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Deutschland 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 | Period over Period | |||||
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 | $ | 0.762 | $ | 0.596 | 27.9% | ||
Earnings per Share ("EPS") from continuing | $ | 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 |
Year to Date Results
2019 | 2018 | Period over Period | ||||||
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 | $ | 2.042 | $ | 1.926 | 6.0% | |||
Earnings per Share ("EPS") from continuing | $ | 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 |
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 |
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 |
"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 | Box Office | Theatre | |||
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 | ||||||
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 | % | Year to Date 2018 Top Cineplex Films | 3D | % | ||
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%<
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