ATCHISON, KANSAS, U.S. — A 6% sales gain in specialty wheat starches helped MGP Ingredients, Inc. to offset sales drops in other ingredient areas in the fiscal year ended Dec. 31, 2015.
The Atchison, Kansas, U.S.-based company on March 10 posted net income of $26.19 million, equal to $1.48 per share on the common stock, for the fiscal year, which was up 11% from $23.67 million, or $1.32 per share, in the previous fiscal year. Net sales of $327.6 million were up 4.5% from $313.4 million in the previous fiscal year.
Within the company’s Ingredient Solutions segment, sales of specialty wheat starches in fiscal year 2015 increased to $29.98 million from $28.21 million. Overall segment sales were $57.37 million, up 0.9% from $56.84 million despite sales drops of 1% for specialty wheat proteins, 10% for commodity wheat starch and 11% for commodity wheat proteins.
“Our Ingredients Solutions segment had a very strong year overall, but slower growth rates in the second half indicate that realizing the long-term potential for this segment may occur at a slower pace,” said Gus Griffin, president and chief executive officer of MGP Ingredients.
Ingredient Solutions recorded gross profit of $7.87 million, up 29% from $6.09 million in the previous fiscal year. Gross margin for 2015 was 13.7%, which compared with 10.7% for 2014, primarily due to the shift in product sales mix to higher value specialty products, a decrease in the cost of raw materials and energy, and lower production costs.
In the fourth quarter for Ingredient Solutions, gross profit was $600,000, which compared with $1.8 million in the previous year’s fourth quarter, and net sales were $12.8 million, a 7% decrease from the previous year’s fourth quarter.
In Distillery Products, net sales of $270.22 million were up 5.3% from $256.56 million in the previous fiscal year. Gross profit of $50.66 million was more than double the gross profit of $22.33 million in Distillery Products in the previous fiscal year.
In the fourth quarter, MGP Ingredients companywide had net income of $6.47 million, or 38¢ per share, which was down 4% from $6.77 million, or 38¢ per share, in the fourth quarter of the previous year. The fourth quarter of 2014 included an insurance settlement gain of $7.1 million. Fourth-quarter net sales rose 7% to $81.5 million from $80.32 million.
In 2016 MGP Ingredients expects net sales percentage growth to be in the high single digits. Operating income over the next three years is expected to increase by a compound annual growth rate in the 10% to 15% range.
“The initial phase of our strategy has gone much faster than we anticipated, both in terms of producing financial results and the pace of implementation of key strategic initiatives,” Griffin said. “While we realized many of the immediate opportunities in 2015, we are very confident that we are building a strong team and making the necessary investments to enable us to deliver against our longer term potential.”
“As our business grows, there will be some inherent quarter-to-quarter volatility due to product and customer mix, but we believe that sustained long-term growth will be the underlying trend,” he said.