SOURCE: CTI Industries Corporation

April 30, 2010 08:30 ET

CTI Industries Corporation First Quarter 2010 Financial Results

CTI Reports Substantial Increases in Sales and Profits

BARRINGTON, IL--(Marketwire - April 30, 2010) -  CTI Industries Corporation (NASDAQ: CTIB), a manufacturer and marketer of flexible packaging and storage products, laminated films and novelty balloons, today announced its results of operations for the first quarter of 2010.

Consolidated net sales for the first quarter of 2010 were $12,411,000 compared to consolidated net sales of $9,603,000 for the first quarter of 2009, representing an increase of over 29%. The Company earned net income of $599,000 or $0.22 per share (basic) and $0.21 per share (diluted) for the first quarter of 2010 which is more than six times net income of $93,000 or $0.03 per share (basic and diluted) for the first quarter of 2009.

The Company will host a conference call to discuss first quarter results with investors. The conference call will be held on April 30, 2010 at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). The dial-in telephone number for the call is 800-829-2707. The participant passcode is 5469991. A replay of the call will be available from April 30, 2010 through May 30, 2010 by dialing 888-203-1112. The replay passcode is 5469991.

Key Factors and Trends

First quarter 2010 results reflected strong sales in both the novelty balloon and pouch product lines. 

Sales of pouch products were up 208% from $986,000 in the first quarter 2009 to $3,041,000 in the first quarter of 2010. Most of this increase was a reflection of strong continuing sales of zippered vacuumable pouches to a principal customer. Sales of CTI's proprietary ZipVac™ line of vacuumable pouches also increased. 

Novelty product revenues were up 18.6%, from $6,580,000 in the first quarter of 2009 to $7,804,000 in the first quarter of 2010. Sales of laminated films showed a modest decline from $1,876,000 in the first quarter of 2009 to $1,367,000 in the first quarter of 2010.

Gross margins increased to 24.5% in the first quarter of 2010 compared to 21.5% for the first quarter of 2009. This increase is the result of (i) increased production and sales volume during the first quarter of 2010 resulting in lower unit cost than in the same period of 2009 and (ii) a change in the mix of products sold to certain novelty and pouch products having a higher margin.

Bank Financing

On April 29, 2010, the Company entered into a Credit Agreement with Harris N.A. (the "Bank") under which the Bank agreed to extend to the Company a credit facility in the aggregate amount of $14,417,000. The facility includes a Revolving Credit of up to $9,000,000, an Equipment Loan of up to $2,500,000, a Mortgage Loan of $2,333,350 and a Term Loan of $583,333. The maturity date on the loans is April 29, 2013. Closing of the Agreement and the loan transactions provided for in the Agreement is anticipated to be concluded on April 30, 2010. Proceeds of the loans will be utilized for the repayment of all outstanding loan and capital lease obligations of the Company to RBS Citizens N.A. and RBS Asset Finance in the aggregate amount of approximately $11,000,000, and for working capital purposes and for the purchase of capital equipment.  

Statements made in this release that are not historical facts are "forward-looking" statement (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties and are subject to change at any time. These "forward-looking" statements may include, but are not limited to, statements containing words such as "may," "should," "could," "would," "expect," "plan," "goal," "anticipate," "believe," "estimate," "predict," "potential," "continue," or similar expressions. Factors that could cause results to differ are identified in the public filings of the Company with the Securities and Exchange Commission. More information on factors that could affect CTI's business and financial results are included in its public filings made with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

-- FINANCIAL HIGHLIGHTS FOLLOW --

 
CTI Industries Corporation and Subsidiaries            
Condensed Consolidated Balance Sheets            
 
    March 31, 2010     December 31, 2009  
             
Assets   (Unaudited)        
Current Assets:                
  Cash and cash equivalents   $ 678,517     $ 870,446  
  Accounts receivable, net     8,694,793       7,320,181  
  Inventories, net     10,124,880       9,643,914  
  Other current assets     1,304,642       1,313,881  
Total current assets     20,802,832       19,148,422  
                 
Property, plant and equipment, net     9,231,630       9,533,411  
Other assets     1,790,315       1,713,476  
                 
Total Assets   $ 31,824,777     $ 30,395,309  
                 
Liabilities & Equity                
Total current liabilities   $ 18,414,732     $ 16,734,520  
Long term debt, less current maturities     3,641,674       4,881,568  
Stockholders' equity     9,711,245       8,762,663  
Noncontrolling interest     57,126       16,558  
                 
Total Liabilities & Equity   $ 31,824,777     $ 30,395,309  
                 
                 
                 
 
Consolidated Statements of Operations                
 
    Three Months Ended March 31  
    2010     2009  
    (Unaudited)     (Unaudited)  
                 
Net sales   $ 12,410,766     $ 9,603,422  
Cost of sales     9,366,194       7,536,919  
                 
Gross profit     3,044,572       2,066,503  
                 
Operating expenses     2,084,516       1,604,755  
                 
Income from operations     960,056       461,748  
                 
Other (expense) income:                
  Net Interest expense     (244,073 )     (295,551 )
  Other     (13,223 )     (21,598 )
                 
Income before income taxes and noncontrolling interest     702,760       144,599  
                 
Net Income     116,359       50,158  
                 
Income before noncontrolling interest     586,401       94,441  
                 
Less: Net income (loss) attributable to noncontrolling interest     (12,443 )     1,234  
                 
      Net income attributable to CTI Industries Corporation   $ 598,844     $ 93,207  
                 
Income applicable to common shares   $ 598,844     $ 93,207  
                 
Basic income per common share   $ 0.22     $ 0.03  
                 
Diluted income per common share   $ 0.21     $ 0.03  
                 
Weighted average number of shares and equivalent shares of common stock outstanding:                
    Basic     2,769,002       2,808,720  
                 
    Diluted     2,793,863       2,825,482