MGPI

Good morning, and welcome to the MGP Ingredients first quarter 2026 earnings conference call with Julie Francis, President and CEO, and Brandon Gall, CFO. 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 a touch-tone phone. To withdraw your question, please press star then two. Please also note that this event is being recorded today. In addition, this call may involve certain forward-looking statements. The company's actual results could differ materially from any forward-looking statements due to a number of factors, including the risk factors described in the company's annual and quarterly reports filed with the SEC.

The company assumes no obligation to update any forward-looking statements made during the call, except as required by law. This call will contain references to certain non-GAAP measures, which the company believes are useful in evaluating the company's performance. A reconciliation of these measures to the most comparable GAAP measures is included in today's earnings release, which was issued this morning before the markets opened and is available at www.mgpingredients.com. At this time, I would like to turn the call over to Julie Francis, President and CEO of MGP Ingredients.

Good morning. I'd like to thank you all for joining us today on our first quarter 2026 earnings call. Let's kick it off with a review of some of our quarterly results and progress made against our key initiatives. Brandon can go into the financial metrics during his comments. Sales in the first quarter of 2026 came in at $106.4 million, down versus the prior year, in line with our expectations. Adjusted EBITDA of $15 million and adjusted basic EPS of $0.15 also declined versus the first quarter of last year. However, both of these key metrics were ahead of expectations. We are pleased with this performance as it helps to validate the work we've been doing to drive progress in our business while simultaneously navigating a challenging industry backdrop.

In the first quarter, we continued to focus our energy on the areas we can control and to sharpen our strategic focus and strengthen execution across the organization. For Branded Spirits, we maintained momentum in our premium plus portfolio in the first quarter, which was led by Penelope Bourbon and benefited from improved demand for select mid-price offerings. We also delivered solid growth in Ingredient Solutions as the improvements the team has made in operational reliability are taking hold and delivering results. While I plan to talk more about our segment performance later, I'd like to share a few recent actions we have taken. As you know, we've been strengthening and revamping our strategy, marketing, and supply chain functions in order to add specific capabilities to address new and existing opportunities and to build out best-in-class processes designed to balance improved commercial planning while driving disciplined execution and long-term success.

As part of these efforts, we recently announced there will be a temporary idling of our distilling operations in Kentucky at Limestone Branch and Lux Row starting in May. Like many companies across the industry, we are navigating this challenging environment and taking the steps we believe are necessary to better align our operations and inventory. While this temporary idling will unfortunately affect 33 employees, it is not expected to impact the availability of our products or our services to our customers and is necessary to adjust our production to align with current inventory levels. We'd like to remind everyone that our largest facility in Lawrenceburg, Indiana, remains fully operational and will continue to operate to serve our brands, clients, and customers. Shifting to our business segments. I'll begin with Branded Spirits, which remains the focus as our primary long-term growth driver.

As expected, first quarter sales were down year-over-year. However, we continue to see constructive progress, particularly within the premium plus and mid-price tiers. We view these price tiers as critical to the long-term health of our portfolio, and we are pleased to see they both saw growth in the quarter. Importantly, gross margin expanded 180 basis points to 47.8%, reflecting improved mix and early benefits from our revenue growth management initiatives. Gross profit of $21.1 million was down versus the prior year and primarily driven by an expected decline in sales of private label products within our other category. Premium plus sales increased 1.5%, supported by continued consumer demand for our differentiated high-quality offerings and the increasing effectiveness of our focused growth strategies.

Penelope Bourbon once again delivered strong performance with sales up 10% year-over-year. As you recall, this brand is cycling the highly successful launch of Penelope Wheated in the first quarter of last year. Even against this comparison, we saw growth driven by sustained and growing momentum in our core SKU, Penelope Four Grain, along with strong consumer response to limited time releases such as Havana, Rio, and American Light Whiskey. We are also encouraged by the early traction from our new ready-to-pour offerings, including our Black Walnut and Apple Cinnamon Old Fashioned products, which continue to expand Penelope's consumption occasions. Turning to Yellowstone. Despite a year-over-year decline for the first quarter, we are seeing early signs of stabilization and recovery, supported by deliberate investments in innovation and digital capabilities.

Our ultra-premium limited release, Yellowstone Recollection, has been exceptionally well received, earning strong critical acclaim and press coverage, with consumer demand exceeding our initial expectations. As discussed in our last earnings call, we continue to increase our investment in digital marketing and media capabilities. Yellowstone is the first brand we've deployed a fully integrated digital activation strategy, combining best-in-class social media execution with targeted paid media in focus states. Including select control states. In Pennsylvania and California, for example, this approach, combined with revenue growth management initiatives, drove robust double-digit growth for Yellowstone in the first quarter versus the prior year. Turning to tequila, where our El Mayor brand delivered year-over-year growth, driven by continued progress in price pack architecture efforts. This included expanded 1.75 liter offerings and the introduction of 375 milliliter sizes as consumers increasingly adopt premium tequila across a broader range of occasions and price points.

Similarly, Exotico Tequila was up strong double digits, fueled by the addition of a 1 liter offering, which is enabling continued gains in on-premise distribution alongside price optimization. Additionally, the 375 milliliter size is allowing consumers to trade up from mixto tequila to high quality, 100% agave tequila at an attractive price point in off-premise channels. For mid and value price portfolios, combined sales declined 3% in the first quarter. These are improving trends as we continue to prioritize our strongest performing SKUs and channels. Revenue growth management and Price pack channel optimization remain critical levers in these categories, and we are encouraged by early results as we execute against this strategy. Looking ahead, we are intentionally concentrating resources behind approximately 10 of our most promising brands with a clear focus on purposeful differentiation and innovation to support sustainable long-term growth.

At the same time, we are managing the portfolio with discipline. As discussed on our prior call, we've initiated comprehensive portfolio review and rationalization. During the first quarter of 2026, we discontinued more than 30 tail brands with approximately 15 additional brands planned to be discontinued by the end of this year. Combined, these brands represent approximately 1% of segment net sales and we expect when annualized, will represent an estimated 20 basis points of improvement to the segment's gross margin profile. For our Branded Spirits segment, we are excited about the opportunities ahead across our broader portfolio. As with all growth trajectories, we will take many steps forward, some bigger and some smaller.

We also will likely alternate between some really healthy quarters and some softer ones as we continue to successfully prioritize our best performing offerings and ramp up our investments in these brands while continuing to cycle new product introductions. Turning to Distilling Solutions, where despite the challenging domestic whiskey supply environment, our first quarter results came in as expected. Segment sales of $28 million decreased 40% over a year, while gross profit of $8.6 million declined 54% as elevated inventory levels continued. In the first quarter, we maintained our focus on creating a differentiated value proposition to better position MGP as a long-term strategic partner for both large and small customers.

Our brown goods customers expansion efforts are taking hold, as demonstrated by growth of 9% in age sales and the addition of more than 20 new customers in the first quarter, including a significant national private label whiskey customer. We are proud of the customer expansion progress we are making, particularly given the current industry backdrop. As discussed on our last earnings call, we are also broadening our premium white good offerings. These efforts are focused on complementing our brown goods portfolio. During the quarter, we transacted our first customer sale under this new, highly customized initiative. While we are pleased with the progress we are making, given the unique and highly customized nature of these product offerings, these projects will take time to fully commercialize and scale.

That said, we now expect growth from this initiative to be in picking up in the second half of this year. Our focus on premium white goods is designed to leverage the scale, heritage, and quality of our Indiana distillery to produce premium gin and grain-neutral spirits, which can then be customized to meet each customer's specific needs. We expect that this effort will allow us to move beyond commoditized offerings, generate more attractive economics and better asset utilization rates, and also serve as a bridge to longer term and deeper relationships with strategic customers. Our efforts are also focused on driving cash generation by increasing our value-added service offerings as we look to attract and retain a wider pool of customers.

Warehouse services made up approximately 30% of our Distilling Solutions segment sales in the first quarter, and both sales and gross profit were up versus the prior year. Turning now to our Ingredient Solutions segment, where sales of $34.2 million increased 29% versus the prior year. This growth was primarily driven by higher sales volume, price, and mix for our specialty wheat proteins and starches. Gross profit of $3.8 million was up 56%, with gross margin of 11.2% up nearly 200 basis points as higher sales of specialty protein and starch products were partially offset by higher waste disposal costs. This successful first quarter was driven by continued improvements in operational reliability with each month better than the past one.

For the quarter, efficiency was up 14% year-over-year, with a slower start to the year firmly offset by a solid March. We plan to continue to move towards greater efficiency as we improve overall and as we begin to cycle previous throughput issues. Fluid disposal has been more complex and more costly than initially projected. Reducing waste and disposal costs are a key priority, and we're implementing additional measures by year end and continue to expect to remove these costs over the long term. At the end of the second quarter and into the third, we have a planned shutdown for scheduled maintenance and capital projects designed to further improve reliability and throughput, and to provide some relief in our waste stream disposal costs. Brandon will share the related financial impacts in a moment.

Despite the effluent challenge, we are moving in the right direction in Ingredient Solutions. We are pleased with the momentum as better operational reliability means we have more product to sell. This is key as we continue to see increasing demand for our proprietary and unique products. We will remain focused on driving growth through our specialty fiber, Fibersym, our specialty protein, Arise, and our extrusion protein, ProTerra. I'd like to highlight the progress we are making in driving a Cost Ownership management mindset that is supporting growth and our bottom line by eliminating waste, driving efficiencies, and maximizing effectiveness. One reinvestment example of this is the work we completed to streamline marketing services and to reduce our non-working media spend while reinvesting those savings into our Yellowstone digital marketing programs.

Going forward, we will continue to reinforce this mindset by embedding productivity and cost discipline into our operating routines, performance management, and compensation metrics. Productivity and a cost management focus are becoming a part of our regular management routines, helping us to uncover and track opportunities to eliminate waste and driving us to operate more efficiently and effectively across the entire organization. With that, I'd like to turn the call over to Brandon.

Thank you, Julie. Turning now to our financial results. For the first quarter of 2026, we reported consolidated sales of $106 million. While sales decreased 13% compared to the year-ago period, they were in line with expectations. Gross profit of $33.6 million was down 22%, while gross margin of 31.6% declined by approximately 400 basis points. Our total SG&A spend declined by approximately 1% in the first quarter, while adjusted SG&A declined by approximately 2%. As expected, Branded Spirits advertising and promotion expenses were 13.6% of branded spirit sales, a reduction of approximately 24% year-over-year as we cycled the final period of elevated marketing spend prior to our current, more disciplined and efficient realignment efforts.

We continue to expect full-year branded spirit sales A&P to be 13%-14% of branded spirit sales. Net income decreased to a loss of $134.8 million, primarily due to a discrete non-cash adjustment of $179.5 million to reduce the carrying amount of goodwill and other long-lived assets in the Branded Spirits segment. This also included approximately $27 million for equipment unrelated to the distillation process at our Lux Row facility in Kentucky. Adjusted net income of $3.3 million decreased 57% on a year-over-year basis. On a per share basis, we had a loss of $6.30 for the first quarter versus a loss of $0.14 in the prior year, primarily due to the adjustments I just noted.

On an adjusted basis, earnings per share of $0.15 decreased 58% year-over-year. Adjusted EBITDA of $15 million decreased 31% over the same period. Capital expenditures declined 75% to $2 million in the first quarter, and we continue to estimate CapEx of approximately $20 million for the full year as we look to optimize our capital deployment in the current industry environment. Finally, as of March 31st, our net debt leverage ratio was approximately 2.1x. Turning to annual guidance for 2026, which we are reaffirming, we continue to expect net sales between $480 million-$500 million. Adjusted EBITDA is projected to range from $90 million-$98 million.

This is consistent with previous expectations as the efficiencies and savings from our recently implemented Cost Ownership mindset initiative is expected to offset our reduced gross profit outlook in Ingredient Solutions. Our adjusted basic earnings per share range remains between $1.50 and $1.80, and average shares outstanding should be approximately 21.4 million shares for the full year. Our annual tax rate is expected to be approximately 27%. Turning to our balance sheet and cash flow outlook. As Julie shared, the decision to temporarily idle our Kentucky distilling operations beginning in May was difficult. However, given the current environment, it is an additional example of the capital prudence necessary to position us for long-term success. As a result, we expect full-year improvement in cash flows of $10 million versus previous expectations.

Excluding the impact of the Penelope earn out payment, we now anticipate 2026 full-year operating cash flow of $50 million-$55 million and free cash flows of $30 million-$35 million. We also anticipate an improvement in our net leverage ratio as a result of the temporary idling and expect it to peak at approximately 3.5x, down from the 3.75x figure we provided on our fourth quarter earnings call. We continue to estimate net whiskey put away in the $13 million-$18 million range for 2026, which represents our second consecutive year of meaningful capital investment optimization and stewardship. This target includes both new production and procurement of barrels and is consistent with prior expectations, as much of the temporary idling was factored into the previously provided outlook.

From a business segment perspective, our full-year segment outlook for Distilling Solutions sales and gross profit is consistent with previously shared estimates. However, our white goods sales outlook for 2026 has been reduced and is now expected to be up mid-single digits, largely due to the time needed to fully commercialize and scale these customized new projects. Much of this reduction is expected to be offset by improved sales within other product lines. Our full-year sales outlook for Ingredient Solutions is consistent with previously shared estimates. However, we now expect full-year segment gross margins to be in the mid-teens as a result of the increased effluent costs and plant shutdown at the end of the second quarter and into the third quarter. Our full-year segment outlook for Branded Spirits is unchanged from previously shared estimates.

To close, I'd like to stress Julie's comments regarding our performance to date as it helps to validate the work we've been doing to drive progress in our business while simultaneously navigating the challenging industry backdrop. With that, I'd like to turn the call back over to Julie.

Thank you, Brandon. Before we wrap up, I wanna thank the entire MGP team for another quarter of persistence, dedication and hard work, and for their commitment to executing against our strategic roadmap. This strategic roadmap is designed to drive growth across all three businesses. For our Branded Spirits, we will continue to focus on winning in the premium plus category with Penelope Bourbon while strengthening our overall brand focus. We will prioritize our best performing brands and plan to rationalize approximately 20% of our tail brands. We will also strive to increase our penetration in national accounts and to strengthen our digital marketing capabilities. For Distilling Solutions, we will remain focused on rebuilding our aged whiskey pipelines while broadening our premium white goods offerings to complement our brown goods portfolio.

We will also continue to work on attracting and retaining a wider pool of customers by growing our private label and international whiskey programs and by expanding our value-added service offerings. For Ingredient Solutions, our efforts will remain focused on driving growth through our industry-leading specialty fiber and specialty protein product offerings. We'll also continue to implement new processes to help return to operational excellence and improve reliability and throughput. In addition, managing high waste disposal costs will remain a key priority for this segment. Looking ahead, I'm encouraged by the progress we are making across our organization. As I stated earlier, our strategy remains grounded in focus, execution, discipline, and accountability. We're actively evaluating all available levers to operate more efficiently and effectively.

While the industry outlook remains challenging over the near term, we are committed to addressing our challenges in order to position MGP to emerge as a better aligned and more resilient company that is capable of delivering long-term value creation. With that, I'd like to turn the call over to the operator for any questions.

The first question comes from Robert Moskow with TD Cowen. Please go ahead.

Hi, this is Seamus Cassidy on for Rob, and thanks for the question. I was hoping you guys could provide a little bit more detail on sort of the early learnings from your portfolio review in Branded Spirits, and I guess what approach you took to this review. You mentioned the investment in Yellowstone and ten brands in total. What went into the decision to invest in these brands? Secondly, does rationalizing tail brands have any impact on sort of like capacity or distributor alignment or any considerations there? Thanks.

Hey, it's Julie. Thanks so much. Appreciate it. Let's do this SKU conversation first. As you've read, we did discontinue over 30 tail brands in Q1 with expected another 15 by year end. We are seeing that that's approximately 1% of our segment net sales, and when we analyze it, we expect 20 basis points of improvement. We do see some learnings, as you said. The learnings are that, you know, these weren't highly visible brands in the market, but they consume resources. Think about it, there's, you know, changeover configurations, there's glass containers, there's liquid that we had. It does improve line efficiency. It provides more line time for core SKUs. We do have a few that are growing quite nicely. The main impact is really inventory reduction.

We're reducing working capital over $2.5 million and other logistics supply chain costs like warehouse and storage. From a distributor focus, it doesn't take away their focus. If anything, I'd have to say is that it's allowed them with our partnership approach this year of really targeting, you know, our top 10 brands for them to focus their execution, focus their activation on. We're seeing some nice momentum in their planning and both in their execution in Q1. I'd say from a, you know, kind of shifting there to a, you know, power brands, the 10, how do we do it? I think you might recall, we did bring in new capabilities about six months ago to lead the marketing organization. As you can imagine, it's been a robust six months.

First and foremost, doing comprehensive reviews of our top two portfolios, which are American Whiskey and Tequila. You can think about, you know, the positioning, what the brands stand for, consumer segments, competitive sets, key occasions, price pack architecture. You know, A&P allotment, any overlap from the robust re-portfolio that we have, that we're blessed with in American Whiskey. The same for Tequila. From that, you really come out with those key brands. Then a, you know, strategic roadmap for investment and for execution. We then kind of put a, what we call a brand growth framework around those brands to make sure that they're selectively being pushed and executed, invested against a couple key areas. One, it's about kind of mental availability. Think about, and you referenced digital.

Think about reaching out to more consumers through increased paid media, our ability to, you know, target those geo segments that we want based off zip codes. It's about having the right and dynamic content, the right message to the right consumer, the right channel at the right time. It's physical availability, right? How are we going to increase our pods, our distribution, our velocities across all accounts? In particular, you've heard us talk about national account expansion and opportunities across off premise and on-premise. Increasing store visibility and execution remains a goal. One of the heavy up areas we did focus on is elevating our digital media capabilities. We've doubled the investment there. We've brought a highly capable, high expertise into the team. We've also tested in-house digital media.

As you heard in my prepared comments, Yellowstone was our first test and learn. We did a couple of states. Within those states, you know, we're seeing a nice turnaround for Yellowstone Select up double digits. That's really around both media and pricing, heavy up in those markets and really tied to, you know, targeting those zip codes that actually purchase Yellowstone. We're pleased with the results. It's early days, but you can see that type of approach going to our other focus brands as well.

Very clear. Thanks.

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

Thank you. I wanted to get a little bit more color on some of your gross margin comments. Well, first, specifically to clear up, when you're talking about that 20 basis point improvement, is that on a run rate basis as you exit the year, or is that for the full year?

Yeah, that's a run rate annualized basis. The impacts we mentioned, Sean, and thank you for the question, won't necessarily all hit in 2026. However, what is going to hit is factored into our guidance and can be expected on an annualized basis going forward.

Okay, thank you. That's just within Branded Spirits, right?

That's correct.

Okay. On the ingredient side, so, would you expect that by the end of the year, you would kind of be back to where you thought you would be on gross margin? Or is this hit gonna, you know, linger into next year?

Yeah, no, thanks for the question. You know, first, I do wanna say, you know, we are pleased with the operational reliability improvements we've sequentially made as the year has start. You know, our downtime is more efficient by 14%. Really what's driving that is our unplanned equipment outages have reduced since December by 10 points. Also throughput improvements are up 18%. Operational reliability has allowed us to obviously get more pounds out. We have robust consumer demand for our proprietary platforms across starch and fiber. You saw that with our, certainly with our sales number. More to sell, more reliable. The gross margin is being impacted by effluent.

We talked about that before, we do expect, you know, starting in the second, the end of the second quarter with our planned shutdown that's gonna cross over the end of Q2 into Q3. We expect, 'cause we're gonna bring in a piece of equipment that, a third dryer, that's gonna help us eliminate some of that effluent. We expect that impact to sequentially go down by the end of the year and cut it in half. By the time we end the year, we expect mid-teens on gross margin. Again, as I stated before, by the end of 2027, we would expect that to be into the high 20s.

Okay, thank you. Then on distilling, is that the commentary that you made about white goods, you know, maybe coming a little bit slower and offset though by other products, what are the gross margin implications for that shift?

Yeah, we're still expecting, Sean, low to mid-30s gross margins for the Distilling Solutions segment. As we said in our prepared remarks, those sales are expected to be offset by other product lines within the segment and business unit. We're staying consistent with what we said last time.

Okay. Thank you very much.

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

Hey, good morning, and thank you for the questions today. I guess first on Distilling Solutions, last quarter you talked about discussions with larger customers to take shape through the second quarter and potentially provide some color on the 2026 outlook and beyond. Wondering if you had any incremental color there. What are you hearing in terms of customer needs and timing to demand inflection and any further comfort that 2026 could be a bottom?

Yeah, thanks. Hey, Marc Torrente. Thank you. Appreciate that. I'll start with kinda the end. We do continue to view that 2026 will likely be a trough year for Distilling Solutions. Nothing we saw in Q1 necessarily changed that view. I tell you, we still are very pleased with our partnership approach that we've enacted. We believe it's working. Our conversation with customers remain active. They're pragmatic, they're constructive. Inventory levels across the industry are still elevated, but we're certainly seeing customers move from a posture of broad pauses to much more targeted planning discussions. Importantly, those conversations are increasingly focused on how they wanna reengage product types and customization services, not necessarily if.

We still do expect clarity as we move through the end of Q2, which is consistent what we said previously from some of those multinationals on where they stand in their, you know, in their cycle. While the overall cycle, we think, is normalizing and will take time to normalize, we believe that we're gonna exit this period stronger, better customer relationships with our more differentiated offering than before. Again, we certainly will keep you abreast as we have those conversations, but not too many things have changed since the last time we talked.

Okay. Thank you for that. Just more color on the decision to idle distilling in Kentucky. Was there anything incremental you're seeing in the market that drove that decision during the quarter? What percent of your overall distilling capacity does that represent? How much of that is for your own brands versus outside brands? It doesn't really sound like that has any impact to your outlook for distilling sales or branded product availability. Just to confirm that. Thanks.

Yeah. Okay, Marc. No, good. I'll start at the end. Yes, it has no impact on either brand or distilling. I'd just say, you know, our decision to temporarily idle, you know, our Kentucky distilling operations really impacts a modest portion of our or of our total distilling capacity. It really was driven by inventory alignment, not customer demand disruption. Most of the paused production was intended for future age inventory for our own brands rather than near term customer commitments. As you recall, in 2025, I think we did a very nice job of really balancing our Distilling Solutions production to the sales impact. We had significant production reduction to more balance within our needs in the industry reset.

Also, as you know, it meaningfully reduced our fixed costs, and we're able to optimize production schedules and still, you know, hit into the 30s. We thought it was very prudent to do the same thing for our Branded Spirits. Once we did, once we were able to hit our 2026 production needs that were met for our brands and for any of our customers, we did choose to idle that. We announced that, as you know, and Brandon, if you want to clean up any impact to that idling to some of the balance sheet.

Yeah. We shared the balance sheet and cash flow benefits. As Julie said, this is, you know, inventory driven and working capital driven, and us just being good stewards to the balance sheet. You know, as far as operations and impact to the income statement, these costs that we incur there, because they're primarily for our Branded Spirits put away, have historically been capitalized, show up later in the income statement. We don't expect much of on an adjusted basis, much of an impact to operating margins, et cetera.

Okay. Appreciate the color. Thanks.

Yep.

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

All right. Thanks for taking my questions. A couple from me. First of all, on your prepared remarks, you talked about onboarding 20 new customers in the... I can't remember if you said that was the Branded Spirits segment collectively or brown goods specifically, but I'm wondering if you can talk about kind of who this new customer base is, the, you know, the extent to which these are aged versus new customers. Then, kinda in this, you know, difficult environment, kinda how this really came about and kind of where they were sourcing from historically, if you can provide any context there.

Hey, Ben Klieve. Thanks for that question. We're, we're pleased. Our partnership approach is working, and I kinda wanna step back from the top of the funnel. You probably heard of us talk that we believe the addressable market's around, you know, 1,000 customers in which we've been targeting the last couple of years. You know, really engaging in some data. We've been able to address, define an addressable total market of 4,000. We've, you know, allocated them out to our sales team, who is, I would say, very adverse now on our differentiated value proposition and bringing that to life to our customers. They've had some hits.

You know, 75% of that pool was really new to industry customers, and then 25%, approximately 25% was sourced from competitors. Broadly speaking, these are brown goods, typically aged purchases. You know, I think some of it is, you know, the team's done a nice job of really ensuring that the broader market and consumers and customers know that, you know, we're open for business. You know, the craftsmanship that you get at MGP for brown and for white goods, we've got different mash bills, we've got different ability to finish barrels, and we also have capabilities to do all sorts of sizes. I think before, number one, they might not have heard of MGP, that we actually do smaller batches.

Some of these customers certainly are the ones that are hearing it and calling us surprised, and they thought they had to go a different route to get, you know, our quality juice.

Very good. Thanks, Julie. That's, that's helpful. One more from me on the tax line. 27% rate on a full year basis. Wondering if you can help us understand your expectations around cash taxes given the, you know, non-cash expenses in the first quarter.

Yeah. The OCM initiative that we highlighted on this call and last call, which is ownership cost mindset management, it is taking effect all across the organization, up and down the P&L. The cash taxes are being optimized from an outflow and timing standpoint as much as possible. Those benefits are gonna be felt there. We still are expecting, you know, excluding the impact of the impairment, you know, around the 27% for the year, knowing that Q1 was gonna be a little wonky because of a couple discrete things that took place. The cash management mindset is in full force. We're gonna mitigate that as much as possible throughout the course of the year.

Okay. All right. Thank you, Brandon. Thanks, Julie. I'll get back in queue.

Sounds good.

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

Thank you. Just wanna say thank you on behalf of the entire MGP team, we thank you for your continued confidence and support. We look forward to talking to you in the next quarter. Take care.

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