Eastside Distilling(EAST) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated gross sales for Q1 2021 increased 4% to $3.2 million compared to $3.1 million for the same period in 2020 [11] - Gross profit dollars improved to $749,000, up from $725,000 last year, with a gross margin of 24% for the quarter [13] - Net income reached $3.7 million, or $0.33 per share, with adjusted EBITDA showing a loss of $1.2 million [15] Business Line Data and Key Metrics Changes - Spirits sales were down 21% year-over-year, primarily due to lower Azuñia volumes, while Craft Canning sales grew 31% [11][34] - Portland Potato Vodka brand revenue increased 5% year-on-year, and Burnside brand revenue rose 9% year-on-year [22] - Azuñia brand revenue decreased by 30% due to slow on-premise sales and intentional reduction of deep discounts [24] Market Data and Key Metrics Changes - The pandemic continued to negatively affect on-premise sales, particularly in Oregon and California [10] - The craft canning division is expected to run at 85% to 90% capacity as peak summer months approach [34] Company Strategy and Development Direction - The company is focused on a turnaround strategy emphasizing growth, brand differentiation, and product innovation [19] - Plans to pivot from a broad national approach to a concentrated geographic strategy targeting five primary and five secondary states [27] - The company aims to integrate craft and spirits operations for optimal efficiency and growth [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's transformation and the potential for accelerated growth, particularly in the spirits segment [38] - The reopening of markets post-COVID is expected to enhance on-premise sales and brand experiences [76] Other Important Information - The company has made significant changes to its management team, bringing in experienced professionals from the spirits and consumer products sectors [18] - A three-year strategic growth plan is set to begin in June, which will guide operations and capital structure [37] Q&A Session Summary Question: Will the cash infusion from the private placement accelerate company initiatives? - The $3.3 million raised was primarily to refinance maturing notes, with some incremental liquidity added to the balance sheet [40] Question: Can you provide details on the $2.2 million of other income this quarter? - The income included one-time gains from PPP loan forgiveness, termination of a license agreement, and inventory sales [42][43] Question: Are there plans to grow the canning operation by investing in more trucks? - The market for beverage manufacturing is significant, and the company is exploring both mobile and fixed location opportunities for expansion [44][45] Question: What competitive advantages does the company have over competitors? - The company offers best-in-class products and is focusing on building brand identity and consumer experiences [48][50] Question: What are the plans for ready-to-drink (RTD) cocktails? - There is significant potential in the RTD segment, with plans to develop unique, high-quality products that can generate substantial revenue [53][56] Question: How will the company adapt to the reopening of markets post-COVID? - The company plans to enhance experiential marketing and focus on on-premise promotions rather than deep discounts [77]