What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-03 compared with 2021-08-04 · 125 added, 99 removed, 597 unchanged (27% of the section changed)

3 unchanged sentences

(Dollars in thousands, except share and per share amounts)

Quarter Ended June 30, Year to Date Ended June 30,

Quarter Ended September 30, Year to Date Ended September 30,

2021 2020 2021 2020

9 unchanged sentences

Net income 23,673 10,381 59,159 28,713

Income attributable to participating securities 150 57 299 123

Net loss attributable to noncontrolling interest 203 — 279 —

1 unchanged sentence

23,876 10,381 59,438 28,713

Income attributable to participating securities ( 175 ) ( 69 ) ( 471 ) ( 192 )

Net income used in Earnings Per Share calculation $ 23,701 $ 10,312 $ 58,967 $ 28,521

Basic and diluted weighted average common shares 21,981,201 16,916,675 20,293,818 16,943,130

4 unchanged sentences

(Dollars in thousands)

Quarter Ended June 30, Year to Date Ended June 30,

Quarter Ended September 30, Year to Date Ended September 30,

2021 2020 2021 2020

Net income $ 20,059 $ 8,490 $ 35,486 $ 18,332

Net income attributable to MGP Ingredients, Inc.

$ 23,876 $ 10,381 $ 59,438 $ 28,713

Other comprehensive income, net of tax:

Unrealized gain on foreign currency translation adjustment 1 — 7 —

Unrealized loss on foreign currency translation adjustment ( 141 ) — ( 134 ) —

Change in Company-sponsored post-employment benefit plan ( 89 ) 74 ( 40 ) 89

Other comprehensive income 1 21 56 15

Comprehensive income 20,060 8,511 35,542 18,347

Comprehensive loss attributable to noncontrolling interest ( 76 ) — ( 76 ) —

Other comprehensive income (loss) ( 230 ) 74 ( 174 ) 89

Comprehensive income attributable to MGP Ingredients, Inc.

23,646 10,455 59,264 28,802

Comprehensive loss attributable to noncontrolling interest 203 — 279 —

Comprehensive income $ 23,443 $ 10,455 $ 58,985 $ 28,802

See accompanying notes to unaudited condensed consolidated financial statements

2 unchanged sentences

(Unaudited) (Dollars in thousands)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current Assets

Cash and cash equivalents $ 16,162 $ 21,662

Receivables (less allowance for credit losses, $ 100 and $ 24 at June 30, 2021, and December 31, 2020, respectively)

Receivables (less allowance for credit losses, $ 150 and $ 24 at September 30, 2021, and December 31, 2020, respectively)

92,152 56,966

1 unchanged sentence

Prepaid expenses 2,888 2,644

Refundable income taxes 1,382 —

Total current assets 351,896 222,283

30 unchanged sentences

authorized 40,000,000 shares;

issued 23,123,793 shares at June 30, 2021 and 18,115,965 shares at December 31, 2020;

and 21,961,233 and 16,915,862 shares outstanding at June 30, 2021 and December 31, 2020, respectively

issued 23,125,166 shares at September 30, 2021 and 18,115,965 shares at December 31, 2020;

and 21,963,574 and 16,915,862 shares outstanding at September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 315,543 15,503

1 unchanged sentence

Accumulated other comprehensive income 312 486

Treasury stock, at cost, 1,162,560 and 1,200,103 shares at June 30, 2021 and December 31, 2020, respectively

Treasury stock, at cost, 1,161,592 and 1,200,103 shares at September 30, 2021 and December 31, 2020, respectively

( 22,406 ) ( 23,125 )

8 unchanged sentences

(Dollars in thousands)

Year to Date Ended June 30,

Year to Date Ended September 30,

Cash Flows from Operating Activities

2 unchanged sentences

Depreciation and amortization 13,668 9,618

Net loss attributable to noncontrolling interest ( 76 ) —

Gain on sale of assets 5 337

1 unchanged sentence

Deferred income taxes, including change in valuation allowance 465 460

Unrealized gain on foreign currency 7 —

Other, net ( 236 ) —

Changes in operating assets and liabilities, net of effects of acquisition:

25 unchanged sentences

Effect of exchange rate changes on cash ( 2 ) —

Increase in cash and cash equivalents 15,581 8,436

Increase (decrease) in cash and cash equivalents ( 5,500 ) 16,657

Cash and cash equivalents, beginning of period 21,662 3,309

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For Year to Date Ended June 30, 2021

For Year to Date Ended September 30, 2021

(Unaudited) (Dollars in thousands)

28 unchanged sentences

4 6,715 315,062 293,800 542 ( 22,469 ) ( 76 ) 593,578

Comprehensive income:

Net income — — — 23,876 — ( 203 ) 23,673

Other comprehensive loss — — — — ( 230 ) — ( 230 )

Dividends and dividend equivalents of $ 0.12 per common share and per restricted stock unit, net of estimated forfeitures

— — — ( 2,654 ) — — — ( 2,654 )

Share-based compensation — — 480 — — — — 480

Stock shares awarded, forfeited, or vested — — ( 64 ) — — 64 — —

Stock shares repurchased — — — — — ( 1 ) — ( 1 )

Equity consideration for Merger — — 65 — — — — 65

Balance, September 30, 2021

$ 4 $ 6,715 $ 315,543 $ 315,022 $ 312 $ ( 22,406 ) $ ( 279 ) $ 614,911

See accompanying notes to unaudited condensed consolidated financial statements

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For Year to Date Ended June 30, 2020

For Year to Date Ended September 30, 2020

(Unaudited) (Dollars in thousands)

18 unchanged sentences

Net income — — — 8,490 — — 8,490

Other comprehensive loss — — — — 21 — 21

Other comprehensive income — — — — 21 — 21

Dividends and dividend equivalents of $ 0.12 per common share and per restricted stock unit, net of estimated forfeitures

3 unchanged sentences

4 6,715 15,026 245,016 ( 231 ) ( 23,833 ) 242,697

Comprehensive income:

Net income — — — 10,381 — — 10,381

Other comprehensive income — — — — 74 — 74

Dividends and dividend equivalents of $ 0.12 per common share and per restricted stock unit, net of estimated forfeitures

— — — ( 2,043 ) — — ( 2,043 )

Share-based compensation — — 258 — — — 258

Stock shares awarded, forfeited, or vested — — — — — 634 634

Balance, September 30, 2020

$ 4 $ 6,715 $ 15,284 $ 253,354 $ ( 157 ) $ ( 23,199 ) $ 252,001

See accompanying notes to unaudited condensed consolidated financial statements

15 unchanged sentences

See Note 3, Business Combination, for further details.

As a result of the merger with Luxco, during the quarter ended June 30, 2021, the Company established a new reportable segment structure that separates Branded Spirits from the Distillery Products segment.

As a result of the merger with Luxco, during the second quarter 2021, the Company established a new reportable segment structure that separates Branded Spirits from the Distillery Products segment.

The Ingredient Solutions segment remains unchanged.

6 unchanged sentences

All significant intercompany balances and transactions have been eliminated in consolidation.

These unaudited condensed consolidated financial statements as of and for the quarter ended June 30, 2021, 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, 2020, filed with the Securities and Exchange Commission (“SEC”).

These unaudited condensed consolidated financial statements as of and for the quarter and year to date ended September 30, 2021, 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, 2020, filed with the Securities and Exchange Commission (“SEC”).

The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

10 unchanged sentences

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.

whiskeys are normally aged in barrels for several years, following industry practice;

all barreled bourbon and whiskey is classified as a current asset.

Bourbon and whiskeys, included in inventory, are normally aged in barrels for several years, following industry practice;

all barreled bourbon

and whiskey is classified as a current asset.

The Company includes warehousing, insurance, and other carrying charges applicable to barreled whiskey in inventory costs.

2 unchanged sentences

Inventory consists of the following:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Finished goods $ 44,852 $ 16,414

32 unchanged sentences

Insurance recoveries, to the extent of costs and losses, are reported as a reduction to costs on the Condensed Consolidated Statements of Income.

Insurance recoveries, in

excess of costs and losses, if any, would be reported as a separate caption in Operating income on the Condensed Consolidated Statements of Income.

Insurance recoveries, in excess of costs and losses, if any, would be reported as a separate caption in Operating income on the Condensed Consolidated

Statements of Income.

Legally committed recovery amounts obtained prior to contingencies being resolved are recorded in Accrued expenses and other on the Condensed Consolidated Balance Sheets.

22 unchanged sentences

The Company separately evaluates indefinite-lived intangible assets for impairment.

As of June 30, 2021, the Company determined that goodwill and indefinite-lived intangible assets were not impaired.

As of September 30, 2021, the Company determined that goodwill and indefinite-lived intangible assets were not impaired.

Fair Value of Financial Instruments.

11 unchanged sentences

The fair value of the Company’s debt is estimated based on current market interest rates for debt with similar maturities and credit quality.

The fair value of the Company’s debt was $ 276,919 and $ 44,548 at June 30, 2021 and December 31, 2020, respectively.

The financial statement carrying value of total debt was $ 270,391 (including unamortized loan fees) and $ 39,871 (including unamortized loan fees) at June 30, 2021 and December 31, 2020, respectively.

The fair value of the Company’s debt was $ 251,053 and $ 44,548 at September 30, 2021 and December 31, 2020, respectively.

The financial statement carrying value of total debt was $ 247,677 (including unamortized loan fees) and $ 39,871 (including unamortized loan fees) at September 30, 2021 and December 31, 2020, respectively.

These fair values are considered Level 2 under the fair value hierarchy.

5 unchanged sentences

(“Agricola”) (combined “LMX”), which are accounted for as equity method investments since the date of acquisition.

At June 30, 2021, the investment in LMX was $ 5,739 , which is recorded in Investment in joint ventures on the Condensed Consolidated Balance Sheet.

During the quarter and year to date ended June 30, 2021, the Company recorded a $ 334 loss from our equity method investments, which is recorded in Other income (loss), net on the Condensed Consolidated Statement of Income.

At September 30, 2021, the investment in LMX was $ 5,334 , which is recorded in Investment in joint ventures on the Condensed Consolidated Balance Sheet.

During the quarter and year to date ended September 30, 2021, the Company recorded a $ 405 and $ 739 , respectively, loss from our equity method investments, which is recorded in Other income (loss), net on the Condensed Consolidated Statement of Income.

Recently Adopted Accounting Standard Updates.

The Company did not adopt any new Accounting Standard Updates during the quarter ended June 30, 2021 .

The Company did not adopt any new Accounting Standard Updates during the quarter ended September 30, 2021 .

The Company generates revenues from the Distillery Products segment by the sale of products and by providing warehouse services related to the storage and aging of customer products.

3 unchanged sentences

The following table presents the Company’s sales by segment and major products and services:

Quarter Ended June 30, Year to Date Ended June 30,

Quarter Ended September 30, Year to Date Ended September 30,

2021 2020 2021 2020

31 unchanged sentences

The Company Shares were valued at $ 296,213 and represented approximately 22.8 percent of the Company’s outstanding common stock immediately following the closing of the Merger.

The Merger Consideration is subject to customary purchase price adjustments, including working capital, a portion of which may be paid in common stock.

The preliminary Merger Consideration will increase or decrease to the extent that actual closing date working capital exceeds or is less than the contractually agreed upon working capital target.

In addition, the preliminary Merger Consideration will be increased for any acquired cash.

In connection with the closing of the Merger on April 1, 2021, the preliminary purchase price adjustments increased the cash consideration paid by approximately $ 75 and increased stock consideration by approximately $ 159 .

The Merger Consideration was subject to customary purchase price adjustments related to, among other things, net working capital, acquired cash and assumed debt.

The consideration paid at the Closing included a preliminary estimated purchase price adjustment.

In September 2021, the parties finalized the purchase price adjustment, which decreased the cash consideration paid by approximately $ 608 and increased stock consideration by an additional 1,373 shares from the preliminary amounts that were paid at closing.

The cash portion of the Merger Consideration, the repayment of assumed debt, and transaction-related expenses were financed with borrowings under the Company’s existing Credit Agreement which was drawn down on April 1, 2021.

3 unchanged sentences

The taxable component of the transaction will create additional tax basis and a corresponding future tax deduction for the Company.

The Merger was accounted for as a business combination in accordance with Accounting Standard Codification 805 “ASC 805”), Business Combinations, and as such, assets acquired, liabilities assumed, and consideration transferred were recorded at their estimated fair values on the acquisition date.

The Merger was accounted for as a business combination in accordance with Financial Accounting Standards Board Accounting Standard Codification 805, Business Combinations (“ASC 805”), and as such, assets acquired, liabilities assumed, and consideration transferred were recorded at their estimated fair values on the acquisition date.

The fair value of the assets acquired and liabilities assumed are based upon a preliminary assessment of fair value and may change as valuations for certain tangible assets, intangible assets and contingent liabilities are finalized and the associated income tax impacts are determined.

25 unchanged sentences

(a) The Company issued 5,007,833 shares of MGP Common Stock which was valued at $ 59.15 per share on April 1, 2021.

The value of MGP Common Stock includes the preliminary working capital adjustment of $ 159 .

In September 2021, the parties finalized the purchase price adjustments which increased stock consideration by an additional 1,373 shares from the preliminary amounts that were paid at closing.

(b) Intangible assets acquired includes trade names with an estimated fair value of $ 178,100 and distributor relationships with an estimated fair value of $ 41,400 .

11 unchanged sentences

The operating results of Luxco were consolidated with the Company’s operating results subsequent to the merger date.

During the quarter and year to date ended June 30, 2021, the Company recorded $ 59,298 of Sales and $ 6,520 of Income before income taxes, attributable to Luxco on it’s Condensed Consolidated Statement of Income.

During the quarter and year to date ended June 30, 2021, the Company has incurred $ 6,738 and $ 8,628 , respectively, of transaction related costs, which are included in Selling, general and administrative expenses on the Condensed Consolidated Statements of Income.

During the quarter and year to date ended September 30, 2021, the Company recorded $ 59,057 and $ 118,355 , respectively, of Sales and $ 6,038 and $ 12,559 , respectively, of Income before income taxes, attributable to Luxco on it’s Condensed Consolidated Statement of Income.

During the quarter and year to date ended September 30, 2021, the Company has incurred $ 294 and $ 8,922 , respectively, of transaction related costs, which are included in Selling, general and administrative expenses on the Condensed Consolidated Statements of Income.

Pro Forma Information .

The following table summarizes the unaudited pro forma financial results for the quarter and year to date ended June 30, 2021 and 2020, as if the Merger had occurred on January 1, 2020:

The following table summarizes the unaudited pro forma financial results for the quarter and year to date ended September 30, 2021 and 2020, as if the Merger had occurred on January 1, 2020:

Pro Forma Financial Information

Quarter Ended June 30, Year to Date Ended June 30,

Quarter Ended September 30, Year to Date Ended September 30,

2021 2020 2021 2020

4 unchanged sentences

Merger related costs incurred by the Company of $ 294 and $ 8,922 for the quarter and year to date ended June 30, 2021, respectively, were excluded and $ 7,032 is assumed to have been incurred on January 1, 2020.

Merger related costs incurred by Luxco of $ 3,132 were excluded from the year to date ended June 30, 2021 pro forma results.

A non-recurring expense of $ 2,529 for the quarter and year to date ended June 30, 2021 related to the fair value adjustment of finished goods inventory estimated to have been sold was removed and included in the results for the year to date ended June 30, 2020.

Merger related costs incurred by Luxco of $ 3,132 were excluded from the year to date ended September 30, 2021 pro forma results.

A non-recurring expense of $ 2,529 for the year to date ended September 30, 2021 related to the fair value adjustment of finished goods inventory estimated to have been sold was removed and included in the results for the year to date ended September 30, 2020.

Other acquired tangible and intangible assets are assumed to be recorded at estimated fair value on January 1, 2020 and are amortized or depreciated over their estimated useful lives.

6 unchanged sentences

The distributor relationships have a useful life of 20 years.

The amortization expense for the quarter and year to date ended June 30, 2021 was $ 518 .

As of June 30, 2021, the expected future amortization expense related to definite-lived intangibles assets are as follows:

The amortization expense for the quarter and year to date ended September 30, 2021 was $ 517 and $ 1,035 , respectively.

As of September 30, 2021, the expected future amortization expense related to definite-lived intangibles assets are as follows:

Remainder of 2021 $ 518

8 unchanged sentences

Acquisitions — 224,850 — 224,850

Balance, June 30, 2021

Balance, September 30, 2021

$ — $ 227,588 $ — $ 227,588

4 unchanged sentences

Acquisitions — 178,100 — 178,100

Balance, June 30, 2021

Balance, September 30, 2021

$ — $ 178,990 $ — $ 178,990

2 unchanged sentences

Description (a)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Credit Agreement - Revolver, 1.34 % (variable rate) due 2025

11 unchanged sentences

Long-term debt and Credit Agreement - Revolver $ 244,450 $ 38,271

(a) Interest rates are as of June 30, 2021.

(a) Interest rates are as of September 30, 2021.

(b) Loan fees are being amortized over the life of the Credit Agreement and Note Purchase Agreement.

4 unchanged sentences

The Company incurred $ 666 new loan fees related to the Credit Agreement during 2021.

The Credit Agreement includes certain requirements and covenants, which the Company was in compliance with at June 30, 2021.

As of June 30, 2021, the Company had $ 232,000 outstanding borrowings under the Credit Agreement leaving $ 168,000 available.

The Credit Agreement includes certain requirements and covenants, which the Company was in compliance with at September 30, 2021.

As of September 30, 2021, the Company had $ 210,000 outstanding borrowings under the Credit Agreement leaving $ 190,000 available.

The cash portion of the Merger Consideration, the repayment of assumed debt, and transaction-related expenses were financed with $ 242,300 borrowings under the Credit Agreement which was drawn down on April 1, 2021.

2 unchanged sentences

has provided written notice to the Company of its authorization of such a higher amount) and issuance of $ 20,000 of Senior Secured Notes.

On July 29, 2021, PGIM, Inc.

(“Prudential”) provided the Company notice pursuant to Section 1.2 of the Note Agreement that Prudential has authorized an increase in the amount of the senior promissory notes that may be issued under the uncommitted shelf facility under the Note Agreement from $ 105,000 to $ 140,000 , effective as of July 29, 2021.

The deadline for issuing the notes under the shelf facility is August 23, 2023.

1 unchanged sentence

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, which the Company was in compliance with at June 30, 2021.

The Note Purchase Agreement includes certain requirements and covenants, which the Company was in compliance with at September 30, 2021.

Other long-term borrowings.

5 unchanged sentences

See Note 3, Business Combination, for further details.

Income tax expense for the quarter and year to date ended June 30, 2021, was $ 6,412 and $ 11,027 , respectively, for an effective tax rate of 24.2 percent and 23.7 percent, respectively.

The effective tax rate for quarter and year to date ended June 30, 2021, differed from the 21 percent federal statutory rate on pretax income, primarily due to state taxes, income taxes on foreign subsidiaries acquired as a result of the Merger, nondeductible transaction costs, and a change in accounting estimate related to the Company’s state tax credits.

The increase in the estimated annual effective tax rate was partially offset by state and federal credits, including income taxes on foreign subsidiaries acquired as a result of the Merger, the deduction applicable to export activity, and a change related to the Company’s valuation allowance related to the ability to use certain state net operating losses carryforward.

Income tax expense for the quarter and year to date ended June 30, 2020, was $ 2,550 and $ 5,774 , respectively, for an effective tax rate of 23.1 percent and 24.0 percent, respectively.

The effective tax rate for the quarter ended June 30, 2020 differed from the 21 percent federal statutory rate on pretax income, primarily due to state income taxes, partially offset by state and federal tax credits and the deduction applicable to export activity.

The effective tax rate for the year to date ended June 30, 2020, differed from the 21 percent federal statutory rate on pretax income, primarily due to state taxes, estimated increase in the Company’s valuation allowance related to state income tax attributes, and the discrete tax impact of vested share-based awards, partially offset by federal and state credits, the deduction applicable to income derived from export activity.

Income tax expense for the quarter and year to date ended September 30, 2021, was $ 7,674 and $ 18,701 , respectively, for an effective tax rate of 24.5 percent and 24.0 percent, respectively.

The effective tax rate for quarter and year to date ended September 30, 2021, differed from the 21 percent federal statutory rate on pretax income, primarily due to state taxes, income taxes on foreign subsidiaries acquired as a result of the Merger, nondeductible transaction costs, partially offset by state and federal credits and the deduction applicable to export activity.

Income tax expense for the quarter and year to date ended September 30, 2020, was $ 2,862 and $ 8,636 , respectively, for an effective tax rate of 21.6 percent and 23.1 percent, respectively.

The effective tax rate for the quarter ended September 30, 2020 differed from the 21 percent federal statutory rate on pretax income, primarily due to state income taxes, partially offset by state and federal tax credits, the release of a portion of the Company’s valuation allowance and the deduction applicable to export activity.

The effective tax rate for the year to date ended September 30, 2020, differed from the 21 percent federal statutory rate on pretax income, primarily due to state taxes, partially offset by federal and state credits, and the deduction applicable to income derived from export activity.

Equity and EPS

The computations of basic and diluted EPS:

Quarter Ended June 30, Year to Date Ended June 30,

Quarter Ended September 30, Year to Date Ended September 30,

2021 2020 2021 2020

1 unchanged sentence

$ 23,673 $ 10,381 $ 59,159 $ 28,713

Income attributable to participating securities (b)

150 57 299 123

net loss attributable to noncontrolling interest 203 — 279 —

Net income attributable to MGP Ingredients, Inc.

Income attributable to participating securities (b)

( 175 ) ( 69 ) ( 471 ) ( 192 )

Net income used in EPS calculation $ 23,701 $ 10,312 $ 58,967 $ 28,521

Share information:

3 unchanged sentences

(a) Net income attributable to all shareholders.

(b) Participating securities included 166,674 and 116,127 unvested restricted stock units (“RSUs”), at June 30, 2021 and 2020, respectively.

(c) Under the two-class method, basic and diluted weighted average common shares at June 30, 2021 and 2020 exclude unvested participating securities.

(b) Participating securities included 163,024 and 115,399 unvested restricted stock units (“RSUs”), at September 30, 2021 and 2020, respectively.

(c) Under the two-class method, basic and diluted weighted average common shares at September 30, 2021 and 2020 exclude unvested participating securities.

Share Issuance.

On April 1, 2021, as part of the consideration for the Merger, the Company issued 5,007,833 shares of common stock.

The shares issued represented approximately 22.8 percent of the Company’s outstanding stock immediately following the closing of the Merger.

The shares issued represented approximately 22.8 percent of the Company’s outstanding stock immediately

following the closing of the Merger.

In September 2021, the parties finalized the purchase price adjustments, which increased stock consideration by an additional 1,373 shares from the preliminary amounts that were paid at closing.

Share Repurchase.

2 unchanged sentences

This share repurchase program may be modified, suspended, or terminated by the Company at any time without prior notice.

The Company did no t repurchase any shares during the year to date ended June 30, 2021 and has $ 20,947 remaining under the share repurchase plan.

During the year to date ended June 30, 2020, the Company repurchased approximately 159,104 shares of MGP Common Stock for $ 4,053 .

The Company did no t repurchase any shares during the year to date ended September 30, 2021 and has $ 20,947 remaining under the share repurchase plan.

During the year to date ended September 30, 2020, the Company repurchased approximately 159,104 shares of MGP Common Stock for $ 4,053 .

The Common Stock share activity:

8 unchanged sentences

Balance, June 30, 2021 437 21,961,233

Issuance of Common Stock — 2,361

Repurchase of Common Stock (a)

Balance, September 30, 2021 437 21,963,574

Shares Outstanding

8 unchanged sentences

Balance, June 30, 2020 437 16,895,522

Issuance of Common Stock — 17,798

Repurchase of Common Stock (a)

Balance, September 30, 2020 437 16,913,313

(a) The Common Stock repurchases were for tax withholding on equity based compensation

7 unchanged sentences

The fire damaged certain equipment in the facility’s feed drying operations and caused temporary loss of production time.

At June 30, 2021, the Company received a legally binding commitment from their insurance carrier of $ 11,300 that was recorded as Receivables on the Condensed Consolidated Balance Sheet.

During the quarter and year to date ended June 30, 2021, the Company recorded $ 6,230 and $ 9,840 , respectively, of partial settlement from its insurance carrier as a reduction of Cost of sales.

At June 30, 2021, recorded within Accrued expenses and other on the Condensed Consolidated Balance Sheet is $ 11,400 related to legally committed insurance recovery amounts obtained prior to contingencies related to the insurance claim being resolved.

At September 30, 2021, the Company received a legally binding commitment from their insurance carrier of $ 11,500 that was recorded as Receivables on the Condensed Consolidated Balance Sheet.

During the quarter and year to date ended September 30, 2021, the Company recorded $ 6,404 and $ 16,244 , respectively, of partial settlement from its insurance carrier as a reduction of Cost of

The Company recorded $ 16,500 related to legally committed insurance recovery amounts obtained prior to contingencies related to the insurance claim being resolved, in Accrued expenses and other on the Consolidated Balance Sheet at September 30, 2021.

The Company is working to construct a replacement drying system.

The Company’s insurance is expected to provide coverage of any business interruption and other losses from damage to property, plant and equipment, but there can be no assurance to the

amount or timing of possible insurance recoveries if ultimately claimed by the Company.

The Company’s insurance is expected to provide coverage for business interruption and other losses from damage to property, plant and equipment, but there can be no assurance to the amount or timing of possible insurance recoveries.

Ransomware Cyber-Attack.

3 unchanged sentences

Following the attack, MGP implemented a variety of measures to further enhance our cybersecurity protections and minimize the impact of any future attack.

The Company’s insurance may cover additional losses from this incident, but there can be no assurance as to the amount or timing of any possible insurance recoveries if ultimately claimed by the Company.

The Company’s insurance may cover additional losses from this incident, but there can be no assurance as to the amount or timing of any possible insurance recoveries.

Shareholder matters.

In 2020, two putative class action lawsuits were filed in the United States District Court for District of Kansas, naming the Company and certain of its current and former executive officers as defendants, asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

The plaintiffs seek to pursue claims on behalf of a class consisting of purchasers or acquirers of the Company’s Common Stock during certain specified periods (the “Class Periods”).

The plaintiffs sought to pursue claims on behalf of a class consisting of purchasers or acquirers of the Company’s Common Stock during certain specified periods (the “Class Periods”).

On May 28, 2020, the two lawsuits were consolidated and the Court appointed City of Miami Fire Fighters’ and Police Officers’ Retirement Trust as lead plaintiff.

3 unchanged sentences

On July 22, 2020, the Retirement Trust filed a consolidated Amended Complaint.

The Consolidated Complaint alleges that the defendants made false and/or misleading statements regarding the Company’s forecasts of sales of aged whiskey, and that, as a result the Company’s Common Stock traded at artificially inflated prices throughout the Class Periods.

The plaintiffs seek compensatory damages, interest, attorneys’ fees, costs, and unspecified equitable relief, but have not specified the amount of damages being sought.

The Consolidated Complaint alleged that the defendants made false and/or misleading statements regarding the Company’s forecasts of sales of aged whiskey, and that, as a result the Company’s Common Stock traded at artificially inflated prices throughout the Class Periods.

The plaintiffs sought compensatory damages, interest, attorneys’ fees, costs, and unspecified equitable relief, but have not specified the amount of damages being sought.

On September 8, 2020, defendants filed a Motion to Dismiss the Consolidated Amended Complaint.

The Motion has been fully briefed and remains pending.

Discovery is stayed while the motion is pending.

The Company intends to continue to vigorously defend itself in this action.

On August 31, 2021, the court issued a Memorandum and Order granting the Motion to Dismiss dismissing plaintiff’s claims with prejudice.

The Plaintiff had until September 30, 2021 to file a notice of appeal and the Plaintiff did not appeal.

On May 11, 2020, Mitchell Dorfman, a shareholder in MGP, filed an action in the United States District Court for the District of Kansas, under the caption Dorfman, derivatively on behalf of MGP Ingredients v.

23 unchanged sentences

2020-CV-000609.

The Petition alleges that plaintiff commenced the action under K.S.A.

The Petition alleges that plaintiff commenced the action

17-6510 to enforce his alleged right to inspect books and records of the Company, in order to enable him to evaluate possible misconduct by the Company’s Board of Directors and management.

10 unchanged sentences

the Employee Equity Incentive Plan of 2014 (the “2014 Plan”) and the Non-Employee Director Equity Incentive Plan (the “Directors’ Plan”).

As of June 30, 2021, 516,861 RSUs had been granted of the 1,500,000 shares approved under the 2014 Plan, and 120,619 shares had been granted of the 300,000 shares approved under the Directors’ Plan.

As of June 30, 2021, there were 171,824 unvested RSUs under the Company’s long-term incentive plans and 166,674 were participating securities (Note 7).

As of September 30, 2021, 516,861 RSUs had been granted of the 1,500,000 shares approved under the 2014 Plan, and 121,557 shares had been granted of the 300,000 shares approved under the Directors’ Plan.

As of September 30, 2021, there were 168,074 unvested RSUs under the Company’s long-term incentive plans and 163,024 were participating securities (Note 7).

Deferred Compensation Plan.

1 unchanged sentence

The Company’s obligations under this plan will change in conjunction with the performance of the participants’ investments, along with contributions to and withdrawals from the plan.

Realized and unrealized gains (losses) on deferred compensation plan investments were included as a component of Other income (loss), net on the Company’s Condensed Consolidated Statements of Income for the quarter and year to date ended June 30, 2021.

For quarter and year to date ended June 30, 2021, the Company had a gain on deferred compensation plan investments of $ 246 and $ 276 , respectively.

For quarter and year to date ended June 30, 2020, the Company had a gain on deferred compensation plan investments of $ 331 and $ 167 , respectively.

For quarter ended September 30, 2021, the Company had a loss on deferred compensation plan investments of $ 15 and for year to date ended September 30, 2021, the Company had a gain on deferred compensation plan investments of $ 261 .

For quarter and year to date ended September 30, 2020, the Company had a gain on deferred compensation plan investments of $ 185 and $ 352 , respectively.

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.

2 unchanged sentences

STI plan deferral were deposited, at the time of payment, into the EDC Plan by the Company and allocated by participants among Company-determined investment options.

At June 30, 2021 and December 31, 2020, the EDC Plan investments were $ 3,558 and $ 2,007 , respectively, which were recorded in Other assets on the Company’s Condensed Consolidated Balance Sheets.

The EDC Plan current liabilities were $ 897 at June 30, 2021 and were included in Accrued expenses and other on the Company’s Condensed Consolidated Balance Sheet.

The EDC Plan non-current liabilities were $ 2,924 and $ 3,140 at June 30, 2021 and December 31, 2020, respectively, and were included in Other noncurrent liabilities on the Company’s Condensed Consolidated Balance Sheets.

At September 30, 2021 and December 31, 2020, the EDC Plan investments were $ 3,555 and $ 2,007 , respectively, which were recorded in Other assets on the Company’s Condensed Consolidated Balance Sheets.

The EDC Plan current liabilities were $ 897 at September 30, 2021 and were included in Accrued expenses and other on the Company’s Condensed Consolidated Balance Sheet.

The EDC Plan non-current liabilities were $ 3,155 and $ 3,140 at September 30, 2021 and December 31, 2020, respectively, and were included in Other noncurrent liabilities on the Company’s Condensed Consolidated Balance Sheets.

Operating Segments

As discussed in Note 1, the Company established a new reportable segment structure as a result of the Merger and prior periods have been revised to reflect the new operating segments.

At June 30, 2021, the Company had three segments:

At September 30, 2021, the Company had three segments:

Distillery Products, Branded Spirits, and Ingredient Solutions.

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Operating profit for each segment is based on sales less identifiable operating expenses.

Non-direct selling, general and administrative expenses, interest expense, other special charges, and other general miscellaneous expenses are excluded from segment operations and are classified as Corporate.

Non-direct selling, general and

administrative expenses, interest expense, other special charges, 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.

Quarter Ended June 30, Year to Date Ended June 30,

Quarter Ended September 30, Year to Date Ended September 30,

2021 2020 2021 2020

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The following table allocates assets to each segment as of:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Identifiable Assets

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Subsequent Events

On August 2, 2021, the Company’s Board of Directors declared a quarterly dividend payable to stockholders of record as of August 20, 2021, of the Company’s Common Stock, and a dividend equivalent payable to holders of certain RSUs as of August 20, 2021, of $ 0.12 per share and per unit, payable on September 3, 2021.

Note Purchase Agreements.

On July 29, 2021, PGIM, Inc.

(“Prudential”) provided the Company notice pursuant to Section 1.2 of the Note Purchase and Private Shelf Agreement dated as of August 23, 2017 (as amended by the First Amendment to Note Purchase and Private Shelf Agreement dated as of February 14, 2020, the Second Amendment to Note Purchase and Private Shelf Agreement dated as of September 30, 2020, the Third Amendment to Note Purchase and Private Shelf Agreement dated as of January 25, 2021, and the Fourth Amendment to Note Purchase and Private Shelf Agreement dated as of May 14, 2021, the “Note Agreement”) that Prudential has authorized an increase in the amount of the senior promissory notes that may be issued under the uncommitted shelf facility under the Note Agreement from $ 105,000 to $ 140,000 , effective as of July 29, 2021.

On November 1, 2021, the Company’s Board of Directors declared a quarterly dividend payable to stockholders of record as of November 19, 2021, of the Company’s Common Stock, and a dividend equivalent payable to holders of certain RSUs as of November 19, 2021, of $ 0.12 per share and per unit, payable on December 3, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements