• MGP Ingredients Reports Strong Fourth Quarter and Full Year 2023 Results

    Source: Nasdaq GlobeNewswire / 22 Feb 2024 06:30:01   America/Chicago

    ATCHISON, Kan., Feb. 22, 2024 (GLOBE NEWSWIRE) -- MGP Ingredients, Inc. (Nasdaq:MGPI), a leading provider of distilled spirits, branded spirits, and food ingredient solutions, today reported results for the fourth quarter and full year ended December 31, 2023.

    2023 fourth quarter consolidated results compared to 2022 fourth quarter

    • Sales increased 13% to $214.9 million.
    • Gross profit increased 35% to $85.1 million, representing 39.6% of sales.
    • Operating income increased 45% to $43.1 million. Adjusted operating income increased 70% to $50.4 million.
    • Net income increased 38% to $31.0 million. Adjusted net income increased 63% to $36.6 million.
    • Adjusted EBITDA increased 60% to $56.2 million.
    • Basic earnings per common share ("EPS") increased to $1.39 per share from $1.02 per share. Adjusted basic EPS increased to $1.64 per share from $1.02 per share.
    • Diluted EPS increased to $1.39 per share from $1.01 per share. Adjusted diluted EPS increased to $1.64 per share from $1.01 per share.

    2023 full year consolidated results compared to 2022 full year

    • Sales increased 7% to $836.5 million.
    • Gross profit increased 20% to $304.7 million, representing 36.4% of sales.
    • Operating income decreased slightly to $148.6 million. Adjusted operating income increased 21% to $180.3 million.
    • Net income decreased 2% to $107.1 million. Adjusted net income increased 20% to $131.1 million.
    • Adjusted EBITDA increased 20% to $202.5 million.
    • Basic EPS decreased to $4.82 per share from $4.94 per share. Adjusted basic EPS increased to $5.90 per share from $4.94 per share.
    • Diluted EPS decreased to $4.80 per share from $4.92 per share. Adjusted diluted EPS increased to $5.88 per share from $4.92 per share.

    “We are very pleased with our performance for the quarter and full year and remain confident in the long-term sustainability of our business model,” said David Bratcher, CEO and president of MGP Ingredients. “Our strong financial results for the quarter and year reflect continued strength in each of our business segments and the dedication of our team. Demand for our new distillate and aged whiskey was strong, which resulted in brown goods sales increasing 39% and 26% for the fourth quarter and full year 2023, respectively, as compared to the prior year periods. In our Branded Spirits segment, we continued our premiumization efforts and are pleased that sales of our premium plus portfolio grew 50% in the quarter and 24% overall for the year, which in turn drove further gross margin expansion across the portfolio. As for our Ingredient Solutions business, we remain encouraged by the traction our specialty wheat proteins and starches continue to gain. The results across all three business segments for the fourth quarter and full year demonstrate the continued success of executing our long-term strategy.”

    Distilling Solutions
    In the fourth quarter 2023, sales for the Distilling Solutions segment increased 8% to $108.9 million, reflecting a 22% increase in sales of premium beverage alcohol. Gross profit increased to $40.0 million or 36.7% of segment sales, compared to $31.7 million, or 31.3% of segment sales in the fourth quarter 2022.

    For the full year 2023, Distilling Solutions segment sales increased 5% to $450.9 million, reflecting a 14% increase in sales of premium beverage alcohol, due to continued strong new distillate and aged American whiskey sales. Gross profit increased to $145.0 million, or 32.2% of segment sales, compared to $126.3 million, or 29.5% of segment sales in 2022.  

    Branded Spirits
    For the fourth quarter 2023, sales for the Branded Spirits segment increased 19% to $72.6 million. Sales of the premium plus price tier spirit brands grew 50%. Gross profit increased to $33.1 million, or 45.6% of segment sales compared to $24.7 million, or 40.6% of segment sales in the fourth quarter 2022.

    For the full year 2023, Branded Spirits sales increased 7% to $253.9 million, reflecting continued strength in the premium plus portfolio of brands. Sales of the premium plus price tier spirit brands grew 24%. Gross profit increased to $112.8 million, or 44.4% of segment sales, compared to $95.5 million, or 40.1% of segment sales in 2022.

    Ingredient Solutions
    In the fourth quarter 2023, sales for the Ingredient Solutions segment increased 15% to $33.4 million. Gross profit increased to $12.0 million, or 36.0% of segment sales, compared to $6.9 million, or 23.8% of segment sales in the fourth quarter 2022.

    For the full year 2023, Ingredient Solutions segment sales increased 14% to $131.7 million, driven primarily by higher sales of specialty wheat proteins and specialty wheat starches. Gross profit increased to $47.0 million, or 35.7% of segment sales, compared to $31.5 million, or 27.2% of segment sales in 2022.

    Other
    Advertising and promotion expenses for the fourth quarter 2023 increased $1.5 million, or 14%, to $12.3 million as compared to the fourth quarter 2022. For the full year 2023, advertising and promotion expenses increased $8.5 million, or 29%, to $38.2 million as compared to the full year 2022.

    Corporate selling, general and administrative ("SG&A") expenses for the fourth quarter 2023 increased $3.2 million to $25.8 million as compared to the fourth quarter 2022. For the full year, corporate SG&A expenses increased $16.8 million to $91.4 million as compared to 2022.

    During the fourth quarter 2023, the impairment of assets and other one-time expenses totaled $1.1 million related to the planned closure of the Atchison distillery, and the change in fair value of the contingent consideration totaled $2.9 million related to the Penelope acquisition. For the full year 2023, the impairment of assets and other one-time expenses totaled $19.4 million related to the planned closure of the Atchison distillery, and the change in fair value of the contingent consideration totaled $7.1 million related to the Penelope acquisition.

    The corporate effective tax rate for the fourth quarter 2023 was 24.0%, compared with 19.0% from the year ago period. The corporate effective tax rate for the full year 2023 was 24.4% compared with 22.3% in 2022.

    2024 Outlook
    MGP is offering the following consolidated guidance for fiscal 2024:

    • Sales are projected to be in the range of $742 million to $756 million, following the closure of the Company's Atchison, Kansas distillery in December 2023.
    • Adjusted EBITDA is expected to be in the range of $213 million to $217 million, which excludes the add back of share-based compensation expense.a
      • Including the add back of share-based compensation expense, adjusted EBITDA is expected to be in the range of $218 million to $222 million.
    • Adjusted basic earnings per common share are forecasted to be in the $6.12 to $6.23 range, with basic weighted average shares outstanding expected to be approximately 22.3 million at year end.
    1. Beginning in the first quarter of 2024, the Company intends to add back share-based compensation expense when reporting adjusted EBITDA. Please refer to page 15 for a schedule of historical share-based compensation expense amounts and their respective impacts on previously reported adjusted EBITDA metrics.

    “As we look forward, we continue to monitor the potential impact of inventory levels at distributors, overall American whiskey supply and consumption patterns, and inflation on consumers. Despite these industry headwinds, we feel uniquely positioned to grow as a company in this dynamic operating environment, as evidenced by our implied guidance midpoint growth of 6% of adjusted EBITDA for fiscal 2024,” concluded Bratcher.

    Conference Call and Webcast Information
    MGP Ingredients will host a conference call for analysts and institutional investors at 10 a.m. ET today to discuss these results and current business trends.   The conference call and webcast will be available via:

    Webcast:                     ir.mgpingredients.com on the Events & Presentations page
    Conference Call:          844-308-6398 (domestic) or 412-717-9605 (international)

    About MGP Ingredients, Inc.
    MGP Ingredients, Inc. (Nasdaq: MGPI) is a leading producer of premium distilled spirits, branded spirits, and food ingredient solutions. Since 1941, we have combined our expertise and energy aimed at formulating excellence, bringing product ideas to life collaboratively with our customers.

    As one of the largest distillers in the U.S., MGP’s offerings include bourbon and rye whiskeys, gins, and vodkas, which are created at the intersection of science and imagination, for customers of all sizes, from crafts to multinational brands. With distilleries in Kentucky and Indiana, and bottling operations in Missouri, Ohio, and Northern Ireland, MGP has the infrastructure and expertise to create on any scale.

    MGP’s branded spirits portfolio covers a wide spectrum of brands in every segment, including iconic brands from Luxco, which was founded in 1958 by the Lux Family. Luxco is a leading producer, supplier, importer, and bottler of beverage alcohol products. Our branded spirits mission is to meet the needs and exceed the expectations of consumers, associates, and business partners. Luxco’s award-winning spirits portfolio includes well-known brands from four distilleries: Bardstown, Kentucky-based Lux Row Distillers, home of Ezra Brooks, Rebel, Blood Oath, David Nicholson, and Daviess County; Lebanon, Kentucky-based Limestone Branch Distillery, maker of Yellowstone Kentucky Straight Bourbon Whiskey, Minor Case Straight Rye Whiskey, and Bowling & Burch Gin; Jalisco, Mexico-based Destiladora González Lux, producer of 100% agave tequilas, El Mayor, Exotico, and Dos Primos; and the historic Ross & Squibb Distillery in Lawrenceburg, Indiana, where Penelope Bourbon, Remus Straight Bourbon Whiskey, and Rossville Union Straight Rye Whiskey are produced. The innovative and high-quality brand portfolio also includes Everclear Grain Alcohol, Pearl Vodka, Green Hat Gin, Saint Brendan’s Irish Cream, The Quiet Man Irish Whiskey, and other well-recognized brands.

    In addition, our Ingredient Solutions segment offers specialty proteins and starches that help customers harness the power of plants and provide a host of functional, nutritional, and sensory benefits for a wide range of food products.

    The transformation of American grain into something more is in the soul of our people, products, and history. We’re devoted to unlocking the creative potential of this extraordinary resource. For more information, visit mgpingredients.com.

    Cautionary Note Regarding Forward-Looking Statements
    This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements about the sustainability of the business model of MGP Ingredients, Inc. (the “Company” or “MGP”), its ability to grow, and the Company’s 2024 outlook, including its expectations for sales, adjusted EBITDA, adjusted basic earnings per common share (“EPS”), and shares outstanding. Forward looking statements are usually identified by or are associated with words such as “intend,” “plan,” “believe,” “estimate,” “expect,” “anticipate,” “project,” “forecast,” “hopeful,” “should,” “may,” “will,” “could,” “encouraged,” “opportunities,” “potential,” and similar terminology. These forward-looking statements reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, Company performance, Company financial results, and Company financial condition and are not guarantees of future performance.

    All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Factors that could cause actual results to differ materially from our expectations include without limitation any effects of changes in consumer preferences and purchases and our ability to anticipate or react to those changes; our ability to compete effectively; damage to our reputation or that of any of our key customers or their brands; failure to introduce successful new brands and products or have effective marketing or advertising; changes in public opinion about alcohol or our products; our reliance on our distributors to distribute our branded spirits; our reliance on fewer, more profitable customer relationships; interruptions in our operations or a catastrophic event at our facilities; decisions concerning the quantity of maturing stock of our aged distillate; warehouse expansion issues; our reliance on a limited number of suppliers; our reliance on a limited number of suppliers; work disruptions or stoppages; climate change and measures to address climate change; our closure of our Atchison, Kansas distillery; regulation and taxation and compliance with existing or future laws and regulations;   tariffs, trade relations, and trade policies; excise taxes, incentives and customs duties; our ability to protect our intellectual property rights and defend against alleged intellectual property rights infringement claims; failure to secure and maintain listings in control states; labeling or warning requirements or limitations on the availability of our products; product recalls or other product liability claims; anti-corruption laws, trade sanctions and restrictions; class action or other litigation; higher costs or the unavailability and cost of raw materials, product ingredients, energy resources, or labor; failure of our information technology systems, networks, processes, associated sites, or service providers; acquisitions and potential future acquisitions; interest rate increases; reliance on key personnel; commercial, political, and financial risks; covenants and other provisions in our credit arrangements; pandemics or other health crises; ability to pay any dividends; limited rights of common stockholders and antitakeover provisions in our governing documents; the impact of issuing shares of our common stock; and the effectiveness or execution of our strategic plan. For further information on these risks and uncertainties and other factors that could affect the Company’s business, see the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, 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 operating income, adjusted income before income taxes, adjusted net income, adjusted MGP earnings, adjusted EBITDA and adjusted basic and diluted EPS, as well as guidance for adjusted EBITDA and adjusted basic EPS. The presentation of these non-GAAP financial measures should be reviewed in conjunction with operating income, income before income taxes, net income, net income used in earnings per common share calculation, and basic and diluted EPS computed in accordance with U.S. GAAP and should not be considered a substitute for the GAAP measure. We believe that the non-GAAP measures provide useful information to investors regarding the Company's performance and overall results of operations. In addition, management uses these non-GAAP measures in conjunction with GAAP measures when evaluating the Company’s operating results compared to prior periods on a consistent basis, assessing financial trends, and for forecasting purposes. Non-GAAP financial measures may not provide information that is directly comparable to other companies, even if similar terms are used to identify such measures. The attached schedules provide a full reconciliation of historical non-GAAP financial measures to the most directly comparable U.S. GAAP financial measure. Full year 2024 guidance measures of adjusted EBITDA and adjusted basic EPS are provided on a non-GAAP basis without a reconciliation to the most directly comparable GAAP measures because the Company is unable to predict with a reasonable degree of certainty certain items contained in the GAAP measures without unreasonable efforts. Such items include without limitation, acquisition related expenses, restructuring and related expenses, and other items not reflective of the Company's ongoing operations.

    For More Information
    Investors & Analysts:
    Mike Houston
    646-475-2998 or investor.relations@mgpingredients.com

    Media:
    Greg Manis
    913-360-5440 or greg.manis@mgpingredients.com



    MGP INGREDIENTS, INC.
    OPERATING INCOME ROLLFORWARD
    (Dollars in thousands)

    Operating income, quarter versus quarter Operating
    Income    		  Change 
    Operating income for quarter ended December 31, 2022 $29,715    
    Increase in gross profit - Branded Spirits segment  8,433  29 pp(a)
    Increase in gross profit - Distilling Solutions segment  8,326  28 pp
    Increase in gross profit - Ingredient Solutions segment  5,173  17 pp
    Increase in advertising and promotion expenses  (1,470) (4)pp
    Increase in SG&A expenses  (3,148) (11)pp
    Impairment of long-lived assets and other  (1,057) (4)pp
    Change in fair value of contingent consideration  (2,900) (10)pp
    Operating income for quarter ended December 31, 2023 $43,072  45% 
     


    Operating income, year versus year Operating
    Income    		  Change 
    Operating income for year ended December 31, 2022 $148,965    
    Increase in gross profit - Distilling Solutions segment  18,682  13 pp(a)
    Increase in gross profit - Branded Spirits segment  17,260  12 pp
    Increase in gross profit - Ingredient Solutions segment  15,464  10 pp
    Increase in advertising and promotion expenses  (8,499) (6)pp
    Increase in SG&A expenses  (16,768) (11)pp
    Impairment of long-lived assets and other  (19,391) (13)pp
    Change in fair value of contingent consideration  (7,100) (5)pp
    Operating income for year ended December 31, 2023 $148,613  —% 
     

    (a) Percentage points (“pp”).


    MGP INGREDIENTS, INC.
    EARNINGS PER SHARE (“EPS”) ROLLFORWARD

    Change in EPS, quarter versus quarter EPS Change 
    Basic EPS for quarter ended December 31, 2022 $1.02    
    Change in operating income (a)  0.49  48 pp(b)
    Change in other expense, net (a)  0.03  3 pp
    Change in interest expense(a)  (0.04) (4)pp
    Change in weighted average shares outstanding  (0.01) (1)pp
    Change in effective tax rate  (0.10) (10)pp
    Basic EPS for quarter ended December 31, 2023  1.39  36% 
    Impact of dilutive shares outstanding  —  — pp
    Diluted EPS for quarter ended December 31, 2023 $1.39  36% 
     


    Change in EPS, year versus year EPS Change 
    Basic EPS for year ended December 31, 2022 $4.94    
    Change in operating income(a)  (0.02) — pp(b)
    Change in interest expense(a)  (0.04) (1)pp
    Change in other expense, net(a)  0.11  2 pp
    Change in weighted average shares outstanding  (0.02) — pp
    Change in effective tax rate  (0.15) (3)pp
    Basic EPS for year ended December 31, 2023  4.82  (2)% 
    Impact of dilutive shares outstanding  (0.02) (1)pp
    Diluted EPS for year ended December 31, 2023 $4.80  (3)% 
     

    (a) Items are net of tax based on the effective tax rate for the base year (2022).
    (b) Percentage points ("pp")


    MGP INGREDIENTS, INC.
    SALES BY OPERATING SEGMENT
    (Dollars in thousands)

     DISTILLING SOLUTIONS SALES
     Quarter Ended December 31, Quarter versus Quarter Sales
    Change Increase/(Decrease)
     2023 2022 $ Change % Change
    Brown goods$74,334 $53,624 $20,710  39%
    White goods 11,446  16,514  (5,068) (31)
    Premium beverage alcohol 85,780  70,138  15,642  22 
    Industrial alcohol 8,099  11,671  (3,572) (31)
    Food grade alcohol 93,879  81,809  12,070  15 
    Fuel grade alcohol 1,835  3,374  (1,539) (46)
    Distillers feed and related co-products 5,525  10,227  (4,702) (46)
    Warehouse services 7,674  5,777  1,897  33 
    Total Distilling Solutions$108,913 $101,187 $7,726  8%
            


     BRANDED SPIRITS SALES
     Quarter Ended December 31, Quarter versus Quarter Sales
    Change Increase/(Decrease)
     2023 2022 $ Change % Change
    Ultra premium$20,154 $12,409 $7,745  62%
    Super premium 3,810  2,752  1,058  38 
    Premium 8,149  6,283  1,866  30 
    Premium plus 32,113  21,444  10,669  50 
    Mid 20,101  19,122  979  5 
    Value 11,859  11,091  768  7 
    Other 8,542  9,204  (662) (7)
    Total Branded Spirits$72,615 $60,861 $11,754  19%
     


     INGREDIENT SOLUTIONS SALES
     Quarter Ended December 31, Quarter versus Quarter Sales
    Change Increase / (Decrease)
     2023 2022 $ Change % Change
    Specialty wheat starches$17,073 $15,122 $1,951  13%
    Specialty wheat proteins 12,373  10,088  2,285  23 
    Commodity wheat starches 3,543  3,737  (194) (5)
    Commodity wheat proteins 371  —  371  N/A
    Total Ingredient Solutions$33,360 $28,947 $4,413  15%
            



    MGP INGREDIENTS, INC.
    SALES BY OPERATING SEGMENT
    (Dollars in thousands)

     DISTILLING SOLUTIONS SALES
     Year Ended December 31, Year versus Year Sales Change
    Increase/(Decrease)
     2023 2022 $ Change % Change
    Brown goods$289,191 $229,523 $59,668  26%
    White goods 58,645  74,510  (15,865) (21)
    Premium beverage alcohol 347,836  304,033  43,803  14 
    Industrial alcohol 38,010  46,812  (8,802) (19)
    Food grade alcohol 385,846  350,845  35,001  10 
    Fuel grade alcohol 7,798  13,681  (5,883) (43)
    Distillers feed and related co-products 28,578  40,354  (11,776) (29)
    Warehouse services 28,632  23,598  5,034  21 
    Total Distilling Solutions$450,854 $428,478 $22,376  5%
            


     BRANDED SPIRITS SALES
     Year Ended December 31, Year versus Year Sales Change
    Increase/(Decrease)
     2023 2022 $ Change % Change
    Ultra premium$63,748 $48,245 $15,503  32%
    Super premium 13,424  12,274  1,150  9 
    Premium 28,293  24,211  4,082  17 
    Premium Plus 105,465  84,730  20,735  24 
    Mid 75,676  82,530  (6,854) (8)
    Value 47,907  47,395  512  1 
    Other 24,885  23,284  1,601  7 
    Total Branded Spirits$253,933 $237,939 $15,994  7%
            


     INGREDIENT SOLUTIONS SALES
     Year Ended December 31, Year versus Year Sales Change
    Increase/(Decrease)
      2023  2022 $ Change % Change
    Specialty wheat starches$66,050 $62,567 $3,483  6%
    Specialty wheat proteins 48,291  39,313  8,978  23 
    Commodity wheat starches 16,413  14,023  2,390  17 
    Commodity wheat proteins 982  38  944  2,484 
    Total Ingredient Solutions$131,736 $115,941 $15,795  14%
            



    MGP INGREDIENTS, INC.
    CONSOLIDATED STATEMENTS OF INCOME
    (Dollars in thousands)

      Quarter Ended December 31, Year Ended December 31,
      2023 2022 2023 2022
    Sales $214,888  $190,995  $836,523  $782,358 
    Cost of sales  129,743   127,782   531,811   529,052 
    Gross profit  85,145   63,213   304,712   253,306 
             
    Advertising and promotion expense  12,336   10,866   38,213   29,714 
    Selling, general and administrative  25,780   22,632   91,395   74,627 
    Impairment of long-lived assets and other  1,057   —   19,391   — 
    Change in fair value of contingent consideration  2,900   —   7,100   — 
    Operating income  43,072   29,715   148,613   148,965 
             
    Interest expense, net  (2,017)  (960)  (6,647)  (5,451)
    Other expense, net  (225)  (981)  (220)  (3,342)
    Income before income taxes  40,830   27,774   141,746   140,172 
             
    Income tax expense  9,784   5,263   34,616   31,300 
    Net income  31,046   22,511   107,130   108,872 
             
    Net loss attributable to noncontrolling interest  21   146   345   590 
    Net income attributable to MGP Ingredients, Inc.  31,067   22,657   107,475   109,462 
             
    Income attributable to participating securities  (311)  (180)  (1,074)  (871)
    Net income used in earnings per share calculation $30,756  $22,477  $106,401  $108,591 
             
    Weighted average common shares        
    Basic  22,070,337   22,011,785   22,059,816   22,002,990 
    Diluted  22,070,337   22,304,093   22,173,918   22,053,966 
             
    Earnings per common share        
    Basic $1.39  $1.02  $4.82  $4.94 
    Diluted $1.39  $1.01  $4.80  $4.92 
     


    MGP INGREDIENTS, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Dollars in thousands)

     December 31,
     2023 2022
    ASSETS   
    Current Assets:   
    Cash and cash equivalents$18,388  $47,889 
    Receivables, net 144,286   109,267 
    Inventory 346,853   289,722 
    Prepaid expenses 3,580   2,957 
    Refundable income taxes 1,190   4,327 
    Total Current Assets 514,297   454,162 
        
    Property, plant, and equipment 489,646   450,800 
    Less accumulated depreciation and amortization (227,343)  (215,168)
    Property, Plant, and Equipment, net 262,303   235,632 
    Operating lease right-of-use assets, net 13,975   15,042 
    Investment in joint ventures 5,197   5,534 
    Intangible assets, net 271,706   216,768 
    Goodwill 321,544   226,294 
    Other assets 3,326   4,779 
    TOTAL ASSETS$1,392,348  $1,158,211 
        
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    Current Liabilities:   
    Current maturities of long-term debt$6,400  $5,600 
    Accounts payable 73,594   66,432 
    Federal and state excise taxes payable 2,251   4,627 
    Accrued expenses and other 31,861   28,716 
    Total Current Liabilities 114,106   105,375 
        
    Long-term debt, less current maturities 85,305   29,510 
    Convertible senior notes 195,544   195,225 
    Long-term operating lease liabilities 11,292   11,622 
    Contingent consideration 69,200   — 
    Other noncurrent liabilities 4,763   3,723 
    Deferred income taxes 63,071   67,112 
    Total Liabilities 543,281   412,567 
    Total equity 849,067   745,644 
    TOTAL LIABILITIES AND TOTAL EQUITY$1,392,348  $1,158,211 
     


    MGP INGREDIENTS, INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Dollars in thousands)

      Year Ended December 31,
      2023 2022
    Cash Flows from Operating Activities    
    Net income $107,130  $108,872 
    Adjustments to reconcile net income to net cash provided by operating activities:    
    Depreciation and amortization  22,113   21,455 
    Impairment of long-lived assets and other  19,391   — 
    Share-based compensation  10,635   5,502 
    Equity method investment loss  337   2,220 
    Deferred income taxes, including change in valuation allowance  (4,041)  1,011 
    Change in fair value of contingent consideration  7,100   — 
    Other, net  728   194 
    Changes in operating assets and liabilities, net of effects of acquisition:    
    Receivables, net  (32,397)  (16,786)
    Inventory  (46,921)  (44,350)
    Prepaid expenses  (481)  (1,468)
    Income taxes payable (refundable)  3,136   1,212 
    Accounts payable  (2,406)  10,626 
    Accrued expenses and other  348   1,984 
    Federal and state excise taxes payable  (2,375)  (2,365)
    Other, net  1,486   829 
    Net cash provided by operating activities  83,783   88,936 
         
    Cash Flows from Investing Activities    
    Additions to property, plant, and equipment  (55,267)  (45,323)
    Purchase of business, net of cash acquired  (103,712)  — 
    Contributions to equity method investment  —   (2,810)
    Other, net  (263)  320 
    Net cash used in investing activities  (159,242)  (47,813)
         
    Cash Flows from Financing Activities    
    Payment of dividends and dividend equivalents  (10,675)  (10,646)
    Purchase of treasury stock  (801)  (715)
    Principal payments on long-term debt  (5,600)  (3,403)
    Proceeds from credit agreement - revolver  105,000   — 
    Payments on credit agreement - revolver  (42,000)  — 
    Net cash provided by (used in) financing activities  45,924   (14,764)
         
    Effect of exchange rate changes on cash and cash equivalents  34   (38)
    Increase (decrease) in cash and cash equivalents  (29,501)  26,321 
    Cash and cash equivalents, beginning of period  47,889   21,568 
    Cash and cash equivalents, end of period $18,388  $47,889 
     


    MGP INGREDIENTS, INC.
    RECONCILIATION OF SELECTED GAAP MEASURES TO ADJUSTED NON-GAAP MEASURES
    (UNAUDITED)(in thousands)

     Quarter Ended December 31, 2023
     Operating
    Income    		 Income before
    Income Taxes    		 Net
    Income    (b)    		 MGP
    Earnings    (a)    		 Basic
    EPS    		 Diluted
    EPS
    Reported GAAP Results$43,072 $40,830 $31,046 $30,756 $1.39 $1.39
    Impairment of long-lived assets and other (c) 1,057  1,057  803  803  0.04  0.04
    Fair value of contingent consideration(d) 2,900  2,900  2,204  2,204  0.10  0.10
    Business acquisition costs (e) 246  246  187  187  0.01  0.01
    CEO transition costs (f) 3,134  3,134  2,382  2,382  0.10  0.10
    Adjusted Non-GAAP results$50,409 $48,167 $36,622 $36,332 $1.64 $1.64
     


     Quarter Ended December 31, 2022
     Operating
    Income    		 Income before
    Income Taxes    		 Net
    Income    		 MGP
    Earnings    (a)    		 Basic
    EPS    		 Diluted
    EPS
    Reported GAAP Results$29,715 $27,774 $22,511 $22,477 $1.02 $1.01
    No adjustments for the period —  —  —  —  —  —
    Adjusted Non-GAAP results$29,715 $27,774 $22,511 $22,477 $1.02 $1.01
     


     Year Ended December 31, 2023
     Operating
    Income    		 Income before
    Income Taxes    		 Net
    Income    (b)    		 MGP
    Earnings    (a)    		 Basic
    EPS    		 Diluted
    EPS
    Reported GAAP Results$148,613 $141,746 $107,130 $106,401 $4.82 $4.80
    Impairment of long-lived assets and other(c) 19,391  19,391  14,660  14,660  0.66  0.66
    Fair value of contingent consideration(d) 7,100  7,100  5,368  5,368  0.24  0.24
    Business acquisition costs (e) 2,060  2,060  1,557  1,557  0.07  0.07
    CEO transition costs (f) 3,134  3,134  2,369  2,369  0.11  0.11
    Adjusted Non-GAAP results$180,298 $173,431 $131,084 $130,355 $5.90 $5.88
     


     Year Ended December 31, 2022
     Operating
    Income    		 Income before
    Income Taxes    		 Net
    Income    		 MGP
    Earnings    (a)    		 Basic
    EPS    		 Diluted
    EPS
    Reported GAAP Results$148,965 $140,172 $108,872 $108,591 $4.94 $4.92
    No adjustments for the period —  —  —  —  —  —
    Adjusted Non-GAAP results$148,965 $140,172 $108,872 $108,591 $4.94 $4.92
     

    (a)   MGP Earnings has been defined as "Net income used in earnings per share calculation."
    (b)   The tax rate used for non-GAAP items for the quarter and year ended December 31, 2023 was 24.0% and 24.4%, respectively.
    (c)   The impairment of long-lived assets and other relates to the closure of the Company's distillery located in Atchison, Kansas, which included $17,112 of impairment of assets as well as $2,279 of expenses related to severance costs, inventory write offs, contract termination fees, consulting fees, and other miscellaneous expenses for the year ended December 31, 2023. For the quarter ended December 31, 2023, the full expense amount relates to severance costs, inventory write offs, contract termination fees, consulting fees and other miscellaneous expenses. Impairment of long-lived assets and other are included in the Consolidated Statement of Income as a component of operating income and relates to the Distilling Solutions segment.
    (d)   Fair value of contingent consideration relates to the quarterly adjustment of the contingent consideration liability related to the acquisition of Penelope Bourbon LLC. It is included in the Consolidated Statement of Income as a component of operating income and relates to the Branded Spirits segment.
    (e)   Business acquisition costs are included in the Consolidated Statement of Income within the selling, general, and administrative line item and include transaction and integration costs associated with the acquisition of Penelope Bourbon LLC.
    (f)   The CEO transition costs are included in the Consolidated Statement of Income within the selling, general and administrative line item. The adjustment includes additional employee related costs, specifically share-based compensation expense, in connection with the transition of the CEO position.


    MGP INGREDIENTS, INC.
    RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
    (UNAUDITED) (in thousands)

     Quarter Ended December 31, Year Ended December 31,
     2023 2022 2023 2022
    Net Income$31,046 $22,511 $107,130 $108,872
    Interest expense 2,017  960  6,647  5,451
    Income tax expense 9,784  5,263  34,616  31,300
    Depreciation and amortization 5,841  5,198  22,113  21,455
    Equity method investment 146  1,184  337  2,220
    Impairment of long-lived assets and other 1,057  —  19,391  —
    Fair value of contingent consideration 2,900  —  7,100  —
    Business acquisition costs 246  —  2,060  —
    CEO transition costs 3,134  —  3,134  —
    Adjusted EBITDA$56,171 $35,116 $202,528 $169,298
     

    The non-GAAP adjusted EBITDA measure is defined as earnings before interest expense, income tax expense, depreciation and amortization, equity method investment, impairment of long-lived assets and other, fair value of contingent consideration, business acquisition costs, CEO transition costs. See "Reconciliation of selected GAAP measures to adjusted non-GAAP measures" for further details.


    MGP INGREDIENTS, INC.
    RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA - ADJUSTING FOR SHARE-BASED COMPENSATION EXPENSE
    (UNAUDITED) (in thousands)

    Beginning in the first quarter 2024, the Company plans to add back share-based compensation expense to the non-GAAP adjusted EBITDA measure.

     Year Ended December 31,
     2023 2022
    Net Income$107,130 $108,872
    Interest expense 6,647  5,451
    Income tax expense 34,616  31,300
    Depreciation and amortization 22,113  21,455
    Equity method investment 337  2,220
    Impairment of long-lived assets and other 19,391  —
    Fair value of contingent consideration 7,100  —
    Business acquisition costs 2,060  —
    CEO transition costs 3,134  —
    Adjusted EBITDA - as reported historically 202,528  169,298
    Share-based compensation expense 7,501  5,502
    Adjusted EBITDA- adjusted for share-based compensation$210,029 $174,800
     

    CEO transition costs are included in the share-based compensation expense on the consolidated financial statements. Total share-based compensation expense was $10,635 for the year ended December 31, 2023.

    The non-GAAP adjusted EBITDA- adjusted for share-based compensation is defined as earnings before interest expense, income tax expense, depreciation and amortization, equity method investment, impairment of long-lived assets and other, fair value of contingent consideration, business acquisition costs, CEO transition costs, and share-based compensation expense. See "Reconciliation of selected GAAP measures to adjusted non-GAAP measures" and "Reconciliation of Net Income to Adjusted EBITDA" for further details.


    MGP INGREDIENTS, INC.
    DILUTIVE SHARES OUTSTANDING CALCULATION
    (UNAUDITED)

     Quarter Ended December 31, Year Ended December 31,
     2023 2022 2023 2022
    Principal amount of the bonds$201,250,000  $201,250,000  $201,250,000  $201,250,000 
    Par value$1,000  $1,000  $1,000  $1,000 
    Number of bonds outstanding (b) 201,250   201,250   201,250   201,250 
            
    Initial conversion rate 10.3911   10.3911   10.3911   10.3911 
    Conversion price$96.23620  $96.23620  $96.23620  $96.23620 
            
    Average share price (c)$96.08000  $111.74095  $101.79016  $98.53736 
    Impact of conversion (d)$—  $233,673,666  $212,864,486  $206,062,202 
            
    Cash paid for principal (201,250,000)  (201,250,000)  (201,250,000)  (201,250,000)
    Conversion premium$—  $32,423,666  $11,614,486  $4,812,202 
            
    Average share price$96.08000  $111.74095  $101.79016  $98.53736 
    Conversion premium in shares (a) (e) —   290,168   114,102   48,836 
     

    (a)   Number of bonds outstanding is calculated by taking the principal amount of the bonds divided by the par value.


    (b)   Average share price is calculated by taking the average of the daily closing share price for the period. If the average share price is less than the conversion price of $96.23620 per share, the impact to EPS is anti-dilutive and therefore the shares were excluded from the diluted EPS calculation.


    (c)   Impact of conversion is calculated by taking the number of bonds outstanding multiplied by the initial conversion rate multiplied by the average share price. If the average share price is less than the conversion price then the impact of conversion is zero.


    (d)   The impacts of the Convertible Senior Notes were included in the diluted weighted average common shares outstanding if the impact was dilutive. The Convertible Senior Notes would only have a dilutive impact if the average market price per share during the quarter and year to date period exceeds the conversion price of $96.23620 per share.


    (e)   Conversion premium in shares is calculated by taking the conversion premium divided by the average share price. If the average share price is less than the conversion price, then the conversion premium in shares is zero.


    MGP INGREDIENTS, INC.
    Purchase Accounting - Summary of Fair Value Step Up
    (UNAUDITED)(in thousands)

    The acquisition of Penelope Bourbon LLC, which closed on June 1, 2023, was accounted for as a business combination in accordance with Accounting Standard Codification 805, Business Combinations, and as such, assets acquired, liabilities assumed, and consideration transferred were recorded at their estimated fair values on the acquisition date. The table below reflects the summary for distributor relationships purchase price accounting step up to fair value, the related amortization period, and the Income Statement caption within which the adjustment is included.

           Income Statement Impact
     Step Up
    Value    		 Amortization
    Period    		 Income Statement
    Caption    		 Quarter Ended
    December 31, 2023    		 Year Ended
    December 31, 2023
    Definite-lived intangible asset - Distributor relationships$23,700 20 years SG&A $296 $691
     



    MGP INGREDIENTS, INC.
    Impact of the Planned Closure of the Atchison Distillery
    Segment Operating Results and Pro-Forma Results
    Year Ended December 31, 2023
    (UNAUDITED) (in thousands)

     Distilling Solutions  
     Year Ended December 31, 2023 Increase/(Decrease) 
     As Reported (a) Pro-Forma(b) $ Change % Change 
    Brown Goods$289,191  $289,191  $—  —% 
    White Goods 58,645   14,421   (44,224) (75) 
    Premium beverage alcohol 347,836   303,612   (44,224) (13) 
    Industrial alcohol 38,010   —   (38,010) (100) 
    Food grade alcohol 385,846   303,612   (82,234) (21) 
    Fuel grade alcohol 7,798   16   (7,782) (100) 
    Distillers feed and related co-products 28,578   10,096   (18,482) (65) 
    Warehouse services 28,632   28,632   —  —  
    Total Sales$450,854  $342,356  $(108,498) (24)% 
             
    Gross profit$144,964  $156,075  $11,111  8% 
    Gross margin % 32.2%  45.6%   13.4 pp(c)
                  


     Ingredient Solutions 
     Year Ended December 31, 2023 Increase/(Decrease) 
     As Reported (a) Pro-Forma(b) $ Change % Change 
    Specialty wheat starches$66,050  $66,050  $—  —% 
    Specialty wheat proteins 48,291   48,291   —  —  
    Commodity wheat starches 16,413   16,413   —  —  
    Commodity wheat proteins 982   982   —  —  
    Total Sales$131,736  $131,736  $—  —% 
             
    Gross profit$46,967  $40,538  $(6,429)(d)(14)% 
    Gross margin % 35.7%  30.8%   (4.9)pp(c)
                  


     Consolidated 
     Year Ended December 31, 2023 Increase/(Decrease) 
     As Reported (a) Pro-Forma(b) $ Change % Change 
    Sales$836,523  $728,025  $(108,498) (13)% 
    Gross profit$304,712  $309,394  $4,682  2% 
    Gross margin % 36.4%  42.5%   6.1 pp(c)
     

    (a)  Represents actual results of the Company for the year ended December 31, 2023, as reported in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
    (b)  Represents the Company's results for the year ended December 31, 2023 excluding results associated with the Company's Atchison, Kansas distillery. These are pro-forma unaudited financial results and are preliminary. In some circumstances, white goods, industrial alcohol, fuel grade alcohol, and at times certain co-products are produced at the Company's Lawrenceburg, Indiana distillery. The pro-forma financial results assume the loss of the waste starch slurry credit and no gain or loss on the disposal. The results of the Branded Spirits segment for the year ended December 31, 2023 would not have been impacted by a closure of the Atchison, Kansas distillery.
    (c)  Percentage points (“pp”).
    (d)  The reduction in gross profit for the Ingredient Solutions segment is the result of increased cost of goods sold from no longer receiving an intercompany credit for the waste starch slurry by-product purchased by the adjoined Atchison, Kansas distillery. The value of the intercompany credit is derived from the value of corn which has fluctuated over time.



    MGP INGREDIENTS, INC.
    Impact of the Planned Closure of the Atchison Distillery
    Segment Operating Results and Pro-Forma Results
    Year Ended December 31, 2022
    (UNAUDITED) (in thousands)

     Distilling Solutions 
     Year Ended December 31, 2022 Increase/(Decrease) 
     As Reported (a) Pro-Forma(b) $ Change % Change 
    Brown Goods$229,523  $229,523  $—  —% 
    White Goods 74,510   24,110   (50,400) (68) 
    Premium beverage alcohol 304,033   253,633   (50,400) (17) 
    Industrial alcohol 46,812   907   (45,905) (98) 
    Food grade alcohol 350,845   254,540   (96,305) (27) 
    Fuel grade alcohol 13,681   41   (13,640) (100) 
    Distillers feed and related co-products 40,354   9,477   (30,877) (77) 
    Warehouse services 23,598   23,598   —  —  
    Total Sales$428,478  $287,656  $(140,822) (33)% 
             
    Gross profit$126,282  $132,388  $6,106  5% 
    Gross margin % 29.5%  46.0%   16.5 pp(c)
                  


     Ingredient Solutions 
     Year Ended December 31, 2022 Increase/(Decrease) 
     As Reported (a) Pro-Forma(b) $ Change % Change 
    Specialty wheat starches$62,567  $62,567  $—  —% 
    Specialty wheat proteins 39,313   39,313   —  —  
    Commodity wheat starches 14,023   14,023   —  —  
    Commodity wheat proteins 38   38   —  —  
    Total Sales$115,941  $115,941  $—  —% 
             
    Gross profit$31,503  $26,017  $(5,486)(d)(17)% 
    Gross margin % 27.2%  22.4%   (4.8)pp(c)
                  


     Consolidated 
     Year Ended December 31, 2022 Increase/(Decrease) 
     As Reported (a) Pro-Forma(b) $ Change % Change 
    Sales$782,358  $641,536  $(140,822) (18)% 
    Gross profit$253,306  $253,926  $620  —% 
    Gross margin % 32.4%  39.6%   7.2 pp(c)
     

    (a)  Represents actual results of the Company for the year ended December 31, 2022, as reported in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.
    (b)  Represents the Company's results for the year ended December 31, 2022 excluding results associated with the Company's Atchison, Kansas distillery. These are pro-forma unaudited financial results and are preliminary. In some circumstances, white goods, industrial alcohol, fuel grade alcohol, and at times certain co-products are produced at the Company's Lawrenceburg, Indiana distillery. The pro-forma financial results assume the loss of the waste starch slurry credit and no gain or loss on the disposal. The results of the Branded Spirits segment for the year ended December 31, 2022 would not have been impacted by a closure of the Atchison, Kansas distillery.
    (c)  Percentage points (“pp”).
    (d)  The reduction in gross profit for the Ingredient Solutions segment is the result of increased cost of goods sold from no longer receiving an intercompany credit for the waste starch slurry by-product purchased by the adjoined Atchison, Kansas distillery. The value of the intercompany credit is derived from the value of corn which has fluctuated over time.


    Primary Logo

Share on,