Eastside Distilling, Inc.

Good afternoon and welcome to the Eastside Distilling Third Quarter 2023 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 then one on your touch-tone phone. To withdraw from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Tiffany Milton, Controller. Please go ahead.

Thank you. Good afternoon, everyone, and thank you for joining us today to discuss Eastside Distilling's financial results for the third quarter of 2023. I'm Tiffany Milton, Eastside's Controller, and joining us on today's call to discuss these results are Jeffrey Gwinn, the company's Chief Executive Officer, and Bruce Wells, Crafts Controller. 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. 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. 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 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 its going concern, and all the risks and related information described from time to time and 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 31st, 2022, filed with the Securities and Exchange Commission. Now, with that said, I'd like to turn the call over to Jeffrey Gwinn. Jeffrey, please proceed.

Thank you, Tiffany, and welcome, everyone, to the third quarter earnings conference call. I appreciate the opportunity to discuss our performance and outlook with you. While we've made strides towards our goal of achieving positive operating cash flow, both in the craft digital printing business and our spirits business, there are challenges we need to address. All year long, I have spoken about the collective goals I have laid out for both craft and spirits segments to generate EBITDA and, importantly, net income that not only allows us to invest in growth, but also to deleverage and to offset the public company costs. And while we've made progress towards these goals, it's clear that we still have work to do. One significant challenge we're facing is the growing economic headwinds in both the craft beverage and spirits categories. Unfortunately, these headwinds have intensified toward the end of the third quarter and into the fall. The external economic environment plays a crucial role in our ability to achieve our financial objectives. Understanding and navigating these challenges will be key to reaching our targets. Now, in the craft digital printing segment, the quarter showcased positive developments with notable wins in our new digital printing customers, such as Ford and Thirsty in the water category, who, by the way, is at the forefront of using digital printing through market to consumers. Scrap's record-breaking quarter with 4.8 million digital can orders demonstrates continued demand for our services. While we face challenges in the mobile canning business, improvements in scrap and utilization offset some of these issues. As we approach the fourth quarter, we anticipate seasonal softness, a trend observed in the same period last year. Now moving on to spirits, we experienced a notable improvement. with spirits EBITDA loss of only $73,000 in the quarter, a significant reduction compared to the previous year. Despite an overall decline in the top line, Portland potato vodka performed well, and we observed softness in various spirit categories, including tequila category, which has historically been a very strong performer. Despite these challenges, we managed to mitigate the impact by implementing successful pricing strategies in key markets, while Burnside and Zezunia require more attention due to underinvestment, our strategic focus on winning territories, right-sizing production, and improving the supply chain is yielding positive results, as reflected in improved EBITDA performance. Corporate and G&A expenses remain a challenge for a company our size, but we've made progress in reducing costs. Tiffany will provide some details on the one-time loss associated with the completed debt-for-equity swap. But if you exclude those losses, our adjusted EBITDA shows meaningful progress in the quarter. As we enter the fourth quarter, we acknowledge the need for further improvements across all aspects of the business to achieve positive cash flow and net income. Our ongoing efforts to address challenges enhance operational efficiency and capitalize on opportunities positions for success. We remain committed to our goals and are optimistic about the future. Now I'll turn it over to Tiffany to provide additional insights into our financials and the completed debt for equity swap. Tiffany, please go ahead.