Mod-Pac's earnings rise on folding carton printing
Mod-Pac Corp. posted its biggest quarterly profit in nearly four years during the third quarter as the Buffalo specialty printing company's folding carton sales strengthened.
Mod-Pac also benefited from the elimination of its money-losing commercial print and direct mail business, which was shut down in June and had been a drag on its overall earnings.
Mod-Pac said today its profits jumped to $1 million, or 29 cents per share, from $14,000, or less than a penny per share, a year earlier. It was just the third quarterly profit that Mod-Pac has posted since the final quarter of 2005.
The company's sales were nearly flat at $12.4 million, down from $12.5 million, because of the elimination of the commercial print business, which contributed $1 million in revenues a year ago. Excluding that business, Mod-Pac's sales grew by 9 percent.
The improved revenues from Mod-Pac's continuing operations were due to strength in the company's custom folding carton business, which grew by 15 percent during the quarter to $9.4 million, as Mod-Pac increased its sales to two of its existing customers and added another new client.
The custom folding carton business also has benefited from the growing popularity of store-brand products among cost-conscious consumers, which has boosted demand for the packaging that Mod-Pac makes, said Daniel G. Keane, the company's president and chief executive officer.
The company's print services business, which makes personalized printed products such as wedding invitations and napkins, saw its sales drop by 18 percent to $799,000 as the weak economy reduced demand.
Mod-Pac also has strengthened its cash position, which had been steadily eroding as the company absorbed fairly consistent losses over most of the last three years. The company generated $1 million in cash from its operations during the quarter, which enabled it to pay down the borrowings on its line of credit by $600,000 to $1.7 million. The company also raised nearly $900,000 by surrendering life insurance policies on its executives and selling off the assets of its commercial print business for a gain of $200,000.
The company also reached an agreement last month to sell its Blasdell factory, which it closed last year. The sale price is expected to roughly match the value Mod-Pac is carrying the property at on its books.
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