Exhibit 99.1
|
|
|
NEWS
RELEASE
|
|
|
|
|
|
1300
Main Street, P.O. Box 130 • Atchison, Kanas 66002-0130
|
|
|
|
913.367.1480
• 800.255.0302 • Fax 913.367.0192
|
|
|
|
www.mgpingredients.com
• Symbol/Market: MGPI/NASDAQ
|
|
|
|
|
|
|
|
|
|
Contact:
|
Steve Pickman
|
|
|
|
|
913-367-1480
|
FOR IMMEDIATE RELEASE:
MGPI ANNOUNCES FOURTH QUARTER AND FISCAL YEAR
2005 RESULTS
ATCHISON,
Kan., August 16, 2005—MGP Ingredients, Inc. (Nasdaq: MGPI) today reported net income of $732,000, or
$0.05 per common share, for its fiscal 2005 fourth quarter, which ended June 30.
This compares to net income of $3,164,000, or $0.20 per share, for the fourth
quarter of fiscal 2004. 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 in the current year’s fourth quarter
totaled $73,949,000 compared to net sales of $78,995,000 in the prior year’s
fourth quarter.
For all 12 months of fiscal 2005, net income was
$4,004,000, or $0.25 per share, compared to net income of $9,468,000, or $0.61
per share, in fiscal 2004. Net sales for fiscal 2005 totaled $275,177,000
compared to net sales of $270,673,000 in fiscal 2004. Results for fiscal 2004
included approximately $9.6 million in business interruption insurance proceeds
resulting from the September 13, 2002 distillery explosion at the company’s
Atchison, Kansas plant. No such proceeds were included in fiscal 2005 results.
As previously announced, fourth quarter results were
below expectations due primarily to higher than expected energy costs, lower
than anticipated fuel grade alcohol prices, lower than expected sales of
specialty food ingredients and increased sales of lower valued commodity wheat
gluten, which, due to market conditions, was sold below cost.
Sales in the company’s distillery segment were
slightly lower in the fourth quarter of fiscal 2005 compared to the fourth
quarter of fiscal 2004. “While pricing pressures in the fuel grade alcohol area
contributed to distillery results that were below our expectations for the
fourth quarter, we are experiencing an easing of that pressure in the current
quarter,” said Ladd Seaberg, president and chief executive officer. “Part of the new energy bill that was
recently passed by Congress and signed into law by President Bush calls for a
near doubling of the use of renewable fuels—to 7.5 billion gallons by 2012. We
believe this is an encouraging sign for ethanol prices going forward, barring excess
capacity situations that may arise as the result of this legislation.”
Seaberg noted that fuel grade alcohol remains an “important
and integral part” of the company’s business. “However, in recent times,” he
added, “we have elected to devote an increasing share of our capacity to food
grade alcohol, particularly at our Atchison, Kansas distillery. This is
possible through the production flexibility that our distillery operations
provide and our commitment to maintain a leadership position in supplying
customers with some of the highest quality, high purity food grade alcohol
available anywhere in the world. While we plan to maintain a very visible
presence in the fuel alcohol market, we have no plans at this time to build
that presence by increasing our production capacity. Rather, we remain focused
on evaluating and implementing measures to strengthen the efficiencies of our
existing capacities for both food grade and fuel grade alcohol.”
MGPI’s patented wheat-based resins for pet product
applications continued to experience growth in the fourth quarter, increasing
sequentially in each of the last two quarters of 2005. To a lesser extent, sequential
sales of the company’s Wheatex® line of textured wheat proteins, which principally
are sold for use in meat and seafood analogs as well as meat extension
applications, also increased for the second consecutive quarter. Sales of MGPI’s
Fibersym™ resistant starch, which is used to increase the dietary fiber levels
of foods, were almost even with the immediately preceding third quarter, but up
substantially compared to both the first and second quarters of the year.
“The focus of our specialty ingredients growth
strategy has always been on leveraging our proven product development
capabilities to build a diverse portfolio of innovative ingredients,” said
Michael Trautschold, executive vice president of marketing and sales. “We
continue to execute on those initiatives and are excited about the
possibilities these efforts provide.”
Trautschold cited recent developments that
illustrate progress toward the company’s goals. Among the newest of MGPI’s
specialty ingredients, FiberRite™ RW is a recent addition to the company’s portfolio
of resistant starches. The company developed FiberRite™ RW as a fiber enhancer
and partial fat replacer for use in a wide array of food products. “Yogurt, ice
cream and salad dressings are among the more compelling potential applications
for this unique ingredient,” added Trautschold. “Increasing dietary fiber and
decreasing saturated fat are high priorities for food companies and consumers,
and we expect FiberRite™ RW to be received favorably in the marketplace. Early
response among customers has been quite positive.”
Progress on ingredient development initiatives
extends to the company’s wheat protein business as well. MGPI continues to expand
its portfolio of textured proteins with recent innovations that include new
varieties of Wheatex® RediShred which possess the fibrous structure of shredded
meat and seafood products and provide greater convenience for customers during
processing. The company has also recently introduced new additions to the
Wheatex® line that have been developed specifically for use in soup and seafood
applications, including dry soup mixes, instant and canned soups, seafood
appetizers and seafood salads.
Ingredients
Strong increases in MGPI’s unique line of protein-
and starch-based resins sold for use in the manufacture of pet chews and
related treats remained a significant contributor to total sales of specialty
ingredients in the fourth quarter. However, while specialty ingredients sales
overall in the quarter increased by nearly 12 percent sequentially over the
third quarter, they were 22 percent below sales in the fiscal 2004 fourth
quarter, which was characterized by very strong increases in demand for
ingredients for use in low-carbohydrate products. The decline in this demand in
the current year’s fourth quarter compared to a year ago primarily affected the
company’s Fibersym™ line of resistant starches. The company’s Arise® line of
specialty wheat protein isolates and certain varieties of Wheatex® were also
affected by the downturn in demand for low-carb products. However, as noted
above, Wheatex® sales did improve on a linked quarter basis and, although down
slightly from the third quarter, sales of Fibersym™ were up substantially
compared to both the first and second quarters of the year.
Sales of commodity ingredients rose by 45 percent
over the prior year’s fourth quarter, driven by increased sales of commodity
wheat gluten, which, due to market conditions, were at prices below cost. The
rise in commodity gluten sales was due to increased unit sales resulting from
higher quantities on hand compared to the prior year’s fourth quarter. Although
the company has deemphasized gluten sales, gluten remains a co-product from the
processing of flour in the manufacture of starch. The company uses gluten to
make specialty proteins. Because sales of specialty proteins lagged proportionately
behind the pace of starch sales, the company had more gluten available for sale
during the fourth quarter of fiscal 2005 than in the same period the prior
year.
Distillery Products
As noted above, total sales revenue from distillery
products in the fiscal 2005 fourth quarter was slightly less than distillery
sales revenue experienced in the fourth quarter of 2004. A 49 percent increase
in food grade alcohol sales was offset by a 20 percent decrease in fuel alcohol
sales combined with a 26 percent decrease in sales of distillers feed, the
principal by-product of the alcohol production process.
The increase in total food grade alcohol sales
resulted primarily from increased production at the company’s Atchison
distillery. In the prior year’s fourth quarter, less food grade alcohol was
produced at that location while the distillery was undergoing start-up
operations after being rebuilt following the September, 2002 explosion. Sales
of food grade alcohol for industrial applications rose substantially due to
increased unit sales and improved prices, while sales of food grade alcohol for
beverage applications increased slightly, with higher selling prices offsetting
lower unit volume. The decrease in fuel alcohol sales revenue was due to a
decline in the average selling price as unit sales were approximately even with
the year-ago period. The decrease in distillers feed sales compared to the
prior year was due to lower selling prices. Unit sales of distillers feed were
up compared to a year ago as the result of increased alcohol production.
Segment Data
Complete sales and pre-tax income data by segments
for the fourth quarter and 12 months ended June 30, 2005 and 2004 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:
|
|
|
4th QTR.
FY 2005
|
|
4th QTR.
FY 2004
|
|
12 Months
FY 2005
|
|
12 Months
FY 2004
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ingredients Segment
|
|
$
|
26,636,000
|
|
$
|
31,513,000
|
|
$
|
92,495,000
|
|
$
|
102,711,000
|
|
|
Distillery Products Segment
|
|
47,313,000
|
|
47,482,000
|
|
182,682,000
|
|
167,962,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income (loss)
|
|
|
|
|
|
|
|
|
|
|
Ingredients Segment
|
|
$
|
1,963,000
|
|
$
|
6,983,000
|
|
$
|
(778,000
|
)
|
$
|
17,268,000
|
|
|
Distillery Products Segment
|
|
(227,000
|
)
|
(1,316,000
|
)
|
8,524,000
|
|
257,000
|
|
|
Corporate
|
|
(526,000
|
)
|
(426,000
|
)
|
(1,619,000
|
)
|
(1,875,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outlook
“With the closure of fiscal 2005, we have ended a year
in which our performance was consistently measured against the significant
impact that the low-carbohydrate diet movement had on our results in the prior
fiscal year,” Seaberg said. “During most of fiscal 2005, and especially during
the fourth quarter, we dealt with unfavorable comparisons to the prior year’s
dramatic increase in demand for low-carbohydrate products, which reached a peak
in the fourth quarter of fiscal 2004 and then subsided. Compared to two years
ago, before the low-carb trend became a factor, our sales of specialty
ingredients in fiscal 2005 increased by 88 percent driven by growth in sales
related to both food and non-food applications. Along with more normalized
comparisons beginning in the first quarter of fiscal 2006, we begin a new
fiscal year with indications of improvements in both our specialty ingredients
and distillery products areas. Our goals going forward will be on increasing
sales of our product portfolio and reaping efficiencies gained from recent
capital expenditures and cost structure refinements.”
Conference Call Information
The company will host an investor conference call
today at 10 a.m. central time to review the third quarter results.
Stockholders and other interested parties may listen to the call live via telephone
by dialing 800-322-0079 by 9:50 a.m. central time, or access
it on the Internet at www.mgpingredients.com.
About MGP Ingredients
In business since 1941, 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.
Cautionary Note Regarding
Forward-Looking Statements
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. 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) the
availability and cost of grain, (ii) fluctuations in gasoline prices, (iii) fluctuations
in energy costs, (iv) competitive environment and related market
conditions, (v) our ability to realize operating efficiencies, (vi) the
effectiveness of our hedging programs, (vii) access to capital, and (viii) actions
of governments.
MGP INGREDIENTS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
|
(unaudited)
|
|
Three
Months Ended June 30
|
|
Twelve
Months Ended June 30
|
|
|
(Dollars in thousands, except
per share)
|
|
2005
|
|
2004
|
|
2005
|
|
2004
|
|
|
NET SALES
|
|
$
|
73,949
|
|
$
|
78,995
|
|
$
|
275,177
|
|
$
|
270,673
|
|
|
COST OF SALES
|
|
67,470
|
|
67,816
|
|
249,936
|
|
245,766
|
|
|
GROSS PROFIT
|
|
6,479
|
|
11,179
|
|
25,241
|
|
24,907
|
|
|
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
|
|
5,064
|
|
7,013
|
|
19,318
|
|
20,339
|
|
|
OTHER OPERATING INCOME
|
|
128
|
|
2
|
|
707
|
|
10,720
|
|
|
INCOME FROM OPERATIONS
|
|
1,543
|
|
4,168
|
|
6,630
|
|
15,288
|
|
|
OTHER INCOME
|
|
20
|
|
1,344
|
|
890
|
|
1,450
|
|
|
INTEREST EXPENSE
|
|
(353
|
)
|
(271
|
)
|
(1,393
|
)
|
(1,088
|
)
|
|
INCOME BEFORE INCOME TAXES
|
|
1,210
|
|
5,241
|
|
6,127
|
|
15,650
|
|
|
PROVISION FOR INCOME TAXES
|
|
478
|
|
2,077
|
|
2,123
|
|
6,182
|
|
|
NET INCOME
|
|
$
|
732
|
|
$
|
3,164
|
|
$
|
4,004
|
|
$
|
9,468
|
|
|
OTHER COMPREHENSIVE INCOME
(LOSS)
|
|
(199
|
)
|
0
|
|
23
|
|
0
|
|
|
COMPREHENSIVE INCOME
|
|
533
|
|
3,164
|
|
4,027
|
|
9,468
|
|
|
BASIC EARNINGS PER COMMON
SHARE
|
|
$
|
0.05
|
|
$
|
0.20
|
|
$
|
0.25
|
|
$
|
0.61
|
|
|
DILUTED EARNINGS PER COMMON
SHARE
|
|
$
|
0.04
|
|
$
|
0.19
|
|
$
|
0.24
|
|
$
|
0.59
|
|
|
DIVIDENDS PER COMMON SHARE
|
|
$
|
—
|
|
$
|
—
|
|
$
|
0.15
|
|
$
|
0.075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding - Basic
|
|
15,994,218
|
|
15,741,024
|
|
15,974,503
|
|
15,473,228
|
|
|
Weighted average shares
outstanding - Diluted
|
|
16,459,071
|
|
16,528,588
|
|
16,542,943
|
|
15,967,756
|
|
CONSOLIDATED BALANCE SHEETS
|
(unaudited)
|
|
June 30
|
|
June 30
|
|
|
(Dollars in thousands)
|
|
2005
|
|
2004
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
10,384
|
|
$
|
6,488
|
|
|
Receivables
|
|
28,097
|
|
34,243
|
|
|
Inventories
|
|
31,252
|
|
32,775
|
|
|
Prepaid expenses
|
|
628
|
|
828
|
|
|
Deferred income taxes
|
|
2,448
|
|
2,090
|
|
|
Refundable income taxes
|
|
837
|
|
0
|
|
|
Total Current Assets
|
|
73,646
|
|
76,424
|
|
|
PROPERTY AND EQUIPMENT, At
Cost
|
|
317,626
|
|
296,377
|
|
|
Less accumulated depreciation
|
|
201,997
|
|
187,280
|
|
|
|
|
115,629
|
|
109,097
|
|
|
Insurance Receivable
|
|
—
|
|
1,425
|
|
|
OTHER ASSETS
|
|
225
|
|
91
|
|
|
|
|
$
|
189,500
|
|
$
|
187,037
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
4,705
|
|
$
|
3,201
|
|
|
Accounts payable
|
|
11,744
|
|
10,576
|
|
|
Accrued expenses
|
|
5,621
|
|
7,815
|
|
|
Deferred income
|
|
10,948
|
|
12,598
|
|
|
Income taxes payable
|
|
0
|
|
2,423
|
|
|
Total Current Liabilities
|
|
$
|
33,018
|
|
$
|
36,613
|
|
|
|
|
|
|
|
|
|
LONG-TERM DEBT
|
|
16,785
|
|
12,561
|
|
|
POST-RETIREMENT BENEFITS
|
|
6,342
|
|
5,977
|
|
|
DEFERRED INCOME TAXES
|
|
12,828
|
|
13,677
|
|
|
STOCKHOLDERS’ EQUITY
|
|
120,527
|
|
118,209
|
|
|
|
|
$
|
189,500
|
|
$
|
187,037
|
|