MGP Ingredients of Atchison, Kansas was founded in 1941. Its first distillery was the Atchison Distillery that produces grain neutral spirits and industrial alcohol products as well as their related co-products. As hard as it sounds, MGPIs Board of Directors has announced it will be closing its Atchison Distillery on or around January 2024.
The Board says its decision to close the Atchison Distillery is consistent with the Companyโs plan to address profitability headwinds associated with its white goods and industrial alcohol products within its Distilling Solutions segment. It expects to incur a one-time aggregate pre-tax charge of approximately $23.0 to $31.0 million in fiscal year 2023 in connection with the closure of the Atchison Distillery.
The company says it will continue to operate and invest in its Ingredient Solutions business located in Atchison, including the previously announced $16.7 million-dollar texturized protein facility that is scheduled to be completed by the end of the year. The company will also continue to operate and invest in its Lawrenceburg, Indiana distillery operations, often referred to as the old Seagram’s Distillery, now called the Ross & Squibb Distillery.
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โAfter careful deliberation, we have concluded that the closure of our Atchison distillery is a necessary step to further align the product categories we participate in and their supporting operations, consistent with our long-term strategic objectives,โ said David Colo, President and CEO of MGP Ingredients, Inc.
โThe additional supply of grain neutral spirits and industrial alcohol that has entered the market during the past few years has had a meaningful and structural impact on the market. Combining these market factors with the increase in local corn basis costs during this same time frame has resulted in these product lines no longer being economically viable for the Company. The decision to close the Atchison distillery unfortunately represents the best path forward. We are grateful for the unwavering support and contributions of our distillery employees, customers, suppliers, and the people of Atchison. We are committed to ensuring a smooth transition as we wind down operations at the distillery between now and the end of the year, and we look forward to continuing to support the Atchison community.โ
Here are some additional details as reported from the companyโs Form 8-K. In addition, the companyโs management will be discussing the planned Atchison distillery closure when the Company releases its financial results later this year.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 12, 2023
MGP Ingredients, Inc.
Item 2.05. Costs Associated with Exit or Disposal Activities.
On July 12, 2023, the Board of Directors of MGP Ingredients, Inc. (the โCompanyโ) approved the decision to close the Companyโs distillery located in Atchison, Kansas (the โAtchison Distilleryโ). The anticipated closure date is January 2024. The decision to close the Atchison Distillery is consistent with the Companyโs plan to address profitability headwinds associated with its white goods and industrial alcohol products within its Distilling Solutions segment.
The Company currently expects to incur one-time aggregate pre-tax charges of approximately $23.0 to $31.0 million in fiscal year 2023 in connection with the closure of the Atchison Distillery. This is expected to include approximately $17.0 to $21.0 million in non-cash restructuring expenses for asset impairments (fixed assets, inventory, and leases), and approximately $2.0 to $4.0 million in cash expenses for items such as severance costs, contract termination fees, and consulting fees. In addition to these expenses, the Company expects to incur approximately $4.0 to $6.0 million in capital expenditures in connection with decoupling the Atchison Distillery from the Companyโs Ingredient Solutions facility, also located in Atchison, Kansas.
The estimates of the charges, expenses, and expenditures that the Company expects to incur, and the timing of such charges, expenses, and expenditures, are subject to a number of assumptions and actual amounts may differ from these estimates. In addition, the Company may incur other charges, expenses, or expenditures not currently contemplated due to unanticipated events that may occur as a result of or in connection with the planned closure of the Atchison Distillery.
Item 2.06. Material Impairments.
The information contained in Item 2.05 of this Current Report is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
The closure of the Atchison Distillery is expected to reduce the Companyโs consolidated net sales in 2024 as compared to prior periods; however, it is also expected to be accretive to consolidated gross margin percentage beginning in 2024. Additional information will be provided when the Company releases its financial results during the rest of the year, as more information becomes available.
MGP Ingredients, Inc. is one of the largest distillers in the U.S., MGPโs 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.
MGPโs branded spirits portfolio covers a wide spectrum of brands in every segment, including Luxco which the company acquired for $475 million from the Luxco family in January 2021. Luxco is a leading producer, supplier, importer and bottler of beverage alcohol products. Luxcoโs 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 Gonzรกlez Lux, producer of 100% agave tequilas, El Mayor, Exotico and Dos Primos; and the historic Ross & Squibb Distillery in Lawrenceburg, Indiana, where Penelope Bourbon (just recently acquired for $215 million), 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 Brendanโs Irish Cream, The Quiet Man Irish Whiskey and other well-recognized brands.
In addition to distilled spirit the companyโs 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.
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MGP Acquires Penelope Bourbon for $215.8 Million (Including Incentives) โ Expanding Luxcoโs Whiskey Portfolio โ May 2023
Distilled Spirits Makers MGP Ingredients Acquires Luxco for $475 Million โ January 2021
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