Third Quarter and Nine-Month 2022 Financial Highlights
- Net sales of $2.3 million, as compared to $5.2 million in the prior year period, while for the nine-months of 2022 net sales were $12.5 million, as compared to $17.5 million for the comparable period of 2021
- Lower revenues for three-and nine-month period in 2022 primarily attributable to high price of helium
- Helium pricing has moderated downward during the third quarter although it remains a challenge on everyday order volumes
- Net loss improved to $0.12 per share for the third quarter of 2022, as compared to a loss of $0.14 per share in the prior year comparable period
- Adjusted EBITDA was negative $0.6 million for the third quarter of 2022, compared to negative $0.2 million in the prior year comparable period
- Adjusted EBITDA for the nine-months of 2022 was negative $0.2 million compared to negative $0.6 million in the prior year comparable period
Business Highlights
- The fourth quarter traditionally has been strong as the Company ships product for its largest holiday, Valentine's Day, and its Candy Blossoms product which are immune from helium pricing
- Gross margins are comparable despite the drop in revenue from the prior year, highlighting cost reduction steps that have been implemented
2022 Financial Guidance
- While improving from three months ago, helium prices remain elevated which has led to lower-than-expected foil balloon sales, the Company's top selling product line. The Company therefore can no longer support a full year expectation of $1.2 million of Adjusted EBITDA.
LAKE BARRINGTON, IL / ACCESSWIRE / November 15, 2022 / Yunhong CTI Ltd. (NASDAQ:CTIB) ("Yunhong CTI" or the "Company"), a leading manufacturer of custom film products, foil and latex novelty balloons, and flexible packaging products, today announced its financial results for the third quarter ended September 30, 2022. Management will host a conference call to discuss these results and other matters on Thursday, November 16, 2022, at 9:00 a.m. Central Time / 10:00 a.m. Eastern Time.
Management Commentary
"Without seasonal candy blossom sales, our third-quarter performance highlighted the impact of the elevated market price for helium on our foil balloon business," said Frank Cesario, Chief Executive Officer, Yunhong CTI. "As we discussed previously, our strongest product area is foil balloons, and most are filled with helium rather than air. The cost of helium increased substantially in early 2022, which negatively impacted demand from our customers. The price of helium continues to come down but at a rate slower than any of us would like, which has been a significant drag on our performance."
Commenting further on Q3 2022 financial results, Cesario stated, "Last year saw the benefit of a mature pandemic response positively impacting balloon sales. This year featured the helium issue. We were able to navigate that challenge because we streamlined our entity and no longer had to support the same level of infrastructure. As helium prices continue to normalize, we expect to see the benefits of what we have accomplished operationally. As it is, we were able to hold a slightly stronger adjusted EBITDA on $5 million less in revenue. As revenue improves, we expect to see significant benefits.
"Our fourth quarter is traditionally our strongest as we ship for Valentine's Day, the top holiday in our industry. We ship 6-8 weeks prior to holidays, and have inventories for this year's surge in shipments packing our warehouse. We expect the next several weeks should be strong in terms of product shipments."
Third Quarter 2022 Results
For the three-month period ended September 30, 2022 and 2021, net sales by product category were as follows:
| Three Months Ended | ||||||||||||||||||||||||
| September 30, 2022 | September 30, 2021 | |||||||||||||||||||||||
| % of $ | % of $ | |||||||||||||||||||||||
Product Category |
(000)
Omitted
|
Net Sales |
(000)
Omitted
|
Net Sales | Variance |
%
change
|
||||||||||||||||||
Foil Balloons |
1,612 | 71 | % | 4,295 | 83 | % | (2,683 | ) | (62 | )% | ||||||||||||||
Film Products |
537 | 24 | % | 689 | 13 | % | (152 | ) | (22 | )% | ||||||||||||||
Other |
114 | 5 | % | 200 | 4 | % | (86 | ) | (43 | )% | ||||||||||||||
Total |
2,263 | 100 | % | 5,184 | 100 | % | (2,921 | ) | (56 | )% | ||||||||||||||
For the nine-month periods ended September 30, 2022 and 2021, net sales were $12,478,000 and $17,495,000, respectively.
For the nine-month period ended September 30, 2022 and 2021, net sales by product category were as follows:
| September 30, 2022 | September 30, 2021 | |||||||||||||||||||||||
| % of $ | % of $ | |||||||||||||||||||||||
Product Category |
(000)
Omitted
|
Net Sales |
(000)
Omitted
|
Net Sales | Variance |
%
change
|
||||||||||||||||||
Foil Balloons |
8,118 | 65 | % | 13,793 | 79 | % | (5,675 | ) | (41 | )% | ||||||||||||||
Film Products |
1,900 | 15 | % | 1,500 | 9 | % | 400 | 27 | % | |||||||||||||||
Other |
2,460 | 20 | % | 2,202 | 12 | % | 258 | 12 | % | |||||||||||||||
Total |
12,478 | 100 | % | 17,495 | 100 | % | (5,017 | ) | (29 | )% | ||||||||||||||
Non-GAAP Results
To provide additional information regarding the Company's results, we have disclosed in this press release a Non-GAAP measure that combines EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) as well as results excluding deconsolidation charges and certain non-recurring charges and benefits. 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, the 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 table. Similarly, management and the board of directors look at the results of the entity going forward, without the impact of deconsolidation costs related to the disposal of subsidiaries and related non-cash charges, which can be significant. Again, this pro forma result is not a replacement for the Company's financial results as reported under GAAP. It simply provides another viewpoint that may otherwise be obscured by a comprehensive presentation. A reconciliation between this pro forma result and our financial results as reported under GAAP is also presented.
Third Quarter and Year to Date 2022 and 2021 Summary Results (Non-GAAP; unaudited)
| 2022 Q3 | 2021 Q3 | 2022 YTD | 2021 YTD | |||||||||||||
Net Income |
(969,000 | ) | (638,000 | ) | (1,389,000 | ) | 1,465,000 | |||||||||
Addback: Interest |
121,000 | 89,000 | 325,000 | 437,000 | ||||||||||||
Addback: Taxes |
||||||||||||||||
Addback Lender fees |
116,000 | 250,000 | 390,000 | 494,000 | ||||||||||||
Addback: Equity comp |
61,000 | - | 155,000 | - | ||||||||||||
Addback: Depr/Amort |
118,000 | 118,000 | 314,000 | 370,000 | ||||||||||||
Addback: Gain on sale |
- | - | - | (3,357,000 | ) | |||||||||||
Adj EBITDA |
(553,000 | ) | (181,000 | ) | (205,000 | ) | (591,000 | ) | ||||||||
Third Quarter 2022 Results Conference Call / Webcast Information
Yunhong CTI will host its conference call on Wednesday, November 16th at 9:00 a.m. Central Time / 10:00 a.m. Eastern Time.
The live webcast will be available at https://www.webcaster4.com/Webcast/Page/2863/46944. For those planning to participate in the call, please dial +1-888-506-0062 for domestic calls, or +1-973-528-0011 for international calls. The Conference ID # is 184864.
A replay of the conference call will be available for two weeks following the call at +1- 877-481-4010 (for domestic calls) or +1-919-882-2331 (for international calls), replay conference ID #46944.
About Yunhong CTI Ltd.
Yunhong CTI Ltd. is one of the leading manufacturers and marketers of foil balloons and produces laminated and printed films for commercial uses. Yunhong CTI also distributes Candy Blossoms and other gift items and markets its products throughout the United States and in several other countries. For more information about our business, visit our corporate website at www.ctiindustries.com.
Forward-Looking Statements
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. We cannot anticipate the duration of increased tariffs between the United States and other countries, particularly China. We do not know whether we will be successful in passing such additional costs through to customers. The COVID-19 pandemic has had a negative impact on our operations, and we do not yet know the depth or duration of that disruption. The ultimate impact of inflation and supply chain pressures, as well as potential material limitations related to responses to Russia's invasion of Ukraine, including helium availability and cost, are unknown at this time and might have a material impact on our business and financial performance. 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.
Investor Relations Contact:
Company Contact:
info@ctiindustries.com
+ 1 - 847-382-1000
Investor Relations Contact:
TraDigital IR
Kevin McGrath
+1-646-418-7002
kevin@tradigitalir.com
Yunhong CTI LTD
Consolidated Condensed Balance Sheets
| (unaudited) | ||||||||
| September 30, 2022 | December 31, 2021 | |||||||
Cash and equivalents |
101,000 | 66,000 | ||||||
Accounts receivable |
1,411,000 | 3,443,000 | ||||||
Inventories |
9,162,000 | 7,876,000 | ||||||
Other current assets |
663,000 | 1,089,000 | ||||||
Total current assets |
11,337,000 | 12,474,000 | ||||||
Property, Plant and Equipment |
21,214,000 | 21,093,000 | ||||||
Less: accumulated depreciation |
(20,242,000 | ) | (19,951,000 | ) | ||||
Property, Plant and Equipment, net |
972,000 | 1,142,000 | ||||||
Noncurrent assets |
4,005,000 | 3,666,000 | ||||||
Total assets |
16,314,000 | 17,282,000 | ||||||
Trade payables |
2,078,000 | 2,132,000 | ||||||
Line of credit |
3,972,000 | 5,003,000 | ||||||
Notes payable - current |
266,000 | 1,919,000 | ||||||
Other current liabilities |
1,973,000 | 1,317,000 | ||||||
Current liabilities |
8,289,000 | 10,371,000 | ||||||
Notes payable - noncurrent |
462,000 | - | ||||||
Notes payable - officer; subordinated |
1,252,000 | - | ||||||
Operating lease liabilities |
3,496,000 | 2,860,000 | ||||||
Noncurrent liabilities |
5,210,000 | 2,860,000 | ||||||
Total liabilities |
13,499,000 | 13,231,000 | ||||||
Shareholders equity |
2,815,000 | 4,051,000 | ||||||
Total liabilities and equity |
16,314,000 | 17,282,000 | ||||||
Yunhong CTI LTD
Summarized Condensed Consolidated Statement of Operations
(unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Net sales |
2,263,000 | 5,184,000 | 12,478,000 | 17,495,000 | ||||||||||||
Cost of sales |
2,021,000 | 4,528,000 | 10,394,000 | 14,559,000 | ||||||||||||
Gross profit |
242,000 | 656,000 | 2,084,000 | 2,936,000 | ||||||||||||
Gain on Building Sale |
- | - | - | (3,357,000 | ) | |||||||||||
Operating expenses |
999,000 | 937,000 | 3,166,000 | 3,080,000 | ||||||||||||
Loss/(income) from operations |
(757,000 | ) | (281,000 | ) | (1,082,000 | ) | 3,213,000 | |||||||||
Interest expense |
120,000 | 89,000 | 325,000 | 437,000 | ||||||||||||
Other (income)/expense |
92,000 | (148,000 | ) | (18,000 | ) | 79,000 | ||||||||||
Net (loss) / income before tax |
(969,000 | ) | (222,000 | ) | (1,389,000 | ) | 2,697,000 | |||||||||
Income tax |
||||||||||||||||
Net (loss)/income (continuing ops) |
(969,000 | ) | (222,000 | ) | (1,389,000 | ) | 2,697,000 | |||||||||
Loss from discontinued operations |
- | (416,000 | ) | (1,232,000 | ) | |||||||||||
Minority interest |
- | (5,000 | ) | 738,000 | ||||||||||||
Foreign currency adjustment |
- | 344,000 | 405,000 | |||||||||||||
Comprehensive Loss |
(969,000 | ) | (982,000 | ) | (1,389,000 | ) | 1,060,000 | |||||||||
Preferred stock deemed dividends |
(146,000 | ) | (168,000 | ) | (550,000 | ) | (2,045,000 | ) | ||||||||
Net (loss)/inc attributable to |
||||||||||||||||
Yunhong CTI Shareholders |
(1,115,000 | ) | (801,000 | ) | (1,939,000 | ) | (1,318,000 | ) | ||||||||
Fully diluted earnings per share |
$ | (0.12 | ) | $ | (0.14 | ) | $ | (0.28 | ) | $ | (0.22 | ) | ||||
SOURCE: Yunhong CTI Ltd.
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