Regal Entertainment Q1 earnings soar


Regal Entertainment Group, the No. 1 U.S. movie theater chain, reported a large spike in quarterly net profit on Thursday due to stronger film offerings and a gain from the initial public offering of part of its stake in National CineMedia Inc..

The results beat Wall Street estimates, but Regal executives stood by a previously issued full-year earnings forecast. They said, however, that a blockbuster-filled summer film slate could push results beyond Wall Street expectations.

Shares of Regal were up 77 cents or 3.7 percent at $21.75 in morning trade on the New York Stock Exchange.

Regal reported net income of $229.1 million, or $1.46 a share, for its first quarter, compared with net income of $11.2 million, or 7 cents a share, in the year-ago quarter.

Net income for the quarter included a gain of $209.0 million related to the IPO transaction, the company said in a statement.

Regal realized the large after-tax gain from a payment and sales of shares of National CineMedia, an in-theater advertising company that it formed with two other cinema chains.

Excluding the gain, the company earned 13 cents a share, which was above analysts' estimate of 9 cents a share for the quarter.

The company reported total revenue of $625 million for the quarter, up from about $585 million in the year-ago quarter.

Analysts were expecting revenue of $594.5 million, according to Reuters Estimates.

Revenue from admissions rose 8.9 percent, driven by a 7.7 percent rise in ticket prices and a 1.1 percent increase in attendance. Concessions rose 4.7 percent per capita, for a total concession revenue increase of 6.1 percent.

The sharp rise in ticket prices stemmed from a corresponding increase in the number of R- and PG-13-rated films, which command adult ticket prices, and from the popularity of the IMAX version of the ancient Greek battle film "300," Miles said.

The company left unchanged its February forecast for $520 million to $535 million in adjusted earnings before interest, taxes, depreciation and amortization.

But Chief Financial Officer Amy Miles told analysts that the upcoming film lineup could bring stronger growth than the 2 percent rise in attendance that Wall Street expects for the chain.

Industry box office has decreased 2 percent so far in the current quarter versus last year, but Regal Chairman and Chief Executive Michael Campbell said he expects a May and June film schedule anchored by the sequels to the hugely profitable franchises "Spider-Man," "Shrek" and "Pirates of the Caribbean" to drive a turnaround in those numbers.

"We are now looking forward to a blockbuster-filled summer film slate," Campbell said.

Campbell said the company was on track to begin installing digital projection equipment in new theaters by the end of this year and would convert existing theaters in early 2008.

Regal expects to end the fiscal year with 6,373 screens, down from last year's ending total of 6,403, and to make $115 million to $130 million in capital expenditures in 2007.

The company's board of directors also declared the regular quarterly dividend of 30 cents per share, payable June 21 to holders of record on June 13.