MGP Ingredients, Inc. (MGPI) has reported a 27.87 percent rise in profit for the quarter ended Dec. 31, 2016. The company has earned $8.28 million, or $0.48 a share in the quarter, compared with $6.48 million, or $0.38 a share for the same period last year.
Revenue during the quarter went down marginally by 0.45 percent to $81.14 million from $81.51 million in the previous year period. Gross margin for the quarter expanded 234 basis points over the previous year period to 21.67 percent. Total expenses were 86.94 percent of quarterly revenues, down from 87.64 percent for the same period last year. This has led to an improvement of 70 basis points in operating margin to 13.06 percent.
Operating income for the quarter was $10.60 million, compared with $10.07 million in the previous year period.
"Our fourth quarter and fiscal 2016 results mark further progress against our long term strategic plan," said Gus Griffin, president and chief executive officer of MGP. "While revenues declined slightly as we continue to migrate away from industrial alcohol, gross profit and margins expanded and operating income improved in both our Distillery Products and Ingredient Solutions segments. We are pleased with the progress against our goals for the year and enter 2017 strongly positioned for growth."
For fiscal year 2017, MGP Ingredients, Inc. projects operating income to grow in the range of 10 percent to 15 percent. Reconfirming previous guidance, operating income is expected to grow between 10% and 15% annually from 2016 through 2018. Recognizing the difficulty of projecting three years in the future, our conservative estimate of growth in operating income in 2019 is 15% to 20% as sales of aged whiskey inventory becomes a more significant factor.
Working capital increases sharply
MGP Ingredients, Inc. has recorded an increase in the working capital over the last year. It stood at $73.91 million as at Dec. 31, 2016, up 38.09 percent or $20.39 million from $53.52 million on Dec. 31, 2015. Current ratio was at 3 as on Dec. 31, 2016, up from 2.42 on Dec. 31, 2015. Cash conversion cycle (CCC) has increased to 57 days for the quarter from 44 days for the last year period. Days sales outstanding went down to 15 days for the quarter compared with 17 days for the same period last year.
Days inventory outstanding has increased to 57 days for the quarter compared with 41 days for the previous year period. At the same time, days payable outstanding was almost stable at 15 days for the quarter, when compared with the previous year period.
Debt moves up
MGP Ingredients, Inc. has witnessed an increase in total debt over the last one year. It stood at $36 million as on Dec. 31, 2016, up 7.59 percent or $2.54 million from $33.46 million on Dec. 31, 2015. Total debt was 15.98 percent of total assets as on Dec. 31, 2016, compared with 17.22 percent on Dec. 31, 2015. Debt to equity ratio was at 0.25 as on Dec. 31, 2016, down from 0.29 as on Dec. 31, 2015.
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