MGP Ingredients (NASDAQ:MGPI) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
The full earnings call is available at https://event.choruscall.com/mediaframe/webcast.html?webcastid=ZipI6U1z
Summary
MGP Ingredients reported first-quarter 2026 sales of $106.4 million, a decline from the previous year but aligned with expectations. Adjusted EBITDA was $15 million, and adjusted EPS was $0.15, both surpassing projections despite being lower year-over-year.
The company is focusing on strategic initiatives, including temporary idling of distillation operations in Kentucky to align operations with inventory levels. This move affects 33 employees but is not anticipated to impact product availability.
Future guidance is reaffirmed with expected net sales between $480 million and $500 million for 2026. Adjusted EBITDA is projected between $90 million and $98 million, with efforts to offset reduced gross profit outlook through cost management.
MGP Ingredients is concentrating resources on approximately 10 key brands and has discontinued over 30 tail brands in Q1 2026. The company is also investing in digital marketing and national account expansion.
Despite a challenging industry backdrop, the company is making progress in ingredient solutions, with a 29% increase in sales driven by higher sales volumes and improved operational reliability.
Full Transcript
OPERATOR
Good morning and welcome to MGP Ingredients first quarter 2026 earnings conference call with Julie Francis, President and CEO and Brandon Gaul, CFO. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the Star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then one on a touchtone phone. To withdraw your question, please press Star then two. Please also note that 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 to 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.. at this time I would like to turn the call over to Julie Francis, President and CEO of MGP Ingredients.
Julie Francis (President and CEO)
Good morning. I’d like to thank you all for joining us today on our first quarter 2026 earnings call. Let’s kick it off with a review of some of our quarterly results and progress made against our key initiatives and then Brandon can go into the financial metrics during his comments. Sales in the first quarter of 2026 came in at $106.4 million down versus the prior year, but in line with our expectations. Adjusted EBITDA of $15 million and adjusted basic EPS of $0.15 also declined versus the first quarter of last year. However, both of these key metrics were ahead of expectations. We are pleased with this performance as it helps to validate the work we’ve been doing to drive progress in our business while simultaneously navigating a challenging industry backdrop in the first quarter. We continue to focus our energy on the areas we can control and to sharpen our strategic focus and strengthen execution across the organization for brand experience. We maintained momentum in our Premium plus portfolio in the first quarter which was led by Penelope Bourbon and benefited from improved demand for select mid price offerings. We also delivered solid growth in Ingredient Solutions as the improvement the team has made in operational reliability are taking hold and delivering results. While I plan to talk more about our segment performance later. I’d like to share a few recent actions we have taken. As you know, we have been strengthening and revamping our strategy, marketing and supply chain functions in order to add specific capabilities to address new and existing opportunities and to build out best in class processes designed to balance improved commercial planning while driving disciplined execution and long term success. As part of these efforts, we recently announced there will be a temporary idling of our distilling operations in Kentucky at Limestone Branch and Los Angeles Row starting in May. Like many companies across the industry, we are navigating this challenging environment and taking the steps we believe are necessary to better align our operations and inventory. While this temporary idling will unfortunately affect 33 employees, it is not expected to impact the availability of our products or our services to our customers and it is necessary to adjust our production to align with current inventory levels. We would like to remind everyone that our largest facility in Lawrenceburg, Indiana remains fully operational and will continue to operate to serve our brands, clients and customers shifting to our business segments I’ll begin with Branded Spirits which remains the focus as our primary long term growth driver. As expected, first quarter sales were down year over year. However we continue to see constructive progress particularly within the premium plus and mid price tiers. We view these price tiers as critical to the long term health of our portfolio and we are pleased to see they both saw growth in the quarter. Importantly, Gross margin expanded 180 basis points to 47.8% reflecting improved mix and early benefits from our revenue growth management initiatives. Gross profit of $21.1 million was down versus the prior year and primarily driven by an expected decline in sales of private label products. Within our other category, premium plus sales increased 1.5% supported by continued consumer demand for our differentiated high quality offerings and and the increasing effectiveness of our focused growth strategies. Penelope Bourbon once again delivered strong performance with sales up 10% year over year. As you recall, this brand is cycling the highly successful launch of Penelope we did in the first quarter of last year. Even against this comparison, we saw growth driven by sustained and growing momentum in our core SKU Penelope Four Grain along with strong consumer response to limited time releases such as Havana Rye and American Light Whiskey. We are also encouraged by the early traction from our new ready to pour offerings including our Black Walnut and Apple Cinnamon old fashioned products which continue to expand Penelope’s consumption occasions. Turning to Yellowstone Despite a year over year decline for the first quarter we are seeing early signs of stabilization and recovery supported by deliberate investments in innovation and digital capabilities. Our ultra premium limited release Yellowstone Recollection has been exceptionally well received earning strong critical acclaim and press coverage. With consumer demand exceeding our initial expectations, as discussed in our last earnings call, we continue to increase our investment in digital marketing and media capabilities. Yellowstone is the first brand we’ve deployed a fully integrated digital activation strategy combining best in class social media execution with targeted paid media in focus states including select control states in Pennsylvania in California for example. This approach combined with revenue growth management initiatives drove robust double digit growth for Yellowstone in the first quarter versus the prior year. Turning to tequila where our Elmo brand delivered year over year growth driven by continued progress in price pack architecture efforts. This included expanded 1.75 liter offerings and the introduction of three 75 milliliter sizes as consumers increasingly adopt premium tequila across a broader range of occasions and price points. Similarly, exotico tequila was up strong double digits fueled by the addition of a 1 liter offering which is enabling continued gains in on premise distribution alongside price optimization. Additionally, the 375 milliliter size is allowing consumers to trade up from Mixto tequila to high quality 100% agave tequila at an attractive price point in off premise channels for mid and value price Portfolios. Combined sales declined 3% in the first quarter. These are improving trends as we continue to prioritize our strongest performing SKUs and channels. Revenue growth management and price pack channel optimization remain critical levers in these categories and we are encouraged by early results as we execute against this strategy. Looking ahead, we are intentionally concentrating resources behind approximately 10 of our most promising brands with a clear focus focus on purposeful differentiation and innovation to support sustainable long term growth. At the same time, we are managing the portfolio with discipline. As discussed on our prior call, we have initiated comprehensive portfolio review and rationalization. During the first quarter of 2026 we discontinued more than 30 tail brands with approximately 15 additional brands planned to be discontinued by the end of this year. Combined these brands represent approximately 1% of segment net sales and we expect when annualized will represent an estimated 20 basis point of improvement to the segment’s gross margin profile. For our branded spirit segment, we are excited about the opportunities ahead across our broader portfolio. As with all growth trajectories, we will take many steps forward, some bigger and some smaller. We also will likely alternate between some really healthy quarters and some softer ones as we continue to successfully prioritize our best performing offerings and ramp up our investment in these brands while continuing to cycle new product introductions. Turning to distilling solutions where despite the challenging domestic whiskey supply environment, our first quarter results came in as expected. Segment sales of $28 million decreased 40% over a year while gross profit of $8.6 million declined 54%. As elevated inventory levels continued in the first quarter, we maintained our focus on creating a differentiated value proposition to better position MGP as a long term strategic partner for both large and small customers. Our brown goods customers expansion efforts are taking hold as demonstrated by growth of 9% in aged sales and the addition of more than 20 new customers in the first quarter, including a significant national private label whiskey customer. We are proud of the customer expansion progress we are making, particularly given the current industry backdrop. As discussed on our last earnings call, we are also broadening our premium white good offerings and these efforts are focused on complementing our brown goods portfolio. During the quarter, we transacted our first customer sale under this new highly customized initiative. While we are pleased with the progress we are making, given the unique and highly customized nature of these product offerings, these projects will take time to fully commercialize and scale. That said, we now expect growth from this initiative to be picking up in the second half of this year. Our focus on premium white goods is designed to leverage the scale, heritage and quality of our Indiana distillery to produce premium gin and grain neutral spirits which can then be customized to meet each customer specific needs. We expect that this effort will allow us to move beyond commoditized offerings, generate more attractive economics and better asset utilization rates and also serve as a bridge to longer term and deeper relationships with strategic customers. Our efforts are also …
This post was originally published here
