Ballantyne Strong, Inc (BTN)

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Ballantyne Strong, Inc. (BTN)

Q1 2011 Earnings Call

May 6, 2011 10:00 AM ET


Robert Rinderman – IR

Gary Cavey – President and CEO

Kevin Herrmann – Secretary, Treasurer and CFO


Tom Wilmers (ph) – Private Investor

Greg Scott – Merriman Capital

Robert Routh – Phoenix Partners Group

Brandon Taylor (ph) – Private Investor

Gregg Hillman – First Wilshire Securities Management

Wayne Cadwallader – Elkhorn Partners limited

Mike Rindos – Rodman & Renshaw

James Fronda – Sidoti

Jim Gentrup – Discovery Investment Research

Steve Schnipper – Private Investor

Bob Schwartz (ph) – Private Investor



Ladies and gentlemen, thank you for standing by, and welcome to the Ballantyne Strong 2011 First Quarter Results Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded Friday, May 6, 2011.

And I would now like to turn the conference over to your Ballantyne Investor Relations Mr. Robert Rinderman. Please go ahead, sir.

Robert Rinderman

Thank you, Frank. Good morning, everyone. Welcome to Ballantyne Strong’s 2011 first quarter results conference call.

This call may contain forward-looking statements related to the future financial results of Ballantyne Strong. Listeners are cautioned that such statements are based upon current expectations and assumptions and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.

Listeners should note that these statements are only predictions. They are subject to inherent risks and uncertainties that are detailed from time to time in the company’s Securities & Exchange Commission filings.

The company’s actual performance may differ materially because of these or other factors discussed in the management’s discussion and analysis of results of operations and financial conditions section of the company’s SEC filings, copies of which can be obtained from the SEC or Ballantyne’s new website

All information discussed on this conference call is as of today and the company undertakes no obligation to update these statements or these expectations from prior conversations. I’ll remind listeners that today’s call is being webcast live over the Internet that a replay will be available on Ballantyne’s website for 30 days after the call ends.

Now going to turn the call over to President and CEO, Gary Cavey, who is joined this morning by CFO, Kevin Herrmann. Gary?

Gary Cavey

Thank you, Rob. Good morning everybody. We appreciate you joining us today. Earlier today we reported the 2011 first quarter earnings per share of $0.11 up from $0.07 the prior year on a 26% increase in net revenues to $31.9 million.

All three of our core digital cinema components, Ballantyne businesses projection equipment, screens and services achieved solid year-over-year increases compared to the 2010 period. Kevin will give you more color and specifics on our performance following my remarks.

We demonstrated strong year-over-year sales increases in these three key digital areas. However, the timing of certain digital equipment sales was impacted principally due to delays in certain customer closing their financing arrangements with third-party lenders. These three ways impacted our Q1 top and bottom line performance.

As we discussed on our last conference call, many of these independent chains have stopped short of digitizing their entire circuits due to lack of available funding. Many exhibitors, customers have partnered with Ballantyne for decades, giving the company nearly 80 years’ presence in the cinema industry and we of course will continue to assist the independent theatres with the processes of locating potential funding sources with the goal of ultimately supplying them with their turnkey projection systems, screens and aftercare maintenance and monitoring services.

With the recently improved domestic box offices numbers here in Q2 an optimism surrounding the upcoming 2011 movie slate as well as the 2012 pipeline, we also remain very confident that the recent funding bottlenecks is in the process of being alleviated. Our business is also seeing very positive signs in Q2. We believe Ballantyne continues to be uniquely well-positioned as the leading one-stop cinema solutions provider. Our organization has unrivaled wealth of exhibitor relationships around the globe that we expect will continue to benefit us in the near and long term.

Now that we entered the digital age of cinema, we expect movie theatre technology to evolve at a considerably faster pace. And given BTN’s diversified turnkey business model, we expect to be at the nexus on the ongoing rapid pace of industry change. International markets especially China and Latin America should continue to offer many more growth opportunities for Ballantyne. The Chinese government is backing the financing of their cinema sector’s growth and that early stage uptrend is expected to last for years into the future. They are focused on adding brand new and cutting edge digital complexes to satisfy the huge demand for cinema.

As I also mentioned on our recent Q4 call China presently has only about 6500 movie screens to keep a population of more than 1.3 billion people entertained. We have seen a wide range of predictions for projected Chinese screen growth with the most conservative estimates estimating at a 100% growth over the next five year period.

The United States in contrast has approximately 39,000 movie screens for a population of about 310 million. You can do them quick math and see why we are excited about the tremendous growth opportunity that China presents.

Ballantyne in particular is uniquely positioned for success in the region as our partner NEC is manufacturing digital projectors domestically in China. We also continue to gain traction with our cinema screen business in that country. Our company is shipping uncut rolls of cinema screens to Ballantyne’s China based partner who completes the process of making them both theatre-worthy and ready for installation.

Amongst other potential NOC business opportunities we are aggressively targeting the flat panel digital advertising signage business with our monitoring expertise. We also provide these clients with a – with a range of additional value added services to help them manage this business. One recent client was looking for us to manage the full range of cutting edge electronic systems at their theatre and we worked this out allowing them to manage much of their theatre operations remotely.

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