What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-03 compared with 2022-08-04 · 122 added, 91 removed, 575 unchanged (27% of the section changed)

3 unchanged sentences

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

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

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

2022 2021 2022 2021

16 unchanged sentences

Net income used in Earnings Per Common Share calculation $ 23,620 $ 23,701 $ 86,117 $ 58,967

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

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

Share information:

Basic weighted average common shares 22,008,381 21,981,201 22,000,026 20,293,818

Diluted weighted average common shares 22,228,814 21,981,201 22,000,026 20,293,818

Basic Earnings Per Common Share $ 1.07 $ 1.08 $ 3.91 $ 2.91

Diluted Earnings Per Common Share $ 1.06 $ 1.08 $ 3.91 $ 2.91

See accompanying notes to unaudited condensed consolidated financial statements

2 unchanged sentences

(Dollars in thousands)

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

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

2022 2021 2022 2021

1 unchanged sentence

$ 23,808 $ 23,876 $ 86,805 $ 59,438

Other comprehensive income (loss), net of tax:

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

Other comprehensive loss, net of tax:

Unrealized loss on foreign currency translation adjustment ( 467 ) ( 141 ) ( 1,116 ) ( 134 )

Change in Company-sponsored post-employment benefit plan ( 76 ) ( 89 ) ( 102 ) ( 40 )

Other comprehensive income (loss) ( 443 ) 1 ( 675 ) 56

Other comprehensive loss ( 543 ) ( 230 ) ( 1,218 ) ( 174 )

Comprehensive income attributable to MGP Ingredients, Inc.

5 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) (Dollars in thousands)

June 30, 2022 December 31, 2021

(Dollars in thousands)

September 30, 2022 December 31, 2021

Current Assets

Cash and cash equivalents $ 50,674 $ 21,568

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

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

107,653 92,537

16 unchanged sentences

Federal and state excise taxes payable 4,713 6,992

Income taxes payable 141 —

Accrued expenses and other 26,420 24,869

15 unchanged sentences

authorized 40,000,000 shares;

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

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

and 21,993,355 and 21,964,314 shares outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 317,541 315,802

1 unchanged sentence

Accumulated other comprehensive income ( 864 ) 354

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

Treasury stock, at cost, 1,131,811 and 1,160,852 shares at September 30, 2022 and December 31, 2021, respectively

( 21,665 ) ( 22,357 )

8 unchanged sentences

(Dollars in thousands)

Year to Date Ended June 30,

Year to Date Ended September 30,

Cash Flows from Operating Activities

9 unchanged sentences

Prepaid expenses 1,165 1,206

Income taxes payable 141 1,017

Refundable income taxes ( 1,006 ) ( 2,086 )

Accounts payable 12,613 ( 6,678 )

19 unchanged sentences

Effect of exchange rate changes on cash ( 82 ) ( 2 )

Increase in cash and cash equivalents 15,847 15,581

Increase (decrease) in cash and cash equivalents 29,106 ( 5,500 )

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 June 30, 2022

(Unaudited) (Dollars in thousands)

For Year to Date Ended September 30, 2022

(Dollars in thousands)

Preferred Issued Common Additional

26 unchanged sentences

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

Comprehensive income:

Net income (loss) — — — 23,808 — ( 180 ) 23,628

Other comprehensive loss — — — — ( 543 ) — ( 543 )

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

— — — ( 2,660 ) — — — ( 2,660 )

Share-based compensation — — 363 — — — — 363

Stock shares awarded, forfeited, or vested — — ( 62 ) — — 62 — —

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

Balance, September 30, 2022

$ 4 $ 6,715 $ 317,541 $ 423,063 $ ( 864 ) $ ( 21,665 ) $ ( 934 ) $ 723,860

See accompanying notes to unaudited condensed consolidated financial statements

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For Year to Date Ended June 30, 2021

(Unaudited) (Dollars in thousands)

For Year to Date Ended September 30, 2021

(Dollars in thousands)

Preferred Issued Common Additional

27 unchanged sentences

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

Comprehensive income:

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

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

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

— — — ( 2,654 ) — — — ( 2,654 )

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

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

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

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

Balance, September 30, 2021

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

See accompanying notes to unaudited condensed consolidated financial statements

22 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 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”).

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

2 unchanged sentences

Pursuant to the rules and regulations of the SEC, certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted.

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

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

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

5 unchanged sentences

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.

During the year to date ended September 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.

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.

4 unchanged sentences

Inventories are stated at lower of cost or net realizable value on the first-in, first-out, or FIFO, method.

Inventory valuations are impacted by constantly changing prices paid for key materials, primarily corn.

Inventory valuations are impacted by constantly changing prices paid for key materials.

Inventory consists of the following:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Finished goods $ 49,008 $ 35,362

54 unchanged sentences

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

As of June 30, 2022, the Company determined that goodwill and indefinite-lived intangible assets were not impaired.

As of September 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 $ 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.

The fair value of the Company’s debt was $ 178,062 and $ 272,971 at September 30, 2022 and December 31, 2021, respectively.

The financial statement carrying value of total debt was $ 231,051 (including unamortized loan fees) and $ 233,399 (including unamortized loan fees) at September 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, 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.

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

Equity Method Investments.

2 unchanged sentences

(“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.

The investment in LMX, which is recorded in Investment in joint ventures on the Condensed Consolidated Balance Sheet, was $ 6,140 and $ 4,944 at September 30, 2022 and December 31, 2021, respectively.

During the quarter ended September 30, 2022 and 2021, the Company recorded a loss of $ 856 and $ 405 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 September 30, 2022 and 2021, the Company recorded a loss of $ 1,036 and $ 739 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 September 30, 2022, the Company purchased $ 8,265 and $ 28,194 , respectively, of bulk beverage alcohol from LMX, and during the quarter and year to date ended September 30, 2021, the Company purchased $ 8,052 and $ 19,724 , respectively, 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 June 30, 2022 .

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

3 unchanged sentences

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

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,

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,

2022 2021 2022 2021

34 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.

30 unchanged sentences

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

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

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

6 unchanged sentences

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 Intangible assets acquired included 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.

1 unchanged sentence

Pro Forma Information .

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:

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

Pro Forma Financial Information

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

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

Sales $ 176,611 $ 504,243

3 unchanged sentences

Merger related costs incurred by the Company of $ 294 and $ 8,922 for the quarter

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

and year to date ended September 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 quarter and year to date ended September 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 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:

The amortization expense for the quarter and year to date ended September 30, 2022 was $ 518 and $ 1,553 , respectively, and the amortization expense for the quarter and year to date ended September 30, 2021 was $ 517 and $ 1,035 , respectively.

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

Remainder of 2022 $ 517

8 unchanged sentences

Acquisitions — — — —

Balance, June 30, 2022

Balance, September 30, 2022

$ — $ 226,294 $ — $ 226,294

4 unchanged sentences

Acquisitions — — — —

Balance, June 30, 2022

Balance, September 30, 2022

$ — $ 178,990 $ — $ 178,990

2 unchanged sentences

Description (a)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Credit Agreement - Revolver, 4.14 % (variable rate) due 2025

13 unchanged sentences

Long-term debt and Credit Agreement - Revolver $ 226,251 $ 230,172

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

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

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

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

On August 31, 2022, the Credit Agreement was amended to change the interest rate benchmark from LIBOR to SOFR.

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

As of September 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”).

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

The 2041 Notes were issued pursuant to an indenture, dated as of November 16, 2021 ( the “Indenture”), by and among the Company, as issuer, Luxco, Inc., MGPI Processing, Inc.

3 unchanged sentences

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.

Upon conversion, the Company will pay cash up to the aggregate principal amount of the 2041 Notes to be converted and pay or deliver, as the case may be, cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at its election, in respect to the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the 2041 Notes being converted.

Note Purchase Agreements.

The Company’s Note Purchase and Private Shelf Agreement (the “Note Purchase Agreement”), with PGIM, Inc., 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 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 Company’s Note Purchase and Private Shelf Agreement (the “Note Purchase Agreement”), with PGIM, Inc.,(“Prudential”), an affiliate of Prudential Financial, Inc., and certain affiliates of Prudential, provides for the issuance of $ 20,000 of Series A Senior Secured Notes and the issuance of up to $ 105,000 of additional Senior Secured Notes (or any higher amount solely to the extent Prudential has provided written notice to the Company of its authorization of such a higher amount).

On 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 Secured Notes that may be issued under the uncommitted shelf facility under the Note Agreement from $ 105,000 to $ 140,000 , effective as of July 29, 2021.

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

1 unchanged sentence

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

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

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

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

As of September 30, 2022, the Company has $ 16,000 of Series A Senior Secured Notes and $ 20,000 of additional Senior Secured Notes outstanding under the Note Purchase Agreement leaving $ 120,000 available of Senior Secured Notes.

Other long-term borrowings.

As part of the Merger, the Company acquired additional long-term notes payable to certain counties in Kentucky.

As part of the Merger, the Company acquired additional long-term notes payable to certain counties in Kentucky and during the quarter ended September 30, 2022, the Company paid off the outstanding balances.

The Company’s tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that quarter.

3 unchanged sentences

See Note 3, Business Combination, for further details.

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.

Income tax expense for the quarter and year to date ended September 30, 2022, was $ 7,533 and $ 26,037 for an effective tax rate of 24.2 percent and 23.2 percent, respectively.

The effective tax rate for the quarter and year to date ended September 30, 2022 differed from the 21 percent federal statutory rate on pretax income primarily due to state and foreign income taxes, partially offset by state and federal tax credits, and the deduction applicable to export activity.

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

The effective tax rate for the 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.

Equity and EPS

The computations of basic and diluted EPS:

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

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

2022 2021 2022 2021

5 unchanged sentences

Net income used in EPS calculation $ 23,620 $ 23,701 $ 86,117 $ 58,967

Basic and diluted weighted average common shares (c)

Share information:

Basic weighted average common shares (c)

22,008,381 21,981,201 22,000,026 20,293,818

Basic and diluted EPS $ 1.15 $ 0.91 $ 2.84 $ 1.81

Diluted weighted average common shares (c)(d)

22,228,814 21,981,201 22,000,026 20,293,818

Basic EPS $ 1.07 $ 1.08 $ 3.91 $ 2.91

Diluted EPS $ 1.06 $ 1.08 $ 3.91 $ 2.91

(a) Net income attributable to all shareholders.

(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.

(b) Participating securities included 176,398 and 163,024 unvested restricted stock units (“RSUs”), at September 30, 2022 and 2021, respectively.

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

(d) The impacts of the Convertible Senior Notes were included in the diluted weighted average common shares if the inclusion was dilutive.

The Convertible Senior Notes would only have a dilutive impact if the average market price per share during the quarter and year to date period exceeds the conversion price of $ 96.24 per share.

Share Issuance.

4 unchanged sentences

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 year to date ended June 30, 2022.

The Company did no t repurchase any shares under the share repurchase program during 2022, prior to its expiration on February 27, 2022.

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

9 unchanged sentences

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

Issuance of Common Stock — 606

Repurchase of Common Stock (a)

Balance, September 30, 2022 437 21,993,355

Shares Outstanding

7 unchanged sentences

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

Issuance of Common Stock — 2,361

Repurchase of Common Stock (a)

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

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

34 unchanged sentences

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

As of June 30, 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).

As of September 30, 2022, 585,353 RSUs had been granted of the 1,500,000 shares approved under the 2014 Plan, and 130,982 shares had been granted of the 300,000 shares approved under the Directors’ Plan.

As of September 30, 2022, there were 178,608 unvested RSUs under the Company’s long-term incentive plans and 176,398 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 (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.

For quarter and year to date ended September 30, 2022, the Company had a loss on deferred compensation plan investments of $ 103 and $ 931 , respectively.

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

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.

Participants were able to direct the deferral of a portion of their base salary and a portion of their estimated accrued Short-term incentive plan (“STI Plan”) amounts that were paid during first quarter of the following year.

Base salary amounts elected for deferral are deposited into the EDC Plan by the Company on a weekly basis and allocated by participants among Company-determined investment options.

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

At June 30, 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.

STI Plan deferral amounts are 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, 2022 and December 31, 2021, the EDC Plan investments were $ 2,510 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 September 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 $ 2,310 and $ 2,981 at September 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 June 30, 2022, the Company had three segments:

At September 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 June 30, Year to Date Ended June 30,

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

2022 2021 2022 2021

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The following table allocates assets to each segment as of:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Identifiable Assets

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Subsequent Events

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.

On November 3, 2022, the Company’s Board of Directors declared a quarterly dividend payable to stockholders of record as of November 18, 2022, of the Company’s Common Stock, and a dividend equivalent payable to holders of certain RSUs as of November 18, 2022, of $ 0.12 per share and per unit, payable on December 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