Good afternoon, and welcome to the Eastside Distilling third quarter 2022 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 telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Heather White with Eastside Distilling. Please go ahead. Thank you. Good afternoon, everyone, and thank you for joining us today to discuss Eastside Distilling's financial results for the second quarter 2022. I'm Heather White with Eastside Distilling, and I'll be your moderator for today's call. Joining us on today's call to discuss these results are Mr. Geoffrey Gwin, the company's Interim Chief Executive Officer and Chief Financial Officer, Ms. Tiffany Milton, Eastside's controller, and Mr. Bruce Wells, Craft's controller. Following their remarks, we will open the call to your questions. Now, before we begin with the 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, 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, anticipate, 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 in 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 the Form 10-K for the year ended 31st December 2021, filed with the Securities and Exchange Commission. Now, with that said, I'd like to turn the call over to Geoffrey Gwin. Geoffrey, please proceed. Thank you, Heather, and let me welcome you all to our second quarter conference call. You should have had an opportunity to review our earnings press release, and Tiffany Milton will take you through the performance of the company in a few minutes. I'd like to update you on our performance as well and some of our progress to date in the transformation of our businesses as we implement our three-year strategic plan. Our spirits business had a good quarter. We executed some key strategic wholesale agreements and realized some gains on the sale of excess brown spirits that were not currently in our operational plan. Spirits gross margins in the quarter was 53%, which I think is a record for the company and is up from the 21% in the prior year. Now breaking that down, year to date, we've achieved 32% gross margins in our spirits wholesale branded, retail businesses and 53% in bulk spirit sales. This margin improvement underscores some comments I think I've made in prior calls that we sit on very valuable aged whiskey inventory. This inventory is in very short supply and has increased in value over the course of the pandemic. Now it's been critical for us to capture these expanded gross margins in our traditional branded spirits business. Now, as we've said in the past, we will no longer sell the spirits at a loss so retailers and distributors can enjoy disproportionate profits. Now let's take a look at the second quarter branded spirits results in volume, price, and mix. Volume was a headwind, but most of our decline there was a result of lower sales of Azuñia through channels where we were losing money. Now, adjusting for one-time sales of about 175 cases of Burnside to Taster's Club last year, volumes of Burnside would have been down 6% year-over-year for the quarter versus the 20 we reported. We have begun to see improvements as we move price points up for the key SKUs. Our mix has been somewhat affected negatively by the fact that we're selling less Azuñia, which has a much higher gross revenue rate than the rest of the portfolio. But that's been offset by some savings and a lack of discounting on our part. As we head into the third quarter, we need to make more progress on improving volumes, but you should expect to see us continue to lap the discontinued Azuñia sales to the discount channels and that impact on year-over-year comparisons. The sales team had a number of key wins in the spirits in the quarter. For example, we were invited by ClubCorp, the largest owner operator of golf clubs and country clubs in the U.S., to test our Azuñia Tequila in their Texas market. We were authorized in 50 QFC stores at the division of Kroger in Washington, starting in Q3, and also one placement in another 17 Pinkie's stores in Texas. The sales team has done a good job in laying the groundwork for profitable sales growth, and we hope to have more wins here to report in the coming months. We've made progress in spirits. We believe with more investment dollars, we could probably accelerate this growth. Now, for the balance of the year, we face a number of opportunities and challenges. We need to continue to implement the shift where we're taking strategic price increases, where we are reducing input costs and investing in local marketing. This is not going to be easy in a market where distributors are destocking and inventory is running at very low levels. With consumers facing higher prices and less disposable dollars, they are shifting to lower price points. This kind of environment favors large spirits distributors, but we have outstanding products and in some markets, strong brand equity. Now let's turn for a minute and let's talk about Craft Canning + Printing. Craft Canning + Printing had a very important quarter. At the end of April, we turned on our new digital can printer and began the long-awaited next phase of growth in that business. As many of you know, digital can printing is transforming the craft beverage space. We are taking share of can decoration from traditional craft label and shrink sleeve providers. The business proposition here is very simple. Most traditional craft labels found on aluminum cans are technologies that effectively make the cans unable to be recycled, and they have to go into landfills. However, digital can printing cans, they are 100% recyclable. Now, in a key market like Portland, where craft beverage is driven by environmentally conscious consumers, this is a powerful differentiator. That's not all the benefits of digital can printing. We also provide unparalleled decorating capabilities, photorealistic graphics, and the ability to make label changes at the last minute. These capabilities are game changers in the space. As a reminder, the space I'm referring to is not just beer, but all types of craft beverage. It's a space that's growing dramatically, encompassing every imaginable beverage variety. It's important to keep in mind this new technology will take time to reach its full potential. In the quarter, we began introducing our customers to our digital can printing capabilities. Through the end of July, over 60 customers had switched to digital can printed cans, and we had printed over 1.4 million cans. Our strategy has been to introduce can printing to key customers, believing that once they see the benefit, they will never return to traditional labels. Given that focus and the methodical ramp-up in utilization, we still have a ways to go to show you all the profitability of our new digital printing business. However, I believe we are on the way and seeing printing utilization improve weekly as we continue to build a printing backlog of customers. We have added a second printing shift, and we will be in a position to improve printer utilization in the current quarter. Now, Craft's mobile canning business saw volume decline versus last year. As many of our Craft customers shifted to on-premise sales, we were also impacted by stiffer competition and fewer sales of consumables. As I've shared in prior calls, our investment in digital can printing will strengthen our performance in mobile canning and open the door to new opportunities. As an example, we made an announcement this quarter about a new relationship with Approach Beverage. This is a direct opportunity that came from digital can printing. We bring this key new customer digital can printing capabilities and have acquired its production assets in Portland. This will be our first co-packing facility to attack the underserved micro craft beverage space. We're excited about all the changes at Craft, and we believe we have made good progress positioning the company to grow. Now let's talk about some other important developments. We continue to make progress working on our balance sheet. In the quarter, we terminated our relationship and paid back Live Oak and extended our bank line for a short period with First Interstate. We are planning on replacing that line with an asset-based facility in the current quarter. The balance of the year, we face two critical challenges. We have to drive earnings improvement despite an uncertain consumer environment while pushing forward on our transformation plans with both Craft and Spirits. We do need to identify sources of capital to help us drive incremental investment in both businesses, and I believe we have the team, the strategy, and the opportunity to do so. Before I hand it over to Tiffany for some more numbers, I'd like to introduce you to a new member of the team, Bruce Wells, who has joined Craft as our controller there, and he will be glad to help answer your questions on Craft's performance. Now, Tiffany, can you take us through some of the details of the quarter? Thank you, Jeff, and thank you all for joining our call today. Let's review the second quarter. On a consolidated basis, our gross sales were over $5 million for the second quarter of 2022, compared to $3.6 million for the second quarter of 2021. Spirit sales were over $3.7 million for 2022, compared to $1.5 million for 2021 due to bulk spirit sales. Craft sales were $1.4 million for 2022 and $2.1 million for 2021, reflecting our continued offering of bundled packages at discounted prices due to competition which suppressed sales in 2022. Craft also faced challenges with insourcing and the continued effects of COVID in 2021. In addition, the ramp-up of the printing business at Craft was slower than expected, but July almost outpaced both May and June combined. We are still offering bundled services with a slight increase in price, but are now including our printed cans as part of that package. This was rolled out at the end of June. Our consolidated gross profit increased to $1.5 million for Q2 2022, compared to $900,000 for Q2 2021, again, driven by the bulk spirit sales, but partially offset by Craft. Our consolidated gross margins were 31% for 2022 and 26% for 2021. Spirits margins were 53% for 2022 and 21% for 2021 due to the bulk spirit sales and Craft had margins of -28% for 2022 and 30% for 2021. Not the way we wanted it to go, but Craft margins reflect the package rates that we're offering to our customers that in Q1 and Q2 didn't include a price increase despite an increase in our costs, and they reflect the intangible costs of getting the printer into full operation. Our OpEx increased primarily at Craft due to increased rent on our new Argyle and Spokane warehouses and the loss we had to recognize on the quote-unquote, "disposal of our trucks." As we entered into a lease management agreement with Enterprise and in accordance with GAAP, we had to record a loss on those trucks when we turned the titles over to Enterprise to manage and maintain our fleet, but we moved them to right-of-use assets and lease liabilities on our balance sheet. Spirits OpEx was flat. Adjusted EBITDA was -$350,000 for 2022 and -$700,000 for 2021, representing our bulk spirit sales and continued efforts to drive success to the bottom line by reducing overhead and eliminating unnecessary costs. This is almost a $350,000 improvement from 2021. Turning to the balance sheet, we raised $1 million during the quarter, ending with cash of $1 million as we invested in significant can inventory for our digital can printer. We also fully paid off our secured facility to Live Oak of $1.9 million with proceeds from our bulk spirit sales. We reduced our debt by $800,000 in the first half of 2022 and will continue to do so throughout the remainder of the year. Our prepaids decreased over $2 million as the digital can printer became operational and moved to PP&E, which increased over $4 million. Our AP increased slightly to $300,000 as we continued to invest in inventory. I would like to wrap up the financial results with this thought: We can improve results, but we are on a rather steep learning curve. We experienced the craziness of the economy and supply chain issues with costs and shipping as well as hiring. We are still executing on our three-year plan to increase sales while being conscious of overhead spending in both businesses. We are excited about the growth potential of the printer for the remainder of the year as well as our spirits results and successes in Q2, and are eager to see where the business is headed. We'll now open the floor for questions. Operator? We will now begin the question and answer session. To ask a question, you may press Star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press Star then two. At this time, we will pause momentarily to assemble our roster. Our first question is from Kelvin Seto with Crater Lake. Please go ahead. Hi, Geoffrey. Tiffany Milton, thanks for your opening remarks. I just want to talk about the craft canning business. I'm doing a sequential comparison here. I think in this quarter, we are doing $1.4 million of revenue compared to $1.1 million, which was last quarter. That's a good thing, right? But usually when we look at a gross profit, it. The losses actually widen quite a bit, right? I think usually companies do have positive gross profit margin, but for ours it's negative. Can you talk a little bit more about this since we are banking on craft canning to deliver a turnaround? Sure. Sure, Kelvin. I'm happy to do that. One of the things that you have to keep in mind about this quarter is this is a transition quarter for the printing business. Craft, as you know, moved into a very large digital printing operation, and we had no revenue, you know, to speak of to start with, you know, when we turned on the printer. Remember, when you're operating, you have to hire people, you know, put everything in place. The first month or so of the quarter, you know, we were really just starting the process of moving digital printing, you know, getting up and going. You're gonna see sequential improvement, and you're gonna see it basically if you look at it monthly, each month, we're improving on the printing results. You know, April was a slower start probably than we had hoped. May was a better opportunity for us to start to get the printer, you know, operating, introduce it to more customers. June was the same, you know. You know, sequential improvement. I can just tell you now, I mean, July is much better than June, and our goal is to continue to see improvements each month as we go through the balance of the year. As you see the printer ramp up to what we think it's capable of doing, you'll see the margins, you know, steadily improve. Now, that was the printing side of the business. We also had the mobile business that started to shift into its busier season, and we had a lot of work to do there. One of the challenges that we're facing in Craft is hiring people. I mean, like everybody else, you know, Portland's a super tight market for hiring people, and we've, you know, faced the challenges of getting the right people in the right job and keeping turnover low. It's improved from last year, but we still came into the quarter with a substantially fewer operators in mobile than we had the year before. Yeah. Got it. Thanks. Another question I have. I'm looking at our adjusted EBITDA numbers, right? We are, I think, having a total $56,000 of losses, so I think that's a huge improvement from the last quarter, which is quarter one. If I do add back the interest expense, I think we should be losing roughly $1.1 million, right? Of cash required to stay afloat for another quarter. I'm looking at our cash in the bank and some loans coming, it seems like we're in a fragile situation. How should investors think about our current balance sheet situation? Right. I mean, every day, you know, the company manages the business to improve its liquidity, and this is no different, you know, this quarter or the next quarter. I think what we've shown in two quarters now is that we are able to monetize assets and raise liquidity to the extent that we need to. You know, an example this quarter is we, you know, we're able to monetize some of the brown spirits that was not currently in our growth plan. Last year, the company went through an exercise where we identified exactly what we needed and put together a cost reduction plan for the Burnside business and then identified you know a large number of the barrels that we didn't think that we were gonna need immediately or that we'd rather swap out and get a different age you know set up in our product plan. The first quarter, we did some sales as you saw here. In the second quarter, we did some sales. I'll tell you, we've done a small amount in the third quarter. You know, we're gonna manage our liquidity to get us to a point where the craft side of the business is ramped up, is throwing off EBITDA. That's been the plan, you know, all along. I think we've talked about that for over a year now, is that we see line of sight to a business at Craft that's generating cash, and we see a line of sight to a company, a business at on the spirit side that will consume less cash initially. Obviously, if we had more capital, we could grow it faster, and then you're gonna have a healthier business going forward. That's the game plan. When it comes to the balance sheet, you know, we have, as you know, a number of constituents that have invested in the company. I think they believe in the growth story here, and I believe there's an opportunity for us to continue to, you know, walk people through the growth opportunity that's ahead with both craft and spirits. You know, the team's gonna do the best we can to, you know, push out some of these maturities and get people focused on the longer term. I mean, I think that's a key part. We had the same challenges last year and the prior year. Now, obviously, the capital markets are different this year than we had last year and the prior year. I still see a lot of value here and growth opportunity in the company. You know, our goal is to get people to focus on that and continue to make improvements quarterly in the balance sheet. Yeah. Thanks for the details. I think just a follow-up on that, right? Previously, we have an existing loan with TQLA, and a few days back, it was increased by half a million. How should investors think about this amount in terms of its purpose, right? 'Cause it's not big and not small as well. Is this like the kinda like final amount that you need to have to ride through before it can hit break even? Because from my point of view, it's like, you know, we can't be overloading our P&L with interest expenses. It's coming close to $1 million, and we can't increase our share count perpetually. Yeah. You know, that's a good point. We are facing higher cost of capital this quarter, and you can see it in the interest expense. I mean, it's more significant than the prior year quarter. It's an issue that you know, I think we have to focus on. I mean, when you look at the balance sheet today, I think we can see Craft's get to a point where it's generating positive EBITDA at a faster rate than spirits is. Basically, that balance sheet right there is unencumbered other than what we have right now with FIB, First Interstate Bank. All the debts at Eastside you know, our subsidiary down there will probably have a higher debt capacity. You know, one of the challenges is to see if we can use the capacity there to, you know, shift and balance the debt load at Eastside. In the long run, you know, companies don't thrive when investors basically apply a super high cost of capital. I mean, that's a challenge that everybody's facing, I think, right now, and I'm expecting it to be somewhat transitory. I mean, we're not gonna see long periods of time where, you know, our cost of capital is gonna be this high. If we deliver the plan, Kelvin, that we've talked about, you know, repeatedly at Craft, and you see the growth there, and you see the improvements in spirits, I believe that we're gonna have opportunities to finance and grow the company, going forward. Clearly TQLA has been an important component of a constituent for the company. I mean, when we purchased Azuñia, you know, shortly after that purchase, TQLA helped us with financing for working capital, and they've done it, you know, periodically through the last couple of years. I think that's a testament to their interest in the company and their willingness to partner with us and see the company be successful. I'm hopeful that we will continue, and we'll find other partners that see the opportunity in the company, both spirits and craft. We see a chance to really continue to invest and grow the company faster. Yep, got it. Just one final question from me. The way I look at it is that Eastside Distilling has been incredibly blessed, right? To have shareholders like Michael Bikle, the Kew Cannings, like you mentioned about, great staff as well, Tiffany, the Amys, Bruce as well, yourself. I really do hope that we can turn this company around sooner, right? So that we can consolidate the market and start clocking in some big wins. I was looking at some earnings calls of companies like MGM. Many CEOs have been openly talking about how their company should be valued and why they are buying back shares aggressively because they see a huge disconnect between what the company is worth to them and the public market value right now. For us, I get that we are investing in growth and then paying down our debt eventually. I know, could you walk with us, you know, hypothetically speaking, you know, in your mind, why should Eastside Distilling be worth substantially higher than what it is being traded right now? Well, I mean, this is a question that all, I think, investors have to think about and go through the process of making a determination what the company's worth. I mean, every day, as you know, Kelvin, the market determines and places the theoretical value on the company. I would argue that that value can change pretty substantially from time to time just based on perceptions. I mean, look at the view of the market in today's lens, looking down towards a potential recession versus what we were seeing last year. You know, it changes, right? What I can tell you is that this company is unique. This is a public company, but it has two distinctly different businesses in very unique and attractive areas. They all benefit from one thing, right, which is the development of craft beverages. It's happening everywhere. We talked about it on a number of conference calls. You see it as you walk through the grocery aisle, you know, talked about that at times. You see it when you move into craft markets, when you go into liquor stores, and you just see an incredible number of new brands that are developing. This is a place that we're attacking different ways. I mean, we've got the spirits brands on one hand that we build and produce and sell. On the other hand, we have a business that offers craft services to beverage manufacturers in the Pacific Northwest and in Colorado. I think this is a unique business. You gotta keep in mind, last quarter, in the first quarter, we operated on, from the craft side, one type of business, a mobile filling business. This quarter, the second quarter, we launched two businesses, printing and a co-packing business. I think those two businesses are gonna dwarf the other business that we had, you know, in the first quarter. The change in the space that we're in is dramatic. The change inside the company is significant. Things are changing very rapidly at the company. Now, putting a price on that is almost impossible at this point, right? You can calculate the market cap, add debt, subtract, you know, cash, you know, go through that exercise, and you can come up with an enterprise value. You can multiply it by a number in the industry. You can multiply it by perceived board, you know, cash flow. All those are ways we can do it, but at the end of the day, we have businesses that are developing very rapidly. I think the answer to that question is gonna be down the road, and it'll be a tangible easier to identify question. You're right. You know, some companies identify themselves as being underfunded, and they try to buy back stock and adjust the price, you know, and redeploy capital that way. This is not a company that's gonna do that because we need too much cash right now just to grow. We are a public company, so we're always faced with the possibility of you know of having people apply different valuations on the company. You know, we'll have to see how that develops in the marketplace. For now, I'll tell you that I do think that we have outstanding opportunities in the spaces that we're operating. We have great opportunities within the company and the changes that we're making. I think you know we're gonna be in a position to prove to the market that you know this is a valuable company that's probably undervalued today. Great answer, Geoffrey. Thanks so much. Yeah. Thanks, Kelvin. Next question is from Kevin So with Slingshot Capital. Please go ahead. Hey, Geoffrey. Hey, Kevin. Could you hear me? Yeah. Yeah, great. I was thinking about the gross margins on the spirits side for the remainder of the year, assuming if we did not sell any excess barrels, what will our gross margins be? Secondly, could you expand a little bit more on the distribution agreements we currently have? Yeah. Yeah. I mean, the gross margin on spirits really speaks to both the opportunity and the challenge of the company. I wanna answer the question a couple ways. The first way is we said in the conference call, I mean, when you look at the spirits margins this quarter versus the prior quarter last year, I mean, we're talking about 52% versus 21%, right? Huge difference. Now, bulk spirits are around 62%, right? Our existing businesses are much lower. If we don't do bulk sales, which I just already told you that we did out with some in the third quarter, we'd be much lower than the 52%. What I will tell you is that in every product line that we're in, we've worked to improve gross profit dollars and gross profit margin. We've done it by raising price, we've done it by lowering costs, right? We've done it by trying to improve velocity. I talked about a volume price mix on my comments, and you know, we clearly struggle with some volume, and you see it in the year-over-year comps, on the brands and the details that we've given. I think it's important for people to understand that when you have a business that seemingly was burning cash and just you know, you're. We were just racing for growth and under, you know, prior management, and we're trying to transition to a profitable growth. We had to back out of unprofitable sales in spirits. I mean, we don't have the money to invest in, you know, something where we buy a dollar of tequila, and we end up getting 80 cents back. I mean, that's just not gonna work for a company like ours anymore. We have changed the game plan, and we're going for big opportunities. I mean, we said it on the call. We've announced that we're in a test with ClubCorp, and we've had other, you know, significant opportunities. If we land some of these things, if we continue to drive the volume price mix in the third and fourth quarter, you're gonna see margins continue to improve in spirits, and I think we're gonna be in a better place year-over-year. Now, I'm sure Annie's on the phone, she probably can respond as well. We've got a lot of work to do in the back half of the year to get ourselves to a point where we're achieving our plan, and that's, you know, a function of a weaker consumer than we had the first half of the year. We will be taking temporary price reductions here and there strategically when we think there's an opportunity to take some share and improve our market position in some of our brands in some markets. You know, our goal is to see spirits sales outside of bulk improving through the back half of the year. Right. Can you talk a bit more about the current distribution agreements we have or we have won in the quarter? Right. ClubCorp is a test, as I talked about. These are new customers. We've got some opportunities with Kroger in Washington. You know, a number of things. The company's changed its strategy as we talked about in partnering with larger distributors like RNDC. We've spent some time working with other resource groups in Southern California to help us reignite and grow sales in Azuñia. You know, I think these have been all good investments. We're gonna have to see how they develop from here. I mean, one of the things in spirits that you have to remember is you can open a door, right? We've seen this in the past. You can be highly successful opening the door to a point of distribution, and you can get your product on the shelf. What you have to do is you have to get customers to taste it, to try it, to connect with it and come back and buy more, right? That's one of the things that is the Holy Grail, I think, in spirits, go-to-market, is what we call velocity. The best part about the story at Eastside is our products are better than the others on the shelf. I mean, let's just go through it. Our tequila is outstanding. The black is, you know, tastes more like a bourbon to me. It is outstanding tequila. It you know is I would argue one of the best two-year añejos you can find. At the price point, it's a bargain. Our vodka is, you know, outstanding as well. It's not crappy GNS. It's made into something you can drink. This is true potato Portland-based water ethanol. I mean, vodka that I think is super in the marketplace, and it's priced competitively. The Burnside product line is outstanding as well. I mean, I've said this repeatedly, the Buckman line is a better bourbon than I've tasted anywhere else in the United States. I personally can't get enough of it. Whenever I'm in market and buying stuff, I'm looking to get as much of it as I can take off the shelf personally and get in my bag and get it home. I think we have outstanding products, and I think at the end of the day, those are gonna be the things that drive the bigger opportunities. When people like ClubCorp and others start to taste it, when they start to realize, "Hey, we can deliver an outstanding product at a better price point, a true craft spirit," then you're gonna start to see more of these types of wins, right? You know, I'm hopeful we'll see some more in the year. Great. Sounds like we're expanding to many places. Do we have the team in place to ensure that we can, you know, deliver the goods and not face supply shortages? Like, I know previously we didn't have enough glass, you know. Yeah execute and expand production to meet the potential sales? Yeah. Yeah. I mean, the supply chain is a challenge that we all face. Every company faces this. We face it on the spirit side, we face it on the craft side. It is clearly the biggest issue. Now, I think, you know, with gas prices coming back down here, we're gonna have some relief on the diesel logistics front. You know, I'm pretty confident we're in a position where we can continue to improve and drive our costs lower relative to the revenue moves. I think our gross margins will expand over time. As I said, the more important thing is to drive velocity, repeat sales in the quarter, and turn over working capital. Yeah, I think we have what we need there. I stated earlier at the beginning of the question and answer, the biggest issue that we have to deal with near term is people. I don't think the broader public understands the challenges of what's ahead of us. I'm not just talking about our company, I'm talking about other markets, other industries. When you have full employment, right? You're still dealing with stimulus that's lingering and you know, the challenges of how that starts to manifest itself and having to pay ever higher labor rates to you know, to fill gaps in your business. We find that as a problem, you know, and we're seeing it on both sides of the business. I don't think this is gonna resolve itself in a quarter or so. That's the biggest challenge on the supply chain, is just handling our labor costs. Right. Thanks, Geoffrey Gwin, for the detailed answers. I want to ask a little bit more questions on, you know, our digital printer business. Could you share with us what's the current utilization rate? You know, are we able to raise prices along with inflation? And has the wait time Yeah Increased for our services? Yeah. It's not a linear thing. I mean, every day is a different, you know, utilization rate, right? I mean, some days it's higher, some days it's lower. The trend is improving over the course of each week and month. We track this thing daily. We track cans printed, cans sold, cash received. I mean, it's that important for us to monitor it and to develop it. You know, we have the capability to print all types of things, right? We can do 12 ounces, 16 ounces, 12 ounce weeks. We can change the mix, and as we change the mix, we can improve margins based on what the opportunities are. The utilization might not necessarily always be, you know, going directly up, you know, week after week. If we're shifting to a higher mix, product opportunity, you know, then you could see yourself actually print less but make more money, generate more revenue. We also have the challenges of changeovers and issues around that if we're moving through SKUs. We have one printer. We've talked about the fact that we wanna have two printers and grow the business and scale the company. I'm pleased with how we're doing. I mean, you're talking about. I think we're number five at even number four machine or number five in North America. We've learned a lot in the last couple months. Our partners have been very helpful and have worked with us, you know, to help us improve utilization. We think that there's gonna be more improvement, as I said, as we go through the quarter here. I can't give you a number, but I think we have plenty of room to improve. If you wanna, you know, I'd put us in the, you know, below 40% utilization at this point where we are today. We're probably somewhere in the 30s. Right. All right. Those are good. Last question from me. If we were to back out the Craft Canning business separate from the printing business, is Craft Canning actually having a positive gross profit margin right now? Craft Canning, the mobile business, has changed pretty significantly year over year. The margins in that business, I, you know, want to caution you can make direct comparisons, and you can say, "Hey, are we generating positive margins?" Which we are, but the business has changed. Let's think about this for a second. If we are canning for our customer, and in the prior year we were canning for our customer and buying cans and selling them to them, but we didn't decorate the cans. This year, we're canning for our customer, but we are also looking to replace ourselves as just buying and selling the cans, and now we're printing the can for them. Now, that's a big differentiator. We might have been in a position last year where we are buying a can, selling it to them, but we didn't take care of the decoration. This year, we're doing the same thing, but we're adding the decoration. In some cases, we didn't buy the can from last year, and we're looking to buy the can for them. The business profile has changed at Craft. As we move into digital can printing, our customer base changes as well. We've talked about this. I mean, we're no longer just supporting the craft beverage space. We're starting to see a broader array of customers. We talked about this, you know, about this, you know, deal that we did in the quarter where we took over assets from Approach Beverage. I mean, this is a CBD water company that's, you know, bringing a large amount of their Portland-based business to us and that's completely different than beer. I mean, that's gonna have a different demand profile than we have in the beer space, which has a seasonal peak, usually in the summer. You know, there's a lot happening at Craft. The margins aren't where we want them to be. We have a lot of, you know, areas that we have to improve on the mobile canning side. I think what's gonna happen is when you look at this business in the future, the co-packing opportunity that we lost through the Approach acquisition of their facility and the digital can printing is gonna make mobile look tiny in comparison. It's gonna be a smaller part of a bigger organization. Right. Thank you, Geoffrey. I hope to speak to you, next quarter. Yeah, great. This concludes our question and answer session. I would like to turn the conference back over to Geoffrey Gwin for any closing remarks. Yeah. I just wanna thank everybody for joining the call. I'm really excited about the transitions that we're seeing in front of us. It's not easy. I mean, I think you can see it in our Craft numbers how hard it is. You know, we have a lot of work to do in spirits as well, as I said, based on the consumer and what we're facing in the back half of the year. The exciting part, and we didn't spend enough time on it, but I'll just mention it now, is that our team is also improving. We have added Bruce Wells, as I mentioned, who's our controller now at Craft. You know, Tiffany has joined us from last year, and we're talking about really a pretty significant transformational change that we've seen in spirits. Amy Lancer stepped up and done a fabulous job in building out the go-to-market strategy there. We have more investments to make on both sides of the business and Approach, the assets that we purchased from Approach, our new facility there, and also on the spirit side. I'm, you know, excited about the opportunity, and I'm really getting excited about the team. I think as we go into the third quarter, we're gonna see more improvement and looking forward to report that improvement to you as we get into the fall. All right. With that, I'll end the call, and thank you again for the time today. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.