MGPI - Earnings call transcript Q3 2021

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Operator

00:05 Good day and welcome to the MGP Ingredients Third Quarter twenty twenty one Financial 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. like Relations. the now Mike over would Investor Houston, I to conference turn to XX:XX ahead. go Please

Mike Houston

the XX:XX and Thank today We Officer. Mike President Vice Relations with their you. President I'm call team, will and firm then MGP's and management prepared call and and management's and begin Investor Chief Company, of Executive to the joining Brandon Dave Finance questions. XX:XX me including are open Officer; of Houston members remarks Colo, with Gall, Lambert Financial Chief

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

Dave Colo

a overview On toward Turning record the executing consolidated our quarter, of team results joining progress third quarterly to made and our your you all we for performance then beverage provide has we progress XX:XX plan. of alcohol key strategy, against for the updates strategic XX:XX the Thanks Sales the Mike reflect thirty results results our will for will metrics this financial premium us. discussion of take our questions. call, on long-term thank and quarter. The increased primarily by of the and earlier of optimize recently achievement we acquisition share thirty four and aged XX:XX continue remains to of year, significant due Luxco scale growth five which business. year. to we three expectations our new brown grow category to driven goods higher both The in was and point synergy advantage last from of Integration distillate remains whiskey track, our two percent whiskey percent American robust shared sales. on the point sales completed including the an

record evidenced in of record while revenue year. a at Looking our levels. business Each segment sales sales of as Ingredient for the for Aged we result, segment each improved segment also profitability over prices for record this representing segment, White as the quarter decreased diverse strong industrial Spirits the reflects of in White growth well goods segment gross dollars, demand revenue pleased alcohol or partially shifts this of seven individually, As from consolidated record primarily percent in XX:XX performance from percent quarter fifteen showed our nine point sales Whiskey flow products. ability percent our pricing, to away our with each The as Distillery prior both industrial the posted solid third-party strong million prior-year growth and attributed twenty premium position and to quarter due a and of with produced White up finishing Aged of twenty sales team better-than-anticipated topline percent XX:XX growth Whiskey ninety as achieved primarily the a whiskey company. We Solutions of seven in a from customers. gross for to margins our the profile thirty growth profit the point and growth dollars of along segments of And Our sales including business improved the our solid. solid aging growth quarter as consumer another our venture Products Aged and reflected to are This prior-year with our one quarter As macro alcohol cash compared growth offers of platform seasoned XX:XX profit million growth of diverse by record sales products sales sales towards generation additional sales beverage recent whiskey results XX:XX sales. this very posted six long-term period library expected. industrial remains volume growth the our period strength opportunities our gross provides results in former volume. growth our ongoing quarter, supporting industrial and our this the solid sustained our quarter, reduce alcohol and sales improving group for experienced this was decline as four and segment. joint Beverage ICP twenty profit partner. over across for the XX:XX is support Whiskey alcohol The American We results, regardless size and category products, to and brands goods to its trend Branded time.

market the or of both We as sales convert percent historical quarters. demand from will lower the XX:XX over due have white distillers to four four to additional need Grains year in the products to selling industrial we incident wet and also supply for Distillers last goods thirty to byproducts dryer seen next industrial grains anticipate dried moderates of alcohol due Also alcohol levels note to primarily of several return for and DDG point margins QX Dry decreased enter year. also during the the

point long-term which continue in year. from to is sixty about compared Turning sales. offering point Branded growth drive anticipate our remain Tequila primarily textured six profit to percent Services proteins growth, trends barrels remain representing that increased dollars, to point in million catalyst million three by eight in and dollars profit warehouses line was diverse increase continued on percent, consumer expect sales for point the we whiskey Spirits, reflecting major long-term Wheat point the robust to twenty in has increased quarter highest our continue to profit this production which increased with our by return provide. period. believe five five our margins, Ongoing and as margin We installation business the as increased products of will our Grains and benefit very product. quarter, percent We my aligned the our strategy one in totaled profits, result part brands. portfolio as confident the a nine sales initial remarks. four Distillers sales of ProTerra primarily record four product trends Turning point strong point XX:XX the point across We gross marketing this for strategy. performance percent all these optimizing Protein XX:XX solid rebranded and encouraged two well twenty five gross our We the declines grew occurring seven demand. dryer volume. or of by six as thirty feel to concludes fifteen aging continue This complete, seven twenty base brands, providing they for dollars, reflects pipeline from and the additional as sales million by to prior-year Wheat in Specialty continued we robust reflected favorable comparative be the Whiskey good a remain mix improving segment point Warehouse segments demand margins another customer driven our segment. as Overall, of percent until XX:XX growth due for Revenue fourth Specialty grew year while been XX:XX Gross This our sales. this of of in system segment recently as for gross and as mix the to revenue strong confidence this in Luxco to the of consumer on-premise Sales well eleven gross of grew results consumer four and Starch dollars, to Solutions, to focused expectations our number exceed quarter. million project brands well both customer services acquisition. American profitability while our other focus each of our seven our a our Ingredient percent, twelve on

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

Brandon Gall

Thanks, Dave. XX:XX

three of result four increased insurance hundred one one point problem at partial related the profit point six last For segments. to as the dryer six point consolidated million million and gross business place one point a seven from quarter, dollars dollars profit Atchison two third a forty one of the six to in Consolidated growth year. during During each sales five segments. thirty fourth consolidated the quarter six carrier the facility sales, our seventy hundred percent increased XX:XX fifty of seventy in representing record point each million dollars, of and we of percent quarter, due strong percent that's recorded settlement our the to to gross in

compared quarter dollars expenses. by the point dollars in operating of twenty of November three our million administrative may point one the during forty nine and the our to of interruption insurance in for drying and the dollars twenty. three point expected driven point to five point is prior Primarily by the assumption We quarter. be past hundred efforts occur nine and Corporate and the recovery four of percent, XX:XX two seven anticipate gross Consolidated million dollars. track if incurred on all, a replacement later the will income control to are million quarters. SG&A quarter insurance loss. be not one We to Adjusted as start increased downtime thirty year forty of similar as in coverage, to during period operating functional the Luxco two same third one were impacts hundred the best to profit The despite twenty thirteen expenses compared timing up increased and million general thirty million percent the offset selling, income portion, recognized fully dollars outside four in a not business two quarter. any system

term zero the and Net eight to earnings and dollars per zero dollars to per percent effects of hundred the tax point in income zero from prior one credits per zero third point period. XX:XX of point was million three capability to quarter increased point representing to quarter, nine increased even from the point in generating to compared in total million quarter demonstrates to percent proceeds. primarily third and pretax in year of twenty The Our segments. one period. million for percent prior one income, total the point our five lessen proportion XX:XX funded year year drive dollars insurance point to fifteen to XX:XX that continue million in flows approximately million for expenditures twenty dollars between provide dryer dollars, due five capital to due the point dollars to twenty quarter share one one from to higher our three will We eight These which per increase the fifty invest strong, prior the access Adjusted grow seventeen dollars the capital corporate costs twenty effective current long share We rate share, the third all value. tax shareholder total fundamental as we replacement. growth. share to the seven compared yielded twenty share received. of in for be primarily million balance four related six business operating ability point through record invest cash hundred six the six dollars Adjusted dollars increased as positive thirty one one million quarter point the four and increased of percent were increases eight strong the four anticipate and for in twenty XX:XX dollars one to the thirty one twenty point sheet three one cash which twenty due anticipate dollars, year XX:XX be from third dollars three to per Our continue to year and prior allowing results million quarter our twenty. to us EBITDA EPS a to

two and seven the million dollars million cash a hundred sixteen dollars. ended we debt such, quarter As balance of of a with balance point and two point seven forty

over We range are range offering the to fifteen six point EBITDA five fiscal million XX:XX projected expected in to dollars shareholders. for the million an to the dollars. seventy five to back approximately hundred me earnings November dollars in way the shares and Board December million per record million outstanding and Dave five dividend five Adjusted quarter dollars to of end. of twenty twenty dollars of to Sales important success share share, remarks. consolidated Board guidance dollars concluding XX:XX following two payable adjusted share amount dollars with to turn three nineteenth. seven Recently, increased be per as is of now one be point authorized and one stockholders to expected the dividends view hundred XX:XX things one. seven be third of twenty five to be to forecasted at for dollars is average as the third the are one four of twenty zero thirty for share, weighted year The to per point in which Let a company zero continues point million are on

Dave Colo

Thanks XX:XX Brandon.

Now, additional strategic long-term on I our initiatives support touch plan. like that to some would

the We mitigate for positioned Demand supply robust strong increased to continues and we pleased products are disruptions. well to the of our and results and balance business remains be costs through despite challenges energy year. with very the the year-to-date delivered these our believe chain commodity

our XX:XX each now monitor to strategy. and to Aged full-year factored Turning continue closely impact. our into We potential sales have their Whiskey of these guidance

our whiskey million of increase growth customers. one Spirits the five at dollars versus hundred the from our point addition Products amount and nine now supports Branded point The inventory demand and Luxco's anticipated With aging Aging sits quarter increased prior total Whiskey, at dollars eight nine fifty million cost. Distillery our

unchanged. remains objective long-term Our

continue to the demand We aged needs. coming remains segment with strong brands. large Our own Premium of to their for both within XX:XX growth and will primarily to continue and due levels inventory small. our target our Products pricing favorable brands brands, customers robust our from customer’s support Products adequate to Distillery sales demand beverage experience Distillery

during on-premise sales the an Spirits. also in We uptick for our experienced channel quarter our Branded

We the which brands premium continue to Tequila ultra-premium more end very are capacity this of American inventory. pleased the brands. of our as expect calendar our We through and full and open the with establishments to year reload performance their quarter, include and Whiskey XX:XX this

results team. accelerated our on Our to collaboration long-term speak call up and plan. open to the like integration confidence would the the questions, everyone by the XX:XX Before reiterate in I we strategic for

quarter very our profitability. segments. continues continued priced by positioned And its Distillery focus solid remain plan well while this year. categories our additional committed drive growing the the channel results each from brands enhanced XX:XX and are our on further years. a to execution to building quarter are with is as reporting customer, Branded amongst Solutions pleased the solutions business lastly, provider spirits momentum the We of that continues on capabilities, last with and We Ingredient Products of positioned and market segment optimize opportunities to total Spirits The

three business begin portion uniquely consumer we create now call. long-term Our we XX:XX strong of shareholder ready sustainable with are are believe question-and-answer to value. trends, aligned segments the which and the Operator, will

Operator

ahead. Our Instructions] first question question-and-answer online. Mitch XX:XX Please [Operator We you Pinheiro session. now begin now Mitch, the from of Sturdivant. will go are comes

Mitch Pinheiro

you XX:XX hear Hello, can me?

Dave Colo

Mitch. Hey XX:XX

Mitch Pinheiro

XX:XX about this Sorry -- Luxco versus last Have over year's quarter? year's pro-forma quarter growth that. talked quarter about the you

Brandon Gall

the this for Mitch, Yes, is Brandon. question. XX:XX Thanks

each and as dollars been Luxco dollars using our topline quality gross nineteen quarter on we've quarter profit an of in In sales per we a sixty million since fifty about dollars has of north number -- basically rate twenty So, of October dollars did of quarter second twenty had at been has each and we twenty earnings quarter net roughly million now the gross quarter diligence, north in analysis in in about sales LTM in profit. million sales their owned run for million row well. a

quarters each outperformed since we the in Branded segment expectations. you the closed transaction that of the has as can those Spirits So, see

Mitch Pinheiro

so it's that roughly is the percent Okay, side sales twenty on -- -- year-over-year, running roughly range. in XX:XX at that roughly

Brandon Gall

right, so mean you some from that's percent as Yes, COVID, (ph) imagine related on adjustments, QV [QV] the I yes, included and XX:XX to about twenty can that especially our expectations. basis, from

Mitch Pinheiro

expectations on you And, what coming this into beat there? talk relative were when you expected XX:XX quarter, sort to of expectations where Luxco, the drove results better than we this quarter

Dave Colo

as very our Tequila demand, we premise it's up brand XX:XX Yes. on the doing in I we're and remarks, back. as brands. premium The think said come And, ultra-premium brands Whiskey well coming also to from as prepared Mitch our American primarily it's well. starting picking are

primary be three factors So, driving the those the would performance.

Mitch Pinheiro

I'm do it's And, next but and a in that? that. can then inflation, -- sure around input XQ and -- how put cost think the how to may that's things XX:XX rate be it guidance, you bottles growth about and not Okay. look your next year obviously offsetting a year there going looks it, cost inflation, But, know is meaningful I how like as like approach into you into you about we factored

Dave Colo

commodity try the contracting well So, years we've we over discussed of that think our the risk-management possible. as through much in disciplined our products a Solutions products as being price, think as process as can approach inflation how and our as with position and we I anticipate Ingredient and our past in possible as to we we sell input and through inflation input is of hedge we've several successful in before, the as cost for you pretty XX:XX that approach where been try next got Mitch, we're company approach distilled can as very we to Yes, year and I well. XX:XX as process we've year. pass we the But, segment successful sure much the input now the through next as pass where we as segments imagine

account that as into year all earnings take we we'll for So, call. guidance provide QX next the on

Mitch Pinheiro

thank XX:XX will Okay, back the get in I you. queue.

Dave Colo

Mitch. Thanks, XX:XX

Brandon Gall

XX:XX Thanks, Mitch.

Operator

Truist Bill go question ahead. next from Securities. with Our Chappell comes XX:XX Please

Bill Chappell

XX:XX Thanks. morning. Good

Dave Colo

Good XX:XX Bill. morning,

Brandon Gall

Bill. XX:XX Good morning,

Bill Chappell

kind I aged XX:XX Hey, on strong sustainability questions the few inventory. a very results. of start these just mean, let's of with

period be earnings? to long quarters, the start place sustainable? you of is, that known I one-time feel could or inventory top the bottom base over some I and where provided and to question do continue two, past year in this for to have solid a monetize now out like this growth think a year time kind solid as type or I line this that contributor it's upside can of a mean, foundation three-time we've aged is you've a -- in for three guess or model thing two-time be kind or this is you or of a the you

Dave Colo

-- Yes, quarter-after-quarter, increase distillate seeing XX:XX over out time customer playing we're and new too. what it's that as aged think here to continues as who Bill, is far our we're base products what's I both selling

more seeing a in result is signal predictable. demand it repeatable, I the stable, probably this particular of has products also of more additional most the I gives think across we that that some in XX:XX demand indicator these think past little thought this of in business us -- bit that a customer the we've lines. probably up the the and that customers little that's types we talked success these it, in particular bit that's and So, each a stability aged predictability still best more quarter we've all becoming in a to for to spike we're So, as quarters, but product confidence think to pick the I see contributed seen, more we continue COVID. adding of

answer So, very two. business momentum sustainable think I and twenty our that have the as we this is twenty of good is guess go short into we do -- part in a we

Bill Chappell

of how white grown to good mean, past this question what got a years, over some I the has tough and And where at value but look growing kind for names level Luxco, over is the vent, digits then due Mitch's a I XX:XX do twenty is portfolio the then players more of than the That's one this XX:XX business it's or the of that mean, you. low-single twenty I from percent is and growth saying a think not past premium necessarily to changed kind or more kind really comparison, has most it's the at have and I of spirits as, few so to boost value moving year more COVID and white that is is focus of type sustainable? on time part think higher offsetting things conditions kind percent hear. more help performance spirits the certainly you're some I So, this for the but of

Dave Colo

a and and American premium more volume within player as which and the on from XX:XX with company Yes, Bill, transitioning the a I That's categories it brands summarized five two pure brands the been think particular over exactly portfolio are Tequila four Luxco been away years. spirit. highest brands, what's being know you perfectly. happening the play Whiskey you We've ultra-premium growth in as to just last focusing

paying So, that the through results. definitely seeing effort we're and off in work is and it come

Bill Chappell

with part Got Luxco, then go mean done in seem you other be And know with? portfolio it. it and you have se force, -- than because part now to what you you the good integrated was per I especially seemed more I sales to would game a have regards then still -- plan, do are the you cash is foundation I seeing That's distribution, now like to the add hear. now you of brands to assume it's that's generating the that that guess, to XX:XX always give it that to out it

Dave Colo

track feel has executing could The company at. the Yes, gone where Branded here. really XX:XX actually very is is well. on The part no, good team M&A extremely we particularly we're plan well, integration definitely happen Bill ahead in future it's plan, We about and what of assumed if Spirits. the not for of

So, everything looks really good.

if active we M&A we makes some pursue We so in those. are space, find we're to definitely us, sense the deals for think going

that important the of the So, yes. an of view as part we acquisition. Luxco still purpose

Bill Chappell

XX:XX whiskey before Luxco that the are or term? brands Got national it. had own you just the And now deal, would within for in those your near happen there in distribution that

Dave Colo

Yes, MGP XX:XX were we today states one, sixteen on brands or legacy and made with in when acquisition the our you we will, seventeen states. if April we're four here in now as forty we sit

which accelerated of we've rollout distribution huge capabilities. national brands, the obviously and our that benefit urban with So, the whiskey their and Luxco national is a came acquisition

on of ahead be where extremely actually in well the distribution would thought those brands, that's we're going we us. expanded but for So, we

Bill Chappell

last would of the me, year next margins is I with the Industrial dramatically, a it where or as some by past could enough you I at maybe a to? acquisition and would it's that have think locked earnings visibility. to Alcohol for as have now drop that so much not Luxco And in year, matters year, just that on from pretty this over point glut drag big one drop next be it XX:XX dramatically fair guess pricing that you the the industrial thought assessment used contracts Great. be the prices much in then alcohol piece, your with the

Dave Colo

we're return season relatively the of the Bill. for corn four margin we're in is to capacity but would fact that goods thought in the historical came overall is on the that's profitability year happened, factor up costs that thought we think white levels. right and We now the back contracting and for as pricing of I last company, XX:XX market as is, what industrial on the quarters what market. to historical but to are margins Luxco going we've Yes, the as next in and was high, I seeing discussing to been but exactly literally the happen a returning fact mean, has the that's levels with additional The that significantly, staying this definitely

exactly So, was play it playing out. to pretty much thought it's out we how going

Bill Chappell

not the normal. XX:XX Just because it's levels just below historical back clear, getting to to of be it's dropping glut

Dave Colo

we're Yes, line work we've completely but so season mean, XX:XX at seeing more to I with point are margins some do we're there, the this historical got through seeing yet, margins. in the that -- we're contracting not

Bill Chappell

XX:XX Okay.

Dave Colo

prior seeing XX:XX in the back this to we've but year Not levels. been fiscal the margins

Bill Chappell

Thanks it. That's all Got I much. XX:XX had. so

Dave Colo

Thanks Bill. XX:XX

Brandon Gall

Bill. Thanks, XX:XX

Operator

the This I over closing remarks. Dave back Colo for to any concludes XX:XX would question-and-answer session. conference like to turn the

Dave Colo

XX:XX to speaking again and in call. quarter. Thank quarter you our forward for with the look our your company for us for after today third We you joining fourth interest

Operator

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

may You disconnect. now

MGP Ingredients (MGPI) 3 Nov 212021 Q3 Earnings call transcript