MGP INGREDIENTS INC (MGPI)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollar amounts in thousands, unless otherwise noted)

CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS

This Report may contain forward-looking statements as well as historical information.  All statements, other than statements of historical facts, regarding the prospects of our industries and our prospects, plans, financial position, mission, and strategy may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements about our source of cash being adequate; our ability to support our liquidity and operating needs through cash generated from operations and borrowings; and our capital expenditures.  Forward looking statements are usually identified by or are associated with such words as “intend,” “plan,” “believe,” “estimate,” “expect,” “anticipate,” “project,” “forecast,” “hopeful,” “should,” “may,” “will,” “could,” “encouraged,” “opportunities,” “potential,” and similar terminology.  These forward-looking statements reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, our performance, our financial results, and our financial condition and are not guarantees of future performance.

All forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. For information on these risks and uncertainties and other factors that could affect the Company’s business, see the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our Annual Report on Form 10-K for the year ended December 31, 2025, this Report, and our other filings with the Securities and Exchange Commission (the “SEC”). Forward looking statements in this Report are made as of the date of this Report, and we undertake no obligation to update any forward-looking statements or information made in this Report, except as required by law.

OVERVIEW

MGP is a leading producer of branded and distilled spirits as well as food ingredient solutions. We have an extensive award-winning global portfolio of branded spirits, which we produce through our distilleries and bottling facilities and sell to distributors. Our branded spirits products account for a range of price points from value products through premium plus brands. Distilled spirits include premium bourbon, rye, and other whiskeys (“brown goods”) and grain neutral spirits (“GNS”), including vodka and gin. Our distilled spirits are either sold directly or indirectly to manufacturers of other branded spirits. Our protein and starch food ingredients are predominantly wheat based and provide a host of functional, nutritional, and sensory benefits for a wide range of food products to serve the consumer packaged goods industry. Our ingredient products are sold directly, or through distributors, to manufacturers and processors of finished packaged goods or to bakeries.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes included in this Report, as well as our audited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations - General,” set forth in our Annual Report on Form 10-K for the year ended December 31, 2025.

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RESULTS OF OPERATIONS

Consolidated Results

The table below details the consolidated results for the quarters ended June 30, 2026 and 2025:

(a) Percentage points (“pp”).

Sales - Sales for the quarter ended June 30, 2026 were $124,357, a decrease of 15 percent compared to the year-ago quarter, which was the result of decreased sales in the Distilling Solutions and Branded Spirits segments, partially offset by increased sales in the Ingredient Solutions segment. Within the Distilling Solutions segment, sales were down 42 percent primarily due to decreased sale volume of brown goods. Within the Branded Spirits segment, sales were down 1 percent primarily due to decreased sales volume of our private label bottled products within the other category. Within the Ingredient Solutions segment, sales were up 2 percent, primarily due to increased sales of biofuel and other (see “Segment Results”).

Gross profit - Gross profit for the quarter ended June 30, 2026 was $46,471, a decrease of 20 percent compared to the year-ago quarter, which was the result of decreased gross profit in each segment. Within the Distilling Solutions segment, gross profit decreased by $7,510, or 40 percent. Within the Ingredient Solutions segment, gross profit decreased by $4,018, or 53 percent. Within the Branded Spirits segment, gross profit decreased $388, or 1 percent (see “Segment Results”).

Advertising and promotion expenses - Advertising and promotion expenses for the quarter ended June 30, 2026 were $5,683, a decrease of 18 percent compared to the year-ago quarter, primarily driven by timing of advertising and promotion spend.

SG&A expenses - SG&A expenses for the quarter ended June 30, 2026 were $20,237, a decrease of 13 percent compared to the year-ago quarter, primarily driven by our cost savings initiatives.

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Operating income - Operating income for the quarter ended June 30, 2026 decreased to $17,652 from $20,318 for the quarter ended June 30, 2025, primarily due to a decrease in gross profit in each segment and an increase in provision for credit loss related to one of our significant customers filing a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code during July 2026. These decreases were partially offset by the change in fair value of contingent consideration, as well as decreases in SG&A and advertising and promotion expenses.

(a) See “Segment Results.”

(b) Percentage points (“pp”).

Income tax expense - Income tax expense for the quarter ended June 30, 2026 was $3,063, for an effective tax rate of 20.3 percent. Income tax expense for the quarter ended June 30, 2025 was $4,308, for an effective tax rate of 23.0 percent. The decrease in income tax expense, quarter versus quarter, was due primarily to lower income before income taxes. The decrease in tax rate, quarter versus quarter, was primarily due to the discrete impact of a state law change on the Company’s deferred tax balances.

Earnings per common share (“EPS”) - Basic and Diluted EPS was $0.55 for the quarter ended June 30, 2026, compared to $0.67 for the quarter ended June 30, 2025. The change in basic and diluted EPS, quarter versus quarter, was primarily due to an increase in interest expense, net and a decrease in operating income.

(a) Net of tax based on the effective tax rate for the base year (2025).

(b) Percentage points (“pp”).

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The table below details the consolidated results for the year to date ended June 30, 2026 and 2025:

(a) Percentage points (“pp”).

Sales - Sales for the year to date ended June 30, 2026 were $230,784, a decrease of 14 percent compared to the year-ago period, which was the result of decreased sales in the Distilling Solutions and Branded Spirits segments, partially offset by increased sales in the Ingredient Solutions segment. Within the Distilling Solutions segment, sales were down 41 percent primarily due to decreased sales volume of brown goods. Sales of Branded Spirits were down 4 percent, primarily due to decreased sales volume of our private label bottled products within the other category. Within the Ingredient Solutions

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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS

This Report may contain forward-looking statements as well as historical information.  All statements, other than statements of historical facts, regarding the prospects of our industries and our prospects, plans, financial position, mission, and strategy may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements about our sources of cash being adequate; our ability to support our liquidity and operating needs through cash generated from operations and borrowings; and our capital expenditures.  Forward-looking statements are usually identified by or are associated with such words as “intend,” “plan,” “believe,” “estimate,” “expect,” “anticipate,” “project,” “forecast,” “hopeful,” “should,” “may,” “will,” “could,” “encouraged,” “opportunities,” “potential,” and similar terminology.  These forward-looking statements reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, our performance, our financial results, and our financial condition and are not guarantees of future performance.

All forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. For information on these risks and uncertainties and other factors that could affect the Company’s business, see the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report and our other filings with the Securities and Exchange Commission (the “SEC”). Forward-looking statements in this Report are made as of the date of this Report, and we undertake no obligation to update any forward-looking statements or information made in this Report, except as required by law.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis (“MD&A”) of Financial Condition and Results of Operations is designed to provide a reader of MGP’s consolidated financial statements with a narrative from the perspective of management. MGP’s MD&A is presented in the following sections:

•Overview

•Results of Operations

•Branded Spirits Segment

•Distilling Solutions Segment

•Ingredient Solutions Segment

•Cash Flow, Financial Condition and Liquidity

•Critical Accounting Estimates

•New Accounting Pronouncements

OVERVIEW

MGP is a leading producer of branded and distilled spirits as well as food ingredient solutions. We have an extensive award-winning global portfolio of branded spirits, which we produce through our distilleries and bottling facilities and sell to distributors. Our branded spirits products account for a range of price points from value products through premium plus brands. Distilled spirits include premium bourbon, rye, and other whiskeys (“brown goods”) and grain neutral spirits (“GNS”), including vodka and gin. Our distilled spirits are either sold directly or indirectly to manufacturers of other branded spirits. Our protein and starch food ingredients serve a host of functional, nutritional, and sensory benefits for a wide range of food products to serve the consumer packaged goods industry. Our ingredient products are sold directly, or through distributors, to manufacturers and processors of finished packaged goods or to bakeries.

Our strategic plan is designed to leverage our history and strengths as well as the positive macro trends we see in the industries in which we compete, while providing better insulation from outside factors, including swings in commodity pricing.

Branded Spirits Segment

Our Branded Spirits segment mission is to align our product offering and enhance focus on growing spirits categories and price tiers. The favorable macro industry trends we anticipate will benefit our business in the long-term include growth in high-end whiskey and tequila brands as well as long-term growth in the U.S. across all spirit categories in the premium plus price tier. Our Branded Spirits segment is also subject to unfavorable macro industry trends, which include inflation, tariffs, inflation and interest rate impacts on consumers, increased competition as consumer packaged good companies seek to capitalize on consumer trends, as well as changes in consumer consumption patterns. Our strategy for the Branded Spirits segment is to

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focus on the right brands at the right price points in the right spirits categories to maximize our profits. Additionally, our strategy is to focus on scaling high-growth premium brands, focus on our channel and customer strategy, build scalable growth through regional execution, and continue to invest in our people. Branded Spirits segment sales for 2025 decreased 3 percent over the prior year.

Distilling Solutions Segment

Our Distilling Solutions segment mission is to cultivate lasting partnerships with customers across all product categories by leveraging our technical distilling expertise, strong sales and operating platform, aging whiskey inventory, and unique project development skills. Our Distilling Solutions segment is subject to unfavorable macro industry trends, which include increased competition as industry participants seek to capitalize on consumer trends, inflation and interest rate impacts on customers, overall American whiskey supply and consumer consumption patterns, as well as increased commodity prices. Additionally, the industry has been impacted by unfavorable industry trends resulting in a number of distilleries reducing production or shutting down operations. Our strategy for the Distilling Solutions segment is to further develop our existing customer relationships, capitalize on new customer opportunities, grow in the private label category, maximize the value of our aged inventory by partnering with customers whose business models uniquely benefit from its attributes, optimize our digital interface to enhance the customer experience, and enhance awareness of MGP as a global partner to branded spirits suppliers.

We continue to focus on utilizing our capabilities and product offerings to attract and develop customer relationships for our brown goods. During 2025, the industry continued to experience a softening of American whiskey category trends as well as elevated industry-wide barrel whiskey inventories, which resulted in the inability of some customers to honor their contracts with us and a number of our large customers to pause their whiskey purchases after completing their existing contracts. We expect these trends to continue. Distilling Solutions segment sales for 2025 decreased 45 percent over the prior year.

Ingredient Solutions Segment

Our Ingredient Solutions segment mission is to remain a strategic business partner in specialty ingredients providing premium dietary fiber and plant protein supporting health and wellness brands. The favorable macro industry trends we anticipate will benefit our business include increasing consumer focus on high fiber and lower net carbs, high protein, plant-based protein, and non-GMO products. We continue to provide customer solutions, taking advantage of our position within growing consumer trends. Our strategy for the Ingredient Solutions segment is to focus on enhancing our operational reliability, expand and optimize our dietary fiber, plant proteins, and clean label starches; expand our extruded products platform; and continue to innovate and expand opportunities through research and development. Ingredient Solutions segment sales for 2025 decreased 7 percent over the prior year.

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RESULTS OF OPERATIONS

Consolidated results

The table below details the consolidated results for 2025, 2024 and 2023:

(a) Percentage points (“pp”).

Sales

2025 to 2024 - Sales for 2025 were $536,375, a decrease of 24 percent compared to 2024, which was the result of decreased sales in each segment. Distilling Solutions segment sales decreased 45 percent, primarily due to decreased sales of brown goods. Ingredient Solutions segment sales decreased 7 percent, primarily due to decreased sales of specialty wheat starches. Branded Spirits segment sales decreased 3 percent, primarily due to decreased sales of brands within the value and mid price tiers.

2024 to 2023 - Sales for 2024 were $703,625, a decrease of 16 percent compared to 2023, which was the result of decreased sales in each segment. Distilling Solutions segment sales decreased 26 percent, primarily due to decreased sales of white goods and other co-products in connection with the December 2023 closure of the Atchison Distillery and decreased brown goods sales. Branded Spirits segment sales decreased 5 percent, primarily due to decreased sales of brands within the mid and value price tiers. Ingredient Solutions segment sales decreased 1 percent, primarily due to decreased sales of specialty wheat proteins and commodity wheat starches, partially offset by increased sales of specialty wheat starches.

Gross profit

2025 to 2024 - Gross profit for 2025 was $199,409, a decrease of 30 percent compared to 2024. The decrease was driven by decreased gross profit in each segment. The Distilling Solutions segment gross profit decreased by $73,325, or 52 percent. The Ingredient Solutions segment gross profit decreased by $10,707, or 41 percent. The Branded Spirits segment gross profit decreased by

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