MGP INGREDIENTS INC

Previous wording

Gross profit -Gross profit for the quarter ended March 31, 2025 was $43,330, a decrease of 31 percent compared to the year-ago quarter. The decrease was driven by a decrease in gross profit in each segment. Within the Distilling Solutions segment, gross profit decreased by $15,403, or 45 percent. Within the Ingredient Solutions segment, gross profit decreased by $3,728, or 60 percent. Within the Branded Spirits segment, gross profit decreased $334, or 1 percent (see “Segment Results”).

Current wording

Gross profit -Gross profit for the quarter ended June 30, 2025 was $58,387, a decrease of 30 percent compared to the year-ago quarter. The decrease was driven by decreased gross profit in the Distilling Solutions and Branded Spirits segments, partially offset by increased gross profit in the Ingredient Solutions segment. Within the Distilling Solutions segment, gross profit decreased by $23,661, or 56 percent. Within the Branded Spirits segment, gross profit decreased $1,649, or 5 percent. Within the Ingredient Solutions segment, gross profit increased by $465, or 7 percent (see “Segment Results”).

Previous wording

SG&A expenses -SG&A expenses for the quarter ended March 31, 2025 were $21,205, a slight increase of 1 percent compared to the year-ago quarter.

Current wording

SG&A expenses -SG&A expenses for the quarter ended June 30, 2025 were $23,156, a slight increase of 2 percent compared to the year-ago quarter, primarily driven by increased incentive compensation accrual as compared to the year-ago quarter, which was partially offset by our cost savings initiatives.

Previous wording

Operating income (loss) -Operating income (loss) for the quarter ended March 31, 2025 decreased to a loss of $747 from income of $28,917 for the quarter ended March 31, 2024, primarily as a result of the decrease in gross profit in the Distilling Solutions segment, the change in the fair value of the contingent consideration liability related to the improved performance of the Penelope brand, and the decrease in gross profit in the Ingredient Solutions segment.

Current wording

Operating income -Operating income for the quarter ended June 30, 2025 decreased to $20,318 from $43,387 for the quarter ended June 30, 2024, primarily as a result of the decrease in gross profit in the Distilling Solutions segment, the change in the fair value of the contingent consideration liability related to the improved performance of the Penelope brand, and the decrease in gross profit in the Branded Spirits segment. These decreases were partially offset by the reduction in advertising and promotion expenses.

Previous wording

Earnings per common share (“EPS”) -Basic and Diluted EPS was $(0.14) for the quarter ended March 31, 2025, compared to $0.92 for the quarter ended March 31, 2024. The change in basic and diluted EPS, quarter versus quarter, was primarily due to a decrease in operating income and the change in effective tax rate.

Current wording

Earnings per common share (“EPS”) -Basic and Diluted EPS was $0.67 for the quarter ended June 30, 2025, compared to $1.43 for the quarter ended June 30, 2024. The change in basic and diluted EPS, quarter versus quarter, was primarily due to a decrease in operating income.

Previous wording

Sales - Sales for the quarter ended March 31, 2025 were $121,653, a decrease of 29 percent compared to the year-ago quarter, which was the result of decreased sales in each segment. Within the Distilling Solutions segment, sales were down 45 percent primarily due to decreased sales of brown goods. Within the Ingredient Solutions segment, sales were down 26 percent, primarily due to decreased sales of specialty wheat starches and proteins. Within the Branded Spirits segment, sales were down 4 percent due to decreased sales of brands in the value and mid price tiers (see “Segment Results”).

Current wording

Sales - Sales for the year to date ended June 30, 2025 were $267,147, a decrease of 26 percent compared to the year-ago period, which was the result of decreased sales in each segment. Within the Distilling Solutions segment, sales were down 46 percent primarily due to decreased sales of brown goods. Within the Ingredient Solutions segment, sales were down 11 percent, primarily due to decreased sales of specialty wheat starches and proteins. Sales of Branded Spirits were down 5 percent, primarily due to decreased sales of brands in the value and mid price tiers (see “Segment Results”).

Previous wording

Income tax expense - Income tax expense for the quarter ended March 31, 2025 was $671, for an effective tax rate of (28.1) percent. Income tax expense for the quarter ended March 31, 2024 was $6,262, for an effective tax rate of 23.3 percent. The decrease in income tax expense, quarter versus quarter, was due primarily to lower income before income taxes, as the Company was in a net loss position for the quarter ended March 31, 2025, primarily due to the change in the fair value of the contingent consideration liability related to the Penelope acquisition. The tax rate for the quarter ended March 31, 2025 was negative primarily due to the net loss position and the discrete tax impact of the vesting of share based awards granted in the prior years during periods of higher stock prices.

Current wording

Income tax expense - Income tax expense for the year to date ended June 30, 2025 was $4,979, for an effective tax rate of 30.5 percent. Income tax expense for the year to date ended June 30, 2024, was $16,370, for an effective tax rate of 23.7 percent. The decrease in income tax expense, year to date versus year to date, was primarily due to the lower income before income taxes. The increase in the tax rate, year to date versus year to date, was primarily due to the discrete tax impact of the vesting of share based awards granted in the prior years during periods of higher stock prices.

Previous wording

Total sales of the Branded Spirits segment for the quarter ended March 31, 2025 decreased by $1,919, or 4 percent, compared to the prior year quarter primarily due to lower sales volume, partially offset by higher net price/mix (as defined in the table above). Sales of brands within the value and mid price tiers decreased primarily driven by lower sales volume of certain tequila, liqueur, and cordial brands. Sales within the premium plus price tier increased driven by increased net price/mix and sales volume reflecting increased focus on the American whiskey and tequila categories.

Current wording

Total sales of the Branded Spirits segment for the quarter ended June 30, 2025 decreased by $3,521, or 5 percent, compared to the prior year quarter, primarily due to lower sales volume and a decrease in net price/mix (as defined in the table above). Sales of brands within the value and mid price tiers decreased, driven by lower sales volume and net price/mix primarily in certain tequila, liqueur, and cordial brands. Sales within the premium plus price tier increased 1%, driven by increased sales volume reflecting our increased focus on the American whiskey and tequila categories. The increase in sales volume within premium plus price tier was partially offset by decreased net price/mix.

Previous wording

Gross profit decreased slightly versus prior year quarter by $334, or 1 percent, primarily driven by a decrease in sales volume, partially offset by increased net/price mix. Gross margin for the quarter ended March 31, 2025 increased to 46.0 percent from 44.9 percent for the prior year quarter, driven primarily by increased sales in the premium plus price tier.

Current wording

Gross profit decreased versus prior year quarter by $1,649, or 5 percent, primarily driven by a decrease in net price/mix and lower sales volume within the value and mid price tiers. Gross margin for the quarter ended June 30, 2025 increased to 52.8 percent from 52.5 percent for the prior year quarter, driven primarily by increased sales in the premium plus price tier.

Previous wording

Total sales of the Distilling Solutions segment for the quarter ended March 31, 2025 decreased by $37,909, or 45 percent, compared to the prior year quarter, primarily driven by lower brown goods sales. Brown goods sales volume and net price/mix decreased primarily due to reduced customer demand resulting from elevated industry-wide barrel inventory levels. White goods and other co-products sales decreased primarily due to a reduction in sales volume resulting from phasing out a number of white goods customer contracts in the wake of the Atchison distillery closure, as well as reduced production volumes of dried distillers grain. Warehouse sales were slightly up as compared to prior year quarter.

Current wording

Total sales of the Distilling Solutions segment for the quarter ended June 30, 2025 decreased by $43,388, or 46 percent, compared to the prior year quarter, primarily driven by lower brown goods sales. Brown goods sales volume and net price/mix decreased primarily due to reduced customer demand resulting primarily from elevated industry-wide barrel inventory levels. White goods and other co-products sales decreased primarily due to a reduction in sales volume resulting from phasing out a number of white goods customer contracts following the closure of our Atchison distillery, as well as reduced production volumes of co-products, primarily dried distillers grain. Warehouse sales were slightly down as compared to prior year quarter.

Previous wording

Gross profit decreased versus prior year quarter by $15,403, or 45 percent, due to lower brown goods sales volume and net price/mix, partially offset by increased gross profit in white goods and other co-products due to favorable net price/mix as well as increased gross profit in warehouse services. Gross margin for the quarter ended March 31, 2025 decreased to 39.8 percent from 40.2 percent for the prior year quarter.

Current wording

Gross profit decreased versus prior year quarter by $23,661, or 56 percent, due to lower brown goods sales volume and net price/mix, partially offset by increased gross profit in white goods and other co-products due to favorable net price/mix. Gross margin for the quarter ended June 30, 2025 decreased to 37.6 percent from 45.5 percent for the prior year quarter.

Previous wording

Total sales of the Ingredient Solutions segment for the quarter ended March 31, 2025 decreased by $9,082, or 26 percent, compared to the prior year quarter. The decrease was primarily driven by decreased sales volume of specialty wheat starches and decreased net/price mix of specialty wheat proteins. The declines in specialty wheat starches and proteins were impacted by supply challenges resulting from adverse weather and complexities associated with the closure of the Atchison distillery, as well as the timing of commercialization of new customers.

Current wording

Total sales of the Ingredient Solutions segment for the year to date ended June 30, 2025 decreased by $7,484, or 11 percent, compared to the prior year period. The decrease was primarily driven by decreased sales volume of specialty wheat starches and decreased net/price mix of specialty wheat proteins. The declines in specialty wheat starches and proteins were due to supply challenges resulting from adverse weather and complexities associated with the closure of our Atchison distillery, as well as the timing of commercialization of new customers. These declines were offset by increased sales volume of specialty and commodity wheat proteins and increased net price/mix of specialty wheat starches.

Previous wording

Gross profit decreased versus prior year quarter by $3,728, or 60 percent. Gross margin for the quarter ended March 31, 2025 decreased to 9.3 percent from 17.4 percent for the prior year quarter. The decrease in gross profit was primarily driven by decreased sales volume of specialty wheat starches and decreased net/price mix of specialty wheat proteins. The declines in specialty wheat starches and proteins gross profit were impacted by supply challenges and additional costs resulting from adverse weather and complexities associated with the closure of the Atchison distillery, as well as the timing of commercialization of new customers.

Current wording

Gross profit decreased by $3,263, or 25 percent for the year to date ended June 30, 2025 compared to the prior year period. Gross margin for the year to date ended June 30, 2025 decreased to 16.3 percent from 19.3 percent for the prior year period. The decrease in gross profit was primarily driven by decreased net price/mix of specialty wheat proteins and decreased sales volume of specialty wheat starches. These declines were impacted by supply challenges, additional costs resulting from adverse weather, and complexities associated with the closure of our Atchison distillery, as well as timing of commercialization of new customers.

Previous wording

Cash decreased $5,161 for the quarter ended March 31, 2025, compared to a increase of $1,109 for the quarter ended March 31, 2024, for a net decrease in cash of $6,270, period versus period.

Current wording

Cash decreased $7,953 for the year to date ended June 30, 2025, compared to an increase of $2,623 for the year to date ended June 30, 2024, for a net decrease in cash of $10,576, period versus period.

Previous wording

Operating Activities. Cash provided by operating activities for the quarter ended March 31, 2025 was $44,684. The cash provided by operating activities resulted primarily from cash provided by operating assets and liabilities of $26,611, adjustments for non-cash or non-operating charges of $21,130, including the change in fair value of contingent consideration, depreciation and amortization, and share-based compensation, partially offset by a net loss of $3,057. The primary drivers of the changes in operating assets and liabilities were $40,594 of cash provided by decreased accounts receivables, net, due to timing of customer payments and lower sales during the quarter, this was partially offset by $13,439 use of cash related to an increase in inventories, primarily due to an increase in barreled distillate.

Current wording

Operating Activities. Cash provided by operating activities for the year to date ended June 30, 2025 was $56,357. The cash provided by operating activities resulted primarily from adjustments for non-cash or non-operating charges of $35,419, including the change in fair value of contingent consideration, depreciation and amortization, and share-based compensation, net income of $11,370 and cash provided by operating assets and liabilities of $9,568. The primary drivers of the changes in operating assets and liabilities were $31,103 of cash provided by decreased accounts receivables, net, due to timing of customer payments and lower sales during the quarter. This was partially offset by $15,224 use of cash related to an increase in inventories, primarily due to an increase in barreled distillate, and $10,687 use of cash related to a decrease in accounts payable due to timing of vendor payments and lower costs during the year to date period.

Previous wording

Cash provided by operating activities for the quarter ended March 31, 2024 was $24,623. The cash provided by operating activities resulted primarily from net income of $20,584, adjustments for non-cash or non-operating charges of $11,603, including depreciation and amortization, the changes in fair value of contingent consideration, and share-based compensation, partially offset by cash used in operating assets and liabilities of $7,564. The primary drivers of the changes in operating assets and liabilities were $10,380 use of cash related to accrued expenses and other, which related to the incentive compensation payout during the quarter, and $10,207 use of cash related to a decrease in accounts payable due to timing of payments. These uses of cash were offset by $11,257 of cash provided by a decrease in accounts receivable, net, due to timing of sales and customer payments during the quarter.

Current wording

Cash provided by operating activities for the year to date ended June 30, 2024 was $29,582. The cash provided by operating activities resulted primarily from net income of $52,601, adjustments for non-cash or non-operating charges of $21,745, including depreciation and amortization, the changes in fair value of contingent consideration, and share-based compensation, partially offset by cash used in operating assets and liabilities of $44,764. The primary drivers of the changes in operating assets and liabilities were $14,766 use of cash related to increased accounts receivable, net, due to timing of sales and customer payments during the year to date period, $11,754 use of cash related to an increase in inventories, primarily due to an increase in barreled distillate, $10,738 use of cash related to accrued expenses and other, which related to the incentive compensation payout during the year to date period, and $6,345 use of cash related to a decrease in accounts payable due to timing of payments.

Previous wording

Investing Activities. Cash used in investing activities for the quarter ended March 31, 2025 was $19,926, which resulted from additions to property, plant, and equipment (see “Capital Spending”). Cash used in investing activities for the quarter ended March 31, 2024 was $27,266, which primarily resulted from additions to property, plant, and equipment of $27,026 (see “Capital Spending”).

Current wording

Investing Activities. Cash used in investing activities for the year to date ended June 30, 2025 was $32,167, which resulted primarily from additions to property, plant, and equipment of $32,156 (see “Capital Spending”). Cash used in investing activities for the year to date ended June 30, 2024 was $33,657, which primarily resulted from additions to property, plant, and equipment of $33,397 (see “Capital Spending”).

Previous wording

Capital Spending. We manage capital spending to support our business growth plans. We have incurred $8,094 and $13,134 of capital expenditures and have paid $19,926 and $27,026 for capital expenditures for the quarter ended March 31, 2025 and 2024, respectively. We expect to incur approximately $36,000 in capital expenditures in 2025, which includes capital expenditures for facility improvement and expansion, facility sustaining projects, and environmental, health, and safety projects. The difference between the amount of capital expenditures incurred and amount paid is due to the change in capital expenditures in accounts payable.

Current wording

Capital Spending. We manage capital spending to support our business growth plans. We have incurred $18,691 and $22,560 of capital expenditures and have paid $32,156 and $33,397 for capital expenditures for the years to date ended June 30, 2025 and 2024, respectively. We expect to incur approximately $32,500 in capital expenditures in 2025, which includes capital expenditures for facility improvement and expansion, facility sustaining projects, and environmental, health, and safety projects. The difference between the amount of capital expenditures incurred and amount paid is due to the change in capital expenditures in accounts payable.

Previous wording

Financing Activities. Cash used in financing activities for the quarter ended March 31, 2025 was $30,213, due to net payments on debt of $26,600 (see “Long-Term and Short-Term Debt”), payments of dividends and dividend equivalents of $2,578 (see “Dividends and Dividend Equivalents”), and repurchases of Common Stock of $1,035 (see “Treasury Purchases” and “Share Repurchase”).

Current wording

Financing Activities. Cash used in financing activities for the year to date ended June 30, 2025 was $33,103, due to net payments on debt of $24,200 (see “Long-Term and Short-Term Debt”), payments of dividends and dividend equivalents of $5,156 (see “Dividends and Dividend Equivalents”), payments of loan fees related to borrowings of $2,712, and repurchases of Common Stock of $1,035 (see “Treasury Purchases” and “Share Repurchase”).

Previous wording

Cash provided by financing activities for the quarter ended March 31, 2024 was $3,767, due to net proceeds on debt of $13,400 (see “Long-Term and Short-Term Debt”), partially offset by repurchase of Common Stock of $6,961 (see “Treasury Purchases” and “Share Repurchases”) and payments of dividends and dividend equivalents of $2,672 (see “Dividends and Dividend Equivalents”).

Current wording

Cash provided by financing activities for the year to date ended June 30, 2024 was $6,721, due to net proceeds on debt of $21,800 (see “Long-Term and Short-Term Debt”), partially offset by repurchase of Common Stock of $9,735 (see “Treasury Purchases” and “Share Repurchases”) and payments of dividends and dividend equivalents of $5,344 (see “Dividends and Dividend Equivalents”).

Previous wording

Treasury Purchases. 105,776 RSUs vested and converted to shares of Common Stock for employees during the quarter ended March 31, 2025, of which we withheld and purchased for treasury 31,631 shares valued at $1,035 to cover payment of associated withholding taxes.

Current wording

Treasury Purchases. 105,776 RSUs vested and converted to shares of Common Stock for employees during the year to date ended June 30, 2025, of which we withheld and purchased for treasury 31,631 shares valued at $1,035 to cover payment of associated withholding taxes.

Previous wording

73,230 RSUs vested and converted to shares of Common Stock for employees during the quarter ended March 31, 2024, of which we withheld and purchased for treasury 22,885 shares valued at $1,961 to cover payment of associated withholding taxes.

Current wording

81,942 RSUs vested and converted to shares of Common Stock for employees during the year to date ended June 30, 2024, of which we withheld and purchased for treasury 25,521 shares valued at $2,185 to cover payment of associated withholding taxes.

Previous wording

Share Repurchase. On February 29, 2024, we announced that our Board of Directors approved a $100,000 share repurchase program. Under the share repurchase program, we can repurchase stock from time to time for cash in open market purchases, privately negotiated transactions, or by other means, in accordance with applicable securities laws and other legal requirements. The repurchase program has no expiration date and may be modified, suspended, or discontinued at any time by the Company without prior notice. During the quarter ended March 31, 2025, we did not repurchase any share of Common Stock under the share repurchase program. During the quarter ended March 31, 2024, the Company repurchased approximately 59,084 shares of Company Stock for approximately $5,000. As of March 31, 2025, there was approximately $53,412 remaining under the share repurchase program.

Current wording

Share Repurchase. On February 29, 2024, we announced that our Board of Directors approved a $100,000 share repurchase program. Under the share repurchase program, we can repurchase stock from time to time for cash in open market purchases, privately negotiated transactions, or by other means, in accordance with applicable securities laws and other legal requirements. The repurchase program has no expiration date and may be modified, suspended, or discontinued at any time by the Company without prior notice. During the year to date ended June 30, 2025, we did not repurchase any shares of Common Stock under the share repurchase program. During the year to date ended June 30, 2024, the Company repurchased approximately 92,447 shares of Company Stock for approximately $7,500. As of June 30, 2025, there was approximately $53,412 remaining under the share repurchase program.

Previous wording

On May 1, 2025, we announced a dividend payable to stockholders of record of our Common Stock, resulting in dividend equivalents payable to RSU holders, of $0.12 per share and per RSU. The dividend and dividend equivalent are payable on May 30, 2025 to stockholders of record and certain RSU holders as of May 16, 2025.

Current wording

On July 31, 2025, we announced a dividend payable to stockholders of record of our Common Stock, resulting in dividend equivalents payable to certain RSU holders, of $0.12 per share and per RSU. The dividend and dividend equivalent are payable on August 29, 2025 to stockholders of record and certain RSU holders as of August 15, 2025.

Previous wording

Long-Term and Short-Term Debt. We maintain debt levels we consider appropriate after evaluating a number of factors, including cash flow expectations, cash requirements for ongoing operations, investment and financing plans (including brand development, merger and acquisition, Board-approved dividends, and share repurchase activities), and the overall cost of capital. Total debt was $297,114 (net of unamortized loan fees of $5,736) at March 31, 2025, and $323,541 (net of unamortized loan fees of $5,909) at December 31, 2024.

Current wording

Long-Term and Short-Term Debt. We maintain debt levels we consider appropriate after evaluating a number of factors, including cash flow expectations, cash requirements for ongoing operations, investment and financing plans (including brand development, merger and acquisition, Board-approved dividends, and share repurchase activities), and the overall cost of capital. Total debt was $297,086 (net of unamortized loan fees of $8,164) at June 30, 2025, and $323,541 (net of unamortized loan fees of $5,909) at December 31, 2024. We had net borrowings on debt of $24,200 for year to date ended June 30, 2025 and net proceeds on debt of $21,800 for the year to date ended June 30, 2024. Additionally, during the year to date ended June 30, 2025, we incurred $2,712 of loan fees associated with amending and restating our credit agreement.

Previous wording

Financial Condition and Liquidity. Our principal uses of cash in the ordinary course of business are for input costs used in our production processes, salaries, capital expenditures, and investments supporting our strategic plan, such as the aging of barreled distillate and potential mergers and acquisitions. Generally, during periods when commodities prices are rising, our operations require increased use of cash to support inventory levels.

Current wording

Financial Condition and Liquidity. Our principal uses of cash in the ordinary course of business are for input costs used in our production processes, salaries, capital expenditures, and investments supporting our strategic plan, such as the aging of barreled distillate and potential mergers and acquisitions. Generally, during periods when commodity prices are rising, our operations require increased use of cash to support inventory levels.

Previous wording

At March 31, 2025, our current assets exceeded our current liabilities by $334,384, largely due to our inventories, at cost, of $378,243. At March 31, 2025, our cash balance was $20,112 and we have used our various debt agreements for liquidity purposes, with $320,000 available under our Credit Agreement for additional borrowings and $228,400 available under the Note Purchase Agreement (see Note 4, Corporate Borrowings). We anticipate being able to support our short-term liquidity and operating needs largely through cash generated from operations. We regularly assess our cash needs and the available sources to fund these needs. We utilize short-term and long-term debt to fund discretionary items, such as capital investments, dividend payments, and potential mergers and acquisitions. Subject to market conditions, we could also fund future mergers and acquisitions through the issuance of additional shares of Common Stock. In addition, we have strong operating results such that we believe financial institutions should provide sufficient credit funding to meet short-term financing requirements, if needed.

Current wording

At June 30, 2025, our current assets exceeded our current liabilities by $341,632, largely due to our inventories, at cost, of $379,702. At June 30, 2025, our cash balance was $17,320 and we have used our various debt agreements for liquidity purposes, with $416,000 available under our credit agreement for additional borrowings and $230,000 available under the Note Purchase Agreement (see Note 4, Corporate Borrowings). We anticipate being able to support our short-term liquidity and operating needs largely through cash generated from operations. We regularly assess our cash needs and the available sources to fund these needs. We utilize short-term and long-term debt to fund discretionary items, such as capital investments, dividend payments, and potential mergers and acquisitions. Subject to market conditions, we could also fund future mergers and acquisitions through the issuance of additional shares of Common Stock. In addition, we have strong operating results such that we believe financial institutions should provide sufficient credit funding to meet short-term financing requirements, if needed.