MGP Ingredients Announces $100 Million Share Repurchase Program
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Insights
The authorization of a $100.0 million share repurchase program by MGP Ingredients represents a significant capital allocation decision that can impact the company's stock valuation. From a financial perspective, share buybacks are often perceived as a signal that management believes the stock is undervalued. It can also be a method to return capital to shareholders, potentially leading to an increase in earnings per share (EPS) by reducing the number of outstanding shares.
However, it is crucial to assess the company's financial health to ensure that the repurchase does not compromise its ability to invest in future growth opportunities or maintain operational stability. A strong balance sheet, as mentioned by the CEO, indicates that MGP Ingredients is confident in its liquidity and debt management. Investors will be interested in how these buybacks are financed, whether through existing cash reserves or debt, as this will affect the company's leverage ratios and interest coverage capabilities.
The strategic move by MGP Ingredients to repurchase shares follows a record year and strong segment performance, which may reinforce investor confidence in the company's market position and competitive strength. A share repurchase program can often be interpreted as a positive market signal, suggesting that the company's leadership has a bullish outlook on its future performance.
It is important to analyze industry trends, particularly in the distilled spirits and food ingredient sectors, to understand the context of this decision. Factors such as consumer demand, raw material costs and regulatory changes could influence the company's future earnings and, by extension, the sustainability of the share repurchase program. The absence of an expiration date for the repurchase authorization provides flexibility, but also introduces uncertainty regarding the program's duration and potential impact over time.
Share repurchase programs are often subject to scrutiny regarding corporate governance practices. It is essential to ensure that such programs are aligned with shareholder interests and not just a tool to artificially inflate stock prices or management compensation, which is often tied to stock performance. The decision by MGP Ingredients' board of directors should be evaluated in the context of the company's overall governance policies and long-term strategic goals.
Transparency in the execution of the share buyback, including the timing and pricing of repurchases, will be key in maintaining shareholder trust. The flexibility of the program allows management to respond to market conditions, but it also requires a robust framework to prevent potential conflicts of interest and ensure that the repurchase program is conducted in a manner that is fair and equitable to all shareholders.
ATCHISON, Kan., Feb. 29, 2024 (GLOBE NEWSWIRE) -- MGP Ingredients, Inc. (Nasdaq: MGPI), a leading provider of distilled spirits, branded spirits, and food ingredient solutions, today announced that its board of directors has approved the repurchase of up to
“Following another record year and strong results from each of our three business segments in 2023, we are well positioned to implement this additional pillar of shareholder return while maintaining a strong balance sheet to enable additional growth opportunities,” said David Bratcher, CEO and president of MGP Ingredients. “Today’s announcement reflects our continued confidence in our strategy, the sustainable strength of our business, and our ability to generate strong, long-term cash flows.”
The Company may repurchase shares from time to time through open market purchases, in privately negotiated transactions, or by other means, in accordance with applicable securities laws and other legal requirements. The timing and amount of any shares repurchased will depend upon market conditions and other factors. The authorization has no expiration date and may be modified, suspended, or discontinued at any time.
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
Distillery in Lawrenceburg, Indiana, where Penelope Bourbon, 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
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements about the ability of MGP Ingredients, Inc. (the “Company” or “MGP”) to maintain a strong balance sheet to enable growth opportunities and to generate cash flows; and the strength of our business. Forward looking statements are usually identified by or are associated with words such 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, Company performance, Company financial results, and Company financial condition and are not guarantees of future performance.
All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Factors that could cause actual results to differ materially from our expectations include without limitation any effects of changes in consumer preferences and purchases and our ability to anticipate or react to those changes; our ability to compete effectively; damage to our reputation or that of any of our key customers or their brands; failure to introduce successful new brands and products or have effective marketing or advertising; changes in public opinion about alcohol or our products; our reliance on our distributors to distribute our branded spirits; our reliance on fewer, more profitable customer relationships; interruptions in our operations or a catastrophic event at our facilities; decisions concerning the quantity of maturing stock of our aged distillate; warehouse expansion issues; our reliance on a limited number of suppliers; our reliance on a limited number of suppliers; work disruptions or stoppages; climate change and measures to address climate change; our closure of our Atchison, Kansas distillery; regulation and taxation and compliance with existing or future laws and regulations; tariffs, trade relations, and trade policies; excise taxes, incentives and customs duties; our ability to protect our intellectual property rights and defend against alleged intellectual property rights infringement claims; failure to secure and maintain listings in control states; labeling or warning requirements or limitations on the availability of our products; product recalls or other product liability claims; anti-corruption laws, trade sanctions and restrictions; class action or other litigation; higher costs or the unavailability and cost of raw materials, product ingredients, energy resources, or labor; failure of our information technology systems, networks, processes, associated sites, or service providers; acquisitions and potential future acquisitions; interest rate increases; reliance on key personnel; commercial, political, and financial risks; covenants and other provisions in our credit arrangements; pandemics or other health crises; ability to pay any dividends; limited rights of common stockholders and antitakeover provisions in our governing documents; the impact of issuing shares of our common stock; and the effectiveness or execution of our strategic plan. For further 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 the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as well as the Company’s other SEC filings. The Company undertakes no obligation to update any forward-looking statements or information in this press release, except as required by law.
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
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