Analyst: Regal Entertainment Is Stable But Has High Debt Levels
The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.
Third-quarter revenues roughly in line with our expectations and adjusted earnings per share above our expectations driven by lower operating expenses other expense. Revenue was $813 million compared with our estimate of $815 million and the consensus estimate of $800 million. Adjusted Ebitda was $177 million compared with our estimate of $172 million. EPS was 48 cents compared with our estimate of 31 cents and the consensus estimate of 30 cents; however, adjusted EPS was 38 cents (excluding 10 cents in one-time charges) closer to our expectations.
Regal Entertainment (NYSE:RGC) continues to make accretive acquisitions as away to deliver ongoing shareholder value. We suspect that Regal will target smaller theater chains, as they have fewer resources to manage a portfolio of digital theaters and less negotiating leverage with studios in regards to film rental costs. Additionally, as Regal increases its theater base through acquisitions its stake in National Cinemedia increases, Regal expects to have roughly 25 million shares in National Cinemedia by the end of FY:13 due to its recent acquisition activity.
During the quarter, Regal opened one theater with 12 screens and closed three theaters with 21 screens. According to Regal, new screens generate approximately 125 percent of the portfolio’s per screen average, while closed screens generate approximately 65 percent of the per screen average.