CTI Industries Corporation Reports Results for Full-Year and Fourth Quarter 2011

BARRINGTON, IL--(Marketwire -03/26/12)- CTI Industries Corporation (NASDAQ: CTIB - News), a manufacturer and marketer of novelty balloons, printed and laminated films and flexible packaging and storage products, today announced its full-year results of operations for 2011, as well as for the three months ended December 31, 2011.

Year-End Results

For the year ended December 31, 2011, consolidated net sales totaled $47,171,000, compared to consolidated net sales of $47,748,000 for the year ended December 31, 2010, a decrease of 1%. For the year, CTI achieved net income of $484,000 or $0.15 per share (basic and diluted), compared to $1,828,000 or $0.61 per share (basic) and $0.60 (diluted) for 2010.

Fourth Quarter Results

Consolidated net sales for the fourth quarter of 2011 were $10,778,000 compared to consolidated net sales of $11,701,000 for the fourth quarter of 2010, a decrease of 8%. For the fourth quarter of 2011, CTI had net income of $155,000, compared to net income of $379,000 for the fourth quarter of 2010, a decrease of 59%. Earnings per share for the fourth quarter of 2011 were $0.05 (basic and diluted), compared to $0.12 (basic and diluted) for the same period of 2010.

Key Factors and Trends

2011 was another successful year for CTI. Sales were just below the highest levels recorded in CTI's 35 year history. The robust sales were driven by a 20% increase in sales of our latex novelty items. The bottom line was affected principally by two factors (i) a significant increase in raw materials costs, particularly for latex and (ii) an increase in the effective tax rate for the Company due to the depletion of a tax valuation allowance available in prior years. Absent these two factors, net income for 2011 would have been higher than the record amount recorded last year.

Gross margin levels dropped in large part to the increase in raw materials costs, particularly latex, from 22.2% in 2010 to 19.5% in 2011. Total cost of raw materials increased in 2011 to 47% of sales compared to 45% of sales in 2010. In the fourth quarter, the effect of raw materials prices began to moderate and gross margin levels increased to 21.7% for the quarter.

Fourth quarter results were also affected by sales, marketing and administrative costs associated with the development of a new product line introduced in the 2012 and the development of new customers in the U.S. and Europe.

During 2011, CTI's office and warehouse in Germany made great strides by establishing relationships with select retail chains and has begun shipments of novelty products in mainland Europe with targeted customers. During the year, CTI's Mexican subsidiary increased its production capacity and flexibility by utilizing new production equipment.

CTI generated over $800,000 in cash flow from operations and reduced long term indebtedness by over $500,000. The Company's working capital balance increased to over $5 million.

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.

 

CTI Industries Corporation and Subsidiaries
Condensed Consolidated Balance Sheets

                                       December 31, 2011  December 31, 2010
                                       -----------------  -----------------
                ASSETS
Current assets:
  Cash                                 $         338,523  $         761,874
  Accounts receivable, (less allowance
   for doubtful accounts of $70,000
   and $59,000 respectively)                   7,091,194          8,533,626
  Inventories, net                            13,338,317         10,368,037
  Net deferred income tax asset                  760,241            750,485
  Prepaid expenses and other current
   assets                                      1,772,694          1,012,067
                                       -----------------  -----------------

    Total current assets                      23,300,969         21,426,089

    Total property, plant and
     equipment, net                            8,843,909          9,659,768

    Total other assets                         1,470,644          1,775,531
                                       -----------------  -----------------

TOTAL ASSETS                           $      33,615,522  $      32,861,388
                                       =================  =================


 LIABILITIES AND STOCKHOLDERS' EQUITY


    Total current liabilities          $      17,688,994  $      17,952,042
    Total long-term liabilities, less
     current maturities                        4,171,033          3,129,685
                                       -----------------  -----------------
      Total Liabilities                       21,860,027         21,081,727

    Total CTI Industries Corporation
     stockholders' equity                     11,860,768         11,784,340

    Noncontrolling Interest                     (105,273)            (4,679)
                                       -----------------  -----------------

      Total Equity                            11,755,495         11,779,661
                                       -----------------  -----------------

TOTAL LIABILITIES & STOCKHOLDERS'
 EQUITY                                $      33,615,522  $      32,861,388
                                       =================  =================



CTI Industries Corporation and Subsidiaries
Condensed Consolidated Statements of Operations

                                                  Three months ended
                      Year ended December 31,        December 31,
                         2011         2010         2011         2010

                     -----------  -----------  -----------  -----------
Net sales            $47,171,498  $47,747,611  $10,778,107  $11,700,684
Cost of sales         37,965,245   37,145,439    8,381,984    9,265,322
                     -----------  -----------  -----------  -----------
    Gross profit       9,206,253   10,602,172    2,396,123    2,435,362

Operating expenses:
  General and
   administrative      5,278,507    4,921,457    1,303,511    1,113,939
  Selling                910,882      914,698      256,350      243,369
  Advertising and
   marketing           1,579,162    1,719,509      470,230      389,985
                     -----------  -----------  -----------  -----------

    Total operating
     expenses          7,768,551    7,555,664    2,030,091    1,747,293
                     -----------  -----------  -----------  -----------

Income from
 operations            1,437,702    3,046,508      366,032      688,069

Other (expense)
 income:
  Interest expense,
   net                  (773,111)    (919,170)    (171,269)    (219,363)
  Other                   38,169      (31,382)       3,272        5,966
                     -----------  -----------  -----------  -----------

    Total other
     expense            (734,942)    (950,552)    (167,997)    (213,397)
                     -----------  -----------  -----------  -----------

Income before income
 taxes and
 noncontrolling
 interest                702,760    2,095,956      198,035      474,672

Income tax expense       319,444      342,688       65,636      134,426
                     -----------  -----------  -----------  -----------

Net Income               383,316    1,753,268      132,399      340,246

Less: Net loss
 attributable to
 noncontrolling
 interest               (100,594)     (74,250)     (22,928)     (38,334)
                     -----------  -----------  -----------  -----------

    Net income
     attributable to
     CTI Industries
     Corporation     $   483,910  $ 1,827,518  $   155,327  $   378,580
                     ===========  ===========  ===========  ===========

Income applicable to
 common shares       $   483,910  $ 1,827,518  $   155,327  $   378,580
                     ===========  ===========  ===========  ===========

Basic income per
 common share        $      0.15  $      0.61  $      0.05  $      0.12
                     ===========  ===========  ===========  ===========

Diluted income per
 common share        $      0.15  $      0.60  $      0.05  $      0.12
                     ===========  ===========  ===========  ===========

Weighted average
 number of shares
 and equivalent
 shares of common
 stock outstanding:
  Basic                3,138,958    2,981,188    3,141,261    3,130,862
                     ===========  ===========  ===========  ===========

  Diluted              3,181,102    3,039,442    3,180,143    3,205,154
                     ===========  ===========  ===========  ===========