Consolidated sales increased 3% from prior year periodContinued strength across each business segment
ATCHISON, Kan., May 04, 2023 (GLOBE NEWSWIRE) -- MGP Ingredients, Inc. (Nasdaq:MGPI), a leading provider of distilled spirits, branded spirits, and food ingredient solutions, today reported results for the first quarter ended March 31, 2023.
2023 first quarterconsolidated results compared to 2022first quarter
“Our year is off to another strong start, as this quarter’s gross profit and adjusted EBITDA performance represents the second best quarter in Company history, second only to the record first quarter of 2022,” said David Colo, president and CEO of MGP Ingredients. “Sales of brown goods grew 10% from the prior year period to record levels, driven by strong new distillate customer commitments, higher pricing across all brown goods, and stronger than expected customer demand for spot purchases. Within our Branded Spirits segment, revenue grew 2% and we recently realigned our national distribution capabilities with Republic National Distributing Company (“RNDC”) toward the end of the quarter. We believe this realignment with RNDC, as well as continued investment in our premium plus family of spirits brands, continues to position us well for incremental growth and margin expansion opportunities going forward. We are also pleased with the continued strength of our Ingredient Solutions business, which continues to benefit from broader consumer trends that include the shift toward plant-based diets as reflected by the segment’s gross profit and margin performance this quarter.”
Distilling SolutionsIn the first quarter 2023, sales for the Distilling Solutions segment increased 2% to $113.2 million, reflecting a 2% increase in sales of premium beverage alcohol, due to higher brown goods sales. Gross profit decreased to $33.0 million or 29.2% of segment sales, compared to $38.9 million, or 34.9% of segment sales in the first quarter 2022.
Branded SpiritsFor the first quarter 2023, sales for the Branded Spirits segment increased 2% to $56.9 million. Gross profit decreased slightly to $24.6 million, or 43.2% of segment sales compared to $24.8 million, or 44.5% of segment sales in the first quarter 2022.
Ingredient SolutionsIn the first quarter 2023, sales in the Ingredient Solutions segment increased 10% to $30.9 million. Gross profit increased to $12.2 million, or 39.5% of segment sales, compared to $8.1 million, or 29.0% of segment sales in the first quarter 2022.
OtherAdvertising and promotion expenses for the first quarter 2023 increased $2.2 million, or 41%, to $7.7 million as compared to the first quarter 2022.
Corporate selling, general and administrative ("SG&A") expenses for the first quarter 2023 increased $4.3 million, or 26%, to $20.5 million as compared to the first quarter 2022.
The corporate effective tax rate for the first quarter 2023 was 23.7%, compared with 23.0% from the first quarter 2022.
2023 Outlook MGP is confirming the following consolidated guidance for fiscal 2023:
Conference Call and Webcast InformationMGP Ingredients will host a conference call for analysts and institutional investors at 10 a.m. ET today to discuss these results and current business trends. The conference call and webcast will be available via:
Webcast: | ir.mgpingredients.com on the Events & Presentations page | |
Conference Call: | 844-308-6398 (domestic) or 412-717-9605 (international) |
About MGP Ingredients, Inc.MGP Ingredients, Inc. (Nasdaq: MGPI) is a leading producer of premium distilled spirits, branded spirits, and food ingredient solutions. Since 1941, we have combined our expertise and energy aimed at formulating excellence, bringing product ideas to life collaboratively with our customers.
As one of the largest distillers in the U.S., MGP’s offerings include bourbon and rye whiskeys, gins, and vodkas, which are created at the intersection of science and imagination, for customers of all sizes, from crafts to multinational brands. With distilleries in Kentucky, Indiana and Kansas, and bottling operations in Missouri, Ohio, and Northern Ireland, MGP has the infrastructure and expertise to create on any scale.
MGP’s branded spirits portfolio covers a wide spectrum of brands in every segment, including iconic brands from Luxco, which was founded in 1958 by the Lux Family. Luxco is a leading producer, supplier, importer and bottler of beverage alcohol products. Our branded spirits mission is to meet the needs and exceed the expectations of consumers, associates and business partners. Luxco’s award-winning spirits portfolio includes well-known brands from four distilleries: Bardstown, Kentucky-based Lux Row Distillers, home of Ezra Brooks, Rebel, Blood Oath, David Nicholson and Daviess County; Lebanon, Kentucky-based Limestone Branch Distillery, maker of Yellowstone Kentucky Straight Bourbon Whiskey, Minor Case Straight Rye Whiskey and Bowling & Burch Gin; Jalisco, Mexico-based Destiladora González Lux, producer of 100% agave tequilas, El Mayor, Exotico and Dos Primos; and the historic Ross & Squibb Distillery in Lawrenceburg, Indiana, where the Remus Straight Bourbon Whiskey and Rossville Union Straight Rye Whiskey are produced. The innovative and high-quality brand portfolio also includes Everclear Grain Alcohol, Pearl Vodka, Green Hat Gin, Saint Brendan’s Irish Cream, The Quiet Man Irish Whiskey and other well-recognized brands.
In addition, our Ingredient Solutions segment offers specialty proteins and starches that help customers harness the power of plants and provide a host of functional, nutritional, and sensory benefits for a wide range of food products.
The transformation of American grain into something more is in the soul of our people, products, and history. We’re devoted to unlocking the creative potential of this extraordinary resource. For more information, visit mgpingredients.com.
Cautionary Note Regarding Forward-Looking StatementsThe forward-looking statements contained herein include, but are not limited to, statements about the expected effects on MGP Ingredients, Inc. (the "Company," or "MGP") of continuing consumer trends and our announced expansionary projects and the Company's outlook for 2023. Forward looking statements are usually identified by or are associated with such words as “intend,” “plan,” “believe,” “estimate,” “expect,” “anticipate,” "project," "forecast," “hopeful,” “should,” “may,” “will,” “could,” “encouraged,” “opportunities,” “potential,” and/or the negatives or variations of these terms or similar terminology.
These forward-looking statements reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, Company performance, and Company financial results and financial condition and are not guarantees of future performance. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. Important factors that could cause actual results to differ materially from our expectations include:
For further information on these and other risks and uncertainties that may affect our business, including risks specific to our Distilling Solutions, Branded Spirits and Ingredient Solutions segments, see Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2022.
Non-GAAP Financial Measures In addition to reporting financial information in accordance with U.S. GAAP, the Company provides certain non-GAAP financial measures that are not in accordance with, or alternatives for, GAAP. In addition to the comparable GAAP measures, the Company has disclosed adjusted EBITDA, as well as guidance for adjusted EBITDA and adjusted basic EPS. The presentation of these non-GAAP financial measures should be reviewed in conjunction with net income computed in accordance with U.S. GAAP and should not be considered a substitute for the GAAP measure. We believe that the non-GAAP measures provide useful information to investors regarding the Company's performance and overall results of operations. In addition, management uses these non-GAAP measures in conjunction with GAAP measures when evaluating the Company’s operating results compared to prior periods on a consistent basis, assessing financial trends and for forecasting purposes. Non-GAAP financial measures may not provide information that is directly comparable to other companies, even if similar terms are used to identify such measures. The attached schedule provides a full reconciliation of historical adjusted EBITDA to net income, its most directly comparable U.S. GAAP financial measure. Full year 2023 guidance measures of adjusted EBITDA and adjusted basic EPS are provided on a non-GAAP basis without a reconciliation to the most directly comparable GAAP measures because the Company is unable to predict with a reasonable degree of certainty certain items contained in the GAAP measures without unreasonable efforts. Such items include, but are not limited to, acquisition related expenses, restructuring and related expenses, and other items not reflective of MGP’s ongoing operations.
For More InformationInvestors & Analysts:Mike Houston646-475-2998 or investor.relations@mgpingredients.com
Media:Greg Manis913-360-5440 or greg.manis@mgpingredients.com
MGP INGREDIENTS, INC. | ||||||||
OPERATING INCOME ROLLFORWARD | ||||||||
(Dollars in thousands) | ||||||||
Operating income, quarter versus quarter | Operating Income | Change | ||||||
Operating income for the quarter ended March 31, 2022 | $ | 50,080 | ||||||
Decrease in gross profit - Distilling Solutions segment | (5,905 | ) | (12 | ) | pp(a) | |||
Decrease in gross profit - Branded Spirits segment | (189 | ) | — | pp | ||||
Increase in gross profit - Ingredient Solutions segment | 4,097 | 8 | pp | |||||
Increase in advertising and promotion expenses | (2,229 | ) | (4 | ) | pp | |||
Increase in SG&A expenses | (4,295 | ) | (9 | ) | pp | |||
Operating income for the quarter ended March 31, 2023 | $ | 41,559 | (17 | )% |
(a) Percentage points (“pp”).
MGP INGREDIENTS, INC. | ||||||||
EARNINGS PER COMMON SHARE (“EPS”) ROLLFORWARD | ||||||||
Change in basic and diluted EPS, quarter versus quarter | Basic and Diluted EPS | Change | ||||||
Basic and diluted EPS for the quarter ended March 31, 2022 | $ | 1.69 | ||||||
Change in operating income (b) | (0.30 | ) | (18 | ) | pp(a) | |||
Change in interest expense, net (b) | 0.02 | 1 | pp | |||||
Change in weighted average shares outstanding | (0.01 | ) | (1 | ) | pp | |||
Basic EPS for the quarter ended March 31, 2023 | $ | 1.40 | (18 | )% | ||||
Impact of dilutive shares outstanding | (0.01 | ) | (1 | ) | pp | |||
Diluted EPS for the quarter ended March 31, 2023 | $ | 1.39 | (19 | )% |
(a) Percentage points (“pp”).(b) Items are net of tax based on the effective tax rate for the base year (2022).
MGP INGREDIENTS, INC. | |||||||||||||
SALES BY OPERATING SEGMENT | |||||||||||||
(Dollars in thousands) | |||||||||||||
DISTILLING SOLUTIONS SALES | |||||||||||||
Quarter versus Quarter Sales | |||||||||||||
Quarter Ended March 31, | Change Increase/(Decrease) | ||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||
Brown goods | $ | 68,324 | $ | 62,145 | $ | 6,179 | 10 | % | |||||
White goods | 15,954 | 20,086 | (4,132 | ) | (21 | ) | |||||||
Premium beverage alcohol | 84,278 | 82,231 | 2,047 | 2 | |||||||||
Industrial alcohol | 10,439 | 11,495 | (1,056 | ) | (9 | ) | |||||||
Food grade alcohol | 94,717 | 93,726 | 991 | 1 | |||||||||
Fuel grade alcohol | 2,556 | 3,282 | (726 | ) | (22 | ) | |||||||
Distillers feed and related co-products | 9,092 | 8,917 | 175 | 2 | |||||||||
Warehouse services | 6,858 | 5,584 | 1,274 | 23 | |||||||||
Total Distilling Solutions | $ | 113,223 | $ | 111,509 | $ | 1,714 | 2 | % | |||||
BRANDED SPIRITS SALES | |||||||||||||
Quarter versus Quarter Sales | |||||||||||||
Quarter Ended March 31, | Change Increase/(Decrease) | ||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||
Ultra premium | $ | 9,115 | $ | 12,597 | $ | (3,482 | ) | (28 | )% | ||||
Super premium | 2,847 | 2,946 | (99 | ) | (3 | ) | |||||||
Premium | 6,784 | 6,140 | 644 | 10 | |||||||||
Premium plus | 18,746 | 21,683 | (2,937 | ) | (14 | ) | |||||||
Mid | 20,835 | 19,273 | 1,562 | 8 | |||||||||
Value | 13,421 | 11,299 | 2,122 | 19 | |||||||||
Other | 3,881 | 3,496 | 385 | 11 | |||||||||
Total Branded Spirits | $ | 56,883 | $ | 55,751 | $ | 1,132 | 2 | % |
INGREDIENT SOLUTIONS SALES | |||||||||||||
Quarter versus Quarter Sales | |||||||||||||
Quarter Ended March 31, | Change Increase / (Decrease) | ||||||||||||
2023 | 2022 | $ Change | % Change | ||||||||||
Specialty wheat starches | $ | 14,686 | $ | 15,203 | $ | (517 | ) | (3 | )% | ||||
Specialty wheat proteins | 11,890 | 9,419 | 2,471 | 26 | |||||||||
Commodity wheat starches | 3,807 | 3,353 | 454 | 14 | |||||||||
Commodity wheat proteins | 521 | — | 521 | N/A | |||||||||
Total Ingredient Solutions | $ | 30,904 | $ | 27,975 | $ | 2,929 | 10 | % | |||||
MGP INGREDIENTS, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||||||||
(Dollars in thousands, except share and per share amounts) | ||||||||
Quarter Ended March 31, | ||||||||
2023 | 2022 | |||||||
Sales | $ | 201,010 | $ | 195,235 | ||||
Cost of sales | 131,186 | 123,414 | ||||||
Gross profit | 69,824 | 71,821 | ||||||
Advertising and promotion expenses | 7,733 | 5,504 | ||||||
Selling, general, and administrative expenses | 20,532 | 16,237 | ||||||
Operating income | 41,559 | 50,080 | ||||||
Interest expense, net | (995 | ) | (1,598 | ) | ||||
Other income (expense), net | 123 | 54 | ||||||
Income before income taxes | 40,687 | 48,536 | ||||||
Income tax expense | 9,655 | 11,165 | ||||||
Net income | 31,032 | 37,371 | ||||||
Net loss attributable to noncontrolling interest | 39 | 66 | ||||||
Net income attributable to MGP Ingredients, Inc. | 31,071 | 37,437 | ||||||
Income attributable to participating securities | (311 | ) | (318 | ) | ||||
Net income used in earnings per common share calculation | $ | 30,760 | $ | 37,119 | ||||
Weighted average common shares | ||||||||
Basic | 22,040,224 | 21,989,100 | ||||||
Diluted | 22,072,271 | 21,989,100 | ||||||
Earnings per common share | ||||||||
Basic | $ | 1.40 | $ | 1.69 | ||||
Diluted | $ | 1.39 | $ | 1.69 |
MGP INGREDIENTS, INC. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||
(Dollars in thousands) | |||||||
March 31, 2023 | December 31, 2022 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 31,728 | $ | 47,889 | |||
Receivables, net | 128,611 | 109,267 | |||||
Inventory | 308,558 | 289,722 | |||||
Prepaid expenses | 6,542 | 2,957 | |||||
Refundable income taxes | — | 4,327 | |||||
Total Current Assets | 475,439 | 454,162 | |||||
Property, plant, and equipment | 461,069 | 450,800 | |||||
Less accumulated depreciation and amortization | (220,100 | ) | (215,168 | ) | |||
Property, Plant, and Equipment, net | 240,969 | 235,632 | |||||
Operating lease right-of-use assets, net | 14,698 | 15,042 | |||||
Investment in joint ventures | 5,274 | 5,534 | |||||
Intangible assets, net | 216,250 | 216,768 | |||||
Goodwill | 226,294 | 226,294 | |||||
Other assets | 5,262 | 4,779 | |||||
TOTAL ASSETS | $ | 1,184,186 | $ | 1,158,211 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Current maturities of long-term debt | $ | 6,400 | $ | 5,600 | |||
Accounts payable | 66,755 | 66,432 | |||||
Federal and state excise taxes payable | 7,388 | 4,627 | |||||
Income taxes payable | 4,716 | — | |||||
Accrued expenses and other | 17,056 | 28,716 | |||||
Total Current Liabilities | 102,315 | 105,375 | |||||
Long-term debt, less current maturities | 27,914 | 29,510 | |||||
Convertible senior notes | 195,305 | 195,225 | |||||
Long-term operating lease liabilities | 11,252 | 11,622 | |||||
Other noncurrent liabilities | 3,768 | 3,723 | |||||
Deferred income taxes | 67,685 | 67,112 | |||||
Total Liabilities | 408,239 | 412,567 | |||||
Total equity | 775,947 | 745,644 | |||||
TOTAL LIABILITIES AND TOTAL EQUITY | $ | 1,184,186 | $ | 1,158,211 |
MGP INGREDIENTS, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||
(Dollars in thousands) | ||||||||
Quarter to Date Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cash Flows from Operating Activities | ||||||||
Net income | $ | 31,032 | $ | 37,371 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 5,171 | 5,621 | ||||||
Share-based compensation | 1,215 | 1,373 | ||||||
Equity method investment loss (income) | 260 | (394 | ) | |||||
Deferred income taxes, including change in valuation allowance | 573 | 347 | ||||||
Other, net | 99 | 24 | ||||||
Changes in operating assets and liabilities: | ||||||||
Receivables, net | (19,227 | ) | (9,601 | ) | ||||
Inventory | (18,707 | ) | (13,696 | ) | ||||
Prepaid expenses | (3,578 | ) | 657 | |||||
Income taxes payable (refundable) | 9,043 | 5,437 | ||||||
Accounts payable | 6,498 | 4,638 | ||||||
Accrued expenses and other | (10,208 | ) | (8,896 | ) | ||||
Federal and state excise taxes payable | 2,761 | (515 | ) | |||||
Other, net | 89 | (136 | ) | |||||
Net cash provided by operating activities | 5,021 | 22,230 | ||||||
Cash Flows from Investing Activities | ||||||||
Additions to property, plant, and equipment | (16,237 | ) | (10,642 | ) | ||||
Contributions to equity method investment | — | (1,028 | ) | |||||
Other, net | (708 | ) | (363 | ) | ||||
Net cash used in investing activities | (16,945 | ) | (12,033 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Payment of dividends and dividend equivalents | (2,669 | ) | (2,661 | ) | ||||
Purchase of treasury stock | (801 | ) | (714 | ) | ||||
Principal payments on long-term debt | (800 | ) | (807 | ) | ||||
Net cash used in financing activities | (4,270 | ) | (4,182 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 33 | (288 | ) | |||||
Increase (decrease) in cash and cash equivalents | (16,161 | ) | 5,727 | |||||
Cash and cash equivalents, beginning of period | 47,889 | 21,568 | ||||||
Cash and cash equivalents, end of period | $ | 31,728 | $ | 27,295 |
MGP INGREDIENTS, INC. | |||||||
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (UNAUDITED) | |||||||
(in thousands) | |||||||
Quarter Ended March 31, | |||||||
2023 | 2022 | ||||||
Net Income | $ | 31,032 | $ | 37,371 | |||
Interest expense | 995 | 1,598 | |||||
Income tax expense | 9,655 | 11,165 | |||||
Depreciation and amortization | 5,171 | 5,621 | |||||
Equity method investment loss (income) | 260 | (394 | ) | ||||
Adjusted EBITDA | $ | 47,113 | $ | 55,361 |
The non-GAAP adjusted EBITDA measure is defined as earnings before interest expense, income tax expense, depreciation and amortization, and equity method investment loss (income).
MGP INGREDIENTS, INC. | |||||||
DILUTIVE SHARES OUTSTANDING CALCULATION (UNAUDITED) | |||||||
Quarter Ended March 31, | |||||||
2023 | 2022 | ||||||
Principal amount of the bonds | $ | 201,250,000 | $ | 201,250,000 | |||
Par value | $ | 1,000 | $ | 1,000 | |||
Number of bonds outstanding (a) | 201,250 | 201,250 | |||||
Initial conversion rate | 10.3911 | 10.3911 | |||||
Conversion price | $ | 96.23620 | $ | 96.23620 | |||
Average share price (b) | $ | 97.73393 | $ | 80.54661 | |||
Impact of conversion (c) | $ | 204,382,062 | $ | — | |||
Cash paid for principal | (201,250,000 | ) | (201,250,000 | ) | |||
Conversion premium | $ | 3,132,062 | $ | — | |||
Average share price | $ | 97.73393 | $ | 80.54661 | |||
Conversion premium in shares (d) (e) | 32,047 | — |
(a) Number of bonds outstanding is calculated by taking the principal amount of the bonds divided by the par value.
(b) Average share price is calculated by taking the average of the daily closing share price for the period. If the average share price is less than the conversion price of $96.23620 per share, the impact to EPS is anti-dilutive and therefore the shares were excluded from the diluted EPS calculation.
(c) Impact of conversion is calculated by taking the number of bonds outstanding multiplied by the initial conversion rate multiplied by the average share price. If the average share price is less than the conversion price then the impact of conversion is zero.
(d) The impacts of the Convertible Senior Notes were included in the diluted weighted average common shares outstanding if the impact was dilutive. The Convertible Senior Notes would only have a dilutive impact if the average market price per share during the quarter and year to date period exceeds the conversion price of $96.23620 per share. For the quarter ended March 31, 2023, the inclusion of the shares had a dilutive impact and were included in the diluted EPS calculation. There was no dilutive impact for the quarter ended March 31, 2022.
(e) Conversion premium in shares is calculated by taking the conversion premium divided by the average share price. If the average share price is less than the conversion price, then the conversion premium in shares is zero.
Source: MGP Ingredients