Financial Data and Key Metrics Changes - Consolidated sales for Q4 2024 decreased by 16% to $180.8 million compared to the prior year period, and excluding the impact of the Atchison Distillery, sales decreased by 7% [10][38] - Adjusted EBITDA decreased by 9% to $53.1 million, with lower SG&A expenses partially offsetting reduced gross profits [11][43] - Basic earnings per common share declined to a loss of $1.91 due to a one-time noncash adjustment to goodwill, while adjusted basic earnings per share decreased 4% to $1.57 [11][45] - Full year 2024 capital expenditures were approximately $73 million, expected to decline to about $36 million in 2025 [35][46] Business Line Data and Key Metrics Changes - Distilling Solutions segment reported sales declined by 25%, with a 10% decline in Brown Goods sales partially offset by a 15% increase in warehouse service sales [38] - Branded Spirits segment sales decreased by 12% due to continued declines in value price brands and a 12% decline in premium plus sales [39] - Ingredient Solutions sales increased by 4%, with specialty protein sales posting its first quarterly growth [39][40] Market Data and Key Metrics Changes - Annual whiskey production in the US increased by nearly 1 million barrels since 2020, reaching nearly 4.6 million barrels, but consumption has normalized from post-COVID levels, leading to excess inventory [21][22] - Industry data shows total US whiskey production through October 2024 is down 1%, with a 4% decline in the last six months [25][26] Company Strategy and Development Direction - The company aims to maintain its position as a leading supplier of high-quality differentiated premium American whiskey while navigating challenges in the Brown Goods business [8][9] - The focus is on enhancing branded spirits and ingredient solutions businesses, which are expected to drive consolidated financial performance in 2025 and beyond [10][30] - The company is committed to optimizing its distillery cost structure and strengthening key customer relationships to mitigate the impact of lower production volumes [27][28] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging operating environment due to elevated industry-wide barrel whiskey inventories and soft whiskey consumption [9][21] - The company expects ongoing challenges in the distilling solutions business to overshadow growth in branded spirits and ingredient solutions in 2025 [30] - Management remains confident in the long-term value of aged whiskey inventory and the potential for recovery in the distilling solutions segment [60][80] Other Important Information - The company recorded a $73.8 million non-cash adjustment to the carrying value of goodwill in the branded spirits segment due to unfavorable macroeconomic factors [44] - The net whiskey put away declined from $51.1 million in 2023 to $32.9 million in 2024, contributing to a 22% increase in full-year cash flow from operations [46] Q&A Session Summary Question: Strategy for aged whiskey going forward - Management confirmed that while aged sales are expected to decline, they remain committed to the aged business and are proactively engaging with customers to understand their needs [56][60] Question: Confidence in distilling solutions returning to growth - Management expressed cautious optimism, noting that industry players are expected to behave more rationally over time, and they are taking steps to control costs and improve efficiency [78][80] Question: Impact of tariffs on international sales - Management indicated that current exposure to European tariffs is minimal, but they are monitoring the situation closely as tariffs are set to resume at higher rates [108] Question: Guidance visibility and contracted sales - Management stated that a large percentage of projections for the year are contracted, and they are proactively renegotiating contracts to align with market needs [89][91] Question: Cash flow projections and capital expenditures - Despite pressure on earnings, management expects strong free cash flow due to reduced capital expenditures and lower net whiskey put away [97][100]

FOURTH QUARTER AND FULL YEAR 2024 RESULTS This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements regarding the impact of whiskey consumption and whiskey inventories on brand goods performance for MGP Ingredients, Inc. (the "Company" or "MGP"); the Company's ability to access capital and drive shelf presence; and the Company's 2025 guidance, including its expectations for sales, adjusted EBIT ...

Group 1 - MGP reported revenue of $180.8 million for the quarter ended December 2024, a year-over-year decline of 15.9% and an EPS of $1.57 compared to $1.64 a year ago [1] - The reported revenue exceeded the Zacks Consensus Estimate of $178.04 million by 1.55%, and the EPS surprised by 5.37% against the consensus estimate of $1.49 [1] - MGP's stock has returned -9.7% over the past month, while the Zacks S&P 500 composite changed by -2.3%, indicating underperformance relative to the broader market [3] Group 2 - Sales to Customers in Branded Spirits were $64.01 million, below the estimated $68.11 million, reflecting an 11.9% decline year-over-year [4] - Sales to Customers in Ingredient Solutions were $34.75 million, slightly above the estimated $34.19 million, showing a year-over-year increase of 4.2% [4] - Sales to Customers in Distilling Solutions were $82.05 million, exceeding the estimated $75.68 million, but represented a significant year-over-year decline of 24.7% [4]

Core Points - Rebel Bourbon has launched a limited-edition Kyle Busch 108 Single Barrel Bourbon, selected by NASCAR champion Kyle Busch and bottled at 108 proof (54% ABV) [1][2] - The bourbon is handcrafted using Rebel's original wheated recipe since 1849 and aged for four years, offering a robust flavor and smooth finish [3] - An allocation of 5,000 cases is available nationwide at a suggested retail price of $39.99 per 750mL bottle [3] Company and Industry Insights - Rebel Bourbon aims to embody a rebellious spirit through its products, with Kyle Busch personally selecting the barrels for this release [4][5] - The branding includes unique elements such as barrel numbers, Busch's signature, and the RCR logo, appealing to collectors and fans [4] - The partnership with Richard Childress Racing (RCR) enhances the brand's visibility, with Busch driving the No. 8 Chevrolet in select NASCAR Cup Series races [5][8] - Luxco, the parent company of Rebel Bourbon, has a diverse portfolio of beverage alcohol products and merged with MGP Ingredients, Inc. in 2021 [7] - Richard Childress Racing has a rich history in NASCAR, with over 200 victories and multiple championships, further solidifying the partnership's significance [8]

Core Insights - MGP reported quarterly earnings of $1.57 per share, exceeding the Zacks Consensus Estimate of $1.49 per share, but down from $1.64 per share a year ago [1] - The company achieved a revenue of $180.8 million for the quarter, surpassing the Zacks Consensus Estimate by 1.55%, but down from $214.89 million year-over-year [3] Earnings Performance - The earnings surprise for the quarter was 5.37%, with the company having surpassed consensus EPS estimates in all four of the last quarters [2] - MGP's shares have declined approximately 17.2% since the beginning of the year, contrasting with a 1.3% gain in the S&P 500 [4] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.50 on revenues of $134.09 million, and for the current fiscal year, it is $3.41 on revenues of $587.27 million [8] - The estimate revisions trend for MGP is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [7] Industry Context - The Beverages - Alcohol industry, to which MGP belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, suggesting potential challenges ahead [9] - Another company in the same industry, Brown-Forman B, is expected to report a quarterly earnings decline of 21.7% year-over-year, with revenues projected at $1.07 billion, a slight increase of 0.4% from the previous year [10]

Customer Concentration - MGP Ingredients reported that its five largest Distilling Solutions customers accounted for approximately 21% of consolidated sales in 2024[19]. - The Branded Spirits segment's five largest customers contributed about 20% to consolidated sales, with one customer alone accounting for 13%[23]. - The Ingredient Solutions segment's five largest customers represented around 14% of consolidated sales, with one customer making up 12%[24]. - The company reported a significant reliance on a limited number of wholesale distributors, with one distributor accounting for approximately 13% of consolidated net sales for 2024[55]. - The company is focusing on higher margin specialty ingredients, which may increase reliance on fewer, more profitable customer relationships[59]. Product Development and Innovation - MGP is strategically migrating sales towards higher price, higher margin specialty wheat ingredients to enhance profitability in the baking and tortilla food segments[24]. - The company produces premium wheat starches marketed under the Fibersym brand, which is FDA approved as a dietary fiber[26]. - MGP's specialty wheat proteins are developed under the Arise brand and are Project Verified Non-GMO[27]. - The company’s success depends on its ability to innovate and develop new brands and products, with the launch of new products being inherently uncertain[50]. Employee and Labor Relations - The company has a total of 660 employees as of December 31, 2024, with several collective bargaining agreements in place[36]. - MGP emphasizes employee safety and offers competitive compensation and benefits to attract and retain skilled labor[37]. - Approximately 30% of the company's workforce is unionized, and labor disruptions could negatively affect operations and financial performance[69]. Operational Risks - The company has experienced short-term interruptions in operations at production facilities due to industrial accidents, which could negatively impact business performance[60]. - The company faces risks related to capital projects, including cost overruns and delays, which could adversely impact operations[65]. - Warehouse expansion is necessary for business operations, but it carries risks such as regulatory issues and cost overruns[67]. - The company relies on a limited number of suppliers for raw materials, exposing it to supply chain risks if any key supplier fails to meet requirements[68]. - Climate change and water scarcity may increase production costs and impact capacity, potentially harming the company's financial condition[70][71]. Regulatory and Legal Environment - The company is subject to a broad range of federal, state, local, and foreign laws and regulations that impact various aspects of operations[41]. - The company is subject to extensive regulations, and changes in laws could lead to increased costs and operational challenges[72][75]. - Tariffs and changing trade relations could adversely affect the company's business and results of operations[76]. - The company is subject to various litigations that could lead to significant legal costs and potential damages, impacting financial results[87]. - The company may face class action lawsuits related to the health impacts of beverage alcohol, which could adversely affect its reputation and financial condition[88]. Financial Performance - Sales for 2024 were $703,625, a decrease of 16% compared to 2023, with Distilling Solutions segment sales down 26%, Branded Spirits down 5%, and Ingredient Solutions down 1%[149]. - Gross profit for 2024 was $286,317, a decrease of 6% compared to 2023, driven by a 44% decrease in Ingredient Solutions segment gross profit[151]. - Net income for 2024 was $34,465, a decrease of 68% compared to 2023, with a net income margin of 4.9%[148]. - The effective tax expense rate for 2024 was 49.6%, an increase of 25.2 percentage points compared to 2023[148]. - Operating income for 2024 decreased to $74,426 from $148,613 in 2023, primarily due to a $73,755 goodwill impairment related to the Branded Spirits segment[159]. Capital Structure and Financing - The company anticipates that it will be able to meet the covenants in its credit arrangements, but external factors could materially affect its operations and financial condition[113]. - The company may incur substantial indebtedness to finance acquisitions, increasing vulnerability to debt service requirements if interest rates rise[108]. - Total debt rose to $323,541 at the end of 2024 from $287,249 at the end of 2023, reflecting an increase of 13%[209]. - The company issued approximately 5.0 million shares of Common Stock in connection with the Merger, which could substantially dilute current stockholders' ownership percentage[107]. Cash Flow and Investments - Cash provided by operating activities increased to $102,278 in 2024 from $83,783 in 2023, representing a year-over-year increase of 22%[201]. - Cash used in investing activities decreased significantly to $71,558 in 2024 from $159,242 in 2023, a reduction of approximately 55%[203]. - Capital expenditures for 2024 were $71,181, compared to $55,267 in 2023, indicating a year-over-year increase of 29%[204]. - The company repurchased 886,936 shares of Common Stock for approximately $46,588 during 2024, with $53,412 remaining under the share repurchase program[208]. Market and Competitive Landscape - The company operates in highly competitive markets, with substantial competition from larger enterprises that have greater resources[46]. - The company faces risks related to changes in consumer preferences, which could negatively affect business results if customers shift away from higher-margin products[45]. - The profitability of distillers feed, a co-product of alcohol production, is subject to fluctuations in corn prices, which could materially affect the business[99].

Financial Performance - Consolidated sales for Q4 2024 decreased 16% to $180.8 million, with a 7% decrease excluding the Atchison distillery impact[4]. - Net income for Q4 2024 resulted in a loss of $42.0 million due to a one-time, non-cash goodwill adjustment of $73.8 million, while adjusted net income decreased 6% to $34.4 million[4][7]. - For the full year 2024, consolidated sales decreased 16% to $703.6 million, with adjusted net income down 4% to $125.3 million[9]. - The net loss for the year ended December 31, 2024, was $41,998 million, compared to a net income of $107,130 million in 2023, indicating a significant decrease in profitability[27]. - MGP Ingredients reported a net loss of $41,998,000 compared to a net income of $31,046,000 for the same quarter in 2023[37]. - For the year ended December 31, 2024, total sales were $703,625 thousand, a decrease of $1,292 thousand compared to the previous year[53]. Segment Performance - Distilling Solutions segment sales decreased 25% to $82.0 million in Q4 2024, with gross profit down 8% to $36.7 million[8]. - Branded Spirits segment sales decreased 12% to $64.0 million in Q4 2024, with gross profit down 11% to $29.6 million[11]. - Ingredient Solutions segment sales increased 4% to $34.7 million in Q4 2024, achieving a gross margin of 23.5%[13]. - Total Distilling Solutions sales decreased by 25% to $82,045,000 in Q4 2024 from $108,913,000 in Q4 2023[30]. - Year-over-year sales for Total Distilling Solutions fell by 26% to $332,204,000 in 2024 from $450,854,000 in 2023[32]. - Year-over-year Branded Spirits sales decreased by 5% to $240,816,000 in 2024 compared to $253,933,000 in 2023[32]. - Total Ingredient Solutions sales slightly decreased by 1% to $130,605,000 in 2024 from $131,736,000 in 2023[32]. Goodwill and Impairment - The company incurred a goodwill impairment of $73.755 million in 2024, which was not present in 2023, indicating a significant impact on financial results[27]. - Goodwill impairment for Q4 2024 was $73,755,000, impacting overall operating income significantly[34]. - The company experienced a goodwill impairment of $73,755,000 for the year ended December 31, 2024, which is nondeductible for income tax purposes[40]. Cash and Assets - Total current assets increased to $546.136 million in 2024 from $514.297 million in 2023, reflecting a growth of approximately 6.2%[28]. - Cash and cash equivalents rose to $25.273 million in 2024, up from $18.388 million in 2023, marking an increase of about 37.5%[28]. - MGP Ingredients' total debt as of December 31, 2024, was $323,541,000, with a net debt of $298,268,000, resulting in a net debt leverage ratio of 1.5[41]. Shareholder Actions - The company repurchased 758,576 shares for $36.6 million in Q4 2024 and 886,936 shares for $46.6 million during the full year[4][9]. Guidance and Projections - 2025 financial guidance projects sales between $520 million and $540 million, with adjusted EBITDA expected in the range of $105 million to $115 million[17]. - Adjusted EBITDA guidance for the full year 2024 is provided on a non-GAAP basis, but specific figures are not disclosed due to uncertainty in predicting certain GAAP items[25]. Tax and Expenses - The effective tax rate for Q4 2024 was (31.5)%, primarily due to the goodwill adjustment, with an adjusted rate of 24.0%[16]. - The effective tax rate, excluding the impacts of the nondeductible goodwill impairment, was 24.0% for the quarter ended December 31, 2024[40]. - The company’s advertising and promotion expenses for the year increased to $40.508 million in 2024 from $38.213 million in 2023, reflecting a rise of approximately 6.0%[27]. Operational Losses - The company reported an operating loss of $30.442 million for the fourth quarter of 2024, compared to an operating income of $43.072 million in the same quarter of 2023[27]. - Operating income for Q4 2024 was a loss of $30,442,000, a decrease of 171% compared to an operating income of $43,072,000 in Q4 2023[34].

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against MGP Ingredients, Inc. regarding breaches of fiduciary duties by the board of directors following a class action complaint related to significant stock price declines due to misrepresentations about inventory and sales projections [1][2][3]. Company Overview - MGP Ingredients, Inc. is a manufacturer of various hard liquors including tequila, bourbon, rye, whiskey, vodka, and gin, selling products under its own brands and to other distributors [2]. Industry Context - Sales of hard liquors surged during the COVID-19 pandemic but have since slowed as quarantines ended, leading to increased inventory levels across the alcoholic beverage industry [2]. Legal Allegations - The class action complaint alleges that during the class period from May 4, 2023, to October 30, 2024, MGPI misled investors by assuring them that it was well-prepared for the industry slowdown and that its sales projections were accurate [2]. Stock Performance Impact - Following announcements of a slowdown in demand and excess inventory, MGPI's stock price fell by 29.5% on October 17, 2024, and an additional 14.7% on October 31, 2024, resulting in a total decline of nearly 50% and significant loss in market capitalization [3].

Core Points - Yellowstone Bourbon has donated a total of $1 million to the National Parks Conservation Association (NPCA) since 2018, marking a significant milestone in their partnership [1][2][5] - The brand will continue its annual donation of over $250,000 as part of the renewed partnership with NPCA [1][2] - To celebrate this achievement, a new video series will be launched to highlight the impacts of park protection made possible by the partnership, with the first video debuting on February 20 [3][4] Company Overview - Yellowstone Bourbon was founded by Joseph Bernard Dant and is named after America's first national park, established in 1872 [7] - The brand is part of Limestone Branch Distillery, which was established by seventh-generation Master Distiller Stephen Beam in 2011 [7] - Yellowstone Bourbon has been a significant corporate donor to NPCA, supporting various campaigns to protect national parks and engage the public [5][7] Partnership Impact - The partnership has led to numerous initiatives, including a music video series featuring artists performing in national parks and direct support for flood relief efforts in Yellowstone National Park [5] - NPCA, established in 1919, has over 1.6 million members and works to safeguard national parks for future generations [6]

Core Viewpoint - A securities class action lawsuit has been filed against MGP Ingredients, Inc. (MGPI) for allegedly making materially false and misleading statements regarding its business operations and prospects during the class period from May 4, 2023, to October 30, 2024 [1][2]. Group 1: Allegations Against the Company - The lawsuit claims that MGPI's defendants failed to disclose a slowdown in consumption and oversupply of their products, which rendered their positive statements about the company's business misleading [2]. - The complaint indicates that the defendants' statements lacked a reasonable basis at all relevant times, impacting investor decisions [2]. Group 2: Legal Process for Investors - Investors in MGPI have until February 14, 2025, to seek appointment as lead plaintiff representatives in the class action, which involves directing the litigation on behalf of all class members [3]. - The lead plaintiff is typically the investor or group of investors with the largest financial interest in the case, and their decision to serve does not affect their ability to share in any recovery [3]. Group 3: Law Firm Information - Kessler Topaz Meltzer & Check, LLP, the law firm handling the case, has a reputation for prosecuting class actions and has recovered billions for victims of corporate misconduct [4].