MGP Ingredients Reports Full Year Net Income of $1.62 Million, Up From $1 Million in 2011
Date Posted: March 13, 2013
Atchison, KS—MGP Ingredients, Inc. (Nasdaq:MGPI) (the "Company") reported March 12 results for the fourth quarter and fiscal year ended December 31, 2012.
Net income for the fourth quarter was $180,000, or $0.01 earnings per diluted share, compared with net income of $16.1 million, or $0.89 per diluted share, in the prior year.
Net Income in the prior-year period includes a $13.0 million, or $0.77 per diluted share, asset acquisition gain (net of tax effect), associated with the acquisition of the company's Indiana distillery.
Net sales for the fourth quarter increased by 22 percent over the year ago period.
Significantly higher beverage alcohol sales more than offset a reduction in sales of alcohol for industrial applications.
The Indiana distillery continues to increase production of premium spirits, including bourbon and rye whiskeys.
Higher ingredient sales in the fourth quarter were paced by strong gains for MGP's Fibersym® resistant starch, which increases dietary fiber levels while reducing the caloric content of bakery and prepared foods.
Fourth quarter gross profit improved significantly to $7.4 million, or 8.6 percent of net sales, compared with gross profit of $155,000 in the prior-year quarter.
Income from operations was $970,000 compared to a loss of $7.3 million in the prior year period (excluding $13.0 million related to the above-mentioned asset purchase gain).
Driving the improved profitability was a higher mix of premium products sold in both the distillery and ingredient segments.
Other contributing factors include improved unit volume and pricing for the distiller's feed by-product.
Net income for the current fourth quarter also included a net loss in equity earnings of $555,000 from the ICP joint venture.
Net income for the twelve months of 2012 was $1.62 million, or $0.09 per diluted share, compared with net income of $1.0 million, or $0.06 per diluted share in the prior twelve months.
Net sales for the full year increased by 19 percent to $334.3 million. Higher sales from the Indiana distillery accounted for the majority of the year-over-year increase.
"This was not a satisfactory year for MGP," said Tim Newkirk, President and Chief Executive Officer.
"The corn drought and consequent grain price volatility in 2012 prevented us from making any progress on our bottom line.
"Our strategy for navigating this tough marketplace is to put more emphasis on our premium products.
"On that front we did achieve solid sales growth driven by our bourbon and rye whiskeys, custom distillery blends and our food ingredients targeting nutritional health."
"The improvement in our gross margins over the past few quarters is a key step as we work toward generating consistent operating profits and cash flow.
"We continue to experience lower volumes and margin compression in bulk alcohol sales due to higher input costs and increased market supply.
"However, our actions to reshape both our product mix and our asset base are beginning to bear fruit, even in the face of these ongoing industry challenges."
"We did reach an important milestone," he continued, "as the fourth quarter marked the first full year of ownership of our Indiana distillery.
"We accomplished a great deal as we re-established MGP's presence in the premium segment of distilled spirits. In taking over this former captive distillery, we knew that we had to first prove ourselves as a reliable independent supplier."
"With the help of new management and capital investments at the Indiana facility, we're on track to see even stronger sales of premium spirits and custom blends in the coming year.
"We have positioned MGP to serve not only the major players in our industry, but also the growing base of independent craft distillers. Meanwhile, aged brown goods remain in short supply and we will continue to pursue opportunistic purchases to add to our aged barrel inventory."
For more information, call 913-367-1480.