MGP Performance Boosted by Ingredients Solutions Business

09 Mar 2017 --- MGP Ingredients has reported a 0.4% decrease in net sales in Q4 to $81.1 million, as increases in net sales of premium beverage alcohol were more than offset by a sales decline in lower margin industrial alcohol. Gross profit increased 11.6% to $17.6 million, reflecting stronger profit performance in both the Distillery Products and Ingredient Solutions segments.

"Our fourth quarter and fiscal 2016 results mark further progress against our long term strategic plan," said Gus Griffin, president and CEO of MGP. "While revenues declined slightly as we continue to migrate away from industrial alcohol, gross profit and margins expanded and operating income improved in both our Distillery Products and Ingredient Solutions segments. We are pleased with the progress against our goals for the year and enter 2017 strongly positioned for growth."

For the fourth quarter of 2016, net sales for the Distillery Products segment decreased 1.0% to $68.0 million. Gross profit improved to $16.0 million, or 23.5% of net segment sales, compared with $15.2 million, or 22.1% of net segment sales in the fourth quarter 2015. For the year, net sales of Distillery Products decreased 1.8% to $265.2 million. Gross profit improved to $56.8 million, or 21.4% of net segment sales, compared with $50.7 million, or 18.7% of net segment sales in 2015. Results for both the quarter and the full year reflect strong demand for the Company's high quality whiskey products. This trend contributed strongly to the margin expansion in both periods.

Griffin said, "While yearlong softness in the industrial alcohol market offset premium beverage revenue gains, MGP's bourbon and rye whiskeys reported strong revenue growth throughout the year, outperforming the continued steady growth of the bourbon category and contributing to gains in MGP's gross profit and margins."

For the 2016 fourth quarter, net sales for the Ingredient Solutions segment increased 2.5% to $13.1 million. Gross profit increased to $1.6 million, or 12.4% of net segment sales, compared with $0.6 million, or 4.7% of net segment sales in the fourth quarter 2015. For the full year 2016, net sales for the Ingredient Solutions segment decreased 7.6% to $53.0 million. Gross profit increased to $8.4 million, or 15.9% of net segment sales, compared with $7.9 million, or 13.7% of net segment sales in 2015. Full year gross profit margins grew due to a decline in input costs and improved plant efficiencies, partially offset by a lower average selling price.

Griffin said, "Our Ingredient Solutions segment returned to modest growth in the fourth quarter as sales gains in specialty wheat starch more than offset sales declines in commodity wheat starch and proteins versus the prior year period. We continue our work to take full advantage of the macro trends benefitting this segment."