Beeline Holdings, Inc. Q1 FY2024 earnings call

Management Statement and Operational Highlights

• The company operates two distinct businesses: Craft Beverage services and Spirits. Craft invested in digital can printing technology a couple of years ago, and adoption is accelerating with record can production in Q1.
• The Spirits business had a strong Q1 2024, with the best operating results for core operations in some time. Despite consumer price-trading down trends, volumes were in line with expectations, and agave input prices are coming down. The company is refocusing spirits investment on profitable segments and regions.
• Conor Kilkenny joined as Craft CEO in January 2024 with manufacturing background. He has started hiring a business development person to expand business, and Craft's mobile canning business is above breakeven.

Segment Performance

• Craft Beverage services business (Craft): 2024 Q1 sales were $1.8 million, compared to $1.5 million in 2023 Q1. Margins were 3% in 2024 and -7% in 2023.
• Spirits business: 2024 Q1 sales were $600,000, compared to $1.4 million in 2023 Q1. Margins were 23% in 2024 and 54% in 2023.
• Consolidated: Gross sales were $2.5 million in 2024 Q1 vs. $2.9 million in 2023 Q1. Gross profit was $200,000 in 2024 Q1 vs. $600,000 in 2023 Q1. Consolidated gross margins were 8% in 2024 and 22% in 2023. Operating expenses were $1.2 million in 2024 Q1 vs. $1.9 million in 2023 Q1. Net loss was $1.3 million in 2024 Q1 vs. $1.6 million in 2023 Q1. Adjusted EBITDA was flat at about -$800,000 for both periods.

Guidance

• Expect improved margins in Q2.
• Significant progress made in fixing the balance sheet over the past year by reducing a large amount of debt converted to equity. Focus now on driving growth through the income statement. Craft revenue is growing due to business realignment. Spirits business is near profitability, and advanced discussions are ongoing for a new partnership to push Spirits into new profitability in the back half of the year.

Risks

• NASDAQ listing issues, with balance sheet fixes being a priority.
• Numerous risks and uncertainties exist regarding product market acceptance, new customer acquisition, product development, business model execution, acquisition integration, capital acquisition, and going concern, which could materially differ actual results from forward-looking statements.

Question and Answer

Q: Can you give us a little clearer sense of the ramp-up of output on the digital can printer?

A: Q1 volume met expectations, now achieving 24/7 printing and on track for full capacity. Customer base is wider than expected, including sports events, college groups with specific unique needs.

Q: Any updates that you can provide would be helpful on shoring up the balance sheet or any changes there?

A: Significant progress made in reducing debt to equity last year. Focus on driving growth through income statement. Craft revenue growing, Spirits near profitability, with advanced discussions ongoing for new partnership to boost Spirits profitability.

Q: Any updates on one-time items on the Craft side and mobile canning business?

A: Had one-time expenses in Q1 to meet customer needs. Mobile canning business is above breakeven, still active in Portland. Digital printing is the biggest opportunity, with a technology partner and increased investment.

Q: Elaborate on the spirits business profitability improvement and potential partnership?

A: Spirits business cost position improved in packaging, liquid, and working on overhead.有望通过改善成本地位和利用龙舌兰价格下降提升盈利, close to finalizing a new potential partnership.