Eastside Distilling(US:EAST)2024-05-18 10:54Financial Data and Key Metrics Changes - Consolidated gross sales for Q1 2024 were $2.5 million, down from $2.9 million in Q1 2023, primarily due to bulk spirit sales of $600,000, offset by an increase in printed can sales [69] - Operating expenses decreased to $1.2 million in Q1 2024 from $1.9 million in Q1 2023, reflecting successful restructuring efforts [70] - Net loss for Q1 2024 was $1.3 million compared to $1.6 million in Q1 2023, with adjusted EBITDA remaining flat at approximately negative $800,000 for both periods [70] Business Line Data and Key Metrics Changes - Craft sales increased to $1.8 million in 2024 from $1.5 million in 2023, while spirit sales decreased to $600,000 in 2024 from $1.4 million in 2023 due to bulk spirit sales in Q1 2023 [15] - Craft's production output was 320% higher than Q1 2023, achieving three record months of production [12] - Consolidated gross profit was $200,000 for Q1 2024, down from $600,000 in Q1 2023, with gross margins at 8% compared to 24% in 2023 [16] Market Data and Key Metrics Changes - The tequila market is facing strong near-term headwinds as consumers trade down, impacting overall spirits sales [6] - Input prices for agave are coming down from all-time highs, which is expected to lead to savings in upcoming quarters [5] Company Strategy and Development Direction - The company is focusing on a multi-year effort to refocus spirits investment in profitable segments and regions [6] - There is a commitment to improving manufacturing processes and leveraging digital can printing technology to enhance market presence and sustainability [13][14] - The company aims to achieve significant market share and brand equity while maintaining a cost-leading position across packaging and overhead [55] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ramp-up of digital can printing and the potential for increased production capacity later in the year [26] - The company is in advanced discussions to enhance the profitability of its spirits business, with expectations for positive cash flow and net income [88] - Management highlighted the importance of marketing around products in retail environments to capture consumer attention effectively [21][85] Other Important Information - The company has recently hired a Business Development Manager to enhance sales efforts and leverage existing relationships in the beverage industry [23] - Management noted that mobile canning operations have reached positive EBITDA in the first quarter, indicating improved operational efficiency [92] Q&A Session Summary Question: Can you provide clarity on the ramp-up of output on the digital can printer? - Management indicated that the ramp-up is meeting expectations, with a broader customer base moving to digital printing [76] Question: What is the status of the balance sheet and any changes during the quarter? - The company has made significant changes to improve the balance sheet, including reducing debt and converting it to equity [77] Question: How is the spirits business performing, and what are the plans for profitability? - Management is in discussions to push spirits into profitability, with a focus on improving cost positions and leveraging savings from agave price reductions [94]