SOURCE: CTI Industries Corporation

CTI Industries Corporation

August 12, 2015 06:30 ET

CTI Industries Corporation Reports Substantial Increases in Earnings, Margins and EBITDA for the Second Quarter 2015

LAKE BARRINGTON, IL--(Marketwired - Aug 12, 2015) - 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 and first six months of 2015. Highlights include:

  • Net Income of $52,000 for the Second Quarter compared to a loss of $122,000 in the Second Quarter 2014.
  • Net Income of $336,000 (Ten Cents per share) for the Six Months ended June 30, 2015 compared to a net loss of $77,000 for the same period of 2014.
  • EBITDA up 62% for the Second Quarter, from $568,000 in the Second Quarter 2014 to $918,000 in the Second Quarter 2015; EBITDA up 54% for the Six Months ended June 30, 2015 to $2,291,000 compared to $1,490,000 for the same period of 2014.
  • The Gross Margin Rate increased from 23% in the Second Quarter 2014 to 25.8% in the Second Quarter 2015.

Consolidated net sales for the three months ended June 30, 2015 were $13,621,000 compared to revenues of $13,159,000 for the same period of 2014.

Stephen Merrick, President, stated: "This is the best second quarter results we have seen in the past five years. Our results for the second quarter, and for the first six months, of 2015 reflect our continuing progress toward consistent profitability and positive cash flow."

Key Factors and Trends

Gross margin rates improved substantially in the Second Quarter this year, rising to 25.8% compared to 23% for the Second Quarter last year. For the six month period ended June 30, 2015, gross margins were 26.3% compared to 23.2% for the same period last year. These increases are attributable to (i) increased sales of higher margin products, particularly in the vacuum sealing line, (ii) an increase in the gross margin rates of our Mexico subsidiary, Flexo Universal and (iii) generally higher gross margin rates of a direct sales company marketing household container products which has been consolidated as a variable interest entity.

Net sales of our vacuum sealing line of products in the Second Quarter were strong, increasing by 30% from $2,040,000 in the Second Quarter 2014 to $2,654,000 in the Second Quarter this year. 

Sales of foil balloons increased by 2.4% for the Second Quarter from $6,115,000 in the Second Quarter 2014 to $6,262,000 in the Second Quarter this year. Sales of latex balloons declined for the quarter, reflecting principally the decline in the Dollar value of Peso denominated sales.

Revenues from the sale of home container products through our affiliated direct sales entity increased by 46.3% from $581,000 in the Second Quarter 2014 to $850,000 in the Second Quarter 2015.

Interest expense remains a significant factor affecting net income. In the second quarter 2015, the Company incurred net interest costs of $289,000 and for the six months incurred net interest charges of $692,000. Much of this interest cost relates to the outstanding mezzanine loan in the principal amount of $5 million. In the second quarter 2014, the Company incurred net interest cost of $205,000 and, for the six months last year, incurred a net interest cost of $506,000.

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 (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, 2015     *December 31, 2014            
Assets (Unaudited)                  
Current Assets:                            
  Cash and cash equivalents (VIE $17,000 and $14,000, respectively) $ 204,039     $ 150,332                
  Accounts receivable, net (VIE $7,000 and $9,000 respectively)   9,210,602       11,286,797                
  Inventories, net (VIE $833,000 and $699,000, respectively)   17,958,181       17,755,300                
  Other current assets (VIE $46,000 and $68,000, respectively)   2,827,962       3,281,497                
Total current assets   30,200,784       32,473,926                
                             
Property, plant and equipment, net (VIE $507,000 and $557,000, respectively)   6,924,353       7,755,527                
Other assets (VIE $486,000 and $487,000, respectively)   2,824,504       2,817,457                
                             
Total Assets $ 39,949,641     $ 43,046,910                
                             
Liabilities & Equity                            
Total current liabilities (VIE $1,192,000 and $742,000, respectively) $ 18,447,630     $ 20,929,377                
Long term debt, less current maturities (VIE $10,000 and $322,000, respectively)   8,893,235       9,310,164                
CTI Industries Corporation stockholders' equity   12,591,531       12,880,171                
Noncontrolling interest   17,245       (72,802 )              
                             
Total Liabilities & Equity $ 39,949,641     $ 43,046,910                
                             
                               
                               
Condensed Consolidated Statements of Operations                  
                   
  Three Months Ended June 30,     Six Months Ended June 30,  
  2015     2014     2015     2014  
  (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
                               
Net sales $ 13,620,833     $ 13,158,876     $ 28,596,161     $ 28,079,207  
Cost of sales   10,100,571       10,132,840       21,087,503       21,555,762  
                               
Gross profit   3,520,262       3,026,036       7,508,658       6,523,445  
                               
Operating expenses   3,270,077       3,081,735       6,339,263       6,253,194  
                               
Income (loss) from operations   250,185       (55,699 )     1,169,395       270,251  
                               
Other (expense) income:                              
  Net Interest expense   (288,806 )     (204,980 )     (692,160 )     (506,469 )
  Other   7,311       2,696       3,298       (2,481 )
                               
Net (loss) income before taxes   (31,310 )     (257,983 )     480,533       (238,699 )
                               
Income tax expense (benefit)   52,171       (83,726 )     225,233       (85,903 )
                               
Net (loss) income   (83,481 )     (174,257 )     255,300       (152,796 )
                               
Less: Net (loss) income attributable to noncontrolling interest   (135,156 )     (51,768 )     (80,990 )     (75,730 )
                               
    Net income (loss) attributable to CTI Industries Corporation $ 51,675     $ (122,489 )   $ 336,290     $ (77,066 )
                               
Net income (loss) applicable to common shares $ 51,675     $ (122,489 )   $ 336,290     $ (77,066 )
                               
Other Comprehensive (Loss) Income                              
  Foreign currency adjustment   (78,370 )     189,488       (462,512 )     1,396  
    Comprehensive (loss) income $ (26,695 )   $ 66,999     $ (126,222 )   $ (75,670 )
                               
Basic income (loss) per common share $ 0.02     $ (0.04 )   $ 0.10     $ (0.02 )
                               
Diluted income (loss) per common share $ 0.01     $ (0.04 )   $ 0.10     $ (0.02 )
                               
Weighted average number of shares and equivalent shares of common stock outstanding:                              
  Basic   3,301,116       3,301,116       3,301,116       3,275,335  
                               
  Diluted   3,448,349       3,453,217       3,448,520       3,431,723  
                               
                               
                               
*The condensed consolidated financial statements do not include all required disclosures, refer to the Form 10K for omitted disclosures.          
           
           
                   
CTI Industries Corporation and Subsidiaries            
EBITDA                  
                   
  Three Months Ended     Six Months Ended  
  June 30,     June 30,  
  2015   2014     2015   2014  
Reconciliation from Net Income to EBITDA                          
Net Income (Loss) $ 51,675   $ (122,489 )   $ 336,290   $ (77,066 )
                           
  Depreciation and amortization   506,505     561,590       1,012,391     1,133,733  
  Interest expense   308,048     212,361       716,937     519,385  
  Income taxes (benefit)   52,171     (83,726 )     225,233     (85,903 )
                           
Total net adjustments   866,724     690,225       1,954,561     1,567,215  
                           
EBITDA $ 918,399   $ 567,736     $ 2,290,851   $ 1,490,149