Exhibit
99.1
CONTACT:
Steve Pickman at 913-367-1480
FOR IMMEDIATE RELEASE: MGPI ANNOUNCES FISCAL 2005 SECOND QUARTER RESULTS
ATCHISON, Kan., February 8,
2005—MGP Ingredients, Inc. (Nasdaq: MGPI)
today reported results for its fiscal 2005 second quarter ended December 31,
2004.
Net
income for the quarter was $1,354,000, or $0.08 per common share, compared to
$1,834,000, or $0.12 per share, in the same period one year ago. The earnings
per share data has been adjusted to reflect MGPI’s two-for-one stock split that
went into effect after the close of business on June 30, 2004. Net sales
totaled $61,164,000, an increase of three percent over sales of $59,409,000 in
the 2004 second quarter, which included approximately $3.0 million of business
interruption insurance proceeds resulting from the September 13, 2002
distillery explosion at its Atchison, Kansas plant.
Net
income for the first six months of fiscal 2005 was $1,645,000 compared to net
income of $4,304,000 for the first six months of fiscal 2004. Net sales for the first six months of fiscal
2005 were $130,042,000, an increase of 12 percent over net sales of
$116,463,000 in the same period a year ago. The company’s result for the first
six months of fiscal 2004 included approximately $8.7 million of business
interruption insurance proceeds resulting from the September 13, 2002
distillery explosion.
“Strong
increases in sales of both fuel grade alcohol and food grade alcohol drove a 6
percent increase in distillery products sales in the second quarter,” said Ladd
Seaberg, president and chief executive officer. “Results for our ingredients
segment were mixed. The ongoing
popularity of pet treats incorporating our Polytriticum® line of grain-based
resins drove strong gains in that business; and we experienced a sequential
quarter rebound in our Fibersym™ line of resistant starches, which had been
trending downward concurrent with the slowing of the low-carb market. The low-carb slowdown continued to impact
sales of our Arise® line of wheat protein isolates as well as our Wheatex® line
of textured wheat proteins.”
Specialty ingredients sales in the second
quarter increased by 4 percent compared to the 2004 second quarter, but
decreased on a sequential basis when compared to the first quarter of fiscal
2005. Both Arise® and Wheatex® sales
were impacted by the slowdown in the low-carb market, and Arise was further
impacted by growing competitive pricing pressures.
“As leaders in the development of
innovative products from wheat and other grains, we are accustomed to seeing
increased competition in markets we help create,” said Michael Trautschold,
executive vice president of marketing and sales. “Our unique customer solutions focus will
serve us in good stead as we pursue opportunities in all of our markets. We believe that building solutions-based
relationships with our customers will present new opportunities upward in the
ingredients development stream, consistent with our strategic shift away from
commodity ingredients.”
Fibersym™ sales increased compared to the
second quarter of 2004, and also increased on a sequential quarter basis. “The increase in Fibersym™ sales represents a
modest rebound from recent negative sales trends,” continued Trautschold. “The market for this line is still very new
and thus difficult to forecast, but it is apparent that compelling
opportunities remain for the functionality and nutritional profile that
Fibersym™ brings as a fiber enhancer in food products.”
Sales of the Company’s Polytriticum® line
for use in the manufacture of pet chews increased compared to last year’s
second quarter. Planned upgrades of the
Company’s facilities designed to expand processing and packaging
capabilities for pet-related ingredients and
products are proceeding on schedule.
Management expects the upgrades to be in place in the spring.
-more-
ADD 1—MGPI ANNOUNCES
An
overall 7 percent increase in total sales of distillery products in the second
quarter was driven by a 47 percent increase in sales of food grade alcohol and
a 14 percent increase in sales of fuel grade alcohol. Within the food grade alcohol area, sales of
alcohol for industrial applications rose by $2.8 million, or 65 percent, and
sales of alcohol for beverage applications rose by approximately $739,000, or 23
percent. Distillers feed sales decreased by $1,279,000, or nearly 17 percent
compared to the prior year due to both lower unit sales lower selling prices.
Complete
sales and pre-tax income data by segments for the second quarter ended December
31 follow below. Pretax operating profits for each segment are based on net
sales less identifiable operating expenses. Interest expense, investment income
and other general miscellaneous expenses have been excluded from segment
operations and classified as Corporate:
|
Sales
|
|
2nd Quarter
FY 2005
|
|
2nd Quarter
FY 2004
|
|
6 Months
FY 2005
|
|
6 Months
FY 2004
|
|
|
Ingredients
Segment
|
|
$
|
18,860,000
|
|
$
|
19,630,000
|
|
$
|
41,614,000
|
|
$
|
41,547,000
|
|
|
Distillery
Products Segment
|
|
42,304,000
|
|
39,779,000
|
|
88,428,000
|
|
74,916,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
income (loss)
|
|
|
|
|
|
|
|
|
|
|
Ingredients
Segment
|
|
$
|
(1,684,000
|
)
|
$
|
2,075,000
|
|
$
|
(1,800,000
|
)
|
4,646,000
|
|
|
Distillery
Products Segment
|
|
4,301,000
|
|
1,400,000
|
|
5,175,000
|
|
3,305,000
|
|
|
Corporate
|
|
(541,000
|
)
|
(452,000
|
)
|
(818,000
|
)
|
(847,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
“Looking
ahead toward the second half of fiscal 2005, we will face some very challenging
comparisons to prior year results,” Seaberg continued. “The third and fourth quarters of fiscal 2004
are when we saw the greatest ramp-up of specialty ingredients sales related to
the low-carb market. The subsequent
fall-off of that business since then has been well-documented, and will result
in decreases versus prior year periods. In
response to this situation, during the second quarter we have instituted
programs that have resulted in improved production yields and efficiencies and
have simultaneously implemented cost reduction measures in the operational
areas of personnel, maintenance, and laboratory expense. The results of these measures will be
realized more fully in the third and fourth quarters”
Seaberg
added that distillery revenues should remain strong through the balance of
2005, as should revenues in the company’s pet ingredient area. “We remain a leader in the development of
wheat and other grain-based specialty products,” he said. “We will continue to leverage that core
competency by cultivating our specialty ingredients development pipeline that
will in turn position us to stay ahead of the commoditization of certain
classes of ingredients. We look forward
to sharing our progress in these areas as it occurs.”
The
company will host an investor conference call on Tuesday, February 8, at 10
a.m. central time to review the second quarter results. Stockholders and other
interested parties may listen to the call via telephone by dialing 800-322-0079
by 9:50 a.m. central time on February 8, or access it on the Internet at
www.mgpingredients.com.
In
business for more than half a century, MGP Ingredients, Inc. is a recognized
pioneer in the development and production of natural grain-based products. The
company has facilities in Atchison, Kan., Pekin, Ill., and Kansas City, Kan.
that utilize the latest technologies to assure high quality products and to
maintain efficient production and service capabilities.
This
news release contains forward-looking statements as well as historical
information. Forward-looking statements are identified by or are associated
with such words as “intend,” “believe,” “estimate,” “expect,” “anticipate,” “hopeful,”
“should,” “may” and similar expressions. 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. The forward-looking statements are based on
many assumptions and factors, including those relating to grain prices,
gasoline prices, energy costs, product pricing, competitive environment and
related marketing conditions, operating efficiencies, access to capital, actions
of governments or government officials and actions of insurers. Any changes in
the assumptions or factors could produce materially different results than
those predicted and could impact stock values.
###