Eastside Distilling(EAST) - 2018 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Gross sales for 2018 totaled $7.2 million, up from $3.8 million in 2017, representing an increase of 89% [13][29] - Net sales increased by 135% to $6.1 million compared to $2.6 million in the prior year [29] - The net loss for the year was $9.1 million, or $1.49 per share, compared to a net loss of $5.2 million, or $1.42 per share in 2017 [40] Business Line Data and Key Metrics Changes - Total case sales for the year were 58,746, with branded products accounting for 37,262 cases and private label for 21,484 cases, reflecting a 90% increase in branded products and a 450% increase in private label [30] - In Q4, branded products grew by 135% to 13,949 cases, while private label cases increased by 826% to 4,816 compared to Q4 of 2017 [30] Market Data and Key Metrics Changes - The wholesale revenue grew by approximately 124% for the year, representing about 60% of the overall business [33] - Retail and special events operations generated approximately $1.2 million, a 20% decrease from the previous year [34] Company Strategy and Development Direction - The company is focused on a three-pronged strategy: creating a cash cow in Oregon, being a dealmaker in the crafted spirits space, and developing a brand factory through partnerships with branding firms [9][11] - The acquisition of Craft Canning is seen as transformational, providing significant growth potential and operational efficiencies [10][47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2019, highlighting the successful launch of Redneck Riviera whiskey and the anticipated growth in the CBD beverage market [9][58] - The company plans to leverage its Oregon operations as a proving ground for products before national rollout [9] Other Important Information - The company ended the year with a strong working capital position, with cash totaling approximately $10.6 million and inventories over $11 million [41] - The Craft acquisition is expected to enhance revenue generation and operational capabilities significantly [43][47] Q&A Session Summary Question: What is driving growth within the non-Redneck portfolio? - Management indicated that branding activities and increased sales and marketing efforts are key drivers of growth [63] Question: Can you provide a breakdown of distribution points? - The on-premise business accounts for about 15% of total distribution, with corporate accounts contributing approximately 30% of overall distribution [66] Question: What is the M&A strategy moving forward? - The company is looking for bolt-on acquisitions that can integrate easily into existing operations, focusing on synergistic opportunities [68][69]