Seamus Cassidy

Seamus Cassidy asked if MGP's industry outlook for a down year accounts for recent positive scanner data trends, sought clarity on 2026 as a trough for brown goods (specifically new distillate contracts), and questioned the strategy for aged whiskey sales given historical volatility.

Answer

CEO Julie Francis stated that MGP's 2026 guidance for Branded Spirits reflects both premium plus momentum and mid-to-value expectations, with good visibility. For Distilling Solutions, she confirmed that most aged and distillate contracts for 2026 are substantially locked in, reflecting current market pricing. She also highlighted the strategic pivot to premium white goods and warehouse services to deepen customer relationships and manage costs.

Seamus Cassidy asked if MGP Ingredients' 2026 industry outlook accounts for recent positive scanner data trends, and sought clarity on the visibility of 2026 as a trough year for brown goods, including new distillate contracts and the strategy for aged whiskey sales.

Answer

CEO Julie Francis stated that 2026 guidance reflects premium plus momentum and mid-to-value expectations, with good visibility. She confirmed that most aged and distillate contracts for 2026 are substantially locked in, and the company is expanding into premium white goods and private label aged whiskey contracts to stabilize the Distilling Solutions business.

Seamus Cassidy from TD Cowen, on behalf of Rob Moskow, asked for an assessment of the industry's inventory rationalization progress, referencing TTB production cut data, and questioned whether the competitive environment remains sensible.

Answer

CFO Brandon Gall acknowledged the encouraging signs from TTB data but emphasized that the industry still has a ways to go with inventory rationalization, with the dynamic expected to persist into 2026. He described the environment as one where strong partnerships matter, stating that MGPI is adding new customers and is well-positioned to emerge stronger from the current challenges.

Seamus Cassidy, on for Rob Moskow, questioned the 7% growth in Premium Plus branded spirits, asking if it was ahead of expectations given the prior flattish full-year outlook, or simply due to innovation timing. He also asked about the Branded Spirits margin profile, considering the pricing actions on mid- and value-tier brands.

Answer

Brandon Gall, Interim CEO & CFO, confirmed the quarter was encouraging for Premium Plus, led by strong performance from Penelope, El Mayor, and Rebel 100. He noted Penelope's performance was slightly above expectations, leading to an increased contingent liability, but it was too early to revise the full-year outlook. Regarding margins, he explained that some price reductions, particularly in tequila, are offset by lower input costs like agave, so it's not a one-for-one margin trade-off.

Seamus Cassidy, on behalf of Robert Moskow at TD Cowen, asked about the long-term outlook for the Distilling Solutions segment, questioning how long it might take for production cuts to rebalance the market and for the segment to return to growth. He also inquired about the S-3 filing for Donn Lux's shares and whether the company might repurchase them.

Answer

Brandon Gall, Interim President, CEO, and CFO, stated that the challenging environment for Distilling Solutions is expected to persist through 2025 and into 2026. He emphasized that MGP is proactively reducing its own production and controlling costs. Regarding the S-3 filing, Gall described it as a 'housekeeping item' stemming from the original Luxco acquisition agreement and not indicative of any new strategic shift.