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Mod-Pac Pleased by Growth in Weak Economy

Printing company has been profitable since 2010 after 3 years of losses

By David Robinson

May 5, 2011

 Mod-Pac Corp. chief executive Daniel G. Keane won’t make predictions about the Buffalo printing company’s future. But he’s pretty pleased with how it’s been doing lately.

“The results have been very good,” Keane said Wednesday, following the company’s annual shareholders meeting. “We’ve done very well in the weak economy.”

The company, which lost money every year from 2006 to 2009, has been profitable for every quarter since, and its sales during the first quarter of this year were Mod-Pac’s strongest since the end of 2005.

“We’re just very happy to see ourselves on the right track,” said Kevin Keane, Daniel Keane’s father and the company’s chairman.

During the difficult down years, triggered by the loss of its biggest customer, Mod-Pac restructured its business, scrapping its money-losing commercial print operations, cutting costs and jobs, and taking other steps to improve efficiency and productivity.

“We have steadily improved the operating efficiency of the business,” said David B. Lupp, Mod-Pac’s chief operating officer and chief financial officer.

Those steps lowered Mod- Pac’s break-even point and left it with roughly 350 employees in Buffalo. At the same time, its executives were focusing the business on its bread-and-butter: custom folding cartons for food and consumer product packaging, along with stock boxes used by candy shops and other retail customers.

Those core businesses both grew last year, and Daniel Keane said he expects a strengthening economy to add even more spring to the rebound.

Mod-Pac’s biggest business, its custom folding carton prod-

ucts, has grown at a nearly 17 percent annual pace since 2008 as the company has won new customers and gained additional work from existing clients.

“We’ve been able to build momentum in this product line,” Keane said.

Mod-Pac’s stock packaging business, where sales slumped by 17 percent from 2007 to 2009, rebounded last year with a 7 percent increase in revenues as the improving economy prompted consumers to increase discretionary spending.

That business, which generated $9.6 million in sales last year, remains more than $1 million below its prerecession peak, but Keane said he expects revenues to pick up as the rebounding economy gains steam and consumers spend more.

The momentum spilled over into the first quarter, with Mod- Pac’s total sales growing by 16 percent to $13.9 million — their highest level since the fourth quarter of 2005. Most of the growth came from a 21 percent jump in revenues at its custom folding carton business, which provides 80 percent of Mod- Pac’s sales, while stock packaging revenues grew by 5 percent.

The company earned $357,000, which was Mod-Pac’s second-highest quarterly profit since the end of 2009.

drobinson@buffnews.com