What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-26 compared with 2024-02-22 · 232 added, 207 removed, 846 unchanged (34% of the section changed)

2 unchanged sentences

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors;

Because of its inherent limitations, our internal control over financial reporting may not prevent or detect misstatements.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

With the participation of the Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission.

With the participation of the Interim Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission.

As a result of this assessment, management has concluded that the Company’s internal control over financial reporting as of December 31, 2024 was effective.

KPMG, LLP, the independent registered public accounting firm that audited the Company’s financial statements contained herein, has issued an audit report on our internal control over financial reporting as of December 31, 2023, which is included in Item 8 of this Form 10-K.

KPMG, LLP, the independent registered public accounting firm that audited the Company’s consolidated financial statements contained herein, has issued an audit report on our internal control over financial reporting as of December 31, 2024, which is included in Item 8 of this Form 10-K.

Report of Independent Registered Public Accounting Firm

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A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and

dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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As discussed in Note 1 to the consolidated financial statements, the Company’s Distilling Solutions segment routinely enters into bill and hold arrangements, whereby the Company produces and sells aged and unaged distillate to customers.

As discussed in Note 3 to the consolidated financial statements, brown goods premium beverage alcohol revenue was $289,191 thousand for the year ended December 31, 2023, a portion of which was for bill and hold arrangements.

As discussed in Note 3 to the consolidated financial statements, brown goods revenue was $265,873 thousand for the year ended December 31, 2024, a portion of which was for bill and hold arrangements.

We identified the evaluation of revenue recognized under bill and hold arrangements as a critical audit matter because of the extent of additional audit effort required to test the incremental bill and hold revenue recognition criteria.

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Also, to evaluate that the Company does not have the ability to use the product or direct to another customer, we inspected underlying documentation for the same sample of bill and hold transactions to determine legal title to the product had transferred to the customer.

Acquisition-date fair value measurement of contingent consideration liability

As discussed in Note 1 and 4 to the consolidated financial statements, on June 1, 2023, the Company acquired Penelope Bourbon LLC (Penelope) in a business combination for cash consideration of $104,638 thousand and contingent consideration of up to $110,800 thousand if the Penelope business achieves certain net sales targets between the acquisition date and December 31, 2025.

At the acquisition date, management estimated the fair value of the contingent consideration liability to be $62,100 thousand using a Monte Carlo simulation based on certain assumptions including projected net sales over the term of the earn-out period and volatility rate.

We identified the assessment of the acquisition-date fair value measurement of the contingent consideration liability as a critical audit matter.

Fair value measurement of contingent consideration liability

As discussed in Notes 1 and 4 to the consolidated financial statements, on June 1, 2023, the Company acquired Penelope Bourbon LLC (Penelope) in a business combination for cash consideration of $104,638 thousand and contingent consideration of up to $110,800 thousand if the Penelope business achieves certain net sales targets between the acquisition date and December 31, 2025.

As of December 31, 2024, management estimated the fair value of the contingent consideration liability to be $85,300 thousand using a Monte Carlo simulation based on certain assumptions including projected net sales over the term of the earn-out period and volatility rate.

We identified the assessment of the fair value measurement of the contingent consideration liability as a critical audit matter.

A high degree of subjective auditor judgment was required to evaluate the projected net sales and volatility rate used in the Monte Carlo simulation.

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The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s acquisition-date valuation of the contingent consideration liability, including controls related to the determination of projected net sales and volatility rate.

We performed sensitivity analyses over the projected net sales and volatility rate to assess the impact of changes in those assumptions on the Company’s determination of the acquisition-date fair value of the contingent consideration liability.

We assessed the projected net sales by comparing them to Penelope’s historical actual results, actual results since the acquisition, and industry data.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s fair value measurement of the contingent consideration liability, including controls related to the projected net sales and volatility rate.

We performed sensitivity analyses over the projected net sales and volatility rate to assess the impact of changes in those assumptions on the fair value

of the contingent consideration liability.

We assessed the projected net sales by comparing them to Penelope’s actual results since the acquisition, management’s updated forecasts, and industry data.

We also involved valuation professionals with specialized skills and knowledge, who assisted us in evaluating the volatility rate used in the Monte Carlo simulation model by comparing it to comparable companies.

Valuation of Branded Spirits goodwill and indefinite-lived intangible assets

As discussed in Notes 1 and 5 to the consolidated financial statements, the Company recorded goodwill and intangible assets, net of $247,789 thousand and $268,451 thousand, respectively as of December 31, 2024.

For the year ended December 31, 2024, the Company recorded goodwill impairment of $73,755 thousand to adjust the carrying amount of the Branded Spirits reporting unit to fair value.

The Company tests goodwill and indefinite-lived intangible assets for impairment at least annually, in the fourth quarter, and on an interim basis if events and circumstances occur that would indicate it is more likely than not that the fair value of a reporting unit is less than carrying value.

During the fourth quarter, the Company performed a quantitative assessment of goodwill and its indefinite-lived intangible assets.

The estimated fair value of the Branded Spirits reporting unit used in the assessment of goodwill was determined through a combination of an income approach and a market approach.

The estimated fair value used in the assessment of the Company’s indefinite-lived intangible assets was determined using the relief from royalty method.

These fair value estimates were based on certain assumptions made by the Company, including projected revenue and operating margins, and the respective discount rates and market royalty rates.

We identified the evaluation of the fair value of the Branded Spirits reporting unit and indefinite-lived intangible assets within the Branded Spirits reporting unit as a critical audit matter.

Subjective and challenging auditor judgment was required to evaluate (1) the revenue growth rates, operating margins and discount rate assumptions used in the determination of the fair value of the Branded Spirits reporting unit, and (2) the revenue growth rates, royalty rates, and discount rates used in the determination of the fair value of certain indefinite-lived intangible assets.

A significant degree of auditor judgment was also required in evaluating the guideline public companies used in the market approach for the Branded Spirits reporting unit.

Changes to these assumptions could have had a significant effect on the Company’s assessment of the carrying values of the goodwill assigned to the Branded Spirits reporting unit and the associated indefinite-lived intangible assets.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter.

This included controls over the revenue growth rates, operating margins, discount rates and royalty rates used to measure the fair value of the Branded Spirits reporting unit and associated indefinite-lived intangible assets.

To assess the Company’s ability to forecast, we compared historical forecasts to actual results.

We performed sensitivity analyses over the revenue growth rates, operating margins, discount rates, and royalty rates to assess the impact of changes in these assumptions on the estimated fair values.

We evaluated the revenue growth rates and operating margin assumptions by comparing them to past and current performance of the Branded Spirits reporting unit and external industry data.

We involved professionals with specialized skills and knowledge, who assisted in:

• evaluating the Company’s royalty rates by determining that the royalty rates used were supported by the associated margins and consistent with other internal and publicly available data.

• evaluating the discount rates used by the Company by comparing the Company’s inputs to the discount rate to publicly available data for comparable entities and assessing the resulting discount rate.

• comparing the guideline public companies used in the market approach to available internal and external data.

We have served as the Company’s auditor since 2008.

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Impairment of long-lived assets and other 137 19,391 —

Goodwill impairment

Change in fair value of contingent consideration 16,100 7,100 —

Insurance recoveries — — ( 16,325 )

Operating income 74,426 148,613 148,965

Interest expense, net ( 8,439 ) ( 6,647 ) ( 5,451 )

Other expense, net ( 220 ) ( 3,342 ) ( 1,230 )

Other income (expense), net 2,455 ( 220 ) ( 3,342 )

Income before income taxes 68,442 141,746 140,172

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Other comprehensive loss

( 261 ) ( 93 ) ( 658 )

Comprehensive income attributable to MGP Ingredients, Inc.

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Cash and cash equivalents $ 25,273 $ 18,388

Receivables (less allowance for credit loss of $ 1,475 at both December 31, 2023 and 2022)

Receivables (less allowance for credit loss of $ 1,875 and $ 1,475 at December 31, 2024 and 2023, respectively

148,488 144,286

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Retained earnings 563,929 539,883

Accumulated other comprehensive income ( 397 ) ( 304 )

Accumulated other comprehensive loss ( 658 ) ( 397 )

Treasury stock, at cost, 1,930,459 and 1,109,053 shares at December 31, 2024 and 2023, respectively

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Impairment of long-lived assets and other 137 19,391 —

Gain on insurance recoveries — — ( 16,325 )

Goodwill impairment 73,755 — —

Share-based compensation 4,016 10,635 5,502

Equity method investment loss 337 2,220 1,611

Equity method investment loss (gain) ( 1,827 ) 337 2,220

Deferred income taxes, including change in valuation allowance 359 ( 4,041 ) 1,011

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Contributions to equity method investments — — ( 2,810 )

Proceeds from property insurance recoveries — — 16,325

Other, net ( 377 ) ( 263 ) 320

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Payment of dividends and dividend equivalents ( 10,630 ) ( 10,675 ) ( 10,646 )

Purchase of treasury stock ( 801 ) ( 715 ) ( 767 )

Loan fees incurred with borrowings — — ( 7,050 )

Repurchase of Common Stock ( 48,773 ) ( 801 ) ( 715 )

Proceeds from long-term debt 125,000 105,000 —

Principal payments on long-term debt ( 89,400 ) ( 47,600 ) ( 3,403 )

Proceeds from credit agreement - revolver 105,000 — 242,300

Payments on credit agreement - revolver ( 42,000 ) — ( 242,300 )

Proceeds from convertible senior notes — — 201,250

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

Net cash provided by (used in) financing activities ( 23,803 ) 45,924 ( 14,764 )

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Stock shares repurchased — — — — — ( 715 ) — ( 715 )

Equity consideration for Merger — — 296,279 — — — — 296,279

Balance, December 31, 2022

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MGP Ingredients, Inc.

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

Distilled spirits include premium bourbon, rye, and other whiskeys and grain neutral spirits (“GNS”), including vodka and gin.

(“MGP,” or the “Company”) is a leading producer of branded and distilled spirits, as well as food ingredient solutions.

Distilled spirits include premium bourbon, rye, and other whiskeys (“brown goods”) and grain neutral spirits (“GNS”), including vodka and gin.

The Company’s distilled spirits are either sold directly or indirectly to manufacturers of other branded spirits.

MGP was also a producer of high quality industrial alcohol for use in both food and non-food applications, which was primarily produced at the Company’s distillery located in Atchison, Kansas, prior to its closure during December 2023.

The Company has a portfolio of its own high quality branded spirits which are produced through the distilleries and bottling facilities and sold to distributors.

The Company’s branded spirits products account for a range of price points from value products through ultra premium brands.

The Company has a portfolio of its own high quality branded spirits which are produced through its distilleries and bottling facilities and sold to distributors.

The Company’s branded spirits products account for a range of price points from value products through premium plus brands.

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

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

On June 1, 2023, the Company acquired Penelope Bourbon LLC (“Penelope”), which, prior to the Company’s acquisition, was a family and founder-owned and operated American whiskey company with a diverse portfolio of high-quality whiskeys in the premium plus price tiers.

See Note 4, Business Combination, for further details.

The ingredient products are sold directly, or through distributors, to manufacturers and processors of finished packaged goods or to bakeries.

The Company reports three operating segments:

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The financial reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”).

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.

The application of certain of these policies places demands on management’s judgment, with financial reporting results relying on estimation about the effects of matters that are inherently uncertain.

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Inventories are stated at the 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.

Properties, Depreciation, and Amortization.

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This is a faithful depiction of the satisfaction of the performance obligation because, at that point control passes to the customer, the customer has legal title and the risk and rewards of ownership have transferred, and the customer has a present obligation to pay.

The Distilling Solutions segment routinely enters into bill and hold arrangements, whereby the Company produces and sells aged and unaged distillate to customers, and the product is barreled at the customer’s request and warehoused at a Company location for an extended period of time in accordance with directions received from the Company’s customers.

The Distilling Solutions segment routinely enters into bill and hold arrangements, whereby the Company produces and sells aged and unaged distillate to customers, and the product is barreled at the customer’s request and warehoused by the Company for an extended period of time in accordance with directions received from the Company’s customers.

Even though the aged and unaged distillate remains in the Company’s possession, a sale is recognized at the point in time when the customer obtains control of the product.

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An impairment loss is recognized when the carrying value exceeds the fair value of the asset group.

For the year ended December

31, 2023, the Company recognized impairment of long-lived assets and other of $ 19,391 .

See Note 6, Closure of the Atchison Distillery, for more information.

Recognition of Insurance Recoveries.

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

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

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

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

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

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

At December 31, 2021, the Company received a legally binding commitment from its insurance carrier for final settlement of $ 43,688 , $ 27,363 related to business interruption and $ 16,325 for the damaged dryer.

The Company recorded a settlement related to business interruption from its insurance carrier of $ 23,583 for the year ended December 31, 2021.

The business interruption portion of the settlement was recorded as a reduction of cost of sales on the Consolidated Statements of Income and the insurance recoveries for the replacement of the damaged dryer was recorded as insurance recoveries on the Consolidated Statements of Income.

The Company finalized the construction of the replacement drying system and placed this dryer into service during 2021.

Income Taxes.

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Adjustments resulting from the translation process are included as a component of accumulated other comprehensive income.

The Company maintains a U.S.

bank account denominated in British pounds sterling and it is adjusted for the market exchange rate at the reporting period-end.

Any impacts of the adjustment for the exchange rate applied to the financial asset is reported in other expense, net on the Consolidated Statements of Income.

Business Combinations.

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

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

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

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During the measurement period, which can be up to one year after the acquisition date, the Company can make adjustments to the fair value of the assets acquired and liabilities assumed, with the offset being an adjustment to goodwill.

Goodwill and Other Intangible Assets.

The Company records goodwill and other indefinite-lived intangible assets in connection with various acquisitions of businesses and allocates the goodwill and other indefinite-lived intangible assets to its respective reporting units.

Goodwill and Indefinite-Lived Intangible Assets.

The Company records goodwill and indefinite-lived intangible assets in connection with various acquisitions of businesses and allocates the goodwill and other indefinite-lived intangible assets to its respective reporting units.

All goodwill and indefinite-lived intangible assets included in the Consolidated Balance Sheet are related to the Branded Spirits reporting unit.

The Company evaluates goodwill for impairment at least annually, in the fourth quarter, or on an interim basis if events and circumstances occur that would indicate it is more likely than not that the fair value of a reporting unit is less than the carrying value.

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

As of December 31, 2023, the Company determined that goodwill and indefinite-lived intangible assets were not impaired.

See Note 5, Goodwill and other Intangible Assets for more information.

Fair Value of Financial Instruments.

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

The fair value calculation of contingent consideration associated with the acquisition of Penelope uses unobservable inputs, such as estimated net sales over the term of the earn-out period, discount rates, and volatility rates.

The fair value calculation of contingent consideration associated with the acquisition of Penelope Bourbon LLC (“Penelope”) uses unobservable inputs, such as estimated net sales over the term of the earn-out period, discount rates, and volatility rates.

The contingent consideration is measured using the Monte Carlo simulation approach.

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At December 31, 2024 and 2023, the investment in LMX was $ 7,024 and $ 5,197 , respectively, which is recorded in investment in joint ventures on the Consolidated Balance Sheets.

During the years ended December 31, 2023 and 2022, the Company recorded a $ 337 and $ 2,220 loss from equity method investments, respectively, which is recorded in other income (expense), net on the Consolidated Statements of Income.

During the years ended December 31, 2024 and 2023, the Company recorded a gain of $ 1,827 and a loss of $ 337 from equity method investments, respectively, which is recorded in other income (expense), net on the Consolidated Statements of Income.

Recently Adopted Accounting Standard Updates.

The Company did not adopt any new Accounting Standard Updates (“ASU”) during the year ended December 31, 2023.

ASU 2023-07, Improvements to Reportable Segment Disclosures , which requires companies to disclose significant segment expenses provided to the chief operating decision maker (“CODM”) and a description of other segment items.

Additionally, all existing annual disclosures must be provided on an interim basis.

This ASU is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

This ASU is required to be applied retrospectively to all prior periods presented in the consolidated financial statements.

The Company adopted ASU 2023-07 in 2024 and applied the amendment retrospectively to all periods presented in the Company’s consolidated financial statements.

See Note 14, Operating Segments, for more information.

Recently Issued Accounting Pronouncements.

ASU 2023-07, Improvements to Reportable Segment Disclosures , which requires improved disclosures related to significant segment expenses.

This ASU requires companies to disclose significant segment expenses provided to the chief operating decision maker (“CODM”), a description of other segment items and all existing annual disclosures must be provided on an interim basis.

This ASU is effective for annual periods beginning after December 15, 2023.

Early adoption is permitted and must be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact to the Company’s financial statements.

ASU 2023-09, Improvements to Income Tax Disclosures, requires improved disclosures related to the rate reconciliation and income taxes paid.

This ASU requires companies to reconcile the income tax expense attributable to continuing operations to the statutory federal income tax rate applied to pre-tax income from continuing operations.

Additionally, this ASU requires

companies to disclose the total amount of income taxes paid during the period.

This ASU requires companies to reconcile the income tax expense attributable to continuing operations to the U.S.

statutory federal income tax rate applied to pre-tax income from continuing operations.

Additionally, this ASU requires companies to disclose the total amount of income taxes paid during the period.

This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The guidance is required to be applied on a prospective basis with the option to apply retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact to the Company’s financial statements.

The guidance is required to be applied on a prospective basis with the option to apply retrospectively to all prior periods presented in the consolidated financial statements.

The Company is currently evaluating the impact to the Company’s consolidated financial statements.

ASU 2024-03, Disaggregation of Income Statement Expenses, requires disaggregated disclosures in the notes to the consolidated financial statements of certain categories of expenses that are included in expense line items on the Consolidated Statement of Income.

This ASU is effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

The guidance is required to be applied on a prospective basis with the option to apply retrospectively to all prior periods presented in the consolidated financial statements.

The Company is currently evaluating the impact to the Company’s consolidated financial statements.

ASU 2024-04, Induced Conversions of Convertible Debt Instruments, clarifies the requirement for determining whether certain settlements of convertible debt instruments should be accounted for as induced conversions or extinguishments.

This ASU is effective for annual periods beginning after December 15, 2025.

Early adoption is permitted and can be applied either on a prospective basis or retrospective basis.

The Company is currently evaluating the impact of this ASU to the Company’s consolidated financial statements, however the Company does not anticipate this guidance having a material impact to the consolidated financial statements.

The other recent accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) are not expected to have a significant impact on the Company’s consolidated financial statements and related disclosures.

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Brown goods $ 265,873 $ 289,191 $ 229,523

White Goods 58,645 74,510 75,818

Premium beverage alcohol 347,836 304,033 237,892

Industrial alcohol 38,010 46,812 62,628

Food grade alcohol 385,846 350,845 300,520

Fuel grade alcohol 7,798 13,681 14,916

Distillers feed and related co-products 28,578 40,354 19,545

Warehouse services 33,430 28,632 23,598

White goods and other co-products 32,901 133,031 175,357

Total Distilling Solutions 332,204 450,854 428,478

Branded Spirits

Ultra premium 63,748 48,245 27,722

Super premium 13,424 12,274 8,937

Premium 28,293 24,211 17,626

Premium plus 110,991 105,465 84,730

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On May 8, 2023, the Company entered into a definitive agreement to acquire 100 percent of the equity of Penelope, and subsequently completed the acquisition on June 1, 2023 (the “Acquisition”).

Penelope, prior to the Acquisition, was a family and founder-owned and operated American whiskey company with a diverse portfolio of high-quality whiskeys in the premium plus price tiers.

Penelope, prior to the Acquisition, was a family and founder-owned and operated American whiskey company with a diverse portfolio of high-quality whiskeys in the premium plus price tier.

As a result of the Acquisition, the Company enhanced its presence in the growing American whiskey category and expanded its portfolio of premium plus price tier brands.

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

During the year ended December 31, 2023, the

Company finalized the net working capital adjustments, which decreased the cash consideration from $ 105,000 at closing to $ 104,638 at December 31, 2023.

During the year ended December 31, 2023, the Company finalized the net working capital adjustments, which decreased the cash consideration from $ 105,000 at closing to $ 104,638 at December 31, 2023.

The cash portion of the consideration and transaction-related expenses were paid using both cash on hand and borrowings under the Company’s existing credit agreement.

See Note 7, Corporate Borrowings, for further details.

For tax purposes, the Acquisition was structured as an asset purchase which created additional tax basis in the assets acquired as a result of valuing the assets at fair market value and the purchase price will be accounted for in accordance with U.S.

federal tax law.

Indefinite-lived intangible assets and goodwill is expected to be deductible for U.S.

Indefinite-lived intangible assets and goodwill are deductible for U.S.

income tax purposes.

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The operating results and pro forma results are not disclosed due to the immaterial impact to the Company’s Consolidated Statements of Income.

During the year ended December 31, 2023, the Company incurred $ 2,060 of costs related to the Acquisition, which are included in selling, general, and administrative expenses on the Consolidated Statements of Income.

During the years ended December 31, 2024 and 2023, the Company incurred $ 116 and $ 2,060 , respectively, of costs related to the Acquisition, which are included in selling, general, and administrative expenses on the Consolidated Statements of Income.

Contingent Consideration.

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The changes in fair value of the obligation resulted from changes in the key assumptions between measurement dates, such as projected net sales, discount rates, and volatility rates.

During the year ended December 31, 2023, there was a $ 7,100 adjustment to the fair value measurement of the contingent consideration obligation, which was included in the change in fair value of contingent consideration on the Consolidated Statements of Income.

During the years ended December 31, 2024 and 2023, there was a $ 16,100 and $ 7,100 adjustment, respectively, to the fair value measurement of the contingent consideration obligation, which was included in the change in fair value of contingent consideration on the Consolidated Statements of Income.

The amount payable is based upon achievement of certain net sales targets between the Acquisition date and December 31, 2025.

The possible payments range from zero to a maximum payout of $ 110,800 .

Merger with Luxco

Description of the transaction .

On January 22, 2021, the Company entered into a definitive agreement to acquire Luxco, Inc.

(“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.

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

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

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

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

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

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.

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.

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

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

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

Operating Results .

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

During the year ended December 31, 2021, the Company recorded $ 177,607 and $ 17,027 , of sales and income before income taxes, respectively, attributable to Luxco on the Consolidated Statements of Income.

During the year ended December 31, 2021, the Company incurred $ 8,927 of transaction related costs, which are included in selling, general and administrative expenses on the Consolidated Statements of Income.

Pro Forma Information .

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

Pro Forma Financial Information

Year Ended December 31,

Sales $ 671,090

Net income 100,597

Basic earnings per common share 4.84

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 $ 8,927 for the year ended December 31, 2021 were excluded.

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

A non-recurring expense of $ 2,529 for the year ended December 31, 2021 related to the fair value adjustment of finished goods inventory estimated to have been sold was removed and included in the results for the year ended December 31, 2020.

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

The summary pro forma financial information is for informational purposes only, is based on estimates and assumptions, and does not purport to represent what the Company’s consolidated results of operations actually would have been if the Merger had occurred at an earlier date, and such data does not purport to project the Company’s results of operations for any future period.

The basic shares outstanding used to calculate the pro forma net income per share amounts presented above have been adjusted to assume shares issued at the closing of the Merger were outstanding since January 1, 2020.

GOODWILL AND OTHER INTANGIBLE ASSETS

Definite-Lived Intangible Assets.

The Company acquired definite-lived intangible asset in connection with various acquisitions of businesses.

The Company acquired definite-lived intangible assets in connection with various acquisitions of businesses prior to 2024.

The distributor relationships have a carrying value of $ 55,461 , net of accumulated amortization of $ 9,639 .

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The amortization expense for the years ended December 31, 2024 and 2023 was $ 3,255 and $ 2,761 , respectively.

The weighted average amortization period at December 31, 2023 for definite-lived intangible assets is 18.1 years

The weighted average remaining amortization period at December 31, 2024 for definite-lived intangible assets is 17.1 years.

As of December 31, 2024, the expected future amortization expense related to definite-lived intangibles assets are as follows:

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Total $ 55,461

Goodwill and Indefinite-Lived Intangible Assets.

The Company records goodwill and indefinite-lived intangible assets in connection with various acquisitions of businesses and allocates the goodwill and indefinite-lived intangible assets to its respective reporting units.

The Company records goodwill in connection with various acquisitions of businesses and allocates the goodwill to its respective reporting units.

The Company tests goodwill for impairment at least annually, in the fourth quarter or on an interim basis if events and circumstances occur that would indicate it is more likely than not that the fair value of a reporting unit is less than the carrying value.

To the extent that the carrying amount exceeds fair value, an impairment of goodwill is recognized and allocated to the reporting units.

During the fourth quarter, the Company experienced a decrease in stock price and market capitalization as well as experienced the effects of the softening alcohol industry which contributed to declines in current year consolidated results and forecasted outlook.

Based on these factors, the Company performed a quantitative assessment of goodwill.

The Company engaged a third party valuation specialist to assist in comparing the fair value of the Branded Spirits reporting unit to the respective carrying value.

The estimate of fair value of the Company’s reporting unit was calculated using equal weighting of the income approach that utilized the discounted cash flow method and the market approach that utilized the guideline public company method.

Estimates in the determination of fair value of the reporting unit through the income approach were based on (i) discount rates based on the reporting unit’s weighed average cost of capital, (ii) future expected cash flows including revenue and operating margin projections, and (iii) long-term growth rates based on inflation forecasts, industry growth, and long-term economic growth potential.

The market approach compares enterprise values and historical and projected results of public companies that reflect economic conditions and risks that are similar to the reporting unit to calculate an estimated enterprise value.

These assumptions are based on historical trends as well as the projections and assumptions used in the Company’s budget and long-range plans.

These assumptions reflect the Company’s estimates of future economic and competitive conditions which can be affected by several factors such as inflation, business valuations in the market, the economy, and market competition.

Any changes in these assumptions may affect the Company’s fair value estimate and the results of an impairment test.

Based on the results of the Company’s impairment analysis, the Company recorded an impairment charge of $ 73,755 to adjust the carrying amount of the Branded Spirits reporting unit to fair value.

This goodwill impairment is included as a component of operating income in the Consolidated Statement of Income for the year ended December 31, 2024 and as a reduction of goodwill in the Consolidated Balance sheet as of December 31, 2024.

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

Distilling Solutions Branded Spirits Ingredient Solutions Total

Balance at December 31, 2022

Balance at December 31, 2022 (a)

$ — $ 226,294 $ — $ 226,294

Acquisitions — 95,250 — 95,250

Balance at December 31, 2023

$ — $ 321,544 $ — $ 321,544

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

Distilling Solutions Branded Spirits Ingredient Solutions Total

Balance at December 31, 2022

Balance at December 31, 2023 (a)

— 321,544 — 321,544

Acquisitions — 34,000 — 34,000

Impairment — ( 73,755 ) — ( 73,755 )

Balance at December 31, 2024

$ — $ 247,789 $ — $ 247,789

(a) There was no accumulated impairment losses recorded at December 31, 2023 and 2022.

Indefinite-Lived Intangible Assets.

The Company records indefinite-lived intangible assets in connection with various acquisitions of businesses and allocates the indefinite-lived intangible assets to its respective reporting units.

During the fourth quarter 2024, in connection with the assessment of the same events and circumstances impacting the Branded Spirit reporting unit, the Company performed a quantitative impairment test of its indefinite-lived assets.

The Company values its indefinite-lived intangible assets under the income approach using a relief-from-royalty method, which assumes the value of the asset is the sum of the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the asset and instead licensed it from another company.

When estimating the fair value, the Company made certain assumptions for its future revenue projections, market royalty rates, and discount rates.

These assumptions reflect the Company’s estimates of future economic and competitive conditions which consider many factors including macroeconomic conditions, industry growth rates, and competition.

These factors are subject to change as a result of changing market conditions.

The most sensitive assumption used in the analysis was a 10 percent discount rate.

The results of the assessment that the estimated fair values for the indefinite-lived intangible assets exceed its carrying value and no impairment loss was recognized for indefinite-lived intangible assets.

The carrying amount of trade name indefinite-lived intangible assets, which relates to the Branded Spirit segment, was $ 212,990 at both December 31, 2024 and 2023.

As of December 31, 2024, the fair value of the Company’s indefinite-lived trade names exceeded the respective carrying values by a range of 10 percent to 20 percent.

While the indefinite-lived trade names were not determined to be impaired, if these brands do not perform as projected or if market factors utilized in the impairment analysis deteriorate, including unfavorable changes in the weighted average cost of capital, these changes could materially affect the expected cash flows, and such impacts could potentially result in a material non-cash impairment charge.

CLOSURE OF THE ATCHISON FACILITY

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The impaired assets were recorded within the Distilling Solution segment.

Additionally, the Company recorded $ 2,279 of expenses related to severance costs, inventory write offs, contract termination fees, consulting fees, and other miscellaneous expenses, which were recorded in impairment of long-lived assets and other on the Consolidated Statement of Income for the year ended December 31, 2023.

Additionally, for the years ended December 31, 2024 and 2023, the Company recorded $ 137 and $ 2,279 , respectively, of expenses related to severance costs, inventory write offs, contract termination fees, consulting fees, and other miscellaneous expenses, which were recorded in impairment of long-lived assets and other on the Consolidated Statement of Income.

CORPORATE BORROWINGS

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Credit Agreement - Revolver, 5.52 % (variable rate) due 2026

$ 105,000 $ 63,000

Convertible Note, 1.88 % (fixed rate) due 2041

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

12,000 15,200

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

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The unamortized loan fees are being amortized over the life of the Credit Agreement.

Part of the cash portion of the consideration paid to acquire Penelope and transaction-related expenses were financed with $ 105,000 borrowings under the Credit Agreement.

Part of the cash portion of the consideration paid to acquire Penelope and transaction-related expenses were financed with $ 105,000 borrowings under the Credit Agreement during 2023.

As of December 31, 2024, the Company had $ 105,000 outstanding borrowings under the Credit Agreement, leaving $ 295,000 available.

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The Company did not capitalize any new loan fees related to the Note Purchase Agreement during 2024.

The unamortized balance of total loan fees related to the Note Purchase Agreement was $ 71 at December 31, 2023 and is being amortized over the life of the Note Purchase Agreement.

The unamortized

balance of total loan fees related to the Note Purchase Agreement was $ 52 at December 31, 2024 and is being amortized over the life of the Note Purchase Agreement.

The Note Purchase Agreement is secured by substantially all assets, excluding real property.

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• During any calendar quarter commencing after the quarter ending March 31, 2022, if the closing sale price of Common Stock for at least 20 trading days in the period of 30 consecutive trading days is more than 130 % of the conversion price;

• during the 5 consecutive business days following any 10 consecutive trading day period in which the trading price per $1 principal amount of the notes for each trading day was less than 98 % of the product of the closing sale price of

Common Stock on such trading day and the conversion rate on such trading day;

• during the five consecutive business days following any ten consecutive trading day period in which the trading price per $1 principal amount of the notes for each trading day was less than 98 % of the product of the closing sale price of Common Stock on such trading day and the conversion rate on such trading day;

• upon the occurrence of specified corporate events, as defined in the Indenture;

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Change in valuation allowance ( 965 ) 1,135 416

Nondeductible goodwill impairment

Share-based compensation ( 362 ) ( 288 ) ( 34 )

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Section 174 timing difference 1,554 2,032

Contingent Consideration

Other 2,462 2,462

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Balance at December 31, 2022

Increase 1,135

Balance at December 31, 2023

Decrease ( 965 )

Balance at December 31, 2024

As of December 31, 2024, the Company’s total valuation allowance of $ 2,243 related to net operating loss in U.S.

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federal tax purpose, all tax years after 2020 remain open to examination.

Amounts paid for income tax in foreign jurisdictions are not material to the financial statements.

Amounts paid for income tax in foreign jurisdictions are not material to the consolidated financial statements.

In addition, the Company is subject to examination for its state tax returns for years 2020, and forward, with the exception of certain net operating losses and credit carryforwards originating in years prior to 2020 that remain subject to adjustment.

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All directors are elected annually for a one year term.

Any vacancies on the Board may only be filled by the stockholders and not by the Board.

Stockholders who own 10 percent or more of the outstanding Common Stock or Preferred Stock have the right to call a special meeting of stockholders.

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(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.

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

There was no dilutive impact for the year ended December 31, 2024.

Share Issuance.

On April 1, 2021, as part of the consideration for the Merger with Luxco, the Company issued 5,007,833 shares of Common Stock.

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

Share Repurchase.

On February 29, 2024, the Company announced that its Board of Directors approved a $ 100,000 share repurchase program.

Under the share repurchase program, the Company can repurchase stock from time to time for cash in open market purchases, privately negotiated transactions, or by other means, in accordance with applicable securities laws and other legal requirements.

The repurchase program has no expiration date and may be modified, suspended, or discontinued at any time by the Company without prior notice.

During the year ended December 31, 2024, the Company repurchased 886,936 shares of Common Stock for approximately $ 46,588 .

As of December 31, 2024, there were approximately $ 53,412 remaining under the share repurchase program.

Shares Outstanding Activity.

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Issuance of Common Stock — 91,051

Repurchase of Common Stock — ( 8,436 )

Repurchase of Common Stock (a)

— ( 912,457 )

Balance at December 31, 2024

437 21,194,707

(a) 886,936 shares were repurchased during the year end December 31, 2024, pursuant to the Company’s share repurchase program.

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

Dividends and Dividend Equivalents.

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February 22 March 15 March 29 $ 0.12 $ 0.12 $ 2,641 $ 31 $ 2,672

May 4 May 19 June 2 0.12 0.12 2,641 27 2,668

August 3 August 18 September 1 0.12 0.12 2,642 27 2,669

November 2 November 17 December 1 0.12 0.12 2,642 27 2,669

May 2 May 17 May 31 0.12 0.12 2,642 30 2,672

August 1 August 16 August 30 0.12 0.12 2,639 30 2,669

October 31 November 15 November 29 0.12 0.12 2,588 29 2,617

$ 0.48 $ 0.48 $ 10,510 $ 120 $ 10,630

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(b) Includes estimated forfeitures.

The Company has operating leases for railcars, computer equipment, office spaces, a bottling facility, a distribution facility, fulfillment center, retail location, and certain equipment.

The Company has operating leases for railcars, computer equipment, office spaces, warehouse facilities, a distribution facility, fulfillment center, and certain equipment.

The Company has no finance leases.

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Lease components are accounted for separately from non-lease components, such as common-area maintenance, based on the relative, observable stand-alone prices of the components.

The Company’s leases have remaining lease terms of less than one year to ten years , some of which may include options to extend the lease.

The Company’s leases have remaining lease terms of less than one year to nine years , some of which may include options to extend the lease.

Options to renew the Company’s leases were not considered when assessing the value of the right-of-use assets because the Company is not reasonably certain that it will assert the options to renew the leases.

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

On December 16, 2024, a putative securities class action, captioned Operating Engineers Construction Industry Miscellaneous Pension Fund v.

MGP Ingredients, Inc.

et al., was filed in the United States District Court for the Southern District of New York against the Company, two of its former Chief Executive Officers and its current Interim Chief Executive Officer and Chief Financial Officer (the “Operating Engineers Action”).

The Operating Engineers Action was brought on behalf of a putative class who acquired publicly traded MGP common stock between May 4, 2023 and October 30, 2024.

On February 13, 2025, a second putative securities class action, captioned Bronstein v.

MGP Ingredients, Inc.

et al., was filed in the United States District Court for the Southern District of New York against the same defendants (the “Bronstein Action”).

The Bronstein Action was brought on behalf of a putative class who acquired publicly traded MGP securities between May 4, 2023 and October 30, 2024.

Both actions assert securities fraud claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, in connection with statements made in the Company’s quarterly earnings releases and on earnings calls during the alleged class period.

Motions have been filed to consolidate the actions together with Lead Plaintiff applications.

The Company believes there are substantial defenses to the claims asserted and intends to defend the lawsuits vigorously.

On January 23, 2025, a putative derivative lawsuit captioned Sebald v.

Colo, et al., Case No.

2:25-cv-02034, was filed in the United States District Court for the District of Kansas against two of the Company’s former Chief Executive Officers, its current Interim Chief Executive Officer and Chief Financial Officer, and the members of its Board of Directors.

The Company is a “Nominal Defendant” in the lawsuit, which reflects the fact that the lawsuit is maintained by the named plaintiff on behalf of the Company and that the plaintiff seeks damages on the Company’s behalf.

The complaint alleges, among other things, that

the defendants breached their fiduciary duties and violated federal securities laws by causing the Company to make false and/or misleading statements and/or omissions in public filings during the class period alleged in the securities actions.

It also alleges breaches of fiduciary duties by failing to maintain internal controls, seeking shareholder approval of an equity incentive plan, and causing the Company to repurchase its own stock at artificially inflated prices.

The complaint brings additional claims for unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets and seeks indemnity and contribution from the named current and former officers.

The Company believes there are substantial defenses to the claims asserted and intends to defend the lawsuit vigorously.

EMPLOYEE BENEFIT PLANS

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As of December 31, 2024, the Company was authorized to issue 40,000,000 shares of Common Stock and had a treasury share balance of 1,930,459 at December 31, 2024.

The Company currently has two active share-based compensation plans:

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

The plans were approved by stockholders at the Company’s annual meeting in May 2014.

The Company’s share-based compensation plans provide for the awarding of stock options, stock appreciation rights, and shares of restricted stock and RSUs for senior executives and salaried employees, as well as for outside directors.

Compensation expense related to RSU awards is based on the market price of the stock on the date the Board of Directors

communicates the approved award and is amortized over the vesting period of the restricted stock award.

The Company had two active share-based compensation plans, the 2014 Equity Incentive Plan as amended (the “2014 Plan”) and the 2014 Non-Employee Director Equity Incentive Plan (the “Directors’ Plan”), both of which expired in April 2024.

At the Company’s annual meeting in May 2024, the stockholders of the Company approved a new equity-based compensation plan, the 2024 Equity Incentive Plan (the “2024 Plan”), which initially authorized 1,319,320 shares for issuance, subject to the adjustment and add-back provision of the 2024 Plan.

Similar to prior plans, the 2024 Plan provides for the awarding of stock options, stock appreciation rights, shares of restricted stock, RSUs and other stock-based awards for executive officers and other employees, as well as for non-employee directors and certain consultants and advisors.

The 2024 Plan provides that vesting occurs pursuant to the time period specified in the particular award agreement approved for that issuance of RSUs.

As of December 31, 2024, 1,323,614 shares remain available for issuance under the 2024 Plan.

Compensation expense related to RSU awards is based on the market price of the stock on the date the Board of Directors communicates the approved award and is amortized over the vesting period of the restricted stock award.

The Consolidated Statements of Income for 2024, 2023, and 2022 reflect total share-based compensation costs and director fees for awarded grants of $ 4,016 , $ 5,425 , and $ 3,487 , respectively, related to these plans.

For long-term incentive awards to be granted in the form of RSUs in 2024 based on 2023 results, the Human Resources and Compensation Committee (“HRCC”) determined that the grants would have performance conditions that would be based on the same performance metrics as the Short-Term Incentive Plan (the “STI Plan”).

For long-term incentive awards to be granted in the form of RSUs in 2025 based on 2024 results, the Human Resources and Compensation Committee (“HRCC”) of the Company’s Board of Directors determined that the grants would have performance conditions that would be based on the same performance metrics as the Short-Term Incentive Plan (the “STI Plan”).

The performance metrics are adjusted operating income, adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”), and adjusted EPS.

Because management determined at the beginning of 2023 that the performance metrics would more likely than not be met, amortization of the estimated dollar pool of RSUs to be awarded based on 2023 results was started in the first quarter over an estimated 48 month period, including 12 months to the grant date and an additional 36 months to the vesting date.

The Consolidated Statements of Income for 2023, 2022, and 2021 reflects share-based compensation costs for grants to be awarded of $ 5,187 , $ 2,018 , and $ 960 , respectively.

The 2014 Plan, with 1,500,000 shares registered for future grants, provides that vesting occurs pursuant to the time period specified in the particular award agreement approved for that issuance of RSUs, which is to be not less than three years unless vesting is accelerated due to the occurrence of certain events.

As of December 31, 2023, 658,081 RSUs had been granted from the 1,500,000 shares approved for under the 2014 Plan.

Directors’ Plan.

The Director’s Plan, with 300,000 shares registered for future grants, provides that vesting occurs pursuant to the time period specified in the particular award agreement approved for that issuance of equity.

As of December 31, 2023, 139,579 shares were granted from the 300,000 shares approved for grants under the Directors’ Plan and all 139,579 shares were vested.

Because the 2024 performance metrics were not met, there was no amortization of the estimated dollar pool of RSUs to be awarded based on 2024 results, as such there was no share-based compensation costs for grants to be awarded on the Consolidated Statement of Income for the year ended December 31, 2024.

The Consolidated Statements of Income for 2023 and 2022 reflect share-based compensation costs for grants to be awarded of $ 5,187 , and $ 2,018 , respectively.

The following table presents the summary of unvested RSUs under the Company’s share-based compensation plans for 2024, 2023, and 2022:

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As of December 31, 2024, there was $ 3,085 of total estimated unrecognized compensation costs (net of estimated forfeitures) related to granted RSU awards.

These costs are expected to be recognized over a weighted average period of approximately 1.0 year.

These costs are expected to be recognized over a weighted average period of approximately 1.2 years.

Upon their vesting, the Company purchased restricted stock and RSUs from employees to cover associated withholding taxes.

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Amounts expensed under the STI Plan totaled $ 13,443 , and $ 13,370 for 2023, and 2022, respectively.

There were no amounts expensed under the STI Plan for 2024.

Deferred Compensation Plan.

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Significant customers.

For 2023, the Company had sales to one customer that accounted for approximately 11 percent of consolidated sales.

For 2022 and 2021, the Company had no sales to an individual customer that accounted for more than 10 percent of consolidated sales.

For 2024, one customer of the Branded Spirits segment accounted for approximately 13 percent of consolidated sales and one customer of the Ingredient Solutions segment accounted for approximately 12 percent of consolidated sales.

For 2023, the Company had sales to one customer that accounted for approximately 11 percent of consolidated sales, respectively.

For 2022, the Company had no sales to an individual customer that accounted for more than 10 percent of consolidated sales.

During the years 2024, 2023, and 2022, the Company’s ten largest customers accounted for approximately 53 percent, 44 percent, and 38 percent of consolidated sales, respectively.

Significant suppliers.

For 2023, the Company had purchases from two grain suppliers that approximated 20 percent of consolidated purchases.

For 2024, the Company had purchases from two suppliers that approximated 25 percent of consolidated purchases.

In addition, the Company’s ten largest suppliers, accounted for approximately 57 percent of consolidated purchases.

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See Note 1, Nature of Operations and Summary of Significant Accounting Policies.

The Company leased bottling and warehousing facilities in St.

Louis, Missouri from Kemper-Themis, L.L.C.

(“Kemper”), which was owned by Donn Lux, a member of the Company’s Board of Directors.

On October 31, 2023, the Company’s Audit Committee and Board of Directors approved the purchase of the Kemper bottling and warehousing facilities from Kemper for $ 9,000 .

The purchase and sales agreement was entered into by both parties subsequent to Board approval and the transaction closed in February 2024.

The transaction was entered into at fair value based on two independent appraisers’ valuation;

therefore, the transaction is deemed to have been conducted at an arm’s length.

OPERATING SEGMENTS

1 unchanged sentence

Distilling Solutions, Branded Spirits, and Ingredient Solutions.

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

The Company’s operating segments are based on the financial information the chief operating decision maker uses to allocate resources and evaluate performance of the business.

During the year ended December 31, 2024, the chief operating decision maker was the Company’s Chief Executive Officer.

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

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

The Branded Spirits segment consists of a portfolio of high quality branded spirits which are produced through the distilleries and bottling facilities.

The Ingredient Solutions segment consists of specialty starches and proteins and commodity starches and proteins.

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

Non-direct SG&A, interest expense, and other general miscellaneous expenses are excluded from segment operations and are classified as Corporate.

The Ingredient Solutions segment consists of specialty starches and proteins as well as commodity starches and proteins.

Intersegment sales and transfers are recorded at cost and are treated as a transfer of inventory.

All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance.

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

The CODM used the operating income to evaluate the segment profitability and to assess the actual results compared to the budget.

Non-direct selling, general, and administrative expenses (“SG&A”), non-direct advertising and promotion expense, interest expense, and other general miscellaneous expenses are classified as Corporate.

Receivables, inventories, and equipment have been identified with the segments to which they relate.

All other assets are considered as Corporate.

The following table presents summarized financial information for each segment:

The following tables present summarized financial information for each segment:

Year Ended December 31, 2024

Distilling Solutions Branded Spirits Ingredient Solutions Corporate Total

$ 332,204 $ 240,816 $ 130,605 $ — $ 703,625

Sales to customers:

Distilling Solutions $ 450,854 $ 428,478 $ 352,504

Branded Spirits 253,933 237,939 183,566

Ingredient Solutions 131,736 115,941 90,650

Cost of Goods Sold 190,277 122,620 104,411 — 417,308

Gross Profit 141,927 118,196 26,194 — 286,317

Advertising and promotion expense 1,352 36,909 1,714 533 40,508

SG&A expense 2,970 39,711 3,949 34,761 81,391

Impairment of long-lived assets and other 137 — — — 137

Goodwill impairment

— 73,755 — — 73,755

Change in fair value of contingent consideration — 16,100 — — 16,100

Operating income $ 137,468 $ ( 48,279 ) $ 20,531 $ ( 35,294 ) $ 74,426

Depreciation and amortization $ 7,893 $ 8,035 $ 4,711 $ 1,350 $ 21,989

Year Ended December 31, 2023

Distilling Solutions Branded Spirits Ingredient Solutions Corporate Total

$ 450,854 $ 253,933 $ 131,736 $ — $ 836,523

Cost of Goods Sold 305,890 141,152 84,769 — 531,811

Gross Profit 144,964 112,781 46,967 — 304,712

Distilling Solutions $ 144,964 $ 126,282 $ 114,106

Branded Spirits 112,781 95,521 62,644

Ingredient Solutions 46,967 31,503 22,215

Total $ 304,712 $ 253,306 $ 198,965

Advertising and promotion expense 1,127 34,463 2,400 223 38,213

SG&A expense 2,301 37,389 3,838 47,867 91,395

Impairment of long-lived assets and other 19,391 — — — 19,391

Change in fair value of contingent consideration — 7,100 — — 7,100

Operating income $ 122,145 $ 33,829 $ 40,729 $ ( 48,090 ) $ 148,613

Depreciation and amortization $ 11,833 $ 6,952 $ 2,574 $ 754 $ 22,113

Distilling Solutions $ 11,833 $ 11,641 $ 10,766

Branded Spirits 6,952 5,909 5,138

Ingredient Solutions 2,574 2,473 2,069

Corporate 754 1,432 1,119

Total $ 22,113 $ 21,455 $ 19,092

Income (loss) before income taxes:

Distilling Solutions $ 122,145 $ 121,651 $ 110,317

Branded Spirits 33,829 33,333 20,742

Ingredient Solutions 40,729 27,532 19,194

Corporate ( 54,957 ) ( 42,344 ) ( 29,157 )

Total $ 141,746 $ 140,172 $ 121,096

(a) Sales revenue from foreign sources totaled $ 49,822 , $ 56,719 , and $ 42,593 for the years ended December 31, 2023, 2022, and 2021, respectively, and is largely derived from the United Kingdom, Japan, Canada, Mexico, and Australia.

The balance of total sales revenue is from domestic sources.

Year Ended December 31, 2022

Distilling Solutions Branded Spirits Ingredient Solutions Corporate Total

$ 428,478 $ 237,939 $ 115,941 $ — $ 782,358

Cost of Goods Sold 302,196 142,418 84,438 — 529,052

Gross Profit 126,282 95,521 31,503 — 253,306

Advertising and promotion expense 959 27,341 1,180 234 29,714

SG&A expense 3,672 34,847 2,791 33,317 74,627

Operating income $ 121,651 $ 33,333 $ 27,532 $ ( 33,551 ) $ 148,965

Depreciation and amortization $ 11,641 $ 5,909 $ 2,473 $ 1,432 $ 21,455

(a) Sales from foreign sources totaled $ 36,240 , $ 49,822 , and $ 56,719 for the years ended December 31, 2024, 2023, and 2022, respectively, and is largely derived from the United Kingdom, Japan, Canada, Mexico, and Australia.

The balance of total sales is from domestic sources.

The following table allocates assets to each segment as of:

Identifiable Assets

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SUBSEQUENT EVENTS

Related Party Transaction.

The Company leases bottling and warehousing facilities in St.

Louis, Missouri from Kemper-Themis, L.L.C.

(“Kemper”), which is owned by Donn Lux, a member of the Company’s Board of Directors.

On October 31, 2023, the Company’s Audit Committee and Board of Directors approved the purchase of the Kemper bottling and warehousing facilities from Kemper for $ 9,000 .

The purchase and sales agreement was entered into by both parties subsequent to Board approval and the transaction closed in February 2024.

The transaction was entered into at fair value based on two independent appraisers’ valuation;

therefore, the transaction is deemed to have been conducted at an arm’s length.

Dividend Declaration.

On February 26, 2025, the Company announced a quarterly dividend payable to stockholders of record of the Company’s Common Stock, resulting in dividend equivalents payable to RSU holders, of $ 0.12 per share and per RSU.

The dividend and dividend equivalents are payable on March 29, 2024, to stockholders of record and RSU holders on March 15, 2024.

The dividend and dividend equivalents are payable on March 28, 2025, to stockholders of record and RSU holders as of March 14, 2025.

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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 8. Financial Statements and Supplementary Data