MGP Ingredients Reports 1Q Net Income of $1.4 Million, Down From $1.8 Million in 1Q 2012
Date Posted: May 7, 2013
Atchison, KS—MGP Ingredients, Inc. (Nasdaq/MGPI) (the “Company”) reported May 6 results for the first quarter ended March 31, 2013.
Net income for the first quarter was $1.4 million compared with net income of $1.8 million in the prior year.
Net income in the first quarter of 2013 includes a previously announced $1.4 million gain on sale of discontinued operations.
The Company sold its bioplastics manufacturing facility in Onaga, Kansas, and certain assets at the extruder bio-resin laboratory located in Atchison, Kansas.
Net income in the prior-year period includes a gain of $4.0 million associated with the sale of a 20 percent interest in the Illinois Corn Processing (ICP) joint venture.
Net sales for the first quarter were approximately even compared with the year-ago period.
Higher beverage alcohol sales continue to offset the reduction in sales of bulk alcohol for industrial applications.
Premium spirits growth at the Indiana distillery is being driven by the addition of new customers and strong demand for whiskey and bourbon. Higher ingredient sales in the first quarter were led by strong demand for our specialty wheat proteins used in a variety of food applications in the U.S. and internationally.
First quarter income from operations improved significantly to $1.2 million, compared with an operating loss of $2.3 million in the prior-year quarter.
The Company’s shift to a higher value alcohol product mix is being augmented with increased manufacturing yields, lowering the cost-per-gallon.
Other factors contributing to better operating performance in the first quarter include improved pricing for the distiller’s feed by-product.
Net income for the current quarter also included a pre-tax net loss in equity earnings of $969,000 from the ICP joint venture.
The Company’s marketing agreement with ICP was not renewed for 2013.
“Business remains challenging in bulk white goods, which still represent the majority of our alcohol sales,” said Tim Newkirk, President and Chief Executive Officer.
“The difference, however, from one year ago is in our improved ability to generate positive operating results.
"Despite corn and flour prices that remain elevated, MGP has benefited in terms of availability and pricing from our grain sourcing agreements.
"Our new approach has also lowered working capital requirements and reduced inventory volatility related to commodity price swings.
"This is a complete departure from the past. MGP’s inventory today reflects our premium focus, with much lower volumes yet higher per-unit values.
"We’ve gone from barge loads to barrels.
"Another area where we’ve reduced our fixed costs and increased flexibility is transportation, resulting in greater efficiency and better customer service.”
He continued, “We’ve made real progress over the past few quarters. I credit our employees, including key personnel we added in the areas of supply chain, plant operations and finance.
"The addition of whiskeys and bourbons to our revenue mix has certainly helped our profitability, and that holds even greater potential in the coming years.”
“MGP is gearing up for the next phase of growth in premium spirits,” Newkirk said.
“The first year of ownership of our new distillery was mainly about honoring past contracts and showing that we can deliver a quality product. At the same time, our expanded sales team has brought in a significant number of new customers.
"More recently, we raised our profile among the hundreds of artisan craft distillers with the release of our new mash bills. Almost half of the spirits industry growth in 2012 was from flavored new products.
"We are uniquely positioned to support a large number of famous and emerging distiller brands with new product development, production and warehousing.
"Our Indiana location, near the famous Whiskey Trail, is ideal for establishing MGP as the innovation leader for all things whiskey and bourbon.
"Our vision includes a new customer innovation center, plans for which are currently under development.”
For more information, call 913-367-1480.