MGP Ingredients, Inc. Announces FY 2011 First Quarter Results


  Company reports Q1 diluted earnings of $0.28 per share vs. year-ago earnings of $0.23 per share
  Total sales increase of 13 percent driven mainly by food grade alcohol
  Company strengthens sales, product innovation and customer-facing teams

ATCHISON, Kan., Nov. 9, 2010 (GLOBE NEWSWIRE) -- MGP Ingredients, Inc. (Nasdaq:MGPI) today reported net income of $5,002,000, or $0.28 in diluted earnings per share, for the first quarter of fiscal 2011, which ended September 30, 2010. This compares with net income of $3,738,000, or $0.23 in diluted earnings per share, for the first quarter of fiscal 2010. Total sales in the first quarter were $56,978,000, a 13 percent increase from sales of $50,249,000 for the same period one year ago. The increase was principally due to higher sales of food grade alcohol, with positive contributions from the Company's joint venture distillery operations.

"We are pleased to report another quarter of solid profitability in both of our key segments, including a strong performance from our Illinois Corn Processing, LLC (ICP), joint venture in Pekin, Illinois," said Tim Newkirk, president and chief executive officer. "On the distillery side, we are seeing better demand for high quality food grade industrial alcohol. At the same time, ICP is approaching normalized volumes following start-up last fiscal year. Our focus in this segment is on maintaining gross margin in the face of rising input costs. While we can expect some quarterly variation in distillery sales due to demand cycles and other factors, the general trend is positive and gross margin remains above target."

Newkirk continued, "The ingredients segment continues to make very good progress despite plant interruptions to effect capital investments to support growth. We are especially encouraged by growing demand for our unique fiber and textured wheat protein platforms. I also want to point out that our first quarter SG&A expenses included costs related to our incentive plans, as well as the added expense of rolling out our new business information system. Costs were also affected by the use of outside resources to design and implement supply chain and operating efficiency improvements. While our investments in generating future revenues have a short-term impact on profits, these are critical moves to help capture our full market opportunity."

Distillery Products Segment

  Total distillery products sales revenue for the first quarter was $42.5 million, an increase of 24 percent compared to the prior year's first quarter. The majority of the increase was attributable to a 32 percent increase in high quality food grade alcohol. Fuel grade alcohol revenues accounted for approximately 5 percent of total distillery products sales for the quarter. 
  Distillery products pre-tax profits of $8.1 million were up 22 percent from pre-tax income of $6.6 million during the same quarter a year ago. While overall revenues and gross profits increased year-over-year, greater profitability was hampered by significant increases in natural gas prices and corn prices, two principle components of the cost of goods sold. For the first quarter, the per-bushel cost of corn was approximately 15 percent higher than the first quarter of fiscal 2010, while the per-million cubic foot cost of natural gas averaged 58 percent higher than a year ago.

Ingredient Solutions Segment

  Total ingredient segment sales revenue for the first quarter was $14.1 million, a decrease of 8 percent compared to the prior year's first quarter. The majority of this decrease in revenue was attributable to lower unit volumes of certain specialty starches as well as commodity starches due to planned slowdowns to accommodate a series of facility and process improvements. This decrease was partially offset by a slight increase in sales of specialty proteins.
  Ingredient solutions pre-tax income declined to $1.4 million compared with $2.3 million in the prior year's first quarter. This was principally due to higher unit production costs caused by the decreased volume. Profitability was aided by a higher mix of targeted ingredients and lower raw material costs for flour, with the per-pound cost of flour declining by 14 percent compared to the year ago quarter.

Other Segment

  Sales in the other segment for the first quarter were approximately $0.4 million, a decrease of approximately 40 percent compared to the previous year's first quarter. There were no revenues of pet products in the fourth quarter compared with a year ago. As previously announced, the company sold the assets related to pet products during the first quarter of fiscal 2010. Sales of plant-based biopolymers and resins also decreased by approximately 12 percent due mainly to a decline in unit pricing partially offset by increased volume.
  The other segment reported a slight pre-tax loss of $20,000 compared to net income of $116,000 in the prior year period due mainly to lower unit pricing.


Newkirk said, "We are seeing compelling evidence that our new business model is operating as planned. We now can be totally focused on generating higher sales of the right products. Our integrated production profile continues to provide a steady source of profits and cash flows from distillery products, allowing us to maintain a relatively high level of reinvestment in supporting specialty ingredient sales to our branded packaged goods customers.

"There is a strong focus at MGPI to enhance our service levels on the ingredients side with regard to product innovation and commercialization. This is based on heightened new product activity across several of our key customer categories. We've said before that our job is to help our customers grow their businesses. To support this mission, we are strengthening our product innovation and applications capabilities and have recently added a new national sales director to lead our sales initiatives in the ingredients segment."

Newkirk concluded, "The coming year will be all about execution. The early evidence of improved profitability is encouraging, but MGPI is still a work in progress."        

About MGP Ingredients

In business since 1941, MGP Ingredients, Inc. is a recognized pioneer in the development and production of value–added, grain-based starches, proteins and food grade alcohol products for the branded packaged goods industry. The company has facilities in Atchison, Kan., and Onaga, Kan. that are equipped with the latest technologies to assure high quality products and to maintain efficient production and service capabilities.

Cautionary Note Regarding Forward-Looking Statements

This news release contains forward-looking statements as well as historical information. Forward-looking statements are usually identified by or are associated with such words as "intend," "plan", "believe," "estimate," "expect," "anticipate," "hopeful," "should," "may," "will", "could", "encouraged", "opportunities", "potential" and/or the negatives of these terms or variations of them or similar terminology.  They reflect management's current beliefs and estimates of future economic circumstances, industry conditions, Company performance and financial results and are not guarantees of future performance.  All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement.  Important factors that could cause actual results to differ materially from our expectations include, among others: (i) disruptions in operations at our Atchison facility,  (ii) the availability and cost of grain and fluctuations in energy costs, (iii) the effectiveness of our hedging strategy, (iv) the competitive environment and related market conditions, (v) our ability to maintain compliance with all applicable loan agreement covenants (vi), the ability to effectively operate the Illinois Corn Processing, LLC ("ICP"), joint venture, (vii) our ability to realize operating efficiencies, (viii) and actions of governments. For further information on these and other risks and uncertainties that may affect the company's business, see Item 1A. Risk Factors in the company's Annual Report on Form 10-K for the fiscal year ended June 30, 2010.

                                                                     MGP INGREDIENTS, INC.
                                                         CONSOLIDATED STATEMENTS OF INCOME
                                         (unaudited)                         Quarter Ended
            (Dollars in thousands, except per share)     Sept. 30, 2010     Sept. 30, 2009
                                           Net Sales             56,978           $ 50,249
                                       Cost of Sales            46,624             40,412
                                        Gross Profit           $ 10,354            $ 9,837
        Selling, General and Administrative Expenses              6,227              4,596
                               Other operating costs               273                797
              Gain/(Loss) on sale/disposal of assets               289              (200)
                              Income from Operations          $ 3,565            $ 4,644
                                   Other Income, Net                  3                 21
                                    Interest Expense             (125)              (789)
          Equity in earnings/(loss) of joint venture             1,589               (48)
                          Income Before Income Taxes            $ 5,032            $ 3,828
                        Provision  for Income Taxes                30                 90
                                          Net Income           $ 5,002            $ 3,738
              Other Comprehensive Income, net of tax                 28                  3
                                Comprehensive Income           $ 5,030            $ 3,741
                     Basic Earnings Per Common Share             $ 0.28             $ 0.23
                   Diluted Earnings Per Common Share             $ 0.28             $ 0.23
       Weighted average shares outstanding – Basic         16,675,744         16,602,971
     Weighted average shares outstanding – Diluted         16,696,246         16,603,068
                                                                                                                                         CONSOLIDATED BALANCE SHEET (UNAUDITED)       
                      (Dollars in thousands)     Sept. 30, 2010     June 30, 2010                                 (Dollars in thousands)     Sept. 30, 2010     June 30, 2010        
                                      ASSETS                                                                         LIABILITIES AND STOCKHOLDERS' EQUITY                          
                             Current Assets:                                                                      Current Liabilities:                                            
                   Cash and cash equivalents              $ 157           $ 6,369                   Current maturities on long-term debt              $ 700               $ 689       
                             Restricted cash                 --               971                              Revolving credit facility              1,517                  --       
                                 Receivables             22,249            17,674                                       Accounts payable             10,377              10,341       
                                   Inventory             18,121            14,524                          Accounts payable to affiliate              3,672               4,951       
                            Prepaid expenses              1,802             1,517                                       Accrued expenses              6,194               7,510       
                                    Deposits              1,120               733                              Total Current Liabilities           $ 22,460            $ 23,491       
                  Deferred income tax assets              4,330             6,267                                     Other Liabilities:                                            
                     Refundable income taxes                600               578                Long-term debt, less current maturities             1,897               2,082       
                        Total Current Assets           $ 48,379          $ 48,633                                        Deferred credit              5,239               5,379       
                                                                                   Accrued Retiree Health and Life Insurance Benefits              8,339               8,170       
             Property and Equipment, At Cost            165,614           164,559                          Other non-current liabilities              2,767               2,964       
               Less accumulated depreciation         (108,388)         (107,196)                                  Deferred income taxes              4,330               6,267       
          Net property, plant and equipment           $ 57,226          $ 57,363                                      Total Liabilities           $ 45,032            $ 48,353       
     Investment in unconsolidated subsidiary             15,883            14,266                                   Stockholders' Equity             77,237              72,784       
                                Other assets                781               875                                  TOTAL LIABILITIES AND                                            
                                TOTAL ASSETS          $ 122,269         $ 121,137                                   STOCKHOLDERS' EQUITY          $ 122,269           $ 121,137       
                           Capital Structure                                                                                                                                     
                          Net Investment in:                                                                              Financed By:                                            
                             Working capital           $ 25,919          $ 25,142                                        Long-term debt*            $ 1,897             $ 2,082       
               Property, plant and equipment             57,226            57,363                                   Deferred liabilities             20,675              22,780       
                    Other non-current assets             16,664            15,141                                   Stockholders' equity             77,237              72,784       
                                       Total           $ 99,809          $ 97,646                                                  Total           $ 99,809            $ 97,646       
                                                  *Excludes short-term portion. Short- term portion is included within working capital.                                           
CONTACT:  MGP Ingredients, Inc.
          Steve Pickman