
MGP Ingredients, Inc. (Nasdaq: MGPI), a leading supplier of branded and distilled spirits and food ingredient solutions, announced its financial results for the first quarter ended March 31, 2025. Despite a difficult operating environment, the company reported performance that aligns with its full-year expectations and expressed optimism about its long-term positioning.
“We are pleased with our first-quarter results, which demonstrate resilience in the face of persistent industry headwinds,” said Brandon Gall, Interim President and CEO, and CFO of MGP Ingredients. “While the industry continues to contend with elevated barrel whiskey inventories and ongoing consumer caution, we observed encouraging indicators across all three of our operating segments. These early signs of stabilization suggest that our strategic initiatives are beginning to take hold.”
Gall emphasized the company’s renewed focus and strategic discipline in navigating the current environment. “We are concentrating on the initiatives that will have the greatest impact, leveraging our competitive strengths, and executing with heightened discipline. Our confidence in MGP’s strategic direction remains strong, and we are reaffirming our full-year guidance for 2025. We continue to make steady progress toward our goal of transforming MGP into a premier branded spirits company.”
First Quarter 2025 Financial Summary
Compared to the same quarter in 2024, MGP reported a decline across key financial metrics:
- Consolidated sales fell by 29% to $121.7 million, reflecting anticipated softness in both brown goods and specialty ingredient sales.
- Gross profit decreased 31% to $43.3 million, resulting in a gross margin contraction of 120 basis points to 35.6%.
- Net income declined by 115%, shifting to a net loss of $3.1 million. This was primarily due to a $10.6 million increase in the fair value of contingent consideration tied to the improved performance of the Penelope brand.
- Adjusted net income, excluding non-recurring items, dropped 68% to $7.8 million.
- Earnings per share (EPS) turned negative, dropping to $(0.14), compared to $0.92 in the prior-year period. On an adjusted basis, EPS fell 66% to $0.36, including a $(0.07) per share negative tax impact from the vesting of previously granted share-based awards.
- Adjusted EBITDA declined 46% to $21.8 million.
- Capital expenditures decreased by 38% to $8.1 million.
- Operating cash flow improved significantly, rising $20.1 million year-over-year to $44.7 million.
- As of March 31, 2025, the company’s net debt leverage ratio stood at approximately 1.6x, reflecting solid balance sheet management.
In a move to further strengthen its liquidity position and financial flexibility, MGP upsized its revolving credit facility from $400 million to $500 million in April 2025 and extended the maturity date to 2030. The company also expanded the accordion feature from $100 million to $200 million and extended its shelf registration to issue up to $250 million in senior secured promissory notes through 2028. According to management, these developments reflect lenders’ confidence in MGP’s financial strength and provide additional capacity to support future growth initiatives.

Segment Results
Branded Spirits
Sales in the Branded Spirits segment declined 4% year-over-year to $48.2 million. However, not all categories within the segment experienced weakness. Notably, sales of the company’s premium and above-premium offerings grew 7%, driven by strong execution and increased focus on strategic growth priorities in American whiskey and tequila. The Penelope brand delivered particularly robust results during the quarter.
Conversely, sales in the mid-tier and value-priced categories dropped by double-digit percentages. This decline was attributed to reduced demand for certain tequila, liqueur, and cordial brands, reflecting shifting consumer preferences and cautious discretionary spending.
Despite the modest decline in segment sales, gross profit in Branded Spirits fell just 1% to $22.2 million, maintaining a strong gross margin of 46.0%, compared to 44.9% in the prior year. This improvement in gross margin reflects the company’s emphasis on premiumization and cost discipline.
Distilling Solutions
The Distilling Solutions segment reported significant declines, with sales and gross profit both falling by 45%, to $46.9 million and $18.7 million, respectively. The primary cause was weaker demand for brown goods, as elevated barrel inventories across the industry continue to limit customer purchasing.
White goods and co-product sales also decreased, aligning with expectations. This was due in part to the phase-out of certain customer contracts following the closure of the company’s Atchison distillery. Additionally, lower production volumes of dried distillers grain contributed to the decline.
Despite the steep revenue reduction, gross margin held steady at 39.8%, indicating effective cost containment and operational stability in the face of reduced volume.
Ingredient Solutions
Sales in the Ingredient Solutions segment fell 26% year-over-year to $26.5 million, primarily due to lower demand for specialty starches and proteins. Adverse weather conditions and operational disruptions associated with the Atchison distillery closure impacted supply, while delays in commercializing new customer relationships also weighed on performance.
Gross profit in the segment declined significantly to $2.5 million, down from $6.2 million in the prior-year quarter. This resulted in a sharp margin decline, with gross margin falling to 9.3%, from 17.4% in the first quarter of 2024.
Operating and Tax Expenses
Advertising and promotional spending for the quarter totaled $8.2 million, a 6% reduction from the previous year. Within the Branded Spirits segment, marketing investment accounted for nearly 16% of segment sales, consistent with the company’s timing of planned initiatives and brand-building efforts.
MGP reported an effective tax rate of (28.1)% for the quarter, compared to a positive 23.3% in Q1 2024. The negative rate was driven primarily by unfavorable impacts related to share-based compensation granted in prior periods of higher stock valuation. On an adjusted basis, the effective tax rate increased to 43.0%, reflecting the impact of discrete tax items.