MGP Ingredients reports $117.9 million in sales as operating income falls 43%
Key Facts
MGP Ingredients reported consolidated sales of $117.9 million in the third quarter of 2026, down from $130.9 million in the same period of 2025, according to its official results release. Gross profit fell to $40.5 million from $49.4 million, while gross margin declined to 34.3% from 37.8%. Operating income also fell 43% to $12.0 million, and adjusted operating income declined 44% to $14.0 million. Selling, general and administrative expenses rose 14% year over year. The official release did not provide analyst estimates or indicate the size of any potential variance from them.
The decline came amid mixed performance across the company's three segments. Ingredient solutions sales rose 5% to $30.8 million, while distilling solutions sales fell 29% to $29.0 million and branded spirits sales declined 4% to $58.2 million. The company said growth in ingredient solutions was not enough to offset weakness in the other two segments. It attributed the sales decline mainly to an expected drop in brown goods sales within distilling solutions and lower sales of internationally packaged private-label products within branded spirits. It said growth in ingredient solutions partly offset the declines.
Costs weighed on gross margin. The company said higher costs for the residual starch stream in ingredient solutions, increased costs in branded spirits and lower brown goods volume outweighed the effect of lower distilling costs. In the branded spirits segment, gross profit was $29.2 million, down 9% from $32.2 million a year earlier. The segment's gross margin fell to 50.2% from 53.0%, a decline of 280 basis points. The results show that lower sales were not the only factor behind weaker profitability, as they coincided with lower segment margins and higher costs in some areas. The company's consolidated gross margin consequently fell to 34.3%.
In the spirits market, the company said higher industry-wide barrel inventories led to a 47% decline in brown goods sales during the quarter. By contrast, sales of white spirits and co-products rose 32%. In the branded portfolio, Chief Executive Julie Francis said Penelope Bourbon sales grew 12% and mid-priced brands posted 6% year-over-year growth. Those gains pointed to continued growth in some products despite weaker brown goods sales and inventory pressures. The divergent trends reflect differences in demand among the product categories in which the company operates.
Francis said operating cash flow was $32 million during the quarter. She added that adjusted EBITDA, adjusted basic earnings per share and net leverage at period-end were better than the company's internal expectations. The company reduced total debt by $28.4 million during the quarter, but net debt to adjusted EBITDA stood at 3.6 times on September 30, 2026, compared with 1.8 times in the same period a year earlier. The company reaffirmed its fiscal 2026 guidance, including sales of $480 million to $500 million and adjusted EBITDA of $90 million to $98 million. It also maintained its adjusted basic earnings per share range of $1.50 to $1.80 and capital expenditure of about $20 million.
The company declared a quarterly cash dividend of $0.12 per share, payable to shareholders of record on November 13, 2026, on November 27. It also said its name and ticker would change to Sempreon, Inc. and CASK, effective November 2, 2026. The third-quarter results call was listed on the investor relations calendar for October 28, 2026, at 10 a.m. Eastern time. MGPI shares closed at $15.32 on October 27, according to EL7 data. The developments follow a quarter of lower sales and profitability, alongside the company's reaffirmation of its full-year financial ranges.