UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 9, 2012
MGP Ingredients, Inc.
(Exact name of registrant as specified in its charter)
Kansas | 0-17196 | 48-0531200 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
100 Commercial Street Box 130 Atchison, Kansas 66002 |
(Address of principal executive offices) (Zip Code) |
(913) 367-1480
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |
||
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On May 9, 2012 MGP Ingredients, Inc. (the "Company") issued a press release, incorporated into this Item 2.02 by reference, relating to financial results for the first quarter of 2012, which ended March 31, 2012. The press release, dated May 9, 2012 is furnished pursuant to Item 2.02, "Results of Operations and Financial Condition," Item 7.01, "Regulation FD Disclosure" and Item 9.01, "Financial Statements and Exhibits."
Item 7.01. Regulation FD Disclosure.
Attached as Exhibit 99.1, and incorporated into this Item 7.01 by reference, is a press release relating to the Company's financial results for the first quarter of 2012, which ended March 31, 2012.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
99.1 Press Release dated May 9, 2012, furnished solely for the purpose of incorporation by reference into Items 2.02, 7.01 and 9.01.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
MGP Ingredients, Inc. |
||
Date: May 9, 2012 | By: | /s/ TIMOTHY W. NEWKIRK Timothy W. Newkirk President and Chief Executive Officer |
INDEX TO EXHIBITS
99.1 Press Release dated May 9, 2012, furnished solely for the purpose of incorporation by reference into Items 2.02, 7.01 and 9.01.
EXHIBIT 99.1
Highlights
ATCHISON, Kan., May 9, 2012 (GLOBE NEWSWIRE) -- MGP Ingredients, Inc.(Nasdaq:MGPI) today reported financial results for the first quarter ended March 31, 2012. In August 2011, the Company changed its fiscal year end to December 31 from June 30. As a result, the new fiscal year covers the period from January 1, 2012, through December 31, 2012.
Net income for the three-month period ended March 31, 2012, includes a $4.0 million gain on the previously announced sale of 20 percent of the Company's interest in the Illinois Corn Processing joint venture. The Company's ingredient solutions segment showed greatly improved profitability from both the prior-year period and the linked quarter. This was partially offset by lower pre-tax income in distillery products, in which the Company experienced a swing in earnings with a $0.8 million unfavorable impact on earnings related to the accounting for open commodity contracts compared to a $1.5 million favorable impact for the prior-year period. Also in the current quarter, the Company recorded initial sales, including premium bourbon and whiskeys, from its recently-acquired distillery in Lawrenceburg, Ind. Operational improvements are underway at the facility under new leadership, complemented by a stronger sales and marketing team.
"We're making great progress in terms of a higher value sales mix, thanks in part to the addition of premium bourbons and whiskeys to our product portfolio," said Tim Newkirk, president and chief executive officer. "However, we aren't satisfied with our ability to generate consistently higher profit margins. During the quarter, we entered a grain supply contract for the Indiana distillery and amended the grain supply agreement for our Atchison facility that now permits us to secure corn for delivery up to 12 months in the future at fixed prices. This marks a significant change from past purchase and hedging practices for corn, our most important largest ingredient. We implemented strategic sourcing for wheat flour several years ago. By partnering with world-class corn suppliers, we have taken a major step toward better managing our corn volatility. This will be especially important as we grow our businesses in an environment of stubbornly high commodity prices."
For the first quarter ended March 31, 2012, the Company reported net income of $1.8 million, or $0.10 per diluted share, compared with net income of $700,000, or $0.04 per diluted share, in the prior-year period. Gross profit in the first quarter was $5.5 million on net sales of $86.3 million compared with gross profit of $6.5 million in the prior-year period on net sales of $64.1 million. Gross profit margin was adversely impacted from the production shutdown in December 2011, but operations showed sequential monthly improvement in this year's first quarter. The Company did not gain the full benefit of its new corn sourcing agreement during the quarter because it was finalized in the last month of the period. First quarter 2012 operating income was also impacted by one-time costs related to the commencement of production at LDI, as well as reorganization expenses.
Distillery Products Segment Review
Ingredient Solutions Segment Review
Other Segment Review
Newkirk concluded, "We've made significant changes at MGPI over the years in terms of our product portfolio, our cost structure and our business processes. As a result, we are generating profitable sales in the face of near-record commodity costs, compared with significant losses during the last period in which prices approached these levels. However, this is only a starting point. With initiatives like our new raw materials strategy and the addition of higher value beverages from our newly-acquired Indiana distillery, we are working to improve profitability in subsequent quarters."
About MGP Ingredients
In business since 1941, MGP Ingredients, Inc. has pioneered food science innovation and the production of value-added, grain-based starches, proteins and food-grade alcohol products for the branded packaged goods industry. The Company has facilities in Atchison, Kansas, Onaga, Kansas, and its newest facility in the adjoining towns of Lawrenceburg and Greendale, Indiana. Each is dedicated to utilizing the latest technologies to assure the highest quality products and superior customer service. For more information, visit www.mgpingredients.com.
Cautionary Note Regarding Forward-Looking Statements
This news release contains forward-looking statements as well as historical information. Forward-looking statements are usually identified by or are associated with such words as "intend," "plan," "believe," "estimate," "expect," "anticipate," "hopeful," "should," "may," "will," "could," "encouraged," "opportunities," "potential" and/or the negatives of these terms or variations of them or similar terminology. They reflect management's current beliefs and estimates of future economic circumstances, industry conditions, Company performance and financial results 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 statement. Investors should not place undue reliance upon forward-looking statements and the Company undertakes no obligation to publicly update or revise any forward-looking statements. Important factors that could cause actual results to differ materially from our expectations include, among others: (i) disruptions in operations at our Atchison facility, (ii) the availability and cost of grain and fluctuations in energy costs, (iii) the effectiveness of our hedging strategy, (iv) the competitive environment and related market conditions, (v) the ability to effectively pass raw material price increases on to customers, (vi) the ability to effectively operate the Illinois Corn Processing, LLC ("ICP") joint venture, (vii) our ability to maintain compliance with all applicable loan agreement covenants, (viii) our ability to realize operating efficiencies, (ix) and actions of governments, (x) consumer tastes and preferences. For further information on these and other risks and uncertainties that may affect the Company's business, see Item 1A. Risk Factors in Part II of the Company's Transition Report on Form 10-K for the six-month period ended December 31, 2011.
MGP INGREDIENTS, INC. | ||
CONSOLIDATED STATEMENTS OF INCOME | ||
(unaudited) | Quarter Ended | |
(Dollars in thousands, except per share) | Mar. 31, 2012 | Mar. 31, 2011 |
Gross Sales | $ 88,430 | $ 64,211 |
Less Excise Taxes | 2,086 | 23 |
Net Sales | $ 86,344 | $ 64,188 |
Cost of Sales | 80,765 | 57,669 |
Gross Profit | $ 5,579 | $ 6,519 |
Selling, General and Administrative Expenses | $ 7,748 | $ 5,690 |
Other operating costs | 74 | -- |
Income (loss) from Operations | $ (2,243) | $ 829 |
Gain on Joint Venture Interest | 4,055 | -- |
Other Income, Net | 2 | 3 |
Interest Expense | (255) | (92) |
Equity in earnings of joint ventures | 437 | 124 |
Income Before Income Taxes | $ 1,996 | $ 864 |
Provision for Income Taxes | 120 | 163 |
Net Income | $ 1,876 | $ 701 |
Other Comprehensive Income | 173 | 17 |
Comprehensive Income | $ 2,049 | $ 718 |
Basic Earnings Per Common Share | $ 0.10 | $ 0.04 |
Diluted Earnings Per Common Share | $ 0.10 | $ 0.04 |
Weighted average shares outstanding – Basic | 16,916,304 | 16,711,938 |
Weighted average shares outstanding – Diluted | 16,919,308 | 16,732,812 |
CONSOLIDATED BALANCE SHEET (UNAUDITED) | |||||
(Dollars in thousands) | Mar. 31, 2012 | Dec. 31, 2011 | (Dollars in thousands) | Mar. 31, 2012 | Dec. 31, 2011 |
ASSETS | LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current Assets: | Current Liabilities: | ||||
Cash and cash equivalents | $ -- | $ 383 | Current maturities on long-term debt | $ 1,684 | $ 1,670 |
Restricted cash | 6,151 | 7,605 | Revolving credit facility | 21,792 | 21,142 |
Receivables | 35,788 | 27,804 | Accounts payable | 20,970 | 22,704 |
Inventory | 34,318 | 31,082 | Accounts payable to affiliate, net | 4,787 | 6,167 |
Prepaid expenses | 1,367 | 958 | Accrued expenses | 5,841 | 4,023 |
Deposits | -- | -- | Derivative Liabilities | 3,165 | 3,465 |
Deferred income taxes | 6,802 | 6,056 | Total Current Liabilities | $ 58,239 | $ 59,171 |
Refundable income taxes | 446 | 566 | Other Liabilities: | ||
Derivative Assets | -- | 1,304 | Long-term debt, less current maturities | 6,425 | 6,852 |
Assets held for sale | -- | 2,300 | Deferred credit | 4,045 | 4,195 |
Total Current Assets | $ 84,872 | $ 78,058 | Accrued retirement, health and life insurance benefits | 6,415 | 6,309 |
Property and equipment, at cost | 186,036 | 185,386 | Other non-current liabilities | 1,744 | 2,144 |
Less accumulated depreciation | (111,143) | (108,307) | Noncurrent deferred income taxes | 6,802 | 6,056 |
Net property, plant and | Total Other Liabilities | $ 25,431 | $ 25,556 | ||
equipment | $ 74,893 | $ 77,079 | Total Liabilities | $ 83,670 | $ 84,727 |
Investment in unconsolidated subsidiary | 8,049 | 12,147 | Stockholders' Equity | 85,918 | 84,430 |
Other assets | 1,774 | 1,873 | TOTAL LIABILITIES AND | ||
TOTAL ASSETS | $ 169,588 | $ 169,157 | STOCKHOLDERS' EQUITY | $ 169,588 | $ 169,157 |
Capital Structure | |||||
Net Investment in: | |||||
Cash and cash equivalents | $ -- | $ 383 | |||
Financed By: | |||||
Working capital | $ 26,633 | $ 18,887 | Long-term debt* | $ 6,425 | $ 6,852 |
Property, plant and equipment | 74,893 | 77,079 | Deferred liabilities | 19,006 | 18,704 |
Other non-current assets | 9,823 | 14,020 | Stockholders' equity | 85,918 | 84,430 |
Total | $ 111,349 | $ 109,986 | Total | $ 111,349 | $ 109,986 |
*Excludes short-term portion. Short- term portion is included within working capital. |
CONTACT: Marta Myers, 913-367-1480