mgpi-20210930
12-31FALSE00008350112021Q300008350112021-01-012021-09-30xbrli:shares00008350112021-10-29iso4217:USD00008350112021-07-012021-09-3000008350112020-07-012020-09-3000008350112020-01-012020-09-30iso4217:USDxbrli:shares00008350112021-09-3000008350112020-12-31xbrli:pure00008350112020-01-012020-12-3100008350112019-12-3100008350112020-09-300000835011us-gaap:PreferredStockMember2020-12-310000835011us-gaap:CommonStockMember2020-12-310000835011us-gaap:AdditionalPaidInCapitalMember2020-12-310000835011us-gaap:RetainedEarningsMember2020-12-310000835011us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000835011us-gaap:TreasuryStockMember2020-12-310000835011us-gaap:NoncontrollingInterestMember2020-12-310000835011us-gaap:RetainedEarningsMember2021-01-012021-03-3100008350112021-01-012021-03-310000835011us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000835011us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000835011us-gaap:TreasuryStockMember2021-01-012021-03-310000835011us-gaap:PreferredStockMember2021-03-310000835011us-gaap:CommonStockMember2021-03-310000835011us-gaap:AdditionalPaidInCapitalMember2021-03-310000835011us-gaap:RetainedEarningsMember2021-03-310000835011us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000835011us-gaap:TreasuryStockMember2021-03-310000835011us-gaap:NoncontrollingInterestMember2021-03-3100008350112021-03-310000835011us-gaap:RetainedEarningsMember2021-04-012021-06-300000835011us-gaap:NoncontrollingInterestMember2021-04-012021-06-3000008350112021-04-012021-06-300000835011us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300000835011us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300000835011us-gaap:TreasuryStockMember2021-04-012021-06-300000835011us-gaap:PreferredStockMember2021-06-300000835011us-gaap:CommonStockMember2021-06-300000835011us-gaap:AdditionalPaidInCapitalMember2021-06-300000835011us-gaap:RetainedEarningsMember2021-06-300000835011us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300000835011us-gaap:TreasuryStockMember2021-06-300000835011us-gaap:NoncontrollingInterestMember2021-06-3000008350112021-06-300000835011us-gaap:RetainedEarningsMember2021-07-012021-09-300000835011us-gaap:NoncontrollingInterestMember2021-07-012021-09-300000835011us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000835011us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300000835011us-gaap:TreasuryStockMember2021-07-012021-09-300000835011us-gaap:PreferredStockMember2021-09-300000835011us-gaap:CommonStockMember2021-09-300000835011us-gaap:AdditionalPaidInCapitalMember2021-09-300000835011us-gaap:RetainedEarningsMember2021-09-300000835011us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300000835011us-gaap:TreasuryStockMember2021-09-300000835011us-gaap:NoncontrollingInterestMember2021-09-300000835011us-gaap:PreferredStockMember2019-12-310000835011us-gaap:CommonStockMember2019-12-310000835011us-gaap:AdditionalPaidInCapitalMember2019-12-310000835011us-gaap:RetainedEarningsMember2019-12-310000835011us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000835011us-gaap:TreasuryStockMember2019-12-310000835011us-gaap:RetainedEarningsMember2020-01-012020-03-3100008350112020-01-012020-03-310000835011us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310000835011us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310000835011us-gaap:TreasuryStockMember2020-01-012020-03-310000835011us-gaap:PreferredStockMember2020-03-310000835011us-gaap:CommonStockMember2020-03-310000835011us-gaap:AdditionalPaidInCapitalMember2020-03-310000835011us-gaap:RetainedEarningsMember2020-03-310000835011us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310000835011us-gaap:TreasuryStockMember2020-03-3100008350112020-03-310000835011us-gaap:RetainedEarningsMember2020-04-012020-06-3000008350112020-04-012020-06-300000835011us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300000835011us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300000835011us-gaap:PreferredStockMember2020-06-300000835011us-gaap:CommonStockMember2020-06-300000835011us-gaap:AdditionalPaidInCapitalMember2020-06-300000835011us-gaap:RetainedEarningsMember2020-06-300000835011us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300000835011us-gaap:TreasuryStockMember2020-06-3000008350112020-06-300000835011us-gaap:RetainedEarningsMember2020-07-012020-09-300000835011us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300000835011us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300000835011us-gaap:TreasuryStockMember2020-07-012020-09-300000835011us-gaap:PreferredStockMember2020-09-300000835011us-gaap:CommonStockMember2020-09-300000835011us-gaap:AdditionalPaidInCapitalMember2020-09-300000835011us-gaap:RetainedEarningsMember2020-09-300000835011us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300000835011us-gaap:TreasuryStockMember2020-09-30mgpi:segment0000835011mgpi:DosPrimosTequilaLLCMember2021-09-300000835011mgpi:DosPrimosTequilaLLCMember2021-09-300000835011mgpi:DestiladoresSADeCUAndAgricolaLGSDERLDECVMember2021-04-010000835011mgpi:DestiladoresSADeCUAndAgricolaLGSDERLDECVMember2021-09-300000835011mgpi:DestiladoresSADeCUAndAgricolaLGSDERLDECVMember2021-07-012021-09-300000835011mgpi:DestiladoresSADeCUAndAgricolaLGSDERLDECVMember2021-01-012021-09-300000835011mgpi:BrownGoodsMembermgpi:DistilleryProductsMember2021-07-012021-09-300000835011mgpi:BrownGoodsMembermgpi:DistilleryProductsMember2020-07-012020-09-300000835011mgpi:BrownGoodsMembermgpi:DistilleryProductsMember2021-01-012021-09-300000835011mgpi:BrownGoodsMembermgpi:DistilleryProductsMember2020-01-012020-09-300000835011mgpi:DistilleryProductsMembermgpi:WhiteGoodsMember2021-07-012021-09-300000835011mgpi:DistilleryProductsMembermgpi:WhiteGoodsMember2020-07-012020-09-300000835011mgpi:DistilleryProductsMembermgpi:WhiteGoodsMember2021-01-012021-09-300000835011mgpi:DistilleryProductsMembermgpi:WhiteGoodsMember2020-01-012020-09-300000835011mgpi:PremiumBeverageAlcoholMembermgpi:DistilleryProductsMember2021-07-012021-09-300000835011mgpi:PremiumBeverageAlcoholMembermgpi:DistilleryProductsMember2020-07-012020-09-300000835011mgpi:PremiumBeverageAlcoholMembermgpi:DistilleryProductsMember2021-01-012021-09-300000835011mgpi:PremiumBeverageAlcoholMembermgpi:DistilleryProductsMember2020-01-012020-09-300000835011mgpi:IndustrialAlcoholMembermgpi:DistilleryProductsMember2021-07-012021-09-300000835011mgpi:IndustrialAlcoholMembermgpi:DistilleryProductsMember2020-07-012020-09-300000835011mgpi:IndustrialAlcoholMembermgpi:DistilleryProductsMember2021-01-012021-09-300000835011mgpi:IndustrialAlcoholMembermgpi:DistilleryProductsMember2020-01-012020-09-300000835011mgpi:DistilleryProductsMembermgpi:FoodGradeAlcoholMember2021-07-012021-09-300000835011mgpi:DistilleryProductsMembermgpi:FoodGradeAlcoholMember2020-07-012020-09-300000835011mgpi:DistilleryProductsMembermgpi:FoodGradeAlcoholMember2021-01-012021-09-300000835011mgpi:DistilleryProductsMembermgpi:FoodGradeAlcoholMember2020-01-012020-09-300000835011mgpi:FuelGradeAlcoholMembermgpi:DistilleryProductsMember2021-07-012021-09-300000835011mgpi:FuelGradeAlcoholMembermgpi:DistilleryProductsMember2020-07-012020-09-300000835011mgpi:FuelGradeAlcoholMembermgpi:DistilleryProductsMember2021-01-012021-09-300000835011mgpi:FuelGradeAlcoholMembermgpi:DistilleryProductsMember2020-01-012020-09-300000835011mgpi:DistillersFeedAndRelatedCoProductsMembermgpi:DistilleryProductsMember2021-07-012021-09-300000835011mgpi:DistillersFeedAndRelatedCoProductsMembermgpi:DistilleryProductsMember2020-07-012020-09-300000835011mgpi:DistillersFeedAndRelatedCoProductsMembermgpi:DistilleryProductsMember2021-01-012021-09-300000835011mgpi:DistillersFeedAndRelatedCoProductsMembermgpi:DistilleryProductsMember2020-01-012020-09-300000835011mgpi:WarehouseServicesMembermgpi:DistilleryProductsMember2021-07-012021-09-300000835011mgpi:WarehouseServicesMembermgpi:DistilleryProductsMember2020-07-012020-09-300000835011mgpi:WarehouseServicesMembermgpi:DistilleryProductsMember2021-01-012021-09-300000835011mgpi:WarehouseServicesMembermgpi:DistilleryProductsMember2020-01-012020-09-300000835011mgpi:DistilleryProductsMember2021-07-012021-09-300000835011mgpi:DistilleryProductsMember2020-07-012020-09-300000835011mgpi:DistilleryProductsMember2021-01-012021-09-300000835011mgpi:DistilleryProductsMember2020-01-012020-09-300000835011mgpi:BrandedSpiritsMembermgpi:UltraPremiumSpiritsMember2021-07-012021-09-300000835011mgpi:BrandedSpiritsMembermgpi:UltraPremiumSpiritsMember2020-07-012020-09-300000835011mgpi:BrandedSpiritsMembermgpi:UltraPremiumSpiritsMember2021-01-012021-09-300000835011mgpi:BrandedSpiritsMembermgpi:UltraPremiumSpiritsMember2020-01-012020-09-300000835011mgpi:BrandedSpiritsMembermgpi:PremiumSpiritsMember2021-07-012021-09-300000835011mgpi:BrandedSpiritsMembermgpi:PremiumSpiritsMember2020-07-012020-09-300000835011mgpi:BrandedSpiritsMembermgpi:PremiumSpiritsMember2021-01-012021-09-300000835011mgpi:BrandedSpiritsMembermgpi:PremiumSpiritsMember2020-01-012020-09-300000835011mgpi:BrandedSpiritsMembermgpi:MidSpiritsMember2021-07-012021-09-300000835011mgpi:BrandedSpiritsMembermgpi:MidSpiritsMember2020-07-012020-09-300000835011mgpi:BrandedSpiritsMembermgpi:MidSpiritsMember2021-01-012021-09-300000835011mgpi:BrandedSpiritsMembermgpi:MidSpiritsMember2020-01-012020-09-300000835011mgpi:BrandedSpiritsMembermgpi:ValueSpiritsMember2021-07-012021-09-300000835011mgpi:BrandedSpiritsMembermgpi:ValueSpiritsMember2020-07-012020-09-300000835011mgpi:BrandedSpiritsMembermgpi:ValueSpiritsMember2021-01-012021-09-300000835011mgpi:BrandedSpiritsMembermgpi:ValueSpiritsMember2020-01-012020-09-300000835011mgpi:BrandedSpiritsMembermgpi:OtherBrandedSpiritsMember2021-07-012021-09-300000835011mgpi:BrandedSpiritsMembermgpi:OtherBrandedSpiritsMember2020-07-012020-09-300000835011mgpi:BrandedSpiritsMembermgpi:OtherBrandedSpiritsMember2021-01-012021-09-300000835011mgpi:BrandedSpiritsMembermgpi:OtherBrandedSpiritsMember2020-01-012020-09-300000835011mgpi:BrandedSpiritsMember2021-07-012021-09-300000835011mgpi:BrandedSpiritsMember2020-07-012020-09-300000835011mgpi:BrandedSpiritsMember2021-01-012021-09-300000835011mgpi:BrandedSpiritsMember2020-01-012020-09-300000835011mgpi:SpecialtyWheatStarchesMembermgpi:IngredientSolutionsMember2021-07-012021-09-300000835011mgpi:SpecialtyWheatStarchesMembermgpi:IngredientSolutionsMember2020-07-012020-09-300000835011mgpi:SpecialtyWheatStarchesMembermgpi:IngredientSolutionsMember2021-01-012021-09-300000835011mgpi:SpecialtyWheatStarchesMembermgpi:IngredientSolutionsMember2020-01-012020-09-300000835011mgpi:IngredientSolutionsMembermgpi:SpecialtyWheatProteinsMember2021-07-012021-09-300000835011mgpi:IngredientSolutionsMembermgpi:SpecialtyWheatProteinsMember2020-07-012020-09-300000835011mgpi:IngredientSolutionsMembermgpi:SpecialtyWheatProteinsMember2021-01-012021-09-300000835011mgpi:IngredientSolutionsMembermgpi:SpecialtyWheatProteinsMember2020-01-012020-09-300000835011mgpi:CommodityWheatStarchMembermgpi:IngredientSolutionsMember2021-07-012021-09-300000835011mgpi:CommodityWheatStarchMembermgpi:IngredientSolutionsMember2020-07-012020-09-300000835011mgpi:CommodityWheatStarchMembermgpi:IngredientSolutionsMember2021-01-012021-09-300000835011mgpi:CommodityWheatStarchMembermgpi:IngredientSolutionsMember2020-01-012020-09-300000835011mgpi:IngredientSolutionsMembermgpi:CommodityWheatProteinMember2021-07-012021-09-300000835011mgpi:IngredientSolutionsMembermgpi:CommodityWheatProteinMember2020-07-012020-09-300000835011mgpi:IngredientSolutionsMembermgpi:CommodityWheatProteinMember2021-01-012021-09-300000835011mgpi:IngredientSolutionsMembermgpi:CommodityWheatProteinMember2020-01-012020-09-300000835011mgpi:IngredientSolutionsMember2021-07-012021-09-300000835011mgpi:IngredientSolutionsMember2020-07-012020-09-300000835011mgpi:IngredientSolutionsMember2021-01-012021-09-300000835011mgpi:IngredientSolutionsMember2020-01-012020-09-300000835011mgpi:LuxcoMember2021-04-012021-04-010000835011mgpi:LuxcoMember2021-04-010000835011mgpi:LuxcoMember2021-09-012021-09-300000835011mgpi:LuxcoMemberus-gaap:TradeNamesMember2021-04-010000835011mgpi:DistributorRelationshipsMembermgpi:LuxcoMember2021-04-010000835011mgpi:DistributorRelationshipsMembermgpi:LuxcoMember2021-04-012021-04-010000835011mgpi:LuxcoMember2021-07-012021-09-300000835011mgpi:LuxcoMember2021-01-012021-09-300000835011mgpi:LuxcoMember2020-07-012020-09-300000835011mgpi:LuxcoMember2020-01-012020-09-300000835011mgpi:LuxcoMemberus-gaap:AcquisitionRelatedCostsMember2021-04-012021-06-300000835011mgpi:LuxcoMemberus-gaap:AcquisitionRelatedCostsMember2021-01-012021-06-300000835011mgpi:LuxcoMemberus-gaap:AcquisitionRelatedCostsMember2020-01-012020-01-010000835011mgpi:LuxcoMemberus-gaap:AcquisitionRelatedCostsMembermgpi:LuxcoMember2021-01-012021-09-300000835011mgpi:LuxcoMemberus-gaap:FairValueAdjustmentToInventoryMember2021-01-012021-09-300000835011mgpi:DistilleryProductsMember2020-12-310000835011mgpi:BrandedSpiritsMember2020-12-310000835011mgpi:IngredientSolutionsMember2020-12-310000835011mgpi:DistilleryProductsMember2021-09-300000835011mgpi:BrandedSpiritsMember2021-09-300000835011mgpi:IngredientSolutionsMember2021-09-300000835011us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMembermgpi:RevolvingCreditAgreementDue2025Member2021-09-300000835011us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMembermgpi:RevolvingCreditAgreementDue2025Member2020-12-310000835011mgpi:NotePurchaseAgreementDue2027Memberus-gaap:SecuredDebtMember2021-09-300000835011mgpi:NotePurchaseAgreementDue2027Memberus-gaap:SecuredDebtMember2020-12-310000835011us-gaap:SecuredDebtMembermgpi:NotePurchaseAgreementDue2029Member2021-09-300000835011us-gaap:SecuredDebtMembermgpi:NotePurchaseAgreementDue2029Member2020-12-310000835011us-gaap:NotesPayableOtherPayablesMember2021-09-300000835011us-gaap:NotesPayableOtherPayablesMember2020-12-310000835011mgpi:CreditAgreementDue2025Member2020-02-140000835011mgpi:CreditAgreementDue2025Member2021-05-140000835011us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2021-05-140000835011mgpi:CreditAgreementMember2021-09-300000835011mgpi:CreditAgreementDue2025Membermgpi:LuxcoMember2021-04-012021-04-010000835011us-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredDebtMembermgpi:NotePurchaseAgreementMember2021-05-140000835011us-gaap:SecuredDebtMembermgpi:NotePurchaseAgreementMember2021-05-140000835011us-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredDebtMembermgpi:NotePurchaseAgreementMember2021-07-280000835011us-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredDebtMembermgpi:NotePurchaseAgreementMember2021-07-290000835011mgpi:NotePurchaseAgreementDue2027Memberus-gaap:SecuredDebtMember2017-01-012017-12-310000835011us-gaap:SecuredDebtMembermgpi:NotePurchaseAgreementDue2029Member2019-01-012019-12-310000835011us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-09-300000835011us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-3000008350112019-02-250000835011us-gaap:PreferredStockMember2020-12-310000835011us-gaap:CommonStockMember2020-12-310000835011us-gaap:PreferredStockMember2021-01-012021-03-310000835011us-gaap:CommonStockMember2021-01-012021-03-310000835011us-gaap:PreferredStockMember2021-03-310000835011us-gaap:CommonStockMember2021-03-310000835011us-gaap:PreferredStockMember2021-04-012021-06-300000835011us-gaap:CommonStockMember2021-04-012021-06-300000835011us-gaap:PreferredStockMember2021-06-300000835011us-gaap:CommonStockMember2021-06-300000835011us-gaap:PreferredStockMember2021-07-012021-09-300000835011us-gaap:CommonStockMember2021-07-012021-09-300000835011us-gaap:PreferredStockMember2021-09-300000835011us-gaap:CommonStockMember2021-09-300000835011us-gaap:PreferredStockMember2019-12-310000835011us-gaap:CommonStockMember2019-12-310000835011us-gaap:PreferredStockMember2020-01-012020-03-310000835011us-gaap:CommonStockMember2020-01-012020-03-310000835011us-gaap:PreferredStockMember2020-03-310000835011us-gaap:CommonStockMember2020-03-310000835011us-gaap:PreferredStockMember2020-04-012020-06-300000835011us-gaap:CommonStockMember2020-04-012020-06-300000835011us-gaap:PreferredStockMember2020-06-300000835011us-gaap:CommonStockMember2020-06-300000835011us-gaap:PreferredStockMember2020-07-012020-09-300000835011us-gaap:CommonStockMember2020-07-012020-09-300000835011us-gaap:PreferredStockMember2020-09-300000835011us-gaap:CommonStockMember2020-09-300000835011mgpi:DryerFireMember2021-09-300000835011mgpi:DryerFireMember2021-07-012021-09-300000835011mgpi:DryerFireMember2021-01-012021-09-30mgpi:plan0000835011us-gaap:RestrictedStockUnitsRSUMembermgpi:The2014PlanMember2021-01-012021-09-300000835011mgpi:The2014PlanMember2021-09-300000835011us-gaap:RestrictedStockUnitsRSUMembermgpi:TheDirectorsPlanMember2021-01-012021-09-300000835011mgpi:TheDirectorsPlanMember2021-09-300000835011us-gaap:RestrictedStockUnitsRSUMember2021-09-300000835011us-gaap:OperatingSegmentsMembermgpi:DistilleryProductsMember2021-07-012021-09-300000835011us-gaap:OperatingSegmentsMembermgpi:DistilleryProductsMember2020-07-012020-09-300000835011us-gaap:OperatingSegmentsMembermgpi:DistilleryProductsMember2021-01-012021-09-300000835011us-gaap:OperatingSegmentsMembermgpi:DistilleryProductsMember2020-01-012020-09-300000835011mgpi:BrandedSpiritsMemberus-gaap:OperatingSegmentsMember2021-07-012021-09-300000835011mgpi:BrandedSpiritsMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300000835011mgpi:BrandedSpiritsMemberus-gaap:OperatingSegmentsMember2021-01-012021-09-300000835011mgpi:BrandedSpiritsMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300000835011us-gaap:OperatingSegmentsMembermgpi:IngredientSolutionsMember2021-07-012021-09-300000835011us-gaap:OperatingSegmentsMembermgpi:IngredientSolutionsMember2020-07-012020-09-300000835011us-gaap:OperatingSegmentsMembermgpi:IngredientSolutionsMember2021-01-012021-09-300000835011us-gaap:OperatingSegmentsMembermgpi:IngredientSolutionsMember2020-01-012020-09-300000835011us-gaap:CorporateNonSegmentMember2021-07-012021-09-300000835011us-gaap:CorporateNonSegmentMember2020-07-012020-09-300000835011us-gaap:CorporateNonSegmentMember2021-01-012021-09-300000835011us-gaap:CorporateNonSegmentMember2020-01-012020-09-300000835011us-gaap:OperatingSegmentsMembermgpi:DistilleryProductsMember2021-09-300000835011us-gaap:OperatingSegmentsMembermgpi:DistilleryProductsMember2020-12-310000835011mgpi:BrandedSpiritsMemberus-gaap:OperatingSegmentsMember2021-09-300000835011mgpi:BrandedSpiritsMemberus-gaap:OperatingSegmentsMember2020-12-310000835011us-gaap:OperatingSegmentsMembermgpi:IngredientSolutionsMember2021-09-300000835011us-gaap:OperatingSegmentsMembermgpi:IngredientSolutionsMember2020-12-310000835011us-gaap:CorporateNonSegmentMember2021-09-300000835011us-gaap:CorporateNonSegmentMember2020-12-310000835011us-gaap:SubsequentEventMember2021-11-012021-11-01

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, 2021  
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/b0b9d3f6ba853e3cb37481d3ed669751-mgpi-20210930_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 (§232.405 of this chapter) 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.
Large accelerated filer                                                         x Accelerated filer
 Non-accelerated filer                          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: 
21,964,296 shares of Common Stock, no par value as of October 29, 2021



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 11, 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, per 9-liter case 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 share and per share amounts)

 Quarter Ended September 30,Year to Date Ended September 30,
 2021202020212020
Sales$176,611 $102,964 $459,873 $294,606 
Cost of sales119,525 79,802 313,661 227,531 
Gross profit57,086 23,162 146,212 67,075 
Selling, general and administrative expenses24,202 9,510 65,165 28,377 
Operating income32,884 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 taxes31,347 13,243 77,860 37,349 
Income tax expense7,674 2,862 18,701 8,636 
Net income23,673 10,381 59,159 28,713 
Net loss attributable to noncontrolling interest203  279  
Net income attributable to MGP Ingredients, Inc.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 shares21,981,201 16,916,675 20,293,818 16,943,130 
Basic and diluted Earnings Per Share$1.08 $0.61 $2.91 $1.68 





















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,
 2021202020212020
Net income attributable to MGP Ingredients, Inc. $23,876 $10,381 $59,438 $28,713 
Other comprehensive income, net of tax:
Unrealized loss on foreign currency translation adjustment(141) (134) 
Change in Company-sponsored post-employment benefit plan(89)74 (40)89 
Other comprehensive income (loss)(230)74 (174)89 
Comprehensive income attributable to MGP Ingredients, Inc. 23,646 10,455 59,264 28,802 
Comprehensive loss attributable to noncontrolling interest203  279  
Comprehensive income$23,443 $10,455 $58,985 $28,802 



































See accompanying notes to unaudited condensed consolidated financial statements

4


       MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (Dollars in thousands)
 September 30, 2021December 31, 2020
Current Assets  
Cash and cash equivalents$16,162 $21,662 
Receivables (less allowance for credit losses, $150 and $24 at September 30, 2021, and December 31, 2020, respectively)
92,152 56,966 
Inventory239,312 141,011 
Prepaid expenses2,888 2,644 
Refundable income taxes1,382  
Total current assets351,896 222,283 
Property, plant, and equipment391,111 313,730 
Less accumulated depreciation and amortization(193,863)(181,738)
Property, plant, and equipment, net197,248 131,992 
Operating lease right-of-use assets, net 8,436 5,151 
Investment in joint ventures5,334  
Intangible assets, net219,355 890 
Goodwill227,588 2,738 
Other assets7,611 3,521 
Total assets$1,017,468 $366,575 
Current Liabilities  
Current maturities of long-term debt$3,227 $1,600 
Accounts payable37,004 30,273 
Federal and state liquor taxes payable6,498 107 
Income taxes payable 704 
Accrued expenses and other39,737 20,645 
Total current liabilities86,466 53,329 
Long-term debt, less current maturities36,068 38,271 
Credit agreement - revolver208,382  
Long-term operating lease liabilities5,999 3,057 
Other noncurrent liabilities5,163 7,094 
Deferred income taxes60,479 2,298 
Total liabilities402,557 104,049 
Commitments and Contingencies (Note 8)
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 23,125,166 shares at September 30, 2021 and 18,115,965 shares at December 31, 2020; and 21,963,574 and 16,915,862 shares outstanding at September 30, 2021 and December 31, 2020, respectively
6,715 6,715 
Additional paid-in capital315,543 15,503 
Retained earnings315,022 262,943 
Accumulated other comprehensive income312 486 
Treasury stock, at cost, 1,161,592 and 1,200,103 shares at September 30, 2021 and December 31, 2020, respectively
(22,406)(23,125)
Total MGP Ingredients, Inc. stockholders’ equity615,190 262,526 
Noncontrolling interest(279) 
Total equity614,911 262,526 
Total liabilities and equity$1,017,468 $366,575 
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,
 20212020
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 amortization13,668 9,618 
Gain on sale of assets5 337 
Share-based compensation5,247 2,693 
Deferred income taxes, including change in valuation allowance465 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 expenses1,206 (2,032)
Income taxes payable(2,086)(673)
Accounts payable(6,678)2,057 
Accrued expenses and other15,859 5,647 
Federal and state liquor taxes payable(1,961)139 
Other, net(682)(146)
Net cash provided by operating activities70,785 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 - revolver242,300 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 activities112,883 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 period21,662 3,309 
Cash and cash equivalents, end of period$16,162 $19,966 
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, 2021
(Unaudited) (Dollars in thousands)
Capital
Stock
Preferred
Issued CommonAdditional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
income
Treasury
Stock
Non-controlling InterestTotal
Balance, December 31, 2020
$4 $6,715 $15,503 $262,943 $486 $(23,125)$ $262,526 
Comprehensive income:
Net income   15,427    15,427 
Other comprehensive income    55   55 
Dividends and dividend equivalents of $0.12 per common share and per restricted stock unit, net of estimated forfeitures
   (2,052)   (2,052)
Share-based compensation  3,229     3,229 
Stock shares awarded, forfeited or vested  (716)  716   
Stock shares repurchased     (674) (674)
Balance, March 31, 2021
4 6,715 18,016 276,318 541 (23,083) 278,511 
Comprehensive income:
Net income   20,135   (76)20,059 
Other comprehensive income    1   1 
Dividends and dividend equivalents of $0.12 per common share and per restricted stock unit, net of estimated forfeitures
   (2,653)   (2,653)
Share-based compensation  1,538     1,538 
Stock shares awarded, forfeited or vested  (705)  705   
Stock shares repurchased     (91) (91)
Equity consideration for Merger  296,213  296,213 
Balance, June 30, 2021
4 6,715 315,062 293,800 542 (22,469)(76)593,578 
Comprehensive income:
Net income   23,876  (203)23,673 
Other comprehensive loss    (230) (230)
Dividends and dividend equivalents of $0.12 per common share and per restricted stock unit, net of estimated forfeitures
   (2,654)   (2,654)
Share-based compensation  480     480 
Stock shares awarded, forfeited, or vested  (64)  64   
Stock shares repurchased     (1) (1)
Equity consideration for Merger  65     65 
Balance, September 30, 2021
$4 $6,715 $315,543 $315,022 $312 $(22,406)$(279)$614,911 
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, 2020
(Unaudited) (Dollars in thousands)

Capital
Stock
Preferred
Issued CommonAdditional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Balance, December 31, 2019
$4 $6,715 $14,029 $230,784 $(246)$(20,242)$231,044 
Comprehensive income:
Net income— — — 9,842 — — 9,842 
Other comprehensive loss— — — — (6)— (6)
Dividends and dividend equivalents of $0.12 per common share and per restricted stock unit, net of estimated forfeitures
— — — (2,059)— — (2,059)
Share-based compensation— — 902 — — — 902 
Stock shares awarded, forfeited or vested— — (567)— — 804 237 
Stock shares repurchased— — — — — (4,395)(4,395)
Balance, March 31, 2020
4 6,715 14,364 238,567 (252)(23,833)235,565 
Comprehensive income:
Net income— — — 8,490 — — 8,490 
Other comprehensive income— — — — 21 — 21 
Dividends and dividend equivalents of $0.12 per common share and per restricted stock unit, net of estimated forfeitures
— — — (2,041)— — (2,041)
Share-based compensation— — 662 — — — 662 
Balance, June 30, 2020
4 6,715 15,026 245,016 (231)(23,833)242,697 
Comprehensive income:
Net income— — — 10,381 — — 10,381 
Other comprehensive income— — — — 74 — 74 
Dividends and dividend equivalents of $0.12 per common share and per restricted stock unit, net of estimated forfeitures
— — — (2,043)— — (2,043)
Share-based compensation— — 258 — — — 258 
Stock shares awarded, forfeited, or vested— — — — — 634 634 
Balance, September 30, 2020
$4 $6,715 $15,284 $253,354 $(157)$(23,199)$252,001 



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, branded spirits and food ingredients. Distilled spirits include premium bourbon and rye whiskeys and grain neutral spirits, including vodka and gin. Our distilled spirits are either packaged and sold under our own brands to distributors, sold, directly or indirectly, to manufacturers of other branded spirits, or direct to consumer. 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. Our industrial alcohol and ingredients products are sold directly, or through distributors, to manufacturers and processors of finished packaged goods or to bakeries. 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, primarily, from wheat flour.  

On April 1, 2021, the Company acquired Luxco, Inc. and its affiliated companies (“Luxco”, or “Luxco Companies”) which is a leading branded beverage alcohol company across various categories, with a more than 60-year business heritage. Luxco’s operations predominately involve the producing, importing, bottling and rectifying of distilled spirits. See Note 3, Business Combination, for further details.

As a result of the merger with Luxco, during the second quarter 2021, the Company established a new reportable segment structure that separates Branded Spirits from the Distillery Products segment. The Ingredient Solutions segment remains unchanged. The new segment presentation reflects how management is now operating the business and making resource allocations. The Company now reports three operating segments: Distillery Products, Branded Spirits and Ingredient Solutions. Certain amounts in the 2020 consolidated financial statements have been reclassified to conform to the 2021 presentation and prior periods have been revised to reflect the new operating segment structure.

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 and year to date ended September 30, 2021, 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, 2020, 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.

The Company holds 60 percent interest in Dos Primos Tequila, LLC (“Dos Primos”). The Company consolidated Dos Primos activity on the financial statements and backs out the 40 percent non-controlling interest portion on a separate line.

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, inclusive of the effects related to COVID-19.  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 as well as bottles, caps, and labels used in the bottling process and certain maintenance and repair items.  Bourbon and whiskeys, included in inventory, are normally aged in barrels for several years, following industry practice; all barreled bourbon
9


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, 2021December 31, 2020
Finished goods$44,852 $16,414 
Barreled distillate (bourbons and whiskeys)159,897 105,445 
Raw materials22,667 6,954 
Work in process985 1,805 
Maintenance materials9,401 8,634 
Other1,510 1,759 
Total$239,312 $141,011 

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 receive 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.

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. For certain international customers, deposits are required in advance of shipment. These deposits are reported as contract liabilities until control passes to the customer and revenue is recognized.

The Company’s Distillery Products segment routinely enters into bill and hold arrangements, whereby the Company produces and sells aged and unaged distillate to customers, and the product is 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 aged and 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 of the following bill and hold criteria have to be met in order for control to be transferred to the customer: the reason for the bill and hold arrangement is substantive - 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.

Excise Taxes. The Company is responsible for compliance with the Alcohol and Tobacco Tax and Trade Bureau
of the U.S. Treasury Department (the “TTB”) regulations which includes making timely and accurate excise tax payments. The Company is subject to periodic compliance audits by the TTB. Individual states also impose excise taxes on alcohol beverages in varying amounts. The Company calculates its Federal and state excise tax expense based upon units shipped and on its understanding of the applicable excise tax laws. 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.

Recognition of Insurance Recoveries. Estimated loss contingencies are recognized as charges to income when they are probable and reasonably estimable. Insurance recoveries are not recognized until all contingencies related to the insurance claim have been resolved and settlement has been reached with the insurer. Insurance recoveries, to the extent of costs and losses, are reported as a reduction to costs on the Condensed Consolidated Statements of Income. Insurance recoveries, in excess of costs and losses, if any, would be reported as a separate caption in Operating income on the Condensed Consolidated
10


Statements of Income. Legally committed recovery amounts obtained prior to contingencies being resolved are recorded in Accrued expenses and other on the Condensed Consolidated Balance Sheets.

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 each year during the period.

Translation of Foreign Currencies. Assets and liabilities of Niche Drinks Co., Ltd. (“Niche”), a wholly-owned subsidiary of the Company whose functional currency is the British pound sterling, are translated to U.S. dollars using the exchange rate in effect at the condensed consolidated balance sheet date. Results of operations are translated using average rates during the period. Adjustments resulting from the translation process are included as a component of Accumulated other comprehensive income.

Business Combinations. Assets acquired and liabilities assumed during a business combination are generally recorded at fair market value as of the acquisition date. Goodwill is recognized to the extent that the purchase consideration exceeds the assets acquired and liabilities assumed. The Company uses its best estimate and third party valuation specialists to determine the fair value of the assets acquired and liabilities assumed. During the measurement period, which can be up to one year after the acquisition date, the Company can make adjustments to the fair value of the assets acquired and liabilities assumed, with the offset being an adjustment to goodwill.

Goodwill and Indefinite-Lived Intangible Assets. The Company records goodwill and other indefinite-lived intangible assets in connection with various acquisitions of businesses and allocates the goodwill and other indefinite-lived intangible assets to its respective reporting units. The Company evaluates goodwill 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. To the extent that the carrying amount exceeds fair value, an impairment of goodwill is recognized. Judgment is required in the 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. The Company separately evaluates indefinite-lived intangible assets for impairment. As of September 30, 2021, the Company determined that goodwill and indefinite-lived intangible assets were not impaired.

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.
 
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 $251,053 and $44,548 at September 30, 2021 and December 31, 2020, respectively. The financial statement carrying value of total debt was $247,677 (including unamortized loan fees) and $39,871 (including unamortized loan fees) at September 30, 2021 and December 31, 2020, 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 9.
11



Equity Method Investments. The condensed consolidated financial statements include the results of Luxco and its affiliated companies since April 1, 2021, when the Company obtained control through the Merger. The Company holds 50 percent interests in DGL Destiladores, S.de R.L. de C.V. (“DGL”) and Agricola LG, S.de R.L. de C.V. (“Agricola”) (combined “LMX”), which are accounted for as equity method investments since the date of acquisition. At September 30, 2021, the investment in LMX was $5,334, which is recorded in Investment in joint ventures on the Condensed Consolidated Balance Sheet. During the quarter and year to date ended September 30, 2021, the Company recorded a $405 and $739, respectively, loss from our equity method investments, which is recorded in Other income (loss), net on the Condensed Consolidated Statement of Income.

Recently Adopted Accounting Standard Updates. The Company did not adopt any new Accounting Standard Updates during the quarter ended September 30, 2021.

Note 2.  Revenue

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 Branded Spirits and Ingredient Solutions segments 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 include a single performance obligation (either the sale of products or the provision of warehouse services).

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,
2021202020212020
Distillery Products
Brown goods$42,793 $32,068 $129,600 $86,038 
White goods21,187 16,210 56,049 47,922 
Premium beverage alcohol63,980 48,278 185,649 133,960 
Industrial alcohol14,790 19,461 46,896 64,032 
Food grade alcohol78,770 67,739 232,545 197,992 
Fuel grade alcohol3,592 1,274 10,862 3,970 
Distillers feed and related co-products4,016 6,119 13,660 19,889 
Warehouse services4,666 4,041 12,949 11,641 
Total Distillery Products91,044 79,173 270,016 233,492 
Branded Spirits
Ultra premium13,118 2,365 23,692 3,049 
Premium6,310 72 12,692 243 
Mid17,107  34,894  
Value19,057  40,001  
Other5,969 12 11,278 29 
Total Branded Spirits61,561 2,449 122,557 3,321 
Ingredient Solutions
Specialty wheat starches12,231 11,604 35,051 30,938 
Specialty wheat proteins8,901 7,994 23,299 20,372 
Commodity wheat starches2,626 1,596 7,572 5,247 
Commodity wheat proteins248 148 1,378 1,236 
Total Ingredient Solutions24,006 21,342 67,300 57,793 
Total sales$176,611 $102,964 $459,873 $294,606 

12


Note 3. Business Combination

Description of the transaction. On January 22, 2021, the Company entered into a definitive agreement to acquire Luxco, and subsequently completed the merger on April 1, 2021 (the “Merger”). Luxco is a leading branded beverage alcohol company across various categories, with a more than 60-year business heritage. As a result of the Merger, MGP increased its scale and market position in the branded-spirits sector and believes it strengthened its platform for future growth of higher valued-added products.

Following the Merger, the Luxco Companies became wholly-owned subsidiaries of MGP and are included within the Branded Spirits segment. The aggregate consideration paid by the Company in connection with the Merger was $237,500 in cash (less assumed indebtedness) and 5,007,833 shares of common stock of the Company, subject to adjustment for fractional shares (the “Company Shares,” and together with the cash portion, the “Merger Consideration”). The Company Shares were valued at $296,213 and represented approximately 22.8 percent of the Company’s outstanding common stock immediately following the closing of the Merger. The Merger Consideration was subject to customary purchase price adjustments related to, among other things, net working capital, acquired cash and assumed debt. The consideration paid at the Closing included a preliminary estimated purchase price adjustment. In September 2021, the parties finalized the purchase price adjustment, which decreased the cash consideration paid by approximately $608 and increased stock consideration by an additional 1,373 shares from the preliminary amounts that were paid at closing.

The cash portion of the Merger Consideration, the repayment of assumed debt, and transaction-related expenses were financed with borrowings under the Company’s existing Credit Agreement which was drawn down on April 1, 2021. See Note 5, Corporate Borrowings, for further details.

For tax purposes, the transaction was structured partially as a tax-free reorganization and partially as a taxable acquisition, as defined in the Internal Revenue Code. The Company anticipates the amount transferred in a tax deferred manner, under the tax-free reorganization rules, will not create additional tax basis for the Company. The taxable component of the transaction will create additional tax basis and a corresponding future tax deduction for the Company.

The Merger was accounted for as a business combination in accordance with Financial Accounting Standards Board Accounting Standard Codification 805, Business Combinations (“ASC 805”), 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 acquired and liabilities assumed 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.
13



Purchase Price Allocation. The following table summarizes the preliminary allocation of the consideration paid for Luxco to the preliminary estimated fair value of the assets acquired and liabilities assumed at the acquisition date, with the excess recorded to goodwill.

Consideration:
Cash, net of assumed debt$150,092 
Value of MGP Common Stock issued at close (a)
296,279 
Fair value of total consideration transferred$446,371 
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash $479 
Receivables29,675 
Inventory90,854 
Prepaid expenses1,454 
Property, plant and equipment, net41,279 
Investments in joint ventures5,085 
Intangible assets (b)
219,500 
Other assets4,257 
Total assets392,583 
Current maturities of long-term debt (c)
87,509 
Accounts payable14,453 
Federal and state liquor taxes payable8,352 
Accrued expenses and other2,832 
Other noncurrent liabilities196 
Deferred income taxes57,720 
Total liabilities171,062 
Goodwill224,850 
Total $446,371 

(a) The Company issued 5,007,833 shares of MGP Common Stock which was valued at $59.15 per share on April 1, 2021. In September 2021, the parties finalized the purchase price adjustments which increased stock consideration by an additional 1,373 shares from the preliminary amounts that were paid at closing.
(b) Intangible assets acquired includes trade names with an estimated fair value of $178,100 and distributor relationships with an estimated fair value of $41,400.
(c) The fair value of Luxco’s debt that was assumed by MGP in the transaction and repaid on the closing date.

In accordance with ASC 805 assets acquired, liabilities assumed, and consideration transferred were recorded at their estimated fair values on the acquisition date. The fair value measurements of tangible and intangible assets and liabilities were based on significant inputs not observable in the market and represent Level 3 measurements within the fair value hierarchy. Level 3 inputs include discount rates that would be used by a market participant in valuing these assets and liabilities, projections of revenues and cash flows, distributor attrition rates, royalty rates and market comparable, among others. The fair value of work-in-process and finished goods inventory was determined using the comparative sales method and raw materials was determined using the replacement cost method.

Goodwill of $224,850 represents the excess of the consideration transferred over the estimated fair value of assets acquired net of liabilities assumed. No Goodwill is expected to be deductible for tax purposes. The Intangible assets acquired includes indefinite-lived intangible assets, trade names, with an estimated fair value of $178,100 and definite-lived intangible assets, distributor relationships, with an estimated fair value of $41,400 and a useful life of 20 years. The trade names and distributor relationships acquired by the Company have been adjusted to the estimated fair values using the relief from royalty method and multi-period earnings method, respectively. Management and a third party valuation team performed a preliminarily valuation analysis to determine the fair value of each trade name and distributor relationship.
14




Operating Results. The operating results of Luxco were consolidated with the Company’s operating results subsequent to the merger date. During the quarter and year to date ended September 30, 2021, the Company recorded $59,057 and $118,355, respectively, of Sales and $6,038 and $12,559, respectively, of Income before income taxes, attributable to Luxco on it’s Condensed Consolidated Statement of Income. During the quarter and year to date ended September 30, 2021, the Company has incurred $