SOURCE: CTI Industries Corporation

CTI Industries Corporation

May 11, 2016 08:00 ET

CTI Industries Corporation Reports First Quarter 2016 Results

BARRINGTON, IL--(Marketwired - May 11, 2016) - CTI Industries Corporation (NASDAQ: CTIB), a manufacturer and marketer of foil and latex balloons, vacuum storage products, laminated films and home organizing products, today announced its results of operations for the first quarter of 2016.

For the first quarter 2016, net sales increased to $15,205,000 compared to net sales of $14,975,000 for the first quarter of 2015. Significant sales items include:

  • Sales of foil balloons increased by 13% in the quarter to $8,014,000 from $7,094,000 in the first quarter of 2015.
  • Sales of branded vacuum sealing products increased to $2,209,000 for the quarter from $2,130,000 in the first quarter 2015. Overall sales in the vacuum sealing line were down due to lower sales of zippered vacuum bags.
  • Sales in our line of home organizing products were up over 103% to $1,458,000 in the first quarter compared to $718,000 in the first quarter last year.
  • Sales of film products were up 30% to $1,020,000 in the first quarter compared to $783,000 in the first quarter last year.
  • Revenues from the sale of latex balloons declined in the first quarter due principally to the decline in the Dollar value of Peso denominated sales. Unit volume actually increased in the quarter.

Income from operations for the first quarter was $647,000 compared to income from operations in the first quarter 2015 of $919,000. The decline was attributable to increases in selling and administrative expenses and a slightly lower gross margin rate for the quarter. However gross margin remained generally strong in the first quarter at 25.8%.

After reflecting all additional items including, in particular, warrant valuation costs, net income for the quarter was $7,000. Net income for the first quarter 2015 was $285,000. A significant portion of the difference between net income this quarter and the first quarter last year relates to the non-cash warrant valuation cost which arises from the increased value of outstanding warrants due to the increase in the price of the Company's common stock in the quarter. The amount of the change in fair value of the warrants outstanding in the first quarter 2016 was $188,000 compared to $41,000 in the first quarter last year. 

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the First Quarter 2016 were $996,000 compared to EBITDA of $1,372,000 for the same period of 2015.

Stephen Merrick, President and Chief Operating Officer, stated: "While our bottom line results for the first quarter this year fell a bit short of the first quarter 2015, we are pleased with the continued growth in revenues in our product lines and in our operating results reflecting the non-cash change in fair value of the outstanding warrants, which are required to be adjusted to fair value through earnings until we are able to retire our mezzanine debt and associated warrants." He stated, "We continue to anticipate strong revenues and results in the balance of the year in each of our principal product lines -- foil balloons, latex balloons, vacuum sealing systems and home organizing and container products."

Non-GAAP Measures

To provide additional information regarding the Company's results, we have disclosed in this press release EBITDA. The Company defines EBITDA as earnings (loss) before net interest, other expense, taxes, depreciation and amortization expense. The Company has included EBITDA as a supplemental financial measure in this press release because it is a key measure used by management and the board of directors to understand and evaluate the core operating performance of the Company, to prepare budgets and operating plans, and because management believes such measure provides useful information in understanding and evaluating the Company's operating results. However, use of EBITDA as an analytic tool has its limitations and you should not consider this measure in isolation or as a substitute for analysis of the Company's financial results as reported under GAAP. A reconciliation to the closest GAAP statement of this non-GAAP measure is contained in the accompanying tables.

About CTI: CTI Industries Corporation is one of the leading manufacturers and marketers of foil and latex balloons, develops, produces and markets vacuum sealing systems for household use, distributes and markets home organizing and container products and produces laminated and printed films for commercial uses. CTI markets its products throughout the United States and in a number of other countries.

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, 2016     *December 31, 2015  
             
Assets   (Unaudited)        
Current Assets:                
  Cash and cash equivalents (VIE $89,000 and $82,000, respectively)   $ 195,430     $ 346,404  
  Accounts receivable, net     11,742,385       11,410,999  
  Inventories, net (VIE $1,229,000 and $1,264,000, respectively)     17,726,942       17,869,911  
  Other current assets (VIE $53,000 and $50,000, respectively)     2,787,632       2,809,857  
Total current assets     32,452,389       32,437,171  
                 
Property, plant and equipment, net (VIE $464,000 and $462,000, respectively)     6,407,211       6,553,555  
Other assets (VIE $440,000 and $440,000, respectively)     2,858,499       2,814,243  
                 
Total Assets   $ 41,718,099     $ 41,804,969  
                 
Liabilities & Equity                
Total current liabilities (VIE $1,661,000 and $1,697,000, respectively)   $ 20,200,726     $ 20,200,675  
Long term debt, less current maturities (VIE $112,000 and $0, respectively)     9,276,700       9,015,270  
CTI Industries Corporation stockholders' equity     12,861,186       12,787,487  
Noncontrolling interest     (620,512 )     (198,463 )
                 
Total Liabilities & Equity   $ 41,718,100     $ 41,804,969  
                 
                 
                 
Condensed Consolidated Statements of Operations  
    Three Months Ended March 31  
    2016     2015  
    (Unaudited)     (Unaudited)  
                 
Net sales   $ 15,204,994     $ 14,975,329  
Cost of sales     11,283,147       10,986,933  
                 
Gross profit     3,921,847       3,988,396  
                 
Operating expenses     3,274,790       3,069,187  
                 
Income from operations.     647,057       919,209  
                 
Other (expense) income:                
  Net Interest expense     (358,460 )     (362,740 )
  Warrant expense     (187,664 )     (40,614 )
  Other     (10,484 )     (4,012 )
                 
Income before income taxes     90,449       511,843  
                 
Income tax expense (benefit)     6,986       173,062  
                 
Net Income     83,463       338,781  
                 
Less: Net income (loss) attributable to noncontrolling interest     76,701       54,166  
                 
    Net income attributable to CTI Industries Corporation   $ 6,762     $ 284,615  
                 
Income applicable to common shares   $ 6,762     $ 284,615  
                 
Other Comprehensive Loss                
  Foreign currency adjustment     (67,602 )     (384,142 )
    Comprehensive loss   $ (60,840 )   $ (99,527 )
                 
Basic income per common share   $ 0.00     $ 0.09  
                 
Diluted income per common share   $ 0.00     $ 0.08  
                 
Weighted average number of shares and equivalent shares of common stock outstanding:                
  Basic     3,339,240       3,301,116  
                 
  Diluted     3,479,069       3,448,689  
                 
                 
*The condensed consolidated financial statements do not include all required disclosures, refer to the Form 10K for omitted disclosures.  
   
   
         
    Three Months Ended
    March 31,
    2016   2015
Reconciliation from Net Income to EBITDA            
Net Income   $ 6,762   $ 284,615
             
  Depreciation and amortization     439,468     505,886
  Interest expense     542,968     408,889
  Income taxes     6,986     173,062
             
Total net adjustments     989,422     1,087,837
             
EBITDA   $ 996,184   $ 1,372,452