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Ballantyne
Reports Diluted Q3 EPS of $0.33 on 93% Increase in Net Revenues to $63.4 Million
November
3, 2011
Source: Ballantyne Strong Ballantyne
Strong reported all-time record financial results for the third quarter (Q3) and
nine months ended September 30, 2011.
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Third
Quarter Highlights · Net revenues increased
93% to $63.4 million compared to Q3 2010. · Operating
income increased 86% to $6.6 million compared to Q3 2010. ·
Achieved diluted earnings per share of $0.33 compared to $0.16 per share in Q3
2010. Third Quarter Results Ballantyne
Strong’s net revenues almost doubled to an all-time quarterly record $63.4
million, led by a 167% year-over-year increase in digital product sales. The large
rise included revenues from Ballantyne’s successful full-scale digital cinema
deployment on behalf of long-time customer Marcus Theatres®, a division of
The Marcus Corporation (NYSE: MCS), which contributed in excess of 50% of the
Company’s top-line results for the period. Cinema service revenues more than
doubled to $4.6 million when compared to Q3 2010, largely due to a significant
increase in projection system installation revenues generated by the Company’s
STS Services Group, including the Marcus Theatres rollout. Cinema
screen sales were $2.4 million during the three-month period, versus $5.0 million
a year ago. The decline was primarily a result of exhibitors accelerating their
digital 3-D rollouts in anticipation of certain 3-D movie releases in prior quarters.
The Company generated 86% growth in operating income to
$6.6 million, up from $3.5 million in the year-ago quarter. Net earnings were
$4.7 million, or $0.33 per diluted share, a more than 100% increase compared to
$2.3 million, and $0.16 in Q3 2010, respectively. Consolidated
gross profit increased 55% to $10.0 million, or a 15.8% gross margin on net revenues,
compared to gross profit of $6.5 million, or 19.6% of net revenues in the year-earlier
period. The gross profit increase was mainly due to Ballantyne’s significant
year-over-year rise in digital product sales. The margin decline was primarily
attributable to an increase in the contribution of digital product sales to the
revenue mix, as these carry higher price points but lower margins. Selling
expenses were $0.9 million, or 1.5% of net revenues, compared to $0.7 million
in Q3 2010, or 2.2% of net revenues. The year-over-year increase was primarily
due to the hiring of additional personnel to expand international and service
marketing efforts, as well as supporting the Company’s China-based sales
offices. General and administrative expenditures were $2.5 million, or 4.0% of
revenues, versus 2.2 million, or 6.7% of prior-year revenues. The increase reflects
higher personnel costs and professional fees, but the percentage of revenues declined
on a year-over-year basis, reflecting the large top-line increase. Nine-Month
Results Net revenues rose 46.0% to $132.9
million. Gross profit rose 36.8% to $22.9 million, and was 17.2% of net revenues,
versus $16.7 million, or 18.4% of net revenues. Net earnings were $8.7 million,
or $0.60 per diluted share, compared to net earnings of $6.1 million, or $0.42
per diluted share, in the first nine months of 2010. Balance
Sheet and Cash Flow Update Ballantyne’s
cash and cash equivalents balance at quarter-end was $22.4 million, compared to
$22.3 million at December 31, 2010. The $30 million increase in receivables during
Q3 was a temporary phenomenon due to funds owed to Ballantyne from digital equipment
sales during Q3, and the majority of those funds have been collected subsequent
to September 30. The Company generated cash flow from operations of $2.3 million
and spent approximately $2.4 million on capital expenditures, during the nine
months ended September 30, 2011. Commenting on
the Company’s record operating results, President and CEO Gary L. Cavey stated,
“The 2011 third quarter was a very strong reporting period for Ballantyne
and the Marcus Theatres digital cinema deployment, including NEC projector sales
and installations, was a big contributor to our success. The Company’s cinema
services group demonstrated why we are leaders in the industry, completing Marcus’s,
large 550+ system rollout in only 45 days. “Our
talented, hardware-agnostic team members are equally adept at installing full
theatrical circuits as they are with assisting smaller chains and individual theatres.
Our focus on expanding Ballantyne’s maintenance and NOC service customer
base continues to grow as we strive to expand this easily scalable portion of
our business that will bring us recurring revenues in the future. Following the
Marcus deployment, we are also providing annual maintenance services across their
circuit and 24/7 proactive monitoring of all projection systems from our state-of-the-art
NOC in Omaha. “Another
key element for Ballantyne is further expanding our array of products and services
– both organically and through acquisitions and alliances. Pursuant to this
strategy, subsequent to quarter-end, we signed a key reseller agreement with Barco
(NYSE Euronext Brussels: BAR), one of the worldwide leaders in cinema.
Adding their popular line of digital products is a very important addition and
complementary to our NEC relationship, as our customers will benefit from more
options to choose from as part of Ballantyne’s one-stop, turnkey cinema solutions,”
concluded Mr. Cavey.
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