Mgp Ingredients, Inc. · NASDAQ:MGPI
Mgp Ingredients — Investor Presentation (November 2022)
37 slides from Mgp Ingredients's investor presentation, Nov 9, 2022
Slide 1: Investor Presentation August 2022
INVESTOR PRESENTATION August 2022* 1 * updated November 9, 2022
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Certain of the comments made in this presentation and in the question and answer session that follows may contain forward-looking statements in relation to operations, financial condition and operating results of MGP Ingredients, Inc. (“MGP,” or “the Company”) and such sta
Slide 3: Mission Statement
MISSION STATEMENT Secure our future by consistently delivering superior financial results by more fully participating in all levels of the alcohol and food ingredients segments for the betterment of our shareholders, employees, partners, consumers and communities. 3
Slide 4: MGP Overview – As of December 31, 2021
MGP OVERVIEW – AS OF DECEMBER 31, 2021 MGP has a portfolio of highly attractive business units centered around its historic core DISTILLING BRANDED INGREDIENT SOLUTIONS SPIRITS(1) SOLUTIONS Sales: $184MM Sales: $353MM Sales: $91MM (29% of Total) (56% of Total) (15% of Total) Adj. GP Margin(2) : GP M
Slide 5: Distilling Solutions
DISTILLING SOLUTIONS MGP IS A LEADING SUPPLIER OF ALCOHOL SOLUTIONS TO THIRD PARTIES 2021 Total Revenue of $352,504 Products consist of the following: $19,545 $17,523 $14,916 • Brown Goods: Premium bourbon and rye whiskeys sold as aged whiskey or unaged new distillate, which is then aged by customer
Slide 6: Distilling Solutions
DISTILLING SOLUTIONS MGP’S UNIQUE EXPERTISE POSITIONS US AS THE PREFERRED PARTNER TO OUR CUSTOMERS Atchison, KS Operations • Company HQ • Distillery Scale provides competitive pricing • Largest supplier of distilled gin • Grain Neutral Spirits/Vodka • Industrial alcohol Capacity supports long-term g
Slide 7: Distilling Solutions
DISTILLING SOLUTIONS MGP IS WELL POSITIONED TO CONTINUE BENEFITTING FROM GROWTH IN U.S. SPIRITS – PRIMARILY AMERICAN WHISKEY U.S. Spirits Continue To Gain Share Of Total Beverage Alcohol Growth of American Whiskey Continues To Outperform U.S. Spirits Market Share - Revenue 5-year U.S. American Whisk
Slide 8: Distilling Solutions growth strategies
DISTILLING SOLUTIONS MGP HAS IDENTIFIED FOUR STRATEGIES TO CONTINUE DELIVERING LONG-TERM GROWTH WITHIN THE DISTILLING SOLUTIONS SEGMENT Distilling Solutions Growth Strategy Distilling Solutions Gross Profit Ladder 1. Focused Migration Away From Industrial Alcohol To White Beverage Alcohol 2. Continu
Slide 9: Branded Spirits
BRANDED SPIRITS WITH THE ACQUISITION OF LUXCO, MGP HAS AN ESTABLISHED PORTFOLIO WITH A FOCUS ON GROWING HIGH POTENTIAL, HIGH MARGIN BRANDS 2021 Total Revenue of $183,566 (1)(3) Luxco Brand Examples By Price Tier: • Ultra Premium: Yellowstone Bourbon, Remus Repeal Bourbon, Blood Oath Bourbon, Rebel 1
Slide 10: Branded Spirits – Expansive Family of Brands
BRANDED SPIRITS YELLOWSTONE 1EXPANSIVE FAMILY OF BRANDS LIMITED Straight Bourbon ROSSVILLE Whiskey UNION SRP: $99.99 Barrel Proof Straight Rye Whiskey SRP: $69.99 GEORGE REMUS MINOR CASE Straight Bourbon Straight Rye Whiskey Whiskey SRP: $39.99 SRP: $39.99 YELLOWSTONE Straight Bourbon Whiskey SRP: $
Slide 11: Luxco Acquisition Benefits
BRANDED SPIRITS COMPLETED IN APRIL 2021, THE LUXCO ACQUISITION INCREASES MGP’S SCALE IN BRANDED SPIRITS & ESTABLISHES AN ADDITIONAL PLATFORM FOR FUTURE GROWTH The Luxco Acquisition Offers Numerous Key Benefits National Sales Platform Operational Capabilities Diverse Portfolio of Brands • Sales / Dis
Slide 12: Branded Spirits innovation and growth categories
BRANDED SPIRITS MGP’S BRANDED SPIRITS CONTINUE TO FOCUS AND INNOVATE WITHIN U.S. SPIRITS GROWTH – PRIMARILY HIGH-END AMERICAN WHISKEY, TEQUILA & GIN Recent Innovation Launches are Designed to Capitalize on Growth Across Spirits Categories Continues to Outperform in the High-End Fastest Growing Price
Slide 13: Five Strategies for Branded Spirits Growth
BRANDED SPIRITS WE’VE IDENTIFIED FIVE STRATEGIES TO CONTINUE DELIVERING LONG-TERM GROWTH WITHIN THE BRANDED SPIRITS SEGMENT Branded Spirits Growth Strategy Focus on the Right Marketing Support 1. Focus on the Right Categories • Paid Social (Facebook, 2. Focus on the Right Brands AWARENESS Instagram)
Slide 14: Ingredient Solutions
INGREDIENT SOLUTIONS MGP IS A LEADING SUPPLIER OF SPECIALTY WHEAT STARCHES & PROTEINS 2021 Total Revenue of $90,650 Products consist of the following: $1,393 • Specialty Wheat Starches: Premium wheat starches sold to food processors and distributors, a substantial portion of $10,014 which is altered
Slide 15: Growing Specialty Plant-Based Markets
INGREDIENT SOLUTIONS MGP IS STRONGLY POSITIONED TO SERVE GROWING SPECIALTY PLANT-BASED MARKETS • One in four consumers say they are eating more protein from plant sources vs. a year ago1 • Global sales of meat alternatives expected to reach $100B in the next decade2 • Consumption of plant-based meat
Slide 16: Ingredient Solutions Growth Strategies
INGREDIENT SOLUTIONS MGP HAS IDENTIFIED FIVE STRATEGIES TO CONTINUE DELIVERING LONG-TERM GROWTH WITHIN THE INGREDIENT SOLUTIONS SEGMENT Ingredient Solutions Growth Strategy What Nutrients Do Consumers See As “Healthy”? 85% Dietary Fiber in Diet– #1 1. Expand Market Share of Fibersym and 84% Vitamin
Slide 17: Aggressively Expand Fibersym and Arise Platforms
INGREDIENT SOLUTIONS AGGRESSIVELY EXPAND FIBERSYM AND ARISE PLATFORMS Fibersym® RW Overview Strategy • Granular RS4-type resistant wheat • Maximize value of existing capacities starch • SKU rationalization • Allows formulators to boost the • Develop marketing campaign to connect to end users fiber c
Slide 18: Expand Textured Plant Proteins
INGREDIENT SOLUTIONS EXPAND TEXTURED PLANT PROTEINS U.S. product launches and plant-based claims Strategy Region 2017 2018 2019 2020 2021 • Expand our production capabilities with new “in-house” U.S. 198 291 539 637 772 extrusion platform in Atchison • Innovate new products to include pea, pulses, s
Slide 19: Operational Excellence
OPERATIONAL EXCELLENCE A CULTURE OF CONTINUOUS IMPROVEMENT • Improving throughput while maintaining consistency of high-quality products • Managing commodity cost risks • Formula-driven pricing • Locking in margins • Passing through significant swings in cost • Continued focus on safety initiative –
Slide 20: Environmental & Sustainability Initiatives
ENVIRONMENTAL & SUSTAINABILITY INITIATIVES RESPONSIBLY GROW OUR BRANDS AND PRODUCTS, WHILE FOSTERING A SUSTAINABLE FUTURE FOR THE ENVIRONMENT ON WHICH WE DEPEND As a small public company, MGP has begun its ESG journey As an organization, we are making our own commitments to: • Promoting a positive r
Slide 21: Financial Results
FINANCIAL RESULTS 21
Slide 22: Consolidated Financial Results
CONSOLIDATED FINANCIAL RESULTS THE COMPANY HAS DELIVERED RECORD RESULTS IN EACH BUSINESS SEGMENT Revenue ($MM) Adjusted EPS1 ($) $627 $4.26 $376 $396 $363 $2.51 $2.17 $2.27 2018 2019 2020 2021 2018 2019 2020 2021 Adjusted EBITDA1 ($MM) FY 2022 Guidance Sales are projected to be in the range of $745
Slide 23: Strong Balance Sheet, Cash Flow and Access to Capital
STRONG BALANCE SHEET, CASH FLOW AND EXCELLENT ACCESS TO CAPITAL Free Cash Flow and Conversion 1 $93.6 • MGP has seen strong, consistent improvement in free cash flow Free Cash Flow Free Cash Flow Conversion • In recent quarters, improvement in operating cash flow was driven by $51.0 record aged whis
Slide 24: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES REMAIN FOCUSED ON GROWTH OPPORTUNITIES Capital Allocation Priorities M&A • M&A will continue to be an important lever to increase our capabilities, margin up our portfolios, and accelerate growth in all segments. Whiskey Put-Away • With our inventory in balance, matchin
Slide 25: Consolidated Financial Results – Second Quarter 2022
CONSOLIDATED FINANCIAL RESULTS – SECOND QUARTER 2022 Operating Income Drivers Second Quarter 2021-22 ($MM) $7.9 $0.1 $35.3 • Sales increased 11% to $195.0 million as a result of sales growth in $2.1 $2.5 Distilling Solutions and Ingredient Solutions segments $27.7 ($2.2) ($2.7) • Gross Profit increa
Slide 26: Q2 2022 Consolidated Sales
Q2 2022 CONSOLIDATED SALES SALES WERE UP 11% WITH GROWTH IN DISTILLING SOLUTIONS AND INGREDIENT SOLUTIONS SEGMENTS Key Drivers • Distilling Solutions growth primarily due to Consolidated Sales Fav/ (unfav) vs Prior Year increased sales of brown goods within (quarter ended 6/30/2022) premium beverage
Slide 27: Distilling Solutions
DISTILLING SOLUTIONS SALES GROWTH DRIVEN BY AGED WHISKEY AND NEW DISTILLATE Distilling Solutions Sales Fav/ (Unfav) vs Prior Year (quarter ended 6/30/2022) $MM $MM % Brown Goods $56.3 $12.6 29% White Goods 17.4 (0.8) (4) Premium Beverage Alcohol 73.8 11.8 19 Industrial Alcohol 12.9 (1.9) (13) Food G
Slide 28: Branded Spirits
BRANDED SPIRITS SALES DECLINE DUE TO MID AND OTHER PRICE TIERS, PARTIALLY OFFSET BY INCREASED SALES OF ULTRA PREMIUM PRICE TIER Branded Spirits Sales Fav/ (Unfav) vs Prior Year (quarter ended 6/30/2022) $MM $MM % Ultra Premium $9.4 $1.4 18% Super Premium 3.2 0.1 1 Premium 5.8 0.5 9 Mid 23.3 (2.1) (8
Slide 29: Ingredient Solutions
INGREDIENT SOLUTIONS SALES GROWTH DRIVEN BY SPECIALTY PRODUCTS Ingredient Solutions Sales Fav/ (Unfav) vs Prior Year (quarter ended 6/30/2022) $MM $MM % Specialty Wheat Starches $16.0 $3.4 27% Specialty Wheat Proteins 10.1 1.8 21 Commodity Wheat Starches 3.1 0.5 18 Commodity Wheat Proteins 0.1 (0.5)
Slide 30: Appendix
MGP APPENDIX
Slide 31: U.S. Spirits Market
U.S. SPIRITS MARKET 9-Liter Cases (000s) 2021 Volume % Change Total Distilled Spirits (TDS) 291,110 +9.3% Total Whiskey 76,453 +4.9% American Whiskey (Bourbon/Rye/Tennessee) 29,703 +4.5% Super Premium 4,723 +15.6% Rye 1,593 +12.9% Vodka 78,067 +1.6% Super Premium 5,669 +13.9% Gin 9,989 -1.7% Super P
Slide 32: Reconciliation of Selected GAAP to Non-GAAP Measures
RECONCILIATION OF SELECTED GAAP TO NON-GAAP MEASURES BRANDED SPIRITS GROSS PROFIT TO ADJUSTED GROSS PROFIT Branded Spirits segment ($ in thousands) 2021 Gross Profit $62,644 Inventory Step-Up 2,529 Adjusted Gross Profit1 $65,173 Adjusted Gross Margin 35.5% Source: Company filings 32 Note: Branded Sp
Slide 33: Reconciliation of Selected GAAP to Non-GAAP Measures
RECONCILIATION OF SELECTED GAAP TO NON-GAAP MEASURES EARNINGS PER SHARE TO ADJUSTED EARNINGS PER SHARE 2018 2019 2020 2021 Basic EPS $2.17 $2.27 $2.37 $4.37 Insurance recoveries - - - (0.59) Inventory Step-Up – Branded Spirits - - - 0.12 Business Acquisition Costs - - 0.05 0.36 CEO Transition Costs
Slide 34: Reconciliation of Selected GAAP to Non-GAAP Measures
RECONCILIATION OF SELECTED GAAP TO NON-GAAP MEASURES NET INCOME TO ADJUSTED EBITDA AND FREE CASH FLOW ($ in thousands) 2018 2019 2020 2021 Net Income $37,284 $38,793 $40,345 $90,817 Interest 1,168 1,305 2,267 4,037 Taxes 11,696 7,144 12,256 30,279 Depreciation and Amortization 11,362 11,572 12,961 1
Slide 35: Reconciliation of Debt to Net Debt
RECONCILIATION OF DEBT TO NET DEBT ($ in thousands) 2018 2019 2020 2021 Total Debt $32,014 $41,060 $39,871 $233,399 Cash and cash equivalents 5,025 3,309 21,662 21,568 Net Debt $26,989 $37,751 $18,209 $211,831 35 Source: Company filings
Slide 36: Reconciliation of Selected GAAP to Non-GAAP Measures
RECONCILIATION OF SELECTED GAAP TO NON-GAAP MEASURES FOR THE QUARTER ENDED JUNE 30, 2021, AND 2022 Operating Quarter Ended June 30, 2022 (in thousands) Gross Profit Net Income EPS Income Reported GAAP Results $59,224 $35,306 $25,362 $1.15 No adjustments for the period - - - - Adjusted Non-GAAP Resul
Slide 37: Reconciliation of Selected GAAP to Non-GAAP Measures
RECONCILIATION OF SELECTED GAAP TO NON-GAAP MEASURES RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA – SECOND QUARTER Quarter Ended Quarter Ended ($ in thousands) 6/30/2022 6/30/2021 Net Income $25,362 $20,059 Interest 1,543 1,104 Income Tax Expense 7,339 6,412 Depreciation and Amortization 5,303 5,
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