Attached files
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| 8-K - FORM 8-K - BALLANTYNE STRONG, INC. | btn20150731_8k.htm |
Exhibit 99.1
Ballantyne Strong Reports Financial Results
for Second Quarter of 2015
OMAHA, Nebraska (August 6, 2015) – Ballantyne Strong, Inc. (NYSE MKT: BTN), a diversified provider of digital technology services, products and solutions, today reported financial results for the second quarter ended June 30, 2015.
Net revenues were $19.7 million in the second quarter of 2015, compared with $22.0 million in the same period of the prior year. Net loss totaled $2.9 million, or ($0.21) per share, in the second quarter of 2015, compared with net income of $381,000, or $0.03 per share, in the same period of the prior year.
The financial results for the second quarter of 2015 include the following items:
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● |
Severance and facility consolidation costs of $1.1 million related to cost reduction initiatives to enhance future profitability |
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● |
A charge of $1.0 million related to the valuation of inventory |
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● |
Costs associated with the proxy contest totaling $0.3 million |
Excluding these charges, adjusted net loss totaled $0.5 million, or ($0.04) per share, in the second quarter of 2015.
Kyle Cerminara, Chairman of Ballantyne Strong, commented, “Since May 13th, the management team has worked closely with the newly composed Board to evaluate our entire cost structure and various lines of business. As a first step, we have developed and implemented a reorganization plan to reduce our cost structure and enhance our future profitability. As we continue to evaluate the Company and determine which product and service areas represent the best long-term growth opportunities, we will be taking further steps to realign the business to maximize future profitability and increase shareholder value. We're excited about the current mix of businesses at Ballantyne Strong and the future opportunities for growth. We are committed to working with the management team to invest in our current businesses by leveraging the significant cash balances of the Company.”
Q2 2015 Financial Summary
Managed Services revenues were $7.8 million in the second quarter of 2015, compared with $7.6 million in the same period of the prior year. The increase is primarily attributable to higher project revenues in the digital media business.
Systems Integration revenues were $12.2 million in the second quarter of 2015, compared with $14.8 million in the same period of the prior year. The decrease is primarily attributable to lower sales of digital projectors, which was partially offset by higher sales of screens.
Consolidated gross profit was $3.7 million in the second quarter of 2015, compared with $4.2 million in the same quarter of the prior year. Gross margin was 18.6% in the second quarter of 2015, compared with 19.3% in the same quarter of the prior year.
Selling, general and administrative expenses (SG&A) were $5.5 million in the second quarter of 2015, compared with $4.4 million in the same quarter of the prior year. SG&A in the second quarter of 2015 included $0.7 million in severance expense, $0.4 million in facility consolidation expense driven by a 27% reduction in square footage in the Omaha facility and $0.3 million in expenses related to the proxy contest. Excluding these expenses, the decrease in SG&A was attributable to reductions in compensation related expenses.
Six Month Results
For the six months ended June 30, 2015, net revenues were $42.2 million, compared with $44.0 million for the same period in 2014. Gross profit amounted to $7.9 million, or 18.8% of net revenues, compared to gross profit of $8.5 million, or 19.2% of net revenues in the prior-year period. Net loss was $13.1 million, or ($0.93) per share, compared to a net loss of $0.2 million, or ($0.02) per diluted share, in the first half of 2014. The results for the six months ended June 30, 2015 included $12.6 million of charges related to severance, facility consolidation, the proxy contest, inventory valuation and deferred tax valuation allowances. Excluding these costs the Company had a net loss of $0.5 million, or ($0.03) per share.
Balance Sheet
Ballantyne’s cash and cash equivalents balance at June 30, 2015 was $24.7 million, an increase from the $23.9 million at the end of the prior quarter. The increase in cash and cash equivalents balance was primarily attributable to strong collections of accounts receivable.
Conference Call and Webcast
A conference call to discuss the 2015 second quarter financial results will be held on Thursday, August 6, 2015 at 8:00 a.m. Eastern Time / 7:00 a.m. Central Time. Investors and analysts are invited to access the conference call by dialing 866-652-5200 (domestic) or 412-317-6060 (international), and referencing “Ballantyne Strong”. There will also be a live webcast of the call available at the Investor Relations section of http://www.strong-world.com.
After the live webcast, a replay will remain available in the Investor Relations section of Ballantyne Strong’s website. A replay of the call will be available at 877-344-7529 (domestic) or 412-317-0088 (international) through August 21, 2015, conference ID 10070355.
About Ballantyne Strong, Inc. (www.strong-world.com)
Ballantyne Strong designs, integrates, and installs technology solutions for a broad range of applications; develops and delivers out-of-home messaging, advertising and communications; manufactures projection screens and lighting products; and provides managed services including monitoring of networked equipment. The Company focuses on serving the retail, financial, government and cinema 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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Nate Legband |
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Elise Stejskal |
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Chief Financial Officer |
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Investor Relations |
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402/829-9404 |
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402/829-9423 |
-tables follow-
Ballantyne Strong, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
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June 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 |
$ | 24,661 | $ | 22,491 | ||||
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Accounts receivable (net of allowance for doubtful accounts of $690 and $679, respectively) |
13,323 | 20,266 | ||||||
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Inventories: |
||||||||
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Finished goods, net |
10,590 | 11,195 | ||||||
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Work in process |
534 | 632 | ||||||
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Raw materials and components, net |
1,330 | 2,281 | ||||||
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Total inventories, net |
12,454 | 14,108 | ||||||
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Recoverable income taxes |
162 | 1,255 | ||||||
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Deferred income taxes |
963 | 3.541 | ||||||
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Other current assets |
3,253 | 2,956 | ||||||
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Total current assets |
54,816 | 64,617 | ||||||
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Property, plant and equipment (net of accumulated depreciation of $6,088 and $5,834, respectively) |
13,151 | 13,914 | ||||||
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Intangible assets, net |
941 | 1,168 | ||||||
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Goodwill |
956 | 1,029 | ||||||
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Notes receivable |
3,264 | 2,985 | ||||||
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Deferred income taxes |
— | 4,910 | ||||||
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Other assets |
876 | 1,447 | ||||||
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Total assets |
$ | 74,004 | $ | 90,070 | ||||
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Liabilities and Stockholders’ Equity |
||||||||
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Current liabilities: |
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Accounts payable |
$ | 6,881 | $ | 9,039 | ||||
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Accrued expenses |
5,389 | 4,366 | ||||||
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Customer deposits/deferred revenue |
5,034 | 5,473 | ||||||
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Income tax payable |
640 | 1,009 | ||||||
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Total current liabilities |
17,944 | 19,887 | ||||||
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Deferred revenue |
1,766 | 2,230 | ||||||
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Deferred income taxes |
1,633 | 715 | ||||||
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Other accrued expenses, net of current portion |
1,100 | 1,776 | ||||||
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Total liabilities |
22,443 | 24,608 | ||||||
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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 16,809 shares at June 30, 2015 and December 31, 2014, respectively; 14,138 and 14,078 shares outstanding at June 30, 2015 and December 31, 2014, respectively |
168 | 168 | ||||||
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Additional paid-in capital |
38,809 | 38,657 | ||||||
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Accumulated other comprehensive income: |
||||||||
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Foreign currency translation |
(3,293 |
) |
(2,325 |
) | ||||
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Postretirement benefit obligations |
139 | 139 | ||||||
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Retained earnings |
33,977 | 47,062 | ||||||
| 69,800 | 83,701 | |||||||
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Less 2,731 of common shares in treasury, at cost at June 30, 2015 and December 31, 2014 |
(18,239 |
) |
(18,239 |
) | ||||
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Total stockholders’ equity |
51,561 | 65,462 | ||||||
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Total liabilities and stockholders’ equity |
$ | 74,004 | $ | 90,070 | ||||
Ballantyne Strong, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three and Six Months Ended June 30, 2015 and 2014
(In thousands, except per share data)
(Unaudited)
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2015 |
2014 |
2015 |
2014 |
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Net product sales |
$ | 15,114 | $ | 16,202 | $ | 32,249 | $ | 31,037 | ||||||||
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Net service revenues |
4,609 | 5,825 | 9,938 | 13,011 | ||||||||||||
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Total net revenues |
19,723 | 22,027 | 42,187 | 44,048 | ||||||||||||
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Cost of products sold |
12,759 | 14,184 | 27,554 | 26,634 | ||||||||||||
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Cost of services |
3,288 | 3,596 | 6,702 | 8,951 | ||||||||||||
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Total cost of revenues |
16,047 | 17,780 | 34,256 | 35,585 | ||||||||||||
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Gross profit |
3,676 | 4,247 | 7,931 | 8,463 | ||||||||||||
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Selling and administrative expenses: |
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Selling |
1,442 | 1,559 | 3,120 | 3,104 | ||||||||||||
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Administrative |
4,062 | 2,822 | 7,861 | 6,715 | ||||||||||||
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Total selling and administrative expenses |
5,504 | 4,381 | 10,981 | 9,819 | ||||||||||||
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Gain (loss) on the sale or disposal of assets |
(381 |
) |
2 | (379 |
) |
8 | ||||||||||
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Loss from operations |
(2,209 |
) |
(132 |
) |
(3,429 |
) |
(1,348 |
) | ||||||||
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Equity income of joint venture |
94 | — | 94 | 95 | ||||||||||||
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Other income (expense): |
||||||||||||||||
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Interest income |
167 | 182 | 331 | 359 | ||||||||||||
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Interest expense |
(11 |
) |
(18 |
) |
(24 |
) |
(27 |
) | ||||||||
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Other income (expense), net |
(65 |
) |
(123 |
) |
580 | 86 | ||||||||||
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Total other income |
91 | 41 | 887 | 418 | ||||||||||||
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Loss before income taxes |
(2,024 |
) |
(91 |
) |
(2,448 |
) |
(835 |
) | ||||||||
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Income tax benefit (expense) |
(895 |
) |
472 | (10,636 |
) |
622 | ||||||||||
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Net earnings (loss) |
$ | (2,919 |
) |
$ | 381 | $ | (13,084 |
) |
$ | (213 |
) | |||||
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Basic earnings (loss) per share |
$ | (0.21 |
) |
$ | 0.03 | $ | (0.93 |
) |
$ | (0.02 |
) | |||||
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Diluted earnings (loss) per share |
$ | (0.21 |
) |
$ | 0.03 | $ | (0.93 |
) |
$ | (0.02 |
) | |||||
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Weighted average shares outstanding: |
||||||||||||||||
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Basic |
14,121 | 14,060 | 14,106 | 14,043 | ||||||||||||
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Diluted |
14,121 | 14,106 | 14,106 | 14,043 | ||||||||||||
Ballantyne Strong, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2015 and 2014
(In thousands)
(Unaudited)
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Six Months Ended June 30, |
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2015 |
2014 |
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Cash flows from operating activities: |
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Net loss |
$ | (13,084 |
) |
$ | (213 |
) | ||
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Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
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Provision for doubtful accounts |
24 | (17 |
) | |||||
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Provision for obsolete inventory |
957 | (39 |
) | |||||
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Provision for warranty |
324 | (195 |
) | |||||
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Depreciation and amortization |
1,264 | 813 | ||||||
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Equity in income of joint venture |
(94 |
) |
(95 |
) | ||||
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Loss on forward contracts |
— | 145 | ||||||
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(Gain) loss on disposal or transfer of assets |
379 | (8 |
) | |||||
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Deferred income taxes |
8,813 | (400 |
) | |||||
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Share-based compensation expense |
151 | 200 | ||||||
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Changes in operating assets and liabilities: |
||||||||
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Accounts, unbilled and notes receivable |
7,081 | 5,977 | ||||||
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Inventories |
440 | 818 | ||||||
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Other current assets |
(392 |
) |
98 | |||||
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Accounts payable |
(2,129 |
) |
(3,781 |
) | ||||
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Accrued expenses |
(569 |
) |
(1,618 |
) | ||||
|
Customer deposits/deferred revenue |
(904 |
) |
(353 |
) | ||||
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Current income taxes |
778 | (2,382 |
) | |||||
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Other assets |
(126 |
) |
(90 |
) | ||||
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Net cash provided by (used in) operating activities |
2,913 | (1,140 |
) | |||||
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Cash flows from investing activities: |
||||||||
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Capital expenditures |
(240 |
) |
(536 |
) | ||||
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Proceeds from sale of assets |
5 | 56 | ||||||
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Net cash used in investing activities |
(235 |
) |
(480 |
) | ||||
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Cash flows from financing activities: |
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Payments on capital lease obligations |
(14 |
) |
— | |||||
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Excess tax benefits from share-based arrangements |
11 | (6 |
) | |||||
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Net cash used in financing activities |
(3 |
) |
(6 |
) | ||||
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Effect of exchange rate changes on cash and cash equivalents |
(505 |
) |
(262 |
) | ||||
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Net increase (decrease) in cash and cash equivalents |
2,170 | (1,888 |
) | |||||
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Cash and cash equivalents at beginning of period |
22,491 | 28,791 | ||||||
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Cash and cash equivalents at end of period |
$ | 24,661 | $ | 26,903 | ||||
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Supplemental disclosure of non-cash investing and financing activities: |
||||||||
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Capital lease obligations for property and equipment |
$ | 226 | $ | — | ||||
###
Reconciliation of Non-GAAP Financial Measures
Adjusted Net Loss and Adjusted EPS Reconciliation
Adjusted net loss and adjusted EPS are non-GAAP measures. The Company believes these measures provide a useful indication of profitability and basis for assessing the operations of the Company without the impact of charges related to severance, facility consolidation, the proxy contest, inventory valuation and deferred tax valuation allowances.
Adjusted net loss should not be considered in isolation or as a substitute for net loss or other profitability metrics prepared in accordance with GAAP. Adjusted net loss, as presented, may not be comparable to similarly titled measures of other companies.
Set forth below is a reconciliation of net loss to adjusted net loss. There were no similar items noted during the three or six months ended June 30, 2014.
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Unaudited, in thousands except per share |
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Three months ended June 30, 2015 |
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Net loss |
$ | (2,919 |
) | |
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Severance costs |
693 | |||
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Facility consolidation costs |
426 | |||
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Inventory valuation |
958 | |||
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Proxy contest charges |
297 | |||
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Pre-tax total |
2,374 | |||
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Income tax expense on adjustments |
- | |||
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Adjusted net less |
$ | (545 |
) | |
|
Basic and diluted shares outstanding |
14,121 | |||
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Adjusted EPS-basic and diluted |
$ | (0.04 |
) | |
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Six months ended June 30, 2015 |
||||
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Net loss |
$ | (13,084 |
) | |
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Severance costs |
695 | |||
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Facility consolidation costs |
426 | |||
|
Inventory valuation |
958 | |||
|
Proxy contest charges |
460 | |||
|
Pre-tax total |
2,539 | |||
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Deferred tax valuation allowance |
7,659 | |||
|
Change in foreign tax treatment due to valuation allowance |
2,413 | |||
|
Adjusted net loss |
$ | (473 |
) | |
|
Basic and diluted shares outstanding |
14,106 | |||
|
Adjusted EPS-basic and diluted |
$ | (0.03 | ) | |
7