SOURCE: CTI Industries Corporation

CTI Industries Corporation

March 25, 2014 06:30 ET

CTI Industries Corporation Reports Results for Full Year and Fourth Quarter 2013

Record Sales and Increased Profits

LAKE BARRINGTON, IL--(Marketwired - Mar 25, 2014) - CTI Industries Corporation (NASDAQ: CTIB), a manufacturer and marketer of novelty balloons, flexible packaging and storage products and printed and laminated films, today announced its full-year results of operations for 2013, as well as for the three months ended December 31, 2013.

Year-End Results

For the year ended December 31, 2013, consolidated net sales totaled $56,059,000, compared to consolidated net sales of $49,543,000 for the year ended December 31, 2012, an increase of 13.2%. Sales for 2013 were at an all-time record high for CTI. For the year, CTI achieved net income of $376,000 or $0.12 per share (basic) and $0.11 (diluted), compared to $102,000 or $0.03 per share (basic and diluted) in 2012, a more than 269% improvement.

Fourth Quarter Results

Consolidated net sales for the fourth quarter of 2013 were $15,200,000 compared to consolidated net sales of $12,133,000 for the fourth quarter of 2012, an increase of more than 25.3%. For the fourth quarter of 2013, CTI had net income of $67,000 or $0.02 per share (basic and diluted), compared to a loss of $215,000 for the fourth quarter of 2012 or $0.07 per share (basic and diluted).

Key Factors and Trends

In 2013, net sales rose to the highest level in CTI's 38 year history, to $56 million as sales in the pouch and container line expanded 32.4% while sales in the novelty line of foil and latex balloons continued to expand as well. Overall, sales increased by 13.2% over 2012 sales of $49.5 million. Sales of our branded line of vacuum sealing machines and associated rolls and pouches, which were introduced in 2012 grew to $12.5 million in the year, and we anticipate continued significant revenue growth in that line during 2013.

Our income from operations increased by 97.4%, from $1,059,000 in 2012 to $2,090,000 in 2013. In the fourth quarter, income from operations increased from a loss of $65,000 to income of $603,000.

However, our bottom line results were affected by significant interest expense we incurred during the year, particularly related to our mezzanine loan of $5 million and the warrants associated with that loan, and also to relatively high tax expense. For the year, we incurred net interest expense of $1,440,000 and in the fourth quarter, we incurred net interest expense of $468,000.

Operating expenses increased modestly from $9,848,000 in 2012 to $10,523,000 in 2013, but as a percentage of sales operating expenses decreased from 19.9% of sales in 2012 to 18.8% of sales in 2013.

Gross margin levels increased from 22% in 2012 to 22.5% in 2013. This increase resulted from a change in the mix of products sold and also to gross margins achieved by our Mexico subsidiary, Flexo Universal.

Our liquidity improved with the result that our working capital increased from just over $10.1 million as of December 31, 2012 to more than $11.7 million on December 31, 2013.

CTI Industries Corporation, based in suburban Chicago, designs, develops, produces and markets a line of novelty balloon products, laminated and printed films for packaging applications and flexible packaging and storage products.

Statements made in this release that are not historical facts are "forward-looking" statements (within the meaning of Section 21E of the Securities Exchange Act of 1934) 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. We have based these forward-looking statements on our current expectations and projections about future results. Although we believe that our opinions and expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements, and our actual results may differ substantially from statements made herein. 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          
           
    December 31, 2013   December 31, 2012  
ASSETS          
Current assets:              
  Cash and cash equivalents (VIE $54,000 and $22,000, respectively)   $ 666,616   $ 351,064  
  Accounts receivable, (less allowance for doubtful accounts of $217,000 and $99,000 respectively)    
8,883,106
   
7,773,332
 
  Inventories, net     15,428,413     15,813,276  
  Net deferred income tax asset     931,245     846,371  
  Prepaid expenses and other current assets (VIE $79,000 and $108,000, respectively)     2,261,298     2,345,711  
    Total current assets     28,170,678     27,129,754  
               
    Total property, plant and equipment, net     8,681,771     8,699,070  
               
    Total other assets     2,219,051     1,918,319  
               
TOTAL ASSETS   $ 39,071,500   $ 37,747,143  
               
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
               
               
  Total current liabilities (VIE $493,000 and $198,000, respectively)   $ 16,432,989   $ 16,963,447  
  Total long-term liabilities, less current maturities (VIE $441,000 and $533,000, respectively)     9,874,386     8,701,650  
    Total Liabilities     26,307,375     25,665,097  
               
  Total CTI Industries Corporation stockholders' equity     12,655,890     12,242,738  
               
  Noncontrolling Interest     108,235     (160,692 )
               
    Total Equity     12,764,125     12,082,046  
               
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY   $ 39,071,500   $ 37,747,143  
               
                         
                         
CTI Industries Corporation and Subsidiaries             
Condensed Consolidated Statements of Operations             
                         
    Year ended December 31,     Three months ended December 31,  
    2013     2012     2013     2012  
                         
Net sales   $ 56,059,477     $ 49,542,762     $ 15,200,470     $ 12,132,945  
Cost of sales     43,446,618       38,636,245       11,341,234       9,346,057  
    Gross profit     12,612,859       10,906,517       3,859,236       2,786,888  
                                 
Operating expenses:                                
  General and administrative     6,564,355       6,357,249       2,002,032       1,915,791  
  Selling     2,224,551       1,720,878       775,654       416,095  
  Advertising and marketing     1,733,609       1,769,477       478,271       520,399  
                                 
    Total operating expenses     10,522,515       9,847,604       3,255,957       2,852,285  
                                 
Income (loss) from operations     2,090,344       1,058,913       603,279       (65,397 )
                                 
Other (expense) income:                                
  Interest expense, net     (1,439,712 )     (991,152 )     (467,662 )     (377,906 )
  Other     27,232       24,841       12,889       11,636  
                                 
    Total other expense     (1,412,480 )     (966,311 )     (454,773 )     (366,270 )
                                 
Income (loss) before income taxes and noncontrolling interest     677,864       92,602       148,506       (431,666 )
                                 
Income tax expense (benefit)     269,836       46,272       46,074       (157,454 )
                                 
Net income (loss)     408,028       46,330       102,432       (274,213 )
                                 
Less: Net loss attributable to noncontrolling interest     32,519       (55,419 )     35,601       (58,844 )
                                 
    Net income (loss) attributable to CTI Industries Corporation   $ 375,509     $ 101,749     $ 66,831     $ (215,369 )
                                 
Income (loss) applicable to common shares   $ 375,509     $ 101,749     $ 66,831     $ (215,369 )
                                 
Other Comprehensive Income                                
  Foreign currency adjustment     (81,919 )     114,097       (201,813 )     26,015  
    Comprehensive income (loss) attributable to CTI Industries Corporation   $ 293,590     $ 215,846     $ (134,982 )   $ (189,354 )
                                 
Basic income (loss) per common share   $ 0.12     $ 0.03     $ 0.02     $ (0.07 )
                                 
Diluted income (loss) per common share   $ 0.11     $ 0.03     $ 0.02     $ (0.07 )
                                 
Weighted average number of shares andequivalent shares of common stock outstanding:                                
  Basic     3,248,646       3,216,756       3,248,646       3,240,266  
                                 
  Diluted     3,404,804       3,293,106       3,407,288       3,252,528