This is the latest installment in the exhibition consolidation saga — and a logical one in light of Carmike‘s stated goal to build itself to 3,000 screens from about 2,660 in time for the onslaught of potential blockbuster sequels Hollywood plans to release in 2015. Westfield, NJ-based Digiplex has 206 screens in 21 locations and agreements to pick up five theaters with 53 screens, and introduces Carmike to four states: Arizona, Connecticut, Maryland and New Hampshire. Carmike can flex its financial muscle: It owns about 19% of cinema ad sales company Screenvision, which National CineMedia recently agreed to buy for $375M.
Digiplex — the short name for Digital Cinema Destinations Corp — is an interesting target. CEO Bud Mayo, who controls 39.5% of the voting shares, is well known in the industry. He co-founded Clearview Cinema, sold to Cablevision in 1998, and then co-founded Cinedigm, which he ran until 2010 when he founded Digiplex. Over that period he became a vocal supporter of digital projection and alternative content. He urged his colleagues, at the recent CinemaCon industry convention, to step up their efforts to find concerts and sports events to show on typically slow weeknights.
But small theater chains have struggled: Digiplex shares lost more than 23% of their value since the company went public in 2012. They’re up 8.3% in after-market trading today, following the announcement of the deal with Carmike. It has agreed to exchange 0.1775 of its shares for each of Digiplex’s 7.93M shares. That implies a $45.3M value for Digiplex — a 15.4% premium based on its market value today, based on Carmike’s closing price of $32.19 a share.
Here’s the companies’ release: Read More »
The chain said in July that it would go on a shopping spree when it raised $88.1M through a secondary stock offering. “We are not seeing fixer-uppers or turnaround projects,” CEO David Passman told analysts at the time. Today’s deal seems to fit his criteria. It will provide Carmike with an additional 147 screens in three states — Florida, California, and Illinois — giving it a total of 2,681 at 257 theaters in 37 states. They shouldn’t need much work: “Muvico is a cinema technology leader and industry pioneer, with recent capital expenditures for digital projection system upgrades, IMAX and MuviXL large format screens, installations of cutting-edge sound, reserved seating and ticket kiosks, as well as additional facility enhancements,” Passman says. “We expect limited incremental maintenance capital expenditures on these acquired facilities over the near-term.” He adds that the deal will add Bogart’s Bar & Grill restaurants to Carmike theaters in Thousand Oaks, Calif. and Rosemont, Ill. which advances “our entry into the full-service food and beverage arena.” Seven of the nine theaters are in Florida and most have beer and wine service, entertainment centers, party rooms and conference facilities. The deal should boost revenues by $68M and cash flow by $5.4M and provides “a number of operational and cost synergy opportunities,” Passman says. Carmike will have a chance to discuss the deal with analysts tomorrow when it releases its Q3 earnings.
Shares are down about 1.4% pre-market. The exhibition chain announced that it has launched an underwritten public offering of 4.5M shares of common stock, with an opportunity for underwriters to nab an additional 675,000 shares. The proceeds could be used for acquisitions, as well as general corporate purposes, the company says. “We are not seeing fixer-uppers or turnaround projects,” CEO David Passman told analysts this morning. The goal is to expand to 300 locations with 3,000 screens. Carmike made the announcement as it released Q2 earnings that looked great on the top line, but will disappoint some investors on the bottom — even though they’re substantially up. Read More »
All exhibition chains struggled with the weak box office in early 2012. But Carmike suffered from a triple whammy in Q1 as it recorded $12.3M in interest expenses — due in part to the additional leverage to finance its acquisition of Rave’s theaters at the end of 2012 — as well as about $3.1M in charges to cancel leases for underperforming theaters. The company ended up with a net loss of $5.8M, down from a $3.2M profit in the period a year ago, on revenues of $130.1M, +0.1%. The top line was right about where analysts expected. But the net loss of 33 cents a share contrasts with forecasts for a seven cent profit. Revenues from admissions fell 1.4% to $81.5M as the rise in the price of the average ticket — to $7.02 from $6.68 — was offset by the 4.6% drop in attendance to 11.6M. Even so, concessions revenues rose 2.7% to $48.6M, as the average concessions sales per patron rose 27 cents to $4.18. The company says that the increase reflects the success of its experiments and efforts to promote high-margin goodies. “Last year’s first quarter box office benefited from a strong and well-balanced film slate, creating a challenging year-over-year comparison for the industry,” CEO Dave Passman says. But Q2 “is off to a strong start,” he adds, and “we expect the positive momentum to continue throughout the summer as the upcoming release calendar features a … Read More »
This is becoming a familiar theme in exhibition, although Carmike‘s Q4 numbers are complicated by its acquisition in November of 251 screens from Rave Reviews Cinemas as well as an $86.5M year-end tax benefit. With those factored in, Carmike had net income of $91.6M in Q4, up from $1.7M at the end of 2011, on revenues of $146.6M, +23.2%. The revenue number beats forecasts for $144.25M. The company reported EPS of $5.19; without one-time items, that comes to 43 cents vs an adjusted number for last year of 24 cents. Analysts expected the company to generate unadjusted EPS of 24 cents in Q4 vs last year’s 13 cents. Accounting complications aside, the basic numbers look solid: Admissions revenues rose 22.6% to $93.7M as the chain sold 13.2M tickets (+16.1%) at an average price of $7.10 a ticket (+5%). Concessions revenues were up 24.3% to $52.9M, with average sales per patron of $3.99. It was the 12th straight quarter of concessions growth. “The Company’s growing footprint expanded to approximately 2,500 screens as we took another step along our way to achieving Carmike’s next corporate milestone of 3,000 screens and 300 locations across ‘Hometown America’,” CEO David Passman says. “We will continue to actively target acquisitions and attractive build-to-suit opportunities.”
Carmike shares are up more than 9% in early trading after it announced its agreement to pay $19M — and assume $100.4M in lease obligations — for Rave’s 16 theaters with 251 screens in the south and mid-west. Carmike signaled its interest in acquisitions early this year when it launched a refinancing effort that included a $56.5M stock sale and $210M sale of senior secured notes. CEO David Passman calls today’s deal a “key, opportunistic development for Carmike as we recently embarked on a corporate mission of expanding our footprint to 300 theatres and 3,000 screens through attractive acquisitions.” Rave is controlled by private equity firm BV Investment Partners. The companies expect the deal to close by year end.
Here’s the release: Read More »
3RD UPDATE, 3:15 PM: The FBI just made this statement:
“The FBI’s Atlanta Field office is aware of the telephonic threats received by Carmike Cinemas and has initiated a criminal investigation into the matter. While the FBI takes seriously such threats or efforts to extort or intimidate companies engaged in interstate commerce, responding law enforcement, to date, have not developed evidence or information at those specific locations that would substantiate or elevate the threat. Anyone with information regarding this matter should contact the Atlanta Office FBI at tel. (404) 679-9000 or email at email@example.com .” – SA Stephen Emmett, FBI Atlanta.
And the corporate headquarters of Carmike Cinemas just issued this statement:
On the evening of August 16th, Carmike Cinemas received a non-specific telephoned bomb threat at our corporate offices in Columbus, Georgia after hours. We alerted community law enforcement officials and the FBI. Searches have been completed at the affected theatres by members of law enforcement and nothing was found.
A federal investigation is underway and Carmike is assisting with this as well as in the many communities where we have theatres. If additional details on the investigation are uncovered, we expect those to come from federal and local law enforcement agencies.
All theatres affected by the threat have been checked and deemed safe for use. Carmike Cinemas would like to express our thanks to the
… Read More »
The operations side looks solid at first glance, although a one-time $5M expense to extinguish some debt may startle investors who focus on the bottom line. The exhibition chain generated net income of $1.2M, -79.7% vs last year’s Q2, on revenues of $136.3M, +3.7%. The revenue figure is just a little short of the $136.7M analysts expected. The earnings figure at 7 cents a share is way below the 30 cents the Street anticipated. But if you strip out the debt repayment, the earnings figure would come to 39 cents. Once again, we’re seeing a theater chain report a decrease in ticket sales outweighed by increased ticket prices and concessions spending. Total attendance fell 3.6% to 12.6M. But the average ticket price each patron paid was up nearly 6% to $6.91. Concession payments per patron were up 8.6% to $3.92. With the reduction in debt “Carmike has now entered a new phase focused on increasing our circuit footprint, which we expect to achieve through a combination of acquisitive and organic growth,” CEO David Passman says. He adds that the company “extends its deepest sympathy to those affected by the tragedy in Aurora, Colorado. Our thoughts and prayers are with everyone impacted by this senseless, random act of violence. We regularly monitor and review our safety procedures to ensure that our patrons continue to have a safe and enjoyable experience.”
Cinemark, which owns the theater where this morning’s shooting took place, is -3.2% in early trading. And others are down as well: The largest chain, Regal, is -3.3%, and IMAX is -1.8%. Smaller chains are also off more than the market. Marcus and Reading are both -0.8%. In addition, companies that serve theaters are being hit. Ad sales company National CineMedia is -1.8% and 3-D technology firm RealD is -0.5%. The one big exception is Carmike. It’s up 2.0% following a Bloomberg report last night that said it could be a takeover target.
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Rising attendance and costs controls did the trick once again for a major exhibition chain. Carmike generated $3.2M in net income in Q1, up from an $18.2M loss in the period last year, on revenues of $130.8M, up 36.5%.The revenue number cleanly beat the $124.5M that analysts expected. And earnings at 25 cents a share contrasts with the Street’s expectation of a penny. Total attendance leaped 29.6% to 12.2M while the average ticket price was up 4.7% to $6.84. Concession sales per person were up 19 cents to $3.91 — a new quarterly high for the chain. CEO David Passman crowed that Carmike’s attendance gain “was well ahead of the industry increase of 24%.” The company has tried to weed out underperforming venues and “while we are not done, we can now focus on transitioning into a growth mode,” he says. Analysts likely will want to know more about its plans as the industry prepares for a consolidation wave; many small chains that couldn’t afford to switch to digital projection are talking about selling before Hollywood studios only offer releases on hard drives or via satellite. On April 11 Carmike raised $56M by issuing 4.6M shares of it common stock at $13 a share. The company also has restructured its debt to give it more flexibility.
The exhibition company’s stock is down about 6.7% in initial after-market trading following its announcement that it will boost its outstanding shares by nearly 31%. Carmike will issue 4M shares — diluting the value of current stock holdings. The company says it will use the cash raised from the sale of the additional stock for “general corporate purposes.” Carmike is taking advantage of the 111.8% increase in its stock price since the beginning of the year. It expects to report admissions revenues of as much as $84M for Q1, which would be up 37% vs the same period last year. Attendance in the first part of this year came close to 12.3M, up 30.9%. Carmike has said that it wants to strengthen its balance sheet. Debt covenants currently limit its spending to $25M. That could hamper its ability to build additional large-sized screens — Carmike’s BigD theaters give it an alternative to Imax. Meanwhile Carmike’s stock has been unusually volatile: With about 13M shares outstanding, minor changes in its net profits can result in big swings in its earnings per share. Carmike says that it “continues to evaluate refinancing opportunities” that could include taking on additional debt. Along with the announcement about the refinancing, the company said that the board nominated Neenah Paper Chairman Sean Erwin to become a director, replacing Carmike COO Fred Van Noy who will not be up for re-election.
Shares in the exhibition company are up more than 13% in after hours trading following a Q4 report that handily beat Wall Street forecasts. Carmike generated $1.7M in net income, up from a $3.1M loss in the same period in 2010, on revenues of $120.1M, up 4.3%. The revenue figure topped the $112.2M that analysts predicted. And earnings, at 14 cents a share, soared past the 5 cents that investors expected. The chain says that its attendance was up about 3% in contrast to the rest of the industry which saw domestic attendance fall 3%. This is the third consecutive quarter in which Carmike beat its peers, the company says. “Carmike’s operating strategy has shifted from primarily closing underperforming theatres and ‘refreshing’ existing facilities to once again growing our overall circuit, further expanding Carmike’s Small-Town America footprint,” CEO David Passman says. “We are targeting aggregate screen growth through new-builds, which include our Big D large format auditoriums and in select locations, such as our forthcoming Sandestin, FL entertainment complex, VIP dining options.” The company averaged 237 theaters and 2,259 screens in the quarter. Average attendance per screen was up about 1.9% to 5,046 — although the average admission payment per person dropped 4.5% to $6.76. But concession sales per person rose 11.2% to $3.77.
B. Riley analyst Eric Wold says it will in a major look-forward report today for the film business. He predicts 4% growth in box office sales this year — the result of a 1% uptick in attendance and a 3% rise in average ticket prices. What makes him so confident, especially following the 3.9% drop in 2011? Wold says that more consumers would have gone to the movies last year if Hollywood hadn’t released so many dogs. He dismisses another theory: that tickets are becoming too expensive. If that were the case, he says, then we would have seen soft numbers throughout the year — instead box offices set records in Q2 and Q3. He’s also optimistic about 2012 because there’ll be at least 25 sequels of films that collectively generated $3.64B at box offices. Sequels typically deliver about 6% less in ticket sales than the originals. But even if 2012′s films slip 20%, consumers will spend 12% more than they did for sequels in 2010. That could “set up 2012 for a potential rebound,” Wold says. He’s also encouraged to see that there’ll be at least 40 wide-release 3D Read More »
The weak box office sales this past weekend made it clear that the year is going to end with a whimper. Regal’s shares fell 8.7%, making it the biggest loser among the theater chains followed by Carmike (-4.9%) and Cinemark (-2.9%). Companies closely aligned with theaters also suffered: 3-D technology provider RealD fell 6.2% while ad seller National Cinemedia was off nearly 3%. “The hoped-for 4Q11 box office pop is slipping away,” says Lazard Capital Markets analyst Barton Crockett. Ticket sales so far this quarter are down about 6.9% vs the same period last year, he says. He predicts the quarter will end down 1.9% following an expected surge of Christmas weekend turnout for Paramount’s Mission: Impossible Ghost Protocol as it goes into wide release, Warner Bros’ Sherlock Holmes: A Game Of Shadows, Sony’s The Girl With The Dragon Tatoo, Fox’s Alvin And The Chipmunks: Chipwrecked, and Paramount’s The Adventures Of Tintin. Read More »
The mostly rural theater chain reported net income of $3.1M, up from $530,000 in the period last year, on revenues of $134M, up 8.5%. The revenue figure nearly matched the $134.43M that analysts expected, while profits, at 24 cents a share, beat forecasts by a penny. Carmike says that the average price consumers spent for a ticket fell 1.8% to $6.49 due to “increased discounts and promotional activities.” But it had a 5.6% pickup in box office sales as average attendance per screen grew 7.8%. It also saw 14.4% growth in revenues from concessions as the average consumer spent $3.57, up 6.3%. As for 4Q, CEO David Passman says that “we expect the quarter to finish strongly.”
Don’t be fooled by the headlines this summer that likely will focus on how strong movie ticket sales look compared to last year. Researchers at SNL Kagan predict that domestic box office for the period from late April to the end of August will be up 1.7% to about $4.2 billion. Not bad – especially considering that this year’s figure counts 42 releases vs. 45 last year — right? Not so fast. When Kagan looks at all sources of income including international sales, home video, and TV, it estimates that this year’s crop will generate $4.45 billion in profits on $12.3 billion in revenues. That’s down slightly from last year’s $4.49 billion in profit on revenues of nearly $13 billion. The forecast follows Kagan’s estimate that only 2 out of 16 releases in April clearly will be profitable: Fox’s Rio and Universal’s Fast Five. Three others could be profitable for distributors, depending on the terms of their deals with exhibitors: Universal’s Hop, FilmDistrict’s Insidious, and Summit Entertainment’s Source Code.
While the studios sort through their finances, theater chains will enjoy any uptick in summer sales. Box office revenues in the first quarter for the four biggest publicly traded chains – Carmike, Cinemark, Reading International, and Regal – dropped 17.2% vs the same period last year to about $803 million. Their concession sales were down 12.6% to about $337 million, although sales per customer rose 3.2% to $2.97.
Carmike Cinemas this morning joined the parade of exhibition companies that attributed lousy 1Q earnings to the fact that Hollywood didn’t serve up 3D hits that could match last year’s standouts: Fox’s Avatar and Disney’s Alice in Wonderland. The chain’s net loss grew to $18.4 million from $3.5 million in the same period last year on revenues of $96.2 million, down 22%. The loss, at $1.44 a share, far exceeds the average estimate among analysts of a 49 cent loss. ”Despite the slow start, we are optimistic about the balance of 2011,” CEO David Passman said.