Luxco acquisition takes MGP to new heights in Q2By Kate Malczewski
Third-party spirits producer and Luxco owner MGP Ingredients posted “record” results in the second quarter of fiscal 2021.
For the second quarter ending 30 June 2021, the Kansas-based firm reported consolidated sales of US$174.9 million – up by 89% compared with the same period last year.
Meanwhile, consolidated gross profit grew by 174.5% to US$56.8m, and consolidated operating income increased by 144% to US$27.7m.
David Colo, president and CEO of MGP Ingredients, said: “The record consolidated quarterly results reflect the progress our team has made toward executing our long-term strategic plan.”
Colo noted that the business recently revamped its core leadership line-up, with David Bratcher promoted to chief operating officer, Amel Pasagic appointed chief information officer and Erika Lapish joining as vice-president of human resources.
The company credits its strong performance in part to its purchase of American whiskey maker Luxco, acquired in a deal valued at US$475m that was finalised in April.
Colo continued: “Sales of premium beverage alcohol increased 54.2%, primarily driven by brown goods sales growth of 72.8% from last year, which was due to both higher aged whiskey and new distillate sales. The American Whiskey category remains robust, and we continue to optimise our significant share and scale advantage to grow the business.
“Integration of our recently completed acquisition of Luxco remains on track, including achievement of the synergy expectations we shared earlier in the year. This additional platform is already improving our gross profit and cash flow generation profile and provides long-term growth opportunities for the company.”
The producer saw growth across segments. Distillery Products climbed by 20.8% to US$90.3m, driven by aged whiskey sales and “robust consumer demand” for premium products, said Colo. MGP’s “newly created” Branded Spirits segment, led by the Luxco acquisition, hit US$60.4m in sales, and the Ingredient Solutions segment grew by 39.1% to US$24.2m.
Projected sales for fiscal 2021 now range from US$570m to US$580m.
Colo concluded: “While we are off to a strong start to the year, we remain conscientious of the pandemic’s continued uncertainty and its potential impact on our results.
“We remain committed to the execution of our long-term growth strategy, further building on the momentum from last quarter and year. Our three business segments are uniquely aligned with strong consumer trends, which we believe will create long-term and sustainable shareholder value. While we are very pleased with the unprecedented aged whiskey sales year to date, our full-year guidance reflects aged whiskey demand to moderate in the back half of the year and over the long-term, to grow in line with the overall American Whiskey category.”
For an in-depth look at how third-party producers like MGP are diversifying their portfolios, read our analysis of the trend towards own-label products.