ATCHISON, KAS. — Net income at MGP Ingredients, Inc. decreased 36% in the third quarter ended Sept. 30, falling to $9,008,000, equal to 52c per share on the common stock, from $14,137,000, or 82c per share, in the same period a year ago. Last year’s results included an $11,381,000 gain on the sale of an equity method investment.

Net sales increased, rising to $95,031,000 from $86,333,000.

“Our third-quarter results exhibit the top-line improvement we expected, with consolidated net sales for the quarter up about 10% and operating income increasing by almost 15%,” Augustus C. Griffin, president and chief executive officer, said during a Nov. 1 conference call with analysts. “While we remain very pleased with our progress against all parts of our strategic plan, we did experience some short-term production challenges at our Lawrenceburg (Indiana) facility that impacted our margins.

“We are confident that the issues have been resolved and we are poised for further growth in the fourth quarter. Based on the improved momentum of our business and the continued solid execution of our strategic plan, we are again reaffirming our operating income growth guidance for the year.”

Gross profit in the Ingredient Solutions segment increased 57% to $3.3 million in the third quarter of fiscal 2018, up from $2.1 million in the same period of fiscal 2017, while sales increased 19% to $16.7 million.

MGP Ingredients Arise wheat protein cookies“Gross margins increased 480 basis points due to higher gross profits on specialty wheat proteins and starches and commodity wheat proteins,” Mr. Griffin said. “Our base wheat protein can either be sold as commodity wheat proteins or further valued up to be sold as specialty wheat proteins. While we continue to see strong demand for our specialty wheat proteins and are pleased with the new customer interest in our TruTex offerings, we are also seeing strong demand for commodity wheat proteins as a result of clean label initiatives by our customers.

“We are pleased with this segment’s continued strong sales growth and are focused on leveraging the consumer trends of high-fiber, high-protein, non-G.M.O., plant-based proteins and clean label ingredients, is consistently fueling this growth. We continue to strongly believe in the potential of these trends provide.”

Net income in the nine months ended Sept. 30 totaled $24,971,000, or $1.48 per share, down 12% from $28,378,000, or $1.70 per share, in the same period a year ago. Net sales increased 5% to $271,239,000 from $259,255,000.

MGPI confirmed its guidance for operating income to grow between 10% and 15% during fiscal 2018. Net sales growth for 2018 is projected in the high single-digit percentage range.