ATCHISON, Kan. - MGP Ingredients , Inc. (NASDAQ:MGPI), a prominent provider of distilled spirits and food ingredient solutions, has released preliminary financial results for the third quarter ending September 30, 2024. The company anticipates a 24% decrease in sales to $161.5 million compared to the same period in 2023. Excluding the impact of the Atchison distillery, sales are projected to decline by 14%.
The Distilling Solutions segment is expected to see a 36% drop in sales, with a 22% decrease in brown goods sales. The Branded Spirits segment is forecasted to fall by 6%, although premium plus sales are slightly up by 1%. Ingredient Solutions segment sales are also expected to decrease by 18%.
In contrast, net income is projected to increase by 82% to $23.9 million. However, adjusted net income is anticipated to decline by 5%. Basic earnings per share (EPS) are expected to rise to $1.07, while adjusted basic EPS is expected to decrease by 5% to $1.29. Adjusted EBITDA is predicted to fall by 9% to $45.7 million.
MGP Ingredients has revised its full-year 2024 financial outlook, now expecting to fall short of the previously confirmed expectations. Sales for 2024 are estimated to range between $695 million to $705 million, with adjusted EBITDA between $196 million to $200 million, and adjusted EPS between $5.55 to $5.65.
David Bratcher, CEO and president of MGP Ingredients, expressed disappointment with the third-quarter results and the outlook for the fourth quarter. He cited soft alcohol spirits category trends and elevated whiskey inventories as contributing factors to the pressure on their brown goods business, particularly impacting their smaller, craft customer base. Bratcher remains confident about the company's long-term growth outlook, emphasizing their continued transition to a branded spirits company.
MGP Ingredients plans to report its finalized third-quarter results on October 31, 2024, before the market opens, followed by a conference call to discuss the results, accessible via their Investor Relations website.
This article is based on a press release statement, and the financial information provided is preliminary and subject to change following the company's completion of its financial closing procedures.
In other recent news, MGP Ingredients has been the focus of several key developments. The company reported a robust Q2 performance, with consolidated sales rising by 7%. This was driven by an 11% increase in Branded Spirits sales and a strong performance in the Distilling Solutions segment, leading to a record gross margin of 43.6%. MGP Ingredients also reiterated its full-year guidance, predicting stronger profits and earnings growth in the latter half of 2024.
In addition to financial performance, MGP Ingredients has made significant changes to its corporate governance structure. The company updated its Amended and Restated Bylaws to address the Universal Proxy Rules, allowing preferred stockholders to act by majority written consent. The Board has also been granted the authority to fill any Board vacancy.
Roth/MKM has maintained its Buy rating on MGP Ingredients, anticipating the company's third-quarter earnings announcement around October 31st. The firm holds a positive outlook on MGP Ingredients' fundamentals due to its focus on high-margin products. These recent developments highlight MGP Ingredients' dynamic approach to both its financial performance and corporate governance.
InvestingPro Insights
As MGP Ingredients navigates through a challenging period, InvestingPro data provides additional context to the company's financial situation. Despite the projected 24% decrease in sales for Q3 2024, MGP's financial health appears to be relatively stable. The company's P/E ratio (adjusted) stands at 14.28, suggesting that the stock might be reasonably valued considering the current market conditions.
An InvestingPro Tip indicates that MGP operates with a moderate level of debt, which could be advantageous during this period of reduced sales. This moderate debt level, combined with the fact that liquid assets exceed short-term obligations, may provide MGP with financial flexibility to weather the current downturn.
Another relevant InvestingPro Tip highlights that MGP has been profitable over the last twelve months, with a gross profit of $304.62 million and an operating income margin of 22.02%. This profitability, despite the challenges, aligns with the company's projected increase in net income for Q3 2024.
It's worth noting that while the company faces headwinds, analysts still predict MGP will be profitable this year. This outlook, coupled with the company's historical high return over the last decade, suggests potential resilience in MGP's business model.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 7 additional InvestingPro Tips available for MGP Ingredients, providing a deeper understanding of the company's financial position and market performance.
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