MGP Ingredients's (NASDAQ:MGPI) Q4 Sales Beat Estimates But Full-Year Sales Guidance Misses Expectations
Food and beverage supplier MGP Ingredients (NASDAQGS:MGPI) reported Q4 FY2023 results topping analysts' expectations , with revenue up 12.5% year on year to $214.9 million. On the other hand, the company's full-year revenue guidance of $749 million at the midpoint came in 4.9% below analysts' estimates. It made a non-GAAP profit of $1.64 per share, improving from its profit of $1.01 per share in the same quarter last year.
Is now the time to buy MGP Ingredients? Find out by accessing our full research report, it's free.
MGP Ingredients (MGPI) Q4 FY2023 Highlights:
Revenue: $214.9 million vs analyst estimates of $205.4 million (4.6% beat)
EPS (non-GAAP): $1.64 vs analyst estimates of $1.35 (21.1% beat)
Management's revenue guidance for the upcoming financial year 2024 is $749 million at the midpoint, missing analyst estimates by 4.9% and implying -10.5% growth (vs 7% in FY2023)
Free Cash Flow of $21.97 million, up 33.6% from the previous quarter
Gross Margin (GAAP): 39.6%, up from 33.1% in the same quarter last year
Market Capitalization: $2.02 billion
Headquartered in Atchison, Kansas, MGP Ingredients (NASDAQGS:MGPI) is a leading supplier of high-quality ingredients to the food and beverage industry
Beverages and Alcohol
The beverages and alcohol category encompasses companies engaged in the production, distribution, and sale of refreshments like beer, wine, and spirits, along with soft drinks, juices, and bottled water. These companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the explosion of alcoholic craft beer drinks or the steady decline of non-alcoholic sugary sodas. The industry is highly competitive, with a diverse range of products from large multinational corporations, niche brands, and startups vying for market share. It's also subject to varying degrees of government regulation and taxation, especially for alcoholic beverages.
Sales Growth
MGP Ingredients is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefitting from better brand awareness and economies of scale. On the other hand, one advantage is that its growth rates can be higher because it's growing off a small base.
As you can see below, the company's annualized revenue growth rate of 28.4% over the last three years was exceptional for a consumer staples business.
This quarter, MGP Ingredients reported robust year-on-year revenue growth of 12.5%, and its $214.9 million in revenue exceeded Wall Street's estimates by 4.6%. Looking ahead, Wall Street expects revenue to decline 5.8% over the next 12 months, a deceleration from this quarter.
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Cash Is King
If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
MGP Ingredients's free cash flow came in at $21.97 million in Q4, up 3,708% year on year. This result represents a 10.2% margin.
Over the last eight quarters, MGP Ingredients has shown mediocre cash profitability, putting it in a pinch as it gives the company limited opportunities to reinvest, pay down debt, or return capital to shareholders. Its free cash flow margin has averaged 4.5%, subpar for a consumer staples business. Furthermore, its margin has averaged year-on-year declines of 2.2 percentage points over the last 12 months.
Key Takeaways from MGP Ingredients's Q4 Results
We were impressed by how significantly MGP Ingredients blew past analysts' EPS and gross margin expectations this quarter. We were also excited its revenue outperformed Wall Street's estimates. In particular, the company's premium branded spirits portfolio grew by an astonishing 50% year on year. On the other hand, its full-year revenue guidance missed analysts' expectations. Overall, the results seemed fairly positive and shareholders should feel optimistic. The stock is up 2.2% after reporting and currently trades at $94 per share.
So should you invest in MGP Ingredients right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
