CASK

MGP Ingredients Inc. (NASDAQ: MGPI) reported lower third-quarter 2026 sales and earnings as weakness in its Distilling Solutions business outweighed growth in Ingredient Solutions. The company nevertheless said adjusted EBITDA and adjusted earnings per share were ahead of its expectations and reaffirmed its full-year guidance.

Consolidated sales declined 10% year over year to $117.9 million. Gross profit fell 18% to $40.5 million, while adjusted operating income dropped 44% to $14.0 million. Adjusted EBITDA was $21.5 million, down 33%, and adjusted EPS fell 54% to $0.39.

On a GAAP basis, operating income was $12.0 million, net income was $6.9 million and basic and diluted EPS was $0.32. That compared with operating income of $21.0 million, net income of $15.4 million and EPS of $0.71 a year earlier. Adjustments in the latest quarter included costs related to idled Kentucky facilities, executive transitions, restructuring and other items.

Distilling weakness weighs on results

Distilling Solutions recorded the largest sales decline among MGP’s three businesses. Segment sales fell 29% to $29.0 million amid what the company described as an oversupplied and challenging industry market.

Brown goods sales dropped 47% to $15.0 million as MGP continued rebuilding its aged whiskey pipeline. The decline was partly offset by a 32% increase in white goods and other co-products sales to $5.7 million, supported by expanded business with ready-to-drink and private-label customers. Warehouse services revenue increased 3% to $8.3 million.

Distilling Solutions gross profit declined 34% to $9.4 million, while operating income also fell 34% to $8.7 million. Gross margin narrowed by 2.3 percentage points to 32.4%, though MGP characterized the margin as healthy given market conditions.

Branded Spirits posts mixed brand performance

Branded Spirits sales decreased 4% to $58.2 million. Premium-plus sales were down 1% at $31.9 million, although Penelope sales increased 12%. Mid- and value-priced products generated $23.3 million of sales, up 1% overall, while the company said selected mid-priced brands grew 6% as it prioritized better-performing labels. Other segment sales declined 46% to $3.1 million.

Gross profit in Branded Spirits fell 9% to $29.2 million, and gross margin contracted by 2.8 percentage points to 50.2%. Adjusted operating income declined 11% to $15.6 million.

MGP said its priorities include competing in premium-plus spirits while pursuing opportunities across mid- and value-priced categories. It also plans to increase penetration in national accounts and strengthen its digital marketing capabilities.

Ingredient sales rise, but profitability contracts

Ingredient Solutions was the only segment to report revenue growth, with sales increasing 5% to $30.8 million. Specialty wheat protein sales rose 15% to $10.3 million, reflecting higher volumes that included textured proteins. Sales in the “all others” category increased 64% to $5.6 million, supported by biofuel and other byproducts. Specialty wheat starch sales declined 12% to $14.9 million.

Despite the revenue increase, segment gross profit fell 39% to $1.8 million, and gross margin declined by 4.3 percentage points to 6.0%. Operating income was down 37% at $1.1 million. MGP said it is implementing processes intended to improve reliability and throughput while managing high waste-starch stream costs. Its growth focus remains on specialty fiber and protein products.

Cash flow and full-year outlook

Year-to-date operating cash flow was negative $8.9 million, compared with positive $92.5 million in the prior-year period. The presentation attributed the change primarily to lower adjusted EBITDA, movements in receivables and increased net barrelled-whiskey putaway, partly offset by lower tax payments and other working-capital changes. Third-quarter operating cash flow was $32 million.

MGP reaffirmed its 2026 guidance for 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 continues to expect an effective tax rate of about 23%, approximately 21.4 million basic weighted-average shares outstanding and capital expenditures of roughly $20 million.

Management said it is evaluating ways to operate more efficiently while following a strategy centered on focus, execution, discipline and accountability. In Distilling Solutions, the company plans to rebuild its aged whiskey pipeline, broaden its premium white-goods offerings and expand ready-to-drink, private-label and value-added services.

The company also said a new Nasdaq ticker, CASK, will take effect on November 2, 2026.

MGP cautioned that the industry outlook remains challenging. Risks identified in the presentation include shifts in consumer demand, competitive and economic conditions, distributor reliance, the management of maturing whiskey inventory, raw-material and labor costs, tariffs and trade policies, operational disruptions, capital-project execution and the company’s ability to implement its strategy.

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