Milling & Baking News - March 13, 2018 - 21

Financial Results

Specialty ingredients help spur
profit growth at MGPI in 2017
ATCHISON, KAS. - Net income
at MGP Ingredients, Inc. increased
35% in the fiscal year ended Dec. 31,
2017, climbing to $40,827,000, equal
to $2.44 per share on the common
stock, from $30,230,000, or $1.82 per
share, in fiscal 2016. Net sales for the
full year also increased, rising 9% to
$347,448,000 from $318,263,000.
During the fourth quarter, net income totaled $12,364,000, or 74c per
share, up 54% from $8,031,000, or 48c
per share, in the same period a year
ago. Net sales were $88,193,000, up
from $81,145,000.
"2017 marked the third full year of
the implementation of our strategic
plan," August C. Griffin, president
and chief executive officer, said during a March 2 conference call with
analysts. "We continue to build on the
strong foundation we've established,
and we are very pleased with the results for this quarter and the year as
they underscore this continued progress against our long-term strategic
goals. Both of our business segments
showed strong growth over the prior year, driving operating income

growth that was consistent with our
guidance."
Gross profit in the Ingredient Solutions segment increased to $9.2
million in fiscal 2017, up from $8.4
million in fiscal 2016, while sales increased 6.5% to $56.4 million. During

MGP Ingredients, Inc.
share price
per share

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the fourth quarter, gross profit in the
segment totaled $1.8 million, up from
$1.6 million in the same period a year
ago. Net sales during the quarter increased nearly 8% to $14.2 million.
"Gross margins expanded 40 basis points, supported by higher net

Gruma USA income up 2% in
fiscal 2017; revenues inch higher

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channel was impacted by the company's decision to reduce supply of
some s.k.u.s (stock-keeping units)
based on profitability."
Gruma said operating margin improved to 14.1% from 14% during the

GRUMA USA

MONTERREY, MEXICO - In the year
ended Dec. 31, 2017, Gruma USA had
operating income of 5,696 million pesos ($305.8 million), up 2% from 5,600
million pesos in 2016. For the fourth
quarter ended Dec. 31, operating income increased 1% to 1,439 million
pesos from 1,423 million.
Net sales at Gruma USA increased
1% in fiscal 2017 to 40,471 million
pesos ($2,173.3 million) from 39,944
million pesos. For the fourth quarter,
net sales fell 3% to 10,160 million pesos from 10,479 million.
"Gains in the tortilla business were
driven by the retail channel, where
volume benefits primarily from
growth of some core products, some
specialty products and healthier alternatives," Raul Cavazos Morales,
chief financial officer, said during
a Feb. 22 conference call with analysts. "Higher volumes also reflect
increased distribution at club stores
and improved formulation of existing
products, making them clean label.
On the other hand, the food service

full year and improved to 14.2% from
13.6% in the fourth quarter.
Cost of sales as a percentage of net
sales improved to 55.5% from 58.1% in
the fourth quarter, Gruma said, driven
by a change in the sales mix toward
higher margin s.k.u.s at the retail tortilla business, lower depreciation as

sales in both our specialty wheat
protein and specialty wheat starch
businesses," Mr. Griffin said. "We
take a long-term view on the growth
of our businesses, identifying strong
macro consumer trends and making
the appropriate investments of time
and capital to leverage those trends.
The growth of our specialty ingredients products this year reflect that
approach. We knew the patent on
our Fibersym specialty wheat starch
product would expire last year, and
we took actions to strengthen our position in the market and build upon
the strong partnerships with our customers. These actions ensured we'd
be able to continue to benefit from the
increase in consumer interest and enhanced dietary fiber.
"As a result, we saw a strong
growth in that business. Similarly,
we invested the time and funds to
reestablish and build our textured
wheat protein business to maximize
the potential offered by the increased
consumer interest in plant-based proteins. As a result, sales of our TruTex
specialty wheat protein product more
than doubled in 2017. We are very
pleased with this progress and excited about the potential for this key
growth platform." MBN
accelerated depreciation was concluded
during the third quarter of fiscal 2017
for assets of the current Dallas plant that
will not be used at the new plant, and
cancellation of liability insurance provisions to reflect actual expenses.
Gruma said it incurred $61 million
in capital expenditures during the
fourth quarter and $272 million for
the full year. During the fourth quarter, the company allocated expenditures to the United States (in connection with the new tortilla plant in
Dallas and the expansion of a tortilla
plant in Florida), to Europe (in connection with a tortilla plant in Russia,
the expansion of a tortilla plant in The
Netherlands, and packaging automation at a flatbread plant in England)
and to Mexico (for a tortilla plant
near Puebla and technology upgrades
at GIMSA).
Overall, majority net income at Gruma S.A.B. de C.V. in fiscal 2017 was
6,218 million pesos ($333.6 million),
up 5% from 5,922 million pesos in fiscal 2016. EBITDA was 11,344 million
pesos, up 3% from 10,964 million pesos, while sales increased 3% to 70,581
million pesos from 68,206 million pesos. MBN
Milling & Baking News

March 13, 2018 / 21

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Milling & Baking News - March 13, 2018

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