Eastside Distilling Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 13, 2024

There are 6 speakers on the call.

Operator

Please note, this event is being recorded. I would now like to turn the conference over to Tiffany Milton, Controller. Please go ahead.

Speaker 1

Thank you. Good evening, everyone, and thank you for joining us today to discuss Eastside Distilling's financial results for the Q1 of 2024. I'm Tiffany Milton, Eastside's Controller and joining us on today's call to discuss these results Jeffrey Gwynn, the company's Chief Executive Officer and Conor Kilkenny, Craft's CEO. Following our remarks, we will open the call to your questions. Now before we begin with prepared remarks, we submit for the record the following statement.

Speaker 1

Certain matters discussed on this conference call by the management of Eastside Distilling may be forward looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, Section 21E of the Securities Exchange Act of 1934 as amended and such forward looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward looking statements describe future expectations, plans, results or strategies and are generally preceded by words such as may, future, plan or planned, will or should, expected, anticipates, draft, eventually or projected. Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events or results to differ materially from those projected in the forward looking statements. Such matters involve risks and uncertainties that may cause actual results to differ materially, including, but not limited to, the company's acceptance and the company's products in the market, success in obtaining new customers, success in product development, ability to execute the business model and strategic plans, success in integrating acquired entities and assets, ability to obtain capital, ability to continue its going concern and all the risks and related information described from time to time in the company's filings with the Securities and Exchange Commission, including the financial statements and related information pertaining to the company's annual report on Form 10 ks for the year ended December 31, 2023, filed with the Securities and Exchange Commission.

Speaker 1

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

Speaker 2

Okay, great. Thank you, Tiffany, and welcome to our Q1 2024 conference call. We have a lot to discuss this quarter. In addition to Tiffany, I'm excited to have Conor Kilkenny join us today. Conor joined Eastside in January as the CEO of Kraft and comes to us with an extensive background in manufacturing.

Speaker 2

Connor will share some of his first impressions of Craft's business and outlook in a moment. Now, if you're new to the company, we operate 2 distinctly unique businesses, including a craft beverage services business, which we refer to as craft, and we also have a spirits business, which sells a number of great brands, including Burnside Whiskeys, Portland Potato Vodka, and Amazon I'm sorry, Azunia Tequila, primarily in the Pacific Northwest, as well as other regional markets. Now one particular highlight in our company is the investment we made at Craft and Digital Can Printing a couple of years ago. This is a very new technology that allows us to decorate 100% recyclable aluminum cans for the craft beverage segment. This is very exciting business opportunity for us as one of the most dynamic and competitive spaces in consumer packaging.

Speaker 2

Now new entrants in this category are faced with tough decisions as they chart a route to market. It's a crowded space and extremely expensive to launch a new beverage brand. Think about it. How many new products have you come across in your daily life over the last year? Now I'd be surprised if you actually guess that number correctly.

Speaker 2

I suspect you'd be way off on that number. But the reality is many new products are simply go unnoticed. They simply show up. You may notice them briefly, but they fade away in the morass of all the new ideas and concepts we see daily. Now for a start up, reaching you, a potential consumer, just getting your attention, let alone actually building brand equity with you is a huge challenge.

Speaker 2

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

Speaker 2

Now why is this important for us? It's important because marketing around your product has changed. When I say around the product, what I'm talking about, where it's sold on the shelf, the point of purchase. The moment a consumer makes a choice, that moment is huge. It's a moment of opportunity.

Speaker 2

Unlike a consumer connecting online, you have to see it, seek it out, find it, purchase it, have intent. On the shelf at retail, you're at the moment of opportunity as the consumer rolls by. They're there to buy something. So a new brand has a huge opportunity to win a customer. And I've said this repeatedly in the past, in the craft beverage space, the great equalizer here at the moment of opportunity is the packaging opportunity.

Speaker 2

You can go like that light with old boring cans and old technology or you can pick something that speaks to the consumer. Consumer beverage marketing has changed and we deliver the opportunity to run circles around national brands. To see this opportunity, you need to start by wandering through the craft beer space in your grocery store. There you will see great marketing, local brands fighting successfully for shelf space. We see them win daily with data.

Speaker 2

Craft beer is not struggling. Those brands that embrace their advantage are winning. In that aisle of the grocery store, you will see canned decoration in many forms, old school, screen printed, limited colors, same, seen it there always, same design. You'll see paper labels, not recyclable. Shrink wrapped plastic labels, not recyclable.

Speaker 2

The later 2 are difficult because they require high volumes and a lot of working capital. And in our market, you'll see a new type of digital packaging, digitally printed cans. These cans are extraordinary. They are the digital billboard that can change after 15 minutes when you drive by the stadium on the way home from a concert or show. They can be unique, unique for a season, for a day, for a week.

Speaker 2

They can be a special beer, unexpected, hard to get seasonal. The opportunities are endless here. Beverage manufacturers embracing this technology are just getting started. As I've started talking about this adoption 2 years ago, we've only seen a game momentum. But now we finally have seen data that shows that these digital trend cans are driving incremental sales for our customers.

Speaker 2

We saw the adoption expanding again this quarter. In fact, I would say the adoption is accelerating for us. In the quarter, Craft produced a record number of cans. Connor will talk about that in a moment. Now while gross margins were impacted by a number of factors, including transitioning to a lower price can contract, expensing new parts and a price investment for large volume, we are pleased with the performance.

Speaker 2

We expect improved margins in Q2, but most importantly, we see this business growing and evolving very quickly. Now I'm going to let Conor talk in more detail about digital printing and craft, but I want to talk for a minute about the spirits and its performance for the quarter. Spirits had a great quarter, producing the best operating result without bulk sales we've seen in some time. EBITDA for that segment was only a $56,000 loss for the entire quarter. Importantly, volumes in Oregon were in line with what our expectations were despite the clear trend of consumers trading down at retail.

Speaker 2

Now this consumer shift has been ongoing for a few quarters now and we've seen it across multiple categories. Also, it's important to keep an eye on agave prices. We're seeing tequila prices come off input prices come off all time highs, and we expect to see savings in the oncoming quarters there. That said, the tequila market is clearly facing strong near term headwinds as consumers trade down there as well. We embarked on a multiyear effort to refocus our spirits investment in profitable segments and regions, And we will have more to report on that progress in the coming quarters, but suffice it to say for Q1, I'm really pleased with the results.

Speaker 2

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

Speaker 3

Thank you, Jeffrey, and I'm very excited to be a part of the team. I look forward to meeting some of you on the call and you're always welcome to visit our facility in Portland. First, a bit about my background. I have an 11 year career working for a large scale engineering firm focusing on manufacturing efficiency. In 2013, myself and a man from Dublin, Ireland named James Gill started an engineering office in our garages, which focused on large scale high-tech manufacturing.

Speaker 3

Over the course of the next 11 years, we grew Barry Weymiller Design Group's high-tech consulting practice to the 3rd largest in the United States. This experience gave me insights into the some of the world's largest and best run operations across multiple sectors in consumer products, but also how to set up a company for rapid scaling. I believe Craft will benefit from a number of process improvements that are already being implemented. For Q1 this year, Craft's production output was 3 20%. I'll say that again, 3 20% higher than Q1 of 'twenty three.

Speaker 3

We had 3 record months of production in historically the most difficult quarter and we're on track for a 4th. Now I'll start my comments by echoing what I've heard over the past 4 months as I have traveled and meet new customers. What is clear is that digital can printing isn't just a trend, it's an industry revolution. Unlike cans burdened by wasteful sticker labels and plastic wraps, our 100% recyclable solution is a game changer. Distribution and retail partners alike are recognizing the environmental impact and the digital printing crashes the forefront of sustainable packaging solutions.

Speaker 3

Another primary benefit of our product, shelf presence. Forward thinking brands are unlocking the full potential of our technology to forge deeper connections with consumers. Our technology offers millions of color combinations and a multitude of finishes ranging from metallics, sophisticated mattes and high gloss applications. Furthermore, our technology empowers brands to add another dimension with unique can textures, creating a truly immersive brand experience. And our commitment to producing cans of the highest quality doesn't go unnoticed.

Speaker 3

We recently won Decoration of the Year for our Mother's Day can, featuring a unique texture that personalizes each can with the name of every mother in their company, an award which serves as a testament our dedication to innovation and eye catching design. Yet another piece that differentiates Craft is our decade of experience of being a world class mobile canner. We have a firsthand understanding of the rigors of a production line and have leveraged our expertise to create cans with unmatched durability. They'll not only look stunning on store shelves, but also run flawlessly on high speed lines, minimizing downtime and maximizing efficiency. In fact, we're seeing broad adoption and I'm pleased to report we won 3 new large volume customers.

Speaker 3

Winning a customer like that is a big deal because you're winning their confidence. You become their supply chain and their marketing platform. So performance in between the 4 walls matters, quality matters and craft means quality. To further increase our quality and throughput, we began making incremental investments to improve our manufacturing. And while that impacted margins in the short term, it will drastically improve the end result.

Speaker 3

Everything we are doing here is being done the right way, no cutting corners. We believe in doing something once and doing it right. In summary, I'm very excited to be a part of this exciting new business and I have a world class team to work with. And I want to take a second to recognize the leadership of that team. We have Bill Anders, who leads our manufacturing.

Speaker 3

Bill has over a decade of experience in mobile canning and printing industry. And in my opinion, he's also the most knowledgeable pro in the industry when it comes to operating and maximizing the output of a digital printer. Leading our co packing and mobile division is Michael Kilgore, a seasoned industry veteran with over a decade of experience from head brewer to a wide ranges of experience in co packing and mobile canning. His diverse expertise lends to his ability to drive process improvements and maximize efficiency. The last person I want to recognize is our controller, Bruce Wells.

Speaker 3

Bruce is the most experienced pro in our company and is also a manufacturing accountant. Bruce's knowledge allows us to have extremely accurate estimates on our manufacturing costs, which allows us to be very targeted as to where we implement improvements that yield the highest ROIs. One final announcement I would like to make is, we have recently hired a business development manager, Kevin Mann. Kevin is based in Seattle, Washington and was the Marketing and Sales Director for nearly half a decade for a national beverage company, Ninkasi. His leadership led them through an explosive growth period.

Speaker 3

Kevin has relationships with most of the major beverage companies, distributors and grocers in the Western U. S. He understands the entire lifecycle of our cans from the source to the end consumer and is already forming strategic partnerships that are immediately translating to sales. Now with that, I will turn it over to Tiffany.

Speaker 1

Thank you, Conor. I'll summarize the financial results for the quarter and then we will take questions. On a consolidated basis, our gross sales were $2,500,000 for the Q1 of 'twenty four $2,900,000 for Q1 'twenty three, primarily due to bulk spirit sales of 600,000 offset by an increase in printed can sales. Craft sales were $1,800,000 for $24,000,000 and $1,500,000 for 2023 as printing is finally gaining its full potential. Spirit sales were $600,000 for $24,000,000 and $1,400,000 for 2023, decreasing as a result of the bulk spirit sales in Q1 2023.

Speaker 1

Our consolidated gross profit was $200,000 for Q1 'twenty four and $600,000 for 2023, primarily due to our bulk spirit sales in Q1 'twenty three of $500,000 Our consolidated gross margins were 8% for 'twenty four 22% for 2023. Craft had margins of 3% for 2024 and negative 7% for 2023. Spirits margins were 23% for 2024 and 54% for 2023, primarily related to the bulk spirit sales. Operating expenses were $1,200,000 for Q1 'twenty four and $1,900,000 for Q1 'twenty three, a decrease of almost 650,000 dollars Our lower expenses reflect the success of our restructuring efforts throughout 2023. Our net loss was $1,300,000 for Q1 'twenty four and $1,600,000 for Q1 'twenty three and our adjusted EBITDA was flat at about negative $800,000 for both periods.

Speaker 1

We will now open the floor for questions. Operator?

Operator

The first question today is from Sean McGowan with ROTH. Please go ahead.

Speaker 2

Hey, Sean.

Speaker 4

Hey, guys. Thanks. Hey, Jeff. How are you? Couple of questions, if I can.

Speaker 4

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

Speaker 2

I'll start and I'll let Conor add anything if he'd like to. I think we're seeing it really meet our expectation in the Q1 on volume. I mean, as Connor said, I mean, the year over year comparison is there's really no comparison. We're really fully into 20 fourseven printing now. And that basically puts this thing on path to get to full capacity here shortly.

Speaker 2

I mean, there'll be opportunities to streamline, get more out of it here, but I see ourselves really on path here to fill the machine up. And I expect that we'll be in a position later in the quarter, later in the year to announce more capacity coming online in the facility. So we'll be able to double what we're producing with 1 machine. So I'm very pleased with the ramp up and Connergen has done a fabulous job debottlenecking it. But moreover than that, getting out into the field and really seeing the customer base, understanding where the market is and pulling people over the fence into the digital printing landscape.

Speaker 2

I can't stress how important that is today, because once you get them over and you convert their supply chain and you start to really show them what they can do with this new packaging, then you're really in a position to just build off. And this is reoccurring business too, right? So we're not having to resell this stuff every cycle. So Sean, I think I'm pleased with where we are in the ramp up.

Speaker 4

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

Speaker 2

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

Speaker 2

We're starting to do business for other college groups that are part of the NIL, right? So there's this is not going after the same large customers and fighting for the overpriced. These are starting to be customers that that specifically need something unique like this, who can who are looking for something where they can really benefit from the advantages that we can with digital

Speaker 4

printing. And if any updates that you can provide would be helpful on on showing up the balance sheet or any changes there both during the quarter and anything subsequent to this upgrading? Right.

Speaker 2

That's a great question. I mean, one of the big things that everybody is obviously aware of and concerned about is the NASDAQ listing issue. Last year, we went down the road and this has been something that I've been working on for 2 years now is to fix the balance sheet. Fixing the balance sheet has been a priority and we've made big changes there. Last year, we reduced a large amount of debt and converted to equity.

Speaker 2

That was a hard choice to make, but it was a choice I think was absolutely necessary to put us in a position where we could invest in the business and move forward. And I think that that's a focus in the Q1 here and into the Q2. We're looking to build a credible plan that's not just wholly built on balance sheet adjustments, debt to equity, but on really the income statement now. What you're starting to see in the company is the income statement change, right? We're seeing Crafts revenue really grow through what it historically did because we've realigned the business.

Speaker 2

But on the Spirit side, we're at a point where you're starting to see that business really at breakeven. And we alluded to it in the comments, and I'll just reiterate now, we're in advanced profitability here in the back half of the year. So between the balance sheet, some possible changes that we're working on to get our in compliance with Nasdaq and finishing some of these priorities on the income statement, driving Craft to full capability out of its one facility, leveraging fixed expenses with multiple digital printers. And then on the Spirit side, finally getting to a point where we're generating positive cash and net income out of that business. Those two elements are going to be the best fix for the balance sheet, I think.

Operator

The next question is from Matt Campbell with Liriday Capital. Please go ahead.

Speaker 5

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

Speaker 5

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

Speaker 2

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

Speaker 3

Yes. So our first goal was to hire a salesperson up in Seattle. But we laid out a kind of a skill set of what we're looking for up there, mainly geared towards a business development manager to help with our sales team. And what we went and hadn't found is a guy who has, like I said, he had 5 years experience as the marketing and the sales director for one of the largest beverage companies in the Northwest. And he's very, very hungry, but he's also very skilled at finding how we are a value add for the customer.

Speaker 3

So we're not just offering and say a beautiful can to them. You can also help them with their forecasting, right, also their business strategy as well as how to leverage that. But, he's already in his 1st 3 weeks here, he's already sold a tremendous number

Speaker 2

of cans.

Speaker 5

That's great to hear. Yes.

Speaker 3

And then And then We're incurring orders too.

Speaker 2

Yes.

Speaker 5

No, that's helpful. So it sounds like you guys have gotten the kinks out of the printing side of the equation and now you can drive the revenue, which is great to hear. Were there any other one time items on the Craft side? Like where is mobile canning that side of the business? Is that now breakeven for us, so it's not going to bleed?

Speaker 3

Yes. What color there?

Speaker 2

Go ahead, Conor.

Speaker 3

Yes. Mobile was actually positive EBITDA in the Q1. So, yes, we've gotten the operation down to where the expenses align with what the sales are. And so, yes, it's actually above breakeven.

Speaker 2

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

Speaker 2

And to scale that business, the company struggled with the return on investment, because if you can think about it, moving a factory, a tiny small factory footprint, and we had 13 of them at our peak, and moving them to a customer, bringing them back, you bear a tremendous amount of risk and operational complexity. And then inevitably, when the customer gets large enough, they just moved off and built their own factory or bought their own equipment. Now, we haven't fully exited mobile, because the mobile customer base is extremely important to us. I mean, it's part of our DNA, but it also informs the company on how we can better serve our customer. So while we have reduced our mobile activities, we've exited Denver, we've reduced our activities in Seattle to some degree and also Spokane, We're still very active in Portland and we will continue to be very active in Portland.

Speaker 2

But as Connor said, we've got that to a point where we size the opportunity. It's a great part of the package that we can cross sell, but the biggest opportunity, as you said, is digital printing. There's only a handful of people in North America with functional digital printing. There have been investments made in other technologies that are not effective apparently. And so fortunately, we have a great partner in Hendercoff.

Speaker 2

That's the technology partner that we have that helps us with our equipment. And we're doubling down there. We're going to get. So as far as the one time items, you can imagine, I mean, there's a lot of things that you have to react to in a quarter. So, as we see this volume of demand in front of us and Conoco gets that demand, for us, we have to be in a position that we meet the customers' needs.

Speaker 2

We cannot win a $1,000,000 can deal from somebody and then wake up on a Sunday afternoon and say, we don't have the spare part to keep this thing running through the weekend, right. So we did have a number of items in the quarter that we had to expense in the quarter. So for example, we had a large amount of spare parts we bought, pulled in, we expensed that, we had a lot of scrap that we caught up with as we ramped up, had extra freight. And the other thing that I'll take my hat off to Connor is immediately in the door, he worked on our can costs and we our partner on the supply chain on the can side is outstanding and they've helped us source cans cheaper, so we can deliver that on to our customers at a better price. So we work through some higher priced cans in the quarter that normally we wouldn't have had.

Speaker 2

So, as I look forward, I think we're in a position to really see some gross margin improvements. And then as I said before, the bigger opportunity for the business is when you get even more horsepower in that facility. You're not going to pay for another large number of operators because our operators are outstanding and they can manage 2 machines, you're not going to have to pay another lease payment, you're not going to have to pay more for the overhead because that's going to be leveraged. So as we move the cans, volumes up through $2,000,000 a month and into a much bigger number, you're really going to see the margins and the profitability here change.

Speaker 5

That's helpful, Jeff. If I could just elaborate on or have you elaborate on Sean McGowan's question about the spirits business. You said you're in discussions to push spirits into profitability. Obviously, you commented on agave prices now coming down, but we never know where agave is going to go. So taking that out of the equation, is there a partnership that you envision here?

Speaker 5

How should we think about that where you do something that can really start to accelerate the opportunity that we have in these brands that have been really haven't had any tender loving care for a while now?

Speaker 2

Yes, that's it's a big question. I mean for everybody on the call, the company evaluated selling brands 2 years ago or basically not this past Christmas, but the holiday before that. We went to a full year of looking at the brands, talking to people that were potentially interested in them, and we continue to do that. But one of the things that we've realized is there's a huge opportunity to maximize the value of the brand by continuing to on this course to improve their performance, specifically their profitability performance. And one of the challenges that we've had is and you have to go back in the company's history a few years here.

Speaker 2

Company was built to produce product in larger scale and the vision then was to serve 1 of our brands that we don't we're not involved in with anymore and that's the Redneck Riviera brand. And we bring in blended whiskeys into Portland, we build product and then we ship it back east. Conceptually, it made no sense as far as trying to keep costs low. And inevitably, it proved to be a very bad business decision because in the end of the day, what we ended up having was a very expensive position on the shelf and we weren't able to compete there. And so as the company downsized across the board in sales, its whole market operation East And Harold Weber, who is probably on this call, remembers this because he asked these questions call after call about why not be on in New Jersey, why not be bringing products here, that whole apparatus was extremely expensive.

Speaker 2

And in the 3 tier distribution system, you have to be super focused on your investment in your go to market plan. So in this case, as that came back to reality and we were focusing And one of the key goals here in this next step is that And one of the key goals here in this next step is to be in a cost leading position finally. So we want to be in a position where we have significant market share, brand equity in our market. We can drive volumes, but we want to be in a costly position, not just with the packaging, the liquid, but also with our overhead. So you've seen the liquid already because I mean, look, over the last 2 years, we've sold bourbon wholesale at record prices and the margins in that, you can see in this quarter.

Speaker 2

Compared to last quarter, we had really big profitability year over year or last year comparing it to this year because we sold wholesale bourbon at great prices. We have a very low cost position there and we're realizing really high prices in wholesale. So my point with that is, we've got our cost position down everywhere, packaging, liquid, we now just finished the overhead piece and we're going to have enough margin, gross margin dollars to do exactly what I was talking about on the craft side, which is market around our brands and spirits. If there's one thing that's been a great thing about this company having 2 diverse groups, a spirits business, consumer products spirits business and then being this unique digital printing business is it's being informed at the importance of marketing around your bottle on the shelf in a liquor store. We've spent a ton of money on Portland Trail Blazers in the past, on billboards, on all kinds of things, but we've not marketed around the bottle in the store.

Speaker 2

When we get our cost position right and we have enough disposable dollars to attack the market, we're going to win and we're going to take share and you're going to see volumes grow, they're going to start in Portland and we're also going to use what savings we can get in the agave move down to do the same thing in Zuni. Zuni is a little bit more complicated because it's a multistate product and it goes through the traditional 3 tier distribution system. We have to work with our distribution partners and that's been a long running challenge. In Oregon, it's a control state. So it's a different route to market.

Speaker 2

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

Speaker 5

Thank you very much and continue good luck the future. Looking forward to seeing us start to turn the income statement around. Awesome work.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Jeffrey Gwynn for any closing

Speaker 2

remarks. Great. Thank you, Gary. And I'd like to thank all of you guys on the call for listening to our conference call, and we look forward to updating you on the Q2. All right, great.

Speaker 2

Have a good evening.

Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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Key Takeaways

  • Craft’s digital can printing business delivered a 320% year-over-year production increase in Q1, hit record monthly volumes, and is ramping toward full capacity with plans to add a second digital printer.
  • Customers are increasingly adopting digital-printed cans—secured by large-volume deals for sports events and college partnerships—and mobile canning operations achieved positive EBITDA in Q1.
  • The spirits segment posted its best operating result without bulk sales in years, narrowing the Q1 EBITDA loss to $56,000 as Oregon volumes held steady and agave input costs began to decline.
  • Q1 consolidated gross sales were $2.5 million (vs. $2.9 million in Q1 ’23) and gross profit fell to $0.2 million, while restructuring reduced operating expenses by $0.65 million and net loss narrowed to $1.3 million.
  • The company improved its balance sheet by cutting debt and converting to equity, is hiring a Seattle-based business development manager to accelerate sales, and is focusing on income-statement growth to regain Nasdaq compliance.
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Earnings Conference Call
Eastside Distilling Q1 2024
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