Ballantyne Reports 2012 Q4 Net Income of $1.6 Million and EPS of $0.11 on Revenues of $39.1 Million
OMAHA, Neb.--(BUSINESS WIRE)-- Ballantyne Strong, Inc. (NYSE MKT: BTN):
|Conference call:||Today - Monday, March 11, 2013 at 10:00 AM ET|
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Ballantyne Strong, Inc. (NYSE MKT: BTN), a provider of digital cinema projection equipment, screens and services as well as specialty lighting equipment, today reported its financial results for the fourth quarter ended December 31, 2012.
Commenting on the Company's results, President and CEO Gary L. Cavey stated, "The recent cinema industry transition from analog to a state-of-the-art digital platform has provided Ballantyne with a unique opportunity to capitalize on our role as a leading turnkey solutions provider to theatrical exhibitors around the world. The fourth quarter represented a solid sequential turnaround for Ballantyne as an improvement in gross profit margin helped drive our return to profitability following a challenging third quarter period in which pricing pressure on digital projection systems along with some transitional costs associated with the service business negatively impacted our results.
"Ballantyne generated $169.1 million of revenue, $5.5 million in net income and EPS of $0.39 for the full year. We finished the twelve-month period with a cash balance of $40.2 million and no long-term debt. When coupled with additional availability on our credit facility, our cash position provides solid support for organic growth in our current businesses, and to finance potential acquisitions that complement our existing core strengths.
"Notwithstanding the progress made to date, we are still in the early stages of executing on our refocused business strategy. We believe our emphasis on pursuing higher margin opportunities and serving markets that place a premium on using the most current technologies will continue to produce solid returns for our stakeholders. In future periods, we believe our operating leverage will continue to improve, providing the foundation to diversity our business."
Fourth Quarter Results
Ballantyne Strong's total net revenues were $39.1 million versus $51.5 million in Q4 '11. The year-over-year decrease was largely due to the reduced level and pace of remaining exhibitor transitions to digital cinema technology. BTN remains focused on leveraging its sales efforts toward the remaining domestic market, generally the small to mid-sized exhibitors. Digital cinema theatre revenue accounted for $38.5 million of the Company's total sales compared to $50.7 million in the year ago-quarter. BTN continues to capitalize on its worldwide relationships with global exhibitors, as reflected in its recently announced contract with one of the largest cinema chains in Latin America.
Cinema service revenue was $3.4 million, compared to $4.2 million in Q4 '11. The decrease was mainly due to the completion of major installation and integration deployment work on behalf of one the world's leading exhibitors. This decline was partially offset by growth in the Network Operations Center (NOC) 24/7 monitoring businesses, which saw sales increase during the three-month period.
The Company's cinema screen business generated a 13% year-over-year increase in sales to $3.7 million during the quarter, reflecting healthy replacement screen sales as well as continued international screen sales growth.
The specialty lighting business generated quarterly sales of $0.6 million, compared to $0.8 million a year ago. This decrease is primarily due to a slowdown in sales of follow spotlights along with a decrease in parts sales. While demand for lighting in the venue and entertainment sectors remains soft, the Company has refocused it efforts toward architectural accent lighting, on the back of Ballantyne's recent success with the World Trade Center project. This project will produce the world's first high-powered LED beacon light based on the Company's proprietary LED Solutions technology.
Fourth quarter gross profit was $6.2 million, a 15.1% decrease from $7.3 million a year ago. The reduced sales volume, as previously outlined, impacted gross profit dollars. More importantly, the Company generated a 160 basis point increase in its gross profit margin, compared to the year-ago period gross margin. The improvement over the same quarter a year ago was due to the shift of sales mix in our business as screens and service, which carry higher margin, accounted for 18% of the total, compared to 14.5% in the prior year period.
SG&A expenses decreased 13% to $4.0 million, versus $4.6 million in the prior-year period. The decrease is due to severance charges taken in the 4th quarter, 2011. The Company continues to exercise expense discipline to ensure spending is in-line with overall business trends amid the ongoing transformation of the cinema exhibition business.
The Company achieved Q4 net earnings of $1.6 million, or $0.11 per diluted share, in-line with net earnings of $1.6 million, or $0.11 per diluted share in Q4 '11.
Full-year 2012 Results
Net revenues were $169.1 million, compared to $184.4 million in 2011. Gross profit was $22.6 million, or 13.4% of net revenues, versus gross profit of $30.2 million, or 16.4% of net revenues in the comparable prior-year period. Net earnings amounted to $5.5 million, or $0.39 per diluted share, compared to net earnings of $10.3 million, or $0.71 per diluted share in the twelve months ended December 31, 2011.
Balance Sheet and Cash Flow Update
Ballantyne's cash and cash equivalents balance at quarter-end was $40.2 million, up from $36.8 million at the end of Q3 '12. The Company generated cash flow of $4.9 million from operations in Q4 '12 and used a net of $0.4 million in cash for its operating activities in FY 2012.
About Ballantyne Strong, Inc. ( www.strong-world.com )
Ballantyne Strong is a provider of digital cinema projection equipment, screens and services as well as specialty lighting equipment. The Company supplies major and independent theater chains, top arenas, theme parks and architectural sites around the world.
Except for the historical information in this press release, it includes forward-looking statements that involve risks and uncertainties, including but not limited to, quarterly fluctuations in results; customer demand for the Company's products; the development of new technology for alternate means of motion picture presentation; domestic and international economic conditions; the management of growth; and other risks detailed from time to time in the Company's Securities and Exchange Commission filings. Actual results may differ materially from management's expectations.
Ballantyne Strong, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three and Twelve Months Ended December 31, 2012 and 2011
(In thousands, except per share amounts)
Three Months Ended
Twelve Months Ended
|Cost of revenues||32,921||44,201||146,490||154,220|
|General & administrative||2,909||3,633||11,456||11,106|
|Total SG&A expenses||3,971||4,644||15,923||15,041|
|Gain on transfer of assets||(29)||(25)||1,332||11|
|Income from operations||2,176||2,657||8,003||15,183|
|Equity in income (loss) of joint venture||9||(68)||10||(189)|
|Other income (expense) net||(41)||61||137||(71)|
|Income before income taxes||2,144||2,650||8,150||15,065|
|Income tax expense||584||1,035||2,608||4,718|
|Basic earnings per share||$||0.11||$||0.11||$||0.39||$||0.72|
|Diluted earnings per share||$||0.11||$||0.11||$||0.39||$||0.71|
|Weighted average shares outstanding:|
Ballantyne Strong, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
December 31, 2012 and 2011
|Cash and cash equivalents||$||40,168||$||39,889|
|Accounts receivable (net of allowance)||26,227||30,579|
|Recoverable income taxes||2,069||793|
|Deferred income taxes||1,724||1,961|
|Other current assets||2,948||5,692|
|Total current assets||84,107||96,420|
|Investment in joint venture||—||1,849|
|Property, plant and equipment, net||11,105||9,419|
|Property held for sale||—||1,810|
|Intangible assets, net||105||262|
|Deferred income taxes||1,936||1,596|
|Liabilities and Stockholders' Equity|
|Customer deposits/deferred revenue||5,251||5,037|
|Income tax payable||—||4,135|
|Total current liabilities||27,210||45,916|
|Deferred income taxes||580||397|
|Other accrued expenses, net of current portion||1,538||351|
|Commitments and contingencies|
Preferred stock, par value $.01 per share; Authorized 1,000
Common stock, par value $.01 per share; Authorized 25,000
|Additional paid-in capital||37,770||37,234|
|Accumulated other comprehensive income (loss):|
|Foreign currency translation||269||(137||)|
|Postretirement benefit obligation||46||81|
Less 2,713 and 2,155 of common shares in treasury, at
|Total stockholders' equity||66,916||63,223|
|Total liabilities and stockholders' equity||$||99,546||$||113,456|