MGP Ingredients, Inc.

Good day and welcome to the MGP Ingredients second quarter 2024 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 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, VP of Investor Relations. Please go ahead.

Thank you. I'm Amit Sharma, Vice President of Investor Relations, and joining me are members of the management team, including David Bratcher, Chief Executive Officer and President, and Brendan Gall, Chief Financial Officer. We will begin the call with management's prepared remarks and then open the call to questions. As a reminder, this call may include certain forward-looking statements. The company's actual results could differ materially from any forward-looking statements made today due to the number of factors, including the risk factors described in the company's most recent annual report files with the SEC. 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 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. The press release is available on MGPI's website at www.mgpingredients.com. This call is being webcast, and a replay will be available on our website. With that, I would like to turn the call over to MGP's Chief Executive Officer and President, David Bratcher. David.

Thank you, Ahmed. We are excited to have you on board to lead our investor relations efforts as we continue to add strong talent throughout our organization, including two other recent hires, David Koya as EVP of Operations and Paul Lux as VP of Sales for Distilling Solutions. Good morning, everyone. I will begin with an overview of our second quarter performance and provide updates on key performance metrics and initiatives. I will then turn it over to Brandon to discuss our quarterly results in greater detail. We will wrap up with the discussion of our outlook for the full year before we open it up for questions. We delivered another quarter of strong operating results as we continue to make consistent progress towards becoming a premier branded spirits company. we successfully recommissioned our Luxro distillery, giving us additional distilling capacity in Bardstown, Kentucky, to continue to support our branded whiskey growth. Our first half 2024 results were in line with our expectations, enabling us to reaffirm our full year sales EBITDA and EPS guidance. Specific to second quarter 2024, on a pro forma basis, when factoring in Atchison distillery closure, Consolidated sales increased by 7%, driven by the ongoing momentum of our Branded Spirits business and solid brown good sales within our Distilling Solutions segment. As a reminder, prior year reported sales included Atchison Distillery-related sales. At the segment level, Distilling Solutions performance sales grew by 9%. We posted our highest ever quarterly brown good sales driven by new distillate. As expected, sales of Brown's goods during the first half of 2024 were more heavily weighted toward the second quarter, and we expect the same ordering pattern to play out in the second half of 2024. I am proud of our sales team for their nimbleness as they continue to work with our Brown Good customers to help them successfully adapt to the current consumption and inventory patterns at distributor and retailer levels. I believe we are uniquely positioned to thrive in the current environment, given our competitive facility footprint, long track record of producing high-quality aged and new disc lint, and our extensive roster of large multinational and craft customers. Turning to the branded spirit segment, quarterly sales increased by 11% driven by strong innovation, focused execution, higher investments behind our key brands, and contributions from M&A. Our strong branded trends reflect our continued shift to a premium portfolio as our premium plus portfolio now accounts for 48% of branded spirit segment sales, well above its 30% contribution for the full year 2021. It's a testament to our focused strategy of premiumizing our portfolio to align it with an evolving consumer taste across the alcoholic beverage industry and to leverage our improving capabilities and talent throughout our branded organization. As expected, quarterly sales for the rest of the branded spirit segment declined modestly. Distributor inventories for our branded portfolio remain relatively stable, even below historical levels in some cases. We continue to work closely with our partners to invest behind our Premium Plus brands and innovation to drive impactful retail execution, increase brand awareness, and fill distribution white space in targeted markets. Our ingredient solution segment sales declined 3% as lower commodity starch and specialty protein sales were partially offset by a strong double-digit increase in our specialty starch sales. While a stronger U.S. dollar impacted our quarterly sales, our FibroSIM branded specialty starches, which provide FDA approved dietary fiber, continue to benefit from long-term consumer driven tailwinds across several large food categories. Turning to gross margin, quarterly gross margins increased to 43.6%, which is an all-time high for MGP. Branded spirits segment gross margins exceeded 50% for the first time since the Luxco merger, while distilling solution gross margins increased to 45.5% as we continue to benefit from our decision to close the Atchison distillery. I am very pleased with our gross margin trajectory as it validates our strategic actions and reflects tangible progress and our objective to becoming a higher margin branded spirits company. Our continued focus on execution and cost discipline enabled quarterly adjusted EBITDA growth of 7%, even though A&P expenses increased by 35% as we continue to invest behind our premium plus price brands. Second quarter adjusted earnings per share increased by nearly 15% to $1.71 per share. Our first half results were in line with our expectations, enabling us to reaffirm our full year top line and profit guidance for the year. And I believe we remain well positioned to deliver even stronger profits and earnings growth for the second half of 2024. In summary, we are executing our strategic priorities to build a premier branded spirits company. I believe we are uniquely positioned with the right mix of distilling assets, growing brands, and a strong team to deliver long-term growth and shareholder value. With that, let me turn it over to Brandon for a review of our quarterly financial results and full year outlook in greater detail. Brandon?