- Earnings call transcript Q3 2022

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Ballantyne Strong, Inc.

Third Quarter 2022 Earnings Conference Call. We'll open the floor for your questions and comments after the presentation. [Operator Instructions] I would now like to turn the call over to John Nesbett of IMS Investor Relations. Thank you.

begin. may You

John Nesbett

welcome the and Strong's conference earnings Good quarter to ended for third September call afternoon, Ballantyne XXth, XXXX.

today Todd Officer; On Chief call from are Strong the Mark Executive Officer; Kyle Major, and Financial Chief Cerminara, Chairman. Ballantyne Roberson,

and remind uncertainties discussion management's measures. like The on described will the earnings expectations disclaims references described and the and reconciliations and release statements, posted materially financial in of current expressly differ in view section begin, forward-looking some statements call. also These to the website. call that under the measures today, to actual are SEC and we non-GAAP by to statements everyone Relations company non-GAAP of the also are no obligation from to to Before available filings. are update be of Today's risks also GAAP as nature. contain in to are company's except I'd Investor may certain presentation those made law. this based Risks and terms obligation cause statements is results any definition These today's on subject as and in uncertainties forward-looking required in

At Mark. may over be time, understand call measures decisions. you ahead, to making I'd to all before the in those review go like turn to our used this companies, non-GAAP Mark. Our not investment any and and comparable to other we encourage Please financial reporting

Mark Roberson

Thanks, John, and good afternoon.

start PowerPoint, the X. we'll following on Slides you're and X If

and equity and FG in business supplier Financial, capital holdings, company, Green X is And our know, you we and X equity currently of managed holdings. currently holdings already to Entertainment in the primary primary allocated of segment. We're most and estate holding services Firefly we've leading first. real have Ballantyne projection screens As have a

mind of with we're to business incubating more about in ignition and real line have today. our holding key that hear through There a themes we soon. Georgia also are We start keep go you'll a few digital as in as estate well business that to

producer up are We provider again revenues entertainment has with cinema several growing that managed exciting and QX our segment. catalysts see North been premium we in business. America, of our XX%, the Business screens leading services largest growth and in entertainment in

for holdings X exhibitors equity drivers robust capital That Avatar and unique appreciation. We've relationships X also for the industry said, the at capital at the sum have year we cycle. Our we're a the content first trading schedule North of operating currently levels On each seen finish for book to value are and the parts. to a positioning growth the are expecting in release propositions upgrade meaningful region in business with XXXX of discount on year the and exhibitors our are of entertainment. of and the growth strong improving accelerated and of gearing for up major of end multiyear a expect entertainment value We've America, business. strengthening strong all business been commencing year, the and customers largest post-COVID. are really our Slide as and screens over X, account Starting through the the XX% potential which

relationships the exhibitors note and with shown literally exhibitors and that of customers. Cinemark the and AMC, returns from strengthening IMAX to we of the past those other capital to and years. spend and important We to important addition the an equally basis, accelerate on begin growth, believe are would and independent of regional we've largest their In all screens X here, other we've been supply exclusive over hundreds couple I industry. post-COVID upgrades laser projection in drive the box projection those for as levels to and office relationships more both Xenon the industry even at

First, we it by recovery and really saw office, this the a very driven strong to with box summer, in blockbusters. was a regard handful industry the of large

are As finish looking Black with we closing that and will year. for ahead, months. year, releases the much X the names And be stronger broader much Avatar the next then and see box in close ahead industry next out and we familiar Panther a and expectations this There year are blockbuster strong XX out content for the more diverse. office scheduled is some the

back Jones of is Captain then Guardians Fast and Wick, Cruise Mermaid, impossible the Indiana of the Tom Some Dune, Furious Games Marvel, the of mission and XX, first those X Little prequel Galaxy, sequel, include with Hunger John next there's sequels.

be So solid for XXXX very a year theatrical. to looks

a to XXX and focused installations this quarter turning York began will around initial is Slide New laser AMC the upgrade for This a on industry, past their us for well. to deal year. upgrades this starting upgrades really We're cycle. XXX the markets. the X as already Now with AMC's complete it's first as big big really to X,XXX deal planned California and regard

exclusive optical laser to services screens drive business leading we who's many been as expanding laser supplier screen audio, X the with we've Cinemark coatings to deeply to This long with our the a also there's optimizing exhibitors in suit. largest gearing those we'll XX the the the manufacturer to important is most I and go, and exhibitors past laser. So starting next We and projection, underway way partner for next and projection spend just air one to circuit of as we're years, Cinionic, years plans we our starting several see preferred on screens follow services. going industry and industry of is for the of And entrenched over XX projects up to projection, years now expect past some our XXX% to change is of and positioned. of believe the it's spent in other well to a the for mentioned, be very years over the in catalysts the their several at services least. and

principal growth and of on a year. delivering Inside Studios on wrapped and Turning up those in recently, opens Safe the those Studios Entertainment of of portfolio of is expect now XX also and I Box. to already. Safe the are the would completed completed photography Black adds the be expected inside episodes, we half in first of XXXX. to Haven and delivered Box process this Haven Crackle the end and and is a and the X. meaningful being line XX X before to of Strong air episodes first new and started projects, the We business acquired opportunities. content Black on it production business new for Group, Slide

as can royalty engine our business scale while working streams Slide goal at of additional acquired other for really projects, a revenue the very on as both Strong to revenue. as content presales creating Group. the pipeline. drive capital risk also has a overall well XX, Studios tax utilizing immensely emerge business longer-term part near-term to of distribution So you minimize as on the is Over see a growth and refundable credits to the the the build as of we've meaningful well into potential from the portfolio and projects to adding And model been library, Entertainment this coproduction here overall several time, and

on XX. equity to the XX now turning through Slides holdings Now

value meaningful potential unique appreciation. holdings Financial, and launch each and the At capital propositions announced merchant FG equity have growth for of banking Our drivers its FG platform. recently

now the year on has X already side. spec year. it asset past but loss contracts is back with business and has and SPAC's time. evolves complete the platform its into forced completed is an are Over reinsurance or so, cap more management this merchant IPO team compelling busy banking Oppfi, transactions as reinsurance all & been the X building Those Hagerty scales FG team assets, and really building Financial Inc. and FG and that They've over important the

announced capital Act quarter, as our XXXX provides future of structured and shareholders During for which of to shares it means in dealership. XX is FGF. may enrolling LLC over deal, significantly They investment over of Ballantyne of markets. outstanding common Ballantyne Ballantyne. Hyundai new a transferred it stock was and recall, to venture-backed mobile private we benefit to Firefly is merged Ventures shares company, under FGF FGF and major into good where the an the an digital with business structure since stock of -- a equity point Firefly, collectively of asset over purchases really and of Firefly’s the we've grown FX, you outside the of This of growth. program finance the our to media into advertising LLC, we be position, hold at Google a been the the fleet method purchase operators XX% our will summer, third professional and and invested Firefly has there pleased our with they're alongside drivers and the now we attain our

basically earn So to leading U.K.'s help entry advertising advertising purchase. subsidize their In European Firefly announced drivers market of July, also the the car the can taxi into our acquisition with revenue company.

they're multiplies to performing amplify non-digital the exceptionally to has as per well. able potential markets. this Firefly the and to [intern] continues as As acquire, revenue grow also top revenue they really and been from the digital, convert GreenFirst

board $XX almost and capacity Following adjusted shell $XX X involved also lumber a second of to forest the quarter, feet. leading their the the a producers just transaction for earnings land small in reported of with GreenFirst $XX private EBITDA They million announced the of over is million. one In to of last million sale summer. GreenFirst from Canada net over today million. produce

that growth, operating cycle office non-core a seen meaningful revenue And XXXX at Todd. we our very an value in They're very over This monetizing strong generating has nice of we're in with box I'll a bit quite watching So entertainment to it believe so the rate. industry assets holdings potential. strong and recently, well in rapid that, upgrade Overall, they're debt for its laser is represent and turn we're growth and well. M&A positioned performing our and cash, looking intrinsic equity also reducing business, rebound With a seeing closely. that infancy. we're

Todd Major

as everyone. Thanks, of back the look on over to comparison I'll as the going revenue start trend quarter start well XX quick and for prior good quarterly the for the at Slide Mark, XXXX. afternoon, year a the

summarizes months, just of profit the XX% we up the year-over-year As pre-COVID XX the revenue generated on year, revenue XX% in flow-through levels more services and higher for increase and a is higher now XXXX We you products in the respectively. the XX touched on have $XX the revenue on revenue on results run rate The consolidated resulted prior even last basis. commentary over of prior quarter. slide, the gross revenue XX%, add annual adjusting previous year. recognized $XXX,XXX as surpassed the an XX% the but continued under to Slide both million. increase, we momentum achievement in a during than from the factoring significant can the before bit This the consolidated profit, of year, total operating pickup of the have quarter. sale see, gross the And were in increased prior credits in employee for retention year-over-year. After third

equipment increased to As revenue compared at compared the business projection SG&A. decrease a of resulted in the in prior expenses prior of travel profit a as activity the current Studios XX% the recognized in gross the screen and a retention year for percentage other launch the impact in entertainment audio our to of Strong The related and credits as adjusting and year-over-year faster from products from year. on was increase. of marketing primarily the percentage had product revenue Employee revenue for in After year-over-year prior of gross an year and mix revenue, the also ERC, percentage year. major Higher components and the than gross XX% was margin grew margin services. XX% rate the accounted and to XX% comparison higher-margin

improved operating Excluding the XX%. total $XXX,XXX loss of prior year, the recorded over employee in retention credits

losses. the which product approximately holding GreenFirst assets. marked ownership the acquisition XX% shares, year-over-year method. and now. a its quarter reduced ownership operating of in third transaction each just Holdings forest of to a business GreenFirst primary including XX%. teams Shifting XX on unrealized balance value quarter, to sheet fair Strong XXXX, equity quarter the our our change a resulted value of launch sixth and to market included with in and equity have our reminder, a the strong resulting method, for costs in method operating common consecutive the gains to businesses. in additional screens under operating issuance we Slide in of to Studios fair The in accounting improvement operating the results, services positive Strong connection paper portfolio our income. its completed Entertainment, testament Under percentage in GreenFirst in incurred change of As from we is This over after for even generated the The of our

As debt, structure manufacturing complex, we of mortgages capital on which our is Canada have comprised of discussed not in facility on has the balance the prior sheet [Alpharetta]. and the ignition digital calls, our amount a in primarily MDI small only is and building overly

our our value of the As capital sheet appreciation. some on believe the holdings, during of deploying working improvement quarter. perspective, have saw for which of assets as From Mark the an real year X/XX. the mentioned we the operating breakdown XX third potential we're the balance experienced significant first Slide meaningful a presents capital of equity during half earlier, estate in to capital decreases

see, $XX equity As value of and holdings cash million. total you our the can approximate

our value Cerminara, That ascribed Given the to the review. Kyle remarks value call wraps Chairman, we take some some there to up believe for enterprise financial before is questions. we current little strong today, over now business ignition turn operations. and being digital I'll our entertainment our

Kyle Cerminara

Thanks, Todd.

at many that of very I clear diverse currently of businesses undervalued are think There's to a number the company. have trading it's we some parts. that to discount a a

every what stock every inexpensive So do and I so why these about think we is going it? to about our night. and are questions day

answer our have. shareholder through Strong also stages the have We'll that, to out the some creative but We've happy in over the to hoped. strategy shareholder of our have had group Investor meeting and of in we intrinsic in last grow diverse really transactions going responded stock value North second done have would to figuring and This glad market price challenging and company holding resilience that ways an questions, ownership Our I Ballantyne, way has increasing Carolina. intrinsic us its shown value, Day market that very larger to has various I'm not to only over X price the on number value. Charlotte, few discount be our interested and Annual great not years. we of conditions to position strength having the be very but at last December many hope the makes few even company you I'm I and areas as continue businesses it helped for year, year. open to in growth. We the questions an amazing some our years in create see last this ask With group operator up as we'll a

up the also Annual please at Meeting December. Shareholder We your it in open questions Operator, for questions. welcome

Operator

Partners. first the Instructions] And [Operator [ph] with from Adam is question coming Darson O'Brien

Unidentified Analyst

cycle? it stand upgrade impact product cycle? you Can think give services in where on guys bit the of the you us color revenue? laser terms for we how And in about How a more should does

Kyle Cerminara

to equally upgrades. an the out large probably spread It's begin seeing years, largest cycle technology refresh It's primarily starting for from a like question, It's good years, the the the as -- laser question. projection going analog a past quite Thanks the industry X-plus decade so. that industry. and for We're has industry. to probably and with be the upgraded all And the big upgrade had really exhibitors occurred The event it's cycle upgrade from a or in event upgrade the projection is laser upgrade. to next technology really really The the the is big the Xenon Cinemark last few to probably digital. Yes. the biggest industry for AMC Adam. exhibitors over

Now to the couple year. the AMC of so of and their years. with first probably over of publicly started theirs in Out couple intent circuit end hundred screens, about wave, their of by upgrade a this the announced which to do X,XXX worked half take far their we've them next will

the the stage of world pitches with it's early It's really I'd really first inning. of few first analogy, probably the the So first say series going inning. it's

big They industry. for spend of pretty a to it's that's So going us, the It's screens capital of and were largest with exclusive providers. drive going drive lot the services. lot a in to a both event

So big for It it's for only not years. going potential squarely revenue deal. this our to or be will a next year next several drive year the

Operator

next Up E.F. Edward we have with Reilly Hutton.

Edward Reilly

Just in how And might increase wanted attribute sales, equipment too. to question. maybe cycle? Adam's you large piggyback I'm the wondering that to relate the upgrade what on digital

Kyle Cerminara

other we for for equipment. we Yes. bit to digital projection, demand servers. We quite of only but a services, audio sell not starting We're seeing types come equipment, and screens through of sell sell

just upgrades. So for that lot upgrade and we're laser is is seeing be starting projection demand of but a normal some to by that driven of replacement also cycle, laser

skew starting laser, especially players as guys it's really suit. We're to mix. and So smaller independent We'll a a towards it laser. follow the regional see to start see the out roll bigger little more

Edward Reilly

Got And pretty that's noticed revenue the big to long Belgium the European What's source how there? jump driving the category revenue, facility opened you. really then during sales And quarter. I'm main Okay. curious for on a I was the there. as

Kyle Cerminara

is just the towards got quarter, third running end this facility of Yes. September. started. and really the The getting August, in summer up It Belgium really

a U.S. product recover has of we're the flow but bit the So little been market impact the little through market a -- really isn't European driving we're than the the seeing It's starting to Really, some from COVID now. market. to just European see there, it majority starting. slower

So see up European naturally. just demand to the picking market we're starting

So I the wouldn't that attribute to of a itself. facility lot

the to the build to our the sales there to due market the market Belgium that exhibitors ability in as team. certainly regional closer to upside closer up more and we be facility there's and think I and

Edward Reilly

curious then you. the production pipeline. it for about on-brand seems I'm And [Kyle], very The Tank like you. Job is Okay. Got much

versus wondering about are much how you sourcing going the of Just how original titles. are from Landmark And names original ideas?

Mark Roberson

Yes. The the to we work Part of is really Tank have appropriate original, mentioned potential the And working that that's works other there been coming ones we have no specifically with yes, working the be are looking were over for pipeline next few before and at select think tank something that it's a internally on in we through specifically Sona] a as to group on the we are ones. well. [Ron brought really But The want on going of that a Kyle, projects actually Strong There's we and year. were is job you interesting we shortage developed what prioritize -- and project Studios and projects. of and about really, really excited do to Job. we're while. We

Kyle Cerminara

Yes. interesting first -- -- be to going about these all and through just a finished it. project excited Kyle. big This pretty haven experience was with We of is is one really really we I'm Haven projects. Safe because it big it a going with Safe pretty our

it's going think to opportunity. enormous revenue be I an

will over sells of we'd we'd terms to how in necessarily to like genre, of the But Safe do, terms like but it way the Haven like the next indicative few of months. type So do be of the it project to watch fun pretty more it. of was not in

So was pretty and was the already presold, tax to investors we risk it minimal. our use credits

company case. the me people movies, have and speculating asked you are asked not about So and that's some the I know on

we a big of -- we're working that So have projects on. pipeline we're

see from projects Safe obviously possible we and was We what's Tank that and really working that within what's for the Screen that great we possible. are that dear Job, movies have the we that and that we've happened scandals to library and Haven that Soul not content I'd deals based particularly of the that the for a when other things have deal Soup But we're that acquired the genre question original are are other some or to are that on we at we have possible, on I these was working financial Tank to neat Buffett. did team a interesting Chickens to with financial interesting. look Soul -- Soup on working Media. to we're this because like about thanks your create. And Chickens Job think can near that is Warren it's or upon see of the

Warren it's it. sell of to We give help too original to Buffett. to don't really have to have production the stuff has want we're going much are I sell it, going of very around it have -- going they some much, how We'll out coming from but away the cool some anniversary content really, that

many Warren it, content lost it's but do very to we'll outside that, working movie, and be press that of have [Ron really with with hopefully note we're going that, we're around to do going quoted the that we of that. we're So have in that that that movie that I are the the And working also, similar some you’ll do with that to some Sona]. things -- -- interesting This of release some a first be think, mentioned the original them. around we was Mark will that we stuff around are Buffet some --

Edward Reilly

to for lastly, Got watching IPO]? on you. update the forward looking timeline the it. And [spin any then Yes, just

Unidentified Company Representative

SEC, monitoring what potentially ready so can we have we're to time that this conditions file, date. We time to say which market to at it's filings has microcap you I or up the changing. transaction, But limited be to go we been at the small for particularly see keep filed go, think last to market and IPOs. soon. with be continuing our month conditions. if will point, I We'll know, as but the all dealmaking our you not about can The say S-X And, I'm that Yes. tell we're ideal

Kyle Cerminara

I'd is conditions. subject to -- The just that market other on make point not that we're

business. be pin, we occurs C with and and have Plan will that this have We there PB something

much. So stay say tuned we on it. to But too Mark's can't point,

Operator

Janney Brett have Reiss with we next, Scott. Up Montgomery

Brett Reiss

ad is start coming on the that some we're of show quarter, are We the airing percentage way get Box, Crackle? Black revenues from which to the is compensated. the Crackle on this generated Inside going

Kyle Cerminara

Inside most itself -- the smaller of we'll inside the we'll doesn't talk XX-minute a to back-end back residuals, is models black, Studios lend few end, a the et a whole which smaller show production. there's lot in business, of really in revenue. participation that the employ get a -- different It's Black Box have cetera, format. doesn't

the more So of way as a that. get we've it's fee for Strong We're a Black of model production is it's We'll structured some fee do revenue, We'll that -- that that's cover go business overhead, Box will the deal. because fee-for-service we paid type getting nice producing We'll more inside primary generate model. but to services not it a of a for a it. way off of more some Studios. but of the be

Brett Reiss

Okay.

Now to that business like customer to burden? contract so for customer, disruptions the are inflationary pressures going or service good laser we chain that the be has you The upgrades, have that's any the on with if which your some bear us. cost there's of looks supply of protected

Kyle Cerminara

the projector -- there can't that scheduled because get next delivering were our but our will of the lot issue create labor timing service of these delays equipment chain simply out things this It's our and and timing equipment. are side year in installation, on -- delays for that some operators a the if In generally of potentially the Yes. projection some time more sure, cost the installations in delays of year that's manufacturers and screen of timing doesn't have the in happen of a pressure work, supply delays on business, why some a lot projection terms of been in delayed us. push of with for

hasn't have petroleum some on into but products. of material see next a To the freight pressure we of materials, along. inflationary extent primarily those costs had with be of out areas, impact, that this to do To and we impact, pushes shipping, we'll deal of a some thing, PVC huge inflationary that. year. that and we in couple that able it pass It a your So pressures, question year kind see packaging

Brett Reiss

Right.

sight Now with a be when we're will breakeven? cash enjoying, revenue there the is of run rate line flow we

Kyle Cerminara

Yes.

this we company, quarter. EBITDA a As were breakeven

we're the we're the through business. marching growth. despite We're can We're do some So doing lead business. fact investments flow that P&L. areas Studios will as you digital the Those future some emission see, require the making that. That's in investments to incubating some towards some things away that things with

are post-COVID. So lot think We continuing through et out starting our to that I because are of road. the see COVID, And of a we investments ones germinate. the recovered. we're building future, planning sales mentioned, including along A things some in moving better I got we're the company just for company nicely seeds. to seeds the becoming We're cetera force, larger positioning we down much make this lot those a

Brett Reiss

-- can anything share said, Is there anything Right. what be with one. stay you presentation, And then it ignition, us going and digital with ignition? last The slide your on on to -- when happening it what's digital mentioned tuned.

Unidentified Company Representative

the I'll that's add ignition], a little [digital all context if right, to [Mark].

Kyle Cerminara

Yes.

Unidentified Company Representative

people there. people in business businesses, up Outdoor, process we and had and -- it, and lots that, started of signage we a clean time. some really than effectively Firefly, we turned businesses, merged interesting We we of how building it cleaning technologists really smart some had effort to huge was have XX,XXX, Firefly. Georgia, that we that and it. and fun other of a of customer a all housed the interesting had for was up ignition in with in that's With space years engineers ago. owned building, had were also software that square a and project more digital trying building signage people. a up hired a had we bit And Convergence. customer it we position to technology Convergence -- in digital into was foot need were we Firefly, it really we -- were of Outdoor in some And was signs huge Strong little we was was a Georgia to we called Alpharetta, down it that So and in that we had ended same digital the was a Atlanta, XX,XXX the business at or some -- And couple these digital a was that which having sold was a equity what called Out Strong different and

things small is so So of really outdoor building, this of some a or the We up again. be that capital, of we've Firefly beyond other now during building. had were locally had defined that, because the And how been the and out -- and and it. we sale-leaseback land continue we've And the just working eventually idea we on we businesses just buying they're building the we we we ended building and with immaterial, that that incubating in expanding taking own about businesses to haven't the a ignition talked more in incubating we digital needed been that strong with few we did but that, back, inside some buildout, Georgia. and additional perhaps that

for interesting or It's businesses them on more inside to have some business. make bigger a raising them, anything WeWork like grow. that It's a Regis focused or not we plans that, So a really that. of money building helping like

in investing of So it. some more We're Financial on terms things money that lots going side. of FG doing at takes into banking, not merchant Strong's it's Ballantyne to it venture account we're of the in the be but

out to some them going because to worry us our don't venture we turn that going of our But getting hopefully really investments into we're to blowing in not some don't bowling lots of businesses have of venture. into not the this and of X hopefully, that case. be about to we're lots on tons exhausting be will will capital like That's So go you like things Firefly. capital be that. But money of worry like interesting

as some be so and had really interesting gets pretty the my of year over next more We've will or already, -- loss significantly of it's So behind -- going flow the into upside be don't there'll things, be hopefully, I it. through coming attention. this things it won't there from of That's a cash [indiscernible]. but our lot come expanding idea lots these a

have lot now. your community now in venture right that it's of full someone it the getting us helping that's Hope question. really and a steam answers We build

Operator

further have back floor the remarks. queue. closing to in for to management I'd like We no questions turn

Mark Roberson

all us you joining today. Thank for

to If feel And on X Shareholders' of our us Meeting you a either do have to any have reach call reminder, the other of we early today. free please just questions, the December. out up in coming Annual

see you there. of Thanks. So some to I hope

Operator

Thank does gentlemen. call. you, conference today's ladies conclude and This

wonderful disconnect for may time, at phone participation. day. and your have Thank this You your a lines you

FG (FGH) 12 Nov 222022 Q3 Earnings call transcript