On August 1, 2024, MGP Ingredients Inc (MGPI, Financial) released its 8-K filing for the second quarter ended June 30, 2024. MGP Ingredients Inc is a producer and supplier of premium distilled spirits and specialty wheat protein and starch food ingredients. The company operates in three segments: Distillery Solutions, Branded Spirits, and Ingredient Solutions, deriving most of its revenue from the Distillery Solutions segment.
Performance Overview
MGP Ingredients Inc (MGPI, Financial) reported a 9% decrease in sales to $190.8 million for Q2 2024, primarily due to the closure of the Atchison distillery. Excluding this impact, consolidated sales increased by 7%. Net income remained largely flat at $32.0 million, while adjusted net income rose 15% to $38.0 million. The company’s adjusted EBITDA increased by 7% to $57.5 million, achieving its highest quarterly adjusted EBITDA margin of 30.2%.
Segment Analysis
For the Distilling Solutions segment, sales decreased by 20% to $93.4 million due to the Atchison distillery closure. However, excluding this impact, segment sales increased by 9%, driven by higher brown goods sales. The Branded Spirits segment saw an 11% increase in sales to $64.0 million, fueled by the momentum in the premium plus portfolio. Ingredient Solutions segment sales decreased by 3% to $33.4 million.
Financial Achievements
Despite the challenges, MGP Ingredients Inc (MGPI, Financial) achieved significant financial milestones. The company’s adjusted net income margin increased by 410 basis points to 19.9%, and adjusted basic EPS rose by 15% to $1.71 per share. Capital expenditures year-to-date were $22.6 million, with expectations of approximately $85 million for the full year.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Sales | $190.8 million | $209.8 million | -9% |
| Net Income | $32.0 million | $32.0 million | 0% |
| Adjusted Net Income | $38.0 million | $33.0 million | +15% |
| Adjusted EBITDA | $57.5 million | $53.7 million | +7% |
| Adjusted Basic EPS | $1.71 | $1.49 | +15% |
Commentary and Outlook
"This quarter, our MGP team delivered strong results driven largely by the continued momentum in our premium plus branded spirits portfolio and solid brown goods sales. Our increasing investments behind our key brands and exciting new product innovation continue to yield positive results, helping us expand our distribution footprint and accelerate our transition into a premier branded spirits company," said David Bratcher, CEO and president of MGP Ingredients.
MGP Ingredients Inc (MGPI, Financial) reiterated its full-year guidance, projecting sales in the range of $742 million to $756 million, adjusted EBITDA between $218 million and $222 million, and adjusted basic EPS between $6.12 and $6.23.
Conclusion
While MGP Ingredients Inc (MGPI, Financial) faced challenges due to the Atchison distillery closure, the company demonstrated resilience with strong performance in its Branded Spirits segment and maintained its full-year guidance. Investors will be keen to see how the company navigates the dynamic environment in the spirits industry and continues its growth trajectory.
Explore the complete 8-K earnings release (here) from MGP Ingredients Inc for further details.
