Everyman Media Group (EMAN ), the UK's 4th largest cinema company, reported strong revenue and EBITDA growth for the 6 months ended 30 June 2022 (H1 2022), with revenues up 41% to £40.7m compared to the same period in 2019 and EBITDA up 14% to £7.5m. The performance is impressive given 2019 yielded record revenues and the pandemic had not yet forced people indoors.
Everyman ended the period with 37 cinemas, compared to 28 in H1 2019, having opened a five-screen venue in Edinburgh. Six further venues have been contracted to open in H2 2022 and 2023, the company said.
Everyman said growth was driven by several factors: an increased number of venues, strong admissions, higher-than-average spends, and the impact of reduced VAT in Q1. The company is confident its full year performance will be in line with expectations.
Alex Scrimgeour, CEO, commented: "It has been a busy six months for the Group, as our exceptional venue teams entertained guests across the country. Despite well publicised headwinds we have managed to deliver record half year sales and EBITDA. We remain confident that people's enjoyment of cinema and specifically Everyman remains undiminished".
First half results will be published on 28 September.
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Today's results from Everyman are notable for defying a larger downtrend in the cinema industry. While cinema companies have definitively bounced back from the worst days of the pandemic in 2021, revenues are still down 40% compared to 2019. In the US, no productions aiming to net box office revenues of US$40m in their opening weekend are expected later this summer, compared to 3 movies in the same time frame in 2019.
The pandemic prompted production studios to put a much larger emphasis on streaming, conditioning viewers to accept the home theater experience as good enough, especially as large 4K HDR TVs have now become affordable. As viewers have got used to the home theatre, they have been reluctant to go back to cinemas, further exacerbated by the unfolding cost of living crisis.
In addition, the industry is suffering from a supply chain issue, especially in VFX post-production that was decimated during the pandemic.
Clearly, these issues plaguing the production industry have trickled down to cinema companies. Streaming businesses are quickly becoming some of the largest production companies, and Netflix is hardly releasing anything in cinemas - where they are, it is often a limited release for a few weeks.
That's showing up in multinational cinema group Cineworld's share price, which is down 66% YoY and a staggering 90% compared to January 2020. Everyman Media has performed relatively well, with its shares down only 21% YoY and 35% over the last 5 years, tracking the broader downturn in equities.
So why is the much smaller Everyman Media different? Firstly, it offers a non-traditional cinema experience, catering to film enthusiasts, and offering a premium experience where customers can sit in large comfortable seats and enjoy gourmet food and wine delivered to them. They place an emphasis on customer service and present a wide selection of films in addition to mainstream offerings.
Yet, they are not a small or niche company. With a market cap of £100m and running the 4th largest network of cinemas in the UK, Everyman has shown that there is high demand for this sort of movie experience, even as the rest of the industry struggles. Today's positive financial update is testament to this.
As home theatre technology improves and streaming takes a more prevalent role, perhaps more cinema chains will adopt some of Everyman's features to distinguish their product. Everyman's upbeat results may be a sign of things to come for the industry and/or a sign of a broader recovery for the sector.
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