Stephen Merrick
大家早上好，感谢各位参加本次电话会议。我是Stephen Merrick，CTI总裁，我将与我们的首席财务官Tim Patterson以及公司董事兼投资者关系总监Stan Brown一起为大家呈现我们的业绩报告。报告结束后，我们将留出时间供大家提问。
今年我们开局良好，很高兴报告第一季度取得了强劲的净利润业绩。本季度我们实现净利润285,000美元，相当于每股收益0.09美元，完全稀释后每股收益0.08美元。这比去年第一季度45,000美元、每股0.01美元的收益高出六倍多。
这些显著改善的业绩在我们的财务报表中以多种方式体现，最重要的可能是毛利率和毛利水平的提升。去年第一季度，我们的毛利率为23.4%。今年第一季度，毛利率跃升至26.6%。这一增长直接反映在我们的毛利水平上——在收入基本与去年第一季度持平的情况下，今年我们实现了近400万美元的毛利，而去年第一季度毛利约为350万美元。
毛利率的提升有几个原因：首先，在我们的乳胶气球业务中，由于原材料乳胶成本下降，过去一年利润率有所提高；其次，总体而言，随着薄膜成本和原材料乳胶成本的改善，我们的原材料成本整体下降；第三，我们正在从利润率更高的产品中获得更多收入，包括部分真空密封系列产品、新的Candy Loons产品线以及家用容器产品。
财务业绩的整体改善也体现在其他重要指标上。今年第一季度营业利润为919,000美元，而去年第一季度为326,000美元。此外，本季度我们在收益报告中还报告了EBITDA（息税折旧摊销前利润）。需要说明的是，这不是GAAP会计准则指标，但我们在内部使用它来衡量核心经营业绩，因此我们在收益报告中包含了这一指标，并提供了与GAAP数据的调节表。今年第一季度EBITDA为1,372,000美元，而去年为920,000美元，这显示了我们今年迄今在经营业绩方面取得的显著改善。
我还想指出，我们业绩改善的一个因素是我们实际上比去年第一季度减少了超过100,000美元的运营费用，使运营费用占销售额的比例从去年第一季度的21.2%降至今年第一季度的20.5%。
利息仍然是我们收益方程中的重要因素。今年第一季度总利息支出为409,000美元，而去年第一季度为307,000美元。正如我们报告的那样，这部分利息支出的很大一部分与我们500万美元的夹层贷款利息以及与该贷款相关的债务折价费用有关。
此外，我想指出汇率变动对我们的业绩产生了一定影响。例如在墨西哥，我们的许多销售以墨西哥比索计价，而比索对美元贬值，因此墨西哥销售的美元价值有所下降。同时，随着欧元、英镑和比索对美元贬值，我们美国公司向海外子公司销售产品的当地货币成本增加，而这些子公司销售额的美元价值下降。
现在让我谈谈各产品线的销售业绩。总体而言，第一季度销售额保持强劲，总额达到14,975,000美元，而去年第一季度净销售额为14,920,000美元。
我们的真空密封系列收入持续改善，第一季度达到2,810,000美元，而去年第一季度为2,781,000美元。这些销售反映了本季度拉链袋销售额的小幅下降，但我们品牌真空密封机和密封袋系列持续稳定增长，从去年第一季度的1,975,000美元增至今年第一季度的210万美元。该产品线的销售额往往在年内逐步增长，第三和第四季度最为强劲。我们继续为该产品线争取销售渠道，在美国最大的零售连锁店以及其他连锁店和在线零售商中取得了良好的销售业绩，并且正在寻求更多的连锁店渠道。
在我们的铝箔气球产品线中，第一季度净销售额从去年的7,273,000美元小幅下降至今年第一季度的7,094,000美元。然而，这是汇率变动产生影响的一个领域，因为英国、欧洲和墨西哥铝箔气球销售的美元收入价值下降。在美国，包括对我们最大客户的净销售额在内的销售额实际上在本季度有所增长。总体而言，我们的铝箔气球产品线销售保持强劲，我们继续看到单位销售额的增长，尽管受到一些汇率影响。今年，我们推出了几款新的气球设计，包括成功的黑板绘图产品，并将在年内推出更多设计。
关于乳胶气球销售，与去年相比，本季度净销售额的美元价值有所下降，但大部分下降与比索对美元贬值有关。乳胶产品的单位销售额和毛利率保持强劲，我们继续在所有市场（包括墨西哥、美国、英国和欧洲）开发该产品线的新销售。
本季度，我们在新产品线中实现了良好的收入增长，包括Candyloons和Candy Blossoms以及我们的家用容器产品，这两者都享有较高的利润率。这些产品线及一些配件产品的收入在今年第一季度增至1,968,000美元，而去年同期为1,139,000美元。我们预计这两条产品线将继续贡献越来越多的收入和利润。
我们的财务状况良好。今年第一季度，我们产生了1,586,000美元的正向经营现金流。截至今年3月31日，我们的营运资本余额接近12,000,000美元，现金及信贷额度可用资金超过100万美元。
展望今年，我们既关注收入增长，也关注盈利能力提升。我们相信，在真空密封系统产品线以及新颖铝箔气球和乳胶产品线方面，我们都有增长机会。我们有许多潜在客户，并正在积极在美国、英国、墨西哥、拉丁美洲和欧洲为这些产品线寻找新客户和机会。我们预计将继续看到较新产品线的增长，包括Candy Blossoms、Candyloons和我们的家用容器产品线。
在努力增加收入的同时，我们同样重视保持和提高盈利能力。目前，我们没有为开发或推出新产品线规划任何重大的新支出，并且我们正在努力将运营费用控制在维持盈利能力的合理水平。
我们的报告到此结束。接线员，现在可以协助我们处理参会者的问题吗？
Stephen Merrick
Good morning, everyone, and thank you for participating in the call. My name is Stephen Merrick. I am the President of CTI and I will be presenting our report with Tim Patterson, our Chief Financial Officer; and Stan Brown, the Director of our Company and Director of Investor Relations. At the conclusion of our report, there will be an opportunity for you to ask any questions you may have. We are off to a good start this year and we are pleased to report strong bottomline results for the first quarter. For the quarter we had net income of $285,000, which represents earnings of $0.09 per share, $0.08 fully diluted. This is more than six times the earnings we generated in the first quarter last year which is $45,000, $0.01 per share. These much improved results are reflected in our financials in a number of different ways, probably the most significant is the improvement in our gross margin rate and our gross margins. In the first quarter last year, our gross margin rate was 23.4%. In the first quarter this year, the gross margin rate jumped to 26.6%. This increase is directly reflected in our gross profit levels, on revenues which were essentially equal the first quarter last year, we generated almost $4 million in gross profit this year, compared to about $3.5 million in gross profit in the first quarter last year. This increase in margins has come about for several reasons. First, in our latex balloon business margins have increased over the past year due to the decline in the cost of raw latex. Second, in general, our cost of raw materials has declined overall as we have seen some improvement in film costs, as well as in raw latex. Third, we are generating more revenue from products, which have a higher margin rate, including some of our vacuum sealing line of products, our new Candy Loons product line and our household container products. The general improvement in financial result is also reflected in some other significant measures. Income from operations in the first quarter this year was $919,000, compared to $326,000 for the first quarter last year. Also this quarter, we reported EBITDA, earnings before interest, taxes, depreciation and amortization, in our earnings release. I want to note that this is not a GAAP accounting measure, but we do use it internally to measure our core operating results, so we have included it in the earnings release with a reconciliation to our GAAP numbers. For the first quarter this year, EBITDA was $1,372,000, compared to $920,000 last year, showing the significant improvement in operating results we have achieved so far this year. I do also want to note that a factor in our improved results is that we have actually reduced our operating expenses compared to the first quarter last year by over $100,000, reducing operating expenses as a percentage of sales from 21.2% in the first quarter last year to 20.5% in the first quarter this year. Interest remains a significant factor in our earnings equation. In the first quarter this year total interest expense was $409,000 compared to $307,000 in the first quarter last year. As we have reported a significant part of this interest expense relates to the interest we pay on our $5 million mezzanine loan and on the debt discount charge associated with that loan. Also I do want to note the changes in currency exchange rates are having some impact on our results. In Mexico, for example, many of our sales are denominated in Mexican pesos, which have declined in value against the dollar. So the dollar value of sales in Mexico have declined. Also with the decline in the value of the euro, the pound and the peso against the dollar, the cost to our foreign subsidiaries in their local currencies of product we sell to them from the U.S. has increased and the dollar value of their sales has declined. Let me turn now to our sales results in product lines. In general, sales remained strong in the first quarter reaching a total of $14,975,000 compared to net sales of $14,920,000 in the first quarter last year. Revenues in our vacuum sealing line continue to improve, reaching to $2,810,000 in the first quarter compared to $2,781,000 in the first quarter last year. These sales reflect a small decline in the sale of zippered pouches for the quarter, but a continued steady increase in our branded line of vacuum sealing machines and pouches from $1,975,000 on the first quarter last year to $2.1 million in the first quarter this year. Sales in this line tend to increase over the course of the year with the third and fourth quarters being the strongest. We continue to have placement for this product line and good sales results in the largest U.S. retail chain as well as in other chains and online retailers. And we are pursuing additional chain store placement to the line. In our foil balloon line, we saw a modest decrease in net sales for the first quarter from $7,273,000 last year to $7,094,000 in the first quarter this year. However, this is a place in which currency exchange rate have had their effect as the dollar value of revenues for the sale of foil balloons in the U.K., Europe and Mexico declined. In the U.S., net sales including net sales to our largest customer were actually up for the quarter. In general, sales in our foil balloon line remained strong and we continue to see increases in unit sales, although we are experiencing some currency exchange rate impact. This year, we have introduced several new balloon designs including a successful blackboard drawing product and will be introducing additional designs during the year. With respect to latex balloons sales, we experienced some decline in the dollar value of net sales in the quarter compared to last year, but for the most part that decline relates to the decline in value of the peso against the dollar. Unit sales and gross margins on latex products remained strong and we continue to develop new sales in this line in all of our markets, including Mexico, the U.S., the U.K. and Europe. During the quarter, we experienced good revenue growth in new lines of products, including Candyloons and Candy Blossoms and our household container products, both of which enjoy high margins. Revenues on these product lines and some accessory products increased to $1,968,000 for the first quarter this year compared to $1,139,000 in the same period last year. We do expect both of these lines to continue to contribute increasing levels of revenue and margin. Our financial condition is good. During the first quarter, this year we generated positive cash flow from operations in the amount of $1,586,000. As of March 31 this year, we had working capital balance of almost $12,000,000 and we had over $1 million in cash and availability on our line of credit. As we go forward this year, we are focused both on growing our revenues and our profitability. We believe we have opportunities for growth in our vacuum sealing system product line and in our novelty foil balloon and latex lines. We have a number of prospects and are actively pursuing new customers and opportunities in those lines in United States, the U.K., Mexico, Latin America and Europe. And we expect to continue to see growth in our newer lines, including Candy Blossoms and Candyloons and our household container product line. While we are working to increase revenues, we are as much focused on maintaining and increasing profitability. At this point, we do not have any significant new expenses planned for the development or introduction of new product lines. And we are working to manage our operating expenses to levels consistent with maintaining profitability. That concludes our report. Operator, may we have your assistance with respect to questions for calls from our participants?
