Strong performance from ingredient, distillery buoys MGPI earnings

by Holly Demaree
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"While the demand for our products remains strong, our margins continue to reflect downward pressure from market-wide soft pricing conditions for our distillers feed co-product (Dried Distillers Grain, or DDG)," Griffin said.
 
ATCHISON, KANSAS, U.S. – Strong performance from the Distillery Products and Ingredient Solutions segments pushed earnings, along with the company’s long-term growth plan. Operating profit in the segment in the second quarter ended June 30 was $10.5 million, up 15.2% from the same period a year ago. 

MGPI CEO Gus Griffin
Gus Griffin, president and chief executive officer of MGPI.
“Our second-quarter results reflect continued progress from the aggressive implementation of our long-term strategic plan,” said Gus Griffin, president and chief executive officer (CEO) of MGPI.  “Results in both Distillery Products and Ingredient Solutions showed solid growth over the prior year. Through the first half of 2017, we have grown operating income 10.3% and we remain optimistic about the outlook for the full year.”

For the second quarter of 2017, net sales for the Distillery Products segment increased 5.9% to $70.7 million, as a 15.2% increase in net sales of premium beverage alcohol more than offset a 7.4% decline in sales of industrial alcohol. Gross profit improved to $16 million, or 22.6% of net segment sales, compared with $13.7 million, or 20.5% of net segment sales, in the second quarter 2016.

“We continue to see strong demand for our premium beverage alcohol products,” Griffin said.  “This demand reflects the strength of the underlying market trends and our ability to attract, retain and build strong partnerships with existing and new customers. While the demand for our products remains strong, our margins continue to reflect downward pressure from market-wide soft pricing conditions for our distillers feed co-product (Dried Distillers Grain, or DDG).”

For the 2017 second quarter, net sales for the Ingredient Solutions segment increased 10.3% to $15.1 million. Gross profit increased to $2.9 million, or 19.1% of net segment sales, compared with $1.9 million, or 13.7% of net segment sales, in the second quarter 2016.

“Consistent with our strategy of maximizing the value of our production, we saw strong growth from our higher margin specialty proteins and starches,” Griffin said. “We are particularly pleased with our progress in developing our TruTex textured protein business.”

MGPI remains focused on its long-term growth strategy while also expanding its premium beverage alcohol product offerings.

“These results demonstrate both the strength and potential of our long-term strategy,” Griffin said. “We are making great strides against that strategy, as evidenced by both our results and our progress implementing specific strategic initiatives. Expanding our premium beverage alcohol product offerings, capabilities and customer focus has enabled us to continue our migration away from industrial alcohol. We continue to invest in building our inventory of aged whiskey to support our longer-term growth, and the value of that inventory, at cost, now totals $56.4 million. While still very early, we are pleased with the progress on our brands initiative. Ingredient Solutions is a core piece of our long-term strategy and we are encouraged by developments within that segment.  Divesting our non-core interest in ICP will allow us to further sharpen our focus on the drivers of our long-term growth.”
 
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