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Regal Entertainment Group (NYSE:RGC)

Q1 2013 Earnings Call

April 30, 2013 4:30 pm ET

Executives

Amy E. Miles - Chief Executive Officer and Director

David H. Ownby - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer

Analysts

Eric O. Handler - MKM Partners LLC, Research Division

Townsend Buckles - JP Morgan Chase & Co, Research Division

Barton E. Crockett - Lazard Capital Markets LLC, Research Division

Robert Fishman - Nomura Securities Co. Ltd., Research Division

Bo Tang - Barclays Capital, Research Division

Ryan Fiftal - Morgan Stanley, Research Division

Matthew J. Harrigan - Wunderlich Securities Inc., Research Division

Lee Hon Siong - Stifel, Nicolaus & Co., Inc., Research Division

Operator

Good afternoon. My name is Bob, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Regal Entertainment Group Fiscal First Quarter 2013 Earnings Release Conference Call, with our hosts Amy Miles, Chief Executive Officer of Regal Entertainment Group; and David Ownby, Chief Financial Officer of Regal Entertainment Group. [Operator Instructions]

I would like to remind our listeners that this conference call contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

All statements, other than statements of historical facts communicated during this conference call, may constitute forward-looking statements. These forward-looking statements involve risks and uncertainties.

Important factors that can cause actual results to differ materially from the company's expectations are disclosed in the risk factors contained in the company's Annual Report on Form 10-K, dated February 25, 2013. All forward-looking statements are expressly qualified in their entirety by such factors.

Now I will turn the call over to Amy Miles.

Amy E. Miles

As we begin a new fiscal year, we'll take a few moments to highlight the key operational and strategic initiatives that should have a positive impact on our results in 2013 and beyond. First and foremost, we're pleased that our recently completed acquisitions have been fully integrated into our operations and are already having a positive impact on our market share and financial results. The addition of 301 Great Escape screens last November, and over 500 Hollywood theater screens just a few weeks ago, both at highly accretive multiples, accounted for almost 1/2 of the M&A activity in our industry in the last 6 months, and we fully expect these transactions to provide a platform for growth in the near term.

As we look for ways to best utilize our cash and financial flexibility, we continue to believe that strategic acquisitions at accretive multiples are a great way to lever ongoing shareholder value. We're optimistic regarding the potential for further industry consolidation and look forward to evaluating future opportunities.

Over the last several quarters, we have frequently discussed our efforts to bring a premium experience to a larger portion of our customer base. With over 115 premium screens in place, and more on the way, we believe that we are well positioned to capitalize on the numerous premium format films scheduled for release and the rapidly approaching summer movie season.

The product-driven success of our IMAX screens, combined with our growing portfolio of RPX screens, allow us to deliver a premium experience in practically all of our key markets. Add to that, our 3,000 3D-capable screens, the continued rollout of our expanded concession menu, the widespread availability of mobile ticketing, and experiments with luxury seating and it's easy to see that some form of premium experience is available to majority of our customers.

We are extremely pleased with the incremental revenue and returns from our investment in the premium experience, and expect these and other initiatives to benefit our results for the remainder of 2003 (sic) 2013 and beyond. On the heels of a very successful 2012, our film distribution joint venture Open Road Films, has continued to generate positive momentum in early 2003 (sic) 2013. With 3 wide releases and just under $100 million of box office growth already in the books, and 3 other films scheduled for release later this year, we are excited about Open Road's prospects for success in the near term. We continue to be impressed with Open Road's management team's keen eye for content and their disciplined approach to deal economics and we remain optimistic regarding their ability to create incremental value for our shareholders.

And finally, our field personnel's ability to provide great customer experience while keeping a close watch on our cost structure, has been a key part of our success for the last couple of years. As clearly demonstrated in the first quarter, their attention to detail, regardless of the box office environment, consistently enhances our ability to generate meaningful free cash flow for our shareholders. We believe that our operational execution, the ability to efficiently manage our theater level costs week in and week out, drive growth in our concession per caps and engage our key customers on a local level, is an important competitive strength and we fully expect our operations personnel to continue to perform at a high level in the future.

Now for the box office environment. Not unexpectedly, first quarter industry box office revenues of over $2.3 billion declined by approximately 9.5% versus the same period last year. Strong carryover from Django, The Hobbit, Les Mis and other holiday films fueled box office growth in the early part of the quarter, that this year's film slate simply could not compete with the record box office results generated in both February and March of last year.

Despite the decline in the first quarter, industry box office revenues totaled approximately $10.5 billion for the trailing 4 quarters just ended, and have remained remarkably consistent, on an annual basis, for the past several years. We believe that the long-term stability of the box office, combined with our ability to grow market share through accretive acquisitions, will continue to positively impact our operating results in 2013 and the future. Looking ahead to the remainder of 2013, we are extremely encouraged by what appears to be a promising lineup of high profile films that are evenly spaced throughout the release calendar. Superhero fans will again have plenty of choices at the box office with Iron Man 3 this weekend, Man of Steel in mid-June, and Hugh Jackman as The Wolverine in late July. Science fiction fans won't be disappointed either with Star Trek: Into Darkness, World War Z and Pacific Rim all scheduled for release this summer. A number of key films from other genres including: The Lone Ranger; the next installment of both The Fast and the Furious and Hangover franchises; The Heat, from Bridesmaid's director, Paul Feig; and Pixar's Monsters University round out what appears to be a very promising summer schedule. And the holiday release schedule is equally exciting, with Marvel's Thor in early November; the second Hunger Games film on Thanksgiving weekend and the second installment of Peter Jackson's The Hobbit in mid-December. With these factors in mind, we are optimistic regarding the potential for box office success for the remainder of this year.

In summary, we are again extremely pleased with our recent acquisition of over 800 screens and our ongoing operational execution. And we are optimistic regarding the potential for box office during the summer season.

I would now like to turn the presentation over to David for a discussion of our financial performance.

David H. Ownby

Thanks, Amy, and good afternoon, everyone. Today, I'll provide some additional analysis of our first quarter results, some key information regarding our recent acquisition of Hollywood theaters and an update with respect to our balance sheet and asset base.

For our fiscal first quarter, we generated total revenues of $642.8 million, including $436.6 million of box office revenue, $171.8 million of concession sales and $34.4 million of other operating revenue. Our first quarter admissions revenue benefited from our acquisition of Great Escape Theaters and fell by just under 8% in the aggregate as compared to the almost 10% decline in U.S. box office reported by Rentrak. Our aggregate attendance also declined by just under 8%, as a decline in premium ticket sales and a shift in customer mix put downward pressure on our average ticket price, which fell 0.5% to $8.79.

Premium ticket sales, overall, accounted for approximately 16% of our admissions revenue during the quarter as compared to 18% in the same period last year. Our concession revenue decreased about 4.6% in the aggregate, but grew by 3.3% on a per attendee basis. As with the case throughout 2012, the improvement in our concession per cap was largely driven by improvements in beverage and popcorn volume, but also benefited from the continued rollout of our expanded food menu.

Other operating revenues increased $3.6 million as compared to the same period last year due, primarily, to increases in vendor marketing revenues and revenues from our gift card and discount ticket programs. Regardless of the box office environment, it is imperative that our management team and field personnel carefully manage our cost structure in order to maintain our operating margins. Given the first quarter box office environment, we were once again pleased with our operational execution.

Our film and advertising expense of $215.9 million represented 49.5% of admissions revenue, an improvement of 40 basis points as compared to the same period last year, and slightly below our historical first quarter average. The overall decline in industry box office and a lack of box office concentration were the primary drivers of the improvement.

Our 86.1% concession margin fell by 70 basis points as compared to the same period last year due, primarily, to minor increases in raw material and packaged good costs, and a minor shift in the mix of products sold at the concession stand.

Total rent expense of $99.6 million increased 5.8% in the aggregate, due primarily to the additional rent associated with the 107 new screens we opened in the back half of 2012, and the Great Escape screens acquired in late November.

On a per screen basis, our rent expense increased approximately 1.7% as compared with the same period last year. And as Amy mentioned earlier, our field personnel's focus on cost control continued to have a positive impact on our operating results.

Total other operating expenses of $183.6 million increased by 3.8% in the aggregate, due primarily to the cost associated with the Great Escape screens acquired in late November, but fell by 0.2% on a per screen basis as compared to the first quarter of last year, due primarily to decreases in theater-level attendance-driven costs and lower payments associated with premium format revenue.

Once again, our field personnel's ability to control variable cost while still delivering a great customer experience and a meaningful increase in our concession per caps was a key driver of our success in the first quarter.

Despite the challenging box office environment, the positive impact of our Great Escape acquisition, the increase in our concession per cap and our operational execution helped generate adjusted EBITDA and adjusted earnings per share that were both in line with consensus Wall Street estimates.

As Amy mentioned earlier, we were extremely pleased to complete the acquisition of Hollywood theaters for $191 million in cash and approximately $47 million of assumed capital lease obligations on the first day of our fiscal second quarter. The acquired portfolio includes 513 high-quality, well-maintained screens, located in 16 states and 3 U.S. territories. 88% of the screens feature stadium seating, and 96% came already equipped with digital projectors. The integration of the Hollywood screens into our management and procurement program is complete, and we have already begun realizing the operation synergies associated with the transaction. We have a long history of creating shareholder value through acquisition and fully expect this transaction to be immediately accretive to both our earnings and our cash flow.

Capital expenditures net of assets sales for the quarter totaled $20.4 million and we continued to actively manage our asset base during the quarter, closing 3 theaters with 26 screens, to end the quarter with 537 theaters and 6,854 screens.

Based on our development schedule and outlook for the remainder of 2013, we still expect full year capital expenditures to be between $100 million and $115 million. In addition to the 513 screens acquired from Hollywood theaters, we also expect to open 6 to 8 new build theaters with 70 to 100 screens, and close 4 to 6 theaters with 30 to 50 screens for the remainder of the year, which would result in an ending count of approximately 582 theaters and 7,412 screens for 2013.

With respect to the balance sheet, we ended the quarter with $395 million in cash, just under $200 million of which was earmarked for the Hollywood acquisition, and a total debt balance of approximately $2.2 billion. The growth in our 2012 adjusted EBITDA has had a positive impact on our leverage calculations, and as of the end of the quarter, our overall leverage ratio was 3.3x and our leverage ratio, as defined by our senior credit facility, totaled approximately 1.9x. Both calculations pro forma for the Great Escape acquisition.

In mid-April, we took advantage of historically low rates in the leveraged loan market and successfully amended our senior credit facility, providing for a 50 basis point reduction in the LIBOR-based interest rate applicable to our $1 billion term loan. With our current capital structure and interest rate swap portfolio, and including the capital leases assumed in the Hollywood theaters acquisition, we now expect our interest expense to be approximately $143 million in 2013 or $36 million per quarter for the remainder of the year.

In closing, we are extremely pleased with our recent strategic and operational execution and we remain optimistic regarding the potential for box office success in the upcoming summer movie season.

This includes -- this concludes our prepared remarks, and we will now open the lines for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Eric Handler with MKM Partners.

Eric O. Handler - MKM Partners LLC, Research Division

A couple of things. First, can you talk about what the M&A pipeline looks at the moment? Are you seeing many deals still being granted about? And then, also, just looking at revenue on a per screen basis, your overall admissions revenue outpaced the industry, but if you look at it on a per screen basis, it looked like it was a bit below. Was that obscured by the acquisitions? Or was there something else going on?

Amy E. Miles

I'll speak first, Eric, to the M&A pipeline. We talked about over the, I guess, recent couple of quarters, we're successful in executing about 50% of the M&A activity, with respect to the deals that were available at that time. While there's nothing that we can specifically speak to today, I guess, we think about it more as the broad environment for M&A. And we still believe, as we look out over the next, I'm going to call it, 12 to 24 months to give it a longer-term horizon, that we're going to continue to have accretive acquisition opportunities. Hard, again, to predict that timing, but as we look out over the next 12 to 24 months, I do believe it's a good environment for consolidation in our industry.

David H. Ownby

And Eric, when you look at our performance on a per screen basis, just a couple of things I'll point out, and maybe it's best just to talk about our screens, just in 2 or 3 buckets here. First, if you think about what drives our outperformance in a lot of the quarters is our IMAX screens. And unfortunately, that wasn't the case in this particular quarter. I don't think that's too surprising, given the great first quarter that the IMAX screens had in the first quarter of last year. And although The Hobbit and Oz performed pretty well in IMAX this first quarter, they simply just couldn't keep up with last year's IMAX first quarter slate, which included M:I-4; Journey to the Center of the Earth 2; Underworld: Awakening; John Carter, which opened surprisingly well in IMAX, and of course, the huge opening of The Hunger Games. So all in all, our IMAX screens were down about 23% per screen in the first quarter. The second bucket maybe, I'll talk about is just the -- as you mentioned, the acquisition screens. I think we've communicated previously to the street that the Great Escape screens that we acquired late last year are generally located in smaller markets, and therefore, generate smaller box office revenue per screen. So when you average those screens into our existing asset base, it brings down that per screen average a little bit. Now on a pro forma basis, the Great Escape screens performed in line with the broader industry in Q1. And so when you strip out those 2 specific buckets and just leave, kind of, our existing non-IMAX screens, on a stand-alone basis, they were down 9.6%, excuse me, 9.6% per screen, which is right in line with the number reported by Rentrak for the U.S.

Operator

Our next question comes from the line of Townsend Buckles with JPMorgan.

Townsend Buckles - JP Morgan Chase & Co, Research Division

Amy, if you could talk about the state of your studio relationships coming out of CinemaCon. And if I can ask you about the negotiations you had with Disney around Iron Man 3, they were reportedly seeking better terms on the movie, as well as its future titles. Just -- so any -- characterization you could give about how those talks went and the outcome?

Amy E. Miles

I mean, I guess, I'll speak broadly to your first question. And I would say that the relationship with the studios is very good, as coming out of CinemaCon. And I think what you're specifically asking with respect to Disney, over the years, we've had a lot of discussions with our studio partners. And that regards many aspects of the financial or business arrangement that we have. And I guess, this particular discussion just happen to be in a public forum. And that's a little bit unusual from that perspective. But I think the good news there is we found a mutual solution and all parties, as we speak, are now working together to maximize the growth for our Iron Man 3. And that's how it should be. So we're not, for competitive reasons, going to discuss anything related to any of our studio arrangements. But as we've pointed out before, the long-term trend in our industry shows a lot of stability in the film and advertising line. And we would expect to continue to have long-term stability in that line item for the future.

Townsend Buckles - JP Morgan Chase & Co, Research Division

And it seems the studio has been talking a bit more about pursuing monetization of maybe, the 60-plus days theatrical window, including areas like premium VoD, which Universal spoke I think fairly openly about. Do you expect any more activity in the horizon there? And if you can update your stance on issues like that?

Amy E. Miles

I mean, where I -- our stance with respect to the windows have not changed over time. What we're seeing more kind of -- in the discussions that we're having with the studios is a little bit more focused with respect to the electronic sell-throughs a bit outside of the business. Not as much discussion, to be fair, on the premium VoD side. And so we're hopeful that the studios will continue to find ways, not encroaching on our window, but to improve what happened in the home. And you saw some stability in the home revenues last year, and hopefully, that will continue to improve as we look to 2013 and '14. And again, if we can help our studio partners in that regard, we're willing to do that because of the general ecosystem. That's good when you see growth, not just on our side, but inside the home. But not a lot of discussions, as we speak, as it relates to windows.

Operator

Our next question comes from the line of Barton Crockett with Lazard Capital Markets.

Barton E. Crockett - Lazard Capital Markets LLC, Research Division

I guess, I'm curious a little bit about your kind of current view of Open Road, which has had some successes, less material on the financials this quarter, but they do have an interesting film slate. I'm just curious, over time, could you ever envision a scenario where that would be spun off into a separate company that would have more visibility to public investors, kind of like MCM? Or is it always something that you think will be kind of a small niche just jointly owned by you and AMC?

Amy E. Miles

I think it's probably just a little bit premature to answer that question, Barton. I think it's how we think about Open Road today, we're very excited about the success that they have been able to achieve in what I would define as a relatively short time period, considering that the first film was launched in September of 2011. So we've been very pleased with the success. And we believe that our investment thesis in Open Road has proven true at this point. So we do believe we're going to have future opportunities as it relates to our -- to the Open Road investment. I think it's just maybe a little premature today to speculate on what those may be. But we are very excited, to date, with their performance.

Operator

Our next question comes from the line of Robert Fishman with Nomura.

Robert Fishman - Nomura Securities Co. Ltd., Research Division

If I could just follow up on the Iron Man. Do you foresee that the public nature of this negotiation is making it more difficult to negotiate other future studio film clips? And then, maybe, if I might try. Can you help quantify the impact of film clips looking forward to 2Q results? And if there's going to be any impact? And maybe, looking further out to other Disney movies, especially looking forward to their 2015 line up?

Amy E. Miles

No, I do not think the public forum changes the negotiations with our studio partners on a going forward basis. And I'm sorry...

David H. Ownby

Yes, and when you think about the go-forward economics, Robert, I mean, as always, our deals in place with the studios depend a lot on the success of films. So to the extent studios bring us films on our scale-type deals that bring a lot of people to our theaters, then, certainly, that could increase our film cost. And quite frankly, we're happy to pay that to get more people into our theaters. But the structure of those -- of those deals are still such that we pay for performance.

Robert Fishman - Nomura Securities Co. Ltd., Research Division

Okay. And maybe if I can just follow one up on the dividend. David, maybe can you help us think about how you think about the regular dividend, and is there a specific payout ratio or yield that you're focused on?

David H. Ownby

We've never thought about it that way, Robert. We always think about it simply more as if -- when we have cash to allocate, how do we best use that cash to benefit our long-term shareholders. Obviously, in recent periods, we've been able to do a little bit of everything. We've been able to acquire some new screens and grow our business. We've been able to invest in things like Open Road and in addition to that, continue to pay a healthy recurring dividend and a special dividend late last year. So we'll continue to look for the various -- those various opportunities, certainly, as Amy mentioned earlier, I think we feel like there's still a good backdrop for M&A in the industry. And we'll continue to be active in looking for those opportunities and evaluating those opportunities. But as we have always done, we'll continue to try to combine that with a healthy approach to shareholder return.

Operator

Our next question comes from the line of Bo Tang with Barclays.

Bo Tang - Barclays Capital, Research Division

I have one for Amy and one for David. Amy, over the last few years, the studios, they've been trying to derisk their business models through an increased focus on making franchise films. Do you -- do you think that this will also help derisk your business model as well? And at what point you'll become concerned about moviegoers growing tired of some of these franchises?

Amy E. Miles

I mean, I think from that perspective, as we mentioned earlier, a lot of these key big franchise pictures are what kind of drive a lot of our attendance year in and year out. And I think if you look over the past 4 or 5 years, the percent of the box office represented by those key blockbuster films probably pretty consistent. I think what it does do is provide opportunities such as Open Road. And as a studio, they're continuing to focus their resources and their capital on the big blockbuster films. I think we've shown that there are other distribution opportunities to fill our shoulder season. And I think that's going to continue to be an increased opportunity for our business.

Bo Tang - Barclays Capital, Research Division

Got it. And then, David, I was just hoping to get your late thinking around your leverage target. And then, also, if you could just break out ticket prices for the quarter, between 2D, 3D and IMAX please?

David H. Ownby

Sure. Let's do that first, Bo. For the first quarter, our 2D ticket price was $8.33, that's up just a couple of pennies from last year. Our IMAX ticket price was $15.40, that's a little bit lower than last year. And our RealD ticket price was $11.83, that's just a few cents higher than last year. And sorry, Bo. You asked about leverage, our leverage targets. And really, our thinking there hasn't changed. We've talked, for a long period of time, about our, kind of, being comfortable kind of in that 3x to 4x net debt to EBITDA. That's where we are today, and feel like that gives us a lot of financial flexibility to do the things that are important to our business.

Operator

Our next question comes from the line of Ben Swinburne with Morgan Stanley.

Ryan Fiftal - Morgan Stanley, Research Division

This is Ryan Fiftal in for Ben. I think a number of studio signed on for the DCDC partnership that you guys have. So maybe we could talk a little bit about the ongoing impact to the industry of the continued digital rollout. So I have 2 questions along those lines. First, I guess, on an industry level, when do you foresee the end of physical print, how far out do you think that is? And what impact do you think that will have on the industry? Do you see that there are a lot of older kind of analog-only theaters that could come out of the market, potentially impact your and other players' market shares? And then, second, I'd be interested to get your ongoing thoughts on digital stability to expand your content beyond the traditional Hollywood output. And how you can see that potentially impacting your relationship with the studios.

Amy E. Miles

Okay. I think that with respect to your first question, I believe the industry, today, is just over 80-some-odd-percent digital. So as we talked about that before and what does that mean from an overall industry perspective, again, we felt like that, that provided Regal some opportunity as it relates to consolidation and M&A. And you've seen some of that come to fruition over the past several months. So that backdrop of the conversion to digital and what it means for a broader industry, again, we believe will continue to support our M&A efforts. Now as it relates to the end of film, I think that's just a little bit harder call to make today. And you can understand why it's more efficient and better for the studios to provide content in a digital world. But I think at this stage, there will be an end to film and it's probably near term. It's just hard for me to put a solid time period to that. And remember that part of the benefits of digital, we're not just seeing domestically, we're also seeing internationally. So I do think that helps accelerate the end of film. It's, again, just hard to guess when that date may be.

David H. Ownby

And Ryan, as it relates to alternative content, up until this point, there's always been some type of physical barrier to widespread use of alternative content in our theaters. Up -- in recent years, there's been a limited amount of digital projectors. And even after we got a lot of digital projectors, the delivery of the content was still somewhat of an issue, particularly, if you want to do a live event. So I think now, as we get the DCDCs rolled out in the relative near term here, I think what you'll see is the physical barriers in front of alternative content drop away. Then, we'll have a real chance to look and see if there's a business model that makes sense. I just -- I'm not sure anybody has had a real chance to do that yet.

Ryan Fiftal - Morgan Stanley, Research Division

Just a quick follow-up on the latter. If the digital delivery satellites were to go live today, do you think there's quite a bit of content that's kind of waiting to get into your distribution channel? Or do you think that you'll look at it more as an ecosystem that will have to develop and it could take a number of years before we see some impact?

David H. Ownby

I think there's probably still some issues around the business model, specifically, rights to content, who's going to pay for the marketing of that content and those types of things. But really, those are conversations we weren't going to have a lot of until we remove those physical barriers. So I think it's a little bit early to say that.

Operator

Our next question comes from the line of Matthew Harrigan with Wunderlich Securities.

Matthew J. Harrigan - Wunderlich Securities Inc., Research Division

I actually had a couple. You were right in line with my EBITDA number, but the rent expense was quite a bit wider than I thought. I know on a per screen basis, Great Escapes, just as you've pointed out on the revenue side, is going to be a little bit lower. But it feels like the roll off on the new screens on relatively old screens, particularly, adjusting to performance is pretty favorable on the rent side. And then, secondly, on the cost template. Somehow, I don't have food commodities in my exhibition model. But I'm curious as to how sticky that slight issue on the concession in the gross margin is going forward. I mean, 1% or so, you typically don't see that. And then, thirdly, my real fuzzy question. When you look at -- over the last few years, and everything that's happening in terms of broadband penetration in your various markets and all that. Are you seeing more dispersion and a relative performance on quarterly box office and by movie in some of the markets that are pretty advanced on high-speed broadband side and such, they're relative to some of your more traditional -- I know you're not a rural operator, but maybe some of the markets where you have lower penetration on alternative media?

Amy E. Miles

I'll take the last one. We'll go in reverse order, if that's okay, Matthew. But with respect to the -- we always see regional differences in content performance. Again, films played differently throughout the United States. And I couldn't say today that we've seen any kind of material change or shift that's tied to technology in any of our markets. We're seeing again, the changes that we always see is film place, I mean, as content plays across the circuit. And we have a lot of data points with 580 theaters and a lot of markets there where we can look, and I couldn't point to any market that looks different from a technology -- or more advanced from a technology perspective, performing differently than a similar market.

David H. Ownby

And Matthew, on your P&L questions. On the rent line, we had talked about a little bit before that the Great Escape screens were in smaller markets and therefore, had a little bit smaller cost. And in fact, their rent looks a little bit more like ours, it's most of the other OpEx line, where you probably see more of that smaller cost because of the smaller markets. So I'm not sure what you had in your model, but I think if you kind of do a per screen calculation of our rent, it was up about 1.7% per screen, that's largely a reflection of the fact that the new screens that we opened last year, those typically have a little bit higher rent. And the older screens that rolled off plus, like I said, the Great Escape screens don't matter a whole lot, but the older screens that rolled off had a little bit lower rent, and that's why you get that roughly up 1.6% or 1.7% per screen quarter-over-quarter. And on the concession cost side, you pointed out that we were up I think, about 70 basis points in the quarter in terms of concession cost. I'll point out that Q2 -- Q1 of last year was actually a little bit abnormally low. If you look at our full year number for 2012, I think it was 13.5%. And that number bounces around, depending on the -- specifically, the mix of stuff we sell every quarter at the stand. Usually, it bounces around -- somewhere around 20 to 30 basis points around the average. So I wouldn't consider this particular quarter anything unusual or trend setting.

Matthew J. Harrigan - Wunderlich Securities Inc., Research Division

That's good. But even if you strip out Great Escape, it looks like on the incremental benefit you got on the revenue side and on the nearest screens, you are not nearly capping up on the ramp side. I mean, the contribution margin on the newer screens versus the older screens rolling off has to be pretty nice looking forward there.

David H. Ownby

Yes, so I think we talked about before that even though some of those screens were in smaller markets, they still had good margins. And that's one of the reasons they have good margins.

Operator

Our next question comes from the line of Ben Mogil with Stifel, Nicolaus.

Lee Hon Siong - Stifel, Nicolaus & Co., Inc., Research Division

This is actually Kevin Lee for Ben. Just a quick one, really. How have the additions of the Great Escape and Hollywood theater screens changed the circuit in terms of performance of certain genres or geographies?

David H. Ownby

Nothing significant that we would point to. I mean, a lot of that -- I think we've talked about the fact that the Great Escape screens are a little bit smaller markets. But by and large, when we look over a 12-month period, I don't think we'd see anything unusual in terms of how different films play in those markets. The Hollywood screens are much more in markets, on average, that are -- they look a lot more like the existing Regal asset base in terms of size. So again, nothing from either circuit that I would consider significant.

Operator

Ladies and gentlemen, that's all the time we have for questions today. I'd like to turn the floor back over to management for closing comments.

Amy E. Miles

Thank you for dialing in to our first quarter call today. And we look forward to speaking with you in a few months after the start of the great summer. Thank you. Bye-bye.

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