Movie Gallery's 1st-Qtr. Revenues Increase 12.4%3 May, 2001 By: Hive News
Movie Gallery Inc. on Wednesday announced financial results for the first quarter of 2001, reporting that revenues for the quarter, a 13-week period ended April 1, 2001, increased to $91,571,000, up 12.4% from $81,493,000 for the first quarter of 2000, a 13-week period ended April 2, 2000. Net income increased 3.1% to $4,019,000 for the quarter from $3,900,000 for the first quarter last year, while earnings per diluted share increased 9.4% to $0.35 from $0.32.
During the first quarter, the company incurred a previously announced nonrecurring charge related to the amendment of its supply agreement with Rentrak Corporation of $1,600,000 ($954,000, or $0.08 per diluted share, after tax). Results for the first quarter also include a charge of $811,000 ($483,000, or $0.04 per diluted share, after tax) related to non-cash compensation expense associated with the repricing of stock options. Excluding these charges, net income for the first quarter was $5,456,000, or $0.47 per diluted share.
Adjusted EBITDA, excluding the nonrecurring charge and the non-cash compensation, for the latest quarter increased 26.5% to $16,025,000 from $12,664,000 for the same prior-year period. Cash earnings (net income before amortization of intangibles and non-cash compensation, excluding the nonrecurring charge) increased 39.1% to $0.64 per diluted share from $0.46 per diluted share.
"We are very pleased to have added to the earnings momentum demonstrated by Movie Gallery over the past three years, with the strongest quarterly performance in the company's history," remarked Joe Malugen, chairman and c.e.o. of Movie Gallery. "Our revenues for the quarter reflect an increase of 4.3% in same-store sales, which is substantially above our targeted goal, as well as a 7.4% increase in our base of stores in operation, to 1,031 at the end of the quarter compared with 960 at the same time in 2000.
"The growth in revenues is partially attributable to increasing demand for DVD product, which accounted for approximately 8.5% of rental revenue for the quarter," Malugen said. "In addition, we believe our business benefited from relatively favorable weather compared with the first quarter last year.
"Movie Gallery's increasing revenues generated substantial operating leverage for the quarter. Excluding the nonrecurring charge and non-cash compensation, this leverage, combined with stronger execution at the store level, produced improvement in each of our operating expense categories for the quarter as a percentage of revenues. As a result, Movie Gallery's operating profit margin increased to 10.7% for the quarter from 9.2% for the first quarter of 2000, and its after tax margin rose to 6.0% from 4.8%.
"The first quarter's results strengthen our ability to achieve our financial targets for 2001. For the current year, we continue to expect revenues of approximately $350 million, driven by same-store sales of 1% to 2% for the remainder of the year and the opening of approximately 75 new internally developed stores, 24 of which opened during the first quarter. With 2001 consisting of 53 weeks, we expect earnings per diluted share, excluding the nonrecurring charge, for the year in a range of $1.18 to $1.28 and cash earnings per share, excluding the nonrecurring charge, in a range of $1.70 to $1.80.
"Following unusually high same-store sales growth of 8.5% and comparison against an exceptional slate of title releases for the second quarter last year, we expect same-store sales for the second quarter of 2001 to be in the low negative single digits. We anticipate revenues for the second quarter, a 13-week period ending July 1, 2001, in a range of $81.0 million to $84.0 million, compared with $77.3 million for the second quarter last year, and net income per diluted share in a range of $0.18 to $0.23, versus $0.17 for the comparable period in 2000," Malugen added.