MGPI - Earnings call transcript Q4 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. And welcome to the MGP Ingredients Fourth Quarter and Full Year 2018 Results Conference Call. 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 Houston, to now Relations. Investor would turn over the Mike I sir. ahead, go Please

Mike Houston

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

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

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

Gus Griffin

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

our our momentum year. X.X%. a increased alcohol our demand strategic the allowed implementation plan our elements XX% fourth financial strong Gross the XXXX solid Ingredient performance increased fourth with improved beverage of are well in products our continued Now, operating us the as reporting strong and XX.X%. for premium full-year consistent and marked results, deliver guidance of results. of quarter we profit business the We plan the very net for Consolidated grew to of income Solutions saw The turning increased year all on for again, as of and the in sales segment. strategic the execution to plan. this

year beverage premium within X.X% sales Distillery net segment Looking in our which brown as demand for driven beverage net strong in an at was alcohol each segment, XX% alcohol, X.X%, our increase Products by we year-over-year. our The goods. individually, grew premium to full sales of continue grew see growth

We are attract the our with with by demand ability our as customers. to continued well alcohol very supported existing strong for customers, pleased as strong products, premium cultivate partnerships new beverage

in our vast our increase in distillate growth. increase initiative majority to than is prior our growth our coverage tailor robust sales across the supporting direct American For more net increase the year, our net quarter. portfolio, in we offerings underlying role new product of new added and the third the result the sales results that of with of have better year. also was the offerings. incremental sales fourth the and This a category Whiskey The Whiskey our These American customers reflected of consecutive driving

on margin revenue XXXX expected. growth order and as net of While in growth overall solid U.S. Based was for year premium recently our Whiskey beverage year, net from the throughout goods evident sales typical the alcohol alcohol sales business brown full in delivered growth industry. volatility sales the flow our our the net outpaced data, Distilled Spirits outpaced category. beverage sustained released total And American Council, quarterly premium annual spirits

a continue in in grow We to being exposed as the segments. to growing share market, we from fastest-growing categories benefit

gross impact headwinds dried factored have XXXX do outlook. distillers strong to to expect had goods, gross of to grains due demand a to industrial $XX.X profit pricing and gross distillery due these the margins. market segment for or quarter, market primarily products goods brown the X.X% solid grew in segment We for year. and Sales improved into in white the our basis positive XX alcohol driven impacted million pricing While declined in margins and on them Overall, our DDG pressure fourth continue points pricing.

distillate sustainable year have macro compared invest we beginning our of lower and unchanged with ability maintain these brands XXXX, customers, are we view our we the limited we Throughout as own the While to development driven continue sustained reaching XX.X% as higher Consistent the trend distillate strategy, consumer experienced existing expected our products. inventory environment a year, results due which new XXXX. first of our for customers not to strategic robust with the to partnerships prior yearend led whiskey, position. year, aged aged fill our continue to our pricing customers of support than inventory improved leverage $XX.X to compared market seek our sales growth and sales, million that strong at our these in of this and the by demand long-term to aged attract new Due in demand. gaps, to attract continue the cost. the inventory American we for increased see supports whiskey our to Even quarter to that Whiskey strengthens pricing to enhances to of retain whiskey, category, new we by

the net XX.X% basis to categories. ingredients million. by was year year sales This ingredient good points, a grew improved XXX Net for product while Gross gross solutions. across Turning by supported solutions. $XX.X all higher X.X%, sales for margins very expanded profit to

full experienced our we both businesses wheat in the specialty year. wheat gains for specialty and pleased with We are proteins particularly the starch

positioned the for to consumer against alternatives. increasing healthy well demand We be continue eating

efforts During previous leverage to interest we highlighted in our increased trend textured of calls, with proteins protein success this consumer have based wheat our and plant product. the TruTex the

from potential trends continue our offer. our trends to we of we this well While trend longer burger. decision will remains due Despite strategic customers that robust, pleased consumer to loss, a the plant that did the we fully new funnel and and for product lose reformulate this plan to projects favorable term. positioned both are based their with to large has that these benefit are segments trend over from business benefit consumer of confident capture continue customer and project us their our Overall, to

my the building reflect remarks. positioning Our as both that continue against plan. momentum XXXX to the results of and This strength concludes we that we initial are execute

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

Tom Pigott

Thanks, Gus.

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

XXX basis XXX increase solutions both net XX.X% in the profit solutions. Gross For basis reflecting ingredient the and and beverage a ingredient a million, ingredient gross and alcohol premium $XX.X point in distillery XX.X% reflecting in point quarter, $XXX.X consolidated growth stronger to segments. increased in million, to results segment. distillery XXX to margin points reflecting by profit basis increased Gross sales the XX.X%, increased solutions products products improvement

Corporate consistent quarter XXXX, performance for sales by a net expenses reflecting points Gross of point increased driven million general to consolidated basis selling, a the XXX our the year, quarter. segments. in in ingredient year ingredient Gross increased to growth gains result flat $XX.X by prior segments. X.X% XX% distillery XX increased solutions. products XX.X% both the in to margin million, and were basis administrative strong as $XXX.X profit products and compared for For in solutions to and distillery improvement

For to and the brand's the both and of million full grew reflecting to $XX.X significantly million compared to Operating during increased in the the in to profit costs quarter million income the investments MGP growth year segments. form advertising the to compared primarily prior gross million $XX.X SG&A prior platform $XX.X year, quarter, promotion. in for due personnel fourth year, $XX.X from slightly

For growth to the primarily million XX.X% year, increased $XX.X compared also in to profit segments. year, due million income both the to operating in gross $XX.X prior

expense the and company's of tax a in prior tax million of current tax the the the compared net XXXX. million Jobs reflected December $X.X to $X.X quarter in income law revaluation in Tax benefit deferred becoming benefit response Cuts was year the Our in liability of quarter. This to Acts

XX.X% benefit tax was were XXXX. per decreased rate fourth million full compared income to $X.XX, the tax of quarter the Net revaluation corporate XX.X% fourth liability quarter For for prior year, share deferred and earnings the during $XX.X X.X% year. in to the effective reflecting the the

invest share gain decreased due as decreased $XX.X income $X.XX per XXXX net revaluation. sale year, the in to XX.X% primarily the prior deferred successful MGP's shareholders. strong of sheet which discussed as well funds us return to even and we library grow business, to whiskey cash us to warehouse balance allows as We've of cash-generating flow continue fundamental on $X.XX the year, from the in project the to For in and as net grow allowing strong, provide strong aging the tax earnings remains well to as of full inventory. third ICP the capability quarter per invest of our million liability share to our to our

as produced cash the operations inventory of invested flow aging. a million strong XXXX net million, a XXXX Following for in company our on toward $XX.X even XXXX $XX.X from barrel distillate growing performance,

and continue balance year-end, a million of the share. available line dividend credit in amount per to access the cash quarter have $X.XX $X very Recently, under the $XXX had good its of Board million We authorized MGP on to first sheet. At capital.

We and strong very our financial in to flow to deliver dividend from cash strong operations. performance response in are confidence to increase the quarterly continued our business pleased

our a shareholders. Additionally, demonstrates the as to program well authorized million return to program. both funds share to Board as also ability grow This $XX repurchase X-year invest

Now, turning guidance. to

has mid is conditions As XXXX industrial to market. press single-digit alcohol percentage are due volatility to of morning, company's the some the this to MGP margins in increase in projected modestly income growth be estimate current subject XXXX The compared following to gross the the range is to in is expected XXXX. in shares the growth guidance XXXX note versus XXXX. operating in forecasted outlined fiscal offered in sales effective for rate net release XXXX, XX% at share be XXXX is XX% do that guidance than the outstanding year-end. are to to million Please approximately $X.XX Earnings The XX% possible $X.XX potential approximately be the forecasted and XX to share include the outstanding from per repurchases. shares any expected XXXX and off to expected earnings per impact range. be higher share to not tax results.

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

Gus Griffin

and great results strong products year we are against and ability progress Whiskey category Overall, In the with our the Tom. quarter full to our Thanks, growth pleased of potential. results segment, plan. offers continued produced the us has distillery strategic we've very our made and American our leverage

Our us efforts positioned and investments continue growth have support to of the this category. to well

addition We and made The premium manager international offerings, warehouse fully capabilities have million our to of product purchasing American from beverage enable category. opening expansion our coverage. growth our we in and us the warehouses. more new new expanded of benefit XXXX, the significant sales progress new alcohol land $XX.X will Whiskey program, global In sales

and invested in completed We the expect be XXXX. million $XX to have now approximately project

continued of whiskey and enhances also inventory position. We our this competitive grow valuable aged asset to our

aged several of phase inventory. our of been sales have past in next this XXXX strategic the the over we use consistent While of whiskey limited years, deployment our marks of

more We whiskey. selling begin aged will whiskey aged older and both

continue and customers progress, to our with pleased this will prospective and current our We implementing work initiative. with are

the market, and quality as in lower As expectations. believe this visibility these will multinational long-term achieve growth. aged customers a steady ongoing We the our with result in at feel the us yearly that high to discussions year's of balance grow to support we increased line already continue consistently sales, in to the is have expect transacted with are that in and required will the and away, continue aged to as the sales we that we we offer brand to competitive with against inventory XXXX. products And supply of There of deliver our craft export product prices national Even inventory confident pricing enable we ours. need guidance. to sales from with owners segment, in ability have our resources strong cases, be some to we a than our put confident some to market, range well wider

pleased premium be the our While to owners segment focus with brands we other initiative. with be brand continue products will the progress of distilled our distillery always spirits, supplying of

Crafted we expanded rye, To our Whiskey. brands Rossville portfolio, we our added first both of footprint. Rye geographic Union brands XXXX, Master During our our portfolio proprietary in Straight

We recently, award-winning our also Eight the and fine Most a of by introduced launched & of Blended bourbons inspired Series. the we second Bourbon Repeal Remus release blend American Whiskey, Reserve Sand railroad. whiskeys

we In terms This of our Colorado. and Most announced existing in XXXX, we during to progress introduced confidence expansion, a market have our the and brands result of Arizona, is expansion markets. recently, our into Texas. expansion made we Illinois in our

Our brands has eventually leads trial which accolades. retail support. high distribution generates awareness, portfolio consumer of leads additional received awards to Winning consistently which and and to adoption, consumer

with We are shape beginning take this our brands. progression to see

in in profit invest portfolio outlook to our for continue will We brand's is investment this reflected XXXX. our and

specialty we XXXX growth key segment. will as especially also lines. to saw maximize for was strong an strong We continue year our in us product in Ingredients Solutions value

on key consumer we and leveraging clean past. performance of in proteins, have will protein, this done fiber, level We high plant-based high the focus by label the trends high maintaining of non-GMO as

practices We the of a also employee made our operational to significant progress Safety culture. safety safety safety next raise to part Up, make comprehensive enhanced strategy. our level integral excellence program, launched and We more on an our

recent facilities Safety British AA both Additionally, the our achieved Consortium from ratings Retail Audits. Food

to facilities mentioned quarter, the overcoming in focused the our key We I mention long ran these strategies well Lastly, all on over very fourth the of we earlier year. challenges the term. in remain want that

Operator, that ready call. our we and we concludes begin That quarter-to-quarter strong and to we experience growth resources remarks. investments will us question-and-answer provide serve as strategy the some volatility, that have While and XXXX need the confident positioned can are us the we XXXX well to reminder a portion deliver may in are our of beyond. prepared

Operator

question begin now Group. of will first from [Operator question-and-answer the Alex And session. will Craig-Hallum our Fuhrman We come Instructions] Capital

Alex Fuhrman

taking see and some about the to guidance meaningful question going and commentary for you really XXXX we're I year. of congratulations year a my Thank the Great. for aged to strong on where the around is this to ask wanted start more whiskey. specifically deployment

back-end then the expect when with wondering wondering interpret XXXX, that, how see perhaps to spot specifically perhaps, sales really that Is substantial X-year-old greater the XXXX get if if I we we already in to are Just then intending should on more that product we loaded? if whiskey? comment quarter that's return continue X talked thereafter? more there return your seeing first in or you're should aging and just past, see now greatest aged know it that start aged you're And to in grow about an you've throughout Or X-year-old just inventory should to the if of about where the whiskey opportunities possible or it. being the even on sweet perhaps getting to

Gus Griffin

Alex, you correct. are

of growth aged the As of I 'XX. said, Aged, sales driver be a key really our XXXX of is deployment. whiskey next in this phase will

that. contracting started have We

it. transaction-ing started We have

how fourth of very sales. can out so much continue to driver year, visibility be did due will deliver terms this confident going not that years. past as will guidance we We to future the business feel amount we the are, we color have forward consumer flow our a vast as growth quarter, will in to driving we is a it product, year the going In said our our we with to to choppy but our and like this provide history, the we'll be we and it aged to color that was try growth. from what's over provide the know on on revenue you of But new to flow distillate, where try out need

so We make at continue of to that inventory to going our to whiskey continue away in inventory, incremental are to whiskey. that the we're a strong put incremental pace sales from increase growth have to to aged going sure years drive we future

Alex Fuhrman

revenues. mid-single growth growth digit as segment, well? digit thinking And for expectation that just us year, your with Is line for in the you to the looking expected about be anything that about for can mid-single is there share in beverage then the with guidance

Gus Griffin

give alcohol in could is that's or bit then in into and a competitive Well, revenue guidance our guidance that. we business don't factored into goods, a certainly the ingredient headwind also pricing more white go and is general, headwind headwinds factored so guidance. against going comp strong two in and seeing we're One our that's segment, solutions very we have that industrial little a factors but do continued by that's into

Operator

And the from Chappell next comes question of SunTrust. Bill

Bill Chappell

short Thanks, few little this. change good price can my Is with I'm expectation three a that any clear bit help you inventory. morning. to get aged me, going in Hey, that a head there ask for the questions Gus. answer maybe Bear on but times

Gus Griffin

though some even market the whiskey consistency that allow we out our No, structure competitive and will combination our provide us to the quality of in aged continue offerings, really unstructured will to strong the be, efforts is there highlighted I to and to that offerings, getting market, our continue think of pricing.

no, expectation. change our So, no in

Bill Chappell

I if for far, selling for contracted all inventory? is covers does that the fair it you've say not that 'XX, guidance XXXX includes to but of include part class look of And all, your of so what at includes, what

Gus Griffin

us whiskey, our the need we deliver to aged It selling, includes guidance.

white feel interest in the it's is don't sweeping on that of focusing before, out goods prudent. mentioned we four-year-old, wouldn't the all of we need pricing, our the I have to maximizing and value And that As in potential in opposed best inventory, think so we some to, ingredients. strong warehouse our industrial headwinds, comp interest, as don't be

the we emptying on to use not we but if to judiciously, that. great it pricing to and we're going still sell and it judge focus at more, will, So the just the we use make warehouse deliver them, all cost is can do we get will guidance market, sure

both So we'll future feel and years look continue to we the for we this at to confident the levers, year constantly market, growth. have that drive

Bill Chappell

you I found for kind for change business. think a concern? if of also around some out kind facility, distillate? party boomed for into look can at, why Just called some third a distributors of and that, that's than actually maybe bourbon get But highlight aged to And in of companies times? to of that down have what that. kind And that you industry less three get barrel people alluded dynamics the you Doesn't naturally, supply can and has the the going road of terms tying you the of your these of are craft go the not barrel

Gus Griffin

Yes, so, you correct selling there out people to are other continue aged and are will whiskey. that there be

I and important focus consistency things two the think to that quality. is is on

brand you're if over high-quality owner, consistent supply a years. the a want So is what you

but So goes somebody as won't able it business, same for that continually will period time, inventory of product over time. of you a there be if out referenced, be source that to short means

bill, the continue always So built a consistency our us expect. we to same to with, strong we support get we from the can in able deliver, we work mash of puts same their pricing so of with we consistency us term, can guarantee growth the we've to them quality achieve be will they that and that they've gotten customers, position strong long that partnerships

Bill Chappell

what, it headwind ago just and And how put two that to is years some the then years it this kind we Can questions headwind? drop-off least around just, at just two can compares of ago, of three in saw, a on you it industrial is or you kind parameters of last industrial.

Gus Griffin

market into the us industrial so some the, for how reason sort that, our guidance. with I baked hesitate the we quantify it of that's the to surprised volatility, consistently of has because

market, in will until change strong the the there's industrial I structure volatility. think, a continue fundamental be to really, there of

Bill Chappell

to then business customer line? last on from you side, protein the And do grow year the one this me with large expect of a that loss in

Gus Griffin

the that but business do term. that guidance We down to don't very That's, strong. grow give longer over to level, the is expect trend we

strong, is very is our in offering position product strong. market very that Our

it chicken I people have and looking funnel, in As use and mentioned, beef crab. project to our we

the by long-term are breadth uses product. confident customer the So of in we're trend very, very and and interest using and it in the for applications very encouraged that

Bill Chappell

I'll Got it over. thanks. it, turn

Operator

remarks. would our concludes turn Gus the I Griffin question-and-answer closing any And back session. like to to this for over conference

Gus Griffin

Thank interest for us you all and for our company your in joining today.

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

Operator

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

disconnect. now may You

MGP Ingredients (MGPI) 27 Feb 192018 Q4 Earnings call transcript