MGP Ingredients Inc (MGPI) Reports Q3 2023 Earnings: Sales Up 5%, Net Income Down 45%
Q3 2023 sales increased by 5% to $211.6 million
Gross profit rose by 24% to $73.4 million, representing 34.7% of sales
Net income decreased by 45% to $13.1 million due to impairment of assets and one-time expenses
Adjusted net income increased by 28% to $30.2 million
On November 2, 2023, MGP Ingredients Inc (NASDAQ:MGPI), a leading provider of distilled spirits, branded spirits, and food ingredient solutions, reported its third quarter results for the period ending September 30, 2023. The company saw a 5% increase in sales, reaching $211.6 million, and a 24% increase in gross profit, amounting to $73.4 million. However, net income decreased by 45% to $13.1 million, primarily due to the impairment of assets and other one-time expenses of $18.3 million related to the planned Atchison distillery closure.
Performance Across Segments
MGPI's Distilling Solutions segment saw a 3% increase in sales to $111.9 million, driven by strong sales of brown goods, up 28% versus the prior year period. The Branded Spirits segment saw a 6% increase in sales to $66.8 million, led by sales of premium plus brands, which increased 33% to $30.8 million. The Ingredient Solutions segment saw an 11% increase in sales to $33.0 million.
Financial Highlights
Despite the increase in sales and gross profit, MGPI's operating income decreased by 41% to $19.8 million, and net income decreased by 45% to $13.1 million. This was primarily due to the impairment of assets and other one-time expenses related to the planned Atchison distillery closure, as well as the increase in fair value of contingent consideration of $4.2 million related to the Penelope acquisition.
However, the company's adjusted operating income increased by 26% to $42.7 million, and adjusted net income increased by 28% to $30.2 million. Adjusted EBITDA also increased by 24% to $48.1 million.
Outlook for 2023
For fiscal 2023, MGPI expects sales to be in the range of $815 million to $835 million. Adjusted EBITDA is expected to be in the range of $192 million to $197 million. Adjusted basic EPS is forecasted to be in the $5.50 to $5.65 range.
Despite the challenges faced in Q3 2023, MGPI remains committed to executing its strategy and believes its continued strong performance underscores the strength of its business model.
Explore the complete 8-K earnings release (here) from MGP Ingredients Inc for further details.
This article first appeared on GuruFocus.
