EAST - Earnings call transcript Q4 2020 | Eastside Distilling, Inc.

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Operator

Good day, and welcome to the Eastside Distilling Reports Fourth Quarter and Year-End 2020 Financial Results. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask question. [Operator Instructions] Please note that, this event is being recorded. I would now like to turn the conference over to Amy Brassard, Corporate Affairs Director. ahead. go Please

Amy Brassard

Brassard much. joining so results everyone, thank I'm and the Thank today's today filed Distilling, issued Earlier, XX-K. its Good XXXX to results for Amy XXXX. XXXX year-end their us quarter moderator financial Eastside discuss release, you fourth press year-end Eastside in and you Form and call. afternoon, with Eastside for a and quarter and your I'll financial be for fourth the company Distilling's

to call the today's on these Chief results Officer; Block, us Joining Geoffrey Officer. Paul Mr. discuss Chief company's Executive are Financial and Chairman Gwin, and Mr. Eastside's

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

Private the that as planned, cause are draft, are uncertainties or of or will of future the or of assets, that differ the projected Section statements eventually should, amended, circumstances, those and by expectations, generally as forward-looking not begin statement. Eastside of and Distilling involve Such Harbor the expected, limited company's strategies but to Listeners to forward-looking XXXX. are words results in materially results related record, the statements to acceptance that from entities obtain Securities meaning to, ability could information prepared and with the within submit actual pursuant we statements plan risks success described capital, product of market, cause the continue may the statements. Exchange all describe materially the provisions cautioned time and with Reform Exchange time model the multitude future integrating Litigation The Section differ strategic as be we to may acquired XXE related matters of forward-looking ability the statements Securities plans, growing by amended XX, Certain December of include, results Commission. Form from in for and anticipates, ended company's risks filed with ability to to preceded on filings Act the on following new such concern uncertainties products annual the company's risks in plans, Act are discussed or statements, and financial report and the and and for in the such projected. success year Securities in call the and subject may, development, a and or made management XXXX Securities XX-K Before success events company's including Securities matters pertaining Exchange XXXX future, XXA XXXX, execute the such of are of remarks, the Safe Commission, and forward-looking obtaining conference customers, in its to to business information to the the this Act

to would Now with call the turn proceed. Gwin. over like I that to please Geoffrey said, Geoffrey,

Geoffrey Gwin

February, sale Amy. in quarter during few In you, we pleased Redneck significant and sorry, to closed continue the operating report, both we I'm agreement. and fourth – make the Thank months of Eastside termination of improving I'm quarter fourth Riviera first the the performance the asset to XXXX. progress

improve division. we While have manufacture those position. and of QX in to liquidity on brands our year, we to focused products one this sheet we Craft now our are steps many Redneck we balance the in continued of fully Canning own transaction some taken That significantly was

shortly. fronts, progress of have a across on will number which We elaborate made Paul

results the XXXX prior the in prior Craft. for to $X.X million compared $XX.X an million, at Azuñia professional $XX.X increased Redneck sales million This operating discontinued million year. to to This due XX-K note, primarily quarter $X.X However, offset the much in year to first Gross easier. X.X% Riviera benefits, increased our ending fiscal have depreciation, and by reduction lower was XXXX in comparing to let's from review XX, was should increase XX% make lower expenses. in partially ASC million XXXX with expenses our $XX and the and $XX.X in presented legal line in to due the reduced we December for XX% in and fees, higher expenses, FASB, operations increase declined results. amortization profit million sales. as compensation and year. acquisition, XXX-XX. year-end through the sales insurance reported and fourth Please Gross from non-cash rent Total This and

of quarters, reductions restructuring the As two we company's have stated has we begun prior to that over operations a led significant have the overhead. in

of beginnings in impact this the report. see can of this restructuring You the

the Azuñia in cases expand continues or our cases fourth However, of prior $X.XX about outside of brand shipped this year. X,XXX quarter. per of Redneck in of – the this X,XXX $X.XX share. Of and year. into seasonally of the X,XXX a In we excluding operations strongest distribution loss, in as including Vodka total, was company as of Riviera. and that or and you a The evidence the should part the $X.X share expand $XX.X compares loss company loss represented Potato of million, spirits, quarter, delivered to of Burnside see net X,XXX a Portland XXXX a get million, loss we Oregon. cases to the cases respectively discontinued continue more of This The to

gross XX% over prior of you million. in fourth profit loss all which of of reinstated share $X the affected a basis, generated company in significantly per the in of including million The excluding increase a $X.XX Burnside grew a sales Redneck, Gross a to period aware, a On on-premise year a a to $X.XX. loss generated net year California XXXX. loss on As are over quarter. of dining consolidated we states shutdown prior compared the and same in the Azuñia quarter number $X.X

EBITDA one-time loss in stock-based in was Adjusted number and million fourth $XXX,XXX the such $XXX,XXX of as EBITDA That wrote some During items compensation. paid $X.X quarter, off includes quarter. nature professional the fees. we assets brand-related for

Given markets are performance. we our during key environment the the pleased in this quarter, with

company purchase $X.XX. year, million bullet quarter shortly. average X% at issue of shares issued the flow maturity. consideration the of and sheet. like this to balance $XXX,XXX year will determined million cash we under your ended liability Company price cash turning for intersect first to the to the and outstanding I'd three-year, reduces X.X both $XX.X million in facility. Azuñia the and be the consideration and with a shares The that to deferred draw the a weighted ABL had $X.X a In attention Now will This Oak note subordinated Live with acquisition. remaining the

Redneck meaningful As sheet agreement, made reduced first the I earlier, the our on close balance we've balance month the of suggested outstanding our improving with have of million. in Oak the progress and Since to Live $X.X we termination year. only liquidity

the million full loans We on quarter. in first our $X.X forgiveness in PPP received have also

We our first have refinancing, in conference on May. made to good call maturities progress there and during XXXX for our all more we'll quarter report have

wrapping I'd on our like take a and up my Before to restructuring moment comments, actions. update you

integrating described have in been actively three the As companies. prior calls, two we we've

the a on a transformation complete looking the progress parts charting robust see we're XXXX, large significant keep company eventually path that course built of profitability. of have the growth executed made will Now have of our company plan, and can has that that included internally. and if we we into This

a clear sheet stronger opportunities better expect balance should You and this results, growth year.

We the the professional a a company focus company. areas continue is transformation and on systems to the with a platform, reshape of that building processes, all integrating touching

you who to could over Now, for Paul, to at our here on exciting developments Paul? share and turn I'd update it company like plan of the XXXX. operating more the

Paul Block

I'm and you, made this I call great Thank and Levy-Navarro is join share and progress Geoff Eastside news has our you right. I Directors. the the all to have to serves the experienced country's and to and and one Levy-Navarro board CEO, consumer Burke of for the also since of product All to I our Committee practice Liz Board of excited particularly time wine for say for details company to Ms. leader. spirits earnings the the our Levy-Navarro public company's been mean, thank a date say call Liz serve addition distributors. afternoon. Compensation taking biggest the the last private Director will has Beverage, Chair to relevant currently as is as Committee today. and of Ms. larger on have an what's Board appointed is company. Audit director Nomination

extensive in Board beverage her Liz So the to addition industry with familiar X-tier very and alcohol experience, distribution. is

can markets be making to exciting the in objectives assure ever. rate. in craft spirits one is compounded publicly category our pick articulate for aboard Eastside category how summer. the up continues is Eastside We a XX%-plus about growth I annual anticipate diminished today consumer demand and fix, grow the speed, We'll not return Liz. progress company. as to We're is overall build welcome company growth is and goals listed has will on craft Eastside to a only of as and and to how over exactly the achieve robust you that also open the XXXX. the capitalize spirits will that will category What as we up So

To report mentioned, fixing do allow decreases this liquidity want balance we're pay million have we've us an end The fuel and significantly balance so is Number grow subordinated look Again, notes as our illiquid $X add the sheet, one, and divested as for and I and Geoff our Riviera, I our that debt, additional build with step at progressing cash we to balance build we're what our decreases the capital transactions next the to overall to to overall growth cash our how to before secured of which of to all and the financial debt overall opportunities. Geoff we're on the significantly fix, increases that, potentially first will investment working sheet. off capital significantly progress liquidity. we're – structure. and First, Redneck progressed. making mentioned, fixing

in Now secondly, XX%. margin Craft Last historically gross division within we're our was had fixing division. spirits margin we year XXXX C&B the have the issue

The same core objective. gross to the to However, highest-margin and At our brand XX% working improve to Burnside on accomplish control. well of below in margin and XX% spirits margin the a and the our repricing And systems spirits our XX% division brands is XX%. for XXXX margin with margins we're fixing from the Azuñia in increase are Portland third the this margin. and well. all as total new Eastside XX% way plan to gross now with spirits now Potato We're we're only our margin we a overall brand division company's time like XXXX and XXXX focusing on XX% Azuñia and gross well with was Vodka repositioning gross we're product brands

as one and and With VP the data the Controller benefit and the addition of as seasoned to of CPAs, one the faster effectiveness. deeper for has of to two plan fact-based efficiencies FP&A, the company optimal evaluate

to these highest improving discretionary company resources and and using our Now against fix opportunities. promotion in to resources pricing, to we're addition the spend deploy controls, systems ROI

to operators has Leader. have CFO, continue lead now our platform Michael building and Eastside. spirit our I've So and the progressed? Milton, created practice are all our build we C&B Michael Controller; bringing Karstadt. executive secure of our best overall the business, and important spirit team new FP&A is we overseeing CPA additions executive a and chain our an We're which we Amy asset our people. Lancer, also to professional an what to to mentioned support also two Geoff First, Gwin excellence exceptional how is Tiffany for most finance supply supply CPA new fortunate new to center with chain Craft

all Officer, addition Oak. of to now by with And supply. you Craft is our busy Janet our Michael C&B, know So Chief helping Branding about many in of new spirits us

a You'll to tenure she Tequila. last a her the in and efforts period work explosive Vodka, launches to Portland repositions In builds the new over have Potato of the seeing Eastside Burnside much months. Whiskey Eastside of Janet's growth contributed company short few be identity brand, Azuñia as and and Janet's new time

and Sales a of a with executive Wexler Eastside the experience sales leader Lauren] is Just beverage this sales Spirits understands [ph]. focused addition [ph]. The Bull and division Jay how SVP Ray brings build Diageo, a profitable, seasoned that approach. through brands for Red we've recruited week, sales well-balanced a at to strategic of world-class Ray Ray

solid platform Craft offers Secondly, Michael place we're to the C&B category we're the that positive Michael that flow. and prize is conversion the is the in to under business. on manufacturing high a margin, accretive high investments. invest build building speed, as of focused total a in With a can Craft have free focused on alcoholic expansion competitive resources opportunity. And will up significant, Craft offer size building ROI beverage and this we our building contract and C&B set. The high for has means plan a and growth we cash

opportunities also For we allocation. to deliver two have our building investment the on plan capital brand ready XXXX, we to pending focused spirits three And portfolio. XXXX we're our go mentioned, Eastside for When And brands third, we'll gross XX% brand not a flagship valuable in gross over have will only profit. but we margin achieve created as Eastside Distilling. for $XXX,XXX and a a

new Just over to Lion's shipped the in Rye this distribution cases last Whiskey centers we've Oregon. Eastside week, of our XXX

Eastside well way with So we're branded our and up the and on running product.

forte brand gross This margin on merits Currently, to Portland XX% Four we addition Potato be investment. brand believe hit made Vodka. growing craft-oriented consumers is product in bottle, I brand a a double-digits distilled is focus cork new our as we're and in products, can $XX revenue. branded mentioned. the with our of and in this Now the with million first times focused Eastside

for gross fantastic near-term with rapidly. The the need XX%. above handcrafted margin but get focus XX% the Azuñia Blanco, tequila a margin is on the Black it's competitive, to and XX% category gross other in and our is over increase growing is Reposado space XXXX. tequila Label brand of below distiller double-barrel focus bourbon tequila with at Now more Black hand and We'll We last, from the is head with Añejo be a to we'll for Label. our a The that on Blue Azuñia, It's product will very position cask but ourselves important in to earnings certainly to growth plan whiskey tequila. have on overall products, next geographic of Oak delicious. Black a Burnside with our And profitable whiskey. rye on a not along least, call. a focus our concentrated win Janet new created just

barrel-strength The and the gross eventually XX% a offering our be tucked XX%. in to bourbon. premium we'll reserve XX% from XX-year shift Burnside over on addition, In label focus over on margins to

Now let's that And and strategies. objectives for of grow revenue let's to look at look our growth at how going with terms our in XXXX. objectives we're

company, year-on-year. plan overall our grow the XX% to For is plus revenue

our forecast growth brands, drivers revenue Now Riviera The portion The spirits this plan Redneck the of plus category craft XX%. and the Potato Azuñia. is of revenue be which XXXX Vodka the is without growth growth Portland brand. spirits year-on-year, projection Eastside exceeds this will primary XX% new for

Now the division, QX will late for revenue the craft XXXX in drivers will truck is other beverage the revenue primary for the the X%. is forecast is plan year-on-year, XXXX lines portion two for category new projected to which of and be onboard and XX% The QX. the new Craft that growth manufacturing X% growth customers in added at

and discounts deep year-on-year, again to XXXX SG&A, plus then of to the XXX% XX%, by gross Craft driven for increase the Looking fees doing and, business. the is And without our and new looking spirits XX% good of then to year-on-year. is XX% his planned efficiency, board. profit is year-on-year, is plan Michael plus of plus spirits’ reduction Craft the be with flat a gross is endowment addition year-on-year. for overhead profit high-margin for growth C&B The Redneck a for revenue. profit, course, is which portfolio a of plan with XXXX to that's to plan integrating for professional down XXXX the objective The planned spirit planned of to decrease branded and the in gross operational XXXX reduce Riviera. work by SG&A XXXX and growth correlates SG&A Craft be be center all our across XX% of excellence actually And XX% price our Eastside reduction driven for objective efforts into at is The and the

resource. growth growth plan So to concentration will of all overall support The very compelling objective. strategy about this be

Oregon, XXX% in Washington concentrate Craft the we'll states Colorado. our three profit. These gross Craft, For efforts of and equal

the profit. and gross For efforts Washington, spirits states: these five states Oregon, we'll concentrate our XX% California, equal Colorado. of spirit, five in And Texas

to value pillars strategic our build, action drive Now addition briefly that will path want and fix, create in you, our for our plan, to share value extraordinary shareholders. five I the forward grow

distribution is a business burst concentrically, gain locally, any rapid build to learned first for The pillar our business creation ensure solid foundation built in and a a first then value stream we We've focus; of of in cost. not earnings to shareholders. sustainable that a consistent is national our craft-oriented

of focus we'll a our a concentrate So limited as set on we of and set core states core resources. consumers,

efficient with the C&B proficiency. of the The value chain, spirit Combining operational competency an works execution division it to the XXXX. second as and excellence. to division, center effective This into is operations but chain and pillar XXXX, not Craft Craft supply only bring C&B The creation in buy, work make of supply we create distribute. focus can as we spirits as expand also we

center In excellence, our created excellence forecasting focused of a also we've of on management. finance, area combined spearheaded requirements inventory of This planning for marketing, center VP. FP&A to and our and is planning, sales production by excellence, operations cash addition

conversion. pillar that capital opportunities growth that initiatives offering value is The Craft those those high-growth C&B investment third with high-margin, optimize return cash one the and of creation flow. our is includes highest and accretive high-cash

will our with of identity second pillar that premium gross a this have our progress and you Eastside finally our book each the highlight of Officer XX% that is is XX%. connect in a consumers in fourth brands. seek our of our brands updated differentiation made -- be brand we've area. I spirits creation The opportunity with for you us of fifth The to a Potato We creation pillar unique Vodka spirits of of profit each value Portland exciting our with experiential brand like our to sending manner. develop is And profit for this Brand one the is value Janet say will propel portfolio innovation. progress high-margin most with to-date. the brand brands areas gross Chief Oak, will to product

products consistently experience. production will handcrafted and taste We create a focus farm-to-flask offer that improve and/or premium ingredient,

vital, identity is product corresponding Although important. spirits is for premium brand equally unique unique as

summary, we're focus we're growth, accretive building and we're Distilling and in proficiency, with innovation. fixing, growing brand differentiation So product Eastside

achieve excited plus clear. time we SG&A XX% now We're plan for your your to and up the and the future about this in open It's very thank plus growth, you We'll Our year XX% Eastside. revenue gross XX%. decrease and is interest questions. today, profit for your line investment

Operator

We question-and-answer session. will today first ahead. question will the with come our now Instructions] Capital. Weber from Harold Aegis [Operator go begin And Please

Harold Weber

you the of idea give you're we're a it that will I going a hoping of the going have. out expansion was, you stuff could know don't questions was I How’re you East if the whole that exactly them. you bit you guys. as focus clarify to focus far as number ones, as the this of what that on ask the doing? -- rolling about little other Hi, to to could So I making And wanted Coast? some an talked One of be? how out brands stable far as about had it Obviously, we on we're of and

Paul Block

But occasion minimal and vodka fairly liqueur mention coffee to going whiskey and that's the that is growth on. Harold. Hue-Hue. or the one Hue-Hue. conspicuously brand I so It we're guess, tequila didn't of some you. and like areas small keep not take to Well, coffee bigger other I absent I that relative rum in doesn't and mean I usage Thank is mean and can that,

we've of to significant but a on and maintain focus and also more of spoke limited about the yes, money, the And those And small can been high a And And a velocity So concentration company. that's loss. Vodka. because reason, very have operating with typically, three burn categories Burnside chased We Azuñia, per lot distribution. and whiskey. to vodka, net We're significant three Portland Potato biggest cash tequila brands growth point we're dream which expansion, is caused been the and going about we have have resource. issue. a distribution we I

So a before we're employing on. that And with will to attempt a focused strategy that's specific distribution that and more in concentrated, build it loyal strategy them bit move didn't and bring keep in will relationships area consumers gain a and we get now and work.

Midwest more in that be the going any seems right going our or That's give So the be venture more now. not to West to area up time We're distribution being. the for of East. in to

key relationships. And to West. we'll that distributor relationships, focused manner were in to the and So same rapid distribution, look to leverage we'll in our gain we our account but continue not continue the

Harold Weber

Okay. what premium reception products? new Eastside How is on -- batch call been what's the the you small

Paul Block

Well cases can They said retail rye. just of single... aged that's overwhelmed sherry you product so Eastside the in quality. who've point, give try to I anybody that XX-year-old will all the as for we that tasted $XXX. We're samples at just our The you hoping new of are cast sherry with XXX got cast barrels some it. But

Harold Weber

How supplying? have much of do capability we

Paul Block

you as I -- have XXXX Well barrels. we we did have told

Now XXXX we're down barrels. to

the And is XXXX I for the don't a more prevalent part that aged you... of have exact aged So we significant number of supply significant whiskey. have barrels is not but and whiskey as an some

Harold Weber

exact don't I No Paul. an number want

line we if We can bottom supply fulfill the we have that, them? So plenty can of is it? demand

Paul Block

got You it.

one batch You that doesn't but got edition it. and And the permanent limited making mean now. make things make product. mean we another it can't doesn't grow And we're is, that a it's can't batch. as we idea

Harold Weber

That's right.

Paul Block

of -- the in back what's mind. our That

our focused are in the bourbon continue. highest three the we're of those back the should a And So we and to cask, products And whiskey single-malt the forward, on margins the the as are sherry the and you about about this rye. think are business you would brand. the think products head those like

Harold Weber

can if demand get there. for I what end here is on stuff see -- we it a is that giant my Good out over

it long very would be we think can I it successful. supply as as So

Paul Block

areas And but or to want in go specific we the Midwest East to won't just we're or the not East the we saying Coast be focused.

Harold Weber

for am I thing assuming the rollout Is that Vodka? right? And Potato substantial Okay. like the sounds it goes the same

Paul Block

and Yes. you as mentioned had high-quality the into the we which bottle week, Vodka if the it And that but Portland -- been into growth. shifted had because product that things packaging the screw feel have XX%. we screw recall, PPV. We is top focus that is Potato has nature the over bottle put Burnside. as the put Well really significant. we more a reflected forte been distillation same every It we ingredients cork craft have I I that the said way just of and double-digit and the a faster stay And demand the on top didn't the doesn't it on we

the she's Janet's coastal what which and get breadth you'll communities. fresh around done come of whole air book the is with around the identity see up a Now you brand when

immediately that as and be distribution as California We're see launching we'll trying testing the our improve also our speak communities then into on pricing. there can we margins roll. in of success brand. we And we building surfing So some to positioning

Operator

question ahead. go Taylor Investment ARS with And Partners. come Ross from our Please next will

Ross Taylor

very much. you Thank

got what free yet. But me through what bank two about eventually you've opportunities to had different arms of of the sort generates? business. of to a operating Canning a what and business -- margin, finance Some of of as looks business K that just questions interesting wanted this you could the revenues, become offers kind cash business to a brand really it the I to answered, get kind chance a It of I will talk become go the kind were can my Canning expansion it while but growth haven't to like some really company the flow separate

love business. get better Canning the of a So of I'd the understanding economics to

Paul Block

Geoff to try want do that? you

Geoffrey Gwin

realizes gets about that into Sure. business just But is look It's misunderstood he's is fan He business out. producing return very seasonality I the a about a start think a garage business And season or has think base facility I Thanks capital, on then, that in route form a can. business the think about little market, of market. to with you through we and is to when brewing is his has season his the so And working co-packing Canning to script. mean the this going. we're packages had have margins. a margins he year the in we're he he's because market -- I breaking you of see utilization he to the co-packing mass here we're first strong all when -- because customer a get thing and mean capital driver think his afford the it equipment. need already follow it of less He of the desperate quarter. basis. business about of out to mean above brewer, But on and it Yes weakest critical what Well, a on-premise phenomenal can more building he than Canning mainly been large to but spoke point I deliver arguably when really XX% in think it. is low he can't a his we to gets cash some the wasn't Ross. canning He limited. line. produce a small big a CapEx. in at and by flow people be offer. And make year not backyard gross mean really Craft fully to in a pull starts The seasonal got lines. business in two it's the Paul picking we're year we product more where last we has the almost serving enough. just a where when who want up receivables just barrels are into where got so And choices could production completely of is the through using two you the we We routes can't kegs. out full canning going I

there's phenomenal there we're year. And and that's has so, the been growth where this there's smaller space where on last customer a It phenomenal year. And margins the attacking. side, really outstanding was

better with you'll the our with of started Craft One numbers. along. with more is Craft's I And that of some literally And things customer. do And our key can see of growing to do them them we've this partnerships going product, we customers, year basically. we're mean, customers. that had of no up offering the a salespeople life some managing that better helping already with show job

So excited Craft. about we're

Ross Taylor

talk you're the you from revenue if all full add running you lines potential equal? is bringing Can out? is two would lines add, the Are expect you're revenue created what And new the from what potential on? about a

Geoffrey Gwin

a some and to and back, we're as about turnaround And great ROTH to more And a and do conference production we're efficiency. about the the to a and we we've the is think it at profitable question. bringing again have we that next then becomes if is then I new and to customer. well It's the imagine, we So think, talked it we past the about service have But to customer. in customer right? day manage moving of business spoke this come investors this the the it the them customer, to we the ways long one route

this really becomes doing business is of part efficiency, more profitable position way right planning -- job better the a the assets. by by is so, that And

have and actually able this one transit the last building times to these we hub-and-spoke people question, our of around about year specifically find our number could the could that's unproductive services the very the response mentioned And margins, incremental have not we're Volume, investments it's or that to the to just into high system strategies dramatically -- to It's don't the they're move the partnerships customers year grow. further we partner that the fabulous some that's of about. this created talked customers attack. different moving And really is But grow. this we And of some So attractive. we're the is asset tremendously with important the a team outstanding. has something going and assets assets around make that employing can very being a field, price/mix, Paul in own. and we are long offer opportunistically to try that business this to And so answer directions for There will and teams. into built no, differently. not your plan that to I numbers

Paul Block

million. assets just we answer can I currently your we're because at that is would the $XX.X current month deliver we terms XXX% about, that But the And million, bell business actually of at in mobile, constraints. we're issue really year, the utilization, well said, $XX.X the is, what utilization million, periods. Geoff output shoulder have question at have as do I ran $XX.X thing this -- year. got could proximity that this XXX% is if The the on they output, Well, with the to if it of that us and it's curve mean, operate a of But so restricts the were it's every specifically.

because you these take market. to in current expand able to different it's have more or is, hard thought markets be mobile your trucks share market the So, into

with the opportunity, model if had take you -- a on or extremely I I big different. we and point. It call talk is But looks fuel flow the think I head but free one it the cash think different. business fund second, burn create time mentioned we and not One, think, lot the of some works didn't it for spirits thesis you overall. is, a can right about cash And investment I enterprise. on Craft. time well a big the the It the is maybe separately, this that and gem really really won't hit can So model business

You're the what premium team what of absolutely right. ideas. on the in sales mean, please canned RTD we we we what we And we do getting start other already market Azuñia get production number that. a division? organic if have and have an a margarita? if could us But And And I if RTDs?

and merge? compatibility these So we up be them engine going which to the we will plan here, a that of five-year do how at the What to at and strategy view can look I is in longer-term they do really they to accelerate exactly two? leverage the the what think, you looking And as complementary rev I you said. do Where growth? be how a we summer, three-year we're Where diverge? coming

Ross Taylor

Thank you. I'll the And the a question. past, say kindly than efficient. In second bottling production and perhaps less was

get do think where full that What operating at stand? effective taken be we don't And efficiency? to where So steps taking? are you to that to steps need we it's what

Paul Block

of had out Yes. barrels. was Riviera I a had. we wasn't We're well really We take way. of thing had mean, on inventory We lot We first all we that the space that utilized. our the Redneck did bottles. had

more going going said half, than footprint number We're in distribute. by to one. So it's to make cut and as be I we're our

side, one things we're So raw because And three-bid we're then putting scale. side more manufacturing Milwaukee policies to is demand. to contract actually create place concentrating and we're for three that material. down lower bottling spirit, in and four can will with the Craft sourcing efficiency there's months, of into more going the actually our and to start integrate in the buying months area, on and closing Craft And more purchasing obviously and which eventually our in a become facility cost high in manufacturer we're systems going be it

drive we out down So full utilize if be, our overhead our fixed which capacity will can allocation. and we fill need capacity

be if be to we be we XX%, And have XXX% to discussion be and close own to pretty fast to where want we to want you product. I maybe be we we once flexibility I more we just want line, close pay there to Milwaukee I'd a big outsourcing. we'll to the think and So bottling Personally, we're efficient. on to where innovators we think our to be. we producing was want be -- have like market and XX% want lot automate a give by We creative

maybe the next XX%. say by we'll earnings call, we're XX%, So And I'd have some news. more

Ross Taylor

pretty Thank progress. Well, exciting that's much. you very a

earned You I a it's us. been many for hard are get but know -- guys accolades road, you doing you've

Paul Block

the you capital provide returns. for we much. thank you you get so working guys, so Well, We're

Geoffrey Gwin

lot. a Thanks Thanks.

Operator

[ph]. question ahead. Lorde And our Capital will Please come go Campbell with Matt next from

Unidentified Analyst

great questioner job. previous And what Hi, just support I to the want said.

job guys great well and the streamlining of business, new turn lot member. You just heavy rightsizing I'm see excited experience about people. opportunities on see congratulate the very industry are to guys a want a sheet, lifting a good -- the what and are streamlining balance of focusing Board business as doing really really to people guys on bringing I'm It's this phenomenal profitable you have you on here because I and really as that to bringing you on very, real starting doing, complementary excited.

great work. So the keep up

Paul Block

were Thanks know I leadership. in were talked you you Matt. interested we before And when sales --

really -- how So growth. we've to we -- checked going accelerate that be box and that's don't I we're realize that can overall think

Unidentified Analyst

at, No, I'd going. done all and exciting business Redneck that really that taking balance see off by wasn't and see say where -- of of but job it's for investors. of to And again by it a getting guys profitable look much the and out streamlining things. to cutting that focusing doing sheet the so was good we're And our you to are right excited we've -- exciting our

applaud and come. I down heads keep you're your things doing and So will good what

Geoffrey Gwin

Thanks, Matt.

yourself, on XX amount to you to XX-K aspect it. it Midway other that see to out or And it has hard management Just how has I we're was the gone of to capital pulled give the you help releasing and information great team the unprofitable that literally been has follow-up the Riviera lengths a see. we've and it's quick for you exhaustively call, try tremendous can effectively was. But the follow about sheet how as and a to much used. this Redneck think investors mean, transformation. income that in detail to you'll it's so, I page statement balance see for are

that And think operate how so without the I that. important you it's company is and going some for about time to to about take and think think

did our that to at in that see have thing in to other of made the that I to performance is think I call item. it's a did like in that want as to we've improvement weakest we we year-end -- one-time say and company's out quarter hard lot of it's The and what Craft sequential when a see hard

a the Redneck number actually number fees reported $X.X closing of which So million, not it's negative off the that of had had deal. fees. worse sequentially a professional in that seems while We sense we've EBITDA far like around it's we

inventory up at cleaned also We year-end.

products a also up took was imagine that and a in As on some for sheet cleaned is to necessarily believe. can There did of SKUs a new you That all a we there care TTB I being some over adjustments exiting there. that item, event quite these preparing would compensation would number which bit we the balance subsequent consider expenses. $XXX,XXX be I is total settlements reoccurring

going in easier dollars picks this my the going improved starting to run, the higher-margin and over I to script, is last work starting it's you're up reflect And and said really in see there the and really the to Craft the products new with company to has be the year and as performance done see. when all company So, performance fall. been into to volume

Operator

Ross go come from question Taylor ARS Please ahead. Investment will our And next Partners. with

Ross Taylor

break pieces thought one. I Thank not mine I'd Geoff. into you, two

anywhere brand? questions bottle You wanted coming kept you actually the radically and with just on and what how us you this step you mix And out near premium will to can it what get ask the us it? the through of price We Also, worth nature and run at because I sounds product, very just places an an can what in how much talked you rate It brought like, like being about barrels actually not high decide to answered margins. out. valuable of of that's basically make idea there the in a one-time books is, to you're figure when Are about brown really walk is you some much kind if or out of this idea we ongoing have out selling the the margins if be. And, number could those you it prestige gave and that's at the margin liquor it of of different kind point? back is, K. you sustainable because items the

Geoffrey Gwin

Paul Paul with spent on room. when how went business. at Paul were And thoughts both Great. company this. a love this great in this in Portland. I to with took Actually over into out Paul, the is being. a time We on segue way my to the I early I joined I a better And answers that changing. take barrel this than the there he jump product the really is the question period let question-and-answer And stab We came could, and company, it's how but think me team. secretly all

time the going for the Redneck just affected. the were across one-off we visit at because that to ever forgotten So, with entire been a pacing started why what just keep And if the the spent while that reason to were barrels barrels working time, so they is company. literally we and there trying Milwaukee. seemingly we margin's there some in had you've trying everywhere, forever and and went to forgotten, have what's of that out after velocity through had we why figure had And and with us, the the barrels been company, for production happening much company they sitting forgotten staff, the been by been and Azuñia were have we -- products

and noses so, we gin incredible. a amazing have But And to we you Paul that's fairly stuff show past and least And something here build. an It's wait at was along to the as that product. these under tasting this is is, investor community said, this years. thinks it as then for start to opportunity to fascinating Eastside clear, me, for Eastside our what as was know, few the realize, enough market And us bumbling that literally realize were of builds delicious. second, became and begin you really all you things the

spirits have phenomenal team the the success what and team's eyes great to really path Paul have experience in we rest knowledge the been be. join the of to with it's and the the product. have what begin and And they could kind our think that built, have of build We his to to asset, open having we we I people, he's

So, And taste it I Paul? great you'll appreciate story. think it's when it. you a really

Paul Block

sometimes fast barrels not I'm it to new was they powerful but to And enough? was all, Portland tactical out create apologetic Craft biggest had gets about the to got the a god. these And going like then we company. are we is to bottles. that going aha, repeat these mean business. really how And And I biggest Geoff's oh, a exciting like, because which to it move out a It and everyone's Portland response It's our to the problem, biggest them And said, basically we setback sucked. a led all right. brand. -- need we led Portland to fleet all that re-brand Yes. in the found breakthroughs we because and origin, always we're we and our said, well, and well,

the brand you until ring, wait so, different. you new give new and see and our because wait see so it is And me a until book, website,

these or company brands. the recognize even won't You

not we're brand great is. traditional we're you was a getting the blending how model look aging doing business than at Because allows more We're inspire we're company. And just Eastside And so, than us what the what did we're distillers, product. buying that craft actually but is phenomenal doing scale that's great perfection. powerful barrels and and differently much to were it product the to and we what know

went ingredients have have can are They going farm-to-flask we is you but strategic with an platform a very and tactical, barrels local But absolutely the Geoff's bottles get all that We big local, go of can that aha usually branding, if They national grow, a now, into So I'm to let's indigenous to right? not to just a from imagine that brands. of model business right. craft out because and tasting distillery. rooms. little bring

done give you you any do give don't has don't artists, you up Nobody up of national you brand. it So give produced, it. a could batch don't the up with but craft,

in a could guys little whoever us mean a are that scale into point. Harold's this else, craft on and and go has involve for a But a space Bacardi, day, all But level between might thing out another capital. of that whole small investment geographically to new really I action. this more but So, Diageo inspired push distilleries little between that really to big we proprietary and those stuff is is enter doing

Ross Taylor

success from out? depending but be say how suck, and -- would California funded that do and have I either do plays or say more I business on but be want on be Portland I more. coming does to Canning Well, the capital want Seattle sucks I'm could question, one to would

California of seems And agricultural agave I of forward? that in of lot. nearly Can Mexico and -- plan through up have I coming you would how does not have last brands business prices out game crops last the I doubled of and the crazy it agave roof. when you walk particularly and that's market. walk gotten the impact lot seem costs kind going to this been even kind through tequila. So, a us avocado think question in like us Things like. gone And is of in ask is what service through have of flow high-end March the there. in an kind have that that? obviously it I But Mexico speaking would shot the saw guess to A seem

Paul Block

do don't want Geoff to Yes, I start? know-- you

Geoffrey Gwin

cost Yes, and cost don't other or the sell can -- now really mean And I talk much then it is of it a about right. product the I'll structured agave piece don't we working too as of charting the and can start problem. is get can better it's Paul immediately and Paul really where with a in we're business. right the on that's right we But the really path margins than sell can. much forward answer the question I -- understanding one it things a too

Now, a number ways. you can do that of in

and sides pushing this to figure we're point we're do revenues, to on problem of both can raising raising You you can and out. think which that still still and at in think thinks the think right, company going I the -- attack going that I And is to And it gets expenses. I it you do great that's that and products. by by the core pays the start price of outstanding the everybody making this is an doing opportunity. what it looked turning is

down partners They are do. really at what they are. there Our phenomenal

cost taste Black a Julio, tasted down. bourbon. and got a market out -- haven't Don relying in to which tequila the it get side, you've with If Azuñia into is tastes on right the haven't the literally Don to SKU, haven't is team agave people is have not And this lowering way. we on All to the taken it we're right moving and cost our -- But the able working companies challenge. going you on than mean I we there been problem competes Julio better mean the tasted opinion. tequila it my almost highest like in I it's if

partners well and with our We as and But get extraordinary it been hands, we're in is a what treat Paul's tequila that market. don't it drink. specifically when serves teaser that hand it the black. of we've we don't well probably the our have as agave. response with a We It's a here's a focus It's It's we aged because we have using and it in same and right? super-premium way seven-year it take selling super-premium market to of part -- agave. the

Ross Taylor

in basically as of tequila true been been is lower sipping just this you've So, end that has the place marketed some the shelf?

Geoffrey Gwin

Right.

Paul Block

price I then Places there couple agave demand as with cost that -- that goes and belly down be agave because up was back is comes coffee down business there with in should supply and juice it price decreases, like pork Trading right as issues, but orange Yes, remember and there's the of in movie. decreases, a the nectar comes increases supply and But coffee up. and

But that's So, market. like the number to market me the one. looked bean agave so coffee

a lot fluctuation of in agave. cost the So, of there's

issue. an unbelievable. trying have just putting to haven't been this is not it's I sell marketing mean so COVID, product. The restricted, -- basically in little tasted that is and great. a it but It's price But promote talk the man it. has anybody that I been really an I not ultra-premium to and second like, is would Azuñia well product. It's we're we it just We're issue I've

And depressed so we're making margins. these

a do of have marketing we figure the ideas. positioning, a on we with and how So, And and we're what force margin? the a really make out a other and to is better we're branding, thinking that's day sales some challenge

We really cool have agave this syrup.

or Look mindset, tequila And in If got you're packaging somehow a -- different product things way about all different different a is your the shots to at occasion you've the things bar. different, present usage tequila way. the you're margin doing in that offering drive very right? a allows or fireplace of up bundling that's to you it's if sipping bourbon different products start to and by a

the But ways to a command can explosive premium way product and the and the to and packaging growth. the it There's to excuse on it going some more squeeze I that and specific what higher hard that -- up Nectar consumers have side, go we of is look gold. is. efficient mean start and will. have find in a And a we so we effective. can And branding them going we're we as identity price. also and and as enjoying tie that capture at down resonates with to to me be in is manufacturing

Ross Taylor

can front of like social who going influencers it in spending about you role for would of this I sort to media big It in hardest place get the sounds brand. to so who thing a liquors. be people out the have big agree to people can is bring play money might

into you're a it lot. for you If like it, don't

it nearly they can And front I it's things like that around you of that and places it things deal people. it. and getting actually where to by who it actually so free getting once help take you people marketing good a of that like it If open some start think get marketing perhaps people out say it, -- great might there and seems free in getting that obviously, find land would up go la-la in drink or

Paul Block

strategy the that told was we all to one That's that account to I chain but very and longer was off-premise that one been you a lot think certain Riviera. the and than Well to back have piggyback Eastside I've I are around expensive of wanted they that except correct. resonate it, And national about investors the thing will Redneck's to if reasons And with acquired have to burst on-prem. been think competitive. a Azuñia of come on and extent, Azuñia on have into that that Azuñia was Redneck is very piggyback happy

So very that are expensive. and very competitive they've to well been change the on-premise going in

the I street that's my in the accounts. for is strategy trade our So and local an script, which stores there up jargon said why revenue for There's down local on-premise is and liquor taking. amount extraordinary of

want mean, And here. the our just us my to bring I our strategy it. is it's It's us. cut the how going dollars going return. employ So spending achieve there's revenue to that is off for we're that and not is, we nose to we're message

So then sustainable. not marketing is it differentiation on get product what and a mean price better business to years. the be if an low I've then to been account There's the advantaged. into lowest. for call you a going it. at in just compete price XX Price, I is Northwestern you're that's price

efficiency. volume compete the really product scale go increase just to on then and you're price, if and So need be you going to through and lowest-priced

we that's but So not -- who are.

to about can need the We we right will on have of be grow. efforts concentration brand the is So margins we and just and we the down street to Tequila relevant and think invest. need then need and up fire. really to

Ross Taylor

my parting say will be it's will to I see. comment refreshing Well

the You're business [Indiscernible] this almost dark around we company. like But to a right kind it room, taken [Indiscernible]. have wandering company blindfold and this something room point, professional man has finally off this of and run real actually might seems at like in been a started the blind we a that

that effort. I So appreciate

Geoffrey Gwin

very about excited Yes. the year. We're Ross. Thanks

Ross Taylor

you. Thank

Geoffrey Gwin

Yeah.

Operator

to conclude any I'd like to this for the conference question-and-answer closing And the turn Block session. will over Mr. remarks.

Paul Block

and just you. time for back work get results. us to I'd thank deliver Well to say it's like And now to

Appreciate time. can joining the everyone. and we So cheers conversation to you your another interest. thank you for at continue And

So cheers.

Operator

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

You may now disconnect lines this your at time.

Eastside Distilling (BLNE) 1 Apr 212020 Q4 Earnings call transcript