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Transcription:

Management Presentation March 2018

Investor Considerations This presentation may include ''forward-looking statements.'' To the extent that the information presented in this presentation discusses financial projections, information, or expectations about ipic Entertainment Inc. s business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as ''should,'' ''may,'' ''intends,'' ''anticipates,'' ''believes,'' ''estimates,'' ''projects,'' ''forecasts,'' ''expects,'' ''plans,'' and ''proposes.'' Although ipic Entertainment Inc. believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. You are urged to carefully review and consider any cautionary statements and other disclosures, including the statements made under the heading "Risk Factors" and elsewhere in the company s most recent 10Q filing or Offering Circular. Forward-looking statements speak only as of the date of the document in which they are contained, and ipic Entertainment Inc. does not undertake any duty to update any forward-looking statements except as may be required by law. A copy of the company s financial filings can be obtained from us. Contact: ipic Entertainment Inc. 433 Plaza Real Suite 335 Boca Raton, FL 33432 Attn: General Counsel

Company Overview 1 Market Positioning 2 Strategic Growth Pillars 3 Conclusions 4 3

What is ipic? ipic is Anything but Ordinary ASPIRATIONAL EXPERIENTIAL SOCIAL AFFORDABLE LUXURY The ipic audience enjoys a night out with a level of comfort typically reserved for a fivestar resort The typical ipic experience lasts over 4.5 hours; the two-hour movie is just one element in a complete entertainment experience ipic is the perfect destination for a date night or group outing; ipic s social nature is a recipe for retention and repeat visits ipic is a fraction of the cost of box seats at a sporting event or concert, yet offers a similar level of luxury and amenities 4

Current Operations 15 locations, 115 screens 2017 Revenue of ~$139.5 million; 2017 Store-Level EBITDA of ~$14.0 million Members account for 47% of Revenue 5

Investment Considerations Proven track record Attractive targeted unit economics Positive macro economics Experienced management team 6

(1) Overview: Our Model ipic is a Restaurant-Led Business Model 2017 Revenue Theater Competitors (1) Other Income 2% Other Income 5% Environment: Theater & Box Office 44% Theatrical Box Office 64% Food, Beverage & Service 54% Food & Beverage 31% 1. Competitors include AMC, Regal and Cinemark 7

(1) Overview: Our Restaurant-Led Model Award Winning Culinary Leadership Sherry Yard Chief Operating Officer 3x winner of the James Beard Award Oversees all restaurant, food, and beverage concepts for ipic s locations nationwide 20 years working alongside Wolfgang Puck as executive pastry chef and partner, creating menus for restaurants such as Spago, Cut and Chinois - Created dishes for the Academy Awards Governor s Ball, Grammy Awards, and Emmy Awards Began her culinary career at the venerable Rainbow Room in New York City, Montrachet and Tribeca Grill Food Network personality and awardwinning cookbook author 8

(1) Overview: Our Restaurant-Led Model Renowned Cuisine & Cocktails Seasonal American Dining Fresh, sustainable ingredients for shareable plates Rustic setting with a modern, multi-layered social dining experience 7.6K average square feet $42.65 average check (1) Garden-fresh Italian artisanal cuisine Perfect gathering place for friends, creating a unique setting for lively dining and conversation 6.8K average square feet $36.77 average check (1) Intimate gastro-lounge and cocktail driven restaurant Skillfully crafted cocktails and soulful social plates 5.0K average square feet $34.25 average check (1) 1. Average check data in 2017 9

(1) Overview: Our World-Class Auditoriums Truly Differentiated Theater Experience 2017 Revenue Theater Competitors (1) Other Income 2% Other Income 5% Box Office 30% Environment: Theater & Box Office 44% Theatrical Box Office 64% Food, Beverage & Service 54% Food & Beverage 31% 1. Competitors include AMC, Regal and Cinemark 10

(1) Overview: Our Theater Revenue Per Screen Other Theater Chains Not Even Close ipic s average revenue per screen is 135% higher 1 than the rest of the industry $1,674 2017 Revenue per Screen (000 s) $1,367 $213 $264 $830 $923 $146 $768 $440 $128 $578 $182 $499 $506 $169 $160 $411 $284 $366 $306 $319 $273 $386 $487 Average Generation I Generation II Generation III 2 (U.S. only) Admission Revenue/Screen Concession Revenue/Screen Other Revenue/Screen 1. Competitor data taken from 2016 company public filings; ipic consolidated metric calculated using 2017 estimated weighted average of $1,190 per screen 11

(1) Overview: Our Strong Consumer Affinity Strong Customer Loyalty Our Restaurants: Open Table s Diner s Choice Winner Our Theaters (1) Our customers promote the brand City Perch (3): Feb/Apr/May 2017 Tanzy (2): Feb/Apr 2017 Yes 85% 85% Likely to Recommend Tuck Room Tavern (2): Feb/May 2017 8-Time Winner in 2017 5 Stars Ratings Distribution 84 Maybe 2% No 13% 4 Stars 3 Stars 29 61 Positive 81% 81% Positive Customer Sentiment 2 Stars 15 1 Star 4 Source: NewBrand Analytics 1. Data represents YTD 2017 survey results 12

(4) Overview: Guest Affinity = Strong Financials Industry-Leading Performance Meaningfully Higher Ticket Price With Significantly Larger F&B Contribution Avg. Ticket Price (per person) $20.38 Avg. Food & Beverage Spend (per person) $24.83 $8.95 $4.89 Theater Peers (1) (1) Theater Peers Premium elements of ipic s experience drive 2.3x higher ticket prices ipic s high-end dining & concession options drive 5.0x higher revenue per person 1. Theater Peers defined as AMC, Regal and Cinemark (U.S. Operations). Thru June 2017 13

(1) Overview: Our Non-Four-Wall Digital Business 3 Sources of Brand-Related Revenue 2017 Revenue Theater Competitors (1) Other Income 2% Non-Film Revenue 16% Other Income 5% Box Office 30% Environment: Theater & Box Office 44% Theatrical Box Office 64% Food, Beverage & Service 54% Food & Beverage 31% 1. Competitors include AMC, Regal and Cinemark 14

(1) Overview: Our Non-Four-Wall Digital Business ipic Access Membership Program Fast-Growing Membership Model Silver Level Free to join Special pricing on all movie tickets Weekly newsletters Gold Level $29 per year Earn 1 Access point for every dollar spent on qualifying purchases. Points can be redeemed on qualifying ipic and Tuck Hospitality Group items Key Demographic Highlights Platinum Level No additional cost Earn 1.5 Access points for every dollar spent on qualifying purchases Free birthday ticket gift Special access to member events Elite Level Ultra-Exclusive membership level 25% off bottles of wine in all Tuck Hospitality Group restaurants Coming Soon: VIP concierge service access 60% Female, 40% Male 34 39 median age $119K Average HHI / $153K Median for Avids 90% of guests between the ages of 21 and 54 1. Member spend thru June 2017 15

(1) Overview: Our Digital Business Sponsorship: Brand Partnerships and Alternative Content Brand Partnerships $1.8MM in sponsorship income in 2017 Alternative Content Live performances: magic, comedy, and music Exclusive Netflix partnership Video game competitions (Minecraft, League of Legends) Private events Brand Partner Pop-Up Stores 16

Company Overview 1 Market Positioning 2 Strategic Growth Pillars 3 Conclusions 4 17

New-Age Market Positioning 1 + 1 + 1 = 4 Restaurant Business + Lounge Business + Theater Business = 4 Hour Customer Experience 1 1 1 4 Polished Casual Restaurants Farm-to-Glass Lounges/Bars Luxury Theater Experience Entire Night Out in a Single Location 18

Big Growth Opportunity For: Eat-ertainment Brand Given Size and Composition of US Full-Service Restaurant Business $260 Billion US Whitespace Potential 200+ US Full-Service Restaurant Business $2.6 Billion = ipic s 200+ US Growth Potential 1% Targeted Market Share # of Units 44 16 20 2017 2019 2025 Long-Term Potential 19

Big Growth Opportunity For: Eat-ertainment Brand Given Size and Composition of US Full-Service Restaurant Business $260 Billion US Full-Service Restaurant Business Kitchen Substitute Occasion Experiential-Dining Occasion Specialized Business-Models and Facilities Focused on One of these Two Occasions >$35B 1? $5B< ~$5B< 1995 2017 2010 2030 1. Technomic 2017 Top-500 Report 20

Our Digital Business: ipic s Membership Model Creates First-Mover Advantages Membership: Percent of Total System Sales Member Spend by Tier 47% 1 36% 2 25% 3 $7,862 ipic Members: Annual Dollar Spend $3,011 ipic Starbucks Domino's $431 $156 Elite Platinum Gold Silver 1: ipic FY 2107 2: Starbucks Results 3Q17 3: Stifel Financial estimate for 2017 4: Source: Epsilon Data Management, 2015 21

Investor Highlights: Strong Ownership Group ipic Holdings 32% Village Roadshow 24% ERS & TRS 24% Regal Cinemas 7% PVR Cinemas 2% Group of High Net Worth individuals led by Hamid Hashemi Management team with unique combination of successful movie exhibition, restaurant, and lounge operational and development experience Proven track record of A diversified multinational entertainment company with sales of over $1B annually Co-producer and financier of 89 commercial films with Warner Brothers and Sony Pictures Employees Retirement Systems of Alabama (ERS) Teachers Retirement System of Alabama (TRS) Over $32Bn in assets Provides debt facility to ipic for new construction One of the leading and most geographically diverse theatre circuits in the United States 7,315 screens in 561 theatres in 43 states The largest and the most premium film and retail entertainment company in India 600 screens in 131 locations in 51 cities 30 years in exhibition and restaurant business building the most successful theater in North America 22

Company Overview 1 Market Positioning 2 Strategic Growth Pillars 3 Conclusions 4 23

Investor Highlights 3) Strategic Growth Pillars (a) Grow Existing Store Profitability (b) Execute on Domestic Growth Opportunity (c) Pursue International Growth Opportunity (d) Expand Digital Growth Opportunity

(3a) Strategic Pillar: Grow Existing Store Profits Gen III Box Office Revenue is +78% Higher than Gen I $1,674 2017 Revenue per Screen (000 s) $1,367 $213 $264 $830 $923 $146 $768 $440 $128 $578 $182 $499 $506 $169 $160 $411 $284 $366 $306 $319 $273 $386 +78% $487 Average Generation I Generation II Generation III 2 (U.S. only) Admission Revenue/Screen Concession Revenue/Screen Other Revenue/Screen 1. Competitor data taken from 2016 company public filings; ipic consolidated metric calculated using 2017 estimated weighted average of $1,190 per screen 25

(3a) Strategic Pillar: Grow Existing Store Profits 2018 Major Initiative: Remodel Program (at least three locations) Generation I: 35%< Premium-Plus Generation III: >65% Premium-Plus Scottsdale Existing Auditorium Generation III* Auditorium Customer Preference* for Premium-Plus Seating is 4:1 Even with ~$9 Average Upcharge * Compared to Premium Seats 26

(3a) Strategic Pillar: Grow Existing Store Profits ipic s Patented Pod Seating: A Truly Differentiated Theater Experience Premium-Plus versus Premium Seats 4X Higher Utilization +60% Higher Ticket Pricing +80% Higher Average F+B Spend 27

(3b) Strategic Pillar: Domestic Unit Growth (i) Core Development Plans (2019-beyond = 4 Openings Annually) (ii) Non-Traditional Locations (Hotels, Condos, Office-Buildings, Cruise Ships) (iii) Synergistic Acquisition Opportunities Longer-Term Strategic Goal 2019-2021 Key Goal: Achieve Local-Market Scale Effects 200+ # of Units 43 16 19 2017 2019 2025 Long-Term Potential Source: Management Analysis 28

(3b) Strategic Pillar: Domestic Unit Growth Targeted Unit Economic Model Real-World Scale Effects Achieve Local Scale in Key Targeted Markets 1 Construction Costs Leasehold Improvement FF&E Costs $9.0 10.0MM $6.0 6.5MM Soft Costs ~$2.5MM Profit/ Store Total Development Costs Less: Landlord Tenant Improvement Contribution $17.5 19.0MM $6.5 7.5MM ipic Investment $11.0 12MM Convenience Factor Brand Awareness Year 3 Operating Performance Year 3 Revenue $14.0 15.0MM 0% 25% 50% 100% Year 3 Unit Level Cash Flow $2.5 3.0MM Local Market s Maturation Unleveraged Cash on Cash Return 20%+ Actual data may vary 29

(3c) Strategic Pillar: International Growth Option (a) 2018 Initiative: Middle East Saudi Arabia (b) Europe (c) Asia Memorandum of Understanding with BAS Group in Saudi Arabia Saudi Arabia: Market Characteristics United States Saudi Arabia Estimated SA as % of USA Population 325 million 32.5 million 10% Screens 40,000 4,000 ~10% Theaters 5,750 400 ~7% IPIC Saudi Arabia Development Guidance Locations Screens ipic Target 25 to 30 250 to 300 Market Share 6% to 7% 6% to 7% Mgt Outlook: 25 to 30 Saudi Arabian Locations over Next 10 Years 30

(3d) Strategic Pillar: Scaling Digital Opportunity Digital-World Network Effects More Units Prime Directive: Achieving Real-World & Digital Scale Effects Z More Members More Membership Value More Co-Branded Partners More Co-Branded Benefits/Deals 31

Company Overview 1 Market Positioning 2 Strategic Growth Pillars 3 Conclusions 4 32

Financials: Historical Performance Targeted Year-3 Unit Economic Model Increasing Revenue per Screen Rising Attendance ($000 s) 893 1,074 1,035 1,181 1,278 1,191 (000 s) 2,489 2,916 3,049 645 1,521 1,897 1,907 1,010 2011 2012 2013 2014 2015 2016 2017 2011 2012 2013 2014 2015 2016 2017 Growing Spend per Visit ($) 38.53 39.48 39.53 40.69 40.85 41.68 45.21 19.65 18.88 19.82 19.66 19.35 20.18 19.44 21.25 19.55 21.3 22.08 19.6 20.38 24.83 2011 2012 2013 2014 2015 2016 2017 Avg. Ticket F&B / Visit Total Revenue / Visit 33

Investor Highlights: 2018 Outlook Management 2018 Guidance* Total revenue growth of +3% to +7%; Comparable-Store sales growth in the range of 0% to plus +5%; Store-level EBITDA of $17.0 million to $18.0 million; Adjusted EBITDA loss of ($1.5) to ($0.5) million; Net capital expenditures to be between $20mm and $25mm. * Compared to Preliminary Full-Year 2017 Results Issued March 8, 2018 34

Investor Highlights: Key Conclusions Industry-Leading, Ultimate Entertainment Experience Theater Anchor Tenant of Choice Uniquely Diversified Revenue Base Solid Financial Performance and Unit Economics Strong Growth Potential A-List Management Team and Ownership Group 35