MGP Ingredients (MGPI) investor relations material

Executive summary

• Second quarter 2026 sales declined 15% year-over-year to $124.4M, with gross profit down 20% to $46.5M and net income at $12.0M, but adjusted EBITDA and EPS exceeded internal expectations, driven by premium plus brand momentum and operational improvements.

• Premium plus portfolio, led by Penelope Bourbon (+13%) and Yellowstone (+54%), showed strong momentum, offsetting declines in other segments.

• Ingredient Solutions segment delivered sales growth against a strong prior year, supported by operational improvements and strong customer demand.

• Strategic initiatives included four key leadership appointments, cost management, and a disciplined distributor transition following RNDC's bankruptcy, resulting in early positive momentum.

• Year-to-date, sales fell 14% to $230.8M, with a net loss of $122.8M driven by $179.5M in goodwill and asset impairments in Branded Spirits.

Financial highlights

• Consolidated sales declined 15% year-over-year to $124.4M; gross profit fell 20% to $46.5M; net income was $12.0M, down 17% year-over-year; adjusted net income was $15.8M.

• Adjusted EBITDA was $27.6M, a 23% decrease year-over-year, with adjusted EPS at $0.72.

• Gross margin was 37.4%, down from 40.1% year-over-year, mainly due to higher waste starch costs in Ingredient Solutions.

• Operating cash flow was negative $40.7M year-to-date, compared to $56.4M in the prior year.

• Total debt increased to $369.6M at June 30, 2026, from $252.3M at year-end 2025.

Outlook and guidance

• Full-year 2026 net sales expected between $480M and $500M; adjusted EBITDA projected at $90M–$98M; adjusted basic EPS for 2026 expected between $1.50 and $1.80.

• Effective tax rate for 2026 anticipated at 23% due to Kansas tax law changes.

• Operating cash flow forecasted at $50M–$55M, free cash flow at $30M–$35M, both excluding Penelope earnout.

• Capital expenditures for 2026 are expected to be approximately $20M.

• Management expects liquidity needs to be met through operations and available credit, with $338M available under the credit agreement and $236.4M under the Note Purchase Agreement.