Mgp Ingredients, Inc. · NASDAQ:MGPI
Mgp Ingredients — Merger or Acquisition (January 2021)
31 slides from Mgp Ingredients's merger presentation, Jan 25, 2021
Slide 1: MGP Ingredients Announces Definitive Merger Agreement with Luxco, Inc.
INVESTOR PRESENTATION MGP Ingredients, Inc. Announces Definitive Merger Agreement with Luxco, Inc. January 25th 2021
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Certain of the comments made in this presentation and in the question and answer session that follows may contain forward-looking statements in relation to operations, financial condition and operating results of MGP Ingredients, Inc., and Luxco, Inc. and its affiliates (“
Slide 3: Today's Presenters
Brandon Gall Vice President of Finance and Chief Financial Officer TODAY’S PRESENTERS Dave Colo President and Chief Executive Officer 3
Slide 4: Agenda for Today's Discussion
AGENDA FOR TODAY’S DISCUSSION A. Transaction Summary B. MGP Overview and Strategic Priorities C. Financial Highlights D. Q&A
Slide 5: Transaction Summary
TRANSACTION SUMMARY
Slide 6: Transaction Summary
TRANSACTION SUMMARY ■ MGP Ingredients, Inc. (“MGP” or the “Company”) announces Definitive Merger Agreement with Luxco for $475 MM1 ̶ Luxco is a leading branded beverage alcohol company across various categories with 60+ years of heritage ̶ Purchase price represents 16.9x LTM Oct 2020 Adjusted EBITDA
Slide 7: Luxco Overview
LUXCO OVERVIEW Company Overview ■ Formed in 1958 when Paul A. Lux and David Sherman Sr. established the David Sherman Corporation (“DSC”), which has since grown into a producer, bottler, importer and marketer of a broad portfolio of well-known spirits brands ̶ David Sherman was bought out by the Lux
Slide 8: Luxco Brand Portfolio
Focus Brands (~46% of LTM Oct 2020 Net Revenue) Select Other Brands (~54% of LTM Oct 2020 Net Revenue) LUXCO BRAND PORTFOLIO Established portfolio with a strategic approach to growing high potential, high margin Focus Brands 8 BOURBON TEQUILA IRISH WHITE SPIRITS BOURBON TEQUILA IRISH WHITE SPIRITS C
Slide 9: Luxco Operational Footprint and Sales Network
LUXCO OPERATIONAL FOOTPRINT AND SALES NETWORK Platform with extensive operational capabilities and comprehensive national sales footprint Operational Capabilities Bottling / Blending Various bottling lines with cream, spirits and RTD processing capabilities National Sales Platform All Others: 10 Mar
Slide 10: Luxco Financial Overview
LUXCO FINANCIAL OVERVIEW Adjusted Shipment Volume1 (MM 9-Liter Cases) Adjusted Net Revenue1 ($MM) Adjusted Gross Profit1 ($MM) and Margin (%) Adjusted EBITDA1 ($MM) and Margin (%) Stable and cash generative business with track record of consistent performance. Margin improvement driven by operationa
Slide 11: Transaction Rationale
TRANSACTION RATIONALE The proposed transaction is attractive and consistent with MGP’s strategy Provides immediate scale and infrastructure to MGP’s Branded Spirits business Experienced team to support long-term growth Financially attractive combination Significant diversification into higher value-
Slide 12: Significant Diversification into Higher Value-Added Products
SIGNIFICANT DIVERSIFICATION INTO HIGHER VALUE-ADDED PRODUCTS 1 White Goods: Vodka White Goods: Gin Brown Goods: New Distillate Whiskey Industrial Alcohol Branded Spirits Products Brown Goods: Aged Whiskey Move Up the Gross Profit Ladder MGP Portfolio Diversification Transaction is consistent with MG
Slide 13: Provides Immediate Scale and Infrastructure to MGP's Branded Spirits Business
PROVIDES IMMEDIATE SCALE AND INFRASTRUCTURE TO MGP’S BRANDED SPIRITS BUSINESS 2 Luxco provides MGP’s branded spirits business with a step change in scale and a stable platform for future growth Established Branded Spirits Platform Proven Brand Building Capability TRACK RECORD OF DEVELOPING INNOVATIV
Slide 14: Experienced Team to Support Long-Term Growth
David Bratcher – President of Luxco Appointed to current role in 2013 ‒ Oversees all day-to-day business of Luxco, including sales, marketing, operations, IT and finance Luxco team to remain involved and continue to drive the performance of the business Donn Lux – Chairman of Luxco Longstanding
Slide 15: Additional Upside from Potential Cost and Revenue Synergies
ADDITIONAL UPSIDE FROM POTENTIAL COST AND REVENUE SYNERGIES 4 15 Revenue Synergies Cost Synergies ■ Incremental sales by expanding MGP brands through Luxco’s distribution channel ■ Incremental sourced sales due to addition of Luxco bottling capabilities ■ Back office functions and warehousing saving
Slide 16: Financially Attractive Combination
16.2% 2019 FINANCIALLY ATTRACTIVE COMBINATION5 Enhances Profitability and Improves Cash Flow G ro ss M ar gi n E B IT D A M ar gi n Transaction generates value for MGP’s shareholders across a range of metrics 21.1% 2019 FC F C on ve rs io n 1 71.6% 2019 1. FCF Conversion calculated as (EBITDA – Cape
Slide 17: MGP Overview and Strategic Priorities
MGP OVERVIEW AND STRATEGIC PRIORITIES
Slide 18: Mission Statement
MISSION STATEMENT Secure our future by consistently delivering superior financial results by more fully participating in all levels of the alcohol and food ingredients segments for the betterment of our shareholders, employees, partners, consumers and communities. 18
Slide 19: MGP Strategy
Capitalize on unique expertise within Ingredient Solutions Maintain conservative capital structure, disciplined approach to M&A and focus on shareholder value creation Focus on maintaining and strengthening the core business units 5 1 Develop and expand Branded Spirits platform 4 Explore additional
Slide 20: MGP Overview
■ Leading supplier of distilled spirits, facilitating the creation of bourbons, rye whiskeys, distilled gins and vodkas ■ Continued strategic position within MGP as legacy producer of food grade alcohol ■ Capacity and capability provide key competitive advantage ■ Shifting business mix towards highe
Slide 21: Expansive Brand Family
EXPANSIVE BRAND FAMILY Highly complementary fit between Luxco brands and MGP’s premium spirits portfolio REMUS VOLSTEAD RESERVE Straight Bourbon whiskey SRP: $199.99 REMUS REPEAL RESERVE Straight Bourbon whiskey SRP: $84.99 ROSSVILLE UNION Barrel Proof Straight Rye Whiskey SRP: $69.99 GREEN HAT Dist
Slide 22: Financial Highlights
FINANCIAL HIGHLIGHTS
Slide 23: Financing Overview
FINANCING OVERVIEW Prudent transaction financing with subsequent deleveraging anticipated Transaction Financing Summary Credit Highlights • Anticipated financing is expected to be comprised of $246MM drawn on the existing revolving credit facility and assumed debt, and $238MM common equity issuance
Slide 24: Combined Financial Highlights
COMBINED FINANCIAL HIGHLIGHTS Illustrative overview of MGP financials and reporting segments (pre-synergies) Pro Forma 24 ($MM) DISTILLERY PRODUCTS BRANDED SPIRITS INGREDIENT SOLUTIONS PF MGP (Combined) MGP (Standalone) 2019A PF Net Sales $294.2 $185.7 $65.5 $545.5 $362.7 % of Total Net Sales 53.9%
Slide 25: Concluding Remarks
CONCLUDING REMARKS The combination with Luxco is in line with the core MGP strategy and represents an important step for the business Operational Financial Strategic ■ Meaningful branded spirits business which provides scale and infrastructure to MGP ■ Vertical integration opportunities with white g
Slide 26: Q&A
Q&A
Slide 27: Appendix
APPENDIX
Slide 28: Transaction Sources & Uses
TRANSACTION SOURCES & USES Sources & Uses ($MM) Financing Overview ■ $246MM drawn on the existing revolving credit facility and assumed debt ̶ Full $300MM currently available from the credit facility with $100MM incremental accordion feature ■ 5.0MM1 shares of common stock issued to sellers 28 Sourc
Slide 29: Reconciliation of GAAP to Non-GAAP
RECONCILIATION OF GAAP TO NON-GAAP 291. Adjustments relate to exceptional items, impact from MGP ownership, COVID impact and others. 1 Luxco Reconciliation of GAAP to Non GAAP Measures (Unaudited) (Dollars in Thousands) 2018 2019 LTM Oct-20 Net Income $6,862 $7,380 $24,188 % of Revenue 4.0% 4.0% 12.
Slide 30: Reconciliation of GAAP to Non-GAAP (Cont'd)
RECONCILIATION OF GAAP TO NON-GAAP (CONT’D) 30 MGP Reconciliation of GAAP to Non GAAP Measures (Dollars in Thousands) 2019 Net Income $38,792 % of Revenue 10.7% Income Tax Expense $7,144 Net Interest (Income) / Expense, Non-Operating Items $1,305 EBIT $47,241 % of Revenue 13.0% Depreciation & Amorti
Slide 31: Reconciliation of GAAP to Non-GAAP (Cont'd)
RECONCILIATION OF GAAP TO NON-GAAP (CONT’D) 31 (Dollars in Thousands) 2019 PF Combined Net Income $46,172 % of Revenue 8.5% Income Tax Expense $7,763 Net Interest (Income) / Expense $4,739 PF Combined EBIT $58,673 % of Revenue 10.8% PF Combined Depreciation & Amortization $20,930 PF Combined EBITDA
MGP Ingredients — Merger or Acquisition (January 2021) on 6ix