MGP second-quarter profits up on lower costs
World Grain Staff
ATCHISON, KANSAS, U.S. — MGP Ingredients, Inc. reported on Aug. 7 that net income for the second quarter was $5.1 million or 28¢ per share for the second quarter, compared to net income of $300,000 or 2¢ per share a year ago.
Second quarter net income included $2.3 million in equity earnings from the company's joint ventures.
Net sales of $80.6 million for the second quarter increased by 1.5% from the year-ago quarter. Beverage alcohol sales improved significantly on higher shipments from the Indiana distillery. Increased sales of industrial alcohol were offset by lower sales of by-products. Ingredient segment sales in the second quarter declined from a year ago. The company’s gross profit during the second quarter was $8.4 million, or 10.4% of net sales, compared to $5.3 million, or 6.7% of net sales in the prior year period.
For the first six months of 2014 net sales were $159.6 million, a decrease of 3.8% from the prior year period. Income from operations for the year to date was $4.8 million, an increase of 166% from the same period a year ago. Net income of $9.9 million for the first six months includes $5.7 million in equity earnings from the company’s joint ventures, compared with a joint venture loss of $0.9 million during the same period a year ago.
The distillery products segment reported second quarter pre-tax operating income of $6 million, or 9.1% of distillery products net sales, compared to $3.1 million, or 4.9% of distillery products sales, during the same quarter a year ago. Lower corn costs were mainly responsible for the improvement in return on sales over the prior year. The average per-bushel cost of corn decreased 35.7% from second quarter 2013, while the per-million cubic foot cost of natural gas was essentially unchanged. Distillery products sales for the second quarter were $65.4 million, an increase of 2.3% compared to the prior year quarter. Higher volume in all categories was somewhat offset by lower pricing.
The ingredients segment reported second quarter pre-tax operating income of $1.4 million, or approximately 9.5% of sales, compared to $900,000, or approximately 5.7% of sales, for the same quarter a year ago. Profitability in this year’s second quarter was positively impacted by product mix and lower flour prices compared to a year ago. The price of flour decreased by 13.5% year-over-year. Total ingredient segment sales for the second quarter declined by 2.1% to $15.2 million from the prior year.
Ingredients segment results for the first six months include pre-tax operating income of $1.7 million, or approximately 6% of sales, compared to income of $2.7 million, or approximately 8.6% of sales, for the same period a year ago. The price of flour decreased by 12.2% from the same period a year ago.