MGP Ingredients Sales Fall 15% as Distilling Solutions Slump
Consolidated sales fell to $124.4 million in the second quarter, reflecting a deepening year-over-year decline.
MGP Ingredients (MGPI) reported a 15% year-over-year decrease in consolidated sales for the second quarter. The result marks an acceleration of the downward trend seen in the first quarter, when sales fell 13% to $106.4 million.
The specialty spirits and ingredients producer saw its consolidated gross margin decline 270 basis points year-over-year to 37.4%. This represented a moderation in margin erosion compared to the 400 basis point decline reported in the prior quarter. Adjusted EBITDA fell 23% year-over-year to $27.6 million, though the decline was less severe than the 31% drop recorded in the first quarter.
Performance diverged across the company's primary segments. Branded Spirits sales decreased 1% year-over-year to $59.6 million, a recovery from the 8% decrease in the first quarter. Growth within the Premium Plus category accelerated to 5% year-over-year from 1.5% in the prior quarter, while Penelope Bourbon grew 13% year-over-year.
Distilling Solutions sales fell 42% year-over-year to $29.2 million, a steeper decline than the 40% drop in the first quarter. The segment was weighed down by brown goods sales, which fell 59% year-over-year.
Ingredient Solutions sales rose 2% year-over-year to $35.5 million, but the segment's gross margin fell to 10.1% from 21.7% a year earlier. The margin collapse was due to higher waste starch stream costs.
Operating income for the quarter was further impacted by an increased provision for credit loss following a customer bankruptcy. The company's net debt leverage ratio rose to 3.5x as of June 30, 2026, up from 2.1x at the end of March.
MGP Ingredients reaffirmed its full-year 2026 guidance, projecting sales between $480 million and $500 million, adjusted EBITDA between $90 million and $98 million, and adjusted basic EPS between $1.50 and $1.80. The company now expects a full-year effective tax rate of approximately 23% following a revision in 2025 Kansas tax law.
Year-to-date capital expenditures were $6.4 million as of June 30, 2026, down from $18.7 million during the same period in 2025.