What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-04 compared with 2022-05-05 · 151 added, 98 removed, 515 unchanged (33% of the section changed)

3 unchanged sentences

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

Quarter Ended March 31,

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

2022 2021 2022 2021

Sales $ 194,982 $ 174,939 $ 390,217 $ 283,262

3 unchanged sentences

Selling, general and administrative expenses 17,859 25,793 34,125 36,739

Other operating income, net ( 29 ) —

Other operating (income) expense, net ( 6 ) — ( 35 ) —

Operating income 35,306 27,663 85,386 48,163

Interest expense, net ( 1,543 ) ( 1,104 ) ( 3,141 ) ( 1,592 )

Other income, net 54 30

Other income (expense), net ( 1,062 ) ( 88 ) ( 1,008 ) ( 58 )

Income before income taxes 32,701 26,471 81,237 46,513

1 unchanged sentence

Net income 25,362 20,059 62,733 35,486

Net loss attributable to noncontrolling interest 66 —

Net (income) loss attributable to noncontrolling interest 198 76 264 76

Net income attributable to MGP Ingredients, Inc.

1 unchanged sentence

Income attributable to participating securities ( 217 ) ( 150 ) ( 535 ) ( 299 )

Net income used in Earnings Per Share calculation $ 37,119 $ 15,281

Net income used in Earnings Per Common Share calculation $ 25,343 $ 19,985 $ 62,462 $ 35,263

Basic and diluted weighted average common shares 22,002,385 21,916,721 21,995,779 19,436,143

Basic and diluted Earnings Per Share $ 1.69 $ 0.90

Basic and diluted Earnings Per Common Share $ 1.15 $ 0.91 $ 2.84 $ 1.81

See accompanying notes to unaudited condensed consolidated financial statements

2 unchanged sentences

(Dollars in thousands)

Quarter Ended March 31,

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

2022 2021 2022 2021

Net income attributable to MGP Ingredients, Inc.

$ 25,560 $ 20,135 $ 62,997 $ 35,562

Other comprehensive income, net of tax:

Unrealized loss on foreign currency translation adjustment ( 219 ) —

Other comprehensive income (loss), net of tax:

Unrealized gain (loss) on foreign currency translation adjustment ( 430 ) 1 ( 649 ) 7

Change in Company-sponsored post-employment benefit plan ( 13 ) — ( 26 ) 49

8 unchanged sentences

(Unaudited) (Dollars in thousands)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Current Assets

Cash and cash equivalents $ 37,415 $ 21,568

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

Receivables (less allowance for credit loss, $ 175 and $ 150 at June 30, 2022, and December 31, 2021, respectively)

105,393 92,537

34 unchanged sentences

authorized 40,000,000 shares;

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

issued 23,125,166 shares at June 30, 2022 and December 31, 2021;

and 21,992,751 and 21,964,314 shares outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 317,240 315,802

1 unchanged sentence

Accumulated other comprehensive income ( 321 ) 354

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

Treasury stock, at cost, 1,132,415 and 1,160,852 shares at June 30, 2022 and December 31, 2021, respectively

( 21,726 ) ( 22,357 )

8 unchanged sentences

(Dollars in thousands)

Quarter Ended March 31,

Year to Date Ended June 30,

Cash Flows from Operating Activities

3 unchanged sentences

Share-based compensation 2,131 4,767

Gain on equity method investment ( 394 ) —

Deferred income taxes, including change in valuation allowance 125 ( 1,568 )

Other, net 82 ( 69 )

Changes in operating assets and liabilities:

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

Receivables, net ( 13,142 ) 7,531

9 unchanged sentences

Additions to property, plant, and equipment ( 18,087 ) ( 18,336 )

Purchase of business, net of cash acquired — ( 149,599 )

Contributions to equity method investment ( 1,028 ) ( 988 )

4 unchanged sentences

Purchase of treasury stock ( 713 ) ( 765 )

Loan fees paid related to borrowings — ( 666 )

Principal payments on long-term debt ( 1,614 ) —

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

Proceeds from credit agreement - revolver — 242,300

Payments on credit agreement - revolver — ( 10,306 )

Payment on assumed debt as part of the Merger — ( 87,497 )

Net cash provided by (used in) financing activities ( 7,649 ) 138,359

Effect of exchange rate changes on cash ( 39 ) 3

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For Quarter Ended March 31, 2022 and 2021

For Year to Date Ended June 30, 2022

(Unaudited) (Dollars in thousands)

17 unchanged sentences

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

Comprehensive income:

Net income (loss) — — — 25,560 — — ( 198 ) 25,362

Other comprehensive loss — — — — ( 443 ) — — ( 443 )

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

— — — ( 2,658 ) — — — ( 2,658 )

Share-based compensation — — 1,409 — — — — 1,409

Stock shares awarded, forfeited or vested — — ( 740 ) — — 740 — —

Stock shares repurchased — — — — — ( 2 ) — ( 2 )

Balance, June 30, 2022

$ 4 $ 6,715 $ 317,240 $ 401,915 $ ( 321 ) $ ( 21,726 ) $ ( 754 ) $ 703,073

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 June 30, 2021

(Unaudited) (Dollars in thousands)

Preferred Issued Common Additional

3 unchanged sentences

income Treasury

Stock Non-controlling Interest Total

Balance, December 31, 2020

10 unchanged sentences

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

Comprehensive income:

Net income (loss) — — — 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

See accompanying notes to unaudited condensed consolidated financial statements

4 unchanged sentences

MGP Ingredients, Inc.

(“the Company,” and “MGP”) is a Kansas corporation headquartered in Atchison, Kansas and is a leading producer and supplier of premium distilled spirits, branded spirits and food ingredients.

(“the Company,” or “MGP”) is a Kansas corporation headquartered in Atchison, Kansas and is a leading producer and supplier of premium distilled spirits, branded spirits and food ingredients.

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

15 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 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”).

These unaudited condensed consolidated financial statements as of and for the quarter and year to date ended June 30, 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.

9 unchanged sentences

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

Immaterial Correction to Prior Period Financial Statements.

During the quarter ended June 30, 2022, the Company identified an immaterial correction related to gross amounts of Property, plant and equipment and Accumulated depreciation and amortization in the Condensed Consolidated Balance Sheet as of December 31, 2021.

The Company performed a materiality assessment, considering both quantitative and qualitative factors, which resulted in the determination that the correction to the financial statements is immaterial.

As such, the Company corrected the December 31, 2021 gross balances for Property, plant, and equipment and Accumulated depreciation and amortization on the Condensed Consolidated Balance Sheet reported in this Form 10-Q by equal and offsetting amounts, which resulted in no change to the balance of Property, plant, and equipment, net.

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.

5 unchanged sentences

Inventory consists of the following:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Finished goods $ 46,859 $ 35,362

13 unchanged sentences

Control is transferred to the customer in bill and hold transactions when:

customer acceptance specifications have been met, legal title has transferred, the customer has a present obligation to pay for the product, and the risk and rewards of ownership have transferred to the customer.

the customer acceptance specifications have been met, legal title has transferred, the customer has a present obligation to pay for the product, and the risk and rewards of ownership have transferred to the customer.

Additionally, all of the following bill and hold criteria have to be met in order for control to be transferred to the customer:

5 unchanged sentences

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.

These allowances and discounts are not for distinct goods and are paid only when the depletion volume targets are achieved by the customer.

The amounts reimbursed to customers are determined based on agreed-upon amounts and are recorded as a reduction of revenue.

9 unchanged sentences

A valuation allowance is recognized if it is “more likely than not” that at least some portion of the deferred tax asset will not be realized.

Earnings Per Share (“EPS”).

Earnings Per Common Share (“EPS”).

Basic and diluted EPS is computed using the two-class method, which is an earnings allocation formula that determines net income per share for each class of 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.

Diluted EPS is computed using the if-converted method by dividing the net income attributable to common shareholders by the weighted average shares outstanding, inclusive of the impact of the Convertible Senior Notes, except for where the result would be anti-dilutive as of the balance sheet date.

Translation of Foreign Currencies.

15 unchanged sentences

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

As of March 31, 2022, the Company determined that goodwill and indefinite-lived intangible assets were not impaired.

As of June 30, 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 $ 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.

The fair value of the Company’s debt was $ 212,654 and $ 272,971 at June 30, 2022 and December 31, 2021, respectively.

The financial statement carrying value of total debt was $ 231,953 (including unamortized loan fees) and $ 233,399 (including unamortized loan fees) at June 30, 2022 and December 31, 2021, respectively.

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

Fair value disclosure for deferred compensation plan investments is included in Note 9.

Fair value disclosure for deferred compensation plan investments is included in Note 9, Employee and Non-Employee Benefit Plans.

See Note 3, Business Combination, for discussion related the the fair value of tangible and intangible assets acquired and liabilities assumed as part of the merger with Luxco.

Equity Method Investments.

1 unchanged sentence

(“DGL”) and Agricola LG, S.de R.L.

(“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.

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

The investment in LMX, which is recorded in Investment in joint ventures on the Condensed Consolidated Balance Sheet, was $ 5,792 and $ 4,944 at June 30, 2022 and December 31, 2021, respectively.

During the quarter ended June 30, 2022 and 2021, the Company recorded a loss of $ 574 and $ 334 from our equity method investments, respectively, which is recorded in Other income (expense), net on the Condensed Consolidated Statement of Income.

During the year to date ended June 30, 2022 and 2021, the Company recorded a loss of $ 180 and $ 334 from our equity method investments, respectively, which is recorded in Other (income) expense, net on the Condensed Consolidated Statement of Income.

During the quarter and year to date ended June 30, 2022, the Company purchased $ 11,538 and $ 19,929 , respectively, of bulk beverage alcohol from LMX, and during the quarter and year to date ended June 30, 2021, the Company purchased $ 11,672 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 March 31, 2022 .

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

1 unchanged sentence

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.

Revenue related to sales of products is recognized at a point in time whereas revenue generated from warehouse services and contract bottling services is 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 March 31,

T he following table presents the Company’s sales by segment and major products and services:

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

2022 2021 2022 2021

Distilling Solutions

12 unchanged sentences

Premium 5,775 5,303 11,915 5,329

Mid 23,301 25,407 42,574 25,407

Value 12,908 13,228 24,207 13,228

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.

4 unchanged sentences

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.

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.

28 unchanged sentences

Total $ 445,763

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

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

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.

3 unchanged sentences

The fair value measurements of tangible and intangible assets and liabilities were based on significant inputs not observable in the market and represent Level 3 measurements within the fair value hierarchy.

Level 3 inputs include discount rates that would be used by a market participant in valuing these assets and liabilities, projections of revenues and cash flows, distributor attrition rates, royalty rates and market comparable, among others.

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.

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.

cost approach and the sales comparison approach.

Goodwill of $ 223,556 , none of which is 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 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.

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

Pro Forma Information .

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:

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

Pro Forma Financial Information

Quarter Ended March 31,

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

Sales $ 174,939 $ 327,632

Net income 28,124 44,747

Basic and diluted earnings per share 0.76

Basic and diluted earnings per common share 1.28 2.04

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 $ 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.

Merger related costs incurred by the Company of $ 6,738 and $ 8,628 for the quarter

and year to date ended June 30, 2021, respectively, were excluded and $ 6,738 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.

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 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:

The amortization expense for the quarter and year to date ended June 30, 2022 was $ 517 and $ 1,035 , respectively, and the amortization expense for the quarter and year to date ended June 30, 2021 was $ 518 .

As of June 30, 2022, the expected future amortization expense related to definite-lived intangible assets are as follows:

Remainder of 2022 $ 1,035

8 unchanged sentences

Acquisitions — — — —

Balance, March 31, 2022

Balance, June 30, 2022

$ — $ 226,294 $ — $ 226,294

4 unchanged sentences

Acquisitions — — — —

Balance, March 31, 2022

Balance, June 30, 2022

$ — $ 178,990 $ — $ 178,990

2 unchanged sentences

Description (a)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Credit Agreement - Revolver, 2.79 % (variable rate) due 2025

2 unchanged sentences

Note Purchase Agreement

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

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

16,800 18,400

8 unchanged sentences

Long-term debt and Credit Agreement - Revolver $ 227,764 $ 230,172

(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.

(a) Interest rates are as of June 30, 2022.

(b) Loan fees are being amortized over the life of the debt instruments.

Credit Agreement.

2 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 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 Credit Agreement includes certain requirements and covenants, which the Company was in compliance with at June 30, 2022.

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.

As of June 30, 2022, the Company had no outstanding borrowings under the Credit Agreement leaving $ 400,000 available.

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.

5 unchanged sentences

Note Purchase Agreements.

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.

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 $ 20,000 of Series A Senior Secured Notes and the issuance of up to $ 105,000 of additional Senior Secured Notes (or any higher amount solely to the extent PGIM, Inc.

has provided written notice to the Company of its authorization of such a higher amount).

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.

(“Prudential”) provided the Company notice pursuant to Section 1.2 of the Note Agreement that Prudential has authorized an increase in the amount of additional 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.

During 2017, the Company issued $ 20,000 of Senior Secured Notes with a maturity date of August 23, 2027.

During 2017, the Company issued $ 20,000 of Series A Senior Secured Notes with a maturity date of August 23, 2027.

During 2019, the Company issued $ 20,000 of additional Senior Secured Notes with a maturity date of April 30, 2029.

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

The Note Purchase Agreement includes certain requirements and covenants, which the Company was in compliance with at June 30, 2022 .

As of June 30, 2022, the Company has $ 20,000 outstanding borrowings under the Note Purchase Agreement leaving $ 120,000 available.

Other long-term borrowings.

5 unchanged sentences

See Note 3, Business Combination, for further details.

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.

Income tax expense for the quarter and year to date ended June 30, 2022, was $ 7,339 and $ 18,504 for an effective tax rate of 22.4 percent and 22.8 percent, respectively.

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

The increase in Income tax expense for the quarter and year to date ended June 30, 2022 was primarily due to higher Income before income taxes as compared to the prior year periods.

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

The effective tax rate for the 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.

Equity and EPS

The computations of basic and diluted EPS:

Quarter Ended March 31,

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

2022 2021 2022 2021

Net income (a)

8 unchanged sentences

(a) Net income attributable to all shareholders.

(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.

(b) Participating securities included 189,297 and 166,674 unvested restricted stock units (“RSUs”), at June 30, 2022 and 2021, respectively.

(c) Under the two-class method, basic and diluted weighted average common shares at June 30, 2022 and 2021 exclude unvested participating securities.

Share Issuance.

3 unchanged sentences

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

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.

The Company did no t repurchase any shares during the year to date ended June 30, 2022.

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

Common Stock Share Activity.

5 unchanged sentences

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

Issuance of Common Stock — 7,655

Repurchase of Common Stock (a)

Balance, June 30, 2022 437 21,992,751

Shares Outstanding

4 unchanged sentences

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

Issuance of Common Stock — 5,022,122

Repurchase of Common Stock (a)

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

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

6 unchanged sentences

, 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.

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.

3 unchanged sentences

, 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 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.

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

The Petition in Kearns asserts claims for breach of fiduciary duties, waste of corporate assets, and unjust enrichment.

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.

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

The Company was a nominal defendant in each action.

Plaintiffs alleged 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 asserted 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.

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

The Petition in Kearns asserted claims for breach of fiduciary duties, waste of corporate assets, and unjust enrichment.

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

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

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).

As of June 30, 2022, 585,353 RSUs had been granted of the 1,500,000 shares approved under the 2014 Plan, and 130,386 shares had been granted of the 300,000 shares approved under the Directors’ Plan.

As of June 30, 2022, there were 191,637 unvested RSUs under the Company’s long-term incentive plans and 189,297 were participating securities (Note 7).

Deferred Compensation Plan.

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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, 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 .

Realized and unrealized gains (losses) on deferred compensation plan investments were included as a component of Other income (expense), net on the Company’s Condensed Consolidated Statements of Income for the quarter and year to date ended June 30, 2022.

For quarter and year to date ended June 30, 2022, the Company had a loss on deferred compensation plan investments of $ 489 and $ 828 , respectively.

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.

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.

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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 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.

At June 30, 2022 and December 31, 2021, the EDC Plan investments were $ 2,598 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 June 30, 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 $ 2,280 and $ 2,981 at June 30, 2022 and December 31, 2021, respectively, and were included in Other noncurrent liabilities on the Company’s Condensed Consolidated Balance Sheets.

Operating Segments

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

At June 30, 2022, the Company had three segments:

Distilling Solutions, Branded Spirits, and Ingredient Solutions.

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All other assets are considered as Corporate.

Quarter Ended March 31,

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

2022 2021 2022 2021

Sales to Customers

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The following table allocates assets to each segment as of:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Identifiable Assets

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Subsequent Events

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.

On August 4, 2022, the Company’s Board of Directors declared a quarterly dividend payable to stockholders of record as of August 19, 2022, of the Company’s Common Stock, and a dividend equivalent payable to holders of certain RSUs as of August 19, 2022, of $ 0.12 per share and per unit, payable on September 2, 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