MGP Ingredients Reports 2Q Net Loss of $850,000 Compared to a $10.3 Million Net Loss in 2Q 2011
Date Posted: August 10, 2012
Atchison, KS—MGP Ingredients, Inc. (Nasdaq/MGPI) reported Aug. 9 results for the second quarter ended June 30, 2012.
The net loss of $850,000, or $0.05 per diluted share, compared favorably with a net loss of $10.3 million, or $0.61 per diluted share, in the prior year.
Net sales for the second quarter increased 24 percent compared to the same quarter a year ago.
The increase was primarily attributable to higher volume and improved pricing in high quality food grade alcohol.
The recently acquired Lawrenceburg, Indiana distillery contributed to higher sales of beverage alcohol, along with sales of distillers feed and warehousing revenues.
The ingredients segment reported lower sales for the period due to decreased volume partially offset by improved pricing.
Net income for the second quarter improved from a year ago, with a net loss of $850,000 compared with a net loss of $10.3 million.
The net loss for the second quarter was driven by the continuing high costs of raw materials and the temporary effects of a planned 1-week shut-down of the Atchison, Kansas, plant for maintenance and capital upgrades.
The company also experienced higher personnel costs related to the acquisition of the Lawrenceburg, Indiana distillery in late 2011.
The loss during the prior-year period included significant unfavorable changes to cost of sales from open hedge contracts.
“We’re making continued progress on growing the top-line,” said Tim Newkirk, president and chief executive officer.
“Our profitability, on the other hand, continues to lag behind our targets.
"High corn prices are certainly having an impact in terms of margin compression.
"However this is mainly a function of some of our existing supply contracts, most of which are expected to roll off in the second half of the year.
"That’s why we haven’t yet been able to fully take advantage of our new sourcing agreements.
"Fortunately, our supply partner has an extensive global corn origination network and is not solely dependent on local origination for our facilities’ corn supply.
"We also benefit from their much greater buying power.
"By the fourth quarter, we expect to be back to flat pricing for most of our grain needs, thereby reducing our corn basis risk and its negative impact on distillery margins.
“Performance at our Lawrenceburg, Indiana distillery is coming up to speed now that the facility has been integrated with our SAP platform.
"Process changes at the plant are expected to result in increased quality and efficiency.
"We’re also seeing greater interest in a broader range of premium beverages as we spend more time with LDI’s customer base.
"Demand remains strong for premium aged bourbon and whiskeys; therefore, we added to our MGP-owned barrel inventory in the second quarter at an investment of approximately $5 million.”
Net income for the first six months of 2012 improved to $1,026,000, or $0.06 per diluted share, compared with a net loss of $9.6 million, or $0.57 per diluted share a year ago.
Net sales for the 2012 six month period were $171.8 million, an increase of 29 percent on the prior-year period.
For more information, call 913-367-1480.