Q3 2024 Eastside Distilling Inc Earnings Call

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Speaker Change: Good evening and welcome to the Eastside Distilling 3rd Quarter 2024 Financial Results Conference Call.

Speaker Change: 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.

Please note, this event is being recorded.

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

Speaker Change: Good evening, everyone. Thank you for joining us today to discuss Eastside Distilling's financial results for the third quarter of 2024. I'm Tiffany Milton, Eastside's Chief Accounting Officer, and joining us on today's call to discuss these results is Jeffrey Gwin, the company's Chief Executive Officer.

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

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,

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Speaker Change: 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: Now, with that said, I welcome you all to our third quarter conference call. The agenda for our call today is to review the third quarter numbers, and then Jeffrey Gwin, our CEO, will discuss the results for the third quarter and the recently announced Beeline transaction.

Speaker Change: For the quarter, we reported sales of $783,000 and an improvement in gross profit. Our spirits division generated $46,000 in positive EBITDA before corporate expenses, a notable turnaround from a loss in the previous year.

Speaker Change: This improvement highlights the progress we've made in restructuring our spirits business.

despite facing challenges in the broader spirits market.

Speaker Change: Our vodka sales performed well, while our tequila brand, Azunia, continues to struggle due to distribution changes we've previously mentioned.

Speaker Change: We did see an increase in corporate expenses due to significant professional fees related to the merger transaction.

Speaker Change: Additionally, we raised $440,000 through a direct equity placement. For a detailed discussion on the merger and debt exchange, please refer to the subsequent events section of our Form 10-Q. Now I'd like to turn the call over to Geoffrey Gwin. Geoffrey, please proceed.

Geoffrey Gwin: Thank you, Tiffany. As previously disclosed in our SEC funds, we recently acquired Beeline Financial Holdings.

Bank, a digital mortgage technology company.

Geoffrey Gwin: Since we are in the process of consolidating Beeline's operations with our own, we believe it would be premature to provide incomplete information about Beeline until the consolidation is complete.

Geoffrey Gwin: We intend to file additional information concerning Beeline in the future, including audited financial statements, which will be included in a current report on Form 8K and will be filed here shortly.

Geoffrey Gwin: That said, I'm delighted to welcome the B-Line management team, Nick Luisa, Chris Moe and Jess Kennedy, as well as all the B-Line employees.

Geoffrey Gwin: This is an exceptional team of people, exceptional leadership group that brings a unique vision and extensive experience that we are thrilled to have them on board here at Eastside.

Geoffrey Gwin: Nearly two years ago, Eastside's board initiated a strategic review to explore avenues for enhancing shareholder value.

Geoffrey Gwin: Initially, we considered focusing on our spirits business, including the potential sale of one or more brands. Our immediate objective

was to restructure the spirits division to achieve profitability.

Geoffrey Gwin: During this period, we successfully transformed CRAP, too, from a small regional mobile canning operation into a digital can printing operation in the Pacific Northwest.

Geoffrey Gwin: Earlier this year it became clear that to meet our business objectives for both companies to maintain our status as a public company.

Geoffrey Gwin: We needed to reassess the opportunities available to each of these businesses, particularly in the light of the constraints, which are not unique just to Eastside, but also, more broadly, affecting all small public companies these days.

Geoffrey Gwin: This led us to pursue a potential sale of craft and to reduce our debt, ultimately creating the opportunity to acquire beeline.

Geoffrey Gwin: As you will learn in the coming days, B-Lan is a great opportunity in my view.

Geoffrey Gwin: In summary, it's a dynamic company focused on innovating the mortgage origination sector through advanced technology.

Geoffrey Gwin: B-Line is well positioned for significant growth, aligned seamlessly with our public company objectives, especially in the context of unfavorable market conditions such as those that we expect going forward with lower interest rates and a thriving mortgage origination business.

Geoffrey Gwin: I firmly believe that the mortgage opportunity we are pursuing is extraordinary. The annual mortgage origination market in the U.S. exceeds 1.5 trillion. It represents one of the last segments of personal finance yet to be fully transformed by modern technology.

Geoffrey Gwin: The B-Land team has a proven track record of innovation in this field. With lower rates, pent-up demand, and new technologies designed to enhance sales and reduce costs, B-Land's business model is particularly compelling.

Geoffrey Gwin: Now, turning to our spirits business, I'm very pleased to report that we did achieve positive EBITDA in the quarter, a milestone for the company.

Geoffrey Gwin: Well, we still face a number of challenges in the business, including substantial headwinds, which we are on the right path, I think, and I expect continued improvement in spirits through the year with most of the restructuring activities now behind us.

Geoffrey Gwin: In conclusion, I'm very excited about the future and encourage you to review our public funds as we approach the end of the year.

Geoffrey Gwin: At the appropriate time, we'll outline our plans for the upcoming year, including Beeline's contributions given that we are in the process of finalizing this transaction, as I said earlier, and maintain best practices of corporate governance and fair disclosure. We'll forego our traditional Q&A session this quarter.

and we will obviously resume that at our next meeting.

Geoffrey Gwin: Thank you for your continued interest in Eastside and we look forward to sharing more of our vision with you soon.

Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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