SOURCE: CTI Industries Corporation

CTI Industries Corporation

May 10, 2011 10:01 ET

CTI Industries Corporation First Quarter 2011 Financial Results

LAKE BARRINGTON, IL--(Marketwire - May 10, 2011) - 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 2011.

Consolidated net sales for the first quarter of 2011 were $12,698,000 compared to consolidated net sales of $12,411,000 for the first quarter of 2010, representing an increase of 2.3%. The Company earned net income of $297,000 or $0.09 per share (basic and diluted) for the first quarter of 2011 compared to net income of $599,000 or $0.22 per share (basic) and $0.21 per share (diluted) for the first quarter of 2010.

Key Factors and Trends

Sales in each of the foil balloon, latex balloon and film product lines continued to increase, while sales of pouch products were down compared to the first quarter 2010. Despite an increase in sales, profits were down due to (i) increased raw materials costs and (ii) a shift in the mix of product sales to lower margin items and (iii) an increase in the book amount of U.S. income tax reported in the first quarter this year.

Novelty product revenues were up 8.9%, from $7,804,000 in the first quarter of 2010 to $8,495,000 in the first quarter of 2011. Sales of laminated films also increased from $1,367,000 in the first quarter of 2010 to $1,745,000 in the first quarter of this year.

In the first quarter of this year, pouch sales declined to $2,154,000 from $3,041,000 in the first quarter of 2010.

Gross margins declined to 19.5% in the first quarter of 2011 compared to 24.5% for the first quarter of 2010. The decline in this quarter is the result of (i) significant increases in the cost of raw materials, particularly latex and films and (ii) a change in the mix of products sold to products having a lower margin. Profit was also affected by the fact that the Company recorded U.S. income tax in the amount of $140,000 in the first quarter of this year compared to no income tax expense in the first quarter of 2010 due to a reduction in the valuation reserve against deferred tax assets that offset income tax expense.

Statements made in this release that are not historical facts are "forward-looking" statements (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.

CTI Industries Corporation and Subsidiaries
Condensed Consolidated Balance Sheets

                                        March 31, 2011   December 31, 2010
                                       ----------------  -----------------
              Assets                     (Unaudited)
Current Assets:
  Cash and cash equivalents           $         400,914  $         761,874
  Accounts receivable, net                   10,052,699          8,533,626
  Inventories, net                           11,033,046         10,368,037
  Other current assets                        2,345,493          1,762,552
                                      -----------------  -----------------
Total current assets                         23,832,152         21,426,089

Property, plant and equipment, net            9,520,566          9,659,768
Other assets                                  1,603,832          1,775,531
                                      -----------------  -----------------

Total Assets                          $      34,956,550  $      32,861,388
                                      =================  =================

       Liabilities & Equity
Total current liabilities             $      19,004,908  $      17,952,042
Long term debt, less current
 maturities                                   3,417,099          3,129,685
CTI Industries Corporation
 Stockholders' equity                        12,571,417         11,784,340
Noncontrolling interest                         (36,874)            (4,679)
                                      -----------------  -----------------
Total Liabilities & Equity            $      34,956,550  $      32,861,388
                                      =================  =================



Condensed Consolidated Statements of Operations

                                           Three Months Ended March 30
                                             2011               2010
                                      -----------------  -----------------
                                         (Unaudited)        (Unaudited)

Net sales                             $      12,697,655  $      12,410,766
Cost of sales                                10,226,883          9,366,194
                                      -----------------  -----------------

Gross profit                                  2,470,772          3,044,572

Operating expenses                            1,872,341          2,084,516
                                      -----------------  -----------------

Income from operations.                         598,431            960,056

Other (expense) income:
  Net Interest expense                         (139,206)          (244,073)
  Other                                          11,117            (13,223)
                                      -----------------  -----------------

Income before income taxes                      470,342            702,760

Income tax expense                              205,429            116,359
                                      -----------------  -----------------

Net Income                                      264,913            586,401

Less: Net loss attributable to
 noncontrolling interest                        (32,195)           (12,443)
                                      -----------------  -----------------

      Net income attributable to CTI
       Industries Corporation         $         297,108  $         598,844
                                      =================  =================

Income applicable to common shares    $         297,108  $         598,844
                                      =================  =================

Basic income per common share         $            0.09  $            0.22
                                      =================  =================

Diluted income per common share       $            0.09  $            0.21
                                      =================  =================

Weighted average number of shares and
 equivalent shares of common stock
 outstanding:
    Basic                                     3,137,837          2,769,002
                                      =================  =================

    Diluted                                   3,198,742          2,793,863
                                      =================  =================