Mike Campbell, Co-Chairman & Co-CEO Kurt Hall, Co-Chairman & Co-CEO Amy Miles, CFO September 2004...
-
Upload
thomasine-thomas -
Category
Documents
-
view
219 -
download
0
Transcript of Mike Campbell, Co-Chairman & Co-CEO Kurt Hall, Co-Chairman & Co-CEO Amy Miles, CFO September 2004...
Mike Campbell, Co-Chairman & Co-CEOKurt Hall, Co-Chairman & Co-CEO
Amy Miles, CFO
September 2004New York & Boston Non-Deal Roadshow
2
Forward-looking StatementsThis 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 included herein, other than statements of historical fact, 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 2003 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2004. All forward-looking statements are expressly qualified in their entirety by such factors.
This presentation contains references to “Adjusted EBITDA” (earnings before interest, taxes, depreciation and amortization expense, loss on debt extinguishment, merger and restructuring expenses and amortization of deferred stock compensation, gain on disposal and impairment of operating assets, minority interest in earnings of consolidated subsidiaries and other, net) was approximately $553.4 million, or 21.9% of total revenues, for the four quarters ended July 1, 2004. We believe EBITDA, Adjusted EBITDA and Free Cash Flow provide useful measures of cash flows from operations for our investors because EBITDA, Adjusted EBITDA and Free Cash Flow are industry comparative measures of cash flows generated by our operations and because they are financial measures used by management to assess the performance and liquidity of our Company. EBITDA, Adjusted EBITDA and Free Cash Flow are not measurements of financial performance or liquidity under accounting principles generally accepted in the United States of America and should not be considered in isolation or construed as a substitutes for net income or other operations data or cash flow data prepared in accordance with accounting principles generally accepted in the United States of America for purposes of analyzing our profitability or liquidity. In addition, not all funds depicted by EBITDA, Adjusted EBITDA and Free Cash Flow are available for management's discretionary use. For example, a portion of such funds are subject to contractual restrictions and functional requirements to pay debt service, fund necessary capital expenditures and meet other commitments from time to time as described in more detail in the Company’s 2003 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2004. EBITDA, Adjusted EBITDA and Free Cash Flow, as calculated, may not be comparable to similarly titled measures reported by other companies. Regal Entertainment Group has provided a reconciliation of net cash provided by operating activities and operating income to EBITDA and Adjusted EBITDA on its Web site at www.REGmovies.com. All forward-looking statements are expressly qualified in their entirety by such factors.
3
Agenda:
Regal Overview
Steady Industry Growth Trends and Solid Fundamentals
Proven Business Strategy Generates Free Cash Flow
Regal CineMedia Generating Incremental Free Cash Flow
Financial Overview & Summary
5
Largest Domestic Motion Picture Exhibitor
Trailing 4 Quarters Ended July 1, 2004
Revenue $2.5 billion
Adjusted EBITDA $553 million
Adj. EBITDA margin 21.9%
Attendance 265 million
Free Cash Flow $312 million
Free Cash Flow Per Share $2.12
6
National Footprint & Modern Assets
• 544 Theatres
• 6,053 Screens
• 11.1 Screens/Theatre
• 17% of U.S. Screens
• 61% Stadium Seating
• 85% of Screens in sole exhibitor zones
• 45 of Top 50 Markets
$2 Billion Invested Since 1997 =
Modern Asset Base & Significant Free Cash Flow
5
83
9
23
2 13
22
37
7
3
10
47
1698
14
1
3
4
1
3
7 24
2
2 8
13
11
2
25
52
252
4
6
As of 7/1/04
13
5
4
1311
7
Industry Leading Margins
Regal $553 21.9% $312 12.3%
Comparable Avg.(1) - 17.9% - 7.3%
LTM Adj. LTM Adj. Free Cash FCF
EBITDA EBITDA Margin(2) Flow Margin(3)
Focus on efficient theatre operations
Lower rent and occupancy costs
Effective cost controls
Utilize scale to negotiate national contracts
Regal CineMedia provides margin accretion
Industry Leading Margins = Increased Free Cash Flow(1) Comparable average includes AMC Entertainment Inc., Carmike Cinemas, Inc. & Cinemark, Inc. for the fiscal
twelve month or 52/53 week period ending closest to June 30, 2004.(2) Adj. EBITDA is presented “as calculated” by Regal and AMC in their quarterly financial reports and is calculated
for Carmike and Cinemark as Income from operation + depreciation & amortization.(3) Free cash flow = Cash provided by operating activities – capital expenditures + proceeds from asset sales.
9
Steady Box Office Growth Trends
$3
$4
$5
$6
$7
$8
$9
$10
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
Box Office Revenue
Steady Box Office Growth
Source: NATO & Nielsen EDI
Box Office GrowthAvg. 6.2% growth per year
AttendanceAvg. 2.7% growth per year
Ticket & Concession PricesAvg. 2-3% growth per year
6.2% Growth Per Year
(billions)
10
Industry Screen Count Improved supply dynamics
Screen count down from peak = increased attendance/screenDecline in seats increases utilization
Replacement cycle is increasing screens per theatre and enhancing marginsExpect growth in screensto return to historical replacement model(2-3% per annum)Regal’s model works regardless of pace of rationalization
Source: NATO
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
Ind
oo
r S
cre
en
% C
ha
ng
e f
rom
Ye
ar-
to-Y
ea
r36
38
40
42
44
46
48
50
Att
en
da
nc
e/S
cre
en
(0
00
s)
Year-to-Year Chg. Attendance/Screen
12
Proven Business Strategy
Focus on efficient theatre operationsIndustry leading marginsSelective investment in asset base
Return Value to Shareholders$5.65 per share paid in 2003$5.86 per share paid in 2004(1)
Quarterly dividend has increased substantiallyFrom $0.00 to $0.15 (beginning Dec. 2003)From $0.15 to $0.18 (beginning March 2004)From $0.18 to $0.20 (beginning Sept. 2004)From $0.20 to $0.30 (beginning Dec. 2004)
Recently announced $50 million share repurchase program
Evaluate accretive acquisitionsRegal CineMedia opportunities
(1) Includes dividends paid through 9/15/04 plus $0.30 per share dividend expected to be paid in December 2004.
13
Prudent Acquisition StrategyRegal’s Focus
High quality assetsAccretive to cash flows and earningsSignificant near term synergies
Recent transactions: TransactionValue EBITDA Pre Post
Year (millions) (millions) Synergy SynergyHoyts 2003 $223 $43 5.2x 4.1xSignature & others 2004 $226 $37 6.1x 5.2x
Combination of Regal, United Artists and Edwards =$25-$35 million in synergies
Proven acquisition integration process with 16 successful acquisitions since 1995
15
Digital Content NetworkFirst of its kind in-theatre Digital Content Network (“DCN”) capable of showing:
On-screen advertisingDigital Content Distribution
Big Screen ConcertsCineMeetingsCineEducationOther Digital ContentAs of 7/1/04:
Screens: 5,085
Theatres: 420
Plasma: 1,271
Markets: 78
Unparalleled National Presence265+ Million Annual Attendance
25 of Top 25 Markets45 of Top 50 Markets
% Rev.
80-85%
15-20%
16
Cinema Advertising = Free Cash Flow
Revolutionizing cinema advertising
Delivery method Slides DigitalDistribution/production cost High Low
Targeting capability Limited High
Entertainment value Low High
Consumer recall Low 4-6x TV
% National advertisersin cinema Few Growing
Regal’s margin <=30% 50%+
Old New
18
RCM Business Model Highlights
2004 First half results % Increase
RCM Revenue $43 million +59%% Advertising 75%
% CineMeetings and other 25%
Inventory sell-through 76% +12%
CPM Rate +13%
High margin advertising contributing to EBITDA Margins
CineMeetings and other businesses exceeding internal budgets
Generating incremental free cash flow
20
Strong Revenue and EBITDA Performance
$1,819
$2,014
$2,267
$2,490 $2,527
6,053
6,045
5,6635,8765,911
$600
$1,000
$1,400
$1,800
$2,200
$2,600
$3,000
2000 2001 2002 2003 LTM
5,000
5,400
5,800
6,200
6,600
Revenue Ending Screen Count
EBITDA*Revenue*($ in millions)($ in millions)
$553.0
$293.5
$350.8
$481.1
$544.4
21.9%21.9%21.2%
17.4%
16.1%
$150
$200
$250
$300
$350
$400
$450
$500
$550
$600
2000 2001 2002 2003 LTM
14%
16%
18%
20%
22%
24%
26%
28%
EBITDA Margin
*Pro Forma for the combination of Regal, Edwards and UA. Excludes results of theatres closed in connection with reorganizations
21
Cash is King
(1) Closing price as of 9/13/04 = $18.94
LTM
7/1/04
Income from operations $388.7
+ Changes in working capital items and other 11.3
Net cash provided by operating activities 400.0
- Capital expenditures (129.6)
+ Proceeds from asset sales 41.9
Free cash flow $312.3
Free cash flow / share $2.12
Free cash flow / Adj. EBITDA 56%
Price / free cash flow 8.9x
Free cash flow yield 11.2%
Dividend yield(1) 6.34%
($ in millions)
22
Building Blocks for Growth
Revenue Growth
Drivers
Accretive Acquisitions
Free Cash Flow
FCF and Capital Structure
6.2% box office growth results from attendancegrowth of approx. 2.7% and price increases of 2-3%
Pursue accretive acquisitions
Strong margins = Significant Free Cash Flow
Dividend Attractive cash dividend yield
Cost Control Industry leading theatre operations
Regal CineMediaGenerate incremental free cash flow and increase margins
(1) Source: NATO(2) Source: Company Estimate
23
Regal Monthly Stock Price & Total Return
$16.00$18.00$20.00$22.00$24.00$26.00$28.00$30.00$32.00$34.00
5/9
/20
02
8/9
/20
02
11
/9/2
00
2
2/9
/20
03
5/9
/20
03
8/9
/20
03
11
/9/2
00
3
2/9
/20
04
5/9
/20
04
8/9
/20
04
Stock Price
Total Return
Note: Total return assumes gross dividends invested in additional shares of Regal stock
$5.05
$5.00
$0.15
$0.18
$0.20
$0.15
24% Annual Rate of Return
24
Investment Highlights
++
++
==
Steady Industry Growth & Solid Fundamentals
Proven Business Strategy
Deliver Shareholder
Value
Generates Free Cash Flow
Stock A
ppreciatio
n + Dividends P
aid = 65% Retu
rn* S
ince IPO
Based on stock price as of 9/10/04. Total return based on reinvesting gross dividend in shares of common stock. Annual equivalent return with reinvested dividends = 24%
Regal CineMedia++