Ballantyne Strong, Inc. has a market cap of $71.5 million; its shares were traded at around $4.98 with a P/E ratio of 6.4 and P/S ratio of 0.4. Ballantyne Strong, Inc. had an annual average earning growth of 52.3% over the past 5 years.
Highlight of Business Operations:Service revenues increased 12.9% in the second quarter of 2012 to $3.3 million from $2.9 million a year-ago due to the industry continuing its transition to digital cinema, providing increasing opportunities for our service team to sell a range of services including, but not limited to, installation, after-sale maintenance, repairs, cabling, wiring and NOC (Network Operation Center) services. As expected, revenues generated from servicing film equipment decreased to $0.2 million in the second quarter of 2012 compared to $0.3 million in the comparable period of 2011 while revenues generated from servicing digital equipment amounted to $3.1 million in the second quarter of 2012 from $2.7 million in the second quarter of 2011, consistent with the transition to digital cinema.
Sales of lighting products decreased 26.0% to $0.7 million from $0.9 million a year-ago. The decrease is primarily due to a decrease in sales of parts and other lighting products to $0.2 million from $0.5 million a year-ago. Sales of follow spotlights were relatively flat at $0.5 million in the second quarter of 2012 compared to $0.4 million in 2011. Even though demand for lighting for the venue and entertainment sectors of the construction business is still slow, we are moving to focus on a growing segment, architectural accent lighting.
Service revenues increased 29.2% to $7.0 million in 2012 from $5.4 million a year-ago as the motion picture industrys transition to digital cinema resulted in more opportunities for our service team including installation and maintenance of digital projectors. Revenues from servicing digital products rose to $6.6 million or 94% of all service revenues in 2012 from $4.8 million or 88% in 2011. As expected, revenues generated from servicing film equipment decreased to $0.4 million in 2012 compared to $0.6 million a year-ago consistent with the industry transition to digital equipment.
Sales of film projection equipment declined 48.4% to $1.2 million in 2012 from $2.3 million a year-ago. Sales of film replacement parts declined to $0.8 million during 2012 from $1.7 million during 2011, while sales of xenon lamps amounted to $0.4 million compared to $0.8 million a year-ago. These declines were expected and sales of these products are expected to continue to decline as the industry continues to transition to digital cinema.
Net cash used in operating activities was $4.2 million in the first six months of 2012, which included net income of $4.3 million, plus non-cash charges (benefits) for gain on assets, deferred tax expense, depreciation and amortization, reserve provisions and non-cash stock compensation totaling $(0.1) million. Cash was provided by a $1.5 million return on investment from our joint venture investment in Digital Link II. Changes in working capital used cash from operating activities of $9.9 million. This is primarily due to an increase in inventory, a decrease in accounts payable, as well as accruals and timing of tax deposits, partially offset by a decrease in the balance of accounts receivables. Inventory levels increased $2.0 million at June 30, 2012 to enable the Company to take advantage of vendor discounts for inventory expected to be sold in the third quarter of 2012. Accounts payable decreased $5.3 million as the Company paid for fourth quarter 2011 inventory purchases. Accounts receivable balances decreased $1.8 million due to collections of the higher sales volume of the prior fourth quarter 2011 as compared to the second quarter of 2012.
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