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8-K - 8-K - CARMIKE CINEMAS INCd44952d8k.htm

Exhibit 99.1

 

LOGO

 

  Webcast/Conference Call TODAY, Monday, July 27 at 5:00 p.m. ET
  WEBCAST LINK:    www.carmikeinvestors.com (archived for 30 days)
  CALL DIAL-IN:    800/761-0069 or 212/231-2925 (international callers)
  CALL REPLAY:    800/633-8284 or 402/977-9140, passcode: 21771948 (through August 3)

CARMIKE CINEMAS REPORTS 20% RISE IN SECOND QUARTER

OPERATING REVENUE TO A RECORD $219.1 MILLION

43% Increase in Q2 Operating Income and

24% Growth in Adjusted EBITDA

COLUMBUS, Georgia – July 27, 2015 – Carmike Cinemas, Inc. (NASDAQ: CKEC), a leading entertainment, digital cinema and 3-D motion picture exhibitor, today reported results for the three and six month periods ended June 30, 2015, as summarized below.

SUMMARY FINANCIAL DATA

(unaudited)

 

     Three Months Ended
June 30
     Six Months Ended
June 30
 
(in millions)    2015      2014      2015      2014  

Total operating revenues

   $ 219.1       $ 183.0       $ 403.4       $ 341.9   

Operating income

     26.9         18.7         38.9         26.8   

Interest expense

     12.6         13.0         25.3         26.1   

Theatre level cash flow (1)

     47.0         37.6         82.5         65.2   

Net (loss) income

     (1.4      3.2         (1.1      0.1   

Adjusted net income (1)

     8.8         4.5         11.9         2.3   

Adjusted EBITDA (1)

     40.8         32.8         70.6         54.4   

 

(in millions)    Jun. 30, 2015      Dec. 31, 2014  

Total debt(1)

   $ 459.4       $ 445.1   

Net debt(1)

   $ 326.6       $ 347.5   

 

(1) Theatre level cash flow, adjusted net income, adjusted EBITDA, total debt and net debt are supplemental non-GAAP financial measures. Reconciliations of theatre level cash flow and adjusted EBITDA to net (loss) income and adjusted net income to net (loss) income for the three and six months ended June 30, 2015 and 2014, as well as a schedule of total debt and net debt as of June 30, 2015 and December 31, 2014, are included in the supplementary tables accompanying this news announcement.

“Carmike’s strong second quarter operating revenue growth reflects the ongoing success of our theatre-level initiatives and the progress we are achieving around our value-building theatre acquisition and organic growth strategies. Buoyed by an attendance increase of nearly 14%, Carmike’s strong operating and financial momentum has continued in 2015 as we achieved record performance across several key financial metrics, including a 20% rise in operating revenues that marked an all-time quarterly record, as well as a 43% rise in operating income, and increases in adjusted EBITDA and theatre level cash flow of over 24% and 25%, respectively,” stated David Passman, Carmike Cinemas’ President and Chief Executive Officer.

“In the second quarter, we generated record-level concessions and other spending per patron, marking 22 consecutive reporting periods of year-over-year concessions and other per patron spending growth while maintaining healthy margins. Carmike’s 24% increase in total concessions and other revenues and 9% rise in concessions and other spending per patron again highlight our team’s long-term successful food and beverage initiatives. We are confident the growth in this high-margin revenue stream will play a key role in our overall top-line growth as we continue to test new food and beverage concepts and introduce our concessions innovations and in-theatre dining services in additional markets across our circuit.


“Second quarter total admissions revenue grew 17%, while admissions revenue per screen was substantially in-line with the industry. Over the past several years, Carmike’s admissions revenue growth per screen has consistently outperformed the overall industry, including by some 600 basis points in the comparable 2014 period, in large part due to the customer-centric focus and accomplishments of our theatre-level operating teams.

“Looking ahead, we intend to continue our role as an industry consolidator, with our capital allocation strategy focused on expanding our theatre circuit in complementary markets through opportunistic theatre acquisitions and new build locations. We are committed to completing transactions that add high-quality assets to our footprint and generate attractive levels of theatre level cash flow, which we believe will enhance shareholder value and support our platform for sustainable growth. We remain optimistic regarding potential opportunities to acquire additional theatres and with a strong balance sheet that includes over $132 million in cash and a recently refinanced capital structure, our board, management team and I remain confident in the company’s prospects to further strategically expand the business.

“We are pleased with our record operating performance for the first half of 2015, our ability to execute against our theatre-level initiatives and the continued success of the box office environment and remain optimistic that the positive operating environment will continue for the remainder of 2015 and beyond,” concluded Mr. Passman.

THEATRE PERFORMANCE STATISTICS

(unaudited)

 

     Three Months Ended June 30      Six Months Ended June 30  
     2015      2014      2015      2014  

Average theatres

     271         253         272         252   

Average screens

     2,884         2,667         2,889         2,664   

Average attendance per screen(1)

     6,145         5,840         11,504         10,934   

Average admission per patron(1)

   $ 7.62       $ 7.39       $ 7.42       $ 7.30   

Average concessions/other sales per patron(1)

   $ 4.75       $ 4.36       $ 4.73       $ 4.43   

Total attendance (in thousands)(1)

     17,724         15,574         33,181         29,152   

Total revenue (in thousands)

   $ 219,099       $ 182,987       $ 403,433       $ 341,910   

 

(1) Includes activity from theatres designated as discontinued operations and reported as such in the consolidated statements of operations.

Carmike Cinemas’ Chief Financial Officer Richard B. Hare stated, “Second quarter operating revenue growth of 19.7% reflects a 17.3% increase in admissions revenue and a 23.9% rise in concessions and other revenue. Top-line growth is attributable to Carmike’s expanded theatre circuit, a favorable box office environment versus the prior year, a 3.1% increase in average ticket prices, and a 8.9% rise in concessions/other spending per patron. Overall, guests spent a record-level of $12.37 per visit on average in the second quarter, which represents a 5.3% increase in combined per patron spending compared to the prior year.

“Carmike’s Q2 2015 film exhibition costs as a percentage of admissions revenues were 58.7%, versus 56.0% in Q2 2014, reflecting a higher concentration of strong performing titles, while concession costs as a percentage of concessions and other revenue declined by 20 basis points to 11.6%.

“The increases in our three theatre-level expense categories primarily reflect the 8.1% year-over-year rise in Carmike’s average screen count related to recent acquisitions and new theatre openings. Salaries and benefits rose $2.6 million to $26.1 million, theatre occupancy costs increased $2.9 million to $23.9 million, and other theatre operating costs were $33.1 million, compared to $28.5 million in the second quarter of 2014. Importantly, these combined theatre-level expense categories as a percentage of total operating revenues decreased by 200 basis points versus the prior year period.

“General and administrative expenses were $8.2 million for Q2 2015, including $1.2 million of non-cash share-based compensation expense and $0.8 million of merger and acquisition related costs. Quarterly interest expense decreased $0.4 million to $12.6 million in Q2 2015, due primarily to lower capital lease and financing obligation balances.

“On June 17, Carmike issued $230 million aggregate principal amount of 6.00% Senior Secured Notes due 2023. Net proceeds from this offering were used to repay our $210 million 7.375% Senior Secured Notes due 2019. Carmike recorded non-recurring loss on extinguishment of debt charges of $17.6 million in the second quarter of 2015 for the write-off of unamortized debt issuance costs, including a prepayment penalty of $11.6 million related to the termination of its existing senior secured notes. The refinancing is expected to yield $1.7 million of annual interest expense savings through 2023.


“Carmike simultaneously entered into a new $50 million revolving credit facility that replaces the prior $25 million revolver that was scheduled to mature in April 2016 and was undrawn at closing. By leveraging the current favorable credit environment, our recent refinancing activity expands our total debt capacity while locking in attractive capital costs for our extended maturities.

“Adjusted EBITDA increased 24.4% to $40.8 million and theatre level cash flow rose 25.1% to $47.0 million due to a combination of Carmike’s strong top-line growth, higher attendance levels, results-focused operating disciplines, and expanded scale. Reflecting cash of $132.8 million at June 30, 2015 and our recent refinancing, we ended the quarter with $326.6 million of net debt, compared with $347.5 million at December 31, 2014. Our capital allocation strategy continues to focus on deploying cash to expand our theatre circuit through accretive acquisitions and new build locations,” concluded Mr. Hare.

Supplemental Financial Measures

Theatre level cash flow, EBITDA, adjusted EBITDA, adjusted net income, total debt and net debt are supplemental non-GAAP financial measures used by Carmike to evaluate its operating performance. Carmike defines theatre level cash flow as adjusted EBITDA, as defined below, plus general and administrative expenses. Carmike believes that theatre level cash flow is an important supplemental measure of operating performance for a motion picture exhibitor’s operations because it provides a measure of the core operations, rather than factoring in items such as general and administrative expenses and depreciation and amortization, among others. In addition, Carmike believes that theatre level cash flow, as defined, is a widely accepted measure of comparative operating performance in the motion picture exhibition industry. Adjusted net income is defined as net (loss) income plus impairment of long-lived assets, loss on extinguishment of debt, merger and acquisition-related expenses, share-based compensation expense and (gain) loss on sale of property and equipment, net of tax. Carmike believes adjusted net income is an important supplemental measure of operating performance for a motion picture exhibitor because it provides a measure of core operations. Total debt is defined as the sum of current maturities of capital leases and long-term financing obligations, long-term debt and capital leases and long-term financing obligations (less current maturities). Net debt is defined as total debt less cash and cash equivalents. EBITDA is defined as net (loss) income plus income tax (benefit) expense, interest expense and depreciation and amortization. Adjusted EBITDA is defined as EBITDA plus income (loss) from unconsolidated affiliates, loss from discontinued operations, loss on extinguishment of debt, merger and acquisition-related expenses, share-based compensation expense, (gain) loss on sale of property and equipment, and impairment of long-lived assets. Carmike believes that EBITDA and adjusted EBITDA are important supplemental measures of operating performance for a motion picture exhibitor’s operations because they provide measures of core operations.

About Carmike Cinemas

Carmike Cinemas, Inc. is a U.S. leader in digital cinema, 3-D cinema deployments and alternative programming and is one of the nation’s largest motion picture exhibitors. Carmike has 270 theatres with 2,882 screens in 41 states. The circuit includes 48 premium large format (PLF) auditoriums featuring state-of-the-art technology and luxurious seating, including 30 “BigDs,” 16 IMAX auditoriums and two MuviXL screens. As “America’s Hometown Theatre Chain” Carmike’s primary focus is mid-sized communities. Visit www.carmike.com for exact show-times and to purchase tickets.

Disclosure Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about our beliefs, expectations and future performance, are forward-looking statements. Forward-looking statements include statements preceded by, followed by or that include the words, “believes,” “expects,” “anticipates,” “plans,” “estimates,” “seeks” or similar expressions. Examples of forward-looking statements in this press release include the Company’s expectations regarding results from our operating strategies, box office performance, food and beverage strategies, circuit expansion and additional acquisition opportunities. Forward-looking statements are only predictions and are not guarantees of performance. These statements are based on beliefs and assumptions of management, which in turn are based on currently available information. The forward-looking statements also involve risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Many of these factors are beyond our ability to control or predict. Important factors that could cause actual results to differ materially from those contained in any forward-looking statement include, but are not limited to: our ability to achieve expected results from our strategic acquisitions, general economic conditions in our regional and national markets; our ability to comply with covenants contained in our senior secured credit agreement and the indenture governing our 6.00% Senior Secured Notes due 2023; our ability to operate at expected levels of cash flow; financial market conditions including, but not limited to, changes in interest rates and the availability and cost of capital; our ability to meet our contractual obligations, including all outstanding financing commitments; the availability of suitable motion pictures for exhibition in our markets; competition in our markets; competition with other forms of entertainment; and other factors, including the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, under the caption “Risk Factors.” We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

Contact:

Norberto Aja or Jennifer Neuman

JCIR

  

Richard B. Hare

Chief Financial Officer

212/835-8500 or ckec@jcir.com    706/576-3416

 


CARMIKE CINEMAS, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

    

Three Months Ended

June 30,

   

Six Months Ended

June 30,

 
     2015     2014     2015     2014  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Revenues:

        

Admissions

   $ 134,986      $ 115,116      $ 246,342      $ 212,687   

Concessions and other

     84,113        67,871        157,091        129,223   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenues

     219,099        182,987        403,433        341,910   

Operating costs and expenses:

        

Film exhibition costs

     79,288        64,434        140,971        117,323   

Concession costs

     9,728        7,977        17,750        15,096   

Salaries and benefits

     26,069        23,487        49,783        45,021   

Theatre occupancy costs

     23,899        20,954        47,334        41,315   

Other theatre operating costs

     33,082        28,545        65,111        57,927   

General and administrative expenses

     8,211        6,528        18,238        14,026   

Depreciation and amortization

     13,747        11,927        26,834        23,698   

(Gain) loss on sale of property and equipment

     (2,293     395        (3,324     328   

Impairment of long-lived assets

     481        —          1,870        358   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating costs and expenses

     192,212        164,247        364,567        315,092   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     26,887        18,740        38,866        26,818   

Interest expense

     12,639        13,000        25,308        26,116   

Loss on extinguishment of debt

     17,550        —          17,550        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before income tax and income (loss) from unconsolidated affiliates

     (3,302     5,740        (3,992     702   

Income tax (benefit) expense

     (1,281     2,392        (1,014     382   

Income (loss) from unconsolidated affiliates

     576        (126     1,924        (210
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from continuing operations

     (1,445     3,222        (1,054     110   

Loss from discontinued operations

     —          —          —          (52
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ (1,445   $ 3,222      $ (1,054   $ 58   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

        

Basic

     24,464        22,872        24,393        22,847   

Diluted

     24,464        23,483        24,393        23,463   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income per common share (Basic and Diluted):

   $ (0.06   $ 0.14      $ (0.04   $ —     
  

 

 

   

 

 

   

 

 

   

 

 

 


CARMIKE CINEMAS, INC. and SUBSIDIARIES

SUPPLEMENTARY NON-GAAP RECONCILIATIONS

THEATRE LEVEL CASH FLOW AND ADJUSTED EBITDA (Unaudited)

($ in thousands)

 

     Three Months Ended
June 30,
     Six Months Ended
June 30,
 
     2015      2014      2015      2014  
     (Unaudited)      (Unaudited)      (Unaudited)      (Unaudited)  

Net (loss) income

   $ (1,445    $ 3,222       $ (1,054    $ 58   

Income tax (benefit) expense

     (1,281      2,392         (1,014      382   

Interest expense

     12,639         13,000         25,308         26,116   

Depreciation and amortization

     13,747         11,927         26,834         23,698   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

   $ 23,660       $ 30,541       $ 50,074       $ 50,254   

(Income) loss from unconsolidated affiliates

     (576      126         (1,924      210   

Loss from discontinued operations

     —           —           —           52   

Loss on extinguishment of debt

     17,550         —           17,550         —     

(Gain) loss on sale of property and equipment

     (2,293      395         (3,324      328   

Impairment of long-lived assets

     481         —           1,870         358   

Merger and acquisition-related expenses

     799         945         2,453         1,559   

Share-based compensation expense

     1,177         796         3,858         1,593   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 40,798       $ 32,803       $ 70,557       $ 54,354   
  

 

 

    

 

 

    

 

 

    

 

 

 

General and administrative expenses

     6,235         4,787         11,927         10,874   
  

 

 

    

 

 

    

 

 

    

 

 

 

Theatre level cash flow

   $ 47,033       $ 37,590       $ 82,484       $ 65,228   
  

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL DEBT AND NET DEBT (Unaudited)

($ in thousands)

 

     June 30,
2015
     December 31,
2014
 

Current maturities of capital leases and long-term financing obligations

   $ 9,337       $ 9,667   

Long-term debt

     224,341         205,205   

Capital leases and long-term financing obligations, less current maturities

     225,714         230,203   
  

 

 

    

 

 

 

Total debt

   $ 459,392       $ 445,075   

Less cash and cash equivalents

     (132,821      (97,537
  

 

 

    

 

 

 

Net debt

   $ 326,571       $ 347,538   
  

 

 

    

 

 

 

ADJUSTED NET (LOSS) INCOME (Unaudited)

($ in thousands)

 

     Three Months Ended
June 30,
     Six Months Ended
June 30,
 
     2015      2014      2015      2014  
     (Unaudited)      (Unaudited)      (Unaudited)      (Unaudited)  

Net (loss) income

   $ (1,445    $ 3,222       $ (1,054    $ 58   

Impairment of long-lived assets

     481         —           1,870         358   

Loss on extinguishment of debt

     17,550         —           17,550         —     

(Gain) loss on sale of property and equipment

     (2,293      395         (3,324      328   

Merger and acquisition-related expenses

     799         945         2,453         1,559   

Share-based compensation expense

     1,177         796         3,858         1,593   

Tax effect of adjustments to net income

     (7,440      (897      (9,411      (1,612
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net income

   $ 8,829       $ 4,461       $ 11,942       $ 2,284   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average shares outstanding (basic)

     24,464         22,872         24,393         22,847   

Weighted average shares outstanding (diluted)

     24,863         23,483         24,826         23,463   

Adjusted net income per share (basic)

   $ 0.36       $ 0.20       $ 0.49       $ 0.10   

Adjusted net income per share (diluted)

   $ 0.36       $ 0.19       $ 0.48       $ 0.10   

 

(1) Adjustments to net (loss) income for the three and six months ended June 30, 2015 and 2014 are shown net of tax effect of 42.0%, which represents the estimated combined federal and state tax rates for each period.