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CARMIKE CINEMAS. MANAGEMENT PRESENTATION. January 2012. Disclaimer.

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CARMIKE CINEMAS

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Carmike cinemas

CARMIKE CINEMAS

MANAGEMENT PRESENTATION

January2012


Disclaimer

Disclaimer

This presentation contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by, followed by or that include the words, “believes,” “expects,” “anticipates,” “plans,” “estimates” or similar expressions. Examples of forward-looking statements in this presentation include our ticket and concession price increases, our cost control measures, our strategies and operating goals, our plans regarding debt reduction, our film slate for 2012 and future years, and our capital expenditure and theater expansion/closing plans. These statements are based on beliefs and assumptions of management, which in turn are based on currently available information. The forward-looking statements also involve risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Many of these factors are beyond our ability to control or predict. Important factors that could cause actual results to differ materially from those contained in any forward-looking statement include, but are not limited to:

  • The inability to consummate the transactions described in this presentation on terms favorable to us;

  • The inability to satisfy any conditions to closing or to complete any related financing in connection with the transactions described in this presentation;

  • Our ability to comply with covenants contained in our senior secured credit agreement;

  • Our ability to operate at expected levels of cash flow;

  • Our ability to meet our contractual obligations, including all outstanding financing commitments;

  • Financial market conditions including, but not limited to, changes in interest rates and the availability and cost of capital;

  • The availability of suitable motion pictures for exhibition in our markets;

  • Competition in our markets;

  • Competition with other forms of entertainment;

  • The effect of our leverage on our financial condition; and

  • Other factors, including the risk factors disclosed in our annual report on form 10-K for the year ended December 31, 2010 and our quarterly reports on form 10-Q under the caption “risk factors.”

    We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of these in light of new information or future events.


Company overview

COMPANY OVERVIEW

  • 1


Carmike overview

CARMIKE OVERVIEW

WA

1

ID

2

MT

6

OR

1

MN

6

ND

5

  • 4th largest U.S. exhibitor

    • 235 theatres / 2,215 screens

  • Diversified portfolio with theatres in 36 states

  • America’s Hometown Theatre

    • Target small to mid-size non-urban markets

  • Favorable recent attendance trends vs. industry

  • Leading digital and 3D platform poised for growth in 3D-driven film slate

    • 2,089 digital screens

    • 726 3-D screens

    • Introduced Big D large format

  • Improving operating metrics driven by concessions and cost-cutting measures undertaken

  • New growth initiatives include 30-year agreement with Screenvision, alternative content, Big D theatre format and VIP Ovation Club offering

  • Strengthened Balance Sheet through operating and financial discipline

WI

3

NY

1

SD

5

MI

13

WY

1

CA

1

PA

17

IA

5

UT

3

NE

2

OH

4

IL

9

IN

3

DE

1

CO

6

WV

2

VA

5

MO

1

KS

1

KY

5

NC

23

NM

1

TN

21

OK

10

TX

9

AR

7

SC

10

GA

22

AL

14

States with 1 – 9 Theatres

States with 10 – 19 Theatres

FL

9

States with 20+ Theatres

Note: Includes California theatre no longer operated (10/04); excludes 3 MNM theatres acquired 10/21


Small market benefits

Small Market Benefits

SMALLER FOOTPRINT

  • 10-12 screens ideal

  • Offer entertainment in a family-friendly setting

LIMITED LOCAL

ENTERTAINMENT

OPTIONS & COMPETITION

  • Small town America’s favorite theatre

  • Presence in locations with minimal entertainment alternatives

SIMPLE EFFICIENT

STRATEGY

  • 3-D / digital strategy

  • High concession margins

  • Enhanced cash flow per screen

UNIQUE HOLLYWOOD

FOCUS

  • Connectivity with audience base

  • Focus on event films, family animation, sequels ideal for hometown audiences


Digital and 3 d exhibition pioneer

Digital and 3-D Exhibition Pioneer

CARMIKE IS A LEADER IN THE DEPLOYMENT OF DIGITAL AND 3-D CINEMA


Significant digital upside

Significant Digital Upside

FOCUS ON DIGITAL FORMAT HAS POSITIONED CARMIKE TO CAPITALIZE ON GROWING DIGITAL OPPORTUNITIES

  • Superior picture quality, brightness and color – no degradation over time

  • Revenue drivers:

    • Improved programming flexibility

      • Limit “sell outs”

      • Increases revenue and customer satisfaction

    • 3-D content

    • Alternative content

      • Concerts (U2 3-D, Kenny Chesney, Dave Matthews, Foo Fighters)

      • Opera and ballet (Emerging Pictures relationship)

      • Pay-per-view events

      • Live sports (BCS Championship, NCAA Final Four, NBA Skills, FIFA World Cup)

      • Religious (Fox Faith)

  • On-screen advertising (Screenvision) – 3-D format, lobby ads, mobile, etc.


Carmike cinemas

3-D BENEFITS

  • 3-D content is important revenue driver

    • 24% of CKEC Q3 box receipts from 3-D titles

  • 3-D film genre well-suited to CKEC markets

    • Animation, family, action

  • Higher ticket prices

    • $3.00+ premium

  • Growing base of 3-D titles and special events

    • 23 films released in ’10, 35+ in 11, including numerous ‘franchise’ sequels, 40+ releases for ‘12

Enhanced

Experience

Premium Ticket Prices


Big d ovation club

Big D/Ovation club


Screenvision agreement

Screenvision Agreement

30 YEAR AGREEMENT WITH ADVERTISING PARTNER SCREENVISION PROVIDES FURTHER GROWTH OPPORTUNITIES

  • Extended long-term on-screen exclusive exhibition agreement with cinema advertising leader for additional 30 years

    • Carmike has been Screenvision customer for ~20 years

    • Current deal enhances partnership and provides Carmike with equity upside

  • Carmike received $30 million pre-tax cash payment on 1/4/11

    • Prepaid bank debt with $15 million of proceeds, further deleveraging balance sheet

  • Carmike received 20% ownership interest in Screenvision profits and growth; which can go as high as 25% or as low as 15% depending on screen count, while also giving Carmike rights to distributions upon a monetization event of Screenvision

  • Perfectly aligned partnership

    • Screenvision has similar small-town footprint to Carmike

    • Local advertiser focus yields synergies

  • New relationship forged with respected media investor Shamrock Capital

  • Cinema advertising regarded as one of the fastest growing media segments in the United States


Theatre management strategy

Theatre Management Strategy

  • Focus on details “through the eyes of our patrons”

    • Refreshing our circuit

    • Clean facilities

    • Friendly and well-trained associates

    • Appropriate number of employees per theatre to achieve better customer experience

  • Performing general maintenance on older theatres

    • Helps compete with other entertainment attractions in Carmike markets

  • Theatre utilization

    • Alternative content – leveraging digital platform

    • Staggered show times

  • Opening larger, state-of-the art theatres averaging ~12 screens

    • Third party ‘build-to-suit’ theatres require less upfront investment for Carmike

    • Digital entertainment complexes featuring stadium seating

  • Closing under-performing theatres, exiting expired leases

    • Most are smaller theatres with fewer/non-digital screens


Concessions success

Concessions Success

  • Excellent, industry-leading margins

    • Seven straight quarter-over-quarter per cap increases

  • Streamlined concession offerings

    • Focus on highest margin products such as:

      • Coca-Cola/fountain drinks, popcorn (including flavored), nachos, cotton candy and select candy offerings (M&M products)

  • Driving more revenue

    • Up-selling patrons with combo / value pricing

      • Reusable/refillable popcorn buckets – leads to repeat visits/loyalty

    • Stimulus Tuesdays (still going strong after 2.5 years)

      • Special Stimulus Tuesday discounted concession offerings

    • Single point of sale for tickets and concessions – pilot program

    • Promotions – including specialized tie-ins, bounce-backs, etc.

    • Ovation Room (VIP Auditorium in Chattanooga, TN – nation’s first ‘Green’ theatre)

1


Movie going most popular and best value

Annual attendance (mm)

Ticket Price per Patron

Movie-going…Most Popular and Best Value

Most Popular Out-of-Home Entertainment Experience

Most Attractive Value Proposition

Source: 2008 MPAA, Pricewaterhouse Coopers


Financial summary

FINANCIAL SUMMARY

  • 2


Theatre operations ytd 2011

Theatre Operations – YTD 2011

2

Notes:

1 As percentage of total revenue for YTD 9/30/2011

2 Other theatre operating costs include labor, utilities, occupancy and facility lease expenses


Historical financial summary

Historical Financial Summary


Q3 and ytd 2011 financial update

Q3 and YTD 2011 Financial Update


Key operating metrics

Key Operating Metrics


Carmike cinemas

THEATRE LEVEL CASH FLOW (unaudited)

1Operating income is defined as operating revenues less operating expenses which includes film exhibition, concession, theatre operating, G&A, and non-cash operating charges.


Carmike cinemas

TOTAL DEBT AND BANK DEBT (unaudited)

1

2

1 Financing obligations are not included as debt under the terms of the Company’s debt agreement.

2The Company has prepaid $110 million of debt in the last four years.


Strategic initiatives to enhance balance sheet

Strategic Initiatives to Enhance Balance Sheet

CARMIKE HAS UNDERTAKEN SEVERAL INITIATIVES TO IMPROVE CASH FLOW AND FURTHER STRENGTHEN ITS CAPITAL STRUCTURE POSITION

LOCALIZATION

RATIONALIZATION

DIGITAL SCREEN

IMPLEMENTATION

Rationalized asset base by purging under-performing and non-strategic locations

Improves revenue (increased exhibition options and 3-D) and cost efficiency

SUSPENSION OF

CASH DIVIDEND

DEBT REPAYMENT

Allowed for cash allocation to repay term loan principal

Carmike improving its future capital position through repayment of outstanding term loans

LIMITED CAPEX

SPEND

G&A REDUCTION

Only theater chain to complete its digital roll-out, limiting need for significant future capex

Carmike has lowered general and administrative costs

STATED OBJECTIVE IS TO IMPROVE FREE CASH FLOW GENERATION AND CONTINUE TO REDUCE LEVERAGE


Key financial takeaways

Key Financial Takeaways

  • Continue to utilize free cash to voluntarily pre-pay bank debt and strengthen balance sheet

    • Goal of $200 million bank debt in reach (~$211 million at quarter-end)

  • Strengthened balance sheet to continue to pursue growth opportunities (upgrade equipment, new builds, acquisitions, etc.) vs. paying dividends or repurchasing stock

    • Want to take advantage of the expiring window of opportunity to go digital that some smaller circuits are either unwilling or unable to do

  • Concessions success with industry-leading margins

    • Seven straight quarters of higher per caps

    • Creative experimentation with promotions and merchandising strategies to up-sell patrons and foster loyalty/repeat visits

  • Continue focus on ‘details matter’ strategy

    • Improving attendance metrics and encouraging repeat business with customer-centric attitude

  • High margins and free cash flow conversion to serve as catalysts to strengthen balance sheet and pre-pay existing debt

  • Screenvision partnership, strategic new builds / closures and improved pricing

  • Further capitalize upon digital/3-D circuit advantages

    • Admission premiums, programming flexibility, high-quality image/sound, alternative content, etc.


Closing remarks

Closing remarks

Screenvision Investment

Refreshed Circuit

Strengthened Balance Sheet

Growth via New Builds & Acquisitions

BIG D

Strong Concessions

Per Cap Growth


Q a session

Q&A Session

Thank You!

Investor Relations contacts:

Richard Hare, CFO

Carmike Cinemas

(706)576-3415

[email protected]

Robert Rinderman

Jaffoni & Collins

212/835-8500

[email protected]


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