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Posted on  

November 13, 2002

MGP sets goals in wake of blast

St. Joseph News-Press

ATCHISON, Kan. — With the re-opening of its damaged distillery a year away, officials at MGP Ingredients Inc. say they are setting realistic goals for the current fiscal year.

MGP Ingredients, formerly Midwest Grain Products, experienced a large explosion in September at its distillery in Atchison. In a conference call Tuesday, Ladd Seaberg, president and chief operating officer, said the total rebuilding process is expected to take nine months to a year, but some production could begin at the plant next month.

“Considering substantial increases in grain costs, combined with the Atchison shutdown, our fiscal 2003 target for operating income is to break even,” Mr. Seaberg said.

Insurance payments received because of the explosion boosted MGP Ingredients’ net income to $6.79 million for the first quarter of fiscal year 2003, which ended Sept. 30. Without the insurance, the company would have had a net loss of $1.1 million. The company’s insurance reimbursements of $13 million amounted to $7.9 million after taxes.

Following the explosion, MGP Ingredients laid off 45 workers. The company employs more than 200 people in Atchison.

“I think it is very important for stockholders to realize that despite some of the challenges we face, our financial position is very strong and will help carry us forward,” Mr. Seaberg said.

The distillery produced both food-grade alcohol and fuel alcohol, commonly known as ethanol.

The shutdown could reduce the company’s income from a government program that gave cash incentives to ethanol producers to increase grain usage.

Mr. Seaberg noted that MGP Ingredients received just over $1 million from the program during the quarter. Due to reduced production, the company’s eligibility for 2003 is questionable.

MGP Ingredients is focusing on expanding its production of specialty ingredients made from wheat. The starches and ingredients are used by manufacturers of food, personal care and pet products. Last year, sales were $37.4 million. Over the next two years, the company hopes to increase sales by more than 30 percent.

“While we feel this is achievable, we are mindful of various factors that could cause actual results to differ materially from the goal,” Mr. Seaberg said.

One of the main challenges will be expanding the company’s customer base, he said.

Later this month, MGP Ingredients plans to complete an expansion project in Atchison that involves additional processing and drying equipment for specialty wheat products. The $8.3 million expansion is being funded in part by the U.S. Department of Agriculture.



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