Ballantyne Reports Financial Results for Third Quarter of 2013

Ballantyne Strong, Inc. (NYSE MKT: BTN):

Ballantyne Strong, Inc. (NYSE MKT: BTN), a provider of digital equipment, screens and managed services as well as specialty lighting equipment, today reported financial results for the third quarter ended September 30, 2013.

Net revenues were $18.9 million in the third quarter of 2013, compared with $39.3 million in the same period of the prior year. Net earnings totaled $46 thousand, or $0.00 per diluted share, in the third quarter of 2013, compared with a net loss of $268 thousand, or ($0.02) per share, in the same period of the prior year.

Gary L. Cavey, President and CEO of Ballantyne Strong, commented, “We are making good progress on our strategic initiative to transition our business more towards managed services, which was accelerated with our October 1st acquisition of Convergent Media Systems. The acquisition of Convergent positions the Company to capitalize on growing demand for digital signage and enterprise video solutions, and will result in substantially more of our revenue being generated through recurring managed services contracts that leverage our state-of-the-art Network Operations Centers (NOC). We are continuing to look for additional opportunities to expand our presence in markets that will further increase our managed services business.

“We are also seeing good momentum in our cinema screen business, which grew 23% over the prior year, and we are making investments to further strengthen our product offerings. During the third quarter, we made a small acquisition of a provider of unique screen coatings and paint for high-end screens. This acquisition enhances our screen business by securing ownership of the formulations and related coatings that are critical to our ongoing success. We have recently introduced a new PREMIUM HGA screen that utilizes our new HI-GAIN coating technology that we believe sets a new standard for large format screens and positions this business to continue delivering strong growth,” said Mr. Cavey.

Q3 2013 Financial Summary

Sales of theatre products and services were $18.3 million in the third quarter of 2013, compared with $38.4 million in the same period of the prior year. The decline reflects the continued softening in demand as the cinema industry’s shift to a digital equipment platform winds down.

Cinema screen sales increased 23% to $3.7 million, compared with $3.0 million in the same period of the prior year. The increase was primarily attributable to increased demand from several North American exhibitors that are replacing screens as part of theatre upgrades.

Managed services revenues were $2.7 million, compared to $4.3 million in the same quarter of the prior year. The decrease is primarily attributable to a decline in non-recurring digital projection system installation sales, which was partially offset by an increase in recurring revenues from after-sale maintenance and NOC 24/7/365 monitoring revenue.

Consolidated gross profit decreased to $3.3 million, from $3.7 million in the same quarter of the prior year. However, gross profit margin in the third quarter of 2013 increased to 17.7% from 9.5% in the year-ago period, which was primarily attributable to a decline in lower margin theatre net revenues as a percentage of total sales and an increase in the relative contribution from higher margin cinema screen manufacturing and managed services during the period.

Selling and administrative expenses were $3.4 million, down from $3.7 million in the year-earlier period. The lower selling and administrative expenses was due primarily to a decline in spending associated with tradeshows and consultants. The Company also incurred approximately $200 thousand in expenses related to acquisition activities in the third quarter of 2013. As a percentage of net revenues, year-over-year selling and administrative expenditures rose from 9.4% to 17.9%, reflecting the decline in net revenues.

Nine-Month Results

Net revenues were $70.9 million for the first nine months of 2013, compared with $130.0 million during the same period of the prior year. Gross profit amounted to $11.9 million, or 16.8% of net revenues, compared to gross profit of $16.4 million, or 12.6% of net revenues in the prior-year period. Net earnings were $1.9 million, or $0.13 per diluted share, compared to net earnings of $4.0 million, or $0.28 per diluted share, in the first nine months of 2012.

Balance Sheet and Cash Flow Update

Ballantyne’s cash and cash equivalents balance at September 30, 2013 was $26.3 million, down from $45.1 million at the end of the prior quarter. The decline in cash and cash equivalents balance primarily reflects cash utilized to fund and make deposits on acquisitions during the quarter. Over the first nine months of 2013, the Company generated $5.8 million in positive cash flow from operations.

About Ballantyne Strong, Inc. (www.strong-world.com)

Ballantyne Strong is a provider of digital equipment, screens and managed 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. Through its subsidiary, Convergent Media Systems, the Company is also a leading player in digital signage and content creation and distribution systems for the retail, hospitality, financial services, cinema and government markets.

Forward-Looking Statements

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.