Q2 2025 MGP Ingredients Inc Earnings Call

Mark Davidson: Good morning and welcome to the MGP Ingredients second quarter earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Amit Sharma, Vice President, Investor Relations. Please go ahead.

Good morning, and welcome to the M. G. P ingredients second 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.

After today's remarks, there will be an opportunity to ask questions ask a question you May Press Star then one on you touched on phone to withdraw your question. Please press Star then two please.

Please note this event is being recorded.

I would now like to turn the conference over to Amit Sharma, Vice President Investor Relations. Please go ahead.

Amit Sharma: Thank you. Good morning and welcome to MGP's second quarter earnings conference call. I'm Amit Sharma, Vice President of Investor Relations, and this morning I'm joined on the call by Julie Francis, our new Chief Executive Officer and President, who will introduce herself and make some initial observations. Brandon Gall, our Chief Financial Officer, and Mark Davidson, our VP, Corporate Controller, and Head of Treasury. They will provide an overview of our quarterly results and outlook. As customary, we will begin the call with management's prepared remarks before opening the call to anonymous questions. Before we begin, this call may involve certain forward-looking statements. The company's actual results could differ materially from any forward-looking statements due to a number of factors, including the risk factors described in the company's quarterly and annual reports filed with the SEC.

Good morning, and welcome to <unk> second quarter earnings Conference call, Amit Sharma, Vice President of Investor Relations and this morning I'm joined on the call by Julian Francis Our New Chief Executive Officer, and President who will introduce herself and make some initial observations Brendan got all our chief financial Officer and Mark.

And our VP corporate controller and head up catch rate, Dave will provide an overview of our quarterly results and outlook.

As customer already you'd be able to begin the call with management's prepared remarks before opening the call to analysts questions.

So let me begin this call may involve certain forward looking statements. The company's actual results could differ materially from any forward looking statements due to a number of factors, including the risk factors described in the company's quarterly and annual reports filed with the FCC.

Amit Sharma: The company assumes no obligation to update any forward-looking statements made during the call except as required by the law. Additionally, this call will contain references to certain non-GAAP measures, which we believe are useful in evaluating the company's performance. A reconciliation of these measures to the most directly comparable GAAP measures is included in today's earnings release, which was issued this morning before the market opened and is available on our website, www.mgpingredients.com. At this time, I would like to turn the call over to Brandon for opening remarks.

The company assumes no obligation to update any forward looking statements made during the call except as required by the law.

Additionally, this call will contain references to certain non-GAAP measures, which we believe are useful in evaluating the company's performance.

Yeah. He conciliation of these measures the most directly comparable GAAP measures is included in today's earnings release, because they showed this morning before the market open and is available on our website www Dot M. J P ingredients dot com.

At this time I would like to turn the call over to Brandon for opening remarks.

Brandon Gall: Thank you, Amit. Good morning, everyone. As we announced last week, after a thorough search, our board of directors appointed Julie Francis as our next President and CEO. I strongly believe that Julie is the right person to lead us forward during this important time for the company. She brings a strong strategic lens, deep commercial expertise, and a proven ability to build and lead teams. Her fresh perspectives and track record of success at global, industry-leading CPG companies, particularly in the beverage segment, will be critical as we advance our long-term vision of becoming a premier branded spirits company. Julie has taken the reins during a challenging time for our industry, and she's wasting no time diving into all aspects of our business. There is no doubt she's the right person for the job, and I look forward to partnering with her during this next chapter. Julie, welcome aboard.

Thank you Amit good morning, everyone.

As we announced last week after a thorough search our board of directors appointed Julie Francis as our next president and CEO.

I strongly believe that Julie is the right person to lead US forward. During this important time for the company. She brings a strong strategic lens deep commercial expertise and a proven ability to build and lead teams.

Fresh perspectives and track record of success at global industry, leading CPG companies, particularly in the beverage segment will be critical as we advance our long term vision of becoming a premier branded spirits company.

We have taken the reins during a challenging time for our industry and she is wasting no time diving into all aspects of our business. There is no doubt she's the right person for the job and I look forward to partnering with her during this next chapter Julie welcome aboard.

Julie Francis: Thanks, Brandon, and hello, everyone. I'm thrilled to be joining the MGP team. Let me first thank Brandon and the executive team and our entire MGP family for their hard work, collaboration, and dedication in delivering solid second quarter results. I've had the opportunity to attend our leadership and business meetings and to also meet individually with our broader teams last week, and what I've learned has only reinforced what drew me to this opportunity. First and foremost, MGP's culture. There's something unique about working in the type of culture where everyone is deeply passionate and takes great pride in our business, in their teams, and our people. MGP has an integrated partnership approach to customers and suppliers, as well as a deep commitment to the communities we serve.

Thanks, Brandon and Hello, everyone.

Thrilled to be joined the N. G. P team, let me first thank Brandon and the executive team and our entire M. D. P family for their hard work collaboration and dedication in delivering solid second quarter results.

I've had the opportunity to attend our leadership and business meetings and to also meet individually with our brighter teams last week and what I've learned has only reinforced what drew me to this opportunity.

First and foremost N G piece culture.

There's something unique about working in the type of culture, where everyone is deeply passionate and takes great pride in our business.

And their teams and our people.

M. G. P has an integrated partnership approach to customers and suppliers as well as a deep commitment to the communities we serve.

Julie Francis: There's a certain responsibility we have when we're a part of these teams, and I really like and thrive in that type of culture. Second, a growth mindset. MGP's unique capabilities, impeccable reputation, and product offerings give us the right to win in each of the industries in which we compete. More importantly, I believe that all three businesses have a significant growth runway, which can be unlocked as we operate with clarity, operational, and executional excellence, with integrity, tough-mindedness, and agility across all of our platforms and functions. I'm energized by the opportunity ahead, confident in our ability to build on our progress, and look forward to working with all of you in the investor community. With that, I will turn the call back to Brandon for the business update.

There's a certain responsibility we had when we were part of these teams and I'm and I really like and thrive in that type of culture.

Second.

A growth mindset M. P. P unique capabilities impeccable reputation and product offerings give us the right to win in each of the industries in which we compete.

More importantly, I believe that all three businesses have a significant growth runway, which can be unlocked as we operate with clarity operational and execution excellence with integrity tough minuses and agility across all of our platforms and functions.

I'm energized by the opportunity ahead confident in our ability to build on our progress and look forward to working with all of you in the Investor community with that I will turn the call back to Brendan for the business update.

Brandon Gall: Thanks, Julie. Our second quarter 2025 performance demonstrated the strength of the foundation Julie mentioned, as all three of our segments showed sequential improvements relative to the first quarter of 2025. Overall, second quarter results came in largely as expected, driven by the continued strength in our Premium Plus branded spirits portfolio and improved year-over-year performance in Ingredient Solutions. Distilling Solutions also progressed in line with our expectations, with improving stability and visibility. At a high level, we believe all three business segments are on a solid trajectory. We're seeing progress against the priorities we laid out earlier in the year, and I'm excited to build on that momentum as we move into the second half of the year.

Thanks, Julie our second quarter 2025 performance demonstrated the strength of the foundation Julie mentioned as all three of our segments showed sequential improvements relative to the first quarter of 2025 overall.

Overall second quarter results came in largely as expected driven by the continued strength in our premium plus spread spirits portfolio and improved year over year performance ingredient solutions, just filling solutions also progressed in line with our expectations with improving stability and visibility at a high level. We believe all three business segments are on solid trajectory.

We're seeing progress against the priorities, we laid out earlier in the year and I'm excited to build on that momentum as we move into the second half of the year specifically.

Brandon Gall: Specifically for the second quarter of 2025, as expected, consolidated sales and adjusted EBITDA decreased 24% and 38% respectively from the prior year period, primarily due to the anticipated decline in Distilling Solutions' performance. Branded spirits segment sales declined by 5%, but our Premium Plus portfolio posted positive growth. Adjusted earnings per common share declined to 97 cents per share, while year-to-date operating cash flows increased to $56.4 million, versus $29.6 million in the same period last year. With another quarter of solid execution, we remain on track to achieve our full-year 2025 sales and adjusted earnings guidance. Mark will provide greater detail on our quarterly results shortly. Let me take the next few minutes to highlight the current operating environment and the progress we're making against each of our key initiatives. The external environment remains challenging and fluid.

Specifically for the second quarter of 2020 fives as expected consolidated sales and adjusted EBITDA decreased 24% and 38% respectively from the prior year period, primarily due to the anticipated decline in distilling solutions performance branded spirits segment sales declined by 5%, but our premium plus port.

<unk> posted positive growth adjusted earnings per common share declined to 97 cents per share while year to date operating cash flows increased to $56 $4 million versus $29 $6 million in the same period last year.

With another quarter of solid execution, we remain on track to achieve our full year 2025 sales and adjusted earnings guidance.

Mark will provide greater detail on our quarterly results. Shortly let me take the next few minutes to highlight the current operating environment and the progress we're making against each of our key initiatives. The external environment remains challenging and fluid overall economic uncertainty persistent inflation and higher interest rates continue to weigh on consumer sentiment, which led to a multiyear low.

Brandon Gall: Overall economic uncertainty, persistent inflation, and higher interest rates continue to weigh on consumer sentiment, which held to a multi-year low during the quarter. While sentiment improved a bit last month, consumer confidence in this backdrop continues to pressure discretionary spending, leading to more cautious purchasing behaviors. Despite this setting, we continue to execute with discipline and make progress on our key initiatives, starting with the branded spirits segment. Our key initiative for the branded spirits segment is focus. We believe our decision to focus on fewer but more attractive growth opportunities is working, as our Premium Plus portfolio again outperformed the broader category, with 1% growth for the second quarter compared to the year-ago period. Our key brands, Penelope, El Mayor, and Rebel 100, are particularly well-positioned to benefit from our focus initiative as we continue to prioritize investments behind these brands.

During the quarter, while sentiment improved a bit last month consumer confidence in this backdrop continues to pressure discretionary spending leading to more cautious purchasing behaviors. Despite this setting we continue to execute with discipline and make progress on our key initiatives starting with the brand experience segment.

A key initiative for the branded spirits segment. Its focus we believe our decision to focus on fewer but more attractive growth opportunities is working as our premium plus portfolio again outperformed the broader category with 1% growth for the second quarter compared to the year ago period, our key brands Penelope L me or and rebel 100.

We're particularly well positioned to benefit from our focus initiatives as we continue to prioritize investments behind these brands for the full year, we expect a healthy double digit percentage increase in the A&P spending for these brands collectively even as our overall A&P spend will be down as we've mentioned on the last calls.

Brandon Gall: For the full year, we expect a healthy double-digit percentage increase in the A&P spending for these brands collectively, even as our overall A&P spend will be down, as we've mentioned on the last calls. While our focus brands delivered positive dollar sales growth in the latest 13-week period ending on July 12th, as reported by Nielsen, let me briefly talk about the terrific growth trajectory of Penelope, the key driver of our continued Premium Plus performance. Penelope is our flagship Premium Plus offering in the American whisky category, with a brand identity that's built on innovation, craftsmanship, authenticity, and accessible price points, attributes that resonate strongly with today's bourbon drinkers. Penelope Weeded is expanding the brand's strong foundation by capitalizing on consumer demand for more approachable bourbon with softer, smoother taste profiles. Penelope Weeded continues to build on its strong start with continued expansion into new markets.

While our focus brands delivered positive dollar sales growth in the latest 13 week period ending on July 12th as reported by Nielsen. Let me briefly talk about the terrific growth trajectory of Penelope the key driver of our continued Permian plus performance.

<unk>, our flagship premium plus offering and the American whiskey category with a brand identity. That's built on innovation craftsmanship authenticity and accessible price points attributes that resonate strongly with today's Bourbon drinkers.

And L. P. We did it's expanding the brand's strong foundation by capitalizing on consumer demand for more approachable Bourbon with softer smoother taste profile and.

And L. P. We did continues to build on its strong start with continued expansion into new markets. Penelope is also expanding its ready to pour offerings to tap into the faster growing cocktail segment can L. P. Pizza with fashion is already among the top 15, 750 ml premium plus our T P offerings in Nielsen.

Brandon Gall: Penelope is also expanding its ready-to-pour offerings to tap into the faster-growing cocktail segment. Penelope Peach Old Fashion is already among the top 15 750 mL Premium Plus RTP offerings in Nielsen, and we plan to further expand Penelope's RTP offerings with the introduction of Penelope Black Walnut Old Fashion in the third quarter. This continued momentum has made Penelope one of the fastest-growing Premium Plus American whisky brands. Based on the retail dollar sales growth reported by Nielsen for the past 4, 13, and 52-week periods ending on July 12th, Penelope has been the second fastest growing of the top 30 Premium Plus American whisky brands. With a full pipeline of planned innovation, we expect this broad-based momentum to continue through the rest of the year.

And we plan to further expand and L. P. S. R. T P offerings with the introduction of an L. P black Walnut old fashion in the third quarter.

This continued momentum is made to help you one of the fastest growing premium plus American whiskey brands based on the retail dollar sales growth reported by Nielsen for the past 413, and 52 week periods ending on July 12th can L. P has been the second fastest growing of the top 30 premium plus American whiskey brands with a full pipeline of planned innovation.

We expect this broad based momentum to continue through the rest of the year.

Brandon Gall: Given year-to-date trends, we now expect our Premium Plus segment to grow by low single digits for the full year compared to 2024, an improvement from our initial projections. At the same time, as expected, sales of our mid and value-tier brands remain softer in the second quarter due to heightened price competition in select pockets. As I mentioned last quarter, we are taking appropriate actions, including greater price support, to make these offerings more appealing. Although the rate of decline for sales in these price tiers improved sequentially in the second quarter, we believe the impact of these actions on shipments is still taking effect. While we remain encouraged, we now expect the mid and value price tier to be down low double digits for 2025 compared to 2024, versus our initial expectations of mid to high single-digit declines.

Given year to date trends, we now expect our premium plus segment to grow by low single digits for the full year compared to 2024 and improvement from our initial projections.

At the same time as expected sales of our mid and value tier brands remained soft during the second quarter due to heightened price competition in select pockets as I mentioned last quarter, we are taking appropriate actions, including greater price support to make these offerings more appealing.

Although the rate of decline for sales in these price tiers improved sequentially in the second quarter. We believe the impact of these actions on shipments is still taking effect. While we remain encouraged we now expect the mid and value priced here to be down low double digits for 2025 compared to 2024 versus our initial expectations of mid to high single digit declines.

Brandon Gall: Earlier this week, we announced our decision to partner with Breakthrough Beverage Group for distribution of our products in California. Breakthrough is one of the leading beverage distributors in the country, and their proven track record and deep expertise in the Premium Plus categories made them the ideal choice to drive growth for us in this market. Our NDC continues to be our distributor in many states, and they remain a valuable partner. We're currently working with both companies in an effort to minimize any potential disruptions during the transition and do not expect this transition to have a material financial impact on our 2025 results. For the Distilling Solutions segment, our key initiative to strengthen partnership with key customers continues to show positive results.

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Earlier this week, we announced our decision to partner with Breakthru beverage group for distribution of our products in California breakthrough is one of the leading beverage distributors in the country and their proven track record and deep expertise in the premium plus category has made him the ideal choice to drive growth for us in this market are in D. C continues to be our distributor in many states.

And they remain a valuable partner, we're currently working with both companies and in an effort to minimize any potential disruptions during the transition and do not expect this transition to have a material financial impact on our 2025 results.

But the distilling solution segment, our key initiatives to strengthen partnership with key customers continues to show positive results, while brown goods volume and pricing were down during the quarter compared to the second quarter 2024, they were consistent with our expectations and more importantly continued to show signs of stabilization.

Brandon Gall: While brown goods volume and pricing were down during the quarter compared to the second quarter of 2024, they were consistent with our expectations and, more importantly, continued to show signs of stabilization. The brown goods industry is navigating a challenging environment, one that we expect to persist in 2026. We're responding by listening carefully to our customers' needs, offering them tailored solutions, and demonstrating flexibility with respect to quantities, pricing, and timing. As expected, a number of our large strategic customers, after completing their existing contracts, have expressed the need to temporarily pause their whisky purchases, which continues to be reflected in our full-year guidance. In most cases, these brands are well-established with a taste profile that we are uniquely positioned to support.

The brown goods industry is navigating a challenging environment.

One that we expect to persist in 2026, we're responding by listening carefully to our customers' needs offering them tailored solutions and demonstrating flexibility with respect to quantities pricing and timing as expected a number of our large strategic customers. After completing their existing contracts have expressed the need to temporarily pause their whiskey PERC.

She says which continues to be reflected in our full year guidance. In most cases. These brands are well established with the taste profile that we are uniquely positioned to support.

Brandon Gall: But importantly, these customers remain engaged with our team pertaining to their future needs for brown goods, as well as other products we're able to offer, including Premium Gen and Neutral Grain Spirits. As a result, we continue to expect Distilling Solutions' first-half sales and profits to be stronger than the second half. We are complementing our refreshed commercial outreach by taking a disciplined approach to our brown goods production levels and optimizing our cost structure by collaborating with our suppliers and adjusting our distillery downtimes. As I mentioned last quarter, we're also significantly reducing our whisky put-away to manage our aging whisky inventory levels and our cash flows. More broadly, overall American whisky production appears to be responding to the current environment. The year-over-year decline in total industry whisky production, which began late last year, has picked up pace.

But importantly, these customers remain engaged with our team pertaining to their future needs for brown goods as well as other products, we're able to offer including premium gin and neutral grain spirits. As a result, we continue to expect the sealing solutions first half sales and profits to be stronger than the second half.

We are complementing our refreshed commercial outreach by taking a disciplined approach to our brown goods production levels and optimizing our cost structure by collaborating with our suppliers and adjusting our distillery downtime as I mentioned last quarter. We're also significantly reduce our whiskey put away to manage our aging whiskey inventory levels and our cash flows.

More broadly overall American whiskey production appears to be responding to the current environment the year over year decline in total industry whisky production, which began late last year has picked up pace. The latest available T. T V data through April 2025 shows even deeper production cuts with total whiskey production in the U S now down.

Brandon Gall: The latest available TTB data through April 2025 shows even deeper production cuts, with total whisky production in the US now down 14% for the last 12 months, down 24% the last six months, and down 28% in the last three months. While challenges remain, including excess whisky inventories and soft demand, the actions being taken across the industry are constructive, and we believe that increasing industry discipline and rational behavior, combined with our decisive actions, position us to emerge with a stronger competitive position. I'd like to take a moment to acknowledge the entire Distilling Solutions team for their bold actions to make difficult but necessary adjustments over the course of the year. Since our Q4 2024 earnings call, not only have no customers canceled their contracts, but substantially all have either confirmed or amended their purchases in a way that prioritizes the needs of their brands and business.

14% for the last 12 months down 24% in the last six months and down 28% in the last three months, while challenges remain including excess whiskey inventories and soft demand the actions being taken across the industry are constructive and we believe that increasing industry discipline and rational behavior combined with <unk>.

Our decisive actions position us to emerge with a stronger competitive position.

I would like to take a moment to acknowledge the entire distilling solutions team for their bold actions to make.

Difficult, but necessary adjustments over the course of the year.

Since our Q4 2024 earnings call not only had no customers cancel their contracts, but substantially all have either confirmed or amended their purchases in a way that prioritizes the needs of their brands and business as a result of the commitment we have shown our customers. We are encouraged by the commitment they have shown us in return and that will have higher <unk>.

Brandon Gall: As a result of the commitment we have shown our customers, we're encouraged by the commitment they have shown us in return and now have higher confidence in the remainder of 2025 and increasingly 2026. Turning to our Ingredient Solutions segment, the sequential performance improvements in the second quarter give me confidence that our key initiative to achieve operational and commercial executional excellence in our Ingredient Solutions segment is on track. Although still present in the second quarter, supply challenges that impacted segment results in the first quarter moderated as our team focused on increasing manufacturing reliability, simplifying processes, and aligning resources. We're increasing our capital investments in the Addison Plant with the goal of further streamlining operations, unlocking additional growth capabilities, and improving operational consistency. Our commercial execution also improved during the quarter.

Turning to the remainder of 2025 it increasingly 2026.

Turning to our ingredient solutions segment, the sequential performance improvements in the second quarter gives me confidence that our key initiatives to achieve operational and commercial execution excellence and our ingredient solutions segment is on track, although still present in the second quarter supply challenges that impacted segment results in the first quarter moderated as.

Our team focused on increasing manufacturing reliability, simplifying processes and aligning resources.

We're increasing our capital investments in the Atlas implant with the goal of further streamlining operations unlocking additional growth capabilities and improving operational consistency.

Brandon Gall: Strong consumer demand for higher protein and fiber in their diets is a powerful driver for our specialty starch and protein offerings. Our Fiberson branded specialty starch continues to gain traction across a growing number of food categories, while our sales team continues to gain North American-based customers for our Rise branded specialty protein offerings. As expected, our new biofuel plant came online in July. The new plant is a key component of our efforts to mitigate costs associated with the disposal of the waste starch stream, which is a byproduct of our ingredients facility. While we continue to expect the new plant to mitigate these costs in the long term, realizing the full extent of these cost savings will take time as we ramp up production and fully commercialize our end product.

Our commercial execution also improved during the quarter strong consumer demand for higher protein and fiber in their diets is a powerful driver for our specialty starch and protein offerings, our fibers and branded specialty starch continues to gain traction across a growing number of food categories. While our sales team continue to gain in North American based customers for our rise branded spur.

The protein offerings.

As expected our new biofuel plant came online in July the new plan is a key component of our efforts to mitigate costs associated with the disposal of the waste start stream, which is a byproduct of our ingredients facility.

While we continue to expect the new plan to mitigate these costs in the long term realizing the full extent of these cost savings will take time as we ramp up production and fully commercialize our end product.

Brandon Gall: Overall, despite the soft start to the year, we believe the Ingredient Solutions segment remains well-positioned to post higher sales and profitability in the second half of the full year 2025 compared to the first half. Across the organization, our productivity initiatives remain on track and are expected to make a substantial contribution to our full-year outlook. Our balance sheet remains a key strength, particularly given the higher liquidity and flexibility following the upsizing of our credit facility and the extension of our private placement shelf in the first half of the year. Our net debt leverage remains under two times, and we continue to generate cash to support our capital allocation priorities.

Overall, despite the soft start to the year, we believe the ingredient solutions segment remains well positioned to post higher sales and profitability in the second half of the full year 2025 compared to the first half.

Across the organization our productivity initiatives remain on track and are expected to make substantial contribution to our full year outlook, our balance sheet remains a key strength, particularly given the higher liquidity and flexibility following the upsizing of our credit facility and the extension of our private placement shelf in the first half of the year, our net debt leverage remain.

Under two times, and we continue to generate cash to support our capital allocation priorities.

Brandon Gall: Given the solid results in the quarter, we are reaffirming our 2025 guidance, and we continue to expect net sales in the $520 to $540 million range, adjusted EBITDA in the $105 to $115 million range, and adjusted basic earnings per share in the $2.45 to $2.75 range. We now expect average shares outstanding of approximately $21.4 million for the full year and capital expenditures of approximately $32.5 million. Our full-year effective tax rate remains unchanged at approximately 25%. Within our branded spirits segment, we now expect Premium Plus sales to be up low single digits for the year. However, we expect sales of our mid and value price portfolio and other to be below our initial expectations, leading to a modest decline in branded spirits segment sales for the full year 2025 as compared to 2024.

Given the solid results in the quarter, we are reaffirming our 2025 guidance. 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 earnings per share in the $2 45.

To $2 75 range, we now expect average shares outstanding of approximately $21 4 million for the full year and capital expenditures of approximately $32 5 million, our full year effective tax rate remains unchanged at approximately 25%.

Within our branded spirits segment, we now expect premium plus sales to be up low single digits for the year. However, we expect sales of our mid and value price portfolio and other to be below our initial expectations, leading to a modest decline in branded spirits segment sales for the full year 2025 as compared to 2024, we continue to expect branch spirits segment gross.

Brandon Gall: We continue to expect branded spirits segment gross margins to be in the upper 40% range. Turning to tariffs, similar to our industry peers, we're not completely immune to tariff impacts and continue to closely monitor the tariff environment, particularly related to exemptions for goods compliant with the US-Mexico-Canada Agreement and the potential impact of tariffs on consumer purchasing behavior. Given the evolving situation regarding the implementation and timing of tariffs, their potential financial impacts are not included in our current outlook, and we continue to look across our supply chain for additional opportunities to mitigate any potential headwinds. Let me now hand it over to Mark for a review of the second quarter results.

<unk> to be in the upper 40% range.

Turning to tariffs similar to our industry peers, we're not completely immune to tariff impacts and continue to closely monitor the tariff environment, particularly related to exemptions for goods compliant with the U S Mexico, Canada agreement and the potential impact of tariffs on consumer purchasing behavior.

Given the evolving situation regarding the implementation and timing of tariffs there are potential financial impacts are not included in our current outlook and we continue to look across their supply chain for additional opportunities to mitigate any potential headwinds. Let me now hand, it over to Mark for a review of the second quarter results.

Mark Davidson: Thank you, Brandon. For the second quarter of 2025, consolidated sales decreased 24% to $145.5 million compared to the year-ago period. Within our segments, branded spirits sales decreased by 5% due to the expected double-digit decline in our mid and value price brands driven by lower volumes of certain tequila, liqueur, and cordial brands. Our Premium Plus sales increased by 1%, reflecting continued momentum in our focus brands, in particular Penelope. Distilling Solutions segment sales declined by 46%, primarily driven by a 54% decline in brown goods sales. Second quarter warehouse service sales decreased by 5%, while white goods sales declined by 27% due to the phasing out of a number of white goods customer contracts in the wake of the Addison Distillery closure, as well as reduced production volumes of co-products, primarily dried distillers' grains.

Thank you Brandon for the second quarter of 2025 consolidated sales decreased 24% to $145 5 million compared to the year ago period, with an earth segments branded spirits sales decreased by 5% due to the expected double digit decline in our mid and value priced brands.

By lower volumes of certain tequila in the core and cordial brands, our premium plus sales increased by 1%, reflecting continued momentum our focus brands in particular Penelope to.

<unk> solutions segment sales declined by 46%, primarily driven by 54% decline in Brown goods sales second quarter warehouse service sales decreased by 5%, while white goods sales declined by 27% due to the phasing out of a number of white goods customer contracts in the wake of the Atchison.

Larry closure as well as reduced production volumes of co products, primarily dry distillers grains.

Mark Davidson: Ingredient Solutions sales increased by 5% during the second quarter, driven by a strong rebound in our specialty wheat protein sales. Following a 26% decline in the first quarter, specialty protein sales increased by 13% in the second quarter as we successfully commercialized new customers for these product offerings. Our Fiberson branded specialty wheat starch sales declined 4% below year-ago levels. Consolidated gross profit decreased 30% to $58.4 million, primarily due to lower gross profits in the Distilling Solutions and branded spirits segments. Gross margin declined by 350 basis points to 40.1%. First quarter SG&A expenses increased 2% compared to the prior year period. However, excluding the impact of a higher incentive compensation accrual in 2025, as we rebuild incentives, SG&A expense decreased by 8%, driven primarily by our cost savings initiatives.

Ingredient solution sales increased by 5% during the second quarter driven by a strong rebound in our specialty wheat protein sales following a 26% decline in the first quarter specialty protein sales increased by 13% in the second quarter as we successfully commercialized new customers for these product offerings.

Our fiber some branded specialty wheat starch sales declined 4% below year ago levels.

Consolidated gross profit decreased 30% to $58 4 million.

Primarily due to lower gross profits in the distilling solutions and bring the spirit segment's gross margin declined by 350 basis points to 41%.

First quarter, SG&A expenses increased 2% compared to the prior year period.

However, excluding the impact of a higher incentive compensation accrual in 2025, as we rebuild incentives as G&A expense decreased by 8% driven primarily by our cost savings initiatives.

Mark Davidson: Advertising and promotion expenses declined 41% compared to the prior year as we lapped elevated spend for certain advertising campaigns during the year-ago quarter, as well as continued realignment of our spend behind our most attractive growth opportunities. Although we continue to expect branded spirits A&P spend to be approximately 12% of segment sales for the full year 2025, it represented 10% of branded spirits sales in the second quarter, largely due to the timing of certain advertising campaigns within the year. Second quarter adjusted EBITDA decreased 38% to $35.9 million, due primarily to lower gross profits as previously discussed. Net income for the second quarter declined to $14.4 million, primarily due to a lower operating performance and an $8 million increase in the fair value of the contingent consideration liability related to the continued improved performance of the Penelope brand.

Advertising and promotion expenses declined 41% compared to the prior year as we lapped elevated spend for certain advertising campaigns during the year ago quarter as well as continued realignment of our spend behind our most attractive growth opportunities.

Although we continue to expect branded spirits A&P spend to be approximately 12% of segment sales for the full year 2025.

Represented 10% of branded spirits sales in the second quarter.

Due to the timing of certain advertising campaigns within the year.

Second quarter, adjusted EBITDA decreased 38% to $35 $9 million due primarily to lower gross profits as previously discussed net income for the second quarter declined to $14 4 million <unk>.

Primarily due to a lower operating performance and an $8 million increase in the fair value of the contingent consideration liability related to the continued improved performance of the Penelope brand.

Mark Davidson: On an adjusted basis, net income decreased 45% to $20.9 million. Basic earnings per common share decreased to 67 cents per share, while adjusted basic EPS decreased 43% to 97 cents per share. We continue to prioritize strong cash generation by managing our working capital and reducing our barrel inventory put-away. Our year-to-date cash flow from operations was $56.4 million, up $26.8 million compared to the prior year period, driven primarily by favorable working capital changes. Our year-to-date net barrel inventory put-away of $14.7 million was down 28% versus the prior year period, and we continue to expect net put-away of $15 to $20 million for the full year. Capital expenditures were $10.6 million during the second quarter and $18.7 million year to date.

On an adjusted basis net income decreased 45% to $29 million.

Basic earnings per common share decreased 67 per share while adjusted basic EPS decreased 43% to <unk> 97 per share.

We continue to prioritize strong cash generation by managing our working capital and reducing our barrel inventory put away our year to date cash flow from operations was $56 4 million.

Of $26 $8 million compared to the prior year period, driven primarily by favorable working capital changes.

Our year to date net barrel inventory put away from $14 $7 million was down 28% versus the prior year period, and we continue to expect net put away of $15 million to $20 million for the full year.

Capital expenditures were $10 $6 million during the second quarter and $18 $7 million year to date, we now expect full year 2025 capital expenditures of approximately $32 5 million.

Mark Davidson: We now expect full year 2025 capital expenditures of approximately $32.5 million, a reduction of more than 50% compared to 2024 and down from our previous expectations of $36 million due to decreased investment in certain barrel warehouse projects to better align our warehouse investment with customer demand. Our balance sheet remains healthy, and we remain well-capitalized with debt totaling $297.1 million as of the end of the second quarter, leaving us with more than $600 million in availability under our debt facilities. We ended the quarter with a cash position of $17.3 million, and our net debt leverage ratio remains largely stable at approximately 1.8 times as of June 30th, 2025. With that, let me hand it over to Brandon before opening for questions.

A reduction of more than 50% compared to 2024 and down from our previous expectations of $36 million due to decreased investment in certain barrel warehouse projects to better align our warehouse investment with customer demand.

Our balance sheet remains healthy and we remain well capitalized with debt totaling $297 $1 million as of the end of the second quarter, leaving us with more than $600 million in availability under our debt facilities. We ended the quarter with a cash position of $17 $3 million and our net debt leverage ratio.

Largely stable at approximately one eight times.

As of June 32025.

With that let me hand, it over to Brandon before opening for questions.

Brandon Gall: To close, given the sequential improved results in the second quarter, we remain on track to deliver our full-year outlook. Our teams are executing with purposeful focus, agility, and a targeted approach, leading to continued momentum across key branded segments, improved execution in the ingredients business, and greater visibility and stability in the distilling solutions business. We are excited to have Julie on the team to lead us forward on our journey in becoming a premier branded spirits company. That concludes our prepared remarks. Operator, we're ready to begin the question and answer portion of the call.

Close given the sequential improved results in the second quarter, we remain on track to deliver our full year outlook. Our teams are executing with purposeful focus agility and a targeted approach leading to continued momentum across key branded segments improved execution in the ingredients business and greater visibility and stability in the distilling solutions business.

We are excited to have Julien the team to lead us forward on our journey of becoming a premier branded spirits company that concludes our prepared remarks, operator, we're ready to begin the question and answer portion of the call.

Mark Davidson: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you're using a speaker phone, 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. And our first question comes from Bill Chapel from Truist Securities. Please go ahead.

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, if you're 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.

And our first question comes from Bill Chappell from <unk> Securities. Please go ahead.

Brandon Gall: Morning, Bill.

Julie Francis: Thanks, Bill.

Brandon Gall: Good morning.

Julie Francis: And welcome, Julie. Nice to welcome aboard. I wanted to, I guess, first talk a little bit more about the new distillate contracts and kind of where we are and visibility from that standpoint. I mean, I guess question one, are you now through all or a high majority of the contracts, kind of negotiations, discussions? Two, can you see, assuming that they hold in place, kind of where we will hit a low watermark in terms of revenue over the next few quarters? And three, you know, what's your sense that these are conservative enough or or or overly conservative in terms of kind of what they're ordering? I mean, historically, our brands are overly conservative until they run out, and then they add more. So I'm just trying to understand, you know, maybe a little more color on that whole process.

Hey, Bill.

Morning.

And welcome Julian.

Welcome aboard.

Wanted to I guess.

Yes.

First talk a little bit more about the new distillate contracts and kind of where we are and visibility from that standpoint, I mean, I guess question. One are you know through all or a high majority of the contracts kind of negotiations discussions.

Do you can you see assuming that they hold in place kind of where we will hit a low watermark in terms of revenue over the next few quarters.

And three.

What's your sense that these are conservative enough or or overly conservative in terms of kind of what they're ordering I mean historically.

Yeah.

A manufacturer or brands or overly conservative until they run out and then they add more so just trying to understand maybe a little more color on that whole process.

Brandon Gall: Yeah. Thanks, Bill. So as we as we shared in the prepared remarks, well, firstly, you know, we just couldn't be any more proud of our Distilling Solutions team. Their outreach and partnership-first approach is really, you know, resonating with our customers and with our business. And as of today, no contracts that we have with customers in February have been canceled. In fact, substantially all, Bill, have been either confirmed or amended. You know, the little we have remaining are progressing well, and a lot of, you know, maybe the holdup, if you want to describe it as that, maybe have to do with possibly extending the agreement in some cases. So very, very encouraged by the team's progress there. As far as the visibility goes, this gives us really, really great visibility for the remainder of 2025.

Yes, Thanks Bill.

Yes.

As we shared in the prepared remarks firstly.

We just couldn't be any more proud of our distilling solutions team there.

Reach and partnership first approach.

Really resonating with.

With our customers with our business.

As of today.

No contracts that we have with customers in February.

It will be cancelled.

<unk> substantially all bill had been either confirmed or amended.

The little we have remaining are progressing well and a lot of maybe the hold up if you want to describe it is that maybe has to do with it.

Possibly extending.

The agreement in some cases, so very very encourage by.

By the team's progress there as far as the visibility goes this gives us really really great visibility for the remainder of 2025.

Brandon Gall: We can talk about this more in a moment, but the back half is going to be relatively lighter than the first half due to some contracts that were reset. But even with that, that was expected, and that was contemplated in our guide at the beginning of the year and in our current guide. So we feel that things are coming in as we had projected, and in some cases, slightly better. So that's through 2025. We've also stated consistently that this dynamic is going to persist into '26. And while some of our customers are taking temporary pauses in their purchasing as they want to bounce out and work down their inventory, we're confident that we're going to remain their long-term partner and supplier. We just don't know exactly when that's going to resume and at what type of volume.

We can talk about this more in a moment, but.

The back half is going to be relatively lighter than the first half due to some contracts that what we said.

But even with that that was expected and that was contemplated in our guidance at the beginning of the year and in our current guide. So we feel that things are coming in as we had as we had projected and in some cases slightly better so that's through 2025.

We've also stated consistently that this dynamic is going to persist and then 26 and.

While some of our customers are taking temporary pauses in their purchasing as they want to balance out and worked down their inventory.

We're confident that we're going to remain their long term partner and supplier.

Brandon Gall: So we need a little bit more time there in this dynamic environment to work that out with them. And then as far as conservatism goes, Bill, you know, the quarter came in really pretty much in line with our expectations. Again, some of the renegotiations that we've had have come in slightly better collectively, and we've had a little bit better performance in H than expected at the beginning of the year. But other than that, things are playing out as we had thought. We still continue to expect Distilling Solutions' sales, excuse me, to be down 50% on the year. And we earlier stated that gross profit dollars for the segment are going to be down 65%. That latter number may come in a little bit better for the reasons we described.

We just don't know exactly when that's going to resume and at what type of volume. So we need a little bit more time, there in this dynamic environment to work that out with them.

And then as far as conservatism goes bill.

The quarter came in.

Really pretty much in line with our expectations again some of the renegotiations that we've had have come in slightly better collectively and we've had a little bit better performance in age than expected at the beginning of the year, but other than that things are playing out as we had thought.

We still continue to expect.

Just filling solution sales excuse me the down 50% on the year.

And we earlier stated that gross profit dollars for the segment were going to be down 65%.

That latter number may come in a little bit better for the reasons, we described but other than that we feel like we are.

Brandon Gall: But other than that, we feel like we're right down the middle in terms of our projections, and we're very, very confident in the way things have come in and are playing out so far.

Right down the middle in terms of our projections and we're very very confident in where things have come in and are playing out so far.

Julie Francis: And so just to make sure, back to the age, I mean, you know, your original expectations were little to no H sales this year. So maybe you can talk a little bit of why it's a better other than just being conservative, like where you're seeing the orders and how you manage. I mean, I imagine, you know, everybody wants a discount. Somebody could come and buy some discounted product in the back half of the year, or are you just saying holding off because we're not going to give it away, it's not going to go bad?

And so just to make sure back to the east.

Your original expectations were.

Little to no age sales. This year. So maybe you can talk a little bit of why it's a better other than just being conservative with where youre seeing the orders and how you manage I mean, I imagine you know everybody wants a discount.

Somebody could come in and buy some discounted product in the back half of the year or are you just saying holding off because we're not going to give it away, it's not going to go bad.

Brandon Gall: Yeah. Great question. So we're really seeing it in a couple of pockets. Firstly, again, going back to our partnership approach, our increased outreach to our craft and regional customers is resonating, and you know, it's almost always their preference to deal directly with MGP and our team than to go through a third-party broker. In almost all these cases, they're already using our liquid, and so the ability to go to them directly has been a great step forward in our relationship there. So that's part of the improvement we're seeing this year. But additionally, if there are, in some instances, customers that are coming to market for the first time for a number of reasons, and they want to buy H, but they view this as a long-term plan and program for what they're trying to do. So they also want someone who can provide them new distillate.

Yeah.

Great question. So we're really seeing it in a couple of pockets firstly, our again going back to our partnership approach are our increased outreach to our craft and regional customers is resonating.

And.

It's almost always their preference to deal directly with <unk>.

<unk> GP and our team. Then then you go through a third party broker.

No.

All of these cases, they're already using our liquid and so the ability to go to them directly has been.

A great step forward in our relationship there. So that's that's part of the improved.

Improvement, we're seeing this year, but.

But additionally, if there there are in some instances customers that are coming to market for the first time for a number of reasons and they want to buy they want to buy aged but maybe the central long term.

<unk> plan and program for what they are trying to do so they also want someone who can provide the new distillate as we've said a number of times. We're unique in that we can offer both in both breadth and scale and so we're starting to see some some traction there as well bill.

Brandon Gall: As we've said a number of times, we're unique in that we can offer both in both breadth and scale. And so we're starting to see some traction there as well, Bill.

Julie Francis: Okay. Great. Thanks so much.

Brandon Gall: You bet. Thank you, Bill.

Okay, great. Thanks, so much.

Mark Davidson: The next question comes from Mark Tornet from Wells Fargo. Please go ahead.

You bet. Thank you Bill.

The next question comes from Mark Torrent from Wells Fargo. Please go ahead.

Mitch Pinheiro: Hey, good morning. Thanks for the question. And Julie, congratulations. We look forward to working with you.

Hey, good morning.

A question and jewelry, congratulations and we look forward to working with you.

Julie Francis: Thanks, Mark. Appreciate it.

Mitch Pinheiro: Yep. First question. Brandon Margin stood out. I think highest GM and EBITDA since the acquisition. Any additional color on gross margin phasing from here? And then advertising came down materially, perhaps some timing, but we know the strategy for this year is to be more targeted around central brands. There seems to be success. What's been working? What else do you need to adjust? And any other changes in branded to consider with pricing positioning or distribution as we go forward?

Thanks I appreciate it.

Yep.

First question.

Brandon margin stood out I think highest G M and EBITDA with the acquisition any additional color on gross margin phasing from here and then advertising came down materially perhaps some timing, but we know the strategy for this year is to be more targeted around central brands.

There seems to be success, what's been working what else do you need to adjust and any other changes and granted to consider with price and positioning or distribution as we go forward.

Brandon Gall: All right. I think I got most of that. Mark, you may have to help me fill out some pieces I missed. But yeah, brand spirits margins were very strong in the quarter. You know, that's really reflective of our performance of our Premium Plus portfolio and the proportionate mix we're seeing over time there. We do think in the back half of the year, margins may be relatively lighter than that as we expect value to continue to be under pressure, and the gross profit dollars associated with that are going to continue to be a bit of a headwind. A&P was down quite a bit in the quarter, but it sticks out more only because Q2 of last year was very high due to some programming we did around college basketball that we didn't redo again this year.

Alright, I think I got most of that Mark you may ask.

Help me fill out some pieces I mess, but yeah, Brent a brown spirits margins are very strong in the quarter.

That's really reflective of our performance of our premium plus portfolio and the proportionate mix.

We're seeing over time there.

We do think in the back half of the year our margins.

May be relatively lighter than that as we expect value to continue to be under pressure and the gross profit dollars associated with that.

Are going to continue to be a bit of a headwind A&P was down quite a bit in the quarter, but it sticks out more only because Q2 of last year was very high due to some product we did around college basketball that we didn't redo again this year, we're still expecting for the year A&P for our branded spirits to be roughly 12%.

Brandon Gall: We're still expecting for the year A&P for our branded spirits to be roughly 12% of net sales, which is down from the, you know, roughly 15% we've been seeing. However, when you take that A&P investment and do it as a percentage of our Premium Plus brands, which is where all that money is going, that number is actually closer to 25%, which is, as we all know, well above the industry averages. What's working? Focus. The key initiative here is focus. We've got a lot of great brands, and sometimes we don't know where to begin and where to focus. So we've really tried to improve that this year in both our sales and our marketing execution. And Penelope, El Mayor, and Rebel are all reacting to that in a positive way. And so that's what we're seeing.

Net sales, which is down from the roughly 15% we've been seeing however, when you take that A&P investment and do it as a percentage of our premium plus brands, which is where all of that money is going that number is actually closer to 25% which is which.

Which is as we all know well above the industry averages.

What's working focus the key initiative here is focused we've got a lot of great. We've got a lot of great brands.

And sometimes we don't know where to begin.

Where to focus so we've really tried to improve that this year in both our sales and our marketing execution.

Penelope.

Or and rebel are all are all of them.

Reacting to that in a positive way and so that's what we're seeing that's what's working as far as.

Brandon Gall: That's what's working as far as further pricing and mid and value, I think was your last question, Mark. Look, you know, value especially is somewhere that's getting increasingly competitive, whether it's in promotions, taking down line pricing, or even rebates. It seems like everything's on the table, and there are just so many things we can or want to do there. And so we'd rather use our marketing dollars in support for the higher margin Premium Plus brands in our portfolio, but we aren't afraid to adjust our line pricing to adjust to our competitive set and what they're doing.

Further pricing in mid and value I think was your last question Mark.

Look.

Value, especially as some of that is getting increasingly competitive whether it's in promotions taken down line pricing.

We're even rebates it seems like everything's on the table and there just <unk>.

So many things, we can or want to do there and so we'd rather use our marketing dollars and support for the higher margin premium plus brands in our portfolio, but we but we aren't afraid to adjust our line pricing to adjust to our competitive set and what they're doing.

Mitch Pinheiro: Okay. Thanks for that color. And then I guess more on distilling sales and earnings for a bit better than at least we were thinking, but seem more in line with your own expectations. Maybe just any more on how you're thinking about the phasing front half versus back half in the context of the full year. I guess any upside in the front half could seem to imply more or a deeper impact into the back half and perhaps even in the front half of '26. So if margins were to hold in better than expected, as they seem to be, is that coming from more cost control? Is that where just pricing is falling in on these contract resets? Is it mixed or a combination of all of the above? Thanks.

Okay. Thanks for that color and then I guess more on.

Sterling sales and earnings were a bit better than at least we were thinking but it seem more in line with your own expectations.

Maybe just any more on how youre thinking about the phasing front half versus back half in the context of the full year.

Got any upside and the front half could seem to imply more deeper impact into the back half and perhaps even in the front half of 2006.

If margins were to hold at better than expected as they seem to be is that coming from more cost control is that were just pricing is falling in on these contract resets is that mix or a combination of all of the Bob. Thanks.

Mark Davidson: Yeah, Mark, I'll start with that one. Yeah, you know, as we've mentioned, there is some phasing of contracts, and as a result, you know, with the 50% decline in sales for the full year, that would imply a big decrease in H2 from H1. On the gross profit standpoint, as Brandon mentioned, we expect that 65% decline that we previously guided to to be a little bit better. And where we're seeing that benefit is in pricing. Pricing negotiations have gone well, and so we've seen some favorability there, again, as we've been able to successfully partner with our Distilling Solutions customers. And so we're encouraged by that. We see that show through in pricing, and that's where we see that margin and gross profit benefit coming through in the back half.

Yeah, Mark I'll start with that one yeah, you know as we've mentioned there is some phasing of contracts and as a result without with a 50% decline in sales for the full year that that would imply a big decrease in H two from each one on the gross profit standpoint, as Brandon mentioned we.

That 65% decline that we previously.

Guided you to be to be a little bit better.

Where we're seeing that benefit is in our pricing.

Pricing negotiations have gone well and so we've seen some favorability there again as we've been able to successfully partner.

With our distilling solutions customers and so we're encouraged by that we see that show through in pricing and.

And that's where do we see that margin and gross profit benefit coming through in the back half.

Brandon Gall: Yeah. And the only thing I'd add to that is, you know, just due to the lower sales and lower production volume in the second half, the team's doing a phenomenal job in doing what they can to mitigate costs and especially fix cost absorption levels. But we do expect some margin pressure, gross margin pressure in the back half. And as such, we're still expecting, you know, roughly 30% margins for the segment, which would imply that the back half is going to be probably closer to the mid 20s levels.

The only thing I'd add to that is just due to the lower sales and lower production volume in the second half the team is doing a phenomenal job.

Doing what they can to mitigate costs, and especially fixed costs absorption levels, but we do expect some margin pressure gross margin pressure in the back half and as such we are still expecting roughly 30% margins for the segment, which would imply that the back half is going to be probably closer to the mid twenty's levels.

Mark Davidson: The next question comes from Robert Moscow from TD Cowan. Please go ahead.

The next question comes from Robert Moskow from TD Cowen. Please go ahead.

Ben Klieve: Hi, this is Shay Muscassi on for Rob Moscow. And thanks for the question. And welcome, Julie, as well. So my question is on Distilling Solutions. You cited the TTP data, which shows, you know, pretty notable production cuts. In light of that, could you sort of help frame where we are in terms of inventory rationalization at the industry level? And then secondly, would you describe the competitive environment as sensible still, especially in the context of your proactive engagement on pricing negotiations?

Hi, This is David <unk> on for Rob Moskow, and thanks for the question and welcome Julie as well.

So my question is on distilling solutions you cited the TTP data, which is pretty notable production in light of that could you sort of help frame, where we are in terms of inventory rationalization at the industry level and then second we would you describe the competitive environment is sensible still especially in the car.

Taxes of your proactive engagement on pricing negotiations.

Brandon Gall: Yeah. So on the TTB, yeah, very encouraging signs. And, you know, from an overall inventory dynamic perspective, we still have a ways to go, Shamus. This is not going to be an overnight fix. However, you know, and as we said, this is going to go into 2026, and we still feel that way. You know, but what we are seeing is, you know, in tough environments like these, we keep coming back to it, but partnerships matter. You know, customers and suppliers want to line up with those that they see a long-term relationship with. And, you know, the commitment that the team is showing out in the market is demonstrating that commitment. And I feel that, you know, our customers are responding, both current customers and new. We are actually adding customers in this environment. And so we're very encouraged by all that.

Yeah.

So on the TTP.

Yeah, very encouraging signs and.

From an overall.

Inventory dynamic perspective.

Still have always to go Seamus.

This is not going to be an overnight fix.

However, as we said this is going to go.

Drilling into 2026, and we still feel that way.

But what we are seeing is.

Environments like these we keep coming back to it but partnerships matter.

Customers and suppliers want to wind up with those that they see a long term relationship with.

And the.

The commitment that the team is showing out in the market is demonstrating that commitment and.

All of that.

Customers are responding both current customers and new we are actually adding customers in this environment.

And so we're very encouraged by all of that.

Brandon Gall: So, you know, definitely this dynamic is going to persist. But we do feel that, you know, as a leading contract distiller for American whisky, we were positioned well coming into this, and we feel like we're doing all the right things, and we're controlling the controllables to be better positioned coming out of it.

So definitely this dynamic it's going to persist.

But we do feel that.

A leading contract distiller for American Whiskey, we're positioned well coming into this and we feel like we're doing all the right things and we're controlling the controllable.

Two to be better positioned coming out of it.

Mark Davidson: Great. Thank you. And the next question comes from Sean McGowan from Roth Capital Partners. Please go ahead.

Great. Thank you.

And then I have a question.

And the next question comes from Sean Mcgowan from Roth Capital Partners. Please go ahead.

Ben Klieve: Thank you. Good to talk again. And.

Brandon Gall: Thanks, Bill.

Alright, thank you.

Ben Klieve: I'll welcome to your commentary. Julie, thanks. My question is on, could you give us some color on the difference in your mind between a paused purchase and a canceled contract? You know, how like how solid are those contracts if they've been paused, and is that pause like indefinite?

Again.

Welcome to your commentary.

Thanks.

Austin is on.

Could you add some color on the difference in your mind between paused purchase on a canceled contract.

Like how solid all those contracts if they've been paused cause like indefinite.

Brandon Gall: Yeah. Their purchasing has been paused. The contract came to an end. And typically, these, you know, come up for renewal, and, you know, they're negotiated as all contracts are. But, you know, we got the sense when we really began our outreach at the beginning of the year that, you know, there may be a pause coming. We have, you know, we can see inventory and pull rates on our customers with barrels in our warehouse. So we were able to have that open dialogue. And look, you know, like I said, Sean, these are, especially in the cases I mentioned, and we're talking about very large multinational customers with well-established, very large brands. And, you know, historically, there's very little customer churning in instances like these. Our relationship with these customers in a lot of cases goes back years and years and years and years.

Yes.

Our purchasing and spend pause the contract.

Came to an end and typically.

These come up for renewal and.

They are negotiated as all contracts are.

But we got the sense when we really began our outreach at the beginning of the year that.

There may be a pause coming.

We have.

We can see inventory and pool rates on on our customers with barrels in our warehouse.

So we were able to have that open dialogue.

And look like like I said, Sean these are.

Specially in the cases, I mentioned and we're talking about.

Very large multinational customers with.

With well established very large brands and.

Historically, there is very little Custer.

Customer churning in instances like these our relationship with these customers and a lot of cases goes back years and years and years and years.

Brandon Gall: And the uniqueness of our product and taste profile, you know, we think is a very strong positive for that as it represents their brand with their consumers. So, you know, we do view it that way as a temporary pause. And we're also confident that it will resume. It may not resume at the same volumes it left off at when it does pick back up, but that's okay. We'll work back into it with them. And in the meantime, we're going to look to partner in different ways, whether it's through other product offerings like gin and G&S for vodka, or in helping them, you know, find homes for their inventory or other creative solutions for them to benefit their business.

And the unique niche.

The uniqueness of our product.

In taste profile.

We think is a.

A very strong positive for us it represents their brand with their consumers. So yeah, we do view it that way as a temporary pause and we're also confident that it will resume.

It may not resume at the same volumes left off that when they when it does pick back up.

Okay, we will work back into it with them and in the meantime, we're going to look to partner in different ways, whether it's through other product offerings like Gen in GFS for vodka.

And helping them find homes for their inventory or other creative solutions for them to benefit their business.

Ben Klieve: Thanks for that clarity. And one little other clarification question. On the SG&A in the quarter, I think you mentioned that there were some items in there, you know, related to compensate, you know, incentive comp that, you know, if you exclude that, the SG&A was down a little bit more. Should we expect that elevated level of incentive comp to continue in the subsequent quarters, or was that kind of a one-time thing?

Thanks for that clarity.

The other clarification question on the SG&A and.

In the quarter I think you mentioned that there was some items in there related to compensation and incentive comp.

If you exclude that SG&A was down a little bit more should we expect that elevated level of incentive comp.

New.

Subsequent quarters or was that kind of a onetime thing.

Brandon Gall: Yeah. No, we expect SG&A as a percentage of sales in Q2 to persist in the back half of the year. And additionally, yeah, this is a reinstatement of the incentive comp. So it is year over year going to stick out a little bit more. But, you know, the important thing there is going back to controlling what we can control, our cost savings initiatives and productivity initiatives at the beginning of the year. If you peel that out, it's actually showing, you know, an 80% decline in adjusted SG&A. So very proud of the team for coming together and driving those savings. And yeah, we look forward to finding more as the year goes on.

Yes, we expect SG&A as a percentage of sales in Q2.

To persist in the back half of the year and.

Additionally.

This is the reinstatement of the incentive comp so it is year over year.

Stick out a little bit more but.

The important thing there is going back to controlling what we can control our cost savings initiatives and productivity initiatives at the beginning of the year. If you Peel that out is actually showing an 8% decline in adjusted SG&A. So.

Very proud of the team for coming together and driving those savings and and yes, we look forward to finding more as the year goes on.

Ben Klieve: Okay. All right. Thank you very much.

Brandon Gall: Thanks, Sean.

Alright, Thank you very much.

Mark Davidson: And the next question comes from Mitch Pinheiro from Sturdivant & Company. Please go ahead.

Thank you Sean.

And the next question comes from Mitch Pinheiro from Sturdivant and company. Please go ahead.

Mitch Pinheiro: Hey, yeah. Good morning and welcome, Julie. I just had a couple of questions for you. Okay. So, you know, you talk about visibility. You know, you've talked to your customers. You have good visibility. But we do see visibility. You know, we're going to have significant, you know, downward pressure in sales for a while on the distilling side. Like, what does the visibility do for you? I mean, are we seeing it? Is that visibility enabling you to maintain a 30% gross margin, or do you think the visibility is more advantageous than that? And, you know, maybe it'll help you to improve the margins from these current levels.

Hey.

Good morning.

Julie.

Just had a couple of questions for you.

Okay.

So.

Can you talk about visibility.

Yes, you are talking to your customers you have good visibility.

But we do see visibility.

We're going to have significant.

Downward pressure in sales for a while on the distillate side.

Like what does the visibility do for you I mean are we seeing it is that visibility, enabling you to maintain a 30% gross margin or do you think the visibility.

Is more advantageous than that.

<unk>.

And maybe it will help you to improve the margins from these current levels.

Brandon Gall: Yeah. So, you know, what the visibility gives us more than anything is confidence. We can see the proverbial bottom of the pool a little bit more clearly. And what it also allows us to do is set ourselves up for operational success. So we know how many shifts to run. You know, we know what campaigns to run product-wise. We know how many operators we need on site and so on. So it's visibility in the numbers, but also the visibility in being able to operate efficiently. And, you know, this pullback in the overall market happened pretty fast. And the team's done a very, very nice job of reacting. But to your gross margin question, if we're going to be in the mid 20s in the back half of 2025, you know, we're doing what we can to chip away at that and get those numbers up.

Yeah, so with the visibility gives us more than anything is confidence.

Can see the proverbial bottom of the pool, a little bit more clearly.

And and what it also allows us to do is set.

Set ourselves up for operational success. So we know how many shifts drawn.

We know what campaigns around product wise, we know how many operators we need on site and so on so.

Its visibility in the numbers, but also the visibility and being able to operate.

Operate efficiently and.

This.

This pullback in the overall market had been pretty fast and the team's done a very very nice job of reacting.

But to your gross margin question for you.

And to be in the mid twenties.

In the back half.

2025.

We're doing what we can to chip away at that and get those numbers up and whether it's through.

Brandon Gall: And whether it's through finding greater efficiencies or doing what makes us unique. So one of those examples is we're one of the only contract distillers of American whisky that can also distill G&S and Premium Gin for our customers. And while it's not necessarily as high a price as brown goods, it's an excellent way to gain efficiencies and scale in our facility. And also, it's an excellent way to further partner with our customers in these hard times. So, you know, there's even proactive commercial activities that can actually improve the margin profile. So, you know, we're hopeful, Mitch, to answer your question in a long way that, you know, we're going to keep chipping away and we're going to get those margins up over time.

Finding greater efficiencies.

We're doing what makes us unique so one of those.

Examples is where we're one of the only contract distilleries of American Whiskey that can also distill CNS and premium <unk> for our customers.

And while it's not necessarily as high a price as brown goods its.

It's an excellent way to gain efficiencies and scale in our facility. So and it also is an excellent way to further partner with our customers in these hard times so.

There's even a proactive commercial activities that can actually improve the margin profile. So.

We're hopeful Mitch to answer your question in a long way.

We're going to keep chipping away and we're going to get those margins up overtime. Okay.

Mitch Pinheiro: Okay. And then how, you know, so I think I heard you say that you expect net put-away for 2025 to be in the $15 to $20 million range. Is that correct?

Okay and then how.

So I think I heard you.

You say that you expect put away net put away for 2025 to be in the $15 million to $20 million range is that correct.

Brandon Gall: That's right. That's correct.

Mitch Pinheiro: So, I mean, is that, I mean, how's that fit with, you know, just, you know, the overall slowdown? Is this $15 to $20 million of net put-away sort of specific, you know, juice for certain customers that you need to do? And there's a, you know, there's a chunk of your inventory that's sitting there sort of just unaccounted for.

That's right that's correct.

I mean is that I mean, how does that foot with.

Just.

The overall slowdown is this $15 million to $20 million of net put away.

Pacific.

Juice for certain customers that you need to do and there is and there is a.

There is a chunk of your inventory that's sitting there it's really just unaccounted for.

Brandon Gall: Yeah. Most of it, most of our put-away is for our own brands. Okay. So those are brands like Penelope, Rebel, and so on. So that's where most of our $15 to $20 million is going. And then, you know, the pockets of put-away that we are doing for Distilling Solutions have more to do with long-term agreements to supply H in the future for potential customers and for current customers. So there's some of that contemplated in there as well. But, you know, what we're also in a really unique position to do in any quarter or any month is find good opportunities in the market. Okay. So we've got as good of a feel as anyone as to value.

Yeah, most of it most of our put away as far our owned brands. Okay. So those are brands like Penelope.

And so on so that's where most of our $15 million to $20 million going.

And then.

But the pockets of put away that we are doing for distilling our solutions.

More to do with long term agreements.

To supply age in the future for from potential customers and for current customers. So theres some of that contemplated in there as well.

But what we're also in a really unique position to do in any in any quarter or any any month.

As you know.

Find good opportunities in the market. Okay. So we've got we've got as good of a feel as anyone as to.

Brandon Gall: And so if there are barrels out there that we know are not only unique and rare, but we can also monetize in a better way, we'll go out and buy those in the open market. And we can then resell them. We could also dump them and bottle them in our own brands. So that's also factoring into that $15 to $20 million, Mitch. So, that's just a little bit of context around, you know, what that consists of and how we approach it.

Value and so if there are barrels out there that we know are not only unique and rare, but we can also monetize.

And a better and a better way.

We will go out and buy those in the open market and we can then we sell them.

Can also dump them in bottle bottle them in our own brands. So.

That's also factoring into that $15 million to $20 million that so.

That's just a little bit of context around what that consists of and how we approach it.

Mitch Pinheiro: Yeah, that's helpful. And then, you know, with sort of the ready-to-drink segment sort of really helping the spirits in the industry, at least in terms of volume, are you doing, or are you participating in any of that growth through, you know, obviously through third-party brands?

Yeah, that's helpful and then.

With.

Sort of the ready to drink segment sort of.

Really helping.

Spirits.

History.

At least in terms of volume.

Sure.

Are you doing or are you participating in any of that growth.

Through obviously through third party brands.

Brandon Gall: Yeah, absolutely. And, you know, we've participated in that in white goods and G&S too, but also, you know, to your point, in American whisky. So a lot of that, you know, tends to go out the door. It's not always H for very long, if at all. But yeah, no, you can imagine that a lot of our customers who buy traditional bourbon for traditional brands would also lean on us for that capability as well.

Yeah, absolutely and we.

Participated in that in white goods in.

GFS too.

But but also to your point in American whiskey, So a lot of that.

It tends to go out the door a lot it's not always age for very long if at all.

But yes, you can imagine that a lot of our customers who buy traditional bourbon for traditional brands would also lean on us for that capability as well.

Mitch Pinheiro: Okay. And then I guess finally, just on the branded spirit side, so Penelope obviously has been, you know, you see SKUs increasing, you know, your distribution is increasing. I mean, what's the rest of the portfolio like? I mean, obviously, if Penelope is doing really well, that would, you know, obviously imply some weakness there. Is there any particular brands that have been weaker than normal or also are shining, you know, besides your, you know, you've called out Rebel and, well, El Mayor on the tequila side. So anything happening within the Premium Plus that's weaker than it should be, or, you know, I'd love to hear that.

Okay, and then I guess finally, just on the branded spirits side.

So now we'll be obviously spin.

C C.

Skus, increasing your distributions increasing.

What's the rest of the portfolio like them, obviously, but nobody is doing really well that would obviously imply some weakness there is there any particular brands that have been weaker than normal or also we're shining.

Besides you you've called out rebel and.

Well, you're on the tequila side, so anything happening within the premium plus.

Weaker than it should be or.

Brandon Gall: Yeah. Yeah. So Penelope, like you said, is continuing just with tremendous momentum. The lifeblood of that brand is innovation and in coming out with offerings and items that resonate with consumers and meet them exactly where they are. Penelope Weeded is a great example of that, but even our recently introduced ready-to-serve line or ready-to-pour line of Penelope Peach Old Fashioned and Black Walnut Old Fashioned are great examples of doing exactly that. So very, very proud and pleased with the progress of Penelope. El Mayor too, you know, strong volumes in the quarter. We came out with new packaging and some new size offerings, so we're excited for that. And Rebel too showed sales growth in the quarter. But there are offsets, Mitch, primarily in a couple of larger volume American whisky brands.

Love to hear that.

Yeah.

Yes, so Penelope like you said is continuing just tremendous momentum the lifeblood of that brand is innovation and.

And coming out with our offerings and and items that are that resonate with consumers and meet them exactly where they are.

<unk> is a great example of that but even our recently introduced ready ready to serve line of ready to pour line.

<unk> fashioned and black Walnut Oldfashioned.

Good examples of doing exactly that so very very proud.

I'm pleased with the progress of Penelope all Mayo or too.

Strong volumes in the quarter.

We came out with new packaging and some new science offerings. So we're excited for that and rebel two showed sales growth in the quarter, but they're all said offsets Mitch.

Primarily in a couple of larger volume of American Whiskey brands.

Brandon Gall: And those are actually, you know, declines that we've been, you know, we've been dealing with in recent quarters as well. But we're not just sitting on our hands there. We are making adjustments, whether it's with line pricing to better position it with their respective competitive sets, but also with, you know, innovation as well. And so, you know, there's additional ready-to-serve products coming out possibly across other parts of our portfolio, albeit at different price points than Penelope. So, you know, that may round out our Premium Plus price tier for you better, Mitch.

And those are actually declines that we've been.

We've been dealing with in recent quarters as well.

But we're not just sitting on our hands. There we are making adjustments, whether it's with line pricing to <unk>.

Position that with their respective competitive sets.

But also with.

Innovation as well and so there is additional readiness serve products coming out possibly across other parts of our portfolio, albeit a different price points than Penelope so.

You know that that may round out our premium plus priced or for even better Mitch.

Mitch Pinheiro: All right. Well, I appreciate the insight. Thank you.

Brandon Gall: Thank you, Mitch.

Alright, well I appreciate the insight thank you.

Mark Davidson: Again, if you have questions, please press star, then one. And the next question comes from Ben Cleve from Lake Street Capital Markets. Please go ahead.

Thank you Mitch.

Again, if you have questions. Please press Star then one.

And our next question comes from Van Cleef from Lake Street Capital markets. Please go ahead.

Ben Klieve: All right. Thanks for taking my questions. And morning everybody. And Julie, congratulations on the new role. A couple of questions on the ingredients segment. It's great to see.Year-over-year

Alright, thanks for taking my questions.

Good morning, everybody and Dr. Julie congratulations on the new role.

A couple of questions on the ingredients segment, its great to see year over year growth both on the top line on an earnings here too.

Mark Davidson: growth, both on the top line and on earnings here. I have two questions. First one is, Brandon, I'm wondering if you can give us an update on the challenges in the export market specific to this segment, and both on a kind of sequential basis and year-over-year basis, what that impact was in the second quarter, and then kind of if you have any insights regarding the export opportunity in the back half of the year.

Two questions first one is brand and I'm wondering if you can give us an update on the challenges in the export market specific to this segment.

Both on a sequential basis and year over year basis, what that impact was in the second quarter, and then kind of a few of any insights regarding the export opportunity in the back half of the year.

Conference Specialist: Yeah. So, you know, as it relates to export with Ingredients Solutions, what we're really talking about there is our specialty protein product line, specifically our rice specialty protein. And as you recall, most of that for a long time has been sold with a long-term partner into Japan. And as we discussed last year, they started, they began really slowing down their purchases. And so it was a little bit of a surprise at the time, but the team has done a great job in recommercializing that rice line in North America with new and existing customers. And the demand from Japan is still there, not at the same volumes that we've seen historically. But interestingly enough, as we look into next year, they're looking to possibly increase their orders.

Yeah.

So is.

As it relates to export with ingredient solutions, what we're really talking about there is our specialty protein product line, specifically our arise.

Specialty protein and as you'll recall.

Most of that for a long time.

It's been sold with a long term partner in Japan.

And as we've discussed last year. They started they began really slowing down their purchases and so it was a little bit a little bit of a surprise at the time, but the team has done a great job in commercializing that arise line in North America.

With new and existing customers and.

The demand from Japan is still there.

Not at the same volumes that we've seen historically.

But interestingly enough.

We look into next year, Theyre looking to possibly increase their orders.

Conference Specialist: But the important thing is that we've been able to find a home for that, not quite at the same pricing that we may have been getting prior, but still at very profitable pricing. So very proud of the team and their ability to react to what's going on internationally.

But the important thing is is that we've been able to find a home for that.

Quite at the same pricing that we may have been getting prior but still at very profitable pricing. So very proud of the team and their ability to react.

David Bratcher: And just to add to that, Ben, to that point, that's the key component of the driver of the increase versus Q2 of last year. Specialty protein sales increased 13% due to our ability to replace that export volume with domestic customers. And then you mentioned sequential increase. You know, the ingredients segment increased significantly sequentially from Q1. Sales were up 32%. The biggest driver of that increase is our specialty wheat protein offerings, which increased 5.3 million versus Q1 due to our ability to commercialize that lost export business domestically, as we messaged earlier this year.

What's going on internationally.

And just to add to that and to the point that that's a key component of the driver of the increase versus Q2 of last year specialty protein sales increased 13% due to our ability to replace that export volume with domestic customers and then you mentioned sequential.

Kris you know the ingredients segment increased significantly sequentially from Q1 sales were up 32%. The biggest driver of that increase is our specialty wheat protein offerings.

Which increased $5 $3 million versus Q1 due to our ability to commercialize.

That loss of export business domestically as we messaged earlier this year.

Mark Davidson: Great. Great. That's helpful from both of you. Thank you. And then my second question on this segment, and we'll get back in Q, is around there's a lot of things moving in the right direction here. The biofuel plant's coming online for some cost savings. You've got this dynamic with the export pressure starting to maybe wane that you just talked about, new customers onboarding, and you expect the second half to be better both in revenue and profit than the first. I'm wondering if you can maybe help us isolate that new customer contribution element of this. You talked about a couple of new customers coming online here at some point within the second quarter.

Great great.

Well from both of you. Thank you and then my second question on this on the second one and I'll get back in queue is around.

There's a lot of things moving in the right direction here the biofuel plants coming online for some cost savings you've got this dynamic with the export pressure starting to maybe Wayne that you that you just talked about new customers on boarding and you expect second half to be better on both in revenue and profit in the first.

Im wondering if you can maybe help us isolate that new customer contribution.

Element of this.

Talked about a couple of new customers coming online here at some point within the second quarter I'm wondering one if they came online is as in the magnitude that you expected and then kind of where they stand today from a revenue perspective versus where do you think there'll be at a run rate basis here in the quarters to come.

Mark Davidson: Wondering, one, if they came online in the magnitude that you expected, and then kind of where they stand today from a revenue perspective versus where you think they'll be at a run rate basis here in the quarters to come.

Conference Specialist: Yeah. So a lot of the new customers that we've been getting, as Mark just said, has been on the specialty protein and rice front in North America. And any new customer, especially in this business, there can be a load-in and then some choppiness. And we've seen some of that. In fact, Q1 was choppy as a result of this. Q2 was where we expected it to be. We expect Q3 to be strong as well for specialty protein, maybe not quite as strong as in Q2, but then we expect a strong Q4. So it's going to be maybe a slight step down in Q3, but the choppiness is reducing in its size, which is great to see and what you would expect. Where the opportunity really is on the new customer front is in our Proterra extruded protein facility that came online last April.

Yes so.

A lot of a lot of the new customers that we've been getting as Mark just said.

Ben.

The specialty protein arise front in North America and.

Any new customer, especially in this business there can be a load in and then some choppiness in that we've seen some of that in fact Q1 was choppy.

As a result of this Q2 was where we expected it to be we expect Q3 to be strong as well for specialty protein maybe not quite as strong as in Q2, but then we expect a strong Q4, so it's going to be.

Maybe a slight step down in Q3, but the Choppiness is is reducing in its size, which is great to see and what you would expect where the opportunity really is on the new customer front isn't our portera extruded protein facility that came online last April.

Conference Specialist: And like I said, in this business, it can take anywhere from 8 to 12 to 24 months to commercialize a new customer. It's a lot of work. It's a lot of commitment. And the team is making a lot of progress there. This is a great facility, up to 10 million pounds of production capability. And I shared earlier in the year that we had two large customers that we've been working with that we were hoping to come on in the back half of the year. I had a discussion about that just recently with the team, as you'd imagine. That is still looking good in both cases. Could be more Q4. But the point is that we're making progress. Additionally, something we're doing to increase our customer pipeline and funnel is we're expanding our capabilities and our offerings at our Proterra facility.

Like I said in this business it can take anywhere from eight to 12 to 24 months.

To commercialize a new customer it's a lot of work, it's a lot of commitment and.

And the team is making a lot of progress. There. This is a great facility up to 10 million pounds of production capability and I shared earlier in the year that we had two large customers that we've been working with that.

That we were hoping to come on in the back half of the year.

I had a discussion about that just recently with the team as you would imagine that is still looking good in both cases it.

It could be more Q4.

But the point is is that we're making progress.

Additionally, something we're doing to increase our our customer pipeline and funnel is we're expanding our capabilities and our offerings at our <unk> facility. We are now we're now working with soy as an example.

Conference Specialist: We are now working with Soy, as an example. And the result of that has been a complete inbound of new customers and new opportunities. So because this facility is located separately from our overall ingredients facility, we're able to experiment with different grains such as this. So that's really where our runway is for growth in terms of new customer acquisition, Ben. And that's where the team's focused and making a lot of progress.

And the result of that has been.

Sweet.

Inbound of new customers and new opportunities so.

Because this facility is located.

Located separately from our overall ingredients facility, we're able to experiment with.

Current range such as this so.

That's really where our runway is.

For growth in terms of new customer acquisition band and that's what the team is focused and making a lot of progress.

Mark Davidson: Very good. That's interesting to hear. Well, congratulations on that segment specifically, having some good momentum here and mitigating a lot of the challenges in the spirit side as well in the quarter. Take your take on my questions, and we'll get back in Q.

Very good.

Interesting to hear on well congratulations on that segment, specifically, having some good momentum here and mitigating a lot of the challenge in the spirits side as well in the quarter. Thanks for taking my questions I'll get back in queue.

Conference Specialist: Perfect. Thank you, Ben.

Mark Davidson: This concludes our question and answer session. I would like to turn the conference back over to Julie Francis for any closing remarks.

Perfect. Thank you Ben.

This concludes our question and answer session I would like to turn the conference back over to Julie Francis for any closing remarks.

Amit Sharma: Thank you. I'd like to thank everyone for joining our quarterly earnings call today. I look forward to engaging with all of you in the very near future and playing a much more active role in the next earnings call. So good luck, everyone. We'll talk soon. Cheers.

Thank you and I'd like to thank everyone for joining our currently quarterly earnings call today, I look forward to engaging with all of you in the very near future and playing a much more active role in our next earnings call. So good luck, everyone. We'll talk to you in tears.

Mark Davidson: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.

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