First Quarter 2024 Highlights
- Revenue increased 11.2% to
$11.1 million for the quarter - The acquisition of Innovative Cinema Solutions (“ICS”) and increased product sales contributed favorably to revenue growth. - Gross profit improved to 24.0% of revenue for the quarter from 23.3% in the prior year with favorable product mix.
- In
April 2024 , announced a transaction to mergeStrong/MDI Screen Systems, Inc. “(Strong/MDI”) with FG Acquisition Corp., a Canadian special purpose acquisition company, which will be renamedSaltire, Inc. - Transaction values Strong/MDI at
$30 million .Strong Global Entertainment will retain a significant economic stake, participating in the future growth and success of Strong/MDI and Saltire.
- Transaction values Strong/MDI at
- Marketplace momentum for laser upgrades and our international expansion continue to position the Company for growth.
Select Financial Highlights
- Revenue increased 11.2% to
$11.1 million in the first quarter of 2024 from$10.0 million in the first quarter of 2023 due to increased sales of projection screens and equipment, as well as increased demand for installation and maintenance services. The increase in demand from cinema customers was due to a combination of increased sales efforts, expanded market share and a rebound in the rate of investment by exhibitors for the upgrade of their auditoriums, particularly related to the pace of laser projection upgrades.Strong Global Entertainment expects the upgrade activity to be a multi-year catalyst in the industry. - Gross profit increased to
$2.7 million or 24.0% of revenues in 2024 compared to$2.3 million or 23.3% in 2023. The increase resulted primarily from increased demand for large format projection cinema screens and maintenance services, and this was the first full quarter of contribution from the ICS acquisition. - Income from operations was
$0.2 million for the first quarter of 2024 compared to$0.5 million during 2023. We incurred higher general and administrative expenses in connection with operating as an independent public company following the separation inMay 2023 , which was partially offset by the increase in gross profit. - Net income from continuing operations was
$0.1 million as compared to$0.6 million in 2023. - Adjusted EBITDA decreased to
$0.4 million as compared to$0.8 million in the prior year, as increased profitability from products and services from continuing operations was offset by the increased general and administrative costs primarily related to expenses associated with operating as a stand-alone public company.
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About
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Use of Non-GAAP Measures
EBITDA and Adjusted EBITDA are not measures of performance defined in accordance with GAAP. However, Adjusted EBITDA is used internally in planning and evaluating the Company’s operating performance. Accordingly, management believes that disclosure of these metrics offers investors, bankers and other stakeholders an additional view of the Company’s operations that, when coupled with the GAAP results, provides a more complete understanding of the Company’s financial results.
EBITDA and Adjusted EBITDA should not be considered as an alternative to net income (loss) or to net cash from operating activities as measures of operating results or liquidity. The Company’s calculation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures used by other companies, and the measures exclude financial information that some may consider important in evaluating the Company’s performance.
EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of the Company’s results as reported under GAAP. Some of these limitations are: (i) they do not reflect the Company’s cash expenditures, or future requirements for capital expenditures or contractual commitments, (ii) they do not reflect changes in, or cash requirements for, the Company’s working capital needs, (iii) EBITDA and Adjusted EBITDA do not reflect interest expense, or the cash requirements necessary to service interest or principal payments, on the Company’s debt, (iv) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements, (v) they do not adjust for all non-cash income or expense items that are reflected in the Company’s statements of cash flows, (vi) they do not reflect the impact of earnings or charges resulting from matters management considers not to be indicative of the Company’s ongoing operations, and (vii) other companies in the Company’s industry may calculate these measures differently than the Company does, limiting their usefulness as comparative measures.
Management believes EBITDA and Adjusted EBITDA facilitate operating performance comparisons from period to period by isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. These potential differences may be caused by variations in capital structures (affecting interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense). The Company also presents EBITDA and Adjusted EBITDA because (i) management believes these measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in the Company’s industry, (ii) management believes investors will find these measures useful in assessing the Company’s ability to service or incur indebtedness, and (iii) management uses EBITDA and Adjusted EBITDA internally as benchmarks to evaluate the Company’s operating performance or compare the Company’s performance to that of its competitors.
Forward-Looking Statements
In addition to the historical information included herein, this press release contains “forward-looking statements” that are subject to substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this press release are forward-looking statements. Forward-looking statements contained in this press release may be identified by the use of words such as “anticipate,” “believe,” “contemplate,” “could,” “estimate,” “expect,” “intend,” “seek,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “target,” “aim,” “should,” “will” “would,” or the negative of these words or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements are based on the Company’s current expectations and are subject to inherent uncertainties, risks and assumptions that are difficult to predict. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. These and other risks and uncertainties are described more fully in the section titled “Risk Factors” in the final prospectus related to the public offering filed with the
Investor Relations Contacts:
IR@strong-entertainment.com
Consolidated Balance Sheets
(In thousands)
(Unaudited)
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 5,111 | $ | 5,470 | ||||
Accounts receivable, net | 6,299 | 6,476 | ||||||
Inventories, net | 4,446 | 4,079 | ||||||
Assets of discontinued operations | - | 940 | ||||||
Other current assets | 1,264 | 1,062 | ||||||
Total current assets | 17,120 | 18,027 | ||||||
Property, plant and equipment, net | 1,488 | 1,592 | ||||||
Operating lease right-of-use assets | 4,697 | 4,793 | ||||||
Finance lease right-of-use asset | 1,136 | 1,201 | ||||||
881 | 903 | |||||||
Other long-term assets | 26 | 10 | ||||||
Total assets | $ | 25,348 | $ | 26,526 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,642 | $ | 3,544 | ||||
Accrued expenses | 2,975 | 3,112 | ||||||
Payable to | 119 | 129 | ||||||
Short-term debt | 2,453 | 2,456 | ||||||
Current portion of long-term debt | 271 | 270 | ||||||
Current portion of operating lease obligations | 403 | 397 | ||||||
Current portion of finance lease obligations | 258 | 253 | ||||||
Deferred revenue and customer deposits | 1,867 | 1,318 | ||||||
Liabilities of discontinued operations | 161 | 1,392 | ||||||
Total current liabilities | 12,149 | 12,871 | ||||||
Operating lease obligations, net of current portion | 4,361 | 4,460 | ||||||
Finance lease obligations, net of current portion | 904 | 971 | ||||||
Long-term debt, net of current portion | 234 | 301 | ||||||
Deferred income tax liabilities, net | 135 | 125 | ||||||
Other long-term liabilities | 4 | 4 | ||||||
Total liabilities | 17,787 | 18,732 | ||||||
Commitments, contingencies and concentrations | ||||||||
Stockholders' Equity: | ||||||||
Preferred stock | - | - | ||||||
Paid-in-capital related to Class A and Class B common stock | 15,814 | 15,740 | ||||||
Accumulated deficit | (2,785 | ) | (2,712 | ) | ||||
Accumulated other comprehensive loss | (5,468 | ) | (5,234 | ) | ||||
Total stockholders' equity | 7,561 | 7,794 | ||||||
Total liabilities and stockholders' equity | $ | 25,348 | $ | 26,526 |
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended | ||||||||
2024 | 2023 | |||||||
Net product sales | $ | 8,022 | $ | 7,204 | ||||
Net service revenues | 3,048 | 2,747 | ||||||
Total net revenues | 11,070 | 9,951 | ||||||
Cost of products | 5,938 | 5,465 | ||||||
Cost of services | 2,475 | 2,166 | ||||||
Total cost of revenues | 8,413 | 7,631 | ||||||
Gross profit | 2,657 | 2,320 | ||||||
Selling and administrative expenses: | ||||||||
Selling | 518 | 534 | ||||||
Administrative | 1,959 | 1,240 | ||||||
Total selling and administrative expenses | 2,477 | 1,774 | ||||||
Income from operations | 180 | 546 | ||||||
Other income (expense): | ||||||||
Interest expense, net | (115 | ) | (56 | ) | ||||
Foreign currency transaction gain | 162 | 117 | ||||||
Other income, net | 25 | 12 | ||||||
Total other income | 72 | 73 | ||||||
Income from continuing operations before income taxes | 252 | 619 | ||||||
Income tax expense | (133 | ) | (55 | ) | ||||
Net income from continuing operations | 119 | 564 | ||||||
Net loss from discontinued operations | (192 | ) | (191 | ) | ||||
Net (loss) income | $ | (73 | ) | $ | 373 | |||
Basic net (loss) income per share: | ||||||||
Continuing operations | $ | 0.01 | $ | 0.09 | ||||
Discontinued operations | (0.02 | ) | (0.03 | ) | ||||
Basic net (loss) income per share | $ | (0.01 | ) | $ | 0.06 | |||
Diluted net (loss) income per share: | ||||||||
Continuing operations | $ | 0.01 | $ | 0.09 | ||||
Discontinued operations | (0.02 | ) | (0.03 | ) | ||||
Diluted net (loss) income per share | $ | (0.01 | ) | $ | 0.06 | |||
Weighted-average shares used in computing net (loss) income per share: | ||||||||
Basic | 7,877 | 6,000 | ||||||
Diluted | 7,883 | 6,000 |
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended | ||||||||
2024 | 2023 | |||||||
Cash flows from operating activities: | ||||||||
Net income from continuing operations | $ | 119 | $ | 564 | ||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
Provision for (recovery of) doubtful accounts | 18 | (18 | ) | |||||
Provision for obsolete inventory | 14 | 14 | ||||||
Provision for warranty | 10 | 44 | ||||||
Depreciation and amortization | 153 | 179 | ||||||
Gain on acquisition of ICS assets | (23 | ) | - | |||||
Amortization and accretion of operating leases | 158 | 16 | ||||||
Deferred income taxes | 10 | (19 | ) | |||||
Stock-based compensation expense | 74 | 18 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 527 | 593 | ||||||
Inventories | (419 | ) | (284 | ) | ||||
Current income taxes | 102 | 130 | ||||||
Other assets | (216 | ) | (418 | ) | ||||
Accounts payable and accrued expenses | (693 | ) | (135 | ) | ||||
Deferred revenue and customer deposits | 555 | 618 | ||||||
Operating lease obligations | (154 | ) | (19 | ) | ||||
Net cash provided by operating activities from continuing operations | 235 | 1,283 | ||||||
Net cash used in operating activities from discontinued operations | (492 | ) | (513 | ) | ||||
Net cash (used in) provided by operating activities | (257 | ) | 770 | |||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (22 | ) | (75 | ) | ||||
Net cash used in investing activities from continuing operations | (22 | ) | (75 | ) | ||||
Net cash used in investing activities from discontinued operations | - | (83 | ) | |||||
Net cash used in investing activities | (22 | ) | (158 | ) | ||||
Cash flows from financing activities: | ||||||||
Principal payments on short-term debt | (21 | ) | (250 | ) | ||||
Principal payments on long-term debt | (67 | ) | (9 | ) | ||||
Borrowings under credit facility | 2,839 | 1,596 | ||||||
Repayments under credit facility | (2,765 | ) | (225 | ) | ||||
Payments on finance lease obligations | (61 | ) | (25 | ) | ||||
Net cash transferred to parent | - | (1,217 | ) | |||||
Net cash used in financing activities from continuing operations | (75 | ) | (130 | ) | ||||
Net cash provided by financing activities from discontinued operations | - | - | ||||||
Net cash used in financing activities | (75 | ) | (130 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (5 | ) | (20 | ) | ||||
Net increase in cash and cash equivalents from continuing operations | 133 | 1,058 | ||||||
Net decrease in cash and cash equivalents from discontinued operations | (492 | ) | (596 | ) | ||||
Net (decrease) increase in cash and cash equivalents | (359 | ) | 462 | |||||
Cash and cash equivalents at beginning of period | 5,470 | 3,615 | ||||||
Cash and cash equivalents at end of period | $ | 5,111 | $ | 4,077 |
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months Ended | ||||||||
2024 | 2023 | |||||||
Net (loss) income | $ | (73 | ) | $ | 373 | |||
Net loss from discontinued operations | 192 | 191 | ||||||
Net income from continuing operations | 119 | 564 | ||||||
Interest expense, net | 115 | 56 | ||||||
Income tax expense | 133 | 55 | ||||||
Depreciation and amortization | 153 | 179 | ||||||
EBITDA | 520 | 854 | ||||||
Stock-based compensation expense | 74 | 18 | ||||||
Adjust gain on purchase of ICS | (23 | ) | - | |||||
Foreign currency transaction loss (gain) | (162 | ) | (117 | ) | ||||
Adjusted EBITDA | $ | 409 | $ | 755 |
Source:
2024 GlobeNewswire, Inc., source