ATCHISON, KANSAS, U.S. — MGP Ingredients, Inc. on November 9 reported that stronger sales and product innovation helped drive improved earnings for the first quarter ended Sept. 30. Net income in the quarter was $5,002,000, equal to 28¢ per share on the common stock, up 34% from $3,738,000, or 23¢ per share, in the first quarter of fiscal 2010.

Sales were $56,978,000, up 13% from $50,249,000 in the same period a year ago.

“We are pleased to report another quarter of solid profitability in both of our key segments, including a strong performance from our Illinois Corn Processing, L.L.C. (ICP), joint venture in Pekin, Ill.,” said Tim Newkirk, president and chief executive officer. “On the distillery side, we are seeing better demand for high quality food grade industrial alcohol. At the same time, ICP is approaching normalized volumes following start-up last fiscal year. Our focus in this segment is on maintaining gross margin in the face of rising input costs. While we can expect some quarterly variation in distillery sales due to demand cycles and other factors, the general trend is positive and gross margin remains above target.

“The ingredients segment continues to make very good progress despite plant interruptions to effect capital investments to support growth. We are especially encouraged by growing demand for our unique fiber and textured wheat protein platforms. I also want to point out that our first quarter SG&A expenses included costs related to our incentive plans, as well as the added expense of rolling out our new business information system. Costs were also affected by the use of outside resources to design and implement supply chain and operating efficiency improvements. While our investments in generating future revenues have a short-term impact on profits, these are critical moves to help capture our full market opportunity.”

In its Ingredient Solutions segment, MGPI posted pre-tax income of $1.4 million, down from $2.3 million in the first quarter of fiscal 2010. Net sales were $14.1 million, down 8% from the same period a year ago.

MGPI said the majority of the sales decline was due to lower unit volumes of certain specialty starches as well as commodity starches due to planned slowdowns to accommodate a series of facility and process improvements. A narrow increase in sales of specialty proteins partially offset the decrease.

Distillery Products posted pre-tax income of $8.1 million, up 22% from $6.6 million in the same period a year ago. Net sales in the Distillery Products segment were $42.5 million, up 24% from $31.4 million. MGPI attributed the majority of the increase to a 32% gain in high quality food grade alcohol.