Mod-Pac Corp.’s third-quarter profits jumped by 43 percent, rebounding from two straight quarterly losses as the Buffalo specialty printing company’s sales hit a record high.
The return to profitability comes as Mod-Pac’s top two executives are proposing to take the company private through a buyout offer that would pay shareholders $7.20 per share, a 31 percent premium from Friday’s closing price of $5.49. Mod-Pac’s shares opened today – the first day of trading since the offer was disclosed – up $1.51 to $7.
The improvement in Mod-Pac’s profits stemmed from stronger sales of its custom folding cartons, which grew by almost 10 percent as the company picked up extra business from some of its existing customers and began to book sales from some larger customers that were added last year. Mod-Pac also has gained several smaller new accounts, company officials said today.
“We continue to anticipate solid product demand for the remaining part of 2012,” said Daniel G. Keane, Mod-Pac’s president and chief executive officer, who is making the bid to take the company private with his father, Kevin, who is the company’s chairman. Together, the Keanes control 43 percent of the voting rights in Mod-Pac, giving them a strong foothold for their bid to acquire all of the outstanding shares they don’t own.
Mod-Pac, which lost money during both the first and second quarter as sales stagnated and costs rose, said its profits during the third quarter strengthened to $895,000, or 27 cents per share, from $625,000, or 18 cents per share, a year ago.
The company’s sales strengthened by 7 percent to $15.3 million from $14.2 million, with all of the increase coming from the custom folding carton business, which rose to $12.3 million. Sales of Mod-Pac’s stock packaging slipped by 1 percent to $2.3 million, while revenues from its personalized print products dipped by 3 percent to $700,000.