Q3 2023 MGP Ingredients Inc Earnings Call
Good morning, and welcome to the M. D. P ingredients third quarter 2023 financial results conference call.
All participants will be in listen only mode.
Should you need assistance Presidio conference specialist a question to start key followed by zero.
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Pretty much all your question. Please press Star then two.
Please note. This event is being recorded I would now.
I'd like to turn the conference over to Mike Houston. Please go ahead.
Thank you I'm, Mike Houston with Lambert Global N V. P of Investor Relations firm and joining me are members of their management team, including Dave Colo, President and Chief Executive Officer.
The golf, Vice President of Finance and Chief Financial Officer.
We will begin the call with management's prepared remarks, and then open the call to question.
However, before we begin today's call. It is my responsibility to inform you that this call may involve certain forward looking statements based on current expectations.
The company's actual results could differ materially from any forward looking statements made today due to a number of factors, including the risks and uncertainties described in today's earnings release and the company's other SEC filings.
The company assumes no obligation to update any forward looking statements or information included in this call.
Additionally, this call will contain references to certain non-GAAP measures, which we believe are useful in evaluating the company's performance.
Reconciliations of these measures to the most directly comparable GAAP measures are included in today's earnings release.
Anyone does not already have a copy of the earnings release issued by M. G. P. Today, you can access it at the company's website Www Dot N G P ingredients dot com.
At this time I would like to turn the call over to N. G. P <unk>, President and Chief Executive Officer, Dave Colo Dave.
Thank you, Mike and thanks to everyone for joining the call today.
On this call we will begin with an overview of our performance for the quarter ended September 32023.
Provide updates on key financial performance metrics.
And discuss the progress we have made against our strategy.
At the end of the call we will open the line for Q&A.
I am proud of the considerable progress we have made toward achieving our targets for fiscal 2023.
The strong results. This quarter has enabled us to revise our full year guidance upwards, increasing the anticipated ranges for adjusted EBITDA and adjusted basic EPS for the second straight quarter.
Our continued solid performance throughout the year could not have been possible without our dedicated team.
We again achieved our best quarterly sales in company history, while also growing consolidated gross profit by 24% to a quarterly record with gross margins expanding across all business segments.
Consolidated sales for the third quarter of 'twenty twenty-three increased 5% year over year to $211.6 million.
Gross profit increased 24% to $73 $4 million, representing 34, 7% of consolidated sales.
Net income decreased 45% to $13 $1 million, primarily driven by one time expenses of $18 $3 million related to the planned outage at some distillery closure as well as the increase of $4 $2 million in fair value of contingent.
Consideration related to the Penelope acquisition.
Excluding these items adjusted net income increased 28% to $30 $2 million.
Adjusted EBITDA increased 24% to $48 $1 million.
We delivered another robust quarter and are just selling solutions segment with sales, increasing 3% year over year to $111 $9 million.
Gross profit for the quarter increased to $33.3 million or 29.8% of segment sales.
The increase in gross profit can be attributed primarily to the increase in sales of new distillate and aged whiskey Brown goods.
Compared to the prior year period sales of Brown goods for the quarter increased 28% driven primarily by increased pricing due to continued strong demand for both new distillate and aged whiskey.
Brown goods sales growth has continued to outpace longer term market trends.
It has been primarily driven by craft as well as multinational customers.
Our confidence in our brown goods sales visibility for the balance of the year remains high.
Looking ahead to fiscal 'twenty 'twenty four our visibility is also improving as we believe we now have the vast majority of our expected distilling solution segment Brown goods sales for 'twenty 'twenty four already committed.
Yeah.
We believe we are well positioned to support continued growth in the American whiskey category.
We will continue to be strategic with our aged whiskey sales to enable us to meet expected customer needs for the balance of this year as.
As well as position us to meet anticipated customer needs in the coming years.
Turning to white goods and industrial alcohol.
We continue to reduce the volumes of our industrial alcohol and white goods products produced and sold during the third quarter.
As a result white goods sales decreased by 30% year over year.
And sales of our industrial alcohol products decreased 13% during the third quarter.
As expected on a combined basis. These product lines continue to have negative gross margins in the quarter.
In July we announced the planned closure of the white goods and industrial alcohol distillery in Atchison, Kansas slated for January 2024.
This announcement reinforces our strategy focused on improving profitability by shifting away from industrial alcohol and white goods products.
To mitigate the continued impact of increased input costs.
Excess supply available in the market.
Brandon will speak in more detail about the financial impact of the closure.
Before that I want to remind our listeners that this strategic decision first required us to solve how to physically decoupled the atchison distillery from the ingredients facility.
Now is it the plan has been identified to successfully decoupled facilities, we are continuing to evaluate the most economically viable options for the waste start stream.
As you recall the way start stream is a byproduct of the ingredients facility.
That is purchased by the adjoined distillery and results in an intercompany credit to the ingredient solutions segment.
We have identified third parties, who will utilize our start stream.
No cost to the company in fiscal year 2024, which.
Which is detailed in the updated pro forma financials found in our earnings release, which Brandon will speak to shortly.
We firmly believe these actions will enable us to further align our product categories and their supporting operations toward achieving our long term strategic objectives.
As we continue to assess more accretive options to dispose of the waste start stream and their impact on our financial results.
We will provide additional details in future earnings calls.
Given the recent announcement of the athletes in distillery closure it.
It is difficult to predict how it might impact the fourth quarter of this year.
As customers put their respective transition plans into place.
But we continue to believe the closure will be accretive to consolidated gross margin percentage beginning in 2024.
Turning to branded spirits.
Segment sales totaled $66 $8 million during the quarter, an increase of 6% versus the prior year period.
The increase in year over year performance in this segment was primarily driven by the strength of our premium plus brands.
Each grew 33% from the prior year period.
We are very pleased with the continued growth of our premium plus cells because they represented 46% of segment sales this quarter.
This is a meaningful improvement from the 32% of sales are premium plus brands represented back in the third quarter of 2021.
Following the <unk> acquisition.
Our focus on investing behind our higher margin premium plus brands resulted in an increase in gross profit to $29 million or 43, 5% of segment sales.
The increase in gross margin can be attributed to the favorable performance of our higher margin premium plus brands.
Additionally, we remain confident that inventory destocking for our brands is close to running its course, and we're focused on driving velocity and points of distribution across our portfolio brands.
In June of this year, we announced the completion of our acquisition of Penelope Bourbon.
Hey, fast growing brand that improves our ability to further participate in the popular American whiskey category.
We continue to believe this brand has meaningful long term growth potential which is supported by the results we delivered during the third quarter.
We could not be more enthusiastic about the Penelope brand.
It supports our long term strategy.
Just on premium amortization and enhances our portfolio of premium plus price tier brands.
We remain pleased with Penelope is continued momentum as we expand its presence to new markets.
We expect to be in 37 states by the end of 2023.
Our branded spirits strategy remains focused on growing points of distribution by leveraging the expansion of our premium plus brands portfolio with a particular focus on our tequila and American whiskey brands.
Turning to ingredient solutions.
Sales for the quarter increased 11% to a record $33 million, while gross profit increased to $11 $1 million or 33, 8% of segment sales.
The increase in sales primarily reflects continued rising consumer preference toward high protein low carb diets, which drove higher sales of our specialty wheat proteins and starches.
As well as our commodity wheat starches.
Finally, I want to thank our team for their tremendous efforts and continued execution.
We remain encouraged by our diverse customer base, and our product offerings, which continue to align with broader consumer trends.
We believe our improved profitability and our proven ability to execute against our long term strategy continue to provide us with the momentum required to achieve our fiscal 2023 goals.
This concludes my initial remarks, let me now turn things over to Brandon Gall for a review of the key metrics and numbers Brandon.
Thanks, Dave.
The third quarter of 2023 consolidated sales increased 5% compared to the prior year period to $211 $6 million.
Gross profit increased 24% to $73 $4 million, representing 34, 7% of sales.
Advertising and promotional expenses for the third quarter increased $2 $2 million to $9 $5 million as compared to $7 $3 million in the prior year period.
Of this amount $8 $2 million was invested towards our premium plus branded spirits. This advertising and promotion spend represented 12, 3% of total branded spirits segment sales in the quarter.
The year over year increase remains consistent with our premium innovation strategy and we plan to continue to invest marketing spend against our higher margin premium plus price tier brands.
Corporate selling general and administrative expenses for the quarter increased $3 7 million to $21 $6 million as compared to the third quarter of 2022, primarily due to higher personnel expenses.
During the quarter, we also incurred $18 3 million in one time expenses related to the planned closure of our Atlas in the story.
This amount $17 $1 million related to noncash asset impairments.
We believe the vast majority of these one time charges related to the closure were accounted for in the third quarter. However, there will be additional one time occurrences relating to severance and equipment sales as examples in subsequent quarters.
These one time expenses have been excluded from our adjusted financial metrics as well as our full year 2023 guidance.
Also during the quarter, we increased the fair value of the contingent consideration liability related to the <unk> acquisition by $4 $2 million.
This is a noncash expense related to the earn out consideration associated with the expected positive performance of the Penelope brand. Following the acquisition in June of this year we.
We will continue to evaluate this contingent consideration liability in subsequent quarters.
Just as necessary on a quarterly basis throughout the term of the earn out period, which ends in December 2025.
This noncash expense has been excluded from our adjusted financial metrics as well as our full year 2023 guidance.
Operating income for the third quarter decreased 41% to $19.8 million.
Due primarily to the previously mentioned asset impairments and other onetime expenses related to the planned closure of our apps in the salary as well as the change in fair value of the contingent consideration related to the fidelity acquisition.
Excluding these items adjusted operating income increased 26% to $42.7 million.
Our corporate effective tax rate for the third quarter of 2023, it was 25% compared with 24, 2% from the year ago period.
The increase in our corporate effective tax rate is due primarily to a reduction of state tax credits during the period.
Net income for the second quarter decreased 45% to $13 $1 million, while adjusted net income increased 28% to $32 million.
Basic and diluted earnings per share decreased to 59 per share from $1 seven per share.
<unk> 58 per share from $1.06 per share respectively.
Adjusted basic and diluted earnings per common share increased to $1 36 per share.
$1.07 per share.
At $1 34 per share from $1.06 per share respectively.
Adjusted EBITDA for the quarter was $48 $1 million, an increase of 24% compared to the year ago period. The increase was primarily driven by the strong performance of all three business segments.
Now an update on commodities corn wheat flour right natural gas represent our largest commodity expenses and each continues to experience elevated prices throughout the quarter.
Compared to the prior year period, our input cost of corn increased 4% wheat flour increased 24% Rai increased 40% and natural gas increased 30%.
Our risk management process and our focus on products that are premium and more specialty in nature have continued to enable us to mitigate the impacts of higher input costs over the past several quarters and most of our product lines.
As we have mentioned previously regarding the planned closure of our assets and the story, we continue to expect to incur one time aggregate pre tax charges of approximately $23 million $31 million in fiscal 2023.
Of that amount, we anticipate $6 million in capital expenditures in connection with the decoupling of the axis and the salary from the ingredient solutions facility also located at Atchison, Kansas.
Now an updated look at the financial impact of the assets and distilleries performance on a preliminary pro forma unaudited basis for year to date ended September 30th 2023.
Excluding the financial impact will be at some distillery results were as follows.
Holiday sales and distilling solutions sales are reduced by $87 million.
Consolidated gross profit has increased by $2 $4 million consolidated gross margin has increased by 620 basis points.
As Dave already mentioned, we continue to assess viable options for the ingredient solutions weights start stream post decoupling and their respective impact to overall consolidated profitability.
Additional information will be provided when the company released its financial results as more information becomes available.
In accordance with accounting guidance, we expect to present, the absolute story operations as discontinued operations. Once the facility is shut down and assets are available to be sold.
It is important to note that some circumstances white goods industrial alcohol fuel and at times certain co products.
Our produced at our Lawrenceburg, Indiana distillery.
Please refer to the pro forma schedules included in this morning's earnings release for more information.
Moving to cash flow.
Cash flow from operations was $48 $6 million for the year to date period downturn $72 $3 million in the prior year to date period.
The reduction in cash flow from operations was primarily driven by a decrease in accounts payable and an increase in our barrel distillate in finished goods inventory.
Our balance sheet remains healthy, allowing us to continue to invest to grow.
We remain well capitalized with debt totaling $316 $7 million and a cash position of $28 million.
Turning to capital allocation, we remain focused on organic and acquisitive growth opportunities that align well with our long term strategy as well as the underlying consumer trends, which we believe our business is well positioned to leverage we.
We will continue to evaluate M&A opportunistically with the goal of accelerating growth and increasing our capabilities and product offerings.
In addition, continuing to put away whiskey for Egypt remains a critical component of our capital allocation strategy.
Effectively matching whiskey put away with growing future distilling solutions and branded spirits segment sales remains a key priority.
And it's critical to our long term strategy.
Our investment in inventory of aging whiskey increase to $239 $1 billion that cost an increase of $4 $5 million compared to the second quarter of 2023.
Investing capital expenditures to enhance our operational capabilities is another important capital allocation priority and it resulted in capital expenditures was $36 $9 million for the first nine months of the year, an increase of $8 $4 million versus the prior year period.
We continue to expect approximately $63 million in capital expenditures for the full year 2023, which is up from the figure we shared during the first quarters call due to the decoupling capital investment associated with the planned closure that's in the story.
We continue to expect our capital expenditures will be used for facility improvement and expansion.
Such as our distillation expansion at Luxor, the Steelers and Bardstown, Kentucky. The addition of whiskey barrel warehouses to support continued growth of our lawrenceburg and Bardstown distilleries and our new texture is protein extrusion facility in Atchison, Kansas, which is still expected to come online in the first quarter of 2024.
Additionally, we plan to prioritize investments and facilities sustenance projects as well as environmental health and safety projects.
The board of directors authorized a quarterly dividend of <unk> 12 per share.
Payable on December <unk> to stockholders of record as of November 17th.
The board continues to be dividends as an important way to share the success of the company with stockholders.
We continue to believe our capital allocation strategy focused on organic and acquisitive growth aligns well with our long term strategy leveraging this approach. We believe we can better position the business to benefit from the underlying consumer trends.
Now, let me turn things back over to David for concluding remarks.
Thanks, Brandon we are very pleased with the strong performance this quarter and continued momentum throughout the year.
Demand for our products in each of the three segments remains strong and.
And we believe our actions will continue to position the business for long term success.
To account for these continued strong results. We are again updating our full year fiscal 2023 guidance to the following.
We continue to expect sales to be in the range of $815 million.
$835 million.
Adjusted EBITDA is now expected to be in the range of $192 million to $197 million, reflecting an increase of approximately $5 million to the low and high end of the guidance range, we provided last quarter.
Adjusted basic earnings per common share has been revised upward and is now expected to be in the range of $5 50.
To $5 65 per share.
With basic weighted average shares outstanding expected to be approximately $22 1 million at year end.
Before we open up the call for questions I'd like to welcome David Bradshaw to the call. This morning.
As you saw in this morning's press release, David will be promoted to CEO and President on January one 2024, following my retirement.
I had the pleasure of working closely with David for more than two years and we are fortunate to have such a talented and capable leader to be the next CEO of M. G. P.
It's been a privilege to work with the board of M. G P and a talented and passionate group of employees throughout the company altogether, who have achieved significant results in a number of areas in the past few years.
As our Chief operating officer, and President of branded spirits. David has played a critical role in supporting the company's growth over the past several years and we are looking forward to his continued leadership across the organization.
He is the right leader to help M. G. P leverage the solid foundation, we have established over the years and see significant opportunities that lie ahead of us for many years to come.
I will be staying on in an advisory capacity through April 30th to assist David and our board and ensuring a smooth and.
Seamless transition.
That concludes our prepared remarks, operator, we are ready to begin the question and answer portion of the call.
We will now begin the question and answer session.
To ask a question my first one.
Excuse me speaker phone.
More questions Keith.
Two is probably a question. Please press star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question will come from Marc <unk> with Wells Fargo.
You May now go ahead.
Hey, good morning. Thank you for taking my questions first off wanted to say congrats to Dave on the retirement and to David on the new promotion.
Maybe we could start there.
It is coming at a time, but some strategic shifts in the portfolio and David it's coming from the branded side should we expect much of the same in terms of portfolio direction or maybe any other tweaks to the strategy, perhaps in other areas of the portfolio.
We know Dave and David have worked closely together since acquisition.
Yeah, Mark Thanks for the comments, it's a day.
Yeah, I think you know our strategy has been pretty well thought out you know over the last few years and we just completed our our next five year strategy here recently and our direction will me remain pretty consistent I mean, we're as you well know we're on a path to migrate the business in the portfolio.
To more and more of a branded spirits position business.
We've made some pretty.
Strategic moves over the last few years to enable us to do that.
For the most part I think you'll see David under David's leadership, and I'll, let him speak to this as well, but that's our broader strategy.
And I think we're well positioned to continue to pursue that.
No I would add that I've had the privilege of working hand in hand, with our data and brand and in the rest of the executive team and developing a strategic plan that we have in place today.
We believe the solid foundation for the future and we're going to continue to build on that foundation.
Okay, Great and then on the guidance Q3 had some upside at least to street expectations and while you raised EBITDA for the year you held sales guide rather wide is that just a function of the astral and transition process and perhaps some.
Potential variability around how those sales will land.
Yeah, Mark that's that's the primary reason for that.
So far the adjutant transitions progressed pretty much how we expected we're at the point now where we are.
<unk> final orders from customers for the balance of the year.
But there's fear you never know right there could still be some uncertainty around our customers as they transition and getting their supply from us to other suppliers that you know there could be some potential.
Exits earlier than we planned, but we think we've accounted for that in the revenue guidance that we've provided.
Okay, and then just lastly on visibility into next year I think the comment was a vast majority of brown goods sales for next year already committed how is this tracking the pattern to this point last year is there any underlying shifted mix of age versus new and any other color on how.
Those negotiations have been progressing.
I assume pricing ability.
Quite strong.
Yeah, I think you know compared to last year, I think we're pretty much on track.
The team has done an outstanding job of getting forward commitments in place.
More on new distillate as we've discussed in the past, but we also have excellent progress on our H Brown goods sales.
For 2024.
So I think we feel like we're in a great position as we go into 2024 and the teams are already working on 2025 as well so very similar if not had a bit of where we were last year.
Got it thanks guys.
Thanks Mark.
Our next question will come from Gerald <unk> with Wedbush.
You May now go ahead.
Great Good morning.
David Congratulations on your promotion and Dave Congrats on your retirement, it's been great working with you and wishing you all the best.
Thank you. Thank you.
Sure. Thanks.
First one is just on branded spirits I think the revenue growth came in certainly better than we had been modeling for understanding. This was the first full quarter benefit from and that would be can.
Can you probably quantify how much of the six points that that brand specifically drone.
On the growth in the segment or just any color on how we should think about the contribution going forward. Thanks.
Yeah. Gerald this is Brandon so the <unk> brand.
It is right in line, if not exceeding our expectations to date.
So we're seeing great performance and contribution from Penelope.
Going forward, we're not going to breakout individual brand performance below what I will say is that especially as it relates to our premium plus priced brands in our portfolio, we are seeing contribution.
You know up and down that whole list of brands. So we're very happy with the performance turned in by the segment in the quarter.
Understood. Thank you.
My next questions on this.
Sterling solutions segment, Brendan I guess, it's for you and it's really more of a housekeeping question, but when.
When we look at the historical margin profile and distilling solutions.
Gross margin in your income before tax margins are fairly closely aligned historically.
Looking out to 2020 for once the atrazine distillery closes and then considering your gross margin enhancements youre going to get in that segment.
Is there any reason why gross margin and income before tax margins would not continue to remain fairly closely aligned.
Excluding any nonrecurring items or impairments et cetera, any color there would be great. Thank you.
Yeah.
So excluding all the impairments you mentioned is important but on a go forward basis and we do have this listed in our schedules of our earnings release, but yeah. So.
Forma basis, excluding the Atchison distillery, our gross margin profile of distilling solutions increases about 340 basis points to rub 44, 1% on a pro forma year to date basis, so about impact to margin is going to be.
Quite noticeable.
Not only.
Just filling in solutions, but for the consolidated business as well.
Right I'm, just just to follow up on the income before tax would you expect a lot of the margin enhancements to continue to flow through to your to your income before tax or is there are there any considerations to be mindful of once the discovery closes just in terms of op income before tax.
Yeah, No we would expect that flow through to be consistent with what youre seeing at the gross profit and gross margin level.
Perfect. Thank you very much.
Our next question will come from Bill Chappell with Jewish Securities.
You May now go ahead.
Thanks, Good morning, and my congratulations as well Dave.
On the retirement Bill.
Thank you.
A couple questions I guess first on the on the branded spirits business you talked that you were still working through some of them kind of the excess inventory within channels and I think the whole industry is.
Any way to quantify what like what sales could have been or how much that impacted branded seal because still 6% year over year is pretty pretty solid. So just trying to understand or did it really was a very small impact in knowing impact is expected going forward.
Yeah, I think bill we discussed this a little bit on the last quarter call, but we feel like we're pretty much through the any issues with excess inventory at the distributor level there may be.
A few brands that we still have a little bit to work through but there was really I don't think our our revenue was materially impacted.
Due to any excess inventory issues in the channel.
Got it.
And then.
Only half kidding, but what do your brow.
Brown spirits distill it salespeople do over the next six months, if if you've resold so much of the business for 24, and and and you know I guess.
I can talk about like.
Is there excess capacity, where you can continue to sell more beyond your plan and is there some some optionality there and then too.
We hear a lot of things being G O P. B just overall sluggish.
Slowdown on spirits in general about.
Incremental demand for brown goods over the next few years and in your new distillate sales are probably the best leading indicator. There. So maybe you can just talk about what you're hearing and seeing from your customers in terms of expectations in terms of getting better getting worse cooling down.
Help us understand I guess one.
Can they sell more next year than they've already committed to and do you have capacity for that and to kind of what you're hearing from your customers in terms of demand 345 years from now thanks.
Yeah no.
Our our sales team and Brown goods, you know they've done a fabulous job as we've mentioned earlier getting us into the position that we're in with.
Having forward commitments on both new distillate and aged.
And once they have 2024 as an example.
The vast majority of those sales committed then obviously, they're working on 25 and beyond so we don't give them a break they don't get to take the year off once they get 2024 book So they're working diligently on on 25 and beyond on cells.
The capacity question is as you know we've had some pretty good increases in throughput and our lawrenceburg distillery.
We're bringing on additional capacity in Bardstown as we plan for 2024 and beyond and this is part of our Strat plan and this will be spoken to more when we give guidance for.
For 2024, all of those capacity increases et cetera are factored into the guidance that we'll provide in for 'twenty 'twenty four bill there will be.
Some additional capacity as we continue to drive continuous improvement and bring the capacity on in in Bardstown. So we'll make sure that we're selling in that in the most profitable profitable manner to keep driving that improvement in the business.
From a consumer demand point of view and this whole G. L. P. A drug issue.
We don't really see currently it's not really an impact to our business I think it's very early early innings with what is the true impact going to be from a consumer perspective.
On whether it's food or beverage consumption, but as we sit here today, we don't see that having a meaningful impact on our business certainly it hasnt year to date and I personally wouldn't anticipate it having a significant impact on our business.
Going forward to be honest.
Our customers continue to.
We want to you know forward book commitments with us because what they're trying to do obviously is make sure they have certainty of supply around liquid for their brands.
So we really you know the biggest change we've seen there is not necessarily in.
Customers committing but more and I'm going to say more on the craft side of things is trying to push payables out because of the higher interest rates an impact that has on their businesses, but overall the demand we're seeing remains pretty solid for the new distillate and aged.
Great. Thanks, so much.
Thank you.
Okay.
Please press Star then one.
Our next question will come from Vivien <unk> with TD, calling you.
You May now go ahead.
Hi, Thank you good morning, and I'd like to ask them.
Okay.
On the.
The product segment, another very nice quarter.
Price mix realization and premium beverage alcohol.
Of course, you know volumes are under pressure I was wondering whether you could offer some commentary on kind of the volume dynamics between brown and white goods in the quarter.
Yes, Vivien this is Brandon so yeah in our.
Our Q, we do break out premium beverage alcohol, which includes both brown goods and white goods and within that we share that sales are up 13%, but volume to your point is at 15 and that 15% down draft as is all directly related to white goods industrial alcohol, so our demand for our brown.
Goods from a volume standpoint remains intact, but I will share the majority of the 28% growth in brown goods in the quarter was price driven.
Got it that's really helpful and then just.
What about the brown goods category in the whiskey category more broadly.
Finally to TTP, which is publishing its data again, it looks like inventory building.
Total third party whiskey pricing might be under pressure.
I was wondering if you can just comment at all on what you're seeing in terms of other whiskey pricing in the market. Thanks.
Are you speaking to our distilling our bulk whiskey business in particular are awesome yeah.
Yeah, I think you know from our perspective on our our inventories et cetera.
What we try to do is balance, particularly on our age side, our inventory needs and build of inventory with our anticipated future customer needs and demand.
And we still are in that position today, we make our lay down decisions based on those anticipated needs.
And we're not seeing anything today that would tell us that we as a company are imbalanced in that particular <unk>.
Regard it as far as pricing pressure in the market.
What we're seeing is we've continued to attract pretty pretty healthy pricing as Brandon just discussed and the majority of the increase in our brown goods revenue this quarter was driven by pricing versus volume.
Going forward I think what we're we're anticipating and I think a lot of our competitors are anticipating is that the global demand for American whiskey is going to continue to remain strong.
As will domestic whiskey.
But if you look at the rest of the world the share that American Whiskey has globally is it's still very underpenetrated. So through the combination of continued demand domestically and the significant potential that we feel is available globally, we still feel like we're in a solid position.
And to continue to grow this business.
Got it thanks very much.
Yep.
And of course are no further questions.
This concludes our question and answer session I would like to turn the conference back over to Boulder Colo for any closing remarks.
Alright. Thank you for your interest in our company and for joining US today for our third quarter earnings call and we look forward to talking with you again after the fourth quarter.
The conference has now concluded.
For today's presentation you may now disconnect.
Okay.