ATCHISON, KAN. – Profits and sales were under severe pressure at MGP Ingredients, Inc. in the first quarter of 2025, but results were largely in line with expectations, and management held guidance for the full year unchanged.

“We are pleased with first quarter results that keep us on track to meet our full-year guidance,” said Brandon Gall, interim president and chief executive officer, and chief financial officer. “While elevated industry-wide barrel whiskey inventories and a cautious consumer environment remain as headwinds, we saw signs of positive progress across all three of our business segments. These early signs of stabilization give us confidence that the proactive actions we are taking are beginning to take hold.”

For the company’s Ingredients Solutions business, gross profits fell sharply and sales dropped by more than a quarter in the three-month period.

For the first quarter ended March 31, MGP Ingredients sustained a net loss of $2.99 million. A year earlier, the company had net income of $20.4 million, equal to 92¢ per share on the common stock. Sales were $121.65 million, down 29% from $170.65 million in the first quarter last year.

Results included a $14.7 million charge, due to the strong performance of the company’s Penelope spirits brand and a resultant change in a “fair value of contingent consideration” prospectively due to the seller. Adjusted net income was $7.8 million, down 68%.

While the company’s branded premium spirit sales were strong, other spirits segments were under pressure, said Mark Davidson, vice president and corporate controller.

“Our mid- and value-price brands declined by double digits during the quarter due to lower sales of certain tequila, liqueur, and cordials brands within those price tiers, while our Premium Plus sales increased by 7%, reflecting continued momentum in select American whiskey and tequila brands,” he said.

Gall said weakness in the company’s core spirits business is “consistent with overall consumer trends.”

“Our key initiative for our Branded Spirits segment this year is focus,” Gall said. “To focus on fewer but more attractive growth opportunities within our branded portfolio. Our Premium Plus portfolio continues to be the growth engine of the Branded Spirits segment, and we believe our Penelope, El Mayor, and Rebel 100 brands are particularly well positioned to benefit from our focus initiative.”

Gross profit of the Ingredients Solution segment was $2.45 million, down 60% from $6.18 million a year earlier. Sales were $26.48 million, down 26% from $35.57 million a year earlier.

Davidson said the sales drop was driven by lower sales of specialty wheat starches and “decreased net price mix of specialty wheat proteins.”

“The declines in specialty wheat starches and proteins were impacted by supply challenges resulting from adverse weather and complexities associated with the closure of the Atchison distillery as well as the timing of commercialization of new customers,” he said.

Gall voiced optimism about prospects for the division.

“Underlying demand for our specialty ingredients remain strong, and we’re executing with great urgency,” he said. “Our Fibersym branded specialty starch continues to gain traction, with food manufacturers seeking FDA approved dietary fiber solutions. In specialty proteins, we’re making good headway with new customers in North America, especially in the plant-based and functional food categories.

“Operationally, we’re executing several key initiatives. Our Deep Well project is fully operational, and our new biofuel facility is on track to go live in the second half of 2025. We believe these investments will reduce disposal costs, improve efficiency and further differentiate our capabilities in a competitive market.

“At the same time, we’re increasing investments in our ingredients facility that are designed to increase throughput, improve reliability, and further streamline operations. Our teams are energized. Our customer pipeline is growing, and our commercial execution is improving. We’re fostering operational execution with greater cross-functional collaboration to increase transparency, accountability and responsiveness.

“We believe these actions will help to unlock additional growth opportunities and further solidify our position as a leading specialty wheat ingredient supplier. Despite the soft quarter, we believe the Ingredient Solutions segment is well positioned for stronger performance for the remainder of the year. “

During the call, an analyst asked for clarification about what transpired during the quarter and why management was confident results would improve.

Gall acknowledged that the quarter was tough for the ingredients business, but said results largely were in line with expectations. He reviewed progress the company was making on the major capital projects undertaken at Atchison.

“We’ve got the largest amount of maintenance and reliability CapEx budgeted for this year than we have in the last five or more years,” Gall said. “So the team is very focused there on solving for those two projects and improving our reliability to get the product we need. On the commercialization front, for specialty wheat starches, the demand is there. It’s been the production issues that we’ve had that have kept our inventories low and have been a fulfillment challenge for the team. As we improve our operations and our reliability, that should take care of itself.

“Secondly, on specialty protein, for the second quarter in a row, we saw a rise growth from a volume standpoint. However, due to the customer onboarding choppiness that we mentioned, the customer mix in the quarter wasn’t the optimal level and where we expect it to be.  That being said, we expect Q2 and the subsequent quarters to get better. In fact, we’re already seeing orders from those right customers in April and May for Arise specialty protein. And then for our ProTerra specialty protein, the team continues to make a lot of progress there.”

After financial results were announced May 1, shares of MGP Ingredients rose $1.40, or 4.8%, to close at $30.87.