ATCHISON, KANSAS, U.S. — Double-digit sales growth in specialty wheat starches and proteins was not enough to offset struggles in the distillery products business at MGP Ingredients, Inc. in the third quarter, as earnings and sales trended lower in the period.
Net income at MGP Ingredients fell 8% in the third quarter ended Sept. 30, falling to $8.161 million, equal to 48¢ per share on the common stock, down from $8.834 million, or 52¢ per share, in the same period a year ago. Net sales also declined, falling to $90.685 million from $95.031 million.
Gross profit in the Ingredient Solutions segment decreased to $2.9 million in the third quarter of fiscal 2019, down 12% from $3.3 million in the third quarter of fiscal 2018, while sales increased 4% to $17.4 million.
“We are very pleased with the overall progress in this segment as we achieved double-digit sales growth in both specialty wheat starches and proteins,” Augustus C. Griffin, president and chief executive officer, said during an Oct. 31 conference call with analysts. “While continuing to cycle the loss of a large customer for our Trutex textured specialty wheat protein product at the end of last year, we continue to recruit new customers for this product and remain confident that it will be a driver of long-term growth. We also saw strong growth in our Arise specialty wheat protein product line this quarter. This product is used to increase protein in bakery and pasta items, targeting consumers who want to add more protein to their diets, while reducing their carb intake. This product line is also aligned with the clean label trend, allowing food manufacturers to improve texture and shelf life without adding chemical preservatives.
“The FDA approval of our Fibersym in FiberRite specialty wheat starches also removed a major barrier to the growth for this product line and we are now seeing its potential. These products ideally suited to help brands develop healthier food offerings, delivering high-fiber content while lowering carbs, in line with the increased consumer interest in the keto diet.”
MGPI maintained its guidance for operating income to grow between 10% and 20% in fiscal 2019. Fiscal 2019 sales growth is projected in the mid-single-digit percentage range versus 2018, the company said.