MGP Ingredients, Inc.
Q4 2016 Earnings Call Transcript

Published: 8 Mar 2017

[Operator:]

Good morning. And welcome to the MGP Ingredients' Fourth Quarter 2016 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Bob Burton. Please go ahead.

[Bob Burton:]

Thank you, Nicole. Good morning, everyone and thank you for joining the MGP Ingredients conference call and webcast to discuss the company’s financial results for the fourth quarter and fiscal year 2016. I’m Bob Burton with Lambert Edwards, MGP’s Investor Relations firm and joining me are members of their management team, including Gus Griffin, President and Chief Executive Officer; and Tom Pigott, Vice President of Finance and Chief Financial Officer. We will begin the call with management’s prepared remarks and then open the call up to questions. However, before we begin today’s call, it is my responsibility to inform you that this call may involve certain forward-looking statements such as projections of revenue, earnings and capital structure, as well as statements on the plans and objectives of the company’s business. The company’s actual results could differ materially from any forward-looking statements made today due to a number of factors, including the risk factors described in the company’s most recent annual and quarterly reports filed with the Securities and Exchange Commission. The company assumes no obligation to update any forward-looking statements made during the call. If anyone does not already have a copy of the press release issued by MGP today, you can access it at the company’s website www.mgpingredients.com. At this time, I would like to turn the call over to MGP’s President and Chief Executive Officer, Gus Griffin. Gus?

[Gus Griffin:]

Thank you, Bob. And thank you all for joining us on this call. On this call, we'll provide an overview of the quarter and year, updates on key financial performance metrics and discussion of progress against our strategy. Then we'll take your questions. We expect the call to run about 45 minutes. Now turning to results. 2016 was a great year for MGP. We built on the solid foundation we set in 2015; we made substantial progress against all of our growth strategies. The key components of our strategy include maximizing the value of our production capacity, capturing a greater share of the value chain, investing for growth, continuing strong risk management disciplined and building the MGP brand. In 2016, the progress we made against all of these strategies which demonstrated in our financial results. While our net sales declined 2.9% in 2016, we maximized the value of our production, achieving strong double digit growth in premium beverage alcohol while steadily migrating away from less attractive industrial alcohol. As a result, we grew full year gross profit 11.5% and gross margin expanded by 260 basis points. Operating income also improved 27.8% for the year driven by the growth and gross profit in the special items we recorded in the third quarter. Looking at each segment individually. In our Distillery Product segment, while year long softness in the industrial alcohol market offset premium beverages revenue gains, MGP's bourbon and rye whiskeys delivered strong revenue growth throughout the year outperforming the continued steady growth of the bourbon category, and contributing to gains in MGP's gross profit. Over time, the continued shift towards beverage alcohol should provide MGP and our investors a more stable and profitable revenue stream. Our Premium Beverage Alcohol net sales grew by 14.5% for the year while Industrial Alcohol declined 21.9%. We remain pleased with the pace of our migration as premium beverage alcohol reached 66% of food grade alcohol sales for the year. This is up from 57% in 2015. As we've said in the past, we are putting away barrel whiskey inventory for our own use. In addition, to using it to support the development of our own brands, it may also be used to build strong strategic partnerships and to attract and retain new distillate customers. Due to the rapid growth of the bourbon category and the accelerated M&A activity in the industry, the demand for [whitely] aged whiskey been very strong. Because of the strong demand, we were able to begin leveraging limited sales of whitely aged whiskey inventory to support our strategy of building partnerships and attracting and retaining customers for our new distillates. Our ongoing strategy is to aggressively build our inventory of aged whisky and despite the sales we ended the year with over $50 million of inventory, up $22.7 million versus 2015. For competitive reasons, we do not share volumes, pricing or margin for specific product lines. With the projected impact of this activity is included in the guidance we have provided to investors today. With the shift in product mix towards higher margin premium beverage alcohol, full year segment gross profit grew to $56.8 million even as revenue declined. Gross margins improved to 21.4%, a 270 basis point expansion. Turning to Ingredients Solutions. The segment return to modest growth in the fourth quarter as sales gains in specialty wheat starches more than offset sales decline in commodity wheat starches and proteins versus the prior year period. While full year revenues declined 7.6%, gross profit grew by 7.3% to $8.4 million. Gross margin expanded 220 basis points driven by lower input cost and improved plan efficiencies, partially offset by lower selling prices. We continue our work to take full advantage of the macro trends benefiting this segment. For 2016, execution of our strategy drove improvements in gross profit, margins and operating income. That concludes my initial remarks. Let me now turn things over to Tom Pigott who will review the key metrics in numbers. Tom?

[Tom Pigott:]

Thanks Gus. As Gus discussed we had a strong gross profit performance for the quarter and the year. For the quarter, our consolidated net sales were relatively flat decreasing 40 basis points to $81.1 million. However, gross profit increased 11.6% to $17.6 million for the quarter driven by a 240 basis points improvement in gross margin. The margin growth was primary driven by the favorable mix Gus mentioned. For the year, consolidated net sales decreased 2.9% to $318.3 million; gross profit increased 11.5% to $65.3 million as gross margin expanded 260 basis points to 20.5%. Again the key driver of our margin growth was migration to higher margin products. We continue to invest for the future in SG&A. For the quarter, SG&A expense was up $1.3 million due to timing of the accrual for incentive compensation and increased in advertising promotion partially offset by declined in pension expense. For the full year 2016, SG&A was up $1 million primarily due to increased advertising and promotion, higher personnel cost and increased professional fees partially offset by a decrease in incentive compensation and severance cost. The strong gross profit performance contributed to a 5.2% increase in operating income for the quarter. For the year, on a GAAP basis, operating income increased 27.8% to $42 million. Of the 27.8%, 10.3 percentage points were driven by $3.4 million in other income recorded in the third quarter of 2016 from the insurance settlement and asset sale. Operating performance drove the remaining 17.5 percentage points of growth. Our ICP joint venture made an improved contribution of $1.8 million to this quarter's results and for the year equity earnings contributed $4 million, down from $6.1 million in 2015. Our full year tax rate was reduced to 30.3% down from 31.8% in the prior year. Net income for the fourth quarter increased 27.9% to $8.3 million and earnings per share increased 26.3% to $0.48. Net income for the full year increased 19.1% to $31.2 million and earnings per share increased 23% to $1.82 per share primarily driven by the strong operating performance over the full year. Our cash flow performance for the year was very good as we generated $19.7 million in operating cash flow, an increase of 5.7%. Within this result, we funded an increase in our MGP aged whiskey inventory of $22.7 million. In addition, this $19.7 million in operating cash flow more than funded our investing activities of $17.7 million. The investing activities included both the warehouse expansion program as well as the acquisition of George Remus brand. Overall MGP's balance sheet remains very solid, allowing us to continue to invest to grow as well as return funds to shareholders. Recently the Board authorized our first quarter dividend doubling amount to $0.04 per share. The Board views dividend is an important way to share the success of the company with shareholders. Going forward, MGP is providing the following guidance for fiscal 2017 and beyond. Reconfirming previous guidance, operating income is expected to grow between 10% and 15% annually from 2016 through 2018. This guidance excludes a favorable litigation settlement and asset sale gain recorded in the third quarter of 2016. Recognizing the difficulty of projecting three years in the future, our conservative estimate of growth in operating income in 2019 is 15% to 20% as sales of aged whiskey become a more significant factor. Modest growth is expected in net sales in 2017, subject to some volatility as the company continues to shift sales from industrial alcohol to beverage alcohol. 2017 gross margins are expected to continue to grow versus 2016. The 2017 effective tax rate is forecast to be 31%, and shares outstanding are expected to be approximately 16.8 million at year end. 2017 profitability for ICP remains exposed to the challenging and volatile conditions in the fuel ethanol industry. Let me now turn things back over to Gus for his concluding remarks.

[Gus Griffin:]

Thanks Tom. We've discussed in some detail how our overall strategy is advancing at MGP. We made substantial progress in 2016 and we believe that we enter 2017 strongly positioned for growth. We remained focused on our key strategies over the long term. And although we may experience quarter-to-quarter volatility, we remain confident that focus on these strategies will drive superior long-term shareholder returns. We are maximizing the value of our production by focusing on premium beverage alcohol and migrating away from the lower margin industrial alcohol. A key part of this continues migration will be attractive new customers for both our gin and vodka as well as for our new whiskey distillates. We are expanding our sales force to broaden our customer base. We have developed additional capabilities and have launched a new gin platform to help accelerate our customers MGP efforts. We made progress on capturing value share by introducing Till American Wheat Vodka and acquiring the George Remus brand. Till has already won five prestigious awards and we have expanded its initial distribution. We are very excited about the potential of George Remus brand and we'll be announcing expansion plans for it in the near future. We also added leadership and building our sales and marketing team to support our brand initiative. We invested to grow steadily executing our $29 million whiskey warehouse expansion plan and aggressively putting away whiskey. Our MGP aged whiskey inventory valued to cost has now reached $50.9 million. We implemented strong risk management programs, managing input cost to help expand our margin. And we continue to consistently build the MGP brand with all of our stakeholders. The results just reported underline our belief that these strategies position us for a long-term shareholder growth. That concludes our prepared remarks. Operator, we are ready to begin the question-and-answer portion of the call.

[Operator:]

[Operator Instructions] And our first question comes from Alex Fuhrman of Craig-Hallum Capital Group. Please go ahead.

[Alex Fuhrman:]

Great. Thank you for taking my question and congratulation on a quite 2016. I wanted to ask couple of things by looking at the operating income guidance over the next couple years and starting to see that bigger ramp that you are looking for in 2019. Can you give us a sense of how much aged product you have factored into that guidance over the next two years? And then as you talk about getting to more of a 15% to 20% EBIT growth rate in 2019, is that assume that you start selling aged product at roughly the rate call it $5 million or $6 million per quarter that you have been putting it away. Just wondering how we should try to think about those numbers here.

[Gus Griffin:]

Okay. So I'll take the aged whiskey piece then I'll turn it over to Tom to talk bit more about the guidance. I think it's important to understand we sold some aged this year. It was whitely aged, there were limited sales. So we still remain focused on both building our aged whiskey inventory over time and hoarding it to get the most value for it. But at the same time when attractive demand comes along that fits our strategic needs in terms of tracking and retaining customers for our new distillates and also make sense for us to do that. In terms of figuring out what we are going to put away -- what our put away rate is going to be for the long term, that's a little bit odd in science. Every year we get a little bit better view of market trends, a little bit better view of future demand. And then the actual rate we put away is going to be both influenced by our view of the projected long-term demand and the potential short-term sales of the whitely aged inventory. So we think it will continue to grow but maybe possibly at slower rate than it has.

[Tom Pigott:]

Yes. So, Alex, overall we do see a steady increase as the value that inventory grows up and that's factored into our guidance. Because of the dynamic nature of our customers' demand and the opportunities that presented to us, we don't want to get too specific in terms of what we provide you, given the nature of the situation but suffice it to say we are in the very early innings of this aspect of our strategy and we are sitting on a very valuable $50 million of inventory that we'll deploy over time. And that's all factored into our guidance. And certainly as we noted in the release, there is some conservatism as we get further out. But again it's dynamic and we don't want to put specific numbers out there at this stage in the process.

[Alex Fuhrman:]

That's helpful for us thinking about it. And then I was wondering if you could just put a little bit more context around the growth rate on the beverage alcohol side and obviously we don't have a lot of history on seeing that number reported. It obviously grew very nicely; it looks like 9% growth here in the first quarter but had been growing a little bit faster earlier in the year. Can you give us just a little bit more perspective on sort of the underlying growth rate that you've seen over the last couple of years in the beverage alcohol? And does that tend to be a number that can fluctuate a lot quarter-to-quarter given the timing of sales and the buying patterns of some of your customers being more of a B2B business, just wondering how we should think about that 9% growth for beverage in the fourth quarter? Do you guys feel that was a great number yourselves? And then as you look towards some type of revenue growth here in 2017, more or less what kind of a growth rate are you envisioning for the beverage part of the business which I would imagine you have a little bit more visibility into than the industrial part?

[Tom Pigott:]

Good -- overall we are pleased with the growth on the year and on the quarter. The thing you hit a little bit on it in your question there, there is timing of order in terms of when our -- since we are several steps move from the end consumer the actual revenue growth quarter from quarter can be lumpy in our business and the important thing also is that when we look at what we are wrapping around in Q4 of last year, premium beverage alcohol net sales were up 46%. So we had a very difficult comp period and so that's part of the reason why you don't see as big growth number as we reported in other quarters. But overall we feel confident that we'll continue to share and growing categories and drive strong revenue growth in premium beverage alcohol.

[Operator:]

Our next question comes from Bill Chappell of SunTrust. Please go ahead.

[Bill Chappell:]

Thanks. Good morning. Few questions. One just [Brown] formerly other day commented that there was slowdown in spirit overall in kind of the December quarter. They didn't really know why. You know if you are seeing that and then kind of if there as you look with your inventory build kind of what's your expectation for brown spirits in particular to grow over the next three four years as what you have take into account?

[Gus Griffin:]

Bill, we look at -- we always look at long-term trends. We are putting away whiskey for multiple years based on that so I think there was recent -- most recent 12 months Nielsen -- excuse me the most recent 12 weeks Nielsen for TDS was still up 2.9 but it declined versus the previous 12 weeks I guess. But what we'll get is total TDS for 2016 was up 4.5 and value in 2.4 in volume, bourbon were more exposed was up 7.7 in value and 6.8 in volume which are actually accelerations of the previous year and the five year CAGR. So I think another important thing to note is, it's also the seven straight year that spirits have taken share from beer. So that the underlying macro trends are very, very strong. I think it was also nice to see vodka rebound last year. And then also gin the total category was actually up just a little bit under 1%. So in terms of long-terms trends which what we really based our projections on and our investing on, I think we are seeing good, strong healthy trends and in particular it's great to see that acceleration in the bourbon category.

[Bill Chappell:]

Okay. And then on the inventory side have been, I understand you will continue to build but is this -- is 2017 kind of the last build year and then we would start to see it kind of in terms of what's on the balance sheet start to plateau and then pull down or could it continue to build into 2018?

[Gus Griffin:]

Yes. So for 2017 we -- you are right, we do expect it to continue to build, getting out further I think you will see it start to deploy more and that the level of increases moderate as that inventory becomes age and will sell but the overall balance will continue to grow in 2017.

[Bill Chappell:]

Okay. And last is on customers, can you just help clarify on white spirits both, have there been any major customer losses in the past couple of years? And then do you expect I think what you said was as refocusing the business yes so that you could get and go out and win new customers but that was longer timeframe do you expect or have you won any new business in recent that kind of helps that side of the business in 2017-2018?

[Gus Griffin:]

Yes. I think we are talking about beverage alcohol -- premium beverage alcohol now right Bill.

[Craig Bibb:]

Correct, yes, on vodka, gin.

[Gus Griffin:]

Yes. Over time, you heard me say before I think that on the whiskey side we've never lost a customer. On the vodka side, that's a much more different factors come in. It could be simply the brand changes where it is bottled and so they pull from a different source. But it's not an absolute when you hang on to these. But we have renewed our effort there to -- it is part of the overall migration plan from industrial alcohol to premium beverage alcohol. So we have renewed our commitment to the beverage alcohol. The GNS and segment and we've expanded our capabilities. We are putting more bigger sales effort against it. So it would take a while. It's not going to be steady trend. This year we move from 57% to 66%. It is sort of comes as you win the business. But we think we are in both a better position to win new business, in a better position to hang on to our business in the white good space than we were in the past.

[Bill Chappell:]

Okay. Then actually one more on gross margin that was a lot better than I expected in the quarter despite the mix maybe in little bit different. How is that -- is commodities in just favorable and kind of the outlook as we go into 2017 there?

[Tom Pigott:]

Yes. So, yes, you are right Bill on the quarter we did have some commodity favorability. But that was largely offset by some lower average pricing both in industrial and some of our premium beverage contracts that fluctuate with the commodity. So the commodity favorability received was broadly offset by the lower average pricing. And overall we see commodities being right now slightly favorable year-over-year. And but again a lot of our pricing mechanism is try to neutralize the impact the commodities throughout the year.

[Operator:]

Our next question comes from Francesco Pellegrino of Sidoti and Company. Please go ahead.

[Francesco Pellegrino:]

Good morning, guys. So just for self I really appreciate the greater transparency that you guys are giving into the food grade alcohol. I noticed that you gave year-over-year numbers. Can we get maybe half premium beverage alcohol revenue for the first half of 2016 and the second half of 2016 or even quarterly, just so we have a little bit more transparency for what's company reports going forward?

[Tom Pigott:]

Yes. So in our 10-K we have given it to you for each year and I think based on the two quarters you can impute some of those numbers and we'll certainly try to provide more in our disclosures going forward to help you out.

[Francesco Pellegrino:]

Okay. But maybe we can touch base about that offline because as they forecast going forward, I just think about the ramp in growth that the company is going to be experiencing. Just having that ahead of time would be helpful but that's okay. So one of the other things that I want to ask you about was, what's up with related party purchase sequentially speaking from 3Q to 4Q and the jump that we saw.

[Tom Pigott:]

Yes, overall, so the related party transactions are us buying industrial alcohol to support our customers from ICP which is a joint venture in Pekin and basically they supplement our industrial alcohol business. Now from quarter-to-quarter there different times when [Akson] is running pretty full and they can supplement our capabilities there especially as we migrate to premium beverage alcohol with that facility. So that you will see some volatility in those transactions but overall the strategy is to slowly migrate away from the industrial alcohol side of the business and focus on the premium beverage alcohol.

[Francesco Pellegrino:]

What's interesting about it though is if the industrial market is so bad and then sequentially speaking you have the huge uptick in related party purchases and it flows through to the income statement a really large what was it a $1.7 million difference year-over-year and related [Multiple Speakers]

[Tom Pigott:]

But I would tell is that from time to time there is an opportunity to make some margin on that business and supplement our customers demand, so you'll see some ups and downs in those figures.

[Francesco Pellegrino:]

Okay. If we are going to be seeing ups and downs in those figures, why is the company been restating the related party purchases for the past year?

[Tom Pigott:]

So well couple of things. One, what I want to explain is that the sales are reported on the front of our income statement our sales to customers and then what's in footnote three is our purchase for ICP. So those two numbers won't be the same because we are carrying inventory. And then on the second, the second point is from time to time we'll go through and we might see a transaction that may not have been picked up in our SAP query and if we see that we always do correct it. None of the corrections are material or have any significant impact on our business.

[Francesco Pellegrino:]

Okay. Changing gear for a minute. So all the CapEx spending that you guys have been investing within distillery segment. When should we start to be anticipating or expensing this is or realizing the growth and depreciation going forward?

[Tom Pigott:]

So overall the capital plan, we have our expansion plan is $29 million program and it's in place to allow us to store more aged whiskey going forward. The plan as well as expected to be complete in 2018. Now as each, we have the plan has several warehouses attributed to it so each warehouse is completed, it's capitalized and included into our results. So over time you will see that start to appear in depreciation expense. Now that said, there have been some assets that rolled off and so you do have kind of in and out on that line in the P&L.

[Francesco Pellegrino:]

Okay. And just my last question. So when you guys give guidance like you guys always said aggressive guidance and to be honest with you, you always come in and just exceed expectations for I guess the expectations that you set for yourself. So I am not really concerned about like the long-term guidance that you guys have provided us with, but more concerned about just where the overall industry is going for some of these out years. And when you just look at where annual bourbon barrel sales were last year like around like a million barrels but 1.9 million barrels were produced last year. There is 6.7 million barrels of total inventory of bourbon in Kentucky. I just see this massive inventory build for the industry. I know if something that if works out well for you guys are going to be doing it extremely well on the margin side. But it just seems if we are sitting on this snow ball or this ticking time bomb where eventually supply could eventually crush demand and it just seems that we have all these indicators right now where production is and production is so far ahead of demand that it just seems as if -- it's becoming more of a concern than this lucrative opportunity. And just a little bit of color or push back on that.

[Gus Griffin:]

Sure. This is Gus. Let me address that. First of all, you have to remember that people are -- the production should be four more years ahead of demand, okay. Because if you have growing-- ever growing category you are putting down to meet the demand in four years or more. That's the first thing. Second I think you probably heard me talk about my theories on the growth -- the strength of the growth of the bourbon category, not only the strength of that trend but the longevity of that trend. So we saw today, I gave you some numbers that five year CAGR and last year I think we are about 5% and in 2016 the growth rate was 6.8% in volume. So the trend is actually accelerating. We think this is a decade's quarrel, long trend for several reasons. I think another piece of data that we just released was the export volume for bourbon was up over 10%. So one of the things that are going to drive the bourbon category long term is international expansion. And to see that up 10% obviously much faster than it's growing in the US. So it's another reason we think it's going to go on for the long term. And then finally just getting to us as a company, one of the reasons we are growing faster than the category is we've a very diverse portfolio of customers. And we are more broadly exposed to the fastest growing categories and the fastest growing segments.

[Operator:]

Our next question comes from Jon Braatz of Kansas City Capital. Please go ahead.

[Jon Braatz:]

Good morning, Gus. Good morning, Tom. Just little clarification, in the fourth quarter here you sold some premium aged whiskey. Was that something that arose just because of market circumstances or is it sort of changes now that over the next couple years you will be selling a little bit more aged whiskey? And if that's the case and your guidance basically remains the same, is the offset to that higher expense is associated with building your branded volume in the let say vodka, whiskey and gin?

[Gus Griffin:]

Jon, this is Gus. So let me talk a little bit about the sale of aged. First of all, these are limited sales and it was whitely aged, most of this product was a year old and that really comes about because of the strength of the growth of the category but also the M&A activity. So you had new buyers buying brands who had even more aspirational growth than the sellers and might have had holes in their inventory that they want to fill. Where it plays out for us is we wanted to make sure that we partnered with our customers and selling this whitely aged product is a way to help them and help us retain customers and attract new customers. So strategically it makes a lot of sense for us. And it's also very profitable. In terms of -- Tom, you want to talk about where it is in our guidance.

[Tom Pigott:]

Yes. So keep in mind the guidance Jon is up, we over delivered 2016 so we offer higher base and certainly there is some contemplation of aged inventory as well in investment and brand tucked into the guidance at this point. So, yes, both factors are built into what we are projecting out in the future.

[Gus Griffin:]

Sorry Jon. I just make sure there is no misunderstanding, our long-term strategy hasn't changed. So we even know we are selling, made some limited sales of white whiskey I mean slightly aged whiskey and might make them in the future. We are still investing to build that asset over the long term just as we will be investing to build our brands over long term.

[Jon Braatz:]

Is some of the aged whiskey that you are selling to one year old whiskey, is that at prices that you would not have expected earlier and that it was such good deal that you couldn't pass up?

[Gus Griffin:]

I think they were certainly good prices and they are certainly nothing that is both from those sales and other things we've seen in the market, nothing that has in anyway lessened our belief in the value of the return on aging whiskey is a long term. But it really goes back to it being a great strategic move for us in terms of building the partnerships and attracting and retaining customers for new distillates. So is really a way to strengthen -- as I have said before a way to strengthen our position in the market. We view that the aged whisky inventory as an asset and tool that we can use to strengthen our position and this was part of that plan.

[Jon Braatz:]

Okay. Looking ahead into 2017 in terms of your brand strategy, I feel you have the George Remus and you have [Metsus] and it sound like you are working on something in the gin area. Incrementally how much -- can you give us a sense how much additional cost investments, whatever you want to call it might be incurred in the development of the brand strategy?

[Tom Pigott:]

Yes, Jon, the strategy is internally phased and we've just hired a new VP of Brand, Andy Mansinne and he is working through what the appropriate rollout strategies and investments we need to make. So we don't want to give specific numbers out there but overall we see this is a longer term contribution to the company's results. In their early years, we are not anticipating sizeable returns from this but over the long term we think it's got a lot of potential.

[Gus Griffin:]

Let me just jump in and add to that. It is very much long term. Both the sales results and the investment results, we don't think would be big enough to breakout in the short term, but we are very pleased with the steps we are going through, the progress we are making and the plans we have and eventually they will fan out and we will break them out.

[Operator:]

Our next question comes from Howie Xia of BeaconLight Capital. Please go ahead.

[Howie Xia:]

Hi, good morning, Tom and Gus. I just want to understand the difference of the growth rate between the white goods and brown goods within the premium beverage alcohol segment and how big is that delta? Is one growing substantially faster than the other?

[Gus Griffin:]

We don't breakout growth rates or margins or pricing by any specific product line. So we want them altogether as premium beverage alcohol. I think you can look at the underlying category trends so you have bourbon growing of volume last year at 6.8, you have gin growing at little bit less than 1, you had vodka growing at I think 2.4. So obviously bourbon and again bourbon in this instance covers bourbon, rye and Tennessee Whiskey growing at an accelerated rate. And then as I said before, we have a very, very diverse customer portfolio. And so we are even -- we are really broadly exposed to the fastest growing segments and categories. That can give you some color there.

[Operator:]

This concludes our question-and-answer session. I'd like to turn the conference back over to Gus Griffin for any closing remarks.

[Gus Griffin:]

Thank you. Thank you all for your interest in our company. And we look forward to talking with you again after the first quarter.

[Operator:]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.