MGP Ingredients, Inc. (NASDAQ:MGPI) Q1 2024 Earnings Call Transcript

Brandon Gall: We’re not giving any specific numbers. Each pricing was up in new distillate pricing. If you look at it a customer-by-customer basis was also up. We did have one of our larger relatively lower-priced multinational customers in the quarter by a lot. So they brought the average price down for new distillate. But like I said, on a customer-by-customer basis, we’re very pleased with the pricing, and we expect the same to continue as we go forward.

Operator: [Operator’s Instructions] We have a follow-up question from Sean McGowan from ROTH MKM.

Sean McGowan: I know this gets added back for the adjusted EBITDA and adjusted net income. But how do we — is there a way to know what that contingent liability is going to be? And how long will that be hanging out on the income statement?

Brandon Gall: Yes. That’s going to be out there through 2025. So December 2025 is when the earn-out is officially concluded with the Penelope transaction. So we expected — it’s a goofy one, all met from an accounting standpoint. A lot of Monte-Carlo simulation is revisited as you every quarter. It’s been plus or minus $4 million, exceeding in the last couple of quarters. And we expect it just to continue to ramp up as the brand continues to perform in line with our expectations, similarly each quarter until we get to the end of 2025. Now that number, it changes because of volatility in the market because of interest rates or forecasts or actuals. So there’s something — some inputs that we provide. That helps conclude what that number is in a given quarter, but there’s also some external volatility measures as an example, that also impact that. So I wish to give you a more clear answer, Sean, but hopefully, that color helps a little bit in your model.

Sean McGowan: It does. But I just want to be clear on 2 things. One, is it eventually going to be cash? And second, is it the kind of thing like the better it is, the more — the better we should feel about it because that means that they’re outperforming.

David Bratcher: That’s exactly right. It will be a cash outflow by the end of 2025 or sooner if they hit their metrics sooner is the way it’s drawn up. It can be as much as approximately $110 million. And you’re exactly right. It’s definitely something as that number gets bigger, it’s a positive for the brand. That means it’s performing in line or better than our expectations.

Operator: This concludes the question-and-answer session. I would now like to turn the conference back over to David Bratcher for any closing remarks.

David Bratcher: Thank you for your interest in our company and for joining us today for our first quarter earnings call. We look forward to talking with you again after the second quarter.

Operator: The Conference is now concluded, thank you for attending today’s presentation. You may now disconnect. Goodbye.