Exhibit 99.1
NEWS ANNOUNCEMENT | | FOR IMMEDIATE RELEASE |
Conference call: | Today, Monday, August 9, 2010 at 10:00 a.m. ET |
Dial-in number: | 888 722 1094 (no pass code required) |
Webcast / Replay URL: | www.earnings.com or http://www.ballantyne-strong.com/IREvents.aspx |
| Replay available on Internet for 90 days. |
Ballantyne Q2 EPS Rose to $0.19 from $0.07 on 67% Increase
in Net Revenues to Record $32.7 Million and
Benefit From Digital Link II, LLC Joint Venture
OMAHA, Nebraska (August 9, 2010) 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 second quarter (Q2) and six months ended June 30, 2010.
Second Quarter Results
Ballantyne Strong’s net revenues rose 67% to $32.7 million, an all-time quarterly record, reflecting a significant increase in digital cinema equipment sales as well as year-over-year sales gains from cinema screens and digital cinema services. Net earnings rose to $2.8 million, or $0.19 per diluted share, compared to net earnings of $0.9 million, or $0.07 per diluted share a year-ago. Q2 2010 results were positively impacted by approximately $1.3 million ($0.8 million after-tax) of equity income and gains pertaining to the Company’s 44.4% ownership in the Digital Link II, LLC joint venture during the quarter. The income primarily resulted from the sale of projectors that were previously held within the joint venture and compares to a net loss from the joint venture of $0.2 million in Q2 2009.
Sales of digital cinema equipment rose 97% to $19.7 million, reflecting growing global demand for digital projection systems, primarily in the Americas and China. Ballantyne’s cinema screen sales increased approximately 45% to $4.5 million in Q2 2010, largely due to the ongoing worldwide adoption of 3D digital cinema technology, the bulk of which requires a specialty “silver” screen. Cinema services revenue nearly doubled to $2.1 million, reflecting the mid-April commencement of the Company’s agreement with a major US exhibitor to handle their digital projection equipment installations and systems integration. To date, these installs and integrations have been running smoothly.
Consolidated gross profit rose to $6.0 million, or 18.2% of revenue in Q2 2010, from $4.3 million, or 21.7% of revenue in Q2 2009. The expected decline in gross profit margin reflects the increase in sales of digital projection equipment that carry lower margins than most of the Company’s other products and services. SG&A rose 12.6% to approximately $3.0 million, but fell significantly as a percentage of net revenues to 9.1%, compared to 13.5% in Q2 2009. Ballantyne remains focused on limiting the growth in SG&A expenses in order to drive operating leverage.
Six-Month Results
For the six-month period ended June 30, 2010, net revenues rose 58.1% to $58.1 million. Gross profit in the first half of 2010 was $10.3 million, or 17.7% of net revenues, compared to first half 2009 gross profit of $7.6 million, or 20.8% of net revenues. Net earnings for the first six months of 2010 was $3.8 million, or $0.26 per diluted share, compared to net earnings of $1.5 million, or $0.10 per diluted share, in the first half of 2009.
Balance Sheet Update
Ballantyne generated $3.3 million in cash from operating activities and ended the quarter with $24.1 million in cash and cash equivalents, compared to $23.6 million at December 31, 2009.
John P. Wilmers, President and CEO, commented, “Sales and service momentum accelerated in the second quarter as the worldwide digital cinema rollout picked up additional steam due to the completion of digital cinema equipment funding for the three largest domestic exhibitors and a desire by other global exhibitors to capitalize on the success and expanding pipeline of 3D releases and alternative digital content. This momentum had an obvious positive impact on Ballantyne’s 2010 first half operating results as our digital cinema business is benefiting from an increasing number of NEC digital projector sales in the Americas and China, a sharp ramp-up in digital cinema service installations and our cinema screen manufacturing business, which has been operating at full capacity in recent months.
“Given the growing backlog for cinema screens, we recently acquired our existing Canadian manufacturing facility and a parcel of adjacent land. We are undertaking a previously announced $6 million expansion of this facility, including the cost of the acquisition, with the goal of materially increasing our capacity to meet growing global demand for conventional, large-format, gain, silver and other specialized cinema screens. We expect to have this important expansion completed by year-end.”
About Ballantyne Strong, Inc. (www.ballantyne-strong.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.
-tables follow-
2
Ballantyne Strong, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
| | Three Months Ended
June 30, | | Six Months Ended
June 30, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
| | | | | | | | | |
Net revenues | | $ | 32,748,573 | | $ | 19,602,707 | | $ | 58,086,082 | | $ | 36,746,160 | |
Cost of revenues | | 26,777,628 | | 15,350,114 | | 47,819,601 | | 29,114,497 | |
Gross profit | | 5,970,945 | | 4,252,593 | | 10,266,481 | | 7,631,663 | |
| | | | | | | | | |
Selling & administrative expenses: | | | | | | | | | |
Selling | | 839,163 | | 767,791 | | 1,553,998 | | 1,436,190 | |
Administrative | | 2,137,663 | | 1,875,652 | | 4,138,446 | | 3,952,312 | |
Total S&A expenses | | 2,976,826 | | 2,643,443 | | 5,692,444 | | 5,388,502 | |
Gain (loss) on disposal or transfer of assets | | 170,501 | | (1,943 | ) | 170,501 | | (1,943 | ) |
Income from operations | | 3,164,620 | | 1,607,207 | | 4,744,538 | | 2,241,218 | |
| | | | | | | | | |
Interest income | | 9,625 | | 29,404 | | 13,390 | | 70,534 | |
Interest expense | | (7,576 | ) | (9,328 | ) | (15,393 | ) | (17,441 | ) |
Equity in income (loss) of joint venture | | 984,364 | | (233,625 | ) | 825,766 | | (418,137 | ) |
Other income (expense) net | | 17,793 | | (68,333 | ) | (26,224 | ) | 112,904 | |
Income before income taxes | | 4,168,826 | | 1,325,325 | | 5,542,077 | | 1,989,078 | |
Income tax expense | | (1,390,717 | ) | (391,404 | ) | (1,765,118 | ) | (513,438 | ) |
Net earnings | | $ | 2,778,109 | | $ | 933,921 | | $ | 3,776,959 | | $ | 1,475,640 | |
| | | | | | | | | |
Earnings per share | | | | | | | | | |
Basic | | $ | 0.20 | | $ | 0.07 | | $ | 0.27 | | $ | 0.11 | |
Diluted | | $ | 0.19 | | $ | 0.07 | | $ | 0.26 | | $ | 0.10 | |
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
Basic | | 14,142,820 | | 13,995,286 | | 14,109,096 | | 13,991,766 | |
Diluted | | 14,380,405 | | 14,138,239 | | 14,333,818 | | 14,127,450 | |
3
Ballantyne Strong, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
| | June 30, 2010 | | Dec. 31, 2009 | |
Assets | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 24,063,446 | | $ | 23,589,025 | |
Restricted cash | | 486,404 | | 442,766 | |
Accounts receivable, net | | 17,556,443 | | 8,877,980 | |
Unbilled revenue | | 758,556 | | 1,894,075 | |
Inventories, net | | 16,632,450 | | 12,987,048 | |
Recoverable income taxes | | 1,711,108 | | 1,850,699 | |
Deferred income taxes | | 2,066,348 | | 1,943,679 | |
Consignment inventory | | 599,243 | | 486,527 | |
Other current assets | | 2,484,131 | | 667,592 | |
Total current assets | | 66,358,129 | | 52,739,391 | |
Investment in joint venture | | 3,218,199 | | 2,216,638 | |
Property, plant and equipment, net | | 6,349,948 | | 3,612,935 | |
Intangible assets, net | | 883,518 | | 1,103,128 | |
Other assets | | 17,257 | | 17,257 | |
Deferred income taxes | | 131,230 | | 520,951 | |
Total assets | | $ | 76,958,281 | | $ | 60,210,300 | |
Liabilities and Stockholders’ Equity | | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 21,646,461 | | $ | 9,768,896 | |
Other accrued expenses | | 3,254,898 | | 3,623,143 | |
Customer deposits | | 3,803,356 | | 2,295,946 | |
Income tax payable | | 715,389 | | 1,246,247 | |
Total current liabilities | | 29,420,104 | | 16,934,232 | |
Deferred income taxes | | 261,131 | | 274,977 | |
Other accrued expenses, net of current portion | | 491,256 | | 483,425 | |
Total liabilities | | 30,172,491 | | 17,692,634 | |
Commitments and contingencies | | | | | |
Stockholders’ equity: | | | | | |
Preferred stock, par value $.01 per share; Authorized 1,000,000 shares, none outstanding | | — | | — | |
Common stock, par value $.01 per share; Authorized 25,000,000 shares; issued 16,405,781 shares in 2010 and 16,283,676 shares in 2009 | | 164,057 | | 162,836 | |
Additional paid-in capital | | 35,969,290 | | 35,332,787 | |
Accumulated other comprehensive income (loss): | | | | | |
Foreign currency translation | | (432,645 | ) | (286,086 | ) |
Minimum pension liability | | 110,665 | | 110,665 | |
Retained earnings | | 26,357,103 | | 22,580,144 | |
| | 62,168,470 | | 57,900,346 | |
Less 2,139,982 of common shares in treasury, at cost | | (15,382,680 | ) | (15,382,680 | ) |
Total stockholders’ equity | | 46,785,790 | | 42,517,666 | |
Total liabilities and stockholders’ equity | | $ | 76,958,281 | | $ | 60,210,300 | |
4
Selected Cash Flow Statement Items (unaudited):
| | Six Months Ended
June 30, | |
| | 2010 | | 2009 | |
| | | | | |
Net earnings | | $ | 3,776,959 | | $ | 1,475,640 | |
Depreciation and amortization | | 927,598 | | 923,206 | |
Equity in (income) loss of joint venture | | (825,766 | ) | 418,137 | |
Net cash provided by operating activities | | 3,274,071 | | 73,328 | |
Capital expenditures | | (3,282,331 | ) | (457,146 | ) |
Proceeds from sales of investments in securities | | — | | 10,025,000 | |
Net cash provided by (used in) investing activities | | (3,263,747 | ) | 9,576,617 | |
Net increase in cash & cash equivalents | | 474,421 | | 9,743,980 | |
Cash & cash equivalents at beginning of period | | 23,589,025 | | 11,424,984 | |
Cash & cash equivalents at end of period | | $ | 24,063,446 | | $ | 21,168,964 | |
# # #
CONTACT: | |
Kevin Herrmann | Robert Rinderman, David Collins |
Chief Financial Officer | Jaffoni & Collins Incorporated |
402/453-4444 | 212/835-8500; btn@jcir.com |
5
