MGP Ingredients Reports Q1 Results, Makes Profit Despite Commodity Price Rises
The company had a Q1 net income per share of $0.10, against the previous year’s $0.04, this was driven by gains associated with the sale of joint venture interest. Distillery sales were up 44% to $72.4 million.
10 May 2012 --- MGP Ingredients, Inc. has reported financial results for the first quarter. Net sales for the company were up 34%, compared to the same period a year ago led by gains in food grade alcohol.
The company had a Q1 net income per share of $0.10, against the previous year’s $0.04, this was driven by gains associated with the sale of joint venture interest.Distillery sales were up 44% to $72.4 million.
Net income for the three-month period ended March 31, 2012, includes a $4.0 million gain on the previously announced sale of 20 percent of the Company’s interest in the Illinois Corn Processing joint venture.
The Company’s ingredient solutions segment showed greatly improved profitability from both the prior-year period and the linked quarter. This was partially offset by lower pre-tax income in distillery products, in which the Company experienced a swing in earnings with a $0.8 million unfavorable impact on earnings related to the accounting for open commodity contracts compared to a $1.5 million favorable impact for the prior-year period.
“We’re making great progress in terms of a higher value sales mix, thanks in part to the addition of premium bourbons and whiskeys to our product portfolio,” said Tim Newkirk, president and chief executive officer. “We’ve made significant changes at MGPI over the years in terms of our product portfolio, our cost structure and our business processes. As a result, we are generating profitable sales in the face of near-record commodity costs, compared with significant losses during the last period in which prices approached these levels. However, this is only a starting point. With initiatives like our new raw materials strategy and the addition of higher value beverages from our newly-acquired Indiana distillery, we are working to improve profitability in subsequent quarters.”
Ingredient segment sales for the first quarter were $13.5 million, approximately even with the prior year’s quarter. Higher average pricing more than offset declines in unit volume. While sales of commodity starches increased significantly during the quarter, the Company remains focused on sales of its specialty starches and proteins.
The ingredients segment reported a first quarter pre-tax operating income of $1.6 million compared to pre-tax operating income of $100,000 for the quarter a year ago. This was principally due to improved average selling prices, a higher value product mix and lower natural gas prices. Flour costs averaged approximately 5 percent higher compared with the prior-year period.
