OMAHA, Nebraska (November 7, 2018) – Ballantyne Strong, Inc. (NYSE American: BTN), a holding company with diverse business activities focused on serving the cinema, retail, financial, advertising and government markets, today reported financial results for the third quarter ended September 30, 2018.
Net revenues were $16.5 million in the third quarter of 2018, compared with $19.6 million in the same period of the prior year. Loss from operations was ($1.8) million in the third quarter of 2018, compared with income from operations of $0.5 million in the same period of the prior year. Net loss from continuing operations was ($1.2) million, or ($0.08) per share, in the third quarter of 2018 compared with ($1.0) million, or ($0.07) per share, in the same period of the prior year.
Q3 2018 Financial Summary
Cinema revenues were $11.6 million in the third quarter of 2018, compared with $12.3 million in the same period of the prior year. The decrease was driven primarily by lower sales of screens, digital cinema equipment and non-recurring maintenance services, partially offset by higher sales of screen support systems and installation services.
Digital Media revenues were $5.1 million in the third quarter of 2018, compared with $7.6 million in the same period of the prior year. The decrease was driven primarily by lower revenue from installation services and smaller decreases in contract maintenance revenue, sales of digital signage equipment and revenue from non-recurring maintenance. These decreases were partially offset by $1.5 million of revenue in the current year from our taxicab advertising business that did not exist in the prior year.
Consolidated gross profit was $3.5 million in the third quarter of 2018, compared with $5.3 million in the same quarter of the prior year. Gross margin was 21.5% in the third quarter of 2018, compared with 27.2% in the same quarter of the prior year. The decrease in gross margin percentage was driven primarily by an increase in fixed costs in the Digital Media segment associated with the new Strong Digital Media taxicab advertising business. Excluding the new taxicab advertising business, gross profit was $4.4 million, or 29.6% gross margin. We expect gross losses in the taxicab advertising business will continue into 2019 until enough advertising revenue can be generated to cover these fixed costs.
Selling and administrative expenses were $4.5 million in the third quarter of 2018, compared with $4.8 million in the same quarter of the prior year. The decrease was driven by decreases in consulting expenses and marketing expenses, partially offset by an increase in professional fees.
Ballantyne’s cash and cash equivalents balance at September 30, 2018 was $5.7 million, compared to $4.9 million at December 31, 2017. The increase in cash was primarily driven by $4.5 million of proceeds from the sale of the Company’s common stock of BK Technologies, Inc. during the third quarter of 2018 and $4.0 million of net proceeds from a sale-leaseback of the Company’s Alpharetta, Georgia office facility during the second quarter of 2018. This increase was mostly offset by the cash impact of operating losses. Equity method investments had a book value of $12.0 million and a market value of $9.4 million as of September 30, 2018.
About Ballantyne Strong, Inc. (www.ballantynestrong.com)
Ballantyne Strong and its subsidiaries engage in diverse business activities including the design, integration and installation of technology solutions for a broad range of applications; development and delivery of out-of-home messaging, advertising and communications; manufacturing of projection screens; and providing managed services including monitoring of networked equipment. The Company focuses on serving the cinema, retail, financial, advertising and government markets.
Except for the historical information in this press release, it includes forward-looking statements which involve a number of risks and uncertainties, including but not limited to those discussed in the “Risk Factors” section contained in Item 1A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and the following risks and uncertainties: the Company’s ability to expand its revenue streams, potential interruptions of supplier relationships or higher prices charged by suppliers, the Company’s ability to successfully compete and introduce enhancements and new features that achieve market acceptance and that keep pace with technological developments, the Company’s ability to successfully execute its capital allocation strategy, the Company’s ability to retain or replace its significant customers, the impact of a challenging global economic environment or a downturn in the markets, economic and political risks of selling products in foreign countries, risks of non-compliance with U.S. and foreign laws and regulations, cybersecurity risks and risks of damage and interruptions of information technology systems, the Company’s ability to retain key members of management and successfully integrate new executives, the Company’s ability to complete acquisitions, strategic investments, entry into new lines of business, divestitures, mergers or other transactions on acceptable terms or at all, the Company’s ability to assert its intellectual property rights, the impact of natural disasters and other catastrophic events, the adequacy of insurance and the impact of having a controlling stockholder. Given the risks and uncertainties, readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described herein, as well as others not now anticipated. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except where required by law, the Company assumes no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.
Chairman and Chief Executive Officer