Q4 2023 Yunhong Green CTI Ltd Earnings Call

Operator: www.cctexas.com Good day, and welcome to the Yoncon Green CTI fourth quarter and year-ended December 2023 earnings conference call. During today's presentation, all parties will be in a listen-only mode.

Good day and welcome to the young Kong Green C. T. I first fourth quarter and year ended December 'twenty to 'twenty three earnings conference call during today's.

His presentation all parties will be in a listen only mode. Following the presentation. The conference will be open to questions. This conference is being recorded today February 'twenty to 'twenty to 'twenty four.

Operator: Following the presentation, the conference will be open to questions. This conference is being recorded today, February 22, 2024. The earnings press release accompanying this conference call was issued last night. On the call today is Yung Hong's Green CTI's Chief Executive Officer, Frank Cesario, as well as Chief Operating Officer, Jana Schwan.

Earnings Press release accompanying this conference call was issued last night.

On the call today is Youll Homescreen C T I S Chief Executive Officer, Frank scenario, as well as Chief operating Officer, John Schwan before we begin we would want to note that you should read the forward looking statements in the company's earnings press release.

Operator: 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 and certain assumptions and expectations on future events that are subject to risks and uncertainty. The company's form 10-K for the year ended December 31, 2022 lists some of the most important risk 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 measures. The company views adjusted EBITDA as an operating performance measure, and, as such, it believes that the GAAP financial measure most directly comparable to it is net income or loss.

During today's call management will make certain predictive statements that reflect 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.

Do you want in 'twenty to 'twenty two lists some of the most important risk factors that could cause actual results to differ from its predictions.

Note that the company's earnings press release makes reference to adjusted EBITDA, a non-GAAP financial measure that.

The company views adjusted EBITDA is 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 Companys periodic filings with the Securities and Exchange Commission at this.

Frank Cesario: 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 Cesario, Chief Executive Officer of Yonghong Green CTI.

Time, I would like to turn the call over to Frank says Oreo Chief Executive Officer of young Hungry and C. T. I Sir Please go ahead.

Frank Cesario: Thank you, Jenny, and thank you to everyone joining us today. We finish the year with strong Valentine's Day shipments, and we are already knee-deep in production for Mother's Day, Father's Day, and graduation season. Our fourth quarter revenue beat the prior year by 1.2 million 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. Year-to-date sales were $17.8 million in 2023, compared to $18 million in 2022.

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 fourth quarter revenue beat the prior year by $1 2 million as we saw improvement in foil balloons commercial films and Luna inspired gifts.

One trend we've identified this as 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.

Year to date sales were $17 8 million in 2023 compared to $18 million. During 2022 I'm pleased how we fought back from a third quarter deficit on this metric and that shows up in our margin performance.

Frank Cesario: I'm pleased how we fought back from a third-quarter deficit on this metric, and that shows up in our margin performance. Gross margins improved 18% in 2023 versus 17% the prior year, and that was driven by a strong fourth quarter. More appropriate revenues allowed us to post a 24% gross margin in the fourth quarter 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.

Gross margins improved to 18% in 2023 versus 17% in the prior year.

And that was driven by a strong fourth quarter.

More appropriate revenues allowed us to post a 24% gross margin in the fourth quarter 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 four years or so and should improve in the Russian supply becomes available for now it's something we watch.

Frank Cesario: This has been an issue every four years or so and should improve when the Russian supply becomes available. 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 $1.2 million dollar improvement in net income and a $1 million dollar improvement in adjusted EBITDA, with earnings per share going from a 22 cent loss to a 1 cent loss. With that said, we are nowhere near where we need to be.

We always own our results last year, we said they simply were not good enough with all the challenges I am pleased to have reported a full year 2023, with a $1.2 million improvement in net income and a $1 million improvement in adjusted EBITDA with earnings per share going from a 22 cent loss to a one set of laws.

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 before we talk about our activity in who buy China I would ask our chief operating officer, John This one to share. So the high level actions, we've implemented that led to a much improved financial performance in 2023.

Jonna Schwan: We continue to push the envelope on operating efficiently and look to add a new revenue stream. Before we talk about our activity in Hubei, China, I would ask our Chief Operating Officer, Jonna Schwan, to share some of the high-level actions we've implemented that led to a much-improved financial performance in 2023.

Hi, Jonathan.

Jonna Schwan: Thank you, Frank. And hello, everyone. We have spoken before about the benefits of automation. We now have two 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 costs. We have started the process to have our third 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 fit. This is an important operating environment that we have developed over the years, and it has delivered an incredibly positive impact on the organization as we continue to push the bounds of efficiency. Frank?

Thank you Frank and Hello, everyone. We have spoken before about the benefits of automation. We now have two 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 third 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.

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

Thank you.

Frank Cesario: Thank you, John. Now, let's talk about that recent bit of news related to our purchase 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 Yoon Hung family of companies. We believe this relationship should offer dividends in both our traditional business areas as well as the new materials space.

Thank you Jonathan.

Now, let's talk about that recent bit of news related to our purchasing of a manufacturing facility in <unk> China.

This initiative was not taken lightly it 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 composed of all materials business.

We also have a stronger connection with the rest of the UN hung family of companies.

We believe this relationship show up should offer dividends in both our traditional business areas as well as the new materials space.

Frank Cesario: By issuing up to 5 million 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 sustainability. We made this directional push very clear last year when we rebranded our company. We're now building inventory to support our very active period with customers for Mother's Day, Father's Day, and graduation season. We are bringing our new assets online for use. We have proven ourselves nimble and look to continue to move at speed.

By issuing up to 5 million 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 composed of all biodegradable and recyclable materials to enhance environmental sustainability.

We made this directional push very clear last year, when we rebranded our company well.

We're now building inventory to support our very active period with customers for mother's day father's day and graduation season.

We are bringing our new assets online for us we have proven ourselves nimble and look to continue to move at speed.

Operator: As we don't speak to listen to ourselves talk, this concludes our prepared remarks. 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&A line. Thank you. Thank you very much, Frank. We are now opening the floor for questions. If you have any questions, please press star 1 on your phone keypad now. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For anyone using speaker equipment, it may be necessary to pick up your handset before you press star 2.

As we don't speak to listen to ourselves talk this concludes our prepared remarks, 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&A line. Thank you.

Thank you very much Frank we are now opening the floor for questions. If you have any questions. Please press star one on your phone keypad now a confirmation tone will indicate that your line is in the question. Keith You May Press Star two if you would like to remove your question from the key so anyone using speaker equipment. It may.

Be necessary to pick up your handset before pressing the keys piece hold amendment, whilst the poll for any questions.

Operator: Please hold a moment whilst we poll for any questions. Just a reminder there, if you have any questions on the phone lines, please press star 1 on your phone keypad. Okay, Frank. I'm not seeing anyone in the queue at the moment, but I can certainly let you know if someone jumps in.

Just to remind you that if you have any questions on the phone lines. Please press star one on your phone keypad now.

Okay, Frank I'm not seeing anyone in the queue at the moment I can certainly let you know if someone jumps in I can hand back to you for any further comments yeah. It just tells US we're that good I appreciate that look we're happy to summarize what you can.

Frank Cesario: I can hand back to you for any further comments. Yeah, it just tells us we're that good, and 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. We do appreciate your interest in our company, and we look forward to the story that we can talk about in 2024.

I'll read in the press release.

We know when people listen to this and ask US questions later, which is great. 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.

Operator: And with that, I wish everyone a good day. Thank you very much, Frank. Thank you, Joanna. This does conclude today's conference. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

Thank you very much front and thank you John as this does conclude today's conference you may disconnect. Your phone lines at this time and have a wonderful day. Thank you feel participation.