Top exhibitor Regal Entertainment Group reported higher quarterly earnings, driven by strong showings for “Shrek 2” and the latest “Harry Potter” installment, capping a strong second quarter for U.S. theater chains.
Company, owner of 17% of all movie screens in the U.S., reported a profit of $7.8 million, including a one-time payment to extinguish debt.
Without the debt payment, earnings were up 22% to $53 million in the quarter ended July 1 from $47 million a year earlier. Revenue was up 4% to $673 million from $648 million one year ago.
Already nearly twice the size of its closest competitor, the company will continue to pursue increased cash flow through expansion, Regal topper Mike Campbell said. “We do believe there are more opportunities for regional acquisitions,” he said. “They are easy to accomplish, and we are able to wring out a lot of synergies and eliminate a lot of overhead.”
Campbell said the Justice Dept. had asked the company for additional information related to its acquisition of Signature Theaters, announced in April. Campbell characterized the request as routine and predicted the acquisition of the 37-theater circuit would be completed in September.
“We don’t see theater concentration or consolidation to be a major factor here,” Campbell said, adding he thought the inquiry is an attempt by the DOJ to “understand our business better.”
Regal’s per-screen attendance grew 3.5% in the quarter, slightly below the national per-screen growth of 5% measured by EDI. Regal said those results are typical of the markets in which it operates. Revenue from admissions was up 2%, concession sales rose 4% and other revenue, which included strong growth in its new theater advertising and events unit Regal Cinemedia, was up 23%.
Outlook for the second half is up slightly, based on the performance of “The Bourne Supremacy,” “Spider-Man 2” and “I, Robot” and a slate of new releases including “The Manchurian Candidate,” M. Night Shyamalan’s “The Village” and Tom Cruise vehicle “Collateral.” Company expects a 1%-2% increase in box office for 2004.
Regal declared a previously announced 20¢ quarterly dividend on top of a one-time $5 per-share dividend.
Regal’s results follow those of AMC Entertainment, the No. 2 theater chain, which booked a record $489 million in sales for the quarter just ended — a 4% increase from the same quarter last year.