Investor Presentation

Transcription

1 Investor Presentation

2 THIS PRESENTATION INCLUDES FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ALL STATEMENTS INCLUDED HEREIN, OTHER THAN STATEMENTS OF HISTORICAL FACT, MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO BE CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE COMPANY S EXPECTATIONS ARE DISCLOSED IN THE RISK FACTORS CONTAINED IN THE COMPANY S 2016 ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE SEC ) ON FEBRUARY 27, ALL FORWARD-LOOKING STATEMENTS ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY SUCHFACTORS. THIS PRESENTATION CONTAINS REFERENCES TO NON-GAAP FINANCIAL MEASURES INCLUDING ADJUSTED EBITDA (NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST ADJUSTED FOR INTEREST EXPENSE, NET, PROVISION FOR INCOME TAXES, DEPRECIATION AND AMORTIZATION, NET LOSS ON DISPOSAL AND IMPAIRMENT OF OPERATING ASSETS AND OTHER, SHARE-BASED COMPENSATION EXPENSE, ACQUISITION RELATED COSTS, LOSS ON EXTINGUISHMENT OF DEBT, EARNINGS RECOGNIZED FROM NCM, CASH DISTRIBUTIONS FROM NCM AND OTHER NON-CONSOLIDATED ENTITIES, AND NONCONTROLLING INTEREST, NET OF TAX AND EQUITY IN INCOME OF NON-CONSOLIDATED ENTITIES AND OTHER, NET). A RECONCILIATION OF CURRENT YEAR NON-GAAP FINANCIAL MEASURES IS AVAILABLE ON THE COMPANY S WEB SITE AT WE BELIEVE EBITDA, ADJUSTED EBITDA AND FREE CASH FLOW PROVIDE USEFUL MEASURES OF CASH FLOWS FROM OPERATIONS FOR OUR INVESTORS BECAUSE EBITDA, ADJUSTED EBITDA AND FREE CASH FLOW ARE INDUSTRY COMPARATIVE MEASURES OF CASH FLOWS GENERATED BY OUR OPERATIONS AND BECAUSE THEY ARE FINANCIAL MEASURES USED BY MANAGEMENT TO ASSESS THE LIQUIDITY AND PERFORMANCE OF OUR COMPANY. EBITDA, ADJUSTED EBITDA AND FREE CASH FLOW ARE NOT MEASUREMENTS OF LIQUIDITY OR PERFORMANCE UNDER U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND SHOULD NOT BE CONSIDERED IN ISOLATION OR CONSTRUED AS A SUBSTITUTE FOR OTHER OPERATIONS DATA OR CASH FLOW DATA PREPARED IN ACCORDANCE WITH U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR PURPOSES OF ANALYZING OUR LIQUIDITY OR PERFORMANCE. IN ADDITION, NOT ALL FUNDS DEPICTED BY EBITDA, ADJUSTED EBITDA AND FREE CASH FLOW ARE AVAILABLE FOR MANAGEMENT S DISCRETIONARY USE. FOR EXAMPLE, A PORTION OF SUCH FUNDS ARE SUBJECT TO CONTRACTUAL RESTRICTIONS AND FUNCTIONAL REQUIREMENTS TO PAY DEBT SERVICE, FUND NECESSARY CAPITAL EXPENDITURES AND MEET OTHER COMMITMENTS FROM TIME TO TIME AS DESCRIBED IN MORE DETAIL IN THE COMPANY S 2016 ANNUAL REPORT ON FORM 10-K FILED WITH THE SEC ON FEBRUARY 27, EBITDA, ADJUSTED EBITDA AND FREE CASH FLOW, AS CALCULATED, MAY NOT BE COMPARABLE TO SIMILARLY TITLED MEASURES REPORTED BY OTHER COMPANIES.

3 Company Overview

4 About Us 7,379 SCREENS ~20% OF NORTH AMERICAN BOX OFFICE 566 THEATRES 211M ANNUAL ATTENDEES NYSE ticker RGC Market capitalization* $3.2 billion Annual dividend $0.88 per share Credit rating B1/BB- Employees over 25,000 CEO Amy Miles CFO David Ownby Senior executive average tenure 20 years Company headquarters Knoxville, TN * Market Cap as of June 30, 2017 market close 4

5 Regal is a Leader in the U.S. Exhibition Industry Geographic Diversification States: 43 + D.C & 3 U.S. territories Markets: 48 out of Top 50 Modern Asset Base Sony 4K Digital Projection ~65% feature premium amenities 5

6 Attractive Business Model Stable industry with consistent, long-term growth High return investment opportunities augmenting top- and bottom-line growth Substantial, and consistent, free cash flow generation Established track record of effective and efficient capital allocation 66

7 RGC Yielding Consistent and Outsized Returns Total Return ( ) 400% 350% 300% RGC 352% 250% 200% 150% 100% S&P % 50% 0% Note: Assumes dividend re-investment on ex-dividend date 7

8 Strong Industry Fundamentals

9 Most Affordable Out-of-Home Entertainment Option 2016 Average Ticket Price 2016 Attendance (Millions) $100 $80 $60 $40 $20 $92.98 $62.18 $55.88 $58.35 $31.00 $8.65 Theme Parks 410 Sports 134 Cinema 1,315 $0 NFL NHL NBA Theme Parks MLB Family of four can go to the movies for under $40 Cinema More people went to the movies in 2016 than all theme parks, MLB, NFL, NBA and NHL combined. Source: 2016 MPAA data 9

10 Our Industry Provides Steady Long-Term Growth INDUSTRY BOX-OFFICE EXCEEDED $10B EACH OF THE LAST 8 YEARS $12.0 ~4% Box Office CAGR ( ) $10.0 $8.0 $6.0 $4.0 $2.0 $ Note: Red bar indicates a recession year. 10

11 Strong Product Slate for 2017 Film Release Date Dunkirk 07/21/2017 Thor: Ragnarok 11/03/2017 Murder on the Orient Express 11/10/2017 Justice League 11/17/2017 Coco 11/22/2017 Star Wars: The Last Jedi 12/15/2017 Ferdinand 12/15/2017 Jumanji: Welcome to the Jungle 12/20/2017 Pitch Perfect 3 12/22/2017 Greatest Showman 12/25/

12 Regal is Outperforming the Industry RGC Box Office (Millions) $2,125 $2,075 $2,025 $1,975 $1,925 $1,875 Industry Box Office (Billions) $11.5 $11.3 $11.1 $10.9 $10.7 $10.5 $10.3 $1, $

13 High Return Investment Opportunities

14 High Return Investment Opportunities Re-seat theatres with luxury recliners Enhanced food and beverage offerings Addition of large-format IMAX and RPX screens Enhanced loyalty program 14

15 Reseated Theatres Recent Results Converted screens generated $82 million of incremental revenues and $38 million of incremental adjusted EBITDA in 2016 versus the prior year Attendance growth of 12% Average ticket prices at converted locations increased 7.3% in 2016, 400 basis points higher than growth at traditional theatre locations $82M 2016 incremental revenues 12% Attendance growth $38M 2016 incremental adjusted EBITDA 7.3% 2016 average ticket price increase 15

16 Luxury Reclining Seats 138 sites and 1,691 screens operating with reclining seats currently ~30% of the circuit with reclining seats by year end 2017 Efficient capital spend, moderate investment with high return Potential for 10% 15% more of the circuit to be converted by 2019 Landlords funded over 50% in

17 Large Format Screens 92 IMAX screens 109 RPX screens 17

18 VIP Concepts Luxury sections inside traditional theatres VIP area with bar and lounge Auditorium service prior to showtime Reserved seating 18

19 Enhanced Food and Beverage Offerings Expanded food in 247 locations reaching over 57% of attendees, expect to offer in ~270 locations by the end of 2017 Alcohol in 172 locations reaching ~ 35% of attendees, expect to offer in ~215 locations by the end of 2017 Food sales generated over $112M in revenue in 2016 Incremental to EBITDA margin, low investment with moderate return 19

20 Enhanced Loyalty Program Regal Crown Club Largest program in the industry with over 14 million active members Loyalty club members spent $1.1 billion in fiscal 2016 Enhancements to loyalty program are focused on driving usage, attendance and spend 20

21 Financial Review

22 Capital Allocation Strategy Focus on efficient investments with medium to high returns Augment internal growth with selective M&A and new builds Continue to return capital to shareholders via annual and special dividends, when appropriate 22

23 Established record of consistent and strong free cash flow generation Free Cash Flow $350 $300 $250 $200 $300 $187 $280 $303 $196 $286 $263 $242 $194 $261 $197 Over $235 million average free cash flow per year $150 $143 $100 $50 $ * Adjusted to exclude $448 million of net cash proceeds from NCMI IPO in 2007 * 23

24 Size and Scale Advantage CONSISTENTLY LOW OPERATING COSTS DRIVEN BY SCALE AND OPERATIONAL EFFICIENCY Film Rent & Ad Costs Cost of Concession 65.0% 15.0% 60.0% 14.0% 13.4% 13.7% 13.5% 55.0% 53.7% 53.6% 52.4% 52.3% 52.0% 13.0% 12.8% 12.7% 50.0% 12.0% 45.0% 11.0% 40.0% %

25 Liquidity and Debt OUR DIVERSIFIED DEBT STRUCTURE MAXIMIZES FLEXIBILITY AND LIMITS REFINANCE RISK $1,000 $1,103 $750 $775 $500 $250 $250 $250 $ % Sr. Notes Due 2022 Sr. Credit Facility 5.75% Sr. Notes Due % Sr. Notes Due 2025 Net Debt / LTM Adj EBITDA 3.5x 25

26 Return on Invested Capital SINCE 2002 WE HAVE GENERATED AN AVERAGE 13.6% RETURN ON INVESTED CAPITAL 1, COMPARED TO A 6.5% WEIGHTED AVERAGE COST OF CAPITAL 2 (CURRENT) 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% ROIC in excess of Current WACC ROIC WACC AVG ROIC Avg. ROIC: 13.6% Current WACC: 6.5% 1. ROIC = (Operating Income after taxes) / (Equity + Net Debt) 2. Source: provided by RGC 26

27 Shareholder Value Total Return Since IPO 1 : 417.9% Dividends Since IPO: $ Annualized Return: 11.5% Current Dividend Yield: 4.3% $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $ Special Regular Note 1 : Total return assumes gross dividends reinvested in RGC from 05/10/02 to 06/30/17 27

28 Summary Augmenting stable underlying industry growth through selective investments with strong returns Resolutely focused on producing superior long-term returns for our shareholders Substantial internal and external growth opportunities remain Strong balance sheet and substantial free cash flow to support growth and return of capital to shareholders 28

29 Appendix

30 5 Year Financial Overview $ IN MILLIONS Revenue $ 3,197.3 $ 3,127.3 $ 2,990.1 $ 3,038.1 $ 2,820.0 Net income Adjusted EBITDA Percent of Revenue 19.7% 19.4% 19.3% 19.7% 20.5% Cash provided by operating activities Capital expenditures, net Free Cash Flow Percent of Revenue 6.2% 8.3% 6.5% 8.0% 9.3% 30

31 Reconciliation of Net Income to EBITDA $ IN MILLIONS Net income $ $ $ $ $ Interest expense, net Provision for income taxes Depreciation and amortization EBITDA $ $ $ $ $

32 Reconciliation of EBITDA to Net Cash Provided by Operating Activities $ IN MILLIONS EBITDA $ $ $ $ $ Interest expense, net (128.1) (129.6) (126.5) (141.3) (135.0) Provision for income taxes (111.2) (100.1) (73.4) (107.0) (89.5) Deferred income taxes 2.4 (10.9) 6.6 (11.8) 52.4 Changes in operating assets and liabilities (67.4) 35.5 (42.9) (5.0) (68.3) Gain on sale of NCM, Inc (30.9) Loss on extinguishment of debt Landlord contributions Other items, net (3.8) Net cash provided by operating activities $ $ $ $ $

33 Reconciliation of EBITDA to ADJUSTED EBITDA $ IN MILLIONS EBITDA $ $ $ $ $ Net loss on disposal & impairment Share based compensation Gain on sale of NCM, Inc. (30.9) Loss on extinguishment of debt Earnings recognized from NCM (29.4) (31.0) (32.1) (37.5) (34.8) Cash distributions from NCM and other non-consolidated entities Noncontrolling interest, net of tax and equity in income of non-consolidated entities and other, net (43.8) (38.5) (29.4) (28.5) (2.0) Adjusted EBITDA $ $ $ $ $