MGP INGREDIENTS INC 10-Q

ITEM 1. FINANCIAL STATEMENTS MGP INGREDIENTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) (Dollars in thousands, except share and per share amounts) Quarter Ended June 30, Year to Date Ended June 30, 2026 2025 2026 2025 Sales $ 124,357 $ 145,494 $ 230,784 $ 267,147 Cost of sales 77,886 87,107 150,731 165,430 Gross profit 46,471 58,387 80,053 101,717 Advertising and promotion expenses 5,683 6,913 11,874 15,085 Selling, general, and administrative expenses 20,237 23,156 41,303 44,361 Provision for credit loss 2,148 — 2,148 — Impairment and other 751 — 180,277 — Change in fair value of contingent consideration — 8,000 — 22,700 Operating income (loss) 17,652 20,318 ( 155,549 ) 19,571 Interest expense, net ( 2,879 ) ( 1,897 ) ( 4,300 ) ( 3,751 ) Other income, net 299 314 249 529 Income (loss) before income taxes 15,072 18,735 ( 159,600 ) 16,349 Income tax expense (benefit) 3,063 4,308 ( 36,802 ) 4,979 Net income (loss) 12,009 14,427 ( 122,798 ) 11,370 Attributable to noncontrolling interest — ( 1 ) 3 32 Net income (loss) attributable to MGP Ingredients, Inc. 12,009 14,426 ( 122,795 ) 11,402 Attributable to participating securities ( 155 ) ( 159 ) ( 68 ) ( 127 ) Net income (loss) used in earnings per common share calculation $ 11,854 $ 14,267 $ ( 122,863 ) $ 11,275 Weighted average common shares Basic 21,433,066 21,360,984 21,411,374 21,351,809 Diluted 21,433,066 21,360,984 21,411,374 21,351,809 Earnings per common share Basic $ 0.55 $ 0.67 $ ( 5.74 ) $ 0.53 Diluted $ 0.55 $ 0.67 $ ( 5.74 ) $ 0.53 See accompanying notes to unaudited condensed consolidated financial statements 3 MGP INGREDIENTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Dollars in thousands) Quarter Ended June 30, Year to Date Ended June 30, 2026 2025 2026 2025 Net income (loss) attributable to MGP Ingredients, Inc. $ 12,009 $ 14,426 $ ( 122,795 ) $ 11,402 Other comprehensive income (loss), net of tax: Unrealized gain (loss) on foreign currency translation adjustment 69 638 ( 175 ) 955 Unrealized loss on interest rate swaps ( 156 ) — ( 156 ) — Change in Company-sponsored post-employment benefit plan ( 21 ) ( 21 ) ( 42 ) ( 42 ) Other comprehensive income (loss) ( 108 ) 617 ( 373 ) 913 Comprehensive income (loss) attributable to MGP Ingredients, Inc. 11,901 15,043 ( 123,168 ) 12,315 Comprehensive income (loss) attributable to noncontrolling interest — 1 ( 3 ) ( 32 ) Comprehensive income (loss) $ 11,901 $ 15,044 $ ( 123,171 ) $ 12,283 See accompanying notes to unaudited condensed consolidated financial statements 4 MGP INGREDIENTS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands) June 30, 2026 December 31, 2025 Current Assets Cash and cash equivalents $ 17,794 $ 18,460 Receivables, net (less allowance for credit loss of $ 3,338 and $ 1,190 at June 30, 2026, and December 31, 2025, respectively) 103,559 116,160 Inventory 408,416 382,741 Prepaid expenses 5,075 2,139 Refundable income taxes — 3,209 Total current assets 534,844 522,709 Property, plant, and equipment 574,211 594,898 Less accumulated depreciation and amortization ( 277,776 ) ( 266,911 ) Property, plant, and equipment, net 296,435 327,987 Operating lease right-of-use assets, net 11,056 13,847 Investment in joint venture 6,861 8,211 Intangible assets, net 206,079 244,696 Goodwill — 115,667 Other assets 2,488 2,747 Total assets $ 1,057,763 $ 1,235,864 Current Liabilities Current maturities of long-term debt $ 6,400 $ 6,400 Accounts payable 47,916 54,589 Contingent consideration — 110,800 Federal and state excise taxes payable 4,474 5,755 Income taxes payable 3,188 — Accrued expenses and other 14,511 22,507 Total current liabilities 76,489 200,051 Long-term debt, less current maturities 166,854 49,735 Convertible senior notes 196,342 196,183 Long-term operating lease liabilities 8,170 10,561 Other noncurrent liabilities 2,790 2,534 Deferred income taxes 16,305 60,010 Total liabilities 466,950 519,074 Commitments and Contingencies (Note 8) Stockholders’ Equity Capital stock Preferred, 5 % non-cumulative; $ 10 par value; authorized 1,000 shares; issued and outstanding 437 shares 4 4 Common stock No par value; authorized 40,000,000 shares; issued 23,125,166 shares at June 30, 2026 and December 31, 2025; and 21,411,844 and 21,294,315 shares outstanding at June 30, 2026 and December 31, 2025, respectively 6,715 6,715 Additional paid-in capital 327,964 330,872 Retained earnings 317,680 445,736 Accumulated other comprehensive loss ( 746 ) ( 373 ) Treasury stock, at cost, 1,713,322 and 1,830,851 shares at June 30, 2026 and December 31, 2025, respectively ( 60,804 ) ( 64,518 ) Total MGP Ingredients, Inc. stockholders’ equity 590,813 718,436 Noncontrolling interest — ( 1,646 ) Total equity 590,813 716,790 Total liabilities and equity $ 1,057,763 $ 1,235,864 See accompanying notes to unaudited condensed consolidated financial statements 5 MGP INGREDIENTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) Year to Date Ended June 30, 2026 2025 Cash Flows from Operating Activities Net income (loss) $ ( 122,798 ) $ 11,370 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 12,651 11,638 Goodwill and other long-lived assets impairment 179,526 — Share-based compensation 2,313 2,030 Equity method investment gain ( 150 ) ( 494 ) Deferred income taxes, including change in valuation allowance ( 43,653 ) ( 901 ) Change in fair value of contingent consideration — 22,700 Payment of contingent consideration ( 48,700 ) — Other, net 546 446 Changes in operating assets and liabilities: Receivables, net 12,520 31,103 Inventory ( 25,631 ) ( 15,224 ) Prepaid expenses ( 2,974 ) ( 1,752 ) Income taxes payable 6,397 3,128 Accounts payable ( 2,499 ) ( 10,687 ) Accrued expenses and other ( 7,001 ) 4,663 Federal and state excise taxes payable ( 1,281 ) ( 1,504 ) Other, net 2 ( 159 ) Net cash provided by (used in) operating activities ( 40,732 ) 56,357 Cash Flows from Investing Activities Additions to property, plant, and equipment ( 10,219 ) ( 32,156 ) Distributions from equity method investment 1,500 — Other, net 322 ( 11 ) Net cash used in investing activities ( 8,397 ) ( 32,167 ) Cash Flows from Financing Activities Payment of dividends and dividend equivalents ( 5,196 ) ( 5,156 ) Repurchase of Common Stock ( 886 ) ( 1,035 ) Loan fees paid related to borrowings — ( 2,712 ) Proceeds from long-term debt 145,000 28,000 Principal payments on long-term debt ( 28,200 ) ( 52,200 ) Payment of contingent consideration ( 62,100 ) — Net cash provided by (used in) financing activities 48,618 ( 33,103 ) Effect of exchange rate changes on cash and cash equivalents ( 155 ) 960 Decrease in cash and cash equivalents ( 666 ) ( 7,953 ) Cash and cash equivalents, beginning of period 18,460 25,273 Cash and cash equivalents, end of period $ 17,794 $ 17,320 See accompanying notes to unaudited condensed consolidated financial statements 6 MGP INGREDIENTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY For Year to Date Ended June 30, 2026 (Unaudited) (Dollars in thousands) Capital Stock Preferred Issued Common Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Non-controlling Interest Total Balance, December 31, 2025 $ 4 $ 6,715 $ 330,872 $ 445,736 $ ( 373 ) $ ( 64,518 ) $ ( 1,646 ) $ 716,790 Comprehensive loss: Net loss — — — ( 134,804 ) — — ( 3 ) ( 134,807 ) Other comprehensive loss — — — — ( 265 ) — — ( 265 ) Dividends declared (a) — — — ( 2,625 ) — — — ( 2,625 ) Share-based compensation — — 1,434 — — — — 1,434 Stock shares awarded, forfeited or vested — — ( 3,827 ) — — 3,827 — — Stock shares repurchased — — — — — ( 886 ) — ( 886 ) Balance, March 31, 2026 4 6,715 328,479 308,307 ( 638 ) ( 61,577 ) ( 1,649 ) 579,641 Comprehensive income: Net income — — — 12,009 — — — 12,009 Other comprehensive loss — — — — ( 108 ) — — ( 108 ) Dividends declared (a) — — — ( 2,636 ) — — — ( 2,636 ) Share-based compensation — — 1,907 — — — — 1,907 Stock shares awarded, forfeited or vested — — ( 773 ) — — 773 — — Exchange of non-controlling interest — — ( 1,649 ) — — 1,649 — Balance, June 30, 2026 $ 4 $ 6,715 $ 327,964 $ 317,680 $ ( 746 ) $ ( 60,804 ) $ — $ 590,813 (a) Dividends and dividend equivalents were 0.12 per common share, per restricted stock unit, and per performance stock unit for the quarters ended March 31, 2026 and June 30, 2026. See accompanying notes to unaudited condensed consolidated financial statements 7 MGP INGREDIENTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY For Year to Date Ended June 30, 2025 (Unaudited) (Dollars in thousands) Capital Stock Preferred Issued Common Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (loss) Treasury Stock Non-controlling Interest Total Balance, December 31, 2024 $ 4 $ 6,715 $ 332,195 $ 563,929 $ ( 658 ) $ ( 68,019 ) $ ( 1,623 ) $ 832,543 Comprehensive loss: Net loss — — — ( 3,024 ) — — ( 33 ) ( 3,057 ) Other comprehensive income — — — — 296 — — 296 Dividends declared (a) — — — ( 2,578 ) — — — ( 2,578 ) Share-based compensation — — 524 — — — — 524 Stock shares awarded, forfeited or vested — — ( 3,784 ) — — 3,784 — — Stock shares repurchased — — — — — ( 1,035 ) — ( 1,035 ) Balance, March 31, 2025 4 6,715 328,935 558,327 ( 362 ) ( 65,270 ) ( 1,656 ) 826,693 Comprehensive income: Net income — — — 14,426 — — 1 14,427 Other comprehensive income — — — — 617 — — 617 Dividends declared (a) — — — ( 2,599 ) — — — ( 2,599 ) Share-based compensation — — 991 — — — — 991 Stock shares awarded, forfeited, or vested — — ( 670 ) — — 670 — — Balance, June 30, 2025 $ 4 $ 6,715 $ 329,256 $ 570,154 $ 255 $ ( 64,600 ) $ ( 1,655 ) $ 840,129 (a) Dividends and dividend equivalents were $ 0.12 per common share, per restricted stock unit, and per performance stock unit for the quarters ended March 31, 2025 and June 30, 2025. See accompanying notes to unaudited condensed consolidated financial statements 8 MGP INGREDIENTS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, unless otherwise noted) Note 1. Accounting Policies and Basis of Presentation The Company. MGP Ingredients, Inc. (“MGP” or the “Company”) is a Kansas corporation headquartered in Atchison, Kansas and is a leading producer of branded and distilled spirits, as well as food ingredient solutions. The Company has an extensive award-winning global portfolio of its own high quality branded spirits, which are produced through its distilleries and bottling facilities and sold to distributors. The Company’s branded spirits products account for a range of price points from value products through premium plus brands. Distilled spirits include premium bourbon, rye, and other American whiskeys (“brown goods”) and grain neutral spirits (“GNS”), including vodka and gin. The Company’s distilled spirits are either sold directly or indirectly to manufacturers of other branded spirits. The Company’s protein and starch food ingredients are predominantly wheat based and provide a host of functional, nutritional, and sensory benefits for a wide range of food products to serve the consumer packaged goods industry. The ingredient products are sold directly, or through distributors, to manufacturers and processors of finished packaged goods or to bakeries. The Company reports three operating segments: Branded Spirits, Distilling Solutions, and Ingredient Solutions. Basis of Presentation and Principles of Consolidation. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned and majority owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements as of and for the quarter and year to date ended June 30, 2026, should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”). The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal and recurring adjustments) necessary to fairly present the results for interim periods in accordance with U.S. generally accepted accounting principles (“GAAP”). Pursuant to the rules and regulations of the SEC, certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted. On April 1, 2026, the Company entered into a membership interest purchase agreement and acquired the remaining 40 percent non-controlling interest in Dos Primos Tequila, LLC (“Dos Primos”), making it a wholly-owned subsidiary of the Company. Prior to the agreement, the Company held a 60 percent interest in Dos Primos. The Company consolidated Dos Primos activity on its financial statements and presented the 40 percent non-controlling interest portion on a separate line prior to the purchase agreement. Use of Estimates. The financial reporting policies of the Company conform to GAAP. The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The application of certain of these policies places demands on management’s judgment, with financial reporting results relying on estimation about the effects of matters that are inherently uncertain. For all of these policies, management cautions that future events may not develop as forecast and estimates routinely require adjustment and may require material adjustment. Inventory. Inventory includes finished goods, raw materials in the form of agricultural commodities used in the production process as well as bottles, caps, and labels used in the bottling process, and certain maintenance and repair items. Bourbons, ryes, and other whiskeys, included in inventory, are normally aged in barrels for several years, following industry practice; all barreled bourbon, rye, and other whiskeys are classified as a current asset. The Company includes warehousing, insurance, and other carrying charges applicable to barreled whiskey in inventory costs. 9 Inventories are stated at the lower of cost or net realizable value on the first-in, first-out, or FIFO, method. Inventory valuations are impacted by constantly changing prices paid for key materials. Inventory consists of the following: June 30, 2026 December 31, 2025 Finished goods $ 38,557 $ 42,263 Barreled distillate (bourbons and other whiskeys) 325,554 301,665 Raw materials 28,836 25,534 Work in process 5,225 2,782 Maintenance materials 9,251 9,097 Other 993 1,400 Total $ 408,416 $ 382,741 Revenue Recognition. Revenue is recognized when control of the promised goods or services, through performance obligations by the Company, is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for the performance obligations. The term between invoicing and when payment is due is not significant and the period between when the entity transfers the promised good or service to the customer and when the customer pays for that good or service is generally one year or less. Revenue is recognized for the sale of products at the point in time finished products are delivered to the customer in accordance with shipping terms. This is a faithful depiction of the satisfaction of the performance obligation because, at the point control passes to the customer, the customer has legal title and the risks and rewards of ownership have transferred, and the customer has a present obligation to pay. The Distilling Solutions segment routinely enters into bill and hold arrangements, whereby the Company produces and sells aged and unaged distillate to customers, and the product is barreled at the customer’s request and warehoused by the Company for an extended period of time in accordance with directions received from the Company’s customers. Even though the aged and unaged distillate remains in the Company’s possession, a sale is recognized at the point in time when the customer obtains control of the product. Control is transferred to the customer in bill and hold transactions when the customer acceptance specifications have been met, legal title has transferred, the customer has a present obligation to pay for the product, and the risks and rewards of ownership have transferred to the customer. Additionally, all of the following bill and hold criteria have been met in order for control to be transferred to the customer: the reason for the bill and hold arrangement is substantive, the customer has requested the product be warehoused, the product has been identified as separately belonging to the customer, the product is currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or direct it to another customer. Warehouse services revenue is recognized over the time that warehouse services are rendered and as they are rendered. This is a faithful depiction of the satisfaction of the performance obligation because control of the aging products has already passed to the customer and there are no additional performance activities required by the Company, except as requested by the customer. The performance of the service activities, as requested, is invoiced as satisfied and revenue is concurrently recognized. Contract bottling is recognized over the time contract bottling services are rendered and as they are rendered. Sales in the Branded Spirits segment reflect reductions attributable to consideration given to customers in incentive programs, including discounts and allowances for certain volume targets. These allowances and discounts are not for distinct goods and are paid only when the depletion volume targets are achieved by the customer. The amounts reimbursed to customers are determined based on agreed-upon amounts and are recorded as a reduction of revenue. Excise Taxes. The Company is responsible for compliance with the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Treasury Department (the “TTB”) regulations, which include making timely and accurate excise tax payments. The Company is subject to periodic compliance audits by the TTB. Individual U.S. states also impose excise taxes on alcohol beverages in varying amounts. The Company calculates its U.S. federal and state excise tax expense based upon units shipped and on its understanding of the applicable excise tax laws. Excise taxes that are both imposed on and concurrent with a specific revenue-producing transaction, and that are collected by the Company from a customer, are excluded from revenue and expense. 10 Income Taxes. The Company accounts for income taxes using an asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. A valuation allowance is recognized if it is more likely than not that at least some portion of the deferred tax asset will not be realized. Earnings Per Common Share (“EPS”). Basic and diluted EPS is computed using the two-class method, which is an earnings allocation formula that determines net income per share for each class of the Company’s common stock, no par value (“Common Stock”) and participating securities according to dividends declared and participation rights in undistributed earnings. Basic EPS amounts are computed by dividing net income attributable to common shareholders by the weighted average shares outstanding during each period. Diluted EPS is computed using the if-converted method by dividing the net income attributable to common shareholders by the weighted average shares outstanding, inclusive of the impact of potentially dilutive items such as the Convertible Senior Notes or stock options, except for where the result would be anti-dilutive as of the balance sheet date. Translation of Foreign Currencies. Assets and liabilities of Niche Drinks Co Ltd (“Niche”), a wholly-owned subsidiary of the Company whose functional currency is the British pound sterling, are translated to U.S. dollars using the exchange rate in effect at the condensed consolidated balance sheet date. Results of operations are translated using average rates during the period. Adjustments resulting from the translation process are included as a component of accumulated other comprehensive income. Goodwill and Indefinite-Lived Intangible Assets. The Company records goodwill and indefinite-lived intangible assets in connection with various acquisitions of businesses and allocates the goodwill and indefinite-lived intangible assets to its respective reporting units. All goodwill and indefinite-lived intangible assets included in the Condensed Consolidated Balance Sheets are related to the Branded Spirits reporting unit. The Company evaluates goodwill for impairment at least annually, in the fourth quarter, or on an interim basis if events and circumstances occur that would indicate it is more likely than not that the fair value of a reporting unit is less than the carrying value. To the extent that the carrying value exceeds fair value, an impairment of goodwill is recognized. Judgment is required in the determination of reporting units, the assignment of assets and liabilities to reporting units, including goodwill, and the determination of fair value of the reporting units. The Company separately evaluates indefinite-lived intangible assets for impairment. See Note 3, Goodwill and Other Intangible Assets for more information. Impairment of Long-Lived Assets. The Company reviews long-lived assets for impairment when events or changes in circumstances indicate the carrying amount of the asset group may not be fully recoverable. The Company determines the carrying amount of the asset group compared to the future projected undiscounted cash flows as well as quantitative and qualitative factors. An impairment loss is recognized when the carrying value exceeds the fair value of the asset group. The Company committed to a plan to abandon a long-lived asset at its distillery located in Bardstown, Kentucky, which was temporarily idled beginning in May 2026. The Company has not placed the equipment, a feed dryer not used in the distillation process, into service and does not intend to sell it. As a result, during the first quarter of 2026, the Company recorded a $ 26,869 impairment of assets, which was recorded in impairment and other on the Condensed Consolidated Statement of Income (Loss). The impaired assets were recorded within the Branded Spirits segment. Additionally, during the quarter ended June 30, 2026, the Company recorded $ 751 of costs related to the idled Kentucky facilities, which was recorded in impairment and other on the Condensed Consolidated Statement of Income (Loss). Derivative Instruments. The Company enters into derivative contracts to manage risk exposure to interest rate fluctuations. The Company records derivative instruments on the balance sheet at fair value in accordance with GAAP. See Note 5, Derivative Instruments and Hedging Activities for additional information regarding derivative financial instruments and hedging activities. Fair Value of Financial Instruments. The Company determines the fair values of its financial instruments based on a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The hierarchy is broken down into three levels based upon the observability of inputs. Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value in its entirety requires judgment and considers factors specific to the asset or liability. 11 The Company’s short-term financial instruments include cash and cash equivalents, accounts receivable, and accounts payable. The carrying value of the short-term financial instruments approximates the fair value due to their short-term nature. These financial instruments have no stated maturities or have short-term maturities that approximate market. The fair value of the Company’s debt is estimated based on current market interest rates for debt with similar maturities and credit quality. Excluding the impact of the conversion feature of the Convertible Senior Notes and using the stated maturity of 2041, the fair value of the Company’s debt was $ 312,516 and $ 195,527 at June 30, 2026 and December 31, 2025, respectively. The financial statement carrying value of total debt (net of unamortized loan fees) was $ 369,596 and $ 252,318 at June 30, 2026 and December 31, 2025, respectively. These fair values are considered Level 2 under the fair value hierarchy. The fair value calculation of contingent consideration associated with the acquisition of Penelope Bourbon LLC (“Penelope”) uses unobservable inputs, such as estimated net sales over the term of the earn-out period, discount rates, and volatility rates. The contingent consideration is measured using the Monte Carlo simulation approach. The inputs used in the calculation of the contingent consideration liability are considered Level 3 under the fair value hierarchy due to the lack of relevant market activity. There was no adjustment to the fair value of the contingent consideration liability during the quarter and year to date ended June 30, 2026, as the Company achieved the maximum net sales target as defined in the Penelope acquisition agreement during the third quarter 2025. During the quarter and year to date ended June 30, 2025, there was $ 8,000 and $ 22,700 in adjustments to the fair value measurement of the contingent consideration obligation which was included in the change in fair value of contingent consideration on the Condensed Consolidated Statements of Income. The fair value of the Company’s contingent consideration liability was $ 110,800 at December 31, 2025. The amount payable is based upon achievement of certain net sales targets between the acquisition date and December 31, 2025. The Company paid the full contingent consideration of $ 110,800 on April 28, 2026. Fair value disclosure for deferred compensation plan investments is included in Note 9, Employee and Non-Employee Benefit Plans. Fair value disclosure for interest rate swaps is included in Note 5, Derivative Instruments and Hedging Activities. Equity Method Investments. The Company holds 50 percent interests in DGL Destiladores, S.de R.L. de C.V. (“DGL”) and Agricola LG, S.de R.L. de C.V. (“Agricola” and together with DGL, “LMX”), which are accounted for as equity method investments and are considered affiliates of the Company. The investment in LMX, which is recorded in investment in joint venture on the Condensed Consolidated Balance Sheets, was $ 6,861 and $ 8,211 at June 30, 2026 and December 31, 2025, respectively. During the quarter and year to date ended June 30, 2026, the Company recorded income of $ 169 and $ 150 , respectively, from its equity method investments. During the quarter and year to date ended June 30, 2025, the Company recorded income of $ 237 and $ 494 , respectively, from its equity method investments. Income from the equity method investment is recorded in other income, net on the Condensed Consolidated Statements of Income (Loss). Additionally, during the year to date ended June 30, 2026, the Company received a $ 1,500 distribution payment from LMX. During the quarters ended June 30, 2026 and 2025, the Company purchased $ 2,128 and $ 6,524 , respectively, of finished goods from LMX and bulk beverage alcohol from the other 50 percent owner of DGL. During the year to date ended June 30, 2026 and 2025, the Company purchased $ 3,590 and $ 10,566 , respectively, of finished goods from LMX and bulk beverage alcohol from the other 50 percent owner of DGL. Recently Adopted Accounting Standard Updates. ASU 2024-04, Induced Conversions of Convertible Debt Instruments, clarifies the requirement for determining whether certain settlements of convertible debt instruments should be accounted for as induced conversions or extinguishments. This ASU is effective for annual periods beginning after December 15, 2025. Early adoption is permitted and can be applied either on a prospective basis or retrospective basis. The Company adopted this ASU during the first quarter of 2026, and it had no impact on the Company’s consolidated financial statements. Recently Issued Accounting Pronouncements. ASU 2024-03, Disaggregation of Income Statement Expenses , requires disaggregated disclosures in the notes to the consolidated financial statements of certain categories of expenses that are included in expense line items on the Consolidated Statements of Income. This ASU is effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The guidance is required to be applied on a prospective basis with the option to apply retrospectively to all prior periods presented in the consolidated financial statements. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements. ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software, amends certain aspects of the accounting for software costs, including removing software development project stages and requiring companies to capitalize software 12 costs when both of the following occur: (1) management authorizes or commits to funding a software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. This ASU is effective for annual periods beginning after December 15, 2027 and interim periods within those fiscal years. Early adoption is permitted and can be applied prospectively, retrospectively, or utilizing a modified transition approach. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. ASU 2025-11, Narrow-Scope Improvement (Topic 270 - Interim Reporting), clarifies the current interim reporting requirements and the form and content of the interim reporting requirements, and includes a disclosure principle that requires companies to disclose material events since the end of the last annual reporting period. This ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements. Note 2. Revenue The Company generates revenue from the Branded Spirits segment by the sale of products and by providing contract bottling services. The Company generates revenue from the Distilling Solutions segment by the sale of products and by providing warehouse services related to the storage and aging of customer products. The Company generates revenue from the Ingredient Solutions segment by the sale of products. Revenue related to sales of products is recognized at a point in time, whereas revenue generated from warehouse services and contract bottling services are recognized over time. Contracts with customers include a single performance obligation (either the sale of products or the provision of warehouse services and contract bottling services). Disaggregation of Sales. The following table presents the Company’s sales disaggregated by segment and major products and services: Quarter Ended June 30, Year to Date Ended June 30, 2026 2025 2026 2025 Branded Spirits Premium plus $ 32,645 $ 31,099 $ 55,296 $ 53,417 Mid 16,225 15,493 29,468 28,520 Value 8,324 8,936 14,827 16,277 Other 2,436 4,992 4,276 10,533 Total Branded Spirits 59,630 60,520 103,867 108,747 Distilling Solutions Brown goods 14,260 35,057 29,169 68,713 Warehouse services 8,622 8,001 16,914 16,078 White goods and other co-products 6,338 6,942 11,137 12,152 Total Distilling Solutions 29,220 50,000 57,220 96,943 Ingredient Solutions Specialty wheat starches 18,889 18,474 37,305 34,327 Specialty wheat proteins 12,749 12,612 25,457 19,960 Commodity wheat starches 2,670 3,061 5,287 5,780 Commodity wheat proteins 76 827 459 1,390 Biofuel and other 1,123 — 1,189 — Total Ingredient Solutions 35,507 34,974 69,697 61,457 Total sales $ 124,357 $ 145,494 $ 230,784 $ 267,147 Note 3. Goodwill and Other Intangible Assets Definite-Lived Intangible Assets. The Company acquired definite-lived intangible assets in connection with various acquisitions of businesses prior to 2026. The distributor relationships have a carrying value of $ 50,579 , net of accumulated 13 amortization of $ 14,521 . The distributor relationships have a useful life of 20 years. The amortization expense for the quarters ended June 30, 2026 and 2025 was $ 814 , respectively. The amortization expense for the year to date ended June 30, 2026 and 2025 was $ 1,627 , respectively. As of June 30, 2026, the expected future amortization expense related to definite-lived intangible assets is as follows: Remainder of 2026 $ 1,628 2027 3,255 2028 3,255 2029 3,255 2030 3,255 Thereafter 35,931 Total $ 50,579 Goodwill. Changes in the carrying amount of goodwill by business segment were as follows: Distilling Solutions Branded Spirits Ingredient Solutions Total Balance, December 31, 2025 $ — $ 115,667 $ — $ 115,667 Impairment — ( 115,667 ) — ( 115,667 ) Balance, June 30, 2026 $ — $ — $ — $ — Impairment Analysis. During the first quarter of 2026, the Company experienced a decrease in stock price and market capitalization, and as a result, the Company performed a quantitative assessment of goodwill. The Company engaged a third party valuation specialist to assist in comparing the fair value of the Branded Spirits reporting unit to the respective carrying value. The estimate of fair value of the Company’s reporting unit was calculated using equal weighting of the income approach that utilized the discounted cash flow method and the market approach that utilized the guideline public company method. Estimates in the determination of fair value of the reporting unit through the income approach were based on (i) discount rates based on the reporting unit’s weighted average cost of capital, (ii) future expected cash flows including revenue and operating margin projections, and (iii) long-term growth rates based on inflation forecasts, industry growth, and long-term economic growth potential. The market approach compares enterprise values and historical and projected results of public companies that reflect economic conditions and risks that are similar to the reporting unit to calculate an estimated enterprise value. These assumptions are based on historical trends as well as the projections and assumptions used in the Company’s budget and long-range plans. These assumptions reflect the Company’s estimates of future economic and competitive conditions which can be affected by several factors such as inflation, business valuations in the market, the economy, and market competition. Any changes in these assumptions may affect the Company’s fair value estimate and the results of an impairment test. As of the assessment date, to corroborate the Company’s fair value conclusion, it combined the estimated fair values of the reporting units and performed a market capitalization reconciliation to validate the reasonableness of the implied control premium. The Company calculated the market capitalization using both the stock price on the assessment date as well as the average stock price over a reasonable period of time preceding the assessment date. Based on this reconciliation, the Company believes the control premium to be reasonable. Based on the results of the Company’s impairment analysis, the Company recorded an impairment charge of $ 115,667 to reduce the carrying amount of the Branded Spirits reporting unit during the first quarter of 2026. This goodwill impairment was recorded in impairment and other on the Condensed Consolidated Statement of Income (Loss) for the year to date ended June 30, 2026 and as a reduction of goodwill in the Consolidated Balance Sheets as of June 30, 2026. Indefinite-Lived Intangible Assets. Changes in the carrying amount of trade name intangible assets by business segment were as follows: Distilling Solutions Branded Spirits Ingredient Solutions Total Balance, December 31, 2025 $ — $ 192,490 $ — $ 192,490 Impairment — ( 36,990 ) — ( 36,990 ) Balance, June 30, 2026 $ — $ 155,500 $ — $ 155,500 Impairment Analysis. During the first quarter of 2026, in connection with the assessment of the same events and circumstances impacting the Branded Spirits reporting unit, the Company performed a quantitative impairment test of its indefinite-lived assets. The Company values its indefinite-lived intangible assets under the income approach using a relief- 14 from-royalty method, which assumes the value of the asset is the sum of the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the asset and instead licensed it from another company. When estimating the fair value, the Company made certain assumptions for its future revenue projections, market royalty rates, and discount rates. These assumptions reflect the Company’s estimates of future economic and competitive conditions which consider many factors including macroeconomic conditions, industry growth rates, and competition. Any changes in these assumptions may affect the Company’s fair value estimate and the results of an impairment test. The most sensitive assumption used in the analysis was a 15 percent discount rate. Based on the results of the Company’s impairment analysis, the Company recorded an impairment charge of $ 36,990 to adjust the carrying amount of the trade name indefinite-lived intangible assets to fair value during the first quarter of 2026. The impairment was recorded in impairment and other on the Condensed Consolidated Statement of Income (Loss) for the year to date ended June 30, 2026 and as a reduction of intangible assets in the Consolidated Balance Sheets as of June 30, 2026. As of June 30, 2026, after the first quarter impairment was recorded, the fair values of the Company’s indefinite-lived intangible assets were equal to the respective carrying values. The Company will continue to evaluate its indefinite-lived intangible assets in future quarters. Independent of the expected future operating performance of the indefinite-lived intangible assets, any further significant changes in discount rates, even if due to macroeconomic factors, could put pressure on the carrying value of its indefinite-lived intangible assets. In addition, if future revenues and contributions to the Company’s operating results for any of its indefinite-lived intangible assets perform at levels below its current projections, the Company may be required to record impairment charges to certain intangible assets related to the Branded Spirits reporting unit. A determination that a portion or all of the Company’s assets are impaired could have a material adverse effect on its business, consolidated financial condition, and results of operations. Note 4. Corporate Borrowings The following table presents the Company’s outstanding indebtedness: Description (a) June 30, 2026 December 31, 2025 Credit Agreement - Revolver, 4.99 % (variable rate) due 2030 $ 162,000 $ 42,000 Convertible Senior Notes, 1.88 % (fixed rate) due 2041 201,250 201,250 Note Purchase Agreement Series A Senior Secured Notes, 3.53 % (fixed rate) due 2027 4,000 5,600 Senior Secured Notes, 3.80 % (fixed rate) due 2029 9,600 11,200 Total indebtedness outstanding 376,850 260,050 Less unamortized loan fees (b) ( 7,254 ) ( 7,732 ) Total indebtedness outstanding, net 369,596 252,318 Less current maturities of long-term debt ( 6,400 ) ( 6,400 ) Long-term debt $ 363,196 $ 245,918 (a) Interest rates are as of June 30, 2026. (b) Loan fees are being amortized over the life of the debt agreements. Credit Agreement. On February 14, 2020, the Company entered into a credit agreement (the “Credit Agreement”) with multiple participants led by Wells Fargo Bank, National Association (“Wells Fargo Bank”) which provided for a $ 300,000 revolving credit facility and had a maturity date of May 14, 2026. On April 24, 2025, the Company entered into an Amended and Restated Credit Agreement (as amended, the “A&R Credit Agreement”) with Wells Fargo Bank, as administrative agent, swingline lender, and issuing lender, and the other lenders and parties thereto. The A&R Credit Agreement amends and restates the Company’s existing Credit Agreement, extending the maturity date to April 24, 2030. The A&R Credit Agreement increases the size of the revolving credit facility to $ 500,000 and permits the Company to increase the amount of the revolving credit facility by up to an additional $ 200,000 , subject to certain conditions and at the discretion of the lenders. The Company incurred no new loan fees related to the A&R Credit Agreement during the year to date ended June 30, 2026. The A&R Credit Agreement includes certain requirements and covenants with which the Company was in compliance at June 30, 2026. As of June 30, 2026, the Company had $ 162,000 of outstanding borrowings under the A&R Credit Agreement, leaving $ 338,000 available. 15 Convertible Senior Notes. On November 16, 2021, the Company issued $ 201,250 in aggregate principal amount of 1.88 % convertible senior notes due in 2041 (the “2041 Notes”). The 2041 Notes were issued pursuant to an indenture, dated as of November 16, 2021 (the “Indenture”), by and among the Company, as issuer, Luxco, Inc., MGPI Processing, Inc., and MGPI of Indiana, LLC, as subsidiary guarantors, and U.S. Bank National Association, as trustee. The 2041 Notes are senior, unsecured obligations of the Company and interest is payable semi-annually in arrears at a fixed interest rate of 1.88 % on May 15 and November 15 of each year. Holders of the 2041 Notes have the option to require the Company to purchase their notes on each of November 15, 2026, November 15, 2031 and November 15, 2036 at a repurchase price equal to 100 % of the principal amount of the 2041 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. The 2041 Notes mature on November 15, 2041 unless earlier repurchased, redeemed, or converted, per the terms of the Indenture. Upon conversion, the Company will pay cash up to the aggregate principal amount of the 2041 Notes to be converted and pay or deliver, as the case may be, cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at its election, in respect to the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the 2041 Notes being converted. Note Purchase Agreements. The Company’s Note Purchase and Private Shelf Agreement (the “Note Purchase Agreement”) with PGIM, Inc. (“Prudential”), an affiliate of Prudential Financial, Inc., and certain affiliates of Prudential, provides for the issuance of $ 20,000 of Series A Senior Secured Notes and the issuance of up to $ 105,000 of additional Senior Secured Notes (or any higher amount solely to the extent Prudential has provided written notice to the Company of its authorization of such a higher amount). Effective August 23, 2023, the Note Purchase Agreement was amended to increase the total amount of Senior Secured Notes that may be issued under the facility of the Note Purchase Agreement to $ 250,000 . On April 24, 2025, the Note Purchase Agreement was amended to extend the period for issuing senior secured promissory notes under the Note Purchase Agreement from August 31, 2026 to April 24, 2028. During 2017, the Company issued $ 20,000 of Series A Senior Secured Notes with a maturity date of August 23, 2027. During 2019, the Company issued $ 20,000 of additional Senior Secured Notes with a maturity date of April 30, 2029. The Note Purchase Agreement includes certain requirements and covenants with which the Company was in compliance at June 30, 2026 . As of June 30, 2026, the Company had $ 4,000 of Series A Senior Secured Notes and $ 9,600 of additional Senior Secured Notes outstanding under the Note Purchase Agreement, leaving $ 236,400 available under the Note Purchase Agreement. Note 5. Derivative Instruments and Hedging Activities The Company is exposed to interest rate risk on its variable-rate borrowings under its A&R Credit Agreement. To manage a portion of this exposure, on June 10, 2026, the Company entered into three pay-fixed, receive-floating interest rate swaps with an aggregate notional amount of $ 55,000 that became effective on June 30, 2026. The Company has designated each swap as a cash flow hedge of the variability in interest payments attributable to changes in one-month Term SOFR on a corresponding amount of the Company’s A&R Credit Agreement. The interest rate swaps are recorded at fair value and are adjusted to market on a quarterly basis. The entire change in fair value of each designated swap is recorded in accumulated other comprehensive income/loss (“AOCI”) and is reclassified into interest expense in the same period in which the hedged interest payments affected earnings. As of June 30, 2026, the maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is approximately four years (through 2030). For the quarter and year to date ended June 30,2026, the unrealized loss on interest rate swaps recognized in AOCI was $ 156 (net of tax expense of $ 52 ). At June 30, 2026, the amount of net gains (losses) on qualifying derivatives currently recorded in AOCI expected to be reclassified into interest expense within the next twelve months is immaterial . The aggregate notional amount of the Company’s derivative instruments designated as cash flow hedges, interest rate swaps, was $ 55,000 at June 30, 2026. For the quarter and year to date ended June 30, 2026, the gain (loss) recognized in AOCI reclassified into interest expense was immaterial. The following table presents the fair value of the Company’s derivative instruments and their location on the condensed consolidated balance sheets: Balance Sheet Location June 30, 2026 Derivative liabilities: Interest rate swaps Accrued expenses $ 44 Interest rate swaps Other noncurrent liabilities $ 164 16 All derivative instruments are carried at fair value and are classified within Level 2 of the fair value hierarchy. The Company estimates the fair value of its interest rate swaps using a discounted cash flow model based on observable market inputs, including SOFR forward and discount curves, and incorporates an adjustment for nonperformance risk. As of June 30, 2026, the Company had not posted any collateral related to these instruments. If the credit risk related contingent features underlying these agreements had been triggered on June 30, 2026, the Company could have been required to settle or post collateral of up to $ 208 . The Company’s interest rate swaps are governed by the International Swaps and Derivative Association master agreement with the counterparty, which provides for net settlement of all outstanding transactions in the event of default or termination. The Company's policy is to present its derivative assets and liabilities on a gross basis in the condensed consolidated balance sheets, and it has not offset any amounts related to its interest rate swaps. As of June 30, 2026, the gross and net amounts of the Company’s interest rate swaps subject to this enforceable master netting arrangement were the same, as reflected in the fair value table above. Note 6. Income Taxes The Company’s tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, the estimated annual effective tax rate is updated and a year to date adjustment is made to the provision. The Company’s quarterly effective tax rate can be subject to significant change due to the effect of discrete items arising in a given quarter. Income tax expense (benefit) for the quarter and year to date ended June 30, 2026 was $ 3,063 and $( 36,802 ), respectively, for an effective tax rate of 20.3 percent and 23.1 percent, respectively. The effective tax rate for the quarter ended June 30, 2026 differed from the 21 percent U.S. federal statutory rate on pretax income primarily due to the impact of federal and state tax credits and the discrete impact of a state law change on the Company’s deferred tax balances, partially offset by state income tax and income tax on foreign subsidiaries. The effective tax rate for the year to date ended June 30, 2026 differed from the 21 percent U.S. federal statutory rate on pretax income primarily due to the discrete tax impact related to the vesting of share-based awards, as well as state income tax and income tax on foreign subsidiaries, partially offset by federal and state tax credits and the discrete impact of a favorable state law change on the Company’s deferred tax balances. Additionally, the favorable tax impact for the year to date ended June 30, 2026 was a result of the reduction of deferred tax liabilities due to the goodwill and other long-lived asset impairments. Income tax expense for the quarter and year to date ended June 30, 2025 was $ 4,308 and $ 4,979 , respectively, for an effective tax rate of 23.0 percent and 30.5 percent. The effective tax rate for the quarter and year to date ended June 30, 2025 differed from the 21 percent U.S. federal statutory rate on pretax income primarily due to the state income tax and income tax on foreign subsidiaries, partially offset by federal and state tax credits. In addition, for the year to date ended June 30, 2025, the effective tax rate differed from the U.S. federal statutory rate on pretax income due to the discrete tax impact related to the vesting of share based awards. 17 Note 7. Equity and EPS The following table presents computations of basic and diluted EPS: Quarter Ended June 30, Year to Date Ended June 30, 2026 2025 2026 2025 Operations: Net income (loss) (a) $ 12,009 $ 14,427 $ ( 122,798 ) $ 11,370 Attributable to noncontrolling interest — ( 1 ) 3 32 Attributable to participating securities (unvested shares and units) (b) ( 155 ) ( 159 ) ( 68 ) ( 127 ) Net income (loss) used in EPS calculation $ 11,854 $ 14,267 $ ( 122,863 ) $ 11,275 Share information: Basic weighted average common shares (c) 21,433,066 21,360,984 21,411,374 21,351,809 Diluted weighted average common shares (d) 21,433,066 21,360,984 21,411,374 21,351,809 Basic EPS $ 0.55 $ 0.67 $ ( 5.74 ) $ 0.53 Diluted EPS $ 0.55 $ 0.67 $ ( 5.74 ) $ 0.53 (a) Net income attributable to all stockholders. (b) Participating securities included 280,492 and 222,462 unvested restricted stock units (“RSUs”) at June 30, 2026 and 2025, respectively. (c) Under the two-class method, basic weighted average common shares exclude unvested participating securities. (d) The impacts of the Convertible Senior Notes and stock options were included in the diluted weighted average common shares if the inclusion was dilutive. The Convertible Senior Notes would only have a dilutive impact if the average market price per share during the quarter and year to date period exceeds the conversion price of $ 96.24 per share. Share Repurchase. On February 29, 2024, the Company announced that its Board of Directors approved a $ 100,000 share repurchase program. Under the share repurchase program, the Company can repurchase stock from time to time for cash in open market purchases, privately negotiated transactions, or by other means, in accordance with applicable securities laws and other legal requirements. The repurchase program has no expiration date and may be modified, suspended, or discontinued at any time by the Company without prior notice. During the quarters and year to dates ended June 30, 2026 and 2025, the Company repurchased no shares under the share repurchase program. As of June 30, 2026, there was approximately $ 53,412 remaining under the share repurchase program. Common Stock Share Activity. The following table presents the Company’s share activity: Shares Outstanding Capital Stock Preferred Common Stock Balance, December 31, 2025 437 21,294,315 Issuance of Common Stock — 109,225 Repurchase of Common Stock (a) — ( 34,415 ) Balance, March 31, 2026 437 21,369,125 Issuance of Common Stock — 42,719 Balance, June 30, 2026 437 21,411,844 Shares Outstanding Capital Stock Preferred Common Stock Balance, December 31, 2024 437 21,194,707 Issuance of Common Stock — 107,267 Repurchase of Common Stock (a) — ( 31,631 ) Balance, March 31, 2025 437 21,270,343 Issuance of Common Stock — 21,099 Balance, June 30, 2025 437 21,291,442 (a) The Common Stock repurchases were for tax withholding on equity-based compensation. 18 Note 8. Commitments and Contingencies The Company and its subsidiaries are, from time to time, a party to legal and regulatory proceedings arising in the ordinary course of its business. The Company accrues estimated costs for a contingency when management believes that a loss is probable and can be reasonably estimated. On December 16, 2024, a putative securities class action, captioned Operating Engineers Construction Industry Miscellaneous Pension Fund v. MGP Ingredients, Inc. et al., was filed in the United States District Court for the Southern District of New York against the Company, two of its former Chief Executive Officers and its current Chief Financial Officer (the “Operating Engineers Action”). The Operating Engineers Action was brought on behalf of a putative class who acquired publicly traded MGP common stock between May 4, 2023 and October 30, 2024. On February 13, 2025, a second putative securities class action, captioned Bronstein v. MGP Ingredients, Inc. et al., was filed in the United States District Court for the Southern District of New York against the same defendants (the “Bronstein Action”). The Bronstein Action was brought on behalf of a putative class who acquired publicly traded MGP securities between May 4, 2023 and October 30, 2024. Both actions assert securities fraud claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, in connection with statements made in the Company’s quarterly earnings releases and on earnings calls during the alleged class period. The Operating Engineers Action and Bronstein Action have been consolidated and transferred to the United States District Court for the District of Kansas, now captioned In re MGPI Ingredients, Inc. Securities Litigation. Lead Plaintiffs filed an Amended Complaint on May 15, 2025, which Defendants moved to dismiss on July 15, 2025. On March 25, 2026, the District Court dismissed the Amended Complaint and denied Plaintiffs leave to amend. On April 24, 2026, Plaintiffs filed their Notice of Appeal of the March 25, 2026 Decision to the United States Court of Appeals for the Tenth Circuit. The Company believes there are substantial defenses to the claims asserted and intends to defend the lawsuit vigorously. On January 23, 2025, a putative derivative lawsuit captioned Sebald v. Colo, et al., Case No. 2:25-cv-02034, was filed in the United States District Court for the District of Kansas against two of the Company’s former Chief Executive Officers, its current Chief Financial Officer, and the members of its Board of Directors (the “Sebald Action”). On March 17, 2025, a second putative derivative lawsuit captioned Reid v. Bratcher, et al., Case No. 2:25-cv-02127, was filed in the United States District Court for the District of Kansas against the same defendants (the “Reid Action”). On July 1, 2025, the respective plaintiffs in these cases filed a consolidated amended complaint (the “Consolidated Action”). On May 15, 2025, a third putative derivative lawsuit captioned Kruitwagen v. Bratcher, et al., Case No. 2:25-cv-02262, was filed in the United States District Court for the District of Kansas against the same defendants as in the Consolidated Action (the “Kruitwagen Action”). The Company is a “Nominal Defendant” in the lawsuits, which reflects the fact that the lawsuits are maintained by the respective named plaintiffs on behalf of the Company and that the plaintiffs seek damages on the Company’s behalf. The complaints allege, among other things, that the defendants breached their fiduciary duties and violated federal securities laws by causing the Company to make false and/or misleading statements and/or omissions in public filings during the class period alleged in the securities action and also allege breaches of fiduciary duties by failing to maintain internal controls. The complaints also allege breaches of fiduciary duties by seeking shareholder approval of an equity incentive plan, and causing the Company to repurchase its own stock at artificially inflated prices. The complaints bring additional claims for unjust enrichment, abuse of control, gross mismanagement, aiding and abetting breaches of fiduciary duties, and waste of corporate assets and seek indemnity and contribution from the named current and former officers. On July 24, 2025 and July 28, 2025, the Court entered orders staying the Consolidated Action and the Kruitwagen Action, respectively, pending an outcome on the motion to dismiss filed in the putative securities class action. On April 8, 2026, the Court entered an order extending the stays and directing the parties to file a status report by May 1, 2026. The Court subsequently issued orders continuing the stays in both actions pending the outcome of the Tenth Circuit appeal. The defendants believe there are substantial defenses to the claims asserted and intend to defend the lawsuits vigorously. Note 9. Employee and Non-Employee Benefit Plans Share-Based Compensation Plans . The Company has one equity-based compensation plan, the Amended and Restated 2024 Equity Incentive Plan (the “A&R 2024 Plan”). The 2024 Equity Incentive Plan (the “2024 Plan”) authorized 1,319,320 shares for issuance, subject to the adjustment and add-back provision of the 2024 Plan. On May 13, 2026, the stockholders of the Company approved the A&R 2024 Plan, which increased the number of shares available under the 2024 Plan by an additional 750,000 shares. The A&R 2024 Plan provides for the awarding of stock options, stock appreciation rights, shares of restricted stock, RSUs, performance stock units (“PSUs”), and other stock-based awards for executive officers and other employees, as well as non-employee directors and certain consultants and advisors. As of June 30, 2026, 1,145,211 shares remain available for issuance under the A&R 2024 Plan. PSUs are counted at the target level established on the award’s grant date and are adjusted after the performance period ends and the Human Resources and Compensation Committee has certified the achievement of their performance goals. 19 Deferred Compensation Plan. The Company established an unfunded Executive Deferred Compensation Plan (the “EDC Plan”) effective June 30, 2018, with a purpose to attract and retain highly-compensated key employees by providing participants with an opportunity to defer receipt of a portion of their salary, bonus, and other specified compensation. The Company’s obligations under the EDC Plan change in conjunction with the performance of the participants’ investments, along with contributions to and withdrawals from the EDC Plan. Realized and unrealized gains (losses) on deferred compensation plan investments were included as a component of other income, net on the Company’s Condensed Consolidated Statements of Income. For the quarter and year to date ended June 30, 2026, the Company had a gain on deferred compensation plan investments of $ 130 and $ 132 , respectively, and for the quarter and year to date ended June 30, 2025, the Company had a gain on deferred compensation plan investments of $ 92 and $ 48 , respectively. EDC Plan investments are classified as Level 1 in the fair value hierarchy since the investments trade with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoing basis. At June 30, 2026 and December 31, 2025, the EDC Plan investments were $ 1,983 and $ 2,236 , respectively, which were recorded in other assets on the Company’s Condensed Consolidated Balance Sheets. The EDC Plan current liabilities were $ 611 and $ 585 at June 30, 2026 and December 31, 2025, respectively, which were included in accrued expenses and other on the Company’s Condensed Consolidated Balance Sheets. The EDC Plan non-current liabilities were $ 1,812 and $ 1,651 at June 30, 2026 and December 31, 2025, respectively, and were included in other noncurrent liabilities on the Company’s Condensed Consolidated Balance Sheets. Note 10. Operating Segments At June 30, 2026, the Company had three segments: Branded Spirits, Distilling Solutions, and Ingredient Solutions. The Company’s operating segments are based on the financial information the chief operating decision maker uses to allocate resources and evaluate performance of the business. The Branded Spirits segment consists of a portfolio of high quality branded spirits which are produced through distilleries and bottling facilities. The Distilling Solutions segment consists of food grade alcohol (primarily brown goods) and distillery co-products, such as distillers feed (commonly called dried distillers grain in the industry). The Distilling Solutions segment also includes warehouse services, such as barrel put away, barrel storage, and barrel retrieval services. The Ingredient Solutions segment consists of specialty starches and proteins as well as commodity starches and proteins. Intersegment sales and transfers are recorded at cost and are treated as a transfer of inventory. All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance. Operating income for each segment is based on sales less identifiable operating expenses. Non-direct selling, general, and administrative expenses, interest expense, and other general miscellaneous expenses are excluded from segment operations and are classified as Corporate. Receivables, inventories, property, plant and equipment, leases, goodwill, and intangible assets have been identified with the segments to which they relate. All other assets are considered as Corporate. The following tables present summarized financial information for each segment: Quarter Ended June 30, 2026 Branded Spirits Distilling Solutions Ingredient Solutions Corporate Total Sales $ 59,630 $ 29,220 $ 35,507 $ — $ 124,357 Cost of Goods Sold 28,034 17,918 31,934 — 77,886 Gross Profit 31,596 11,302 3,573 — 46,471 Advertising and promotion expense 5,546 — 114 23 5,683 SG&A expense 7,945 717 763 10,812 20,237 Provision for credit loss 2,148 — — — 2,148 Impairment and other 751 — — — 751 Operating income (loss) $ 15,206 $ 10,585 $ 2,696 $ ( 10,835 ) $ 17,652 Depreciation and amortization $ 2,144 $ 1,767 $ 2,119 $ 356 $ 6,386 20 Quarter Ended June 30, 2025 Branded Spirits Distilling Solutions Ingredient Solutions Corporate Total Sales $ 60,520 $ 50,000 $ 34,974 $ — $ 145,494 Cost of Goods Sold 28,536 31,188 27,383 — 87,107 Gross Profit 31,984 18,812 7,591 — 58,387 Advertising and promotion expense 6,268 285 331 29 6,913 SG&A expense 8,979 786 970 12,421 23,156 Change in fair value of contingent consideration 8,000 — — — 8,000 Operating income (loss) $ 8,737 $ 17,741 $ 6,290 $ ( 12,450 ) $ 20,318 Depreciation and amortization $ 2,145 $ 2,025 $ 1,307 $ 353 $ 5,830 Year to Date Ended June 30, 2026 Branded Spirits Distilling Solutions Ingredient Solutions Corporate Total Sales $ 103,867 $ 57,220 $ 69,697 $ — $ 230,784 Cost of Goods Sold 51,135 37,293 62,303 — 150,731 Gross Profit 52,732 19,927 7,394 — 80,053 Advertising and promotion expense 11,558 86 122 108 11,874 SG&A expense 15,915 1,421 1,635 22,332 41,303 Provision for credit loss 2,148 — — — 2,148 Impairment and other 180,277 — — — 180,277 Operating income (loss) $ ( 157,166 ) $ 18,420 $ 5,637 $ ( 22,440 ) $ ( 155,549 ) Depreciation and amortization $ 4,303 $ 3,565 $ 4,077 $ 706 $ 12,651 Year to Date Ended June 30, 2025 Branded Spirits Distilling Solutions Ingredient Solutions Corporate Total Sales $ 108,747 $ 96,943 $ 61,457 $ — $ 267,147 Cost of Goods Sold 54,565 59,451 51,414 — 165,430 Gross Profit 54,182 37,492 10,043 — 101,717 Advertising and promotion expense 13,922 431 651 81 15,085 SG&A expense 17,969 1,438 2,094 22,860 44,361 Change in fair value of contingent consideration 22,700 — — — 22,700 Operating income (loss) $ ( 409 ) $ 35,623 $ 7,298 $ ( 22,941 ) $ 19,571 Depreciation and amortization $ 4,285 $ 4,080 $ 2,578 $ 695 $ 11,638 21 The following table allocates assets to each segment as of: June 30, 2026 December 31, 2025 Identifiable Assets Branded Spirits $ 550,586 $ 734,459 Distilling Solutions 337,437 342,449 Ingredient Solutions 139,069 133,807 Corporate 30,671 25,149 Total $ 1,057,763 $ 1,235,864 Note 11. Subsequent Events Allowance for Credit Losses. On July 26, 2026, one of the Company’s significant customers filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code. As a result, the Company recognized an allowance for credit loss of $ 2,148 on the Condensed Consolidated Balance Sheet as of June 30, 2026 and in provision for credit loss on the Condensed Consolidated Statements of Income (Loss) for the quarter and year to date ended June 30, 2026. The allowance for credit loss was recorded within the Branded Spirits segment. The Company evaluates its credit losses periodically and as circumstances warrant which may result in changes to the credit loss allowance. The Company is evaluating the impact of the bankruptcy on future sales and cash collections, and the ultimate amount recoverable may differ from current estimates. Dividend. On July 29, 2026, the Company announced a quarterly dividend payable to stockholders of record of the Company’s common stock, resulting in dividend equivalents payable to certain RSU holders, of $ 0.12 per share and per RSU. The dividend and dividend equivalents are payable on August 28, 2026 to stockholders of record and certain RSU holders as of August 14, 2026. 22