ATCHISON, KANSAS, U.S. — Net income at MGP Ingredients, Inc. increased 10% in the first quarter ended March 31, rising to $9.654 million, equal to 57¢ per share on the common stock, up from $8.752 million, or 52¢ per share, in the same period a year ago. Net sales also increased, rising to $89.096 million from $87.956 million.
“While both our business segments showed top-line growth over the prior year, driving consolidated sales for the quarter up a little over 1%, our results were lighter than we would have liked,” Augustus C. Griffin, president and chief executive officer, said during a May 1 conference call with analysts. “Our results for this quarter reflect both headwinds to our business and customer order timing. However, we do not believe they are the result of any changes in underlying consumer trends or our position in the market. As a result, and after a detailed review of our outlook for the remainder of the year, we are confidently confirming our previous annual guidance.”
Gross profit in the Ingredient Solutions segment decreased to $1.4 million in the first quarter of fiscal 2019, down 55% from $3.1 million in the first quarter of fiscal 2018, while sales increased 6.9% to $14.5 million.
“As mentioned on our Q4 call, we lost a large customer for our TruTex textured wheat protein product at the end of the year,” Griffin said. “And the 6.2% decline in sales of specialty wheat proteins reflects the beginning of us cycling against that lost business. While it would take time to recover that business through other customers, we feel very good about the robust project pipeline for this product line and are still confident that it will be a driver of long-term growth.
“Growth of our specialty wheat starches was hampered by the uncertain regulatory status of our Fibersym and FiberRite products. The recent FDA approval of these products as sources of dietary fiber has removed that barrier. And customers have immediately begun initiating new projects with us. Versus the year-ago quarter, our flour costs were higher, negatively impacting margins. In addition to our strong risk management program, we believe our efforts to optimize both customer and product mix will help us moderate this impact over the remainder of the year.”
Griffin said MGPI’s facility did not experience any flooding during the recent floods in the region, but its Atchison Ingredient Solutions operation did experience a brief interruption as a result of the situation.
“This negatively impacted our segment gross margins by 250 basis points for the period,” he said. “But we returned to full capacity during the quarter.”
MGPI confirmed its guidance for operating income to grow between 15% and 20% during fiscal 2019. Fiscal 2019 sales growth is projected in the mid-single-digit percentage range versus 2018, the company said.