MGP Ingredients (NASDAQ:MGPI) reported third-quarter 2026 sales and earnings that declined from a year earlier but exceeded its internal expectations, supported by cost-management efforts, operating cash flow and stronger-than-anticipated results in branded spirits and brown goods sales.
The company reported consolidated sales of $117.9 million, down 10% year over year. Net income fell 55% to $6.9 million, or $0.32 per share, from $0.71 per share a year earlier. Adjusted earnings were $0.39 per share, down 54%, while adjusted EBITDA declined 33% to $21.5 million.
President and Chief Executive Officer Julie Francis said sales were in line with expectations, while adjusted EBITDA and adjusted earnings per share came in ahead of plan. “Our ownership cost management mindset has helped offset the pressures in our businesses,” Francis said.
The company reaffirmed its full-year outlook, including projected net sales of $480 million to $500 million, adjusted EBITDA of $90 million to $98 million and adjusted basic earnings per share of $1.50 to $1.80.
Rebrand to Sempreon and distribution changes
MGP Ingredients said it will adopt the corporate name Sempreon on Nov. 2, with shares set to trade on Nasdaq under the ticker symbol CASK. Francis said the rebrand will not alter the company’s three reportable segments, financial reporting, 2026 guidance or leadership team.
The company also continued to overhaul its distribution network during the quarter, transitioning six additional markets to new distributors after moving 10 markets to a large new distributor in June. The system cutovers affected branded-spirit volumes in those territories, though Francis said branded-spirit sales excluding the company’s “other” category were consistent with the prior year and ahead of expectations.
Francis said further control-state transitions are expected in the fourth quarter, but their impact should be less significant because those markets operate through state-run systems. She said the company expects distributor-related cutover headwinds to dissipate as it exits the year.
Branded spirits sales decline as Penelope grows
Branded Spirits segment sales totaled $58.2 million, down 4% from the prior-year quarter. Gross profit was $29.2 million, and gross margin fell 280 basis points to 50.2%, primarily due to higher costs associated with bottling-facility maintenance and outside contractors supporting efficiency improvements.
Francis said those costs are expected to continue in the fourth quarter at a lower rate and should dissipate toward year-end and into the first quarter. Despite the quarterly margin decline, the company maintained its outlook for slight full-year gross-margin improvement in the segment.
Premium Plus sales fell 1%, though they would have increased 1.5% excluding Ezra Brooks. The company repositioned Ezra Brooks Bourbon into the mid-price tier with the reintroduction of Ezra 90 Proof.
- Penelope sales increased 12%, following 166% growth in the prior-year quarter. Its core expressions rose 35%.
- Yellowstone sales declined 23%, reflecting the timing of its single-barrel program and comparison with prior-year Ready-to-Pour launches. Yellowstone Select sales grew 11%, while Toasted increased 38%.
- Everclear sales rose 4%.
- Mid- and value-price brands collectively rose 1%, while mid-price brands gained 6%, led by Ezra Brooks 90 Proof, Exotico and Juarez tequilas, Saint Brendan’s and Arrow.
The company added more than 3,500 off-premise distribution points for its Premium Plus portfolio during the quarter. It also introduced MGP Chapter One: Out of the Shadows, a 10-year-old, 111-proof straight bourbon sold under the MGP brand name.
Distilling Solutions pressured by industry oversupply
Distilling Solutions sales fell 29% to $29 million, while gross profit declined 34% to $9.4 million. Segment gross margin decreased 230 basis points to 32.4%.
The company cited continued industry oversupply and elevated barrel inventories, which have weighed on demand and pricing for brown goods. Brown-goods sales declined 47% year over year, although they were ahead of management’s expectations because of spot-market sales.
Sales of white goods and other co-products increased 32%, driven by premium white-goods sales to large national and multinational customers. Francis said the company is increasingly pursuing Ready-to-Drink and private-label customers, which represented more than 25% of year-to-date brown- and white-goods product sales. Total product sales to that customer set rose 90% from the prior year.
Warehouse-services revenue increased 3% and represented 29% of segment sales. Chief Financial Officer Brandon Gall said warehouse services are contracted, margin-accretive and cash-flow generative.
Ingredient Solutions sales rise, but margin remains pressured
Ingredient Solutions sales increased 5% to $30.8 million. Specialty wheat protein sales, including texture proteins, rose 15%, while specialty wheat starch sales declined 12% following longer-than-expected downtime after a scheduled plant shutdown.
Gross profit was $1.8 million and gross margin was 6%, reflecting continued losses in biofuel and other byproducts, where waste-starch-stream costs are recorded. The results were partially offset by an initial insurance recovery related to a 2025 equipment outage.
Francis said third-quarter production volumes rose 10% year over year despite the downtime, and the business is fully booked for available production. She said the plant has achieved approximately 90% capacity utilization for three straight months following the shutdown, giving management confidence in its full-year Ingredient Solutions outlook of $140 million to $150 million in sales.
Cash flow, debt reduction and outlook
Third-quarter operating cash flow was $31.9 million, the company’s highest level since the third quarter of 2025. Year-to-date operating cash flow, excluding a Pernod Ricard payout payment, was $39.8 million.
MGP Ingredients reduced total debt by $28.4 million during the quarter and ended with net leverage of 3.6 times, ahead of its expectations. Gall said the company expects most, if not all, holders of its $201 million convertible senior notes to exercise their right to require repurchase on Nov. 16. The company said it has capacity to fund the repurchases through its credit agreement, note purchase agreement or a combination of the two.
For the full year, the company continues to expect operating cash flow of $50 million to $55 million and free cash flow of $30 million to $35 million, excluding the impact of a Penelope earnout payment. Management also expects fourth-quarter results to be stronger than the third quarter.
About MGP Ingredients (NASDAQ:MGPI)
MGP Ingredients, Inc (NASDAQ: MGPI) is a producer and marketer of distilled spirits and specialty food and beverage ingredients. The company operates distilleries and processing facilities that manufacture bourbon, rye whiskey, vodka, gin, tequila and other distilled products, as well as grain-based alcohol and related ingredients.
The company serves customers through both its Distilling Solutions and Branded Spirits businesses. Its branded portfolio includes products such as Ezra Brooks, Yellowstone, Daviess County, El Mayor and Everclear, while its distilling operations supply spirits and alcohol to beverage companies and other commercial customers.
