EAST - Earnings call transcript Q1 2021 | Eastside Distilling, Inc.

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Operator

Good afternoon, and welcome to the Eastside Distilling First Quarter 2021 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note 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

Eastside much. quarter joining so results everyone, thank press Earlier, Brassard and the moderator be Thank today's release. financial for today Good results to for call. with Amy I'm us quarter issued financial and discuss you I'll first your first you Eastside XXXX. afternoon, Distilling, XXXX Eastside for a Distilling's in

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

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

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

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

Geoffrey Gwin

our achieved and of plan. key which first to transformation and Amy, number first milestones you, the in welcome a were earnings in business afternoon We call. good of Thank quarter quarter, all our

the and one typically income and QX remember, of year the of to our company in I will quarters burn its a the through progress as and year develop business balance the It's We transformational made rate. reducing to volumes QX, Oregon particular, and the will California Notwithstanding Azuñia and more important purchase we to purchase the down. largely slow events Craft quarter As reported had Riviera for cost structure Canning. PPP in consideration. in Spirits call, asset Redneck in quarter cash These received out termination and our the in both which shut in a on we impact The detail go see statement our year. loans is and had expect we sheet, make continues an us slowest two benefit in forgiveness as closed evolving up coming pandemic moment. it QX changes both agreement. and with we the still We be is our fourth which of we finalized to this, we all pick this good

we pulled to the make numbers Azuñia Now sales out to presenting with numbers. discontinued let's to year-over-year Consolidated Redneck compared operation for Riviera first a are quarter Note as the comparable. million the more the $X.X increased look X% at gross quarter results same compare $X.X we sales year growing COVID largely sales Canning XX%. before XX% XXXX. to the volumes. prior quarter the Spirits for down million another in had strong to due when the period were it in lower pandemic, with Craft the

cases to the higher a on of year-over-year, quarter. year. the The were liter to sales prior total as Azuñia revenue similar Portland the began in while affect sales During on-prem X,XXX Potato gross were Vodka higher sales cases reposition case compared brand. to in lower. the sold we X,XXX dollars continued negatively pandemic we Burnside's equivalent quarter were

quarter. pulled quarter have from calculated We sales to from $XXX,XXX improved quarter $XXX,XXX, XX% the with year, gross the the activities and flat QX, back purposely which Gross case dollars year. margin profit revenue was the sales last for unprofitable in prior in also in affected off-net up Azuñia

However, the we quarter gross did take an which reduced margins. of inventory $XXX,XXX, adjustment in

was we this and $XXX,XXX margin had year. you not line of It's Paul last despite quarter the any the the were products lower into note, improvement important have improvement profit a Eastside can to calls. adjustment, talking the nearly the this in Excluding would in in seen the gross shipped fact distribution to conference expenses see prior the Operating the nice XX%. new improvement much have been I over of two Below than we quarter. about

in in nature. $XXX,XXX incurred in were includes that fees this However, the one-time professional quarter

to as the price a to the $X.X from of is EBITDA the Riviera million mentioned a We and the fully In was on was in compared of for or forgiveness, I total, number one-time of on last expense nearly $XXX,XXX Azuñia. reported reduction Excluding to share the for items a year. quarter. a termination those helped share basis. same which PPP Redneck loss net diluted a before a the adjustment in drive those improvement items QX a million, gain income purchase fee, period expenses, inventory, $X.X million $X.X $X.XX $X.XX

adjusting one-time for professional adjusted $X.X earlier, the gains, was QX. mentioned stock inventory loss the million However, EBITDA I in adjustment non-recurring of and number a expenses, compensation this

sheet. to the turning Now balance

are a three today. making the close XXX,XXX even quarter, has and moved bullet you'll Intersect. see $X.X shares notwithstanding outstanding long-term meaningful of had payables. and we've the and We we stock our progress and See, purchase last in of our to Azuñia Subsequent more in decline of in capital report. agreement lowered value been with debt shares The progress The a inventories, tranche have we quarter bear investment X% XX.X maturity issued second interest years. working face issued to the in as with to notes of million notes shares of with a of million a reduction

from we the on place LP with in also million Fund. increased That private X proceeds a April, refinanced Bigger in $X.X with the Capital balance Fund sheet. cash transaction notes maturing addition, In notes and District Capital

and Spirits current I business breakeven call, continued performance. have on last and align investments in the we our margins in process improving Craft investments to improve incremental our in already can explained operational both have improvements investments our These planning. taken coming to rate. people the As ahead. the in Canning In restructuring seeing and and We've made immediately actions incremental we see and burn – to we to are these returns been quarters sales cash quarter, Spirits investments restructure lower from

a we’re manufacturing. Head results CEO, are and took some we Officer, Craft on results to Chief forward. And individuals. and capturing is took ensure believe investment to deliver It has in improvements timely company. now Spirits basis. the in of can of new and patience. long management place, expect with going is in plan date the Head exception consumer Canning the pleased Branding and of took the a on it entirely we time, you process But have and a actively progress it team Finally, the stronger made skillset from so with The reporting and an much myself, I your all am here, controls everyone team new Sales, products to

out Paul? to it Now of with the over details way, Paul. of the quarter the I'll turn

Paul Block

to And you Okay. our Thank thank you, the earnings join today. all call time taking for Geoff.

end, creation results have and we expense, With along initiatives operational perspective, indication company results I to discussed forward. call, on cash key are been To product unlevered to value our since focus, call, of reducing time achieved progress While short XX%. with differentiation flow last the the sales to QX fixing, of last these focus Distilling’s five focused specifically operating progress relative XX% do in innovation. an breaking and substantial income, of profit report initiative were the the turnaround initiatives, areas brand and share improving we that consolidated even an results growth, our From basis. this to a I QX X%, up some accretive said, we Today, Eastside an anticipated down up free operating on it's and and mentioned. remained growing In focus OpEx overall Geoff and as have of consolidated gross on date net wanted proficiency, growth. building the

performance drive All better the numbers perspective. level. consolidated mentioned new realized share inventory but focus underlying need from sales faster. trend that profit in the adjustment to I direction, with captured is at a not that to these profitable Geoff on task we and to increases for adjusted going Now are to healthy please execution with and be to are gross and highlight EBITDA increase reduce adjusted continue our go one-time these costs. indicators the key note are management team now right we The the wanted

operating increase expense goal the strategic toward and sustainable As operating faster cash company fundamentals income we flow. critical of will continue pivots, move breakeven and unlevered decrease free our underlying to through

we results to better anticipated, the Spirits faster go but the achieved QX, portfolio in we be exists. and opportunity planned still and For the

Vodka Oregon Potato more premium We OLCC premium continue our expansion expanding Burnside momentum with Potato cork to maintain Washington in the focus and look forward production to Portland to focused and to brand Portland revenue quarter, The was product shipped months. in up the brand plan the Eastside bottle coming Oregon. first up in offerings. produced the due year more cap. the to this California now of in branded We forte the to on For throughout state year-on-year and states X% on Vodka XX brand and change and portfolio in X% new continue due growth brand the The the and was is to year-on-year offerings. distribution and increased revenue

point, we've accounts due selling to and to in OLCC have Rye are completion, steady success the recently but now gains for another Repeat loyal ongoing. our share Eastside bit Competition. gold double Eastside the sales a products We've American with in the the go. Francisco and little to the the portfolios we these are our stocked regulatory consumers. so On brand the compliance at gold launch on retail won secured medal stickers Lion's ordered behind metal ready We medal Spirits Single Malt to our planned a brand been San a can for distribution gold and fully

XXXX Azuñia Western been As QX we've think and trade down also spirits to unique country. reduction the discounts pricing anticipated leverage practices. the across broad product, in deep margin States. manage for for to concentrate we mentioned, I the This brand trend geography Azuñia of our points. XX the sales to on Geoff of COVID up batch forward gross results approach intentional important eliminated portfolio the We've and chain premium the produce the on-premise the focus channel Overall on-premise the of is Azuñia reset street change QX organic eliminated and Plan deep has the discounts. is most slow revenue sales unprofitable, down XXXX improvement XX% and and historical, was due for United as

intended. X% And XX% Here's the XXXX. this indication – to now a vision, what is in on that now in and on is was executing margin increased gross has increased a we clear QX XXXX XXXX to

one-time results these adjusted not again for inventory increase. were the Now,

overall margin. improve to However progression they the against do our goal reflect underlying

a distributors effort to Our and of West conducting three through the plan one brand – plus a focus managers five. sales force distributors our broad to premium of promotion to price is sales five approach to awareness, We're primary in to States marketing, cost a and We're trial link this our an We've in secondary manage profitable pivoting focus promotions. that the as focus sales continue our sales spirits great distribution, true five target to experiences. engage X.X team on on to manner. distribution of and the employed five a structure discounts this a sales from million. more with from price We've now XX brands of plan consumer to we a premise brand geographic a consumer pivoting a We're brand seven the strategic of understands to managers. point sells forward We're building concentrated from from a time at at and to million distributor focus on floor build pivoting is merchandising account the features to capability a on drive that national the on pivoting in States account sense and Focus X.X decreased is East. approach and structure individual a five a of getting In to state-wide. promotion. in tier audience. The team underway five that and displays sales purchase from means to strategic manages on-premise, The among pivots off preference that with and merchandising and means partners execute accounts, pivots down West urgency. sales

significant while the deploying about drive of operating more strategy right people the and right our our it base. to much saves changes sizing Now, initiative salesforce spirit accelerated and hiring expense,

as introduced Wexler we to our lead new Eric to addition In in of our talked our that meeting, Sales our recruited Sales, very about Industry SVP Executive Ray Manager I West Pascal has a recently in an trained he classically at last at He's MBA E in studied and Seagram Point Gallo and Pinnora. & BA Eric been Region. J and Bacardi, West Marketing, important for Management. and worked

was spirits also Kyle addition recruited serving Most Southwest to Action Troth recently wine, XX to management. account Manager Spirits, recently, and experience Wine markets. surrounding region. we've Arizona in years has from key Now, a and recruited as Kyle lead in Kyle Eric, distributor & Sales boutique our

focus veteran sales Eastside We Sales for have region believes Western goal the and triple country S team in region our Eastside maintaining important maintained very Griffin U with time Overall, will be a Sales as as lead revenue alone. secondary Bill Southwest in retained can Eastern being part the of distribution. Northwest Manager Ryan Meek veteran and the the the we the to just the for our spirits the Manager the region. of and

Now, in are on the of focusing sales focus also spirits on addition growth, on production, we've optimization things spirits to list our to do.

team line We and we operation continue use contract that the the input. automation fully Eventually craft and long-term. proficiently spirits allow more midterm to to will our internal focus utilization to integrate multitasking packing on plan optimal capacity the through near-term, for us full

distillery. just of As national, alcohol craft can leading see, million to local you company team a $XXX continue suitable a build craft we professional inspired not $XX beverage million a

to I evolution and all changing adapt as I the and we're with for more we're be growth, team not spirits scales a spirits grows. business Our driving unique position capable believe the the were we game, to think and – and clearly able enterprise be believe also doing we're objectives short-term only creating but portfolio. the of less, infrastructure

the craft butter company. XX% for were while spirits about and a our year of part certainly is the sales demonstrating talking our services underlying up and Craft spirits, most materials. for canning the an of Now demand spend a canning is vision bread and company division XXXX ago, of exciting canning robust strong division the we QX time

to has XX% to capacity changes. very done operational locations. going customers The anticipated craft XX% at bring to profitability. to good as summer gross new months. contiguous manage enter engaging is business in and expanding team job changing we to a peak and due is unit the The business the mix variation challenge the the the and of customers, run of grows new profit However, margin profile The to we as begin XX% in down services forward customer same the base and period was customer

and budgeted to growth interesting opportunities is incremental our overall plan goal canning, small expansion, identified bolt-on The from diversify the to and this have is we fiscal opportunities for addition in Craft continues we're increase bottle the to to manufacturing. accretive to-date. a and In services, plan organic expand fix the flow mobile several growth expansion. expand cash of substantial business into locations portion evaluating capital mobile to and geography for cash and the craft generate acquisition to Eastside

focus sure, our is continue And in pivots execution for the grow we plan All those profitable XX% consolidated our the solid profit sales in and XX%, you to Now business, With to XX%. place with goals were achieve the in the immediate and our XXXX of and turning drive call. strategic QX but gross programs in and operational we to and to we place, have goals expense reduce ambitious focus last to remainder shared year. to plans a the grow strong operating growth continue acceleration. on back

And the of forecast to for results serves results May exercise a During and goals one we're forecast the to our purposes, both just begin XXXX two, anticipated that year-to-date to this benchmark achieve we'll forecast will mentioned. three-year May, track for plan actual to year month go. be full strategic to the a set conducting for growth XXXX ensure two record on June. to I The

three Now to to to to structure, as strategic our once years thesis company, growth the serve serve capital community. market plan completed as our investment and foundation guide investing and will this operations the

craft scale spirits and category believe future with tends a potential We talent high local for created be artistic. have we high undervalued We in position the to unique company's accelerated to that believe continue growth. caliber to with a

in fuel growth. we'll small To demonstrate plan investor Geoff and additional to As ahead. to the you thank and support open in I to the accretive fall always interest questions. raise growth initiate for line to as for for this We results, generate external of campaign tranche Eastside look to our we a strong, end, plans now to And capital expanded interest we'll marketing the and Distilling. Eastside in a continue share your

Operator

[Operator from being ahead. question go Our now the is question-and-answer will Please first We [indiscernible]. session. Instructions]

Unidentified Analyst

infusion the quarter. private from in just us million Congratulations guys on I track. after? and that see ask are the amazing there. are come of with the cost you capital questions company? to the or you the down Hi, And can some are on right cash we two $X.X placement, to unique going of has does do other what want that opportunities accelerate from process? anything And more the banks raise needing foresee I bid

Geoffrey Gwin

Great. that we The end refinancing and refinance to Paul, actually to addition in $X.X primarily $X.X maturing an jump raised we that were notes I'll – is April had question. was afterwards. million in please This And to of notes then you proceeds And in million in, the to those. here want Geoffrey. take those if so May. jump in million and had incremental the about $X to

paid that obviously transaction we the in second that you'll see some million costs For $X quarter.

So benefit we to did million, the the add liquidity not we're we full the sheet. $X didn't balance of get the in – the going full but get

a there's company go as them all we're and investment possibly an as capital large a we we're think very we capital of we're to bit grow. We're to Paul? through to the how question, year. company. fuel growth But for And investors Paul be your even of raise here opportunities Now building capital any coming the raise. about plan opportunity the with a little second going from to to tremendous thoughtful stock alluded make here, to, – our diluted of number has as part that mentioned, and the to not looking do three-year and very to showing investment Paul work committee external a the going

Unidentified Analyst

one-time a some color saw it wanted All this or million million? you quarter. there be from Are it us be of would income recurring? right, to they the other X-K incoming? I just with share $X.X $X.X was Geoff. Amy, check Would on that Could with you this I

Geoffrey Gwin

Yes.

press the important EBITDA some of that. items to of at the release, down to break we you If down look out the into flow-through one-time take and it's adjusted a

prepared one-time my a we As items. I had of said lot in comments,

with one-time million. So termination we We had that’s license then the some about then the been final gain that Intersect forgiveness also, year end couple of again, of to Azuñia XX bought years $XXX,XXX earnout. Riviera, about working a associated had the million. $X a was and And we of we about Redneck was the PPP that we it finalize the tequila was income that's the business also reevaluation we've $X.X ago. of inventory transaction loan, item $X.X another statement. Azuñia, ago a of the talked entered months from and gain the And adjustment that And that this, at on And sold with of called the we agreement million. earnout with a

see the that release. bottom the you'll bridge all So of at press those in

Unidentified Analyst

landscape to big what All by operation been And in trucks is a the to for we for agree I and there's that grow current in much. right. canning steps canning the If size last the scale while, FY yes, are Thank pursuing looking our are into Are analyzing growth. we enough operation? canning market have that? scope you investing our double XXXX? more to so a question. one I I've

Paul Block

This I can respond is to Paul. that.

in to with States that. Just the of significant market Yes, the the is beverage in manufacturing entire size I United dollars, is industry think the your packing and start question. it's of last contract billions a

is So enormous. pick is the prize opportunity. size challenge The accretive of to off strategically the

and on pasteurize there's that also difference? when my and locations, we it's I as you a And truck. what fixed in put you demand. Well, to get is But and pasteurization fixed in in a a high pasteurizer then the have mobile. obviously as mentioned into investment, can there And very mobile we incremental What's – is can be expand opportunity to do location, statements, the mean? with I calls, pasteurization prepared fixed we mentioned a there's $X opportunity, significant that to locations. would, will, in impossible say I but I there. and because it's impossible sales, mentioned previous really products on canning, into $XXX,XXX then I not have proportionate margin think flow convert there's good to and Mobile just mobile possibly the with cash million expanded opportunity of As it's if

So get three, then that's number as manufacturing And capable then could we bottles spirits, as be cans more in actually two. opportunity better do bottles, manufacturing well there as at contract number to for confident. will more become because and we

expand canning If And for what demand. do if focused, your mobile soft, canning that in to bit, may does bottles and may is diversified us? it's but fixed Well, a in very so may is pasteurization be up. a good be and up little great so be general it's to that locations down canning be also be

manufacturer. we So beverage contract at really looking just more comprehensive mobile, are a beyond alcohol as and we're looking this trucks

Unidentified Analyst

end. for right. you. That's my all on All me Great. Thank

Paul Block

Thank you.

Operator

Capital. The question Bjorn XXx Please ahead. go Ng next is with from

Bjorn Ng

Hey, Geoffrey, turnaround evening. good Hey, Paul. such detailed plan for business a Thanks Eastside. for

forward, I team Eastside propel the think shareholder have I'm got a excited right the of you be that to brand Eastside. guys to and

I here. questions got So two just

competitions? niche to earn spirits, do carve can important And we ourselves? ability competitive see the whiskey, marketing our which over how we branding you our Could translate of creating role to for on consumers tequila in and As consumer advantage a a playing we currently out certain margins. elaborate and mindset, have other an

Paul Block

have, say the we I Whether competitive one question. that's which one I probably best-in-class great said, as would is Bjorn, a great a have it's, the absolutely products. advantage Yes, is it phenomenal And won single handmade Azuñia Goose batch It's It's is it. some everyone Burnside made, Buckman, premium Eastside products; Burnside Black. new who and Hollow, and tries medals. gold the products organic. we just product. loves

very the So about day, distilled PPV, time that we're vodka just potato unique. four other talking

say So I products are one of important most our would our differentiators.

working on consumer product our is thing up two a make and identity values. things The attributes second because we're there's that brand;

values consumer thinking to experiences. So our brands we're and

out to and we've Vodka, decided the We're Potato and Portland Portland to on wind Potato we're Vodka example link surfing surfing. beach starting going beach, For communities. the to with

has that of a So differentiator identity.

a at approach, we're and for and black a a looking new which doing Burnside, black For is gold RTD And style oriented we're more Burnside, white. can. that's

So is as as the the much product as identity. it it's

one comments, we're our distribution craft smart, that I big team. how to go between distiller. think point on to of built energy for in They are but not we experienced brands, local other in difference long, very is artistic, velocity really fact too and as oversight but it I the and mentioned small, us, distribution knows are of the prepared to a can my the with below and guys point It’s per smart, bring very sustain network. the

think of I unique kind that's So too.

distilleries, team product be So big we're building, this kind for the I actually would and sleeper below the built say identity craft we've guys. to but sure, of like a cell above almost

but analytical, extremely very very entrepreneurial. So smart,

on and demonstrate say would things. we’ll some it. thing then And get that don't We little growing. bit craft take want the we company the especially be within current We've portfolio. spirits a to se. opportunity per we of side, $XXX plenty small we'll be do but and the So that dilution, to where what do We're three being to deliver need And don't our capital. we we're some capital, more operation. need need branding. extra it In not want continue side, will $XX do, looking a acquire will capital to we buy not we'll brands we we the with We're results, of invest looking to of bolt-on are we say create those I one the want And investment we're million. trusted consistent, performing, to million, got that in to the lot a

that for that. your hope you So thank I question answers and

Bjorn Ng

thanks Paul, for right, All details. lot a the

I got ready-to-drink just on the cocktail. one question So

drink. gold were RTD So the you new black and heard I just about Burnside sharing

think like still So more. market you that what get the and affected COVID RTD cocktails to on by the see on for market creating do more can I'd is just thoughts on-premise your off-premise as we

different have for Holdings, flavors which brands variety witnessed actually We Celsius more the consumers curiosity customer like the have brand. for try of and to Monster they where attracts out, success Beverage,

RTD potential of see plans the have revenue And you potential do the do in Could that segment? through So we walk segment? us you invest this? in to

Paul Block

Yes. yes, RTDs. one first, RTDs to store. the price in somewhere I alcohol an We're at XX type. and Well, XX there's store, in looking we tremendous and at potential did product about and We points by our audit had think volume just

high So now it and want they want flavor, and People the colors want they want is alcohol enormous. convenience, want they opportunity content. they

So though. the market is ripe. It's very crowded

in, question, be, come high-quality product to more but so Yes. very quality level a values you asked for the your that product differentiated, expensive giving can shooting So with as and that at and maybe product, when we do we have higher maybe premium expense. we for think we a first

So – and cherry flavored and and what a in right very well in Azuñia whiskey, store. XX at we're – products, Burnside well. XXX new lemonade. whiskey then a was different a RTDs, Cola Azuñia top really first three Flavored a the margarita we the organic tested flavored rose and to probably now looking bottle Marionberry Burnside and both tested an honey then our tested just in And concept for

We significant. for be fairly space. differentiate. it's right So there could to out what an RTD do and now It Eastside? to think I be need we lucrative mean, revenue we extraordinary need the for could just get

some $XX in that require investment of we've Burnside the the with for there think Eastside, be So out purchase. in marketing we're $XX unique very tested concept see they million be I require million, $XX us a and product. will million, is and reason And will And any already could both well very unique what product. a Azuñia getting it both I deliver and it don't tested the but could can't terms right on now and doing

building evolving scenario. product Now we're business the and we're case

So a we'll to back but need report money. have just more with players that, lot a We that's big careful. We be very to you. lot interesting. we're of spending of think on There's

but I methodical and want be we we and be to focused to keep deliberate. want we want So fast, be to as saying,

Bjorn Ng

a supporting it's shareholder appreciate answers, forward useful be I I a so much, you Thank lot and and work looking are and of like It's your And way. always in lot for right. definitely hard chatting your all to you so All you are more the we Geoffrey. to privilege with Paul. you methodological Thanks our and details. I'm the how you.

Paul Block

your so you thank Well, support. for much

Geoffrey Gwin

appreciate it. so Yes. I Thanks much.

Operator

is The go Kelvin next ahead. with Please Seetoh question Partners. GIM from

Kelvin Seetoh

from say Hi, a absolute about is lot this to building is nearing and want Singapore. Brand expect. to investment on Paul. on Kelvin, that I you’re just This must. capital calling We And everything. care return

Eastside, always honest, makes You plan have very you're you different. a game and strong for which

your caliber of Janet guide are with with Geoffrey We along company. to someone and a blessed

still XXXX, of So on-premise is out sales question affected my that one that shipped have mostly was number right were is Azuñia given quarter And in even our the first I one dining quarter lower think closed. than we because now, of cases XXXX.

possibility that e-commerce are also is considering. to how and a like a you. able more And just guys period business wanted if do during sales So be we another you Thank know lead Azuñia to difficult resilient may around this? I

Paul Block

Kelvin. you How doing? Two questions. Yes. very good Hey, are

on First be on driven going steps deep Azuñia, case, losing we're have and to in accounts I about per and a lose causing it to we really identified to three there's was us way are been Azuñia give discounts two $XX. where money giving that think the Florida And one what we finding $XXX lose before on a we forward. to where has brand There were lot is discount actually price. we of take case. might And were a think providing we've per step that profit take is we're Azuñia, account the back or

business. one of $XX,XXX So the just some in basis also a probably number interrupt on we're an accounts. stopping discount, when loss annualized of But obviously stop that these account. identified we may we've account that And a

of We're lot points, guys there. price a really looking of you. price distributor So place. and But margins look, us. strategy at you volume is the in and first pricing and frontline on a the distributors. our very working in working prices. distributors We'll through the work of get They've our our product. we're pushed have And with low been have of Azuñia has a out to our work pricing been which our the fact, is model, distributors And promotion antithesis recalibrating our supportive lot said, step promotional working with with and our do to we're we're

market you by opportunity do Azuñia? really the And tequilas. lowest is product. what's So to that don't for as the opportunity The this phenomenal pricing it

You to tequila focusing do price and the of handcrafted then merchandise to tasting front shelf that Black, frontline be in near-term, this point And need get XX%. available. going it we batch off a product at out, best we're the by it and point the of pricing it margin as the we the gross organic that's the some purchase brand a which get to get tequila In need message for that and deserves consumers. made a of of it Azuñia has on price

issue, $XXX below an great not $XXX down can still a frontline, it great that's discount it So and tasting have and to retails we for product, margin.

really in in in And the pricing the for it's and to growth. repackage exponential brand So the more the the reposition, right. to longer-term, Black; the focus it's on near-term, long-term refocus mid-term, in it's – get to

company, for in to on your we're sustainable long-term in We're our it's tough platform. for question decrease great fixing growth of the on much e-commerce So now little things we're so over because then all we and a evolution with as very And many yes, the the is second the volume e-commerce fixing e-commerce going bit great it growth but a near-term, to be behind salient. as can spirits be product. for Azuñia, see is but just

online, of online looking available selling looking whiskey we're many have all outlets limited brand, for Eastside’s products possible. as at and to through the edition online, our we're that clubs with and matter, as looking we're So trying at

your appreciate and really an all we questions communicating support, basis. all us on your with So and for ongoing thanks

Kelvin Seetoh

liked steps taking. exact are I you Paul, right. the All

now think And I team will this, think dangerous know, –this it your could roughly think Steve, as a tightens a or we acquisition I which that call. pricing brand, of a be the perceived spiral proper executing differently. is that single I but have I place, say you in the downward things amount in discounting just is the $X to amazing. CEO, be a question do that previous think I that really sales My just believe his is quarter, could when more brand in million brand acquire last Azuñia, of previous it's we this wanted is

expectations speak true important recalibrate rather brand the your Thanks the not how understanding could I However, hold it, but still is much. think so to or you it belief Azuñia’s about and it out your of of to just about you in curiosity, does I'm holding potential?

Paul Block

Geoff and positioned, grow priced, reducing loyal Well, million chime it I to and is then don't you consumers it be try I could million a $XX can can price, what the you Yes. be tremendous but and has price $X by, in get needs that brand that properly brand a but it happens brand, can And When brand marketed, a base. separately, consumer believe believe too potential. grow. be sensitive and create by you a or bridge

the those changed, when be underlying we I know tremendous and looking So Azuñia do can have – fundamentals yes, maybe brand he didn't he and acquiring to the they're it. was fundamentals absolutely. million opportunity X if change think But could of I think need was

Geoffrey Gwin

think there's it's one taste thought bourbon, that point of super can that our And a the one then Portland. that I in millennial and multiple chance superstars. Vodka are extraordinary which wasn't at, were opportunity. the was to way in really margin one oh, a saying, you tremendous tapped the it in in is a other price. past what the and tastes that think have think North ever were Burnside all Potato lost of hottest fact in mentioned and it's But brand be a the about that is I of and and Azuñia you spreads of script, it it could with phenomenal, buying look fields. actually a Paul he I focused kind anymore. to super about a amount a year, be of changes And brand with we other on a Oregon this that, can't go This accelerated. colors, it premium add in and mentioned, that – black couple happened that, it it brand. to the accelerated it former marketed there's premium it, it's mix and more wanted Paul we had of that salespeople margins. it It's tequila when it, And a well. pretty It you I as understand I pandemic, when to the going Yes. referring on the – tastes has last not bourbon super amount really you at are do his on make that mean, we're product. with a was upside brands all Oregon also the you've a you think what had and America, to was is, just of we repositioned hard category approached if Paul put it like a has have what it to trial more in I I approach the And couple It this was there. brand to region, people track chance like think I of a regional markets out Portland the out. Tequila think to if mean, huge

so think comment at frankly towards is all your brands some And be pointed but I just very could Azuñia, point, large these

Paul Block

it Branding we promised and And we new point, is Officer. to our was we brought XX%. XX% – it grow purchase intent Well would a when market the volume in bottle. And the up was XX% the XX%. for research Vodka Oak, up said the we changed in quantitative test we Janet And would to what Potato be more that Chief who is Geoff’s

we're into we're seeing market taking and and So the fact-based results. converting we're it research data

research pricing We on our just kind of adjust trying and fix the been no have Azuñia. done focus. to We've

market. kind create So into the the when in vitro can we take we'll the I'm significant really that research find and upside, sure more methodology, we ways into get of to

put that we're And go test able that to work, throw report ensure then works the we we're of do of not dollars methodology thing into to to the can thanks. going And a and back because out replicate creating promised, to we're and wanted so that allocation going and behind us and results. allows it be and I waste And they funds things. to some money. market that's it. just spend not but is what millions the We're into, that millions other

Kelvin Seetoh

about vaccinated it brands. ideas makes Geoffrey call you, Paul to in more Thank call. I like really one is before hop that's try many if And just so shareholders may, announced drink, drink,. want sharing our to exciting. where places. so earnings back your CDC, to for people one just most fully the and I I can squeeze question think, I remove mask

last So question. on in Thank of does our much. customers? for our we what on terms that's a us can level, you from execute it reactivating mean demand marketing how broader my the So or so

Paul Block

right. you're Yes, well,

people this is parties have, think kind going is alone. drinking there's whole been that York possible more. I I and be entertaining opportunity New is summer I following, gathering They've entirely at and be makes know no think to but socialize. the up of what is, I will open to so going to country

course is just of the millennials And company. will people fire. the will So cocktail what's social other's there's culture among setting is been especially on increase and exponentially nothing, be enjoying

So and partying, and well all ages organizing demographics. be as and young socializing people will

that reset think us. I So will for field the playing

that it's very in Of they're they're brand. to be interact but with link with differently to did experience going lot your you're to not the get on do in great a course, as us We're accounts, and while well again. friends, alive it while chain And great the to doesn't on-premise the promoting we because It's will low price it I the can said and us. menu, and really start we go consumer brand just helpful where while their to drinking my your consumer before. that going in do with product for prepared to statement experience really, the come than for will we're that's get

great And and us going going give to well. to to it vehicle be going been that's on-premise the that in about. to – we're can happen. I've to get we're discounts to be pivoting we're a to talking marketing experiential place be So deep not going focused That's the where do promotions, the

Kelvin Seetoh

can't so you I quarter. much. to your providing Thank all thank you much. every of and with so for do wait journey Thanks leadership. We appreciate you your efforts

Operator

next Partners. [Operator from is with Instructions] Taylor Ross The question ARS ahead. Investment go Please

Ross Taylor

whiskey like strikes I'd have influential noticed Irish sale Thank and the that be it an couple the my influencers even and ago idea was sponsored – and me Irish the something talk other you a but key an weeks like, alcohol WWE brand day questions like as space further and to or are I going been founded of a to driving answered, personality. do Most when the you. of or of the a explore, there media experience, look the to I I'm strikes have the it high-quality by in me of this. listening I the at social of

opportunity? social Eastside social And Because this, are media is multiply with get we hardest people's really that and some basically force find you good. you the when the alcohol strategy, gets, influencer, so that that seeing I that to how going set I'm what the to more it thing expensive it out quality telling the it to you're without is getting the reference harder point buy were in, someone are

Paul Block

a that's question. great I think

to that We've and the that, Our celebrities. is we fun with merchandising been to marketing part had and with really get blocking us before. have which experience the focused team tie-ins of so combined and need on all tackling

the like, as we'd of celebrities from wanting probably to calls are brands. many we've agents our as a align So opportunities with had their number

focus our social a get our also really our and product We number we have and positioning can media intentionally also our honestly right. of for placement marketing, we've opportunities probably underutilized until and

your is point. think influencing is all to marketing our I strategy open, about wide and all the influencers opportunity guerrilla the about So

working a price for unfortunately lot goods, day modeling. most understand May haven't really standard we working So my spent it of we it's the to-date because that I on the forecast done on of of and cost

lot in to get two months able like all or finding what really, influencing which high were successful, are and to finished, really when done, be fundamentals have among one we what of which means a is attention the our So away, influence influencers, done of have a past who which going we turn the been people we think that's I to we've others.

of now, of three conversation turn where bring the And wish to fixing. had a ready you, the time more the to kind but said XXX,XXX our I'm of people out part like for we to not placements, increase we're not build. there. have from get feeling been fixing together. now followers, can it's doing big about we'll in strategy XX,XXX, we're but the can social discussion tell we job, weeks can job, really June but we'll on just, a good, lot think I plan to start bring it going the much the not We'll couple looking entire this doing years. constantly the on and we're executive better that rest do out for team can I we're time I celebrities, to we're being, at it's think just now I we that of year next a social product be focused we So having and and a honestly plan media which session, that's we've media,

going more you'll and see we'll So that you more forward. on area there report for

Ross Taylor

Okay.

private is capital obviously question the undervalued for the mentioned the size as second of the that the given me have nature I It of uniquely potential or raise strike a and any raise. The would possibility you've be company done equity or in would perhaps importance who placement and it to a in doing. you're space player do real a has interest what strategic or you the best someone or someone a as was if done

and to you're the I'd it to small millions to handful need you, to to raise of don't rather road do assure market sitting alone. feel when you waited but capital, hate a perhaps might because try to strategic, pay get need and of not for months and people fear raise that the who waiting to you're we're I handcuffed to pockets of if marketplace? going actually I not how and a the raise, to going I a out six here I that discount into on a premium actually deeper awhile drop you be it, another secondary for that thought work, think many I'm throughout raise. me you with to having to So a to wanted know hear love three, find rather try than people dollars you going do

Geoffrey Gwin

on move shareholder stock to thinking existing some very value of debt, offer for had day transaction And cash I what is investors? up? place mean, day capital how every the refinance, we're the is the we of an value. think end an dollars fact in million bigger that mean, move the it couple of was in an or the the do shareholders raise that's advantage transactional And maximize notes. too senior you is all do last – taking people's do one, of we is and something capital the where guys. destructive appreciate our jump that I Ross, down of in and having we And example example in thing with – for a to of I paid I of option the along confidence we're want will intention build stock the I option we structure lot a do a really and that. could How do that. up the we to diluted

that's inside the you thinking, my was try to why, can to people team us the just the entire the products new. for changed, calls is and are best company has that, going I company way think number we're from executive statement talk through and transitioned describe, before important The foot you see everywhere. of you've for tell the because you is while transformation to having know market ideas it I I'll new, to been So significantly find it and this is what what script itself, new. were completely now, transformation the that, we is income sheet they that walk to go what the to a I think The out haven't If so balance said and said of we're as today. to some on the can

pretty So we about has people of there's a I plan, think very job the – Be to plan transparent is. to plan the year, good have walking what this something that confident do through plan for that that And the their Paul's referred one year and good a of plan growth the investor can people three time stewards at be we there. how get to we resources. the give

us get we well and summer, that think the I for than in calls so is people go, have more here effective it's the up. And Investor important company is which to Relations have of some $XXX and hire taken point do go to where it's value ahead it's make are to of be they through we that company. get guys But take going this going had out company, value the to to this we more that work inundated I stock done everybody I creativity a the still with I number and company. and take so it I to wanting a people going you to to we the us see way, we But have take that have way track is, the investors conversations road who's believe that's mean, and once a bring a your drive of awesome meeting group of growing and is and about on discount think we're a to annual learn and part we're think in and like And it's the to liquidation and million too. start what along how going here. interested to to going lot

Ross Taylor

Yes.

needed brand about. base you what willing execute find honestly people have steps might operationally. getting taken would it, by liquidation so particularly fantastic. and I provide we’re And the capital that And at you're point wait, your going recognized who of under talking template you it demonstrated this could been with valuable holder So And a their you've – time. always assumption to people way that think keep market. honestly the I in would what as idea waiting need to just it trading to just a step-off given part be ability kind I value because problem really and lays fantastic. don't agree just size, you far to think generate going of they've the it pushing your I thinking therefore could and deal. of of that buy inside has to has returns if awareness been And refi proof been been forward cheaper chance do for say now you you're think have you to be I on do you they they're through I builds in think and a of around went is What I get doing think pushing going that a execution that I front the been, was and the you did kind one. And that very in the people up.

Geoffrey Gwin

to share got Ross. opposed seek results be day, be focused that you drive Thank We're of at the you're value We we resisted be the is of calls a in of to our We're get with – drive just approach. agree is plus going all because strategy day, but that's and with discount, value really patient. shelf, articulating a will just do what the our not we've towards even price and shares in will as could to few and chime every that, get in on had to you. results a premium to just to discount that, price I the we've overnights, to oriented on to I say, our shares be focus end investors in going lot broad up. cash the

seek a prove we do aligned go to a with all that take we We our I with work to little get is happy think on we're we I So deliver you investor investment guidance – think a group. can some we're more, bit, results, I bit current your just do can and more that. to want think We'll and we're do demonstrating, because and little long way.

Ross Taylor

to sure agree yourself would think I I I that would that's and make short. where argue with you don't sell

I'm in I think very a investors get have lot that matter rapidly. the proven I all that. to will that. in things recognize you recognize, market there. stick have just that And you the team of your getting place It's to here a should there's hopefully think And of getting confident

pace change here accelerate from and does. the think of I should it as

a that think from change now. should I we year

and I opportunities be different very price hopefully the environment, at looking stock think company. we're very to different a different for very going

Paul Block

We agree.

Geoffrey Gwin

appreciate your Ross. support We

thanks. Okay,

Operator

question-and-answer concludes session. like to for to Block remarks. This back I turn conference Paul would any our over the closing

Paul Block

Well, Geoff confidence questions. I'd we're appreciate forward. the just work. And to like to accelerating as keep joining your and we and your to for team you call. for the thank interest you back going Have thank And evening. Again, said, and the everybody I go great and for all good a joining Thank today.

Operator

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

disconnect. now may You

Eastside Distilling (BLNE) 14 May 212021 Q1 Earnings call transcript