MGP Ingredients Reports Record Fourth Quarter and Full Year 2021 Results
MGP Ingredients, Inc. (Nasdaq:MGPI) reported strong financial results for 2021, with consolidated sales up 58.5% year-over-year, totaling $626.7 million. The fourth-quarter sales rose 65.3% to $166.8 million. Gross profit for the full year increased 101.4% to $199.0 million. Operating income surged 133.0%, reaching $126.4 million. Fully diluted EPS improved to $4.34 from $2.37 in 2020. Looking ahead, MGP expects sales in 2022 to reach $690 million to $715 million and plans $33 million in expansion projects.
- Sales increased 58.5% to $626.7 million for the full year.
- Operating income rose 133.0% to $126.4 million.
- Gross profit reached a record $199.0 million, up 101.4%.
- Fully diluted EPS increased to $4.34, compared to $2.37 in 2020.
- Fourth-quarter sales improved 65.3% to $166.8 million.
- Adjusted EBITDA increased 99.4% to $141.0 million.
- Expansion projects totaling approximately $33 million planned for the next two years.
- Corporate selling, general, and administrative expenses increased to $88.9 million, attributed to Luxco expenses and one-time acquisition costs.
- The corporate effective tax rate rose to 25.0% for the full year from 23.3% in 2020.
Full year consolidated sales increased
Full year operating income increased
ATCHISON, Kan., Feb. 24, 2022 (GLOBE NEWSWIRE) -- MGP Ingredients, Inc. (Nasdaq:MGPI), a leading provider of distilled spirits, branded spirits and specialty food ingredients, today reported results for the fourth quarter and full year ended December 31, 2021.
2021 fourth quarter consolidated results compared to 2020 fourth quarter
- Sales increased
65.3% to$166.8 million , as a result of sales growth in each of the reporting segments. - Gross profit increased
66.3% to$52.8 million , representing31.6% of consolidated sales. - Operating income increased
191.6% to$45.3 million ; adjusted operating income increased70.5% to$29.0 million . - Adjusted EBITDA increased
67.5% to$34.5 million . - Fully diluted earnings per share ("EPS") increased to
$1.40 per share from$0.69 per share; fully diluted adjusted EPS increased to$0.87 per share from$0.75 per share.
2021 full year consolidated results compared to 2020 full year
- Sales increased
58.5% to$626.7 million , due to strong growth in each of the reporting segments. - Gross profit increased
101.4% to a record$199.0 million , representing31.7% of consolidated sales, due to strong growth in each of the reporting segments. - Adjusted gross profit increased
103.9% to a record$201.5 million , representing32.2% of consolidated sales. - Operating income increased
133.0% to$126.4 million ; adjusted operating income increased112.8% to$121.5 million . - Adjusted EBITDA increased
99.4% to$141.0 million . - Fully diluted EPS increased to
$4.34 per share compared to$2.37 per share in 2020; fully diluted adjusted EPS increased to$4.24 per share from$2.51 per share.
“Our record performance this year demonstrated the strength of our business model and the value each of our segments bring to our global customer base and was bolstered by the synergistic effects of the Luxco acquisition,” said David Colo, president and CEO of MGP Ingredients. “New distillate and aged whiskey sales experienced another solid year which drove a
Distillery Products Segment
For the fourth quarter of 2021, Distillery Products segment sales increased
For the full year 2021, Distillery Products segment sales increased
“Strong consumer demand for our American Whiskey products continues to drive meaningful sales for premium beverage alcohol,” said Colo. “Our impressive gross profit results highlight the long-term value of our aging whiskey inventory and is augmented by our ability to create new relationships and develop partnerships with existing customers. We remain focused on being proactive to attract additional aged whiskey and new distillate customers across each customer type.”
Branded Spirits Segment
In the fourth quarter of 2021, sales for the Branded Spirits segment totaled
For the full year 2021, Branded Spirits segment sales totaled
“Our strong Branded Spirits segment results for the quarter and year continued to benefit from the accelerated Luxco integration efforts by the organization,” commented Colo. “Growth in our American Whiskey and Tequila offerings contributed to the solid results for the quarter and year. We believe consumer demand for our expansive family of brands and spirits will continue to position us well for incremental growth.”
Ingredient Solutions Segment
For the fourth quarter of 2021, Ingredient Solutions segment sales increased
For the full year 2021, Ingredient Solutions segment sales increased
"Ingredient Solutions again finished the year with great momentum, as our specialty wheat starches and proteins business lines contributed to another strong quarter," Colo continued. "We remain pleased with our diverse customer base and ability to further optimize the product mix and channels to drive additional profitability."
Other
MGP experienced a fire at the Atchison facility during the fourth quarter 2020. During the quarter, the Company received a final settlement from its insurance carrier,
Corporate selling, general and administrative ("SG&A") expenses for the fourth quarter 2021, inclusive of advertising and promotion expenses, increased to
The corporate effective tax rate for the fourth quarter 2021 was
Fully diluted EPS increased to
2022 Outlook
MGP is offering the following increased consolidated guidance for fiscal 2022:
- Sales are projected to be in the range of
$690 million to$715 million . - Adjusted EBITDA is expected to be in the range of
$150 million to$157 million . - Basic adjusted earnings per share are forecasted to be in the
$4.15 t o$4.35 range, with basic weighted average shares outstanding expected to be approximately 22.0 million at year end. - Fully diluted adjusted earnings per share are forecasted to be in the
$3.95 t o$4.10 range, with fully diluted weighted average shares outstanding expected to be approximately 24.1 million at year end.
Conclusion
"We are very pleased with the momentum we ended the fiscal year on and believe we are well positioned to execute and deliver against our long-term growth strategy in fiscal 2022," Colo continued. “As a result of the continued demand we have been experiencing in each of our three business segments, we recently announced expansionary projects totaling approximately
Conference Call and Webcast Information
MGP 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 page
Conference 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 U.S. distilleries in Kentucky, Indiana, Kansas, and Washington D.C., 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 five 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
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 Statements
The forward-looking statements contained herein include, but are not limited to, statements about the expected effects on MGP Ingredients, Inc. ("the Company") of the recent acquisition of Luxco, Inc. and its affiliates ("Luxco"), anticipated earnings enhancements, synergies and other strategic options. Forward looking statements are usually identified by or are associated with such words as “intend,” “plan,” “believe,” “estimate,” “expect,” “anticipate,” “hopeful,” “should,” “may,” “will,” “could,” “encouraged,” “opportunities,” “potential,” and/or the negatives or variations of these terms or similar terminology.
These forward-looking statements reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, Company performance, and Company financial results and financial condition and are not guarantees of future performance. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. Important factors that could cause actual results to differ materially from our expectations include, among others: (i) the satisfaction of the conditions to closing the transaction to acquire Luxco in the anticipated timeframe or at all; (ii) the failure to obtain necessary regulatory approvals related to the acquisition of Luxco; (iii) the ability to realize the anticipated benefits of the acquisition of Luxco; (iv) the ability to successfully integrate the businesses; (v) disruption from the acquisition of Luxco making it more difficult to maintain business and operational relationships; (vi) significant transaction costs and unknown liabilities;(vii) litigation or regulatory actions related to the proposed acquisition of Luxco, and (viii) the financing of the acquisition of Luxco. Additional factors that could cause results to differ materially include, among others, (i) disruptions in operations at our Atchison facility, our Indiana facility, or any Luxco facility, (ii) the availability and cost of grain and flour, and fluctuations in energy costs, (iii) the effectiveness of our grain purchasing program to mitigate our exposure to commodity price fluctuations, (iv) the effectiveness or execution of our strategic plan, (v) potential adverse effects to operations and our system of internal controls related to the loss of key management personnel, (vi) the competitive environment and related market conditions, (vii) the impact of the COVID-19 pandemic, (viii) the ability to effectively pass raw material price increases on to customers, (ix) our ability to maintain compliance with all applicable loan agreement covenants, (x) our ability to realize operating efficiencies, (xi) actions of governments, and (xii) consumer tastes and preferences. For further information on these and other risks and uncertainties that may affect our business, including risks specific to our Distillery Products and Ingredient Solutions segments, see Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2021.
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, MGP has disclosed adjusted operating income, adjusted income before taxes, adjusted net income, adjusted MGP earnings, basic and diluted adjusted earnings per share, and adjusted EBITDA. The presentation of non-GAAP financial measures should be reviewed in conjunction with operating income, income before taxes, net income, net income attributable to common shareholders and basic and diluted earnings per share computed in accordance with U.S. GAAP and should not be considered a substitute for these GAAP measures. The non-GAAP adjustments referenced in the section entitled "Reconciliation of Selected GAAP Measures to Adjusted Non-GAAP Measures," take into account the impacts of items that are not necessarily ongoing in nature and/or predictive of the Company's operating trends. We believe that these 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 these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measure.
For More Information
Investors & Analysts:
Mike Houston
646-475-2998 or investor.relations@mgpingredients.com
Media:
Greg Manis
913-360-5440 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, 2020 | $ | 15,543 | ||||||
| Increase in gross profit - Branded Spirits segment | 20,447 | 131.6 | pp(a) | |||||
| Increase in gross profit - Distillery Products segment | 953 | 6.1 | pp | |||||
| Decrease in gross profit - Ingredient Solutions segment | (378 | ) | (2.4 | ) | pp | |||
| Increase in insurance recoveries | 16,325 | 105.0 | pp | |||||
| Increase in Advertising and promotion expenses | (5,332 | ) | (34.3 | ) | pp | |||
| Increase in selling general and administrative expenses | (2,242 | ) | (14.4 | ) | pp | |||
| Operating income for quarter ended December 31, 2021 | $ | 45,316 | 191.6 | % | ||||
| Operating income, year versus year | Operating Income | Change | ||||||
| Operating income for year ended December 31, 2020 | $ | 54,241 | ||||||
| Increase in gross profit - Branded Spirits segment | 60,457 | 111.5 | pp(a) | |||||
| Increase in gross profit - Distillery Products segment | 38,333 | 70.7 | pp | |||||
| Increase in gross profit - Ingredient Solutions segment | 1,369 | 2.5 | pp | |||||
| Increase in Insurance recoveries | 16,325 | 30.1 | pp | |||||
| Increase in Advertising and promotion expenses | (13,386 | ) | (24.7 | ) | pp | |||
| Increase in SG&A expenses | (30,976 | ) | (57.1 | ) | pp | |||
| Operating income for year ended December 31, 2021 | $ | 126,363 | 133.0 | % | ||||
(a) Percentage points (“pp”).
MGP INGREDIENTS, INC.
EARNINGS PER SHARE (“EPS”) ROLLFORWARD
| Change in basic and diluted EPS, quarter versus quarter | EPS | Change | ||||||
| Basic and diluted EPS for quarter ended December 31, 2020 | $ | 0.69 | ||||||
| Change in operations (a) | 1.32 | 191.3 | pp(b) | |||||
| Change in income attributable to participating securities(c) | 0.03 | 4.3 | pp | |||||
| Change in other income (expense), net (a) | (0.05 | ) | (7.2 | ) | pp | |||
| Change in interest expense(a) | (0.04 | ) | (5.8 | ) | pp | |||
| Change in weighted average shares outstanding(d) | (0.40 | ) | (58.0 | ) | pp | |||
| Tax: Change in effective tax rate | (0.08 | ) | (11.6 | ) | pp | |||
| Change in noncontrolling interest | (0.03 | ) | (4.3 | ) | pp | |||
| Basic EPS for quarter ended December 31, 2021 | 1.44 | 108.7 | % | |||||
| Conversion feature of Convertible Senior Notes | (0.04 | ) | (5.8 | ) | pp | |||
| Diluted EPS for quarter ended December 31, 2021 | $ | 1.40 | 102.9 | % | ||||
| Change in basic and diluted EPS, year versus year | EPS | Change | ||||||
| Basic and diluted EPS for year ended December 31, 2020 | $ | 2.37 | ||||||
| Change in operating income(a) | 3.24 | 136.7 | pp(b) | |||||
| Change in income attributable to participating securities(c) | 0.03 | 1.3 | pp | |||||
| Change in interest expense(a) | (0.08 | ) | (3.4 | ) | pp | |||
| Change in other income (expense), net(a) | (0.08 | ) | (3.4 | ) | pp | |||
| Change in weighted average shares outstanding(d) | (0.98 | ) | (41.4 | ) | pp | |||
| Tax: Change in effective tax rate | (0.10 | ) | (4.2 | ) | pp | |||
| Change in noncontrolling interest | (0.03 | ) | (1.3 | ) | pp | |||
| Basic EPS for year ended December 31, 2021 | 4.37 | 84.4 | % | |||||
| Conversion feature of Convertible Senior Notes | (0.03 | ) | (1.3 | ) | pp | |||
| Diluted EPS for year ended December 31, 2021 | $ | 4.34 | 83.1 | % | ||||
(a) Items are net of tax based on the effective tax rate for the base year (2020).
(b) Percentage points ("pp")
(c) Income attributable to participating securities changes primarily due to the awarding and vesting of the employee RSUs that receive dividend equivalent payments.
(d) Weighted average shares outstanding change primarily due to our repurchases of Common Stock, the vesting of employee RSUs, our purchase of vested RSUs from employees to pay withholding taxes, and the granting of Common Stock to directors. Additionally, during 2021, the weighted average shares outstanding was impacted by the issuance of shares as part of the Merger consideration.
MGP INGREDIENTS, INC.
SALES BY OPERATING SEGMENT
(Dollars in thousands)
| DISTILLERY PRODUCTS SALES | ||||||||||||
| Quarter Ended December 31, | Quarter versus Quarter Sales Change Increase/(Decrease) | |||||||||||
| 2021 | 2020 | $ Change | % Change | |||||||||
| Brown goods | $ | 32,474 | $ | 35,346 | $ | (2,872 | ) | (8.1 | )% | |||
| White goods | 19,769 | 15,951 | 3,818 | 23.9 | ||||||||
| Premium beverage alcohol | 52,243 | 51,297 | 946 | 1.8 | ||||||||
| Industrial alcohol | 15,732 | 16,650 | (918 | ) | (5.5 | ) | ||||||
| Food grade alcohol | 67,975 | 67,947 | 28 | — | ||||||||
| Fuel grade alcohol | 4,054 | 1,660 | 2,394 | 144.2 | ||||||||
| Distillers feed and related co-products | 5,885 | 6,220 | (335 | ) | (5.4 | ) | ||||||
| Warehouse services | 4,574 | 3,990 | 584 | 14.6 | ||||||||
| Total Distillery Products | $ | 82,488 | $ | 79,817 | $ | 2,671 | 3.3 | % | ||||
| BRANDED SPIRITS SALES | |||||||||||
| Quarter Ended December 31, | Quarter versus Quarter Sales Change Increase/(Decrease) | ||||||||||
| 2021 | 2020 | $ Change | % Change | ||||||||
| Ultra premium | $ | 10,338 | $ | 723 | $ | 9,615 | 1,329.9 | % | |||
| Premium | 6,971 | 91 | 6,880 | 7,560.4 | |||||||
| Mid | 16,996 | — | 16,996 | N/A | |||||||
| Value | 18,513 | — | 18,513 | N/A | |||||||
| Other | 8,191 | 14 | 8,177 | 58,407.1 | |||||||
| Total Branded Spirits | $ | 61,009 | $ | 828 | $ | 60,181 | 7,268.2 | % | |||
| INGREDIENT SOLUTIONS SALES | ||||||||||||
| Quarter Ended December 31, | Quarter versus Quarter Sales Change Increase / (Decrease) | |||||||||||
| 2021 | 2020 | $ Change | % Change | |||||||||
| Specialty wheat starches | $ | 12,707 | $ | 10,693 | $ | 2,014 | 18.8 | % | ||||
| Specialty wheat proteins | 8,186 | 6,588 | 1,598 | 24.4 | ||||||||
| Commodity wheat starches | 2,442 | 2,383 | 59 | 2.5 | ||||||||
| Commodity wheat proteins | 15 | 606 | (591 | ) | (97.5 | ) | ||||||
| Total Ingredient Solutions | $ | 23,350 | $ | 20,270 | $ | 3,080 | 15.2 | % | ||||
MGP INGREDIENTS, INC.
SALES BY OPERATING SEGMENT
(Dollars in thousands)
| DISTILLERY PRODUCTS SALES | ||||||||||||
| Year Ended December 31, | Year versus Year Sales Change Increase/(Decrease) | |||||||||||
| 2021 | 2020 | $ Change | % Change | |||||||||
| Brown goods | $ | 162,074 | $ | 121,384 | $ | 40,690 | 33.5 | % | ||||
| White goods | 75,818 | 63,873 | 11,945 | 18.7 | ||||||||
| Premium beverage alcohol | 237,892 | 185,257 | 52,635 | 28.4 | ||||||||
| Industrial alcohol | 62,628 | 80,682 | (18,054 | ) | (22.4 | ) | ||||||
| Food grade alcohol | 300,520 | 265,939 | 34,581 | 13.0 | ||||||||
| Fuel grade alcohol | 14,916 | 5,630 | 9,286 | 164.9 | ||||||||
| Distillers feed and related co-products | 19,545 | 26,109 | (6,564 | ) | (25.1 | ) | ||||||
| Warehouse services | 17,523 | 15,631 | 1,892 | 12.1 | ||||||||
| Total Distillery Products | $ | 352,504 | $ | 313,309 | $ | 39,195 | 12.5 | % | ||||
| BRANDED SPIRITS SALES | |||||||||||
| Year Ended December 31, | Year versus Year Sales Change Increase/(Decrease) | ||||||||||
| 2021 | 2020 | $ Change | % Change | ||||||||
| Ultra premium | $ | 34,030 | $ | 3,772 | $ | 30,258 | 802.2 | % | |||
| Premium | 19,663 | 334 | 19,329 | 5,787.1 | |||||||
| Mid | 51,890 | — | 51,890 | N/A | |||||||
| Value | 58,514 | — | 58,514 | N/A | |||||||
| Other | 19,469 | 43 | 19,426 | 45,176.7 | |||||||
| Total Branded Spirits | $ | 183,566 | $ | 4,149 | $ | 179,417 | 4,324.3 | % | |||
| INGREDIENT SOLUTIONS SALES | ||||||||||||
| Year Ended December 31, | Year versus Year Sales Change Increase/(Decrease) | |||||||||||
| 2021 | 2020 | $ Change | % Change | |||||||||
| Specialty wheat starches | $ | 47,758 | $ | 41,631 | $ | 6,127 | 14.7 | % | ||||
| Specialty wheat proteins | 31,485 | 26,960 | 4,525 | 16.8 | ||||||||
| Commodity wheat starches | 10,014 | 7,630 | 2,384 | 31.2 | ||||||||
| Commodity wheat proteins | 1,393 | 1,842 | (449 | ) | (24.4 | ) | ||||||
| Total Ingredient Solutions | $ | 90,650 | $ | 78,063 | $ | 12,587 | 16.1 | % | ||||
MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
| Quarter Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Sales | $ | 166,847 | $ | 100,915 | $ | 626,720 | $ | 395,521 | ||||||||
| Cost of sales | 114,094 | 69,184 | 427,755 | 296,715 | ||||||||||||
| Gross profit | 52,753 | 31,731 | 198,965 | 98,806 | ||||||||||||
| Advertising and promotion expense | 6,210 | 878 | 16,098 | 2,712 | ||||||||||||
| Selling, general and administrative | 17,552 | 15,310 | 72,829 | 41,853 | ||||||||||||
| Insurance Recoveries | (16,325 | ) | — | (16,325 | ) | — | ||||||||||
| Operating income | 45,316 | 15,543 | 126,363 | 54,241 | ||||||||||||
| Interest expense, net | (1,329 | ) | (566 | ) | (4,037 | ) | (2,267 | ) | ||||||||
| Other income (loss), net | (751 | ) | 275 | (1,230 | ) | 627 | ||||||||||
| Income before income taxes | 43,236 | 15,252 | 121,096 | 52,601 | ||||||||||||
| Income tax expense | 11,578 | 3,620 | 30,279 | 12,256 | ||||||||||||
| Net income | 31,658 | 11,632 | 90,817 | 40,345 | ||||||||||||
| Net loss attributable to noncontrolling interest | 211 | — | 490 | — | ||||||||||||
| Net income attributable to MGP Ingredients, Inc. | 31,869 | 11,632 | 91,307 | 40,345 | ||||||||||||
| Income attributable to participating securities | (236 | ) | (75 | ) | (712 | ) | (261 | ) | ||||||||
| Net income used in earnings per share calculation | $ | 31,633 | $ | 11,557 | $ | 90,595 | $ | 40,084 | ||||||||
| Weighted average common shares | ||||||||||||||||
| Basic | 21,983,310 | 16,919,241 | 20,719,663 | 16,937,125 | ||||||||||||
| Diluted | 23,011,154 | 16,919,241 | 20,982,453 | 16,937,125 | ||||||||||||
| Earnings per share | ||||||||||||||||
| Basic | $ | 1.44 | $ | 0.69 | $ | 4.37 | $ | 2.37 | ||||||||
| Diluted | $ | 1.40 | $ | 0.69 | $ | 4.34 | $ | 2.37 | ||||||||
MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
| December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | |||||||||||
| ASSETS | LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||
| Current Assets: | Current Liabilities: | |||||||||||||
| Cash and cash equivalents | $ | 21,568 | $ | 21,662 | Current maturities of long-term debt | $ | 3,227 | $ | 1,600 | |||||
| Receivables, net | 92,537 | 56,966 | Accounts payable | 53,712 | 30,273 | |||||||||
| Inventory | 245,944 | 141,011 | Federal and state excise taxes payable | 6,992 | 107 | |||||||||
| Prepaid expenses | 1,510 | 2,644 | Income taxes payable | — | 704 | |||||||||
| Refundable income taxes | 5,539 | — | Accrued expenses and other | 24,869 | 20,645 | |||||||||
| Total Current Assets | 367,098 | 222,283 | Total Current Liabilities | 88,800 | 53,329 | |||||||||
| Property, plant, and equipment | 428,249 | 313,730 | Other liabilities: | |||||||||||
| Less accumulated depreciation and amortization | (220,963 | ) | (181,738 | ) | Long-term debt, less current maturities | 35,266 | 38,271 | |||||||
| Property, Plant, and Equipment, net | 207,286 | 131,992 | Convertible senior notes | 194,906 | — | |||||||||
| Operating lease right-of-use assets, net | 9,671 | 5,151 | Long-term operating lease liabilities | 6,997 | 3,057 | |||||||||
| Investment in joint ventures | 4,944 | — | Other noncurrent liabilities | 5,132 | 7,094 | |||||||||
| Intangible assets, net | 218,838 | 890 | Deferred income taxes | 66,101 | 2,298 | |||||||||
| Goodwill | 226,294 | 2,738 | Total Liabilities | 397,202 | 104,049 | |||||||||
| Other assets | 7,336 | 3,521 | Total equity | 644,265 | 262,526 | |||||||||
| TOTAL ASSETS | $ | 1,041,467 | $ | 366,575 | TOTAL LIABILITIES AND TOTAL EQUITY | $ | 1,041,467 | $ | 366,575 | |||||
MGP INGREDIENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net income | $ | 90,817 | $ | 40,345 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 19,092 | 12,961 | ||||||
| Gain on insurance recoveries | (16,325 | ) | — | |||||
| Share-based compensation | 5,555 | 3,002 | ||||||
| Equity Method investment loss | 1,611 | — | ||||||
| Deferred income taxes, including change in valuation allowance | 6,772 | 593 | ||||||
| Other, net | 145 | 494 | ||||||
| Changes in operating assets and liabilities, net of effects of acquisition: | ||||||||
| Receivables, net | (6,031 | ) | (16,173 | ) | ||||
| Inventory | (14,214 | ) | (3,886 | ) | ||||
| Prepaid expenses | 2,586 | (748 | ) | |||||
| Income taxes payable (refundable) | (6,242 | ) | 1,750 | |||||
| Accounts payable | 5,301 | 1,817 | ||||||
| Accrued expenses and other | 738 | 11,537 | ||||||
| Federal and state excise taxes payable | (1,467 | ) | (34 | ) | ||||
| Other, net | (75 | ) | 1,597 | |||||
| Net cash provided by operating activities | 88,263 | 53,255 | ||||||
| Cash Flows from Investing Activities | ||||||||
| Additions to property, plant, and equipment | (47,389 | ) | (19,701 | ) | ||||
| Purchase of business, net of cash acquired | (149,005 | ) | (2,750 | ) | ||||
| Contributions to equity method investment | (1,470 | ) | — | |||||
| Proceeds from property insurance recoveries | 16,325 | — | ||||||
| Proceeds from sale of property and other | — | 2,906 | ||||||
| Other, net | (1,080 | ) | (102 | ) | ||||
| Net cash used in investing activities | (182,619 | ) | (19,647 | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Payment of dividends and dividend equivalents | (10,017 | ) | (8,188 | ) | ||||
| Purchase of treasury stock | (767 | ) | (4,411 | ) | ||||
| Loan fees paid related to borrowings | (7,050 | ) | (1,148 | ) | ||||
| Principal payments on long-term debt | (1,620 | ) | (1,208 | ) | ||||
| Proceeds from credit agreement - revolver | 242,300 | 54,700 | ||||||
| Payments on credit agreement - revolver | (242,300 | ) | (55,000 | ) | ||||
| Proceeds from Convertible Senior Notes | 201,250 | — | ||||||
| Payment on assumed debt as part of the Merger | (87,509 | ) | — | |||||
| Net cash provided by (used in) financing activities | 94,287 | (15,255 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents | (25 | ) | — | |||||
| Increase (decrease) in cash and cash equivalents | (94 | ) | 18,353 | |||||
| Cash and cash equivalents, beginning of period | 21,662 | 3,309 | ||||||
| Cash and cash equivalents, end of period | $ | 21,568 | $ | 21,662 | ||||
MGP INGREDIENTS, INC.
RECONCILIATION OF SELECTED GAAP MEASURES TO ADJUSTED NON-GAAP MEASURES
(UNAUDITED)
(in thousands)
| Quarter Ended December 31, 2021 | ||||||||||||||||||||||||||
| Gross Profit | Operating Income | Income before Income Taxes | Net Income | MGP Earnings(a) | Basic EPS | Diluted EPS | ||||||||||||||||||||
| Reported GAAP Results | $ | 52,753 | $ | 45,316 | $ | 43,236 | $ | 31,658 | $ | 31,633 | $ | 1.44 | $ | 1.40 | ||||||||||||
| Adjusted to remove: | ||||||||||||||||||||||||||
| Insurance recoveries(b) | — | (16,325 | ) | (16,325 | ) | (12,244 | ) | (12,244 | ) | (0.56 | ) | (0.53 | ) | |||||||||||||
| Business acquisition costs(c) | — | 5 | 5 | 5 | 5 | — | — | |||||||||||||||||||
| Adjusted Non-GAAP results | $ | 52,753 | $ | 28,996 | $ | 26,916 | $ | 19,419 | $ | 19,394 | $ | 0.88 | $ | 0.87 | ||||||||||||
| Quarter Ended December 31, 2020 | |||||||||||||||||
| Gross Profit | Operating Income | Income before Income Taxes | Net Income | MGP Earnings(a) | Basic and Diluted EPS | ||||||||||||
| Reported GAAP Results | 31,731 | $ | 15,543 | $ | 15,252 | $ | 11,632 | $ | 11,557 | $ | 0.69 | ||||||
| Adjusted to remove: | |||||||||||||||||
| CEO transition costs (d) | — | 542 | 542 | 188 | 188 | 0.01 | |||||||||||
| Business acquisition costs (c) | — | 919 | 919 | 919 | 919 | 0.05 | |||||||||||
| Adjusted Non-GAAP results | $ | 31,731 | $ | 17,004 | $ | 16,713 | $ | 12,739 | $ | 12,664 | $ | 0.75 | |||||
| Year Ended December 31, 2021 | ||||||||||||||||||||||||||
| Gross Profit | Operating Income | Income before Income Taxes | Net Income | MGP Earnings(a) | Basic EPS | Diluted EPS | ||||||||||||||||||||
| Reported GAAP Results | $ | 198,965 | $ | 126,363 | $ | 121,096 | $ | 90,817 | $ | 90,595 | $ | 4.37 | $ | 4.34 | ||||||||||||
| Adjusted to remove: | ||||||||||||||||||||||||||
| Insurance recoveries(b) | — | (16,325 | ) | (16,325 | ) | (12,244 | ) | (12,244 | ) | (0.59 | ) | (0.58 | ) | |||||||||||||
| Inventory step-up - Branded Spirits (e) | 2,529 | 2,529 | 2,529 | 2,529 | 2,510 | 0.12 | 0.12 | |||||||||||||||||||
| Business acquisition costs(c) | — | 8,927 | 8,927 | 7,529 | 7,467 | 0.36 | 0.36 | |||||||||||||||||||
| Adjusted Non-GAAP results | $ | 201,494 | $ | 121,494 | $ | 116,227 | $ | 88,631 | $ | 88,328 | $ | 4.26 | $ | 4.24 | ||||||||||||
| Year Ended December 31, 2020 | |||||||||||||||||
| Gross Profit | Operating Income | Income before Income Taxes | Net Income | MGP Earnings(a) | Basic and Diluted EPS | ||||||||||||
| Reported GAAP Results | $ | 98,806 | $ | 54,241 | $ | 52,601 | $ | 40,345 | $ | 40,084 | $ | 2.37 | |||||
| Adjusted to remove: | |||||||||||||||||
| CEO transition costs (d) | — | 1,932 | 1,932 | 1,467 | 1,467 | 0.09 | |||||||||||
| Business acquisition costs (c) | — | 919 | 919 | 919 | 919 | 0.05 | |||||||||||
| Adjusted Non-GAAP results | $ | 98,806 | $ | 57,092 | $ | 55,452 | $ | 42,731 | $ | 42,470 | $ | 2.51 | |||||
MGP INGREDIENTS, INC.
RECONCILIATION OF SELECTED GAAP MEASURES TO ADJUSTED NON-GAAP MEASURES
(a) MGP Earnings has been defined as "Net income used in earnings per share calculation"
(b) The Insurance recovery costs are included in the Consolidated Statement of Income within the Insurance recoveries line item. During November 2020, we experienced a fire at the Atchison facility. The fire damaged certain equipment in the facility’s feed drying operations and caused a temporary loss of production time. This adjustment includes the legally binding commitment from our insurance carrier for final settlement for the replacement of the damaged dryer.
(c) The Business acquisition costs are included in the Consolidated Statement of Income within the Selling, general and administrative line item. The adjustment includes transaction and integration costs associated with the merger with Luxco.
(d) 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 in connection with the transition of CEOs.
(e) The finished goods Inventory valuation step-up costs are included in the Consolidated Statement of Income within Cost of goods by the Branded Spirits segment. The adjustment includes the purchase accounting adjustment to value the acquired finished goods inventory at its estimated fair value.
MGP INGREDIENTS, INC.
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(UNAUDITED) (in thousands)
| Quarter Ended December 31, | Year Ended December 31, | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| Net Income | $ | 31,658 | $ | 11,632 | $ | 90,817 | $ | 40,345 | |||||
| Interest expense | 1,329 | 566 | 4,037 | 2,267 | |||||||||
| Income tax expense | 11,578 | 3,620 | 30,279 | 12,256 | |||||||||
| Depreciation and amortization | 5,424 | 3,343 | 19,092 | 12,961 | |||||||||
| Equity method investment | 872 | — | 1,611 | — | |||||||||
| Insurance recoveries | (16,325 | ) | — | (16,325 | ) | — | |||||||
| Inventory step-up - Branded Spirits | — | — | 2,529 | — | |||||||||
| Business acquisition costs | 5 | 919 | 8,927 | 919 | |||||||||
| CEO transition costs | — | 542 | — | 1,932 | |||||||||
| Adjusted EBITDA | $ | 34,541 | $ | 20,622 | $ | 140,967 | $ | 70,680 | |||||
The non-GAAP adjusted EBITDA measure is defined as earnings before interest, taxes, depreciation and amortization, equity method investment, insurance recoveries, inventory step-up, business acquisition costs and CEO transition costs. See section "reconciliation of selected GAAP measure to non-GAAP measures" for further details on each of these non-GAAP Items.
MGP INGREDIENTS, INC.
Purchase Accounting - Summary of Preliminary Fair Value Step Up
(UNAUDITED) (in thousands)
The Merger was accounted for as a business combination in accordance with Accounting Standard Codification 805 (“ASC 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 fair value of the assets and liabilities are based upon a preliminary assessment of fair value and may change as valuations for certain tangible assets, intangible assets and contingent liabilities are finalized and the associated income tax impacts are determined. The Company expects to finalize the purchase price allocation as soon as practicable, but no longer than one year from the acquisition date. The table below reflects the summary for Finished Goods inventory, Whiskey inventory, Property, plant and equipment, and Distributor relationships preliminary 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, 2021 | Year Ended December 31, 2021 | ||||||||
| Finished Goods Inventory | $ | 2,529 | 3 months | Cost of sales | $ | — | $ | 2,529 | ||||
| Whiskey Inventory | 1,065 | 10 years | Cost of sales | 27 | 81 | |||||||
| Property, plant and equipment | 7,340 | various | Cost of sales | 487 | 1,534 | |||||||
| Definite-lived intangible asset - Distributor relationships | 41,400 | 20 years | SG&A | 516 | 1,552 | |||||||
| Total Fair Value Step Up | $ | 52,334 | $ | 1,030 | $ | 5,696 | ||||||
FAQ
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