Business Segment Information

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Business Segment Information

4. Business Segment Information

The Company’s internal management financial reporting consists of Craft C+P, Eastside spirits and corporate. Craft C+P offers digital can printing and co-packing services in Portland, Oregon allowing it to offer end-to-end production capabilities. Craft C+P operates 13 mobile lines in Washington and Oregon. The spirits brands span several alcoholic beverage categories, including whiskey, vodka, rum, and tequila and are sold on a wholesale basis to distributors in open states, and brokers in control states. The Company’s principal area of operation is in the U.S. and has two spirits customers that represents 37% of its revenue. Corporate consists of key accounting personnel and corporate expenses such as public company and board costs, as well as interest on debt.

The measure of profitability reviewed is condensed statements of operations and gross margins. These business segments reflect how operations are managed, operating performance is evaluated and the structure of internal financial reporting. Total asset information by segment is not provided to, or reviewed by, the chief operating decision maker (“CODM”) as it is not used to make strategic decisions, allocate resources or assess performance. The accounting policies of the segments are the same as those described for the Company in the Summary of Significant Accounting Policies in Note 3.

Eastside Distilling, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2023

(Unaudited)

Segment information was as follows for the three months ended March 31, 2023 and 2022:

(Dollars in thousands)	2023			2022
Craft C+P
Sales	$	1,456		$	1,076
Net sales		1,477			1,076
Cost of sales		1,578			1,111
Gross profit		(101	)		(35	)
Total operating expenses		749			1,047
Net loss		(884	)		(1,093	)
Gross margin		-7	%		-3	%
Interest expense	$	4		$	11
Depreciation and amortization		368			221
Significant noncash items:
Loss on disposal of property and equipment		6			-
Stock compensation		-			205
Spirits
Sales	$	1,423		$	2,704
Net sales		1,376			2,664
Cost of sales		634			1,682
Gross profit		742			982
Total operating expenses		522			625
Net income		221			357
Gross margin		54	%		37	%
Depreciation and amortization	$	39		$	42
Corporate
Total operating expenses	$	610		$	905
Net loss		(935	)		(1,300	)
Interest expense	$	325		$	395
Significant noncash items:
Stock compensation		111			170

Craft C+P’s sales increased due to new digital printing revenues offset by lower mobile revenues. Gross margin decreased compared to the prior year as digital printing continues to ramp up and is not at sufficient capacity to offset related operating expense. The Company also incurred higher raw material costs in the quarter related to digital printing.