MGP Ingredients Reports Strong Second Quarter 2022 Results

Consolidated sales increased 11% from prior year period
Operating income increased 28%

ATCHISON, Kan., Aug. 04, 2022 (GLOBE NEWSWIRE) -- MGP Ingredients, Inc. (Nasdaq:MGPI), a leading provider of distilled spirits, branded spirits, and food ingredient solutions, today reported results for the second quarter ended June 30, 2022.

2022 second quarter consolidated results compared to 2021 second quarter
  • Sales increased 11% to $195.0 million, as a result of sales growth in the Distilling Solutions and Ingredient Solutions segments.
  • Gross profit increased 4% to $59.2 million, representing 30.4% of sales. Adjusted gross profit decreased slightly from $59.4 million.
  • Operating income increased 28% to $35.3 million. Adjusted operating income decreased 4% from $36.9 million.
  • Net income increased 26% to $25.4 million. Adjusted net income decreased 10% from $28.1 million.
  • Adjusted EBITDA decreased 5% to $40.1 million.
  • Basic and diluted earnings per common share ("EPS") increased to $1.15 per share from $0.91 per share. Adjusted basic and diluted EPS decreased to $1.15 per share from $1.27 per share.

“We are pleased with our team’s performance during the second quarter as we continue to execute against our long-term strategic plan,” said David Colo, president and CEO of MGP Ingredients. “Continued strength in the demand for new distillate and aged whiskey resulted in brown goods sales growth of 29% versus the prior year period, driving an overall increase in sales of 19% for premium beverage alcohol. As expected, industrial alcohol and white goods gross profits were negatively impacted by increased commodity costs and additional supply that has entered the market. Consumer demand for our Branded Spirits premium plus offerings, which include premium, super premium and ultra premium brands, remains strong. We also increased our advertising and promotion investment in these brands to support anticipated incremental growth. Our enthusiasm for our Ingredient Solutions segment remains strong, which again delivered record results during the second quarter as we made further progress to optimize segment product mix and align with consumer demand trends. We are confident the marketing platform and go-to-market strategy we have in place will drive further growth in the segment.”

Distilling Solutions
In the second quarter 2022, sales for the Distilling Solutions segment increased 19% to $107.1 million, reflecting a 19% increase in sales of premium beverage alcohol. Gross profit decreased to $29.8 million or 27.8% of segment sales, compared to $32.0 million, or 35.4% of segment sales in the second quarter 2021.

Branded Spirits
For the second quarter 2022, sales for the Branded Spirits segment declined 3% to $58.6 million. Gross profit increased to $21.0 million, or 35.8% of segment sales compared to $18.4 million, or 30.5% of segment sales in the second quarter 2021. Excluding the impact of purchase accounting related to the Luxco acquisition, gross margin was 34.7% for the second quarter 2021.

Ingredient Solutions
In the second quarter 2022, sales in the Ingredient Solutions segment increased 21% to a record $29.3 million. Gross profit increased to $8.5 million, or 29.0% of segment sales, compared to $6.4 million, or 26.5% of segment sales in the second quarter 2021.

Other
Advertising and promotion expenses for the second quarter 2022 increased $2.7 million to $6.1 million as compared to the second quarter 2021, primarily driven by incremental investment in the ultra premium, super premium and premium price tier spirit brands.

Corporate selling, general and administrative ("SG&A") expenses for the second quarter 2022 decreased $7.9 million to $17.9 million as compared to the second quarter 2021, primarily due to the one-time acquisition costs in 2021 related to the Luxco acquisition that did not recur in 2022.

The corporate effective tax rate for the second quarter 2022 was 22.4%, compared with 24.2% from the year ago period.

“As we look ahead to the second half of the year, we are confident in our ability to build on the accomplishments we have made towards our long-term strategic objectives,” said Colo. “The expansionary projects we announced earlier this year remain on track and we believe will enable us to meet evolving consumer trends and demand. Our approach to capital allocation remains unchanged, and we will continue to prioritize organic and acquisitive growth. Our excellent performance during the first half of the year has enabled us to revise our full-year guidance upward.”

2022 Outlook
MGP is revising upward its previous consolidated guidance for fiscal 2022:

  • Sales are projected to be in the range of $745 million to $765 million.
  • Adjusted EBITDA is expected to be in the range of $156 million to $163 million.
  • Basic adjusted earnings per common share are forecasted to be in the $4.41 to $4.65 range, with basic weighted average shares outstanding expected to be approximately 22.0 million at year end.

Full year 2022 guidance measures of adjusted EBITDA and basic adjusted EPS are provided on a non-GAAP basis without a reconciliation to the most directly comparable GAAP measures because MGP is unable to predict with a reasonable degree of certainty certain items contained in the GAAP measures without unreasonable efforts. Such items include, but are not limited to, acquisition related expenses, restructuring and related expenses, and other items not reflective of MGP’s ongoing operations.

Conference Call and Webcast Information
MGP Ingredients will host a conference call for analysts and institutional investors at 10 a.m. ET today to discuss these results and current business trends. The conference call and webcast will be available via:

  Webcast: ir.mgpingredients.com on the Events & Presentations page
  Conference Call: 844-308-6398 (domestic) or 412-717-9605 (international)

About MGP Ingredients, Inc.
MGP Ingredients, Inc. (Nasdaq: MGPI) is a leading producer of premium distilled spirits, branded spirits, and food ingredient solutions. Since 1941, we have combined our expertise and energy aimed at formulating excellence, and bringing product ideas to life collaboratively with our customers.

As one of the largest distillers in the U.S., MGP’s offerings include bourbon and rye whiskeys, gins, and vodkas, which are created at the intersection of science and imagination, for customers of all sizes, from crafts to multinational brands. With U.S. distilleries in Kentucky, Indiana, Kansas, and Washington D.C., and bottling operations in Missouri, Ohio, and Northern Ireland, MGP has the infrastructure and expertise to create on any scale.

MGP’s branded spirits portfolio covers a wide spectrum of brands in every segment, including iconic brands from Luxco, which was founded in 1958 by the Lux Family. Luxco is a leading producer, supplier, importer and bottler of beverage alcohol products. Our branded spirits mission is to meet the needs and exceed the expectations of consumers, associates and business partners. Luxco’s award-winning spirits portfolio includes well-known brands from five distilleries: Bardstown, Kentucky-based Lux Row Distillers, home of Ezra Brooks, Rebel, Blood Oath, David Nicholson and Daviess County; Lebanon, Kentucky-based Limestone Branch Distillery, maker of Yellowstone Kentucky Straight Bourbon Whiskey, Minor Case Straight Rye Whiskey and Bowling & Burch Gin; Jalisco, Mexico-based Destiladora González Lux, producer of 100% agave tequilas, El Mayor, Exotico and Dos Primos; MGP’s historic distillery in Lawrenceburg, Indiana, where the George Remus Straight Bourbon Whiskey and Rossville Union Straight Rye Whiskey are produced; and the Washington, D.C.-based Green Hat Distillery, producer of the Green Hat family of gins. The innovative and high-quality brand portfolio also includes Everclear Grain Alcohol, Pearl Vodka, Saint Brendan’s Irish Cream, The Quiet Man Irish Whiskey and other well-recognized brands.

In addition, our Ingredient Solutions segment offers specialty proteins and starches that help customers harness the power of plants and provide a host of functional, nutritional and sensory benefits for a wide range of food products.

The transformation of American grain into something more is in the soul of our people, products, and history. We’re devoted to unlocking the creative potential of this extraordinary resource. For more information, visit mgpingredients.com.

Cautionary Note Regarding Forward-Looking Statements
The forward-looking statements contained herein include, but are not limited to, statements about the expected effects on MGP Ingredients, Inc. ("the Company") of continuing consumer trends and our announced expansionary projects. Forward looking statements are usually identified by or are associated with such words as “intend,” “plan,” “believe,” “estimate,” “expect,” “anticipate,” “hopeful,” “should,” “may,” “will,” “could,” “encouraged,” “opportunities,” “potential,” and/or the negatives or variations of these terms or similar terminology.

These forward-looking statements reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, Company performance, and Company financial results and financial condition and are not guarantees of future performance. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. Important factors that could cause actual results to differ materially from our expectations include, (i) disruptions in the operations at any of our facilities, (ii) the availability and cost of grain, flour, and agave, and fluctuations in energy costs, (iii) the effectiveness of our grain purchasing program to mitigate our exposure to commodity price fluctuations, (iv) the effectiveness or execution of our strategic plan, (v) potential adverse effects to operations and our system of internal controls related to the loss of key management personnel, (vi) the competitive environment and related market conditions, (vii) the impact of the COVID-19 pandemic, (viii) the effects of inflation and the ability to effectively pass raw material and other price increases on to customers, (ix) our ability to maintain compliance with all applicable loan agreement covenants, (x) increases in interest rates, (xi) our ability to realize operating efficiencies, (xii) actions of governments, and (xiii) consumer tastes and preferences. For further information on these and other risks and uncertainties that may affect our business, including risks specific to our Distilling Solutions, Branded Spirits and Ingredient Solutions segments, see Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2021 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.

Non-GAAP Financial Measures
In addition to reporting financial information in accordance with U.S. GAAP, the Company provides certain non-GAAP financial measures that are not in accordance with, or alternatives for, GAAP. In addition to the comparable GAAP measures, MGP has disclosed adjusted gross profit, adjusted operating income, adjusted income before taxes, adjusted net income, adjusted MGP earnings, adjusted EBITDA and basic and diluted adjusted earnings per common share. The presentation of non-GAAP financial measures should be reviewed in conjunction with gross profit, operating income, income before income taxes, net income, net income used in earnings per common share calculation and basic and diluted EPS computed in accordance with U.S. GAAP and should not be considered a substitute for these GAAP measures. The non-GAAP adjustments referenced in the section entitled "Reconciliation of Selected GAAP Measures to Non-GAAP Measures," take into account the impacts of items that are not necessarily ongoing in nature and/or predictive of the Company's operating trends. We believe that these non-GAAP measures provide useful information to investors regarding the Company's performance and overall results of operations. In addition, management uses these non-GAAP measures in conjunction with GAAP measures when evaluating the Company’s operating results compared to prior periods on a consistent basis, assessing financial trends and for forecasting purposes. Non-GAAP financial measures may not provide information that is directly comparable to other companies, even if similar terms are used to identify such measures. The attached schedules provide a full reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measure.

For More Information
Investors & Analysts:
Mike Houston
646-475-2998 or investor.relations@mgpingredients.com

Media:
Greg Manis
913-360-5440 or greg.manis@mgpingredients.com


MGP INGREDIENTS, INC.
OPERATING INCOME ROLLFORWARD
(Dollars in thousands)

Operating income, quarter versus quarter   Operating Income   Change  
Operating income for quarter ended June 30, 2021   $ 27,663        
Increase in gross profit - Branded Spirits segment     2,526     9   pp(a)
Increase in gross profit - Ingredient Solutions segment     2,076     8   pp
Decrease in gross profit - Distilling Solutions segment     (2,205 )   (8 ) pp
Increase in Advertising and promotion expenses     (2,694 )   (10 ) pp
Decrease in SG&A expenses     7,934     29   pp
Increase in Other operating income (expense), net     6       pp
Operating income for quarter ended June 30, 2022   $ 35,306     28 %  


Operating income, year to date versus year to date   Operating Income   Change  
Operating income for year to date ended June 30, 2021   $ 48,163        
Increase in gross profit - Branded Spirits segment     27,222     57   pp(a)
Increase in gross profit - Distilling Solutions segment     8,483     17   pp
Increase in gross profit - Ingredient Solutions segment     6,214     13   pp
Increase in Advertising and promotion expenses     (7,345 )   (15 ) pp
Decrease in SG&A expenses     2,614     5   pp
Increase in Other operating income (expense), net     35       pp
Operating income for year to date June 30, 2022   $ 85,386     77 %  

(a) Percentage points (“pp”).

MGP INGREDIENTS, INC.
EARNINGS PER COMMON SHARE (“EPS”) ROLLFORWARD

Change in basic and diluted EPS, quarter versus quarter   Basic and
Diluted EPS
  Change  
Basic and diluted EPS for quarter ended June 30, 2021   $ 0.91        
Increase in Operating income (b)     0.26     28   pp(a)
Increase in other income (expense), net(b)     (0.03 )   (3 ) pp
Tax: Change in effective tax rate     0.04     4   pp
Change in income allocated to participating securities     (0.01 )   (1 ) pp
Change in interest expense, net (b)     (0.02 )   (2 ) pp
Basic and diluted EPS for quarter ended June 30, 2022   $ 1.15     26 %  


Change in basic and diluted EPS, year to date versus year to date   Basic and
Diluted EPS
  Change  
Basic and diluted EPS for year to date ended June 30, 2021   $ 1.81        
Increase in Operating income(b)     1.60     88   pp(a)
Change in interest expense, net(b)     (0.07 )   (4 ) pp
Increase in other income (expense), net(b)     (0.03 )   (1 ) pp
Tax: Change in effective tax rate     0.04     2   pp
Change in weighted average shares outstanding     (0.51 )   (28 ) pp
Basic and diluted EPS for year to date ended June 30, 2022   $ 2.84     57 %  

  (a) Percentage points (“pp”).
  (b) Items are net of tax based on the effective tax rate for the base year (2021).


MGP INGREDIENTS, INC.
SALES BY OPERATING SEGMENT
(Dollars in thousands)

  DISTILLING SOLUTIONS SALES  
  Quarter Ended June 30,   Quarter versus Quarter Sales Change Increase/(Decrease)  
    2022     2021   $ Change   % Change  
Brown goods $ 56,331   $ 43,766   $ 12,565     29 %  
White goods   17,441     18,205     (764 )   (4 )  
Premium beverage alcohol   73,772     61,971     11,801     19    
Industrial alcohol   12,885     14,770     (1,885 )   (13 )  
Food grade alcohol   86,657     76,741     9,916     13    
Fuel grade alcohol   3,312     4,753     (1,441 )   (30 )  
Distillers feed and related co-products   11,267     4,672     6,595     141    
Warehouse services   5,902     4,182     1,720     41    
Total Distilling Solutions $ 107,138   $ 90,348   $ 16,790     19 %  
                 


  BRANDED SPIRITS SALES  
  Quarter Ended June 30,   Quarter versus Quarter Sales Change Increase/(Decrease)  
    2022     2021   $ Change   % Change  
Ultra premium $ 9,435   $ 8,002   $ 1,433     18 %  
Super premium   3,226     3,184     42     1    
Premium   5,775     5,303     472     9    
Mid   23,301     25,407     (2,106 )   (8 )  
Value   12,908     13,228     (320 )   (2 )  
Other   3,921     5,302     (1,381 )   (26 )  
Total Branded Spirits $ 58,566   $ 60,426   $ (1,860 )   (3 )%  


  INGREDIENT SOLUTIONS SALES  
  Quarter Ended June 30,   Quarter versus Quarter Sales Change
Increase / (Decrease)
 
    2022     2021   $ Change   % Change  
Specialty wheat starches $ 16,001   $ 12,598   $ 3,403     27 %  
Specialty wheat proteins   10,109     8,352     1,757     21    
Commodity wheat starches   3,130     2,663     467     18    
Commodity wheat proteins   38     552     (514 )   (93 )  
Total Ingredient Solutions $ 29,278   $ 24,165   $ 5,113     21 %  
                 

MGP INGREDIENTS, INC.
SALES BY OPERATING SEGMENT
(Dollars in thousands)

  DISTILLERY PRODUCTS SALES  
  Year to Date Ended June 30,   Year to Date versus Year to date Sales Change Increase/(Decrease)  
    2022     2021   $ Change   % Change  
Brown goods $ 118,476   $ 86,807   $ 31,669     36 %  
White goods   37,527     34,862     2,665     8    
Premium beverage alcohol   156,003     121,669     34,334     28    
Industrial alcohol   24,380     32,106     (7,726 )   (24 )  
Food grade alcohol   180,383     153,775     26,608     17    
Fuel grade alcohol   6,594     7,270     (676 )   (9 )  
Distillers feed and related co-products   20,184     9,644     10,540     109    
Warehouse services   11,486     8,283     3,203     39    
Total Distilling Soutions $ 218,647   $ 178,972   $ 39,675     22 %  
                 


  BRANDED SPIRITS SALES  
  Year to Date Ended June 30,   Year to Date versus Year to date Sales Change Increase/(Decrease)  
    2022     2021   $ Change   % Change  
Ultra premium $ 22,032   $ 8,128   $ 13,904   171 %  
Super premium   6,172     3,595     2,577   72    
Premium   11,915     5,329     6,586   124    
Mid   42,574     25,407     17,167   68    
Value   24,207     13,228     10,979   83    
Other   7,417     5,309     2,108   40    
Total Branded Spirits $ 114,317   $ 60,996   $ 53,321   87 %  
                 


  INGREDIENT SOLUTIONS SALES  
  Year to Date Ended June 30,   Year to Date versus Year to date Sales Change Increase/(Decrease)  
    2022     2021   $ Change   % Change  
Specialty wheat starches $ 31,204   $ 22,820   $ 8,384     37 %  
Specialty wheat proteins   19,528     14,398     5,130     36    
Commodity wheat starches   6,483     4,946     1,537     31    
Commodity wheat proteins   38     1,130     (1,092 )   (97 )  
Total Ingredient Solutions $ 57,253   $ 43,294   $ 13,959     32 %  
                 

MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)

    Quarter Ended June 30,   Year to Date Ended June 30,
      2022       2021       2022       2021  
Sales   $ 194,982     $ 174,939     $ 390,217     $ 283,262  
Cost of sales     135,758       118,112       259,172       194,136  
Gross profit     59,224       56,827       131,045       89,126  
                 
Advertising and promotion expenses     6,065       3,371       11,569       4,224  
Selling, general and administrative expenses     17,859       25,793       34,125       36,739  
Other operating (income) expense, net     (6 )           (35 )      
Operating income     35,306       27,663       85,386       48,163  
                 
Interest expense, net     (1,543 )     (1,104 )     (3,141 )     (1,592 )
Other income (expense), net     (1,062 )     (88 )     (1,008 )     (58 )
Income before income taxes     32,701       26,471       81,237       46,513  
                 
Income tax expense     7,339       6,412       18,504       11,027  
Net income     25,362       20,059       62,733       35,486  
                 
Net (income) loss attributable to noncontrolling interest     198       76       264       76  
Net income attributable to MGP Ingredients, Inc.     25,560       20,135       62,997       35,562  
                 
Income attributable to participating securities     (217 )     (150 )     (535 )     (299 )
Net income used in earnings per common share calculation   $ 25,343     $ 19,985     $ 62,462     $ 35,263  
                 
Basic and diluted weighted average common shares     22,002,385       21,916,721       21,995,779       19,436,143  
                 
Basic and diluted earnings per common share   $ 1.15     $ 0.91     $ 2.84     $ 1.81  


MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)

  June 30, 2022   December 31, 2021
ASSETS      
Current Assets:      
Cash and cash equivalents $ 37,415     $ 21,568  
Receivables, net   105,393       92,537  
Inventory   272,948       245,944  
Prepaid expenses   6,768       1,510  
Refundable income taxes         5,539  
Total Current Assets   422,524       367,098  
       
Property, plant, and equipment   418,040       404,149  
Less accumulated depreciation and amortization   (206,055 )     (196,863 )
Property, Plant, and Equipment, net   211,985       207,286  
Operating lease right-of-use assets, net   15,559       9,671  
Investment in joint ventures   5,792       4,944  
Intangible assets, net   217,803       218,838  
Goodwill   226,294       226,294  
Other assets   6,663       7,336  
TOTAL ASSETS $ 1,106,620     $ 1,041,467  
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current Liabilities:      
Current maturities of long-term debt $ 4,189     $ 3,227  
Accounts payable   60,572       53,712  
Federal and state excise taxes payable   7,673       6,992  
Income taxes payable   141        
Accrued expenses and other   20,681       24,869  
Total Current Liabilities   93,256       88,800  
       
Long-term debt, less current maturities   32,698       35,266  
Convertible senior notes   195,066       194,906  
Long-term operating lease liabilities   12,206       6,997  
Other noncurrent liabilities   4,095       5,132  
Deferred income taxes   66,226       66,101  
Total Liabilities   403,547       397,202  
Total equity   703,073       644,265  
TOTAL LIABILITIES AND TOTAL EQUITY $ 1,106,620     $ 1,041,467  


MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)

    Year to Date Ended June 30,
      2022       2021  
Cash Flows from Operating Activities        
Net income   $ 62,733     $ 35,486  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization     10,924       8,425  
Share-based compensation     2,131       4,767  
Deferred income taxes, including change in valuation allowance     125       (1,568 )
Other, net     82       (69 )
Changes in operating assets and liabilities, net of effects of acquisition:        
Receivables, net     (13,142 )     7,531  
Inventory     (27,508 )     (408 )
Prepaid expenses     266       (897 )
Income taxes payable     141       1,017  
Accounts payable     11,438       (12,996 )
Accrued expenses and other     (4,791 )     7,987  
Federal and state liquor excise payable     681       716  
Other, net     (61 )     (2,537 )
Net cash provided by operating activities     43,019       47,454  
         
Cash Flows from Investing Activities        
Additions to property, plant, and equipment     (18,087 )     (18,336 )
Purchase of business, net of cash acquired           (149,599 )
Contributions to equity method investment     (1,028 )     (988 )
Other, net     (369 )     (1,312 )
Net cash used in investing activities     (19,484 )     (170,235 )
         
Cash Flows from Financing Activities        
Payment of dividends and dividend equivalents     (5,322 )     (4,707 )
Purchase of treasury stock     (713 )     (765 )
Loan fees paid related to borrowings           (666 )
Principal payments on long-term debt     (1,614 )      
Proceeds from credit agreement - revolver           242,300  
Payments on credit agreement - revolver           (10,306 )
Payment on assumed debt as part of the Merger           (87,497 )
Net cash provided by (used in) financing activities     (7,649 )     138,359  
         
Effect of exchange rate changes on cash     (39 )     3  
Increase in cash and cash equivalents     15,847       15,581  
Cash and cash equivalents, beginning of period     21,568       21,662  
Cash and cash equivalents, end of period   $ 37,415     $ 37,243  


MGP INGREDIENTS, INC.
RECONCILIATION OF SELECTED GAAP MEASURES TO ADJUSTED NON-GAAP MEASURES (UNAUDITED)
(in thousands)

  Quarter Ended June 30, 2022
  Gross Profit   Operating Income   Income before Income Taxes   Net Income   MGP Earnings(a)   Basic and
Diluted EPS
Reported GAAP Results $ 59,224   $ 35,306   $ 32,701   $ 25,362   $ 25,343   $ 1.15
No adjustments for the period                      
Adjusted Non-GAAP results $ 59,224   $ 35,306   $ 32,701   $ 25,362   $ 25,343   $ 1.15


  Quarter Ended June 30, 2021
  Gross Profit   Operating Income   Income before Income Taxes   Net Income   MGP Earnings(a)   Basic and
Diluted EPS
Reported GAAP Results $ 56,827   $ 27,663   $ 26,471   $ 20,059   $ 19,985   $ 0.91
Adjusted to remove:                      
Inventory step-up - Branded Spirits (b)   2,529     2,529     2,529     2,529     2,510     0.11
Business acquisition costs (c)       6,738     6,738     5,535     5,473     0.25
Adjusted Non-GAAP results $ 59,356   $ 36,930   $ 35,738   $ 28,123   $ 27,968   $ 1.27


  Year to Date Ended June 30, 2022
  Gross Profit   Operating Income   Income before Income Taxes   Net Income   MGP Earnings(a)   Basic and
Diluted EPS
Reported GAAP Results $ 131,045   $ 85,386   $ 81,237   $ 62,733   $ 62,462   $ 2.84
No adjustments for the period                      
Adjusted Non-GAAP results $ 131,045   $ 85,386   $ 81,237   $ 62,733   $ 62,462   $ 2.84


  Year to Date Ended June 30, 2021
  Gross Profit   Operating Income   Income before Income Taxes   Net Income   MGP Earnings(a)   Basic and
Diluted EPS
Reported GAAP Results $ 89,126   $ 48,163   $ 46,513   $ 35,486   $ 35,263   $ 1.81
Adjusted to remove:                      
Inventory step-up - Branded Spirits (b)   2,529     2,529     2,529     2,529     2,510     0.13
Business acquisition costs(c)       8,628     8,628     7,303     7,241     0.37
Adjusted Non-GAAP results $ 91,655   $ 59,320   $ 57,670   $ 45,318   $ 45,014   $ 2.31

(a)   MGP Earnings has been defined as "Net income used in Earnings Per Common Share calculation."

(b)   The finished goods Inventory valuation step-up costs are included in the Condensed Consolidated Statement of Income within Cost of goods by the Branded Spirits segment. The adjustment includes the purchase accounting adjustment to value the finished goods inventory acquired in the Luxco acquisition at its estimated fair value.

(c)   The Business acquisition costs are included in the Condensed Consolidated Statement of Income within the Selling, general and administrative line item. The adjustment includes transaction and integration costs associated with the merger with Luxco.

MGP INGREDIENTS, INC.
RECONCILIATION OF SELECTED GAAP MEASURES TO ADJUSTED NON-GAAP MEASURES - BRANDED SPIRITS SEGMENT (UNAUDITED)
(in thousands)

  Quarter Ended June 30, 2022  
  Revenue   Gross Profit   Gross Margin  
Reported GAAP Results - Branded Spirits segment $ 58,566   $ 20,960   35.8 %  
No adjustments for the period            
Adjusted Non-GAAP results - Branded Spirits segment $ 58,566   $ 20,960   35.8 %  


  Quarter Ended June 30, 2021  
  Revenue   Gross Profit   Gross Margin  
Reported GAAP Results - Branded Spirits segment $ 60,426   $ 18,434   30.5 %  
Inventory step-up (a)       2,529   4.2   pp(b)
Adjusted Non-GAAP results - Branded Spirits segment $ 60,426   $ 20,963   34.7 %  

(a)   The finished goods Inventory valuation step-up costs are included in the Condensed Consolidated Statement of Income within Cost of goods by the Branded Spirits segment. The adjustment includes the purchase accounting adjustment to value the finished goods inventory acquired in the Luxco acquisition at its estimated fair value.
(b)   Percentage points (“pp”).


MGP INGREDIENTS, INC.
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(UNAUDITED)
(in thousands)

  Quarter Ended June 30,   Year to Date Ended June 30,
    2022     2021     2022     2021
Net Income $ 25,362   $ 20,059   $ 62,733   $ 35,486
Interest expense   1,543     1,104     3,141     1,592
Income tax expense   7,339     6,412     18,504     11,027
Depreciation and amortization   5,303     5,115     10,924     8,425
Equity method investment   574     334     180     334
Inventory step-up - Branded Spirits       2,529         2,529
Business acquisition costs       6,738         8,628
Adjusted EBITDA $ 40,121   $ 42,291   $ 95,482   $ 68,021

The non-GAAP adjusted EBITDA measure is defined as earnings before interest, taxes, depreciation and amortization, equity method investment and business acquisition costs. See section "reconciliation of selected GAAP measure to non-GAAP measures" for further details on each of these non-GAAP Items.


Primary Logo

Source: MGP Ingredients