Eastside Distilling Reports Fiscal Second Quarter 2015 Financial Results
Q2 Sales Up 66% to $427,000 With 1,930 Cases Shipped
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PORTLAND, OR -- (Marketwired) -- 08/17/15 -- Eastside Distilling, Inc. (OTCQB: ESDI), a producer of award-winning master-crafted spirits, reported financial results for the second quarter ended June 30, 2015.
Second Quarter 2015 Financial Highlights vs. Year-Ago Quarter
- Revenue up 66% to $427,000
- Gross profit totaled $146,000 versus $175,000 in Q2 2014
- Net loss totaled $688,000 versus net income of $9,700 in Q2 2014
- Adjusted EBITDA totaled a loss of $633,000
Second Quarter 2015 Operational Highlights
- Case shipments increased 88% to 1,930 from 1,028 in the same year-ago quarter.
- Expanded distribution in GA, MD, MN, PA, and especially OR and WA.
- Continued national rollout campaign receiving state listing approval for spirits sales in Virginia, followed by initial order of Burnside Bourbon.
- Named official sponsor of spirits for the 2015 Portland Rose Festival.
- Teamed up with Reed's Inc., makers of nationally recognized nonalcoholic ginger beer to serve award winning beverages at the 2015 Portland Rose Festival and Molalla Buckeroo Rodeo.
- Showcased the company's award-winning spirits at the 16th Annual B. Riley & Co. Conference, which was attended by more 2,000 members of the financial community.
Second Quarter 2015 Financial Results Revenues in the second quarter of 2015 increased 66% to $427,000 compared to $257,000 in the same year-ago period. The increase in revenue is primarily attributable to increased penetration in existing markets across the Pacific Northwest as well as increased distribution to additional states that came online in the second quarter.
Gross margins in the second quarter of 2015 declined to 34.3% of revenue from 68.2% in the year-ago period. The decreased gross margins is primarily attributable to a change in the sales-channel mix along with higher allocated facility costs, due to our new larger facility. As volumes continue to increase, the company anticipates better fixed facility cost coverage and hence improved gross margins.
Net loss in the second quarter of 2015 totaled approximately $688,000 or ($0.02) per diluted share, compared to net income of $9,700 or $0.00 per diluted share in the year-ago quarter. The wider net loss is primarily due to a $665,000 increase in SG&A, including advertising, office personnel, marketing, legal and accounting expenses all associated with the company's planned increase in infrastructure to support its national expansion plans.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and change in fair value of derivative liabilities) for the second quarter of 2015 totaled a loss of $633,000 versus a gain of $11,000 in the year-ago period (see discussion about the company's presentation of adjusted EBITDA, a non-GAAP term, and its reconciliation to the nearest GAAP metric, below).
Cash at June 30, 2015, decreased to $145,000 compared to $1.0 million at December 31, 2014, with the decrease resulting from cash used in operations.
Further details about the company's results in fiscal second quarter 2015 are available in its quarterly report on Form 10-Q, which is available for download from the investor relations section of the company's website at www.eastsidedistilling.com.
Management Commentary "During the second quarter, we continued to experience strong growth in case sales, but more importantly further positioned the company for a more aggressive rollout across multiple states," said the company's CEO, Steven Earles.
"The increase in SG&A in the second quarter of 2015 reflects our investments in our national expansion plan as well as a multi-faceted marketing campaign to bring our regional success and award-winning spirits to these new markets. We believe this investment could not be timelier, with sales of distilled spirits climbing 14% over the last five years to a record 210 million cases sold in 2014. As the sales volumes continue to increase, we expect to leverage the efficiencies associated with our operating model that ultimately will improve bottom-line results.
"We maintained momentum on the national rollout front adding Virginia to our listing approved states. We continue to target the top liquor consumption states including New York and Texas as we look to expand our national footprint in the second half of this year. We are also shipping spirits to all of our approved states and are currently finalizing a large purchase order with a major distributor soon to be announced.
"A key part of the roll out of our national campaign is internal development and preparation. Our new 41,000 sq. ft. distillery now provides ample room for growth. In addition, we continue to advance our product innovation and have expanded our broad product portfolio with the recent introduction of our American Whiskey, labeled Barrel Hitch, which is already experiencing strong results.
"We are also in full swing with planning and preparation for our seasonally strong third and fourth quarters. I would like to thank all of our employees for their dedication and hard work in the second quarter to insure we take full advantage of the opportunities available to us as we move into the second half of the year and the holiday season in particular.
"In all, we expect these internal and external efforts to keep us on course towards achieving the high goals we've set for 2015, with the ultimate goal of building long-term shareholder value. The second half of 2015 looks even brighter with the company now approved in 11 states and several pending, it's much larger production facility on-line, and various marketing initiatives in place to ensure the success with our national expansion. As a result, we believe the company is well positioned to continue its high rate of growth."
About Eastside Distilling Eastside Distilling, Inc. (OTCQB: ESDI) has been producing high-quality, master crafted spirits since 2008 and is located in Southeast Portland's Distillery Row. Makers of award winning spirits, the company is unique in the marketplace and is distinguished by its highly decorated product lineup that includes Burnside Bourbon, Barrel Hitch American Whiskey, Below Deck Rums, Portland Potato Vodka and a distinctive line of infused whiskeys. All Eastside spirits are master crafted from natural ingredients for unparalleled quality and taste. The company is publicly traded under the symbol OTCQB: ESDI. For more information visit: www.eastsidedistilling.com or follow the company on: Twitter & Facebook.
Forward-Looking Statements Certain matters discussed in this press release may be forward-looking statements. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the Company's products in the market; the Company's success in obtaining new customers; the Company's success in product development; the Company's ability to execute its business model and strategic plans; the Company's success in integrating acquired entities and assets, and all the risks and related information described from time to time in the Company's filings with the Securities and Exchange Commission ("SEC"), including the financial statements and related information contained in the Company's Annual Report on Form 10-K and interim Quarterly Reports on Form 10-Q. Examples of forward-looking statements in this release may include statements related to our strategic focus, product verticals, anticipated revenue and profitability. The Company assumes no obligation to update the cautionary information in this release.
Fiscal Second quarter 2015 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 August 14, 2015 in its Annual Report on Form 10-Q for the period ended June 30, 2015, and which can be viewed at www.sec.gov and in the investor relations section of the company's website at www.eastsidedistilling.com.
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. Management believes this non-GAAP measure provides useful information about the company's operating results.
The company defines adjusted EBITDA as net income (loss), plus interest expense, provision for income taxes, depreciation and amortization, loss from discontinued operations (goodwill impairment), and stock-based compensation. The table below provides a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure.
Six Months Ended
June 30,
2015 2014
----------- -----------
Net (loss) income $(1,519,078) $ (15,511)
Add:
Interest expense 5,684 858
Provision for income taxes - -
Depreciation and amortization 9,009 2,064
Stock-based compensation 83,375 -
----------- -----------
Adjusted EBITDA $(1,421,010) $ (12,589)
=========== ===========
Eastside Distilling, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
June 30, 2015 and December 31, 2014
June 30, December 31,
2015 2014
(unaudited) (1)
------------ ------------
Assets
Current assets:
Cash $ 145,950 $ 1,082,290
Trade receivables 66,997 138,041
Inventories 849,970 377,020
Prepaid expenses 234,788 174,147
------------ ------------
Total current assets 1,297,705 1,771,498
Property and equipment - net 85,517 81,206
Other assets 107,500 193,750
------------ ------------
Total Assets $ 1,490,722 $ 2,046,454
------------ ------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 914,245 $ 206,630
Accrued liabilities 184,540 72,610
Deferred revenue 5,473 8,275
Current portion of note payable 3,891 3,560
Convertible note payable 150,000 150,000
------------ ------------
Total current liabilities 1,258,149 441,075
Note payable - less current portion 20,543 23,271
------------ ------------
Total liabilities 1,278,692 464,346
------------ ------------
Commitments and contingencies (Note 10)
Stockholders' equity:
Preferred stock, $0.0001 par value;
100,000,000 shares authorized; no shares
issued and outstanding at June 30, 2015 and
December 31, 2014 -- --
Common stock, $0.0001 par value; 900,000,000
shares authorized; 45,550,000 and 45,512,500
shares issued and outstanding at June 30,
2015 and December 31, 2014, respectively 4,555 4,551
Additional paid-in capital 5,687,238 5,538,242
Accumulated deficit (5,479,763) (3,960,685)
------------ ------------
Total stockholders' equity 212,030 1,582,108
------------ ------------
Total Liabilities and Stockholders' Equity $ 1,490,722 $ 2,046,454
------------ ------------
(1) Derived from the Company's December 31, 2014
audited financial statements
Eastside Distilling, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
For the three and six months ended June 30, 2015 and 2014
(unaudited)
Three Months Ended Six Months Ended
------------------------ ------------------------
June 30, June 30, June 30, June 30,
2015 2014 2015 2014
----------- ----------- ----------- -----------
Sales $ 427,591 $ 257,622 $ 852,501 $ 439,972
Less excise taxes 123,177 49,782 223,017 85,019
----------- ----------- ----------- -----------
Net sales 304,414 207,840 629,484 354,953
Cost of sales 157,651 32,164 350,832 127,101
----------- ----------- ----------- -----------
Gross profit 146,763 175,676 278,652 227,852
Selling, general, and
administrative expenses 832,039 165,444 1,843,883 242,505
----------- ----------- ----------- -----------
Income (loss) from
operations (685,276) 10,232 (1,565,231) (14,653)
Other income (expense) -
net (2,784) (464) 46,153 (858)
----------- ----------- ----------- -----------
Income (loss) before
income taxes (688,060) 9,768 (1,519,078) (15,511)
Provision for income
taxes -- -- -- --
----------- ----------- ----------- -----------
Net income (loss) $ (688,060) $ 9,768 $(1,519,078) $ (15,511)
----------- ----------- ----------- -----------
Basic and diluted net
income (loss) per
common share $ (0.02) $ 0.00 $ (0.03) $ (0.00)
----------- ----------- ----------- -----------
Basic and diluted
weighted average common
shares outstanding 45,547,115 32,000,000 45,529,903 32,000,000
----------- ----------- ----------- -----------
Image Available: http://www2.marketwire.com/mw/frame_mw?attachid=2874122
Company Contact: Eastside Distilling, Inc. Julie Bohn Executive Assistant to the CEO Tel 971-888-4264 [email protected] Investor Relations: Liolios Group, Inc. Chris Tyson Tel 949-574-3860 [email protected]
Source: Eastside Distilling Inc.
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