Good morning, and welcome to the MGP Ingredients Third Quarter of 2025 Earnings Conference Call. Please note that this event is being recorded today. I will now hand the conference over to Amit Sharma, Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to MGP's Third Quarter Earnings Conference Call. I'm Amit Sharma, Vice President of Investor Relations. And this morning, I'm joined on the call by Julie Francis, our Chief Executive Officer; and Brandon Gall, our Chief Financial Officer. We will begin the call with management's prepared remarks and then open to your questions. Before we begin, this call may involve certain forward-looking statements. The company's actual results could differ materially from any forward-looking statements due to a number of factors, including the risk factors described in the company's annual report filed with the SEC. The company assumes no obligation to update any forward-looking statements made during the call, except as required by law. Additionally, this call will contain references to certain non-GAAP measures, which we believe are useful in evaluating the company's performance. A reconciliation of these measures to the most comparable GAAP measures is included in today's earnings release, which was issued this morning before the markets opened and is available on our website, www.mgpingredients.com. At this time, I would like to turn the call over to Julie for her opening remarks.

Thank you, Amit. Good morning, everyone. As we review our third quarter results, I want to begin by sharing reflections from my time in the business and how it's shaping our priorities and actions. I will then provide an update of our 5 key initiatives before handing it over to Brandon for a deeper review of our third quarter results and updated guidance. These first few months truly have been a whirlwind as I've traveled around the country to visit our distilleries, bottling facilities, manufacturing plants, as well as to meet with our distribution partners and retailers in the market. Most importantly, I've had honest and candid conversations with a broad cross-section of our organization, hosting more than 60 one-on-ones and several town hall meetings. I'm also appreciative of the feedback and conversations I've had with investors and analysts as well. MGP is a company with a proud heritage, strong brands, and amazing people who are passionate about our business. What I've seen is inspiring and the opportunity now is to harness that passion with greater focus, performance, and accountability to drive meaningful progress. While we fully recognize the challenges facing our industry and our company, we are committed to improving our strategic clarity, taking decisive actions, controlling the controllables, and emerging stronger. This will not be an overnight fix. Some initiatives will bear fruit quickly, while others will take a bit longer, but the work is already underway. While it's too early to get into specifics, let me share a few highlights. First, we are conducting an exhaustive strategic review of our business and using a thorough approach that takes the time to ask these hard questions: What capabilities will differentiate us in the future? How do we allocate resources that ensure both growth and discipline? Where can we create the most value? This is not just a planning exercise. It's about execution and a data-driven approach to ensure that we are making the right choices, establishing clear priorities, setting ambitious targets, and ensuring accountability for results. Another key component of the strategic work is a more active portfolio management of our spirits brands. While having a branded portfolio spanning across all price points and categories is an undeniable strength, we believe that the opportunity ahead lies in being more precise and focused, prioritizing the brands with the greatest potential, distinctive positioning, and scalable growth while trimming persistent underperformers. The goal is clear: a streamlined, more balanced portfolio that drives sustainable growth and delivers higher margins. As part of these plans this morning, we announced the appointment of Matias Bentel as our Chief Marketing Officer; and Chris Wiseman as Senior Vice President of Operations. I am confident that Matias' strong expertise and deep experiences in building and growing brands at Brown-Forman and other leading alcoholic beverage companies will be instrumental in accelerating our branded growth agenda. Strengthening operational execution is another key component of our strategic agenda. Chris' appointment to lead our operations underscores our commitment to and deliberate focus on strengthening operational reliability, agility, and efficiency across the enterprise. To fuel growth, we are focusing on unlocking additional cost savings. MGP has always been an efficient operator and our current initiatives are delivering excellent results. As we look ahead, we are developing scalable and repeatable processes that promote a continuous improvement mindset, foster cross-functional collaboration, and build a robust pipeline of projects designed to unlock additional productivity and savings. I am encouraged and energized by the enthusiasm and alignment I see across the organization and look forward to sharing the strategic road map for the next phase of our growth with you early next year. Now turning to our third quarter results. We delivered another strong quarter and are seeing early signs of progress across many parts of our business. The environment remains challenging, but our results continue to reflect the strength of our brands, the resilience of our businesses and the focus of our team. We are leveraging MGP's unique capabilities to navigate the near-term while positioning the company for better results ahead. There's more work to be done, but the foundation we are building is solid and gives us confidence in MGP's long-term potential. For the third quarter, consolidated sales declined 19% as the continued growth in our premium plus portfolio and higher specialty ingredient sales were offset by the expected declines in brown goods and mid- to value brands. Adjusted EBITDA declined to $32 million, while adjusted basic earnings per share reached $0.85, both above our expectations, reflecting favorable mix improvements, pricing discipline, and productivity initiatives. Our solid cash flows continue to be a key highlight with year-to-date operating cash flows up 26% for the same period last year to $93 million. With another quarter of solid delivery, we are confident in finishing the year ahead of our previous expectations. Brandon will provide greater detail on our updated guidance shortly, but we are raising our full-year 2025 adjusted EBITDA and adjusted earnings per share guidance to the range of $110 million to $115 million and $2.60 to $2.75 of EPS, respectively, while tightening our sales guidance to a range of $525 million to $535 million. This has been a period of transition for our company, our customers, and the broader alcoholic industry. Despite these challenges, our team continue to advance our 5 key initiatives for 2025, which are: sharpen our commercial focus; strengthen key customer relationships; improve operational execution; fortify our balance sheet; and drive greater productivity. Let me provide brief highlights of our progress on each of these initiatives. Beginning with our focus initiative, Branded Spirits, which we believe is the main engine of growth and value creation for MGP. Our decision to focus our A&P investments behind the most attractive growth opportunities continues to deliver results as our premium plus portfolio once again outperformed the overall category. The most tangible example of this focused approach is Penelope Bourbon as it continues to exceed expectations. According to Nielsen dollar sales data for the past 52 weeks, Penelope now ranks among the top 30 premium plus American whiskey brands in the country. Even more impressively, it has been the second fastest-growing brand in this group over the last 52 weeks and the fastest-growing over the past 13 to 26 weeks. Our team's relentless focus has fueled Penelope's remarkable growth since acquisition. We are applying that same discipline to elevate other brands in our portfolio, new tools, including brand health dashboards and advanced analytics are enabling smarter A&P decisions, sharper insights, and stronger brand equity across the portfolio. Innovation is central to our growth agenda as it enables us to meet consumers where they are in terms of quality, price points, occasions, and convenience. Our exciting new product launches in the fast-growing ready-to-pour cocktail segment demonstrate how we are applying our deeper understanding of consumer insights and category trends. The Penelope Black Walnut Old Fashioned launched during the third quarter is off to a strong start, building on the success of Penelope Peach Old Fashioned that launched earlier this year. We also introduced 3 new cocktails under the Yellowstone brand to further expand our presence in this fast-growing segment. With their beautiful presentation, approachable price point, and desirable alcohol proof, these new products are directly addressing consumer need for high-quality, affordable, and convenient crafted cocktails, making them an especially attractive entry point for females and new to whiskey drinkers. The year-to-date results in our distilling business show that our second initiative to strengthen partnership with key customers is working. Though sales and profits declined during the quarter, they came in ahead of our expectations, reflecting disciplined pricing, operational efficiencies, and better-aged whiskey sales. Throughout the year, we have maintained a close engagement with our key distilling customers to align on their production needs. While some customers have paused their near-term whiskey purchases as they rebalance their inventories, most have expressed their commitment to a continued long-term strategic partnership with MGP. Our commercial teams are working closely with them to develop innovative solutions that leverage our unrivaled scale and aged whiskey inventories as well as our high-quality and flexible production capabilities to offer premium gin, white spirits, specialty grain distillates in addition to brown goods. Importantly, our customers recognize our differentiated value proposition. And last month, Diageo North America named MGP as one of its distinguished suppliers, a meaningful acknowledgment of our strong partnership and contribution to the success of their brands. I'm also pleased to see that the broader domestic whiskey industry continues to recalibrate to the current environment. According to TTB data through June of 2025, total U.S. whiskey production is down 19% over the prior 12 months, down 28% over the prior 6 months, and down 32% over the prior 3 months. While inventories remain high, this trend is an encouraging signal that the market is working through its imbalance. We believe this rational behavior by the broader industry, combined with our strong partnership with strategic customers, will position MGP to emerge stronger once brown goods supply and demand dynamics normalize. Turning to our Ingredient Solutions segment, we are pleased with the ongoing top-line momentum in this business. However, operational execution fell short of our expectations and pressured segment margins. This resulted from an unanticipated equipment outage and lower operational reliability, elevated waste starch disposal costs, and higher start-up costs in our textured protein business. This critical equipment outage pressured our third quarter performance and is expected to remain a headwind in the fourth quarter, which is reflected in our revised full-year outlook. We are taking decisive actions to strengthen operational reliability. We've increased plant staffing, raised maintenance capital, and engaged an external engineering firm to partner with our operations team for a comprehensive review of plant performance. Together, we are addressing critical process dependency, restructuring key workflows, and implementing predictive analytics and enhanced preventative maintenance protocols to identify and resolve potential issues before they impact production. I am confident that the addition of Chris Wiseman to lead our operations team will further strengthen and accelerate these initiatives, enabling us to return to our targeted level of performance in the coming quarters. While the newly operational biofuel plant is expected to mitigate our waste starch disposal costs, these costs were higher than expected during the quarter due to operational challenges during start-up. Learnings from that start-up are already helping us refine our processes. And as production ramps up, we expect the biofuel plant to provide greater relief on waste starch disposal costs over time. And lastly, our extrusion protein business is gaining traction as we expand our portfolio beyond wheat to soybean and pea-based proteins to compete more effectively across the full extrusion segment. During the quarter, we secured a large new customer, underscoring the potential of this expanded platform. While start-up costs associated with this commercialization effort temporarily pressured margins, we expect these costs to moderate as volumes ramp up and the businesses scale. Even as we make steady progress on these operational challenges in the Ingredient Solutions segment, commercially, we continue to have a clear right to win in this segment. Consumer demand for high-fiber and high-protein foods continues to accelerate, and we are well positioned to capture this growth. The specialty starch and protein categories are expected to post mid- to high single-digit growth over the next five years according to industry reports. Our flagship Fibersym and Arise brands are already category leaders, and our R&D teams are partnering with a growing number of leading food manufacturers to incorporate our specialty ingredients into their new existing products. We also continue to collaborate with leading university and research institutions to expand the functionality and application of these ingredients. With these commercial strengths and ongoing progress towards restoring operational excellence, we believe that we're well positioned to deliver solid top line and margin growth in our Ingredient Solutions business over the next several years. Our last two initiatives to fortify our balance sheet and drive productivity savings remain firmly on track. Brandon will provide additional details on these two key initiatives, but I'm pleased with our financial strength and our team's efforts to drive efficiencies throughout the enterprise. Let me close by saying that we are doing what we said we will do, controlling the controllables and being transparent about what's working and what's not working. This balance between accountability and opportunity guides how we view our businesses and how we communicate about them. While the path ahead is unlikely to be linear, it's increasingly becoming well defined. As we look ahead, we are continuing to build on the strength of our differentiated customer value propositions across each of our businesses. I see greater alignment, stronger commercial execution, a clear view of where we can win and a growing sense of confidence and optimism across the organization. With that, let me hand it over to Brandon for a review of our quarter and updated guidance.

Thank you, Julie. For the third quarter of 2025, consolidated sales decreased 19% to $131 million compared to the year-ago period. Within our segments, third quarter sales for the Branded Spirits segment decreased by 3%. Our premium plus sales posted a third consecutive quarter of positive growth, driven by the continued momentum of the Penelope Bourbon brand. However, premium plus performance was more than offset by the expected softness in the rest of this segment, including a 7% collective decline in the mid and value brands. Distilling Solutions segment sales declined by 43% compared to the prior year period. Although our brown goods sales decreased by 50%, our year-to-date sales and margin are trending above our initial outlook, reflecting higher aged whiskey sales and the success of our proactive partnership approach with key customers. Given that, we now expect 2025 Distilling Solutions sales and gross profit to be down 46% and 55%, respectively, from prior year relative to our previous outlook of down 50% and 65%. Ingredient Solutions sales increased by 9% compared to the prior year quarter, primarily due to higher specialty and commodity wheat protein sales. Third quarter gross profit, however, declined by 36% due to equipment outage and other operational reliability issues that Julie mentioned earlier. While we have a good line of sight to resolving these issues, they'll remain a headwind in the fourth quarter. As a result, we now expect Ingredient Solutions segment sales and gross profit to be down mid- to high single digits and approximately 40% for the full year, respectively. Consolidated gross profit decreased 25% to $49 million, primarily due to lower gross profits in the Distilling Solutions and Ingredient Solutions operating segments. Gross margin declined by 300 basis points to 37.8%. Third quarter SG&A expenses increased by 10%. But on an adjusted basis, this increase was reduced to 4%. It's important to note also that when removing the impact from the reinstatement of the incentive accrual in 2025, adjusted SG&A was down 9% due primarily to our productivity initiatives. Advertising and promotion expenses declined 31% as we continue to realign our spending behind our most attractive growth opportunities. For the full year, we continue to expect Branded Spirits A&P to be approximately 12% of Branded Spirits segment sales, largely in line with the year-to-date trends. Adjusted EBITDA decreased 29% to $32 million, primarily due to lower gross profit. Net income declined to $15 million, primarily due to lower operating results. On an adjusted basis, net income decreased 36% to $18 million. Basic earnings per common share decreased to $0.71 per share, while adjusted basic earnings per share decreased 34% to $0.85 per share. Year-to-date cash flows from operations increased 26% to $93 million as we continue to prioritize strong cash generation by managing our working capital, including barrel inventory putaway. Our year-to-date barrel putaway reduced to $16 million, and we continue to expect the full year net putaway to be in the $16 million to $20 million range relative to $33 million in 2024. Capital expenditures were $7 million during the quarter and $25 million year-to-date. We continue to expect full year 2025 CapEx of $32.5 million, a reduction of more than 50% from last year as we continue to streamline capital expenditures in the current environment. Our balance sheet remains healthy. We remain well capitalized to support the Penelope contingent consideration payment, and we'll be prudent in our support of ongoing operations, long-term growth investments, and future capital structure considerations. We ended the quarter with total debt of $269 million and net debt leverage ratio of 1.8x. Given the encouraging year-to-date results, we are raising our full-year adjusted EBITDA and adjusted EPS guidance while tightening the guidance range for sales. We now expect 2025 sales to be in the $525 million to $535 million range, adjusted EBITDA to be in the $110 million to $115 million range and adjusted basic earnings per share to be in the $2.60 to $2.75 range. For the full year, we continue to expect average shares outstanding of approximately 21.4 million and an effective tax rate of approximately 25%. For the final quarter of the year, our focus remains on staying close to our customers, keeping tight control of costs, maintaining financial discipline, and allocating capital carefully to the areas that we believe create the greatest value. I'm proud of how our teams are navigating this period and confident that the foundation we are building today under Julie's leadership will support durable, profitable growth in the years ahead. With that, let me now hand it over to Julie before opening for your questions.

Thank you, Brandon. As we look ahead, our focus remains on delivering results with confidence and credibility. We're working to create a more resilient business model, one that can weather industry cycles and still deliver sustained growth. That means making the tough decisions, prioritizing the highest return opportunities, driving operational excellence, and supporting our businesses with the right level of investment. There is still work ahead. But what encourages me most is how aligned our team has become around the company's direction and purpose. That alignment, combined with our strong balance sheet, differentiated capabilities and growing brand momentum gives me confidence that MGP is on a stronger, steadier path towards creating lasting value for our shareholders, customers and organization. Thank you. Brandon and I will now take your questions.

And our first question for today will come from Sean McGowan with ROTH Capital.

First question is, I guess, a broad one on industry trends. You talked about the reduction in production, but what are you seeing? What are you hearing from your customers regarding channel inventory and how much further work needs to be done?

Yes. Thanks for the question, Sean. What we're hearing from our customers is really the need and the willingness to stay close. There's a lot of changes going on in the industry. There's still elevated inventory. There's obviously reduced production, as you mentioned. There's also distilleries that are closing their doors or furloughing employees. And the general response that we're seeing from our customers is increasingly wanting to communicate and have open dialogue. But what we're also seeing, Sean, is a lot of our historically indirect customers that usually purchase from third parties, our product want to deal directly with MGP. They want to have that relationship. They want to be close to us because they know that we're committed to the space and going to be there over the long term.

Okay. Maybe that ties into a follow-up. A lot of the numbers in the quarter were a little better than I had thought. So congrats on that. But the gross margin in distilling was especially strong. Is that kind of related to what you just mentioned of staying close to the customer? Or can you talk generally about how you were able to hold up those margins?

Yes. The margins definitely came in even better than our expectations in the quarter. And there's really 2 reasons for that. A larger volume of aged sales than we had anticipated. Again, it's the customers working very closely with the team. And we're seeing orders from customers who predominantly historically have only purchased new distillate. But like everyone else in the space, they're looking for ways to innovate and to differentiate further on the shelf. And we're getting calls from customers like those that want to buy aged for the first time. They want to put out a new limited-time-only product on the shelf, maybe at a different price point from their core portfolio. And we're really well set up for that, as you know, due to the breadth and scale of our aged offerings and our ability to help them innovate, whether that's through blending, through picking out the right match fill or the right age profile. So it's things like these that are really improving our aged performance over our initial expectations. The second thing, Sean, is the team operationally is doing a tremendous job in managing the cost structure of the facility. That's a top four or five volume-producing bourbon facility in the United States. So while ramping up is difficult, like we've had to do in previous years, ramping down is even more complex. And the team has done a really nice job from a productivity initiative point of view in executing the cost side.

And our next question will come from Robert Moskow with TD Cowen.

This is Seamus Cassidy on for Rob Moskow. Julie, you mentioned in your prepared remarks sort of more active portfolio management around the Branded Spirits portfolio. Since the Luxco acquisition, MGPI has focused its ad spend and acquisitions on more premium brands. And you've said you're comfortable letting mid and value decline as a result of this. So I guess my question is, could you walk us through some of the pros and cons between sort of trimming some of these lower-performing brands? Because while they may be slower growing, I imagine they still add scale to your portfolio and provide positive cash flow.

Thank you for your question. I appreciate it. Branded Spirits is clearly central to our strategic growth strategy. We are satisfied with the performance of our premium plus segment, particularly with our core brands: Penelope, El Mayor, and Rebel. We've seen a 4% increase in the premium plus category, while the broader category hasn't performed as well. Penelope, in particular, is experiencing rapid growth. Your point is valid; we are still significantly invested in the mid-to-value sector. I believe there is an opportunity for us to take the focus we've established in premium plus and apply it more strategically in the mid-to-value space. There are brands with strong presence and several regional and channel opportunities where we can apply innovations that could enhance performance. We're reassessing our approach in that segment, as I see promising brands that could benefit from some extra support, helping us counteract the decline in mid-to-value. Currently, our priority remains on the mid segment, and I anticipate we'll start turning our attention to enhancing value around 2026.

Our next question will come from Marc Torrente with Wells Fargo.

I guess first on billings, with the larger customers that have paused their purchases you've referenced this call in the past, have there been any incremental pauses or maybe even restarts out of those customers? And then how is planning progressing with those customers? Any, I guess, additional commentary on your visibility into 2026?

Thanks for the question, Marc. We've mentioned previously that our large multinational customers have indicated a pause in their purchasing. We anticipate having more insights on 2026 around spring next year. We are maintaining close communication with them, and as noted in our prepared remarks, Diageo recognized us as one of their distinguished suppliers, highlighting our ability to engage effectively with our customers. We have been particularly accommodating to craft customers, who are shifting from just-in-case to just-in-time purchasing, with cash availability influencing their buying decisions. Interestingly, some craft customers, who typically focus on new distillate, are now seeking aged whiskey due to increased demand, which is where we excel with our unique mash builds and experienced master distiller. This positive development aligns with the proactive approach our team adopted six months ago to enhance customer engagement and agility. The Distilling segment remains crucial to our business, as evidenced by our successful partnership with Penelope, a customer of our Ross & Squibb distillery. They have been innovative and produced quality products, and we were pleased to see their acquisition in 2023. However, we do expect some challenges in the first half of 2026, with hopes of a more favorable environment in the latter half.

Okay. Great. Appreciate that. And then on the ingredients side, it sounds like there's a combination of headwinds in the quarter, sales perhaps a bit lighter versus expectations, but then also some execution issues. Maybe just some more color on the recovery timing here. It sounds like would be ongoing impact into Q4. Will this all be contained in 2025? And you also started to report some biofuel sales. Maybe any other detail on the expected ramp there and cost offsets?

Yes. Thanks, Marc. First, obviously, we're not satisfied with the results we saw in Ingredient Solutions, both from a year-to-date and then in particular, in Q3. I tell you, first, it's important to note that it's not a commercial demand issue. These are platforms that are in high demand, and we've ramped up our R&D department, which really is paying off dividends. We've got some large customers that have come on board that are expanding their products. So the demand is there. And where we fell short, we're in a few different areas. One, there was an equipment outage, and I'll take full responsibility for that. As I've got in the business, Marc, it became clear that one of our more important dryers had had significant operational reliability issues, downtime, yield, waste. And in my experience, it was best for us to take that equipment offline, rebuild it. It did come offline a couple of months ago, and it will be online by the end of this month and we will see better performance. So that is a discrete event, but I did want to make sure that people understood that our expectation is for it to have headwinds into Q4. But after that, we certainly will be on a better path to full productivity coming out of that dryer. But we have had continuous operational reliability across the plant as we closed down that Atchison distillery. And we've taken a few discrete decisive actions. One, I did bring in a project engineering team, boots in the plant, I'd like to say. They're well-known for working alongside management and leadership to bring a plant back to performance. We've invested 15% more in adding staffing. We're increasing maintenance CapEx. And also, we're bringing back predictive analytics and some of the enhanced preventive maintenance that we are known for. And then certainly bringing in a leader that has extensive operational turnaround experience that's led manufacturing, production, engineering, and also some of the other key safety and quality metrics, bringing Chris on board is an important part. So we do believe and expect to see continuous improvement heading into next year. And the teams are working really hard. So I'm going to turn it over to Brandon on biofuel. But I do want to say one area we're pleased to see is our ProTerra line in extrusion. We did get online our larger customer that we've been talking about. A little bit higher start-up costs, which could be expected with all the different R&D and test runs that you do. But that is starting up mid-November with salable product. And so, we're pleased to get that online. And now I'll turn it over to Brandon for biofuel.

Yes. Before I get into biofuel, all these actions, Marc, that Julie just listed, and there's a lot of very positive actions that she and the team are taking. We do not expect it to be fully contained. Maybe the dryer will be that specific discrete issue. But when you're hiring new people, when you're investing capital, when you're building in new processes, that does take a bit of time. So we do expect to return to our historical high level of performance, but probably not until the first part of next year or the first half of next year. So more to come on that, Marc. But yes, to your question around biofuel. So that project was commissioned in the quarter. Proud to say that the team shipped out their first tanker biofuel in September. You saw some of that in the numbers. But these things do take time. And so, whether it's getting it efficiently started up, whether it's hitting customer spec, rebuilding the customer network for this type of facility and a couple of other things, they do take time. But over time, we do expect this to offset a large part of the disposal costs we're currently incurring in addition to some of the other initiatives we have going to dispose of some of the other byproduct. So while Julie said very well, we're not pleased with the performance to date. We do believe that we're doing the right things to correct that going forward.

And our next question will come from Ben Klieve with Lake Street Capital Markets.

First, I would like to hear more about the recent success of Penelope. It's quite impressive that the growth is accelerating even as the business has reached a certain scale. Can you identify any factors contributing to this growth? Are you experiencing accelerated growth due to greater velocity, increased household penetration, or distribution gains? Is there anything specific driving the growth numbers from the past six months?

Ben, it's Julie. I appreciate the call. Yes, Penelope certainly is performing quite nicely. We're pleased to say we're the second fastest-growing brand out there in the last 52 weeks. So we're pleased on that. But I would tell you this, if you think about Penelope and the positioning, it's kind of like an unbourbon bourbon. So it's attracting a broader range of folks across the spectrum. It's a brand that's built on innovation. So we're very purposeful on sending out innovation. It's also very tight on the releases. I was out in the market the last couple of weeks and talking to retailers and how the excitement that they generally have around Penelope, and they definitely said that our approach to limiting the number of cases with each launch. One guy was saying that he's got 60 people on his bourbon list and a lot of the releases are sold out and don't even come on to the shelf. So we think that's a key part of it. And then knowing our consumers. We just launched the Penelope Old Fashioned line. We started with Peach, which was highly successful. We're just out with Black Walnut. And some of the brand insights that we saw there was that we had an opportunity to engage with females. Females who were curious about bourbon and entering into this category, and they were looking for a lower proof, attractive price point. And also, they're about image and visual appeal. So if you've ever seen that bottle, it's a beautiful bottle. So we think that that hit on bringing in new consumers. And then certainly, from a distribution standpoint, our independents certainly are doing a great job of launching Penelope and having a significant number of average items. Our opportunity still does lie with a national footprint across on-premise and national accounts. So we do feel bullish that there's some upside on getting more distribution across the nation, in particular, in some of those national accounts.

Great. That's all very helpful. For my follow-up, I'm curious, Julie, about one of the comments you made regarding your Distilling Solutions customers shifting from just-in-case to just-in-time. In that context, how was that considered in your updated full year guidance? Are you expecting some just-in-time orders to come in over the next month or two that you have clear visibility on? Or is this something you are anticipating based on past conversations with customers that aren't confirmed yet?

In Q4, we have provided our guidance and are confident in what we reaffirmed and adjusted. Over the past eight months, we have actively engaged with our customers. We are readily available and accommodating, and we are willing to accept any orders they can place as their budget allows. This is crucial. We have consistently met our forecasts in recent quarters, and we believe our planning reflects actual demand. While there may be some occasional orders from customers, they are generally from craft customers who tend to place smaller orders.

Yes. What I want to add is that we are nearing 1,000 customers who have purchased whiskey from us over the years. Regarding just-in-time versus just-in-case, it means that these customers are not necessarily willing to enter into long-term contracts, which limits our visibility into their purchasing behaviors. However, due to the diverse and large number of customers we serve, especially at the craft level, we can observe market trends indicating a shift toward increased demand for aged products, which is definitely a positive sign. Although it's challenging to predict precisely when a particular craft customer will make a purchase, the broad base of customers provides us with confidence that these trends are emerging, and we anticipate this will continue.

And our next question will come from Mitch Pinheiro with Sturdivant.

So when you look at the data, both for Branded Spirits and even the TTB data, we see inventory, both barrels and also in the retail side and the distributor level kind of full, still full. But pricing data is still much better than I would have expected, holding up. You might expect to see more discounting and pricing actions, but we're not. And I'm just curious as your view on this. Is it saying something larger about the category? Is it saying anything about consumer preferences and/or consumer value?

Mitch, Julie, thanks for the question. First and foremost, we certainly believe strongly as most folks, American whiskey and tequila, our really strong long-term outlook is really healthy. And as we talk about the pricing environment, yes, it's largely remained rational across all core categories. And certainly, there are pockets, regional pockets of greater competitive intensity. And we're certainly seeing in the nonpremium end some investment and some pricing in the value brands in particular, but nothing that causes us concern. And as you called out, it's been pretty rational. So I think that to me, it shows that people are bullish on the strength of the categories and the health of the categories for long-term value, and they don't want to do anything rash to destroy any of the value that they can capture.

And I guess then just sort of a follow-up. So you've always talked about your revenue in the Distillery Solutions business being 1/3, the multinationals, 1/3, your larger regionals or nationals and then 1/3 craft. Is that still there? Or with the sort of decline, it seems like there's a greater decline in craft. Is that now a smaller portion of your business? And yes, let's leave it at that.

And Mitch, you were breaking up in the middle. Can you repeat that, please?

Yes, Mitch, I’ll begin with that. Generally, we are observing a higher proportion of aged sales compared to new distillate than we anticipated at the start of the year. Typically, this distribution is about one-third for each segment. Aged customers tend to lean more towards craft products, which is where we are noticing the increased demand and improved performance as the year progresses. Many of the larger national and multinational customers who usually purchase new distillate are still doing so, but some have paused their orders, as we've previously discussed. This pause has shifted the composition of our sales mix towards aged products.

And our next question is a follow-up from Sean McGowan with ROTH Capital Partners.

A quick question first. What is your expectation for the margin profile on the biofuel? And then more broadly, again, I'm a little surprised with this deep into the call and the word tariff hasn't come up. So could you give us your latest thoughts on that?

Yes. I'll begin with the biofuel. Regarding our gross margin profile, we may need some more time before we share our expectations. However, we believe that once the biofuel facility is fully operational and efficient, and we start selling at the anticipated prices along with receiving the tax accreditations over time, it should help to offset a significant portion of the disposal costs we are currently facing. As we progress, we will look at market pricing and expectations for next year, and we will be glad to provide more information. Regarding tariffs, we are experiencing some pressure, but not to the extent that some of our competitors might be facing, which benefits us as we are primarily domestic. The tariffs we are encountering mainly affect dry goods and some products and materials we import. However, it's more challenging to measure the impact on some of our customers with a more international focus. The export data, particularly for American whiskey, has shown significant volatility this year, indicating some short-term fluctuations in related patterns.

And it's included in our guidance.

Yes. Great point. And the incremental tariff exposure that we are experiencing is contemplated in our full year guide.

And with that, we will conclude our question-and-answer session. I'd like to turn the conference back over to Julie Francis for any closing remarks.

Thank you, Joe. I'd like to thank everyone for joining us today on our quarterly earnings call. I look forward to engaging with all of you in the very near future and playing a much more active role in the next earnings call. So good luck, everyone, and we'll talk soon. Cheers.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.