Investor Presentation
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, 2017. 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 ATWWW.REGMOVIES.COM. 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, 2017. EBITDA, ADJUSTED EBITDA AND FREE CASH FLOW, AS CALCULATED, MAY NOT BE COMPARABLE TO SIMILARLY TITLED MEASURES REPORTED BY OTHER COMPANIES.
Company Overview
About Us 7,315 561 NYSE ticker—RGC SCREENS THEATRES Market capitalization*—$2.5 billion Annual dividend—$0.88 per share Credit rating—B1/BB- Employees—over 25,000 ~20% 211M CEO—Amy Miles OF NORTH AMERICAN ANNUAL ATTENDEES CFO—David Ownby BOX OFFICE Senior executive average tenure—20 years Company headquarters—Knoxville, TN * Market Cap as of September 30, 2017 market close 4
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 ~68% feature premium amenities 5
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
Strong Industry Fundamentals
Most Affordable Out-of-Home Entertainment Option 2016 Attendance (Millions) 2016 Average Ticket Price Sports $100 $92.98 134 $80 $62.18 $58.35 $55.88 Theme Parks $60 410 $40 $31.00 Cinema $20 1,315 $8.65 $0 NFL NHL NBA Theme MLB Cinema Parks More people went to the movies Family of four can go to the movies for in 2016 than all theme parks, MLB, NFL, under $40 NBA and NHL combined. Source: 2016 MPAA data 8
Our Industry Provides Steady Long-Term Growth INDUSTRY BOX-OFFICE EXCEEDED $10B EACH OF THE LAST 8 YEARS ~4% Box Office CAGR (1986 - 2016) $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Note: Red bar indicates a recession year. 9
Strong Product Slate for Q4 2017 Film Release Date A Bad Moms Christmas 11/03/2017 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 12/25/2017 10
Regal is Outperforming the Industry RGC Box Office Industry Box Office (Millions) (Billions) $2,125 $11.5 $11.3 $2,075 $11.1 $2,025 $10.9 $1,975 $10.7 $1,925 $10.5 $1,875 $10.3 $10.1 $1,825 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 11
High Return Investment Opportunities
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 13
Reseated Theatres—Recent Results Converted screens generated $82 million $82M $38M of incremental revenues and $38 million of incremental adjusted EBITDA in 2016 versus the prior year 2016 incremental 2016 incremental revenues adjusted EBITDA Attendance growth of 12% Average ticket prices at converted locations increased 7.3% in 2016, 400 basis points higher than growth at 12% 7.3% traditional theatre locations Attendance growth 2016 average ticket price increase 14
Luxury Reclining Seats 151 sites and 1,833 screens operating with reclining seats currently ~30% of the circuit with reclining seats by early 2018 Potential for 10%–15% more of the circuit to be converted by 2019 Efficient capital spend, moderate Landlords funded over 50% investment with high return in 2016 15
Large Format Screens 92 IMAX screens 109 RPX screens 16
VIP Concepts Luxury sections inside traditional theatres VIP area with bar and lounge Auditorium service prior to showtime Reserved seating 17
Enhanced Food and Beverage Offerings Expanded food in 255 locations reaching over 59% of attendees, expect to offer in ~270 locations by the end of 2017 Alcohol in 172 locations reaching ~ 36% of attendees, expect to offer in ~200 locations by the end of 2017 Food sales generated over $112M in revenue in 2016 Incremental to EBITDA margin, low investment with moderate return 18
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 19
Financial Review
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 21
Established record of consistent and strong free cash flow generation Free Cash Flow $350 $303 $300 $286 $300 $280 Over $235 $263 $261 million average $242 $250 free cash flow per year $197 $196 $194 $187 $200 $143 $150 $100 $50 $0 2005 2006 2007 * 2008 2009 2010 2011 2012 2013 2014 2015 2016 * Adjusted to exclude $448 million of net cash proceeds from NCMI IPO in 2007 22
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% 13.7% 13.5% 13.4% 12.8% 55.0% 13.0% 53.7% 53.6% 12.7% 52.4% 52.3% 52.0% 50.0% 12.0% 45.0% 11.0% 40.0% 10.0% 2016 2015 2014 2013 2012 2016 2015 2014 2013 2012 23
Liquidity and Debt OUR DIVERSIFIED DEBT STRUCTURE MAXIMIZES FLEXIBILITY AND LIMITS REFINANCE RISK $1,100 $1,000 $775 $750 $500 $250 $250 $250 $0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 5.75% Sr. Notes Due 2022 Sr. Credit Facility 5.75% Sr. Notes Due 2023 5.75% Sr. Notes Due 2025 Net Debt / LTM Adj EBITDA 3.8x 24
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% Avg. ROIC: 13.6% 12% 10% ROIC in excess of Current WACC 8% Current WACC: 6% 6.5% 4% 2% 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ROIC WACC AVG ROIC 1. ROIC = (Operating Income after taxes) / (Equity + Net Debt) 25 2. Source: provided by RGC
Shareholder Value Total Return Since IPO 1 : 310.7% Dividends Since IPO: $ 29.12 Annualized Return: 9.6% Current Dividend Yield: 5.5% $7.00 $6.00 $5.00 $4.00 Special $3.00 Regular $2.00 $1.00 $0.00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Note 1 : Total return assumes gross dividends reinvested in RGC from 05/10/02 to 09/30/17 26
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