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A Peek Into The Future of Theatrical Exhibition NASDAQ: DCIN www.digiplexdest.com

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Digital Cinema Destinations Investor Presentation

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Page 1: Dcin 102013

A Peek Into The Future of Theatrical Exhibition

NASDAQ: DCIN

www.digiplexdest.com

Page 2: Dcin 102013

Forward-Looking Statements

Certain statements and estimates in this presentation are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. They include, for example, statements about: expected benefits from the conversion to digital cinema; and the Company’s ability to successfully pursue its strategies. These forward-looking statements are not guarantees of future performance. They are based on management's expectations that involve a number of business risks and uncertainties, including the risks set forth under the heading “Risk Factors” in our 10-K for the year ended June 30, 2013, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Any estimates or other forward-looking statements provided in this presentation speak only as of the date they were made, and, except to the extent required by law, we undertake no obligation to update or review any estimate and/or forward-looking statement because of new information, future events or other factors.

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Investment Highlights

Growth Story: Fastest growing public company in the theater exhibition space

Revenues have grown 3.7x year over year

Potential for significant multiple expansion as company grows in size and liquidity improves

Strong Acquisition Pipeline: Favorable M&A landscape in the theater exhibition industry provides wealth of opportunities

Management has relationships, dialogues, and business history with a vast number of theater owners / prospective acquisition candidates

Content Play: Emphasis on alternative content provides innovative strategy to drive incremental growth and improve capacity utilization

Focused on acquiring proprietary content that can drive customers to theaters at non-peak times

Strong Management Team: Executive team of industry veterans provides outsized experience and knowledge base relative to company size

Pioneers in the digital cinema industry (Clearview / Cinedigm legacy)

Most of the current management team has worked together for over a decade at previous enterprises

Strategic Alliances: Digiplex has meaningful relationships with key industry players, providing material credibility at an early growth stage

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Industry Overview

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Page 5: Dcin 102013

Sources: Box Office Mojo, Box Office Magazine

U.S. Annual Box Office Performance (billions $US)

VCR Internet

DVD

Commercial Penetration of New Media Forms “Competing” With Box Office:

Cable

5% Box Office CAGR* (1970-2011)

2012 $10.8 2012 broke all-time domestic box record

set in 2009 by ~$240 million, for a total of $10.8 billion

Stable industry with consistent pricing power, despite technological advances

Inexpensive out-of-home entertainment option typically resilient to economic pressures

Average ticket price has grown from $5.66 in 2001 to $7.96 in 2012

Long-Term Industry Box Office Success and Stability

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Cinema Has Performed Well Over Decades

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Film Remains the Most Popular and Affordable Out-of-Home Entertainment

Cinemas

Theme Parks

$-

$50

$100

$150

$200

$250

$300

$350

- 200 400 600 800 1,000 1,200 1,400

Ave

rage

Co

st

Popularity (Attendance)

Source: MPAA – Theatrical Market Statistics, 2012

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Page 7: Dcin 102013

Corporate Strategy

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Strategic Overview

Acquisition Plan: Opportunistically expand Digiplex ’s national footprint by identifying and acquiring solid performing theaters in accretive transactions at reasonable cash flow multiples (approx. 4.5x – 6x, including initial CapEx)

Improve the Theater-Going Experience: Further enhance acquired theaters with additional investments in digital technology and focus on customer enjoyment

Increase Utilization: Drive theater-level utilization rates with proprietary and alternative programming to attract targeted niche customers to events at off-peak times

Long-term Goals:

100 theaters/1,000 screens in 75/100 top DMAs

Become a media company: As the platform grows, Digiplex will be increasingly focused on pushing proprietary content through its platform and to other non-owned affiliates

Goal of alternative content reaching 20% of total revenue at high margins, with minimal risk

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Screen Acquisition Landscape

Disciplined Approach

Price: ~4.5x-6x Theater-Level Cash Flow

Includes initial CapEx and cost of improvements

Location: methodical targeting of free zones in top-100 DMAs

Focus on creating media distribution network better tailored to local tastes

Early stage of roll-up allows us to be more opportunistic than our competition geographically

Approximately 40,000 Screens Domestically

~ 20,000 Owned by Top 4 Exhibitors

(AMC, Regal, Cinemark, Carmike)

~8,000 Regional Circuits

~12,000 Disaggregated Independents

Our Opportunity:

We believe that there is a substantial number of theaters within this subset of screens that are ripe for acquisition. We seek acquisition candidates that fit the following:

• Cash Flow Positive • High Quality Assets • Located in Top 100 DMA • Owners Seeking Exit Opportunity

Favorable Industry Trends

Industry has a significant number of smaller-scale regional and “Mom n’ Pop” theatre owners

Ongoing digital conversion of domestic screen base requires significant investment on behalf of owners to stay relevant; often exceeding capital access

These factors have produced significant opportunities in the acquisition pipeline

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Current Footprint:

19 Theaters / 184 Screens

Located in six states (AZ, CA, CT, NJ, OH, PA)

15 of Digiplex’s 19 locations are in top 30 DMAs

100% digital screen base (including 35-40% 3D capable)

Long-Term Goal: Grow to become a national circuit featuring 100 theaters / 1,000 screens in 75 of the

Top 100 DMAs

Added 165 screens since the Company’s IPO in April 2012

Additional Positives:

Joint Venture with Start Media provides acquisition vehicle / capital

The size of DCIN’s footprint allows for better acquisition opportunities (smaller theaters at preferred pricing / purchase multiples)

Digiplex Footprint Overview

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Page 11: Dcin 102013

Digiplex Acquisition History

Theatre Location State Acquisition Date # Theaters # Screens

Transaction

Value ($MM)

TTV /

TLCF

TTV/

Screen

Rialto Westfield New Jersey 6

Cranford Cranford New Jersey 5

Acquisition 1 31-Dec-10 2 11 $1.8 ND $163,636

Bloomfield 8 Bloomfield Connecticut 8

Acquisition 2 17-Feb-11 1 8 $0.1 1.0x $12,500

Cinema Center of Bloomburg Bloomsburg Pennslyvania 11

Cinema Center of Camp Hill Camp Hill Pennslyvania 12

Cinema Center of Fairground Mall Reading Pennslyvania 10

Cinema Center of Selinsgrove Selinsgrove Pennslyvania 12

Cinema Center of Williamsport Williamsport Pennslyvania 9

Acquisition 3 20-Apr-12 5 54 $13.9 4.8x $257,407

Lisbon Theater Lisbon Connecticut 12

Acquisition 4 29-Sep-12 1 12 $6.6 6.0x $550,000

Surprise Point 14 Surprise Arizona 14

Apple Valley Apple Valley California 14

Mission Marketplace Oceanside California 13

Temecula Tower Temecula California 10

Poway Poway California 10

Mission Valley San Diego California 7

River Village Bonsall California 6

Acquisition 5 11-Dec-12 7 74 $12.8 5.0x $172,973

Sparta Sparta New Jersey 3

Acquisition 6 1-Jan-13 1 3 ND ND ND

Solon Solon Ohio 16

Acquisition 7 1-Feb-13 1 16 ND ND ND

Torrington Torrington Connecticut 6

Acquisition 8 19-Jul-13 1 6 $0.6 ND $105,751

Mean 9.6 4.2x $210,378

Median 10.0 4.9x $168,305

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Strategy: Schedule wide range of alternative programming, building awareness and attendance gains through active targeted marketing and comprehensive social media customer engagement initiatives

Long-term goal: Generate 20% of total box receipts from alternative content, improving attendance metrics at ~50% higher ticket price…replacing underperforming Hollywood titles on screen

Progress Update: Continuing to introduce DCIN’s alternative programming, targeted marketing platform, and active, low-cost social-based outreach strategies that were successfully implemented in its first 3 locations to its newly acquired facilities

Alternative programming as a % of total fiscal Q4’13 admissions revenues averaged ~3% at locations owned for more than one year (6% in Q3 ‘13 – less contribution from Hollywood content)

Improve Utilization: Alternative Programming

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Procure Content Schedule Programming Market Events

A diverse range of programming that appeals to wide array of audiences

Ideally Mon.-Thurs., when average cinemas operate at <10% capacity

Digital content allows for timely and targeted schedule and content optimization

Create awareness/interest through DCIN’s consumer engagement initiatives: customer targeting, relationship building, fostering a two-way dialog with guests

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Sample Content and Event Grosses

Day of the Week Event Offered

Event Gross that Day

Highest Grossing Movie that Day

Lowest Grossing Movie that Day

Event Ticket Price (1 adult)

Monday Opera Encore: Die Walkure $453 $250 $0 $12.50

Movie Classic: Star Trek 25th Anniversary $911 $284 $169 $12.50

Opera Encore: Wagner’s Dream $389 $360 $0 $12.50

Tuesday Ballet: Nutcracker Live $1,345 $125 $0 $20.00

Concert: Rolling Stones Live in 1978 $672 $90 $9 $12.50

Ballet: Le Corsaire $566 $125 $0 $15.00

Wednesday Broadway: West Side Story $2,425 $73 $56 $12.50

Broadway: Love Never Dies $1,422 $108 $0 $12.50

Opera: La Traviata $1,340 $93 $0 $20.00

Thursday Movie Classic: Singin’ in the Rain $2,603 $608 $48 $12.50

Art Show: Leonardo Live $1,592 $272 $20 $12.50

Movie Classic: Singin’ in the Rain $955 $235 $28 $12.50

Saturday Opera Live: Don Giovanni $7,073 $530 $21 $25.00

Opera Live: La Traviata $3,850 $1,169 $48 $12.50

Sports: Mayweather vs. Ortiz $1,817 $2,037 $44 $18.00

Sunday Opera Live: Phantom of the Opera $1,104 $282 $28 $18.00

Ballet: Le Corsaire $976 $309 $8 $15.00

Los Angeles Philharmonic $479 $309 $8 $18.00

Averages: $783.31 $497.05 $76.41 $15.01

Improve Utilization: Alternative Programming Successes

Alternative programming consistently outperforming lowest (and often highest) grossing movies…at higher prices

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15%

20%

25%

30%

Mon Tues Wed Thurs Fri Sat Sun

Weekly Box Office Contribution (Historical) Goal for Alternative Content

Source: BoxOfficeMojo.com, 2012 daily domestic box office data

Conceptual Overview: Alternative Content to Drive Utilization

Long-Term Goal: Achieve 20% Box Office Contribution from Alternative Content

High Margin / Low Risk

Benefits of Alternative Content:

Drive incremental weekday attendance

Smooth out the daily demand curve

Generate attractive admission premiums

Longer-term downstream revenue opportunities

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DigiNext Value-Creation Opportunity

Unique, specialty content joint venture with Nehst Studios featuring a curated series of documentaries and indie features (hand-selected from world’s leading film festivals) shown on Digiplex circuit and at friendly, non-competing theaters

Forged unique alternative content distribution alliance with cinema advertising giant potential platform of 14,000+ Screenvision theater network auditoriums across the US

DCIN receives 50% of all net downstream/ancillary revenues including DVD, digital downloads and international broadcast rights

Additional features and unique benefits of DigiNext: Opportunity for innovative live Q&A between audience and cast members Affordable pricing ($7.00 per ticket, or $6.00 if 5-title subscription purchased) ‘Pay it Forward’ – a charitable program allowing Digiplex patrons to give back to their community ~Ten releases/year (excluding high-traffic ‘holidays’)

Using Digital Technology to Serve Diverse Audience

Leveraging digital technology in innovative ways to enhance entertainment options

Select DCIN theater locations have started presenting special engagements of major Hollywood movie releases with both Spanish and English sound tracks

Participating locations include, Apple Valley and San Diego, CA, and Reading, PA

DCIN plans to expand this entertainment option to include more locations and to feature Asian and other foreign language presentations in addition to Spanish

February 2013 March 2013 April 2013 August 2013 December 2013

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Bud Mayo, Chairman and CEO (Board Member): Industry veteran with over two decades of experience. Previously, Bud founded and led both Cinedigm Digital Cinema Corp., the pioneer and leader in digital cinema, and Clearview Cinema Group, a top U.S. theater circuit. In recognition of his efforts within the industry, Bud received the distinct honor of being inducted into the film exhibition Hall of Fame at the industry's 2010 ShowEast conference.

Brian Pflug, CFO (Board Member): Former Controller at Clearview Cinemas and former SVP of Accounting and Finance at Cinedigm Digital Cinema Corp. Mr. Pflug has worked with Bud Mayo since 1998, when Brian was controller at Clearview Cinemas. The two then worked together at Cinedigm Digital Cinema Corp. where Brian rose to senior vice president of Accounting and Finance, his most recent position before Digiplex.

Chuck Goldwater, Senior Vice President (Board Member): Industry veteran with over two decades of experience. Former CEO of Digital Cinema Initiatives, the major studio consortium that set digital standards; and was the former Head of Cinedigm’s digital cinema unit. Chuck has held senior management positions at a number of leading theater exhibitors including USA Cinemas, National Amusements and Loews Theatres, and he served as President/CEO of Mann Theatres and President at Clearview Cinemas.

Jeff Butkovsky, Chief Technology Officer: Jeff has an extensive background in digital cinema and over 25 years in

technology management, software development and technology sales. He was Cinedigm Digital Cinema Corp.’s Senior Vice President and Chief Technology Officer from October 2000 to July 2010.

Experienced Management Team of Industry Pioneers

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Digiplex Corporate Officers

Page 17: Dcin 102013

Case Study: Clearview Cinemas

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Sep. 1994: Co-founded by Bud Mayo with 4 theaters and 8 screens

Dec. 1994: Received equity from CMNY Capital and added 3 screens

1995: Acquired 3 theaters and 11 screens

May 1996: Received equity investment of $4.5M from MidMark Capital

1996: Acquired 9 theaters and 39 screens

Aug. 1997: IPO – Sold 1.15M shares for $9.2M gross

Jan. – Sep. 1998: Acquired 11 theaters and the right to operate one theater for a total of 54 screens

1997: Acquired 14 theaters with 79 screens, added 6 screens to acquired theaters and constructed a 5-screen theater

Dec. 1998: Sale to Cablevision (NYSE: CVC) for $160M, including New York City’s Ziegfeld Theatre

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS: The above information is presented solely for informational purposes, and no representation, warranty or guarantee is being made relative to the future performance of the Company or the trading price of its Class A common stock whatsoever.

Share Price Aug 21, 1997 (market open): $ 8.00

Sold for Share Price Dec 8, 1998 (on or about 12/8): $24.25

Hold Time (# of days): ~ 474

Return on Investment (approximate): 233%

1994

Clearview Cinemas Corporate Timeline

1995 1996 1997 1998

Bud Mayo co-founded Clearview with four theaters and sold the company to Cablevision four years later

Attractive exit price for IPO investors:

Page 18: Dcin 102013

Carmike Cinemas Case Study

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DCIN Screen Count DCIN Return

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Page 19: Dcin 102013

Key Strategic Partnerships

Joint Venture Partner

•Up to $20MM in acquisition capital

On Screen Advertising Partner

•($0.17 per patron, ~50/50 split)

•Content through Fathom

Point-of-Sale Software

•Integrated with EMS and ERP

Negotiating Partner with Film Distributors

•Monthly flat fee for license fee negotiations

Exhibitor Management Services Platform

•EMS tracks ticketing, receipts, revenue, payments, scheduling

Specialty Content JV

•Provides documentaries and indie features

•Alternative Content Distributor

•14,000 screen network

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Start Media Joint Venture

Formation: December 10, 2012

Purpose: To acquire, refit and operate movie theaters

Start Media has committed to contribute up to $20 million.

Agreement:

JV is managed by a four person board of managers (equal representation)

As of June 30, 2013, Digiplex and Start Media owned 33% and 67% of the equity of JV, respectively

JV has a first right of refusal to acquire any theaters DCIN wishes to acquire, except for any theaters within a ten mile radius of existing Digiplex owned theaters. If JV does not exercise its right of first refusal, DCIN has the right to make the acquisition independently.

Agreement for ten years, optional renewal of terms in 2022

Progress Update:

Digiplex has contributed 961,393 shares of Class A common stock

Start Media has contributed approximately $10.3 million in cash to date

Capital contributions were used for the UltraStar acquisitions, the Torrington theater acquisition, and to fund anticipated capital expenditures for JV-owned theaters

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Financials

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(1) Theater level cash flow and Adjusted EBITDA are supplemental non-GAAP financial measures. These metrics as shown above are net of Start Media’s share of these items.

Selected Financials and Operating Metrics

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($ in thousands) 2013 2012 % ∆ 2013 2012 % ∆

Admission revenue 7,578 2,651 186% 21,305 4,738 350%

Concession revenue 3,301 1,032 220% 8,889 1,646 440%

Other 322 113 185% 990 287 245%

Total Revenue 11,201 3,796 195% 31,184 6,671 367%

Net Loss (1,209) (1,002) NM (5,256) (1,967) NM

Gross Margin Analysis

Box office less exhibition cost gross margin 47.3% 44.0% 8% 49.8% 49.6% 0%

Concession gross margin 82.0% 81.9% 0% 83.2% 82.1% 1%

Theatre level cash flow (1) 1,922 701 174% 5,633 1,251 350%

Adjusted EBITDA (1) 888 32 NM 2,366 (410) NM

Key Operating Metrics

Theaters 18 8 125% 18 8 125%

Average Screens 178 62 187% 130 30 333%

Total attendance (in thousands) 1,009 339 198% 2,852 570 400%

Average attendance per screen 5,667 5,506 3% 22,014 19,331 14%

Average admission per patron 7.92$ 7.82$ 1% 7.83$ 8.31$ (6%)

Average concessions sales per patron 3.45$ 3.04$ 13% 3.27$ 2.89$ 13%

Sales Total Per Patron 11.37$ 10.86$ 5% 11.10$ 11.20$ (1%)

Three Months Ended Twelve Months Ended

June 30, June 30,

Page 23: Dcin 102013

Selected Financials and Operating Metrics

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Assets Liabilities and Equity

($ in thousands) 2013 2012 ($ in thousands) 2013 2012

Cash and Equivalents 3,607 2,037 Accounts payable 2,478 851

Accounts Receivable 697 238 Accrued expenses 3,964 1,088

Inventories 191 78 Payable to vendor for digital systems - 3,334

Deferred financing costs, current portion 357 - Notes payable, current portion 1,373 1,000

Prepaid expenses and other current assets 1,444 381 Capital lease, current portion 121 -

Total Current Assets 6,296 2,734 Earnout from theater acquisition 296 79

Deferred revenue 305 31

Property and equipment, net 29,171 15,432 Total Current Liabilities 8,537 6,383

Goodwill 3,156 980

Intangible Assets 6,186 4,114 Notes payable, long-term portion 8,615 -

Security deposit 205 3 Capital lease, net current portion 239 -

Deferred financing costs, long-term portion, net 1,225 - Unfavorable leasehold liability, long-term portion 159 190

Other Assets 9 14 Deferred rent expense 407 83

Total Assets 46,248 23,277 Deferred tax liability 199 39

Total Liabilities 18,156 6,695

Preferred stock - -

55 45

9 9

Additional paid in capital 25,816 19,285

Accumulated deficit (7,049) (2,757)

Total stockholder equity 18,831 16,582

Noncontrolling Interest 9,261 -

Total Equity 28,092 16,582

Class B Common Stock (900,000 shares authorized,

865,000 and 900,000 issued and outstanding as of June 30,

2013 and 2012)

Twelve Months Ended

June 30,

Class A Common Stock (20,000,000 shares authorized,

5,511,938 and 4,519,452 issued and outstanding as of June

30, 2013 and 2012)

June 30,

Twelve Months Ended

Page 24: Dcin 102013

Digiplex Model Summary – “Cinema Reinvented”

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Cash flow positive theaters

Top DMAs

Pay reasonable cash flow multiples (including initial CapEx)

Convert analog systems

Integrate into DCIN digital platform

Add additional screens where feasible/profitable

Theaters to entertainment destinations

Innovative programming + social media = increased seat utilization (especially on slow weeknights)

ex: Sporting Events, Opera, Ballet

ACQUIRE

CONVERT & INVEST

TRANSFORM

Software systems provide flexibility/efficiency/lower expenses

Virtual print fees (VPF) benefit theater level cash flows, offsetting film rent

Participation on NCM national

pre-show ad network (19K+ screens)

Generating guaranteed per attendee minimum rate…or better

Attendance gains lead to enhanced concession revenues at attractive gross margins (>80%)

3D (36% of footprint is 3D compatible)

Alternative programming (~50%+ higher ticket prices)

Ad revenues of 17¢ per patron is NCM minimum guarantee

COST REDUCTIONS

PRE-SHOW ADVERTISING

INCREMENTAL REVENUES

Page 25: Dcin 102013

Investment Highlights

Growth Story

Strong Acquisition Pipeline

Content Play

Strong Management Team

Strategic Alliances

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