UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Item 2.02 Results of Operations and Financial Condition.
On August 14, 2023, Eastside Distilling, Inc. (the “Company”) issued a press release announcing financial results for the fiscal quarter ended June 30, 2023. The text of the press release is furnished as Exhibit 99.1 to this current report.
Item 7.01 Regulation FD Disclosure.
On August 14, 2023, Eastside issued a press release, the text of which is furnished as Exhibit 99.1 to this current report. The press release reported that Eastside has accompanied earnings with an updated investor presentation. The presentation may be reviewed at the Investor Information section of Eastside’s website at eastsidedistilling.com/events-and-presentations.
The information in this Item 2.02, 7.02 and Exhibit 99.1 hereto shall not be deemed “filed” for the purposes of or otherwise subject to the liabilities under Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Unless expressly incorporated into a filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, the information contained in this Item 2.02 and Exhibit 99.1 hereto shall not be incorporated by reference into any Company filing, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Directors
On August 8, 2023, the Board of Directors (the “Board”) of the Company accepted the resignation of Mr. Joseph Giansante from the Board, effective August 11, 2023.
On August 8, 2023, the Board appointed Mr. Geoffrey Gwin to serve as a member of the Board beginning August 11, 2023 and until his successor is duly elected and qualifies or until his earlier death, resignation, or removal. Information concerning Mr. Gwin follows.
Geoffrey Gwin was appointed as the Company’s Chief Executive Officer on February 1, 2022 and Chief Financial Officer as of June 15, 2020. Mr. Gwin previously served as a member of the Board of Directors from August 2019 through June 2020. Mr. Gwin formed Group G Capital Partners, LLC in 2003 and has continuously managed its related strategies as its Chief Investment Officer. From June 2018 until February 2020, Mr. Gwin was a Member of Quad Capital Management Advisors, LLC and the Managing Member of Group G Capital Partners, LLC. Mr. Gwin is a Board Observer of SMArtX Advisory Solutions, Inc., a private company offering technology solutions to wealth advisors, RIA’s and other financial services firms. Mr. Gwin has held positions at Symphony Asset Management, BHF-BANK Aktiengesellschaft, and Citibank, Inc. over the last two decades. Mr. Gwin holds a Bachelor of Science in Business from Wake Forest University and is a Chartered Financial Analyst.
| Exhibit | Description | |
| 99.1 | Press Release dated August 14, 2023 | |
| 104 | Cover page interactive data file (embedded within the iXBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: August 14, 2023
| EASTSIDE DISTILLING, INC. | ||
| By: | /s/ Geoffrey Gwin | |
| Geoffrey Gwin | ||
| Chief Executive Officer and Chief Financial Officer | ||
Exhibit 99.1
Eastside Distilling Reports Second Quarter 2023 Financial Results
Company to Host Conference Call at 5:00pm ET Today
PORTLAND, Oregon, August 14, 2023 /PRNewswire/ — Eastside Distilling, Inc. (NASDAQ: EAST) (“Eastside” or the “Company”), a consumer-focused beverage company that builds craft inspired experiential brands and high-quality artisan products around premium spirits, digital can printing, co-packing and mobile filling, reported second quarter end 2023 financial results for the period ended June 30, 2023.
Second Quarter 2023 Highlights:
| ● | Craft C+P reports a 43% increase in net sales from the prior-year second quarter | |
| ● | Craft C+P printed a record number of cans for four consecutive months, over 4 million cans in the quarter, and achieved positive EBITDA for the Craft C+P segment in June 2023 | |
| ● | Spirits made incremental progress cutting operating losses from the prior-year second quarter |
“While I am extremely pleased with the increase in digital can sales, the Company made progress improving operations across both of its businesses,” said Geoffrey Gwin, Eastside’s CEO. “Craft has become the preeminent decorated digital can provider in the Pacific Northwest and our spirits business has made more progress in reaching our goal of EBITDA profitability than we expected at this point in the year.”
Financial Results
Gross sales for the three months ending June 30, 2023 decreased to $2.8 million from $5.1 million due to bulk spirits sales of $2.6 million for the three months ending June 30, 2022. Excluding bulk spirits sales, gross sales increased $0.2 million from the prior-year quarter. Craft C+P sales increased due to digital can printing as that business segment won new customers and expanded business with existing customers.
Gross profit for the three months ending June 30, 2023 decreased to $26,000 from $1.5 million due to bulk spirits sales gross profit of $1.6 million for the three months ending June 30, 2022. Excluding bulk spirits gross profit, gross profit increased $0.2 million from the prior-year quarter. Gross margin was 1% for the three months ending June 30, 2023 and 30% for the three months ending June 30, 2022. Last year’s gross margins were due to selling a portion of our inventory of highly valuable whiskey inventory. Craft margins increased sequentially as digital can printing volumes improved through the quarter.
Operating costs for the three months ending June 30, 2023 decreased to $1.4 million from $2.6 million for the three months ending June 30, 2022 primarily related to decreased compensation related to headcount, professional fees and sponsorship costs. The Company has undertaken a broad restructuring in spirits which has lowered sales and realigned investment focusing on the most profitable spirits brands and regions.
Net loss for the three months ending June 30, 2023 decreased to $1.6 million from $1.8 million, which included bulk spirits sales net income of $1.6 million for the three months ending June 30, 2022. Excluding bulk spirits net income, net loss was reduced by $1.7 million from the prior-year quarter. The Company reported adjusted EBITDA of $(1.0) million and $(0.4) million for the three months ending June 30, 2023 and 2022, respectively. Excluding bulk spirits adjusted EBITDA of $1.6 million for the three months ending June 30, 2022, adjusted EBITDA improved $1.0 million from the prior-year quarter. (See description of adjusted EBIDTA in “Use of Non-GAAP Measures” below.)
During the six months ending June 30, 2023, the Company sold 135,167 shares of common stock in at-the-market public placements with the proceeds used to fund operations and invest in working capital primarily in its digital can printing business.
The Company is reaffirming guidance that Craft C+P will continue to see improvements by printing a record number of cans and generating cash flow in the third quarter of 2023, and spirits will further reduce its operating loss in the third quarter.
Reverse Stock Split
The Company effected a 1-for-20 reverse common stock split on May 12, 2023. All shares 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 table below provides a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure.
Second Quarter 2023 Conference Call Details
Date and Time: Monday, August 14, 2023 at 5:00pm 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.
Presentation Information: Slides relating to this earnings release can be found on the Company’s website in the Events and Presentations section of the Investor page at https://www.eastsidedistilling.com/events-and-presentations
Replay: A teleconference replay of the call will be available for three days at (877) 344-7529 or (412) 317-0088, replay access code #2681925. 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 Portland, Oregon, since 2008. The Company is distinguished by its highly decorated product lineup that includes Azuñia Tequilas®, Burnside Whiskeys®, Hue-Hue Coffee Rum®, and Portland Potato Vodkas®. All Eastside spirits are crafted from natural ingredients for quality and taste. Eastside’s Craft Canning + Printing subsidiary is one of the Northwest’s leading independent mobile canning, co-packing and digital can printing businesses.
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 unaudited financial statements and accompanying notes filed by the Company with the Securities and Exchange Commission on Form 10-Q for the period ended June 30, 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
Dollars in thousands, except share and per share
| June 30, 2023 | December 31, 2022 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 839 | $ | 723 | ||||
| Trade receivables, net | 926 | 876 | ||||||
| Inventories | 3,610 | 4,442 | ||||||
| Prepaid expenses and current assets | 768 | 579 | ||||||
| Total current assets | 6,143 | 6,620 | ||||||
| Property and equipment, net | 5,156 | 5,741 | ||||||
| Right-of-use assets | 2,492 | 2,988 | ||||||
| Intangible assets, net | 5,576 | 5,758 | ||||||
| Other assets, net | 340 | 369 | ||||||
| Total Assets | $ | 19,707 | $ | 21,476 | ||||
| Liabilities and Stockholders’ Equity (Deficit) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,363 | $ | 1,728 | ||||
| Accrued liabilities | 1,481 | 1,509 | ||||||
| Deferred revenue | 154 | 18 | ||||||
| Current portion of secured credit facilities, net of debt issuance costs | 3,513 | 3,442 | ||||||
| Current portion of note payable, related party | 4,654 | 4,598 | ||||||
| Current portion of notes payable | 7,749 | - | ||||||
| Current portion of lease liabilities | 803 | 991 | ||||||
| Other current liability, related party | 1,224 | 725 | ||||||
| Total current liabilities | 21,941 | 13,011 | ||||||
| Lease liabilities, net of current portion | 1,804 | 2,140 | ||||||
| Note payable, related party | - | 92 | ||||||
| Notes payable, net of current portion | - | 7,749 | ||||||
| Total liabilities | 23,745 | 22,992 | ||||||
| Stockholders’ equity (deficit): | ||||||||
| Common stock, $0.0001 par value; 1,750,000 shares authorized; 968,176 and 809,963 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | - | - | ||||||
| Preferred stock, $0.0001 par value; 100,000,000 shares authorized; 2,500,000 shares issued and outstanding as of both June 30, 2023 and December 31, 2022 | - | - | ||||||
| Additional paid-in capital | 74,299 | 73,505 | ||||||
| Accumulated deficit | (78,337 | ) | (75,021 | ) | ||||
| Total stockholders’ equity (deficit) | (4,038 | ) | (1,516 | ) | ||||
| Total Liabilities and Stockholders’ Equity (Deficit) | $ | 19,707 | $ | 21,476 | ||||
Eastside Distilling, Inc. and Subsidiaries
For the Three and Six Months Ended June 30, 2023 and 2022
(Dollars and shares in thousands, except per share amounts)
(Unaudited)
Consolidated Statements of Operations:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Sales | $ | 2,757 | $ | 5,123 | $ | 5,636 | $ | 8,903 | ||||||||
| Less customer programs and excise taxes | 96 | 266 | 122 | 306 | ||||||||||||
| Net sales | 2,661 | 4,857 | 5,514 | 8,597 | ||||||||||||
| Cost of sales | 2,635 | 3,405 | 4,847 | 6,198 | ||||||||||||
| Gross profit | 26 | 1,452 | 667 | 2,399 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing expenses | 369 | 729 | 880 | 1,376 | ||||||||||||
| General and administrative expenses | 1,194 | 1,748 | 2,558 | 3,678 | ||||||||||||
| (Gain) loss on disposal of property and equipment | (135 | ) | 101 | (129 | ) | 101 | ||||||||||
| Total operating expenses | 1,428 | 2,578 | 3,309 | 5,155 | ||||||||||||
| Loss from operations | (1,402 | ) | (1,126 | ) | (2,642 | ) | (2,756 | ) | ||||||||
| Other income (expense), net | ||||||||||||||||
| Interest expense | (326 | ) | (762 | ) | (655 | ) | (1,168 | ) | ||||||||
| Other income | 85 | 100 | 56 | 100 | ||||||||||||
| Total other income (expense), net | (241 | ) | (662 | ) | (599 | ) | (1,068 | ) | ||||||||
| Loss before income taxes | (1,643 | ) | (1,788 | ) | (3,241 | ) | (3,824 | ) | ||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net loss | (1,643 | ) | (1,788 | ) | (3,241 | ) | (3,824 | ) | ||||||||
| Preferred stock dividends | (37 | ) | (36 | ) | (75 | ) | (75 | ) | ||||||||
| Net loss attributable to common shareholders | $ | (1,680 | ) | $ | (1,824 | ) | $ | (3,316 | ) | $ | (3,899 | ) | ||||
| Basic net loss per common share | $ | (1.96 | ) | $ | (2.39 | ) | $ | (3.94 | ) | $ | (5.16 | ) | ||||
| Basic weighted average common shares outstanding | 856 | 764 | 841 | 755 | ||||||||||||
Eastside Distilling, Inc. and Subsidiaries
For the Three and Six Months Ended June 30, 2023 and 2022
(Dollars in thousands)
Segments:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (Dollars in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Craft C+P | ||||||||||||||||
| Sales | $ | 1,949 | $ | 1,429 | $ | 3,405 | $ | 2,505 | ||||||||
| Net sales | 1,904 | 1,329 | 3,381 | 2,405 | ||||||||||||
| Cost of sales | 1,967 | 1,698 | 3,545 | 2,809 | ||||||||||||
| Gross profit | (63 | ) | (369 | ) | (164 | ) | (404 | ) | ||||||||
| Total operating expenses | 565 | 1,097 | 1,314 | 1,947 | ||||||||||||
| Net loss | $ | (578 | ) | $ | (1,376 | ) | $ | (1,462 | ) | $ | (2,272 | ) | ||||
| Gross margin | -3 | % | -28 | % | -5 | % | -17 | % | ||||||||
| Spirits | ||||||||||||||||
| Sales | $ | 808 | $ | 3,694 | $ | 2,231 | $ | 6,398 | ||||||||
| Net sales | 757 | 3,528 | 2,133 | 6,192 | ||||||||||||
| Cost of sales | 668 | 1,707 | 1,302 | 3,389 | ||||||||||||
| Gross profit | 89 | 1,821 | 831 | 2,803 | ||||||||||||
| Total operating expenses | 358 | 722 | 880 | 1,347 | ||||||||||||
| Net income (loss) | $ | (238 | ) | $ | 1,099 | $ | (17 | ) | $ | 1,456 | ||||||
| Gross margin | 12 | % | 52 | % | 39 | % | 45 | % | ||||||||
| Corporate | ||||||||||||||||
| Total operating expenses | $ | 505 | $ | 759 | $ | 1,115 | $ | 1,861 | ||||||||
| Net loss | $ | (827 | ) | $ | (1,511 | ) | $ | (1,762 | ) | $ | (3,008 | ) | ||||
Adjusted EBITDA Reconciliation:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net loss | $ | (1,643 | ) | $ | (1,788 | ) | $ | (3,241 | ) | $ | (3,824 | ) | ||||
| Add: | ||||||||||||||||
| Interest expense | 326 | 762 | 655 | 1,168 | ||||||||||||
| Depreciation and amortization | 410 | 423 | 817 | 686 | ||||||||||||
| EBITDA | (907 | ) | (603 | ) | (1,769 | ) | (1,970 | ) | ||||||||
| (Gain) loss on disposal of property and equipment | (135 | ) | 101 | (129 | ) | 101 | ||||||||||
| Stock compensation | 55 | 145 | 166 | 520 | ||||||||||||
| Adjusted EBITDA | $ | (987 | ) | $ | (357 | ) | $ | (1,732 | ) | $ | (1,349 | ) | ||||
INVESTOR RELATIONS CONTACT: ir@eastsidedistilling.com
This information is being distributed to you by: Eastside Distilling, Inc.
2321 NE Argyle Street, Unit D, Portland, Oregon 97211
Cover |
Aug. 08, 2023 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Aug. 08, 2023 |
| Entity File Number | 001-38182 |
| Entity Registrant Name | EASTSIDE DISTILLING, INC. |
| Entity Central Index Key | 0001534708 |
| Entity Tax Identification Number | 20-3937596 |
| Entity Incorporation, State or Country Code | NV |
| Entity Address, Address Line One | 2321 NE Argyle Street |
| Entity Address, Address Line Two | Unit D |
| Entity Address, City or Town | Portland |
| Entity Address, State or Province | OR |
| Entity Address, Postal Zip Code | 97211 |
| City Area Code | (971) |
| Local Phone Number | 888-4264 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Trading Symbol | EAST |
| Security Exchange Name | NASDAQ |
| Title of 12(g) Security | Common Stock, $0.0001 par value |
| Entity Emerging Growth Company | false |
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