MOD-PAC CORP. (NASDAQ: MPAC) (the “Company”), a manufacturer of custom and stock paperboard packaging and provider of personalized print products, today announced financial results for its fourth quarter and year ended December 31, 2011.
In the fourth quarter of 2011, revenue increased $1.8 million, or 13.7%, to $14.6 million from $12.8 million in the fourth quarter of 2010. Each of the Company’s product lines contributed to the revenue growth. Net income was $0.4 million, or $0.12 per diluted share, compared with $0.2 million, or $0.07 per diluted share, in the fourth quarter of 2010. The higher net income reflects positive leverage from higher sales, offset by negative product mix and continued raw material pricing pressures. The prior year fourth quarter includes a $178 thousand, or $0.05 per diluted share, charge for impaired asset write-downs.
Total revenue for 2011 was $56.2 million compared with $48.7 million in 2010, reflecting higher folding carton sales and improved waste sales due to a recovery in the recycling market. Net income increased 43.3% to $1.9 million, or $0.55 per diluted share, in 2011 from $1.3 million, or $0.37 per diluted share, in 2010. Higher revenue along with productivity and cost reduction initiatives drove the net income increase.
Daniel G. Keane, President and CEO, commented, “As a result of our continued implementation of our targeted sales strategy, we delivered strong performance in 2011. This was primarily led by growing business from existing customers and increased market-share gains in our custom folding cartons line.”
Fourth Quarter 2011 Sales Review
- Sales of custom folding cartons were up 17.7% to $10.3 million in the 2011 fourth quarter from $8.7 million in the prior year fourth quarter, mainly due to business from one new customer, increased sales to two relatively new customers and increased waste sales.
- Stock packaging sales increased 4.9%, or $0.2 million, to $3.5 million in the fourth quarter, primarily due to improved market conditions.
- Personalized print sales were $660,000 in the fourth quarter of 2011, up slightly from $621,000 in the fourth quarter of 2010.
David B. Lupp, Chief Operating Officer and Chief Financial Officer, noted, “We believe our consistent growth in folding cartons is because we have executed an aggressive sales and marketing plan to expand our penetration into the marketplace. This coupled with the implementation of increasing efficiency and sustainability in every area of our business, has shown through in our operating performance and margins in 2011. However, in the fourth quarter, our gross margin was negatively impacted by product mix and higher raw materials costs. We have been working to offset these impacts and believe that over time we can achieve greater leverage on higher sales.”