Group 1: Potential Merger Discussions - Pernod Ricard and Brown-Forman are in talks to form a partnership similar to a merger of equals [1][2] - Brown-Forman confirmed it is engaged in discussions with Pernod Ricard regarding a potential business combination [2] - Both companies stated that the partnership would create a global spirits leader with enhanced scale and a powerful brand portfolio [3][4] Group 2: Expected Synergies and Market Position - The anticipated operational synergies would leverage Brown-Forman's iconic brands, such as Jack Daniel's, and Pernod Ricard's global distribution strength [5] - A merger would combine two of the world's largest spirits groups, enhancing their market presence [5] - The combined entity would benefit from a balanced geographic footprint and significant market reach [3][4] Group 3: Industry Context and Challenges - The spirits industry is currently facing pressure on consumer demand, particularly in major markets like the US and China [6] - Factors contributing to the slowdown in growth include moderation in consumption and lower consumer confidence [6] - Pernod Ricard reported a 15% drop in net sales in the US, attributing this decline to a soft spirits market [7]

Core Insights - The company has made significant progress in 2025, finishing the year above expectations despite a challenging operating environment in the spirits industry [4][5][37] - The strategic roadmap focuses on disciplined execution, organizational changes, and leveraging financial strength for long-term growth [2][3][39] Financial Performance - For Q4 2025, consolidated sales decreased by 23% year-over-year, with adjusted EBITDA at $26 million and adjusted basic EPS at $0.63 [5][28] - Full-year 2025 results included consolidated sales of $536 million, adjusted EBITDA of $116 million, and adjusted basic EPS of $2.85, with operating cash flows increasing by 19% to $122 million [5][29] - The company expects 2026 net sales in the range of $480 million to $500 million, with adjusted EBITDA between $90 million and $98 million [30] Industry Outlook - The spirits industry is anticipated to face continued challenges in 2026, with expectations of another down year for both the industry and the company [4][6][31] - Consumer sentiment and spending are under pressure, influenced by competition from online gambling, gaming, and health-focused trends [6][7] Strategic Initiatives - The Branded Spirits segment is viewed as the primary growth engine, with a focus on the Premium Plus category, particularly Penelope Bourbon, which saw an 80% increase in sales [8][10][12] - The company plans to rationalize 20% of its tail brands to streamline operations and focus on higher-velocity SKUs [11][75] - Investment in digital marketing and analytics is prioritized to enhance brand awareness and connect with consumers [13][68] Distilling Solutions Segment - The Distilling Solutions segment experienced a significant decline in sales, down 47% in 2025, with expectations of a further 35% decline in 2026 [25][31] - The company is focused on creating a differentiated value proposition and expanding its premium white goods offerings to complement its brown goods portfolio [15][16] Ingredient Solutions Segment - The Ingredient Solutions business is expected to benefit from strong consumer demand for high-protein and high-fiber products, with anticipated double-digit sales growth in 2026 [19][20] - Operational improvements and increased capital investment are being implemented to return to historical levels of operational excellence [21][79]

Financial Data and Key Metrics Changes - For Q4 2025, consolidated sales decreased by 23% year-over-year to $138 million, with adjusted EBITDA declining by 51% to $26 million and adjusted basic EPS decreasing by 60% to $0.63 [23][24][26] - For the full year 2025, consolidated sales were $536 million, adjusted EBITDA was $116 million, and adjusted basic EPS was $2.85, while operating cash flows increased by 19% to $122 million [8][26][27] - Net income for Q4 2025 was a loss of $135 million, primarily due to a non-cash adjustment of $153 million related to goodwill [26] Business Line Data and Key Metrics Changes - Branded Spirits segment sales declined by 1% in Q4 and 3% for the full year, with premium plus sales growing by 10% in Q4, driven by Penelope Bourbon [23][30] - Distilling Solutions segment sales fell by 47% in Q4 and 45% for the full year, with gross profit declining by 52% [23][24] - Ingredient Solutions sales decreased by 10% in Q4 and 7% for the full year, impacted by equipment outages and higher waste disposal costs [24][30] Market Data and Key Metrics Changes - The spirits industry is expected to face continued pressure, with consumer sentiment and spending under strain due to competition from online gambling and health trends [9][10] - Domestic whiskey production has sharply declined, with reports indicating a 26% drop over the trailing 12 months [15] Company Strategy and Development Direction - The company is focusing on strategic clarity and prioritizing growth in the premium plus category, particularly with Penelope Bourbon [4][11] - A comprehensive portfolio management review process is being implemented to rationalize 20% of tail brands, aiming to enhance focus and efficiency [13][65] - The company is committed to investing in digital marketing and analytics to drive brand awareness and improve execution [14][79] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that 2026 is likely to be another challenging year for the spirits industry, but expresses optimism based on proactive actions and strategic clarity [4][35] - The outlook for 2026 includes expected net sales in the range of $480 million to $500 million and adjusted EBITDA between $90 million and $98 million [29][30] Other Important Information - The company plans to increase its advertising and promotion spend to approximately 13.5% of segment sales in 2026 [32] - A significant earnout payment related to the Penelope acquisition is expected to impact cash flows in 2026 [32][33] Q&A Session Summary Question: What are you seeing regarding pricing in the industry? - Management indicates that pricing is rational, with some adjustments being made to offer more affordable pack sizes [40][41] Question: Does your credit facility allow limitations on how you can use it regarding the Penelope payment? - There are no limitations on the credit facility related to the Penelope earn-out, and the bank group views this payment positively [43] Question: Can you speak to your visibility on 2026 being the trough for brown goods? - Management confirms good visibility for 2026, with most aged and distillate contracts under contract [49][51] Question: What is embedded from fully committed orders in your guidance for distilling? - Substantially all new distillate orders are under contract, and guidance reflects similar spot ages to 2025 [57] Question: How will the rationalization of tail brands impact your 2026 guidance? - The rationalization is accounted for in the 2026 guidance and is not expected to impact it negatively [85]

Financial Data and Key Metrics Changes - For Q4 2025, consolidated sales decreased by 23% year-over-year to $138 million, with adjusted EBITDA declining by 51% to $26 million and adjusted basic EPS decreasing to $0.63, a 60% drop [8][24][26] - For the full year 2025, consolidated sales were $536 million, adjusted EBITDA was $116 million, and adjusted basic EPS was $2.85, with operating cash flows increasing by 19% to $122 million [8][24][26] Business Line Data and Key Metrics Changes - Branded Spirits segment sales declined by 1% in Q4 and 3% for the full year, while premium plus sales grew by 10% in Q4, driven by Penelope Bourbon [23][30] - Distilling Solutions segment sales fell by 47% in Q4 and 45% for the full year, with gross profit declining by 52% [23][24] - Ingredient Solutions sales decreased by 10% in Q4 and 7% for the full year, impacted by equipment outages and higher waste disposal costs [24][30] Market Data and Key Metrics Changes - The spirits industry is expected to face continued pressure, with consumer sentiment and spending under strain due to competition from online gambling and health trends [9][10] - Domestic whiskey production has sharply declined, with reports indicating a 26% drop over the trailing 12 months [15] Company Strategy and Development Direction - The company is focusing on strategic clarity and prioritizing growth in the premium plus category, particularly with Penelope Bourbon [4][11] - A comprehensive portfolio management review process is being implemented to rationalize 20% of tail brands, aiming to enhance focus and efficiency [13][63] - The company plans to increase advertising and promotion spending to approximately 13.5% of segment sales in 2026, with a shift towards digital media [14][80] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that 2026 is likely to be another challenging year for the spirits industry, but expresses optimism based on proactive actions and strategic clarity [4][9] - The company expects net sales in the range of $480 million to $500 million for 2026, with adjusted EBITDA between $90 million and $98 million [28][29] Other Important Information - The company is committed to maintaining a flexible balance sheet and managing working capital effectively, with a focus on cash generation [32][33] - The Penelope earnout payment is expected to impact operating cash flow significantly in 2026, but the company anticipates deleveraging over time [32][33] Q&A Session Summary Question: What are you seeing regarding pricing in the industry? - Management indicates that pricing is rational, with affordability being an issue, and they are launching smaller pack sizes to address this [40][41] Question: Does your credit facility allow limitations on how you can use it regarding the Penelope payment? - There are no limitations on the credit facility related to the Penelope earn-out, and the bank group views this payment positively [43] Question: Can you speak to your visibility on 2026 being the trough for brown goods? - Management confirms good visibility for 2026, with most aged and distillate customers under contract [51] Question: What is the degree to which rationalizations are built into your 2026 guidance? - Rationalizations are not expected to impact the 2026 guidance, as they are accounted for in the long tail brands [85]

Financial Data and Key Metrics Changes - For Q4 2025, consolidated sales decreased by 23% year-over-year to $138 million, with adjusted EBITDA declining by 51% to $26 million and adjusted basic EPS decreasing by 60% to $0.63 [24][27] - For the full year 2025, consolidated sales were $536 million, adjusted EBITDA was $116 million, and adjusted basic EPS was $2.85, while operating cash flows increased by 19% to $122 million [8][27] - Net income for Q4 2025 was a loss of $135 million, primarily due to a non-cash adjustment of $153 million related to goodwill [27] Business Line Data and Key Metrics Changes - The Branded Spirits segment saw a 1% decline in sales for Q4 and a 3% decline for the full year, with premium plus sales growing by 10% in Q4, driven by Penelope Bourbon [24][30] - The Distilling Solutions segment experienced a 47% decline in Q4 sales, including a 53% decline in brown goods sales, with full year sales down 45% [24][30] - Ingredient Solutions sales declined by 10% in Q4 and 7% for the full year, impacted by equipment outages and higher waste disposal costs [25][30] Market Data and Key Metrics Changes - The spirits industry is expected to face continued challenges, with consumer sentiment under pressure due to competition from online gambling and health trends [9][10] - Domestic whiskey production has sharply declined, with reports indicating a 26% drop over the trailing 12 months [16] Company Strategy and Development Direction - The company is focusing on strategic clarity and prioritizing growth in the premium plus category, particularly with Penelope Bourbon [4][11] - A comprehensive portfolio management review process is being implemented to rationalize 20% of tail brands, aiming to enhance focus and efficiency [13][63] - The company plans to increase advertising and promotion spending to approximately 13.5% of segment sales in 2026, with a shift towards digital media [14][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that 2026 is likely to be another down year for the industry, but expresses optimism based on proactive actions and strategic clarity [4][35] - The company expects net sales in the range of $480 million to $500 million for 2026, with adjusted EBITDA between $90 million and $98 million [29][30] - Management emphasizes the importance of maintaining a flexible balance sheet and prioritizing cash generation [32][33] Other Important Information - The company is committed to reducing costs and managing working capital effectively, with capital expenditures expected to be approximately $20 million in 2026 [29][33] - The Penelope earnout payment is expected to impact cash flows significantly, with operating cash flow projected to be in the range of $40 million to $45 million [32][33] Q&A Session Summary Question: What are you seeing regarding pricing in the industry? - Management indicates that pricing is rational, with affordability being an issue, and they are launching smaller pack sizes to address this [39][40] Question: Does your credit facility allow limitations on how you can use it regarding the Penelope payment? - There are no limitations on the credit facility related to the Penelope earn-out, and the bank views this payment positively [42] Question: Can you speak to your visibility on 2026 being the trough for brown goods? - Management confirms good visibility for 2026, with most contracts under agreement and a focus on premium white goods to reduce costs [49][51] Question: What is the degree of rationalization in the Branded Spirits segment? - The rationalization of tail brands is not expected to impact 2026 guidance, and the company plans to recover costs from divesting certain brands [82][83]

INVESTOR PRESENTATION Fourth Quarter 2025 2 QUARTERLY AND FULL-YEAR HIGHLIGHTS February 2026 FORWARD LOOKING STATEMENTS AND NON-GAAP DISCLAIMER 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 ability of the whiskey inventories of MGP Ingredients, Inc. (the "Company" or "MGP") to provide optionality and upside; ability of the Company to support and meet liquidity needs an ...

Core Insights - The Mairs & Power Small Cap Fund reported a return of 2.06% in the first nine months of 2025, underperforming against benchmarks such as the Russell 2000 Total Returns Index, which increased by 10.39% [1] - The market remains concentrated in 2025, with a few dominant mega-cap stocks related to artificial intelligence driving most favorable outcomes [1] Fund Performance - The fund's performance lagged behind the S&P Small Cap 600 TR, which rose by 4.24%, and the Morningstar U.S. Fund Small Blend, which returned 6.15% [1] Company Focus: MGP Ingredients, Inc. - MGP Ingredients, Inc. (NASDAQ:MGPI) experienced a one-month return of 1.93% but saw a significant decline of 43.49% over the last 52 weeks, closing at $26.35 per share with a market capitalization of $561.105 million on December 10, 2025 [2] - The company faced challenges due to excess inventory, particularly in bourbon, and shifts in consumer consumption levels across the alcohol industry [3] Hedge Fund Interest - MGP Ingredients, Inc. was held by 18 hedge fund portfolios at the end of the third quarter, down from 26 in the previous quarter, indicating reduced interest among hedge funds [4] - While MGP Ingredients is acknowledged for its potential, certain AI stocks are viewed as offering greater upside potential with less downside risk [4]

Financial Performance - Consolidated sales decreased by 19% to $130.9 million[6] - Branded Spirits sales declined by 3%[6] - Distilling Solutions sales decreased significantly by 43%[6] - Ingredient Solutions sales increased by 9%[6] - Adjusted EBITDA decreased by 29% to $32.3 million[6] - Adjusted EPS decreased by 34% to $0.85[6] - Year-to-date operating cash flows increased 26% to $92.5 million[6, 27] Segment Analysis - Branded Spirits premium plus sales increased 3% to $32.1 million, while value sales decreased 19% to $8.2 million[11] - Distilling Solutions sales decreased 50% to $28.5 million for brown goods[22] - Ingredient Solutions saw a sales increase of 5% to $17.0 million in specialty wheat starches and 15% to $8.9 million in specialty wheat proteins[23] Financial Guidance - The company raised full year adjusted EBITDA guidance to $110 million to $115 million[24] - The company raised full year adjusted basic EPS guidance to $2.60 to $2.75[24]

Industry Trend - Brandy has a long history predating the US, but isn't typically associated with the US [1] - A distillery in New York's Hudson Valley aims to change the perception of brandy in the US [1]

Core Viewpoint - Stock Spirits Group has appointed Steven Libermann as the new CEO, succeeding Jean-Christophe Coutures, who is stepping down for family reasons [1][4]. Group 1: Leadership Transition - Steven Libermann will take over as CEO in December, bringing experience from his previous roles at Nomad Foods, where he held senior positions since 2015 [1][2]. - Libermann is expected to enhance the company's transformation strategy, focusing on empowerment, execution, and sustainable growth [3]. Group 2: Company Developments - Under Coutures' leadership, Stock Spirits expanded its portfolio by acquiring several businesses, including Clan Campbell and Germany's Borco-Marken-Import Matthiesen [3][5]. - The company has also entered the non-alcoholic spirits market with a 0% ABV gin-style product [3]. - Recently, Stock Spirits announced the closure of its production facility in Hamburg, expected to shut down in early 2027 [5]. Group 3: Financial and Market Position - Libermann emphasized the company's strong financial platform and its potential for growth in European markets [4]. - Stock Spirits is transitioning from a central European operator to a leading pan-European player, indicating a strategic shift in its market positioning [5].