# MGP INGREDIENTS INC (MGPI) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from MGP INGREDIENTS INC's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/835011/000162828025007962/mgpi-20241231.htm
Accession: 0001628280-25-007962
Filing date: 2025-02-26
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/MGPI/
All MD&A years: /company/MGPI/mda/
Previous year: /company/MGPI/mda/fy2023/ (FY 2023)
Next year: /company/MGPI/mda/fy2025/ (FY 2025)

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS

This Report may contain forward looking statements as well as historical information.  All statements, other than statements of historical facts, regarding the prospects of our industries and our prospects, plans, financial position, mission, and strategy may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements about our sources of cash being adequate; our capital expenditures; our ability to support our liquidity and operating needs through cash generated from operations; and our ability to obtain credit funding.  Forward looking statements are usually identified by or are associated with such words as “intend,” “plan,” “believe,” “estimate,” “expect,” “anticipate,” “project,” “forecast,” “hopeful,” “should,” “may,” “will,” “could,” “encouraged,” “opportunities,” “potential,” and similar terminology.  These forward-looking statements reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, our performance, our financial results, and our financial condition and are not guarantees of future performance.

All forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. For information on these risks and uncertainties and other factors that could affect the Company’s business, see the “Risk Factors” and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” of this Report and our other filings with the Securities and Exchange Commission (the “SEC”). Forward-looking statements in this Report are made as of the date of this Report, and we undertake no obligation to update any forward-looking statements or information made in this Report, except as required by law.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis (“MD&A”) of Financial Condition and Results of Operations is designed to provide a reader of MGP’s consolidated financial statements with a narrative from the perspective of management. MGP’s MD&A is presented in the following sections:

•Overview

•Results of Operations

•Distilling Solutions Segment

•Branded Spirits Segment

•Ingredient Solutions Segment

•Cash Flow, Financial Condition and Liquidity

•Critical Accounting Estimates

•New Accounting Pronouncements

OVERVIEW

MGP is a leading producer of branded and distilled spirits as well as food ingredient solutions. Distilled spirits include premium bourbon, rye, and other whiskeys (“brown goods”) and grain neutral spirits (“GNS”), including vodka and gin. Our distilled spirits are either sold directly or indirectly to manufacturers of other branded spirits. We have a portfolio of our own high quality branded spirits, which we produce through our distilleries and bottling facilities and sell to distributors. Our branded spirits products account for a range of price points from value products through premium plus brands. Our protein and starch food ingredients serve a host of functional, nutritional, and sensory benefits for a wide range of food products to serve the consumer packaged goods industry. Our ingredients products are sold directly, or through distributors, to manufacturers and processors of finished packaged goods or to bakeries.

Our strategic plan is designed to leverage our history and strengths as well as the positive macro trends we see in the industries in which we compete, while providing better insulation from outside factors, including swings in commodity pricing.

Distilling Solutions Segment

Our Distilling Solutions segment mission is to cultivate lasting partnerships with customers across all product categories by leveraging our technical distilling expertise, strong sales and operating platform, aging whiskey inventory, and unique project development skills. Our Distilling Solutions segment is subject to unfavorable macro industry trends, which include increased competition as industry participants seek to capitalize on consumer trends, inflation and interest rate impacts on customers, overall American whiskey supply and consumer consumption patterns, as well as increased commodity prices. Our strategy for the Distilling Solutions segment is to further develop our existing customer relationships, expand our core strengths through

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innovation, services and stability, cultivate additional domestic customers for brown goods sales, and increase our global presence in the American whiskey market.

We continue to focus on attracting customers and developing customer relationships for our brown goods as well as shifting our focus away from industrial alcohol, fuel grade alcohol, and white beverage alcohol. During 2024, the industry experienced a softening of American whiskey category trends as well as elevated industry-wide barrel whiskey inventories, which led to instances of customer contract non-performance that put pressure on our brown goods business. We expect these trends to continue. Distilling Solutions segment sales for 2024 decreased 26 percent over the prior year.

Branded Spirits Segment

Our Branded Spirits segment mission is to align our product offering and enhance focus on growing spirits categories and price tiers. The favorable macro industry trends we anticipate will benefit our business in the long-term include growth in high-end whiskey and tequila brands as well as long-term growth in the U.S. across all spirit categories in the premium plus price tier. Our Branded Spirits segment is also subject to unfavorable macro industry trends, which include inflation and interest rate impacts on consumers, increased competition as industry participants seek to capitalize on consumer trends, as well as changes in consumer consumption patterns. Our strategy for the Branded Spirits segment is to focus on the right brands at the right price points in the right spirits categories to maximize profit for the Company. Additionally, our strategy is to grow our overall points of distribution, increase innovation, build brand awareness, and continue to invest in our people. Branded Spirits segment sales for 2024 decreased 5 percent over the prior year.

Ingredient Solutions Segment

Our Ingredient Solutions segment mission is to remain a strategic business partner of choice earning meaningful relationships through collaboration, innovation, and dedication to best-in-class customer service. The favorable macro industry trends we anticipate will benefit our business include more consumer focus on high fiber and lower net carbs, high protein, plant-based protein, and non-GMO products. We continue to provide customer solutions, taking advantage of our position within growing consumer trends. Our strategy for the Ingredient Solutions segment is to expand and optimize our dietary fiber, plant proteins, and clean label starches; expand our extruded products platform; and continue to innovate and expand opportunities through research and development. Ingredient Solutions segment sales for 2024 decreased 1 percent over the prior year.

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RESULTS OF OPERATIONS

Consolidated results

The table below details the consolidated results for 2024, 2023 and 2022:

[[GREPCENT_TABLE]]
[["","Year Ended December 31,","","","","% Increase (Decrease)"],["","2024","","2023","","2022","","","","","","2024 v. 2023","","2023 v. 2022"],["Sales","$","703,625","","","$","836,523","","","$","782,358","","","","","","","(16)","%","","7","%"],["Cost of sales","417,308","","","531,811","","","529,052","","","","","","","(22)","","","1"],["Gross profit","286,317","","","304,712","","","253,306","","","","","","","(6)","","","20"],["Gross margin %","40.7","%","","36.4","%","","32.4","%","","","","","","4.3","","pp(a)","4.0","","pp(a)"],["Advertising and promotion expenses","40,508","","","38,213","","","29,714","","","","","","","6","","","29"],["SG&A expenses","81,391","","","91,395","","","74,627","","","","","","","(11)","","","22"],["Impairment of long-lived assets and other","137","","","19,391","","","\u2014","","","","","","","(99)","","","N/A"],["Goodwill impairment","73,755","","","\u2014","","","\u2014","","","","","","","N/A","","N/A"],["Change in fair value of contingent consideration","16,100","","","7,100","","","\u2014","","","","","","","127","","","N/A"],["Operating income","74,426","","","148,613","","","148,965","","","","","","","(50)","","","\u2014"],["Operating margin %","10.6","%","","17.8","%","","19.0","%","","","","","","(7.2)","","pp","(1.2)","","pp"],["Interest expense, net","(8,439)","","","(6,647)","","","(5,451)","","","","","","","27","","","22"],["Other income (expense), net","2,455","","","(220)","","","(3,342)","","","","","","","(1,216)","","","(93)"],["Income before income taxes","68,442","","","141,746","","","140,172","","","","","","","(52)","","","1"],["Income tax expense","33,977","","","34,616","","","31,300","","","","","","","(2)","","","11"],["Effective tax expense rate %","49.6","%","","24.4","%","","22.3","%","","","","","","25.2","","pp","2.1","","pp"],["Net income","$","34,465","","","$","107,130","","","$","108,872","","","","","","","(68)","%","","(2)","%"],["Net income margin %","4.9","%","","12.8","%","","13.9","%","","","","","","(7.9)","","pp","(1.1)","","pp"],["Basic EPS","$","1.56","","","$","4.82","","","$","4.94","","","","","","","(68)","%","","(2)","%"],["Diluted EPS","$","1.56","","","$","4.80","","","$","4.92","","","","","","","(68)","%","","(2)","%"]]
[[/GREPCENT_TABLE]]

(a) Percentage points (“pp”).

Sales

2024 to 2023 - Sales for 2024 were $703,625, a decrease of 16 percent compared to 2023, which was the result of decreased sales in each segment. Distilling Solutions segment sales decreased 26 percent, primarily due to decreased sales of white goods and other co-products in connection with the December 2023 closure of the Atchison Distillery and decreased brown goods sales. Branded Spirits segment sales decreased 5 percent, primarily due to decreased sales of brands within the mid and value price tiers. Ingredient Solutions segment sales decreased 1 percent, primarily due to decreased sales of specialty wheat proteins and commodity wheat starches, partially offset by increased sales of specialty wheat starches.

2023 to 2022 - Sales for 2023 were $836,523, an increase of 7 percent compared to 2022, which was the result of increased sales in the Distilling Solutions, Branded Spirits, and Ingredient Solutions segments. Distilling Solutions segment sales were up 5 percent, primarily due to an increase in sales of brown goods. Branded Spirits segment sales increased 7 percent, primarily due to increased sales of brands in the premium plus price tier. Ingredient Solutions segment sales increased 14 percent due to increased sales across all Ingredient Solutions product lines.

Gross profit

2024 to 2023 - Gross profit for 2024 was $286,317, a decrease of 6 percent compared to 2023. The decrease was driven by a decrease in gross profit in the Ingredient Solutions and Distilling Solutions segments, partially offset by an increase in gross profit in the Branded Spirits segment. The Ingredient Solutions segment gross profit decreased by $20,773, or 44 percent. The Distilling Solutions segment gross profit decreased by $3,037, or 2 percent. The Branded Spirits segment gross profit increased by $5,415, or 5 percent.

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2023 to 2022 - Gross profit for 2023 was $304,712, an increase of 20 percent compared to 2022. The increase was driven by an increase in gross profit in the Distilling Solutions, Branded Spirits, and Ingredient Solutions segments. The Distilling Solutions segment gross profit increased by $18,682, or 15 percent. The Branded Spirits segment gross profit increased by $17,260, or 18 percent. The Ingredient Solutions segment gross profit increased by $15,464, or 49 percent.

Advertising and promotion expenses

2024 to 2023 - Advertising and promotion expenses for 2024 were $40,508, an increase of 6 percent compared to 2023. This increase was primarily driven by increased advertising and promotion investment in the Branded Spirits segment, specifically in the premium plus price tiers.

2023 to 2022 - Advertising and promotion expenses for 2023 were $38,213, an increase of 29 percent compared to 2022. This increase was primarily driven by increased advertising and promotion investment in the Branded Spirits segment, primarily in the premium plus price tiers.

SG&A expenses

2024 to 2023 - SG&A expenses for 2024 were $81,391, a decrease of 11 percent compared to 2023. The decrease in SG&A expenses was primarily due to reduced incentive compensation expenses.

2023 to 2022 - SG&A expenses for 2023 were $91,395, an increase of 22 percent compared to 2022. The increase in SG&A expenses was primarily due to higher personnel expenses and incentive compensation, inclusive of certain incremental costs incurred relating to our CEO transition, and business acquisition expenses related to the acquisition of Penelope.

Operating income

[[GREPCENT_TABLE]]
[["","","Operating income","","% Increase (Decrease)"],["Operating income for 2022","","$","148,965"],["Increase in gross profit - Distilling Solutions segment(a)","","18,682","","","13","","pp(b)"],["Increase in gross profit - Branded Spirits segment(a)","","17,260","","","12","","pp"],["Increase in gross profit - Ingredient Solutions segment(a)","","15,464","","","10","","pp"],["Increase in advertising and promotion expenses","","(8,499)","","","(6)","","pp"],["Increase in SG&A expenses","","(16,768)","","","(11)","","pp"],["Impairment of long-lived assets and other","","(19,391)","","","(13)","","pp"],["Change in fair value of contingent consideration","","(7,100)","","","(5)","","pp"],["Operating income for 2023","","148,613","","","\u2014","%"],["Decrease in gross profit - Ingredient Solutions segment(a)","","(20,773)","","","(14)","","pp(b)"],["Decrease in gross profit - Distilling Solutions segment(a)","","(3,037)","","","(2)","","pp"],["Increase in gross profit - Branded Spirits segment(a)","","5,415","","","4","","pp"],["Increase in advertising and promotion expenses","","(2,295)","","","(2)","","pp"],["Decrease in SG&A expenses","","10,004","","","7","","pp"],["Decrease in impairment of long-lived assets and other","","19,254","","","13","","pp"],["Goodwill impairment","","(73,755)","","","(50)","","pp"],["Change in fair value of contingent consideration","","(9,000)","","","(6)","","pp"],["Operating income for 2024","","$","74,426","","","(50)","%"]]
[[/GREPCENT_TABLE]]

(a) See segment discussion.

(b) Percentage points (“pp”).

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2024 to 2023 - Operating income for 2024 decreased to $74,426 from $148,613 for 2023, primarily due to the $73,755 goodwill impairment related to the Branded Spirits segment recorded during the fourth quarter 2024, the decrease in gross profit in the Ingredient Solutions segment, the change in fair value of the contingent consideration liability related to the Penelope acquisition, the decrease in gross profit in the Distilling Solutions segment, and the increase in advertising and promotion expenses, as discussed above. These decreases were partially offset by the impact of the impairment of assets and other expenses in the prior year related to the closure of the Atchison Distillery which closed in December 2023, the decrease in SG&A expenses as discussed above, and the increase in gross profit in the Branded Spirits segment.

2023 to 2022 - Operating income for 2023 decreased to $148,613 from $148,965 for 2022, primarily due to the impairment of assets and other expenses of $19,391 related to the closure of the Atchison Distillery, increased SG&A expenses and advertising and promotion expenses as discussed above, and the change in fair value of contingent consideration of $7,100 related to the Penelope acquisition. These impacts were mostly offset by increased gross profit in all three segments.

Income tax expense

2024 to 2023 - Income tax expense for 2024 was $33,977, for an effective tax rate for the year of 49.6 percent. Income tax expense for 2023 was $34,616, for an effective tax rate for the year of 24.4 percent. The 25.2 percentage point increase was primarily due to the nondeductible impairment of goodwill, partially offset by a decrease in valuation allowance.

2023 to 2022 - Income tax expense for 2023 was $34,616, for an effective tax rate for the year of 24.4 percent. Income tax expense for 2022 was $31,300, for an effective tax rate for the year of 22.3 percent. The 2.1 percentage point increase was primarily due to an increase in valuation allowances and lower tax credits.

Basic and diluted EPS

[[GREPCENT_TABLE]]
[["","","EPS","","% Increase (Decrease)"],["Basic EPS for 2022","","$","4.94"],["Change in operating income(a)","","(0.02)","","","\u2014","","pp(b)"],["Change in interest expense(a)","","(0.04)","","","(1)","","pp"],["Change in other income (expense), net(a)","","0.11","","","2","","pp"],["Change in weighted average shares outstanding(c)","","(0.02)","","","\u2014","","pp"],["Change in effective tax rate","","(0.15)","","","(3)","","pp"],["Basic EPS for 2023","","4.82","","","(2)","%"],["Impact of dilutive shares outstanding","","(0.02)","","","(1)","","pp"],["Diluted EPS for 2023","","$","4.80","","","(3)","%"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","","EPS","","% Increase (Decrease)"],["Basic EPS for 2023","","$","4.82"],["Change in operating income(a)","","(2.53)","","","(52)","","pp(b)"],["Change in interest expense(a)","","(0.06)","","","(2)","","pp"],["Change in other income (expense), net(a)","","0.09","","","2","","pp"],["Change in weighted average shares outstanding(c)","","0.01","","","\u2014","","pp"],["Change in effective tax rate","","(0.77)","","","(16)","","pp"],["Basic and diluted EPS for 2024","","$","1.56","","","(68)","%"]]
[[/GREPCENT_TABLE]]

(a)Items are net of tax based on the effective tax rate for each base year.

(b)Percentage points (“pp”).

(c)Weighted average shares outstanding change primarily related to the vesting of employee restricted stock units (“RSUs”), our withholding and purchase of vested RSUs from employees to pay withholding taxes, and the granting of Common Stock to directors. Additionally, during 2024, the weighted average shares outstanding were impacted by shares repurchased, pursuant to the Company’s share repurchase program.

2024 to 2023 - Basic and diluted EPS was $1.56 in 2024, compared to $4.82 and $4.80, respectively in 2023. The change in basic and diluted EPS was primarily due to a decrease in operating income and increase in the effective tax rate, both driven primarily by the nondeductible goodwill impairment. Additionally, the decrease was related to an increase in interest expense. These decreases were partially offset by the change other income (expense), net related to equity method investment income.

2023 to 2022 - Basic EPS decreased to $4.82 in 2023 from $4.94 in 2022, primarily due to the increase in effective tax rate, partially offset by a decrease in other income (expense), net. Diluted EPS decreased to $4.80 in 2023 from $4.92 in 2022, primarily due to the above described changes in basic EPS as well as the impact of dilutive shares outstanding related to the conversion feature of the Convertible Senior Notes.

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DISTILLING SOLUTIONS SEGMENT

[[GREPCENT_TABLE]]
[["","DISTILLING SOLUTIONS SALES"],["","Year Ended December 31,","","Year-versus-Year Sales Change Increase/ (Decrease)"],["","2024","","2023","","$ Change","","% Change"],["Brown goods","$","265,873","","","$","289,191","","","$","(23,318)","","","(8)","%"],["Warehouse services","33,430","","","28,632","","","4,798","","","17"],["White goods and other co-products","32,901","","","133,031","","","(100,130)","","","(75)"],["Total Distilling Solutions","$","332,204","","","$","450,854","","","$","(118,650)","","","(26)","%"],["","Change in Year-versus-Year Sales Attributed to:"],["","Total(a)","","Volume(b)","","Net Price/Mix(c)"],["Brown goods","(8)%","","5%","","(13)%"],["","Other Financial Information"],["","Year Ended December 31,","Year-versus-Year Increase/(Decrease)"],["","2024","","2023","","Change","","% Change"],["Gross profit","$","141,927","","","$","144,964","","","$","(3,037)","","","(2)","%"],["Gross margin %","42.7","%","","32.2","%","","10.5","","pp(d)"]]
[[/GREPCENT_TABLE]]

(a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.

(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.

(c) Net price/mix change is calculated by taking the difference between current period sales-per-unit and prior period sales-per unit, multiplied by current period sales volume. The product is then divided by prior period sales dollars.

(d) Percentage points (“pp”).

2024 compared to 2023

Total Distilling Solutions sales for 2024 decreased by $118,650, or 26 percent, compared to 2023. The decrease in sales of the Distilling Solution segment is primarily related to the decrease in sales volume of white goods and other co-products, which was due to the closure of the Atchison Distillery during December 2023. The decrease in brown goods was primarily related to a decrease in net price/mix (as defined above), partially offset by increased sales volume. The brown goods decline was primarily the result of softening American whiskey category trends and elevated industry-wide barrel inventories, leading to softer than expected spot sales, and instances of customer contract non-performance. These dynamics put pressure on our brown goods business. These decreases were partially offset by increased sales of warehouse services.

Gross profit decreased year versus year by $3,037, or 2 percent. Gross margin for 2024 increased to 42.7 percent from 32.2 percent for 2023. The decrease in gross profit was due primarily to a decrease in brown goods sales due to net price/mix as we sold younger barrels on average in 2024 compared to 2023. This decline was partially offset by the positive impact the closure of the Atchison Distillery had on white goods and other co-products’ gross profit and gross margin.

26

[[GREPCENT_TABLE]]
[["","DISTILLING SOLUTIONS SALES"],["","Year Ended December 31,","","Year-versus-Year Sales Change Increase/ (Decrease)"],["","2023","","2022","","$ Change","","% Change"],["Brown goods","$","289,191","","","$","229,523","","","$","59,668","","","26","%"],["Warehouse services","28,632","","","23,598","","","5,034","","","21"],["White goods and other co-products","133,031","","","175,357","","","(42,326)","","","(24)"],["Total Distilling Solutions","$","450,854","","","$","428,478","","","$","22,376","","","5","%"],["","Change in Year-versus-Year Sales Attributed to:"],["","Total(a)","","Volume(b)","","Net Price/Mix(c)"],["Brown goods","26%","","3%","","23%"],["","Other Financial Information"],["","Year Ended December 31,","Year-versus-Year Increase/(Decrease)"],["","2023","","2022","","Change","","% Change"],["Gross profit","$","144,964","","","$","126,282","","","$","18,682","","","15","%"],["Gross margin %","32.2","%","","29.5","%","","2.7","","pp(d)"]]
[[/GREPCENT_TABLE]]

(a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.

(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.

(c) Net price/mix change is calculated by taking the difference between current period sales-per-unit and prior period sales-per unit, multiplied by current period sales volume. The product is then divided by prior period sales dollars.

(d) Percentage points (“pp”).

2023 compared to 2022

Total Distilling Solutions sales for 2023 increased by $22,376, or 5 percent, compared to 2022. Sales of brown goods and warehouse services increased while white goods and other co-products decreased compared to 2022. The increase in sales of brown goods was driven by an increase in net price/mix and higher sales volume. This increase was partially offset by a decrease in sales of white goods and other co-products which was driven primarily by lower sales volume in connection with the Atchison Distillery closure, partially offset by higher net price/mix.

Gross profit increased year versus year by $18,682, or 15 percent. Gross margin for 2023 increased to 32.2 percent from 29.5 percent for 2022. The increase in gross profit was due primarily to increased net/price mix and increased volume of higher margin brown goods. This increase was partially offset by larger gross profit losses in the Atchison Distillery.

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BRANDED SPIRITS SEGMENT

[[GREPCENT_TABLE]]
[["","BRANDED SPIRITS SALES"],["","Year Ended December 31,","","Year-versus-Year Sales Change Increase/ (Decrease)"],["","2024","","2023","","$ Change","","% Change"],["Premium plus","$","110,991","","","$","105,465","","","$","5,526","","","5","%"],["Mid","63,454","","","75,676","","","(12,222)","","","(16)"],["Value","42,100","","","47,907","","","(5,807)","","","(12)"],["Other","24,271","","","24,885","","","(614)","","","(2)"],["Total Branded Spirits","$","240,816","","","$","253,933","","","$","(13,117)","","","(5)","%"],["","Change in Year-versus-Year Sales Attributed to:"],["","Total(a)","","Volume(b)","","Net Price/Mix(c)"],["Branded Spirits","(5)%","","(7)%","","2%"],["","Other Financial Information"],["","Year Ended December 31,","Year-versus-Year Increase/(Decrease)"],["","2024","","2023","","Change","","% Change"],["Gross profit","$","118,196","","","$","112,781","","","$","5,415","","","5","%"],["Gross margin %","49.1","%","","44.4","%","","4.7","","pp(d)"]]
[[/GREPCENT_TABLE]]

(a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.

(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.

(c) Net price/mix change is calculated by taking the difference between current period sales-per-unit and prior period sales-per unit, multiplied by current period sales volume. The product is then divided by prior period sales dollars.

(d) Percentage points (“pp”).

2024 compared to 2023

Total Branded Spirits sales for 2024 decreased by $13,117, or 5 percent, compared to 2023, due primarily to our optimization efforts, including increased pricing on certain lower margin mid and value brands, which resulted in decreased sales volume of select brands within those price tiers. This decrease was partially offset by an increase in sales of brands within the premium plus price tier, which was primarily due to the acquisition and growth of Penelope.

Gross profit increased year versus year by $5,415, or 5 percent. Gross margin for 2024 increased to 49.1 percent compared to 44.4 percent for 2023. The increase in gross profit was primarily driven by increased net price/mix driven primarily by the acquisition of Penelope, and increased pricing on certain mid and value brands. The increase was also driven by lower average unit cost within the segment.

28

[[GREPCENT_TABLE]]
[["","BRANDED SPIRITS SALES"],["","Year Ended December 31,","","Year-versus-Year Sales Change Increase/ (Decrease)"],["","2023","","2022","","$ Change","","% Change"],["Premium plus","$","105,465","","","$","84,730","","","$","20,735","","","24","%"],["Mid","75,676","","","82,530","","","(6,854)","","","(8)"],["Value","47,907","","","47,395","","","512","","","1"],["Other","24,885","","","23,284","","","1,601","","","7"],["Total Branded Spirits","$","253,933","","","$","237,939","","","$","15,994","","","7","%"],["","Change in Year-versus-Year Sales Attributed to:"],["","Total(a)","","Volume(b)","","Net Price/Mix(c)"],["Branded Spirits","7%","","(6)%","","13%"],["","Other Financial Information"],["","Year Ended December 31,","Year-versus-Year Increase/(Decrease)"],["","2023","","2022","","Change","","% Change"],["Gross profit","$","112,781","","","$","95,521","","","$","17,260","","","18","%"],["Gross margin %","44.4","%","","40.1","%","","4.3","","pp(d)"]]
[[/GREPCENT_TABLE]]

(a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.

(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.

(c) Net price/mix change is calculated by taking the difference between current period sales-per-unit and prior period sales-per unit, multiplied by current period sales volume. The product is then divided by prior period sales dollars.

(d) Percentage points (“pp”).

2023 compared to 2022

Total Branded Spirits sales for 2023 increased by $15,994, or 7 percent compared to 2022. Sales of brands within the premium plus price tier as well as sales within the other category and the value price tier increased while sales of brands within the mid price tier decreased. The increase in sales of brands within the premium plus price tier was primarily due to the acquisition of Penelope, an increase in net price/mix, and an increase in sales volume. Sales within the value and other categories increased primarily due to an increase in net price/mix. These increases were partially offset by decreased sales of brands within the mid price tier, primarily due to decreased sales volume as a result of sales shifting to higher margin accretive brands within the premium plus price tier, partially offset by an increase in net price/mix within the mid price tier.

Gross profit increased year versus year by $17,260, or 18 percent. Gross margin for 2023 increased to 44.4 percent compared to 40.1 percent for 2022. The increase in gross profit was primarily driven by contributions from the acquisition and growth of Penelope as well as by higher net price/mix in the premium plus, value, mid, and other price tiers. These increases were partially offset by increased input costs across all categories.

29

INGREDIENT SOLUTIONS SEGMENT

[[GREPCENT_TABLE]]
[["","INGREDIENT SOLUTIONS SALES"],["","Year Ended December 31,","","Year-versus-Year Sales Change Increase/ (Decrease)"],["","2024","","2023","","$ Change","","% Change"],["Specialty wheat starches","$","76,005","","","$","66,050","","","$","9,955","","","15","%"],["Specialty wheat proteins","41,768","","","48,291","","","(6,523)","","","(14)"],["Commodity wheat starches","12,351","","","16,413","","","(4,062)","","","(25)"],["Commodity wheat proteins","481","","","982","","","(501)","","","(51)"],["Total Ingredient Solutions","$","130,605","","","$","131,736","","","$","(1,131)","","","(1)","%"],["","Change in Year-versus-Year Sales Attributed to:"],["","Total(a)","","Volume(b)","","Net Price/Mix(c)"],["Total Ingredient Solutions","(1)%","","4%","","(5)%"],["","Other Financial Information"],["","Year Ended December 31,","","Year-versus-year Increase/(Decrease)"],["","2024","","2023","","Change","","% Change"],["Gross profit","$","26,194","","","$","46,967","","","$","(20,773)","","","(44)","%"],["Gross margin %","20.1","%","","35.7","%","","(15.6)","","pp(d)"]]
[[/GREPCENT_TABLE]]

(a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.

(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.

(c) Net price/mix change is calculated by taking the difference between current period sales-per-unit and prior period sales-per unit, multiplied by current period sales volume. The product is then divided by prior period sales dollars.

(d) Percentage points (“pp”).

2024 compared to 2023

Total Ingredient Solutions sales for 2024 decreased by $1,131, or 1 percent, compared to 2023. The decrease was primarily driven by decreased net price/mix across all product categories, as well as a decrease in sales volume of specialty wheat proteins primarily due to continued export market headwinds. Additionally, the decrease was attributable to a decrease in sales volume of commodity wheat starches. These decreases were partially offset by an increase in sales volume of specialty wheat starches.

Gross profit decreased year versus year by $20,773, or 44 percent. Gross margin for 2024 decreased to 20.1 percent from 35.7 percent for 2023. The decrease in gross profit was primarily driven by higher input costs associated with the removal of the intercompany credit for the waste starch slurry by-product since the closure of the Atchison Distillery, as well as other costs incurred to ready the waste starch for commercial sale. Additionally, we incurred incremental costs for the new extrusion manufacturing facility as well as other unexpected plant related costs during the year. The decrease in gross profit was also attributable to decreased net price/mix and sales volume of specialty wheat proteins.

30

[[GREPCENT_TABLE]]
[["","INGREDIENT SOLUTIONS SALES"],["","Year Ended December 31,","","Year-versus-Year Sales Change Increase/ (Decrease)"],["","2023","","2022","","$ Change","","% Change"],["Specialty wheat starches","$","66,050","","","$","62,567","","","$","3,483","","","6","%"],["Specialty wheat proteins","48,291","","","39,313","","","8,978","","","23"],["Commodity wheat starches","16,413","","","14,023","","","2,390","","","17"],["Commodity wheat proteins","982","","","38","","","944","","","2,484"],["Total Ingredient Solutions","$","131,736","","","$","115,941","","","$","15,795","","","14","%"],["","Change in Year-versus-Year Sales Attributed to:"],["","Total(a)","","Volume(b)","","Net Price/Mix(c)"],["Total Ingredient Solutions","14%","","(6)%","","20%"],["","Other Financial Information"],["","Year Ended December 31,","","Year-versus-year Increase/(Decrease)"],["","2023","","2022","","Change","","% Change"],["Gross profit","$","46,967","","","$","31,503","","","$","15,464","","","49","%"],["Gross margin %","35.7","%","","27.2","%","","8.5","","pp(d)"]]
[[/GREPCENT_TABLE]]

(a) Total sales change is calculated by taking the difference between current period sales dollars and prior period sales dollars, divided by prior period sales dollars.

(b) Volume change is calculated by taking the difference between current period sales volume and prior period sales volume, multiplied by prior period sales per unit. The product is then divided by prior period sales dollars.

(c) Net price/mix change is calculated by taking the difference between current period sales-per-unit and prior period sales-per unit, multiplied by current period sales volume. The product is then divided by prior period sales dollars.

(d) Percentage points (“pp”).

2023 compared to 2022

Total Ingredient Solutions sales for 2023 increased by $15,795, or 14 percent, compared to 2022. The increase in Ingredient Solutions sales was driven by increases in sales in all product lines. The higher sales of specialty wheat proteins was driven by higher net price/mix and higher sales volume. Additionally, sales of specialty wheat starches and commodity wheat starches increased primarily due to higher net price/mix, partially offset by lower sales volume.

Gross profit increased year versus year by $15,464, or 49 percent. Gross margin for 2023 increased to 35.7 percent from 27.2 percent for 2022. The increase in gross profit was primarily driven by higher average selling price across all product categories, partially offset by higher input costs for specialty wheat starches and proteins.

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CASH FLOW, FINANCIAL CONDITION, AND LIQUIDITY

We believe our financial condition continues to be of high quality, as evidenced by our ability to generate adequate cash from operations while having ready access to capital at competitive rates.

Operating cash flow and borrowings through our Credit Agreement, Convertible Senior Notes and Note Purchase Agreement (see Note 7, Corporate Borrowings) provide the primary sources of cash to fund operating needs and capital expenditures. These same sources of cash are used to fund stockholder dividends and other discretionary uses. Our overall liquidity reflects our strong business results and an effective cash management strategy that takes into account liquidity management, economic factors, and tax considerations. We expect our sources of cash to be adequate to provide for budgeted capital expenditures, potential mergers or acquisitions, and anticipated operating requirements for the next 12 months and beyond.

[[GREPCENT_TABLE]]
[["Cash Flow Summary","","Year Ended December 31,","","Changes, Year versus Year-Increase / (Decrease)"],["","","2024","","2023","","2022","","2024 v. 2023","","2023 v. 2022"],["Cash provided by operating activities","","$","102,278","","","$","83,783","","","$","88,936","","","$","18,495","","","$","(5,153)"],["Cash used in investing activities","","(71,558)","","","(159,242)","","","(47,813)","","","87,684","","","(111,429)"],["Cash provided by (used in) financing activities","","(23,803)","","","45,924","","","(14,764)","","","(69,727)","","","60,688"],["Effect of exchange rate changes on cash and cash equivalents","","(32)","","","34","","","(38)","","","(66)","","","72"],["Increase (decrease) in cash and cash equivalents","","$","6,885","","","$","(29,501)","","","$","26,321","","","$","36,386","","","$","(55,822)"]]
[[/GREPCENT_TABLE]]

Operating Activities. Cash provided by operating activities was $102,278 during the year ended December 31, 2024. The cash provided by operating activities during 2024 resulted primarily from net income of $34,465 and adjustments for non-cash or non-operating charges of $114,994, including goodwill impairment, depreciation and amortization, the change in fair value of contingent consideration, and share-based compensation, partially offset by uses of cash due to changes in operating assets and liabilities of $47,181. The primary drivers of the changes in operating assets and liabilities were $18,155 use of cash related to an increase in inventories, primarily barreled distillate, and $15,111 use of cash related to accrued expenses and other related to reduced incentive compensation expenses.

Cash provided by operating activities was $83,783 during the year ended December 31, 2023. The cash provided by operating activities during 2023 resulted primarily from net income of $107,130, and adjustments for non-cash or non-operating charges of $56,263, including depreciation and amortization, impairment of long-lived assets and other, share-based compensation, partially offset by uses of cash due to changes in operating assets and liabilities of $79,610. The primary drivers of the changes in operating assets and liabilities were $46,921 use of cash related to an increase in inventories, primarily barreled distillate, and $32,397 use of cash related to an increase in receivables.

Investing Activities. Cash used in investing activities for the year ended December 31, 2024 was $71,558, which primarily resulted from additions to property, plant and equipment of $71,181 (see “Capital Spending”).

Cash used in investing activities for the year ended December 31, 2023 was $159,242, which primarily resulted from $103,712 related to the acquisition of Penelope and additions to property, plant and equipment of $55,267 (see “Capital Spending”).

Capital Spending. We manage capital spending to support our business growth plans. We have incurred $73,161, $61,108, and $47,859 of capital expenditures and have paid $71,181, $55,267, and $45,323 for capital expenditures for the years ended December 31, 2024, 2023 and 2022, respectively. The difference between the amount of capital expenditures incurred and amount paid is due to the change in capital expenditures in accounts payable. We expect approximately $36,000 in capital expenditures for 2025, which we expect to use for facility improvement and expansion, facility sustenance projects, and environmental health and safety projects.

Financing Activities. Cash used in financing activities for the year ended December 31, 2024 was $23,803, due to repurchases of Common Stock of $48,773 (see “Treasury Purchases” and “Share Repurchases”), and payments of dividends and dividend

32

equivalents of $10,630 (see Note 9, Equity and EPS for additional information), partially offset by net proceeds on long-term debt of $35,600 (see Long-Term and Short-Term Debt).

Cash provided by financing activities for the year ended December 31, 2023 was $45,924, primarily due to net proceeds on long-term debt of $57,400 (see Long-Term and Short-Term Debt), partially offset by payments of dividends and dividend equivalents of $10,675 (see Note 9, Equity and EPS for additional information).

Treasury Purchases. 81,942 RSUs vested and converted to common shares during the year ended December 31, 2024, of which we withheld and purchased for treasury 25,521 shares valued at $2,185 to cover payment of associated withholding taxes.

22,592 RSUs vested and converted to common shares during the year ended December 31, 2023, of which we withheld and purchased for treasury 8,437 shares valued at $801 to cover payment of associated withholding taxes.

Share Repurchases. On February 29, 2024, we announced that our Board of Directors approved a $100,000 share repurchase program. Under the share repurchase program, we can repurchase Common Stock from time to time for cash in open market purchases, privately negotiated transactions, or by other means, in accordance with applicable securities laws and other legal requirements. The repurchase program has no expiration date and may be modified, suspended, or discontinued at any time by the Company without prior notice. During the year ended December 31, 2024, we repurchased 886,936 shares of Common Stock for approximately $46,588, resulting in approximately $53,412 remaining under the share repurchase program.

Long-Term and Short-Term Debt. We maintain debt levels we consider appropriate after evaluating a number of factors, including cash flow expectations, cash requirements for ongoing operations, investment and financing plans (including brand development, Board-approved dividends and share repurchases) and the overall cost of capital. Total debt was $323,541 (net of unamortized loan fees of $5,909) at December 31, 2024 and $287,249 (net of unamortized loan fees of $6,601) at December 31, 2023. Net borrowing on all debt for 2024 and 2023 were $35,600, and $57,400, respectively (see Note 7, Corporate Borrowings for additional information).

Dividends and Dividend Equivalents. See Note 9, Equity and EPS for further discussion.

On February 26, 2025, we announced a dividend payable to stockholders of record of our Common Stock, resulting in dividend equivalents payable to RSU holders, of $0.12 per share and per RSU. The dividend and dividend equivalent are payable on March 28, 2025 to stockholders of record and RSU holders as of March 14, 2025.

Financial Condition and Liquidity

Our principal uses of cash in the ordinary course of business are for input costs used in our production processes, salaries, and investments supporting our strategic plan, such as capital expenditures, the aging of barreled distillate primarily to support our branded spirits segment, and potential mergers or acquisitions.  Generally, during periods when commodities prices are rising, our operations require increased use of cash to support inventory levels.

Our principal sources of cash are product sales and borrowings on our various debt agreements.  Under these agreements, we must meet certain financial covenants and restrictions, and at December 31, 2024, we met those covenants and restrictions.

At December 31, 2024, our current assets exceeded our current liabilities by $453,686, largely due to our inventories, at cost, of $364,944. At December 31, 2024, our cash balance was $25,273, and we have used our various debt agreements for liquidity purposes, with $295,000 available under our Credit Agreement for additional borrowings and $226,800 available under the Note Purchase Agreement (see Note 7, Corporate Borrowings for additional information). We anticipate being able to support our short-term liquidity and operating needs largely through cash generated from operations. We regularly assess our cash needs and the available sources to fund these needs. We utilize short-term and long-term debt to fund discretionary items, such as capital investments, dividend payments, share repurchases as well as potential mergers or acquisitions. Subject to market conditions, we could also fund future mergers and acquisitions through the issuance of additional shares of Common Stock. In addition, we have strong operating results such that we believe financial institutions should provide sufficient credit funding to meet our short-term financing requirements, if needed.

33

Contractual Obligations

The following table provides information on the amounts and payments of our contractual obligations at December 31, 2024:

[[GREPCENT_TABLE]]
[["","Payments due by period"],["","Total","","Short-Term (a)","","Long-Term"],["Long-term debt","$","329,450","","","$","6,400","","","$","323,050"],["Interest on long-term debt (c)","66,836","","","4,606","","","62,230"],["Operating leases","17,891","","","4,777","","","13,114"],["Purchase commitments","83,029","","","79,355","","(b)","3,674"],["Other","7,307","","","455","","","6,852"],["Total","$","504,513","","","$","95,593","","","$","408,920"]]
[[/GREPCENT_TABLE]]

(a)Short-term obligation payments are due within 12 months from the current year end.

(b)Includes open purchase order commitments related to raw materials and packaging used in the ordinary course of business of $68,696.

(c)Excludes variable interest on long-term debt.

Industrial Revenue Bonds 

We are in the process of completing several projects that have been financed using industrial revenue bonds in the state of Kentucky. Traditionally, industrial revenue bonds have been used as an economic development tool in the state to attract desirable businesses, including business in the bourbon industry, and have allowed a 15 to 40 year real property tax abatement on our renovated and newly-constructed warehouse buildings and distilleries in Kentucky. As of December 31, 2024, approximately $50,000 of our facilities in Nelson County, Kentucky and approximately $39,300 of our facilities in Williamstown, Kentucky were financed with industrial revenue bonds. The city then leased the facilities back to us under a capital lease, the terms of which provide for the payment of basic rent in an amount sufficient to pay principal and interest on the bonds. Our obligation to pay rent under the lease is in the same amount and due on the same date as the obligation to pay debt service on the bonds which we hold. The lease permits us to present the bonds at any time for cancellation, upon which our obligation to pay basic rent would be canceled. At the bonds’ maturity, the facilities will revert to us without costs. If we were to present the bonds for cancellation prior to maturity, a nominal fee could be incurred. We may not be able to use industrial revenue bonds in the future due to legislative, regulatory, and related changes in the state of Kentucky.

We recorded the land and buildings as assets in property, plant, and equipment, net, on our Consolidated Balance Sheets. Because we own all outstanding bonds, have a legal right to set-off, and intend to set-off the corresponding lease and interest payments, we have netted the capital lease obligation with the bond asset. No amount for our obligation under the capital lease is reflected on our Consolidated Balance Sheets, nor do we reflect an amount for the corresponding industrial revenue bond asset (see Note 11, Commitments and Contingencies for additional information).

CRITICAL ACCOUNTING ESTIMATES

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.  The application of certain of these policies places demands on management’s judgment, with financial reporting results relying on estimation about the effects of matters that are inherently uncertain.  For all of these policies, management cautions that future events rarely develop as forecast, and estimates routinely require adjustment and may require material adjustment. We have identified the most critical accounting policies which involve the most complex and subjective judgments. These should be read in conjunction with the significant accounting policies discussed in Note 1, Nature of Operations and Summary of Significant Accounting Policies.

Contingent Consideration. The estimated fair value of the contingent consideration obligation associated with the acquisition of Penelope Bourbon LLC (“Penelope”) was determined using a Monte Carlo simulation approach at the acquisition date. This approach requires significant assumptions, including projected net sales, discount rates, and volatility rates. The contingent consideration liability is measured on a quarterly basis and recorded at fair value. The changes in fair value of the obligation result from changes in the key assumptions between measurement dates, such as projected net sales, discount rates, and volatility rates. The adjustment to fair value is recorded in the change in fair value of contingent consideration line on the Consolidated Statements of Income.

34

Goodwill and Indefinite-Lived Intangible Assets. We test goodwill and indefinite-lived intangible assets for impairment at least annually, in the fourth quarter, or on an interim basis if events and circumstances occur that would indicate it is more likely than not that the fair value of a reporting unit is less than the carrying value. We have the option to evaluate qualitative factors to assess if goodwill and indefinite-lived intangible assets are impaired before quantifying the fair value of the reporting unit. Management judgment is required in the evaluation of qualitative factors, determination of reporting units, the assignment of assets and liabilities to reporting units, including goodwill, and the determination of fair value of the reporting units. To the extent that the carrying amount exceeds fair value, an impairment of goodwill is recognized and allocated to the reporting units.

During the fourth quarter, we experienced a decrease in stock price and market capitalization as well as experienced the effects of the softening alcohol industry which contributed to declines in current year consolidated results and our forecasted outlook. Based on these factors, we performed a quantitative assessment of goodwill and our indefinite-lived intangible assets.

Goodwill - We engaged a third party valuation specialist to assist in comparing the fair value of the Branded Spirits reporting unit to the respective carrying value. The estimate of fair value of our reporting unit was calculated using equal weighting of the income approach that utilized the discounted cash flow method and the market approach that utilized the guideline public company method. Estimates in the determination of fair value of the reporting unit through the income approach were based on (i) discount rates based on the reporting unit’s weighed average cost of capital, (ii) future expected cash flows including revenue and operating margin projections, and (iii) long-term growth rates based on inflation forecasts, industry growth, and long-term economic growth potential. The market approach compares enterprise value and historical and projected results of public companies that reflect economic conditions and risks that are similar to the reporting unit to calculate an estimated enterprise value. These assumptions are based on historical trends as well as the projections and assumptions used in our budget and long-range plans. These assumptions reflect our estimates of future economic and competitive conditions which can be affected by several factors such as inflation, business valuations in the market, the economy, and market competition. Any changes in these assumptions may affect our fair value estimate and the results of an impairment test.

As a result of the quantitative goodwill impairment test, we recorded an impairment charge of $73,755 to adjust the carrying amount of the Branded Spirits reporting unit to fair value. This goodwill impairment is included as a component of operating income in the Consolidated Statement of Income for the year ended December 31, 2024 and as a reduction of goodwill in the Consolidated Balance Sheet as of December 31, 2024.

Assumptions used in impairment testing are made at a point in time and require significant judgment; therefore, they are subject to change based upon the facts and circumstances present at each impairment test date. Additionally, these assumptions are generally interdependent and do not change in isolation. However, as it is reasonably possible that changes in assumptions could occur, as a sensitivity measure, we have presented the estimated effects of isolated changes in discount rates and long-term growth rates on the fair value of our reporting unit. These estimated changes in fair value are not necessarily representative of the actual impairment that would be recorded in the event of a fair value decline. The most sensitive assumption used in the analysis was a 10 percent discount rate. A 50 basis point increase to the discount rate would result in an approximate $17,000 increase in the impairment expense recorded, while a 50 basis point decrease in the rate would result in an approximate $20,000 decrease in the impairment expense recorded. The revenue projections and long-term growth rate assumptions are less sensitive. All else equal, a 50 basis point change in the average revenue projection or long-term growth rate would result in a change in impairment expense between $5,000 and $15,000.

Indefinite-lived intangibles - Additionally, in connection with the assessment of the same events and circumstances as discussed above, we performed a quantitative impairment test of our indefinite-lived intangible assets. The estimated fair value of our indefinite-lived intangible assets was calculated based on the income approach that utilized the relief from royalty method. When estimating the fair value, we made certain assumptions for our future revenue projections, market royalty rates, and discount rates. These assumptions reflect our estimates of future economic and competitive conditions which consider many factors including macroeconomic conditions, industry growth rates and competition. These factors are subject to change as a result of changing market conditions. Any changes in these assumptions may affect our fair value estimate and the results of an impairment test.

The results of the quantitative assessment indicated that the estimated fair values for the indefinite-lived intangible assets exceed their carrying value and no impairment loss was recognized for the year ended December 31, 2024.

35

Assumptions used in impairment testing are made at a point in time and require significant judgment; therefore, they are subject to change based upon the facts and circumstances present at each impairment test date. Additionally, these assumptions are generally interdependent and do not change in isolation. However, as it is reasonably possible that changes in assumptions could occur, as a sensitivity measure, we have presented the estimated effects of isolated changes in discount rates and royalty rates on fair value of indefinite-lived intangible assets. These estimated changes in fair value are not necessarily representative of the actual impairment that would be recorded in the event of a fair value decline. The most sensitive assumption used in the analysis was a 10 percent discount rate. A 50 basis point increase in the discount rate, or a 50 basis point decrease in royalty rates, would not change our conclusion that the indefinite-lived intangible assets were not impaired.

As discussed above, any significant decline in our market capitalization or changes in discount rates, even if due to macroeconomic factors, could put pressure on the carrying value of our goodwill. In addition, if future revenues and contributions to our operating results for any of indefinite-lived intangible assets or Branded Spirits reporting unit deteriorate at rates in excess of our current projections, we may be required to record additional impairment charges to certain intangible assets. A determination that a portion or all of our goodwill or indefinite-lived intangible assets are impaired could have a material adverse effect on our business, consolidated financial condition and results of operations. For a further discussion of our annual impairment testing of goodwill and indefinite-lived intangible assets and the impairment charge to goodwill that we recorded in 2024, see Note 5, Goodwill and Other Intangible Assets.

NEW ACCOUNTING PRONOUNCEMENTS

For information with respect to recent accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 1, Nature of Operations and Summary of Significant Accounting Policies.