MGP Ingredients, Inc. Reports Q4 and Year End 2012 Results

MGP Ingredients, Inc. Reports Q4 and Year End 2012 Results

Emphasis on Premium Products Helps to Counter Market Volatility


  *Q4 net sales increase 22%; full year net sales increase 19%
  *Q4 net income of $0.01 earnings per share; prior-year net income of $0.89
    per share included $0.77 per share in asset purchase gain (net of tax
  *Operating income improves from increased sales of premium spirits and
    specialty ingredients, but difficult industry conditions persist
  *Positives for 2013 include new orders for whiskey and bourbon distillates,
    higher anticipated ingredient sales, and planned improvements at alcohol

ATCHISON, Kan., March 12, 2013 (GLOBE NEWSWIRE) -- MGP Ingredients, Inc.
(Nasdaq:MGPI) (the "Company") today reported results for the fourth quarter
and fiscal year ended December 31, 2012. Net income for the fourth quarter was
$180,000, or $0.01 earnings per diluted share, compared with net income of
$16.1 million, or $0.89 per diluted share, in the prior year. Net Income in
the prior-year period includes a $13.0 million, or $0.77 per diluted share,
asset acquisition gain (net of tax effect), associated with the acquisition of
the company's Indiana distillery.

Net sales for the fourth quarter increased by 22 percent over the year ago
period. Significantly higher beverage alcohol sales more than offset a
reduction in sales of alcohol for industrial applications. The Indiana
distillery continues to increase production of premium spirits, including
bourbon and rye whiskeys. Higher ingredient sales in the fourth quarter were
paced by strong gains for MGP's Fibersym® resistant starch, which increases
dietary fiber levels while reducing the caloric content of bakery and prepared

Fourth quarter gross profit improved significantly to $7.4 million, or 8.6
percent of net sales, compared with gross profit of $155,000 in the prior-year
quarter. Income from operations was $970,000 compared to a loss of $7.3
million in the prior year period (excluding $13.0 million related to the
above-mentioned asset purchase gain). Driving the improved profitability was a
higher mix of premium products sold in both the distillery and ingredient
segments. Other contributing factors include improved unit volume and pricing
for the distiller's feed by-product. Net income for the current fourth quarter
also included a net loss in equity earnings of $555,000 from the ICP joint

Net income for the twelve months of 2012 was $1.62 million, or $0.09 per
diluted share, compared with net income of $1.0 million, or $0.06 per diluted
share in the prior twelve months. Net sales for the full year increased by 19
percent to $334.3 million. Higher sales from the Indiana distillery accounted
for the majority of the year-over-year increase.

"This was not a satisfactory year for MGP," said Tim Newkirk, President and
Chief Executive Officer. "The corn drought and consequent grain price
volatility in 2012 prevented us from making any progress on our bottom line.
Our strategy for navigating this tough marketplace is to put more emphasis on
our premium products. On that front we did achieve solid sales growth driven
by our bourbon and rye whiskeys, custom distillery blends and our food
ingredients targeting nutritional health."

"The improvement in our gross margins over the past few quarters is a key step
as we work toward generating consistent operating profits and cash flow. We
continue to experience lower volumes and margin compression in bulk alcohol
sales due to higher input costs and increased market supply. However, our
actions to reshape both our product mix and our asset base are beginning to
bear fruit, even in the face of these ongoing industry challenges."

"We did reach an important milestone," he continued, "as the fourth quarter
marked the first full year of ownership of our Indiana distillery. We
accomplished a great deal as we re-established MGP's presence in the premium
segment of distilled spirits. In taking over this former captive distillery,
we knew that we had to first prove ourselves as a reliable independent

"With the help of new management and capital investments at the Indiana
facility, we're on track to see even stronger sales of premium spirits and
custom blends in the coming year. We have positioned MGP to serve not only the
major players in our industry, but also the growing base of independent craft
distillers. Meanwhile, aged brown goods remain in short supply and we will
continue to pursue opportunistic purchases to add to our aged barrel

Premium Spirits and Industrial Alcohol

  *Distillery products sales for the fourth quarter were $71.4 million, an
    increase of 23.5 percent compared to the prior year quarter. Increases in
    sales of premium spirits, whiskeys, bourbons and distillers feed were
    offset by declines in lower-grade industrial alcohol products. Results
    from the prior-year period did not include premium beverage sales from the
    Indiana distillery, as well as fees related to the warehousing of barrels
    used in the aging of third-party-owned whiskey and bourbon.
  *The distillery products segment reported fourth quarter pre-tax operating
    income of $4.9 million, or 6.9 percent of sales, compared to a pre-tax
    profit of $855,000 during the same quarter a year ago. Quarter over
    quarter, pricing for distillery products out-paced the increased costs for
    corn, excluding the impact of accounting for open commodity contracts. For
    the fourth quarter, the per-bushel cost of corn averaged 15.1 percent
    higher than a year ago, with natural gas declining by an average of 18.5
    percent over the same period.
  *Distillery products sales for the twelve months of 2012 were $276.6
    million, an increase of 24.8 percent over the prior year period. Pre-tax
    segment operating income for the twelve months was $14.8 million, a
    multifold increase from $2.9 million over the same period a year ago.

Food Ingredients

  *Ingredient segment sales for the fourth quarter were $14.6 million, an
    increase of 20 percent from the prior year's quarter. Sales benefited from
    both higher average pricing and unit volumes.
  *The ingredients segment reported fourth quarter pre-tax operating income
    of $1.2 million compared with a loss of $548,000 for the same quarter a
    year ago. Profitability improved significantly from the prior year due to
    higher average selling prices and lower costs for natural gas and raw
    materials, principally flour.
  *Ingredients segment sales for the twelve months of 2012 were $56.4
    million, approximately even with the prior year period. Pre-tax segment
    operating income for the twelve months improved significantly to $5.2
    million compared with $1.0 million over the same period a year ago.


  *Sales of the Company's plant-based biopolymers in the fourth quarter were
    $217,000 compared with $257,000 in the same period one year ago. The
    Company reported a pre-tax operating loss of $97,000 compared to a pre-tax
    loss of $162,000 in the prior year's quarter. For the twelve months
    segment sales were $1.1 million compared with last year's $960,000. The
    pre-tax operating loss for the twelve months was $429,000 compared with a
    pre-tax loss of $658,000 in the prior-year.

Subsequent Asset Sale

On February 8, 2013, the Company completed the sale of its bioplastics
manufacturing facility in Onaga, Kansas, and certain assets at the Company's
extruder bio-resin laboratory located in Atchison, Kansas. The purchase price
was $2.8 million in cash and was not subject to either an escrow arrangement
or working capital adjustment. The Company expects to record a $1.4 million
gain on sale in the first quarter of 2013 as a result.


Newkirk said, "The coming year will keep us focused on sales of premium
products. We face continued competitive pricing in our bulk white goods,
namely industrial and beverage alcohol. To counter this, we must lower the
cost-per-gallon at both of our distilleries with more efficient energy usage,
equipment upgrades and process improvements."

He concluded, "MGP has gone to great lengths over the past two years to reduce
the impact of commodity volatility on our business. This transformation is
reflected today in a higher value sales mix, a more effective supply chain,
and a more productive base of assets. We won't be satisfied, however, until we
achieve the level of profits and cash flow returns that we believe are within
our reach. The proof will be in the results. To that end, we anticipate
progress on our bottom line in 2013 as our efforts start to take hold."

About MGP Ingredients

MGP is a leading independent supplier of premium spirits, offering flavor
innovations and custom distillery blends to the beverage alcohol industry. The
Company also produces high quality food grade industrial alcohol and
formulates grain-based starches and proteins into nutritional, as well as
highly functional, innovations for the branded consumer packaged goods
industry. Distilled spirits are produced at facilities in the adjacent towns
of Lawrenceburg and Greendale, Indiana. The Company is headquartered in
Atchison, Kansas, where a variety of distilled alcohol products and food
ingredients are manufactured. For more information, visit

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,"
"encouraged," "opportunities," "potential" 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.
Investors should not place undue reliance upon forward-looking statements and
the Company undertakes no obligation to publicly update or revise any
forward-looking statements. Important factors that could cause actual results
to differ materially from our expectations include, among others: (i)
disruptions in operations at our Atchison or Indiana facilities, (ii) the
availability and cost of grain and fluctuations in energy costs, (iii) the
effectiveness of our hedging strategy, (iv)the competitive environment and
related market conditions, (v)the ability to effectively pass raw material
price increases on to customers, (vi)the ability to effectively operate the
Illinois Corn Processing, LLC ("ICP") joint venture, (vii)our ability to
maintain compliance with all applicable loan agreement covenants, (viii)our
ability to realize operating efficiencies, (ix)actions of governments and
(x)consumer tastes and preferences. For further information on these and
other risks and uncertainties that may affect the Company's business, see Item
1A. Risk Factors in Part II of the Company's Report on Form 10-K for the year
ended December 31, 2012.

(unaudited)                    Quarter Ended           Year to Date Ended
(Dollars in thousands, except   Dec. 31, 2012 Dec. 31,   Dec. 31,   Dec. 31,
per share)                                    2011       2012       2011
Gross Sales                     $86,350     $70,425  $338,232 $279,656
Less Excise Taxes               --            86         3,897      193
Net Sales                       $86,350     $70,339  $334,335 $279,463
Cost of Sales                   78,930        70,184     309,312    272,786
Gross Profit                    $7,420      $155     $25,023  $6,677
Selling, General and            $6,466      $6,343   $26,536  $21,987
Administrative Expenses
Other Operating Costs and       (16)          $ (180)    (569)      $ 539
(Gain) Loss on
Sale of Assets, Net                                              
Impairment of Long Lived Assets --           $ 1,301    --         $ 1,301
Bargain Purchase Gain           --           (13,048)   --         (13,048)
Income (Loss) from Operations   $970        $5,739   $(944)   $(4,102)
Gain on Sale of Joint Venture   --           --        4,055      --
Other Income, Net               (1)           2          2          53
Interest Expense                (158)         (216)      (870)      (422)
Equity in Earnings (Loss)       (465)         2,279      (301)      (2,723)
Income (Loss) Before Income     $346        $7,804   $1,942   $(7,194)
Provision for Income Taxes      166           (8,340)    318        (8,272)
Net Income                      $180        $16,144  $1,624   $1,078
Other Comprehensive Income      (209)         2,500      802        1,968
Comprehensive Income (Loss)     $(29)       $18,644  $2,426   $3,046
Basic Earnings (Loss) Per       $0.01       $0.89    $0.09    $0.06
Common Share
Diluted Earnings (Loss) Per     $0.01       $0.89    $0.09    $0.06
Common Share
Weighted Average Shares         16,995,251    16,904,748 16,951,168 16,804,797
Weighted Average Shares         16,995,251    16,907,209 16,951,168 16,808,883

(Dollars in     Dec. 31,    Dec. 31,   (Dollars in       Dec. 31,   Dec. 31,
thousands)      2012        2011       thousands)        2012       2011
                                       LIABILITIES AND
ASSETS                               STOCKHOLDERS'               
Current Assets:                      Current                     
Cash and Cash                          Current
Equivalents     $ --       $383     Maturities on     $1,683   $1,670
                                       Long-term Debt
Restricted Cash 12          7,605      Revolving Credit --         21,142
Receivables     35,325      27,804     Accounts Payable 18,860     22,704
Inventory       36,532      31,082     Accounts Payable 4,008      6,167
                                       to Affiliate, Net
Prepaid         697         958        Accrued Expenses 5,220      4,023
Deferred Income 5,283       6,056      Derivative        --         3,465
Taxes                                 Liabilities
Refundable      242         566        Total Current     $29,771  $59,171
Income Taxes                           Liabilities
Derivative      --          1,304      Other                       
Assets                                 Liabilities:
Assets Held for                        Long-term Debt,
Sale            --          2,300      Less Current      5,168      6,852
                                       Revolving Credit
                                    facility,         25,893     --
Total Current   $78,091   $78,058  Deferred Credit  4,133      4,195
                                       Health and Life
                                    Insurance        5,096      6,309
Property and                           Other Noncurrent
Equipment, at   190,519     185,386    Liabilities       1,000      2,144
Less                                   Noncurrent
Accumulated     (115,128)   (108,307)  Deferred Income   5,283      6,056
Depreciation                           Taxes
Net Property,                        Total Other       $46,573  $25,556
Plant and                             Liabilities
Equipment       $75,391   $77,079  Total Liabilities $76,344  $84,727
Equity Method   7,301       12,147     Stockholders'     86,827     84,430
Investments                            Equity
Other                                  TOTAL LIABILITIES
Noncurrent      2,388       1,873      AND                         
TOTAL ASSETS    $163,171  $169,157 STOCKHOLDERS'     $163,171 $169,157
Net Investment                                                  
Cash and Cash   $ --       $383                                
                                    Financed By:                
Working Capital $48,320   $18,887  Long-term Debt*   $31,061  $6,852
Property, Plant 75,391      77,079     Deferred          15,512     18,704
and Equipment                          Liabilities
Other                                  Stockholders'
Noncurrent      9,689       14,020     Equity            86,827     84,430
Total           $133,400  $109,986 Total             $133,400 $109,986
*Excludes short-term portion.Short- term portion is included within working

CONTACT: Investors & Analysts:
         George Zagoudis, Investor Relations
         913-360-5441 or
         Shanae Randolph, Corporate Director of Communications
         913-360-5442 or

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