MGP Ingredients, Inc. (Nasdaq:MGPI), a
leading provider of distilled spirits, branded spirits, and food
ingredient solutions, today reported results for the fourth quarter
and full year ended December 31, 2023.
2023 fourth quarter consolidated results
compared to 2022 fourth quarter
- Sales increased 13% to $214.9 million.
- Gross profit increased 35% to $85.1 million, representing 39.6%
of sales.
- Operating income increased 45% to $43.1 million. Adjusted
operating income increased 70% to $50.4 million.
- Net income increased 38% to $31.0 million. Adjusted net income
increased 63% to $36.6 million.
- Adjusted EBITDA increased 60% to $56.2 million.
- Basic earnings per common share ("EPS") increased to $1.39 per
share from $1.02 per share. Adjusted basic EPS increased to $1.64
per share from $1.02 per share.
- Diluted EPS increased to $1.39 per share from $1.01 per share.
Adjusted diluted EPS increased to $1.64 per share from $1.01 per
share.
2023 full year consolidated results compared to 2022
full year
- Sales increased 7% to $836.5 million.
- Gross profit increased 20% to $304.7 million, representing
36.4% of sales.
- Operating income decreased slightly to $148.6 million. Adjusted
operating income increased 21% to $180.3 million.
- Net income decreased 2% to $107.1 million. Adjusted net income
increased 20% to $131.1 million.
- Adjusted EBITDA increased 20% to $202.5 million.
- Basic EPS decreased to $4.82 per share from $4.94 per share.
Adjusted basic EPS increased to $5.90 per share from $4.94 per
share.
- Diluted EPS decreased to $4.80 per share from $4.92 per share.
Adjusted diluted EPS increased to $5.88 per share from $4.92 per
share.
“We are very pleased with our performance for the quarter and
full year and remain confident in the long-term sustainability of
our business model,” said David Bratcher, CEO and president of MGP
Ingredients. “Our strong financial results for the quarter and year
reflect continued strength in each of our business segments and the
dedication of our team. Demand for our new distillate and aged
whiskey was strong, which resulted in brown goods sales increasing
39% and 26% for the fourth quarter and full year 2023,
respectively, as compared to the prior year periods. In our Branded
Spirits segment, we continued our premiumization efforts and are
pleased that sales of our premium plus portfolio grew 50% in the
quarter and 24% overall for the year, which in turn drove further
gross margin expansion across the portfolio. As for our Ingredient
Solutions business, we remain encouraged by the traction our
specialty wheat proteins and starches continue to gain. The results
across all three business segments for the fourth quarter and full
year demonstrate the continued success of executing our long-term
strategy.”
Distilling Solutions In the fourth quarter
2023, sales for the Distilling Solutions segment increased 8% to
$108.9 million, reflecting a 22% increase in sales of premium
beverage alcohol. Gross profit increased to $40.0 million or 36.7%
of segment sales, compared to $31.7 million, or 31.3% of segment
sales in the fourth quarter 2022.
For the full year 2023, Distilling Solutions segment sales
increased 5% to $450.9 million, reflecting a 14% increase in sales
of premium beverage alcohol, due to continued strong new distillate
and aged American whiskey sales. Gross profit increased to $145.0
million, or 32.2% of segment sales, compared to $126.3 million, or
29.5% of segment sales in 2022.
Branded Spirits For the fourth quarter 2023,
sales for the Branded Spirits segment increased 19% to $72.6
million. Sales of the premium plus price tier spirit brands grew
50%. Gross profit increased to $33.1 million, or 45.6% of segment
sales compared to $24.7 million, or 40.6% of segment sales in the
fourth quarter 2022.
For the full year 2023, Branded Spirits sales increased 7% to
$253.9 million, reflecting continued strength in the premium plus
portfolio of brands. Sales of the premium plus price tier spirit
brands grew 24%. Gross profit increased to $112.8 million, or 44.4%
of segment sales, compared to $95.5 million, or 40.1% of segment
sales in 2022.
Ingredient SolutionsIn the fourth quarter 2023,
sales for the Ingredient Solutions segment increased 15% to $33.4
million. Gross profit increased to $12.0 million, or 36.0% of
segment sales, compared to $6.9 million, or 23.8% of segment sales
in the fourth quarter 2022.
For the full year 2023, Ingredient Solutions segment sales
increased 14% to $131.7 million, driven primarily by higher sales
of specialty wheat proteins and specialty wheat starches. Gross
profit increased to $47.0 million, or 35.7% of segment sales,
compared to $31.5 million, or 27.2% of segment sales in 2022.
OtherAdvertising and promotion expenses for the
fourth quarter 2023 increased $1.5 million, or 14%, to $12.3
million as compared to the fourth quarter 2022. For the full year
2023, advertising and promotion expenses increased $8.5 million, or
29%, to $38.2 million as compared to the full year 2022.
Corporate selling, general and administrative ("SG&A")
expenses for the fourth quarter 2023 increased $3.2 million to
$25.8 million as compared to the fourth quarter 2022. For the full
year, corporate SG&A expenses increased $16.8 million to $91.4
million as compared to 2022.
During the fourth quarter 2023, the impairment of assets and
other one-time expenses totaled $1.1 million related to the planned
closure of the Atchison distillery, and the change in fair value of
the contingent consideration totaled $2.9 million related to the
Penelope acquisition. For the full year 2023, the impairment of
assets and other one-time expenses totaled $19.4 million related to
the planned closure of the Atchison distillery, and the change in
fair value of the contingent consideration totaled $7.1 million
related to the Penelope acquisition.
The corporate effective tax rate for the fourth quarter 2023 was
24.0%, compared with 19.0% from the year ago period. The corporate
effective tax rate for the full year 2023 was 24.4% compared with
22.3% in 2022.
2024 Outlook MGP is offering the following
consolidated guidance for fiscal 2024:
- Sales are projected to be in the range of $742 million to $756
million, following the closure of the Company's Atchison, Kansas
distillery in December 2023.
- Adjusted EBITDA is expected to be in the range of $213 million
to $217 million, which excludes the add back of share-based
compensation expense.a
- Including the add back of share-based compensation expense,
adjusted EBITDA is expected to be in the range of $218 million to
$222 million.
- Adjusted basic earnings per common share are forecasted to be
in the $6.12 to $6.23 range, with basic weighted average shares
outstanding expected to be approximately 22.3 million at year
end.
- Beginning in the first quarter of 2024, the Company intends to
add back share-based compensation expense when reporting adjusted
EBITDA. Please refer to page 15 for a schedule of historical
share-based compensation expense amounts and their respective
impacts on previously reported adjusted EBITDA metrics.
“As we look forward, we continue to monitor the potential impact
of inventory levels at distributors, overall American whiskey
supply and consumption patterns, and inflation on consumers.
Despite these industry headwinds, we feel uniquely positioned to
grow as a company in this dynamic operating environment, as
evidenced by our implied guidance midpoint growth of 6% of adjusted
EBITDA for fiscal 2024,” concluded Bratcher.
Conference Call and Webcast InformationMGP
Ingredients will host a conference call for analysts and
institutional investors at 10 a.m. ET today to discuss these
results and current business trends. The conference
call and webcast will be available via:
Webcast:
ir.mgpingredients.com on the Events &
Presentations pageConference
Call:
844-308-6398 (domestic) or 412-717-9605 (international)
About MGP Ingredients, Inc.MGP Ingredients,
Inc. (Nasdaq: MGPI) is a leading producer of premium distilled
spirits, branded spirits, and food ingredient solutions. Since
1941, we have combined our expertise and energy aimed at
formulating excellence, bringing product ideas to life
collaboratively with our customers.
As one of the largest distillers in the U.S., MGP’s offerings
include bourbon and rye whiskeys, gins, and vodkas, which are
created at the intersection of science and imagination, for
customers of all sizes, from crafts to multinational brands. With
distilleries in Kentucky and Indiana, and bottling operations in
Missouri, Ohio, and Northern Ireland, MGP has the infrastructure
and expertise to create on any scale.
MGP’s branded spirits portfolio covers a wide spectrum of brands
in every segment, including iconic brands from Luxco, which was
founded in 1958 by the Lux Family. Luxco is a leading producer,
supplier, importer, and bottler of beverage alcohol products. Our
branded spirits mission is to meet the needs and exceed the
expectations of consumers, associates, and business partners.
Luxco’s award-winning spirits portfolio includes well-known brands
from four distilleries: Bardstown, Kentucky-based Lux Row
Distillers, home of Ezra Brooks, Rebel, Blood Oath, David
Nicholson, and Daviess County; Lebanon, Kentucky-based Limestone
Branch Distillery, maker of Yellowstone Kentucky Straight Bourbon
Whiskey, Minor Case Straight Rye Whiskey, and Bowling & Burch
Gin; Jalisco, Mexico-based Destiladora González Lux, producer of
100% agave tequilas, El Mayor, Exotico, and Dos Primos; and the
historic Ross & Squibb Distillery in Lawrenceburg, Indiana,
where Penelope Bourbon, Remus Straight Bourbon Whiskey, and
Rossville Union Straight Rye Whiskey are produced. The innovative
and high-quality brand portfolio also includes Everclear Grain
Alcohol, Pearl Vodka, Green Hat Gin, Saint Brendan’s Irish Cream,
The Quiet Man Irish Whiskey, and other well-recognized brands.
In addition, our Ingredient Solutions segment offers specialty
proteins and starches that help customers harness the power of
plants and provide a host of functional, nutritional, and sensory
benefits for a wide range of food products.
The transformation of American grain into something more is in
the soul of our people, products, and history. We’re devoted to
unlocking the creative potential of this extraordinary resource.
For more information, visit mgpingredients.com.
Cautionary Note Regarding Forward-Looking
StatementsThis press release may contain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including without limitation statements about
the sustainability of the business model of MGP Ingredients, Inc.
(the “Company” or “MGP”), its ability to grow, and the Company’s
2024 outlook, including its expectations for sales, adjusted
EBITDA, adjusted basic earnings per common share (“EPS”), and
shares outstanding. Forward looking statements are usually
identified by or are associated with words such as “intend,”
“plan,” “believe,” “estimate,” “expect,” “anticipate,” “project,”
“forecast,” “hopeful,” “should,” “may,” “will,” “could,”
“encouraged,” “opportunities,” “potential,” and similar
terminology. These forward-looking statements reflect management’s
current beliefs and estimates of future economic circumstances,
industry conditions, Company performance, Company financial
results, and Company financial condition and are not guarantees of
future performance.
All forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially.
Factors that could cause actual results to differ materially from
our expectations include without limitation any effects of changes
in consumer preferences and purchases and our ability to anticipate
or react to those changes; our ability to compete effectively;
damage to our reputation or that of any of our key customers or
their brands; failure to introduce successful new brands and
products or have effective marketing or advertising; changes in
public opinion about alcohol or our products; our reliance on our
distributors to distribute our branded spirits; our reliance on
fewer, more profitable customer relationships; interruptions in our
operations or a catastrophic event at our facilities; decisions
concerning the quantity of maturing stock of our aged distillate;
warehouse expansion issues; our reliance on a limited number of
suppliers; our reliance on a limited number of suppliers; work
disruptions or stoppages; climate change and measures to address
climate change; our closure of our Atchison, Kansas distillery;
regulation and taxation and compliance with existing or future laws
and regulations; tariffs, trade relations, and trade
policies; excise taxes, incentives and customs duties; our ability
to protect our intellectual property rights and defend against
alleged intellectual property rights infringement claims; failure
to secure and maintain listings in control states; labeling or
warning requirements or limitations on the availability of our
products; product recalls or other product liability claims;
anti-corruption laws, trade sanctions and restrictions; class
action or other litigation; higher costs or the unavailability and
cost of raw materials, product ingredients, energy resources, or
labor; failure of our information technology systems, networks,
processes, associated sites, or service providers; acquisitions and
potential future acquisitions; interest rate increases; reliance on
key personnel; commercial, political, and financial risks;
covenants and other provisions in our credit arrangements;
pandemics or other health crises; ability to pay any dividends;
limited rights of common stockholders and antitakeover provisions
in our governing documents; the impact of issuing shares of our
common stock; and the effectiveness or execution of our strategic
plan. For further information on these risks and uncertainties and
other factors that could affect the Company’s business, see the
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” sections of the
Company’s Annual Report on Form 10-K for the year ended December
31, 2023, as well as the Company’s other SEC filings. The Company
undertakes no obligation to update any forward-looking statements
or information in this press release, except as required by
law.
Non-GAAP Financial Measures In addition to
reporting financial information in accordance with U.S. GAAP, the
Company provides certain non-GAAP financial measures that are not
in accordance with, or alternatives for, GAAP. In addition to the
comparable GAAP measures, the Company has disclosed adjusted
operating income, adjusted income before income taxes, adjusted net
income, adjusted MGP earnings, adjusted EBITDA and adjusted basic
and diluted EPS, as well as guidance for adjusted EBITDA and
adjusted basic EPS. The presentation of these non-GAAP financial
measures should be reviewed in conjunction with operating income,
income before income taxes, net income, net income used in earnings
per common share calculation, and basic and diluted EPS computed in
accordance with U.S. GAAP and should not be considered a substitute
for the GAAP measure. We believe that the non-GAAP measures provide
useful information to investors regarding the Company's performance
and overall results of operations. In addition, management uses
these non-GAAP measures in conjunction with GAAP measures when
evaluating the Company’s operating results compared to prior
periods on a consistent basis, assessing financial trends, and for
forecasting purposes. Non-GAAP financial measures may not provide
information that is directly comparable to other companies, even if
similar terms are used to identify such measures. The attached
schedules provide a full reconciliation of historical non-GAAP
financial measures to the most directly comparable U.S. GAAP
financial measure. Full year 2024 guidance measures of adjusted
EBITDA and adjusted basic EPS are provided on a non-GAAP basis
without a reconciliation to the most directly comparable GAAP
measures because the Company is unable to predict with a reasonable
degree of certainty certain items contained in the GAAP measures
without unreasonable efforts. Such items include without
limitation, acquisition related expenses, restructuring and related
expenses, and other items not reflective of the Company's ongoing
operations.
For More InformationInvestors
& Analysts:Mike Houston646-475-2998 or
investor.relations@mgpingredients.com
Media:Greg Manis913-360-5440 or
greg.manis@mgpingredients.com
MGP INGREDIENTS, INC.OPERATING INCOME
ROLLFORWARD(Dollars in thousands)
|
Operating income, quarter versus quarter |
|
Operating Income |
|
Change |
|
|
Operating income for quarter ended December 31, 2022 |
|
$ |
29,715 |
|
|
|
|
|
Increase in gross profit - Branded Spirits segment |
|
|
8,433 |
|
|
29 |
|
pp(a) |
| Increase in gross profit -
Distilling Solutions segment |
|
|
8,326 |
|
|
28 |
|
pp |
| Increase in gross profit -
Ingredient Solutions segment |
|
|
5,173 |
|
|
17 |
|
pp |
| Increase in advertising and
promotion expenses |
|
|
(1,470 |
) |
|
(4 |
) |
pp |
| Increase in SG&A
expenses |
|
|
(3,148 |
) |
|
(11 |
) |
pp |
| Impairment of long-lived
assets and other |
|
|
(1,057 |
) |
|
(4 |
) |
pp |
| Change in fair value of
contingent consideration |
|
|
(2,900 |
) |
|
(10 |
) |
pp |
| Operating income for
quarter ended December 31, 2023 |
|
$ |
43,072 |
|
|
45 |
% |
|
| |
|
Operating income, year versus year |
|
Operating Income |
|
Change |
|
|
Operating income for year ended December 31, 2022 |
|
$ |
148,965 |
|
|
|
|
|
Increase in gross profit - Distilling Solutions segment |
|
|
18,682 |
|
|
13 |
|
pp(a) |
|
Increase in gross profit - Branded Spirits segment |
|
|
17,260 |
|
|
12 |
|
pp |
|
Increase in gross profit - Ingredient Solutions segment |
|
|
15,464 |
|
|
10 |
|
pp |
|
Increase in advertising and promotion expenses |
|
|
(8,499 |
) |
|
(6 |
) |
pp |
|
Increase in SG&A expenses |
|
|
(16,768 |
) |
|
(11 |
) |
pp |
|
Impairment of long-lived assets and other |
|
|
(19,391 |
) |
|
(13 |
) |
pp |
|
Change in fair value of contingent consideration |
|
|
(7,100 |
) |
|
(5 |
) |
pp |
| Operating income for
year ended December 31, 2023 |
|
$ |
148,613 |
|
|
— |
% |
|
| |
(a) Percentage points (“pp”).
MGP INGREDIENTS, INC.EARNINGS PER SHARE
(“EPS”) ROLLFORWARD
|
Change in EPS, quarter versus quarter |
|
EPS |
|
Change |
|
|
Basic EPS for quarter ended December 31, 2022 |
|
$ |
1.02 |
|
|
|
|
|
Change in operating income (a) |
|
|
0.49 |
|
|
48 |
|
pp(b) |
| Change in other expense, net
(a) |
|
|
0.03 |
|
|
3 |
|
pp |
| Change in interest
expense(a) |
|
|
(0.04 |
) |
|
(4 |
) |
pp |
| Change in weighted average
shares outstanding |
|
|
(0.01 |
) |
|
(1 |
) |
pp |
| Change in effective tax
rate |
|
|
(0.10 |
) |
|
(10 |
) |
pp |
| Basic EPS for quarter
ended December 31, 2023 |
|
|
1.39 |
|
|
36 |
% |
|
| Impact of dilutive shares
outstanding |
|
|
— |
|
|
— |
|
pp |
| Diluted EPS for
quarter ended December 31, 2023 |
|
$ |
1.39 |
|
|
36 |
% |
|
| |
|
Change in EPS, year versus year |
|
EPS |
|
Change |
|
|
Basic EPS for year ended December 31, 2022 |
|
$ |
4.94 |
|
|
|
|
|
Change in operating income(a) |
|
|
(0.02 |
) |
|
— |
|
pp(b) |
| Change in interest
expense(a) |
|
|
(0.04 |
) |
|
(1 |
) |
pp |
| Change in other expense,
net(a) |
|
|
0.11 |
|
|
2 |
|
pp |
| Change in weighted average
shares outstanding |
|
|
(0.02 |
) |
|
— |
|
pp |
| Change in effective tax
rate |
|
|
(0.15 |
) |
|
(3 |
) |
pp |
| Basic EPS for year
ended December 31, 2023 |
|
|
4.82 |
|
|
(2 |
)% |
|
| Impact of dilutive shares
outstanding |
|
|
(0.02 |
) |
|
(1 |
) |
pp |
| Diluted EPS for year
ended December 31, 2023 |
|
$ |
4.80 |
|
|
(3 |
)% |
|
| |
(a) Items are net of tax based on the effective tax rate for the
base year (2022).(b) Percentage points ("pp")
MGP INGREDIENTS, INC.SALES BY OPERATING
SEGMENT(Dollars in thousands)
| |
DISTILLING SOLUTIONS SALES |
| |
Quarter Ended December 31, |
|
Quarter versus Quarter Sales Change
Increase/(Decrease) |
| |
2023 |
|
2022 |
|
$ Change |
|
% Change |
|
Brown goods |
$ |
74,334 |
|
$ |
53,624 |
|
$ |
20,710 |
|
|
39 |
% |
| White goods |
|
11,446 |
|
|
16,514 |
|
|
(5,068 |
) |
|
(31 |
) |
|
Premium beverage alcohol |
|
85,780 |
|
|
70,138 |
|
|
15,642 |
|
|
22 |
|
| Industrial alcohol |
|
8,099 |
|
|
11,671 |
|
|
(3,572 |
) |
|
(31 |
) |
|
Food grade alcohol |
|
93,879 |
|
|
81,809 |
|
|
12,070 |
|
|
15 |
|
| Fuel grade alcohol |
|
1,835 |
|
|
3,374 |
|
|
(1,539 |
) |
|
(46 |
) |
| Distillers feed and related
co-products |
|
5,525 |
|
|
10,227 |
|
|
(4,702 |
) |
|
(46 |
) |
| Warehouse services |
|
7,674 |
|
|
5,777 |
|
|
1,897 |
|
|
33 |
|
|
Total Distilling Solutions |
$ |
108,913 |
|
$ |
101,187 |
|
$ |
7,726 |
|
|
8 |
% |
| |
|
|
|
|
|
|
|
| |
BRANDED SPIRITS SALES |
| |
Quarter Ended December 31, |
|
Quarter versus Quarter Sales Change
Increase/(Decrease) |
| |
2023 |
|
2022 |
|
$ Change |
|
% Change |
|
Ultra premium |
$ |
20,154 |
|
$ |
12,409 |
|
$ |
7,745 |
|
|
62 |
% |
| Super premium |
|
3,810 |
|
|
2,752 |
|
|
1,058 |
|
|
38 |
|
| Premium |
|
8,149 |
|
|
6,283 |
|
|
1,866 |
|
|
30 |
|
|
Premium plus |
|
32,113 |
|
|
21,444 |
|
|
10,669 |
|
|
50 |
|
| Mid |
|
20,101 |
|
|
19,122 |
|
|
979 |
|
|
5 |
|
| Value |
|
11,859 |
|
|
11,091 |
|
|
768 |
|
|
7 |
|
| Other |
|
8,542 |
|
|
9,204 |
|
|
(662 |
) |
|
(7 |
) |
|
Total Branded Spirits |
$ |
72,615 |
|
$ |
60,861 |
|
$ |
11,754 |
|
|
19 |
% |
|
|
| |
INGREDIENT SOLUTIONS SALES |
| |
Quarter Ended December 31, |
|
Quarter versus Quarter Sales Change Increase /
(Decrease) |
| |
2023 |
|
2022 |
|
$ Change |
|
% Change |
|
Specialty wheat starches |
$ |
17,073 |
|
$ |
15,122 |
|
$ |
1,951 |
|
|
13 |
% |
| Specialty wheat proteins |
|
12,373 |
|
|
10,088 |
|
|
2,285 |
|
|
23 |
|
| Commodity wheat starches |
|
3,543 |
|
|
3,737 |
|
|
(194 |
) |
|
(5 |
) |
| Commodity wheat proteins |
|
371 |
|
|
— |
|
|
371 |
|
|
N/A |
|
Total Ingredient Solutions |
$ |
33,360 |
|
$ |
28,947 |
|
$ |
4,413 |
|
|
15 |
% |
| |
|
|
|
|
|
|
|
MGP INGREDIENTS, INC.SALES BY OPERATING
SEGMENT(Dollars in thousands)
| |
DISTILLING SOLUTIONS SALES |
| |
Year Ended December 31, |
|
Year versus Year Sales Change
Increase/(Decrease) |
| |
2023 |
|
2022 |
|
$ Change |
|
% Change |
|
Brown goods |
$ |
289,191 |
|
$ |
229,523 |
|
$ |
59,668 |
|
|
26 |
% |
| White goods |
|
58,645 |
|
|
74,510 |
|
|
(15,865 |
) |
|
(21 |
) |
|
Premium beverage alcohol |
|
347,836 |
|
|
304,033 |
|
|
43,803 |
|
|
14 |
|
| Industrial alcohol |
|
38,010 |
|
|
46,812 |
|
|
(8,802 |
) |
|
(19 |
) |
|
Food grade alcohol |
|
385,846 |
|
|
350,845 |
|
|
35,001 |
|
|
10 |
|
| Fuel grade alcohol |
|
7,798 |
|
|
13,681 |
|
|
(5,883 |
) |
|
(43 |
) |
| Distillers feed and related
co-products |
|
28,578 |
|
|
40,354 |
|
|
(11,776 |
) |
|
(29 |
) |
| Warehouse services |
|
28,632 |
|
|
23,598 |
|
|
5,034 |
|
|
21 |
|
|
Total Distilling Solutions |
$ |
450,854 |
|
$ |
428,478 |
|
$ |
22,376 |
|
|
5 |
% |
| |
|
|
|
|
|
|
|
| |
BRANDED SPIRITS SALES |
| |
Year Ended December 31, |
|
Year versus Year Sales Change
Increase/(Decrease) |
| |
2023 |
|
2022 |
|
$ Change |
|
% Change |
|
Ultra premium |
$ |
63,748 |
|
$ |
48,245 |
|
$ |
15,503 |
|
|
32 |
% |
| Super premium |
|
13,424 |
|
|
12,274 |
|
|
1,150 |
|
|
9 |
|
| Premium |
|
28,293 |
|
|
24,211 |
|
|
4,082 |
|
|
17 |
|
|
Premium Plus |
|
105,465 |
|
|
84,730 |
|
|
20,735 |
|
|
24 |
|
| Mid |
|
75,676 |
|
|
82,530 |
|
|
(6,854 |
) |
|
(8 |
) |
| Value |
|
47,907 |
|
|
47,395 |
|
|
512 |
|
|
1 |
|
| Other |
|
24,885 |
|
|
23,284 |
|
|
1,601 |
|
|
7 |
|
|
Total Branded Spirits |
$ |
253,933 |
|
$ |
237,939 |
|
$ |
15,994 |
|
|
7 |
% |
| |
|
|
|
|
|
|
|
| |
INGREDIENT SOLUTIONS SALES |
| |
Year Ended December 31, |
|
Year versus Year Sales Change
Increase/(Decrease) |
| |
|
2023 |
|
|
2022 |
|
$ Change |
|
% Change |
|
Specialty wheat starches |
$ |
66,050 |
|
$ |
62,567 |
|
$ |
3,483 |
|
|
6 |
% |
| Specialty wheat proteins |
|
48,291 |
|
|
39,313 |
|
|
8,978 |
|
|
23 |
|
| Commodity wheat starches |
|
16,413 |
|
|
14,023 |
|
|
2,390 |
|
|
17 |
|
| Commodity wheat proteins |
|
982 |
|
|
38 |
|
|
944 |
|
|
2,484 |
|
|
Total Ingredient Solutions |
$ |
131,736 |
|
$ |
115,941 |
|
$ |
15,795 |
|
|
14 |
% |
| |
|
|
|
|
|
|
|
MGP INGREDIENTS, INC.CONSOLIDATED
STATEMENTS OF INCOME(Dollars in
thousands)
| |
|
Quarter Ended December 31, |
|
Year Ended December 31, |
| |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Sales |
|
$ |
214,888 |
|
|
$ |
190,995 |
|
|
$ |
836,523 |
|
|
$ |
782,358 |
|
| Cost of sales |
|
|
129,743 |
|
|
|
127,782 |
|
|
|
531,811 |
|
|
|
529,052 |
|
|
Gross profit |
|
|
85,145 |
|
|
|
63,213 |
|
|
|
304,712 |
|
|
|
253,306 |
|
| |
|
|
|
|
|
|
|
|
| Advertising and promotion
expense |
|
|
12,336 |
|
|
|
10,866 |
|
|
|
38,213 |
|
|
|
29,714 |
|
| Selling, general and
administrative |
|
|
25,780 |
|
|
|
22,632 |
|
|
|
91,395 |
|
|
|
74,627 |
|
| Impairment of long-lived
assets and other |
|
|
1,057 |
|
|
|
— |
|
|
|
19,391 |
|
|
|
— |
|
| Change in fair value of
contingent consideration |
|
|
2,900 |
|
|
|
— |
|
|
|
7,100 |
|
|
|
— |
|
|
Operating income |
|
|
43,072 |
|
|
|
29,715 |
|
|
|
148,613 |
|
|
|
148,965 |
|
| |
|
|
|
|
|
|
|
|
| Interest expense, net |
|
|
(2,017 |
) |
|
|
(960 |
) |
|
|
(6,647 |
) |
|
|
(5,451 |
) |
| Other expense, net |
|
|
(225 |
) |
|
|
(981 |
) |
|
|
(220 |
) |
|
|
(3,342 |
) |
|
Income before income taxes |
|
|
40,830 |
|
|
|
27,774 |
|
|
|
141,746 |
|
|
|
140,172 |
|
| |
|
|
|
|
|
|
|
|
| Income tax expense |
|
|
9,784 |
|
|
|
5,263 |
|
|
|
34,616 |
|
|
|
31,300 |
|
|
Net income |
|
|
31,046 |
|
|
|
22,511 |
|
|
|
107,130 |
|
|
|
108,872 |
|
| |
|
|
|
|
|
|
|
|
| Net loss attributable to
noncontrolling interest |
|
|
21 |
|
|
|
146 |
|
|
|
345 |
|
|
|
590 |
|
|
Net income attributable to MGP Ingredients,
Inc. |
|
|
31,067 |
|
|
|
22,657 |
|
|
|
107,475 |
|
|
|
109,462 |
|
| |
|
|
|
|
|
|
|
|
| Income attributable to
participating securities |
|
|
(311 |
) |
|
|
(180 |
) |
|
|
(1,074 |
) |
|
|
(871 |
) |
|
Net income used in earnings per share
calculation |
|
$ |
30,756 |
|
|
$ |
22,477 |
|
|
$ |
106,401 |
|
|
$ |
108,591 |
|
| |
|
|
|
|
|
|
|
|
| Weighted average
common shares |
|
|
|
|
|
|
|
|
|
Basic |
|
|
22,070,337 |
|
|
|
22,011,785 |
|
|
|
22,059,816 |
|
|
|
22,002,990 |
|
|
Diluted |
|
|
22,070,337 |
|
|
|
22,304,093 |
|
|
|
22,173,918 |
|
|
|
22,053,966 |
|
| |
|
|
|
|
|
|
|
|
| Earnings per common
share |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.39 |
|
|
$ |
1.02 |
|
|
$ |
4.82 |
|
|
$ |
4.94 |
|
|
Diluted |
|
$ |
1.39 |
|
|
$ |
1.01 |
|
|
$ |
4.80 |
|
|
$ |
4.92 |
|
|
|
MGP INGREDIENTS, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(Dollars in
thousands)
| |
December 31, |
| |
2023 |
|
2022 |
| ASSETS |
|
|
|
| Current Assets: |
|
|
|
|
Cash and cash equivalents |
$ |
18,388 |
|
|
$ |
47,889 |
|
|
Receivables, net |
|
144,286 |
|
|
|
109,267 |
|
|
Inventory |
|
346,853 |
|
|
|
289,722 |
|
|
Prepaid expenses |
|
3,580 |
|
|
|
2,957 |
|
|
Refundable income taxes |
|
1,190 |
|
|
|
4,327 |
|
|
Total Current Assets |
|
514,297 |
|
|
|
454,162 |
|
| |
|
|
|
| Property, plant, and
equipment |
|
489,646 |
|
|
|
450,800 |
|
| Less accumulated depreciation
and amortization |
|
(227,343 |
) |
|
|
(215,168 |
) |
|
Property, Plant, and Equipment, net |
|
262,303 |
|
|
|
235,632 |
|
| Operating lease right-of-use
assets, net |
|
13,975 |
|
|
|
15,042 |
|
| Investment in joint
ventures |
|
5,197 |
|
|
|
5,534 |
|
| Intangible assets, net |
|
271,706 |
|
|
|
216,768 |
|
| Goodwill |
|
321,544 |
|
|
|
226,294 |
|
| Other assets |
|
3,326 |
|
|
|
4,779 |
|
|
TOTAL ASSETS |
$ |
1,392,348 |
|
|
$ |
1,158,211 |
|
| |
|
|
|
| LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
| Current Liabilities: |
|
|
|
|
Current maturities of long-term debt |
$ |
6,400 |
|
|
$ |
5,600 |
|
|
Accounts payable |
|
73,594 |
|
|
|
66,432 |
|
|
Federal and state excise taxes payable |
|
2,251 |
|
|
|
4,627 |
|
|
Accrued expenses and other |
|
31,861 |
|
|
|
28,716 |
|
|
Total Current Liabilities |
|
114,106 |
|
|
|
105,375 |
|
| |
|
|
|
| Long-term debt, less current
maturities |
|
85,305 |
|
|
|
29,510 |
|
| Convertible senior notes |
|
195,544 |
|
|
|
195,225 |
|
| Long-term operating lease
liabilities |
|
11,292 |
|
|
|
11,622 |
|
| Contingent consideration |
|
69,200 |
|
|
|
— |
|
| Other noncurrent
liabilities |
|
4,763 |
|
|
|
3,723 |
|
| Deferred income taxes |
|
63,071 |
|
|
|
67,112 |
|
|
Total Liabilities |
|
543,281 |
|
|
|
412,567 |
|
| Total equity |
|
849,067 |
|
|
|
745,644 |
|
|
TOTAL LIABILITIES AND TOTAL EQUITY |
$ |
1,392,348 |
|
|
$ |
1,158,211 |
|
|
|
MGP INGREDIENTS, INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS(Dollars in
thousands)
| |
|
Year Ended December 31, |
| |
|
2023 |
|
2022 |
| Cash Flows from Operating
Activities |
|
|
|
|
|
Net income |
|
$ |
107,130 |
|
|
$ |
108,872 |
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
|
22,113 |
|
|
|
21,455 |
|
|
Impairment of long-lived assets and other |
|
|
19,391 |
|
|
|
— |
|
|
Share-based compensation |
|
|
10,635 |
|
|
|
5,502 |
|
|
Equity method investment loss |
|
|
337 |
|
|
|
2,220 |
|
|
Deferred income taxes, including change in valuation allowance |
|
|
(4,041 |
) |
|
|
1,011 |
|
|
Change in fair value of contingent consideration |
|
|
7,100 |
|
|
|
— |
|
|
Other, net |
|
|
728 |
|
|
|
194 |
|
|
Changes in operating assets and liabilities, net of effects of
acquisition: |
|
|
|
|
|
Receivables, net |
|
|
(32,397 |
) |
|
|
(16,786 |
) |
|
Inventory |
|
|
(46,921 |
) |
|
|
(44,350 |
) |
|
Prepaid expenses |
|
|
(481 |
) |
|
|
(1,468 |
) |
|
Income taxes payable (refundable) |
|
|
3,136 |
|
|
|
1,212 |
|
|
Accounts payable |
|
|
(2,406 |
) |
|
|
10,626 |
|
|
Accrued expenses and other |
|
|
348 |
|
|
|
1,984 |
|
|
Federal and state excise taxes payable |
|
|
(2,375 |
) |
|
|
(2,365 |
) |
|
Other, net |
|
|
1,486 |
|
|
|
829 |
|
|
Net cash provided by operating activities |
|
|
83,783 |
|
|
|
88,936 |
|
| |
|
|
|
|
| Cash Flows from Investing
Activities |
|
|
|
|
|
Additions to property, plant, and equipment |
|
|
(55,267 |
) |
|
|
(45,323 |
) |
|
Purchase of business, net of cash acquired |
|
|
(103,712 |
) |
|
|
— |
|
|
Contributions to equity method investment |
|
|
— |
|
|
|
(2,810 |
) |
|
Other, net |
|
|
(263 |
) |
|
|
320 |
|
|
Net cash used in investing activities |
|
|
(159,242 |
) |
|
|
(47,813 |
) |
| |
|
|
|
|
| Cash Flows from Financing
Activities |
|
|
|
|
|
Payment of dividends and dividend equivalents |
|
|
(10,675 |
) |
|
|
(10,646 |
) |
|
Purchase of treasury stock |
|
|
(801 |
) |
|
|
(715 |
) |
|
Principal payments on long-term debt |
|
|
(5,600 |
) |
|
|
(3,403 |
) |
|
Proceeds from credit agreement - revolver |
|
|
105,000 |
|
|
|
— |
|
|
Payments on credit agreement - revolver |
|
|
(42,000 |
) |
|
|
— |
|
|
Net cash provided by (used in) financing
activities |
|
|
45,924 |
|
|
|
(14,764 |
) |
| |
|
|
|
|
| Effect of exchange rate
changes on cash and cash equivalents |
|
|
34 |
|
|
|
(38 |
) |
| Increase (decrease) in cash
and cash equivalents |
|
|
(29,501 |
) |
|
|
26,321 |
|
| Cash and cash equivalents,
beginning of period |
|
|
47,889 |
|
|
|
21,568 |
|
| Cash and cash equivalents, end
of period |
|
$ |
18,388 |
|
|
$ |
47,889 |
|
| |
MGP INGREDIENTS, INC.RECONCILIATION OF
SELECTED GAAP MEASURES TO ADJUSTED NON-GAAP MEASURES
(UNAUDITED)(in thousands)
| |
Quarter Ended December 31, 2023 |
| |
Operating Income |
|
Income before Income Taxes |
|
Net Income(b) |
|
MGP Earnings(a) |
|
Basic EPS |
|
Diluted EPS |
|
Reported GAAP Results |
$ |
43,072 |
|
$ |
40,830 |
|
$ |
31,046 |
|
$ |
30,756 |
|
$ |
1.39 |
|
$ |
1.39 |
|
Impairment of long-lived assets and other (c) |
|
1,057 |
|
|
1,057 |
|
|
803 |
|
|
803 |
|
|
0.04 |
|
|
0.04 |
|
Fair value of contingent consideration(d) |
|
2,900 |
|
|
2,900 |
|
|
2,204 |
|
|
2,204 |
|
|
0.10 |
|
|
0.10 |
|
Business acquisition costs (e) |
|
246 |
|
|
246 |
|
|
187 |
|
|
187 |
|
|
0.01 |
|
|
0.01 |
|
CEO transition costs (f) |
|
3,134 |
|
|
3,134 |
|
|
2,382 |
|
|
2,382 |
|
|
0.10 |
|
|
0.10 |
| Adjusted Non-GAAP
results |
$ |
50,409 |
|
$ |
48,167 |
|
$ |
36,622 |
|
$ |
36,332 |
|
$ |
1.64 |
|
$ |
1.64 |
| |
| |
Quarter Ended December 31, 2022 |
| |
Operating Income |
|
Income before Income Taxes |
|
Net Income |
|
MGP Earnings(a) |
|
Basic EPS |
|
Diluted EPS |
|
Reported GAAP Results |
$ |
29,715 |
|
$ |
27,774 |
|
$ |
22,511 |
|
$ |
22,477 |
|
$ |
1.02 |
|
$ |
1.01 |
|
No adjustments for the period |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| Adjusted Non-GAAP
results |
$ |
29,715 |
|
$ |
27,774 |
|
$ |
22,511 |
|
$ |
22,477 |
|
$ |
1.02 |
|
$ |
1.01 |
| |
| |
Year Ended December 31, 2023 |
| |
Operating Income |
|
Income before Income Taxes |
|
Net Income(b) |
|
MGP Earnings(a) |
|
Basic EPS |
|
Diluted EPS |
|
Reported GAAP Results |
$ |
148,613 |
|
$ |
141,746 |
|
$ |
107,130 |
|
$ |
106,401 |
|
$ |
4.82 |
|
$ |
4.80 |
|
Impairment of long-lived assets and other(c) |
|
19,391 |
|
|
19,391 |
|
|
14,660 |
|
|
14,660 |
|
|
0.66 |
|
|
0.66 |
|
Fair value of contingent consideration(d) |
|
7,100 |
|
|
7,100 |
|
|
5,368 |
|
|
5,368 |
|
|
0.24 |
|
|
0.24 |
|
Business acquisition costs (e) |
|
2,060 |
|
|
2,060 |
|
|
1,557 |
|
|
1,557 |
|
|
0.07 |
|
|
0.07 |
|
CEO transition costs (f) |
|
3,134 |
|
|
3,134 |
|
|
2,369 |
|
|
2,369 |
|
|
0.11 |
|
|
0.11 |
| Adjusted Non-GAAP
results |
$ |
180,298 |
|
$ |
173,431 |
|
$ |
131,084 |
|
$ |
130,355 |
|
$ |
5.90 |
|
$ |
5.88 |
| |
| |
Year Ended December 31, 2022 |
| |
Operating Income |
|
Income before Income Taxes |
|
Net Income |
|
MGP Earnings(a) |
|
Basic EPS |
|
Diluted EPS |
|
Reported GAAP Results |
$ |
148,965 |
|
$ |
140,172 |
|
$ |
108,872 |
|
$ |
108,591 |
|
$ |
4.94 |
|
$ |
4.92 |
|
No adjustments for the period |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| Adjusted Non-GAAP
results |
$ |
148,965 |
|
$ |
140,172 |
|
$ |
108,872 |
|
$ |
108,591 |
|
$ |
4.94 |
|
$ |
4.92 |
| |
(a) MGP Earnings has been defined as "Net
income used in earnings per share calculation."
(b) The tax rate used for non-GAAP items for the
quarter and year ended December 31, 2023 was 24.0% and 24.4%,
respectively. (c) The impairment of long-lived
assets and other relates to the closure of the Company's distillery
located in Atchison, Kansas, which included $17,112 of impairment
of assets as well as $2,279 of expenses related to severance costs,
inventory write offs, contract termination fees, consulting fees,
and other miscellaneous expenses for the year ended December 31,
2023. For the quarter ended December 31, 2023, the full expense
amount relates to severance costs, inventory write offs, contract
termination fees, consulting fees and other miscellaneous expenses.
Impairment of long-lived assets and other are included in the
Consolidated Statement of Income as a component of operating income
and relates to the Distilling Solutions segment.
(d) Fair value of contingent consideration relates
to the quarterly adjustment of the contingent consideration
liability related to the acquisition of Penelope Bourbon LLC. It is
included in the Consolidated Statement of Income as a component of
operating income and relates to the Branded Spirits
segment.(e) Business acquisition costs are
included in the Consolidated Statement of Income within the
selling, general, and administrative line item and include
transaction and integration costs associated with the acquisition
of Penelope Bourbon LLC. (f) The CEO transition
costs are included in the Consolidated Statement of Income within
the selling, general and administrative line item. The adjustment
includes additional employee related costs, specifically
share-based compensation expense, in connection with the transition
of the CEO position.
MGP INGREDIENTS, INC.RECONCILIATION OF
NET INCOME TO ADJUSTED EBITDA (UNAUDITED) (in
thousands)
| |
Quarter Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Net Income |
$ |
31,046 |
|
$ |
22,511 |
|
$ |
107,130 |
|
$ |
108,872 |
|
Interest expense |
|
2,017 |
|
|
960 |
|
|
6,647 |
|
|
5,451 |
|
Income tax expense |
|
9,784 |
|
|
5,263 |
|
|
34,616 |
|
|
31,300 |
|
Depreciation and amortization |
|
5,841 |
|
|
5,198 |
|
|
22,113 |
|
|
21,455 |
|
Equity method investment |
|
146 |
|
|
1,184 |
|
|
337 |
|
|
2,220 |
|
Impairment of long-lived assets and other |
|
1,057 |
|
|
— |
|
|
19,391 |
|
|
— |
|
Fair value of contingent consideration |
|
2,900 |
|
|
— |
|
|
7,100 |
|
|
— |
|
Business acquisition costs |
|
246 |
|
|
— |
|
|
2,060 |
|
|
— |
|
CEO transition costs |
|
3,134 |
|
|
— |
|
|
3,134 |
|
|
— |
|
Adjusted EBITDA |
$ |
56,171 |
|
$ |
35,116 |
|
$ |
202,528 |
|
$ |
169,298 |
|
|
The non-GAAP adjusted EBITDA measure is defined as earnings
before interest expense, income tax expense, depreciation and
amortization, equity method investment, impairment of long-lived
assets and other, fair value of contingent consideration, business
acquisition costs, CEO transition costs. See "Reconciliation of
selected GAAP measures to adjusted non-GAAP measures" for further
details.
MGP INGREDIENTS, INC.RECONCILIATION OF
NET INCOME TO ADJUSTED EBITDA - ADJUSTING FOR SHARE-BASED
COMPENSATION EXPENSE(UNAUDITED) (in thousands)
Beginning in the first quarter 2024, the Company plans to add
back share-based compensation expense to the non-GAAP adjusted
EBITDA measure.
| |
Year Ended December 31, |
| |
2023 |
|
2022 |
|
Net Income |
$ |
107,130 |
|
$ |
108,872 |
|
Interest expense |
|
6,647 |
|
|
5,451 |
|
Income tax expense |
|
34,616 |
|
|
31,300 |
|
Depreciation and amortization |
|
22,113 |
|
|
21,455 |
|
Equity method investment |
|
337 |
|
|
2,220 |
|
Impairment of long-lived assets and other |
|
19,391 |
|
|
— |
|
Fair value of contingent consideration |
|
7,100 |
|
|
— |
|
Business acquisition costs |
|
2,060 |
|
|
— |
|
CEO transition costs |
|
3,134 |
|
|
— |
|
Adjusted EBITDA - as reported historically |
|
202,528 |
|
|
169,298 |
|
Share-based compensation expense |
|
7,501 |
|
|
5,502 |
|
Adjusted EBITDA- adjusted for share-based
compensation |
$ |
210,029 |
|
$ |
174,800 |
|
|
CEO transition costs are included in the share-based
compensation expense on the consolidated financial statements.
Total share-based compensation expense was $10,635 for the year
ended December 31, 2023.
The non-GAAP adjusted EBITDA- adjusted for share-based
compensation is defined as earnings before interest expense, income
tax expense, depreciation and amortization, equity method
investment, impairment of long-lived assets and other, fair value
of contingent consideration, business acquisition costs, CEO
transition costs, and share-based compensation expense. See
"Reconciliation of selected GAAP measures to adjusted non-GAAP
measures" and "Reconciliation of Net Income to Adjusted EBITDA" for
further details.
MGP INGREDIENTS, INC.DILUTIVE SHARES
OUTSTANDING CALCULATION(UNAUDITED)
| |
Quarter Ended December 31, |
|
Year Ended December 31, |
| |
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Principal amount of the bonds |
$ |
201,250,000 |
|
|
$ |
201,250,000 |
|
|
$ |
201,250,000 |
|
|
$ |
201,250,000 |
|
| Par value |
$ |
1,000 |
|
|
$ |
1,000 |
|
|
$ |
1,000 |
|
|
$ |
1,000 |
|
| Number of bonds outstanding
(b) |
|
201,250 |
|
|
|
201,250 |
|
|
|
201,250 |
|
|
|
201,250 |
|
| |
|
|
|
|
|
|
|
| Initial conversion rate |
|
10.3911 |
|
|
|
10.3911 |
|
|
|
10.3911 |
|
|
|
10.3911 |
|
| Conversion price |
$ |
96.23620 |
|
|
$ |
96.23620 |
|
|
$ |
96.23620 |
|
|
$ |
96.23620 |
|
| |
|
|
|
|
|
|
|
| Average share price (c) |
$ |
96.08000 |
|
|
$ |
111.74095 |
|
|
$ |
101.79016 |
|
|
$ |
98.53736 |
|
| Impact of conversion (d) |
$ |
— |
|
|
$ |
233,673,666 |
|
|
$ |
212,864,486 |
|
|
$ |
206,062,202 |
|
| |
|
|
|
|
|
|
|
| Cash paid for principal |
|
(201,250,000 |
) |
|
|
(201,250,000 |
) |
|
|
(201,250,000 |
) |
|
|
(201,250,000 |
) |
| Conversion
premium |
$ |
— |
|
|
$ |
32,423,666 |
|
|
$ |
11,614,486 |
|
|
$ |
4,812,202 |
|
| |
|
|
|
|
|
|
|
| Average share price |
$ |
96.08000 |
|
|
$ |
111.74095 |
|
|
$ |
101.79016 |
|
|
$ |
98.53736 |
|
| Conversion premium in
shares (a) (e) |
|
— |
|
|
|
290,168 |
|
|
|
114,102 |
|
|
|
48,836 |
|
| |
(a) Number of bonds outstanding is
calculated by taking the principal amount of the bonds divided by
the par value.(b) Average share price is
calculated by taking the average of the daily closing share price
for the period. If the average share price is less than the
conversion price of $96.23620 per share, the impact to EPS is
anti-dilutive and therefore the shares were excluded from the
diluted EPS calculation. (c) Impact of conversion
is calculated by taking the number of bonds outstanding multiplied
by the initial conversion rate multiplied by the average share
price. If the average share price is less than the conversion price
then the impact of conversion is zero. (d) The
impacts of the Convertible Senior Notes were included in the
diluted weighted average common shares outstanding if the impact
was dilutive. The Convertible Senior Notes would only have a
dilutive impact if the average market price per share during the
quarter and year to date period exceeds the conversion price of
$96.23620 per share. (e) Conversion premium in
shares is calculated by taking the conversion premium divided by
the average share price. If the average share price is less than
the conversion price, then the conversion premium in shares is
zero.
MGP INGREDIENTS, INC.Purchase
Accounting - Summary of Fair Value Step Up(UNAUDITED)(in
thousands)
The acquisition of Penelope Bourbon LLC, which closed on June 1,
2023, was accounted for as a business combination in accordance
with Accounting Standard Codification 805, Business Combinations,
and as such, assets acquired, liabilities assumed, and
consideration transferred were recorded at their estimated fair
values on the acquisition date. The table below reflects the
summary for distributor relationships purchase price accounting
step up to fair value, the related amortization period, and the
Income Statement caption within which the adjustment is
included.
| |
|
|
|
|
|
|
Income Statement Impact |
| |
Step Up Value |
|
Amortization Period |
|
Income Statement Caption |
|
Quarter Ended December 31, 2023 |
|
Year Ended December 31, 2023 |
|
Definite-lived intangible asset - Distributor relationships |
$ |
23,700 |
|
20 years |
|
SG&A |
|
$ |
296 |
|
$ |
691 |
|
|
MGP INGREDIENTS, INC.Impact of the
Planned Closure of the Atchison Distillery Segment
Operating Results and Pro-Forma ResultsYear Ended
December 31, 2023(UNAUDITED) (in thousands)
| |
Distilling Solutions |
|
| |
Year Ended December 31, 2023 |
|
Increase/(Decrease) |
|
| |
As Reported (a) |
|
Pro-Forma(b) |
|
$ Change |
|
% Change |
|
|
Brown Goods |
$ |
289,191 |
|
|
$ |
289,191 |
|
|
$ |
— |
|
|
— |
% |
|
| White Goods |
|
58,645 |
|
|
|
14,421 |
|
|
|
(44,224 |
) |
|
(75 |
) |
|
|
Premium beverage alcohol |
|
347,836 |
|
|
|
303,612 |
|
|
|
(44,224 |
) |
|
(13 |
) |
|
| Industrial alcohol |
|
38,010 |
|
|
|
— |
|
|
|
(38,010 |
) |
|
(100 |
) |
|
|
Food grade alcohol |
|
385,846 |
|
|
|
303,612 |
|
|
|
(82,234 |
) |
|
(21 |
) |
|
| Fuel grade alcohol |
|
7,798 |
|
|
|
16 |
|
|
|
(7,782 |
) |
|
(100 |
) |
|
| Distillers feed and related
co-products |
|
28,578 |
|
|
|
10,096 |
|
|
|
(18,482 |
) |
|
(65 |
) |
|
| Warehouse services |
|
28,632 |
|
|
|
28,632 |
|
|
|
— |
|
|
— |
|
|
|
Total Sales |
$ |
450,854 |
|
|
$ |
342,356 |
|
|
$ |
(108,498 |
) |
|
(24 |
)% |
|
| |
|
|
|
|
|
|
|
|
| Gross
profit |
$ |
144,964 |
|
|
$ |
156,075 |
|
|
$ |
11,111 |
|
|
8 |
% |
|
| Gross margin
% |
|
32.2 |
% |
|
|
45.6 |
% |
|
|
|
13.4 |
|
pp(c) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Ingredient Solutions |
|
| |
Year Ended December 31, 2023 |
|
Increase/(Decrease) |
|
| |
As Reported (a) |
|
Pro-Forma(b) |
|
$ Change |
|
% Change |
|
|
Specialty wheat starches |
$ |
66,050 |
|
|
$ |
66,050 |
|
|
$ |
— |
|
|
— |
% |
|
| Specialty wheat proteins |
|
48,291 |
|
|
|
48,291 |
|
|
|
— |
|
|
— |
|
|
| Commodity wheat starches |
|
16,413 |
|
|
|
16,413 |
|
|
|
— |
|
|
— |
|
|
| Commodity wheat proteins |
|
982 |
|
|
|
982 |
|
|
|
— |
|
|
— |
|
|
|
Total Sales |
$ |
131,736 |
|
|
$ |
131,736 |
|
|
$ |
— |
|
|
— |
% |
|
| |
|
|
|
|
|
|
|
|
| Gross
profit |
$ |
46,967 |
|
|
$ |
40,538 |
|
|
$ |
(6,429 |
) |
(d) |
(14 |
)% |
|
| Gross margin
% |
|
35.7 |
% |
|
|
30.8 |
% |
|
|
|
(4.9 |
) |
pp(c) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Consolidated |
|
| |
Year Ended December 31, 2023 |
|
Increase/(Decrease) |
|
| |
As Reported (a) |
|
Pro-Forma(b) |
|
$ Change |
|
% Change |
|
|
Sales |
$ |
836,523 |
|
|
$ |
728,025 |
|
|
$ |
(108,498 |
) |
|
(13 |
)% |
|
|
Gross profit |
$ |
304,712 |
|
|
$ |
309,394 |
|
|
$ |
4,682 |
|
|
2 |
% |
|
| Gross margin
% |
|
36.4 |
% |
|
|
42.5 |
% |
|
|
|
6.1 |
|
pp(c) |
| |
(a) Represents actual results of the Company for the
year ended December 31, 2023, as reported in the Company's Annual
Report on Form 10-K for the year ended December 31,
2023.(b) Represents the Company's results for the year
ended December 31, 2023 excluding results associated with the
Company's Atchison, Kansas distillery. These are pro-forma
unaudited financial results and are preliminary. In some
circumstances, white goods, industrial alcohol, fuel grade alcohol,
and at times certain co-products are produced at the Company's
Lawrenceburg, Indiana distillery. The pro-forma financial results
assume the loss of the waste starch slurry credit and no gain or
loss on the disposal. The results of the Branded Spirits segment
for the year ended December 31, 2023 would not have been impacted
by a closure of the Atchison, Kansas
distillery.(c) Percentage points
(“pp”).(d) The reduction in gross profit for the
Ingredient Solutions segment is the result of increased cost of
goods sold from no longer receiving an intercompany credit for the
waste starch slurry by-product purchased by the adjoined Atchison,
Kansas distillery. The value of the intercompany credit is derived
from the value of corn which has fluctuated over time.
MGP INGREDIENTS, INC.Impact of the
Planned Closure of the Atchison Distillery Segment
Operating Results and Pro-Forma ResultsYear Ended
December 31, 2022(UNAUDITED) (in thousands)
| |
Distilling Solutions |
|
| |
Year Ended December 31, 2022 |
|
Increase/(Decrease) |
|
| |
As Reported (a) |
|
Pro-Forma(b) |
|
$ Change |
|
% Change |
|
|
Brown Goods |
$ |
229,523 |
|
|
$ |
229,523 |
|
|
$ |
— |
|
|
— |
% |
|
| White Goods |
|
74,510 |
|
|
|
24,110 |
|
|
|
(50,400 |
) |
|
(68 |
) |
|
|
Premium beverage alcohol |
|
304,033 |
|
|
|
253,633 |
|
|
|
(50,400 |
) |
|
(17 |
) |
|
| Industrial alcohol |
|
46,812 |
|
|
|
907 |
|
|
|
(45,905 |
) |
|
(98 |
) |
|
|
Food grade alcohol |
|
350,845 |
|
|
|
254,540 |
|
|
|
(96,305 |
) |
|
(27 |
) |
|
| Fuel grade alcohol |
|
13,681 |
|
|
|
41 |
|
|
|
(13,640 |
) |
|
(100 |
) |
|
| Distillers feed and related
co-products |
|
40,354 |
|
|
|
9,477 |
|
|
|
(30,877 |
) |
|
(77 |
) |
|
| Warehouse services |
|
23,598 |
|
|
|
23,598 |
|
|
|
— |
|
|
— |
|
|
|
Total Sales |
$ |
428,478 |
|
|
$ |
287,656 |
|
|
$ |
(140,822 |
) |
|
(33 |
)% |
|
| |
|
|
|
|
|
|
|
|
| Gross
profit |
$ |
126,282 |
|
|
$ |
132,388 |
|
|
$ |
6,106 |
|
|
5 |
% |
|
| Gross margin
% |
|
29.5 |
% |
|
|
46.0 |
% |
|
|
|
16.5 |
|
pp(c) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Ingredient Solutions |
|
| |
Year Ended December 31, 2022 |
|
Increase/(Decrease) |
|
| |
As Reported (a) |
|
Pro-Forma(b) |
|
$ Change |
|
% Change |
|
|
Specialty wheat starches |
$ |
62,567 |
|
|
$ |
62,567 |
|
|
$ |
— |
|
|
— |
% |
|
| Specialty wheat proteins |
|
39,313 |
|
|
|
39,313 |
|
|
|
— |
|
|
— |
|
|
| Commodity wheat starches |
|
14,023 |
|
|
|
14,023 |
|
|
|
— |
|
|
— |
|
|
| Commodity wheat proteins |
|
38 |
|
|
|
38 |
|
|
|
— |
|
|
— |
|
|
|
Total Sales |
$ |
115,941 |
|
|
$ |
115,941 |
|
|
$ |
— |
|
|
— |
% |
|
| |
|
|
|
|
|
|
|
|
| Gross
profit |
$ |
31,503 |
|
|
$ |
26,017 |
|
|
$ |
(5,486 |
) |
(d) |
(17 |
)% |
|
| Gross margin
% |
|
27.2 |
% |
|
|
22.4 |
% |
|
|
|
(4.8 |
) |
pp(c) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Consolidated |
|
| |
Year Ended December 31, 2022 |
|
Increase/(Decrease) |
|
| |
As Reported (a) |
|
Pro-Forma(b) |
|
$ Change |
|
% Change |
|
| Sales |
$ |
782,358 |
|
|
$ |
641,536 |
|
|
$ |
(140,822 |
) |
|
(18 |
)% |
|
|
Gross profit |
$ |
253,306 |
|
|
$ |
253,926 |
|
|
$ |
620 |
|
|
— |
% |
|
| Gross margin
% |
|
32.4 |
% |
|
|
39.6 |
% |
|
|
|
7.2 |
|
pp(c) |
| |
(a) Represents actual results of the Company for the
year ended December 31, 2022, as reported in the Company's Annual
Report on Form 10-K for the year ended December 31,
2022.(b) Represents the Company's results for the year
ended December 31, 2022 excluding results associated with the
Company's Atchison, Kansas distillery. These are pro-forma
unaudited financial results and are preliminary. In some
circumstances, white goods, industrial alcohol, fuel grade alcohol,
and at times certain co-products are produced at the Company's
Lawrenceburg, Indiana distillery. The pro-forma financial results
assume the loss of the waste starch slurry credit and no gain or
loss on the disposal. The results of the Branded Spirits segment
for the year ended December 31, 2022 would not have been impacted
by a closure of the Atchison, Kansas
distillery.(c) Percentage points
(“pp”).(d) The reduction in gross profit for the
Ingredient Solutions segment is the result of increased cost of
goods sold from no longer receiving an intercompany credit for the
waste starch slurry by-product purchased by the adjoined Atchison,
Kansas distillery. The value of the intercompany credit is derived
from the value of corn which has fluctuated over time.
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