Gerald Pascarelli: Understood. Thank you. My next question is on the Distilling Solutions segment. Brandon, I guess it’s for you and it’s really more of a housekeeping question. But when we look at the historical margin profile in Distilling Solutions, gross margin and your income before tax margins are fairly closely aligned historically. Looking out to 2024, once the Atchison distillery closes and then considering the gross margin enhancements you are going to get in that segment, is there any reason why gross margin and income before tax margins would not continue to remain fairly closely aligned? This is obviously excluding any non-recurring items or impairments, et cetera. Any color there would be great. Thank you.
Brandon Gall: Yeah. So excluding all the impairments you mentioned is important. But on a go-forward basis and we do have this listed in our schedules of our earnings release. But, yeah, so on a pro forma basis, excluding the Atchison distillery, our gross margin profile of Distilling Solutions increases about 1,340 basis points to around 44.1% on a pro forma year-to-date basis. So that impact to margin is going to be quite noticeable for not only for the Distilling Solutions but for the consolidated business as well.
Gerald Pascarelli: Right. And just a follow-up on the income before tax, would you expect a lot of the margin enhancements to continue to flow through to your income before tax or is there — are there any considerations to be mindful of once the distillery closes just in terms of income before tax?
Brandon Gall: Yeah. No. We would expect that flow-through to be consistent with what you are seeing at the gross profit and gross margin level.
Gerald Pascarelli: Okay. Thank you very much.
Operator: Our next question will come from Bill Chappell with Truist Securities. You may now go ahead.
Bill Chappell: Thanks. Good morning and my congratulations as well, Dave, on the retirement.
Dave Colo: Thanks, Bill. Thank you.
Bill Chappell: A couple of questions. I guess, first on the Branded Spirits business, you talked that you were still working through some of kind of the excess inventory within channels and I think the whole industry is. I mean, any way to quantify like what sales could have been or how much that impacted branded sales, because still 6% year-over-year is pretty solid. So just trying to understand or did it really was a very small impact and no impact is expected going forward?
Dave Colo: Yeah. I think, Bill, we discussed this a little bit on the last quarter call, but we feel like we are pretty much through any issues with excess inventory at the distributor level. There may be a few brands that we still have a little bit to work through, but there was really, I don’t think our revenue was materially impacted due to any excess inventory issues in the channel.
Bill Chappell: Got it. And then only half kidding, but what do your brown spirits distillate salespeople do over the next six months? If you have presold so much of the business for 2024, and I guess, one, talk about like, is there excess capacity where you can continue to sell more beyond your plan and is there some optionality there? And then two, we hear a lot of things be it GLP, be it just overall sluggish — slowdown on spirits in general, about incremental demand for brown goods over the next few years and your new distillate sales are probably the best leading indicator there. So maybe you can just talk about what you are hearing and seeing from your customers in terms of expectations, in terms of getting better, getting worse, cooling down.
Help us understand, I guess, one, can they sell more next year than they have already committed and do you have the capacity for that? And two, kind of what you are hearing from your customers in terms of demand three years, four years, five years from now? Thanks.
Dave Colo: Yeah. No. Our sales team in brown goods, they have done a fabulous job, as we have mentioned earlier, getting us into the position that we are in with having forward commitments on both new distillate and aged. And once they have 2024 as an example, the vast majority of those sales committed and obviously, they are working on 2025 and beyond. So we don’t give them a break. They don’t get to take the year off once they get 2024 books. So they are working diligently on 2025 and beyond on sales. The capacity question is, as you know, we have had some pretty good increases in throughput in our Lawrenceburg distillery. We are bringing on additional capacity in Bardstown, as we plan for 2024 and beyond and this is part of our strap plan and this will be spoken to more when we give guidance for 2024.
All of those capacity increases, et cetera, are factored into the guidance that we will provide in for 2024, Bill. There will be some additional capacity as we continue to drive continuous improvement and bring the capacity on in Bardstown. So we will make sure that we are selling that in the most profitable manner to keep driving the improvement in the business. From a consumer demand point of view in this whole GLP drug issue, our — we don’t really see currently, it’s not really an impact to our business. I think it’s very early innings with what is the true impact going to be from a consumer perspective on whether it’s food or beverage consumption. But as we sit here today, we don’t see that having a meaningful impact on our business.
