Good morning, and welcome to the MGP Ingredients Second Quarter 2023 earnings results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing Star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then one on your telephone keypad. To withdraw your question, please press Star then two. Please note, this event is being recorded. I would now like to turn the conference over to Mike Houston with Lambert Global. Please go ahead. Thank you. I'm Mike Houston with Lambert Global, MGP's investor relations firm, joining me today are members of their management team, including David Colo, President and Chief Executive Officer, and Brandon Gall, Vice President of Finance and Chief Financial Officer. We will begin the call with management's prepared remarks and then open the call to questions. However, before we begin today's call, it is my responsibility to inform you that this call may involve certain forward-looking statements based on current expectations. The company's actual results could differ materially from any forward-looking statements made today due to a number of factors, including the risks and uncertainties described in today's earnings release and the company's other SEC filings. The company assumes no obligation to update any forward-looking statements or information included in this call. Additionally, this call will contain reference to certain non-GAAP measures, which we believe are useful in evaluating the company's performance. Reconciliations of these measures to the most directly comparable GAAP measures are included in today's earnings release. If anyone does not already have a copy of the earnings release issued by MGP today, you can access it at the company's website, www.mgpingredients.com. At this time, I'd like to turn the call to MGP's President and Chief Executive Officer, David Colo. Dave? Thank you, Mike, and thanks, everyone, for joining the call today. On this call, we will begin with an overview of our performance for the quarter ended June 30, 2023, provide updates on key financial performance metrics, and discuss the progress we have made against our strategy. At the end of the call, we will open the line for Q&A. I am proud of the considerable progress we have made toward achieving our targets for fiscal 2023. Our strong performance during the second quarter could not have been possible without our impressive and resolute team. We achieved our best quarterly sales and gross profit performance in company history. Adjusted EBITDA during the second quarter was also the second-best quarter in company history, second only to the record first quarter of 2022. In addition, on June 1st, we closed on the acquisition of Penelope Bourbon, which expands the presence of premium plus price tier brands in our portfolio. Penelope has been a fast-growing brand at ultra and super premium price points within the American whiskey category and is expected to be gross margin accretive to our branded spirits segment, as well as accretive to consolidated adjusted basic earnings per share. We plan to build on this momentum, and importantly, this acquisition is an example of executing against our strategy focused on premiumization. Consolidated sales for the second quarter of 2023 increased 7% year-over-year to $209 million, while gross profit increased 29% to $76.3 million, representing 36.5% of consolidated sales. Net income increased 26% to $32 million, while adjusted net income increased 31% to $33.1 million. Adjusted EBITDA increased 28% to $51.2 million. In our Distilling Solutions segment, sales of brown goods grew 30% compared to the prior year period. The increase was driven primarily by increased pricing due to continued strong demand for both new distillate and aged whiskey. Our branded spirits segment sales decreased 2% year-over-year due to volume declines in our mid and value price tier brands. As a reminder, we experienced significant one-time volume gains in our mid and value brands in the first quarter associated with our distributor realignment. We remain encouraged by consumer trends overall and specifically the demand for our premium plus price tier brands, which achieved sales growth of 29% compared to the prior year period. Excluding Penelope, premium plus sales grew north of 20% in the quarter. Consumer demand for our American whiskey and tequila premium plus brands remained strong and continued to drive gross margin expansion. Turning to our Ingredient Solutions segment, our team has continued to execute at an elevated level and achieved record second quarter sales and gross profit results during the period. Further optimization of the segment product mix to align with broader consumer trends resulted in an 18% increase in segment sales compared to the prior year period, and gross profit of 33.6% of segment sales. Turning to discuss each segment in greater detail. We posted another strong quarter in our Distilling Solutions segment, with sales increasing 9% to $116.9 million year-over-year. Gross profit for the quarter increased to $38.7 million, or 33.1% of segment sales. The increase in gross profit can be attributed primarily to the increase in sales of new distillate and aged whiskey. Compared to the prior year period, sales of brown goods for the quarter increased 30%, driven primarily by increased pricing due to continued strong demand for both new distillate and aged whiskey. Brown good sales growth has continued to outpace longer-term market trends and has been primarily driven by craft as well as multinational customers. Our confidence in our brown goods sales visibility through fiscal 2023 remains high. Looking ahead to fiscal 2024, our visibility is beginning to take form, and we believe we have the majority of our expected Distilling Solutions segment brown goods sales for next year already committed. Our significant market advantages continue to position us well to support continued growth in the American whiskey category. We will continue to be strategic with our aged whiskey sales to enable us to meet expected customer needs for the balance of this year, as well as position us to meet anticipated customer needs in the coming years. Turning to white goods and industrial alcohol, we continue to reduce the volumes produced and sold of our industrial alcohol and white goods products during the second quarter. As a result, white goods sales decreased by 4% year-over-year, and sales of our industrial alcohol products decreased 22% during the second quarter. As expected, on a combined basis, these product lines continue to have negative gross margins in the quarter. Last month, we announced the planned closure of the white goods and industrial alcohol distillery in Atchison, Kansas, slated for January 2024. This announcement reinforces our strategy, focused on shifting away from industrial alcohol and white goods products to mitigate the continued impact of increased input costs and excess supply available in the market. The decision was not made lightly. After careful consideration, we determined this is a necessary step following many consecutive quarters in which gross margins for white goods and industrial alcohol were negative. During the past two years, the impact of additional supply of white goods and industrial alcohol into the market following COVID, combined with increases in local corn basis costs, resulted in the production of these product lines at the Atchison Distillery to no longer be economically viable. Brandon will speak about the financial impacts, as well as provide additional details on a pro forma basis shortly. Before that, I want to clarify that this decision will not impact the operations of any of the company's other production facilities, and we plan to continue normal operations at the Atchison Distillery through the end of the year. As a reminder, in an effort to pursue this strategy, we first had to solve how to physically decouple the Atchison Distillery from the ingredient facility. Now that a plan has been identified to successfully decouple the facilities, we are now evaluating the most economically viable options for the waste starch stream. As you recall, the waste starch stream is a byproduct of the ingredient facility that is purchased by the adjoining distillery and results in an intercompany credit to the Ingredient Solutions segment. We firmly believe these actions will enable us to further align our product categories and their supporting operations toward achieving our long-term strategic objectives. However, given the recent announcement of the Atchison Distillery closure, we will gain more clarity on how this decision will impact the back half of fiscal 2023 as we work with customers on their transition plans. Turning to branded spirits, segment sales totaled $57.6 million during the quarter, a decline of 2% versus the prior year period. While the decline was driven by lower volumes in our mid and value price tier categories, we are encouraged by the strong performance of our premium plus brands. Our continued focus on investing behind our higher-margin Premium Plus brands resulted in an increase in gross profit to $26 million, or 45.1% of segment sales. The increase in gross margin can be attributed to the favorable performance of our higher-margin Premium Plus brands. As I briefly mentioned earlier, during the second quarter, we closed the acquisition of Penelope Bourbon, a fast-growing brand that improves our ability to further participate in the popular American whiskey category, and which we believe has meaningful long-term growth potential. We could not be more enthusiastic about this deal as it supports our long-term strategy focused on premiumization and enhances our portfolio of Premium Plus price tier brands. The integration process is on track, and we remain pleased with Penelope's continued momentum as we expand its presence to new markets. Our branded spirit strategy remains focused on growing profitability by leveraging the expansion of our Premium Plus brands portfolio, with a particular focus on our tequila and American whiskey brands. Turning to Ingredient Solutions, sales for the quarter increased 18% to a record $34.5 million, while gross profit increased to a second quarter record of $11.6 million, or 33.6% of segment sales. The increase in sales primarily reflects rising consumer demand for plant-based proteins and food products with lower net carbohydrates, which drove higher sales of our specialty wheat proteins and starches, as well as our commodity wheat starches. Finally, I want to thank our team for their tremendous efforts and continued execution. We remain encouraged by our diverse customer base and our product offerings, which continue to align with broader consumer trends. We believe our improved profitability and our proven ability to execute against our long-term strategy continue to provide us with the momentum required to achieve our fiscal 2023 goals. This concludes my initial remarks. Let me now turn things over to Brandon Gall for a review of the key metrics and numbers. Brandon? Thanks, Dave. For the second quarter of 2023, consolidated sales increased 7% compared to the prior year period, to $209 million. Gross profit increased 29% to $76.3 million, representing 36.5% of sales. Advertising and promotion expenses for the second quarter increased 42% to $8.6 million, as compared to $6.1 million in the prior year period. Of this amount, $7.9 million was invested toward our Premium Plus branded spirits, which represented 13.7% of total branded spirits segment sales in the quarter. The year-over-year increase is consistent with our premiumization strategy, and we plan to continue to increase the marketing spend on our higher margin Premium Plus price tier brands. Corporate selling, general and administrative expenses for the quarter increased $5.7 million- $23.5 million as compared to the second quarter of 2022. Operating income for the second quarter increased 25% to $44.1 million, primarily to the previously mentioned increase in consolidated gross profit. Excluding business acquisition costs associated with Penelope, adjusted operating income increased 29% to $45.6 million. Our corporate effective tax rate for the second quarter of 2023 was 25.3%, compared with 22.4% from the year ago period. The increase in our corporate effective tax rate was primarily due to higher income before income taxes and lower tax credits. Net income for the second quarter increased 26% to $32 million, while adjusted net income increased 31% to $33.1 million. Basic and diluted earnings per common share increased to $1.44 per share from $1.15 per share. Adjusted basic and diluted earnings per common share increased to $1.49 per share from $1.15 per share. Adjusted EBITDA for the quarter was $51.2 million, an increase of 28% compared to the year ago period. The increase was primarily driven by the strong performance of all three business segments. Now an update on commodities. Corn, wheat, flour, rye, and natural gas represent our largest commodity expenses, and each continued to experience elevated prices throughout the second quarter. Compared to the prior year period, our input costs for corn increased 8%, wheat flour increased 24%, rye increased 47%, and natural gas increased 18%. Our risk management process and our focus on products that are premium and more specialty in nature have continued to enable us to mitigate the impacts of inflation over the past several quarters in most of our product lines. Additionally, we enter any given year with the majority of the commodities purchased against committed volumes. Furthermore, we did not experience any significant supply chain disruptions during the second quarter of 2023. As Dave mentioned, in July, we announced the planned closure of our Atchison Distillery and expect to incur one-time aggregate pre-tax charges of approximately $23 million-$31 million in fiscal 2023. This range includes the following estimates: $17 million-$21 million in non-cash restructuring expenses for asset impairments, including fixed assets, inventory, and leases. $2 million-$4 million in cash expenses for items such as severance costs, contract termination fees, and consulting fees. $4 million-$6 million in capital expenditures in connection with the decoupling of the Atchison Distillery from the Ingredient Solutions facility, also located in Atchison, Kansas. Now a look at the financial impact of the Atchison Distillery's performance on a preliminary pro forma unaudited basis for fiscal 2022 and year to date, ended June 30, 2023. For fiscal year 2022, excluding the financial impact of the Atchison Distillery, results were as follows: consolidated sales and Distilling Solutions sales are reduced by $140.8 million. Consolidated gross profit is increased by $620,000, and consolidated gross margin is increased by 720 basis points. Distilling Solutions gross profit is increased by $6.1 million. Ingredient Solutions gross profit is reduced by $5.5 million. For the year-to-date ended June 30, 2023, excluding the financial impacts of the Atchison Distillery, results were as follows: consolidated sales and Distilling Solutions sales are reduced by $62.3 million. Consolidated gross profit is increased by $118,000. Consolidated gross margin is increased by 650 basis points. Distilling Solutions gross profit is increased by $3.5 million. Ingredient Solutions gross profit is reduced by $3.4 million. The reduction in gross profit for the Ingredient Solutions segment in both periods is a result of increased cost of goods sold from no longer receiving an intercompany credit for the waste starch slurry byproduct purchased by the adjoined Atchison, Kansas Distillery. The value of the intercompany credit is derived from the value of corn, which has fluctuated over time. These pro forma financials assume the loss of the waste starch slurry credit and no gain or loss on disposal. As Dave already mentioned, we continue to assess viable options for the Ingredient Solutions waste starch stream post-decoupling and the respective impacts to overall consolidated profitability. Additional information will be provided when the company releases its financial results as more information becomes available. In accordance with accounting guidance, we expect to qualify for discontinued operations presentation once the facility is shut down and assets are available to be sold. It's important to note that in some circumstances, white goods, industrial alcohol, fuel, and at times, certain co-products, are produced at the Lawrenceburg, Indiana distillery. Please refer to the pro forma schedules included in this morning's earnings release for more information. Moving to cash flow. Cash flow from operations was $20.2 million for the year-to-date period, down from $43 million in the prior year-to-date period. The reduction in cash flow from operations was driven by an increase in accounts receivable due to the timing of sales, as well as increases in inventory, primarily our barreled distillate and finished goods inventory. Our balance sheet remains healthy, allowing us to continue to invest to grow. We remain well capitalized, with debt totaling $325.1 million and a cash position of $22 million. Turning to capital allocation, we remain focused on organic and acquisitive growth opportunities that align well with our long-term strategy, as well as underlying consumer trends, which we believe our business is well positioned to leverage. On June 1st, we closed our acquisition of Penelope Bourbon, which we paid $105 million in cash upfront. The structure of the deal includes an additional potential earn-out, up to an additional maximum cash payout of $110.8 million, for a total consideration of up to $215.8 million. The additional potential earn-out is contingent upon certain performance conditions being met and is measured through December 31st, 2025. The earn-out will be treated as a contingent consideration liability and will be remeasured on a quarterly basis for accounting purposes. We will continue to evaluate M&A opportunistically to accelerate growth and increase our capabilities and product offerings. Additionally, putting away whiskey remains a critical component of our capital allocation strategy. Effectively matching whiskey put away with growing future Distilling Solutions and branded spirits segment sales remains a key priority and is critical to our long-term strategy. Our investment in inventory of aging whiskey increased to $234.6 million at cost, an increase of $24 million compared to the first quarter of 2023. Investing in capital expenditures to enhance our operational capabilities is another important capital allocation priority, and it resulted in capital expenditures of $14 million in the second quarter, an increase of $4.5 million versus the prior year quarter. We now expect approximately $63 million in capital expenditures for the full year of 2023, which is up from the $58 million figure we shared last quarter, due to the decoupling capital investment associated with the planned closure of the Atchison Distillery. We continue to expect our capital expenditures will be used for facility improvement and expansion, such as our new texturized protein extrusion facility in Atchison, Kansas, our distillation expansion at Lux Row Distillers in Bardstown, Kentucky, and the addition of whiskey barrel warehouses to support continued growth at our Lawrenceburg and Bardstown distilleries. Additionally, we plan to prioritize investments in facility sustenance projects as well as environmental, health, and safety projects. The Board of Directors authorized a quarterly dividend of $0.12 per share, which is payable on September 1st for stockholders of record as of August 18. The board continues to view dividends as an important way to share the success of the company with stockholders. We continue to believe our capital allocation strategy, focused on organic and acquisitive growth, aligns well with our long-term strategy. Leveraging this approach, we believe we can better position the business to benefit from underlying consumer trends. Now, let me turn things back over to Dave for concluding remarks. Thanks, Brandon. We are pleased with the strong performance this quarter. Demand for our products in each of the three segments remains strong. We believe our actions will continue to position the business for long-term success. To account for our strong first half performance, along with the recent acquisition of Penelope Bourbon, we are updating our full-year fiscal 2023 guidance to the following. We continue to expect sales to be in the range of $815 million-$835 million. Adjusted EBITDA is now expected to be in the range of $187 million-$192 million, reflecting an increase of approximately $9 million to the low and high end of the guidance range we provided last quarter. Adjusted basic earnings per common share has been revised upward and is now expected to be in the range of $5.35-$5.50 per share, with basic weighted average shares outstanding, expected to be approximately 22.1 million at year-end. The acquisition of the Penelope American Whiskey brand on June 1st, and the announcement in July to close our Atchison, Kansas distillery and exit the white goods and industrial alcohol product lines produced at that location by January 2024, Marc two key strategic decisions for the company. The Penelope acquisition is in line with our stated strategy to grow our branded spirits portfolio by acquiring brands that have strong growth trends and expect to be gross margin accretive to our business. The closure of the Atchison, Kansas distillery and exit of the associated industrial and white goods products produced at that facility by January 2024, supports our overall gross margin expansion efforts by rationalizing product lines that are no longer economically viable and have provided a drag on consolidated gross margins. Going forward, we remain committed to leveraging the solid foundation we have established over the years with the ongoing objective of delivering sustainable long-term value for our stockholders. That concludes our prepared remarks. Operator, we are ready to begin the question-and-answer portion of the call. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you're 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 star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Gerald Pascarelli with Wedbush. Please go ahead. Hi, good morning. Thank you very much for the questions. Just to start, on kind of some of your previous commentary. Obviously, your announcement to close the distillery in Kansas, you acquired Penelope Bourbon over the course of the quarter. You've been clear that you want to drive margin accretive growth, but should we view some of these recent actions as the company may be getting a little more aggressive to drive this growth, than, than you've been in the past? Specifically, should we maybe expect more kind of similar acquisitions to the Penelope acquisition that you, that you announced a couple of months ago over the near term? Is, is, is that fair, just in terms of what you're looking to acquire, and specifically, will it be in bourbon? Thank you. Yeah. Yeah, thanks, Gerald. The decision to close the Atchison Distillery, let's start there. You know, we've been talking about the negative impact that white goods and industrial have had on our business for the last really two years. One of the reasons we could not really exit that business was that we had to figure out a way to decouple the distillery from the ingredients facility due to the fact that the distillery receives the waste starch stream that's generated from the ingredients facility. What we've been able to do, you know, figure out basically over the last 12 months, is a solution to allow us to decouple, which has then triggered the decision to go ahead and close the Atchison Distillery. I'd say that's pretty consistent with what we've been talking about, but we had to come up with an engineered solution in order to make that happen, which we've now done. We're always looking for ways to improve our, our margin profile in the business, and this is certainly a, a positive step in that direction. I'd say it, it is an aggressive move, but we've, we have it well thought out, and we have very good solutions that we'll be putting in place between now and the end of the year to allow that decoupling to occur. On the acquisition front, you know, Penelope is right in the bull's eye of the type of brands that we would like to acquire. It's obviously an American whiskey brand, which continues to be American whiskey, one of the highest growth categories in all of spirits. It's been a high growth brand in the ultra-premium and premium plus price points, if you will. It's definitely a brand that, you know, we've been talking about that fits the profile of how we want to grow our premium plus segment of our business and brands. Absolutely, as we go forward, we continue to evaluate, you know, brands such as Penelope or brands in the American whiskey category, tequila category, that meet the criteria of, you know, high growth brands, margin accretive to the overall portfolio, and that we feel has future upside in growth. I don't know that it's a signal we're being more aggressive versus just consistent with what we've been stating our strategy is. Perfect. Thanks very much for the color. One more, and then I'll, I'll pass it on. This is just a housekeeping question. When we look out to 2024, just based on your commentary on being able to still produce, potentially produce white goods at your other distillery, I guess, simply speaking, are you planning on still producing white goods in 2024, or is that unclear and, you know, up for evaluation at this point? Yeah. you know, we shared this morning, Gerald, that year to date, if you exclude the Atchison Distillery, white goods production in the Lawrenceburg, Indiana, distillery was about $6.9 million worth of sales. We do this just for select customers. you know, this will likely continue, but a couple things to note. It's not gonna be significant. We don't expect, for example, all the volume in Atchison to swing over to Lawrenceburg, right? We don't expect it to be significant. It'll be for, you know, just in select circumstances. Another, another thing to note, because the, the amount of volume we're doing in Lawrenceburg is, is relatively much smaller than Atchison, we're able to use a different process, whereby the, the actual gross margin on, on that, on those sales is actually positive. Just a couple things worth noting. Perfect. Super helpful. Thanks very much, guys. The next question comes from Vivien Azer with Cowen and Company. Please go ahead. Hi, good morning. Morning. Morning, Vivien. I wanted to start on, on the guidance. Obviously, very nice to see the positive revision on, on the bottom line. But given that guidance now incorporates Penelope, I'm wondering if you can comment on the decision to hold the top line. Obviously, the, the range is reasonably wide, but are there any offsets that are worth calling out relative to the initial plan when you established guidance in February around the underlying business, where maybe you've gotten a little bit less constructive and Penelope is the offset allowing you to, to hold the top line? Thank you. The guidance we issued this morning, the raise does reflect continued strong underlying trends we're seeing in our business and continuing to see. From a sales perspective, Vivien, our guide implies a year-over-year back half increase of 6% at the midpoint, which is very consistent with what we saw in the first half. Penelope is factored in to our back half in the rest of the year guide, but our sales guide, leaving it unchanged, also reflects the uncertainty the Atchison Distillery closure is having, as we look to transition plans with our customers in the back half. One other thing worth noting, Vivien, is, it's emblematic of our continued success we're having in margining up our business as it implies year-over-year EBITDA margin expansion, which is the continued direction that we're looking to take our business. Certainly, and, and the improvement in, in the Adjusted EBITDA margin is, is certainly nice to see. For my follow-up question, please, you noted that you've made some very good headway in terms of securing commitments in 2024. Can you offer any more incremental color on that, new versus aged, and how the timing, you know, would benchmark relative to, to prior years? Thanks. Yeah, as Dave shared earlier, you know, the majority of our expected brown goods sales next year are committed at this point, and that, that goes across all spectrums. That's multinational and craft customers, for example, Vivien, and it's, it's also new distillate and aged. At this point in time, because we do contract out multiple years for new distillate, it probably skews more towards the new distillate side of the multinational customer type, as you'd expect, but it is representative of our whole customer set and portfolio. Terrific. Thank you. The next question comes from Sean McGowan, excuse me, McGowan with Roth MKM. Please go ahead. Yeah, thank you. First question is on the decline in, you know, the, the segments under premium plus, you know, the value in mid. How much of that is due to you managing it down versus, you know, just reduced demand? I'd like some color on that, if you could. Thanks. Yeah, Sean, the if you'll recall, in the first quarter, we had outsized gains in our mid and value brands, revenue, and that was due to the distributor realignment initiative that we announced, in the first quarter. I think what we're seeing is, in the second quarter, obviously we, we didn't have that one-time gain, and we did speak to that, you know, last quarter, that we, we weren't expecting to continue to see growth in mid and value once we got past the initial pipeline fill, if you will, associated with the distributor realignment. We are not actively managing down our mid and value brands. We're letting them basically follow a natural course of what's going on in the broader market around mid and value brands, so it's, it's not an active process we're pursuing to manage those down. Okay. Thank you. Then my follow-up is on the gross margin improvement, which continues to be pretty strong. How much of that... Can you quantify, Brandon, how much of the gross margin improvements, you know, maybe particularly within premium plus, how much of that is price versus, you know, other factors? Yeah, it's, it's definitely price and mix. As we continue to naturally, you know, gravitate more and more of our portfolio to the premium plus price points, you're gonna get that natural lift, Sean. As, you know, we've discussed, that, you know, looking at not necessarily the top line of the entire brand and spirit segment, but, you know, looking at the growth of the premium plus sales, is really indicative of where we're looking to take this portfolio long term, because if we're successful there, you're gonna see that natural margin lift as we saw in the quarter. Okay. Thank you very much. Good. The next question comes from Marc Torrente with Wells Fargo. Please go ahead. Hey, good morning, guys. Thank you for taking my questions. Just a few here. On Penelope, there are limited financial disclosures with the initial release. Could you provide any more sizing, growth expectations, margin profile, synergy expectations, et cetera? Then any additional detail on the earn-out provision from here? Yeah, I'll, I'll start with that one. Thanks, Mark. Yeah, so the, the information we provided and disclosed on Penelope was admittedly a, a little bit limited. We did that on purpose for competitive reasons. You know, they, they are a customer of ours, and there may be additional similar type deals we look at in, in the future, and we wanted to, you know, disclose only as much as we thought necessary on that front. You know, this is a very margin accretive brand. It's also, as I already noted, an existing customer of ours. A lot of the inventory they do have is at their cost, which was what we sold to them, and that's now transferred over. As we work through that over the next in the coming quarters and even years, in some cases, we do expect to gain those synergies, on the, on the cost side. Then as we roll out to additional markets and also gain points of distribution in the markets we're in, you know, we expect to see further tailwinds there as well, Marc. Okay, you touched on M&A some. Are the recent actions that you guys have undertaken prohibitive in any way for more immediate deals? Are you more focused on paying down the debt here? Is, is Europe still a priority for you guys? Yeah, so this is not prohibitive for us to continue looking at and assessing additional deals. Our leverage ratio is very manageable. It's, it's under 2x on a net basis. So our facility and debt arrangements definitely give us the dry powder available if we do see something that makes a lot of sense for this business. And yeah, as we've discussed, Marc, brands like Penelope here domestically make a lot of sense for us and where we're trying to, you know, take the brand and spirits portfolio. But we also do see, to your point, and continue to see white space outside the United States. you know, 97% of our sales are in North America, and, so we, we see great opportunity to expand that and take our portfolio elsewhere over time. Okay, and then just one more for me. Ingredient Solutions, will this now be completely separated from an operational standpoint? How are you guys thinking about this business going forward? Thanks. Yeah. Once we complete the decoupling process by the end of the year, Marc, the two facilities will be decoupled. We still think very highly of our ingredients business, and we'll continue to operate and grow that, that part of our business. It's probably been one of our most consistent performers in year after year, growing top line, expanding gross margins, and contributing to the bottom line. At this point, we view that as a key part of the business going forward. Thank you. The next question comes from Bill Chappell with Truist Securities. Please go ahead. Thanks. Good morning. Morning. First, just trying to understand the modeling for the back half as you, as you exit the white goods business. I understand on a, you know, pro forma basis, they're not adding a whole lot of earnings per se, but I'm just trying to understand, as customers walk away, you know, over these next four or five months, I imagine that facility, which is running 24/7, 365, is underutilized, you know, lower and lower, and it does kind of generate some reverse operating leverage. I think that's the way it works. Don't know how you're modeling it or how that's accounted for into your guidance, or how or if you're just kind of excluding that and assuming it was a normalized business to get to the numbers, just any, any color there would be great. Yeah. You know, firstly, you know, we're, we're committed to honoring our, our customer, relationships and commitments, throughout the, the end of the year, Bill. We're really not looking to fully close the facility until, until January 2024. That being said, you know, transition plans happen with customers. These are customers that, you know, in, in a lot of cases, have been customers for not just years, but decades. We are fully committed to helping them transition in an orderly process. However, that being said, we don't know at this point what that's gonna look like. You know, as you'll recall, we did moderate back our throughput at that facility at the beginning of the year to really take out what we felt like were some of the more, volatile, type sales that we were making on the margin. We have moderated it back, so far in the first 6 months of the year. That's gonna continue, but as for how, you know, the, the rest of the business is gonna go, you know, there, some of that is contemplated in our guide, and, we'll give you, you know, another update as or more updates as the year goes on, as we report earnings. Got it. I mean, it's safe to say they're, they're operating at probably some incremental losses in the back half that's factored into your guidance? They very much could be, Bill. Okay. You know, Dave, as you look, I know it's a low margin business that you're walking away from, but it is still, it's profitable or accretive to some extent at EPS, especially, vodka, gin side. I mean, how do you look that in terms of the company's earnings power or earnings growth over the next few years? Do you feel like you can easily replace that with other parts of the business to continue growth? Do you feel like next year is a, a step down in terms of EPS growth, as you, as you walk away from part of the business? Any, any thoughts there? Yeah. No, I think it'll actually help our ability to grow our margins, improve our margin profile and our EPS growth over the years, Bill, because basically, if you look at the pro forma financials that Brandon spoke to, in 2022, I think we had $140 million in revenue with zero gross profit. You know, once you factor in the netting out of the waste starch credit that goes back to ingredients to offset the loss on the white good industrial product lines. The same thing year to date this year. We're basically on a net basis, we have all the revenue that's coming from white goods and industrial is generating, you know, again, on a net basis, taking into account the credit going back to an ingredients, no gross margin whatsoever. It actually should help us going forward to expand our gross margin profile and to grow EPS. Got it. One last one for me. Just trying to understand the Penelope impact, and I, I'm not sure if you disclosed that. Like, is there a rough number we're, we're including into, to this year or next year, or as we're looking next year, or is that to, to be determined? Yeah, we, we haven't disclosed that yet, Bill, for the reasons, you know, we've, we've discussed, and it is contemplated in. It's obviously a very gross margin accretive deal for our branded spirit segment, and we also expect it to be immediately accretive to our consolidated earnings per share. That hasn't changed. The little bit of color we did share was that premium, you know, we closed the deal on June 1st, so there was, you know, a month of performance of Penelope in Q2. Premium plus sales were up year-over-year 29%, but we wanted to be sure to add that even if you exclude Penelope in the quarter, our premium plus sales were up north of 20%. The rest of the portfolio is really poor-performing as well. As the year and years after go on, we, we expect Penelope to add more and more to it. Okay, yeah, sorry, I, I meant to ask it a different way. I think you've said Penelope's in 30 states. Can you... I mean, that seems to imply that it's pretty widely distributed. Is there any other metrics you have just to kind of give us an idea of how that compares to, compares to, like, Yellowstone or other, some of your other Luxco brands? Yeah, there, there's more states to go, to your point, but, you know, it, it's a very young brand. It's one that's growing very, very fastly. In the states we're in, and I think where you're going, Bill, is, points of distribution, and we see a lot of runway there as well, just given it, in a lot of the markets, those 30 markets you just mentioned, they've only been in there, in, in some cases, months, you know, just up to a couple or a few years. We see, you know, not only from a market perspective, but also from an account perspective, a lot of runway. As far as quantifying how it compares to maybe the rest of our portfolio or Yellowstone, we're not prepared to do that at this point. You know, we'll take that into consideration moving forward. Great. Thank you. The next question comes from Mitchell Pinheiro with Sturdivant. Excuse me, Sturdivant. Please go ahead. Good morning. Just, just, follow up. Penelope had one month of sales in the quarter. Was there-- did it have any impact on your finished goods or barreled distillate figures for the end of the quarter? Yeah, Mitch, good point. Our barreled inventory or, our put away, increased in the quarter, about $24 million. You know, more than half of that was just organic, you know, due to a lot of our efforts to, you know, put away to match for future demand. But also it's due to our continuous improvement efforts as we've been seeing, especially out of our Lawrenceburg, Indiana, facility. The remainder of that, so just under $10 million of that number, is due to Penelope barrels that were part of the acquisition that came across and are now being reflected on our balance sheet. Was, is any finished goods there as well, or? Yeah, there, there was definitely an increase in our finished goods, so we, that came as part of the acquisition as well, as you'd imagine. There, there was an increase there. Okay. Thank you. Then, just a question on the branded spirits. You know, obviously, you know, the 28% price mix in the quarter, volumes were down, and I realize it's, you know, in the mid and the value segments, but what does the, what does the br-... look like in your premium plus categories? Is it flat? Are consumers accepting, you know, these significant price increases, with, with-- without any, without any, you know, problems? Can you talk about that a little bit? Yeah. The, the volume actually was up for premium plus as well in, in the quarter. It, you know, on all fronts, it was a very, very strong quarter for our premium plus branded spirits, price tiers, segment. You know, we, you know, the momentum really seemed to come out of the back half of the quarter, too. You know, when you couple the momentum we have there and, you know, the relationship with our, with, our RNDC that we entered into in the first quarter, with Penelope acquisition, and that was announced in earlier in Q2. We really feel like, you know, we're really well positioned, Mitch, to really deliver a strong back half. Hey, Mitch, what I, what I would add to what Brandon said is, the other thing we spoke of on our Q1 call relative to brands was we felt there was excess inventory in the market at the distributor level, and I'm sure you've been reading about, you know, destocking occurring in spirits in general. We feel like we pretty much cycled through that, and as we got to kinda mid to back half of the second quarter, we started seeing shipments pick up again, specifically in our premium plus brands. I think overall, yeah, at the price points we have on those brands, we're starting to see, you know, the shipments pick back up, which is a great sign because it continues to show consumer pull on those key brands, as well as we feel like we've kinda worked through the overstock issues that we were battling through in the first quarter. Okay. Just one last question on the Ingredient Solutions. The, you know, volume there was also down 1%, and I'm just curious how that fits with, you know, you know, with the longer-term trends of, you know, whether it's, you know, plant-based alternatives or higher fiber, if you could just talk about that a little bit, I'd appreciate it? Yeah. Dave just entered destocking on the branded spirits side. Coming into the year, on our food ingredient side, a lot of our customers are large distributors here in the United States, and, entering the year, they were a little heavy on their inventory as well. Q1 and even a little bit into the beginning of Q2, the purchase patterns were a little lighter than we'd expected. However, Mitch, that has picked up, as the, as that's been, you know, better, more or less right-sized, from an inventory standpoint. It was, it, it was a great quarter for the segment, and, and, we, you know, we expect, you know, a strong back half to the year for Ingredient Solutions. All right. Thank you very much. This concludes our question and answer session. I would like to turn the conference back over to David Colo for any closing remarks. Thank you for your interest in our company and for joining us today for our second quarter earnings call. We look forward to talking with you again after the third quarter. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.