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 first quarter ended March
31, 2018.
Net revenues were $15.8 million in the first quarter of 2018,
compared with $17.9 million in the same period of the prior year.
Loss from operations was ($3.1) million in the first quarter of
2018, compared with ($0.6) million in the same period of the prior
year. Net loss from continuing operations was ($3.8) million, or
($0.26) per share, in the first quarter of 2018 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, “We incurred significant start-up costs with the launch
of our New York City taxi-top advertising business, which we
believe will be a notable contributor to Digital Media revenue in
the second half of 2018. We also signed a very significant Digital
Signage as a Service (DSaaS) contract that should begin to benefit
our Digital Media results in late 2018. Lastly, we announced an
agreement with Eclipse Screens under which we expect to benefit
from selling screens to the themed entertainment industry over the
coming months and years.”
Q1 2018 Financial SummaryCinema revenues were $11.4
million in the first quarter of 2018, compared with $12.7 million
in the same period of the prior year. The decrease was driven by
decreased sales of lamps, projectors and screen support systems,
partially offset by increases in sales of audio equipment and
projection system installation services.
Digital Media revenues were $4.7 million in the first quarter of
2018, compared with $5.3 million in the same period of the prior
year. This decrease was driven by decreased non-recurring digital
signage equipment sales, partially offset by increased recurring
digital signage as a service (“DSaaS”) and increased sales of
installation services.
Consolidated gross profit was $2.9 million in the first quarter
of 2018, compared with $4.4 million in the same quarter of the
prior year. Gross margin was 18.0% in the first quarter of 2018,
compared with 24.8% in the same quarter of the prior year. The
decrease in gross margin percentage was driven by an increase in
fixed costs in the Digital Media segment associated with the
operational ramp up of the new Strong Digital Media advertising
business. Revenues are expected to gradually increase throughout
2018 and 2019 absorbing a larger portion of those fixed costs until
the business generates a positive gross profit in late 2018 or
early 2019.
Selling and administrative expenses were $5.9 million in the
first quarter of 2018, compared with $5.0 million in the same
quarter of the prior year. The increase was driven by an increase
in audit, tax and legal expenses of $0.4 million, compensation and
benefit expense of $0.4 million and amortization expense of $0.1
million.
Balance SheetBallantyne’s cash and cash equivalents
balance at March 31, 2018 was $3.3 million, compared to $4.9
million at December 31, 2017. The decrease in cash was primarily
driven by operating losses. Equity method investments had a book
value of $17.8 million and a market value of $15.5 million as of
March 31, 2018.
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, advertising 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)
March 31, 2018 December 31, 2017
(Unaudited)
Assets Current assets: Cash and cash equivalents
$ 3,348 $ 4,870 Accounts receivable, net 10,749 10,766 Inventories,
net 4,193 4,821 Other current assets 2,064 1,785
Total current assets 20,354 22,242 Property, plant and equipment,
net 10,542 10,826 Equity method investments 17,833 18,053 Goodwill
and intangible assets, net 4,873 4,924 Other assets 3,429
2,969 Total assets $ 57,031 $ 59,014
Liabilities
and Stockholders' Equity Current liabilities: Accounts payable
and accrued expenses $ 7,783 $ 6,496 Short-term debt, including
current portion of long-term 565 565 Deferred revenue and customer
deposits 2,314 1,619 Other current liabilities 40 -
Total current liabilities 10,702 8,680 Long-term debt, net of
current portion and debt issuance costs 1,855 1,870 Other
liabilities 4,316 4,342 Total liabilities 16,873
14,892 Stockholders' equity 40,158 44,122 Total
liabilities and stockholders' equity $ 57,031 $ 59,014
Ballantyne Strong, Inc. and Subsidiaries Condensed
Consolidated Statements of Operations (In thousands, except
per share data) (Unaudited) Three
Months Ended March 31, 2018 2017
Net product sales $ 8,639 $ 12,456 Net service revenues
7,189 5,470 Total net revenues 15,828 17,926
Cost of products sold 5,812 10,308 Cost of services 7,166
3,179 Total cost of revenues 12,978
13,487 Gross profit 2,850 4,439 Selling and
administrative expenses: Selling 1,225 1,490 Administrative
4,709 3,547 Total selling and administrative
expenses 5,934 5,037 Loss from
operations (3,084 ) (598 ) Other income (expense): Interest income
- 22 Interest expense (45 ) (10 ) Foreign currency transaction gain
104 3 Fair value adjustment to notes receivable (42 ) - Other
(expense) income, net (10 ) 5 Total other
income 7 20 Loss before income taxes
and equity method investment (loss) income (3,077 ) (578 ) Income
tax expense 698 1,493 Equity method investment (loss) income
(10 ) 2,481 Net (loss) earnings from continuing
operations (3,785 ) 410 Net loss from discontinued operations, net
of tax - (23 ) Net (loss) earnings $ (3,785 )
$ 387
Net (loss) earnings per share - basic Net
(loss) earnings from continuing operations $ (0.26 ) $ 0.03 Net
loss from discontinued operations - (0.00 ) Net (loss) earnings
(0.26 ) 0.03
Net (loss) earnings per share - diluted Net
(loss) earnings from continuing operations $ (0.26 ) $ 0.03 Net
loss from discontinued operations - (0.00 ) Net (loss) earnings
(0.26 ) 0.03
Ballantyne Strong, Inc. and
Subsidiaries Condensed Consolidated Statements of Cash
Flows (In thousands) (Unaudited)
Three Months Ended March 31, 2018
2017 Cash flows from operating activities: Net (loss)
earnings $ (3,785 ) $ 387 Net loss from discontinued operations,
net of tax - (23 ) Net (loss) earnings from
continuing operations (3,785 ) 410 Non-cash expenses, net 1,149
1,574 Fair value adjustment to notes receivable 42 - Equity method
investment loss (income) 10 (2,481 ) Changes in operating assets
and liabilities, net 993 1,064 Net cash
flows (used in) provided by operating activities - continuing
operations (1,591 ) 567 Net cash flows used in operating activities
- discontinued operations - (24 ) Net cash
(used in) provided by operating activities (1,591 ) 543 Cash
flows from investing activities: Purchase of equity securities -
(2,525 ) Dividends received from investee in excess of cumulative
earnings 23 103 Capital expenditures (356 ) (1,120 )
Net cash used in investing activities - continuing operations (333
) (3,542 ) Cash flows from financing activities: Principal
payments on long-term debt (16 ) - Purchase of treasury stock - (65
) Payments on capital lease obligations (53 ) (67 )
Net cash used in financing activities (69 ) (132 ) Effect of
exchange rate changes on cash and cash equivalents - continuing
operations 471 39 Net decrease in cash
and cash equivalents (1,522 ) (3,092 ) Discontinued operations cash
activity included above: Add: Cash balance included in assets held
for sale at beginning of period - 175 Less: Cash balance included
in assets held for sale at end of period - (150 ) Cash and cash
equivalents at beginning of period 4,870 7,596
Cash and cash equivalents at end of period $ 3,348 $
4,529
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version on businesswire.com: https://www.businesswire.com/news/home/20180508006307/en/
Ballantyne Strong, Inc.Lance Schulz,
402-829-9427Chief Financial Officer
Ballantyne Strong (AMEX:BTN)
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