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INVESTOR PRESENTATION Fourth Quarter 2024 February 2025
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FORWARD LOOKING STATEMENTS AND NON-GAAP DISCLAIMER This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements regarding the impact of whiskey consumption and whiskey inventories on brand goods performance for MGP Ingredients, Inc. (the “Company” or “MGP”); the Company’s ability to access capital and drive shelf presence; and the Company’s 2025 guidance, including its expectations for sales, adjusted EBITDA, adjusted basic earnings per common share ("EPS"), tax rate, shares outstanding, and capital expenditures. Forward looking statements are usually identified by or are associated with words such as “intend,” “plan,” “believe,” “estimate,” “expect,” “anticipate,” “project,” “forecast,” “hopeful,” “should,” “may,” “will,” “could,” “encouraged,” “opportunities,” “potential,” and similar terminology. These forward-looking statements reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, Company performance, Company financial results, and Company financial condition and are not guarantees of future performance. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Factors that could cause actual results to differ materially from our expectations include without limitation any effects of changes in consumer preferences and purchases and our ability to anticipate or react to those changes; our ability to compete effectively and any effects of industry dynamics and market conditions; damage to our reputation or that of any of our key customers or their brands; failure to introduce successful new brands and products or have effective marketing or advertising; changes in public opinion about alcohol or our products; our reliance on our distributors to distribute our branded spirits; our reliance on fewer, more profitable customer relationships; interruptions in our operations or a catastrophic event at our facilities; decisions concerning the quantity of maturing stock of our aged distillate; any inability to successfully complete our capital projects or fund capital expenditures or any warehouse expansion issues; our reliance on a limited number of suppliers; our reliance on a limited number of suppliers; work disruptions or stoppages; climate change and measures to address climate change; regulation and taxation and compliance with existing or future laws and regulations; tariffs, trade relations, and trade policies; excise taxes, incentives and customs duties; our ability to protect our intellectual property rights and defend against alleged intellectual property rights infringement claims; failure to secure and maintain listings in control states; labeling or warning requirements or limitations on the availability of our products; product recalls or other product liability claims; anti-corruption laws, trade sanctions, and restrictions; litigation or legal proceedings; limited rights of common stockholders and anti- takeover provisions in our governing documents; the impact of issuing shares of our common stock; higher costs or the unavailability and cost of raw materials, product ingredients, energy resources, or labor; failure of our information technology systems, networks, processes, associated sites, or service providers; acquisitions and potential future acquisitions; interest rate increases; reliance on key personnel; commercial, political, and financial risks; covenants and other provisions in our credit arrangements; pandemics or other health crises; ability to pay any dividends and make any share repurchases; and the effectiveness or execution of our strategic plan. For further information on these risks and uncertainties and other factors that could affect the Company’s business, see the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as well as the Company’s other SEC filings. The Company undertakes no obligation to update any forward-looking statements or information in this presentation, except as required by law. Non-GAAP Financial Measures In addition to providing 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, the Company has disclosed measures excluding the impact of the Atchison distillery, adjusted gross profit, adjusted operating income, adjusted net income, adjusted EBITDA, net debt, net debt leverage ratio, and adjusted basic and diluted EPS, as well as guidance for adjusted EBITDA and adjusted basicEPS. The presentation of these non-GAAP financial measures should be reviewed in conjunction with gross profit, operating income, net income, debt, and basic and diluted EPS computed in accordance with U.S. GAAP and should not be considered a substitute for the GAAP measure. We believe that the 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 appendix provide a full reconciliation of historical non-GAAP financial measures to the most directly comparable U.S. GAAP financial measure. Full year 2024 guidance measures of adjusted EBITDA and adjusted basic EPS are provided on a non-GAAP basis without a reconciliation to the most directly comparable GAAP measures because the Company is unable to predict with a reasonable degree of certainty certain items contained in the GAAP measures without unreasonable efforts. Such items include without limitation, acquisition related expenses, restructuring and related expenses, and other items not reflective of the Company's ongoing operations. NASDAQ:MGPI2
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FOURTH QUARTER AND FULL YEAR 2024 RESULTS • Consolidated sales decreased 7% to $180.8 million. Full year sales declined by 4% to $703.6 million(1) • Distilling Solutions sales declined by 6%(1) and 3%(1) for the fourth quarter and full year, respectively, due to lower brown goods sales. Soft whiskey consumption and elevated industry-wide barrel whiskey inventories are expected to have a larger impact on brown goods performance in 2025. • Branded Spirits sales declined 12% and 5% for the fourth quarter and full year, respectively. Our premium plus sales increased 5% for the full year, while mid and value brands declined 15% largely due to our optimization efforts. • Ingredient Solutions sales increased 4%(1) for the fourth quarter and declined 1%(1) for the full year. Our specialty starch momentum continued with double digit growth for the full year, while specialty protein sales returned to positive growth in the fourth quarter reflecting new business wins. • Full year adjusted EBITDA and adjusted EPS decreased by 6% and 4% to $196.5 million and $5.64, respectively, after four years of consecutive growth. • Full year cash flow from operations increased 22% to a record-high $102.3 million. Our net debt leverage remains stable at 1.5x at the end of 2024, with over $520 million of available liquidity. 3 (1) Results exclude impact of the Atchison distillery. See appendix for more information Note: All comparisons are on a year-over-year basis. See appendix for GAAP to non-GAAP reconciliations. FOURTH QUARTER RESULTS WERE IN LINE WITH OUR EXPECTATIONS
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FOURTH QUARTER 2024 SALES WERE IN LINE WITH EXPECTATIONS • Distilling Solutions segment(1) sales decreased 6% to $82.0 million, driven by lower brown goods sales • Branded Spirits segment sales decreased 12% to $64.0 million as optimization of mid and value brands was amplified by lower premium plus sales • Ingredient Solutions segment(1) sales increased 4% to $34.8 million. Specialty starch sales remained strong, while specialty protein sales returned to positive growth with new business wins 4 Consolidated Sales, excluding Atchison distillery (Quarter Ended 12/31/2024) Change vs Prior Year $MM $MM % Distilling Solutions $82.0 $(5.4) (6)% Branded Spirits 64.0 (8.6) (12) Ingredient Solutions 34.8 1.4 4 MGP Ingredients $180.8 $(12.6) (7)% FOURTH QUARTER SALES DECREASED BY 7%, EXCLUDING THE IMPACT OF THE ATCHISON DISTILLERY Note: Totals may not foot due to rounding. All comparisons are on a year-over-year basis. (1) Results exclude the impact of the Atchison distillery. See appendix for more information.
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GROSS PROFIT PRESSURED PRIMARILY BY BROWN GOODS 5 Adjusted Gross Profit(1) ($, MM Fourth Quarter 2024) 1 Results exclude impact of the Atchison distillery 2 Items are net of tax based on the effective tax rate for the base year (2023) Note: See appendix for GAAP to non-GAAP reconciliations. GP: gross profit $87.4 ($6.8) ($2.5) ($3.6) $74.5 Q4 2023 Distilling Solutions GP Ingredient Solutions GP Branded Spirits GP Q4 2024 Adjusted EPS(2) ($, Fourth Quarter 2024) $1.64 ($0.12) $0.03 $0.02 $1.57 Basic and Diluted EPS Q4 2023 Change in operating income Change in other income (expense), net Change in weighted average shares outstanding Basic and diluted EPS Q4 2024
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DISTILLING SOLUTIONS 6 Distilling Solutions (excluding Atchison distillery) (Quarter ended 12/31/2024) Change vs Prior Year $MM $MM % Change Brown goods $67.0 $(7.3) (10)% Warehouse services 8.8 1.1 15 White goods and other co-products 6.2 0.9 16 Sales $82.0 $5.4 (6)% Gross Profit $36.7 $(6.8) (16)% Gross Margin 44.8% (5) pp UNFAVORABLE INDUSTRY-WIDE DYNAMICS CONTINUE TO PRESSURE BROWN GOODS BUSINESS Note: Total may not foot due to rounding. All comparisons are on a year-over-year basis. Results exclude impact of the Atchison distillery. See appendix for more information. PP: Percentage points
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BRANDED SPIRITS 7 Branded Spirits (Quarter ended 12/31/2024) Change vs Prior Year $MM $MM % Premium plus $28.3 $(3.8) (12)% Mid 16.8 (3.3) (16) Value 10.4 (1.5) (12) Other 8.5 (0.1) (1) Sales $64.0 $(8.6) (12)% Gross Profit $29.6 $(3.5) (11)% Gross Margin 46.2% (0.6) pp QUARTERLY PREMIUM PLUS SALES PRIMARILY REFLECT LAPPING STRONG GROWTH IN THE YEAR-AGO PERIOD Note: Total may not foot due to rounding. All comparisons are on a year-over-year basis. PP: Percentage points
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INGREDIENT SOLUTIONS 8 Ingredient Solutions (excluding Atchison distillery) (Quarter ended 12/31/2024) Change vs Prior Year $MM $MM % Specialty wheat starches $18.4 $1.3 8% Specialty wheat proteins 12.8 0.5 4 Commodity wheat starches 3.5 (0.1) (1) Commodity wheat proteins 0.1 (0.3) (84) Sales $34.8 $(1.4) 4% Gross Profit $8.1 $(2.6) (24)% Gross Margin 23.5% (8.7) pp RETURN TO POSITIVE SALES GROWTH AS SPECIALTY PROTEIN SALES REBOUND Note: Total may not foot due to rounding. All comparisons are on a year-over-year basis. Results exclude the results associated with the Atchison distillery. See appendix for more information. PP: Percentage points
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Full Year 2025 Guidance1 Sales $520 million to $540 million Adjusted EBITDA $105 million to $115 million Adjusted basic EPS $2.45 to $2.75 Effective tax rate ~ 25% Basic weighted average shares outstanding ~ 21.3 million Capital expenditures ~ $36 million 2025 FINANCIAL GUIDANCE 9 1 Guidance is as of February 26, 2025.
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0.6x 0.2x 1.5x 1.0x 1.3x 1.5x 2019 2020 2021 2022 2023 2024 Net Leverage Ratio STRONG BALANCE SHEET WITH EXCELLENT ACCESS TO CAPITAL • Balance sheet remains healthy, and we remain well capitalized with debt totaling $324 million and a cash position of $25 million(1) • Excellent access to capital with total availability of $522 million under our credit agreement and note purchase agreement(1) • Net leverage ratio of 1.5x(1) 10 Note: $ in millions; See appendix for GAAP to non-GAAP reconciliations. (1) As of December 31, 2024
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Penelope’s Innovation Shows Untapped Potential 20 New SKUs Launched in 2024 +65% YoY Sales Growth1 OUR PREMIUM PLUS BRANDS ARE GAINING TRACTION Continued Momentum in Penelope® Bourbon 1 As reported by NABCA for the 12 month period ending on 12/31/2024 2 As reported by Nielsen for the 52 weeks period ending on 12/28/2024 El Mayor® Growing Ahead of the Tequila Category +20% YoY Sales Growth2 Upcoming Packaging Redesign Expected to Drive Greater Shelf Presence
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APPENDIX
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RECONCILIATION OF SELECTED GAAP TO NON-GAAP MEASURES 13 NET INCOME TO ADJUSTED EBITDA AND NET DEBT LEVERAGE RATIO ($ in thousands) 2019 2020 2021 2022 2023 2024 Net Income $38,793 $40,345 $90,817 $108,872 $107,130 $34,465 Interest 1,305 2,267 4,037 5,451 6,647 8,439 Taxes 7,144 12,256 30,279 31,300 34,616 33,977 Depreciation and amortization 11,572 12,961 19,092 21,455 22,113 21,989 Share-based compensation expense 2,547 5,289 3,306 5,502 7,501 3,188 Equity method investment loss (gain) - - 1,611 2,220 337 (1,827) Impairment of long-lived assets and other - - - - 19,391 137 Fair value of contingent consideration - - - - 7,100 16,100 Goodwill impairment 73,755 Business acquisition costs - 919 8,927 - 2,060 116 Executive transition costs - 1,932 - - 3,134 4,075 Insurance recoveries - - (16,325) - - - Unusual items cost - - - - - 2,081 Inventory step-up – Branded Spirits - - 2,529 - - - Adjusted EBITDA $61,361 $75,969 $144,273 $174,800 $210,029 $196,495 Total debt $41,060 $39,871 $233,399 $230,335 $287,249 $323,541 Cash and cash equivalents 3,309 21,662 21,568 47,889 18,388 25,273 Total net debt $37,751 $18,209 $211,831 $182,446 $268,861 $298,268 Net debt leverage ratio1 0.6x 0.2x 1.5x 1.0x 1.3x 1.5x 1 Net debt leverage ratio is defined as net debt divided by adjusted EBITDA
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RECONCILIATION OF SELECTED GAAP TO NON-GAAP MEASURES 14 FOR THE QUARTERS ENDED DECEMBER 31, 2024 AND 2023 Quarter Ended December 31, 2024 (in thousands) Operating Income Net Income Basic and Diluted EPS Reported GAAP Results $(30,442) $(41,998) $(1.91) Goodwill impairment 73,755 73,755 3.36 Fair value of contingent consideration 200 152 0.01 Business acquisition costs 15 11 - Executive transition costs 2,857 2,171 0.10 Unusual items costs 408 310 0.01 Adjusted Non-GAAP Results $46,793 $34,401 $1.57 Quarter Ended December 31, 2023 (in thousands) Operating Income Net Income Basic EPS Reported GAAP Results $43,072 $31,046 $1.39 Impairment of long-lived assets and other 1,057 803 0.04 Fair value of contingent consideration 2,900 2,204 0.10 Business acquisition costs 246 187 0.01 Executive transition costs 3,134 2,382 0.10 Adjusted Non-GAAP Results $50,409 $36,622 $1.64
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RECONCILIATION OF SELECTED GAAP TO NON-GAAP MEASURES 15 RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA ($ in thousands) Quarter Ended 12/31/2024 Quarter Ended 12/31/2023 Net income (loss) $(41,998) $31,046 Interest expense 2,041 2,017 Income tax expense 10,053 9,784 Depreciation and amortization 5,691 5,841 Share based compensation 440 1,850 Equity method investment loss (gain) (381) 146 Impairment of long-lived assets and other - 1,057 Goodwill impairment 73,755 - Fair value of contingent consideration 200 2,900 Business acquisition costs 15 246 Executive transition costs 2,857 3,134 Unusual items costs 408 - Adjusted EBITDA $53,081 $58,021
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DESCRIPTION OF NON-GAAP ITEMS • Excluding the impacts of the nondeductible goodwill impairment, the effective tax rate was 24.0% and 23.9% for the quarter and year ended December 31, 2024, respectively. This is the effective tax rate used for the non-GAAP items • Goodwill impairment relates to the write down of goodwill during the quarter and year ended December 31, 2024. This is nondeductible for income tax purposes. It is included in the Consolidated Statement of Income as a component of operating income and relates to the Branded Spirits segment. • The impairment of long-lived assets and other relates to impairment of assets as well as miscellaneous expenses incurred in connection with the closure of the Atchison distillery. Impairment of long-lived assets and other are included in the Condensed Consolidated Statement of Income as a component of operating income and relates to the Distilling Solutions segment. • Fair value of contingent consideration relates to the quarterly adjustment of the contingent consideration liability related to the acquisition of Penelope Bourbon LLC. It is included in the Condensed Consolidated Statement of Income as a component of operating income and relates to the Branded Spirits segment. • Business acquisition costs are included in the Condensed Consolidated Statement of Income within the selling, general, and administrative line item and include transaction and integration costs associated with the various acquisitions and mergers. • The executive transition costs are included in the Condensed Consolidated Statement of Income within the selling, general, and administrative line item. The adjustment includes costs related to the transition of certain executive positions. • The unusual items costs are included in the Condensed Consolidated Statement of Income within the selling, general and administrative line item. The adjustment includes professional and legal costs associated with special projects. • The insurance recovery costs are included in the Condensed Consolidated Statement of Income within the insurance recoveries line item. During November 2020, the Company experienced a fire at the Atchison facility. The fire damaged certain equipment in the facility's feed drying operations and caused a temporary loss of production time. This adjustment includes the final settlement from our insurance carrier for the replacement of the damaged dryer. • The finished goods inventory valuation step-up costs are included in the Condensed Consolidated Statement of Income within the cost of goods by the Branded Spirits segment. The adjustment includes the purchase accounting adjustment to value the acquired finished goods inventory at its fair value. 16
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QUARTERLY GAAP RESULTS 17 Consolidated Sales (Quarter Ended 12/31/2024) Change vs Prior Year $MM $MM % Distilling Solutions $82.1 $(26.9) (25)% Branded Spirits 64.0 (8.6) (12) Ingredient Solutions 34.8 1.4 4 MGP Ingredients $180.8 $(34.1) (16)% EPS Drivers1 Fourth Quarter 2023-24 a Items are net of tax based on the effective tax rate for the base year (2023) GP: gross profit Gross Profit Drivers Fourth Quarter 2023-24 ($MM) $85.2 ($3.9) ($3.2) ($3.6) $74.5 Q4 2023 Ingredient Solutions GP Distilling Solutions GP Branded Spirits GP Q4 2024
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IMPACT OF THE CLOSURE OF THE ATCHISON DISTILLERY (1) Represents actual results of the Company for the quarter ended December 31, 2024. (2) Represents actual results of the Company for the quarter ended December 31, 2023. (3) Represents the Company's results for the quarter ended December 31, 2023 or 2024 excluding results associated with the Company's Atchison, Kansas distillery. These are pro-forma unaudited financial results. In some circumstances, white goods, industrial alcohol, fuel grade alcohol, and at times certain co-products are produced at the Company's Lawrenceburg, Indiana distillery. The pro-forma financial results assume the loss of the waste starch slurry credit and no gain or loss on the disposal. The results of the Branded Spirits segment for the quarter ended December 31, 2023 and 2024 would not have been impacted by a closure of the Atchison, Kansas distillery. (4) Percentage points (“pp”). 18 Quarter Ended 12/31/2023 (in thousands) Change As Reported(2) Pro-Forma(3) $ % Sales $214,888 $193,373 $(21,515) (10)% Gross Profit $85,145 $87,399 $2,254 3% Gross Margin % 39.6% 45.2% 5.6 pp(4) Quarter Ended 12/31/2024 (in thousands) Change As Reported(1) Pro-Forma(3) $ % Sales $180,796 $180,796 $- -% Gross Profit $74,475 $74,475 $- -% Gross Margin % 41.2% 41.2% 0.0 pp(4) UNAUDITED PRO-FORMA RESULTS – CONSOLIDATED
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IMPACT OF THE CLOSURE OF THE ATCHISON DISTILLERY 19 UNAUDITED PRO-FORMA RESULTS – DISTILLING SOLUTIONS Quarter Ended December 31, 2024 (in thousands) Change As Reported(1) Pro-Forma(3) $ % Brown Goods $66,989 $66,989 $- -% Warehouse Services 8,818 8,818 - - White goods and other co-products 6,238 6,238 - - Sales $82,045 $82,045 $- -% Gross Profit $36,727 $36,727 $- -% Gross Margin % 44.8% 44.8% 0.0 pp(4) Quarter Ended December 31, 2023 (in thousands) Change As Reported(2) Pro-Forma(3) $ % Brown Goods $74,334 $74,334 $- -% Warehouse Services 7,674 7,674 - - White goods and other co-products 26,905 5,390 (21,515) (80) Sales $108,913 $87,398 $(21,515) (20)% Gross Profit $39,978 $43,528 $3,550 9% Gross Margin % 36.7% 49.8% 13.1 pp(4) (1) Represents actual results of the Company for the quarter ended December 31, 2024. (2) Represents actual results of the Company for the quarter ended December 31, 2023. (3) Represents the Company's results for the quarter ended December 31, 2023 or 2024 excluding results associated with the Company's Atchison, Kansas distillery. These are pro-forma unaudited financial results. In some circumstances, white goods, industrial alcohol, fuel grade alcohol, and at times certain co-products are produced at the Company's Lawrenceburg, Indiana distillery. The pro-forma financial results assume the loss of the waste starch slurry credit and no gain or loss on the disposal. The results of the Branded Spirits segment for the quarter ended December 31, 2023 and 2024 would not have been impacted by a closure of the Atchison, Kansas distillery. (4) Percentage points (“pp”).
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20 Quarter Ended 12/31/2024 (in thousands) Change As Reported(1) Pro-Forma(3) $ % Specialty Wheat Starches $18,359 $18,359 $- -% Specialty Wheat Proteins 12,821 12,821 - - Commodity Wheat Starches 3,505 3,505 - - Commodity Wheat Proteins 61 61 - - Sales $34,746 $34,746 $- -% Gross Profit $8,163 $8,163 $- -% Gross Margin % 23.5% 23.5% - pp(4) Quarter Ended 12/31/2023 (in thousands) Change As Reported(2) Pro-Forma(3) $ (5) % Specialty Wheat Starches $17,073 $17,073 $- -% Specialty Wheat Proteins 12,373 12,373 - - Commodity Wheat Starches 3,543 3,543 - - Commodity Wheat Proteins 371 371 - - Sales $33,360 $33,360 $- -% Gross Profit $12,022 $10,726 $(1,296) (11)% Gross Margin % 36.0% 32.2% (3.8) pp(4) IMPACT OF THE CLOSURE OF THE ATCHISON DISTILLERY (1) Represents actual results of the Company for the quarter ended December 31, 2024. (2) Represents actual results of the Company for the quarter ended December 31, 2023. (3) Represents the Company's results for the quarter ended December 31, 2023 or 2024 excluding results associated with the Company's Atchison, Kansas distillery. These are pro-forma unaudited financial results. In some circumstances, white goods, industrial alcohol, fuel grade alcohol, and at times certain co-products are produced at the Company's Lawrenceburg, Indiana distillery. The pro-forma financial results assume the loss of the waste starch slurry credit and no gain or loss on the disposal. The results of the Branded Spirits segment for the quarter ended December 31, 2023 and 2024 would not have been impacted by a closure of the Atchison, Kansas distillery. (4) Percentage points (“pp”). (5) The reduction in gross profit for the Ingredient Solutions segment is the result of increased cost of goods sold from no longer receiving an intercompany credit for the waste starch slurry by-product purchased by the adjoined Atchison, Kansas distillery. The value of the intercompany credit is derived from the value of corn which has fluctuated over time. UNAUDITED PRO-FORMA RESULTS – INGREDIENT SOLUTIONS