MGP Ingredients Reports Strong First Quarter 2015 Results
05/07/2015
"We are very pleased with our first quarter results, which are early evidence of the traction we are gaining against our new strategic plan," said
First Quarter 2015 Highlights (vs. first quarter 2014)
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Gross profit increased by
$6.6 million to$13.4 million - Gross margin improved 8.0 percentage points to 16.6%
-
Operating income increased by
$5.2 million to$6.9 million -
ICP joint venture contributed
$1.3 million to pretax income, down from$3.2 million a year ago -
Net income rose by 6.0% to
$5.1 million (note that 2014 results benefited from a low effective tax rate) -
Earnings per share (EPS) rose by
$0.02 per share to$0.28 per share
Distillery Products Segment -- Gross Profit Rises 91%
For the quarter, gross profit for the Distillery Products segment rose to
Griffin noted, "Consistent with our new strategy, we remain focused on maximizing the value of our production, as evidenced by the positive mix shift in food grade alcohol sales toward higher margin vodkas, gins, and whiskeys. In addition to improving margin, we expect that over time this shift will lead to a lessening of the historical correlation between product pricing and input costs, and give the company additional insulation from external factors such as swings in energy costs and commodity prices."
Ingredient Solutions - Specialty Products support stronger margin performance
For the first quarter of 2015, gross profit for the Ingredient Solutions segment increased to
The segment's focus remains on the production and commercialization of specialty ingredients, with 83.9% of total segment net sales in specialty products, up from 78.7% in the first quarter of 2014. For the first quarter of 2015, sales revenue of specialty starches rose 18.6% from the first quarter of 2014. Average pricing for the Ingredient Solutions segment declined less than one percent, while flour prices declined 5.8% versus the prior year period.
Griffin added, "We are very pleased to see the strong growth in our specialty starches. It is clear that the industry is reacting favorably to the unique benefits that our products offer. Additionally, the favorable mix shift towards specialty products is further evidence of our focus on maximizing the value of our production and helped us achieve strong pricing relative to flour costs. We continue to be confident in our plans to realize the long-term potential of this business segment."
Other
Corporate selling, general and administrative expenses were
The company's ICP joint venture, which produces high quality food grade alcohol, chemical intermediates and fuel, generated a positive contribution to MGP's net income in the first quarter of 2015. Solid operational results led to joint venture equity method investment earnings of
Conclusion
"Overall, we are very pleased with the gross profit gains reported in both Distillery Products and Ingredient Solutions," said Griffin. "Despite our higher tax rate and lower contribution from our ICP joint venture, our improved operating income results were able to drive growth in net income and EPS (Results of Operations table attached). We are off to a strong start to the year, and we are encouraged by the outlook for the remainder of 2015."
Annual Meeting
The company's annual meeting of shareholders is scheduled for
The strategies include:
1. Maximizing the value of the company's current production volumes
2. Capturing a larger share of the value chain
3. Investing to support growth
4. Continuing strong risk management discipline
5. Building the MGP brand
Operating income is the key metric for measuring the successful implementation of the strategic plan. The goal is to grow adjusted operating income by a multiple of four over the 2014-2019 five-year period.
About
MGP is a leading supplier of premium distilled spirits and specialty wheat proteins and starches. Distilled spirits include bourbon and rye whiskeys, gins and vodkas, which are carefully crafted through a combination of art and science and backed by over 150 years of experience. The company's proteins and starches are created in the same manner and provide a host of functional, nutritional and sensory benefits for a wide range of food products. MGP additionally is a top producer of high quality industrial alcohol for use in both food and non-food applications. The company is headquartered in
Cautionary Note Regarding Forward-Looking Statements
This news release contains forward-looking statements as well as historical information. All statements, other than statements of historical facts, included in this Quarterly Report on Form 10-Q regarding the prospects of our industry and our prospects, plans, financial position and business strategy may constitute forward-looking statements. In addition, 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 or variations of these terms or similar terminology. They reflect management's current beliefs and estimates of future economic circumstances, industry conditions, Company performance, and Company 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
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RESULTS OF OPERATIONS | |
$ (thousands) | |
Net income for the quarter ended |
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Improved by: | |
Increased gross profit from distillery products segment | 5,475 |
Increased gross profit from ingredient solutions segment | 1,112 |
Other | 66 |
Reduced by: | |
Decreased earnings from equity method investments | (1,982) |
Increase in income taxes | (2,978) |
Increased selling, general, and administrative expenses | (1,408) |
Net income for the quarter ended |
$5,070 |
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) | ||
Quarter Ended | ||
(Dollars in thousands, except per share) |
2015 |
2014 |
Sales | $84,864 |
|
Less: excise taxes | 4,451 | 5,586 |
Net sales | 80,413 | 78,996 |
Cost of sales | 67,025 | 72,195 |
Gross profit | 13,388 | 6,801 |
Selling, general and administrative expenses | 6,480 | 5,072 |
Income from operations | 6,908 | 1,729 |
Interest expense, net | (131) | (197) |
Equity method investment earnings | 1,352 | 3,334 |
Income before income taxes | 8,129 | 4,866 |
Provision for income taxes | 3,059 | 81 |
Net income | 5,070 | 4,785 |
Other comprehensive loss, net of tax | (72) | (175) |
Comprehensive income | $4,998 |
|
Basic and diluted earnings per share | $0.28 |
|
Dividends and dividend equivalents per common share | $0.06 |
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CONSOLIDATED BALANCE SHEET (UNAUDITED) | |||||
(Dollars in thousands) |
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(Dollars in thousands) |
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ASSETS | LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current Assets: | Current Liabilities: | ||||
Cash and cash equivalents | $6,391 |
|
Current maturities of long-term debt | $2,567 |
|
Receivables | 32,866 | 32,672 | Accounts payable | 16,539 | 16,076 |
Inventory | 37,654 | 34,441 | Accounts payable to affiliate, net | 4,018 | 3,333 |
Prepaid expenses | 1,743 | 1,179 | Accrued expenses | 7,848 | 8,010 |
Deferred income taxes | 6,524 | 7,924 | Income taxes payable | 574 | — |
Refundable income taxes | — | 388 | Other current liabilities | 725 | 716 |
Total Current Assets | 85,178 | 82,245 | Total Current Liabilities | 32,271 | 30,748 |
Other Liabilities: | |||||
Property and equipment | 202,850 | 198,176 | Long-term debt, less current maturities | 7,652 | 7,670 |
Less accumulated depreciation and amortization | (137,306) | (134,295) | Revolving credit facility | 14 | — |
Deferred credit | 3,939 | 4,099 | |||
Accrued retirement, health and life insurance benefits | 4,305 | 4,420 | |||
Net Property, Plant and Equipment | 65,544 | 63,881 | Deferred income taxes | 9,924 | 9,297 |
Equity method investments | 13,673 | 12,373 | Total Liabilities | 58,105 | 56,234 |
Other noncurrent assets | 2,192 | 2,100 | Stockholders' equity | 108,482 | 104,365 |
TOTAL ASSETS | $166,587 |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $166,587 |
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Capital Structure | |||||
Net Investment in: | Financed By: | ||||
Working capital | $52,907 |
|
Long-term debt* | $7,666 |
|
Property, plant and equipment | 65,544 | 63,881 | Deferred liabilities | 18,168 | 17,816 |
Other noncurrent assets | 15,865 | 14,473 | Stockholders' equity | 108,482 | 104,365 |
Total | $134,316 |
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Total | $134,316 |
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*Excludes short-term portion. Short-term portion is included within working capital. |
CONTACT: For More Information Investors & Analysts:Source:Bob Burton 616-258-5773 or Investor.Relations@mgpingredients.com Media:Shanae Randolph , Corporate Director of Communications 913-367-1480 or shanae.randolph@mgpingredients.com
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