Q1 2025 MGP Ingredients Inc Earnings Call
Operator: Good morning, and welcome to the MGP Ingredients First Quarter Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero.
Good morning, and welcome to the M. G. P ingredients first quarter earnings call. All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
Operator: After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded.
After today's remarks, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded.
Amit Sharma: I would now like to turn the conference over to Amit Sharma, Vice President of Investor Relations. Please go ahead. Thank you.
Speaker Change: I'd now like to turn the conference over to Amit Sharma, Vice President of Investor Relations. Please go ahead. Thank you good morning, and welcome to M. D piece first quarter earnings Conference call I'm, Amit Sharma, Vice President of Investor Relations and joining me is Brandon Gall interim President and Chief Executive Officer, and Chief Financial Officer at <unk>.
Amit Sharma: Good morning and welcome to MGP's first quarter earnings conference call. I'm Amit Sharma, Vice President of Investor Relations, and joining me is Brandon Gall, Interim President and Chief Executive Officer and Chief Financial Officer.
Brandon Gall: and Mark Davidson, Vice President, Corporate Controller and Head of Treasury.
Davidson.
Speaker Change: This president corporate controller and treasurer.
Amit Sharma: We will begin the call with non-ingredient prepared remarks before opening the call to analyst questions. Before we begin, this call may involve certain forward-looking The company's actual results could differ materially from any forward-looking statements made today due to a number of factors, including the risk factors described in the company's annual and quarterly reports filed with it. The company assumes no obligations to upgrade any forward-looking statements made during the call except as required by the law.
Speaker Change: Well begin the call with not against prepared remarks before opening the call to analysts questions.
Speaker Change: Before we begin this call may involve certain forward looking statements. The company's actual results could differ materially from any forward looking statements made today due to a number of factors, including the risk factors described in the company's annual and quarterly reports filed the Betsy.
Speaker Change: The company assumes no obligations to update any forward looking statements made during the call except as required by the law.
Amit Sharma: Additionally, this call will contain references to non-GAAP measures, which we believe are useful in evaluating the A reconciliation of these measures to the most comparable gap measures is included in today's which was issued this morning before the market opened and is available on our website. at www.mgpingredients.com.
Speaker Change: Additionally, this call will contain references to certain non-GAAP measures, which we believe are useful in evaluating the company's performance.
Speaker Change: Reconciliation of these mega to the most comparable GAAP measures is included in today's earnings release, because they showed this morning before the market opened and is available on our website at www Dot M. J P ingredients dot com.
Brandon Gall: At this time, I would like to turn the call over to Brandon Gall. Brandon. Thank you, Amit. Good morning, everyone. I'd like to begin by offering a few highlights from our first quarter results.
Brandon Gall: This time I would like to turn the call over to Brandon Gall Brendan.
Brandon Gall: Thank you Amit good morning, everyone I'd like to begin by offering a few highlights from our first quarter results. I'll then share some comments on the progress we're making on the key initiatives shared on our last earnings call to stabilize our brown goods business repositioned, our branded spirits ingredients businesses for growth accelerate our companywide productivity agenda.
Brandon Gall: I'll then share some comments on the progress we're making on the key initiatives shared on our last earnings call to stabilize our brown goods business, reposition our branded spirits and ingredients businesses for growth, accelerate our company wide productivity agenda, and fortify our balance sheet.
Brandon Gall: And fortify our balance sheet I will then turn things over to Mark for a detailed review of our quarterly financials.
Brandon Gall: I'll then turn things over to Mark for a detailed review of our quarterly finance. Our first quarter results delivered an encouraging start to the year and set us on course to meet our four-year guidance. While industry-wide barrel whiskey inventories remain elevated and consumers are more cautious in the current environment, we saw signs of positive progress across all three of our businesses, as our teams are focusing on our most impactful initiatives in executing with great discipline. These early signs of stabilization are encouraging and give us confidence that the proactive steps we're taking are beginning to take hold.
Brandon Gall: First quarter results delivered an encouraging start to the year and set us on course to meet our full year guidance, while industry wide barrel whiskey inventories remain elevated and consumers are more cautious in the current environment. We saw signs of positive progress across all three of our businesses as our teams are focusing on our most impactful initiatives in executing with <unk>.
Brandon Gall: Great discipline. These early signs of stabilization are encouraging and give us confidence that the proactive steps. We're taking are beginning to take hold.
Brandon Gall: Our productivity initiatives are off to a strong start and we are leaning harder on our competitive strengths and positioning, enabling us to reaffirm our 2025 outlook. At the same time, we also took meaningful steps to fortify our balance sheet and further increase our financial flexibility during the first half of the year. As for the first quarter of 2025, results were in line with our expectations. We believe this sets us up for improved performance throughout the rest of the year. Consolidated sales and adjusted EBITDA decreased 29% and 46%, respectively, from the prior year period, primarily due to the expected decline in the distilling solutions performance and cadence of the planned rebound in ingredient solutions results.
Brandon Gall: Our productivity initiatives are off to a strong start.
Leaning harder on our competitive strengths and positioning enabling us to reaffirm our 2025 outlook.
Brandon Gall: At the same time, we also took meaningful steps to fortify our balance sheet and further increase our financial flexibility during the first half of the year.
Brandon Gall: As for the first quarter of 2025 results were in line with our expectations and we believe this sets us up for improved performance throughout the rest of the year.
Brandon Gall: Consolidated sales and adjusted EBITDA decreased 29% and 46% respectively from the prior year period, primarily due to the expected decline in the distilling solutions performance and cadence of the plan rebound in ingredient solutions results.
Brandon Gall: Branded Spirit segment sales declined by 4%, but our Premium Plus portfolio posted solid growth. Adjusted earnings per common share declined to $0.36 per share, while operating cash flows increased by nearly 82% to $44.7 million.
Brandon Gall: Brian It's spirits segment sales declined by 4%, but our premium plus portfolio posted solid growth adjusted earnings per common share declined to 36 per share while operating cash flows increased by nearly 82% to $44.7 million.
Brandon Gall: I'll now take a moment to highlight the current operating environment and the progress we're making against each of our key initiatives. Starting with the Branded Spirits segment, our key initiative for our Branded Spirits segment this year is Focus on Fewer, but More Attractive Growth Opportunities Within Our Branded Portfolio. Our Premium Plus Portfolio continues to be the growth engine of the Branded Spirits segment, and we believe our Penelope, El Mayor, and Rebel 100 brands are particularly well-positioned to benefit from our focus initiatives. After demonstrated strong growth in 2024, these brands were the primary drivers of the 7% growth in our Premium Plus portfolio during the first quarter, as we refocused our brand investments behind our best opportunities.
Brandon Gall: I'll now take a moment to highlight the current operating environment and the progress, we're making against each of our key initiatives.
Brandon Gall: Starting with the branded spirits segment, a key initiative for our branded spirits segment. This year its focus to focus on fewer but more attractive growth opportunities within our branded portfolio.
Brandon Gall: Our premium plus portfolio continues to be the growth engine of the branded spirits segment, and we believe our Penelope L. A or in rebel 100 brands are particularly well positioned to benefit from our focused initiatives.
Brandon Gall: After demonstrated strong growth in 2020 for these brands were the primary drivers of the 7% growth in our premium plus portfolio during the first quarter as we refocus our brand investments behind our best opportunities. These actions, which include targeted digital campaigns, he sponsorship and sampling activations and sharper in store.
Brandon Gall: These actions, which include targeted digital campaigns, key sponsorship and sampling activations, and sharper in-store execution, are expected to expand consumer and trade awareness and engagement for these brands. Penelope's momentum continued with another quarter of strong growth. Innovation is a key component of the Penelope brand, and that trend continued with the launches of Penelope Weeded and Penelope Ready to Serve Cocktails during the quarter. Penelope Weeded Bourbon is off to a strong start in several key markets, with plans to further expand distribution over the coming month. Penelope Ready to Serve is the brand's first foray into the fast-growing prepared cocktail segment.
Brandon Gall: Houston are expected to expand consumer and trade awareness engagement for these brands.
Brandon Gall: And L piece momentum continued with another quarter of strong growth innovation is a key component of the Penelope brand and that trend continued with the launches of Penelope weeded and Penelope ready to serve cocktails during the quarter.
Brandon Gall: Penelope Redid Bourbon is off to a strong start in several key markets with plans to further expand distribution of the coming months.
Brandon Gall: L P ready to serve as the brand's first foray into the fast growing prepared cocktail segment. It's now available in select markets and the Penelope Peach old fashioned flavor with plans to expand to additional markets in flavors throughout the summer.
Brandon Gall: It's now available in select markets in the Penelope Peach Old Fashioned flavor. We plan to expand to additional markets and flavors throughout the summer. Our Rebel 100 Premium offering also continues to gain momentum as we realign our Rebel brand. Our partnership with Richard Childress Racing and the No. 8 Kyle Busch Race Car is enabling Rebel 100 to expand into markets and channels that are aligned with targeted consumer cohorts for this brand. Tequila continues to expand its share of the total spirits category, and our premium tequila brand, El Mayor, is well positioned to benefit from this trend.
Brandon Gall: Our rebel 100 premium offering also continues to gain momentum as we realign our rebel brand.
Brandon Gall: Our partnership with Richard Childress racing and the number eight Kyle Busch race car is enabling rebel 100 to expand in the markets and channels that are aligned with targeted consumer cohorts for the spring.
Brandon Gall: Tequila continues to expand its share of the total spirits category and our premium Tequila brand <unk> is well positioned to benefit from this trend we're watching updated packaging for all <unk>, including a new bottle and expanded sizes to complement our 750 ml offering the.
Brandon Gall: We're launching updated packaging for El Mayor, including a new bottle in expanded sizes to complement our 750 ml offering. The updated packaging is based on feedback in collaboration with our key partners and is expected to lift El Mayor's shelf presence in in-store merchandising activities. As we look ahead, we have a pipeline of exciting innovation to further strengthen our tequila portfolio and amplify our portfolio's rich heritage and craftsmanship. At the same time, and as expected, sales of our mid-end value-to-your-brands declined during the quarter. This ongoing decline is consistent with overall consumer trends. However, we are taking appropriate actions intended to reduce this rate of decline, while opportunistically meeting consumers where they are in the current economic environment.
Brandon Gall: The updated packaging is based on feedback in collaboration with our key partners and is expected to lift all me or shelf presence and in store merchandising activities. As we look ahead, we have a pipeline of exciting innovation to further strengthen our tequila portfolio enable a fire portfolios rich heritage and craftsmanship at.
Brandon Gall: At the same time and as expected sales of our mid and value tier brands declined during the quarter. This ongoing decline is consistent with overall consumer trends. However, we are taking appropriate actions intended to reduce this rate of decline well opportunistically meeting consumers, where they are in the current economic environment.
Brandon Gall: For our Distilling Solutions segment, the main initiative is to strengthen our partnerships with customers. While Brown Goods volumes and pricing were down during the quarter, they were consistent with our expectations. As I mentioned on the fourth quarter conference call, we're taking decisive, proactive actions designed to de-risk our Brown Goods business. These actions, which include working with customers to align on their volume needs at market-based pricing, are resonating. Our partnership-first approach is leading to more collaborative and constructive discussions, and in many cases, amending and extending supply contracts. This is an encouraging trend that seemed less likely just a few months ago.
Brandon Gall: Or it is stealing solution segment. The main initiative is to strengthen our partnerships with customers, while brown goods volumes and pricing were down during the quarter. They were consistent with our expectations as I mentioned on the fourth quarter conference call. We're taking decisive proactive actions designed to Derisk, our brown goods business. These actions which include working with customer.
Brandon Gall: Two line on their volume needs at market based pricing are resonating.
Brandon Gall: Our partnership first approach is leading to more collaborative and constructive discussions and in many cases amending and extending supply contracts. This is an encouraging trend that seem less likely just a few months ago.
Brandon Gall: We're also taking steps to improve our partnership with Kraft Customers, which has long been the foundation of MGP's brown goods heritage. We're tailoring solutions to attract new and past customers and to establish MGP as their preferred brown goods partner. At the same time, our efforts to optimize our distillery cost structure are off to a good start, helping us cushion the impact of lower ground goods volumes and enabling us to manage margins and offer more competitive prices to our customers. We continue to be disciplined with our brown guts production and inventories. Our net whiskey put away is expected to be down materially in 2025 as compared to 2024, reflecting our decision to right size excess inventory and further improve cash flows.
Brandon Gall: We're also taking steps to improve our partnership with craft customers, which has long been the foundation of M. G. P. S Brown goods heritage.
We're tailoring solutions to attract new and past customers and to establish M. G P. As their preferred brown goods partner.
Brandon Gall: At the same time, our efforts to optimize our distillery cost structure are off to a good start helping us cushion the impact of lower brown goods volumes, and enabling us to manage margins and offer more competitive prices to our customers.
Brandon Gall: We continue to be disciplined with our brown goods production and inventories are net was he put away is expected to be down materially in 2025 as compared to 2024, reflecting our decision to right size, the excess inventory and further improve cash flows.
Brandon Gall: The overall American Whiskey category is also responding to the current environment with deeper production. The most recent TTB production data, which was released after our fourth quarter earnings call, is through the end of December 2024. This production data shows an increasing rate of decline in industry production volume. Total whiskey production down 4% for the full year, down 8% for the last 6 months of 2024, and down 15% in the last 3 months of 2024. These declines are consistent with several recent news articles about closures or furloughs by a number of whiskey distillers. While it's difficult to accurately predict the timing and extent of a production reset, we believe the actions we are seeing across the industry are a clear signal that rationalization is underway.
Brandon Gall: The overall American whiskey categories also responding to the current environment with deeper production cuts. The most recent T. T. B production data, which was released after our fourth quarter earnings call is through the end of December 2020 for this production data shows an increasing rate of decline in industry production volumes with total whiskey production down.
Brandon Gall: 4% for the full year down 8% for the last six months of 'twenty 'twenty, four and down 15% in the last three months of 2024. These.
Brandon Gall: These declines are consistent with several recent news articles about closures or furloughs by number of whisky distilleries.
Brandon Gall: While it's difficult to accurately predict the timing and extent of the production reset we believe the actions we are seeing across the industry are a clear signal that rationalization is underway.
Brandon Gall: We believe the combination of scale, quality, reliability, and customization that we bring to our Brown Goods customers is unmatched in the industry. We also believe that our proactive actions position us well to emerge with a stronger competitive position and give us confidence in our four-year sales and profitability outlook for the distilling solutions sector.
Brandon Gall: We believe the combination of scale quality reliability and customization that we bring to our brown goods customers is unmatched in the industry. We also believe that our proactive actions position us well to emerge with a stronger competitive position and gives us confidence our full year sales and profitability outlook for the distilling solution segment.
Brandon Gall: Turning to our ingredient solution segment, our key initiative here is execution. As expected, quarterly sales were impacted by supply disruption resulting from adverse weather and complexities associated with the closure of the Atchison Distillery, as well as the commercialization of new customers. That said, the quarter was largely in line with our expectations, and we expect sequential improvement in the second quarter as projects come online and customer order patterns normalize. Underlying demand for our specialty ingredients remains strong, and we're executing with great urgency. Our fibrous and branded specialty starch continues to gain traction with food manufacturers seeking FDA-approved dietary fiber solutions.
Brandon Gall: Turning to our ingredient solutions segment, our key initiative here is execution as expected quarterly sales were impacted by supply disruption, resulting from adverse weather and complexities associated with the closure of the atrazine distillery as well as the commercialization of new customers that said that the quarter was largely in line with our expectations.
Brandon Gall: And we expect sequential improvement in the second quarter as projects come online and customer order patterns normalized underlying demand for our specialty ingredients remains strong and we're executing with great urgency or viruses branded specialty starch continues to gain traction with food manufacturers seeking FDA approved dietary fiber solutions.
Brandon Gall: In specialty proteins, we're making good headway with new customers in North America, especially in the plant-based and functional food category. Operationally, we're executing several key initiatives. Our deep well project is fully operational, and our new biofuel facility is on track to go live in the second half of 2025. We believe these investments will reduce disposal costs, improve efficiency, and further differentiate our capabilities in a competitive market. At the same time, we're increasing investments in our ingredients facility that are designed to increase throughput, improve reliability, and further streamline operations. Our teams are energized, our customer pipeline is growing, and our commercial execution is improving.
Brandon Gall: In specialty proteins, we're making good headway with new customers in North America, especially in the plant based in functional food categories.
Brandon Gall: Operationally, we're executing several key initiatives our deep well project is fully operational in our new biofuel facility is on track to go live in the second half of 2025, we believe these investments will reduce disposal costs improve efficiency and further differentiate our capabilities in a competitive market at the <unk>.
Brandon Gall: Same time, we are increasing investments in our ingredients facility that are designed to increase throughput improve reliability and further streamline operations. Our teams are energized our customer pipeline is growing and our commercial execution is improving we're fostering operational execution with greater cross functional collaboration to increase transparency.
Brandon Gall: We're fostering operational execution with greater cross-functional collaboration to increase transparency, accountability, and responsiveness. We believe these actions will help to unlock additional growth opportunities and further solidify our position as the leading specialty wheat ingredient supplier. Despite the soft quarter, we believe the ingredient solution segment is well positioned for stronger performance for the remainder of the year.
Brandon Gall: N C accountability and responsiveness. We believe these actions will help to unlock additional growth opportunities and further solidify our position as a leading specialty wheat ingredients supplier. Despite the soft quarter. We believe the ingredient solutions segment is well positioned for stronger performance for the remainder of the year.
Brandon Gall: Yeah.
Brandon Gall: Turning now to our financial position, we've made substantial progress in our initiative to fortify our balance sheet, enhance our liquidity with the upsizing of our credit facility, and the extension of our private placement shelf on Farewall 2. Mark will provide more details on this in a moment, but I'm encouraged by the liquidity and financial flexibility the amended facilities provide in support of our growth agenda and other capital needs. A balance sheet remains strong, with net debt leverage well within our target range. We continue to generate solid operating cash flow, and we remain disciplined in our capital allocation, including working capital and capex.
Brandon Gall: Turning now to our financial position, we made substantial progress on our initiative to fortify our balance sheet and enhanced our liquidity with the upsizing of our credit facility and the extension of our private placement shelf unfavorable terms Mark will provide more details on this in a moment, but I am encouraged by the liquidity and financial flexibility the amended facilities provide in support of our growth agenda.
Brandon Gall: In other capital needs, our balance sheet remains strong with net debt leverage well within our target range. We continue to generate solid operating cash flow and we remain disciplined in our capital allocation, including working capital and Capex.
Brandon Gall: Our initiative to drive greater productivity across the enterprise is also taking hold. We have high productivity targets for the quarter and full year, and I'm pleased with our team's dedication and progress on this initiative. Our teams are identifying new efficiencies throughout the supply chain, streamlining processes, and working to leverage our scale and capability to generate additional savings. While it's early days, we believe these efforts are laying the foundation for stronger execution of our strategic initiative.
Brandon Gall: Our initiatives to drive greater productivity across the enterprise is also taking hold we have high productivity targets for the quarter and full year and I'm pleased with our team's dedication and progress on this initiative.
Brandon Gall: Teams are identifying new efficiencies throughout the supply chain streamlining processes and working to leverage our scale and capabilities to generate additional savings. While it's early days. We believe these efforts are laying the foundation for stronger execution of our strategic initiatives with respect to tariffs at present based on what has been formally announced.
Brandon Gall: For more information visit www.fema.gov With respect to tariffs, at present, based on what has been formally announced, we do not expect tariffs to have a material impact on our full-year results. We will continue to closely monitor the tariff environment, particularly related to its potential impact on consumer confidence and purchasing behavior. Similar to our industry peers, we are not completely immune to tariff impacts and are looking across our supply chain for additional opportunities to mitigate any potential headwinds.
Brandon Gall: We do not expect tariffs to have a material impact on our full year results. We will continue to closely monitor the tariff environment, particularly related to its potential impact on consumer confidence and purchasing behavior.
Brandon Gall: Similar to our industry peers, we're not completely immune to tariff impacts and are looking across our supply chain for additional opportunities to mitigate any potential headwinds.
Brandon Gall: Given the encouraging first quarter results, we are reaffirming our 2025 guidance as we continue to expect net sales in the $520 million to $540 million range. Adjusted EBITDA in the $105 million to $115 million range, and adjusted basic EPS in the $2.45 to $2.75 range, with average shares outstanding of approximately $21.3 million, and four-year effective tax rate of approximately 25%.
Brandon Gall: Given the encouraging first quarter results, we are reaffirming our 2025 guidance as we continue to expect net sales in the $520 million to $540 million range.
Brandon Gall: Adjusted EBITDA in the $105 million to $115 million range and adjusted basic EPS in the $2 45 to $2 75 range with average hills shares outstanding of approximately $21 3 million in full year effective tax rate of approximately 25%.
Mark Davidson: Let me now hand it over to Mark for a review of our first quarter results. Thank you, Brandon. For the first quarter of 2025, consolidated sales decreased 29% to $121.7 million. compared to the year ago. Within our segments, branded speared sales decreased by 4%. Are min-value price brands declined by double digits during the quarter due to lower sales of certain tequila, liqueur, and cordial brands within those prices? While our premium plus sales increased by 7%, reflecting continued momentum and select American whiskey and tequila. Distilling solution segment sales declined by 45%, primarily driven by a 49% decline in brown goods.
Brandon Gall: Let me now hand, it over to Mark for a review of our first quarter results.
Mark: Thank you Brandon for the first quarter of 2025 consolidated sales decreased 29% to $121 $7 million compared to the year ago period.
Mark: It's in our segments branded spirits sales decreased by 4%.
Mark: Our main value priced brands declined by double digits during the quarter due to lower sales of certain tequila, Nucor and cordial brands within those price tiers, while our premium plus sales increased by 7%, reflecting continued momentum in select American whiskey and tequila brands.
Mark: Distilling solutions segment sales declined by 45%, primarily driven by a 49% decline in brown goods sales.
Mark Davidson: First quarter warehouse service sales increased by 2%, while white goods sales declined by 51% due to the phasing out of 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. Ingredient solution sales decreased by 26% during the first quarter, driven by decreased sales volume of specialty wheat starches and decreased net price mix of specialty wheat protein. 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.
Mark: First quarter warehouse service sales increased by 2%, while white goods sales declined by 51% due to the phasing out of a number of white good customer contracts in the week, but theatricism destroyed distillery closure as well as reduced production volumes of dry distillers grain.
Mark: Ingredient solution sales decreased by 26% during the first quarter driven by decreased sales volume of specialty wheat, starches and decreased net price mix, especially wheat proteins.
Mark: The declines in specialty wheat, starches and proteins were impacted by supply challenges, resulting from resulting from adverse weather and complexities associated with the closure of the Atchison distillery as well as the timing of commercialization of new customers.
Mark Davidson: Consolidated gross profit decreased 31% to $43.3 million dollars, primarily due to lower gross profits in the distilling solutions, ingredient solutions operating Gross margin declined by 120 basis points to 35%.
Mark: Consolidated gross profit decreased 31% to $43 $3 million.
Mark: Primarily due to lower gross profits in the distilling solutions and ingredient solutions operating segments gross margin declined by 120 basis points to 35, 6%.
Mark Davidson: First Quarter SG&A. is relatively flat, up just 1% compared to the prior year. with a modest decline on an adjusted Brandon's favorite segment, advertising a promotion expense of $7.7 million, declined 1% from the year ago period. As we streamline our brand investments, we continue to expect our full year A&P to be down in 2025 compared to 2020. However, during the first quarter, A&P's spend for our Penelope, El Mayor, and Rebel brands collectively was higher than the year-ago period, as we are intentionally focusing on our most impactful opportunities within We expect A&P spend for these three key brains collectively to be higher for the full year 2025 compared to 2020.
Mark: First quarter SG&A expense.
Mark: It was relatively flat up just 1% compared to the prior year period with a modest decline on an adjusted basis.
Mark: Branded spirits segment advertising and promotion expense of $7 $7 million declined 1% from the year ago period.
Mark: As we streamline our brand investments we continue to expect our full year A&P to be down in 2025 compared to 2024. However, during the first quarter A&P spend for Penelope <unk> rebel brands collectively was higher than the year ago period, as we are intentionally focusing on our most impactful opportunities.
Mark: These within the sector.
Mark: We expect A&P spend for these three key brands collectively to be higher for the full year 2025 compared to 2024.
Mark Davidson: First quarter adjusted EBITDA decreased 46% to $21.8 million dollars as lower gross profits more than offset reductions and adjusted SG&A and advertising and promotion Net income for the first quarter decreased to a loss of $3.1 million due to lower gross profit. $10.6 million increase in the fair value of the contingent consideration liability, reflecting the stronger-than-expected performance of the Penelope brand. On an adjusted basis, net income decreased 68% to $7.8 million. Basic earnings per common share decreased to a loss of $0.14 per share, while adjusted basic EPS decreased 66% to $0.36 per share. Please note that our adjusted basic EPS included a $0.07 per share unfavorable tax impact related to the besting of share-based awards granted in prior years during periods of higher stock We continue to prioritize strong cash generation by managing our working capital and reducing our barrel inventory.
Mark: First quarter, adjusted EBITDA decreased 46% to $21.8 million as lower gross profits more than offset reductions in adjusted SG&A and advertising and promotion costs.
Mark: Net income for the first quarter decreased to a loss of $3 $1 million due to lower gross profit and a $10.6 million increase in the fair value of the contingent consideration liability, reflecting the stronger than expected performance of the Penelope brain.
Mark: On an adjusted basis net income decreased 68% to $7 $8 million.
Mark: Basic earnings per common share decreased to a loss of 14 <unk> per share while adjusted basic EPS decreased 66% to 36 cents per share.
Mark: Please note that our adjusted basic EPS included a seven cent per share unfavorable tax impact.
Mark: Weighted to the vesting of share based awards granted in prior years during periods of higher stock prices.
Mark: We continue to prioritize strong cash generation by managing our working capital and reducing our barrel inventory put away our first quarter cash flow from operations was $44 7 million up from $24 $6 million during the prior year period, driven primarily by favorable working capital changes.
Mark Davidson: Our first quarter cash flow from operations was $44.7 million, up from $24.7 million. Prior Year Period, Driven Primarily by Favorable Working Capital. Our net whiskey put away was $12 million during the quarter, which was up versus the prior year. primarily to the timing of whiskey production within As our planned reductions in production volume are more heavily weighted towards the remainder of the year. We continue to expect full-year net whiskey putaway of $15 to $20 million, down significantly from $33 million in 2020. Capital expenditures declined 38% versus the prior year period to $8.1 million for the first We continue to expect full year 2025 capital expenditures of $36 million, representing a nearly 50% decline compared Our balance sheet remains healthy, and we are well capitalized with debt totaling $297.1 million as of the end of the first quarter, after net payments on debt of $26.6 million during the quarter, leaving us with $548.4 million in availability under our debt .
Mark: Our net whiskey put away it was $12 million during the quarter, which was up versus the prior year period due primarily to the timing of whiskey production within the year. That's our planned reductions in production volume are more heavily weighted towards the remainder of the year.
Mark: We continue to expect full year net whiskey pulled way of $15 million to $20 million down significantly from $33 million in 2024.
Capital expenditures declined 38% versus the prior year period to $8 1 million for the first quarter.
Mark: We continue to expect full year 2025 capital expenditures of $36 million.
Mark: Representing a nearly 50% decline compared to 2024.
Mark: Our balance sheet remains healthy and we are well capitalized with debt totaling $297 $1 million as of the end of the first quarter. After net payments on debt of $26 $6 million during the quarter, leaving us with $548 4 million and availability under our debt facilities. We ended the.
Mark Davidson: We ended the quarter with a cash position of $20.1 million, and our net debt leverage ratio remained largely stable at approximately 1.6%. On April 24, 2025, we successfully upsized our current facility from $400 million to $500 million and extended its maturity from 2026 to 2035. We also increased the size of the accordion feature from $100 million to $200 million. In addition, we extended our shelf for issuing up to $250 million of senior secured promissory notes from 2026 to 2021. These increased commitments at competitive terms are a testament to the strength of our balance sheet and give us additional financial flexibility to address our cash needs.
Mark: But the cash position $20.1 billion and our net debt leverage ratio remained largely stable at approximately one six times.
Mark: On April 24, 2025, we successfully upsized, our credit facility from $400 million to $500 million and extended its maturity from 2026 to 2030. We also increased the size of the accordion feature from $100 million to $200 million. In addition, we extended our shelf for issuing.
Mark: Up to $250 million senior secured promissory notes from 2026 to 2028.
Mark: These increased commitments at competitive terms are a testament to the strength of our balance sheet and give us additional financial flexibility to address our cash needs.
Mark Davidson: which include the expected settlement of our contingent consideration liability related to the Penelope acquisition, the refinancing of our convertible notes, if desired, and the execution of our strategic growth agenda.
Mark: Which include the expected settlement of a contingent consideration liability related to the Penelope acquisition, the refinancing of our convertible notes if desired.
Mark: Execution of our strategic growth agenda.
Brandon Gall: With that, let me hand it over to Brandon before opening for your Thanks, Mark. To close, we are pleased with our start to 2025. The first quarter unfolded as expected, with early signs of stabilization across all three states. We're executing our strategy with discipline and agility, leaning into our premium brand focus, enhancing customer partnerships and distilling solutions, and revitalizing.
Brandon Gall: With that let me hand, it over to Brandon before opening for your questions.
Speaker Change: Thanks, Mark to close we are pleased with our start to 2025, the first quarter unfolded as expected with early signs of stabilization across all three segments. We are executing our strategy with discipline and agility leaning into our premium brand focus enhancing customer partnerships into selling solutions and revitalizing agreed.
Brandon Gall: Branded Spirits is now our largest segment, and we believe it will be the foundation of our growth as we continue to move forward on our journey toward becoming a premier Branded Spirits Earlier this month, with a focus on long-term shareholder value creation, our Board of Directors took steps to strengthen its ranks in anticipation of our next chapter of business. Finally, I want to thank the entire MGP team for their hard work and agility. We're confident in our team, our strategy, and our ability to navigate the current environment while building long-term shareholder value.
Branded spirits is now our largest segment and we believe it'll be the foundation of our growth as we continue to move forward on our journey towards becoming a premier branded spirits company.
Speaker Change: Earlier this month with a focus on long term shareholder value creation, our board of directors took steps to strengthen its ranks in anticipation of our next chapter of growth finally, I would like to thank the entire M. G. P team for their hard work and agility, we're confident in our team our strategy and our ability to navigate.
Speaker Change: The current environment, while building long term shareholder value.
Operator: That concludes our prepared remarks. Operator, we're ready to begin the question and answer portion of the call. Thank you. We will now begin the question and answer session. And to ask a question, you may press star, then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we'll pause momentarily to assemble a roster.
Speaker Change: That concludes our prepared remarks, operator, we're ready to begin the question and answer portion of the call.
Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we'll pause momentarily to assemble our roster.
Mark Torrente: And our first question comes from Mark Torrente from Wells Fargo. Please go ahead. Hey, good morning, thanks for my question.
Arc Torrent: And our first question comes from Arc Torrent from Wells Fargo. Please go ahead.
Speaker Change: Hey, good morning, Mike.
Speaker Change: Questions.
Speaker Change: Hum.
Brandon Gall: First, just on your visibility into the Outlook, I guess specifically on distilling solutions, you've talked about proactively working with your customers to recalibrate pricing and order volumes. How much of your customer base have you made those adjustments with? What's been the general feedback and how does that flow through to your Outlook in terms of volume cadence and also any pricing resets for the year? Yeah, thanks for the question, Mark. Yeah, we introduced this concept of leaning into partnership for distilling solutions last quarter, and very, very, very pleased to say that the team has reached out to and had discussions with 100% of our contracted customers this year.
Speaker Change: First just on your visibility in to the outlook I guess, specifically on distilling solution, you've talked about proactively working with your customers to recalibrate pricing in order volumes, maybe how much of your customer base have you made those adjustments with what's been the general feedback and how does that.
Speaker Change: Flow through to your outlook in terms of volume cadence and also the pricing reset for the year.
Mark: Yeah. Thanks for the question Mark.
Speaker Change: Yeah, we introduced this concept.
Speaker Change: Meaning in the partnership for distilling solutions last quarter and a very very very pleased to say that the team has reached out to and had discussions with 100% of our contracted customers. This year. The vast majority of the of those discussions has led to either the customer confirming.
Brandon Gall: The vast majority of those discussions has led to either the customer confirming their current orders for volume, price and timing, or modifying them in some way. So, the vast majority of those customers have given us feedback. They have come back to us and said, you know what, I need this volume, not that volume, or, you know what, I need this more this match bill, not that match bill. My pricing is a little high compared to what I'm seeing. We'd appreciate it if you can, you know, maybe give us a more competitive price. In other cases, Mark, they've asked us to say, hey, I know I'm due to purchase it this quarter.
Speaker Change: Their current orders for volume price and timing.
Speaker Change: Or modifying them in some way so.
Speaker Change: The vast majority of those customers have given us feedback they have come back to US and said you know what I need this volume not that volume or you know what I need this more this mash bill not that Nashville.
Speaker Change: Our pricing is a little high compared to what I'm seeing we'd appreciate it if you can maybe give us some more competitive price.
Speaker Change: In other cases Barclays they've asked us say, hey, I know them due to our purchase this quarter kind of maybe do it in a later quarter or vice versa. So any combination of those three or four opportunities, we're seeing and it's been a game changer to use our sales teams word.
Brandon Gall: Can I maybe do it in a later quarter or vice versa? So, any combination of those three or four opportunities we're seeing, and it's been a game changer to use our sales team's word for it, because it's changed the tenor of the conversation and the tone, and it's really opened things up. In fact, not only does it give us greater visibility for 2025, but some of these conversations have even led to extensions beyond 25. So, on that latter point, we still have more work to do and a lot more conversations to have, but the signs are very encouraging and the team's doing a great job.
Speaker Change: For it because it does change the tenor of the conversation and the tone and it has really opened things up in fact, not only does it give us greater visibility for 2025, but some of these conversations have you been led to extensions beyond 25. So on that latter point, we still have more work to do and I'm a lot more conversations to have.
Speaker Change: But the signs are very encouraging and the team is doing a great job.
Brandon Gall: Okay, I appreciate the color there. And then, I guess, is your outlook for the segment still in line with prior expectations? And then just any additional color on margins? Specifically for distilling solutions, they are well ahead of expectations, at least from our end. How did those come in versus your own expectations? How much of that is from your cost savings actions versus maybe baseline business performing better, and how do you see that progressing through the year? Yeah, so firstly, I'll start and Mark, I'll let Mark chime in with some of the details. But so firstly, the vast majority of those discussions that have resulted into either confirmed or modifications, and most of those are, have been modifications.
Speaker Change: Okay I appreciate the color there and then.
Speaker Change: What is your outlook for the segment still in line with prior expectations and then just any additional color on margins.
Speaker Change: Specifically for just throwing push them there well ahead of expectation, but leads from our end how did those come in versus your own expectation how much of that is from your cost savings actions versus maybe baseline business performing better and how do you see that progressing through the year. Thanks.
Speaker Change: Yeah, So firstly I'll start and Marc I'll, let mark chime in with some of the details, but so firstly the vast majority of those discussions that have resulted into either confirmed or modifications and in most of those are have been modifications. That's all contemplated in our forward guide Mark So when we when we put those numbers together.
Brandon Gall: That's all contemplated in our forward guide marks. So when we, when we put those numbers together back in February and last spoke, you know, we really, the team really took a hard pause to think, okay, what is going to get it done in the market? And and so we are still seeing things within those expectations. So everything that the pricing volume, everything I just mentioned is contemplated.
Speaker Change: Back in February and last spoke Oh, we really the team really took a hard pause to think okay. What is going to get it done in the market and so we are still seeing things.
Speaker Change: Things within those expectations, so everything about the pricing volume everything I've just mentioned is contemplated.
Mark Davidson: And then as far as Mark, I'll let you take the numbers here for how it relates to the year as far as far as our full year expectations for the distilling solution segment. Those those still remain, you know, we communicated, we expect sales for the year to be down 50%, gross profit to be down 65% for the year for the segment. That's still what we're expecting. You know, when you look at the first quarter sales in gross profit, we're only down 45%. But again, I believe, as we mentioned in February, that that's a cadence. We expect the distilling solution segment to have stronger 1st half results than 2nd due to timing contracts and how those play play out and fall off in the back half of the year.
Speaker Change: And then as far as.
Mark: Mark I'll, let you take the numbers here for how it relates to Europe.
Mark: As far as far as our full year expectations for the distilling solution segment. Those those still remain you know we communicated we expect sales for the year to be down 50% gross profit to be down 65% for the year for the segment. That's still what we're expecting you know when you look at the first quarter sales and gross profit were only down.
Mark: 45%, but again I believe as we mentioned in February that that's a cadence we expect the distilling solutions segment to have stronger first half results and second due to timing.
Mark: Contracts and how those play play out and fall off in the back half of the year.
Mark Davidson: And just to add to that, the modifications we're speaking of in a lot of cases weren't adjusted in Q1, but they will be adjusted as the year goes on too. So that's what we're seeing for that segment in 2025, Mark. Impressions understood. Thanks.
Mark: And just add to that.
Mark: The modifications, we're speaking of and a lot of cases weren't adjusted.
Mark: Adjusted in Q1, but they will be adjusted as the year goes on too. So that's what we're seeing for that segment in 2025 Mark.
Speaker Change: Okay understood. Thanks.
Bill Chappell: Thank you all.
Mark: Thank you Mark.
Bill Chappell: The next question comes from Bill Chappell from Truist Securities, please go ahead. Thanks. Good morning. I'm going to go over and build. Just some maybe quantification on a few of the issues, and I'll kind of rapid-fire.
The next question comes from Bill Chappell from Truest Securities. Please go ahead.
Bill Chappell: Thanks, Good morning.
Speaker Change: I'm available mill.
Bill Chappell: Uh huh.
Bill Chappell: Maybe quantification on a few of the issues are and I'll kind of rapid fire, one what percentage or where are we in terms of the and distillate negotiations and when do you think that to be 99% a.
Bill Chappell: One, you know, what percentage or where are we in terms of the new distillate negotiations, and when do you think that to be, you know, at 99 percent? Two, you talked about, A, we're taking steps to stabilize or improve our branded spirits, the mid and lower tier. Can you maybe give us some examples of what you're doing and what you're doing differently and how that should change in the near term?
Bill Chappell: Two you talked about hey, we're taking steps to stabilize or improve our branded spirits, the mid and lower tier can you maybe give us some examples of what you're doing and what you're doing differently and how that.
Bill Chappell: How that should change in the near term and then three on ingredient solutions I guess I didn't really understand or maybe you could explain to us why after this quarter, you're more optimistic that things will improve later this year. So some examples or something behind that just to give us confidence because that's the business we have to kind of leave.
Bill Chappell: And then three, on ingredient solutions, I guess I didn't really understand, or maybe you could explain to us why after this quarter you're more optimistic that things will improve later this year. So some examples or something behind that just to give us confidence because that's the business we have kind of least visibility into. Thanks so much. Yeah, thanks for the question, Bill. So, on Dislink Solutions, let's start there. That's where you started. You know, we expect to come to this conclusion as soon as we can on, you know, the remaining, you know, 25% or so of customers that we're still negotiating for this year's contract.
Bill Chappell: Visibility into thanks, so much.
Bill Chappell: Yeah. Thanks for the question Bill so.
So oh I'm, just thinking solutions, let's start there that's where you started.
Bill Chappell: Yeah, we expect to come to this conclusion as soon as we can on the remaining.
Bill Chappell: 5% or so of customers that were still negotiating for this year's contract.
Brandon Gall: But the good news is, is that, you know, we're not hearing anything that's making us think differently about our guide at this point in time. So, we feel that's very, very encouraging. So, we'll wait until, you know, next quarter's call, but I think if we continue to make the progress we're making, we're going to have a good answer by then.
Bill Chappell: And but the.
Bill Chappell: The good news is is that you know we're not hearing anything that's making us think differently about our guide at this point in time. So we feel that's very very encouraging. So we'll wait until the next quarter's call, but I think if we continue to make the progress we're making we're going to have good answer by then so secondly on unbranded spear.
Brandon Gall: So, secondly, on Branded Spirits, Minimum Value Stabilization. Yep, a lot of, you know, the Q1 softness was anticipated by us, but we do know that we've got to take measures to reduce the D cell of those sales declines. So, what we're doing, you know, is what we've already talked about, is putting in more, you know, discount pricing and price support for some of the Minimum Value brands. It's very competitive in some of those areas, specifically for tequilas, cordials, and liqueurs. And so, a lot of that price support was contemplated, and it's still making its way through the market, and we expect that to take hold in subsequent quarters.
Bill Chappell: Sure it's been in value stabilization, yes, Oh.
Bill Chappell: A lot of the you know the Q1 softness was anticipated by us, but we do know that.
Bill Chappell: We've got to take a while.
Bill Chappell: You got to take measures to reduce the T cell <unk> of those sales decline. So what we're doing is what we've already talked about is putting in more.
Bill Chappell: Discount pricing and price support offer similar value brands.
It's very competitive.
Bill Chappell: Some of those areas specifically for keyless cordials in the cores and so a lot of that price support what's contemplated and it's still making its way through the market and we expect that to take hold in.
Bill Chappell: In subsequent quarters.
Brandon Gall: And then finally, Bill, on your ingredients question, yeah, so the quarter, as tough as it was, it came in largely within our expectations, and we called out the whys on the Q4 call, namely the weather impact from the cold and snow we saw in early January. We also talked about the customer choppiness. Both those things played out. What we also had, additionally, was some operational uptime issues of which we are addressing and solving through our CapEx programs this year. So, what gives us confidence on that front is, first, let's start with operations. So, you know, operationally, we have two really important projects that we need to complete this year.
Bill Chappell: And then finally bill on your ingredients question, yes. So.
Bill Chappell: The corner.
Bill Chappell: As tough as it was it came in largely within our expectations and we called out the wise on the Q4 call, namely the weather impact from the cold and snow. We saw in early January we also talked about the customer choppiness. Both those things played out well. We also had additionally was.
Bill Chappell: Some.
Bill Chappell: Operational uptime issues of which we are addressing and solving through our capex programs. This year. So what gives us confidence on that front is first let's start with what's up with operation. So operationally, we have two really important projects.
Brandon Gall: The first one is the Deep Well project that was completed in the first quarter. The second one, being the biofuel facility, that is still on schedule to be up and running and having an impact on the second half of the year for that business. In fact, I was in Atchison with the team last week. The still was delivered in a ceremony. It was had for the employees there. So, we are making great progress on those projects. Additionally, staying with operations, we need to have more reliability, and we need to improve our overall equipment effectiveness. And that said, we've got the largest amount of maintenance and reliability CapEx budgeted for this year than we have in the last five or more years.
Bill Chappell: But we need to complete this year. The first one is the deep well.
Bill Chappell: Reject that was completed in the first quarter. The second one being the biofuel facilities that is still on schedule.
Bill Chappell: To be up and running and and having an impact on the second half of the year for that business. In fact, I was in Atchison, with the team last week, but.
Bill Chappell: It's still was delivered in a ceremony was had for the employees. There. So we are making great progress on those projects. Additionally, staying with operations.
Bill Chappell: We need we need to have more reliability and we need to improve our overall equipment effectiveness and that said we've got.
Bill Chappell: The largest amount of maintenance and reliability capex budget for this year than we have in the last five or more years. So the team is very focused there on solving for those two projects and improving our reliability they get the product we need.
Brandon Gall: So, the team is very focused there on solving for those two projects and improving our reliability to get the product we need.
Brandon Gall: Okay, on the commercialization front, you know, for specialty wheat starches, the demand is there. It's been the production issues that we've had that have kept our inventories low and has been a fulfillment challenge for the team. So, as we improve our operations and our reliability, that should take care of itself. Secondly, on specialty protein, for the second quarter in a row, we saw a rise growth from a volume standpoint. However, due to the customer onboarding choppiness that we mentioned, the customer mix in the quarter wasn't the optimal level and where we expect it to be.
Bill Chappell: Okay on the commercial side, our commercialization front for.
Bill Chappell: For specialty wheat starches the demand is there its been the production issues that we've had that have kept our inventories low and and that's been a fulfillment challenge for the team. So as we improve our operations and our reliability that should take care of itself secondly on specialty protein for.
Bill Chappell: For the second quarter in a row, we saw a rise.
Bill Chappell: Both from a volume standpoint, however, due to the customer Onboarding Choppiness that we mentioned the customer mix in the quarter wasn't the optimal level and where we expect it to be that being said.
Brandon Gall: That being said, we expect Q2 in the subsequent quarters to get better. In fact, we're already seeing orders from those right customers in April and May for a rise specialty protein. And then for our proteras specialty protein, the team continues to make a lot of progress there. I mentioned the three inclusions that the R&D team is developing. Those are ready to go in our undergoing trial with potential customers as we speak. And the team is still very dedicated and focused on bringing in customers, mostly for the second half of this year, Bill. So, there's a lot that gets us excited.
Bill Chappell: We expect Q2 in the subsequent quarters to get better in fact, youre already seeing orders from from those right customers in April and May for arise specialty protein and then for our pro terrorist specialty protein. The team continues to make a lot of progress there I mentioned, the three inclusions that we that the R&D team.
Bill Chappell: As developing those are ready to go and are undergoing trial with with potential customers as we speak and the team is still very dedicated and focused on on bringing in customers mostly for the second half of this year Bill. So there's there's a lot that gets us excited.
Bill Chappell: We've got to execute the theme for this segment is execution, both operationally and commercially. This team is more than capable of doing it. They've done it in the past, but operationally and commercially, they've been thrown some curveballs, but I'm very proud with how they're responding and that's what gives us confidence. Got it.
Bill Chappell: We've got to execute the theme for this segment is execution, both operationally and commercially this team is more than capable of doing it they've done it in the past.
Bill Chappell: But operationally and commercially they've they've been thrown some curve balls, but I'm very proud with how they're responding and that's what gives us confidence.
Bill Chappell: And then just second, just kind of follow up on them. The new distillate business, I mean, if we're looking at it kind of as a Trailing 12-month Evodah. You know, and it's coming down as you're renegotiating and lowering the volumes. Like, when do we hit a plateau? I mean, when does that, okay, this is the trough. We now know what the base case is, and we can start growing from here. Is that end of this year? Does that move into next year? Do you understand what I'm asking? And just trying to look at that business particular with the negotiation of how, then, we can model and say, okay, this is the base case, and here's where we go.
Bill Chappell: Got it and then just secondly, just kind of follow up on them.
Bill Chappell: Again, new distillate business I mean, if we're looking at it kind of as a.
Bill Chappell: Trailing 12 month EBITDA.
Bill Chappell: And it's coming down as you're renegotiating and and and lowering the volumes like when do we hit a plateau I mean when does that.
Bill Chappell: This is this is the trough, we now know what the base cases, and we can start growing from here is that.
Bill Chappell: End of this year does that move into next year.
Bill Chappell: I understand what I'm, asking and just just trying to look at that business, particularly with the negotiation of how then we can model and say okay. This is the base case, and here's where we go.
Brandon Gall: Yeah, great question. And that's what we talked about internally quite a bit. And, you know, we shared on our last call that the elevated inventory of barrels in the industry, we expect to that overhang to persist into 2026. That being said, we're not waiting for that to take care of itself. We're taking the proactive actions that we've been discussing. And so our, you know, our goal there is to bring that plateau forward as quickly as possible. We're making great progress there. We still have more work to do. The team is, you know, operating with that partnership approach, and it's resonating.
Bill Chappell: Yeah, Great question, and that's what we talk about internally quite a bit and we shared on our last call that will be elevated inventory of barrels.
Bill Chappell: In the industry, we expect to that overhang persist.
Bill Chappell: The 2026 that being said, we're not waiting for that to take care of itself, where we're taking the proactive actions that we've been discussing and so are you know our goal there is to bring that plateau forward as quickly as possible, we're making great progress there we still have more work to do.
Bill Chappell: The team is.
Bill Chappell: Operating with that partnership approach and it's resonating.
Brandon Gall: We need a little bit more time, Bill, to, you know, to keep doing what we're doing. But we are seeing good signs both internally and externally.
Bill Chappell: We need a little bit more time bill.
Bill Chappell: Keep doing what we're doing but we are seeing good good signs both internally and externally we shared some of the T. P B data.
Brandon Gall: We shared some TTB data that's updated through the end of 2024. And the production deceleration over the course of the year was pretty dramatic, which isn't necessarily anything you'd expect to want to see, but it's the rational behavior that we're looking for in our industry. So we're starting to see the right signs of progress and stabilization, Bill. It's still a little bit too early to make a definitive call. So just give us some more time. We know we're doing the right thing. Great. Thanks so much. Thank you, Bill.
Bill Chappell: That's updated through the end of 'twenty 'twenty four and the the production.
Bill Chappell: The acceleration over the course of the year, it was pretty dramatic which isn't necessarily.
Bill Chappell: Necessarily anything you'd expect to want to see but it's the rational behavior that we're looking for in our industry. So we're starting to see the right signs of progress and stabilization Bill it's still a little bit too early to make a definitive call. So just give us some more time, we know we're doing the right things.
Speaker Change: Great. Thanks, so much.
Speaker Change: Thank you Bella.
Seamus Cassidy: The next question comes from Robert Moskow from TD Cowan, please go ahead. Hi, this is Seamus Cassidy on for Rob Moskow, and thanks for the question. So on your last call, you noted that you expected premium plus sales within branded for the year to be roughly flattish, partially due to a cutback on sort of the allocated barrel offerings where demand has slowed. Given the plus 7% in one queue, and you sort of noted that innovation had performed well, is it fair to say that things came in a little ahead of expectation, or is it sort of just a timing element with regards to innovation?
Speaker Change: The next question comes from Robert Moskow from T. D. Cowen. Please go ahead.
sheamus capacity: Hi, This is sheamus capacity on for Rob Moskow and thanks for the question.
sheamus capacity: So on your last call you noted that you expected premium plus sales within branded for the year to be roughly flattish partially due to a cutback on sort of the allocated barrel offerings, where demand has slowed.
Speaker Change: Given the plus 7% Q1and you sort of noted that innovation had performed well is it fair to say that things came in a little ahead of expectation or is it sort of just a timing element with regards to the inhibition.
Brandon Gall: Yeah, I think, great question. It was a very encouraging quarter for Premium Plus. It was led by Penelope's great growth and its ability to continue using innovation as its platform to resonate with customers. But also, El Mayor and Rebel 100 and Rebel Premium also showed growth in the quarter. So a lot of that was expected, and they were very encouraged by it. But Penelope for the quarter did come in a bit above expectations, which is why we took the contingent liability up in the quarter on our balance sheet, which is a great sign.
Speaker Change: Yeah, I think a great question. It was a very encouraging quarter for premium plus a it was led by Penelope is great growth and its ability to continue using innovation and as its platform to run it to resonate with customers, but also a L may or and rebel 100.
Speaker Change: Rebel premium also showed growth in the quarter. So a lot of that was expected and we're very encouraged by it but.
Speaker Change: For the quarter did come in a bit above expectations, which is why we took the hit we took the contingent liability up.
Speaker Change: In the quarter on our balance sheet, which is a great sign so it's too early to revise our full year outlook on where we think premium plus is going to come in and Seamus.
Seamus Cassidy: So it's too early to revise our full-year outlook on where we think Premium Plus is going to come in, Seamus. But like you said, we're off to a really good start. Understood. Thanks.
You know like you said, we're off to a really good start.
Speaker Change: Understood. Thanks, and then given sort of like the pricing actions within branded that you called out on mid and value, but how should we think about the evolution of the margin profile for the segment I'm you know for a while now there's sort of been as you know a structural tailwind of the growing premium plus mix, but presumably if you take some of those pricing actions that would also.
Brandon Gall: And then, given sort of like the pricing actions within branded that you called out on mid and value, how should we think about the evolution of the margin profile for the segment? You know, for a while now, there's sort of been this, you know, structural tailwind of the growing premium plus mix. But presumably, if you take some of those pricing actions, that would also boost volume on your mid and value brands. So just sort of how you're thinking about that and balancing the profit and margin implications. Thanks. Yeah, it sounds like you've been sitting around our table internally.
Speaker Change: Boost volume on your mid and value brands, So just sort of how you're thinking about that and balancing the profit and margin implications. Thanks.
Speaker Change: Yeah.
Speaker Change: Sounds like you've been sitting around our table internally. That's what we're you know we were talking about quite a bit yeah, I mean, the the price.
Brandon Gall: That's what we're talking about quite a bit. Yeah, I mean, the price support we mentioned on the Q4 call is rolling out. It's not necessarily taking effect on the shelf as quickly as we'd anticipated, but it's still making its way out to the shelf and to the consumer. And I mentioned tequila being one of those categories within our mid-end value brand portfolio that's seeing some of the headwind. And I think a lot of the pricing we're seeing out in the market that's being reduced at the shelf is a result of reduction in costs, particularly agave costs.
Speaker Change: The price support we mentioned in on the Q4 call and is rolling out it's not necessarily taking effect on the shelf as quickly as we had anticipated, but its still making its way out to the shopping to the consumer and.
Speaker Change: I mentioned tequila being one of those categories within our mid and value.
Speaker Change: Brand portfolio that seeing some of the headwind and I think a lot of the pricing we're seeing out in the market that's being reduced at the shelf is a result of reduction in costs, particularly agave costs. So.
Brandon Gall: So it's really, that's part of the competitive race that we're all in. And so what I'm trying to say, Seamus, is at least in some cases, reducing price doesn't necessarily mean there's going to be a one-for-one trade-off of margin in this environment. Understood, thanks.
Speaker Change: It's really that's part of the competitive race that we're all in and so you know what.
Speaker Change: What I'm trying to say Seamus is not at least in some cases, reducing price doesn't necessarily mean, there's going to be a one for one trade off of margin in this environment.
Speaker Change: Understood. Thanks.
Operator: Each share is $1.
Operator: This is a production of the National Agricultural Foundation, in association with the U.S.
Sean McGowan: Department The next question comes from Sean McGowan from Roth Capital. Please go ahead. Thank you very much. Appreciate it. Questions? Which one? Yeah, two questions. Can you can you talk about whether or not you think there was any impact in terms of customer demand from anticipated tariffs? Like there are any customers that work in Europe? Are they ordering more because they think there might be an increase in tariffs later, even if it's not there now? Are you talking for Distilling Solutions, Sean? Can you help me answer? Yeah, Distilling Solutions. I know it's kind of indirect and you don't have a clear view of what they're doing, but do you think there might have been any kind of a pull forward?
Speaker Change: Thanks Seamus.
Speaker Change: The next question comes from Sean Mcgowan from Roth Capital. Please go ahead.
Sean McGowan: Thank you very much appreciate it.
Speaker Change: Sure Sean.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Can you can you talk about whether or not you think there was any impact in terms of customer demand from.
Speaker Change: <unk> tariffs.
Speaker Change: Customers that work.
Speaker Change: Work in Europe.
Speaker Change: Are they ordering more because they think there might be an increase in tariffs later in or even if it's not there now.
Speaker Change: Are you talking for the sealing solutions, Sean can you help me answer yes.
Speaker Change: Drilling solutions.
Speaker Change: Yeah, I have a clear view of what Theyre doing but do you think that might have been any kind of a pull forward.
Brandon Gall: Not that we're seeing. A lot of our conversations have been around contracts, as we mentioned, and a lot of the volume and timing on those were put in place, you know, well before the tariffs in a lot of senses. So, you know, we're not necessarily seeing that, definitely didn't see it in the quarter, but that doesn't mean that, you know, potentially finished goods by our customers or other industry participants didn't move around, but we don't have as much insight into that.
Speaker Change: Not not that we're seeing a lot of.
Speaker Change: A lot of our conversations have been around contracts as we've as we mentioned and a lot of the a lot of the volume and timing on those were put in place well before the tariffs and a lot of sense. It. So yeah, we're not necessarily seeing that definitely can see it in the quarter, but that doesn't mean that.
Speaker Change: Potentially finished goods by our customers or other industry participants.
Speaker Change: It didn't move around but we don't have as much insight into that okay. Alright. Thanks, and then the other question was.
Brandon Gall: All right, thanks. And then the other question was, you know, you noted the improved or, you know, kind of a better-than-expected performance of Penelope. That seems like a bit of a turnaround. Weren't you talking last quarter about how... You weren't expecting to see as much upside in Penelope as you had earlier thought, or can you talk a little bit about that? Yeah, I appreciate that. So yeah, two things. Number one, we never, we never, you know, so that we don't have strong expectations for Penelope. In fact, you know, the expectations we have going into this year were very, we did temper them back a little bit, you know, coming into Q4.
Speaker Change: You noted the improved or kind of a better than expected performance with Penelope.
Speaker Change: Looks like a bit of a turnaround where you talking last quarter about how maybe.
Speaker Change: You werent expecting to see as much upside and Penelope as you had earlier thought can you talk a little bit about that.
Speaker Change: Yeah, No I appreciate that so yeah, two things number one.
Speaker Change: We never we never.
Speaker Change: So that we don't have strong expectations for peanuts.
Speaker Change: In fact.
Speaker Change: The expectations, we had going into this year, we're very we did temper them back a little bit coming into Q4.
Brandon Gall: But then two things have happened. Number one, the brand really performed well in the quarter. And so that, you know, that's not necessarily changing our full outlook, but it's definitely, like I said to Seamus, it's a good start for the brand and for Premium Plus for us. But what it also does, because Q1 came in so strong, the accounting will say that you've got to now accelerate your contingent liability, which is what we did in the quarter. So, you know, we are still very, very, very optimistic about this brand. You know, it's performing really, really well in a very difficult consumer backdrop.
Speaker Change: But then two things have happened number one the brand really performed well in the quarter.
Speaker Change: And so that's you know that's not necessarily changing our full outlook, but it's definitely like I said just seamus. It's a good start for the brand and for premium plus for us.
Speaker Change: But what it what it also does because Q1 came in so strong be counting well, we'll say that you've got now accelerate your contingent liability, which is what we did in the quarter. So we are still very very very optimistic about this brand is performing really really well in a very difficult consumer backdrop.
Brandon Gall: And, you know, we're excited for the things to come as it relates to Penelope.
Speaker Change: We're excited for the things to comment as it relates been L. P.
Brandon Gall: Okay, thank you very much.
Speaker Change: Great. Okay. Thank you very much.
Mitch Pinheiro: you've shown The next question comes from Mitch Pinheiro from. DIRT event. Please go ahead. Yeah, hey, good morning. I'm going to... Most of my questions have been asked, just a couple here. One, When I look at the barrel distillate, you know, it was up 16% year over year. even up sequentially, is that Rise solely from your own, you know, your brands and spirits business, or is there any of that coming from the distilling solution? Yeah, when you talk about that increase you're talking about on the on the put away side? Yeah, correct.
Speaker Change: Michelle.
Speaker Change: The next question comes from Mitch Pinheiro from US dirt event. Please go ahead.
Mitch Pinheiro: Yeah, Hey, good morning.
Speaker Change: Good morning.
Most of my questions have been asked just a couple here one.
Speaker Change: When I look at the barrel distillate.
Speaker Change: You know it was up 16% year over year.
Speaker Change: Even up sequentially.
Speaker Change: Is that.
Speaker Change: Rice.
Speaker Change: Solely from your own your branded spirits business at work is there any of that coming from the distilling solutions.
Speaker Change: Yeah.
When you talk about that increase you've been talking about on the on the put away side, Yeah correct. Yeah. So much so that that is that is solely for our brand in support of our branded spirits business.
Brandon Gall: Yeah, so Mitch, so that is solely in support of our Branded Spirits business and that, you know, the reason that has increased in Q1 despite what we've indicated is going to be a decrease for the full year, we're expecting $15 to $20 million for the full year, down from $33 million last year, so the reason that's heavy in Q1 is just due to timing of production, so our planned production reductions out of our distilleries for the year have been more heavily weighted to the remainder of the year, and so as a result of our Q1 production was higher than it will be the rest of the year, and as a result our put away in support of our was higher.
Speaker Change: And that you know the reason has increased in Q1, despite what we'd indicated is going to be a decrease for the full year, we're expecting $15 million to $20 million for the full year down from $33 million last year. So the reason that's heavy in Q1, it's just due to timing of production.
Speaker Change: Our our play into production reductions.
Speaker Change: Out of our distilleries for the year have been more heavily weighted to the remainder of the year and so as a result of our Q1 production was higher than it will be the rest of the year and as a result, our put away in support of our brands It was higher.
Brandon Gall: Yeah, and that's all part of our productivity initiative, Mitch, where, you know, we had to move around our scheduling to maximize efficiency and keep costs competitive, and so that's the way it played out, and I could get into a lot more detail, but I'll spare you all from that, but yeah, so the takeaway is it was up in the quarter, but we're still expecting $15 to $20 million in total net put away this year, which is down from $33 million last year, and that $15 to $20 million is for brand and spirits. So if you were to...
Speaker Change: And that's and that's all part of our productivity initiative match, where we had to move around our scheduling four to maximize efficiency and keep cost competitive.
Speaker Change: So that's.
Speaker Change: That's the way it played out and I can get into a lot more detail, but I'll spare you all from that but.
Speaker Change: Yeah. So the takeaway is it was up in the quarter, but we're still we're still expecting $15 million to $20 million in total net put away. This year, which is down from $33 million last year in that $15 million to $20 million is for.
Speaker Change: <unk> branded spirits.
Speaker Change: So if I if you were to.
Brandon Gall: If you were to disclose, you know, the barrel distillate for your distillery products versus your branded spirits, is it fair to say the distillery products business put away? Was down, not in the put away, but the actual level of distillate, is that down? Yeah, because there were there were age sales in the quarter. So those age sales would be a reduction in the distilling solutions inventory. And given the inventory that was added in the quarter was for brands. Yep, that's right. Distilling solutions overall position would be reduced by that amount.
Speaker Change: If you were to disclose it.
Speaker Change: It's still there.
Speaker Change: Barreled distillate for your.
Speaker Change: Jewelry products versus your branded spirits is it fair to say the distillery products business put away.
Speaker Change: Was down not even to put away, but the actual level of distillate.
Speaker Change: Is that down.
Speaker Change: Yeah, because there were there were eight sales in the quarter, so those aged sales would.
Speaker Change: It would be a reduction in the distilling solutions inventory and given the inventory that was added in the quarter was for brands Yep. That's right just doing solutions overall position what would be reduced by that amount.
Brandon Gall: Okay, and and then Based on your comment prior about production and productivity and the timing, when you're putting away this aged distillate, is it going to have a higher cost just because your throughput Perfect cost is lower, or are these, or is the embedded margin, you know, in the distillate that you're putting away consistent with prior years? Yeah, great question. Yeah, so any, you know, any overhead, you know, absorption is going to be impacted by the volume we produce. And yeah, the assumption there is right, Mitch, is that, you know, the less we produce, the more that, the more that overhead has to get spread over fewer barrels, which is why we were very vocal about the productivity initiatives we were putting in place for the year on the Q4 call.
Speaker Change: Okay.
Speaker Change: And.
Speaker Change: And then.
Speaker Change: Based on your comment prior about production and productivity and in the timing.
Speaker Change: You're putting away this this new <unk>.
Speaker Change: Distillate is it going to have.
Speaker Change: A higher cost just because youre your throughput.
For fixed cost is lower.
Speaker Change: Or are these whereas the embedded margin you know in the distillate that you are putting away consistent with prior years.
Speaker Change: Yeah great.
Speaker Change: Great question, Yes, so any.
Speaker Change: Any overhead.
Speaker Change: Yeah absorption is going to be impacted by the volume we produce and the assumption there is right matches that.
Speaker Change: The less we produce the more that the more that over it as it gets spread over fewer barrels.
Speaker Change: Which is why we were very vocal about the productivity initiatives, we're putting in place for the year I'm on the Q4 call. So a lot of that has to do with scheduling as we mentioned a lot of it has to do with going back to our suppliers and vendors.
Brandon Gall: So, a lot of that has to do with scheduling, as we mentioned, a lot of it has to do with going back to our suppliers and vendors and having the same partnership conversation we're having with our customers. And so we're doing all the right things, I think, to make our cost structure as competitive as possible. And because we know that's what our customers need. And we feel like we're well suited from a, from an operational standpoint, you know, to do that. In a lot of ways, so we like our positioning there as well as the tax we're taking.
Speaker Change: Having the same partnership conversation, we're having with our customers and so I'm, we're doing all the right things I think to make our cost structure as competitive as possible.
Speaker Change: And and because we know that's what our customers need and we feel like we're well suited from a from an operational standpoint to do that in a lot of ways. So we like our positioning there as well as the tax we're taking.
Brandon Gall: And those are our filming... and to our the guidance numbers that we've given as well. Yep. Thanks. And then When I, when I, you know, it looks like We're starting to see a little more promotional pricing. in the whiskey category, just both anecdotally and just what I've seen on, in some of my data. But it appears it's more tame than I would have thought. Is there— are producers, not only, you know... Well, in the industry-wide, are they kind of hanging on to price or are we, what seems to be, we're starting to see a little more value being driven, you know, instead of getting, you're seeing older product getting, you know, some six-year, eight-year kind of product out there as opposed to four-year.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: And two are the guidance numbers that we get.
Speaker Change: Then as well and then.
Speaker Change: When I when I.
Speaker Change: It looks like.
Speaker Change: We're starting to see a little more promotional.
Speaker Change: Promotional pricing.
Speaker Change: I'm in the whiskey category.
Speaker Change: But anecdotally what I've seen on it in some of my day that and.
Speaker Change: But it appears it's more tame than I would've thought.
Speaker Change: Is there.
Speaker Change: Our our producers not only.
Speaker Change: Well in the industry wide are they kind of hanging on to price or what seems to be we're starting to see a little more value being driven you know instead of getting you're seeing older product getting.
Speaker Change: Some six year eight year kind of product out there as opposed to four year or are we starting to see.
Brandon Gall: Are we starting to see sort of like the pricing almost inherent being given to consumers in the form of better value product? Is that how the industry, you think, is going to approach... like promotion and and and and holding on to price. Yeah, I think, you know, that's the challenge in the spirits industry is, you know, that our product can last on the shelf at retail or even the shelf at home for quite a while. So I think, you know, a lot of consumers, rather than, you know, buying that incremental bottle, even for a slightly reduced price, a lot of them are just maybe drinking more of what they have at home.
Speaker Change: Sort of like the <unk>.
Speaker Change: Pricing almost in hiring being.
Speaker Change: Being given to consumers in the form of better value product is that is that how the industry thinks going to approach.
Speaker Change: Like promotion and and and and holding on to price.
Speaker Change: Yeah I think.
Speaker Change: That's the challenge in the spirits industry is that our product can last on the shelf at retail or even the shelter at home for quite a while so I think you know a lot of consumers rather than buying.
Speaker Change: Buying that incremental bottle, even for a slightly reduced price one of the largest maybe drinking more of what they have at home and so it's really hard to draw that direct correlation necessarily as a as it relates to spirits and American whiskey, but that could explain maybe part of the behavior, you're seeing now mentioned that we're seeing maybe more generally but you know what I will say you know what.
Brandon Gall: And so it's really hard to draw that direct correlation, necessarily, as it relates to whether it's an American whiskey, but that could explain maybe part of the behavior you're seeing now, Mitch, and that we're seeing maybe more generally. But, you know, what I will say, you know, with, you know, one example is, you know, could be, you know, our Penelope brand. And what the team is doing such a great job there doing is when they are coming forward with innovation, it is with an eye to where the consumer is today. And there's a lot of, there's a lot of the macro headwinds that are affecting consumers in the United States and outside of the United States, as we're all aware.
Speaker Change: One example is <unk>.
Could be our P and L. P brand and what the team is doing such a great job. They're doing is when they are coming forward with innovation. It is with an eye towards the consumer is today and there's a lot of there's a lot of the macro headwinds that are affecting consumers in the United States and outside the United States as we're all aware and when we bring forward.
Brandon Gall: And when we bring forward a brand or an innovation like Penelope Weeded at that $35 to $39 price point, that's now making one of our Penelope products more approachable for a consumer that shops in that price range, which is exactly where we want them to be. So now we're giving them that gateway into not only the American whiskey category, but our Penelope brand. And just one more example, and we mentioned it on prepared remarks, Mitch, is our Penelope Peach Dultascian. This is our first ready-to-serve, ready-to-port product for Penelope. It came out in the quarter, and this is going to retail more in the $20 to $30 range.
Speaker Change: At a brand or an innovation like Penelope weeded at that 35 to $39 price point, that's now that that's now making one of our Penelope products more approachable for our consumer that shops in that price range, which is exactly where we want them to be so now, we're giving them that gateway into not only the American whiskey category, but.
Speaker Change: <unk> brand and just one more example, we mentioned that on the prepared remarks matches, our P and L. P pizza old fashion.
Speaker Change: Our first ready to serve ready to pour product for Penelope It came out in the quarter and this is gonna retail more in the 20 to $30 range. So again, it's going to be even more approachable from a consumer standpoint, and also a great entry point and on ramp into the category and ended up in L. P family for consumers.
Operator: So again, it's going to be even more approachable from a consumer standpoint and also a great entry point and on-ramp into the category and into the Penelope family for consumers. Alright, that's all I have. Thanks for the question. Thank you, Mitch. Again, if you have a question, please press star then 1.
Okay.
Speaker Change: That's all I have.
Speaker Change: For the corporate image.
Speaker Change: Again, if you have a question. Please press Star then one our next question comes from Ben <unk> from Lake Street Capital markets. Please go ahead.
Benjamin Klieve: Our next question comes from Ben Klieve from Lake Street Capital Markets.
Brandon Gall: Please go ahead. All right, thanks for taking my questions. How about just a quick one regarding the ongoing CEO search? And so curious one, if you just provide any any kind of general updates. But specifically, I'm also wondering the degree to which all of the kind of strategic initiatives that you have embarked on of late are, you know, are if any of these strategic initiatives you considered are being held back given the ongoing CEO search? Apologies for the poorly worded question. No, no worries, Ben. Great question. So, CEO search is still underway. These searches take time.
Ben: Alright, thanks for taking my questions.
Speaker Change: Just a quick one regarding the ongoing CEO search and so curious wanted if you can just provide any any kind of general updates, but specifically I'm also wondering the degree to which all of the kind of strategic initiatives that you have embarked on of late or or if any of these strategic initiatives.
Ben: <unk> are being held back given the ongoing CEO search.
Ben: For the poorly worded question there.
Ben: No no no. We're it's been great question. So CEO search is still underway.
Brandon Gall: And, you know, we've even shared from the start that it's not uncommon for CEO public company searches the last four to eight months. And I've also read that, you know, the smaller the market cap, the longer it can take. So, but that doesn't mean that the board is not very focused on this. And it is a top priority. But what we're also seeing, though, is other, you know, changes in leadership at the board level and, you know, in reevaluating, you know, the individuals on the board at the director level and positioning that board to make important decisions and to guide us in the future.
Ben: Let's just take time and.
Ben: We've even check from the start that its not uncommon for a CEO of public companies searches the last four to eight months and I've also read that the smaller the market cap the longer can take.
Ben: So but that doesn't mean that the board is not very focused on this.
Ben: And it is it is a top priority, but what we're also seeing though is as other changes in leadership at the board level.
Speaker Change: Uh huh.
Ben: And re.
Speaker Change: Evaluating the.
Speaker Change: The individuals on the board at the director level, and a positioning that board to make important decisions in the guide us in the future. So oh, well just because the CEO search is still ongoing.
Brandon Gall: So, just because, you know, the CEO search is still ongoing, it doesn't mean that we're not making great strides from a leadership perspective as a company.
Speaker Change: It doesn't mean that we're not making great strides from a leadership perspective, as a company and as it relates to strategic initiatives been hopefully you're picking up the fact that we're not just waiting around.
Brandon Gall: Yeah, and as it relates to strategic initiatives, Ben, hopefully you're picking up the fact that we're not just waiting around. We don't have that luxury right now. And so, the team is taking action. I could not be more proud of the team throughout the organization. This has been an absolute pleasure of mine to be able to work even more closely and cross-functionally with them over the last few months. And so, yeah, we are taking action. We are seeing things through the same lens and aligning. And we do, we don't have a choice, Ben. And the time is now.
Speaker Change: We don't have that luxury right now and so the team is taking action.
Speaker Change: I could not be more proud of the team throughout the organization. This has been an absolute pleasure of mine to be able to work even more closely.
Speaker Change: Cross functionally with them over the last few months and so yeah. We are taking action we are seeing things through the same lens and aligning and we do it we don't have a choice spend and and the time is now and and and I'm very very proud with the decisive actions the team is taking.
Benjamin Klieve: And I'm very, very proud with the decisive actions the team is taking. Very good. I appreciate that. Thanks for taking my question. I'll get back to you. Thank you. Thank you, Ben.
Speaker Change: Very good I appreciate that thanks for taking my question I'll get back in queue.
Speaker Change: Thank you Ben.
Operator: There are no more questions in the queue. This concludes our question and answer session.
Speaker Change: There are no more questions in the queue. This concludes our question and answer session I would like to turn the conference back over to Brandon Gall for any closing remarks.
Brandon Gall: I would like to turn the conference back over to Brandon Gall for any closing remarks. Thank you for your interest in our company and for joining us today for our first quarter earnings call. We look forward to meeting with many of you over the next few weeks. The conference is now concluded. Thank you for attending today's presentation.
Speaker Change: Thank you for your interest in our company and for joining US today for our first quarter earnings call. We look forward to meeting with many of you over the next few weeks.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.
Speaker Change: [music].