Carmike Cinema stock plunged 6% Thursday after the No. 2 exhib warned that “the disappointing opening of ‘Godzilla’ ” meant its second-quarter earnings would be “significantly lower” than expectations.
Carmike, which operates 2,700 screens in rural markets and small towns, has a grim outlook for the lizard pic, which grossed a lower-than-expected $55.7 million last weekend. Carmike execs told a Wall Street analyst conference call that it expected the lizard pic’s box office to slide 60%-65% this weekend and to finish up with a domestic gross of about $130 million, according to analysts on the call.
Carmike execs also told analysts that on Tuesday and Wednesday “Godzilla” did about 38% of the business across its circuit as “The Lost World” did at the same period after its opening weekend last May. Carmike controller Philip Smitley confirmed these numbers late Thursday.
The warning fueled jitters about the overall exhib sector’s outlook for the quarter, particularly as Carmike execs said they believed “Godzilla” was performing on the same level in small and big markets.
Carmike dropped $1.56 to close at $25.75 Thursday. Stocks of two other major exhibs, AMC Entertainment and Loews Cineplex, have fallen sharply in recent days, although AMC stock bounced back slightly Thursday. AMC CEO Peter Brown declined comment Thursday, while Loews CEO Larry Ruisi did not return calls.
Carmike did not say how much it expects to earn in the second quarter, saying only that its earnings would be “significantly lower than analysts’ previous estimates,” which ranged from $5 million to $7 million compared with the profit of $5.9 million earned by Carmike in the second quarter of last year. In response to the warning, Wall Street analysts slashed their predictions for the quarterly profit to as low as $2.2 million.
Carmike execs said “Godzilla’s” weak performance would cost the exhib $10 million in revenue in the second quarter, roughly 10% of the exhib’s revenue in last year’s second quarter.
But “Godzilla” was not the only factor behind Carmike’s poor quarter. The exhib said the “poor performance” of film releases in April also hurt the quarter, and execs told analysts that attendance fell 12.3% in April.
Oppenheimer & Co. analyst Alan Gould said the warning was being made very early in the quarter, which ends June 30.
“June is basically the most important month, so that means April and May must have been very disappointing,” Gould said.
Carmike noted that film product through June “looks favorable (but) … it is unlikely that the upcoming pictures will surpass expectations sufficiently to overcome the current shortfall.”
Smitley said it is too early to estimate how low the profit would fall because “June is still way up in the air. There are a couple of pictures there that could blow the doors off and swing things in the opposite direction.”
“The biggest wild card is ‘The Truman Show,’ ” Smitley added.
Gould said he cut his estimate from 57¢ a share (about $6.5 million) to 20¢ a share ($2.2 million), based on his assumption about the June box office.
Lehman Bros. analyst Alison Sachs said the final quarterly profit was very uncertain because of the potential for the June box office performance to recover. She said she had revised her second-quarter estimate to 40¢ a share, about $4.5 million.