10q10k10q10k.net

What changed in MGP INGREDIENTS INC's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of MGP INGREDIENTS INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+297 added−277 removedSource: 10-K (2026-02-25) vs 10-K (2025-02-26)

Top changes in MGP INGREDIENTS INC's 2025 10-K

297 paragraphs added · 277 removed · 225 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

43 edited+10 added−6 removed17 unchanged
Biggest changeGall 43 Interim President and Chief Executive Officer since January 1, 2025 and Chief Financial Officer and Vice President of Finance for the Company since April 2019. Treasurer of the Company since May 2023. Corporate Controller for the Company from June 2018 to March 2019.
Biggest changeServed at the Company as Interim President and Chief Executive Officer from January to July 2025, Vice President of Finance from April 2019 to May 2025, Corporate Controller from June 2018 to March 2019, Director of Supply Chain Finance and Director of Business Development from May 2014 to June 2018, and Director of Financial Planning and Analysis from January 2012 to April 2014.
Our mission is to secure our future by consistently delivering superior financial results by more fully participating in all levels of the alcohol and food ingredients segments for the betterment of our shareholders, employees, partners, consumers, and communities. INFORMATION ABOUT OUR SEGMENTS We report three operating segments: Distilling Solutions, Branded Spirits, and Ingredient Solutions. Distilling Solutions Segment.
Our mission is to secure our future by consistently delivering superior financial results by more fully participating in all levels of the alcohol and food ingredients segments for the betterment of our shareholders, employees, partners, consumers, and communities. INFORMATION ABOUT OUR SEGMENTS We report three operating segments: Branded Spirits, Distilling Solutions, and Ingredient Solutions. Branded Spirits Segment.
Our operations are also subject to regulation by various U.S. federal agencies, including the Alcohol and Tobacco Tax Trade Bureau (“TTB”), OSHA, the Food and Drug Administration (“FDA”), the United States Environmental Protection Agency (“EPA”), and by various U.S. state and local and foreign authorities.
Our operations are also subject to regulation by various U.S. federal agencies, including the Alcohol and Tobacco Tax and Trade Bureau (“TTB”), OSHA, the Food and Drug Administration (“FDA”), the United States Environmental Protection Agency (“EPA”), and by various U.S. state and local and foreign authorities.
Our notable health, welfare, recognition, and retirement benefits for our U.S. employees include: • Company subsidized health insurance including Company paid life and disability insurance • Wellness program with financial rewards • Enhanced Employee Assistance Programs • 401(k) Plan with Company matching contributions • Tuition assistance program • Paid vacation and holidays, including a floating holiday • Expanded paid parental leave • Charitable giving program with Company matching of employee donations • Professional development employee resource group • Recognition platform to celebrate employee successes and milestone events • Employee referral program with financial incentives Employee safety is one of our top priorities.
Our notable health, welfare, recognition, and retirement benefits for our U.S. employees include: • Company subsidized health insurance including Company paid life and disability insurance • Wellness program with financial rewards • Enhanced Employee Assistance Programs • 401(k) Plan with Company matching contributions • Tuition assistance program • Paid vacation and holidays, including a floating holiday • Paid parental leave • Charitable giving program with Company matching of employee donations • Professional development employee resource group • Recognition platform to celebrate employee successes and milestone events • Employee referral program with financial incentives Employee safety is one of our top priorities.
Ingredient Solutions also offers a Non-GMO Project Verified texturized plant proteins under the Proterra ® brand. These proteins are designed for “non-meat” food applications and are marketed in a number of countries throughout the world to provide texture and protein in various food applications. Additionally, we offer gluten-free textured pea proteins within the Proterra ® portfolio of products.
Ingredient Solutions also offers Non-GMO Project Verified texturized plant proteins under the Proterra ® brand. These proteins are designed for “non-meat” food applications and are marketed in a number of countries throughout the world to provide texture and protein in various food applications. Additionally, we offer gluten-free textured pea and soy proteins within the Proterra ® portfolio of products.
We sell our specialty wheat starches on a global basis, primarily to food processors and distributors. 2 We primarily market our specialty wheat starches under the brand name Fibersym ® , a resistant wheat starch.
We sell our specialty wheat starches on a global basis, primarily to food processors and distributors. We primarily market our specialty wheat starches under the brand name Fibersym ® , a resistant wheat starch.
White goods and other co-products - Our white goods consists of GNS, including vodka and gin. Our GNS is sold in bulk quantities. Our gin is primarily created by redistilling GNS together with proprietary formulations of botanicals or botanical oils. The bulk alcohol co-products sales include distillers feed, which is principally derived from the mash from alcohol processing operations.
White goods and other co-products - Our white goods consist of GNS, including vodka and gin. Our GNS is sold in bulk quantities. Our gin is primarily created by redistilling GNS together with proprietary formulations of botanicals or botanical oils. The bulk alcohol co-products sales include distillers feed, which is principally derived from the mash from alcohol processing operations.
We process corn and other grains (including rye, barley, wheat, barley malt, and milo) into food grade alcohol and distillery co-products, such as distillers feed (commonly called dried distillers grain in the industry), which are produced at our distilleries in Lawrenceberg, Indiana, and Bardstown, Kentucky.
We process corn and other grains (including rye, barley, wheat, barley malt, and milo) into food grade alcohol and distillery co-products, such as distillers feed (commonly called dried distillers grain in the industry), which are produced at our distilleries in Lawrenceburg, Indiana, and Bardstown, Kentucky.
Such laws and regulations cover virtually every aspect of our operations, including production and storage facilities, distillation and maturation requirements, importing ingredients, distribution of beverage alcohol products, marketing, pricing, labeling, packaging, advertising, water usage, waste water discharge, disposal of hazardous wastes and emissions, and other matters.
Such laws and regulations cover virtually every aspect of our operations, including production and storage facilities, distillation and maturation requirements, importing ingredients, distribution of beverage alcohol products, marketing, pricing, labeling, packaging, advertising, water usage, wastewater discharge, disposal of hazardous wastes and emissions, and other matters.
We develop and administer company-wide policies and trainings designed to ensure the safety of each team member and compliance with Occupational Safety and Health Administration (“OSHA”) standards or similar standards for our operations outside of the U.S. 4 Our Company strives for workforce retention.
We develop and administer company-wide policies and trainings designed to ensure the safety of each team member and compliance with Occupational Safety and Health Administration (“OSHA”) standards or similar standards for our operations outside of the U.S. 4 Table of Contents Our Company strives for workforce retention.
METHOD OF PRESENTATION All amounts in this Report, except for shares, par values, bushels, gallons, pounds, mmbtu, proof gallons, 9-liter cases, per share, per bushel, per gallon, per pound, per mmbtu, per proof gallon, per 9-liter case, and percentage amounts, are shown in thousands unless otherwise noted.
METHOD OF PRESENTATION All amounts in this Report, except for shares, par values, bushels, gallons, pounds, mmbtu, proof gallons, 9-liter cases, per share, per bushel, per gallon, per pound, per mmbtu, per proof gallon, per 9-liter case, and percentages, are shown in thousands unless otherwise noted.
Our entire starch portfolio is also known to provide whiteness, clean flavor, and viscosity. Specialty Wheat Proteins - We have developed numerous specialty wheat proteins for food applications under our Arise brand platform. Specialty wheat proteins are created from vital wheat gluten through a variety of proprietary processes which change its molecular structure.
Our entire starch portfolio is also known to provide whiteness, clean flavor, and viscosity. 2 Table of Contents Specialty wheat proteins - We have developed numerous specialty wheat proteins for food applications under our Arise brand platform. Specialty wheat proteins are created from vital wheat gluten through a variety of proprietary processes which change its molecular structure.
Value - Value branded spirits include brands such as Arrow ® Cordials, Canada House ® Canadian Whisky, Lady Bligh ® Rum, and Juarez ® Tequila. Other - Other includes private label products sold primarily through our wholly-owned subsidiary, Niche Drinks, Co., Ltd, retail sales at our distilleries, and contract bottling services.
Value - Value branded spirits include brands such as Arrow ® Cordials, Canada House ® Canadian Whisky, Lady Bligh ® Rum, and Juarez ® Triple Sec. Other - Other includes private label products sold primarily through our wholly-owned subsidiary, Niche Drinks, Co., Ltd, retail sales at our distilleries, and contract bottling services.
ITEM 1. BUSINESS MGP Ingredients, Inc. was incorporated in 2011 in Kansas, continuing a business originally founded by Cloud L. Cray, Sr. in Atchison, Kansas in 1941. As used herein, the term “MGP,” “Company,” “we,” “our,” “us,” and words of similar import, refers to MGP Ingredients, Inc. and its consolidated subsidiaries unless the context otherwise indicates.
ITEM 1. BUSINESS MGP Ingredients, Inc. was incorporated in 2011 in Kansas, continuing a business originally founded by Cloud L. Cray, Sr. in Atchison, Kansas in 1941. As used herein, the terms “MGP,” “Company,” “we,” “our,” “us,” and words of similar import, refer to MGP Ingredients, Inc. and its consolidated subsidiaries unless the context otherwise indicates.
Premium plus branded spirits include brands such as Penelope ® Bourbon, Yellowstone ® Bourbon, Rebel ® Bourbon, Remus ® Bourbon, Blood Oath ® Bourbon, Ezra Brooks ® Bourbon, Minor Case ® Straight Rye Whiskey, Rossville Union ® Straight Rye Whiskey, The Quiet Man ® Irish Whiskey, Green Hat ® Gin, and Everclear ® grain alcohol.
Premium plus branded spirits include brands such as Penelope ® Bourbon, Yellowstone ® Bourbon, Rebel ® Bourbon, Remus ® Bourbon, Blood Oath ® Bourbon, Ezra Brooks ® Bourbon, Minor Case ® Straight Rye Whiskey, Rossville Union ® Straight Rye Whiskey, The Quiet Man ® Irish Whiskey, and Everclear ® grain alcohol.
In our efforts to best serve our customers and maximize returns to stockholders, we have strategically been migrating our sales towards higher price, higher margin specialty wheat ingredients to better serve the baking and tortilla food segments. During 2024, our five largest Ingredient Solutions customers, combined, accounted for approximately 14 percent of our consolidated sales.
In our efforts to best serve our customers and maximize returns to stockholders, we have strategically been migrating our sales towards higher price, higher margin specialty wheat ingredients to better serve the baking and tortilla food segments. During 2025, our five largest Ingredient Solutions customers, combined, accounted for approximately 17 percent of our consolidated sales.
During 2024, one customer of the Ingredient Solutions segment accounted for approximately 12 percent of our consolidated sales. Specialty Wheat Starches - Wheat starch is the carbohydrate-bearing portion of wheat flour. We produce a premium wheat starch powder by extracting the starch from a starch slurry.
During 2025, one customer of the Ingredient Solutions segment accounted for approximately 14 percent of our consolidated sales. Specialty wheat starches - Wheat starch is the carbohydrate-bearing portion of wheat flour. We produce a premium wheat starch powder by extracting the starch from a starch slurry.
During 2024, our five largest Distilling Solutions customers, combined, accounted for approximately 21 percent of our consolidated sales. 1 Brown goods - The majority of our distillery capacities are dedicated to the production of high quality, high purity food grade alcohol for beverage applications, including bourbon, rye and other whiskeys.
During 2025, our five largest Distilling Solutions customers, combined, accounted for approximately 17 percent of our consolidated sales. Brown goods - The majority of our distillery capacities are dedicated to the production of high quality, high purity food grade alcohol for beverage applications, including bourbon, rye and other whiskeys.
We have robust equal employment opportunity and anti-discrimination policies, and in 2024 our U.S. employees completed mandatory training focused on respect in the workplace and our anti-discrimination policies. Our employees have multiple avenues available through which inappropriate behavior can be reported, including a confidential hotline.
We have robust equal employment opportunity and anti-discrimination policies, and in 2025 all new hire U.S. employees completed mandatory training focused on respect in the workplace and our anti-discrimination policies. Our employees have multiple avenues available through which inappropriate behavior can be reported, including a confidential hotline.
RAW MATERIALS AND PACKAGING MATERIALS Our principal Distilling Solutions segment raw materials, or input costs, are corn and other grains (including rye, barley, wheat, barley malt, and milo), which are processed into brown goods, white goods and other co-products.
Our principal Distilling Solutions segment raw materials, or input costs, are corn and other grains (including rye, barley, wheat, barley malt, and milo), which are processed into brown goods, white goods and other co-products. Our principal Ingredient Solutions segment raw material is wheat flour, which is processed into starches and proteins.
Additionally, premium plus includes El Mayor ® Tequila and Dos Primos ® Tequila, which are produced with our joint ventures, DGL Destiladores, S.de R.L. de C.V. (“DGL”) and Agricola LG, S.de R.L. de C.V. (“Agricola”, and together with DGL, “LMX” ).
Additionally, premium plus includes El Mayor ® Tequila, which is produced with our joint ventures, DGL Destiladores, S.de R.L. de C.V. (“DGL”) and Agricola LG, S.de R.L. de C.V.
Mid - Mid branded spirits include brands such as Brady’s ® Irish Cream, Saint Brendan’s ® Irish Cream Liqueur, Pearl ® Vodka, and Lord Calvert ® Canadian Whisky. Additionally, mid includes Exotico ® Tequila, which is produced with our joint venture, DGL.
(“Agricola”, and together with DGL, “LMX”). 1 Table of Contents Mid - Mid branded spirits include brands such as Brady’s ® Irish Cream, Saint Brendan’s ® Irish Cream Liqueur, Pearl ® Vodka, and Lord Calvert ® Canadian Whisky. Additionally, mid includes Exotico ® Tequila and Juarez ® Tequila, which are produced with our joint venture, DGL.
Vital wheat gluten is added by bakeries and food processors to baked goods, such as breads, and to pet foods, cereals, processed meats, and fish and poultry to improve the nutritional content, texture, strength, shape, and volume of the product. The neutral flavor and color of vital wheat gluten also enhances the flavor and color of certain foods.
When we process wheat flour to derive starch, we also derive vital wheat gluten. Vital wheat gluten is added by bakeries and food processors to baked goods, such as breads, and to pet foods, cereals, processed meats, and fish and poultry to improve the nutritional content, texture, strength, shape, and volume of the product.
GENERAL INFORMATION MGP is a leading producer of branded and distilled spirits, as well as food ingredient solutions. Distilled spirits include premium bourbon, rye, and other whiskeys (“brown goods”) and grain neutral spirits (“GNS”), including vodka and gin. Our distilled spirits are either sold directly or indirectly to manufacturers of other branded spirits.
Distilled spirits include premium bourbon, rye, and other whiskeys (“brown goods”) and grain neutral spirits (“GNS”), including vodka and gin. Our distilled spirits are either sold directly or indirectly to manufacturers of other branded spirits.
The cohesiveness and elasticity of the gluten enables the dough in wheat and other high protein breads to rise and to support added ingredients, such as whole cracked grains, raisins and fibers. Vital wheat gluten is also added to white breads, hot dog buns, and hamburger buns to improve the strength and cohesiveness of the product.
The neutral flavor and color of vital wheat gluten also enhances the flavor and color of certain foods. The cohesiveness and elasticity of the gluten enables the dough in wheat and other high protein breads to rise and to support added ingredients, such as whole cracked grains, raisins and fibers.
In our Branded Spirits segment, competition is based primarily on product innovation, price, brand recognition, product distribution, retail positioning, and quality factors, such as flavor. In our Ingredient Solutions segment, competition is based primarily on product innovation, product characteristics, price, brand, color, flavor, or other properties that affect how the ingredient is being used.
In our Branded Spirits segment, competition is based primarily on product innovation, price, brand recognition, product distribution, retail positioning, and quality factors, such as flavor. In our Distilling Solutions segment, competition is based primarily on product innovation, product characteristics, functionality, price, service, and quality factors, such as flavor.
A collective bargaining agreement, covering 46 employees at the St. Louis facility, expires on February 28, 2029. We have not experienced any recent work stoppages, and we consider our relationship with our employees, both union and non-union, to be good. We believe our employees are key to achieving our business objectives.
Louis facility, expires on February 28, 2029. We have not experienced any recent work stoppages, and we consider our relationship with our employees, both union and non-union, to be good. We believe our employees are key to achieving our business objectives. Our key human capital measures include employee safety, employee retention, rewards and recognition, and professional development.
Some of these patent filings cover significant product formulation and processes used to manufacture our products. We have trademark protection, both in terms of registrations and common law rights, for the majority of the brands we produce within our Branded Spirits and Ingredient Solutions segments.
We have trademark protection, both in terms of registrations and common law rights, for the majority of the brands we produce within our Branded Spirits and Ingredient Solutions segments. We believe our trademark rights are critical to the success of the brands we produce and the marketing of those products.
Market place prices generally track the fluctuations in the overall starch market in this category. However, wheat starch has unique functions in wheat based food formulations and provides for a cleaner more neutral flavor profile in finished goods.
Marketplace prices generally track the fluctuations in the overall starch market in this category. However, wheat starch has unique functions in wheat based food formulations and provides for a cleaner more neutral flavor profile in finished goods. Commodity wheat proteins - Commodity wheat protein, or vital wheat gluten, is a free-flowing light tan powder which contains approximately 75 percent protein.
Within our diversified Branded Spirits portfolio, there are certain product lines, limited offerings, and categories that experience varying demand during certain periods throughout the year. Other than these product lines, our sales, on average, are generally not seasonal. 3 TRANSPORTATION Historically, our products have been transported to customers by truck and rail, most of which is provided by common carriers.
Other than these product lines, our sales, on average, are generally not seasonal. 3 Table of Contents TRANSPORTATION Historically, our products have primarily been transported to customers by truck and rail, most of which is provided by common carriers.
HUMAN CAPITAL As of December 31, 2024, we had a total of 660 employees. A collective bargaining agreement, covering 80 employees at the Atchison facility, that was due to expire on August 31, 2024, was successfully renewed until August 31, 2029. A collective bargaining agreement, covering 71 employees at the Lawrenceburg facility, expires on October 24, 2027.
HUMAN CAPITAL As of December 31, 2025, we had a total of 617 employees. A collective bargaining agreement, covering 90 employees at the Atchison facility, expires on August 31, 2029. A collective bargaining agreement, covering 64 employees at the Lawrenceburg facility, expires on October 24, 2027. A collective bargaining agreement, covering 43 employees at the St.
We have a portfolio of our own high quality branded spirits, which we produce through our distilleries and bottling facilities and sell to distributors. Our branded spirits products account for a range of price points from value products through premium plus brands.
GENERAL INFORMATION MGP is a leading producer of branded and distilled spirits, as well as food ingredient solutions. We have an extensive award-winning global portfolio of branded spirits, which we produce through our distilleries and bottling facilities and sell to distributors. Our branded spirits products account for a range of price points from value products through premium plus brands.
PATENTS, TRADEMARKS, AND LICENSES Our patent-related activities pertain to our Ingredient Solutions segment. We have filed patent applications and have obtained issued patents in several countries to protect a range of inventions developed in our research and development efforts, including inventions relating to our products.
We have filed patent applications and have obtained issued patents in several countries to protect a range of inventions developed in our research and development efforts, including inventions relating to our products. Some of these patent filings cover significant product formulation and processes used to manufacture our products.
In addition, beverage alcohol products are subject to customs, duties, or excise taxation in many countries, including taxation at the federal, state, and local level in the U.S. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Our executive officers as of February 26, 2025: Name Age Principal Occupation and Business Experience Brandon M.
In addition, beverage alcohol products are subject to customs, duties, or excise taxation in many countries, including taxation at the federal, state, and local level in the U.S.
Our packaging for our Branded Spirits segment includes oak barrels, glass bottles, polyethylene terephthalate (“PET”) containers, caps, labels, aluminum cans, and cartons. ENERGY Natural gas is an input cost used to operate boilers to make steam heat. We procure natural gas for our facilities in the open market from various suppliers.
We purchase oak barrels from multiple suppliers and some customers supply their own barrels. ENERGY Natural gas is an input cost used to operate boilers to make steam heat. We procure natural gas for our facilities in the open market from various suppliers.
We routinely benchmark our compensation practices and benefit programs against those of comparable industries and in the geographic areas where our facilities are located. We believe that our compensation and employee benefits are competitive and allow us to attract and retain skilled and unskilled labor throughout our organization.
We believe that our compensation and employee benefits are competitive and allow us to attract and retain skilled and unskilled labor throughout our organization.
Contract bottling is a service provided to a customer to process and bottle spirits for brands not owned by the Company. Ingredient Solutions Segment. Our Ingredient Solutions segment consists primarily of specialty wheat starches, specialty wheat proteins, commodity wheat starches, and commodity wheat protein products which are sold to customers pursuant to purchase orders.
The mash is sold primarily to processors of animal feed as a high protein additive primarily as dried distillers feed. Ingredient Solutions Segment. Our Ingredient Solutions segment consists primarily of specialty wheat starches, specialty wheat proteins, commodity wheat starches, and commodity wheat protein products which are sold to customers pursuant to purchase orders.
The mash is sold primarily to processors of animal feed as a high protein additive primarily as dried distillers feed. Branded Spirits Segment. Our Branded Spirits segment consists of a portfolio of high-quality brands, which we produce through our distilleries and bottling facilities and sell to distributors or to state governments that directly control the sale of alcohol.
Our Branded Spirits segment consists of a portfolio of high-quality brands, which we produce through our distilleries and bottling facilities and sell to distributors or to state governments that directly control the sale of alcohol. Sales are pursuant to customer contracts and purchase orders. MGP’s branded spirits include a wide spectrum of brands across numerous categories and price tiers.
Our principal Branded Spirits segment raw materials, or input costs, include corn and other grains (including rye, barley, wheat, barley malt, and milo), agave, and flavoring. Our principal Ingredient Solutions segment raw material is wheat flour, which is processed into starches and proteins. The cost of grain has, at times, been subject to substantial fluctuation.
RAW MATERIALS AND PACKAGING MATERIALS Our principal Branded Spirits segment raw materials, or input costs, include corn and other grains (including rye, barley, wheat, barley malt, and milo), agave, and flavoring.
We believe our trademark rights are critical to the success of the brands we produce and the marketing of those products. SEASONALITY Sales for some of our products, including brown goods and branded spirits, can fluctuate from period to period due to the inherent demands and timing of our customers and consumer needs.
SEASONALITY Sales for some of our products, including brown goods and branded spirits, can fluctuate from period to period due to the inherent demands and timing of our customers and consumer needs. Within our diversified Branded Spirits portfolio, there are certain product lines, limited offerings, and categories that experience varying demand during certain periods throughout the year.
Sales are pursuant to customer contracts and purchase orders. MGP’s branded spirits include a wide spectrum of brands across numerous categories and price tiers. During 2024, our five largest Branded Spirits customers, combined, accounted for approximately 20 percent of our consolidated sales. During 2024, one customer of the Branded Spirits segment accounted for approximately 13 percent of our consolidated sales.
During 2025, our five largest Branded Spirits customers, combined, accounted for approximately 25 percent of our consolidated sales. During 2025, one customer of the Branded Spirits segment accounted for approximately 16 percent of our consolidated sales. Premium plus - The premium plus price tier includes the luxury, ultra premium, super premium, and premium price tiers.
Our key human capital measures include employee safety, employee retention, rewards and recognition, and professional development. At the Board of Directors level, the Human Resources and Compensation Committee of our Board is responsible for overseeing matters related to human capital management.
At the Board of Directors level, the Human Resources and Compensation Committee of our Board is responsible for overseeing matters related to human capital management. We routinely benchmark our compensation practices and benefit programs against those of comparable industries and in the geographic areas where our facilities are located.
Our principal packaging material for our Distilling Solutions segment is oak barrels. Both new and used barrels are utilized for the aging of premium brown goods. We purchase oak barrels from multiple suppliers and some customers supply their own barrels.
The cost of grain has, at times, been subject to substantial fluctuation. Our packaging for our Branded Spirits segment includes oak barrels, glass bottles, containers (glass, plastic, and aluminum), closures, labels, and cartons. Our principal packaging material for our Distilling Solutions segment is oak barrels. Both new and used barrels are utilized for the aging of premium brown goods.
Removed
Premium plus - The premium plus price tier includes the ultra premium, super premium, and premium price tiers.
Added
Contract bottling is a service provided to a customer to process and bottle spirits for brands not owned by the Company. Distilling Solutions Segment.
Removed
Commodity Wheat Proteins - Commodity wheat protein, or vital wheat gluten, is a free-flowing light tan powder which contains approximately 75 percent protein. When we process wheat flour to derive starch, we also derive vital wheat gluten.
Added
Vital wheat gluten is also added to white breads, hot dog buns, and hamburger buns to improve the strength and cohesiveness of the product. This wheat protein is also the starter material used to create our textured wheat product line branded under Proterra ® .
Removed
This wheat protein is also the starter material used to create our textured wheat product line branded under Proterra ® . COMPETITIVE CONDITION Our products compete against similar products of many large and small companies. In our Distilling Solutions segment, competition is based primarily on product innovation, product characteristics, functionality, price, service, and quality factors, such as flavor.
Added
Biofuel and other - The biofuel plant converts waste starch, a byproduct of our ingredients facility, into a commercial product. This facility is a key component of our efforts to mitigate costs associated with the disposal of the waste starch streams. COMPETITIVE CONDITION Our products compete against similar products of many large and small companies.
Removed
Director of Supply Chain and New Business Development Finance for the Company from May 2014 to May 2018. Erika Lapish 50 Chief Human Resources Officer and Vice President for the Company since February 2023. Vice President Human Resources for the Company from May 2021 to February 2023.
Added
In our Ingredient Solutions segment, competition is based primarily on product innovation, product characteristics, price, brand, color, flavor, or other properties that affect how the ingredient is being used. PATENTS, TRADEMARKS, AND LICENSES Our patent-related activities pertain to our Ingredient Solutions segment.
Removed
Vice President Human Resources at R1 RCM - Central Operations from February 2018 to May 2021. Vice President Human Resources, North American Operations at Benteler Automotive from January 2015 to February 2018. Amel Pasagic 41 Chief Commercial Officer and Vice President for the Company since January 2024. Chief Information Officer for the Company from July 2021 to January 2024.
Added
INFORMATION ABOUT OUR EXECUTIVE OFFICERS Our executive officers as of February 25, 2026: Name Age Principal Occupation and Business Experience Julie Francis 54 President and Chief Executive Officer for the Company since July 2025. Chief Operating Officer of Schwan’s Company, an affiliate of CJ CheilJedang Corporation, from January 2021 to July 2024.
Removed
Vice President, Information Technology for the Company from April 2021 to July 2021. Served in a variety of IT leadership roles with increasing responsibility at Luxco, Inc. beginning in June 2011.
Added
President, Consumer Brands, Americas – Schwan’s Company from October 2018 to December 2020. Senior Vice President, Commercial and Category Development – Total Beverage Alcohol at Constellation Brands from April 2017 to October 2018. Chief Commercial Officer, Coca-Cola Refreshments USA at The Coca-Cola Company from 2010 to 2015 and roles of increasing responsibility at Coca-Cola Enterprises from 2004 to 2010.
Added
Brandon Gall 44 Chief Financial Officer for the Company since April 2019 and Treasurer of the Company since May 2023.
Added
Kathleen Molamphy 48 Chief Legal and Human Resources Officer, Secretary for the Company since February 2026. Chief Legal Officer and Corporate Secretary for the Company from October 2025 to February 2026 and Vice President, General Counsel and Corporate Secretary from September 2024 to October 2025.
Added
Served at ICL Americas LLC, a subsidiary of ICL Group Ltd., as Vice President, General Counsel and Secretary - ICL Americas from December 2019 to August 2024 and as General Counsel and Secretary - ICL Americas from May 2018 to December 2019.
Added
Served at Bunge North America, a subsidiary of Bunge Limited, as Senior Counsel – Bunge North America from April 2010 to May 2018 and as Corporate Counsel – Bunge North America from November 2004 to March 2010.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

80 edited+25 added−22 removed96 unchanged
Biggest changeThese provisions include: • the rights of holders of our Preferred Stock under our Articles of Incorporation (see “Common Stockholders have limited rights under our Articles of Incorporation”); • additional shares of Preferred Stock and Common Stock that could be issued by our Board of Directors to make it more difficult for a third-party to acquire, or to discourage a third-party from acquiring, a majority of our outstanding voting stock; • non-cumulative voting in the election of directors; • limitations on the ability of stockholders to call special meetings of stockholders; and • advance notice requirements for nominations of candidates for election to our Board of Directors or for proposing matters that can be acted upon by our stockholders at stockholder meetings. 13 Our Board of Directors is authorized to issue additional shares of Common Stock and Preferred Stock and may issue the available authorized shares without notice to, or further action by, our stockholders, unless stockholder approval is required by law or the rules of the Nasdaq Global Select Market.
Biggest changeThese provisions include: • the rights of holders of our Preferred Stock under our Articles of Incorporation (see Common Stockholders have limited rights under our Articles of Incorporation ); • additional shares of preferred stock and Common Stock that could be issued by our Board of Directors to make it more difficult for a third-party to acquire, or to discourage a third-party from acquiring, a majority of our outstanding voting stock; • non-cumulative voting in the election of directors; • limitations on the ability of stockholders to call special meetings of stockholders; and • advance notice requirements for nominations of candidates for election to our Board of Directors or for proposing matters that can be acted upon by our stockholders at stockholder meetings.
If our environmental, social, and governance (“ESG”) or sustainability positions or practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our reputation, stock price, ability to attract and retain high-quality talent, and the performance of our business may be negatively affected.
If our environmental, social, and governance (“ESG”), sustainability, or other positions or practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our reputation, stock price, ability to attract and retain high-quality talent, and the performance of our business may be negatively affected.
Under our Articles of Incorporation, (i) holders of our preferred stock, par value $10.00 per share (“Preferred Stock”), are entitled to elect five of our nine directors and (ii) only holders of our Preferred Stock are entitled to vote with respect to a merger, dissolution, lease, exchange or sale of substantially all of our assets, or on an amendment to the Articles of Incorporation, unless such action would increase or decrease the authorized shares or par value of the Common or Preferred Stock, or change the powers, preferences or special rights of the Common or Preferred Stock so as to affect the holders of Common Stock adversely.
Under our Articles of Incorporation, (i) holders of our preferred stock, par value $10.00 per share (“Preferred Stock”), are entitled to elect five of our nine directors and (ii) only holders of our Preferred Stock are entitled to vote with respect to a merger, dissolution, lease, exchange, or sale of substantially all of our assets, or on an amendment to the Articles of Incorporation, unless such action would increase or decrease the authorized shares or par value of the Common Stock or Preferred Stock, or change the powers, preferences or special rights of the Common or Preferred Stock so as to affect the holders of Common Stock adversely.
We have various mechanisms in place to discourage takeover attempts, which may reduce or eliminate our stockholders’ ability to sell their shares for a premium in a change of control transaction. In addition, we could issue additional shares of Common Stock, which could adversely impact the market price of our Common Stock.
We have various mechanisms in place to discourage takeover attempts, which may reduce or eliminate stockholders’ ability to sell their shares for a premium in a change of control transaction. In addition, we could issue additional shares of Common Stock, which could adversely impact the market price of our Common Stock.
Ransomware attacks or other cybersecurity breaches have occurred, either internally or at our third-party technology service providers, and have caused and may in the future cause us to be prevented from accessing our data, 14 resulting in interruptions or delays in our business, and causing us to incur remediation costs or requiring us to pay ransom to a hacker which takes over our systems, or damage our reputation.
Ransomware attacks or other cybersecurity breaches have occurred, either internally or at our third-party technology service providers, and have caused and may in the future cause us to be prevented from accessing our data, resulting in interruptions or delays in our business, and causing us to incur remediation costs or requiring us to pay ransom to a hacker which takes over our systems, or damage our reputation.
Moreover, even if a product liability or other legal or regulatory claim is unsuccessful, has no merit, or is not 11 pursued, the negative publicity surrounding assertions against our products or processes and the associated legal and other expenses could have a material adverse effect on our business, financial condition, or results of operations.
Moreover, even if a product liability or other legal or regulatory claim is unsuccessful, has no merit, or is not pursued, the negative publicity surrounding assertions against our products or processes and the associated legal and other expenses could have a material adverse effect on our business, financial condition, or results of operations.
The concentrated control of our stock and rights of holders of Preferred Stock under our Articles of Incorporation could delay, defer, or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that our other stockholders support, or conversely these factors could result in the consummation of such a transaction that our other stockholders do not support.
The concentrated control of our stock and rights of Preferred Stockholders under our Articles of Incorporation could delay, defer, or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that our other stockholders support, or conversely these factors could result in the consummation of such a transaction that our other stockholders do not support.
We may not be able to discover or determine the extent of any unauthorized use of our proprietary rights. Third parties that license our proprietary rights also may take actions that diminish the value of our proprietary rights or reputation. The protection of our 10 intellectual property may require the expenditure of significant financial and managerial resources.
We may not be able to discover or determine the extent of any unauthorized use of our proprietary rights. Third parties that license our proprietary rights also may take actions that diminish the value of our proprietary rights or reputation. The protection of our intellectual property may require the expenditure of significant financial and managerial resources.
Unfavorable media, whether accurate or not, related to our industry, to us, our products, our brands, our customers’ products, marketing, personnel, operations, business performance, or prospects could negatively affect our reputation, stock price, ability to attract and retain high-quality talent, or the performance of our business.
Unfavorable media, whether accurate or not, related to us or our industry, products, brands, customers, customers’ products, marketing, personnel, operations, business performance, or prospects could negatively affect our reputation, stock price, ability to attract and retain high-quality talent, and the performance of our business.
Our ability to make and sell our products depends upon the availability of raw materials and energy resources. Prices and supply of all products are subject to market forces, such as inflation, weather, changes in domestic and global demand and supply, and global political or economic issues.
Our ability to make and sell our products depends upon the availability of raw materials and energy resources. Prices and supply of all products are subject to market forces, such as inflation, weather, changes in domestic and global demand and supply, and global political and economic issues.
If any of our key suppliers encounters an operational or financial issue, is no longer able to meet our timing, quality, or capacity requirements, ceases doing business with us, or significantly raises prices, and we are not able to promptly develop alternative cost-effective sources of supply or production, it could lead to an interruption in supply to us and higher prices than those we have negotiated or than are available in the market at the time, and in turn, have a material adverse effect on our business, financial condition, or results of operations.
If any of our key suppliers encounters an operational or financial issue, is no longer able to meet our timing, quality, or capacity requirements, ceases doing business with us, or significantly raises prices, and we are not ab le to promptly develop alternative cost-effective sources of supply or production, it could lead to an interruption in supply to us and higher prices than those we have negotiated or than are available in the market at the time, and in turn, have a material adverse effect on our business, financial condition, or results of operations.
Specifically, we could be required to incur significant additional capital expenditures, increase our operating expenses, or change the manner in which we conduct our business in response to new environmental, food, health, or safety related laws and regulations.
Specifically, we could be required to incur significant additional costs or capital expenditures, increase our operating expenses, or change the manner in which we conduct our business in response to new environmental, food, health, or safety related laws and regulations.
Any acceleration of our debt or termination of our credit 16 arrangements would negatively impact our overall liquidity and might require us to take other actions to preserve any remaining liquidity.
Any acceleration of our debt or termination of our credit arrangements would negatively impact our overall liquidity and might require us to take other actions to preserve any remaining liquidity.
Although we maintain insurance coverage for various cybersecurity risks, we may incur costs or financial losses that are either not insured against or not fully covered through our insurance. All of these potential failures or disruptions of our data security systems or our IT systems could have a material adverse impact on our business, financial conditions, or results of operations.
Although we maintain insurance coverage for various cybersecurity risks, we may incur costs or financial losses that are either not insured against or not fully covered through our insurance. All of these potential failures or disruptions of our data security systems or our IT systems could have a material adverse impact on our business, financial condition, or results of operations.
Failure to comply with anti-corruption laws, trade sanctions, and restrictions, or similar laws or regulations may have a material adverse effect on our business and financial results. We market and sell our products in over 50 countries. Some of the countries where we do business have a higher risk of corruption than others.
Failure to comply with anti-corruption laws, trade sanctions, and restrictions, or similar laws or regulations may have a material adverse effect on our business and financial results. We market and sell our products in over 45 countries. Some of the countries where we do business have a higher risk of corruption than others.
Generally, our Common Stock and Preferred Stock vote as separate classes on all other matters requiring stockholder approval. As of December 31, 2024, the majority of the outstanding shares of our Preferred Stock is beneficially owned by one individual, who is effectively in control of the election of five of our nine directors under our Articles of Incorporation.
Generally, our Common Stock and Preferred Stock vote as separate classes on all other matters requiring stockholder approval. As of December 31, 2025, the majority of the outstanding shares of our Preferred Stock is beneficially owned by one individual, who is effectively in control of the election of five of our nine directors under our Articles of Incorporation.
A change in dividend payments or share repurchases could adversely affect the price of our Common Stock. Additionally, any share repurchases may not enhance shareholder value because the market price of our Common Stock may decline below the levels at which we repurchased shares of Common Stock, and short-term stock price fluctuations could reduce the program’s effectiveness. ITEM 1B.
A change in dividend payments or share repurchases could adversely affect the price of our Common Stock. Additionally, any share repurchases may not enhance shareholder value because the market price of our Common Stock may decline below the levels at which we repurchased shares of Common Stock, and short-term stock price fluctuations could reduce the program’s effectiveness.
A pandemic or other widespread health crisis could disrupt or negatively impact credit markets, which could adversely affect the availability and cost of capital. These impacts could limit our ability to fund our operations and satisfy our obligations. Cash dividends and share repurchases are subject to uncertainties which could affect the price of our Common Stock.
A pandemic or other widespread health crisis could disrupt or negatively impact credit markets, which could adversely affect the availability and cost of capital, which could limit our ability to fund our operations and satisfy our obligations. Cash dividends and share repurchases are subject to uncertainties which could affect the price of our Common Stock.
Changes in laws, regulatory measures, governmental policies, guidelines, initiatives, or the manner in which current ones are interpreted or applied, could cause us to incur material additional costs or liabilities and jeopardize the growth of our business in the affected market.
Changes in laws, regulatory measures, governmental policies, guidelines, initiatives, or the manner in which current ones are interpreted or applied, could cause us to incur material additional costs or liabilities and jeopardize the growth of our business.
The concentrated control of our stock and rights of holders of Preferred Stock could also discourage a potential investor from acquiring our Common Stock due to the limited voting power of such stock relative to the Preferred Stock and could have an adverse effect on the market price of our Common Stock.
The concentrated control of our stock and rights of Preferred Stockholders could also discourage a potential investor from acquiring our Common Stock due to the limited voting power of such stock relative to the Preferred Stock and could have an adverse effect on the market price of our Common Stock.
These laws and regulations cover virtually every aspect of our operations, including production and storage/warehouse facilities, distillation, and maturation requirements, importing ingredients, importing and exporting our products, distribution of beverage alcohol products, marketing, pricing, labeling, packaging, advertising, trade practices, water usage, wastewater discharge, disposal of hazardous wastes and emissions, air emissions and quality, and other matters.
These laws and regulations cover virtually every aspect of our operations, including production and storage/warehouse facilities, distillation, maturation requirements, importing ingredients, importing and exporting our products, distribution of beverage alcohol products, marketing, pricing, labeling, packaging, advertising, data privacy, taxation, trade practices, water usage, wastewater discharge, disposal of hazardous wastes and emissions, air emissions and quality, and other matters.
Any capital project we undertake involves risks, including cost overruns, delays and performance uncertainties, regulatory risks (including our ability to timely obtain necessary approvals and permits), and the risk of potential changes in laws and regulations (including zoning and environmental requirements). The expected benefits from any of our capital or other projects may not be realized.
Any capital project we undertake involves risks, including cost overruns, delays and performance uncertainties, regulatory risks (including our ability to timely obtain necessary approvals and permits), and the risk of potential changes in laws and regulations (including zoning and environmental requirements). The expected benefits from any of our capital and other projects have not been and may not be realized.
Our freight cost and the timely delivery of our products could be adversely affected by a number of factors that could reduce the profitability of our operations, including driver or equipment shortages, higher fuel costs, weather conditions, traffic congestion, shipment container availability, rail shut down, increased government regulation, and other matters.
Our freight cost and the timely delivery of our products could be adversely affected by a number of factors that could reduce the profitability of our operations, including driver or equipment shortages, higher fuel costs, weather conditions, traffic congestion, shipment container availability, rail shutdown, increased government regulation, and other matters.
For example, in recent years, we have noticed shifting consumer preferences and media attention directed to gluten, gluten intolerance, and “clean label” products. This could decrease our revenues and revenue growth, which could have a material adverse effect on our business, financial condition, or results of operations.
For example, in recent years, we have noticed shifting consumer preferences and media attention directed to gluten, gluten 7 Table of Contents intolerance, and “clean label” products. This could decrease our revenues and revenue growth, which could have a material adverse effect on our business, financial condition, or results of operations.
Also, as a result of these pricing actions, consumers could purchase less or move from purchasing our higher-margin products to our lower-margin products. A failure of one or more of our key information technology (“IT”) systems, networks, processes, associated sites, or service providers could have a negative impact on our business.
Also, as a result of these pricing actions, consumers could purchase less or move from purchasing our higher-margin products to our lower-margin products. 14 Table of Contents A failure of one or more of our key information technology (“IT”) systems, networks, processes, associated sites, or service providers could have a negative impact on our business.
Additional risks not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition, or results of operations. COMMERCIAL, COMPETITION, AND INDUSTRY RISKS Changes in consumer preferences and purchases, and our ability to anticipate or react to them, could negatively affect our business results.
Additional risks not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition, or results of operations. 5 Table of Contents COMMERCIAL, COMPETITION, AND INDUSTRY RISKS Changes in consumer preferences and purchases, and our ability to anticipate or react to them, could negatively affect our business results.
Product contamination, whether arising accidentally or through deliberate third-party action, or other events that harm the integrity or consumer support for our or our customers’ products could affect the demand for our or our customers’ products.
Product contamination, whether arising accidentally or through deliberate action, or other events that harm the integrity or consumer support for our or our customers’ products could affect the demand for our or our customers’ products.
See also Part II, Item 8, Note 7, Corporate Borrowings, to our Consolidated Financial Statements. Pandemics or other health crises could disrupt or otherwise negatively impact our operations, including the demand for our products and our ability to produce and deliver our products.
See also Part II, Item 8, Note 7, Corporate Borrowings, to our Consolidated Financial Statement s. Pandemics or other health crises could disrupt or otherwise negatively impact our operations, including the demand for our products and our ability to produce and deliver our products.
Any new trade agreements, economic sanctions, or new, expanded or retaliatory tariffs could result in an increase in the price of our and our customer’s products, could increase the costs of finished goods and raw materials (including finished goods produced through our joint venture operations in Mexico and our Northern Ireland operations as well as raw materials we procure from outside the U.S.), could prompt consumers to seek alternative products, could result in a supply imbalance in the U.S if we and our competitors have reduced sales in other countries, and could potentially impact our business, financial condition, or results of operations.
Any new trade agreements, economic sanctions, or new, expanded or retaliatory tariffs or other retaliatory actions, particularly any retaliatory tariffs or other retaliatory actions related to products imported to the U.S. from Mexico or Northern Ireland, could result in an increase in the price of our and our customer’s pr oducts, could increase the costs of finished goods and raw materials (including finished goods produced through our joint venture operations in Mexico and our Northern Ireland operations as well as raw materials we procure from outside the U.S.), could prompt consumers to seek alternative products, could result in a supply imbalance in the U.S. if we and our competitors have reduced sales in other countries, and could potentially impact our business, financial condition, or results of operations.
We also store a substantial amount of our own inventory of aged or aging bourbon, rye, and other whiskeys at our warehouses and at other facilities, including facilities owned by certain third-party producers. If a catastrophic event were to occur at any of these locations, our business, financial condition, or results of operations could be adversely affected.
We also store a substantial amount of our own inventory of aged or aging bourbon, rye, and other whiskeys at our warehouses and at other facilities, including facilities owned by third-parties. If a catastrophic event were to occur at any of these locations, our business, financial condition, or results of operations could be adversely affected.
See also “—Tariffs imposed by the U.S. and other countries, as well as rapidly changing trade relations, could negatively impact our customers and have a material adverse effect on our business and results of operations.” Covenants and other provisions in our credit arrangements could hinder our ability to operate.
See also —Tariffs 16 Table of Contents imposed by the U.S. and other countries, as well as rapidly changing trade relations, could negatively impact our customers and have a material adverse effect on our business and results of operations . Covenants and other provisions in our credit arrangements could hinder our ability to operate.
Furthermore, our facilities and those of our customers and suppliers could be required to comply with new regulations imposed by state and local governments in response to such an outbreak. Compliance with these new measures could cause an increase in the cost, or delay or reduce the volume, of products produced at our facilities or those of our suppliers.
Furthermore, our facilities and those of our customers and suppliers could be required to comply with new regulations imposed by state and local governments in response to such an outbreak, which could cause an increase in the cost, or delay or reduce the volume, of products produced at our facilities or those of our suppliers.
The Company has previously experienced, and is expected to continue to be exposed to, failures of our IT systems and those of our third-party vendors due to various causes, including those caused by natural disasters, power outages, computer and telecommunications failures, viruses, phishing attempts, cyber-attacks, malware and ransomware attacks, security breaches, failures in maintenance or development of new IT systems, and errors by employees or vendors.
We have previously experienced, and is expected to continue to be exposed to, failures of our IT systems and those of our third-party vendors due to various causes, including those caused by natural disasters, power outages, computer and telecommunications failures, viruses, phishing attempts, cyber-attacks, malware and ransomware attacks, security breaches, failures in maintenance or development of new IT systems, and errors by employees or vendors.
Customer and consumer preferences and purchases may shift due to a host of factors, many of which are difficult to predict, including: 5 • demographic and social trends; • economic conditions; • product innovations; • public health policies and initiatives (including dietary guidelines and labeling requirements regarding alcohol consumption); • health and wellness trends (including the use of GLP-1 drugs); • changes in government regulation and taxation of beverage alcohol products; • the expansion of, legalization of, and increased acceptance or use of cannabis; and • changes in travel, leisure, dining, entertaining, and beverage consumption trends.
Customer and consumer preferences and purchases may shift due to a host of factors, many of which are difficult to predict, including: • demographic and social trends; • economic conditions; • product innovations; • public health policies and initiatives (including dietary guidelines and labeling requirements regarding alcohol consumption) and concerns or regulations related to product safety or quality; • health and wellness trends (including the use of GLP-1 drugs); • changes in government regulation and taxation of beverage alcohol products; • the expansion, legalization, and increased acceptance or use of cannabis; and • changes in travel, leisure, dining, gifting, entertaining, and beverage consumption trends.
We cannot assure you that our U.S. distributors will continue to purchase our branded spirits, resell them at our desired or targeted prices, commit sufficient time and resources to promote and market our brands and product lines, or that they can or will sell them to our desired or targeted markets.
We cannot provide assurances that our U.S. distributors will continue to purchase our branded spirits, resell them at our desired or targeted prices, commit sufficient time and resources to promote and market our brands and product lines, or that they can or will sell them to our desired or targeted markets.
Assuming our revolving credit facility was fully drawn up to the current $400 million maximum principal commitment, for each 1% increase in Secured Overnight Financing Rate (“SOFR”) would result in a $4.0 million increase in annual interest expense under the revolving credit facility.
Assuming our revolving credit facility was fully drawn up to the current $500 million maximum principal commitment, for each 1% increase in Secured Overnight Financing Rate (“SOFR”) would result in a $5.0 million increase in annual interest expense under the revolving credit facility.
In addition, the sale or prospect of a sale of a substantial number of shares by our principal stockholders could have an adverse effect on the market price of our Common Stock.
In addition, the sale or prospect of a sale of 13 Table of Contents a substantial number of shares by our principal stockholders could have an adverse effect on the market price of our Common Stock.
See also Part I, “Item 3―Legal Proceedings” and Part II, Item 8, Note 11, Commitments and Contingencies, to our Consolidated Financial Statements. 12 RISKS RELATED TO OUR CAPITAL STRUCTURE Common Stockholders have limited rights under our Articles of Incorporation.
See also Part I, Item 3―Legal Proceedings and Part II, Item 8, Note 11, Commitments and Contingencies, to our Consolidated Financial Statements . RISKS RELATED TO OUR CAPITAL STRUCTURE Common Stockholders have limited rights under our Articles of Incorporation.
Furthermore, a group of stockholders beneficially owning appro ximately 23 percent of our Common Stock as of December 31, 2024 (excluding shares controlled by certain other stockholders) have a right to nominate up to two of the four directors to be elected by holders of our Common Stock pursuant to the terms of a shareholders’ agreement, provided they continue to hold a certain amount of our Common Stock, and two other individuals who beneficially own approximately 13 percent of our Common Stock as of December 31, 2024 have agreed to vote in favor of those nominees with respect to any share s of Common Stock over which they have sole voting control.
Furthermore, a group of stockholders beneficially owning appro ximately 20 percent of our Common Stock as of December 31, 2025 (excluding shares controlled by certain other stockholders) have a right to nominate up to two of the four directors to be elected by our Common Stockholders pursuant to a shareholders’ agreement, provided they continue to hold a certain amount of our Common Stock, and two other individuals who beneficially own approximately 9 percent of our Common Stock as of December 31, 2025 have agreed to vote in favor of those nominees with respect to any share s of Common Stock over which they have sole voting control.
For example, we may not realize the expected benefits from the mini fuel plant being constructed at our Atchison, Kansas location or from the ultimate disposal of the distillery assets from our distillery in Atchison, Kansas that we closed in December 2023.
For example, we may not realize the expected benefits from the mini fuel plant that was constructed at our Atchison, Kansas location or from the ultimate disposal of the distillery assets from our distillery in Atchison, Kansas (the “Atchison Distillery”) that we closed in December 2023.
The loss of service of any of our key personnel could be disruptive to our operations and create uncertainty about our business and future direction, which could have a material adverse effect on our business, financial condition, results of operations, or on our system of internal controls. On December 31, 2024, David S.
The loss of service of any of our key personnel could be disruptive to our operations and create uncertainty about our business and future direction, which could have a material adverse effect on our business, financial condition, results of operations, or on our system of internal controls.
We have established relationships for our branded spirits with a limited number of wholesale distributors, and one wholesale distributor represented approximately 13 percent of our consolidated net sales for 2024. Failure to maintain those relationships could significantly and adversely affect our business, sales, and growth.
We have established relationships for our branded spirits with a limited number of distributors, and one distributor represented approximately 16 percent of our consolidated net sales for 2025. Failure to maintain those relationships could significantly and adversely affect our business, sales, and growth.
Work disruptions or stoppages by our unionized workforce could cause interruptions in our operations. As of December 31, 2024, approximately 197 of our 660 employees were members of a union.
Work disruptions or stoppages by our unionized workforce could cause interruptions in our operations. As of December 31, 2025, approximately 197 of our 617 employees were members of a union.
The loss of a significant amount of our aged or aging inventory at these facilities through fire, natural disaster, or otherwise could result in a reduction in supply of the affected products and could affect our long-term performance of any affected brands.
The loss of a significant amount of our aged or aging inventory at these facilities through fire, natural disaster, or otherwise could result in a reduction in supply of the affected products, could affect the long-term performance of any affected products, and could have a material impact on our business.
The ultimate success of our branded spirits also depends in large part on our distributors’ ability and desire to distribute and actively promote our branded spirits to our desired U.S. target markets, as we rely significantly on them for product placement and retail store penetration. In addition, all of our distributors also distribute competitive brands and product lines.
The ultimate success of our branded spirits depends in large part on our distributors’ ability and desire to distribute and actively promote our branded spirits to our desired U.S. target markets, as we rely significantly on them for product placement and retail store penetration.
Changes or proposed changes in U.S. and foreign governments’ trade policies have resulted in, and may continue to result in, new trade agreements, economic sanctions, or new, expanded or retaliatory tariffs against certain countries or covering certain products or ingredients (including recent U.S. tariffs imposed or threatened to be imposed on Mexico, Canada, China, and other countries and any retaliatory actions taken by such countries).
Changes or proposed changes in U.S. and foreign governments’ trade policies have resulted in, and may continue to result in, new trade agreements, economic sanctions, new, expanded or retaliatory tariffs, or other retaliatory actions against certain countries or covering certain products or ingredient s (including recent U.S. tariffs imposed or threatened to be imposed on imports from other countries and any retaliatory actions taken by these countries).
In the past, we have experienced short term interruptions of operations at some of our production facilities due to industrial accidents.
In the past, we have experienced short term interruptions of operations at some of our production facilities due to industrial accidents, equipment failures, and other causes.
To the extent that our products rely on unique or proprietary processes or techniques, replacing production lost as a result of a catastrophic event by purchasing from outside suppliers would be difficult. Our strategic plan involves significant investment in the aging of barreled distillate.
To the extent that our products rely on unique or proprietary attributes, processes, or techniques, replacing production lost as a result of a catastrophic event by purchasing from outside suppliers would be difficult. 8 Table of Contents We have made significant investment in the aging of barreled distillate.
Additionally, we could be exposed to potential liability, litigation, governmental inquiries, investigations, or regulatory enforcement actions and we could be subject to the payment of fines or other penalties, ransoms, legal claims by our suppliers, customers, or employees, and significant remediation costs. Our business may suffer from risks related to acquisitions and potential future acquisitions.
Additionally, we could be exposed to potential liability, litigation, governmental inquiries, investigations, or regulatory enforcement actions and we could be subject to the payment of fines or other penalties, ransoms, legal claims by our suppliers, customers, or employees, and significant remediation costs. We may not be able to successfully implement our strategies.
Our principal competitors in these markets have substantial financial, marketing, and other resources, and several are much larger enterprises than us. Many of our current and potential competitors have larger customer bases, greater name recognition, and broader product offerings. In recent years, the industries in which we compete have continued to experience consolidation.
Our principal competitors in these markets have substantial financial, marketing, and other resources, and several are much larger enterprises than us. Many of our current and potential competitors have larger customer bases, greater name recognition, and broader product offerings.
Industry consolidation can have varying degrees of impact, including the creation of new and larger competitors. We are dependent on being able to generate sales and other operating income in excess of the costs of products sold in order to obtain margins, profits, and cash flows to meet or exceed our targeted financial performance measures.
We are dependent on being able to generate sales and other operating income in excess of the costs of products sold in order to obtain margins, profits, and cash flows to meet or exceed our targeted financial performance measures.
If our competitors were to decrease their pricing, we may choose to do the same, which could adversely affect our margins and profitability. If we did not do the same, our revenues could be adversely affected due to the potential loss of sales.
We have been, and may continue to be, adversely impacted by elevated industry-wide barrel inventories of whiskey. If our competitors were to decrease their pricing, we may choose to do the same, which could adversely affect our margins and profitability. If we did not do the same, our revenues could be adversely affected due to the potential loss of sales.
Further, we cannot predict whether our products will become subject to increased rules and regulations, which, if enacted, could increase our costs or adversely impact sales. For example, in early January 2025, the U.S.
Further, we cannot predict whether our products will become subject to increased rules and regulations, which, if enacted, could increase our costs or adversely impact sales.
We are, and from time to time may become, subject to litigation and various legal proceedings in the ordinary course of our business, including litigation and proceedings related to commercial disputes, intellectual property matters, privacy and data protection and employment disputes, as well as stockholder derivative suits, class action lawsuits, mass arbitrations and other matters, that may involve claims for substantial amounts of money or for other relief, result in significant costs for legal representation, arbitration fees, or other legal or related services, or necessitate changes to our business or operations.
We are, and from time to time may become, subject to litigation and various legal proceedings in the ordinary course of our business, including litigation and proceedings related to commercial disputes, intellectual property matters, privacy and data protection and employment disputes, as well as stockholder derivative suits, class action lawsuits, mass arbitrations and other matters, that may involve claims for substantial amounts of money or for other relief, result in significant costs for legal representation, arbitration fees, or other legal or related services, or necessitate changes to our business or operations. 12 Table of Contents In particular, we and other companies operating in our industry may face the possibility of class action or similar litigation alleging that the continued excessive use or abuse of beverage alcohol has caused death or serious health problems.
Increases in regulation of this nature could substantially reduce consumer awareness of our products in the affected markets and m ake the introduction of new products more challenging. Governmental agencies may issue dietary guidelines that recommend reduced alcohol consumption, which could impact consumer behavior.
Certain countries historically have banned all television, newspaper, magazine, and digital commerce/advertising for beverage alcohol products. Increases in regulation of this nature could substantially reduce consumer awareness of our products in the affected markets and m ake the introduction of new products more challenging. Governmental agencies may issue dietary guidelines that recommend reduced alcohol consumption, which could impact consumer behavior.
In addition, governments may prohibit, impose, or increase limitations on advertising and promotional activities or times or locations where beverage alcohol may be sold or consumed, or adopt other measures that could limit our opportunities to reach consumers or sell our products. Certain countries historically have banned all television, newspaper, magazine, and digital commerce/advertising for beverage alcohol products.
In addition, governments have in the past and may in the future prohibit, impose, or increase limitations on advertising and promotional activities or times or locations where beverage alcohol may be sold or consumed, or adopt other measures that could limit our opportunities to reach consumers or sell our products.
Our focus on higher margin specialty ingredients may make us more reliant on fewer, more profitable customer relationships. Our strategic plan for our Ingredient Solutions segment includes focusing our efforts on the sale of specialty proteins and starches to targeted consumer packaged goods customers, which may make our Ingredient Solutions segment reliant on these customer relationships.
Our focus on higher margin specialty ingredients may make us more reliant on fewer, more profitable customer relationships. Our Ingredient Solutions business sells specialty proteins and starches to targeted consumer packaged goods and distributor customers, which may make our Ingredient Solutions segment reliant on these customer relationships.
Any future accidents or other catastrophic events could result in an extended interruption or reduction of production at our facilities, and we may incur costs or financial losses that are either not insured against or not fully covered through our insurance.
Any future accidents, equipment failures, or catastrophic events could result in an extended interruption or reduction of production at our facilities, which could lead to delays or disruptions in shipments and sales and costs or financial losses that are either not insured against or not fully covered through our insurance.
Similarly, stakeholders and others who disagree with our ESG or sustainability actions, positions, or statements may speak negatively or advocate against us, which could have a material adverse effect on our business, financial condition, or results of operations. 6 A failure to introduce successful new brands and products or have effective marketing or advertising could adversely affect our results of operations.
Similarly, stakeholders and others who disagree with our ESG, sustainability, or other actions, positions, or statements may speak negatively or advocate against us, which could have a material adverse effect on our business, financial condition, or results of operations.
Additionally, we procure barrels, glass, PET containers, caps, labels, aluminum cans, cartons, bottle closures, and other products from third-party vendors.
Additionally, we procure barrels, glass bottles, containers (including glass, plastic, and aluminum), closures, labels, cartons, and other products from third-party vendors.
In addition, it could be difficult, time consuming, and expensive to replace any key management member or other critical personnel, and no guarantee exists that we will be able to recruit suitable replacements or assimilate new key personnel into our organization. Our global business is subject to commercial, political, and financial risks.
In addition, it could be difficult, time consuming, and expensive to replace any key management member or other critical personnel, and no guarantee exists that we will be able to recruit suitable replacements or assimilate new key personnel into our organization. We may be required to recognize impairment charges that could negatively affect our financial results.
We have a high concentration of certain raw material and finished goods purchases from a limited number of suppliers, which exposes us to risk . We have third-party supply agreements for our grain supply (primarily corn) and wheat flour. We also procure some textured wheat proteins through a third-party toll manufacturer in the U.S.
We have a high concentration of certain raw material and finished goods purchases from a limited number of suppliers, which exposes us to risk . We have third-party supply agreements for our grain supply (primarily corn) and wheat fl our.
Litigation or assertions of this type have adversely affected companies in the tobacco industry, and it is possible that we, as well as our distributors, customers, or suppliers, could be named in litigation of this type.
It is also possible that governments could assert that the use of alcohol has significantly increased government funded health care costs. Litigation or assertions of this type have adversely affected companies in the tobacco industry, and it is possible that we, as well as our distributors, customers, or suppliers, could be named in litigation of this type.
Surgeon General suggested requiring that alcohol products have labels with increased and more prominent warnings regarding the health risks of alcohol consumption and in the past, advocacy groups in Australia, Canada, and the United Kingdom have called for the consideration of requiring the sale of alcohol in plain packaging with more comprehensive health warnings or have launched additional health-related campaigns in an effort to change drinking habits in those countries.
For example, advocacy groups in Australia, Canada, and the United Kingdom have called for the consideration of 11 Table of Contents requiring the sale of alcohol in plain packaging with more comprehensive health warnings and have launched additional health-related campaigns in an effort to change drinking habits in those countries.
Our success depends, in part, on our ability to innovate and develop new brands and products, and customer demands may require us to make internal investments to achieve or sustain competitive advantages and meet customer expectations.
A failure to introduce successful new brands and products or have effective marketing or advertising could adversely affect our results of operations. Our success depends, in part, on our ability to innovate and develop new brands and products, and customer demands may require us to make internal investments to achieve or sustain competitive advantages and meet customer expectations.
In addition, there is no assurance that we will not experience work disruptions or stoppages in the future, which could interrupt our operations, adversely affect our relationships with our customers, and could have a material adverse effect on our business, financial condition, or results of operations.
In addition, there is no assurance that we will not experience work disruptions or stoppages in the future, which could interrupt our operations, adversely affect our relationships with our customers, and could have a material adverse effect on our business, financial condition, or results of operations. 9 Table of Contents Climate change, or legal, regulatory, or market measures to address climate change, may negatively affect our business or operations, and water scarcity or quality could negatively impact our production costs and capacity.
LEGAL, REGULATORY, AND COMPLIANCE RISKS We are subject to extensive regulation and taxation, as well as compliance with existing or future laws and regulations, which may require us to incur substantial expenditures. We are subject to a broad range of federal, state, local, and foreign laws and regulations intended to protect public health and the environment.
LEGAL, REGULATORY, AND COMPLIANCE RISKS We are subject to extensive regulation and taxation, as well as compliance with existing or future laws and regulations, which may require us to incur substantial expenditures.
We could also be adversely affected if we are not successful in developing new brands or products as a result of new brand or product introductions by our competitors. Some of our competitors may have greater financial and other resources than we do, making them better positioned to pursue new investment opportunities.
We could also be adversely affected if we are not successful in developing new brands or products as a result of new brand or product introductions by our competitors.
Our capital projects may also result in other unanticipated events or unintended consequences, such as the diversion of management’s attention from other operational matters or disruptions to our ongoing operations. 8 Although we currently finance most of our capital expenditures through cash provided by operations, we also may depend on increased borrowing or other financing arrangements to fund future capital expenditures.
Although we currently finance most of our capital expenditures through cash provided by operations, we also may depend on increased borrowing or other financing arrangements to fund future capital expenditures.
Water is the main ingredient in substantially all of our distillery products and is also necessary for the production of our food ingredients. It is also a limited resource, facing challenges from climate change, increasing pollution, and poor management.
Water is the main ingredient in substantially all of our distillery products, is necessary for the production of our other products, and is a limited resource.
Our products are sold in more than 50 countries; accordingly, we are subject to risks associated with doing business globally, including commercial, political, and financial risks.
For example, in the fourth quarter 2024 and 2025, we recorded impairment charges related to our Branded Spirits reporting unit. Our global business is subject to commercial, political, and financial risks. Our products are sold in more than 45 countries; accordingly, we are subject to risks associated with doing business globally, including commercial, political, and financial risks.
In addition, increased IT security threats and more sophisticated cyber-crime pose a potential risk to the security of our IT systems, networks, and services, as well as the confidentiality, availability, and integrity of our data. This could lead to outside parties having access to our confidential data, strategic information, or information regarding our employees, suppliers, or customers.
In addition, increased IT security threats and more sophisticated cyber-crime (including through the use of existing and emerging technologies, such as artificial intelligence (“AI”)) pose a potential risk to the security of our IT systems, networks, and services, as well as the confidentiality, availability, and integrity of our data.
Acquiring additional distilled spirits brands or other businesses could have a significant effect on our financial position and could cause substantial fluctuations in our operating results. An increase in interest rates would increase the cost of servicing our debt and could reduce our profitability. Our revolving credit facility bears interest at variable rates. The U.S.
The failure to implement our cost savings and productivity initiatives in accordance with our expectations could have a negative effect on our business, financial condition, or results of operations . An increase in interest rates would increase the cost of servicing our debt and could reduce our profitability. Our revolving credit facility bears interest at variable rates.
Our operations are also subject to regulation by various U.S. federal agencies, including the TTB, OSHA, the 9 FDA, and the EPA, by various U.S. state and local authorities, and by various foreign authorities. We are also required to conduct business only with holders of licenses to import, warehouse, transport, distribute, and sell beverage alcohol products.
We are subject to a broad range of federal, state, local, and foreign laws and regulations, and we are subject to regulation by various U.S. federal agencies, including the TTB, OSHA, the FDA, and the EPA, by various U.S. state and local authorities, and by various foreign authorities.
A failure to sufficiently innovate or maintain adequate and effective marketing or advertising could inhibit our ability to maintain our brand relevance and drive product sales.
In addition, some of our competitors may have greater financial and other resources than we do, making them better positioned to pursue new investment opportunities. A failure to sufficiently innovate or maintain adequate and effective marketing or advertising could inhibit our ability to maintain our brand relevance and drive product sales.
Larger retailers may seek to improve their profitability and sales by asking for lower prices 7 or increased trade spending. The efforts of retailers could result in reduced profitability for the distilled spirits industry as a whole and indirectly adversely affect our financial results.
In addition, retail industry consolidation has led to increased retailer purchasing power, and larger retailers can often seek to improve their profitability and sales by asking for lower prices or increased trade spending. If the purchasing power of these large retailers continues to increase, it could negatively affect our financial results.
Damage to our reputation, or that of any of our key customers or their brands, could affect our business performance. The success of our products depends in part upon the positive image that consumers have of our brands and the third-party brands that use our products.
The success of our products depends in part upon the positive image that consumers have of our brands and products, the consumer goods that use our products, and the raw materials and finished goods that we use to produce our products.
Competition is based on such factors as product innovation, product characteristics, product taste and quality, pricing, color, as well as name and brand image.
Competition is based on such factors as product innovation, product characteristics, product taste and quality, pricing, color, as well as name and brand image. In recent years, the industries in which we compete have continued to experience consolidation. Industry consolidation can have varying degrees of impact, including the creation of new and larger competitors.
Part of our strategic business plan is to grow our business through acquisitions, and we continue to evaluate and engage in discussions concerning potential acquisition opportunities, some of which could be material. For example, in April 2021 we acquired Luxco, Inc.
Part of our strategic business plan is to grow our business through acquisitions, and we continue to evaluate opportunities to acquire or invest in businesses or brands to expand our portfolio.
We cannot assure you that these and other governmental regulations applicable to our industry will not change or become more stringent.
We are also required to conduct business only with holders of licenses to import, warehouse, transport, distribute, and sell beverage alcohol products. We cannot assure you that the laws and regulations applicable to us will not change or become more stringent.

… 47 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+1 added−0 removed7 unchanged
Biggest changeOur Vice President of Information Technology and Security provides updates on cybersecurity threats and risks to the Audit Committee of our Board of Directors throughout the year. In addition, the Audit Committee reviewed cybersecurity risks and mitigation strategies in 2024 as part of their oversight of our enterprise risk management process.
Biggest changeIn addition, our Board of Directors reviewed cybersecurity risks and mitigation strategies in 2025 as part of their oversight of our enterprise risk management process.
Our Vice President of Information Technology and Security has over 25 years of experience in IT and has held a variety of IT roles across multiple business lines within the financial services, aviation, and hospitality industries. He received both his bachelor’s and master’s degrees in information management and holds Certified Information Systems Security Professional (“CISSP”) certification.
Our Vice President of Information Technology and Security has over 25 years of experience in IT and has held a variety of IT roles across multiple business lines within the financial services, aviation, and hospitality industries. He received both his bachelor’s and master’s degrees in information management and holds a Certified Information Systems Security Professional (“CISSP”) certification.
We also engage reputable third-party consultants to help evaluate and test our vulnerability to cybersecurity threats as well as to conduct annual penetration 17 tests to help identify exploitable cybersecurity vulnerabilities. Our IT team assesses these testing results and implements any appropriate measures to mitigate vulnerabilities identified.
We also engage reputable third-party consultants to help evaluate and test our vulnerability to cybersecurity threats as well as to conduct annual penetration tests to help identify exploitable cybersecurity vulnerabilities. Our IT team assesses these testing results and implements any appropriate measures to mitigate vulnerabilities identified.
We evaluate third-party service providers from a cybersecurity risk perspective using a range of measures, including information security and cybersecurity due diligence assessments, ongoing monitoring and evaluation of our providers, examination of available System and Organization Controls attestation reports, and inclusion security and privacy contractional provisions in our agreements with our providers.
We evaluate third-party service providers from a cybersecurity risk perspective using a range of measures, including information security and cybersecurity due diligence assessments, ongoing monitoring and evaluation of our providers, examination of available System and Organization Controls attestation reports, and inclusion security and privacy contractual provisions in our agreements with our providers.
Our Vice President of Information Technology and Security monitors our processes for preventing, detecting, mitigating, and remediating cybersecurity incidents through his management of, and participation in, the cybersecurity risk management and strategy processes described above, including through the operation of our incident response plans, which include escalation to our Interim Chief Executive Officer and Chief Financial Officer, as appropriate. 18
Our Vice President of Information Technology and Security monitors our processes for preventing, detecting, mitigating, and remediating cybersecurity incidents through his management of, and participation in, the cybersecurity risk management and strategy processes described above, including through the operation of our incident response plans, which include escalation to our Chief Executive Officer and Chief Financial Officer, as appropriate. 18 Table of Contents
Assessment of cybersecurity risk is part of our overall enterprise risk management (“ERM”) process, which is reviewed by the Audit Committee of our Board of Directors, along with our strategies for managing our cybersecurity risks.
Assessment of cybersecurity risk is part of our overall enterprise risk management (“ERM”) process, which is reviewed by our Board of Directors as well as the Audit Committee of our Board of Directors and includes identification of strategies to manage our cybersecurity risks.
Governance. The Audit Committee of our Board of Directors is responsible for overseeing risk assessments and risk management, including cybersecurity risks. Our IT team is responsible for assessing and managing our risks from cybersecurity threats. Our IT team is led by our Vice President of Information Technology and Security, who reported to our Chief Financial Officer during 2024.
Governance. Our Board of Directors and the Audit Committee of our Board of Directors is responsible for overseeing risk assessments and risk management, including cybersecurity risks. Our IT team is responsible for assessing and managing our risks from cybersecurity threats.
Added
Our IT team is led by our Vice President of Information Technology and Security, who reports to our Chief Financial Officer. Our Vice President of Information Technology and Security provides updates on cybersecurity threats and risks to the Audit Committee of our Board of Directors throughout the year.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changePROPERTIES As of February 26, 2025, our material properties include: Location Principal Activities Segment United States: Atchison, Kansas Wheat flour processing, warehousing, research and quality control laboratories, office space, and a technical innovation center Ingredient Solutions and Corporate Leawood, Kansas (a) Office space Corporate Lawrenceburg and Greendale, Indiana Distillery, warehousing, tank farm, quality control laboratory, and research and development Distilling Solutions Sunman, Indiana Warehousing facility Distilling Solutions Williamstown, Kentucky Warehousing facility Distilling Solutions Springfield, Kentucky (a) Warehousing facilities Distilling Solutions Lebanon, Kentucky Distillery, office space, and retail location Branded Spirits Bardstown, Kentucky Distillery, office space, retail location, and warehousing facilities Branded Spirits and Distilling Solutions St.
Biggest changePROPERTIES As of February 25, 2026, our material properties include: Location Principal Activities Segment United States: Atchison, Kansas Wheat flour processing, warehousing, research and quality control laboratories, office space, and a technical innovation center Ingredient Solutions and Corporate Leawood, Kansas (a) Office space Corporate Lawrenceburg and Greendale, Indiana Distillery, warehousing, tank farm, quality control laboratory, and research and development Branded Spirits and Distilling Solutions Sunman, Indiana Warehousing facility Distilling Solutions Williamstown, Kentucky Warehousing facility Distilling Solutions Springfield, Kentucky (a) Warehousing facilities Distilling Solutions Lebanon, Kentucky Distillery, office space, and retail location Branded Spirits Bardstown, Kentucky Distillery, office space, retail location, and warehousing facilities Branded Spirits and Distilling Solutions St.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed1 unchanged
Biggest changeGenerally Accepted Accounting Principles (“GAAP”), we record a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
Biggest changeIn accordance with GAAP, we record a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
ITEM 3. LEGAL PROCEEDINGS The Company is, from time to time, a party to legal or regulatory proceedings arising in the ordinary course of its business. The discussion regarding litigation in Note 11, Commitments and Contingencies, included elsewhere in this Report is incorporated herein by reference. In accordance with U.S.
ITEM 3. LEGAL PROCEEDINGS The Company is, from time to time, a party to legal or regulatory proceedings arising in the ordinary course of its business. The discussion regarding litigation in Note 11, Commitments and Contingencies, included elsewhere in this Report is incorporated herein by reference.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed0 unchanged
Biggest changePURCHASES OF EQUITY SECURITIES BY ISSUER Share repurchase activity during the quarter ended December 31, 2024 was as follows: Total Number of Shares (or Units) Purchased Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (in thousands) (1) October 1, 2024 through October 31, 2024 — $ — — $ 90,000 November 1, 2024 through November 30, 2024 557,552 (2) 49.09 557,552 62,630 December 1, 2024 through December 31, 2024 201,024 (2) 45.86 201,024 53,412 Total 758,576 758,576 (1) On February 29, 2024, we announced that our Board of Directors approved a $100,000 share repurchase program.
Biggest changePURCHASES OF EQUITY SECURITIES BY ISSUER Share repurchase activity during the quarter ended December 31, 2025 was as follows: Total Number of Shares (or Units) Purchased Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (in thousands) (1) October 1, 2025 through October 31, 2025 — $ — — $ 53,412 November 1, 2025 through November 30, 2025 — — — 53,412 December 1, 2025 through December 31, 2025 — — — 53,412 Total — — (1) On February 29, 2024, we announced that our Board of Directors approved a $100,000 share repurchase program.
The graph assumes $100 (one hundred dollars) was invested on December 31, 2019, and that all dividends were reinvested.
The graph assumes $100 (one hundred dollars) was invested on December 31, 2020, and that all dividends were reinvested.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDERS MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Our Common Stock is traded on the Nasdaq Global Select Market under the ticker symbol MGPI. As of February 21, 2025, there were approximately 277 holders of record of our Common Stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Our Common Stock is traded on the Nasdaq Global Select Market under the ticker symbol MGPI. As of February 20, 2026, there were approximately 265 holders of record of our Common Stock.
According to reports received from Nasdaq, the average daily trading volume of our Common Stock (excluding block trades) ranged from 70,688 to 3,398,021 shares during the year ended December 31, 2024. 19 STOCK PERFORMANCE GRAPH The following graph compares the cumulative total return of our Common Stock for the five-year period ended December 31, 2024, against the cumulative total return of the S&P 500 Stock Index (broad market comparison), Russell 3000 (broad market comparison), and Russell 2000 - Consumer Staples (line of business comparison ).
According to reports received from Nasdaq, the average daily trading volume of our Common Stock (excluding block trades) ranged from 100,600 to 2,802,200 shares during the year ended December 31, 2025. 19 Table of Contents STOCK PERFORMANCE GRAPH The following graph compares the cumulative total return of our Common Stock for the five-year period ended December 31, 2025, against the cumulative total return of the S&P 500 Stock Index (broad market comparison), Russell 3000 (broad market comparison), and Russell 2000 - Consumer Staples (line of business comparison ).
The repurchase program has no expiration date and may be modified, suspended, or discontinued at any time by the Company without prior notice. (2) All shares were repurchased under the share repurchase program announced on February 29, 2024. ITEM 6. [Reserved] 20
The repurchase program has no expiration date and may be modified, suspended, or discontinued at any time by the Company without prior notice.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

85 edited+36 added−24 removed44 unchanged
Biggest changeIngredient Solutions segment sales for 2024 decreased 1 percent over the prior year. 22 RESULTS OF OPERATIONS Consolidated results The table below details the consolidated results for 2024, 2023 and 2022: Year Ended December 31, % Increase (Decrease) 2024 2023 2022 2024 v. 2023 2023 v. 2022 Sales $ 703,625 $ 836,523 $ 782,358 (16) % 7 % Cost of sales 417,308 531,811 529,052 (22) 1 Gross profit 286,317 304,712 253,306 (6) 20 Gross margin % 40.7 % 36.4 % 32.4 % 4.3 pp (a) 4.0 pp (a) Advertising and promotion expenses 40,508 38,213 29,714 6 29 SG&A expenses 81,391 91,395 74,627 (11) 22 Impairment of long-lived assets and other 137 19,391 — (99) N/A Goodwill impairment 73,755 — — N/A N/A Change in fair value of contingent consideration 16,100 7,100 — 127 N/A Operating income 74,426 148,613 148,965 (50) — Operating margin % 10.6 % 17.8 % 19.0 % (7.2) pp (1.2) pp Interest expense, net (8,439) (6,647) (5,451) 27 22 Other income (expense), net 2,455 (220) (3,342) (1,216) (93) Income before income taxes 68,442 141,746 140,172 (52) 1 Income tax expense 33,977 34,616 31,300 (2) 11 Effective tax expense rate % 49.6 % 24.4 % 22.3 % 25.2 pp 2.1 pp Net income $ 34,465 $ 107,130 $ 108,872 (68) % (2) % Net income margin % 4.9 % 12.8 % 13.9 % (7.9) pp (1.1) pp Basic EPS $ 1.56 $ 4.82 $ 4.94 (68) % (2) % Diluted EPS $ 1.56 $ 4.80 $ 4.92 (68) % (2) % (a) Percentage points (“pp”).
Biggest changeIngredient Solutions segment sales for 2025 decreased 7 percent over the prior year. 22 Table of Contents RESULTS OF OPERATIONS Consolidated results The table below details the consolidated results for 2025, 2024 and 2023: Year Ended December 31, % Increase (Decrease) 2025 2024 2023 2025 v. 2024 2024 v. 2023 Sales $ 536,375 $ 703,625 $ 836,523 (24) % (16) % Cost of sales 336,966 417,308 531,811 (19) (22) Gross profit 199,409 286,317 304,712 (30) (6) Gross margin % 37.2 % 40.7 % 36.4 % (3.5) pp (a) 4.3 pp (a) Advertising and promotion expenses 31,083 40,508 38,213 (23) 6 SG&A expenses 84,819 81,391 91,395 4 (11) Impairment of long-lived assets and other — 137 19,391 N/A (99) Goodwill and indefinite-lived intangible asset impairment 152,622 73,755 — 107 N/A Change in fair value of contingent consideration 25,500 16,100 7,100 58 127 Operating income (loss) (94,615) 74,426 148,613 (227) (50) Operating margin % (17.6) % 10.6 % 17.8 % (28.2) pp (7.2) pp Interest expense, net (7,044) (8,439) (6,647) (17) 27 Other income (expense), net 1,309 2,455 (220) (47) (1,216) Income (loss) before income taxes (100,350) 68,442 141,746 (247) (52) Income tax expense 7,482 33,977 34,616 (78) (2) Effective tax expense rate % (7.5) % 49.6 % 24.4 % (57.1) pp 25.2 pp Net income (loss) $ (107,832) $ 34,465 $ 107,130 (413) % (68) % Net income (loss) margin % (20.1) % 4.9 % 12.8 % (25.0) pp (7.9) pp Basic EPS $ (4.99) $ 1.56 $ 4.82 (420) % (68) % Diluted EPS $ (4.99) $ 1.56 $ 4.80 (420) % (68) % (a) Percentage points (“pp”).
MGP’s MD&A is presented in the following sections: • Overview • Results of Operations • Distilling Solutions Segment • Branded Spirits Segment • Ingredient Solutions Segment • Cash Flow, Financial Condition and Liquidity • Critical Accounting Estimates • New Accounting Pronouncements OVERVIEW MGP is a leading producer of branded and distilled spirits as well as food ingredient solutions.
MGP’s MD&A is presented in the following sections: • Overview • Results of Operations • Branded Spirits Segment • Distilling Solutions Segment • Ingredient Solutions Segment • Cash Flow, Financial Condition and Liquidity • Critical Accounting Estimates • New Accounting Pronouncements OVERVIEW MGP is a leading producer of branded and distilled spirits as well as food ingredient solutions.
(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.
(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.
(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.
(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.
(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.
(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.
(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.
(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.
(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.
(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.
In addition, if future revenues and contributions to our operating results for any of indefinite-lived intangible assets or Branded Spirits reporting unit deteriorate at rates in excess of our current projections, we may be required to record additional impairment charges to certain intangible assets.
In addition, if future revenues and contributions to our operating results for any of the indefinite-lived intangible assets or Branded Spirits reporting unit deteriorate at rates in excess of our current projections, we may be required to record additional impairment charges to certain intangible assets.
We have the option to evaluate qualitative factors to assess if goodwill and indefinite-lived intangible assets are impaired before quantifying the fair value of the reporting unit.
We have the option to evaluate qualitative factors to assess if goodwill and indefinite-lived intangible assets are impaired before quantifying the fair value of the reporting unit and indefinite-lived intangible asset.
Estimates in the determination of fair value of the reporting unit through the income approach were based on (i) discount rates based on the reporting unit’s weighed average cost of capital, (ii) future expected cash flows including revenue and operating margin projections, and (iii) long-term growth rates based on inflation forecasts, industry growth, and long-term economic growth potential.
Estimates in the determination of fair value of the reporting unit through the income approach were based on (i) discount rates based on the reporting unit’s weighted average cost of capital, (ii) future expected cash flows including revenue and operating margin projections, and (iii) long-term growth rates based on inflation forecasts, industry growth, and long-term economic growth potential.
The decrease in sales of the Distilling Solution segment is primarily related to the decrease in sales volume of white goods and other co-products, which was due to the closure of the Atchison Distillery during December 2023. The decrease in brown goods was primarily related to a decrease in net price/mix (as defined above), partially offset by increased sales volume.
The decrease in sales of the Distilling Solutions segment is primarily related to the decrease in sales volume of white goods and other co-products, which was due to the closure of the Atchison Distillery during December 2023. The decrease in brown goods was primarily related to a decrease in net price/mix (as defined above), partially offset by increased sales volume.
The favorable macro industry trends we anticipate will benefit our business include more consumer focus on high fiber and lower net carbs, high protein, plant-based protein, and non-GMO products. We continue to provide customer solutions, taking advantage of our position within growing consumer trends.
The favorable macro industry trends we anticipate will benefit our business include increasing consumer focus on high fiber and lower net carbs, high protein, plant-based protein, and non-GMO products. We continue to provide customer solutions, taking advantage of our position within growing consumer trends.
Cash used in financing activities for the year ended December 31, 2024 was $23,803, due to repurchases of Common Stock of $48,773 (see “Treasury Purchases” and “Share Repurchases”), and payments of dividends and dividend 32 equivalents of $10,630 (see Note 9, Equity and EPS for additional information), partially offset by net proceeds on long-term debt of $35,600 (see Long-Term and Short-Term Debt).
Cash used in financing activities for the year ended December 31, 2024 was $23,803, due to repurchases of Common Stock of $48,773 (see “Treasury Purchases” and “Share Repurchases”) and payments of dividends and dividend equivalents of $10,630 (see Note 9, Equity and EPS for additional information), partially offset by net proceeds on long-term debt of $35,600 (see “Long-Term and Short-Term Debt”).
For information on these risks and uncertainties and other factors that could affect the Company’s business, see the “Risk Factors” and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” of this Report and our other filings with the Securities and Exchange Commission (the “SEC”).
For information on these risks and uncertainties and other factors that could affect the Company’s business, see the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report and our other filings with the Securities and Exchange Commission (the “SEC”).
Financial Condition and Liquidity Our principal uses of cash in the ordinary course of business are for input costs used in our production processes, salaries, and investments supporting our strategic plan, such as capital expenditures, the aging of barreled distillate primarily to support our branded spirits segment, and potential mergers or acquisitions.
Our principal uses of cash in the ordinary course of business are for input costs used in our production processes, salaries, and investments supporting our strategic plan, such as capital expenditures, the aging of barreled distillate primarily to support our branded spirits segment, and potential mergers or acquisitions.
All statements, other than statements of historical facts, regarding the prospects of our industries and our prospects, plans, financial position, mission, and strategy may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements about our sources of cash being adequate; our capital expenditures; our ability to support our liquidity and operating needs through cash generated from operations; and our ability to obtain credit funding.
All statements, other than statements of historical facts, regarding the prospects of our industries and our prospects, plans, financial position, mission, and strategy may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements about our sources of cash being adequate; our ability to support our liquidity and operating needs through cash generated from operations and borrowings; and our capital expenditures.
As of December 31, 2024, approximately $50,000 of our facilities in Nelson County, Kentucky and approximately $39,300 of our facilities in Williamstown, Kentucky were financed with industrial revenue bonds.
As of December 31, 2025, approximately $50,000 of our facilities in Nelson County, Kentucky and approximately $39,300 of our facilities in Williamstown, Kentucky were financed with industrial revenue bonds.
Our overall liquidity reflects our strong business results and an effective cash management strategy that takes into account liquidity management, economic factors, and tax considerations. We expect our sources of cash to be adequate to provide for budgeted capital expenditures, potential mergers or acquisitions, and anticipated operating requirements for the next 12 months and beyond.
Our overall liquidity reflects our effective cash management strategy that takes into account liquidity management, economic factors, and tax considerations. We expect our sources of cash to be adequate to provide for budgeted capital expenditures, potential mergers or acquisitions, and anticipated operating requirements for the next 12 months and beyond.
These estimated changes in fair value are not necessarily representative of the actual impairment that would be recorded in the event of a fair value decline. The most sensitive assumption used in the analysis was a 10 percent discount rate.
These estimated changes in fair value are not necessarily representative of the actual impairment that would be recorded in the event of a fair value decline. The most sensitive assumption used in the analysis was an 11 percent discount rate.
These estimated changes in fair value are not necessarily representative of the actual impairment that would be recorded in the event of a fair value decline. The most sensitive assumption used in the analysis was a 10 percent discount rate.
These estimated changes in the fair value are not necessarily representative of the actual impairment that would be recorded in the event of a fair value decline. The most sensitive assumption used in the analysis was an 11 percent discount rate.
This goodwill impairment is included as a component of operating income in the Consolidated Statement of Income for the year ended December 31, 2024 and as a reduction of goodwill in the Consolidated Balance Sheet as of December 31, 2024.
This goodwill impairment is included as a component of operating income in the Consolidated Statement of Income (Loss) for the year ended December 31, 2025 and as a reduction of goodwill in the Consolidated Balance Sheet as of December 31, 2025.
Our Branded Spirits segment is also subject to unfavorable macro industry trends, which include inflation and interest rate impacts on consumers, increased competition as industry participants seek to capitalize on consumer trends, as well as changes in consumer consumption patterns.
Our Branded Spirits segment is also subject to unfavorable macro industry trends, which include inflation, tariffs, inflation and interest rate impacts on consumers, increased competition as consumer packaged good companies seek to capitalize on consumer trends, as well as changes in consumer consumption patterns.
As a result of the quantitative goodwill impairment test, we recorded an impairment charge of $73,755 to adjust the carrying amount of the Branded Spirits reporting unit to fair value.
As a result of the quantitative goodwill impairment test, we recorded an impairment charge of $132,122 to adjust the carrying amount of the Branded Spirits reporting unit to fair value.
Our strategy for the Ingredient Solutions segment is to expand and optimize our dietary fiber, plant proteins, and clean label starches; expand our extruded products platform; and continue to innovate and expand opportunities through research and development.
Our strategy for the Ingredient Solutions segment is to focus on enhancing our operational reliability, expand and optimize our dietary fiber, plant proteins, and clean label starches; expand our extruded products platform; and continue to innovate and expand opportunities through research and development.
This increase was partially offset by larger gross profit losses in the Atchison Distillery. 27 BRANDED SPIRITS SEGMENT BRANDED SPIRITS SALES Year Ended December 31, Year-versus-Year Sales Change Increase/ (Decrease) 2024 2023 $ Change % Change Premium plus $ 110,991 $ 105,465 $ 5,526 5 % Mid 63,454 75,676 (12,222) (16) Value 42,100 47,907 (5,807) (12) Other 24,271 24,885 (614) (2) Total Branded Spirits $ 240,816 $ 253,933 $ (13,117) (5) % Change in Year-versus-Year Sales Attributed to: Total (a) Volume (b) Net Price/Mix (c) Branded Spirits (5)% (7)% 2% Other Financial Information Year Ended December 31, Year-versus-Year Increase/(Decrease) 2024 2023 Change % Change Gross profit $ 118,196 $ 112,781 $ 5,415 5 % Gross margin % 49.1 % 44.4 % 4.7 pp (d) (a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.
The increase in gross margin was primarily driven by increased sales in the premium plus price tier. 26 Table of Contents BRANDED SPIRITS SALES Year Ended December 31, Year-versus-Year Sales Change Increase/(Decrease) 2024 2023 $ Change % Change Premium plus $ 110,991 $ 105,465 $ 5,526 5 % Mid 63,454 75,676 (12,222) (16) Value 42,100 47,907 (5,807) (12) Other 24,271 24,885 (614) (2) Total Branded Spirits $ 240,816 $ 253,933 $ (13,117) (5) % Change in Year-versus-Year Sales Attributed to: Total (a) Volume (b) Net Price/Mix (c) Branded Spirits (5)% (7)% 2% Other Financial Information Year Ended December 31, Year-versus-Year Increase/(Decrease) 2024 2023 Change % Change Gross profit $ 118,196 $ 112,781 $ 5,415 5 % Gross margin % 49.1 % 44.4 % 4.7 pp (d) (a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.
Cash used in investing activities for the year ended December 31, 2024 was $71,558, which primarily resulted from additions to property, plant and equipment of $71,181 (see “Capital Spending”).
Cash used in investing activities for the year ended December 31, 2025 was $45,525, which primarily resulted from additions to property, plant and equipment of $45,488 (see “Capital Spending”). Cash used in investing activities for the year ended December 31, 2024 was $71,558, which primarily resulted from additions to property, plant and equipment of $71,181 (see “Capital Spending”). Capital Spending.
Additionally, during 2024, the weighted average shares outstanding were impacted by shares repurchased, pursuant to the Company’s share repurchase program. 2024 to 2023 - Basic and diluted EPS was $1.56 in 2024, compared to $4.82 and $4.80, respectively in 2023.
Additionally, during 2024, the weighted average shares outstanding were impacted by shares repurchased pursuant to the Company’s share repurchase program. 2025 to 2024 - Basic and diluted EPS was $(4.99) in 2025, compared to $1.56 in 2024.
(b) Percentage points (“pp”). 24 2024 to 2023 - Operating income for 2024 decreased to $74,426 from $148,613 for 2023, primarily due to the $73,755 goodwill impairment related to the Branded Spirits segment recorded during the fourth quarter 2024, the decrease in gross profit in the Ingredient Solutions segment, the change in fair value of the contingent consideration liability related to the Penelope acquisition, the decrease in gross profit in the Distilling Solutions segment, and the increase in advertising and promotion expenses, as discussed above.
These decreases were partially offset by the decrease in advertising and promotion expenses, as discussed above. 2024 to 2023 - Operating income for 2024 decreased to $74,426 from $148,613 for 2023, primarily due to the $73,755 goodwill impairment related to the Branded Spirits segment recorded during the fourth quarter 2024, the decrease in gross profit in the Ingredient Solutions segment, the change in fair value of the contingent consideration liability related to the Penelope acquisition, the decrease in gross profit in the Distilling Solutions segment, and the increase in advertising and promotion expenses, as discussed above.
The estimated fair value of our indefinite-lived intangible assets was calculated based on the income approach that utilized the relief from royalty method. When estimating the fair value, we made certain assumptions for our future revenue projections, market royalty rates, and discount rates.
Indefinite-lived intangibles - The estimated fair value of our trade name indefinite-lived intangible assets within our Branded Spirits reporting unit was calculated based on the income approach that utilized the relief-from-royalty method. When estimating the fair value, we made certain assumptions for our future revenue projections, market royalty rates, and discount rates.
Additionally, these assumptions are generally interdependent and do not change in isolation. However, as it is reasonably possible that changes in assumptions could occur, as a sensitivity measure, we have presented the estimated effects of isolated changes in discount rates and royalty rates on fair value of indefinite-lived intangible assets.
However, as it is reasonably possible that changes in assumptions could occur, as a sensitivity measure, we have presented the estimated effects of isolated changes in discount rates and royalty rates on fair value of indefinite-lived intangible assets.
These increases were partially offset by increased input costs across all categories. 29 INGREDIENT SOLUTIONS SEGMENT INGREDIENT SOLUTIONS SALES Year Ended December 31, Year-versus-Year Sales Change Increase/ (Decrease) 2024 2023 $ Change % Change Specialty wheat starches $ 76,005 $ 66,050 $ 9,955 15 % Specialty wheat proteins 41,768 48,291 (6,523) (14) Commodity wheat starches 12,351 16,413 (4,062) (25) Commodity wheat proteins 481 982 (501) (51) Total Ingredient Solutions $ 130,605 $ 131,736 $ (1,131) (1) % Change in Year-versus-Year Sales Attributed to: Total (a) Volume (b) Net Price/Mix (c) Total Ingredient Solutions (1)% 4% (5)% Other Financial Information Year Ended December 31, Year-versus-year Increase/(Decrease) 2024 2023 Change % Change Gross profit $ 26,194 $ 46,967 $ (20,773) (44) % Gross margin % 20.1 % 35.7 % (15.6) pp (d) (a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.
However, it will take time to realize the benefits of these cost mitigation and reliability initiatives. 30 Table of Contents INGREDIENT SOLUTIONS SALES Year Ended December 31, Year-versus-Year Sales Change Increase/(Decrease) 2024 2023 $ Change % Change Specialty wheat starches $ 76,005 $ 66,050 $ 9,955 15 % Specialty wheat proteins 41,768 48,291 (6,523) (14) Commodity wheat starches 12,351 16,413 (4,062) (25) Commodity wheat proteins 481 982 (501) (51) Total Ingredient Solutions $ 130,605 $ 131,736 $ (1,131) (1) % Change in Year-versus-Year Sales Attributed to: Total (a) Volume (b) Net Price/Mix (c) Total Ingredient Solutions (1)% 4% (5)% Other Financial Information Year Ended December 31, Year-versus-year Increase/(Decrease) 2024 2023 Change % Change Gross profit $ 26,194 $ 46,967 $ (20,773) (44) % Gross margin % 20.1 % 35.7 % (15.6) pp (d) (a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.
(c) Net price/mix change is calculated by taking the difference between current period sales-per-unit and prior period sales-per unit, multiplied by current period sales volume. The product is then divided by prior period sales dollars. (d) Percentage points (“pp”). 2023 compared to 2022 Total Distilling Solutions sales for 2023 increased by $22,376, or 5 percent, compared to 2022.
(c) Net price/mix change is calculated by taking the difference between current period sales-per-unit and prior period sales-per unit, multiplied by current period sales volume. The product is then divided by prior period sales dollars. (d) Percentage points (“pp”). 2025 compared to 2024 Total Distilling Solutions sales for 2025 decreased by $150,804, or 45 percent, compared to 2024.
(c) Net price/mix change is calculated by taking the difference between current period sales-per-unit and prior period sales-per unit, multiplied by current period sales volume. The product is then divided by prior period sales dollars. (d) Percentage points (“pp”). 2023 compared to 2022 Total Ingredient Solutions sales for 2023 increased by $15,795, or 14 percent, compared to 2022.
(c) Net price/mix change is calculated by taking the difference between current period sales-per-unit and prior period sales-per unit, multiplied by current period sales volume. The product is then divided by prior period sales dollars. (d) Percentage points (“pp”). 2025 compared to 2024 Total Ingredient Solutions sales for 2025 decreased by $8,571, or 7 percent, compared to 2024.
For a further discussion of our annual impairment testing of goodwill and indefinite-lived intangible assets and the impairment charge to goodwill that we recorded in 2024, see Note 5, Goodwill and Other Intangible Assets.
For a further discussion of our annual impairment testing of goodwill and indefinite-lived intangible assets and the results of that testing, see Note 5, Goodwill and Other Intangible Assets.
We have identified the most critical accounting policies which involve the most complex and subjective judgments. These should be read in conjunction with the significant accounting policies discussed in Note 1, Nature of Operations and Summary of Significant Accounting Policies. Contingent Consideration .
We have identified the most critical accounting policies which involve the most complex and 34 Table of Contents subjective judgments. These should be read in conjunction with the significant accounting policies discussed in Note 1, Nature of Operations and Summary of Significant Accounting Policies. Goodwill and Indefinite-Lived Intangible Assets.
Diluted EPS decreased to $4.80 in 2023 from $4.92 in 2022, primarily due to the above described changes in basic EPS as well as the impact of dilutive shares outstanding related to the conversion feature of the Convertible Senior Notes. 25 DISTILLING SOLUTIONS SEGMENT DISTILLING SOLUTIONS SALES Year Ended December 31, Year-versus-Year Sales Change Increase/ (Decrease) 2024 2023 $ Change % Change Brown goods $ 265,873 $ 289,191 $ (23,318) (8) % Warehouse services 33,430 28,632 4,798 17 White goods and other co-products 32,901 133,031 (100,130) (75) Total Distilling Solutions $ 332,204 $ 450,854 $ (118,650) (26) % Change in Year-versus-Year Sales Attributed to: Total (a) Volume (b) Net Price/Mix (c) Brown goods (8)% 5% (13)% Other Financial Information Year Ended December 31, Year-versus-Year Increase/(Decrease) 2024 2023 Change % Change Gross profit $ 141,927 $ 144,964 $ (3,037) (2) % Gross margin % 42.7 % 32.2 % 10.5 pp (d) (a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.
The decrease in gross profit was due to lower brown goods sales volume and net price/mix, partially offset by increased gross profit in warehouse services. 28 Table of Contents DISTILLING SOLUTIONS SALES Year Ended December 31, Year-versus-Year Sales Change Increase/(Decrease) 2024 2023 $ Change % Change Brown goods $ 265,873 $ 289,191 $ (23,318) (8) % Warehouse services 33,430 28,632 4,798 17 White goods and other co-products 32,901 133,031 (100,130) (75) Total Distilling Solutions $ 332,204 $ 450,854 $ (118,650) (26) % Change in Year-versus-Year Sales Attributed to: Total (a) Volume (b) Net Price/Mix (c) Brown goods (8)% 5% (13)% Other Financial Information Year Ended December 31, Year-versus-Year Increase/(Decrease) 2024 2023 Change % Change Gross profit $ 141,927 $ 144,964 $ (3,037) (2) % Gross margin % 42.7 % 32.2 % 10.5 pp (d) (a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.
This increase was primarily driven by increased advertising and promotion investment in the Branded Spirits segment, primarily in the premium plus price tiers. SG&A expenses 2024 to 2023 - SG&A expenses for 2024 were $81,391, a decrease of 11 percent compared to 2023.
This increase was primarily driven by increased advertising and promotion investment in the Branded Spirits segment, specifically in the premium plus price tiers. SG&A expenses 2025 to 2024 - SG&A expenses for 2025 were $84,819, an increase of 4 percent compared to 2024.
Basic and diluted EPS EPS % Increase (Decrease) Basic EPS for 2022 $ 4.94 Change in operating income (a) (0.02) — pp (b) Change in interest expense (a) (0.04) (1) pp Change in other income (expense), net (a) 0.11 2 pp Change in weighted average shares outstanding (c) (0.02) — pp Change in effective tax rate (0.15) (3) pp Basic EPS for 2023 4.82 (2) % Impact of dilutive shares outstanding (0.02) (1) pp Diluted EPS for 2023 $ 4.80 (3) % EPS % Increase (Decrease) Basic EPS for 2023 $ 4.82 Change in operating income (a) (2.53) (52) pp (b) Change in interest expense (a) (0.06) (2) pp Change in other income (expense), net (a) 0.09 2 pp Change in weighted average shares outstanding (c) 0.01 — pp Change in effective tax rate (0.77) (16) pp Basic and diluted EPS for 2024 $ 1.56 (68) % (a) Items are net of tax based on the effective tax rate for each base year.
Basic and diluted EPS EPS % Increase (Decrease) Basic EPS for 2023 $ 4.82 Change in operating income (a) (2.53) (52) pp (b) Change in interest expense (a) (0.06) (2) pp Change in other income (expense), net (a) 0.09 2 pp Change in weighted average shares outstanding (c) 0.01 — pp Change in effective tax rate (0.77) (16) pp Basic and diluted EPS for 2024 $ 1.56 (68) % EPS % Increase (Decrease) Basic and diluted EPS for 2024 $ 1.56 Change in operating income (a) (3.84) (246) pp (b) Change in interest expense (a) 0.03 2 pp Change in other income (expense), net (a) (0.03) (2) pp Change in weighted average shares outstanding (c) (0.15) (10) pp Change in income attributable to participating securities (c) 0.04 3 pp Change in effective tax rate (2.60) (167) pp Basic and diluted EPS for 2025 $ (4.99) (420) % (a) Items are net of tax based on the effective tax rate for each base year.
The primary drivers of the changes in operating assets and liabilities were $18,155 use of cash related to an increase in inventories, primarily barreled distillate, and $15,111 use of cash related to accrued expenses and other related to reduced incentive compensation expenses. Cash provided by operating activities was $83,783 during the year ended December 31, 2023.
The primary drivers of the changes in operating assets and liabilities were $18,155 use of cash related to an increase in inventories, primarily barreled distillate, and $15,111 use of cash related to accrued expenses and other related to reduced incentive compensation expenses. Investing Activities.
At December 31, 2024, our cash balance was $25,273, and we have used our various debt agreements for liquidity purposes, with $295,000 available under our Credit Agreement for additional borrowings and $226,800 available under the Note Purchase Agreement (see Note 7, Corporate Borrowings for additional information).
At December 31, 2025, our cash balance was $18,460, and we have used our various debt agreements for liquidity purposes, with $458,000 available under our Credit Agreement for additional borrowings and $233,200 available under the Note Purchase Agreement (see Note 7, Corporate Borrowings for additional information).
Treasury Purchases. 81,942 RSUs vested and converted to common shares during the year ended December 31, 2024, of which we withheld and purchased for treasury 25,521 shares valued at $2,185 to cover payment of associated withholding taxes. 22,592 RSUs vested and converted to common shares during the year ended December 31, 2023, of which we withheld and purchased for treasury 8,437 shares valued at $801 to cover payment of associated withholding taxes.
Treasury Purchases. 105,776 RSUs vested and converted to Common Stock for employees during the year ended December 31, 2025, of which we withheld and purchased for treasury 31,631 shares valued at $1,035 to cover payment of associated withholding taxes. 81,942 RSUs vested and converted to Common Stock for employees during the year ended December 31, 2024, of which we withheld and purchased for treasury 25,521 shares valued at $2,185 to cover payment of associated withholding taxes.
These assumptions reflect our estimates of future economic and competitive conditions which consider many factors including macroeconomic conditions, industry growth rates and competition. These factors are subject to change as a result of changing market conditions. Any changes in these assumptions may affect our fair value estimate and the results of an impairment test.
These assumptions reflect our estimates of future economic and competitive conditions which consider many factors including macroeconomic conditions, industry growth rates and competition. These factors are subject to change as a result of changing market conditions.
Our ingredients products are sold directly, or through distributors, to manufacturers and processors of finished packaged goods or to bakeries. Our strategic plan is designed to leverage our history and strengths as well as the positive macro trends we see in the industries in which we compete, while providing better insulation from outside factors, including swings in commodity pricing.
Our strategic plan is designed to leverage our history and strengths as well as the positive macro trends we see in the industries in which we compete, while providing better insulation from outside factors, including swings in commodity pricing.
Cash provided by operating activities was $102,278 during the year ended December 31, 2024.
Cash provided by operating activities was $121,528 during the year ended December 31, 2025.
Cash Flow Summary Year Ended December 31, Changes, Year versus Year-Increase / (Decrease) 2024 2023 2022 2024 v. 2023 2023 v. 2022 Cash provided by operating activities $ 102,278 $ 83,783 $ 88,936 $ 18,495 $ (5,153) Cash used in investing activities (71,558) (159,242) (47,813) 87,684 (111,429) Cash provided by (used in) financing activities (23,803) 45,924 (14,764) (69,727) 60,688 Effect of exchange rate changes on cash and cash equivalents (32) 34 (38) (66) 72 Increase (decrease) in cash and cash equivalents $ 6,885 $ (29,501) $ 26,321 $ 36,386 $ (55,822) Operating Activities.
Cash Flow Summary Year Ended December 31, Changes, Year versus Year-Increase / (Decrease) 2025 2024 2023 2025 v. 2024 2024 v. 2023 Cash provided by operating activities $ 121,528 $ 102,278 $ 83,783 $ 19,250 $ 18,495 Cash used in investing activities (45,525) (71,558) (159,242) 26,033 87,684 Cash provided by (used in) financing activities (83,522) (23,803) 45,924 (59,719) (69,727) Effect of exchange rate changes on cash and cash equivalents 706 (32) 34 738 (66) Increase (decrease) in cash and cash equivalents $ (6,813) $ 6,885 $ (29,501) $ (13,698) $ 36,386 Operating Activities.
Distilled spirits include premium bourbon, rye, and other whiskeys (“brown goods”) and grain neutral spirits (“GNS”), including vodka and gin. Our distilled spirits are either sold directly or indirectly to manufacturers of other branded spirits. We have a portfolio of our own high quality branded spirits, which we produce through our distilleries and bottling facilities and sell to distributors.
Distilled spirits include premium bourbon, rye, and other whiskeys (“brown goods”) and grain neutral spirits (“GNS”), including vodka and gin. Our distilled spirits are either sold directly or indirectly to manufacturers of other branded spirits.
Sales 2024 to 2023 - Sales for 2024 were $703,625, a decrease of 16 percent compared to 2023, which was the result of decreased sales in each segment.
Branded Spirits segment sales decreased 3 percent, primarily due to decreased sales of brands within the value and mid price tiers. 2024 to 2023 - Sales for 2024 were $703,625, a decrease of 16 percent compared to 2023, which was the result of decreased sales in each segment.
The repurchase program has no expiration date and may be modified, suspended, or discontinued at any time by the Company without prior notice. During the year ended December 31, 2024, we repurchased 886,936 shares of Common Stock for approximately $46,588, resulting in approximately $53,412 remaining under the share repurchase program. Long-Term and Short-Term Debt.
During the year ended December 31, 2024, we repurchased 886,936 shares of Common Stock for approximately $46,588, resulting in approximately $53,412 remaining under the share repurchase program. Long-Term and Short-Term Debt.
Management judgment is required in the evaluation of qualitative factors, determination of reporting units, the assignment of assets and liabilities to reporting units, including goodwill, and the determination of fair value of the reporting units. To the extent that the carrying amount exceeds fair value, an impairment of goodwill is recognized and allocated to the reporting units.
Management judgment is required in the evaluation of qualitative factors, determination of reporting units, the assignment of assets and liabilities to reporting units, including goodwill, and the determination of fair value of the reporting units and indefinite-lived intangible assets.
Operating income Operating income % Increase (Decrease) Operating income for 2022 $ 148,965 Increase in gross profit - Distilling Solutions segment (a) 18,682 13 pp (b) Increase in gross profit - Branded Spirits segment (a) 17,260 12 pp Increase in gross profit - Ingredient Solutions segment (a) 15,464 10 pp Increase in advertising and promotion expenses (8,499) (6) pp Increase in SG&A expenses (16,768) (11) pp Impairment of long-lived assets and other (19,391) (13) pp Change in fair value of contingent consideration (7,100) (5) pp Operating income for 2023 148,613 — % Decrease in gross profit - Ingredient Solutions segment (a) (20,773) (14) pp (b) Decrease in gross profit - Distilling Solutions segment (a) (3,037) (2) pp Increase in gross profit - Branded Spirits segment (a) 5,415 4 pp Increase in advertising and promotion expenses (2,295) (2) pp Decrease in SG&A expenses 10,004 7 pp Decrease in impairment of long-lived assets and other 19,254 13 pp Goodwill impairment (73,755) (50) pp Change in fair value of contingent consideration (9,000) (6) pp Operating income for 2024 $ 74,426 (50) % (a) See segment discussion.
Operating income (loss) Operating income (loss) % Increase (Decrease) Operating income for 2023 $ 148,613 Decrease in gross profit - Ingredient Solutions segment (a) (20,773) (14) pp (b) Decrease in gross profit - Distilling Solutions segment (a) (3,037) (2) pp Increase in gross profit - Branded Spirits segment (a) 5,415 4 pp Increase in advertising and promotion expenses (2,295) (2) pp Decrease in SG&A expenses 10,004 7 pp Decrease in impairment of long-lived assets and other 19,254 13 pp Goodwill impairment (73,755) (50) pp Change in fair value of contingent consideration (9,000) (6) pp Operating income for 2024 74,426 (50) % Decrease in gross profit - Distilling Solutions segment (a) (73,325) (98) pp (b) Decrease in gross profit - Ingredient Solutions segment (a) (10,707) (14) pp Decrease in gross profit - Branded Spirits segment (a) (2,876) (4) pp Decrease in advertising and promotion expenses 9,425 13 pp Increase in SG&A expenses (3,428) (5) pp Decrease in impairment of long-lived assets and other 137 — pp Change in goodwill and indefinite-lived intangible asset impairment (78,867) (106) pp Change in fair value of contingent consideration (9,400) (13) pp Operating loss for 2025 $ (94,615) (227) % (a) See segment discussion.
Total debt was $323,541 (net of unamortized loan fees of $5,909) at December 31, 2024 and $287,249 (net of unamortized loan fees of $6,601) at December 31, 2023. Net borrowing on all debt for 2024 and 2023 were $35,600, and $57,400, respectively (see Note 7, Corporate Borrowings for additional information). Dividends and Dividend Equivalents.
Total debt was $252,318 (net of unamortized loan fees of $7,732) at December 31, 2025 and $323,541 (net of unamortized loan fees of $5,909) at December 31, 2024. Net payments on all debt for 2025 were $69,400 and net borrowings on all debt for 2024 were $35,600 (see Note 7, Corporate Borrowings for additional information).
These decreases were partially offset by the impact of the impairment of assets and other expenses in the prior year related to the closure of the Atchison Distillery which closed in December 2023, the decrease in SG&A expenses as discussed above, and the increase in gross profit in the Branded Spirits segment. 2023 to 2022 - Operating income for 2023 decreased to $148,613 from $148,965 for 2022, primarily due to the impairment of assets and other expenses of $19,391 related to the closure of the Atchison Distillery, increased SG&A expenses and advertising and promotion expenses as discussed above, and the change in fair value of contingent consideration of $7,100 related to the Penelope acquisition.
These decreases were partially offset by the impact of the impairment of assets and other expenses in the prior year related to the closure of the Atchison Distillery which closed in December 2023, the decrease in SG&A expenses as discussed above, and the increase in gross profit in the Branded Spirits segment.
The 25.2 percentage point increase was primarily due to the nondeductible impairment of goodwill, partially offset by a decrease in valuation allowance. 2023 to 2022 - Income tax expense for 2023 was $34,616, for an effective tax rate for the year of 24.4 percent.
The 25.2 percentage point increase was primarily due to the nondeductible impairment of goodwill, partially offset by a decrease in valuation allowance.
As discussed above, any significant decline in our market capitalization or changes in discount rates, even if due to macroeconomic factors, could put pressure on the carrying value of our goodwill.
A 50 basis point change in the discount rate, the average revenue projection, or long-term growth rate would result in an immaterial change in the impairment expense recorded. As discussed above, any further significant decline in our market capitalization or changes in discount rates, even if due to macroeconomic factors, could put pressure on the carrying value of our goodwill.
A 50 basis point increase to the discount rate would result in an approximate $17,000 increase in the impairment expense recorded, while a 50 basis point decrease in the rate would result in an approximate $20,000 decrease in the impairment expense recorded. The revenue projections and long-term growth rate assumptions are less sensitive.
A 50 basis point increase to the discount rate would result in an approximate $17,500 increase in the impairment expense recorded, while a 50 basis point decrease in the rate would result in an approximate $19,500 decrease in the impairment expense recorded. .
(c) Net price/mix change is calculated by taking the difference between current period sales-per-unit and prior period sales-per unit, multiplied by current period sales volume. The product is then divided by prior period sales dollars. (d) Percentage points (“pp”). 2023 compared to 2022 Total Branded Spirits sales for 2023 increased by $15,994, or 7 percent compared to 2022.
(c) Net price/mix change is calculated by taking the difference between current period sales-per-unit and prior period sales-per unit, multiplied by current period sales volume. The product is then divided by prior period sales dollars.
Cash provided by financing activities for the year ended December 31, 2023 was $45,924, primarily due to net proceeds on long-term debt of $57,400 (see Long-Term and Short-Term Debt), partially offset by payments of dividends and dividend equivalents of $10,675 (see Note 9, Equity and EPS for additional information).
Cash used in financing activities for the year ended December 31, 2025 was $83,522, due to net payments on long-term debt of $69,400 (see “Long-Term and Short-Term Debt”), payments of dividends and dividend equivalents of $10,325 (see Note 9, Equity and EPS for additional information), and payments of loan fees of $2,762 (see “Long-Term and Short-Term Debt”).
(b) Includes open purchase order commitments related to raw materials and packaging used in the ordinary course of business of $68,696. (c) Excludes variable interest on long-term debt. Industrial Revenue Bonds We are in the process of completing several projects that have been financed using industrial revenue bonds in the state of Kentucky.
(b) Includes open purchase order commitments related to raw materials and packaging used in the ordinary course of business of $50,837. (c) Excludes variable interest on long-term debt.
Gross profit 2024 to 2023 - Gross profit for 2024 was $286,317, a decrease of 6 percent compared to 2023. The decrease was driven by a decrease in gross profit in the Ingredient Solutions and Distilling Solutions segments, partially offset by an increase in gross profit in the Branded Spirits segment.
The decrease was driven by a decrease in gross profit in the Ingredient Solutions and Distilling Solutions segments, partially offset by an increase in gross profit in the Branded Spirits segment. The Ingredient Solutions segment gross profit decreased by $20,773, or 44 percent. The Distilling Solutions segment gross profit decreased by $3,037, or 2 percent.
See Note 9, Equity and EPS for further discussion. On February 26, 2025, we announced a dividend payable to stockholders of record of our Common Stock, resulting in dividend equivalents payable to RSU holders, of $0.12 per share and per RSU.
On February 25, 2026, we announced a dividend payable to stockholders of record of our Common Stock, resulting in dividend equivalents payable to RSU holders, of $0.12 per share and per RSU. The dividend and dividend equivalent are payable on March 27, 2026 to stockholders of record and RSU holders as of March 13, 2026.
Our branded spirits products account for a range of price points from value products through premium plus brands. Our protein and starch food ingredients serve a host of functional, nutritional, and sensory benefits for a wide range of food products to serve the consumer packaged goods industry.
Our protein and starch food ingredients serve a host of functional, nutritional, and sensory benefits for a wide range of food products to serve the consumer packaged goods industry. Our ingredient products are sold directly, or through distributors, to manufacturers and processors of finished packaged goods or to bakeries.
We expect approximately $36,000 in capital expenditures for 2025, which we expect to use for facility improvement and expansion, facility sustenance projects, and environmental health and safety projects. Financing Activities .
The difference between the amount of capital expenditures incurred and amount paid is due to the change in capital expenditures in accounts payable. We expect approximately $20,000 in capital expenditures for 2026, which we expect to use for facility improvement and facility sustenance projects, and environmental health and safety projects. Financing Activities .
We have incurred $73,161, $61,108, and $47,859 of capital expenditures and have paid $71,181, $55,267, and $45,323 for capital expenditures for the years ended December 31, 2024, 2023 and 2022, respectively. The difference between the amount of capital expenditures incurred and amount paid is due to the change in capital expenditures in accounts payable.
We manage capital spending to support our business growth plans. We have incurred $31,887, $73,161, and $61,108 of capital expenditures and have paid $45,488, $71,181, and $55,267 for capital expenditures for the years ended December 31, 2025, 2024 and 2023, respectively.
Our strategy for the Branded Spirits segment is to focus on the right brands at the right price points in the right spirits categories to maximize profit for the Company. Additionally, our strategy is to grow our overall points of distribution, increase innovation, build brand awareness, and continue to invest in our people.
Our strategy for the Branded Spirits segment is to 21 Table of Contents focus on the right brands at the right price points in the right spirits categories to maximize our profits.
Subject to market conditions, we could also fund future mergers and acquisitions through the issuance of additional shares of Common Stock.
We utilize short-term and long-term debt to fund discretionary items, such as capital investments, dividend payments, share repurchases, as well as potential mergers or acquisitions. Subject to market conditions, we could also fund future mergers and acquisitions through the issuance of additional shares of Common Stock or preferred stock.
Goodwill - We engaged a third party valuation specialist to assist in comparing the fair value of the Branded Spirits reporting unit to the respective carrying value.
We performed a quantitative assessment of goodwill and our indefinite-lived intangible assets as part of our annual impairment test in accordance with our accounting policy during the fourth quarter. Goodwill - We engaged a third party valuation specialist to assist in comparing the fair value of the Branded Spirits reporting unit to the respective carrying value.
Ingredient Solutions segment sales decreased 1 percent, primarily due to decreased sales of specialty wheat proteins and commodity wheat starches, partially offset by increased sales of specialty wheat starches. 2023 to 2022 - Sales for 2023 were $836,523, an increase of 7 percent compared to 2022, which was the result of increased sales in the Distilling Solutions, Branded Spirits, and Ingredient Solutions segments.
Ingredient Solutions segment sales decreased 1 percent, primarily due to decreased sales of specialty wheat proteins and commodity wheat starches, partially offset by increased sales of specialty wheat starches. Gross profit 2025 to 2024 - Gross profit for 2025 was $199,409, a decrease of 30 percent compared to 2024. The decrease was driven by decreased gross profit in each segment.
These impacts were mostly offset by increased gross profit in all three segments. Income tax expense 2024 to 2023 - Income tax expense for 2024 was $33,977, for an effective tax rate for the year of 49.6 percent. Income tax expense for 2023 was $34,616, for an effective tax rate for the year of 24.4 percent.
The 57.1 percentage point decrease was primarily due to the nondeductible impairment of goodwill. 2024 to 2023 - Income tax expense for 2024 was $33,977, for an effective tax rate for the year of 49.6 percent. Income tax expense for 2023 was $34,616, for an effective tax rate for the year of 24.4 percent.
The decrease in SG&A expenses was primarily due to reduced incentive compensation expenses. 2023 to 2022 - SG&A expenses for 2023 were $91,395, an increase of 22 percent compared to 2022.
The increase in SG&A expenses was primarily driven by increased incentive compensation as compared to the prior year, which was partially offset by our cost savings initiative. 2024 to 2023 - SG&A expenses for 2024 were $81,391, a decrease of 11 percent compared to 2023. The decrease in SG&A expenses was primarily due to reduced incentive compensation expenses.
All else equal, a 50 basis point change in the average revenue projection or long-term growth rate would result in a change in impairment expense between $5,000 and $15,000. Indefinite-lived intangibles - Additionally, in connection with the assessment of the same events and circumstances as discussed above, we performed a quantitative impairment test of our indefinite-lived intangible assets.
All else equal, a 50 basis point change in the average revenue projection or long-term growth rate would result in a change in impairment expense between $10,500 and $13,500.
The cash provided by operating activities during 2023 resulted primarily from net income of $107,130, and adjustments for non-cash or non-operating charges of $56,263, including depreciation and amortization, impairment of long-lived assets and other, share-based compensation, partially offset by uses of cash due to changes in operating assets and liabilities of $79,610.
The cash provided by operating activities during 2025 resulted primarily from a net loss of $107,832, offset by adjustments for non-cash or non-operating charges of $203,136, including goodwill and indefinite-lived intangible asset impairment, the change in the fair value of the contingent consideration, and depreciation and amortization; cash provided by the changes in operating assets and liabilities of $26,224.
This increase was primarily driven by increased advertising and promotion investment in the Branded Spirits segment, specifically in the premium plus price tiers. 2023 to 2022 - Advertising and promotion expenses for 2023 were $38,213, an increase of 29 percent compared to 2022.
This decrease was primarily driven by the realignment of our advertising and promotion spend to brands in our Branded Spirits segment we believe to have the most attractive growth opportunities. 2024 to 2023 - Advertising and promotion expenses for 2024 were $40,508, an increase of 6 percent compared to 2023.
The increase in Ingredient Solutions sales was driven by increases in sales in all product lines. The higher sales of specialty wheat proteins was driven by higher net price/mix and higher sales volume. Additionally, sales of specialty wheat starches and commodity wheat starches increased primarily due to higher net price/mix, partially offset by lower sales volume.
The decrease was primarily driven by decreased sales volume of specialty wheat starches and commodity wheat starches as well as decreased net price/mix of specialty wheat proteins.
The results of the quantitative assessment indicated that the estimated fair values for the indefinite-lived intangible assets exceed their carrying value and no impairment loss was recognized for the year ended December 31, 2024. 35 Assumptions used in impairment testing are made at a point in time and require significant judgment; therefore, they are subject to change based upon the facts and circumstances present at each impairment test date.
Assumptions used in impairment testing are made at a point in time and require significant judgment; therefore, they are subject to change based upon the facts and circumstances present at each impairment test date. Additionally, these assumptions are generally interdependent and do not change in isolation.
This decline was partially offset by the positive impact the closure of the Atchison Distillery had on white goods and other co-products’ gross profit and gross margin. 26 DISTILLING SOLUTIONS SALES Year Ended December 31, Year-versus-Year Sales Change Increase/ (Decrease) 2023 2022 $ Change % Change Brown goods $ 289,191 $ 229,523 $ 59,668 26 % Warehouse services 28,632 23,598 5,034 21 White goods and other co-products 133,031 175,357 (42,326) (24) Total Distilling Solutions $ 450,854 $ 428,478 $ 22,376 5 % Change in Year-versus-Year Sales Attributed to: Total (a) Volume (b) Net Price/Mix (c) Brown goods 26% 3% 23% Other Financial Information Year Ended December 31, Year-versus-Year Increase/(Decrease) 2023 2022 Change % Change Gross profit $ 144,964 $ 126,282 $ 18,682 15 % Gross margin % 32.2 % 29.5 % 2.7 pp (d) (a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.
This decline was partially offset by the positive impact the closure of the Atchison Distillery had on white goods and other co-products’ gross profit and gross margin. 29 Table of Contents INGREDIENT SOLUTIONS SEGMENT INGREDIENT SOLUTIONS SALES Year Ended December 31, Year-versus-Year Sales Change Increase/(Decrease) 2025 2024 $ Change % Change Specialty wheat starches $ 68,124 $ 76,005 $ (7,881) (10) % Specialty wheat proteins 39,915 41,768 (1,853) (4) Commodity wheat starches 10,371 12,351 (1,980) (16) Commodity wheat proteins 3,109 481 2,628 546 Biofuel and other 515 — 515 N/A Total Ingredient Solutions $ 122,034 $ 130,605 $ (8,571) (7) % Change in Year-versus-Year Sales Attributed to: Total (a) Volume (b) Net Price/Mix (c) Total Ingredient Solutions (7)% (6)% (1)% Other Financial Information Year Ended December 31, Year-versus-year Increase/(Decrease) 2025 2024 Change % Change Gross profit $ 15,487 $ 26,194 $ (10,707) (41) % Gross margin % 12.7 % 20.1 % (7.4) pp (d) (a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.
The Ingredient Solutions segment gross profit decreased by $20,773, or 44 percent. The Distilling Solutions segment gross profit decreased by $3,037, or 2 percent. The Branded Spirits segment gross profit increased by $5,415, or 5 percent. 23 2023 to 2022 - Gross profit for 2023 was $304,712, an increase of 20 percent compared to 2022.
The Distilling Solutions segment gross profit decreased by $73,325, or 52 percent. The Ingredient Solutions segment gross profit decreased by $10,707, or 41 percent. The Branded Spirits segment gross profit decreased by $2,876, or 2 percent. 23 Table of Contents 2024 to 2023 - Gross profit for 2024 was $286,317, a decrease of 6 percent compared to 2023.
The primary drivers of the changes in operating assets and liabilities were $46,921 use of cash related to an increase in inventories, primarily barreled distillate, and $32,397 use of cash related to an increase in receivables. Investing Activities.
These increases in operating assets and liabilities were partially offset by $18,145 use of cash related to an increase in inventories, primarily barreled distillate. Cash provided by operating activities was $102,278 during the year ended December 31, 2024.
Branded Spirits segment sales for 2024 decreased 5 percent over the prior year. Ingredient Solutions Segment Our Ingredient Solutions segment mission is to remain a strategic business partner of choice earning meaningful relationships through collaboration, innovation, and dedication to best-in-class customer service.
Distilling Solutions segment sales for 2025 decreased 45 percent over the prior year. Ingredient Solutions Segment Our Ingredient Solutions segment mission is to remain a strategic business partner in specialty ingredients providing premium dietary fiber and plant protein supporting health and wellness brands.
This increase was partially offset by a decrease in sales of white goods and other co-products which was driven primarily by lower sales volume in connection with the Atchison Distillery closure, partially offset by higher net price/mix. Gross profit increased year versus year by $18,682, or 15 percent.
This decrease was partially offset by increased sales volume within the premium plus price tier, reflecting the continued momentum of the Penelope brand. The increase in sales volume within the premium plus price tier was partially offset by decreased net price/mix. Gross profit decreased year versus year by $2,876, or 2 percent.
Operating cash flow and borrowings through our Credit Agreement, Convertible Senior Notes and Note Purchase Agreement (see Note 7, Corporate Borrowings) provide the primary sources of cash to fund operating needs and capital expenditures. These same sources of cash are used to fund stockholder dividends and other discretionary uses.
These sources of cash are used to fund our operating needs, capital expenditures, stockholder dividends and other discretionary uses. We continue to monitor market conditions which may create credit and economic challenges that could adversely impact our cash flow from operating activities and cash provided by borrowings.

… 65 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed6 unchanged
Biggest changeBased on weighted average outstanding fixed-rate borrowings at December 31, 2024, a 100 basis point increase in market rates would result in a decrease in the fair value of our outstanding fixed-rate debt of $25,467, and a 100 basis point decrease in market rates would result in an increase in the fair value of our outstanding fixed-rate debt of $9,138. 36
Biggest changeBased on weighted average outstanding fixed-rate borrowings at December 31, 2025, a 100 basis point increase in market rates would result in a decrease in the fair value of our outstanding fixed-rate debt of $16,827, and a 100 basis point decrease in market rates would result in an increase in the fair value of our outstanding fixed-rate debt of $19,506. 36 Table of Contents
Based on weighted average outstanding variable-rate borrowings at December 31, 2024, a 100 basis point increase over the current rates actually in effect at such date would increase our interest expense on an annual basis by $1,050.
Based on weighted average outstanding variable-rate borrowings at December 31, 2025, a 100 basis point increase over the current rates actually in effect at such date would increase our interest expense on an annual basis by $420.

Other MGPI 10-K year-over-year comparisons