| [August 07, 2017] |
 |
Ballantyne Strong Reports Financial Results for Second Quarter 2017
Ballantyne
Strong, Inc. (NYSE American: BTN), a holding company with
diverse business activities focused on serving the cinema, retail,
financial and government markets, today reported financial results for
the second quarter ended June 30, 2017.
Net revenues were $19.4 million in the second quarter of 2017, compared
with $20.6 million in the same period of the prior year. Loss from
operations was ($0.8) million in the second quarter of 2017, compared
with income from operations of $2.0 million in the same period of the
prior year. Net loss from continuing operations was ($1.9) million, or
($0.14) per share, in the second quarter of 2017, compared with net
earnings from continuing operations of $1.8 million, or $0.12 per share,
in the same period of the prior year. Certain expenses had a
disproportionately negative impact on second quarter 2017 results,
including increases of $0.4 million associated with our CRM and ERP
systems implementation, $0.4 million in bad debt expense, and $0.4
million in audit and legal expenses that were primarily related to the
restatement of our 2016 financial statements and internal control
remediation efforts.
Kyle Cerminara, Chairman and CEO of Ballantyne Strong, Inc. commented,
"With an ongoing sense of urgency, we are continuing the strategic
review that began in mid-2015 to position BTN in the most ideal mix of
businesses to create long-term shareholder value. Our objective
continues to be to build a high performing holding company with a
diverse mix of businesses that contribute to the overall cash flow of
the company. Similar to nearly all corporate turnarounds, there are
investments required to achieve the best outcome for shareholders and
there are consequences for less optimal decisions of the past. We always
remind ourselves that the opportunity to invest in any turnaround was
created by the need for these changes. We are continuing to scale our
investment in sales and marketing, corporate infrastructure, digital
signage as a service (DSaaS) software, research and development,
strategic investments and new business opportunities to position BTN to
be a much larger company in the coming years. We believe these
investments are necessary to achieve the desired result of a larger and
highly profitable company. We are optimistic about the investments we
have made to date and we will adjust our spending and investment
strategy if we do not see the desired results within a reasonable amount
of time. We will also change our mix of businesses to achieve the ideal
balance between growth and profitability. We are very excited about the
future of BTN over the next few years and beyond."
Q2 2017 Financial Summary
Cinema revenues were $9.6 million
in the second quarter of 2017, compared with $11.3 million in the same
period of the prior year. The decrease was driven by decreased sales of
projectors, digital parts, and warranties, partially offset by a slight
increase in screen sales.
Digital Media revenues were essentially flat at $9.8 million in the
second quarter of 2017 and 2016. Increases in sales of digital signage
equipment and installation services were offset by decreases in
recurring service contract revenue.
Consolidated gross profit was $5.3 million in the second quarter of
2017, compared with $6.1 million in the same quarter of the prior year.
Gross margin was 27.2% in the second quarter of 2017, compared with
29.9% in the same quarter of the prior year, as lower margin equipment
sales and services accounted for a larger portion of the Company's
revenues in the second quarter of 2017.
Selling, general and administrative expenses (SG&A) were $6.1 million in
the second quarter of 2017, compared with $4.2 million in the same
quarter of the prior year. The increase in SG&A expenses was primarily
due to a $0.5 million increase in employee-related costs, $0.4 million
associated with our CRM and ERP systems implementation, $0.4 million in
bad debt expense, and $0.4 million in audit and legal expenses that were
primarily related to the restatement of our 2016 financial statements
and internal control remediation efforts.
Discontinued Operations
As a result of 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. Our
discontinued operations generated a negligible after tax loss and
negligible basic and diluted loss per share in the second quarter of
2017 compared to an after tax loss of ($0.9) million and basic and
diluted loss per share of ($0.06) in the second quarter of 2016.
Balance Sheet
Excluding assets held for sale, Ballantyne's
cash and cash equivalents balance at June 30, 2017 was $2.8 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 million of long term debt. Equity method
investments had a book value of $18.1 million and a market value of
$16.4 million as of June 30, 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 Statements
Except 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/A 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 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,
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)
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
|
|
|
(Unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,800
|
|
$
|
7,596
|
|
Accounts receivable, net
|
|
|
16,943
|
|
|
16,316
|
|
Inventories, net
|
|
|
6,964
|
|
|
6,563
|
|
Other current assets
|
|
|
5,537
|
|
|
2,606
|
|
Total current assets
|
|
|
32,244
|
|
|
33,081
|
|
Property, plant and equipment, net
|
|
|
11,187
|
|
|
11,187
|
|
Equity method investments
|
|
|
18,134
|
|
|
13,098
|
|
Goodwill and intangible assets, net
|
|
|
4,561
|
|
|
3,246
|
|
Other assets
|
|
|
1,834
|
|
|
1,827
|
|
Total assets
|
|
$
|
67,960
|
|
$
|
62,439
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
10,855
|
|
$
|
9,272
|
|
Short-term debt, including current portion of long-term
|
|
|
2,563
|
|
|
-
|
|
Customer deposits/deferred revenue
|
|
|
3,201
|
|
|
4,211
|
|
Other current liabilities
|
|
|
198
|
|
|
165
|
|
Total current liabilities
|
|
|
16,817
|
|
|
13,648
|
|
Long-term debt, net of current portion
|
|
|
1,899
|
|
|
-
|
|
Other liabilities
|
|
|
4,421
|
|
|
3,637
|
|
Total liabilities
|
|
|
23,137
|
|
|
17,285
|
|
Stockholders' equity
|
|
|
44,823
|
|
|
45,154
|
|
Total liabilities and stockholders' equity
|
|
$
|
67,960
|
|
$
|
62,439
|
|
|
|
|
|
|
|
|
|
Ballantyne Strong, Inc. and Subsidiaries
|
|
Condensed Consolidated Statements of Operations
|
|
Three and Six Months Ended June 30, 2017 and 2016
|
|
(In thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net product sales
|
|
$
|
12,917
|
|
|
$
|
14,862
|
|
|
$
|
25,493
|
|
|
$
|
26,597
|
|
|
Net service revenues
|
|
|
6,483
|
|
|
|
5,696
|
|
|
|
11,832
|
|
|
|
11,075
|
|
|
Total net revenues
|
|
|
19,400
|
|
|
|
20,558
|
|
|
|
37,325
|
|
|
|
37,672
|
|
|
Cost of products sold
|
|
|
10,429
|
|
|
|
11,280
|
|
|
|
20,817
|
|
|
|
20,038
|
|
|
Cost of services
|
|
|
3,697
|
|
|
|
3,129
|
|
|
|
6,795
|
|
|
|
6,249
|
|
|
Total cost of revenues
|
|
|
14,126
|
|
|
|
14,409
|
|
|
|
27,612
|
|
|
|
26,287
|
|
|
Gross profit
|
|
|
5,274
|
|
|
|
6,149
|
|
|
|
9,713
|
|
|
|
11,385
|
|
|
Selling and administrative expenses:
|
|
|
|
|
|
|
|
|
|
Selling
|
|
|
1,419
|
|
|
|
1,149
|
|
|
|
2,909
|
|
|
|
2,174
|
|
|
Administrative
|
|
|
4,688
|
|
|
|
3,037
|
|
|
|
8,234
|
|
|
|
6,135
|
|
|
Total selling and administrative expenses
|
|
|
6,107
|
|
|
|
4,186
|
|
|
|
11,143
|
|
|
|
8,309
|
|
|
(Loss) income from operations
|
|
|
(833
|
)
|
|
|
1,963
|
|
|
|
(1,430
|
)
|
|
|
3,076
|
|
|
Other (expense) income:
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
-
|
|
|
|
27
|
|
|
|
22
|
|
|
|
40
|
|
|
Interest expense
|
|
|
(28
|
)
|
|
|
(27
|
)
|
|
|
(38
|
)
|
|
|
(40
|
)
|
|
Foreign currency transaction loss
|
|
|
(107
|
)
|
|
|
(180
|
)
|
|
|
(104
|
)
|
|
|
(1,005
|
)
|
|
Change in value of marketable securities
|
|
|
-
|
|
|
|
116
|
|
|
|
-
|
|
|
|
(366
|
)
|
|
Excess distribution from joint venture
|
|
|
-
|
|
|
|
502
|
|
|
|
-
|
|
|
|
502
|
|
|
Other income, net
|
|
|
7
|
|
|
|
6
|
|
|
|
10
|
|
|
|
43
|
|
|
Total other (expense) income
|
|
|
(128
|
)
|
|
|
444
|
|
|
|
(110
|
)
|
|
|
(826
|
)
|
|
(Loss) earnings before income taxes and equity method investment
(loss) income
|
|
|
(961
|
)
|
|
|
2,407
|
|
|
|
(1,540
|
)
|
|
|
2,250
|
|
|
Income tax expense
|
|
|
776
|
|
|
|
653
|
|
|
|
2,269
|
|
|
|
1,337
|
|
|
Equity method investment (loss) income
|
|
|
(212
|
)
|
|
|
-
|
|
|
|
2,269
|
|
|
|
41
|
|
|
Net (loss) earnings from continuing operations
|
|
|
(1,949
|
)
|
|
|
1,754
|
|
|
|
(1,540
|
)
|
|
|
954
|
|
|
Net loss from discontinued operations, net of tax
|
|
|
(26
|
)
|
|
|
(921
|
)
|
|
|
(49
|
)
|
|
|
(734
|
)
|
|
Net (loss) earnings
|
|
$
|
(1,975
|
)
|
|
$
|
833
|
|
|
$
|
(1,589
|
)
|
|
$
|
220
|
|
|
Net (loss) earnings per share - basic
|
|
|
|
|
|
|
|
|
|
Net (loss) earnings from continuing operations
|
|
$
|
(0.14
|
)
|
|
$
|
0.12
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.07
|
|
|
Net loss from discontinued operations
|
|
|
(0.00
|
)
|
|
|
(0.06
|
)
|
|
|
(0.00
|
)
|
|
|
(0.05
|
)
|
|
Net (loss) earnings
|
|
$
|
(0.14
|
)
|
|
$
|
0.06
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.02
|
|
|
Net (loss) earnings per share - diluted
|
|
|
|
|
|
|
|
|
|
Net (loss) earnings from continuing operations
|
|
$
|
(0.14
|
)
|
|
$
|
0.12
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.07
|
|
|
Net loss from discontinued operations
|
|
|
(0.00
|
)
|
|
|
(0.06
|
)
|
|
|
(0.00
|
)
|
|
|
(0.05
|
)
|
|
Net (loss) earnings
|
|
$
|
(0.14
|
)
|
|
$
|
0.06
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ballantyne Strong, Inc. and Subsidiaries
|
|
Condensed Consolidated Statements of Cash Flows
|
|
Six Months Ended June 30, 2017 and 2016
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2017
|
|
2016
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net (loss) earnings
|
|
$
|
(1,589
|
)
|
|
$
|
220
|
|
|
Net loss from discontinued operations, net of tax
|
|
|
49
|
|
|
|
734
|
|
|
Net (loss) earnings from continuing operations
|
|
|
(1,540
|
)
|
|
|
954
|
|
|
Non-cash expenses, net
|
|
|
2,661
|
|
|
|
1,765
|
|
|
Equity method investment income
|
|
|
(2,269
|
)
|
|
|
(41
|
)
|
|
Changes in operating assets and liabilities, net
|
|
|
(1,037
|
)
|
|
|
(4,122
|
)
|
|
Net cash flows from operating activities - continuing operations
|
|
|
(2,185
|
)
|
|
|
(1,444
|
)
|
|
Net cash flows from operating activities - discontinued operations
|
|
|
(146
|
)
|
|
|
(2,724
|
)
|
|
Net cash used in operating activities
|
|
|
(2,331
|
)
|
|
|
(4,168
|
)
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchase of equity securities
|
|
|
(2,525
|
)
|
|
|
(3,764
|
)
|
|
Dividends received from investee in excess of cumulative earnings
|
|
|
103
|
|
|
|
103
|
|
|
Capital expenditures
|
|
|
(2,103
|
)
|
|
|
(653
|
)
|
|
Proceeds from sale of business
|
|
|
60
|
|
|
|
-
|
|
|
Net cash used in investing activities
|
|
|
(4,465
|
)
|
|
|
(4,314
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Proceeds from issuance of long-term debt
|
|
|
2,000
|
|
|
|
-
|
|
|
Payment of debt issuance costs
|
|
|
(36
|
)
|
|
|
-
|
|
|
Principal payments on long-term debt
|
|
|
(2
|
)
|
|
|
-
|
|
|
Purchase of treasury stock
|
|
|
(102
|
)
|
|
|
(133
|
)
|
|
Proceeds from exercise of stock options
|
|
|
33
|
|
|
|
53
|
|
|
Payments on capital lease obligations
|
|
|
(134
|
)
|
|
|
(159
|
)
|
|
Excess tax benefits from share-based arrangements
|
|
|
-
|
|
|
|
6
|
|
|
Net cash provided by (used in) financing activities
|
|
|
1,759
|
|
|
|
(233
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents -
continuing operations
|
|
|
66
|
|
|
|
916
|
|
|
Effect of exchange rate changes on cash and cash equivalents -
discontinued operations
|
|
|
-
|
|
|
|
(69
|
)
|
|
Net decrease in cash and cash equivalents
|
|
|
(4,971
|
)
|
|
|
(7,868
|
)
|
|
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
|
|
|
-
|
|
|
|
(1,415
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
|
7,596
|
|
|
|
17,862
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
2,800
|
|
|
$
|
12,787
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170807005808/en/
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