Exhibit 99.1
|
|
|
Cray
Business Plaza
100 Commercial St., P.O. Box 130
Atchison, Kansas 66002-0130
913.367.1480 • 913.367.0192 (fax)
www.mgpingredients.com
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NEWS
RELEASE
|
Contact: Robert Zonneveld, CFO,
at 913-360-5229
MGP INGREDIENTS ANNOUNCES FIRST QUARTER FY 2008 RESULTS
Highlights:
• Q1 total sales of $88.0 million increased
3.5% over year ago
• Q1 diluted EPS loss of ($0.02) compared with
$0.41 in year-ago quarter
• Ingredient solutions segment shows strong
improvement vs. year ago
• Distillery profits impacted by lower ethanol
pricing and unit sales
• Company expands segment reporting categories
ATCHISON, Kan., November 8, 2007—MGP Ingredients, Inc.
(Nasdaq/MGPI) today reported a net loss of $318,000, or $0.02 in diluted earnings per share, for the first quarter of fiscal 2008,
which ended September 30, 2007. This compares with net income of $7.0 million,
or $0.41 in diluted earnings per share, for the first quarter of fiscal 2007. Total
sales in the first quarter of fiscal 2008 were $88.0 million, an increase of
3.5 percent from first quarter sales a year ago.
The
company continued to show a positive turnaround in the ingredient solutions
segment, reporting pre-tax income of approximately $311,000 in the first
quarter compared with a pre-tax loss of $2.5 million in the prior year’s first
quarter. Total ingredient solutions sales improved by 55 percent, led
principally by higher sales of vital wheat gluten. Improved ingredient
solutions segment operating margins also reflected a more optimal product mix
of higher valued specialty ingredients. Further improvements were impeded by
increased wheat prices, which averaged 20.2 percent higher versus the first
quarter a year ago. Meanwhile, pre-tax income in the company’s distillery
products segment declined to $679,000 compared with $15.2 million in last year’s
first quarter. Distillery products sales declined by 6.7 percent compared with
year-ago levels. This was due to a significant decline in selling prices for
fuel grade alcohol (ethanol) as well as reduced unit sales compared with the
year-ago period, as well as higher costs for corn, the principal raw material
used in the alcohol production process. A negative earnings performance in the
company’s Other segment, consisting primarily of developing business lines for
pet product and plant-based biopolymer applications, more than offset first
quarter profitability in the ingredient solutions and distillery products
segments. An increase in selling, general and administrative expenses, mainly
related to financial reporting systems and outside professional fees and
expenses, also contributed to the first quarter net loss.
“In
light of the company’s strategy, with an emphasis on a greater diversity of
products, processes and customers, MGP Ingredients has increased the number of
its financial reporting segments,” stated Ladd Seaberg, chairman and chief
executive officer. Beginning in fiscal 2008, the company’s new segments are:
Ingredient Solutions, Distillery Products, Other (Resin and Polymer
Technologies), and Corporate.
“We
began to feel the impact of lower ethanol pricing on distillery profits in our
fiscal 2007 fourth quarter,” Seaberg said. “Prices declined further in the
first quarter of our current fiscal year compared to both the fourth and first
quarters of fiscal 2007. The situation was compounded by higher prices for
corn, one of our main cost components, compared to a year ago. Additionally,
certain production issues related to our distillery processes yielded a
production level below our maximum capacity. Although corn prices have remained
at or near this higher level, we have recently experienced some strengthening
in ethanol pricing since the end of the first quarter. These changing dynamics
illustrate the sensitivity and operating leverage in our fuel grade alcohol
business”.
-more-
Seaberg
added that “the adverse impact of lower fuel grade alcohol results on first
quarter distillery profits was somewhat offset by continued strength in pricing
for our food grade alcohol. We plan to seek out additional opportunities to
expand our products and services to customers in the high quality food grade
side, which includes both beverage and industrial applications. Our other main
focus is on strengthening our commercialization capabilities for ingredients. The
recent profit improvements in this segment are only the first phase of a plan
to increase revenues and income.”
Segment
Results
The
following is a summary of sales and pre-tax profits/(loss) allocated to each
operating segment for the first quarter ended September 30. Interest expense,
investment income and other general miscellaneous expenses are classified as
corporate.
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First Qtr
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|
First Qtr
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(In thousands)
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FY 2008
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|
FY 2007
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Ingredient Solutions
|
|
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|
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Net Sales
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$
|
22,288
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|
$
|
14,424
|
|
|
Pre-Tax Inc. (Loss)
|
|
311
|
|
(2,463
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)
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|
|
|
|
|
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Distillery Products
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Net Sales
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$
|
64,358
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|
$
|
69,005
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|
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Pre-Tax Income
|
|
679
|
|
15,242
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Net Sales
|
|
$
|
1,331
|
|
$
|
1,566
|
|
|
Pre-Tax Income (Loss)
|
|
(1,050
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)
|
(1,099
|
)
|
|
|
|
|
|
|
|
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Corporate
|
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$
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(386
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)
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$
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(865
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)
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First
Quarter Sales Highlights
Total
sales of distillery products in the first quarter of fiscal 2008 declined
approximately 6.7 percent to $64.4 million compared to the same quarter of
fiscal 2007. This decline was due to a $7 million, or 18.8 percent, decrease in
sales of fuel grade alcohol. Sales of food grade alcohol improved by $1.6
million, or 6.7 percent, over the prior year with gains in both beverage and
industrial applications. Sales of distillers feed, the principal by-product of
the alcohol production process, increased by approximately $761,000, or 10.3
percent, over last year’s first quarter.
Total
ingredient solutions sales in the first quarter of fiscal 2008 increased by
approximately $7.9 million, or 54.5 percent, compared to the prior year’s first
quarter. The principal reason was a $5.7 million increase in sales of vital
wheat gluten, which resulted from higher unit volumes and substantially
improved prices compared with year-ago levels. Other notable improvements included
a $1.4 million, or 21.7 percent, increase in specialty starch sales, and a
$910,000, or 24.3 percent, increase in sales of specialty proteins. The 15
percent decrease in the Other segment resulted from lower sales of Chewtex®
resins for use in pet product applications. The decrease was partially offset
by growing sales of plant-based polymers and composites.
Moving
Ahead with Plans to Improve Sales and Profits
“Coming off a
record fiscal year we hit a strong headwind in our first quarter,” said Tim Newkirk,
president and chief operating officer. “Despite our success in restoring our
ingredient solutions segment to profitability, we were severely impacted by
lower ethanol pricing and higher corn costs on the distillery side.”
-more-
1
Newkirk
added: “We aren’t anticipating a long-term decline in ethanol prices and
therefore we have no plans to reduce our budgeted production. This area of our
business is still generating good cash flow and if ethanol selling prices
increase in the second half of our fiscal year, we are well positioned to
benefit from such an improvement. On the other hand, should ethanol selling
prices not experience a more robust improvement for the remainder of the
current fiscal year, our distillery income would likely continue to show a
decline compared to last year’s profitability in this segment.
“We
recognize over the near term that while we may be unable to reduce earnings
volatility from the fuel grade alcohol side of our business, we are moving
forward with plans to improve and sustain the profitability of our company. We
have two strong business segments within our integrated manufacturing network. Our
strong balance sheet and operating cash flows provide us with financial flexibility.
Following several years of relatively high capital expenditures on new plant
and equipment, we anticipate lower spending in the current fiscal year, nearly
one-half the amount of recent years.”
Newkirk
continued, “We are beginning to see greater opportunities for growing our
ingredient solutions business. The steps we took last year to improve profits
in the base business were only the beginning. MGPI has a solid footprint in the
food industry. Our product reach extends to most of the major food processors,
where healthy food remains a long-term focus. Consumers recognize the need for
higher fiber in their diets. Our unique Fibersym® and FiberRite® resistant
starches, which perform like fiber while also providing additional nutritional
and functional benefits, effectively address this need. With a renewed goal on
commercialization and a much deeper R&D presence with our key customers, we
can see growing prospects for our established specialty starches and proteins,
as well as an expanding pipeline of exciting new programs.”
Seaberg
concluded, “Given the prospects for continued volatility in our key input
commodities, our best action is to keep moving toward greater emphasis on
value-added ingredients and high quality alcohol products, thereby lessening
the impact of grain costs on our profitability.”
Investor
Conference Call
The
company will host an investor conference call today (November 8) at 10 a.m.
central time to review first quarter results. Stockholders and other interested
parties may listen to the call live via telephone by dialing 888-603-6873
domestically or 973-582-2706 internationally by 9:50 a.m. central time, or
access it on the Internet at www.mgpingredients.com. The conference
identification number for entering the call is 9403425.
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., Kansas City, Kan., and Onaga, 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 usually identified by or are
associated with such words as “intend,” “plan”, “believe,” “estimate,” “expect,”
“anticipate,” “hopeful,” “should,” “may,” “will”, “could” 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) 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. 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 July 1,
2007.
###
2
MGP Ingredients, Inc.
Consolidated Statements of Income
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(unaudited)
|
|
Quarter Ended
|
|
Year to Date Ended
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|
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(Dollars in thousands, except per share)
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|
Sept. 30, 2007
|
|
Oct. 1, 2006
|
|
Sept. 30, 2007
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|
Oct. 1, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
87,977
|
|
$
|
84,995
|
|
$
|
87,977
|
|
$
|
84,995
|
|
|
Cost of Sales
|
|
82,058
|
|
69,462
|
|
82,058
|
|
69,462
|
|
|
Gross Profit
|
|
$
|
5,919
|
|
$
|
15,533
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|
$
|
5,919
|
|
$
|
15,533
|
|
|
Selling, General and
Administrative Expenses
|
|
6,279
|
|
4,859
|
|
6,279
|
|
4,859
|
|
|
Income from Operations
|
|
$
|
(360
|
)
|
$
|
10,674
|
|
$
|
(360
|
)
|
$
|
10,674
|
|
|
Other Income, Net
|
|
190
|
|
360
|
|
190
|
|
360
|
|
|
Interest Expense
|
|
(276
|
)
|
(219
|
)
|
(276
|
)
|
(219
|
)
|
|
Income Before Income Taxes
|
|
(446
|
)
|
10,815
|
|
(446
|
)
|
10,815
|
|
|
Provision for Income Taxes
|
|
(128
|
)
|
3,839
|
|
(128
|
)
|
3,839
|
|
|
Net Income
|
|
$
|
(318
|
)
|
$
|
6,976
|
|
$
|
(318
|
)
|
$
|
6,976
|
|
|
Other Comprehensive Gain (Loss)
|
|
1,350
|
|
(190
|
)
|
1,350
|
|
(190
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
|
$
|
1,032
|
|
$
|
6,786
|
|
$
|
1,032
|
|
$
|
6,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Common Share
|
|
$
|
(0.02
|
)
|
$
|
0.43
|
|
$
|
(0.02
|
)
|
$
|
0.43
|
|
|
Diluted Earnings Per Common
Share
|
|
$
|
(0.02
|
)
|
$
|
0.41
|
|
$
|
(0.02
|
)
|
$
|
0.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding – Basic
|
|
16,498,348
|
|
16,308,870
|
|
16,498,348
|
|
16,308,870
|
|
|
Weighted average shares
outstanding – Diluted
|
|
16,920,303
|
|
16,817,119
|
|
16,920,303
|
|
16,817,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
EBITDA (1)
|
|
$
|
3,657
|
|
$
|
14,506
|
|
$
|
3,657
|
|
$
|
14,506
|
|
|
Depreciation & Amortization
|
|
$
|
3,827
|
|
$
|
3,472
|
|
$
|
3,827
|
|
$
|
3,472
|
|
|
Capital Expenditures
|
|
$
|
1,473
|
|
$
|
5,591
|
|
$
|
1,473
|
|
$
|
5,591
|
|
(1) EBITDA equals earnings before
taxes, interest, depreciation and amortization. We have included EBITDA because
we believe it provides stockholders with additional information to measure our
performance and liquidity.
|
EBITDA Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
(318
|
)
|
$
|
6,976
|
|
$
|
(318
|
)
|
$
|
6,976
|
|
|
Provision for income taxes
|
|
(128
|
)
|
3,839
|
|
(128
|
)
|
3,839
|
|
|
Interest expense
|
|
276
|
|
219
|
|
276
|
|
219
|
|
|
Depreciation and amortization
|
|
3,827
|
|
3,472
|
|
3,827
|
|
3,472
|
|
|
EBITDA
|
|
$
|
3,657
|
|
$
|
14,506
|
|
$
|
3,657
|
|
$
|
14,506
|
|
Consolidated Balance Sheet
|
|
|
Sept. 30, 2007
|
|
July 1
|
|
|
(Dollars in thousands)
|
|
|
|
2007
|
|
|
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,241
|
|
$
|
3,900
|
|
|
Segregated cash and investments
|
|
30
|
|
3,336
|
|
|
Receivables (less allowance of $223 and $207 respectively)
|
|
30,491
|
|
34,298
|
|
|
Inventories
|
|
52,905
|
|
42,595
|
|
|
Prepaid expenses
|
|
3,373
|
|
1,037
|
|
|
Deferred income tax assets
|
|
5,323
|
|
5,759
|
|
|
Refundable income taxes
|
|
1,576
|
|
364
|
|
|
Total Current Assets
|
|
$
|
95,939
|
|
$
|
91,289
|
|
|
Property and Equipment, At Cost
|
|
362,047
|
|
360,472
|
|
|
Less accumulated depreciation
|
|
(231,925
|
)
|
(228,260
|
)
|
|
Net Property, plant and
equipment
|
|
$
|
130,122
|
|
$
|
132,212
|
|
|
Other Assets
|
|
656
|
|
803
|
|
|
TOTAL ASSETS
|
|
$
|
226,717
|
|
$
|
224,304
|
|
|
|
|
|
|
|
|
|
Capital Structure
|
|
|
|
|
|
|
Net Investment in:
|
|
|
|
|
|
|
Working capital
|
|
$
|
50,053
|
|
$
|
48,704
|
|
|
Property, plant and equipment
|
|
130,122
|
|
132,212
|
|
|
Other non-current assets
|
|
656
|
|
803
|
|
|
Total
|
|
$
|
180,831
|
|
$
|
181,719
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Current maturities on long-term
debt
|
|
$
|
4,106
|
|
$
|
4,151
|
|
|
Revolving credit facility
|
|
11,000
|
|
7,000
|
|
|
Accounts payable
|
|
14,775
|
|
15,814
|
|
|
Accrued expenses
|
|
8,523
|
|
7,769
|
|
|
Deferred revenue
|
|
7,482
|
|
7,851
|
|
|
Total Current Liabilities
|
|
$
|
45,886
|
|
$
|
42,585
|
|
|
|
|
|
|
|
|
|
Long-Term Debt
|
|
7,922
|
|
8,940
|
|
|
Post-Retirement Benefits
|
|
8,035
|
|
7,860
|
|
|
Deferred Income Taxes
|
|
18,129
|
|
16,771
|
|
|
Stockholders’ Equity
|
|
146,745
|
|
148,148
|
|
|
TOTAL LIAB./STOCKHOLDERS EQ.
|
|
$
|
226,717
|
|
$
|
224,304
|
|
|
|
|
|
|
|
|
|
Financed By:
|
|
|
|
|
|
|
Long-term debt*
|
|
$
|
7,922
|
|
$
|
8,940
|
|
|
Deferred liabilities
|
|
26,164
|
|
24,631
|
|
|
Shareholders’ equity
|
|
146,745
|
|
148,148
|
|
|
Total
|
|
$
|
180,831
|
|
$
|
181,719
|
|
*Excludes short-term portion. Short term portion is
included within working capital.