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Item 1A. Risk Factors

2025-02-26 compared with 2024-02-22 · 122 added, 92 removed, 257 unchanged (45% of the section changed)

Our business is subject to certain risks and uncertainties that could cause actual results and events to differ materially from forward looking statements.

The following discussion identifies those which we consider to be most important.

The following discussion identifies those risks which we consider to be material.

The following discussion of risks is not all inclusive.

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• product innovations;

• public health policies and initiatives (including dietary guidelines regarding alcohol consumption);

• public health policies and initiatives (including dietary guidelines and labeling requirements regarding alcohol consumption);

• health and wellness trends (including the use of GLP-1 drugs);

• changes in government regulation and taxation of beverage alcohol products;

• the expansion of, legalization of, and increased acceptance or use of marijuana;

• the expansion of, legalization of, and increased acceptance or use of cannabis;

• changes in travel, leisure, dining, entertaining, and beverage consumption trends.

Our success depends in part on fulfilling available opportunities to meet consumer needs and anticipating changes in consumer preferences with successful new brands, products, and product innovations.

If our customers and consumers shift away from spirits (particularly brown spirits, such as our bourbon, rye, and other whiskeys) or shift from purchasing our higher-margin products to our lower-margin products, our business, financial condition, or results of operations could be adversely affected.

If our customers and consumers shift away from spirits (particularly brown spirits, such as our bourbon, rye, and other American whiskeys) or shift from purchasing our higher-margin products to our lower-margin products, our business, financial condition, or results of operations could be adversely affected.

In addition, consumer pantry, retailer, distributor, or supplier inventory destocking, which we have experienced in the past, could adversely impact our business, financial condition, or results of operations.

Additionally, customer contract non-performance, which we have experienced in the past, could adversely impact our business, financial condition, or results of operations.

The markets for our products are very competitive, and our business could be negatively affected if we do not compete effectively.

We may also be negatively impacted by industry dynamics and market conditions.

The markets for our products are very competitive.

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We are dependent on being able to generate sales and other operating income in excess of the costs of products sold in order to obtain margins, profits, and cash flows to meet or exceed our targeted financial performance measures.

Competition is based on such factors as product innovation, product characteristics, product taste and quality, pricing, color, and name and brand image.

Pricing of our products is partly dependent upon industry capacity, which is impacted by competitor actions to bring online idled capacity or to build new production capacity.

If market conditions make our Branded Spirits products too expensive or our distilled solutions or specialty ingredients products too expensive for use in consumer goods, our revenues could be affected.

If our principal competitors were to decrease their pricing, we could choose to do the same, which could adversely affect our margins and profitability.

Competition is based on such factors as product innovation, product characteristics, product taste and quality, pricing, color, as well as name and brand image.

Pricing of our products is partly dependent upon industry capacity, which is impacted by competitor actions to bring online idled capacity or to build new production capacity, and may lead us to adjust our pricing, which could adversely impact our business, financial condition, or results of operations.

We have been, and may continue to be, adversely impacted by elevated industry-wide barrel inventories of whiskey.

In addition, if market conditions make our Branded Spirits products too expensive or our Distilling Solutions or Ingredient Solutions products too expensive for use in consumer goods, our revenues could be affected.

If our competitors were to decrease their pricing, we may choose to do the same, which could adversely affect our margins and profitability.

If we did not do the same, our revenues could be adversely affected due to the potential loss of sales.

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Also, there are several distributors that now control distribution for several states.

If we fail to maintain good relations with a distributor, our branded spirits could, in some instances be frozen out of one or more markets entirely.

If we fail to maintain good relations with a distributor, our branded spirits could, in some instances be excluded from one or more markets entirely.

The ultimate success of our branded spirits also depends in large part on our distributors’ ability and desire to distribute and actively promote our branded spirits to our desired U.S.

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Moreover, the retail industry, particularly in Europe, North America, and other countries in which we operate or may operate in the future, continues to consolidate, resulting in larger retailers with increased purchasing power, which may affect our competitiveness in these markets.

Larger retailers may seek to improve their profitability and sales by asking for lower prices or increased trade spending.

Larger retailers may seek to improve their profitability and sales by asking for lower prices

or increased trade spending.

The efforts of retailers could result in reduced profitability for the distilled spirits industry as a whole and indirectly adversely affect our financial results.

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In the past, we have experienced short term interruptions of operations at some of our production facilities due to industrial accidents.

future accidents or other catastrophic events could result in an extended interruption or reduction of production at our facilities, and we may incur costs or financial losses that are either not insured against or not fully covered through our insurance.

Any future accidents or other catastrophic events could result in an extended interruption or reduction of production at our facilities, and we may incur costs or financial losses that are either not insured against or not fully covered through our insurance.

Our customers store a substantial amount of barreled inventory of aged or aging bourbon, rye, and other whiskeys at our warehouses.

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The loss of a significant amount of aged or aging inventory at these facilities through fire, natural disaster, or otherwise could result in customer claims against us, liability for customer losses, and a reduction of warehouse services revenue.

We also store a substantial amount of our own inventory of aged or aging bourbon, rye, and other whiskeys at our warehouses and at the facilities of certain third-party producers.

We also store a substantial amount of our own inventory of aged or aging bourbon, rye, and other whiskeys at our warehouses and at other facilities, including facilities owned by certain third-party producers.

If a catastrophic event were to occur at any of these locations, our business, financial condition, or results of operations could be adversely affected.

The loss of a significant amount of our aged or aging inventory at these facilities through fire, natural disaster, or otherwise could result in a reduction in supply of the affected product or products and could affect our long-term performance of any affected brands.

The loss of a significant amount of our aged or aging inventory at these facilities through fire, natural disaster, or otherwise could result in a reduction in supply of the affected products and could affect our long-term performance of any affected brands.

To the extent that our products rely on unique or proprietary processes or techniques, replacing production lost as a result of a catastrophic event by purchasing from outside suppliers would be difficult.

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Demand for products could change significantly between the time of production and the date of sale.

It may be more difficult to make accurate predictions regarding new products and brands.

It has in the past and may continue to be more difficult to accurately predict demand for our products and brands.

Inaccurate decisions or estimations could lead to an inability to supply future demand or lead to a future surplus of inventory and consequent write down in the value of aged or aging distillate.

As a result, our business, financial condition, or results of operations could be materially adversely affected.

The inability to successfully complete our capital projects or fund necessary capital expenditures could adversely impact us.

Warehouse expansion issues could negatively impact our operations and our business.

Expansion of our business operations requires additional warehouse capacity.

In the event additional warehouse capacity is required, there is the risk of completion delays, the risk of cost overruns, and regulatory risks, including our ability to timely obtain necessary approvals and permits, and potential changes in laws and regulations, including zoning and environmental requirements, which could have a material adverse effect on our business, financial condition, or results of operations.

Any capital project we undertake involves risks, including cost overruns, delays and performance uncertainties, regulatory risks (including our ability to timely obtain necessary approvals and permits), and the risk of potential changes in laws and regulations (including zoning and environmental requirements).

The expected benefits from any of our capital or other projects may not be realized.

For example, we may not realize the expected benefits from the mini fuel plant being constructed at our Atchison, Kansas location or from the ultimate disposal of the distillery assets from our distillery in Atchison, Kansas that we closed in December 2023.

Our capital projects may also result in other unanticipated events or unintended consequences, such as the diversion of management’s attention from other operational matters or disruptions to our ongoing operations.

Although we currently finance most of our capital expenditures through cash provided by operations, we also may depend on increased borrowing or other financing arrangements to fund future capital expenditures.

If we are unable to obtain suitable financing on favorable terms, we may not be able to complete future capital projects and our ability to maintain or expand our operations may be limited.

The occurrence of these events could have a material adverse effect on our business, financial condition, and results of operations.

In addition, expansion of our business operations requires additional warehouse capacity.

In the event additional warehouse capacity is required, there is the risk of cost overruns, delays, regulatory risks, and the risk of potential changes in laws and regulations, which could have a material adverse effect on our business, financial condition, or results of operations.

We have a high concentration of certain raw material and finished goods purchases from a limited number of suppliers, which exposes us to risk .

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As of December 31, 2024, approximately 197 of our 660 employees were members of a union.

Although our relations with our three unions are stable, there is no assurance that we will not experience work disruptions or stoppages in the future, which could interrupt our operations, adversely affect our relationships with our customers, and could have a material adverse effect on our business, financial condition, or results of operations.

Although our relations with our three unions are stable, our failure to renew our collective bargaining agreements on reasonable terms could result in labor disruptions and increased labor costs, which could adversely affect our financial performance.

In addition, there is no assurance that we will not experience work disruptions or stoppages in the future, which could interrupt our operations, adversely affect our relationships with our customers, and could have a material adverse effect on our business, financial condition, or results of operations.

Climate change, or legal, regulatory, or market measures to address climate change, may negatively affect our business or operations, and water scarcity or quality could negatively impact our production costs and capacity.

Increasing concentrations of carbon dioxide and other greenhouse gases in the atmosphere may have an adverse effect on global temperatures, weather patterns, and the frequency and severity of extreme weather events and natural disasters.

In the event that climate change, or legal, regulatory, or market measures enacted to address climate change, has a negative effect on agricultural productivity in the regions from which we procure agricultural products such as corn and wheat, we could be subject to decreased availability or increased prices for these agricultural products, which could have a material adverse effect on our business, financial condition, or results of operations.

In the event that the effects of climate change, or legal, regulatory, or market measures enacted to address climate change, has a negative effect on agricultural productivity in the regions from which we procure agricultural products such as corn and wheat, we could be subject to decreased availability or increased prices for these agricultural products, which could have a material adverse effect on our business, financial condition, or results of operations.

Increasing regulation of emissions could increase the cost of energy, including fuel, required to operate our facilities or transport and distribute our products, thereby substantially increasing the production, distribution, and supply chain costs associated with our products.

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As demand for water continues to increase, water becomes more scarce and the quality of available water deteriorates, we may be affected by increasing production costs or capacity constraints, which could have a material adverse effect on our business, financial condition, or results of operations.

We may not realize the anticipated benefits from the announced planned closure of our Atchison, Kansas distillery.

On July 13, 2023, we announced the planned closure of our distillery located in Atchison, Kansas, and we closed this distillery in December 2023.

The anticipated future impact of this closure, including with respect to the ultimate disposal of the distillery assets and impacts to our Ingredient Solutions business, is subject to assumptions, estimates, and other uncertainties, some of which are beyond our control.

If these estimates and assumptions are incorrect, if we experience delays or unanticipated costs associated with the closure, or if other unanticipated events or unintended consequences occur in connection with the closure, our business and financial results could be adversely affected and could differ materially from our expectations.

LEGAL, REGULATORY, AND COMPLIANCE RISKS

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Our operations are also subject to regulation by various U.S.

federal agencies, including the TTB, OSHA, the FDA, the EPA, and by various U.S.

state and local and foreign authorities.

federal agencies, including the TTB, OSHA, the

FDA, and the EPA, by various U.S.

state and local authorities, and by various foreign authorities.

We are also required to conduct business only with holders of licenses to import, warehouse, transport, distribute, and sell beverage alcohol products.

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Certain countries historically have banned all television, newspaper, magazine, and digital commerce/advertising for beverage alcohol products.

Increases in regulation of this nature could substantially reduce consumer awareness of our products in the affected markets and make the introduction of new products more challenging.

Governmental agencies may issue dietary guidelines that recommend reduced alcohol

consumption, which could impact consumer behavior.

Increases in regulation of this nature could substantially reduce consumer awareness of our products in the affected markets and m ake the introduction of new products more challenging.

Governmental agencies may issue dietary guidelines that recommend reduced alcohol consumption, which could impact consumer behavior.

These matters may have a material adverse effect on our business, financial condition, or results of operations.

Tariffs imposed by the U.S.

and those imposed by other countries, as well as rapidly changing trade relations, could negatively impact our customers and have a material adverse effect on our business and results of operations.

Changes in U.S.

and foreign governments’ trade policies have resulted in, and may continue to result in, tariffs on imports into and exports from the countries where we operate.

and other countries, as well as rapidly changing trade relations, could negatively impact our customers and have a material adverse effect on our business and results of operations.

Changes or proposed changes in U.S.

and foreign governments’ trade policies have resulted in, and may continue to result in, new trade agreements, economic sanctions, or new, expanded or retaliatory tariffs against certain countries or covering certain products or ingredients (including recent U.S.

tariffs imposed or threatened to be imposed on Mexico, Canada, China, and other countries and any retaliatory actions taken by such countries).

For example, during the period from 2018 through mid-year 2022, the United Kingdom and the European Union imposed tariffs on the import of American whiskey in response to tariffs imposed by the U.S.

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These tariffs are currently slated to be reinstated and doubled if an agreement is not reached by March 31, 2025.

Similar retaliatory tariffs may be implemented in the future.

Any further deterioration of economic relations between the U.S.

and other countries or any increase in existing tariffs or the imposition of additional tariffs could result in an increase in the price of our and our customer’s products in those countries, could prompt consumers in those countries to seek alternative products, could result in a supply imbalance in the U.S if we and our competitors have reduced sales in those countries, and could potentially impact our business, financial condition, or results of operations.

Any new trade agreements, economic sanctions, or new, expanded or retaliatory tariffs could result in an increase in the price of our and our customer’s products, could increase the costs of finished goods and raw materials (including finished goods produced through our joint venture operations in Mexico and our Northern Ireland operations as well as raw materials we procure from outside the U.S.), could prompt consumers to seek alternative products, could result in a supply imbalance in the U.S if we and our competitors have reduced sales in other countries, and could potentially impact our business, financial condition, or results of operations.

Changes in excise taxes, incentives, and customs duties related to products containing alcohol could adversely affect our business.

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Third parties that license our proprietary rights also may take actions that diminish the value of our proprietary rights or reputation.

The protection of our intellectual property may require the expenditure of significant financial and managerial resources.

The protection of our

intellectual property may require the expenditure of significant financial and managerial resources.

Moreover, the steps we take to protect our intellectual property may not adequately protect our rights or prevent third parties from infringing or misappropriating our proprietary rights.

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Further, we cannot predict whether our products will become subject to increased rules and regulations, which, if enacted, could increase our costs or adversely impact sales.

For example, advocacy groups in Australia, Canada, and the United Kingdom have called for the consideration of requiring the sale of alcohol in plain packaging with more comprehensive health warnings or have launched additional health-related campaigns in an effort to change drinking habits in those countries.

For example, in early January 2025, the U.S.

Surgeon General suggested requiring that alcohol products have labels with increased and more prominent warnings regarding the health risks of alcohol consumption and in the past, advocacy groups in Australia, Canada, and the United Kingdom have called for the consideration of requiring the sale of alcohol in plain packaging with more comprehensive health warnings or have launched additional health-related campaigns in an effort to change drinking habits in those countries.

This could result in additional governmental regulations concerning the production, marketing, labeling, or availability of our products, any of which could damage our reputation, make our brands unrecognizable, or reduce demand of our products, which could adversely affect our profitability.

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A significant product liability or other legal judgment or a related regulatory enforcement action against us, or a significant product recall, may materially and adversely affect our reputation and profitability.

Moreover, even if a product liability or other legal or regulatory claim is unsuccessful, has no merit, or is not pursued, the negative publicity surrounding assertions against our products or processes and the associated legal and other expenses could have a material adverse effect on our business, financial condition, or results of operations.

Moreover, even if a product liability or other legal or regulatory claim is unsuccessful, has no merit, or is not

pursued, the negative publicity surrounding assertions against our products or processes and the associated legal and other expenses could have a material adverse effect on our business, financial condition, or results of operations.

Failure to comply with anti-corruption laws, trade sanctions, and restrictions, or similar laws or regulations may have a material adverse effect on our business and financial results.

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New or expanded export control regulations, economic sanctions, embargoes or other forms of trade restrictions imposed on countries in which we or our associates do business may curtail our existing business and may result in serious economic challenges in these geographies, which could have a material adverse effect on our and our associates’ operations, and may result in impairment charges on goodwill or other intangible assets.

For example, the United States, United Kingdom, and other countries imposed significant new sanctions and export controls against Russia, Russian banks and certain Russian individuals following Russia’s invasion of Ukraine and additional sanctions or

further punitive actions may be implemented in the future.

The conflict and related sanctions have resulted and could continue to result in disruptions to global trade, commodity markets (including grain, corn, wheat, energy, and natural gas markets), and supply chain continuity.

Class action or other litigation relating to alcohol abuse or the misuse of alcohol could adversely affect our business .

Companies in our industry may face the possibility of class action or similar litigation alleging that the continued excessive use or abuse of beverage alcohol has caused death or serious health problems.

We are, and from time to time may become, subject to litigation, and adverse outcomes in such litigation could have a material adverse effect on our business.

We are, and from time to time may become, subject to litigation and various legal proceedings in the ordinary course of our business, including litigation and proceedings related to commercial disputes, intellectual property matters, privacy and data protection and employment disputes, as well as stockholder derivative suits, class action lawsuits, mass arbitrations and other matters, that may involve claims for substantial amounts of money or for other relief, result in significant costs for legal representation, arbitration fees, or other legal or related services, or necessitate changes to our business or operations.

In particular, we and other companies operating in our industry may face the possibility of class action or similar litigation alleging that the continued excessive use or abuse of beverage alcohol has caused death or serious health problems.

It is also possible that governments could assert that the use of alcohol has significantly increased government funded health care costs.

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While we have not been named in these lawsuits, we could be named in similar lawsuits in the future.

Any class action or other litigation asserted against us could be expensive and time-consuming to defend against, deplete our cash, divert our personnel resources and, if the plaintiffs in such actions were to prevail, could harm our business significantly.

The defense of these actions is time consuming and expensive and may subject us to damages, penalties, or fines as well as reputational damage to our business.

We evaluate these litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses.

Based on these assessments and estimates, we may establish reserves and disclose the relevant litigation claims or legal proceedings, as and when required or appropriate.

These assessments and estimates are based on information available to management at the time of such assessment or estimation and involve a significant amount of judgment.

As a result, actual outcomes or losses could differ materially from those envisioned by our current assessments and estimates.

Our failure to successfully defend or settle any of these litigations or legal proceedings could result in liability that, to the extent not covered by our insurance, could have a material adverse effect on our business, financial condition, and results of operations.

See also Part I, “Item 3―Legal Proceedings” and Part II, Item 8, Note 11, Commitments and Contingencies, to our Consolidated Financial Statements.

RISKS RELATED TO OUR CAPITAL STRUCTURE

Common Stockholders have limited rights under our Articles of Incorporation.

Under our Articles of Incorporation, (i) holders of our preferred stock, par value $10.00 per share (“Preferred Stock”), are entitled to elect five of our nine directors and (ii) only holders of our Preferred Stock are entitled to vote with respect to a merger, dissolution, lease, exchange or sale of substantially all of our assets, or on an amendment to the Articles of Incorporation, unless such action would increase or decrease the authorized shares or par value of the Common or Preferred Stock, or change the powers, preferences or special rights of the Common or Preferred Stock so as to affect the holders of Common Stock adversely.

Generally, our Common Stock and Preferred Stock vote as separate classes on all other matters requiring stockholder approval.

As of December 31, 2024, the majority of the outstanding shares of our Preferred Stock is beneficially owned by one individual, who is effectively in control of the election of five of our nine directors under our Articles of Incorporation.

Furthermore, a group of stockholders beneficially owning appro ximately 23 percent of our Common Stock as of December 31, 2024 (excluding shares controlled by certain other stockholders) have a right to nominate up to two of the four directors to be elected by holders of our Common Stock pursuant to the terms of a shareholders’ agreement, provided they continue to hold a certain amount of our Common Stock, and two other individuals who beneficially own approximately 13 percent of our Common Stock as of December 31, 2024 have agreed to vote in favor of those nominees with respect to any share s of Common Stock over which they have sole voting control.

Our two class structure with our Common Stock and Preferred Stock may prevent the inclusion of our Common Stock in certain stock market indices, may cause stockholder advisory firms or others to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure, and may result in large institutional investors not purchasing shares of our Common Stock.

Any actions or publications by stockholder advisory firms, institutional investors, or others critical of our corporate governance practices or capital structure could also adversely affect the value of our Common Stock or make it difficult for us to attract and retain qualified directors.

Any actions we might pursue to eliminate the Preferred Stock would require the support of the holders of our Preferred Stock and would likely involve payment to the holders of our Preferred Stock for redeeming their shares, the amount of which could be material and would involve risks related to the valuation and terms of any such transaction.

The concentrated control of our stock and rights of holders of Preferred Stock under our Articles of Incorporation could delay, defer, or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that our other stockholders support, or conversely these factors could result in the consummation of such a transaction that our other stockholders do not support.

The concentrated control of our stock and rights of holders of Preferred Stock could also discourage a potential investor from acquiring our Common Stock due to the limited voting power of such stock relative to the Preferred Stock and could have an adverse effect on the market price of our Common Stock.

In addition, the sale or prospect of a sale of a substantial number of shares by our principal stockholders could have an adverse effect on the market price of our Common Stock.

We have various mechanisms in place to discourage takeover attempts, which may reduce or eliminate our stockholders’ ability to sell their shares for a premium in a change of control transaction.

In addition, we could issue additional shares of Common Stock, which could adversely impact the market price of our Common Stock.

Various provisions of our Articles of Incorporation and bylaws and of Kansas corporate law may discourage, delay, or prevent a change in control or takeover attempt of our Company by a third-party which our management and Board of Directors opposes.

Stockholders who might desire to participate in such a transaction may not have the opportunity to do so.

These antitakeover provisions could substantially impede the ability of stockholders to benefit from a change of control or change in our management and Board of Directors.

These provisions include:

• the rights of holders of our Preferred Stock under our Articles of Incorporation (see “Common Stockholders have limited rights under our Articles of Incorporation”);

• additional shares of Preferred Stock and Common Stock that could be issued by our Board of Directors to make it more difficult for a third-party to acquire, or to discourage a third-party from acquiring, a majority of our outstanding voting stock;

• non-cumulative voting in the election of directors;

• limitations on the ability of stockholders to call special meetings of stockholders;

• advance notice requirements for nominations of candidates for election to our Board of Directors or for proposing matters that can be acted upon by our stockholders at stockholder meetings.

Our Board of Directors is authorized to issue additional shares of Common Stock and Preferred Stock and may issue the available authorized shares without notice to, or further action by, our stockholders, unless stockholder approval is required by law or the rules of the Nasdaq Global Select Market.

We believe that it is necessary to maintain a sufficient number of available authorized shares of our Common Stock in order to provide us with the flexibility to issue Common Stock for business purposes that may arise as deemed advisable by our Board.

The issuance of additional shares of Common Stock or Preferred Stock may significantly dilute the equity ownership of our current stockholders and could have an adverse effect on the market price of our Common Stock.

GENERAL RISKS

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Our ability to make and sell our products depends upon the availability of raw materials and energy resources.

Prices and supply of all products are subject to market forces, such as weather, changes in domestic and global demand and supply, and global political or economic issues, including repercussions from Russia’s invasion of Ukraine.

Prices and supply of all products are subject to market forces, such as inflation, weather, changes in domestic and global demand and supply, and global political or economic issues.

Higher costs or insufficient availability of suitable grain, agave, water, wood, glass, plastics, closures, and other input materials, or higher associated labor costs or insufficient availability of labor, could have a material adverse effect on our business, financial condition, or results of operations.

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and handling other processes necessary to manage our business.

The Company has previously experienced, and is expected to continue to be exposed to, failures of our IT systems and those of our third-party vendors due to various causes, including those caused by natural disasters, power outages, computer and telecommunications failures, viruses, phishing attempts, cyber-attacks, malware and

ransomware attacks, security breaches, failures in maintenance or development of new IT systems, and errors by employees or vendors.

We have technology and processes in place designed to detect and respond to such failures and disruptions;

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This could lead to outside parties having access to our confidential data, strategic information, or information regarding our employees, suppliers, or customers.

Ransomware attacks or other cybersecurity breaches have occurred, either internally or at our third-party technology service providers, and have caused and may in the future cause us to be prevented from accessing our data, resulting in interruptions or delays in our business, and causing us to incur remediation costs or requiring us to pay ransom to a hacker which takes over our systems, or damage our reputation.

resulting in interruptions or delays in our business, and causing us to incur remediation costs or requiring us to pay ransom to a hacker which takes over our systems, or damage our reputation.

Although we maintain insurance coverage for various cybersecurity risks, we may incur costs or financial losses that are either not insured against or not fully covered through our insurance.

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• Our financial results may be negatively impacted by cash expenses and non-cash charges incurred in connection with an acquisition if goodwill or other intangible assets we acquire become impaired.

For example, in the fourth quarter 2024, we recorded a goodwill impairment charge related to the Branded Spirits reporting unit.

See also Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates—Goodwill and Indefinite-Lived Intangible Assets” and Part II, Item 8, Note 5, Goodwill and Other Intangible Assets, to our Consolidated Financial Statements.

• We may enter new markets or markets in which we have limited prior experience.

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We intend to finance our acquisitions through a combination of our available cash resources, third-party financing and, in appropriate circumstances, the further issuance of equity and debt securities.

Any issuance of our Common Stock or securities convertible into our Common Stock to fund an acquisition could substantially dilute the ownership percentage of our current stockholders and negatively impact the market price of our Common stock.

Any issuance of our Common Stock or securities convertible into our Common Stock to fund an acquisition could

substantially dilute the ownership percentage of our current stockholders and negatively impact the market price of our Common stock.

For example, in connection with the Merger we issued approximately 5.0 million shares of our Common Stock.

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Our revolving credit facility bears interest at variable rates.

Federal Reserve began raising the Federal Funds interest rate in early 2022 and continued to do so throughout the first half of 2023 in response to concerns about inflation.

As of December 31, 2023, the Federal Funds interest rate was at the highest level in 22 years.

Although the Federal Reserve has held interest rates steady since July 2023 and has pointed to potential interest rate cuts, there is no guarantee that they may again raise interest rates in response to continuing concerns about inflation.

Federal Reserve began raising the Federal Funds interest rate in early 2022 and continued to do so throughout the first half of 2023.

Although the Federal Reserve cut interest rates during 2024, they may again raise interest rates in the future.

Any increase in interest rates would increase the cost of servicing our variable rate debt and could materially reduce our profitability and cash flows.

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We rely on the continued services of key personnel involved in management, finance, product development, sales, manufacturing, marketing, human resources, operations, and distribution, and upon the efforts and abilities of our executive management team.

The loss of service of any of our key personnel could have a material adverse effect on our business, financial condition, results of operations, or on our system of internal controls.

The loss of service of any of our key personnel could be disruptive to our operations and create uncertainty

about our business and future direction, which could have a material adverse effect on our business, financial condition, results of operations, or on our system of internal controls.

On December 31, 2024, David S.

Bratcher’s service as our Chief Executive Officer and President ended, and Brandon M.

Gall was appointed to serve as our Interim President and Chief Executive Officer effective January 1, 2025, in addition to serving in his current role of Chief Financial Officer.

We are currently conducting a search for a permanent President and Chief Executive Officer.

If we cannot attract and retain key personnel, or if our search for qualified personnel is prolonged, our system of internal controls may be affected, which could lead to an adverse effect on our business, financial condition, or results of operations.

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Our products are sold in more than 50 countries;

accordingly, we are subject to risks associated with doing business internationally, including commercial, political, and financial risks.

In addition, we are subject to potential business disruption caused by military conflicts (including the current conflicts in Ukraine and Israel);

accordingly, we are subject to risks associated with doing business globally, including commercial, political, and financial risks.

In addition, we are subject to potential business disruption caused by military conflicts;

the results of elections;

potentially unstable governments or legal systems;

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and health pandemics.

If shipments of our products to international markets were to experience significant disruption due to these risks or for other reasons, it could have a material adverse effect on our financial results.

If shipments of our products to international markets were to experience significant disruption, it could have a material adverse effect on our financial results.

We are also subject to financial risks and our business has been, and could in the future also be, negatively impacted by unfavorable economic conditions, including inflation, deflation, exchange rate fluctuations, and credit or capital market instability.

See also “—Tariffs imposed by the U.S.

and other countries, as well as rapidly changing trade relations, could negatively impact our customers and have a material adverse effect on our business and results of operations.”

Covenants and other provisions in our credit arrangements could hinder our ability to operate.

Our failure to comply with covenants in our credit arrangements could result in the acceleration of the debt extended under such agreements, limit our liquidity, and trigger other rights of our lenders.

Our credit arrangements (Note 7, Corporate Borrowings) contain a number of financial and other covenants that include provisions which require us, in certain circumstances, to meet certain financial tests.

These covenants could hinder our ability

to operate and could reduce our profitability.

Our credit arrangements contain a number of financial and other covenants that include provisions which require us, in certain circumstances, to meet certain financial tests.

These covenants could hinder our ability to operate and could reduce our profitability.

The lender may also terminate or accelerate our obligations under our credit arrangements upon the occurrence of various events in addition to payment defaults and other breaches.

Any acceleration of our debt or termination of our credit arrangements would negatively impact our overall liquidity and might require us to take other actions to preserve any remaining liquidity.

Any acceleration of our debt or termination of our credit

arrangements would negatively impact our overall liquidity and might require us to take other actions to preserve any remaining liquidity.

Although we anticipate that we will be able to meet the covenants in our credit arrangements, there can be no assurance that we will do so, as there are a number of external factors that affect our operations over which we have little or no control, that could have a material adverse effect on our business, financial condition, or results of operations.

See also Part II, Item 8, Note 7, Corporate Borrowings, to our Consolidated Financial Statements.

Pandemics or other health crises could disrupt or otherwise negatively impact our operations, including the demand for our products and our ability to produce and deliver our products.

A pandemic, such as COVID-19, or another widespread health crisis could negatively impact the global economy which could have a negative impact on our operations, including voluntary or mandatory temporary closures of our facilities or offices;

interrupt our supply chain, which could impact the cost or availability of raw materials;

cause disruptions or restrictions on our ability to travel or to market and distribute our products;

reduce consumer demand for our products or those of our customers due to bar and restaurant closures or reduced consumer traffic in bars, restaurants, and other locations;

A pandemic, such as COVID-19, or another widespread health crisis, could have a negative impact on our operations, including voluntary or mandatory temporary closures of our facilities or offices;

interruptions to our supply chain, which could impact the cost or availability of raw materials;

disruptions or restrictions on our ability to travel or to market and distribute our products;

reductions in consumer demand for our products or those of our customers due to bar and restaurant closures or reduced consumer traffic in bars, restaurants, and other locations;

and labor shortages.

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These impacts could limit our ability to fund our operations and satisfy our obligations.

We may not pay dividends or may pay smaller dividends on our Common Stock in the future.

The payment of dividends, as well as the amount of any dividends, requires approval of our Board of Directors.

Future dividend payments are also subject to our financial results, the availability of statutory surplus funds to pay dividends, restrictions in our debt agreements, and our capital allocation strategy.

These or other factors could result in a change to our current policy of paying dividends on our Common Stock or may result in us paying smaller dividends on our Common Stock in the future.

RISKS RELATED TO OUR CAPITAL STRUCTURE

Common Stockholders have limited rights under our Articles of Incorporation.

Under our Articles of Incorporation, holders of our preferred stock, par value $10.00 per share (“Preferred Stock”), are entitled to elect five of our nine directors and only holders of our Preferred Stock are entitled to vote with respect to a merger, dissolution, lease, exchange or sale of substantially all of our assets, or on an amendment to the Articles of Incorporation, unless such action would increase or decrease the authorized shares or par value of the Common or Preferred Stock, or change the powers, preferences or special rights of the Common or Preferred Stock so as to affect the holders of Common Stock adversely.

Generally, our Common Stock and Preferred Stock vote as separate classes on all other matters requiring stockholder approval.

As of December 31, 2023, the majority of the outstanding shares of our Preferred Stock is beneficially owned by one individual, who is effectively in control of the election of five of our nine directors under our Articles of Incorporation.

Furthermore, a group of stockholders beneficially owning approximately 21 percent of our Common Stock as of December 31, 2023 (excluding shares controlled by certain other stockholders) have a right to nominate up to two of the four directors to be elected by holders of our Common Stock pursuant to the terms of a shareholders’ agreement, provided they continue to hold a certain amount of our Common Stock, and two other individuals who beneficially own approximately 13 percent of our Common Stock as of December 31, 2023 have agreed to vote in favor of those nominees with respect to any shares of Common Stock over which they have sole voting control.

Any actions we might pursue to eliminate the Preferred Stock would require the support of the holders of our Preferred Stock and would likely involve payment to the holders of our

Preferred Stock for redeeming their shares, the amount of which could be material and would involve risks related to the valuation and terms of any such transaction.

In addition, the sale or prospect of a sale of a substantial number of shares by our principal stockholders could have an adverse effect on the market price of our Common Stock.

We have various mechanisms in place to discourage takeover attempts, which may reduce or eliminate our stockholders’ ability to sell their shares for a premium in a change of control transaction.

In addition, we could issue additional shares of Common Stock, which could adversely impact the market price of our Common Stock.

Stockholders who might desire to participate in such a transaction may not have the opportunity to do so.

These antitakeover provisions could substantially impede the ability of stockholders to benefit from a change of control or change in our management and Board of Directors.

These provisions include:

• the rights of holders of our Preferred Stock under our Articles of Incorporation (see “Common Stockholders have limited rights under our Articles of Incorporation”);

• non-cumulative voting in the election of directors;

• limitations on the ability of stockholders to call special meetings of stockholders;

• advance notice requirements for nominations of candidates for election to our Board of Directors or for proposing matters that can be acted upon by our stockholders at stockholder meetings.

Cash dividends and share repurchases are subject to uncertainties which could affect the price of our Common Stock.

The payment of dividends, the amount of any dividends, and any share repurchase program require approval of our Board of Directors.

Future dividend payments and share repurchases are also subject to our financial results, the availability of statutory surplus funds to pay dividends, restrictions in our debt agreements, and our capital allocation strategy.

These or other factors could result in a change to our current policy of paying dividends on our Common Stock, us paying smaller dividends on our Common Stock in the future, or a change in the amount, timing and frequency of any share repurchases.

A change in dividend payments or share repurchases could adversely affect the price of our Common Stock.

Additionally, any share repurchases may not enhance shareholder value because the market price of our Common Stock may decline below the levels at which we repurchased shares of Common Stock, and short-term stock price fluctuations could reduce the program’s effectiveness.

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-K

Item 1A. Risk Factors