Yunhong CTI Ltd. Q1 2023 Earnings Call

Following the presentation the conference will be open to questions.

This conference is being recorded today April 27th 2023.

Good day and welcome to the young hung C. T. I first quarter 2023 earnings conference call.

The earnings press release accompanying this conference call was issued last night.

During todays presentation, all parties will be in a listen only mode.

On the call today is <unk>, Chief Executive Officer, Frank says Oreo as well as Chief operating Officer, John Swann.

Following the presentation the conference will be open to questions.

This conference is being recorded today April 27th 2023.

Before we begin we want to note that you should read the forward looking statements in the company's earnings press release.

The earnings press release accompanying this conference call was issued last night.

During today's call management will make certain predictive statements that reflect the current views about future performance and financial results.

The company basis, these statements and certain assumptions and expectations on future events that are subject to risks and uncertainties.

The company's Form 10-K for the year ended December 31, 2020 to list some of the most important risk factors that could cause actual results to differ from its predictions.

Please also note that the Companys earnings press release makes reference to adjusted EBITDA, a non-GAAP financial measure.

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 as net income or loss.

For further information please refer to the earnings press release, and the Companys periodic filings with the Securities and Exchange Commission.

At this time I would like to turn the call over to <unk>, Chief Executive Officer of young Hunk GTI. Sir. Please go ahead.

Thanks, Matthew Good morning, everyone. We appreciate you joining us for our update call today.

In considering our comments I was struck by how much the world has changed since the third quarter of 2022, and that's not a lot of time, but.

The helium pricing have become such a huge issue in our space ultimately contributing to the largest player in the industry restructuring.

We saw our own revenue dropped by more than half from the prior year as we fought for Bottomline.

I'm pleased to share that helium prices have improved they continue to fall and are approaching normalized levels, we can't wait for that to actually happen, but it is getting closer.

This favorable trend combined with the significant realignment of our operations and strengthening of our balance sheet achieved over the last couple of years are all reflected in our overall improved financial results for the first quarter and growth in shareholder value.

Revenue only trailed the prior year by zero point $7 million going from $5 $8 million last year to $5 $1 million this year.

And despite that profitability still increased in terms of both percentage and dollar terms.

We are relentless in finding more efficient structures as we satisfy our customers and that starts with our chief operating officer, Jonathan <unk>.

She played a critical role in strengthening our operations and driving sales in the challenging environment all of which supported the improved result results we reported in Q1.

As I believe that's the driving force of today's conversation I welcome Jonathan to share her thoughts on making <unk>, even more profitable Sean Thanks, Brian Hello, everyone.

We have talked about some of these elements in our prior calls.

There were three that revisiting in terms of efficiencies we have gained from these initiatives.

Our incremental approach to automation of certain manufacturing lines has been the correct strategy and we continue to make gradual investments in this arena.

We track and measure our activity is every day with a continuous improvement mindset.

The discipline has identified opportunities in staffing and workflows that have allowed us to increase throughput year over year.

Elevated helium prices reduced balloon volumes, we took advantage of the situation to eliminate costly overtime and inefficient processes.

Our vendor relationships are strong and long standing we have good insights into their operations and capabilities, which allows us to source efficiently and helps manage our liabilities, while keeping our working capital deployment manageable.

Finally, I must call out our long term employees for their leadership and dedication. It makes me proud to see 10, 2030, and even 40 year employees.

These are individuals who understand everything about what needs to be done everyday to achieve our goals and our driving factor in the efforts to exceed our customers' expectations.

Yeah.

Thanks, John .

We are accountable for our results couple of months ago, We reviewed 2022 performance and we owned it adjusted EBITDA number that just didn't cut it we've talked about helium and it was a huge issue we have to find a way to fight through and we fought but.

Definitely wasn't the number that we can accept.

I am pleased to share that we improved adjusted EBITDA from <unk> 3 million in the first quarter last year to 0.7 million today we.

We had atypical costs and benefits going both ways as we will frequently occur, but we're staking out an improved measure of performance. Despite any market conditions, good or bad we have to fight for that bottom line answer.

Nobody knows what the future holds if we are in a recessionary period, it's been our experience that balloons and party supplies tend to be counter cyclical as they are low cost solutions for individuals and families.

As well as a mechanism for businesses, calling attention to promotional items.

Inflation supply chain issues haven't ended we've all become more comfortable with them and thus more effective in dealing with them.

We ended the year with a reasonable debt level and a growing asset base.

We continue to work on biodegradable and Compostable solutions and next month, we'll be visiting partner companies in Asia.

We continue to work on the prototyping of these material alternatives with a single goal in mind of transitioning them to viable and attractive commercial solutions.

Well that sounds easy would have already happened if it works, but the price is so huge we are engaged on this particularly with our connection to the Unum group, which holds related patents and knowhow.

With that Matthew I understand that most folks catch this on replay, but if anyone's here with us live and wants to ask a question Matthew please invite them into the Q&A. Thank you.

Certainly at this time, we'll be conducting a question and answer session. If you have any questions or comments. Please press star one on your phone at this time.

We do ask that we're posing your question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.

Once again, if you have any questions or comments. Please press star one on your phone.

Please hold while we poll for questions.

Your first question is coming from Glen Hamilton Your line is live.

Hey, Glenn.

Hey, Frank and Donna.

I had a good quarter I guess.

I don't know what I was expecting so lease you're profitable thats good quick.

Quick question when are you planning to go to the main lines that next month.

Yes so.

Chaz early may.

Is it just going to you or John or any board of directors are just yourself at this point, we have no we have.

Have a small team going but it is going to be a mixed crowd and yes, I will be there.

Yes, we have we have a lot of things that we have to connect down so John and I, both do a lot in connecting with our counterparts over there.

And every once in a while you just have to get there in person.

<unk> things.

Okay I'd be happy to join you guys and I would actually pay for my own airfare, but I'm just kind of choking aetna.

As your Mandarin.

[laughter] not too good.

My daughter does speak Mandarin pretty well bell, so, but that's neither here nor there.

What do you and John and the team hope to accomplish by going out the China and meeting with the leadership there.

Well on a number of different levels, but the most important thing is this push for <unk> solutions.

So we're trying to launch new materials and in doing that there's always the disconnect between what we see is ballooning party goods manufacturer and when folks who make material C and other things. They do so it's important to have things that we can look at together and talk about together in kind of a push to try to get to commercial solutions and others.

<unk> youre trading material back and forth and specs back and forth and we find that that slow going so we're impatient by nature.

And it seems like the right time to kind of align everybody on trying to move us forward into a commercial success.

Okay.

I know you can't say anything at this point, but do you expect any revenue to be generated in the year 2023, even if its in the fourth quarter of hard to say at this point.

It's impossible to say at this point I would love for that to be true.

I just don't know we've been working on prototyping for a while some things are closer than others.

Yes.

If you said do you have somebody in your pocket I'll say I don't if you said do you have something that could happen and I'll say, we do.

I just don't know, how that's going to play out.

Okay.

No other questions keep it up and.

I'd like to see ownership plus.

Again start buying scared you know, how I feel about that but so far.

<unk> done.

Bakken down the wrong tree I think on this one but just keep up what you're doing I guess.

Alright, I appreciate the call. Thanks, Glenn Okay. Thank you.

Thank you that concludes our Q&A session I will now hand, the conference back to <unk>. Please go ahead.

Alright, Thank you very much and look this is a nice.

<unk> point share with you, where we've been going what we've been doing I look forward to our next call. When we talk about Q2 and what the second half looks like in.

In the meantime, we're pushing and Thats, what we do we're going to keep pushing and.

Our commitment to give you answers that.

Youre happy with as well so thank you for listening to our call and have a good day.

Okay.

Thank you everyone. This concludes today's event you may disconnect at this time and have a wonderful day.

Thank you for your participation.

Yes.

Yes.