Good day, and welcome to the MGP Ingredients fourth quarter of 2024 financial results conference call. All participants will be in a listen-only mode for the duration of the call. Should you need any assistance on today's call, 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 telephone keypad. And to withdraw a question, please press star, then two. Also, please be aware that today's call is being recorded. I would now like to turn the call over to Amit Sharma, Vice President of Investor Relations. Please go ahead. Thank you. Good morning and welcome to MGP's fourth quarter earnings conference call. I'm Amit Sharma, Vice President of Investor Relations, and joining me is Brandon Gall, Interim President, Chief Executive Officer, and Chief Financial Officer, and Mark Davidson, VP, Corporate Controller, and Head of Treasury. We will begin the call with management's prepared remarks before opening the call to analyst questions. Before we begin, this call may involve certain forward-looking statements. The company's actual results could differ materially from any forward-looking statements made today due to a number of factors, including the risk factors described in the company's annual report filed with the SEC. The company assumes no obligation to update any forward-looking statements made during the call, except as required by law. Additionally, this call will contain references to certain non-GAAP measures, which we believe are useful in evaluating the company's performance. A reconciliation of these measures to the most directly comparable GAAP measures is included in today's earnings release, issued this morning before the market opens. If anyone does not already have a copy of the earnings release, you can access it on our website, MGPIngredients.com. With that, I would like to turn the call over to Brandon Gall. Brandon. Thank you, Amit. Good morning, everyone. Before diving into our results and outlook for 2025, I want to take a moment to recognize our incredible team across the organization as they continue to act with speed, agility, and dedication in a difficult and volatile operating environment. Their actions ensured that our fourth-quarter results were in line with our expectations, and our full-year 2024 results were within our updated guidance. We've made meaningful strides across two of our three operating segments. However, this progress was more than offset by the faster-than-expected and larger-than-expected decline in our brown goods business, primarily due to elevated industry-wide barrel whiskey inventories. As we look ahead, we are committed to maintaining our position as one of the leading suppliers of high-quality, differentiated, premium American whiskey. Elevated inventories in high, albeit slowing, industry whiskey production will remain a headwind for our brown goods business, but we are taking decisive actions that are designed to navigate the current industry landscape and put us in a stronger competitive position. On the other hand, we are pleased with the trajectories of our Branded Spirits and Ingredient Solutions businesses. These two businesses, on a combined basis, accounted for a majority of our sales and gross profit in 2024, and we believe we are well-positioned to deliver attractive growth and make them an even bigger driver of our consolidated financial performance in 2025 and beyond. As for the fourth quarter of 2024, results were in line with expectations. Consolidated sales for the fourth quarter decreased 16% from the prior year period. Factoring in the Atchison Distillery closure, consolidated sales decreased by 7% as the expected declines in the Distilling Solutions and Branded Spirits sales more than offset a return to growth in the Ingredient Solutions segment. Adjusted EBITDA decreased by 9% to $53.1 million as lower SG&A expenses partially offset reduced gross profits. Basic earnings per common share declined to a loss of $1.91 per share due to a one-time non-cash adjustment to goodwill. Adjusted basic earnings per share decreased 4% to $1.57 per share. Before Mark and I discuss the results and our 2025 guidance in detail, let me take the next few minutes to highlight the current operating environment in each of our three business segments. Starting with the Branded Spirits segment, this business continues to perform well and remains a cornerstone of our long-term strategy to establish MGP as a premier branded spirits company. Across the global alcoholic beverage segment, North America is one of the most attractive markets, and American whiskey and tequila are among the most attractive categories. We are well-represented across both these sectors, strongly positioning us for the long term. As we look ahead, many of our Premium Plus brands continue to gain traction in the marketplace. This is highlighted by the continued momentum of Penelope and El Mayor, two of our largest Premium Plus brands, whose sales were up strong double digits in 2024. The strong sales trend for Rebel 100 is another example of the upside potential of our Premium Plus portfolio. Rebel 100's strong sales performance is benefiting from our realignment of the Rebel brand with the lifestyles of its targeted consumer cohort and more impactful marketing, highlighted by our sponsorship of Kyle Busch's number eight car under Richard Childress Racing for the NASCAR season. We see potential to employ a similar playbook with other brands in our portfolio. At the same time, our extensive portfolio of brands across the price spectrum positions us well to opportunistically meet consumers where they are, particularly in the current environment. We are pleased with the double-digit average annual growth of our Premium Plus portfolio over the last two years. Notwithstanding some near-term volatility, we believe that it remains well-positioned to grow ahead of the category over the long term. Turning to our Ingredient Solutions segment, sequentially improving sales and gross margin performance in the fourth quarter reinforced our confidence in this business's attractive long-term growth and gross margin upside potential. Food with better functional nutrition, such as high protein and high fiber, continues to meaningfully outgrow overall food industry spending. Our specialty starches under the Fibersym brand and specialty protein products under the Arise brand are designed to meet these needs. Our innovation pipeline remains strong, with opportunities to expand into higher growth and markets, including plant-based foods and healthy snack categories. We continue to receive strong interest from both existing and new customers, and we are committed to working closely with them to develop Ingredient Solutions that align with emerging consumer trends. We're positioning this business to take full advantage of these tailwinds by sharpening our commercial and operational execution. The recent promotion of Mike Buttshaw to the Ingredient Solutions segment President role should enable even closer cross-functional collaboration within the team. In addition, the completion of the B-starch fuel plant should provide cost relief related to the disposal of the waste starch stream in the second half of 2025. We believe these initiatives will help to unlock additional growth potential of this business and further solidify our position as a leading specialty wheat ingredient supplier. Now, let me provide an update on our Distilling Solutions business. As we called out on our third-quarter earnings call, soft whiskey consumption and elevated industry-wide barrel whiskey inventories are having a larger and quicker-than-expected impact on our brown goods results, and this pattern is continuing. Annual whiskey production in the U.S. has increased by nearly a million barrels since 2020 to nearly 4.6 million barrels, as a number of new and existing distillers have added or expanded distilling capacities to fulfill stronger demand from not just multinational and craft whiskey brands, but also private investment funds. However, with consumption normalizing from post-COVID levels, most of these demand projections turned out to be too optimistic and left brands with too much aging inventory relative to their current sales. This issue was initially more pronounced among our smaller craft brand customers, but we are now seeing similar issues from many of our other customers as well. As a result, to better align their inventories with current demand, they are cutting back their orders for both new fill and aged whiskey. These developments are putting even more pressure on Distilling Solutions sales and gross profit in 2025 than we previously anticipated, and we believe this dynamic will persist into 2026. The good news is that our customers remain committed to the American whiskey category, and the brown goods industry appears to be responding to this excess inventory. Industry data published by the TTB shows that after double-digit increases over the last three years, total U.S. whiskey production through October is down 1% in 2024, including a 4% decline in the last six months compared to the same periods in 2023. At the same time, TTB industry usage trends are improving as total whiskey barrel dumps are down 1% in the last six months relative to a 4% decline year-to-date through October and a 10% decline in 2023. We are encouraged by this nascent improvement in the industry supply-demand dynamics, even though total whiskey inventories remain elevated relative to historical levels. That said, we're not simply waiting for market conditions to improve. We're taking decisive, proactive actions designed to de-risk our brown goods outlook and emerge in a stronger competitive position from this period. As we mentioned on our last earnings call, we're optimizing our distillery cost structure to mitigate the impact of lower production volumes. Now, as we plan additional production cuts in 2025 and 2026, we have identified additional cost savings opportunities and are leaning more on our key suppliers and partners to further lower our overall cost structure. At the same time, we are strengthening our key customer relationships. We have a strong reputation and a long track record of providing high-quality aged and new distillate to many of the largest American whiskey brands. Our ability to produce unique and complex mash bills at scale is unmatched in the industry. We are leveraging these strengths to plan more strategic partnerships with our top customers. Let me reiterate that we remain committed to our brown goods business. We're confident that our actions will help us navigate this challenging period and position us to capture the full value of our aging whiskey inventory over time. Putting it all together, our 2025 guidance signals that these ongoing challenges in the Distilling Solutions business will continue to overshadow meaningful strides in our branded spirits and Ingredient Solutions businesses. Specifically, for 2025, we expect net sales in the $520 million-$540 million range, adjusted EBITDA in the $105 million-$115 million range, and adjusted basic earnings per share in the $2.45-$2.75 range, with average shares outstanding of approximately 21.3 million shares and full-year tax rate of approximately 25%. Due to the factors and our proactive actions I mentioned earlier, the full-year guidance now assumes approximately 50% decline in Distilling Solutions segment sales and a 65% decline in segment gross profit relative to our previous estimate of 35% and 50% declines, respectively. Full-year Branded Spirits segment sales are expected to be relatively flat, with gross margin in the high 40s in line with 2024 as we cut back on some of our single barrel programs as consumers and retailers become a bit more selective and as we sharpen our price points on some brands. W e expect Ingredient Solutions to return to positive sales growth in 2025, along with improving gross margins. We've accelerated our productivity initiatives to reduce costs across the business in this challenging environment, including a double-digit percentage reduction in our corporate headcount implemented earlier this month. We believe these initiatives will help offset the reinstated incentive compensation accrual this year and will remain a tailwind for the company beyond 2025. We're committed to investing behind our brands. At the same time, we're reducing and realigning our advertising and promotion spend to our most attractive growth opportunities. As a result, Branded Spirits A&P spend as a percent of branded sales will be approximately 12% in 2025. That said, with most of our A&P spending behind our Premium Plus portfolio, Branded Spirits A&P as a percent of our Premium Plus sales will remain high at approximately 25%, well ahead of industry spending levels. As we look at the quarterly cadence, first quarter tends to be our smallest gross profit and EBITDA quarter due to the seasonality of our business. We expect this dynamic to be even more pronounced in 2025 due to weather-related disruptions and the timing of onboarding new customers in our Ingredient Solutions business. We remain committed to generating strong cash flows. As part of this commitment, 2025 CapEx is expected to be approximately $36 million, down from approximately $73 million in 2024, and net whiskey put away is expected to be in the $15 million-$20 million range, down from approximately $33 million and $51 million in 2024 and 2023, respectively. Our 2025 whiskey put away is primarily for our own brands. Given the evolving situation regarding the implementation and timing of tariffs, their potential financial impacts are not included in our current outlook. The vast majority of any impact would be from our tequila brands that are imported from Mexico, as well as other imported products. We have contingency plans in place to focus on what we can control to help mitigate the potential impact of any tariffs. With that, let me hand it over to Mark for the review of our fourth quarter results. Thank you, Brandon. For the fourth quarter of 2024, consolidated sales decreased 16% to $180.8 million compared to the year-ago period. Excluding the impact of the Atchison Distillery, consolidated sales decreased by 7%. Within the Distilling Solutions segment, reported sales declined by 25%. Excluding the impact of the Atchison Distillery, segment sales declined by 6%, as a 10% decline in brown goods sales was partially offset by a 15% increase in warehouse service sales. Branded Spirits segment sales decreased by 12% due to the continued double-digit decline in our mid and value price brands, as well as a 12% decline in our Premium Plus sales as we lapped strong growth in the year-ago period. Ingredient Solutions sales increased by 4%. As expected, specialty protein sales posted its first quarterly growth of the year as new business wins offset the stronger U.S. dollars impact on our international sales. While we are proud of the progress we've made in generating specialty protein demand in North America, we expect order patterns to be relatively choppy in the early quarters of 2025 as we work to onboard new specialty protein customers. Our specialty starch sales increased 8%, leading to a record year in 2024 as Fibersym continues to benefit from long-term consumer-driven tailwinds. Consolidated gross profit decreased 13%. Excluding the impact of the Atchison Distillery, consolidated gross profit declined by 15% to $74.5 million due to lower gross profits across all three operating segments. Gross margin declined by 400 basis points to 41.2%. Fourth quarter SG&A expenses declined by 21% due to the lower incentive compensation expense, while advertising and promotion expenses declined 15%, largely due to the timing of certain A&P campaigns within the year. Full-year 2024 A&P spending increased by 6% compared to full-year 2023. Fourth quarter Adjusted EBITDA decreased 9% to $53.1 million as lower gross profits more than offset reduced SG&A and advertising and promotion costs. During the fourth quarter, we recorded a $73.8 million non-cash adjustment to the carrying value of goodwill in the Branded Spirits segment, primarily due to certain unfavorable macroeconomic factors such as a high discount rate and lower peer valuation multiples since the 2021 Luxco acquisition. This non-cash charge is excluded from our adjusted metrics as outlined in our earnings release. The impairment is not a reflection of the performance of the Luxco or Penelope acquisitions, as each have performed well since their respective closed dates. Net income for the fourth quarter decreased to a loss of $42 million due to the previously mentioned one-time non-cash adjustment. On an adjusted basis, net income decreased 6% to $34.4 million. Basic earnings per common share decreased to a loss of $1.91, while adjusted basic EPS decreased 4% to $1.57. We continue to prioritize strong cash generation by managing our working capital and reducing our barrel inventory put away. Net whiskey put away declined from $51.1 million in 2023 to $32.9 million in 2024, helping to drive a 22% increase in full-year cash flow from operations to $102.3 million, a record year for the company. Capital expenditures were $29.7 million during the fourth quarter and $73.2 million for the full year. 2024 capital expenditures likely represented a high watermark for our capital spending, as we expect it to decline to $36 million in 2025. Our balance sheet remains healthy, and we remain well capitalized, with debt totaling $323.5 million as of the end of 2024, leaving us with approximately $520 million in availability under our debt facilities. We ended the year with a cash position of $25.3 million, and our net debt leverage ratio remained largely stable at approximately 1.5 times at the end of 2024. With that, let me hand it over to Brandon. Despite our lower year-over-year financial projections and the uncertainty we face as an industry at this point in the cycle, we remain confident. We continue to be profitable, and we believe our balance sheet, cash flow generation, and access to capital gives us a strong foundation. We remain a leader in the contract distillation of American whiskey, and we are committed to this business and our customers. We are also a leading supplier of specialty wheat ingredients. In both cases, we believe we will emerge stronger and more competitive in the years to come. What gives us even more confidence is the progress we are making toward our mission of becoming a premier Branded Spirits company. Over the last four years, our Branded Spirits initiative has evolved from an aspirational idea to what we believe will be our largest segment by sales and gross profit in 2025. Our diverse portfolio of brands spans categories and price points, giving us the ability to meet consumers where they are. Our portfolio Premium Plus price brands have performed well, growing to 46% of total segment sales and expanding gross margin by 1,500 basis points since 2021. Our national sales and marketing platform, combined with the scale of our portfolio, allows us to be a critical partner with distributors. We believe this is yet another example where our commitment and leadership position us well to emerge stronger and more competitive in the years ahead. But what really gives me the most confidence is our people. Every day, I am humbled and honored to work side by side with my colleagues at MGP. Our team is passionate, innovative, agile, and resilient. There's no other group of individuals more committed and capable than those on our team. In conclusion, we believe our business stands on strong financial footing. We remain well-positioned in all three of the industries in which we compete, and our unique capabilities and product offerings give us the right to win. The current environment in the spirits industry is challenging. However, we believe our strategy and, most importantly, our people will steer us into greater success. 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, and to withdraw a question, you may press star then two. At this time, we will take our first question, which will come from Bill Chappell with Truist Securities. Please go ahead. Thanks, good morning. Can you just, I mean, talk a little bit more about your strategy for aged going forward? And when I say that, it's not just for, it seems like you've kind of shut down the spot market, which makes sense. But even for customers where you're making aged that they're going to buy down the road, I mean, last quarter or the end of last year, you were kind of left high and dry by some customers that had committed to that inventory and then walked away from it. Are you putting anything in place? Are you calling the customer base of who you're going to do that for? I mean, just trying to understand how you're de-risking that business a little bit more. Yeah. Thanks, Bill, for the question. Yeah, this is Brandon. So yeah, you're exactly right on a lot of those points. Last year in 2024, as we said at the beginning of the year, aged sales were going to be down year over year. New distillate sales were up last year, mid-single digits. So on the aged front, it did play out largely how we anticipated. We expect this year to be down even more just due to where we are at this point in the cycle for that business. However, that being said, we are not giving up on the aged business. Although we are at the point in the cycle where maybe it's in relatively less demand, we do not believe this will always be the case. We are still the only contract distiller partner to offer customers new distillate and aged at the breadth and scale that we do. This is important to our existing customers as it helps them fill gaps and new customers as it speeds up their brand timelines. As our increased focus is internationally, aged will play an even more critical role in our success, so we believe our long track record, Bill, our reputation for quality, and our commitment to our brown goods business and customers will allow us to monetize the value of our aged over time. Just to the point we're at in the cycle, it's not playing as prominent of a role as it has in the past. Yeah, and Bill, the second part of your question is a really good one, which is what's transpired with our customers since the Q3 call, so since last quarter, customers that just recently confirmed their contracts reached out to us to cancel their 2025 orders, while others began calling us for reduced pricing. At the same time, spot pricing too for both new distillate and aged continued its decline below the reduced levels that we'd anticipated back in October. So in response, we've done two things, two critical action steps. Number one, we made the strategic decision to begin outreach to our other contracted customers in an attempt to proactively align pricing to market levels and volume to their recalibrated needs. While these conversations are still taking place, we assume this proactive partnership approach will result in additional reductions in sales and gross profit. Simultaneously, we've also set in motion cost savings initiatives to offset some of these impacts. However, even with these measures, we expect distilling solution sales and gross profit to be down now 50% and 65% respectively this year. So to sum it up, Bill, we are really leaning into our relationships with our critical customers. Rather than waiting for our phone to ring to see what customers are going to say, we're using the value of the relationship and the long-standing interactions we've had with them to proactively contact them and ask them what their real needs are and compare that to where the market prices are today. Because it's very critical for us, as we remain committed to this business, to expand that partnership and to work with them through these tough times. Got it. So just to translate it, from November, there's not much change to what your outlook was for age in 2025. But the real difference is now you have, I guess, a firmer after going through at least a third of the customers, if not half, with new pricing and new volume. You've come up with kind of a new estimate of what new business will be in 2025. Is that the right way to think about it? Yeah, that's right. Our outlook on age for 2025 volumetrically is largely what it was back in October, which was pretty small, especially related to prior years. If anything's changed, we're probably going to get a little sharper on price there where we can. But yeah, the age outlook hasn't changed. We feel really good about our inventory position. We feel very confident that we're going to be able to monetize that over time. Okay. And then second, just on the branded portfolio, it's tougher for us to understand the true growth, excluding what you're planning to call. So is there any way to, as you rationalize that portfolio, understand kind of what the drag will be in '25 for brands you're exiting or de-emphasizing versus just kind of the core growth? Yeah. So in Premium Plus, Bill, we're expecting flattish sales for the year. And the overall branded spirits market is still trying to find its footing and stabilization. So we feel that flattish growth, especially at some of those price points, is prudent. Although, obviously, we're going to aim for higher. But we're trying to be realistic with our numbers for 2025. And the reason for that really is twofold. Number one, what we've taken out of the 2025 number that we had previously had a lot of success with are the single barrel offerings to retailers. These are high-margin, high-priced, really good products and really good offerings that were very, very popular when they first came out a few years ago. They were popular because they were very scarce, and they were very premium, and they were very original to what that retailer could offer. It differentiated that retailer. But what's happened is a lot of other suppliers have gone smart to it as well. And so the scarcity has gone away, and the high-priced nature is a little less consumable because of that from a consumer standpoint. So the demand has gone down on those. So we are taking that number down in our 2025 for our Premium Plus portfolio. We're also incorporating more price support at certain price tiers to either strategically position certain products versus their competitive set or to help move maybe some higher-priced, slower-moving inventory to help clear. So that's Premium Plus. And Mid and Value collectively is going to be down mid- to high-single digits, which sequentially is a really good improvement from 2024. And the reason for that is we are now no longer going to be lapping the repositioning of Rebel 80, which is a mid-price American whiskey that we discontinued in 2024. So that's now going to be out of the comparison periods, and we expect the Mid and Value portfolio to perform relatively better sequentially. Great. Thanks for the color. Yep. Thank you, Bill. And our next question will come from Robert Moskow with TD Cowen. Please go ahead. Hi, this is Seamus Cassidy on f or Rob Moskow, and thanks for the question. So you cited the TTB data, and looking at that data, it seems like there's something like over a decade of current consumption sitting in barrels. You said that you and other industry participants are cutting production to address the supply-demand imbalance. But my question is, looking at maybe 2026 and beyond, how confident are you that Distilling Solutions can return to growth? Or said differently, how long do you think it will take for these production cuts to start actually sort of addressing the supply-demand imbalance that you're seeing in the market right now? Yeah. Great question. So we see this tough environment persisting through 2025 and into 2026, as we stated. And it really depends on the industry how much more beyond that it's going to last. However, we do expect over time industry players to behave more rationally. And like we shared, we're starting to see some signs of that, which is encouraging. What we do know, Seamus, is that we're doing our part. We are reducing our production. We are controlling our controls, such as reducing costs, running with greater efficiency, and staying close to our customers. That being said, and like I said with Bill, we still believe that our aged will remain valuable, and although we remain committed to this business, it's worth noting that it's going to be a much smaller part of our overall business in the coming quarters and years than it's been in the past. Got it. That's helpful. And then maybe one more from me. There's an S-3 out this morning with Chairman Donn Lux listing his shares for sale. Given his significant ownership stake, is there any appetite by the company to maybe step in and repurchase some of these shares, especially in the context of the increased share repurchase activity in 4Q? Yeah. Great question. So yeah, the S-3 that went out this morning is more of a housekeeping item. When we did the Luxco acquisition, it was actually part of the agreement that we would do a number of those on behalf of Donn and his family. I believe this is the second one that we've done. So this is exactly that. We wanted to do it in the back half of last year, but there was some information that the board was aware of that prevented us from doing it. So that's why we filed it today. Understood. Thank you. Thanks, Seamus. And our next question will come from Marc Torrente with Wells Fargo. Please go ahead. Hey, good morning. And thank you for the question. I guess first on the guidance, typically entering a year, you would provide an idea of your visibility ahead. You guys typically cite the amount of distilling plant already contracted for the year. So maybe, I guess, entering this year, new environment, help us get some comfort around the outlook. Could you maybe provide some context around the buildup of the guide, particularly for distilling, and also any cadence considerations, perhaps by segment for the year? Thanks. Yeah. Thanks, Marc. Yeah. So a large percent, in fact, the vast majority, again, of our projections for this year are contracted. Given the fact that we're anticipating even relying even less on spot and age, even more of our expected sales are under commitment through new distillate. Since October, November, last time we spoke Marc, I've already shared what's transpired and what we're doing in response. So we increased the year-over-year decline in that business to 50% sales and 65% gross profit. That gross profit impact is approximately $21 million incrementally to what we had shared a few months ago. And that's netting out a lot of the really, really great cost savings initiatives the team's identified and is putting in place. So that number otherwise would have been much bigger. So from a confidence standpoint, we feel we're doing all the right things. We are getting out in front of it. We are anticipating, rather than hoping that our contracts hold. We are now building into our guide for the first time that the contracts are going to be possibly renegotiated closer to what our customers need and closer to the market price for those products. So that is a first for us. That is us being proactive. And that is us really trying to partner with our customers and show our commitment to them and to this business. As far as cadence, go ahead, Mark. Yeah. Yeah. As far as quarterly cadence, we mentioned in our prepared remarks that seasonality would be an issue and we'd have some softness in the first quarter, specifically as it relates to our Ingredient Solutions segment due to some unexpected shutdowns and plant-related issues we've already experienced and some choppiness as it relates to the specialty protein sales relating to new domestic business that we spoke to contributing to our Q4 growth in specialty protein. With that ingredients soft Q1, what we're going to see is a softer relative Q1 to the rest of the year, and to give you an idea of that Q1 of 2024, we had approximately 22% of our gross profit in the first quarter of 2024. It'll be even more pronounced than that. A lower respective gross profit is expected in the first quarter of 2025. Okay. Thank you for that color. Then how are you thinking through cash flow progression for the year? Earnings are under pressure. You've rebased CapEx, even with, I think, some carryover projects. And then there's a likely potential for the Penelope earnout. So just any additional color on how you're thinking about cash needs for the year and management throughout? Thanks. Yeah. Yeah. I'll start on that one. Yeah. It's a great question. So yeah, last year, as Mark shared, cash flow from operations was a record for our company, over $100 million for the year. And this year, despite your point Marc, the pressure on earnings and the lower EBITDA outlook, we still expect this to be a very strong free cash flow year for the business. And the reason for that is just, as you said, we are reducing our CapEx significantly. We believe last year was a high watermark for the business. This year, we think it's going to be approximately $36 million, somewhere in that range. But still, we are not walking away from very positive ROI projects that are going to help us strategically position ourselves in the future. So that's going to be one huge source of cash that wasn't there in the past. And then additionally, our put away is also going to be reduced on a net basis this year. So we're forecasting probably $15 million-$20 million in net put away. Last year was roughly $32 million-$33 million. And the year before that, it was closer to $51 million. So just through those actions alone, we're able to free up a lot of cash and use that at our disposal, whether that's to pay down debt or do other things opportunistically out in the market. That being said, our net leverage ratio at the end of the year was approximately one and a half. We do expect that with the lower earnings to be pushed upward, possibly. But we don't see it going above two times before the end of the year. Oh, and one other thing, Marc, for the Penelope earnout, that's not slated to be paid out until Q1 of 2026. Okay. Great. Very helpful. Thank you, Mark. And our next question will come from Sean McGowan with Roth. Please go ahead. Thank you. Two questions. One, yeah, can you hear me? Yep. Okay. How confident are you on the, given the changes in inventory and what's going on in the industry, how confident are you of the carrying value of the distillate that you have on your books? Yeah. We're confident, Sean. Our carrying value remains far below where market prices are. And you can imagine just at our size and scale, that our costs can be relatively low within the industry. And so there's no cause for concern at this point in time there. Okay. My other question was, you talked about the vast majority of the tariff exposure being on tequila. But can you talk a little bit about Europe? I mean, yeah, the European tariffs kind of resuming at the end of next month. And what portion of your output is eventually on the part of your customers bound for Europe? And what kind of exposure does that represent? Yeah. Today, it represents very little exposure is the answer. But we don't view that necessarily as the case longer term. So yeah, where the tariffs are is they are set to resume later on this year and resume at an even higher rate than they were before in Europe at around 50%. So those conversations are fluid. We have more than one industry trade associations that are really working on behalf of the industry to try to do what they can to mitigate or prevent those tariffs from coming back on. But yeah, as far as our guidance goes for 2025, Sean, not a big number is incorporated into that for international sales. Okay. Thank you. Thank you, Sean. And our next question will come from Ben Klieve with Lake Street Capital Markets. Please go ahead. All right. Thanks for taking my questions. First question on the ingredient business. I'm wondering if you can elaborate a bit on the magnitude of the 1X costs in that segment in 2024 and expected continued expenses on a 1X basis in the first half of 2025 as you kind of transition that segment post-Atchison. Yeah. No. Thanks. This is Mark. So for the full year 2024, our ingredients gross profit was down $20.8 million versus the prior year. So the first item there, $6.5 million of that had to do with the B-starch credit. And that's excluded from our pro forma adjusted metrics for the segment, which we provide in our earnings release schedules. So aside from the B-starch credit, we had about around $8 million in other operational costs and headwinds, including incremental costs to dispose of the B-starch slurry byproduct, which is something that we are mitigating with our biofuel facility in the second half of 2025. And then lastly, approximately $2.5 million of cost to operate the ProTerra facility that did not exist in 2023. So those are really the one-time costs, the remainder of the decrease in gross profit related to sales decreases, particularly in specialty protein. Yeah. So just to build on that, yes, the specialty protein business, that was the business that took a hit last year due to the strong FX headwinds of the strong U.S. dollar. A lot of our Arise 500 business goes to Japan. So after losing a big slug of that business last year, the team's done a really, really nice job of finding domestic customers for that in the time since. We saw that come on in Q4, which if you look at our specialty protein product line, it was the first quarter of growth of the year for that product line. Although it's going to be choppy as these new customers are onboarded in 2025, we do expect there to be more demand for that product, which is great news. Secondly, Mark mentioned ProTerra. We are very excited for this new capability. Just as a reminder, this commenced in Q2 in one line. We're making more and more progress. It's still going to be a slight drag to the Ingredient Solutions business P&L in 2025, but much less than it was last year. Just a couple of updates there. We have two new accounts expected to come online in the second half that are very, very large accounts for that business. We also have three new ingredient inclusions that are expected to be released and ready for sale in Q3 and Q4. Again, very excited for that business. This has been a very, very challenging year operationally. Separating it from the distillery came with a ton of complexity, and that's what's resulted in a lot of these one-time costs, but I'm very, very proud of the team for how they've responded, and I'm also very, very excited to share the news earlier in the year about the promotion of Mike Buttshaw to president of Ingredient Solutions. His ability to work collaboratively now with not only the commercial team, but across functions, is just going to be incredibly accretive to that business over time. Got it. No, that all makes sense. A lot of moving pieces, and yeah, certainly a lot of progress there of late. I guess one follow-up question on this segment is then around the international business that you referred to, Brandon. Is your expectation that those international customers are just kind of lost? Have they gone to another ingredient within their recipes, or are they expected to come back on here maybe as their inventory levels come down or as forex pressures mitigate? Yeah. Great question. So as a reminder, our Arise product line in specialty protein, just like our Fibersym product line in specialty starch, are very proprietary to us. We are leaders in those two areas in terms of specialty wheat ingredients. And so yeah, so the Japanese business, as an example, did go away quite a bit in 2024 and also in 2025. But their substitutes for what we do are hard to come by. And so we are seeing as the U.S. dollar has weakened a little bit over the last, say, number of months relative to the Japanese yen, we are seeing that interest come back. So it was definitely economic and not function, which is why we're seeing them show more interest again, even still at higher or elevated levels of exchange rate. Very good. I appreciate you guys taking my questions. Thanks a lot. To go back in the queue. Thank you, Ben. Again, if you have a question, you may press star and then one to join the queue. Our next question will come from Mitch Pinheiro with Sturdivant. Please go ahead. Yeah. Hi. Good morning. Hey, Mitch. Hi. So as far as looking at your put away for 2025, you're going to have some put away. But I'm curious, I guess that's all for your Branded Spirits business. There'd be no need to really put away for wholesale customers. Is that right? Yeah. That's our thinking right now. It's primarily going to be for our own brands. But as we watch the dynamics in the industry, that's a decision that we revisit every month. But similar to last year, we expect this year's net put away to be down year over year. And most of that is going to go to brands. Okay. And then is there a fungibility of the mash bills from a product that was earmarked for wholesale customers? Can any of it be reused for your higher margin Branded Spirits offerings? Absolutely. And we do that all the time. In fact, and it goes both ways. If there's a branded spirits barrel that maybe the innovation team decided to go a different direction on, then those get freed up likewise for Distilling Solutions customers. So yeah, it's a very symbiotic relationship between the two segments as it relates to inventory. Okay. And then, so as the Distilling Solutions business recovers, which is the customer segment that's going to drive that improvement, the beginning of that improvement? Yeah. I understand it's not for 2025. This is going to be a down year, and you talked about it going into 2026 still being weak, but as you look a little longer term, which is the segment that starts to drive your business to more positive growth? Yeah. The way we look at it and the way we're really trying to dial it in is focusing on certain customers, but also where we're differentiated, and where we're differentiated is in the higher-rye mash bills that we provide. We're also differentiated in that a lot of these customers we've supplied for a long time, so we are almost synonymous, if not fully synonymous, with their taste profile. The easy and quick answer is that the larger national and multinational customers of ours who've been around a long time are likely going to drive that growth in the future when it does return. Those same customers too have a lot of inventory. And we're working with them as well to recalibrate. But also, the other answer is that it really comes down to the strength of the brand. There are some craft and regional brands that are doing very well. And we feel like they've got a really good shot at becoming more household brands over time. So it's not just going to be one certain segment. The craft and the smaller brands are under probably more pressure for a lot of reasons than maybe some of their larger peers. But that's where we come in handy, Mitch, is we're able to help them innovate. We're able to help them blend. We're able to help them come out with new products to stay fresh in the mind of consumers with their age. And we're able to give them affordable new distillate in warehouse form over time to grow. And then just one more question. So I mean, this down cycle in the industry and particularly as it relates to your wholesale business, the distillery product segment, this is basically accelerating your business transformation to being almost a pure play Branded Spirits business. Is that correct? Is that the right way you're going to sort of strategically handle this? I know you have long-term customers that are going to be with you for a while, but it looks like this could be the, I mean, the catalyst to really accelerate the transformation. Is that the right way to look at this? Yeah. I think mostly, Mitch. T his isn't how we thought we'd get here, if I'm being perfectly honest. This was a lot sharper and impactful of a downturn in the cycle than even we anticipated, but it is a reminder as to why our strategy is and has been what it has been over the last five to 10 years. You were with us when we first announced that we were going to start building organically our own Branded Spirits initiative and capability in-house back in 2014. We switched from building it in-house to acquiring in 2020 after we realized that, you know what, the brown goods business is a great business, but it's very volatile, and we also realized that building a branded spirits business organically, it's A, really hard, and B, it takes a long time, and C, it costs a lot of money, so that's when we switched from build to buy. I think we all know where that led. That led to a fantastic acquisition of Luxco in 2021, followed by another fantastic acquisition of Penelope in 2023. The idea of being a branded spirits business was just that. It was an aspiration just four years ago. The fact that fast-forwarding to 2025, it's going to be our largest segment by sales and gross profit. It's also going to be our most stable business. It's also going to be the business that's going to enable us to grow much, much faster and bigger into the future. We're very proud of the progress we've made, and we're really proud of how we're positioned going forward. Okay. Thank you. And Thank you. And Thank you. And just final question, and you sort of touched on it in that answer, is in terms of M&A and some of the smaller craft. I mean, there are some good craft brands out there. Are there any conversations increasing? Do you anticipate doing any acquisition, or is this a hunker down year and we'll look at acquisitions next year? Yeah. So the non-negotiable number one priority for us is stabilizing our business, primarily our Distilling Solutions business. And that's through greater focus and partnership. But that focus and partnership applies to our other businesses as well because we always feel there's improvements to be made. But M&A is going to remain part of our long-term strategy. So we're not putting our head all the way down ever. We have to always, in my view anyway, Mitch, keep our eyes open as opportunities come because sometimes the best opportunities come in tough times, and we don't want to turn our head to that. More specifically, look, we didn't share it on the call, but our customer count last year as we entered 2024 was more than 840 customers. This year, even in the tougher 2024 environment, it grew to more than 930 customers. So within that customer set, there could be a lot of options, Mitch, to do something strategically, and I think what you also see in these environments is a lot of creative and innovative partnership ideas. So we don't know where things could go, but I do know that as we partner closer and closer with all of our customers, that that's going to be always going to be a possibility just as it's been in the past. Okay. All right. Well, thank you for the insights. Appreciate it. Thank you. Thank you, Mitch. Thank you for your interest in our company. Go ahead, John. Yep. This concludes our question and answer session. I'd like to turn the conference back over to Brandon Gall for any closing remarks. Thank you for your interest in our company and for joining us today for our fourth quarter earnings call. We look forward to meeting with many of you over the next few weeks.