MGPI - Earnings call transcript Q4 2017

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Operator

Good day. And welcome to the MGP Ingredients Inc., Fourth Quarter and Full Year 2017 Call and webcast. All participants will be in listen-only mode [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions [Operator Instructions]. Please note this event is being recorded. to conference like to now would turn over the Mr. I Houston. Mike ahead. Please go

Mike Houston

Financial the And Finance for everyone. Thank year Investor call Ingredients Tom discuss and MGP you. are Chief XXXX. Officer. and financial Officer And to you with Good morning, I'm thank me and Mike members for and fourth and Gus of the quarter Lambert, joining Houston the webcast Company's full results Edwards, joining including President MGP's their Vice Griffin, of President Pigott, Chief Relations firm. today management team, Executive conference

the management's call We call will open then remarks the begin to questions. with prepared and up

to this update MGP annual the and forward-looking of and issued filed President Securities Gus? to At like Company's I the time, the the plans actual Company's projections of Gus Exchange call call, MGP's statements well you today business. www.mgpingredients.com. statements by The due and Officer, before to any call today, the results site, could forward-looking the have press quarterly may the statements including begin today's would responsibility over factors as Company's and Company my release turn of number certain on forward-looking that you can at objectives does access revenue, obligation Chief materially structure, from capital it Company's no of Web it Griffin. However, made with Commission. most during to made not as risk The earnings a as recent Executive the this inform described to anyone involve call. assumes copy If and already reports we in the such is differ statements, factors, any a

Gus Griffin

discussion an you Thank and all us. provide financial progress this Then we your And results, you, thank questions. against call, take of will performance strategy. our updates we metrics key of our will for overview on On Mike. joining

third the our implementation XXXX full of year of results. strategic to marked plan. turning Now the

pleased income from of year, prior XX.X% continue our consistent results growth they We this we've our for and XX% foundation net was growth very XX% operating goals. quarter long year income, with the the strong against we driving are gross increased continued MGP showed guidance. XXXX. growth as increased with to that met the strategic segments term excluding sales our on build X.X%, of guidance its for Both progress year and in to special the business strong over underscore profit items this established. And the operating the Consolidated

offerings. In Looking grew full and strong continue customers Distillery sales benefits our at segment for market The strong demand premium existing attract grew strong see our highlighted in Spirits and goods. to and successful alcohol building in trends, grade brown food XX% year, vodka we whiskey, recently driven within segment, the alcohol by our trends. Council for of the increase reflect white an results These us partnerships strong net of underlying of goods our X.X% market with customers their which the economic gin The efforts new bridging, annual range our released each Distilled individually. Total our beverage in Products increase year of XX.X% X.X% premium sales was net beverage for alcohol. to growth driven net year-over-year sales growth XX.X% alcohol. sales premium by net beverage as of

and For the and news a total X.X%. for sales of There beverage X.X% alcohol the share sixth is increasing lot accelerated five The volume for annual whiskey good CAGR Distilled here. continued sales also trends for volume straight value volume of premiumization at for American year with year. with straight sales certainly total the annual X.X% years, up whiskey Spirits grew gained eight American spirits

clear that outperforming is the to results the However, market. our broader when comparing we industry, for are it results overall the

efforts broader producer that us the fastest offerings the has to whiskey, whiskey a meet over rye CAGR Our our whiskey U.S. in customers' whiskey growing in given cases. the our States. further of American of of category and now expand and rye volumes category is year needs total product annual with is growing segments. coverage exposure largest while MGP grew plus and United sales five capabilities rye industry And offer the to categories nicely, American is a XXX,XXX XX% XX.X% subset and the

grade alcohol XXXX. this food maximizing of the XX%. whiskey strategy super sales have whiskey growing With to believed from food the to beverage of our high our towards premium industrial grade show over American value full end fastest In X.X% overall of White We The slightly from of with external make in factors. lower pricing to down represented XX% segment, segment premium or increased segment volatile key We brands. who super the help from Distillery and away growing up of customers us alcohol are production In Products XX% more up is sales that the premium, end the premium was was high-end strategies of XX.X%. volume total category XX.X%. beverage products insulate our the of vodka annual the sales, premium Goods alcohol at also fortunate segments. super high with year, category growing alcohol. a utilize volume XX% gin one would story but in margin for mix segment migrate at similar XXXX the our

margins Distillery the alcohol year. segment DDG, aged our despite basis with Consistent profit points of $XX.X pressure industrial XX.X%, grew strategy, XXX for So and co-product build continue whiskey. market in we for long-term million our pricing expanded downward our the soft pricing gross and year-long from reaching global strong Segment or to for conditions our feed pressure inventory gross distillers

distillery this category, customers new customers. using seek gaps retain position is addition our for expected consumer as strengthen and whiskey used than to of inventory of the fill by strong sustained attract higher to robust we whiskey to demand to aged it driven Due the the whiskey In aged to own American see demand. growth our brands, to ability support development also to and market our continue

continue to whiskey new and our of the building aged our aged We existing at million to of And inventory $XX.X Products. support the with for focused the year-end to limited our attract sales inventory partnerships even We our sales, year. on by increased whiskey. of Distillery new remain reaching at cost rightly XX%, customers we close strategic leverage

market enhanced starch the knew partnerships trends. view build to These while from Turning approach. expanded the our our businesses, dietary wheat consumer specialty wheat to identifying in appropriate growth XX the to The be our take net improved products customers. growth last took Fibersym patent of in would our a time upon higher of X.X% interest we’d strong June, in specialty term gross capital to able actions both strong trends We X.X% and fiber. specialty supported on the and Gross the year making protein points, our we our and with for $X.X sales macro specialty those continue sales margins and Net consumer year. by Ingredient and reflect ensure position profit strengthen million on expire to wheat ingredients and benefit that starch products the the increase businesses. Solutions. We of grew leverage long basis to this investments actions

and to protein in business. and texture our to the result, that saw we funds Similarly, increased the strong potential we invested growth reestablish a maximize plant build offered business consumer proteins. interest As the in by time wheat based

in XXXX. than doubled sale TruTex wheat protein specialty result, of our more product a As

We very and are about pleased for this growth potential with the key progress platform. excited this

opportunities by and This for quarter as fourth strategic of results the maximize both macro we trends our with my execute ability the and pleased our long very term to full business confident are the segments. in initial remain We remarks. year concludes our plan provided

review Tom? metrics turn Tom Let Pigott a key numbers. for me now to of things and

Tom Pigott

Gus. Thanks,

growth and both As Gus with performance and gross featured in in revenue this highlighted, the we're of top profit the business. pleased bottom gains strong Overall, balanced segments. quarter

in XX% points increased million, XX basis Gross profit to reflecting our beverage to segments. both to alcohol improvement in Gross XX.X%, XX Solution gross Distillery quarter, Ingredients $XX.X $XX.X sales reflecting basis margin points in and reflecting the products consolidated For X.X% ingredients. Products. and million, increased net distillery a profit specialty growth results premium increased

as point XX.X% and XXXX, expenses the for XXX margins basis and XXX Corporate professional in $X reflecting profit general increases increased quarter. increased Gross personnel consolidated in for in increased administrative selling Gross incentive by year, Distillery to improvement to sales the growth ingredients. both and X.X% driven to results strong million, net of result in specialty million $XX a Products the million compensation, $XXX.X due and Ingredient For XX.X% were Products. segments. points alcohol up basis and cost beverage fees profit to Solution Distillery gross premium by

increase by primarily full income due $XX.X to in For reflecting at year, growth incentive the gross brands in increased segments million quarter and to million SG&A to in million, investments profit investments fourth year compared an compensation. $XX.X the for in MGP during flat was the quarter, relatively the prior million Operating $X.X $XX.X platform SG&A. both offset

which in $X.X prior operating full due the profit income million during SG&A special operating the investments were by the year, in For other compared growth from XXXX both guidance. X.X% excluded gross related year, to primarily income in recorded in our increased offset to segments and to $XX million items to totaling million, the decrease $XX.X

to benefit $X.X million in the of law tax tax tax expense This Jobs compared year million reflects Act Company's the benefit current was to in deferred quarter. becoming response in effective the Cuts corporate of of prior the Our and quarter in $X.X XXXX. December liability Tax the revaluation

to For tax compared the rate prior effective the the year, XX.X% year. in full was corporate XX.X%

the rate XX.X% reform. reflects favorable the taxes. Our $X.XX, current per $XX.X quarter increased of million to driven projection and of XX% for by our income XXXX earnings impact tax guidance Net share the fourth was of

the income to the the the to of from XXXX earnings during year, For per $X.XX prior per share third year. the tax improved net and quarter the fourth on in revaluation sale benefit XXXX, net full to and operating $X.XX quarter in $XX.X throughout performance primarily of of increased increased liability gain ICP the share due million deferred the year, the XX.X%

in well cash in invested even XXXX net invest $XX.X we as warehouse even $XX.X $XX.X to ageing nice this whiskey. inventory of from XXXX million for increased million distillery cash a Gus strong barrel results strong example as We’ve our expectations. provide million allows our operations company to which capability to as project mentioned, As MGPs our with towards to flow the in the were flow the of segments and discussed grow, from grow as generation our us of we're if to both return provides continue shareholders. library XXXX with sheet cash fundamental ageing. growth consistent the pleased invest our funds to and and our of allowing us balance very business, strong remained

we for Recently, addition, good credit a under year In Board At very new and the providing August, of the per revolving amount credit million share. first In into to sheet. $XXX million balance million quarter on continue dividend access entered facility. to available $X.XX of $X.X line MGP capital. $XXX.X in end, credit had have cash authorized we agreement the the

with amount. operations. This dividend were of in as to quarter from performance view quarterly share and very strong represents cash dividend quarterly response company dividend our to to in important success deliver flow XXX% an confidence way the Board the to increase continued the to our pleased increase dividends business continues the financial prior shareholders. over The strong We

estimate to in As is continues XXXX in approximately shares between outlined be inventory are XXXX; and is from XXXX for operating XXXX is to in for to morning, fiscal following beyond; at of XXXX grow versus sales operating be to year $XX.X percent high volatility to tax industrial alcohol. release XX% the has guidance net is income XXXX versus margins a year to in MGP and income rate more XXXX. and as become range previous the of the digit expected fiscal significant expected grow shift some guidance, reconfirming at expected aged XX whiskey sales XX% conservative to XX% press company offered to the the end. single projected XX% factor. growth beverage Company’s effective are forecasted modestly to outstanding continue sales Gross growth million subject premium this

things turn for Gus his remarks. back let Now concluding me to

Gus Griffin

Thanks, Tom.

in ability premium Products and year our are the we strongly our our pleased quarter demonstrated beverage full business with our Distillery reestablishing progress plan. plant our against TruTex value results alcohol We segment. Solution by segment made protein strategic with and our Ingredient maximize and based and We to platform our growing

the our sales premium capabilities coverage. value and product maximize to of our alcohol by expanding We production, continued demand customer meeting offerings, strong beverage

premium Distillery brand Products we focus initiative. owners brands of always with other are of be the supplying spirits, the with pleased our segment will progress our While distilled

of on Here launch Remus limited XXXX, focused the Repeal we’ve fourth quarter. in edition our the developing in of Reserve brands, our portfolio including

We and organization, people adding strengthening our and also our processes. key worked to develop systems

of into first XXXX, result are work the expanding additional of the current brands Illinois. and expand markets, that a Colorado As be in of performance we Arizona, to quarter into now we ready In our will markets. and

barreled also progressing year. to inventory continue grow, during further warehouse putting We expansion the whiskey invest away to our on and

the Our macro investment. year approximately had benefitting business authorized end, We through we now million to committed million trends investing warehouse our investment and segments. in to remain to is both capacity of consumer this $XX.X of on reach incurred capitalize $XX

remain are We the term. strategies key on over the focused and positioned our market well long in

volatility, may concludes experience we that shareholder to call. prepared term on strategies quarter-to-quarter begin we we question-and-answer-portion Operator, drive focusing will remarks. remain superior our of confident returns. some the While are the long these That ready

Operator

the We will question-and-answer-session [Operator begin Instructions].

question ahead. go Please first comes from Bill SunTrust. The Chappell from

Bill Chappell

a shipments whiskey talk of anything exact quarter premium just you some that you affected you the fourth in quarter? much How terms little third if talk in quarter? was quarter, the would levels the third then that timing about the in lightly-aged And Can of more bit of sold of know fourth versus sales? spirit about

Gus Griffin

any But peel as volatility, terms brown gave not further particular in actual. of terms said ready of or further into have particular those to ready in We that. the peeling sales. not quarter-to-quarter that. we're product we've white any that and segments product do we back types, Bill, back some we're into of And a to

of customers, patterns Some their forth. the and our to it's due so order nature

volatility we what encourage quarters. think look to is is you the would at term than long within we at and the so long important look And we really term rather

Bill Chappell

some do do barrel standpoint and for be And of did we on it XXXX from like other going the a XXXX? level also increased How much inventory the look it as see Should in million natural at a you corn out forward? or increase demand but as you build it from feel should a the gas and you've for XXXX, distilled, from market XXXX. obviously wasn't both standpoint you growing amount and input topped here, lesser and

Gus Griffin

to this committed it, all favorable That's we're commodity we're availability. committed it. conditions, all, to of grow in of continuing Still I prices very First good. and growing and to terms year think barrel natural gas

short In terms growth of continued the the of long and the the demand, term, category. certainly all to both for points term data

away we're customer orders, put the fourth away for quantities we this better putting way. quarter. match match about simply we're specific We for have a our fourth that builds it's shelves. very with So customers And builds. not just didn't substantial we're away away the and same to were of our good producing able that put just to amount to in in so understand that feel and barrels, those important plans early we up year that. our able to just -- line the putting quite At up we quarter lined In time, that were specific

putting were we're though quarter it impact were put any fourth able of barrels. sales even away. didn't lot our away we that So have to on obviously, pleased And we a

said we're to In committed terms longer inventory. term, of as I net building

in start selling and growth aged would We will to the those we of slow whiskey expect we as rate to think start XXXX. increase sales more

Bill Chappell

new this there maintain or just trying quarter customer work conversation then you any brown lot to and just mean in a last it Or customers just about you of is on. mainly flows customers, your ebbs winning take customers, coming competition And on new Are is quarter? of the from how terms new current customers, one Can last count. to for trying spirits? understand specialty the of I

Gus Griffin

customers. new on taking are We

new winning customers. are We

the there competitors and people We us in our investing things both ability strong offer, them new meet to new we in sure capabilities and to eventually of four We all position and our that capacity year and sell inventory aged particularly maintain our needs, there. are terms our old to market. our we whiskey, commitment, now to out them market. long-term position warehouses make our and Certainly, to the to together a services offerings or basket older committed are their sets term sell rightly think them, to of and whiskey those partnership the commitment apart gives product in their long that strong us very and ability success, and

Operator

Alex Mr. from Capital comes from Please Group. question ahead. Fuhrman next The go Craig-Hallum

Alex Fuhrman

ask area quarters focused, many you people products The over and ingredients business. customers in the in your I products. where give food other wanted high to years you been pretty in several types nicely of company of a row had that gross a revenues strong We’ve plant big think it Would are increase landscape, us are when that single perhaps say lot there big evolve and part digit XXXX, based grocery couple years? And solutions ingredient of what a proteins in next and the sense but that of sustainable? profit of looks ingredient using stores an in your much increasingly that. interest just has I mean being you of business a the how not the in Can restaurants. you’ve evolution is better trying understand envision about could which How know to you growing there. that that’s like as several part talk in ingredient I for do a up solutions is now. you arrow about of

Gus Griffin

really macro about the excited trends. Well first, we’re let me say

this, showing the a got that because myself talking wasn’t to like the on going work sometimes company showing months, or I people really at feel in P&L other excited, talking XX the as wasn’t level was a and the and was last the up least we’ve I For about up lot of it. about people outside scenes excited it behind been at other

these strong. of trends very fiber, So enhanced and based enhanced non-GMO proteins protein, plant particularly

And to doing we’ve the our of piece behind a potential. ourselves it’s and lot of get small that been positioned so a scenes business really maximize to work while

out, have over you pointed gross grown As last years, dollars three profit the XX%.

points. XXX expanded have margins basis Our

there. of long-term a on Ingredient lot a strategy. really And our piece of core Solutions these we things going had we’ve see So good reasons, as for

Your question they how use people people see continue Fibersym are we about using expanding it, how product. to our

some it’s business, ways animal about, a dietary to ever offering And into expanded seeing it some turning an fiber, seeing the taking we're range niche of for customers of they enhance so at particularly TruTex carb what which the to in that some customer are place usage also excited And that our alternative thereafter. and low we're its an place protein. protein. product, increasing We're protein our course rice products, wheat increased textured that of end then in they're we're seeing offering and to

Alex Fuhrman

briefly if a those in where presumably news they how you your third, to inning do Do the are going little markets that And Can fourth, in us brands. evolution move on markets of like as we and I think the year? could more you feel brands sense on markets? you're launched some that just some places original sounds the should that then the of new incrementally just guess fifth ask every about you Can you the of in. the how you you in I in markets give in to It XXXX. see bit comment in you're performed a

Gus Griffin

long before, term we've is initiative. As this very said a

do right the to expect to -- the build now right these build things in organization the brands our right partners. the to ways, way, find right we We want

significant that us. So be long will contributors term these to

additional so And to we it's prudent for confidence steps. us really as learnings steps. And get make important get to we make careful as

we When to and original Vodka the went American further. -- to that Wheat any and any completed George before learned the we we strengthened brought Remus brand, positioning our went our strengthening we and we repackaged had the it packaging right further. actual back packaging markets, itself in wasn't and we product we before So until went

Repeal that distributor the a steps. brand Reserve. repackage brand. step. to as that enough themselves we careful not the behind they the So our have okay, well said systems -- them, we've of really right their they're getting after repackaged till confident our behind George it, out to they're our they those that and partners make another see to potential Remus organization robust brands only getting but proposition, said, consumers support point the build Remus, in this We've in people organization we after the introduced doing The traction, point in understand market, processes we the enough we're and the we that is our are evolution the we're system We because like the we

consumers, felt we U.S., markets. have enough Illinois, market that up the can of in confidence only place. test complexity, -- we the market good the know Arizona, with with of of take we step another another Colorado, markets, the we our we terms in performance So what think brands significant we'll your we okay, the about that us the are markets, theory those in that felt, and partner and existing now enough support -- both need that portion next a now distributor it's of our go puts size. but in we takeaway also to have and They're retail, results, to we And still the

Operator

Mr. comes Please question from and Co. next go Sidoti from ahead. The Francesco Pellegrino

Francesco Pellegrino

to get the beverage to of about growth, the I the additional don't of the sales alcohol XX% So into mix growth premium color brown about I more? due was want white was quality much much the breakdown But that little it ask due experiencing it and want could How XX% X%. pricing, of the bit brown to a you sold throughout quarter. was that volume? aging to for how you

Gus Griffin

this We’re any that not back that prepared further pull time. to

Francesco Pellegrino

maintaining the are just XXXX looked if long-term of outlook year. a insight And additional provided just and And you year, wrong, I more provided two for had you period guys I had you year guess went right. taking that when and guys So back as went with your base guidance some saying at last a what it looks as guidance. a step the XXXX what

just and consolidated your You some revenue you movements pretty year. growth maybe wondering business modest right entire the direction you got what for strong towards what get guys have that for line in what expectations, going to growth. guiding growth I’m the the are exceeded underperformed And that outsized top

Gus Griffin

overall view of date, Franceso, a goods. primarily take the both we the within pricing in really Drilling how forward, I has bit so expectations. optimistic highlighted when volume was we we a we changed business So as in can feel evidenced as in this our this to by but terms line and trends the lot piece think you I market, our well brown down the our to the away Gus year. in making of growth quarters to look in warehouses which for as strongest grow. customers’ one our investment business on as know continue we going incremental of put we’re category premium with that’s broader quarter, Certainly supported nothing the XX% think revenue you that more saw And that little performed was we mentioned

answer question how we’re of So does looking that at? in terms your

Francesco Pellegrino

in CapEx spending for Is you there are range about a XXXX? number thinking or that guys

Gus Griffin

for with the about And plans program what to continuation million. currently the that consistent XXXX. in as is that is fairly We’re we $XX have million this authorized of at going will program year $XX warehouse at now be include

Francesco Pellegrino

Did three And Arizona, think when for about Colorado I Illinois. those get roll the right? and initial I out

Gus Griffin

Yes.

Francesco Pellegrino

initial empty the maybe fourth it just its if quarter? us the sounds could as be Whether will uptick? or maybe quarter? occurred nothing the sell-through cases volume what understand channels Because what be those really you the first and half help first maybe into Could barrels in in

Gus Griffin

those we’re first said quarter. going the We go to into in

And gain. a so again, is long-term this

outlet those in in markets. retail get trying So of we’re not every to any distribution

distributors, which the give of target unrealistic. focused, well something brand us ones resources. in not them terms a very terms for It serves with the them partnerships long-term. really our of accounts, of because We’re building serves well that of We’ll asking in maximizing our we’re the our terms list matter in us

on distribution for we’re restaurants cases stores So look not to make for premium for off the like that the premise the asking we’re to and and bars where get key we’ll asking all ’XX. then key people and grocery m-cap on sure XXX distribution gradually that. build a come store, products we premise through And

marketing brands the break some so there Surely And long there'll term. you the sure is some don’t pop we're building we tremendous those building will see sales anyway that in sales over a distribution, months. wouldn’t behind early those but matters what with pipeline be But out distributor. really and running be programs quality pipeline our making the effort it and

really we it show we're up and the long do it while. focused it's numbers there our for right in I as term won't said, in So a

Francesco Pellegrino

The XX%. I how over just really do a consolidated at is potential out were saw get last me revenue thing question years for that -- XX% you the puzzling the little grew for from When me. but your volume the for in on SG&A math I to one numbers. I been you has XXXX arrive interesting the guess this a the business, operating bit basis growth can your sales And some that Because do up business leverage earnings model. and

operating be. percentage is see model? what variable? and percentage And SG&A what the of question get different the significant point So in of leverage maybe currently your will at ask to way fixed a is to that What do we

Gus Griffin

of set that based level And yes, platform spend. and lot XX%. XXXX, base of up terms SG&A a A&P So both a up in was business investment brand for the of sizably up in people fundamental to was

do as at to, it grow expand we expect forward, platform go the that XXXX. in Now, to but we not SG&A as continue we 'XX, rate grew in

as establish for making longer investment that branded we we're further certainly will platform, fund overtime, the it So term. this SG&A

Tom Pigott

to we important it's ground think that zero. really understand I from came

is increase incremental incremental significant. But increases. the be forward, we won't of adding people, we add similar go you when So types those as

Francesco Pellegrino

XXXX tap what base start leverage the place. or as That's and in into distilled And inventory cost really that have barrel infrastructure you currently you that levels I'm to at… the getting

Gus Griffin

Yes, get you’ve growth inventory. well of drivers margin forward, the as deploying got two aged as from moderation SG&A the you the going

Operator

next ahead. from question go comes Leshock Instructions] from [Operator Please Chris Equity. Ballast The

Chris Leshock

through. line? of benefit side from Are of questions here could turn tax recent the tax on top you changes in excise savings things tax I'd December the guys any Couple law like that to the coming on there

Tom Pigott

no. us For directly

beneficiaries any the from the players. are for for favorable a overall customers tax all that certainly, change. is industry tax change But benefit Our primary law the

Chris Leshock

I pretty know you're retail. substantial selling if to it's

three the the quarter. mentioned in you're You first adding states

If end of you quarter? in states many are selling at count the total first you those, how the

Tom Pigott

I believe XX.

Chris Leshock

And what some either start sales? or to -- give some the you some data information on will point branded at

Tom Pigott

Right now begin it’s out not becomes certainly business. where to threshold when split driver, material that it Certainly, it a material we’ll reaches more impact our you. that for

It’s we overtime terms invest up For important and for right be able now, focus then that an share it’s in more on it’s in a we’ll it business start mode incubation and important of us. results. and to

Gus Griffin

many to understand, important people brands. approach think we’re who slightly dramatic different I to it’s launch taking Chris, a

then how trying the they’re expectations uncommon not in and brand with their and for see fine all So out the and year coast what first are to quarter on it. in their and somebody announcement they’re may by to which to in want do end nationwide, starts from the that the build the work they it’s of of they

a taking approach. very deliberate We’re

make We So the had, that new account sure a our we this and right for that marketing not make to sales the toe into sure us getting brands. also stuff the only was forth. right We want but way so didn’t bad. for to initiative way in to too right to process want brand we things, orders

and So it from want too that then we make zero. aggressive don’t really was ourselves sure completely And ground cause to problems. get we

to our processing In terms of that customer of sure support there we all make marketing service order effective. want sure to to was want programs and were we it, that make our that our and

big hit. a gamble a might big and people some So hope for take

to very ready programs and and If say they’ll markets, a we’ll tested sales steady are in markets able And go pragmatic systems meaningful battle big say people we in Colorado to those and than tranche know now of and those confidence okay, another into in approach we’ll and be now. do and have we’re bigger effort. support more okay, our we’re Illinois, be taking we marketing we’ll bigger to then We’re and Arizona, we’ll are it. because markets, well that

Chris Leshock

the majority year? that fair bulk or increase, be was to of that over to efforts least increase it the in XX% SG&A, that branding of say Would say the the related increase at the

Gus Griffin

biggest was branding The the driver efforts, yes.

Chris Leshock

several my and At you’ve showing in And concerned up least dollars the I see past. from we’ve profitability starting bit. now Gus, laid the plan impact the spend it talked times clearly are about a perspective, out can but to not

some to chance know, the got you’ve roll I as was biggest million surprise $X think the that all do was increase and in SG&A. year-over-year one out we the probably the on quarter it in this will But quarter point. effort breadth, top some and right. see it the dollars at doing line branding apology in but of steady, slow nice revenue to be showing same up the And

it One was spend. prior this? warehouse spend $XX total utilized, warehouse be to What been on clarify you give appreciated. the last in capacity? expansion in pretty any much And the has question, approval So that’s wanted is that is now would fully capacity or there up on help million general, to below just the can to -- total

Gus Griffin

about at immediately get to $XX continued to in Essentially tranches get dash. we've this put they completed, million warehouses really warehouse that added so program. demand And driving additional as the were we is it. customer So prior, that's

their to out forecast in growth. needs. customers terms of our their with overall we growth, of continue their they continue as And to warehouses up to so add And estimates support we

Chris Leshock

rough the much bought is Any the and paid there? How product capacity? on? are customer warehouse in versus you product split of Is funding that cost

Gus Griffin

customers, is The our for supporting majority yes.

Operator

the turn closing over Mike Huston our conference Mr. concludes to This to would I back for remarks. any question-and-answer-session. like

Mike Houston

and take fourth and for us year think today interest in Thank our I company our for for I'll that. you your quarter call. joining full

are first year quarter. after forward continued again talking we certainly to this the to pleased and and We the experienced you momentum strength look with

Operator

you for today's concluded. attending now has conference The presentation. Thank

You may now disconnect.

MGP Ingredients (MGPI) 3 Mar 182017 Q4 Earnings call transcript