Grainnet

Atchison, KS—MGP Ingredients, Inc. (Nasdaq:MGPI) reported Feb. 9 net income of $4,778,000, or $0.28 in diluted earnings per share, for the second quarter of fiscal 2010, which ended December 31, 2009.

This compares with a net loss of $42,716,000, or $2.58 in diluted loss per share, for the second quarter of fiscal 2009.

Current year quarterly results include charges related to the formation of the previously announced Illinois Corn Processing, LLC joint venture, gains on the sale of equipment, and a federal income tax refund.

The prior year's second quarter loss included restructuring, impairment and other charges totaling $22.9 million.

Total sales in the second quarter of fiscal 2010 were $44,672,000, a 39.0 percent decrease from sales of $73,242,000 for the same period a year ago.

The sales decline was principally due to the company's planned reductions in sales of fuel grade alcohol and commodity ingredients.

Full MGP Ingredients Report

For the first six months of fiscal 2010, the company had net income of $8,516,000, or $0.50 in diluted earnings per share, on sales of $91,756,000.

That compares to a net loss of $59,959,000, or $3.62 in diluted loss per share, on sales of $172,262,000 for the first six months of the prior fiscal year.

"In the first quarter of this fiscal year, we essentially completed our business transformation process, followed in the second quarter by the strengthening of our balance sheet," said Tim Newkirk, president and chief executive officer.

"The solid profitability we continued to produce in the second quarter is indicative of the tremendous strides we have made and the potential that lies before us.

"I am very excited and pleased that 1) we have made such remarkable progress in such a relatively short period of time, and 2) we have a sound structure in place, strategically and organizationally, to grow our business in a more consistently profitable manner."

Newkirk noted, "Our progress continues in the ingredient solutions segment, as evidenced by the growing number of active projects in development.

"For example, while second quarter sales of our nutritional fiber derived from wheat remained approximately even with the first quarter level, sales of this unique value-added ingredient are up 10 percent compared to last year's second quarter.

"This is reflected by the fact that our specialty value-added ingredients accounted for approximately 88 percent of all sales within this segment compared to 67 percent the same time a year ago, when commodity wheat gluten and starches combined made up the remaining 33 percent of our entire ingredients portfolio.

"With improvements in our sales mix and cost structure, we are highly encouraged by our early successes in the value-added portion of this segment of our business.

"Adding to this, the formation of the Illinois Corn Processing joint venture operation in Pekin further bolsters our position as a provider of higher-value alcohol products for consumer packaged goods.

"We are committed to focusing on the production and commercialization of high quality food grade alcohol, which accounted for over 80 percent of our total distillery segment sales in the second quarter versus 53 percent a year ago.

"As planned, sales of fuel alcohol now account for less than 4 percent of our total distillery segment sales and represented only 2.5 percent of total company revenues in the current year's second quarter.

"In last year's second quarter, 32 percent of our distillery sales and 22 percent of all company revenue was attributable to fuel alcohol.

"This is yet another example of the success of our new strategic focus."

John Speirs, chairman of the company's board of directors, stated, "From a strategic growth perspective, MGPI now has the ability to seize short-term opportunities, as well as long-term opportunities.

"This company has reached an exciting milestone in its long and proud history and is positioned to further solidify its role as an enterprise that truly adds value to key customers in the branded packaged goods industry."

Speirs added, "MGPI has actually increased its market opportunity in high quality food grade alcohol with the new joint venture, while reducing its capital base dramatically compared to prior years.

"We have also expanded our reach in specialty protein and starch ingredients with our previously announced agreement with a major distributor to the bakery industry."

Commenting on the company's improving capital structure, Speirs said, "During the second quarter, the company sold a 50 percent stake in its former Pekin alcohol facility for $15 million.

"We applied the proceeds, along with other cash resources, toward debt reduction.

"As a result, net debt declined from $38 million at the end of the current year's first quarter to $11 million by the end of the second quarter.

"Additionally, we had $17.8 million of availability on our revolver at the end of the second quarter. In this uncertain economic environment, we view our financial flexibility as a key competitive advantage."

For more information, call 913-367-1480.

See Related Websites/Articles:

• MGP Ingredients
• Full MGP Ingredients Report

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