Ballantyne Strong, Inc. (NYSE MKT: BTN), a diversified
provider of digital technology services, products and solutions,
today reported financial results for the first quarter ended March
31, 2015.
Net revenues were $22.5 million in the first quarter of 2015,
compared with $22.0 million in the same period of the prior
year.
Net loss totaled $10.2 million, or ($0.72) per share, in the
first quarter of 2015, compared with a net loss of $594,000, or
($0.04) per share, in the same period of the prior year. Financial
results for the first quarter of 2015 include a nonrecurring,
non-cash charge totaling $10.1 million relating to a valuation
allowance against the Company’s U.S. tax jurisdiction deferred tax
assets.
Excluding the valuation allowance, adjusted net loss totaled
$92,000, or ($0.01) per share, in the first quarter of 2015.
Chris Stark, President of Ballantyne Strong, commented, “We had
a solid performance in the first quarter from our Systems
Integration segment driven by strong sales of our screens and
library management systems. However, this was offset by a
weaker-than-expected performance from our Managed Services segment,
as a result of slow conversion of customers from pilot programs to
full deployments. We are highly focused on improving the Company’s
overall performance and we are realigning and redeploying our
resources to produce better results in the second half of the year.
The management team is looking forward to working with the new
composition of the Board to implement new strategies and ideas that
will support improved performance and shareholder value.”
Q1 2015 Financial Summary
Managed Services revenues were $7.0 million in the first quarter
of 2015, compared with $8.4 million in the same period of the prior
year. The decrease is primarily attributable to lower project
revenues in the digital media business.
Systems Integration revenues were $15.7 million in the first
quarter of 2015, compared with $14.0 million in the same period of
the prior year. The increase is primarily attributable to higher
sales of digital projectors in Asia, higher sales of library
management systems, and higher sales of screens.
Consolidated gross profit was $4.3 million in the first quarter
of 2015, compared with $4.2 million in the same quarter of the
prior year. Gross margin was 19.0% in the first quarter of 2015,
compared with 19.1% in the same quarter of the prior year.
Selling, general and administrative expenses (SG&A) were
$5.5 million in the first quarter of 2015, compared with $5.4
million in the same quarter of the prior year. The increase in
SG&A was primarily attributable to expenses related to the
proxy contest.
Income tax expense was $9.7 million in the first quarter of
2015, which included a non-cash charge totaling $10.1 million
relating to a valuation allowance against the Company’s U.S. tax
jurisdiction deferred tax assets. The valuation allowance resulted
from negative evidence in the form of operating losses in the U.S.
in recent years. Should the Company’s taxable income increase in
the future, it is possible that some or all of the valuation
allowance against the deferred tax assets could be reversed. The
Company is taking actions to strengthen the profitability of U.S.
operations to utilize these deferred tax assets and this will be a
primary focus of management and the Board in the future.
Balance Sheet
Ballantyne’s cash and cash equivalents balance at March 31, 2015
was $23.9 million, an increase from the $22.5 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 and a refund relating to fiscal 2013 tax
payments.
Conference Call and Webcast
A conference call to discuss 2015 first quarter financial
results will be held on Monday, May 11, 2015 at 11:30 a.m. Eastern
Time / 10:30 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 May 21, 2015, conference ID
10064990.
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 cinema, retail, financial, 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.
Ballantyne Strong, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(In thousands)
March 31,2015
December 31,2014
(Unaudited) Assets Current assets: Cash and
cash equivalents $ 23,882 $ 22,491 Accounts receivable (net of
allowance for doubtful accounts of $690 and $679, respectively)
15,099 20,266 Inventories: Finished goods, net 9,710 11,195 Work in
process 512 632 Raw materials and components, net 1,860 2,281 Total
inventories, net 12,082 14,108 Recoverable income taxes 147 1,255
Deferred income taxes 996 3.541 Other current assets 3,315 2,956
Total current assets 55,521 64,617 Property, plant and equipment
(net of accumulated depreciation of $5,900 and $5,834,
respectively) 13,755 13,914 Intangible assets, net 1,037
1,168 Goodwill 943 1,029 Notes receivable 3,121 2,985 Deferred
income taxes — 4,910 Other assets 1,145 1,447 Total assets $ 75,522
$ 90,070
Liabilities and Stockholders’ Equity Current
liabilities: Accounts payable $ 6,356 $ 9,039 Accrued expenses
4,932 4,366 Customer deposits/deferred revenue 4,266 5,473 Income
tax payable 690 1,009 Total current liabilities 16,244 19,887
Deferred revenue 1,986 2,230 Deferred income taxes 1,583 715 Other
accrued expenses, net of current portion 1,422 1,776 Total
liabilities 21,235 24,608 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 16,869 and 16,809 shares at March 31, 2015 and
December 31, 2014, respectively; 14,138 and 14,078 shares
outstanding at March 31, 2015 and December 31, 2014, respectively
168 168 Additional paid-in capital 38,768 38,657 Accumulated other
comprehensive income: Foreign currency translation (3,446 ) (2,325
) Postretirement benefit obligations 139 139 Retained earnings
36,897 47,062 72,526 83,701
Less 2,731 of common shares in treasury,
at cost at March 31, 2015 and December 31, 2014
(18,239
)
(18,239
)
Total stockholders’ equity 54,287 65,462 Total liabilities and
stockholders’ equity $ 75,522 $ 90,070
Ballantyne Strong, Inc. and
Subsidiaries
Condensed Consolidated Statements of
Operations
Three Months Ended March 31, 2015
and 2014
(In thousands, except per share
data)
(Unaudited)
2015 2014
Net product sales
$ 17,142 $ 14,834 Net service revenues 5,328
7,187 Total net revenues 22,470 22,021
Cost of products sold 14,795 12,450 Cost of services
3,414 5,355 Total cost of revenues
18,209 17,805 Gross profit 4,261 4,216
Selling and administrative expenses: Selling 1,677 1,546
Administrative 3,799 3,893 Total
selling and administrative expenses 5,476 5,439 Gain on sale or
disposal of assets 2 7 Loss from
operations
(1,213
)
(1,216 ) Equity in income of joint venture — 95 Other income
(expense): Interest income 164 177 Interest expense
(19
)
(9
)
Other income, net 645 209 Total other
income 790 377 Loss before income taxes
(423
)
(744 ) Income tax (expense) benefit (9,741 ) 150
Net loss
$
(10,164
)
$ (594 ) Basic earnings (loss) per share
$
(0.72
)
$ (0.04 ) Diluted loss per share
$
(0.72
)
$ (0.04 ) Weighted average shares outstanding: Basic 14,091
14,026 Diluted 14,091
14,026
Ballantyne Strong, Inc. and
Subsidiaries
Condensed Consolidated Statements of
Cash Flows
Three Months Ended March 31, 2015
and 2014
(In thousands)
(Unaudited)
2015 2014 Cash flows from operating
activities: Net loss
$
(10,164
)
$ (594 ) Adjustments to reconcile net loss to net cash provided by
(used in) operating activities: Provision for doubtful accounts 18
69 Provision for obsolete inventory
(49
)
(8 ) Provision for warranty 99 (134 ) Depreciation and amortization
569 434 Equity in income of joint venture — (95 ) Loss on forward
contracts — 348 Gain on disposal or transfer of assets
(2
)
(7 ) Deferred income taxes 8,692 519 Share-based compensation
expense 111 101 Changes in operating assets and liabilities, net of
effect of acquisitions: Accounts receivable, unbilled and notes
receivable 5,062 3,709 Inventories
1,920 (179 )
Other current assets
(410
)
(200
)
Accounts payable
(2,651 ) (3,314 ) Accrued expenses (480 ) (1,343 ) Customer
deposits/deferred revenue (1,448 ) (208 )
Current income taxes
849 (1,599 ) Other assets 10 (56 ) Net cash
provided by (used in) operating activities 2,126
(2,557 ) Cash flows from investing activities: Capital
expenditures (161 ) (258 ) Proceeds from sales of assets 5
56 Net cash used in investing activities
(156 ) (202 ) Cash flows from financing activities:
Payments on capital lease obligations (14 ) — Excess tax benefits
from share-based arrangements 19 — Net
cash used in financing activities 5 — Effect of exchange rate
changes on cash and cash equivalents (584 ) (541 )
Net increase (decrease) in cash and cash equivalents 1,391 (3,300 )
Cash and cash equivalents at beginning of period 22,491
28,791 Cash and cash equivalents at end of
period $ 23,882 $
25,491
Supplemental disclosure of non-cash investing and financing
activities: 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 deferred tax asset valuation allowance.
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 months
ended March 31, 2014.
Unaudited, in thousands except per share
Three months ended March 31,
2015
Net loss $ (10,164 ) Deferred tax valuation allowance 7,659 Change
in foreign tax treatment due to valuation allowance 2,413
Adjusted net loss $ (92 ) Basic and diluted shares
outstanding 14,091 Adjusted EPS-basic and diluted $ (0.01 )
Ballantyne Strong, Inc.Nate LegbandChief Financial
Officer402-829-9404orFinancial ProfilesTony
Rossi310-622-8221trossi@finprofiles.com
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