TORONTO, Nov. 10,
2022 /CNW/ - (TSX: CGX) - Cineplex Inc.
("Cineplex" or the "Company") today released its financial results
for the three and nine months ended September 30, 2022. Unless otherwise specified,
all amounts are in Canadian dollars.
Third Quarter Summary
- Total revenues increased 35.7% to $339.8
million as compared to the third quarter of 2021.
- Net income improved to positive $30.9
million as compared to a net loss of $33.6 million for the third quarter of 2021.
- Adjusted EBITDAaL increased 89.8% to $20.4 million as compared the third quarter of
2021.
- Record all-time quarterly adjusted EBITDAaL in the Player One
Amusement Group business of $9.0
million.
- Record all-time quarterly adjusted EBITDAaL in the
Location-Based Entertainment business of $9.7 million.
- Box office revenues reached 70% of the third quarter 2019
levels.
"During the third quarter, Cineplex reported total revenues of
$339.8 million and adjusted EBITDAaL
of $20.4 million, a 90 percent
increase from the same quarter last year" said Ellis Jacob, President & CEO. "Despite
limited Hollywood film product, we
still achieved box office revenues of 70 percent compared to the
same quarter in 2019. This was driven by strong box office in July
and the success of our international film product. Cineplex
consistently takes an industry leading market share in
international cinema. In fact, we earned an impressive 80 percent
of the North American box office for the Punjabi film, Chhalla
Mud Ke Nahi Aaya. In addition, our commitment to growing our
diversified businesses continues to deliver results, including an
all-time quarterly record adjusted EBITDAaL in the Player One
Amusement Group and Location-Based Entertainment businesses."
Jacob continued, "this quarter we are celebrating a few
important milestones from across the business, including the
overwhelming turnout for National Cinema Day on September 3, 2022, where we welcomed over half a
million guests, which proved to be Cineplex's busiest day so far in
2022 and third busiest day in the last five years. It was truly
remarkable to see the industry work together– with large and small
theatre chains across Canada,
the United States and Europe celebrating moviegoing. Also, during
the quarter, we welcomed Empire Company Limited to the Scene+
loyalty program as co-owners alongside Cineplex and Scotiabank, and
we have seen strong membership growth in recent months. We are also
excited about the addition of Home Hardware Stores Limited as
Scene+ loyalty partners with a launch expected to take place in the
summer of 2023."
"With respect to the Cineworld litigation, on September 7, 2022, Cineworld filed for Chapter 11
Bankruptcy in the United States
and the following day, the US Bankruptcy Court ordered a worldwide
stay of all enforcement proceedings against Cineworld. We attempted
to lift the stay with respect to the ongoing appeal in Ontario, but our request was denied.
Therefore, for the time being, the appeal in Ontario will remain stayed until a date to be
determined. With that said, we continue to work closely with our
advisors to monetize and maximize the judgement claim," said
Jacob.
"As we move forward, we have many highly anticipated
titles hitting the big screen, including the release of two of the
most anticipated films of 2022, Black Panther: Wakanda
Forever and Avatar: The Way of Water, which is the
sequel to the highest grossing film of all time. We are focused on
increasing our offerings and generating momentum for our business,
as evidenced through the partnerships with non-traditional studios
such as Netflix for the theatrical release of Glass Onion: A
Knives Out Mystery, and through the success of International
Cinema in attracting a wide Canadian audience. With the backdrop of
recessionary concerns, Cineplex is well positioned across all its
business units to further capitalize on consumer demand for
affordable out-of-home entertainment," Jacob concluded.
Month
|
2019 Box Office
(i)
|
2022 Box Office
(i)
|
2022 as a Percentage
of 2019
|
July
|
$76,935
|
$65,618
|
85 %
|
August
|
$56,537
|
$36,060
|
64 %
|
September
|
$44,393
|
$23,021
|
52 %
|
Q3 2022
Total
|
$177,865
|
$124,700
|
70 %
|
October
|
$54,528
|
$33,907
|
62 %
|
(i) Amounts are in
thousands of dollars.
|
Third Quarter and Year to Date 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)
|
2022
|
2021
|
Change
(i)
|
2022
|
2021
|
Change
(i)
|
Total
revenues
|
$339,837
|
$250,380
|
35.7 %
|
$918,438
|
$356,718
|
157.5 %
|
Theatre
attendance
|
11,084
|
8,272
|
34.0 %
|
28,837
|
9,835
|
193.2 %
|
Net income (loss)
(ii)
|
$30,857
|
$(33,552)
|
NM
|
$(10,055)
|
$(226,944)
|
-95.6 %
|
Net income (loss) as a
percentage of sales (ii)
|
9.1 %
|
(13.4) %
|
22.5 %
|
(1.1) %
|
(63.6) %
|
62.5 %
|
Cash provided by
operating activities
|
$5,811
|
$52,023
|
-88.8 %
|
$47,526
|
$33,524
|
41.8 %
|
Box office revenues per
patron ("BPP") (iii)
|
$11.25
|
$11.38
|
-1.1 %
|
$11.83
|
$11.23
|
5.3 %
|
Concession revenues per
patron ("CPP") (iii)
|
$8.35
|
$8.58
|
-2.7 %
|
$8.65
|
$8.39
|
3.1 %
|
Adjusted EBITDA
(iii)
|
$63,094
|
$48,606
|
29.8 %
|
$177,508
|
$1,599
|
NM
|
Adjusted EBITDAaL (ii)
(iii)
|
$20,430
|
$10,762
|
89.8 %
|
$50,475
|
$(104,493)
|
NM
|
Adjusted EBITDAaL
margin (ii) (iii)
|
6.0 %
|
4.3 %
|
1.7 %
|
5.5 %
|
(29.3) %
|
34.8 %
|
Adjusted free cash flow
(iii)
|
$1,568
|
$(5,753)
|
NM
|
$1,667
|
$(150,485)
|
NM
|
Adjusted free cash flow
per share (iii)
|
$0.025
|
$(0.091)
|
NM
|
$0.026
|
$(2.376)
|
NM
|
Earnings per share
("EPS") - basic (ii)
|
$0.49
|
$(0.53)
|
NM
|
$(0.16)
|
$(3.58)
|
-95.5 %
|
EPS - diluted
(ii)
|
$0.43
|
$(0.53)
|
NM
|
$(0.16)
|
$(3.58)
|
-95.5 %
|
i.
|
Period over period
change calculated based on thousands of dollars except percentage
and per share values. Changes in percentage amounts are calculated
as 2022 value less 2021 value.
|
ii.
|
2022 includes expenses
related to the Cineworld Transaction and associated litigation and
claims recovery in the amount of $1.2 million (2021 - $4.1 million)
for the third quarter and $2.7 million (2021 - $9.1 million) for
the year-to-date.
|
iii.
|
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.
|
KEY DEVELOPMENTS IN THE THIRD QUARTER OF 2022
The following describes certain key business initiatives
undertaken and results achieved during the third quarter of 2022 in
each of Cineplex's core business areas:
FILM ENTERTAINMENT AND CONTENT
Theatre Exhibition
- Reported third quarter box office revenues of $124.7 million, an increase of $30.6 million (32.5%) from $94.1 million due to a 34.0% increase in theatre
attendance.
- Celebrated National Cinema Day on September 3, 2022, welcoming approximately
550,000 guests across the theatre exhibition circuit, representing
the largest attendance for a single day for the year to date, and
the third largest attendance for a single day in the last five
years, following Avengers: Endgame that opened in
April 2019 and Avengers: Infinity
War that opened in April
2018.
- BPP was $11.25, $(0.13) or 1.1% lower than $11.38 reported during the prior year period. The
decrease was primarily due to product offerings at discounted
prices on National Cinema Day.
- Opened British Columbia's
second ScreenX auditorium at Cineplex Cinemas Langley.
Theatre Food Service
- Reported third quarter theatre food service revenues of
$92.5 million, an increase of
$21.6 million (30.4%) compared to the
prior year period primarily due to a 34.0% increase in theatre
attendance.
- National Cinema Day held on September 3,
2022, resulted in the second highest grossing food service
revenue day of 2022.
- CPP was $8.35, representing a
decrease of $0.23 or 2.7% when
compared to the prior year period, primarily due to the impact of
National Cinema Media Day held on September
3, 2022, attracting discount seekers, resulting in lower
average consumer spend and purchase incidence among total guests
visiting Cineplex's theatre circuit on that day.
Alternative Programming
- Alternative Programming (Cineplex Events) in the third quarter
of 2022 featured the return of violinist and conductor André Rieu's
summer concerts from Maastricht, Netherlands, the faith-based film
Lifemark, and the return of stage events to the big screen
with the National Theatre's production of Prima Facie
starring Jodie Comer.
- Cineplex Distribution (Cineplex Pictures) released the anime
hit Dragon Ball Super: Super Hero, along with three
international films Chili Laugh Story (China), The Killer (South Korea) and Khetet Mazinger
(Egypt).
- Featured numerous strong performing international films,
including Chhalla Mud Ke Nahi Aaya (Punjabi), Laal Singh
Chaddha (Hindi) and Maid in Malacanang (Tagalog), of
which Cineplex represented 80.0%, 42.0% and 37.5%, respectively, of
the total North American market share.
Digital Commerce
- Total registered users for Cineplex Store increased 7% from the
prior year period, reaching approximately 2.3 million registered
users.
MEDIA
- Reported third quarter media revenues of $25.2 million, an increase of $11.2 million or 79.4% as compared to the prior
year period.
Cinema Media
- Reported third quarter cinema media revenues of $15.1 million, an increase of $8.5 million or 127.4% over the prior year
period, due to increases in cinema advertising as a result of
increased theatre attendance and a return by advertisers to
cinema.
Digital Place-Based Media
- Reported third quarter revenues of $10.1
million, an increase of $2.7
million or 36.5% due to increased advertising at digital out
of home networks and higher project installation revenues.
AMUSEMENT AND LEISURE
- Reported all-time quarterly record revenues in the third
quarter of $69.6 million, an increase
of $16.3 million or 30.5% compared to
the prior year period.
Player One Amusement Group
- Reported third quarter record revenues of $45.5 million, an increase of $10.1 million or 28.4% compared to the prior year
period. Adjusted EBITDAaL during the third quarter was an all-time
quarterly record of $9.0 million, an
increase of $2.0 million or 28.4%
compared to the prior year period. The increase in revenues and
adjusted EBITDAaL were primarily due to increases in P1AG amusement
revenues from US and Canada route
locations at FEC's and theatres, along with an increase in
distribution sales.
Location-based Entertainment
- Reported all-time record revenues in the third quarter of
$31.0 million, an increase of
$9.3 million or 42.5% compared to the
prior year period. The current period included a third quarter
record for food service revenues of $10.4
million, all-time quarterly record amusement revenues of
$20.2 million and $0.5 million of media and other revenues.
Adjusted EBITDAaL for the third quarter was an all-time quarterly
record of $9.7 million, an increase
of $0.5 million or 5.6% compared to
the prior year period. The increase in revenues and adjusted
EBITDAaL were primarily due to all LBE venues being open during the
entire period compared to the prior year period that was subject to
capacity restrictions.
LOYALTY
- Membership in the Scene+ loyalty program increased to 10.8
million members during the period ended September 30, 2022.
- Welcomed Empire Company Limited as a co-owner of Scene+ during
the third quarter, providing members with increased opportunities
to earn and redeem points through Empire's family of brands firstly
in Atlantic Canada on August 11, 2022, in Western Canada on September 22, 2022, and across Canada by early 2023.
- Recognized a gain of $50.1
million on the disposition of its 1/6th ownership interest
in Scene+, leaving a 1/3rd ownership interest in Scene+ with the
satisfaction of specific non-financial milestones related to the
reorganization of Scene+.
- Announced that Home Hardware Stores Limited will be joining
Scene+ with a launch expected to take place in the summer of 2023,
providing members with additional opportunities to earn and redeem
points.
CORPORATE
- In recognition of National Indigenous Peoples Day, Cineplex
donated $1 from every movie ticket
sold, plus every purchase on the Cineplex Store, at The Rec Room
and Playdium, to imagineNATIVE, the world's largest presenter of
Indigenous screen content.
- Commemorated National Day for Truth and Reconciliation on
September 30, 2022 by partnering with
the Orange Shirt Society to raise awareness and honour Indigenous
communities through Pre-Show content and through donations to the
Orange Shirt Society.
- Fundraised and sponsored local Pride celebrations across
Canada, including employee
participation in select Pride parades, as well as made a corporate
donation to Rainbow Railroad in support of LGBTQ2IA+ programs.
- Donated the proceeds raised during National Accessibility Week
to the Canadian Paralympic Committee, an organization with a
mission ensuring that people, programs, and equipment are in place
so that Canadians with disabilities can be active in sports.
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 its 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
Non-GAAP financial
measures are 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 RATIO
A non-GAAP ratio is defined by 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.
The below are non-GAAP financial measures or non-GAAP ratios
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, gain on disposal of assets, foreign exchange, the
equity income (loss) of CDCP, and impairment, depreciation,
amortization, interest and taxes of Cineplex's other joint ventures
and associates. Adjusted EBITDAaL modifies adjusted EBITDA to
deduct current period cash rent paid or payable related to lease
obligations. During the year, Cineplex agreed to a variety of
arrangements with landlords to reduce or defer cash rent paid or
payable as a result of the impact of COVID-19.
Subsequent to the adoption of IFRS 16, Leases, by
Cineplex 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 as reported by other entities.
Reconciliation of reported net income (loss) to adjusted
EBITDAaL
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
|
|
|
|
|
|
Net income
(loss)
|
$
30,857
|
$
(33,552)
|
|
$
(10,055)
|
$
(226,944)
|
|
|
|
|
|
|
Depreciation and
amortization - other
|
26,079
|
28,297
|
|
79,622
|
85,541
|
Depreciation -
right-of-use assets
|
23,277
|
25,151
|
|
72,026
|
77,206
|
Interest expense -
lease obligations
|
15,946
|
14,842
|
|
45,389
|
43,942
|
Interest expense -
other
|
16,303
|
17,990
|
|
40,198
|
49,554
|
Interest
income
|
(84)
|
(68)
|
|
(152)
|
(202)
|
Current income tax
(recovery) expense
|
—
|
—
|
|
(724)
|
3,339
|
EBITDA
|
$
112,378
|
$
52,660
|
|
$
226,304
|
$
32,436
|
|
|
|
|
|
|
(Gain) loss on disposal
of assets
|
(49,848)
|
22
|
|
(54,341)
|
(29,859)
|
Loss (gain) on
financial instruments recorded at fair value
|
1,630
|
(2,570)
|
|
7,230
|
(3,370)
|
CDCP equity loss
(income) (i)
|
30
|
(988)
|
|
(492)
|
2,293
|
Foreign exchange (gain)
loss
|
(1,239)
|
(529)
|
|
(1,628)
|
66
|
Depreciation and
amortization - joint ventures and associates (ii)
|
130
|
—
|
|
394
|
—
|
Taxes and interest of
joint ventures and associates (ii)
|
13
|
11
|
|
41
|
33
|
Adjusted
EBITDA
|
$
63,094
|
$
48,606
|
|
$
177,508
|
$
1,599
|
|
|
|
|
|
|
Cash rent paid/payable
related to lease obligations (iii)
|
(42,275)
|
(37,469)
|
|
(127,419)
|
(106,467)
|
Negotiated
lease-related cash savings for the period (iii) (iv)
|
—
|
—
|
|
—
|
—
|
Cash rent paid not
pertaining to current period
|
(389)
|
(375)
|
|
386
|
375
|
Adjusted EBITDAaL
(iv)
|
$
20,430
|
$
10,762
|
|
$
50,475
|
$
(104,493)
|
|
|
|
|
|
|
(i)
|
CDCP equity loss
(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 with the exception of CDCP (see (i) above).
|
(iii)
|
The cash rent paid or
payable includes negotiated lease obligations savings of $0.8
million (2021 - $29.5 million) through September 30, 2022.
The negotiated lease obligation savings represent forgiveness of
lease payments.
|
(iv)
|
See Non-GAAP and other
financial measures section of this news release.
|
Adjusted Free Cash Flow
Free cash flow is a non-GAAP measure generally used by Canadian
corporations as an indicator of financial performance and it should
not be viewed as a measure of liquidity or a substitute for
comparable metrics prepared in accordance with GAAP. Standardized
free cash flow adjusts the amount of cash from operating activities
to deduct capital expenditures net of proceeds on sale of assets in
ordinary business operations. Standardized free cash flow is a
non-GAAP measure recommended by the CICA in its 2008 interpretive
release, Improved Communication with Non-GAAP Financial
Measures: General Principles and Guidance for Reporting EBITDA and
Free Cash Flow, and is designed to enhance comparability.
Adjusted free cash flow is also a non-GAAP measure used by Cineplex
to modify standardized free cash flow to exclude certain cash flow
activities and to measure the amount available for activities such
as repayment of debt, dividends to owners and investments in future
growth through acquisitions. Beginning with the MD&A for the
three months ending March 31, 2019,
Adjusted free cash flow included repayments of lease obligations
that represented the principal portion of rent expenses that were
included in net income calculation prior to the adoption of
accounting standard IFRS 16, Leases, by Cineplex effective
January 1, 2019. Given that the
materiality of the principal portion of the rent expenses and
comparability of adjusted free cash flow disclosure for comparative
periods, adjusted free cash flow also adjusts standard free cash
flow to deduct principal amount of repayment of lease
obligation.
Cineplex presents standardized free cash flow and adjusted free
cash flow per Share because they are key measures used by investors
to value and assess Cineplex. Management of Cineplex defines
adjusted free cash flow as standardized free cash flow adjusted for
certain items, and considers adjusted free cash flow the amount
available for distribution to Shareholders. Standardized free cash
flow is defined by the CICA as cash from operating activities as
reported in the GAAP financial statements, less total capital
expenditures minus proceeds from the disposition of capital assets
other than those of discontinued operations, as reported in the
GAAP financial statements; and dividends, when stipulated, unless
deducted in arriving at cash flows from operating activities. The
standardized free cash flow calculation excludes common dividends
and others that are declared at the Board's discretion.
Reconciliation of reported cash provided by operating
activities to adjusted free cash flow per share
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
|
|
|
|
2022
|
2021
|
|
2022
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by
operating activities
|
$
5,811
|
$
52,023
|
|
$
47,526
|
$
33,524
|
Less: Total capital
expenditures net of proceeds on sale of assets
|
(14,466)
|
(1,603)
|
|
(34,936)
|
(15,310)
|
|
|
|
|
|
|
Standardized free cash
flow
|
(8,655)
|
50,420
|
|
12,590
|
18,214
|
|
|
|
|
|
|
Add/(Less):
|
|
|
|
|
|
Changes in operating
assets and liabilities (i)
|
25,815
|
(32,640)
|
|
42,012
|
(118,843)
|
Changes in operating
assets and liabilities of joint ventures and associates
(i)
|
1,892
|
(31)
|
|
1,960
|
(1,357)
|
Repayments of lease
obligations - principal
|
(26,330)
|
(24,191)
|
|
(83,025)
|
(62,734)
|
Principal portion of
cash rent paid not pertaining to current period
|
(381)
|
—
|
|
381
|
737
|
Growth capital
expenditures and other (ii)
|
9,727
|
736
|
|
22,859
|
13,708
|
Share of income of
joint ventures and associates, net of non-cash
depreciation
|
(500)
|
(47)
|
|
(428)
|
(210)
|
Net cash received from
CDCP (iii)
|
—
|
—
|
|
5,318
|
—
|
Adjusted free cash
flow
|
$
1,568
|
$
(5,753)
|
|
$
1,667
|
$
(150,485)
|
|
|
|
|
|
|
Average number of
shares outstanding
|
63,362,713
|
63,342,557
|
|
63,356,694
|
63,339,070
|
|
|
|
|
|
|
Adjusted free cash
flow per share
|
$
0.025
|
$
(0.091)
|
|
$
0.026
|
$
(2.376)
|
(i)
|
Changes in operating
assets and liabilities are not considered a source or use of
adjusted free cash flow.
|
(ii)
|
Growth capital
expenditures and other represent expenditures on Board approved
projects, exclude maintenance capital expenditures, and are net of
proceeds on asset sales. The Revolving Facility is available to
Cineplex to fund Board approved projects.
|
(iii)
|
Excludes the share of
loss 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 distributions received from CDCP, are considered
to be uses and sources of adjusted free cash flow.
|
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. The below are supplementary financial measures
that Cineplex uses to depict its financial performance, financial
position or cash flows.
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 and other financial
measure, 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 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 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.
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, 2022 the impact of two locations that have been opened
or acquired and four locations that have been closed or otherwise
disposed of have been excluded, resulting in 152 theatres being
included in the same theatre metrics. For the nine months ended
September 30, 2022 the impact of two
locations that have been opened or acquired and six locations that
have been closed or otherwise disposed of have been excluded,
resulting in 150 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.
Lease-related cash saving
Quantified savings
negotiated with landlords as a result of the COVID-19
disclosures.
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. Forward-looking statements
also include, statements pertaining to:
- Cineplex's outlook, goals, expectations and projected
results of operations, including factors and assumptions underlying
Cineplex's projections regarding the duration and impact of a novel
strain of coronavirus ("COVID-19") pandemic on Cineplex, the movie
exhibition industry and the economy in general, as well as
Cineplex's response to the pandemic related to the closure or
operational restrictions of its theatres and location-based
entertainment ("LBE") venues, employee reductions and other
cost-cutting initiatives and increased expenses relating to safety
measures taken at its facilities to protect the health and
well-being of guests and employees;
- Cineplex's expectations with respect to liquidity and
capital expenditures, including its ability to meet its ongoing
capital, operating and other obligations, and anticipated needs
for, and sources of, funds; and
- Cineplex's ability to execute cost-cutting and revenue
enhancement initiatives in response to the COVID-19
pandemic.
The COVID-19 pandemic has had an unprecedented impact on
Cineplex, along with the rest of the movie exhibition industry and
other industries in which Cineplex operates, including material
decreases in revenues, results of operations and cash flows. The
situation continues to evolve and the social and economic effects
are widespread. As an entertainment and media company that operates
spaces where guests gather in close proximity, Cineplex's business
has been significantly impacted by the actions taken to control the
spread of COVID-19. These actions included, among other things, the
introduction of vaccine passports or proof of vaccination mandates,
social distancing measures and restrictions including those on
capacity. During the second quarter of 2022, as COVID-19 cases
declined across the country, restrictions relating to capacity
limits, vaccine passports and mask mandates were lifted in all of
the markets in which Cineplex operates, providing clearer
visibility for Cineplex's business and the return to normalcy.
Cineplex is actively monitoring the situation and is adapting its
business strategies as the impact of the COVID-19 pandemic
evolves.
By their very nature, forward-looking statements involve
inherent risks and uncertainties, including those described in
Cineplex's Annual Information Form ("AIF"), and MD&A for the
year ended December 31, 2021 ("Annual
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, could cause
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 the movie exhibition industry and
the economy in general, as well as Cineplex's response to the
COVID-19 pandemic as related to the closure or capacity
restrictions of its theatres and LBE venues, employee reductions
and other cost-cutting initiatives, and increased expenses relating
to safety measures taken at its facilities to protect the health
and well-being of customers and employees; Cineplex's
expectations with respect to liquidity and capital expenditures,
including 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 in response to the COVID-19
pandemic; risks generally encountered in the relevant industry,
competition, customer, legal, taxation and accounting matters; the
outcome of the litigation surrounding the termination of the
Cineworld transaction; and diversion of management time on
litigation related to the Cineworld transaction.
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, 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.sedar.com.
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:
Cineplex Inc. Q3 2022
Earnings Webcast:
|
|
Date:
|
Thursday, November 10,
2022
|
|
|
Time:
|
10:00 a.m. Eastern
Daylight Time
|
|
|
Audio Webcast:
|
Audience URL
https://events.q4inc.com/attendee/503133444
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 855874. 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 over 171 movie theatres
and location-based entertainment venues. 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) and complexes specially
designed for teens and families (Playdium). It also operates
successful businesses in digital commerce (CineplexStore.com),
alternative programming (Cineplex Events), cinema media (Cineplex
Media), digital place-based media (Cineplex Digital Media "CDM")
and amusement solutions (Player One Amusement Group "P1AG").
Providing even more value for its guests, 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 10,000 people in
its offices across Canada and the
United States. To learn more visit Cineplex.com or download
the Cineplex App.
SOURCE Cineplex