MGP Ingredients, Inc.

Second-quarter 2026 consolidated sales were $124.4 million, down 15% year over year. Gross profit was $46.5 million, down 20%, and consolidated gross margin was 37.4%, down approximately 270 basis points. EPS was $0.55 versus $0.67 last year; adjusted basic EPS was $0.72, down 26% year over year. Adjusted EBITDA was $27.6 million, down 23% year over year. For guidance, the company reaffirmed full-year 2026 net sales of $480 million to $500 million, adjusted EBITDA of $90 million to $98 million, and adjusted basic EPS of $1.50 to $1.80. It also kept operating cash flow guidance at $50 million to $55 million and free cash flow at $30 million to $35 million, both excluding the Penelope earn-out payment. Segment outlook: Distilling Solutions sales are expected to be down about 35% and gross profit down about 40%; Ingredient Solutions sales are expected to be $140 million to $150 million with gross margin in the high single to low double-digit range; Branded Spirits sales are expected to decline in the mid-single digits with slight gross margin improvement.

Julie Francis framed the quarter as evidence that MGP’s strategic roadmap is working, even in a difficult industry backdrop. She emphasized stronger execution in Premium Plus brands, better distribution, portfolio rationalization, and added commercial talent, including new leaders across Distilling Solutions, Branded Spirits, and finance. Her tone was constructive and confident, but she repeatedly noted that parts of the market remain challenging, especially Distilling Solutions and Ingredient Solutions.

Brandon Gall focused on the financial bridge: lower consolidated sales and gross profit were mainly driven by expected declines in brown goods and Distilling Solutions, partly offset by Ingredient Solutions growth. He cited SG&A down 13% and adjusted SG&A down 19%, but noted a $2.1 million credit loss provision tied to RNDC’s Chapter 11 filing. He also highlighted capex down 66% to $6.4 million year to date, full-year capex still expected at about $20 million, net debt leverage at roughly 3.5x at June 30 after the approximately $111 million Penelope earn-out payment, and reaffirmed cash flow guidance of $50 million to $55 million operating cash flow and $30 million to $35 million free cash flow.

Analysts pressed on whether Branded Spirits innovation was unusually strong, how much runway remains for distribution expansion, and whether the quarter changed the full-year outlook. Management said innovation was solid but measured, with about 15% less innovation than last year and more emphasis on digital support; they also said national and regional accounts still have a meaningful runway because MGP is under-indexed and currently has a 3x to 6x item disadvantage. On Distilling Solutions, management said customers are still focused on reducing inventory and managing working capital, and Brandon added that TTB data shows production down roughly 28% year over year, dumps down about 9%, and inventory growth has been cut roughly in half versus six months ago, suggesting gradual rationalization rather than a sharp recovery.