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MOD-PAC CORP. Reports Second Quarter 2006 Financial Results; Custom Folding Cartons Product Line Grows 19.8%; Personalized Print Achieves Record Quarter of $1.4 Million Driven by Web-Based Sales.

Article Excerpt
BUFFALO, N.Y. -- MOD-PAC CORP. (NASDAQ: MPAC) a commercial on demand printer and manufacturer of custom paper board packaging, today reported revenue of $11.0 million for the second quarter of 2006, which ended July 1, 2006. This compares with revenue of $16.3 million for the second quarter of 2005. For the second quarter this year, a net loss of $1.0 million, or $0.29 per diluted share, compares with net income of $0.7 million, or $0.18 per diluted share, in the same period last year.

Revenue

Impacting the quarter-to-quarter revenue comparative was $1.8 million in amortization in the second quarter of 2005 for a contract buy-out fee from a former customer that elected to produce its own printed materials. In addition, the second quarter last year included $5.6 million in commercial print sales primarily to its former customer that elected to take its printing in house. The former customer paid $22 million in September 2004 for the contract buyout, and it had been amortized over a 16-month period. In the fourth quarter of 2005, the final $14.1 million of the contract buy-out fee was fully amortized.

Growth in the custom folding carton product line in the 2006 second quarter of $1.2 million, or 19.8%, reached a quarter record of $7.5 million and helped to offset the decline in commercial print and the effect of the contract buy-out fee. Growth was driven by increased volume to new customers and slightly higher prices resulting from higher material costs. The second quarter has tended to be the strongest quarter for custom folding cartons.

Excluding the amortization and royalty fee impacts, commercial print revenue in the second quarter of last year would have been $5.1 million compared with $0.32 million in commercial print in the second quarter of this year. On a sequential basis, commercial print sales grew 50% compared with the first quarter of 2006.

Total web-based sales for this year's second quarter increased to $0.50 million, a 99% increase from $0.25 million in the second quarter last year and a 33% increase from $0.37 million in the first quarter of 2006. Web-based sales include commercial print sales for MOD-PAC's...