Ballantyne Strong, Inc (NYSE:BTN) Q2 2022 Earnings Conference Call August 2, 2022 5:00 PM ET
Company Participants
John Nesbett – IMS Investor Relations
Kyle Cerminara – Chairman
Mark Roberson – Chief Executive Officer
Todd Major – Chief Financial Officer
Conference Call Participants
Edward Reilly – EF Hutton
Brett Reiss – Janney Montgomery Scott
Operator
Ladies and gentlemen, thank you for standing by. And welcome to the Ballantyne Strong, Inc. Second Quarter 2022 Earnings Conference Call. All participants are in listen-only mode. [Operator Instructions] After today’s presentation there’ll be an opportunity to ask questions. [Operator Instructions]
Please also note this event has been recorded. And now I’d like to turn the call over to John Nesbett of IMS Investor Relations. Thank you. You may begin.
John Nesbett
Good afternoon. And welcome to Ballantyne Strong’s earnings conference call for the second quarter ended June 30, 2022. On the call today are — from Ballantyne Strong are Kyle Cerminara, Chairman of the Board; Mark Roberson, Chief Executive Officer; and Todd Major, Chief Financial Officer. There’s also a slide presentation that management will be referencing that is available in the Investor Relations section of the Ballantyne Strong website.
Before we begin, I’d like to remind everyone that some statements made on this call will be forward-looking in nature. These statements are based on management’s current view and expectations as of today and the company is under no obligation and expressly disclaims any obligation to update forward-looking statements except as required by law.
These statements are also subject to risks and uncertainties and may cause actual results to differ materially from those described on today’s call. Risks and uncertainties are also described in the company’s SEC filings.
Today’s presentation and discussion also contain references to non-GAAP financial measures. The definition of non-GAAP terms and reconciliations to GAAP measures are available in the earnings release posted on the Investor Relations section of the company’s website.
Our non-GAAP measures may not be comparable to those used by other companies and we encourage you to review and understand all of our financial reporting before making any investment decisions.
At this time, I’d like now to turn the call over to Mark Roberson. Go ahead Mark.
Mark Roberson
Thanks, John. Good afternoon and thanks for joining today. Before we jump into the details for the quarter, we’ll just step back and throttle context starting on slides three and four of the PowerPoint. Ballantyne is a holding company. We have operating businesses in real estate holdings primarily in our Strong Entertainment Group and our equity holding portfolio includes FG Financial, GreenFirst Forest Products and Firefly.
Overall, we’ve seen a strong post-COVID rebound and our business has really been performing well, with consolidated revenues increasing by 50% to $9.1 million for the quarter and 76% to just over $19 million on a year-to-date basis. This increase in our revenues has been directly correlated to the recovery in the Entertainment industry, particularly in the Cinema space, with increase in both the quality and content of studio content driving record breaking box office results for our customers.
On the slide deck if you refer to slides three through 10, I will walk the Entertainment business. Our Strong Entertainment operating business is the largest supplier of Cinema screens in North America. We’re a market leader in managed services and we recently launched the new content division.
With the macro climate becoming more favorable and the backlog of movies coming to the Cinema increasing, we’re seeing our Cinema customers starting to do two very important things. Number one, they’re relying more heavily on outsourced technical support and services, rather than hire and build up staffing internally. And two, they’re beginning to accelerate capital investments, particularly as it relates to the upgrade cycle from Xenon projection to laser.
Cinemark, for example, started a 10-year project upgrade all of their cinemas to laser prior to COVID and we’re now seeing them restart those projects. AMC announced just this spring that they would be starting the first phase of their laser upgrades this summer and without getting too deep into the technical aspects of laser versus Xenon, what we’re seeing is as the industry recovery continues, we’re seeing exhibitors starting to deploy capital on upgrading like laser projection, as well as other investments to drive the customer experience.
The increase in laser projection was a positive catalyst for both our screen business and for our service and distribution revenues. And we expect the laser upgrade cycle to be a positive industry catalyst for at least the next several years.
As we see demand for projection and audio equipment increasing, we’re also seeing increased service installation demand and our recurring monthly revenue maintenance contracts are largely back to pre-COVID levels now, with project and installation revenue starting to pick up as well.
Our eclipse immersive screens were significant contributor to the first half results, primarily from the military projects. The eclipse was a larger contributor in the first quarter for our screen business and we started to see the product mix shift actually more heavily towards Cinema in the second quarter, which we believe is a good sign for the second half of the year as exhibitors prepare for the large slate of releases, including the next installment of Avatar and increase their investments in projector and screen upgrades.
Strong Studios, which adds content and opens up new growth opportunities is a new line of business for the Entertainment Group. We acquired a portfolio project and started production on one of those projects Safehaven this summer.
We’re working on several other projects, both from the acquired portfolio, as well as adding other new projects. The overall business model and the goal of Strong Studios is utilized co-production and distribution pre-sales, as well as refundable tax credits for production funding, which minimizes our capital at risk as we build out the content library, creating both near-term revenue, as well as a longer term value.
We’re partnering with other production companies and production services companies on these early projects, which minimizes our capital at risk and increases our ability to execute and be nimble with minimal fixed staffing. Over time, we expect this business to evolve into a meaningful revenue producer for the Entertainment Group.
Turning to our equity holdings on slide 11 through 14, we increased our stake in FG Financial this quarter and hold 2.9 million shares or approximately 31% of the common shares outstanding. FG Financial has continued to invest and expanding its Reinsurance and its SPAC platforms. So far this year FGF has completed two SPAC IPOs, FG Merger Corp. and FG Acquisition Corp., and currently evaluating acquisition targets.
FGF’s Reinsurance business is patiently deploying capital and entered into two new contracts this year. FGF also have its equity in Hagerty and UPSI [ph] as a result of completed SPAC transactions from 2021.
We hold $13 million in preferred equity in Firefly, which is a private VC-backed company and we acquired those shares through our sale of Strong Outdoor last year. Firefly has continued to grow and innovate post-COVID. They announced a new program with Hyundai just recently, where Firefly will be able to enroll professional drivers and fleet operators at the point of purchase and drivers can earn advertising revenues which helps to subsidize their purchase of the vehicle.
In July, Firefly also announced their entry into the European market with the acquisition of Ubiquitous, which is the U.K.’s leading taxi advertising company. Ubiquitous has been a leader in the outdoor advertising for over 40 years and they’ve been focused on using technology and data analytics, which improves their advertising effectiveness and fits right into the Firefly, digital advertising and digital transformation strategy.
We hold 50.3 million shares in GreenFirst which is traded on the Toronto Exchange. Following the transaction last summer where GreenFirst acquired the lumber assets and sawmills from Rayonier, it is now a leading lumber producer in Canada and has the capacity to produce over 9 million board feet annually in Central Canada.
This quarter another large player in the North American lumber market, Interfor announced that they had acquired approximately 16% stake in GreenFirst. We believe GreenFirst is well position, both in the current cycle, as well as for the longer term.
Overall, the Entertainment industry opening is accelerating, the backlog of movies coming into cinemas unprecedented and our revenues have rebounded as a result. We’re entering a major capital upgrade cycle that will drive spending over the next five years to 10 years. And we’re well positioned to gain share domestically and internationally looking ahead on both the screen, as well as the services side of the business.
And the upside in Eclipse and the addition of Strong Studios further increases our growth opportunities. With regard to the planned spin-off of the Entertainment Group, our registration statement on Form S-1 is on file with SEC. In terms of timing of the IPO, for the Group, we’re evaluating market conditions, there should be appropriate timing and we will continue to do so on an ongoing basis.
Now I’ll turn it over to Todd.
Todd Major
Thanks, Mark. Good afternoon, everyone. We continue to see meaningful increases in revenue when compared to the prior year. The year-over-year increase was more than 50%, with revenues from both the sale of products and services higher than the prior year.
While gross margin dollars were relatively flat compared to the prior year margin as a percentage of revenue was down. However, it is important to point out that prior year gross margin included a benefit of nearly $850,000 related to employee retention credits.
As presented in the lower table after adjusting for the employee retention credit, recognizing the prior year, gross margin dollars were up nearly 50% and gross margin as a percentage of revenue was flat year-over-year.
Some shifts and product mix, including higher sales of projection and audio equipment and pulling down a gross margin percentage a bit. And we’re also seeing some inflationary pressure on raw materials, labor, packaging and freight.
Employee retention credits recognized in the prior year also had a $450,000 impact on the year-and-year — year-over-year comparison of SG&A. The increase can primarily be contributed to two other items.
Number one, we continue to make investments in our sales and marketing teams, and are seeing an increase in the corresponding tradeshow and marketing efforts, as the activity across the industry continues to ramp upward.
And number two, the second quarter of 2022 was our first full quarter operating Strong Studios and the costs associated with that part of the business rolling up to the SG&A line.
Excluding the total $1.3 million employee retention credits reported in the prior year, operating loss improved over 30% and Strong Entertainment generated its fifth consecutive quarter of positive operating income.
Moving down the P&L a bit, as the broader markets declined during the first half of the year, we experienced some contraction in the fair value of our GreenFirst equity holdings, which we mark-to-market every quarter.
Shifting over the balance sheet now, cash flow used in operations and decreases in working capital during the first half of the year, combined with the cash payment in connection with the Strong Studios acquisition of projects from Chicken Soup, as well as the down payment for the purchase of the Digital Ignition building were partially offset by a $2.3 million prepayment on a note receivable. In addition, we deployed additional capital to our FGF equity holdings by participating in the common stock offering late in the second quarter. We believe we continue to maintain adequate liquidity.
That wraps up the financial review and I’ll now turn the call over to our Chairman, Kyle Cerminara for some closing remarks before we take questions.
Kyle Cerminara
Hey, everyone. This is Kyle. I am going to tee us up for the Q&A section. But before we get to this, my hope is that if you have a question about the company, you’ll ask it and we’ll do our best to answer your question.
Before we open it up, I know many of you are either current or prospective shareholders and while I’m the Chairman of the company, I’m also its largest shareholder. And there’s no doubt I want to see the stock price do well.
In fact, just last quarter added to our position in the company and if it remains at these depressed levels, I anticipate that we will continue to look for opportunities during open windows to increase our position in the company.
A few things that are important to me. We’re currently listed on the New York Stock Exchange, America, and this cost some additional money. It also gives us the opportunity to consider doing transactions that we wouldn’t otherwise be able to do if we were private company.
So every quarter we weigh the costs and benefits of listing. We currently believe there’s a benefit of being listed and that can change in the future, but we’re currently in favor of continuing down the path as a public company.
We have a number of holdings that can grow and prosper with a focus strategy. GreenFirst is the best example of this. It was only a few years ago, a little over two years ago that people were struggling with our investment in tiny little a tasket [ph] capital. I think our team demonstrated that we can take a little $5 million market cap company and turn it into something special. GreenFirst is one example, but there are many more.
If you go back several years ago, we started a company inside of downtime, Strong Club, Strong Outdoor. There was a workout of some screens that we inherited from a customer that defaulted to our legacy convergent, our Digital Signage business.
With that we turn lemons into lemonade and created a new company and over a number of years we created value for our shareholders that was some pain and suffering. But the net result was that we sold the business to Firefly in exchange for equity in their business.
And if you had told me that Firefly would grow to be the company that is today, I would have probably put reasonably odds on it back then. But it’s amazing to watch what it’s become and we’re really excited to see what Firefly is going to — turn into as it continues to grow and prosper down the road.
So we’re planting seeds like GreenFirst and Firefly today inside of Ballantyne Strong. You’ve heard about Strong — the Strong Studios business, which is a new seed that we’ve planted. FG Financial and Digital Ignition, we have other seeds that will continue to plant and hopefully harvest someday down the road.
But the one thing I can promise you is that we’re all working very hard to create value for shareholders. And that we want nothing more than to create long-term value. We take this into account in every decision we make and hopefully that will not every decision is going to work out perfectly, but we hope that many of them will turn out to be like Ballantyne Strong and Firefly.
So, with that, I will open it up to questions and fire away.
Question-and-Answer Session
Operator
[Operator Instructions] Our first question will come from Edward Reilly with EF Hutton. You may not go ahead.
Edward Reilly
Hey, guys. Thanks for taking my question. With regard to the upgrade cycle, I was wondering how frequently screens typically need to be replaced?
Mark Roberson
Hey. Yeah. Thanks for calling in. Good question. The answer like most things, it varies greatly depending on the exhibitor, as a general rule, we would kind of tell you that screens generally should be replaced after five years to seven years, after that period of time, you’re going to see some degradation in the optical quality of the screen coatings and a lot of it can also be accelerated, depending on temperature conditions and other environmental factors within each Cinema. So it does vary. But a good rule of thumb is that five-year to seven-year mark, certainly there exhibitors who like folks do lots of things, stretch them out longer than that. But that’s the number that I would use as a kind of a standard rule of thumb.
Edward Reilly
Got it. And I was wondering, given AMCs recent release, I was wondering about the cadence of the laser projection upgrade cycle. I was wondering if you expect more business to come from this later on in the year?
Mark Roberson
Yeah. Yeah. We do. Actually, we were starting to see that already. We already have some projects underway both with AMC, as well as with other exhibitors, and we believe this is going to be an upgrade cycle that runs over multiple years.
Cinemark is announced pre COVID that they were intending to or actually contractually committed to upgrade all of their cinemas over a 10-year period. They started before COVID. They had pause during COVID. And they’ve started reaccelerating that program on their side.
AMC made their announcement back, I believe it was in March, and they’re already starting with their first kind of wave of upgrades this summer. We’re seeing some of those do in already and expect that to ramp up in the back half of the year and really continue probably over the next three years, four year, five years.
Edward Reilly
Got you. Do expect the majority of revenue to come from this be service revenue and should we maybe expect lower margins going forward if that’s the case?
Mark Roberson
I’m sorry, can you repeat the first part of that question?
Edward Reilly
Yeah. I was wondering, basically, about the revenue breakdown with the partnership with Cinionic. And if it’s mostly services revenue, should we maybe expect lower margins going forward?
Mark Roberson
I would expect our service business carries reasonable margins. We have higher margins than our screen business where we manufacture the product. So product mix does play a part in our margins.
I would actually expect to see our margins increase as Cinema screen deployments increase, that becomes a larger portion of our product mix going forward, that would have a positive impact on margins.
Service revenue and it depends on the flavor of service, our partnership with Cinionic, basically we’re the preferred provider or preferred supplier of services for them for their customers. That’s not a low margin business. So that really doesn’t have a negative impact on our margins at all.
Edward Reilly
Okay. Great. Thanks for clearing that up. And then any update on the Belgium and China operations?
Mark Roberson
Yeah. In Belgium, that’s a new initiative that we just announced back in April and May, I believe was in March, actually, that we made the announcement. We’re cranking that up right now. We’re in process and expect to be shipping out of that facility in the third quarter, maybe even if they may — we may have already actually shipped some out already, I wouldn’t want to say that, but certainly, by the end of the third quarter, we’ll have activity out of that facility.
It’ll be a little bit of a slower start. We’re getting our first batch of inventory there where we can quick ship to customers in the market. And just a backup kind of the purpose of that, what we’re doing and why we’re doing it, it’s probably important.
There’s — Europe represents a very large Cinema market. There’s approximately 40,000 to 44,000 screens. In the North American market, there’s approximately the same amount of screens in the European market, little more fragmented market, but very similar to the U.S. and North American markets in terms of size.
We have a very market share in the U.S. and Canada and North America. We have an extremely small market share in Europe. And part of the reason that we have such a small market share in Europe is we’ve never really had a local presence in the continent.
And when you’re shipping screens from our plant in Canada into the U.S. and Canada, that’s pretty easy, when you’re shipping screens across the water over to Europe and also to China, it becomes a little more of a cost issue, but even more importantly, it becomes a service issue in terms of being able to quickly supply customers with screen. So that’s really held us back in those markets.
And so the objective of both the China and the Belgium finishing plant are to provide — to be able to provide quick turnaround, quick ship products to customers there, so that we can start to increase our share.
So as I said, in Europe, we expect — that’s up and running, we expect to start seeing shipments out of there in the second half and Q3. China’s also up and running, it’s a little slower there, primarily because of the continued restrictions in China on entry into the country, as well as other things. So both of those are operational and we’d expect to see increased volume out of those going forward, particularly as we get into 2023.
Edward Reilly
Got you. And then final one for me, because one of the point, is the exclusive relationship with AMC and Cinemark, is that for North America only or is that a worldwide?
Mark Roberson
That’s primarily North America. Cinemark is really primarily…
Edward Reilly
Okay.
Mark Roberson
… the North. AMC is the North American exclusive.
Edward Reilly
Okay. Got it. Thanks, guys.
Mark Roberson
Yeah.
Edward Reilly
Appreciate it.
Mark Roberson
Okay.
Kyle Cerminara
Thanks, Ed.
Operator
[Operator Instructions] Our next question will come from Brett Reiss with Janney Montgomery Scott. You may now go ahead.
Brett Reiss
Hi, gentlemen.
Mark Roberson
Hi, Brett.
Brett Reiss
Hey. How you doing?
Mark Roberson
Good. How are you?
Brett Reiss
Good. Good. Good. I guess the service revenues were kind of flat sequentially quarter-to-quarter, is this seasonality that impacts that or is that going to pick up in subsequent quarters, with all the good things going on in the industry now?
Mark Roberson
Yeah. There’s not too much real seasonality in that number. There’s a little more seasonality, and probably, our product sales and there isn’t a service revenue. But it does very up and down depending on what customers are doing and how much they’re calling us for installation work, project management, et cetera.
I would expect to see that start to tick up. As the laser upgrades increase over time, we’re certainly going to get busier and we’re seeing things get busier now. Those upgrades are starting to come through.
Brett Reiss
Okay. Now the Ubiquitous acquisition by Firefly.
Mark Roberson
Yeah.
Brett Reiss
How big an acquisition was that and is it public knowledge, what the revenues of Ubiquitous were?
Mark Roberson
Yeah. I don’t believe that those parameters are public. Kyle may be — may know more about that than I do in terms of any of those numbers wants to make public so you can chime in, if I’m incorrect.
But from what I’ve seen or what I know, I don’t believe that the actual revenues of a private company, I don’t believe their revenues are public, so I can’t share that or the deal parameters. What I can say is, they’re a significant player in the U.K. market and really afford the history in one of the major players in the U.K., so that’s a very significant increase in enhancement of Firefly’s scope and reach in a meaningful acquisition for them.
Brett Reiss
Do you think that after this acquisition is made and integrated that that’s the piece of the puzzle that Firefly needs to see to move forward with their own IPO?
Mark Roberson
Yeah. I mean, I think, it’s — certainly one of several probably pieces of the puzzle, I don’t necessarily know or could speak to whether that’s the piece of the puzzle. But it’s certainly a positive step for their growth and positioning of their company.
Brett Reiss
The gestation period for the Safehaven production by Strong Studios, how long is that and when the Safehaven is burned? If it’s a successful production, can you give me some sense of what kind of revenues would flow back to us? If it’s very successful, what would we make it moderately successful? Any color you could give to me, so I can put my arms around that…
Mark Roberson
Sure.
Brett Reiss
…the piece it.
Mark Roberson
Yeah. Yeah. I mean on Safehaven and this, certainly, would apply, probably, broader than just this one project. But as we’re producing a project like Safehaven, we’re going to have economics in a couple of ways. Number one, we receive production fees along the way as these productions are being made, for our services to the production, those kind of come off the top.
And that’s decent, but, certainly, not life changing in terms of huge upside, where the upside comes in, is really on the back end. We’re — we have the IPO of, the production is usually successful, we share in the back end profitability of the fee — of the project. So, if it’s moderately successful, it’s good. We cover our costs. We make some production fees. If it’s hugely successful, then we make upside on the back end.
Brett Reiss
Can you — $10 million, $1 million, $500,000, any — can you throw a number out there?
Mark Roberson
Yeah. This is a new line of business for us.
Brett Reiss
Okay.
Mark Roberson
And I’m not going to necessarily throw out a number right now, in terms of setting an expectation that may prove to be wrong and be brought back…
Brett Reiss
Okay.
Mark Roberson
… later. Yeah, the number that didn’t turn out to be right. So I’d say stay tuned.
Brett Reiss
Okay.
Kyle Cerminara
Hey, Mark. Let me add some — let me add to that. So, hey, Brett. How you doing? This is Kyle.
Brett Reiss
Hi, Kyle. Yes. Yes, sir.
Kyle Cerminara
So, you asked a few questions and I was just taking some notes. So I wanted to — before you go too far done asking additional questions, just sort of address them. On the Ubiquitous acquisition by Firefly, they haven’t stated publicly what the revenues are.
But just like the acquisitions they made in New York. They’ve had a great strategy of taking non-digital assets and converting them to digital, which has a significant multiple that adds to both, the revenue on digital assets is dramatically higher than the revenue on non-digital assets. So they’re buying a business that has significant revenue in Ubiquitous, just like they did with Curb in New York.
Brett Reiss
Right.
Kyle Cerminara
And with our business in New York, strong business in New York. And outside of that, though, they’re able to convert their — these non-digital assets to digital and get sometimes 3 times, 4 times, 5 times, 6 times the revenue per vehicle or even more than that, in some cases from it.
So well, I think, Ubiquitous acquisition is a very attractive one in terms of adding to the revenue and profitability of a Firefly, it’s going to be even more beneficial as they convert that these assets from non-digital to digital.
And in terms of when Firefly might come public, either by IPO or SPAC or when they may sell and we would have like a realization event in terms of the approximately $13 million that we hold in our balance sheet at cost.
I’ve been involved in Firefly for a long time, since they only had a few million dollars of revenue to now having many, many, many multiples of that. And it’s been really fun to watch them grow and both organically and through some acquisitions that we’ve talked about.
And I would have thought that, it would be prudent for them to be thinking about going public when we had some excitement in the IPO market or in the SPAC market over the last 12 months or 24 months.
But they have — Firefly has an extraordinary Board consisting of a representer from Google Ventures or GV, a representer from NSX and a few others that have just been a great addition to the Board. I’m on the Board as well and…
Brett Reiss
Okay.
Kyle Cerminara
… we — I think that over time that, what I’ve observed is that, Firefly continues to mature, not in terms of growth, its growth has actually been doing extremely well. But it continues to mature as a company and I think that by the time it goes public, it’s going to look like a completely different company than it did two years or three years ago and even than it does today. So the value keeps going up and I’m really excited to watch it grow over the next few years.
Yeah, I know, Mark, didn’t want to commit to like dollar amounts for some of these movies, but I think you could probably see us making in the several millions of dollars per movie to making very little in any movie. But the one thing that we’ve been trying to focus on is not losing a lot of money on a movie.
Brett Reiss
Right.
Kyle Cerminara
So that’s sort of been the core thesis is, let’s go into this business where we — we’re confident that when we underwrite a project, that we’re not going to have like a massive loss on the project and that if things go right, then it’s significant upside.
So sort of limits the downside and when it’s a blockbuster, which as Mark was trying to suggest, it’s hard to predict which ones will be blockbusters. But when we do get a blockbuster, we certainly will make millions and millions of dollars on those. It’s just a matter of hard to predict which ones will be it and I think that’s why Mark was being conservative around saying, putting $1 matter on it rather.
Brett Reiss
Great. I thank you for the added color on these questions — on my questions there. Kyle, if I may, could you tell the listeners you invested, I guess, an additional $2 million in FG Financial? Why is that a good use of corporate cash?
Mark Roberson
So it’s a great question. I’m glad you asked it. Thank you. So we had planned on actually investing in FG financial at higher prices, the fact that the stock declined right before the pricing of the offering. I’m not sure why it did that. I think we’re all, as good at guessing that as anyone.
But in terms of, when the opportunity presented itself, it seemed like the right thing to do in terms of adding to our position. We have a pretty good idea of what we think the intrinsic value of each of the assets inside of FG Financial is. We know that we’re adding to those assets every day.
And over time, what you’re going to see is that FG Financial, as we sort of stated a couple of years ago, as we’ve been building up the platform is going to evolve much more into an asset management business and a merchant banking business than just sort of a singular focus on one or two products.
So the reinsurance — the reinsurer took us a while to get up and up and running. But now we have a — we built a great team. We’ve got — I think this is one of the best reinsurance market I’ve seen in my career and I think it’s very fortuitous that not only do we have, I came in licensed reinsurers with that’s capitalized.
But we have a great reinsurance team, underwriting team and management team and we’re well positioned to sort of pick and choose what we think are some of the best reinsurance contracts out there that have very, very high returns on them based on our projections.
Outside of that, we’ve — we initially, the SPAC market was very hot two years ago. It’s cold since then and we’ve been able to close two SPACs, one that has done reasonably well, Hagerty and the other one that hasn’t done as well, UPSI. But we still very much like that company and think it will do well over time.
We’ve also IPO to fresh new SPACs, one in Canada, which I think we’re one of only one or two publicly traded SPACs in Canada. So it’s made us actually pretty unique in Canada, in terms of deal flow, and one in the U.S., which is a smaller SPAC.
So when you compare that to some of the larger SPACs that have struggled to get deals done, some of the more famous deals like I think Pershing Square announced that they were not moving forward with their SPAC in the monster sized SPAC that they did and some of the other more headliner SPACs that have not necessarily close transactions like we’ve been able to have pretty amazing deal flow for all of our SPACs and I’m very happy with that. I think we’ll continue to do that.
But SPAC is just one of the platform strategies that we’ll be doing inside of FG Financial. It’s really a bit of a merchant banking and asset management platform that will be growing over time and you’re going to start to see some of those new initiatives over the next six months, 12 months, 18 months that I think will be pretty exciting.
So I’m really excited about FG Financial. I think, we own a very large percentage of it. We not only bought it inside of Ballantyne Strong. I use my own capital to buy it as well and I obviously am a large shareholder of Ballantyne Strong. So I thought it was good for Ballantyne and good for our own money as well. So happy to answer any other questions you have on that. But that’s sort of our thinking around that.
Brett Reiss
Right. Now, Ballantyne Strong cash level is down to around $4 million. With the ambitious things on your agenda, is that enough tasks to get done what to want to get done?
Mark Roberson
Well, GreenFirst is a very large position for us as I’m sure you have seen and we’re very…
Brett Reiss
Yeah.
Mark Roberson
… optimistic about GreenFirst in the — in both the short run and in the long run. But you’ve probably seen that there’s been a great deal of M&A activity in the lumber industry and particularly in Canada. So you saw that Resolute was recently sold, I think for something like a 60% premium to a buyer that people may not have been expecting to be in the industry looking for acquisitions. So I thought that was very interesting.
You also had some speculation recently about West Fraser, Interfor recently took a 16% position in GreenFirst, which was not anticipated by any of us, which I think is — but it’s certainly welcomed by Ballantyne Strong and FG. So we’re certainly happy about their position. And I think that there’s going to be quite a bit more M&A activity over the next 12 months to 18 months in the industry.
So, at some point, we will find the right time to monetize that, most likely through a M&A transaction would be my guess. I’m not sure when that will occur and but when that does occur, it will certainly provide for substantial capital for us to execute on certain things that we want to do.
In the meantime, we have other sources of liquidity that we can see if we need but we very — at these prices, you’ve seen that we’re buyers of the stock and I can’t imagine the scenario where we’re — we would issue common stock at this prices to Ballantyne Strong.
Brett Reiss
Great. Kyle, thank you and Mark and Todd, thank you as well for answering my questions. I’m going to jump back in queue.
Mark Roberson
Thanks, Brett.
Operator
This concludes our question-and-answer session. I would like to turn the conference back over to Mark Roberson for any closing remarks.
Mark Roberson
Great. Thanks, Anthony. Thank you, everybody, for dialing in and joining this call. Hopefully, this was productive. I think this is a really good call. If you have additional questions or think of other things that you’d like to ask us or talk about, both Todd, Kyle and myself are always available. Our contact information at IR is on the earnings release and on our website, so feel free to reach out at any time. Look forward to speaking with you. Thanks again.
Operator
The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.
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