Higher volumes drive income gains at MGP Ingredients

by Eric Schroeder
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ATCHISON, KAS. — Net income at MGP Ingredients, Inc. in the first quarter ended March 31 increased to $4,785,000, equal to 26c per share on the common stock, up sharply from $1,477,000, or 8c per share, in the same period a year ago. Last year’s results included a profit of $1.4 million from discontinued operations and zero earnings from continuing operations.

Net sales fell 9% to $78,996,000 from $86,404,000.

In the company’s Ingredients Solutions segment, operating income totaled $299,000, down 81% from $1,572,000 a year ago. Net sales for the quarter fell 9% to $14,064,000 from $15,402,000.

“Net sales for specialty wheat proteins for the quarter ended March 31, 2014, decreased $842,000 compared to the quarter ended March 31, 2013, due to a volume decrease along with flat average pricing,” MGPI noted in a May 8 filing with the Securities and Exchange Commission. “Specialty wheat starches saw a $368,000 decrease in net sales compared to the same period a year ago due to lower pricing partially offset by an increase in volume. Commodity wheat starch saw a 7.1% increase in net sales compared to the same period a year ago due to a volume increase partially offset by a decrease in per unit pricing.

“While we experienced a quarter-versus-quarter increase in our commodity products as a percentage of total segment net sales, our focus remains on the production and commercialization of specialty ingredients.  Our return on net sales decreased from 10.2% for the quarter ended March 31, 2013, to 2.1% for the quarter ended March 31, 2014. This decrease was driven primarily by mix of sales during the quarter ended March 31, 2014, compared to the quarter ended March 31, 2013.

“While the ingredients solutions segment as a whole experienced a 7.6% quarter-versus-quarter decrease in average pricing, we saw a decrease in the per-pound cost of flour, which averaged 10.9% lower than the quarter ended March 31, 2013. On the other hand, the per-million cubic foot cost of natural gas increases by 8% compared to the quarter ended March 31, 2013.”
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