MGP Ingredients, Inc.

Good day and welcome to the MGP Ingredients First Quarter 2020 for Financial Results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star key and zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and one on your telephone keypad. To withdraw your questions, please press star and two. Please note, this event is being recorded. I would now like to turn the conference over to Mike Hudson. Please go ahead, sir.

Thank you. I'm Mike Houston with Lambert Global, MGP's investor relations firm. And joining me are members of their management team, including David Bratcher, Chief Executive Officer and President, 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. 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 report filed with the Securities and Exchange Commission. The company assumes no obligation to update any forward-looking statements made during the call, except as required by law. Additionally, this call will contain reference 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. If anyone does not already have a copy of the earnings 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 Chief Executive Officer and President, David Bratcher. David?

Thank you, Mike, and thanks everyone for joining the call today. On this call, we will begin with an overview of our performance for the quarter ended March 31, 2024. provide updates on key financial performance metrics, and discuss the progress we have made towards our strategic plan. At the end of the call, we will open the line for Q&A. I am pleased with the results we posted this quarter and the progress we have made towards our long-term strategic plan. On a pro forma basis, when factoring in the Atchison Distillery closure, our distilling solution segment achieved sales growth when looking at our business today compared to a prior year period without the adjusted distiller results. We also had solid sales growth in ingredient solutions in our Premium Plus brands within Branded Spirits. All in all, this quarter was in line with our financial expectations as described during our previous earnings call. Other highlights for the quarter include the promotion of Amal Pesajic to the Chief Commercial Officer role, the commissioning of our newly built textured wheat protein facility, and several incredible brand initiatives, each of which we will talk about on the call today. Starting with the promotion of Umel to his newly created role, he will continue to leverage the business intelligence and predictive data insights he developed at CIO and apply them across all three business segments. Amel's wealth of experience and his unique strategic view of our business will be critical in driving the next phase of growth for MGP. We are excited about the insight he will bring to our business and as our commercial leader. Turning to our distilling solution segment, we are pleased to have completed the Atchison Distillery closure in December of 2023, which led to a record quarterly segment gross margin in Q1 of 2024, as well as accomplishing our strategic intent of being brown goods focused in our distilling solutions business. As we reported last quarter, we have the vast majority of our anticipated total brown goods volume committed for 2024. Also, as we previously indicated, we expect the last three quarters of 2024 will result in stronger profits as compared to Q1, Due to the variation in the timing of customer demand and the timing of our Bardstown, Kentucky distillery expansion project coming online in April. Turning to Branded Spirits, we are very pleased with the continued growth of our Premium Plus sales as they represent 42% of segment sales this quarter. This represents a stark improvement from the 33% figure we experienced in the first quarter of 2023. This meaningful improvement was partially offset by lower volumes of our allocated single-barrel premium plus brands as compared to 2023 due to the seasonal nature of these specialty programs. While the seasonal nature of these special programs put pressure on our gross profits this quarter, we were still able to expand gross margin to 44.9%, which is a testament to our continued investment in premiumization. Our branded spirit strategy remains focused on growing points of distribution by leveraging the expansion of our Premium Plus brand portfolio, with particular focus on our tequila and American whiskey brands. As an example, we shipped Spinalipi into two new states during the quarter. Our brand marketing initiatives during the first quarter included entering into a sponsorship of Kyle Busch No. 8 car under Richard Childress Racing, which boldly showcases our Rebel Bourbon brand and will continue throughout the racing season. In addition, we had six brands win double gold at the San Francisco World Spirits Competition and successfully launched new innovative items such as Penelope Tokai, Penelope Rio, and Yellowstone Rum Cast Finish. These are just a few examples of our innovation and marketing efforts to increase the sales velocity of our Premium Plus Brands portfolio. Turning to ingredient solutions, sales for the quarter were a record and primarily reflect continued rising consumer preference towards high-protein, low-net-carb diets, which drove higher sales of our specialty products. We expect to see this trend continue in upcoming quarters, as can be seen by anyone visiting their local grocery store and seeing the proliferation of keto and low-net-carb alternatives, which ties well to our ingredient solutions growth strategy. In addition, we are extremely proud of the grand opening of our textured protein facility, which was dedicated to Ladd Seabird, the late husband of our chairman, Karen Seabird. It was absolutely fabulous to see Karen and her family celebrate his memory and the indelible mark he left on the company with such a beautiful facility dedication. This concludes my initial remarks. Let me turn things over to Brandon Goff for a review of the key metrics and numbers. Brandon?