BUFFALO, N.Y., April 23 -- MOD-PAC CORP., a specialized printer and manufacturer of paperboard packaging, today announced results for its first quarter ended March 29, 2003. MOD-PAC CORP. became a separately traded NASDAQ Company on March 14, 2003, when it was spun-off from Astronics Corporation in a tax-free distribution to the Astronics shareholders on the basis of one share of MOD-PAC capital stock for every two shares of Astronics capital stock. Per share amounts reported here reflect Astronics shares outstanding and common stock equivalents for the periods prior to the distribution factored by the distribution ratio.
For the quarter ended March 29, 2003, net sales increased 21.2% to $9.2 million compared with net sales of $7.6 million in the first quarter of 2002. The $1.6 million increase was a result of $1.7 million in higher sales from MOD-PAC's commercial printing product line, which has grown rapidly since its introduction three years ago and now represents over 30% of total sales. Net sales for this product line were $2.9 million for the first quarter of this year. The growth in this product line stems from increasing market penetration by MOD-PAC's internet marketing customer, VistaPrint and the broadened product offering that MOD-PAC produces which now includes business cards, direct mail materials, marketing brochures and presentation folders.
The growth in sales was slightly offset by a $0.1 million decline in MOD-PAC's custom folding carton product line. Net sales for the custom folding carton line were $3.1 million, which represents approximately one third of total sales. This line has been impacted by the soft economy causing lower demand by customers who are reducing their inventories and order levels. Sales of MOD-PAC's stock boxes and personalized printing product lines remained stable relative to last year's first quarter.
Net income for the first quarter of 2003 improved 10.5% to $527 thousand compared with net income of $477 thousand in the same quarter last year. Operating margins decreased in the 2003 first quarter to 9.2% from 9.9% in 2002. Higher administration costs were associated with the transition to a public company and to manage the growth in the business. Earnings per share for the first quarter were up $.01 to $0.13 compared with $0.12 for the first quarter of 2002.
"The commercial print business continues to meet our expectations for growth," observed Daniel G. Keane, President and CEO of MOD-PAC CORP. "We see this product line continuing this pattern for the months ahead as additional products are introduced. Although we have experienced a sluggish start on the year in folding cartons due to economic factors, we have had indications from our customers that gives us reason to expect that we will see some modest gains in the near future for this crucial component of our packaging product lines."
He went on to say, "We continue to lay the foundation for growth: adding capacity, introducing new products and adding to our capabilities in sales, marketing and administration."
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