Eastside Distilling, Inc.
Q4 2020 Earnings Call Transcript

Published: 31 Mar 2021

[Operator:]

Good day, and welcome to the Eastside Distilling Reports Fourth Quarter and Year-End 2020 Financial Results. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask question. Please note that, this event is being recorded. I would now like to turn the conference over to Amy Brassard, Corporate Affairs Director. Please go ahead.

[Amy Brassard:]

Thank you so much. Good afternoon, everyone, and thank you for joining us today to discuss Eastside Distilling's financial results for the fourth quarter and year-end 2020. I'm Amy Brassard with Eastside Distilling, and I'll be your moderator for today's call. Earlier, Eastside issued their fourth quarter and year-end 2020 financial results in a press release, and the company filed its 2020 Form 10-K.

[Geoffrey Gwin:]

Thank you, Amy. I'm pleased to report, we continue to make significant progress in improving the operating performance of Eastside during both the fourth quarter – I'm sorry, the fourth quarter and the first few months of 2021. In February, we closed the Redneck Riviera termination and asset sale agreement. While we continued to manufacture some Redneck products in Q1 of this year, we are now fully focused on those brands we own in our Craft Canning division. That transaction was one of the many steps we have taken to significantly improve our balance sheet and liquidity position. We have made progress across a number of fronts, which Paul will elaborate on shortly.

[Paul Block:]

All right. Thank you, Geoff and thank you all for taking the time to join our earnings call this afternoon. I mean, Eastside has made great progress since our last call and I'm excited to share the details today. I have to say our biggest news to date is the addition of Liz Levy-Navarro to the company's Board of Directors. Ms. Levy-Navarro has been appointed as Chair of the Compensation Committee and will also serve on the Audit and Nomination Committee for the company. Ms. Levy-Navarro is an experienced CEO, public and private company board director and consumer product practice leader. I have to say what's particularly relevant is Liz currently serves as a Board Director for Burke Beverage, one of the country's larger wine and spirits distributors. So in addition to her extensive Board experience, Liz is very familiar with the alcohol beverage industry and 3-tier distribution. So welcome aboard Liz.

[Operator:]

We will now begin the question-and-answer session. And our first question today will come from Harold Weber with Aegis Capital. Please go ahead.

[Harold Weber:]

Hi, guys. How’re you doing? One of the questions I had wanted to ask you was, if you could give an idea of the -- you talked about some of it about the brands that we're going to focus on as far as expansion the whole stable that we have. Obviously, you're going to focus on a number of them. And the other ones, I don't know exactly what it will be? So I was hoping you could clarify that a little bit and as far as how we're making out rolling this stuff out of East Coast?

[Paul Block:]

I guess, I can take that, Harold. Thank you. Well, I mean the one brand I didn't mention and that's conspicuously absent is Hue-Hue. It doesn't mean that we're not going to keep Hue-Hue. But that usage occasion in coffee liqueur or coffee rum is fairly minimal and small relative to some of the other bigger growth areas like whiskey and tequila and vodka and so on. So yes, we're going to focus on vodka, tequila and whiskey. And those have been typically, the three biggest growth categories and the three brands Azuñia, Burnside and Portland Potato Vodka. And the reason, I spoke more about concentration is because we have very limited resource. We're a small company. We can dream about expansion, but we also have to maintain velocity per point of distribution. And that's been a significant issue. And we've chased distribution with a lot of money, which caused significant cash burn and a high net operating loss. So that strategy didn't work. And now we're employing a strategy that's a bit more focused and concentrated, that will get gain and keep distribution and it will attempt to bring in loyal consumers and build relationships with them in a specific area before we move on. So that seems to be more in the West right now. We're not going to give up any distribution in the Midwest or East. That's going to be more of our venture area for the time being. So we'll continue to leverage our distributor relationships, our key account relationships. And we'll continue to look to gain distribution, but not in the same focused and rapid manner that we were in the West.

[Harold Weber:]

Okay. How is -- what's the reception been on the new what you call small batch premium Eastside products?

[Paul Block:]

Well as I said we just got 100 cases of the new Eastside rye. We're hoping to give you all samples of that at some point, so you can try it. But anybody who've tasted our sherry cast that's aged in 70-year-old sherry cast barrels that will retail for $148. They just are overwhelmed with the product quality. The single...

[Harold Weber:]

How much capability do we have of supplying?

[Paul Block:]

Well as I told you we have -- we did have 8000 barrels. Now we're down to 4000 barrels. So some of the more aged whiskey is not as prevalent but we have significant supply 4000 barrels and a significant part of that is the aged whiskey. And I don't have an exact number for you...

[Harold Weber:]

No I don't want an exact number Paul. So the bottom line is that, if we have plenty of demand we can supply it? We can fulfill them?

[Paul Block:]

You got it. You got it. And the idea is, it's limited edition now. and we're making one batch but that doesn't mean we can't make another batch. And that doesn't mean as things grow we can't make it a permanent product.

[Harold Weber:]

That's right.

[Paul Block:]

That -- what's in the back of our mind. So as you think about this business forward, you should think about a brand. And the products we're focused on are the three whiskey the single-malt sherry cask, the bourbon and the rye. And those are the highest margins and those are the products we in the back of our head would like to continue.

[Harold Weber:]

Good is -- what I see on my end over here is a giant demand for that stuff if we can get it out there. So as long as we can supply it I think it would be very successful.

[Paul Block:]

And we're not saying we won't go to specific areas in the East or the East Coast or the Midwest but we just want to be focused.

[Harold Weber:]

Okay. And I am assuming the same thing goes for the substantial rollout it sounds like the Potato Vodka? Is that right?

[Paul Block:]

Yes. Well the Portland Potato Vodka is we have -- if you recall, I mentioned that we had shifted the packaging into the forte bottle which is the same bottle as Burnside. We put a cork on it because it had a screw top and we just didn't feel the screw top reflected the high-quality distillation and ingredients that we put into PPV. And things have been as I said double-digit and really over 30%. It doesn't stay that way every week, but the demand has been significant. And the more we focus on the craft nature of that product the faster growth. Now what Janet's done is she's come up with a whole identity which you'll see when you get the brand book around the breadth of fresh air and around the coastal communities. So we'll be launching in California immediately as we speak into some of the surfing communities and building distribution there testing our positioning our pricing. We're also trying to improve margins on that brand. And as we see success then we can roll.

[Operator:]

And our next question will come from Ross Taylor with ARS Investment Partners. Please go ahead.

[Ross Taylor:]

Thank you very much. Some of my questions were just answered, but I wanted to get I haven't had a chance to go through the K yet. But can you talk about the Canning business as a separate business what kind of revenues, what kind of operating margin, what kind of free cash flow it generates? It really looks to me like you've got two different arms to this company and that eventually the Canning business while it offers some really interesting growth opportunities will become -- could become a sort of a bank to finance the expansion of the brand business. So I'd love to get a better understanding of the economics of the Canning business.

[Paul Block:]

Geoff do you want to try that?

[Geoffrey Gwin:]

Sure. Thanks Ross. Yes the Canning business is just -- is a phenomenal business when you look at it on a cash flow return on capital basis. I mean think about business has very little CapEx. It's got some working capital, but mainly it's in the form of building receivables the seasonal business follow the seasonality arguably could be less so when you completely want and pull out. We just got out of the weakest season of the year so it wasn't really a big driver in the first quarter. But I mean Paul spoke to it in the script. I mean we see strong gross margins above 40% when this thing is fully going. And we're already into a season where we're picking up here where we have almost full utilization of the equipment. And we're going into the year with two more production packages than we had last year two more lines. The Craft Canning business is misunderstood by the market, I think because people think about co-packing think about low margins. But we're serving a customer that is in desperate need of what we offer. I mean think about a small brewer, who starts brewing in his backyard or his garage and you make a business out of it. And he gets to the point where he realizes that he has a route to market. He has a fan base and all he's been using is the routes to market through barrels and on-premise through kegs. And then, we get -- he gets to a critical mass breaking when he can start to can. Well, his choices in canning are limited. He can't really deliver his product to a large co-packing facility to produce because he's not producing enough. He just can't afford a canning line. And so, there's a space there on the smaller side, where there's really outstanding margins and that's where we're attacking. And the customer growth has been phenomenal this year. It was phenomenal last year. One of the things that we're going to do better this year is managing the life of that customer. I mean, Craft literally had no salespeople basically. And we can do a better job of growing with our customers, offering them more product, helping them along. And we've already started with some partnerships with some of our key customers. And you'll see that show up with Craft's numbers. So we're excited about Craft.

[Ross Taylor:]

Can you talk about what is the revenue potential if you're running full out? And what is the revenue add, you would expect from a potential add from the two new lines you're bringing on? Are all lines created equal?

[Geoffrey Gwin:]

It's a great question. But think about it and we spoke to some investors about this at the ROTH conference and I think, we've talked about it in the past as well is one of the ways that this business becomes more profitable is the efficiency. And imagine, we're bringing production to the customer, right? So we're moving to the customer. And if we have a long route to the customer and then we service them and then we come back, we have to manage the turnaround and do it again the next day to a new customer. And so, the -- part of the way that this business becomes more profitable is by efficiency, right is by really doing a better job planning position assets. So one of the strategies that we're employing this year is building around this hub-and-spoke system and moving assets around -- I mentioned the partnerships in the last response to just about some of our customers and being able to actually partner with people and move our assets further into the field, so we don't have these tremendously long unproductive transit times for the teams. But to answer your question, specifically no, they're not created differently. There are some investments we can make this year to dramatically grow. It's not built into the plan or the numbers that Paul talked about. And that's something that we're opportunistically going to try to attack. And that's the incremental services that we could offer that have very high margins, the customers will find very important and attractive. And this business has a number of different directions we could grow. Volume, price/mix, it's really a fabulous asset to own. And the team is outstanding.

[Paul Block:]

Well, actually I can answer that specifically. The current -- well I mean, just in terms of your question about, what is the output, the output of the assets that we currently have could do $15.6 million, if they ran at 100% utilization every month of the year. But the issue with that is this year, we're at $10.2 million, because as Geoff said, we're on a bell curve and we have the shoulder periods. And the thing that really restricts us is, it's mobile, so it's got proximity constraints. But if this business were to operate at 100% utilization, it would deliver $15.6 million. So, the thought is, it's hard because you have to be able to expand these mobile trucks into different markets or take more market share in your current market. So -- but the big opportunity, I think, you hit it right on the head is, this is a gem and we didn't really talk about the business model or the investment thesis overall. But if we had some time and I won't take a lot of time on the call maybe separately, I think the business model works extremely well with Craft. One, you mentioned one point. It can really fuel free cash flow that can fund spirits and not create a big cash burn for the enterprise. And second, I think it looks different. It is different. You're absolutely right. But what if we start getting in the RTD market and we have a canned production division? And what if we do premium RTDs? And what if we could an organic Azuñia margarita? I mean, already the sales team on please get us that. And we have a number of other ideas. So I think, as we look at the longer-term strategy which we're going to be coming to you in the summer, a five-year view and a three-year plan and how can we really rev up the engine here, I will be looking at that exactly what you said. What is the complementary compatibility of these two? Where do they diverge? Where do they merge? And how do we leverage them to accelerate growth?

[Ross Taylor:]

Thank you. And a second question. In the past, the bottling and production was perhaps I'll say kindly less than efficient. So where do we stand? And what steps are we taking? What steps don't need to be taken to get that to where you think that it's operating at full effective efficiency?

[Paul Block:]

Yes. We're well on our way. I mean, the first thing we did was take out all of the Redneck Riviera inventory that we had. We had bottles. We had barrels. We had a lot of space that wasn't really utilized. So we're going to cut our footprint more than in half, number one. We're going to be as I said it's by make and distribute. So we're concentrating our buying and our sourcing into one area, because there's obviously more efficiency and scale. And we're putting more policies in place three-bid systems and more things that will create lower cost on the purchasing side of raw material. And then in the manufacturing side, we're going to be actually closing down the Milwaukee facility eventually in three months, four months and we're going to integrate it with Craft and Craft can actually start to become a contract manufacturer for bottling spirit, which is in high demand. So we can fill out our capacity and utilize our full capacity if we need be, which will drive down fixed overhead allocation. So I'd pay to give you -- I think we're like maybe 50%, 60% where we want to be once we close Milwaukee and we automate the bottling line, we'll be pretty close to 100% where we want to be. And there was a big discussion on outsourcing. Personally, I think we have a lot more flexibility if we want to be innovators and we want to be fast to market and we want to be creative by producing our own product. We just have to be efficient. So I'd say we're 60%, 70%. And maybe by the next earnings call, we'll have some more news.

[Ross Taylor:]

Well, that's a pretty exciting progress. Thank you very much. You guys are doing -- it's been I know a hard road, but you've earned many accolades you get for us.

[Paul Block:]

Well, thank you so much. We're working for you guys, so you provide the capital we get returns.

[Geoffrey Gwin:]

Thanks. Thanks a lot.

[Operator:]

And our next question will come from Matt Campbell with Lorde Capital . Please go ahead.

[Unidentified Analyst:]

Hi, great job. And I just want to support what the previous questioner said. You guys are doing a really good job of streamlining -- rightsizing the balance sheet, streamlining the business, focusing on the profitable business opportunities and really bringing on very, very complementary people. It's great to see you bringing on people that have phenomenal industry experience as well as this new Board member. I just want to congratulate you guys on a lot of heavy lifting and really excited about what you guys are doing, because I'm starting to see a real turn here and I'm excited. So keep up the great work.

[Paul Block:]

Thanks Matt. And I know you were -- when we talked before you were interested in sales leadership. So we've checked that box and we're really -- that's going to be -- I don't think we realize how that can accelerate overall growth.

[Unidentified Analyst:]

No, I'd say you guys are doing all the right things. And again really excited to see that we've done a good job of taking -- Redneck was exciting to look at, but it wasn't profitable for investors. And by getting that off of our -- out of our business and by focusing and streamlining and cutting the balance sheet that so much it's exciting to see where we're going. So I applaud what you're doing and keep your heads down and good things will come.

[Geoffrey Gwin:]

Thanks, Matt. Just as a quick follow-up to that for investors that are on the call, the 10-K that we're releasing has a tremendous amount of detail in it. I mean, the management team has gone to great lengths to try to exhaustively give you information to help you follow this transformation. And it's hard to see. Midway and I think it's page 50 or so, you'll see we've pulled out the Redneck Riviera income statement and balance sheet and you can literally see for yourself, how effectively unprofitable it was. But the other aspect about it was how much capital has been used. And so I think it's important for you to take some time and think about that and think about how the company is going to operate without that. The other thing that I did want to call out is we did say that we've made sequential improvement in the company's performance and it's hard to see that in our weakest quarter in Craft and it's hard to see that at year-end when we have a lot of -- what I like to think of as a one-time item. So while we've reported a negative EBITDA number of $1.1 million, which seems like it's worse sequentially it's actually not that far off in the sense that we had a number of professional fees. We had fees around closing the Redneck deal. We also cleaned up inventory at year-end. As you can imagine exiting a number of SKUs preparing for all these new products we did quite a bit there. There was some compensation adjustments also some settlements that we took care to being cleaned up on the balance sheet and a TTB item, which is a subsequent event I believe. That total there is over $650,000 that I would consider would be reoccurring necessarily in expenses. So, the company is starting to reflect the performance and all the work has been done over the last year and into the fall. And as I said in my script, when volume picks up in this company with the new products higher-margin dollars there and Craft really starting to run, you're going to see really improved performance and it's going to be easier to see.

[Operator:]

And our next question will come from Ross Taylor with ARS Investment Partners. Please go ahead.

[Ross Taylor:]

I thought I'd break mine into two pieces not one. Thank you, Geoff. You actually just answered a number of the questions I wanted to ask about the nature of the one-time items and the like, and kind of gave us an idea what run rate could be. We can figure it out. It sounds like if we back step out that's in the K. Also, will you walk us through what brought you to the idea of coming out with this kind of premium prestige brand? And, you talked about very high margins. Are those margins sustainable if you decide to make this an ongoing product, or how much of the margin is, because you basically have some really valuable brown liquor in barrels places that's just not being kept on the books at anywhere near what it actually is worth when you mix it and bottle it? And how much is, because you can get out there and you're selling at radically different price point?

[Geoffrey Gwin:]

Great. Actually Paul, let me take a stab at this. Paul really answers this question better than I could, but I secretly love to jump in there with my thoughts on how this product came to being. And I think it's a great segue way into how this company is changing. And that is early on when Paul joined the company, both he and I went out the Portland. We spent time with the team. We were all over the business. And Paul took a question-and-answer period in the barrel room. So, if you've ever been to visit us, we had barrels -- we have barrels everywhere, barrels that have just been sitting there for what seemingly forever in Milwaukee. And after that time, we went through and we were working with the production staff, and we started pacing some of the one-off products that had been there for a while and just had been forgotten, literally forgotten by the company. And the reason why they were forgotten is because the company spent so much time trying to keep Redneck going at the velocity across the entire company, and they were trying to figure out what's happening with Azuñia and why the margin's affected. And so, what was fascinating is literally under our noses were gin and you start tasting these things and you realize this stuff is, as Paul said, delicious. It's incredible. And then you begin to realize, wait a second, Eastside builds amazing product. But as we all know, and the investor community fairly enough thinks of Eastside as something that's bumbling along here for the past few years. And it became clear, at least to me, that this was an opportunity for us to really show the market that we have to build. We have the people, we have the asset, and we have the knowledge to really build phenomenal product. And I think it's been great having Paul join and with his experience in spirits the team that he's built, they begin to kind of open the rest of the team's eyes to what we have and what our path to success could be. So, it's a great story. And I think you'll really appreciate it when you taste it. Paul?

[Paul Block:]

Yes. I mean I'm not going to repeat it all, but it really gets exciting because Geoff's right. It was basically a tactical response to a problem, because we had all these barrels and all these bottles. And we said, well, how are we going to move them out fast enough? And we said, well, we got to create a new brand. And that led -- sometimes the biggest setback fleet to the biggest breakthroughs and that led to the biggest aha, which was we need to re-brand our company. And we're always apologetic about Portland and our origin, and everyone's like, oh, Portland sucked. And then they found out Portland is powerful in the Craft business. It's like a god. And so, wait until you see our new website, and wait until you see the new brand book, and give me a ring, because it is so different. You won't even recognize the company or these brands. And so, what the Eastside brand did was inspire us to look at the business model differently than what we were doing and actually how powerful it is. Because we're not distillers, but you know what we're doing that's just phenomenal is we're buying great product. We're getting great barrels and we're aging and blending the product to perfection. And that allows much more scale than a traditional craft company. So I'm not going to go into all that now, but Geoff's absolutely right. We went from tactical, let's get the barrels and bottles out to a strategic platform of branding, to an aha of a business model that we can grow, because craft is usually very local, right? They have tasting rooms. They have a little distillery. But just imagine if you can bring farm-to-flask ingredients that are local and indigenous with big national brands. So you don't give up the artists, you don't give up batch produced, you don't give up craft, but you could do it with a national brand. Nobody has done any of it. So, this is for another day, but we really could enter into a proprietary space that is between a Diageo whoever else, I mean Bacardi, all those guys that are doing stuff on big scale and little small craft distilleries and go in between and push out geographically to Harold's point. But that might involve a little more investment capital. But this thing has really inspired us to a whole new level of action.

[Ross Taylor:]

Well, and that would be capital would either be coming on success or could be funded depending on how the Canning business plays out? I do want to say -- I have one more question, but I do want to say I'm from Seattle and Portland does suck, but California sucks more. So, the last question I would ask speaking of California is tequila. And kind of walk us through the agave market. Things have gotten kind of crazy it seems like in there. A lot of agricultural crops in Mexico seem to have shot through the roof. I saw even this last in March I guess avocado prices nearly doubled and coming out of Mexico and the like. But that's obviously been an impact I would think in that business particularly when you have brands that service flow and high-end agave costs seem to have gone up a lot. Can you walk us through that? And does it not kind of how -- what the game plan is going forward?

[Paul Block:]

Yes, I don't know-- Geoff do you want to start?

[Geoffrey Gwin:]

Yes, I'll start with agave and then Paul can really talk about the other piece of the problem. I mean it really is a cost too -- or a product cost too much as it's structured now and we don't sell it right. And Paul can really answer the -- don't sell it right question much better than I can. But that's one of the things we're working on immediately is understanding and charting a path forward where we can get the margins right in the business. Now, you can do that in a number of ways. You can do that by raising revenues, right, raising the price point and you can do that by pushing on expenses. And we're going to attack both sides of the problem and we're going to figure it out. I still think that this is -- I still think and I think everybody in the company thinks that's looked at it this is an outstanding opportunity. And it gets to the core of what you start turning the pays and doing which is making great products. Our partners down there are phenomenal at what they do. They really are. If you've tasted the Azuñia Black which competes right out there with Don Julio, highest SKU, I mean it is literally better than Don Julio in my opinion. I mean it's a tequila if you haven't tasted it almost tastes like a bourbon. And the problem is we haven't been able to get people to taste it and we haven't got -- taken into the market in the right way. But on the cost side, we're going to -- our team is working on lowering the cost and not relying on agave moving down. All tequila companies have this challenge. We have it specifically with our partners because the tequila that we're using is super-premium agave. It's a seven-year agave. It's aged and black. It's extraordinary and it serves a super-premium market. But -- and here's a teaser probably part of Paul's response as well we don't treat it that way when we get in our hands, right? We don't take it to the market with the same focus of what we have in hand and we've been selling it as a well drink.

[Ross Taylor:]

So, this is true sipping tequila that you've been basically has been marketed as just some place in the lower end of the shelf?

[Geoffrey Gwin:]

Right.

[Paul Block:]

Yes, there's a couple of issues, but I was in the coffee business and coffee is up there with pork belly and orange juice like in that remember that Trading Places movie. But agave nectar -- agave should be right there with it because as supply increases then cost comes down and as demand decreases, the price comes down and supply decreases, and price goes back up. So, the agave market to me looked like the coffee bean market. But so that's number one. So, there's a lot of fluctuation in the cost of agave. The second issue is just that we have an ultra-premium product. It's not an issue. It's really unbelievable. I mean I haven't -- it's been COVID, so I've been a little restricted, but anybody I would talk to has tasted Azuñia is just like, man this is great. But we're not marketing that product. We're basically putting it in the well and trying to price promote it and sell it. And so we're making these depressed margins. So, what we have to figure out is how do we make a better margin? And that's really a positioning, a branding, and a marketing challenge and we're on some with the sales force the other day and we're thinking of ideas. We have this really cool agave syrup. And somehow you've got to start bundling things or packaging things or offering different products in a way that allows you to drive your margin up and to present the product in a different way. Look tequila is all about -- it's a different usage occasion a different mindset, right? If you're sipping bourbon by the fireplace that's very different, if you're doing shots of tequila at the bar. And so we have to capture a specific identity that resonates with consumers and tie in that premium product in a way that can command a higher price. There's the gold. I mean on the manufacturing side, it is what it is. Nectar is going to go up and down and we're going to squeeze them as hard as we can and find ways to be more efficient and effective. And we will. But we also have to look at the branding and the packaging and start enjoying -- excuse me some of explosive growth.

[Ross Taylor:]

It sounds like social media is going to have a big role to play in this place so you can get it out in front of people who might be sort of influencers who can bring people to the brand. I would agree the hardest thing about spending big money for liquors. If you don't like it, you're into it for a lot. And so obviously, it seems that that would help a great deal of getting people -- getting things out there where you get actually free marketing or nearly free marketing by getting it in front of people. If it's that good I think that perhaps once things start to open up and go you can take it around some places in la-la land and find people who might actually drink it, like it and say they like it.

[Paul Block:]

That's correct. And one thing that I think will resonate with all the investors have been around a lot longer than I have is one of the reasons that I've been told that we acquired Azuñia and Azuñia was happy to come to Eastside was to piggyback on the back of Redneck Riviera. Well if you think about it, Redneck's strategy was that national burst into off-premise chain account that are very expensive and very competitive. And Azuñia wanted to piggyback on that and they have to a certain extent, but except on-prem. So they've been going to on-premise change in the well that are very competitive and very expensive. So that's why I said in my script, our strategy is up and down the street which is trade jargon for local liquor stores and local on-premise accounts. There's an extraordinary amount of revenue there for the taking. So it's not that we're going to cut off our nose here. I mean, there's revenue for us. It's just how we want to achieve it. And my message is and the strategy we're going to employ is, is spending our dollars that bring us the return. So just to get a product into an account at a low price is not sustainable. I've been in marketing for 40 years. Price, if you're going to compete on price then you better be the lowest. I mean that's what the Northwestern business call it. There's differentiation and then it is price advantaged. So if you're really going to compete on price, then you need to be the lowest-priced product and just increase volume and go through scale and efficiency. So -- but that's not who we are. So we really need to think about up and down the street concentration of efforts and the brand will grow. Tequila is on fire. We just need to be relevant and we need to have the right margins and then we can invest.

[Ross Taylor:]

Well I will say my parting comment will be it's refreshing to see. You're right this company has kind of almost been like a blind man wandering around in the room, a dark room and something that we . But it seems at this point, we might actually finally have taken off the blindfold and started to run this business like a real professional company. So I appreciate that effort.

[Geoffrey Gwin:]

Thanks Ross. We're very excited about the year. Yes.

[Ross Taylor:]

Thank you.

[Geoffrey Gwin:]

Yeah.

[Operator:]

And this will conclude the question-and-answer session. I'd like to turn the conference over to Mr. Block for any closing remarks.

[Paul Block:]

Well I'd just like to say thank you. And now it's time for us to get back to work and deliver results. So cheers to everyone. Appreciate you joining and thank you for your interest. And we can continue the conversation at another time. So cheers.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.