Eastside Distilling Reports Fourth Quarter 2023 Financial Results
- Record 14.1 million cans digitally printed in 2023.
- 88% increase expected in can printing for Q1 2024.
- Operating losses for spirits improved by 74%.
- Decrease in gross sales to $2.1 million in Q4 2023.
- Flat gross profit at $(0.1) million with a gross margin of (6)%.
- Operating costs decreased to $1.4 million in Q4 2023.
- Net loss decreased to $2.1 million in Q4 2023.
- Adjusted EBITDA reported as $(1.3) million for Q4 2023.
- 304,305 shares of common stock sold in public placements in 2023.
- 1-for-20 reverse common stock split on May 12, 2023.
- None.
Insights
Eastside Distilling's recent financial report indicates a mixed performance in the past quarter, with a notable decrease in gross sales from $2.4 million to $2.1 million. However, this has been partially offset by growth in their digital can printing segment, which suggests a strategic pivot towards this area of operation. The company's focus on profitable segments within the Spirits business is evident from the stable gross margin and the improved spirits margins.
From a market perspective, the growth in digital can printing is particularly interesting as it demonstrates adaptability and innovation in a competitive market. The company's expectation of record can printing results in the first quarter of 2024 could signal an emerging growth driver, potentially attracting investor interest.
The significant reduction in net loss from $9.7 million to $2.1 million, with a notable decrease in operating costs, reflects Eastside's efforts in restructuring and cost management. The reduction in headcount and professional fees, combined with a strategic realignment towards the most profitable spirits brands and regions, is a positive sign for operational efficiency.
However, investors should be cautious about the liquidity position, given the sale of over 300,000 shares to fund operations, which could be indicative of cash flow challenges. The reverse stock split also suggests a previous attempt to stabilize the stock price, a move that often raises concerns about a company's long-term value proposition.
When evaluating the financial statements, it is important to consider the use of non-GAAP measures such as adjusted EBITDA. While these measures can provide additional insights into a company's operational performance, they are not standardized and can vary significantly between companies. Investors should understand the specific adjustments Eastside is making when they report these figures, as these adjustments can sometimes be used to present a more favorable view of the company's financial health.
The reverse stock split is another area that requires careful legal scrutiny, as it can affect shareholder value and the market's perception of the company. It's essential to understand the legal implications and how it aligns with shareholder interests.
Company to Host Conference Call at 8:30 am ET Tuesday, April 2, 2024
Fourth Quarter 2023 Highlights:
- Craft digitally printed a record 14.1 million cans in 2023
- Company expecting record can printing in the first quarter of 2024 of over 4.7 million cans; an
88% increase year over year - Spirits operating losses improved by
74% and expects continued improvement in the first quarter of 2024
"The Company finished the year with substantially improved results in both businesses, most notably in our Spirits business," said Geoffrey Gwin, Eastside's CEO. "In addition, we are excited to report we expect record digital can printing results in the first quarter—we are off to a great start."
Financial Results
Gross sales for the three months ending December 31, 2023 decreased to
Gross profit for both the three months ending December 31, 2023 and 2022 was flat at
Operating costs for the three months ending December 31, 2023 decreased to
Net loss for the three months ending December 31, 2023 decreased to
During the year ending December 31, 2023, the Company sold 304,305 shares of common stock in at-the-market public placements, with the proceeds used primarily to fund the operations of its digital can printing business.
Reverse Stock Split
The Company effected a 1-for-20 reverse common stock split on May 12, 2023. All share quantities and per share information in this earnings release have been adjusted to give effect to this reverse stock split.
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.
Fourth Quarter 2023 Conference Call Details
Date and Time: Tuesday, April 2, 2024 at 8:30 am 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 #3217484. 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 December 31, 2023 and 2022 Dollars in thousands, except share and per share | ||||||||
2023 | 2022 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 403 | $ | 723 | ||||
Trade receivables, net | 559 | 836 | ||||||
Inventories | 3,212 | 4,442 | ||||||
Prepaid expenses and other current assets | 363 | 619 | ||||||
Total current assets | 4,537 | 6,620 | ||||||
Property and equipment, net | 4,768 | 5,741 | ||||||
Right-of-use assets | 2,602 | 2,988 | ||||||
Intangible assets, net | 5,005 | 5,758 | ||||||
Other assets, net | 568 | 369 | ||||||
Total Assets | $ | 17,480 | $ | 21,476 | ||||
Liabilities and Stockholders' Equity (Deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,076 | $ | 1,728 | ||||
Accrued liabilities | 575 | 1,509 | ||||||
Deferred revenue | 88 | 18 | ||||||
Current portion of secured credit facilities, net of debt issuance costs | - | 3,442 | ||||||
Current portion of note payable, related party | 92 | 4,598 | ||||||
Current portion of notes payable | 486 | - | ||||||
Current portion of lease liabilities | 888 | 991 | ||||||
Other current liability, related party | - | 725 | ||||||
Total current liabilities | 4,205 | 13,011 | ||||||
Lease liabilities, net of current portion | 1,824 | 2,140 | ||||||
Secured credit facilities, related party | 2,700 | - | ||||||
Secured credit facilities, net of debt issuance costs | 342 | - | ||||||
Note payable, related party | - | 92 | ||||||
Notes payable, net of current portion | 7,556 | 7,749 | ||||||
Total liabilities | 16,627 | 22,992 | ||||||
Stockholders' equity (deficit): | ||||||||
Common stock, | - | - | ||||||
Preferred stock, | - | - | ||||||
Preferred stock, | - | - | ||||||
Additional paid-in capital | 83,559 | 73,505 | ||||||
Accumulated deficit | (82,706) | (75,021) | ||||||
Total stockholders' equity (deficit) | 853 | (1,516) | ||||||
Total Liabilities and Stockholders' Equity (Deficit) | $ | 17,480 | $ | 21,476 | ||||
Eastside Distilling, Inc. and Subsidiaries For the Three Months and Years Ended December 31, 2023 and 2022 (Dollars and shares in thousands, except per share amounts) | ||||||||||||||||
Consolidated Statements of Operations: | ||||||||||||||||
Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Sales | $ | 2,081 | $ | 2,360 | $ | 10,798 | $ | 14,327 | ||||||||
Less customer programs and excise taxes | 79 | 51 | 299 | 444 | ||||||||||||
Net sales | 2,002 | 2,309 | 10,499 | 13,883 | ||||||||||||
Cost of sales | 2,120 | 2,457 | 9,438 | 11,442 | ||||||||||||
Gross profit | (118) | (148) | 1,061 | 2,441 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing expenses | 338 | 547 | 1,599 | 2,625 | ||||||||||||
General and administrative expenses | 1,256 | 1,291 | 4,646 | 6,407 | ||||||||||||
(Gain) loss on disposal of property and | (196) | (43) | (364) | 58 | ||||||||||||
Total operating expenses | 1,398 | 1,795 | 5,881 | 9,090 | ||||||||||||
Loss from operations | (1,516) | (1,943) | (4,820) | (6,649) | ||||||||||||
Other income (expense), net | ||||||||||||||||
Interest expense | (246) | (240) | (1,108) | (2,216) | ||||||||||||
Impairment loss | (364) | (7,453) | (364) | (7,453) | ||||||||||||
Loss on debt to equity conversion | - | - | (1,321) | - | ||||||||||||
Other income | (12) | (73) | 78 | 52 | ||||||||||||
Total other income (expense), net | (622) | (7,766) | (2,715) | (9,617) | ||||||||||||
Loss before income taxes | (2,138) | (9,709) | (7,535) | (16,266) | ||||||||||||
Provision for income taxes | - | - | - | - | ||||||||||||
Net loss | (2,138) | (9,709) | (7, 535) | (16,266) | ||||||||||||
Preferred stock dividends | (37) | (37) | (150) | (150) | ||||||||||||
Net loss attributable to common shareholders | $ | (2,175) | $ | (9,746) | $ | (7,685) | $ | (16,416) | ||||||||
Basic net loss per common share | $ | (1.39) | $ | (12.42) | $ | (7.04) | $ | (21.40) | ||||||||
Basic weighted average common shares | 1,570 | 785 | 1,091 | 767 | ||||||||||||
Eastside Distilling, Inc. and Subsidiaries For the Three Months and Years Ended December 31, 2023 and 2022 (Dollars in thousands) | ||||||||||||||||
Segments: | ||||||||||||||||
Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Craft C+P | ||||||||||||||||
Sales | $ | 1,180 | $ | 1,245 | $ | 6,817 | $ | 5,626 | ||||||||
Net sales | 1,154 | 1,245 | 6,712 | 5,526 | ||||||||||||
Cost of sales | 1,451 | 1,532 | 6,829 | 6,341 | ||||||||||||
Gross profit | (297) | (287) | (117) | (815) | ||||||||||||
Total operating expenses | 624 | 468 | 2,637 | 3,494 | ||||||||||||
Net loss | $ | (937) | $ | (763) | $ | (2,749) | $ | (4,249) | ||||||||
Gross margin | -26 % | -23 % | -2 % | -15 % | ||||||||||||
Spirits | ||||||||||||||||
Sales | $ | 901 | $ | 1,115 | $ | 3,981 | $ | 8,701 | ||||||||
Net sales | 848 | 1,064 | 3,787 | 8,357 | ||||||||||||
Cost of sales | 669 | 925 | 2,609 | 5,101 | ||||||||||||
Gross profit | 179 | 139 | 1,178 | 3,256 | ||||||||||||
Total operating expenses | 293 | 569 | 1,476 | 2,532 | ||||||||||||
Impairment loss | 364 | 7,453 | 364 | 7,453 | ||||||||||||
Net loss | $ | (474) | $ | (7,960) | $ | (601) | $ | (6,781) | ||||||||
Gross margin | 21 % | 13 % | 31 % | 39 % | ||||||||||||
Corporate | ||||||||||||||||
Total operating expenses | $ | 481 | $ | 758 | $ | 1,768 | $ | 3,064 | ||||||||
Loss on debt to equity conversion | - | - | 1,321 | - | ||||||||||||
Net loss | $ | (727) | $ | (986) | $ | (4,185) | $ | (5,236) | ||||||||
Adjusted EBITDA Reconciliation: | ||||||||||||||||
Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net loss | $ | (2,138) | $ | (9,709) | $ | (7,535) | $ | (16,266) | ||||||||
Add: | ||||||||||||||||
Interest expense | 246 | 240 | 1,108 | 2,216 | ||||||||||||
Depreciation and amortization | 234 | 416 | 1,356 | 1,520 | ||||||||||||
EBITDA | (1,658) | (9,053) | (5,071) | (12,530) | ||||||||||||
(Gain) loss on disposal of property and | (196) | (43) | (364) | 58 | ||||||||||||
Loss on debt to equity conversion | - | - | 1,321 | - | ||||||||||||
Impairment loss | 364 | 7,453 | 364 | 7,453 | ||||||||||||
Stock compensation | 148 | 17 | 246 | 663 | ||||||||||||
Adjusted EBITDA | $ | (1,342) | $ | (1,626) | $ | (3,504) | $ | |||||||||
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SOURCE Eastside Distilling, Inc.
FAQ
What was the record number of cans digitally printed by Eastside Distilling in 2023?
How much is the expected increase in can printing for the first quarter of 2024?
What was the improvement percentage in operating losses for spirits?
What was the gross profit for the three months ending December 31, 2023?
How many shares of common stock were sold in public placements in 2023?
