Carmike Cinemas profit falls to $1.2 million in second quarter despite higher ticket and concession revenue

tadams@ledger-enquirer.comAugust 1, 2012 

Despite moviegoers paying more on average for tickets and concession sales — which boosted operating revenue — Carmike Cinemas’ net income sank to $1.2 million in the second quarter, the company said today.

The movie theater chain, headquartered in downtown Columbus, posted net income of nearly $5.9 million in the same April-June period a year ago.

“Although the U.S. box office in the second quarter was modestly lower on a year-over-year basis, the industry faced a very challenging comparison as Q2 in 2011 was one of the two all-time best quarters on record, with last year’s 3rd quarter being the other,” Carmike President and Chief Executive Officer David Passman said in conference call with research analysts who follow his company.

Also cutting into the second-quarter financial results was a loss of nearly $5 million from the firm’s move to extinguish portions of its debt. Carmike has been working to pay down what it owes for several years.

The second-quarter financial results boiled down to earnings per share of 7 cents, which was far below the 30 cents per share average anticipated by the nine Wall Street analysts surveyed by financial research firm Thomson Financial. A year ago, earnings per share came in at 46 cents.

Still, Passman said he was “very pleased” with the “solid” performance of Carmike, particularly because of the rising sales from admission tickets per person, with concession and “other” revenue showing the same trend. Concessions are soft drinks, popcorn and candy, while the “other” category primarily includes fees charged for 3-D viewing glasses and $2-per-ticket upcharges for watching a movie in one of its premium “BigD” auditoriums.

Carmike Chief Financial Officer Richard Hare pointed out the company pushed the average combined ticket and concession take in the quarter to $10.83 per patron, up 6.9 percent from the $10.13 per person it took in during the second quarter last year. The average admissions take from each moviegoer rose from $6.52 a year ago to $6.91 this quarter. Average concessions and other revenue per person was up from $3.61 to $3.92.

Passman began today’s conference call by expressing “deep sadness and sympathy” for the victims and families impacted by the mass shooting at a non-Carmike movie theater less than two weeks ago. Twelve people were killed by a lone gunman, with dozens more wounded.

The shooting occurred July 20 during a midnight premiere showing of the blockbuster Batman movie, "The Dark Knight Rises,” which has since racked up $300 million in ticket sales across the country.

There is nothing to indicate that the Batman film has suffered at the box office from the shooting’s emotional fallout, Passman said on the conference call.

He pointed out the second quarter’s numbers were led by the Disney and Marvel collaboration of “The Avengers,” which has generated more than $600 million in U.S. ticket sales. Other strong films were “Madagascar 3,” “Men in Black 3” and “Snow White and the Huntsman,” as well as a solid carryover from the first quarter by “The Hunger Games.”

Said Passman of upcoming movies: “Some of the other titles we and our valued patrons eagerly are awaiting include 'Twilight: Breaking Dawn 2' in November, 'Bourne Legacy,' 'Expendables 2,' 'Taken 2,' the newest James Bond feature, 'Skyfall,' and 'Paranormal Activity 4.'

The ticket and concession revenue increases came even though total circuit-wide attendance for the motion-picture exhibitor slipped from about 13 million in the second quarter last year to just under 12.6 million this quarter.

The company reported slightly higher film-exhibition costs, concession costs, general and administrative expenses and other operating costs.

It all added up to operating revenue of nearly $136.3 million in the three-month period, which was nearly $5 million more than the quarter last year.

For the full six months, Carmike reported a profit of $4.4 million on operating revenue of nearly $267 million. That compares to a loss of $12.5 million on operating revenue of $227.2 million through the first half of 2011.

The CEO noted the company raised $56 million through the sale of 4.6 million shares of common stock in April. It also issued $210 million in senior secured notes, money that was used to retire a bank term loan.

Carmike, which has been pumping money into repairs and maintenance of its existing theaters over the last few years, is now positioning itself to open new movie houses and retrofit others over the next couple of years.

“In recent months, we have highlighted Carmike’s ongoing transition from a ‘fix it’ to a ‘grow it’ strategy,” Passman said. “Our current target for Carmike’s circuit is 300 theaters and 3,000 screens, up from approximately 240 locations (and 2,245 screens) today.”

The company has theaters in 35 states, with all of its first-run locations already outfitted for digital viewing. It has about 750 screens equipped for 3-D viewing, which is one of its cash-generating sources with more of those films being released.

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