Yunhong CTI Ltd. Reports Fourth Quarter and Full Year 2022 Results

About this update from Yunhong Green Cti Ltd.

Financial Highlights (unaudited) Net sales in the fourth quarter were $5.6 million , as compared to $6.6 million in the prior year period Full year 2022 net sales were $18.0 million , as compared to $24.1 million for the comparable period of 2021 Lower revenues in 2022 primarily attributable to high price of helium, which negatively impacted foil-balloon sales Helium prices declined during the second half of 2022 and in early 2023 Despite 25% lower revenue for the full year, gross margins improved to 17.4% in 2022, compared to 15.6% in 2021 Increased sales of products which do not require helium, such as our candy and balloon gift combinations, mitigated the impact of elevated helium prices during 2022 and led to a significant sequential revenue increase from Q3 to Q4 2022 Net loss improved to $0.01 per share for the fourth quarter of 2022 and $0.22 for the full year, as compared to a loss of $2.01 per share in 2021 Adjusted EBITDA was $0.1 million for 2022, compared to $1.0 million in the prior year comparable period (as noted below, the latter excludes a one-time $3 million gain on the sale of a building and a $10 million non-cash loss related to the sale of Flexo Universal) Business Highlights Fourth quarter sales, led by candy and balloon gift items, more than doubled third quarter sales in 2022 Despite $1 million in higher sales during the fourth quarter of 2021 ( $6.6 million ), gross margin in the fourth quarter 2022 was $1.1 million (18.9%), vs. $0.8 million (12.6%) in the same period of 2021 With continued moderation in helium pricing in 2023 and improved customer demand for foil balloons, the Company expects to realize improving profitability due to the structural, operating and balance sheet improvements made to its business over the past two years. LAKE BARRINGTON, IL / ACCESSWIRE / February 22, 2023 / 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 fourth quarter and year ended December 31, 2022 . Management will host a conference call to discuss these results and other matters on Thursday, February 23, 2023 , at 9:00 a.m. Central Time / 10:00 a.m. Eastern Time . Management Commentary "The fourth quarter highlighted what our business transformation has brought about, despite helium prices dropping much more slowly than we would like," said Frank Cesario , Chief Executive Officer, Yunhong CTI . "Products unrelated to helium did well in the fourth quarter, which mitigated substantially reduced revenue in foil balloons. Overall revenue in the fourth quarter of 2022 more than doubled sequentially from the third quarter; and perhaps most telling was our ability to deliver a higher gross margin than the fourth quarter of 2021, in terms of both dollars and percentage, despite $1 million in lower overall revenue. For the year the top line was down $6 million , more than 100% of which was attributable to reduced sales of helium filled foil balloons, and yet gross margin percentage increased from 15.6% to 17.4%. Our team quickly adjusted to challenging market circumstances and identified other opportunities with customers to help navigate a difficult sales environment. The ability to work collaboratively with our customers, supported by our refocused business and improved balance sheet, positions us well as we move through 2023." Commenting further, Cesario stated, "Our customer order book is improving. Helium prices continue to decline, which is good for us and our customers. The return of Russia to the market as an expanding helium supplier is difficult to predict and so we've prepared our business to operate successfully in this pricing environment, with a low degree of leverage that we believe affords better flexibility and overall return. With our core market showing improvement, we are optimistic heading into 2023. "Finally, the compostable material solutions that Yunhong Biotechnology has been creating are advancing through the development cycle. We have prototyped materials and are working with third parties on compostable alternatives to plastic. It's too early to say we have answers, but we know more than we did a year ago, and believe the possibilities are significant. This opportunity confirms our belief that there is the potential for meaningful value creation by partnering with the Yunhong group, and others, on these emerging technologies." 2022 Results (unaudited) For the periods ended December 31, 2022 and 2021, net sales by product category were as follows: Twelve Months Ended December 31, 2022 December 31, 2021 $ % of $ % of (000) (000) Product Category Omitted Net Sales Omitted Net Sales Foil Balloons 10,858 60 % 18,235 76 % Film Products 2,036 11 % 2,386 10 % Other 5,154 29 % 3,464 14 % Total 18,048 100 % 24,086 100 % 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. 2022 and 2021 Summary Results (Non-GAAP; unaudited) 2022 Year 2021 Year Net Income (1,467,000 ) (7,728,000 ) Addback: Disposal on Flexo Universal 10,200,000 Addback: Interest 450,000 564,000 Addback: Taxes Addback Lender fees 471,000 694,000 Addback: Equity comp 164,000 - Addback: Depr/Amort 448,000 488,000 Addback: Gain on sale - (3,357,000 ) Adj EBITDA 66,000 861,000 2022 Results Conference Call / Webcast Information Yunhong CTI will host its conference call on Thursday, February 23 , 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: [email protected] + 1-847-382-1000 Investor Relations Contact: TraDigital IR Kevin McGrath +1-646-418-7002 [email protected] Yunhong CTI LTD Consolidated Condensed Balance Sheets (unaudited) December 31, 2022 December 31, 2021 Cash and equivalents 146,000 66,000 Accounts receivable 1,618,000 3,443,000 Inventories 8,325,000 7,876,000 Other current assets 389,000 1,089,000 Total current assets 10,478,000 12,474,000 Property, Plant and Equipment 21,256,000 21,094,000 Less: accumulated depreciation (20,334,000 ) (19,951,000 ) Property, Plant and Equipment, net 922,000 1,143,000 Noncurrent assets 3,882,000 3,665,000 Total assets 15,282,000 17,282,000 Trade payables 1,313,000 2,132,000 Line of credit 2,878,000 5,003,000 Notes payable - current 289,000 1,919,000 Other current liabilities 2,998,000 1,317,000 Current liabilities 7,478,000 10,371,000 Notes payable - noncurrent 427,000 - Notes payable - officer; subordinated 1,267,000 - Operating lease liabilities 3,364,000 2,860,000 Noncurrent liabilities 5,058,000 2,860,000 Total liabilities 12,536,000 13,231,000 Shareholders equity 2,746,000 4,051,000 Total liabilities and equity 15,282,000 17,282,000 Yunhong CTI LTD Summarized Condensed Consolidated Statement of Operations (unaudited) Three months ended December 31 , Twelve months ended December 31 , 2022 2021 2022 2021 Net sales 5,570,000 6,591,000 18,048,000 24,086,000 Cost of sales 4,516,000 5,763,000 14,910,000 20,322,000 Gross profit 1,054,000 828,000 3,138,000 3,764,000 Operating expenses 1,092,000 1,190,000 4,258,000 4,270,000 Loss from operations (38,000 ) (362,000 ) (1,120,000 ) (506,000 ) Interest expense 125,000 127,000 450,000 564,000 Other (income)/expense (85,000 ) 9,936,000 (103,000 ) 6,658,000 Net loss before tax (78,000 ) (10,425,000 ) (1,467,000 ) (7,728,000 ) Income tax Net loss (continuing ops) (78,000 ) (10,425,000 ) (1,467,000 ) (7,728,000 ) Gain from discontinued operations - 1,406,000 174,000 Minority interest - (718,000 ) Foreign currency adjustment - 6,273,000 5,885,000 Comprehensive Loss (78,000 ) (2,746,000 ) (1,467,000 ) (1,669,000 ) Preferred stock deemed dividends (34,000 ) (1,528,000 ) (584,000 ) (3,573,000 ) Net loss attributable to Yunhong CTI Shareholders (112,000 ) (10,547,000 ) (2,051,000 ) (11,845,000 ) Fully diluted earnings per share $ (0.01 ) $ (1.79 ) $ (0.22 ) $ (2.01 ) SOURCE: Yunhong CTI Ltd. 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