Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 30, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | MGP INGREDIENTS INC | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 16,686,927 | |
Amendment Flag | false | |
Entity Central Index Key | 835,011 | |
Entity Filer Category | Accelerated Filer | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Income Statement [Abstract] | |||
Sales | $ 77,191 | $ 84,864 | |
Less: excise taxes | 356 | 4,451 | |
Net sales | 76,835 | 80,413 | |
Cost of sales | [1] | 59,789 | 67,025 |
Gross profit | 17,046 | 13,388 | |
Selling, general and administrative expenses | 6,321 | 6,480 | |
Operating income | 10,725 | 6,908 | |
Equity method investment earnings (Note 2) | 517 | 1,352 | |
Interest expense, net | (311) | (131) | |
Income before income taxes | 10,931 | 8,129 | |
Income tax expense | 3,872 | 3,059 | |
Net income | 7,059 | 5,070 | |
Other comprehensive loss, net of tax | (17) | (72) | |
Comprehensive income | $ 7,042 | $ 4,998 | |
Basic and diluted earnings per share (in usd per share) | $ 0.41 | $ 0.28 | |
Dividends and dividend equivalents per common share (in usd per share) | $ 0.08 | $ 0.06 | |
[1] | Includes related party purchases of $6,241 and $9,292 for the quarter and year-to-date periods ended March 31, 2016 and 2015, respectively. |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||
Cost of sales, related party transactions | $ 6,241 | $ 9,292 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 0 | $ 747 |
Receivables (less allowance for doubtful accounts: March 31, 2016 - $24; December 31, 2015 - $24) | 31,204 | 30,670 |
Inventory | 68,383 | 58,701 |
Prepaid expenses | 1,351 | 1,062 |
Total current assets | 100,938 | 91,180 |
Property and equipment | 233,002 | 229,914 |
Less accumulated depreciation and amortization | (149,585) | (146,360) |
Property and equipment, net | 83,417 | 83,554 |
Equity method investments (Note 2) | 15,780 | 18,563 |
Other assets | 972 | 1,013 |
Total assets | 201,107 | 194,310 |
Current Liabilities | ||
Current maturities of long-term debt | 5,997 | 3,345 |
Accounts payable | 16,740 | 20,940 |
Accounts payable to affiliate, net | 2,302 | 2,291 |
Accrued expenses | 7,335 | 10,400 |
Income taxes payable | 4,797 | 685 |
Total current liabilities | 37,171 | 37,661 |
Long-term debt, less current maturities | 19,239 | 7,579 |
Revolving credit facility | 12,208 | 22,536 |
Deferred credit | 3,228 | 3,402 |
Accrued retirement health and life insurance benefits | 4,085 | 4,136 |
Deferred income taxes | 2,135 | 2,757 |
Other noncurrent liabilities | 80 | 79 |
Total liabilities | $ 78,146 | $ 78,150 |
Commitments and Contingencies (Note 4) | ||
Capital stock | ||
Preferred, 5% non-cumulative; $10 par value; authorized 1,000 shares; issued and outstanding 437 shares | $ 4 | $ 4 |
Common stock | ||
No par value; authorized 40,000,000 shares; issued 18,115,965 shares at March 31, 2016 and December 31, 2015, and16,686,927 and 16,681,576 shares outstanding at March 31, 2016 and December 31, 2015, respectively | 6,715 | 6,715 |
Additional paid-in capital | 12,361 | 11,356 |
Retained earnings | 120,242 | 114,558 |
Accumulated other comprehensive loss, net of tax | (517) | (500) |
Treasury stock, at cost | ||
Shares of 1,429,038 at March 31, 2016 and 1,434,389 at December 31, 2015 | (15,844) | (15,973) |
Total stockholders’ equity | 122,961 | 116,160 |
Total liabilities and stockholders’ equity | $ 201,107 | $ 194,310 |
Condensed Consolidated Balance5
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Statement of Financial Position [Abstract] | ||
Receivables allowance for doubtful accounts (in dollars) | $ 24 | $ 24 |
Preferred stock, percentage non-cumulative (percent) | 5.00% | 5.00% |
Preferred stock, par value (in Dollars per share) | $ 10 | $ 10 |
Preferred stock, shares authorized (shares) | 1,000 | 1,000 |
Preferred stock, shares issued (shares) | 437 | 437 |
Preferred stock, shares outstanding (shares) | 437 | 437 |
Common stock, shares authorized (shares) | 40,000,000 | 40,000,000 |
Common stock, shares issued (shares) | 18,115,965 | 18,115,965 |
Common stock, shares outstanding (shares) | 16,686,927 | 16,681,576 |
Treasury stock (shares) | 1,429,038 | 1,434,389 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash Flows from Operating Activities | ||
Net income | $ 7,059 | $ 5,070 |
Adjustments to Reconcile Net Income to Net Cash Provided by (used in) Operating Activities: | ||
Depreciation and amortization | 3,304 | 3,091 |
Distribution received from equity method investee | 3,300 | 0 |
Deferred income taxes, including change in valuation allowance | (622) | 2,027 |
Share-based compensation | 652 | 205 |
Equity method investment earnings | (517) | (1,352) |
Changes in Operating Assets and Liabilities: | ||
Receivables, net | (534) | (194) |
Inventory | (9,682) | (3,213) |
Prepaid expenses | (289) | (564) |
Accounts payable | (4,236) | 819 |
Accounts payable to affiliate, net | 11 | 685 |
Accrued expenses | (3,958) | (1,248) |
Income taxes payable | 4,112 | 962 |
Deferred credit | (174) | (160) |
Accrued retirement health and life insurance benefits | (67) | (127) |
Other | 0 | 120 |
Net cash provided by (used in) operating activities | (1,641) | 6,121 |
Cash Flows from Investing Activities | ||
Additions to property and equipment | (3,053) | (5,030) |
Net cash used in investing activities | (3,053) | (5,030) |
Cash Flows from Financing Activities | ||
Principal payments on long-term debt | (438) | (398) |
Proceeds from credit facility | 8,099 | 1,086 |
Payments on credit facility | (3,646) | (738) |
Loan fees incurred with borrowings | (68) | (291) |
Net cash provided by (used in) financing activities | 3,947 | (341) |
Increase (decrease) in cash and cash equivalents | (747) | 750 |
Cash and cash equivalents, beginning of year | 747 | 5,641 |
Cash and cash equivalents, end of period | $ 0 | $ 6,391 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Changes In Stockholders' Equity (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands | Total | Capital Stock Preferred | Issued Common | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock |
Beginning Balance at Dec. 31, 2015 | $ 116,160 | $ 4 | $ 6,715 | $ 11,356 | $ 114,558 | $ (500) | $ (15,973) |
Comprehensive income: | |||||||
Net income | 7,059 | 7,059 | |||||
Change in post employment benefits | (17) | (17) | |||||
Dividends and dividend equivalents, net of forfeitures | (1,375) | (1,375) | |||||
Share-based compensation | 1,005 | 1,005 | |||||
Stock shares awarded, forfeited or vested | 129 | 129 | |||||
Ending Balance at Mar. 31, 2016 | $ 122,961 | $ 4 | $ 6,715 | $ 12,361 | $ 120,242 | $ (517) | $ (15,844) |
Accounting Policies and Basis o
Accounting Policies and Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Accounting Policies and Basis of Presentation | Accounting Policies and Basis of Presentation. The Company. MGP Ingredients, Inc. ("Company") is a Kansas corporation headquartered in Atchison, Kansas. It was incorporated in 2011 and is a holding company with no operations of its own. Its principal directly-owned operating subsidiaries are MGPI Processing, Inc. ("Processing") and MGPI of Indiana, LLC ("MGPI-I"). Processing was incorporated in Kansas in 1957 and is the successor to a business founded in 1941 by Cloud L. Cray, Sr. On January 3, 2012 , MGP Ingredients, Inc. reorganized into a holding company structure (the "Reorganization") through a series of steps involving various legal entities. Prior to the Reorganization, Processing was named MGP Ingredients, Inc. Basis of Presentation and Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements as of and for the quarter ended March 31, 2016 should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Report on Form 10-K/A for the year ended December 31, 2015 filed with the Securities and Exchange Commission ("SEC"). The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Use of Estimates. The financial reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The application of certain of these policies places significant demands on management’s judgment, with financial reporting results relying on estimation about the effects of matters that are inherently uncertain. For all of these policies, management cautions that future events rarely develop as forecast, and estimates routinely require adjustment and may require material adjustment. Inventory. Inventory includes finished goods, raw materials in the form of agricultural commodities used in the production process and certain maintenance and repair items. Bourbon and whiskeys are normally aged in barrels for several years, following industry practice; all barreled bourbon and whiskey is classified as a current asset. The Company includes warehousing, insurance, and other carrying charges applicable to barreled whiskey in inventory costs. Inventories are stated at the lower of cost or market on the first-in, first-out, or FIFO, method. Inventory valuations are impacted by constantly changing prices paid for key materials, primarily corn. Inventory consists of the following: March 31, December 31, Finished goods $ 18,963 $ 15,126 Barreled distillate 33,813 28,278 Work in process 1,942 2,364 Raw materials 7,161 6,675 Maintenance materials 5,610 5,371 Other 894 887 Total $ 68,383 $ 58,701 Equity Method Investments. The Company accounts for its investment in non-consolidated subsidiaries under the equity method of accounting when the Company has significant influence, but does not have more than 50 percent voting control, and is not considered the primary beneficiary. Under the equity method of accounting, the Company reflects its investment in non-consolidated subsidiaries within the Company’s Consolidated Balance Sheets as Equity method investments; the Company’s share of the earnings or losses of the non-consolidated subsidiaries are reflected as Equity method investment earnings in the Consolidated Statements of Comprehensive Income. The Company reviews its investments in non-consolidated subsidiaries for impairment whenever events or changes in business circumstances indicate that the carrying amount of the investments may not be fully recoverable. Evidence of a loss in value that is other than temporary include, but are not limited to, the absence of an ability to recover the carrying amount of the investment, the inability of the investee to sustain an earnings capacity which would justify the carrying amount of the investment, or, where applicable, estimated sales proceeds which are insufficient to recover the carrying amount of the investment. If the fair value of the investment is determined to be less than the carrying value and the decline in value is considered to be other than temporary, an appropriate write-down is recorded based on the excess of the carrying value over the best estimate of fair value of the investment. Revenue Recognition. Except as discussed below, revenue from the sale of the Company’s products is recognized as products are delivered to customers according to shipping terms and when title and risk of loss have transferred. Income from various government incentive grant programs is recognized as it is earned. The Company’s Distillery segment routinely produces unaged distillate, and this product is frequently barreled and warehoused at a Company location for an extended period of time in accordance with directions received from the Company’s customers. This product must meet customer acceptance specifications, the risks of ownership and title for these goods must be passed, and requirements for bill and hold revenue recognition must be met prior to the Company recognizing revenue for this product. Separate warehousing agreements are maintained for customers who store their product with the Company and warehouse revenues are recognized as the service is provided. Sales include customer paid freight costs billed to customers for the quarters ended March 31, 2016 and 2015 of $4,137 and $3,399 , respectively. Recognition of Insurance Recoveries. Estimated loss contingencies are recognized as charges to income when they are probable and reasonably estimable. Insurance recoveries are not recognized until all contingencies related to the insurance claim have been resolved and settlement has been reached with the insurer. Insurance recoveries, to the extent of costs and lost profits, are reported as a reduction to Cost of sales on the Consolidated Statement of Comprehensive Income. Insurance recoveries in excess of costs and losses are included in Insurance recoveries on the Consolidated Statement of Comprehensive Income. During October 2014, the Company experienced a fire at its Atchison facility. Certain equipment in the facility's feed drying operations was damaged, but repairable, and the Company experienced a seven -day temporary loss of production. The Company reached final settlement with its insurance carrier to close this claim during the quarter ended March 31, 2015, and received $460 of business interruption insurance proceeds that were recorded in the quarter ended June 30, 2015. Income Taxes. The Company accounts for income taxes using an asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Evaluating the need for, and amount of, a valuation allowance for deferred tax assets often requires significant judgment and extensive analysis of all available evidence on a jurisdiction-by-jurisdiction basis. Such judgments require the Company to interpret existing tax law and other published guidance as applied to the Company's circumstances. As part of this assessment, the Company considers both positive and negative evidence about its profitability and tax situation. A valuation allowance is recognized if it is more likely than not that at least some portion of the deferred tax asset will not be realized. Accounting for uncertainty in income tax positions requires management judgment and the use of estimates in determining whether the impact of a tax position is "more likely than not" of being sustained. The Company considers many factors when evaluating and estimating its tax positions, which may require periodic adjustment and which may not accurately anticipate actual outcomes. It is possible that amounts reserved for potential exposure could change as a result of the conclusion of tax examinations and, accordingly, materially affect the Company’s reported net income after tax. Earnings per Share. Basic and diluted earnings per share are computed using the two-class method, which is an earnings allocation formula that determines net income per share for each class of Common Stock and participating security according to dividends declared and participation rights in undistributed earnings. Per share amounts are computed by dividing net income from continuing operations attributable to common shareholders by the weighted average shares outstanding during the period. Long-Lived Assets and Loss on Impairment of Assets. Management reviews long-lived assets, mainly property and equipment assets, whenever events or circumstances indicate that usage may be limited and carrying values may not be fully recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are determined to be impaired, the impairment is measured by the amount by which the asset carrying value exceeds the estimated fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No events or conditions occurred during the quarter ended March 31, 2016 that required the Company to test its long-lived assets for impairment. Fair Value of Financial Instruments. The Company determines the fair values of its financial instruments based on a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The hierarchy is broken down into three levels based upon the observability of inputs. Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value in its entirety requires judgment and considers factors specific to the asset or liability. The Company’s short term financial instruments include cash and cash equivalents, accounts receivable and accounts payable. The carrying value of the short term financial instruments approximates the fair value due to their short term nature. These financial instruments have no stated maturities or the financial instruments have short term maturities that approximate market. The fair value of the Company’s debt is estimated based on current market interest rates for debt with similar maturities and credit quality. The fair value of the Company’s debt was $37,492 and $34,603 at March 31, 2016 and December 31, 2015 , respectively. The financial statement carrying value of total debt was $37,444 (net of unamortized loan fees of $667 ) and $33,460 at March 31, 2016 and December 31, 2015 , respectively. These fair values are considered Level 2 under the fair value hierarchy. Dividends and Dividend Equivalents. On March 7, 2016, the Board of Directors declared a dividend payable to stockholders of record as of March 21, 2016, of the Company's common stock, no par value ("Common Stock"), and a dividend equivalent payable to holders of restricted stock units ("RSUs") as of March 21, 2016, of $0.08 per share and per unit. The total payment of $1,378 , comprised of dividend payments of $1,335 and dividend equivalent payments of $43 , was paid on April 14, 2016. On March 12, 2015, the Board of Directors announced a dividend payable to stockholders of record as of March 26, 2015, of the Company's Common Stock, and a dividend equivalent payable to holders of RSUs as of March 26, 2015, of $0.06 per share and per unit. The total payment of $1,087 , comprised of dividend payments of $1,061 and dividend equivalent payments of $26 was paid on April 21, 2015. Credit Agreement. On March 21, 2016, the Company entered into a Third Amended and Restated Credit Agreement (the "Credit Agreement") with Wells Fargo Bank, National Association. The Credit Agreement contains customary terms and conditions substantially similar to the Second Amended and Restated Credit Agreement (the "Previous Credit Agreement") and associated schedules with Wells Fargo Bank, National Association except as described below. Such terms and conditions include limitations on mergers, consolidations, reorganizations, recapitalizations, indebtedness and certain payments, as well as financial condition covenants relating to leverage and interest coverage ratios. The Company's obligations under the Credit Agreement may be accelerated upon customary events of default, including, without limitation, non-payment of principal or interest, breaches of covenants, certain judgments against the loan parties, cross-defaults to other material debt, a change in control and specified bankruptcy events. The Credit Agreement added a $15,000 term loan to the existing $80,000 revolving facility resulting in a $95,000 facility. The principal of the term loan can be prepaid at any time without penalty or otherwise will be repaid by the Company in installments of $250 each month, commencing on May 1, 2016. Additionally, the Credit Agreement reduced certain restrictions on acquisitions. Under the Previous Credit Agreement, only acquisitions less than $1,000 individually and $7,500 in the aggregate were permitted. The Credit Agreement eliminated the individual dollar limitation and increased the aggregate limitation to $35,000 . The Credit Agreement also added an increased minimum fixed charge coverage ratio of 1.25 x (compared to 1.10 x in the Previous Credit Agreement) while the $15,000 term loan is outstanding, however, the special fixed coverage ratio is only tested if excess availability, after giving effect to such restricted payment, is less than 17.5 percent of the total amount of the facility. The Company was in compliance with the Credit Agreement covenants at March 31, 2016 . The Company incurred $68 of new loan fees related to the Credit Agreement during the quarter ended March 31, 2016 . The unamortized balance of total loan fees related to the Credit Agreement was $667 at March 31, 2016 and is included in the carrying value of total debt on the Condensed Consolidated Balance Sheets as described above in the Fair Value of Financial Instruments section. The loan fees are being amortized over the life of the Credit Agreement. The amount of borrowings which the Company may make is subject to borrowing base limitations adjusted for the Fixed Asset Sub-Line collateral as described in the Credit Agreement. As of March 31, 2016 , the Company's total outstanding borrowings under the credit facility were $33,878 , comprised of $12,875 of revolver borrowing, $6,003 of fixed asset sub-line term loan borrowing, and $15,000 of term loan borrowing, leaving $53,352 available. The average interest rate for total borrowings of the Credit Agreement at March 31, 2016 was 3.24 percent . Recent Accounting Pronouncements. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting , which simplifies certain aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is evaluating the effect that ASU 2016-09 will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606) Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which requires the entity to determine whether the nature of its promise is to provide a good or service to the customer (that is, the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (that is, the entity is an agent). This determination is based upon whether the entity controls the good or the service before it is transferred to the customer. ASU No. 2016-08 has a mandatory adoption date for the Company of January 1, 2018, the same mandatory adoption date as ASU No. 2014-09 and ASU No. 2015-14. Early adoption is permitted at January 1, 2017. The standard and updates permit the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09, updated by ASU 2015-14 and ASU 2016-08, will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , which increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and discloses key information about leasing arrangements. This update, along with IFRS 16, Leases, is the result of the FASB’s and the International Accounting Standards Board’s (IASB’s) efforts to meet this objective and improve financial reporting. ASU 2016-02 is effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures. In January 2016 the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10) , which enhances the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The ASU is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted following the early application guidance set forth in the pronouncement. The Company is evaluating the effect that ASU 2016-01 will have on its consolidated financial statements and related disclosures. On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. At its July 9, 2015 meeting, the FASB agreed to defer by one year the mandatory effective date of its revenue recognition standard, but will also provide entities the option to adopt it as of the original effective date (ASU No. 2015-14). The new standard has a mandatory adoption date for the Company of January 1, 2018. Early adoption is permitted at January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09, updated to ASU 2015-14, will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. |
Equity Method Investments
Equity Method Investments | 3 Months Ended |
Mar. 31, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | Equity Method Investments. As of March 31, 2016 , the Company’s investments that are accounted for using the equity method of accounting consisted of the following: (1) 30 percent interest in ICP, which manufactures alcohol for fuel, industrial and beverage applications, and (2) 50 percent interest in D.M. Ingredients, GmbH, ("DMI"), which produced certain specialty starch and protein ingredients until June 30, 2015 (see DMI discussion below). On February 26, 2016, we received a cash dividend distribution from ICP in the amount of $3,300 , which was our 30 percent share of the total distribution. Realizability of DMI Investment. On December 29, 2014, the Company gave notice to DMI and to the Company's partner in DMI, Crespel and Dieters GmbH & Co. KG ("C&D"), to terminate the joint venture effective June 30, 2015. C&D also provided notice to terminate DMI effective June 30, 2015. On June 22, 2015, a termination agreement was executed by and between the Company, DMI, and C&D to dissolve DMI effective June 30, 2015. Additionally, on June 22, 2015 a termination agreement was executed by and between the Company and DMI to terminate their distribution agreement effective June 29, 2015. Under German law, commencing on June 30, 2015, normal operations for DMI ceased and a one -year winding down process began once the registration of resolutions, appointment of liquidators, inventory count, and publication of the notice to potential creditors was complete, which occurred on October 29, 2015. On or after October 29, 2016, the remaining liquidating proceeds will be disbursed. Summary Financial Information (unaudited). Condensed financial information related to the Company’s non-consolidated equity method investment in ICP is shown below. Quarter Ended March 31, March 31, ICP’s Operating results: Net sales (a) $ 49,609 $ 39,598 Cost of sales and expenses (b) 47,886 35,169 Net income $ 1,723 $ 4,429 (a) Includes related party sales to MGPI of $6,241 and $8,754 for the quarters ended March 31, 2016 and 2015 , respectively. (b) Includes depreciation and amortization of $735 and $662 for the quarters ended March 31, 2016 and 2015 , respectively. The Company’s equity method investment earnings from joint ventures, based on unaudited financial statements, is as follows: Quarter Ended March 31, March 31, ICP (30% interest) $ 517 $ 1,329 DMI (50% interest) — 23 $ 517 $ 1,352 The Company’s investment in joint ventures is as follows: March 31, December 31, ICP (30% interest) $ 15,396 (a) $ 18,179 DMI (50% interest) 384 384 $ 15,780 $ 18,563 (a) During the quarter ended March 31, 2016 , the Company received a $3,300 cash distribution from ICP, which reduced the Company's investment amount in ICP. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share. The computations of basic and diluted earnings per share are as follows: Quarter Ended March 31, March 31, Operations: Net income (a) $ 7,059 $ 5,070 Less: Amounts allocated to participating securities (nonvested shares and units) (b) 270 209 Net income attributable to common shareholders $ 6,789 $ 4,861 Share information: Basic weighted average common shares (c) 16,607,074 (d) 17,395,659 Incremental shares from potential dilutive securities (e) — 713 Diluted weighted average common shares 16,607,074 17,396,372 Basic and diluted earnings per share $ 0.41 $ 0.28 (a) Net income attributable to all shareholders. (b) Participating securities include 128,500 and 278,900 nonvested restricted shares at March 31, 2016 and 2015 , respectively. (c) Under the two-class method, basic weighted average common shares exclude outstanding nonvested, participating securities consisting of restricted share awards of 128,500 and 278,900 at March 31, 2016 and 2015 , respectively. (d) Basic weighted average common shares at March 31, 2016 were affected by the September 1, 2015, purchase of 950,000 shares of common stock in a privately-negotiated transaction with F2 SEA, Inc., an affiliate of SEACOR Holdings, Inc. pursuant to a Stock Repurchase Agreement. SEACOR Holdings, Inc. is the 70 percent owner of ICP, the Company's 30 percent equity method investment. (e) There were no anti-dilutive shares related to stock options for the quarters ended March 31, 2016 and 2015 . There were dilutive shares related to stock options totaling 0 and 4,000 for the quarters ended March 31, 2016 and 2015 , respectively. The dilutive shares resulted in potential dilutive securities of 0 and 713 for the quarters ended March 31, 2016 and 2015 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies. Commitments. Open purchase order commitments at March 31, 2016 related to raw materials and packaging used in the ordinary course of business were $66,893 extending out to January 2017 . Open purchase order commitments at March 31, 2016 related to the purchase of capital assets were $2,978 . In addition, refer to the Company's contractual obligations/commitments that were disclosed in the Report on Form 10-K/A as of the year ended December 31, 2015 . Contingencies. There are various legal and regulatory proceedings involving the Company and its subsidiaries. The Company accrues estimated costs for a contingency when management believes that a loss is probable and can be reasonably estimated. The Alcohol and Tobacco Tax Trade Bureau ("TTB") performed a federal excise tax audit of the Company’s subsidiaries, MGPI of Indiana, LLC and MGPI Processing, Inc., for the periods January 1, 2012 through July 31, 2015 and January 1, 2013 through July 31, 2015, respectively. The Company is in the process of addressing the preliminary findings of the TTB audit regarding clerical errors and support for storage losses. The Company is unable to determine the probability that additional excise tax and penalties will be owed and cannot reasonably estimate the amount thereof. However, the Company believes it is probable that a penalty may be imposed by the TTB as a result of certain TTB audit findings but it is unable to reasonably estimate the amount thereof. Management expects that the aggregate liabilities, if any, arising from such legal and regulatory proceedings, including the TTB audit, would not have a material adverse effect on the consolidated financial position or results of operations of the Company. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense for the quarter ended March 31, 2016 was $3,872 , for an effective tax rate for the quarter of 35.4 percent . The effective tax rate differs from the 35 percent federal statutory rate on pretax income primarily due to the impact of state income taxes and the domestic production activities deduction. The Company continues to evaluate all available positive and negative evidence to determine the likelihood of realization of the deferred tax assets. Income tax expense for the quarter ended March 31, 2015 was $3,059 , for an effective tax rate for the quarter of 37.6 percent . The principal reason for the 2.2 percent reduction in the Company’s effective tax rate quarter-versus-quarter is that the federal domestic production activities deduction is no longer limited by net operating loss carryovers in 2016. As of March 31, 2016 the Company has a remaining valuation allowance of $1,383 related to capital loss carryforwards that, in our estimate, are not more likely than not to be realized prior to their respective carryforward periods. The Company continues to evaluate all available positive and negative evidence to determine the likelihood of realization of the deferred tax assets. |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments. Certain commodities the Company uses in its production process are exposed to market price risk due to volatility in the prices for those commodities. The Company's grain supply contract for its Lawrenceburg and Atchison facilities permits the Company to purchase grain for delivery up to 12 months into the future at negotiated prices. The pricing for these contracts is based on a formula using several factors. The Company has determined that the firm commitments to purchase grain under the terms of these contracts meet the normal purchases and sales exception as defined under ASC 815, Derivatives and Hedging , and has excluded the fair value of these commitments from recognition within its consolidated financial statements until the actual contracts are physically settled. The Company’s production process also involves the use of wheat flour and natural gas. The contracts for wheat flour and natural gas range from monthly contracts to multi-year supply arrangements; however, because the quantities involved have always been for amounts to be consumed within the normal expected production process, the Company has determined that these contracts meet the criteria for the normal purchases and sales exception and have excluded the fair value of these commitments from recognition within its consolidated financial statements until the actual contracts are physically settled. |
Operating Segments
Operating Segments | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Operating Segments | Operating Segments. The Company has two reportable segments: distillery products and ingredient solutions. The distillery products segment consists of food grade alcohol and distillery co-products, such as distillers feed (commonly called dried distillers grain in the industry), fuel grade alcohol, and corn oil. The distillery products segment also includes warehouse services, including barrel put away, barrel storage, and barrel retrieval services. Ingredient solutions consists of specialty starches and proteins, commodity starches and commodity proteins. Operating profit for each segment is based on net sales less identifiable operating expenses. Non-direct selling, general and administrative expenses, interest expense, earnings from our equity method investments, other special charges and other general miscellaneous expenses have been excluded from segment operations and classified as Corporate. Receivables, inventories and equipment have been identified with the segments to which they relate. All other assets are considered as Corporate. Quarter Ended March 31, March 31, Net Sales to Customers Distillery products $ 63,842 $ 65,862 Ingredient solutions 12,993 14,551 Total 76,835 80,413 Gross Profit Distillery products 14,850 11,487 Ingredient solutions 2,196 1,901 Total 17,046 13,388 Depreciation and Amortization Distillery products 2,518 2,171 Ingredient solutions 444 575 Corporate 342 345 Total 3,304 3,091 Income before Income Taxes Distillery products 14,380 11,138 Ingredient solutions 1,602 1,333 Corporate (5,051 ) (4,342 ) Total $ 10,931 $ 8,129 The following table allocates assets to each segment: As of March 31, 2016 As of December 31, 2015 Identifiable Assets Distillery products $ 155,928 $ 138,355 Ingredient solutions 22,332 24,023 Corporate 22,847 31,932 Total $ 201,107 $ 194,310 |
Employee and Non-Employee Benef
Employee and Non-Employee Benefit Plans | 3 Months Ended |
Mar. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee and Non-Employee Benefit Plans | Employee and Non-Employee Benefit Plans. Equity-Based Compensation Plans . The Company’s equity-based compensation plans provide for the awarding of stock options, stock appreciation rights, shares of restricted stock ("Restricted Stock"), and RSUs for senior executives and salaried employees as well as non-employee directors. The Company has two active equity-based compensation plans: the Employee Equity Incentive Plan of 2014 (the "2014 Plan") and the Non-Employee Director Equity Incentive Plan (the "Directors' Plan"). The 2014 Plan replaced the inactive Stock Incentive Plan of 2004 (the "2004 Plan"), although the 2004 Plan had a remaining balance of 128,500 nonvested outstanding awards at March 31, 2016 . At the May 2014 annual meeting, shareholders also approved a new Employee Stock Purchase Plan ("ESPP"). At March 31, 2016 this ESPP was not active, but the previous ESPP plan remained intact. The 2014 Plan provides that vesting occurs pursuant to the time period specified in the particular award agreement approved for that issuance of RSUs, which is not less than three years unless vesting is accelerated due to the occurrence of certain events. Prior to early 2015, awards granted under the 2014 Plan had only service conditions required for vesting. The compensation expense related to awards with only service conditions was based on the market price of the stock determined on the date the Board of Directors approved the grants amortized over the service condition vesting period. In early 2015, the Board of Directors approved awards with both service and performance conditions. The compensation expense related to awards with both service and performance conditions are treated as a cash bonus award to be settled in RSUs. Because management has determined that award performance conditions are substantive, the estimated compensation expense is recognized ratably over the period beginning in the performance condition measurement year (the year prior to the grant date year) when, or if, the Company determines that it is highly probable the performance conditions will be met and ending on the award service condition vesting date. Until the grant date, the award is liability-classified because it is a fixed dollar amount to be awarded in a variable number of RSUs. As a liability-classified award, related compensation expense is reflected in Selling, general and administrative expenses on the Condensed Consolidated Statements of Comprehensive Income and the corresponding liability in Accrued Expenses on the Condensed Consolidated Balance Sheets. If it is determined in the measurement year that meeting the performance conditions is highly probable and then the determination changes to less than highly probable later in the year, the compensation expense recognized while the determination was highly probable, along with the corresponding liability, are immediately reversed. At the grant date in the following year (when the number of RSUs to be awarded is known), the liability-classified award is reclassified and the award becomes equity-classified. Compensation expense related to the equity-classified award is reflected in Selling, general and administrative expenses on the Condensed Consolidate Statements of Comprehensive Income and the corresponding equity entry in Additional paid-in capital on the Condensed Consolidated Balance Sheets. Awards with only service conditions continue to be granted under the 2014 Plan at the discretion of the Board of Directors as a means to attract and retain key employees. As of March 31, 2016 , 206,093 RSUs had been granted under the 2014 Plan, with 6,256 of those forfeited for termination of employment. As of March 31, 2016 , the unamortized balance of liability-classified awards, net of estimated forfeitures, was $1,193 . The Directors' Plan provides that vesting occurs pursuant to the time period specified in the particular award agreement approved for that issuance, which is not less than one year unless vesting is accelerated due to the occurrence of certain events. As of March 31, 2016 , 36,189 shares had been granted related to the Directors' Plan. The compensation expense related to awards granted under the Directors' Plan is based on the closing market price of the Company's stock on the day before the award. As of March 31, 2016 , 665,837 shares of unvested Restricted Stock and RSUs were outstanding under the Company’s active and inactive long-term incentive plans. Randall M. Schrick, the Company's former Vice President of Production and Engineering, retired effective December 31, 2015. In recognition of Mr. Schrick's service, the Company elected to continue the vesting of his shares of Restricted Stock and RSUs on their original vesting schedules, which extend beyond Mr. Schrick's retirement date. The Company determined that Mr. Schrick's change in employment status to a consultant resulted in a modification of his unvested equity awards. Accordingly, recognition of the remaining associated compensation expense was accelerated and fully recognized prior to his retirement date. Mr. Schrick was awarded additional RSUs in February 2016, based on 2015 Company performance, in his capacity as a consultant. Because Mr. Schrick has no substantive service condition associated with his award, the remainder of the associated compensation expense not previously accrued during 2015 of $152 was expensed during the quarter ended March 31, 2016 . Associated compensation expense was reflected in Selling, general and administrative expenses on the Condensed Consolidated Statements of Comprehensive Income. Mr. Schrick's unvested awards at March 31, 2016 were 16,500 shares of Restricted Stock and 38,514 RSUs. |
Accounting Policies and Basis16
Accounting Policies and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements as of and for the quarter ended March 31, 2016 should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Report on Form 10-K/A for the year ended December 31, 2015 filed with the Securities and Exchange Commission ("SEC"). The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. |
Use of Estimates | Use of Estimates. The financial reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The application of certain of these policies places significant demands on management’s judgment, with financial reporting results relying on estimation about the effects of matters that are inherently uncertain. For all of these policies, management cautions that future events rarely develop as forecast, and estimates routinely require adjustment and may require material adjustment. |
Inventory | Inventory. Inventory includes finished goods, raw materials in the form of agricultural commodities used in the production process and certain maintenance and repair items. Bourbon and whiskeys are normally aged in barrels for several years, following industry practice; all barreled bourbon and whiskey is classified as a current asset. The Company includes warehousing, insurance, and other carrying charges applicable to barreled whiskey in inventory costs. Inventories are stated at the lower of cost or market on the first-in, first-out, or FIFO, method. Inventory valuations are impacted by constantly changing prices paid for key materials, primarily corn. |
Equity Method Investments | Equity Method Investments. The Company accounts for its investment in non-consolidated subsidiaries under the equity method of accounting when the Company has significant influence, but does not have more than 50 percent voting control, and is not considered the primary beneficiary. Under the equity method of accounting, the Company reflects its investment in non-consolidated subsidiaries within the Company’s Consolidated Balance Sheets as Equity method investments; the Company’s share of the earnings or losses of the non-consolidated subsidiaries are reflected as Equity method investment earnings in the Consolidated Statements of Comprehensive Income. The Company reviews its investments in non-consolidated subsidiaries for impairment whenever events or changes in business circumstances indicate that the carrying amount of the investments may not be fully recoverable. Evidence of a loss in value that is other than temporary include, but are not limited to, the absence of an ability to recover the carrying amount of the investment, the inability of the investee to sustain an earnings capacity which would justify the carrying amount of the investment, or, where applicable, estimated sales proceeds which are insufficient to recover the carrying amount of the investment. If the fair value of the investment is determined to be less than the carrying value and the decline in value is considered to be other than temporary, an appropriate write-down is recorded based on the excess of the carrying value over the best estimate of fair value of the investment. |
Revenue Recognition | Revenue Recognition. Except as discussed below, revenue from the sale of the Company’s products is recognized as products are delivered to customers according to shipping terms and when title and risk of loss have transferred. Income from various government incentive grant programs is recognized as it is earned. The Company’s Distillery segment routinely produces unaged distillate, and this product is frequently barreled and warehoused at a Company location for an extended period of time in accordance with directions received from the Company’s customers. This product must meet customer acceptance specifications, the risks of ownership and title for these goods must be passed, and requirements for bill and hold revenue recognition must be met prior to the Company recognizing revenue for this product. Separate warehousing agreements are maintained for customers who store their product with the Company and warehouse revenues are recognized as the service is provided. |
Recognition of Insurance Recoveries | Recognition of Insurance Recoveries. Estimated loss contingencies are recognized as charges to income when they are probable and reasonably estimable. Insurance recoveries are not recognized until all contingencies related to the insurance claim have been resolved and settlement has been reached with the insurer. Insurance recoveries, to the extent of costs and lost profits, are reported as a reduction to Cost of sales on the Consolidated Statement of Comprehensive Income. Insurance recoveries in excess of costs and losses are included in Insurance recoveries on the Consolidated Statement of Comprehensive Income. |
Income Taxes | Income Taxes. The Company accounts for income taxes using an asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Evaluating the need for, and amount of, a valuation allowance for deferred tax assets often requires significant judgment and extensive analysis of all available evidence on a jurisdiction-by-jurisdiction basis. Such judgments require the Company to interpret existing tax law and other published guidance as applied to the Company's circumstances. As part of this assessment, the Company considers both positive and negative evidence about its profitability and tax situation. A valuation allowance is recognized if it is more likely than not that at least some portion of the deferred tax asset will not be realized. Accounting for uncertainty in income tax positions requires management judgment and the use of estimates in determining whether the impact of a tax position is "more likely than not" of being sustained. The Company considers many factors when evaluating and estimating its tax positions, which may require periodic adjustment and which may not accurately anticipate actual outcomes. It is possible that amounts reserved for potential exposure could change as a result of the conclusion of tax examinations and, accordingly, materially affect the Company’s reported net income after tax. |
Earnings per Share | Earnings per Share. Basic and diluted earnings per share are computed using the two-class method, which is an earnings allocation formula that determines net income per share for each class of Common Stock and participating security according to dividends declared and participation rights in undistributed earnings. Per share amounts are computed by dividing net income from continuing operations attributable to common shareholders by the weighted average shares outstanding during the period. |
Long-lived Assets and Loss on Impairment of Assets | Long-Lived Assets and Loss on Impairment of Assets. Management reviews long-lived assets, mainly property and equipment assets, whenever events or circumstances indicate that usage may be limited and carrying values may not be fully recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are determined to be impaired, the impairment is measured by the amount by which the asset carrying value exceeds the estimated fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments. The Company determines the fair values of its financial instruments based on a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The hierarchy is broken down into three levels based upon the observability of inputs. Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value in its entirety requires judgment and considers factors specific to the asset or liability. The Company’s short term financial instruments include cash and cash equivalents, accounts receivable and accounts payable. The carrying value of the short term financial instruments approximates the fair value due to their short term nature. These financial instruments have no stated maturities or the financial instruments have short term maturities that approximate market. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting , which simplifies certain aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is evaluating the effect that ASU 2016-09 will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606) Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which requires the entity to determine whether the nature of its promise is to provide a good or service to the customer (that is, the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (that is, the entity is an agent). This determination is based upon whether the entity controls the good or the service before it is transferred to the customer. ASU No. 2016-08 has a mandatory adoption date for the Company of January 1, 2018, the same mandatory adoption date as ASU No. 2014-09 and ASU No. 2015-14. Early adoption is permitted at January 1, 2017. The standard and updates permit the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09, updated by ASU 2015-14 and ASU 2016-08, will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , which increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and discloses key information about leasing arrangements. This update, along with IFRS 16, Leases, is the result of the FASB’s and the International Accounting Standards Board’s (IASB’s) efforts to meet this objective and improve financial reporting. ASU 2016-02 is effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures. In January 2016 the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10) , which enhances the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The ASU is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted following the early application guidance set forth in the pronouncement. The Company is evaluating the effect that ASU 2016-01 will have on its consolidated financial statements and related disclosures. On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. At its July 9, 2015 meeting, the FASB agreed to defer by one year the mandatory effective date of its revenue recognition standard, but will also provide entities the option to adopt it as of the original effective date (ASU No. 2015-14). The new standard has a mandatory adoption date for the Company of January 1, 2018. Early adoption is permitted at January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09, updated to ASU 2015-14, will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. |
Accounting Policies and Basis17
Accounting Policies and Basis of Presentation (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Inventory | Inventory consists of the following: March 31, December 31, Finished goods $ 18,963 $ 15,126 Barreled distillate 33,813 28,278 Work in process 1,942 2,364 Raw materials 7,161 6,675 Maintenance materials 5,610 5,371 Other 894 887 Total $ 68,383 $ 58,701 |
Equity Method Investments (Tabl
Equity Method Investments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of Equity Method Investments | The Company’s investment in joint ventures is as follows: March 31, December 31, ICP (30% interest) $ 15,396 (a) $ 18,179 DMI (50% interest) 384 384 $ 15,780 $ 18,563 (a) During the quarter ended March 31, 2016 , the Company received a $3,300 cash distribution from ICP, which reduced the Company's investment amount in ICP. Condensed financial information related to the Company’s non-consolidated equity method investment in ICP is shown below. Quarter Ended March 31, March 31, ICP’s Operating results: Net sales (a) $ 49,609 $ 39,598 Cost of sales and expenses (b) 47,886 35,169 Net income $ 1,723 $ 4,429 (a) Includes related party sales to MGPI of $6,241 and $8,754 for the quarters ended March 31, 2016 and 2015 , respectively. (b) Includes depreciation and amortization of $735 and $662 for the quarters ended March 31, 2016 and 2015 , respectively. |
The Company's Equity in Earnings (Loss) of Joint Ventures | The Company’s equity method investment earnings from joint ventures, based on unaudited financial statements, is as follows: Quarter Ended March 31, March 31, ICP (30% interest) $ 517 $ 1,329 DMI (50% interest) — 23 $ 517 $ 1,352 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The computations of basic and diluted earnings per share are as follows: Quarter Ended March 31, March 31, Operations: Net income (a) $ 7,059 $ 5,070 Less: Amounts allocated to participating securities (nonvested shares and units) (b) 270 209 Net income attributable to common shareholders $ 6,789 $ 4,861 Share information: Basic weighted average common shares (c) 16,607,074 (d) 17,395,659 Incremental shares from potential dilutive securities (e) — 713 Diluted weighted average common shares 16,607,074 17,396,372 Basic and diluted earnings per share $ 0.41 $ 0.28 (a) Net income attributable to all shareholders. (b) Participating securities include 128,500 and 278,900 nonvested restricted shares at March 31, 2016 and 2015 , respectively. (c) Under the two-class method, basic weighted average common shares exclude outstanding nonvested, participating securities consisting of restricted share awards of 128,500 and 278,900 at March 31, 2016 and 2015 , respectively. (d) Basic weighted average common shares at March 31, 2016 were affected by the September 1, 2015, purchase of 950,000 shares of common stock in a privately-negotiated transaction with F2 SEA, Inc., an affiliate of SEACOR Holdings, Inc. pursuant to a Stock Repurchase Agreement. SEACOR Holdings, Inc. is the 70 percent owner of ICP, the Company's 30 percent equity method investment. (e) There were no anti-dilutive shares related to stock options for the quarters ended March 31, 2016 and 2015 . There were dilutive shares related to stock options totaling 0 and 4,000 for the quarters ended March 31, 2016 and 2015 , respectively. The dilutive shares resulted in potential dilutive securities of 0 and 713 for the quarters ended March 31, 2016 and 2015 , respectively. |
Operating Segments (Tables)
Operating Segments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Quarter Ended March 31, March 31, Net Sales to Customers Distillery products $ 63,842 $ 65,862 Ingredient solutions 12,993 14,551 Total 76,835 80,413 Gross Profit Distillery products 14,850 11,487 Ingredient solutions 2,196 1,901 Total 17,046 13,388 Depreciation and Amortization Distillery products 2,518 2,171 Ingredient solutions 444 575 Corporate 342 345 Total 3,304 3,091 Income before Income Taxes Distillery products 14,380 11,138 Ingredient solutions 1,602 1,333 Corporate (5,051 ) (4,342 ) Total $ 10,931 $ 8,129 |
Schedule of Segment Reporting Identifiable Assets | The following table allocates assets to each segment: As of March 31, 2016 As of December 31, 2015 Identifiable Assets Distillery products $ 155,928 $ 138,355 Ingredient solutions 22,332 24,023 Corporate 22,847 31,932 Total $ 201,107 $ 194,310 |
Accounting Policies and Basis21
Accounting Policies and Basis of Presentation - Inventory (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Accounting Policies [Abstract] | ||
Finished goods | $ 18,963 | $ 15,126 |
Barreled distillate | 33,813 | 28,278 |
Work in process | 1,942 | 2,364 |
Raw materials | 7,161 | 6,675 |
Maintenance materials | 5,610 | 5,371 |
Other | 894 | 887 |
Total | $ 68,383 | $ 58,701 |
Accounting Policies and Basis22
Accounting Policies and Basis of Presentation (Detail) - USD ($) $ / shares in Units, $ in Thousands | Apr. 14, 2016 | Mar. 21, 2016 | Apr. 21, 2015 | Mar. 26, 2015 | Oct. 31, 2014 | Mar. 31, 2016 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2015 |
Accounting Policies [Abstract] | |||||||||
Shipping and handling revenue | $ 4,137 | $ 3,399 | |||||||
Loss of production, period | 7 days | ||||||||
Total insurance recoveries | $ 460 | ||||||||
Debt instrument, fair value disclosure | 37,492 | $ 34,603 | |||||||
Long-term debt, gross | $ 37,444 | $ 33,460 | |||||||
Subsequent Event [Line Items] | |||||||||
Common stock, dividends, per share, declared (in Dollars per share) | $ 0.08 | $ 0.06 | |||||||
Payments of dividends | $ 1,087 | ||||||||
Dividends paid with cash | 1,061 | ||||||||
Dividend equivalent payments | $ 26 | ||||||||
Subsequent Event [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Payments of dividends | $ 1,378 | ||||||||
Dividends paid with cash | 1,335 | ||||||||
Dividend equivalent payments | $ 43 |
Accounting Policies and Basis23
Accounting Policies and Basis of Presentation - Debt (Details) | Mar. 21, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Line of Credit Facility [Line Items] | |||
Loan fees in other assets | $ 972,000 | $ 1,013,000 | |
Outstanding borrowings under credit facility | 33,878,000 | ||
Credit facility, remaining borrowing capacity | $ 53,352,000 | ||
Average interest rate (as a percent) | 3.24% | ||
Revolver borrowings [Member] | |||
Line of Credit Facility [Line Items] | |||
Outstanding borrowings under credit facility | $ 12,875,000 | ||
Fixed asset sub-line term loan [Member] | |||
Line of Credit Facility [Line Items] | |||
Outstanding borrowings under credit facility | 6,003,000 | ||
Second Amended and Restated Credit Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 80,000,000 | ||
Covenant compliance, maximum individual acquisition allowable (less than) | 1,000,000 | ||
Covenant compliance, maximum aggregate acquisitions allowable | 7,500,000 | ||
Unamortized loan fees | 68,000 | ||
Loan fees in other assets | 667,000 | ||
Third Amended and Restated Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | 95,000,000 | ||
Periodic payment, principal | 250,000 | ||
Covenant compliance, maximum aggregate acquisitions allowable | $ 35,000,000 | ||
Covenant compliance, fixed charge coverage ratio excess availability (as a percent) (less than) | 17.50% | ||
Minimum [Member] | Second Amended and Restated Credit Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Covenant compliance, fixed charge coverage ratio | 1.10 | ||
Minimum [Member] | Third Amended and Restated Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Covenant compliance, fixed charge coverage ratio | 1.25 | ||
Term Loan [Member] | Third Amended and Restated Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Long-term debt | $ 15,000,000 | $ 15,000,000 |
Equity Method Investments (Deta
Equity Method Investments (Detail) - USD ($) $ in Thousands | Feb. 26, 2016 | Mar. 31, 2016 | Mar. 31, 2015 |
Schedule of Equity Method Investments [Line Items] | |||
Distribution received from equity method investee | $ 3,300 | $ 0 | |
Wind down period | 1 year | ||
DMI [Member] | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity method ownership percentage (percent) | 50.00% | ||
ICP [Member] | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity method ownership percentage (percent) | 30.00% | ||
Distribution received from equity method investee | $ 3,300 | $ 3,300 | |
Related party sales to MGPI | 6,241 | 8,754 | |
Depreciation and amortization | $ 735 | $ 662 |
Equity Method Investments - Ope
Equity Method Investments - Operating Results (Details) - ICP [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Schedule of Equity Method Investments [Line Items] | ||
Net sales | $ 49,609 | $ 39,598 |
Cost of sales and expenses | 47,886 | 35,169 |
Net income | $ 1,723 | $ 4,429 |
Equity Method Investments - The
Equity Method Investments - The Company's Equity in Earnings (Loss) of Joint Ventures (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Schedule of Equity Method Investments [Line Items] | ||
Equity in earnings (loss) of joint ventures | $ 517 | $ 1,352 |
ICP [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity in earnings (loss) of joint ventures | 517 | 1,329 |
DMI [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity in earnings (loss) of joint ventures | $ 0 | $ 23 |
Equity Method Investments - T27
Equity Method Investments - The Company's Investment in Joint Ventures (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments | $ 15,780 | $ 18,563 |
ICP [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments | 15,396 | 18,179 |
DMI [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments | $ 384 | $ 384 |
Earnings per Share - The Comput
Earnings per Share - The Computations of Basic and Diluted Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operations: | ||
Net income | $ 7,059 | $ 5,070 |
Less: Amounts allocated to participating securities (nonvested shares and units) | 270 | 209 |
Net income attributable to common shareholders | $ 6,789 | $ 4,861 |
Share information: | ||
Basic weighted average common shares | 16,607,074 | 17,395,659 |
Incremental shares from potential dilutive securities | 0 | 713 |
Diluted weighted average common shares | 16,607,074 | 17,396,372 |
Basic and diluted earnings per share (in usd per share) | $ 0.41 | $ 0.28 |
Earnings per Share (Detail)
Earnings per Share (Detail) - shares | Sep. 01, 2015 | Mar. 31, 2016 | Mar. 31, 2015 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Shares purchased in Stock Repurchase Agreement | 950,000 | ||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 0 | 0 | |
Dilutive securities (in shares) | 0 | 4,000 | |
Incremental shares from potential dilutive securities | 0 | 713 | |
ICP [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Equity method ownership percentage (percent) | 30.00% | ||
ICP [Member] | SEACOR Holdings, Inc. [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Equity method ownership percentage (percent) | 70.00% | ||
Restricted Stock [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Restricted stock (in shares) | 128,500 | 278,900 |
Commitments and Contingencies (
Commitments and Contingencies (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Long-term Purchase Commitment [Line Items] | |
Commitments | $ 66,893 |
Capital Expenditures [Member] | |
Long-term Purchase Commitment [Line Items] | |
Aggregate purchase commitments | $ 2,978 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) | $ 3,872 | $ 3,059 |
Effective tax rate (as a percent) | 35.40% | 37.60% |
Federal statutory rate (as a percent) | 35.00% | |
Reduction in effective income tax rate (as a percent) | 2.20% | |
Deferred tax asset, valuation allowance | $ 1,383 |
Operating Segments (Detail)
Operating Segments (Detail) | 3 Months Ended |
Mar. 31, 2016segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Operating Segments - Operating
Operating Segments - Operating Profit (Loss) for Each Segment (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Net Sales to Customers | ||
Net Sales to Customers | $ 76,835 | $ 80,413 |
Gross Profit | ||
Gross Profit | 17,046 | 13,388 |
Depreciation and Amortization | ||
Depreciation and Amortization | 3,304 | 3,091 |
Income before Income Taxes | ||
Income before Income Taxes | 10,931 | 8,129 |
Operating Segments [Member] | Distillery Products [Member] | ||
Net Sales to Customers | ||
Net Sales to Customers | 63,842 | 65,862 |
Gross Profit | ||
Gross Profit | 14,850 | 11,487 |
Depreciation and Amortization | ||
Depreciation and Amortization | 2,518 | 2,171 |
Income before Income Taxes | ||
Income before Income Taxes | 14,380 | 11,138 |
Operating Segments [Member] | Ingredient Solutions [Member] | ||
Net Sales to Customers | ||
Net Sales to Customers | 12,993 | 14,551 |
Gross Profit | ||
Gross Profit | 2,196 | 1,901 |
Depreciation and Amortization | ||
Depreciation and Amortization | 444 | 575 |
Income before Income Taxes | ||
Income before Income Taxes | 1,602 | 1,333 |
Corporate [Member] | ||
Depreciation and Amortization | ||
Depreciation and Amortization | 342 | 345 |
Income before Income Taxes | ||
Income before Income Taxes | $ (5,051) | $ (4,342) |
Operating Segments - Identifiab
Operating Segments - Identifiable Assets for Each Segment (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Segment Reporting Information [Line Items] | ||
Identifiable Assets | $ 201,107 | $ 194,310 |
Operating Segments [Member] | Distillery Products [Member] | ||
Segment Reporting Information [Line Items] | ||
Identifiable Assets | 155,928 | 138,355 |
Operating Segments [Member] | Ingredient Solutions [Member] | ||
Segment Reporting Information [Line Items] | ||
Identifiable Assets | 22,332 | 24,023 |
Corporate Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Identifiable Assets | $ 22,847 | $ 31,932 |
Employee and Non-Employee Ben35
Employee and Non-Employee Benefit Plans (Detail) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016USD ($)planshares | Mar. 31, 2015shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of active equity-based compensation plans | plan | 2 | |
Directors Option Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grants in period (in shares) | 36,189 | |
Minimum [Member] | Non-Employee Director Equity Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 1 year | |
Restricted Stock Units (RSUs) [Member] | The 2014 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grants in period (in shares) | 206,093 | |
RSUs forfeited for termination of employment (in shares) | 6,256 | |
Unamortized balance of liability-classified awards, net of estimated forfeitures | $ | $ 1,193 | |
Restricted Stock Units (RSUs) [Member] | Employee Equity Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Restricted Stock and Restricted Stock Units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unvested awards (in shares) | 665,837 | |
Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock (in shares) | 128,500 | 278,900 |
Vice President [Member] | Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unvested awards (in shares) | 38,514 | |
Accelerated share-based compensation expense | $ | $ 152 | |
Vice President [Member] | Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unvested awards (in shares) | 16,500 |