Exhibition chain Regal Entertainment Group reported Thursday that fourth-quarter earnings nearly doubled to $46.3 million, or 30 cents a share, on an 8% gain in revenues to $799.1 million.
In addition, CEO Amy Miles has issued an upbeat forecast for 2015, saying the exhibitor is “encouraged” by the results so far this year. Box office has been up by 10%, thanks to surprisingly strong performances by “American Sniper” and “SpongeBob SquarePants: Sponge Out of Water.”
The earnings report, released after the market closed Thursday, were slightly above the consensus forecast of 30 cents a share. Revenues were in line with forecasts.
Adjusted EBITDA jumped 23% to $163.5 million for the fourth quarter.
Regal said the results were positively impacted by the fact that the quarter consisted of 14 weeks — one more week than the 2013 quarter — as it converted from a retail calendar to a traditional one.
“In 2014 we demonstrated our ability to deliver value to our shareholders despite a challenging box office environment as our strategic and operational execution helped generate total shareholder return of over 20% for the third consecutive year,” said Miles. “Looking ahead, we are encouraged by the industry box office results for the last several weeks and optimistic about the potential for box office success throughout 2015.”
Regal, which has 534 theaters with 7,367 screens, put itself up for sale in October but announced last month that it was unable to make a deal. Miles addressed the failed sale effort in a conference call with analysts Thursday, saying management has returned to “business as usual” with a focus enhancing shareholder value, converting seats to luxury style and enhancing menu offerings at its locations.
Miles noted that Regal plans to convert about 25% of its locations to the luxury seating. She also said that the majority of 2015’s capital spending budget of $80 million would be allocated to conversions — which cost between $200,000 and $225,000 per screen, with landlords picking up 25% to 30% of the cost.
Standard and Poor analyst Tuna Amobi told Variety that Regal’s returns from the conversions have been “more than acceptable.”