BTN Ballantyne Strong Inc

Ballantyne Strong, Inc. (NYSE Amex: BTN)

Conference call:

       

Today - Friday, May 6, 2011 at 10:00 AM ET

Webcast / Replay URL:

http://www.strong-world.com/IREvents.aspx or www.earnings.com

The replay will be available on the Internet for 90 days.

Dial-in number:

800 732 6870 (no pass code required)

Ballantyne Strong, Inc. (NYSE Amex: BTN), a provider of digital cinema projection equipment and services, cinema screens and other cinema products, today reported financial results for the first quarter (Q1) ended March 31, 2011.

First Quarter Results

Ballantyne Strong’s net revenues rose 26% to $31.9 million, led by strong performances from the Company’s cinema screen and service businesses. Cinema screen net sales achieved an approximate 93% year-over-year increase to $6.8 million. The continuing strong demand for 3D-compatible silver screens helped drive this growth, which was also buoyed by the 35% added manufacturing capacity expansion at the Company’s state-of-the-art Quebec facility.

The Company’s digital cinema services group generated a 177% revenue increase to $2.5 million, compared to $0.9 million a year ago. The level of cinema services was negatively impacted by temporary delays for certain exhibitor customers seeking third-party equipment financing during Q1.

Digital cinema product sales rose approximately 34% to $18.6 million, compared to $13.9 million in the year-ago period. Similar to the services business, the timing of certain equipment sales was delayed due to the temporary unavailability of capital for the expected purchases, prior to quarter-end.

Ballantyne’s net earnings were $1.5 million, or $0.11 per diluted share, compared to $1.0 million, or $0.07 in Q1 2010.

Consolidated gross profit increased 41% to $6.1 million, or a 19% gross margin on net revenues, compared to gross profit of $4.3 million, or 17% of net revenues in the year-earlier period. The 200 basis point gross profit margin rise reflects the relative Q1 contribution from Ballantyne’s cinema screen and service businesses, which performed well during the period. Selling and administrative expenses were $3.8 million, or 12% of net sales, up from $2.7 million in Q1 ‘10, or 10.7% of net sales. The year-over-year increase was primarily due to the hiring of several additional sales personnel, the expansion of the Company’s Asian operations and an increase in professional fees.

Balance Sheet and Cash Flow Update

Ballantyne finished the period with $11.6 million in cash and cash equivalents, compared to $22.3 million at December 31, 2010. The difference in the balance was largely a timing issue related to the temporary delay in certain digital projection equipment sales that ultimately did not get shipped before quarter-end. As a result, the Company recorded cash flow used in operations of $9.4 million during the period and spent $1.8 million on capital expenditures, including $1.4 million for the continuation of the expansion work on its cinema screen manufacturing facility.

Commenting on Q1 results, President and CEO Gary L. Cavey stated, “We achieved solid Q1 results although the timing of certain digital projection equipment shipments was delayed, principally due to customer financing issues with third-party lenders. This development negatively impacted our Q1 top- and bottom-line performance. Fortunately, some of the financing bottleneck has been alleviated subsequent to quarter-end, and we are off to a strong start in Q2.

“Our cinema screens business achieved its best-ever results in Q1 and with the manufacturing capacity expansion at our state-of-the-art Quebec facility now behind us, we remain excited about this phase of our business. We were also pleased with the performance of Ballantyne’s cinema services group during the period, including the addition of new Network Operations Center (NOC) monitoring customers. The financial contribution from our services business would also have been greater had the aforementioned financing delays not pushed certain equipment sales to the following quarters.”

About Ballantyne Strong, Inc. (www.strong-world.com)

Ballantyne Strong is a provider of digital cinema projection equipment and services as well as cinema screens, motion picture projectors and specialty lighting equipment and services. The Company supplies major and independent theater chains, top arenas, theme parks and architectural sites around the world.

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.

Ballantyne Strong, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

Three Months Ended

March 31,

2011   2010   Net revenues $ 31,874 $ 25,338 Cost of revenues 25,821 21,042 Gross profit 6,053 4,296   Selling and administrative expenses: Selling 981 715 Administrative 2,834 2,001 Total selling and administrative expenses 3,815 2,716 Gain on sale of assets 1 - Income from operations 2,239 1,580   Net interest expense (11) (4) Equity in loss of joint venture (144) (159) Other expense, net - (44) Earnings before income taxes 2,084 1,373 Income tax expense (567) (374) Net earnings $ 1,517 $ 999 Basic earnings per share $ 0.11 $ 0.07 Diluted earnings per share $ 0.11 $ 0.07   Weighted average shares outstanding: Basic 14,318 14,075 Diluted 14,447 14,272

Ballantyne Strong, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

Mar. 31, 2011

 

Dec. 31, 2010

Assets

Current assets:

Cash and cash equivalents

$11,610 $22,250 Restricted cash 209 209

Accounts receivable (net of allowance for doubtful accounts of $270 and $306, respectively)

20,795 16,380 Unbilled revenue 2,287 7,057 Inventories: Finished goods, net 22,783 21,857 Work in process 765 432 Raw materials and components, net 5,197 5,651 Total inventories, net 28,745 27,940 Recoverable income taxes 82 5 Other current assets 5,006 5,571 Total current assets 68,734 79,412 Investment in joint venture 1,915 2,070 Property, plant and equipment, net 11,479 9,750 Other non-current assets 615 723 Deferred income taxes 602 76 Total assets $83,345 $92,031 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $18,645 $30,751 Other accrued expenses 4,224 3,890 Customer deposits 4,387 2,849 Income tax payable 680 1,521 Total current liabilities 27,936 39,011 Other non-current liabilities 630 643

Total liabilities

28,566 39,654 Commitments and contingencies Stockholders’ equity: 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 16,549 shares in 2011 and 16,453 shares in 2010 166 165 Additional paid-in capital 36,795 36,241 Accumulated other comprehensive income: Foreign currency translation 590 260 Minimum pension liability 80 80 Retained earnings 32,531 31,014 70,162 67,760 Less 2,140 of common shares in treasury, at cost (15,383) (15,383) Total stockholders’ equity 54,779 52,377 Total liabilities and stockholders’ equity $83,345 $92,031

Selected Cash Flow Statement Items

(In thousands)

(Unaudited)

  Three Months Ended

March 31,

2011   2010 Net cash used in operating activities $ (9,426) $ (787) Cash flows from investing activities: Proceeds from sale of assets 29 - Capital expenditures (1,791) (148) Net cash used in investing activities (1,762) (148) Cash flows from financing activities: Proceeds from exercise of stock options 47 - Excess tax benefits from share-based compensation 300 - Issuance of restricted stock 163 - Net cash provided by financing activities 510 - Effect of exchange rate changes on cash and cash equivalents 38 98 Net decrease in cash and cash equivalents (10,640) (837) Cash and cash equivalents at beginning of period 22,250 23,589 Cash and cash equivalents at end of period $ 11,610 $ 22,752