TORONTO, Aug. 11,
2022 /CNW/ - (TSX: CGX) - Cineplex Inc.
("Cineplex" or the "Company") today released its financial results
for the three and six months ended June 30,
2022. Unless otherwise specified, all amounts are in
Canadian dollars.
"Cineplex delivered its strongest quarter in over two years,
thanks to a great film slate and record-breaking results from
across our diversified businesses," said Ellis Jacob, President & CEO, Cineplex. "The
cumulative success of Top Gun: Maverick, Doctor Strange
in the Multiverse of Madness, and Jurassic World
Dominion during the quarter – which saw each film opening with
a domestic box office over $100
million – is a testament to the fact that when strong film
product is available, Canadians return to our theatres in droves.
We generated positive net income for the first time since the start
of the pandemic. We also achieved a second quarter record BPP of
$12.29 and an all-time quarterly
record CPP of $8.84. We also saw very
encouraging results in our other businesses, including an all-time
quarterly record adjusted EBITDAaL in Player One Amusement Group
and record second quarter adjusted EBITDAaL in the Location-Based
Entertainment business."
Jacob continued, "in addition to reporting our strongest results
since the pandemic began, this quarter we are celebrating a few
other important milestones from across the business, including the
expansion of the Scene+ loyalty program and Empire Company Limited
joining Scotiabank and Cineplex as partners. Today, we are also
celebrating the one-year anniversary of CineClub."
"With respect to the Cineworld litigation, we remain focused on
preparations for the Ontario Court
of Appeal hearings which are scheduled for October 12 and 13 of this year. As part of the
ongoing efforts to maximize and monetize the value of the
judgement, we have engaged Moelis & Company as financial
advisor and Goodmans LLP as lead counsel," said Jacob.
"As we look forward, we remain confident in the recovery of our
businesses, our strong capital management and liquidity, and our
efforts to manage financial uncertainties as we have done during
previous economic downturns. The strong quarterly results aided our
compliance with the financial covenant testing for the second
quarter of 2022. In anticipation of ongoing film release shifts
caused by COVID-19 related production delays, we have received the
support and confidence of our lending group for the suspension of
financial covenant testing in the third quarter of 2022. With the
backdrop of recessionary concerns, Cineplex is well positioned to
further capitalize on pent-up consumer demand for affordable
out-of-home entertainment," Jacob concluded.
Second Quarter Financial
Results
|
|
2022
|
|
2021
|
Period over
Period Change (i)
|
Total
revenues
|
$
|
349.9
million
|
$
|
64.9
million
|
438.9 %
|
Theatre
attendance
|
|
11.1
million
|
|
1.1
million
|
866.2 %
|
Net income (loss)
(ii)
|
$
|
1.3 million
|
$
|
(103.7) million
|
NM
|
Net income (loss) as a
percentage of sales (ii)
|
|
0.4 %
|
|
(159.7) %
|
160.1 %
|
Cash provided by (used
in) operating activities
|
$
|
47.2 million
|
$
|
17.1 million
|
175.2 %
|
Box office revenues per
patron ("BPP") (iii)
|
$
|
12.29
|
$
|
10.89
|
12.9 %
|
Concession revenues per
patron ("CPP") (iii)
|
$
|
8.84
|
$
|
7.86
|
12.5 %
|
Adjusted EBITDA
(iii)
|
$
|
77.9
million
|
$
|
(16.9) million
|
NM
|
Adjusted EBITDAaL (ii)
(iii)
|
$
|
35.8
million
|
$
|
(53.2) million
|
NM
|
Adjusted EBITDAaL
margin (ii) (iii)
|
|
10.2 %
|
|
(81.9) %
|
92.1 %
|
Adjusted free cash flow
(iii)
|
$
|
21.8
million
|
$
|
(65.9)
million
|
NM
|
Adjusted free cash flow
per Share (iii)
|
$
|
0.345
|
$
|
(1.041)
|
NM
|
Earnings per Share
("EPS") - basic and diluted (ii)
|
$
|
0.02
|
$
|
(1.64)
|
NM
|
Year to Date Financial
Results
|
|
2022
|
|
2021
|
Period over
Period Change (i)
|
Total
revenues
|
$
|
578.6 million
|
$
|
106.3 million
|
444.1 %
|
Theatre
attendance
|
|
17.8
million
|
|
1.6 million
|
NM
|
Net loss
(ii)
|
$
|
(40.9)
million
|
$
|
(193.4) million
|
-78.8 %
|
Net loss as a
percentage of sales (ii)
|
|
(7.1) %
|
|
(181.9) %
|
174.8 %
|
Cash provided by (used
in) operating activities
|
$
|
41.7
million
|
$
|
(18.5)
million
|
NM
|
Box office revenues per
patron ("BPP") (iii)
|
$
|
12.19
|
$
|
10.44
|
16.8 %
|
Concession revenues per
patron ("CPP") (iii)
|
$
|
8.83
|
$
|
7.40
|
19.3 %
|
Adjusted EBITDA
(iii)
|
$
|
114.4
million
|
$
|
(47.0) million
|
NM
|
Adjusted EBITDAaL (ii)
(iii)
|
$
|
30.0
million
|
$
|
(115.3) million
|
NM
|
Adjusted EBITDAaL
margin (ii) (iii)
|
|
5.2 %
|
|
(108.4) %
|
113.6 %
|
Adjusted free cash flow
(iii)
|
$
|
0.1
million
|
$
|
(144.7) million
|
NM
|
Adjusted free cash flow
per Share (iii)
|
$
|
0.002
|
$
|
(2.285)
|
NM
|
Earnings per Share
("EPS") - basic and diluted (ii)
|
$
|
(0.65)
|
$
|
(3.05)
|
-78.7 %
|
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 - $2.6 million) for the second quarter and $1.5
million (2021 - $5.0 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.
|
Proactive Credit Facility
Amendment
On August 10, 2022, Cineplex
entered into a fifth amending agreement to the Credit Agreement,
(the "Fifth Credit Agreement Amendment"), which among other things,
extended the suspension of financial covenant testing until the
fourth quarter of 2022 and liquidity covenant requirement until
March 31, 2023. The following is a
summary of the key terms of the Fifth Credit Agreement
Amendment:
a. The suspension of financial covenant testing was extended
until the fourth quarter of 2022. On resumption of financial
covenant testing in the fourth quarter of 2022:
-
- for the fourth quarter of 2022, testing will be based on an
annualized calculation of Adjusted EBITDA (as further adjusted in
accordance with the Credit Agreement definitions) based on
the actual results for the fourth quarter multiplied by 4;
- for the quarter ending on March 31,
2023, testing will be based on an annualized calculation of
Adjusted EBITDA based on actual results for the fourth quarter of
2022 and the first quarter of 2023 multiplied by 2; and
- for the quarter ending on June 30,
2023, testing will be based on an annualized calculation of
Adjusted EBITDA based on the actual results of the fourth quarter
of 2022, the first quarter of 2023 and the second quarter of 2023
multiplied by 4/3.
b. Thereafter, testing will be based on an annualized
calculation of the cumulative Adjusted EBITDA on a trailing four
fiscal quarter basis;
c. The Total Leverage Ratio of 3.75x will apply when financial
covenants are reinstated, and will be reduced quarterly by 0.25x
until the third quarter of 2023 at which point it will reach a
level of 3.00x;
d. The liquidity covenant will continue and be amended requiring
available liquidity (as defined) to be maintained at all times
until March 31, 2023 at no less than
$100.0 million;
e. The Senior Leverage Ratio to be based on annualized Adjusted
EBITDA and set at 1.0x lower than the Total Leverage Ratio. Senior
Leverage Ratio is defined as (i) Total Debt (as defined in the
Credit Agreement) less any Notes Payable to (ii) Adjusted EBITDA;
and
f. A fixed charge coverage ratio of greater than 1.25x will
continue to apply.
This summary of the Fifth Credit Agreement Amendment is
qualified in its entirety by reference to the provisions of the
Credit Agreement which contains a complete statement of those terms
and conditions. The Credit Agreement and each of the First, Second,
Third, Fourth and Fifth Credit Agreement Amendment were filed on
SEDAR on June 30, 2020, November 13, 2020, February 8, 2021, January
4, 2022, and August 10, 2022,
respectively, for each of Credit Agreement Amendments.
KEY DEVELOPMENTS IN THE SECOND
QUARTER OF 2022
The following describes certain key business initiatives
undertaken and results achieved during the second quarter of 2022
in each of Cineplex's core business areas:
FILM ENTERTAINMENT AND
CONTENT
Theatre Exhibition
- Reported second quarter box office revenues of $136.4 million, a $123.9
million increase from 2021 as a result of increased theatre
attendance compared to theatre closures that remained in effect for
a majority of the prior year period due to government mandated
restrictions.
- BPP was $12.29, a second quarter
record, which increased by $1.40 or
12.9% when compared to the prior year period, primarily due to an
increase in premium offerings in the current period as compared to
the prior period which had no 3D or ScreenX performances, in
addition to the VIP auditoriums being closed for the majority of
the second quarter of 2021.
- Introduced an online booking fee on June
15, 2022 that applies to tickets purchased through
Cineplex's mobile app and website that will contribute to
Cineplex's further investment in its digital infrastructure.
Theatre Food Service
- Reported second quarter theatre food service revenues of
$98.0 million, an increase of
$89.0 million compared to the prior
year period primarily due to a significant increase in theatre
attendance.
- CPP was $8.84, an all-time
quarterly record, representing an increase of $0.98 or 12.5% when compared to the prior year
period, primarily due to an increase in food service sales at VIP
auditoriums which drive a higher CPP and modest price
increases.
Alternative Programming
- During the second quarter, Cineplex hosted the global exclusive
free fan event finale of Star Wars Obi-Wan Kenobi with a
live broadcast to an additional nine locations from the Scotiabank
Theatre in Toronto. This event
also included a special question and answer session featuring
Canadian director Deborah Chow and
Canadian actor, Hayden
Christensen.
- Alternative Programming (Cineplex Events) in the second quarter
of 2022 included the anime feature Jujutsu Kaisen 0,
Turandot and Hamlet from The Metropolitan Opera, a
concert from Twenty One Pilots, the anime feature Seventeen
Power of Love and a two-night event for WWE Wrestlemania
38.
Digital Commerce
- Total registered users for Cineplex Store increased 10% from
the prior year period, reaching over 2.2 million registered
users.
MEDIA
- Reported second quarter media revenues of $26.4 million, an increase of $17.0 million or 180.9% as compared to the prior
year period.
Cinema Media
- Reported second quarter cinema media revenues of $18.7 million, an increase of $16.3 million or 675.4% over the prior year
period, due to increases in cinema advertising as a result of
reopened theatres and new film releases.
Digital Place-Based Media
- Reported second quarter revenues of $7.7
million, an increase of $0.7
million or 10.3% due to higher project installation
revenues.
AMUSEMENT AND LEISURE
Amusement Solutions
- Reported all-time record revenues in the second quarter of
$65.7 million, an increase of
$43.5 million or 196.3% compared to
the prior year period primarily due to increases in P1AG amusement
revenues from US and Canada route
locations at FEC's and theatres, and increases in amusement
revenues from LBE businesses.
Location-based Entertainment
- Reported all-time record revenues in the second quarter of
$28.1 million, including a second
quarter record for food service revenues of $10.2 million, all-time record for amusement
revenues of $17.4 million and
$0.5 million of media and other
revenues, an increase of $26.0
million compared to the prior year period. The increase was
primarily due to all LBE venues being open without capacity
restrictions compared to closures that remained in effect for a
majority of the prior year period.
LOYALTY
- Membership in the Scene+ loyalty program remained flat during
the period ended June 30, 2022.
- Announced updates to the Scene+ program, welcoming Empire
Company Limited as a co-owner of Scene+, providing members with
increased opportunities to earn and redeem points. Empire will
rollout Scene+ across their family of brands in Atlantic Canada in August 2022, and by early 2023, will be launched
across Canada.
CORPORATE
- Celebrated Pride Month with a collection of films available on
the Cineplex Store aiming to recognize and amplify LGBTQ2IA+
voices, with a portion of the proceeds donated to support local
Pride celebrations across Canada.
- Partnered with imagineNATIVE, the world's largest presenter of
Indigenous screen content to curate a Cineplex Store collection to
raise awareness of the rich culture, history and experiences of
Indigenous people, with a portion of the proceeds donated to
charitable causes.
OPERATING RESULTS FOR THE THREE
AND SIX MONTHS ENDED JUNE 30,
2022
Total revenues
Total revenues for the three months ended June 30, 2022 increased $285.0 million (438.9%) to $349.9 million as compared to the prior year
period. Total revenues for the six months ended June 30, 2022 increased $472.3 million (444.1%) to $578.6 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
two periods is provided below.
Non-GAAP and other financial measures discussed throughout this
news release, including adjusted EBITDA, adjusted EBITDAaL,
adjusted EBITDAaL margin, 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 Non-GAAP and other
financial 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
|
Second
Quarter
|
Year to
Date
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
|
|
|
|
|
|
|
Box office
revenues
|
$
136,372
|
$
12,498
|
991.2 %
|
$ 216,324
|
$
16,316
|
NM
|
Theatre attendance
(i)
|
11,092
|
1,148
|
866.2 %
|
17,753
|
1,563
|
NM
|
Box office revenue per
patron (i)
|
$ 12.29
|
$ 10.89
|
12.9 %
|
$ 12.19
|
$ 10.44
|
16.8 %
|
BPP excluding premium
priced product (i)
|
$ 10.51
|
$ 10.09
|
4.2 %
|
$ 10.50
|
$
9.73
|
7.9 %
|
Same theatre box office
revenues (i)
|
$
134,709
|
$
12,484
|
979.1 %
|
$ 213,587
|
$
16,296
|
NM
|
Same theatre attendance
(i)
|
11,013
|
1,146
|
861.0 %
|
17,622
|
1,560
|
NM
|
% Total box from
premium priced product (i)
|
42.4 %
|
22.8 %
|
19.6 %
|
40.2 %
|
20.2 %
|
20.0 %
|
(i) Represents
a supplementary financial measure. See Non-GAAP and other financial
measures section of this news release.
|
Box office
continuity
|
Second
Quarter
|
Year to
Date
|
|
Box
Office
|
Theatre
Attendance
|
Box
Office
|
Theatre
Attendance
|
2021 as
reported
|
$
12,498
|
1,148
|
$
16,316
|
1,563
|
Same theatre attendance
change
|
107,460
|
9,868
|
167,732
|
16,062
|
Impact of same theatre
BPP change
|
12,294
|
—
|
25,680
|
—
|
New and acquired
theatres (i)
|
1,663
|
78
|
2,722
|
129
|
Disposed and closed
theatres (i)
|
(14)
|
(2)
|
(4)
|
(1)
|
Scene+ points issued
presented as marketing costs
|
2,471
|
—
|
3,878
|
—
|
2022 as
reported
|
$
136,372
|
11,092
|
$
216,324
|
17,753
|
(i) See Non-GAAP and
other financial measures section of this news release.
Represents theatres opened, acquired, disposed or closed subsequent
to the start
of the prior year comparative period and is used to report on
Cineplex's supplementary financial measures.
|
Second Quarter 2022
Top Cineplex Films
|
3D
|
%
Box
|
Second Quarter 2021
Top Cineplex Films
|
3D
|
%
Box
|
1
|
Top Gun:
Maverick
|
|
21.1 %
|
1
|
F9: The Fast
Saga
|
|
17.3 %
|
2
|
Doctor Strange In The
Multiverse of Madness
|
√
|
20.0 %
|
2
|
A Quiet Place Part
II
|
|
16.0 %
|
3
|
Jurassic World
Dominion
|
√
|
10.4 %
|
3
|
The Conjuring: The
Devil Made Me Do It
|
|
10.2 %
|
4
|
Sonic The Hedgehog
2
|
|
6.9 %
|
4
|
Godzilla Vs.
Kong
|
|
8.2 %
|
5
|
Fantastic Beasts: The
Secrets of Dumbledore
|
|
5.1 %
|
5
|
Cruella
|
|
7.9 %
|
Year to Date
2022 Top Cineplex Films
|
3D
|
%
Box
|
Year to Date 2021
Top Cineplex Films
|
3D
|
%
Box
|
1
|
Top Gun:
Maverick
|
|
13.3 %
|
1
|
F9: The Fast
Saga
|
|
16.2 %
|
2
|
Doctor Strange In The
Multiverse of Madness
|
√
|
12.6 %
|
2
|
A Quiet Place Part
II
|
|
15.0 %
|
3
|
The Batman
|
|
11.5 %
|
3
|
The Conjuring: The
Devil Made Me Do It
|
|
9.6 %
|
4
|
Spider-Man: No Way
Home
|
√
|
7.7 %
|
4
|
Godzilla Vs.
Kong
|
|
7.7 %
|
5
|
Jurassic World
Dominion
|
√
|
6.6 %
|
5
|
Cruella
|
|
7.4 %
|
Second Quarter and Year to Date
Box office revenues increased $123.9
million to $136.4 million
during the second quarter of 2022, compared to $12.5 million recorded in the same period in
2021. This increase was mainly due to a 9.9 million increase in
theatre attendance, as Cineplex's theatre circuit was open during
the quarter at full operating capacity, compared to operating
restrictions or closure requirements that remained in effect for a
majority of the prior year period. The release of highly
anticipated films also contributed to the significant increase in
box office revenues including Doctor Strange in the Multiverse
of Madness and Top Gun: Maverick which reported a North
American gross of $126.7 million during its opening
weekend and has become the ninth biggest all-time grossing film in
North America.
BPP for the three months ended June 30,
2022 was $12.29, a second
quarter record, representing an increase of $1.40 or 12.9% from $10.89 reported in the prior year period. This
increase was due to increased revenue from premium priced
offerings, accounting for 42.4% of Cineplex's box office revenues
in the second quarter of 2022, as compared to 22.8% in the prior
year period. In the prior year period, there were no 3D or
ScreenX performances, and VIP auditoriums were closed for the
majority of the second quarter of 2021. The reorganization of SCENE
resulted in a change in revenue recognition leading to higher box
office revenues during the quarter of $2.6 million, a BPP increase of $0.24 with a corresponding increase in marketing
costs of $2.6 million, with respect
to Scene+ points issued on box office transactions.
For the year to date period, box office revenues increased
$200.0 million to $216.3 million, compared to $16.3 million recorded in the prior year period.
This increase was primarily due to a 16.2 million increase in
theatre attendance as Cineplex's theatre circuit was open for the
entire period with increased operating capacity, compared to
operating restrictions or closure requirements that remained in
effect for a majority of the prior year period.
BPP during the year to date period was $12.19, which increased $1.75 or 16.8% from $10.44 reported in the prior year period. This
increase was due to higher percentage of box office revenue from
premium priced offering, which accounted for 40.2% of Cineplex's
box office revenues in the six months ended June 30, 2022, as compared to 20.2% in the prior
year period. The reorganization of SCENE resulted in a change in
revenue recognition leading to higher box office revenues during
the year to date period of $4.1
million, a BPP increase of $0.23 with a corresponding increase in marketing
costs of $4.1 million, with
respect to Scene+ points issued on box office transactions.
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 store attendance reported in thousands of patrons and per
patron amounts):
Food service
revenues
|
Second
Quarter
|
Year to
Date
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
|
|
|
|
|
|
|
Food service -
theatres
|
$ 98,046
|
$
9,022
|
986.7 %
|
$
156,805
|
$ 11,561
|
NM
|
Food delivery -
theatres
|
2,390
|
3,676
|
-35.0 %
|
5,639
|
7,454
|
-24.4 %
|
Food service -
LBE
|
10,178
|
516
|
NM
|
16,537
|
687
|
NM
|
Food delivery -
LBE
|
23
|
44
|
-48.1 %
|
44
|
81
|
-45.9 %
|
Total food service
revenues
|
$
110,637
|
$
13,258
|
734.5 %
|
$
179,025
|
$
19,783
|
804.9 %
|
|
|
|
|
|
|
|
Theatre attendance
(i)
|
11,092
|
1,148
|
866.2 %
|
17,753
|
1,563
|
NM
|
CPP (i) (ii)
|
$
8.84
|
$
7.86
|
12.5 %
|
$
8.83
|
$
7.40
|
19.3 %
|
Same theatre food
service revenues (i)
|
$ 96,446
|
$
9,006
|
970.9 %
|
$
154,113
|
$ 11,537
|
NM
|
Same theatre attendance
(i)
|
11,013
|
1,146
|
861.0 %
|
17,622
|
1,560
|
NM
|
|
|
|
|
|
|
|
(i) Represents a
supplementary financial measure. See Non-GAAP and other financial
measures section of this news release.
|
(ii) Food service
revenue from LBE and delivery is not included in the CPP
calculation.
|
Theatre food service
revenue continuity
|
Second
Quarter
|
Year to
Date
|
|
|
Theatre Food
Service
|
Theatre
Attendance
|
Theatre Food
Service
|
Theatre
Attendance
|
|
2021 as
reported
|
$
9,022
|
1,148
|
$
11,561
|
1,563
|
|
Same theatre attendance
change
|
77,523
|
9,868
|
118,748
|
16,062
|
|
Impact of same theatre
CPP change
|
7,642
|
—
|
20,113
|
—
|
|
New and acquired
theatres (i)
|
1,601
|
78
|
2,692
|
129
|
|
Disposed and closed
theatres (i)
|
(16)
|
(2)
|
(24)
|
(1)
|
|
Scene+ points issued
presented as marketing costs
|
2,274
|
—
|
3,715
|
—
|
|
2022 as
reported
|
$
98,046
|
11,092
|
$
156,805
|
17,753
|
|
(i) See Non-GAAP and
other financial measures section of this news release. Represents
theatres opened, acquired, disposed or closed subsequent to the
start
of the prior year comparative period and is used to report on
Cineplex's supplementary financial measures.
|
|
Second Quarter and Year to Date
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 The Rec Room and Playdium.
Food service revenues increased by $97.4
million during the second quarter primarily due to the
$89.0 million increase in theatre
food service revenues to $98.0
million in the quarter. During the current period,
Cineplex's theatre circuit and LBE businesses operated without
government mandated capacity restrictions and proof of vaccination
programs compared to ongoing capacity restrictions or mandated
closure requirements enforced during the prior year period. Food
service revenues from LBE businesses which had two additional
locations as compared to the prior year period, increased by
$9.7 million during the second
quarter from $0.5 million to
$10.2 million, further contributing
to the increase in food service revenue. However, as a result of
staffing availability, certain LBE venues were unable to operate at
full operating levels, restricting the ability to book group
events, reduced operating hours, and not operating the dining areas
at full capacity. CPP for three months ended June 30, 2022 was an all-time quarterly record of
$8.84, which increased by
$0.98 or 12.5%. Modest prices
increases to Cineplex's core food service products, two additional
VIP theatre locations and film product that appealed to first-run
viewers who tend to have a higher concession spend contributed to
the increase in CPP, as compared to the prior year period. VIP
auditoriums which drive higher CPP were closed for the majority of
second quarter of 2021. The reorganization of SCENE resulted in a
change in revenue recognition leading to higher concession revenues
during the quarter of $2.5 million, a
CPP increase of $0.22 with a
corresponding increase in marketing costs of $2.5 million, with respect to Scene+ points
issued on concession transactions.
For the year to date period, food service revenues increased by
$159.2 million, primarily due to a
$145.2 million increase in theatre
food service revenues. The increase in theatre food service
revenues is primarily due to increases in theatre attendance which
increased by 16.2 million to 17.8 million. The prior year period
was materially impacted by government mandated theatre and LBE
venues closures, restrictions indoor dining and operating
restrictions. Contributing to the increase in total food service,
food service revenues from LBE businesses increased $15.9 million during the year to date period from
$0.7 million to $16.5 million. CPP during the year to date period
was $8.83, which increased by
$1.43 or 19.3%. During the prior year
period, government mandated closure requirements and restrictions
limited consumer spend resulting in minimal premium purchases which
historically generate higher CPP, contributing to a lower CPP
recognized. The reorganization of SCENE resulted in a change in
revenue recognition leading to higher concession revenues during
the year to date period of $4.0
million, a BPP increase of $0.22 with a corresponding increase in marketing
costs of $4.0 million, with respect
to Scene+ points issued on concession transactions.
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
|
Second
Quarter
|
Year to
Date
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
|
|
|
|
|
|
|
Cinema media
|
$
18,700
|
$
2,412
|
675.3 %
|
$
26,949
|
$
4,311
|
525.1 %
|
Digital place-based
media
|
7,706
|
6,989
|
10.3 %
|
15,002
|
14,164
|
5.9 %
|
Total media
revenues
|
$
26,406
|
$
9,401
|
180.9 %
|
$
41,951
|
$
18,475
|
127.1 %
|
Second Quarter and Year to Date
Total media revenues increased $17.0
million or 180.9% to $26.4
million during the second quarter of 2022 compared to the
prior year period. For the year to date period, total media
revenues increased $23.5 million or
127.1% to $42.0 million. The increase
during both periods was due to an increase in Cinema media due to
significant increases in pre-show and show-time advertising
revenues, resulting in a quarterly and year to date increase
of.$16.3 million and $22.6 million, respectively. During the prior
year periods, theatre closures or operating restrictions remained
in effect for a majority of the prior year period negatively
impacting media revenues. Cineplex's cinema media arrangements are
impacted by theatre attendance levels which drive impressions and
ultimately impact media revenue generated by Cineplex. Accordingly,
the increase in cinema media revenue reflects the increase in
attendance levels when compared to the prior period. During
the second quarter and year to date periods, digital placed-based
media revenues increased $0.7 million
and $0.8 million, respectively,
compared to the prior year periods as a result of higher project
installation revenues.
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
|
Second
Quarter
|
Year to
Date
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
|
|
|
|
|
|
|
Amusement - P1AG
excluding Cineplex exhibition and LBE (i)
|
$ 45,097
|
$ 20,446
|
120.6 %
|
$ 79,936
|
$ 33,005
|
142.2 %
|
Amusement - Cineplex
exhibition (i)
|
3,248
|
199
|
NM
|
5,339
|
271
|
NM
|
Amusement -
LBE
|
17,378
|
1,539
|
NM
|
30,872
|
2,782
|
NM
|
Total amusement
revenues
|
$
65,723
|
$
22,184
|
196.3 %
|
$
116,147
|
$
36,058
|
222.1 %
|
(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.
|
Second Quarter and Year to Date
Amusement revenues increased $43.5
million or 196.3% to an all-time quarterly record of
$65.7 million during the second
quarter as compared to the prior year period. The increase was
primarily due to a $24.7 million
increase in P1AG amusement revenues from US and Canada route locations at FEC's and theatres.
The increase was also attributable to a $15.8 million increase in LBE amusement revenues,
resulting in an all-time quarterly record of $17.4 million for LBE amusement revenues. During
the period, increased operating activities at P1AG US and
Canada route locations at FEC's
and theatres, as well as LBE businesses, compared to the government
mandated closure requirements or capacity restrictions that
remained in effect for a majority of the prior year period,
contributed to significant increases in amusement revenues.
For the year to date period, amusement revenues increased
$80.1 million or 222.1% to
$116.1 million. The increase was
primarily due to a $46.9 million
increase in P1AG amusement revenues from US and Canada route locations at FEC's and theatres.
Further contributing to the increase was a $28.1 million increase in LBE amusement revenues.
The current period also includes two additional locations of The
Rec Room, resulting in increased LBE amusement revenues as
compared to the prior year period. The increase is also
attributable to increased operating activities as operating
restrictions and mandatory closure requirements were lifted,
compared to the government mandated closure requirements or
capacity restrictions that remained in effect for a majority of the
prior year period.
Other revenues
The following table highlights the other revenues which includes
revenues from the Cineplex Store, online booking fees, 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
|
Second
Quarter
|
Year to
Date
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
Total other
revenues
|
$
10,740
|
$
7,585
|
41.6 %
|
$
25,154
|
$
15,706
|
60.2 %
|
Second Quarter and Year to Date
The increase in other revenues during the second quarter of 2022
and year to date period is primarily due to breakage revenues
relating to higher gift card redemptions and an online booking fee
that applies to tickets purchased through Cineplex's mobile app and
website which was implemented on June 15,
2022.
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
|
Second
Quarter
|
Year to
Date
|
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
|
|
|
|
|
|
|
|
|
Film cost
|
$
69,958
|
$
5,611
|
NM
|
$ 108,974
|
$
6,846
|
NM
|
|
Film cost percentage
(i)
|
51.3 %
|
44.9 %
|
6.4 %
|
50.4 %
|
42.0 %
|
8.4 %
|
|
(i) Represents a
supplementary financial measure. See Non-GAAP and other financial
measures section of this news release.
|
|
Second Quarter and Year to Date
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, impacted by film cost terms
which vary by title and distributor.
The increase in film cost and film cost percentage in the second
quarter of 2022 and year to date over the prior year periods
is due to the release of first run film product including Doctor
Strange in the Multiverse of Madness and Top Gun:
Maverick. Film cost percentage increased 6.4% and 8.4%
for the second quarter and year to date as compared to the prior
year periods due to the top films in second quarter of 2022
having higher settlement rates and making up a larger percentage
of box office revenues.
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
|
Second
Quarter
|
Year to
Date
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
Cost of food service -
theatre
|
$
22,447
|
$
2,686
|
735.8 %
|
$
35,483
|
$
4,019
|
783.0 %
|
Cost of food service -
LBE
|
2,888
|
181
|
NM
|
4,709
|
260
|
NM
|
Total cost of food
service
|
$
25,335
|
$
2,867
|
783.7 %
|
$
40,192
|
$
4,279
|
839.3 %
|
|
|
|
|
|
|
|
Theatre concession cost
percentage (i)
|
22.3 %
|
21.2 %
|
1.1 %
|
21.8 %
|
21.1 %
|
0.7 %
|
LBE food cost
percentage (i)
|
28.3 %
|
32.3 %
|
-4.0 %
|
28.4 %
|
33.9 %
|
-5.5 %
|
Theatre concession
margin per patron (i)
|
$
6.86
|
$
6.20
|
10.6 %
|
$
6.90
|
$
5.83
|
18.4 %
|
|
|
|
|
|
|
|
(i) Represents a
supplementary financial measure. See Non-GAAP and other financial
measures section of this news release.
|
Second Quarter and Year to Date
Cost of food service at the theatres varies primarily with
theatre attendance, the cost of food and materials purchases 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 cost of food service during the second quarter
of 2022 and year to date period is positively correlated to the
increase in food service revenues recognized during the quarter and
year to date period as Cineplex's theatre circuit and LBE
businesses were open and operating for the entire period, compared
to closures or capacity restrictions that remained in effect for a
majority of the prior year period. Theatre concession cost
percentage for the second quarter and year to date period remained
flat when compared to the prior year period. LBE food cost
percentage decreased for both the second quarter and year to date
period when compared to the prior year period which focused
primarily on food delivery service with lower
margins.
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
|
Second
Quarter
|
Year to
Date
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
|
|
|
|
|
|
|
Depreciation of
property, equipment and leaseholds
|
$
23,865
|
$
25,197
|
-5.3 %
|
$
48,132
|
$
51,980
|
-7.4 %
|
Amortization of
intangible assets and other assets
|
2,786
|
2,538
|
9.8 %
|
5,411
|
5,264
|
2.8 %
|
Sub-total -
depreciation and amortization - other assets
|
$
26,651
|
$
27,735
|
-3.9 %
|
$
53,543
|
$
57,244
|
-6.5 %
|
|
|
|
|
|
|
|
Depreciation -
right-of-use assets
|
24,486
|
25,737
|
-4.9 %
|
48,749
|
52,055
|
-6.4 %
|
Total depreciation and
amortization
|
$
51,137
|
$
53,472
|
-4.4 %
|
$
102,292
|
$
109,299
|
-6.4 %
|
Second Quarter and Year to Date
Depreciation of property, equipment and leaseholds decreased by
$1.3 million, or 5.3% during the
quarter compared to the prior year period, and by $3.8 million or 7.4% for the year to date period
compared to the prior year period. The decrease was primarily due
to fully depreciated property, equipment and leaseholds.
The quarterly and year to date increase in amortization of
intangible assets and other as compared to the prior year period is
due to software developments and additions.
Depreciation of right-of-use decreased by $1.3 million and $3.3
million during the quarter and year to date period,
respectively. The decrease is primarily due to modifications to
lease agreements as a result of COVID-19 which reduced the
corresponding right-of-use asset and related depreciation
recognized.
(Gain) 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):
(Gain) loss on
disposal of assets
|
Second
Quarter
|
Year to
Date
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
|
|
|
|
|
|
|
(Gain) loss on disposal
of assets
|
$
(4,650)
|
$
179
|
NM
|
$
(4,493)
|
$
(29,881)
|
-85.0 %
|
Second Quarter and Year to Date
The change in the (gain) loss on disposal of assets for the
second quarter as compared to the prior year period was due to the
sale of certain restrictive lease rights for total proceeds of
$5.4 million completed during the
second quarter, compared to nominal activity in the prior year
period.
The change in the (gain) loss on disposal of assets for the year
to date period as compared to the prior year period was due to the
sale of Cineplex's head office buildings for gross proceeds of
$57.0 million completed during the
first quarter of 2021.
Other costs
Other costs include three main sub-categories of expenses;
theatre occupancy expenses, which capture 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
|
Second
Quarter
|
Year to
Date
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
|
|
|
|
|
|
|
Theatre occupancy
expenses
|
$
17,398
|
$
5,349
|
225.3 %
|
$
29,160
|
$
12,131
|
140.4 %
|
Other operating
expenses
|
144,021
|
53,790
|
167.7 %
|
254,527
|
101,596
|
150.5 %
|
General and
administrative expenses
|
15,322
|
14,213
|
7.8 %
|
31,406
|
28,330
|
10.9 %
|
Total other
costs
|
$
176,741
|
$
73,352
|
140.9 %
|
$
315,093
|
$
142,057
|
121.8 %
|
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):
Theatre occupancy
expenses
|
Second
Quarter
|
Year to
Date
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
|
|
|
|
|
|
|
Cash rent paid/payable
(i)
|
$ 36,931
|
$ 25,530
|
44.7 %
|
$ 72,763
|
$ 47,752
|
52.4 %
|
Other
occupancy
|
18,259
|
12,204
|
49.6 %
|
33,159
|
26,511
|
25.1 %
|
One-time items
(ii)
|
(678)
|
(2,237)
|
-69.7 %
|
(1,283)
|
(3,219)
|
-60.1 %
|
Total theatre occupancy
including cash lease payments
|
$
54,512
|
$
35,497
|
53.6 %
|
$
104,639
|
$
71,044
|
47.3 %
|
Cash rent paid/payable
related to lease obligations (iii)
|
(37,114)
|
(30,148)
|
23.1 %
|
(75,479)
|
(58,913)
|
28.1 %
|
Theatre occupancy as
reported
|
$
17,398
|
$
5,349
|
225.3 %
|
$
29,160
|
$
12,131
|
140.4 %
|
(i) Represents the cash
payments for theatre rent paid or payable during the
quarter.
|
(ii) One-time items
include amounts related to both theatre rent and other theatre
occupancy costs including real estate taxes, business taxes and
common
area maintenance. They are isolated here to illustrate Cineplex's
theatre rent and other theatre occupancy costs excluding these
one-time, non-recurring items.
|
(iii) Cash rent
paid/payable that has been reallocated to offset the lease
obligations.
|
Theatre occupancy
continuity
|
Second
Quarter
|
Year to
Date
|
|
Occupancy
|
Occupancy
|
2021 as
reported
|
$
5,349
|
$
12,131
|
Impact of new and
acquired theatres
|
353
|
673
|
Impact of disposed
theatres
|
133
|
570
|
Same store rent change
(i)
|
6,878
|
16,317
|
One-time
items
|
1,558
|
1,936
|
Decrease in
subsidies
|
9,313
|
13,647
|
Other
|
781
|
452
|
|
|
|
Impact of IFRS
16:
|
|
|
Cash rent related
to lease obligations
|
(6,967)
|
(16,566)
|
2022 as
reported
|
$
17,398
|
$
29,160
|
(i) Represents a
supplementary financial measure. See Non-GAAP and other financial
measures section of this news release.
|
Second Quarter and Year to Date
Theatre occupancy expenses increased $12.0 million or 225.3% during the second quarter
of 2022 compared to the prior year period. This increase was
primarily due to the reduction in subsidies received as a result of
the reopening of Cineplex's businesses. The increase was also
attributable to higher theatre rent related expenses including
common area maintenance and taxes incurred as Cineplex's theatres
were open during the period. During the prior year period, Cineplex
recognized lower theatre occupancy expenses as a majority of
theatres were closed or operating at far below normal capacity
levels. Same-store rent increased $6.9
million primarily due to rent relief measures negotiated
with landlord partners which were $6.7
million higher in the prior year period. Cineplex was able
to reduce theatre occupancy expenses through the recognition of
realty tax and rent subsidies of $0.4
million (2021 - $9.9
million).
For the year to date period, theatre occupancy expenses
increased $17.0 million or 140.4%
compared to the prior year. This increase was primarily due to
increased theatre rent related expenses, including common area
maintenance and taxes, as Cineplex's theatres were permitted to
operate in the current period at a greater capacity compared to the
prior year period. During the prior year period, Cineplex
recognized lower theatre occupancy expenses as a majority of
theatres were closed or operating at far below normal capacity
levels. Same-store rent increased $16.3
million primarily due to rent relief measures negotiated
with landlord partners, which were $17.4
million higher in the prior year period. Similarly, due to
the reopening of Cineplex's businesses, Cineplex received a lower
amount of subsidy relief when compared to the prior year period and
recognized realty tax and rent subsidies of $6.9 million (2021 - $20.8
million).
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):
Other operating
expenses
|
Second
Quarter
|
Year to
Date
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
Theatre
payroll
|
$ 37,175
|
$
5,473
|
579.2 %
|
$ 53,472
|
$
9,108
|
487.1 %
|
Theatre operating
expenses
|
26,184
|
8,078
|
224.2 %
|
48,539
|
17,431
|
178.5 %
|
Media
|
12,017
|
7,959
|
51.0 %
|
22,196
|
16,243
|
36.7 %
|
P1AG
|
36,979
|
19,687
|
87.8 %
|
66,833
|
35,257
|
89.6 %
|
LBE (i)
|
16,885
|
3,939
|
328.7 %
|
28,007
|
7,757
|
261.1 %
|
LBE pre-opening
(ii)
|
—
|
678
|
NM
|
—
|
906
|
NM
|
SCENE
|
4,663
|
5,654
|
-17.5 %
|
18,504
|
10,398
|
78.0 %
|
Marketing
|
2,458
|
1,123
|
118.9 %
|
3,820
|
2,240
|
70.5 %
|
Scene+ point
issuance
|
5,126
|
—
|
100.0 %
|
8,121
|
—
|
100.0 %
|
Other (iii)
|
6,621
|
5,630
|
17.6 %
|
13,549
|
11,150
|
21.5 %
|
Other operating
expenses including cash lease payments
|
$
148,105
|
$
58,221
|
154.4 %
|
$
263,043
|
$
110,490
|
138.1 %
|
Cash rent paid/payable
related to lease obligations (iv)
|
(4,084)
|
(4,431)
|
-7.8 %
|
(8,516)
|
(8,894)
|
-4.3 %
|
Total other operating
expenses
|
$
144,021
|
$
53,790
|
167.7 %
|
$
254,527
|
$
101,596
|
150.5 %
|
(i) Includes operating
costs of LBE locations. Overhead relating to management of LBE
portfolio are included in the 'Other' line.
|
(ii) Includes
pre-opening costs of LBE.
|
(iii) Other category
includes overhead costs related to LBE and other Cineplex internal
departments.
|
(iv) Cash rent
paid/payable that has been reallocated to offset the lease
obligations.
|
Other operating
expenses continuity
|
Second
Quarter
|
Year to
Date
|
2021 as
reported
|
$
53,790
|
$
101,596
|
Impact of new and
acquired theatres
|
1,043
|
1,601
|
Impact of disposed
theatres
|
(116)
|
(161)
|
Same theatre payroll
change (i)
|
30,979
|
43,344
|
Same theatre operating
expenses change (i)
|
17,974
|
30,805
|
Media operating
expenses change
|
4,058
|
5,954
|
P1AG operating expenses
change
|
17,292
|
31,576
|
LBE operating expenses
change
|
12,946
|
20,250
|
LBE pre-opening
change
|
(678)
|
(906)
|
SCENE change
|
(991)
|
8,106
|
Marketing
change
|
1,335
|
1,580
|
Scene+ point issuance
change
|
5,126
|
8,121
|
Other
|
916
|
2,283
|
|
|
|
Impact of IFRS
16:
|
|
|
Cash rent related to
lease obligations
|
347
|
$
378
|
2022 as
reported
|
$
144,021
|
$
254,527
|
(i) See Non-GAAP and
other financial measures section of this news release. These are
measures included as part of Cineplex's supplementary financial
measure calculations.
|
Second Quarter and Year to Date
Other operating expenses increased $90.2
million or 167.7% during the second quarter of 2022 compared
to the prior year period. The increase was primarily driven by
increases in same store theatre payroll and theatre operating
expenses of $31.0 million and
$18.0 million, respectively, as
Cineplex's theatres were permitted to operate for the entire period
as compared to extended closures in effect during the prior year
period. Cineplex also recognized P1AG other operating expenses of
$37.0 million, an increase of
$17.3 million when compared to the
prior year period. During the second quarter of 2022, government
mandated closure requirements and capacity restrictions were
lifted, resulting in increased operating activities at P1AG US and
Canadian route locations at FEC's and theatres. The lifting of
government-imposed restrictions also resulted in increased
operations at LBE businesses leading to a $12.9 million increase in LBE other operating
expenses when compared to the prior year period. Cineplex also
recognized a $1.0 million decrease in
SCENE operating costs, and a $5.1
million increase in marketing expenses relating to the
presentation of the cost of issuance of Scene+ points. Despite the
lifting of government mandated restrictions in the current period,
Cineplex received $1.2
million (2021 - $15.8 million)
of subsidies, which offset theatre payroll, non-theatre rent,
realty tax and utilities.
For the year to date, the overall increase in other operating
expenses from the prior year resulted from the reopening of
Cineplex's theatres, LBE businesses and P1AG US and Canada route locations at FEC's and theatres
as compared to the closure requirements and capacity restrictions
that remained in effect for a majority of the prior year period.
The increase was primarily driven by increases in same theatre
payroll and theatre operating expenses of $44.4 million and $31.1
million, respectively, as Cineplex's theatres operated for
the entire period as compared to government mandated restrictions
and closures in the prior year. Similarly, due to increased
operating activities at P1AG US and Canadian route locations at
FEC's and theatres, Cineplex also recognized P1AG other operating
expenses of $66.8 million, an
increase of $31.6 million when
compared to the prior year. LBE businesses were permitted to
operate at increased capacity due to the lifting of government
mandated restrictions, resulting in a $20.3
million increase in LBE other operating expenses when
compared to the prior year. Cineplex also recognized a $8.1 million increase in SCENE operating costs,
and a $8.1 million increase in
marketing expenses relating to the presentation of the cost of
issuance of Scene+ points. Cineplex received $21.9 million (2021 - $30.2 million) of subsidies in the current
period, comprised of $19.5 million
(2021 - $24.7 million) of payroll
subsidies of which $14.6 million
(2021 - $13.1 million) was offset
against theatre payroll, and $2.4
million (2021 - $5.5 million)
of non-theatre rent, realty tax and utility subsidies.
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 net
of these costs (in thousands of dollars):
G&A
expenses
|
Second
Quarter
|
Year to
Date
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
|
|
|
|
|
|
|
G&A excluding the
following items
|
$ 13,916
|
$
9,924
|
40.2 %
|
$ 26,604
|
$ 20,082
|
32.5 %
|
Restructuring
|
12
|
16
|
-25.0 %
|
1,453
|
476
|
205.3 %
|
Transaction /
Litigation costs
|
1,235
|
2,591
|
-52.3 %
|
1,489
|
5,021
|
-70.3 %
|
LTIP (i)
|
352
|
1,795
|
-80.4 %
|
2,093
|
3,099
|
-32.5 %
|
Option plan
|
399
|
445
|
-10.3 %
|
916
|
844
|
8.5 %
|
G&A expenses
including cash lease payments
|
$
15,914
|
$
14,771
|
7.7 %
|
$
32,555
|
$
29,522
|
10.3 %
|
Cash rent paid/payable
included as part of lease obligations (ii)
|
(592)
|
(558)
|
6.1 %
|
(1,149)
|
(1,192)
|
-3.6 %
|
G&A expenses as
reported
|
$
15,322
|
$
14,213
|
7.8 %
|
$
31,406
|
$
28,330
|
10.9 %
|
(i) LTIP includes the
expenses for RSUs and PSUs, as well as the expense for the
executive and Board deferred share unit plans.
|
(ii) Cash rent
paid/payable that has been reallocated to offset the lease
obligations.
|
Second Quarter and Year to Date
G&A expenses increased $1.1
million during the second quarter of 2022 compared to the
prior year period. Cineplex recognized $2.8
million of labour subsidies in the second quarter of 2021,
and none in the second quarter of 2022, contributing to a net
increase of $3.4 million in head
office payroll expenses. Cineplex incurred $1.2 million (2021 - $2.6
million) of expenses related to litigation and claims
recovery arising from the Cineworld Transaction during the
quarter.
G&A expenses for the year to date period increased
$3.1 million compared to the prior
year period. The change was primarily due to $7.5 million higher head office payroll expenses
due to $3.7 million lower labour
subsidies received. Cineplex received $2.0
million of labour subsidies in 2022, compared to
$5.7 million received in 2021.
Cineplex incurred year to date costs relating to litigation and
claims recovery arising from the Cineworld Transaction of
$1.5 million (2021 - $5.0 million).
NET INCOME (LOSS), EBITDA AND
ADJUSTED EBITDAaL (see Non-GAAP and other financial measures
section of this news release)
The following table presents net loss, EBITDA, adjusted EBITDA
and adjusted EBITDAaL for the three and six months ended
June 30, 2022 as compared to the
prior year period (expressed in thousands of dollars, except
adjusted EBITDAaL margin):
NET LOSS, EBITDA AND
ADJUSTED EBITDAaL
|
Second
Quarter
|
Year to
Date
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
1,313
|
$
(103,704)
|
NM
|
$ (40,912)
|
$
(193,392)
|
-78.8 %
|
Net income (loss) as a
percentage of sales
|
0.4 %
|
(159.7) %
|
160.1 %
|
(7.1) %
|
(181.9) %
|
174.8 %
|
EBITDA
|
$
80,963
|
$ (17,700)
|
NM
|
$ 113,926
|
$ (20,224)
|
NM
|
Adjusted
EBITDA
|
$
77,939
|
$ (16,902)
|
NM
|
$ 114,414
|
$ (47,007)
|
NM
|
Adjusted
EBITDAaL
|
$
35,764
|
$ (53,165)
|
NM
|
$
30,045
|
$
(115,255)
|
NM
|
Adjusted EBITDAaL
margin
|
10.2 %
|
(81.9) %
|
92.1 %
|
5.2 %
|
(108.4) %
|
113.6 %
|
Second Quarter and Year to Date
Net income and adjusted EBITDAaL for the second quarter of 2022
was $1.3 million and $35.8 million, respectively, as compared to a net
loss of $103.7 million and an
adjusted EBITDAaL loss of $53.2
million, respectively, in the prior year period. The removal
of operating restrictions on Cineplex's theatres and LBE venues
across Canada, resulted in
significantly improved performance when compared to the prior year
period.
Net loss and adjusted EBITDAaL for the six months ended
June 30, 2022 was $40.9 million and $30.0
million, respectively, as compared to a net loss of
$193.4 million and an adjusted
EBITDAaL loss of $115.3 million,
respectively, in the prior year period. The movement in both net
loss and adjusted EBITDAaL was due to the removal of operating
restrictions on Cineplex theatres and LBE venues across
Canada, compared to operating
restrictions that remained in effect for a majority of the prior
year period.
ADJUSTED FREE CASH FLOW (see
Non-GAAP and other financial measures section of this news
release)
For the second quarter of 2022, adjusted free cash flow per
common share of Cineplex was $0.35 as
compared to $(1.04) in the prior year
period. Adjusted free cash flow per Share for the second quarter of
2022 and year to date period increased mainly due to significantly
improved operating results with the easing of COVID-19 restrictions
on Cineplex's theatres and LBE businesses. During the current
period, Cineplex's businesses were permitted to operate at
increased capacity levels as remaining government restrictions were
lifted, compared to extended closure periods that remained in
effect for a majority of the prior year resulting in significantly
reduced operations.
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.
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.
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 June 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
153 theatres being included in the same theatre metrics. For the
six months ended June 30, 2022 the
impact of one location that has been opened or acquired and five
locations that have been closed or otherwise disposed of have been
excluded, resulting in 153 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 second
quarter. Ellis Jacob, President
and Chief Executive Officer and Gord Nelson, Chief Financial
Officer, will host the call scheduled for:
Cineplex Inc. Q2 2022 Earnings Webcast:
Date:
|
Thursday, August 11,
2022
|
|
|
Time:
|
10:00 a.m. Eastern
Daylight Time
|
|
|
Audio
Webcast:
|
Audience URL
https://events.q4inc.com/attendee/339303405
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:b1-226-828-7575 (Local) or 1-833-950-0062 (Canada
Toll-free), access code 200573. 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 170 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.
Cineplex Inc.
Consolidated Balance
Sheets
(expressed in thousands of Canadian
dollars)
|
|
|
|
|
June 30,
|
|
December 31,
|
|
2022
|
|
2021
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
Cash and cash
equivalents
|
$
26,584
|
|
$
26,938
|
Trade and other
receivables
|
66,498
|
|
80,679
|
Income taxes
receivable
|
2,713
|
|
1,984
|
Inventories
|
29,893
|
|
24,899
|
Prepaid expenses and
other current assets
|
15,322
|
|
13,365
|
Fair value of interest
rate swap agreements
|
482
|
|
—
|
|
141,492
|
|
147,865
|
|
|
|
|
Non-current assets
|
|
|
|
Property, equipment and
leaseholds
|
435,462
|
|
464,439
|
Right-of-use
assets
|
733,166
|
|
768,675
|
Fair value of interest
rate swap agreements
|
3,482
|
|
—
|
Interests in joint
ventures
|
2,475
|
|
7,423
|
Intangible
assets
|
80,871
|
|
81,651
|
Goodwill
|
635,686
|
|
635,545
|
Derivative financial
instrument
|
3,640
|
|
9,240
|
|
|
|
|
|
$
2,036,274
|
|
$
2,114,838
|
Cineplex Inc.
Consolidated Balance Sheets …
continued
(expressed in thousands of Canadian dollars)
|
|
|
|
|
June 30,
|
|
December 31,
|
|
2022
|
|
2021
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
Accounts payable and
accrued expenses
|
$
146,399
|
|
$
157,950
|
Income taxes
payable
|
1,923
|
|
1,945
|
Deferred revenue and
other
|
275,598
|
|
293,206
|
Lease
obligations
|
98,354
|
|
101,058
|
Fair value of interest
rate swap agreements
|
—
|
|
8,063
|
|
|
|
|
|
522,274
|
|
562,222
|
|
|
|
|
Non-current liabilities
|
|
|
|
Share-based
compensation
|
4,597
|
|
4,940
|
Long-term
debt
|
782,421
|
|
739,211
|
Fair value of interest
rate swap agreements
|
—
|
|
6,160
|
Lease
obligations
|
967,191
|
|
1,004,465
|
Post-employment
benefit obligations
|
9,206
|
|
9,973
|
Other
liabilities
|
6,911
|
|
7,590
|
|
|
|
|
|
1,770,326
|
|
1,772,339
|
|
|
|
|
Total liabilities
|
2,292,600
|
|
2,334,561
|
|
|
|
|
|
|
|
|
Shareholders' deficit
|
|
|
|
|
|
|
|
Share
capital
|
852,661
|
|
852,465
|
Deficit
|
(1,192,306)
|
|
(1,151,394)
|
Hedging reserves and
other
|
(131)
|
|
(131)
|
Contributed
surplus
|
83,640
|
|
80,027
|
Cumulative translation
adjustment
|
(190)
|
|
(690)
|
|
|
|
|
Total shareholders' deficit
|
(256,326)
|
|
(219,723)
|
|
|
|
|
|
$
2,036,274
|
|
$
2,114,838
|
Cineplex Inc.
Consolidated Statements of
Operations
(expressed in thousands of Canadian dollars,
except per share amounts)
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended June 30,
|
|
|
|
|
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
Box office
|
$
136,372
|
|
$
12,498
|
|
$
216,324
|
|
$
16,316
|
Food service
|
110,637
|
|
13,258
|
|
179,025
|
|
19,783
|
Media
|
26,406
|
|
9,401
|
|
41,951
|
|
18,475
|
Amusement
|
65,723
|
|
22,184
|
|
116,147
|
|
36,058
|
Other
|
10,740
|
|
7,585
|
|
25,154
|
|
15,706
|
|
|
|
|
|
|
|
|
|
349,878
|
|
64,926
|
|
578,601
|
|
106,338
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
Film cost
|
69,958
|
|
5,611
|
|
108,974
|
|
6,846
|
Cost of food
service
|
25,335
|
|
2,867
|
|
40,192
|
|
4,279
|
Depreciation -
right-of-use assets
|
24,486
|
|
25,737
|
|
48,749
|
|
52,055
|
Depreciation and
amortization - other assets
|
26,651
|
|
27,735
|
|
53,543
|
|
57,244
|
(Gain) loss on disposal
of assets
|
(4,650)
|
|
179
|
|
(4,493)
|
|
(29,881)
|
Other costs
|
176,741
|
|
73,352
|
|
315,093
|
|
142,057
|
Share of loss (income)
of joint ventures and associates
|
384
|
|
1,052
|
|
(302)
|
|
3,466
|
Interest expense -
lease obligations
|
14,739
|
|
14,741
|
|
29,443
|
|
29,100
|
Interest expense -
other
|
13,812
|
23,895
|
17,899
|
|
23,895
|
|
31,564
|
Interest
income
|
(38)
|
|
(108)
|
|
(68)
|
|
(134)
|
Foreign
exchange
|
(623)
|
|
365
|
|
(389)
|
|
595
|
Loss (gain) on
financial instruments recorded at fair value
|
1,770
|
|
(800)
|
|
5,600
|
|
(800)
|
|
|
|
|
|
|
|
|
|
348,565
|
|
168,630
|
|
620,237
|
|
296,391
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
1,313
|
|
(103,704)
|
|
(41,636)
|
|
(190,053)
|
|
|
|
|
|
|
|
|
Income tax (recovery) expense
|
|
|
|
|
|
|
|
Current
|
—
|
|
—
|
|
(724)
|
|
3,339
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
1,313
|
|
$ (103,704)
|
|
$
(40,912)
|
|
$ (193,392)
|
|
|
|
|
|
|
|
|
Net income (loss) per share -
basic
|
$
0.02
|
|
$
(1.64)
|
|
$
(0.65)
|
|
$
(3.05)
|
|
|
|
|
|
|
|
|
Net income (loss) per share -
diluted
|
$
0.02
|
|
$
(1.64)
|
|
$
(0.65)
|
|
$
(3.05)
|
Cineplex Inc.
Consolidated Statements of
Comprehensive Income (Loss)
(expressed in thousands of
Canadian dollars)
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended June 30,
|
|
|
|
|
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
1,313
|
|
$
(103,704)
|
|
$
(40,912)
|
|
$
(193,392)
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss)
|
|
|
|
|
|
|
|
Items that will be reclassified subsequently to net
income:
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
917
|
|
(480)
|
|
500
|
|
(908)
|
Other comprehensive income
(loss)
|
917
|
|
(480)
|
|
500
|
|
(908)
|
Comprehensive income (loss)
|
$
2,230
|
|
$
(104,184)
|
|
$
(40,412)
|
|
$
(194,300)
|
Cineplex Inc.
Consolidated Statements of Changes in
Equity
(expressed in thousands of Canadian
dollars)
For the periods ended June 30, 2022 and 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
Contributed
surplus
|
|
Hedging
reserves and
other
|
|
Cumulative
translation
adjustment
|
|
Deficit
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1, 2022
|
|
$
852,465
|
|
$
80,027
|
|
$
(131)
|
|
$
(690)
|
|
$ (1,151,394)
|
|
$
(219,723)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(40,912)
|
|
(40,912)
|
Other comprehensive
income
|
|
—
|
|
—
|
|
—
|
|
500
|
|
—
|
|
500
|
Total comprehensive loss
|
|
—
|
|
—
|
|
—
|
|
500
|
|
(40,912)
|
|
(40,412)
|
Share option
expense
|
|
—
|
|
916
|
|
—
|
|
—
|
|
—
|
|
916
|
PSU/RSU
expense
|
|
—
|
|
2,780
|
|
—
|
|
—
|
|
—
|
|
2,780
|
Issuance of shares on
exercise of options
|
|
196
|
|
(83)
|
|
—
|
|
—
|
|
—
|
|
113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2022
|
|
$
852,661
|
|
$
83,640
|
|
$
(131)
|
|
$
(190)
|
|
$ (1,192,306)
|
|
$
(256,326)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1, 2021
|
|
$
852,379
|
|
$
75,882
|
|
$
(131)
|
|
$
(502)
|
|
$
(903,394)
|
|
$
24,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(193,392)
|
|
(193,392)
|
Other comprehensive
loss
|
|
—
|
|
—
|
|
—
|
|
(908)
|
|
—
|
|
(908)
|
Total comprehensive loss
|
|
—
|
|
—
|
|
—
|
|
(908)
|
|
(193,392)
|
|
(194,300)
|
Share option
expense
|
|
—
|
|
844
|
|
—
|
|
—
|
|
—
|
|
844
|
PSU/RSU
expense
|
|
—
|
|
974
|
|
—
|
|
—
|
|
—
|
|
974
|
Settlement for
cancelled options
|
|
—
|
|
(60)
|
|
—
|
|
—
|
|
—
|
|
(60)
|
Issuance of shares on
exercise of options
|
|
69
|
|
(69)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
$
852,448
|
|
$
77,571
|
|
$
(131)
|
|
$
(1,410)
|
|
$ (1,096,786)
|
|
$
(168,308)
|
Cineplex Inc.
Consolidated Statements of Cash
Flows
(expressed in thousands of Canadian dollars
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended June 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
|
|
|
|
|
|
Cash provided by (used in)
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
|
Net income
(loss)
|
$
1,313
|
$
(103,704)
|
|
$
(40,912)
|
$
(193,392)
|
Adjustments to
reconcile net income to net cash provided by operating
activities
|
|
|
|
|
|
Depreciation and
amortization - other assets
|
26,651
|
27,735
|
|
53,543
|
57,244
|
Depreciation -
right-of-use assets
|
24,486
|
25,737
|
|
48,749
|
52,055
|
Unrealized foreign
exchange
|
(488)
|
245
|
|
(336)
|
456
|
Interest rate swap
agreements - non-cash interest
|
(6,764)
|
(1,849)
|
|
(17,121)
|
(5,377)
|
Accretion of
convertible debentures and notes payable
|
4,610
|
4,021
|
|
9,210
|
7,759
|
Other non-cash
interest
|
176
|
177
|
|
346
|
624
|
(Gain) loss on
disposal of assets
|
(4,650)
|
179
|
|
(4,493)
|
(29,881)
|
Non-cash share-based
compensation
|
1,559
|
1,194
|
|
3,696
|
1,818
|
Change in fair value
of financial instruments
|
1,770
|
(800)
|
|
5,600
|
(800)
|
Net change in
interests in joint ventures and associates
|
(391)
|
1,576
|
|
(370)
|
4,792
|
Changes in operating
assets and liabilities
|
(1,120)
|
62,622
|
|
(16,197)
|
86,203
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
47,152
|
17,133
|
|
41,715
|
(18,499)
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
Proceeds from disposal
of assets, net
|
1,653
|
3,252
|
|
1,670
|
59,916
|
Purchases of property,
equipment and leaseholds
|
(12,538)
|
(5,026)
|
|
(22,140)
|
(13,741)
|
Intangible assets
additions
|
(2,608)
|
(1,992)
|
|
(4,781)
|
(5,078)
|
Tenant
inducements
|
43
|
2,005
|
|
605
|
5,665
|
Net cash received from
CDCP
|
5,318
|
—
|
|
5,318
|
—
|
|
|
|
|
|
|
Net cash (used in)
provided by investing activities
|
(8,132)
|
(1,761)
|
|
(19,328)
|
46,762
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
(Repayments) borrowings
under credit facilities, net
|
(9,000)
|
13,000
|
|
34,000
|
(221,000)
|
Repayments of lease
obligations - principal
|
(27,428)
|
(19,086)
|
|
(56,695)
|
(38,543)
|
Exercise of cash
option
|
79
|
—
|
|
113
|
—
|
Issuance of notes
payable, net
|
—
|
—
|
|
—
|
243,996
|
Financing
fees
|
—
|
—
|
|
—
|
(321)
|
|
|
|
|
|
|
Net cash used in
financing activities
|
(36,349)
|
(6,086)
|
|
(22,582)
|
(15,868)
|
|
|
|
|
|
|
Effect of exchange rate
differences on cash
|
(181)
|
413
|
|
(159)
|
553
|
Increase (decrease) in
cash and cash equivalents
|
2,490
|
9,699
|
|
(354)
|
12,948
|
Cash and cash equivalents - Beginning of
period
|
24,094
|
19,503
|
|
26,938
|
16,254
|
|
|
|
|
|
|
Cash and cash equivalents - End of
period
|
$
26,584
|
$
29,202
|
|
$
26,584
|
$
29,202
|
|
|
|
|
|
|
Supplemental information
|
|
|
|
|
|
Cash paid for interest
- lease obligation
|
$
14,426
|
$
14,167
|
|
$
28,793
|
$
26,772
|
Cash paid for interest
- other
|
$
7,820
|
$
5,918
|
|
$
33,539
|
$
21,512
|
Cash received for
income taxes, net
|
$
(36)
|
$
(49,028)
|
|
$
(36)
|
$
(53,515)
|
Cineplex Inc.
Consolidated Supplemental
Information
(expressed in thousands of Canadian
dollars)
Reconciliation of reported net income (loss) to adjusted
EBITDAaL
|
Three months
ended June 30,
|
|
Six months ended
June 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
|
|
|
|
|
|
Net income
(loss)
|
$
1,313
|
$
(103,704)
|
|
$
(40,912)
|
$
(193,392)
|
|
|
|
|
|
|
Depreciation and
amortization - other
|
26,651
|
27,735
|
|
53,543
|
57,244
|
Depreciation -
right-of-use assets
|
24,486
|
25,737
|
|
48,749
|
52,055
|
Interest expense -
lease obligations
|
14,739
|
14,741
|
|
29,443
|
29,100
|
Interest expense -
other
|
13,812
|
17,899
|
|
23,895
|
31,564
|
Interest
income
|
(38)
|
(108)
|
|
(68)
|
(134)
|
Current income tax
(recovery) expense
|
—
|
—
|
|
(724)
|
3,339
|
|
|
|
|
|
|
EBITDA
|
$
80,963
|
$
(17,700)
|
|
$
113,926
|
$
(20,224)
|
|
|
|
|
|
|
(Gain) loss on disposal
of assets
|
(4,650)
|
179
|
|
(4,493)
|
(29,881)
|
Loss (gain) on
financial instruments recorded at fair value
|
1,770
|
(800)
|
|
5,600
|
(800)
|
CDCP equity loss
(income) (i)
|
332
|
1,043
|
|
(522)
|
3,281
|
Foreign exchange (gain)
loss
|
(623)
|
365
|
|
(389)
|
595
|
Depreciation and
amortization - joint ventures and associates (ii)
|
133
|
—
|
|
264
|
—
|
Taxes and interest of
joint ventures and associates (ii)
|
14
|
11
|
|
28
|
22
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
77,939
|
$
(16,902)
|
|
$
114,414
|
$
(47,807)
|
|
|
|
|
|
|
Cash rent paid/payable
related to lease obligations (iii)
|
(41,791)
|
(35,137)
|
|
(85,144)
|
(68,998)
|
Negotiated
lease-related cash savings for the period (iii) (iv)
|
—
|
(751)
|
|
—
|
—
|
Cash rent paid not
pertaining to current period
|
(384)
|
(375)
|
|
775
|
750
|
|
|
|
|
|
|
Adjusted EBITDAaL
(iv)
|
$
35,764
|
$
(53,165)
|
|
$
30,045
|
$
(115,255)
|
|
|
|
|
|
|
(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 - $18.2 million) through June 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.
|
Cineplex Inc.
Consolidated Supplemental
Information
(expressed in thousands of Canadian dollars,
except number of shares and per share data)
Reconciliation of reported cash provided by (used in)
operating activities to adjusted free cash flow per share
|
Three months
ended June 30,
|
|
Six months ended
June 30,
|
|
|
|
|
|
|
|
2022
|
2021
|
|
2022
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by
(used in) operating activities
|
$
47,152
|
$
17,133
|
|
$
41,715
|
$
(18,499)
|
Less: Total capital
expenditures net of proceeds on sale of assets
|
(10,885)
|
(4,992)
|
|
(20,470)
|
(13,707)
|
|
|
|
|
|
|
Standardized free
cash flow
|
36,267
|
12,141
|
|
21,245
|
(32,206)
|
|
|
|
|
|
|
Add/(Less):
|
|
|
|
|
|
Changes in operating
assets and liabilities (i)
|
1,120
|
(62,622)
|
|
16,197
|
(86,203)
|
Changes in operating
assets and liabilities of joint ventures and associates
(i)
|
775
|
(524)
|
|
68
|
(1,326)
|
Repayments of lease
obligations - principal
|
(27,428)
|
(19,086)
|
|
(56,695)
|
(38,543)
|
Principal portion of
cash rent paid not pertaining to current period
|
(381)
|
(369)
|
|
762
|
737
|
Growth capital
expenditures and other (ii)
|
6,078
|
4,511
|
|
13,132
|
12,972
|
Share of loss (income)
of joint ventures and associates, net of non-cash
depreciation
|
95
|
2
|
|
72
|
(163)
|
Net cash received
from CDCP (iii)
|
5,318
|
—
|
|
5,318
|
—
|
Adjusted free
cash flow
|
$
21,844
|
$
(65,947)
|
|
$
99
|
$
(144,732)
|
|
|
|
|
|
|
Average number of
Shares outstanding
|
63,360,746
|
63,339,618
|
|
63,353,634
|
63,337,300
|
|
|
|
|
|
|
Adjusted free cash
flow per Share
|
$
0.345
|
$
(1.041)
|
|
$
0.002
|
$
(2.285)
|
(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.
|
SOURCE Cineplex