Eastside Distilling, Inc. (EAST) Q4 2023 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals declining sales and margins, with a lack of significant improvements in financial performance. Despite some positive developments in digital printing and spirits, the overall sentiment is negative due to flat or declining key metrics. The Q&A section highlights capacity constraints and management's inability to provide clear answers, which could further unsettle investors. The lack of a clear strategic plan and guidance also contributes to a negative outlook.
Key Financial Performance
Gross Sales $2.1 million for Q4 '23, down from $2.4 million for Q4 '22, primarily due to seasonality in printing, lower mobile canning and spirit sales.
Craft Sales $1.2 million for both '23 and '22, indicating stability despite improvements in printed can production.
Spirit Sales $900,000 for '23, down from $1.1 million for '22, reflecting a decrease in bulk bourbon sales.
Consolidated Gross Profit Flat at negative $100,000 for both Q4 '23 and '22.
Consolidated Gross Margins Negative 6% for both '23 and '22.
Craft Margins Negative 26% for 2023, compared to negative 23% for 2022.
Spirits Margins 21% for '23, up from 13% for 2022, indicating improved profitability in the spirits segment.
Adjusted EBITDA Negative $1.3 million for '23, improved from negative $1.6 million for 2022, primarily due to decreased operating expenses.
Impairment Loss $400,000 for 2023 related to the Azunia brand, down from $7.5 million for 2022.
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Operating Highlights
New Products: The company is focusing on digital printing for beverage packaging, which is a significant shift in their product offering.
Market Expansion: Eastside Distilling is winning new customers across the West Coast, including larger clients launching new SKUs.
Operational Efficiencies: Craft printing operations improved significantly, printing 14.1 million cans in 2023, up from 4.8 million in the previous year.
Operational Performance: The spirits segment achieved a net operating loss of only $114,000 in Q4 2023, a 78% improvement from the previous year.
Strategic Shifts: The company is transitioning from a spirits-focused business to a leading innovator in consumer beverage packaging.
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Risk or Challenges
Market Acceptance and Product Success: Risks related to the company's acceptance of its products in the market and success in obtaining new customers.
Product Development: Challenges in successfully developing new products.
Business Model Execution: Risks associated with the ability to execute the business model and strategic plans.
Integration of Acquisitions: Challenges in successfully integrating acquired entities and assets.
Capital Acquisition: Risks related to the ability to obtain necessary capital.
Going Concern: Concerns regarding the company's ability to continue as a going concern.
Regulatory Compliance: Ongoing challenges in remaining NASDAQ compliant.
Supply Chain Management: Risks associated with handing over critical components of the supply chain to the company.
Economic Factors: Potential impacts from economic factors affecting sales and profitability.
Impairment Losses: Recorded impairment losses related to the Azunia brand, amounting to $400,000 for 2023.
Seasonality in Sales: Seasonal fluctuations affecting sales in both Craft and Spirits segments.
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Guidance & Outlook
Transformation Focus: Eastside Distilling has transformed from a spirits-focused company to a leading innovator in consumer beverage packaging.
Craft Services Growth: The Craft printing business printed 14.1 million cans in 2023, significantly up from 4.8 million in the previous year, with expectations of printing over 4.7 million cans in Q1 2024.
Digital Printing Strategy: The company is focusing on digital printing to attract new customers and enhance marketing strategies for beverage packaging.
Debt Management: Efforts are underway to lower outstanding debt and extend payment maturities with key lenders.
Spirits Segment Outlook: The spirits segment is expected to make further progress towards breaking even on a cash basis in 2024.
Craft Services EBITDA: Craft printing operations are anticipated to deliver positive EBITDA in upcoming quarters.
Sales Expectations: The company expects continual improvement in sales and margins throughout 2024.
Revenue Projections: Gross sales for Q4 2023 were $2.1 million, with expectations for growth in the Craft segment.
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Shareholder Return Plan
Shareholder Return Plan: None
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Key Q&A
Q:What was the average sale price of the 300-ish that you sold?
A:I don't know if I have that here in front of me. I'll ask Tiffany, our Controller is online, she can look that up.
Q:What is your canning capacity? And what percent of capacity are you running?
A:We have one machine with a capacity of 25 million cans a year, and we expect to get a second machine this year, doubling our capacity.
Q:How about the mobile canning, what percentage capacity?
A:We're north of 50%, but there's plenty of excess capacity.
Q:Why wouldn't you take your current brands and create a hard seltzer?
A:There are many opportunities, but RTD is a high working capital space, and we need to be careful about pulling the company in new directions.
Q:What kind of growth do you see in the digital printing mix over the next couple of quarters?
A:We're substantially above what we did last year, but the biggest risk is working capital.
Q:Where do you see breakeven? How many cans a quarter do you need?
A:The company should be close to breakeven based on production this quarter, but scrap and other issues might pull us negative.
Q:How is the Board supporting this transition of the company?
A:We've been blessed with a talented group, and we need to continue to bring in more resources to support growth.
Q:Are you going to get the funds for the new machine through growth?
A:We've been working on a financing package that we think will take serious and inform an operating lease.
Q:Have we seen a bottoming of the spirit side?
A:Yes, we are seeing improvements, but we need to lower overhead costs.
Q:Is the mobile canning business still a headwind?
A:It has been a drag, but it's a profitable segment and will continue to contribute cash.
Q:When do you think you'll get that second printer?
A:We're working on it, but it's dependent on working capital in Q2.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the average sale price of the cans sold, stating they would need to look it up later.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Coast
Pacific Northwest
Portland Potato
Potato Vodka
RTD
acquisition
beverage
bourbon
brand
breakeven
can machine
canning
capacity
change
concept
consumer
cost
couple
direction
fact
label
loss
marketing
money
month
number
others
packaging
people
place
price point
process
production
quarter
scrap
segment
side
space
technology
value
way
EAST Transcript
Eastside Distilling, Inc. (EAST) Q3 2024 Earnings Call Transcript
Positive11-15
The earnings call summary highlights positive financial performance, including improved sales and EBITDA. The acquisition of Beeline Financial Holdings is a strategic move, enhancing growth potential in the mortgage sector. Despite risks like market acceptance and competitive pressures, the company's restructuring efforts show progress. The direct equity placement indicates confidence in shareholder value enhancement. The Q&A section lacks concerns, suggesting analyst confidence. Overall, the company's strategic initiatives and financial improvements point to a positive stock price reaction over the next two weeks.
Eastside Distilling, Inc. (EAST) Q2 2024 Earnings Call Transcript
Positive8-14
The earnings call highlights significant growth in digital printing revenue and gross profit, along with improved operational efficiencies. Despite a net loss, the company shows progress in financial performance and has an optimistic outlook for Q3. The reset in the tequila strategy poses risks, but the overall positive momentum in sales and strategic initiatives suggests a potential stock price increase of 2% to 8% over the next two weeks.
Eastside Distilling, Inc. (EAST) Q4 2023 Earnings Call Transcript
Unknown4-2
The earnings call reveals declining sales and margins, with a lack of significant improvements in financial performance. Despite some positive developments in digital printing and spirits, the overall sentiment is negative due to flat or declining key metrics. The Q&A section highlights capacity constraints and management's inability to provide clear answers, which could further unsettle investors. The lack of a clear strategic plan and guidance also contributes to a negative outlook.
Eastside Distilling, Inc. (EAST) Q3 2023 Earnings Call Transcript
Unknown11-18
Despite improved gross margins and reduced losses, the earnings call reveals concerning factors: a debt-for-equity swap, plans to increase share count, and challenges in mobile canning. The Q&A highlights uncertainties in spirits and digital printing growth, with management avoiding specifics. Economic headwinds and destocking further cloud the outlook. These elements suggest a negative stock price reaction.
EAST Report
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