MGP Ingredients, Inc. (Nasdaq: MGPI), a
leading provider of branded and distilled spirits as well as food
ingredient solutions, today reported results for the first quarter
ended March 31, 2024.
2024 first
quarter consolidated results compared to
2023 first
quarter:
- Due to the Atchison distillery
closure, sales decreased 15% to $170.6 million. Excluding the
impact of the Atchison distillery in both periods, consolidated
sales were in line with the prior year period.
- As expected, gross profit decreased
10% to $62.8 million, representing 36.8% of sales. Excluding the
impact of the Atchison distillery in the current period, gross
margin was 37.3%.
- Operating income decreased 30% to
$28.9 million. Adjusted operating income decreased 19% to $33.6
million.
- Net income decreased 34% to $20.6
million. Adjusted net income decreased 22% to $24.2 million.
- Adjusted EBITDA decreased 17% to
$40.2 million.
- Basic earnings per common share
(“EPS”) decreased to $0.92 per share from $1.40 per share. Adjusted
basic EPS decreased to $1.07 per share from $1.40 per share.
- Diluted EPS decreased to $0.92 per
share from $1.39 per share. Adjusted diluted EPS decreased to $1.07
per share from $1.39 per share.
“Given our previously communicated outlook for the first quarter
of the year, we are pleased with the results, and remain optimistic
regarding our business throughout the remainder of the year,” said
David Bratcher, CEO and president of MGP Ingredients. “Within our
Branded Spirits segment, we remain confident in our premiumization
strategy, as we saw continued sales growth in our premium plus
portfolio, which was up 12% year over year. Our Distilling
Solutions business continues to make progress towards our long-term
strategy of being brown goods focused with the successful closure
of the Atchison white goods facility. Lastly, our Ingredient
Solutions business achieved record sales this quarter as demand for
our specialty ingredients remains strong.”
Distilling SolutionsIn the
first quarter 2024, as expected, sales for the Distilling Solutions
segment decreased 25% to $84.9 million. Excluding the impact of the
Atchison distillery in both periods, sales increased 2% to $83.6
million during the first quarter of 2024. Gross profit increased to
$34.1 million, or 40.2% of segment sales, compared to $33.0
million, or 29.2% of segment sales in the first quarter 2023.
Excluding the impact of the Atchison distillery in the current
period, segment gross margin was 41.2% in the first quarter
2024.
Branded SpiritsFor the first quarter 2024,
sales for the Branded Spirits segment decreased 12% to $50.1
million, due to expected sales declines in mid and value price tier
brands. Sales of the premium plus price tier spirit brands grew
12%. Gross profit decreased to $22.5 million, or 44.9% of segment
sales compared to $24.6 million, or 43.2% of segment sales in the
first quarter 2023.
Ingredient SolutionsIn the first quarter 2024,
sales for the Ingredient Solutions segment increased 15% to $35.6
million. Gross profit decreased to $6.2 million, or 17.4% of
segment sales, compared to $12.2 million, or 39.5% of segment sales
in the first quarter 2023. Excluding the impact of the Atchison
distillery in both periods, gross profit decreased to $6.2 million,
or 17.4% of segment sales, compared to $10.4 million, or 33.6% of
segment sales in the first quarter 2023.
OtherAdvertising and promotion expenses for the
first quarter 2024 increased $1.0 million, or 12%, to $8.7 million
as compared to the first quarter 2023.
Corporate selling, general, and administrative (“SG&A”)
expenses for the first quarter 2024 increased 2% to $21.0 million
as compared to the first quarter 2023.
During the first quarter 2024, the change in fair value of the
contingent consideration totaled $4.1 million related to the
Penelope acquisition.
The corporate effective tax rate for the first quarter 2024 was
23.3%, compared with 23.7% from the year ago period.
2024 Outlook MGP is confirming the following
consolidated guidance for fiscal 2024:
- Sales are projected to be in the range of $742 million to $756
million, following the closure of the Company's Atchison, Kansas
distillery in December 2023.
- Adjusted EBITDA is expected to be in the range of $218 million
to $222 million, inclusive of the add back of share-based
compensation expense.
- Adjusted basic earnings per common share are forecasted to be
in the $6.12 to $6.23 range, with basic weighted average shares
outstanding expected to be approximately 22.3 million at year
end.
"Looking to the remainder of the year, we remain confident in
both the business and our long-term strategy and will continue to
invest in initiatives we believe will provide our shareholders with
enhanced value,” concluded Bratcher.
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 branded and
distilled spirits, as well as 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 and Indiana, 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 Penelope Bourbon, 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
Statements This press release may contain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including without limitation statements about
optimism regarding the business of MGP Ingredients, Inc. (the
“Company” or “MGP”); its premiumization strategy, business, and
long-term strategy; its ability to enhance shareholder value; and
the Company’s 2024 outlook, including its expectations for sales,
adjusted EBITDA, adjusted basic earnings per common share (“EPS”),
and shares outstanding. Forward looking statements are usually
identified by or are associated with words such as “intend,”
“plan,” “believe,” “estimate,” “expect,” “anticipate,” “project,”
“forecast,” “hopeful,” “should,” “may,” “will,” “could,”
“encouraged,” “opportunities,” “potential,” and similar
terminology. These forward-looking statements reflect management’s
current beliefs and estimates of future economic circumstances,
industry conditions, Company performance, Company financial
results, and Company financial condition and are not guarantees of
future performance.
All forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially.
Factors that could cause actual results to differ materially from
our expectations include without limitation any effects of changes
in consumer preferences and purchases and our ability to anticipate
or react to those changes; our ability to compete effectively;
damage to our reputation or that of any of our key customers or
their brands; failure to introduce successful new brands and
products or have effective marketing or advertising; changes in
public opinion about alcohol or our products; our reliance on our
distributors to distribute our branded spirits; our reliance on
fewer, more profitable customer relationships; interruptions in our
operations or a catastrophic event at our facilities; decisions
concerning the quantity of maturing stock of our aged distillate;
warehouse expansion issues; our reliance on a limited number of
suppliers; our reliance on a limited number of suppliers; work
disruptions or stoppages; climate change and measures to address
climate change; our closure of our Atchison, Kansas distillery;
regulation and taxation and compliance with existing or future laws
and regulations; tariffs, trade relations, and trade policies;
excise taxes, incentives and customs duties; our ability to protect
our intellectual property rights and defend against alleged
intellectual property rights infringement claims; failure to secure
and maintain listings in control states; labeling or warning
requirements or limitations on the availability of our products;
product recalls or other product liability claims; anti-corruption
laws, trade sanctions and restrictions; class action or other
litigation; higher costs or the unavailability and cost of raw
materials, product ingredients, energy resources, or labor; failure
of our information technology systems, networks, processes,
associated sites, or service providers; acquisitions and potential
future acquisitions; interest rate increases; reliance on key
personnel; commercial, political, and financial risks; covenants
and other provisions in our credit arrangements; pandemics or other
health crises; ability to pay any dividends; limited rights of
common stockholders and antitakeover provisions in our governing
documents; the impact of issuing shares of our common stock; and
the effectiveness or execution of our strategic plan. For further
information on these risks and uncertainties and other factors that
could affect the Company’s business, see the “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” sections of the Company’s Annual Report on
Form 10-K for the year ended December 31, 2023 and its Quarterly
Report on Form 10-Q for the quarter ended March 31, 2024, as well
as the Company’s other SEC filings. The Company undertakes no
obligation to update any forward-looking statements or information
in this press release, except as required by law.
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
operating income, adjusted income before income taxes, adjusted net
income, adjusted MGP earnings, adjusted EBITDA and adjusted basic
and diluted EPS, 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 operating income,
income before income taxes, net income, net income used in earnings
per common share calculation, and basic and diluted EPS 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
schedules provide a full reconciliation of historical non-GAAP
financial measures to the most directly comparable U.S. GAAP
financial measure. Full year 2024 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 without
limitation, acquisition related expenses, restructuring and related
expenses, and other items not reflective of the Company's ongoing
operations.
For More Information
Investors & 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, 2023 |
|
$ |
41,559 |
|
|
|
|
Decrease in gross profit -
Ingredient Solutions segment |
|
|
(6,023 |
) |
|
(15 |
)% |
|
Decrease in gross profit - Branded Spirits segment |
|
|
(2,061 |
) |
|
(5 |
) |
pp(a) |
Increase in gross profit -
Distilling Solutions segment |
|
|
1,055 |
|
|
3 |
|
pp |
Increase in advertising and
promotion expenses |
|
|
(950 |
) |
|
(2 |
) |
pp |
Increase in SG&A
expenses |
|
|
(447 |
) |
|
(1 |
) |
pp |
Impairment of long-lived
assets and other |
|
|
(116 |
) |
|
— |
|
pp |
Change in fair value of
contingent consideration |
|
|
(4,100 |
) |
|
(10 |
) |
pp |
Operating income for
the quarter ended March 31, 2024 |
|
$ |
28,917 |
|
|
(30 |
)% |
|
(a) |
|
Percentage
points (“pp”). |
|
|
|
MGP INGREDIENTS, INC.EARNINGS PER
COMMON SHARE (“EPS”) ROLLFORWARD
Change in EPS, quarter versus quarter |
|
EPS |
|
Change |
|
Basic EPS for the quarter ended March 31, 2023 |
|
$ |
1.40 |
|
|
|
|
Change in operating income
(b) |
|
|
(0.44 |
) |
|
(31 |
)% |
|
Change in other income (expense), net(b) |
|
|
(0.01 |
) |
|
(1 |
) |
pp(a) |
Change in interest expense,
net (b) |
|
|
(0.04 |
) |
|
(3 |
) |
pp |
Change in effective tax
rate |
|
|
0.01 |
|
|
1 |
|
pp |
Basic and Diluted EPS
for the quarter ended March 31, 2024 |
|
$ |
0.92 |
|
|
(34 |
)% |
|
(a) |
|
Percentage
points (“pp”). |
(b) |
|
Items are net
of tax based on the effective tax rate for the base year
(2023). |
|
|
|
MGP INGREDIENTS, INC.SALES BY OPERATING
SEGMENT(Dollars in thousands)
|
DISTILLING SOLUTIONS SALES |
|
|
Quarter Ended March 31, |
|
Quarter versus Quarter SalesChange
Increase/(Decrease) |
|
|
|
2024 |
|
|
2023 |
|
$ Change |
|
% Change |
|
Brown goods |
$ |
66,331 |
|
$ |
68,324 |
|
$ |
(1,993 |
) |
|
(3 |
)% |
|
Warehouse services |
|
7,956 |
|
|
6,858 |
|
|
1,098 |
|
|
16 |
|
|
White goods and other
co-products |
|
10,565 |
|
|
38,041 |
|
|
(27,476 |
) |
|
(72 |
) |
|
Total Distilling Solutions |
$ |
84,852 |
|
$ |
113,223 |
|
$ |
(28,371 |
) |
|
(25 |
)% |
|
|
|
|
|
|
|
|
|
|
|
BRANDED SPIRITS SALES |
|
|
Quarter Ended March 31, |
|
Quarter versus Quarter SalesChange
Increase/(Decrease) |
|
|
|
2024 |
|
|
2023 |
|
$ Change |
|
% Change |
|
Premium plus |
|
20,906 |
|
|
18,746 |
|
|
2,160 |
|
|
12 |
% |
|
Mid |
|
14,761 |
|
|
20,835 |
|
|
(6,074 |
) |
|
(29 |
) |
|
Value |
|
10,009 |
|
|
13,421 |
|
|
(3,412 |
) |
|
(25 |
) |
|
Other |
|
4,470 |
|
|
3,881 |
|
|
589 |
|
|
15 |
|
|
Total Branded Spirits |
$ |
50,146 |
|
$ |
56,883 |
|
$ |
(6,737 |
) |
|
(12 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INGREDIENT SOLUTIONS SALES |
|
|
Quarter Ended March 31, |
|
Quarter versus Quarter SalesChange Increase /
(Decrease) |
|
|
|
2024 |
|
|
2023 |
|
$ Change |
|
% Change |
|
Specialty wheat starches |
$ |
22,271 |
|
$ |
14,686 |
|
$ |
7,585 |
|
|
52 |
% |
|
Specialty wheat proteins |
|
9,995 |
|
|
11,890 |
|
|
(1,895 |
) |
|
(16 |
) |
|
Commodity wheat starches |
|
3,262 |
|
|
3,807 |
|
|
(545 |
) |
|
(14 |
) |
|
Commodity wheat proteins |
|
37 |
|
|
521 |
|
|
(484 |
) |
|
(93 |
) |
|
Total Ingredient Solutions |
$ |
35,565 |
|
$ |
30,904 |
|
$ |
4,661 |
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
MGP INGREDIENTS, INC.CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)(Dollars in thousands, except share and
per share amounts)
|
|
Quarter Ended March 31, |
|
|
|
2024 |
|
|
|
2023 |
|
Sales |
|
$ |
170,563 |
|
|
$ |
201,010 |
|
Cost of sales |
|
|
107,768 |
|
|
|
131,186 |
|
Gross profit |
|
|
62,795 |
|
|
|
69,824 |
|
|
|
|
|
|
Advertising and promotion
expenses |
|
|
8,683 |
|
|
|
7,733 |
|
Selling, general, and
administrative expenses |
|
|
20,979 |
|
|
|
20,532 |
|
Impairment of long-lived
assets and other |
|
|
116 |
|
|
|
— |
|
Change in fair value of
contingent consideration |
|
|
4,100 |
|
|
|
— |
|
Operating income |
|
|
28,917 |
|
|
|
41,559 |
|
|
|
|
|
|
Interest expense, net |
|
|
(2,019 |
) |
|
|
(995 |
) |
Other income (expense),
net |
|
|
(52 |
) |
|
|
123 |
|
Income before income taxes |
|
|
26,846 |
|
|
|
40,687 |
|
|
|
|
|
|
Income tax expense |
|
|
6,262 |
|
|
|
9,655 |
|
Net income |
|
|
20,584 |
|
|
|
31,032 |
|
|
|
|
|
|
Net loss attributable to
noncontrolling interest |
|
|
51 |
|
|
|
39 |
|
Net income attributable to MGP Ingredients,
Inc. |
|
|
20,635 |
|
|
|
31,071 |
|
|
|
|
|
|
Income attributable to
participating securities |
|
|
(239 |
) |
|
|
(311 |
) |
Net income used in earnings per common share
calculation |
|
$ |
20,396 |
|
|
$ |
30,760 |
|
|
|
|
|
|
Weighted average
common shares |
|
|
|
|
Basic |
|
|
22,142,277 |
|
|
|
22,040,224 |
|
Diluted |
|
|
22,142,277 |
|
|
|
22,072,271 |
|
|
|
|
|
|
Earnings per common
share |
|
|
|
|
Basic |
|
$ |
0.92 |
|
|
$ |
1.40 |
|
Diluted |
|
$ |
0.92 |
|
|
$ |
1.39 |
|
|
|
|
|
|
|
|
|
|
MGP INGREDIENTS, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)(Dollars in
thousands)
|
March 31, 2024 |
|
December 31, 2023 |
ASSETS |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
19,497 |
|
|
$ |
18,388 |
|
Receivables, net |
|
133,005 |
|
|
|
144,286 |
|
Inventory |
|
348,934 |
|
|
|
346,853 |
|
Prepaid expenses |
|
5,483 |
|
|
|
3,580 |
|
Refundable income taxes |
|
— |
|
|
|
1,190 |
|
Total Current Assets |
|
506,919 |
|
|
|
514,297 |
|
|
|
|
|
Property, plant, and
equipment |
|
502,744 |
|
|
|
489,646 |
|
Less accumulated depreciation
and amortization |
|
(231,849 |
) |
|
|
(227,343 |
) |
Property, Plant, and Equipment, net |
|
270,895 |
|
|
|
262,303 |
|
Operating lease right-of-use
assets, net |
|
11,258 |
|
|
|
13,975 |
|
Investment in joint
ventures |
|
4,901 |
|
|
|
5,197 |
|
Intangible assets, net |
|
270,893 |
|
|
|
271,706 |
|
Goodwill |
|
321,544 |
|
|
|
321,544 |
|
Other assets |
|
3,872 |
|
|
|
3,326 |
|
TOTAL ASSETS |
$ |
1,390,282 |
|
|
$ |
1,392,348 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current Liabilities: |
|
|
|
Current maturities of long-term debt |
$ |
6,400 |
|
|
$ |
6,400 |
|
Accounts payable |
|
49,559 |
|
|
|
73,594 |
|
Federal and state excise taxes payable |
|
3,800 |
|
|
|
2,251 |
|
Income taxes payable |
|
4,340 |
|
|
|
— |
|
Accrued expenses and other |
|
16,159 |
|
|
|
31,861 |
|
Total Current Liabilities |
|
80,258 |
|
|
|
114,106 |
|
|
|
|
|
Long-term debt, less current
maturities |
|
98,799 |
|
|
|
85,305 |
|
Convertible senior notes |
|
195,624 |
|
|
|
195,544 |
|
Long-term operating lease
liabilities |
|
9,229 |
|
|
|
11,292 |
|
Contingent consideration |
|
73,300 |
|
|
|
69,200 |
|
Other noncurrent
liabilities |
|
3,813 |
|
|
|
4,763 |
|
Deferred income taxes |
|
63,716 |
|
|
|
63,071 |
|
Total Liabilities |
|
524,739 |
|
|
|
543,281 |
|
Total equity |
|
865,543 |
|
|
|
849,067 |
|
TOTAL LIABILITIES AND TOTAL EQUITY |
$ |
1,390,282 |
|
|
$ |
1,392,348 |
|
|
|
|
|
|
|
|
|
MGP INGREDIENTS, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)(Dollars in
thousands)
|
|
Quarter to Date Ended March 31, |
|
|
|
2024 |
|
|
|
2023 |
|
Cash Flows from Operating
Activities |
|
|
|
|
Net income |
|
$ |
20,584 |
|
|
$ |
31,032 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
5,289 |
|
|
|
5,171 |
|
Share-based compensation |
|
|
1,116 |
|
|
|
1,215 |
|
Equity method investment loss |
|
|
296 |
|
|
|
260 |
|
Deferred income taxes, including change in valuation allowance |
|
|
645 |
|
|
|
573 |
|
Change in fair value of contingent consideration |
|
|
4,100 |
|
|
|
— |
|
Other, net |
|
|
157 |
|
|
|
99 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Receivables, net |
|
|
11,257 |
|
|
|
(19,227 |
) |
Inventory |
|
|
(2,119 |
) |
|
|
(18,707 |
) |
Prepaid expenses |
|
|
(1,904 |
) |
|
|
(3,578 |
) |
Income taxes payable (refundable) |
|
|
5,530 |
|
|
|
9,043 |
|
Accounts payable |
|
|
(10,207 |
) |
|
|
6,498 |
|
Accrued expenses and other |
|
|
(10,380 |
) |
|
|
(10,208 |
) |
Federal and state excise taxes payable |
|
|
1,548 |
|
|
|
2,761 |
|
Other, net |
|
|
(1,289 |
) |
|
|
89 |
|
Net cash provided by operating activities |
|
|
24,623 |
|
|
|
5,021 |
|
|
|
|
|
|
Cash Flows from Investing
Activities |
|
|
|
|
Additions to property, plant, and equipment |
|
|
(27,026 |
) |
|
|
(16,237 |
) |
Other, net |
|
|
(240 |
) |
|
|
(708 |
) |
Net cash used in investing activities |
|
|
(27,266 |
) |
|
|
(16,945 |
) |
|
|
|
|
|
Cash Flows from Financing
Activities |
|
|
|
|
Payment of dividends and dividend equivalents |
|
|
(2,672 |
) |
|
|
(2,669 |
) |
Repurchase of Common Stock |
|
|
(6,961 |
) |
|
|
(801 |
) |
Proceeds from long-term debt |
|
|
30,000 |
|
|
|
— |
|
Principal payments on long-term debt |
|
|
(16,600 |
) |
|
|
(800 |
) |
Net cash provided by (used in) financing
activities |
|
|
3,767 |
|
|
|
(4,270 |
) |
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
|
(15 |
) |
|
|
33 |
|
Increase (decrease) in cash
and cash equivalents |
|
|
1,109 |
|
|
|
(16,161 |
) |
Cash and cash equivalents,
beginning of period |
|
|
18,388 |
|
|
|
47,889 |
|
Cash and cash equivalents, end
of period |
|
$ |
19,497 |
|
|
$ |
31,728 |
|
|
|
|
|
|
|
|
|
|
MGP INGREDIENTS, INC.RECONCILIATION OF
SELECTED GAAP MEASURES TO ADJUSTED NON-GAAP MEASURES
(UNAUDITED)(in thousands)
|
Quarter Ended March 31, 2024 |
|
OperatingIncome |
|
Income beforeIncome Taxes |
|
NetIncome(b) |
|
MGPEarnings(a) |
|
BasicEPS |
|
DilutedEPS |
Reported GAAP Results |
$ |
28,917 |
|
$ |
26,846 |
|
$ |
20,584 |
|
$ |
20,396 |
|
$ |
0.92 |
|
$ |
0.92 |
Adjusted to remove: |
|
|
|
|
|
|
|
|
|
|
|
Impairment of long-lived assets and other (c) |
|
116 |
|
|
116 |
|
|
89 |
|
|
89 |
|
|
— |
|
|
— |
Fair value of contingent consideration(d) |
|
4,100 |
|
|
4,100 |
|
|
3,145 |
|
|
3,145 |
|
|
0.14 |
|
|
0.14 |
Business acquisition costs (e) |
|
71 |
|
|
71 |
|
|
55 |
|
|
55 |
|
|
— |
|
|
— |
CEO transition costs (f) |
|
375 |
|
|
375 |
|
|
288 |
|
|
288 |
|
|
0.01 |
|
|
0.01 |
Adjusted Non-GAAP
results |
$ |
33,579 |
|
$ |
31,508 |
|
$ |
24,161 |
|
$ |
23,973 |
|
$ |
1.07 |
|
$ |
1.07 |
|
Quarter Ended March 31, 2024 |
|
OperatingIncome |
|
Income beforeIncome Taxes |
|
NetIncome(b) |
|
MGPEarnings(a) |
|
BasicEPS |
|
DilutedEPS |
Reported GAAP Results |
$ |
41,559 |
|
$ |
40,687 |
|
$ |
31,032 |
|
$ |
30,760 |
|
$ |
1.40 |
|
$ |
1.39 |
Adjusted to remove: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No adjustments for the period |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
Adjusted Non-GAAP results |
$ |
41,559 |
|
$ |
40,687 |
|
$ |
31,032 |
|
$ |
30,760 |
|
$ |
1.40 |
|
$ |
1.39 |
(a) |
|
MGP Earnings is defined as "Net income used in Earnings Per Common
Share calculation." |
(b) |
|
The tax rate used for
non-GAAP items for the quarter ended March 31, 2024 was 23.3%. |
(c) |
|
The impairment of long-lived
assets and other relates to miscellaneous expenses incurred during
the quarter ended March 31, 2024 in connection with the closure of
the Atchison Distillery. Impairment of long-lived assets and other
are included in the Condensed Consolidated Statement of Income as a
component of operating income and relates to the Distilling
Solutions segment. |
(d) |
|
Fair value of contingent
consideration relates to the quarterly adjustment of the contingent
consideration liability related to the acquisition of Penelope
Bourbon LLC. It is included in the Condensed Consolidated Statement
of Income as a component of operating income and relates to the
Branded Spirits segment. |
(e) |
|
Business acquisition costs are
included in the Condensed Consolidated Statement of Income within
the selling, general, and administrative line item and include
transaction and integration costs associated with the acquisition
of Penelope Bourbon LLC. |
(f) |
|
The CEO transition costs are
included in the Condensed Consolidated Statement of Income within
the selling, general, and administrative line item. The adjustment
includes additional employee related costs in connection with the
transition of the CEO position. |
|
|
|
MGP INGREDIENTS, INC.RECONCILIATION OF
NET INCOME TO ADJUSTED EBITDA (UNAUDITED)(in
thousands)
|
Quarter Ended March 31, |
|
|
2024 |
|
|
2023 |
Net Income |
$ |
20,584 |
|
$ |
31,032 |
Interest expense |
|
2,019 |
|
|
995 |
Income tax expense |
|
6,262 |
|
|
9,655 |
Depreciation and amortization |
|
5,289 |
|
|
5,171 |
Share based compensation |
|
1,116 |
|
|
1,215 |
Equity method investment loss |
|
296 |
|
|
260 |
Impairment of long-lived assets and other |
|
116 |
|
|
— |
Fair value of contingent consideration |
|
4,100 |
|
|
— |
Business acquisition costs |
|
71 |
|
|
— |
CEO transition costs |
|
375 |
|
|
— |
Adjusted EBITDA |
$ |
40,228 |
|
$ |
48,328 |
|
|
|
|
|
|
The non-GAAP adjusted EBITDA measure is defined as earnings
before interest expense, income tax expense, depreciation and
amortization, share based compensation, equity method investment
loss, impairment of long-lived assets and other, fair value of
contingent consideration, business acquisition costs, and CEO
transaction costs. See "Reconciliation of selected GAAP measure to
adjusted non-GAAP measures" for further details.
MGP INGREDIENTS, INC.DILUTIVE SHARES
OUTSTANDING CALCULATION (UNAUDITED)
|
Quarter Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
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) |
$ |
86.65639 |
|
|
$ |
97.73393 |
|
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 |
$ |
86.65639 |
|
|
$ |
97.73393 |
|
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 to date period exceeds
the conversion price of $96.23620 per share. |
(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. |
|
|
|
MGP INGREDIENTS, INC.Impact of the
Closure of the Atchison DistillerySegment
Operating Results and Pro-Forma ResultsQuarter
Ended March 31, 2024(UNAUDITED) (in thousands)
|
Distilling Solutions |
|
|
Quarter Ended March 31, 2024 |
|
Increase/(Decrease) |
|
|
As Reported(a) |
|
Pro-Forma(b) |
|
$ Change |
|
% Change |
|
Brown goods |
$ |
66,331 |
|
|
$ |
66,331 |
|
|
$ |
— |
|
|
— |
% |
|
Warehouse services |
|
7,956 |
|
|
|
7,956 |
|
|
|
— |
|
|
— |
|
|
White goods and other
co-products |
$ |
10,565 |
|
|
$ |
9,318 |
|
|
|
(1,247 |
) |
|
(12 |
) |
|
Total Sales |
$ |
84,852 |
|
|
$ |
83,605 |
|
|
$ |
(1,247 |
) |
|
(1 |
)% |
|
|
|
|
|
|
|
|
|
|
Gross
profit |
$ |
34,083 |
|
|
$ |
34,474 |
|
|
$ |
391 |
|
|
1 |
% |
|
Gross margin
% |
|
40.2 |
% |
|
|
41.2 |
% |
|
|
|
1.0 |
|
pp(c) |
|
Ingredient Solutions |
|
|
Quarter Ended March 31, 2024 |
|
Increase/(Decrease) |
|
|
As Reported(a) |
|
Pro-Forma(b) |
|
$ Change |
|
% Change |
|
Specialty wheat starches |
$ |
22,271 |
|
|
$ |
22,271 |
|
|
$ |
— |
|
— |
% |
|
Specialty wheat proteins |
|
9,995 |
|
|
|
9,995 |
|
|
|
— |
|
— |
|
|
Commodity wheat starches |
|
3,262 |
|
|
|
3,262 |
|
|
|
— |
|
— |
|
|
Commodity wheat proteins |
|
37 |
|
|
|
37 |
|
|
|
— |
|
— |
|
|
Total Sales |
$ |
35,565 |
|
|
$ |
35,565 |
|
|
$ |
— |
|
— |
% |
|
|
|
|
|
|
|
|
|
|
Gross
profit |
$ |
6,180 |
|
|
$ |
6,180 |
|
|
$ |
— |
(d) |
— |
% |
|
Gross margin
% |
|
17.4 |
% |
|
|
17.4 |
% |
|
|
|
— |
|
pp(c) |
|
Consolidated |
|
|
Quarter Ended March 31, 2024 |
|
Increase/(Decrease) |
|
|
As Reported(a) |
|
Pro-Forma(b) |
|
$ Change |
|
% Change |
|
Sales |
$ |
170,563 |
|
|
$ |
169,316 |
|
|
$ |
(1,247 |
) |
|
(1 |
)% |
|
Gross profit |
$ |
62,795 |
|
|
$ |
63,186 |
|
|
$ |
391 |
|
|
1 |
% |
|
Gross margin
% |
|
36.8 |
% |
|
|
37.3 |
% |
|
|
|
0.5 |
|
pp(c) |
(a) |
|
Represents actual results of the Company for the quarter ended
March 31, 2024, as reported in the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2024. |
(b) |
|
Represents the Company's results
for the quarter ended March 31, 2024 excluding results associated
with the Company's Atchison, Kansas distillery. These are pro-forma
unaudited financial results. In some circumstances, white goods,
industrial alcohol, fuel grade alcohol, and at times certain
co-products are produced at the Company's Lawrenceburg, Indiana
distillery. The results of the Branded Spirits segment for the
quarter ended March 31, 2024 would not have been impacted by a
closure of the Atchison, Kansas distillery. |
(c) |
|
Percentage points (“pp”). |
(d) |
|
There was no reduction in gross
profit for the Ingredient Solutions segment as the Company is no
longer receiving an intercompany credit for the waste starch slurry
by-product since the closure of the distillery in Atchison Kansas
during December 2023. |
|
|
|
MGP INGREDIENTS, INC.Impact of the
Closure of the Atchison DistillerySegment
Operating Results and Pro-Forma ResultsQuarter
Ended March 31, 2023(UNAUDITED) (in thousands)
|
Distilling Solutions |
|
|
Quarter Ended March 31, 2023 |
|
Increase/(Decrease) |
|
|
As Reported(a) |
|
Pro-Forma(b) |
|
$ Change |
|
% Change |
|
Brown Goods |
$ |
68,324 |
|
|
$ |
68,324 |
|
|
$ |
— |
|
|
— |
% |
|
Warehouse services |
|
6,858 |
|
|
|
6,858 |
|
|
|
— |
|
|
— |
|
|
White goods and other
co-products |
|
38,041 |
|
|
|
6,621 |
|
|
|
(31,420 |
) |
|
(83 |
) |
|
Total Sales |
$ |
113,223 |
|
|
$ |
81,803 |
|
|
$ |
(31,420 |
) |
|
(28 |
)% |
|
|
|
|
|
|
|
|
|
|
Gross
profit |
$ |
33,028 |
|
|
$ |
34,858 |
|
|
$ |
1,830 |
|
|
6 |
% |
|
Gross margin
% |
|
29.2 |
% |
|
|
42.6 |
% |
|
|
|
13.4 |
|
pp(c) |
|
Ingredient Solutions |
|
|
Quarter Ended March 31, 2023 |
|
Increase/(Decrease) |
|
|
As Reported(a) |
|
Pro-Forma(b) |
|
$ Change |
|
% Change |
|
Specialty wheat starches |
$ |
14,686 |
|
|
$ |
14,686 |
|
|
$ |
— |
|
|
— |
% |
|
Specialty wheat proteins |
|
11,890 |
|
|
|
11,890 |
|
|
|
— |
|
|
— |
|
|
Commodity wheat starches |
|
3,807 |
|
|
|
3,807 |
|
|
|
— |
|
|
— |
|
|
Commodity wheat proteins |
|
521 |
|
|
|
521 |
|
|
|
— |
|
|
— |
|
|
Total Sales |
$ |
30,904 |
|
|
$ |
30,904 |
|
|
$ |
— |
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
Gross
profit |
$ |
12,203 |
|
|
$ |
10,392 |
|
|
$ |
(1,811 |
) |
(d) |
(15 |
)% |
|
Gross margin
% |
|
39.5 |
% |
|
|
33.6 |
% |
|
|
|
(5.9 |
) |
pp(c) |
|
Consolidated |
|
|
Quarter Ended March 31, 2023 |
|
Increase/(Decrease) |
|
|
As Reported(a) |
|
Pro-Forma(b) |
|
$ Change |
|
% Change |
|
Sales |
$ |
201,010 |
|
|
$ |
169,590 |
|
|
$ |
(31,420 |
) |
|
(16 |
)% |
|
Gross
profit |
$ |
69,824 |
|
|
$ |
69,843 |
|
|
$ |
19 |
|
|
— |
% |
|
Gross margin
% |
|
34.7 |
% |
|
|
41.2 |
% |
|
|
|
6.5 |
|
pp(c) |
(a) |
|
Represents actual results of the Company for the quarter ended
March 31, 2023, as reported in the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2023. |
(b) |
|
Represents the Company's results
for the quarter ended March 31, 2023 excluding results associated
with the Company's Atchison, Kansas distillery. These are pro-forma
unaudited financial results. In some circumstances, white goods,
industrial alcohol, fuel grade alcohol, and at times certain
co-products are produced at the Company's Lawrenceburg, Indiana
distillery. The pro-forma financial results assume the loss of the
waste starch slurry credit and no gain or loss on the disposal. The
results of the Branded Spirits segment for the quarter ended March
31, 2023 would not have been impacted by a closure of the Atchison,
Kansas distillery. |
(c) |
|
Percentage points (“pp”). |
(d) |
|
The reduction in gross profit for
the Ingredient Solutions segment is the result of increased cost of
goods sold from no longer receiving an intercompany credit for the
waste starch slurry by-product purchased by the adjoined Atchison,
Kansas distillery. The value of the intercompany credit is derived
from the value of corn which has fluctuated over time. |
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