Regal Entertainment Group Reports Results for Fiscal Third Quarter 2013 and Declares Quarterly Dividend

Business Wire

KNOXVILLE, Tenn.--(BUSINESS WIRE)--

Regal Entertainment Group (RGC), a leading motion picture exhibitor owning and operating the largest theatre circuit in the United States, today announced fiscal third quarter 2013 results.

Total revenues for the third quarter ended September 26, 2013 were $813.1 million compared to total revenues of $692.9 million for the third quarter ended September 27, 2012. Net income attributable to controlling interest in the third quarter of 2013, which included an $18.5 million after-tax gain on the sale of National CineMedia common stock, was $75.1 million compared to $24.0 million in the third quarter of 2012. Diluted earnings per share was $0.48 for the third quarter of 2013 compared to $0.15 for the third quarter of 2012. Adjusted diluted earnings per share(1) was $0.38 for the third quarter of 2013 compared to $0.17 for the third quarter of 2012. Adjusted EBITDA(3) was $177.3 million for the third quarter of 2013 compared to $133.7 million for the third quarter of 2012. Reconciliations of non-GAAP financial measures are provided in the financial schedules accompanying this press release.

Regal’s Board of Directors also today declared a cash dividend of $0.21 per Class A and Class B common share, payable on December 13, 2013, to stockholders of record on December 4, 2013. The Company intends to pay a regular quarterly dividend for the foreseeable future at the discretion of the Board of Directors depending on available cash, anticipated cash needs, overall financial condition, loan agreement restrictions, future prospects for earnings and cash flows as well as other relevant factors.

“We are pleased to report third quarter records for both total revenue and Adjusted EBITDA as total revenues exceeded $800 million and Adjusted EBITDA exceeded $175 million for the second consecutive quarter,” stated Amy Miles, CEO of Regal Entertainment Group. “We are encouraged by the year-to-date industry box office results and are optimistic regarding the box office prospects for the upcoming holiday season,” Miles continued.

Forward-looking Statements:

This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements included herein, other than statements of historical fact, may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in the risk factors contained in the Company's 2012 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 25, 2013. All forward-looking statements are expressly qualified in their entirety by such factors.

Conference Call:

Regal Entertainment Group management will conduct a conference call to discuss third quarter 2013 results on October 24, 2013 at 4:30 p.m. (Eastern Time). Interested parties can listen to the call live on the Internet through the investor relations section of the Company's Web site: www.REGmovies.com, or by dialing 877-407-0778 (Domestic) and 201-689-8565 (International). Please dial in to the call at least 5 - 10 minutes prior to the start of the call or go to the Web site at least 15 minutes prior to the call to download and install any necessary audio software. When prompted, ask for the Regal Entertainment Group conference call. A replay of the call will be available beginning approximately two hours following the call. Those interested in listening to the replay of the conference call should dial 877-660-6853 (Domestic) or 201-612-7415 (International) and enter conference call ID #405492.

About Regal Entertainment Group:

Regal Entertainment Group (RGC) operates the largest and most geographically diverse theatre circuit in the United States, consisting of 7,334 screens in 575 theatres in 42 states along with Guam, Saipan, American Samoa and the District of Columbia as of September 26, 2013. The Company operates theatres in 46 of the top 50 U.S. designated market areas. We believe that the size, reach and quality of the Company’s theatre circuit not only provide its patrons with a convenient and enjoyable movie-going experience, but is also an exceptional platform to realize economies of scale in theatre operations.

Additional information is available on the Company's Web site at www.REGmovies.com.

       

Regal Entertainment Group

Consolidated Statements of Income Information

For the Fiscal Quarters and Three Quarters Ended 9/26/13 and 9/27/12

(in millions, except per share data)

(unaudited)

 
Quarter Ended Three Quarters Ended
Sept. 26, 2013     Sept. 27, 2012 Sept. 26, 2013     Sept. 27, 2012
Revenues
Admissions $ 548.4 $ 471.0 $ 1,556.0 $ 1,439.8
Concessions 224.1 187.3 623.6 559.9
Other operating revenues 40.6   34.6   118.6   101.4  
Total revenues 813.1 692.9 2,298.2 2,101.1
 
Operating expenses
Film rental and advertising costs 286.6 247.6 812.4 749.7
Cost of concessions 30.5 25.5 85.9 75.2
Rent expense 105.7 95.9 309.9 285.3
Other operating expenses 208.7 185.2 597.7 546.0
General and administrative expenses (including share-based compensation of $2.2 and $2.4 for the quarters ended September 26, 2013 and September 27, 2012, respectively, and $7.0 for the three quarters ended September 26, 2013 and September 27, 2012) 16.9 16.1 54.5 48.7
Depreciation and amortization 50.8 45.0 149.0 137.6
Net loss on disposal and impairment of operating assets 4.1   3.9   4.7   6.4  
Income from operations 109.8 73.7 284.1 252.2
 
Interest expense, net 35.0 32.3 106.5 102.8
Earnings recognized from NCM (10.4 ) (8.7 ) (24.6 ) (23.1 )
Gain on sale of NCM, Inc. common stock (30.9 ) (30.9 )
Loss on extinguishment of debt 30.7
Other, net (9.2 ) 10.5   (23.4 ) (0.8 )
Income before income taxes 125.3 39.6 225.8 173.3
Provision for income taxes 50.2   15.7   92.2   65.9  
Net income 75.1 23.9 133.6 107.4
Noncontrolling interest, net of tax   0.1   0.1   0.1  
Net income attributable to controlling interest $ 75.1   $ 24.0   $ 133.7   $ 107.5  
 
Diluted earnings per share $ 0.48 $ 0.15 $ 0.86 $ 0.69
Adjusted diluted earnings per share(1) $ 0.38 $ 0.17 $ 0.87 $ 0.72

Weighted average number of diluted shares outstanding(2)

155.8 155.1 155.7 154.9
                         

Consolidated Summary Balance Sheet Information

(dollars in millions)

(unaudited)

 
As of

Sept. 26, 2013

As of

Dec. 27, 2012

 
Cash and cash equivalents $ 270.2 $ 109.5
Total assets 2,508.3 2,209.5
Total debt 2,307.9 1,995.2
Total stockholders’ deficit of Regal Entertainment Group (656.6 ) (696.8 )
       

Operating Data

(unaudited)

 
Quarter Ended Three Quarters Ended

Sept. 26, 2013

    Sept. 27, 2012 Sept. 26, 2013     Sept. 27, 2012
 
Theatres at period end 575 524 575 524
Screens at period end 7,334 6,621 7,334 6,621
Average screens per theatre 12.8 12.6 12.8 12.6
Attendance (in thousands) 62,392 53,585 174,318 161,603
Average ticket price $ 8.79 $ 8.79 $ 8.93 $ 8.91
Average concessions per patron $ 3.59 $ 3.50 $ 3.58 $ 3.46
 
 
Reconciliation of EBITDA to Net Cash Provided by (Used in) Operating Activities

(dollars in millions)

(unaudited)

 
Quarter Ended Three Quarters Ended
Sept. 26, 2013 Sept. 27, 2012 Sept. 26, 2013 Sept. 27, 2012
 
EBITDA $ 211.1 $ 117.0 $ 481.4 $ 413.8
Interest expense, net (35.0 ) (32.3 ) (106.5 ) (102.8 )
Provision for income taxes (50.2 ) (15.7 ) (92.2 ) (65.9 )
Deferred income taxes 3.8 20.4 6.3 29.8
Changes in operating assets and liabilities (100.0 ) (114.3 ) (31.3 ) (114.6 )
Gain on sale of NCM, Inc. common stock (30.9 ) (30.9 )
Loss on extinguishment of debt 30.7
Other items, net 0.2   17.7   (1.9 ) 21.4  
Net cash provided by (used in) operating activities $ (1.0 ) $ (7.2 ) $ 255.6   $ 181.7  
 
 
Reconciliation of EBITDA to Adjusted EBITDA

(dollars in millions)

(unaudited)

 
Quarter Ended Three Quarters Ended
Sept. 26, 2013 Sept. 27, 2012 Sept. 26, 2013 Sept. 27, 2012
 
EBITDA $ 211.1 $ 117.0 $ 481.4 $ 413.8
Net loss on disposal and impairment of operating assets 4.1 3.9 4.7 6.4
Share-based compensation expense 2.2 2.4 7.0 7.0
Gain on sale of NCM, Inc. common stock (30.9 ) (30.9 )
Loss on extinguishment of debt 30.7
Noncontrolling interest, net of tax and other, net (9.2 ) 10.4   (23.5 ) (0.9 )
Adjusted EBITDA(3) $ 177.3   $ 133.7   $ 469.4   $ 426.3  
 
 
Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow

(dollars in millions)

(unaudited)

Quarter Ended Three Quarters Ended
Sept. 26, 2013 Sept. 27, 2012 Sept. 26, 2013 Sept. 27, 2012
 
Net cash provided by (used in) operating activities $ (1.0 ) $ (7.2 ) $ 255.6 $ 181.7
Capital expenditures (21.5 ) (27.8 ) (70.1 ) (63.1 )
Proceeds from asset sales 2.6   0.1   6.7   1.1  
Free cash flow(3) $ (19.9 ) $ (34.9 ) $ 192.2   $ 119.7  
       

Reconciliation of Net Income Attributable to Controlling Interest to Adjusted Diluted Earnings Per Share

(dollars in millions, except per share data)

(unaudited)

 
Quarter Ended Three Quarters Ended
Sept. 26, 2013     Sept. 27, 2012 Sept. 26, 2013     Sept. 27, 2012
 
Net income attributable to controlling interest $ 75.1 $ 24.0 $ 133.7 $ 107.5

Loss on extinguishment of debt, net of related tax effects

19.4
Gain on sale of available for sale securities, net of related tax effects (1.6 )
Gain on sale of NCM, Inc. common stock, net of related tax effects (18.5 ) (18.5 )

Net loss on disposal and impairment of operating assets, net of related tax effects

2.5   2.4 2.8   3.9

Net income attributable to controlling interest, excluding loss on extinguishment of debt, net of related tax effects, gain on sale of available for sale securities, net of related tax effects, gain on sale of NCM, Inc. common stock, net of related tax effects, and net loss on disposal, impairment of operating assets, net of related tax effects

$ 59.1 $ 26.4 $ 135.8 $ 111.4
 

Weighted average number of diluted shares outstanding(2)

155.8 155.1 155.7 154.9
Adjusted diluted earnings per share(1) $ 0.38 $ 0.17 $ 0.87 $ 0.72
Diluted earnings per share $ 0.48 $ 0.15 $ 0.86 $ 0.69

_______________________________

            (1)   We have included adjusted diluted earnings per share, which is diluted earnings per share excluding loss on extinguishment of debt, net of related tax effects, gain on sale of available for sale securities, net of related tax effects, gain on sale of NCM, Inc. common stock, net of related tax effects, and net loss on disposal and impairment of operating assets, net of related tax effects, because we believe it provides investors with a useful industry comparative and is a financial measure used by management to assess the performance of our Company.
 
(2) Represents reported weighted average number of diluted shares outstanding for purposes of computing diluted earnings per share and adjusted diluted earnings per share for the quarters and three quarters ended September 26, 2013 and September 27, 2012.
 
(3) Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization expense, net loss on disposal and impairment of operating assets, share-based compensation expense, gain on sale of NCM, Inc. common stock, loss on extinguishment of debt and noncontrolling interest, net of tax and other, net) was approximately $177.3 million for the quarter ended September 26, 2013. We believe EBITDA, Adjusted EBITDA and Free Cash Flow provide useful measures of cash flows from operations for our investors because EBITDA, Adjusted EBITDA and Free Cash Flow are industry comparative measures of cash flows generated by our operations and because they are financial measures used by management to assess the liquidity of our Company. EBITDA, Adjusted EBITDA and Free Cash Flow are not measurements of liquidity under U.S. generally accepted accounting principles and should not be considered in isolation or construed as a substitute for other operations data or cash flow data prepared in accordance with U.S. generally accepted accounting principles for purposes of analyzing our liquidity. In addition, not all funds depicted by EBITDA, Adjusted EBITDA and Free Cash Flow are available for management’s discretionary use. For example, a portion of such funds are subject to contractual restrictions and functional requirements to pay debt service, fund necessary capital expenditures and meet other commitments from time to time as described in more detail in the Company’s 2012 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 25, 2013. EBITDA, Adjusted EBITDA and Free Cash Flow, as calculated, may not be comparable to similarly titled measures reported by other companies.

Contact:
Financial Contact:
Kevin Mead
Regal Entertainment Group
Vice President Investor Relations and Planning
Kevin.Mead@regalcinemas.com
865-925-9685
or
Media Contact:
Ken Thewes
Regal Entertainment Group
Senior Vice President and Chief Marketing Officer
865-925-9539

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