Holidays, upped screen count power bottom
NEW YORK – Strong box office performance over the holidays and an expanded screen count helped Regal Cinemas Inc. boost net profit 59%, to $11.4 million, in the fourth quarter, it said Friday, on 28% higher revenue of $130.5 million.
Regal, which last month agreed to be acquired by leveraged buyout firms Kohlberg Kravis Roberts and Hicks, Muse, Tate & Furst for $31 a share or $1.5 billion, said full-year earnings rose 53%, to $41.3 million, on 23% higher revenues of $479 million.
Regal execs revealed in a conference call with Wall Street analysts Friday that three shareholder lawsuits had been filed against the company because of the board’s decision to accept KKR/Hicks Muse’s offer. As a result, the Regal execs refused to answer questions from analysts and execs also did not return calls from Daily Variety.
Not discounting December
Like most other exhibs, Regal said the final weeks of December had a big impact on the quarter’s results.
“Although November’s box office was a little soft, December’s results with films such as ‘Titanic’ and ‘Tomorrow Never Dies’ led to a solid aggregate performance for the quarter,” Regal CEO Michael Campbell said.
Campbell added that the 21% increase in the number of screens in operation, to 2,306 by the end of December, “helped increase revenues.”
Regal did not disclose revenue growth adjusted for the new screen openings, but Lehman Bros. analyst Larry Petrella estimated that, based on the company’s estimate of total admissions, admissions per screen rose just under 1%.
Cobb in the count
Campbell noted that Regal also was increasing the margins at the Cobb Theaters it acquired last year. “This trend continued in the fourth quarter,” he said.
Petrella said the result was in line with analyst expectations. Regal stock fell 12¢ Friday to close at $29.25.
Business so far in the first quarter has, most exhibs say, been extremely strong given the record-breaking performance of “Titanic,” although last year’s first quarter was given an unusual lift by the re-release of the “Star Wars” trilogy. Campbell said Regal was “well positioned for this quarter.”
Once KKR and Hicks Muse finalize their acquisition of Regal, it will be merged into the exhibition companies now owned by the two LBO firms – Act III Theaters and United Artists Theater Circuit. That will result in the nation’s biggest exhib, with more than 5,400 screens.