Yunhong CTI Ltd. Reports Third Quarter 2022 Results

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:
[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)
		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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