Ballantyne Strong, Inc. (NYSE American: BTN), a holding
company with diverse business activities focused on serving the
cinema, retail, financial, advertising and government markets,
today reported financial results for the fourth quarter ended
December 31, 2017.
Net revenues were $15.8 million in the fourth quarter of 2017,
compared with $19.9 million in the same period of the prior year.
Loss from operations was ($1.9) million in the fourth quarter of
2017, compared with income from operations of $0.8 million in the
same period of the prior year. Net loss from continuing operations
was ($1.0) million, or ($0.07) per share, in the fourth quarter of
2017 compared with net income from continuing operations of $0.4
million, or $0.03 per share, in the same period of the prior
year.
Kyle Cerminara, Chairman and CEO of Ballantyne Strong, Inc.,
commented, “In 2017, we made necessary investments in our systems
and internal controls that temporarily increased our general and
administrative expenses. We also invested in creating two new
businesses, StrongVest and Strong Digital Media, that we believe
are pivotal to the future of the company. We launched our first
ETF, the CWA Income ETF (BATS: CWAI) and we are approaching the one
year anniversary of the fund. In early 2018, we entered the New
York City taxi top advertising business through Strong Digital
Media and we expect this business to begin generating significant
revenue over the next few months. We are continuing to refine our
holding company structure and we expect to optimize this structure
further in 2018.”
Segment OrganizationDuring the fourth quarter of 2017, we
reorganized our corporate reporting structure and moved the
operations of Strong Technical Services, Inc. from the Digital
Media segment to the Cinema segment. All prior periods have been
recast in our segment reporting to reflect the current segment
organization.
Q4 2017 Financial SummaryCinema revenues were $10.8
million in the fourth quarter of 2017, compared with $12.9 million
in the same period of the prior year. The decrease was driven by
decreased sales of projectors, lamps and screen support systems,
partially offset by increases in projection system installations
and sales of screens and digital parts.
Digital Media revenues were $5.2 million in the fourth quarter
of 2017, compared with $7.2 million in the same period of the prior
year. This decrease was driven by decreased non-recurring digital
signage equipment and installation sales, partially offset by
increased recurring digital signage as a service (“DSaaS”) and
digital signage maintenance sales.
Consolidated gross profit was $3.9 million in the fourth quarter
of 2017, compared with $5.4 million in the same quarter of the
prior year. Gross margin was 24.8% in the fourth quarter of 2017,
compared with 27.0% in the same quarter of the prior year, as lower
revenues resulted in less favorable absorption of fixed operating
costs in the fourth quarter of 2017.
Selling and administrative expenses were $5.6 million in the
fourth quarter of 2017, compared with $4.4 million in the same
quarter of the prior year. The increase was primarily due to a
contract termination charge of $0.4 million, as well as increases
in compensation and benefit expenses of $0.3 million, consulting
expenses of $0.2 million and bad debt expense of $0.1 million.
Full Year 2017 ResultsFor the year ended December 31,
2017, net revenues were $72.6 million, compared with $76.3 million
for 2016. Gross profit amounted to $18.9 million, or 26.1% of net
revenues, compared to gross profit of $21.2 million, or 27.7% of
net revenues in the prior year. Net loss from continuing operations
was ($3.6) million, or ($0.25) per share, for 2017, compared to net
income from continuing operations of $0.9 million, or $0.06 per
share, for the prior year.
Balance SheetExcluding assets held for sale, Ballantyne’s
cash and cash equivalents balance at December 31, 2017 was $4.9
million, compared to $7.6 million at December 31, 2016. The
decrease in cash was driven by operating losses and cash utilized
for the purchase of equity investments and for capital
expenditures, partially offset by proceeds from the issuance of
$2.5 million of short and long term debt. Equity method investments
had a book value of $18.1 million and a market value of $15.3
million as of December 31, 2017.
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, 2017 and
the following risks and uncertainties: the Company’s ability to
expand its revenue streams, 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 capital allocation strategy, the Company’s ability to
retain or replace its significant customers, the impact of a
challenging global economic environment 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 new executives, the Company’s ability to complete
acquisitions, strategic investments, entry into new lines of
business, divestitures, mergers or other transactions on acceptable
terms or at all, 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)
(Unaudited) December 31,
2017 2016 Assets Current assets:
Cash and cash equivalents $ 4,870 $ 7,596 Accounts receivable, net
10,766 16,316 Inventories, net 4,821 6,563 Other current assets
1,785 2,606 Total current assets 22,242 33,081
Property, plant and equipment, net 10,826 11,187 Equity method
investments 18,053 13,098 Goodwill and intangible assets, net 4,924
3,246 Other assets 2,969 1,827 Total assets $ 59,014
$ 62,439
Liabilities and Stockholders' Equity Current
liabilities: Accounts payable and accrued expenses $ 6,496 $ 9,272
Short-term debt, including current portion of long-term 565 -
Deferred revenue and customer deposits 1,619 4,211 Other current
liabilities - 165 Total current liabilities 8,680
13,648 Long-term debt, net of current portion and debt issuance
costs 1,870 - Other liabilities 4,342 3,637 Total
liabilities 14,892 17,285 Stockholders' equity 44,122
45,154 Total liabilities and stockholders' equity $ 59,014 $ 62,439
Ballantyne Strong, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (In
thousands, except per share amounts) (Unaudited)
Quarters Ended
December 31, Years Ended December 31, 2017
2016 2017 2016 Net product sales $ 9,243 $
14,723 $ 47,544 $ 54,391 Net service revenues 6,519
5,191 25,102 21,863 Total
net revenues 15,762 19,914 72,646 76,254 Cost of products sold
4,523 11,128 35,446 42,338 Cost of services 7,337
3,392 18,266 12,760 Total
cost of revenues 11,860 14,520
53,712 55,098 Gross profit 3,902 5,394 18,934
21,156 Selling and administrative expenses: Selling 1,210 1,310
5,417 4,612 Administrative 4,415 3,135
16,121 12,262 Total selling and
administrative expenses 5,625 4,445 21,538 16,874 Loss on sale or
disposal of assets (210 ) (118 ) (210 )
(118 ) (Loss) income from operations (1,933 ) 831 (2,814 ) 4,164
Other income (expense): Interest income 1 5 9 70 Interest expense
(79 ) - (153 ) (47 ) Fair value adjustment to notes receivable
1,146 - 1,146 - Foreign currency transaction gain (loss) 106 (20 )
(304 ) (1,002 ) Change in value of marketable securities - 434 -
(34 ) Excess distribution from joint venture - - - 502 Other
(expense) income, net (7 ) 14 (16 )
118 Total other income (expense) 1,167
433 682 (393 ) (Loss) earnings
before income taxes and equity method investment income (766 )
1,264 (2,132 ) 3,771 Income tax expense 709 934 3,418 3,019 Equity
method investment income 442 47
1,958 117 Net (loss) earnings from continuing
operations (1,033 ) 377 (3,592 ) 869 Net income (loss) from
discontinued operations, net of tax 41 (535 )
(25 ) (1,277 ) Net loss $ (992 ) $ (158 ) $ (3,617 )
$ (408 )
Net (loss) earnings per share - basic Net (loss)
earnings from continuing operations $ (0.07 ) $ 0.03 $ (0.25 ) $
0.06 Net earnings (loss) from discontinued operations 0.00 (0.04 )
(0.00 ) (0.09 ) Net loss (0.07 ) (0.01 ) (0.25 ) (0.03 )
Net
(loss) earnings per share - diluted Net (loss) earnings from
continuing operations $ (0.07 ) $ 0.03 $ (0.25 ) $ 0.06 Net
earnings (loss) from discontinued operations 0.00 (0.04 ) (0.00 )
(0.09 ) Net loss (0.07 ) (0.01 ) (0.25 ) (0.03 )
Ballantyne Strong, Inc. and Subsidiaries Condensed
Consolidated Statements of Cash Flows (In thousands)
(Unaudited) Years Ended December
31, 2017 2016 Cash flows from
operating activities: Net loss $ (3,617 ) $ (408 ) Net loss from
discontinued operations, net of tax (25 ) (1,277 )
Net (loss) earnings from continuing operations (3,592 ) 869
Non-cash expenses, net 5,653 3,723 Fair value adjustment to notes
receivable (1,146 ) - Excess distribution from joint venture - (502
) Equity method investment income (1,958 ) (117 ) Changes in
operating assets and liabilities, net 1,053
(4,065 ) Net cash flows provided by (used in) operating activities
- continuing operations 10 (92 ) Net cash flows (used in) provided
by operating activities - discontinued operations (123 )
(3,370 ) Net cash used in operating activities (113 ) (3,462
) Cash flows from investing activities: Purchase of equity
securities (2,525 ) (7,048 ) Dividends received from investee in
excess of cumulative earnings 253 - Capital expenditures
(3,275 ) (3,762 ) Net cash used in investing activities -
continuing operations (5,547 ) (10,810 ) Net cash used in investing
activities - discontinued operations 134 297
Net cash used in investing activities (5,413 ) (10,513 )
Cash flows from financing activities: Proceeds from issuance
of long-term debt 2,000 - Proceeds from issuance of short-term debt
500 - Payment of debt issuance costs (49 ) - Principal payments on
long-term debt (33 ) - Purchase of treasury stock (102 ) (230 )
Proceeds from exercise of stock options 71 135 Payments on capital
lease obligations (240 ) (268 ) Excess tax benefits from
stock-based compensation - 45 Net cash
provided by (used in) financing activities 2,147
(318 ) Effect of exchange rate changes on cash and cash
equivalents - continuing operations 478 583 Effect of exchange rate
changes on cash and cash equivalents - discontinued operations
- (589 ) Net decrease in cash and cash
equivalents (2,901 ) (14,299 ) Discontinued operations cash
activity included above: Add: Cash balance included in assets held
for sale at beginning of period 175 4,208 Less: Cash balance
included in assets held for sale at end of period - (175 ) Cash and
cash equivalents at beginning of period 7,596
17,862 Cash and cash equivalents at end of period $ 4,870
$ 7,596 Supplemental disclosure of cash paid for:
Interest $ 152 $ 46 Income taxes $ 2,830 $ 3,378
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version on businesswire.com: http://www.businesswire.com/news/home/20180315006445/en/
Ballantyne Strong, Inc.Lance Schulz,
402-829-9427Chief Financial Officer
Ballantyne Strong (AMEX:BTN)
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