Stephen Merrick
各位早上好，感谢大家参加我们的电话会议。我将为大家介绍我们的财报，与我一同出席的还有我们的首席财务官Tim Patterson，以及公司董事兼投资者关系总监Stan Brown。报告结束后，我们将回答大家可能提出的问题。
与去年同期相比，我们第三季度和截至9月30日的年初至今销售额和业绩均有所下滑。稍后我们将详细讨论这些结果的具体情况，但我想说的是，我们预计第四季度将表现强劲。在最近几年中，我们的第四季度通常是最强劲的季度，我们预计今年也将如此。
首先，让我回顾一下第三季度和九个月的结果，以及导致我们今年迄今业绩未达预期的因素。第三季度，我们的净销售额为13,226,000美元，而去年第三季度的净销售额为13,476,000美元，与去年第三季度相比仅下降约2%。第三季度的小幅下降主要是由于箔膜气球销售额较去年第三季度下降约400,000美元，以及我们的商业薄膜销售额较去年第三季度下降约480,000美元。然而，箔膜气球销售额在今年大部分时间里表现强劲，九个月累计销售额高于去年同期。我们预计今年第四季度也将如此。
截至2017年9月30日的九个月，我们的净收入为41,397,000美元，较去年同期的42,832,000美元下降约3.4%。年初至今，箔膜气球和乳胶气球的销售额表现强劲，高于去年。而我们的其他产品线，如糖果气球和家居容器产品的销售额也保持了同步增长。然而，我们的真空密封产品和商业薄膜产品线的销售额出现了一些下滑，这导致了整体销售额的适度下降。稍后我将逐一回顾各产品线的销售结果和前景。
第三季度，我们净亏损275,000美元，每股亏损0.08美元；九个月累计亏损742,000美元，每股亏损0.20美元。我们预计第四季度业绩将显著改善，稍后将进行讨论。
现在让我按产品线回顾我们的业绩和预期。在我们的箔膜产品线中，年初至今的收入表现强劲。九个月期间，箔膜气球收入今年为21,447,000美元，而去年同期为20,540,000美元，增长了4.4%。我们看到在美国和欧洲，新老客户的销售额均有所增长。我们在美国、欧洲、英国和墨西哥的多个零售连锁店开发和维护了箔膜气球项目，同时也在与分销商和专业客户开发新的销售渠道。我们预计第四季度的收入将继续保持强劲增长。
在未来几个月内，我们将投入运行2台新的箔膜气球转换机，这将使我们的生产能力提高近30%。我们相信，增加的产能将使我们能够在2018年实现箔膜气球产品线更强的销售增长。
我们的乳胶气球产品线已从去年的疲软业绩中恢复，第三季度增长近40%，达到2,620,000美元，而去年第三季度为1,875,000美元。九个月期间，乳胶气球收入为6,969,000美元，而去年同期为6,182,000美元，增长了12.7%。去年年底投产的新乳胶气球生产线显著提高了我们的乳胶气球产能，并支持了该产品线的增长和收入。今年我们在墨西哥（我们的乳胶气球工厂所在地）的零售连锁店和分销商处实现了大部分乳胶气球销售增长，但我们也在美国、欧洲和英国寻求该产品线的销售机会。
与去年相比，今年我们的品牌真空密封产品线销售额出现疲软。截至9月30日的九个月，该产品线的收入为5,668,000美元，而去年同期为7,362,000美元，下降约23%。我们认为，大部分下降发生在今年前6个月，这归因于一位主要客户以折扣价清仓处理过剩库存，该客户在去年第四季度从我们这里购买了大量的真空密封机用于促销活动。我们认为，这些折扣销售至少影响了截至6月份我们在这些商店的当前真空密封机产品线的销售。
然而，在今年第三季度，我们的品牌真空密封产品线销售额恢复到更正常的水平，我们预计在第四季度和明年将实现强劲的销量。我们很高兴地报告，我们已经续签了Ziploc品牌真空密封产品的商标许可，为期两年，并且该产品线仍然是美国最大零售连锁店的主力产品。我们通过亚马逊和在线渠道在另一家零售连锁店继续保持该产品线的地位，并且我们继续寻求额外的零售渠道。
在我们的其他产品线中，包括糖果气球和家居容器产品，销售额总体上继续与2016年保持同步。在我们的商业薄膜产品线中，今年出现了一些下降，从去年九个月的3,508,000美元降至今年同期的2,194,000美元。我们为该产品线主要客户提供的一款产品今年停产，导致了这一下降。然而，我们继续为该客户提供其他产品，并且正在为商业薄膜加工开发新的客户关系。
影响我们今年迄今盈利能力的因素之一是整体毛利率的下降。第三季度，毛利率从去年第三季度的25.3%降至今年第三季度的24.1%。今年九个月期间的毛利率为24%，而去年同期为26.1%。今年的毛利率受到产品销售组合变化的影响，高利润率产品（如我们的真空密封产品线）在销售产品中的比例下降，而利润率相对较低的产品（如乳胶气球）在销售产品中的比例上升。
展望未来，随着我们的真空密封产品销售额和箔膜气球销售额继续改善，以及我们实现目前正在实施的生产成本节约效率，我们确实预计毛利率将有所改善。我们已经启动了一项计划，以实现运营成本降低和生产成本改进，目前正在实施过程中。总体而言，我们的目标是实现约240万美元的总成本改进。我们预计这些改进将在2018年完全实现，但已经在本年第三和第四季度开始实施其中一些措施。这些降低和改进包括大幅减少营销咨询费用、通过将部分箔膜气球生产转移到墨西哥业务来降低生产成本、降低医疗保健成本、消除英国业务的亏损以及人员精简。
在第三季度，我们确实实现了一些成本降低的效益，特别是与减少营销、咨询成本和人员相关的效益。然而，这些效益被我们为当前融资关系和努力实现再融资而产生的238,000美元一次性额外财务咨询和法律费用所抵消。正如我们所报告的，我们正在积极处理与当前高级和夹层贷款人的融资关系状况，并努力完成与另一家金融机构的再融资。我们现在正深入参与这项再融资工作，并相信我们很快就能完成再融资。然而，在再融资完全完成之前，我们不能保证再融资将会完成。在进行这些努力的过程中，我们当然会及时提供结果信息。
我们预计将以强劲的态势结束今年。正如我所指出的，我们预计第四季度在我们的主要产品线——箔膜气球产品线、乳胶气球产品和品牌真空密封产品线的销售额将表现强劲，并且我们确实预计将实现我概述的部分成本降低和改进。
我们的报告到此结束。接线员，可以请您协助处理与会者的问题吗？
Stephen Merrick
Good morning, everyone I thank you for participating in our call. I will be presenting our report and with me is Tim Patterson, our Chief Financial Officer; and Stan Brown, Director of our company and Director of Investor Relations. At the conclusion of the report, we will be available to answer questions that you may have. Our sales and results are down somewhat for the third quarter and for the year-to-date through September 30, compared to the same period as last year. We will get into specifics on these results in a minute, but I do want to say that we are expecting to have a strong fourth quarter. In most recent years, our strongest quarter is the fourth quarter, and we expect that will be the case this year as well. First, let me review the results of the third quarter and the nine months, and the factors that resulted in our shortfall and results so far this year. In the third quarter, our net sales were $13,226,000, compared to net sales of $13,476,000 in the third quarter last year, a decline of only about 2% compared to the third quarter last year. That small decline for the third quarter resulted from foil balloon sales being down by about $400,000 from the third quarter last year, and our commercial film sales being down about $480,000 for the third quarter last year. However, foil balloon sales have been strong through much of the year, and are up against last year through the nine months. We expect that, that will be the case through the fourth quarter this year as well. For the nine months ended September 30, 2017, our net revenues have been $41,397,000, which is down about 3.4% on the year from $42,832,000 for that period last year. For the year-to-date, sales of foil balloons and latex balloons have been strong and are higher than last year. And sales in our other lines of Candyloons and home container products have kept pace. However, we have experienced some decline in the sale of our vacuum sealing products and our commercial film product lines, which account for the overall modest decline in sales. In a minute, I will review sales results and prospects in each of the product lines. For the third quarter, we incurred a net loss of $275,000 or $0.08 per share, and for the nine months, we had a loss of $742,000 or $0.20 per share. We do anticipate significantly improved results in the fourth quarter as we will discuss. Let me turn now to a review of our results and our expectations by product line. In our foil product line, revenues for the year-to-date have been strong. For the nine months, foil balloon revenues have been $21,447,000 this year compared to $20,540,000 for that period last year, an increase of 4.4%. We have seen increases in sales over a range of customers, both new and existing, particularly in the United States and Europe. We have developed and maintained foil balloon programs at a number of retail chains in the United States, Europe, the United Kingdom and Mexico, and also are developing new sales with distributors and specialty customers. We do expect revenues in the fourth quarter to continue to be strong and increasing. Over the next couple of months, we will be putting into service 2 new foil balloon converting machines, which will increase our production capacity by almost 30%. We believe this increased capacity will enable us to achieve stronger sales growth in our foil balloon line in 2018. Our latex balloon product line has recovered from weaker results last year, growing by almost 40% in the third quarter, to $2,620,000 from $1,875,000 in the third quarter last year. For the nine months, latex balloon revenues have been $6,969,000 compared to $6,182,000 for the same period last year, that's an increase of 12.7%. A new latex balloon line came on stream late last year, significantly increasing our latex balloon capacity, and is supporting our growth and revenues in this product line. Much of our growth in sales of latex balloons this year has been achieved with retail chains and distributors in Mexico, where our latex balloon plant is located, but we are pursuing sales opportunities for this product line in the U.S., Europe and the U.K. We have experienced weakness in the sales of our branded vacuum sealing line this year compared to last. For the nine months ended September 30, our revenues in this line have been $5,668,000 compared to $7,362,000 for the same period last year, a decline of about 23%. We believe that most of this decline, which occurred in the first 6 months of this year is attributable to the selloff of excess inventory at discounted prices by a major customer, who purchased a large quantity of vacuum sealing machines from us for a promotion in the fourth quarter of last year. These sales at discounted prices, we believe, impacted the sale of our current line of vacuum sealing machines in those stores, at least through June. In the third quarter this year though, sales of our branded vacuum sealing product lines returned to a more normalized rate, and we expect will achieve strong volumes in the fourth quarter and into next year. We are pleased to report that we have renewed our trademark license for Ziploc brand vacuum sealing products for 2 more years, and that the line remains a mainstay at the largest retail chain in the United States. We continue to have a position with this line in another retail chain through Amazon and online, and we continue to pursue additional retail channels. In our other product lines, including Candyloons and home container products, sales generally continue to keep pace with 2016. In our commercial film product line, we have experienced some decline this year from $3,508,000 for the nine months last year to $2,194,000 for that period this year. One of the products we provided to our principle customer for this line was discontinued this year, resulting in this decline. However, we continue to provide other products to this customer and are developing a new customer relationship for commercial film processing. Factors affecting our profitability so far this year has been a decline in our overall gross margin rate. For the third quarter, gross margin rate declined from 25.3% for the third quarter last year to 24 1% for the third quarter this year. And for the nine months this year, the gross margin rate was 24% compared to 26.1% for the same period last year. Gross margin rates this year have been affected by changes in the mix of the product sold, with high-margin products such as our vacuum sealing line declining as a percent of products sold, and somewhat lower margin products like latex balloons increasing as a percent of product sold. Going forward, we do expect to see some improvement in gross margin rates as our vacuum sealing products sales and foil balloon sales continue to improve, and as we achieve some of the efficiencies in production cost savings we are implementing now. We have initiated a program to achieve operational cost reductions and production cost improvements, which is in the process of being implemented now. In total, we have targeted total reductions in cost improvements of approximately $2.4 million. We expect to realize these reductions in improvements fully in 2018, but have already begun to implement a number of them for effect in the third and fourth quarters this year. These reductions and improvements include significant reductions in marketing consulting fees, reduced production cost by transferring some foil balloon production to our Mexico operation, reduction in our healthcare costs, elimination of losses in the U.K. operation and reductions among our personnel. In the third quarter, we did realize some of these cost reduction benefits, particularly related to the reduction of marketing, consulting cost and personnel. However, these benefits were offset by one-time additional expenses of $238,000 we incurred for financial consulting and legal expenses associated with our current financing relationship and efforts to achieve refinancing. As we have reported, we are actively engaged in addressing the status of our financing relationship with our present senior and mezzanine lenders, and in efforts to complete a financing of those lenders with another financial institution. We are deeply engaged now in this refinancing effort and believe that we will be able to conclude a refinancing soon. However, until the refinancing is fully concluded, we cannot give an assurance that a refinancing will be completed. As we proceed with these efforts, we will of course, provide prompt information on the results. We are expecting to close the year on a strong note. As I indicated, we expect our sales in the fourth quarter will be strong in our principle product lines, our foil balloon product line, our latex balloon products and our branded vacuum sealing line, and we do expect to realize some of the cost reductions and improvements I outlined. That concludes our report. Operator, may we have your assistance with respect to questions from our participants?
