MGP Ingredients Q3 Earnings Beat, Growth Strategies Set in Motion
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MGP Ingredients, Inc. MGPI posted third-quarter 2024 results, wherein the top line met the Zacks Consensus Estimate, while the bottom line surpassed the same. However, the company’s sales and earnings decreased year over year.
The third-quarter performance is prompting strategic adjustments in response to softening trends in the American whiskey category and high barrel inventories. Plans for 2025 include lowering net aging whiskey put away, reducing whiskey production and optimizing the cost structure to address decreased production volumes, which are expected to significantly affect sales and profitability in the Distilling Solutions segment.
Despite these challenges, ongoing investments in the brand portfolio are anticipated to drive organic growth and strengthen the long-term competitive positioning of the brown goods business. Furthermore, stronger performance is expected in the Ingredient Solutions segment in 2025, even amid current transitory headwinds.
MGP Ingredients, Inc. Price, Consensus and EPS Surprise
MGP Ingredients, Inc. price-consensus-eps-surprise-chart | MGP Ingredients, Inc. Quote
MGPI’s Quarterly Performance: Key Insights
MGPI posted adjusted earnings of $1.29 per share, which surpassed the Zacks Consensus Estimate of $1.27. However, the bottom line decreased from $1.34 in the year-ago quarter.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Total sales of $161.5 million decreased 23.7% year over year. Excluding the impact of the Atchison distillery, total sales declined 14% year over year. This reflects lower sales in each of the three operating segments.
Gross profit was $65.8 million, down 10.4% year over year. We note that the adjusted gross margin increased 30 basis points (bps) year over year to 40.8%, mainly due to significant margin growth in the Branded Spirits segment.
Advertising and promotion expenses rose 1.5% year over year to $9.6 million. Corporate selling, general, and administrative (SG&A) expenses decreased 20.2% year over year to $17.2 million.
Adjusted EBITDA was $45.7 million, down 8.8% year over year. The company’s adjusted EBITDA margin increased 460 bps year over year to 28.3%.
MGP Ingredients’ Q3 Segmental Details
Sales for the Zacks Rank #5 (Strong Sell) company’s Distilling Solutions segment fell 36% year over year to $71.9 million. Excluding the impact of the Atchison distillery, the segment’s sales declined 18%, primarily due to a 22% drop in brown goods sales, which included lower sales of aged and new distillates. Reported segment gross profit decreased 14% year over year to $28.6 million.
Sales in the Branded Spirits segment decreased 6% year over year to $62.6 million, mainly due to a decline in sales from the mid and value-priced portfolio. However, premium plus sales increased 1% as the company continued to implement targeted initiatives in the American whiskey and tequila categories. Gross profit for Branded Spirits rose 12% to $32.4 million.
The Ingredient Solutions segment experienced an 18% decrease in sales, totaling $26.9 million, primarily due to the ongoing impact of a stronger U.S. dollar on its specialty protein sales as well as reduced sales volume of commodity wheat starches amid heightened domestic competition.
Gross profit fell 57.5% to $4.7 million. Excluding the effects of the Atchison distillery and the related intercompany credit for the waste starch slurry by-product, gross profit decreased to $4.7 million from $9.4 million in the third quarter of 2023.