Financial Data and Key Metrics Changes - Consolidated sales decreased by 29% to $121.7 million compared to the prior year period [21] - Adjusted EBITDA decreased by 46% to $21.8 million, primarily due to lower gross profits [25] - Adjusted earnings per common share declined to $0.36, while operating cash flows increased by nearly 82% to $44.7 million [6][26] - Gross profit decreased by 31% to $43.3 million, with gross margin declining by 120 basis points to 35.6% [23] Business Line Data and Key Metrics Changes - Branded Spirits segment sales decreased by 4%, while the Premium Plus portfolio posted a 7% growth [21][6] - Distilling Solutions segment sales declined by 45%, primarily driven by a 49% decline in brown goods sales [21] - Ingredient Solutions sales decreased by 26%, impacted by supply challenges and decreased sales volume of specialty wheat starches [22][15] Market Data and Key Metrics Changes - The overall American whiskey category is experiencing a production decline, with total whiskey production down 4% for the full year and down 15% in the last three months of 2024 [14] - The company is seeing a shift in consumer behavior, with more consumers opting to drink what they have at home rather than purchasing new products [98] Company Strategy and Development Direction - The company is focusing on fewer but more attractive growth opportunities within its Branded Spirits portfolio [7] - Key initiatives include stabilizing the brown goods business, repositioning branded spirits for growth, and enhancing productivity [5][4] - The company is taking proactive actions to strengthen partnerships with customers in the Distilling Solutions segment [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the proactive steps being taken to stabilize the business and improve performance throughout the year [5] - The company reaffirmed its 2025 guidance, expecting net sales in the range of $520 million to $540 million and adjusted EBITDA between $105 million and $115 million [20] - Management noted that while the current environment is challenging, there are early signs of stabilization across all three segments [29] Other Important Information - The company has made substantial progress in fortifying its balance sheet, including upsizing its credit facility and extending its private placement shelf [19][27] - The company is prioritizing strong cash generation by managing working capital and reducing barrel inventory put away [25] Q&A Session Summary Question: Visibility into the outlook for Distilling Solutions - Management confirmed that discussions with 100% of contracted customers have led to modifications in orders and pricing, providing greater visibility for 2025 [34][35] Question: Outlook for the Distilling Solutions segment - Management expects sales for the Distilling Solutions segment to be down 50% for the year, with gross profit down 65% [39] Question: Quantification of new distillate negotiations - Management indicated that they expect to conclude negotiations with the remaining 25% of customers soon, with no negative feedback affecting their guidance [45][46] Question: Optimism for Ingredient Solutions - Management highlighted operational improvements and upcoming projects that are expected to enhance performance in the Ingredient Solutions segment [49][50] Question: Impact of anticipated tariffs on customer demand - Management stated that they have not seen any significant impact on customer demand related to anticipated tariffs [76] Question: Performance of the Penelope brand - Management noted that the Penelope brand performed better than expected, leading to an increase in contingent liability on the balance sheet [66][80]

Core Viewpoint - The company experienced a revenue increase in Q4 2024 but faced a significant decline in net profit due to rising expenses, while Q1 2025 showed recovery in both revenue and net profit, driven by strong performance in the restaurant channel and improved gross margins [1][7]. Financial Performance - In Q4 2024, the company reported revenue of 1.07 billion, a year-on-year increase of 14.90%, while net profit was 942.32 million, down 36.49% due to increased expenses [2][4]. - For the full year 2024, the company achieved revenue of 4.05 billion, up 12.59%, and net profit of 6385.77 million, up 13.16% [2]. - In Q1 2025, revenue reached 1.01 billion, a 10.5% year-on-year increase, and net profit was 1766 million, up 36.86% [5][7]. Business Segments - The company’s restaurant business generated 2.0 billion in 2024, a 22.2% increase, with Q4 showing a 17.3% growth, primarily due to deepening partnerships with major clients [3]. - The brand customization segment saw revenue of 523.3 million in 2024, up 15.1%, with Q4 growth of 26.5% attributed to increased orders from clients like Sam's [3]. - The distributor channel continued to decline, with a 34.9% drop in revenue for 2024, reflecting a strategic shift towards direct channels [3]. Profitability Metrics - The company maintained a gross margin of 38.70% for 2024, slightly down from the previous year, while Q4 gross margin improved to 39.28% due to lower raw material costs [4]. - The net profit margin for 2024 was 15.78%, a slight increase, but Q4 saw a decline to 8.77% due to higher sales and management expenses [4]. Future Outlook - The company anticipates continued growth in the restaurant channel in 2025, supported by ongoing collaborations with major clients and the acquisition of Jiaxing Aibeibang Food Co., which is expected to enhance revenue and product capabilities [6][7]. - The focus remains on B2B client expansion, with expectations for improved profitability driven by cost stability and optimized expenses [6][7].