Yunhong Green CTI Q4 2023 Earnings Call Transcript

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February 22, 2024

Key Takeaways

  • Q4 revenue surpassed prior year by $1.2 million, driven by stronger foil balloons, commercial films, and balloon-inspired gifts.
  • Full-year net income improved by $1.2 million and adjusted EBITDA rose by $1 million, narrowing EPS loss from $0.22 to $0.01.
  • Helium pricing continues to exert a slight negative impact on margins, though the pressure has eased compared to the past 18 months.
  • Two automated manufacturing lines with robotic arms significantly cut labor costs and boosted efficiency, with a third line slated for 2024 deployment.
  • The planned acquisition of a Hubei, China facility—funded by up to 5 million new shares—aims to expand production of compostable, biodegradable, and recyclable materials.
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Earnings Conference Call
Yunhong Green CTI Q4 2023
00:00 / 00:00

There are 3 speakers on the call.

Operator

Good day, and welcome to the Yumkong Green CTI 4th Quarter and Year Ended December 2023 Earnings Conference Call. During today's presentation, all parties will be in a listen only mode. Following the presentation, the conference will be opened to questions. This conference is being recorded today, February 22, 2024. The earnings press release accompanying this conference call was issued last night.

Operator

On the call today is Junghong's Green CTI's Chief Executive Officer, Frank Susario well as Chief Operating Officer, Jana Schwan. Before we begin, we would want to note that you should read the forward looking statements in the company's earnings press release. During today's call, management will make certain predictive statements that reflect its current views about future performance and financial results. The company bases these statements on certain assumptions and expectations on future events that are subject to risks and factors that could cause actual results to differ from its predictions. Please note that the company's earnings press release makes reference to adjusted EBITDA and non GAAP financial measure.

Operator

The company views adjusted EBITDA as an operating performance measure and as such the company believes that the GAAP financial measure most directly comparable to it is net income or loss. For further information, please refer to the earnings press release and the company's periodic filings with the Securities and Exchange Commission. At this time, I would like to turn the call over to Frank Susario, Chief Executive Officer of Young Home Green CTI. Sir, please go ahead.

Speaker 1

Thank you, Jenny, and thank you to everyone joining us today. We finished the year with a strong Valentine's Day shipments now already knee deep in production for Mother's Day, Father's Day and graduation season. Our 4th quarter revenue beat the prior year by $1,200,000 as we saw improvement in foil balloons, commercial films and balloon inspired gifts. One trend we've identified is a shift from everyday business to seasonal business. That's good at this point during the year and something we will work on before entering the second half, particularly as we look to add new revenue streams to our offerings.

Speaker 1

Year to date sales were $17,800,000 in 2023 compared to $18,000,000 during 20.20 I'm pleased how we fought back from a 3rd quarter deficit on this metric and that shows up in our margin performance. Gross margins improved to 18% in 2023 versus 17% the prior year, and that was driven by strong 4th quarter. More appropriate revenues allowed us to post a 24 percent gross margin in the Q4 of 2023 versus 19% in the prior year. Helium pricing continues to have a slightly negative impact on our marketplace, but much less so than the prior 18 months. This has been an issue every 4 years or so and should improve when the Russian supply becomes available.

Speaker 1

For now, it's something we watch. We always own our results and last year we said they simply were not good enough. With all the challenges, I'm pleased to have reported a full year 2023 with a $1,200,000 improvement in net income and a $1,000,000 improvement in adjusted EBITDA, with earnings per share going from a $0.22 loss to a $0.01 loss. With that said, we are nowhere near where we need to be. We continue to push the envelope on operating efficiently and look to adding new revenue streams.

Speaker 1

Before we talk about our activity in Hubei, China, I would ask our Chief Operating Officer, John O'Shwan to share some of the high level actions we've implemented that led to a much improved financial performance in 2023. Jonah?

Speaker 2

Thank you, Frank, and hello, everyone. We have spoken before about the benefits of automation. We now have 2 manufacturing lines featuring robotic arms, and it should be no surprise that they are consistently our top performing lines over and above the reduction in labor cost. We have started the process to have our 3rd line operational during 2024. Results are also driven by strong vendor partner relationships along with processes and people who know what they should be doing and have the experience and culture to raise issues and opportunities as they see.

Speaker 2

This is an important operating environment that we have developed over the years, and it has delivered an incredibly positive impact to the organization as we continue to push the bounds of efficiency. Frank?

Speaker 1

Thank you, Jonna. Now let's talk about that recent bit of news related to our purchasing of a manufacturing facility in Hubei, China. This initiative was not taken lightly and was concluded after careful consideration internally and with our partners in China, who have significant resources and experience, especially with new emerging growth opportunities. As a result of this strategic initiative, we now have more direct manufacturing facilities that can be used in the compostable materials business. We also have a stronger connection with the rest of the Yoonhong family of companies.

Speaker 1

We believe this relationship should offer dividends in both our traditional business areas as well as the new material space. By issuing up to 5,000,000 shares of our common stock, we look to acquire a fully equipped facility with working capital, and we can avail ourselves to exponentially more people who can support and grow our business. We and our broader group continue to move through the process of developing and bringing to market our patented compostable, biodegradable and recyclable materials to enhance environmental We know most people catch this on the replay, but for anyone who's on live, if you'd like to ask a question, Jenny will open the Q and A line. Thank you.

Operator

Thank you very much, Frank. We are now opening the floor for questions. Okay. Frank, I'm not seeing anyone in the queue at the moment. I can certainly let you know if someone jumps in.

Operator

I can hand back to you for any further comments.

Speaker 1

Yes. It just tells us we're that good. I appreciate that. Look, we're happy to summarize what you can all read in the press release. And we know, again, people will listen to this and ask us questions later, which is great.

Speaker 1

We do appreciate your interest in our company and we look forward to the story that we can talk about 2024. And with that, I wish everyone a good day.

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