Banking on strong summer films such as “The Last Airbender” and “Despicable Me,” Carmike Cinemas on today reported a third-quarter profit of $530,000, or 4 cents per share.
The performance by the Columbus-based movie-theater company fell just below the expectations of nearly a dozen Wall Street analysts surveyed by Thompson Financial. They anticipated an average profit of 6 cents per share.
But the quarterly results were far better than a year ago, when Carmike sank to a loss of $20.6 million, or $1.63 per share. Rising operating costs and a non-cash impairment, or writeoff, of more than $17 million hurt the financial picture then. The impairment was taken by the firm primarily because of competition entering some of its markets.
David Passman, Carmike’s president and chief executive officer, said Monday improving cash flow and the elimination of lagging theaters contributed to the firm’s profit in the July-September period.
“We averaged 40 less screens in the quarter compared to last year and believe our strategy of closing underperforming locations and focusing on the patron movie-going experience is working,” he said.
The CEO noted that high-grossing movies such as “Inception” and “Salt,” which did well nationally in large urban markets, did not necessarily pay off in the small to midsize communities in which Carmike operates. And while the slate of normal two-dimensional films also was a disappointment, he said, 3-D offerings are showing plenty of potential.
“During the third quarter, approximately 23 percent of our box office revenues came from 3-D presentations, and with 10 titles in the fourth quarter and more than 30 anticipated next year, we are working to meet the increasing demand,” Passman said.
Carmike operates 240 theaters, with 2,241 screens, in 36 states, with all but 130 of the screens digital. After adding 40 more 3-D screens in the third quarter, the company now has nearly 600 equipped with the eye-popping technology.
The third-quarter profit came on total revenue of $124.8 million, the company said, which compares to $122.3 million in the same period a year ago. The chain’s total attendance slipped from 12.7 million to 12.5 million.
Filtering the financial information down to the individual movie fan, Carmike said patrons spent an average of $9.97 each to view a movie in one of its theaters in the third quarter. That was up 3.5 percent from a year ago, when the take from each customer was $9.63.
In the current quarter, moviegoers paid an average of $6.61 for an admission ticket and $3.36 for concessions — popcorn, candy and soft drinks — and “other” sales. For instance, in Columbus the company also makes money by charging people $3 for special glasses to watch 3-D movies.
On the expense side, Richard Hare, Carmike’s chief financial officer, said lower fees for renting movies and a drop in advertising costs helped the company. Theater operating costs also were slightly higher because of occupancy and utility expenses, he said.
Carmike also continues to chip away at its debt, with Hare saying the firm paid off an extra $5 million in the quarter. It has knocked $25 million off its debt load with prepayments so far this year, Hare said, with the total amount now owed at $238 million.
Passman pointed out the company’s recent partnership with Screenvision, a movie-theater advertising firm. The deal promises to pay off handsomely and soon, he said.
“In addition to our regular periodic screen advertising payments, we will receive a $30 million upfront payment in the first quarter of 2011 and hold an approximate 20 percent ownership interest in the growth of Screenvision,” the CEO said.
While Carmike posted a profit in the third quarter, it remains in the red in the first nine months of this year. Through September, the company reported a loss of $9.4 million, or 74 cents per share, on total revenue of $376.4 million. Again, that’s far better than a year ago when it racked up a loss of $21.8 million, or $1.72 per share, through the first nine months. That was on total revenue of $377 million.
The Wall Street analysts polled by Thomson Financial currently expect Carmike to earn 28 cents per share in the fourth quarter of this year, down from 48 cents a year ago. For the year, the stock pros anticipate a loss of 35 cents per share. Looking ahead to 2011, they see a profit of 66 cents per share.
Films coming up in the current quarter that should be strong draws include “Harry Potter and the Deathly Hallows: Part I,” “The Chronicles of Narnia: The Voyage of the Dawn Treader,” and “Tron: Legacy.”
In trading today on the Nasdaq exchange, Carmike shares (Ticker: CKEC) slipped 6 cents, or 0.7 percent, to $7.95. The stock’s 52-week trading range is $5.36 to $19 per share.