Cinedigm Digital Cinema Corp. Announces Improved
First Quarter Operating Results
August 13, 2010
Source: Cinedigm
Revenue and Adjusted EBITDA Increase
19% and 17%, Respectively; Reports Strong Progress on Operational
and Structural Initiatives
 Click here for financial results
Cinedigm Digital Cinema Corp reported improved operating results
for the first quarter ended June 30, 2010. The Company also
reported strong progress with its operational and structural
initiatives, as noted below.
Revenues for the first quarter were $19.4 million, representing
a 19.4% increase from the prior year's first quarter of $16.2
million, and 24.0% ahead of the seasonally slow fourth quarter
of fiscal 2010. The Company posted Adjusted EBITDA(1) (defined
below) of $10.5 million, increasing 16.6% from $9.0 million
in the prior year's first quarter, and 24.6% from the fiscal
2010 fourth quarter. The net loss in the first quarter of
$7.1 million, or $0.24 per share -- essentially flat with
the first quarter of the prior year -- includes various non-cash
items aggregating $9.1 million or $0.31
per share.
Adam M. Mizel, interim co-Chief Executive Officer and Chief
Financial Officer, commented, "We are quite pleased with
our first quarter performance, as it demonstrates the progress
we are making against the many strategic and operational initiatives
underway to advance our business.
"The revenue increase in the
first quarter was due to improved performance in nearly all
divisions, including strong virtual print fee revenues growth
during the busy initial summer movie season; $1.6 million
in new revenues from our Digital Cinema Service division as
it earned a full quarter of Phase 1 service fees and expanded
its Phase 2 deployments; improved local and national advertising
sales; strong movie delivery volumes; and the distribution
of several live 3D sports and movie events."
Adjusted EBITDA in the fourth quarter was $10.5 million, an
increase of 16.6% as compared to the year-ago period. This
increase was due to improved operating margins and careful
expense management, partially offset by higher one time SG&A
costs primarily due to $912,000 of non-recurring expense accruals
related to the retirement of Bud Mayo as President and CEO.
Adjusted EBITDA in the first quarter excluding the EBITDA
earned in our Phase 1 and Phase 2 Deployment subsidiaries,
which is pledged to service the non-recourse debt of those
subsidiaries, and excluding the non-recurring CEO transition
costs, was $(469,000). This represents a modest improvement
compared to $(492,000) in the fiscal fourth quarter.
However, Cinedigm would have seen near breakeven Adjusted
EBITDA in this quarter if not for a rescheduling by our exhibitor
partners to fiscal second quarter of 151 budgeted Phase 2
installations. This postponement shifted approximately $460,000
of EBITDA into Q2. As of today, 114 of these rescheduled systems
have been installed, and it is fully anticipated that the
balance of the deferred installations, along with most of
the installations budgeted for the second quarter, will be
successfully deployed.
Cinedigm continues to benefit from positive operating leverage
inherent in the expansion of digital cinema, and expects this
cash flow metric to continue to improve with additional Phase
2 deployments in the balance of our fiscal year.
Cinedigm also successfully completed an important debt refinancing
during the quarter. In May 2010, all of the Company's Phase
1 non-recourse debt was refinanced with $172.5 million of
new non-recourse debt on more favorable terms than the prior
facility, including a reduction in interest rates and greater
covenant flexibility. The new non-recourse facility has a
6-year maturity and received a Ba1 rating from Moody's.
Mr. Mizel noted, "Though the summer months are typically
a quiet period in our business as studios and exhibitors focus
on the extensive summer movie release schedule, Cinedigm has
continued to build momentum.
"The Cinedigm Entertainment Group or 'CEG,' expanded
its market leadership in bringing live 3D sporting events
to theatres, by distributing the NCAA Final Four(R) and Championship
games in April and then in July brought the FIFA World Cup(TM)
Final to theatres. Our content pipeline has expanded with
several significant live events and movie distribution contracts
in final negotiations.
" In addition, yesterday we announced our three year
agreement to become the Digital Cinema Advisor to the Telluride
Film Festival as well as a sponsor of this year's Telluride
Film Festival. We expect this high profile relationship to
support our efforts to build CEG. We are focused on adding
to our management talent with the promotion of John Brownson
to President of Unique Screen Media, our pre-show advertising
subsidiary. We are also excited to nominate Peter Brown, the
former Chairman and CEO of AMC Theaters, to our Board. We
will continue to attract the talent required to capitalize
on our growing opportunities."
Gary S. Loffredo, interim co-Chief Executive Officer, added,
"The completion of the NATO Cinema Buying Group Exhibitor-Buyer
contract in the quarter ended December 31, 2009 re-energized
our ability to finalize agreements with exhibitors. Since
that time, Cinedigm signed 942 screens for Phase 2, bringing
total screens under Master License Agreements (MLAs) to 1,717
screens.
" Even with the summer slowdown, we are in final contractual
discussions with several other significant circuits and have
seen our pipeline expand to over 3,500 systems. We expect
an even busier fall and an expansion of our signed backlog.
To date we have installed 741 Phase 2 systems and more than
4,400 screens in total. Each additional screen install should
create incremental EBITDA."
Mr. Mizel concluded, "We are pleased with and proud of
our progress. We have numerous business opportunities in our
pipeline and are increasingly confident in our prospects for
the balance of this fiscal year and beyond."
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