MGP Ingredients Reports Record Third Quarter 2021 Results
11/03/2021
Increases full-year 2021 guidance
Strong execution in each business segment led to record results
2021 third quarter results compared to 2020 third quarter results
- Consolidated sales increased 71.5% to
$176.6 million as a result of strong growth in each of the reporting segments. - Consolidated gross profit increased 146.5% to
$57.1 million , due to strong growth in each of the reporting segments. - Consolidated operating income increased 140.9% to
$32.9 million ; adjusted operating income increased 142.6% to$33.2 million . - Earnings per share ("EPS") increased to
$1.08 per share from$0.61 per share; adjusted EPS increased to$1.09 per share from$0.61 per share. - Adjusted EBITDA increased to
$38.4 million from$17.1 million , representing a 124.2% increase.
“The record consolidated quarterly results reflect the progress our team has made toward executing our long-term strategic plan,” said
“Integration of our recently completed acquisition of
Distillery Products Segment
In the third quarter of 2021, sales for the Distillery Products segment increased 15.0% to
“We posted another solid quarter in the Distillery Products segment, primarily driven by strong aged whiskey sales, as a result of the continued robust consumer demand for our premium beverage alcohol offerings,” said Colo. “The macro consumer trend supporting the ongoing growth of the American Whiskey category remains robust, which is confirmed by the demand we’re experiencing from new and existing brown goods customers. White goods sales also experienced significant growth of 30.7% from the prior year period, primarily due to improved prices and volume.”
Branded Spirits Segment
In the third quarter of 2021, sales for the
“Our
Ingredient Solutions Segment
For the third quarter of 2021, sales in the Ingredient Solutions segment increased 12.5% to
“This quarter’s record results reflected the solid demand we continue to experience for our plant-based proteins and starches in the Ingredient Solutions segment,” said Colo. “We believe our diverse customer base and product offering continue to be aligned with strong consumer trends.”
Other
MGP experienced a fire at the
Corporate selling, general and administrative expenses increased to
The corporate effective tax rate for the quarter was 24.5% compared with 21.6% in the year ago period. The increases, as compared to the prior year period, was primarily due to higher pre-tax income, which
lessened the effects of tax credits received.
GAAP earnings per share increased to
2021 Outlook
MGP is offering the following increased consolidated guidance for fiscal 2021, including
- Sales are projected to be in the range of
$570 million to$615 million . - Adjusted EBITDA is expected to be in the range of
$125 million to$135 million . - Adjusted earnings per share are forecasted to be in the
$3.75 to$4.05 range, with weighted average shares outstanding expected to be approximately 20.7 million at year end.
Conclusion
“We are very pleased with the continued solid results this quarter by each of our reporting segments,” said Colo. “We remain committed to the execution of our long-term growth strategy, further building on the momentum from last quarter and the year. The Distillery Products business is well positioned as a total solutions provider with enhanced capabilities while our Ingredient Solutions segment continues to optimize customer, market, and channel to drive additional profitability. And lastly,
Conference Call and Webcast Information
Webcast: | ir.mgpingredients.com on the Events & Presentations page | ||
Conference Call: | 844-308-6398 (domestic) or 412-717-9605 (international) |
About
As one of the largest distillers in the
MGP’s branded spirits portfolio covers a wide spectrum of brands in every segment, including iconic brands from
In addition, our Ingredient Solutions segment offers specialty proteins and starches that help customers harness the power of plants and provide a host of functional, nutritional and sensory benefits for a wide range of food products.
The transformation of American grain into something more is in the soul of our people, products, and history. We’re devoted to unlocking the creative potential of this extraordinary resource. For more information, visit mgpingredients.com.
Cautionary Note Regarding Forward-Looking Statements
The forward-looking statements contained herein include, but are not limited to, statements about the expected effects on
These forward-looking statements reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, Company performance, and Company financial results and financial condition and are not guarantees of future performance. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. Important factors that could cause actual results to differ materially from our expectations include, among others: (i) the ability to realize the anticipated benefits of the acquisition of
Non-GAAP Financial Measures
In addition to reporting financial information in accordance with
For More Information
Investors & Analysts:
646-475-2998 or investor.relations@mgpingredients.com
Media:
913-360-5440 or greg.manis@mgpingredients.com
OPERATING INCOME ROLLFORWARD | ||||||||
(Dollars in thousands) | ||||||||
Operating income, quarter versus quarter | Operating Income |
Change | ||||||
Operating income for quarter ended |
$ | 13,652 | ||||||
Increase in gross profit - |
21,828 | 159.9 | pp(a) | |||||
Increase in gross profit - Distillery Products segment | 11,063 | 81.0 | pp | |||||
Increase in gross profit - Ingredient Solutions segment | 1,033 | 7.6 | pp | |||||
Increase in selling general and administrative expenses | (14,692 | ) | (107.6 | ) | pp | |||
Operating income for quarter ended |
$ | 32,884 | 140.9 | % |
Operating income, year to date versus year to date | Operating Income |
Change | ||||||
Operating income for year to date ended |
$ | 38,698 | ||||||
Increase in gross profit - |
40,010 | 103.4 | pp(a) | |||||
Increase in gross profit - Distillery Products segment | 37,379 | 96.6 | pp | |||||
Increase in gross profit - Ingredient Solutions segment(a) | 1,748 | 4.5 | pp | |||||
Increase in selling general and administrative expenses | (36,788 | ) | (95.1 | ) | pp | |||
Operating income for quarter ended |
$ | 81,047 | 109.4 | % | ||||
(a) Percentage points (“pp”). | ||||||||
EARNINGS PER SHARE (“EPS”) ROLLFORWARD
Change in basic and diluted EPS, quarter versus quarter | Basic and Diluted EPS |
Change | ||||||
Basic and diluted EPS for quarter ended |
$ | 0.61 | ||||||
Increase in operations(b) | 0.88 | 144.3 | pp(a) | |||||
Increase in other income (expense), net(b) | (0.03 | ) | (4.9 | ) | pp | |||
Change in interest expense, net(b) | (0.02 | ) | (3.3 | ) | pp | |||
Tax: Change in effective tax rate | (0.06 | ) | (9.8 | ) | pp | |||
Increase in shares outstanding resulting from the Merger | (0.30 | ) | (49.2 | ) | pp | |||
Basic and diluted EPS for quarter ended |
$ | 1.08 | 77.1 | % |
Change in basic and diluted EPS, year to date versus year to date | Basic and Diluted EPS |
Change | ||||||
Basic and diluted EPS for year to date ended |
$ | 1.68 | ||||||
Increase in operations(b) | 1.92 | 114.3 | pp(a) | |||||
Decrease in weighted average shares outstanding, excluding the Merger impacts | 0.01 | 0.6 | pp | |||||
Change in interest expense, net(b) | (0.04 | ) | (2.4 | ) | pp | |||
Increase in other income (expense), net(b) | (0.03 | ) | (1.8 | ) | pp | |||
Tax: Change in effective tax rate | (0.04 | ) | (2.4 | ) | pp | |||
Increase in shares outstanding resulting from the Merger | (0.59 | ) | (35.1 | ) | pp | |||
Basic and diluted EPS for year to date ended |
$ | 2.91 | 73.2 | % | ||||
(a) Percentage points (“pp”). | ||||||||
(b) Items are net of tax based on the effective tax rate for the base year (2020). | ||||||||
SALES BY OPERATING SEGMENT
(Dollars in thousands)
DISTILLERY PRODUCTS SALES | ||||||||||||||
Quarter Ended |
Quarter versus Quarter Sales Change Increase/(Decrease) |
|||||||||||||
2021 | 2020 | $ Change | % Change | |||||||||||
Brown goods | $ | 42,793 | $ | 32,068 | $ | 10,725 | 33.4 | % | ||||||
White goods | 21,187 | 16,210 | 4,977 | 30.7 | ||||||||||
Premium beverage alcohol | 63,980 | 48,278 | 15,702 | 32.5 | ||||||||||
Industrial alcohol | 14,790 | 19,461 | (4,671 | ) | (24.0 | ) | ||||||||
Food grade alcohol | 78,770 | 67,739 | 11,031 | 16.3 | ||||||||||
Fuel grade alcohol | 3,592 | 1,274 | 2,318 | 181.9 | ||||||||||
Distillers feed and related co-products | 4,016 | 6,119 | (2,103 | ) | (34.4 | ) | ||||||||
Warehouse services | 4,666 | 4,041 | 625 | 15.5 | ||||||||||
Total Distillery Products | $ | 91,044 | $ | 79,173 | $ | 11,871 | 15.0 | % | ||||||
BRANDED SPIRITS SALES | |||||||||||
Quarter Ended |
Quarter versus Quarter Sales Change Increase/(Decrease) |
||||||||||
2021 | 2020 | $ Change | % Change | ||||||||
Ultra premium | $ | 13,118 | $ | 2,365 | $ | 10,753 | 454.7 | % | |||
Premium | 6,310 | 72 | 6,238 | 8,663.9 | |||||||
Mid | 17,107 | — | 17,107 | n/a | |||||||
Value | 19,057 | — | 19,057 | n/a | |||||||
Other | 5,969 | 12 | 5,957 | 49,641.7 | |||||||
$ | 61,561 | $ | 2,449 | $ | 59,112 | 2,413.7 | % |
INGREDIENT SOLUTIONS SALES | |||||||||||
Quarter Ended |
Quarter versus Quarter Sales Change Increase / (Decrease) |
||||||||||
2021 | 2020 | $ Change | % Change | ||||||||
Specialty wheat starches | $ | 12,231 | $ | 11,604 | $ | 627 | 5.4 | % | |||
Specialty wheat proteins | 8,901 | 7,994 | 907 | 11.4 | |||||||
Commodity wheat starches | 2,626 | 1,596 | 1,030 | 64.5 | |||||||
Commodity wheat proteins | 248 | 148 | 100 | 67.6 | |||||||
Total Ingredient Solutions | $ | 24,006 | $ | 21,342 | $ | 2,664 | 12.5 | % | |||
SALES BY OPERATING SEGMENT
(Dollars in thousands)
DISTILLERY PRODUCTS SALES | ||||||||||||
Year to Date Ended |
Year to Date versus Year to date Sales Change Increase/(Decrease) |
|||||||||||
2021 | 2020 | $ Change | % Change | |||||||||
Brown goods | $ | 129,600 | $ | 86,038 | $ | 43,562 | 50.6 | % | ||||
White goods | 56,049 | 47,922 | 8,127 | 17.0 | ||||||||
Premium beverage alcohol | 185,649 | 133,960 | 51,689 | 38.6 | ||||||||
Industrial alcohol | 46,896 | 64,032 | (17,136 | ) | (26.8 | ) | ||||||
Food grade alcohol | 232,545 | 197,992 | 34,553 | 17.5 | ||||||||
Fuel grade alcohol | 10,862 | 3,970 | 6,892 | 173.6 | ||||||||
Distillers feed and related co-products | 13,660 | 19,889 | (6,229 | ) | (31.3 | ) | ||||||
Warehouse services | 12,949 | 11,641 | 1,308 | 11.2 | ||||||||
Total Distillery Products | $ | 270,016 | $ | 233,492 | $ | 36,524 | 15.6 | % | ||||
BRANDED SPIRITS SALES | |||||||||||
Year to Date Ended |
Year to Date versus Year to date Sales Change Increase/(Decrease) |
||||||||||
2021 | 2020 | $ Change | % Change | ||||||||
Ultra premium | $ | 23,692 | $ | 3,049 | $ | 20,643 | 677.0 | % | |||
Premium | 12,692 | 243 | 12,449 | 5,123.0 | |||||||
Mid | 34,894 | — | 34,894 | n/a | |||||||
Value | 40,001 | — | 40,001 | n/a | |||||||
Other | 11,278 | 29 | 11,249 | 38,789.7 | |||||||
$ | 122,557 | $ | 3,321 | $ | 119,236 | 3,590.4 | % | ||||
INGREDIENT SOLUTIONS SALES | |||||||||||
Year to Date Ended |
Year to Date versus Year to date Sales Change Increase/(Decrease) |
||||||||||
2021 | 2020 | $ Change | % Change | ||||||||
Specialty wheat starches | $ | 35,051 | $ | 30,938 | $ | 4,113 | 13.3 | % | |||
Specialty wheat proteins | 23,299 | 20,372 | 2,927 | 14.4 | |||||||
Commodity wheat starches | 7,572 | 5,247 | 2,325 | 44.3 | |||||||
Commodity wheat proteins | 1,378 | 1,236 | 142 | 11.5 | |||||||
Total Ingredient Solutions | $ | 67,300 | $ | 57,793 | $ | 9,507 | 16.5 | % | |||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
Quarter Ended |
Year to Date Ended |
|||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Sales | $ | 176,611 | $ | 102,964 | $ | 459,873 | $ | 294,606 | ||||||||
Cost of sales | 119,525 | 79,802 | 313,661 | 227,531 | ||||||||||||
Gross profit | 57,086 | 23,162 | 146,212 | 67,075 | ||||||||||||
Selling, general and administrative expenses | 24,202 | 9,510 | 65,165 | 28,377 | ||||||||||||
Operating income | 32,884 | 13,652 | 81,047 | 38,698 | ||||||||||||
Interest expense, net | (1,116 | ) | (594 | ) | (2,708 | ) | (1,701 | ) | ||||||||
Other income (loss), net | (421 | ) | 185 | (479 | ) | 352 | ||||||||||
Income before income taxes | 31,347 | 13,243 | 77,860 | 37,349 | ||||||||||||
Income tax expense | 7,674 | 2,862 | 18,701 | 8,636 | ||||||||||||
Net income | 23,673 | 10,381 | 59,159 | 28,713 | ||||||||||||
Net loss attributable to noncontrolling interest | 203 | — | 279 | — | ||||||||||||
Net income attributable to |
23,876 | 10,381 | 59,438 | 28,713 | ||||||||||||
Income attributable to participating securities | (175 | ) | (69 | ) | (471 | ) | (192 | ) | ||||||||
Net income used in earnings per share calculation | $ | 23,701 | $ | 10,312 | $ | 58,967 | $ | 28,521 | ||||||||
Basic and diluted weighted average common shares | 21,981,201 | 16,916,675 | 20,293,818 | 16,943,130 | ||||||||||||
Basic and diluted earnings per common share | $ | 1.08 | $ | 0.61 | $ | 2.91 | $ | 1.68 | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
2021 |
2020 |
|||||||||||||
ASSETS | LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||
Current Assets: | Current Liabilities: | |||||||||||||
Cash and cash equivalents | $ | 16,162 | $ | 21,662 | Current maturities of long-term debt | $ | 3,227 | $ | 1,600 | |||||
Receivables, net | 92,152 | 56,966 | Accounts payable | 37,004 | 30,273 | |||||||||
Inventory | 239,312 | 141,011 | Federal and state liquor taxes payable | 6,498 | 107 | |||||||||
Prepaid expenses | 2,888 | 2,644 | Income taxes payable | — | 704 | |||||||||
Refundable income taxes | 1,382 | — | Accrued expenses and other | 39,737 | 20,645 | |||||||||
Total Current Assets | 351,896 | 222,283 | Total Current Liabilities | 86,466 | 53,329 | |||||||||
Property, plant, and equipment | 391,111 | 313,730 | Other liabilities: | |||||||||||
Less accumulated depreciation and amortization | (193,863 | ) | (181,738 | ) | Long-term debt, less current maturities | 36,068 | 38,271 | |||||||
Property, Plant, and Equipment, net | 197,248 | 131,992 | Credit agreement - revolver | 208,382 | — | |||||||||
Operating lease right-of-use assets, net | 8,436 | 5,151 | Long-term operating lease liabilities | 5,999 | 3,057 | |||||||||
Investment in joint ventures | 5,334 | — | Other noncurrent liabilities | 5,163 | 7,094 | |||||||||
Intangible assets, net | 219,355 | 890 | Deferred income taxes | 60,479 | 2,298 | |||||||||
227,588 | 2,738 | Total Liabilities | 402,557 | 104,049 | ||||||||||
Other assets | 7,611 | 3,521 | Total equity | 614,911 | 262,526 | |||||||||
TOTAL ASSETS | $ | 1,017,468 | $ | 366,575 | TOTAL LIABILITIES AND TOTAL EQUITY | $ | 1,017,468 | $ | 366,575 | |||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
Year to Date Ended |
||||||||
2021 | 2020 | |||||||
Cash Flows from Operating Activities | ||||||||
Net income | $ | 59,159 | $ | 28,713 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 13,668 | 9,618 | ||||||
Gain on sale of assets | 5 | 337 | ||||||
Share-based compensation | 5,247 | 2,693 | ||||||
Deferred income taxes, including change in valuation allowance | 465 | 460 | ||||||
Other, net | (236 | ) | — | |||||
Changes in operating assets and liabilities, net of effects of acquisition: | ||||||||
Receivables, net | (5,593 | ) | (11,683 | ) | ||||
Inventory | (7,588 | ) | (5,673 | ) | ||||
Prepaid expenses | 1,206 | (2,032 | ) | |||||
Income taxes payable | (2,086 | ) | (673 | ) | ||||
Accounts payable | (6,678 | ) | 2,057 | |||||
Accrued expenses and other | 15,859 | 5,647 | ||||||
Federal and state liquor taxes payable | (1,961 | ) | 139 | |||||
Other, net | (682 | ) | (146 | ) | ||||
Net cash provided by operating activities | 70,785 | 29,457 | ||||||
Cash Flows from Investing Activities | ||||||||
Additions to property, plant, and equipment | (37,257 | ) | (13,507 | ) | ||||
Purchase of business, net of cash acquired | (149,613 | ) | (2,750 | ) | ||||
Contributions to equity method investment | (988 | ) | — | |||||
Proceeds from sale of property | — | 688 | ||||||
Other, net | (1,308 | ) | 56 | |||||
Net cash used in investing activities | (189,166 | ) | (15,513 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Payment of dividends and dividend equivalents | (7,362 | ) | (6,144 | ) | ||||
Purchase of treasury stock | (767 | ) | (4,395 | ) | ||||
Loan fees paid related to borrowings | (666 | ) | (1,148 | ) | ||||
Principal payments on long-term debt | (813 | ) | (300 | ) | ||||
Proceeds from credit agreement - revolver | 242,300 | 54,700 | ||||||
Payments on credit agreement - revolver | (32,300 | ) | (40,000 | ) | ||||
Payment on assumed debt as part of the Merger | (87,509 | ) | — | |||||
Net cash provided by financing activities | 112,883 | 2,713 | ||||||
Effect of exchange rate changes on cash | (2 | ) | — | |||||
Increase (decrease) in cash and cash equivalents | (5,500 | ) | 16,657 | |||||
Cash and cash equivalents, beginning of period | 21,662 | 3,309 | ||||||
Cash and cash equivalents, end of period | $ | 16,162 | $ | 19,966 | ||||
RECONCILIATION OF SELECTED GAAP MEASURES TO ADJUSTED NON-GAAP MEASURES (UNAUDITED)
(in thousands)
Quarter Ended |
|||||||||||||||||||||||
Gross Profit |
Operating Income |
Income before Income Taxes |
Net Income |
MGP Earnings(a) |
Basic and Diluted EPS |
||||||||||||||||||
Reported GAAP Results | $ | 57,086 | $ | 32,884 | $ | 31,347 | $ | 23,673 | $ | 23,701 | $ | 1.08 | |||||||||||
Adjusted to remove: | |||||||||||||||||||||||
Business acquisition costs(b) | — | 294 | 294 | 221 | 221 | 0.01 | |||||||||||||||||
Adjusted Non-GAAP results | $ | 57,086 | $ | 33,178 | $ | 31,641 | $ | 23,894 | $ | 23,922 | $ | 1.09 |
Quarter Ended |
|||||||||||||||||||||||
Gross Profit |
Operating Income |
Income before Income Taxes |
Net Income |
MGP Earnings(a) |
Basic and Diluted EPS |
||||||||||||||||||
Reported GAAP Results | $ | 23,162 | $ | 13,652 | $ | 13,243 | $ | 10,381 | $ | 10,312 | $ | 0.61 | |||||||||||
Adjusted to remove: | |||||||||||||||||||||||
CEO transition costs (d) | — | 22 | 22 | 21 | 21 | — | |||||||||||||||||
Adjusted Non-GAAP results | $ | 23,162 | $ | 13,674 | $ | 13,265 | $ | 10,402 | $ | 10,333 | $ | 0.61 |
Year to Date Ended |
|||||||||||||||||||||||
Gross Profit |
Operating Income |
Income before Income Taxes |
Net Income |
MGP Earnings(a) |
Basic and Diluted EPS |
||||||||||||||||||
Reported GAAP Results | $ | 146,212 | $ | 81,047 | $ | 77,860 | $ | 59,159 | $ | 58,967 | $ | 2.91 | |||||||||||
Adjusted to remove: | |||||||||||||||||||||||
Inventory step-up - |
2,529 | 2,529 | 2,529 | 2,529 | 2,510 | 0.13 | |||||||||||||||||
Business acquisition costs(b) | — | 8,922 | 8,922 | 7,524 | 7,462 | 0.37 | |||||||||||||||||
Adjusted Non-GAAP results | $ | 148,741 | $ | 92,498 | $ | 89,311 | $ | 69,212 | $ | 68,939 | $ | 3.41 |
Year to Date Ended |
|||||||||||||||||||||||
Gross Profit |
Operating Income |
Income before Income Taxes |
Net Income |
MGP Earnings(a) |
Basic and Diluted EPS |
||||||||||||||||||
Reported GAAP Results | $ | 67,075 | $ | 38,698 | $ | 37,349 | $ | 28,713 | $ | 28,521 | $ | 1.68 | |||||||||||
Adjusted to remove: | |||||||||||||||||||||||
CEO transition costs (d) | — | 1,390 | 1,390 | 1,279 | 1,279 | 0.08 | |||||||||||||||||
Adjusted Non-GAAP results | $ | 67,075 | $ | 40,088 | $ | 38,739 | $ | 29,992 | $ | 29,800 | $ | 1.76 | |||||||||||
(a) MGP Earnings has been defined as "Net income attributable to |
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(b) The Business acquisition costs are included in the Condensed Consolidated Statement of Income within the Selling, general and administrative line item. The adjustment includes transaction and integration costs associated with the merger with |
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(c) The finished goods Inventory valuation step-up costs are included in the Condensed Consolidated Statement of Income within Cost of goods by the |
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(d) The CEO transition costs are included in the Condensed Consolidated Statement of Income within the Selling, general and administrative line item. The adjustment includes additional employee related costs in connection with the transition of CEOs. | |||||||||||||||||||||||
RECONCILIATION OF NET INCOME TO Adjusted EBITDA
(UNAUDITED)
(in thousands)
Quarter Ended |
Year to Date Ended |
||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Net Income | $ | 23,673 | $ | 10,381 | $ | 59,159 | $ | 28,713 | |||||||
Interest expense | 1,116 | 594 | 2,708 | 1,701 | |||||||||||
Income tax expense | 7,674 | 2,862 | 18,701 | 8,636 | |||||||||||
Depreciation and amortization | 5,243 | 3,274 | 13,668 | 9,618 | |||||||||||
Equity method investment | 405 | — | 739 | — | |||||||||||
Inventory step-up - |
— | — | 2,529 | — | |||||||||||
Business acquisition costs | 294 | — | 8,922 | — | |||||||||||
CEO transition costs | — | 22 | — | 1,390 | |||||||||||
Adjusted EBITDA | $ | 38,405 | $ | 17,133 | $ | 106,426 | $ | 50,058 |
The non-GAAP adjusted EBITDA measure is defined as earnings before interest, taxes, depreciation and amortization, equity method investment, inventory step-up, business acquisition costs and CEO transition costs. See section "reconciliation of selected GAAP measure to non-GAAP measures" for further details on each of these non-GAAP Items.
Purchase Accounting - Summary of Preliminary Fair Value Step Up
(UNAUDITED)
(in thousands)
The Merger was accounted for as a business combination in accordance with Accounting Standard Codification 805 “ASC 805”), Business Combinations, and as such, assets acquired, liabilities assumed, and consideration transferred were recorded at their estimated fair values on the acquisition date. The fair value of the assets and liabilities are based upon a preliminary assessment of fair value and may change as valuations for certain tangible assets, intangible assets and contingent liabilities are finalized and the associated income tax impacts are determined. The Company expects to finalize the purchase price allocation as soon as practicable, but no longer than one year from the acquisition date. The table below reflects the summary for Finished Goods inventory, Whiskey inventory, Property, plant and equipment, and Distributor relationships preliminary purchase price accounting step up to fair value, the related amortization period and the Income Statement caption within which the adjustment is included.
Income Statement Impact | |||||||||||||||
Step Up Value |
Amortization Period |
Income Statement Caption |
Quarter Ended |
Year to Date Ended |
|||||||||||
Finished Goods Inventory | $ | 2,529 | 3 months | Cost of sales | $ | — | $ | 2,529 | |||||||
Whiskey Inventory | 1,065 | 10 years | Cost of sales | 27 | 54 | ||||||||||
Property, plant and equipment | 7,340 | various | Cost of sales | 487 | 1,047 | ||||||||||
Definite-lived intangible asset - Distributor relationships | 41,400 | 20 years | SG&A | 518 | 1,036 | ||||||||||
Total Fair Value Step Up | $ | 52,334 | $ | 1,032 | $ | 4,666 |

Source: MGP Ingredients, Inc.