MGP Ingredients, who supply premium distilled spirits and specialty wheat proteins and starches, has reported results for the third quarter ended September 30, 2016.
MGP Ingredients, who supply premium distilled spirits and specialty wheat proteins and starches, has reported results for the third quarter ended September 30, 2016.Consolidated net sales decreased 0.5% to $79.9 million as strong increases in net sales of premium beverage alcohol were more than offset by a sales decline in lower margin industrial alcohol. Consolidated gross profit increased 27.5% to $15.1 million, reflecting stronger profit performance in both the Distillery Products and Ingredient Solutions segments. Consolidated gross margin increased 4.1 percentage points to 18.9%. Operating income increased 81.1% to $11.5 million, while net income increased 40.8% to $9.5 million.“We are pleased with the third quarter results,” said Gus Griffin, president and CEO of MGP. “Our focus continues to be on implementation of our long-term strategic plan and this performance reflects our continued progress against that plan.”"Our Ingredient Solutions segment showed solid improvement. We expect pricing headwinds to continue as we work to strengthen our position against long-term macro consumer trends."MGP provided revised guidance for 2016. The 2016 net sales percentage growth projection has been revised downward to reflect year-to-date sales declines. Operating income is expected to increase by a compound annual growth rate in the ten to fifteen percent range through fiscal 2018. 2016 net sales are expected to decline in the low-single digits on a percentage basis. 2016 gross margin gains are expected to be moderate following strong 2015 improvement. "While we may experience continued volatility in our quarterly results, we remain focused on our long-term strategy," said Griffin. "The distilled spirits industry overall continues to show strong growth, driven by the robust bourbon category. To take full advantage of these trends, we have introduced new gin formulations, further expanded our whiskey warehouse expansion plan, and continued to invest in aggressively laying down whiskey. During the third quarter, we added $4.7 million to our inventory of aging whiskey, which now totals $45 million.”"We continue to make steady progress in the development of our own portfolio of premium brands. We have expanded distribution for Till American Wheat Vodka beyond Kansas and Missouri to include Iowa and Indiana and the overall customer response has been very positive.”