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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
August 9, 2010
Source: Ballantyne Strong
Ballantyne Strong, 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.
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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.”
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