Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 25, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 0-17196 | |
Entity Registrant Name | MGP INGREDIENTS INC | |
Entity Incorporation, State or Country Code | KS | |
Entity Tax Identification Number | 45-4082531 | |
Entity Address, Address Line One | 100 Commercial Street | |
Entity Address, City or Town | Atchison | |
Entity Address, State or Province | KS | |
Entity Address, Postal Zip Code | 66002 | |
City Area Code | 913 | |
Local Phone Number | 367-1480 | |
Title of each class | Common Stock, no par value | |
Trading Symbol | MGPI | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 17,024,938 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Entity Central Index Key | 0000835011 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Sales (Note 2) | $ 90,501 | $ 88,252 | $ 179,597 | $ 176,208 |
Cost of sales | 70,979 | 68,811 | 143,415 | 137,816 |
Gross profit | 19,522 | 19,441 | 36,182 | 38,392 |
Selling, general and administrative expenses | 8,648 | 8,309 | 16,795 | 16,871 |
Operating income | 10,874 | 11,132 | 19,387 | 21,521 |
Interest expense, net | (321) | (289) | (573) | (496) |
Income before income taxes | 10,553 | 10,843 | 18,814 | 21,025 |
Income tax expense (Note 4) | 2,642 | 3,316 | 1,183 | 4,571 |
Net income | 7,911 | 7,527 | 17,631 | 16,454 |
Income attributable to participating securities | 51 | 148 | 117 | 323 |
Net income attributable to common shareholders and used in earnings per share calculation | $ 7,860 | $ 7,379 | $ 17,514 | $ 16,131 |
Share information: | ||||
Basic and diluted weighted average common shares (in shares) | 17,021,599 | 16,869,481 | 16,994,864 | 16,856,423 |
Basic and diluted earnings per common share (in dollars per share) | $ 0.46 | $ 0.44 | $ 1.03 | $ 0.96 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 7,911 | $ 7,527 | $ 17,631 | $ 16,454 |
Other comprehensive income (loss), net of tax: | ||||
Change in Company-sponsored post-employment benefit plan | (16) | 41 | (2) | 28 |
Comprehensive income | $ 7,895 | $ 7,568 | $ 17,629 | $ 16,482 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash and cash equivalents | $ 2,162 | $ 5,025 |
Receivables (less allowance for doubtful accounts at June 30, 2019, and December 31, 2018 - $24) | 41,604 | 38,797 |
Inventory | 118,007 | 108,769 |
Prepaid expenses | 1,834 | 1,320 |
Refundable income taxes | 5,404 | 712 |
Total current assets | 169,011 | 154,623 |
Property, plant, and equipment | 299,666 | 295,893 |
Less accumulated depreciation and amortization | (179,772) | (175,105) |
Property, plant, and equipment, net | 119,894 | 120,788 |
Operating lease right-of-use asset, net | 6,163 | 0 |
Other assets | 3,656 | 2,481 |
Total assets | 298,724 | 277,892 |
Current Liabilities | ||
Current maturities of long-term debt | 393 | 386 |
Accounts payable | 20,711 | 25,363 |
Accrued expenses | 11,014 | 11,714 |
Total current liabilities | 32,118 | 37,463 |
Long-term debt, less current maturities | 40,851 | 21,040 |
Credit agreement - revolver | 1,245 | 10,588 |
Operating lease liability | 4,112 | 0 |
Deferred credits | 1,399 | 1,565 |
Accrued retirement, health, and life insurance benefits | 2,482 | 2,595 |
Other noncurrent liabilities | 1,851 | 1,523 |
Deferred income taxes | 2,224 | 1,677 |
Total liabilities | 86,282 | 76,451 |
Commitments and Contingencies | ||
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 June 30, 2019 and December 31, 2018; and 17,024,924 and 16,856,414 shares outstanding at June 30, 2019 and December 31, 2018, respectively | 6,715 | 6,715 |
Additional paid-in capital | 13,117 | 15,375 |
Retained earnings | 213,049 | 198,914 |
Accumulated other comprehensive loss | (97) | (164) |
Treasury stock, at cost | ||
Shares of 1,091,041 at June 30, 2019, and 1,259,551 at December 31, 2018 | (20,346) | (19,403) |
Total stockholders’ equity | 212,442 | 201,441 |
Total liabilities and stockholders’ equity | $ 298,724 | $ 277,892 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Statement of Financial Position [Abstract] | ||
Receivables allowance for doubtful accounts | $ 24 | $ 24 |
Preferred stock, percentage non-cumulative | 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) | 17,024,924 | 16,856,414 |
Treasury stock (shares) | 1,091,041 | 1,259,551 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash Flows from Operating Activities | ||
Net income | $ 17,631 | $ 16,454 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 5,602 | 5,826 |
Gain on sale of assets | (138) | 0 |
Share-based compensation | 2,267 | 1,968 |
Deferred income taxes, including change in valuation allowance | 547 | 729 |
Changes in operating assets and liabilities: | ||
Receivables, net | (2,807) | (1,411) |
Inventory | (9,238) | (13,338) |
Prepaid expenses | (514) | (620) |
Refundable income taxes | (4,692) | 446 |
Accounts payable | (2,883) | (5,106) |
Accrued expenses | (2,750) | (3,232) |
Deferred credits | (166) | (362) |
Accrued retirement health, and life insurance benefits | 211 | (111) |
Net cash provided by operating activities | 3,070 | 1,243 |
Cash Flows from Investing Activities | ||
Additions to property, plant, and equipment | (6,192) | (13,065) |
Deferred compensation plan investments | (1,177) | 0 |
Net cash used in investing activities | (7,369) | (13,065) |
Cash Flows from Financing Activities | ||
Payment of dividends and dividend equivalents | (3,427) | (2,750) |
Purchase of treasury stock for tax withholding on equity-based compensation | (5,467) | (2,073) |
Proceeds on long-term debt | 20,000 | 0 |
Principal payments on long-term debt | (192) | (185) |
Proceeds from credit agreement - revolver | 12,625 | 16,946 |
Payments on credit agreement - revolver | (22,025) | (920) |
Other | (78) | 0 |
Net cash provided by financing activities | 1,436 | 11,018 |
Decrease in cash and cash equivalents | (2,863) | (804) |
Cash and cash equivalents, beginning of period | 5,025 | 3,084 |
Cash and cash equivalents, end of period | $ 2,162 | $ 2,280 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes In Stockholders' Equity - 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, 2017 | $ 168,730 | $ 4 | $ 6,715 | $ 13,912 | $ 167,129 | $ (311) | $ (18,719) |
Comprehensive income: | |||||||
Net income | 8,927 | 8,927 | |||||
Other comprehensive loss | (13) | (13) | |||||
Dividends and dividend equivalents net of estimated forfeitures | (1,374) | (1,374) | |||||
Share-based compensation | 1,052 | 1,052 | |||||
Stock shares awarded, forfeited, or vested | 139 | (981) | 1,120 | ||||
Purchase of treasury stock for tax withholding on share-based compensation | (2,073) | (2,073) | |||||
Ending Balance at Mar. 31, 2018 | 175,388 | 4 | 6,715 | 13,983 | 174,682 | (324) | (19,672) |
Beginning Balance at Dec. 31, 2017 | 168,730 | 4 | 6,715 | 13,912 | 167,129 | (311) | (18,719) |
Comprehensive income: | |||||||
Net income | 16,454 | ||||||
Ending Balance at Jun. 30, 2018 | 182,360 | 4 | 6,715 | 14,484 | 180,835 | (283) | (19,395) |
Beginning Balance at Mar. 31, 2018 | 175,388 | 4 | 6,715 | 13,983 | 174,682 | (324) | (19,672) |
Comprehensive income: | |||||||
Net income | 7,527 | 7,527 | |||||
Other comprehensive loss | 41 | 41 | |||||
Dividends and dividend equivalents net of estimated forfeitures | (1,374) | (1,374) | |||||
Share-based compensation | 501 | 501 | |||||
Stock shares awarded, forfeited, or vested | 277 | 0 | 277 | ||||
Ending Balance at Jun. 30, 2018 | 182,360 | 4 | 6,715 | 14,484 | 180,835 | (283) | (19,395) |
Comprehensive income: | |||||||
Adjustment related to Accounting Standards Update 2018-02 adoption | 0 | (69) | 69 | ||||
Beginning Balance at Dec. 31, 2018 | 201,441 | 4 | 6,715 | 15,375 | 198,914 | (164) | (19,403) |
Comprehensive income: | |||||||
Net income | 9,720 | 9,720 | |||||
Other comprehensive loss | 14 | 14 | |||||
Dividends and dividend equivalents net of estimated forfeitures | (1,714) | (1,714) | |||||
Share-based compensation | 1,031 | 1,031 | 0 | ||||
Stock shares awarded, forfeited, or vested | 94 | (3,770) | 3,864 | ||||
Purchase of treasury stock for tax withholding on share-based compensation | (5,467) | (5,467) | |||||
Ending Balance at Mar. 31, 2019 | 205,119 | 4 | 6,715 | 12,636 | 206,851 | (81) | (21,006) |
Beginning Balance at Dec. 31, 2018 | 201,441 | 4 | 6,715 | 15,375 | 198,914 | (164) | (19,403) |
Comprehensive income: | |||||||
Net income | 17,631 | ||||||
Ending Balance at Jun. 30, 2019 | 212,442 | 4 | 6,715 | 13,117 | 213,049 | (97) | (20,346) |
Beginning Balance at Mar. 31, 2019 | 205,119 | 4 | 6,715 | 12,636 | 206,851 | (81) | (21,006) |
Comprehensive income: | |||||||
Net income | 7,911 | 7,911 | |||||
Other comprehensive loss | (16) | (16) | |||||
Dividends and dividend equivalents net of estimated forfeitures | (1,713) | (1,713) | |||||
Share-based compensation | 481 | 481 | 0 | ||||
Stock shares awarded, forfeited, or vested | 660 | 0 | 660 | ||||
Ending Balance at Jun. 30, 2019 | $ 212,442 | $ 4 | $ 6,715 | $ 13,117 | $ 213,049 | $ (97) | $ (20,346) |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||||
Dividends and dividend equivalents (in dollars per share) | $ 0.10 | $ 0.10 | $ 0.08 | $ 0.08 |
Accounting Policies and Basis o
Accounting Policies and Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
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 and is a leading producer and supplier of premium distilled spirits and specialty wheat protein and starch food ingredients. Distilled spirits include premium bourbon and rye whiskeys and grain neutral spirits, including vodka and gin. MGP is also a top producer of high quality industrial alcohol for use in both food and non-food applications. The Company’s protein and starch food ingredients provide a host of functional, nutritional, and sensory benefits for a wide range of food products to serve the packaged goods industry. The Company’s distillery products are derived from corn and other grains (including rye, barley, wheat, barley malt, and milo), and its ingredient products are derived from wheat flour. The majority of the Company’s sales are made directly or through distributors to manufacturers and processors of finished packaged goods or to bakeries. Basis of Presentation and Principles of Consolidation. The unaudited condensed 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 June 30, 2019 , should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 , 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. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal and recurring adjustments) necessary to fairly present the results for interim periods in accordance with U.S. generally accepted accounting principles (“GAAP”). Pursuant to the rules and regulations of the SEC, certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted. Use of Estimates. The financial reporting policies of the Company conform to GAAP. The preparation of unaudited condensed consolidated 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 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 lower of cost or net realizable value 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: June 30, December 31, Finished goods $ 16,972 $ 17,296 Barreled distillate (bourbons and whiskeys) 85,462 76,374 Raw materials 4,954 4,906 Work in process 1,567 1,550 Maintenance materials 7,871 7,541 Other 1,181 1,102 Total $ 118,007 $ 108,769 Revenue Recognition. Revenue is recognized when control of the promised goods or services, through performance obligations by the Company, is transferred to the customer in an amount that reflects the consideration it expects to be entitled to in exchange for the performance obligations. The term between invoicing and when payment is due is not significant and the period between when the entity transfers the promised good or service to the customer and when the customer pays for that good or service is one year or less. Excise taxes that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer are excluded from revenue. Revenue is recognized for the sale of products at the point in time finished products are delivered to the customer in accordance with shipping terms. This is a faithful depiction of the satisfaction of the performance obligation because, at the point control passes to the customer, the customer has legal title and the risk and rewards of ownership have transferred, and the customer has present obligation to pay. The Company’s distillery products segment routinely enters into bill and hold arrangements, whereby the Company produces and sells unaged distillate to customers, and the product is subsequently barreled at the customer’s request and warehoused at a Company location for an extended period of time in accordance with directions received from the Company’s customers. Even though the unaged distillate remains in the Company’s possession, a sale is recognized at the point in time when the customer obtains control of the product. Control is transferred to the customer in bill and hold transactions when; customer acceptance specifications have been met, legal title has transferred, the customer has a present obligation to pay for the product, and the risk and rewards of ownership have transferred to the customer. Additionally, all the following bill and hold criteria have to be met in order for control to be transfered to the customer; the customer has requested the product be warehoused, the product has been identified as separately belonging to the customer, the product is currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or direct it to another customer. Warehouse services revenue is recognized over the time that warehouse services are rendered and as they are rendered. This is a faithful depiction of the satisfaction of the performance obligation because control of the aging products has already passed to the customer and there are no additional performance activities required by the Company, except as requested by the customer. The performance of the service activities, as requested, is invoiced as satisfied and revenue is concurrently recognized. 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. 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. Earnings Per Share (“EPS”). Basic and diluted EPS 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 attributable to common shareholders by the weighted average shares outstanding during the period. 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 receivables 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 $42,374 and $32,018 at June 30, 2019 and December 31, 2018 , respectively. The financial statement carrying value of total debt was $42,489 (including unamortized loan fees) and $32,014 (including unamortized loan fees) at June 30, 2019 and December 31, 2018 , respectively. These fair values are considered Level 2 under the fair value hierarchy. Fair value disclosure for deferred compensation plan investments is included in Note 8. Recently Adopted Accounting Standard Updates. The Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) , as of January 1, 2019, using the modified retrospective approach (Note 6). The modified retrospective approach provides a method for recording existing leases at adoption and using the effective date as the date of application (the “effective date method”). Under the effective date method, the comparative period reporting is unchanged. Comparative reporting periods are presented in accordance with Topic 840 (previous lease guidance), while periods subsequent to the effective date are presented in accordance with Topic 842. In addition, the Company elected the available practical expedients and implemented internal controls to enable the preparation of financial information on adoption. Adoption of the new standard resulted in the Company recording Operating lease right-of-use assets and Operating lease liabilities in its Condensed Consolidated Balance Sheet of $6,598 and $6,952 , respectively, as of January 1, 2019. The standard did not impact the Company’s consolidated net earnings and also had no impact on its cash flows. In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”). The Company adopted this guidance on January 1, 2019 and it had an immaterial effect on its financial results and disclosures. In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which more closely aligns the accounting for employee and nonemployee share-based payments. The Company adopted this guidance on January 1, 2019, and it had no impact on its financial results and disclosures. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2019 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Revenue | Revenue The following table presents the Company’s revenues by segment and major products and services: Quarter Ended June 30, Year to Date Ended June 30, 2019 2018 2019 2018 Distillery Products Brown goods $ 27,621 $ 27,736 $ 52,448 $ 55,937 White goods 14,691 14,464 31,873 30,334 Premium beverage alcohol 42,312 42,200 84,321 86,271 Industrial alcohol 20,636 19,295 41,079 38,639 Food grade alcohol 62,948 61,495 125,400 124,910 Fuel grade alcohol 1,398 1,567 2,899 3,430 Distillers feed and related co-products 6,181 6,663 13,276 12,887 Warehouse services 3,496 2,927 7,025 5,802 Total distillery products $ 74,023 $ 72,652 $ 148,600 $ 147,029 Ingredient Solutions Specialty wheat starches $ 7,210 $ 7,339 $ 14,090 $ 14,140 Specialty wheat proteins 5,276 6,008 9,718 10,744 Commodity wheat starches 3,013 2,090 5,275 4,132 Commodity wheat proteins 979 163 1,914 163 Total ingredient solutions $ 16,478 $ 15,600 $ 30,997 $ 29,179 Total sales $ 90,501 $ 88,252 $ 179,597 $ 176,208 The Company generates revenues from the distillery products segment by the sale of products and by providing warehouse services related to the storage and aging of customer products. The Company generates revenues from the ingredient solutions segment by the sale of products. Revenue related to sales of products is recognized at a point in time whereas revenue generated from warehouse services is recognized over time. Contracts with customers in both segments include a single performance obligation (either the sale of products or the provision of warehouse services). |
Corporate Borrowings
Corporate Borrowings | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Corporate Borrowings | Corporate Borrowings The following table presents the Company’s outstanding indebtedness: Description (a) June 30, December 31, Credit Agreement - Revolver, 3.80% (variable rate) due 2022 $ 1,600 $ 11,000 Secured Promissory Note, 3.71% (fixed rate) due 2022 1,403 1,594 Prudential Note Purchase Agreement, 3.53% (fixed rate) due 2027 20,000 20,000 Prudential Note Purchase Agreement, 3.80% (fixed rate) due 2029 20,000 — Total indebtedness outstanding 43,003 32,594 Less unamortized loan fees (b) (514 ) (580 ) Total indebtedness outstanding, net $ 42,489 $ 32,014 Less current maturities of long-term debt (393 ) (386 ) Long-term debt $ 42,096 $ 31,628 (a) Interest rates are as of June 30, 2019 . (b) Loan fees are being amortized over the life of the Credit Agreement and Note Purchase Agreements. Credit and Note Purchase Agreements. The Company’s Credit Agreement with Wells Fargo Bank, National Association, provides for a $150,000 revolving credit facility. The Company may increase the facility from time to time by an aggregate principal amount of up to $25,000 provided certain conditions are satisfied and at the discretion of the lender. The Credit Agreement matures on August 23, 2022. The Credit Agreement includes certain requirements and covenants, which the Company was in compliance with at June 30, 2019 . As of June 30, 2019 , the Company’s total outstanding borrowings under the Credit Agreement were $1,600 leaving $148,400 available. The Company’s Note Purchase and Private Shelf Agreement (the “Note Purchase Agreement”) with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc. provides for the issuance of up to $75,000 of Senior Secured Notes. During 2017, the Company issued $20,000 of Senior Secured Notes with a maturity date of August 23, 2027. On April 30, 2019, the Company issued $20,000 of additional Senior Secured Notes with a maturity date of April 30, 2029. The Note Purchase Agreement includes certain requirements and covenants, which the Company was in compliance with at June 30, 2019 . |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, the estimated annual effective tax rate is updated and a year to date adjustment is made to the provision. The Company’s quarterly effective tax rate is subject to significant change due to the effect of discrete items arising in a given quarter. Income tax expense for the quarter and year to date ended June 30, 2019 , was $2,642 and $1,183 , respectively, for an effective tax rate of 25.0 percent and 6.3 percent , respectively. For the quarter ended June 30, 2019 , the effective tax rate differed from the 21 percent federal statutory rate on pretax income, primarily due to state income taxes and certain compensation being subject to the deduction limitations applicable to public companies, partially offset by state and federal tax credits. For the year to date ended June 30, 2019 , the effective tax rate differed from the 21 percent federal statutory rate on pretax income, primarily due to the tax impact of vested share-based awards, the tax impact of state and federal tax credits, partially offset by state income taxes and certain compensation being subject to the compensation deduction limitations applicable for public companies. Income tax expense for the quarter and year to date ended June 30, 2018 , was $3,316 and $4,571 , respectively, for an effective tax rate of 30.6 percent and 21.7 percent , respectively. For the quarter, the effective tax rate differed from the 21 percent federal statutory rate on pretax income, primarily due to a change in estimate in 2018 related to the income tax impact on the 2017 sale of the Company’s equity method investment and a net increase in state taxes. Year to date, the effective tax rate differed from the 21 percent |
EPS
EPS | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
EPS | EPS The computations of basic and diluted EPS: Quarter Ended June 30, Year to Date Ended June 30, 2019 2018 2019 2018 Operations: Net income (a) $ 7,911 $ 7,527 $ 17,631 $ 16,454 Less: Income attributable to participating securities (b) 51 148 117 323 Net income attributable to common shareholders $ 7,860 $ 7,379 $ 17,514 $ 16,131 Share information: Basic and diluted weighted average common shares (c) 17,021,599 16,869,481 16,994,864 16,856,423 Basic and diluted EPS $ 0.46 $ 0.44 $ 1.03 $ 0.96 (a) Net income attributable to all shareholders. (b) Participating securities included 112,865 and 338,375 unvested restricted stock units (“RSUs”), at June 30, 2019 and 2018 , respectively. (c) Under the two-class method, basic and diluted weighted average common shares at June 30, 2019 and 2018 , exclude unvested participating securities. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases The Company has operating leases for railcars, computer equipment, an office space, and certain equipment. The Company has no finance leases. Leases with terms of twelve months or less are not recorded on the Company’s Condensed Consolidated Balance Sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. For leases beginning in 2019 and later, lease components are accounted for separately from non-lease components, such as common-area maintenance, based on the relative, observable stand-alone prices of the components. The Company’s leases have remaining lease terms of one year to five years , some of which may include options to extend the lease. Options to renew the Company’s leases were not considered when assessing the value of the right-of-use assets because the Company was not reasonably certain that it will assert the options to renew the leases. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The following table provides supplemental balance sheet classification information related to leases: Leases Balance Sheet Classification June 30, 2019 Assets Operating Operating lease right-of-use-asset, net $ 6,163 Total leased assets (a) $ 6,163 Liabilities Current Operating Accrued expenses $ 2,073 Noncurrent Operating Operating lease liability 4,112 Total operating lease liability (a) $ 6,185 (a) The Company has no finance lease assets or liabilities. The following table presents the components of lease costs: Quarter Ended June 30, Year to Date Ended June 30, 2019 2019 Operating lease costs $ 569 $ 1,158 Short-term lease costs 250 553 Sublease income (24 ) (48 ) Net lease costs (a)(b) $ 795 $ 1,663 (a) The Company has no finance lease costs. (b) Recorded as a component of Operating income on the Company’s Condensed Consolidated Statement of Income. The following table presents supplemental cash flow and non-cash activity related to lease information: Year to Date Ended June 30, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases (a) $ 1,161 Right-of-use assets obtained in exchange for lease obligations Operating leases (a) $ 576 (a) The Company has no finance leases. The following table presents weighted average discount rate and remaining lease term: June 30, 2019 Weighted average discount rate (a) Operating leases 5.88 % Weighted average remaining lease term (a) Operating leases 3.3 years (a) The Company has no finance leases. As of June 30, 2019, the maturities of operating lease liabilities were as follows: Maturity of Operating Lease Liabilities (a) June 30, 2019 Remainder of 2019 $ 1,192 2020 2,278 2021 1,684 2022 1,079 2023 496 After 2023 57 Total lease payments $ 6,786 Less interest (601 ) Total operating lease liability $ 6,185 (a) The Company has no finance leases. At December 31, 2018, under ASC 840, Leases , the Company’s lease disclosures were: Operating Leases. The Company leases railcars and other assets under various operating leases. For railcar leases, which are the majority, the Company is generally required to pay all service costs associated with the railcars. Rental payments include minimum rentals, and rental expenses with terms longer than one month were $2,081 , $2,372 , and $2,561 for 2018 , 2017 , and 2016 , respectively. Annual commitments under non-cancelable operating leases totaled $6,897 for the five years ending December 31, 2023, and an additional $55 thereafter. The Company’s future minimum rental payments were $2,224 , $1,858 , $1,357 , $977 , and $481 for the years ending December 31, 2019 , 2020 , 2021 , 2022 , and 2023 , respectively. Maturity of Operating Lease Liabilities December 31, 2018 2019 $ 2,224 2020 1,858 2021 1,357 2022 977 2023 481 After 2023 55 Total lease commitments $ 6,952 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and 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. A chemical release occurred at the Company’s Atchison facility on October 21, 2016, which resulted in emissions venting into the air (“the Atchison Chemical Release”). The Company reported the event to the Environmental Protection Agency (“EPA”), the Occupational Safety and Health Administration (“OSHA”), and to Kansas and local authorities on that date, and has cooperated fully to investigate and ensure that all appropriate response actions were taken. OSHA completed its investigation of the Atchison Chemical Release and, on April 19, 2017, issued its penalty to the Company in the amount of $138 . Management settled this assessment with OSHA in full for $75 , which was paid on May 16, 2017. A portion, or all, of the penalty amount may be covered by insurance. The EPA informed the Company on August 1, 2017, that it intends to seek civil penalties of approximately $250 in connection with its investigation of the Atchison Chemical Release. Since the Company expects a negotiated resolution of the EPA civil case and EPA-proposed civil penalties are not material to the quarter and year to date ended June 30, 2019, the Company has not included an accrual in its results. A portion, or all, of the settled penalty amount may be covered by insurance. On May 29, 2019, federal charges for alleged violations of the Clean Air Act related to the Atchison Chemical Release were filed against the Company, along with another unaffiliated company. If convicted, the statutory maximum penalty could result in a fine of up to $1,500 . The Company intends to offer a vigorous defense against the charges. Due to the inherent uncertainty of the matter and because the potential penalties are not material to the quarter and year to date ended June 30, 2019 , the Company has not included an accrual in its results. Private plaintiffs have also initiated, and additional private plaintiffs may initiate, legal proceedings for damages resulting from the Atchison Chemical Release, but the Company is currently unable to reasonably estimate the amount of any such damages that might result. The Company’s insurance is expected to provide coverage of any damages to private plaintiffs, subject to a deductible of $250 , but certain regulatory fines or penalties may not be covered and there can be no assurance to the amount or timing of possible insurance recoveries if ultimately claimed by the Company. |
Employee and Non-Employee Benef
Employee and Non-Employee Benefit Plans | 6 Months Ended |
Jun. 30, 2019 | |
Retirement Benefits [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”). As of June 30, 2019 , 344,555 RSUs had been granted of the 1,500,000 shares approved under the 2014 Plan, and 81,558 shares had been granted of the 300,000 shares approved under the Directors’ Plan. As of June 30, 2019 , there were 118,775 unvested RSUs under the Company’s long-term incentive plans and 112,865 were participating securities (Note 5). Deferred Compensation Plan. The Company established an unfunded Executive Deferred Compensation Plan (“EDC Plan”) effective as of June 30, 2018, with a purpose to attract and retain highly-compensated key employees by providing participants with an opportunity to defer receipt of a portion of their salary, bonus, and other specified compensation. The Company’s obligations under this plan will change in conjunction with the performance of the participants’ investments, along with contributions to and withdrawals from the plan. Realized and unrealized gains (losses) on deferred compensation plan investments were insignificant and were included as a component of Operating income in the Company’s Condensed Consolidated Statements of Income for the quarter and year to date ended June 30, 2019 , because the Company’s deferred compensation investments consist of mutual funds that are considered trading securities. Plan investments are classified as Level 1 in the fair value hierarchy since the investments trade with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoing basis. From plan inception through December 31, 2018, participants were able to direct the deferral of a portion of their 2018 Short-term incentive plan (“STI Plan”) amounts that were paid during first quarter 2019. At the time of payment, the amounts elected for deferral were deposited into the EDC Plan by the Company and allocated by participants among Company-determined investment options. For 2019, participants are able to direct the deferral of a portion of their 2019 base salary and a portion of their estimated, accrued 2019 STI Plan amount. Base salary amounts elected for deferral are deposited into the EDC Plan by the Company on a weekly basis and allocated by participants among Company-determined investment options. At June 30, 2019 , the EDC Plan investments were $1,257 and were recorded in Other assets on the Company’s Condensed Consolidated Balance Sheet. The EDC Plan liability for base pay and the 2019 STI Plan was $1,755 . The current portion of the liability is comprised of estimated amounts to be paid to participants within one year. At June 30, 2019 , $180 of the EDC Plan liability was considered current which was included in Accrued expenses in the Company’s Condensed Consolidated Balance Sheet, and $1,575 was considered non-current and was included in Other noncurrent liabilities on the Company’s Condensed Consolidated Balance Sheet. |
Operating Segments
Operating Segments | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Operating Segments | Operating Segments At June 30, 2019 and 2018 , the Company had two 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) and fuel grade alcohol. The distillery products segment also includes warehouse services, including barrel put away, storage, retrieval, and blending services. Ingredient solutions segment consists of specialty starches and proteins and commodity starches and proteins. Operating profit for each segment is based on sales less identifiable operating expenses. Non-direct SG&A, interest expense, other special charges, and other general miscellaneous expenses are excluded from segment operations and are 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 June 30, Year to Date Ended June 30, 2019 2018 2019 2018 Sales to Customers Distillery products $ 74,023 $ 72,652 $ 148,600 $ 147,029 Ingredient solutions 16,478 15,600 30,997 29,179 Total 90,501 88,252 179,597 176,208 Gross Profit Distillery products 16,503 16,680 31,742 32,550 Ingredient solutions 3,019 2,761 4,440 5,842 Total 19,522 19,441 36,182 38,392 Depreciation and Amortization Distillery products 2,185 2,257 4,354 4,498 Ingredient solutions 367 379 739 813 Corporate 240 261 509 515 Total 2,792 2,897 5,602 5,826 Income (loss) before Income Taxes Distillery products 14,866 14,777 28,301 28,954 Ingredient solutions 2,325 2,142 3,100 4,566 Corporate (6,638 ) (6,076 ) (12,587 ) (12,495 ) Total $ 10,553 $ 10,843 $ 18,814 $ 21,025 The following table allocates assets to each segment as of: June 30, 2019 December 31, 2018 Identifiable Assets Distillery products $ 242,518 $ 223,890 Ingredient solutions 33,264 35,147 Corporate 22,942 18,855 Total $ 298,724 $ 277,892 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On July 29, 2019 , the Board of Directors declared a quarterly dividend payable to stockholders of record as of August 14, 2019 , of the Company’s Common Stock, and a dividend equivalent payable to holders of certain RSUs as of August 14, 2019 , of $.10 per share and per unit, payable on August 30, 2019 . |
Accounting Policies and Basis_2
Accounting Policies and Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation. The unaudited condensed 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 June 30, 2019 , should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 , 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 GAAP. The preparation of unaudited condensed consolidated 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 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. |
Revenue Recognition | Revenue Recognition. Revenue is recognized when control of the promised goods or services, through performance obligations by the Company, is transferred to the customer in an amount that reflects the consideration it expects to be entitled to in exchange for the performance obligations. The term between invoicing and when payment is due is not significant and the period between when the entity transfers the promised good or service to the customer and when the customer pays for that good or service is one year or less. Excise taxes that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer are excluded from revenue. Revenue is recognized for the sale of products at the point in time finished products are delivered to the customer in accordance with shipping terms. This is a faithful depiction of the satisfaction of the performance obligation because, at the point control passes to the customer, the customer has legal title and the risk and rewards of ownership have transferred, and the customer has present obligation to pay. The Company’s distillery products segment routinely enters into bill and hold arrangements, whereby the Company produces and sells unaged distillate to customers, and the product is subsequently barreled at the customer’s request and warehoused at a Company location for an extended period of time in accordance with directions received from the Company’s customers. Even though the unaged distillate remains in the Company’s possession, a sale is recognized at the point in time when the customer obtains control of the product. Control is transferred to the customer in bill and hold transactions when; customer acceptance specifications have been met, legal title has transferred, the customer has a present obligation to pay for the product, and the risk and rewards of ownership have transferred to the customer. Additionally, all the following bill and hold criteria have to be met in order for control to be transfered to the customer; the customer has requested the product be warehoused, the product has been identified as separately belonging to the customer, the product is currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or direct it to another customer. Warehouse services revenue is recognized over the time that warehouse services are rendered and as they are rendered. This is a faithful depiction of the satisfaction of the performance obligation because control of the aging products has already passed to the customer and there are no additional performance activities required by the Company, except as requested by the customer. The performance of the service activities, as requested, is invoiced as satisfied and revenue is concurrently recognized. |
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. 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. |
Earnings Per Share (EPS) | Earnings Per Share (“EPS”). Basic and diluted EPS 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 attributable to common shareholders by the weighted average shares outstanding during the period. |
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 receivables 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. |
Recently Adopted Accounting Standard Updates | Recently Adopted Accounting Standard Updates. The Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) , as of January 1, 2019, using the modified retrospective approach (Note 6). The modified retrospective approach provides a method for recording existing leases at adoption and using the effective date as the date of application (the “effective date method”). Under the effective date method, the comparative period reporting is unchanged. Comparative reporting periods are presented in accordance with Topic 840 (previous lease guidance), while periods subsequent to the effective date are presented in accordance with Topic 842. In addition, the Company elected the available practical expedients and implemented internal controls to enable the preparation of financial information on adoption. Adoption of the new standard resulted in the Company recording Operating lease right-of-use assets and Operating lease liabilities in its Condensed Consolidated Balance Sheet of $6,598 and $6,952 , respectively, as of January 1, 2019. The standard did not impact the Company’s consolidated net earnings and also had no impact on its cash flows. In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”). The Company adopted this guidance on January 1, 2019 and it had an immaterial effect on its financial results and disclosures. In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which more closely aligns the accounting for employee and nonemployee share-based payments. The Company adopted this guidance on January 1, 2019, and it had no impact on its financial results and disclosures. |
Accounting Policies and Basis_3
Accounting Policies and Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Inventory | Inventory consists of the following: June 30, December 31, Finished goods $ 16,972 $ 17,296 Barreled distillate (bourbons and whiskeys) 85,462 76,374 Raw materials 4,954 4,906 Work in process 1,567 1,550 Maintenance materials 7,871 7,541 Other 1,181 1,102 Total $ 118,007 $ 108,769 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Schedule of Revenues Disaggregated | The following table presents the Company’s revenues by segment and major products and services: Quarter Ended June 30, Year to Date Ended June 30, 2019 2018 2019 2018 Distillery Products Brown goods $ 27,621 $ 27,736 $ 52,448 $ 55,937 White goods 14,691 14,464 31,873 30,334 Premium beverage alcohol 42,312 42,200 84,321 86,271 Industrial alcohol 20,636 19,295 41,079 38,639 Food grade alcohol 62,948 61,495 125,400 124,910 Fuel grade alcohol 1,398 1,567 2,899 3,430 Distillers feed and related co-products 6,181 6,663 13,276 12,887 Warehouse services 3,496 2,927 7,025 5,802 Total distillery products $ 74,023 $ 72,652 $ 148,600 $ 147,029 Ingredient Solutions Specialty wheat starches $ 7,210 $ 7,339 $ 14,090 $ 14,140 Specialty wheat proteins 5,276 6,008 9,718 10,744 Commodity wheat starches 3,013 2,090 5,275 4,132 Commodity wheat proteins 979 163 1,914 163 Total ingredient solutions $ 16,478 $ 15,600 $ 30,997 $ 29,179 Total sales $ 90,501 $ 88,252 $ 179,597 $ 176,208 |
Corporate Borrowings (Tables)
Corporate Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | The following table presents the Company’s outstanding indebtedness: Description (a) June 30, December 31, Credit Agreement - Revolver, 3.80% (variable rate) due 2022 $ 1,600 $ 11,000 Secured Promissory Note, 3.71% (fixed rate) due 2022 1,403 1,594 Prudential Note Purchase Agreement, 3.53% (fixed rate) due 2027 20,000 20,000 Prudential Note Purchase Agreement, 3.80% (fixed rate) due 2029 20,000 — Total indebtedness outstanding 43,003 32,594 Less unamortized loan fees (b) (514 ) (580 ) Total indebtedness outstanding, net $ 42,489 $ 32,014 Less current maturities of long-term debt (393 ) (386 ) Long-term debt $ 42,096 $ 31,628 (a) Interest rates are as of June 30, 2019 . (b) Loan fees are being amortized over the life of the Credit Agreement and Note Purchase Agreements. |
EPS (Tables)
EPS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The computations of basic and diluted EPS: Quarter Ended June 30, Year to Date Ended June 30, 2019 2018 2019 2018 Operations: Net income (a) $ 7,911 $ 7,527 $ 17,631 $ 16,454 Less: Income attributable to participating securities (b) 51 148 117 323 Net income attributable to common shareholders $ 7,860 $ 7,379 $ 17,514 $ 16,131 Share information: Basic and diluted weighted average common shares (c) 17,021,599 16,869,481 16,994,864 16,856,423 Basic and diluted EPS $ 0.46 $ 0.44 $ 1.03 $ 0.96 (a) Net income attributable to all shareholders. (b) Participating securities included 112,865 and 338,375 unvested restricted stock units (“RSUs”), at June 30, 2019 and 2018 , respectively. (c) Under the two-class method, basic and diluted weighted average common shares at June 30, 2019 and 2018 , exclude unvested participating securities. |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Schedule of Lease Costs | The following table provides supplemental balance sheet classification information related to leases: Leases Balance Sheet Classification June 30, 2019 Assets Operating Operating lease right-of-use-asset, net $ 6,163 Total leased assets (a) $ 6,163 Liabilities Current Operating Accrued expenses $ 2,073 Noncurrent Operating Operating lease liability 4,112 Total operating lease liability (a) $ 6,185 (a) The Company has no finance lease assets or liabilities. The following table presents the components of lease costs: Quarter Ended June 30, Year to Date Ended June 30, 2019 2019 Operating lease costs $ 569 $ 1,158 Short-term lease costs 250 553 Sublease income (24 ) (48 ) Net lease costs (a)(b) $ 795 $ 1,663 (a) The Company has no finance lease costs. (b) Recorded as a component of Operating income on the Company’s Condensed Consolidated Statement of Income. The following table presents supplemental cash flow and non-cash activity related to lease information: Year to Date Ended June 30, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases (a) $ 1,161 Right-of-use assets obtained in exchange for lease obligations Operating leases (a) $ 576 (a) The Company has no finance leases. The following table presents weighted average discount rate and remaining lease term: June 30, 2019 Weighted average discount rate (a) Operating leases 5.88 % Weighted average remaining lease term (a) Operating leases 3.3 years (a) The Company has no finance leases. |
Maturity of Operating Lease Liabilities | As of June 30, 2019, the maturities of operating lease liabilities were as follows: Maturity of Operating Lease Liabilities (a) June 30, 2019 Remainder of 2019 $ 1,192 2020 2,278 2021 1,684 2022 1,079 2023 496 After 2023 57 Total lease payments $ 6,786 Less interest (601 ) Total operating lease liability $ 6,185 (a) The Company has no finance leases. |
Maturity of Operating Lease Liabilities under 840 | Maturity of Operating Lease Liabilities December 31, 2018 2019 $ 2,224 2020 1,858 2021 1,357 2022 977 2023 481 After 2023 55 Total lease commitments $ 6,952 |
Operating Segments (Tables)
Operating Segments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Quarter Ended June 30, Year to Date Ended June 30, 2019 2018 2019 2018 Sales to Customers Distillery products $ 74,023 $ 72,652 $ 148,600 $ 147,029 Ingredient solutions 16,478 15,600 30,997 29,179 Total 90,501 88,252 179,597 176,208 Gross Profit Distillery products 16,503 16,680 31,742 32,550 Ingredient solutions 3,019 2,761 4,440 5,842 Total 19,522 19,441 36,182 38,392 Depreciation and Amortization Distillery products 2,185 2,257 4,354 4,498 Ingredient solutions 367 379 739 813 Corporate 240 261 509 515 Total 2,792 2,897 5,602 5,826 Income (loss) before Income Taxes Distillery products 14,866 14,777 28,301 28,954 Ingredient solutions 2,325 2,142 3,100 4,566 Corporate (6,638 ) (6,076 ) (12,587 ) (12,495 ) Total $ 10,553 $ 10,843 $ 18,814 $ 21,025 The following table allocates assets to each segment as of: June 30, 2019 December 31, 2018 Identifiable Assets Distillery products $ 242,518 $ 223,890 Ingredient solutions 33,264 35,147 Corporate 22,942 18,855 Total $ 298,724 $ 277,892 |
Accounting Policies and Basis_4
Accounting Policies and Basis of Presentation - Inventory (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
Finished goods | $ 16,972 | $ 17,296 |
Barreled distillate (bourbons and whiskeys) | 85,462 | 76,374 |
Raw materials | 4,954 | 4,906 |
Work in process | 1,567 | 1,550 |
Maintenance materials | 7,871 | 7,541 |
Other | 1,181 | 1,102 |
Total | $ 118,007 | $ 108,769 |
Accounting Policies and Basis_5
Accounting Policies and Basis of Presentation - Narrative (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | |||
Debt instrument, fair value disclosure | $ 42,374 | $ 32,018 | |
Long-term debt | 42,489 | 32,014 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease right-of-use asset, net | 6,163 | 0 | |
Operating lease liability | $ 4,112 | $ 0 | |
ASU 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease right-of-use asset, net | $ 6,598 | ||
Operating lease liability | $ 6,952 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Sales (Note 2) | $ 90,501 | $ 88,252 | $ 179,597 | $ 176,208 |
Distillery products | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales (Note 2) | 74,023 | 72,652 | 148,600 | 147,029 |
Ingredient solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales (Note 2) | 16,478 | 15,600 | 30,997 | 29,179 |
Premium beverage alcohol | Distillery products | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales (Note 2) | 42,312 | 42,200 | 84,321 | 86,271 |
Brown goods | Distillery products | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales (Note 2) | 27,621 | 27,736 | 52,448 | 55,937 |
White goods | Distillery products | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales (Note 2) | 14,691 | 14,464 | 31,873 | 30,334 |
Industrial alcohol | Distillery products | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales (Note 2) | 20,636 | 19,295 | 41,079 | 38,639 |
Food grade alcohol | Distillery products | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales (Note 2) | 62,948 | 61,495 | 125,400 | 124,910 |
Fuel grade alcohol | Distillery products | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales (Note 2) | 1,398 | 1,567 | 2,899 | 3,430 |
Distillers feed and related co-products | Distillery products | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales (Note 2) | 6,181 | 6,663 | 13,276 | 12,887 |
Warehouse services | Distillery products | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales (Note 2) | 3,496 | 2,927 | 7,025 | 5,802 |
Specialty wheat starches | Ingredient solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales (Note 2) | 7,210 | 7,339 | 14,090 | 14,140 |
Specialty wheat proteins | Ingredient solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales (Note 2) | 5,276 | 6,008 | 9,718 | 10,744 |
Commodity wheat starches | Ingredient solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales (Note 2) | 3,013 | 2,090 | 5,275 | 4,132 |
Commodity wheat proteins | Ingredient solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales (Note 2) | $ 979 | $ 163 | $ 1,914 | $ 163 |
Corporate Borrowings - Indebted
Corporate Borrowings - Indebtedness Outstanding (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | ||
Total indebtedness outstanding | $ 43,003 | $ 32,594 |
Less unamortized loan fees | (514) | (580) |
Total indebtedness outstanding, net | 42,489 | 32,014 |
Less current maturities of long-term debt | (393) | (386) |
Long-term debt | 42,096 | 31,628 |
Credit Agreement - Revolver, 3.80% (variable rate) due 2022 | ||
Debt Instrument [Line Items] | ||
Credit Agreement - Revolver, 3.80% (variable rate) due 2022 | $ 1,600 | 11,000 |
Credit agreement, interest rate (as a percent) | 3.80% | |
Secured Promissory Note, 3.71% (fixed rate) due 2022 | Secured Debt | ||
Debt Instrument [Line Items] | ||
Secured Promissory Note, 3.71% (fixed rate) due 2022 | $ 1,403 | 1,594 |
Interest rate during period (as a percent) | 3.71% | |
Prudential Note Purchase Agreement, 3.53% (fixed rate) due 2027 | Secured Debt | ||
Debt Instrument [Line Items] | ||
Total indebtedness outstanding | $ 20,000 | 20,000 |
Fixed interest rate (as a percent) | 3.53% | |
Prudential Note Purchase Agreement, 3.80% (fixed rate) due 2029 | Secured Debt | ||
Debt Instrument [Line Items] | ||
Total indebtedness outstanding | $ 20,000 | $ 0 |
Fixed interest rate (as a percent) | 3.80% |
Corporate Borrowings - Narrativ
Corporate Borrowings - Narrative (Details) - USD ($) | Apr. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Credit Agreement - Revolver, 3.80% (variable rate) due 2022 | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 150,000,000 | ||
Contingent increase in borrowing capacity | 25,000,000 | ||
Outstanding borrowings under credit facility | 1,600,000 | $ 11,000,000 | |
Credit facility, remaining borrowing capacity | 148,400,000 | ||
Prudential Note Purchase Agreement, 3.53% (fixed rate) due 2027 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Term loan face value | 75,000,000 | ||
Proceeds from issuance of debt | $ 20,000,000 | ||
Prudential Note Purchase Agreement, 3.80% (fixed rate) due 2029 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Proceeds from issuance of debt | $ 20,000,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense (Note 4) | $ 2,642 | $ 3,316 | $ 1,183 | $ 4,571 |
Effective tax rate | 25.00% | 30.60% | 6.30% | 21.70% |
Federal statutory rate | 21.00% | 21.00% | 21.00% | 21.00% |
EPS - Computations (Details)
EPS - Computations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Operations: | ||||||
Net income | $ 7,911 | $ 9,720 | $ 7,527 | $ 8,927 | $ 17,631 | $ 16,454 |
Less: Income attributable to participating securities | 51 | 148 | 117 | 323 | ||
Net income attributable to common shareholders and used in earnings per share calculation | $ 7,860 | $ 7,379 | $ 17,514 | $ 16,131 | ||
Share information: | ||||||
Basic and diluted weighted average common shares (in shares) | 17,021,599 | 16,869,481 | 16,994,864 | 16,856,423 | ||
Basic and diluted EPS (in dollars per share) | $ 0.46 | $ 0.44 | $ 1.03 | $ 0.96 |
EPS - Narrative (Details)
EPS - Narrative (Details) - shares | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Restricted Stock Units (RSUs) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Participating securities (in shares) | 112,865 | 338,375 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Lessee, Lease, Description [Line Items] | |||||
Operating | $ 6,163 | $ 6,163 | $ 0 | ||
Current Operating | 2,073 | 2,073 | |||
Noncurrent Operating | 4,112 | 4,112 | 0 | ||
Total operating lease liability | 6,185 | 6,185 | |||
Lease Costs | |||||
Operating lease costs | 569 | 1,158 | |||
Short-term lease costs | 250 | 553 | |||
Sublease income | (24) | (48) | |||
Net lease costs | $ 795 | 1,663 | |||
Cash paid for amounts included in the measurement of lease liabilities, Operating cash flows from operating leases | 1,161 | ||||
Right-of-use assets obtained in exchange for lease obligations, Operating leases | $ 576 | ||||
Weighted average discount rate, Operating leases | 5.88% | 5.88% | |||
Weighted average remaining lease term, Operating leases (in years) | 3 years 3 months 18 days | 3 years 3 months 18 days | |||
Maturities of Operating Lease Liabilities | |||||
Remainder of 2019 | $ 1,192 | $ 1,192 | |||
2020 | 2,278 | 2,278 | |||
2021 | 1,684 | 1,684 | |||
2022 | 1,079 | 1,079 | |||
2023 | 496 | 496 | |||
After 2023 | 57 | 57 | |||
Total lease payments | 6,786 | 6,786 | |||
Less interest | (601) | (601) | |||
Total operating lease liability | $ 6,185 | $ 6,185 | |||
Rental payments, minimum rentals and rental expenses | 2,081 | $ 2,372 | $ 2,561 | ||
Annual commitments under non-cancellable operating leases, next five years | 6,897 | ||||
Annual commitments under non-cancellable operating lease, after 5 years | 55 | ||||
Maturity of Operating Lease Liabilities | |||||
2019 | 2,224 | ||||
2020 | 1,858 | ||||
2021 | 1,357 | ||||
2022 | 977 | ||||
2023 | 481 | ||||
After 2023 | 55 | ||||
Total lease commitments | $ 6,952 | ||||
Minimum | |||||
Lessee, Lease, Description [Line Items] | |||||
Remaining lease terms | 1 year | 1 year | |||
Maximum | |||||
Lessee, Lease, Description [Line Items] | |||||
Remaining lease terms | 5 years | 5 years |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | May 29, 2019 | Aug. 01, 2017 | Apr. 19, 2017 |
Commitments and Contingencies Disclosure [Abstract] | |||
Penalty issued by OSHA | $ 138 | ||
Payments for legal settlements | $ 75 | ||
Insurance deductible | $ 250 | ||
Civil penalties | $ 1,500 |
Employee and Non-Employee Ben_2
Employee and Non-Employee Benefit Plans (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019USD ($)planshares | Jun. 30, 2018shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of active equity-based compensation plans | plan | 2 | |
The 2014 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares approved (in shares) | 1,500,000 | |
The Directors' Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares approved (in shares) | 300,000 | |
Short-term Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
EDC, investments | $ | $ 1,257 | |
STI Plan deferrals expensed | $ | 1,755 | |
Short-term Incentive Plan | Accrued expenses | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
STI Plan deferrals expensed | $ | 180 | |
Short-term Incentive Plan | Noncurrent liabilities | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
STI Plan deferrals expensed | $ | $ 1,575 | |
Restricted Stock Units (RSUs), granted | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs outstanding (in shares) | 118,775 | |
Participating securities (in shares) | 112,865 | 338,375 |
Restricted Stock Units (RSUs), granted | The 2014 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grants in period (in shares) | 344,555 | |
Restricted Stock Units (RSUs), granted | The Directors' Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grants in period (in shares) | 81,558 |
Operating Segments - Narrative
Operating Segments - Narrative (Details) - segment | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Segment Reporting [Abstract] | ||
Number of reportable segments | 2 | 2 |
Operating Segments - Operating
Operating Segments - Operating Profit (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Sales to Customers | ||||
Sales to Customers | $ 90,501 | $ 88,252 | $ 179,597 | $ 176,208 |
Gross Profit | ||||
Gross Profit | 19,522 | 19,441 | 36,182 | 38,392 |
Depreciation and Amortization | ||||
Depreciation and Amortization | 2,792 | 2,897 | 5,602 | 5,826 |
Income (loss) before Income Taxes | ||||
Income (loss) before Income Taxes | 10,553 | 10,843 | 18,814 | 21,025 |
Distillery products | ||||
Sales to Customers | ||||
Sales to Customers | 74,023 | 72,652 | 148,600 | 147,029 |
Gross Profit | ||||
Gross Profit | 16,503 | 16,680 | 31,742 | 32,550 |
Ingredient solutions | ||||
Sales to Customers | ||||
Sales to Customers | 16,478 | 15,600 | 30,997 | 29,179 |
Gross Profit | ||||
Gross Profit | 3,019 | 2,761 | 4,440 | 5,842 |
Operating Segments | Distillery products | ||||
Depreciation and Amortization | ||||
Depreciation and Amortization | 2,185 | 2,257 | 4,354 | 4,498 |
Income (loss) before Income Taxes | ||||
Income (loss) before Income Taxes | 14,866 | 14,777 | 28,301 | 28,954 |
Operating Segments | Ingredient solutions | ||||
Depreciation and Amortization | ||||
Depreciation and Amortization | 367 | 379 | 739 | 813 |
Income (loss) before Income Taxes | ||||
Income (loss) before Income Taxes | 2,325 | 2,142 | 3,100 | 4,566 |
Corporate | ||||
Depreciation and Amortization | ||||
Depreciation and Amortization | 240 | 261 | 509 | 515 |
Income (loss) before Income Taxes | ||||
Income (loss) before Income Taxes | $ (6,638) | $ (6,076) | $ (12,587) | $ (12,495) |
Operating Segments - Identifiab
Operating Segments - Identifiable Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Segment Reporting Information [Line Items] | ||
Identifiable Assets | $ 298,724 | $ 277,892 |
Operating Segments | Distillery products | ||
Segment Reporting Information [Line Items] | ||
Identifiable Assets | 242,518 | 223,890 |
Operating Segments | Ingredient solutions | ||
Segment Reporting Information [Line Items] | ||
Identifiable Assets | 33,264 | 35,147 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Identifiable Assets | $ 22,942 | $ 18,855 |
Subsequent Events (Details)
Subsequent Events (Details) | Jul. 29, 2019$ / shares |
Subsequent Event | |
Subsequent Event [Line Items] | |
Dividend declared (in dollars per share) | $ 0.10 |