Mgp Ingredients, Inc. · NASDAQ:MGPI
Mgp Ingredients — Roth Capital Partners New York Stock Conference 2006
31 slides from Mgp Ingredients's conference presentation, Sep 8, 2006
Slide 1: Charting a New Course for Growth
MGP Ingredients, Inc. Charting a New Course for Growth Ladd Seaberg, President & CEO Tim Newkirk, Vice President & COO Roth Capital Partners New York Stock Conference September, 2006
Slide 2: Safe Harbor Statement
Please note that this presentation was created as of August 30, 2006 and reflects management’s views as of that date. Certain of the information discussed in this presentation may contain forward-looking statements relating to the operations, financial condition and operating results of MGP Ingredie
Slide 3: MGP Ingredients, Inc. Today
MGP Ingredients, Inc. Today Distillery Ingredients 73% 27% $322.5 million in FY 2006 Revenues
Slide 4: Annual Sales FY 2002 - 2006
Annual Sales FY 2002 - 2006 $57.2 $66.2 $102.7 $92.5 $85.5 $182.7 $237.0 $168.0 $135.2 $148.3 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 $214.5 $192.4 $270.7 $ in Millions June FY $275.2 Note: Total sales and segment sales include by-products Distillery Ingredients $322.5 Annual Sales FY 2002 - 2005 $5
Slide 5: Annual Net Income FY 2002 - 2006
Annual Net Income FY 2002 - 2006 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 $ in Millions June FY $6.3 $5.2 $9.5 $4.0 $14.0 High-Quality, High-Purity Alcohol $148.3 $135.2 $168.0 $237.0 $182.7 FY 02 FY 03 FY 04 FY 05 FY 06 Distillery Sales (in millions) 34% 12% 54% Distillery By-Products Fuel Grade Alc
Slide 6: High-Quality, High-Purity Alcohol
High-Quality, High-Purity Alcohol $148.3 $135.2 $168.0 $237.0 $182.7 FY 02 FY 03 FY 04 FY 05 FY 06 Distillery Sales (in millions) 34% 12% 54% Distillery By-Products Fuel Grade Alcohol Food Grade Alcohol Fiscal years ending June 30 FY 06
Slide 7: Starch & Protein Technologies
Starch & Protein Technologies $66.2 $57.2 $102.7 $92.5 $85.5 FY 02 FY 03 FY 04 FY 05 FY 06 Ingredients Sales (in millions) 28% 18% 54% Commodity Ingredients Specialty Food Ingredients Specialty Non-Food Ingredients Fiscal years ending June 30 FY 06
Slide 8: FY 2006 Results
FY 2006 Results • Distillery - Favorable pricing and costs - Outstanding profit growth • Ingredients - Dramatic decline in pet products - Profits hurt by sales mix and wheat costs • Charting a New Course for MGPI - Asset and business process review - New management, new focus
Slide 9: Profits Expanded in Distillery
Profits Expanded in Distillery FY 06 FY 05 $182.7 $237.0 30% 30% Net Sales Pre-Tax Income Note: Pre-tax profit/loss amounts shown do not include corporate expense of approx. $1.6 million and $4.2 million for fiscal 2005 and 2006, respectively. $8.5 $37.0 FY 06 FY 05 335% 335% (in millions) (in milli
Slide 10: Sales Mix and Costs Affect Ingredients
Sales Mix and Costs Affect Ingredients FY 06 FY 05 $92.5 $85.5 ($0.8) ($11.8) FY 06 FY 05 8% Net Sales (in millions) Pre-Tax Loss (in millions) Note: Pre-tax profit/loss amounts shown do not include corporate expense of approx. $1.6 million and $4.2 million for fiscal 2005 and 2006, respectively.
Slide 11: Managing Commodity Risk a Priority
Grain 54% Energy 20% Other 26% Managing Commodity Risk a Priority Energy and grain combined make up close to 74%* of our total COGS * Based on 5-year average
Slide 12: Commodity Cost Trends Are Mixed
Corn Wheat -40.00% -35.00% -30.00% -25.00% -20.00% -15.00% -10.00% -5.00% 0.00% 5.00% 10.00% Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 -28% 9% Commodity Cost Trends Are Mixed Raw Material Price % Change Per Bushel Base Index = 100 at Q4 2004 (June FY)
Slide 13: Spike in Energy Costs Has Abated
Spike in Energy Costs Has Abated 0% 30% 60% 90% 120% Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 97% 20% Natural Gas Price % Change per MCF Base Index = 100 at Q4 2004 (June FY)
Slide 14: MGP Ingredients, Inc.
mgp ingredients, inc.
Slide 15: Contracting and Hedging Programs
Contracting and Hedging Programs • 50% of FY 07 distillery output currently contracted • Cost inputs of contract sales hedged • 80% of natural gas needs for winter months (Nov - Feb) hedged
Slide 16: Opportunity to Drive Gross Margin
Opportunity to Drive Gross Margin June FY 0% 5% 10% 15% 20% 25% Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Gross margin as % of net sales 21% ⑀⏇ High-value products ⑀⏇ Materials sourcing ⑀⏇ Labor & energy costs ⑀⏇ Starch recovery ⑀⏇ Process changes
Slide 17: Driving Peak Performance at MGPI
16 Plan Focus Invest Execute Value Creation Determining our best course of action Leveraging our key assets and skills Employing capital to bring the highest returns Strengthening performance and accountability Driving Peak Performance at MGPI
Slide 18: Continued Profit Growth in Distillery
Continued Profit Growth in Distillery • Fuel Alcohol (Ethanol) - Trend toward longer-term contracts • Industrial Alcohol - Key supplier to core consumer brands • Beverage Alcohol - Largest U.S. contract gin producer - Premium high quality vodka producer - Stable revenue and strong profits
Slide 19: Strong Pricing Drives Distillery Gains
-30% -20% -10% 0% 10% 20% 30% 40% 50% Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 -21% 42% 38% Food Grade Alcohol Fuel Grade Alcohol Strong Pricing Drives Distillery Gains Alcohol price % change per gallon Base Index = 100 at Q4 2004 (June FY)
Slide 20: Distillery Enhancements
Distillery Enhancements ⑀⏇ Incremental volume increases ⑀⏇ Energy efficiency ⑀⏇ Environmental compliance
Slide 21: Return to Excellence in Ingredients
Return to Excellence in Ingredients • 2006 - Evaluation - Profitability by product line - R&D, manufacturing, and sales • 2006 - Evolving Strategy - Drop low-return products - Maximize high-value product capacity • 2007 - Executing the Strategy - Bringing new solutions to market - Profitable transac
Slide 22: Upgrade Product Mix
Upgrade Product Mix • Earn or exit • Strategic customers • High-value opportunities Drive Performance Create Value Profitable Transaction Growth
Slide 23: Integrate R&D and Sales
Upgrade Product Mix • Earn or exit • Strategic customers • High-value opportunities • Solutions partner • Technical sales • Applications support Drive Performance Create Value Integrate R&D and Sales Profitable Transaction Growth
Slide 24: Boost Production Efficiency
Upgrade Product Mix • Earn or exit • Strategic customers • High-value opportunities • Dedicated plants • Cost reduction initiatives • Increased capacity utilization • Solutions partner • Technical sales • Applications support Drive Performance Create Value Boost Production Efficiency Integrate R&D a
Slide 25: Commercializing our Technologies
Commercializing our Technologies Foods Foods Pet Treats Pet Treats Bio- Polymers Bio- Polymers Driving Growth in Ingredients
Slide 26: Greater Focus on Key Food Products
Greater Focus on Key Food Products
Slide 27: Major Initiatives for Pet Treats
Pet Ingredients - Pet treats - Pet food • Finished Pet Products - Co-extruded - Injection molded - Retail packaging options Base Product Line Major Initiatives for Pet Treats
Slide 28: Growing Investment in Biopolymers
Biopolymers - Grain-based resins •Bio-based •Biodegradable • Natural Fiber Composites • $3 million plant investment Growing Investment in Biopolymers
Slide 29: Leveraging our R&D Capabilities
Leveraging our R&D Capabilities ⑀⏇ $2.5 million investment ⑀⏇ Customer testing labs ⑀⏇ Industry showcase
Slide 30: Positive Trends Support Growth
Positive Trends Support Growth • Growth of alternative fuels • Health and wellness lifestyle trends • Nutrition, taste and convenience • Increased spending on pet treats • Bio-economy and green initiatives www.mgpingredients.com
Slide 31: Thank you for your interest in MGPI
Thank you for your interest in MGPI
MGP Ingredients — Roth Capital Partners New York Stock Conference 2006 on 6ix