Transcript Document

Investor Presentation | May 2014
Except for the statements of historical fact, the information presented herein, as
well as comments that management may make, constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the company to be materially different from any future
results, performance or achievements expressed or implied by such forwardlooking statements. Such factors include but are not limited to quarterly
fluctuations in results; customer demand for the Company’s products; the
development of new technology for alternate means of motion picture
presentation; domestic and international economic conditions; the management
of growth; and other risks detailed from time to time in the Company’s
Securities and Exchange Commission filings.
Actual results may differ
materially from management’s expectations. We refer you to the documents
that Ballantyne files from time to time with the Securities and Exchange
Commission. These documents identify and describe important factors that can
cause results to differ materially from those contained in any forward-looking
statements that we may make. Ballantyne assumes no obligation to publicly
update or revise any forward-looking statements.
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80-year track record as a leading supplier to the cinema industry
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Industry transition to digital projection systems required BTN to
move from manufacturing and sales model to a distribution model
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BTN enters managed services business to provide theatres with
management and monitoring of networked digital equipment
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Digital projection conversion cycle generated significant cash flow
from 2010-2012
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Strategic plan developed to redeploy cash to acquire
complementary companies with stronger growth opportunities
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Convergent Media Systems acquired in late 2013 to expand
managed services business and enter new markets
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Managed
Services
Systems
Integration
Convergent Media Systems
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•
Strong Technical Services
Ballantyne Strong
•
Strong/MDI Screen
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Strong-Westrex
Percentage of Q1 2014 Revenues
38%
62%
Systems
Integration
Managed
Services
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Manufacturing and distributing a broad range
of leading edge products
Digital Projectors and Servers
Custom Lighting Solutions
Premium Large Format Screens
Video Security Solutions
Insert Pictures
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Unique Custom Screens for Global Customer Base
World’s Largest 3-D Silver Screen
Wraparound Screen System
360° Screen
Perforated 3-D Screen
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End-to-End Solutions Provider
Design, Develop, Build and Maintain
Target Vertical
Markets
Services
• Media Strategy Development
• Content Creation,
Distribution and
Management
• Network Monitoring & Field
Support
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•
•
•
•
Retail
Financial Services
Cinema
Hospitality
Healthcare
Secondary Education
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24/7/365 staffed help desk
•
Pro-active maintenance &
support
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Automated reporting
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Managed firmware
upgrades
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Managed replacements
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Digital technologies used for out-of-home
messaging, advertising and communications
•
Highly fragmented market with
no dominant player
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Ballantyne is one of the few
companies capable of providing
complete end-to-end, single
source solution for digital media
campaigns
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Strong balance sheet and ability
to be a consolidator provide
competitive advantage
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DOOH Infrastructure
Addressable Market = 17% CAGR through 2017
($ in Billions)
$4.0
$3.0
Infrastructure
Component
$3.7
$2.9
$2.6
$2.0
$1.6
$1.0
2013 NA
Revenue2
2017 NA
Revenue2
CAGR
Hardware
(displays, players
and mounts)
$783M
$1,309M
14.0%
Software
$245M
$406M
13.5%
$98M
$183M
17.0%
$208M
$390M
17.0%
$98M
$183M
40.4%
$122M
$475M
17.3%
Content
Management
Installation and
Project
Management
$0.0
DOOH
DOOH
Advertising Infrastructure
(North
(North
1
2
America)
America)
2013
NOC Services
Content Creation
2017
1. PQ Media; 2. IMS Research and internal pricing estimates
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Overview
Convergent programs and operates instore media for Future Shop. Its work
includes content acquisition, editing,
play listing, encoding and distribution,
as well as network operations,
maintenance, monitoring and
consultative services.
In 2012 Convergent leveraged its retail
media platform in Future Shop stores to
help create an immersive experience for
Future Shop customers. Convergent
implemented a solution that enabled
Future Shop to manage and playback
media across 25 media players that
support 24 unique channels, including
five video walls and zoned content
throughout each store. The solution
provides a full store media takeover and
also supports the Future Shop HD wall.
Applications
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Video walls
Full store takeover
Integration of Digital Signage and
In-Store Audio
Dynamic data pulls from web site
Custom application development
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Overview
Sony’s new retail stores provide its
customers with an interactive,
entertaining shopping experience. It
wanted to showcase Sony
technologies in a harmonized,
integrated way, while providing its
sales staff with enhanced tools to sell
products. Convergent designed an
integrated retail media solution that
leveraged emerging technologies
that allowed customers to interact
with Sony technology and staff in a
new and exciting way.
Applications
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Bravia Wall
Digital Fact Tags
Integration of Digital Signage
and In-Store Audio
Digital Fins
Dynamic Input Change
Convergent accelerated growth in Managed Services business by
adding more than 55,000 pieces of monitored networked equipment
$9,000
$7,930
Units Monitored
60,000
$7,000
50,000
$6,000
40,000
$5,000
$4,230
30,000
20,000
58,709
$4,000
$3,000
$2,310
$2,000
10,000
0
$8,000
1,560
3,064
2011
2012
Recurring Revenue
70,000
$1,000
$0
2013
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Diluted EPS
$0.98
Sales in Millions
$184.4
Peak of digital
conversion cycle in
cinema industry
$175
$0.87
$169.1
$0.78
$0.59
$0.58
$136.3
$125
$0.39
$0.37
$0.31
$0.38
$103.6
$0.19
$0.17
$0.18
$0.15
$75
$72.1
$0.04
$0.05
$49.1
$53.9
$49.7
$51.5
-$0.02
$54.8
-$0.11
$37.4
$25
-$0.22
2003
2004
2005
2006*
2007*
2008*
Sales in Millions
2009
2010
2011
2012
2013*
Diluted EPS
* - 2006 – 2008 diluted EPS excludes impairment of goodwill, 2011 and 2013 excludes one-time expenses
related to reorganization and acquisitions. See Appendix for Non-GAAP Reconciliation
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Manufacturing and distributing a broad range
of leading edge products.
Cash and cash equivalents
$25.5 million
Xxx
Xxx
Working capital
$47.6 million
Xxx
Debt
$0
Xxx
Book value per share Xxx
$4.60
Xxx
Current ratio
3.6
Xxx
xxx
March 31, 2014
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Net revenues of $22.0 million vs. $27.6 million in Q1 2013
 Lower digital projector sales offset by higher revenues in
Managed Services
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Gross margin increased to 19.1% vs. 14.2% in Q1 2013
 Gross margin positively impacted by higher mix of Managed
Services revenues
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Net loss of ($0.04) per share vs. net income of $0.04 per share in
Q1 2013
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Strengthen Convergent’s business development capabilities to
capture growth opportunities in digital media
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Expand managed services and network operations center (NOC)
within cinema market and penetrate other strategic growth
markets
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Build upon digital media capabilities to generate additional
recurring revenue
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Leverage engineering and project management expertise to deliver
user-friendly solutions to customers
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Continually expand product portfolio in Systems Integration
segment into existing and new markets
 Introduction of cloud-based video security solutions in 2014
 Introduction of smaller screens to new markets
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Identify consolidation opportunities in fragmented DOOH market
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Create improved revenue mix
 Greater diversification
 Greater percentage of higher margin services
 More recurring revenue
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Internationally Focused. Midwest Values.
Gary Cavey, President and CEO
Thank you.
Twelve
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months ended months ended months ended months ended months ended
December 31, December 31, December 31, December 31, December 31,
2006
2007
2008
2011
2013
Net Income
Goodwill Impairment
$1,568
$228
($3,034)
1,251
639
2,314
Severance costs
$10,347
$163
1261
1460
Acquisition costs
359
Transitional costs
159
Amortization of inventory markup
164
Amortization of deferred revenue haircut
50
Pre-tax total
Income tax expense on adjustments
1,251
639
2,314
1,261
2,192
(425)
(217)
(787)
(454)
(792)
1,038
1,038
Income tax on change in reinvestment position
Adjusted net income
$2,394
$650
($1,507)
$12,192
$2,601
Diluted shares outstanding
13,915
14,095
14,019
14,031
14,031
Adjusted EPS-diluted
$
0.17
$
0.05 $
(0.11)
$
0.87
$
0.19
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