Ballantyne Strong, Inc. (NYSE MKT: BTN), a holding company
with diverse business activities focused on serving the cinema,
retail, financial and government markets, today reported financial
results for the fourth quarter ended December 31, 2016.
Net revenues were $20.4 million in the fourth quarter of 2016,
compared with $21.3 million in the same period of the prior year.
Income from operations was $1.3 million in the fourth quarter of
2016, compared with a loss from operations of ($0.2) million in the
same period of the prior year. Net income from continuing
operations totaled $1.1 million, or $0.08 per share, in the fourth
quarter of 2016, compared with a net loss from continuing
operations of ($1.1) million, or ($0.07) per share, in the same
period of the prior year.
Kyle Cerminara, Chairman and CEO of Ballantyne Strong, Inc.,
commented, "I am pleased with our results for the fourth quarter of
2016. We’ve continued to make a great deal of progress as we focus
our efforts on transitioning Ballantyne Strong into a high
performing holding company. We will continue to prioritize
strategic capital allocation decisions and pursue only investments
that we expect will result in increasing shareholder value over the
long term. Our company is now in the position of reinvesting our
cost savings back into our businesses to meet our anticipated
growth opportunities. I’m very excited about the potential impact
of these investments over the coming quarters and years."
Q4 2016 Financial SummaryCinema revenues were $9.4
million in the fourth quarter of 2016, compared with $13.6 million
in the same period of the prior year. The decrease is due to lower
digital projector and digital parts sales as the same period of the
prior year included a larger than normal amount of digital
projector sales.
Digital Media revenues were $11.1 million in the fourth quarter
of 2016, compared with $8.0 million in the same period of the prior
year. The increase is attributable to an increase in project
revenue and equipment sales from our digital signage business as
well as a significant increase in demand from our service
business.
Consolidated gross profit was $5.9 million in the fourth quarter
of 2016, compared with $5.2 million in the same quarter of the
prior year. Gross margin was 28.8% in the fourth quarter of 2016,
compared with 24.3% in the same quarter of the prior year. The
increase in gross profit and gross margin percentage was driven by
a more favorable sales mix and by more effective management of
operating costs.
Selling, general and administrative expenses (SG&A) were
$4.4 million in the fourth quarter of 2016, compared with $5.4
million in the same quarter of the prior year. The decrease in
SG&A was driven by a charge in the prior year period of $1.0
million related to bad debt and a reduction in depreciation and
amortization expense of $0.2 million. These decreases were
partially offset by an increase in personnel related expenses of
$0.2 million driven by our investment in sales and marketing.
Expense reductions in several other areas of SG&A in the fourth
quarter of 2016 in comparison to the same period of the prior year
were offset by investments in areas that are expected to drive
revenue growth and operating efficiencies.
Twelve Month ResultsFor the twelve months ended December
31, 2016, net revenues were $76.7 million, compared with $78.1
million for the same period in 2015. Gross profit amounted to $21.6
million, or 28.2% of net revenues, compared to gross profit of
$16.7 million, or 21.4% of net revenues in the prior year period.
Net earnings from continuing operations were $1.6 million, or $0.11
per share, for the twelve months ended December 31, 2016, compared
to a net loss from continuing operations of ($16.7) million, or
($1.19) per share for the same period of the prior year.
Discontinued OperationsAs a result of the plan to pursue
the sale of the Strong Westrex operations, the financial results of
the Strong Westrex business are being reported as discontinued
operations in the condensed consolidated statement of operations.
All prior period results have been reclassified to reflect results
from continuing operations. Net loss from discontinued operations
was ($1.3) million for the twelve months ended December 31, 2016,
compared to a net loss of ($0.7) million in the same period of the
prior year. Net loss from discontinued operations in 2016 includes
a ($0.6) million loss on the sale of Strong Westrex (Beijing)
Technology, Inc. during the fourth quarter of 2016.
Balance SheetExcluding assets held for sale, Ballantyne’s
cash and cash equivalents balance at December 31, 2016 was $7.6
million, which was lower than $17.9 million at December 31, 2015.
The decrease in cash was driven by cash utilized for the purchase
of equity investments and an increase in our accounts receivable
balance in the fourth quarter of 2016. The cash balance for the
Strong Westrex operations, classified under assets held for sale,
was $0.2 million as of December 31, 2016. Investments in equity
method investments had a book value of $13.1 million and a market
value of $14.8 million as of December 31, 2016.
Conference Call and WebcastA conference call to discuss
2016 fourth quarter financial results will be held on Thursday,
March 16, 2017 at 8:30 a.m. Eastern Time / 7:30 a.m. Central Time.
Investors and analysts are invited to access the conference call by
dialing 844-834-0648 (domestic) or 412-317-5195 (international),
and referencing “Ballantyne Strong”. A link to the fourth quarter
presentation and a live webcast of the call is available on the
Investors – Financial Reports & Webcasts section of
http://www.ballantynestrong.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 March 30, 2017, conference ID
10098856.
About Ballantyne Strong, Inc.
(www.ballantynestrong.com)Ballantyne Strong and its
subsidiaries engage in diverse business activities including the
design, integration and installation of technology solutions for a
broad range of applications; development and delivery of
out-of-home messaging, advertising and communications;
manufacturing of projection screens; and providing managed services
including monitoring of networked equipment. The Company focuses on
serving the cinema, retail, financial, and government markets.
Forward-Looking StatementsExcept for the historical
information in this press release, it includes forward-looking
statements which involve a number of risks and uncertainties,
including but not limited to those discussed in the “Risk Factors”
section contained in Item 1A in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2016 and
the following risks and uncertainties: the Company’s ability to
expand its revenue streams to compensate for the lower demand for
its digital cinema products and installation services, potential
interruptions of supplier relationships or higher prices charged by
suppliers, the Company’s ability to successfully compete and
introduce enhancements and new features that achieve market
acceptance and that keep pace with technological developments, the
Company’s ability to successfully execute its investment strategy,
the Company’s ability to retain or replace its significant
customers, the impact of a reversal of the U.S. economic recovery
and a return to volatile or recessionary conditions in the United
States or abroad or a downturn in the markets, economic and
political risks of selling products in foreign countries, risks of
non-compliance with U.S. and foreign laws and regulations,
cybersecurity risks and risks of damage and interruptions of
information technology systems, the Company’s ability to retain key
members of management and successfully integrate the new
executives, acquisition-related risks, the Company’s ability to
assert its intellectual property rights, the impact of natural
disasters and other catastrophic events, the adequacy of insurance,
and the impact of having a controlling stockholder. Given the risks
and uncertainties, readers should not place undue reliance on any
forward-looking statement and should recognize that the statements
are predictions of future results which may not occur as
anticipated. Actual results could differ materially from those
anticipated in the forward-looking statements and from historical
results, due to the risks and uncertainties described herein, as
well as others not now anticipated. New risk factors emerge from
time to time and it is not possible for management to predict all
such risk factors, nor can it assess the impact of all such factors
on our business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from
those contained in any forward-looking statements. Except where
required by law, the Company assumes no obligation to update
forward-looking statements to reflect actual results or changes in
factors or assumptions affecting such forward-looking
statements.
Ballantyne Strong, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(In thousands)
December 31, December 31, 2016
2015 Assets Current assets: Cash and cash equivalents
$ 7,596 $ 17,862 Accounts receivable (less allowance for doubtful
accounts of $1,097 in 2016 and $1,207 in 2015) 16,793 11,032
Inventories, net 6,563 7,192 Recoverable income taxes 656 85 Other
current assets 1,746 2,556 Current assets held for sale 188
7,219 Total current assets 33,542 45,946
Property, plant and equipment, net 11,695 11,703 Marketable
securities — 2,101 Equity method investments 13,098 4,001
Intangible assets, net 1,849 235 Goodwill 889 863 Notes receivable
1,669 1,669 Deferred income taxes 84 — Other assets 74 281
Noncurrent assets held for sale — 65
Total assets $ 62,900 $ 66,864
Liabilities and
Stockholders’ Equity Current liabilities: Accounts payable $
5,175 $ 4,948 Accrued expenses 4,097 3,583 Customer
deposits/deferred revenue 4,211 3,550 Income tax payable 108 1,291
Current liabilities held for sale 57 4,395
Total current liabilities 13,648 17,767 Deferred revenue
1,226 1,288 Deferred income taxes 1,604 1,716 Other accrued
expenses, net of current portion 570 1,581
Total liabilities 17,048 22,352 Stockholders’ equity:
Preferred stock, par value $.01 per share; authorized 1,000 shares,
none outstanding — — Common stock, par value $.01 per share;
authorized 25,000 shares; issued 17,047 and 16,925 shares at
December 31, 2016 and December 31, 2015, respectively; 14,268 and
14,191 shares outstanding at December 31, 2016 and 2015,
respectively 169 169 Additional paid-in capital 39,758 39,157
Accumulated other comprehensive income: Foreign currency
translation (5,709 ) (6,229 ) Postretirement benefit obligation 97
74 Unrealized gain on available-for-sale securities of equity
method investment 136 — Retained earnings 29,885
29,595 64,336 62,766 Less 2,779 and 2,734 of common
shares in treasury, at December 31, 2016 and 2015, respectively, at
cost (18,484 ) (18,254 ) Total stockholders’ equity
45,852 44,512 Total liabilities and
stockholders’ equity $ 62,900 $ 66,864
Ballantyne Strong, Inc. and
Subsidiaries
Condensed Consolidated Statements of
Operations
(In thousands, except per share
data)
(Unaudited)
Three Months Ended Years Ended
December 31, December 31, 2016
2015 2016 2015 Net product sales $
14,723 $ 15,414 $ 54,391 $ 55,166 Net service revenues 5,668
5,918 22,340 22,893
Total net revenues 20,391 21,332
76,731 78,059 Cost of products sold
11,128 12,683 42,338 46,517 Cost of services 3,392
3,468 12,760 14,830 Total
cost of revenues 14,520 16,151
55,098 61,347 Gross profit 5,871 5,182 21,633
16,712 Selling and administrative expenses: Selling 1,310 965 4,612
4,913 Administrative 3,134 4,388
12,262 15,582 Total selling and administrative
expenses 4,444 5,353 16,874 20,495 Loss on sale or disposal of
assets (119 ) (31 ) (118 ) (424 )
Income (loss) from operations 1,308 (202 ) 4,641 (4,207 ) Other
income (expense): Interest income (expense) 6 3 23 312 Fair value
adjustment for notes receivable — — — (1,595 ) Foreign currency
transaction gain (loss) (20 ) 274 (1,002 ) 1,612 Excess
distribution from joint venture — — 502 — Change in value of
marketable securities 434 — (34 ) 117 Other income (expense), net
13 93 118 (21 )
Total other income (expense) 433 370 (393 ) 425 Earnings (loss)
before income taxes and equity method investment income 1,741 168
4,248 (3,782 ) Income tax expense 713 1,248 2,798 13,038 Equity
method investment income 47 1
117 96 Income (loss) from continuing
operations 1,075 (1,079 ) 1,567 (16,724 ) Net loss from
discontinued operations, net of tax (535 ) (103 )
(1,277 ) (743 ) Net earnings (loss) 540
(1,182 ) 290 (17,467 )
Net earnings
(loss) per share – basic Net earnings (loss) from continuing
operations $ 0.08 $ (0.07 ) $ 0.11 $ (1.19 ) Net loss from
discontinued operations (0.04 ) (0.01 ) (0.09
) (0.05 ) Net earnings (loss) $ 0.04 $ (0.08 ) $ 0.02
$ (1.24 )
Net earnings (loss) per share – diluted Net
earnings (loss) from continuing operations $ 0.08 $ (0.07 ) $ 0.11
$ (1.19 ) Net loss from discontinued operations (0.04 )
(0.01 ) (0.09 ) (0.05 ) Net earnings (loss) $
0.04 $ (0.08 ) $ 0.02 $ (1.24 )
Ballantyne Strong, Inc. and
Subsidiaries
Condensed Consolidated Statements of
Cash Flows
(In thousands)
Years Ended December 31, 2016
2015 Cash flows from operating activities: Net earnings
(loss) $ 290 $ (17,467 ) Net loss from discontinued operations, net
of tax (1,277 ) (743 ) Net earnings (loss) from
continuing operations 1,567 (16,724 ) Adjustments to reconcile net
earnings (loss) to net cash provided by operating activities:
Provision for doubtful accounts 6 1,065 Provision for obsolete
inventory (48 ) 1,713 Provision for warranty 325 562 Depreciation
and amortization 2,187 2,303 Impairment of intangible assets — 638
Fair value adjustment to notes receivable — 1,595 Excess
distribution from joint venture 502 — Equity in income of equity
method investments (117 ) (96 ) Unrealized gain on marketable
securities (34 ) (117 )
Loss (gain) on disposal or transfer of
assets
118 424 Deferred income taxes (213 ) 8,817 Share-based compensation
expense 466 501 Dividends received 207
—
Changes in operating assets and liabilities, net of effect of
acquisitions: Accounts receivable (4,220 ) 7,876 Inventories 718
1,687 Other current assets (378 ) (325 ) Accounts payable
931
(3,085 ) Accrued expenses (1,083 ) (221 ) Customer
deposits/deferred revenue 599 (1,670 ) Current income taxes (1,810
) 1,620 Other assets 185 (136 ) Net cash flows
from operating activities – continuing operations
(90
) 6,427 Net cash flows from operating activities – discontinued
operations (3,370 ) 1,554 Net cash (used in)
provided by operating activities
(3,462
) 7,981 Cash flows from investing activities: Purchase of equity
securities (7,048 ) (5,983 ) Capital expenditures
(3,762
) (458 ) Proceeds from sale of assets — 220
Net cash flows from investing activities – continuing
operations
(10,810
) (6,222 ) Net cash flows from investing activities – discontinued
operations 297 17 Net cash used in
investing activities
(10,513
) (6,205 ) Cash flows from financing activities: Purchase of
treasury stock (230 ) (15 ) Proceeds from exercise of stock options
135
—
Payments on capital lease obligations (268 ) (200 ) Excess tax
benefits from share-based arrangements 45 12
Net cash from financing activities (318 ) (203 ) Effect of
exchange rate changes on cash and cash equivalents – continuing
operations 583 (1,867 ) Effect of exchange
rate changes on cash and cash equivalents – discontinued operations
(589 ) (127 ) Net decrease in cash and cash
equivalents (14,299 ) (421 ) Discontinued operations cash activity
included above: Add: Cash balance included in assets held for sale
at beginning of period 4,208 3,190 Less: Cash balance included in
assets held for sale at end of period (175 ) (4,208 ) Cash and cash
equivalents at beginning of year 17,862 19,301
Cash and cash equivalents at end of year $ 7,596 $
17,862 Supplemental disclosure of cash paid for: Interest $
46 $ 45 Income Taxes $ 3,378 $ 2,272 Supplemental disclosure of
non-cash investing and financing activities: Capital lease
obligations for property and equipment $ — $ 752
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170316005451/en/
Ballantyne Strong, Inc.Ryan Burke, 402-829-9434Chief
Financial OfficerorElise Stejskal, 402-829-9423Investor
Relations
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