Attached files
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| 8-K - FORM 8-K - BALLANTYNE STRONG, INC. | btn20131107_8k.htm |
| EX-99 - EXHIBIT 99.2 - BALLANTYNE STRONG, INC. | ex99-2.htm |
Exhibit 99.1
NEWS ANNOUNCEMENT
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Conference call: |
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Today – November 11 at 12:00 p.m. ET |
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Webcast / Replay URL: |
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http://www.strong-world.com (Investor Relations section) |
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The replay will be available on the Internet for 90 days. |
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Dial-in number: |
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877-941-8609; conference ID 4646495 or “Ballantyne Strong” |
Ballantyne Reports Financial Results for Third Quarter of 2013
OMAHA, Nebraska (November 11, 2013) Ballantyne Strong, Inc. (NYSE MKT: BTN), a provider of digital equipment, screens and managed services as well as specialty lighting equipment, today reported financial results for the third quarter ended September 30, 2013.
Net revenues were $18.9 million in the third quarter of 2013, compared with $39.3 million in the same period of the prior year. Net earnings totaled $46 thousand, or $0.00 per diluted share, in the third quarter of 2013, compared with a net loss of $268 thousand, or ($0.02) per share, in the same period of the prior year.
Gary L. Cavey, President and CEO of Ballantyne Strong, commented, “We are making good progress on our strategic initiative to transition our business more towards managed services, which was accelerated with our October 1st acquisition of Convergent Media Systems. The acquisition of Convergent positions the Company to capitalize on growing demand for digital signage and enterprise video solutions, and will result in substantially more of our revenue being generated through recurring managed services contracts that leverage our state-of-the-art Network Operations Centers (NOC). We are continuing to look for additional opportunities to expand our presence in markets that will further increase our managed services business.
“We are also seeing good momentum in our cinema screen business, which grew 23% over the prior year, and we are making investments to further strengthen our product offerings. During the third quarter, we made a small acquisition of a provider of unique screen coatings and paint for high-end screens. This acquisition enhances our screen business by securing ownership of the formulations and related coatings that are critical to our ongoing success. We have recently introduced a new PREMIUM HGA screen that utilizes our new HI-GAIN coating technology that we believe sets a new standard for large format screens and positions this business to continue delivering strong growth,” said Mr. Cavey.
Q3 2013 Financial Summary
Sales of theatre products and services were $18.3 million in the third quarter of 2013, compared with $38.4 million in the same period of the prior year. The decline reflects the continued softening in demand as the cinema industry’s shift to a digital equipment platform winds down.
Cinema screen sales increased 23% to $3.7 million, compared with $3.0 million in the same period of the prior year. The increase was primarily attributable to increased demand from several North American exhibitors that are replacing screens as part of theatre upgrades.
Managed services revenues were $2.7 million, compared to $4.3 million in the same quarter of the prior year. The decrease is primarily attributable to a decline in non-recurring digital projection system installation sales, which was partially offset by an increase in recurring revenues from after-sale maintenance and NOC 24/7/365 monitoring revenue.
Consolidated gross profit decreased to $3.3 million, from $3.7 million in the same quarter of the prior year. However, gross profit margin in the third quarter of 2013 increased to 17.7% from 9.5% in the year-ago period, which was primarily attributable to a decline in lower margin theatre net revenues as a percentage of total sales and an increase in the relative contribution from higher margin cinema screen manufacturing and managed services during the period.
Selling and administrative expenses were $3.4 million, down from $3.7 million in the year-earlier period. The lower selling and administrative expenses was due primarily to a decline in spending associated with tradeshows and consultants. The Company also incurred approximately $200 thousand in expenses related to acquisition activities in the third quarter of 2013. As a percentage of net revenues, year-over-year selling and administrative expenditures rose from 9.4% to 17.9%, reflecting the decline in net revenues.
Nine-Month Results
Net revenues were $70.9 million for the first nine months of 2013, compared with $130.0 million during the same period of the prior year. Gross profit amounted to $11.9 million, or 16.8% of net revenues, compared to gross profit of $16.4 million, or 12.6% of net revenues in the prior-year period. Net earnings were $1.9 million, or $0.13 per diluted share, compared to net earnings of $4.0 million, or $0.28 per diluted share, in the first nine months of 2012.
Balance Sheet and Cash Flow Update
Ballantyne’s cash and cash equivalents balance at September 30, 2013 was $26.3 million, down from $45.1 million at the end of the prior quarter. The decline in cash and cash equivalents balance primarily reflects cash utilized to fund and make deposits on acquisitions during the quarter. Over the first nine months of 2013, the Company generated $5.8 million in positive cash flow from operations.
About Ballantyne Strong, Inc. (www.strong-world.com)
Ballantyne Strong is a provider of digital equipment, screens and managed services as well as specialty lighting equipment. The Company supplies major and independent theater chains, top arenas, theme parks and architectural sites around the world. Through its subsidiary, Convergent Media Systems, the Company is also a leading player in digital signage and content creation and distribution systems for the retail, hospitality, financial services, cinema and government markets.
Forward-Looking Statements
Except for the historical information in this press release, it includes forward-looking statements that involve risks and uncertainties, including but not limited to, quarterly fluctuations in results; customer demand for the Company’s products; the development of new technology for alternate means of motion picture presentation; domestic and international economic conditions; the management of growth; and other risks detailed from time to time in the Company’s Securities and Exchange Commission filings. Actual results may differ materially from management’s expectations.
CONTACT:
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Mary A. Carstens |
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Tricia Ross |
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Chief Financial Officer |
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Financial Profiles |
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402/453-4444 |
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916/939-7285 or tross@finprofiles.com |
-tables follow-
Ballantyne Strong, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2013 and 2012
(In thousands, except per share data)
(Unaudited)
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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2013 |
2012 |
2013 |
2012 |
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Net revenues |
$ | 18,855 | $ | 39,260 | $ | 70,865 | $ | 129,987 | ||||||||
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Cost of revenues |
15,517 | 35,539 | 58,934 | 113,569 | ||||||||||||
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Gross profit |
3,338 | 3,721 | 11,931 | 16,418 | ||||||||||||
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Selling and administrative expenses: |
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Selling |
850 | 1,349 | 2,586 | 3,405 | ||||||||||||
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Administrative |
2,524 | 2,345 | 7,478 | 8,547 | ||||||||||||
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Total selling and administrative expenses |
3,374 | 3,694 | 10,064 | 11,952 | ||||||||||||
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Gain (loss) on the sale/disposal/transfer of assets |
3 | (17 |
) |
7 | 1,361 | |||||||||||
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Income from operations |
(33 |
) |
10 | 1,874 | 5,827 | |||||||||||
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Net interest income (expense) |
152 | (8 |
) |
169 | (30 |
) | ||||||||||
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Equity income (loss) of joint venture |
2 | (65 |
) |
(117 |
) |
1 | ||||||||||
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Other income (expense), net |
(33 |
) |
(205 |
) |
463 | 208 | ||||||||||
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Income (loss) before income taxes |
88 | (268 |
) |
2,389 | 6,006 | |||||||||||
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Income tax expense |
(42 |
) |
— | (502 |
) |
(2,024 |
) | |||||||||
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Net earnings (loss) |
$ | 46 | $ | (268 |
) |
$ | 1,887 | $ | 3,982 | |||||||
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Basic earnings (loss) per share |
$ | 0.00 | $ | (0.02 |
) |
$ | 0.13 | $ | 0.28 | |||||||
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Diluted earnings (loss) per share |
$ | 0.00 | $ | (0.02 |
) |
$ | 0.13 | $ | 0.28 | |||||||
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Weighted average shares outstanding: |
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Basic |
14,009 | 13,959 | 13,995 | 14,055 | ||||||||||||
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Diluted |
14,039 | 13,959 | 14,025 | 14,136 | ||||||||||||
Ballantyne Strong, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
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September 30, |
December 31, |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | 26,333 | $ | 40,168 | ||||
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Accounts receivable (net of allowance for doubtful accounts of $536 and $487, respectively) |
12,404 | 26,227 | ||||||
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Inventories: |
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Finished goods, net |
9,667 | 6,706 | ||||||
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Work in process |
407 | 1,018 | ||||||
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Raw materials and components, net |
3,811 | 3,247 | ||||||
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Total inventories, net |
13,885 | 10,971 | ||||||
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Deposit on Convergent acquisition |
17,424 | — | ||||||
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Other current assets |
4,131 | 6,741 | ||||||
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Total current assets |
74,177 | 84,107 | ||||||
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Property, plant and equipment (net of accumulated depreciation of $4,589 and $3,750, respectively) |
10,149 | 11,105 | ||||||
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Note receivable |
2,388 | 2,232 | ||||||
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Intangible assets, net |
635 | 105 | ||||||
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Goodwill |
1,163 | — | ||||||
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Other assets |
2,172 | 1,997 | ||||||
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Total assets |
$ | 90,684 | $ | 99,546 | ||||
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
$ | 9,028 | $ | 16,646 | ||||
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Accrued expenses |
4,520 | 5,313 | ||||||
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Income taxes payable |
57 | — | ||||||
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Customer deposits/deferred revenue |
2,726 | 5,251 | ||||||
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Total current liabilities |
16,331 | 27,210 | ||||||
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Deferred revenue |
3,081 | 3,302 | ||||||
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Deferred income taxes |
816 | 580 | ||||||
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Other accrued expenses, net of current portion |
1,821 | 1,538 | ||||||
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Total liabilities |
22,049 | 32,630 | ||||||
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Stockholders’ equity: |
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Preferred stock, par value $.01 per share; Authorized 1,000 shares, none outstanding |
— | — | ||||||
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Common stock, par value $.01 per share; Authorized 25,000 shares; issued 16,869 and 16,782 shares at September 30, 2013 and December 31, 2012, respectively; 14,138 and 14,051 shares outstanding at September 30, 2013 and December 31, 2012, respectively |
167 | 167 | ||||||
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Additional paid-in capital |
38,116 | 37,770 | ||||||
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Accumulated other comprehensive income: |
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Foreign currency translation |
(287 |
) |
269 | |||||
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Postretirement benefit obligations |
46 | 46 | ||||||
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Retained earnings |
48,832 | 46,903 | ||||||
| 86,874 | 85,155 | |||||||
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Less 2,731 of common shares in treasury, at cost at September 30, 2013 and December 31, 2012 |
(18,239 |
) |
(18,239 |
) | ||||
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Total stockholders’ equity |
68,635 | 66,916 | ||||||
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Total liabilities and stockholders’ equity |
$ | 90,684 | $ | 99,546 | ||||
Ballantyne Strong, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2013 and 2012
(In thousands)
(Unaudited)
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Nine Months Ended September 30, |
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2013 |
2012 |
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Net cash provided by (used in) operating activities |
$ | 5,775 | $ | (5,346 |
) | |||
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Cash flows from investing activities: |
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Purchase of Peintures Elite, Inc. |
(1,747 |
) |
— | |||||
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Deposit on Convergent acquisition |
(17,424 |
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— | |||||
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Distribution from Joint Venture |
— | 2,508 | ||||||
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Capital expenditures |
(231 |
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(1,095 |
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Proceeds from sale of assets |
6 | 3,332 | ||||||
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Net cash (used in) provided by investing activities |
(19,396 |
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4,745 | |||||
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Cash flows from financing activities: |
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Excess tax benefits from share-based arrangements |
(11 | ) | — | |||||
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Purchase of treasury stock |
— | (2,756 |
) | |||||
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Proceeds from employee stock purchase plan |
4 | — | ||||||
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Net cash used in financing activities |
(7 |
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(2,756 |
) | ||||
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Effect of exchange rate changes on cash and cash equivalents |
(207 |
) |
231 | |||||
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Net decrease in cash and cash equivalents |
(13,835 |
) |
(3,126 |
) | ||||
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Cash and cash equivalents at beginning of period |
40,168 | 39,889 | ||||||
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Cash and cash equivalents at end of period |
$ | 26,333 | $ | 36,763 | ||||
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