Delaware | 000-14993 | 58-1469127 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) | ||
1301 First Avenue, Columbus, Georgia | 31901 | |||
(Address of Principal Executive Offices) | (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
þ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) | Exhibits. |
99.1 | Press Release, dated May 2, 2016. | |
99.2 | Carmike Cinemas First Quarter Fiscal 2016 Management Commentary. |
CARMIKE CINEMAS, INC. | ||||||
Date: May 2, 2016 | By: | |||||
Richard B. Hare | ||||||
Senior Vice President-Finance, Treasurer and Financial Officer |
Exhibit No. | Description of Exhibit | ||
99.1 | Press Release, dated May 2, 2016. | ||
99.2 | Carmike Cinemas First Quarter Fiscal 2016 Management Commentary. |
Three Months Ended March 31 | ||||||||
(in millions) | 2016 | 2015 | ||||||
Total operating revenues | $ | 206.2 | $ | 184.3 | ||||
Operating income | 15.6 | 12.0 | ||||||
Interest expense | 12.4 | 12.7 | ||||||
Theatre level cash flow (1) | 43.1 | 35.5 | ||||||
Net income | 2.2 | 0.4 | ||||||
Adjusted net income (1) | 5.4 | 3.1 | ||||||
Adjusted EBITDA (1) | 36.2 | 29.8 | ||||||
(in millions) | Mar. 31, 2016 | Dec. 31, 2015 | ||||||
Total debt(1) | $ | 463.3 | $ | 454.7 | ||||
Net debt(1) | $ | 367.6 | $ | 352.2 |
(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 income and adjusted net income to net income for the three months ended March 31, 2016 and 2015, as well as a schedule of total debt and net debt as of March 31, 2016 and December 31, 2015, are included in the supplementary tables accompanying this news announcement. |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Average theatres | 276 | 273 | |||||
Average screens | 2,947 | 2,893 | |||||
Average attendance per screen | 5,338 | 5,343 | |||||
Average admissions per patron | $ | 7.80 | $ | 7.20 | |||
Average concessions/other sales per patron | $ | 5.31 | $ | 4.72 | |||
Total attendance (in thousands) | 15,731 | 15,457 | |||||
Total operating revenues (in thousands) | $ | 206,188 | $ | 184,334 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Revenues: | (Unaudited) | (Unaudited) | |||||
Admissions | $ | 122,703 | $ | 111,356 | |||
Concessions and other | 83,485 | 72,978 | |||||
Total operating revenues | 206,188 | 184,334 | |||||
Operating costs and expenses: | |||||||
Film exhibition costs | 68,344 | 61,683 | |||||
Concession costs | 9,580 | 8,022 | |||||
Salaries and benefits | 24,760 | 23,713 | |||||
Theatre occupancy costs | 25,878 | 23,434 | |||||
Other theatre operating costs | 34,541 | 32,029 | |||||
General and administrative expenses | 12,322 | 10,027 | |||||
Depreciation and amortization | 15,157 | 13,087 | |||||
Gain on sale of property and equipment | (282) | (1,031) | |||||
Impairment of long-lived assets | 280 | 1,390 | |||||
Total operating costs and expenses | 190,580 | 172,354 | |||||
Operating income | 15,608 | 11,980 | |||||
Interest expense | 12,386 | 12,669 | |||||
Income (loss) before income tax and income from unconsolidated affiliates | 3,222 | (689) | |||||
Income tax expense | 1,411 | 268 | |||||
Income from unconsolidated affiliates | 414 | 1,348 | |||||
Net income | $ | 2,225 | $ | 391 | |||
Weighted average shares outstanding: | |||||||
Basic | 24,552 | 24,483 | |||||
Diluted | 24,985 | 24,949 | |||||
Net income per common share (Basic and Diluted) | $ | 0.09 | $ | 0.02 |
Three Months Ended March 31, | ||||||||||
2016 | 2015 | |||||||||
(Unaudited) | (Unaudited) | |||||||||
Net income | $ | 2,225 | $ | 391 | ||||||
Income tax expense | 1,411 | 268 | ||||||||
Interest expense | 12,386 | 12,669 | ||||||||
Depreciation and amortization | 15,157 | 13,087 | ||||||||
EBITDA | $ | 31,179 | $ | 26,415 | ||||||
Income from unconsolidated affiliates | (414) | (1,348) | ||||||||
Gain on sale of property and equipment | (282) | (1,031) | ||||||||
Impairment of long-lived assets | 280 | 1,390 | ||||||||
Merger and acquisition-related expenses | 3,752 | 1,654 | ||||||||
Share-based compensation expense | 1,723 | 2,681 | ||||||||
Adjusted EBITDA | $ | 36,238 | $ | 29,761 | ||||||
General and administrative expenses | 6,847 | 5,692 | ||||||||
Theatre level cash flow | $ | 43,085 | $ | 35,453 | ||||||
Mar. 31, | Dec. 31, | ||||||
2016 | 2015 | ||||||
Current maturities of capital leases and long-term financing obligations | $ | 10,455 | $ | 9,978 | |||
Long-term debt | 223,626 | 223,406 | |||||
Capital leases and long-term financing obligations, less current maturities | 229,263 | 221,315 | |||||
Total debt | $ | 463,344 | $ | 454,699 | |||
Less cash and cash equivalents | (95,723) | (102,511) | |||||
Net debt | $ | 367,621 | $ | 352,188 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Net income | $ | 2,225 | $ | 391 | |||
Impairment of long-lived assets | 280 | 1,390 | |||||
Gain on sale of property and equipment | (282) | (1,031) | |||||
Merger and acquisition-related expenses | 3,752 | 1,654 | |||||
Share-based compensation expense | 1,723 | 2,681 | |||||
Tax effect of adjustments to net income | (2,299) | (1,971) | |||||
Adjusted net income | $ | 5,399 | $ | 3,114 | |||
Weighted average shares outstanding (basic) | 24,552 | 24,483 | |||||
Weighted average shares outstanding (diluted) | 24,985 | 24,949 | |||||
Adjusted net income per share (basic) | $ | 0.22 | $ | 0.13 | |||
Adjusted net income per share (diluted) | $ | 0.22 | $ | 0.12 |
(1) | Adjustments to net income for the three months ended March 31, 2016 and 2015 are shown net of tax effect of 42.0%, respectively, which represents the estimated combined federal and state tax rates for each period. |
Operating Results | Management Comments | ||||
$ in millions | Q1 2016 | Q1 2015 | $ Variance | % Change | |
Operating Revenues | |||||
Admissions Revenue | $122.7 | $111.4 | $11.3 | 10.2% | • Industry box office was up 12.5% compared to Q1 2015 due to strong Q4 2015 carryover (Star Wars: The Force Awakens and The Revenant) and strong Q1 2016 slate (Deadpool, Zootopia, and Batman v Superman: Dawn of Justice). • Admissions revenue per screen grew 8.2%. • Difficult year-over-year comparison given Carmike’s Q1 2015 admissions revenue/screen over index of 180 bps. • Acquisition of Sundance Cinemas in Q4 2015 contributed to positive admissions revenues. • Recognized $0.5 million in gift card breakage in Q1 2016. • Increase in year-over-year per patron spend from $7.20 to $7.80. • Tax-on-top pricing strategy implemented in Q4 2015 continues to yield positive results in average admissions per patron spend. |
Concessions and Other Revenue | $83.5 | $73.0 | $10.5 | 14.4% | • Successful Q1 2016 box office fueled increased concessions and other revenues. • Acquisition of Sundance Cinemas in Q4 2015 contributed to positive concessions and other revenues. • Recognized $0.7 million of settlement funds related to the 2010 BP oil spill. • Recognized $0.3 million in gift card breakage in Q1 2016. • Increase in per patron spend from $4.72 to $5.31. • Tax on top pricing strategy implemented in Q4 2015 continues to yield positive results. • Expanded hot food and alcohol programs continue to generate incremental per patron spend of approximately $0.15 at each location. • Q1 2016 marks the third quarter in which all three Ovation dining theatres have been in operation. |
Operating Expenses | |||||
Film Exhibition Costs | $68.3 | $61.7 | $6.6 | 10.8% | • Film exhibition costs as % of revenue increased from 55.4% to 55.7%. • Film exhibition costs % increased due to a higher concentration of top grossing films in Q1 2016 (including carryover of successful films from Q4 2015) vs. Q1 2015. |
Concession Costs | $9.6 | $8.0 | $1.6 | 19.4% | • Concession costs as % of concessions and other revenues increased from 11.0% to 11.5%. • Concession cost as % of concessions and other revenue increased due to rollout of in-theatre dining locations (including the addition of the Sundance locations) during 2015 as well as expansion of locations serving hot food and alcohol. |
Salaries & Wages Expense | $24.8 | $23.7 | $1.1 | 4.4% | • Salaries and benefits as a % of total operating revenues decreased from 12.9% to 12.0%. |
Theatre Occupancy Costs | $25.9 | $23.4 | $2.5 | 10.4% | • Increase in theatre occupancy costs related to 6 theatres and 75 screens (not including acquired screens) opened since Q1 2015, partially offset by impact of closures. • Increase of $0.9 million due to acquired Sundance theatres. |
Other Theatre Operating Expenses | $34.5 | $32.0 | $2.5 | 7.8% | • Other theatre operating costs as a % of total operating revenues decreased from 17.4% in Q1 2015 to 16.8% in Q1 2016. • Increase of $1.0 million due to acquired Sundance theatres. |
Other Income/Expenses | |||||
General and Administrative | $12.3 | $10.0 | $2.3 | 22.9% | • Increase in professional fees primarily associated with the pending AMC merger. |
Depreciation and Amortization Expense | $15.2 | $13.1 | $2.1 | 15.8% | • Increase resulting from higher fixed asset base resulting from recent acquisitions. |
Interest Expense | $12.4 | $12.7 | ($0.30) | (2.20)% | • Reduction in interest expense primarily due to a decrease in the weighted-average interest rate of its 6.00% Senior Notes compared to its previous Senior Notes |
Income Tax Expense | $1.4 | $0.3 | $1.1 | 366.7% | • Increase resulting from higher pre-tax income resulting from successful Q1 2016 box office. |
Income from Unconsolidated Affiliates | $0.4 | $1.3 | ($0.90) | (69.20)% | • Amount is largely attributable to our investment in Screenvision. |
Net Income/EPS | |||||
Net Income | $2.2 | $0.4 | $1.8 | 450.0% | |
EPS (Basic and Diluted) | $0.09 | $0.02 | $0.07 | 350.0% |
Operating Results | Management Comments | ||||
$ in millions | Q1 2016 | Q1 2015 | $ Variance | % Change | |
Non-GAAP Performance Measures | |||||
Adjusted EBITDA | $36.2 | $29.8 | $6.5 | 21.8% | • Top-line revenue growth in Q1 2016 primarily due to strong Industry box office and recent acquisition growth coupled with disciplined management of operating expenses. |
Net Debt | $367.6 | $352.2 | $15.4 | 4.4% | • Increase in principal balance of Senior Notes following refinancing in June 2015. • Addition of $14 million of capital leases and financing obligations in Q1 2016 following amendment of a master lease agreement. |
Adjusted Net Income | $5.4 | $3.1 | $2.3 | 74.2% | • Factors noted above combined with non-cash and other non-recurring charges including expenses incurred with the pending AMC merger and non-cash share-based compensation expense. |
Adjusted EPS (diluted) | $0.22 | $0.12 | $0.10 | 83.3% | • Factors noted above. |
• | Adjusted EBITDA and Theatre Level Cash Flow margins continued to show strong improvement, behind strong top-line growth and management of variable costs. Adjusted EBITDA margin increased from 16.1% in Q1 2015 to 17.6% in Q1 2016. |
• | The integration of 5 theatres and 37 screens from Sundance Cinemas continues to yield positive top and bottom-line growth. These screens are expected to generate annual revenues and Adjusted EBITDA of approximately $24 million and $5.6 million, respectively. |
• | In January 2016, prior to the announcement of our planned merger with AMC, we acquired two theatres and 22 screens from a subsidiary of AMC Entertainment Holdings, Inc. Since late 2011, we have added 65 theatres and over 800 screens to our circuit. Our acquisition plans are currently on hold given the planned merger with AMC. |
• | Our tax-on-top pricing strategy, implemented in Q4 2015, continues to generate growth in per patron spend in admissions and concessions. |
• | Concessions and other revenue per patron increased 12.5% from $4.72 in Q1 2015 to $5.31 in Q1 2016. This marks the 25th consecutive quarter of year-over-year increases in this important growth metric. |
• | At the end of Q1 2016, 58 locations are serving alcohol while 52 locations are serving hot foods. This is up from 30 and 32 locations serving alcohol and hot foods, respectively, at the end of Q1 2015. |
• | We opened a 12 screen theatre in Tulsa, OK in January 2016 and plan to open 4 additional theatres and 38 screens by the end of 2016, all of which will include in-theatre dining. |
• | Our circuit currently includes 55 premium format auditoriums, including 32 of our proprietary Big D auditoriums, 21 IMAX auditoriums and 2 MuviXL auditoriums. |
• | Other theatre operating costs as a percentage of total operating revenues decreased from 43.0% in Q1 2015 to 41.3% in Q1 2016. |
• | Capital expenditures for Q1 2016 were $5.4 million. The Company anticipates total capital expenditures for fiscal year 2016 to be approximately $55 million to $60 million, primarily associated with theatre renovations, new build-to-suit theatres and maintenance. |
• | In January 2016, we repurchased 116,487 shares of our common stock for $2.6 million. In total, we have repurchased approximately 305,000 shares of common stock since the inception of the stock repurchase plan on December 10, 2015. We have suspended the repurchase program due to our pending merger with AMC. |
• | In Q1 2016, we amended an existing master lease agreement which resulted in the addition of approximately $14 million in capital leases and financing obligations to our balance sheet. On a go-forward basis, approximately $1.3 million in annual rent expense will be recorded as interest expense as a result of this amendment. |
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