MGP Ingredients (MGPI) Misses Q2 EPS by 5c, Revenues Miss

MGP Ingredients (NASDAQ: MGPI) reported Q2 EPS of $0.44, $0.05 worse than the analyst estimate of $0.49. Revenue for the quarter came in at $88.3 million versus the consensus estimate of $90.55 million.

2018 second quarter results compared to 2017 second quarter results

• Consolidated net sales increased 2.9% to $88.3 million, reflecting growth in both the Distillery Products and Ingredient Solutions segments.
• Consolidated gross profit increased 3.3% to $19.4 million from $18.8 million, driven by gross profit growth in the Distillery Products segment, partially offset by a decline in the Ingredient Solutions segment.
• Consolidated operating income increased to $11.1 million from $10.5 million, up 5.9% from the prior-year quarter, primarily driven by the gross profit growth.
• Consolidated net income increased 18.2% to $7.5 million.
• Earnings per share increased 18.9% to $0.44 per share from $0.37 per share in the prior-year quarter, driven by improved performance from operations and the absence of an equity method investment loss from ICP, which was divested on July 3, 2017, as well as a lower effective tax rate.

“While the overall American Whiskey category continues to be robust, we experienced some temporary softness in the first half, as a few existing customers delayed or reduced orders due to having previously purchased adequate inventory to meet their near-term needs,” said Gus Griffin, president and CEO of MGP Ingredients. “We continue to expect that our focus on attracting new customers, as well as our strong partnerships with existing customers, will result in stronger revenue growth in the second half of the year, and we are reaffirming our guidance for the year. In addition, we remain very pleased with our progress against all parts of our strategic plan and are continuing to invest for growth.”

“Despite the lower growth rate reflected in our year-to-date results, we remain pleased with our progress and the sustained strength of the categories in which we compete,” Griffin added. “We continue to invest to take full advantage of these key consumer trends and are now pleased to announce that based on continued strong demand for our premium American Whiskeys, we are making significant additional capital investments in our barrel warehouse program. Our projected investment in this program has been increased to approximately $51.8 million in capital expenditures, up from approximately $33.8 million. This increased investment will enable us to meet the long-term storage needs of both our new distillate customers and our own aging whiskey inventory. Our investment in aged whiskey inventory continues to grow, and has now reached $73.0 million, at cost. A portion of the sizable increase in our inventory from last quarter reflects stronger anticipated sales of our premium American Whiskey products in the second half of the year.

“We continue to be pleased with the positive momentum we have experienced on our brands initiative - in particular, our recently launched Rossville Union Rye Whiskey. For the remainder of the year, our focus will be on increasing distribution and velocity in our existing markets,” concluded Griffin.

For earnings history and earnings-related data on MGP Ingredients (MGPI) click here.

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