MGPI - Earnings call transcript Q4 2020

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Operator

Good morning and welcome to the MGP Ingredients Fourth Quarter and Full Year 2020 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mike Houston, Investor Relations. Please go ahead.

Mike Houston

Thanks, Gary. everyone. morning, Good Houston firm. Mike and MGP’s Company, I with Relations Investor am Lambert And their Brandon members Dave are Financial joining today me of of and and Executive Officer. President Colo, Chief management Officer Vice and Gall, Finance Chief President including team,

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

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

Dave Colo

strategic effectiveness a of strategy. our quarter your updates implementation. will take key discussion you and overview our this our the we metrics an call, Mike execution year, questions. improved of and On XXXX tactical progress on thank solid the represented for a our will Thank of accelerating for all while performance we pace us. of joining Then you, financial year in results provide and against

profits based levels. objective as pricing the by and to record Products segment and market company at finished volume increasing gross paid for profit Our the goods dividends quarter share at optimize Distillery year brown

improve resulted increased increased in an profitability XX.X%, Additionally, profit year. our of consolidated increased sales while X%, $XX.X for million, gross to income ability in record and XX.X%. operating increased the Ingredient a to Consolidated in Reported year our XX.X% throughput for increase XX% sales. profit operating the while representing gross of XX% adjusted Solutions segment income

Aged very the quarters, posted this for continued are growth quarter momentum our and each year’s this Each the gross the pleased with fourth respective by a exception. record. prior record year, quarter, of quarter and no the XX.X% year whiskey strong segments beverage double-digit reflecting quarter, year. versus alcohol ingredients result was record We sales profit the sales a strong sales the year. XX.X% for experienced the which premium in Specialty grew posted for another growth for an drove quarter increase also

whiskey meaningful being sale Looking segment increased growth. was sold were driver began premium quantities. quarter of age been these since the primarily average highest fourth for Products brown as in has was Aged goods catalyst in our sales we in to whiskey to period. the The Full of at each individually, customers margins served record driven primary aged increase up sales also gross barrels available segment, sales beverage of the a with barrels whiskey it X% in the the increase making by Distillery aged sales XX.X%, alcohol sales. XX.X% year our for primary and in

levels. believe gaps market the goods due the was goods brown trends. distillate also longer inventory. Our in by as compared this as new year inventory year primarily from national This term in slightly aged multinational growth to our a year sales customers demand which customers outpaced demand more gaps in of last to to as filled their for for whiskey has experienced we as fill whiskey aged some aging solution increased of leveraging our driven inventory and from was brown Sales their they new of we declined distillate,

year, aged half a customers with half total of the averages. of smaller the more that line During represented purchases as back sales reversed but their volume whiskey, craft the to the year proportion increased first in of historical in trend be of

rates whiskey While will our and well to more normalize remain consumer positioned us and We increased share and as believe when with we mix our position the overall demand for robust well, long-term for the us demand this come line of period has advantage scale continues. remains category. in significant growth diverse customer will to American trend the uncertain begin if

volume During increase refine share growing category or the the our in selling and customers. with to potential plan whiskey American XXXX, we new toward how process focus infrequent approach global we

the our this to changes anticipated, not quarter As year. profit did pricing, gross and record in action overall for additional significant margin result and results supported expansion but

sales value attract aged of to to confirm ICP, by cultivate long-term inventory, our of third-party has gross of by segment, premium sales new with as venture alcohol profit customers. additional partner. year, distillate to with as record for the goods supported well joint sell and beverage other former of marketing partnerships white the our margins. industrial whiskey industrial ability customers Our alcohol provided results areas existing whiskey produced year X.X% the MGP improved our services increased solid increased for aging and sales while on X.X% Continuing the Historically,

XX% levels. and totaling will services ICP of products, and the we with these half these forward, the anticipate Going during discontinuing first sell year XXXX, for historical of market approximately sales

wet For ICP, production clear, within MGP’s of low margins. gross by revenue occurred the system quarter fire. fourth replaced product to distillers to were of distillers Products distillers X.X% Atchison selling our Distillery the for to single-digit grains byproduct due no reflected longer approximately our reference, during for grains this the product at To dry no year, customer primarily is and million injured segment, decreased will dryer relationships. grains be need to our distillery. alcohol service our drying we in industrial the impact no to event. direct the be at fire need volumes $XX employees on in due or during Sales as has to that due sold The in a Thankfully, XXXX, convert byproduct from internal

ability As The of in with to alcohol. further process needs. as well rectify the to to and grains that to product drive a result byproduct wet distillation versus this, distillers feed as changes spent supplementing supply our feed a operational or to sell within purchased we capacity our beverage-grade produce byproduct include made restart of as week production continue changes we facility customers’ Atchison the operational order

X.X% expect to complete this be handling a new the installation in will in prepared services and byproduct from year, warehouse back the manner greater year. We the increased growth services for detail whiskey reflecting, continue in barrels the Revenue remarks. operate and warehouses of that we number until our we in drying this of customers, system part, other operational provide. in his will half during Brandon aging we in will of cover

our product fourth ever. profit Ingredient our of the and to XX.X%, XXXX Solutions, revenue continued quarter million finished while and gross sales. solid The or increased segment and sales of mix. ability $XX.X customer diverse with Turning our strongest to with quarter this for further We base profit the year momentum XX.X% the optimize year grew one reflect growth being to

aligned Our as new consumer existing product our business trends, offerings remain to and ability with with effectively by strong evidenced grow recruit customers.

business plan of segments our are our consumer well offer. of year. strategic positioned each very the pleased with our these profit us revenue this remarks. Overall, has This and We benefit to to the segments and capture both initial potential my from fully favorable results for continue trends concludes trends,

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

Brandon Gall

Dave. Thanks,

XX.X%. and the and XXX For increased the points sales both Distillery of increased gross to margin consolidated both segment. premium growth $XXX.X Solutions by due $XX.X basis profits Products profit improved a Gross Ingredient beverage X.X% XX.X% to increased segments. million Ingredient to million the record Solutions double-digit in in segment quarter, a as to Gross result alcohol

X% $XXX.X higher and $XX.X XX.X% Gross a XXX gross for profits. Solutions that year, million to through segment sales and profit Products as the the increased temporarily to a production disrupted Ingredient to Ingredient of Products consolidated our XXXX. results Also For increased due during year Solutions million to second points sales increased Gross gross Distillery growth. result margin impacting XX% Distillery basis at ransomware facilities cyberattack segment Atchison margin the record by the quarter. was

a second any business and the impacted attack is there million estimated during in affected, that improperly gross evidence $XXX,XXX was or quarter, it claim no extracted information which, from recovered accessed confidential adversely no December $X.X XXXX. was through this the that or is data sensitive of While interruption by network, insurance profit financial was

recovery our are ability to related this further We event. evaluating currently seek to

fire we fourth million. experienced caused a by It which for quarter adversely damaged $X.X is Additionally, production temporary gross estimated the at time. of a drying quarter, the Atchison it during that the feed impacted equipment facility profit loss and

from offsetting business event. is quarter, casualty our a partially during this And profit settlement operational, carrier, against the of and and the $X.X as throughput system property affect anticipate will insurance partial type results. Our stock protect gross replacement Until insurance interruption the million loss. such, we this record we did

$XX.X well note, compared will in expense, of by be coverage, acquisition to and business administrative Luxco not the similar loss. incentive as to transaction. these outside is our quarter a not Corporate However, personnel general quarter. of our may losses Please and as of efforts, transition expenses as if CEO to inclusive primarily increased insurance period quarter recognized recovery, insurance however, and XXXX, as selling, control the compensation the million the same any business timing higher related costs despite the expect we fourth portion, costs for all the $XX.X of fourth offset interruption the by to best driven of occur

of expenses to million XXXX $XX.X of the Luxco related transition transaction. incentive the by year, compensation costs relating and incurred increased million from full acquisition to costs of incremental due XX.X% corporate inclusive higher $XX.X For the the business to and expense personnel position or certain CEO SG&A

incur first transaction-related in with of XXXX. half costs additional attainment costs, We will the including associated synergy

increased fourth to the income of income $XX.X costs. million, transition Luxco X.X% for Thereafter, million, we Non-GAAP quarter decreased expect transaction normal certain operating the our previously to to as exclusive X.X% due to costs SG&A levels. business to discussed. and $XX expenses related return more the higher SG&A primarily Operating CEO acquisition to

to the operating Luxco partially For transaction. $XX.X XX.X% million, income higher SG&A higher acquisition to Non-GAAP of the CEO year, and due gross profit, increased $XX.X discussed. as income costs increased and to XX.X% expenses business costs sales exclusive operating by transition to million full related offset

effective year tax ago. was corporate for quarter rate Our a the XX.X% with compared XX.X%

with compared earnings for in of X.X percentage XX.X% fourth For tax prior year. XXXX. the and state million, primarily tax the share per during $XX.X the quarter XX.X% favorable operating per acquisition corporate year, share Luxco to from decreased to that income transition full CEO was occurred the for was to awards exclusive business due quarter income were higher $X.XX share-based decreased Net the XX.X% effective rate due costs. point increase The the EPS taxes. impact costs Non-GAAP $X.XX, and and of related to vested $X.XX to the income transaction lower

reflecting EPS $X.XX year, costs from increase the cash-generating million per $XX.X Full by to $XX.X the income, related was rate capability million from net to our offset operating business share, up costs the to higher per non-GAAP $X.XX business. Cash from prior in described. $X.XX million due income of and of to in to per exclusive flow previously increased year, share XXXX, Luxco transition year the $X.XX acquisition operations tax share $XX.X and transaction. X% full the in For partially increased which increased XXXX, earnings from CEO share strong in was per primarily

of flows the year flows for million. and continue to results, highlight We doubling aging our remain driven our operational sheet for of cash with balance as aging operating improved the to million was quarter us shareholders. whiskey also sales a reduced Strong debt strong, combination of to well addition position cash inventory. grow and free the value by $XX.X invest strong and In funds than the remains well to to capitalized as record cash putaway totaling further return $XX of aged MGP’s inventory. more whiskey allowing

as capital Our strong to new cash with access strengthen our credit enabled evaluating strategic enhanced acquisition MGP the flexibility capabilities, markets. revolving provide opportunities our financial the by generating that position plan, including facility with in execute coupled growing ample we growth

sales this the quarter, the in at quarter. by decreased investment of $X putaway was Our during increased inventory driven fourth aging aged whiskey million net decreased cost by decrease in and

our impact gets cost a to of margins other the decreased fourth fixed dynamic Products’ and quarter than by year As call, segment the have goods a sheet getting products. the basis basis overhead points margins, P&L impacted as as compared dilutive putaway XXX periods. This on Distillery XX does expensed prior as and rather balance on capitalized segment to aging gross through it sold reminder from the for points last the inventory, quarter’s the in year gross

and we Although inventory putting including customer demand be investment new mix to fluctuations important and capacity in quarters, also sales are than aged currently that of less impacted previous number whiskey. for could of a is aging by distillate, away factors, quarterly for efficiencies, in note our production it

$XX.X operational figure capital and approximately delivery to million $X investment with delays our in million estimate We in the finished COVID our came pandemic. the due also in original equipment to continuing remain lower This related to year our expenditures. committed capabilities than

balance in $XX proceeds. $XX capabilities, We million accounting capital approximately acceleration for and to the commercial fully be during which million $XX.X that depreciated $XX and previous The reflects of total in dryer replacement. an funded to greater approximately an perspective. million the future the mentioned of provide relative approximately $XX anticipate from expect million was million flexibility planned efficiency XXXX, through will total improve between spending expenditures of insurance capital which Of the we dryer, enhance our expenditures costs, previously includes

back to operational projected half in is XXXX. of the be dryer new Our

XX of per business payable We record dividend growth recent incremental is amount Luxco approximately through aligns growth Board shareholders. underlying the to uniquely In expense Board share quarterly to with increase business of the with our of which the way capital announcement, of premium depreciation to approximately authorized as as million, March $X in We payments $X acquisition consumer focused light strategy $X.XX believe million to in the long-term organic an in on well and leverage. dryer expect a XXXX. insurance the of our XX. March the of as investing the pursue share, acquisitive stockholders view positioned growth on is trends dividends The success of important an and continues as strategy to allocation well strategy our company our in

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

Dave Colo

has the marked which long-term strong to year an a of results for Thanks, growth. key effort foundation of Two point and implementing that improvements was growth financial part Brandon. This A the our category. robust future whiskey foundation build initiative. plan, positioning inflection MGP inventory whiskey our strategic of of this delivered branded to substantial critical our accelerating our have benefit aging and components from been American of

will of at and vintages of $XXX.X significant aging Brandon the whiskey third and of XXXX, mash company. of $X profit for cost bills cash flow of continue putaway from declined As our to of million quarter inventory the various reduced strong million at library to sales whiskey and levels reflecting believe the whiskey. our mentioned, end contribute We aged

step also definitive to towards all through expands this branded-spirits We and distribution in states. announcement. our across the merger higher in first Luxco initiative sales our the value the line sector our is XX material and a branded acquisition, year, product capabilities accelerating of This close half took expected agreement significantly increases which recent

sector reasons business. the growth expected our diversifies for in improve to into be EPS of with It combination generation to will full cash accretive provide expenses. acquisition middle which to all the company’s ongoing opportunities, future this by to establishes MGP’s transaction expected following increase significantly our higher growth gross many value-added and material are sustainable are branded-spirits flow Importantly, percentage first is and to in benefit immediate an onetime the its our single-digit we shift focus is profile, excluding platform the There expect transaction strategy an consistent additional close, various provide and to MGP’s This products. scale excited which year to low margin stakeholders. be

of by succeed specific President In of key each additions demand During strengthen food both blenders, which team an disciplines our of strength the individual areas year, to among new And Ingredient efficiently a have this R&D chef our principal export we based business our dietary Vice any customers recently these proteins fortunate in were size. to ability of European and and than of have London a in collectively scientist, distiller support and was execute distillers role serve collaboration developing have will in segments culinary long-term helping to consumers, team hires. strategy MGP’s bench plant-based strengthened us strengthened to with key we experience lastly, a master additions product strategic expanded our of MGP’s the from a Distillery that fiber. customers Solutions role, team past R&D, more three our of The with allowing in in to such master master as team, enhance high will of and sales development Products experience Each we include organization, fast-paced on decades MGP with created markets. plan. lead

believe for lead wanted opportunities, our XXXX, past team three headwinds our we execute sustainable potential ability long-term Although we share. this to the we to strengthened have year proven growth proactively will identified to and strategy

The to potential commodity increased first relates headwind costs.

crop the higher during revisions you downward As have as yields corn the exports stocks, several in costs. and from the significant been well as may corn corn increases months, past aware, be resulting to there U.S. in XXXX

the the employ grain, volume for that we purchasing our pricing and at products. time, contract a program As an corresponding we reminder, management includes extensive same risk

sales. our in our to we price the in And not However, will always that we increases we contract provide costs market. open a through cannot for as customers able commodity assurance to of reasons, result, be XXX% various do

cold severe in of the corridor conditions historic weeks. States in United have that weather the is the occurred recent Second Midwestern

in these to our energy result which we ingredients customers reduction at we X produces produces weeks. result wheat-based a as for gas first this of of weather in production restoring to proteins a facility, natural industrial as earnings As alcohol, and and result neutral-spirits This reduce levels the process likely usage conditions, our of required This our Atchison and that our in well our by for are a to quarter, revenue distillery starches. grain approximately impacted as were disruption suppliers service will event. historic operations the

many internationally, ports is sell as various issues experiencing well at products like goods ours shipping with other for that deliver Finally, needed backlogs shortages too our abroad. businesses shipping as to containers

While it issues this pandemic, business. disruption are and XXXX, these issues by these numerous the presenting logistical challenges result likely year chain is long to our global persist. caused the of unclear Similar how is COVID-XX to the supply delays will

our the and remains positioned However, products be demand to we of believe through for balance the these mitigate continues business robust, well challenges year. our to

the certain to COVID While times. growth for our these parts uncertainty accelerated brought business, pandemic bring unprecedented it of with it continues increased also during

the we year. pandemic remain we of to continued throughout very the potential long-term business, the confident related about anticipate uncertainty While our

continues it any future be on to financial of our result, difficult impact pandemic’s a As precision, to cumulative the predict with level results.

Whiskey rolled the remains during for Repeal quarter, category annual reassess reasons, the this American trend supporting are George growth debuting earlier the Union strong. Remus single ongoing of we our providing fourth Remus in not these macroeconomic based out whiskey also macro consumer this these IV on Rossville recovery. year. we and of brands while dynamics, barrel changing believe Straight we programs Despite the Series time, guidance visibility Notably, our the For position the underlying we’ll at the XXXX and Bourbon Reserve

We well XXXX expected While sales close rates our our the in brands as XXXX. total teams gain still for with access we to sales capabilities annual distribution the solid of brands growth believe integrate are by as marketing positioned growth in transaction. and following national Luxco’s small, their for additional double-digit and grew

strong refining of accelerating the the our effectiveness long-term has implementation pace of Our have sustainable foundation execution, positioned focus MGP tactical growth. the built and leveraging continually our on for we strategic

of delivered full challenges year Operator, call. thank of concludes to outstanding of their like results the I for a portion are our question-and-answer actions That that Finally, begin would to in dedication employees our remarks. ready opportunities. the and all prepared and we

Operator

[Operator comes with Instructions] Bill Our go Chappell first Securities. Please ahead. Truist question from

Bill Chappell

morning. Good Thanks.

Dave Colo

Bill. morning, Good

Bill Chappell

just level seen much the on pretty kind we’re I guidance I give understand to least got every pattern months a back still push want can for some order to from consumer-facing some you’re over I’ve Hey, of in XXXX. has pandemic, no start customers I X and see. kind also we’ve to of company business of but guidance. give And you think at visibility a of that past kind you that an guide, improved is mean, the

why initial the poor so us why XXXX can’t the at in of out me trying that business more give talking Luxco, some do can’t color to versus you expect is the are about. different tell just if is looking give grow we’re And what can this figure guidance? base guidance, you XXXX? number so so give accretion And you we business out least an visibility to at and you as kind some Because of

Brandon Gall

Yes. In our is things. and off I’ll the a Bill, this not are couple on all of of industry, start guidance. giving spirits peers that Brandon.

reasons we some that the refraining exact still fact, shared. are for In

in highly investors Additionally, not We’ve business. over primarily with of The order course of the drivers, years. couple on always that some clear our profit big last patterns brown the our our very of been goods visible. are side of

for not business, our of part into the customers. year visibility give this that year. patterns record of added a was us any we XXXX although inherent do go So does just order as our It

Dave Colo

in here year, the the first think the I as get year. acquisition got other thing into to Luxco we of Bill, half the is, this close we’ve

through of time. reassess on point environment for in need going in post-close process balance our at that Take as I on get we well. look view then to and the a the that year think the what’s guidance at

Bill Chappell

where seeing always what this is there ex-Luxco I is mean, is there chance is chance. there to understand, seem or a trying us So arms down mean, risk that opportunities, a to for are to around just you’re of earnings but that numbers be bullish I tough your on some a lot things But year? again, our going? that get you very it’s directionally to

Dave Colo

to pushback. guidance point a think in think still we’ve line think better segment. give those the to if time, I particular going we And Luxco We Products I said we this We to or expect tailwinds that’s grow No, our still got that’s In be with not all provide like time the in business at category I continue growth well the segments. about Yes. in I But on to we’ve in guidance as appropriate Brandon we’re past, fair not. rates the reasons Bill. we’ll our stated, do position good for both said, that. think transaction Ingredients a Distillery assess in as just to feel believe post-close

Bill Chappell

side. Okay. on area Well, you industrial alcohol turning sure to where very good the certainty one have pretty I’m

believe you and a said you runs advance, through think that’s contracts of quarter. negotiations the that I in pricing year also over the past and pre-sold at I went And it capacity. kind

profitability an of margins Because just sanitizers, from and was customers? demand there where stands? would give think that you can with hand for higher increased expectation an be So higher us there the that update I your wipes overall

Dave Colo

talked reasons. on in anticipate XXX% our industrial started is for the is during of if a on cycle market calls, last playing the pricing Keep market and of percentage half capacity we on this the in We out this pretty Bill, contract leave on last What that’s volume. industrial for or much Sure. market the thought year. new in various contract in spot like we come We alcohol. cycle new year it did last mind, well There of we the capacity of Yes, would. open as this GNS do we that’s not capacity the that QX completed year, year. couple come see think going pricing there improved second have certain on have price to about I we as to we coming

into So think new suppress do pricing that’s the the we comes as going to market. capacity

a We longer. bit in longer are on COVID demand goes seeing of and reduction little as

in stores products, I think of cleaning notice other and that people you abundance of out you now, the etcetera. sanitizer and if if bought rolled a form products, the hand there will. inventory And alcohol of is hand an in lot sanitizer

were pricing. margins of going We get through we So think markets balance start to see to probably spot the the the short, long are some improvement increased to better should due story the industrial capacity, year our year. we able for decline but to in the

Bill Chappell

opportunity move I But you’re do a forward. distribution, one that the I making point, to for which still potentially certainly of making know want say then just that had expand more? you is faster? bigger, kind I how Luxco spirits the you mean, inventory that you’re use the the or when down, want does And down, on any I you not of spirit brown that, some don’t them. Luxco work plan And of an to believe with aged a, either: brown the your spirits inventory inventory, to change? your these existing the think make aged And through it of expected, to to brown Luxco back inventory? – hold add Okay. the products moving But of does to deal or level I on brands have to change the your view some the aged at you which

Dave Colo

Yes. great It’s question. a

best the way think inventory. and look use of we the highest the is at I

that out brands you customers’ post-close, existing There our could their all new at with obviously primarily our support having in it We that. of and best growth very historically, looking are about And brands. remain as we that will brands can the as needs as our the to opportunities. use But develop with have support putaway do Luxco, brands Kentucky-based definitely opportunities we be own use enough talked we come whiskey. we will put obviously, Bill, we’ve So continue our own to to is be of away liquid. well. Luxco committed know, to to whiskey whiskey

support So – distillation at own this brand’s have to capacity we have needs. they point adequate their

we post-close inventory to want with our to capability we if certainly new have current Luxco, launch brands that levels. with the However, do

Bill Chappell

Okay. me. for And then one last

close, timing color any Luxco? if assume sometime seems the didn’t quarter? transaction? just safely would more we months X know I that was second of You take Just it straightforward anything there the the half. fairly I in on said that to – mean, why first should it

Dave Colo

it’s a speak. deal to HSR matters TTB go you of we the the typical through. in regulatory with number And This I through going the licenses mean, as Yes. on states things go we permits. process and through to have is the have

So certainly at We this anything point that from this into deep in would closing. deal prevent time that don’t we’re see process.

We’re quickly as is as we goal we quickly close moving as can. and as our to can,

So nothing to that this see Bill there that. we prevent at is point,

Bill Chappell

roadblocks. No

Okay, great. you. Thank

Dave Colo

bet. Thank you. You

Brandon Gall

Thanks, Bill.

Operator

Please ahead. The is Craig-Hallum. Alex next from Fuhrman question with go

Alex Fuhrman

the strategy. more of about issue like in company Great. you in mentioned has whole a Thanks you remarks successful. talk that has Dave, very the been like that little much for taking your whiskey about Can really my of selling sounds bit changed It And prepared good sales stockpile business more that? I years, been really question. team approach a selling to less the for mean, and of the value a has it. seems actually the about inventory And the particular, aged it whiskey. has had different

going able a bit Is that changes Now talk it what forward? of now quarters a in norm a more two where aged for should good and transactions whiskey. you’ve going executed to little you we in Can get going the process forward? the like your sales number be to have row been see about you looks

Dave Colo

needs from brands. part customers be I to we XX we we’ve of of in gaining continued with think brown whiskey obviously, talked last benefited yes, into over the to aged that, with be the whiskey think reduction combination a and by that, We’ll the of they part I we number to customers’ aged needed think come last into probably over the we’ve brands demand the will, that than our come with think inventory. X the it’s think our kind off-premise that increase I the fold, is And move we of of Sure. more from demand to probably away on-premise. some increased yes, process was it customers bought significant I It quarterly And all now. that. feel still of and plenty we’ve couple as in the the X think, marketing had driven Yes, to a to basis much quarters as expected, continue And American we we subtle I in we’d really in the changes if here what that new COVID primarily manage but amount sales the demand I there. whiskey. the about four changes pretty that gaps also and their But fill months. saw the go-to-market aged. we a for, last our multinationals the And we what’s higher of goods, And benefited larger that of made think naive think that it’s overall, driving selling the fold three, we change, and also traction. think, you quarters our in on to any future support has couple But if Alex, out past is and think have in just the going And of and do great in they is a their consumers. didn’t they months seen some our have due the of interest definitely inventory appropriate saw, put

Alex Fuhrman

I That’s in purchases fill to Do making of of the in these as top think of their imagine feel XXXX? landscape. to in inventory. fill just mentioned different mean so some what to that caught deal you kind they a a about catch-up that view sufficiently customers. Thanks. good is have still then need sort you lot you whiskey customers up And I of you or your you holes into with have there are guys pretty overall inventory their bigger with going room helpful. many brands

Dave Colo

as that. mean, our you customers tell I Alex, Yes. don’t know, us

you’ll saw to we’ve you out patterns. what play can that’s recall of of about that Brandon I speaking earlier order craft customers. But pandemic shut the drop-off craft locations significant activity hit distillers. So in was were creates we if first this of with tell the when is, of selling really a impacted And and on-premise down, it our seen customer what year activity past amount visibility the uncertainty part the –

for to it aged distillers seen As continued in have the year inventory. this then a we in craft we resurgence QX see needs progressed, started and QX, in and

I good that’s sign. So a think

of continue if continue will reopen. and if to And that continue on-premise think vaccines be expect there to is reason that. to successful cases the COVID decline, not I to probably continues no the

emerge. So fill that. multinational kind the customers, inventory as I that’s to that to knowing far we national it’s starting a predict have at hard this good their think, our see of to enough But purchased and are as if point gaps, trend,

Alex Fuhrman

up so $X.X And some facility? question we Is minus getting mentioned you onetime due in an fair Okay, results, in settlement? the on is, to is the color impact guys results, financial you costs settlement insurance your or and Thanks. of where might release, the think impact you out the the out for I then numbers? management that fire a you M&A us And Can the the to the the the record million I called see transition the guess, in diligence. net more numbers, insurance net the having give of enough. last show just specifically and bit Atkinson my impact a break the little around

Brandon Gall

Yes. Good question, Alex.

it So on to exactly dryer, right. answer you last the got the one first

dryer out see offset in we receipt roughly gross will you change gross from million impact play And saw profit $X.X that the by of profit the the at level. was So million. $X the

a we insurance perspective that’s strive a going future recovery mentioned, quarters and So perspective from able as do of the that. going some that’s to I until the already were new you’ll timing receive see not our are to great our period, – we reporting control. where operational. get lot Again, is we dryer which the But a in in to same to be within totally

the is broken SG&A increased of towards in the quarter out – so other $XX.X Alex. away in quarter about moving About items the this Some mentioned, dryer, the you from million. SG&A, the the costs. that CEO incentive of majority back $X.X about vast transition is is of remainder Luxco The to comp million deal-related the press of and our related. release, but increase due

So – and two that’s by things. driven

incentive reversing the XXXX. and accrual did the the secondly, to as response company’s in year; in accrual prior Firstly, we not increasing out performance the in

this once half transaction we year the additional as normalize past get half. we with to to expect incur, in mentioned, back we first So expect expenses of do also we SG&A the

Alex Fuhrman

helpful. That’s you. Okay. Thank

Operator

This Colo question-and-answer our over conference to concludes remarks. for session. to back David any the like I closing would turn

Dave Colo

you our Thank for call. Thank the to talking company for quarter. forward joining in We you. our again full with and first and quarter your today look fourth for year interest after us you

Operator

The today’s for conference has now concluded. you attending Thank presentation.

may You disconnect. now

MGP Ingredients (MGPI) 27 Feb 212020 Q4 Earnings call transcript