MGP Ingredients, Inc.

And welcome to the MGP Ingredients Third Quarter 2021 Financial Results Conference 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 presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your phone. To withdraw a question, please press star then two Please note this event is being recorded. I would now like to turn the conference over to Mike Houston, Investor Relations. Please go ahead.

Thank you. I'm Mike Houston with Lambert & Company, MGP's investor relations firm, and joining me today are members of their management team, including Dave Colo, President and Chief Executive Officer, and Brandon Gall, Vice President of Finance and Chief Financial Officer. We will begin the call with management's prepared remarks and then open the call to questions. However, before we begin today's call, it is my responsibility to inform you that this call may involve certain forward-looking statements, such as projections of sales, operating income, gross margin, and effective tax rate, as well as statements on the plans and objectives of the company's business. The company's actual results could differ materially from any forward-looking statements made today due to a number of factors, including the risk factors described in the company's most recent annual and quarterly reports filed with the Securities and Exchange Commission. The company assumes no obligation to update any forward-looking statements made during the call. If anyone does not already have a copy of the press release issued by MGP today, you can access it at the company's website, www.mgpingredients.com. At this time, I would like to turn the call over to MGP's President and Chief Executive Officer, Dave Colo. Dave?

Thanks, Mike, and thank you all for joining us. On this call, we will provide an overview of our results for the quarter, updates on key financial performance metrics, and a discussion of progress against our strategy. Then we will take your questions. Turning to the results for the third quarter, the record consolidated quarterly results reflect the progress our team has made toward executing our long-term strategic plan. Sales of premium beverage alcohol increased 32.5%, primarily driven by brown goods sales growth of 33.4% from last year, which was due to both higher-aged whiskey and new distillate sales. The American whiskey category remains robust, and we continue to optimize our significant share and scale advantage to grow the business. Integration of our recently completed acquisition of Luxco remains on track, including achievement of the synergy expectations we shared earlier in the year. As evidenced in our recent results, this additional platform is improving our gross profit and cash flow generation profile and provides long-term growth opportunities for the company. We experienced record results across each of our business segments this quarter, including record sales growth of aged whiskey and strong sales for our white beverage products, as well as better-than-anticipated growth for our branded spirits segment, and solid results in both revenue and gross profit for our ingredient solution segment. Each of our business segments showed top-line growth over the prior year, and as a result, our consolidated sales and profitability for the quarter achieved record levels. Looking at each segment individually, we posted another record quarter in our distillery product segment, with sales finishing the quarter up 15% to $91 million, while gross profit improved to $27 million, or 29.6% of segment sales. We are very pleased with the record performance of our aged whiskey sales this quarter, representing solid revenue growth as compared to the prior year period from a diverse group of customers. This growth in aged whiskey reflects strong pricing, margins, and demand as the macro consumer trend supporting the ongoing growth of the American whiskey category remains solid. Our diverse aging whiskey library, along with a seasoned sales team and our ability to support a brand's growth regardless of its size, offers a sustained position of strength over time. White goods sales also posted solid growth of 30.7% from the prior year period, primarily due to improved prices and volume. The growth this quarter partially reflected volume shifts away from industrial alcohol and towards our white goods premium beverage products. As for industrial alcohol products this quarter, sales decreased 24% as expected. The decline in industrial alcohol sales was primarily attributed to reduced third-party sales of industrial alcohol produced by ICP, our former joint venture partner. We have also seen additional supply enter the market during the year, and we anticipate margins for both industrial alcohol and white goods products will return to lower historical levels as demand for industrial alcohol also moderates over the next several quarters. Also of note, sales of dry distillers grains, or DDG, decreased 34.4%, primarily due to the need to convert from selling dried to wet distillers grains byproducts due to the dryer incident in Q4 of last year. We expect continued comparative declines in revenue for our distillers grains this year, until the dryer system installation is complete, which we anticipate occurring in the fourth quarter of this year. Revenue from warehouse services increased 15.5%, reflecting in part growth in the number of customer barrels aging in our whiskey warehouses and other services we provide. Turning to branded spirits, results continue to exceed our expectations this quarter. Sales totaled $61.6 million primarily due to the Luxco acquisition. Gross profit increased to $23.2 million, or 37.7% of segment sales. Ongoing consumer demand for our brands has been a major catalyst for growth, which was reflected in the strong performance by our American whiskey and tequila brands, as well as the continued return of on-premise demand. We remain focused on improving our portfolio profitability, by optimizing gross profits and margins, as well as the marketing mix across all of our brands. Turning to ingredient solutions, sales grew 12.5% to $24 million, while gross profit increased to a record $6.9 million, representing 28.7% of segment sales. This reflects another solid increase in gross profit as compared to the prior year period. Specialty wheat starch sales grew 5.4% this quarter, while our specialty wheat protein sales grew 11.4%, both primarily driven by increased volume. We feel very good about the robust project pipeline for these products, as well as our recently rebranded Proterra line of textured proteins, and remain confident that they will drive long-term growth for the segment. We believe our diverse customer base and product offering continue to be aligned with strong consumer trends and remain encouraged by the robust gross margins as a result of our strategy to focus production and sales mix on our highest margin products. Overall, each of our business segments continue to benefit from favorable consumer trends, providing additional confidence in our long-term strategy. This concludes my initial remarks. Let me now turn things over to Brandon Gall for a review of the key metrics and numbers. Brandon?