MGP Ingredients, a leading supplier of premium distilled spirits and specialty wheat proteins and starches, reported results for the third quarter period ended 30 September 2015.
Third quarter 2015 highlights (vs. third quarter 2014)
Net sales increased by $2.8 million or 3.6%.Gross profit increased by $4.6 million to $11.9 million.Gross margin improved 5.4 percentage points to 14.8%.Operating income increased by $2.7 million to $6.4 million.ICP joint venture contributed $1.6 million to pretax income, consistent with $1.6 million a year ago.Net income increased 8.7% to $6.8 million.Earnings per share increased by 11.8% to $.38, more than offsetting the impact of increased tax obligations and the absence of a favorable insurance recovery that occurred in the 2014 third quarter.
For the first nine months of 2015, net sales increased by 3.8% to $246.1 million. Gross profit improved by $20.4 million, to 17.4% of net sales. Operating income was $22.8 million, compared to $8.4 million in the same period a year ago. Net income grew by $3.6 million to $19.7 million, with earnings per share reaching $1.10.
"We are enjoying strong demand for our products, driven by long term macro consumer trends," said Gus Griffin, president and CEO of MGP. "The aggressive implementation of our strategic plan has effectively positioned MGP to realize maximum benefit from these trends. Our third quarter and year-to-date results reflect the solid traction we are realizing from our strategy."
Distillery Products Segment - Gross Profit Rises 80%
For the quarter, net sales for the Distillery Products segment increased 4.7% to $66.7 million. Gross profit rose to $10.4 million, or 15.5% of net sales, compared with $5.8 million, or 9.0% of net sales in the third quarter of 2014. The primary driver of the improvement in gross profit was improved product mix, as net sales of food grade alcohol, which includes beverage alcohol, grew 6.1%.
"Our strong reputation for quality and innovation, combined with our production capacity, make MGP uniquely positioned to benefit from the continual growth of the whiskey category and the premiumization of the beverage alcohol industry," noted Griffin.
Ingredient Solutions - Continued Improvement in Product Mix
For the quarter, net sales for the Ingredient Solutions segment decreased 1.4% to $13.6 million. Gross profit decreased to $1.5 million, or 10.9% of net sales, compared with $1.6 million, or 11.3% of net sales in the third quarter of 2014.
Griffin added, "While segment results were down slightly for the quarter, we were pleased by both the growth in specialty starch net sales, which increased 5.4% over the 2014 quarter, and improved mix, as specialty products accounted for 85.9% of total segment net sales. We remain very confident in the long term growth potential of our ingredient solutions segment."
Other
Corporate selling, general and administrative expenses were $5.5 million for the third quarter of 2015 compared to $5.0 million in the comparable 2014 period, primarily due to an increase in professional fees and personnel costs.
For the quarter, MGP received joint venture equity method investment earnings of $1.6 million from its ICP joint venture, which produces high quality food grade alcohol, chemical intermediates and fuel. This result was consistent with the 2014 third quarter.
