Ingredient solutions help spur profit gain at MGPI

by Eric Schroeder
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MGP Ingredients
Net income at MGP Ingredients increased 35% in fiscal 2017.

ATCHISON, KAS. — Net income at MGP Ingredients, Inc. increased 35% in the fiscal year ended Dec. 31, 2017, climbing to $40,827,000, equal to $2.44 per share on the common stock, from $30,230,000, or $1.82 per share, in fiscal 2016. Net sales for the full year also increased, rising 9% to $347,448,000 from $318,263,000.

During the fourth quarter, net income totaled $12,364,000, or 74c per share, up 54% from $8,031,000, or 48c per share, in the same period a year ago. Net sales were $88,193,000, up from $81,145,000.

Gus Griffin, MGP Ingredients
August Griffin, president and c.e.o. of MGP Ingredients

“2017 marked the third full year of the implementation of our strategic plan,” August C. Griffin, president and chief executive officer, said during a March 2 conference call with analysts. “We continue to build on the strong foundation we’ve established, and we are very pleased with the results for this quarter and the year as they underscore this continued progress against our long-term strategic goals. Both of our business segments showed strong growth over the prior year, driving operating income growth that was consistent with our guidance.”

Gross profit in the Ingredient Solutions segment increased to $9.2 million in fiscal 2017, up from $8.4 million in fiscal 2016, while sales increased 6.5% to $56.4 million. During the fourth quarter, gross profit in the segment totaled $1.8 million, up from $1.6 million in the same period a year ago. Net sales during the quarter increased nearly 8% to $14.2 million.

“Gross margins expanded 40 basis points, supported by higher net sales in both our specialty wheat protein and specialty wheat starch businesses,” Mr. Griffin said. “We take a long-term view on the growth of our businesses, identifying strong macro consumer trends and making the appropriate investments of time and capital to leverage those trends. The growth of our specialty ingredients products this year reflect that approach. We knew the patent on our Fibersym specialty wheat starch product would expire last year, and we took actions to strengthen our position in the market and build upon the strong partnerships with our customers. These actions ensured we’d be able to continue to benefit from the increase in consumer interest and enhanced dietary fiber.

“As a result, we saw a strong growth in that business. Similarly, we invested the time and funds to reestablish and build our textured wheat protein business to maximize the potential offered by the increased consumer interest in plant-based proteins. As a result, sales of our TruTex specialty wheat protein product more than doubled in 2017. We are very pleased with this progress and excited about the potential for this key growth platform.”

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