ATCHISON, KANSAS, U.S. — Net income at MGP Ingredients, Inc. decreased 10% in the fiscal year ended Dec. 31, 2018, falling to $36.576 million, equal to $2.17 per share on the common stock, from $40.827 million, or $2.44 per share, in fiscal 2017. Fiscal 2017 results included an $11.381 million gain on the sale of equity method investment. Net sales, meanwhile, increased, rising 8% to $376.089 million from $347.448 million.
During the fourth quarter, net income totaled $11.822 million, or 69¢ per share, down 6% from $12.364 million, or 74¢ per share, in the same period a year ago. Net sales were $104.850 million, up 19% from $88.193 million.
“2018 marked the fourth full year of the implementation of our strategic plan,” Augustus C. Griffin, president and chief executive officer, said during a Feb. 27 conference call with analysts. “And again, we’re reporting strong financial results consistent with this plan. The improved momentum of our business and continued solid execution of the strategic plan allowed us to deliver on all elements of our guidance for the year. We saw increased demand for our premium beverage alcohol products in the fourth quarter as well as a very strong performance in our Ingredient Solutions segment.”
Gross profit in the Ingredient Solutions segment increased to $11.8 million in fiscal 2018, up from $9.2 million in fiscal 2017, while sales increased nearly 10% to $62 million. During the fourth quarter, gross profit in the segment totaled $2.6 million, up from $1.8 million in the same period a year ago. Net sales during the quarter increased 14% to $16.2 million.
“Gross margins expanded 270 basis points, supported by higher net sales across all product categories,” Griffin said. “This was a very good year for Ingredient Solutions. We are particularly pleased with the gains we experienced in both our specialty wheat proteins and specialty wheat starch businesses for the full year. We continue to be well positioned against the increasing consumer demand for healthy eating alternatives.
“During previous calls, we have highlighted the increased consumer interest in plant-based proteins and the success of our efforts to leverage this trend with our TruTex textured wheat protein product. While that consumer trend remains robust, we did lose a large customer for that product due to their decision to reformulate their plant-based burger. Despite this loss, we are pleased with our project funnel of new customers and projects and are confident that we will continue to benefit from this trend over the longer term.”
The board of directors of MGPI on Feb. 27 approved a $25 million share repurchase authorization that will extend through Feb. 27, 2022. Under the share repurchase program, MGPI will be able to repurchase stock from time to time for cash in open market purchases, block transactions, and privately negotiated transactions in accordance with applicable federal securities laws.
The company also declared a quarterly cash dividend on its common stock of 10¢ per share, payable on March 29 to shareholders of record as of March 13. The dividend rate represents a 25% increase over the previous dividend rate of 8¢ per share of common stock.
“We are very pleased that our ongoing financial strength allows us to reward shareholders with these initiatives while still having ample funds available to invest to grow our business,” said Karen Seaberg, chairman of the board of MGPI Ingredients. “Today’s announcement reflects our continued confidence in the long-term strategy, the health of our balance sheet, and our ability to generate strong cash flows.”