Carmike Cinemas Inc. Nasdaq: CKEC
Investor Presentation 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 forward- looking 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; • Our ability to comply with covenants contained in our senior indebtedness; • 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 Average Screens Per Theatre
. America’s Hometown Theatre 11.0 10.6 10.6 . 275 theatres 10.5 10.0 . 2,931 screens 10.0 9.4 9.5 . Entertainment complexes across 41 states 9.5 9.0 . Mid-size non-urban markets 8.5 . 51 Premium large format (PLF) auditoriums 2010 2011 2012 2013 2014
. Improving operating metrics driven by film Revenue Per Screen ($ in thousands)
slate performance, concessions and the $238.6 $238.2 integration / impact of acquisitions $240
. New growth initiatives include PLF screens, $220 $213.4 $213.4 $209.4 enhanced food and beverage menus and other dining concepts $200
. Expanding upgraded sound, reserved and $180 reclining seating, other amenities 2010 2011 2012 2013 2014
4 Circuit Snapshot
WA 2 MT ND OR 5 4 MN 1 6 NH ID WI NY 1 1 SD MI WY 3 1 4 10 1 CT PA NE IA NJ 3 5 22 UT 2 OH 4 CA IN 5 1 CO IL WV DE, 8 12 5 4 KS 2 VA 1 MO KY 1 4 MD 1 6 NC 1 AZ TN 1 OK 22 NM 22 11 AR SC 1 6 GA 8 AL 25 19 TX 12
FL Summary of Sites 22 Shared, 3
Owned, States with 1 – 9 Theatres 54 Owned
States with 10 – 19 Theatres Leased Leased, 218 States with 20+ Theatres Shared Ownership
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 Sundance Cinemas (10/6/15) . Acquired Digital Cinema Destinations Corp. (8/15/14) . Active new-build program
. Strong balance sheet and free cash flow profile
6 Long-Term Industry Box Office Success and Stability
U.S. Annual Box Office Performance (billions $US) . Cinema has performed well over $12 2014 decades $10.4 $11 5% Box Office CAGR* (1970-2014) . Annual domestic box office revenues $10 have exceeded $10 billion every year $9 since 2009 $8 $7 . 2013 was the second consecutive year $6 the domestic box office broke the all- $5 time record, for a total of $10.9 billion $4 $3 . Stable industry with consistent pricing $2 power, despite technological advances $1 $0 . Inexpensive out-of-home entertainment option typically resilient to economic Commercial Penetration of New Media Forms “Competing” With Box Office: pressures Cable VCR Internet . Average ticket price has grown from DVD $5.66 in 2001 to $8.17 in 2014 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
. John Partilla appointed CEO in November 2015 . Relationship with respected media investor Shamrock Capital . Potential future monetization of Screenvision investment . Currently recorded on Carmike’s financial statements at approximately $5 million
8 Growth Strategy and Business Initiatives
9 Growth Strategy: The Case for Industry Consolidation
. Financial resources to complete additional Top 50 Circuits1 Screens (rounded to hundred) transactions . Net debt leverage of 2.8x at 9/30/2015 Circuits 36 - 50 Circuits 26 - 35 . Cash on hand ~ $120 million 1,600 1,400 . Plan to deploy available cash for M&A Circuits 16 - 25 2,500 . Margin improvement . Concessions purchases
. Film costs Circuits 6 - 15 Big 4* 4,000 19,400 . Efficiency . Current infrastructure can support larger footprint Cineplex . G&A costs of acquired circuits can be eliminated or 1,600 significantly reduced
. Geographic and market size for majority of circuits Big 4* Cineplex Circuits 6 - 15 are similar to Carmike Circuits 16 - 25 Circuits 26 - 35 Circuits 36 - 50 . Circuit sizes 6 – 25 have 325 screens on average . Circuit sizes 26 – 50 have 120 screens on average 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 Recent Acquisitions
. Sundance Cinemas purchase completed . Digital Cinema Destinations Corp. (“Digiplex”) 10/6/15 for $36 million purchase completed 8/15/14 (midway in Q3 ‘14)
. Sundance’s circuit included 5 theatres and 37 . Digiplex’s circuit included 21 theatres and 206 screens in 4 states screens in 8 states . Located in larger DMA’s . Acquired 3 theatres and 28 screens from Digiplex’s acquisition pipeline . Benefits . Strong brand name . Benefits . All locations have premium food and . Complementary geographic fit beverage options . Was an industry leader in alternative content . ~5% of total admissions revenue in certain quarters
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
. 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 . Rave Circuit . 9 theatres and 147 screens across 3 states . 16 Theatres and 251 screens located across 7 states (13 individual markets) . Financial Overview . 7 IMAX screens . $31.8 million purchase price and assumption of . Average theatre only 8 years old $19.1 million in capital leases / financing obligations . Financial Overview . Highlights . $22.2 million purchase price and assumption of $110 . Good geographic fit with Carmike’s circuit million in capital leases / financing obligations1 . 4 PLFs (including 2 IMAX) . 2 Bogart’s Restaurants . Highlights . D-Box Seating . #1 or #2 in market share in 12 of 13 markets . Reserved Seating . Good geographic fit with Carmike’s circuit . Forged new partnership with IMAX
M&A Timeline
2012 2013 2014 2015
(1) Represents lease obligations assumed subsequent to fair value accounting adjustments 13 Growth Strategy: Build-To-Suit Theatres
Opened New Build Locations
City, State 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 Spring Hill, TN 12 Big D Altoona, PA 12 Big D Lawton, OK 13 Big D Announced Pipeline of New Build Locations
City, State Screens Features Albuquerque, NM 13 IMAX Grand Traverse, MI 14 IMAX Tulsa, OK 12 Big D
Accomplishments
. 14 new build-to-suit theatres opened since January 1, 2013 . Projecting 6 new builds to be completed in 2015 . BigD or IMAX PLF auditoriums, stadium seating and single . Targeted locations protect existing markets or expand point-of-sale line 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 . 23 straight quarter-over-quarter per cap increases . Up-selling patrons with combo / value pricing . Reusable/refillable popcorn buckets – . Enhanced concessions menu leads to repeat visits/loyalty . Additional food and beverage offerings . Stimulus Tuesdays (5+ years) . Freestyle Coke machines – 100+ choices . Single point-of-sale for tickets + concessions . Alcoholic beverages . Promotions – event films and seasonal specials
Concessions and Other Revenue per Patron
$5.00 CAGR: 6.7% 2010 – 2014 $4.45 $4.50 $4.19 $3.91 $4.00 $3.66 $3.43 $3.50
$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 in- theatre 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 . Casual in-auditorium dining with alcoholic and non- alcoholic beverages served by central kitchen and In-theatre dining drives additional revenue per patron attentive wait-staff
Multiple in-theatre dining concepts allow . Potential to convert older theatres to this model Carmike to tailor offerings to specific markets . Three locations opened in 2015
17 Dining Initiatives (cont.)
In-theatre casual dining locations
. Opened first full dine-in location in mid-February in Bloomington, IL
. Opened second full dine-in location in late February in Richmond, VA
. Opened third full dine-in location in mid-July 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.) . Raised aggregate of $144 million through two equity offerings . Refinanced debt in June 2015 to secure lower interest rate and extend maturities
. Strategic new builds / closures and improved pricing . Opened 14 new builds since January 1, 2013
. Concessions success with industry-leading margins . Twenty-three 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 (in millions)
$700 60 $600 $262.7 $500 $236.2 40 $194.3 $400 $168.7 56.7 59.1 $300 47.2 50.4 20 $200 $398.6 $427.2 $303.3 $339.6 $100
$0 0 2011 2012 2013 2014 2011 2012 2013 2014 Admissions Concessions & Other
Admissions/Concessions & Other Per Patron Adjusted EBITDA1 (in $ millions)
$8.00 $7.23 $120 $6.85 $7.06 $6.57
$6.00 $90
$4.19 $4.45 $3.91 $4.00 $3.65 $60 $113.4 $97.4 $98.3 $72.8 $2.00 $30
$- $0 2011 2012 2013 2014 2011 2012 2013 2014 Admissions Concessions & Other 1See slide 30 for reconciliation of this financial measure 21 Improved Balance Sheet and Liquidity
. Enhanced operational and financial . Public equity offerings performance . April 2012 . Organic growth, concessions success and . Issued 4.6 million shares at $13/share solid box office/attendance . Net proceeds totaled $56.2 million . Record 2012 and 2013 domestic industry box office results . July 2013 . Accretive acquisitions . Issued 5.2 million shares at $18/share . Net proceeds totaled $88 million . Filed new shelf registration statement Total Stockholders Equity (in $ millions) registering $225 million equity securities in August 2013 $288.5 $245.8 . $230 million senior secured notes
$149.4 . Issued on June 17, 2015 . Lower interest rate and extended maturity
. Undrawn $50 million revolving credit facility $0.1 . Increased our undrawn revolving credit $(5.6) facility from $25 million to $50 million
2010 2011 2012 2013 2014
22 Theatre Operations Q3 2015
Costs and Expenses1
Interest Expense 8%
Depreciation and . Variable operating margin due to Amortization significant fixed cost structure 8%
G&A . Approximately 80% fixed costs 4% Film Exhibition 32% . Ongoing Initiatives: Other Theatre Operating . Optimize seasonal labor 19% . Implement purchasing efficiencies
Concession . Drive operational improvements 5% . Continued focus on reducing costs and improving leverage Theatre Occupancy Salaries and Benefits 13% 14%
1Pie chart above indicates costs as percentage of total expenses for quarter ended 9/30/2015
23 Q3 2015 and YTD 2015 Financial Update
Three Months Ended Q3 2015 Nine Months Ended 2015 v 2014 September 30, Change September 30, Change ($ in millions, except per patron data) 2015 2014 ($) (%) 2015 2014 ($) (%)
Financial Summary
Total Revenue $ 180.2 $ 162.6 17.6 10.8% $ 583.7 $ 504.5 79.1 15.7%
Theatre Level Cash Flow1 25.6 24.5 1.0 4.2% 108.1 89.8 18.3 20.4%
Adjusted EBITDA1 20.1 19.2 0.9 4.6% 90.7 74.0 16.7 22.5%
Adjusted Net (Loss) Income1 (4.6) (4.1) (0.5) 12.4% 7.3 (1.6) 8.9 (568.6%)
Operating Statistics
Average Theatres 269 269 0.0 0.0% 271 257 14 5.4%
Average Screens 2,875 2,830 45 1.6% 2,885 2,713 172 6.3%
Average Attendance Per Screen2 5,319 5,069 250 4.9% 16,859 15,999 860 5.4%
Average Admissions Per Patron2 $ 7.23 $ 6.98 $ 0.25 3.6% $ 7.36 $ 7.19 $ 0.17 2.4%
Average Concessions/Other Per Patron2 $ 4.55 $ 4.35 $ 0.20 4.6% $ 4.68 $ 4.41 $ 0.27 6.1%
Total Attendance (in thousands)2 15,294 14,348 946 6.6% 48,475 43,500 4,975 11.4%
(1) See slide 30 for reconciliation of these financial measures
24 Debt Summary
Total Debt (in $ millions) Interest Expense (in $ millions)
$60 $750 Current Maturities of Capital Leases and Long-Term $51.7 Financing Obligations $49.5 Long-Term Debt $50
$40 $500 $455.3 $449.6 $36.0 $434.6 $34.1 $30 $315.5 $225.1 $245.7 $239.9 $250 $118.6 $20
$196.9 $209.5 $209.6 $209.7 $10
$0 $0 2011 2012 2013 2014 2011 2012 2013 2014
Net Debt (in $ millions) Net Leverage1
$400 $366.2 5.0x $352.0 4.1x $301.8 $311.4 4.0x 3.8x $300 3.2x 3.0x 2.7x $200 2.0x
$100 1.0x
$0 0.0x 2011 2012 2013 2014 2011 2012 2013 2014* 1Defined as Net Debt / Adjusted EBITDA * Proforma for full year Digiplex Adjusted EBITDA 25 Key CKEC Investor Takeaways
. Strong industry outperformance in recent years, driven by…
. Complementary acquisitions of attractive assets
. Customer-centric, theatre-level focus and improvements
. Operational excellence driving concessions promotions/higher per-caps
. New-build state-of-the-art entertainment complexes replacing underperforming theatres
. Right-sized balance sheet with ample liquidity to further expand circuit
. Successfully paid down debt to < 4x net levered
. Strong cash balance and untapped credit facility
. Targeting additional opportunistic M&A growth
. Current corporate overhead can support larger footprint
. Strong 2015 box office with numerous tent-pole films
26 Outlook
27 2015 Film Slate – Select Titles by Quarter
1Q 2015 2Q 2015
American Sniper Avengers: Age of Ultron (IMAX/3D)
Taken 3 Fast and Furious 7 (IMAX)
Fifty Shades of Grey Jurassic World (IMAX/3D)
SpongeBob: Sponge Out of Water Pitch Perfect 2
Cinderella Tomorrowland (IMAX/3D)
Kingsman: The Secret Service Paul Blart: Mall Cop 2
Jupiter Ascending (IMAX/3D) Ted 2
Divergent: Insurgent (3D) Mad Max: Fury Road (3D)
3Q 2015 4Q 2015
Minions (3D) Star Wars: Force Awakens (IMAX/3D)
The Fantastic Four (3D) Hunger Games: Mockingjay 2 (IMAX)
Pan (IMAX/3D) James Bond: Spectre (IMAX)
Ant-Man (IMAX/3D) Victor Frankenstein
Terminator: Genisys (IMAX) The Good Dinosaur (3D)
Magic Mike XXL The Jungle Book (IMAX/3D)
Mission Impossible 5 Alvin and the Chipmunks 4
Hotel Transylvania 2 (3D) The Hateful Eight 28 Appendix
Box Office Performance 2013-14
2014 Top Domestic Grosses 2013 Top Domestic Grosses
Gross1 Gross1 Title ($mm) Title ($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 $202.4
Source: Box Office Mojo 1Represents 2014 and 2013 domestic industry box office grosses 29 Appendix
(Unaudited) Theatre Level Cash Flow and Adjusted EBITDA Three Months Nine Months ($ in thousands) Ended September 30, Ended Septmeber 30,
2015 2014 2015 2014 Net loss $ (6,257) $ (6,757) $ (7,311) $ (6,699) Income tax benefit ( 2,212 ) ( 2,912 ) ( 3,226 ) ( 2,530 ) Interest expense 12,309 12,846 37,617 38,962 Depreciation and amortization 14,455 12,206 41,289 35,903 EBITDA $ 18,295 $ 15,383 $ 68,369 $ 65,636 Income from unconsolidated affiliates ( 1,039 ) ( 756 ) ( 2,963 ) ( 546 ) Income from discontinued operations - - - 52 Merger and acquisition-related expenses 296 2,262 2,749 4,257 Share-based compensation expense 1,199 826 5,057 2,419 Loss on extinguishment of debt - - 17,550 - (Gain) loss on sale of property and equipment ( 41 ) 292 ( 3,365 ) 620 Impairment of long-lived assets 1,388 1,198 3,258 1,556 Adjusted EBITDA $ 20,098 $ 19,205 $ 90,655 $ 73,994 General and Administrative expenses 5,468 5,325 17,395 15,763 Theatre level cash flow $ 25,566 $ 24,530 $ 108,050 $ 89,757
(Unaudited) Adjusted Net Income Three Months Nine Months ($ in thousands) Ended September 30, Ended September 30,
2015 2014 2015 2014 Net loss $ (6,257) $ (6,757) $ (7,311) $ (6,699) Impairment of long-lived assets 1,388 1,198 3,258 1,556 Loss on extinguishment of debt - - 17,550 - Merger and acquisition related expenses 296 2,262 2,749 4,257 Share-based compensation expense 1,199 826 5,057 2,419 (Gain) loss on sale of property and equipment ( 41 ) 292 ( 3,365 ) 620 Tax effect of adjustments to net loss ( 1,194 ) ( 1,923 ) ( 10,605 ) ( 3,718 ) Adjusted net (loss) income $ (4,609) $ (4,102) $ 7,333 $ (1,565)
30 Thank You Carmike Cinemas Inc. Nasdaq: CKEC
Investor Relations Contacts:
Richard Hare, CFO Norberto Aja and Jennifer Neuman Carmike Cinemas JCIR 706/576-3416 212/835-8500 [email protected] [email protected] Investor Presentation 201531