Mar 14 2012 --- MGP Ingredients, Inc. reported financial results for the second quarter and six months ended December 31, 2011. As previously announced, the company changed its fiscal year end to December 31 from June 30.
As a result, the six months ended December 31, 2011, represent a transition period, with the next fiscal year covering the period from January 1, 2012, through December 31, 2012.
Net income for the six month period ended December 31, 2011, includes a $13 million purchase gain and an $8.3 million tax benefit associated with the acquisition of LDI's Distillery Business, partially offset by operating losses in distillery products, ingredients solutions and other segments, including an impairment charge on long-lived assets and a loss related to joint venture operations.
Ingredient segment sales for the second quarter were $12.2 million, a decrease of 16.1 percent compared to the prior year's quarter. Declines in volume were partially offset by price increases averaging 5.7 percent.
Ingredient segment sales for the six-month transition period declined 3.5 percent to $27.6 million, compared to the same period a year ago.
The majority of the decrease was attributable to a $1.2 million, or 11.0 percent, decline in sales of specialty proteins. Specialty starches declined by approximately 1.0 percent compared to the year period. Lower unit volumes for both products were partially offset by higher average pricing.
The ingredients segment reported a second quarter pre-tax operating loss of $0.5 million compared to pre-tax operating income of $0.4 million during the second quarter a year ago. Along with the planned production shutdown, pre-tax margins were severely impacted by increases in the cost of flour versus a year ago. For the six-month transition period pre-tax operating income was $1.0 million compared with $1.8 million in the prior year period. Flour costs averaged approximately 34.0 percent higher per pound compared to the same period a year ago.
"We faced some big challenges over the past six months, complicating the task of putting the right business foundation in place," said Tim Newkirk, president and chief executive officer. "We've made solid progress in terms of lowering our fixed costs and increasing our flexibility. We now have the right strategic partners in place in the areas of raw materials, transportation logistics, and supply chain management. Our long-term goal is to generate sustainable cost and capital savings, improve our hedging, and generate higher cash flows on growing sales."