Ballantyne Strong, Inc. (NYSE MKT: BTN), a diversified provider of digital technology services, products and solutions, today reported financial results for the fourth quarter ended December 31, 2014.
Net revenues were $28.4 million in the fourth quarter of 2014, compared with $32.7 million in the same period of the prior year. Net income totaled $318,000, or $0.02 per diluted share, in the fourth quarter of 2014, compared with a net loss of $1.7 million, or ($0.12) per share, in the same period of the prior year.
Gary L. Cavey, President and CEO of Ballantyne Strong, commented, “Over the past year, we have repositioned Ballantyne Strong to become a more diversified company with greater exposure to higher growth markets in the digital media sector. We have made good progress on building up our business development capabilities in digital media and we are pleased with the quality of opportunities we have in our sales pipeline. With the higher margins we are generating, we are optimistic about our opportunities to deliver profitable growth in the years ahead and create additional value for our shareholders.”
Q4 2014 Financial Summary
Managed Services revenues were $9.4 million in the fourth quarter of 2014, compared with $10.7 million in the same period of the prior year. The decrease is attributable to lower project revenues in the digital media business.
Systems Integration revenues were $19.3 million in the fourth quarter of 2014, compared with $22.2 million in the same period of the prior year. The decline is primarily attributable to the continued softening in demand as the cinema industry’s shift to a digital equipment platform winds down.
Consolidated gross profit was $5.6 million in the fourth quarter of 2014, compared with $4.9 million in the same quarter of the prior year. Gross margin was 19.7% in the fourth quarter of 2014, compared with 15.0% in the same quarter of the prior year.
Selling, general and administrative expenses (SG&A) were $5.2 million in the fourth quarter of 2014, compared with $6.7 million in the same quarter of the prior year. The decrease in SG&A was primarily attributable to lower severance, acquisition-related costs and non-equity based incentive compensation compared to the fourth quarter of 2013.
Full Year Results
For the year ended December 31, 2014, net revenues were $95.1 million, compared with $103.6 million in 2013. Gross profit amounted to $18.2 million, or 19.1% of net revenues, compared to gross profit of $16.8 million, or 16.3% of net revenues, in the prior-year period. Net loss was $4,000, or $0.00 per diluted share, compared to net income of $163,000, or $0.01 per diluted share, in 2013.
Balance Sheet
Ballantyne’s cash and cash equivalents balance at December 31, 2014 was $22.5 million, compared with $24.0 million at the end of the prior quarter. The decrease in cash and cash equivalents balance was primarily attributable to a decrease in accounts payable.
Conference Call and Webcast
A conference call to discuss 2014 fourth quarter financial results will be held on Thursday, March 5, 2015 at 11:30 a.m. Eastern Time / 10:30 a.m. Central Time. Investors and analysts are invited to access the conference call by dialing 866-652-5200 (domestic) or 412-317-6060 (international), and referencing “Ballantyne Strong.” There will also be a live webcast of the call available at the Investor Relations section of http://www.strong-world.com.
After the live webcast, a replay will remain available in the Investor Relations section of Ballantyne Strong’s website. A replay of the call will be available at 877-344-7529 (domestic) or 412-317-0088 (international) through March 13, 2015, conference ID 10061779.
About Ballantyne Strong, Inc. (www.strong-world.com)
Ballantyne Strong designs, integrates, and installs technology solutions for a broad range of applications; develops and delivers out-of-home messaging, advertising and communications; manufactures projection screens and lighting products; and provides managed services including monitoring of networked equipment. The Company focuses on serving the retail, financial, government and cinema 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.
| Ballantyne Strong, Inc. and Subsidiaries | ||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||
| (In thousands) | ||||||||||||
| December 31, | December 31, | |||||||||||
| 2014 | 2013 | |||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 22,491 | $ | 28,791 | ||||||||
| Accounts receivable (less allowance for doubtful accounts of $679 in 2014 and $703 in 2013) | 20,266 | 20,047 | ||||||||||
| Inventories, net | 14,108 | 15,185 | ||||||||||
| Recoverable income taxes | 1,255 | 2,207 | ||||||||||
| Deferred income taxes | 3,541 | 2,264 | ||||||||||
| Other current assets | 2,956 | 3,609 | ||||||||||
| Total current assets | 64,617 | 72,103 | ||||||||||
| Property, plant and equipment, net | 13,914 | 14,721 | ||||||||||
| Intangible assets, net | 1,168 | 895 | ||||||||||
| Goodwill | 1,029 | 1,123 | ||||||||||
| Notes receivable | 2,985 | 2,497 | ||||||||||
| Deferred income taxes | 4,910 | 1,393 | ||||||||||
| Other assets | 1,447 | 2,712 | ||||||||||
| Total assets | $ | 90,070 | $ | 95,444 | ||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 9,039 | $ | 12,844 | ||||||||
| Accrued expenses | 4,366 | 6,236 | ||||||||||
| Customer deposits/deferred revenue | 5,473 | 3,474 | ||||||||||
| Income tax payable | 1,009 | 888 | ||||||||||
| Total current liabilities | 19,887 | 23,442 | ||||||||||
| Deferred revenue | 2,230 | 3,008 | ||||||||||
| Deferred income taxes | 715 | 790 | ||||||||||
| Other accrued expenses, net of current portion | 1,776 | 1,748 | ||||||||||
| Total liabilities | 24,608 | 28,988 | ||||||||||
| Commitments and contingencies | ||||||||||||
| Stockholders’ equity: | ||||||||||||
| Preferred stock, par value $.01 per share; Authorized 1,000 shares, none outstanding | — | — | ||||||||||
| Common stock, par value $.01 per share; Authorized 25,000 shares; issued 16,809 and 16,741 shares at December 31, 2014 and December 31, 2013, respectively; 14,078 and 14,010 shares outstanding at December 31, 2014 and 2013, respectively | 168 | 167 | ||||||||||
| Additional paid-in capital | 38,657 | 38,231 | ||||||||||
| Accumulated other comprehensive income (loss): | ||||||||||||
| Foreign currency translation | (2,325 | ) | (959 | ) | ||||||||
| Postretirement benefit obligation | 139 | 190 | ||||||||||
| Retained earnings | 47,062 | 47,066 | ||||||||||
| 83,701 | 84,695 | |||||||||||
| Less 2,731 of common shares in treasury, at December 31, 2014 and 2013, respectively, at cost | (18,239 | ) | (18,239 | ) | ||||||||
| Total stockholders’ equity | 65,462 | 66,456 | ||||||||||
| Total liabilities and stockholders’ equity | $ | 90,070 | $ | 95,444 | ||||||||
| Ballantyne Strong, Inc. and Subsidiaries | ||||||||||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||||||||||
| Three and Twelve Months Ended December 31, 2014 and 2013 | ||||||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
| Net revenues | $ | 28,374 | $ | 32,745 | $ | 95,086 | $ | 103,610 | ||||||||||||||||
| Cost of revenues | 22,734 | 27,831 | 76,926 | 86,765 | ||||||||||||||||||||
| Gross profit | 5,640 | 4,914 | 18,160 | 16,845 | ||||||||||||||||||||
| Selling and administrative expenses: | ||||||||||||||||||||||||
| Selling | 2,288 | 1,379 | 7,235 | 3,965 | ||||||||||||||||||||
| Administrative | 2,959 | 5,295 | 12,740 | 12,773 | ||||||||||||||||||||
| Total selling and administrative expenses | 5,247 | 6,674 | 19,975 | 16,738 | ||||||||||||||||||||
| Gain (loss) on the sale/disposal/transfer of assets | (2 | ) | (16 | ) | 10 | (8 | ) | |||||||||||||||||
| Income (loss) from operations | 391 | (1,776 | ) | (1,805 | ) | 99 | ||||||||||||||||||
| Net interest income | 166 | 181 | 657 | 350 | ||||||||||||||||||||
| Equity income (loss) of joint venture | (17 | ) | 92 | 78 | (25 | ) | ||||||||||||||||||
| Other income, net | 260 | 64 | 601 | 527 | ||||||||||||||||||||
| Income (loss) before income taxes | 800 | (1,439 | ) | (469 | ) | 951 | ||||||||||||||||||
| Income tax benefit (expense) | (482 | ) | (286 | ) | 465 | (788 | ) | |||||||||||||||||
| Net earnings (loss) | $ | 318 | $ | (1,725 | ) | $ | (4 | ) | $ | 163 | ||||||||||||||
| Basic earnings (loss) per share | $ | 0.02 | $ | (0.12 | ) | $ | 0.00 | $ | 0.01 | |||||||||||||||
| Diluted earnings (loss) per share | $ | 0.02 | $ | (0.12 | ) | $ | 0.00 | $ | 0.01 | |||||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||||||
| Basic | 14,078 | 14,009 | 14,061 | 13,999 | ||||||||||||||||||||
| Diluted | 14,215 | 14,042 | 14,061 | 14,031 | ||||||||||||||||||||
| Ballantyne Strong, Inc. and Subsidiaries | ||||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Years Ended December 31, | ||||||||||||||||||
| 2014 | 2013 | 2012 | ||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||
| Net earnings (loss) | $ | (4 | ) | $ | 163 | $ | 5,542 | |||||||||||
| Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: | ||||||||||||||||||
| Provision for doubtful accounts | 92 | 273 | 626 | |||||||||||||||
| Provision for obsolete inventory | (200 | ) | (111 | ) | (350 | ) | ||||||||||||
| Provision for warranty | — | 430 | 538 | |||||||||||||||
| Depreciation and amortization | 1,924 | 1,511 | 1,268 | |||||||||||||||
| Equity in (income) loss of joint venture | (78 | ) | 25 | (10 | ) | |||||||||||||
| (Gain) loss on forward contracts | 145 | 380 | (145 | ) | ||||||||||||||
| (Gain) loss on disposal or transfer of assets | (11 | ) | 8 | (1,332 | ) | |||||||||||||
| Deferred income taxes | (4,533 | ) | 1,339 | 71 | ||||||||||||||
| Share-based compensation expense | 426 | 461 | 393 | |||||||||||||||
| Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||||||||||||
| Accounts receivable, unbilled and notes receivable | 759 | 8,932 | 6,402 | |||||||||||||||
| Inventories | 1,149 | 689 | 4,265 | |||||||||||||||
| Other current assets | 8 | 1,826 | 2,605 | |||||||||||||||
| Accounts payable | (3,732 | ) | (4,813 | ) | (15,534 | ) | ||||||||||||
| Accrued expenses | (1,904 | ) | (235 | ) | 572 | |||||||||||||
| Customer deposits/deferred revenue | 1,229 | (3,327 | ) | (88 | ) | |||||||||||||
| Current income taxes | 1,145 | 685 | (5,382 | ) | ||||||||||||||
| Other assets | (87 | ) | 268 | 130 | ||||||||||||||
| Net cash provided by (used in) operating activities | (3,672 | ) | 8,504 | (429 | ) | |||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||
| Purchase of businesses, net of cash acquired | — | (18,810 | ) | — | ||||||||||||||
| Distribution from joint venture | — | — | 2,509 | |||||||||||||||
| Capital expenditures | (1,982 | ) | (529 | ) | (2,541 | ) | ||||||||||||
| Proceeds from sales of assets | 57 | 5 | 3,334 | |||||||||||||||
| Net cash provided by (used in) investing activities | (1,925 | ) | (19,334 | ) | 3,302 | |||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||
| Purchase of treasury stock | — | — | (2,756 | ) | ||||||||||||||
| Proceeds from employee stock purchase plan | — | 4 | 8 | |||||||||||||||
| Payments on capital lease obligations | (14 | ) | — | — | ||||||||||||||
| Excess tax benefits from share-based arrangements | (7 | ) | 16 | 2 | ||||||||||||||
| Net cash provided by (used in) financing activities | (21 | ) | 20 | (2,746 | ) | |||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (682 | ) | (567 | ) | 152 | |||||||||||||
| Net increase decrease in cash and cash equivalents | (6,300 | ) | (11,377 | ) | 279 | |||||||||||||
| Cash and cash equivalents at beginning of year | 28,791 | 40,168 | 39,889 | |||||||||||||||
| Cash and cash equivalents at end of year | $ | 22,491 | $ | 28,791 | $ | 40,168 | ||||||||||||
| Supplemental disclosure of cash paid for: | ||||||||||||||||||
| Interest | $ | 34 | $ | 27 | $ | 22 | ||||||||||||
| Income Taxes | $ | 1,724 | $ | 961 | $ | 4,469 | ||||||||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||||||||||||
| Capital lease obligations for property and equipment | $ | 310 | $ | — | $ | — | ||||||||||||
Contacts:
Nate Legband, 402-829-9404
Chief
Financial Officer
or
Financial Profiles
Tony Rossi,
310-622-8221
trossi@finprofiles.com
