Eastside Distilling, Inc. (EAST)·Q3 2024 Earnings Summary

Executive Summary

• Q3 2024 was transitional: Eastside completed the divestiture of Craft Canning + Printing (classified as held for sale in Q3) and, immediately thereafter, closed the Beeline merger; spirits (Bridgetown) posted positive EBITDA and net income while consolidated results remained loss-making due to corporate costs tied to transactions .
• Spirits sales rose 14% sequentially versus Q2, with gross margin expanding to 26% (from 21% YoY) on bulk spirits sales and cost savings; consolidated net loss narrowed YoY to $1.36M despite higher transaction-related professional fees .
• Management withheld forward-looking guidance and forwent Q&A as Beeline consolidation proceeds; audited Beeline financials will be filed in an upcoming 8‑K—an imminent catalyst for updated pro forma outlook and narrative .
• Balance sheet actions reduced leverage post-quarter: the Craft asset sale and debt exchange released $6.6M of debt and surrendered $1.2M of preferred stock, simplifying the legacy portfolio and supporting the pivot toward Beeline .
• Wall Street consensus (S&P Global) for EAST’s Q3 revenue/EPS was unavailable; estimate comparisons are not possible this quarter.

What Went Well and What Went Wrong

• What Went Well

  • Spirits segment profitability: “Spirits segment (excluding corporate expenses) achieved positive EBITDA and net income for the third quarter 2024,” with Bridgetown reporting $18K net income and 26% gross margin . CEO: “we did achieve positive EBITDA in the quarter, a milestone for the company” .
  • Sequential sales momentum in spirits: “Spirits sales increased 14% from the second quarter of 2024,” aided by bulk spirits and cost savings; gross margin improved to 26% from 21% YoY .
  • Portfolio simplification and deleveraging: Divested Craft via asset sale and debt exchange, releasing $6.6M of debt and surrendering $1.2M of preferred stock; immediately after, closed the Beeline merger to reset growth focus .

• What Went Wrong

  • Elevated corporate costs: Operating costs rose to $0.7M from $0.5M YoY due to professional fees for the debt exchange and Beeline merger, contributing to consolidated operating losses .
  • Category headwinds and brand-specific pressure: Management cited continued struggles for Azuñia tequila due to distribution changes; investor narrative remains sensitive to spirits volume mix and distribution execution .
  • Negative consolidated profitability persists: Adjusted EBITDA remained negative at $(0.39)M; total net loss was $(1.36)M (improved YoY but still a loss), reflecting interest expense and corporate costs .

Financial Results

Note: Q3 2024 is presented as continuing operations (Craft C+P classified as held for sale). Q1 and Q2 2024 were reported on a consolidated basis that included Craft C+P at the time.

• Consolidated results (as reported per quarter)

• Spirits/Bridgetown segment (comparable operating lens across 2024)

• Segment/corporate mix (Q3 2024)

• KPIs

Footnote: Q3 2024 excludes Craft C+P (classified as held for sale), while Q1 and Q2 2024 included Craft in consolidated results at the time .

Guidance Changes

Management did not provide formal revenue/EPS or operating guidance pending Beeline consolidation.

Earnings Call Themes & Trends

Management Commentary

• Strategic pivot and disclosure plan: “Since we are in the process of consolidating Beeline’s operations… it would be premature to provide incomplete information… We intend to file additional information… including audited financial statements… shortly.”
• Spirits profitability milestone: “we did achieve positive EBITDA in the quarter, a milestone for the company… I expect continued improvement in spirits through the year with most of the restructuring activities now behind us.”
• Rationale for portfolio reshaping: The Craft asset sale/debt exchange released $6.6M of debt and surrendered $1.2M of preferred stock, enabling the Beeline merger immediately thereafter .
• Category dynamics: “Our vodka sales performed well, while our tequila brand, Azuñia, continues to struggle due to distribution changes we’ve previously mentioned.”
• Transaction costs elevated: “Operating costs… increased to $0.7 million from $0.5 million… primarily due to higher professional fees incurred in connection with the Debt Agreement and the Beeline merger.”

Q&A Highlights

• No Q&A conducted in Q3: Management forwent the traditional Q&A to maintain best practices during the Beeline consolidation; Q&A expected to resume next meeting .
• Themes from prior quarters that remain relevant: Investor focus on balance sheet/Nasdaq compliance and spirits profitability pathway (Q1) ; scaling digital printing and pricing/mix (Q1–Q2) ; mobile canning profitability (Q1) .

Estimates Context

• S&P Global/Capital IQ consensus for EAST’s quarterly revenue and EPS was not available; there appears to be no active sell-side coverage for Q3 2024. As a result, we cannot assess beat/miss versus Wall Street expectations this quarter.

Key Takeaways for Investors

• Spirits turnaround is gaining traction: Bridgetown delivered positive EBITDA and net income with 26% gross margin; sequential spirits sales +14% q/q suggest early operating leverage as resets take hold .
• Portfolio simplification largely complete: Craft divestiture and debt exchange cleaned up the legacy structure and reduced indebtedness, enabling strategic focus on Beeline .
• Near-term catalyst: Forthcoming 8‑K with audited Beeline financials and consolidated plan; expect narrative to shift from spirits turnaround to Beeline growth path and integration milestones .
• Watch corporate cost normalization: Corporate opex jumped YoY due to transaction fees; monitoring for normalization post-consolidation is key to unlocking consolidated profitability .
• Category/brand risks remain: Azuñia distribution challenges continue; sustaining vodka strength while fixing tequila routes-to-market is critical to sustaining spirits profitability .
• Balance sheet trajectory improved post-quarter: $6.6M debt release and preferred surrender help delever; forthcoming disclosures should clarify pro forma liquidity and capital needs .
• Trading setup: With no guidance or estimates, stock may trade on disclosure cadence—timing and content of Beeline audited financials and initial integrated outlook will likely drive near-term moves .

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Sources: Q3 2024 8‑K (Item 2.02; Exhibit 99.1 financials and highlights) ; Q3 2024 earnings call transcript ; Q2 2024 8‑K and call ; Q1 2024 8‑K and call .