UPDATE: Carmike Cinemas posts $6.5 million loss in second quarter

It was a tough second quarter for Carmike Cinemas, with the movie theater company reporting a loss of $6.5 million and hoping for a blockbuster in the second half of this year. The loss, which came on total operating revenue of $127.4 million, translated to 51 cents per share and was far off the 6 cents per share profit expected by stock market analysts surveyed by Thomson Reuters.

In comparison, the company earned $2.8 million, or 22 cents per share, on revenue of $132.9 million in the April-June period a year ago.

“The second quarter was marred by an industry-wide box office decline,” David Passman, Carmike’s president and chief executive officer, said in a statement. “While we take no pleasure in experiencing year-over-year box office declines, we are encouraged that Carmike’s per screen attendance and admissions fared at or better than industry averages.”

The Columbus-based motion-picture exhibitor reported having slightly fewer theaters (241) and screens (2,260) in the quarter, although overall attendance was down by about 540,000 patrons.

However, the average admission per moviegoer climbed from $6.50 in the second quarter a year ago to $6.89 currently. The average concession take per customer — for soft drinks, popcorn and candy — rose from $3.23 to $3.47.

On the viewing front, Passman said, “Consumer preference for 3-D was strong, representing over 26 percent of Carmike’s total box office for the quarter.”

Carmike has invested heavily in digital technology in recent years, with a focus on ramping up the number of 3-D screens in its theaters. It now has nearly 550 such screens operating and expects to reach 600 by the end of September.

That, Passman said, “should accommodate customer demand and studio release schedules, which seem to be steadily growing with upcoming titles.”

And while the CEO said the third quarter is off to a better start in the industry and expressed optimism there will be a stronger performance in the second half of this year, that likely won’t be the case, according to PiperJaffray, an investment and securities firm that follows Carmike and other theater chains. The brokerage firm is projecting a box-office decline of nearly 3 percent through December.

“We see this weakness being driven by a relative lull in compelling titles over the next few months combined with a dearth of exciting 3-D titles on the horizon,” PiperJaffray senior research analyst James Marsh wrote in a recent report.

But 2011 looks much different, according to Marsh, with quarterly earnings comparisons easing and a strong film schedule materializing. Carmike should benefit with its burgeoning 3-D presence, he said, which should help it move toward a 12-month price target of $18 per share.

“We believe 15 of the 35 3-D titles announced to date have the potential to do over $100 million in the domestic box office and at least 10 could generate over $200 million,” Marsh said.

Carmike shares were up 24 cents, or 3.2 percent, to $7.55 per share in trading Monday on the Nasdaq exchange.

Through the first six months of this year, Carmike has lost $9.9 million, or 78 cents per share, on revenue of $251.5 million. That compares to a loss of $1.1 million, or 9 cents per share, on revenue of $254.7 million through the first half of 2009.

Carmike, in the second quarter, launched its “BigD” upgrade at several theaters in its circuit, including the recently completed Carmike 15 project at Columbus Park Crossing. Screens are being enlarged with posh leather seating installed. The company expects to have BigD in about two dozen theaters chainwide by the end of 2011.

The theater firm also is expanding its Hollywood Connection complex in Columbus, adding three large screens to the existing 10-screen format. That project combined with BigD is an investment of nearly $2.4 million in the local market.