Q2 2024 Eastside Distilling Inc Earnings Call

Speaker Change: Good day, and welcome to the Eastside Distilling 2nd Quarter 2024 Financial Results Conference Call. All participants will be in listen-only mode.

Operator: 224 Financial Results Conference Call. All participants will be in listen-only mode.

Operator: 34 financial results conference call. All participants will be in listen-only mode. Should you need assistance? Please signal a conference specialist by pressing the star key followed by zero.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad.

Speaker Change: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To enjoy your question, please press star, then two.

Speaker Change: After today's presentation, there will be an opportunity to ask questions.

Speaker Change: To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two.

Operator: To withdraw your question, please press stars 1 and 2. Please note today's event is being recorded. I would now like to turn the conference over to Tiffany Milton, the controller. Please go ahead.

Operator: Please note today's event is being recorded.

Tiffany Milton: I would now like to turn the conference over to Tiffany Milton, controller. Please go ahead.

Speaker Change: Please note, today's event is being recorded.

Tiffany Milton: I would now like to turn the conference over to Tiffany Milton, controller. Please go ahead.

Tiffany Milton: Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.

Tiffany Milton: Thank you. Good evening, everyone, and thank you for joining us today to discuss Eastside Distilling financial results for the second quarter of 2024. I'm Tiffany Milton Eastside's controller, and joining us on today's call to discuss these results is Geoffrey Gwin, the company's chief executive officer.

Tiffany Milton: Good evening, everyone, and thank you for joining us today to discuss Eastside Distilling's financial results for the second quarter of 2024. I'm Tiffany Milton, Eastside's Controller, and joining us on today's call to discuss these results is Geoffrey Gwin, the company's Chief Executive Officer. Following our remarks, we will open the call to your questions. Now, before we begin with prepared remarks, we submit for the record the following statement. Certain matters discussed on this conference call by the management of Eastside Distilling may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended, and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results, or strategies and are generally preceded by the words such as may, future, plan, or planned, will, or should, expected, anticipates, draft, eventually, or projected.

Tiffany Milton: Thank you. Good evening, everyone, and thank you for joining us today to discuss Eastside Distilling's financial results for the second quarter of 2024. I'm Tiffany Milton, Eastside's controller, and joining us on today's call to discuss these results is Jeffrey Gwin, the company's chief executive officer.

Tiffany Milton: Following our remarks, we will open the call to your questions. Now, before we begin with prepared remarks, we submit for the record the following statement.

Tiffany Milton: Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements. Such matters involve risks and uncertainties that may cause actual results to differ materially, including but not limited to the company's acceptance of its products in the market, success in obtaining new customers, success in product development, ability to execute the business model and strategic plans, success in integrating acquired entities and assets, ability to obtain capital, ability to continue as a going concern, and all the risks and related information described from time to time in the company's filing with the Securities and Now, with that said, I'd like to turn the call over to Geoffrey Gwin.

Speaker Change: Following our remarks, we will open the call to your questions. Now before we begin, with prepared remarks, we submit for the record the following statement.

Tiffany Milton: Certain matters discussed on this conference call by the management of Eastside Distilling may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended. Sections 21 E of the Securities Exchange Act of 1934, as amended, and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward looking statements describe future expectations, plans, results or strategies, and are generally preceded by the words such as may, future, plan, or planned will, or should, expected, anticipate draft, eventually, or projected. Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements.

Speaker Change: Distilling. Certain matters discussed on this conference call by the management of Eastside Distilling may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended.

Speaker Change: Section 21E of the Securities Exchange Act of 1934 is amended, and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker Change: The forward-looking statements describe future expectations.

Speaker Change: plans, results, or strategies, and are generally preceded by the words such as may, future, plan, or planned, will, or should, expected, and dissipates, draft, eventually, or projected.

Speaker Change: Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements.

Tiffany Milton: Such matters involve risks and uncertainties that may cause actual results to differ materially, include but are not limited to the company's acceptance and the company's products in the market, success in obtaining new customers, success in product development, ability to execute the business model and strategic plans, success in integrating acquired entities and assets, ability to obtain capital, ability to continue as a going concern, and all the risks and related information described from time to time in the company's filing with the Securities and Exchange Commission, including the financial statements and related information pertaining to the company's annual report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission.

Speaker Change: Such matters involve risks and uncertainties that may cause actual results to differ materially include, but are not limited to, the company's acceptance and the company's products in the market, success in obtaining new customers, success in product development, ability to execute the business model and strategic plans.

Speaker Change: Success in integrating acquired entities and assets, ability to obtain capital, ability to continue its going concern, and all the risks and related information described from time to time in the company's filings with the Securities and Exchange Commission, including the financial statements and related information pertaining to the company's annual report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission.

Geoffrey Gwin: Now, with that said, I'd like to turn the call over to Jeffrey Gwynne. Jeffrey, please proceed.

Speaker Change: Now with that said, I'd like to turn the call over to Geoffrey Gwin. Geoffrey, please proceed.

Geoffrey Gwin: Thank you, Tiffany, and welcome everyone. I'm glad you could join us today. As you reach the midpoint of 2024, it's a good time to reflect on our progress. We've set ambitious goals for the first half of the year. While we've made significant strides, there's still a lot to do in a lot of half. Since all of these sales were up 11% in the quarter, and we've seen a notable improvement in the West margin compared to the plan year. However, what stands out to me is the success that we're having in our operating businesses and key performance metrics that we're following.

Geoffrey Gwin: Geoffrey, please proceed. Thank you, Tiffany, and welcome, everyone. I'm glad you could join us today.

Geoffrey Gwin: Thank you, Tiffany, and welcome, everyone. I'm glad you could join us today.

Geoffrey Gwin: As we reach the midpoint of 2024, it's a good time to reflect on our progress. We set ambitious goals for the first half of the year, and while we've made some impressive strides, there's still a lot to do in the latter half. Consolidated sales were up 11% in the quarter, and we've seen a notable improvement in gross margin compared to the prior year. However, what stands out to me is the success that we're having in our operating business and the key performance metrics that we're following. That, for example, saw a nearly 50% increase in digital printing revenue.

Geoffrey Gwin: As we reach the midpoint of 2024, it's a good time to reflect on our progress. We set ambitious goals for the first half of the year, and while we've made some impressive strides, there's still a lot to do in the latter half.

Geoffrey Gwin: Consolidated sales were up 11% in the quarter and we've seen a notable improvement in gross margin compared to the prior year.

Geoffrey Gwin: However, what stands out to me is the success that we're having in our operating businesses and key performance metrics that we're following.

Geoffrey Gwin: For example, a nearly 50% increase in digital printing revenue. I mean, they're setting records pretty much quarterly for Canon sales, and our order books are full. We're addressing the challenge of scaling up our digital can printing capacity. Now we have a plan in place to see if it can boost this capacity, and we'll focus on executing it for the rest of the year. I do think that will unlock additional capacity. But this course performance to me just confirms what I've said on numerous conference calls in the past. The digital can printing is gaining traction, strong traction in the market.

Geoffrey Gwin: Pat, for example, saw a nearly 50% increase in digital printing revenue. I mean, they're setting records pretty much quarterly for cannon sales and our order books.

Geoffrey Gwin: I mean, they're setting records pretty much quarterly for can sales, and our order books are full. We're addressing the challenge of scaling up our digital can printing capacity. And we have a plan in place to significantly boost this capacity, and we're focused on executing it for the rest of the year. And I do think that will unlock additional capacity.

Speaker Change: are full.

Speaker Change: We're addressing the challenge of scaling up our digital can printing capacity.

Speaker Change: Now we have a plan in place to seamlessly boost this capacity, and we'll focus on executing it for the rest of the year, and I do think that will unlock additional capacity.

Geoffrey Gwin: But this quarter's performance, to me, just confirms what I've said on numerous conference calls in the past, that digital cam printing is gaining traction, strong traction in the market. Now, Crafts still needs to address critical issues like it needs to improve its gross margins. We need to reduce machine downtime, and unminimized scrap.

Speaker Change: But this quarter's performance, to me, just confirms what I've said on numerous conference calls in the past, that digital cam printing is gaining traction, strong traction in the market.

Geoffrey Gwin: Now crafts still need to address critical issues like it needs to improve its gross margins. We need to reduce machine downtime, minimize scrap; all these things impacted margins and operating cash flow in Q2. And I'm optimistic that we're going to see improvements in the second half of the year.

Speaker Change: Now, Kraft still needs to address critical issues like it needs to improve its gross margins. We need to reduce machine downtime.

Geoffrey Gwin: All these things have impacted margins and operating cash flows too, and I'm optimistic that we're going to see improvements in the second half of the year. Now turning to spirits, that business has made substantial progress as well, and remember the primary goal in that business is to generate positive cash flow. I think we're very close to that.

Speaker Change: Minimize scrap.

Speaker Change: All these things impacted margins and operating cash flow in Q2, and I'm optimistic that we're going to see improvements in the second half of the year.

Geoffrey Gwin: Now turning to spirits, that business has made substantial progress as well. And remember the primary goal in that business is to generate positive cash flow. I think we're very close to that. Now case funds were in fact down 12%, but that was driven in part by this reset of our tequila in the market strategy that we initiated last year, resetting distribution, starting with new distribution in the markets and changing our prices and improving gross margins. Now we've seen better performance in the, and I think we'll have some good numbers reported for the back half of the year across the entire portfolio.

Speaker Change: Now turning to spirits, that business has made substantial progress as well. And remember the primary goal in that business is to generate positive cash flow.

Geoffrey Gwin: Now, case volumes were, in fact, down 12%. That was driven in part by this reset of our tequila-go-to-market strategy that we initiated last year, resetting distribution, starting with new distribution and new markets, and Changing Our Prices and Improving Gross Margin, and we've seen better performance in states like Oregon and Arizona. Our PPV performance in Oregon has been outstanding, and I think we'll have some good numbers reported for the back half of the year across the entire portfolio.

Speaker Change: I think we're very close to that.

Speaker Change: and K-Stone's were in fact down 12%

Speaker Change: But that was driven in part by this reset of our tequila go to market strategy that we initiated last year, resetting distribution, starting with new distribution in new markets.

Speaker Change: and Changing Our Prices and Improving Gross Margins.

Speaker Change: I was seeing better performance in the state-flical organ in Arizona.

Speaker Change: Our PPB performance in Oregon has been outstanding, and I think we'll have some good numbers reported for the back half of the year across the entire portfolio.

Geoffrey Gwin: Despite the lower sales and the fact that we didn't sell any barrels, substantial barrels in the core gross profits increased substantially by 84%, and EBITDA also improved, as I referred to earlier. I think for the quarter, we only reported 53,000 non-elasticity.

Geoffrey Gwin: And despite the lower sales and the fact that we didn't sell any barrels, substantial barrels in the core, gross profits increased substantially, 84%, and even got also improved than referred to earlier. I think for the quarter we only reported for $3,000, not a loss in the data. So we've had a lot of progress, and we expect to see more progress in Q3.

Speaker Change: Despite the lower sales,

Speaker Change: and the fact that we didn't sell any barrels and substantial barrels in the court, those profits increased.

Speaker Change: substantially, 84%. And EBITDA also improved as I referred to earlier.

Speaker Change: I think for the quarter, we only reported 53,000 out of loss in the divide.

Geoffrey Gwin: So we've made a lot of progress, and we expect to see more progress in Q3. Finally, our corporate expenses have decreased yet again by a quarter of a quarter, and we've done that pretty much every quarter for the last two years. We're working to build a sustainable and growing company, and I think we'll continue to make progress in doing that, and we made progress this quarter. Now, with that said, I'll turn it over to Tiffany, and she can present the numbers, and after that, we can take some questions. Thank you, Geoffrey.

Speaker Change: So, we've had a lot of progress.

Geoffrey Gwin: Finally, our corporate expenses have decreased yet again quarter to quarter, and we've done that pretty much every quarter for the last two years. We're working to build a sustainable and growing company, and I think we're continuing to make progress in doing that, and we're going to progress this quarter.

Speaker Change: and we expect to see more progress in Q3.

Speaker Change: Finally our corporate expenses have decreased yet again, quarter of a quarter, we've done that pretty much every quarter of the last two years.

Speaker Change: We're working to build a sustainable and growing company.

Speaker Change: and I think we'll continue to make progress in doing that in the progress of this quarter.

Tiffany Milton: Now, with that said, I'll turn it over to Tiffany, and she can present the numbers. After that, we can take some questions. Thank you, Jeffrey. I'll summarize the financial results for the quarter, and then we will take questions. On a consolidated basis, our gross sales were 3.1 million for the second quarter of 24 and 2.8 million for Q2 23, primarily due to an increase in printed can sales. Craft sales were 2.4 million for 24 and 1.9 million for 23 as our printing operation improved sales and production throughput. Craft printed a record 6 million cans in Q2 of 24.

Speaker Change: Now with that said, I'll turn it over to Tiffany and she can present the numbers and after that we can take some questions.

Tiffany Milton: I'll summarize the financial results for the quarter and then we will take questions. On a consolidated basis, our growth sales were 3.1 million for the second quarter of 24 and 2.8 million for Q2 23, primarily due to an increase in printed can sales. Craft sales were 2.4 million for 24 and 1.9 million for 23, as our printing operation improved sales and production throughput. Craft printed a record 6 million cans in Q2 of 24.

Tiffany Milton: Thank you Geoffrey, I'll summarize the financial results for the quarter, and then we will take questions. On a consolidated basis, our growth sales were 3.1 million for the second quarter of 24, and 2.8 million for Q223, primarily due to an increase in printed cancels.

Speaker Change: Crafts Sales were 2.4 million for 24 and 1.9 million for 23 as our printing operation improved sales and production throughput. Craft printed a record 6 million cans and Q2 of 24.

Tiffany Milton: Spirit sales were 700,000 for 24 and 800,000 for 23, decreasing as a result of lower volumes, primarily in Keela due to changes in our go-to-market strategy with distributors. Our consolidated growth profit was 200,000 for Q2 24 and 26,000 for 2023, primarily due to our printed can sales. Our consolidated growth margins were 5% for 24 and 1% for 23. Craft had no reportable profit margin for 2024 and negative 3% for 2023.

Tiffany Milton: Spirit sales were 700,000 for 24 and 800,000 for 23, decreasing as a result of lower volumes primarily in tequila due to changes in our go-to-market strategy with distributors. Our consolidated gross profit was 200,000 for Q2 24 and 26,000 for 2023, primarily due to our printed can sales. Our consolidated gross margins were 5% for 24 and 1% for 23. Craft had no reportable profit margins for 2024 and negative 3% for 2023. Spirit margins were 26% for 24 and 12% for 2023. Operating expenses were 1.3 million for Q224 and 1.4 million for Q223. Our lowered expenses reflect the success of our continued restructuring efforts throughout 2024.

Speaker Change: Spirit Sales were 700,000 for 24 and 800,000 for 23 decreasing as a result of lower volumes primarily in the QA due to changes in our go-to market strategy with distributors.

Speaker Change: Our consolidated gross profit was $200,000 for Q2-24 and $26,000 for Q2-23, primarily due to our printed can sales.

Tiffany Milton: Spirit margins were 26% for 24 and 12% for 2023. Operating expenses were $1.3 million for Q2-24 and $1.4 million for Q2-23. Our lowered expenses reflect the success of our continued restructuring efforts throughout 2024. Our net loss was $1.5 million for Q2-24 and $1.6 million for Q2-23, and our adjusted EBITDA was flat at about negative $900,000 for both periods.

Speaker Change: Our consolidated growth margins were 5% for 24 and 1% for 23. Kraft had no reportable profit margin for 2024 and negative 3% for 2023. Spirits margins were 26% for 24 and 12% for 2023.

Speaker Change: Operating expenses were 1.3 million for Q224 and 1.4 million for Q223.

Speaker Change: Our Lowered Expenses Reflect Matthew Campbell, Sean McGowan,

Speaker Change: the success of our continued restructuring efforts throughout 2024.

Tiffany Milton: Our net loss was 1.5 million for Q224 and 1.6 million for Q223. And our adjusted EBITDA was flat at about negative 900,000 for both periods.

Speaker Change: Our net loss was $1.5 million for Q2-24 and $1.6 million for Q2-23, and our adjusted EBITDA was flat at about negative $900,000 for both periods. During Q2, we closed on a $1.1 million debt facility for working capital. We will now open the floor for questions. Operator?

Tiffany Milton: During Q2, we closed on a 1.1 million dollar debt facility for working capital.

Operator: During Q2, we closed on a $1.1 million debt facility for working capital. We will now open the floor to questions. Operator? Thank you. We will now begin the question of the intercession. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, we ask that you please pick up your handset before pressing the key. For a joyer question, please press star then two. We'll pause for just a moment to assemble our roster.

Tiffany Milton: We will now open the floor for questions. Operator? Thank you.

Operator: We will now begin the question in the intercession. To ask a question, you may press star them one on your telephone feedback. If you are using the speaker phone, we ask you please pick up your handset before pressing the keys. To enjoy your question, please press star them two.

Speaker Change: Thank you, and we will now begin the question and intercession, so ask a question you may press start and we want on your telephone feedback.

Speaker Change: If you're using a speaker for help, we ask you to please pick up your hands up before pressing the keys.

Operator: We will pause for just a moment to assemble our roster. And once again, ladies and gentlemen, that star them one if you have a question.

Speaker Change: To enjoy your question, please press star then two.

Speaker Change: We'll pause for just a moment to assemble our roster.

Speaker Change: [inaudible]

Operator: And once again, ladies and gentlemen, that's a star more than a one if you have a question. This includes our question and answer session. I'd like to turn the conference back over to the management for the closing of the month.

Speaker Change: Hello and welcome back to my channel, I am Geoffrey Gwin, and welcome back to my channel.

Speaker Change: and once again ladies and gentlemen let's start with the one if you have a question.

Speaker Change: Hello and welcome back to this video.

Operator: This includes our question and the intercession.

Geoffrey Gwin: I would like to turn the conference back over to the management for the closing remarks. Great. Thank you, Rocco. Thank you for the opportunity to share these results with you for the second quarter, and we will look forward to talking to you soon for the third quarter. Thank you.

Speaker Change: This concludes our question and answer session. I'd like to turn the conference back over to management for any closing remarks.

Geoffrey Gwin: Great. Thank you, Rocco. Thank you for the opportunity to share these results with you for the second quarter, and we'll look forward to talking to you soon about the third quarter. Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Speaker Change: Great. Thank You Rocco. Thank you for the opportunity to share this these results with you for the second quarter and we'll look forward to talking to you soon for the third quarter. Thank you.

Operator: This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Speaker Change: Thank you. This includes today's conference hall. We thank you all for attending today's presentation. You may not have to connect your lines and have a wonderful day.

Operator: 34 financial results conference call. All participants will be in listen only mode. Should you need assistance? Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star than one on your telephone keypad. To enjoy your question, please press star than two. Please note today's event is being recorded.

Tiffany Milton: I would now like to turn the conference over to Tiffany Milton controller. Please go ahead. Thank you.

Tiffany Milton: Good evening everyone and thank you for joining us today to discuss Eastside Distilling financial results for the second quarter of 2024. I'm Tiffany Milton Eastside's controller and joining us on today's call to discuss these results is Geoffrey Gwin, the company's chief executive officer. Following our remarks, we will open the call to your questions.

Tiffany Milton: Now before we begin, with prepared remarks, we submit for the record the following statement. Certain matters discussed on this conference call by the management of Eastside Distilling may be forward looking statements within the meaning of section 27A of the Securities Act of 1933 as amended. Sections 21 E of the Securities Exchange Act of 1934 as amended and such forward looking statements are made pursuant to the safe harbor provisions of the private securities litigation reform act of 1995.

Tiffany Milton: The forward looking statements describe future expectations, plans, results or strategies, and are generally preceded by the words such as may, future, plan, or planned will, or should, expected, anticipate draft, eventually, or projected. Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward looking statements.

Tiffany Milton: Such matters involve risks and uncertainties that may cause actual results to differ materially include but are not limited to the company's acceptance and the company's products in the market, success in obtaining new customers, success in product development, ability to execute the business model and strategic plans, success in integrating acquired entities and assets, ability to obtain capital, ability to continue what's going concern, and all the risks and related information described from time to time in the company's filing with the Securities and Exchange Commission, including the financial statements and related information pertaining to the company's annual report on Form 10K for the year ended December 31, 2023, filed with the Securities and Exchange Commission.

Tiffany Milton: Now with that said, I'd like to turn the call over to Jeffrey Gwynne. Jeffrey, please proceed.

Geoffrey Gwin: Thank you, Tiffany, and welcome everyone. I'm glad you could join us today. As you reach the midpoint of 2024, it's a good time to reflect on our progress. We've set ambitious goals for the first half of the year. While we've made significant strides, there's still a lot to do in a lot of half. Since all of these sales were up 11% in the quarter, and we've seen a notable improvement in the West margin compared to the plan year.

Geoffrey Gwin: However, what stands out to me is the success that we're having in our operating businesses and key performance metrics that we're following. For example, a nearly 50% increase in digital printing revenue. I mean, they're setting records pretty much quarterly for Canon sales, and our order books are full. We're addressing the challenge of scaling up our digital can printing capacity. Now we have a plan in place to see if it can boost this capacity and we'll focus on executing it for the rest of the year and I do think that will unlock additional capacity.

Geoffrey Gwin: But this course performance to me just confirms what I've said on numerous conference calls in the past. The digital can printing is gaining traction, strong traction in the market. Now crafts still need to address critical issues like it needs to improve its gross margins. We need to reduce machine downtime, minimize scrap, all these things impacted margins and operating cash flow in Q2. And I'm optimistic that we're going to see improvements in the second half of the year.

Geoffrey Gwin: Now turning to spirits, that business has made substantial progress as well. And remember the primary goal in that business is to generate positive cash flow. I think we're very close to that.

Geoffrey Gwin: Now case funds were in fact down 12%, but that was driven in part by this reset of our tequila in the market strategy that we initiated last year resetting distribution, starting with new distribution in the markets and changing our prices and improving gross margins. Now we've seen better performance in the and I think we'll have some good numbers reported for the back half of the year across the entire portfolio. And despite the lower sales and the fact that we didn't sell any barrels, substantial barrels in the core, gross profits increased substantially, 84% and even got also improved than referred to earlier. I think for the quarter we only reported for $3,000, not a loss in the data. So we've had a lot of progress and we expect to see more progress in Q3.

Geoffrey Gwin: Finally our corporate expenses have decreased yet again quarter to quarter and we've done that pretty much every quarter for the last two years. We're working to build a sustainable and growing company and I think we're continuing to make progress in doing that and we're going to progress this quarter.

Tiffany Milton: Now with that said, I'll turn it over to Tiffany and she can present the numbers after that we can take some questions. Thank you Jeffrey. I'll summarize the financial results for the quarter and then we will take questions. On a consolidated basis our gross sales were 3.1 million for the second quarter of 24 and 2.8 million for Q2 23 primarily due to an increase in printed can sales. Craft sales were 2.4 million for 24 and 1.9 million for 23 as our printing operation improved sales and production throughput.

Tiffany Milton: Craft printed a record 6 million cans in Q2 of 24. Spirit sales were 700,000 for 24 and 800,000 for 23 decreasing as a result of lower volumes primarily in tequila due to changes in our go-to market strategy with distributors. Our consolidated gross profit was 200,000 for Q2 24 and 26,000 for 2023 primarily due to our printed can sales. Our consolidated gross margins were 5% for 24 and 1% for 23. Craft had no reportable profit margins for 2024 and negative 3% for 2023.

Tiffany Milton: Spirit margins were 26% for 24 and 12% for 2023. Operating expenses were 1.3 million for Q224 and 1.4 million for Q223. Our lowered expenses reflect the success of our continued restructuring efforts throughout 2024. Our net loss was 1.5 million for Q224 and 1.6 million for Q223. And our adjusted EBITDA was flat at about negative 900,000 for both periods.

Tiffany Milton: During Q2, we closed on a 1.1 million dollar debt facility for working capital.

Operator: We will now open the floor for questions. Operator? Thank you.

Operator: We will now begin the question in the intercession. To ask a question, you may press star them one on your telephone feedback. If you are using the speaker phone, we ask you please pick up your handset before pressing the keys. To enjoy your question, please press star them two.

Operator: We will pause for just a moment to assemble our roster. And once again, ladies and gentlemen, that star them one if you have a question. This includes our question and the intercession.

Geoffrey Gwin: I would like to turn the conference back over to the management for the closing remarks. Great. Thank you, Rocco. Thank you for the opportunity to share these results with you for the second quarter and we will look forward to talking to you soon for the third quarter. Thank you.

Operator: This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.