Strong Results From Diversified Businesses Drive Record Total
Revenue For The Quarter
TORONTO, Nov. 14, 2019 /CNW/ - (TSX: CGX) - Cineplex Inc.
("Cineplex") today released its financial results for the three and
nine months ended September 30, 2019.
Unless otherwise specified, all amounts are in Canadian
dollars.
Third Quarter Results
|
|
|
|
|
2019
|
2018 Revised and Restated
(i)
|
Period over Period Change (ii)
|
Total revenues (iii)
|
$
|
418.4
|
million
|
$
|
386.4
|
million
|
8.3%
|
Theatre attendance
|
17.5
|
million
|
17.2
|
million
|
1.8%
|
Net income from
continuing operations
|
$
|
15.1
|
million
|
$
|
12.3
|
million
|
22.3%
|
Net
loss from discontinued operations
|
$
|
(1.7)
|
million
|
$
|
(2.1)
|
million
|
NM
|
Net income*
|
$
|
13.4
|
million
|
$
|
10.2
|
million
|
31.1%
|
Box office revenues per patron ("BPP") (iv)
|
$
|
10.16
|
|
$
|
10.07
|
|
0.9%
|
Concession revenues per patron ("CPP") (iv)
|
$
|
6.68
|
|
$
|
6.25
|
|
6.9%
|
Adjusted EBITDA (iv)
|
$
|
106.1
|
million
|
$
|
55.0
|
million
|
93.1%
|
Adjusted EBITDAaL (i) (iv)
|
$
|
62.3
|
million
|
$
|
51.4
|
million
|
21.2%
|
Adjusted EBITDAaL margin (i) (iv)
|
14.9%
|
|
13.3%
|
|
1.6%
|
Adjusted free
cash flow (iv)
|
$
|
48.2
|
million
|
$
|
37.8
|
million
|
27.7%
|
Adjusted free
cash flow per common share
of Cineplex
("Share") (iv)
|
$
|
0.762
|
|
$
|
0.596
|
|
27.9%
|
Earnings per Share ("EPS") from
continuing
operations - basic and diluted
|
$
|
0.24
|
|
$
|
0.19
|
|
26.3%
|
EPS from discontinued operations - basic and diluted
|
$
|
(0.03)
|
|
$
|
(0.03)
|
|
—%
|
EPS - basic and diluted*
|
$
|
0.21
|
|
$
|
0.16
|
|
31.3%
|
*The adoption of IFRS 16 negatively impacted the net income by approximately $3.8 million in the current period and approximately $6.4 million or $0.10 per
Share as compared to Q3 2018.
|
Year to Date Results
|
|
|
|
|
2019
|
2018 Revised and Restated
(i)
|
Period over Period Change (ii)
|
Total revenues (iii)
|
$
|
1,221.9
|
million
|
$
|
1,184.6
|
million
|
3.2%
|
Theatre attendance
|
49.5
|
million
|
52.3
|
million
|
-5.3%
|
Net income from
continuing operations
|
$
|
31.8
|
million
|
$
|
56.2
|
million
|
-43.3%
|
Net
loss from discontinued operations
|
$
|
(6.4)
|
million
|
$
|
(6.4)
|
million
|
NM
|
Net income*
|
$
|
25.4
|
million
|
$
|
49.8
|
million
|
-49.0%
|
Box office revenues per patron ("BPP") (iv)
|
$
|
10.58
|
|
$
|
10.37
|
|
2.0%
|
Concession revenues per patron ("CPP") (iv)
|
$
|
6.70
|
|
$
|
6.31
|
|
6.2%
|
Adjusted EBITDA (iv)
|
$
|
299.3
|
million
|
$
|
179.0
|
million
|
67.2%
|
Adjusted EBITDAaL (i) (iv)
|
$
|
168.2
|
million
|
$
|
167.3
|
million
|
0.6%
|
Adjusted EBITDAaL margin (i) (iv)
|
13.8%
|
|
14.1%
|
|
-0.3%
|
Adjusted free
cash flow (iv)
|
$
|
129.3
|
million
|
$
|
122.0
|
million
|
6.0%
|
Adjusted free
cash flow per common share
of Cineplex
("Share") (iv)
|
$
|
2.042
|
|
$
|
1.926
|
|
6.0%
|
Earnings per Share ("EPS") from
continuing
operations - basic and diluted
|
$
|
0.50
|
|
$
|
0.89
|
|
-43.8%
|
EPS from discontinued operations - basic and diluted
|
$
|
(0.10)
|
|
$
|
(0.10)
|
|
—%
|
EPS - basic and diluted*
|
$
|
0.40
|
|
$
|
0.79
|
|
-49.4%
|
*The adoption of IFRS 16 negatively impacted the net income by approximately $11.0 million in the year to date and approximately $19.7 million or $0.31 per
Share as compared to 2018.
|
i.
|
Prior period figures have been revised as applicable per IFRS 16 and restated as applicable per IFRS 5 to confirm to current period presentation.
|
ii.
|
Period over period change calculated based on thousands of dollars except percentage and per share values.
Changes in percentage amounts are
calculated as 2019 value less 2018 value.
|
iii.
|
All amounts are from continuing operations.
|
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 financial measures reported by Cineplex are defined in the 'Non-GAAP Financial Measures' section at the end of this news release.
|
"Cineplex reported a strong third quarter with growth across all
businesses, resulting in record total revenue of $418.4 million, up 8.3% and adjusted EBITDAaL of
$62.3 million, up 21.2% compared to
the prior year," said Ellis Jacob,
President and CEO, Cineplex.
Recognizing the quarter's strong film slate, theatre attendance
increased 1.8%. This, combined with third quarter records for both
BPP of $10.16 and CPP of $6.68, resulted in a 2.6% increase in box office
revenue and an 8.9% increase in theatre food service revenue. Media
revenue increased 30.6% with growth in both cinema advertising and
digital place-based media revenue; and amusement revenue increased
8.0% as a result of increased route revenue and growth within our
location-based entertainment venues.
Key accomplishments during the quarter included opening the
first reinvented Playdium 2.0 entertainment complex in Brampton, Ontario, adding Canada's second 4DX auditorium at Scotiabank
Theatre Chinook in Calgary,
Alberta, and announcing CDM's partnership with AMC to
deploy, manage and enhance a digital signage network at
approximately 630 locations across the
United States. Also during the quarter, Cineplex initiated a
review process of WorldGaming Network, engaging a third-party
adviser to identify a strategic equity partner to further develop
the online esports business.
Looking ahead, I am encouraged by the positive results from
across our businesses as we further execute our diversification
strategy, build scale and achieve more meaningful growth for the
future."
KEY DEVELOPMENTS IN THE THIRD QUARTER OF 2019
The following describes certain key business initiatives
undertaken and results achieved during the third quarter of 2019 in
each of Cineplex's core business areas:
FILM ENTERTAINMENT AND CONTENT
Theatre Exhibition
- Reported third quarter box office revenues of $177.9 million, an increase of $4.6 million (2.6%) from $173.3 million reported in the prior year period
due to a 1.8% increase in the theatre attendance and growth in
BPP.
- BPP was $10.16, a third quarter
record for Cineplex, $0.09 (0.9%)
higher than $10.07 reported during
the prior year period.
- Opened Canada's second 4DX
auditorium at Scotiabank Theatre Chinook in Calgary, Alberta.
- Announced plans for a new Cineplex VIP Cinemas at Royalmount in
Montreal, Quebec, which is
expected to open in 2022. The VIP Cinemas will include five luxury
auditoriums and a fully licensed lounge.
Theatre Food Service
- Reported a third quarter record for theatre food service
revenues of $117.0 million, an
increase of $9.5 million (8.9%) from
the prior year period as a result of the growth in CPP and a 1.8%
increase in theatre attendance.
- CPP was $6.68, a third quarter
record for Cineplex, $0.43 (6.9%)
higher than $6.25 reported during the
prior year period.
- Expanded alcohol beverage service to an additional 12 theatres,
now totaling 78 (excluding VIP).
- Expanded home delivery options with the addition of a Skip the
Dishes pilot program.
Alternative Programming
- Alternative Programming (Cineplex Events) featured live events
from André Rieu, the one woman show Fleabag by Phoebe Waller-Bridge and Margaret Atwood's book launch of
The Testaments. Feature film events included
Anime titles along with documentaries from BTS and the
feature Game Changers.
- Cineplex international film program featured several strong
performing international films, including Chinese, Hindi, Punjabi
and Filipino films with Hello, Love Goodbye becoming the
highest grossing Filipino title in Cineplex history.
Digital Commerce
-
Online and mobile ticketing represented 31% of total theatre admissions during the third quarter, up from 24% in the prior year period.
-
Total registered users for Cineplex Store increased by 43% in the third quarter of 2019 in addition to a 181% increase in device activations as compared to the prior year period.
MEDIA
- Reported third quarter revenues of $43.3
million for total media, an increase of
$10.1 million (30.6%) compared to the
prior year period.
Cinema Media
- Reported third quarter revenues of $22.6
million, compared to $20.0
million in the prior year period, an increase of 13.0%,
primarily due to increases in show-time and pre-show
advertising.
Digital Place-Based Media
- Reported an all-time quarterly record for digital place-based
media revenues of $20.7 million, an
increase of $7.5 million (57.2%)
compared to the prior year period due to higher project
installation revenues and other digital services revenues.
- Chosen to deploy, manage and enhance AMC theatres' digital
network at approximately 630 locations across the United States, including its box office
signage, theatre menu boards and other ancillary signage.
AMUSEMENT AND LEISURE
Amusement Solutions
- Reported record third quarter revenues of $47.6 million, an increase of $1.9 million (4.2%) over the prior year period as
a result of increased route operations revenue.
Location-based
Entertainment ("LBE")
- Reported third quarter revenues of $19.6
million, an increase of $2.8
million (16.6%) over the prior year period due to two
additional locations of The Rec Room as compared to the
prior year and one Playdium 2.0 in the current period.
- Opened Canada's first
reinvented Playdium 2.0 entertainment complex in
Brampton, Ontario on September 16, 2019.
- During the quarter, Cineplex announced plans to open
Quebec's first location of
The Rec Room at Royalmount in Montreal, Quebec, expected to open in
2022.
Esports
- WGN hosted its second annual Rocket League WGN North American
Championship esports tournament. The tournament grand finals took
place in August 2019 at FAN EXPO
Canada held at the Metro Toronto Convention Centre.
Cineplex initiated a review process of WGN's online esports
business, engaging a third-party adviser to identify a strategic
equity partner.
LOYALTY
- Membership in the SCENE loyalty program increased by 0.2
million members in the period, reaching 10.1 million at
September 30, 2019.
- SCENE celebrated 10 million members with National No Excuses
Day on September 27, 2019
offering SCENE members exclusive promotional offers, including half
off point redemptions.
OPERATING RESULTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019
Total revenues
Total revenues for the three months ended September 30, 2019 increased $32.1 million (8.3%) to $418.4 million as compared to the prior year
period. Total revenues for the nine months ended September 30, 2019 increased $37.3 million (3.2%) to 1,221.9 million as
compared to the prior year period. A discussion of the factors
affecting the changes in box office, food service, media, amusement
and other revenues for the period is provided below.
Non-GAAP measures discussed throughout this news release,
including adjusted EBITDA, adjusted EBITDAaL, adjusted free cash
flow, theatre attendance, BPP, premium priced product, same theatre
metrics, CPP, film cost percentage, food service cost percentage
and concession margin per patron are defined and discussed in the
Non-GAAP measures section of this news release.
Box office revenues
The following table highlights the movement in box office
revenues, theatre attendance and BPP for the quarter and the year
to date (in thousands of dollars, except theatre attendance
reported in thousands of patrons and per patron amounts, unless
otherwise noted):
|
|
|
Box office revenues
|
Third Quarter
|
Year to
Date
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Box office revenues
|
$
|
177,865
|
$
|
173,278
|
2.6%
|
$
|
523,732
|
$
|
541,892
|
-3.4%
|
Theatre attendance (i)
|
17,512
|
17,208
|
1.8%
|
49,511
|
52,280
|
-5.3%
|
Box office revenue per patron (i)
|
$
|
10.16
|
$
|
10.07
|
0.9%
|
$
|
10.58
|
$
|
10.37
|
2.0%
|
BPP excluding premium priced product (i)
|
$
|
8.95
|
$
|
8.72
|
2.6%
|
$
|
9.08
|
$
|
8.85
|
2.6%
|
Canadian industry revenues (ii)
|
|
|
5.4%
|
|
|
-1.7%
|
Same theatre box office revenues (i)
|
$
|
172,292
|
$
|
169,947
|
1.4%
|
$
|
507,346
|
$
|
534,414
|
-5.1%
|
Same theatre attendance (i)
|
17,062
|
16,906
|
0.9%
|
48,213
|
51,548
|
-6.5%
|
% Total
box from premium priced product (i)
|
35.8%
|
41.2%
|
-5.4%
|
42.8%
|
43.9%
|
-1.1%
|
(i) See Non-GAAP measures section of this news
release.
|
(ii)
Source: Gross box office receipts
(inclusive of all taxes) from The Movie Theatre Association of
Canada industry data adjusted for calendar quarter
dates.
|
|
|
|
Box office continuity
|
Third Quarter
|
Year to
Date
|
Box Office
|
Theatre Attendance
|
Box Office
|
Theatre
Attendance
|
2018 as reported
|
$
|
173,278
|
17,208
|
$
|
541,892
|
52,280
|
Same theatre attendance change
|
|
1,575
|
157
|
|
(34,572)
|
(3,335)
|
Impact of same theatre BPP change
|
|
770
|
—
|
|
7,504
|
—
|
New and acquired theatres (i)
|
|
3,234
|
259
|
|
12,440
|
964
|
Disposed and closed theatres (i)
|
|
(992)
|
(112)
|
|
(3,532)
|
(398)
|
2019 as reported
|
$
|
177,865
|
17,512
|
$
|
523,732
|
49,511
|
(i) See Non-GAAP measures section of this news release.
Represents theatres opened, acquired, disposed or closed subsequent to the start of the prior year
comparative period.
|
Third Quarter
|
|
|
|
|
|
Third Quarter 2019 Top
Cineplex Films
|
3D
|
%
Box
|
Third Quarter 2018 Top
Cineplex Films
|
3D
|
%
Box
|
1
|
The Lion King
|
√
|
18.2%
|
1
|
Mission: Impossible Fallout
|
√
|
11.9%
|
2
|
Spider-Man: Far From Home
|
√
|
13.8%
|
2
|
Ant-Man And The Wasp
|
√
|
7.6%
|
3
|
Fast & Furious Presents: Hobbs & Shaw
|
|
6.7%
|
3
|
Jurassic World: Fallen Kingdom
|
√
|
6.9%
|
4
|
It Chapter Two
|
|
6.6%
|
4
|
Crazy Rich Asians
|
|
6.8%
|
5
|
Once Upon A Time In Hollywood
|
|
5.8%
|
5
|
Hotel Transylvania 3: Summer Vacation
|
√
|
6.7%
|
Box office revenues increased $4.6
million, or 2.6%, to $177.9
million during the period, compared to $173.3 million reported in the third quarter in
2018. The increase was due to a 1.8% increase in theatre attendance
to $17.5 million guests and a higher
BPP. The 1.8% increase in theatre attendance was due to a stronger
film slate in the current period as compared to the prior year. BPP
for the three months ended September 30,
2019 was $10.16, a
$0.09 increase (0.9%) from the prior
year period, setting a third quarter record for Cineplex. This
increase was due to price increases in selective markets partially
offset by the 5.4% shift away from premium price product.
Year to Date
|
|
|
|
|
|
Year to Date
2019 Top Cineplex Films
|
3D
|
% Box
|
Year to Date
2018 Top Cineplex Films
|
3D
|
% Box
|
1
|
Avengers: Endgame
|
√
|
11.6%
|
1
|
Avengers: Infinity War
|
√
|
8.3%
|
2
|
The Lion King
|
√
|
6.3%
|
2
|
Black Panther
|
√
|
8.1%
|
3
|
Captain Marvel
|
√
|
5.9%
|
3
|
Incredibles 2
|
√
|
5.4%
|
4
|
Spider-Man: Far From Home
|
√
|
4.7%
|
4
|
Jumanji: Welcome to The Jungle
|
√
|
4.5%
|
5
|
Aladdin
|
√
|
4.0%
|
5
|
Deadpool 2
|
|
4.1%
|
Box office revenues for the nine months ended September 30, 2019 were $523.7 million, a decrease of $18.2 million or 3.4% as compared to the prior
year due to the 5.3% decrease in theatre attendance more than
offsetting the higher BPP in the current year period compared to
the 2018 period.
Cineplex's BPP for the period increased $0.21, or 2.0%, from $10.37 in the prior year period to $10.58 in the current period. This increase was
due to price increases in selective markets as compared to the
prior year period.
Food service revenues
The following table highlights the movement in food service
revenues, theatre attendance and CPP for the quarter and the year
to date (in thousands of dollars, except theatre attendance and
same theatre attendance reported in thousands of patrons and per
patron amounts):
|
|
|
Food service
revenues
|
Third
Quarter
|
Year to Date
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Food service -
theatres
|
$
|
117,048
|
$
|
107,519
|
8.9%
|
$
|
331,961
|
$
|
329,718
|
0.7%
|
Food service -
LBE
|
|
8,502
|
|
8,038
|
5.8%
|
|
26,210
|
|
25,057
|
4.6%
|
Total food service
revenues
|
$
|
125,550
|
$
|
115,557
|
8.6%
|
$
|
358,171
|
$
|
354,775
|
1.0%
|
Theatre attendance
(i)
|
|
17,512
|
|
17,208
|
1.8%
|
|
49,511
|
|
52,280
|
-5.3%
|
CPP (i)
(ii)
|
$
|
6.68
|
$
|
6.25
|
6.9%
|
$
|
6.70
|
$
|
6.31
|
6.2%
|
Same theatre food
service revenues (i)
|
$
|
112,576
|
$
|
104,996
|
7.2%
|
$
|
319,089
|
$
|
324,586
|
-1.7%
|
Same theatre
attendance (i)
|
|
17,062
|
|
16,906
|
0.9%
|
|
48,213
|
|
51,548
|
-6.5%
|
(i) See Non-GAAP
measures section of this news release.
(ii) Food service
revenue from LBE is not included in the CPP calculation.
|
|
|
|
Theatre food service revenue continuity
|
Third Quarter
|
Year to Date
|
Theatre Food Service
|
Theatre Attendance
|
Theatre Food Service
|
Attendance
|
2018 as reported
|
$
|
107,519
|
17,208
|
$
|
329,718
|
52,280
|
Same theatre attendance change
|
|
973
|
157
|
|
(20,998)
|
(3,335)
|
Impact of same theatre CPP change
|
|
6,607
|
—
|
|
15,501
|
—
|
New and acquired theatres (i)
|
|
2,551
|
259
|
|
9,874
|
964
|
Disposed and closed theatres (i)
|
|
(602)
|
(112)
|
|
(2,134)
|
(398)
|
2019 as reported
|
$
|
117,048
|
17,512
|
$
|
331,961
|
49,511
|
(i) See Non-GAAP measures section of this news release.
Represents theatres opened, acquired, disposed or closed subsequent to the start of the prior year
comparative period.
|
Third Quarter
Food service revenues are comprised primarily of concession
revenues, which includes food service sales at theatre locations
and through delivery services including Uber Eats and Skip the
Dishes. Food service revenues also include food and beverage sales
at LBE venues including The Rec Room and Playdium 2.0. Food service
revenues increased $10.0 million or
8.6% mainly as a result of the increase of $9.5 million (8.9%) to $117.0 million in theatre food service revenues,
a third quarter record. The increase in theatre food service
revenues was due to the 1.8% increase in theatre attendance and CPP
which increased 6.9% to $6.68, a
third quarter record for Cineplex. Expanded offerings outside of
core food service products, including offerings at Cineplex's VIP
Cinemas and Outtakes locations and expanded beverage services, have
contributed to increased visitation and higher average transaction
values, resulting in the record CPP in the period.
Food service revenues from LBE increased $0.5 million (5.8%) compared to the prior year
period primarily due to the increase in locations from six in 2018
to nine in 2019.
Year to Date
Food service revenues increased $3.4
million, or 1.0% as compared to the prior year, primarily
due to a 4.6% increase in food service revenues from LBE to
$26.2 million from the increased
locations as compared to the prior year period. Newer locations
typically experience higher sales volumes in the first year of
operations (honeymoon period) before settling into their expected
long-term run-rate levels resulting in a leveling off of results
for older locations. Theatre food service revenues increased
$2.2 million (0.7%) due to the 6.2%
increase in CPP, partially offset by the impact of a 5.3% decrease
in theatre attendance. The CPP of $6.70 is the highest Cineplex has reported
through the first nine months of a year.
While programs including SCENE offers provided on food service
purchases impact CPP, Cineplex believes that this loyalty program
drives incremental visits and food service purchases, resulting in
higher overall food service revenues.
Media revenues
The following table highlights the movement in media revenues for the quarter and the year to date (in thousands of dollars):
|
|
|
Media revenues
|
Third Quarter
|
Year to
Date
|
2019
|
2018 Restated
|
Change
|
2019
|
2018 Restated
|
Change
|
Cinema media
|
$
|
22,572
|
$
|
19,967
|
13.0%
|
$
|
73,244
|
$
|
66,667
|
9.9%
|
Digital place-based media
|
|
20,736
|
13,195
|
57.2%
|
|
53,966
|
38,246
|
41.1%
|
Total media revenues from continuing operations
|
$
|
43,308
|
$
|
33,162
|
30.6%
|
$
|
127,210
|
$
|
104,913
|
21.3%
|
Media revenues from discontinued operations
|
138
|
325
|
-57.5%
|
827
|
1,878
|
-56.0%
|
Total media revenues
|
$
|
43,446
|
$
|
33,487
|
29.7%
|
$
|
128,037
|
$
|
106,791
|
19.9%
|
Third Quarter
Total media revenues from continuing operations increased
$10.1 million (30.6%) to $43.3 million in the third quarter as compared to
the prior year period. The increase was primarily due to a
$7.5 million (57.2%) increase in
digital place-based media to an all- time quarterly record of
$20.7 million primarily as a result
of increased project installation revenues which included rollouts
for new and growth with existing clients. Cinema media increased
$2.6 million (13.0%) to $22.7 million as a result of increases in
show-time and pre-show advertising.
During the quarter, digital place-based media added 464 new
locations (an increase of 3.3% from June 30,
2019) for a total of 14,559 locations as at September 30, 2019.
Year to Date
Total media revenues from continuing operations increased
$22.3 million for the nine months
ended September 30, 2019 as compared
to the prior year period. The increase resulted from a $15.7 million increase in digital place-based
media revenues due to higher project installation revenue and a
$6.6 million increase in Cinema media
due to higher show-time and pre-show theatre advertising.
Year to date, digital place-based media added 1,057 new locations (an increase of 7.8% from December 31, 2018).
Amusement Revenues
The following table highlights the movement in amusement revenues for the quarter and the year to date (in thousands of dollars):
|
|
|
Amusement
revenues
|
Third Quarter
|
Year to
Date
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Amusement - P1AG excluding Cineplex exhibition and LBE (i)
|
$
|
44,788
|
$
|
42,820
|
4.6%
|
$
|
138,278
|
$
|
122,179
|
13.2%
|
Amusement - Cineplex exhibition (i)
|
|
2,847
|
|
2,880
|
-1.1%
|
|
8,239
|
|
7,967
|
3.4%
|
Amusement - LBE
|
|
10,508
|
|
8,138
|
29.1%
|
|
28,243
|
|
22,174
|
27.4%
|
Total amusement revenues
|
$
|
58,143
|
$
|
53,838
|
8.0%
|
$
|
174,760
|
$
|
152,320
|
14.7%
|
(i) Cineplex receives a venue revenue share on games revenues earned at in-theatre game rooms and XSCAPE Entertainment Centres. Amusement - Cineplex
exhibition reports the total of this
venue revenue share which is consistent with the
historical presentation of Cineplex's
amusement revenues. Amusement -
P1AG excluding Cineplex exhibition and LBE reflects P1AG's gross amusement revenues, net of the venue revenue share paid to Cineplex reflected in Amusement - Cineplex exhibition above.
|
Third Quarter
Amusement revenues increased 8.0%, or $4.3 million, to a third quarter record of
$58.1 million in the third quarter of
2019 compared to the prior year period. The growth was primarily
due to an increase in route revenues from family entertainment
centres and theatres in Canada and
the United States including growth
resulting from the agreement signed with Cinemark in the second
quarter of 2018. Amusement revenues from LBE increased 29.1% or
$2.4 million compared to the prior
year period as a result of the additional locations and virtual
reality offerings.
Year to Date
For the year to date period, amusement revenues increased 14.7%
or $22.4 million, to $174.8 million compared to the prior year period
due to the agreement signed with Cinemark resulting in increased
route and distribution revenue and strong growth in revenue from
the additional locations of LBE as compared to the prior year
period.
Other revenues
The following table highlights the other revenues which includes
revenues from the Cineplex Store, promotional activities,
screenings, private parties, corporate events, breakage on gift
card sales and revenues from management fees for the quarter and
the year to date (in thousands of dollars):
|
|
|
Other revenues
|
Third Quarter
|
Year to
Date
|
2019
|
2018 Restated
|
Change
|
2019
|
2018 Restated
|
Change
|
Other revenues from continuing operations
|
$
|
13,582
|
$
|
10,554
|
28.7%
|
$
|
38,053
|
$
|
30,695
|
24.0%
|
Other revenues from discontinued operations
|
|
—
|
|
1
|
NM
|
|
16
|
167
|
-90.4%
|
Total other revenues
|
$
|
13,582
|
$
|
10,555
|
28.7%
|
$
|
38,069
|
$
|
30,862
|
23.4%
|
The quarterly and year to date increases in other revenues from continuing operations are primarily due to higher volume of digital
commerce sales.
Film cost
The following table highlights the movement in film cost and the
film cost percentage for the quarter and the year to date (in
thousands of dollars, except film cost percentage):
|
|
|
Film cost
|
Third Quarter
|
Year to
Date
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Film cost
|
$
|
93,735
|
$
|
90,213
|
3.9%
|
$
|
275,461
|
$
|
287,763
|
-4.3%
|
Film cost percentage (i)
|
|
52.7%
|
52.1%
|
0.6%
|
52.6%
|
53.1%
|
-0.5%
|
(i) See Non-GAAP measures section of this news release.
|
Third Quarter
Film cost varies primarily with box office revenues and can vary
from quarter to quarter usually based on the relative strength of
the titles exhibited during the period. This is due to film cost
terms varying by title and distributor. Film cost percentage during
the third quarter of 2019 was 52.7%, a 0.6% increase from the prior
year. Film cost increased $3.5
million or 3.9% as compared to the prior year due to the top
films in the third quarter of 2019 having higher settlement rates
and making up a larger percentage of box office revenues.
Year to Date
The year to date decrease in film cost expense was due to a
combination of the 0.5% decrease in the film cost percentage and
the lower box office revenues in the current period compared to the
prior year period. The decrease in film cost percentage is
attributable to the top films in the current period having lower
settlement rates compared to the prior year period.
Cost of food service
The following table highlights the movement in cost of food
service and food service cost as a percentage of food service
revenues ("concession cost percentage") for both theatres and LBE
for the quarter and the year to date (in thousands of dollars,
except percentages and margins per patron):
|
|
|
Cost of food service
|
Third Quarter
|
Year to
Date
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Cost of food service - theatre
|
$
|
25,222
|
$
|
21,993
|
14.7%
|
$
|
72,083
|
$
|
67,196
|
7.3%
|
Cost of food service - LBE
|
|
2,217
|
|
2,264
|
-2.1%
|
|
7,039
|
|
6,857
|
2.7%
|
Total cost of food service
|
$
|
27,439
|
$
|
24,257
|
13.1%
|
$
|
79,122
|
$
|
74,053
|
6.8%
|
|
|
|
|
|
|
|
|
|
|
|
Theatre concession cost percentage (i)
|
|
21.5%
|
|
20.5%
|
1.0%
|
|
21.7%
|
|
20.4%
|
1.3%
|
LBE food cost percentage (i)
|
|
26.1%
|
|
28.2%
|
-2.1%
|
|
26.9%
|
|
27.4%
|
-0.5%
|
Theatre concession margin per patron (i)
|
$
|
5.24
|
$
|
4.97
|
5.4%
|
$
|
5.25
|
$
|
5.02
|
4.6%
|
(i) See Non-GAAP measures section of this news release.
|
Third Quarter
Cost of food service at the theatres varies primarily with theatre attendance as well as the quantity and mix of offerings sold. Cost of food
service at LBE venues varies primarily with the
volume of guests who visit the location as
well as the quantity
and mix between food and beverage items sold.
The increase in the theatre cost of food service as compared to
the prior year period was primarily due to the higher food service
revenues in the third quarter of 2019 and the increase in the
theatre concession cost percentage from 20.5% in the prior year
period to 21.5% in 2019.
The theatre concession margin per patron increased 5.4% from
$4.97 in the third quarter of 2018 to
$5.24 in the same period in 2019,
reflecting the impact of the higher CPP during the period.
The decrease in LBE cost of food service as compared to the
prior year period was due to a 2.1% decrease in LBE food cost
percentage from 28.2% in 2018 to 26.9% in 2019. LBE food cost
percentage during the quarter decreased as compared to the prior
period due to improved cost management.
Year to Date
The increase in the theatre cost of food service as compared to
the prior year period was due to an increase in theatre food
service revenues and an increase in the concession cost percentage.
The theatre concession margin per patron increased from
$5.02 in the prior year period to
$5.25 in the current period,
reflecting the impact of the higher CPP in the current period.
The increase in LBE cost of food service as compared to the
prior year period was due to the higher food service revenues
resulting from the increased number of locations.
Depreciation and amortization
The following table highlights the movement in depreciation and amortization expenses during the quarter and the year to date
(in thousands of dollars):
|
|
|
Depreciation and amortization expenses
|
Third Quarter
|
Year to
Date
|
2019
|
2018 Restated
|
Change
|
2019
|
2018 Restated
|
Change
|
Depreciation of property, equipment and leaseholds
|
$
|
28,714
|
$
|
29,338
|
-2.1%
|
$
|
86,944
|
$
|
84,629
|
2.7%
|
Amortization of intangible assets and other
|
|
2,998
|
3,145
|
-4.7%
|
8,804
|
9,114
|
-3.4%
|
Sub-total - depreciation and amortization - other assets
|
$
|
31,712
|
$
|
32,483
|
-2.4%
|
$
|
95,748
|
$
|
93,743
|
2.1%
|
Depreciation - right-of-use assets
|
36,456
|
—
|
NM
|
109,475
|
—
|
NM
|
Total depreciation and amortization from continuing operations
|
$
|
68,168
|
$
|
32,483
|
109.9%
|
$
|
205,223
|
$
|
93,743
|
118.9%
|
Depreciation and amortization from discontinued operations
|
1,215
|
1,116
|
8.9%
|
3,623
|
3,310
|
9.5%
|
Total depreciation and amortization
|
$
|
69,383
|
$
|
33,599
|
106.5%
|
$
|
208,846
|
$
|
97,053
|
115.2%
|
The quarterly decrease of $0.6
million in depreciation of property, equipment and
leaseholds from continuing operations was due to the reduction in
depreciation resulting from fully depreciated assets more than
offsetting the incremental depreciation from investments in
amusement and leisure businesses. The year to date increase of
$2.3 million was primarily due to the
investments in amusement and leisure businesses.
The quarterly and year to date decrease in amortization of
intangible assets and other from continuing operations as compared
to the prior year periods was due to internally developed software
for digital products including the Cineplex mobile app and website
platforms, net of the reallocation to amortization of intangible
assets from discontinued operations.
The quarterly and year to date increase in depreciation of right-of-use assets from continuing operations was as a result of the adoption of IFRS 16. The right-of-use assets are depreciated over the lease term. The current quarter and year to date expense
represents the depreciation charge for the periods.
The quarterly and year to date increase in depreciation and
amortization from discontinued operations was primarily due to
internally developed software for WGN website platforms.
Loss on disposal of assets
The following table shows the movement in the loss on disposal of assets during the quarter and the year to date (in thousands of dollars):
|
|
|
Loss on disposal
of assets
|
Third
Quarter
|
Year to Date
|
2019
|
2018 Restated
|
Change
|
2019
|
2018 Restated
|
Change
|
Loss on disposal from
continuing operations
|
$
|
303
|
$
|
783
|
-61.3%
|
$
|
896
|
$
|
1,617
|
44.6%
|
Loss on disposal from
discontinued operations
|
—
|
—
|
NM
|
—
|
16
|
-100.0%
|
Loss on disposal of
assets
|
$
|
303
|
$
|
783
|
-61.3%
|
$
|
896
|
$
|
1,633
|
-45.1%
|
Other costs
Other costs include three main sub-categories of expenses:
theatre occupancy expenses, which capture the rent and associated
occupancy costs for Cineplex's theatre operations; other operating
expenses, which include the costs related to running Cineplex's
film entertainment and content, media, as well as amusement and
leisure; and general and administrative expenses, which includes
costs related to managing Cineplex's operations, including head
office expenses. Please see the discussions below for more details
on these categories.
The following table highlights the movement in other costs for the quarter and the year to date (in thousands of dollars):
|
|
|
Other costs
|
Third Quarter
|
Year to
Date
|
2019
|
2018 Restated
|
Change
|
2019
|
2018 Restated
|
Change
|
Theatre occupancy expenses
|
$
|
18,219
|
$
|
53,161
|
-65.7%
|
$
|
53,374
|
$
|
157,847
|
-66.2%
|
Other operating expenses
|
|
156,732
|
|
145,809
|
7.5%
|
|
462,434
|
|
431,996
|
7.0%
|
General and administrative expenses
|
|
16,004
|
|
18,033
|
-11.3%
|
|
51,963
|
|
54,004
|
-3.8%
|
Total other costs from continuing operations
|
$
|
190,955
|
$
|
217,003
|
-12.0%
|
$
|
567,771
|
$
|
643,847
|
-11.8%
|
Other costs from discontinued operations
|
1,391
|
|
1,941
|
-28.3%
|
5,530
|
|
6,323
|
-12.5%
|
Total other costs
|
$
|
192,346
|
$
|
218,944
|
-12.1%
|
$
|
573,301
|
$
|
650,170
|
-11.8%
|
Theatre occupancy expenses
The following table highlights the movement in theatre occupancy
expenses for the quarter and the year to date (in thousands of
dollars) with the prior period presentation revised to provide
comparability to the impact of the transition to IFRS 16:
|
|
|
Theatre occupancy expenses
|
Third Quarter
|
Year to
Date
|
2019
|
2018 Revised
|
Change
|
2019
|
2018 Revised
|
Change
|
Cash rent - theatre (i) (vii)
|
$
|
39,111
|
$
|
38,704
|
1.1%
|
$
|
117,879
|
$
|
115,920
|
1.7%
|
Other occupancy
|
|
18,230
|
|
18,484
|
-1.4%
|
|
55,191
|
|
55,857
|
-1.2%
|
One-time items (ii)
|
|
(323)
|
|
(346)
|
-6.6%
|
|
(2,213)
|
|
(2,226)
|
-0.6%
|
Total theatre occupancy including cash lease payments
|
$
|
57,018
|
$
|
56,842
|
0.3%
|
$
|
170,857
|
$
|
169,551
|
0.8%
|
Non-cash rent (iii) (vi)
|
—
|
|
(2,692)
|
NM
|
—
|
|
(8,738)
|
NM
|
Rent previously recognized as a finance lease (iv)
|
—
|
|
(989)
|
NM
|
—
|
|
(2,966)
|
NM
|
Cash rent related to lease obligations (v)
|
(38,799)
|
|
—
|
NM
|
(117,483)
|
|
—
|
NM
|
Theatre occupancy as reported
|
$
|
18,219
|
$
|
53,161
|
-65.7%
|
$
|
53,374
|
$
|
157,847
|
-66.2%
|
(i)
Represents the cash payments for theatre rent during the quarter. See Reconciliation section of the MD&A for further details.
|
(ii)
One-time items include amounts
related to both theatre rent and other
theatre occupancy costs. They are
isolated here to
illustrate Cineplex's theatre rent
and other theatre occupancy costs excluding these one-time, non-recurring items.
|
(iii)
Non-cash rent included in the 2018 balances in the previous reporting period. See Reconciliation section of the MD&A for further details.
|
(iv)
Rent payments that were charged to the finance lease obligations in the previous reporting period. See Reconciliation section of the MD&A for further
details.
|
(v)
Cash rent that has been reallocated to offset the lease obligations.
|
(vi)
See Non-GAAP measures section of this news release.
|
(vii)
The 2019 year-to-date balance includes $0.4 million of cash rent paid not pertaining to the current period. See Non-GAAP measures section of this news
release.
|
|
|
|
Theatre occupancy continuity
|
Third Quarter
Occupancy
|
Year to Date
Occupancy
|
2018 as reported
|
$
|
53,161
|
$
|
157,847
|
Impact of new and acquired theatres
|
|
797
|
|
3,299
|
Impact of disposed theatres
|
|
(474)
|
|
(1,707)
|
Same theatre rent change (i)
|
|
106
|
|
702
|
One-time items
|
|
24
|
|
14
|
Other
|
|
(277)
|
|
(1,002)
|
|
|
|
|
|
Impact of IFRS 16 adoption:
|
|
|
|
|
Impact of non-cash rent in prior period
|
|
2,692
|
|
8,738
|
Cash rent previously recognized as a finance lease
|
|
989
|
|
2,966
|
Cash rent related to lease obligations
|
|
(38,799)
|
|
(117,483)
|
2019 as reported
|
$
|
18,219
|
$
|
53,374
|
(i) See Non-GAAP measures section of this news release.
|
Third Quarter
Theatre occupancy expenses decreased $34.9 million (65.7%) during the third quarter of
2019 compared to the prior year period. This decrease was primarily
due to the impact of the adoption of IFRS 16 partially offset by
the impact of non-cash rent in the prior period.
Total theatre occupancy including cash lease payments increased
$0.2 million (0.3%) during the third
quarter of 2019 compared to the prior year period. This increase
was due to the impact of new theatres net of disposed theatres.
Year to Date
For the year to date period, theatre occupancy expenses
decreased $104.5 million (66.2%)
compared to the prior year due to the impact of the adoption of
IFRS 16 partially offset by the impact of non-cash rent in the
prior year period.
For the year to date period, theatre occupancy including cash
payments increased $1.3 million
(0.8%) as compared to the prior year period. The increase was
primarily due to the impact of new theatres net of disposed
theatres.
Other operating expenses
The following table highlights the movement in other operating
expenses during the quarter and the year to date (in thousands of
dollars) with the prior period presentation revised and restated to
provide comparability to the impact of the transition to IFRS 16
and application of IFRS 5:
|
|
|
Other operating expenses
|
Third Quarter
|
Year to
Date
|
2019
|
2018 Revised and
Restated
|
Change
|
2019
|
2018 Revised and
Restated
|
Change
|
Theatre payroll
|
$
|
40,886
|
$
|
38,003
|
7.6%
|
$
|
118,668
|
$
|
113,802
|
4.3%
|
Theatre operating expenses
|
|
30,060
|
|
29,152
|
3.1%
|
|
88,847
|
|
87,484
|
1.6%
|
Media (i)
|
|
22,932
|
|
14,235
|
61.1%
|
|
60,859
|
|
47,944
|
26.9%
|
P1AG (i)
|
|
38,375
|
|
38,603
|
-0.6%
|
|
119,869
|
|
110,462
|
8.5%
|
LBE (i) (ii)
|
|
13,313
|
|
11,067
|
20.3%
|
|
38,418
|
|
33,068
|
16.2%
|
LBE pre-opening (i) (iii)
|
|
480
|
|
209
|
129.7%
|
|
1,844
|
|
1,347
|
36.9%
|
SCENE
|
|
3,981
|
|
3,168
|
25.7%
|
|
13,079
|
|
10,456
|
25.1%
|
Marketing
|
|
4,083
|
|
5,393
|
-24.3%
|
|
11,126
|
|
13,296
|
-16.3%
|
Business interruption insurance proceeds
|
|
—
|
|
—
|
NM
|
|
—
|
|
(3,700)
|
NM
|
Other (iv)
|
|
7,128
|
|
5,872
|
21.4%
|
|
23,193
|
|
17,883
|
29.7%
|
Other operating expenses including cash lease payments
|
$
|
161,238
|
$
|
145,702
|
10.7%
|
$
|
475,904
|
$
|
432,042
|
10.2%
|
Non-cash rent (v) (vi)
|
|
—
|
|
107
|
NM
|
|
—
|
|
(46)
|
NM
|
Cash rent related to lease obligations (vii)
|
|
(4,506)
|
|
—
|
NM
|
|
(13,470)
|
|
—
|
NM
|
Other operating expenses from continuing operations
|
$
|
156,732
|
$
|
145,809
|
7.5%
|
$
|
462,434
|
$
|
431,996
|
7.0%
|
Other operating expenses from discontinued operations
|
1,391
|
|
1,941
|
-28.3%
|
5,530
|
|
6,323
|
-12.5%
|
Total other operating expenses
|
$
|
158,123
|
$
|
147,750
|
7.0%
|
$
|
467,964
|
$
|
438,319
|
6.8%
|
(i)
Prior period balances were revised to exclude non-cash rent. See Reconciliation section of the MD&A for further details.
|
(ii)
Includes operating costs of LBE locations. Overhead relating to management of LBE portfolio are included in the 'Other' line.
|
(iii)
Includes pre-opening costs of LBE.
|
(iv)
Other category includes overhead costs related to LBE and other Cineplex internal departments.
|
(v)
Non-cash rent included in the 2018 balances in the previous reporting period. See Reconciliation section of the MD&A for further details.
|
(vi)
See Non-GAAP measures section of this news release.
|
(vii)
Cash rent that has been reallocated to offset the lease obligations.
|
|
|
|
Other operating continuity
|
Third Quarter
Other Operating
|
Year to Date
Other Operating
|
2018 as restated
|
$
|
145,809
|
$
|
431,996
|
Impact of new and acquired theatres
|
|
1,232
|
|
5,986
|
Impact of disposed theatres
|
|
(403)
|
|
(1,407)
|
Same theatre payroll change (i)
|
|
2,276
|
|
1,531
|
Same theatre operating expenses change (i)
|
|
687
|
|
158
|
Media operating expenses change
|
|
8,697
|
|
12,915
|
P1AG operating expenses change
|
|
(228)
|
|
9,407
|
LBE operating expenses change
|
|
2,246
|
|
5,350
|
LBE pre-opening change
|
|
271
|
|
497
|
SCENE change
|
|
813
|
|
2,623
|
Marketing change
|
|
(1,310)
|
|
(2,170)
|
Business interruption insurance proceeds change
|
|
—
|
|
3,700
|
Other
|
|
1,255
|
|
5,272
|
Impact of IFRS 16 adoption:
|
|
|
|
|
Non-cash rent in prior period
|
|
(107)
|
|
46
|
Cash rent related to lease obligations
|
|
(4,506)
|
|
(13,470)
|
2019 as reported
|
$
|
156,732
|
$
|
462,434
|
(i) See Non-GAAP measures section of this news release.
|
Third Quarter
Other operating expenses during the third quarter of 2019
increased $10.9 million or 7.5%
compared to the prior year period. Cineplex incurred higher
amusement and leisure costs due to an increase in the number of LBE
locations. Media operating expenses increased due to an increase in
cinema media volumes and higher digital place-based media project
installation revenue as compared to the prior year period. Same
theatre payroll expenses increased due to higher business volumes
for theatre exhibition and higher minimum wages in Alberta, Quebec and British
Columbia.
These increases were partially offset by the cash rent allocated to lease obligations arising upon the adoption of IFRS 16.
Year to Date
For the nine months ended September 30,
2019, other operating expenses increased $30.4 million or 7.0% compared to the prior year
period. Cineplex incurred higher amusement and leisure costs due to
an increase in distribution sales and route revenue from P1AG and
from an increase in the number of LBE venues. Media operating
expenses increased due to higher CDM project installation revenue
and cinema media volumes as compared to the prior year period.
SCENE expenses increased $2.6 million
due to the timing of expenses. Other expenses increased due to
higher digital commerce business volumes as compared to the prior
year period. During the second quarter of 2018, Cineplex recognized
business interruption insurance proceeds of $3.7 million, as a result of the fire at Cineplex
Seton and VIP in late 2017.
These increases were partially offset by the cash rent allocated to lease obligations arising upon the adoption of IFRS 16.
General and administrative expenses
The following table highlights the movement in general and
administrative ("G&A") expenses during the quarter and the year
to date, including Share-based compensation costs, and G&A
expenses net of these costs (in thousands of dollars) with the
prior period presentation revised to provide comparability to the
impact of the transition to IFRS 16:
|
|
|
G&A expenses
|
Third Quarter
|
Year to
Date
|
2019
|
2018 Revised
|
Change
|
2019
|
2018 Revised
|
Change
|
G&A excluding LTIP and option plan expense (i)
|
$
|
13,985
|
$
|
14,586
|
-4.1%
|
$
|
47,705
|
$
|
47,131
|
1.2%
|
Restructuring
|
|
176
|
1,021
|
-82.8%
|
889
|
4,820
|
-81.6%
|
LTIP (ii)
|
|
1,598
|
2,020
|
-20.9%
|
2,607
|
729
|
257.6%
|
Option plan
|
|
408
|
405
|
0.7%
|
1,201
|
1,323
|
-9.2%
|
G&A expenses including cash lease payments
|
$
|
16,167
|
$
|
18,032
|
-10.3%
|
$
|
52,402
|
$
|
54,003
|
-3.0%
|
Non-cash rent (iii) (iv)
|
|
—
|
1
|
NM
|
—
|
1
|
NM
|
Cash rent included as part of lease obligations (v)
|
|
(163)
|
—
|
NM
|
(439)
|
—
|
NM
|
G&A expenses as reported
|
$
|
16,004
|
$
|
18,033
|
-11.3%
|
$
|
51,963
|
$
|
54,004
|
-3.8%
|
(i)
Prior period balance was revised to exclude non-cash rent. See Reconciliation section of the MD&A for further details.
(ii)
LTIP includes the expense for the LTIP program as well as the expense for the executive and Board deferred share unit plans.
(iii)
Non-cash rent included in the 2018 balances in the previous reporting period. See Reconciliation section of the MD&A for further details.
(iv)
See Non-GAAP measures section of this news release.
(v)
Cash rent that has been reallocated to offset the lease obligations.
|
Third Quarter
G&A expenses decreased $2.0
million during the third quarter of 2019 compared to the
prior year period. In the second quarter of 2018 Cineplex
implemented a cost reduction initiative. Costs associated with this
initiative decreased by $0.8 million
as compared to the prior year. In addition to other cost
reductions, G&A costs decreased by $0.4
million due to a decrease in LTIP expense as a result of
lower Share prices.
Year to Date
G&A expenses for the year to date period decreased
$2.0 million (3.8%) as compared to
the prior year period. The decrease in G&A was primarily
due to the $3.9 million reduction in
restructuring costs as compared to the prior year period as a
result of Cineplex's cost reduction initiative which was
implemented in the second quarter of 2018. This was partially
offset by a $1.9 million increase in
LTIP expense. The increase in LTIP expense was as a result of
regular ongoing vesting in the current year and a relatively flat
Share price as compared to the impact of higher forfeitures and a
decrease in Share price by $2.33 in
the prior year.
EARNINGS BEFORE INTEREST, INCOME TAXES, DEPRECIATION AND
AMORTIZATION ("EBITDA") (see Non-GAAP measures section of this news
release)
The following table presents EBITDA, adjusted EBITDA and
adjusted EBITDAaL for the three and nine months ended September 30, 2019 as compared to the prior year
periods (expressed in thousands of dollars, except adjusted
EBITDAaL margin):
|
|
|
EBITDA
|
Third Quarter
|
Year to
Date
|
2019
|
2018 Restated
|
Change
|
2019
|
2018 Restated
|
Change
|
EBITDA
|
$ 107,025
|
$
|
54,860
|
95.1%
|
$ 300,679
|
$ 180,603
|
66.5%
|
Adjusted EBITDA
|
$ 106,132x
|
$
|
54,971
|
93.1%
|
$ 299,257
|
$ 179,006
|
67.2%
|
Adjusted EBITDAaL (i)
|
$
62,312
|
$
|
51,398
|
21.2%
|
$ 168,219
|
$ 167,256
|
0.6%
|
Adjusted EBITDAaL margin (i)
|
14.9%
|
|
13.3%
|
1.6%
|
13.8%
|
14.1%
|
-0.3%
|
(i) Prior period figures have been revised to conform to current period presentation. See Reconciliation section of the MD&A.
|
Adjusted EBITDAaL for the third quarter of 2019 increased
$10.9 million (21.2%) to $62.3 as compared to the prior year period. The
increase was due to higher revenues across all businesses. The
third quarter records for BPP and CPP, coupled with the increase in
theatre attendance resulted in higher box office and theatre food
service revenues. Media revenues increased as a result of an
all-time quarterly record for digital-placed based media due to
increased project installation revenues and an increase in theatre
advertising for cinema media. Higher revenues from LBE and P1AG
also contributed to the increase for adjusted EBITDAaL. Adjusted
EBITDAaL margin, calculated as adjusted EBITDAaL divided by total
revenues, was 14.9%, an increase of 1.6% from 13.3% in the prior
year period due to higher exhibition and media revenues.
Adjusted EBITDAaL for the nine months ended September 30, 2019 increased $1.0 million, or 0.6%, as compared to the prior
year period. The increase was due to the growth in amusement and
media revenues which was partially offset by the decline in box
office revenues as a result of reduced attendance. Adjusted
EBITDAaL margin for the period was 13.8%, a decrease of 0.3% from
14.1% in the prior year period due to lower exhibition revenues and
higher contributions from lower margin businesses including
amusement and leisure.
ADJUSTED FREE CASH FLOW (see Non-GAAP measures section of this news release)
For the third quarter of 2019, adjusted free cash flow per
common share of Cineplex was $0.76 as
compared to $0.60 in the prior year
period. The declared dividends per common share of Cineplex were
$0.45 in the third quarter of 2019
and $0.44 in the prior year period.
During the 12 months ended September 30,
2019, Cineplex generated adjusted free cash flow per Share
of 3.00, compared to 2.73 in the prior 12 month period. Cineplex
declared dividends per Share of $1.77
and $1.71, respectively, in each 12
month period. The payout ratios for these periods were 58.8% and
62.4%, respectively.
NON-GAAP FINANCIAL MEASURES
EBITDA and Adjusted Free Cash Flow
EBITDA and adjusted free cash flow are not measures recognized
by GAAP and do not have standardized meanings in accordance with
such principles. Therefore, EBITDA and adjusted free cash flow may
not be comparable to similar measures presented by other issuers.
As a result of the adoption of IFRS 16, Leases on January 1, 2019, new non-GAAP measures including
adjusted EBITDAaL and associated adjusted EBITDAaL margin have been
introduced to ensure comparability of periods.
EBITDA is calculated by adding back to net income or net loss,
income tax expense, depreciation and amortization expense, and
interest income from continuing operations. Adjusted EBITDA
excludes the change in fair value of financial instrument, loss on
disposal of assets, foreign exchange gain, the equity income of
CDCP, the non-controlling interests' share of adjusted EBITDA of
TG-CPX Limited Partnership, and depreciation, amortization,
interest and taxes of Cineplex's other joint ventures and
associates. Adjusted EBITDAaL modifies adjusted EBITDA to deduct
current period cash rent related to lease obligations. Prior year
adjusted EBITDAaL deducts rent previously recognized as a reduction
in finance lease obligations, and non-cash rent previously
presented as amortization of tenant inducements, rent averaging
liabilities, density right and fair-value lease contract
liabilities. EBITDA, adjusted EBITDA and adjusted EBITDAaL measure
Cineplex's operational performance from continuing operations, and
prior year measurements have been restated to exclude discontinued
operations accordingly.
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.
Adjusted free cash flow is a non-GAAP measure generally used by
Canadian corporations, as an indicator of financial performance and
it should not be seen as a measure of liquidity or a substitute for
comparable metrics prepared in accordance with GAAP.
For a detailed reconciliation of net income or net loss to
EBITDA, adjusted EBITDA and adjusted EBITDAaL and from cash
provided by operating activities to adjusted free cash flow, please
refer to Cineplex's management's discussion and analysis filed on
www.sedar.com.
Earnings per Share Metrics
Cineplex has
presented basic and diluted earnings per share net of this item to
provide a more comparable earnings per share metric between the
current periods and prior year periods. In the non-GAAP measure,
earnings is defined as net income or net loss excluding the change
in fair value of financial instrument.
Per Patron Revenue Metrics
Cineplex
reviews per patron metrics as they relate to box office revenue and
theatre food service revenue such as BPP, CPP, BPP excluding
premium priced product, and concession margin per patron, as these
are key measures used by investors to value and assess Cineplex's
performance, and are widely used in the theatre exhibition
industry. Management of Cineplex 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 and IMAX product; divided by total paid
theatre attendance for the period, less paid theatre attendance for
3D, 4DX, UltraAVX, VIP and IMAX product.
CPP: Calculated as total theatre food service revenues
divided by total paid total theatre attendance for the
period.
Premium priced product: Defined as 3D, 4DX, UltraAVX,
IMAX 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 and nine months ended September 30, 2019 the impact of the five
locations that have been opened or acquired and three locations
that have been closed or otherwise disposed of have been excluded,
resulting in 160 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.
Non-cash rent
Calculated as the total amortization of
tenant inducements, rent averaging liabilities, density rights and
fair-value lease contract liabilities. This accounting treatment
was applicable under IAS 17 in 2018 but not applicable under IFRS
16 in 2019 and onwards.
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, goals and
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 ("MD&A") and in this news release. Those 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,
couldcause actual results to differ materially from the beliefs,
plans, objectives, expectations, anticipations, estimates and
intentions expressed in such forward-looking statements. These
factors include, but are not limited to, 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
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, we undertake 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 MD&A, can be found on SEDAR at www.sedar.com.
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. A leading entertainment and media company, Cineplex
welcomes over 70 million guests annually through its circuit of
theatres and location based entertainment venues across the
country. In addition to being Canada's largest and most innovative film
exhibitor, Cineplex also operates successful businesses in digital
commerce (CineplexStore.com), food service, alternative programming
(Cineplex Events), cinema media (Cineplex Media), digital
place-based media (Cineplex Digital Media), amusement solutions
(Player One Amusement Group) and an online esports platform for
competitive and passionate gamers (WorldGaming Network).
Additionally, Cineplex operates location based entertainment
complexes specially designed for teens and families (Playdium) as
well as Canada's favourite
destination for 'Eats & Entertainment' (The Rec Room), and will
be opening exciting new sports and entertainment venues across
Canada (Topgolf). Cineplex is a
joint venture partner in SCENE, Canada's largest entertainment loyalty
program.
Proudly recognized as having one of the country's Most Admired
Corporate Cultures, Cineplex employs approximately 13,000 people in
its offices across Canada and
the United States. To learn more
visit Cineplex.com or download the Cineplex App.
You are cordially invited to participate in a conference call
with the management of Cineplex (TSX: CGX) to review our third
quarter. Ellis Jacob, President and Chief Executive Officer
and Gord Nelson, Chief Financial Officer, will host the call
scheduled for:
Thursday November 14, 2019
10:00 am Eastern Time
In order to participate in the conference call please dial
647-484-0475, or toll-free from Canada or the U.S. dial 1-888-394-8218 at
least ten minutes prior to 10:00 am
ET. Please quote the conference confirmation code 6219020 to
access the call.
If you cannot participate in a live mode, a replay will be
available. Please dial 647-436-0148, or toll-free from Canada or the U.S. dial 1-888-203-1112. The
replay passcode is 6219020.
The replay will begin at 1:00 pm ET on Thursday, November 14, 2019 and end at 1:00 pm ET
on Thursday, November 21, 2019
Note that media will be participating in listen-only mode.
Cineplex Inc.
Interim Condensed Consolidated Balance Sheets
(Unaudited)
(expressed in thousands of Canadian dollars)
|
|
|
|
|
|
|
September 30, 2019
|
December 31, 2018
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
Cash and cash equivalents
|
$
|
30,074
|
$
|
25,242
|
Trade and other receivables
|
97,299
|
165,586
|
Income taxes receivable
|
8,462
|
4,944
|
Inventories
|
35,725
|
30,592
|
Prepaid expenses and other current assets
|
19,334
|
13,862
|
Fair value of interest rate swap agreements
|
944
|
1,457
|
Assets held for sale
|
5,858
|
—
|
|
197,696
|
241,683
|
Non-current
assets
|
|
|
Property, equipment and leaseholds
|
628,374
|
634,354
|
Right-of-use assets
|
1,257,068
|
—
|
Deferred income taxes
|
14,178
|
13,444
|
Fair value of interest rate swap agreements
|
471
|
2,063
|
Interests in joint ventures and associates
|
29,638
|
38,912
|
Intangible assets
|
88,147
|
108,758
|
Goodwill
|
816,964
|
817,235
|
|
$
|
3,032,536
|
$
|
1,856,449
|
Cineplex Inc.
Interim Condensed Consolidated Balance Sheets … continued
(Unaudited)
(expressed in thousands of Canadian dollars)
|
|
|
|
|
|
|
September 30, 2019
|
December 31, 2018
|
Liabilities
|
|
|
|
|
|
Current liabilities
|
|
|
Accounts payable and accrued liabilities
|
$
|
154,758
|
$
|
186,407
|
Share-based compensation
|
2,250
|
4,862
|
Dividends payable
|
9,500
|
9,183
|
Income taxes payable
|
1,870
|
12,167
|
Deferred revenue
|
170,553
|
214,016
|
Lease obligations
|
112,152
|
3,058
|
Fair value of interest rate swap agreements
|
1,868
|
1,184
|
Liabilities related to assets held for sale
|
2,584
|
—
|
|
455,535
|
430,877
|
Non-current liabilities
|
|
|
Share-based compensation
|
11,612
|
8,210
|
Long-term debt
|
649,000
|
580,000
|
Fair value of interest rate swap agreements
|
15,878
|
7,674
|
Lease obligations
|
1,269,982
|
10,789
|
Post-employment benefit obligations
|
9,484
|
9,250
|
Other liabilities
|
10,443
|
119,110
|
Deferred income taxes
|
219
|
11,528
|
|
1,966,618
|
746,561
|
Total liabilities
|
2,422,153
|
1,177,438
|
|
|
|
Equity
|
|
|
Share capital
|
852,379
|
852,379
|
Deficit
|
(238,516)
|
(179,721)
|
Hedging reserves and other
|
(12,577)
|
(3,678)
|
Contributed surplus
|
9,016
|
7,815
|
Cumulative translation adjustment
|
186
|
2,301
|
Total equity attributable to owners of Cineplex
|
610,488
|
679,096
|
Non-controlling interests
|
(105)
|
(85)
|
Total equity
|
610,383
|
679,011
|
|
$
|
3,032,536
|
$
|
1,856,449
|
Cineplex Inc.
Interim Condensed Consolidated Statements of Operations
(Unaudited)
(expressed in thousands of Canadian dollars, except per share amounts)
|
|
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018 Restated
|
2019
|
2018 Restated
|
Revenues
|
|
|
|
|
Box office
|
$
|
177,865
|
$
|
173,278
|
$
|
523,732
|
$
|
541,892
|
Food
service
|
125,550
|
115,557
|
358,171
|
354,775
|
Media
|
43,308
|
33,162
|
127,210
|
104,913
|
Amusement
|
58,143
|
53,838
|
174,760
|
152,320
|
Other
|
13,582
|
10,554
|
38,053
|
30,695
|
|
418,448
|
386,389
|
1,221,926
|
1,184,595
|
Expenses
|
|
|
|
|
Film cost
|
93,735
|
90,213
|
275,461
|
287,763
|
Cost of food
service
|
27,439
|
24,257
|
79,122
|
74,053
|
Depreciation -
right-of-use assets
|
36,456
|
—
|
109,475
|
—
|
Depreciation and
amortization - other assets
|
31,712
|
32,483
|
95,748
|
93,743
|
Loss on disposal of
assets
|
303
|
783
|
896
|
1,617
|
Other
costs
|
190,955
|
217,003
|
567,771
|
643,847
|
Share of income of
joint ventures and associates
|
(560)
|
(1,118)
|
(2,572)
|
(2,850)
|
Interest expense -
lease obligations
|
12,091
|
126
|
36,780
|
425
|
Interest expense -
other
|
6,244
|
6,766
|
17,453
|
19,536
|
Interest
income
|
(75)
|
(60)
|
(208)
|
(205)
|
Foreign
exchange
|
(449)
|
391
|
569
|
(438)
|
|
397,851
|
370,844
|
1,180,495
|
1,117,491
|
Income from continuing
operations before income taxes
|
20,597
|
15,545
|
41,431
|
67,104
|
Provision for income
taxes
|
|
|
|
|
Current
|
7,932
|
6,182
|
16,345
|
19,008
|
Deferred
|
(2,435)
|
(2,979)
|
(6,762)
|
(8,101)
|
|
5,497
|
3,203
|
9,583
|
10,907
|
Net income from continuing
operations
|
$
|
15,100
|
$
|
12,342
|
$
|
31,848
|
$
|
56,197
|
Net loss from
discontinued operations, net of taxes
|
(1,718)
|
(2,133)
|
(6,429)
|
(6,395)
|
Net income
|
$
|
13,382
|
$
|
10,209
|
$
|
25,419
|
$
|
49,802
|
|
|
|
|
|
Net income from continuing operations
attributable to:
|
|
|
|
|
Owners of
Cineplex
|
$
|
15,102
|
$
|
12,414
|
$
|
31,868
|
$
|
56,269
|
Non-controlling
interests
|
(2)
|
(72)
|
(20)
|
(72)
|
Net income from continuing
operations
|
$
|
15,100
|
$
|
12,342
|
$
|
31,848
|
$
|
56,197
|
|
|
|
|
|
Net income attributable
to:
|
|
|
|
|
Owners of
Cineplex
|
$
|
13,384
|
$
|
10,281
|
$
|
25,439
|
$
|
49,874
|
Non-controlling
interests
|
(2)
|
(72)
|
(20)
|
(72)
|
Net income
|
$
|
13,382
|
$
|
10,209
|
$
|
25,419
|
$
|
49,802
|
|
|
|
|
|
Net income per share attributable to
owners of
Cineplex - basic and diluted:
|
|
|
|
|
Continuing
operations
|
$
|
0.24
|
$
|
0.19
|
$
|
0.50
|
$
|
0.89
|
Discontinued
operations
|
(0.03)
|
(0.03)
|
(0.10)
|
(0.10)
|
Total operations
|
$
|
0.21
|
$
|
0.16
|
$
|
0.40
|
$
|
0.79
|
Cineplex
Inc.
Interim Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(expressed in thousands of Canadian dollars)
|
|
|
|
Three months ended September 30,
|
Nine months ended September 30,
|
|
2019
|
2018 Restated
|
2019
|
2018 Restated
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
$
|
15,100
|
$
|
12,342
|
$
|
31,848
|
$
|
56,197
|
Other comprehensive income (loss) from continuing
operations
|
|
|
|
|
Items that will be reclassified subsequently to net income:
|
|
|
|
|
(Loss) income on hedging instruments
|
(527)
|
1,418
|
(12,148)
|
2,585
|
Associated deferred income taxes recovery (expense)
|
128
|
(332)
|
3,249
|
(650)
|
Foreign currency translation adjustment
|
727
|
(1,230)
|
(2,209)
|
2,242
|
Other comprehensive income (loss)
|
328
|
(144)
|
(11,108)
|
4,177
|
Comprehensive income from continuing operations
|
15,428
|
12,198
|
20,740
|
60,374
|
Net loss from discontinued operations, net of taxes
|
(1,718)
|
(2,133)
|
(6,429)
|
(6,395)
|
Foreign currency translation adjustment from discontinued
operations
|
(65)
|
37
|
94
|
(92)
|
Comprehensive income
|
$
|
13,645
|
$
|
10,102
|
$
|
14,405
|
$
|
53,887
|
|
|
|
|
|
Comprehensive income from continuing operations
attributable to:
|
|
|
|
|
Owners of Cineplex
|
$
|
15,430
|
$
|
12,270
|
$
|
20,760
|
$
|
60,446
|
Non-controlling interests
|
(2)
|
(72)
|
(20)
|
(72)
|
Comprehensive income
|
$
|
15,428
|
$
|
12,198
|
$
|
20,740
|
$
|
60,374
|
|
|
|
|
|
Comprehensive income attributable to:
|
|
|
|
|
Owners of Cineplex
|
$
|
13,647
|
$
|
10,174
|
$
|
14,425
|
$
|
53,959
|
Non-controlling interests
|
(2)
|
(72)
|
(20)
|
(72)
|
Comprehensive income
|
$
|
13,645
|
$
|
10,102
|
$
|
14,405
|
$
|
53,887
|
Cineplex Inc.
Interim Condensed Consolidated
Statements of Changes in Equity
(Unaudited)
(expressed in thousands of Canadian dollars)
For the periods ended September 30, 2019 and 2018
|
|
|
|
|
|
|
|
|
Share
capital
|
Contributed
surplus
|
Hedging
reserves
and other
|
Cumulative
translation
adjustment
|
Deficit
|
Non-
controlling
interests
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1,
2019
|
$
|
852,379
|
$
|
7,815
|
$
|
(3,678)
|
$
|
2,301
|
$
|
(179,721)
|
$
|
(85)
|
$
|
679,011
|
Net income
|
|
—
|
|
—
|
|
—
|
|
—
|
|
25,439
|
|
(20)
|
|
25,419
|
Other comprehensive
loss
|
|
—
|
|
—
|
|
(8,899)
|
|
(2,115)
|
|
—
|
|
—
|
|
(11,014)
|
Total
comprehensive income
|
|
—
|
|
—
|
|
(8,899)
|
|
(2,115)
|
|
25,439
|
|
(20)
|
|
14,405
|
Dividends
declared
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(84,234)
|
|
—
|
|
(84,234)
|
Share option
expense
|
|
—
|
|
1,201
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2019
|
$
|
852,379
|
$
|
9,016
|
$
|
(12,577)
|
$
|
186
|
$
|
(238,516)
|
$
|
(105)
|
$
|
610,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1,
2018
|
$
|
856,761
|
$
|
1,647
|
$
|
1,332
|
$
|
(2,817)
|
$
|
(148,060)
|
$
|
—
|
$
|
708,863
|
Net income
|
|
—
|
|
—
|
|
—
|
|
—
|
|
49,874
|
|
(72)
|
|
49,802
|
Other comprehensive
income
|
|
—
|
|
—
|
|
1,935
|
|
2,150
|
|
—
|
|
—
|
|
4,085
|
Total
comprehensive income
|
|
—
|
|
—
|
|
1,935
|
|
2,150
|
|
49,874
|
|
(72)
|
|
53,887
|
Dividends
declared
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(81,381)
|
|
—
|
|
(81,381)
|
Share option
expense
|
|
—
|
|
1,323
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,323
|
Issuance of shares on
exercise of options
|
|
74
|
|
(6)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
68
|
TGLP non-controlling
interests recognized on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
formation
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
12
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
$
|
856,835
|
$
|
2,964
|
$
|
3,267
|
$
|
(667)
|
$
|
(179,567)
|
$
|
(60)
|
$
|
682,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cineplex Inc.
Interim Condensed Consolidated Statements
of Cash Flows
(Unaudited)
(expressed in thousands of Canadian dollars)
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months
ended
September 30,
|
|
2019
|
2018
|
|
2019
|
2018
|
|
|
Restated
|
|
|
Restated
|
Cash provided by (used
in)
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
|
|
|
|
|
|
Net income from
continuing operations
|
$
15,100
|
$
12,342
|
|
$
31,848
|
$
56,197
|
Adjustments to
reconcile net income to net cash provided by
operating activities
|
|
|
|
|
|
Depreciation
and amortization of property, equipment and
leaseholds, and intangible assets
|
31,712
|
32,483
|
|
95,748
|
93,743
|
Depreciation of
right-of-use assets
|
36,456
|
—
|
|
109,475
|
—
|
Amortization of tenant
inducements, rent averaging liabilities and fair value
lease contract liabilities
|
—
|
(2,584)
|
|
—
|
(8,783)
|
Unrealized foreign
exchange
|
(169)
|
175
|
|
389
|
(119)
|
Interest rate swap
agreements - non-cash interest
|
(287)
|
185
|
|
(1,419)
|
393
|
Accretion of
convertible debentures
|
—
|
606
|
|
—
|
1,815
|
Other non-cash
interest
|
487
|
100
|
|
1,337
|
301
|
Loss on disposal of
assets
|
303
|
783
|
|
896
|
1,617
|
Deferred income
taxes
|
(2,435)
|
(2,979)
|
|
(6,762)
|
(8,101)
|
Non-cash share-based
compensation
|
408
|
405
|
|
1,201
|
1,323
|
Net change in
interests in joint ventures and associates
|
(149)
|
(2,130)
|
|
(3,238)
|
(3,759)
|
Changes in operating
assets and liabilities
|
(3,666)
|
(239)
|
|
(31,943)
|
(19,191)
|
Net cash provided by
operating activities
|
77,760
|
39,147
|
|
197,532
|
115,436
|
Investing activities
|
|
|
|
|
|
Proceeds from
disposal of assets, including asset-related insurance
recoveries
|
—
|
44
|
|
—
|
1,830
|
Purchases of property,
equipment and leaseholds
|
(34,905)
|
(30,582)
|
|
(94,919)
|
(85,546)
|
Acquisition of
businesses, net of cash acquired
|
—
|
(4,685)
|
|
—
|
(4,685)
|
Intangible assets
additions
|
(2,600)
|
(992)
|
|
(5,156)
|
(3,082)
|
Tenant
inducements
|
7,804
|
3,481
|
|
9,153
|
11,729
|
Net cash received from
CDCP
|
3,910
|
2,606
|
|
12,512
|
3,582
|
Net cash used in
investing activities
|
(25,791)
|
(30,128)
|
|
(78,410)
|
(76,172)
|
Financing
activities
|
|
|
|
|
|
Dividends
paid
|
(28,500)
|
(27,549)
|
|
(83,917)
|
(81,064)
|
Borrowings under credit
facilities, net
|
8,000
|
19,000
|
|
69,000
|
40,000
|
Options exercised for
cash
|
—
|
—
|
|
—
|
68
|
Repayments of lease
obligations - principal
|
(31,836)
|
(863)
|
|
(95,900)
|
(2,542)
|
Financing
fees
|
—
|
—
|
|
(243)
|
—
|
Net cash used in
financing activities
|
(52,336)
|
(9,412)
|
|
(111,060)
|
(43,538)
|
Effect of exchange rate
differences on cash
|
(158)
|
(204)
|
|
138
|
463
|
(Decrease)
increase in cash and cash equivalents from continuing
operations
|
(525)
|
(597)
|
|
8,200
|
(3,811)
|
Cash flows used in
discontinued operations
|
(1,441)
|
(965)
|
|
(3,368)
|
(4,224)
|
Cash and
cash equivalents - Beginning of period
|
32,040
|
34,124
|
|
25,242
|
40,597
|
Cash and
cash equivalents - End of period
|
$
30,074
|
$
32,562
|
|
$
30,074
|
$
32,562
|
Supplemental information
|
|
|
|
|
|
Cash paid for interest
- lease obligation
|
$
11,684
|
$
126
|
|
$
35,575
|
$
425
|
Cash paid for interest
- other
|
$
6,406
|
$
7,276
|
|
$
18,668
|
$
18,383
|
Cash paid for income
taxes, net
|
$
2,999
|
$
4,225
|
|
$
29,087
|
$
22,267
|
Cineplex
Inc.
Interim Consolidated Supplemental Information
(Unaudited)
(expressed in thousands of Canadian dollars)
Reconciliation to Adjusted EBITDAaL
|
|
|
|
|
|
|
|
|
Three months ended September
30,
|
|
|
Nine months ended September
30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
Restated
|
|
|
|
|
|
|
Restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from
continuing operations
|
|
$
|
15,100
|
|
$
|
12,342
|
|
|
$
|
31,848
|
|
$
|
56,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization - other
|
|
|
31,712
|
|
|
32,483
|
|
|
|
95,748
|
|
|
93,743
|
Depreciation -
right-of-use assets
|
|
|
36,456
|
|
|
—
|
|
|
|
109,475
|
|
|
—
|
Interest expense -
lease obligations
|
|
|
12,091
|
|
|
126
|
|
|
|
36,780
|
|
|
425
|
Interest expense -
other
|
|
|
6,244
|
|
|
6,766
|
|
|
|
17,453
|
|
|
19,536
|
Interest
income
|
|
|
(75)
|
|
|
(60)
|
|
|
|
(208)
|
|
|
(205)
|
Current income tax
expense
|
|
|
7,932
|
|
|
6,182
|
|
|
|
16,345
|
|
|
19,008
|
Deferred income tax
recovery
|
|
|
(2,435)
|
|
|
(2,979)
|
|
|
|
(6,762)
|
|
|
(8,101)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA from
continuing operations
|
|
$
|
107,025
|
|
$
|
54,860
|
|
|
$
|
300,679
|
|
$
|
180,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on disposal of
assets
|
|
|
303
|
|
|
783
|
|
|
|
896
|
|
|
1,617
|
CDCP equity income
(i)
|
|
|
(790)
|
|
|
(1,131)
|
|
|
|
(3,024)
|
|
|
(2,875)
|
Foreign exchange
(gain) loss
|
|
|
(449)
|
|
|
391
|
|
|
|
569
|
|
|
(438)
|
Non-controlling
interest
|
|
|
2
|
|
|
53
|
|
|
|
20
|
|
|
53
|
Depreciation and
amortization - joint ventures and associates (ii)
|
|
|
23
|
|
|
2
|
|
|
|
76
|
|
|
7
|
Taxes and interest of
joint ventures and associates (ii)
|
|
|
18
|
|
|
13
|
|
|
|
41
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
from continuing operations
|
|
$
|
106,132
|
|
$
|
54,971
|
|
|
$
|
299,257
|
|
$
|
179,006
|
Cash rent paid not
pertaining to current period
|
|
|
(354)
|
|
|
—
|
|
|
|
353
|
|
|
—
|
Cash rent previously
recognized as a finance lease (iv)
|
|
|
—
|
|
|
(989)
|
|
|
|
—
|
|
|
(2,967)
|
Non-cash rent (v)
(vi)
|
|
|
—
|
|
|
(2,584)
|
|
|
|
—
|
|
|
(8,783)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDAaL
(vi) (vii)
|
|
$
|
62,312
|
|
$
|
51,398
|
|
|
$
|
168,219
|
|
$
|
167,256
|
(i)
|
CDCP equity income not included in adjusted EBITDA as CDCP is a limited-life financing vehicle that is funded by virtual print fees collected from
distributors.
|
(ii)
|
Includes the joint ventures and associates with the exception of CDCP (see (i) above).
|
(iii)
|
Balance of cash rents that have been reallocated to offset the lease obligations.
|
(iv)
|
Rent payments that were charged to the finance lease obligations in the previous reporting period. See Reconciliation section of the MD&A for further details.
|
(v)
|
Non-cash rent included in the 2018 balances in the previous reporting period. See Reconciliation section of the MD&A for further details.
|
(vi)
|
See Non-GAAP measures section of this news release.
|
(vii)
|
Prior period figures have been revised to conform to current period presentation. See Reconciliation section of the MD&A for further details.
|
Cineplex Inc.
Interim Consolidated Supplemental Information
(Unaudited)
(expressed in thousands of Canadian dollars, except number of shares
and per share data)
Adjusted Free Cash Flow
|
|
|
|
|
|
|
Three months ended September
30,
|
|
Nine months ended September
30,
|
|
|
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
|
|
|
|
|
Restated
|
|
|
|
|
Restated
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by
operating activities (i)
|
|
$
|
77,760
|
$
|
39,147
|
|
$
|
197,532
|
$
|
115,436
|
Less: Total capital
expenditures net of proceeds on sale of assets
|
|
|
(34,905)
|
|
(30,538)
|
|
|
(94,919)
|
|
(83,716)
|
|
|
|
|
|
|
|
|
|
Standardized free
cash flow
|
|
42,855
|
|
8,609
|
|
102,613
|
|
31,720
|
|
|
|
|
|
|
|
|
|
Add/(Less):
|
|
|
|
|
|
|
|
|
Changes in operating
assets and liabilities (ii)
|
|
3,666
|
|
239
|
|
31,943
|
|
19,191
|
Changes in operating
assets and liabilities of joint ventures and associates
(ii)
|
|
(411)
|
|
1,012
|
|
666
|
|
909
|
Principal component
of lease obligations
|
|
(31,836)
|
|
(863)
|
|
(95,900)
|
|
(2,542)
|
Principal portion of
cash rent paid not pertaining to current period
|
|
(345)
|
|
—
|
|
346
|
|
—
|
Growth capital
expenditures and other (iii)
|
|
30,580
|
|
26,105
|
|
77,463
|
|
69,070
|
Share of income of
joint ventures and associates, net of non-cash
depreciation
|
|
(189)
|
|
2
|
|
(335)
|
|
21
|
Non-controlling
interest
|
|
2
|
|
—
|
|
20
|
|
—
|
Net cash received
from CDCP (iv)
|
|
3,910
|
|
2,606
|
|
12,512
|
|
3,582
|
Adjusted free cash
flow
|
|
$
|
48,232
|
$
|
37,763
|
|
$
|
129,328
|
$
|
122,004
|
Average number of
Shares outstanding
|
|
|
63,333,238
|
|
63,332,946
|
|
|
63,333,238
|
|
63,331,829
|
Adjusted free cash
flow per Share
|
|
$
|
0.762
|
$
|
0.596
|
|
$
|
2.042
|
$
|
1.926
|
Dividends
declared
|
|
$
|
0.450
|
$
|
0.435
|
|
$
|
1.330
|
$
|
1.285
|
(i)
|
Prior period figures have been revised to conform to current period presentation. See Reconciliation section of the MD&A for further details.
|
(ii)
|
Changes in operating assets and liabilities are not considered a source or use of adjusted free cash flow.
|
(iii)
|
Growth capital expenditures and other represent expenditures on Board approved projects, exclude maintenance capital expenditures, and are net of proceeds on asset sales. Cineplex's revolving facility is available to fund Board approved projects.
|
(iv)
|
Excludes the share of income of CDCP, as CDCP is a limited-life financing vehicle funded by virtual print fees collected from distributors. Cash invested into CDCP, as well as cash distributions received from CDCP, are considered to be uses and sources of adjusted free cash flow.
|
SOURCE Cineplex