Beeline Holdings, Inc. Q4 FY2023 earnings call

• The company has undergone significant transformation since 2020, shifting focus to consumer beverage packaging. - In spirits, substantial reduction of bulk inventory in 2022, and progress towards EBITDA positivity in Q4 2023 with a net operating loss of $114,000, a 78% improvement from the prior year. - Craft services had an outstanding year in 2023 with 14.1 million cans printed, improved processes, won new customers, and expects positive EBITDA in upcoming quarters. - Completed balance sheet restructuring, lowered debt, and in discussions with lenders to extend payments and increase liquidity. - Focus on digital printing in Craft services as a critical component of customer supply chains, with plans to get a second printing machine to double capacity.

Spirits Business: In 2023, spirit sales were $900,000 compared to $1.1 million in 2022. Spirits margin was 21% in 2023 versus 13% in 2022. In 2022, the company sold over $4.4 million of barrel inventory, but in 2023, bulk spirits sales were only $800,000. The spirits segment had a net operating loss of $114,000 in Q4 2023, a 78% improvement from the prior year's loss of $433,000. Craft Services Business: In 2023, the Craft printing business printed 14.1 million cans, substantially more than the 4.8 million cans in 2022. Craft sales were $1.2 million in both 2023 and 2022. Craft margin was negative 26% in 2023 versus negative 23% in 2022. The company preannounces to print over 4.7 million cans in the first quarter of 2024, an 88% increase over the first quarter of 2023.

• Craft services expects to print over 4.7 million cans in the first quarter of 2024, an 88% increase from the first quarter of 2023. - Plans to get a second digital printing machine to double installed capacity in Portland, which will significantly leverage fixed costs and improve profitability. - Spirits segment expects to make more progress in 2024 towards breaking even on a cash basis.

• Working capital challenges as the company grows dramatically and consumes working capital in cans. - Difficulty in obtaining capital and continuing as a going concern. - Challenges in spirits distribution due to not incentivizing distribution to lose money, leading some distributors to back off. - Risk of not having cash to sustain growth in Craft services due to inability to get cans quickly enough.

Q: What was the average sale price of the 300-ish barrels sold?

A: Geoffrey Gwin said he would check with Tiffany Milton, the Controller, and get back to the analyst later.

Q: What is the canning capacity and percent of capacity running?

A: Geoffrey Gwin explained that Craft services focuses on digital printing. There is one machine with capacity of 25 million cans a year, plans to get a second machine to double capacity. Mobile canning is gated by people, with excess capacity but currently north of 50% utilization.

Q: Why not leverage current brands like Portland Potato Vodka for hard seltzers?

A: Geoffrey Gwin stated that RTD is a high working capital space with low margins, and the company is laser-focused on digital printing as a critical component of customer supply chains, with multiple opportunities to support new brands without betting on one concept.

Q: When will the second printing machine be obtained?

A: Geoffrey Gwin said they are working on it, but it's affected by working capital and machine availability as everyone wants the machines now due to growing demand.

Q: Has the mobile canning business hit a low?

A: Geoffrey Gwin said mobile canning has been a drag but is now a profitable segment, with costs associated with closing elements being cleaned up, and the bigger opportunity is getting the second printer online for better profitability.