MGP Ingredients Reports 3Q Net Income of $418,000 Compared to $5.5 Million Net Loss in 3Q 2011
Date Posted: November 12, 2012
Atchison, KS—MGP Ingredients, Inc. (Nasdaq/MGPI) (the “Company”) today reported results for the third quarter ended September 30, 2012.
Net income of $418,000, or $0.02 per diluted share, compared favorably with a net loss of $5.5 million, or $0.33 per diluted share, in the prior year.
Net sales for the third quarter were approximately even with the same quarter a year ago.
Significantly higher beverage alcohol sales were offset by a reduction in sales for certain industrial alcohol applications.
The recently acquired Lawrenceburg, Indiana, distillery continues to increase production of premium spirits, including bourbon and rye whiskeys.
The food ingredients segment reported lower sales for the period due to decreased volume partially offset by improved pricing.
Net income for the third quarter was favorably impacted by unrealized hedging gains as recorded in the cost of sales.
This was partially offset by the record-high corn basis, combined with competitive pricing in certain industrial alcohol markets.
Net income compares favorably to the same period last year in which the Company reported an operating loss of $2.6 million, including significant losses on open derivative commodity contracts.
Net income for the third quarter of 2012 also included a net loss of $135,000 from the ICP joint venture, which compares favorably to the prior-year period’s net loss of $2.9 million from the ICP joint venture.
Net income for the first nine months of 2012 improved to $1.4 million, or $0.08 per diluted share, compared with a net loss of $15.1 million, or $0.91 per diluted share over the same period a year ago.
Net sales for the first nine months of 2012 were $247.9 million, an increase of 18.6 percent over the same period last year.
“This was the most challenging quarter of the year in our alcohol markets, characterized by record-high corn prices and increased competition from fuel alcohol producers who are facing negative margins,” said Tim Newkirk, President and Chief Executive Officer.
“We most likely lost some market share at the lower end of the value spectrum, which tends to be more price-sensitive.
"Other products performed well, which is more reflective of our unique formulations and value-added services.
"The decline in industrial sales for the quarter was substantially offset by growth in our premium spirits.
"So, while our third quarter alcohol sales were relatively flat, our profit profile actually improved due to a stronger contribution from beverages.”
Post-acquisition progress continues at the Indiana distillery.
Production rates have more than doubled since the company assumed ownership in December 2011.
Capital improvements and cost reduction programs, including a switch to natural gas, are expected to further increase manufacturing capacity at a lower cost per unit.
Newkirk added, “We’ve made great inroads with our line of premium spirits this year, despite the fact that most of the important year-end order activity for 2012 took place before we acquired the facility.
"Our new beverage sales team is encouraged by the high level of interest among our key customers.”
For more information, call 913-360-5442.