Carmike Cinemas, Inc. (CKEC)

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Carmike Cinemas (CKEC)

Q4 2012 Earnings Call

March 14, 2013 5:00 pm ET


Robert Rinderman

S. David Passman - Chief Executive Officer, President, Director, Chairman of Executive Committee and Member of Corporate Governance Committee

Richard B. Hare - Chief Financial Officer, Principal Accounting Officer, Senior Vice President of Finance and Treasurer


James M. Marsh - Piper Jaffray Companies, Research Division

Eric Wold - B. Riley Caris, Research Division

Joseph D. Hovorka - Raymond James & Associates, Inc., Research Division

John Tinker - Maxim Group LLC, Research Division



Ladies and gentlemen, thank you for standing by. Welcome to the Carmike Cinemas 2012 Q4 Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded, Thursday, March 14, 2013.

I would now like to turn the conference call over to Rob Rinderman from Carmike Cinemas, Investor Relations. Please go ahead, sir.

Robert Rinderman

Thank you, Joe. Good afternoon, everyone.

Certain statements by Carmike Cinemas management on today's call may constitute forward-looking statements that are subject to certain risks, uncertainties and other factors that may cause Carmike's actual performance to be materially different from the performance indicated or implied by such statements. Such risks, uncertainties and other factors are set forth in the company's annual report on Form 10-K for the year ended December 31, 2012 and in other SEC filings. Carmike undertakes no obligation to publicly update or revise any forward-looking statements.

Today's call and webcast may include non-GAAP financial measures. And when required, a reconciliation of all these measures to the most directly comparable financial measure, calculated and then presented in accordance with GAAP, can be found in today's press release and on the company's corporate website.

Carmike Cinemas' President and CEO, David Passman, will now make his opening remarks. David?

S. David Passman

Thank you, Rob, and good afternoon, everyone. We appreciate you joining us on the call today. I'm accompanied by Richard Hare, our Chief Financial Officer; as well as our Chief Operating Officer, Fred Van Noy, who is here to assist us during the Q&A session.

In the fourth quarter of 2012, the industry generated a 16% increase in U.S. box office revenues due to a broad array of well-performing films, a well-balanced release schedule and a relatively less-challenging year-over-year comparison.

The fourth quarter capped an outstanding year with annual box office receipts increasing 6.5%, reaching an all-time record high of $10.8 billion, driven predominantly by attendance gains, as the average ticket price for the 12-month period was only $0.04 higher than in 2011.

Carmike's fourth quarter admissions, concessions and other revenues combined for a healthy 23% increase in Q4 revenues versus the prior year. We were pleased to see the concessions and other sales per patron rose 6% to $3.99. This marks the company's 12th consecutive quarter of concessions and other sales per patron increases.

One of Carmike's key goals is to maintain this positive momentum at the theater level, where we will continue to utilize our most successful concessions promotions in addition to actively experimenting and developing creative new programs.

Average fourth quarter admissions per patron increased 5%, primarily due to there being fewer family-oriented titles and release, as well as nominal ticket price increases. In aggregate, 2012 fourth quarter per patron spending rose to a record $11.09 compared to $10.53 in the 2011 fourth quarter.

Total attendance in Q4 increased approximately 16%, and average attendance per screen increased 9%. We believe Carmike's company-wide emphasis in recent years on providing our cinema-going patrons with excellent customer service to ensure a consistently, enjoyable experience at each of our theaters will continue to foster loyalty and earn repeat business from our valued guests.

Now taking a look at the Q4 film slate performance. Top industry performers during the quarter, included Skyfall, The Twilight Saga, The Hobbit, each generating in excess of $200 million at the box office. Other strong Q4 successes were Wreck-It Ralph, Taken 2, Lincoln, Hotel Transylvania and Argo, with each grossing over $100 million. A few other noteworthy titles from Q4 included Flight, Rise Of The Guardians, Life of Pi, Les Mis and Django Unchained.

Carmike circuits slightly over indexed on 2 successful releases during the period, The Twilight Saga and Taken 2, which seemed to resonate well in our hometown markets compared to other notable Q4 releases such as Skyfall, Argo and Life of Pi, where we under indexed, as we expected.

As widely reported, Q1 2013 has been facing difficult comparisons to the year-ago quarter. However, we're pleased with the performance of Oz the Great and Powerful and Identity Thief and look forward to the opening up G.I. Joe: Retaliation at the end of this month.

Now taking a deeper look at the 2013 calendar. We're optimistic about a number of the upcoming titles starting with Q2 releases: Iron Man 3, The Great Gatsby, Star Trek Into Darkness, Man of Steel and Monsters University, all of which will be available in 3D format. Of note, Gatsby is breaking new ground on the 3D front as a rare drama that is being released in 3D, and we're looking forward to seeing how it plays.

A few of the potential tentpole films among many high-profile movies slated for release in the back half of 2013 include 3D titles such as Pacific Rim, The Wolverine, Smurfs 2, Thor and Hobbit. 2D movies that also make the list of potential 2013 tentpoles include, of course, The Hunger Games: Catching Fire, The Lone Ranger and Ender's Game.

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