KANSAS | 0-17196 | 45-4082531 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
MGP INGREDIENTS, INC. | ||
Date: August 3, 2016 | By: | /s/ Thomas K. Pigott |
Thomas K. Pigott, Vice President and Chief Financial Officer |
• | Consolidated net sales decreased 5.8% to $80.4 million as increases in net sales of premium beverage alcohol were more than offset by a sales decline in lower margin products. |
• | Consolidated gross profit decreased 11.4% to $15.5 million, primarily reflecting lower profit performance in the Ingredients Solutions segment. |
• | Consolidated gross margin decreased 1.2 percentage points to 19.3%. |
• | Operating income decreased 4.0% to $9.1 million. |
• | Equity in joint venture earnings decreased 65.1% to $1.1 million. |
• | Net income decreased 19.9% to $6.3 million. |
• | Earnings per share decreased 15.9% to $0.37. |
• | Operating income is expected to increase by a compound annual growth rate in the ten to fifteen percent range over the next three years. |
• | 2016 net sales percentage growth is expected to be in the low-single digits. |
• | 2016 gross margin gains are expected to be moderate following strong 2015 improvement. |
• | 2016 effective tax rate is forecast to be 34% and shares outstanding are expected to be approximately 16.7 million, reflecting the benefit of the 2015 share repurchase. |
• | Due to challenging and volatile conditions in the fuel ethanol market, ICP's 2015 level of profitability may not be sustainable in 2016. |
Basic and Diluted EPS | Change | |||||||
Basic and diluted earnings per share for the quarter ended June 30, 2015 | $ | 0.44 | ||||||
Change in operations(a) | (0.02 | ) | (4.5 | ) | pp(b) | |||
Change in equity method investments(a) | (0.07 | ) | (15.9 | ) | pp | |||
Change in interest expense(a) | (0.01 | ) | (2.3 | ) | pp | |||
Change in weighted average shares outstanding(c) | 0.02 | 4.5 | pp | |||||
Change in effective tax rate | 0.01 | 2.3 | pp | |||||
Basic and diluted earnings per share for the quarter ended June 30, 2016 | $ | 0.37 | (15.9 | )% |
(a) | Changes are net of tax based on the effective tax rate for each base year. |
(b) | Percentage points ("pp"). |
(c) | Weighted average shares outstanding change primarily due to the vesting of employee restricted stock units, the granting of common stock to directors, the purchase of vested stock by the company from employees to pay withholding taxes, and repurchases by the company of common stock. |
Basic and Diluted EPS | Change | |||||||
Basic and diluted earnings per share for the quarter ended June 30, 2015 | $ | 0.72 | ||||||
Change in operations(a) | 0.12 | 16.7 | pp(b) | |||||
Change in equity method investments(a) | (0.10 | ) | (13.9 | ) | pp | |||
Change in interest expense(a) | (0.01 | ) | (1.4 | ) | pp | |||
Change in weighted average shares outstanding(c) | 0.03 | 4.2 | pp | |||||
Change in effective tax rate | 0.01 | 1.4 | pp | |||||
Basic and diluted earnings per share for the quarter ended June 30, 2016 | $ | 0.77 | 7.0 | % |
(a) | Changes are net of tax based on the effective tax rate for each base year. |
(b) | Percentage points ("pp"). |
(c) | Weighted average shares outstanding change primarily due to the vesting of employee restricted stock units, the granting of common stock to directors, the purchase of vested stock by the company from employees to pay withholding taxes, and repurchases by the company of common stock. |
Quarter Ended | Year to Date Ended | |||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||
Sales | $ | 82,174 | $ | 92,071 | $ | 159,365 | $ | 176,935 | ||||||||
Less: excise taxes | 1,782 | 6,717 | 2,138 | 11,168 | ||||||||||||
Net sales | 80,392 | 85,354 | 157,227 | 165,767 | ||||||||||||
Cost of sales | 64,861 | 67,826 | 124,650 | 134,851 | ||||||||||||
Gross profit | 15,531 | 17,528 | 32,577 | 30,916 | ||||||||||||
Selling, general and administrative expenses | 6,404 | 8,025 | 12,725 | 14,505 | ||||||||||||
Operating income | 9,127 | 9,503 | 19,852 | 16,411 | ||||||||||||
Equity method investment earnings | 1,079 | 3,096 | 1,596 | 4,448 | ||||||||||||
Interest expense, net | (328 | ) | (129 | ) | (639 | ) | (260 | ) | ||||||||
Income before income taxes | 9,878 | 12,470 | 20,809 | 20,599 | ||||||||||||
Income tax expense | 3,570 | 4,599 | 7,442 | 7,658 | ||||||||||||
Net income | 6,308 | 7,871 | 13,367 | 12,941 | ||||||||||||
Other comprehensive income (loss), net of tax | (21 | ) | 330 | (38 | ) | 258 | ||||||||||
Comprehensive income | $ | 6,287 | $ | 8,201 | $ | 13,329 | $ | 13,199 | ||||||||
Basic and diluted earnings per share(a) | $ | 0.37 | $ | 0.44 | $ | 0.77 | $ | 0.72 | ||||||||
Dividends and dividend equivalents per common share | $ | — | $ | — | $ | 0.08 | $ | 0.06 |
(a) | Share information: | Quarter Ended | Year to Date Ended | ||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | ||||||||||
Basic weighted average common shares | 16,617,857 | 17,400,359 | 16,612,416 | 17,398,022 | |||||||||
Incremental shares from potential dilutive securities | — | 795 | — | 755 | |||||||||
Diluted weighted average common shares | 16,617,857 | 17,401,154 | 16,612,416 | 17,398,777 |
(Dollars in thousands) | June 30, 2016 | December 31, 2015 | (Dollars in thousands) | June 30, 2016 | December 31, 2015 | |||||||||||
ASSETS | LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||
Current Assets: | Current Liabilities: | |||||||||||||||
Cash and cash equivalents | $ | 1,554 | $ | 747 | Current maturities of long-term debt | $ | 4,352 | $ | 3,345 | |||||||
Receivables | 33,998 | 30,670 | Accounts payable | 20,982 | 20,940 | |||||||||||
Inventory | 71,595 | 58,701 | Accounts payable to affiliate, net | 2,487 | 2,291 | |||||||||||
Prepaid expenses | 792 | 1,062 | Accrued expenses | 7,101 | 10,400 | |||||||||||
Income taxes payable | 742 | 685 | ||||||||||||||
Total Current Assets | 107,939 | 91,180 | Total Current Liabilities | 35,664 | 37,661 | |||||||||||
Other Liabilities: | ||||||||||||||||
Long-term debt, less current maturities | 18,399 | 7,579 | ||||||||||||||
Revolving credit facility | 18,618 | 22,536 | ||||||||||||||
Property and equipment | 238,150 | 229,914 | Deferred credit | 3,054 | 3,402 | |||||||||||
Less accumulated depreciation and amortization | (152,180 | ) | (146,360 | ) | Accrued retirement, health and life insurance benefits | 4,045 | 4,136 | |||||||||
Net Property, Plant | Deferred income taxes | 2,008 | 2,757 | |||||||||||||
and Equipment | 85,970 | 83,554 | Other non current liabilities | 81 | 79 | |||||||||||
Equity method investments | 16,856 | 18,563 | Total Liabilities | 81,869 | 78,150 | |||||||||||
Other assets | 934 | 1,013 | Stockholders’ equity | 129,830 | 116,160 | |||||||||||
TOTAL ASSETS | $ | 211,699 | $ | 194,310 | TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 211,699 | $ | 194,310 |
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