Mgp Ingredients, Inc. · NASDAQ:MGPI
Mgp Ingredients — Investor Presentation (March 2016)
27 slides from Mgp Ingredients's investor presentation, Mar 29, 2016
Slide 1: Investing for Growth in Premium Spirits and Specialty Food Ingredients
INVESTING FOR GROWTH IN PREMIUM SPIRITS AND SPECIALTY FOOD INGREDIENTS MARCH, 2016
Slide 2: 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. and such statements involve a number of risks and uncertainties.
Slide 3: Company overview
• Founded in 1941 by Cloud L. Cray, Sr. • Headquartered in Atchison, Kansas • 300 employees • Leading supplier of premium bourbon, whiskey, distilled gin, and vodka • Largest U.S. supplier of rye whiskey • Largest U.S. supplier of distilled gin • Largest U.S. supplier of specialty wheat proteins and
Slide 4: Facilities: Lawrenceburg, Atchison and R&D
LAWRENCEBURG, IN DISTILLERY • Distilling & Aging • Wide Range of Whiskeys • Standard & Custom Mash Bills • Gins • Grain Neutral Spirits/Vodka • R&D Lab ATCHISON PROTEIN & STARCH • Specialty Wheat Proteins & Starches • Textured Proteins ATCHISON, KS DISTILLERY • High Quality, Efficient Production • G
Slide 5: Spirits market categories: whiskey, craft, gin, rye
WHISKEY (U.S.) • Category: • 18.5MM Cases • 5% 5 Year CAGR • MGP Estimated Share = 8% CRAFT • Category: • +700 Distilleries • 2014 Volume +58% GIN (U.S.) • Category: • 6.3MM Cases • (3)% 5 Year CAGR • MGP Estimated Share = 65% RYE WHISKEY (U.S.) • Category: • 500K Cases • 45% 5 Year CAGR • MGP Estim
Slide 6: Food ingredient categories: protein, fiber, plant-based, non-GMO
HIGH PROTEIN • Category (N. Amer.) = $16B • 9% projected 5 year CAGR HIGH FIBER • Category (N. Amer.) = $1.3B • 13% projected 5 year CAGR PLANT BASED PROTIENS • Category (N. Amer.) = $0.6B • 4% projected 5 year CAGR NON-GMO • Category (N. Amer.) = $0.8B • 5% projected 5 year CAGR 37% of Americans ar
Slide 7: 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.
Slide 8: Strategic plan
MGP nL R STRATEGIC PLAN Build MGP Brand Maximize Value Invest for Growth Risk Management 2 a a rm = q > o 3 2 a a ts)
Slide 9: Distillery products strategy
• Supplying all tiers of the beverage alcohol market • Large multinationals • Bottlers and rectifiers • Craft • Supporting changing consumer tastes • Share shift from beer to spirits • Share shift from white goods to whiskey • Growth of rye • Premiumization • Mix optimization: customer and product
Slide 10: Ingredient solutions strategy
“The growth in this [meat substitutes] market is propelled by continuous growth in the vegetarian food industry and the increasing health concerns of consumers.” SOURCE LINK “Whatever the science says, many consumers have made up their minds: no genetic tinkering with their food,”* SOURCE LINK • Foc
Slide 11: Metze's Select, first MGP brand
• Metze’s Select - first MGP brand • Showcasing MGP’s range of expertise and strengthening our reputation with trade and consumers • Received an “Outstanding!” rating by Whisky Advocate • Valuable opportunity to learn It’s a more delicate bourbon, light and sweet with notes of citrus and caramel. It
Slide 12: Barrel warehouse and barreled whiskey investment
• Expanding barrel warehouse capacity - $20MM investment • Building our barreled whiskey inventory - Investment up $17MM vs. 2014 to $28MM - Potential uses: - Support own brands - Strategic partnerships - Sell on open market – potential value 3X • Attracting and developing talent
Slide 13: Commodity cost management
• Mix shift to higher value products will reduce overall impact of commodity prices • Disciplined approach to managing commodity costs - Formula-driven pricing - Locking in margins - Passing through significant swings in cost • Strengthened supplier partnerships
Slide 14: Recent recognition and achievements
• Named Distiller of the Year by Whiskey Advocate • Joined The Distilled Spirits Council • Added to the Russell 2000 and the Russell 3000 index funds • Received “Circle of Champions” award for the diversity represented on our Board of Directors • Honored as Large Business of the Year in Lawrenceburg
Slide 15: Financial results
MGP
Slide 16: Net sales year ended 12/31/2015
Fav / (Unfav) vs Prior Year $MM $MM % Distillery Products $270.2 $13.7 5.3% Ingredient Solutions 57.4 0.5 0.9% Total $327.6 $14.2 4.5% NET SALES YEAR ENDED 12/31/2015 • Both segments contributing to growth • Distillery products growth driven by food grade alcohol, +10.5% • Ingredient solutions growt
Slide 17: Gross profit margins
GROSS PROFIT MARGINS ANNUAL PERCENT OF NET SALES • Net Sales shift to more profitable products • Effective price management during commodity declines • Improved plant efficiencies KEY DRIVERS 6.6% 9.1% 17.9% 2013 2014 2015
Slide 18: Operating income drivers 2014 to 2015
2014 Distillery Gross Profit Ingredients Gross Profit SG&A 2014 Insurance Recoveries 2015 OPERATING INCOME DRIVERS 2014 TO 2015 – $MM $16.6 $28.3 $1.8 $(5.6) $(8.3) $32.8
Slide 19: Earnings per share drivers 2014 to 2015
2014 Operations 2014 Insurance Recoveries Equity Investments (ICP) Interest Expense Shares Taxes Rate Change 2015 EARNINGS PER SHARE DRIVERS 2014 TO 2015 $1.32 $1.30 $(0.44) $(0.21) $0.01 $0.02 $(0.52) $1.48
Slide 20: Cash flow drivers
Net Income Depreciation and Amortization Investment in Barreled Distillate Other Operating Cash Drivers Cash Provided by Operations CASH FLOW DRIVERS YEAR ENDED 2015 – $MM Source / (Use) Amount Capital Ex. $(30.5) Dividends (1.1) Share Repurchases (15.4) Financing/Other 28.3 Total $(18.7) $26.2 $12.
Slide 21: Debt to EBITDA
2014 2015 DEBT TO EBITDA – $MM Debt EBITDA • 2015 YE Debt to EBITDA Ratio of .65 • $33MM Available on Credit Facility at 12/31/15 $9.9 $33.5 $39.1 $51.3 See Appendix for GAAP to Non GAAP Reconciliation
Slide 22: 2016 and long term guidance
2016 and Long Term Guidance : • Operating income is expected to increase by a compound annual growth rate in the ten to fifteen percent range over the next three years. • 2016 net sales percentage growth is expected to accelerate into the high single digits. • 2016 gross margin gains are expected to
Slide 23: Summary
• Long-term strategy in place • Turnaround well underway • Mix and investment driving long-term growth • Well positioned against macro trends
Slide 24: Appendix
• GAAP to Non GAAP Reconciliations • Cash flow details
Slide 25: Reconciliation of GAAP to Non GAAP Measures
Reconciliation of GAAP to Non GAAP Measures EBITDA (Dollars in Thousands) 2015 2014 Net Income 26,191$ 23,675$ Interest 534 816 Taxes 12,227 2,265 Depreciation / Amortization 12,382 12,325 EBITDA 51,334$ 39,081$ Total Debt (See Note 4 of 10K) 33,460$ 9,899$ Debt to EBITDA 0.65 0.25
Slide 26: Cash flow detail
Cash Flow Detail Year ended 2015 Other Operating Cash Flow Financing Other $M $M Adjustments to reconcile net income (loss) to net cash provided by operating activities Loan fees incurred with borrowings (348)$ Share based compensation 1,414$ Principle payments on long-term debt (1,641) Excess tax b
Slide 27: MGP Ingredients contact details
MGP Ingredients, Inc.® Cray Business Plaza 100 Commercial Street P.O. Box 130 Atchison, Kansas 66002 800.255.0302 mgpingredients.com