MGPI

Alto Ingredients, Inc. ALTO delivered a significantly improved second-quarter 2026 performance, marking its fourth consecutive quarter of positive gross profit, operating income, net income and adjusted EBITDA. The renewable fuels producer benefited from stronger ethanol crush margins, improved essential ingredient values, lower corn costs and higher sales volumes. However, despite the sharp improvement in profitability, ALTO’s shares have come under significant pressure following the earnings release.Since reporting results on Aug. 5, 2026, Alto Ingredients’ shares have declined 17%. Over the past month, the stock has fallen 19.1%, considerably underperforming the Consumer Products - Discretionary industry, which gained 6.2%, as well as the broader Consumer Discretionary sector, which advanced 0.5%. The S&P 500 also increased 2.1% during the same period. Alto Ingredients has also substantially underperformed several key peers, including Green Plains Inc. GPRE, Gevo, Inc. GEVO and MGP Ingredients, Inc. MGPI. MGP Ingredients and Gevo gained 2.4% and 3.1%, respectively, while Green Plains declined 7.4% during the same period. Image Source: Zacks Investment Research Nevertheless, ALTO’s quarterly results showed continued progress in its underlying business. Alto Ingredients’ second-quarter results reflected a substantial year-over-year improvement. Net sales of $245.7 million surpassed the Zacks Consensus Estimate of $243 million and increased 12.5% from $218.4 million in the prior-year quarter. This growth reflected higher alcohol selling prices, increased specialty alcohol volumes and stronger essential ingredient values. The company sold 88.5 million gallons of ethanol and specialty alcohols, up from 86.7 million gallons a year ago, while the average sales price increased 10% to $2.15 per gallon.Gross profit surged to $16.6 million from a gross loss of $1.9 million in the year-ago quarter. Earnings per share came in at 15 cents, compared with a loss of 15 cents in the prior-year period. Adjusted EBITDA also improved sharply to $23.7 million from negative $0.2 million. The improvement was driven primarily by stronger industry crush margins, which increased to 33 cents per gallon from 11 cents a year ago and contributed approximately $17 million of incremental gross profit. Favorable market conditions also supported ALTO’s performance in the quarter, including robust export demand, strong domestic blending activity and tighter ethanol inventories following industrywide spring maintenance outages. Favorable crop conditions and larger projected grain supplies helped lower corn costs. The company’s essential ingredient business also performed well, with sales increasing $6.1 million year over year. Stronger pricing and a 5% decline in corn costs lifted the consolidated essential ingredient return to 51.6% from 45.2% a year earlier.ALTO is also investing in projects aimed at increasing production and improving profitability. In the second quarter, the company completed a debottlenecking project at its Pekin Campus that is expected to increase annual production capacity by approximately 8%, or 5 million gallons. Management expects the facility to reach the new production levels and realize the full benefit of the additional capacity in the fourth quarter. Apart from this, the company is expanding its CO2-related opportunities, with a third CO2 storage tank at the Columbia facility expected to become operational in the fourth quarter. Alto Ingredients is further benefiting from the 45Z clean fuel production tax credit. Despite the improvement in its financial performance, ALTO continues to face headwinds in the export business. Geopolitical disruptions in the Middle East have increased freight costs and reduced vessel availability, while competition from Brazilian ethanol has weakened the economics of shipping U.S. renewable fuels to Europe. Management noted that these factors contributed to lower renewable fuel export volumes. Continued changes in global trade flows and freight economics could therefore weigh on export opportunities and create volatility in future results.ALTO also incurred higher operating expenses during the quarter, partially offsetting the improvement in gross profit. Repairs and maintenance expenses increased approximately $2 million year over year, primarily due to work related to the Pekin dry mill and ICP spring outages, as well as continued work at the Carbonic facility. Selling, general and administrative expenses also increased $1.8 million. Higher operating costs could weigh on profitability as the company continues its optimization and maintenance activities. Reflecting cautious sentiment around Alto Ingredients, the Zacks Consensus Estimate for EPS has seen downward revisions. Over the past seven days, the EPS estimate for 2026 and 2027 has declined 27.8% and 66.3% to 39 cents and 28 cents, respectively. Image Source: Zacks Investment Research Alto Ingredients is showing meaningful improvement in profitability, supported by stronger ethanol fundamentals, lower corn costs and strategic growth initiatives. However, the sharp post-earnings decline, weaker export conditions, higher operating expenses and downward revisions to earnings estimates point to limited near-term visibility. For now, current investors may consider reducing exposure or exiting positions, while potential investors may prefer to remain on the sidelines. Alto Ingredients currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Alto Ingredients, Inc. (ALTO) : Free Stock Analysis Report Gevo, Inc. (GEVO) : Free Stock Analysis Report Green Plains, Inc. (GPRE) : Free Stock Analysis Report MGP Ingredients, Inc. (MGPI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wednesday, July 29, 2026 at 10:00 a.m. ET President and Chief Executive Officer - Julie Francis Executive Vice President and Chief Financial Officer - Brandon Gall Operator: Good morning and welcome to the MGP Ingredients Second Quarter 2026 Earnings Conference Call with Julie Francis, President and CEO, and Brandon Gall, CFO. [Operator Instructions] Please also note this event is being recorded today. In addition, this call may involve certain forward-looking statements. The company's actual results could differ materially from any forward-looking statements due to a number of factors, including the risk factors described in the company's annual and quarterly reports filed with the SEC. The company assumes no obligation to update any forward-looking statements made during the call, except as required by law. This call will contain references to certain non-GAAP measures, which the company believes are useful in evaluating the company's performance. A reconciliation of these measures to the most comparable GAAP measures is included in today's earnings release, which was issued this morning before the markets opened and is available at [www.mgpingredients.com](https://www.mgpingredients.com). At this time, I would like to turn the call over to Julie Francis, President and CEO of MGP Ingredients. Please go ahead. Julie Francis: Good morning. I'd like to thank you all for joining us today on our second quarter 2026 earnings call. For the second quarter, sales came in at $124.4 million, down versus the prior year as expected. Adjusted EBITDA of $27.6 million and adjusted basic EPS of $0.72 also declined versus the second quarter of last year. However, both of these key metrics were ahead of our expectations. These results reflected continued momentum in our Premium Plus portfolio, led by Penelope Bourbon and Yellowstone, and an improvement in select mid and value-priced brands. We also delivered sales growth in Ingredient Solutions against our best quarter of 2025, which reflects continued strong customer demand, supported by improved operational reliability and inventory availability. In a challenging environment, our Distilling Solutions team delivered both lower distillation costs and favorable sales price and mix, resulting in gross margin expansion versus the prior year. We are pleased with this performance as it reflects the success of the actions we took during the second quarter to execute against our strategic roadmap. It also demonstrates the positive impact of our efforts to strengthen and revamp our sales, marketing, and supply chain functions while adding specific capabilities across all levels of the company to address new and existing growth opportunities. We also continue to drive progress across the business by eliminating waste, driving efficiencies and maximizing effectiveness through the implementation of our ownership cost management initiative, which I've discussed in previous calls. While we'll talk more about our segment performance later in the call, I'd like to take a few moments to update you on the progress we have made with our key initiatives. As I've mentioned previously, we have been strengthening our core by adding specific capabilities to our leadership team. Yesterday, we announced 4 strategic appointments designed to expand our commercial and marketing excellence across Distilling Solutions, Branded Spirits, and overall MGP. Tom Neiheisel joins us as Vice President to lead Distilling Solutions Sales. For Branded Spirits, Sol Clahane is now serving as Managing Director and Leader of National Accounts, while Marilyn Chen has taken the role of Brand Director to lead the marketing efforts behind Penelope Bourbon. On the corporate side, David Sanders has joined us as Vice President to lead Enterprise Financial Planning and Analysis. Together, these appointments expand our leadership and expertise across customer strategy, national retail and on-premise partnerships, brand marketing and planning, as well as reinforce our focus on driving growth across our business and executing against our strategic roadmap. Before turning to our business segments, I want to address the recent distributor news regarding RNDC's bankruptcy filing. Since the beginning of the year, we have known about RNDC's financial challenges, and while the bankruptcy has a financial impact, which Brandon will cover in his remarks, I want to highlight the significant progress we've made strengthening our national distribution network and expanding our route-to-market capabilities. The team has been executing a disciplined transition strategy, conducting extensive market-by-market distributor assessments and carefully evaluating each market's unique dynamics. Through this process, they successfully identified, vetted, and validated new distribution partners to ensure business continuity and position the portfolio for future growth. That preparation is already impacting results. During June, we successfully transitioned 10 markets to Reyes Beverage Group with minimal changes to our route-to-market model and disruption to customers or field operations. Just as importantly, the partnership is generating early positive momentum. During the first month of operation, depletions in our Premium Plus and mid-tier portfolios increased 7% and 4%, respectively. While we are encouraged by this early success, our work is not yet complete. We are currently progressing through various stages of distributor transition for certain open and control states, with many transitions targeted to go live later this quarter. Together with our new distributor partners, we will concentrate on expanding distribution, elevating in-store execution, and accelerating growth across our Premium Plus portfolio. Now turning to our business segments. I'll begin with Branded Spirits, our primary long-term growth platform. The second quarter provided another strong proof point that our strategy is working and our initiatives are strengthening performance despite a challenging industry backdrop. Throughout the quarter, we continued to outperform the broader spirits category by accelerating growth in our Premium Plus portfolio while stabilizing our mid and value-tier price brands. At the same time, we remain focused on building the capabilities needed to sustain long-term growth, including digital marketing, trade marketing, national accounts, and on-premise execution. While reported sales were modestly below prior year, excluding sales of our other products category, which primarily consists of contract bottled products sold in Europe, our Branded Spirits sales increased 3% compared to prior year. This performance exceeds both Nielsen industry trends, which declined 2% during the quarter, and NABCA trends, which were down 3%. Our Premium Plus portfolio grew 5% in the quarter, significantly outperforming both Nielsen and NABCA, which were down 3% and 5%, respectively. We also delivered approximately 1% growth in our mid and value-priced brands, comparing favorably to declines of 2% at Nielsen and 4% at NABCA. These results reflect the strength of our portfolio and the effectiveness of our brand building and revenue growth management, or RGM initiatives. Profitability also continued to improve. Second quarter gross margin expanded 20 basis points to 53%, driven by favorable portfolio mix and early benefits from our RGM efforts. Gross profit totaling $31.6 million was below prior years, resulting from the anticipated decline in our other products category. Overall, we are encouraged by the continued momentum in Branded Spirits and believe our portfolio remains well-positioned to deliver differentiated growth while gaining share in a difficult operating environment. Let's take a moment to focus on our Premium Plus portfolio, which continued to be a key growth engine during the quarter, led by Penelope, Yellowstone, and Everclear. Penelope sales increased 13% despite cycling the highly successful launch of Wheated in the prior year period. Growth was supported by continued strength in Four Grain, an original core brand, which benefited from increased media investment and expanded distribution. The core also benefited from recent innovation, including the introduction of 2 new core expressions, Penelope Kentucky Straight Bourbon and Penelope Rye. We were also excited to add to our ready-to-pour portfolio with the launch of our new BlackBerry Old Fashioned, while also staying true to our brand's ethos with newly introduced limited-time offerings of Penelope Riviera and Architects of Golf. Yellowstone delivered another exceptional quarter, with sales increasing 54%. Growth was driven by innovation, including our recent limited-time release commemorating the United States' 250th anniversary, as well as improved performance of Yellowstone Select in targeted markets supported by increased marketing investment and RGM initiatives. Everclear grew 13%, reflecting increased consumer engagement in key consumption occasions and continued strength in the brand's core positioning. Turning to our mid-price portfolio. Stabilization efforts continue to gain traction. Growth was led by Exotico, Juárez Tequila, and Ezra Brooks, and driven by improved distribution, targeted price actions, and successful distributor transitions and focused brand support. Overall, these results reinforce our confidence that the portfolio is becoming increasingly more balanced with growth in Premium Plus brands complemented by improving performance across our larger heritage brands. Another important strategic initiative is portfolio optimization. During our last earnings call, we discussed plans to rationalize lower priority brands and SKUs to improve focus and profitability. I'm pleased to report that we've exceeded our original expectations. As of the second quarter, we have rationalized 52 brands, representing approximately 47% of our product portfolio. While these brands account for approximately 1% of sales, this effort is expected to improve annualized gross margin by approximately 25 basis points, while also enhancing the sales top-line performance estimated to be 42 basis points through improved commercial focus. Beyond the direct and readily visible P&L benefits, this initiative is creating enterprise value by simplifying operations, improving inventory management, and driving working capital efficiencies across the business. Expanding distribution remains a key strategic priority and an important source of future growth. During the quarter, we grew our national and regional chains off-premise points of distribution by 7% and on-premise points of distribution by 4% sequentially. For these same customers, our Premium Plus portfolio grew off-premise points of distribution by 14% and grew on-premise by 10% sequentially. Overall, we are encouraged by the momentum across Branded Spirits and remain focused on expanding distribution, increasing consumer awareness, optimizing our portfolio, and accelerating growth across our highest priority brands. Turning to Distilling Solutions, second quarter sales were $29.2 million, down 42% compared to prior year. Gross profit of $11.3 million declined 40%. However, gross margin improved approximately 110 basis points to 38.7%, driven by favorable ongoing cost savings initiatives and sales mix. We continue to make gradual progress and believe we remain well-positioned to compete intelligently and aggressively in a very challenging market. As you know, the industry remains significantly oversupplied with elevated inventory levels continuing to pressure demand. Despite these market conditions, we remain one of the leading global providers of contracted new make and aged American whiskey and continue to focus on the actions within our control to strengthen the business and position it for long-term success. The primary focus of our larger national and multinational customers, which historically represent the majority of our new distillate demand, is reducing inventory and managing working capital. Many customers are operating under strict capital allocation guidelines and are limited in their ability to enter into long-term supply commitments as they work through existing inventory positions. Importantly, these discussions are less about production capabilities and more about balance sheet management in a market that remains oversupplied. In response, we continue to deepen customer relationships by providing solutions beyond traditional new distillate supply. This includes opportunistic aged whiskey sales, premium white goods offerings, such as premium GNS and gin, and other services that help customers improve profitability, optimize inventory, and support their broader business objectives. While brown goods sales declined approximately 59% in the quarter versus the prior year, we are seeing encouraging progress in several targeted initiatives. We continue to expand our presence in private label whiskey, and the significant national private label customer we discussed last quarter has increased its business beyond the original demand levels communicated to us. We're also focused on driving cash generation by expanding our portfolio of value-added services and strengthening customer retention. Warehouse services represented approximately 30% of Distilling Solutions sales during the quarter, with both sales and gross profit increasing versus the prior year. While industry conditions remain challenging, we believe our customer relationships, commercial capabilities, aged whiskey expertise, and expanding service offerings position us well to capitalize when the market ultimately normalizes. Turning now to Ingredient Solutions, demand across our specialty ingredient portfolio remains healthy. During the quarter, specialty starch sales, including Fibersym, increased 2%, and we continue to ship all available production to meet customer demand. Our specialty protein platform marketed under Arise also grew, benefiting from favorable mix and pricing. These results underscore the continued demand for high-protein, high-fiber, and nutrient-dense food products. Trends such as GLP-1 adoption, lower net carb diets, and protein-focused nutrition continue to drive innovation across bakery, snack, and meal solution categories. For the second quarter, Ingredient Solutions sales increased 2% to $35.5 million, despite lapping a particularly strong prior year comparison. Growth was driven by favorable pricing and mix within our specialty protein and specialty starch portfolios, as well as improved sales of biofuel and other co-products as operational performance stabilized. These results also reflected an addition of 4 significant new national customers. While revenue trends remain encouraging, profitability continues to be impacted by elevated waste starch disposal costs associated with the transition following the closure of the Atchison Distillery and startup of the biofuel facility. As a result, gross profit declined to $3.6 million and gross margin was 10.1% during the quarter. Since the beginning of the year, the team has significantly improved operational reliability and reduced unplanned downtime, resulting in higher production throughput. While these improvements are encouraging, they also generated greater waste starch stream during the first half than initially anticipated. Through various engineering solutions, the team successfully reduced waste volumes during the second quarter. These solutions have proven to be more cost-effective than traditional waste disposal methods and reduce reliance on third-party providers. However, implementation costs were higher during the quarter than originally expected. While we expect these costs to improve over time as our processes are further optimized, the impact is reflected in our updated full-year Ingredient Solutions margin outlook and incorporated into our 2026 guidance. With that, I will turn the call over to Brandon. Brandon Gall: Thank you, Julie. Turning now to our financial results. For the second quarter of 2026, we reported consolidated sales of $124.4 million, which were down 15% versus the prior year period. Gross profit of $46.5 million was down 20%. Both metrics were lower versus the prior year, primarily due to expected declines in brown goods sales and Distilling Solutions. This was partially offset by higher Ingredient Solutions sales. Consolidated gross margin of 37.4% declined by approximately 270 basis points as higher waste starch stream costs in Ingredient Solutions pressured overall profitability. Both Branded Spirits and Distilling Solutions saw gross margin expansion in the quarter relative to prior year. Branded Spirits advertising and promotion expenses decreased by approximately 12% year-over-year. It represented 9.3% of Branded Spirits sales, primarily due to the timing of spend throughout the year. For the full year, we continue to expect Branded Spirits A&P to be approximately 13% to 14% of Branded Spirits sales. Our total SG&A spend declined by 13% in the second quarter, while adjusted SG&A declined by 19%, with both amounts showing the benefit of our expanded cost savings efforts. These SG&A savings were partially offset by a $2.1 million credit loss provision taken in the quarter relating to the RNDC Chapter 11 filing. Net income of $12 million was down 17% versus the prior year, while adjusted net income of $15.8 million decreased 25% on a year-over-year basis. Earnings per share for the second quarter were $0.55 versus $0.67 in the prior year. On an adjusted basis, earnings per share of $0.72 decreased 26% year-over-year. Adjusted EBITDA of $27.6 million decreased 23% over the same period. Capital expenditures declined 66% to $6.4 million on a year-to-date basis. We continue to estimate CapEx of approximately $20 million for the full year as we look to optimize our capital deployment in the current industry environment. As of June 30th, our net debt leverage ratio was approximately 3.5x, up from 2.1x at the end of March. This expected increase was primarily due to the Penelope earn-out payment of approximately $111 million, which was made during the second quarter. Turning to annual guidance. We are reaffirming our expectations for 2026 net sales to be between $480 million and $500 million. Adjusted EBITDA is still projected to range from $90 million to $98 million. This is consistent with previous expectations as the efficiencies and savings from our recently implemented ownership cost management mindset initiative are expected to offset our reduced gross profit outlook in Ingredient Solutions and our Branded Spirits second quarter provision for credit loss. Adjusted basic EPS for 2026 is still expected to be between $1.50 and $1.80, with weighted average shares outstanding remaining at approximately 21.4 million. We now expect our full-year 2026 effective tax rate will be approximately 23% due to a recent revision to 2025 Kansas State law, which resulted in a favorable revaluation of certain deferred tax liabilities. Turning to our balance sheet and cash flow outlook, we maintain our expectations for full year 2026 operating cash flow of $50 million to $55 million and free cash flow of $30 million to $35 million. Both of these exclude the impact of the Penelope earn-out payment. We anticipate our net leverage ratio will peak during the third quarter. We continue to estimate net whiskey put away in the $13 million to $18 million range for 2026, which includes both new production and procurement of barrels. From a business segment perspective, our full-year segment outlook for Distilling Solutions is consistent with previously shared estimates, with sales down approximately 35% and gross profit down approximately 40%. Our full-year sales outlook of $140 million to $150 million for Ingredient Solutions reflects strong growth as we expect improved year-over-year reliability and throughput gains from our operational initiatives. However, due to increased waste starch stream costs, we now anticipate Ingredient Solutions gross margins to be in the high single to low double-digit range for the full year. Our full-year segment outlook for Branded Spirits is unchanged as we continue to expect sales declines of mid-single digits with slight gross margin improvement. To close, I'd like to reiterate Julie's previous comments. As we move through the second half of 2026, we will maintain our strategic roadmap and continue to drive our key growth initiatives while prioritizing our best opportunities for growth. We won't stop taking the decisive actions that are key to the company's long-term growth, and we will continue to execute with discipline. And with that, I'd like to turn it back over to Julie. Julie Francis: Thank you, Brandon. Before we wrap up, I want to thank the entire MGP team for another quarter of execution, performance, impact, and care, and for their hard work and commitment to deliver against our strategic roadmap. This strategic roadmap is designed to drive growth across all 3 businesses. For Branded Spirits, we will continue to focus on winning in the Premium Plus category with Penelope Bourbon, while strengthening our overall brand focus. We will prioritize our best-performing brands and plan to rationalize approximately 47% of our product portfolio. We will also strive to increase our penetration in national accounts and to strengthen our digital marketing capabilities. For Distilling Solutions, we will remain focused on rebuilding our aged whiskey pipeline while broadening our premium white goods offerings to complement our brown goods portfolio. We will also continue to work on attracting and retaining a wider pool of customers by growing our private label and international whiskey programs and by expanding our value-added service offerings. We are pleased to have an industry veteran join us who is immediately engaging in the business and with customers. And for Ingredient Solutions, our efforts will remain focused on driving growth through our industry-leading specialty fiber and specialty protein product offerings. We expect to continue our operational reliability, enhance inventory availability, and to make continuous improvements across the segment. Managing high waste disposal costs will remain a key priority for this business. Looking ahead, I'm encouraged by the progress we are making across our organization. As I stated earlier, our strategy remains grounded in focus, execution, discipline, and accountability. We're actively evaluating all levers to operate more efficiently and effectively. While the industry outlook remains challenging, we're committed to addressing our challenges in order to position MGP to emerge as a better aligned and more resilient company that is capable of delivering long-term value creation. And with that, I'd like to turn the call over to the operator for any questions. Operator: We will now begin the question and answer session. [Operator Instructions] The first question comes from Seamus Cassidy with TD Cowen. Seamus Cassidy: Spirits, you mentioned some strong innovation and distribution gains that helped drive growth for some of your brands this quarter. So I guess 2-part question. One, would you characterize this quarter as above average in terms of innovation or is the pipeline fairly well balanced throughout the year? And then two, what's the runway for distribution expansion going forward? And I guess thus far, how have your teams sort of been successful in realizing these distribution gains? Julie Francis: Seamus, it's Julie. The very first part of your question was cut off, but -- so I just want to make sure that we have exactly what you said because you didn't start right away. Seamus Cassidy: Yes, sorry, I was just saying strong innovation and distribution gains drove the growth. So, I guess, is this quarter above average in terms of innovation or is the pipeline fairly well balanced? Julie Francis: Okay, got you. Well, first and foremost, I appreciate you joining the call. And yes, this quarter we were certainly pleased with our Branded Spirits performance, really driven by our Premium Plus portfolio. Yes, we certainly did have innovation in the quarter. So it was a strong quarter on innovation, but we had a strong quarter last year as well. If you recall, Penelope -- my scripted remarks, Penelope was up 13% in the quarter, and we were lapping 100% up last year. So very pleased with the team. We're demonstrating that we can cycle very good innovation with new innovation as well. And in the quarter, we did launch in Penelope 2 new core expressions, Kentucky Straight Bourbon and also everyday Rye. And so now we have a core lineup, all of which are under $40 that we have to put on the shelves. And then we'll continue to certainly spice in those limited-time offerings that the Penelope core consumer certainly does appreciate. But I wouldn't say that innovation -- we're pretty measured over the next couple quarters. And we did have a lot of innovation last year. So we're doing about, I'd say about 15% less innovation, but again, it's better. We have digital investment behind it. And so we feel very bullish that the innovation that we are bringing to market is working. Ready-to-Pours was another opportunity that we saw in the product roadmap that we weren't participating in as effectively as we should, and now we're up to 7 RTPs, 4 of which are in Penelope. We did launch BlackBerry in the quarter as well. And so far those 7 SKUs, we already have a 2.4 share. So certainly pleased with the performance. Seamus Cassidy: Great. And then just the runway for distribution expansion for the Branded Spirits portfolio? Julie Francis: Yes, that's great. Yes, we certainly -- in the national and regional accounts, I think you've seen the numbers. We are very pleased with the expansion and what we're seeing there. And we do think there's more opportunity. We did recently announce, I would say a seasoned 30-plus year industry vet to come lead the national accounts. We do think that we're under-indexed in both regional and national. So that runway certainly is there. And I think we've said before, we have anywhere between a 3x to 6x disadvantage in average number of items in national and regional accounts. So we're certainly very pleased with the performance, but we certainly think there's a bigger runway to be had. Operator: Next, we have Marc Torrente with Wells Fargo. Marc Torrente: First, this was another quarter of solid results versus expectations, yet you still reaffirmed the guide. You called out Ingredient Solutions costs as an offset. Any other changes to your outlook for the other segments? Or are those progressing to plan? And how are you thinking about cadence for the remainder of the year? Julie Francis: Yes, I'll take the first part and let Brandon talk about the cadence. But as you saw, Branded Spirits, we certainly have confirmed our full segment outlook, and we've also done that with Distilling Solutions. And I would say on Distilling Solutions, you know, certainly -- the oversupply environment certainly is there, but we're certainly pleased to see some of the performance that we're able to still deliver. The team's doing a great job of managing operating expenses and also in talking to our customers, expanding our premium white goods. And we're certainly pleased to have an industry veteran like Tom join us, you know, 3 different Distilling Solutions, multinational companies he's worked for, for our next chapter of growth. We've got -- our margins were in the mid-30s and we still expect that to be had. In Ingredient Solutions. We did update that full segment outlook for the increased costs due to the waste stream disposal. I would tell you that we've always had in our full-year segment outlook for Ingredient Solutions that the back half we were going to have 15% to 20% more pounds. So as those pounds are a bit more costly on the waste disposal side, that's why we sequentially took down that performance. And I'll turn it over to Brandon for cadence. Brandon Gall: Yes, as far as cadence goes, Marc, depending on the segment, it can be a little different, but we are -- as typical with our business, Q4 will be stronger relative to Q3. And as we're working through the ingredients issues, which are more near end, we expect those to affect profitability in Q3 as well. So Q4, relatively stronger than Q3. Marc Torrente: Okay, I appreciate that. And then entering the year, it seemed you were cautiously optimistic '26 could be a bottom. You had also said that you hope to get some better visibility on key distilling customer needs for '26 and beyond at some point during Q2 or front half of the year. Any updates here in terms of order outlook and maybe your ability to grow off the '26 base? Julie Francis: Yes, let me -- we'll certainly talk about -- let's talk about Distilling Solutions visibility. I think that's a very good question. You know, Tom and team have recently had customers across large multinational and also certainly the large and medium craft. And all the customers still remain very focused on reducing inventory. They're in an oversupply situation, preserving working capital rather than making new long-term distillate commitments. In addition, tighter inventory finance and availability of attractively priced aged whiskey continues to discourage new make purchases across most of the customer segments. We do remain very engaged. Our partnership approach is working with our customers. We'll continue to find opportunities through aged whiskey sales. Private label. I think you heard some nice progress and some nice results from our new customer that we just launched in May, and also in premium goods and warehouse services. We're still very bullish on how well we are positioned at the end of this. And as we get through this very difficult time, that there'll be a few winners. And we think we're positioned to be one of those. But the market does continue to be driven by inventory rationalization and capital allocation discussions. We certainly -- again, we reaffirmed our full year outlook, which is good. And I do want Brandon, and we do have some new TTB data that would have been launched recently. And I think it's important for Brandon to share that. Brandon Gall: Yes. And so TTB data was recently updated through March. So we got 5 incremental months of data recently. And the data supports that exact view, which is this is fundamentally an inventory rationalization cycle. On the production side, trailing 12-month, production is down roughly 28% year-over-year, which is we're now operating as an industry at the lowest run rate we've seen since 2018. On the demand side, dumps for bottling and others is down approximately 9%, not a great print. However, a lot of this we believe is being driven by weak export data and demand due to tariffs and international trade flows. The most encouraging thing within the data is inventory. Although they remain elevated, year-over-year inventory growth has been cut roughly in half from what it was 6 months ago, which is an important signal that production cuts are beginning to work their way through the system. So overall, Marc, we view the data as supportive of a gradual rationalization scenario. We don't yet see evidence of a sharp recovery, but we also don't see evidence that the industry conditions are deteriorating further. Finally, we're seeing a market that is slowly working through excess inventory, moving towards other routes over time. Operator: The next question comes from Sean McGowan with Roth Capital Partners. Sean McGowan: I'd like to drill down a little bit more on the Ingredient Solutions side. So can you talk about, you know, what is it that's holding up the improvement in margins and when would you expect to start to see some progress on that year-over-year? Julie Francis: Yes, thanks, I appreciate that. Yes, here's what has improved, reliability and throughput. As you know, there were significant opportunities as we closed down our Atchison Distillery in operating that facility with reliability. Good news is since March we have been able to produce the pounds that we expected. And again, in the back half, those pounds will be up over 20%. So that's the good news. The opportunity is, obviously, as we produce those pounds, the waste starch stream disposal streams are more costly, the implementation costs and both the costs of disposing them are more costly. We've made great progress on one of the work streams called effluent where we talked last time about sequentially improving that and that has gone down. But we do see this -- certainly this headwind, especially with the more pounds produced in the second half. We do see this persisting to the end of the year and our full segment outlook does represent that. And for 2027, our expectation, again, the same team that has improved the reliability, same team that is solving the effluent, is the same team that has identified the different work streams that we can improve the other 2 different disposals. And so we expect -- and I'd say by the end of 2027, you can expect ending the year around the low 20s for the gross margin. And so certainly pleased with some performance, but not pleased with some of the other areas that we're encountering. Sean McGowan: Okay. And if I can ask you to clarify something you said earlier when you were talking about rationalizing brands. I think you said that the brands that have been rationalized accounted for 1% of sales. Did you mean 1% of Branded Spirits sales or 1% of total company sales? Julie Francis: No, 1% -- yes, that's a great question. No, just 1% of the segment sales. Sorry about that. 1% of the Branded Spirits sales, yes. And listen, I do want -- since you brought it up, I mean, certainly I'm pleased with the progress there. I mean we said last time we were at 30, we'd targeted 45 and we're at 52. And as we've talked to our newest distributor partner and what's important on making sure that we can execute against our plan, certainly they're very pleased to see that we're focused on product portfolio, which with their encouragement, it made us rethink that even more. And as -- we're seeing early proof points that when you focus on the main brands and provide the investment, we've got heavy investment on 5, we've got mid investment on the mid-5 and then selective investments on some of the value brands, when you're able to streamline the focus and the investment, we're seeing some nice results. So I appreciate that question, but we are pleased with some of the progress we're making there. Operator: The next question comes from Mitch Pinheiro with Sturdivant. Mitchell Pinheiro: I had just a couple of questions. So first, just a clarification. Brandon said on the barrel distillate, you would still expect an increase in net put away between $13 million and $18 million. Did I hear that correct? Brandon Gall: Yes, that's correct, Mitch. Mitchell Pinheiro: So we're basically at the high point of the barrel distillate inventory level? Brandon Gall: Yes, that's correct. Mitchell Pinheiro: Is that fair to say? Brandon Gall: Yes, and if you go and look at last year, we followed a very similar arc in that, we strive for efficiencies and the front half, we scheduled most of our put away. So this is -- it's going according to plan. Mitchell Pinheiro: Okay. And obviously this put away is for the branded business, correct? Brandon Gall: It's for both, Branded and Distilling. As you recall, last year, we cut back a distilling put away all the way. And this year we're turning that back on to support our long-term strategy in support of our customers. And so it consists of both this year, Mitch. Mitchell Pinheiro: Okay, and then you talked -- and also I saw that you see the finished goods down. Is the finished goods down? Is that in the Branded Spirits business? Brandon Gall: Yes, much of that's going to be in the Branded Spirits business. That's correct. Mitchell Pinheiro: Okay. And then when you're looking at the -- on the Branded business, obviously the focus has been on Yellowstone and I guess Penelope of course. The -- are you going to focus at all or how do you think about the Remus brand on the Ross & Squibb side and how that factors into the Branded Spirits outlook? Julie Francis: Yes, listen, Remus brand is a fantastic brand that is well received by Bourbon consumers. They love our annual release, but it's a very, very small percent of our business. And certainly, what we've noticed is having that limited-time release and doing it at a frequency that those Bourbon consumers are looking for. We think that's the right approach, given the quality of juice and the core consumer that's behind that, which is the highly engaged Bourbon consumer. So that's the strategy there. And then certainly you can see we have very clear strategies for Premium Plus, Penelope, Yellowstone, El Mayor, and Rebel. And then selectively we're investing against mid and value and just to see some of the movement -- I mean, Mitch, Yellowstone is up 54% this past quarter. You know, a couple of different things. One, yes, we had a limited-time offering, the 250th U.S. anniversary bottle came in too. It had the Statue of Liberty, 7-year juice. So great juice that was well received. But last quarter, I spoke that we started testing our digital investments. Again, we ramped up both capabilities, [indiscernible] running it, gave a very -- 15% of our A&P is now targeted towards digital. It was 0 last year. And we tested 2 different markets on Yellowstone Select, California and Pennsylvania, and I shared they're both up double digits. Good news is that momentum continues and we've actually expanded in another 8 markets and we're seeing similar results. So again, very pleased with the focus and attention we have our product portfolio, both streamlining it and then making sure that each brand, each product portfolio plays a role that should and is appropriately resourced. Operator: The next question is from Ben Klieve with Benchmark. Benjamin Klieve: Congratulations on a nice quarter here. First, I want to double click on the Ingredient Solutions dynamic. And I'm wondering if you can talk about kind of what the end objective is going to be here for this waste stream. Is your expectation that, you know, you're going to have less of the waste stream when improvements are made, more successfully be able to upcycle it, say, to the fuel plant, or just that your costs to get rid of it are going to decrease? And then also I'm wondering if the elevated cost associated with this dynamic this year is, how much of it is a mechanical issue or an operational one? Julie Francis: I just say on the 3 items that you said, what are the piece -- are we going to -- where's it going to come from? It's going to come from all 3, right? One, we're going to, you know, we have a new dryer, right, that we implemented. We did have the successful shutdown, you know, 100 different projects, a large piece of equipment -- 2 large pieces of equipment in there, 4 miles of electrical cables underground were replaced, and we came up on time. The team did a great job. So that dryer will help reduce it, right? So that's one. The second one is being more efficient and effective and where we're disposing of that. And then third, certainly we would expect once we get class implementation -- and I'd tell you, implementation of this type of facility, and really any facility, are 18 to 24 months. So we do know what the costs are, we know where they're ahead of our financial thesis, and the same team that has worked on getting the reliability back is the same team working on this, and we do have a roadmap on how to reduce those costs. Benjamin Klieve: Got it. Got it. Thank you, Julie. And then one other one for me, and I'll get back in queue. I'm wondering if you can elaborate a bit on the ready-to-drink business that you're building here. And can you talk about how you are balancing the kind of innovation pipeline you have with introducing new flavors versus kind of stepping on the gas of existing flavors and products that are getting commercial traction and really leaning in on what you've already built. And maybe that's not a trade-off, but I'm just curious how you're -- kind of you're thinking about this balance so we can kind of understand how significant this product is going to be later this year or next year? Julie Francis: Listen, it's a measured approach, right? We have a product portfolio that we streamline, which allows us to have attention or resource that each brand needs. We have a portfolio roadmap for both innovation and also optimization that is ongoing, it's not episodic. RTPs play a really important role. We're early days into it. I mean, 2.4% market share with just 7 SKUs is pretty good, right? So we want to make sure that we're not just launching innovation and launch innovation. Our distributor partners and consumers want, you know, want one that they connect with and that are going to sell. And so by having -- being really mindful of not just launching a bunch of innovation, being purposeful, what's the right flavor, how is it differentiated? We're very focused on price package architecture. All of these are below $30. There's 12 pours to a bottle. That's less than $3 a drink -- for a fantastic tasting drink. And I can tell you what, people are very enthused with both the SKUs, the price point, and also how it connects with them. And it's not just in whiskey, it's also we've got -- we certainly have some new flavors in espresso and really on those trends. So we're going to be thoughtful, but we also have a whole other piece of business, right? Our 5 focus brands, that we're going to make sure that we are innovating. The new alcohol consumer is drinking, right? But they do want moments, they want experiences, and they want to try different things. And so ensuring that we continue to engage in that, certainly Penelope is a fantastic example of a highly engaged Bourbon consumer who loves to try different things. Very excited about Penelope expressions and Penelope drops. We're going to continue those drops and we're going to be very mindful of that. But then there's other areas like core. We didn't have a Kentucky Straight Bourbon. We didn't have an everyday Rye. Those certainly play a role in any national brand. So launching those and being very purposeful. Our price point is below $40. In this value-minded world with consumers expecting value, that's a great price for great juice. So we're being measured, we're being thoughtful, and we're being impactful. Benjamin Klieve: Congratulations again on a good quarter. Operator: This concludes our question and answer session. I would like to turn the conference back over to Julie Francis for any closing remarks. Julie Francis: Thank you, everyone. We appreciate your engagement in our business and we look forward to talking again in the next quarter. Take care. Cheers. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by continued momentum in the Premium Plus portfolio, specifically Penelope Bourbon and Yellowstone, which helped offset broader industry headwinds. The company executed a significant portfolio optimization, rationalizing 52 brands representing 47% of the product portfolio to improve commercial focus and operational efficiency. Distilling Solutions faced a 42% sales decline as multinational customers prioritized inventory reduction and working capital management over new long-term supply commitments. Ingredient Solutions saw sales growth driven by specialty starch and protein demand, though profitability was hampered by higher-than-expected waste starch disposal costs. Management is aggressively strengthening leadership capabilities, appointing four new strategic executives to lead distilling sales, national accounts, brand marketing, and enterprise FP&A. A disciplined transition of 10 markets to a new distributor partner, Reyes Beverage Group, yielded early positive momentum with a 7% increase in Premium Plus depletions. Full-year 2026 guidance was reaffirmed, assuming that cost-saving initiatives will offset the reduced gross profit outlook in Ingredient Solutions and a $2.1 million credit loss provision. Ingredient Solutions gross margins are expected to remain in the high single to low double-digit range for the full year due to persistent waste disposal headwinds. Management anticipates a gradual industry rationalization rather than a sharp recovery, noting that production cuts are beginning to slow the growth of elevated inventory levels. Branded Spirits advertising and promotion spend is projected to reach 13% to 14% of segment sales for the full year, with a shift toward digital marketing investments. The company expects to reach a net leverage ratio peak in the third quarter of 2026 following the $111 million Penelope earn-out payment. A $2.1 million credit loss provision was recorded in the second quarter related to the RNDC Chapter 11 bankruptcy filing. Ingredient Solutions profitability was impacted by elevated implementation costs for engineering solutions designed to manage waste starch streams. The portfolio rationalization of 52 brands is expected to improve annualized gross margin by approximately 25 basis points and top-line performance by 42 basis points. A favorable revaluation of deferred tax liabilities occurred due to a revision in Kansas State law, lowering the expected effective tax rate to 23%. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that while innovation was strong this quarter, they are being more measured for the remainder of the year, focusing on higher-quality digital investment. The company sees a significant runway in national and regional accounts, where they currently face a 3x to 6x disadvantage in average items per account compared to competitors. Customers remain focused on preserving working capital and utilizing existing inventory rather than making new distillate commitments. Industry production is at its lowest run rate since 2018, which management views as a necessary step toward market normalization. Management expects the waste disposal headwinds to persist through the end of 2026 as production volumes increase by 15% to 20% in the second half. The company targets a return to gross margins in the low 20s for the Ingredient Solutions segment by the end of 2027.

Company reaffirms full-year 2026 guidance and declares $0.12 quarterly dividend ATCHISON, Kan., July 29, 2026--(BUSINESS WIRE)--MGP Ingredients, Inc. (Nasdaq: MGPI), a leading provider of branded and distilled spirits and food ingredient solutions, today reported results for the second quarter ended June 30, 2026. During the quarter, MGP executed against its strategic roadmap, and the company continued to strengthen and revamp its sales, marketing and supply chain functions, while adding specific capabilities to address new and existing growth opportunities. The company also continued to drive progress across the business, by eliminating waste, driving efficiencies and maximizing effectiveness through the implementation of its ownership cost management initiative. Key Second Quarter Metrics "I’m pleased with our second quarter results, as adjusted EBITDA and adjusted basic EPS came in ahead of our expectations. These results reflect continued momentum in our premium plus portfolio, led by Penelope Bourbon and Yellowstone, and an improvement in select mid- and value-priced brands. We also delivered sales growth in Ingredient Solutions, which reflects both continued strong customer demand and improvements in operational reliability," said Julie Francis, president and CEO. "Our second quarter results are a reflection of our efforts to drive long-term growth across all three of our businesses and to deliver value creation, even as we continue to navigate a challenging industry backdrop. As we move through the second half of 2026, we will maintain our strategic roadmap and drive our key growth initiatives, while prioritizing our best opportunities for growth, taking decisive actions and executing with discipline." Consolidated Results Second quarter 2026 versus prior year Sales and gross profit decreased by 15% and 20%, respectively, primarily due to expected declines in brown goods sales in Distilling Solutions, which were partially offset by higher Ingredient Solutions sales. While Branded Spirits and Distilling Solutions delivered gross margin improvement, consolidated gross margin declined ~270 basis points, as higher waste starch stream costs in Ingredient Solutions pressured profitability. Operating income decreased to $17.7 million, as growth in Branded Spirits was offset by expected reductions in Distilling Solutions and Ingredient Solutions and was impacted by an increase in provision for credit loss related to a customer bankruptcy. On an adjusted basis, operating income decreased by 30% to $20.1 million. Adjusted EBITDA decreased 23% to $27.6 million. Advertising and promotion expenses decreased 18% to $5.7 million, primarily due to the timing of spend throughout the year, which has been aligned with the company’s strategic roadmap and focused on the most attractive growth opportunities. Selling, general and administrative expense declined 13%, while adjusted SG&A decreased 19% and represented 15% of consolidated sales, as cost savings efforts continued to expand. Net income was $12.0 million and basic EPS was $0.55 for the second quarter. On an adjusted basis, second quarter net income and basic EPS were $15.8 million and $0.72 per share, respectively. Branded Spirits Second quarter 2026 versus prior year Sales of $59.6 million decreased 1% versus $60.5 million. Gross profit of $31.6 million decreased 1% versus $32.0 million. Gross margin of 53.0% increased by 20 basis points versus 52.8%. Key developments versus prior year Excluding the other products category, which consists primarily of private label bottled products, sales increased 3% and reflected the highest growth rate in the past two years. Premium plus sales increased by 5%, with key brands showing improvement, as the company’s targeted focus on growth opportunities continued to gain traction. Within premium plus, Penelope Bourbon maintained its strong growth trajectory and was up 13%. Yellowstone also saw significant growth, driven by an innovative, limited edition offering. Combined sales of the mid- and value-priced portfolios improved slightly, with mid-priced offerings growing 5%. The company continued to successfully prioritize its best performing brands in these price tiers. Distilling Solutions Second quarter 2026 versus prior year Sales of $29.2 million decreased 42% versus $50.0 million. Gross profit of $11.3 million decreased 40% versus $18.8 million. Gross margin of 38.7% increased by 110 basis points versus 37.6%. Key developments versus prior year As expected, lower demand for aged and new distillate whiskey continued to pressure results and drove a 59% decline in brown goods sales. Gross margin improved, due to better mix and cost savings efforts. Warehouse services revenue increased by high-single digits and was driven, in part, by expanded service offerings. Ingredient Solutions Second quarter 2026 versus prior year Sales of $35.5 million increased 2% versus $35.0 million. Gross profit of $3.6 million decreased 53% versus $7.6 million. Gross margin of 10.1% decreased versus 21.7%. Key developments versus prior year Sales improvement was primarily driven by favorable price and mix of specialty wheat proteins and starches, as well as increased sales of biofuel and other byproducts. Despite improvements in operational reliability, higher waste starch stream costs pressured profitability. 2026 Financial Outlook MGP reaffirmed its consolidated guidance for fiscal 2026: Sales projected to be in the range of $480 million to $500 million. Adjusted EBITDA expected to be between $90 million to $98 million. Adjusted basic EPS expected to be in the $1.50 to 1.80 range, with weighted average basic shares outstanding of approximately 21.4 million. Full-year capital expenditures expected to be approximately $20 million. Due to a recent revision to 2025 Kansas tax law, which resulted in the revaluation of deferred tax liabilities, the company now anticipates its full year 2026 effective tax rate will be approximately 23%. Dividend Distribution The company’s Board of Directors declared a dividend of $0.12 per share of common stock. The dividend is payable on August 28, 2026, to stockholders of record as of August 14, 2026. Conference Call and Webcast Information MGP Ingredients will host a conference call today at 10 a.m. ET, July 29, 2026, to discuss the results, provide a general business update, and answer questions. Please visit the News and Events section of the company’s Investor Relations website to access the webcast. Investors can also dial (844) 308-6398 or (412) 717-9605 (international) to listen to the call. A replay will be available on the company’s website approximately 24 hours after the call concludes. About MGP Ingredients, Inc. MGP Ingredients Inc. (Nasdaq: MGPI) has been formulating excellence since 1941 by bringing product ideas to life across the alcoholic beverage and specialty ingredient industries through three segments: Branded Spirits, Distilling Solutions, and Ingredient Solutions. MGPI is one of the leading spirits distillers with an award-winning portfolio of premium brands including Penelope, Rebel, Remus, and Yellowstone bourbons and El Mayor tequila, under the Luxco umbrella. With distilleries in Indiana and Kentucky; a tequila distillery in Arandas, Mexico; and bottling operations in Missouri, Ohio, and Northern Ireland, the company creates distilled spirits for customers including many world-renowned spirits brands. In addition, the company’s high-quality specialty fiber, protein, and starch ingredients provide functional, nutritional, and sensory solutions for a wide range of food products. To learn more 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 ability of MGP Ingredients, Inc. (the "Company" or "MGP") to drive growth initiatives, prioritize growth opportunities, take decisive actions, and execute with discipline; and the Company’s 2026 outlook, including its expectations for sales, adjusted EBITDA, adjusted basic earnings per share ("EPS"), shares outstanding, capital expenditures, and tax rate. 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 and any effects of industry dynamics and market conditions; unfavorable economic conditions; 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; any inability to successfully complete our capital projects or fund capital expenditures or any warehouse expansion issues; our reliance on a limited number of suppliers; work disruptions or stoppages; climate change and measures to address climate change; 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; litigation or legal proceedings; limited rights of common stockholders and anti-takeover provisions in our governing documents; the impact of issuing shares of our common stock; 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; inability to successfully implement our strategies; interest rate increases; reliance on key personnel; impairment charges; commercial, political, and financial risks; covenants and other provisions in our credit arrangements; pandemics or other health crises; ability to pay any dividends and make any share repurchases. 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, 2025, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, 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 adjusted selling, general, and administrative expenses ("SG&A"), adjusted operating income, adjusted income before income taxes, adjusted net income, adjusted MGP earnings, adjusted EBITDA, 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 SG&A, 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 2026 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.DESCRIPTION OF NON-GAAP ITEMS The non-GAAP adjusted EBITDA measure is defined as earnings before interest expense, income tax expense (benefit), depreciation and amortization, share based compensation, equity method investment loss (gain), executive transition costs, restructuring and other costs, goodwill and other long-lived assets impairment, fair value of contingent consideration, and professional service fees. See "Reconciliation of selected GAAP measure to adjusted non-GAAP measures" for further details on selected non-GAAP items. See "Reconciliation of selected GAAP measure to adjusted non-GAAP measures" for further details on selected non-GAAP items. 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This article first appeared on GuruFocus. Release Date: July 29, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. MGP Ingredients Inc (NASDAQ:MGPI) exceeded expectations for adjusted EBITA and EPS despite a decline in sales compared to the previous year. The company reported continued momentum in its premium plus portfolio and improvement in select mid and value-priced brands. Sales growth was achieved in ingredient solutions, reflecting strong customer demand and improved operational reliability. Gross margin expanded due to lower distillation costs and favorable sales price and mix. Strategic appointments were made to strengthen leadership and expertise across customer strategy, national retail, and brand marketing. Sales for the second quarter were down 15% compared to the prior year, primarily due to expected declines in brown goods sales and distilling solutions. Gross profit decreased by 20%, with consolidated gross margin declining by approximately 270 basis points. Ingredient solutions faced elevated waste starch disposal costs, impacting profitability. The company took a $2.1 million credit loss provision due to a distributor's bankruptcy filing. The distilling solutions segment experienced a 42% decline in sales and a 40% decline in gross profit, attributed to an oversupplied market and elevated inventory levels. Warning! GuruFocus has detected 7 Warning Signs with MGPI. Is MGPI fairly valued? Test your thesis with our free DCF calculator. Q: Spirits, you mentioned some strong innovation and distribution gains that helped drive growth for some of your brands this quarter. Would you characterize this quarter as above average in terms of innovation, or is the pipeline fairly well balanced throughout the year? Also, what's the runway for distribution expansion going forward? A: Julie Francis, President and CEO: This quarter was strong in terms of innovation, particularly with our premium plus portfolio. We launched new core expressions for Penelope, which contributed to growth. While we had significant innovation last year, we are more measured now, focusing on impactful launches. Regarding distribution, we see significant opportunities, especially in national and regional accounts, and have brought in an industry veteran to lead this effort. Q: This is another quarter of solid results versus expectations, yet you still reaffirm the guidance. Are there any other changes to your outlook for the other segments, or are those progressing as planned? A: Julie Francis, President and CEO: We have confirmed our full segment outlook for branded spirits and distilling solutions. Despite the oversupply environment, we are managing operating expenses well and expanding our premium white goods. Ingredient solutions have updated their outlook due to increased waste stream disposal costs, but we expect improvement in the back half of the year. Q: Entering the year, it seemed you were cautiously optimistic that 2026 could be a bottom. Any updates here in terms of order outlook and your ability to grow off the 2026 base? A: Julie Francis, President and CEO: Customers remain focused on reducing inventory and preserving working capital. We are engaged with them, offering solutions like aged whiskey sales and private label opportunities. The market is driven by inventory rationalization, but we are well-positioned for when conditions improve. Recent TTV data supports a gradual rationalization scenario, with production cuts beginning to work through the system. Q: Can you talk about what is holding up the improvement in margins for ingredient solutions, and when would you expect to start seeing progress? A: Julie Francis, President and CEO: We've improved reliability and throughput, but waste starch disposal costs are higher than expected. We've made progress in reducing these costs and expect improvements by the end of 2027, aiming for gross margins in the low 20s. Q: Could you clarify the rationalization of brands? Did the rationalized brands account for 1% of branded spirit sales or total company sales? A: Julie Francis, President and CEO: The rationalized brands accounted for 1% of branded spirit sales. We are focusing on our main brands and seeing positive results from streamlined investments and focus. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

MGP (MGPI) came out with quarterly earnings of $0.72 per share, beating the Zacks Consensus Estimate of $0.49 per share. This compares to earnings of $0.97 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +46.94%. A quarter ago, it was expected that this producer of distillery and ingredients products used by the packaged goods industry would post earnings of $0.04 per share when it actually produced earnings of $0.15, delivering a surprise of +275%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. MGP, which belongs to the Zacks Beverages - Alcohol industry, posted revenues of $124.36 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 2.65%. This compares to year-ago revenues of $145.49 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. MGP shares have lost about 23% since the beginning of the year versus the S&P 500's gain of 8.5%. While MGP has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for MGP was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.46 on $121.03 million in revenues for the coming quarter and $1.60 on $488.52 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Beverages - Alcohol is currently in the bottom 10% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Brown-Forman B (BF.B), another stock in the same industry, has yet to report results for the quarter ended July 2026. This company is expected to post quarterly earnings of $0.38 per share in its upcoming report, which represents a year-over-year change of +5.6%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Brown-Forman B's revenues are expected to be $922.86 million, down 0.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MGP Ingredients, Inc. (MGPI) : Free Stock Analysis Report Brown-Forman Corporation (BF.B) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Food and beverage supplier MGP Ingredients (NASDAQ:MGPI) missed Wall Street’s revenue expectations in Q2 CY2026, with sales falling 14.5% year on year to $124.4 million. On the other hand, the company’s full-year revenue guidance of $490 million at the midpoint came in 1% above analysts’ estimates. Its non-GAAP profit of $0.72 per share was 43.3% above analysts’ consensus estimates. Is now the time to buy MGP Ingredients? Find out in our full research report. Revenue: $124.4 million vs analyst estimates of $125.3 million (14.5% year-on-year decline, 0.7% miss) Adjusted EPS: $0.72 vs analyst estimates of $0.50 (43.3% beat) Adjusted EBITDA: $27.61 million vs analyst estimates of $23.54 million (22.2% margin, 17.3% beat) The company reconfirmed its revenue guidance for the full year of $490 million at the midpoint Management reiterated its full-year Adjusted EPS guidance of $1.65 at the midpoint EBITDA guidance for the full year is $94 million at the midpoint, above analyst estimates of $90.81 million Operating Margin: 14.2%, in line with the same quarter last year Free Cash Flow was -$52.18 million compared to -$557,000 in the same quarter last year Market Capitalization: $399.9 million Headquartered in Atchison, Kansas, MGP Ingredients (NASDAQ:MGPI) is a leading supplier of high-quality ingredients to the food and beverage industry A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. With $500 million in revenue over the past 12 months, MGP Ingredients is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers. As you can see below, MGP Ingredients struggled to generate demand over the last three years. Its sales dropped by 14.6% annually, a poor baseline for our analysis. This quarter, MGP Ingredients missed Wall Street’s estimates and reported a rather uninspiring 14.5% year-on-year revenue decline, generating $124.4 million of revenue. Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. While this projection implies its newer products will catalyze better top-line performance, it is still below the sector average. ALSO WORTH WATCHING: Nvidia’s Quiet Partner. Nvidia’s chips cost a hundred grand. The connectors that make them work cost even more. One company makes them all. Every AI server needs specialized infrastructure the chip companies don’t make. High-speed cables. Power connectors. Thermal sensors. This 90-year-old company built a monopoly on it. The AI boom just started. This stock is still flying under the radar. Claim The Stock Ticker Here for FREE. Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king. MGP Ingredients has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 5.4% over the last two years, slightly better than the broader consumer staples sector. Taking a step back, we can see that MGP Ingredients’s margin dropped by 9.5 percentage points over the last year. Continued declines could signal it is in the middle of an investment cycle. MGP Ingredients burned through $52.18 million of cash in Q2, equivalent to a negative 42% margin. The company’s cash burn increased from $557,000 of lost cash in the same quarter last year. These numbers deviate from its longer-term margin, indicating it is a seasonal business that must build up inventory during certain quarters. It was good to see MGP Ingredients beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its revenue slightly missed. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 2.5% to $19.18 immediately following the results. MGP Ingredients had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.

Interested in MGP Ingredients, Inc.? Here are five stocks we like better. Q2 results beat internal expectations despite weaker year-over-year performance: sales fell 15% to $124.4 million, adjusted EBITDA reached $27.6 million, and adjusted EPS was $0.72. Branded Spirits showed resilience, with sales excluding contract-bottled products up 3% and premium-plus brands up 5%, led by Penelope, Yellowstone and Everclear. MGP also reaffirmed its 2026 guidance. Distilling Solutions remained the main pressure point, as sales plunged 42% amid whiskey oversupply and customer inventory reductions. Ingredient Solutions sales rose 2%, but elevated disposal costs reduced profitability. MGP Ingredients (NASDAQ:MGPI) reported second-quarter 2026 results that exceeded its internal expectations, despite year-over-year declines in sales, earnings and adjusted EBITDA amid continued pressure in the distilled spirits market. President and CEO Julie Francis said quarterly sales totaled $124.4 million, while adjusted EBITDA was $27.6 million and adjusted basic earnings per share were $0.72. Consolidated sales declined 15% from the prior-year period, primarily reflecting lower brown goods sales in the Distilling Solutions segment. → This Tiny AI Supplier Could Be More Important Than the Chipmakers “Both of these key metrics were ahead of our expectations,” Francis said, citing growth in premium-plus branded spirits, improving trends among selected mid- and value-priced brands, and higher Ingredient Solutions sales. Branded Spirits sales were modestly below the prior year on a reported basis, largely because of lower sales in the company’s other products category, which primarily includes contract-bottled products sold in Europe. Excluding that category, Branded Spirits sales rose 3% from a year earlier, according to Francis. → Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? The company said this compared favorably with Nielsen spirits-category trends, which declined 2% during the quarter, and NABCA trends, which fell 3%. MGP’s premium-plus portfolio grew 5%, led by Penelope Bourbon, Yellowstone and Everclear. Penelope sales rose 13%, supported by broader distribution, media investment behind its core offerings and the launch of Penelope Kentucky Straight Bourbon and Penelope Rye. Yellowstone sales increased 54%, aided by limited-time releases, increased marketing investment and revenue-growth-management initiatives. Everclear sales increased 13%. → Innovative ETF Strategies That Are Paying Off This Summer The company’s mid- and value-priced brands grew about 1%, with Exotico, Juárez Tequila and Ezra Brooks among the contributors. Branded Spirits gross margin expanded 20 basis points to 53%, driven by portfolio mix and early benefits from revenue-growth-management efforts. Francis said MGP continued to build distribution in national and regional accounts. Total off-premise points of distribution increased 7% sequentially and on-premise distribution rose 4%. The premium-plus portfolio increased off-premise distribution by 14% and on-premise distribution by 10% sequentially among those customers. The company is also reducing the breadth of its portfolio. It has rationalized 52 brands, representing about 47% of its product portfolio. Those brands represented approximately 1% of Branded Spirits sales, Francis clarified during the question-and-answer session. MGP expects the effort to improve annualized gross margin by about 25 basis points and top-line performance by an estimated 42 basis points through greater commercial focus. MGP addressed the Chapter 11 bankruptcy filing by distributor Republic National Distributing Co., or RNDC. CFO Brandon Gall said the company recorded a $2.1 million credit-loss provision during the quarter related to the filing. Francis said MGP had been aware of RNDC’s financial challenges since the start of the year and had developed a market-by-market transition plan. In June, the company transitioned 10 markets to Reyes Beverage Group with limited disruption, she said. During the first month of operations with Reyes, depletions increased 7% in MGP’s premium-plus portfolio and 4% in its mid-tier portfolio. The company is still working through distributor transitions in certain open and control states, with several changes expected to take effect later in the quarter. Distilling Solutions sales fell 42% year over year to $29.2 million, while gross profit declined 40% to $11.3 million. However, gross margin improved about 110 basis points to 38.7%, supported by cost-saving measures and favorable sales mix. Brown goods sales declined approximately 59% from the prior-year quarter as customers continued to prioritize inventory reduction and working-capital management in an oversupplied whiskey market. Francis said customers remain constrained in their ability to make long-term new-distillate commitments. MGP is pursuing alternative sources of revenue, including aged whiskey sales, premium white goods, private-label whiskey and warehouse services. Warehouse services represented roughly 30% of Distilling Solutions sales in the quarter, with both sales and gross profit rising from a year earlier. Gall said recently updated Alcohol and Tobacco Tax and Trade Bureau data showed trailing 12-month industry production down about 28% year over year, while inventory growth had been cut roughly in half from six months earlier. He characterized the market as moving gradually through an inventory-rationalization cycle rather than entering a sharp recovery. Ingredient Solutions sales increased 2% to $35.5 million, driven by specialty protein and specialty starch pricing and mix, as well as improved sales of biofuel and other co-products. The segment also added four significant national customers during the quarter. Specialty starch sales, including Fibersym, rose 2%, while the Arise specialty protein platform also grew. Francis said demand continued to benefit from interest in protein-focused, high-fiber and lower-net-carb food products. Profitability, however, was affected by elevated waste starch disposal costs following the closure of the Atchison Distilling facility and startup of a biofuel facility. Ingredient Solutions gross profit declined to $3.6 million and gross margin was 10.1%. MGP said engineering initiatives reduced waste volumes during the second quarter, but implementation costs were higher than expected. The company now expects full-year Ingredient Solutions gross margins in the high-single-digit to low-double-digit range. MGP reaffirmed its 2026 outlook for net sales of $480 million to $500 million, adjusted EBITDA of $90 million to $98 million, and adjusted basic EPS of $1.50 to $1.80. The company expects operating cash flow of $50 million to $55 million and free cash flow of $30 million to $35 million, excluding the Penelope earnout payment. Capital expenditures were $6.4 million year to date, down 66% from the prior-year period, and the company maintained its full-year capital spending target of about $20 million. Net leverage was approximately 3.5 times at June 30, up from 2.1 times at the end of March, primarily due to a roughly $111 million Penelope earnout payment made during the second quarter. Gall said the company expects leverage to peak in the third quarter. MGP continues to project net whiskey put-away of $13 million to $18 million for 2026. MGP Ingredients, Inc (NASDAQ: MGPI) is a leading producer of distilled spirits and specialty ingredient solutions for the food, beverage and consumer products industries. Headquartered in Atchison, Kansas, the company operates two main facilities—its historic Atchison plant, founded in 1941 as Midwest Grain Products, and a modern distillery in Lawrenceburg, Indiana. MGP Ingredients supplies an array of distillation products under its beverage and ingredient segments, serving brand owners, private-label producers and co-packers worldwide. The beverage segment features a broad portfolio of premium spirits, including bourbon and rye whiskies, vodka, gin and neutral spirits. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "MGP Ingredients Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.