Document
MGP INGREDIENTS 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 10-Q 
(Mark One) 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019  
or
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________________ to _________________________________
 
Commission File Number:  0-17196
https://cdn.kscope.io/dcdd0578fbd4b7c44710cb29ea1ea4d6-mgpi-20190930_g1.jpg 
MGP INGREDIENTS, INC.
(Exact name of registrant as specified in its charter) 
Kansas45-4082531
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

100 Commercial Street
AtchisonKansas66002
(Address of principal executive offices)(Zip Code)
(913) 367-1480
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, no par valueMGPINASDAQ Global Select Market
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an “emerging growth company.”  See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
x Large accelerated filer                                                       Accelerated filer
 Non-accelerated filer (Do not check if smaller reporting company)    Smaller Reporting Company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 
17,027,063 shares of Common Stock, no par value as of October 25, 2019



INDEX
 
Page
  
  
    
 
 
 
 
 
   
 
   
 
   
 
   
 
 
   
 
   
 
   
 
   
 
   
 
   
 

METHOD OF PRESENTATION

Throughout this Report, when we refer to “the Company,” “MGP,” “we,” “us,” “our,” and words of similar import, we are referring to the combined business of MGP Ingredients, Inc. and its consolidated subsidiaries, except to the extent that the context otherwise indicates. In this document, for any references to Note 1 through Note 10, refer to the Notes to Unaudited Condensed Consolidated Financial Statements in Item 1.
 
All amounts in this report, except for share, par values, bushels, gallons, pounds, mmbtu, proof gallons, per share, per bushel, per gallon, per proof gallon and percentage amounts, are shown in thousands unless otherwise noted.

2


PART I. FINANCIAL INFORMATION 

ITEM 1. FINANCIAL STATEMENTS

MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share amounts)

 Quarter Ended September 30,Year to Date Ended September 30,
 2019201820192018
Sales (Note 2)$90,685  $95,031  $270,282  $271,239  
Cost of sales71,895  75,432  215,310  213,248  
Gross profit18,790  19,599  54,972  57,991  
Selling, general and administrative expenses7,186  7,584  23,981  24,455  
Operating income11,604  12,015  30,991  33,536  
Interest expense, net(364) (334) (937) (830) 
Income before income taxes11,240  11,681  30,054  32,706  
Income tax expense (Note 4)3,025  2,673  4,208  7,244  
Net income8,215  9,008  25,846  25,462  
Income attributable to participating securities54  174  171  491  
Net income attributable to common shareholders and used in earnings per share calculation (Note 5)$8,161  $8,834  $25,675  $24,971  
Basic and diluted weighted average common shares17,027,068  16,872,091  17,006,226  16,861,700  
Basic and diluted earnings per common share$0.48  $0.52  $1.51  $1.48  
 























See accompanying notes to unaudited condensed consolidated financial statements
3


MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands)

Quarter Ended September 30,Year to Date Ended September 30,
 2019201820192018
Net income$8,215  $9,008  $25,846  $25,462  
Other comprehensive income (loss), net of tax:
Change in Company-sponsored post-employment benefit plan(7) 14  (9) 42  
Comprehensive income$8,208  $9,022  $25,837  $25,504  












































See accompanying notes to unaudited condensed consolidated financial statements
4


       MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
 September 30, 2019December 31, 2018
Current Assets  
Cash and cash equivalents$4,397  $5,025  
Receivables (less allowance for doubtful accounts at September 30, 2019, and December 31, 2018 - $24)
40,554  38,797  
Inventory (Note 1)126,193  108,769  
Prepaid expenses1,646  1,320  
Refundable income taxes2,850  712  
Total current assets175,640  154,623  
Property, plant, and equipment304,730  295,893  
Less accumulated depreciation and amortization(182,576) (175,105) 
Property, plant, and equipment, net122,154  120,788  
Operating lease right-of-use asset, net (Note 6)5,628    
Other assets3,598  2,481  
Total assets$307,020  $277,892  
Current Liabilities  
Current maturities of long-term debt (Note 3)$397  $386  
Accounts payable24,200  25,363  
Accrued expenses10,528  11,714  
Total current liabilities35,125  37,463  
Long-term debt, less current maturities (Note 3)40,756  21,040  
Credit agreement - revolver (Note 3)173  10,588  
Operating lease liability (Note 6)3,598    
Deferred credits1,316  1,565  
Accrued retirement, health, and life insurance benefits2,427  2,595  
Other noncurrent liabilities1,576  1,523  
Deferred income taxes2,629  1,677  
Total liabilities87,600  76,451  
Commitments and Contingencies (Note 7)
Stockholders’ Equity  
Capital stock  
Preferred, 5% non-cumulative; $10 par value; authorized 1,000 shares; issued and outstanding 437 shares
4  4  
Common stock  
No par value; authorized 40,000,000 shares; issued 18,115,965 shares at September 30, 2019 and December 31, 2018; and 17,024,938 and 16,856,414 shares outstanding at September 30, 2019 and December 31, 2018, respectively
6,715  6,715  
Additional paid-in capital13,601  15,375  
Retained earnings219,551  198,914  
Accumulated other comprehensive loss(104) (164) 
Treasury stock, at cost  
Shares of 1,091,027 at September 30, 2019, and 1,259,511 at December 31, 2018
(20,347) (19,403) 
Total stockholders’ equity219,420  201,441  
Total liabilities and stockholders’ equity$307,020  $277,892  

See accompanying notes to unaudited condensed consolidated financial statements
5


MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 Year to Date Ended September 30,
 20192018
Cash Flows from Operating Activities  
Net income$25,846  $25,462  
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization8,537  8,529  
Gain on sale of assets(138)   
Share-based compensation2,752  2,464  
Deferred income taxes, including change in valuation allowance952  924  
Changes in operating assets and liabilities:  
Receivables, net(1,757) (15,644) 
Inventory(17,424) (14,197) 
Prepaid expenses(326) 297  
Refundable income taxes(2,138) (31) 
Accounts payable(331) (3,453) 
Accrued expenses(3,236) (2,623) 
Deferred credits(249) (464) 
Accrued retirement health, and life insurance benefits(96) 395  
Other21    
Net cash provided by operating activities12,413  1,659  
Cash Flows from Investing Activities  
Additions to property, plant, and equipment(10,375) (18,870) 
Deferred compensation plan investments(1,189)   
Net cash used in investing activities(11,564) (18,870) 
Cash Flows from Financing Activities  
Payment of dividends and dividend equivalents(5,141) (4,125) 
Purchase of treasury stock for tax withholding on equity-based compensation(5,470) (2,215) 
Proceeds on long-term debt20,000    
Principal payments on long-term debt(288) (279) 
Proceeds from credit agreement - revolver14,140  22,766  
Payments on credit agreement - revolver(24,640) (2,020) 
Other(78)   
Net cash provided by (used in) financing activities(1,477) 14,127  
Decrease in cash and cash equivalents(628) (3,084) 
Cash and cash equivalents, beginning of period5,025  3,084  
Cash and cash equivalents, end of period$4,397  $  








See accompanying notes to unaudited condensed consolidated financial statements
6


MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For Year to Date Ended September 30, 2019
(Unaudited) (Dollars in thousands)
Capital
Stock
Preferred
Issued CommonAdditional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Balance, December 31, 2018
$4  $6,715  $15,375  $198,914  $(164) $(19,403) $201,441  
Comprehensive income:
Net income—  —  —  9,720  —  —  9,720  
Other comprehensive income—  —  —  —  14  —  14  
Dividends and dividend equivalents of $0.10 per common share and per restricted stock unit, net of estimated forfeitures
—  —  —  (1,714) —  —  (1,714) 
Share-based compensation—  —  1,031  —  —  —  1,031  
Stock shares awarded, forfeited, or vested—  —  (3,770) —  —  3,864  94  
Purchase of treasury stock for tax withholding on equity-based compensation—  —  —  —  —  (5,467) (5,467) 
Adjustment related to Accounting Standards Update 2018-02 adoption—  —  —  (69) 69  —    
Balance, March 31, 2019
4  6,715  12,636  206,851  (81) (21,006) 205,119  
Comprehensive income:
Net income—  —  —  7,911  —  —  7,911  
Other comprehensive loss—  —  —  —  (16) —  (16) 
Dividends and dividend equivalents of $0.10 per common share and per restricted stock unit, net of estimated forfeitures
—  —  —  (1,713) —  —  (1,713) 
Share-based compensation—  —  481  —  —  —  481  
Stock shares awarded, forfeited, or vested  —  —  —  —  —  660  660  
Balance, June 30, 2019
4  6,715  13,117  213,049  (97) (20,346) 212,442  
Comprehensive income:
Net income—  —  —  8,215  —  —  8,215  
Other comprehensive loss—  —  —  —  (7) —  (7) 
Dividends and dividend equivalents of $0.10 per common share and per restricted stock unit, net of estimated forfeitures
—  —  —  (1,713) —  —  (1,713) 
Share-based compensation—  —  484  —  —  —  484  
Purchase of treasury stock for tax withholding on share-based compensation  —  —  —  —  —  (1) (1) 
Balance, September 30, 2019
$4  $6,715  $13,601  $219,551  $(104) $(20,347) $219,420  
 
See accompanying notes to unaudited condensed consolidated financial statements



7


MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For Year to Date Ended September 30, 2018
(Unaudited) (Dollars in thousands)
Capital
Stock
Preferred
Issued CommonAdditional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Balance, December 31, 2017
$4  $6,715  $13,912  $167,129  $(311) $(18,719) $168,730  
Comprehensive income:
Net income—  —  —  8,927  —  —  8,927  
Other comprehensive loss—  —  —  —  (13) —  (13) 
Dividends and dividend equivalents of $0.08 per common share and per restricted stock unit, net of estimated forfeitures
—  —  —  (1,374) —  —  (1,374) 
Share-based compensation—  —  1,052  —  —  —  1,052  
Stock shares awarded, forfeited, or vested—  —  (981) —  —  1,120  139  
Purchase of treasury stock for tax withholding on equity-based compensation—  —  —  —  —  (2,073) (2,073) 
Balance, March 31, 2018
4  6,715  13,983  174,682  (324) (19,672) 175,388  
Comprehensive income:
Net income—  —  —  7,527  —  —  7,527  
Other comprehensive income—  —  —  —  41  —  41  
Dividends and dividend equivalents of $0.08 per common share and per restricted stock unit, net of estimated forfeitures
—  —  —  (1,374) —  —  (1,374) 
Share-based compensation—  —  501  —  —  —  501  
Stock shares awarded, forfeited, or vested  —  —  —  —  —  277  277  
Balance, June 30, 2018
4  6,715  14,484  180,835  (283) (19,395) 182,360  
Comprehensive income:
Net income—  —  —  9,008  —  —  9,008  
Other comprehensive income—  —  —  —  14  —  14  
Dividends and dividend equivalents of $0.08 per common share and per restricted stock unit, net of estimated forfeitures
—  —  —  (1,374) —  —  (1,374) 
Share-based compensation—  —  496  —  —  —  496  
Stock shares awarded, forfeited, or vested  —  —  (92) —  —  92    
Purchase of treasury stock for tax withholding on share-based compensation  —  —  —  —  —  (142) (142) 
Balance, September 30, 2018
$4  $6,715  $14,888  $188,469  $(269) $(19,445) $190,362  




See accompanying notes to unaudited condensed consolidated financial statements


8



MGP INGREDIENTS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, unless otherwise noted)

Note 1.  Accounting Policies and Basis of Presentation

The Company. MGP Ingredients, Inc. (“the Company,” and “MGP”) is a Kansas corporation headquartered in Atchison, Kansas and is a leading producer and supplier of premium distilled spirits and specialty wheat protein and starch food ingredients. Distilled spirits include premium bourbon and rye whiskeys and grain neutral spirits, including vodka and gin. MGP is also a top producer of high quality industrial alcohol for use in both food and non-food applications. The Company’s protein and starch food ingredients provide a host of functional, nutritional, and sensory benefits for a wide range of food products to serve the packaged goods industry. The Company’s distillery products are derived from corn and other grains (including rye, barley, wheat, barley malt, and milo), and its ingredient products are derived from wheat flour.  The majority of the Company’s sales are made directly, or through distributors, to manufacturers and processors of finished packaged goods or to bakeries.

Basis of Presentation and Principles of Consolidation. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements as of and for the quarter ended September 30, 2019, should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission (“SEC”).  The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal and recurring adjustments) necessary to fairly present the results for interim periods in accordance with U.S. generally accepted accounting principles (“GAAP”).  Pursuant to the rules and regulations of the SEC, certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted.

Use of Estimates.  The financial reporting policies of the Company conform to GAAP.  The preparation of unaudited condensed consolidated financial statements in conformity with GAAP 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 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.

Inventory.  Inventory includes finished goods, raw materials in the form of agricultural commodities used in the production process and certain maintenance and repair items.  Bourbon and whiskeys are normally aged in barrels for several years, following industry practice; all barreled bourbon and whiskey is classified as a current asset. The Company includes warehousing, insurance, and other carrying charges applicable to barreled whiskey in inventory costs.

Inventories are stated at lower of cost or net realizable value on the first-in, first-out, or FIFO, method.  Inventory valuations are impacted by constantly changing prices paid for key materials, primarily corn. Inventory consists of the following:

September 30, 2019December 31, 2018
Finished goods$16,200  $17,296  
Barreled distillate (bourbons and whiskeys)95,164  76,374  
Raw materials3,720  4,906  
Work in process1,697  1,550  
Maintenance materials8,007  7,541  
Other1,405  1,102  
Total$126,193  $108,769  

9


Revenue Recognition. Revenue is recognized when control of the promised goods or services, through performance obligations by the Company, is transferred to the customer in an amount that reflects the consideration it expects to be entitled to in exchange for the performance obligations. The term between invoicing and when payment is due is not significant and the period between when the entity transfers the promised good or service to the customer and when the customer pays for that good or service is one year or less.

Excise taxes that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer are excluded from revenue. Revenue is recognized for the sale of products at the point in time finished products are delivered to the customer in accordance with shipping terms. This is a faithful depiction of the satisfaction of the performance obligation because, at the point control passes to the customer, the customer has legal title and the risk and rewards of ownership have transferred, and the customer has present obligation to pay.

The Company’s distillery products segment routinely enters into bill and hold arrangements, whereby the Company produces and sells unaged distillate to customers, and the product is subsequently barreled at the customer’s request and warehoused at a Company location for an extended period of time in accordance with directions received from the Company’s customers. Even though the unaged distillate remains in the Company’s possession, a sale is recognized at the point in time when the customer obtains control of the product. Control is transferred to the customer in bill and hold transactions when; customer acceptance specifications have been met, legal title has transferred, the customer has a present obligation to pay for the product, and the risk and rewards of ownership have transferred to the customer. Additionally, all the following bill and hold criteria have to be met in order for control to be transferred to the customer; the customer has requested the product be warehoused, the product has been identified as separately belonging to the customer, the product is currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or direct it to another customer.

Warehouse services revenue is recognized over the time that warehouse services are rendered and as they are rendered. This is a faithful depiction of the satisfaction of the performance obligation because control of the aging products has already passed to the customer and there are no additional performance activities required by the Company, except as requested by the customer. The performance of the service activities, as requested, is invoiced as satisfied and revenue is concurrently recognized.

Income Taxes. The Company accounts for income taxes using an asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. A valuation allowance is recognized if it is “more likely than not” that at least some portion of the deferred tax asset will not be realized.

Earnings Per Share (“EPS”).  Basic and diluted EPS are computed using the two-class method, which is an earnings allocation formula that determines net income per share for each class of Common Stock and participating security according to dividends declared and participation rights in undistributed earnings.  Per share amounts are computed by dividing net income attributable to common shareholders by the weighted average shares outstanding during the period.

Fair Value of Financial Instruments.  The Company determines the fair values of its financial instruments based on a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The hierarchy is broken down into three levels based upon the observability of inputs. Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value in its entirety requires judgment and considers factors specific to the asset or liability.
 
The Company’s short term financial instruments include cash and cash equivalents, accounts receivables and accounts payable.  The carrying value of the short term financial instruments approximates the fair value due to their short term nature. These financial instruments have no stated maturities or the financial instruments have short term maturities that approximate market.
 
10


The fair value of the Company’s debt is estimated based on current market interest rates for debt with similar maturities and credit quality. The fair value of the Company’s debt was $42,350 and $32,018 at September 30, 2019 and December 31, 2018, respectively. The financial statement carrying value of total debt was $41,326 (including unamortized loan fees) and $32,014 (including unamortized loan fees) at September 30, 2019 and December 31, 2018, respectively.  These fair values are considered Level 2 under the fair value hierarchy. Fair value disclosure for deferred compensation plan investments is included in Note 8.

Recently Adopted Accounting Standard Updates. The Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), as of January 1, 2019, using the modified retrospective approach (Note 6). The modified retrospective approach provides a method for recording existing leases at adoption and using the effective date as the date of application (the “effective date method”). Under the effective date method, the comparative period reporting is unchanged. Comparative reporting periods are presented in accordance with Topic 840 (previous lease guidance), while periods subsequent to the effective date are presented in accordance with Topic 842. In addition, the Company elected the available practical expedients and implemented internal controls to enable the preparation of financial information on adoption. Adoption of the new standard resulted in the Company recording Operating lease right-of-use assets and Operating lease liabilities in its Condensed Consolidated Balance Sheet of $6,598 and $6,952, respectively, as of January 1, 2019. The standard did not impact the Company’s consolidated net earnings and also had no impact on its cash flows.

In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”). The Company adopted this guidance on January 1, 2019 and it had an immaterial effect on its financial results and disclosures.

In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which more closely aligns the accounting for employee and nonemployee share-based payments. The Company adopted this guidance on January 1, 2019, and it had no impact on its financial results and disclosures.

Note 2.  Sales

The following table presents the Company’s sales by segment and major products and services:

Quarter Ended September 30,Year to Date Ended September 30,
2019201820192018
Distillery Products
Brown goods$26,606  $32,137  $79,054  $88,074  
White goods15,359  14,727  47,232  45,061  
Premium beverage alcohol41,965  46,864  126,286  133,135  
Industrial alcohol19,525  20,661  60,604  59,300  
Food grade alcohol61,490  67,525  186,890  192,435  
Fuel grade alcohol1,438  1,576  4,337  5,006  
Distillers feed and related co-products6,630  5,898  19,906  18,785  
Warehouse services3,737  3,337  10,762  9,139  
Total distillery products73,295  78,336  221,895  225,365  
Ingredient Solutions
Specialty wheat starches8,432  7,030  22,523  21,170  
Specialty wheat proteins6,166  5,486  15,884  16,230  
Commodity wheat starches2,300  2,793  7,575  6,926  
Commodity wheat proteins492  1,386  2,405  1,548  
Total ingredient solutions17,390  16,695  48,387  45,874  
Total sales$90,685  $95,031  $270,282  $271,239  

11


The Company generates revenues from the distillery products segment by the sale of products and by providing warehouse services related to the storage and aging of customer products. The Company generates revenues from the ingredient solutions segment by the sale of products. Revenue related to sales of products is recognized at a point in time whereas revenue generated from warehouse services is recognized over time. Contracts with customers in both segments include a single performance obligation (either the sale of products or the provision of warehouse services).

Note 3.  Corporate Borrowings

The following table presents the Company’s outstanding indebtedness:
Description(a)
September 30, 2019December 31, 2018
Credit Agreement - Revolver, 3.43% (variable rate) due 2022
$500