Business Segment Information

9 Months Ended

Sep. 30, 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 one spirits customer that represents 17% of its revenue. Corporate consists of key executive and accounting personnel and corporate expenses such as public company and board costs, as well as interest on debt.

The measure of profitability reviewed are 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

September 30, 2023

(Unaudited)

Segment information was as follows for the nine months ended September 30, 2023 and 2022:

(Dollars in thousands)	2023			2022
Craft C+P
Sales	$	5,637		$	4,381
Net sales		5,558			4,281
Cost of sales		5,378			4,809
Gross profit		180			(528	)
Total operating expenses		2,013			2,813
Net loss		(1,812	)		(3,273	)
Gross margin		3	%		-12	%
Interest expense	$	12		$	32
Depreciation and amortization		1,008			982
Significant noncash items:
(Gain) loss on disposal of property and equipment		(171	)		113
Stock compensation		-			148
Spirits
Sales	$	3,080		$	7,586
Net sales		2,939			7,293
Cost of sales		1,940			4,176
Gross profit		999			3,117
Total operating expenses		1,183			1,963
Net income (loss)		(127	)		1,179
Gross margin		34	%		43	%
Depreciation and amortization	$	114		$	122
Significant noncash items:
(Gain) loss on disposal of property and equipment		3			(12	)
Corporate
Total operating expenses	$	1,287		$	2,519
Net loss		(3,458	)		(4,463	)
Interest expense	$	850		$	1,944
Significant noncash items:
Stock compensation		98			498
Loss on debt to equity conversion		1,321			-

Craft C+P’s sales increased due to new digital can printing revenues, offset by lower mobile revenues. Spirits’ sales in 2022 included bulk inventory sales of $4.4 million. During the nine months ended September 30, 2023, the Company undertook restructuring actions to reduce volumes in unprofitable market segments and incrementally restricting actions to lower production costs and improve profitability.