Carmike Cinemas Inc.

Carmike Cinemas Inc.
Nasdaq: CKEC
Investor Presentation 2015
1
Disclaimer
This presentation contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts,
including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded
by, followed by or that include the words, “believes,” “expects,” “anticipates,” “plans,” “estimates” or similar expressions. Examples of forwardlooking statements in this presentation include our ticket and concession price increases, our cost control measures, our strategies and operating
goals, our ability to achieve expected results from our strategic acquisitions, our film slate for 2015 and future years, our potential monetization of
our investment in Screenvsion, our ability to expand alternative content and our capital expenditure and theater expansion/closing plans. These
statements are based on beliefs and assumptions of management, which in turn are based on currently available information. The forward-looking
statements also involve risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking
statement. Many of these factors are beyond our ability to control or predict. Important factors that could cause actual results to differ materially
from those contained in any forward-looking statement include, but are not limited to:
• The inability to consummate the transactions described in this presentation on terms favorable to us;
• The inability to satisfy any conditions to closing or to complete any related financing in connection with the transactions described in this
presentation;
• Our ability to comply with covenants contained in our senior secured credit agreement and the indenture governing its 7.375% Senior Secured
Notes due 2019;
• Our ability to operate at expected levels of cash flow;
• Our ability to meet our contractual obligations, including all outstanding financing commitments;
• Financial market conditions including, but not limited to, changes in interest rates and the availability and cost of capital;
• The availability of suitable motion pictures for exhibition in our markets;
• Competition in our markets;
• Competition with other forms of entertainment;
• The ability of National CineMedia to secure approvals and satisfy conditions necessary to complete the acquisition of Screenvision;
• The effect of our leverage on our financial condition; and
• Other factors, including the risk factors disclosed in our annual report on form 10-K for the year ended December 31, 2014 and our quarterly
reports on form 10-Q under the caption “risk factors.”
We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements,
which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we undertake no
obligation to update publicly any of these in light of new information or future events.
2
Company Overview
3
Circuit Snapshot

4th largest U.S. exhibitor
 America’s Hometown Theatre
10.5
 2,896 screens
10.0
 Mid-size non-urban markets
 46 Premium large format (PLF) auditoriums


11.0
 273 theatres
 Entertainment complexes across 41 states

Average Screens Per Theatre
Improving operating metrics driven by film
slate performance, concessions and the
integration / impact of acquisitions
New growth initiatives include PLF screens,
enhanced food and beverage menus and
other dining concepts
Expanding upgraded sound, reserved and
reclining seating, other amenities
9.5
10.6
10.6
2013
2014
10.0
9.4
9.5
2010
2011
9.0
8.5
Revenue Per Screen
2012
($ in thousands)
$240
$220
$213.4
$209.4
$238.6
$238.2
2013
2014
$213.4
$200
$180
2010
2011
2012
4
Circuit Snapshot
WA
1
MT
5
OR
1
ID
1
WY
1
MN
6
WI
2
SD
4
CO
4
KS
1
AZ
1
OK
10
NM
1
MO
1
AR
6
IL
12
NY
1
MI
11
IA
5
NE
2
UT
2
CA
6
ND
4
IN
5
OH
5
KY
6
TN
22
AL
20
PA
23
WV
2 VA
4
NC
22
GA
25
NH
1
CT
NJ 3
4
DE,
1
MD
1
SC
8
TX
11
FL
22
Summary of Sites
Shared,
3
Owned,
55
Owned
Leased
States with 1 – 9 Theatres
States with 10 – 19 Theatres
Leased, 215
Shared Ownership
States with 20+ Theatres
5
Carmike Investment Highlights
 America’s Hometown Theatre
 Average 10-14 screens per location / family-friendly
setting
 Presence in locations with minimal entertainment
alternatives
 Unique Hollywood focus
 Connectivity with audience base
 Focus on event films, family animation and sequels
ideal for hometown audiences
 Effective and profitable concessions strategy and
theatre enhancement program
 High concession margins
 Industry-leading concessions per caps
 Enhanced food/beverage menu, including alcohol
 Partnership with IMAX and growing number of PLFs
 Enhanced cash flow per screen
 Execution of accretive acquisitions and new builds
 Acquired Digital Cinema Destinations Corp. (8/15/14)
 Acquired Muvico (11/21/13) and select Cinemark
(8/16/13) and Rave theatre locations (11/15/12)
 Active new-build program
 Strong balance sheet and free cash flow profile
6
Long-Term Industry Box Office Success
and Stability
 Cinema has performed well over
decades
U.S. Annual Box Office Performance (billions $US)
$11
 Annual domestic box office revenues
have exceeded $10 billion every year
since 2009
2014
$10.4
$12
$10
5% Box Office CAGR* (1970-2014)
$9
$8
$7
 2013 was the second consecutive year
the domestic box office broke the alltime record, for a total of $10.9 billion
$6
$5
$4
$3
 Stable industry with consistent pricing
power, despite technological advances
$2
$1
$0
 Inexpensive out-of-home entertainment
option typically resilient to economic
pressures
Commercial Penetration of New Media Forms “Competing” With Box Office:
Cable
 Average ticket price has grown from
$5.66 in 2001 to $8.17 in 2014
VCR
Internet
DVD
Sources: Box Office Mojo, Box Office Magazine
7
Screenvision
 Carmike holds equity position in Screenvision
 Carmike entered into 30-year advertising agreement in October 2010
 Carmike received $30 million pre-tax cash payment on January 4, 2011
 Received approximately 20% equity (profits interest) in Screenvision
 Perfectly aligned partnership
 Screenvision has similar small-town footprint to Carmike
 Local advertiser focus yields synergies
 New relationship forged with respected media investor Shamrock Capital
 Potential future monetization of Screenvision investment
 Currently recorded on Carmike’s financial statements at approximately $6 million
8
Growth Strategy and
Business Initiatives
9
Growth Strategy:
The Case for Industry Consolidation
 Financial resources to complete additional
transactions
 Net debt leverage of 3.2x at 12/31/2014
 Cash on hand ~ $98 million
 Plan to deploy available cash for M&A
 Margin improvement
 Concessions purchases
 Film costs
 Efficiency
 Current infrastructure can support larger footprint
 G&A costs of acquired circuits can be eliminated or
significantly reduced
 Geographic and market size for majority of circuits
are similar to Carmike
 Circuit sizes 6 – 25 have 325 screens on average
 Circuit sizes 26 – 50 have 120 screens on average
Top 50 Circuits1
Circuits 26 - 35
1,400
Screens (rounded to hundred)
Circuits 36 - 50
1,600
Circuits 16 - 25
2,500
Circuits 6 - 15
4,000
Big 4*
19,400
Cineplex
1,600
Big 4*
Cineplex
Circuits 6 - 15
Circuits 16 - 25
Circuits 26 - 35
Circuits 36 - 50
1 Information
•
obtained from January 2013 Box Office Magazine
Excludes Muvico and Digiplex acquired by Carmike
* Big 4 includes Cinemark, Regal, AMC and Carmike
10
Growth Strategy: M&A Activity
Digiplex Acquisition
 Digital Cinema Destinations Corp. (“Digiplex”)
purchase completed 8/15 (midway in Q3 ‘14)
 Digiplex’s circuit included 21 theatres and 206
screens in 8 states
 Acquired 3 theatres and 28 screens from
Digiplex’s acquisition pipeline
 Stock for stock transaction
 Acquired 100% of 7.83 million outstanding
shares at exchange ratio of 0.1765
 Benefits
 Complementary geographic fit
 4 new states
 Circuit mostly in mid-market DMAs
 Was an industry leader in alternative content
 ~5% of total admissions revenue in certain
quarters
 Premium experience expansion
 1 IMAX screen
 D-Box 4-D seats in several locations
11
Alternative Content Opportunities
 Expansion of alternative content focus with
Digiplex acquisition
 In some quarters, up to 5% of Digiplex’s total
box office revenues were generated from
alternative content
 Bud Mayo and Alternative Programming Team
bring alternative content expertise to Carmike
 Pending NCMI acquisition of Screenvision
could lead to greater and improved alternative
content through a consolidated platform*
 Admission per caps for alternative content
features often higher than first-run movies
12
Growth Strategy: M&A Activity
Additional Acquisitions
Muvico Entertainment
Rave Reviews Cinemas
 Muvico Circuit
 9 theatres and 147 screens across 3 states
 Rave Circuit
 16 Theatres and 251 screens located across 7 states
(13 individual markets)
 7 IMAX screens
 Average theatre only 8 years old
 Financial Overview
 $31.8 million purchase price and assumption of
$19.1 million in capital leases / financing obligations
 Highlights
 Good geographic fit with Carmike’s circuit
 4 PLFs (including 2 IMAX)
 2 Bogart’s Restaurants
 D-Box Seating
 Reserved Seating
 Financial Overview
 $22.2 million purchase price and assumption of $110
million in capital leases / financing obligations1
 Highlights
 #1 or #2 in market share in 12 of 13 markets
 Good geographic fit with Carmike’s circuit
 Forged new partnership with IMAX
M&A Timeline
2012
2013
2014
(1) Represents lease obligations assumed subsequent to fair value accounting adjustments
13
Growth Strategy: Build-To-Suit Theatres
Opened New Build Locations
City, State
Announced Pipeline of New Build Locations
Screens
Features
Sandestin, FL
10
Big D / Ovation Dining
Manitowoc, WI
10
Big D
Decatur, AL
12
Big D
Winchester, VA
12
Big D
West Melbourne, FL
12
IMAX
Colorado Springs, CO
13
Big D
Champaign, IL
13
Big D
Opelika, AL
13
Big D
Montgomery, AL
13
Big D
Fayetteville, NC
14
IMAX
Yulee, FL
10
Big D
City, State
Screens
Features
Spring Hill, TN
12
Big D
Altoona, PA
12
Big D
Albuquerque, NM
13
IMAX
Lawton, OK
13
Big D
Tulsa, OK
12
Big D
 Eleven new build-to-suit theatres opened since
January 1, 2013
 5 new-builds completed in 2014 with additional
sites scheduled to open in 2015 and beyond
 BigD or IMAX PLF auditoriums, stadium seating
and single point-of-sale line
 Targeted locations protect existing markets or
expand into new underserved locations
 Partnering with leading REITs / top commercial
developers
 Additional leases signed but not yet announced
14
Theatre Management Strategy
 Focus on details “through the eyes of our patrons”
 Refreshed circuit with clean and well-maintained facilities
 Friendly, well-trained associates
 Appropriate staffing levels help achieve superior
customer experience
 Enhanced theatre utilization
 Alternative programming – leveraging digital platform
 Staggered show-times
 Opening state-of-the art theatres averaging ~12 screens
 Third party ‘build-to-suit’ theatres require less upfront
investment for Carmike
 Digital, cutting-edge entertainment complexes feature
stadium seating and other amenities
 Closing underperforming theatres, exiting expired leases
 Mostly smaller theatres with fewer screens
15
Best-In-Class Concessions
 Excellent, industry-leading margins
 Driving more revenue
 20 straight quarter-over-quarter per cap increases
 Up-selling patrons with combo / value pricing
 Q4 ‘14 set new quarterly record $4.57 spending
 Reusable/refillable popcorn buckets –
per patron
leads to repeat visits/loyalty
 Stimulus Tuesdays (5+ years)
 Enhanced concessions menu
 Single point-of-sale for tickets + concessions
 Additional food and beverage offerings
 Promotions – event films and seasonal
 Freestyle Coke machines – 100+ choices
specials
 Alcoholic beverages
Concessions and Other Revenue per Patron
$5.00
$4.50
CAGR: 6.7%
2010 – 2014
$3.91
$4.00
$3.50
$4.45
$4.19
$3.66
$3.43
$3.00
$2.50
$2.00
2010
2011
2012
2013
2014
16
Dining Initiatives
Carmike currently operates two Ovation Clubs, two Bogart’s Restaurants and other intheatre casual dining concepts
 Ovation Club
 Modernized “dinner-and-a-movie” concept with
upscale, full-service restaurant experience
 Features sophisticated amenities, wall-to-wall
screen, luxury seating, and wide selection of food
and adult beverages
 Bogart’s Restaurant
 Offers premier in-theatre dining experience
 Open Table dinner reservations for before or after
the show
 Guests can enjoy alcoholic beverages before,
during and after the show
 In-Theatre Casual Dining
In-theatre dining drives additional revenue per patron
Multiple in-theatre dining concepts allow Carmike to tailor
to specific markets
 Casual in-auditorium dining with alcoholic and nonalcoholic beverages served by central kitchen and
attentive wait-staff
 Potential to convert older theatres to this model
 Two locations opened early 2015 with one
additional location expected to open late spring
2015
17
In-Theatre Casual Dining
 Opened first full dine-in location in mid-February in
Bloomington, IL
 Opened second full dine-in location in late February in
Richmond, VA
 Opening third full dine-in location in late spring in
Athens, GA
 Locations include  Full-service bar
 Electronic call service for in-seat dining
 Reserved seating
 Full menu including appetizers, entrees, desserts
and adult beverages
18
Financial Summary
19
Key Financial Highlights
 Strengthened balance sheet to pursue growth opportunities (acquisitions, equipment upgrades, new
builds, etc.) vs. paying dividends or repurchasing stock
 Raised aggregate of $144 million through two equity offerings
 Refinanced debt in April 2012 after successfully de-levering to $200 million of bank debt and reducing
net leverage to 2.7x
 Strategic new builds / closures and improved pricing
 Opened 11 new builds since January 1, 2013
 Concessions success with industry-leading margins
 Twenty straight quarters of higher per caps
 Creative experimentation with promotions and merchandising strategies to up-sell patrons and foster
loyalty and repeat visits
 Continue focus on ‘details matter’ strategy
 Improving attendance metrics and encouraging repeat business with customer-centric attitude
 High margins and free cash flow conversion, as well as highly anticipated 2015 box office, to serve
as catalysts to further strengthen balance sheet
20
Financial Stability – 4YR Historical Results
Revenue (in $ millions)
Attendance
$700
60
$600
$262.7
$236.2
$500
$400
(in thousands)
40
$194.3
$172.4
$300
$200
$339.6
$309.8
$427.2
$398.6
20
47.2
50.4
2011
2012
56.7
59.1
2013
2014
$100
0
$0
2011
2012
Admissions
2013
2014
Concessions & Other
Adjusted EBITDA1 (in $ millions)
Admissions/Concessions & Other Per Patron
$8.00
$6.57
$120
$7.23
$7.06
$6.74
$6.00
$4.00
$90
$3.86
$3.65
$4.19
$4.45
$60
$97.4
$2.00
$30
$-
$0
2011
2012
Admissions
2013
Concessions & Other
1See
$98.3
$72.8
2011
2014
$113.4
2012
2013
2014
slide 30 for reconciliation of this financial measure
21
Improved Balance Sheet and Liquidity
 Enhanced operational and financial
performance
 Organic growth, concessions success and
solid box office/attendance
 Record 2012 and 2013 domestic industry
box office results
 Public equity offerings
 April 2012
 Issued 4.6 million shares at $13/share
 Net proceeds totaled $56.2 million
 July 2013
 Issued 5.2 million shares at $18/share
 Accretive acquisitions
 Net proceeds totaled $88 million
Total Stockholders Equity
(in $ millions)
$288.5
$245.8
 Filed new shelf registration statement
registering $225 million equity securities in
August 2013
 $210 million senior secured notes
 Issued on April 27, 2012 to replace the
existing term loan
$149.4
 Fewer covenant restrictions with notes
resulting in increased flexibility to pursue
capital expenditures, M&A, dividends, etc.
$0.1
$(5.6)
2010
2011
2012
2013
2014
 Undrawn $25 million revolving credit facility
22
Theatre Operations Q4 2014
Costs and Expenses1
Interest Expense
7%
 Variable operating margin due to
significant fixed cost structure
Depreciation and
Amortization
7%
 Approximately 80% fixed costs
G&A
5%
Film Exhibition
34%
 Ongoing Initiatives:
Other Theatre
Operating
17%
 Optimize seasonal labor
 Implement purchasing efficiencies
Concession
4%
Theatre Occupancy
13%
1Pie
 Drive operational improvements
 Continued focus on reducing costs
and improving leverage
Salaries and Benefits
13%
chart above indicates costs as percentage of total revenue for quarter ended 12/31/2014
23
2014 Q4 and YTD Financial Update
($ in millions, except per patron data)
2014 v 2013
Change
(%)
($)
Twelve Months Ended
December 31,
2013
2014
Q4 2014
Change
(%)
($)
Three Months Ended
December 31,
2013
2014
Financial Summary
Total Revenue
$
185.4 $
171.8
13.5
7.9%
$
689.9 $
634.8
55.1
8.7%
Theatre Level Cash Flow 1
34.5
38.6
(4.1)
(10.5%)
124.3
135.1
(10.8)
(8.0%)
Adjusted EBITDA1
27.1
33.7
(6.6)
(19.6%)
98.3
113.4
(15.2)
(13.4%)
Adjusted Net (Loss) Income 1
(1.1)
5.6
(6.7)
(119.5%)
(4.3)
12.2
(16.5)
(135.4%)
276
252
24
9.5%
262
247
15
6.1%
Average Screens
2,907
2,623
284
10.8%
2,758
2,516
242
9.6%
Average Attendance Per Screen2
5,351
5,700
(349)
(6.1%)
21,414
22,558
Operating Statistics
Average Theatres
(1,144)
(5.1%)
Average Admissions Per Patron 2
$
7.35 $
7.24
$
0.11
1.5%
$
7.23 $
7.06
$
0.17
2.4%
Average Concessions/Other Per Patron 2
$
4.57 $
4.29
$
0.28
6.5%
$
4.45 $
4.19
$
0.26
6.2%
601
4.0%
2,309
4.1%
Total Attendance (in thousands)2
15,555
14,954
59,056
(1)
See slide 30 for reconciliation of these financial measures
(2)
Includes activity from theatres designated as discontinued operations and reported as such in the Company’s Form 10-K filed in March 2015
56,747
24
Debt Summary
Total Debt
$750
(in $ millions)
Current Maturities of Capital Leases and Long-Term
Financing Obligations
Long-Term Debt
$500
$434.6
$315.5
$250
Interest Expense
$455.3
$449.6
$245.7
$239.9
$118.6
$300
$49.5
$50
$40
$34.1
$51.7
$36.0
$20
$196.9
$209.5
$209.6
$209.7
2011
2012
2013
2014
(in $ millions)
$400
$60
$30
$225.1
$0
Net Debt
(in $ millions)
$10
$0
2011
Net Leverage1
$366.2
$352.0
$311.4
$301.8
2012
2013
2014
(in $ millions)
5.0x
4.1x
3.8x
4.0x
3.2x
2.7x
3.0x
$200
2.0x
$100
1.0x
0.0x
$0
2011
2012
2013
2011
2014
2012
2013
2014*
1Defined
as Net Debt / Adjusted EBITDA
* Proforma for full year Digiplex Adjusted EBITDA
25
Key CKEC Investor Takeaways
 Strong industry outperformance in recent years, driven by…
 Complementary acquisitions of attractive assets
 Customer-centric, theatre-level focus and improvements
 Operational excellence driving concessions promotions/higher per-caps
 New-build state-of-the-art entertainment complexes replacing underperforming theatres
 Right-sized balance sheet with ample liquidity to further expand circuit
 Successfully paid down debt to < 4x net levered
 Strong cash balance and untapped credit facility
 Targeting additional opportunistic M&A growth
 Current corporate overhead can support larger footprint
 Highly anticipated 2015 box office with numerous tent-pole films
26
Outlook
27
2015 Film Slate – Select Titles by Quarter
1Q 2015
2Q 2015
American Sniper
Avengers: Age of Ultron (IMAX/3D)
Taken 3
Fast and Furious 7 (IMAX)
Fifty Shades of Grey
Jurassic World (IMAX/3D)
SpongeBob: Sponge Out of Water
Pitch Perfect 2
Cinderella
Tomorrowland (IMAX/3D)
Kingsman: The Secret Service
Paul Blart: Mall Cop 2
Jupiter Ascending (IMAX/3D)
Ted 2
Divergent: Insurgent (3D)
Mad Max: Fury Road (3D)
3Q 2015
4Q 2015
Minions (3D)
Star Wars: Force Awakens (IMAX/3D)
The Fantastic Four (3D)
Hunger Games: Mockingjay 2 (IMAX)
Pan (IMAX/3D)
James Bond: Spectre (IMAX)
Ant-Man (IMAX/3D)
Victor Frankenstein
Terminator: Genisys (IMAX)
The Good Dinosaur (3D)
Magic Mike XXL
The Jungle Book (IMAX/3D)
Mission Impossible 5
Alvin and the Chipmunks 4
Hotel Transylvania 2 (3D)
The Hateful Eight
28
Appendix
Box Office Performance 2013-14
2014 Top Domestic Grosses
Title
2013 Top Domestic Grosses
Gross1
($mm)
Title
Gross1
($mm)
1.
Guardians of the Galaxy
$332.9
1.
Iron Man 3
$409.0
2.
The Hunger Games: Mockingjay – Pt 1
$313.3
2.
Despicable Me 2
$367.4
3.
Captain America: The Winter Soldier
$259.8
3.
The Hunger Games: Catching Fire
$358.8
4.
The LEGO Movie
$257.8
4.
Man of Steel
$291.0
5.
Transformers: Age of Extinction
$245.4
5.
Monsters University
$268.5
6.
Maleficent
$241.4
6.
Gravity
$252.9
7.
X-Men: Days of Future Past
$233.9
7.
Fast & Furious 6
$238.7
8.
Dawn of the Planet of the Apes
$208.5
8.
Oz The Great and Powerful
$234.9
9.
Big Hero 6
$204.6
9.
Star Trek Into Darkness
$228.8
10.
The Amazing Spiderman 2
$202.9
10.
World War Z
$202.4
Source: Box Office Mojo
1Represents 2014 and 2013 domestic industry box office grosses
29
Appendix
(Unaudited)
Theatre Level Cash Flow and Adjusted EBITDA
Three Months
Twelve Months
Ended December 31,
Ended December 31,
($ in thousands)
2014
Net (loss) income
Income tax expense (benefit)
Interest expense
Depreciation and amortization
EBITDA
Loss (income) from unconsolidated affiliates
Loss (income) from discontinued operations
Merger and acquisition-related expenses
Severance agreement charges
Accelerated share-based compensation expense for certain
retirement eligible employees
Lease termination charges
(Gain) loss on sale of property and equipment
Impairment of long-lived assets
Adjusted EBITDA
General and Administrative expenses
Theatre level cash flow
2013
($2,243)
1,121
12,745
13,331
24,954
180
488
1,913
-
(2,071)
1,655
$27,119
7,428
$34,547
205
485
$33,712
4,900
$38,612
(Unaudited)
2013
($8,942)
(1,407)
51,707
49,234
90,592
(366)
52
4,309
-
$5,753
6,104
49,546
42,378
103,781
(1,643)
(206)
4,162
253
1,913
(1,451)
3,212
$98,261
26,046
$124,307
3,063
275
3,726
$113,411
21,676
$135,087
Adjusted Net Income
Three Months
Ended December 31,
($ in thousands)
2014
Net (loss) income
Impairment of long-lived assets
Merger and acquisition related expenses
Accelerated share-based compensation expense for certain
retirement eligible employees
Lease termination charges
(Gain) loss on sale of property and equipment
Severance agreement charges
Tax effect of adjustments to net (loss) income
Adjusted net (loss) income
2014
$3,851
4,338
12,548
11,376
32,113
(1,162)
(350)
2,270
151
Twelve Months
Ended December 31,
2013
($2,243)
1,655
488
1,913
(2,071)
(834)
($1,092)
2014
$3,851
485
2,270
205
151
(1,369)
$5,593
2013
($8,942)
3,212
4,309
$5,753
3,726
4,162
1,913
3,063
275
253
(5,051)
$12,181
(1,451)
(3,353)
($4,312)
30
Thank You
Carmike Cinemas Inc.
Nasdaq: CKEC
Investor Relations Contacts:
Richard Hare, CFO
Carmike Cinemas
706/576-3416
[email protected]
Robert Rinderman
JCIR
212/835-8500
[email protected]
31
Investor Presentation 2015