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

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Presentation on theme: "A Peek Into The Future of Theatrical Exhibition NASDAQ: DCIN www.digiplexdest.com."— Presentation transcript:

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

2 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. 2

3 Investment Highlights  Growth Story: Fastest growing public company in the theater exhibition space  Revenues have risen approximately 167%, year-over-year in calendar 2013 vs 2012  Potential for multiple expansion as DCIN grows in size and trading float and liquidity further improve  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  Experienced 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 legacies)  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 and vendors, providing material credibility at still early growth stage 3

4 Industry Overview 4

5 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* (1970-2013) 2013 $10.9  2013 marks the second consecutive year the domestic box office broke the all-time record, for a total of $10.9 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 $8.05 in 2013 Long-Term Industry Box Office Success and Stability 5 Cinema Has Performed Well Over Decades

6 Film Remains the Most Popular and Affordable Out-of-Home Entertainment Source: MPAA – Theatrical Market Statistics, 2012 6

7 Corporate Strategy 7

8 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 locations 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 when attendance is traditionally very low  Long-term Goals:  National Footprint: 100 theaters/1,000 screens in 75/100 top market areas  Become a media company: As the platform grows, DCIN 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 8

9 Screen Acquisition Landscape Disciplined Approach  Price: ~4.5x-6x Theater-Level Cash Flow  Includes initial CapEx  Location: methodical targeting of free zones in top- 100 market areas  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” theater 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 9

10  Current Footprint:  20 Theaters / 192 Screens  Located in seven states (AZ, CA, CT, MD, NJ, OH, PA)  75% of Digiplex’s 20 locations are in top 30 DMAs  100% digital screen base (including 35-40% 3D capable)  Pro forma Footprint (based on announced theater signings to date):  23 Theaters / 226 Screens  Located in nine states (AZ, CA, CT, FL, MD, NH, NJ, OH, PA)  ~80% of Digiplex’s 23 locations will be in top 30 DMAs  100% digital screen base (including 35-40% 3D-enabled)  Long-Term Goal: Grow to become a national circuit featuring 100 theaters / 1,000 screens in 75 of the Top 100 DMAs  Will have grown more than 11-fold in the nearly two years since IPO (including all announced transactions)  Additional Positives:  Joint Venture with Start Media has been a successful acquisition vehicle  The size of DCIN’s footprint allows for better acquisition opportunities (independently owned theaters at preferred purchase multiples, with frequent stock component) Digiplex Footprint Overview 10

11 Digiplex Transaction History 11 Note: Rows highlighted in blue indicate closed transactions. Rows highlighted in grey indicate announced transactions.

12  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 revenues 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 locations to its newly acquired facilities  Alternative programming as a % of total fiscal Q2’14 admissions revenues averaged 4% at all locations, not just those that were owned for longer periods of time. This far exceeds other circuits’ published data. Improve Utilization: Alternative Programming 12 Procure ContentSchedule ProgrammingMarket 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

13 13 Sample Content and Event Grosses Day of the WeekEvent 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

14 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 14

15 15  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

16  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, Executive 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 16 Digiplex Corporate Officers

17 Case Study: Clearview Cinemas 17 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 1995199619971998  Bud Mayo co-founded Clearview with four theaters and sold the company to Cablevision four years later  Attractive exit price for IPO investors:

18 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 18

19 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 December 31, 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 Class A common stock valued at over $5 million  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 19

20 Financials 20

21 (1) Consolidated Theater level cash flow and Adjusted EBITDA of DCIN are supplemental non-GAAP financial measures. Selected Financials and Operating Metrics 21

22 Selected Financials and Operating Metrics 22

23 Digiplex Model Summary – “Cinema Reinvented” 23  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

24 Investment Highlights  Growth Story  Strong Acquisition Pipeline  Content Play  Experienced Management Team  Strategic Alliances 24


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