Cineplex Reports Third Quarter 2024 Results
In This Article:
TORONTO, Nov. 6, 2024 /CNW/ - (TSX: CGX) - Today, Cineplex Inc. ("Cineplex" or the "Company") released its financial results for the three and nine months ended September 30, 2024. Unless otherwise specified, all amounts contained in this news release are in Canadian dollars.
Q3 2024 Highlights:
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Reported $395.6 million in revenues, exceeding Q3 2019 revenues of $373.7 million
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Generated adjusted EBITDAaL of $47.5 million from continuing operations
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Reported net loss from continuing operations of $24.7 million, which was impacted by the provision for the Competition Tribunal's administrative monetary penalty of $39.2 million
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Delivered BPP of $13.19 and CPP of $9.85, both all-time quarterly records
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Cinema media per patron (CMPP) of $1.37 grew by 10.5% over prior year
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Digital Place-Based Media revenues of $13.3 million grew by 40.3% over prior year, due to expanded digital-out-of-home networks
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Commenced Normal Course Issuer Bid (NCIB) Program
"Our third quarter saw a steady stream of diverse film content which drove audiences into our theatres, resulting in box office revenues reaching 98% of 2019 levels and total revenues exceeding 2019 levels," said Ellis Jacob, President and CEO, Cineplex. "We achieved strong adjusted EBITDAaL and operating cash flow, which allowed us to invest in the business and return to shareholders through share repurchases."
"We have continued to make progress toward our strategic initiatives. We're excited about the opening of three new LBE locations and one new theatre before year end, which will further solidify our position as Canada's leading entertainment destination. Our market leadership also extends to our Media business, which recently joined the Canadian Out-of-Home Marketing and Measurement Bureau ("COMMB"). Our membership enhances the accreditation of our media segment and ensures our DOOH partners receive the most value for their impressions."
"While we are disappointed with the outcome of the Competition Tribunal's decision regarding our online booking fee, we remain confident in our position. As previously announced, Cineplex filed its Notice of Appeal with the Federal Court of Appeal on October 23rd. Enhancing the guest experience is at the forefront of what we do, and our commitment to Canadian consumers has always been about choice."
"Looking ahead, we remain confident that our market leadership, along with our diversified businesses, innovative strategies, and robust consumer data, uniquely position us to capitalize on the strong film slate ahead, enabling us to generate significant free cash flows."
Third Quarter Financial Results
| Financial highlights | Third Quarter | Year to Date | ||||
| (in thousands of dollars, except theatre attendance in thousands of patrons and per share and per patron amounts) | 2024 | 2023 | Change | 2024 | 2023 | Change |
| (i) | (i) | |||||
| | | | | | | |
| Total revenues | $ 395,600 | $ 414,540 | -4.6 % | $ 967,695 | $ 1,073,816 | -9.9 % |
| Theatre attendance | 13,255 | 15,690 | -15.5 % | 31,805 | 38,263 | -16.9 % |
| Net (loss) income from continuing operations | $ (24,734) | $ 24,466 | NM | $ (109,016) | $ 150,152 | NM |
| Net income from discontinued operations, including gain on disposition | $ — | $ 5,280 | -100.0 % | $ 68,003 | $ 25,966 | 161.9 % |
| Net (loss) income (iii) | $ (24,734) | $ 29,746 | NM | $ (41,013) | $ 176,118 | NM |
| Net (loss) income as a percentage of sales from continuing operations (iii) | -6.3 % | 5.9 % | -12.2 % | -11.3 % | 14.0 % | -25.3 % |
| Cash provided by (used in) continuing operating activities | $ 16,374 | $ 36,646 | -55.3 % | $ 53,325 | $ 112,303 | -52.5 % |
| Box office revenues per patron ("BPP") (iv) | $ 13.19 | $ 12.00 | 9.9 % | $ 13.03 | $ 12.44 | 4.7 % |
| Concession revenues per patron ("CPP") (iv) | $ 9.85 | $ 8.44 | 16.7 % | $ 9.49 | $ 8.80 | 7.8 % |
| Adjusted EBITDA (iv) | $ 89,969 | $ 116,448 | -22.7 % | $ 179,176 | $ 257,060 | -30.3 % |
| Adjusted EBITDAaL (iv) | $ 47,482 | $ 74,614 | -36.4 % | $ 52,992 | $ 133,185 | -60.2 % |
| Adjusted EBITDAaL from discontinued operations (iv) | $ — | $ 8,450 | -100.0 % | $ 508 | $ 30,380 | -98.3 % |
| Adjusted EBITDAaL including discontinued operations (iv) | $ 47,482 | $ 83,064 | -42.8 % | $ 53,500 | $ 163,565 | -67.3 % |
| Adjusted EBITDAaL margin from continuing operations (iv) | 12.0 % | 18.0 % | -6.0 % | 5.5 % | 12.4 % | -6.9 % |
| Adjusted free cash flow (iv) | $ (8,363) | $ 59,767 | NM | $ (27,417) | $ 84,738 | NM |
| Adjusted free cash flow per share (iv) | $ (0.131) | $ 0.943 | NM | $ (0.431) | $ 1.337 | NM |
| (Loss) earnings per share from continuing operations - basic (iii) | $ (0.39) | $ 0.39 | NM | $ (1.71) | $ 2.37 | NM |
| Earnings per share from discontinued operations - basic | $ — | $ 0.08 | -100.0 % | $ 1.07 | $ 0.41 | 161.0 % |
| (Loss) earnings per share - basic (iii) | $ (0.39) | $ 0.47 | NM | $ (0.64) | $ 2.78 | NM |
| (Loss) earnings per share from continuing operations - diluted (iii) | $ (0.39) | $ 0.34 | NM | $ (1.71) | $ 1.86 | NM |
| Earnings per share from discontinued operations - diluted | $ — | $ 0.06 | -100.0 % | $ 1.07 | $ 0.28 | 282.1 % |
| (Loss) earnings per share - diluted (iii) | $ (0.39) | $ 0.40 | NM | $ (0.64) | $ 2.14 | NM |
| (i) The results of discontinued operations from P1AG have been excluded from prior period figures as applicable per IFRS 5 to conform to the current period presentation. All amounts are from continuing operations unless otherwise noted. | ||||||
| (ii) Period over period change calculated based on thousands of dollars except percentage and per share values. Changes in percentage amounts are calculated as 2024 value less 2023 value. | ||||||
| (iii) 2024 includes the loss on the 2024 Refinancing of $nil during the third quarter and $56.0 million for year to date, and expenses related to other transactions or litigation outside the normal course of business in the amount of $0.1 million during the third quarter (2023 - $1.8 million) and $2.5 million (2023 - $2.8 million) for year to date. The third quarter and year to date period also include the $39.2 million provision for the Competition Tribunal's administrative monetary penalty. | ||||||
| (iv) Adjusted EBITDA, adjusted EBITDAaL, adjusted EBITDAaL margin, adjusted free cash flow per common share of Cineplex, BPP and CPP are measures that do not have a standardized meaning under generally accepted accounting principles ("GAAP"). These measures as well as other Non-GAAP other financial measures reported by Cineplex are defined in the 'Non-GAAP and Other Financial Measures' section at the end of this news release. | ||||||
Third Quarter and October Box Office Results
The following table compares 2024 monthly box office revenues to 2019 and 2023 monthly box office revenues:
| Month | 2019 Box office (i) | 2023 Box office (i) | 2024 Box office (i) | 2024 as a percentage of 2019 | 2024 as a percentage of 2023 |
| July | $76,935 | $86,388 | $72,468 | 94 % | 84 % |
| August | $56,537 | $67,592 | $67,198 | 119 % | 99 % |
| September | $44,393 | $34,253 | $35,218 | 79 % | 103 % |
| Q3 Total | $177,865 | $188,233 | $174,884 | 98 % | 93 % |
| October | $54,528 | $37,354 | $34,031 | 62 % | 91 % |
| (i) Amounts are in thousands of dollars. | |||||
KEY DEVELOPMENTS IN THE THIRD QUARTER OF 2024
The following describes certain key business initiatives undertaken and results achieved during 2024 in each of Cineplex's core business areas:
FILM ENTERTAINMENT AND CONTENT
Theatre Exhibition
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Reported third quarter box office revenues of $174.9 million, a decrease of $13.3 million or 7.1% from $188.2 million, due to a 15.5% decrease in theatre attendance compared to Cineplex's strongest third quarter ever which included the 'Barbenheimer' phenomenon.
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Reported third quarter BPP of $13.19, an all-time quarterly record, $1.19 or 9.9% higher than the $12.00 reported during the prior year.
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Closed one location in the third quarter at the end of its lease term as part of Cineplex's portfolio optimization and rationalization strategy.
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Enhanced the theatre circuit at Cineplex Cinemas Fredericton, in Fredericton, New Brunswick with a retrofit of recliner seating in all ten auditoriums, opened one ScreenX auditorium at Cineplex Cinemas Coquitlam and VIP in Coquitlam, British Columbia, and installed laser projectors at 17 auditoriums across Canada.
Theatre Food Service
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Reported third quarter theatre food service revenues of $130.6 million, a decrease of $1.8 million or 1.3% compared to the prior year, primarily due to a 15.5% decrease in theatre attendance.
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Reported third quarter CPP of $9.85, an all-time quarterly record, an increase of $1.41 or 16.7% compared to the prior year, primarily due to an increase in average spend.
Alternative Programming and Distribution
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As part of the theatrical distribution partnership with Lionsgate, Cineplex Pictures (Cineplex's distribution business) distributed Kill, Borderlands, Never Let Go, and Megalopolis, as well as The Instigators from Apple Original Films during the third quarter.
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Continued a leadership position in alternative programming, with 9.3% of third quarter box office revenues coming from international films, compared to those films having a 2.7% North-American share. Strong performing titles, Jatt & Juliet 3 (Punjabi), Daaru Na Peenda Hove (Punjabi), and Bibi Rajni (Punjabi) of which Cineplex represented over 75% of total North American box office.
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Event Cinema programming consisted of a variety of successful initiatives including Coraline (the biggest Event Cinema program year to date), and a documentary from BTS member Jung Kook, I Am Still. Andre Rieu continued to drive fans to cinemas with an annual summer concert, and music programming featuring Seventeen Tour Follow Again, Blackpink World Tour.
Digital Commerce
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Curated a Cineplex Store collection in honour of National Day for Truth and Reconciliation to highlight diverse Indigenous experiences, cultures and artistic expressions. Cineplex also made a donation to Tipi of Hope Foundation.
MEDIA
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Reported third quarter media revenues of $31.4 million, an increase of $2.5 million or 8.5% compared to the prior year.
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Continued leveraging expertise in data and analytics to drive revenues.
Cinema Media
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Reported third quarter cinema media revenues of $18.1 million, a decrease of $1.4 million or 7.0% over the prior year.
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Reported a third quarter cinema media per patron (CMPP) of $1.37, an increase of $0.13 or 10.5% over the prior year (see Section 'Non-GAAP and other financial measures').
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Cineplex Media's mall network, featuring over 750 screens across 96 shopping destinations, has been officially accredited by the Canadian Out-of-Home Marketing and Measurement Bureau ("COMMB"), establishing Cineplex's advanced mall audience measurement methodology as the new COMMB standard creating a new standard within the DOOH space.
Digital Place-Based Media
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Reported third quarter revenues of $13.3 million, an increase of $3.8 million or 40.3% over the prior year, primarily due to the agreement with Cadillac Fairview that began in the first quarter.
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Non-project revenues accounted for $7.7 million, an increase of $1.4 million or 23.2% during the third quarter, compared to the prior year of $6.2 million, which primarily consists of media advertising, sales of software and IT support.
LOCATION-BASED ENTERTAINMENT
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Reported third quarter revenues of $31.1 million, a decrease of $3.1 million or 9.1% compared to the prior year.
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Reported third quarter adjusted store level EBITDAaL of $7.6 million, a decrease of $2.3 million or 23.5% compared to the prior year.
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Enhanced the location-based entertainment circuit at The Rec Room South Edmonton, in Edmonton, Alberta, with attraction upgrades of spark bowling, and augmented reality axe throwing and darts.
LOYALTY
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Membership in the Scene+ loyalty program was over 15 million members as at September 30, 2024.
CORPORATE
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Recognized a $39.2 million provision related to the Competition Tribunal's administrative monetary penalty. Cineplex strongly denies the allegations, and is appealing both the finding and penalty.
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Cineplex repurchased for cancellation 185,700 common shares of Cineplex (the "Common Shares") at an average price of $10.99 per Common Share under its previously announced normal course issuer bid (the "NCIB").
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Celebrated Community Day on September 14, 2024 with a morning of free, family-friendly movies, free gaming at XSCAPE Play card locations, and free non-redemption gaming at LBE venues, with select discounted concessions, where one dollar from every concession order of select items, and food and beverage orders were donated to BGC Canada.
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Commemorated National Day for Truth and Reconciliation on September 30, 2024 by raising awareness, honouring Indigenous communities through Pre-Show content, and donating to Tipi of Hope Foundation.
NON-GAAP AND OTHER FINANCIAL MEASURES
National Instrument 52-112, Non-GAAP and Other Financial Measures Disclosure ("NI 52-112") imposes obligations regarding disclosure of non-GAAP financial measures, non-GAAP ratios, and other financial measures. Cineplex reports on certain non-GAAP measures, non-GAAP ratios, supplementary financial measures and total segment measures that are used by management to evaluate Cineplex's performance. The following measures included in this news release do not have a standardized meaning under GAAP and may not be comparable to similar measures provided by other issuers. Cineplex includes these measures because management believes that they assist investors in assessing financial performance. These non-GAAP and other financial measures are used throughout this news release and are defined below.
NON-GAAP FINANCIAL MEASURES
A non-GAAP financial measure is defined in 52-112 as a financial measure disclosed that (a) depicts the historical or expected future financial performance, financial position or cash flow of an entity, (b) with respect to its composition, excludes an amount that is included in, or includes an amount that is excluded from, the composition of the most directly comparable financial measure disclosed in the primary financial statements of the entity, (c) is not disclosed in the financial statements of the entity, and (d) is not a ratio, fraction, percentage or similar representation.
NON-GAAP RATIOS
A non-GAAP ratio is defined in NI 52-112 as a financial measure disclosed that (a) is in the form of a ratio, fraction, percentage or similar representation, (b) has a non-GAAP financial measure as one or more of its components, and (c) is not disclosed in the financial statements.
Below are non-GAAP financial measures or non-GAAP ratios for continuing operations that are reported by Cineplex.
EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDAaL
Management defines EBITDA as earnings before interest income and expense, income taxes and depreciation and amortization expense. Adjusted EBITDA excludes the change in fair value of financial instrument, loss (gain) on disposal of assets, foreign exchange, the equity income of CDCP, and impairment, depreciation, amortization, interest and taxes of Cineplex's other joint ventures and associates, and other items that do not in management's view represent a factor relevant to the ongoing performance of the business such as the Competition Tribunal's administrative monetary penalty. Adjusted EBITDAaL modifies adjusted EBITDA to deduct current period cash rent paid or payable related to lease obligations.
Subsequent to the adoption of IFRS 16, Leases, effective January 1, 2019, the calculation of EBITDA no longer includes a charge for amounts paid or payable with respect to leased property and equipment. Given the majority of Cineplex's businesses are carried on in leased premises, Cineplex introduced the measure of adjusted EBITDAaL which includes a deduction for cash rent paid/payable related to lease obligations. Cineplex's management believes that adjusted EBITDAaL is an important supplemental measure of Cineplex's profitability at an operational level and provides analysts and investors with comparability in evaluating and valuing Cineplex's performance period over period. EBITDA, adjusted for various unusual items, is also used to define certain financial covenants in Cineplex's Credit Facilities. Management calculates adjusted EBITDAaL margin by dividing adjusted EBITDAaL by total revenues.
EBITDA, adjusted EBITDA and adjusted EBITDAaL are non-GAAP measures generally used as an indicator of financial performance and they should not be seen as a measure of liquidity or a substitute for comparable metrics prepared in accordance with GAAP. Cineplex's EBITDA, adjusted EBITDA and adjusted EBITDAaL may differ from similar calculations as reported by other entities and accordingly may not be comparable to EBITDA, adjusted EBITDA or adjusted EBITDAaL reported by other entities.
Adjusted Store Level EBITDAaL Metrics
Cineplex reviews and reports adjusted EBITDAaL at the location level for LBE which is calculated as total LBE revenues from all locations less total LBE operating expenses, which excludes pre-opening costs and overhead relating to the management of LBE.
Adjusted Store Level EBITDAaL Margin
Calculated as adjusted store level EBITDAaL divided by total revenues for LBE for the period.
SUPPLEMENTARY FINANCIAL MEASURES
Supplementary financial measures are financial measures that are not (a) presented in the financial statements and (b) is, or is intended to be, disclosed periodically to depict the historical or expected future financial performance, financial position or cash flow, that is not a non-GAAP financial measure or a non-GAAP ratio as defined in the instrument. Below are supplementary financial measures that Cineplex uses to depict its financial performance, financial position or cash flows.
Earnings (loss) per Share Metrics
Cineplex has presented basic and diluted earnings (loss) per share net of this item to provide a more comparable loss per share metric between the current periods and prior year periods. In the non-GAAP and other financial measures, earnings is defined as net income or net loss attributable to Cineplex excluding the change in fair value of financial instruments.
Per Patron Revenue Metrics
Cineplex reviews per patron metrics as they relate to box office revenue, theatre food service revenue and cinema media revenue such as BPP, CPP, BPP excluding premium priced product, concession margin per patron, and CMPP, as these are key measures used by investors to value and assess Cineplex's performance, and are widely used in the theatre exhibition industry. Cineplex's management defines these metrics as follows:
Theatre Attendance: Theatre attendance is calculated as the total number of paying patrons that frequent Cineplex's theatres during the period.
BPP: Calculated as total box office revenues divided by total paid theatre attendance for the period.
BPP excluding premium priced product: Calculated as total box office revenues for the period, less box office revenues from 3D, 4DX, UltraAVX, VIP ScreenX and IMAX product; divided by total paid theatre attendance for the period, less paid theatre attendance for 3D, 4DX, UltraAVX, VIP, ScreenX and IMAX product.
CPP: Calculated as total theatre food service revenues divided by total paid total theatre attendance for the period.
CMPP: Calculated as total cinema media revenues divided by total paid theatre attendance for the period.
Premium priced product: Defined as 3D, 4DX, UltraAVX, IMAX, ScreenX and VIP film product.
Theatre concession margin per patron: Calculated as total theatre food service revenues less total theatre food service cost, divided by theatre attendance for the period.
Same Theatre Analysis
Cineplex reviews and reports same theatre metrics relating to box office revenues, theatre food service revenues, theatre rent expense and theatre payroll expense as these measures are widely used in the theatre exhibition industry as well as other retail industries.
Same theatre metrics are calculated by removing the results for all theatres that have been opened, acquired, closed or otherwise disposed of subsequent to the start of the prior year comparative period. For the three months ended September 30, 2024 the impact of three locations that were closed or otherwise disposed of have been excluded, resulting in 155 theatres being included in the same theatre metrics. For the nine months ended September 30, 2024 the impact of one location that was opened or acquired and four locations that were closed or otherwise disposed of have been excluded, resulting in 154 theatres being included in the same theatre metrics.
Cost of sales percentages
Cineplex reviews and reports cost of sales percentages for its two largest revenue sources; box office revenues and food service revenues, as these measures are widely used in the theatre exhibition industry. These measures are reported as film cost percentage and concession cost percentage, respectively, and are calculated as follows:
Film cost percentage: Calculated as total film cost expense divided by total box office revenues for the period.
Theatre concession cost percentage: Calculated as total theatre food service costs divided by total theatre food service revenues for the period.
LBE food cost percentage: Calculated as total LBE food costs divided by total LBE food service revenues for the period.
Certain information included in this news release contains forward-looking statements within the meaning of applicable securities laws. These forward-looking statements include, among others, statements with respect to Cineplex's objectives and goals, and the strategies to achieve those objectives and goals, as well as statements with respect to Cineplex's beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective" and "continue" (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements.
By their very nature, forward-looking statements involve inherent risks and uncertainties, including those described in Cineplex's Annual Information Form ("AIF"), Cineplex's management's discussion and analysis for the year ended December 31, 2023 ("Annual MD&A") and in this news release, which is incorporated herein by reference and available on SEDAR+ (www.sedarplus.ca). These risks and uncertainties, both general and specific, give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. Cineplex cautions readers not to place undue reliance on these statements, as a number of important factors, many of which are beyond Cineplex's control, could cause actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements, including: Cineplex's expectations with respect to liquidity and capital expenditures; its ability to meet its ongoing capital, operating and other obligations, and anticipated needs for, and sources of, funds; Cineplex's ability to execute cost-cutting and revenue enhancement initiatives; information concerning future purchases of Common Shares under the NCIB; and risks generally encountered in the relevant industry, competition, customer, legal, taxation and accounting matters.
The foregoing list of factors that may affect future results is not exhaustive. When reviewing Cineplex's forward-looking statements, readers should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the "Risks and Uncertainties" section of Cineplex's Annual MD&A.
Cineplex does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable Canadian securities law. Additionally, Cineplex undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of Cineplex, its financial or operating results or its securities. All forward-looking statements in this news release are made as of the date hereof and are qualified by these cautionary statements. Additional information, including Cineplex's AIF and Annual MD&A, can be found on SEDAR+ at www.sedarplus.ca.
You are cordially invited to participate in a conference call with the management of Cineplex (TSX: CGX) to review our third quarter results. Ellis Jacob, President and Chief Executive Officer and Gord Nelson, Chief Financial Officer, will host the call scheduled for:
Cineplex Inc. Q3 2024 Earnings Webcast:
| Date: | Wednesday, November 6, 2024 |
| | |
| Time: | 10:00 a.m. Eastern Daylight Time |
| | |
| Audio Webcast: | Audience URL https://events.q4inc.com/attendee/427442200 |
| | Pre-registration available. |
| | An archive of the webcast will be available at https://corp.cineplex.com/investors after the webcast for a limited time. |
Please note, analysts who cover the Company, should use the dial-in option to participate in the live question period:
1-226-828-7575 (Local) or 1-833-950-0062 (Canada Toll-free), access code 758686.
All attendees should join the event 5-10 minutes prior to the scheduled start time. Media are welcome to join the call in listen-only mode.
About Cineplex
Cineplex (TSX:CGX) is a top-tier Canadian brand that operates in the Film Entertainment and Content, Amusement and Leisure, and Media sectors. Cineplex offers a unique escape from the everyday to millions of guests through its circuit of 168 movie theatres and location-based entertainment venue. In addition to being Canada's largest and most innovative film exhibitor, the company operates Canada's favourite destination for 'Eats & Entertainment' (The Rec Room), complexes specially designed for teens and families (Playdium), and an entertainment concept that brings movies, amusement gaming, dining, and live performances together under one roof (Cineplex Junxion). It also operates successful businesses in cinema media (Cineplex Media), alternative programming (Cineplex Events), motion picture distribution (Cineplex Pictures), digital commerce (CineplexStore.com), and digital place-based media (Cineplex Digital Media or CDM). Providing even more value for its guests, Cineplex is a partner in Scene+, Canada's largest entertainment and lifestyle loyalty program.
Proudly recognized as having one of the country's Most Admired Corporate Cultures, Cineplex employs over 10,000 people in its offices and venues across Canada. To learn more, visit Cineplex.com.
SOURCE Cineplex
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