Ballantyne Strong, Inc. Q2 2010 Earnings Call Transcript

Ballantyne Strong, Inc. Q2 2010 Earnings Call Transcript
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Ballantyne Strong, Inc. (BTN)

Q2 2010 Earnings Call Transcript

August 9, 2010 10:00 am ET

Executives

Robert Rinderman – Jaffoni & Collins, IR

John Wilmers – President and CEO

Kevin Herrmann – Secretary, Treasurer and CFO

Analysts

Eric Wold – Merriman

Bob Evans – Craig-Hallum Capital

Marla Backer – Hudson Square

Thomas Duffy [ph]

Presentation

Operator

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» Ballantyne Strong, Inc. Q1 2010 Earnings Call Transcript
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» Ballantyne Strong, Inc. Q2 2009 Earnings Call Transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Ballantyne Strong 2010 second quarter results 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 Monday, August 9, 2010.

I would now like to turn the call over to Robert Rinderman of Jaffoni & Collins, Ballantyne Strong Investor Relations. Please go ahead, sir.

Robert Rinderman

Thank you, Lindsey. Good morning, everyone. Welcome to our 2010 second quarter results call. This call will contain forward-looking statements relating 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 US Private Securities Litigation Reform Act of 1995. Listeners should note that these statements are only predictions.

They are subject to inherent risks and uncertainties and may be impacted by several factors, including but not limited to customer demand for the Company's products, development of new technology for alternative means of motion picture presentation, domestic and international economic conditions, the achievement of lower costs and expenses, credit concerns in the theater exhibition industry and other risks detailed from time-to-time in the Company's Securities & Exchange Commission filings.

The Company's actual performance and results could differ materially because of these factors which are 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 Web site

www.sec.gov

or Ballantyne Strong's Web site

www.ballantyne-strong.com

.

All information in this conference call is as of today and the Company undertakes no obligation to update these statements or to update expectations from prior conversations. I also would remind listeners that this call is being webcast live over the Internet that a replay of the call will be available on Ballantyne's corporate Web site for 30 days after the call ends.

With that I'd like to turn it over to our President and Chief Executive Officer, John Wilmers. John, please go ahead.

John Wilmers

Thank you, Rob, and thanks to all of you for joining today's call and webcast. With me this morning is Kevin Herrmann, our CFO. I will review Ballantyne’s Q2 progress, discuss our outlook for the balance of the year and then Kevin will provide a more comprehensive preview or review of our operating results and financial position. We will then open the call to your questions.

We are very pleased to report that Ballantyne achieved all-time record net revenues in Q2, led by strong digital equipment sales as well as solid results our MDI screen manufacturing business which is operating at full capacity and a significant pick up with the STS cinema services subsidiary as the global digital cinema rollout picked up additional momentum during the period.

The large number of 3-D title set for the second half of 2010 and then coming years theatre exhibitors are aggressively focused on digitizing their screens to take full advantage of consumer demand. They are also installing large-format screens and state-of-the-art auditoriums, offering consumers a variety of ways in which to enjoy a movie or some form of alternative content, ranging from Opera to the World Cup which was successfully shown in 3-D earlier this summer at many theatres.

Although still in the early stages we believe alternative content will play an increasingly important role for exhibitors as they look to increase their capacity utilization, especially during less busy non-weekend periods.

Most domestic independent and moderate size theatre circuits that we deal with are continuing to self-finance their digital roll-outs, as expansionary growth capital remains hard to find in this economic environment.

The key remains their ability to secure virtual print fees from the major studios which the DCIP Consortium and Cinedigm have been able to do.

MDI’s screen order backlog continue to roll as a result of 3-D silver screen demand, as well as an increasing number of large-format screen owners primarily from our long-time client, IMAX, as they continue their aggressive growth both domestically and abroad, especially in Asia.

As you know, Asia, particularly, China is a region where we are also achieving significant success with digital projector sales. The country has an aggressive effort underway to open new cinemas to catch up the much the world in terms of per capita screen count. We are also positioning ourselves to participate in their growth by shipping uncut cinema screens to our partner in the region.

In addition to silver and large-format screens, we are also developing a high-gain screen for non-3-D usage. We believe these will prove to be superior in brightness to standard gain screens and we have begun to market them to our exhibitor customers.

Our value proposition is that they are a good investment that can save the exhibitor over the long run by reducing xenon bulb replacement extensive, specifically, allowing exhibitors to use less expensive lower voltage lamps in the auditoriums.

To capitalize on continuing strong global screen demand, we initiated a $6 million expansion program at MDI. The program includes the purchase of our Quebec-based building, the acquisition of an adjacent parcel of land and the addition of 26,000 square feet of production space. This initiative should be completed by year-end raising capacity by Q1 of '011.

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