Good morning, and welcome to the MGP Ingredients, Inc. First Quarter 2026 Earnings Conference Call, with Julie Francis, President and CEO, and Brandon M. Gall, CFO. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key. After today's presentation, there will be an opportunity to ask questions. Also note that this event is being recorded today. In addition, 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 and quarterly reports filed with the SEC. The company assumes no obligation to update any forward-looking statements made during the call, except as required by law. This call will contain references to certain non-GAAP measures, which the company believes 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 at www.mgpingredients.com. At this time, I would like to turn the call over to Julie Francis, President and CEO of MGP Ingredients, Inc.

Good morning. I would like to thank you all for joining us today on our first quarter 2026 earnings call. Let's kick it off with a review of some of our quarterly results and progress made against our key initiatives, and then Brandon can cover the financial metrics during his comments. Sales in 2026 came in at $106.4 million, down versus the prior year but in line with our expectations. Adjusted EBITDA of $15 million and adjusted basic EPS of $0.15 also declined versus the first quarter of last year; however, both of these key metrics were ahead of expectations. We are pleased with this performance as it helps to validate the work we have been doing to drive progress in our business while simultaneously navigating a challenging industry backdrop. In the first quarter, we continued to focus our energy on the areas we can control and to sharpen our strategic focus and strengthen execution across the organization. For Branded Spirits, we maintained momentum in our Premium Plus portfolio in the first quarter, which was led by Penelope Bourbon and benefited from improved demand for select mid-price offerings. We also delivered solid growth in Ingredient Solutions, as the improvements the team has made in operational reliability are taking hold and delivering results. While I plan to talk more about our segment performance later, I would like to share a few recent actions we have taken. As you know, we have been strengthening and revamping our strategy, marketing, and supply chain functions in order to add specific capabilities to address new and existing opportunities and to build out best-in-class processes designed to balance improved commercial planning while driving disciplined execution and long-term success. As a part of these efforts, we recently announced there will be a temporary idling of our distilling operations in Kentucky at Limestone Branch and Lux Row starting in May. Like many companies across the industry, we are navigating this challenging environment and taking the steps we believe are necessary to better align our operations and inventory. While this temporary idling will unfortunately affect 33 employees, it is not expected to impact the availability of our products or our services to our customers, and it is necessary to adjust our production to align with current inventory levels. I would like to remind everyone that our largest facility in Lawrenceburg, Indiana, remains fully operational and will continue to operate to serve our brands, clients, and customers. Shifting to our business segments, I will begin with Branded Spirits, which remains the focus as our primary long-term growth driver. As expected, first quarter sales were down year over year; however, we continue to see constructive progress, particularly within the Premium Plus and mid-price tiers. We view these price tiers as critical to the long-term health of our portfolio, and we are pleased to see they both saw growth in the quarter. Importantly, gross margin expanded 180 basis points to 47.8%, reflecting improved mix and early benefits from our revenue growth management initiatives. Gross profit of $21.1 million was down versus the prior year and primarily driven by an expected decline in sales of private label products within our other category. Premium Plus sales increased 1.5%, supported by continued consumer demand for our differentiated, high-quality offerings and the increasing effectiveness of our focused growth strategies. Penelope Bourbon once again delivered strong performance, with sales up 10% year over year. As you recall, this brand is cycling the highly successful launch of Penelope we did in the first quarter of last year. Even against this comparison, we saw growth driven by sustained and growing momentum in our core SKU, Penelope Four Grain, along with strong consumer response to limited-time releases such as Havana, Rio, and American Light Whiskey. We are also encouraged by the early traction from our new ready-to-pour offerings, including our Black Walnut and Apple Cinnamon Old Fashioned products, which continue to expand Penelope’s consumption occasions. Turning to Yellowstone, despite a year-over-year decline for the first quarter, we are seeing early signs of stabilization and recovery, supported by deliberate investments in innovation and digital capabilities. Our ultra-premium limited release, Yellowstone Recollection, has been exceptionally well received, earning strong critical acclaim and press coverage, with consumer demand exceeding our initial expectations. As discussed in our last earnings call, we continue to increase our investment in digital marketing and media capabilities. Yellowstone is the first brand we have deployed a fully integrated digital activation strategy for, combining best-in-class social media execution with targeted paid media in focus states, including select control states. In Pennsylvania and California, for example, this approach combined with revenue growth management initiatives drove robust double-digit growth for Yellowstone in the first quarter versus the prior year. Turning to tequila, our El Mayor brand delivered year-over-year growth driven by continued progress in price pack architecture efforts. This included expanded 1.75-liter offerings and the introduction of 375-milliliter sizes as consumers increasingly adopt premium tequila across a broader range of occasions and price points. Similarly, Exotico tequila was up strong double digits, fueled by the addition of a 1-liter offering that is enabling continued gains in on-premise distribution alongside price optimization. Additionally, the 375-milliliter size is allowing consumers to trade up from mixto tequila to high-quality 100% agave tequila at an attractive price point in the off-premise channel. For mid- and value-price portfolios, combined sales declined 3% in the first quarter. These are improving trends as we continue to prioritize our strongest performing SKUs and channels. Revenue growth management and price-pack-channel optimization remain critical levers in these categories, and we are encouraged by early results as we execute against this strategy. Looking ahead, we are intentionally concentrating resources behind approximately 10 of our most promising brands, with a clear focus on purposeful differentiation and innovation to support sustainable long-term growth. At the same time, we are managing the portfolio with discipline. As discussed on our prior call, we have initiated comprehensive portfolio review and rationalization. During 2026, we discontinued more than 30 tail brands, with approximately 15 additional brands planned to be discontinued by the end of this year. Combined, these brands represent approximately 1% of segment net sales and, when annualized, are expected to represent an estimated 20 basis point improvement to the segment’s gross margin profile. For our Branded Spirits segment, we are excited about the opportunities ahead across our broader portfolio. As with all growth trajectories, there will be many steps forward, some bigger and some smaller. We will also likely alternate between some really healthy quarters and some softer ones as we continue to successfully prioritize our best performing offerings and ramp up our investments in these brands, while continuing to cycle new product introductions. Turning to Distilling Solutions, where despite the challenging domestic whiskey supply environment, our first quarter results came in as expected. Segment sales of $28 million decreased 40% year over year, while gross profit of $8.6 million declined 54% as elevated inventory levels continued. In the first quarter, we maintained our focus on creating a differentiated value proposition to better position MGP Ingredients, Inc. as a long-term strategic partner for both large and small customers. Our brown goods customers’ expansion efforts are taking hold, as demonstrated by growth of 9% in aged sales and the addition of more than 20 new customers in the first quarter, including a significant national private label whiskey customer. We are proud of the customer expansion progress we are making, particularly given the current industry backdrop. As discussed on our last earnings call, we are also broadening our premium white good offerings, and these efforts are focused on complementing our brown goods portfolio. During the quarter, we transacted our first customer sale under this new highly customized initiative. While we are pleased with the progress we are making, given the unique and highly customized nature of these product offerings, these projects will take time to fully commercialize and scale. That said, we now expect growth from this initiative to pick up in the second half of this year. Our focus on premium white goods is designed to leverage the scale, heritage, and quality of our Indiana distillery to produce premium gin and grain neutral spirits, which can then be customized to meet each customer’s specific needs. We expect that this effort will allow us to move beyond commoditized offerings, generate more attractive economics and better asset utilization rates, and also serve as a bridge to longer-term and deeper relationships with strategic customers. Our efforts are also focused on driving cash generation by increasing our value-added service offerings, as we look to attract and retain a wider pool of customers. Warehouse services made up approximately 30% of our Distilling Solutions segment sales in the first quarter. Both sales and gross profit were up versus the prior year. Turning now to our Ingredient Solutions segment, sales of $34.2 million increased 29% versus the prior year. This growth was primarily driven by higher sales volume, price, and mix for our specialty wheat proteins and starches. Gross profit of $3.8 million was up 56%, with gross margin of 11.2% up nearly 200 basis points, as higher sales of specialty protein and starch products were partially offset by higher waste disposal costs. This successful first quarter was driven by continued improvements in operational reliability, with each month better than the previous one. For the quarter, efficiency was up 14% year over year. With a slower start to the year firmly offset by a solid March, we plan to continue to move towards greater efficiency as we improve overall and as we begin to cycle previous throughput issues. Effluent disposal has been more complex and more costly than initially projected. Reducing waste and disposal costs are a key priority, and we are implementing additional measures by year-end and continue to expect to remove these costs over the long term. At the end of the second quarter and into the third, we have a planned shutdown for scheduled maintenance and capital projects designed to further improve reliability and throughput and to provide some relief in our waste stream disposal costs. Brandon will share the related financial impacts in a moment. Despite the effluent challenge, we are moving in the right direction in Ingredient Solutions. We are pleased with the momentum, as better operational reliability means we have more product to sell, and this is key as we continue to see increasing demand for our proprietary and unique products. We will remain focused on driving growth through our specialty fiber Fibersym, our specialty protein Arise, and our extrusion protein Proterra. Now I would like to highlight the progress we are making in driving an ownership cost management mindset that is supporting growth and our bottom line by eliminating waste, driving efficiencies, and maximizing effectiveness. One reinvestment example of this is the work we completed to streamline marketing services and to reduce our non-working media spend, while reinvesting those savings into our Yellowstone digital marketing programs. Going forward, we will continue to reinforce this mindset by embedding productivity and cost discipline into our operating routines, performance management, and compensation metrics. Productivity and a cost management focus are becoming a part of our regular manager routines, helping us to uncover and track opportunities to eliminate waste and driving us to operate more efficiently and effectively across the entire organization. And with that, I would like to turn the call over to Brandon.

Thank you, Julie. Turning now to our financial results. For 2026, we reported consolidated sales of $106 million. While sales decreased 13% compared to the year-ago period, they were in line with expectations. Gross profit of $33 million was down 22%, while gross margin of 31.6% declined by approximately 400 basis points. Our total SG&A spend declined by approximately 1% in the first quarter, while adjusted SG&A declined by approximately 2%. As expected, Branded Spirits advertising and promotion expenses were 13.6% of Branded Spirits sales, a reduction of approximately 24% year over year as we cycled the final period of elevated marketing spend prior to our current more disciplined and efficient realignment efforts. We continue to expect full-year Branded Spirits A&P to be 13% to 14% of Branded Spirits sales. Net income decreased to a loss of $134.8 million, primarily due to a discrete non-cash adjustment of $179.5 million to reduce the carrying amount of goodwill and other long-lived assets in the Branded Spirits segment. This also included approximately $27 million for equipment unrelated to the distillation process at our Lux Row facility in Kentucky. Adjusted net income of $3.3 million decreased 57% on a year-over-year basis. On a per-share basis, we had a loss of $6.30 for the first quarter versus a loss of $0.14 in the prior year, primarily due to the adjustments I just noted. On an adjusted basis, earnings per share of $0.15 decreased 58% year over year. Adjusted EBITDA of $15 million decreased 31% over the same period. Capital expenditures declined 75% to $2 million in the first quarter, and we continue to estimate CapEx of approximately $20 million for the full year. We look to optimize our capital deployment in the current industry environment. Finally, as of March 31, our net debt leverage ratio was approximately 2.1 times. Turning to annual guidance for 2026, which we are reaffirming, we continue to expect net sales between $480 million and $500 million. Adjusted EBITDA is projected to range from $90 million to $98 million. This is consistent with previous expectations, as the efficiencies and savings from our recently implemented ownership cost management mindset initiative are expected to offset our reduced gross profit outlook in Ingredient Solutions. Our adjusted basic earnings per share range remains between $1.50 and $1.80, and average shares outstanding should be approximately 21.4 million shares for the full year. Our annual tax rate is expected to be approximately 27%. Turning to our balance sheet and cash flow outlook, as Julie shared, the decision to temporarily idle our Kentucky distilling operations beginning in May was difficult. However, given the current environment, it is an additional example of the capital prudence necessary to position us for long-term success. As a result, we expect full-year improvement in cash flows of $10 million versus previous expectations. Excluding the impact of the Penelope earnout payment, we now anticipate 2026 full-year operating cash flow of $50 million to $55 million and free cash flow of $30 million to $35 million. We also anticipate an improvement in our net leverage ratio as a result of the temporary idling and expect it to peak at approximately 3.5 times, down from the 3.75 times figure we provided on our fourth quarter earnings call. We continue to estimate net whiskey put-away in the $13 million to $18 million range for 2026, which represents our second consecutive year of meaningful capital investment optimization and stewardship. This target includes both new production and procurement of barrels, and is consistent with prior expectations as much of the temporary idling was factored into the previously provided outlook. From a business segment perspective, our full-year segment outlook for Distilling Solutions sales and gross profit is consistent with previously shared estimates. However, our white goods sales outlook for 2026 has been reduced and is now expected to be up mid-single digits, largely due to the time needed to fully commercialize and scale these customized new projects. Much of this reduction is expected to be offset by improved sales within other product lines. Our full-year sales outlook for Ingredient Solutions is consistent with previously shared estimates; however, we now expect full-year segment gross margins to be in the mid-teens as a result of the increased effluent costs and plant shutdown at the end of the second quarter and into the third quarter. Our full-year segment outlook for Branded Spirits is unchanged from previously shared estimates. To close, I would like to stress Julie’s comments regarding our performance to date, as it helps to validate the work we have been doing to drive progress in our business while simultaneously navigating the challenging industry backdrop. And with that, I would like to turn the call back over to Julie.

Thank you, Brandon. Before we wrap up, I want to thank the entire MGP Ingredients, Inc. team for another quarter of persistence, dedication, and hard work, and for their commitment to executing against our strategic roadmap. This strategic roadmap is designed to drive growth across all three businesses. For our Branded Spirits, we will continue to focus on winning in the Premium Plus category with Penelope Bourbon, while strengthening our overall brand focus. We will prioritize our best performing brands and plan to rationalize approximately 20% of our tail brands. We will also strive to increase our penetration in national accounts and to strengthen our digital marketing capabilities. For Distilling Solutions, we will remain focused on rebuilding our aged whiskey pipeline while broadening our premium white goods offerings to complement our brown goods portfolio. We will also continue to work on attracting and retaining a wider pool of customers by growing our private label and international whiskey programs and by expanding our value-added service offerings. And for Ingredient Solutions, our efforts will remain focused on driving growth through our industry-leading specialty fiber and specialty protein product offerings. We will also continue to implement new processes to help return to operational excellence and improve reliability and throughput. In addition, managing high waste disposal costs will remain a key priority for this segment. Looking ahead, I am encouraged by the progress we are making across our organization. As I stated earlier, our strategy remains grounded in focus, execution, discipline, and accountability. We are actively evaluating all available levers to operate more efficiently and effectively. While the industry outlook remains challenging over the near term, we are committed to addressing our challenges in order to position MGP Ingredients, Inc. to emerge as a better aligned and more resilient company that is capable of delivering long-term value creation. And with that, I would like to turn the call over to the operator for any questions.

We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press the appropriate key. The first question comes from Robert Moskow with TD Cowen. Please go ahead.

Hi, this is Seamus Cassidy on for Rob, and thanks for the question. Was hoping you could provide a little bit more detail on the early learnings from your portfolio review in Branded Spirits and the approach you took to this review. You mentioned the investment in Yellowstone and 10 brands in total. What went into the decision to invest in these brands? And secondly, does rationalizing tail brands have any impact on capacity or distributor alignment, or any considerations there? Thanks. Hey, Julie, thanks so much. Appreciate it.

Let's do the SKU conversation first. As you have read, we discontinued over 30 tail brands in Q1, with another 15 expected by year-end. These represent approximately 1% of our segment net sales, and when annualized, we expect a 20 basis point improvement in segment gross margin. The learnings are that these were not highly visible brands in the market, but they consumed resources. Think about changeover configurations, glass, containers, and liquid we had. This improves line efficiency and provides more line time for core SKUs. We do have a few that are growing quite nicely, and the main impact is really inventory reduction. We are reducing working capital by over $2.5 million and other logistics and supply chain costs like warehouse and storage. From a distributor focus, it does not take away their focus; if anything, it has allowed them, with our partnership approach this year of really targeting our top 10 brands, to focus their execution and activation. We are seeing nice momentum in their planning and execution in Q1. Shifting to the power brands—the 10—how did we do it? We brought in new capabilities about six months ago to lead the marketing organization. It has been a robust six months, first and foremost doing comprehensive reviews of our top two portfolios, which are American whiskey and tequila. We assessed positioning, what the brands stand for, consumer segments, competitive sets, key occasions, price pack architecture, A&P allotment, and any overlap from the robust portfolio we have in American whiskey, and the same for tequila. From that, we identified the key brands and built a strategic roadmap for investment and execution. We then put a brand growth framework around those brands to ensure they are selectively being pushed, executed, and invested against a couple of key areas. One is mental availability—our referenced digital—reaching more consumers through increased paid media, the ability to target geographies based on ZIP codes, and having the right and dynamic content: the right message, the right consumer, the right channel at the right time. The second is physical availability—how we increase our PODs, distribution, and velocities across all accounts, in particular national account expansion opportunities across off-premise and on-premise. Store visibility and execution remain goals. One of the heavy-up areas we focused on is elevating our digital media capabilities. We have doubled the investment there, brought a highly capable expert into the team, and tested in-house digital media. Yellowstone was our first test-and-learn. We did a couple of states, and within those states we are seeing a nice turnaround for Yellowstone Select, up double digits. That is driven by both media and pricing heavy-ups in those markets and tied to targeting ZIP codes that purchase Yellowstone. We are pleased with the results. It is early days, but you can expect this approach to extend to our other focus brands as well.

Very clear. Thanks.

The next question comes from Sean McGowan with ROTH Capital Partners. Please go ahead.

Thank you. I wanted to get a little bit more color on some of your gross margin comments. First, specifically to clear up, when you are talking about the 20 basis point improvement, is that on a run-rate basis as you exit the year, or is that for the full year? And that is just within Branded Spirits, right?

That is a run-rate, annualized basis. The impacts will all hit in 2026; however, what is going to hit is factored into our guidance and can be expected on an annualized basis going forward. And yes, that is just within Branded Spirits.

Okay. And then on the Ingredient side, by the end of the year, would you expect to be back to where you thought you would be on gross margin, or is this hit going to linger into next year?

Thanks for the question. First, we are pleased with the operational reliability improvements we have sequentially made as the year has started. Our downtime is down, and we are more efficient by 14%. What is driving that is our unplanned equipment outages have reduced since December by 10 points, and throughput improvements are up 18%. Operational reliability has allowed us to get more pounds out. We have robust demand for our proprietary platforms across starch and fiber, and you saw that in our sales. So, more to sell and more reliability. The gross margin is being impacted by effluent. We have discussed that before. At the end of the second quarter, with our planned shutdown that will cross into Q3, we will bring in a piece of equipment—a third dryer—that is going to help us eliminate some of that effluent. We expect those costs to sequentially go down by the end of the year and be cut in half. By the time we end the year, we expect mid-teens gross margin, and by 2027, we would expect that to be in the high twenties.

Thank you. And then on Distilling, the commentary that white goods may be coming a little bit slower and offset by other products—what are the gross margin implications for that shift?

We are still expecting low- to mid-30s gross margins for the Distilling Solutions segment. As we said in our prepared remarks, the white goods sales shortfall is expected to be offset by other product lines within the segment, so we are staying consistent with what we said last time.

Okay. Thank you very much.

The next question comes from Marc Torrente with Wells Fargo. Please go ahead.

I guess first on Distilling Solutions, last quarter you talked about discussions with larger customers taking shape through the second quarter and potentially providing some color on the 2026 outlook and beyond. Do you have any incremental color there? What are you hearing in terms of customer needs and timing to demand inflection? And any further comfort that 2026 could be a bottom?

Thanks, Marc. We continue to view 2026 as likely a trough year for Distilling Solutions. Nothing we saw in Q1 changed that view. We are pleased with our partnership approach. Our conversations with customers remain active, pragmatic, and constructive. Inventory levels across the industry are still elevated, but we are seeing customers move from broad pauses to much more targeted planning discussions. Importantly, those conversations are increasingly focused on how they want to reengage—product types and customization services—not necessarily if. We still expect clarity as we move through 2026, which is consistent with what we said previously, particularly from some multinationals and where they stand in their cycle. While the overall cycle will take time to normalize, we believe we will exit this period stronger, with better customer relationships and a more differentiated offering than before.

Thank you for that. And then more color on the decision to idle distilling in Kentucky. Was there anything incremental you were seeing in the market that drove that decision during the quarter? What percent of your overall distilling capacity does that represent, and how much of that is for your own brands versus outside brands? It does not sound like that has any impact to your outlook for distilling sales or branded product availability—just to confirm.

That is correct—it has no impact on either Distilling Solutions sales or branded product availability. Our decision to temporarily idle our Kentucky distilling operations impacts a modest portion of our total distilling capacity and was driven by inventory alignment, not customer demand disruption. Most of the paused production was intended for future aged inventory for our own brands rather than near-term customer commitments. As you recall, in 2025 we balanced our Distilling Solutions production with sales during the industry reset, which meaningfully reduced our fixed costs and allowed us to optimize production schedules and still deliver gross margins in the 30s. We thought it was prudent to do the same thing for our Branded Spirits. Once our 2026 production needs for our brands and any customers were met, we chose to idle. Brandon can add the balance sheet impacts.

We shared the balance sheet and cash flow benefits. As Julie said, this is inventory- and working-capital-driven and reflects us being good stewards of the balance sheet. Operationally, because most of these costs relate to branded spirits put-away, they have historically been capitalized and show up later in the income statement. We do not expect much impact to operating margins on an adjusted basis.

Appreciate the color. Thanks.

The next question comes from Ben Klieve with Lake Street Capital Markets. Please go ahead.

Thanks for taking my questions. A couple from me. First, in your prepared remarks, you talked about onboarding 20 new customers. I cannot remember if you said that was the Branded Spirits segment collectively or brown goods specifically. Can you talk about who this new customer base is, the extent to which these are aged versus new customers, and in this difficult environment, how this came about and where they were sourcing from historically, if you can provide any context?

Thanks, Ben. We are pleased—our partnership approach is working. Stepping back, we previously targeted an addressable market of around 1,000 customers. By leveraging data, we have identified a total addressable market of about 4,000. We have allocated those prospects to our sales team, which is now very well-versed in our differentiated value proposition. About 75% of that new-customer pool was new-to-industry customers, and approximately 25% came from competitors. Broadly speaking, these wins are brown goods, typically aged purchases. The team has done a nice job ensuring the broader market knows we are open for business and highlighting the craftsmanship you get at MGP Ingredients, Inc. for both brown and white goods. We offer different mash bills, finishing capabilities, and barrel sizes. Some customers were surprised—we do smaller batches—and they had thought they needed to go a different route to get our quality juice.

Very good. Thanks, Julie. One more from me on the tax line. With a 27% rate on a full-year basis, can you help us understand your expectations around cash taxes given the non-cash expenses in the first quarter?

The ownership cost management mindset we highlighted on this call and last is taking effect across the organization, up and down the P&L. Cash taxes are being optimized from an outflow and timing standpoint as much as possible, and those benefits will be felt. Excluding the impact of the impairment, we still expect around 27% for the year, knowing Q1 was a little wonky because of a couple of discrete items. The cash management mindset is in full force, and we will mitigate cash tax outflows as much as possible throughout the year.

This concludes our question and answer session. I would like to turn the conference back over to Julie Francis for any closing remarks.

Thank you. On behalf of the entire MGP Ingredients, Inc. team, thank you for your continued confidence and support. We look forward to talking to you next quarter. Take care.

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