Slide 1: Investor Presentation July 31, 2013
Investor Presentation July 31, 2013
Slide 2: Disclaimers
2 Disclaimers FORWARD-LOOKING STATEMENTS SAFE HARBOR This letter contains forward-looking statements as well as historical information. Forward-looking statements are usually identified by or are associated with such words as “intend,” “plan,” “believe,” “estimate,” “expect,” “anticipate,” “hopeful,
Slide 3: MGP Ingredients Meeting Participants
3 MGP Ingredients Meeting Participants John Speirs, Chairman • Director since 2004 and Chairman since August 2009 • Chairman and co-founder of Stellus Consulting • 35 years of experience in food and alcohol industries including in various senior leadership roles at Diageo, Pillsbury and Lever Brothe
Slide 4: MGP Overview
5 MGP Overview • Leading independent supplier of premium spirits, offering flavor innovations and custom distillery blends to the beverage alcohol industry • Founded in 1941; headquarters and ingredients manufacturing and distillery production facility in Atchison, Kansas; distillery production faci
Slide 5: MGP's Evolution Under Current Board and Management
7 MGP’s Evolution Under Current Board and Management Then (2005-2009) Now (2010-2013) Corporate Focus • Commodity driven model • Revenue built on volume • Focus on high-margin, value-added products • Efficient supply chain and operating systems • Focus on customer innovation Business Processes • Few
Slide 6: Focus on Increasing Scale and Driving Profitability
8 0% 50% 100% 150% 200% 250% 300% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Focus on Increasing Scale and Driving Profitability Wheat Corn Net Income $20 $10 $0 ($10) ($20) ($30) ($40) ($50) $mm 281% 139% 2000 Raw Material Costs . Price of Corn / Bu: $1.85 . Price of Wheat / B
Slide 7: Aggressive Actions to Reposition the Business Generating Clear Results
9 Aggressive Actions to Reposition the Business Generating Clear Results • Reduction in total assets • Lower inventory levels • Reduction in net PP&E • Right sized workforce levels • Lower SG&A • Manageable levels of revolving debt • High value-added portfolio Our Actions • Exited fuel alcohol marke
Slide 8: Transitioning to a Higher Value Portfolio
10 Transitioning to a Higher Value Portfolio 14.8% 18.3% 28.6% 64.6% FY 2005 - FY 2009 FY 2010 - FY 2012 Distillery Ingredients High Value Added Products (% of sales) 43.3% 83.0%
Slide 9: Capitalizing on Favorable Industry Dynamics
11 Capitalizing on Favorable Industry Dynamics • 46% of spirits industry growth in 2012 was from flavored new products • 3.6% growth in whiskey sales in 2012 – the highest rate in 30 years exceeding vodka, gin and tequila 210 249 338 401 471 2008 2009 2010 2011 2012 Growth in U.S. Craft Distillers S
Slide 10: Focus on Efficiency Drives Lower Working Capital Needs
12 Focus on Efficiency Drives Lower Working Capital Needs 16.0% 12.6% FY 2005 - FY 2009 FY 2010 - FY 2012 Working Capital* (% of sales) Supply chain efficiencies, clear incentive systems and improved planning processes implemented under direction of current Board and management drive 45% reduction i
Slide 11: Improving Return on Net Assets Across Portfolio
13 Improving Return on Net Assets Across Portfolio -8.0% 16.4% 15.1% 19.8% FY 2005 - FY 2009 FY 2010 - FY 2012 Ingredients Distillery *Non-GAAP measure: Operating Income to Total Net Assets Return on Net Assets*
Slide 12: Delivering Early Results
14 Delivering Early Results -$2.24 -$0.54 $0.97 $1.30 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 -$0.15 Operating Income ($ in millions)
Slide 13: Enhancing Our Platform to Drive Value Creation
15 Enhancing Our Platform to Drive Value Creation • Exploring alternatives to increase scale • Enhancing distribution capabilities • Improving strategic customer alignment – New blends and whiskey concepts – Prime source for craft distillers – Build inventory of aged bourbon – Vodka flavor innovatio
Slide 14: Independent Directors Focused on Delivering Value to All Stockholders
16 Independent Directors Focused on Delivering Value to All Stockholders • All six independent directors aligned around transformation plan at MGP and supportive of current management – Includes directors elected by Cray family through preferred share ownership – Directors bring strong mix of financ
Slide 15: Executive Compensation Aligned with Performance
17 Executive Compensation Aligned with Performance • Aligning pay with performance and instilling a culture of accountability have been important priorities for MGP’s Board • The Board is focused on retaining talent to continue to lead MGP in driving value • Incentive compensation, if any, is paid b
Slide 16: Cray Family Already Has Significant Control of MGP
18 Cray Family Already Has Significant Control of MGP • The Cray Group consists of: – Karen Seaberg – current Board member and granddaughter of the founder – Cloud L. “Bud” Cray, Jr., – current Board member and son of the founder – Laidacker Seaberg – former Chairman and CEO of MGP and Karen Seaberg
Slide 17: Cray Group Proposals Would Result in Quasi-Private Company
19 Cray Group Proposals Would Result in Quasi-Private Company • Proposals would clear path for Cray Group to control MGP’s entire Board – De-staggering the Board would allow Cray Group to remove any directors each year without reason – As the only holder of more than 10% of outstanding preferred and
Slide 18: Update on Relevant Litigation
20 Update on Relevant Litigation • On July 26th Atchison District Court ruled that Annual Meeting must be recommenced on or before August 26th – The Cray Group also received access to voting records for the adjourned Annual Meeting, providing the identity and voting result of each vote cast • Jackso
Slide 19: Voting Information
21 Voting Information If you have questions about how to vote your shares, or need additional assistance, please contact the firm assisting us in the solicitation of proxy votes: Stockholders Call Toll-Free: (888) 750-5834 Banks and Brokers Call: (212) 750-5833 IMPORTANT Vote the White Proxy Card to
Slide 20: Questions & Answers
Questions & Answers eae