Regal Tops Revenue Estimates In Q3, Eyes Year-End Tentpoles

UPDATE with earnings call and after-hours stock price: Regal Entertainment Group, which operates the largest theater chain in the nation with 7,357 screens in 42 states, reported third-quarter revenue of $725 million that bested both its year-over-year number as well as analysts’ estimates of $716.3 million.

Diluted earnings per share, at $0.14 for quarter that ended September 30, matched expectations. Net income at $21.9 million was down nearly 18%. But last year’s Q3 included an unusual sales tax refund that reduced operating expenses by $16.8 million.

The company, which runs theaters in 46 of the top 50 U.S. markets, also declared a regular quarterly cash dividend of $0.22 per Class A and Class B common share, payable on December 15, 2015, to stockholders of record on December 4.

Shares that fell 2.7% during regular trading, closing at $18.64, recovered after hours. They saw a 3.1% bump following the earnings report.

On the post-earnings analyst call, execs touted concession initiatives (including the introduction of alcohol at some venues) that generated above-average growth in sales per patron — to $4.20, a 9.7% gain. This was the fifth consecutive up quarter for concessions.

Additional gains owed in part to the continued conversion of theaters to premium recliner-seat venues, an initiative Regal execs said they continue to roll out.

Regal also said its average ticket price rose $0.08 to $9.19 during the quarter.

While CEO Amy Miles didn’t dispute the gaudy numbers expected to be in the offing in the fourth quarter for titles including Star Wars: The Force Awakens, the final Hunger Games pic and the new James Bond movie Spectre, she says that Regal “expects to participate” in the tentpoles’ success. “It’s an excited quarter,” she told analysts.

Miles also addressed Paramount’s VOD window experiment with rival AMC Entertainment, conceived over the summer, that included last weekend’s release of Paranormal Activity: Ghost Dimension and this week’s Scout’s Guide To The Zombie Apocalypse. Regal, Cinemark and Carmike are refusing to play the movies because Paramount will make titles available to VOD 17 days after they appear in fewer than below 300 theaters — potentially in the middle of the 90 day period when exhibitors want exclusive rights to new films.

But Miles says she doesn’t oppose the concept: She said the revenue splits didn’t work for Regal and it would be hard to evaluate results of the window winnowing. The CEO added that “we would be open to other options or other experiments that could grow the overall pie.”

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