Outlook: Carmike Cinemas Surges Ahead of the Industry
Revenue beat from higher-than-expected attendance driven by a family friendly slate and higher average attendance per screen at Muvico screens. Revenue was $172 million, compared with our estimate of $165 million and consensus of $163 million. Adjusted EBITDA was $34 million, compared with our estimate of $33 million. Adjusted EPS was $0.24 (excluding $0.09 per share in one-time charges), compared with our estimate of $0.27 and the consensus estimate of $0.27.
Carmike (NASDAQ:CKEC) Q4:13 metrics were ahead of the industry across the board driven by a family friendly release slate, the Muvico acquisition, and a full quarter of Rave assets. Admissions per screen increased over 6 percent year-over-year compared to the industry increase of roughly 1 percent. Attendance per screen increased over 3 percent compared to the industry attendance decline of almost 3 percent. Concessions and other sales per patron increased over 7 percent to $4.29, setting a new company record and marking the sixteenth consecutive quarter with an increase.
Carmike continues to make theater acquisitions, allowing it to leverage its large theater installed base and management expertise. Carmike is able to drive synergies in such areas as managing a digital theater portfolio, lowering concessions costs, and negotiating with studios in to lower film rental costs. Carmike completed two acquisitions during 2H:13: the first was for three theaters and 52 screens from Cinemark (closed August 2013); the second was for nine theaters and 147 screens from Muvico Theaters (closed November 2013.)
We are increasing our FY:14 estimates for revenue to $744 million from $733 million. Adjusted EBITDA to $146 million from $144 million, and EPS to $1.35 from $1.27 to reflect higher screen count, attendance, and revenue per patron expectations. The company once again did not provide forward guidance.
We are maintaining our OUTPERFORM rating and raising our price target to $35.50 from $31. Our price target reflects 7.5x EV/EBITDA multiple applied to our 2014 estimate plus roughly $40 million for its Screenvision stake. The multiple is slight premium to its historical multiple, which we believe is justified given improving operating results and revenue growth from recent M&A. There is upside to our price target given the potential for substantial earnings upside should revenue surpass expectations. Acquisitions in 2014 would be incremental to our estimates.
Michael Pachter is an analyst at Wedbush Securities.