Strength in Numbers for Ballantyne Strong

Mar.22.10 | About: Ballantyne Strong, (BTN)

Shares in digital cinema projection equipment and service provider Ballantyne Strong (AMEX:BTN) has performed exceptionally well in recent weeks thanks to a large contract win and confirmation that it was about to announce solid results for the fourth quarter (Q4 2009) and full year (FY 2009) for the three and twelve month periods ended 31 December 2009.

Revenues for the US$70 million market capitalised company jumped 28.5% to US$18.8 million in Q4 2009 (Q4 2008: US$14.7 million) helping the company lift net earnings to $0.052 million compared to a net loss of $2.3 million a year ago (earnings of 0 cents per share versus loss of 17 cents). Q4 2008 results included a $2.3 million charge for goodwill impairment.

Ballantyne Strong benefited from an increase in demand for digital cinema equipment, which soared 76.7% to $6.9 million in Q4. The surge in revenues helped lift Q4 gross profits 55% to $3.5 million (18.8% of net revenues) compared to $2.3 million a year earlier (15.6% of net revenues). Margins also benefited from cost reductions implemented in 2009 at the company’s manufacturing facility in Omaha. SG&A expenses increased to $3.2 million, excluding a goodwill impairment charge of $2.3 million).

For the full year, net revenues climbed a very respectable 31.6% to $71.2 million (FY 2008: $54.8 million) while gross profit climbed to $14.7 million (20.4% of net revenues) from $8.8 million (16% of net revenues) in 2008. Net income climbed to $2.1 million or 15 cents per diluted share from a net loss of US$3 million (22 cents per diluted share) in the previous year.

The company ended 2009 with $23.6 million in cash and cash equivalents, up slightly from $23.3 million at the end of September 2009.

"Q4 revenue growth was led by an increase in digital projector sales and supported by improvements in both our services and cinema screens businesses,” John P. Wilmers, President and CEO, commented. “Our Asian territories made strong contributions to the fourth quarter and full-year performance, with growing demand coming from China, where they are moving aggressively to convert cinemas to digital technology at the same time they are working to expand their country-wide screen count. We continue to view China and neighboring Asian territories as exciting growth opportunities for Ballantyne Strong.

Shares in the company have tripled in the past year, climbing from a 52 week low of $1.52 to $4.95 last Friday.

The company has a long history, first founded in 1910 by Robert Scott Ballantyne, and more recently acquired Marcel Desrochers, Inc., a Canadian manufacturer of cinema projection screens in 2007.

Amongst its products today are entertainment lighting and services plus digital, audio and film projector systems and services for cinemas.

Disclosure: No positions