Carmike Cinemas Reports 2016 Second Quarter Operating Revenue of $204.7 Million

Carmike Cinemas, a leading entertainment, digital cinema, alternative content and 3-D motion picture exhibitor, today reported results for the three and six-month periods ended June 30, 2016, as summarized below.

“Our second quarter results reflect the continued successful execution of our theatre-level initiatives and operating effectiveness around our recent acquisitions, offset by the difficult year-over-year comparison related to the record U.S. box office performance in the second quarter of 2015,” stated David Passman, Carmike Cinemas’ President and Chief Executive Officer.

“Despite the soft industry trends, our focus on delivering differentiated and improved food and beverage offerings and innovative dining concepts is reflected by the healthy rise of nearly 10% in second quarter concessions and other spending per patron metrics, marking 26 consecutive reporting periods of year-over-year concessions and other per patron spending growth and highlighting the value of our strategies to further leverage our food, beverage and concession initiatives to support our growth. The achievements in our food and beverage strategies helped minimize the impact of a weaker industry box office which contributed to a second quarter admissions revenue per screen decline of approximately 11% year-over-year.

“In summary, while the popularity of the film slate varies from quarter-to-quarter, Carmike’s circuit of high quality theatres, ongoing success in maximizing high-margin concessions revenue opportunities and Company-wide emphasis on customer service excellence, remain relevant and impactful factors in our ability to generate positive operating results over the long-term. Looking ahead, we are optimistic about the box office environment in the second half of this year and on our prospects for the remainder of 2016 and beyond,” concluded Mr. Passman.

Carmike Cinemas’ Chief Financial Officer Richard B. Hare stated, “A difficult year-over-year industry box office comparison led to a 10.4% decrease in attendance, resulting in a $14.4 million decrease in second quarter operating revenues, including declines in admissions revenue, and concessions and other revenue, of 9.5% and 1.9%, respectively. Reflecting the ongoing success of our various operating and management initiatives, average admissions per patron was $7.69, while guests spent an average of $12.89 per visit in the quarter, a 4.2% increase in combined per patron spending, compared to the prior year period.

“Carmike’s 2016 second quarter film exhibition costs as a percentage of admissions revenues were 57.5%, compared to 58.7% in the second quarter of 2015, reflecting a lower concentration of strong performing titles. Concession costs as a percentage of concessions and other revenue increased from 11.6% in Q2 2015 to 12.0% in Q2 2016, reflecting our expansion of theatres with in-theatre dining and enhanced food and beverage options, while two of our three theatre-level expense categories increased primarily as a result of Carmike’s expanded circuit on the back of recent acquisitions and new theatre openings. Salaries and benefits remained relatively flat at approximately $26.0 million, while theatre occupancy costs increased 12.5% to $26.9 million, and other theatre operating costs increased 2.0% to $33.7 million, compared to $33.1 million in the second quarter of 2015. General and administrative expenses were $11.4 million for the second quarter of 2016, including $0.7 million of non-cash share-based compensation expense and $3.9 million of M&A related costs. Most of our M&A expenses are related to our pending merger with AMC. Quarterly interest expense declined 2.0% to $12.4 million in Q2 2016, due primarily to more favorable terms as a result of the refinancing transactions we completed in the second quarter of 2015. A net loss for the quarter of $1.6 million compares to a net loss of $1.4 million in the prior year period. Adjusted EBITDA1 decreased $9.8 million to $31 million, and theatre level cash flow1 decreased $9.1 million to $37.9 million, as a result of our high fixed-cost structure and the year-over-year decline in top-line revenue.

“Looking at our balance sheet, we continue to operate our business on solid financial footing with a healthy balance sheet that includes cash and cash equivalents totaling $108.5 million at June 30, 2016. Total debt as of June 30, 2016 was $461.3 million compared with $454.7 million at December 31, 2015. Net debt1 for the quarter was $352.7 million, compared with $352.2 million at December 31, 2015, reflecting a net leverage ratio of total debt to EBITDA1 of approximately 2.5 times,” concluded Mr. Hare.

As previously announced, in light of the proposed transaction with AMC Entertainment Holdings, Inc., Carmike will not hold a conference call or webcast to review its results for the second quarter of 2016.