USA (TN) – Regal Entertainment Group, the biggest cinema operator in the US, has reported third quarter financial year 2015 figures, which were slightly above expectations thanks to strong concessions sales. Total revenue was up by 4.5% year-on-year to USD $725 million, but net income was down to USD $21.9 million compared to USD $26.7 in the same quarter last year. EBITDA $126.6 million for the third quarter of 2015 compared to $122.5 million for the third quarter of 2014. Key take-aways from Seeking Alpha Regal Q3 2015 are:
- Regal Entertainment Group (NYSE:RGC) reports average ticket price rose $0.08 to $9.19 in Q3.
- The average concessions spend was 9.7% higher at $4.20 per patron.(1)
- Theater count -2 to 571 at the end of the quarter.
- Screens +10 to 7,357.
- The company says the upcoming slate of movie releases sets up well for Q4 and into 2016.
Box office flops like “Fantastic Four” dragged down the results, but the transcript of the earnings call (by Seeking Alpha) revealed that the re-seating program is showing results. The 356 screens re-fitted with recliners in the year prior to the end of Q3 “outperformed the industry box office by over 5,800 basis points,” while new cinemas fitted with recliners generated twice the overall box office of average Regal screens.
Regal plans to convert “approximately 40 buildings with 500 screens in 2015 and should end the year with a total of 850 screens fully equipped with recliners.” The outlook for recliners is to have converted over 1,000 screens by the end of 2016 and 2,000 in total by 2017 (leaving 5,600 screens un-re-seated – around 75%).
For concessions, beverage volume was up +2.2%, popcorn volume up +2.4%, and candy volume up +3.8%, the last attributed to “Minions” and “Inside Out” performing well. By the end of 2016 Regal aims to have 135 cinemas serving alcohol and 185 for enhanced food offerings. Film and advertising expenses were 52.5% of admissions revenue, slightly down.
There was also the Georgia Theatre acquisition of five cinemas in Atlanta in the third quarter. With regards to the Atom Ticket test that Regal participated in alongside Carmike that started a few months ago: “We were pleased with the results and we’re looking to extend further testing opportunities.”
Needless to say, Regal is excited about the prospect of “Bond”, “Hunger Games” and “Star Wars” in Q4. While the managers won’t be drawn on whether they think 2016 will outperform this year, they feel that the long term outlook is ‘stable’. Regal’s share price fell slightly and is trading at the bottom end of its 52 week USD $24.52-$17.48 range. Press Release – 27 October 2015 Regal Q3 2015