ATCHISON, KAN. — Net income at MGP Ingredients, Inc. soared 137% in the second quarter ended June 30, rising to $19.99 million, equal to 91¢ per share on the common stock, up from $8.43 million, or 50¢ per share, in the same period a year ago. Net sales also increased, rising 89% to $174.94 million from $92.56 million.
“We experienced record results across each of our business segments this quarter, including the solid sales growth of aged whiskey, better-than-anticipated growth for our branded spirits segment, strong sales for our white beverage products as well as record results in both revenue and gross profit for our Ingredient Solutions segment,” David J. Colo, president and chief executive officer, said during an Aug. 4 conference call with analysts. “Each of our business segments showed top-line growth over the prior year. And as a result, our consolidated sales and profitability for the quarter achieved record levels.”
Gross profit in the Ingredient Solutions segment increased to $6.4 million in the second quarter of fiscal 2021, up 36% from $4.7 million in the second quarter of fiscal 2020, while sales increased 39% to $24.2 million.
“Specialty wheat starch sales grew 38.1% this quarter, while our specialty wheat protein sales grew 38.9%, both primarily driven by increased volume,” Mr. Colo said. “We feel very good about the robust private pipeline for these products as well as our recently rebranded ProTerra line of textured proteins and remain confident that they will drive long-term growth for this segment.
“We believe our diverse customer base and product offering continue to be aligned with strong consumer trends and remain encouraged by the robust gross margins as a result of our strategy to focus production and sales mix on our highest margin products.”
In the question-and-answer portion of the call, Mr. Colo noted that last year’s results in the Ingredient Solutions segment included a cybersecurity event that hit MGPI, affecting the company’s ability to produce ingredients for about 10 days in the second quarter of fiscal 2020. As a result, he said the company does not anticipate a continuation of the 39% year-over-year sales growth that occurred in the segment.
“It’s not a sustainable number quarter-after-quarter in ingredients,” he explained. “It’d be more in line with kind of what we’ve talked about on some previous calls, that we do think this business is going to continue to grow, but it’s certainly not going to be at those growth rates over the long haul.”
Looking ahead to the remainder of fiscal 2021, Brandon M. Gall, vice president of finance and chief financial officer, said MGPI expects full-year sales to be in the range of $570 million to $580 million, while adjusted EBITDA is forecast in the range of $105 million to $110 million. Adjusted earnings per share are expected to be in the $2.90 to $3 range. Capital expenditures, meanwhile, are expected to total $51.5 million, up from an earlier forecast of $43.3 million, primarily reflecting CapEx related to the acquisition of Luxco.
A fire at the company’s Atchison facility in the fourth quarter damaged feed drying equipment and caused a temporary loss of production time. Mr. Gall said between $15 million to $20 million of an estimated $31 million in damages incurred at the plant are expected to be funded through insurance proceeds.