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MODPAC CORP. Reports Operating Results (10-Q)

August 05, 2010 | About:
10qk

10qk

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MODPAC CORP. (MPAC) filed Quarterly Report for the period ended 2010-07-03.

Modpac Corp. has a market cap of $12.9 million; its shares were traded at around $4.63 with a P/E ratio of 17.8 and P/S ratio of 0.2. MPAC is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

For the second quarter of 2010, total revenue was $11.5 million compared with $11.2 million in 2009, an increase of 2.7%. The custom folding carton product line sales were $9.0 million compared with $8.0 million in the second quarter of 2009. The 13.1% increase was mainly due to substantial new business with a large existing customer, and increased waste sales due to improved market conditions, offset partially by decreased business with several existing customers. Sales of the Companys stock packaging product line were $1.5 million in second quarter of 2010, up slightly from the second quarter of 2009. Personalized print sales for the second quarter of 2010 were $0.9 million, relatively unchanged from the same period in 2009. There were no specialty print and direct mail sales in the second quarter of 2010 due to the product line rationalization that took place at the end of the second quarter of 2009. Specialty print and direct mail sales were $0.7 million in the second quarter of 2009.

For the first six months of 2010, total revenue was $23.5 million, virtually unchanged from the first six months of 2009. The custom folding cartons product line sales were $17.7 million compared with $16.5 million in 2009. The increase of 7.5% was mainly due to substantial new business with a large existing customer and increased waste sales due to improved market conditions. Sales of the Companys stock packaging product line were $4.0 million, compared with $3.6 million in the prior year, an increase of 9.5% mainly due to improved general business conditions. Personalized print sales for the first six months of 2010 were $1.6 million, a decrease of 4.5% compared to the in the same period of 2009, primarily due to continued soft market conditions. There were no specialty print and direct mail sales in the first six months of 2010 due to the product line rationalization that took place at the end of the second quarter of 2009. Specialty print and direct mail sales were $1.5 million in the first six months of 2009.

Selling, general, and administrative (SG&A) costs decreased 4.1% to $1.9 million in the second quarter of 2010 from $2.0 million during the same period in the prior year. This improvement was driven primarily by lower labor costs, offset partially by increased professional service costs and stock option expense. Included in the second quarter of 2009 SG&A, was $65 thousand in workforce reduction costs that were the result of the Companys rationalization of the specialty print and direct mail product lines in the second quarter of 2009. Also included in prior year operating expense was $2.2 million that was associated with the write-down of impaired assets in the second quarter of 2009. This impairment resulted from the Companys rationalization of the specialty print and direct mail product line in the second quarter of 2009 and the write-down of its Blasdell, NY facility to fair market value based on expected selling prices net of costs to sell.

SG&A costs decreased 7.6% to $3.7 million in the first six months of 2010 from $4.0 million during the same period in the prior year. This decrease was driven primarily by lower labor costs, slightly offset by higher stock option expense. Included in the first six months of 2009 SG&A, was $65 thousand in workforce reduction costs that were the result of the Companys rationalization of the specialty print and direct mail product lines in the second quarter of 2009. Also included in prior year operating expense was $2.2 million that was associated with the write-down of impaired assets in the second quarter of 2009. This impairment resulted from the Companys rationalization of the specialty print and direct mail product line in the second quarter of 2009 and the write-down of its Blasdell, NY facility to fair market value based on expected selling prices net of costs to sell.

The net income for the first six months of 2010 was $66 thousand or $0.02 per diluted share, compared with a net loss of $4.3 million, or $1.24 per diluted share, in the first six months of 2009. This net income/loss was due to the fluctuations discussed above.

Capital expenditures, driven primarily by productivity improvements and system related investments, for the first six months of 2010 were $1.0 million compared with $0.7 million in the first six months of 2009. Depreciation and amortization for the first six months of 2010 was $1.4 million compared with $1.9 million in the same period last year.

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10qk
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