MGP INGREDIENTS INC

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 industry and our prospects, plans, financial position, and strategic plan may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements about our ability to realize benefits from our initiatives, 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 source 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

MGP is a leading producer of branded and distilled spirits as well as food ingredient solutions. 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. Distilled spirits include premium bourbon, rye, and other American 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 are predominately wheat based and provide 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 are predominately wheat based and provide 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

Sales - Sales for the quarter ended September 30, 2025 were $130,912, a decrease of 19 percent compared to the year-ago quarter, which was the result of decreased sales in the Distilling Solutions and Branded Spirits segments, partially offset by increased sales in the Ingredient Solutions segment. Within the Distilling Solutions segment, sales were down 43 percent primarily due to decreased sales of brown goods. Within the Branded Spirits segment, sales were down 3 percent due primarily to decreased sales of brands in the value and other price tiers, partially offset by increased sales of brands within the premium plus price tier. Within the Ingredient Solutions segment, sales were up 9 percent, primarily due to increased sales of specialty wheat proteins and starches (see “Segment Results”).

Current wording

Sales - Sales for the quarter ended March 31, 2026 were $106,427, a decrease of 13 percent compared to the year-ago quarter, which was the result of decreased sales in the Distilling Solutions and Branded Spirits segments, partially offset by increased sales in the Ingredient Solutions segment. Within the Distilling Solutions segment, sales were down 40 percent primarily due to decreased sales of brown goods. Within the Branded Spirits segment, sales were down 8 percent primarily due to decreased sales volume of our private label bottled products within the other category. Within the Ingredient Solutions segment, sales were up 29 percent, primarily due to increased sales of specialty wheat proteins and starches (see “Segment Results”).

Previous wording

Gross profit -Gross profit for the quarter ended September 30, 2025 was $49,433, a decrease of 25 percent compared to the year-ago quarter. The decrease was driven by decreased gross profit in each of the segments. Within the Distilling Solutions segment, gross profit decreased by $14,444, or 50 percent. Within the Ingredient Solutions segment, gross profit decreased by $1,712, or 36 percent. Within the Branded Spirits segment, gross profit decreased $226, or 1 percent (see “Segment Results”).

Current wording

Gross profit -Gross profit for the quarter ended March 31, 2026 was $33,582, a decrease of 22 percent compared to the year-ago quarter. The decrease was driven by decreased gross profit in the Distilling Solutions and Branded Spirits segments, partially offset by increased gross profit in the Ingredient Solutions segment. Within the Distilling Solutions segment, gross profit decreased by $10,055, or 54 percent. Within the Branded Spirits segment, gross profit decreased $1,062, or 5 percent. Within the Ingredient Solutions segment, gross profit increased by $1,369, or 56 percent (see “Segment Results”).

Previous wording

Advertising and promotion expenses -Advertising and promotion expenses for the quarter ended September 30, 2025 were $6,691, a decrease of 31 percent compared to the year-ago quarter, primarily driven by the realignment of our advertising and promotion spend to brands we believe have the most attractive growth opportunities.

Current wording

Advertising and promotion expenses -Advertising and promotion expenses for the quarter ended March 31, 2026 were $6,191, a decrease of 24 percent compared to the year-ago quarter, primarily driven by realignment of our advertising and promotion spend to brands we believe have the most attractive growth opportunities.

Previous wording

Operating income -Operating income for the year to date ended September 30, 2025 decreased to $40,587 from $104,868 for the year to date period ended September 30, 2024, primarily due to the decrease in gross profit in the Distilling Solutions segment, the change in the fair value of the contingent consideration liability related to the improved performance of the Penelope brand, and the decrease in gross profit in the Ingredient Solutions and Branded Spirits segments. These decreases were partially offset by the reduction in advertising and promotion expenses.

Current wording

Operating income (loss) -Operating income for the quarter ended March 31, 2026 decreased to a loss of $173,201 from a loss of $747 for the quarter ended March 31, 2025, primarily due to the $179,526 goodwill and other long-lived assets impairment related to the Branded Spirits segment recorded during first quarter 2026. Additionally, contributing to the operating loss was a decrease in gross profit in the Distilling Solutions and Branded Spirits segments. These decreases were partially offset by an increase in gross profit in the Ingredient Solutions segment, decreases in advertising and promotion expenses and SG&A expenses as well as the change in fair value of contingent consideration.

Previous wording

Income tax expense - Income tax expense for the quarter ended September 30, 2025 was $4,276, for an effective tax rate of 21.7 percent. Income tax expense for the quarter ended September 30, 2024 was $7,554, for an effective tax rate of 24.0 percent. The decrease in income tax expense, quarter versus quarter, was due primarily to lower income before income taxes. The decrease in tax rate, quarter versus quarter, was primarily due to the proportionately larger impact of tax credits related to capital investments relative to income before taxes.

Current wording

Income tax expense (benefit) - Income tax benefit for the quarter ended March 31, 2026 was $39,865, for an effective tax rate of 22.8 percent. Income tax expense for the quarter ended March 31, 2025 was $671, for an effective tax rate of (28.1) percent. The decrease in income tax expense, quarter versus quarter, was due primarily to lower income before income taxes. The increase in tax rate, quarter versus quarter, was primarily due to the tax impact of the goodwill and other long-lived assets impairment.

Previous wording

Earnings per common share (“EPS”) -Basic and Diluted EPS was $0.71 for the quarter ended September 30, 2025, compared to $1.07 for the quarter ended September 30, 2024. The change in basic and diluted EPS, quarter versus quarter, was primarily due to a decrease in operating income.

Current wording

Earnings per common share (“EPS”) -Basic and Diluted EPS was $(6.30) for the quarter ended March 31, 2026, compared to $(0.14) for the quarter ended March 31, 2025. The change in basic and diluted EPS, quarter versus quarter, was primarily due to a decrease in operating income.

Previous wording

Total sales of the Branded Spirits segment for the quarter ended September 30, 2025 decreased by $1,876, or 3 percent, compared to the prior year quarter, primarily due to a decrease in net price/mix (as defined in the table above), partially offset by increased sales volume. Sales of brands within the value price tier decreased, driven by lower sales volume and net price/mix primarily in certain cordial brands. Sales within the other category declined driven by decreased sales volume of our private label products. Sales within the premium plus price tier increased 3%, driven by increased sales volume reflecting our continued focus on the American whiskey and tequila categories. The increase in sales volume within the premium plus price tier was partially offset by decreased net price/mix.

Current wording

Total sales of the Branded Spirits segment for the quarter ended March 31, 2026 decreased by $3,990, or 8 percent, compared to the prior year quarter, primarily due to a decrease in sales volume of our private label bottled products within the other category. Sales of brands within the value price tier decreased, driven by lower sales volume and net price/mix as we continued to optimize our offerings in these price tiers. These decreases were partially offset by increased sales volume in the premium plus price tier reflecting our continued focus on the American whiskey and tequila categories.

Previous wording

Gross profit slightly decreased versus the prior year quarter by $226, or 1 percent, primarily driven by a decrease in net price/mix, partially offset by higher sales volume and reduced input costs. Gross margin for the quarter ended September 30, 2025 increased to 53.0 percent from 51.8 percent for the prior year quarter, driven primarily by increased sales in the premium plus price tier.

Current wording

Gross profit decreased versus the prior year quarter by $1,062, or 5 percent, primarily driven by lower sales volume of private label bottled products within the other category. Gross margin for the quarter ended March 31, 2026 increased to 47.8 percent from 46.0 percent for the prior year quarter, driven primarily by increased sales volume in the premium plus price tier.

Previous wording

Total sales of the Distilling Solutions segment for the quarter ended September 30, 2025 decreased by $31,038, or 43 percent, compared to the prior year quarter, primarily driven by lower brown goods sales. Brown goods sales volume decreased due to reduced customer demand resulting primarily from elevated industry-wide barrel inventory levels and the subsequent need of a number of our large customers to pause their whiskey purchases after completing their existing contracts. This decrease was partially offset by an increase in net price/mix of brown goods compared to the prior year quarter. White goods and other co-products sales decreased primarily due to a reduction in sales volume related to certain large customers, as well as reduced production volumes of co-products, primarily dried distillers grain. Warehouse services sales were slightly down as compared to the prior year quarter.

Current wording

Total sales of the Distilling Solutions segment for the quarter ended March 31, 2026 decreased by $18,943, or 40 percent, compared to the prior year quarter, primarily driven by lower brown goods sales. Brown goods sales volume decreased due to reduced customer demand resulting primarily from continued elevated industry-wide barrel inventory levels. This decrease was partially offset by an increase in net price/mix of brown goods compared to the prior year quarter.

Previous wording

Gross profit decreased versus the prior year quarter by $14,444, or 50 percent, due to lower brown goods sales volume, partially offset by increased gross profit within warehouse services. Gross margin for the quarter ended September 30, 2025 decreased to 34.7 percent from 39.8 percent for the prior year quarter.

Current wording

Gross profit decreased versus the prior year quarter by $10,055, or 54 percent, primarily due to lower brown goods sales volume and decreased gross profit of white goods and other co-products. Gross margin for the quarter ended March 31, 2026 decreased to 30.8 percent from 39.8 percent for the prior year quarter primarily due to lower brown goods sales.

Previous wording

Total sales of the Ingredient Solutions segment for the quarter ended September 30, 2025 increased by $2,365, or 9 percent, compared to the prior year quarter. The increase was primarily driven by increased sales volume of specialty wheat proteins and commodity wheat proteins driven by the conversion of new domestic customers that continued during the quarter. Additionally, the increase in sales was due to increased net price/mix of specialty wheat starches.

Current wording

Total sales of the Ingredient Solutions segment for the quarter ended March 31, 2026 increased by $7,707, or 29 percent, compared to the prior year quarter. The increase was primarily driven by increased sales volume and net price/mix of specialty wheat proteins and starches due to cycling against the supply challenges resulting from adverse weather during the prior year quarter, complexities associated with the closure of the Atchison distillery, as well as cycling against the timing of commercialization of new customers during the prior year quarter.

Previous wording

Operating cash flow and borrowings through our Credit Agreement, Convertible Senior Notes, and Note Purchase Agreement (see Note 4, 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 4, 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

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, capital expenditures, and investments supporting our strategic plan, such as the aging of barreled distillate and potential mergers and acquisitions. Generally, during periods when commodity 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 September 30, 2025, our current assets exceeded our current liabilities by $326,843, largely due to our inventories, at cost, of $384,523. At September 30, 2025, our cash balance was $13,447 and we have used our various debt agreements for liquidity purposes, with $443,000 available under our credit agreement for additional borrowings and $231,600 available under the Note Purchase Agreement (see Note 4, Corporate Borrowings). 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, and potential mergers and 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 short-term financing requirements, if needed.

Current wording

At March 31, 2026, our current assets exceeded our current liabilities by $321,058, largely due to our inventories, at cost, of $403,107. At March 31, 2026, our cash balance was $10,357 and we have used our various debt agreements for liquidity purposes, with $464,000 available under our credit agreement for additional borrowings and $234,800 available under the Note Purchase Agreement (see Note 4, Corporate Borrowings). 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 March 31, 2026, we met those covenants and restrictions.

Previous wording

Cash decreased $11,826 for the year to date ended September 30, 2025, compared to an increase of $2,384 for the year to date ended September 30, 2024, for a net decrease in cash of $14,210, period versus period.

Current wording

Cash decreased $8,103 for the quarter ended March 31, 2026, compared to a decrease of $5,161 for the quarter ended March 31, 2025, for a net decrease in cash of $2,942, period versus period.

Previous wording

Operating Activities. Cash provided by operating activities for the year to date ended September 30, 2025 was $92,449. The cash provided by operating activities resulted primarily from adjustments for non-cash or non-operating charges of $46,344, including the change in fair value of contingent consideration, depreciation and amortization, and share-based compensation, net income of $26,799 and cash provided by operating assets and liabilities of $19,306. The primary drivers of the changes in operating assets and liabilities were $41,699 of cash provided by decreased accounts receivables, net, due to timing of customer payments and lower sales during the year to date period, and $7,689 related to increased accrued expenses and other, which related to an increase in our incentive compensation accrual. This was partially offset by $19,935 use of cash related to an increase in inventories, primarily due to an increase in barreled distillate, and $8,446 use of cash related to a decrease in accounts payable due to timing of vendor payments and lower costs during the year to date period.

Current wording

Operating Activities. Cash provided by operating activities for the quarter ended March 31, 2026 was $6,955. The cash provided by operating activities resulted primarily from net loss of $134,807, adjustments for non-cash or non-operating charges of $143,619, including goodwill and other long-lived assets impairment, depreciation and amortization, and share-based compensation and cash used in operating assets and liabilities of $1,857. The primary drivers of the changes in operating assets and liabilities were $29,441 of cash provided by decreased accounts receivables, net, due to timing of customer payments and lower sales during the quarter. This was partially offset by $20,299 use of cash related to an increase in inventories, primarily due to an increase in barreled distillate, and $6,792 use of cash related accrued expenses and other primarily related to an incentive compensation payout during the quarter.

Previous wording

Cash provided by operating activities for the year to date ended September 30, 2024 was $73,512. The cash provided by operating activities resulted primarily from net income of $76,463, adjustments for non-cash or non-operating charges of $32,845, including depreciation and amortization, the changes in fair value of contingent consideration, and share-based compensation, partially offset by cash used in operating assets and liabilities of $35,796. The primary drivers of the changes in operating assets and liabilities were $24,979 use of cash related to an increase in inventories, primarily due to an increase in barreled distillate, $10,627 use of cash related to a decrease in accounts payable due to timing of payments, $9,935 related to accrued expenses and other, which related to a decrease in our incentive compensation accrual, partially offset by $13,979 cash provided by decreased accounts receivables, net, due to timing of sales and customer payments during the year to date period as well as the closure of our Atchison distillery in December 2023.

Current wording

Cash provided by operating activities for the quarter ended March 31, 2025 was $44,684. The cash provided by operating activities resulted primarily from cash provided by operating assets and liabilities of $26,611, adjustments for non-cash or non-operating charges of $21,130, including changes in fair value of contingent consideration, depreciation and amortization, and share-based compensation, partially offset by a net loss of $3,057. The primary drivers of the changes in operating assets and liabilities were $40,594 of cash provided by decreased accounts receivables, net, due to the timing of customer payments and lower sales during the quarter, this was partially offset by $13,439 use of cash related to an increase in inventories, primarily due to an increase in barreled distillate.

Previous wording

Investing Activities. Cash used in investing activities for the year to date ended September 30, 2025 was $40,688, which resulted primarily from additions to property, plant, and equipment of $40,674 (see “Capital Spending”). Cash used in investing activities for the year to date ended September 30, 2024 was $53,126, which primarily resulted from additions to property, plant, and equipment of $52,850 (see “Capital Spending”).

Current wording

Investing Activities. Cash used in investing activities for the quarter ended March 31, 2026 was $3,773, which resulted primarily from additions to property, plant, and equipment of $5,722 (see “Capital Spending”), partially offset by distributions from equity method investments of $1,500. Cash used in investing activities for the quarter ended March 31, 2025 was $19,926, which resulted from additions to property, plant, and equipment (see “Capital Spending”).

Previous wording

Capital Spending. We manage capital spending to support our business growth plans. We have incurred $25,436 and $43,503 of capital expenditures and have paid $40,674 and $52,850 for capital expenditures for the years to date ended September 30, 2025 and 2024, respectively. We expect to incur approximately $32,500 in capital expenditures in 2025, which includes capital expenditures for facility improvement and expansion, facility sustaining projects, and environmental, health, and safety projects. The difference between the amount of capital expenditures incurred and amount paid is due to the change in capital expenditures in accounts payable.

Current wording

Capital Spending. We manage capital spending to support our business growth plans. We have incurred $2,003 and $8,094 of capital expenditures and have paid $5,722 and $19,926 for capital expenditures for the years to date ended March 31, 2026 and 2025, 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 to incur approximately $20,000 in capital expenditures in 2026, which we expect to use for facility improvement and facility sustenance projects, and environmental health and safety projects.

Previous wording

Financing Activities. Cash used in financing activities for the year to date ended September 30, 2025 was $64,286, due to net payments on debt of $52,800 (see “Long-Term and Short-Term Debt”), payments of dividends and dividend equivalents of $7,739 (see “Dividends and Dividend Equivalents”), payments of loan fees of $2,712, and repurchases of Common Stock of $1,035 (see “Treasury Purchases” and “Share Repurchase”).

Current wording

Financing Activities. Cash used in financing activities for the quarter ended March 31, 2026 was $11,084, due to net payments on debt of $7,600 (see “Long-Term and Short-Term Debt”), payments of dividends and dividend equivalents of $2,598 (see “Dividends and Dividend Equivalents”), and repurchases of Common Stock of $886 (see “Treasury Purchases” and “Share Repurchases”).

Previous wording

Cash used in financing activities for the year to date ended September 30, 2024 was $18,048, due to repurchases of Common Stock of $12,235 (see “Treasury Purchases” and “Share Repurchases”), and payments of dividends and dividend equivalents of $8,013 (see “Dividends and Dividend Equivalents”), partially offset by net proceeds on debt of $2,200 (see “Long-Term and Short-Term Debt”).

Current wording

Cash used in financing activities for the quarter ended March 31, 2025 was $30,213, due to net payments on debt of $26,600 (see “Long-Term and Short-Term Debt”), payments of dividends and dividend equivalents of $2,578 (see “Dividends and Dividend Equivalents”), and repurchases of Common Stock of $1,035 (see “Treasury Purchases” and “Share Repurchases”).

Previous wording

81,942 RSUs vested and converted to shares of Common Stock for employees during the year to date ended September 30, 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

Treasury Purchases. 107,631 RSUs vested and converted to shares of Common Stock for employees during the quarter ended March 31, 2026, of which we withheld and purchased for treasury 34,415 shares valued at $886 to cover payment of associated withholding taxes.

Previous wording

Treasury Purchases. 105,776 RSUs vested and converted to shares of Common Stock for employees during the year to date ended September 30, 2025, of which we withheld and purchased for treasury 31,631 shares valued at $1,035 to cover payment of associated withholding taxes.

Current wording

105,776 RSUs vested and converted to shares of Common Stock for employees during the quarter ended March 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

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 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 to date ended September 30, 2025, we did not repurchase any shares of Common Stock under the share repurchase program. During the year to date ended September 30, 2024, the Company repurchased approximately 128,360 shares of Company Stock for approximately $10,000. As of September 30, 2025, there was 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 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 quarter ended March 31, 2026 and 2025 we did not repurchase any shares of Common Stock under the share repurchase program. As of March 31, 2026, there was 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, merger and acquisition, Board-approved dividends, and share repurchase activities), and the overall cost of capital. Total debt was $268,723 (net of unamortized loan fees of $7,927) at September 30, 2025, and $323,541 (net of unamortized loan fees of $5,909) at December 31, 2024. We had net borrowings on debt of $52,800 for year to date ended September 30, 2025 and net proceeds on debt of $2,200 for the year to date ended September 30, 2024. Additionally, during the year to date ended September 30, 2025, we incurred $2,712 of loan fees associated with amending and restating our credit agreement.

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, merger and acquisition, Board-approved dividends, and share repurchase activities), and the overall cost of capital. Total debt was $244,958 (net of unamortized loan fees of $7,492) at March 31, 2026, and $252,318 (net of unamortized loan fees of $7,732) at December 31, 2025. We had net payments on debt of $7,600 and $26,600 for quarter ended March 31, 2026 and 2025, respectively.