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Investor Presentation Mike Campbell, Kurt Hall & Amy Miles. Forward-looking Statements.

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Investor Presentation

Mike Campbell, Kurt Hall & Amy Miles

forward looking statements
Forward-looking Statements

This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included herein may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from the Company’s expectations are disclosed in the risk factors contained in the Company’s prospectus dated May 8, 2002. All forward-looking statements are expressly qualified in the entirety by such factors.

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overview of regal entertainment group
Overview of Regal Entertainment Group

Complementary Growth Businesses

Largest Domestic Theatre Circuit

$461M LTM EBITDA

21% Margin

250+ Million Attendees

$2.2 Billion LTM Revenues

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investment highlights
Investment Highlights

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Long-Term Earnings and Cash Flow Opportunities

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+

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Steady Industry Growth & Solid Fundamentals

Exciting Growth Opportunities

Industry Leading Theatre Operations

Strong Free Cash Flow & Dividend

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positive industry rationalization
Positive Industry Rationalization

2x LT Growth Rate

First Screen Decline Since 1963

  • ‘95 - ‘99: Unprecedented Screen Growth
  • ‘00 - ‘02: Major Reduction of 1800+ Screens
  • 2002+: No New Box, Reduced New Developments

Screen Count – Year over Year Growth

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Screen Reduction Driving Box Office per Screen

Source: NATO

consistent growth in demand
Consistent Growth in Demand

Steady Box Office Growth

($ in billions)

6.2% CAGR

Box Office Revenue

  • Healthy Attendance Trends
    • 3% CAGR over last 10 years
    • Growth in 3 of the last 5 recessions
    • 1.5 billion patrons in 2001, up 5%
  • Consistent Box Office Growth
    • 10th consecutive record year
    • $8.4 billion in 2001, up 10%
  • Stable Annual Price Increases
    • 3% CAGR over the last 10 years

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Source: NATO

beneficiary of fundamental patterns upcoming film calendar
Beneficiary of Fundamental Patterns & Upcoming Film Calendar

Q4 2002

  • Extended Release Calendar
    • Staggering releases reduces head-to-head competition, reduces seasonality and broadens patron traffic
  • Increased Breadth of Films
    • Increasing appeal to a wider demographic
  • Increased Emphasis on Theatrical Success
    • Marketing Expenditures by Studios increasing at a 10% CAGR since 1995

Solid Fundamentals

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beneficiary of fundamental patterns upcoming film calendar1
Beneficiary of Fundamental Patterns & Upcoming Film Calendar

2003

  • Extended Release Calendar
    • Staggering releases reduces head-to-head competition, reduces seasonality and broadens patron traffic
  • Increased Breadth of Films
    • Increasing appeal to a wider demographic
  • Increased Emphasis on Theatrical Success
    • Marketing Expenditures by Studios increasing at a 10% CAGR since 1995

Solid Fundamentals

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national geographically diverse footprint
National, Geographically Diverse Footprint

5

37

6

1

26

7

4

35

1

26

25

12

4

7

9

6

13

2

1

1

1

25

89

13

15

2

4

2

8

8

15

9

20

29

11

51

Largest Domestic Exhibitor

5,711 Screens

23% Market Share

530 Theatres

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As of 9/26/02

improved experience driving demand
Improved Experience Driving Demand

Outperforms Industry

Minimal Future Cap-X

Modern Theatre Circuit

  • Rationalized Theatre Portfolio
  • 61% Screens Built Since 1997
  • 60% Feature Stadium Seating
  • 10.5 Screens / Theatre
  • 75% Theatres with 10+ Screens
  • 9 of Top 10, 23 of Top 25 DMAs

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20 ebitda margins
20%+ EBITDA Margins
  • Superior Operations Management
    • Lower rent and occupancy costs
    • Effective controls on theatre-level costs
    • National contracts and scale drive margins

Leading EBITDA Margins

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* Industry Includes AMC, Carmike, Loews and Cinemark.

proven ability to integrate acquisitions
Proven Ability to Integrate Acquisitions
  • 11 Successful Acquisitions Since 1995

Theatre-Level Cash Flow Margin

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steady industry growth
Steady Industry Growth
  • On-track to realize $30 - $40 million of synergies
    • G&A reductions
    • Concession synergies
    • Reductions in advertising expense and other theatre operating costs
  • Expect continued benefits during the first half of 2003

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simple growth strategy
Simple Growth Strategy
  • Continue Core Theatre Business Momentum
  • Increase Theatre Margins
  • Capitalize on Consolidation Opportunities
  • Pursue High Margin Ancillary Business Opportunities

Generating significant Free Cash Flow

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unique national digital theatre network
Unique National Digital Theatre Network
  • First of Its Kind
  • Internally Funded
  • Initially Focused on Digital Advertising
  • Valuable Long-Term Platform
    • Complementary programming
    • Digital projectors

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Transforming the Theatre into a Unique Advertising, Promotional and Communications Platform

rcm s competitive advantages
RCM’s Competitive Advantages
  • Dedicated Focus on Complementary New Business Opportunities
    • High level management, sales and advertising expertise
  • Direct Control of Theatre Venues and Patron Data
    • Ability to create of wider variety of products and services
    • Better control of delivery of advertising and promotional services
    • Attendance data enables capture of valuable in-depth research
  • Existing Technology Platform Ready
    • Network operating center in use
    • Satellite delivery of digital content implemented in initial theatres
    • Sales, distribution and billing software installed
    • On-going linking of theatres to network represents simple connection process

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advertising revenue opportunity
Theatres Provide Better Recall

High impact

Captive audience

Increasing Fragmentation Among Traditional Mediums

Advertisers Seeking New Platforms to Create Consumer Touchpoints

Advertising Revenue Opportunity

2001E Advertising Market Sizes

($ in billions)

Existing Market Only $100+ million

$25+

$19

$11

$4

Small Shift in Ad Spending

50% - 70%EBITDA Margins

Large Impact on EBITDA

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+

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CPMs

1 market share in top dma s
#1 Market Share in Top DMA’s

DMAs% National BoxRegal Market Share

New York / LA 17.7%

Top 10 40.3%

Top 25 62.1%

Top 50 77.7%

#1

#1

#1

#1

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Source: EDI

revenue and ebitda performance
Revenue and EBITDA Performance

EBITDA*

Revenue*

($ in billions)

($ in millions)

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*Pro Forma for the combination of Regal, Edwards and UA Excludes results of theatres closed in connection with reorganizations 2001 excludes the 53rd week in UA’s fiscal year - $17.9m of revenues and $7.3m of EBITDA.

2002 ebitda margin growth
2002 EBITDA Margin Growth

Regal Improving EBITDA Margins in 2002 vs. 2001

  • Strong box office growth coupled with maximizing operating leverage
  • Realized integration synergies

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conservative leverage and excellent liquidity
Conservative Leverage and Excellent Liquidity

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Conservative Capital Structure

  • As of 11/1/02
  • Net Debt + Leases / EBITDAR = 3.5x
strong free cash flow
Strong Free Cash Flow

($ in millions)

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Significant Free Cash Flow Funds Growth Opportunities

  • Excludes 2002 reorganization payments of approximately $81 million
financial flexibility for growth strategy
Financial Flexibility for Growth Strategy
  • Capitalize on prudent acquisition opportunities
  • Pursue high margin ancillary business
  • Make selective investments in asset base
  • Provide incremental returns through dividends

+

Conservative Capitalization

$200M+ Annual Free Cash FlowBefore Dividend

Flexibility to Execute Growth Strategy

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