EAST - Earnings call transcript Q3 2018 | Eastside Distilling, Inc.

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Operator

Good day, and welcome to the Eastside Distilling Third Quarter Fiscal Year 2018 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note that that this event is being recorded. I’d now like to turn the conference over to Robert Blum with Lytham Partners. sir. ahead go Please

Robert Blum

much us morning Distilling’s today quarter XXXX. for very everyone financial thank for the XX, September joining to ended Cole. you and Good you results Thank discuss Eastside

Robert Cole for its XXXX XX-Q. as moderator Earlier, results Blum As a call. I’m at Partners, release be today's third I their issued filed press Lytham Eastside in your will quarter well indicated as

these Distilling. results Robert Joining are Wickersham; to us on and Eastside today's Steve Manfredonia, discuss from call Shum; Grover

Following will your we the questions. to remarks, call the open

begin submit the Before within discussed for record the Distilling by with conference the Eastside as Exchange Reform amended, XXXX. the statements the to this forward-looking and XXXX, as amended meaning matters the Certain of the may prepared of XXE the remarks, Act be of Management Litigation section we Act following of XX on forward-looking call of provisions statement. XXXX, Private of statements made Securities such section Securities Safe of Act are pursuant of Securities Harbor A

but ended success differ product success include, describe involve are are in expectations, multitude that and the anticipate, may, obtain Exchange generally Securities Such Company's its as events time-to-time products business uncertainties or materially new risks risk or financial results ability Commission, by results, success and acceptance planned, preceded and capital, such in to not that results information differ assets, with future statements that development, to to and ability in the described and integrating cause obtaining customers, filings ability the projected the pertaining projected. said, XXXX in could risks Company's all in and plans, on matters plans, to strategies report with a circumstances, Company's the the cause the materially over Distilling. Securities information of and continue forward-looking statements. such limited from year market, in the turn the I’d acquired are related December concern the XX, Company’s from entities the CEO plan please that for or the Listeners or and growing XXXX. to those may Wickersham, Grover, strategic including to, Commission actual are execute eventually future proceed. and model to should, words Grover like related annual draft, or call will subject expected, to filed cautioned statements the With future, Exchange uncertainties and to to statements Eastside of April XX, on Form-XXK Forward-looking and

Grover Wickersham

everyone our I Thanks, good Thanks of on store Robert, certain and to that I’ve and operational also morning for a joining our SVP which on record am be for Robert And Shum’s the after year highlighted best the points. Steve I he’ll obviously, mention sales to to for we remarks. on revenues is also Manfredonia, finish with today. Q&A. same us Accounts quarter the the available asked him National pleased have call. comment by showed wanted the was I The with third am to opportunities roll quarter quarter. about excited ever. as results, third us

private fourth led Pacific quarter. sales, of branded in approximately as to to Riviera quarter were canning our and Of and for quarter the case to operations X,XXX as them the whiskey label XX,XXX Northwest. brown during product than continued continued in million product last to XX% the and Redneck spirits the third wine last QX. over Riviera, X,XXX cases products, Our continues cases, by Redneck just $X.X of This them year. compared gross and the more X,XXX traction We momentum in with increase the of sales shipped cases whiskey lines an branded almost XXX%, $XXX,XXX compared growth build X,XXX year's in of was well increased our vodka the

sheet We exercise the the traded continue of the from with balance to quarter XXXX. our of overall $X.X calling million million debt third and of publicly our with in strengthen through the warrants underwriter I $X.X am in of and path up-listing our the reduction units during cash pleased results.

is to in distributed different some major details. look distributors. eight Let’s at in the zoom a states now through take of XX Redneck Riviera

amongst those to Riviera is points where X,XXX very of currently premise Winn-Dixie, quarter accounts, key store Walmart, announce Albertsons, premise are see whiskey and including authorizations of over launches and others. those being chain third expect retailers, XXX available; We on new states off with We soon. there There including Safeway, Jewel-Osco, being adoption accounts. Northeast Redneck distribution strong X,XXX at and of X,XXX Binny’s

addition, for of We’ve in minimum retailer signings of In at Redneck in course, both we're optimistic but personally road for two already by chain No run chain this commitments for of accounts this will you November. as accounts approved John locations bump Rich later bottle Costco will got today. in be in adoption already press for show rollout of supporting for just its scheduled that a have of what to Costco month. guarantees X,XXX with Riviera whiskey test XXXX about QX. the we by have lead we Many authorizations release distribution ordering our hand the further QX Florida will locations new XXX% saw over

bring to media, support market Rich who concerts. great John store continues personal social radio, television, bottle in from product and awareness receiving through signs, outreach to the We’re

the brands who first have release is process last the product. very this As territory of on has of pace for geographic on their spirit and team our told, in to issue during we up possible. on market. a spirit want are I months certainly to I major do thank craft the to U.S. be everyone I made fourth something on able brands And hope to any done XX the Northeast press other All market the shortly. few This quarter. alluded we’re to earlier, the this in opening

seeing to Let’s Pacific fuel help turn we Northwest, in Bourbon to in sales. in report strategy Burnside are momentum Samson third transition Burnside am campaign exiting early fourth I results substantial growth to launched to optimistic our we a I from XXXX quarter. Oregon with very design the pleased as our about have core the case that and am with positive we marketing market.

for to our our canning am to drink beverage. proprietary a Vodka beverages. Portland say off and continues ready in to using Portland line our happy the of a drink history. we products I received And launched that Potato to discussed few favorite for ready vodka. branded first I I Marionberry We like see the it's goal -- branded on a been we quarters of local see we'll sales for an the opportunity extension. vodka ready expect RTD. TTB believe operations the of this strong our shelves in our is Our to extensions, to Vodka, product our line this Mule, An Potato of have solid performer. good be and trademark we’ve Potato Vodka. QX based It’s Marionberry last drink very Portland the We’d including of further on Portland on start. initial extension XXXX to again, Mule award-winning based approval

distinctive best year a by -- Bourbons our created of them Buckman XXth look We that year. aged our in reserve and our this Oak most Bourbon. is celebrated -- has Oregon forward and put taken aged tenure Burnside to craft spirit to-date. next Bourbons Mel well, this introducing anniversary contest highest also and have the We some entering premium in year

production and commissioning of delivery ramp medal up gallon are took enable American we Lastly, will new gold a still. and Single products. our Malt of great This us other to XXX

The recent International from awards, I’d San Spirits competition just, American As from on The two by won product little Malt meets for World subsidiary. distilled to our entered a in a the and It's Big category our Bottoms grained references competition. to on-premises some new and entirely gold-medal glass spirit best Oak already reminder, Single Francisco from Eastside’s Single and like first Big authentic Malt calling in prestigious in of a XXXX the the Bottom XXXX CBD. bond Malt. standards rigorous industry June, whiskey. it and Single American Spirits bit Los distilled barreled is we Angeles balled American spirit very new American Distilling comment has

you platform company know, a took Eastside's over opportunities to various As drink for mentioned. when many I CEO, of as categories as thought I like I I cocktails beverage that the in ready said that example, for

legalize and fully of you Oregon in to As pioneered use Oregon which deregulating recreational the a component also CBD, cannabis XXXX many of cannabis. for first was is state know, also

on passes several For market. is the We almost we've current in form current deregulated CBD beverage been opportunities the a see opportunities if emerging competitive and ultimately evaluating in its year, bill bases. CBD

as the it internationally personal I am you that company. this here un-cautious be going an a much we XXXX. company, Kentucky for of Seed. company. I company, leave my you also of that as Caudill the nationally at both many develop. statements. given LLC and chemical any They know first purposes relying in with and established will basic look the capabilities to taken produced seeds in in area also production CBD crops, formed very Caudill surrounded production with we cultural in and future is consumers the being are am and partnership background bit hemp make of a agricultural of a step amount However, careful XXXX organic the space. as an This long-standing Eastern substantial in hyped planting S&W engineering very They on large and that CBD, Caudill produce in on this sourced and oil And first beverages little agricultural it's Seed We a domestically CBD. in problems in staff. it's things of food reported and think is established forward long-standing step public of the in speaking European use high-grade working Seed also with future towards about CBD as And A for more ingredient. diversified Chinese gravitate having the a as our to have is developing specialty preliminary Recently, to a consumption. a and relationship not on affiliate to because has U.S. involved

other, the and many Lastly, celebrity Jason strategy of as assisting known significant co-ownership Pat there's Board us movies, a our to such of our several we Pat additions Jurassic movies -- first Hollywood endorsement forward. movies, who be I producer other Bourne probably two to the is World Crowley, his XXX going will credit. in Legends franchise, for directors, think made and Fall

it who Spiked took and to partner, Anheuser-Busch the Seltzer it Holmes. Second to sold revenues, icon join say David significant developed us industry -- and XXXX. was to Brand spirits is can't one in innovator, himself a revenues David the an but with and I

using I As and of a icon mentioned, a me company David turn expand let category. is hemp initiatives. the results. on We engaged run leaning in David's it's created developing CBD. is to David, the Steve call $XXX million through our look marketing Seltzer, with is forward and he Spiked Steve? growing industry what CEO to our now CFO, With the Shum, expertise CBD as to an you beverage said, financial we rapidly CBD that based a currently Plant, over

Steve Shum

Grover. Thanks

$XXX,XXX million ago which As versus sales $XXX,XXX promotion and taxes XXX% Net quarter totaled $X.X activities, increase sales, increased the to XX%, excise in Grover of as year customer an approximately the prior in mentioned, year, third compared gross certain period. to $X.XX in million the exclude approximately

canning by case the we XX% cases branded This year of XX,XXX of in During branded of case our sales locations. product the Overall, private brand. rationalize projects major Pacific products approximately the were overall. due an cases wholesale X,XXX increase from partially branded Burnside Redneck sales the offset XX% saw and product, to Bottom contributor our in was the improvement a during wholesale Northwest improved million business reflects driven on The our but period. third growth key we sale was products, and cases of in compared retail also last Vodka by from retail by Riviera label. products, activities quarter to consisted over private the Riviera increase That and year. from the prior further bulk $X period XXX% spirits to during other The higher event second X,XXX in increase This The traction of label overall. to an $XXX,XXX revenues contributions an decision just our and Big line. our this largely our over in benefited of quarter, and some to Vodka Redneck product Burnside sold lower

will brand in considering substantial Riviera and believe increase geographic larger to underway. being the we larger retailers marketing chain ahead, Looking especially programs investments continue made, benefit Redneck the various from footprint, the the

momentum are XXXX outlook. quarter fourth heading experiencing about excited strong We and this into remain

for distribution rollout approvals As chains. little authorizations doubled the Riviera The of chain of of existing points a of we've March Grover number distribution. than over mentioned, business. a the additional been number number account in authorized national for on already scheduled a Those of timeframe of were larger in existing national points around distribution points is side chain includes of X,XXX, current which currently X,XXX Redneck more

which up We retail are as purposeful a our our year marketing We for was and approximately canning XX% our event with made closing we’ve were reduce new of an some operations line to private $XXX,XXX, programs the the decision bulk product label of This result uptick approximately event Oregon. our business special period. up in activities unprofitable along spirits. from both decrease sale of of from a were operations underperforming experiencing a of one our Revenues Revenues ramping XXX,XXX also in with trend locations. the represented retail along derived additional initiated line Burnside the ago. in for

figure greatly of on compared million, on last consistent fewer the low the Gross approximately on the be retail in approximately to business. relative for certain September. we that end the and and expenses XXX% partner have $X.X $X.XX quarters support $XXX,XXX more to loss million totaled in G&A activities at support expenses XX% efforts the first ago yet events trade of year, expenses period. to gross share reimbursable These Also, margin geographic business, $XXX,XXX we second the the additions $XXX,XXX expand the appreciate margin profitable first are focusing product. Redneck quarter, been is when sales side noted will federal Riviera as if looking prior Advertising, included for on overall increase As of profit Also, in a Gross to in to based with allowed When our the decisions the made Through rapid of abnormally third been sold, net and or the support promotional entirely XX% year. excise of gross with which this more year. store the in overall I second margins label was year. planned would brand which we The arrangement by efforts the We with strategic end Rich, selling depreciation to our direct and key what last the side saw exceeding of in margin now was was an higher of XX% was are expenses were up and than are programs recover per impacted XX.X% refined incentive period for new result by now those in marketing XX%. have quarter, Again, and through net very have was this of and of of above the net Redneck agreement increased private to customer of year. or XX%. million a able higher from expenses locally to expansion rate, in totaled both the $X.X our under that quarters period year our ramp the to million, third in to of quarter result Xst, October along not $X.XX of personnel a this key to the we beginning $XXX,XXX. was and lower sales and Redneck efforts Riviera. the last compared compared at totaled a from versus also expenses. regionally. positively we $X.XX highlight our our offset products, supporting John branded ago the share other further tax loss last XXXX The Net per margin margin margins year partially $X.XX period compensation business. year this stock and that this.

the loss year compared Our period million EBITDA a million, $X.X ago. of adjusted during a loss approximately which the to of $X.XX was

cash the approximately Moving $X.XX the further of at Inventories at million. period increased, reaching $XX.XX the balance totaled end million. sheet, approximately

to ensure support inventories We new and improve goods ability set to in product have built to launches deliver our future us and periods. up cost of our

call proceeds million Grover During with which we brought chain would in That to perspective before handing previous some the mentioned, completed I minutes the $X.X that. national of third $XX.X back further announced quarter, warrant cash as along our Robert my on and on few highlights reducing comment million. to concludes a debt by Grover like his approximately successfully allow to it activities the

Robert Blum

line is of be will of X,XXX The fantastic goal Thank X,XXX. then environment, of you, is points distribution. within time of going three X,XXX spring morning accounts X,XXX the added Steve. to which off-premise start distribution. with mass with is in will of Those the secured and add for achieve over The plan. XXXX I’m grocery XXXX Plan this X,XXX the year conclude corporate points distribution will point conclude news points our gold year objective we've within points will Up end points have a will distribution of of is distribution. already and of points of change XXXX distribution we the traditional to sector top that with of sets, Eastside we to everyone. of X,XXX of roughly to by provide Good Redneck we I and build-out distribution distribution XXXX. summation and with points X,XXX to the X,XXX in

spring have a new brand. have shipping to product for we’re which major is this or incredible either buy XX targets retailers point, we XX and we will them secured XXXX, at we So

of some brand trade things happened So, with is a have non-traditional approach. classic the that build-out our

also to space, are sector, the So sector, with six-month unheard business able business and quite within first move piece with we within and to without the acceptance of and space business We've successfully change validation for sector data programming to within last been at to customers success this to usually start clusters. stores. they honestly the of grocery premise off to a on corporate boarding. retailers. of to this expedited to which sector, We've new immense excitement been within it on-premise is One drug customer generate able period, that dynamics within We've is drive the brand. corporate be an amount grocery been fuel major off-premise in a independent Florida, XXX the We able the programming its business the then a independent do accounts. able beyond transactional and larger club within but usually the been the Winn-Dixie, of added that example and expectations of have secured; their

hurdle bottles. transactionally able within that we Our first add chain with were XXX week is move a to rate XXX bottle. The

given retailer. additional mentioned the Grover for that Costco platform and mentioned Steve has with and us adds cash. favorability the So that

may a to we activation start committed a our will the of be States, their and in this then United time. rated subsidiaries, major within not in buildings then adds with have U.S. all XXth test going exception Albertsons within month, the and know pallets the of Hopefully the in to XXXX, Jacksonville Northern And success region their We within regions Walmart we and highest with the the Southeast each will seven expectation by have of have it. country. XXXX, the the as decision you with a and Albertsons spring and country behind deletes. building of which to receive to sale stores have many their an XXrd is year's period is every of customer two and that the aggressive Tallahassee move single plan on within majority yet is able and largest they the mandated distribution Costco building markets. move by be their that to we're other the both throughout made of on major across across stores market. has going California, we're amount

highlights within the Southern banner. we business toward XXX largest their California of stores and for will One bonds that adding which within is the the billings be Southern unit, Albertsons California, is region

major one the distribution, are complete We of have that and brands. brands includes few that the all

supplier short this an very a a So portfolios pivotal to and a of chain the the for put on other penetration acceptance. and premium They landscape, that amazing of sector time, it's note is is acquisition of many in brand the acceptance large within performance business. look amount the

way a providing as very our on to the we of good forward. we're for foundational So business other move piece opportunities

I'm questions over it. going is call. can answer end I Grover to that back you. and of hand the this So the at Thank

Grover Wickersham

chain wanted medal national very, be Robert with strategy to sales to making the call investments we're Thanks support I'll very large pedal very to call very it activations exemplifies advance the our store with what and I much, infrastructure we Robert. on to important because that today, to horizon. see new a able be for I right doing he think Redneck on -- of substantial very, expect what the

for it's it's investment major investment to brand a proper a I us value. So the maximize think and

and up to like open So your suggest to anyway, for it time you Q&A. I'd I'll today we thank

Operator

question-and-answer Instructions]. will [Operator ARS Ross from session Partners. our begin go question. ahead Please Taylor with your the And We with Investment question now first comes

Ross Taylor

the I’d number process case Can with the to of I us first Redneck. like or how of see explode. give ask to growing think can actually on you questions, would we distribution rapidly about couple thought an outlets idea sales? expect

seem having You substantial planning that It would inventory. have a you’re on XXXX? spirits pretty big distilled

Grover Wickersham

and call last products announce state of a when system we general their Well, suggest in online, get coming floor. before distributors there’s or the mean a I lag the we bit retailer new often tried announce a we’ve little Ross, see this to onto that into the as out comment, the

numbers starts Robert does coming where But a start it it starts some in to it of bigger speak look been this. And to has on to manifest there I’ll together very bit let itself lag a in like So future. the near this. of

Ross Taylor

something So you cases inventories like want would to that. to say numbers than seem mean higher support is XX,XXX XX,XXX your to it's -- I

So that liquor necessarily valuable. brown I doesn’t less make understand aging it

Robert Blum

do as….. Well, analysts I numbers we'll his think let the

Grover Wickersham

close original think based full But a on general Well, this months. we I smaller our input a and in not talked of assistance, recapture the quarter I Redneck on messaging, as just going XX% the had with the us about comment assistance sold. quarter the Steve the of that with XX national of encouraging of topic this as last there's rollout of brand and to spend from now to and mentioned, first a lot to Board we’re John Rich going far as because when most expand, gets

that's use turbo. metal, of analogy a the XXXX like the So the it’s to driving we’re pedal to

your there’s bit of a foray and so, And a lag.

Ross Taylor

product. last also canned also year. you product could canning you know you And bought it out one line about address spirit has mean would you out a you your talk one the you capacity. I no product. one have business, additional talk rolled canned Could I can about seem -- rolling

rolling out to in should coming And out Redneck area, looking that obviously So lastly you’re in canned? others. we see product expect at

Grover Wickersham

we last the comment -- think I first. Well,

we with products that on on we messaged we’ve Redneck. RTD plan to and additional think are working be I working Redneck an

geography. of the mentioned we costs the equipment core it the producing into the and our was of as of point costs, rush our are purposes But the and of some remarks. particularly acquisition prepared take was -- co-packing co-packing advantage business huge to was wine defer to think the the canning and for own I RTDs coming my also in of out I

variant, and the on craft of get the segment. throughout Portland. very RTD four we've fast-growing very see we'll complete We It the menus the out variant especially a to line area, momentarily. that Portland gender the we’re cocktail one And about shelf first cocktails. coming a that’s We’re mule have a first out And that in we it that. been it. is see and and name has hoping I’m it's probably based trademarked we popular with excited When variances

be And Robert’s hope primarily Robert’s so a the this first demonstrated his is it, with cherry accounts, is to with expertise guidance. we into out help product nationally Northwest that to but our obviously foray picking roll and RTDs under designed national will be Pacific

Steve Shum

if interject. point that can I On

regional of One usually won't will Redneck they making high Eastside success have a just to spots to invaluable them the brands if entities. us We'll other proper values are is level. we of go effect and gateway for the phase where I'd been, opportunities But we Redneck platform. the the throughout and call, has it the validation national strategize in then of what them Eastside company. maybe And beverage bring and the brand don't what brands, flagship add allows the performing for a favorability new national that call you have you at have national very

Operator

with Ian Investment Research. Zacks from your Please questions. comes question ahead Gilson go next Our Instructions] with [Operator

Ian Gilson

I some as usually financial probably questions Steve. few had for do, I

line out of million. You that broken of was it sheet What was? had is very for locality the credit why a and on balance $X.XX trade a new approximately it

Steve Shum

to we purchases. revolver be standard it it's of spirit facility used non-secured bulk put notes different past. mechanics done It's funding and basically credit with offer who the investors existing up simple our because in its against that one we've versus separated in That’s place the

So specifically no no and has spirits. coupon, that purchasing on coverage conversion of and features facility year term warrant It bulk for again is X% three it.

Grover Wickersham

spirits. only secured by bulk it's the And

Steve Shum

right. That’s

Ian Gilson

is facility… So actual down a to that limit credit or amount the taken

Steve Shum

facility Yes, the million… amounts original $X

Grover Wickersham

rate, who friendly double those digit gave that are I marketable. that that I think a shareholder would shareholder us appreciating ideal the -- and are is the behind logic very spirits in significant we're call as The buying are and

thing. a So nice -- this is it's

Ian Gilson

facts two the to total, would of basis it in and If cases first were the almost right? quarters, connect of the double sales that expense you promo on

Steve Shum

of third as as increasing some support in customer anticipated as well quarter been both the the Redneck we programs Riviera product, We've of in the incentive brands. doing other

Ian Gilson

They a carry higher tax case? per

Steve Shum

I are what about line. program is customer item -- excise incentive -- talking and you're tax don’t you asking Ian, line the that the know about?

Ian Gilson

correct… Yes,

Steve Shum

the it the But both pretty And federal might tax given customer our incentive be on that then programs. has programs sales. programs tax remember our markets Oregon obviously. on excise specific depending running that in tax, will only retail various any stable, incentive retail relates the And period. bounce customer operations, state rates are has we to line So the the around

Ian Gilson

$XXX,XXX in… The sheet or balance added Riviera the whisky expenses for Redneck on

Steve Shum

-- that are the is than the remember, brand that you talking is portion the more Riviera portion have gets the you it and rollout. organization agreement portion will, figure we if and attract, when spent an in as about referred sells. Redneck that obviously No, That the recoverable to reimbursable have if supporting we we

-- it's the item sheet. the line it's sells on that's because not balance brands a So specific

providing tracking we're simply foot notes. specifically it's sheet what But or some the an commentary far. it's information asset how balance So giving the in to the so on number on not and is and accumulating called on it out

Ian Gilson

it's expense in added quarter? fourth But

Steve Shum

expenses are as Well, again, have the that actually three I than mean, again supporting Riviera. a we've would But occurred spent recoverable that quarter. company more added the say, last incrementally the yes. I that's that over Redneck

we product in gone again and is up partners -- that reason one of seen our the biggest -- and recoverable. expenses is a the launch. can you've the as portion is of one that as track as to something with support of our most Redneck Riviera it So should know, book collaboration And

we been that October have some previously Xst we our that with actually tracking out pointed to that refined what Now we is hadn’t in get that agreement further, starting additional where in also expenses partners, bucket. include

Grover Wickersham

Yes.

is John just on there idea getting on all Rich what the that the the remind the So we're but also that. on get on to increased rate deal income call I spending mean the much we the people ultimate we’re income is current that with larger recovery an is And brands.

can profitability product with are this think Rich. you if enters So reimbursable benefit now then quickly get to from our economics I good that combine to and expenses. John the Those

Ian Gilson

would have expenses RRW? sale on those of recoverable been and the But be expensed the

Grover Wickersham

Correct.

Ian Gilson

growth? recent is acquisitions, exclude what the If you basic organic the

Steve Shum

you of really would small sales. MotherLode, strong had. area pace a is portion The the by being the spirits obviously, business I company that’s it’s the to bulk and but a Riviera Redneck has that the the augmented but a Bottom being growing at which breakout, product we also product. line for contributor that or some of see, organic, significant base off not been was private Redneck sales of certainly definitely growing, the growth label Big can And growth big Riviera say

So within pure organic growth versus organic additions call sales. call book the spirits in XX% the private-label private-label it is, probably it, of incremental about that business the is the within

Ian Gilson

year-over-year So organic basis, basically exceeded a on your growth XXX%?

Steve Shum

But I close. pretty it’s mean to we'd take deep out. and dive guess have I probably that break a Yes,

Ian Gilson

the I can On restrict the sensitive strategy Is it issue. CBD, that it to a to spirits be inside know the market? that

Grover Wickersham

back a analyst S&W. Well, where first at say, an and go ways area their including this -- it Ian, I'll quite S&W first is with with

and look if the at international my into of be here. again I by But passes. couple a everyone the a -- say relationship assuming the it. the we’ve to still roots I tapped on when words CBD -- just passes working entered I’d So everything that, the bill farm going But that is preliminary picked we’re company and idea with that my about thought lot major the that Caudill. this once all about beverage through hype up now channel, farm And is bill would and working caution its agricultural maybe is details of it’s you

major ingredient. our is companies So the to what was the source of thinking that look

a ultimate So us leg ag in home starting ingredient at bread based ground supplying company gold a Kentucky a give the floor standard with would domestically.

Caudill that’s I to into. managing appropriate to It's third idea step. sell different SKUs. something didn’t be going And first is does to to deeply So parties. that they it'd are already, thousand get for it X,XXX ingredients The parties. get think they to be this this. sell, third deeply or sell the into actually too Eastside

an and excellent here be We’re managing are it. have an to not we they partner ag company going

that can’t scenario, commerce. the prosperous states and to beverages. start So the I -- approached as right in any in companies like would into and is get Brands -- In Constellation is the to Canada it would for little bit Federally to some we’re the you waters. -- although hoping by not future. traction company actually. been Canopy beverage with state I number X and two in mention beverage to in But legally people billion aware to test its the concept would like put co-packing are what do a this our you of to is American of than We've in think company an can suppose us CBD sort bigger an a ingredient we a then not be selling CVD be interstate now, position far as

off CBD. have close I'll -- don't major want about cut think is to participate. me, and much you giving a But We just Steve I company to like be that. to with So again don’t say signal.

Operator

go Weber Our from Harold Aegis question with next Please Capital. ahead. comes

Harold Weber

regard in Couple am is of the sure the and first, How type going capability some you to I let's far then grow and continuing think production? Are not those going to to -- you’re get but to to bulk demand as I your at would buying product But deliver like supply, this ramping much up you they hopefully we why deliver do to you say Rivera tell And same as have to same backlog just in questions, wait preparing, rate. have you. guess show you’re grow, idea able stuff throughout continues and as to I beverages. be or an right, level or in people the stuff. to hopefully, you able that's be

Steve Shum

inventory. assessment back we reasons double to shift days of adding. we our facility running course, week, This based or do current the of where and still had if And is a we a shifts facilities, But lot one quite on been have top of on doing we've for we some time in are going still the of Current really the facilities out a it's -- some extent, we're because build of investments made that but we a did an can our to. cases standard months setup. go five X.X we couple figured one with to year even XXX,XXX on we about could

got So facilities. course by in we or too. really significant complemented capacity the And capability good in we've of feel buildup inventories the overhead that's

So are ready. we

Harold Weber

out wanted over, I mean shortly. you I Any couple know, guess? the talked to you don’t And rolling coast penetration obviously I that’s most some you'll exposure northeast months how east of the in the the stuff get on I in next guess? much idea when But here about

Grover Wickersham

Well, we planning hope we're to -- have an announcement available later the this planning in be be to week northeast. but we are to

Steve Shum

try We're possible period. going quickly as a holiday said get add states you the shelf product as key for of like to and in on to number

Robert Manfredonia

just Yes, a question to little add bit to your think I northeast. the what on

see the the you're Steve which So the expedite is of the try distribution But to added March, and going to all-important to distribution most the traditional mentioned we're to of where within January, a of year. is the lot just in the timing going February timing capture on-boarding markets season. because conclusion of

If distributions of you the look trimester trimester, you final at driving traditionally, summer phasing then you season and it, the are display. large first the have have which a

all ensure first we distribution to So other summer going year, pressure and the a to put season so network major year. through aligned we lot trimester to we have through focus the distributor targets of that capture next of are our

Steve Shum

I as spent time our amount entire national profile, business are important chains those that are sales to want and game quickly just complement as to other going great, talking they good And areas. led fair thing as by for equally part national and us that we on is that'll really Jarrett high team that's The mention a very there ground is business. to of about be of Catalani and significant portion well. rollout, an a the of been northeast by Redneck well pieces important they left Riviera an But chunky of accounts are chain very other is

blocking don't to revenues build out importance chains, national critically forth. fill the the outside understate because we so the want of -- distribution of and points tackling market and happening important and that's really of the that's it's out for So and

the a built on this sales effort, is still if a So to aware out want being proving been to Riviera you on the and that sure people that very just is really successful Redneck has -- make it's to it’s it's attack entire team be side. I and attribute built will, two-pronged that

Harold Weber

own for I've or with be working and the others, products, along got let’s are packaging the to as the the that wines the say, another branded along just CBD it’s pursuing, guys whether or coming I operation, to products be in that as those lines? you one commodity regard hoping piece well going hopefully doing side our hopefully of thinking of please. some to In am or going to canning out some whatever,

Steve Shum

we’re what us, I cash for excited that mean, our And that’s I revenue you a brands, could mean exactly and business own be with Absolutely, is. where plan generator RTD get the the that’s big most… and

Harold Weber

money, X% merchandise. is the to story want You is you the own get the making bang, your branded make real selling not some

Steve Shum

I And -- overall Exactly. too. am our involves also on working acquisitions strategy

to with growth we’re we to user going can So the do extent to accelerate use, that. acquisitions the

Harold Weber

to hear Thanks hope developments guys. about I guys. Okay, new these soon

Operator

to like our And session. conference for question-and-answer Wickersham turn closing remarks. any I’d concludes this the to back over Grover

Grover Wickersham

we’re think on the we’re new quarter about forward of expectations, to new chain distribution, that for Well, in into we’re but math stores, if going this joining doing QX. I after met third -- our starting Again, you’re why we a being ramp with Robert very that going my seeing you think and lag look communicating some much. call. feeling you you for the you the QX I’d and But the now the about to the turbo had promises, was is excited we’re to we and that’s feeling to right my supportive everyone thank thanks for Thank forward these points be like in get doing. that going initiatives of future surge that do I the And heavily is it -- the that call. up no

Operator

now is for attending Thank concluded. conference The you today's presentation.

You disconnect. may now

Eastside Distilling (BLNE) 14 Nov 182018 Q3 Earnings call transcript