Financial Performance - Sales for the quarter ended September 30, 2023, were $211,624, an increase of 5% compared to the same quarter in 2022[103]. - Gross profit for the quarter ended September 30, 2023, was $73,448, a 24% increase year-over-year[105]. - Operating income for the quarter ended September 30, 2023, decreased to $19,839, a decline of 41% compared to the prior year[108]. - Net income for the quarter ended September 30, 2023, was $13,088, representing a 45% decrease from $23,628 in the same quarter of 2022[103]. - For the year to date ended September 30, 2023, sales were $621,635, a 5% increase compared to the same period in 2022[114]. - Gross profit for the year to date ended September 30, 2023, was $219,567, a 16% increase year-over-year[116]. - Operating income for the year to date ended September 30, 2023 decreased to $105,541 from $119,250 for the same period in 2022, a decline of 11 percent[119]. - Basic EPS for the year to date ended September 30, 2023 was $3.43, down 12 percent from $3.91 for the same period in 2022[122]. Expenses - Advertising and promotion expenses for the quarter ended September 30, 2023, were $9,505, an increase of 31% year-over-year[106]. - SG&A expenses for the quarter ended September 30, 2023, were $21,570, a 20% increase compared to the same quarter in 2022[107]. - Advertising and promotion expenses for the year to date ended September 30, 2023 were $25,877, an increase of 37 percent compared to the year-ago period[117]. - SG&A expenses for the year to date ended September 30, 2023 were $65,615, an increase of 26 percent compared to the year-ago period, primarily due to higher personnel and acquisition expenses related to Penelope[118]. Segment Performance - Total sales of the Distilling Solutions segment for the quarter ended September 30, 2023 increased by $3,209, or 3 percent, compared to the prior year quarter[128]. - Gross profit for the Distilling Solutions segment increased by $7,363, or 28 percent, for the quarter ended September 30, 2023[129]. - Total sales of the Distilling Solutions segment for the year to date ended September 30, 2023 increased by $14,650, or 4 percent compared to the year-ago period[134]. - Gross profit for the year to date ended September 30, 2023 increased by $10,356, or 11 percent compared to the year-ago period[135]. - Total sales of the Branded Spirits segment for the quarter ended September 30, 2023 increased by $4,058, or 6 percent compared to the prior year quarter[139]. - Gross profit for the quarter ended September 30, 2023 increased by $3,973, or 16 percent, with gross margin rising to 43.5 percent from 39.9 percent[140]. - Year-to-date sales of Branded Spirits for the period ended September 30, 2023 increased by $4,240, or 2 percent compared to the year-ago period[147]. - Year-to-date gross profit for Branded Spirits increased by $8,827, or 12 percent, with gross margin rising to 43.9 percent from 40.0 percent[148]. - Year-to-date sales of the Ingredient Solutions segment increased by $11,382, or 13 percent, reflecting an increase across all product categories[161]. - Year-to-date gross profit for Ingredient Solutions increased by $10,291, or 42 percent, with gross margin rising to 35.5 percent from 28.3 percent[162]. - Total sales of the Ingredient Solutions segment for the quarter ended September 30, 2023 increased by $3,211, or 11 percent, driven by higher sales across all product categories[153]. - Gross profit for the Ingredient Solutions segment increased by $3,064, or 38 percent, with gross margin rising to 33.8 percent from 27.1 percent[154]. - Sales in the ultra premium price tier for Branded Spirits increased by $6,303, or 46 percent, while sales in the mid price tier decreased by $3,184, or 15 percent[139]. - The increase in sales of brands within the ultra premium price tier was primarily due to an increase in sales of American whiskey brands, including those acquired from Penelope[139]. Asset and Cash Flow - The company recorded a $17,112 impairment of assets related to the planned closure of the Atchison Distillery[100]. - Operating cash flow for the year to date ended September 30, 2023 was $48,605, a decrease of $23,648 compared to $72,253 for the same period in 2022[166]. - Cash used in investing activities increased significantly to $146,690 for the year to date ended September 30, 2023, primarily due to the acquisition of Penelope for $103,712[169]. - Cash provided by financing activities for the year to date ended September 30, 2023 was $78,193, driven by net proceeds on debt of $87,000[171]. - Total debt as of September 30, 2023 was $316,677, an increase from $230,335 at December 31, 2022[177]. - Cash and cash equivalents decreased by $19,859 for the year to date ended September 30, 2023, compared to an increase of $29,106 for the same period in 2022, resulting in a net decrease of $48,965[166]. - The company anticipates being able to support short-term liquidity and operating needs largely through cash generated from operations[180]. Tax and Interest - Income tax expense for the year to date ended September 30, 2023 was $24,832, with an effective tax rate of 24.6 percent[121]. - The change in fair value of contingent consideration related to the Penelope acquisition was $4,200, impacting operating income negatively[119]. - A 100 basis point increase in market interest rates would increase annual interest expense on variable-rate debt by $980[184]. Dividends and Capital Expenditures - The company declared a dividend of $0.12 per share, payable on December 1, 2023, totaling $8,006 for the year to date ended September 30, 2023[175][176]. - The company expects approximately $63,000 in capital expenditures for 2023, including facility improvements and the planned closure of the Atchison Distillery[170]. Current Assets and Liabilities - Current assets exceeded current liabilities by $413,808 as of September 30, 2023, largely due to inventories valued at $342,401[180].
MGP Ingredients(MGPI) - 2023 Q3 - Quarterly Report