SOURCE: CTI Industries Corporation

CTI Industries Corporation

August 12, 2013 06:30 ET

CTI Industries Corporation Reports Second Quarter 2013 Financial Results

Vacuum Sealer Product Line Sales Soar 84%

LAKE BARRINGTON, IL--(Marketwired - Aug 12, 2013) - 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 2013 and for the six month period ended June 30, 2013.

Sales for the second quarter were up 10.3% over second quarter 2012, led by an increase in revenues in the vacuum sealer line of 84% compared to the second quarter last year.

"Sales for the second quarter were strong in our principal product lines, but sales in the vacuum sealer product line soared," reported Stephen Merrick, President. "We have hit our stride in the vacuum sealer line, which is now offered for sale in almost 6,000 retail outlets throughout the United States, and we are pushing for considerably further expansion of our outlets and sales in this line," he said.

Consolidated net sales for the second quarter of 2013 were $13,034,000 compared to consolidated net sales of $11,816,000 for the second quarter of 2012, an increase of 10.3%. The Company had a net loss of $56,000 or $0.02 per share (basic and diluted) for the second quarter of 2013 compared to a net loss of $78,000 or $0.02 per share (basic and diluted) for the second quarter of 2012.

For the six month period ended June 30, 2013, consolidated net sales were $26,379,000 compared to $25,624,000 for the same period in 2012, an increase of 2.9%. For this six month period in 2013, net income was $74,000 or $0.02 per share (basic and diluted) compared to net income of $311,000, or $0.10 per share (basic and diluted) for the same period of 2012.

"We had income from operations in the second quarter this year of $291,000 compared to $13,000 for the same period last year," reported Mr. Merrick, "but our net income this quarter was affected by several charges including (i) a one-time rebate cost of $93,000, (ii) interest expense of $206,000 and (iii) foreign currency exchange loss of $171,000."

Key Factors and Trends

Sales were strong in all of our principal product lines, particularly in the vacuum sealer product line. Sales of in the vacuum sealer product line, including vacuum sealing machines, pouches and rolls, increased by 84% from $1,682,000 the second quarter of 2012 to $3,093,000 for the second quarter this year. For the six months ended June 30, 2013, sales in this line increased by 39% from $3,612,000 last year to $5,021,000 this year.

For the quarter, latex balloon sales increased by 5.9% from $2,837,000 in the second quarter last year to $3,005,000 in the second quarter this year. For foil balloons, sales in the second quarter this year were $5,560,000 compared to $5,513,000 in the second quarter last year.

The gross margin rate in the second quarter this year dipped to 19.0% compared to 19.9% for the same period last year, principally due to a one-time rebate charge incurred in the second quarter this year. For the six months ended June 30, 2013, the gross margin rate was 20.7% compared to 21.3% for the same period last year.

Operating expenses were down modestly in the second quarter 2013 compared to the same period last year, as we managed to moderate expenses incurred last year to support sales growth. As a percentage of revenues, operating expenses declined from 19.8% of sales in the second quarter last year to 16.8% of sales for second quarter this year.

For the quarter, income from operations was $291,000 compared to $13,000 for the second quarter last year. However, net income for the quarter was negatively affected by (i) one-time rebate costs of $93,000, (ii) interest expense of $206,000 and (iii) foreign exchange currency loss of $171,000.

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.

             
             
CTI Industries Corporation and Subsidiaries            
Condensed Consolidated Balance Sheets            
    June 30,
2013
    *December 31,
2012
 
Assets   (Unaudited)        
Current Assets:                
  Cash and cash equivalents (VIE $27,000 and $22,000, respectively)   $ 458,745     $ 351,064  
  Accounts receivable, net     7,646,658       7,773,332  
  Inventories, net     15,058,075       15,813,276  
  Other current assets (VIE $77,000 and $108,000, respectively)     3,063,805       3,192,082  
Total current assets     26,227,283       27,129,754  
                 
Property, plant and equipment, net     8,549,100       8,699,070  
Other assets     2,042,718       1,918,319  
                 
Total Assets   $ 36,819,101     $ 37,747,143  
                 
Liabilities & Equity                
Total current liabilities (VIE $115,000 and $198,000, respectively)   $ 14,684,149     $ 16,963,447  
Long term debt, less current maturities     9,748,117       8,701,650  
CTI Industries Corporation stockholders' equity     12,556,507       12,242,738  
Noncontrolling interest     (169,672 )     (160,692 )
                 
Total Liabilities & Equity   $ 36,819,101     $ 37,747,143  
                 
                         
                         
Condensed Consolidated Statements of Operations            
    Three Months Ended June 30     Six Months Ended June 30  
    2013     2012     2013     2012  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
                                 
Net sales   $ 13,034,306     $ 11,816,448     $ 26,379,072     $ 25,623,592  
Cost of sales     10,552,216       9,463,198       20,922,965       20,175,271  
                                 
Gross profit     2,482,090       2,353,250       5,456,107       5,448,321  
                                 
Operating expenses     2,190,957       2,340,507       4,634,823       4,592,815  
                                 
Income from operations.     291,133       12,743       821,284       855,506  
                                 
Other (expense) income:                                
  Net Interest expense     (200,239 )     (167,002 )     (668,213 )     (347,990 )
  Other     (170,821 )     5,680       (26,297 )     7,906  
                                 
Net (loss) income before taxes     (79,927 )     (148,579 )     126,774       515,422  
                                 
Income tax (benefit) expense     (24,369 )     (52,656 )     61,400       202,275  
                                 
Net (loss) income     (55,558 )     (95,923 )     65,374       313,147  
                                 
Less: Net gain (loss) attributable to noncontrolling interest     420       (18,375 )     (8,980 )     2,066  
                                 
    Net (loss) income attributable to CTI Industries Corporation   $ (55,978 )   $ (77,548 )   $ 74,354     $ 311,081  
                                 
Net (loss) income applicable to common shares   $ (55,978 )   $ (77,548 )   $ 74,354     $ 311,081  
                                 
Other Comprehensive Income (Loss)                                
  Foreign currency adjustment     200,632       (457,369 )     170,232       (299,193 )
    Comprehensive income (loss)   $ 144,654     $ (534,917 )   $ 244,586     $ 11,888  
                                 
Basic (loss) income per common share   $ (0.02 )   $ (0.02 )   $ 0.02     $ 0.10  
                                 
Diluted (loss) income per common share   $ (0.02 )   $ (0.02 )   $ 0.02     $ 0.10  
                                 
Weighted average number of shares and equivalent shares of common stock outstanding:                                
  Basic     3,248,646       3,207,244       3,248,646       3,205,875  
                                 
  Diluted     3,400,641       3,240,559       3,405,946       3,238,795  
                                 
                                 
                                 
*The condensed consolidated financial statements do not include all required disclosures, refer to the Form 10K for omitted disclosures.