It wasn’t just 20th Century Fox that profited on “There’s Something About Mary.” Carmike Cinemas said Wednesday its third quarter profits rose 6.5% to $8.7 million in the third quarter partly because of the sleeper hit.
In response, Wall Street sent Carmike stock soaring 9% to close at $21.31. Analysts said the result was better than expected, and the first increase for the No. 3 exhib in five quarters.
For the past year, Carmike has been hammered by increased competition from megaplexes in its largely small-town markets, as well as by pics that did not play as well as in major urban centers. This quarter, both factors turned around for the exhib, as its new theater program began to feed into higher earnings and the range of pics played well to its audiences, said Carmike controller Philip Smitley.
Carmike’s revenues rose 4.6% to $134.7 million in the quarter, reflecting the strength of the box office through the summer. But Carmike’s profit margins improved, with film rental costs dropping from 53.6% of admission revenues to 51%.
“There’s Something About Mary,” “Armageddon” and “Rush Hour” “all played extremely well in our markets. They had good legs, which always helps,” Smitley said, as exhibs tend to take more of the box office the longer a pic runs.
Carmike’s program to build new plexes with state-of-the-art features like stadium seating, and its retrofit program on existing theaters, is also having an impact. Carmike CEO Michael Patrick said in a statement he was “encouraged with the performance of our new locations (which) … helped in providing us an increase in earnings before interest, taxes, depreciation and amortization of 10.5%” in the quarter.
“The bottom line is it was a good quarter, but it was very much product related” rather than a sign that Carmike’s competitive situation was improving, said SG Cowen analyst Paul Marsh.
Carmike continues to forge ahead with the renovation of its circuit, planning to open 82 new screens in the fourth quarter, while closing about 70 older ones.
Next year, it will open more than 350 new screens, almost half of which will be in new markets, although Smitley said the exhib would maintain its focus on small towns and rural markets.