Regal Entertainment Sees Improved Concession Stand Results
Overall revenues dipped but profits were up.
Regal Entertainment CEO Amy Miles provided an optimistic forecast in a call with analysts Thursday pointing to better than expected box office results in the first quarter of 2015 and improved results thanks to theater enhancements and improved concession stand results.
Miles said 2015 was expected to produce improved results and so far “those results have lived up to the hype.”
Thanks to enhanced menus and the addition of alcoholic beverages in a growing number of theaters, the largest theater circuit in the U.S. averaged $3.92 cents in concession sales per customer, which was a new company record. That is an improvement of 9 cents per customer in the first quarter.
The comparable per capita concession spend in 2014 was $3.64. That is an increase of about 7.5 percent.
Total revenues for the first quarter ended March 31 were actually down to $691.3 million from $726.9 million in the same quarter last year.
Net income, however, was up, rising to $23.1 million compared to a loss of one cent in the first quarter of 2014.
The adjusted diluted earnings per share were 15 cents compared to 20 cents in the first quarter of 2014. EPITDA (cash flow) was $128.1 million compared to $144.2 million a year earlier.
The results were somewhat impacted by a change in the fiscal year. For instance in 2014 the first quarter included results from the days between Christmas and New Year, typically a busy period for theaters, but this year those days were not included.
“A better than expected box office environment,” said Miles, “and our focus on delivering a great customer experience helped us achieve solid first quarter results, highlighted by a record concession per cap and one of the highest first quarter revenue totals in our history.”
She also predicted a big summer ahead: “With a great first quarter box office already in the books and a much-anticipated film slate set for the upcoming summer and holiday seasons, we remain optimistic regarding the potential for box office success throughout 2015.”
Total ticket sales revenue was down because there were fewer 3-D release in the first quarter. A 3-D movie ticket sells at a premium. However, Regal did see an increase of $2.4 million in revenue from greater advance and gift ticket sales.
The results were also impacted because a few movies did very well – especially American Sniper and 50 Shares of Gray – while many others did not perform as hoped.
A lot of the push for future growth and increased movie-going is tied to improving the experience for patrons at the theater.
Regal is quickly converting many of its 570 theaters in 42 states and a number of U.S. territories to luxury reclining seats that enhance the movie going experience and encourage repeat business.
So far in 2015 Regal has converted 63 locations and has 92 others under construction. By the end of 2015 they expect to have a quarter of all their theaters offering the luxury seating experience.
Miles said they are actively looking for more theaters to acquire to fuel continued growth and are not concerned about increased scrutiny by the U.S. Department of Justice into a reported investigation of movie clearance practices.
Movie clearances are the policy of studios and theaters to only book a movie into one location in each neighborhood. Miles said that they believe the practice will continue because it benefits studios by being able to auction off rights in each area, theaters by having an exclusive in an area and consumers who get a greater variety of movies to choose from in the market.