B.O. concerns screen exhib gains

Cinemark latest to see little Street cred despite solid Q2

Exhibition industry investors continued to send mixed signals of sorts Monday, this time after the latest earnings report from Cinemark Holdings Inc., which was good enough to encourage the company to pay its first dividend.

However, analysts have been slightly disappointed in boxoffice results in the second quarter, which failed to meet robust expectations, and Cinemark shares closed unchanged at $16.98.

Cinemark reported a profit of $47.9 million in the second quarter, up from $13.1 million a year ago, on revenue that surged 49.1% to $440 million.

The large increases were driven primarily by the October acquisition of Century Theatres, boosting Cinemark's footprint to 4,568 screens in 402 theaters in 38 states and a dozen countries.

Cinemark said that it has initiated a quarterly dividend of 18 cents per share — prorated down to 13 cents this time around — payable to shareholders of record as of Sept. 13. The dividend reflects Cinemark's "strong performance and outlook," CEO Alan Stock said.

Late last month, Regal Entertainment Group also reported solid quarterly results that underwhelmed investors, causing shares to slide for several days. On Monday, they rose 3% to $21.12.

Although second-quarter boxoffice trends fell below many hopes, the current quarter might exceed expectations based on brisk ticket sales for "The Simpsons Movie," "Transformers," "Harry Potter and the Order of the Phoenix," "Rush Hour 3," "The Bourne Ultimatum" and "Ratatouille," ob-servers believe.

Despite the missed projections, "the overall domestic boxoffice remains strong, with revenue up more than 5% year-to-date and still on track for a record-breaking year," Lehman Brothers analyst Eric Handler said in a recent report.

Cinemark said it intends to regularly pay a quarterly dividend, as is the case with Regal.

"While future payments will be subject to board approval," Stock said, "we are committed to returning value to shareholders as we continue to drive cash flow and deliver attractive returns over the long term."

Cinemark said Monday that admissions revenue in the second quarter was up 55% and concession revenue was up 51%. Attendance rose 24% and the average ticket price 22%, with all metrics being favorably impacted by the Century acquisition.

"The outlook for Cinemark is positive, with a good slate of movies for the remainder of the year and a robust new theater development pipeline," Stock said, adding that the company has opened its first fully digital theater.
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