What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-31 compared with 2025-05-01 · 246 added, 81 removed, 170 unchanged (66% of the section changed)

22 unchanged sentences

Consolidated Results

The table below details the consolidated results for the quarters ended March 31, 2025 and 2024:

Quarter Ended March 31,

The table below details the consolidated results for the quarters ended June 30, 2025 and 2024:

Quarter Ended June 30,

2025 2024 2025 v.

7 unchanged sentences

Change in fair value of contingent consideration 8,000 5,400 48

Operating income (loss) (747) 28,917 (103)

Operating income 20,318 43,387 (53)

Operating margin % 14.0 % 22.7 % (8.7) pp

Interest expense, net (1,897) (2,205) (14)

Other income (expense), net 215 (52) 513

Income (loss) before income taxes (2,386) 26,846 (109)

Other income, net 314 943 (67)

Income before income taxes 18,735 42,125 (56)

Income tax expense 4,308 10,108 (57)

Effective tax expense rate % 23.0 % 24.0 % (1.0) pp

Net income (loss) $ (3,057) $ 20,584 (115) %

Net income $ 14,427 $ 32,017 (55) %

Net income margin % 9.9 % 16.8 % (6.9) pp

(a) Percentage points (“pp”).

Sales - Sales for the quarter ended March 31, 2025 were $121,653, a decrease of 29 percent compared to the year-ago quarter, which was the result of decreased sales in each segment.

Sales - Sales for the quarter ended June 30, 2025 were $145,494, a decrease of 24 percent compared to the year-ago quarter, which was the result of decreased sales in the Distilling Solutions and Branded Spirits segments, partially offset by increased sales in the Ingredient Solutions segment.

Within the Distilling Solutions segment, sales were down 46 percent primarily due to decreased sales of brown goods.

Within the Ingredient Solutions segment, sales were down 26 percent, primarily due to decreased sales of specialty wheat starches and proteins.

Within the Branded Spirits segment, sales were down 4 percent due to decreased sales of brands in the value and mid price tiers (see “Segment Results”).

Gross profit - Gross profit for the quarter ended March 31, 2025 was $43,330, a decrease of 31 percent compared to the year-ago quarter.

The decrease was driven by a decrease in gross profit in each segment.

Within the Branded Spirits segment, sales were down 5 percent due to decreased sales of brands in the value and mid price tiers.

Within the Ingredient Solutions segment, sales were up 5 percent, primarily due to increased sales of specialty wheat proteins and commodity wheat proteins (see “Segment Results”).

Gross profit - Gross profit for the quarter ended June 30, 2025 was $58,387, a decrease of 30 percent compared to the year-ago quarter.

The decrease was driven by decreased gross profit in the Distilling Solutions and Branded Spirits segments, partially offset by increased gross profit in the Ingredient Solutions segment.

Within the Distilling Solutions segment, gross profit decreased by $23,661, or 56 percent.

Within the Ingredient Solutions segment, gross profit decreased by $3,728, or 60 percent.

Within the Branded Spirits segment, gross profit decreased $334, or 1 percent (see “Segment Results”).

Advertising and promotion expenses - Advertising and promotion expenses for the quarter ended March 31, 2025 were $8,172, a decrease of 6 percent compared to the year-ago quarter.

SG&A expenses - SG&A expenses for the quarter ended March 31, 2025 were $21,205, a slight increase of 1 percent compared to the year-ago quarter.

Operating income (loss) - Operating income (loss) for the quarter ended March 31, 2025 decreased to a loss of $747 from income of $28,917 for the quarter ended March 31, 2024, primarily as a result of the decrease in gross profit in the Distilling Solutions segment, the change in the fair value of the contingent consideration liability related to the improved performance of the Penelope brand, and the decrease in gross profit in the Ingredient Solutions segment.

Within the Branded Spirits segment, gross profit decreased $1,649, or 5 percent.

Within the Ingredient Solutions segment, gross profit increased by $465, or 7 percent (see “Segment Results”).

Advertising and promotion expenses - Advertising and promotion expenses for the quarter ended June 30, 2025 were $6,913, a decrease of 41 percent compared to the year-ago quarter, primarily driven by lapping elevated spend for certain advertising campaigns during the year-ago quarter, as well as realignment of our advertising and promotion spend to brands we believe have the most attractive growth opportunities.

SG&A expenses - SG&A expenses for the quarter ended June 30, 2025 were $23,156, a slight increase of 2 percent compared to the year-ago quarter, primarily driven by increased incentive compensation accrual as compared to the year-ago quarter, which was partially offset by our cost savings initiatives.

Operating income - Operating income for the quarter ended June 30, 2025 decreased to $20,318 from $43,387 for the quarter ended June 30, 2024, primarily as a result of the decrease in gross profit in the Distilling Solutions segment, the change in the fair value of the contingent consideration liability related to the improved performance of the Penelope brand, and the decrease in gross profit in the Branded Spirits segment.

These decreases were partially offset by the reduction in advertising and promotion expenses.

Operating income, quarter versus quarter Operating Income Change

Operating income for the quarter ended March 31, 2024

Operating income for the quarter ended June 30, 2024

Decrease in gross profit - Distilling Solutions segment (a)

(23,661) (55) %

Decrease in gross profit - Ingredient Solutions segment (a)

(3,728) (13) pp (b)

Decrease in gross profit - Branded Spirits segment (a)

(1,649) (3) pp (b)

Increase in gross profit - Ingredient Solutions segment (a)

Decrease in advertising and promotion expenses

2 unchanged sentences

Change in fair value of contingent consideration (2,600) (6) pp

Operating loss for the quarter ended March 31, 2025

Operating income for the quarter ended June 30, 2025

$ 20,318 (53) %

1 unchanged sentence

(b) Percentage points (“pp”).

Income tax expense - Income tax expense for the quarter ended March 31, 2025 was $671, for an effective tax rate of (28.1) percent.

Income tax expense for the quarter ended March 31, 2024 was $6,262, for an effective tax rate of 23.3 percent.

The decrease in income tax expense, quarter versus quarter, was due primarily to lower income before income taxes, as the Company was in a net loss position for the quarter ended March 31, 2025, primarily due to the change in the fair value of the contingent consideration liability related to the Penelope acquisition.

The tax rate for the quarter ended March 31, 2025 was negative primarily due to the net loss position and the discrete tax impact of the vesting of share based awards granted in the prior years during periods of higher stock prices.

Earnings per common share (“EPS”) - Basic and Diluted EPS was $(0.14) for the quarter ended March 31, 2025, compared to $0.92 for the quarter ended March 31, 2024.

The change in basic and diluted EPS, quarter versus quarter, was primarily due to a decrease in operating income and the change in effective tax rate.

Income tax expense - Income tax expense for the quarter ended June 30, 2025 was $4,308, for an effective tax rate of 23.0 percent.

Income tax expense for the quarter ended June 30, 2024 was $10,108, for an effective tax rate of 24.0 percent.

The decrease in income tax expense, quarter versus quarter, was due primarily to lower income before income taxes and the proportionately larger percentage tax rate impact for tax credits related to capital investments.

Earnings per common share (“EPS”) - Basic and Diluted EPS was $0.67 for the quarter ended June 30, 2025, compared to $1.43 for the quarter ended June 30, 2024.

The change in basic and diluted EPS, quarter versus quarter, was primarily due to a decrease in operating income.

Change in EPS, quarter versus quarter EPS Change

Basic and Diluted EPS for the quarter ended March 31, 2024

Change in operating income (loss) (a)

Basic and Diluted EPS for the quarter ended June 30, 2024

Change in operating income (a)

(0.79) (56) %

1 unchanged sentence

0.01 1 pp (b)

Change in other income (expense), net (a)

Change in other income, net (a)

(0.02) (1) pp

Change in effective tax rate 0.01 1 pp

1 unchanged sentence

Change in weighted average shares outstanding 0.02 1 pp

Basic and Diluted EPS for the quarter ended March 31, 2025

Basic and Diluted EPS for the quarter ended June 30, 2025

$ 0.67 (53) %

1 unchanged sentence

(b) Percentage points (“pp”).

The table below details the consolidated results for the year to date ended June 30, 2025 and 2024:

Year to Date Ended June 30,

2025 2024 2025 v.

Sales $ 267,147 $ 361,368 (26) %

Cost of sales 165,430 215,341 (23)

Gross profit 101,717 146,027 (30)

Gross margin % 38.1 % 40.4 % (2.3) pp (a)

Advertising and promotion expenses 15,085 20,348 (26)

SG&A expenses 44,361 43,738 1

Impairment of long-lived assets and other — 137 N/A

Change in fair value of contingent consideration 22,700 9,500 139

Operating income 19,571 72,304 (73)

Operating margin % 7.3 % 20.0 % (12.7) pp

Interest expense, net (3,751) (4,224) (11)

Other income, net 529 891 (41)

Income before income taxes 16,349 68,971 (76)

Income tax expense 4,979 16,370 (70)

Effective tax expense rate % 30.5 % 23.7 % 6.8 pp

Net income $ 11,370 $ 52,601 (78) %

Net income margin % 4.3 % 14.6 % (10.3) pp

(a) Percentage points (“pp”).

Sales - Sales for the year to date ended June 30, 2025 were $267,147, a decrease of 26 percent compared to the year-ago period, which was the result of decreased sales in each segment.

Within the Distilling Solutions segment, sales were down 46 percent primarily due to decreased sales of brown goods.

Within the Ingredient Solutions segment, sales were down 11 percent, primarily due to decreased sales of specialty wheat starches and proteins.

Sales of Branded Spirits were down 5 percent, primarily due to decreased sales of brands in the value and mid price tiers (see “Segment Results”).

Gross profit - Gross profit for the year to date ended June 30, 2025 was $101,717, a decrease of 30 percent compared to the year-ago period.

The decrease was driven by a decrease in gross profit in each of the segments.

In the Distilling Solutions segment, gross profit decreased by $39,064 or 51 percent.

In the Ingredient Solutions segment, gross profit decreased by $3,263, or 25 percent.

In the Branded Spirits segment, gross profit declined by $1,983, or 4 percent (see “Segment Results”).

Advertising and promotion expenses - Advertising and promotion expenses for the year to date ended June 30, 2025 were $15,085, a decrease of 26 percent compared to the year-ago period, primarily driven by our realignment of our advertising and promotion spend to brands we believe have the most attractive growth opportunities and lapping elevated spend for certain advertising campaigns during the year-ago quarter.

SG&A expenses - SG&A expenses for the year to date ended June 30, 2025 were $44,361, an increase of 1 percent compared to the year-ago period, primarily driven by increased incentive compensation accrual as compared to the year-ago period, which was partially offset by our cost savings initiatives.

Operating income - Operating income for the year to date ended June 30, 2025 decreased to $19,571 from $72,304 for the year to date period ended June 30, 2024, primarily due to the decrease in gross profit in the Distilling Solutions segment, the change in the fair value of the contingent consideration liability related to the improved performance of the Penelope brand, and the decrease in gross profit in the Ingredient Solutions segment.

These decreases were partially offset by the reduction in advertising and promotion expenses.

Operating income, year to date versus year to date Operating Income Change

Operating income for the year to date ended June 30, 2024

Decrease in gross profit - Distilling Solutions segment (a)

(39,064) (54) %

Decrease in gross profit - Ingredient Solutions segment (a)

(3,263) (5) pp(b)

Decrease in gross profit - Branded Spirits segment (a)

(1,983) (3) pp

Decrease in advertising and promotion expenses

Increase in SG&A expenses

Decrease in impairment of long-lived assets and other 137 1 pp

Change in fair value of contingent consideration (13,200) (18) pp

Operating income for the year to date ended June 30, 2025

$ 19,571 (73) %

(a) See “Segment Results.”

(b) Percentage points (“pp”).

Income tax expense - Income tax expense for the year to date ended June 30, 2025 was $4,979, for an effective tax rate of 30.5 percent.

Income tax expense for the year to date ended June 30, 2024, was $16,370, for an effective tax rate of 23.7 percent.

The decrease in income tax expense, year to date versus year to date, was primarily due to the lower income before income taxes.

The increase in the tax rate, year to date versus year to date, was primarily due to the discrete tax impact of the vesting of share based awards granted in the prior years during periods of higher stock prices.

Earnings per common share - Basic and diluted EPS was $0.53 for the year to date ended June 30, 2025, compared to $2.36 for the year to date ended June 30, 2024.

The change in basic and diluted EPS, year to date versus year to date, was primarily due to a decrease in operating income and the change in effective tax rate.

Change in EPS, year to date versus year to date EPS Change

Basic and Diluted EPS for the year to date ended June 30, 2024

Change in operating income (a)

(1.81) (77) %

Change in interest expense, net (a)

Change in other income, net (a)

(0.01) (1) pp

Change in effective tax rate (0.05) (2) pp

Change in weighted average shares outstanding 0.02 1 pp

Basic and Diluted EPS for the year to date ended June 30, 2025

$ 0.53 (78) %

(a) Net of tax based on the effective tax rate for the base year (2024).

(b) Percentage points (“pp”)

SEGMENT RESULTS

Branded Spirits

The following tables show selected financial information for the Branded Spirits segment for the quarters ended March 31, 2025 and 2024.

The following tables show selected financial information for the Branded Spirits segment for the quarters ended June 30, 2025 and 2024.

BRANDED SPIRITS SALES

Quarter Ended March 31, Quarter versus Quarter Sales Change Increase/(Decrease)

Quarter Ended June 30, Quarter versus Quarter Sales Change Increase/(Decrease)

2025 2024 $ Change % Change

8 unchanged sentences

Other Financial Information

Quarter Ended March 31, Quarter versus Quarter Increase / (Decrease)

Quarter Ended June 30, Quarter versus Quarter Increase / (Decrease)

2025 2024 $ Change % Change

7 unchanged sentences

(d) Percentage points (“pp”).

Total sales of the Branded Spirits segment for the quarter ended March 31, 2025 decreased by $1,919, or 4 percent, compared to the prior year quarter primarily due to lower sales volume, partially offset by higher net price/mix (as defined in the table above).

Sales of brands within the value and mid price tiers decreased primarily driven by lower sales volume of certain tequila, liqueur, and cordial brands.

Sales within the premium plus price tier increased driven by increased net price/mix and sales volume reflecting increased focus on the American whiskey and tequila categories.

Gross profit decreased slightly versus prior year quarter by $334, or 1 percent, primarily driven by a decrease in sales volume, partially offset by increased net/price mix.

Gross margin for the quarter ended March 31, 2025 increased to 46.0 percent from 44.9 percent for the prior year quarter, driven primarily by increased sales in the premium plus price tier.

Total sales of the Branded Spirits segment for the quarter ended June 30, 2025 decreased by $3,521, or 5 percent, compared to the prior year quarter, primarily due to lower sales volume and a decrease in net price/mix (as defined in the table above).

Sales of brands within the value and mid price tiers decreased, driven by lower sales volume and net price/mix primarily in certain tequila, liqueur, and cordial brands.

Sales within the premium plus price tier increased 1%, driven by increased sales volume reflecting our increased focus on the American whiskey and tequila categories.

The increase in sales volume within premium plus price tier was partially offset by decreased net price/mix.

Gross profit decreased versus prior year quarter by $1,649, or 5 percent, primarily driven by a decrease in net price/mix and lower sales volume within the value and mid price tiers.

Gross margin for the quarter ended June 30, 2025 increased to 52.8 percent from 52.5 percent for the prior year quarter, driven primarily by increased sales in the premium plus price tier.

The following tables show selected financial information for the Branded Spirits segment for the year to date ended June 30, 2025 and 2024.

BRANDED SPIRITS SALES

Year to Date Ended June 30, Year to Date versus Year to Date Sales Change Increase/(Decrease)

2025 2024 $ Change % Change

Premium plus $ 53,417 $ 51,613 $ 1,804 4 %

Mid 28,520 31,822 (3,302) (10)

Value 16,277 21,664 (5,387) (25)

Other 10,533 9,088 1,445 16

Total Branded Spirits $ 108,747 $ 114,187 $ (5,440) (5) %

Change in Year to Date versus Year to Date Sales Attributed to:

Net Price/Mix (c)

Total Branded Spirits (5)% (5)% —%

Other Financial Information

Year to Date Ended June 30, Year to Date versus Year to Date Increase / (Decrease)

2025 2024 $ Change % Change

Gross profit $ 54,182 $ 56,165 $ (1,983) (4) %

Gross margin % 49.8 % 49.2 % 0.6 pp (d)

(a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.

(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit.

The product is then divided by prior period sales dollars.

(c) Net price/mix change is calculated by taking the difference between current period sales-per-unit and prior period sales-per unit, multiplied by current period sales volume.

The product is then divided by prior period sales dollars.

(d) Percentage points (“pp”).

Total sales of Branded Spirits for the year to date ended June 30, 2025 decreased by $5,440, or 5 percent, compared to the year-ago period, due to lower sales volume and net price/mix within the value and mid price tiers, primarily in certain tequila, liqueur, and cordial brands.

This decrease was partially offset by increased sales volume within the premium plus price tier, reflecting our increased focus on the American whiskey and tequila categories.

Gross profit for the year to date ended June 30, 2025 decreased by $1,983, or 4 percent, primarily due to a decrease in sales volume and net price/mix within the value and mid price tiers, partially offset by increased premium plus sales volume.

Gross margin for the year to date ended June 30, 2025 increased to 49.8 percent from 49.2 percent for the prior year period, driven primarily by increased sales in the premium plus price tier.

Distilling Solutions

The following tables show selected financial information for the Distilling Solutions segment for the quarters ended March 31, 2025 and 2024.

The following tables show selected financial information for the Distilling Solutions segment for the quarters ended June 30, 2025 and 2024.

DISTILLING SOLUTIONS SALES

Quarter Ended March 31, Quarter versus Quarter Sales Change Increase/(Decrease)

Quarter Ended June 30, Quarter versus Quarter Sales Change Increase/(Decrease)

2025 2024 $ Change % Change

8 unchanged sentences

Other Financial Information

Quarter Ended March 31, Quarter versus Quarter Increase / (Decrease)

Quarter Ended June 30, Quarter versus Quarter Increase / (Decrease)

2025 2024 $ Change % Change

7 unchanged sentences

(d) Percentage points (“pp”).

Total sales of the Distilling Solutions segment for the quarter ended March 31, 2025 decreased by $37,909, or 45 percent, compared to the prior year quarter, primarily driven by lower brown goods sales.

Total sales of the Distilling Solutions segment for the quarter ended June 30, 2025 decreased by $43,388, or 46 percent, compared to the prior year quarter, primarily driven by lower brown goods sales.

Brown goods sales volume and net price/mix decreased primarily due to reduced customer demand resulting primarily from elevated industry-wide barrel inventory levels.

White goods and other co-products sales decreased primarily due to a reduction in sales volume resulting from phasing out a number of white goods customer contracts following the closure of our Atchison distillery, as well as reduced production volumes of co-products, primarily dried distillers grain.

Warehouse sales were slightly down as compared to prior year quarter.

Gross profit decreased versus prior year quarter by $23,661, or 56 percent, due to lower brown goods sales volume and net price/mix, partially offset by increased gross profit in white goods and other co-products due to favorable net price/mix.

Gross margin for the quarter ended June 30, 2025 decreased to 37.6 percent from 45.5 percent for the prior year quarter.

The following tables show selected financial information for the Distilling Solutions segment for the year to date ended June 30, 2025 and 2024.

DISTILLING SOLUTIONS SALES

Year to Date Ended June 30, Year to Date versus Year to Date

Sales Change Increase/(Decrease)

2025 2024 $ Change % Change

Brown goods $ 68,713 $ 141,774 $ (73,061) (52) %

Warehouse services 16,078 16,348 (270) (2)

White goods and other co-products

12,152 20,118 (7,966) (40)

Total Distilling Solutions $ 96,943 $ 178,240 $ (81,297) (46) %

Change in Year to Date versus Year to Date Sales Attributed to:

Net Price/Mix (c)

Brown goods (52)% (38)% (14)%

Other Financial Information

Year to Date Ended June 30, Year to Date versus Year to Date Increase / (Decrease)

2025 2024 $ Change % Change

Gross profit $ 37,492 $ 76,556 $ (39,064) (51) %

Gross margin % 38.7 % 43.0 % (4.3) pp (d)

(a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.

(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit.

The product is then divided by prior period sales dollars.

(c) Net price/mix change is calculated by taking the difference between current period sales-per-unit and prior period sales-per unit, multiplied by current period sales volume.

The product is then divided by prior period sales dollars.

(d) Percentage points (“pp”).

Total sales of the Distilling Solutions segment for the year to date ended June 30, 2025 decreased by $81,297, or 46 percent compared to the year-ago period, primarily driven by lower brown goods sales.

Brown goods sales volume and net price/mix decreased primarily due to reduced customer demand resulting from elevated industry-wide barrel inventory levels.

White goods and other co-products sales decreased primarily due to a reduction in sales volume resulting from phasing out a number of white goods customer contracts in the wake of the Atchison distillery closure, as well as reduced production volumes of dried distillers grain.

Warehouse sales were slightly up as compared to prior year quarter.

Gross profit decreased versus prior year quarter by $15,403, or 45 percent, due to lower brown goods sales volume and net price/mix, partially offset by increased gross profit in white goods and other co-products due to favorable net price/mix as well as increased gross profit in warehouse services.

Gross margin for the quarter ended March 31, 2025 decreased to 39.8 percent from 40.2 percent for the prior year quarter.

Warehouse sales were slightly down as compared to prior year-ago period.

Gross profit for the year to date ended June 30, 2025 decreased by $39,064 compared to the year-ago period, due to lower brown goods sales volume and net price/mix, partially offset by increased gross profit in white goods and other co-products due to favorable net price/mix as well as increased gross profit in warehouse services.

Gross margin for the year to date ended June 30, 2025 decreased to 38.7 percent from 43.0 percent for the prior year period.

Ingredient Solutions

The following tables show selected financial information for the Ingredient Solutions segment for the quarters ended March 31, 2025 and 2024.

The following tables show selected financial information for the Ingredient Solutions segment for the quarters ended June 30, 2025 and 2024.

INGREDIENT SOLUTIONS SALES

Quarter Ended March 31, Quarter versus Quarter Sales Change Increase / (Decrease)

Quarter Ended June 30, Quarter versus Quarter Sales Change Increase / (Decrease)

2025 2024 $ Change % Change

2 unchanged sentences

Commodity wheat starches 3,061 2,973 88 3

Commodity wheat proteins 563 37 526 1,422

Commodity wheat proteins 827 — 827 N/A

Total Ingredient Solutions $ 34,974 $ 33,376 $ 1,598 5 %

3 unchanged sentences

Other Financial Information

Quarter Ended March 31, Quarter versus Quarter Increase / (Decrease)

Quarter Ended June 30, Quarter versus Quarter Increase / (Decrease)

2025 2024 $ Change % Change

7 unchanged sentences

(d) Percentage points (“pp”).

Total sales of the Ingredient Solutions segment for the quarter ended March 31, 2025 decreased by $9,082, or 26 percent, compared to the prior year quarter.

Total sales of the Ingredient Solutions segment for the quarter ended June 30, 2025 increased by $1,598, or 5 percent, compared to the prior year quarter.

The increase was primarily driven by increased sales volume of specialty wheat proteins driven by the commercialization of new domestic customers during the quarter as well as increased sales volume of commodity wheat proteins.

The decline in specialty wheat starches was primarily due to a decrease in sales volume resulting from continued supply challenges resulting from complexities associated with the closure of the Atchison distillery, partially offset by an increase in net price/mix.

Gross profit increased versus prior year quarter by $465, or 7 percent.

Gross margin for the quarter ended June 30, 2025 increased to 21.7 percent from 21.4 percent for the prior year quarter.

The increase in gross profit was primarily driven by decreased input costs of specialty wheat protein and starches, as well as increased sales volume of specialty wheat proteins and net price/mix of specialty wheat starches.

These increases were partially offset by decreased price/mix of specialty wheat proteins.

The following tables show selected financial information for the Ingredient Solutions segment for the year to date June 30, 2025 and 2024.

INGREDIENT SOLUTIONS SALES

Year to Date Ended June 30, Year to Date versus Year to Date Sales Change Increase/(Decrease)

2025 2024 $ Change % Change

Specialty wheat starches $ 34,327 $ 41,474 $ (7,147) (17) %

Specialty wheat proteins 19,960 21,195 (1,235) (6)

Commodity wheat starches 5,780 6,235 (455) (7)

Commodity wheat proteins 1,390 37 1,353 3,657

Total Ingredient Solutions $ 61,457 $ 68,941 $ (7,484) (11) %

Change in Year to Date versus Year to Date Sales Attributed to:

Net Price/Mix (c)

Total Ingredient Solutions (11)% (7)% (4)%

Other Financial Information

Year to Date Ended June 30, Year to Date versus Year to Date Increase / (Decrease)

2025 2024 $ Change % Change

Gross profit $ 10,043 $ 13,306 $ (3,263) (25) %

Gross margin % 16.3 % 19.3 % (3.0) pp (d)

(a) Total sale changes is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.

(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit.

The product is then divided by prior period sales dollars.

(c) Net price/mix change is calculated by taking the difference between current period sales-per-unit and prior period sales-per unit, multiplied by current period sales volume.

The product is then divided by prior period sales dollars.

(d) Percentage points (“pp”).

Total sales of the Ingredient Solutions segment for the year to date ended June 30, 2025 decreased by $7,484, or 11 percent, compared to the prior year period.

The decrease was primarily driven by decreased sales volume of specialty wheat starches and decreased net/price mix of specialty wheat proteins.

The declines in specialty wheat starches and proteins were impacted by supply challenges resulting from adverse weather and complexities associated with the closure of the Atchison distillery, as well as the timing of commercialization of new customers.

Gross profit decreased versus prior year quarter by $3,728, or 60 percent.

Gross margin for the quarter ended March 31, 2025 decreased to 9.3 percent from 17.4 percent for the prior year quarter.

The decrease in gross profit was primarily driven by decreased sales volume of specialty wheat starches and decreased net/price mix of specialty wheat proteins.

The declines in specialty wheat starches and proteins gross profit were impacted by supply challenges and additional costs resulting from adverse weather and complexities associated with the closure of the Atchison distillery, as well as the timing of commercialization of new customers.

The declines in specialty wheat starches and proteins were due to supply challenges resulting from adverse weather and complexities associated with the closure of our Atchison distillery, as well as the timing of commercialization of new customers.

These declines were offset by increased sales volume of specialty and commodity wheat proteins and increased net price/mix of specialty wheat starches.

Gross profit decreased by $3,263, or 25 percent for the year to date ended June 30, 2025 compared to the prior year period.

Gross margin for the year to date ended June 30, 2025 decreased to 16.3 percent from 19.3 percent for the prior year period.

The decrease in gross profit was primarily driven by decreased net price/mix of specialty wheat proteins and decreased sales volume of specialty wheat starches.

These declines were impacted by supply challenges, additional costs resulting from adverse weather, and complexities associated with the closure of our Atchison distillery, as well as timing of commercialization of new customers.

CASH FLOW, FINANCIAL CONDITION, AND LIQUIDITY

5 unchanged sentences

Cash Flow Summary

Quarter to Date Ended March 31, Changes, year versus year Increase / (Decrease)

Year to Date Ended June 30, Changes, year versus year Increase / (Decrease)

Net cash provided by operating activities $ 56,357 $ 29,582 $ 26,775

3 unchanged sentences

Increase (decrease) in cash and cash equivalents $ (7,953) $ 2,623 $ (10,576)

Cash decreased $5,161 for the quarter ended March 31, 2025, compared to a increase of $1,109 for the quarter ended March 31, 2024, for a net decrease in cash of $6,270, period versus period.

Cash decreased $7,953 for the year to date ended June 30, 2025, compared to an increase of $2,623 for the year to date ended June 30, 2024, for a net decrease in cash of $10,576, period versus period.

Operating Activities.

Cash provided by operating activities for the quarter ended March 31, 2025 was $44,684.

The cash provided by operating activities resulted primarily from cash provided by operating assets and liabilities of $26,611, adjustments for non-cash or non-operating charges of $21,130, including the change in fair value of contingent consideration, depreciation and amortization, and share-based compensation, partially offset by a net loss of $3,057.

The primary drivers of the changes in operating assets and liabilities were $40,594 of cash provided by decreased accounts receivables, net, due to timing of customer payments and lower sales during the quarter, this was partially offset by $13,439 use of cash related to an increase in inventories, primarily due to an increase in barreled distillate.

Cash provided by operating activities for the quarter ended March 31, 2024 was $24,623.

Cash provided by operating activities for the year to date ended June 30, 2025 was $56,357.

The cash provided by operating activities resulted primarily from adjustments for non-cash or non-operating charges of $35,419, including the change in fair value of contingent consideration, depreciation and amortization, and share-based compensation, net income of $11,370 and cash provided by operating assets and liabilities of $9,568.

The primary drivers of the changes in operating assets and liabilities were $31,103 of cash provided by decreased accounts receivables, net, due to timing of customer payments and lower sales during the quarter.

This was partially offset by $15,224 use of cash related to an increase in inventories, primarily due to an increase in barreled distillate, and $10,687 use of cash related to a decrease in accounts payable due to timing of vendor payments and lower costs during the year to date period.

Cash provided by operating activities for the year to date ended June 30, 2024 was $29,582.

The cash provided by operating activities resulted primarily from net income of $52,601, adjustments for non-cash or non-operating charges of $21,745, including depreciation and amortization, the changes in fair value of contingent consideration, and share-based compensation, partially offset by cash used in operating assets and liabilities of $44,764.

The primary drivers of the changes in operating assets and liabilities were $10,380 use of cash related to accrued expenses and other, which related to the incentive compensation payout during the quarter, and $10,207 use of cash related to a decrease in accounts payable due to timing of payments.

These uses of cash were offset by $11,257 of cash provided by a decrease in accounts receivable, net, due to timing of sales and customer payments during the quarter.

The primary drivers of the changes in operating assets and liabilities were $14,766 use of cash related to increased accounts receivable, net, due to timing of sales and customer payments during the year to date period, $11,754 use of cash related to an increase in inventories, primarily due to an increase in barreled distillate, $10,738 use of cash related to accrued expenses and other, which related to the incentive compensation payout during the year to date period, and $6,345 use of cash related to a decrease in accounts payable due to timing of payments.

Investing Activities.

Cash used in investing activities for the quarter ended March 31, 2025 was $19,926, which resulted from additions to property, plant, and equipment (see “Capital Spending”).

Cash used in investing activities for the quarter ended March 31, 2024 was $27,266, which primarily resulted from additions to property, plant, and equipment of $27,026 (see “Capital Spending”).

Cash used in investing activities for the year to date ended June 30, 2025 was $32,167, which resulted primarily from additions to property, plant, and equipment of $32,156 (see “Capital Spending”).

Cash used in investing activities for the year to date ended June 30, 2024 was $33,657, which primarily resulted from additions to property, plant, and equipment of $33,397 (see “Capital Spending”).

Capital Spending.

We manage capital spending to support our business growth plans.

We have incurred $8,094 and $13,134 of capital expenditures and have paid $19,926 and $27,026 for capital expenditures for the quarter ended March 31, 2025 and 2024, respectively.

We have incurred $18,691 and $22,560 of capital expenditures and have paid $32,156 and $33,397 for capital expenditures for the years to date ended June 30, 2025 and 2024, respectively.

We expect to incur approximately $32,500 in capital expenditures in 2025, which includes capital expenditures for facility improvement and expansion, facility sustaining projects, and environmental, health, and safety projects.

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Financing Activities.

Cash used in financing activities for the quarter ended March 31, 2025 was $30,213, due to net payments on debt of $26,600 (see “Long-Term and Short-Term Debt”), payments of dividends and dividend equivalents of $2,578 (see “Dividends and Dividend Equivalents”), and repurchases of Common Stock of $1,035 (see “Treasury Purchases” and “Share Repurchase”).

Cash provided by financing activities for the quarter ended March 31, 2024 was $3,767, due to net proceeds on debt of $13,400 (see “Long-Term and Short-Term Debt”), partially offset by repurchase of Common Stock of $6,961 (see “Treasury Purchases” and “Share Repurchases”) and payments of dividends and dividend equivalents of $2,672 (see “Dividends and Dividend Equivalents”).

Cash used in financing activities for the year to date ended June 30, 2025 was $33,103, due to net payments on debt of $24,200 (see “Long-Term and Short-Term Debt”), payments of dividends and dividend equivalents of $5,156 (see “Dividends and Dividend Equivalents”), payments of loan fees related to borrowings of $2,712, and repurchases of Common Stock of $1,035 (see “Treasury Purchases” and “Share Repurchase”).

Cash provided by financing activities for the year to date ended June 30, 2024 was $6,721, due to net proceeds on debt of $21,800 (see “Long-Term and Short-Term Debt”), partially offset by repurchase of Common Stock of $9,735 (see “Treasury Purchases” and “Share Repurchases”) and payments of dividends and dividend equivalents of $5,344 (see “Dividends and Dividend Equivalents”).

Treasury Purchases.

105,776 RSUs vested and converted to shares of Common Stock for employees during the quarter ended March 31, 2025, of which we withheld and purchased for treasury 31,631 shares valued at $1,035 to cover payment of associated withholding taxes.

73,230 RSUs vested and converted to shares of Common Stock for employees during the quarter ended March 31, 2024, of which we withheld and purchased for treasury 22,885 shares valued at $1,961 to cover payment of associated withholding taxes.

105,776 RSUs vested and converted to shares of Common Stock for employees during the year to date ended June 30, 2025, of which we withheld and purchased for treasury 31,631 shares valued at $1,035 to cover payment of associated withholding taxes.

81,942 RSUs vested and converted to shares of Common Stock for employees during the year to date ended June 30, 2024, of which we withheld and purchased for treasury 25,521 shares valued at $2,185 to cover payment of associated withholding taxes.

Share Repurchase.

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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 quarter ended March 31, 2025, we did not repurchase any share of Common Stock under the share repurchase program.

During the quarter ended March 31, 2024, the Company repurchased approximately 59,084 shares of Company Stock for approximately $5,000.

As of March 31, 2025, there was approximately $53,412 remaining under the share repurchase program.

During the year to date ended June 30, 2025, we did not repurchase any shares of Common Stock under the share repurchase program.

During the year to date ended June 30, 2024, the Company repurchased approximately 92,447 shares of Company Stock for approximately $7,500.

As of June 30, 2025, there was approximately $53,412 remaining under the share repurchase program.

Dividends and Dividend Equivalents

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February 26, 2025 March 14, 2025 March 28, 2025 $ 0.12 $ 0.12 $ 2,553 $ 25 $ 2,578

May 1, 2025 May 16, 2025 May 30, 2025 0.12 0.12 2,553 25 2,578

$ 0.24 $ 0.24 $ 5,106 $ 50 $ 5,156

February 22, 2024 March 15, 2024 March 29, 2024 $ 0.12 $ 0.12 $ 2,641 $ 31 $ 2,672

May 2, 2024 May 17, 2024 May 31, 2024 0.12 0.12 2,642 30 2,672

$ 0.24 $ 0.24 $ 5,283 $ 61 $ 5,344

(a) Per share amount.

(b) Dividend equivalent payments on unvested participating securities.

On May 1, 2025, we announced a dividend payable to stockholders of record of our Common Stock, resulting in dividend equivalents payable to RSU holders, of $0.12 per share and per RSU.

The dividend and dividend equivalent are payable on May 30, 2025 to stockholders of record and certain RSU holders as of May 16, 2025.

On July 31, 2025, we announced a dividend payable to stockholders of record of our Common Stock, resulting in dividend equivalents payable to certain RSU holders, of $0.12 per share and per RSU.

The dividend and dividend equivalent are payable on August 29, 2025 to stockholders of record and certain RSU holders as of August 15, 2025.

Long-Term and Short-Term Debt.

We maintain debt levels we consider appropriate after evaluating a number of factors, including cash flow expectations, cash requirements for ongoing operations, investment and financing plans (including brand development, merger and acquisition, Board-approved dividends, and share repurchase activities), and the overall cost of capital.

Total debt was $297,114 (net of unamortized loan fees of $5,736) at March 31, 2025, and $323,541 (net of unamortized loan fees of $5,909) at December 31, 2024.

Total debt was $297,086 (net of unamortized loan fees of $8,164) at June 30, 2025, and $323,541 (net of unamortized loan fees of $5,909) at December 31, 2024.

We had net borrowings on debt of $24,200 for year to date ended June 30, 2025 and net proceeds on debt of $21,800 for the year to date ended June 30, 2024.

Additionally, during the year to date ended June 30, 2025, we incurred $2,712 of loan fees associated with amending and restating our credit agreement.

Financial Condition and Liquidity.

Our principal uses of cash in the ordinary course of business are for input costs used in our production processes, salaries, capital expenditures, and investments supporting our strategic plan, such as the aging of barreled distillate and potential mergers and acquisitions.

Generally, during periods when commodities prices are rising, our operations require increased use of cash to support inventory levels.

Generally, during periods when commodity prices are rising, our operations require increased use of cash to support inventory levels.

Our principal sources of cash are product sales and borrowing on our various debt agreements.

Under our debt agreements, we must meet certain financial covenants and restrictions, and at March 31, 2025, we met those covenants and restrictions.

At March 31, 2025, our current assets exceeded our current liabilities by $334,384, largely due to our inventories, at cost, of $378,243.

At March 31, 2025, our cash balance was $20,112 and we have used our various debt agreements for liquidity purposes, with $320,000 available under our Credit Agreement for additional borrowings and $228,400 available under the Note Purchase Agreement (see Note 4, Corporate Borrowings).

Under our debt agreements, we must meet certain financial covenants and restrictions, and at June 30, 2025, we met those covenants and restrictions.

At June 30, 2025, our current assets exceeded our current liabilities by $341,632, largely due to our inventories, at cost, of $379,702.

At June 30, 2025, our cash balance was $17,320 and we have used our various debt agreements for liquidity purposes, with $416,000 available under our credit agreement for additional borrowings and $230,000 available under the Note Purchase Agreement (see Note 4, Corporate Borrowings).

We anticipate being able to support our short-term liquidity and operating needs largely through cash generated from operations.

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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-Q

Item 2. Management’s Discussion and Analysis