MGP Ingredients’ third quarter results were shaped by outperformance in its premium spirits portfolio and ongoing operational challenges in its Ingredient Solutions business. Management credited the continued growth of Penelope Bourbon and successful pricing strategies in premium brands for offsetting declines in other segments. CEO Julie Francis emphasized, “Penelope now ranks among the top 30 premium plus American whiskey brands in the country,” highlighting the brand’s expanding appeal. However, operational setbacks in Ingredient Solutions, including equipment outages, pressured margins and limited segment profitability.
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MGP Ingredients (MGPI) Q3 CY2025 Highlights:
- Revenue: $130.9 million vs analyst estimates of $128.2 million (18.9% year-on-year decline, 2.1% beat)
- Adjusted EPS: $0.85 vs analyst estimates of $0.60 (40.9% beat)
- Adjusted EBITDA: $32.26 million vs analyst estimates of $25.56 million (24.6% margin, 26.2% beat)
- The company reconfirmed its revenue guidance for the full year of $530 million at the midpoint
- Management raised its full-year Adjusted EPS guidance to $2.68 at the midpoint, a 2.9% increase
- EBITDA guidance for the full year is $112.5 million at the midpoint, above analyst estimates of $109.4 million
- Operating Margin: 16.1%, down from 20.2% in the same quarter last year
- Market Capitalization: $529.2 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From MGP Ingredients’s Q3 Earnings Call
- Sean McGowan (ROTH Capital): Asked about inventory trends and customer willingness to manage elevated channel inventories; CFO Brandon Gall noted closer collaboration and rising direct demand from historically indirect customers, as well as increased aged whiskey sales supporting margins.
- Seamus Cassidy (TD Cowen): Inquired about the pros and cons of trimming mid- and value-tier brands; CEO Julie Francis explained plans to evaluate and selectively support certain brands with regional or innovation potential, rather than a blanket reduction.
- Marc Torrente (Wells Fargo): Sought clarity on the timing and scope of Ingredient Solutions recovery; Francis described targeted actions such as equipment upgrades and new leadership, expecting gradual improvement into next year, while Gall added complete recovery will extend into the first half of 2026.
- Benjamin Klieve (Lake Street Capital): Queried the drivers behind Penelope Bourbon’s accelerated growth; Francis attributed it to product innovation, targeted releases, and expanded distribution, with planned national account expansion as a key upside.
- Mitchell Pinheiro (Sturdivant): Asked about pricing discipline and sales mix in Distilling Solutions; Francis highlighted rational pricing despite full inventories, and Gall noted a larger proportion of aged whiskey sales, particularly to craft customers, shifting the business mix.
Catalysts in Upcoming Quarters
In the quarters ahead, the StockStory team will monitor (1) the pace of operational improvements in the Ingredient Solutions segment, especially as equipment reliability and waste cost reductions are implemented; (2) continued market share gains and distribution expansion for premium spirits brands, most notably Penelope Bourbon and new ready-to-pour cocktails; and (3) evolving customer purchasing patterns in the distilling business as inventory rebalancing progresses. We are also watching execution on new leadership hires and the rollout of portfolio optimization initiatives.
MGP Ingredients currently trades at $25, up from $23.69 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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