Financial results and full-year guidance in
line with recently announced preliminary update
MGP Ingredients, Inc. (Nasdaq: MGPI), a leading provider
of branded and distilled spirits and food ingredient solutions,
today reported results for the third quarter ended September 30,
2024.
“Our third quarter performance was in line with the preliminary
results we provided on October 17. In response to the softening
American whiskey category trends and elevated industry-wide barrel
inventories, in 2025 we plan to further lower our net aging whiskey
put away, scale down our whiskey production, and optimize our cost
structure to mitigate lower production volumes. While current
market dynamics will likely have an even greater impact on our
Distilling Solutions segment sales and profitability in 2025, we
believe that these actions will strengthen the long-term
competitive positioning of our brown goods business. Over the
longer term, we remain confident in our Distilling Solutions
business as our whiskey inventories remain an important part of the
still expanding American whiskey category,” said David Bratcher,
CEO and president of MGP Ingredients.
He added, “We are pleased with our progress towards becoming a
premier branded spirits company. Though further inventory
tightening is a headwind in the near term, we expect our continued
investments behind our brands portfolio to deliver attractive
organic growth. In addition, we expect our Ingredient Solutions
segment to have a stronger 2025 despite current transitory
headwinds.”
2024 third quarter financial highlights compared to 2023
third quarter:
- Consolidated sales decreased 24% to $161.5 million. Excluding
the impact of the Atchison distillery, consolidated sales decreased
by 14%.
- Net income increased 82% to $23.9 million. Adjusted net income
decreased 5% to $28.8 million. Net income margin increased 860
basis points to 14.8%. Adjusted net income margin increased by 350
basis points to 17.8%.
- Basic earnings per common share (“EPS”) increased to $1.07 per
share from $0.59 per share. Adjusted basic EPS decreased 5% to
$1.29 per share from $1.36 per share.
- Consolidated gross profit decreased 10% to $65.8 million. Gross
margin increased by 610 basis points to 40.8%. Excluding the impact
of the Atchison distillery, adjusted gross margin increased 30
basis points to 40.8% largely due to higher Branded Spirits
margins.
- Adjusted EBITDA decreased 9% to $45.7 million. Adjusted EBITDA
margin increased by 460 basis points to 28.3%.
- Capital expenditures were $44 million year-to-date.
- Net debt leverage ratio stands at approximately 1.3x as of
September 30, 2024.
Consolidated Results
In the third quarter 2024, excluding the impact of the Atchison
distillery, consolidated sales decreased by 14% year over year,
reflecting lower sales in all three operating segments.
Consolidated gross profit decreased 10% to $65.8 million,
representing 40.8% of sales. Excluding the impact of the Atchison
distillery, third quarter 2024 consolidated gross margin improved
approximately 30 basis points from the prior year period primarily
reflecting strong margin expansion in the Branded Spirits segment.
Third quarter 2024 operating income and diluted EPS increased 64%
and $0.49 to $32.6 million and $1.07 per share, respectively. On an
adjusted basis, operating income decreased 9% to $39.0 million and
diluted EPS decreased by 4% to $1.29.
Distilling Solutions
For the third quarter 2024, Distilling Solutions segment sales
decreased 36% to $71.9 million. Excluding the impact of the
Atchison distillery, segment sales decreased 18% to $71.9 million
mainly due to the 22% decline in brown goods sales, including lower
aged and new distillate sales. Segment gross profit, as reported,
decreased to $28.6 million, or 39.8% of sales, compared to $33.3
million, or 29.8% of segment sales, in the third quarter 2023.
Branded Spirits
Branded Spirits segment third quarter 2024 sales decreased 6% to
$62.6 million, driven primarily by the decline in mid and value
priced portfolio sales. Premium plus sales grew 1% as we continue
to execute focused initiatives across the American whiskey and
tequila categories. Branded Spirits gross profit increased by 12%
to $32.4 million, or 51.8% of segment sales, compared to $29.0
million, or 43.5% of segment sales, in the prior year period.
Ingredient Solutions
Ingredient Solutions segment sales decreased 18% to $26.9
million primarily due to the stronger U.S. dollar's continued
impact on our specialty protein sales as well as decreased sales
volume of commodity wheat starches due to increased domestic
competition. Gross profit decreased to $4.7 million, or 17.6% of
segment sales, compared to $11.1 million, or 33.8% of segment
sales, in the third quarter 2023. Excluding the impact of the
Atchison distillery and the associated intercompany credit for the
waste starch slurry by-product, gross profit decreased to $4.7
million compared to $9.4 million in the third quarter 2023.
Additional Highlights
Advertising and promotion expenses increased 1% to $9.6 million
as compared to the third quarter 2023.
Corporate selling, general, and administrative (“SG&A”)
expenses for the third quarter 2024 decreased $4.4 million, or 20%,
to $17.2 million as compared to the third quarter 2023.
During the third quarter 2024, the fair value of the contingent
consideration liability related to the Penelope acquisition
increased by $2.2 million compared to the third quarter of
2023.
The corporate effective tax rate for the third quarter 2024 was
24.0%, compared with 25.0% from the year ago period.
2024 Financial Outlook
MGP reaffirmed its recently revised consolidated guidance for
fiscal 2024:
- Sales in the range of $695 million to $705 million, following
the closure of the Atchison distillery in December 2023.
- Adjusted EBITDA in the range of $196 million to $200 million,
inclusive of the add back of share-based compensation expense.
- Adjusted basic EPS in the $5.55 to $5.65 range, with
approximately 22.1 million basic weighted average shares
outstanding at the year end and effective tax rate of approximately
24%.
- Full year capital expenditures of $78 million.
As is customary, we will share our 2025 financial outlook with
our fourth quarter 2024 earnings release; however, we will provide
additional commentary on our 2025 outlook in our conference call
discussing our third quarter results.
Conference Call and Webcast Information
MGP Ingredients will host a conference call today, October 31,
2024, at 10 a.m. ET to discuss these results and current business
trends. Investors can dial 844-308-6398 or 412-717-9605
(international) to listen to the live call. A live webcast will be
available at “News and Events” section of the company’s Investor
Relations website at ir.mgpingredients.com/news-events. A replay of
the conference call will be available on the company’s website.
About MGP Ingredients, Inc.
MGP Ingredients, Inc. (Nasdaq: MGPI) is a leading producer of
premium branded and distilled spirits, as well as food ingredient
solutions. Since 1941, we have combined our expertise and energy
aimed at formulating excellence, bringing product ideas to life
collaboratively with our customers.
As one of the largest distillers in the U.S., MGP’s offerings
include bourbon and rye whiskeys, gins, and vodkas, which are
created at the intersection of science and imagination, for
customers of all sizes, from crafts to multinational brands. With
distilleries in Kentucky and Indiana, and bottling operations in
Missouri, Ohio, and Northern Ireland, MGP has the infrastructure
and expertise to create on any scale.
MGP’s branded spirits portfolio covers a wide spectrum of brands
in every segment, including iconic brands from Luxco, which was
founded in 1958 by the Lux Family. Luxco is a leading producer,
supplier, importer, and bottler of beverage alcohol products. Our
branded spirits mission is to meet the needs and exceed the
expectations of consumers, associates, and business partners.
Luxco’s award-winning spirits portfolio includes well-known brands
from four distilleries: Bardstown, Kentucky-based Lux Row
Distillers, home of Ezra Brooks, Rebel, Blood Oath, David
Nicholson, and Daviess County; Lebanon, Kentucky-based Limestone
Branch Distillery, maker of Yellowstone Kentucky Straight Bourbon
Whiskey, Minor Case Straight Rye Whiskey, and Bowling & Burch
Gin; Jalisco, Mexico-based Destiladora González Lux, producer of
100% agave tequilas, El Mayor, Exotico, and Dos Primos; and the
historic Ross & Squibb Distillery in Lawrenceburg, Indiana,
where Penelope Bourbon, Remus Straight Bourbon Whiskey, and
Rossville Union Straight Rye Whiskey are produced. The innovative
and high-quality brand portfolio also includes Everclear Grain
Alcohol, Pearl Vodka, Green Hat Gin, Saint Brendan’s Irish Cream,
The Quiet Man Irish Whiskey, and other well-recognized brands.
In addition, our Ingredient Solutions segment offers specialty
proteins and starches that help customers harness the power of
plants and provide a host of functional, nutritional, and sensory
benefits for a wide range of food products.
The transformation of American grain into something more is in
the soul of our people, products, and history. We’re devoted to
unlocking the creative potential of this extraordinary resource.
For more information, visit mgpingredients.com.
Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including without limitation statements about the plans of
MGP Ingredients, Inc. (the “Company” or “MGP”) to lower put away,
scale down production, and optimize its cost structure; the
Company’s sales, profitability, competitive positioning, and
confidence in its business; whiskey category expansion; the
Company’s ability to transition to becoming a branded spirits
company, to grow, and to have a stronger 2025; and the Company’s
2024 outlook, including its expectations for sales, adjusted
EBITDA, adjusted EPS, shares outstanding, tax rate, and capital
expenditures. Forward looking statements are usually identified by
or are associated with words such as “intend,” “plan,” “believe,”
“estimate,” “expect,” “anticipate,” “project,” “forecast,”
“hopeful,” “should,” “may,” “will,” “could,” “encouraged,”
“opportunities,” “potential,” and similar terminology. These
forward-looking statements reflect management’s current beliefs and
estimates of future economic circumstances, industry conditions,
Company performance, Company financial results, and Company
financial condition and are not guarantees of future
performance.
All forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially.
Factors that could cause actual results to differ materially from
our expectations include without limitation any effects of changes
in consumer preferences and purchases and our ability to anticipate
or react to those changes; our ability to compete effectively;
damage to our reputation or that of any of our key customers or
their brands; failure to introduce successful new brands and
products or have effective marketing or advertising; changes in
public opinion about alcohol or our products; our reliance on our
distributors to distribute our branded spirits; our reliance on
fewer, more profitable customer relationships; interruptions in our
operations or a catastrophic event at our facilities; decisions
concerning the quantity of maturing stock of our aged distillate;
warehouse expansion issues; our reliance on a limited number of
suppliers; work disruptions or stoppages; climate change and
measures to address climate change; our closure of our Atchison,
Kansas distillery; regulation and taxation and compliance with
existing or future laws and regulations; tariffs, trade relations,
and trade policies; excise taxes, incentives and customs duties;
our ability to protect our intellectual property rights and defend
against alleged intellectual property rights infringement claims;
failure to secure and maintain listings in control states; labeling
or warning requirements or limitations on the availability of our
products; product recalls or other product liability claims;
anti-corruption laws, trade sanctions and restrictions; class
action or other litigation; higher costs or the unavailability and
cost of raw materials, product ingredients, energy resources, or
labor; failure of our information technology systems, networks,
processes, associated sites, or service providers; acquisitions and
potential future acquisitions; interest rate increases; reliance on
key personnel; commercial, political, and financial risks;
covenants and other provisions in our credit arrangements;
pandemics or other health crises; ability to pay any dividends;
limited rights of common stockholders and anti-takeover provisions
in our governing documents; the impact of issuing shares of our
common stock; and the effectiveness or execution of our strategic
plan. For further information on these risks and uncertainties and
other factors that could affect the Company’s business, see the
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” sections of the
Company’s Annual Report on Form 10-K for the year ended December
31, 2023 and its Quarterly Reports on Form 10-Q for the quarter
ended March 31, June 30, and September 30, 2024, as well as the
Company’s other SEC filings. The Company undertakes no obligation
to update any forward-looking statements or information in this
press release, except as required by law.
Non-GAAP Financial Measures
In addition to reporting financial information in accordance
with U.S. GAAP, the Company provides certain non-GAAP financial
measures that are not in accordance with, or alternatives for,
GAAP. In addition to the comparable GAAP measures, the Company has
disclosed measures excluding the impact of the Atchison distillery,
adjusted operating income, adjusted income before income taxes,
adjusted net income, adjusted net income margin, adjusted MGP
earnings, adjusted EBITDA, adjusted EBITDA margin, net debt, net
debt leverage ratio, and adjusted basic and diluted EPS, as well as
guidance for adjusted EBITDA and adjusted basic EPS. The
presentation of these non-GAAP financial measures should be
reviewed in conjunction with operating income, income before income
taxes, net income, net income used in earnings per common share
calculation, debt, and basic and diluted EPS computed in accordance
with U.S. GAAP and should not be considered a substitute for the
GAAP measure. We believe that the non-GAAP measures provide useful
information to investors regarding the Company's performance and
overall results of operations. In addition, management uses these
non-GAAP measures in conjunction with GAAP measures when evaluating
the Company’s operating results compared to prior periods on a
consistent basis, assessing financial trends, and for forecasting
purposes. Non-GAAP financial measures may not provide information
that is directly comparable to other companies, even if similar
terms are used to identify such measures. The attached schedules
provide a full reconciliation of historical non-GAAP financial
measures to the most directly comparable U.S. GAAP financial
measure. Full year 2024 guidance measures of adjusted EBITDA and
adjusted basic EPS are provided on a non-GAAP basis without a
reconciliation to the most directly comparable GAAP measures
because the Company is unable to predict with a reasonable degree
of certainty certain items contained in the GAAP measures without
unreasonable efforts. Such items include without limitation,
acquisition related expenses, restructuring and related expenses,
and other items not reflective of the Company's ongoing
operations.
MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (UNAUDITED)
(Dollars in thousands, except share and
per share amounts)
Quarter Ended September
30,
Year to Date Ended September
30,
2024
2023
2024
2023
Sales
$
161,461
$
211,624
$
522,829
$
621,635
Cost of sales
95,646
138,176
310,987
402,068
Gross profit
65,815
73,448
211,842
219,567
Advertising and promotion expenses
9,647
9,505
29,995
25,877
Selling, general, and administrative
expenses
17,204
21,570
60,942
65,615
Impairment of long-lived assets and
other
—
18,334
137
18,334
Change in fair value of contingent
consideration
6,400
4,200
15,900
4,200
Operating income
32,564
19,839
104,868
105,541
Interest expense, net
(2,174
)
(2,353
)
(6,398
)
(4,630
)
Other income (expense), net
1,026
(25
)
1,917
5
Income before income taxes
31,416
17,461
100,387
100,916
Income tax expense
7,554
4,373
23,924
24,832
Net income
23,862
13,088
76,463
76,084
Net loss attributable to noncontrolling
interest
43
123
162
324
Net income attributable to MGP
Ingredients, Inc.
23,905
13,211
76,625
76,408
Income attributable to participating
securities
(257
)
(129
)
(828
)
(760
)
Net income used in earnings per common
share calculation
$
23,648
$
13,082
$
75,797
$
75,648
Weighted average common shares
Basic
22,069,885
22,066,159
22,110,315
22,056,270
Diluted
22,069,885
22,381,516
22,110,315
22,207,031
Earnings per common share
Basic
$
1.07
$
0.59
$
3.43
$
3.43
Diluted
$
1.07
$
0.58
$
3.43
$
3.41
MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in thousands)
September 30, 2024
December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents
$
20,772
$
18,388
Receivables, net
130,436
144,286
Inventory
372,153
346,853
Prepaid expenses
4,692
3,580
Refundable income taxes
3,955
1,190
Total current assets
532,008
514,297
Property, plant, and equipment
533,386
489,646
Less accumulated depreciation and
amortization
(241,243
)
(227,343
)
Property, plant, and equipment,
net
292,143
262,303
Operating lease right-of-use assets,
net
14,910
13,975
Investment in joint ventures
6,643
5,197
Intangible assets, net
269,265
271,706
Goodwill
321,544
321,544
Other assets
4,106
3,326
TOTAL ASSETS
$
1,440,619
$
1,392,348
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current Liabilities:
Current maturities of long-term debt
$
6,400
$
6,400
Accounts payable
53,717
73,594
Federal and state excise taxes payable
2,482
2,251
Accrued expenses and other
19,739
31,861
Total current liabilities
82,338
114,106
Long-term debt, less current
maturities
87,784
85,305
Convertible senior notes
195,784
195,544
Long-term operating lease liabilities
11,688
11,292
Contingent consideration
85,100
69,200
Other noncurrent liabilities
3,053
4,763
Deferred income taxes
61,987
63,071
Total liabilities
527,734
543,281
Total equity
912,885
849,067
TOTAL LIABILITIES AND TOTAL
EQUITY
$
1,440,619
$
1,392,348
MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
(Dollars in thousands)
Year to Date Ended September
30,
2024
2023
Cash Flows from Operating Activities
Net income
$
76,463
$
76,084
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
16,298
16,272
Impairment of long-lived assets and
other
137
18,334
Share-based compensation
2,748
5,651
Equity method investment loss (gain)
(1,446
)
191
Deferred income taxes, including change in
valuation allowance
(1,084
)
(2,112
)
Change in fair value of contingent
consideration
15,900
4,200
Other, net
292
376
Changes in operating assets and
liabilities, net of effects of acquisition:
Receivables, net
13,979
(14,980
)
Inventory
(24,979
)
(42,015
)
Prepaid expenses
(1,091
)
(1,517
)
Income taxes payable (refundable)
(2,765
)
2,134
Accounts payable
(10,627
)
(10,069
)
Accrued expenses and other
(9,935
)
(2,471
)
Federal and state excise taxes payable
231
(1,908
)
Other, net
(609
)
435
Net cash provided by operating
activities
73,512
48,605
Cash Flows from Investing Activities
Additions to property, plant, and
equipment
(52,850
)
(42,062
)
Purchase of business, net of cash
acquired
—
(103,712
)
Other, net
(276
)
(916
)
Net cash used in investing
activities
(53,126
)
(146,690
)
Cash Flows from Financing Activities
Payment of dividends and dividend
equivalents
(8,013
)
(8,006
)
Repurchase of Common Stock
(12,235
)
(801
)
Proceeds from long-term debt
70,000
105,000
Principal payments on long-term debt
(67,800
)
(18,000
)
Net cash provided by (used in)
financing activities
(18,048
)
78,193
Effect of exchange rate changes on cash
and cash equivalents
46
33
Increase (decrease) in cash and cash
equivalents
2,384
(19,859
)
Cash and cash equivalents, beginning of
period
18,388
47,889
Cash and cash equivalents, end of
period
$
20,772
$
28,030
MGP INGREDIENTS, INC.
SALES BY OPERATING SEGMENT
(Dollars in thousands)
DISTILLING SOLUTIONS
SALES
Quarter Ended September
30,
Quarter versus Quarter Sales
Change Increase/(Decrease)
2024
2023
$ Change
% Change
Brown goods
$
57,110
$
73,409
$
(16,299
)
(22
)%
Warehouse services
8,264
7,353
911
12
White goods and other co-products
6,545
31,091
(24,546
)
(79
)
Total Distilling Solutions
$
71,919
$
111,853
$
(39,934
)
(36
)%
BRANDED SPIRITS SALES
Quarter Ended September
30,
Quarter versus Quarter Sales
Change Increase/(Decrease)
2024
2023
$ Change
% Change
Premium plus
$
31,086
$
30,843
243
1
%
Mid
14,788
17,650
(2,862
)
(16
)
Value
10,034
11,049
(1,015
)
(9
)
Other
6,716
7,277
(561
)
(8
)
Total Branded Spirits
$
62,624
$
66,819
$
(4,195
)
(6
)%
INGREDIENT SOLUTIONS
SALES
Quarter Ended September
30,
Quarter versus Quarter Sales
Change Increase / (Decrease)
2024
2023
$ Change
% Change
Specialty wheat starches
$
16,172
$
17,196
$
(1,024
)
(6
)%
Specialty wheat proteins
7,752
11,440
(3,688
)
(32
)
Commodity wheat starches
2,611
4,226
(1,615
)
(38
)
Commodity wheat proteins
383
90
293
326
Total Ingredient Solutions
$
26,918
$
32,952
$
(6,034
)
(18
)%
MGP INGREDIENTS, INC.
SALES BY OPERATING SEGMENT
(Dollars in thousands)
DISTILLING SOLUTIONS
SALES
Year to Date Ended September
30,
Year to Date versus Year to
Date Sales Change Increase/(Decrease)
2024
2023
$ Change
% Change
Brown goods
$
198,884
$
214,857
$
(15,973
)
(7
)%
Warehouse services
24,612
20,958
3,654
17
White goods and other co-products
26,663
106,126
(79,463
)
(75
)
Total Distilling Solutions
$
250,159
$
341,941
$
(91,782
)
(27
)%
BRANDED SPIRITS SALES
Year to Date Ended September
30,
Year to Date versus Year to
Date Sales Change Increase/(Decrease)
2024
2023
$ Change
% Change
Premium plus
$
82,699
$
73,352
$
9,347
13
%
Mid
46,610
55,575
(8,965
)
(16
)
Value
31,698
36,048
(4,350
)
(12
)
Other
15,804
16,343
(539
)
(3
)
Total Branded Spirits
$
176,811
$
181,318
$
(4,507
)
(2
)%
INGREDIENT SOLUTIONS
SALES
Year to Date Ended September
30,
Year to Date versus Year to
Date Sales Change Increase/(Decrease)
2024
2023
$ Change
% Change
Specialty wheat starches
$
57,646
$
48,977
$
8,669
18
%
Specialty wheat proteins
28,947
35,918
(6,971
)
(19
)
Commodity wheat starches
8,846
12,870
(4,024
)
(31
)
Commodity wheat proteins
420
611
(191
)
(31
)
Total Ingredient Solutions
$
95,859
$
98,376
$
(2,517
)
(3
)%
MGP INGREDIENTS, INC.
OPERATING INCOME ROLLFORWARD
(Dollars in thousands)
Operating income, quarter versus
quarter
Operating Income
Change
Operating income for the quarter ended
September 30, 2023
$
19,839
Increase in gross profit - Branded Spirits
segment
3,406
17
%
Decrease in gross profit - Ingredient
Solutions segment
(6,403
)
(32
)
pp(a)
Decrease in gross profit - Distilling
Solutions segment
(4,636
)
(23
)
pp
Increase in advertising and promotion
expenses
(142
)
(1
)
pp
Decrease in SG&A expenses
4,366
22
pp
Impairment of long-lived assets and
other
18,334
92
pp
Change in fair value of contingent
consideration
(2,200
)
(11
)
pp
Operating income for the quarter ended
September 30, 2024
$
32,564
64
%
Operating income, year to date versus
year to date
Operating Income
Change
Operating income for the year to date
ended September 30, 2023
$
105,541
Decrease in gross profit - Ingredient
Solutions segment
(16,914
)
(16
)%
Increase in gross profit - Branded Spirits
segment
8,975
9
pp(a)
Increase in gross profit - Distilling
Solutions segment
214
—
pp
Increase in advertising and promotion
expenses
(4,118
)
(4
)
pp
Decrease in SG&A expenses
4,673
4
pp
Impairment of long-lived assets and
other
18,197
17
pp
Change in fair value of contingent
consideration
(11,700
)
(11
)
pp
Operating income for the year to date
ended September 30, 2024
$
104,868
(1
)%
(a) Percentage points (“pp”).
MGP INGREDIENTS, INC.
EARNINGS PER COMMON SHARE (“EPS”)
ROLLFORWARD
Change in EPS, quarter versus
quarter
EPS
Change
Basic EPS for the quarter ended September
30, 2023
$
0.59
Change in operating income(b)
0.43
73
%
Change in interest expense, net(b)
0.01
2
pp(a)
Change in other income (expense),
net(b)
0.04
7
pp
Change in effective tax rate
0.01
2
pp
Change in weighted average shares
outstanding
(0.01
)
(2
)
pp
Basic and Diluted EPS for the quarter
ended September 30, 2024
$
1.07
82
%
Change in EPS, year to date versus year
to date
EPS
Change
Basic EPS for the year to date ended
September 30, 2023
$
3.43
Change in operating income(b)
(0.02
)
(1
)%
Change in interest expense, net(b)
(0.06
)
(2
)
pp(a)
Change in other income (expense),
net(b)
0.07
3
pp
Change in effective tax rate
0.03
1
pp
Change in weighted average shares
outstanding
(0.02
)
(1
)
pp
Basic and Diluted EPS for the year to
date ended September 30, 2024
$
3.43
—
%
(a) Percentage points (“pp”).
(b) Items are net of tax based on the
effective tax rate for the base year (2023).
MGP INGREDIENTS, INC.
RECONCILIATION OF SELECTED GAAP
MEASURES TO ADJUSTED NON-GAAP MEASURES (UNAUDITED)
(in thousands, except per share
amounts)
Quarter Ended September 30,
2024
Operating Income
Income before Income
Taxes
Net Income(b)
MGP Earnings(a)
Basic and Diluted EPS
Reported GAAP Results
$
32,564
$
31,416
$
23,862
$
23,648
$
1.07
Adjusted to remove:
Fair value of contingent
consideration(c)
6,400
6,400
4,864
4,864
0.22
Business acquisition costs(d)
15
15
11
11
—
Unusual items costs(e)
34
34
26
26
—
Adjusted Non-GAAP results
$
39,013
$
37,865
$
28,763
$
28,549
$
1.29
Quarter Ended September 30,
2023
Operating Income
Income before Income
Taxes
Net Income
MGP Earnings(a)
Basic EPS
Diluted EPS
Reported GAAP Results
$
19,839
$
17,461
$
13,088
$
13,082
$
0.59
$
0.58
Adjusted to remove:
Impairment of long-lived assets and
other(f)
18,334
18,334
13,750
13,750
0.62
0.61
Fair value of contingent
consideration(c)
4,200
4,200
3,150
3,150
0.14
0.14
Business acquisition costs(d)
314
314
235
235
0.01
0.01
Adjusted Non-GAAP results
$
42,687
$
40,309
$
30,223
$
30,217
$
1.36
$
1.34
Year to Date Ended September
30, 2024
Operating Income
Income before Income
Taxes
Net Income(b)
MGP Earnings(a)
Basic and Diluted EPS
Reported GAAP Results
$
104,868
$
100,387
$
76,463
$
75,797
$
3.43
Adjusted to remove:
Impairment of long-lived assets and
other(f)
137
137
104
104
—
Fair value of contingent
consideration(c)
15,900
15,900
12,116
12,116
0.55
Business acquisition costs(d)
101
101
77
77
—
Executive transition costs(g)
1,218
1,218
928
928
0.04
Unusual items costs(e)
1,673
1,673
1,275
1,275
0.06
Adjusted Non-GAAP results
$
123,897
$
119,416
$
90,963
$
90,297
$
4.08
Year to Date Ended September
30, 2023
Operating Income
Income before Income
Taxes
Net Income
MGP Earnings(a)
Basic EPS
Diluted EPS
Reported GAAP Results
$
105,541
$
100,916
$
76,084
$
75,648
$
3.43
3.41
Adjusted to remove:
Impairment of long-lived assets and
other(f)
18,334
18,334
13,824
13,824
0.63
0.62
Fair value of contingent
consideration(c)
4,200
4,200
3,167
3,167
0.14
0.14
Business acquisition costs(d)
1,814
1,814
1,368
1,368
0.06
0.06
Adjusted Non-GAAP results
$
129,889
$
125,264
$
94,443
$
94,007
$
4.26
$
4.23
MGP INGREDIENTS, INC. Description of Non-GAAP
items
(a)
MGP Earnings is defined as "Net
income used in Earnings Per Common Share calculation."
(b)
The tax rate used for non-GAAP
items for the quarter and year to date ended September 30, 2024 was
24.0% and 23.8%, respectively.
(c)
Fair value of contingent
consideration relates to the quarterly adjustment of the contingent
consideration liability related to the acquisition of Penelope
Bourbon LLC. It is included in the Condensed Consolidated Statement
of Income as a component of operating income and relates to the
Branded Spirits segment.
(d)
Business acquisition costs are
included in the Condensed Consolidated Statement of Income within
the selling, general, and administrative line item and include
transaction and integration costs associated with the acquisition
of Penelope Bourbon LLC.
(e)
The unusual items costs are
included in the Condensed Consolidated Statement of Income within
the selling, general and administrative line item. The adjustment
includes professional and legal costs associated with special
projects.
(f)
The impairment of long-lived
assets and other relates to impairments of assets as well as
miscellaneous expenses in connection with the closure of the
Atchison distillery. Impairment of long-lived assets and other are
included in the Condensed Consolidated Statement of Income as a
component of operating income and relates to the Distilling
Solutions segment.
(g)
The executive transition costs
are included in the Condensed Consolidated Statement of Income
within the selling, general, and administrative line item. The
adjustment includes costs related to the transition of certain
executive positions.
(h)
Adjusted net income margin is
defined as adjusted net income divided by net sales.
(i)
Adjusted EBITDA margin is defined
as adjusted EBITDA divided by net sales.
MGP INGREDIENTS, INC.
RECONCILIATION OF NET INCOME TO
ADJUSTED EBITDA (UNAUDITED)
(in thousands)
Quarter Ended September
30,
Year to Date Ended September
30,
2024
2023
2024
2023
Net Income
$
23,862
$
13,088
$
76,463
$
76,084
Interest expense
2,174
2,353
6,398
4,630
Income tax expense
7,554
4,373
23,924
24,832
Depreciation and amortization
5,680
5,782
16,298
16,272
Share based compensation
767
2,014
2,748
5,651
Equity method investment loss (gain)
(832
)
(388
)
(1,446
)
191
Impairment of long-lived assets and
other
—
18,334
137
18,334
Fair value of contingent consideration
6,400
4,200
15,900
4,200
Business acquisition costs
15
314
101
1,814
Executive transition costs
—
—
1,218
—
Unusual items costs
34
—
1,673
—
Adjusted EBITDA
$
45,654
$
50,070
$
143,414
$
152,008
The non-GAAP adjusted EBITDA measure is defined as earnings
before interest expense, income tax expense, depreciation and
amortization, share based compensation, equity method investment
loss (gain), impairment of long-lived assets and other, fair value
of contingent consideration, business acquisition costs, executive
transition costs, and unusual items costs.
See "Reconciliation of selected GAAP measure to adjusted
non-GAAP measures" and "Description of Non-GAAP items" for further
details.
MGP INGREDIENTS, INC.
NET DEBT LEVERAGE RATIO
(UNAUDITED)
(in thousands)
Quarter Ended December 31,
2023
Quarter Ended March
31,
2024
Quarter Ended June
30,
2024
Quarter Ended September
30,
2024
TTM(a)
September 30, 2024
Net income
$
31,046
$
20,584
$
32,017
$
23,862
$
107,509
Interest expense
2,017
2,019
2,205
2,174
8,415
Income tax expense
9,784
6,262
10,108
7,554
33,708
Depreciation and amortization
5,841
5,289
5,329
5,680
22,139
Share based compensation
1,850
1,116
865
767
4,598
Equity method investment loss (gain)
146
296
(910
)
(832
)
(1,300
)
Impairment of long-lived assets and
other
1,057
116
21
—
1,194
Fair value of contingent consideration
2,900
4,100
5,400
6,400
18,800
Business acquisition costs
246
71
15
15
347
Executive transition costs
3,134
375
843
—
4,352
Unusual items costs
—
—
1,639
34
1,673
Adjusted EBITDA
$
58,021
$
40,228
$
57,532
$
45,654
$
201,435
Total debt
$
289,968
Cash and cash equivalents
20,772
Net debt
$
269,196
Net debt leverage ratio(b)
1.3
(a) TTM is defined as trailing twelve
months
(b) Net debt leverage ratio is defined as
net debt divided by adjusted EBITDA
See "Reconciliation of selected GAAP
measure to adjusted non-GAAP measures" and "Description of Non-GAAP
items" for further details on selected non-GAAP items.
MGP INGREDIENTS, INC.
DILUTIVE SHARES OUTSTANDING CALCULATION
(UNAUDITED)
Quarter Ended September
30,
Year to Date Ended September
30,
2024
2023
2024
2023
Principal amount of the bonds
$
201,250,000
$
201,250,000
$
201,250,000
$
201,250,000
Par value
$
1,000
$
1,000
$
1,000
$
1,000
Number of bonds outstanding(a)
201,250
201,250
201,250
201,250
Initial conversion rate
10.3911
10.3911
10.3911
10.3911
Conversion price
$
96.23620
$
96.23620
$
96.23620
$
96.23620
Average share price(b)
$
82.66859
$
113.32587
$
82.41075
$
103.71316
Impact of conversion(c)
$
172,877,289
$
236,988,065
$
172,338,092
$
216,885,881
Cash paid for principal
(201,250,000
)
(201,250,000
)
(201,250,000
)
(201,250,000
)
Conversion premium
$
—
$
35,738,065
$
—
$
15,635,881
Average share price
$
82.66859
$
113.32587
$
82.41075
$
103.71316
Conversion premium in shares(d)
(e)
—
315,357
—
150,761
(a)
Number of bonds outstanding is
calculated by taking the principal amount of the bonds divided by
the par value.
(b)
Average share price is calculated
by taking the average of the daily closing share price for the
period. If the average share price is less than the conversion
price of $96.23620 per share, the impact to EPS is anti-dilutive
and therefore the shares were excluded from the diluted EPS
calculation.
(c)
Impact of conversion is
calculated by taking the number of bonds outstanding multiplied by
the initial conversion rate multiplied by the average share price.
If the average share price is less than the conversion price then
the impact of conversion is zero.
(d)
The impacts of the Convertible
Senior Notes were included in the diluted weighted average common
shares outstanding if the impact was dilutive. The Convertible
Senior Notes would only have a dilutive impact if the average
market price per share during the quarter and year to date periods
exceed the conversion price of $96.23620 per share.
(e)
Conversion premium in shares is
calculated by taking the conversion premium divided by the average
share price. If the average share price is less than the conversion
price, then the conversion premium in shares is zero.
MGP INGREDIENTS, INC.
Impact of the Closure of the Atchison
Distillery
Segment Operating Results and Pro-Forma
Results
Quarter Ended September 30,
2024
(UNAUDITED) (Dollars in thousands)
Distilling Solutions
Quarter Ended September 30,
2024
Increase/(Decrease)
As Reported(a)
Pro-Forma(b)
$ Change
% Change
Brown goods
$
57,110
$
57,110
$
—
—
%
Warehouse services
8,264
8,264
—
—
White goods and other co-products
6,545
6,545
—
—
Total Sales
$
71,919
$
71,919
$
—
—
%
Gross profit
$
28,644
$
28,644
$
—
—
%
Gross margin %
39.8
%
39.8
%
—
pp(c)
Ingredient Solutions
Quarter Ended September 30,
2024
Increase/(Decrease)
As Reported(a)
Pro-Forma(b)
$ Change
% Change
Specialty wheat starches
$
16,172
$
16,172
$
—
—
%
Specialty wheat proteins
7,752
7,752
—
—
Commodity wheat starches
2,611
2,611
—
—
Commodity wheat proteins
383
383
—
—
Total Sales
$
26,918
$
26,918
$
—
—
%
Gross profit
$
4,725
$
4,725
$
—
(d)
—
%
Gross margin %
17.6
%
17.6
%
—
pp(c)
Consolidated
Quarter Ended September 30,
2024
Increase/(Decrease)
As Reported(a)
Pro-Forma(b)
$ Change
% Change
Sales
$
161,461
$
161,461
$
—
—
%
Gross profit
$
65,815
$
65,815
$
—
—
%
Gross margin %
40.8
%
40.8
%
—
pp(c)
(a)
Represents actual results of the
Company for the quarter ended September 30, 2024, as reported in
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2024.
(b)
Represents the Company's results
for the quarter ended September 30, 2024 excluding results
associated with the Company's Atchison, Kansas distillery. These
are pro-forma unaudited financial results. In some circumstances,
white goods, industrial alcohol, fuel grade alcohol, and at times
certain co-products are produced at the Company's Lawrenceburg,
Indiana distillery. The results of the Branded Spirits segment for
the quarter ended September 30, 2024 were not impacted by a closure
of the Atchison, Kansas distillery.
(c)
Percentage points (“pp”).
(d)
There was no reduction in gross
profit for the Ingredient Solutions segment as the Company is no
longer receiving an intercompany credit for the waste starch slurry
by-product since the closure of the distillery in Atchison, Kansas
during December 2023.
MGP INGREDIENTS, INC.
Impact of the Closure of the Atchison
Distillery
Segment Operating Results and Pro-Forma
Results
Quarter Ended September 30,
2023
(UNAUDITED) (Dollars in thousands)
Distilling Solutions
Quarter Ended September 30,
2023
Increase/(Decrease)
As Reported(a)
Pro-Forma(b)
$ Change
% Change
Brown goods
$
73,409
$
73,409
$
—
—
%
Warehouse services
7,353
7,353
—
—
White goods and other co-products
31,091
6,430
(24,661
)
(79
)
Total Sales
$
111,853
$
87,192
$
(24,661
)
(22
)%
Gross profit
$
33,280
$
37,310
$
4,030
12
%
Gross margin %
29.8
%
42.8
%
13.0
pp(c)
Ingredient Solutions
Quarter Ended September 30,
2023
Increase/(Decrease)
As Reported(a)
Pro-Forma(b)
$ Change
% Change
Specialty wheat starches
$
17,196
$
17,196
$
—
—
%
Specialty wheat proteins
11,440
11,440
—
—
Commodity wheat starches
4,226
4,226
—
—
Commodity wheat proteins
90
90
—
—
Total Sales
$
32,952
$
32,952
$
—
—
%
Gross profit
$
11,128
$
9,408
$
(1,720
)
(d)
(15
)%
Gross margin %
33.8
%
28.6
%
(5.2
)
pp(c)
Consolidated
Quarter Ended September 30,
2023
Increase/(Decrease)
As Reported(a)
Pro-Forma(b)
$ Change
% Change
Sales
$
211,624
$
186,963
$
(24,661
)
(12
)%
Gross profit
$
73,448
$
75,758
$
2,310
3
%
Gross margin %
34.7
%
40.5
%
5.8
pp(c)
(a)
Represents actual results of the
Company for the quarter ended September 30, 2023, as reported in
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2023.
(b)
Represents the Company's results
for the quarter ended September 30, 2023 excluding results
associated with the Company's Atchison, Kansas distillery. These
are pro-forma unaudited financial results. In some circumstances,
white goods, industrial alcohol, fuel grade alcohol, and at times
certain co-products are produced at the Company's Lawrenceburg,
Indiana distillery. The pro-forma financial results assume the loss
of the waste starch slurry credit and no gain or loss on the
disposal. The results of the Branded Spirits segment for the
quarter ended September 30, 2023 were not impacted by a closure of
the Atchison, Kansas distillery.
(c)
Percentage points (“pp”).
(d)
The reduction in gross profit for
the Ingredient Solutions segment is the result of increased cost of
goods sold from no longer receiving an intercompany credit for the
waste starch slurry by-product purchased by the adjoined Atchison,
Kansas distillery. The value of the intercompany credit is derived
from the value of corn which has fluctuated over time.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241031029666/en/
For More Information Investors: Amit Sharma
amit.sharma@mgpingredients.com Media: Greg Manis
greg.manis@mgpingredients.com 913-360-5440
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