Good day, and welcome to the MGP Ingredients Second Quarter 2024 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. 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 Amit Sharma, VP of Investor Relations. Please go ahead. Thank you. I'm Amit Sharma, Vice President of Investor Relations, and joining me are members of the management team, including David Bratcher, Chief Executive Officer and President, and Brandon Gall, Chief Financial Officer. We will begin the call with management's prepared remarks and then open the call to questions. As a reminder, this call may include certain forward-looking statements. The company's actual results could differ materially from any forward-looking statements made today due to the number of factors, including the risk factors described in the company's most recent 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 the law. Additionally, this call will contain reference to certain non-GAAP measures, which we believe are useful in evaluating the company's performance. A reconciliation of these measures to the most directly comparable GAAP measures is included in today's earnings release. The press release is available on MGPI's website at www.mgpingredients.com. This call is being webcast, and a replay will be available on our website. With that, I would like to turn the call over to MGP's Chief Executive Officer and President, David Bratcher. David? Thank you, Amit. We are excited to have you on board to lead our investor relations efforts as we continue to add strong talent throughout our organization, including two other recent hires, David Colyott, as EVP of Operations, and Paul Lux as VP of Sales for Distilling Solutions. Good morning, everyone. I will begin with an overview of our second quarter performance and provide updates on key performance metrics and initiatives. I will then turn it over to Brandon to discuss our quarterly results in greater detail. We will wrap up with a discussion of our outlook for the full year before we open it up for questions. We delivered another quarter of strong operating results as we continue to make consistent progress towards becoming a premier Branded Spirits company. We successfully recommissioned our Lux Row Distillery, giving us additional distilling capacity in Bardstown, Kentucky, to continue to support our branded whiskey growth. Our first half 2024 results were in line with our expectations, enabling us to reaffirm our full year sales, EBITDA and EPS guidance. Specific to second quarter 2024, on a pro forma basis, when factoring in Atchison Distillery closure, consolidated sales increased by 7%, driven by the ongoing momentum of our Branded Spirits business and solid Brown Goods sales within our Distilling Solutions segment. As a reminder, prior year reported sales included Atchison Distillery-related sales. At the segment level, Distilling Solutions pro forma sales grew by 9%. We posted our highest ever quarterly Brown Goods sales, driven by new distillate. As expected, sales of Brown Goods during the first half of 2024 were more heavily weighted toward the second quarter, and we expect the same ordering pattern to play out in the second half of 2024. I am proud of our sales team for their nimbleness as they continue to work with our Brown Goods customers to help them successfully adapt to the current consumption and inventory patterns at distributor and retailer levels. I believe we are uniquely positioned to thrive in the current environment, given our competitive distilling footprint, long track record of producing high quality, aged and new distillate, and our extensive roster of large multinational and craft customers. Turning to the Branded Spirits segment, quarterly sales increased by 11%, driven by strong innovation, focused execution, higher investments behind our key brands, and contributions from M&A. Our strong branded trends reflect our continued shift to a premium portfolio, as our Premium Plus portfolio now accounts for 48% of Branded Spirits segment sales, well above its 30% contribution for the full year 2021. It's a testament to our focused strategy of premiumizing our portfolio to align it with the evolving consumer taste across the alcoholic beverage industry and to leverage our improving capabilities and talent throughout our branded organization. As expected, quarterly sales for the rest of the Branded Spirits segment declined modestly. Distributor inventories for our branded portfolio remained relatively stable, even below historical levels in some cases. We continue to work closely with our partners to invest behind our Premium Plus brands and innovation to drive impactful retail execution, increase brand awareness, and fill distribution white space in targeted markets. Our Ingredient Solutions segment sales declined 3% as lower commodity starch and specialty protein sales were partially offset by a strong double-digit increase in our specialty starch sales. While our stronger U.S. dollar impacted our quarterly sales, our Fibersym branded specialty starches, which provide FDA-approved dietary fiber, continue to benefit from long-term consumer-driven tailwinds across several large food categories. Turning to gross margin, quarterly gross margins increased to 43.6%, which is an all-time high for MGP. Branded Spirits segment gross margins exceeded 50% for the first time since the Luxco merger, while Distilling Solutions gross margins increased to 45.5% as we continue to benefit from our decision to close the Atchison Distillery. I am very pleased with our gross margin trajectory as it validates our strategic actions and reflects tangible progress in our objective to becoming a higher margin Branded Spirits company. Our continued focus on execution and cost discipline enabled quarterly adjusted EBITDA growth of 7%, even though A&P expenses increased by 35% as we continue to invest behind our Premium Plus price brands. Second quarter adjusted earnings per share increased by nearly 15% to $1.71 per share. Our first half results were in line with our expectations, enabling us to reaffirm our full-year top line and profits guidance for the year, and I believe we remain well positioned to deliver even stronger profits and earnings growth for the second half of 2024. In summary, we are executing our strategic priorities to build a premier Branded Spirits company. I believe we are uniquely positioned with the right mix of distilling assets, growing brands, and a strong team to deliver long-term growth and shareholder value. With that, let me turn it over to Brandon for a review of our quarterly financial results and full year outlook in greater detail. Brandon? Thanks, David. For the second quarter of 2024, consolidated sales decreased 9% compared to the prior year period to $190.8 million, primarily due to the Atchison Distillery closure. Excluding the impact of the Atchison Distillery, consolidated sales increased by 7%, driven by higher Distilling Solutions sales and the continued momentum in our Premium Plus branded portfolio. Within the Distilling Solutions segment, sales decreased 20% to $93.4 million due to the Atchison Distillery closure. Excluding the impact of the Atchison Distillery in both periods, segment sales increased 9% from the prior year quarter. Brown goods sales were up 3%, driven primarily by the planned strong increase in our new distillate sales and the timing of customer purchases, as David mentioned in his comments. Our warehouse-related sales increased by 24% to their highest ever second quarter level, reflecting a higher proportion of new distillate sales volumes. Branded Spirits segment sales increased by 11%, mainly due to our Premium Plus portfolio. Including the contribution from last year's Penelope acquisition, Premium Plus portfolio sales increased 29%, while lapping 29% growth in the year ago quarter, reflecting strong performance of our premium price brands. Our mid and value branded sales were relatively flat due to easier year-ago comparisons. Consolidated gross profit increased 9% to $83.2 million, representing 43.6% of sales. Excluding the impact of the Atchison Distillery, second quarter consolidated gross margin improved approximately 80 basis points from the prior year period, as we delivered record gross margins of 52.5% in the Branded Spirits segment and continued to benefit from higher margins in the Distilling Solutions segment. Excluding the impact of the Atchison Distillery, Ingredient Solutions gross margin declined nearly 800 basis points from prior year, primarily due to incremental costs incurred to commercialize the waste starch stream. However, on a sequential basis, segment gross margin increased 400 basis points from the first quarter, primarily due to sequentially higher specialty protein sales. Advertising and promotion expenses increased $3 million to $11.7 million due to increased support of our Premium Plus portfolio. Branded Spirits related A&P totaled $10.8 million and represented 17% of segment sales. We remain committed to investing behind our faster growing, higher margin, Premium Plus price tier brands in our effort to capture a greater share of the American whiskey and tequila categories. Operating income for the second quarter decreased 2% to $43.4 million, while adjusted operating income increased 12% to $51.3 million, as higher gross profits and lower SG&A costs more than offset higher A&P investments. Net income for the second quarter remained flat at $32 million, while adjusted net income increased 15% to $38 million. Basic and diluted earnings per share decreased to $1.43 per share from $1.44 per share. Adjusted basic and diluted EPS increased to $1.71 per share from $1.49 per share. Adjusted EBITDA increased 7% compared to the year ago period, to $57.5 million. Moving to cash flow, year-to-date cash flow from operations was $29.6 million, up from $20.2 million in the prior year period, mainly due to favorable working capital, including lower barrel put away. Our balance sheet remains healthy, and we remain well capitalized, with debt totaling $309.4 million and a cash position of $21 million. Our net debt leverage ratio remained largely stable at approximately 1.4 times at the end of the quarter. Capital expenditures were $9.4 million during the quarter and $22.6 million during the first half. We continue to expect full-year capital expenditures of approximately $85 million for maintenance and initiatives to support our future growth. These initiatives include additional whiskey warehouses, dryer investment at the Lux Row Distillery, a mini fuel plant in Atchison to better monetize the waste starch stream in our Ingredient Solutions segment. Recall that with the closure of the Atchison Distillery, we expect to incur $4 million-$6 million of additional costs in 2024 related to treatment and disposal of the waste starch stream. The mini fuel plant should eliminate these costs by converting the waste starch stream into a commercial product. As part of our overall capital allocation strategy, we remain focused on organic and acquisitive growth opportunities that align with our long-term strategy of becoming a premier Branded Spirits company. To that effect, we continue to evaluate M&A opportunities while investing in whiskey put away to support our Distilling Solutions and Branded Spirits segment sales. During the second quarter, our net whiskey put away was $16.3 million at cost, and we continue to expect net put away to be between $25 million and $30 million for 2024, or roughly half of the 2023 amount. During the second quarter, we repurchased approximately $2.5 million of our common stock, bringing the year-to-date share repurchase amount to $7.5 million. We currently have more than $90 million remaining under the $100 million share repurchase program authorized by the board of directors in the first quarter. The board of directors also authorized a quarterly dividend of $0.12 per share, which is payable on August 30th to stockholders of record as of August 16th. The board continues to view dividends as an important way to share the success of the company with stockholders. Turning to our outlook for the full year. Given our first half performance, we are reiterating our full year guidance, with sales in the range of $742 million-$756 million. Adjusted EBITDA in the range of $218 million-$222 million. Adjusted basic earnings per share is forecasted to be in the range of $6.12-$6.23 per share, assuming basic shares outstanding of approximately 22.3 million at year-end. As David mentioned, we expect stronger profits and earnings growth in the second half of 2024, weighted more towards the fourth quarter. Underpinning our confidence in stronger second half and fourth quarter growth are a few key points. First, we expect our Premium Plus brands momentum to continue. Distributor inventory levels for our brands are in good shape, and positive impact from mix shift to premium brands should enable us to deliver branded gross margins at a higher end of our mid- to upper 40s% range. Second, we continue to have good visibility for our second half Brown Goods sales with committed contracts for a vast majority of expected volumes. As mentioned earlier, our customers are adjusting their purchasing and shipments in response to changing market trends in effort to manage their working capital in the current higher interest rate environment. Given that, similar to the first half, we expect Distilling Solutions sales and profits to continue to be lumpy and disproportionately more weighted toward the fourth quarter. Third, Ingredient Solutions segment gross margin improved by nearly 400 basis points sequentially from the first quarter, and we expect this trajectory to continue in the second half as our specialty protein business ramps up and additional specialty product opportunities take form in the second half. And now, let me turn things back over to David for concluding remarks. Thanks, Brandon. I would like to close by thanking and congratulating the talented and resilient MGP team for another quarter of strong operating performance as they continue to adapt and execute at a high level in a dynamic environment. Notwithstanding near-term trends, we remain optimistic about the long-term health and growth potential of the alcoholic beverage industry. We are fully committed, and even more importantly, we are making consistent progress on our long-term strategy of becoming a premier Branded Spirits company and delivering attractive shareholder returns. 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 touchtone phone. To withdraw your question, please press star, then two. We ask that you please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. The first question will be from Robert Moskow from TD Cowen. Please go ahead. Hi, this is Seamus Cassidy on for Rob Moskow, and thanks for the question. I was hoping, sort of just given the strong volume growth in Brown Goods, if you could help contextualize the -18% price mix result, maybe just directionally, you know, how much of this reflects incremental new distillate mix shift versus sort of like-for-like change in aged versus new pricing? And then on that note, you know, the gross margins for the segment came in ahead of our expectations. So, you know, just curious how this trended relative to your expectations, given sort of this intentional mix shift to new distillate. Thank you. Yeah, this is Brandon. Thanks for the question, Seamus. Yeah, that's exactly right. Brown Goods sales were up 3% in the quarter, led by volume. And to your point, the volume increase was driven by new distillate. As we've shared over the last couple of quarters, we have increased and heightened our focus on new distillate sales, and we shared that we expect them to, you know, be the majority proportionately of our Brown Goods sales this year, and that is in fact playing out. So although the volumes are much greater there, the price mix has declined as a result. So that's where you're seeing the shift there. I will also add that it is mix driven, in that pricing within new distillate was up year-over-year. And aged pricing, too, was in line with expectations, but it was slightly down, for the reason being that the average age of the barrels we sold during the quarter was younger than the same period last year. So, the pricing moved as we would have expected with that. So, the underlying very strong, played out the way we anticipated and the way we planned. That's helpful. Thanks. Goodbye. Thank you. Thank you. Thanks. The next question will be from Bill Chappell from Truist Securities. Please go ahead. Thanks. Good morning. Morning, Bill. Hey, just sticking on the Distilling Solutions segment, I mean, what are you seeing or hearing from your customers about kind of 2025? I guess there's concern that we're seeing a pause in spirits consumption, and obviously, some of the bigger global players have been more cautious. And so I didn't know if that, you know, if you're hearing that in terms of indications for 2025, if you're concerned about that, or if that even played into any of your kind of back half guidance. Hey, Bill, David. It's a great question. So as we've talked about multiple times, you know, the advantage of the new distillate is, it is a contract basis. You know, we're hearing the same things that you would hear, as you'd hear on other investor calls. But as we've said multiple times, as we look at these larger multinational customers and stuff that are buying on a, the new distillate basis, they continue to be optimistic about the future. The great thing about that business is, we've always said, is it's contracted. Now, having that, as we move into 2025, we've also said that we have an ongoing, contract renewal process in place. And as we play through that, we're constantly in contact with them, working through that. But today, you know, I think we're very optimistic, and we're very happy with our strategy on new distillate because of that. Got it. Thank you. And then maybe the second question: on the, the branded side, are you still moving forward? I mean, you had original plans to rationalize some of the sub premium brands and exit that. Is that still in place? Or, you know, trying to understand the strength of the business, if it's coming primarily from Penelope, if it's from some, you know, can maybe talk about Yellowstone or some of the other premium brands. And then also, is it being offset still being offset as planned for the rationalization? Well, our Premium Plus category continues to grow, as you saw in our gross margin percentage. That's, that is the contribution of it, and Penelope and Rebel and El Mayor and, and Yellowstone are all contributing to that. That is our core focus as we look at, as we move forward, and becoming a Branded Spirits company. But what we do at the same time is we, as I've said, we always are gonna offer a portfolio of products across very, you know, very different, categories and different price points. When we talk about rationalizing, we tend to talk about rationalizing the value price point, not so much the, the mid. Although there are a lot of mids that we continue to rework and, and try to reprice into that premium, at least premium category. So it is a strategy. We, we... Yes, to answer your question, we have rationalized some, and we continue to focus on the value side, but that has slowed quite a bit, and we're starting to see the results of that effort. Yeah, just to add, add to that a little bit, Bill. So yeah, in the quarter, mid and value were, you know, flattish, which is an improvement, relative to what we typically see for those two price points. And the reason for that is it was a very weak comp last year. And so as you'll recall, in Q1 of 2023, we had our national distributor realignment, and in March, there was a pipeline fill for mid and value. And so the result was Q2 of last year, for mid, was down 27% and value was down 10%. So that's what we were cycling through. We do not expect, or anticipate mid and value, you know, to show this type of growth or holding serve from, from that perspective for the rest of the year. Yeah, and Bill, just to add one more piece to that. As we look forward in our evolution as a company, we—what we will focus on in developing an innovation, M&A, all the things that are necessary at that Premium Plus price point category, but it doesn't necessarily mean we're gonna shed every mid that we have and stuff, because I think part of what makes us unique and part of what's real in our industry is that you have to service customers across multiple price points. Got it. Just a follow-up to the follow-up to the follow-up. It doesn't sound like you're seeing or saw much inventory destock from distributors this quarter, as certainly compared to last year, but even from first quarter. Yeah, no, I mean, we—as we've said the last time, our inventory levels, and we do monitor it at our distributors, are holding consistent. I think, again, I find it also interesting is now you're starting to see other people talk about the consistency in the inventory, now they're talking a little more on the retail level. I think, you know, I can tell for our company that our inventory is exactly where we need it, has been exactly where we needed it, and we continue to monitor it on a daily basis. Great. Thanks so much. Thank you, Bill. The next question will be from Marc Torrente from Wells Fargo. Please go ahead. Hey, good morning. Thank you for the questions. Just a couple here. On, back to the branded side, total sales were up strong double digits, Premium Plus nearly 30%. You anniversaried the Penelope acquisition during the quarter, which provided some support to sales, maybe like mid-single digits contribution to the segment over the last few quarters. What's your level of confidence that you can continue to grow this segment, given the category and macro backdrop, maybe some of the near-term opportunities you're seeing in terms of brand distribution? Yeah, thanks for the question, Marc. This is Brandon. I'll start out with David, and then fill in my gaps. But it's just continued execution. You know, in the quarter, you're exactly right, so just for everybody else, June 1st was the anniversary of the Penelope acquisition when that closed. So we did get a couple months of benefit in the quarter. But the rest of the Premium Plus portfolio did show robust growth, even if you take out Penelope. So we're very, very proud of that, and that's being led, you know, by the brands that David mentioned, and including our tequila portfolio in Premium Plus also did very well. We also had a nice uptick in our allocated items of Premium Plus offerings, and we expect that to sequentially improve as the year goes on as well. So, the way we see the rest of the year playing out and what gives us optimism is just what we talked about. It's just continued focus on gaining penetration in the points of distribution and growing that way organically within the United States. I think, you know, we've been, thanks. Let me add to that a little bit. I think what's unique about us, and we've talked about this for the last couple of quarters, is, compared to our peer set, especially in the Branded Spirits side, is the white space opportunity. Even if someone wanted to view consumption lower or whatever, the, if you look at where we're at and the opportunity that we have with the brands we have, it's wide open. And this is why you're continuing to see growth in that. Penelope is another, just a perfect example. In just this quarter alone, we expanded into seven more states. So as we move forward and we look at innovation, we look at those focus brands, we look at M&A opportunity, that is where we can be different than our other peers. All right, thank you for that. And then just building on the branded opportunity, you saw record gross margins during the quarter. How much of that was shipment timing versus just underlying, mix momentum, and how do you see that playing out through the rest of the year? Yeah, it was not a surprise to us. When, you know, when, in 2021, when the merger between MGP and Luxco took place, gross margins were in the mid-30s. And if you look at our quarterly results ever since then, it's been a steady step up to the record 52.5% that we just posted this quarter. And it's just continued execution. It's focus, it's investment in A&P on this premium-plus brands, which come, as you'd imagine, with much higher margin, and it's just been continued execution of that approach. Yeah, Marc, I think the best way to say it is if you look at what I just said earlier, our inventory remained level. If we were outweighing shipments, you'd see a climb in it, you know, versus depletions. We monitor our shipment depletions very closely. I think I've indicated it in the past. Even if we look at the internal compensation systems for our own sales team and stuff, they're all depletion-based, not shipment-based. And again, I think that what makes us unique, and it doesn't encourage channel stuffing or loading, and it allows us to better manage that inventory. Okay, and then if I could squeeze in one more. You've talked about the opportunity over time to improve free cash flow conversion as you shift more to a, a new distillate model and branded strategy. You're finishing up a few larger capital projects this year that require elevated CapEx. Maybe help contextualize the longer-term opportunity here and maybe sort of progress we might see into next year. Thanks. Yeah, great question. So there's really two catalysts that are gonna change the free cash flow profile of our business. And the first one, as you mentioned, is CapEx. We are at a high water mark for CapEx this year. As you'll recall, we expect to spend or invest approximately $85 million in CapEx projects. The majority of those are warehouse related. And you know, we've had great success through continuous improvement efforts and some capital of really increasing our throughput at our distilleries. So the warehouses now have to play catch up to support that growth. And so that's gonna continue on a little bit into 2025 as well, although not as high of a level. We, you know, we'll give a, you know, a full read on CapEx later on, but, you know, we expect it to tick down maybe closer to $60 million next year, and then even lower thereafter. So that's where we expect to see the free cash flow pick up from capital. But also on the inventory put away. That's another large item. So, last year, in 2023, on a net basis, our inventory increased more than $50 million. And this year we expect that number to be roughly $25 million. And that's, you know, because of what you just said, we're, we're allocating a lot of our production throughput to new distillate customers. And we are still putting away, we are still investing there, but we feel very good about the level of our inventory, and we feel like we can continue investing, but don't need to at such an accelerated clip. So just through those two capital allocation shifts or adjustments, there's gonna be much more free cash flow to fall to investors to invest in other areas of the business. Thank you. And the next question will be from Ben Klieve from Lake Street. Please go ahead. All right, thanks for taking my questions, and congratulations on the nice quarter, guys. First, I got a question, Dave, following your comment on Penelope and the distribution. You said that Penelope moved into seven new states here in Q2. I'm wondering if you can remind us what the distribution was at this point last year and what the overall distribution levels are right now? Kind of trying to understand the level of year-over-year growth we could still see from Penelope now that it's lapsed in the second half of the year. Yeah. This is Brandon. Thanks for the question, Ben. Yeah, so when we closed the Penelope acquisition in June, there were, you know, right around 30 states, maybe, a couple more than that. And then we finished 2023 at 37 states in total. And so, by the end of this year, or sorry, we added two more states in Q1 and seven in Q2. Probably by this time next year, we expect to be in about all 50. Not all states are, and all the markets are equal. I do want to remind you that, you know, some states are much larger and can have more of an impact than others. But yeah, we are, you know, we're trying to be very thoughtful and deliberate about how we roll this out. We don't want to move too fast. We want to make sure that the market support is there when we do unlock a new state. And Ben, I think that to add to that, the moving into a state is just step one. That opens up a whole new area of white space as we expand pods. So you might go into a state and align with someone and, you know, come out of the gate with, pick a number of pods. But once you're in there and you're able to benchmark other competitors, the real opportunity as we move forward is expansion in that state. So it's just one, but I look at it as the opportunity within those, in those states to continue that expansion and momentum forward. And that's not only true on Penelope, it's true on any of our products that we do. As we enter something, we try to find the right pods to expand at a competitive level. Got it. Got it. I appreciate that. That's helpful. One other big picture question, I'll get back in queue. You know, you talked about, you know, selectively pursuing M&A. In this environment where the spirit segment is, you know, facing its share of dynamics, you know, how has your view of M&A evolved here of late? Are you seeing more brands become available in your targeted categories? You know, are those targets moving? Are valuations coming down? You know, any insights on the M&A environment would be great. I would call the deal flow choppy, just a little, because you got to think about the whole environment, the dynamic environment, and where people are sitting back and trying to really understand what's going on. Now, having said that, we are seeing opportunities, but we've reinforced this for a few quarters in a row, that we want to make sure it's the right opportunity, that it's margin accretive, that it gets us closer to our peers on our gross margin percentage and all. So we are seeing deal flow being able, but that's different than actually being able to pick one that we want to do the right thing on. I expect that we'll continue to see increased deal flow over the rest of this year and into 2025. Okay, very good. Well, I appreciate you taking my questions. I'll get back in queue. Thanks, Bill. Oh, thanks, Ben. The next question is from Mitchell Pinheiro, from Sturdivant & Co. Please go ahead. Hey, good morning. Morning, Mitch. I'm just curious whether, from a revenue point of view, there was in the distilling solutions segment whether there was any differentiation between, you know, your multinationals, nationals, and craft segments? Yeah, great question. So, if you go back to how we talked about that business, new distillate customers tend to be more multinational, and whereas our aged customers tend to be more craft and regional. So as we focus more on the new distillate, those are gonna be the types of customers we're gonna be dealing with more so on a relative basis. You know, on the aged side, that's where you know, we have experienced some choppiness. However, we entered the year, you know, having lived through a cycle like this before, expecting that, which is why we positioned the business the way we did, more toward new distillate. You know, the aged customer, the more craft and regional customer, and we've talked about this as well, has shifted from buying just in case to more so buying just in time. And so, we expect that to continue, you know, throughout the rest of this year, at least. But we feel like we've done a good job in managing the business, to still be predictable, in the way we have. I'd add to that. If you think about the Distilling Solutions segment of our business, what makes it unique, speaking as a long-term brands guy, is the offerings that we offer. There are people who could sell other whiskeys, but to the level that MGP does it and the uniqueness of the mash bills, their ability to convert very quickly in response to those customers at a super competitive price to them, I think it sets us apart, even in a maybe choppy period of time. You know, they're gonna continue to come back, and as you've heard from others, we still have confidence in the American whiskey category. Has it been choppy? Has it slowed some? Yes, but it's still there. It's still rising. The opportunity we've said over and over is not only in the U.S., it's in Europe. It's in a lot of other categories that we can do, and offers us expansion opportunity because we do have that business segment, whereas a lot of peers that we have don't necessarily compete in that area. Very helpful. How does that, when you're looking at the barrel distillate that you're putting away, is that, you know, I guess more and more of that distillate is gonna be for your own brands. Are you putting away more now for third-party customers, or is this most of the new distillate in the age side, or the new barrel distillate? Is that for your own brands now? I mean, is that where- is that how- Yeah. Yeah. Yeah. So last year, when we put away, you know, quite a bit of whiskey, much of that was, you know, the majority of that was definitely for Distilling Solutions customers. This year, when that number has come down a bit, it's gotten a little bit more in parity in terms of whether it's for our own brands or for Distilling Solutions customers, but we're still investing for both, is the main takeaway here. So we have a lot of confidence in both. Like I said, we've seen these mini cycles before. And we, you know, we expect things as they settle out with the consumer and with interest rates, you know, to return to a more normalized level of growth. I would add to that, too. If you think about it, and we've said this in prior quarters, what makes us, again, unique is our ability to take new entrants into the category and bridge them from today to, you know, four years from today. So with that, you know, we are always gonna be putting up a layaway or put away for our, for future customers. I mean, that is what we offer that's unique. There may be other entrants into the category in the distillation business, but when they have zero on it, it's very hard. A customer can come to us today, paint a vision for us, we help them develop their products, provide unique products to them, and say, "Not only can we do that, I can get you and get you in the market today and continue to push your brand and help you grow your brand to become a new, larger, new distillate customer. Just one follow-up is just would love to hear your thoughts or any update on potential international sales. It continues to be a focus area. I mean, I've said for a long time, even for a very long time, that that is the opportunity market. American whiskey in Europe has lagged, and typically on some of these categories, they continue to lag, or even call out tequila. You're starting to see a little tequila arrive in the European markets and stuff. So I do believe that the long-term opportunity is in Europe. We do have feet on the ground. As a matter of fact, I've got a team over there today in Europe that left the U.S. yesterday to go in, explore opportunities, build those relationships, look at how the channels are different, what price points that they're entering on to totally understand the market. I feel like that is a real opportunity, a real white space for Distilling Solutions. Okay. Thank you for the questions. Thank you, Mitch. Again, if you'd like to ask a question, please press star then one. The next question is from Sean McGowan, from Roth Capital Partners. Please go ahead. Thank you. Appreciate it. Two quick things. Can you give us a sense of whether the advertising levels you're expecting in the second half should be, you know, in terms of percentage of revenue, about the same as what you've seen so far in the first half? You know, or will it moderate at all? I know you said you're committed to continuing to advertise, but just trying to get a sense of what the level is gonna be. Yeah, thanks for the question and the opportunity to provide some more insight there. So, A&P spend was north of $10 million in the quarter. Actually, north of $11 million, excuse me. And we do expect Q2 to be the high watermark for the year from a quarterly basis for advertising and promotional spend. A lot of that has to do with shifting a lot of our advertising around March Madness this year. Whereas last year, it was more Q4 weighted. We do expect Q2 to be the higher quarter of spend for particularly for our brand spirits promotion. Additionally, while we're talking about kind of how we see the quarter is playing out, and then I talked to this a little bit in my prepared remarks, Sean, but we do anticipate, you know, our branded sales to be disproportionately weighted towards Q4 relative to Q3. And we saw this similar thing play out between Q1 and Q2. A lot of those contracts are written to where those customers have, they have to purchase either in the first. You know, a certain amount in the first half and a certain amount in the second half. And because of the higher interest rate environment, they are opting to wait and transact later on in that period, which is why Q2 and Q4 will be more heavily weighted. Yeah. I'd add to that, that it's true with brands as well. As you think about, Q4 tends to be, you know, it's obviously holidays, and so you know, you're gonna have a bigger demand for the product, and you'll see a little stronger pace. You know, if you think about where we're at on our guidance and our, and what we've done in Q1 and Q2, I would expect Q3 and Q4 to follow a very similar trend, in profitability in Q1, Q2, and comparing that to Q3 and Q4. Thank you. That's helpful. And then one other quickie. Can you give us a little bit more color on just how much of the growth in Branded Spirits came from Penelope as you lapped it, like, on a year-over-year basis? Yeah. A good portion of it was. The majority of the growth in, in Premium Plus was, from Penelope. But I don't want to take anything away from the rest of the portfolio, because, as I mentioned earlier, we did see robust growth also, in, in, in those other brands. Tequila, David mentioned El Mayor. We're seeing good results with Rebel and a lot of the, the marketing spent behind that brand. So it, it was pretty evenly weighted, of growth outside of Penelope. And then the other thing, too, is that our allocated offerings picked up in the quarter, and we expect it to continue picking up sequentially as the year goes on. Thank you very much. Appreciate that. Ladies and gentlemen, this now concludes our question-and-answer session. I would like to turn the conference back over to David Bratcher for any closing remarks. Thanks, everyone, for the confidence you've placed in our team as we continue to transition into a premier Branded Spirits company. I would also like to thank Mike Houston and the Lambert team for their support and help in driving our investor engagements over the last several years. We are pleased with our first half performance and look forward to meeting many of you at investor conferences over the next several months. Thank you, sir. The conference has now concluded. Thank you for joining today's presentation. You may now disconnect your lines.