Mgp Ingredients, Inc. · NASDAQ:MGPI
Mgp Ingredients — Roth Capital Partners Growth Stock Conference 2006
29 slides from Mgp Ingredients's conference presentation, Feb 22, 2006
Slide 1: MGP Ingredients, Inc. Bringing More Focus Creating More Value
MGP Ingredients, Inc. Bringing More Focus Creating More Value Ladd Seaberg, President and CEO Mike Trautschold, EVP Marketing and Sales Roth Capital Partners * Growth Stock Conference * February 2006
Slide 2: Safe Harbor Statement
Safe Harbor Statement Please note that this presentation was created as ofFebruary 15, 2006 and reflects management's views as ofthat date. Certain of the information discussed in this presentation may contain forward-looking statementsrelating to the operations, financial condition andoperating res
Slide 3: The Investment Opportunity
The Investment Opportunity o Franchise in starch and protein technologies o Wellness and convenience drive specialty food ingredients o Building momentum in non-food ingredients o Growth in ethanol and food-grade alcohol o Strong cash flows, moderating capital needs o Company focus on margin improve
Slide 4: MGP Ingredients - Revenue Mix
MGP Ingredients - Revenue Mix Distillery Ingredients 66% 34% $275 million in FY 2005 Revenues
Slide 5: Distillery Sales - Product Mix
Distillery Sales - Product Mix $148.3 $135.2 $167.9 $182.7 FY 02 FY 03 FY 04 FY 05 Total Distillery Sales (in millions) 31% 15% 54% By-Products Fuel Grade Food Grade Fiscal years ending June 30 FY 05
Slide 6: Ingredients Sales - Product Mix
Ingredients Sales - Product Mix $66.2 $57.2 $102.7 $92.5 FY 02 FY 03 FY 04 FY 05 Total Ingredients Sales (in millions) 37% 16% 47% Commodity Specialty Food Specialty Non-Food Fiscal years ending June 30 FY 05
Slide 7: YTD Segment Results FY 2005 and FY 2006
YTD Segment Results FY 2005 and FY 2006 FY 06FY 05 $5.2 $10.8 FY 06FY 05 $88.4 $108.3 22% Total Sales (6 mo. in millions) Pre-Tax Income (6 mo. in millions) o Higher food grade unit sales o Higher pricing for both grades o Favorable pricing o Good fixed-cost coverage o Despite natural gas "squeeze"
Slide 8: Specialty Ingredients Strategy
Emerging Developing Base Product Line Specialty Ingredients Strategy Biopolymer Products Personal Care Products Pet Products Food Products
Slide 9: Wellness and Convenience Trends
Wellness and Convenience Trends Base Product Line: Food MGPI Ingredient Solutions - Fiber enhanced, reduced fat foods Fibersym(TM), FiberRite(TM)RW-Frozen, refrigerated and par-baked dough systems Arise(R), FP600(TM), HWG 2009(TM) - Low-carb, high-protein bakery and related products Fibersym(TM), Ar
Slide 10: Pet Treats Offer Long-Term Growth
Pet Treats Offer Long-Term Growth Base Product Line MGPI Ingredient Solutions o Pet Ingredients - Pet treats MGPI Chewtex (TM) - Pet food MGPI Pet-tex (TM) o Finished Pet Products - Co-extruded - Injection molded - Retail packaging options Base Product Line
Slide 11: Opportunities in Personal Care
Opportunities in Personal Care Developing Product Line MGPI Ingredient Solutions o Personal Care Hair Care Products Aqua Pro(R), Foam Pro(R) - Skin Care Products Omni-Smooth(R)Super, Skin Flow(TM)
Slide 12: Growing Investment in Biopolymers
Growing Investment in Biopolymers Emerging Product Line MGPI Ingredient Solutions o Biopolymers - Grain-based resins MGPI Terratek (TM) o Bio-based o Biodegradable o Natural Fiber Composites
Slide 13: Driving Adoption of New Products
(R)Driving Adoption of New Products (R) (R) $1.8 $1.9 $2.4 $3.0 FY 02 FY 03 FY 04 FY 05 Rising R&D Investment (in millions) MGPI Pet-Tex(TM) MGPI Terratek(TM) MGPI Chewtex(TM) (R) (R) Fiscal years ending June 30
Slide 14: MGP Ingredients, Inc. Plan for Higher Performance
MGP Ingredients, Inc. Plan for Higher Performance
Slide 15: MGPI Plan for Higher Performance
MGPI Plan for Higher Performance Cost Leadership in Distillery o Commodity Risk o Cost of Goods o Plant Efficiency Profit Improvement in Ingredients
Slide 16: MGPI Plan for Higher Performance
Cost Leadership in Distillery o Commodity Risk o Cost of Goods o Plant Efficiency o Higher-Value Product Mix o Plant Optimization o R&D Profit Improvement in Ingredients Create ValueManage Capital to Build Value MGPI Plan for Higher Performance
Slide 17: MGPI Plan for Higher Performance
Cost Leadership in Distillery o Commodity Risk o Cost of Goods o Plant Efficiency o Reduce Costs o Invest for Growth o Focus on Cash Drive Performance Profit Improvement in Ingredients Create Value Manage Capital to Build Value MGPI Plan for Higher Performance o Higher-Value Product Mix o Plant Opti
Slide 18: Strong Pricing Drives Distillery Growth
Strong Pricing Drives Distillery Growth Alcohol price % change per gallon 20% 15% 10% 5% 0% -21% 14% Food Grade Fuel Grade 17% -5% -10% -15% -20% -25% 4th Qtr. 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr. 2nd Qtr. FY 2004FY 2005FY 2005FY 2005FY 2005FY 2006FY 2006 Fiscal years ending June 30 * Base I
Slide 19: Managing Commodity Risk is a Priority
Grain 54% Energy 20% Managing Commodity Risk is a Priority Energy and grain combined make up close to 74%* of our total COGS * Based on 5-year average Other 26%
Slide 20: Q2 Profits were Impacted by Energy Costs
Q2 Profits were Impacted by Energy Costs 0% 30% 60% 90% 120% Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 112% 43% 75% Natural gas price Q2/06 vs. Q2/05 Natural Gas price increase (per MCF) Base Index = 100 at Q4 FY 2004 Fiscal years ending June 30
Slide 21: Hedging Framework
Hedging Framework o Hedge cost inputs of contract sales o Hedge 80% of natural gas needs for winter months (Nov., Dec., Jan., Feb.)
Slide 22: Lower Corn Prices Add to Margins
Lower Corn Prices Add to Margins Corn price % change per bushel -40% -30% -20% -10% 0% -33% 4th Qtr. 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr. 2nd Qtr. FY 2004FY 2005FY 2005FY 2005FY 2005FY 2006FY 2006 Fiscal years ending June 30 * Base Index = 100 at Q4 FY 2004 (June FY)
Slide 23: Margin Improvement is Key
o Plant efficiencies o Higher production yields o Improved gross margin o Reduced COGS in distillery o Sales mix in Ingredients o New specialty products Margin Improvement is Key $68.9 $61.1 $71.2 $75.7 $77.0 $73.9 $6.8 $6.9 $5.1 $5.7 $12.2 $6.5 Q1 FY 05 Q2 FY 05 Q3 FY 05 Q4 FY 05 Q1 FY 06 Q2 FY 06
Slide 24: Capital Projects
Capital Projects Dollars (Millions) Annual Capital Expenditures $30.0 $20.0 $10.0 $0.0 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 (Projected) $13.3 $13.0 $11.8 $20.7 $21.9 $15.0 Fiscal years ending June 30 Note: Expenditures are net of proceeds from disposition of equipment
Slide 25: Managing our Inventory (Inventory Turns)
Managing our Inventory (Inventory Turns) 15.0 12.6 10.3 10.0 8.8 8.3 8.2 7.1 5.0 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 (Annualized) Fiscal years ending June 30
Slide 26: Programs to Drive Efficiency (and cash)
Improved Order Flow o ERP System implementation o Plant equipment upgrades o Improved starch recovery o Increased protein yield from flour o Improved inventory control Order / Forecast / Inventory SALES PRODUCTION Programs to Drive Efficiency (and cash)
Slide 27: Goal is to Return a Portion of Excess Cash
Goal is to Return a Portion of Excess Cash Cents Per Share 0.18 0.15 0.12 0.09 0.06 0.03 0 $0.15 $0.15 $0.075 $0.075 $0.075 $0.05 1999 Paid Paid Paid Paid Paid Paid Nov. 8, 2000 Nov. 6, 2001 Nov. 5, 2002 Nov. 6, 2003 Nov. 4, 2004 Oct. 5, 2005
Slide 28: The Investment Opportunity
The Investment Opportunity o Franchise in starch and protein technologies o Wellness and convenience drive specialty food ingredients o Building momentum in non-food ingredients o Growth in ethanol and food-grade alcohol o Strong cash flows, moderating capital needs o Company focus on margin improve
Slide 29: Thank you for your interest in MGPI
www.mgpingredients.com Thank you for your interest in MGPI
MGP Ingredients — Roth Capital Partners Growth Stock Conference 2006 on 6ix