• MGP Ingredients Reports Strong Fourth Quarter and Full Year 2022 Results

    Source: Nasdaq GlobeNewswire / 23 Feb 2023 06:30:01   America/Chicago

    Full year consolidated sales increased 25% from prior year period
    Full year net income and adjusted EBITDA both increased 20%

    ATCHISON, Kan., Feb. 23, 2023 (GLOBE NEWSWIRE) --  MGP Ingredients, Inc. (Nasdaq:MGPI), a leading provider of distilled spirits, branded spirits and food ingredient solutions, today reported results for the fourth quarter and full year ended December 31, 2022.

    2022 fourth quarter consolidated results compared to 2021 fourth quarter

    • Sales increased 15% to $191.0 million.
    • Gross profit increased 20% to $63.2 million, representing 33.1% of sales.  
    • Operating income decreased 34% to $29.7 million due to the $16.3 million favorable insurance recovery recorded in the 2021 fourth quarter. Adjusted operating income increased 3% to $29.7 million.
    • Net income decreased 29% to $22.5 million due to the $12.2 million tax-effected, favorable insurance recovery recorded in the 2021 fourth quarter. Adjusted net income increased 16% to $22.5 million.
    • Adjusted EBITDA increased 2% to $35.1 million.
    • Basic earnings per common share ("EPS") decreased to $1.02 per share from $1.44 per share due to the $0.56 per share favorable insurance recovery recorded in the 2021 fourth quarter. Adjusted basic EPS increased to $1.02 per share from $0.88 per share.
    • Diluted EPS decreased to $1.01 per share from $1.44 per share due to the $0.56 per share favorable insurance recovery recorded in the 2021 fourth quarter. Adjusted diluted EPS increased to $1.01 per share from $0.88 per share.
    2022 full year consolidated results compared to 2021 full year

    • Sales increased 25% to $782.4 million.
    • Gross profit and adjusted gross profit increased 27% and 26%, respectively, to $253.3 million, representing 32.4% of sales.
    • Operating income and adjusted operating income increased 18% and 23%, respectively, to $149.0 million.
    • Net income and adjusted net income increased 20% and 23%, respectively, to $108.9 million.
    • Adjusted EBITDA increased 20% to $169.3 million.
    • Basic EPS increased to $4.94 per share from $4.37 per share. Adjusted basic EPS increased to $4.94 per share from $4.26 per share.
    • Diluted EPS increased to $4.92 from $4.37 per share. Adjusted diluted EPS increased to $4.92 per share from $4.26 per share.

    “We are very pleased with our performance for the quarter and full year and remain confident in the long-term sustainability of our business model,” said Dave Colo, president and CEO of MGP Ingredients. “Our record annual results reflect continued strength in each of our business segments. Brown goods sales increased 65% and 42% for the fourth quarter and full year 2022, respectively, as compared to the prior year periods. Underpinning this growth was continued demand for our new distillate and aged whiskey. Meanwhile, increased commodity costs and excess supply in the market continue to negatively impact industrial alcohol and white goods gross profit. Sales of our premium plus portfolio of brands grew 23% in the quarter driving further gross margin expansion in our Branded Spirits segment. In our Ingredient Solutions business, we remain encouraged by the traction our specialty wheat starches and proteins continue to gain. These results for the fourth quarter and full year demonstrate the continued success of executing our long-term strategy.”

    Distilling Solutions
    In the fourth quarter 2022, sales for the Distilling Solutions segment increased 23% to $101.2 million, reflecting a 34% increase in sales of premium beverage alcohol. Gross profit increased to $31.7 million or 31.3% of segment sales, compared to $26.9 million, or 32.6% of segment sales in the fourth quarter 2021.

    For the full year 2022, Distilling Solutions segment sales increased 22% to $428.5 million, reflecting a 28% increase in sales of premium beverage alcohol, due to continued strong new distillate and aged American Whiskey sales. Gross profit increased to $126.3 million, or 29.5% of segment sales, compared to $114.1 million, or 32.4% of segment sales in 2021.  

    Branded Spirits
    For the fourth quarter 2022, sales for the Branded Spirits segment decreased less than 1% to $60.9 million. Sales of the premium plus price tier spirit brands grew 23%. Gross profit increased to $24.7 million, or 40.6% of segment sales compared to $20.9 million, or 34.3% of segment sales in the fourth quarter 2021.

    For the full year 2022, Branded Spirits sales increased 30% to $237.9 million, reflecting the full year impact of the merger with Luxco as well as continued strength in the premium plus portfolio of brands. Sales of the premium plus price tier spirit brands grew 56%. Gross profit increased to $95.5 million, or 40.1% of segment sales, compared to $62.6 million, or 34.1% of segment sales in 2021. Adjusted gross profit increased to $95.5 million, or 40.1% of segment sales, compared to $65.2 million, or 35.5% of segment sales.

    Ingredient Solutions
    In the fourth quarter 2022, sales for the Ingredient Solutions segment increased 24% to $29.0 million. Gross profit increased to $6.9 million, or 23.8% of segment sales, compared to $5.0 million, or 21.2% of segment sales in the fourth quarter 2021.

    For the full year 2022, Ingredient Solutions segment sales increased 28% to $115.9 million, driven primarily by higher sales of specialty wheat starches and specialty wheat proteins. Gross profit increased to $31.5 million, or 27.2% of segment sales, compared to $22.2 million, or 24.5% of segment sales in 2021.

    Other
    Advertising and promotion expenses for the fourth quarter 2022 increased $4.7 million, or 75%, to $10.9 million as compared to the fourth quarter 2021. For the full year 2022, advertising and promotion expenses increased $13.6 million, or 85%. The increases for both periods are primarily driven by the Luxco acquisition and further incremental investment to support continued growth in the premium plus portfolio of brands.

    Corporate selling, general and administrative ("SG&A") expenses for the fourth quarter 2022 increased $5.1 million to $22.6 million as compared to the fourth quarter 2021. For the full year, corporate SG&A expenses increased $1.8 million to $74.6 million as compared to 2021.

    The corporate effective tax rate for the fourth quarter 2022 was 19.0%, compared with 26.8% from the year ago period. The corporate effective tax rate for the full year 2022 was 22.3% compared with 25.0% in 2021.

    2023 Outlook
    MGP is offering the following consolidated guidance for fiscal 2023:

    • Sales are projected to be in the range of $815 million to $835 million.
    • Adjusted EBITDA is expected to be in the range of $178 million to $183 million.
    • Adjusted basic earnings per common share are forecasted to be in the $5.05 to $5.20 range, with basic weighted average shares outstanding expected to be approximately 22.2 million at year end.

    Full year 2023 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 MGP is unable to predict with a reasonable degree of certainty certain items contained in the GAAP measures without unreasonable efforts. Such items include, but are not limited to, acquisition related expenses, restructuring and related expenses, and other items not reflective of MGP’s ongoing operations.

    Conference Call and Webcast Information
    MGP Ingredients will host a conference call for analysts and institutional investors at 10 a.m. ET today to discuss these results and current business trends. The conference call and webcast will be available via:

    Webcast:ir.mgpingredients.com on the Events & Presentations page
    Conference Call:        844-308-6398 (domestic) or 412-717-9605 (international)

    About MGP Ingredients, Inc.
    MGP Ingredients, Inc. (Nasdaq: MGPI) is a leading producer of premium distilled spirits, branded spirits, and food ingredient solutions. Since 1941, we have combined our expertise and energy aimed at formulating excellence, bringing product ideas to life collaboratively with our customers.

    As one of the largest distillers in the U.S., MGP’s offerings include bourbon and rye whiskeys, gins, and vodkas, which are created at the intersection of science and imagination, for customers of all sizes, from crafts to multinational brands. With distilleries in Kentucky, Indiana and Kansas, and bottling operations in Missouri, Ohio, and Northern Ireland, MGP has the infrastructure and expertise to create on any scale.

    MGP’s branded spirits portfolio covers a wide spectrum of brands in every segment, including iconic brands from Luxco, which was founded in 1958 by the Lux Family. Luxco is a leading producer, supplier, importer and bottler of beverage alcohol products. Our branded spirits mission is to meet the needs and exceed the expectations of consumers, associates and business partners. Luxco’s award-winning spirits portfolio includes well-known brands from four distilleries: Bardstown, Kentucky-based Lux Row Distillers, home of Ezra Brooks, Rebel, Blood Oath, David Nicholson and Daviess County; Lebanon, Kentucky-based Limestone Branch Distillery, maker of Yellowstone Kentucky Straight Bourbon Whiskey, Minor Case Straight Rye Whiskey and Bowling & Burch Gin; Jalisco, Mexico-based Destiladora González Lux, producer of 100% agave tequilas, El Mayor, Exotico and Dos Primos; and the historic Ross & Squibb Distillery in Lawrenceburg, Indiana, where the George Remus Straight Bourbon Whiskey and Rossville Union Straight Rye Whiskey are produced. The innovative and high-quality brand portfolio also includes Everclear Grain Alcohol, Pearl Vodka, Green Hat Gin, Saint Brendan’s Irish Cream, The Quiet Man Irish Whiskey and other well-recognized brands.

    In addition, our Ingredient Solutions segment offers specialty proteins and starches that help customers harness the power of plants and provide a host of functional, nutritional, and sensory benefits for a wide range of food products.

    The transformation of American grain into something more is in the soul of our people, products, and history. We’re devoted to unlocking the creative potential of this extraordinary resource. For more information, visit mgpingredients.com.

    Cautionary Note Regarding Forward-Looking Statements
    The forward-looking statements contained herein include, but are not limited to, statements about the expected effects on MGP Ingredients, Inc. (the "Company," or "MGP") of continuing consumer trends and our announced expansionary projects. Forward looking statements are usually identified by or are associated with such words as “intend,” “plan,” “believe,” “estimate,” “expect,” “anticipate,” “hopeful,” “should,” “may,” “will,” “could,” “encouraged,” “opportunities,” “potential,” and/or the negatives or variations of these terms or similar terminology.

    These forward-looking statements reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, Company performance, and Company financial results and financial condition and are not guarantees of future performance. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. Important factors that could cause actual results to differ materially from our expectations include, (i) disruptions in the operations at any of our facilities, (ii) the availability and cost of grain, flour, and agave, and fluctuations in energy costs, (iii) the effectiveness of our grain purchasing program to mitigate our exposure to commodity price fluctuations, (iv) the effectiveness or execution of our strategic plan, (v) potential adverse effects to operations and our system of internal controls related to the loss of key management personnel, (vi) the competitive environment and related market conditions, (vii) the impact of COVID-19 and other pandemics, (viii) the effects of inflation and our ability to effectively pass raw material and other price increases on to customers, (ix) our ability to maintain compliance with all applicable loan agreement covenants, (x) increases in interest rates, (xi) our ability to realize operating efficiencies, (xii) actions of governments, and (xiii) consumer tastes and preferences. For further information on these and other risks and uncertainties that may affect our business, including risks specific to our Distilling Solutions, Branded Spirits and Ingredient Solutions segments, see Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2022.

    Non-GAAP Financial Measures
    In addition to reporting 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, MGP has disclosed adjusted gross profit, adjusted operating income, adjusted income before income taxes, adjusted net income, adjusted MGP earnings, adjusted EBITDA and adjusted basic and diluted earnings per common share. The presentation of non-GAAP financial measures should be reviewed in conjunction with gross profit, operating income, income before income taxes, net income, net income used in earnings per common share calculation, and basic and diluted EPS computed in accordance with U.S. GAAP and should not be considered a substitute for these GAAP measures. The non-GAAP adjustments referenced in the section entitled "Reconciliation of Selected GAAP Measures to Adjusted Non-GAAP Measures," take into account the impacts of items that are not necessarily ongoing in nature and/or predictive of the Company's operating trends.   We believe that these 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 attached schedules provide a full reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measure.

    For More Information
    Investors & Analysts:
    Mike Houston
    646-475-2998 or investor.relations@mgpingredients.com

    Media:
    Greg Manis
    913-360-5440 or greg.manis@mgpingredients.com

    MGP INGREDIENTS, INC.
    OPERATING INCOME ROLLFORWARD
    (Dollars in thousands)

    Operating income, quarter versus quarter Operating
    Income    		 Change 
    Operating income for quarter ended December 31, 2021 $45,316    
    Increase in gross profit - Distilling Solutions segment  4,757  11 pp(a)
    Increase in gross profit - Branded Spirits segment  3,805  8 pp
    Increase in gross profit - Ingredient Solutions segment  1,898  4 pp
    Increase in advertising and promotion expenses  (4,656) (10) pp
    Increase in SG&A expenses  (5,080) (11) pp
    Decrease in insurance recoveries  (16,325) (36) pp
    Operating income for quarter ended December 31, 2022 $29,715  (34)% 


    Operating income, year versus year Operating
    Income    		 Change 
    Operating income for year ended December 31, 2021 $126,363    
    Increase in gross profit - Branded Spirits segment  32,877  26 pp(a)
    Increase in gross profit - Distilling Solutions segment  12,176  10 pp
    Increase in gross profit - Ingredient Solutions segment  9,288  7 pp
    Increase in advertising and promotion expenses  (13,616) (11)pp
    Increase in SG&A expenses  (1,798) (1)pp
    Decrease in insurance recoveries  (16,325) (13)pp
    Operating income for year ended December 31, 2022 $148,965  18% 

    (a) Percentage points (“pp”).

    MGP INGREDIENTS, INC.
    EARNINGS PER SHARE (“EPS”) ROLLFORWARD

    Change in basic and diluted EPS, quarter versus quarter EPS Change 
    Basic and diluted EPS for quarter ended December 31, 2021 $1.44    
    Change in operating income(a)  (0.52) (36)pp(b)
    Change in other income (expense), net(a)  (0.02) (1)pp
    Change in interest expense(a)  0.02  1 pp
    Change in effective tax rate  0.10  7 pp
    Basic EPS for quarter ended December 31, 2022  1.02  (29)%  
    Impact of dilutive shares outstanding  (0.01) (1)pp
    Diluted EPS for quarter ended December 31, 2022 $1.01  (30)%  


    Change in basic and diluted EPS, year versus year EPS Change 
    Basic and diluted EPS for year ended December 31, 2021 $4.37    
    Change in operating income(a)  1.12  26 pp(b)
    Change in interest expense(a)  (0.06) (1)pp
    Change in other income (expense), net(a)  (0.08) (2)pp
    Change in weighted average shares outstanding(c)  (0.51) (12)pp
    Change in effective tax rate  0.10  2 pp
    Basic EPS for year ended December 31, 2022  4.94  13% 
    Impact of dilutive shares outstanding  (0.02) — pp
    Diluted EPS for year ended December 31, 2022 $4.92  13% 

    (a) Items are net of tax based on the effective tax rate for the base year (2021).
    (b) Percentage points ("pp")
    (c) Weighted average shares outstanding change primarily due to our repurchases of Common Stock, the vesting of employee restricted stock units ("RSUs"), our purchase of vested RSUs from employees to pay withholding taxes, and the granting of Common Stock to directors.

    MGP INGREDIENTS, INC.
    SALES BY OPERATING SEGMENT
    (Dollars in thousands)

     DISTILLING SOLUTIONS SALES
     Quarter Ended December 31, Quarter versus Quarter Sales
    Change Increase/(Decrease)
      2022  2021 $ Change % Change
    Brown goods$53,624 $32,474 $21,150  65%
    White goods 16,514  19,769  (3,255) (16)
    Premium beverage alcohol 70,138  52,243  17,895  34 
    Industrial alcohol 11,671  15,732  (4,061) (26)
    Food grade alcohol 81,809  67,975  13,834  20 
    Fuel grade alcohol 3,374  4,054  (680) (17)
    Distillers feed and related co-products 10,227  5,885  4,342  74 
    Warehouse services 5,777  4,574  1,203  26 
    Total Distilling Solutions$101,187 $82,488 $18,699  23%
            


     BRANDED SPIRITS SALES
     Quarter Ended December 31, Quarter versus Quarter Sales
    Change Increase/(Decrease)
      2022  2021 $ Change % Change
    Ultra premium$12,409 $8,231 $4,178  51%
    Super premium 2,752  2,544  208  8 
    Premium 6,283  6,614  (331) (5)
    Premium plus 21,444  17,389  4,055  23 
    Mid 19,122  22,893  (3,771) (16)
    Value 11,091  12,536  (1,445) (12)
    Other 9,204  8,191  1,013  12 
    Total Branded Spirits$60,861 $61,009 $(148) —%


     INGREDIENT SOLUTIONS SALES
     Quarter Ended December 31, Quarter versus Quarter Sales
    Change Increase / (Decrease)
      2022  2021 $ Change % Change
    Specialty wheat starches$15,122 $12,707 $2,415  19%
    Specialty wheat proteins 10,088  8,186  1,902  23 
    Commodity wheat starches 3,737  2,442  1,295  53 
    Commodity wheat proteins —  15  (15) (100)
    Total Ingredient Solutions$28,947 $23,350 $5,597  24%
            

    MGP INGREDIENTS, INC.
    SALES BY OPERATING SEGMENT
    (Dollars in thousands)

     DISTILLING SOLUTIONS SALES
     Year Ended December 31, Year versus Year Sales Change
    Increase/(Decrease)
      2022  2021 $ Change % Change
    Brown goods$229,523 $162,074 $67,449  42%
    White goods 74,510  75,818  (1,308) (2)
    Premium beverage alcohol 304,033  237,892  66,141  28 
    Industrial alcohol 46,812  62,628  (15,816) (25)
    Food grade alcohol 350,845  300,520  50,325  17 
    Fuel grade alcohol 13,681  14,916  (1,235) (8)
    Distillers feed and related co-products 40,354  19,545  20,809  106 
    Warehouse services 23,598  17,523  6,075  35 
    Total Distilling Solutions$428,478 $352,504 $75,974  22%
            


     BRANDED SPIRITS SALES
     Year Ended December 31, Year versus Year Sales Change
    Increase/(Decrease)
      2022  2021 $ Change % Change
    Ultra premium$48,245 $27,722 $20,523 74%
    Super premium 12,274  8,937  3,337 37 
    Premium 24,211  17,626  6,585 37 
    Premium Plus 84,730  54,285  30,445 56 
    Mid 82,530  71,292  11,238 16 
    Value 47,395  38,520  8,875 23 
    Other 23,284  19,469  3,815 20 
    Total Branded Spirits$237,939 $183,566 $54,373 30%
            


     INGREDIENT SOLUTIONS SALES
     Year Ended December 31, Year versus Year Sales Change
    Increase/(Decrease)
      2022  2021 $ Change % Change
    Specialty wheat starches$62,567 $47,758 $14,809  31%
    Specialty wheat proteins 39,313  31,485  7,828  25 
    Commodity wheat starches 14,023  10,014  4,009  40 
    Commodity wheat proteins 38  1,393  (1,355) (97)
    Total Ingredient Solutions$115,941 $90,650 $25,291  28%
            

    MGP INGREDIENTS, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
    (Dollars in thousands)

      Quarter Ended December 31, Year Ended December 31,
       2022   2021   2022   2021 
    Sales $190,995  $166,847  $782,358  $626,720 
    Cost of sales  127,782   114,094   529,052   427,755 
    Gross profit  63,213   52,753   253,306   198,965 
             
    Advertising and promotion expense  10,866   6,210   29,714   16,098 
    Selling, general and administrative  22,632   17,552   74,627   72,829 
    Insurance recoveries  —   (16,325)  —   (16,325)
    Operating income  29,715   45,316   148,965   126,363 
             
    Interest expense, net  (960)  (1,329)  (5,451)  (4,037)
    Other income (loss), net  (981)  (751)  (3,342)  (1,230)
    Income before income taxes  27,774   43,236   140,172   121,096 
             
    Income tax expense  5,263   11,578   31,300   30,279 
    Net income  22,511   31,658   108,872   90,817 
             
    Net loss attributable to noncontrolling interest  146   211   590   490 
    Net income attributable to MGP Ingredients, Inc.  22,657   31,869   109,462   91,307 
             
    Income attributable to participating securities  (180)  (236)  (871)  (712)
    Net income used in earnings per share calculation $22,477  $31,633  $108,591  $90,595 
             
    Weighted average common shares        
    Basic  22,011,785   21,983,310   22,002,990   20,719,663 
    Diluted  22,304,093   21,983,310   22,053,966   20,719,663 
             
    Earnings per common share        
    Basic $1.02  $1.44  $4.94  $4.37 
    Diluted $1.01  $1.44  $4.92  $4.37 

    MGP INGREDIENTS, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
    (Dollars in thousands)

     December 31,
      2022   2021 
    ASSETS   
    Current Assets:   
    Cash and cash equivalents$47,889  $21,568 
    Receivables, net 109,267   92,537 
    Inventory 289,722   245,944 
    Prepaid expenses 2,957   1,510 
    Refundable income taxes 4,327   5,539 
    Total Current Assets 454,162   367,098 
        
    Property, plant, and equipment 450,800   404,149 
    Less accumulated depreciation and amortization (215,168)  (196,863)
    Property, Plant, and Equipment, net 235,632   207,286 
    Operating lease right-of-use assets, net 15,042   9,671 
    Investment in joint ventures 5,534   4,944 
    Intangible assets, net 216,768   218,838 
    Goodwill 226,294   226,294 
    Other assets 4,779   7,336 
    TOTAL ASSETS$1,158,211  $1,041,467 
        
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    Current Liabilities:   
    Current maturities of long-term debt$5,600  $3,227 
    Accounts payable 66,432   53,712 
    Federal and state excise taxes payable 4,627   6,992 
    Accrued expenses and other 28,716   24,869 
    Total Current Liabilities 105,375   88,800 
        
    Long-term debt, less current maturities 29,510   35,266 
    Convertible senior notes 195,225   194,906 
    Long-term operating lease liabilities 11,622   6,997 
    Other noncurrent liabilities 3,723   5,132 
    Deferred income taxes 67,112   66,101 
    Total Liabilities 412,567   397,202 
    Total equity 745,644   644,265 
    TOTAL LIABILITIES AND TOTAL EQUITY$1,158,211  $1,041,467 

    MGP INGREDIENTS, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
    (Dollars in thousands)

      December 31,
       2022   2021 
    Cash Flows from Operating Activities    
    Net income $108,872  $90,817 
    Adjustments to reconcile net income to net cash provided by operating activities:    
    Depreciation and amortization  21,455   19,092 
    Gain on insurance recoveries  —   (16,325)
    Share-based compensation  5,502   5,555 
    Equity method investment loss  2,220   1,611 
    Deferred income taxes, including change in valuation allowance  1,011   6,772 
    Other, net  194   145 
    Changes in operating assets and liabilities, net of effects of acquisition:    
    Receivables, net  (16,786)  (6,031)
    Inventory  (44,350)  (14,214)
    Prepaid expenses  (1,468)  2,586 
    Income taxes payable (refundable)  1,212   (6,242)
    Accounts payable  10,626   5,301 
    Accrued expenses and other  1,984   738 
    Federal and state excise taxes payable  (2,365)  (1,467)
    Other, net  829   (75)
    Net cash provided by operating activities  88,936   88,263 
         
    Cash Flows from Investing Activities    
    Additions to property, plant, and equipment  (45,323)  (47,389)
    Purchase of business, net of cash acquired  —   (149,005)
    Contributions to equity method investment  (2,810)  (1,470)
    Proceeds from property insurance recoveries  —   16,325 
    Proceeds from sale of property and other  150   — 
    Other, net  170   (1,080)
    Net cash used in investing activities  (47,813)  (182,619)
         
    Cash Flows from Financing Activities    
    Payment of dividends and dividend equivalents  (10,646)  (10,017)
    Purchase of treasury stock  (715)  (767)
    Loan fees paid related to borrowings  —   (7,050)
    Principal payments on long-term debt  (3,403)  (1,620)
    Proceeds from credit agreement - revolver  —   242,300 
    Payments on credit agreement - revolver  —   (242,300)
    Proceeds from convertible senior notes  —   201,250 
    Payment on assumed debt as part of the Merger  —   (87,509)
    Net cash provided by (used in) financing activities  (14,764)  94,287 
         
    Effect of exchange rate changes on cash and cash equivalents  (38)  (25)
    Increase (decrease) in cash and cash equivalents  26,321   (94)
    Cash and cash equivalents, beginning of period  21,568   21,662 
    Cash and cash equivalents, end of period $47,889  $21,568 

    MGP INGREDIENTS, INC.
    RECONCILIATION OF SELECTED GAAP MEASURES TO ADJUSTED NON-GAAP MEASURES (UNAUDITED)(in thousands)

     Quarter Ended December 31, 2022
     Gross
    Profit    		 Operating
    Income    		 Income before
    Income Taxes    		 Net
    Income    		 MGP
    Earnings    (a)    		 Basic
    EPS    		 Diluted
    EPS
    Reported GAAP Results$63,213 $29,715 $27,774 $22,511 $22,477 $1.02 $1.01
    No adjustments for the period —  —  —  —  —  —  —
    Adjusted Non-GAAP results$63,213 $29,715 $27,774 $22,511 $22,477 $1.02 $1.01


     Quarter Ended December 31, 2021
     Gross
    Profit    		 Operating
    Income    		 Income before
    Income Taxes    		 Net
    Income    		 MGP
    Earnings    (a)    		 Basic and
    Diluted EPS
    Reported GAAP Results 52,753 $45,316  $43,236  $31,658  $31,633  $1.44 
    Adjusted to remove:           
    Insurance recoveries(b) —  (16,325)  (16,325)  (12,244)  (12,244)  (0.56)
    Business acquisition costs(c) —  5   5   5   5   — 
    Adjusted Non-GAAP results$52,753 $28,996  $26,916  $19,419  $19,394  $0.88 


     Year Ended December 31, 2022
     Gross
    Profit    		 Operating
    Income    		 Income before
    Income Taxes    		 Net
    Income    		 MGP
    Earnings    (a)    		 Basic
    EPS    		 Diluted
    EPS
    Reported GAAP Results$253,306 $148,965 $140,172 $108,872 $108,591 $4.94 $4.92
    No adjustments for the period —  —  —  —  —  —  —
    Adjusted Non-GAAP results$253,306 $148,965 $140,172 $108,872 $108,591 $4.94 $4.92


     Year Ended December 31, 2021
     Gross
    Profit    		 Operating
    Income    		 Income before
    Income Taxes    		 Net
    Income    		 MGP
    Earnings    (a)    		 Basic and
    Diluted EPS
    Reported GAAP Results$198,965 $126,363  $121,096  $90,817  $90,595  $4.37 
    Adjusted to remove:           
    Insurance recoveries(b) —  (16,325)  (16,325)  (12,244)  (12,244)  (0.59)
    Inventory step-up - Branded Spirits(d) 2,529  2,529   2,529   2,529   2,510   0.12 
    Business acquisition costs(c) —  8,927   8,927   7,529   7,467   0.36 
    Adjusted Non-GAAP results$201,494 $121,494  $116,227  $88,631  $88,328  $4.26 

    (a)   MGP Earnings has been defined as "Net income used in earnings per share calculation"

    (b)   The insurance recovery costs are included in the Consolidated Statement of Income within the insurance recoveries line item. During November 2020, we 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 legally binding commitment from our insurance carrier for final settlement for the replacement of the damaged dryer.

    (c)   The business acquisition costs are included in the Consolidated Statement of Income within the selling, general and administrative line item. The adjustment includes transaction and integration costs associated with the merger with Luxco.

    (d)   The finished goods inventory valuation step-up costs are included in the Consolidated Statement of Income within cost of goods by the Branded Spirits segment. The adjustment includes the purchase accounting adjustment to value the acquired finished goods inventory at its estimated fair value.

    MGP INGREDIENTS, INC.
    RECONCILIATION OF NET INCOME TO Adjusted EBITDA
    (UNAUDITED) (in thousands)

     Quarter Ended December 31, Year Ended December 31,
      2022  2021   2022  2021 
    Net Income$22,511 $31,658  $108,872 $90,817 
    Interest expense 960  1,329   5,451  4,037 
    Income tax expense 5,263  11,578   31,300  30,279 
    Depreciation and amortization 5,198  5,424   21,455  19,092 
    Equity method investment 1,184  872   2,220  1,611 
    Insurance recoveries —  (16,325)  —  (16,325)
    Inventory step-up - Branded Spirits —  —   —  2,529 
    Business acquisition costs —  5   —  8,927 
    Adjusted EBITDA$35,116 $34,541  $169,298 $140,967 

    The non-GAAP adjusted EBITDA measure is defined as earnings before interest, taxes, depreciation and amortization, equity method investment, insurance recoveries, inventory step-up and business acquisition costs. See section "reconciliation of selected GAAP measure to non-GAAP measures" for further details on each of these non-GAAP Items.

    MGP INGREDIENTS, INC.
    DILUTIVE SHARES OUTSTANDING CALCULATION
    (UNAUDITED)

     Quarter Ended
    December 31,    		 Year to Date Ended
    December 31,
      2022   2022 
    Principal amount of the bonds$201,250,000  $201,250,000 
    Par value$1,000  $1,000 
    Number of bonds outstanding (b) 201,250   201,250 
        
    Initial conversion rate 10.3911   10.3911 
    Conversion price$96.23620  $96.23620 
        
    Average share price (c)$111.74095  $98.53736 
    Impact of conversion (d)$233,673,666  $206,062,202 
        
    Cash paid for principal (201,250,000)  (201,250,000)
    Conversion premium$32,423,666  $4,812,202 
        
    Average share price$111.74095  $98.53736 
    Conversion premium in shares (a) (e) 290,168   48,836 

    (a)   The impacts of the Convertible Senior Notes were included in the diluted weighted average common shares outstanding if the impact was dilutive. The Convertible Senior Notes would only have a dilutive impact if the average market price per share during the quarter and year to date period exceeds the conversion price of $96.23620 per share. For the quarter and year ended December 31, 2022, the inclusion of the shares had a dilutive impact and were included in the diluted EPS calculation.

    (b)   Number of bonds outstanding is calculated by taking the principal amount of the bonds divided by the par value.

    (c)   Average share price is calculated by taking the average of the daily closing share price for the period. If the average share price is less then the conversion price of 96.23620 per share, the impact to EPS is anti-dilutive and therefore the shares were excluded from the diluted EPS calculation.

    (d)   Impact of conversion is calculated by taking the number of bonds outstanding multiplied by the initial conversion rate multiplied by the average share price. If the average share price is less then the conversion price then the impact of conversion is zero.

    (e)   Conversion premium in shares is calculated by taking the conversion premium divided by the average share price. If the average share price is less then the conversion price then the conversion premium in shares is zero.


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