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Regal Plans to Employ Cash for Dividends Before Debt Reduction

Regal Entertainment Group plans to use free cash flow that may reach the most since 2009 on acquisitions and dividends as it seeks to maintain its level of indebtedness.

The biggest U.S. cinema operator by revenue may use free cash flow, or cash from operations after deducting capital expenses, to acquire an estimated 150 to 400 movie theater screens, after adding 813 during the last two years, said Chief Financial Officer David Ownby. The company’s free cash flow may be $279.4 million for fiscal 2014, according to analyst estimates compiled by Bloomberg.

The theater chain operator with $2.2 billion in debt has had a recurring dividend since 2002 and has paid five special dividends, Ownby said. The Knoxville, Tennessee-based company’s ratio of net debt to earnings before interest, taxes, depreciation and amortization was 3.2 times as of Sept. 30, Ownby said in a third-quarter 2013 earnings call.

“The future, in terms of capital allocation, looks a lot like the past for us,” he said in an Oct. 29 telephone interview. “We’re pretty comfortable where our leverage is today.”

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