Eastside Distilling(US:EAST)2021-11-16 01:24Financial Data and Key Metrics Changes - Q3 2021 consolidated revenue decreased by 23% compared to the previous year, primarily due to the Craft Canning and Bottling division [9] - Q3 2021 sales were reported at $3.3 million, down from $4.3 million in the prior year [30] - Spirits net sales remained flat at $1.4 million compared to the prior year [30] - Adjusted EBITDA loss improved by 16% year-over-year, amounting to a loss of $611,000 [35] - Net loss per share was $0.32, compared to $0.17 in the previous year [35] Business Line Data and Key Metrics Changes - Craft Canning division experienced a 32% year-over-year decrease in revenue due to lower demand [10] - Spirits division's 9-liter case volume was down 7%, but when adjusted for discontinued products, volume was up 8% year-over-year [14] - Burnside's gross profit margin improved year-over-year despite lower case sales due to price increases and focus on higher-margin SKUs [31] Market Data and Key Metrics Changes - The Craft Canning market has seen a shift as on-premise sales return, reducing demand for mobile canning services [52] - The company is pivoting to service a broader beverage market beyond craft beer, including kombucha, energy drinks, and ready-to-drink beverages [53] Company Strategy and Development Direction - The company is focused on a three-year strategic growth plan, emphasizing the need for adequate liquidity to support operations and growth initiatives [19][29] - A shift in distribution strategy is underway, moving from large distributors to smaller, craft-focused distributors to enhance engagement and sales velocity [75] - The company plans to leverage partnerships, such as with Frito-Lay, to enhance product offerings and marketing strategies [82] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround progress, indicating that 80% to 90% of the turnaround is complete [39] - The company is optimistic about future growth, particularly in the spirits division, as it focuses on premium and craft-oriented products [74] - Management highlighted the importance of marketing investments in markets with established distribution to drive brand awareness and sales [44] Other Important Information - The company has secured a new 50,000 square-foot facility for craft operations, which will house new equipment and support growth initiatives [11] - A five-year agreement with O-I Packaging Solutions for glass bottle supply is being finalized to ensure product availability [15] Q&A Session Summary Question: What stage of the turnaround is the company currently at? - Management indicated that the company is in the latter stages of the turnaround, with most issues addressed [39] Question: How is the marketing strategy evolving, especially with the partnership with the Portland Trail Blazers? - Management confirmed an increased willingness to invest in marketing, focusing on markets with strong distribution and consumer demand [42][44] Question: How will the digital can printing and pasteurizer impact sales and margins for Craft Canning? - Management explained that these innovations will allow the company to service a broader beverage market and improve operational efficiency [52][56] Question: What feedback has been received from current Craft Canning customers regarding market shifts? - Management noted that many small brewers are investing in their own equipment and shifting back to keg business, impacting demand for mobile canning [62][63] Question: What is the significance of the partnership with Frito-Lay? - Management emphasized the importance of craftsmanship and micro-marketing capabilities that attracted Frito-Lay to partner with the company [82]