MGPI - Earnings call transcript Q3 2020

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Operator

Good morning and welcome to the MGP Ingredients Inc Third Quarter 2020 Results Call. [Operator instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Mike Houston. Please go ahead.

Mike Houston

Cameron. you, Thank and conference everyone, financial for the joining for Good and thank webcast Ingredients XXXX. call third company's to MGP the morning quarter you discuss results the MGP's Officer. Mike Vice Finance Investor today I'm President members management and of Colo, their and including of Lambert and Chief with and Executive are Relations and Officer; joining Houston firm, me Dave President Financial team Chief Company, Brandon Gall,

up and will questions. begin with call open to We call management's prepared then the remarks, the

actual At it the before today, press this at like I'd differ Officer, most MGP certain Dave? Colo. is MGP's of statements described results any forward-looking you forward-looking the on risk such However, Exchange as any Commission. Executive a not of recent margin to including today's responsibility due from my well can Dave it projections as assumes could have the Securities the the statements gross update objectives company and over company's the materially made we to call, call reports today, website, and plans begin and President number quarterly the to company's www.mgpingredients.com. factors of release inform the rate, effective sales, to as issued of already forward-looking no turn obligation a you this in call that operating income, the involve by factors The tax company's access made time, If annual may company's statements, anyone The business. to during copy call. and does with statements Chief filed and

Dave Colo

joining provide on overview of progress thank results the take of an we this we updates against metrics and call, will On your Mike, discussion us. you, quarter, Then a strategy. our you questions. performance our for all financial and key for Thank will

sales which double pleased this the I the quarter. strong I new will strong very third quarter, while results digit lines highlighted quarter of ingredients and specialty our a growth and growth. to sales the across the Aged am record with product Now experienced whiskey turn yielded distillate also diversity results for segments.

While anticipate into believe market seeking well we plan. our whiskey this long-term to we end trends to of positioned continued the we uncertainty The and overall pandemic XXXX, to the Consumer remain year, remains sustainable, through execute our related increase strategic robust. plant-based portfolio believe lifestyle the and healthier We strong. dietary diets position in part strong. well are amount protein fiber products each their our as of market within while an long-term also growth to provide remains are of positioned American overall

Looking individually, up for distillery at segment million. were XX.X% sales quarter $XX.X product each to the segment, our in

our year We strong prior revenue results pleased of digit are whiskey to sales with strength double very aged equated and which period. record the quarter, the from growth this continued

Our objective best brown our profits gross this profit optimizing delivering continued of of goods one quarter results. by

to $XX.X from whiskey both prior strong the this sales. gross of demand. sales basis However, quarter. of aged gross strength over for pricing new goods whiskey to in the and to sales total that highlights gross Despite the aged our and whiskey achieve beverage and this reflecting negatively year-over-year projected profit our XX.X% inventory our was meet year also Premium quarter brown line very The unique growing XX demand period. we million, impacted resulting were aged both decreased for a sales, ability with distillate continue encouraging expectations quarter while had to we our continue putaways with demand. this segment increased points align to approximately basis barrel decreased decline, points putaway XXX aging segment by reduced as Segment margin margins XX.X%

sooner, and year to for than is brands brands date driven barrels in our have across bring they healthy fill acquire. we to of more this vintages for brands, aspirations the demand This desire represent new customers barrels by year of we portfolio. the sold aged whiskey to fact, their holes support growth year did existing In balance last inventory and sold market a all their their of

Our quarter XX.X% prior has demand, meet growth well meet to investment well of us third believe premium Brown the needs. sales positioned a and in goods the delivering year. building company. library quarter to as for of positioned aging diverse compared sustainable creation were to those are up we beverage value And this projected whiskey we last while

our as in quarter; well the remind patterns inherent to sales While listeners pandemic. we potential to I business as that this to are results continue the like will and exist would customers needs, ongoing premise due the inventory related on pleased there impacts to an to COVID-XX the unpredictability very with quarterly buying

line overall whiskey the While that growth target become in believe the for consumer robust, underlying trends with market trend the long-term American slowing category. a for continue to for more remain we gradually is rate our

We term, market also continue working coverage. the customers customers, our with improve consistently new our relationships in on position and to long to strengthening existing our expanding focus recruiting sales the by geographic

new acquisition aged remains whiskey customer strong our distillate New products the related uncertainty despite and for pandemic. to the growth

customers our quarter. new and and adding year the We offerings, new quarter doing an job more last both new are aged outstanding distillate recruiting this than period for ago customers whiskey

distillate While aged pandemic. historical board the for we the average due this below customer to and across continue craft demand remain new experienced the to quarter, brand strong sales whiskey our

X.X% encouraging. the while slightly COVID-XX for remain traction a continues larger down slightly see the percentage the premium the of year Demand whiskey the the the increased driven were aged of quarter. year white up growth industrial to national As of result quarter. are quarter. elevated and alcohol The sales Continuing gaining quarter versus our more of supporting products macro the of we to other over during long-term on a sales. pricing comprise American alcohol multinational Internationally, International goods a whiskey and our pandemic segment; our prior remain X.X% sales aged to by of as beginning with the beginning brand for increasing customers. areas abroad. result, beverage the trends category were were sales better activity for primarily prior ongoing are Sales industrial to

However, industrial and to support of increased white alcohol slightly alcohol. down volume were goods optimization sales for beverage sales premium

call, dried As term currently DDGs in year's Sales a improved next last reminder And decreased customer experiencing needs. we are from our X.X% grains the we reflecting quarter's of today. or micro are for of distillers pricing factors. contracting short industrial midst alcohol

in and from X.X% warehouse be of quarter number our led customer of part reflecting provide. first growth Revenue services that macro Our unchanged in we based barrels the outlook to XXXX. in services continues DDG increased whiskey for environment other on to lower pricing in pricing warehouses, the the aging the

Turning XX.X% grew solutions, million, segment XX.X% million, to sales. of to or $XX.X $X.X while ingredients increased to gross sales profit XXX.X%

this proteins. ingredients repeat are ingredients small. reflected pleased well expand progress large The quarter. overall as The double brands the customer as in in of sales progress year its very continued the strength and the achieved are We digit strong and solution base, mix both segment with and our admirable starches in results diverse specialty segment growth we made as both new wheat includes and customers, specialty and this team customer this to has

to from amount results healthier mix were improved recognizing successful underscore plant-based also in In the this optimize our forward. going diets overall our the addition trends as product these of protein business seeking Consumer consumer to profitability, and to fiber align favorable an continuing and ingredient both dietary confidence of increase product lifestyle, and quarter. efficiencies we continue improve in to sustainability with of part their segments our of to well trends. our benefit to portfolio. continue And Overall, throughput

very and This demand products concludes encouraged about and strong for initial remain see to my confident outlook. the pricing continue We remarks. our and long-term

to now Brandon? me for Gall key turn the metrics numbers. Let of things over a review Brandon and

Brandon Gall

Dave. Thanks,

$XXX an the distillery For profit as to the sales, solution XX.X% XX.X% profit the XX.X% of margin basis increase quarter. increased million, both solutions ingredients from to consolidated quarter $X.X result and of increased increased to in gross in up XXX points prior segments. a both segments. million, Consolidated gross the approximately ingredients increased reflecting gross XX.X% products and Consolidated distillery sales year product in

distillery products decreased putaway. from negatively impacted margins mentioned barrel gross Dave As were segment

financial coming putaway inventory, a quarters the a we As portion the whiskey with include demand. adverse from continued the inventory in billion The in away resulting projected quarter. note, at a separate we to with aging as impacts putting quarter of not positive barrel less as On persist monthly cyberattack profit the evaluate our results align second this impact all the that our for filed to as any as improved associated the profit continue this loss our which result on in basis. facilities strategy to likely the includes not demand to gross to a is event. claim barrels We're projected profit seeking revenue recover insurance of the any impact, the do temporarily production disrupted of Atchison $X.X well if related

due $X.X since prior selling, sensitive occurred. expenses million, we reminder, were Corporate data a no resumed for and operations or prior increase by which decreased fees, up year The service related settlement. compensation to higher partially was EPA versus and are quarter have confidential normal As remains any the there to the professional evidence administrative general year. costs incentive offset XX.X% expenses breach and

ingredients results the during distillery strong XX.X% compared year income incentive to two expense XXXX, same same We $XX.X was $XX.X than the Non-GAAP period income last mostly to not both compensation And XX.X% as Consolidated As $XX.X operating result operating the make reversed to a million primarily quarters entry expense SG&A reminder operating million incentive segments. prior our and did increased a was to year's the quarter, a in related this due million, exclusive quarter. CEO to of as compensation costs. transition higher last of accrual related result, to product in out year. SG&A the solutions financial increased performance. that of reversing

made operations subsequently with until time year be The Our we've at After were the the tax valuation compared tax change the understood. in allowance. in for for a conservative not of XXXX per nature to $X.XX to discrete more share. will $XX.X provision. took and guidance, corporate primarily per this company's quarter is by decrease tax to some year I'm a period. of we've that capability $XX.X income was This million to ago now from generating were XX.X% to our increases this quarter earnings XX.X% was cash fundamental level. effective state due position quarter and strong And $X.XX cash we income XX.X% results. reflected XXXX, impact laws confident quarter improved law with prior to there better from versus provided portion announce changes increased be our the the Net of we're amendments and primarily benefit third due recurring. quarter these pleased in this discussed totaled operating third the These the business. We can In very billion. rate release could share increased tax the quarter in

fantastic operating this reduced accounts receivable, and increase putaway combination reduction In for of the addition aged a record result drivers to were and performance, inventory. sales an accounts improved main in in of payable, aging

large in business we customers, receivable supply reduction of particularly relationships largest and and and quarter saw flow with our histories as our with to will ebb this accounts with long-term we new expect in export of new longer history, second customers, the agreements customers craft recent despite sales growth sales and our customers. we develop Although evolution

During million aged the quarter. at putaway by net whiskey during million cost. was the in decreased to period, inventory driven and net $X.X $XXX.X increased of decrease This whiskey decreased investment by our sales aging

in believe to we for creation for vintages library builds meet match value various the reflected and Dave of cash and our value of company uncertainty strong this long-term of believe inventory earlier, are projected As will as demand, forward. delivering Despite continue mentioned flows, related levels sustainable company. our positioned realizing to the we the while and we're well the contribute the growth profit operating to going pandemic,

capacity, it's quarters, of and be whiskey. are impacted our investing we less number aging fluctuations can $XX well of customer previous and with balance capitalized also to for of $XX.X away for sales by production value. position distillate, inventory that continue Although, mixing to million debt new demand investment than growth remain in note important a capital shareholder totaling MGP's our factors the quarterly including efficiencies, putting and strong long-term currently allowing and to strong, access sheet aged in We us drive remains million. cash in

line. under of XXXX, As revolving million September $XXX credit million $XXX remain XX, approximately available the

are view is that of to quarterly with The sustainable X, way consistent as share Our to Board in strategy. the strategy with shareholders. which the capital to of of growth an continues the per record the as the success share, amount dividends payable on allocation authorized stockholders $X.XX company contemplate continues opportunities XXth. to the December long-term Recently, Board important November dividend

me to Let concluding remarks. Dave back for now turn over things

Dave Colo

Thanks, Brandon.

I'd ability that strategic Now macro trends initiatives across to additional support like strong our touch our to our consumer remain the on confident plan. some We and long-term with organization. strategy in align long-term

our investment of mentioned, inventory quarter million primarily aged decreased the Brandon putaways at $XXX.X sales As aging This driven and decline decreased whiskey to quarter. in cost. during whiskey this by was increased

long-term well remain the our value. in in and inventory value both this We are economic confident for cash as whiskey, pricing as our long-term as realizing reflected and for the plan flows. of demand maximizing operating We free aged

are We at markets. our of our during continue competition. The excitement and have Union Series has Union IV in Whiskeys our our infusing We in gains Remus the class, strong well also with with Reserve Remus we George exceeded brands Competition; World George Whiskeys rye pleased and Remus to results of of for the Remus Repeal Rossville offerings launch expectations IV, the while as, were Bourbon; quarter year's brands. Whiskeys Series during best Bourbon George gold this the while single initiative consumer Reserve current additional barrel gold progress Straight each took master-craft won pleased Rossville our Rye made and as Repeal our

awards team and markets. proud many existing our both have through of accelerating our on increased are and the the sales our We years, underscore remain won high-quality creates. which the brands liquid focused new velocity distribution over in We brands

are the uncertainty We the strong surrounding by with pandemic. pleased results the quarter our achieved this despite very team

employees. necessary the and our our We ensure take the commitment to to well-being safety continue measures of

the remain As this on pandemic, of effects we maintaining our we navigate position. competitive focused strong

what experience across from headwinds, two not last did any on significant industry. to during calls, an seeing quarter we're we've impact this provide we our spirits Although shared we wanted the update potential the

related early distilled in pantry spike. to causing sales year-over-year to first loading potential part increased the continue the the The off-premise significantly the pandemic, spirits off-premise in Branded of experienced to channel. sales

whiskey we distilled the While have since elevated come a for demand March growth of remains and down spirits remain believe bit dead and rates American April, they and strong.

bars, an craft customer continue closures have our immediate of impact restaurants Second, rooms the on partial and sales. tasting to

mentioned board call, continue across As of pandemic. in throughout We balance headwind and the XXXX. due experience quarter that earlier this anticipate aged did average and the to first customer below brand we to craft the into the whiskey But demand strong of the to for new this year continue sales remain our the distillate historical quarter.

multinational potential to our third is The headwind related customers.

next. most impact and and into While unclear sheets may capital, year the to is balance have balance of cash strong of it their our access good sales throughout conservation brown the how

indicate distilled and international opportunity international further Year-to-date overseas. sales persist, impeding and but our some markets The quarters in that ability order have few and prudence our way. headwind anticipate reduce some was last our of promising identified tariffs meaningful We we in travel their export to goods around these this near-term patterns spirits exercise key our activity, continue. a in past ability develop experienced grow to multinational potential to customers results

segments now long-term Operator, well ready our for strong remain trends. aligned we available. assessing growing additional will to we term strategy our updates opportunities consumer macro believe the and shareholder in coming vehicle continue headwinds headwinds, financial has regularly We that continue position longer expand to abate. these quarters. are and in with once us drive the to investments they in call. potential concert for that our our activity to evaluate strengthen growth our M&A monitor value. position become positioned question-and-answer to ourselves to portion superior, shareholder Both of pandemic we'll growth markets, a as provide begin believe the the to growth international business We of committed each value will with to to long-term sales that opportunity optimize be we Furthermore, And and of continue continue of as provide position

Operator

comes Mitchell Instructions] Your from from question Sturdivant. first Pinheiro [Operator

MitchellPinheiro

Hi, good morning.

just more the last coming demand craft. So quarter put customers, - to for little Is just aged it about being prudent fit and strong not you on which of in distillate? your and you orders. with multinational new saw It's brown did trying the from from what you question coming a good not comments where are the this multinationals? How does

So where's it from? coming

DaveColo

can in multinational position demand seen the to customers and this push them We a out from good very headwind quarter, their from it have we brown quarter. take during that did customers caused comment Mitch. some quarter. have customers the has strong multinational good quarter, with see conservative had and national as which some you national purchases. Yes, did a But delay of the was impact from or cash, the results tell significant We

MitchellPinheiro

you talked type added the some also quarter. were of customers about, new more, lot in you customers And you they? What added a

DaveColo

ability a craft I of think that's Yes. craft slower that helping And pandemic. rate impacted A customers. to whiskey craft by the craft were it ability continue experience lot attract, the are attract the primarily to of new customers. Even drive aged during added pandemic, quarter the sales, offering to new customers. acquire of though craft being the due viability than demonstrates to our the to to continue we our sales at albeit we customers historically But and

MitchellPinheiro

see months months three four distillers calls XX% change business. hearing Is to craft there out ago; the of We industry, I'm that are there go seeing and you're And for three, later of going sort maybe here. to saw of in distillery? what outlook the curious any craft were

DaveColo

mean, we're by still Yes, well. are quite craft - And there's it's the I to talk hearing some customers the goes driven on, what Mitch. still also businesses of some - the that kind consumers seeing of doing struggling fact as that, there's are pandemic being consumers are there for similar when pandemic we're longer and again but what are to as well craft and well. And the customers as that is that that's the quite to large are of well-known offerings. well-known continued to shopping drive And go longer, online brands do aisle has the going we're seeing starting larger and started, consumers to to initially different helping some look sizes, the pandemic more were shop the now unique craft and the brands

that's So quarters. most playing the the probably over dynamic the that out significant see few last we

MitchellPinheiro

one just, on ingredient then just final and the Okay, one side. question solution

levels? So as out, is you've the for, new something mean, look quarters seeing of type customer this seeing strong I you customers? demand demand within that's these had you this the you level this Or of at sort of Or there category in base? really you've been, demand. are we're Is is of growth - that several existing getting your terms accelerating? are

DaveColo

It's say would I is driven. consumer the what is demand a both. combination But of

to plant-based ingredients doing specialty Our well, fibers. and continue are are their in with portfolio; in those the proteins consumers products fibers are who that and wheat-based look diets. now for are line more specialty proteins right extremely And wheat-based

demand those So needs. of primary create innovation seeing for also product that's as lines. to meet that our the We're the innovation some develop and customers of consumer to these the continue And products growth. is driver drive

MitchellPinheiro

margins - quarter? see gross fourth be levels that to any, that you've there what that in any is near be your should - reason a similar we there been the seasonality affect of think to it this Would Or term and would recording there sort is any year? profit is all thing. the that segment, Would sort of

BrandonGall

I doesn't say, good And XX gradually the It's here. if business. you look Brandon. last is necessarily quarters, we that like seasonality said, around We don't what to you've are think that. experience feel But where get is to we been seen has history to this over Mitch, build specifically we the question. ingredients report it now; a segment, Yes, that a gradual this our XX of the it

are growth is and earlier stated, as and you are levels, confident said these we we this that margins So sustainable. this sustainable in gross are,

look business, move to production the going look demand to sales optimize we're continue forward. and and to we side So as at

Operator

Your comes Truist next of question Chappell the Bill Securities. from

BillChappell

Good Thanks. morning.

little what to that I margins First But quarters? gross to margins similar hit I if at I question, two, barrel XXX putaway? see more to there - guess surprised sold next few what inventory just do would your type think I'm hit goal of to has can from was a that go more bit color I And margins, on basis to going I I look kind would hit trying do point inventory the you reduce see because that gross help segment the meaningfully that any Just less bigger guess as how I margin forward? I over higher inventory much up. seeing you the or a aged me understand, this Will it? a certainly see

BrandonGall

I'll the Bill. for Brandon. first, this go Thanks Yes, question. is

we basis quarter XXX we wanted significant yes, a our the did bring to So, in reducing obviously, putaway, due that attention. to to impact barrel everyone's number point a see

as in we be less in in whiskey balance by we for discussing did products guess need of produced. I it produce terms the turn results putaway unfavorable quarter, it, in the So absorbed variances which this layman's when to operating

perspective, an mix issue from a absorption it's So utilization dynamics. cost accounting and fixed

the those with expensed an sheet balance than P&L it costs, products, what inventory, current on sold as overhead which we the of rather in goods the is fixed cost aging in other saw getting quarter. gets capitalized period this So through

equilibrium. have more So be probably would gross we which we putting than selling, actually gross we than then higher in Where equilibrium. artificially putaway, the be true in as resulted is low would we in which theory, been at is were this opposite percentages if sold in if were at been margins, at historically, quarter, we they away than more we're we've margin

script do in the our call-in we dynamic level. coming that for quarters continue type closer we until get mentioned this part to had expect also an of the to to earlier equilibrium we So

DaveColo

we're that to gross objectives wanted achieved there our communicate to because the the well as as as margin pricing on we other trying The distillate. of the And for quarter communicate aged see product, improvement, that you thing new well as expected we should we that had increase in it caused brown the favorability actually at that goods, offset by gross which increased was dampened sold away would whiskey, our have we goods in that fact sales margin cost an put you the that the less of expected.

BillChappell

Got them. I'm $XX $XX look is trying it. think to XX this your down guess closer I like to get off X at to million, Again, knocked goal quarter. million, only I more about to to you

than So could greater it right? the over quarters. next XXX point much And like is sounds hits basis couple it be that

BrandonGall

it's make goal look communicated to the inventories. carry of month; a at Bill. And away. we based we this dynamic sales of term go that and demand. long-term that's to that on is we're What our way not the near planning and those operations we've reduce we aged look number. the through process going we to on at we that whiskey the how and customers We a every bills our type no, Yes, mash And put decisions quantities where our of whiskey evaluate is aged a levels, value whiskey

a it's that process So month. every occurs dynamic

relative demand. on to adjust that is factors we inventories inventory So the will and we're demand how positioned our based seeing our

we're want quarter-to-quarter. that more there than certainly I you It's and fixed there's to that that dynamic think that number much don't change targeting. out it So a can

BillChappell

still And getting the the moving you're with fire to of inventory. comment, is don't a out increase as sudden way Is put right drop gross you look read instead your at a and the into, sale it? margin saying you to of kind in the value on other and comfortable the of all aged, that are the very of age

DaveColo

exactly Bill. that's Yes, right,

BillChappell

then alcohol. switching and industrial gears Okay to

pulled little timeframe is to you thought that of premium to be bit where more interesting you would year. industrial a I And off white next for actually you think it renegotiating - this contracts alcohol spirits. the the switch was I

change you're So seeing to can me what help next you for year? any understand and expectations

DaveColo

the improved we're, Yes, seeing into are last season, we go year. we some as versus contract pricing

calls, - we've from potential that prior the So discussed is to out. happen and prior playing it for

this looking as we into So that's contracting promising go season.

to the of have industrial is as see as our quarter. all alcohol, consistent. mean, we And for we're far goods alcohol, simply pretty work too continuing that the meeting to for nothing and that volume some report we're our do the know, primarily contractual strong and well industrial in white to demand balance And we're dramatic majority volume, change commitments contracted in there. it's is the as so demand quarter As I on the continued for beverage alcohol we the also contract the of year. you

BillChappell

But of continue be industrial think you to will alcohol positive in next year. in terms pricing and margins

DaveColo

seeing point. we're what at on base do this We

Operator

comes at Alex from Fuhrman Craig-Hallum. question next Your

AlexFuhrman

currently question. about us rye that my on bit more of do a are been talk the And feel versus can on a you whiskey you this side? there bills taking aged bourbon mash Wanted for more sense a versus of assortment? rye bourbon the give whiskey? reflect much were broad very your have that mash is in whiskey, little Thanks inventory Or to you focus bills in demand Great. which

DaveColo

Yes, seeing we're demand good across primary our mash types. all bill

movement one demand over particular we're So the the good board. preference across no type significant seeing other; in over

AlexFuhrman

Can this And the them? with a profit. give really Thanks. the taken you have brought or off if one customers just that customers that's better seeing ingredients heightened in there been we're helpful. How grower of you terms that have many sense and food two side, that's of of been us driving could I Okay, growth? yours growth been then nice, fragmented? that a for really Or year? consistent Is fairly ask it you have with on

DaveColo

grower is on kind a across the want and where being reliant obviously it's to spectrum, be coming of of of from versus Yes, broad customers, which type handful you a customers.

So, starches. to diverse utilizing these diverse customers mix proteins that also group specialty have a a that overall, of we're and product selling

types different we're So pretty customers. across demand board all of good in seeing the

Operator

Your Klieve National next Securities question comes with Corporation. Ben from

BenKlieve

for taking questions. good the right, on All here. And congrats thanks quarter my

couple questions me. Just a from

in segment, elaborate ingredient infrastructure reiterate segment, bit curious higher What term? have you And comments the start made long comments especially to front segment? good. the built can been any your value the this have way - that in that a would quarter away? of growth? on the a fantastic infrastructure helpful. on investments within First out of long on infrastructure you're there to if going revenue this that you're scale segment. of be be just mean is the the the on trending a what of level here I making of towards is Is Is I'm earlier kind to that that

DaveColo

have think capacity. be we efficiency of and we'd trying we're a years business can start with this capacity, support point, past I a of results, capacity think this portfolio. to And different the that to little the but the higher talked our CapEx. of what got has production our position couple capacity, focusing that about some and more At we in these on some shifting Yes, we've utilization bit, the are we've the in to growth amount between that of flexibility before we've the we initiatives this capacity been a have and current in where of is place our based that doing we driving probably obviously, on in an our optimize product current the products margin infrastructure, that types investing

BenKlieve

how other affecting you in That's side for for just me from And helpful one the on purchasing what making before the multinationals from Really on impacting these and are terms here you're impact it. sidelines talk waiting potentially of they're the question customers of distillery seeing on the purchase tariffs your can on. across really kind tariffs, tariffs tariffs specifically about their waiting board? clarity for any of kind the these Got are fallout political how election of or decisions. Are customers decisions? then

DaveColo

versus in And category, it's whiskey XX%. right. Yes, year I are I like tariff the these pretty I XX% think exports mean, rate, information tariffs. a It's punitive off American due to prior think, the

to, that face international is team products customers for I'd export anyone is impacting the maybe the across to face in the see our sales. in as the impact our to, American as as we distillery, of required that's on trying just in the as whiskey with another So much and to that's to business, travel board grow to travel or to what it's equally typically it's for our tariffs inability impact to our the try thing particular. kind an sell And over and we're to international pandemic well say trying to have us, seeing contact, we're customers of meet

grow combination that those So it's impeding it's international of business factors with. talk we're our ability when our we to dealing about, a that

BenKlieve

Got it.

Okay.

And dynamic. so didn't appreciate that I

an So this. issue that you your remarks with travel prepared is said in

So of like of on demand really issue travel perspective. referring travel to a BD rather a limiting travel, kind you're downstream, lack this specifically purposes BD from than is issue your

DaveColo

that's right. exactly Yes,

Operator

from McLee comes Berenberg. at question next Your Donald

DonaldMcLee

Good morning, guys.

down a craft the about bit had a up year? I year how COVID? So prior to you versus comparison far to prior customer the what this talk maybe Could were base. And are in sales your of start quick expectations at follow craft the on

BrandonGall

question, detail historically we been has total of great larger that, about customers, a sales, purchasing we've say total amount is than craft, also historically historically, share as Donald. between that the except based seen a usually it's that's been good multinational. of have What we speaking, brown the sales said And craft with that. the that don't in aged national, has of third a down. a to great year-to-date far Yes, aged proportion And into craft so sales, go within percent

from interest so kept with rate demand So and of up the their proportionally historical the increased in craft purchasing. the has as not has customer craft, multinational far national, year-to-date, the

a market what we're It's that's So customer closely. to continue and seeing. segment, very we watch

said, overall environment, to in Dave to been very our have impacted business of have brown have brands than been average, then we're current it's due probably As monitor. our within very goods that continue and to there ongoing, group and others going more an but important resilient, business, still that something that part been the

DonaldMcLee

helpful. terms just of at in higher customer bit, US? on-premise the And as begins at the least then how a that's reopen mix, level to behavior changed asking the a channel Okay, maybe quarter-over-quarter has in channel

DaveColo

spotty. been it's Yes,

weeks up or again third be in the capacity In started think, cases. locations COVID more as couple on-premise of to seen we I the increase impacted started to we that open spikes quarter; see capacity. have last in recent

in to strong we as think growth I So we today, continue sit see here off-premise.

sold I of to think the bit as COVID I down a dip, continuing it's date; issues steady the up some we're growth spirits range. are off-premise on-premise on-premise COVID. syndicated it little throughout XX% But back into has were in seeing the to data, more if XX% it's a starting XX% in impacted channels. plus be They to being more on-premise. increase up low averaging started by dynamics think come you look in off-premise spirits, as distilled took been then emerge typically And got to as to spirits relatively

DonaldMcLee

last the for on solution the me one then and just ingredients Okay, segment.

about the strength similar progressing and demand for for of demand year? seeing proteins fibers. levels weak how's specialty talked new the So you Are in and product of you ProTerra

DaveColo

some ProTerra off We're are base. product lot a of good small our interest. seeing coming development we around a But seeing demand new Yes, pipeline that in are platform. customers from seeing we for albeit a in of lot product ideas of

small lot strong we of interest and product a starting we're at we're this of of So has but - long potential but point, believe a to a growing continue off that base term. lot line

DonaldMcLee

portfolio? factor there? positioned some limiting apply, the years there is for broader that way like wheat-based to it that back multiple to maybe guess, portfolio, type of protein being specialty around does as same the going within Or because comments just does earlier I then your growth And different to ProTerra the the of product Understood. in

DaveColo

think, ProTerra to know the applies ability we for it as expand the as say continue portfolio I'd well, that have to No, I to you foreseeable future.

I So see back to session the concludes you. point, ahead. Colo. at side equation. to of question-and-answer now this any constraints the David like Please go Thank for really conference would the I supply That today. our don't on

Dave Colo

in Thank interest our for for your call. you today our company quarter and for third us joining

look that continue fourth you need with our strategic create We we forward the resources implementing to it the plan toward us We talking remain quarter. long-term make after progress again value. will and provide shareholder to to confident

Mike Houston	Investor Relations
Dave Colo	President and Chief Executive Officer
Brandon Gall	Vice President of Finance and Chief Financial Officer
Mitchell Pinheiro	Sturdivant & Co.
Bill Chappell	Truist Securities, Inc.
Alex Fuhrman	Craig-Hallum Capital Group
Ben Klieve	National Securities Corporation
Donald McLee	Berenberg

MGP Ingredients (MGPI) 1 Nov 202020 Q3 Earnings call transcript