MGP Ingredients, Inc.

Good morning, and welcome to the MGP Ingredients third quarter of 2025 earnings conference call. All participants will be in a listen-only mode. And should you need any assistance today, please signal a conference specialist by pressing the star key followed by zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. And to withdraw a question, you may press star, then 2. Please also note that this event is being recorded today. I would now like to turn the conference over to Amit Sharma, Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to MGP's third 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 Chief Executive Officer, and Brendan Gall, our Chief Financial Officer. We will begin the call with management's prepared remarks and then open to your 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 annual report filed with the SEC. 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 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 comparable GAAP measures is included in today's earnings release, which was issued this morning before the markets opened and is available on our website, www.mgpingredients.com. At this time, I would like to turn the call over to Julie for her opening remarks.

Thank you, Amit. Good morning, everyone. As we review our third quarter results, I want to begin by sharing reflections from my time in the business and how it's shaping our priorities and actions. I will then provide an update of our five key initiatives before handing it over to Brandon for a deeper review of our third quarter results and updated guidance. These first few months truly have been a whirlwind. as I've traveled around the country to visit our distilleries, bottling facilities, manufacturing plants, as well as to meet with our distribution partners and retailers in the market. Most importantly, I've had honest and candid conversations with a broad cross-section of our organization, hosting more than 60 one-on-ones and several town hall meetings. I'm also appreciative of the feedback and conversations I've had with investors and analysts as well. MGP is a company with a proud heritage, strong brands, and amazing people who are passionate about our business. What I've seen is inspiring and the opportunity now is to harness that passion with greater focus, performance, and accountability to drive meaningful progress. While we fully recognize the challenges facing our industry and our company, we are committed to improving our strategic clarity, taking decisive actions, controlling the controllables, and emerging stronger. This will not be an overnight fix. Some initiatives will bear fruit quickly while others will take a bit longer, but the work is already underway. Well, it's too early to get into specifics. Let me share a few highlights. First, we are conducting an exhausted strategic review of our business and using a thorough approach that takes the time to ask these hard questions. What capabilities will differentiate us in the future? How do we allocate resources that ensure both growth and discipline? Where can we create the most value This is not just a planning exercise. It's about execution and a data-driven approach to ensure that we're making the right choices, establishing clear priorities, and setting ambitious targets and ensuring accountability for results. Another key component of this strategic work is a more active portfolio management of our spirits brands. While having a branded portfolio spanning across all price points and categories is an undeniable strength, we believe that the opportunity ahead lies in being more precise and focused. prioritizing the brands with the greatest potential, distinctive positioning, and scalable growth, while trimming persistent underperformers. The goal is clear, a streamlined, more balanced portfolio that drives sustainable growth and delivers higher margins. As part of these plans this morning, we announced the appointment of Matthias Bentel as our Chief Marketing Officer and Chris Wiseman as Senior Vice President of Operations. I am confident that Matthias' strong expertise and deep experiences in building and growing brands at Brown Forman and other leading alcoholic beverage companies will be instrumental in accelerating our brand and growth agenda. Strengthening operational execution is another key component of our strategic agenda. Chris's appointment to lead our operations underscores our commitment to and deliberate focus on strengthening operational reliability, agility, and efficiency across the enterprise to fuel growth we are focusing on unlocking additional cost savings. MGP has always been an efficient operator, and our current initiatives are delivering excellent results. As we look ahead, we are developing scalable and repeatable processes that promote a continuous improvement mindset, foster cross-functional collaboration, and build a robust pipeline of projects designed to unlock additional productivity and savings. I am encouraged and energized by the enthusiasm and alignment I see across the organization and look forward to sharing the strategic roadmap for the next phase of our growth with you early next year. Now, turning to our third quarter results. We delivered another strong quarter and are seeing early signs of progress across many parts of our business. The environment remains challenging, but our results continue to reflect the strength of our brands, the resilience of our businesses, and the focus of our team. We are leveraging MGP's unique capabilities to navigate the near term while positioning the company for better results ahead. There's more work to be done, but the foundation we are building is solid and gives us confidence in MGP's long-term potential. For the third quarter, consolidated sales declined 19% as the continued growth in our premium plus portfolio and higher specialty ingredient sales were offset by the expected declines in brown goods and mid-to-value brands. Adjusted EBITDA declined to $32 million, while adjusted basic earnings per share reached $0.85, both above our expectations, reflecting favorable mix improvements, pricing discipline, and productivity initiatives. Our solid cash flows continue to be a key highlight, with year-to-date operating cash flows up 26% for the same period last year to $93 million. With another quarter of solid delivery, we are confident in finishing the year ahead of our previous expectations, Brandon will provide greater detail on our updated guidance shortly, but we are raising our full year 2025 adjusted EBITDA and adjusted earnings per share guidance to the range of $110 to $115 million and $2.60 to $2.75 of EPS, respectively, while tightening our sales guidance to a range of $525 to $535 million. This has been a period of transition for our company, our customers, and the broader alcoholic industry. Despite these challenges, our team continued to advance our five key initiatives for 2025, which are sharpen our commercial focus, strengthen key customer relationships, improve operation execution, fortify our balance sheet, and drive greater productivity. Let me provide brief highlights of our progress on each of these initiatives. Beginning with our focus initiative, Branded Spirits, which we believe is the main engine of growth and value creation for MGP. Our decision to focus our A&P investments behind the most attractive growth of opportunities continues to deliver results as our Premium Plus portfolio once again outperformed the overall category. The most tangible example of this focused approach is Penelope Bourbon, as it continues to exceed expectations. According to Nielsen Dollar Sales data for the past 52 weeks, Penelope now ranks among the top 30 Premium Plus American whiskey brands in the country, Even more impressively, it has been the second fastest growing brand in this group over the last 52 weeks and the fastest growing over the past 13 to 26 weeks. Our team's relentless focus has fueled Penelope's remarkable growth since acquisition. We're applying that same discipline to elevate other brands in our portfolio. New tools, including brand health dashboards and advanced analytics, are enabling smarter A&P decisions, sharper insights, and stronger brand equity across the portfolio. Innovation is central to our growth agenda as it enables us to meet consumers where they are in terms of quality, price points, occasions, and convenience. Our exciting new product launches in the fast-growing ready-to-pour cocktail segment demonstrates how we are applying our deeper understanding of consumer insights and category trends. The Penelope Black Walnut Old Fashioned launched during the third quarter is off to a strong start. Building on the success, of Penelope Pichol Fashions that launched earlier this year. We also introduced three new cocktails under the Yellowstone brand to further expand our presence in this fast-growing segment. With their beautiful presentation, approachable price point, and desirable alcohol proof, these new products are directly addressing consumer need for high quality, affordable, and convenient crafted cocktails, making them an especially attractive entry point for females and new to whiskey drinkers. The year-to-date results in our distilling business show that our second initiative to strengthen partnership with key customers is working. Though sales and profits declined during the quarter, they came in ahead of our expectations, reflecting disciplined pricing, operational efficiencies, and better-aged whiskey sales. Throughout the year, we have maintained a close engagement with our key distilling customers to align their production needs. While some customers have paused their near-term whiskey purchases as they rebalance their inventories, Most have expressed their commitment to a continued, long-term strategic partnership with MGP. Our commercial teams are working closely with them to develop innovative solutions that leverage our unrivaled scale and aged whiskey inventories, as well as our high-quality and flexible production capabilities to offer premium gin, white spirits, specially grained distillates, in addition to brown goods. Importantly, our customers recognize our differentiated value proposition, and last month, Diageo North America named MGP as one of its distinguished suppliers, a meaningful acknowledgement of our strong partnership and contribution to the success of their brands. I am also pleased to see that the broader domestic whiskey industry continues to recalibrate to the current environment. According to TTB data through June of 2025, total U.S. whiskey production is down 19% over the prior 12 months, down 28% over the prior six months, and down 32% over the prior three months. While inventories remain high, this trend is encouraging signal that the market is working through its imbalance. We believe this rational behavior by the broader industry combined with our strong partnership with strategic customers will position MGP to emerge stronger once brown goods supply and demand dynamics normalize. Turning to our ingredient solution segment, we are pleased with the ongoing top-line momentum in this business. However, operational execution fell short of our expectations and pressured segment margins. This resulted from an unanticipated equipment outage and lower operational reliability, elevated waste starch disposal costs, and higher startup costs in our textured protein business. This critical equipment outage pressured our third quarter performance and is expected to remain a headwind in the fourth quarter, which is reflected in our revised full-year outlook. We are taking decisive actions to strengthen operational reliability. We've increased plant staffing, raised maintenance capital, and engage in an external engineering firm to partner with our operations team for a comprehensive review of plant performance. Together, we are addressing critical process dependency, restructuring key workflows, and implementing predictive analytics and enhanced preventative maintenance protocols to identify and resolve potential issues before they impact production. I am confident that the addition of Chris Wiseman to lead our operations team will further strengthen and accelerate these initiatives, enabling us to return to our targeted level of performance in the coming quarters. While the newly operational biofuel plant is expected to mitigate our waste starch disposal costs, these costs were higher than expected during the quarter due to operational challenges during startup. Learnings from that startup are already helping us refine our processes And as production ramps up, we expect the biofuel plant to provide greater relief on wastewater disposal costs over time. And lastly, our extrusion protein business is gaining traction as we expand our portfolio beyond wheat to soybean and pea-based proteins to compete more effectively across the full extrusion segment. During the quarter, we secured a large new customer underscoring the potential of this expanded platform. While startup costs associated with this commercialization effort temporarily pressured margins, we expect these costs to moderate as volumes ramp up and the businesses scale. Even as we make steady progress on these operational challenges in the ingredient solution segment, commercially, we continue to have a clear right to win in this segment. Consumer demand for high fiber and high protein foods continues to accelerate, and we are well positioned to capture this growth. The specialty starch and protein categories are expected to post mid to high single-digit growth over the next five years, according to industry reports. Our flagship Fibersim and Arise brands are already category leaders, and our R&D teams are partnering with a growing number of leading food manufacturers to incorporate our specialty ingredients into their new existing products. We also continue to collaborate with leading university and research institutions to expand the functionality and application of these ingredients. With these commercial strengths and ongoing progress towards restoring operational excellence, we believe that we're well positioned to deliver solid top line and margin growth in our green solution business over the next several years. Our last two initiatives to fortify our balance sheet and drive productivity savings remain firmly on track. Brandon will provide additional details on these two key initiatives, but I'm pleased with our financial strength and our team's efforts to drive efficiency throughout the enterprise. Let me close by saying that we are doing what we said we will do, controlling the controllables and being transparent about what's working and what's not working. This balance between accountability and opportunity guides how we view our businesses and how we communicate about them. While the path ahead is unlikely to be linear, it's increasingly becoming well-defined. As we look ahead, we are continuing to build on the strength of our differentiated customer value propositions across each of our businesses. I see greater alignment, stronger commercial execution, a clearer view of where we can win, and a growing sense of confidence and optimism across the organization. With that, let me hand it over to Brandon for a review of our quarter and updated guidance.