What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-05 compared with 2021-11-03 · 162 added, 271 removed, 451 unchanged (49% of the section changed)

3 unchanged sentences

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

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

2021 2020 2021 2020

Quarter Ended March 31,

Sales $ 195,235 $ 108,323

1 unchanged sentence

Gross profit 71,821 32,299

Advertising and promotion expenses 5,504 853

Selling, general and administrative expenses 16,266 10,946

Other operating income, net ( 29 ) —

Operating income 50,080 20,500

Interest expense, net ( 1,598 ) ( 488 )

Other income (loss), net ( 421 ) 185 ( 479 ) 352

Other income, net 54 30

Income before income taxes 48,536 20,042

12 unchanged sentences

(Dollars in thousands)

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

2021 2020 2021 2020

Quarter Ended March 31,

Net income attributable to MGP Ingredients, Inc.

12 unchanged sentences

(Unaudited) (Dollars in thousands)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Current Assets

Cash and cash equivalents $ 27,295 $ 21,568

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

Receivables (less allowance for credit loss, $ 175 and $ 150 at March 31, 2022, and December 31, 2021, respectively)

102,062 92,537

15 unchanged sentences

Accounts payable 52,763 53,712

Federal and state liquor taxes payable 6,498 107

Federal and state excise taxes payable 6,476 6,992

Income taxes payable 5,437 —

2 unchanged sentences

Long-term debt, less current maturities 34,463 35,266

Credit agreement - revolver 208,382 —

Convertible senior notes 194,986 194,906

Long-term operating lease liabilities 12,595 6,997

11 unchanged sentences

authorized 40,000,000 shares;

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

issued 23,125,166 shares at March 31, 2022 and December 31, 2021;

and 21,985,100 and 21,964,314 shares outstanding at March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital 316,571 315,802

1 unchanged sentence

Accumulated other comprehensive income 122 354

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

Treasury stock, at cost, 1,140,066 and 1,160,852 shares at March 31, 2022 and December 31, 2021, respectively

( 22,464 ) ( 22,357 )

8 unchanged sentences

(Dollars in thousands)

Year to Date Ended September 30,

Quarter Ended March 31,

Cash Flows from Operating Activities

2 unchanged sentences

Depreciation and amortization 5,621 3,311

Gain on sale of assets 5 337

Share-based compensation 1,373 3,229

Gain on equity method investment ( 394 ) —

Deferred income taxes, including change in valuation allowance 347 ( 648 )

Other, net 24 —

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

Changes in operating assets and liabilities:

Receivables, net ( 9,601 ) ( 4,348 )

4 unchanged sentences

Accrued expenses and other ( 8,896 ) ( 8,278 )

Federal and state liquor taxes payable ( 1,961 ) 139

Federal and state excise taxes payable ( 515 ) ( 107 )

Other, net ( 136 ) ( 1,182 )

2 unchanged sentences

Additions to property, plant, and equipment ( 10,642 ) ( 12,059 )

Purchase of business, net of cash acquired ( 149,613 ) ( 2,750 )

Contributions to equity method investment ( 1,028 ) —

Proceeds from sale of property — 688

Other, net ( 363 ) ( 1,281 )

3 unchanged sentences

Purchase of treasury stock ( 714 ) ( 674 )

Loan fees paid related to borrowings ( 666 ) ( 1,148 )

Principal payments on long-term debt ( 807 ) —

Proceeds from credit agreement - revolver 242,300 54,700

Payments on credit agreement - revolver ( 32,300 ) ( 40,000 )

Payment on assumed debt as part of the Merger ( 87,509 ) —

Net cash provided by financing activities 112,883 2,713

Net cash used in financing activities ( 4,182 ) ( 2,726 )

Effect of exchange rate changes on cash ( 288 ) —

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

Increase in cash and cash equivalents 5,727 924

Cash and cash equivalents, beginning of period 21,568 21,662

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For Year to Date Ended September 30, 2021

For Quarter Ended March 31, 2022 and 2021

(Unaudited) (Dollars in thousands)

8 unchanged sentences

Comprehensive income:

Net income — — — 15,427 — — — 15,427

Other comprehensive income — — — — 55 — — 55

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

— — — ( 2,052 ) — — — ( 2,052 )

Share-based compensation — — 3,229 — — — — 3,229

Stock shares awarded, forfeited or vested — — ( 716 ) — — 716 — —

Stock shares repurchased — — — — — ( 674 ) — ( 674 )

Balance, March 31, 2021

4 6,715 18,016 276,318 541 ( 23,083 ) — 278,511

Comprehensive income:

Net income — — — 20,135 — — ( 76 ) 20,059

Other comprehensive income — — — — 1 — — 1

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

— — — ( 2,653 ) — — — ( 2,653 )

Share-based compensation — — 1,538 — — — — 1,538

Stock shares awarded, forfeited or vested — — ( 705 ) — — 705 — —

Stock shares repurchased — — — — — ( 91 ) — ( 91 )

Equity consideration for Merger — — 296,213 — 296,213

Balance, June 30, 2021

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

Comprehensive income:

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

Net income (loss) — — — 37,437 — — ( 66 ) 37,371

Other comprehensive loss — — — — ( 232 ) — — ( 232 )

4 unchanged sentences

Stock shares repurchased — — — — — ( 711 ) — ( 711 )

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

Balance, September 30, 2021

Balance, March 31, 2022

$ 4 $ 6,715 $ 316,571 $ 379,013 $ 122 $ ( 22,464 ) $ ( 556 ) $ 679,405

See accompanying notes to unaudited condensed consolidated financial statements

MGP INGREDIENTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For Year to Date Ended September 30, 2020

(Unaudited) (Dollars in thousands)

Preferred Issued Common Additional

2 unchanged sentences

Comprehensive

Loss Treasury

income Treasury

Balance, December 31, 2020

2 unchanged sentences

Net income — — — 15,427 — — 15,427

Other comprehensive loss — — — — ( 6 ) — ( 6 )

Other comprehensive income — — — — 55 — 55

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

5 unchanged sentences

$ 4 $ 6,715 $ 18,016 $ 276,318 $ 541 $ ( 23,083 ) $ 278,511

Comprehensive income:

Net income — — — 8,490 — — 8,490

Other comprehensive income — — — — 21 — 21

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

— — — ( 2,041 ) — — ( 2,041 )

Share-based compensation — — 662 — — — 662

Balance, June 30, 2020

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

6 unchanged sentences

Distilled spirits include premium bourbon and rye whiskeys and grain neutral spirits, including vodka and gin.

Our distilled spirits are either packaged and sold under our own brands to distributors, sold, directly or indirectly, to manufacturers of other branded spirits, or direct to consumer.

The Company’s distilled spirits are either packaged and sold under its own brands to distributors, sold, directly or indirectly to manufacturers of other branded spirits, or direct to consumer.

MGP is also a top producer of high quality industrial alcohol for use in both food and non-food applications.

The Company’s protein and starch food ingredients provide a host of functional, nutritional, and sensory benefits for a wide range of food products to serve the packaged goods industry.

Our industrial alcohol and ingredients products are sold directly, or through distributors, to manufacturers and processors of finished packaged goods or to bakeries.

The Company’s protein and starch food ingredients provide a host of functional, nutritional, and sensory benefits for a wide range of food products to serve the consumer packaged goods industry.

The Company’s industrial alcohol and ingredients products are sold directly, or through distributors, to manufacturers and processors of finished packaged goods or to bakeries.

The Company’s distillery products are derived from corn and other grains (including rye, barley, wheat, barley malt, and milo), and its ingredient products are derived primarily from wheat flour.

On April 1, 2021, the Company acquired Luxco, Inc.

and its affiliated companies (“Luxco”, or “Luxco Companies”) which is a leading branded beverage alcohol company across various categories, with a more than 60-year business heritage.

and its affiliated companies (“Luxco”) which is a leading branded beverage alcohol company across various categories, with a more than 60-year business heritage.

Luxco’s operations predominately involve the producing, importing, bottling and rectifying of distilled spirits.

See Note 3, Business Combination, for further details.

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.

The new segment presentation reflects how management is now operating the business and making resource allocations.

The Company now reports three operating segments:

Distillery Products, Branded Spirits and Ingredient Solutions.

Certain amounts in the 2020 consolidated financial statements have been reclassified to conform to the 2021 presentation and prior periods have been revised to reflect the new operating segment structure.

The Company reports three operating segments:

Distilling Solutions, Branded Spirits and Ingredient Solutions.

During 2022, the Company changed the name of its Distillery Products segment to Distilling Solutions.

Certain amounts in the 2021 consolidated financial statements have been reclassified to conform to the 2022 presentation.

Basis of Presentation and Principles of Consolidation.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

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 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”).

These unaudited condensed consolidated financial statements as of and for the quarter ended March 31, 2022, 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, 2021, 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.

3 unchanged sentences

The Company holds 60 percent interest in Dos Primos Tequila, LLC (“Dos Primos”).

The Company consolidated Dos Primos activity on the financial statements and backs out the 40 percent non-controlling interest portion on a separate line.

The Company consolidated Dos Primos activity on the financial statements and presented the 40 percent non-controlling interest portion on a separate line.

Use of Estimates.

1 unchanged sentence

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 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, inclusive of the effects related to COVID-19.

For all of these policies, management cautions that future events rarely develop as forecast, and estimates routinely require adjustment and may require material adjustment.

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.

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.

Bourbons 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:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Finished goods $ 40,842 $ 35,362

6 unchanged sentences

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 it expects to be entitled to receive in exchange for the performance obligations.

Revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration it 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 one year or less.

1 unchanged sentence

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 risk and rewards of ownership have transferred, and the customer has present obligation to pay.

For certain international customers, deposits are required in advance of shipment.

These deposits are reported as contract liabilities until control passes to the customer and revenue is recognized.

The Company’s Distillery Products 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 at a Company location for an extended period of time in accordance with directions received from the Company’s customers.

The Company’s 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 at a Company location 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.

6 unchanged sentences

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 estimated, are not for distinct goods, and 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.

5 unchanged sentences

Excise taxes that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer are excluded from revenue.

Recognition of Insurance Recoveries.

Estimated loss contingencies are recognized as charges to income when they are probable and reasonably estimable.

Insurance recoveries are not recognized until all contingencies related to the insurance claim have been resolved and settlement has been reached with the insurer.

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.

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

Income Taxes.

2 unchanged sentences

Earnings Per Share (“EPS”).

Basic and diluted EPS are computed using the two-class method, which is an earnings allocation formula that determines net income per share for each class of Common Stock and participating security according to dividends declared and participation rights in undistributed earnings.

Per share amounts are computed by dividing net income attributable to common shareholders by the weighted average shares outstanding during each year during the period.

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 Common Stock and participating security 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 impacts of the Convertible Senior Notes, except for where the result would be anti-dilutive as of the balance sheet date.

Translation of Foreign Currencies.

6 unchanged sentences

Assets acquired and liabilities assumed during a business combination are generally recorded at fair market value as of the acquisition date.

Goodwill is recognized to the extent that the purchase consideration exceeds the assets acquired and liabilities assumed.

Goodwill is recognized to the extent that the purchase consideration exceeds the value of the assets acquired and liabilities assumed.

The Company uses its best estimate and third party valuation specialists to determine the fair value of the assets acquired and liabilities assumed.

6 unchanged sentences

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

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

As of March 31, 2022, 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 $ 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.

The fair value of the Company’s debt was $ 257,784 and $ 272,971 at March 31, 2022 and December 31, 2021, respectively.

The financial statement carrying value of total debt was $ 232,677 (including unamortized loan fees) and $ 233,399 (including unamortized loan fees) at March 31, 2022 and December 31, 2021, respectively.

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

1 unchanged sentence

Equity Method Investments.

The condensed consolidated financial statements include the results of Luxco and its affiliated companies since April 1, 2021, when the Company obtained control through the Merger.

The Company holds 50 percent interests in DGL Destiladores, S.de R.L.

(“DGL”) and Agricola LG, S.de R.L.

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

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.

(“Agricola”) (combined “LMX”), which are accounted for as equity method investments since the date of acquisition and is considered an affiliate of the Company.

The investment in LMX, which is recorded in Investment in joint ventures on the Condensed Consolidated Balance Sheet, was $ 6,366 and $ 4,944 at March 31, 2022 and December 31, 2021, respectively.

During the quarter ended March 31, 2022, the Company recorded a $ 394 gain from our equity method investments, which is recorded in Other income, net on the Condensed Consolidated Statement of Income.

During the quarter ended March 31, 2022, the Company purchased $ 8,391 of bulk beverage alcohol from LMX.

Recently Adopted Accounting Standard Updates.

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.

The Company generates revenues from the Branded Spirits and Ingredient Solutions segments by the sale of products.

Revenue related to sales of products is recognized at a point in time whereas revenue generated from warehouse services is recognized over time.

Contracts with customers include a single performance obligation (either the sale of products or the provision of warehouse services).

The Company did not adopt any new Accounting Standard Updates during the quarter ended March 31, 2022 .

The Company generates revenues 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 revenues from the Branded Spirits segment by the sale of products and by providing contract bottling services.

The Company generates revenues from 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, the provision of warehouse services or contract bottling services).

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

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

2021 2020 2021 2020

Distillery Products

Quarter Ended March 31,

Distilling Solutions

Brown goods $ 62,145 $ 43,041

6 unchanged sentences

Warehouse services 5,584 4,101

Total Distillery Products 91,044 79,173 270,016 233,492

Total Distilling Solutions 111,509 88,624

Branded Spirits

Ultra premium 12,597 126

Super premium 2,946 411

Premium 6,140 26

Mid 17,107 — 34,894 —

Value 11,299 —

11 unchanged sentences

On January 22, 2021, the Company entered into a definitive agreement to acquire Luxco, and subsequently completed the merger on April 1, 2021 (the “Merger”).

Luxco is a leading branded beverage alcohol company across various categories, with a more than 60-year business heritage.

Luxco is a leading branded beverage alcohol company

across various categories, with a more than 60-year business heritage.

As a result of the Merger, MGP increased its scale and market position in the branded-spirits sector and believes it strengthened its platform for future growth of higher valued-added products.

Following the Merger, the Luxco Companies became wholly-owned subsidiaries of MGP and are included within the Branded Spirits segment.

Following the Merger, Luxco became a wholly-owned subsidiary of MGP and is included within the Branded Spirits segment.

The aggregate consideration paid by the Company in connection with the Merger was $ 237,500 in cash (less assumed indebtedness) and 5,007,833 shares of common stock of the Company, subject to adjustment for fractional shares (the “Company Shares,” and together with the cash portion, the “Merger Consideration”).

1 unchanged sentence

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.

The consideration paid at 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.

2 unchanged sentences

For tax purposes, the transaction was structured partially as a tax-free reorganization and partially as a taxable acquisition, as defined in the Internal Revenue Code.

The Company anticipates the amount transferred in a tax deferred manner, under the tax-free reorganization rules, will not create additional tax basis for the Company.

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 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.

The Company expects to finalize the purchase price allocation as soon as practicable, but no longer than one year from the acquisition date.

The amount transferred in a tax deferred manner, under the tax-free reorganization rules, did not create additional tax basis for the Company.

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

Purchase Price Allocation.

The following table summarizes the preliminary allocation of the consideration paid for Luxco to the preliminary estimated fair value of the assets acquired and liabilities assumed at the acquisition date, with the excess recorded to goodwill.

The following table summarizes the allocation of the consideration paid for Luxco to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date, with the excess recorded to goodwill.

Consideration:

13 unchanged sentences

Accounts payable 14,453

Federal and state liquor taxes payable 8,352

Federal and state excise taxes payable 8,352

Accrued expenses and other 2,832

12 unchanged sentences

The fair value of work-in-process and finished goods inventory was determined using the comparative sales method and raw materials was determined using the replacement cost method.

Goodwill of $ 224,850 represents the excess of the consideration transferred over the estimated fair value of assets acquired net of liabilities assumed.

No Goodwill is expected to be deductible for tax purposes.

The fair value of personal property assets was determined using the market approach and the indirect and direct method of the cost approach, and the fair value of real property was determined using the cost approach and the sales comparison approach.

Goodwill of $ 223,556 , none of which is to be deductible for tax purposes, represents the excess of the consideration transferred over the estimated fair value of assets acquired net of liabilities assumed.

The Intangible assets acquired includes indefinite-lived intangible assets, trade names, with an estimated fair value of $ 178,100 and definite-lived intangible assets, distributor relationships, with an estimated fair value of $ 41,400 and a useful life of 20 years.

The trade names and distributor relationships acquired by the Company have been adjusted to the estimated fair values using the relief from royalty method and multi-period earnings method, respectively.

Management and a third party valuation team performed a preliminarily valuation analysis to determine the fair value of each trade name and distributor relationship.

Operating Results .

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 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.

The trade names and distributor relationships acquired by the Company have been recorded at the estimated fair values using the relief from royalty method and multi-period earnings method, respectively.

Management engaged a third party valuation specialist to assist in the valuation analysis of certain acquired assets including trade name and distributor relationship.

Pro Forma Information .

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:

The following table summarizes the unaudited pro forma financial results for the quarter ended March 31, 2021, as if the Merger had occurred on January 1, 2020:

Pro Forma Financial Information

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

2021 2020 2021 2020

Quarter Ended March 31,

Sales $ 152,693

2 unchanged sentences

The pro forma results are adjusted for items that are non-recurring in nature and directly attributable to the Merger, including the income tax effect of the adjustments.

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 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.

Merger related costs incurred by the Company of $ 1,890 is assumed to have been incurred on January 1, 2020.

Merger related costs incurred by Luxco of $ 3,132 were excluded from the quarter ended March 31, 2021 pro forma results.

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 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:

The amortization expense for the quarter ended March 31, 2022 was $ 518 .

As of March 31, 2022, the expected future amortization expense related to definite-lived intangibles assets are as follows:

Remainder of 2022 $ 1,552

4 unchanged sentences

Changes in carrying amount of goodwill by business segment were as follows:

Distillery Products Branded Spirits Ingredient Solutions Total

Distilling Solutions Branded Spirits Ingredient Solutions Total

Balance, December 31, 2021

1 unchanged sentence

Acquisitions — — — —

Balance, September 30, 2021

Balance, March 31, 2022

$ — $ 226,294 $ — $ 226,294

Changes in carrying amount of trade name intangible assets by business segment were as follows:

Distillery Products Branded Spirits Ingredient Solutions Total

Distilling Solutions Branded Spirits Ingredient Solutions Total

Balance, December 31, 2021

1 unchanged sentence

Acquisitions — — — —

Balance, September 30, 2021

Balance, March 31, 2022

$ — $ 178,990 $ — $ 178,990

2 unchanged sentences

Description (a)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Credit Agreement - Revolver, 1.45 % (variable rate) due 2025

Convertible Senior Notes, 1.88 % (fixed rate) due 2041

201,250 201,250

Prudential Note Purchase Agreement, 3.53 % (fixed rate) due 2027

Note Purchase Agreement

Senior Secured Notes, 3.53 % (fixed rate) due 2027

17,600 18,400

Prudential Note Purchase Agreement, 3.80 % (fixed rate) due 2029

Senior Secured Notes, 3.80 % (fixed rate) due 2029

20,000 20,000

6 unchanged sentences

Long-term debt and Credit Agreement - Revolver $ 229,449 $ 230,172

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

(a) Interest rates are as of March 31, 2022.

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

3 unchanged sentences

On May 14, 2021, the Credit Agreement was amended to increase the principal amount to $ 400,000 and to increase the amount of the revolving credit facility by up to an additional $ 100,000 .

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 September 30, 2021.

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

The Credit Agreement includes certain requirements and covenants, which the Company was in compliance with at March 31, 2022.

As of March 31, 2022, the Company had no outstanding borrowings under the Credit Agreement leaving $ 400,000 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.

Convertible Senior Notes.

On November 16, 2021, the Company issued $ 201,250 in aggregate principle of 1.875 % convertible senior notes due in 2041 (“2041 Notes”).

The total aggregate principal amount includes $ 26,250 aggregate principal amount of 2041 Notes purchased by the initial purchasers in the offering pursuant to their exercise in full of their option to purchase additional notes under the purchase agreement for the offering.

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 1.875 % on May 15 and November 15 of each year.

The 2041 Notes mature on November 15, 2041 (“Maturity Date”) unless earlier repurchased, redeemed or converted, per the agreement.

Upon conversion, the Company will pay cash up to the aggregate principle 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”), as amended by the First Amendment to Private Shelf Agreement as of February 14, 2020, the Second Amendment to Private Shelf Agreement as of September 30, 2020, the Third Amendment to Private Shelf Agreement as of January 25, 2021, and the Fourth Amendment to Private Shelf Agreement as of May 14, 2021, with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc., provides for the issuance of up to $ 105,000 of Senior Secured Notes (or any higher amount solely to the extent PGIM, Inc.

The Company’s Note Purchase and Private Shelf Agreement (the “Note Purchase Agreement”), with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc., provides for the issuance of up to $ 105,000 of Senior Secured Notes (or any higher amount solely to the extent PGIM, Inc.

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

4 unchanged sentences

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 September 30, 2021.

The Note Purchase Agreement includes certain requirements and covenants, which the Company was in compliance with at March 31, 2022.

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 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.

Income tax expense for the quarter ended March 31, 2022, was $ 11,165 for an effective tax rate of 23.0 percent.

The effective tax rate differed from the 21 percent federal statutory rate on pretax income primarily due to state income taxes, income taxes on foreign subsidiaries, partially offset by state and federal tax credits, and the deduction applicable to export activity.

Income tax expense for the quarter ended March 31, 2021, was $ 4,615 for an effective tax rate of 23.0 percent.

The effective tax rate differed from the 21 percent federal statutory rate on pretax income primarily due to state taxes, nondeductible transaction costs, partially offset by state and federal tax credits and the deduction applicable to export activity.

Equity and EPS

The computations of basic and diluted EPS:

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

2021 2020 2021 2020

Quarter Ended March 31,

Net income (a)

1 unchanged sentence

Net loss attributable to noncontrolling interest 66 —

Income attributable to participating securities (b)

Income attributable to participating securities (unvested shares and units) (b)

( 318 ) ( 146 )

Net income used in EPS calculation $ 37,119 $ 15,281

Share information:

Basic and diluted weighted average common shares (c)

2 unchanged sentences

(a) Net income attributable to all shareholders.

(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.

(b) Participating securities included 189,297 and 162,496 unvested restricted stock units (“RSUs”), at March 31, 2022 and 2021, respectively.

(c) Under the two-class method, basic and diluted weighted average common shares at March 31, 2022 and 2021 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.

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.

1 unchanged sentence

On February 25, 2019, MGP’s Board of Directors approved a $ 25,000 share repurchase authorization commencing February 27, 2019, through February 27, 2022.

Under the share repurchase program, the Company can repurchase stock from time to time for cash in open market purchases, block transactions, and privately negotiated transactions in accordance with applicable federal securities laws.

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 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:

The Company did not renew the share repurchase program upon its expiration.

Under the share repurchase program, the Company could have repurchased stock from time to time for cash in open market purchases, block transactions, and privately negotiated transactions in accordance with applicable federal securities laws.

The Company did no t repurchase any shares during the quarter ended March 31, 2022.

Common Stock Share Activity.

Shares Outstanding

4 unchanged sentences

Balance, March 31, 2022 437 21,985,100

Issuance of Common Stock — 5,022,122

Repurchase of Common Stock (a)

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

2 unchanged sentences

Issuance of Common Stock — 35,114

Repurchase of Common Stock (b)

— ( 169,148 )

Balance, March 31, 2020 437 16,895,522

Issuance of Common Stock — —

Repurchase of Common Stock (a)

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

Balance, March 31, 2021 437 16,940,600

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

(b) 159,104 shares that were repurchased during the quarter ended March 31, 2020 related to the share repurchase program.

The remaining shares repurchased were related to tax withholding on equity based compensation

Commitments and Contingencies

1 unchanged sentence

The Company accrues estimated costs for a contingency when management believes that a loss is probable and can be reasonably estimated.

Dryer Fire Incident.

During November 2020, the Company experienced a fire at the Atchison facility.

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

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 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.

In May 2020, the Company was affected by a ransomware cyber-attack that temporarily disrupted production at its Atchison facilities.

The Company’s financial information was not affected and there is no evidence that any sensitive or confidential company, supplier, customer or employee data was improperly accessed or extracted from our network.

The Company has insurance related to this event and is currently evaluating if it will seek further recovery.

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.

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 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.

The consolidated action is captioned In re MGP Ingredients, Inc.

Securities Litigation and the file is maintained under Master File No.

2:20-cv-2090-DDCJPO.

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

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.

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.

Griffin, et al., Case 2:20-cv-02239.

On June 4, 2020, Justin Carter, a shareholder in MGP, filed an action in the United States District Court for the District of Kansas, under the caption Carter, derivatively on behalf of MGP Ingredients v.

Griffin, et al., Case 2:20-cv-02281.

On June 18, 2020, Alexandra Kearns, a shareholder in MGP, filed an action in the District Court of Atchison County, Kansas, under the caption Kearns, derivatively on behalf of MGP Ingredients v.

Griffin, et al., Case 2020-CV-000042.

Griffin, et al.

, Case 2:20-cv-02239.

On June 4, 2020, Justin Carter, a shareholder in MGP, filed an action in the United States District Court for the

District of Kansas, under the caption Carter, derivatively on behalf of MGP Ingredients v.

Griffin, et al.

, Case 2:20-cv-02281.

On June 18, 2020, Alexandra Kearns, a shareholder in MGP, filed an action in the District Court of Atchison County, Kansas, under the caption K earns, derivatively on behalf of MGP Ingredients v.

Griffin, et al.

, Case 2020-CV-000042.

The defendants are certain of the Company’s current and former officers and directors.

The Company is a nominal defendant in each action.

Plaintiffs allege that the Company was damaged as a result of the conduct of the individual defendants alleged in the MGP Ingredients, Inc.

Securities Litigation, the repurchase of company stock at artificially inflated prices, and compensation paid to the individual defendants.

Plaintiffs allege that the Company was damaged as a result of the commencement of securities litigation against defendants, the repurchase of Company stock at artificially inflated prices, and compensation paid to the individual defendants.

The Complaint in Dorfman asserts claims for violations of Sections 14(a), 10(b), and 20(a) of the Securities Exchange Act of 1934, breach of fiduciary duties, waste of corporate assets, and unjust enrichment.

2 unchanged sentences

The pleadings pray for an award of compensatory damages, including interest, in favor of the Company, for equitable relief related to the Company’s corporate governance, for disgorgement of compensation, and for an award of attorneys’ fees and costs.

On July 13, 2020, defendants filed a Motion to Dismiss in Dorfman.

On August 13, 2020, defendants filed a Motion to Stay the Kearns action pending the resolution of Dorfman.

On November 3, 2020, the court entered an order providing that Defendants’ response to the Carter Complaint shall be due 14 days after a ruling on the Motion to Dismiss filed in Dorfman.

On March 31, 2021, the Dorfman court issued a Memorandum and Order in which it granted defendants’ Motion to Dismiss plaintiff’s federal claims, dismissed those claims without prejudice, denied without prejudice defendants’ Motion to Dismiss plaintiff’s state claims, and stayed the case pending the Kansas Supreme Court’s decision in Herington v.

City of Wichita.

Herington involves the issue of whether a federal decision that determines federal claims and dismisses pendent state law claims for lack of supplemental jurisdiction precludes the reassertion of the state law claims in state court.

The Kearns court has not yet taken any action in response to the court’s Memorandum and Order in Dorfman.

On April 14, 2021, defendants in Carter filed a Motion to dismiss plaintiff’s federal claims and to stay plaintiff’s state claims until fourteen days after the Court rules on the state claims in Dorfman .

On November 25, 2020, Kenneth Laury filed an action in the District Court of Shawnee County, Kansas under the caption Laury v.

MGP Ingredients, Inc., Case Number:

2020-CV-000609.

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.

On January 8, 2021, the Company filed an answer to the Petition, denying that plaintiff has satisfied the statutory requirements for his demand.

On May 13, 2021, the parties stipulated to the voluntary dismissal, with prejudice, of the action.

On August 31, 2021, the court dismissed with prejudice the securities litigation on which some of the derivative claims were based.

On January 4, 2022, the court dismissed the Carter action.

On January 11, 2022, the court dismissed the Dorfman action.

On February 2, 2022, the plaintiffs and defendants entered into a stipulation of dismissal of the Kearns action.

The federal claims alleged in Carter were dismissed with prejudice.

All other derivative claims were dismissed without prejudice.

2016 Atchison Chemical Release.

A chemical release occurred at the Company’s Atchison facility on October 21, 2016, which resulted in emissions venting into the air (“the Atchison Chemical Release”).

Private plaintiffs have initiated, and additional private plaintiffs may initiate, legal proceedings for damages resulting from the Atchison Chemical Release, but the Company is currently unable to reasonably estimate the amount of any such damages that might result.

The Company’s insurance is expected to provide coverage of any damages to private plaintiffs, subject to a deductible, but there can be no assurance to the amount or timing of possible insurance recoveries if ultimately claimed by the Company.

Private plaintiffs initiated legal proceedings against the Company for damages resulting from the Atchison Chemical Release.

The Company reached a settlement with the plaintiffs in December 2021 and the legal proceedings were dismissed with prejudice in January 2022.

Employee and Non-Employee Benefit Plans

Equity-Based Compensation Plans .

The Company’s equity-based compensation plans provide for the awarding of stock options, stock appreciation rights, shares of restricted stock (“Restricted Stock”), and RSUs for senior executives and salaried employees, as well as non-employee directors.

Share-Based Compensation Plans .

The Company’s share-based compensation plans provide for the awarding of stock options, stock appreciation rights, shares of restricted stock (“Restricted Stock”), and RSUs for senior executives and salaried employees, as well as non-employee directors.

The Company has two active equity-based compensation plans:

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

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).

As of March 31, 2022, 585,353 RSUs had been granted of the 1,500,000 shares approved under the 2014 Plan, and 122,740 shares had been granted of the 300,000 shares approved under the Directors’ Plan.

As of March 31, 2022, there were 191,767 unvested RSUs under the Company’s long-term incentive plans and 189,297 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 September 30, 2021.

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.

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 ended March 31, 2022.

For quarter ended March 31, 2022, the Company had a loss on deferred compensation plan investments of $ 339 .

For quarter ended March 31, 2021, the Company had a gain on deferred compensation plan investments of $ 30 .

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 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.

At March 31, 2022 and December 31, 2021, the EDC Plan investments were $ 3,071 and $ 3,072 , respectively, which were recorded in Other assets on the Company’s Condensed Consolidated Balance Sheets.

The EDC Plan current liabilities were $ 617 at both March 31, 2022 and December 31, 2021, which were included in Accrued expenses and other on the Company’s Condensed Consolidated Balance Sheets.

The EDC Plan non-current liabilities were $ 2,565 and $ 2,981 at March 31, 2022 and

December 31, 2021, 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 September 30, 2021, the Company had three segments:

Distillery Products, Branded Spirits, and Ingredient Solutions.

The Distillery Products segment consists of food grade alcohol and distillery co-products, such as distillers feed (commonly called dried distillers grain in the industry) and fuel grade alcohol.

The Distillery Products segment also includes warehouse services, including barrel put away, storage, retrieval, and blending services.

At March 31, 2022, the Company had three segments:

Distilling Solutions, Branded Spirits, and Ingredient Solutions.

The Distilling Solutions segment consists of food grade alcohol and distillery co-products, such as distillers feed (commonly called dried distillers grain in the industry) and fuel grade alcohol.

The Distilling Solutions segment also includes warehouse services, including barrel put away, storage, retrieval, and blending services.

The Branded Spirits segment consists of producing, importing, bottling and rectifying of distilled spirits.

1 unchanged sentence

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 September 30, Year to Date Ended September 30,

2021 2020 2021 2020

Quarter Ended March 31,

Sales to Customers

Distillery Products $ 91,044 $ 79,173 $ 270,016 $ 233,492

Distilling Solutions $ 111,509 $ 88,624

Branded Spirits 55,751 570

1 unchanged sentence

Total $ 195,235 $ 108,323

Distillery Products $ 26,981 $ 15,918 $ 87,211 $ 49,832

Distilling Solutions $ 38,933 $ 28,245

Branded Spirits 24,782 86

2 unchanged sentences

Depreciation and Amortization

Distillery Products $ 2,695 $ 2,461 $ 7,900 $ 7,269

Distilling Solutions $ 2,861 $ 2,573

Branded Spirits 1,782 10

3 unchanged sentences

Income (loss) before Income Taxes

Distillery Products $ 26,047 $ 15,471 $ 84,225 $ 48,203

Distilling Solutions $ 37,992 $ 26,863

Branded Spirits 10,786 ( 1,224 )

3 unchanged sentences

The following table allocates assets to each segment as of:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Identifiable Assets

Distillery Products $ 299,017 $ 281,721

Distilling Solutions $ 317,767 $ 314,816

Branded Spirits 677,283 658,826

3 unchanged sentences

Subsequent Events

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.

On May 5, 2022, the Company’s Board of Directors declared a quarterly dividend payable to stockholders of record as of May 20, 2022, of the Company’s Common Stock, and a dividend equivalent payable to holders of certain RSUs as of May 20, 2022, of $ 0.12 per share and per unit, payable on June 3, 2022.

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