Eastside Distilling (EAST) 13 May 242024 Q1 Earnings call transcript

Good evening, and welcome to the Eastside Distilling First Quarter 2024 Financial Results Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Tiffany Milton, Controller. Please go ahead. you. Thank

Controller. and financial joining quarter these results I'm CEO. Milton, everyone, discuss today of results you on and Tiffany Distilling's us Conor the Eastside for Eastside's Executive is thank Geoffrey evening, to company's us for to XXXX. today's Gwin, Good call joining Chief discuss Officer; And the Craft first Kilkenny,

open we our will the call your remarks, questions. Following to

meaning or Securities discussed following to on the the XXXX the words remarks, anticipates, cautioned planned, prepared Securities events of conference of the Reform statements amended, statements strategies safe we cause company's to plans, the for in actual or risks circumstances, Securities success Securities integrating but to ability statements those in and going of as statement. with of company's to time Exchange Certain entities management from including, Act Act forward-looking risks the XXXX all begin success from as the the and product by of preceded subject matters in of year within acceptance uncertainties describe XXA related information are Section the to filings harbor may uncertainties may, expectations, of the we and business eventually Exchange expected, differ to related a materially differ with in the time risks to future pertaining the the forward-looking Exchange model and obtain including plans, draft, before should, for report future the and Private by provisions such continue cause Now results or ability statements. and limited statements December matters to company's ended XXE the pursuant Distilling be amended, this in future, made XXXX, results development, to, and plan not obtaining to such and and new information statements with the results capital, concern Section the call are forward-looking strategic products and submit that Such filed that customers, such annual Eastside that its or the market, XXXX. and may Listeners generally the projected assets, XX-K The of involve Litigation as are record Securities could projected. acquired materially, or described are in financial and of XX, will Commission, success Commission. on multitude execute Act ability Form company's the forward-looking

Now I'd please to turn with said, Geoffrey, proceed. over Gwin. the that Geoffrey call to like

call. and conference Great. our Thank to you, welcome first Tiffany, XXXX quarter

We lot have quarter. to a discuss this

joined us Conor Eastside background In manufacturing. Kilkenny in to January Tiffany, and of have the us Crafts Conor Conor excited to join some a today. share CEO addition in outlook and of his business first an Craft in extensive of impressions will to moment. as comes I'm with

business, unique a primarily whiskeys, we Northwest including other also well Portland which the as as the which markets. Now including brands, if we operate sells of Craft number refer you're services Beverage Burnside to X Potato have we and to as a Pacific regional distinctly business, Azunia company, a And Craft. Tequila, Vodka great new businesses, Spirits in

one consumer cans a spaces is and of dynamic very company for years Now Craft the This printing most is craft us segment. allows us packaging. of and technology XXX% investment new the This recyclable digital opportunity couple can to is aluminum for a one exciting in competitive the decorate ago. particular highlight very in Beverage our business a that as

to I'd It's a in have you the launch if faced you They chart a it. that year? at products extremely out, Now reality be beverage expensive is across Think products out new simply your over show are as decisions space tough number. last new category life market. with come you'd brand. new simply entrants Now in off to How they and about this many actually But be many correctly. guess daily the way new on surprised I go are that suspect unnoticed. up. number crowded

the them and ideas away morass they daily. notice fade may the You but we new see briefly, and concepts of all

building you you a a with a huge getting is startup, challenge. but attention, potential actually reaching consumer, for Now just brand your alone equity

us Now from feels try to virals. suggesting influencer times people space, you there People build can that the claiming a There this Take to army numbers are my promoters example, take media is daily side. who influencers can get in of to paths large your in fill they large to access segment introduce front for product of an unknowable can have of tsunami me. of like many the social at which to your spirit inboxes brand.

challenges. is with brands, many road that navigating For fraught

seek a the It's purchase moment this around it, us? connecting it is intent. important because is out, huge. your makes for Now the about, it's purchase, where a the product consumer why where on a say choice, a sold the we to online, opportunity. I'm Unlike shelf, marketing have I that When changed. of talking important has see have product find moment moment It's consumer around of point it, it,

something. you're by. at On rolls shelf are the buy to retail, They moment at of opportunity as consumer there the the

moment repeatedly packaging brand huge a in Craft is past, customer. opportunity at great said So And equalizer to opportunity this the win Beverage a based, the I've opportunity. a new in the the the has of here

something with cans brands. struggling. embrace mini deliver screen can that are around brands forms, beverage can same, old changed grocery through has the their to see the will by with beer is you of speaks marketing There, wandering same technology or for it old successfully that space fighting daily limited the in local to marketing, space. data. and beer your win them shelf opportunity advantage grocery the boring that brands, there We craft aisle you start right school, pick winning run can to this seen you design. we will old Consumer To circles consumer. and Those need and see You store. opportunity go colors, not you decoration always, see great Craft friended, store, in see national

day, technology our started. You'll of manufacturers see not lot labels for rep recyclable. way X concert shows that digital shrink plastic saw this we've capital. here. because talking ago, latter a this these are can years see again market, be driving finally But a show. cans, cans hard getting embracing that you of for digital on be when season, difficult for only about The the unique, recyclable, XX beer, are and we after to They seen quarter. And from cans our labels packaging, are They can these you'll a are data paper volumes drive They not momentum. just gain unexpected that now printed Beverage special to home this they adoption get incremental a week. unique trend are a high have I X see a are change We customers. new expanding can a for a endless opportunities adoption seasonal. started require sales type digital the minutes stadium billboard the the digitally working extraordinary. in The by

I would us. moment. of the fact, say Conor accelerating a a that record Craft quarter, In produced about for is In adoption will cans. talk number the in

and price Now a can to while a contract, gross new pleased expensing a performance. lower-priced margins investment factors, number parts volume, impacted are large of by were we including the transitioning with for

importantly, most growing but business QX, and in we margins improved see very expect quickly. evolving We this

I'm about to that in going for the had but a talk want the bulk spirits digital the EBITDA Conor producing for minute Spirits Now quarter, detail craft, a segment for I a sales quarter. and time. its loss for seen $XX,XXX in we've printing talk result the operating quarter. was core let the to about only more without entire some great and for performance best

at clear with consumers work Importantly, and retail. were expectations the our volumes line were of in trading trend despite down what

been prices. shift on as trade there spirits highs, that for seeing investment we've have input savings see to That quarters it near-term in keep to the prices consumers will We results. consumer it upcoming a as a we the to multiyear is and and down pleased more the with say, headwinds ongoing all-time we now, off for facing come on this QX, refocus report strong quarters to multiple to across in few there. coming We're but it's has suffice progress well. important expect regions. market segments And embarked in really I'm clearly our effort quarters, profitable an agave Now on categories. Also, said, seen tequila and eye the

can I there his about introduce at and Welcome, Now Craft, take his want through more and Conor. pause our bit there thoughts the to progress on Conor, you background. a and CEO little he

in Conor. you, by a $XXX,XXX, 'XX, summarize first Spirit were were an QX of Craft the for 'XX, I'll we of quarter, and XXXX. gross gaining million million as questions. for primarily basis, its the as financial due to result for and 'XX $X.X the On and sales. $XXX,XXX can million of for potential. 'XX consolidated for a results 'XX Spirit take million is sales bulk for were printed $X.X then printing spirit million sales quarter sales will $X.X $X.X sales million increase offset full Thank for finally sales the in our $X.X bulk and $XX decreasing QX

for 'XX and to gross for -- was expenses million and for QX QX profit the X% almost XXXX. for our of due 'XX sales. 'XX Spirits were $X.X and book $XXX,XXX. XXXX, XX% XX margins for spirit 'XX, gross primarily related to had our QX for Craft consolidated were QX a XX% were and $XXX,XXX $X.X for margins and sales X% XX% decrease $XXX,XXX of negative $XXX,XXX Operating consolidated XX XX% X% and bulk of XXXX. XXXX, spirit million primarily Our margins in for for for

restructuring the expenses efforts success our lower reflect Our XXXX. throughout of

and periods. flat $X.X at EBITDA for $X.X QX for and net for 'XX, about 'XX million loss our million adjusted both Our $XXX,XXX negative was QX was

now will the for questions. open floor We Operator?

[Operator Instructions].

today first McGowan ROTH. The is Sean with from question

give us kind of can you ramp what you're Can there? digital printer? on of of sense a the Like clearer the output ramp-up seeing up little

anything start if I'll I'll add and to. Conor like you'd let

expectation first in meet it seeing the we're our quarter think volume. on really I

to I quarter, more a but the year in position announce the really in on later expect I coming later to the ourselves to be I no the And see we'll that here, facility. now. shortly. that mean online said, path out to basically get Conor thing to really XX/X more into get There'll the this comparison, on comparison here puts is opportunities fully year-over-year we're As really capacity printing be path full And up. it fill of there's machine in here in capacity

be So one we're we'll with able double machine. producing to what

customer very can't you we're field this people really new digital packaging, and out done their So stress really show going chain Conan once you into too, is convert more business, resell but to pleased that, And off. really because over debottlenecking you position printing into understand can and the it, reoccurring stuff And important job with them and the right? over I what then to cycle. a you're So supply the a is seeing get the the I'm with landscape. base today start ramp-up. in they just them to build has pulling a this that and getting every fence fabulous where how do market the over the is than

Sean, So think with pleased ramp-up. we are the where in I'm I

wondering to know what going from number cans off the there's expecting? more got actual too, up I number the have, the we Are details on getting there. to you pricing just of Like want too where how it you wasn't but but be if are revenue getting you I to I'm far don't number, you're be?

consistency Conor lower on had that at to volume of with needed is get and bring was to over, and customers be of could are we're moving some this, expected. that than expected, cans into we we're make the and part is have working not level but can customers, looking breadth reliability expecting the for. the as price But but little seeing we larger probably the I over really investment echo getting a again, to there the We And sure quarter. wider than Sean, expected. been were what as the had that the to that them scramble machine We much that we we're

this part for enjoy So of not that example, the Dodgers to of can need they from customers other price, these for looking starting to you're that going be drinking groups be this something are starting can college digital if the going we customers after specifically for with the do same are over So advantages going business unique them baseball can this benefit game you're to something like are that where is for large beer to fighting NIL printed. summer, really and printing. We're a who out right? we

provide And grade. can the up any any updates shoring would to you the both balance or during on anything subsequent there, and changes be that helpful sheet quarter

at really big balance not statement seeing big of to things Last the through we're debt business. hard One in it That converted everybody there. side, we've here the is the But it We're debt put half to been a in necessary at on something now advanced for income to the make, equity. listing sheet just starting quarter. the with pushes see revenue the on year. fix And is think We're position starting amount it the move the was sheet built first really point to that's that spirits has business aware to was on and that's hear I've new Crafts year, been made a business the been concerned to and on the changes historically us and group choice priority, realm of the obviously see company working I the in that looking balance you're to comments, in absolutely second now. of adjustments, we could issue. has and years to us What went what a a a road Last here equity, the to did and wholly expect think from NASDAQ the where to you're that now, is grow about but into we credible right? alluded just should Spirit statement the quarter a in really back the and that we've build we're year, Fixing where profitability And because something a and we this forward. a you I'll breakeven. the income a plan into is change, down focus reduced was sheet. invest in large choice, reiterate discussions realigned but we shortly really balance in of of X I

income best to So these one between changes get in out expenses some capability and we're the possible digital we're of of positive printers. to that with I getting fixed Those and the Spirit full balance side, going net our facility, driving NASDAQ working some compliance out on business. sheet, finishing statement, be to balance of are leveraging X point its priorities income then elements on a finally generating on the with Craft And to multiple for cash where the fixed the think. that sheet,

Capital. Matt next from Laridae Instructions]. Campbell The question with [Operator is

it's business been pleasing guy. say Mr. from long development Kilkenny a to hear it about want was a But Jeff, hiring to I haul here.

now Now which hiring and it Did get is business, out to correctly? we're sounds go hear people I like phenomenal. that us

Sure. about want Conor, team the Seattle? your you making talk and investments do in you're to

Yes.

development what how So manager our are out of like hungry, largest customer. hire with salesperson sales the towards to Northwest. one for we we what mainly team looking the at also but and skill geared is to in and X up we a our first was had skilled a up and experience add And Seattle. value were goal companies set he's the sales beverage we he's a business guy very, a there, laid of But found help the and director kind for years' for who he a very finding very of said, has, I the as had marketing in went

first that. beautiful tremendous a offering we also business to to as them just has their how well not In can we're with a leverage forecasting number also cans. as its So he already can of their sold them, weeks, strategy X help

can So on bleed? going mobile Like revenue, for of that the have hear. is breakeven guys that that side any to gotten items the other Is of onetime drive you great the kinks which it out printing equation canning is sounds Craft you side so the now of side? Were the like us, it's the business? there to where not

positive actually in was quarter. EBITDA Mobile the first

So yes, we've align actually breakeven. operation the the the gotten down sales with are. it's expenses above to where it's what And

is small able and originated people was actually fit on people then I business just the conceptually it and X that's to for know to don't Craft which in legacy a the they the remember, production wild by envisioned box it and mobile, of call, capability actually they to line the like Craft. basically I truck a a was and the where was is to site the mean business rooms site. filling of think, it the So small bringing was, Craft fascinating go I the remind that took into business. so people, very a mean, to facility are successful then brewery local it architect and line, local goose they a a that

a a their they the bringing inevitably, off enough, risk and their bear bought gets operational had complicated that with factory And business, and tiny that about was. can scale is, at them of think customer, equipment. own struggled it small our peak large then the investment if moving return them And or back, when it a built the tremendous moving moved XX own because company factory you sounds amount of and footprint, just it to to you and on them complexity. customer we So and

company base to DNA, fully our serve I customer. just we us. of haven't but the better extremely it's mean how part we mobile our important exited also the can informs Now on mobile customer is because

of part There a a not of mobile So we've great in to investments and that is cross apparently. will It's in There's North made we've a in we point biggest have Denver, while we opportunity. and that continue we We're America reduced the digital very the Conor Portland. we as reduced digital sized in still functional active said, our in said, opportunity, that some printing. very got package handful been to also the printing. only activities we've you have are where can degree But with sell. Portland, technologies effective our other people exited active be Seattle activities, But Spokane. as to

Fortunately, in the we that helps have And doubling there. great us partner a have that we're partner That's equipment. Hinterkopf. technology with we down our

as you far that So mean, quarter. as in lot onetime a you the have can to there's items, I to react things of imagine, a

we in that as of and demand So us see of front demand. this volume Conor gets

have up us, we in position we in needs. "We this don't meet had quarter a from part Sunday through the to We deal be that the quarter. we keep thing the number that have can the in the wake to For on and to a X win and say, afternoon somebody we of then a million spare customers' have expense running did items weekend." So cannot

for a and he price. supply our to us can on the had of better my we freight. the with partner costs. hat cheaper, source at on we bought caught is take side on customers up prices as in. And we our pulled the extra had they've We a large in I'll lot off that door, had can a scrap on can our that chain deliver So that. expensed helped outstanding, that ramped amount we we thing of cans to And so immediately spare other example, We up Conor's worked the

we through in work normally have higher-priced we the quarter some had. wouldn't plans So that

some facility. when in margin look we're get as that really bigger a said I see I even position I in you as So is improvements. think more then And the before, the for opportunity forward, gross to business horsepower

and machines. our can are You're not large manage they X another of going operators number to pay for outstanding, because operators

have to going to going leveraged. have to more that's not you're pay to payment; to be because overhead the another You're pay lease towards not going

up much to the going cans, see profitability the bigger a as number, volumes million really here into the a we move you're month $X through and margins So change. and

How Sean spirits on do elaborate you question business. McGowan's about the

Agave you Agave but into in you're to push prices is never spirits go. said on You Obviously, now we where know profitability. commented coming going down, discussions to

that brands really that here? loving you that you equation, tender of How the think So haven't start that these envision while for that that out about should had there taking the can do a is care have we we something a opportunity where to partnership now. accelerate any in

able compete as because to costs very was to sense ended inevitably, bad trying the at up one we're X expensive brands, company year a bring one brand to go the build performance. vision everybody not ago past of and far on you we've Christmas, having huge of be that. brand. it of is mean as and involved this had the or performance, But their were basically but scale that on that's to them, few the evaluated there. to in the larger a of of East. the a do the history that. the Conceptually, shelf, maximize the product interested that in here, I position we've in the our went end into serve what to selling in no product there's And and made company continuing call, holiday people their And at then years proved produce have not before anymore, very by was a on and and and Portland. that we brands it we back company's blended and to was to we've one looking the full we this Redneck realized continued We for decision built specifically to the We value low ship brands to the that potentially of day, the things Riviera improve in years opportunity the back whiskeys of to a profitability we course keep challenges with weren't then talking business

company be Jersey, east. plan. extremely downsized X-tier be the whole go-to-market asked system, the he have this products and your board its you as Weber be Harold that not across operation remembers the whole about distribution because in so call And and apparatus call why market why is in probably after sales, on this And these focused expensive on New investment not -- to bringing super to was in your questions,

in one to step that case, we downsized finally. our be came markets, focusing we of this And key to key goals manufacturing back So reality the position, enough. as were and never on core here cost-leading next a is in in this

we want not we be overhead. brand want to can So where significant in a in but but the with be to share, position, position our we market. equity packaging, also liquid in a have our volumes, the market just with drive cost-leading We

because, really comparing we quarter, had liquid to the quarter sold mean, prices. bourbon last the already compared this can wholesale this great profitability seen I in at in Bourbon X over record year prices see we years, we you you've and last because it a wholesale look, big So at margins sold to last the year-over-year that year

cost there, really wholesale. and realizing very prices we're a have We low in position high

importance and So we're to to what the now just one finish a what going that our a side, Packaging, a market and the is in marketed we've position spirits in that's our we liquid, If position going not business, start on the enough down our we're there's [Indiscernible] a products to can of going Trail and We've talking cost training having in got down the to distribution distribution the store. margin spirits a disposable market, use great you're consumer get all system been brands groups, thing Agave spirits. X it the exactly in everywhere. share, more win, store. we a past this the the and do overhead with and kinds volumes your at my the it it's also partners, dollars around Craft thing spent to point business, diverse the and savings on company piece, we in about shelf ton I in gross then been state, market. money dollars was goes and we've unique it and enough challenge. have in and of with have the is is grow, we're move we at complicated and do which we're little billboards, attack long-running about to marketing blazers right it's being informed going Portland, the ship because to is a our digital that's around we but Portland When through have business, In bottle to to of they're on get multistate liquor bit same going thing things, around on around bottle so to take product, Oregon, work to a control see cost traditional going it's be

good in So really we're position I'm that optimistic a there.

this about having I going potential see think we're in we're partnership, improvements some can't done. to to talk I but that this yet year new close So spirits. really it

Gwin back turn to any question-and-answer Geoffrey I our session. conference for to closing remarks. would concludes like This over the

I'd to Gary. conference you Great. our a call, Great. you, we evening. thank the like on and of guys for updating All listening all Thank to second to right. And quarter. Have call you look good the forward on

presentation. for Thank conference now today's The has attending concluded. you

disconnect. now may You