TORONTO, Feb. 15, 2019
/CNW/ - (TSX: CGX) - Cineplex Inc. ("Cineplex") today released its
financial results for the three months and year ended December 31, 2018. Unless otherwise
specified, all amounts are in Canadian dollars.
Fourth Quarter Results
|
2018
|
2017
|
Period over
Period
Change
(i)
|
Total
revenues
|
$
|
428.2
|
million
|
$
|
426.3
|
million
|
0.4%
|
Theatre
attendance
|
17.0
|
million
|
17.6
|
million
|
-3.2%
|
Net
income
|
$
|
27.2
|
million
|
$
|
28.8
|
million
|
-5.7%
|
Box office
revenues per patron ("BPP") (ii)
|
$
|
10.73
|
|
$
|
10.54
|
|
1.8%
|
Concession
revenues per patron ("CPP") (ii)
|
$
|
6.53
|
|
$
|
6.29
|
|
3.8%
|
Adjusted EBITDA
(ii)
|
$
|
81.6
|
million
|
$
|
79.6
|
million
|
2.5%
|
Adjusted EBITDA
margin (ii)
|
19.1
|
%
|
18.7
|
%
|
0.4%
|
Adjusted free cash
flow (ii)
|
$
|
59.4
|
million
|
$
|
51.3
|
million
|
15.8%
|
Adjusted free cash
flow per common share of Cineplex ("Share") (ii)
|
$
|
0.939
|
|
$
|
0.810
|
|
15.9%
|
Earnings per Share
("EPS") - basic
|
$
|
0.43
|
|
$
|
0.45
|
|
-4.4%
|
EPS excluding
change in fair value of financial instrument - basic
(ii)
|
$
|
0.43
|
|
$
|
0.46
|
|
-6.5%
|
EPS -
diluted
|
$
|
0.43
|
|
$
|
0.45
|
|
-4.4%
|
EPS excluding
change in fair value of financial instrument - diluted
(ii)
|
$
|
0.43
|
|
$
|
0.46
|
|
-6.5%
|
Full Year Results
|
2018
|
2017
|
Period over
Period
Change
(i)
|
Total
revenues
|
$
|
1,614.8
|
million
|
$
|
1,555.1
|
million
|
3.8%
|
Theatre
attendance
|
69.3
|
million
|
70.4
|
million
|
-1.6%
|
Net
income
|
$
|
77.0
|
million
|
$
|
70.3
|
million
|
9.4%
|
Box office
revenues per patron ("BPP") (ii)
|
$
|
10.46
|
|
$
|
10.17
|
|
2.9%
|
Concession
revenues per patron ("CPP") (ii)
|
$
|
6.36
|
|
$
|
6.00
|
|
6.0%
|
Adjusted EBITDA
(ii)
|
$
|
256.4
|
million
|
$
|
235.9
|
million
|
8.7%
|
Adjusted EBITDA
margin (ii)
|
15.9
|
%
|
15.2
|
%
|
0.7%
|
Adjusted free cash
flow (ii)
|
$
|
178.2
|
million
|
$
|
150.6
|
million
|
18.3%
|
Adjusted free cash
flow per common share of Cineplex ("Share") (ii)
|
$
|
2.813
|
|
$
|
2.373
|
|
18.5%
|
Earnings per Share
("EPS") - basic
|
$
|
1.22
|
|
$
|
1.11
|
|
9.9%
|
EPS excluding
change in fair value of financial instrument - basic
(ii)
|
$
|
1.22
|
|
$
|
1.07
|
|
14.0%
|
EPS -
diluted
|
$
|
1.22
|
|
$
|
1.11
|
|
9.9%
|
EPS excluding
change in fair value of financial instrument - diluted
(ii)
|
$
|
1.22
|
|
$
|
1.07
|
|
14.0%
|
i
|
Period over period
change calculated based on thousands of dollars except percentage
and per share values. Changes in percentage amounts are
calculated as 2018 value less 2017 value.
|
ii
|
Adjusted EBITDA,
adjusted EBITDA margin, adjusted free cash flow per common share of
Cineplex, BPP, CPP and EPS excluding change in fair
value of financial instrument items are measures that do not have a
standardized meaning under generally accepted accounting principles
("GAAP")
These measures as well as other Non-GAAP financial measures
reported by Cineplex are defined in the 'Non-GAAP Financial
Measures' section at the
end of this news release.
|
"Cineplex reported record annual results for 2018," said
Ellis Jacob, President and CEO,
Cineplex. "Total revenue increased 3.8% to $1.6 billion and adjusted EBITDA increased 8.7%
to $256.4 million, as our
diversification initiatives continue to build scale and show more
meaningful returns and we continue to focus on managing our
costs."
"On a full year basis, box office revenue increased 1.2% to
$724.2 million and theatre food
service revenue increased 4.4% to an all-time record of
$440.7 million. Box office per patron
("BPP") of $10.46 and concession per
patron ("CPP") of $6.36 also
represented annual records for Cineplex. Media decreased 4.0% to
$165.0 million due to lower cinema
advertising, however, amusement revenue increased 11% to
$205.8 million, primarily due to
added revenue contributions from The Rec Room. Despite the
approximate $13.0 million impact of
the minimum wage increase, adjusted EBITDA grew as a result of the
revenue increases, our diversification initiatives and our focus on
controlling costs, including the $25.0
million cost reduction program. As a result of the
strong operating performance, net income increased 9.4% to
$77.0 million and basic EPS increased
9.9% to $1.22.
Looking at the fourth quarter of 2018, many key revenue segments
delivered increases, including total revenue of $428.2 million, up 0.4%, and adjusted EBITDA of
$81.6 million, up 2.5%. Box office
revenue decreased 1.5% to 182.4 million due to a strong comparator
in 2017 with Star Wars: The Last Jedi, however, theatre food
service revenue increased 0.6% to $111.0
million and increases in BPP to $10.73 and CPP to $6.53 partially offset a 3.2% decline in
attendance. Total media revenue of $58.2
million decreased 5.4% primarily due to lower cinema
advertising as a result of the record comparator in Q4 2017 and
higher digital media project installation revenue in the prior year
period. Amusement revenue increased 8.5% to $53.5 million, largely as a result of greater
contributions from The Rec Room. Total revenue from The
Rec Room amounted to $17.9
million and achieved a store level margin of 22.0%. Despite
the adjusted EBITDA growth, net income was down 5.7% and basic EPS
was down 4.4% primarily due to the amendment of the credit
facilities, which resulted in a one-time charge of $2.7 million, and the interest rate environment,
which resulted in increased non-cash swap charges of $1.0 million.
We accomplished a great deal in 2018, including the opening of
three new theatres and the fifth location of The Rec Room in
London, Ontario. We announced an
agreement with 4DX to bring the experience to an additional 13
locations across Canada and
expanded our Virtual Reality footprint in Canada with an exclusive agreement with The
VOID and a significant investment in VRstudios. We partnered with
Uber Eats to deliver movie theatre snacks right to your door, added
alcohol beverage service to an additional 25 theatres across the
circuit and released our new Cineplex app, featuring an improved
user experience, digital tickets and mobile food and beverage
ordering in VIP auditoriums. Also during the year, Cineplex Digital
Media secured new customer agreements with Arcos Dorados, the
largest independent McDonald's franchisee in the world with
locations in Argentina,
Brazil and Uruguay; and Subway Europe with over 5,400
locations across Europe. Our SCENE
loyalty program continued to grow its membership reaching 9.6
million members and we also piloted a new premium SCENE Gold
loyalty card in Edmonton,
Alberta.
Coming off a record year in 2018, we are encouraged by the
outlook of the 2019 film slate and confident in our strategic
direction as we continue to build scale in our other businesses,
prudently manage our costs and execute on Cineplex's
diversification strategy for future growth."
KEY DEVELOPMENTS IN 2018
The following describes certain key business initiatives
undertaken and results achieved during 2018 in each of Cineplex's
core business areas:
FILM ENTERTAINMENT AND CONTENT
Theatre Exhibition
- Reported annual box office revenues of $724.2 million, a 1.2% increase from 2017 due to
a 2.9% increase in BPP, partially offset by a 1.6% decrease in
theatre attendance.
- BPP of $10.46 represents an
all-time annual record for Cineplex, $0.29 or 2.9% higher than $10.17 reported during 2017.
- Opened three new theatres, Cineplex Cinemas
East Hill in Calgary, Alberta, a seven screen theatre
featuring all recliner seating as well as an UltraAVX screen, D-Box
Motion Seats and Cineplex Clubhouse; Cineplex Cinemas
Pickering and VIP in Pickering,
Ontario, an eleven screen theatre featuring all recliner
seating as well as an UltraAVX screen, D-BOX Motion Seats,
Cineplex Clubhouse with four VIP auditoriums; and
Cineplex Cinemas Seton and VIP in Calgary, Alberta, an eleven screen theatre
featuring all recliner seating as well as an UltraAVX screen and
D-BOX Motion Seats along with four VIP auditoriums.
- During the year, Cineplex opened a VIP cinema in Edmonton, Alberta featuring four VIP
auditoriums at Cineplex Cinemas North Edmonton and VIP; and
the first IMAX auditorium in Saskatoon at the Scotiabank Theatre
Saskatoon and VIP.
- Cineplex, in partnership with CJ 4DPLEX, announced a new
agreement that will expand the 4DX experience to up to 13
additional Cineplex locations across Canada.
- Cineplex, in partnership with CJ 4DPLEX, announced a pilot
project, opening Canada's first
ScreenX auditorium at Cineplex Cinemas Queensway and VIP in
Etobicoke, Ontario. ScreenX
enables a 270-degree, panoramic movie-watching experience.
- During the year, Cineplex closed Cineplex Odeon Orion Gate
Cinemas in order to begin the conversion to a Playdium
location.
Theatre Food Service
- Reported record annual theatre food service revenues of
$440.7 million a 4.4% increase from
2017 due to a record annual CPP of $6.36, a $0.36 or
6.0% increase from 2017.
- During the year, Cineplex added alcohol beverage service to an
additional 25 theatres, now totalling 35 (excluding VIP).
- During the year, Cineplex launched an expanded partnership with
Uber Eats to deliver theatre food products with digital movie
rental through 92 Cineplex theatres in British Columbia, Alberta, Ontario and Quebec.
Alternative Programming
- Alternative Programming (Cineplex Events) during the year
included strong performances from the Metropolitan Opera including
Aida (Verdi) and Samson et
Dalila, performances from the Bolshoi Ballet, Andre Rieu's 2018 Maastrict Concert and
documentaries including the premiere of Peter Jackson's World War I documentary They
Shall Not Grow Old and the Korean documentary, Burn the
Stage.
- Cineplex international film featured numerous international
films, including Hindi, Punjabi, Filipino and Mandarin language
films in select markets across the country.
Digital Commerce
- Online and mobile ticketing represented 28.0% of total
admissions during the year compared to 23.6% in the prior
year.
- Cineplex launched the new Cineplex mobile app which improves
the customer experience through simplified ticket purchases,
digital tickets for paperless entry and mobile food and beverage
ordering in VIP auditoriums.
- Cineplex Store continued to show significant growth with a
30.0% increase in active monthly users, reaching over 980 thousand
users.
MEDIA
- Reported annual media revenues of $165.0
million, 4.0% lower than the prior year mainly as a result
of a decrease in cinema media revenues.
Cinema Media
- Cinema media revenues were $109.0
million in 2018, $7.4 million
or 6.3% lower than 2017. The decrease was due to lower pre-show
advertising due to a challenging advertising environment resulting
in a shift in the timing of campaigns and the impact of Star
Wars: The Last Jedi in the fourth quarter of 2017.
Digital Place-Based Media
- Reported revenues of $56.0
million in 2018, an increase of $0.5
million or 0.9%, compared to the prior year due to higher
project installation revenues.
- Chosen to deploy, maintain and operate a complex merchandising
network of digital menu boards for Arcos Dorados, the largest
independent McDonald's franchisee in the world with locations in
Argentina, Brazil and Uruguay.
- Chosen to deploy, maintain and operate a complex merchandising
network of digital menu boards for Subway Europe ("Subway") at
locations across Europe. Cineplex
will work with Subway to provide ongoing strategic content,
consulting services and marketing initiatives to over 5,400
locations.
AMUSEMENT AND LEISURE
- Announced a strategic partnership with VRstudios Inc.
("VRstudios"), one of the largest providers of turn-key,
location-based virtual reality solutions. Cineplex acquired a 34.7%
interest in VRstudios for $4.7
million. The agreement also includes a commercial
partnership which will provide expansion opportunities in
North America and
internationally.
- Announced a new exclusive expansion agreement with The VOID
that provides Cineplex with the exclusive rights to operate The
VOID concept in Canada. Cineplex
plans to open a minimum of five VOID Experience Centres over the
coming years, with the second location in Canada opened in the West Edmonton mall location of The Rec
Room featuring Star Wars: Secrets of the Empire.
Amusement Solutions
- Reported annual revenues of $176.2
million in 2018 ($10.7 million
from Cineplex theatre gaming and $165.5
million from all other sources of revenues). This
$5.5 million increase over the prior
year is mainly due to increased route revenues in the United States.
- During the year, P1AG entered into an agreement to be the
exclusive amusement services provider for Cinemark. P1AG will
install, operate and service gaming equipment in over 270 Cinemark
locations across the United States
and will pilot three premium gaming locations.
Location-based Entertainment
- The Rec Room reported total annual revenues of
$66.5 million including annual food
service revenues of $34.8 million and
amusement revenues of $29.6
million.
- Opened The Rec Room at CF Masonville Place in
London, Ontario, the fifth
location of The Rec Room.
- In addition to previously announced locations to open in 2019
at Square One in Mississauga,
Ontario, The Amazing Brentwood in Burnaby, British Columbia and Playdium
locations in Whitby and
Brampton, Ontario, Cineplex
announced plans for three new locations of The Rec Room;
located in Newfoundland and
Labrador at the Avalon Mall
in St. John's opening in 2019,
Manitoba at Seasons of
Tuxedo in Winnipeg opening in 2019 and Park Place in Barrie, Ontario which is scheduled to open in
2020.
eSports
- WGN hosted various tournaments including, GT Sport Canadian
Championship Series, the Call of Duty: WWII Canadian
Championship Series, NHL 18 tournament, the Rocket League
Canadian Championship and the Hearthstone Canadian Challenge.
Collegiate Starleague ("CSL"), a subsidiary of WGN, hosted the 2018
North American Collegiate Grand Finals in Huntington Beach, California.
- WGN was the official tournament operator for the United States and Canada for the 2018-2019 World Electronic
Sports Games in partnership with Alisports. WGN hosted the national
tournaments for both countries in the fourth quarter of 2018.
LOYALTY
- Membership in the SCENE loyalty program increased by 0.7
million in 2018, reaching 9.6 million members at December 31, 2018.
- SCENE and Maple Leaf Sports & Entertainment Ltd. ("MLSE")
launched the first campaign to bring MLSE's iconic Toronto Maple
Leafs and Toronto Raptors teams to SCENE members, with access to
"money can't buy" experiences and tickets that will engage
sports-loving SCENE members.
- SCENE launched a pilot of a new premium SCENE Gold loyalty card
in Edmonton, Alberta at six
participating theatre locations.
CORPORATE
- During the year, Cineplex increased and extended its Credit
Facilities, increasing the Revolving Facility by $175.0 million with the Term Facility remaining
unchanged, and extending the maturity dates of Revolving Facility
to November 13, 2023 and Term
Facility to November 13, 2025.
- Cineplex repaid $107.5 million of
convertible debentures in cash at maturity.
- In conjunction with the Credit Facilities, Cineplex entered
into interest rate swap agreements with an aggregate notional
amount of $450 million.
- Effective with the May 2018
dividend, the Board of Directors of Cineplex (the "Board")
announced a monthly dividend increase of 3.6% to $0.145 per share ($1.74 on an annual basis), up from $0.140 per Share ($1.68 on an annual basis).
- Continued to execute the cost reduction program focused on
achieving $25.0 million in annualized
cost savings which was announced during the second quarter,
incurring an additional $1.0 million
of restructuring costs during the fourth quarter ($5.8 million year to date).
- Cineplex was once again the entertainment sponsor for WE Day
and WE Day Family, which was held at the Scotiabank Arena in
Toronto, Ontario. Cineplex also
hosted its annual National Community Day in November 2018 in support of WE, its national
charitable partner. In the past eight years, Cineplex has raised a
total of $3.0 million on Community
Days.
OPERATING RESULTS FOR THE THREE MONTHS AND YEAR ENDED
DECEMBER 31, 2018
Total revenues
Total revenues for the three months
ended December 31, 2018, increased
$1.9 million (0.4%) to $428.2 million as compared to the prior year
period. Total revenues for the year ended December 31, 2018 increased $59.8 million (3.8%) to $1.6 billion 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 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 full year (in thousands of dollars, except theatre
attendance reported in thousands of patrons and per patron amounts,
unless otherwise noted):
|
|
|
Box office
revenues
|
Fourth
Quarter
|
Full
Year
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
|
|
|
|
|
|
|
Box office
revenues
|
$
|
182,352
|
|
$
|
185,048
|
|
-1.5%
|
$
|
724,244
|
|
$
|
715,605
|
|
1.2%
|
Theatre attendance
(i)
|
16,992
|
|
17,551
|
|
-3.2%
|
69,272
|
|
70,394
|
|
-1.6%
|
Box office revenue
per patron (i)
|
$
|
10.73
|
|
$
|
10.54
|
|
1.8%
|
$
|
10.46
|
|
$
|
10.17
|
|
2.9%
|
BPP excluding premium
priced product (i)
|
$
|
9.22
|
|
$
|
8.87
|
|
3.9%
|
$
|
8.94
|
|
$
|
8.61
|
|
3.8%
|
Canadian industry
revenues (ii)
|
|
|
-0.5%
|
|
|
2.5%
|
Same theatre box
office revenues (i)
|
$
|
178,526
|
|
$
|
184,130
|
|
-3.0%
|
$
|
714,121
|
|
$
|
711,288
|
|
0.4%
|
Same theatre
attendance (i)
|
|
16,702
|
|
|
17,444
|
|
-4.3%
|
68,367
|
|
69,862
|
|
-2.1%
|
% Total box from
premium priced product (i)
|
|
44.6
|
%
|
|
45.7
|
%
|
-1.1%
|
|
44.1
|
%
|
|
46.4
|
%
|
-2.3%
|
(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
and full
year dates.
|
Box office
continuity
|
Fourth
Quarter
|
Full
Year
|
|
Box
Office
|
Theatre
Attendance
|
Box
Office
|
Theatre
Attendance
|
2017 as
reported
|
$
|
185,048
|
17,551
|
$
|
715,605
|
70,394
|
Same theatre
attendance change
|
|
(7,831)
|
(742)
|
|
(15,217)
|
(1,495)
|
Impact of same
theatre BPP change
|
|
2,227
|
—
|
|
18,050
|
—
|
New and acquired
theatres (i)
|
|
3,826
|
290
|
|
7,430
|
589
|
Disposed and closed
theatres (i)
|
|
(918)
|
(107)
|
|
(1,624)
|
(216)
|
2018 as
reported
|
$
|
182,352
|
16,992
|
$
|
724,244
|
69,272
|
(i) See Non-GAAP
measures section of this news release. Represents theatres
opened, acquired, disposed or closed subsequent to the start of the
prior year
comparative period.
|
Fourth Quarter
|
Fourth Quarter
2018 Top Cineplex Films
|
3D
|
%
Box
|
Fourth Quarter
2017 Top Cineplex Films
|
3D
|
%
Box
|
1
|
Dr. Seuss' The
Grinch
|
√
|
8.9%
|
1
|
Star Wars: The Last
Jedi
|
√
|
18.9%
|
2
|
A Star Is
Born
|
|
8.9%
|
2
|
Thor:
Ragnarok
|
√
|
12.7%
|
3
|
Venom
|
√
|
8.7%
|
3
|
Justice
League
|
√
|
7.3%
|
4
|
Bohemian
Rhapsody
|
|
8.6%
|
4
|
Blade Runner
2049
|
√
|
5.7%
|
5
|
Fantastic Beasts: The
Crimes Of Grindelwald
|
√
|
7.2%
|
5
|
Jumanji: Welcome To
The Jungle
|
√
|
5.1%
|
Box office revenues decreased $2.7
million, or 1.5%, to $182.4
million during the fourth quarter of 2018, compared to
$185.0 million recorded in the same
period in 2017. This decrease compared to the prior year was
due to a 3.2% decrease in theatre attendance more than offsetting
the impact of a higher BPP. The prior period is a tough
comparator due to Star Wars: The Last Jedi which finished in
the top ten highest grossing films of all-time in North America, as well all of the top films in
2017 were available in 3D as compared to just three in 2018.
BPP for the three months ended December
31, 2018 was $10.73, a
$0.19 increase from the prior year
period due to price increases in selective markets as compared to
the prior year period.
Full Year
|
Full Year 2018 Top
Cineplex Films
|
3D
|
%
Box
|
Full Year 2017 Top
Cineplex Films
|
3D
|
%
Box
|
1
|
Avengers: Infinity
War
|
√
|
6.3%
|
1
|
Beauty and the
Beast
|
√
|
4.9%
|
2
|
Black
Panther
|
√
|
6.1%
|
2
|
Star Wars: The Last
Jedi
|
√
|
4.9%
|
3
|
Incredibles
2
|
√
|
4.1%
|
3
|
Guardians Of The
Galaxy Vol. 2
|
√
|
4.0%
|
4
|
Jurassic World:
Fallen Kingdom
|
√
|
3.4%
|
4
|
Wonder
Woman
|
√
|
3.5%
|
5
|
Deadpool 2
|
√
|
3.1%
|
5
|
Thor:
Ragnarok
|
√
|
3.3%
|
Box office revenues for the year ended December 31, 2018 were $724.2 million, an increase of $8.6 million or 1.2% from the prior year.
This was due to the higher BPP in 2018 compared to 2017, more than
offsetting the 1.6% decrease in theatre attendance year over
year.
Cineplex's BPP for the year ended December 31, 2018 increased $0.29, or 2.9%, from $10.17 in 2017 to an annual record of
$10.46 in 2018. This increase
was primarily due to price increases in selective markets as
compared to the prior year.
Food service revenues
The following table highlights the movement in food service
revenues, theatre attendance and CPP for the quarter and the full
year (in thousands of dollars, except theatre attendance and same
theatre attendance reported in thousands of patrons and per patron
amounts):
Food service
revenues
|
Fourth
Quarter
|
Full
Year
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
|
|
|
|
|
|
|
Food service -
theatres
|
$
|
111,015
|
$
|
110,334
|
0.6%
|
$
|
440,733
|
$
|
422,312
|
4.4%
|
Food service - The
Rec Room
|
9,711
|
9,180
|
5.8%
|
34,768
|
19,564
|
77.7%
|
Total food service
revenues
|
$
|
120,726
|
$
|
119,514
|
1.0%
|
$
|
475,501
|
$
|
441,876
|
7.6%
|
|
|
|
|
|
|
|
Theatre attendance
(i)
|
16,992
|
17,551
|
-3.2%
|
69,272
|
70,394
|
-1.6%
|
CPP (i)
(ii)
|
$
|
6.53
|
$
|
6.29
|
3.8%
|
$
|
6.36
|
$
|
6.00
|
6.0%
|
Same theatre food
service revenues (i)
|
$
|
107,820
|
$
|
109,763
|
-1.8%
|
$
|
433,034
|
$
|
419,661
|
3.2%
|
Same theatre
attendance (i)
|
16,702
|
17,444
|
-4.3%
|
68,367
|
69,862
|
-2.1%
|
|
|
|
|
|
|
|
(i) See Non-GAAP
measures section of this news release.
|
(ii) Food service
revenue from The Rec Room is not included in the CPP
calculation.
|
Theatre food
service revenue continuity
|
Fourth
Quarter
|
Full
Year
|
|
Theatre
Food
Service
|
Theatre
Attendance
|
Theatre
Food
Service
|
Theatre
Attendance
|
2017 as
reported
|
$
|
110,334
|
17,551
|
$
|
422,312
|
70,394
|
Same theatre
attendance change
|
(4,668)
|
(742)
|
(8,978)
|
(1,495)
|
Impact of same
theatre CPP change
|
2,725
|
—
|
22,351
|
—
|
New and acquired
theatres (i)
|
3,195
|
290
|
6,012
|
589
|
Disposed and closed
theatres (i)
|
(571)
|
(107)
|
(962)
|
(216)
|
2018 as
reported
|
$
|
111,015
|
16,992
|
$
|
440,735
|
69,272
|
(i) See Non-GAAP
measures section of this news release. Represents theatres
opened, acquired, disposed or closed subsequent to the start of the
prior year
comparative period.
|
Fourth Quarter
Food service revenues are comprised primarily of concession
revenues, which includes food service sales at theatre
locations. Food service revenues also include food and
beverage sales at The Rec Room. Theatre food service
revenues increased $0.7 million, or
0.6% as compared to the prior year period due to the 3.8% increase
in CPP more than offsetting the impact of a 3.2% decrease in
theatre attendance. The operations of The Rec Room
contributed $9.7 million in the
period.
CPP of $6.53, an increase of 3.8%
compared to the prior year period was a fourth quarter record for
Cineplex. Expanded offerings outside of core theatre food
service products, including offerings at Cineplex's VIP Cinemas and
Outtakes locations, have contributed to increased visitation
and higher average transaction values, resulting in the record
CPP.
Full Year
Food service revenues increased $33.6
million, or 7.6% as compared to the prior year to an annual
record of $475.5 million due impact
of The Rec Room and the higher CPP more than offsetting the
impact of the lower theatre attendance. CPP of $6.00 in 2017 increased 6.0% to $6.36 in 2018, an annual record for
Cineplex. The operations of The Rec Room contributed
$34.8 million in 2018.
Media revenues
The following table highlights the movement in media revenues
for the quarter and the full year (in thousands of dollars):
Media
revenues
|
Fourth
Quarter
|
Full
Year
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
|
|
|
|
|
|
|
Cinema
media
|
$
|
40,478
|
$
|
43,432
|
-6.8%
|
$
|
109,023
|
$
|
116,397
|
-6.3%
|
Digital place-based
media
|
17,740
|
18,087
|
-1.9%
|
55,986
|
55,477
|
0.9%
|
Total media
revenues
|
$
|
58,218
|
$
|
61,519
|
-5.4%
|
$
|
165,009
|
$
|
171,874
|
-4.0%
|
Fourth Quarter
Total media revenues decreased 5.4% to $58.2 million in the fourth quarter of 2018
compared to the prior year period. This decrease was due to
lower cinema media and digital place-based media revenues.
Cinema media decreased by $3.0
million, or 6.8% lower than the prior year period. The
decrease in cinema media was as a result of lower pre-show results
as compared to the prior period which set an all-time quarterly
record due to high anticipation for Star Wars: The Last Jedi
in the fourth quarter of 2017.
Digital place-based media revenues decreased $0.3 million due to decreased project
installation revenue. Lower digital place-based media
revenues as compared to the prior year period was primarily due to
the large initial rollout for Citizens Bank that occurred in the
fourth quarter of 2017.
During the fourth quarter of 2018, digital place-based media
added 78 new locations, an increase of 0.6% over the third quarter
of 2018.
Full Year
Total media revenues decreased $6.9
million, or 4.0%, in the year ended December 31, 2018 compared to the prior
year. This decrease was due to the performance of Cinema
media, which reported a decrease of $7.4
million (6.3%) compared to the prior year due primarily to
lower pre-show results. Digital place-based media revenues
increased $0.5 million due to higher
project installation revenues and an increase in on-going software
and support revenues, partially offset by a decrease in media share
revenues.
Full year, digital place-based media added 576 new locations (an
increase of 4.5%) for a total of 13,502 locations as at
December 31, 2018.
Amusement Revenues
The following table highlights the movement in amusement
revenues for the quarter and the full year (in thousands of
dollars):
Amusement
revenues
|
Fourth
Quarter
|
Full
Year
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
|
|
|
|
|
|
|
Amusement - P1AG
excluding Cineplex exhibition and The Rec Room
(i)
|
$
|
43,307
|
$
|
39,925
|
8.5%
|
$
|
165,486
|
$
|
159,974
|
3.4%
|
Amusement - Cineplex
exhibition (i)
|
2,697
|
2,562
|
5.3%
|
10,664
|
10,649
|
0.1%
|
Amusement - The
Rec Room
|
7,469
|
6,813
|
9.6%
|
29,643
|
14,718
|
101.4%
|
Total amusement
revenues
|
$
|
53,473
|
$
|
49,300
|
8.5%
|
$
|
205,793
|
$
|
185,341
|
11.0%
|
(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 andThe
Rec Room reflects P1AG's gross amusement revenues, net of the
venue revenue share paid to Cineplex reflected in Amusement -
Cineplex exhibition above.
|
Fourth Quarter
Amusement revenues increased 8.5%, or $4.2 million, to $53.5
million in the fourth quarter of 2018 compared to the prior
year period. The increase was due to an increase in route revenues
in the United States in part as a
result of the Cinemark agreement signed in the second quarter of
2018 and strong growth in the revenues from the additional The
Rec Room locations.
Full Year
For the full year period amusement revenues increased 11.0%, or
$20.5 million to $205.8 million, compared to the prior year due to
the acquisition of Dandy Amusements International Inc. ("Dandy") in
the second quarter of 2017 and the agreement signed with Cinemark
in the second quarter of 2018 resulting in increased route revenue
in the United States. In addition, the increase in operating
locations of The Rec Room resulted in an increase of
$14.9 million to amusement
revenues.
Other revenues
The following table highlights the other revenues which includes
revenues from the Cineplex Store, promotional activities,
screenings, private parties, corporate events, breakage on gift
card sales and revenues from management fees for the quarter and
the full year (in thousands of dollars):
Other
revenues
|
Fourth
Quarter
|
Full
Year
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
|
|
|
|
|
|
|
Other
revenues
|
$
|
13,414
|
$
|
10,912
|
22.9%
|
$
|
44,276
|
$
|
40,371
|
9.7%
|
Film cost
The following table highlights the movement in film cost and the
film cost percentage for the quarter and the full year (in
thousands of dollars, except film cost percentage):
Film
cost
|
Fourth
Quarter
|
Full
Year
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
|
|
|
|
|
|
|
Film cost
|
$
|
91,562
|
$
|
98,734
|
-7.3%
|
$
|
379,325
|
$
|
376,759
|
0.7%
|
Film cost percentage
(i)
|
50.2%
|
53.4%
|
-3.2%
|
52.4%
|
52.6%
|
-0.2%
|
(i) See Non-GAAP
measures section of this news release.
|
Fourth Quarter
Film cost varies primarily with box office revenues, and can
vary from quarter to quarter usually based on the relative strength
and concentration of the titles exhibited during the prior
period. The 3.2% decrease in film cost percentage in the
current period was as a result lower settlement rates attributable
to the top films in 2018 compared to 2017.
Full Year
The full year increase in film cost expense was due to a
combination of the higher box revenues in the current period
compared to the prior year period which were partially offset by a
0.2% decrease in the film cost percentage. The decrease in
film cost percentage was attributable to the top films in 2018
having a lower settlement rates compared to the prior year
period.
Cost of food service
The following table highlights the movement in cost of food
service and food service cost as a percentage of food service
revenues ("concession cost percentage") for both theatres and
The Rec Room for the quarter and the full year (in thousands
of dollars, except percentages and margins per patron):
Cost of food
service
|
Fourth
Quarter
|
Full
Year
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
|
|
|
|
|
|
|
Cost of food service
- theatre
|
$
|
23,805
|
$
|
24,328
|
-2.1%
|
$
|
91,001
|
$
|
93,500
|
-2.7%
|
Cost of food service
- The Rec Room
|
2,333
|
2,607
|
-10.5%
|
9,190
|
5,938
|
54.8%
|
Total cost of food
service
|
$
|
26,138
|
$
|
26,935
|
-3.0%
|
$
|
100,191
|
$
|
99,438
|
0.8%
|
|
|
|
|
|
|
|
Theatre concession
cost percentage (i)
|
21.4%
|
22.0%
|
-0.6%
|
20.6%
|
22.1%
|
-1.5%
|
The Rec Room
food cost percentage (i)
|
24.0%
|
28.4%
|
-4.4%
|
26.4%
|
30.4%
|
-4.0%
|
Theatre concession
margin per patron (i)
|
$
|
5.13
|
$
|
4.90
|
4.7%
|
$
|
5.05
|
$
|
4.67
|
8.1%
|
|
|
|
|
|
|
|
(i) See Non-GAAP
measures section of this news release.
|
Fourth Quarter
Cost of food service at the theatres varies primarily with
theatre attendance as well as the quantity and mix of offerings
sold. Cost of food service at The Rec Room varies
primarily with the volume of guests who visit the locations as well
as the quantity and mix between food and beverage items sold.
The decrease in the theatre cost of food service as compared to
the prior year period was due to a 0.6% decrease in the concession
cost percentage during the period.
The theatre concession margin per patron increased 4.7% from
$4.90 in the fourth quarter of 2017
to $5.13 in the same period in 2018,
reflecting the impact of the higher CPP during the period and the
impact of the lower theatre concession cost percentage.
The decrease in The Rec Room cost of food service as
compared to the prior year period was due to the decrease of 4.4%
in The Rec Room food cost percentage during the quarter
compared to the prior period as a result of improved cost
management and menu optimization as new locations opened.
This was partially offset by the higher food service revenues as a
result of the increase in operating locations.
Full Year
The decrease in the theatre cost of food service as compared to
the prior year was due to a 1.5% decrease in the theatre concession
cost percentage. The theatre concession margin per patron
increased from $4.67 in the prior
year to $5.05 in 2018, reflecting the
impact of the higher CPP in 2018.
The increase in The Rec Room cost of food service as
compared to the prior year was due to the higher food service
revenues as a result of the increase in operating locations.
The decrease of 4.0% for the food cost percentage regarding The
Rec Room was due to improved cost management and menu
optimization with the rollout of new locations.
Depreciation and amortization
The following table highlights the movement in depreciation and
amortization expenses during the quarter and the full year (in
thousands of dollars):
Depreciation and
amortization expenses
|
Fourth
Quarter
|
Full
Year
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
|
|
|
|
|
|
|
Depreciation of
property, equipment and leaseholds
|
$
|
30,478
|
$
|
27,456
|
11.0%
|
$
|
115,402
|
$
|
103,119
|
11.9%
|
Amortization of
intangible assets and other
|
4,321
|
3,934
|
9.8%
|
16,450
|
16,797
|
-2.1%
|
Depreciation and
amortization expenses as reported
|
$
|
34,799
|
$
|
31,390
|
10.9%
|
$
|
131,852
|
$
|
119,916
|
10.0%
|
The quarterly and annual increases in depreciation of property,
equipment and leaseholds of $3.0
million and $12.3 million,
respectively, were primarily due to the investments in route
equipment, furniture and fixtures and leasehold improvements.
The quarterly increase in amortization of intangible assets and
other was primarily due to internally developed software for
digital products including the Cineplex mobile app and website
platform. The decrease in amortization of intangible assets for the
annual period was due to certain assets being fully amortized.
Loss on disposal of assets
The following table shows the movement in the loss on disposal
of assets during the quarter the and the full year (in thousands of
dollars):
Loss on disposal
of assets
|
Fourth
Quarter
|
Full
Year
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
Loss on disposal of
assets
|
$
|
1,064
|
$
|
369
|
188.3%
|
$
|
2,697
|
$
|
706
|
282.0%
|
Other costs
Other costs include three main sub-categories of expenses;
theatre occupancy expenses, which capture the rent and associated
occupancy costs for Cineplex's theatre operations; other operating
expenses, which include the costs related to running Cineplex's
film entertainment and content, media, as well as amusement and
leisure; and general and administrative expenses, which includes
costs related to managing Cineplex's operations, including head
office expenses. Please see the discussions below for more details
on these categories.
The following table highlights the movement in other costs for
the quarter and the full year (in thousands of dollars):
Other
costs
|
Fourth
Quarter
|
Full
Year
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
|
|
|
|
|
|
|
Theatre occupancy
expenses
|
$
|
51,991
|
$
|
50,125
|
3.7%
|
$
|
209,838
|
$
|
207,022
|
1.4%
|
Other operating
expenses
|
163,795
|
155,096
|
5.6%
|
602,114
|
569,406
|
5.7%
|
General and
administrative expenses
|
12,779
|
15,709
|
-18.7%
|
66,783
|
66,791
|
—%
|
Total other
costs
|
$
|
228,565
|
$
|
220,930
|
3.5%
|
$
|
878,735
|
$
|
843,219
|
4.2%
|
Theatre occupancy expenses
The following table highlights the movement in theatre occupancy
expenses for the quarter and the full year (in thousands of
dollars):
Theatre occupancy
expenses
|
Fourth
Quarter
|
Full
Year
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
|
|
|
|
|
|
|
Rent
|
$
|
34,963
|
$
|
34,799
|
0.5%
|
$
|
139,179
|
$
|
138,652
|
0.4%
|
Other
occupancy
|
17,578
|
16,541
|
6.3%
|
73,435
|
70,814
|
3.7%
|
One-time items
(i)
|
(550)
|
(1,215)
|
-54.7%
|
(2,776)
|
(2,444)
|
13.6%
|
Total
|
$
|
51,991
|
$
|
50,125
|
3.7%
|
$
|
209,838
|
$
|
207,022
|
1.4%
|
(i) One-time items
include amounts related to both theatre rent and other theatre
occupancy costs. They are isolated here to illustrate
Cineplex's theatre rent and other theatre occupancy costs excluding
these one-time, non-recurring items.
|
Theatre occupancy
continuity
|
Fourth
Quarter
|
Full
Year
|
|
Occupancy
|
Occupancy
|
2017 as
reported
|
$
|
50,125
|
$
|
207,022
|
Impact of new and
acquired theatres
|
330
|
848
|
Impact of disposed
theatres
|
(106)
|
(305)
|
Same theatre rent
change (i)
|
243
|
542
|
One-time
items
|
666
|
(332)
|
Other
|
733
|
2,063
|
2018 as
reported
|
$
|
51,991
|
$
|
209,838
|
(i) See Non-GAAP
measures section of this news release.
|
Fourth Quarter
Theatre occupancy expenses increased $1.9
million during the fourth quarter of 2018 compared to the
prior year period. This increase was primarily due to the
impact of one-time items and other charges, in addition to new
theatres net of disposed theatres.
Full Year
The increase in theatre occupancy expenses of $2.8 million for the 2018 year compared the prior
year was mainly due to the impact of an increase in other charges
($2.1 million) and the impact of new
and acquired theatres net of disposed theatres ($0.5 million) partially offset by an increase in
one-time items ($0.3 million).
Other operating expenses
The following table highlights the movement in other operating
expenses during the quarter and the full year (in thousands of
dollars):
Other operating
expenses
|
Fourth
Quarter
|
Full
Year
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
|
|
|
|
|
|
|
Theatre
payroll
|
$
|
38,663
|
$
|
34,893
|
10.8%
|
$
|
152,465
|
$
|
138,914
|
9.8%
|
Theatre operating
expenses
|
29,940
|
29,476
|
1.6%
|
117,423
|
115,518
|
1.6%
|
Media
|
18,869
|
21,192
|
-11.0%
|
66,777
|
72,985
|
-8.5%
|
P1AG
|
40,076
|
36,174
|
10.8%
|
150,476
|
139,958
|
7.5%
|
The Rec
Room (i)
|
11,609
|
10,896
|
6.5%
|
44,512
|
24,412
|
82.3%
|
Location-based
entertainment pre-opening (ii)
|
349
|
696
|
-49.9%
|
1,915
|
8,605
|
-77.7%
|
SCENE
|
6,889
|
4,073
|
69.1%
|
17,345
|
15,548
|
11.6%
|
Marketing
|
6,663
|
6,283
|
6.0%
|
19,959
|
20,046
|
-0.4%
|
Business interruption
insurance proceeds
|
(1,749)
|
—
|
NM
|
(5,449)
|
—
|
NM
|
Other
(iii)
|
12,486
|
11,413
|
9.4%
|
36,691
|
33,420
|
9.8%
|
Other operating
expenses
|
$
|
163,795
|
$
|
155,096
|
5.6%
|
$
|
602,114
|
$
|
569,406
|
5.7%
|
|
|
|
|
|
|
|
(i) Includes
operating costs of The Rec Room locations. Pre-opening costs
relating toThe Rec Room locations and overhead relating to
management of The Rec Room portfolio are included in the
'Other' line.
|
(ii) Includes
pre-opening costs of The Rec Room andPlaydium
locations.
|
(iii) Other category
includes overhead costs related to The Rec Room, operating
costs of WGN and other Cineplex internal departments.
|
Other operating
continuity
|
Fourth
Quarter
|
Full
Year
|
|
Other
Operating
|
Other
Operating
|
2017 as
reported
|
$
|
155,096
|
$
|
569,406
|
Impact of new and
acquired theatres
|
2,047
|
4,246
|
Impact of disposed
theatres
|
(313)
|
(699)
|
Same theatre payroll
change (i)
|
2,477
|
10,907
|
Same theatre
operating expenses change (i)
|
46
|
1,069
|
Media operating
expenses change
|
(2,323)
|
(6,208)
|
P1AG operating
expenses change
|
3,902
|
10,518
|
The Rec
Room operating expenses change
|
713
|
20,100
|
Location-based
entertainment pre-opening change
|
(347)
|
(6,690)
|
SCENE
change
|
2,816
|
1,797
|
Marketing
change
|
380
|
(87)
|
Business interruption
insurance proceeds change
|
(1,749)
|
(5,449)
|
Other
|
1,050
|
3,204
|
2018 as
reported
|
$
|
163,795
|
$
|
602,114
|
(i) See Non-GAAP
measures section of this news release.
|
|
Fourth Quarter
Other operating expenses during the fourth quarter of 2018
increased $8.7 million or 5.6%
compared to the prior year period. The increase was primarily
due to higher amusement and leisure costs related to P1AG.
Same theatre payroll also increased as a result of the minimum wage
increases in Ontario, Quebec and Alberta. These were partially
offset by a $2.3 million decrease in
media due to decrease in business volumes and a $1.7 million increase in business interruption
proceeds as a result of a fire at Cineplex Seton and VIP in
2017.
Full Year
For the year ended December 31,
2018, other operating expenses increased $32.7 million or 5.7% compared to the prior
year. The increase was primarily due to higher amusement and
leisure costs, including higher P1AG costs, as well as costs
related to new locations of The Rec Room. Same theatre
payroll increased as a result of the minimum wages increases in
Ontario, Quebec and Alberta which more than offset any labor
efficiencies achieved during the year. Media expenses
decreased as a result of the reduction in business volumes and
improved cost management during 2018. Other expenses increased due
to higher digital commerce business volumes during the current year
as compared to the prior year. The Rec Room pre-opening
costs decreased $6.7 million as there
were three openings in the prior year compared to one opening in
the current year.
During 2018, Cineplex recognized business interruption insurance
proceeds of $5.4 million, as a result
of the fire at Cineplex Cinemas Seton and VIP.
General and administrative expenses
The following table highlights the movement in general and
administrative ("G&A") expenses during the quarter and the full
year, including Share-based compensation costs, and G&A
expenses net of these costs (in thousands of dollars):
G&A
expenses
|
Fourth
Quarter
|
Full
Year
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
|
|
|
|
|
|
|
G&A excluding
LTIP and option plan expense
|
$
|
13,438
|
$
|
14,729
|
-8.8%
|
$
|
60,570
|
$
|
64,133
|
-5.6%
|
Restructuring
|
1,022
|
—
|
NM
|
5,842
|
—
|
NM
|
LTIP (i)
|
(2,076)
|
513
|
NM
|
(1,347)
|
836
|
NM
|
Option
plan
|
395
|
467
|
-15.4%
|
1,718
|
1,822
|
-5.7%
|
G&A expenses as
reported
|
$
|
12,779
|
$
|
15,709
|
-18.7%
|
$
|
66,783
|
$
|
66,791
|
—%
|
(i) LTIP includes the
expense for the LTIP program as well as the expense for the
executive and Board deferred share unit plans.
|
Fourth Quarter
G&A expenses decreased $2.9
million during the fourth quarter of 2018 compared to the
prior year period as a result of the $2.6
million decrease in LTIP expense as a result of the decrease
in the Cineplex's Share price at September
30, 2018 of $35.00 to
$25.44 at December 31, 2018. Restructuring costs of
$1.0 million were due to Cineplex's
cost reduction initiative which was implemented in the second
quarter. This initiative is focused on achieving $25.0 million in annualized costs savings, a
component of which will be realized in G&A. Decreases in
G&A in part reflect the initial impact of the rollout of this
initiative.
Full Year
G&A expenses for 2018 were flat compared to the prior year,
due primarily to restructuring costs of $5.8
million which were due to Cineplex's cost reduction
initiative implemented in the second quarter of 2018, partially
offset by a reduction to G&A expenses in part reflecting the
initial impact of the rollout of this initiative.
EARNINGS BEFORE INTEREST, INCOME TAXES, DEPRECIATION AND
AMORTIZATION ("EBITDA") (see Non-GAAP measures section of this news
release)
The following table presents EBITDA and adjusted EBITDA for the
three months and year ended December 31,
2018 as compared to the prior year periods (expressed in
thousands of dollars, except adjusted EBITDA margin):
EBITDA
|
Fourth
Quarter
|
Full
Year
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
|
|
|
|
|
|
|
EBITDA
|
$
|
83,502
|
$
|
80,191
|
4.1%
|
$
|
259,814
|
$
|
240,264
|
8.1%
|
Adjusted
EBITDA
|
$
|
81,637
|
$
|
79,614
|
2.5%
|
$
|
256,365
|
$
|
235,929
|
8.7%
|
Adjusted EBITDA
margin
|
19.1%
|
18.7%
|
0.4%
|
15.9%
|
15.2%
|
0.7%
|
Adjusted EBITDA for the fourth quarter of 2018 increased
$2.0 million, or 2.5%, as compared to
the prior year period, to $81.6
million. This increase as compared to the prior year
period was due primarily to growth in the amusement and leisure
businesses and the increase in theatre food service revenues as a
result of the fourth quarter record CPP. This growth was
partially offset by a decline in box office due to a drop in
theatre attendance and the decrease in media sales in part due to a
stronger fourth quarter in 2017 with the performance of Star
Wars: The Last Jedi. Adjusted EBITDA margin, calculated
as adjusted EBITDA divided by total revenues, was 19.1% in the
current period, an increase of 0.4% from 18.7% in the prior year
period.
Adjusted EBITDA for the year ended December 31, 2018 increased $20.4 million, or 8.7%, to an annual record of
$256.4 million as compared to
$235.9 million primarily due to the
growth in the amusement and leisure businesses, coupled with the
higher contribution from box office and food service revenues
representing the record annual BPP and CPP. Adjusted EBITDA
margin was up 0.7% to 15.9% in 2018 compared to 15.2% in 2017.
ADJUSTED FREE CASH FLOW (see Non-GAAP measures section of
this news release)
For the fourth quarter of 2018, adjusted free cash flow per
common share of Cineplex was $0.94 as
compared to $0.81 in the prior year
period. The declared dividends per common share of Cineplex were
$0.44 in the fourth quarter of 2018
and $0.42 in the prior year period.
During the 12 months ended December 31,
2018, Cineplex generated adjusted free cash flow per Share
of $2.81, compared to $2.37 in the prior 12 month period. Cineplex
declared dividends per Share of $1.72
and $1.66, respectively, in each 12
month period. The payout ratios for these periods were 61.1% and
70.0%, respectively.
NON-GAAP FINANCIAL MEASURES
EBITDA and Adjusted Free Cash Flow
EBITDA and adjusted
free cash flow are not measures recognized by GAAP and do not have
standardized meanings in accordance with such principles.
Therefore, EBITDA and adjusted free cash flow may not be comparable
to similar measures presented by other issuers. Management uses
adjusted EBITDA and adjusted free cash flow to evaluate performance
primarily because of the significant effect certain unusual or
non-recurring charges and other items have on EBITDA from period to
period.
EBITDA is calculated by adding back to net income, income tax
expense, depreciation and amortization expense, and interest
income. Adjusted EBITDA excludes the change in fair value of
financial instrument, gain or loss on disposal of assets, foreign
exchange gain or loss, the equity income of CDCP, the
non-controlling interests' share of adjusted EBITDA of WGN and
TGLP, and depreciation, amortization, interest and taxes of
Cineplex's other joint ventures and associates. Adjusted EBITDA
margin is calculated by dividing adjusted EBITDA by total
revenues.
Adjusted free cash flow is a non-GAAP measure generally used by
Canadian corporations, as an indicator of financial performance and
it should not be seen as a measure of liquidity or a substitute for
comparable metrics prepared in accordance with GAAP.
For a detailed reconciliation of net income to EBITDA and
adjusted EBITDA and from cash provided by operating activities to
adjusted free cash flow, please refer to Cineplex's management's
discussion and analysis filed on www.sedar.com.
Earnings per Share Metrics
Cineplex has presented
basic and diluted earnings per share net of this item to provide a
more comparable earnings per share metric between the current
periods and prior year periods. In the non-GAAP measure, earnings
is defined as net income excluding the change in fair value of
financial instrument.
Per Patron Revenue Metrics
Cineplex reviews per patron
metrics as they relate to box office revenue and theatre food
service revenue such as BPP, CPP, BPP excluding premium priced
product, and concession margin per patron, as these are key
measures used by investors to value and assess Cineplex's
performance, and are widely used in the theatre exhibition
industry. Management of Cineplex defines these metrics as
follows:
Theatre Attendance: Theatre attendance is calculated as
the total number of paying patrons that frequent Cineplex's
theatres during the period.
BPP: Calculated as total box office revenues divided by
total paid theatre attendance for the period.
BPP excluding premium priced product: Calculated as total
box office revenues for the period, less box office revenues from
3D, 4DX, UltraAVX, VIP and IMAX product; divided by total paid
total theatre attendance for the period, less paid total theatre
attendance for 3D, 4DX, UltraAVX, VIP and IMAX product.
CPP: Calculated as total theatre food service revenues
divided by total paid total theatre attendance for the period.
Premium priced product: Defined as 3D, 4DX, UltraAVX,
IMAX and VIP film product.
Theatre concession margin per patron: Calculated as total
theatre food service revenues less total theatre food service cost,
divided by theatre attendance for the period.
Same Theatre Analysis
Cineplex reviews and reports
same theatre metrics relating to box office revenues, theatre food
service revenues, theatre rent expense and theatre payroll expense,
as these measures are widely used in the theatre exhibition
industry as well as other retail industries.
Same theatre metrics are calculated by removing the results for
all theatres that have been opened, acquired, closed or otherwise
disposed of subsequent to the start of the prior year comparative
period. For the three months ended December 31, 2018 the impact of the 3 locations
that have been opened or acquired and 2 locations that have been
closed have been excluded, resulting in 161 theatres being included
in the same theatre metrics. For the year ended December 31, 2018 the impact of the 3 locations
that have been opened or acquired and the 4 locations that have
been closed have been excluded, resulting in 161 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.
The Rec Room food cost percentage: Calculated as
total The Rec Room food costs divided by total The Rec
Room food service revenues for the period.
Certain information included in this news release contains
forward-looking statements within the meaning of applicable
securities laws. These forward-looking statements include,
among others, statements with respect to Cineplex's objectives,
goals and strategies to achieve those objectives and goals, as well
as statements with respect to Cineplex's beliefs, plans,
objectives, expectations, anticipations, estimates and
intentions. The words "may", "will", "could", "should",
"would", "suspect", "outlook", "believe", "plan", "anticipate",
"estimate", "expect", "intend", "forecast", "objective" and
"continue" (or the negative thereof), and words and expressions of
similar import, are intended to identify forward-looking
statements.
By their very nature, forward-looking statements involve
inherent risks and uncertainties, including those described in
Cineplex's Annual Information Form ("AIF"), Cineplex's management's
discussion and analysis ("MD&A") and in this news
release. Those risks and uncertainties, both general and
specific, give rise to the possibility that predictions, forecasts,
projections and other forward-looking statements will not be
achieved. Certain material factors or assumptions are applied in
making forward-looking statements and actual results may differ
materially from those expressed or implied in such statements.
Cineplex cautions readers not to place undue reliance on these
statements, as a number of important factors, many of which are
beyond Cineplex's control, 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, risks generally encountered in the relevant industry,
competition, customer, legal, taxation and accounting
matters.
The foregoing list of factors that may affect future results
is not exhaustive. When reviewing Cineplex's forward-looking
statements, readers should carefully consider the foregoing factors
and other uncertainties and potential events. Additional
information about factors that may cause actual results to differ
materially from expectations and about material factors or
assumptions applied in making forward-looking statements may be
found in the "Risks and Uncertainties" section of Cineplex's
MD&A.
Cineplex does not undertake to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable
Canadian securities law. Additionally, we undertake no obligation
to comment on analyses, expectations or statements made by third
parties in respect of Cineplex, its financial or operating results
or its securities. All forward-looking statements in this news
release are made as of the date hereof and are qualified by these
cautionary statements. Additional information, including Cineplex's
AIF and MD&A, can be found on SEDAR at www.sedar.com.
About Cineplex
Cineplex (TSX:CGX) is a top-tier
Canadian brand that operates in the Film Entertainment and Content,
Amusement and Leisure, and Media sectors. A leading entertainment
and media company, Cineplex welcomes over 70 million guests
annually through its circuit of theatres and location based
entertainment venues across the country. In addition to being
Canada's largest and most
innovative film exhibitor, Cineplex also operates successful
businesses in digital commerce (CineplexStore.com), food service,
alternative programming (Cineplex Events), cinema media (Cineplex
Media), digital place-based media (Cineplex Digital Media),
amusement solutions (Player One Amusement Group) and an online
esports platform for competitive and passionate gamers
(WorldGaming.com). Additionally, Cineplex operates a location based
entertainment business through Canada's newest destination for 'Eats &
Entertainment' (The Rec Room), and will also be opening new
complexes specially designed for teens and families (Playdium) as
well as exciting new sports and entertainment venues across
Canada (Topgolf). Cineplex is a
joint venture partner in SCENE, Canada's largest entertainment loyalty
program.
Proudly recognized as having one of the country's Most Admired
Corporate Cultures, Cineplex employs approximately 13,000 people in
its offices across Canada and the
United States. To learn more visit Cineplex.com or
download the Cineplex App.
You are cordially invited to participate in a conference call
with the management of Cineplex (TSX: CGX) to review our fourth
quarter and year-end results. Ellis
Jacob, President and Chief Executive Officer and Gord
Nelson, Chief Financial Officer, will host the call scheduled
for:
Friday February 15,
2018
10:00 am Eastern
Time
In order to participate in the conference call please dial
647-484-0475, or from outside Toronto and from the U.S., dial 1-888-394-8218
at least five to ten minutes prior to 10:00
am ET. Please quote the conference confirmation code 6219020
to access the call.
If you cannot participate in a live mode, a replay will be
available. Please dial 647-436-0148, or from outside Toronto and from the U.S., dial
1-888-203-1112. The replay passcode is 6219020.
The replay will begin at 1:00 pm ET on Friday February 15, 2018 and end at 1:00 pm ET on
Friday February 22, 2018.
Note that media will be participating in listen-only
mode.
Cineplex
Inc.
|
Consolidated
Balance Sheets
|
(expressed in
thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Restated
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
25,242
|
|
$
|
40,597
|
Trade and other
receivables
|
165,586
|
|
160,938
|
Income taxes
receivable
|
4,944
|
|
1,344
|
Inventories
|
30,592
|
|
28,966
|
Prepaid expenses and
other current assets
|
13,862
|
|
13,013
|
Fair value of interest
rate swap agreements
|
1,457
|
|
314
|
|
|
|
|
|
241,683
|
|
245,172
|
|
|
|
|
Non-current
assets
|
|
|
|
Property, equipment and
leaseholds
|
634,354
|
|
628,129
|
Deferred income
taxes
|
13,444
|
|
7,134
|
Fair value of interest
rate swap agreements
|
2,063
|
|
3,880
|
Interests in joint
ventures and associates
|
38,912
|
|
35,353
|
Intangible
assets
|
108,758
|
|
119,011
|
Goodwill
|
817,235
|
|
816,489
|
|
|
|
|
|
$
|
1,856,449
|
|
$
|
1,855,168
|
Cineplex
Inc.
|
Consolidated
Balance Sheets … continued
|
(expressed in
thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Restated
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
186,407
|
|
$
|
189,929
|
Share-based
compensation
|
4,862
|
|
4,732
|
Dividends
payable
|
9,183
|
|
8,866
|
Income taxes
payable
|
12,167
|
|
9,157
|
Deferred
revenue
|
214,016
|
|
195,808
|
Finance lease
obligations
|
3,058
|
|
3,420
|
Fair value of interest
rate swap agreements
|
1,184
|
|
1,332
|
Convertible
debentures
|
—
|
|
105,080
|
|
|
|
|
|
430,877
|
|
518,324
|
|
|
|
|
Non-current
liabilities
|
|
|
|
Share-based
compensation
|
8,210
|
|
13,816
|
Long-term
debt
|
580,000
|
|
467,867
|
Fair value of interest
rate swap agreements
|
7,674
|
|
—
|
Finance lease
obligations
|
10,789
|
|
5,451
|
Post-employment
benefit obligations
|
9,250
|
|
9,227
|
Other
liabilities
|
119,110
|
|
117,589
|
Deferred income
taxes
|
11,528
|
|
14,031
|
|
|
|
|
|
746,561
|
|
627,981
|
|
|
|
|
Total
liabilities
|
1,177,438
|
|
1,146,305
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Share
capital
|
852,379
|
|
856,761
|
Deficit
|
(179,721)
|
|
(148,060)
|
Hedging reserves and
other
|
(3,678)
|
|
1,332
|
Contributed
surplus
|
7,815
|
|
1,647
|
Cumulative translation
adjustment
|
2,301
|
|
(2,817)
|
|
|
|
|
Total equity
attributable to owners of Cineplex
|
679,096
|
|
708,863
|
Non-controlling
interests
|
(85)
|
|
—
|
|
|
|
|
Total
equity
|
679,011
|
|
708,863
|
|
|
|
|
|
$
|
1,856,449
|
|
$
|
1,855,168
|
Cineplex
Inc.
|
Consolidated
Statements of Operations
|
(expressed in
thousands of Canadian dollars, except per share
amounts)
|
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
Box office
|
$
|
182,352
|
|
$
|
185,048
|
|
$
|
724,244
|
|
$
|
715,605
|
Food
service
|
120,726
|
|
119,514
|
|
475,501
|
|
441,876
|
Media
|
58,218
|
|
61,519
|
|
165,009
|
|
171,874
|
Amusement
|
53,473
|
|
49,300
|
|
205,793
|
|
185,341
|
Other
|
13,414
|
|
10,912
|
|
44,276
|
|
40,371
|
|
|
|
|
|
|
|
|
|
428,183
|
|
426,293
|
|
1,614,823
|
|
1,555,067
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
Film cost
|
91,562
|
|
98,734
|
|
379,325
|
|
376,759
|
Cost of food
service
|
26,138
|
|
26,935
|
|
100,191
|
|
99,438
|
Depreciation and
amortization
|
34,799
|
|
31,390
|
|
131,852
|
|
119,916
|
Loss on disposal of
assets
|
1,064
|
|
369
|
|
2,697
|
|
706
|
Other
costs
|
228,565
|
|
220,930
|
|
878,735
|
|
843,219
|
Share of income of
joint ventures and associates
|
(898)
|
|
(913)
|
|
(3,748)
|
|
(3,486)
|
Interest
expense
|
10,729
|
|
6,596
|
|
30,690
|
|
22,734
|
Interest
income
|
(69)
|
|
(59)
|
|
(274)
|
|
(222)
|
Foreign
exchange
|
(1,750)
|
|
(47)
|
|
(2,191)
|
|
810
|
Change in fair value
of financial instrument
|
—
|
|
94
|
|
—
|
|
(2,643)
|
|
|
|
|
|
|
|
|
|
390,140
|
|
384,029
|
|
1,517,277
|
|
1,457,231
|
|
|
|
|
|
|
|
|
Income before
income taxes
|
38,043
|
|
42,264
|
|
97,546
|
|
97,836
|
|
|
|
|
|
|
|
|
Provision for
income taxes
|
|
|
|
|
|
|
|
Current
|
9,572
|
|
13,246
|
|
27,573
|
|
26,626
|
Deferred
|
1,317
|
|
232
|
|
(6,983)
|
|
864
|
|
|
|
|
|
|
|
|
|
10,889
|
|
13,478
|
|
20,590
|
|
27,490
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
27,154
|
|
$
|
28,786
|
|
$
|
76,956
|
|
$
|
70,346
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
|
|
Owners of
Cineplex
|
$
|
27,179
|
|
$
|
28,786
|
|
$
|
77,053
|
|
$
|
70,763
|
Non-controlling
interests
|
(25)
|
|
—
|
|
(97)
|
|
(417)
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
27,154
|
|
$
|
28,786
|
|
$
|
76,956
|
|
$
|
70,346
|
|
|
|
|
|
|
|
|
Basic net income
per share attributable to owners of
Cineplex
|
$
|
0.43
|
|
$
|
0.45
|
|
$
|
1.22
|
|
$
|
1.11
|
Diluted net income
per share attributable to owners of
Cineplex
|
$
|
0.43
|
|
$
|
0.45
|
|
$
|
1.22
|
|
$
|
1.11
|
Cineplex
Inc.
|
|
|
|
Consolidated
Statements of Comprehensive Income
|
|
|
|
(expressed in
thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
27,154
|
|
$
|
28,786
|
|
$
|
76,956
|
|
$
|
70,346
|
|
|
|
|
|
|
|
|
Other
comprehensive (loss)income
|
|
|
|
|
|
|
|
Items that will be
reclassified subsequently to net income:
|
|
|
|
|
|
|
|
Loss (income) on
hedging instruments
|
(9,593)
|
|
1,012
|
|
(7,008)
|
|
6,147
|
Associated deferred
income taxes expense
|
2,648
|
|
(271)
|
|
1,998
|
|
(1,645)
|
Foreign currency
translation adjustment
|
2,968
|
|
275
|
|
5,118
|
|
(3,918)
|
|
|
|
|
|
|
|
|
Items that will
not be reclassified to net income:
|
|
|
|
|
|
|
|
Actuarial gains
(losses) of post-employment benefit
obligations
|
296
|
|
(582)
|
|
296
|
|
716
|
Associated deferred
income taxes (expense) recovery
|
(79)
|
|
157
|
|
(79)
|
|
(191)
|
|
|
|
|
|
|
|
|
Other
comprehensive (loss) income
|
(3,760)
|
|
591
|
|
325
|
|
1,109
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
$
|
23,394
|
|
$
|
29,377
|
|
$
|
77,281
|
|
$
|
71,455
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
|
|
Owners of
Cineplex
|
$
|
23,419
|
|
$
|
29,377
|
|
$
|
77,378
|
|
$
|
71,861
|
Non-controlling
interests
|
(25)
|
|
—
|
|
(97)
|
|
(406)
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
$
|
23,394
|
|
$
|
29,377
|
|
$
|
77,281
|
|
$
|
71,455
|
Cineplex
Inc.
|
Consolidated
Statements of Changes in Equity
|
(expressed in
thousands of Canadian dollars)
|
For the years
ended December 31, 2018 and 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
Contributed
surplus
|
|
Hedging
reserves
and
other
|
|
Cumulative
translation
adjustment
|
|
Restated
Deficit
|
|
Non-
controlling
interests
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1,
2018
|
|
$
|
856,761
|
|
$
|
1,647
|
|
$
|
1,332
|
|
$
|
(2,817)
|
|
$
|
(148,060)
|
|
$
|
—
|
|
$
|
708,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
—
|
|
—
|
|
—
|
|
—
|
|
77,053
|
|
(97)
|
|
76,956
|
Other comprehensive
income
|
|
—
|
|
—
|
|
(5,010)
|
|
5,118
|
|
217
|
|
—
|
|
325
|
Total
comprehensive income
|
|
—
|
|
—
|
|
(5,010)
|
|
5,118
|
|
77,270
|
|
(97)
|
|
77,281
|
Dividends
declared
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(108,931)
|
|
—
|
|
(108,931)
|
Transfer on repayment
of convertible
debentures
|
|
(4,471)
|
|
4,471
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Share option
expense
|
|
—
|
|
1,718
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,718
|
Issuance of shares on
exercise of options
|
|
89
|
|
(21)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
68
|
TGLP non-controlling
interests recognized on formation
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
12
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2018
|
|
$
|
852,379
|
|
$
|
7,815
|
|
$
|
(3,678)
|
|
$
|
2,301
|
|
$
|
(179,721)
|
|
$
|
(85)
|
|
$
|
679,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1,
2017
|
|
$
|
859,351
|
|
$
|
81
|
|
$
|
(3,170)
|
|
$
|
1,175
|
|
$
|
(108,342)
|
|
$
|
2,800
|
|
$
|
751,895
|
Impact of change in
accounting policy
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2,913)
|
|
—
|
|
(2,913)
|
Restated balance
at January 1, 2017
|
|
$
|
859,351
|
|
$
|
81
|
|
$
|
(3,170)
|
|
$
|
1,175
|
|
$
|
(111,255)
|
|
$
|
2,800
|
|
$
|
748,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
—
|
|
—
|
|
—
|
|
—
|
|
70,763
|
|
(417)
|
|
70,346
|
Other comprehensive
income
|
|
—
|
|
—
|
|
4,502
|
|
(3,929)
|
|
525
|
|
11
|
|
1,109
|
Total
comprehensive income
|
|
—
|
|
—
|
|
4,502
|
|
(3,929)
|
|
71,288
|
|
(406)
|
|
71,455
|
Dividends
declared
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(105,358)
|
|
—
|
|
(105,358)
|
Share option
expense
|
|
—
|
|
1,822
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,822
|
Issuance of shares on
exercise of options
|
|
256
|
|
(256)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Shares repurchased
and cancelled
|
|
(2,846)
|
|
—
|
|
—
|
|
—
|
|
(5,192)
|
|
—
|
|
(8,038)
|
WGN non-controlling
interests recognized on acquisition
|
|
—
|
|
—
|
|
—
|
|
(63)
|
|
2,457
|
|
(2,394)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2017
|
|
$
|
856,761
|
|
$
|
1,647
|
|
$
|
1,332
|
|
$
|
(2,817)
|
|
$
|
(148,060)
|
|
$
|
—
|
|
$
|
708,863
|
Cineplex
Inc.
|
Consolidated
Statements of Cash Flows
|
(expressed in
thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2018
|
2017
|
|
2018
|
2017
|
Cash provided by
(used in)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
Net income
|
$
|
27,154
|
$
|
28,786
|
|
$
|
76,956
|
$
|
70,346
|
Adjustments to
reconcile net income to net cash provided
by operating activities
|
|
|
|
|
|
Depreciation and
amortization of property, equipment
and leaseholds, and intangible assets
|
34,799
|
31,390
|
|
131,852
|
119,916
|
Amortization of
tenant inducements, rent averaging
liabilities and fair value lease contract liabilities
|
(2,323)
|
(2,862)
|
|
(11,106)
|
(10,362)
|
Unrealized foreign
exchange
|
(1,304)
|
1
|
|
(1,423)
|
(32)
|
Interest rate swap
agreements - non-cash interest
|
1,073
|
44
|
|
1,466
|
(200)
|
Accretion of
convertible debentures
|
605
|
566
|
|
2,420
|
2,263
|
Other non-cash
interest
|
893
|
164
|
|
1,194
|
638
|
Financing fees
included in interest expenses
|
1,718
|
—
|
|
1,718
|
—
|
Loss on disposal of
assets
|
1,064
|
369
|
|
2,697
|
706
|
Deferred income
taxes
|
1,317
|
232
|
|
(6,983)
|
864
|
Non-cash share-based
compensation
|
395
|
467
|
|
1,718
|
1,822
|
Change in fair value
of financial instruments
|
—
|
94
|
|
—
|
(2,643)
|
Net change in
interests in joint ventures and associates
|
620
|
(1,419)
|
|
(3,139)
|
(4,031)
|
Tenant
inducements
|
3,113
|
682
|
|
14,842
|
3,674
|
Changes in operating
assets and liabilities
|
15,969
|
60,319
|
|
(3,557)
|
(28,609)
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
85,093
|
118,833
|
|
208,655
|
154,352
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Proceeds from
disposal of assets, including asset-related
insurance recoveries
|
100
|
2,666
|
|
1,930
|
2,976
|
Purchases of
property, equipment and leaseholds
|
(24,547)
|
(46,871)
|
|
(110,120)
|
(170,511)
|
Acquisition of
businesses, net of cash acquired
|
—
|
—
|
|
(4,685)
|
(30,422)
|
Intangible assets
additions
|
(1,900)
|
(2,013)
|
|
(5,475)
|
(5,755)
|
Net cash received
from CDCP
|
684
|
550
|
|
4,266
|
4,165
|
|
|
|
|
|
|
Net cash used in
investing activities
|
(25,663)
|
(45,668)
|
|
(114,084)
|
(199,547)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Dividends
paid
|
(27,550)
|
(26,613)
|
|
(108,614)
|
(105,067)
|
Borrowings
(repayment) under credit facilities, net
|
71,000
|
(22,000)
|
|
111,000
|
169,000
|
Options exercised for
cash
|
—
|
—
|
|
68
|
—
|
Payments under
finance leases
|
(878)
|
(817)
|
|
(3,420)
|
(3,180)
|
Financing
fees
|
(1,718)
|
—
|
|
(1,718)
|
(183)
|
Shares repurchased
and cancelled
|
—
|
(2,031)
|
|
—
|
(8,038)
|
Repayment of
convertible debentures at maturity
|
(107,500)
|
—
|
|
(107,500)
|
—
|
|
|
|
|
|
|
Net cash (used in)
provided by financing activities
|
(66,646)
|
(51,461)
|
|
(110,184)
|
52,532
|
|
|
|
|
|
|
Effect of exchange
rate differences on cash
|
(104)
|
146
|
|
258
|
(293)
|
|
|
|
|
|
|
(Decrease)
increase in cash and cash equivalents
|
(7,320)
|
21,850
|
|
(15,355)
|
7,044
|
|
|
|
|
|
|
Cash and cash
equivalents - Beginning of period
|
32,562
|
18,747
|
|
40,597
|
33,553
|
|
|
|
|
|
|
Cash and cash
equivalents - End of period
|
$
|
25,242
|
$
|
40,597
|
|
$
|
25,242
|
$
|
40,597
|
|
|
|
|
|
|
Supplemental
information
|
|
|
|
|
|
Cash paid for
interest
|
$
|
8,033
|
$
|
4,676
|
|
$
|
26,841
|
$
|
20,908
|
Cash paid for income
taxes, net
|
$
|
6,781
|
$
|
5,146
|
|
$
|
29,048
|
$
|
20,132
|
Cineplex
Inc.
|
Consolidated
Supplemental Information
|
(Unaudited)
|
(expressed in
thousands of Canadian dollars)
|
|
|
Reconciliation to
Adjusted EBITDA
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2018
|
2017
|
|
2018
|
2017
|
Net
income
|
$
|
27,154
|
$
|
28,786
|
|
$
|
76,956
|
$
|
70,346
|
|
|
|
|
|
|
Depreciation and
amortization
|
34,799
|
31,390
|
|
131,852
|
119,916
|
Interest
expense
|
10,729
|
6,596
|
|
30,690
|
22,734
|
Interest
income
|
(69)
|
(59)
|
|
(274)
|
(222)
|
Current income tax
expense
|
9,572
|
13,246
|
|
27,573
|
26,626
|
Deferred income tax
expense (recovery)
|
1,317
|
232
|
|
(6,983)
|
864
|
|
|
|
|
|
|
EBITDA
|
$
|
83,502
|
$
|
80,191
|
|
$
|
259,814
|
$
|
240,264
|
|
|
|
|
|
|
Loss on disposal of
assets
|
1,064
|
369
|
|
2,697
|
706
|
CDCP equity income
(i)
|
(1,311)
|
(1,011)
|
|
(4,186)
|
(3,480)
|
Foreign exchange
(gain) loss
|
(1,750)
|
(47)
|
|
(2,191)
|
810
|
Non-controlling
interest
|
25
|
—
|
|
78
|
189
|
Depreciation and
amortization - joint ventures and associates (ii)
|
26
|
5
|
|
33
|
32
|
Taxes and interest of
joint ventures and associates (ii)
|
81
|
13
|
|
120
|
51
|
Change in fair value
of financial instrument
|
—
|
94
|
|
—
|
(2,643)
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
81,637
|
$
|
79,614
|
|
$
|
256,365
|
$
|
235,929
|
(i)
|
CDCP equity income
not included in adjusted EBITDA as CDCP is a limited-life financing
vehicle that is funded by virtual print fees collected from
distributors.
|
(ii)
|
Includes the joint
ventures and associates with the exception of CDCP (see (i)
above).
|
Cineplex
Inc.
|
Consolidated
Supplemental Information
|
(Unaudited)
|
(expressed in
thousands of Canadian dollars, except number of shares and per
share data)
|
|
|
Adjusted Free Cash
Flow
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
|
|
|
|
|
|
2018
|
2017
|
|
2018
|
2017
|
|
|
|
|
|
|
Cash provided by
operating activities
|
$
|
85,093
|
$
|
118,833
|
|
$
|
208,655
|
$
|
154,352
|
Less: Total capital
expenditures (i)
|
(24,447)
|
(44,205)
|
|
(108,190)
|
(167,535)
|
|
|
|
|
|
|
Standardized free
cash flow
|
60,646
|
74,628
|
|
100,465
|
(13,183)
|
|
|
|
|
|
|
Add/(Less):
|
|
|
|
|
|
Changes in operating
assets and liabilities
|
(15,969)
|
(60,319)
|
|
3,557
|
28,609
|
Changes in operating
assets and liabilities of joint ventures and
associates
|
(1,518)
|
506
|
|
(609)
|
545
|
Tenant
inducements
|
(3,113)
|
(682)
|
|
(14,842)
|
(3,674)
|
Principal component
of financing lease obligations
|
(878)
|
(817)
|
|
(3,420)
|
(3,180)
|
New build capital
expenditures and other
|
19,871
|
37,553
|
|
88,941
|
137,037
|
Share of income of
joint ventures and associates, net of non-cash
depreciation
|
(306)
|
(80)
|
|
(285)
|
89
|
Non-controlling
interest
|
25
|
—
|
|
78
|
189
|
Net cash received
from CDCP (iv)
|
684
|
550
|
|
4,266
|
4,165
|
Adjusted free cash
flow
|
$
|
59,442
|
$
|
51,339
|
|
$
|
178,151
|
$
|
150,597
|
|
|
|
|
|
|
Average number of
Shares outstanding
|
63,333,137
|
63,350,216
|
|
63,332,159
|
63,473,583
|
|
|
|
|
|
|
Adjusted free cash
flow per Share
|
$
|
0.939
|
$
|
0.810
|
|
$
|
2.813
|
$
|
2.373
|
|
|
|
|
|
|
|
|
|
|
Dividends
declared
|
$
|
0.435
|
$
|
0.420
|
|
$
|
1.720
|
$
|
1.660
|
(i)
|
Changes in operating
assets and liabilities are not considered a source or use of
adjusted free cash flow.
|
(ii)
|
Tenant inducements
received are for the purpose of funding new theatre capital
expenditures and are not considered a source of adjusted free cash
flow.
|
(iii)
|
Growth capital
expenditures and other represent expenditures on Board approved
projects, exclude maintenance capital expenditures, and are net of
proceeds on asset sales. Cineplex's revolving facility is
available to fund Board approved projects.
|
(iv)
|
Excludes the share of
income of CDCP, as CDCP is a limited-life financing vehicle funded
by virtual print fees collected from distributors. Cash
invested into CDCP, as well as cash distributions received from
CDCP, are considered to be uses and sources of adjusted free cash
flow.
|
SOURCE Cineplex