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  Highlights    *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 year.  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     ago.        *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.  Summary  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 venture."  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 mgpingredients.com.  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 1A.                                                                                                                                MGP INGREDIENTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)                                                                (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) operations                                                                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 (loss)                                                                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         — operations 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                                                                                                                                  MGP INGREDIENTS, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED)  (Dollars in     December   December   (Dollars in        December   December thousands)      31,        31,        thousands)         31,        31,                 2013       2012                          2013       2012                                       LIABILITIES AND ASSETS                              STOCKHOLDERS'                                                       EQUITY Current assets:                     Current                                                             liabilities: 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                                       Liabilities Deferred income 4,977      5,283                                   taxes Refundable      466        242        Other liabilities:            income taxes Total Current                         Long-term debt, Assets          71,886     78,091     less current       3,611      5,168                                       maturities                                    Revolving credit   18,000     25,893                                       facility Property and    194,687    190,519    Deferred credit    3,925      4,133 equipment Less                                  Accrued accumulated                           retirement, health depreciation    (124,443)  (115,128)  and life insurance 4,423      5,096 and                                   benefits amortization                                    Other noncurrent   640        1,000                                       liabilities 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 Other noncurrent      2,076      2,388                                   assets                                       TOTAL LIABILITIES TOTAL ASSETS    $151,329 $163,171 AND STOCKHOLDERS'  $151,329 $163,171                                       EQUITY                                                                 Capital                                                          Structure Net investment                      Financed By:                  in: 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 assets Total           $117,179 $133,400 Total              $117,179 $133,400                                                                 *Excludes short-term portion.Short-term portion is included within working capital.  CONTACT: Investors & Analysts:          George Zagoudis, Investor Relations          913-360-5441 or george.zagoudis@mgpingredients.com                   Media:          Shanae Randolph, Corporate Director of Communications          913-360-5442 or shanae.randolph@mgpingredients.com  MGP Ingredients, Inc. Logo  
Press spacebar to pause and continue. Press esc to stop.