Stephen Merrick
大家早上好，感谢各位参加我们的电话会议。我是Stephen Merrick，CTI的总裁。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一起汇报我们的业绩。报告结束后，我们将留出时间供大家提问。总体而言，我们第二季度的业绩相当不错，与过去几年的第二季度业绩基本一致。随着今年向前推进，我们预计这将成为公司历史上最强劲的一年。正如最近报道的，我们已经收到了168,000台品牌真空密封机产品及相关薄膜产品的采购订单，将于11月交付。这些订单的总采购订单价值约为790万美元。这些订单是在我们今年第三和第四季度所有产品线的其他预期订单之外的，因此我们预计今年公司总收入将较2015年有大幅增长。
通常，第二季度是我们一年中最弱的季度。然而，与去年第二季度相比，本季度我们的销售额总体增长了约4%。我们在几个主要产品线都实现了强劲增长，包括品牌真空密封产品线、家居整理产品线、铝箔气球和商用薄膜产品。然而，我们的乳胶气球产品线表现疲软，这影响了我们本季度的净销售额和盈利能力。我将详细介绍各个领域的情况，但首先让我总结一下本季度和上半年的业绩。
今年第二季度，我们的净收入为14,151,000美元，而去年第二季度的净收入为13,621,000美元，增长了3.9%。上半年期间，我们的净收入为29,355,000美元，而2015年上半年的净收入为28,596,000美元，增长了2.7%。本季度，我们的营业净收入为202,000美元，而去年第二季度的营业净收入为250,000美元。上半年期间，我们的营业利润为849,000美元，而去年同期的营业利润为1,169,000美元。
今年第二季度，EBITDA为745,000美元，而去年第二季度的EBITDA为918,000美元。然而，正如一段时间以来的情况，我们的净收入受到这些期间必须记录的利息及相关费用的显著影响，其中大部分与我们未偿还的夹层贷款有关。今年第二季度，我们的净利息支出为396,000美元，而去年第二季度的净利息支出为289,000美元。今年上半年，净利息支出为943,000美元，而去年同期的净利息支出为692,000美元。我们的净利息支出部分受到股价变动的影响，这导致我们必须记录的认股权证相关费用增加。因此，随着今年股价上涨，我们必须记录的认股权证相关利息支出也相应增加。
正如我们报告的那样，尽管我们的营业净利润为正，但这些大额利息支出对我们报告的净收入产生了重大影响。因此，今年第二季度，我们报告净亏损83,000美元，每股亏损0.02美元，而去年第二季度净利润为52,000美元。上半年期间，我们净亏损76,000美元，而去年同期净利润为336,000美元。
现在让我谈谈各个产品线领域的具体情况。首先，关于真空密封产品，我们在这个产品线上持续保持稳定和积极的增长。今年第二季度，我们的品牌真空密封产品销售额较去年第二季度增长15%，达到2,435,000美元，而去年为2,119,000美元。上半年期间，该产品线的销售额增长10%，从去年的4,249,000美元增至4,646,000美元。我们预计该产品线将继续强劲增长，当然，我们将在第四季度获得额外的790万美元收入。我们相信，这个主要第四季度销售产品线的稳定增长表明，我们已在这个重要市场中确立了可信赖的主要参与者地位。
我们较新的家居整理产品线继续快速增长。今年第二季度，该产品线的销售额较去年同期增长76%，从去年的850,000美元增至1,496,000美元。今年上半年，该产品线的销售额较去年同期增长88%，从1,568,000美元增至2,954,000美元。该产品线也是我们毛利率提高的主要贡献者，因为该产品线的销售通常具有较高的利润率。我们完全预计这项业务的快速扩张将继续，并且我们的家居整理产品业务将成为我们增长和未来成功的主要来源。
铝箔气球产品的销售额今年继续以良好速度增长。上半年，铝箔气球销售额增长7.5%，从去年同期的13,356,000美元增至14,362,000美元。薄膜销售额今年也表现良好。上半年，商用薄膜产品销售额增长26%，从去年的1,880,000美元增至2,370,000美元。
另一方面，我们的乳胶产品线今年迄今表现不佳，该产品线的业绩对第二季度和上半年的收入和盈利能力都产生了负面影响。第二季度乳胶气球销售额为2,263,000美元，而2015年销售额为2,288,000美元。上半年，乳胶产品销售额为4,768,000美元，而去年为5,464,000美元。该产品线今年迄今的盈利能力较去年显著下降。
有几个因素影响了这些结果。首先，我们的大部分乳胶气球销售以墨西哥比索计价。过去一年，比索对美元的价值大幅下跌。仅今年上半年，这种下跌就影响了我们在墨西哥销售的美元价值，高达900,000美元。其次，我们的墨西哥子公司以美元购买其主要原材料——生乳胶，但大部分产品以比索销售。我们认为这对今年上半年的利润率和盈利能力产生了约80,000美元的实质性影响。此外，我们在今年上半年一直在墨西哥建造新的生产机器，并为此付出了大量成本。该机器预计将提高至少30%的产能，但在今年上半年尚未投产。
我们很高兴地报告，现在这台机器已全面投产，预计将为今年下半年的运营贡献可观的收入和利润，并且我们相信与比索相关的汇率影响可能会缓和。因此，展望未来，我们确实预计乳胶产品线将按照我们的预期为销售和利润做出贡献。
现在让我花几分钟谈谈我们的财务状况和融资情况。正如您可能想象的那样，为今年晚些时候的大订单做准备的成本，以及为我们预计将非常强劲的第四季度准备原材料和其他准备工作的所有成本，对我们的财务资源提出了重大需求。为了满足这些新的大额承诺，我们已采取措施增强我们的资源。
7月，我们进行了私募融资，以每股6美元的价格向几位投资者出售了152,850股普通股。投资者每购买一股还获得半份认股权证，可以每股7美元的价格购买额外股份。此次私募的总收益为917,000美元。此外，我们的银行已同意修改贷款协议，将我们的信贷额度从1,200万美元增加到1,400万美元，有效期至2017年2月，并增加我们今年秋季部分时间因库存水平提高而可借款的最高额度。
我们今年第四季度计划的财务和物流需求是巨大的，但我们相信，在我们预期的今年秋冬大额收入实现之前，我们能够满足这些需求。正如我们所说，我们的意图是尽快偿还或尽可能减少夹层贷款的余额，从而相应减轻该贷款造成的大额利息负担。
我们大额订单和第四季度计划销售所需的重大财务承诺要求我们目前将所有财务资源和新资金用于这些承诺。然而，我们确实预计将在今年年底和2017年头几个月产生大量资金。我们的意图是在2017年第一季度利用这些超额资金全部或部分偿还夹层贷款。因此，我们确实预计我们当前的利息负担将在明年大幅减轻。
最后，我想说，我们对有机会迎来公司历史上迄今为止最大的一年感到非常兴奋，我们都高度专注于实现这一目标。我们的报告到此结束。接线员，请协助我们处理与会者的提问。
Stephen Merrick
Good morning, everyone, and thank you for participating in our 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, 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. In general, our second quarter results were reasonably good and in line with our second quarter results over the past several years. As we progress this year toward what we expect will be the strongest year in our history. As recently reported, we have received purchase orders for 168,000 units of our branded vacuum sealing machine products and for associated film products for delivery in November. The orders have a total purchase order value or about $7.9 million. These orders are in addition to our other anticipated orders for all of our product lines during the third and fourth quarters this year, so we are anticipating a substantial increase in total company revenues this year compared to 2015. Typically, our second quarter is our weakest quarter of our year. However, we did have an overall increase in sales of about 4% for the quarter compared to the second quarter of last year. We had strong increases in sales in several of our principal product lines, including our branded vacuum sealing product line, our home organization product line, foil balloons, and our commercial film products. However, we did experience weakness in our latex balloon product line, which affected both our net sales and our profitability for the quarter. I'll get into some details on each of these areas, but let me first summarize the results for the quarter and for the first six months. For the second quarter of this year, we had net revenues of $14,151,000 compared to net revenues of $13,621,000 in the second quarter last year, an increase of 3.9%. For the six-month period, we had net revenues of $29,355,000, compared to net revenues of $28,596,000 for the first six months of 2015. This is an increase of 2.7%. For the quarter, we had net income from operations of $202,000 compared to net income from operations in the second quarter last year of $250,000. For the six-month period, our income from operations was $849,000 compared to $1,169,000 for the same period of last year. For the second quarter this year, EBITDA was $745,000, compared to EBITDA of $918,000 for the second quarter last year. As has been the case for some time, however, our net income has been affected significantly by the interest in interest-related expenses we are required to record for these periods, much of it relating to the mezzanine loan we have outstanding. In the second quarter of this year, our net interest expense was $396,000, compared to net interest expense in the second quarter last year of $289,000. For the first six months this year, net interest expense was $943,000 compared to net interest expense for the same period last year of $692,000. Our net interest expense is affected in part by changes in our stock price, which result in an increase in the warrant-related expense we are required to record. So as our stock price increased this year, the amount of warrant-related interest expense we had to record also increased. As we have reported, these large interest charges had a significant impact on the net income we report, despite our positive net operating profit results. As a result, for the second quarter this year, we have reported a net loss of $83,000 or $0.02 per share, compared to net income of $52,000 for the second quarter last year. For the six-month period, we had a net loss of $76,000 compared to net income of $336,000 for that same period last year. Let me turn now to some specific on our various product line areas. First, with respect to Vacuum Sealing products, we have continued to have consistent and positive growth in this product line. In the second quarter this year, sales of our branded vacuum sealing products were up 15% over the second quarter last year with $2,435,000 compared to $2,119,000 last year. For the six-month period, sales in this line are up 10% to $4,646,000 from $4,249,000 last year. We expect strong increases in that line to continue and of course we will have the additional $7.9 million of additional revenue in this line in the fourth quarter. We believe that these steady increases in sales in this major fourth quarter sale indicate we have achieved a credible position as one of the major participants in this significant market. Our growth in our newer home organization products line continues at a rapid pace. In the second quarter this year, sales in this line increased by 76% compared to the same period last year from $850,000 last year to $1,496,000 this year. For the six months this year, sales in this line have increased by 88% over the same period last year or $1,568,000 to $2,954,000. This line is also a major contributor to our increase in gross margin rates as sales in this line generally carry higher margin rates. We fully expect that the rapid expansion of this business will continue and that our home organization product business will be a principle source of our growth and future success. Sales of foil balloon products have continued to grow at a good pace this year. For the six months, foil balloon sales increased by 7.5% from $13,356,000 for this period last year to $14,362,000 this year. And film sales have increased nicely this year as well. For the six months, sales of commercial film products have increased by 26% from $1,880,000 last year to $2,370,000 this year. Our latex product line on the other hand has struggled so far this year and results in this line have negatively affected both our revenues and our profitability during the second quarter and for the first six months. Sales of latex balloons for the second quarter were $2,263,000 compared to 2015 sales of $2,288,000. For the six months, sales of latex products have been $4,768,000 compared to $5,464,000 last year. Profitability on that line for the year-to-date has significantly reduced compared to last year. There are several factors affecting these results. First, much of our sales of latex balloons are denominated in Mexican pesos. Over the last year, there has been a significant decline in the value of the peso against the dollar. This decline has affected the dollar value of our sales in Mexico in the first six months of this year alone by as much as $900,000. Second, our Mexico subsidiary purchases its principle raw material, raw latex in dollars, but sells much of its product in pesos. This has had a substantial affect on margins and profitability we believe in the range of about $80,000 for the first six months of this year. Also we have been constructing a new product -- production machine in Mexico during the first half of this year and have incurred substantial costs related to that effort. The machine is expected to increase capacity by at least 30%, but has not been in line during the first half of this year. We're pleased to report now that this machine is in full production and is expected to contribute significant revenues and margins to operations in the second half of this year, and we believe that the exchange rate affect related to peso is likely to moderate. So going forward, we do expect the latex product line to contribute to sales and profits in accordance with our expectations. Now let me spend a few minutes on our financial condition and financing. As you might imagine, the costs associated with preparing for the major order later this year and for all of the cost of raw materials and other preparations for what we expect will be a very strong fourth quarter, have placed a significant demand on our financial resources. In order to meet those new large commitments, we have undertaken efforts to enhance our resources. In July we engaged in a private placement to raise funds and sold 152,850 shares of our common stock to several investors at $6 per share. The investors also received for each share purchased one half warrant to purchase an additional share at $7 per share. The gross proceeds of the placement were $917,000. In addition, our bank has agreed to amend our loan agreement to increase the amount available to us on our line of credit from $12 million to $14 million through February 2017 and also to increase the maximum amount we can borrow on our increased inventory levels we will have for a portion of this fall. The financial and logistical demands of our programs for the fourth quarter this year are substantial, but we believe we will be able to meet those demands until the major revenues we anticipate this fall in winter are realized. As we have indicated, it is our intention to pay-off or reduce as much as possible, the balance on our mezzanine loan as soon as we can and correspondingly to reduce the large interest burden caused by that loan. The substantial financial commitments required for our major orders and planned sales for the fourth quarter have required that we devote all of our financial resources and new funding those commitments for the present. However, we do anticipate that we will generate considerable funds at the end of this year and in the first couple of months of 2017. And it is our intention to utilize those excess funds for payment of all or in part of the mezzanine loan in the first quarter of 2017. So we do anticipate that much of our current interest burden will be reduced next year. In closing, let me say we are extremely excited about the opportunity we've been given to have the biggest year in our history by far and we are all intensely focused on the effort to make that happen. That concludes our report. Operator, may we have your assistance with respect to questions for calls from our participants.
