MGP Ingredients, Inc. Reports Fourth Quarter and 2013 Results

MGP Ingredients, Inc. Reports Fourth Quarter and 2013 Results

              Sees improving margins from lower commodity costs;

        Execution centers on higher-value products and cost discipline


  *Company reports highest quarterly gross margin for the year, aided by
    lower new crop corn prices and favorable basis management
  *Fourth quarter net loss of $0.4 million ($0.02 per share) after $3.4
    million in proxy-related costs
  *Fourth quarter sales down vs year ago due to reduced sourcing of alcohol
    from joint venture
  *Company expects gross margin strength to continue, as reflected in
    contracted distillery sales and lower commodity costs

ATCHISON, Kan., March 12, 2014 (GLOBE NEWSWIRE) -- MGP Ingredients,
Inc.(Nasdaq:MGPI) (the "Company") today reported results for the fourth
quarter ended December 31, 2013. Net loss for the fourth quarter was $0.4
million, or ($0.02) per diluted share, compared to net income of $180,000, or
$0.01 per diluted share, in the prior year. Net loss from continuing
operations for 2013 was $5.8 million, or ($0.34) per diluted share. Income
from discontinued operations was $0.8 million, or $0.05 per diluted share,
resulting in a total net loss of $5 million, or ($0.29) per diluted share.
This compares with net income of $1.6 million, or $0.09 per diluted share, in
2012. Annual results for 2013 were impacted by the record high corn basis
during the third quarter, increased severance costs, and approximately $5.5
million in costs related to the proxy contest.

Net sales for the fourth quarter declined by approximately 10.5 percent from
the year-ago period. Beverage alcohol sales were down slightly, while sales of
industrial alcohol saw greater volume decreases compared to the same period a
year ago. Ingredient sales in the fourth quarter declined approximately 5
percent from a year ago.

Fourth quarter loss from operations was $1.1 million compared to an operating
profit of $970,000 in the fourth quarter of 2012. The Company's gross profit
during the fourth quarter was $7.9 million, or 10.2 percent of net sales,
compared to $7.4 million, or 8.6 percent of net sales in the prior year. The
improvement in gross margins, especially when compared to gross profit of
$815,000 in the previous quarter, was due mainly to increased profitability
from the Company's white goods distillery products. Fourth quarter corporate
expenses of $8.8 million include the previously mentioned $3.4 million in
costs related to the proxy contest and increased severance costs.

For the twelve months of 2013, net sales declined by 3.3 percent to $323.2
million. The Company generated a gross profit margin of 6.6 percent compared
to 7.5 percent in the prior year period. Loss from operations for the twelve
months of 2013 was $5.2 million compared to a loss of $944,000 in the prior

Premium Spirits and Industrial Alcohol

  *Distillery products sales for the fourth quarter were $63.3 million, a
    decrease of 11.4 percent compared to the prior year quarter. The Company
    experienced sales declines in both distillers feed and lower-grade
    industrial alcohol products.The distillery products segment reported
    fourth quarter pre-tax operating income of $6.1 million compared to
    pre-tax operating income of $4.9 million during the same quarter a year
  *For the twelve months of 2013, distillery segment sales were $264 million,
    a decrease of 4.6 percent compared to the prior year period. The decrease
    was mainly driven by an 82 percent reduction in industrial alcohol
    supplied from the Company's joint venture partner. Pre-tax operating
    income for the year was $11.9 million compared to $14.8 million in the
    previous year. Overall distillery segment pricing decreased 5.0 percent
    from the previous year. The per-bushel cost of corn decreased 1.9 percent
    while the per-million cubic foot cost of natural gas averaged 3.0 percent
    higher year-over-year.

During January 2014, the Company experienced a small fire at its Indiana plant
causing a temporary loss of production. The Indiana plant is back in operation
and by the end of February the Company was at pre-fire production
capacity.The Company is currently working with its insurance carrier to
determine the coverage for equipment damage and business interruption losses.

Food Ingredients

  *Ingredient segment sales for the fourth quarter were $13.9 million, a
    decrease of 4.6 percent from the prior year's quarter. Some of the
    Company's specialty products experienced lower volumes during the period.
    The ingredients segment reported fourth quarter pre-tax operating income
    of $559,000, or approximately 4 percent of sales, compared to income of
    $1.2 million, or approximately 9 percent of sales, for the same quarter a
    year ago.
  *For the twelve months of 2013, ingredient segment sales were $58.9
    million, a year-over-year increase of 4.4 percent. In addition to higher
    sales of specialty starches, tight market conditions created a temporary
    selling opportunity for sales of commodity protein. Pre-tax operating
    income for the year was $4.5 million compared to $5.2 million in the prior
    period. This was mainly due to higher raw material cost for flour that
    outpaced pricing increases. Flour costs averaged 14.7 percent higher per
    pound over the prior year.


Co-CEOs Don Tracy and Randy Schrick commented that while the 25 percent growth
in distillery pre-tax margin in Q4 vs a year ago was satisfactory, the trend
in Ingredients was not."For the coming year we look for sales growth to be
driven by products from our Indiana distillery, including new grain mixtures
known as mash bills, and from increased sourcing of alcohol from our joint

MGP is following a plan that involves reducing costs, selling higher value
products, and increasing volume. Our cost structure needs to be more
competitive, especially for products in the commodity categories. Areas of
focus include sourcing, plant efficiency, and administrative overhead.One
goal for 2014 is to reduce SG&A compared to 2013, after adjusting for proxy
costs.The savings generated will be redeployed to support marketing and new
product innovation.

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. The Company is headquartered in Atchison, Kansas, where it also has
facilities for the production of distilled spirits and food ingredients.
Distilled spirits are additionally produced at the Company's facility in
Lawrenceburg, Indiana. 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 facility or Indiana plant,(ii) the
availability and cost of grain and fluctuations in energy costs, (iii) the
competitive environment and related market conditions, (iv) the ability to
effectively pass raw material price increases on to customers, (v) the
viability of the Illinois Corn Processing, LLC ("ICP") joint venture and its
ability to obtain financing, (vi) our ability to maintain compliance with all
applicable loan agreement covenants, (vii) our ability to realize operating
efficiencies, (viii) potential adverse effects to the management of our
businessoperations and our profitability in the wake of the dismissed
litigation related to the proxy contest and related matters, and the
termination of our CEO, (ix) actions of governments, (x) and consumer tastes
and preferences.For further information on these and other risks and
uncertainties that may affect our business, including risks specific to our
Distillery and Ingredient segments, see Item 1A. Risk Factors of our Annual
Report on Form 10-K for the year ended December 31, 2013, as updated by Item

(unaudited)                Quarter Ended             Year to Date Ended
(Dollars in thousands,     December 31, December 31, December 31, December 31,
except per share)          2013         2012         2013         2012
Sales                      $80,936    $86,350    $334,070   $338,232
Less:excise taxes         3,642        —            10,806       3,897
Net sales                  77,294       86,350       323,264      334,335
Cost of sales (a)          69,380       78,930       302,025      309,312
Gross profit               7,914        7,420        21,239       25,023
Selling, general and       8,797        6,466        26,202       26,536
administrative expenses
Other operating costs and  177          (16)         236          (569)
losses on sale of assets
Income (loss) from         (1,060)      970          (5,199)      (944)
Gain on sale of joint      —            —            —            4,055
venture interest
Interest expense           (289)        (159)        (1,118)      (868)
Equity in earnings (loss)  758          (465)        (204)        (301)
of joint ventures
Income (loss) from
continuing operations      (591)        346          (6,521)      1,942
before income taxes
Provision for income taxes (758)        166          (714)        318
Net income (loss) from     167          180          (5,807)      1,624
continuing operations
Discontinued operations,   (528)        —            878          —
net of tax
Net income (loss)          (361)        180          (4,929)      1,624
Other comprehensive income 630          (209)        229          802
(loss), net of tax
Comprehensive income       $269       $(29)      $(4,700)   $2,426
Basic and diluted earnings                                     
(loss) per share
Income (loss) from        $0.01      $0.01      $(0.34)    $0.09
continuing operations
Income from discontinued  (0.03)       —            0.05         —
Net income (loss)          $(0.02)    $0.01      $(0.29)    $0.09
Weighted average shares    17,142,023   16,995,251   17,069,455   16,951,168
outstanding – basic
Weighted average shares    17,142,023   16,995,251   17,069,455   16,951,168
outstanding – diluted


(Dollars in     December   December   (Dollars in        December   December
thousands)      31,        31,        thousands)         31,        31,
                2013       2012                          2013       2012
                                      LIABILITIES AND
ASSETS                              STOCKHOLDERS'                
Current assets:                     Current                      
Cash and cash   $2,857   $ —      Current maturities $1,557   $1,683
equivalents                           of long-term debt
Restricted cash —          12         Accounts payable   23,107     18,860
Receivables     27,821     35,325     Accounts payable   1,204      4,008
                                      to affiliate, net
Inventory       34,917     36,532     Accrued expenses   7,877      5,220
Prepaid                               Current portion of
expenses        825        697        accrued retiree    405        —
                                      health benefits
Deposits        23         —          Total Current      34,150     29,771
Deferred income 4,977      5,283                                  
Refundable      466        242        Other liabilities:           
income taxes
Total Current                         Long-term debt,
Assets          71,886     78,091     less current       3,611      5,168
                                   Revolving credit   18,000     25,893
Property and    194,687    190,519    Deferred credit    3,925      4,133
Less                                  Accrued
accumulated                           retirement, health
depreciation    (124,443)  (115,128)  and life insurance 4,423      5,096
and                                   benefits
                                   Other noncurrent   640        1,000
Net Property,                       Deferred income    4,977      5,283
Plant                                 taxes
and Equipment   70,244     75,391     Total Liabilities  69,726     76,344
Equity method   7,123      7,301      Stockholders'      81,603     86,827
investments                           equity
noncurrent      2,076      2,388                                  
                                      TOTAL LIABILITIES
TOTAL ASSETS    $151,329 $163,171 AND STOCKHOLDERS'  $151,329 $163,171
Net investment                      Financed By:                 
Working capital $37,736  $48,320  Long-term debt*    $21,611  $31,061
Property, plant 70,244     75,391     Deferred           13,965     15,512
and equipment                         liabilities
Other                                 Stockholders'
noncurrent      9,199      9,689      equity             81,603     86,827
Total           $117,179 $133,400 Total              $117,179 $133,400
*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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