v3.22.2.2
Business Segment Information
 9 Months Ended
Sep. 30, 2022
Segment Reporting [Abstract]  
Business Segment Information

5. Business Segment Information

 

The Company’s internal management financial reporting consists of Eastside spirits and Craft C+P. 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 42% of its revenue.

 

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 14 mobile lines in Washington, Oregon and Colorado.

 

The measure of profitability reviewed is condensed statements of operations, and gross margin. 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. Spirits allocates 50% of certain general and administrative expenses to Craft C+P, which is included in the segments’ financial data below.

 

 

Eastside Distilling, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2022

(Unaudited)

 

Segment information was as follows for the nine months ended September 30, 2022 and 2021:

 

(Dollars in thousands)  2022   2021 
Spirits          
Sales  $7,586   $4,304 
Net sales   7,293    3,966 
Cost of sales   4,176    2,989 
Gross profit   3,117    977 
Total operating expenses   3,595    4,358 
Net income (loss)   (2,397)   1,484 
Gross margin   43%   25%
           
Interest expense  $1,944   $846 
Depreciation and amortization   122    229 
Significant noncash items:          
(Gain) loss on disposal of property and equipment   (12)   298 
Forgiveness of debt - PPP   -    (1,052)
Remeasurement of deferred consideration   -    (750)
Gain on disposal of offsite inventory   -    (1,047)
One-time professional fees   -    403 
Stock compensation   458    287 
           
Craft C+P          
Sales  $4,381   $5,834 
Net sales   4,281    5,834 
Cost of sales   4,809    4,499 
Gross profit   (528)   1,335 
Total operating expenses   3,700    3,150 
Net loss   (4,160)   (1,454)
Gross margin   -12%   23%
           
Interest expense  $32   $39 
Depreciation and amortization   982    674 
Significant noncash items:          
Loss on disposal of property and equipment   113    123 
Forgiveness of debt - PPP   -    (396)
Stock compensation   365    290 

 

Craft C+P’s gross margin decreased primarily due to lower sales of services, a change in product and service mix, and higher raw material costs. In addition, Craft C+P’s digital printer commenced operations in April, 2022 and Craft C+P now bears the operating costs. Although printing revenues significantly increased through the quarter, the printer is not yet operating at full capacity.