SOURCE: CTI Industries Corporation

CTI Industries Corporation

March 23, 2016 08:00 ET

CTI Industries Corporation Reports Results for Full Year and Fourth Quarter 2015

Record Sales; Profits Double

BARRINGTON, IL--(Marketwired - Mar 23, 2016) -  CTI Industries Corporation (NASDAQ: CTIB), a manufacturer and marketer of novelty balloons, vacuum and flexible packaging and storage products and printed and laminated films, today announced its full-year results of operations for 2015, as well as for the three months ended December 31, 2015.

Highlights of year-end results include:

  • Net Income more than doubled from $514,000 in 2014 to $1,047,000 in 2015. Per share income increased from $0.16 ($0.15 fully diluted) in 2014 to $0.32 ($0.30 fully diluted) in 2015.

  • Net sales rose to the highest level in CTI's 40-year history to almost $60 million. Net sales in 2015 were $59,365,000 compared to net sales in 2014 of $57,828,000.

  • EBITDA reached $5 million for the year, the highest ever for CTI. In 2015, EBITDA was $4,957,000 compared to EBITDA of $4,036,000 in 2014.

Fourth Quarter Results

Consolidated net sales for the fourth quarter of 2015 were $15,888,000 compared to consolidated net sales of $15,180,000 for the fourth quarter of 2014. For the fourth quarter of 2015, CTI had net income of $502,000, $0.15 per share (basic and diluted), compared to net income of $382,000 for the fourth quarter of 2014, $0.12 per share (basic) and $0.11 per share (diluted).

Key Factors and Trends

Gross margin levels increased from 24.6% in 2014 to 27.5% in 2015. This increase resulted from (i) an increase in the sale of certain higher margin products, including sales of home container products and (ii) production efficiencies resulting from a reduction in factory overhead expenses.

Cash flow from operations increased substantially during 2015 and reached almost $2,600,000 for the year. 

Revenues from the sale of foil balloons and vacuum sealing products increased modestly in 2015; revenues from the sale of latex balloons declined by about 16%. On a unit basis, sales of both foil and latex balloons increased in 2015 over 2014. However, revenues from the sale of these products were negatively affected by currency exchange rate changes, particularly the decline of the Mexican peso and the Euro. With respect to latex balloons, changes in currency exchange rates negatively affected the Dollar value of latex balloon sales by approximately $2.1 million.

Revenues from the sale of a mix of other products almost doubled from $3,408,000 in 2014 to $6,709,000 in 2015. These other products include sales of home container and organization products through a network of independent distributors and sales of "Candy Blossoms" and "Candy Loons."

Non-GAAP Measures

To provide additional information regarding the Company's results, we have disclosed in this press release EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). 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 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" 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, 2015     December 31, 2014  
ASSETS            
Current assets:            
  Cash and cash equivalents (VIE $82,000 and $14,000, respectively)   $ 346,404     $ 150,332  
  Accounts receivable (less allowance for doubtful accounts of $126,000 and $230,000 respectively) (VIE $4,000 and $9,000, respectively)     11,410,999       11,286,797  
  Inventories, net (VIE $1,264,000 and $699,000, respectively)     17,869,911       17,755,300  
  Net deferred income tax asset     761,096       718,694  
  Prepaid expenses and other current assets (VIE $50,000 and $68,000, respectively)     2,048,761       2,562,803  
    Total current assets     32,437,171       32,473,926  
                 
    Total property, plant and equipment, net (VIE $462,000 and $557,000, respectively)     6,553,555       7,755,527  
                 
    Total other assets (VIE $440,000 and $440,000, respectively)     2,814,243       2,817,457  
                 
TOTAL ASSETS   $ 41,804,969     $ 43,046,910  
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
                 
  Total current liabilities (VIE $1,697,000 and $742,000, respectively)   $ 20,200,675     $ 20,929,377  
  Total long-term liabilities, less current maturities (VIE $0 and $322,000, respectively)     9,015,270       9,310,164  
    Total Liabilities     29,215,945       30,239,541  
                 
  Total CTI Industries Corporation stockholders' equity     12,787,487       12,880,171  
                 
  Noncontrolling Interest     (198,463 )     (72,802 )
                 
    Total Equity     12,589,024       12,807,369  
                 
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY   $ 41,804,969     $ 43,046,910  
                 
                 
                 
CTI Industries Corporation and Subsidiaries        
Condensed Consolidated Statements of Operations        
                         
    Year ended December 31,     Three months ended December 31,  
    2015     2014     2015     2014  
Net sales   $ 59,364,701     $ 57,828,200     $ 15,887,720     $ 15,179,684  
Cost of sales     43,013,345       43,623,666       11,150,342       11,243,139  
    Gross profit     16,351,356       14,204,534       4,737,378       3,936,545  
                                 
Operating expenses:                                
  General and administrative     7,134,385       7,231,243       1,833,967       1,732,408  
  Selling     3,510,824       3,041,937       1,085,147       708,414  
  Advertising and marketing     2,889,609       2,322,172       883,966       675,777  
  Loss on sale of assets     -       -                  
  Other (income)     -       -                  
  Asset Impairment Loss     -       -                  
                                 
    Total operating expenses     13,534,818       12,595,352       3,803,080       3,116,599  
                                 
Income from operations     2,816,538       1,609,182       934,298       819,946  
                                 
Other (expense) income:                                
  Interest expense, net     (1,541,740 )     (1,109,301 )     (504,574 )     (367,151 )
  Other     32,470       39,367       (14,759 )     33,800  
                                 
    Total other expense     (1,509,270 )     (1,069,934 )     (519,333 )     (333,351 )
                                 
Income before income taxes and noncontrolling interest     1,307,268       539,248       414,965       486,595  
                                 
Income tax expense     369,596       189,967       (16,917 )     153,668  
                                 
Net income     937,672       349,281       431,882       332,927  
                                 
Less: Net (loss) income attributable to noncontrolling interest     (109,661 )     (165,037 )     (69,907 )     (48,940 )
                                 
    Net income attributable to CTI Industries Corporation   $ 1,047,333     $ 514,318     $ 501,789     $ 381,867  
                                 
Income applicable to common shares   $ 1,047,333     $ 514,318     $ 501,789     $ 381,867  
                                 
Other Comprehensive (Loss) Income                                
  Foreign currency adjustment     (1,175,106 )     (647,711 )     (165,119 )     (95,697 )
    Comprehensive (loss) income attributable to CTI Industries Corporation   $ (127,773 )   $ (133,393 )   $ 336,670     $ 286,170  
                                 
Basic income per common share   $ 0.32     $ 0.16     $ 0.15     $ 0.12  
                                 
Diluted income per common share   $ 0.30     $ 0.15     $ 0.15     $ 0.11  
                                 
Weighted average number of shares and equivalent shares of common stock outstanding:                                
  Basic     3,297,448       3,288,332       3,297,969       3,301,116  
                                 
  Diluted     3,437,140       3,439,427       3,437,691       3,448,406  
                   
                   
                   
CTI Industries Corporation and Subsidiaries
EBITDA
                   
    Three Months Ended   Year Ended
    December 31,   December 31,
    2015     2014   2015   2014
Reconciliation from Net Income to EBITDA                  
Net Income (Loss)   $ 501,790     $ 381,868   $ 1,047,333   $ 514,318
                           
  Depreciation and amortization     439,254       513,463     1,925,965     2,200,160
  Interest expense     546,679       370,839     1,614,574     1,131,441
  Income taxes (benefit)     (16,918 )     153,668     369,596     189,967
                           
Total net adjustments     969,015       1,037,970     3,910,135     3,521,568
                           
EBITDA   $ 1,470,805     $ 1,419,838   $ 4,957,468   $ 4,035,886