Analyst: Regal Entertainment Is Holding Steady

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The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities. 

Fourth-quarter revenues fell below expectations, driven by lower industry attendance. Revenue was $740 million, compared with our estimate of $770 million and the consensus estimate of $769 million. Adjusted EBITDA was $126 million, compared with our estimate of $157 million. Earnings per share was 15 cents, compared with our estimate of 25 cents and with the consensus estimate of 26 cents, however, adjusted EPS was 17 cents (excluding 2 cents per share in onetime charges) slightly closer to our expectations.

Fourth-quarter 2013 box office year-over-year increase was driven by the surge in premium ticket sales, largely due to the success of Gravity, pushing average industry ticket prices higher and offsetting the 7-8 percent decrease in industry attendance. While the average ticket price increase helped to mitigate the impact of lower attendance on admissions revenues, concessions and other revenues did not benefit from a tailwind in revenue per attendee.

Regal Entertainment (NYSE:RGC) continues to make accretive acquisitions as a way to deliver ongoing shareholder value. Regal stated that it is committed to future accretive acquisitions, and we believe they have developed an expertise of qualifying and integrating accretive acquisitions to add value for shareholders. In fiscal year 2013, Regal acquired more than 500 screens through its acquisition of Hollywood Theatres, representing almost a third of the approximately 1,700 screens that changed hands during the year.

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