ATCHISON, KANSAS, U.S. — MGP Ingredients, Inc. on March 12 reported a total net loss for 2013 of $5 million or 29¢ per share, compared to a net income of $1.6 million or 9¢ per share in 2012.
Results were impacted by the record high corn basis during the third quarter, increased severance costs, and $5.5 million in costs related to the proxy contest, MGP said.
The company also reported a net loss of $400,000 or 2¢ per diluted share for the fourth quarter ended Dec. 31, 2013. That compares to net income of $180,000 or 1¢ per share for the same period a year earlier.
Net sales for the fourth quarter declined by approximately 10.5% from the year-ago period.
Fourth-quarter loss from operations was $1.1 million compared to an operating profit of $970,000 in the fourth quarter of 2012. The company's gross profit during the fourth quarter was $7.9 million, or 10.2% of net sales, compared to $7.4 million, or 8.6% of net sales in the prior year.
The improvement in gross margins, especially when compared to gross profit of $815,000 in the previous quarter, was due mainly to increased profitability from the company's white goods distillery products. Fourth-quarter corporate expenses of $8.8 million include the previously mentioned $3.4 million in costs related to the proxy contest and increased severance costs.
For the 12 months of 2013, net sales declined by 3.3% to $323.2 million. The company generated a gross profit margin of 6.6% compared to 7.5% in the prior year period. Loss from operations for the 12 months of 2013 was $5.2 million compared to a loss of $944,000 in the prior year.
Ingredient segment sales for the fourth quarter were $13.9 million, a decrease of 4.6% from the prior year's quarter. Some of the company's specialty products experienced lower volumes during the period. The ingredients segment reported fourth quarter pre-tax operating income of $559,000, or approximately 4% of sales, compared to income of $1.2 million, or approximately 9% of sales, for the same quarter a year ago.
For the 12 months of 2013, ingredient segment sales were $58.9 million, a year-over-year increase of 4.4%. In addition to higher sales of specialty starches, tight market conditions created a temporary selling opportunity for sales of commodity protein. Pre-tax operating income for the year was $4.5 million compared to $5.2 million in the prior period. This was mainly due to higher raw material cost for flour that outpaced pricing increases. Flour costs averaged 14.7% higher per pound over the prior year.
Co-Chief Executive Officers Don Tracy and Randy Schrick commented that while the 25% growth in distillery pre-tax margin in the fourth quarter vs a year ago was satisfactory, the trend in Ingredients was not.
"For the coming year we look for sales growth to be driven by products from our Indiana distillery, including new grain mixtures known as mash bills, and from increased sourcing of alcohol from our joint venture," the CEOs said.