MGP Ingredients — Third Quarter 2026 Earnings Summary

Financial Performance:

• Consolidated sales decreased 10% year-over-year to $117.9 million in Q3 2026, compared to $130.9 million in Q3 2025.
• Gross profit decreased 18% to $40.5 million, with gross margin declining 350 basis points to 34.3% from 37.8% in the prior year period.
• Operating income decreased 43% to $12.0 million; adjusted operating income decreased 44% to $14.0 million.
• Adjusted EBITDA decreased 33% to $21.5 million, compared to $32.3 million in Q3 2025.
• Net income was $6.9 million, and basic EPS was $0.32; adjusted net income was $8.6 million, and adjusted basic EPS was $0.39.
• Year-to-date operating cash outflows were $8.9 million, inclusive of a $48.7 million Penelope earnout payment; excluding this payment, year-to-date operating cash inflows were $39.8 million.
• Net debt leverage ratio increased to 3.6x at September 30, 2026, from 1.8x in the prior year period.
• Capital expenditures year-to-date were $11.0 million, compared to $25.4 million in the prior year.

Guidance and Future Outlook:

• The company reaffirmed full-year 2026 consolidated guidance:
  • Sales projected between $480 million and $500 million.
  • Adjusted EBITDA expected between $90 million and $98 million.
  • Adjusted basic EPS expected between $1.50 and $1.80, based on approximately 21.4 million weighted average basic shares outstanding.
  • Effective tax rate expected to be approximately 23%.
  • Full-year capital expenditures expected to be approximately $20 million.

Business Segments and Product Lines:

• Branded Spirits: Sales decreased 4% to $58.2 million. Gross margin declined 280 basis points to 50.2%. Penelope Bourbon sales grew 12%, while mid-priced brands grew 6%. Premium plus sales decreased 1%. Excluding the "other" category (international private label), sales were in line with the prior year, negatively impacted by distributor system cutovers.
• Distilling Solutions: Sales decreased 29% to $29.0 million. Gross margin declined 230 basis points to 32.4%. Brown goods sales declined 47% due to elevated industry-wide barrel inventories. White goods and other co-products sales increased 32%, and warehouse services revenue increased 3%.
• Ingredient Solutions: Sales increased 5% to $30.8 million. Gross margin declined 430 basis points to 6.0%. Growth was driven by higher sales of specialty wheat proteins and biofuel/byproducts, partially offset by lower specialty wheat starch volumes due to longer-than-expected downtime following a scheduled plant shutdown. Higher waste starch stream costs pressured profitability, partially offset by an initial insurance recovery payment related to a 2025 equipment outage.

Market and Competitive Landscape:

• The Distilling Solutions segment navigated an oversupplied market characterized by elevated industry-wide barrel inventories.
• The Branded Spirits segment faced distributor system cutovers impacting sales.
• Ingredient Solutions experienced operational downtime affecting starch sales volumes.

Risks and Challenges:

• The press release notes risks including changes in consumer preferences, industry dynamics, unfavorable economic conditions, raw material cost volatility, operational interruptions, regulatory changes, and the ability to execute strategic roadmaps.
• Specific challenges cited for the quarter include waste starch stream cost increases, distributor cutovers, and plant shutdown downtime.

Management Commentary and Tone:

• Julie Francis, President and CEO, stated that Q3 results demonstrated execution against the strategic roadmap, noting that cash flow from operations was $32 million and that adjusted EBITDA, adjusted basic EPS, and ending net leverage all exceeded expectations.
• Management expressed confidence in executing the strategic roadmap across the three businesses, supported by financial discipline and a "strong right to win."
• The company reaffirmed its full-year guidance based on these results.

Other Key Points:

• The company declared a quarterly dividend of $0.12 per share, payable on November 27, 2026, to stockholders of record as of November 13, 2026.
• MGP Ingredients, Inc. will change its name to Sempreon, Inc. and its Nasdaq ticker symbol to "CASK" effective November 2, 2026.
• The company reduced total debt by $28.4 million during the quarter.
• Year-to-date, the company paid $48.7 million in contingent consideration related to the Penelope Bourbon acquisition.
• The company reported a $179.5 million impairment charge in the first quarter of 2026 related to goodwill, indefinite-lived intangible assets, and other long-lived assets, as well as expenses related to idled Kentucky facilities.