MGP Ingredients, Inc. (Nasdaq: MGPI) reported a drop in consolidated sales and profits for the second quarter ended June 30, 2025. 

The 24% and 30% drops, respectively, were expected by the company, which announced in November it planned to scale back whiskey production due to changing market dynamics.

“Our second quarter results came in largely as expected as we delivered solid execution and sequential improvement across all three business segments,” Brandon Gall, CFO, said in a news release. “Our decisive actions to improve visibility with our customers are working as second quarter brown goods volume and price declines were in line with our expectations. Our teams remain tightly focused on key initiatives and continue to execute on our strategic priorities, which I expect will position us well for the second half and give us the confidence to reaffirm our 2025 outlook.” 

He added, “I am pleased to welcome Julie as MGP’s new CEO. She brings a strong strategic lens, deep commercial expertise, and a proven ability to lead teams. I look forward to partnering with her and I am confident that under her leadership, MGP will be better positioned to sharpen execution, accelerate growth initiatives, and advance our long-term vision of becoming a premier, branded spirits company.”

“I am excited to take on the CEO role and look forward to building on the progress made by Brandon and the MGP team,” Julie Francis, president and CEO, said. “Our goal continues to be delivering sustainable growth and unlocking meaningful, long-term value for all stakeholders. We will work together with clarity, integrity, and agility to strengthen our customer-centric, brands-led approach and execute with excellence across our platforms.”

2025 second quarter financial highlights compared to 2024 second quarter:

• Consolidated sales decreased 24% to $145.5 million.
• Consolidated gross profit decreased 30% to $58.4 million. Gross margin decreased by 350 basis points to 40.1%.
• Net income decreased 55% to $14.4 million. On an adjusted basis, net income decreased 45% to $20.9 million.
• Basic earnings per common share (“EPS”) decreased to $0.67 per share from $1.43 per share. Adjusted basic EPS decreased 43% to $0.97 per share.
• Adjusted EBITDA decreased 38% to $35.9 million.
• Year-to-date capital expenditures declined 17% to $18.7 million compared to the year-ago period, while year-to-date operating cash flows increased $26.8 million to $56.4 million.
• Net debt leverage ratio stands at approximately 1.8x as of June 30, 2025.

Consolidated Results

Second quarter 2025 consolidated sales decreased by 24% compared to the year-ago quarter, primarily due to expected declines in brown goods sales within the Distilling Solutions segment and value and mid price tiered brands within the Branded Spirits segment. Lower brown goods sales also impacted profitability, leading to a 30% decline in second quarter gross profit. 

Operating income decreased to $20.3 million due to lower gross profit and an $8.0 million increase in the fair value of the contingent consideration liability related to the improved performance of the Penelope brand. Adjusted operating income decreased to $28.7 million as reduced gross profit was partially offset by lower advertising and promotion expenses.

Second quarter advertising and promotion expenses decreased 41% to $6.9 million as the company lapped elevated spend for certain advertising campaigns in the year-ago quarter and continued to realign our spend behind our most attractive growth opportunities. Branded Spirits advertising and promotion spend of $6.3 million was approximately 10% of Branded Spirits segment sales in the second quarter.

Branded Spirits

Branded Spirits segment sales decreased 5% to $60.5 million compared to the prior-year quarter. The increased focus on the company’s most attractive growth opportunities across the American whiskey and tequila categories continued to take hold, leading to 1% growth in premium plus sales to $31.1 million. 

Within the premium plus portfolio, the Penelope brand continued its strong sales trajectory with another quarter of above-category sales growth. As expected, sales of mid and value priced portfolios, combined, declined by nearly 15% due to lower volumes of certain tequila, liqueur, and cordial brands. Branded Spirits gross profit decreased by 5% to $32.0 million, while segment gross margins increased modestly to 52.8%.

Distilling Solutions

Distilling Solutions segment sales decreased by 46% to $50.0 million, compared to the prior-year quarter. Although Distilling Solutions segment sales and profitability continued to be pressured by reduced customer demand for brown goods primarily due to elevated industry-wide barrel inventories, second quarter brown goods sales volume and pricing were largely in line with our expectations, reflecting the positive impact of our proactive engagement and visibility with our customers. Distilling Solutions gross profit of $18.8 million decreased by 56%, or 37.6% of segment sales.

Ingredient Solutions

Ingredient Solutions segment returned to positive growth in second quarter 2025 as sales increased by 5% to $35.0 million compared to the year-ago quarter. As expected, sales improved sequentially from first quarter 2025 for each of the segment product lines reflecting commercialization of new domestic customers as well as improved operational execution relative to the first quarter. Segment gross profit increased to $7.6 million, or 21.7% of segment sales.

2025 Financial Outlook

MGP provided consolidated guidance for fiscal 2025:

• Sales are projected to be in the range of $520 million to $540 million.
• Adjusted EBITDA is expected to be in the range of $105 million to $115 million.
• Adjusted basic EPS is expected to be in the $2.45 to $2.75 range, with weighted average basic shares outstanding of approximately 21.4 million, and an effective tax rate of approximately 25%.
• Full-year capital expenditures are now expected to be approximately $32.5 million relative to previous expectations of approximately $36 million.

Read more: MGP Ingredients Names Julie Francis as New CEO

About MGP Ingredients, Inc.

MGP Ingredients Inc. (Nasdaq: MGPI) has been in operation since 1941 in the alcoholic beverage and specialty ingredient industries through three segments: Branded Spirits, Distilling Solutions, and Ingredient Solutions. MGPI is one of the leading spirits distillers with an award-winning portfolio of premium brands including Penelope, Rebel, Remus, and Yellowstone bourbons and El Mayor tequila, under the Luxco umbrella. With distilleries in Indiana and Kentucky; a tequila distillery in Arandas, Mexico; and bottling operations in Missouri, Ohio, and Northern Ireland, the company creates distilled spirits for customers including many world-renowned spirits brands. In addition, the company’s specialty fiber, protein, and starch ingredients provide functional, nutritional, and sensory solutions for a wide range of food products. To learn more visit MGPIngredients.com.