MGPI - Earnings call transcript Q4 2021

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Operator

Good day and welcome to the MGP Ingredients Fourth Quarter and Full Year 2021 Financial Results Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mike Houston. Please go ahead.

Mike Houston

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

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

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

Dave Colo

safe XXXX. of for call this MGP We and and open begin made quarter our year Ingredients XXXX our XX, will By your have XXXX, will our you, you thanks company. financial Thank updates overview joining and the and against line progress On the an your appreciate hope Mike a and healthy fiscal in interest strategy. performance have we performance remarkable for for metrics we for represented year a today. call, all key the call, with we everyone that At accounts, the and the of Q&A. discuss the end ended on December provide families

focus strategy, As profitable improved tactical effectiveness against of value in to our segments history. most determination our company on our our record we and to products, this for team execution continued achieving and executed performance in across customer the from business strong meet year. allowed our deliver full each The our increased year were financial our of results model while MGP display, resulted in strength demand

done the the and the success aged organizations We team The are has us efforts job of distillate strengths also the The to past quarters, integration for few organization. demand remain strong. pleased whiskey the culture. very an of achieved acquisition a of combined continued one-company new from high-performance with the impressive by and of Luxco creation the benefit the allowing

continue We to incremental expansive to in the shift positioning our consumer meet brands family demand to while achieve growth. of optimize us

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

year. The across are a to achieved we each fourth segments continues the whiskey be for growth for the very with with sustained over driver increase XX.X% premium a beverage the pleased momentum demand alcohol quarter the the growth We year. and of during sales aged in our full

also Ingredient demand up contributed and tequila year. Solutions to for the Branded from XX.X% were segment encouraging the whiskey offerings segment strong quarter-over-quarter double-digit the the quarter and results Spirits benefited sales growth for and for American for with fourth year. Our the

of segment, Products we the year achieved detail, our for $XXX.X and Distillery each the profit XX.X% whiskey up full Gross XX.X% the greater also year improved primary quarter Full driving or at sales segment $XXX.X to increased of in growth. whiskey million the increased increase ending segment Looking sales. the million. aged sales margins sales year beverage record in served premium as of Aged XX.X% with to in driver period. in record with sales sales to a X.X% gross year alcohol

categories. of sustained market longer-term Our outpaced attributed strong brown of the demand our growth the in year by to This was customer sales goods trends. each this

relationships without Our record possible job and team and market the share not for anticipate capturing as demand continues sales have American diverse team’s robust. year across a growth we the expertise could remains cultivated performance our unfilled demand. strength sales been the we experiencing have the prior consumer whiskey fantastic to We have The and our in continue customer base. been do over to

We also expect to persist. strong pricing trends

strength, XXXX. into a the and an will inventory as support growth this sustained for we in to year believe the compared offered also demand whiskey year its Our of has continue aging distillate growth the new Sales period. distillate our posted prior brand’s strong experienced MGP a we ability and increase for regardless of and size to position of quarter of new

selling go-to-market year. we for profit new approach the this as While will when position or customer significant rates will share was for the with normalize period changes resulted and in refine consumer goal to believe and robust, our overall in margin fiscal market approach and volume This and demand scale category for and diverse and remain meaningful to focus expansion growth demand additional more the the achieving American category. share increased our in remains of as toward continues. mix global customers. initiative the the positions well, whiskey resulted gross uncertain begin potential us quarter to infrequent We our XXXX, with trend us well and in we long-term and gains whiskey process our In record increase align how American growth advantage results

to profit partnerships growth for with reflected well products. industrial and confirm primarily volume solid another cultivate primarily was to quarter as ICP, ability pricing our customers whiskey our third-party partner. year-over-year solid The and industrial White XX.X% attract whiskey by XX.X% beverage growth from our industrial XX.X%, reduced joint aged our and customers. White of additional of gross posted Goods Sales existing the partially distillate of shifts aging sales produced with Goods the away premium and our value alcohol further former as alcohol due venture decline long-term alcohol improved growth of to volume. record new year, towards by supported products this decreased results Our attributed sales inventory,

Goods year growth in speak the we customer to the factored in as services the lower whiskey that historical will our levels, return Industrial single-digits, low is be Alcohol and decline in can for we part to White and which to products later to Alcohol XXXX This other discussed, the are warehouses that the Revenue as we previously fiscal to call. Industrial XXXX. year warehouse from the guidance of As services entered anticipate Industrial market. in the for for barrels to margins and profitability has aging Goods number supply into the provide. in anticipated moderates compared both attributed the This of due in additional Alcohol and the White demand increased XX.X% growth

expectations. performance due acquisition. the our to year, totaled Sales Turning to million quarter and primarily Spirits Branded $XXX.X fourth full Luxco the the for for year internal exceeded

a for sales We for remain strength case to ultra-premium as profit the our focused and by gross as continued and select growth. higher-margin distribution of return as us on-premise premium for Gross from consumer whiskey volume profitability. MGP brands on brands. legacy demand. optimizing profitability benefited demand increased $XX.X these our our Strengthening year. or well We also American well for of pricing brands especially our on portfolio major increased segment tequila of has of brands, and continue profits to and brands continued extensive will mix this consumer million to well brands, demand for margins We full products the achieve for incremental and XX.X% our reflecting believe improving family further as higher on position the and growth of improved catalyst segment been

to sales. prices XX.X% wheat to million XX.X%, driven well higher Turning sales as primarily and was the for $XX.X while gross proteins wheat starches Solutions, commodity segment volumes starches. of in or increased specialty selling average increase Ingredient year increased sales of as This by profit increased and

Our experienced we collaboratively as sales, effectively and worked these achieve the and year. R&D innovation for customers’ our teams to needs results record meet

with thank Because quarter of ended Before want recognize and all the them, of past the this to Brandon, I great results full for to and year. we tremendous for and dedication achieved our year employees efforts record their fourth momentum. and call turn the year over I

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

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

Brandon Gall

Thanks, Dave.

quarter, Distillery consolidated Spirits increased segments. improved segment and the XX.X%. basis million each strong profit a points as Gross to increased result For sales growth due to Products XX.X% by $XXX.X to by profit reporting $XX.X the segments. in XX gross of of million increased to performance XX.X% the Gross Branded margin

XXX% XX.X% to profit $XXX.X $XXX new consolidated points in XX.X% Branded further by specialty whiskey to as outperformance and of well a solid Distillery starches gross growth bolstered proteins. increased part and year, distillate increased in XXX Products wheat Gross as strong aged increased double-digit the million, in record segments performance growth Gross profit due Luxco to by and the brands the all in million margin and increased acquired significant sales as to transaction our XXXX. For sales and additional basis for driven by Spirits.

the feed fire XXXX, you temporary at a loss of production time. Atchison during some the experienced facility, and equipment of of As fourth damaging we quarter a recall, drying causing may

recent for the drying damaged fourth of construction the insurance received completed million quarter, of replacement which $XX.X a settlement which our became fourth was during We the quarter. operational During dryer. carrier, system, most from final we the

During portion SG&A the business separate the recorded XXXX, to of And Luxco the by of replacement advertising the partially settlement expenses, cost experienced. the as line a and inclusive sales. remaining $XX.X were assumption statement. for fourth reduction administrative dryer lower of item of by general the which of damaged recorded driven settlement offset income interruption we expenses, expense. Corporate was quarter, incentive business million the the recoveries to the were a primarily expenses of and selling, $XX.X million, promotion of related This on as for insurance compensation was interruptions increased balance

SG&A fourth for For quarter expenses costs. full increased due income advertising Operating acquisition-related and income promotion increased the and corporate XXX% assumption onetime sales $XX.X year, the previously expenses, million to earlier. the $XX.X million expenses, in the to to and increased to to of as discussed of inclusive mentioned operating gross million. XX.X% $XX.X increase due a recovery million, as profits well $XX Adjusted insurance primarily Luxco

year, For profit. million the and to full operating Adjusted XXX% $XXX.X to income due to XXX% and operating gross income million. $XXX.X increased sales increased higher

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

period. tax year-ago XX.X% year, quarter to fully increased period. the full primarily for increases XXX% $X.XX $X.XX higher per and of offering, $XXX XX%, the to year for prior shares the share to was driven increased diluted and share the the and per to an year, per additional the to $X.XX $X.XX. interest strong quarter EBITDA ago to and income the $X.XX from adjusted rates million effective convertible share increase share, during full on shares diluted performance basic full was three of by XXX% million increased earnings expenses all and period. favorable compared and $X.XX earnings the year XX% quarter. For fourth the the share the flour effective to from compared the increased over compared basic Corn, seen our the in per the basic increased due prices tax share are to expense XXXX. business the $XX.X were the the a year-ago income segments. $X.XX Fully The its X gas wheat Adjusted in compared each upward tax associated deductions. Factoring income credits which adjusted in quarter per with have year to in to pretax corporate year corporate fully $X.XX On share the adjusted $X.XX dilutive the Net per associated commodity ago basis, the $X.XX $X.XX for the with Net diluted the Factoring to in offering, largest additional increased natural in rate last $X.XX to EPS increased basis, over from of an for year increased share On earnings to year. EPS to period. and compared year to interest $X.XX increased earnings quarter effect in $X.XX. for increased $X.XX convertible to EPS $X.XX million, from and expense period. in diluted $XX.X per for during adjusted the Fully basic from

Our are sales. as program have possible. price purchased to commodity in employ includes for of is at input time majority that grain management much We purchasing our objective, always, the inflation risk as position that Entering products. extensive as a through and with the we contract in inputs volume been commodity XXXX, we pricing corresponding an the same corresponding line our

been pricing specialty We increases successful products. higher-margin our in these through have in and

Goods moderating for the of well resulted market the as number last in White the Industrial entered of as wake on that pandemic dynamic. the the discussed has has and have we additional in an oversupply as calls, Alcohol However, demand capacity

a keep underlying in these unable with As commodity result, rise products has for pace been pricing to the costs.

balance the position We well was XXXX, We strong, the long-term highlight as see $XX.X approximate sheet from with products expect combined in shareholders. Luxco in flow reflecting XXXX towards up Strong back on of funds and significant acquisition. allowing business MGP’s levels. continue in in converges XXX totaling free our strong to strong of from contribution million for profitability remains million. cash return Industrial which cash-generating gross margin million value of capability a the and operations for basis to invest as well-capitalized percent cash historical a year-over-year us our and year White as point XXXX, Alcohol of grow and $XX.X Cash our million further flows Goods an strategy. was basis to to and execution quarter the decline to debt the $XX.X remain $XXX.X

facility strong fixed X.X% ample Our by growing to opportunities strong the convertible long-term a enabled senior lock in incremental Also the coupled capabilities, acquisition with credit that evaluating the company quarter rate. $XXX issued a with balance cash million interest to execute convertible during impact our to capital or the applied, we plan, growth as of revolving flexibility the in these notes notes are beneficial markets. fixed interest strategic sheet financial with after strengthen rate our generating enhanced the our position is in access MGP tax contributing provide X.XXX% allow including

balance providing these notes Additionally, revolving reduced our for the outstanding liquidity M&A ample of credit also activity. facility future while

aging cost of the inventory increased away by put in net million quarter. fourth investment $XX.X increase was increased driven by Our the whiskey in at This during quarter.

total of year. XXXX. to due $XX.X in also feed increase with CapEx year in $XX.X which We the of operational during in committed capabilities for million $XX.X was million finished our the expenditures continuing to the dryer the responsible million investment our replacement remain compared as capital primarily was system, This and year-over-year significant to the

trends be maintenance investing to XX. March pursue and positioned and $X.XX The approximately well of for Board and well shareholders. in long-term during expansion, In is environmental of record business as the view on capital payable health the important strategy focused consumer uniquely projects. Luxco, Board capital of growth with March in the dividends and projects the with improvement amount organic acquisitive as through acquisition and expect our our share, of stockholders underlying the will the We to to facility company million in growth strategy leverage. the XXXX, completed on light share expenditures of which dividend facility aligns believe authorized allocation used per to as our quarterly an XX of way success which strategy a our $XX.X continues is to as We business safety

priority is CapEx let Dave to me is accelerate back I’ve on to in more a moment. remarks. away also touch as distillery And mentioned capabilities sales We investment that the concluding whiskey will continue spirit organic for put a and and product Dave increase now, to growing offerings, turn M&A things our will products and in branded matching over pursue and with growth future

Dave Colo

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

contribute end library the the remain bills As to and of $XX.X acquisition branded to We and increased our whiskey significant expect vintages supportive our XXXX. was for accelerating meaningfully quarter at they inventory forward. company a Luxco million cash gross profit various and third to increased Brandon mentioned, our of million will mash $XXX.X moving recent flow The continue levels the of to step from aging of of initiative.

the meaningfully of have continued teams has three keep begin approximately fantastic of recently our next distribution successes up segments. each margin cash transaction announced us the line to across expands our expansionary in generation strategic experiencing and the that from to XX projects, improved with X businesses, higher are years flow three to new we Branded demand $XX the MGP’s us The totaling allowing profile. will states and We of sales done million strong Spirit increases the capabilities enable and gross occur expedite Our and business to benefit over sector in business. product integration two the the job a and significantly all the value combined

Analyst which for is completion Kentucky, XXXX expansion the The distillers’ hours million last to where in operate XX late our we expansion $X per allow increase a will in of day XX%. distillery first Row slated and This and capacity by our hosted November. Bardstown, Day facility is is Lux

in located south project project the XX warehouse our completion by slated for second is & is distillery warehouse miles Kentucky. The is $XX of XXXX. construction the approximately Squibb barrel new of of Ross a million Williamstown, facility Lawrenceburg, expansion end The Indiana. in This historic

producing is year. our capable for production $XX.X late million will our pounds slated of extrusion of project products third in It XXXX protein protein million The is per costs. process plant completion related amid of flexibility in-house new in be and texturized R&D Achieving increased Kansas. products texturized manufacturing Atchison, By line ProTerra is outsourcing and the related we of enhance meaningful increasing to scheduling and to times reduced to commercialize growing issues, co-packers our transitioning investment a demand projects effectively lead ability products. in-house, XX

With the distillate growth increased well as sustainable investments experiencing position products. brands organization. spirits aged demand across we for as protein whiskey, well new ultra-premium have for texturized the been our continued and These us

volatility as we supporting strong, to these through we bring the to the trends we our strong base. each consumer near to remain and the expect and XXXX. anticipate believe underlying fiscal business persist of capabilities global broader trends well We While the position, in economy our in our segments of market in segments as value team’s customer term, our continue macro each remain that are confident

will we the a be XXXX. we in deliberate high take of navigate as level market dynamics We we actions operational during will execution and maintain all

expect of sales million $XXX EBITDA would XX% approximately to $XXX rate range which to is approximately prior from range range a Adjusted in For period. XXXX, million the growth of full X% year equate year range million, we rate from XX% $XXX the to be equate XX% to the percentage the expected $XXX which prior to of to period. year to percentage would the growth in a of million, to fiscal be

$X.XX at We approximately in diluted earnings expected end. shares earnings per outstanding $X.XX the fully end. at to year We weighted to with average adjusted per to share XX with the are expected be XX.X outstanding in be average range, basic fully $X.XX million adjusted share basic to to anticipate shares approximately be be diluted million forecasting $X.XX year weighted to range,

and for the our will are the We the sustainable, our Operator, of we are established we the of committed foundation prepared to deliver strong effectiveness with objective tactical concludes over to to leverage shareholders. years the call. refining execution ready we the begin continue That value long-term have to our question-and-answer remarks. portion

Operator

comes Instructions] [Operator Azer from question Our Thank Please first from Vivien ahead. you. go Cowen.

Vivien Azer

morning. good Thank Hi, you.

Dave Colo

morning, Good Vivien.

Brandon Gall

morning. Good

Vivien Azer

the eye that So looks normalization any kind might of around I and sure growth trademarks filed keep Any the you challenging kind of mismatch secondary on inventory comment outlook metrics number there very navigate dive quite in of to whiskey. be are appreciate a help getting is I there TTB? into laid wanted growth that brand aged going was guys like versus that’s wondering the is down your forward? of metrics that any guys for and if getting fully of healthy. to that I the you secondary kind might are your that via Thanks. kind growth forecasting

Dave Colo

and Yes, some whiskey with our the out dynamics see on indicators for see a the Vivien, to opportunity strong both think of to brands, existing new continue to things brands just strong that us. are going at as we well demand attract and look customers the own signals. be able proxy aged as and that by are new a the distillate new we general as customer also as very to customers in about look we multinational leading great demand for craft the customers there good base well and the brands the in I continue we with that national And we very is really growth continuing as

Vivien Azer

appetite you for Great. aged either or are some aging the statements peers large That’s age Are an just reintroducing for certain age just products seeing that products, you a the margin benefit time. on perspective, follow-up statements one on even gross are quick And super desire encouraging. seeing you longer guys first given from – that, aged get whiskey? introducing or from

in So, clear is trend American it that seems a whiskey? Thank like you.

Dave Colo

Yes, we would with agree that.

of to is lay-down our away a demand that lot influences aged out But how on or try of Vivien. there age around, laid is think The year reality I right, we is there project and both older by it we mash whiskey think down of put as requirements. demand much lot future it for bill each a are but I not whiskey. decisions you

I age whiskey brands to a try that the general on and up is there tendency the think the are to market.

Vivien Azer

That’s great. much. so Thanks

Dave Colo

you. Thank

Operator

from go comes Securities. Bill ahead. Please Chappell from question next Truist The

Bill Chappell

Thanks. Good morning.

Dave Colo

Bill. morning, Good

Brandon Gall

Bill. Hey,

Bill Chappell

Just want Vivien’s on much seen to when you bigger follow-up this mean kind put barring of away typically, merger. I put question. away have the the high. in as we than the And don’t the past was quarter grain prices are

natural You take grain lower advantage of prices, gas prices.

there So lot to it of seems what like are indicators you are seeing.

the just tight and very quarters? time So to is was inventory? on something in so it some quite be and – tight directly of is that see the next we’ll this And market the it’s similar going couple probably time for

Dave Colo

year. seeing we are whiskey. evenly X to have particular as can demand to we definitely lay we in throughout years also need down and the to Bill, strong tied look And we X a the aged much operations, etcetera, we that’s next way over how do try No, we run for Yes. it as our to determine to And year try to out operationally. that the

throttle next have the don’t quarter, quarter because away for can’t those accelerate of type high the put You capacity typically you and one distillation back, swings.

and quarter-to-quarter can try we anticipating to throughout So, best lay out we the the to are whiskey future need the we we year sales. to are for down level it going

Bill Chappell

or pandemic? how you do during had you Luxco some out comps just are for brands the to to understand momentum, the bourbon for XXXX and the you that was how the at are with at ending the expecting they us consumption? – in the of looking looking or but you of the do Certainly, I of certainly throughout ‘XX, line whiskey tequila it terms industry the especially it’s or or on momentum tougher in perspective? in brands. comps then inflation brands, tough just what mean, you top tougher very terms year playing see the How inflated had year And are continue strong Okay. the

Dave Colo

Yes.

for I enter going think we we as whiskey in continuing to year We momentum. XXXX. see And tequila this strong for spending a and sustainable where a as business because momentum particular, we to brands good into ahead our it. we’re doing consumer majority our And are and demand significant something American continue pretty that we runway term our last we our the that brands are coming of well brands. got as dollars we’re exited think with and it’s tequila marketing We American think that’s see whiskey longer that’s of very year. that,

Brandon Gall

the add mix sales. in line top Bill, only are we I’d in And to that seeing change is perspective a from our thing a

Branded in continue a top line profit Spirits, are So the we and greater picking to down should while expand not may gross more improve. standard we of but and offset there be to that total up where ultra growth and on in premium the have, the greater brands robust volumes margins of premium value in levels and some may it as be

Bill Chappell

just And I any greater allocation is a little to dollars? of there what focus some thought have think or it those, culling XXX on brands marketing of is

Dave Colo

we we are things in based our always should are we that are but we on we be the the that is the opportunistic look I are now trends Yes. approach taking at mean, never But never, warrant really etcetera. portfolio. there the portfolio we on and think seeing, brands optimizing, the say constantly consumer investments focusing that

continuously we evaluate. something So,

Bill Chappell

number? industrial? between with Got I a it’s will am and do Is to business down looks your get industrial on XX%, what your gin from assuming be areas? like that trying to XX%. and of it. kind away while sales, But doesn’t White it the of to focus growth understand business the some decision of really And pricing earnings alcohol for then a little bit harder to true that walk switching and your was that us lower a kind of vodka what I will just impact Goods, kind over of kind that fair

Brandon Gall

Yes, and asking great it. Bill question, that’s for thanks a

due are we we So, there, the to in little a talked consistent prices, a those out unable bit increases. commodity but is seeing and about this price raise to with what rise are seeing we that’s are input dynamic we

total see will And mentioned – the top out costs are to how more likely directionally just and that what you points for perspective, call speaking, play So, million $XXX what in. Alcohol flattish sales to going both is and will basis about in White is line combined come a you as Industrial with this result XXX a give margins We Goods XXXX. increased year in now. gross just on

Bill Chappell

last one that’s it. under I it. the in for the the are most seems capacity the just I mean, one CapEx Got I plans, then And Got noteworthy most of me, guess you maybe adding the is the – Kentucky. X, on warehouse $XXX Lawrenceburg that – period $XXX time. over to the you long in million million past gave spent enough for tie backyard X over you of was impression you a years the kind of –

is that So, you that is or that even see core just Luxco need is where that the much space? years more few there more business, the legacy next you demand over

Dave Colo

on spirits that new related is the to business. warehousing bulk we spoke – the here call This to Yes. our

and seeing, that it by again Bill, driven is we distillate So, new the demand whiskey. both aged are for increased

our hiatus took on have the expansion. in So, need a year additional seen is increases in this it’s But we as couple pretty expanding growth driving business – these we the of for significant warehousing. whiskey what’s

Brandon Gall

price completed and $XX tag quarter of prior And on that expansion add third total was the million. was the in that, under to just just Bill, to XXXX the

low the we needed, to it why is incrementally the expansion. invest as which $XX going is million So, are to as last relative is as today’s point,

Bill Chappell

Thanks it. so Got much.

Dave Colo

Bill. Thanks,

Operator

Please Klieve The go ahead. from next question Ben comes from Capital. Street Lake

Ben Klieve

Alright. Thanks questions. for taking my

the that have comments top the a White effect down the to I First, did top of you beverage to it do be think year the previous to grade the kind the degree be Goods to to if do contribution, regarding line for to that the wondering can off outlook. believe industrial perspective? said you White on spot something you Good the be the sweet number tailing to expect question last that’s flat. from have expect caller collectively the Brandon, line found contribution, going you here I business break you to a But follow-up that industrial industrial or relatively

Brandon Gall

the dynamic increased side, the are affecting Yes. impact seeing seeing pricing combined from and side the demand are we this both Goods to and the also year. Unfortunately, Industrial due both we moderating White supply

other. one not it’s So, the or

in We them historical are terms averages of margin. in directionally the direction to gross move back same seeing

Ben Klieve

wheat? Thank is down of nimble how enough. expansion And produce be in-house the potentially for Fair facility from or that something the that questions. for to to going Okay. One functionality couple allows that will perspective, of ProTerra you. to be line other that this the road product a going for then you ingredients on other specifically line, be integrating crops Then product facility the couple is the that side, – entirety into line?

Dave Colo

texturized Yes, to pea-based as able forms proteins. Ben. be proteins produce to intent well as of plant-based is wheat-based The or other

allow So, good across it’s going opportunities to and have of quite flexibility plant-based bit a innovation us multiple proteins.

Ben Klieve

Got it. it. Got

of lifting both kind segments, this to me each how one than transportation, you one or of you tariff think for of for challenging the the are international Distillery effect year? other? then think Thank be going of just pronounced offset see Spirit the am export early the Okay. do kind other least And the kind you during wondering and will I say one the year the business time amid Branded to on here more with the you. these variables other actually, Do

Dave Colo

Yes.

the help that I think being business, think will over tariffs I of on removed definitely part time.

in logistical trump the the availability things the demand for whiskey still container run, we that I So, American run there overall the the Ben. in view growth as there I is long long port, think all and But will in demand see internationally you for definitely is short-term, a issues read the about. the us. But congestion still opportunity think high issues

Ben Klieve

taking I will you Very appreciate questions. Okay. back queue. in get good. I the

Dave Colo

Thanks, Ben. Alright.

Operator

Mitch next from Our Pinheiro go ahead. question Sturdivant. Please from comes

Mitch Pinheiro

hey, Yes, good morning.

orders your where So, demand you you do brown weekly. is how getting versus How purchase have much much there? visibility of just of goods have sort visibility contracted

Dave Colo

have aged In the on our much contract demand discussions Mitch. contracting and conversations us very high to dynamics to about it’s out these and that to distillate been have Yes, in trying happening book spot predominantly historically, as What’s whiskey has further scarce, more year have and last more have volumes. brown the it’s that we playing and in it’s more meaningful gotten allowed past customers here more whiskey with talked been sales, new significant availability on whiskey aged contracting a our success been of business. we new particular – in sales distillate, about The on there the difficult business. business this contract

we of on in the I say but today going position disclose I’d you the trying whiskey going the to not on our percent new is well much specific So as better contracted, can forward contract. I aged tell to that’s distillate directionally, that contract how are as ability increase under to and a percentages am having –

Mitch Pinheiro

And of whiskeys. I pandemic the with stocks really or mean, of the a – the lot pandemic obviously things the about of in good how out one American of is out coming through

and availability. go it’s You lack – the the stores into I at shocked of am

to you tendency And true a seen, – of and there going anyway, have talked if of obviously – the customers see is increased see how something you And consumption buy you inventories whiskey? couple about so are a ever into to bottles you you have inventory. of – available, there the much whether versus to household have going household whatever just is

Dave Colo

supply that broad-based the etcetera that’s whiskey But stocks or some get some I etcetera, issue. Mitch, whiskey of are the Yes, think much it’s our whether I information. very pantry I or it it’s And loading is of pretty it’s think how is the is a to category. a to future we’re available sales. it’s whiskey I type obviously we the out reflection American whether a products tell of think out that tough high what just the of yes, demand in age customers lay whiskey of to reflection But seeing aged the of of these for real. demand multinationals on that a business is it’s very nationals, because thing influences tight definitely strong it’s it’s us impacts you that down bourbons, – in understand, can difficult how And

Mitch Pinheiro

thinking? the Well, the that what’s What down what that And Ingredient margin drove this year-over-year? quarter then gross that be the relative what was business, – and XXXX Solutions of – year? And in profile business on kind – okay. of is should margin we last to

Brandon Gall

north in Yes. We in The margins proteins in demand recur robust, are did Thanks for periods. for and growth quarter, and sales Solutions driven repairs reduction Ingredient the again, in our see by starches. gross planned QX to segment a wheat future expected question. of the strong our again, was, related that XX% specialty that very in to maintenance not

down with together that QX, then bring So in in QX we and a those full Solutions. for quarters Ingredient year profile margin disruption also did had two dynamic the

However, of this is year, margins line mid our view upper XX% with in of capability is to this long-run the is segment. that which QX gross QX and more

Mitch Pinheiro

what competitive to Okay. Is in-house And third-party some but of your third as pose and you have sort and risk? IP any capacity? that take then I realize patents you this, that does partners production happens – of the that party, around from

Dave Colo

have constrained of part actually issue The there the suppliers capacity. third-party is Yes. our

us factors to So of leading the own one our facility. build it’s that’s

beyond this that as don’t the to this excess co-manufacturers in-house to bring be think envision a we business we bring also grow it’s continue third-party capacity we So the our because be we in-house. going we utilize market. expansion capacity that to there think need their going to capacity continue But where situation, announced over Mitch, on is even I that can time to to

Mitch Pinheiro

end margin the are the Okay. roughly of final basically that, XX% the to – I – low product mix, Is question XX%. And is between sort the your – the is at factors – range? the drives mix the one what when then range, your is, EBITDA just guidance, look that that is high end,

Brandon Gall

right. year-over-year. Yes, that’s and And the Industrial already to is what a we that little really, of in bit spent Alcohol about talking going exactly time and do decline White dynamic Goods,

give And point have as so only But to not we wanted you approximate sure quarters. decline. I’ll an the four call or last XXX five to also, basis we that be out

driving what’s of product can our kind the a EBITDA of and you the mix standpoint So that only business. but also interplay not see profit gross margins margins, from

Mitch Pinheiro

Okay. the Alright, well, questions. thank you for

Dave Colo

Thanks, Mitch.

Operator

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

Dave Colo

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

Operator

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

disconnect. You may now

MGP Ingredients (MGPI) 26 Feb 222021 Q4 Earnings call transcript