SOURCE: CTI Industries Corporation

CTI Industries Corporation

August 13, 2012 06:30 ET

CTI Industries Corporation Reports Second Quarter 2012 Financial Results

LAKE BARRINGTON, IL--(Marketwire - Aug 13, 2012) -  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 second quarter of 2012 and for the six month period ended June 30, 2012.

Consolidated net sales for the second quarter of 2012 were $11,816,000 compared to consolidated net sales of $11,965,000 for the second quarter of 2011, a decrease of 1.2%. The Company had a net loss of $78,000 or $0.02 per share (basic and diluted) for the second quarter of 2012 compared to net income of $13,000 or $0.00 per share (basic and diluted) for the second quarter of 2011.

For the six month period ended June 30, 2012, consolidated net sales were $25,624,000 compared to $24,662,000 for the same period in 2011, an increase of 3.9%. For this six month period in 2012, net income was $311,000 or $0.10 per share (basic and diluted) compared to net income of $310,000, or $0.10 per share (basic and diluted) for the same period of 2011.

Key Factors and Trends

Gross margin rates in the second quarter and six months of 2012 were 19.9% and 21.3%, respectively. In the second quarter and six months of 2011, the gross margin rates were 17.3% and 18.4% respectively.

Net sales of foil balloons decreased by 1.2% in the second quarter compared to the same period of 2011, from $5,578,000 to $5,513,000. For the six month period, sales of foil balloons increased by 4.1% compared to the same period of 2011, from $11,977,000 to $12,465,000.

For the second quarter 2012, net sales of pouch products were down 1.5% from the second quarter 2011, from $1,707,000 in the second quarter 2011 to $1,682,000 in the second quarter 2012. For the six months ended June 30, 2012, pouch sales were $3,612,000 compared to $3,861,000 for the same period of 2011, a decrease of 6.4%. Pouch sales for the second quarter and the six months did not include significant sales of the new branded line of vacuum sealing machines or pouches which were first introduced in the first quarter 2012.

During the second quarter 2012, sales of latex balloon products increased by 4.1% from $2,725,000 in the second quarter 2011 to $2,837,000. For the six month period, sales of latex balloons increased by 16% compared to the same period in 2011, from $4,821,000 to $5,591,000.

Operating expenses increased in both the second quarter 2012 and six months ended June 30, 2012 over the same periods in the prior year. As a percentage of revenues, operating expenses increased from 15.4% of sales in the six months ended June 30, 2011 to 17.9% of sales for the same period in 2012. This increase principally reflects our investment in infrastructure and personnel related to our new branded vacuum sealer and pouch line of products.

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      
    June 30, 2012     *December 31, 2011  
             
Assets   (Unaudited)        
Current Assets:                
  Cash and cash equivalents (VIE $17,000 and $11,000, respectively)   $ 261,148     $ 338,523  
  Accounts receivable, net     5,673,609       7,091,194  
  Inventories, net     13,794,047       13,338,317  
  Other current assets (VIE $98,000 and $93,000, respectively)     2,501,269       2,532,935  
Total current assets     22,230,073       23,300,969  
                 
Property, plant and equipment, net     8,579,742       8,843,909  
Other assets     1,349,908       1,470,644  
                 
Total Assets   $ 32,159,723     $ 33,615,522  
                 
Liabilities & Equity                
Total current liabilities (VIE $94,000 and $91,000, respectively)   $ 16,484,107     $ 17,688,994  
Long term debt, less current maturities (VIE $638,000 and $687,000, respectively)     3,860,523       4,171,033  
CTI Industries Corporation stockholders' equity     11,918,301       11,860,768  
Noncontrolling interest     (103,208 )     (105,273 )
                 
Total Liabilities & Equity   $ 32,159,723     $ 33,615,522  
                 
                         
                         
Condensed Consolidated Statements of Operations            
 
    Three Months Ended June 30     Six Months Ended June 30  
    2012     2011     2012     2011  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
                                 
Net sales   $ 11,816,448     $ 11,964,764     $ 25,623,592     $ 24,662,419  
Cost of sales     9,463,198       9,894,922       20,175,271       20,121,805  
                                 
Gross profit     2,353,250       2,069,842       5,448,321       4,540,614  
                                 
Operating expenses     2,340,507       1,920,130       4,592,815       3,792,472  
                                 
Income from operations.     12,743       149,712       855,506       748,142  
                                 
Other (expense) income:                                
  Net Interest expense     (167,002 )     (144,035 )     (347,990 )     (283,241 )
  Other     5,680       15,150       7,906       26,268  
                                 
Net (loss) income before taxes     (148,579 )     20,827       515,422       491,169  
                                 
Income tax (benefit) expense     (52,656 )     35,472       202,275       240,901  
                                 
Net (loss) income     (95,923 )     (14,645 )     313,147       250,268  
                                 
Less: Net (loss) gain attributable to noncontrolling interest     (18,375 )     (28,000 )     2,066       (60,195 )
                                 
    Net (loss) income attributable to CTI Industries Corporation   $ (77,548 )   $ 13,355     $ 311,081     $ 310,463  
                                 
Net (loss) income applicable to common shares   $ (77,548 )   $ 13,355     $ 311,081     $ 310,463  
                                 
Other Comprehensive (Loss) Income                                
  Foreign currency adjustment     (457,369 )   $ (57,923 )     (299,193 )   $ 394,708  
    Comprehensive (loss) income   $ (534,917 )   $ (44,568 )   $ 11,888     $ 705,171  
                                 
Basic (loss) income per common share   $ (0.02 )   $ 0.00     $ 0.10     $ 0.10  
                                 
Diluted (loss) income per common share   $ (0.02 )   $ 0.00     $ 0.10     $ 0.10  
                                 
Weighted average number of shares and equivalent shares of common stock outstanding:                                
                                 
  Basic     3,207,244       3,137,848       3,205,875       3,137,842  
                                 
  Diluted     3,240,559       3,187,779       3,238,795       3,193,213  
                                 
                                 
                                 
*The condensed consolidated financial statements do not include all required disclosures, refer to the Form 10K for omitted disclosures.