | $ | 2,487 | $ | 2,879 | ||||
Less customer programs and excise taxes | 76 | 26 | ||||||
Net sales | 2,411 | 2,853 | ||||||
Cost of sales | 2,225 | 2,212 | ||||||
Gross profit | 186 | 641 | ||||||
Operating expenses: | ||||||||
Sales and marketing expenses | 251 | 511 | ||||||
General and administrative expenses | 1,105 | 1,364 | ||||||
(Gain) loss on disposal of property and equipment | (120) | 6 | ||||||
Total operating expenses | 1,236 | 1,881 | ||||||
Loss from operations | (1,050) | (1,240) | ||||||
Other income (expense), net | ||||||||
Interest expense | (248) | (329) | ||||||
Other income (expense) | 5 | (29) | ||||||
Total other expense, net | (243) | (358) | ||||||
Loss before income taxes | (1,293) | (1,598) | ||||||
Provision for income taxes | - | - | ||||||
Net loss | (1,293) | (1,598) | ||||||
Preferred stock dividends | (38) | (38) | ||||||
Net loss attributable to common shareholders | $ | (1,331) | $ | (1,636) | ||||
Basic and diluted net loss per common share | $ | (0.78) | $ | (2.00) | ||||
Basic and diluted weighted average common shares outstanding | 1,706 | 824 | ||||||
Eastside Distilling, Inc. and Subsidiaries For the Three Months Ended March 31, 2024 and 2023 (Dollars in thousands) (Unaudited)
| ||||||||
Segments: | ||||||||
(Dollars in thousands) | 2024 | 2023 | ||||||
Craft C+P | ||||||||
Sales | $ | 1,849 | $ | 1,456 | ||||
Net sales | 1,814 | 1,477 | ||||||
Cost of sales | 1,765 | 1,578 | ||||||
Gross profit | 49 | (101) | ||||||
Total operating expenses | 638 | 749 | ||||||
Net loss | (590) | (884) | ||||||
Gross margin | 3 | % | -7 | % | ||||
Interest expense | $ | - | $ | 4 | ||||
Depreciation and amortization | 270 | 368 | ||||||
Significant noncash items: | ||||||||
(Gain) loss on disposal of property and equipment | (120) | 6 | ||||||
Spirits | ||||||||
Sales | $ | 638 | $ | 1,423 | ||||
Net sales | 597 | 1,376 | ||||||
Cost of sales | 460 | 634 | ||||||
Gross profit | 137 | 742 | ||||||
Total operating expenses | 234 | 522 | ||||||
Net income (loss) | (92) | 221 | ||||||
Gross margin | 23 | % | 54 | % | ||||
Depreciation and amortization | $ | 36 | $ | 39 | ||||
Corporate | ||||||||
Total operating expenses | $ | 364 | $ | 610 | ||||
Net loss | (611) | (935) | ||||||
Interest expense | $ | 248 | $ | 325 | ||||
Significant noncash items: | ||||||||
Stock compensation | 67 | 111 | ||||||
Adjusted EBITDA Reconciliation: | ||||||||
Three Months Ended March 31, | ||||||||
2024 | 2023 | |||||||
Net loss | $ | (1,293) | $ | (1,598) | ||||
Add: | ||||||||
Interest expense | 248 | 329 | ||||||
Depreciation and amortization | 306 | 407 | ||||||
EBITDA | (739) | (862) | ||||||
(Gain) loss on disposal of property and equipment | (120) | 6 | ||||||
Stock compensation | 67 | 111 | ||||||
Adjusted EBITDA | $ | (792) | $ | (745) | ||||
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SOURCE Eastside Distilling, Inc.
FAQ
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