MGP INGREDIENTS INC
For the period ended Dec 31, 2025. Filed Feb 25, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 25, 2026
MGPI$17.12-0.5%Stored close · as of Oct 30, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-02-26.
0001628280-25-007962
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-25.
0000835011-26-000031
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 123 previous paragraphs and 143 current paragraphs.
71 unchanged; 37 reworded; 29 added; 14 removed; 1 previous and 6 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
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2025 to 2024 -SG&A expenses for 2025 were $84,819, an increase of 4 percent compared to 2024. The increase in SG&A expenses was primarily driven by increased incentive compensation as compared to the prior year, which was partially offset by our cost savings initiative.
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Operating income (loss)
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2025 to 2024 - Operating loss for 2025 was $94,615 which decreased from operating income of $74,426 for 2024, primarily due to the $152,622 goodwill and indefinite-lived intangible asset impairment related to the Branded Spirits segment recorded during fourth quarter 2025. Additionally, contributing to the operating loss was a decrease in gross profit in each segment, the
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Total Branded Spirits sales for 2025 decreased by $7,875, or 3 percent, compared to 2024, due to lower sales volume and net price/mix within the value and mid price tiers, primarily in certain tequila, liqueur, and cordial brands. This decrease was partially offset by increased sales volume within the premium plus price tier, reflecting the continued momentum of the Penelope brand. The increase in sales volume within the premium plus price tier was partially offset by decreased net price/mix.
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Gross profit decreased year versus year by $2,876, or 2 percent. Gross margin for 2025 increased to 49.5 percent compared to 49.1 percent for 2024. The decrease in gross profit was primarily driven by a decrease in sales volume and net price/mix within the value price tier, partially offset by increased premium plus sales volume. The increase in gross margin was primarily driven by increased sales in the premium plus price tier.
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Total Distilling Solutions sales for 2025 decreased by $150,804, or 45 percent, compared to 2024. The decrease in sales of the Distilling Solutions segment is primarily driven by lower brown goods sales. Brown goods sales volume and net price/mix decreased primarily due to reduced customer demand resulting from elevated industry-wide barrel inventory levels. White goods and other co-products sales decreased primarily due to a reduction in sales volume resulting from phasing out a number of white goods customer contracts following the closure of our Atchison distillery, as well as reduced production volumes of co-products, primarily dried distillers grain. Warehouse services sales were slightly down as compared to the year-ago period due to lower sales volumes of brown goods.
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Gross profit decreased year versus year by $73,325, or 52 percent. Gross margin for 2025 decreased to 37.8 percent from 42.7 percent for 2024. The decrease in gross profit was due to lower brown goods sales volume and net price/mix, partially offset by increased gross profit in warehouse services.
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Total Ingredient Solutions sales for 2025 decreased by $8,571, or 7 percent, compared to 2024. The decrease was primarily driven by decreased sales volume of specialty wheat starches and commodity wheat starches as well as decreased net price/mix of specialty wheat proteins. The declines in specialty wheat starches and proteins were primarily due to supply challenges resulting from adverse weather, complexities associated with the closure of the Atchison Distillery, and a key equipment outage, as well as the timing of commercialization of new specialty wheat protein customers. These declines were partially offset by increased sales volume of specialty and commodity wheat proteins and increased net price/mix of specialty wheat starches.
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Gross profit decreased year versus year by $10,707, or 41 percent. Gross margin for 2025 decreased to 12.7 percent from 20.1 percent for 2024. The decrease in gross profit was primarily driven by unanticipated operational reliability challenges and a key equipment outage as well as complexities and higher costs associated with the disposal of waste starch streams. During the second half of 2025, the biofuel facility began operations to help mitigate the disposal costs related to the waste starch streams. This project is one of many investments being made to reduce disposal costs and improve the overall reliability of our Ingredients Solutions operations. However, it will take time to realize the benefits of these cost mitigation and reliability initiatives.
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by decreased accounts receivables, net, due to timing of customer payments and a reduction in consolidated sales during the year and $8,424 related to increased accrued expenses and other, which related to an increase in our incentive compensation accrual. These increases in operating assets and liabilities were partially offset by $18,145 use of cash related to an increase in inventories, primarily barreled distillate.
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(d)The Company achieved the maximum net sales target as defined in the Penelope acquisition agreement during the third quarter 2025, and in accordance with the terms of the agreement, the Company will pay out the full contingent consideration during the first half of 2026. (See Note 4, Business Combination for additional information.)
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We performed a quantitative assessment of goodwill and our indefinite-lived intangible assets as part of our annual impairment test in accordance with our accounting policy during the fourth quarter.
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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.
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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.
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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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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.
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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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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.
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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.
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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.
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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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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.
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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.
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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.
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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.
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Previous wording
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.
Current wording
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 ability to support our liquidity and operating needs through cash generated from operations and borrowings; and our capital expenditures. 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.
Previous wording
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.
Current wording
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 Condition 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.
Previous wording
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.
Current wording
MGP is a leading producer of branded and distilled spirits as well as food ingredient solutions. We have an extensive award-winning global portfolio of 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. 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. 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 ingredient products are sold directly, or through distributors, to manufacturers and processors of finished packaged goods or to bakeries.
Previous wording
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.
Current wording
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, tariffs, inflation and interest rate impacts on consumers, increased competition as consumer packaged good companies seek to capitalize on consumer trends, as well as changes in consumer consumption patterns. Our strategy for the Branded Spirits segment is to
Previous wording
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 innovation, services and stability, cultivate additional domestic customers for brown goods sales, and increase our global presence in the American whiskey market.
Current wording
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. Additionally, the industry has been impacted by unfavorable industry trends resulting in a number of distilleries reducing production or shutting down operations. Our strategy for the Distilling Solutions segment is to further develop our existing customer relationships, capitalize on new customer opportunities, grow in the private label category, maximize the value of our aged inventory by partnering with customers whose business models uniquely benefit from its attributes, optimize our digital interface to enhance the customer experience, and enhance awareness of MGP as a global partner to branded spirits suppliers.
Previous wording
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.
Current wording
We continue to focus on utilizing our capabilities and product offerings to attract and develop customer relationships for our brown goods. During 2025, the industry continued to experience a softening of American whiskey category trends as well as elevated industry-wide barrel whiskey inventories, which resulted in the inability of some customers to honor their contracts with us and a number of our large customers to pause their whiskey purchases after completing their existing contracts. We expect these trends to continue. Distilling Solutions segment sales for 2025 decreased 45 percent over the prior year.
Previous wording
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.
Current wording
Our Ingredient Solutions segment mission is to remain a strategic business partner in specialty ingredients providing premium dietary fiber and plant protein supporting health and wellness brands. The favorable macro industry trends we anticipate will benefit our business include increasing 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 focus on enhancing our operational reliability, 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 2025 decreased 7 percent over the prior year.
Previous wording
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.
Current wording
2025 to 2024 - Sales for 2025 were $536,375, a decrease of 24 percent compared to 2024, which was the result of decreased sales in each segment. Distilling Solutions segment sales decreased 45 percent, primarily due to decreased sales of brown goods. Ingredient Solutions segment sales decreased 7 percent, primarily due to decreased sales of specialty wheat starches. Branded Spirits segment sales decreased 3 percent, primarily due to decreased sales of brands within the value and mid price tiers.
Previous wording
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.
Current wording
2025 to 2024 - Gross profit for 2025 was $199,409, a decrease of 30 percent compared to 2024. The decrease was driven by decreased gross profit in each segment. The Distilling Solutions segment gross profit decreased by $73,325, or 52 percent. The Ingredient Solutions segment gross profit decreased by $10,707, or 41 percent. The Branded Spirits segment gross profit decreased by $2,876, or 2 percent.
Previous wording
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.
Current wording
2025 to 2024 - Advertising and promotion expenses for 2025 were $31,083, a decrease of 23 percent compared to 2024. This decrease was primarily driven by the realignment of our advertising and promotion spend to brands in our Branded Spirits segment we believe to have the most attractive growth opportunities.
Previous wording
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.
Current wording
2025 to 2024 - Income tax expense for 2025 was $7,482, for an effective tax rate for the year of (7.5) percent. Income tax expense for 2024 was $33,977, for an effective tax rate for the year of 49.6 percent. The 57.1 percentage point decrease was primarily due to the nondeductible impairment of goodwill.
Previous wording
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.
Current wording
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 in other income (expense), net related to equity method investment income.
Previous wording
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.
Current wording
Total Distilling Solutions sales for 2024 decreased by $118,650, or 26 percent, compared to 2023. The decrease in sales of the Distilling Solutions 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.
Previous wording
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.
Current wording
Our primary sources of liquidity have been cash flow from operating activities and borrowings through our Credit Agreement, Convertible Senior Notes and Note Purchase Agreement (see Note 7, Corporate Borrowings). These sources of cash are used to fund our operating needs, capital expenditures, stockholder dividends and other discretionary uses. We continue to monitor market conditions which may create credit and economic challenges that could adversely impact our cash flow from operating activities and cash provided by borrowings. Our overall liquidity reflects our 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.
Previous wording
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.
Current wording
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 commodity prices are rising, our operations require increased use of cash to support inventory levels.
Previous wording
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.
Current wording
We anticipate being able to support our short-term liquidity and operating needs largely through cash generated from operations and borrowings under our various debt agreements. We expect some holders of the Convertible Senior Notes to require the Company to repurchase the Convertible Senior Notes during the fourth quarter of 2026. Additionally, in accordance with the terms of the agreement, we will pay out the full contingent consideration related to the Penelope acquisition during the first half of 2026. We have sufficient availability to repurchase the Convertible Senior Notes and pay the full contingent consideration related to the Penelope acquisition under our Credit Agreement, Note purchase Agreement, new financing instruments, or a combination thereof. 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 or preferred stock.
Previous wording
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.
Current wording
Operating Activities. Cash provided by operating activities was $121,528 during the year ended December 31, 2025. The cash provided by operating activities during 2025 resulted primarily from a net loss of $107,832, offset by adjustments for non-cash or non-operating charges of $203,136, including goodwill and indefinite-lived intangible asset impairment, the change in the fair value of the contingent consideration, and depreciation and amortization; cash provided by the changes in operating assets and liabilities of $26,224. The primary drivers of the changes in operating assets and liabilities were $32,189 of cash provided
Previous wording
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.
Current wording
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.
Previous wording
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”).
Current wording
Investing Activities. Cash used in investing activities for the year ended December 31, 2025 was $45,525, which primarily resulted from additions to property, plant and equipment of $45,488 (see “Capital Spending”).
Previous wording
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”).
Current wording
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”).
Previous wording
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.
Current wording
Capital Spending. We manage capital spending to support our business growth plans. We have incurred $31,887, $73,161, and $61,108 of capital expenditures and have paid $45,488, $71,181, and $55,267 for capital expenditures for the years ended December 31, 2025, 2024 and 2023, 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 $20,000 in capital expenditures for 2026, which we expect to use for facility improvement and facility sustenance projects, and environmental health and safety projects.
Previous wording
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).
Current wording
Financing Activities. Cash used in financing activities for the year ended December 31, 2025 was $83,522, due to net payments on long-term debt of $69,400 (see “Long-Term and Short-Term Debt”), payments of dividends and dividend equivalents of $10,325 (see Note 9, Equity and EPS for additional information), and payments of loan fees of $2,762 (see “Long-Term and Short-Term Debt”).
Previous wording
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 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).
Current wording
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 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”).
Previous wording
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.
Current wording
Treasury Purchases. 105,776 RSUs vested and converted to Common Stock for employees during the year ended December 31, 2025, of which we withheld and purchased for treasury 31,631 shares valued at $1,035 to cover payment of associated withholding taxes.
Previous wording
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.
Current wording
81,942 RSUs vested and converted to Common Stock for employees 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.
Previous wording
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.
Current wording
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, 2025, we did not repurchase any shares of Common Stock under the share repurchase program. 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.
Previous wording
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).
Current wording
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 $252,318 (net of unamortized loan fees of $7,732) at December 31, 2025 and $323,541 (net of unamortized loan fees of $5,909) at December 31, 2024. Net payments on all debt for 2025 were $69,400 and net borrowings on all debt for 2024 were $35,600 (see Note 7, Corporate Borrowings for additional information). Additionally, during the year ended December 31, 2025, we incurred $2,762 of loan fees associated with amending and restating our credit agreement.
Previous wording
(b)Includes open purchase order commitments related to raw materials and packaging used in the ordinary course of business of $68,696.
Current wording
(b)Includes open purchase order commitments related to raw materials and packaging used in the ordinary course of business of $50,837.
Previous wording
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.
Current wording
We have completed several projects that were 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, 2025, 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.
Previous wording
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.
Current wording
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
Previous wording
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.
Current wording
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 and indefinite-lived intangible asset. 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 and indefinite-lived intangible assets. To the extent that the carrying amount exceeds fair value, an impairment of goodwill is recognized and allocated to the reporting units. To the extent that the carrying amount exceeds fair value, an impairment of indefinite-lived intangibles assets is recognized.
Previous wording
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.
Current wording
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 weighted 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 of the assessment date, to corroborate our fair value conclusion, we combined the estimated fair values for the reporting units and performed a market capitalization reconciliation to validate the reasonableness of the implied control premium. We calculated the market capitalization using both the stock price on the assessment date as well as the average stock price over a reasonable period of time preceding the assessment date. Based on this reconciliation, we believe the control premium to be reasonable.
Previous wording
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.
Current wording
As a result of the quantitative goodwill impairment test, we recorded an impairment charge of $132,122 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 (Loss) for the year ended December 31, 2025 and as a reduction of goodwill in the Consolidated Balance Sheet as of December 31, 2025.
Previous wording
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.
Current wording
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 an 11 percent discount rate. A 50 basis point increase to the discount rate would result in an approximate $17,500 increase in the impairment expense recorded, while a 50 basis point decrease in the rate would result in an approximate $19,500 decrease in the impairment expense recorded. . 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 $10,500 and $13,500.
Previous wording
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.
Current wording
Indefinite-lived intangibles -The estimated fair value of our trade name indefinite-lived intangible assets within our Branded Spirits reporting unit 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.
Previous wording
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.
Current wording
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 the 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 an 11 percent discount rate. A 50 basis point change in the discount rate, the average revenue projection, or long-term growth rate would result in an immaterial change in the impairment expense recorded.
Previous wording
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.
Current wording
As discussed above, any further 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 the 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 results of that testing, see Note 5, Goodwill and Other Intangible Assets.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
focus on the right brands at the right price points in the right spirits categories to maximize our profits. Additionally, our strategy is to focus on scaling high-growth premium brands, focus on our channel and customer strategy, build scalable growth through regional execution, and continue to invest in our people. Branded Spirits segment sales for 2025 decreased 3 percent over the prior year.
Current report — wording carried from elsewhere
change in fair value of the contingent consideration liability related to the acquisition of Penelope Bourbon LLC (“Penelope”), and the increase in SG&A expenses, as discussed above. These decreases were partially offset by the decrease in advertising and promotion expenses, as discussed above.
Current report — wording carried from elsewhere
2025 to 2024 -Basic and diluted EPS was $(4.99) in 2025, compared to $1.56 in 2024. The change in basic and diluted EPS was primarily due to a decrease in operating income and change in the effective tax rate, both driven primarily by the nondeductible goodwill impairment, as well as decreased gross profit in each of the segments. Additionally, the decrease was related to the reduction in the weighted average shares outstanding during the period.
Current report — wording carried from elsewhere
At December 31, 2025, our current assets exceeded our current liabilities by $322,658, largely due to our inventories, at cost, of $382,741. At December 31, 2025, our cash balance was $18,460, and we have used our various debt agreements for liquidity purposes, with $458,000 available under our Credit Agreement for additional borrowings and $233,200 available under the Note Purchase Agreement (see Note 7, Corporate Borrowings for additional information). Under these agreements (including the Credit Agreement amendment and the Note Purchase Agreement amendment we entered into on February 20, 2026), we must meet certain financial covenants and restrictions, and at December 31, 2025, we met those covenants and restrictions.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
As a result of the quantitative impairment test, we recorded an impairment charge of $20,500 to adjust the carrying amount of the trade names indefinite-lived intangible assets to fair value. The impairment is included as a component of operating income in the Consolidated Statement of Income (Loss) for the year ended December 31, 2025 and as a reduction of intangible assets, net in the Consolidated Balance Sheet as of December 31, 2025.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.