TORONTO, May 9, 2019 /CNW/
- (TSX: CGX) - Cineplex Inc. ("Cineplex") today released its
financial results for the three months ended March 31, 2019. Unless otherwise specified,
all amounts are in Canadian dollars.
First Quarter Results
|
|
|
|
|
2019
|
2018
|
Period over
Period
Change (i)
|
Total
revenues
|
$
|
364.9
|
million
|
$
|
390.9
|
million
|
-6.6%
|
Theatre
attendance
|
15.0
|
million
|
17.8
|
million
|
-15.6%
|
Net (loss)
income
|
$
|
(7.4)
|
million
|
$
|
15.2
|
million
|
NM
|
Box office
revenues per patron ("BPP") (ii)
|
$
|
10.44
|
|
$
|
10.21
|
|
2.3%
|
Concession
revenues per patron ("CPP") (ii)
|
$
|
6.35
|
|
$
|
6.09
|
|
4.3%
|
Adjusted EBITDA
(ii)
|
$
|
77.4
|
million
|
$
|
53.5
|
million
|
44.7%
|
Adjusted EBITDAaL
(ii) (iii)
|
$
|
34.3
|
million
|
$
|
49.5
|
million
|
-30.6%
|
Adjusted EBITDAaL
margin (ii) (iii)
|
9.4%
|
|
12.7%
|
|
-3.3%
|
Adjusted free cash
flow (ii)
|
$
|
29.1
|
million
|
$
|
38.6
|
million
|
-24.6%
|
Adjusted free cash
flow per common share of
Cineplex ("Share") (ii)
|
$
|
0.460
|
|
$
|
0.609
|
|
-24.5%
|
Earnings per Share
("EPS") - basic
|
$
|
(0.12)
|
|
$
|
0.24
|
|
NM
|
EPS -
diluted
|
$
|
(0.12)
|
|
$
|
0.24
|
|
NM
|
i.
|
Period over period
change calculated based on thousands of dollars except percentage
and per share values. Changes in percentage amounts are
calculated as 2019 value less 2018 value.
|
ii.
|
Adjusted EBITDA,
adjusted EBITDAaL, adjusted EBITDAaL margin, adjusted free cash
flow per common share of Cineplex, BPP and CPP are measures that do
not have a standardized meaning under generally accepted accounting
principles ("GAAP"). These measures as well as other Non-GAAP
financial measures reported by Cineplex are defined in the
'Non-GAAP Financial Measures' section at the end of this news
release.
|
iii.
|
Prior period figures
have been revised to conform to current period
presentation.
|
"Although the Q1 results were impacted by the anticipated soft
box office product, we continued to execute upon our
diversification strategy and are encouraged by the results from our
new businesses which resulted in Q1 records for media revenue,
amusement revenue and other revenue," said Ellis Jacob, President and CEO, Cineplex.
"Total revenue for the first quarter of 2019 decreased 6.6% due
to a 13.7% decrease in box office and an 11.9% decrease in food
service. These decreases can largely be attributed to the 15.6%
decrease in theatre attendance, which was a result of the quarter's
expected weaker film product and the tough comparator quarter with
last year's record success of the film Black Panther.
Partially offsetting the theatre attendance decline is a record
first quarter box office per patron of $10.44, and record first quarter concession per
patron of $6.35, which increased
$0.23 and $0.26 respectively from the prior year
period. Although there was a decrease in box office revenue
in Q1, this was expected given the January and February 2019 release schedule. As we look
to Q2 and beyond we are encouraged by the recent record-breaking
performance of Avengers: Endgame, which had the largest
global opening weekend ever, and are confident in the strong film
product scheduled for the remainder of the year.
As we continue to grow our diversified businesses, partially
offsetting the Exhibition business decreases was a 17.2% increase
in amusement revenue to an all-time quarterly record of
$58.5 million as a result of P1AG and
The Rec Room; and a 7.7% increase in total media revenue to a Q1
record of $35.0 million, largely due
to a 21.9% increase in digital place-based media revenue as a
result of higher project installation revenue.
The Q1 results are significantly impacted by the adoption of
International Financial Reporting Standards ("IFRS") 16 - Leases
and we encourage you to refer to our Financial Statements and
MD&A for further details. For the quarter, adjusted
EBITDAaL (adjusted EBITDA after lease payments) decreased 30.6%
primarily as a result of the theatre attendance decline as a result
of the soft box office. Net income was negatively impacted by
approximately $3.3M related to the
adoption of IFRS 16 in the current period and approximately
$6.4 million or $0.10 per share as compared to Q1 2018.
Key accomplishments during the quarter included the opening of
our sixth location of The Rec Room in Mississauga, Ontario; the expansion of alcohol
beverage service to an additional 19 theatre locations, now
totaling 54 locations; and our SCENE loyalty program reached 9.7
million members.
Although the first quarter film product was soft, the second
quarter has been strong and we are encouraged by the outlook of the
2019 film slate. We remain 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. As such, we are
pleased to announce a 3.4% dividend increase to $1.80 per share on an annual basis from the
current $1.74 per share. This
increase will be effective with the May
2019 dividend, which will be paid in June 2019."
KEY DEVELOPMENTS IN THE FIRST QUARTER OF 2019
The following describes certain key business initiatives
undertaken and results achieved during the first quarter of 2019 in
each of Cineplex's core business areas:
FILM ENTERTAINMENT AND CONTENT
Theatre Exhibition
- Reported first quarter box office revenues of $156.5 million, a decrease of $24.9 million (13.7%) from $181.4 million reported in the prior year period
due to a 15.6% decrease in theatre attendance from 17.8 million in
2018 to 15.0 million in the first quarter of 2019 due to a weaker
film slate.
- BPP was $10.44, a first quarter
record for Cineplex, an increase of $0.23 (2.3%) over the prior year period BPP of
$10.21.
Theatre Food Service
- Reported first quarter theatre food service revenues of
$95.2 million, a decrease of
$13.1 million (12.1%) from
$108.2 million reported in the prior
year period as a result of the decrease in theatre attendance.
- CPP was $6.35 for the period, a
first quarter record for Cineplex, and $0.26 (4.3%) higher than the prior year
period.
- During the quarter, Cineplex added alcohol beverage service to
an additional 19 theatres, now totalling 54 (excluding VIP).
Alternative Programming
- Alternative Programming (Cineplex Events) in the first quarter
of 2019 included the release of Dragon Ball Super: Broly,
Carmen from The Metropolitan Opera and the concert event BTS
World Tour: Love Yourself in Seoul.
- Cineplex international film for the first quarter of 2019
included strong performances from The Wandering Earth and
Gully Boy.
Digital Commerce
- Total registered users for Cineplex Store increased by 42% in
the first quarter of 2019 as compared to the prior year
period.
- Online and mobile ticketing represented 30% of total admission
during the first quarter, up from 26% in the prior year
period.
- Cineplex Store registered a 107% increase in device activation
over the prior year period.
- Monthly active users of The Cineplex Store increased by 57% as
compared to the prior year period.
MEDIA
- Reported a first quarter record for total media revenues of
$35.0 million, an increase of
$2.5 million, or 7.7% as compared to
the prior year period.
Cinema Media
- First quarter cinema media revenues of $21.4 million increased nominally from
$21.3 million in the prior year
period despite the significant theatre attendance decline.
Digital Place-Based Media
- Reported a first quarter record with revenues of $13.6 million, an increase of $2.4 million (21.9%) compared to the prior year
period due to higher project installation revenues.
AMUSEMENT AND LEISURE
Amusement Solutions
- Reported an all-time quarterly record with revenues of
$50.5 million ($2.8 million from Cineplex theatre gaming and
$47.7 million from all other sources
of revenues), an increase of $7.5
million (17.4%) over the prior year period. The increase was
primarily due to an increase in distribution sales and increased
route revenues in the United
States.
Location Based Entertainment
- The Rec Room reported first quarter revenues of
$16.4 million which included food
service revenues of $7.9 million and
amusement revenues of $8.0
million.
- On March 18, 2019, opened The
Rec Room at Square One Shopping Centre in Mississauga, Ontario, the sixth location of
The Rec Room.
- During the quarter, Cineplex announced plans to open
Atlantic Canada's first
Playdium location in Dartmouth,
Nova Scotia at the Dartmouth Crossing Shopping
Centre, scheduled to open in 2020.
eSports
- On March 24, 2019, WGN hosted the
Madden 19 Canadian Challenge held at Live Nations's The
Lounge in Toronto.
- During the first quarter, WGN hosted the Winnipeg Jets NHL
19 Tournament with the finals held at the Bell MTS Place
in Winnipeg on February 18, 2019.
LOYALTY
- Membership in the SCENE loyalty program increased by 0.1
million members in the period, reaching 9.7 million members at
March 31, 2019.
CORPORATE
- During the quarter, Cineplex was named by Waterstone Human
Capital one of Canada's 10 Most
Admired Corporate Cultures in the large enterprise category for
2018, the third time that Cineplex has won the award that
celebrates best-in-class Canadian organizations.
OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2019
Total revenues
Total revenues for the three months ended March 31, 2019 decreased $25.9 million (6.6%) to $364.9 million as compared to the prior year
period. A discussion of the factors affecting the changes in box
office, food service, media, amusement and other revenues for the
period is provided below.
Non-GAAP measures discussed throughout this news release,
including adjusted EBITDA, adjusted EBITDAaL, adjusted free cash
flow, theatre attendance, BPP, premium priced product, same theatre
metrics, CPP, film cost percentage, food service cost percentage
and concession margin per patron are defined and discussed in the
Non-GAAP measures section of this news release.
Box office revenues
The following table highlights the movement in box office
revenues, theatre attendance and BPP for the quarter (in thousands
of dollars, except theatre attendance reported in thousands of
patrons and per patron amounts, unless otherwise noted):
|
|
Box office
revenues
|
First
Quarter
|
|
2019
|
2018
|
Change
|
|
|
|
|
Box office
revenues
|
$
|
156,496
|
$
|
181,380
|
-13.7%
|
Theatre attendance
(i)
|
14,988
|
17,765
|
-15.6%
|
Box office revenue
per patron (i)
|
$
|
10.44
|
$
|
10.21
|
2.3%
|
BPP excluding premium
priced product (i)
|
$
|
9.03
|
$
|
8.79
|
2.7%
|
Canadian industry
revenues (ii)
|
|
|
-13.1%
|
Same theatre box
office revenues (i)
|
$
|
152,958
|
$
|
180,279
|
-15.2%
|
Same theatre
attendance (i)
|
14,700
|
17,684
|
-16.9%
|
% Total box from
premium priced product (i)
|
40.9%
|
41.1%
|
-0.2%
|
(i) See Non-GAAP
measures section of this news release.
|
(ii) Source: Gross
box office receipts (inclusive of all taxes) from The Movie Theatre
Association of Canada industry data adjusted for calendar quarter
dates.
|
|
|
Box office
continuity
|
First
Quarter
|
|
Box
Office
|
Theatre
Attendance
|
2018 as
reported
|
$
|
181,380
|
17,765
|
Same theatre
attendance change
|
(30,426)
|
(2,985)
|
Impact of same
theatre BPP change
|
3,105
|
—
|
New and acquired
theatres (i)
|
3,538
|
288
|
Disposed and closed
theatres (i)
|
(1,101)
|
(80)
|
2019 as
reported
|
$
|
156,496
|
14,988
|
(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.
|
|
|
|
|
|
|
First Quarter 2019
Top Cineplex Films
|
3D
|
%
Box
|
First Quarter 2018
Top Cineplex Films
|
3D
|
%
Box
|
1
|
Captain
Marvel
|
√
|
16.3%
|
1
|
Black
Panther
|
√
|
22.2%
|
2
|
How To Train Your
Dragon: The Hidden World
|
√
|
7.2%
|
2
|
Jumanji: Welcome To
The Jungle
|
√
|
10.1%
|
3
|
Aquaman
|
√
|
7.0%
|
3
|
Star Wars: The Last
Jedi
|
√
|
5.8%
|
4
|
The Lego Movie 2: The
Second Part
|
√
|
5.1%
|
4
|
Peter
Rabbit
|
|
3.8%
|
5
|
Spider-Man: Into The
Spider-Verse
|
√
|
4.3%
|
5
|
Fifty Shades
Freed
|
|
3.3%
|
Box office revenues decreased $24.9
million, or 13.7%, to $156.5
million during the first quarter of 2019, compared to
$181.4 million reported in the same
period in 2018. The decrease was due to the 15.6% decrease in
theatre attendance to 15.0 million guests, partially offset by
higher BPP. The theatre attendance decrease was due to the
weaker film slate in the first quarter of 2019 compared to the
first quarter of 2018. The prior year period is a tough comparator
due to the success of Black Panther which became the third
highest grossing film of all-time in North America, and the carryover strength of
Star Wars: The Last Jedi and Jumanji: Welcome To The
Jungle from the fourth quarter of 2017.
BPP for the three months ended March 31,
2019 was $10.44, a
$0.23 increase (2.3%) from the prior
year period, and a first quarter record for Cineplex. The
increase in BPP was 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 (in thousands
of dollars, except theatre attendance and same theatre attendance
reported in thousands of patrons and per patron amounts):
|
|
Food service
revenues
|
First
Quarter
|
|
2019
|
2018
|
Change
|
|
|
|
|
Food service -
theatres
|
$
|
95,172
|
$
|
108,230
|
-12.1%
|
Food service - The
Rec Room
|
7,886
|
8,718
|
-9.5%
|
Total food service
revenues
|
$
|
103,058
|
$
|
116,948
|
-11.9%
|
|
|
|
|
Theatre attendance
(i)
|
14,988
|
17,765
|
-15.6%
|
CPP (i)
(ii)
|
$
|
6.35
|
$
|
6.09
|
4.3%
|
Same theatre food
service revenues (i)
|
$
|
92,309
|
$
|
107,551
|
-14.2%
|
Same theatre
attendance (i)
|
14,700
|
17,684
|
-16.9%
|
|
|
|
|
(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
|
First
Quarter
|
|
Theatre Food
Service
|
Theatre
Attendance
|
2018 as
reported
|
$
|
108,230
|
17,765
|
Same theatre
attendance change
|
(18,152)
|
(2,985)
|
Impact of same
theatre CPP change
|
2,909
|
—
|
New and acquired
theatres (i)
|
2,863
|
288
|
Disposed and closed
theatres (i)
|
(678)
|
(80)
|
2019 as
reported
|
$
|
95,172
|
14,988
|
(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.
|
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. Food service revenues
decreased $13.9 million, or 11.9%
mainly as a result of the $13.1
million (12.1%) decrease in theatre food service revenue.
The decrease in theatre food service revenue resulted from the
15.6% decrease in theatre attendance, partially offset by the 4.3%
($0.26) increase in CPP to
$6.35. Food service revenue from
The Rec Room is not included in the CPP calculation.
Food services revenues from The Rec Room decreased
$0.8 million (9.5%) compared to the
prior year period to $7.9 million as
bad winter weather conditions in the first quarter reduced evening
business at several locations resulting in the food service
decline. In addition, locations which have been opened for 12 to 24
months begin to move past the honeymoon phase and begin to settle
into their expected long-term run-rate levels. Newer
locations of The Rec Room typically experience higher sales
volumes in the first year of operations.
CPP of $6.35 is a first quarter
record for Cineplex. Expanded offerings outside of core 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
in the period.
Media revenues
The following table highlights the movement in media revenues
for the quarter (in thousands of dollars):
|
|
Media
revenues
|
First
Quarter
|
|
2019
|
2018
|
Change
|
|
|
|
|
Cinema
media
|
$
|
21,383
|
$
|
21,332
|
0.2%
|
Digital place-based
media
|
13,630
|
11,181
|
21.9%
|
Total media
revenues
|
$
|
35,013
|
$
|
32,513
|
7.7%
|
Total media revenues increased $2.5
million (7.7%) compared to the prior year period to a first
quarter record of $35.0
million. Cinema media revenues increased nominally
(0.2%) compared to the prior year period despite the significant
theatre attendance decline. This increase was due to a 21.9%
or $2.4 million increase in digital
place-based media revenues as a result of higher project
installation revenues. During the quarter, digital
place-based media added 345 new locations for a total of 13,847
locations (an increase of 5% over the prior year period).
Amusement Revenues
The following table highlights the movement in amusement
revenues for the quarter (in thousands of dollars):
|
|
Amusement
revenues
|
First
Quarter
|
|
2019
|
2018
|
Change
|
|
|
|
|
Amusement - P1AG
excluding Cineplex exhibition and The Rec Room
(i)
|
$
|
47,673
|
$
|
40,238
|
18.5%
|
Amusement - Cineplex
exhibition (i)
|
2,784
|
2,737
|
1.7%
|
Amusement - The
Rec Room
|
8,043
|
6,930
|
16.1%
|
Total amusement
revenues
|
$
|
58,500
|
$
|
49,905
|
17.2%
|
(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 The Rec Room reflects
P1AG's gross amusement revenues, net of the venue revenue share
paid to Cineplex
reflected in Amusement - Cineplex exhibition above.
|
Amusement revenues increased 17.2%, or $8.6 million, to an all-time quarterly record of
$58.5 million in the first quarter of
2019 compared to the prior year period. The growth was due to an
increase in distribution sales as well as in route revenues in
the United States in part due to
the Cinemark agreement signed in the second quarter of 2018.
The additional location of The Rec Room in the current year
contributed to an increase of $1.1
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 (in
thousands of dollars):
|
|
Other
revenues
|
First
Quarter
|
|
2019
|
2018
|
Change
|
Other
revenues
|
$
|
11,871
|
$
|
10,126
|
17.2%
|
Film cost
The following table highlights the movement in film cost and the
film cost percentage for the quarter (in thousands of dollars,
except film cost percentage):
|
|
Film
cost
|
First
Quarter
|
|
2019
|
2018
|
Change
|
|
|
|
|
Film cost
|
$
|
78,721
|
$
|
95,204
|
-17.3%
|
Film cost percentage
(i)
|
50.3%
|
52.5%
|
-2.2%
|
(i) See Non-GAAP
measures section of this news release.
|
Film cost varies primarily with box office revenues, and can
vary from quarter to quarter based on the relative strength of the
titles exhibited during the period. This is due to film cost terms
varying by title and distributor. Film cost percentage during the
first quarter of 2019 was 50.3%, a 2.2% decrease from the prior
year period. The decrease in film cost percentage is
attributable to the reduced concentration of box office revenues
from a few titles, with the top five film in the current period
accounting for only 39.9% of box office revenues in the period
(2018 - 45.2%). Top films tend to have higher settlement
rates than the other films in the slate due to their strong
performance.
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 (in thousands of dollars,
except percentages and margins per patron):
|
|
Cost of food
service
|
First
Quarter
|
|
2019
|
2018
|
Change
|
|
|
|
|
Cost of food service
- theatre
|
$
|
21,271
|
$
|
22,436
|
-5.2%
|
Cost of food service
- The Rec Room
|
2,165
|
2,340
|
-7.5%
|
Total cost of food
service
|
$
|
23,436
|
$
|
24,776
|
-5.4%
|
|
|
|
|
Theatre concession
cost percentage (i)
|
22.4%
|
20.7%
|
1.7%
|
The Rec Room
food cost percentage (i)
|
27.5%
|
26.8%
|
0.7%
|
Theatre concession
margin per patron (i)
|
$
|
4.93
|
$
|
4.83
|
2.1%
|
|
(i) See Non-GAAP
measures section of this news release.
|
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 of food and beverage items sold.
The decrease in the theatre cost of food service compared to the
prior year period was due to the lower theatre food service
revenues which was partly offset by the increase in the theatre
concession cost percentage from 20.7% in the prior year period to
22.4% in 2019.
The theatre concession margin per patron increased 2.1% from
$4.83 in the first quarter of 2018 to
$4.93 in the same period in 2019,
reflecting the impact of the higher CPP during the period.
The decrease in The Rec Room cost of food service as
compared to the prior year period was due to the lower food service
revenues.
Depreciation and amortization
The following table highlights the movement in depreciation and
amortization expenses during the quarter (in thousands of
dollars):
|
|
Depreciation and
amortization expenses
|
First
Quarter
|
|
2019
|
2018
|
Change
|
|
|
|
|
Depreciation of
property, equipment and leaseholds
|
$
|
28,857
|
$
|
27,259
|
5.9%
|
Amortization of
intangible assets and other
|
3,998
|
3,935
|
1.6%
|
Sub-total -
depreciation and amortization - other assets
|
$
|
32,855
|
$
|
31,194
|
5.3%
|
Depreciation -
right-of-use assets
|
36,462
|
—
|
NM
|
Total depreciation
and amortization
|
$
|
69,317
|
$
|
31,194
|
122.2%
|
The quarterly increase in depreciation of property, equipment
and leaseholds of $1.6 million (5.9%)
is primarily due to investments in the amusement and leisure
businesses, including the opening of The Rec Room at the
Square One Shopping Centre.
The increase of $0.1 million
(1.6%) in the amortization of intangible assets was primarily due
to internally developed software for digital products including the
Cineplex mobile app and website platform.
The quarterly increase in depreciation of right-of-use assets
was as a result of the adoption of IFRS 16. The right-of-use
assets are depreciated over the lease term. The current
quarter expense represents the depreciation charge for the
quarter.
Loss on disposal of assets
The following table shows the movement in the loss on disposal
of assets during the quarter (in thousands of dollars):
|
|
Loss on disposal
of assets
|
First
Quarter
|
|
2019
|
2018
|
Change
|
|
|
|
|
Loss on disposal of
assets
|
$
|
477
|
$
|
210
|
127.1%
|
Other costs
Other costs include three main sub-categories of expenses;
theatre occupancy expenses, which capture the rent and associated
occupancy costs for Cineplex's theatre operations; other operating
expenses, which include the costs related to running Cineplex's
film entertainment and content, media, as well as amusement and
leisure; and general and administrative expenses, which includes
costs related to managing Cineplex's operations, including head
office expenses. Please see the discussions below for more details
on these categories.
The following table highlights the movement in other costs for
the quarter (in thousands of dollars):
|
|
Other
costs
|
First
Quarter
|
|
2019
|
2018
|
Change
|
|
|
|
|
Theatre occupancy
expenses (i)
|
$
|
18,407
|
$
|
51,898
|
-64.5%
|
Other operating
expenses (i)
|
148,183
|
147,407
|
0.5%
|
General and
administrative expenses (i)
|
18,852
|
18,149
|
3.9%
|
Total other
costs
|
$
|
185,442
|
$
|
217,454
|
-14.7%
|
(i) See Accounting
policies section of the Management's Discussion & Analysis
("MD&A").
|
Theatre occupancy expenses
The following table highlights the movement in theatre occupancy
expenses for the quarter (in thousands of dollars) with the prior
period presentation revised to provide comparability to the impact
of the transition to IFRS 16:
|
|
Theatre occupancy
expenses
|
First
Quarter
|
|
2019
|
Revised
2018
|
Change
|
|
|
|
|
Cash rent - theatre
(i) (vii)
|
$
|
39,879
|
$
|
38,470
|
3.7%
|
Other
occupancy
|
18,418
|
18,667
|
-1.3%
|
One-time items
(ii)
|
(179)
|
(1,272)
|
-85.9%
|
Total theatre
occupancy including cash lease payments
|
$
|
58,118
|
$
|
55,865
|
4.0%
|
|
|
|
|
Non-cash rent (iii)
(vi)
|
—
|
(2,978)
|
NM
|
Rent previously
recognized as a finance lease (iv)
|
—
|
(989)
|
NM
|
Cash rent related to
lease obligations (v)
|
(39,711)
|
—
|
NM
|
Theatre occupancy as
reported
|
$
|
18,407
|
$
|
51,898
|
-64.5%
|
(i) Represents the
cash payments for theatre rent during the quarter. See IFRS 16
transition section of the MD&A for a reconciliation from
previously reported
figures.
|
(ii) One-time items
include amounts related to both theatre rent and other theatre
occupancy costs. They are isolated here to illustrate
Cineplex's theatre rent
and other theatre occupancy costs excluding these one-time,
non-recurring items.
|
(iii) Non-cash rent
included in the 2018 balances in the previous reporting period. See
IFRS 16 transition section of the MD&A for a reconciliation
from
previously reported figures.
|
(iv) Rent payments
that were charged to the finance lease obligations in the previous
reporting period. See IFRS 16 transition section of the
MD&A
for a reconciliation
from previously reported figures.
|
(v) Cash rent that
has been reallocated to offset the lease obligations.
|
(vi) See Non-GAAP
measures section of this news release.
|
(vii) The 2019
balance includes $1.1 million of cash rent paid not pertaining to
the current period. See Non-GAAP measures section of this news
release.
|
|
|
Theatre occupancy
continuity
|
First
Quarter
|
|
Occupancy
|
2018 as
reported
|
$
|
51,898
|
Impact of new and
acquired theatres
|
750
|
Impact of disposed
theatres
|
(535)
|
Same theatre rent
change (i)
|
1,178
|
One-time
items
|
1,093
|
Other
|
(233)
|
|
|
Impact of IFRS 16
adoption:
|
|
|
|
Impact of non-cash
rent in prior period
|
2,978
|
Cash rent previously
recognized as a finance lease
|
989
|
Cash rent related to
lease obligations
|
(39,711)
|
2019 as
reported
|
$
|
18,407
|
(i) See Non-GAAP
measures section of this news release.
|
Theatre occupancy expenses as reported decreased $33.5 million (64.5%) during the first quarter of
2019 compared to the prior year period. This decrease was
primarily due to the impact of the adoption of IFRS 16 partially
offset by the impact of non-cash rent in the prior period.
Total theatre occupancy including cash lease payments increased
$2.2 million (4.0%) during the first
quarter of 2019 compared to the prior year period. This increase
was primarily due to a $1.2 million
increase in same theatre rent and a $1.1
million decrease in one-time credits. The increase in
same-theatre rent was due to the inclusion of the up front payments
of annual rent at one theatre location in the first quarter of 2019
in cash rent-theatre. In comparison, the prior year period includes
one quarter of rent expense for the location.
Other operating expenses
The following table highlights the movement in other operating
expenses during the quarter (in thousands of dollars) with the
prior period presentation revised to provide comparability to the
impact of the transition to IFRS 16:
|
|
Other operating
expenses
|
First
Quarter
|
|
2019
|
Revised
2018
|
Change
|
|
|
|
|
Theatre
payroll
|
$
|
36,710
|
$
|
38,293
|
-4.1%
|
Theatre operating
expenses
|
28,562
|
29,419
|
-2.9%
|
Media (i)
|
16,742
|
16,421
|
2.0%
|
P1AG (i)
|
40,965
|
35,719
|
14.7%
|
The Rec Room
(i) (ii)
|
11,148
|
10,540
|
5.8%
|
Location-based
entertainment pre-opening (i) (iii)
|
691
|
290
|
138.3%
|
SCENE
|
5,038
|
4,217
|
19.5%
|
Marketing
|
2,851
|
4,408
|
-35.3%
|
Other (iv)
|
9,809
|
8,205
|
19.5%
|
Other operating
expenses including cash lease payments
|
$
|
152,516
|
$
|
147,512
|
3.4%
|
Non-cash rent (v)
(vi)
|
—
|
(105)
|
NM
|
Cash rent related to
lease obligations (vii)
|
(4,333)
|
—
|
NM
|
Other operating
expenses as reported
|
$
|
148,183
|
147,407
|
0.5%
|
(i) Prior period
balances were revised to exclude non-cash rent. See IFRS 16
transition section of the MD&A for a reconciliation from
previously reported
figures.
|
(ii) Includes
operating costs of The Rec Room locations. Overhead
relating to management of The Rec Room portfolio are
included in the 'Other' line.
|
(iii) Includes
pre-opening costs of The Rec Room and Playdium
locations
|
(iv) Other category
includes overhead costs related to The Rec Room, operating
costs of WGN and other Cineplex internal departments.
|
(v) Non-cash rent
included in the 2018 balances in the previous reporting period. See
IFRS 16 transition section of the MD&A for a reconciliation
from
previously reported figures.
|
(vi) See Non-GAAP
measures section of this news release.
|
(vii) Cash rent that
has been reallocated to offset the lease obligations.
|
|
|
Other operating
continuity
|
First
Quarter
|
|
Other
Operating
|
2018 as
reported
|
$
|
147,407
|
Impact of new and
acquired theatres
|
2,069
|
Impact of disposed
theatres
|
(429)
|
Same theatre payroll
change (i)
|
(2,679)
|
Same theatre
operating expenses change (i)
|
(1,369)
|
Media operating
expenses change
|
321
|
P1AG operating
expenses change
|
5,246
|
The Rec Room
operating expenses change
|
608
|
Location-based
entertainment pre-opening change
|
401
|
SCENE
change
|
821
|
Marketing
change
|
(1,556)
|
Other
|
1,571
|
|
|
Impact of IFRS 16
adoption:
|
|
|
|
Non-cash rent in
prior period
|
105
|
Cash rent related to
lease obligations
|
(4,333)
|
2019 as
reported
|
$
|
148,183
|
(i) See Non-GAAP
measures section of this news release.
|
Other operating expenses during the first quarter of 2019
increased $0.8 million or 0.5%
compared to the prior year period. The increase was primarily
due to higher amusement and leisure costs related to P1AG due to
higher distribution sales as well as the impact of new and acquired
theatres. These were partially offset by the $2.7 million decrease in same theatre payroll and
the $1.4 million decrease in same
theatre operating expenses as a result of the lower business
volumes for theatre exhibition, a $1.6
million decrease in marketing due to the timing of campaigns
and $4.3 million of cash rent related
to the lease obligations arising upon the adoption of IFRS 16.
General and administrative expenses
The following table highlights the movement in general and
administrative ("G&A") expenses during the quarter, including
Share-based compensation costs, and G&A expenses net of these
costs (in thousands of dollars) with the prior period presentation
revised to provide comparability to the impact of the transition to
IFRS 16:
|
|
G&A
expenses
|
First
Quarter
|
|
2019
|
Revised
2018
|
Change
|
|
|
|
|
G&A excluding
LTIP and option plan expense (i)
|
$
|
17,828
|
$
|
17,773
|
0.3%
|
Restructuring
|
—
|
996
|
NM
|
LTIP (i)
|
762
|
(1,049)
|
NM
|
Option
plan
|
389
|
431
|
-9.7%
|
G&A expenses
including cash lease payments
|
$
|
18,979
|
$
|
18,151
|
4.6%
|
Non-cash rent (iii)
(iv)
|
—
|
(2)
|
NM
|
Cash rent included as
part of lease obligations (v)
|
(127)
|
—
|
NM
|
G&A expenses as
reported
|
$
|
18,852
|
$
|
18,149
|
3.9%
|
(i) Prior period
balance was revised to exclude non-cash rent. See IFRS 16
transition section of the MD&A for a reconciliation of
previously reported figures.
|
(ii) LTIP includes
the expense for the LTIP program as well as the expense for the
executive and Board deferred share unit plans.
|
(iii) Non-cash rent
included in the 2018 balances in the previous reporting
period. See IFRS 16 transition section of the MD&A for a
reconciliation of previously
reported figures.
|
(iv) See Non-GAAP
measures section of this news release.
|
(v) Cash rent that
has been reallocated to offset the lease obligations.
|
G&A expenses increased $0.7
million (4.6%) during the first quarter of 2019 compared to
the prior year period primarily due to a $1.8 million increase in LTIP expense. LTIP in
the first quarter reflected ongoing regular vesting and a
relatively flat share price during the period, compared to a
significant price decrease in the prior year period resulting in an
expense recovery. Professional fees increased by $0.8 million due in part to an increase in
consulting work including the software upgrade undertaken for IFRS
16.
EARNINGS BEFORE INTEREST, INCOME TAXES, DEPRECIATION AND
AMORTIZATION ("EBITDA") (see Non-GAAP measures section of this news
release)
The following table presents EBITDA, adjusted EBITDA and
adjusted EBITDAaL for the three months ended March 31, 2019 as compared to the prior year
periods (expressed in thousands of dollars, except adjusted
EBITDAaL margin):
|
|
EBITDA
|
First
Quarter
|
|
2019
|
2018
|
Change
|
|
|
|
|
EBITDA
|
$
|
76,690
|
$
|
54,890
|
39.7%
|
Adjusted
EBITDA
|
$
|
77,442
|
$
|
53,532
|
44.7%
|
Adjusted EBITDAaL
(i)
|
$
|
34,331
|
$
|
49,458
|
-30.6%
|
Adjusted EBITDAaL
margin (i)
|
9.4%
|
12.7%
|
-3.3%
|
(i) Prior period
figures have been revised to conform to current period
presentation. See IFRS 16 transition section of the
MD&A.
|
Adjusted EBITDAaL for the first quarter of 2019 decreased
$15.1 million, or 30.6%, as compared
to the prior year period. The decrease compared to the prior
year period was primarily due to a decline in box office and
theatre food service revenues as a result of reduced attendance.
Adjusted EBITDAaL margin, calculated as Adjusted EBITDAaL divided
by total revenues, was 9.4%, a decrease of 3.3% from 12.7% in the
prior year period due to lower theatre exhibition revenues and
higher contributions from lower margin businesses including
amusement and leisure.
ADJUSTED FREE CASH FLOW (see Non-GAAP measures section of
this news release)
For the first quarter of 2019, adjusted free cash flow per
common share of Cineplex was $0.46 as
compared to $0.61 in the prior year
period. The declared dividends per common share of Cineplex were
$0.44 in the first quarter of 2019
and $0.42 in the prior year period.
During the 12 months ended March 31,
2019, Cineplex generated adjusted free cash flow per Share
of 2.66, compared to $2.31 in the
prior 12 month period. Cineplex declared dividends per Share of
$1.74 and $1.68, respectively, in each 12 month period. The
payout ratios for these periods were 65.2% and 72.6%,
respectively.
NON-GAAP FINANCIAL MEASURES
EBITDA and Adjusted Free Cash Flow
EBITDA and adjusted free cash flow are not measures recognized
by GAAP and do not have standardized meanings in accordance with
such principles. Therefore, EBITDA and adjusted free cash
flow may not be comparable to similar measures presented by other
issuers. As a result of the adoption of IFRS 16,
Leases on January 1, 2019, new
non-GAAP measures including adjusted EBITDAaL and associated
adjusted EBITDAaL margin have been introduced to ensure
comparability of periods.
EBITDA is calculated by adding back to net income or net loss,
income tax expense, depreciation and amortization expense, and
interest income. Adjusted EBITDA excludes the change in fair
value of financial instrument, loss on disposal of assets, foreign
exchange gain, the equity income of CDCP, the non-controlling
interests' share of adjusted EBITDA of TG-CPX Limited Partnership,
and depreciation, amortization, interest and taxes of Cineplex's
other joint ventures and associates. Adjusted EBITDAaL
modifies adjusted EBITDA to deduct current period cash rent related
to lease obligations. Prior year adjusted EBITDAaL deducts rent
previously recognized as a reduction in finance lease obligations,
and non-cash rent previously presented as amortization of tenant
inducements, rent averaging liabilities, density right and
fair-value lease contract liabilities.
Cineplex's management believes that adjusted EBITDAaL is an
important supplemental measure of Cineplex's profitability at an
operational level and provides analysts and investors with
comparability in evaluating and valuing Cineplex's performance
period over period. EBITDA, adjusted for various unusual
items, is also used to define certain financial covenants in
Cineplex's Credit Facilities. Management calculates adjusted
EBITDAaL margin by dividing adjusted EBITDAaL by total
revenues.
Adjusted free cash flow is a non-GAAP measure generally used by
Canadian corporations, as an indicator of financial performance and
it should not be seen as a measure of liquidity or a substitute for
comparable metrics prepared in accordance with GAAP.
For a detailed reconciliation of net income or net loss to
EBITDA, adjusted EBITDA and adjusted EBITDAaL and from cash
provided by operating activities to adjusted free cash flow, please
refer to Cineplex's management's discussion and analysis filed on
www.sedar.com.
Earnings per Share Metrics
Cineplex has presented basic and diluted earnings per share net
of this item to provide a more comparable earnings per share metric
between the current periods and prior year periods. In the non-GAAP
measure, earnings is defined as net income or net loss excluding
the change in fair value of financial instrument.
Per Patron Revenue Metrics
Cineplex reviews per patron metrics as they relate to box office
revenue and theatre food service revenue such as BPP, CPP, BPP
excluding premium priced product, and concession margin per patron,
as these are key measures used by investors to value and assess
Cineplex's performance, and are widely used in the theatre
exhibition industry. Management of Cineplex defines these metrics
as follows:
Theatre Attendance: Theatre attendance is calculated as
the total number of paying patrons that frequent Cineplex's
theatres during the period.
BPP: Calculated as total box office revenues divided by
total paid theatre attendance for the period.
BPP excluding premium priced product: Calculated as total
box office revenues for the period, less box office revenues from
3D, 4DX, UltraAVX, VIP and IMAX product; divided by total paid
theatre attendance for the period, less paid theatre attendance for
3D, 4DX, UltraAVX, VIP and IMAX product.
CPP: Calculated as total theatre food service revenues
divided by total paid total theatre attendance for the period.
Premium priced product: Defined as 3D, 4DX, UltraAVX,
IMAX and VIP film product.
Theatre concession margin per patron: Calculated as total
theatre food service revenues less total theatre food service cost,
divided by theatre attendance for the period.
Same Theatre Analysis
Cineplex reviews and reports same theatre metrics relating to
box office revenues, theatre food service revenues, theatre rent
expense and theatre payroll expense, as these measures are widely
used in the theatre exhibition industry as well as other retail
industries.
Same theatre metrics are calculated by removing the results for
all theatres that have been opened, acquired, closed or otherwise
disposed of subsequent to the start of the prior year comparative
period. For the three months ended March 31, 2019 the impact of the four locations
that have been opened or acquired and two locations that have been
closed or otherwise disposed of 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.
Non-cash rent
Calculated as the total amortization of tenant inducements, rent
averaging liabilities, density rights and fair-value lease contract
liabilities. This accounting treatment was applicable under IAS 17
in 2018 but not applicable under IFRS 16 in 2019 and onwards.
Certain information included in this news release contains
forward-looking statements within the meaning of applicable
securities laws. These forward-looking statements include,
among others, statements with respect to Cineplex's objectives,
goals and strategies to achieve those objectives and goals, as well
as statements with respect to Cineplex's beliefs, plans,
objectives, expectations, anticipations, estimates and
intentions. The words "may", "will", "could", "should",
"would", "suspect", "outlook", "believe", "plan", "anticipate",
"estimate", "expect", "intend", "forecast", "objective" and
"continue" (or the negative thereof), and words and expressions of
similar import, are intended to identify forward-looking
statements.
By their very nature, forward-looking statements involve
inherent risks and uncertainties, including those described in
Cineplex's Annual Information Form ("AIF"), Cineplex's management's
discussion and analysis ("MD&A") and in this news
release. Those risks and uncertainties, both general and
specific, give rise to the possibility that predictions, forecasts,
projections and other forward-looking statements will not be
achieved. Certain material factors or assumptions are applied in
making forward-looking statements and actual results may differ
materially from those expressed or implied in such statements.
Cineplex cautions readers not to place undue reliance on these
statements, as a number of important factors, many of which are
beyond Cineplex's control, 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 first
quarter. Ellis Jacob, President
and Chief Executive Officer and Gord Nelson, Chief Financial
Officer, will host the call scheduled for:
Thursday May 9,
2019
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
Thursday May 9, 2019 and end at 1:00
pm ET on Thursday May 16, 2019.
Note that media will be participating in listen-only mode.
Cineplex Inc.
Interim Condensed Consolidated
Balance Sheets
(Unaudited)
(expressed in
thousands of Canadian dollars)
|
March
31,
|
|
December
31,
|
|
2019
|
|
2018
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
23,877
|
|
$
|
25,242
|
Trade and other
receivables
|
90,135
|
|
165,586
|
Income taxes
receivable
|
11,042
|
|
4,944
|
Inventories
|
29,738
|
|
30,592
|
Prepaid expenses and
other current assets
|
16,132
|
|
13,862
|
Fair value of interest
rate swap agreements
|
1,094
|
|
1,457
|
|
|
|
|
|
172,018
|
|
241,683
|
|
|
|
|
Non-current
assets
|
|
|
|
Property, equipment and
leaseholds
|
623,937
|
|
634,354
|
Right-of-use
assets
|
1,307,829
|
|
—
|
Deferred income
taxes
|
13,885
|
|
13,444
|
Fair value of interest
rate swap agreements
|
887
|
|
2,063
|
Interests in joint
ventures and associates
|
35,123
|
|
38,912
|
Intangible
assets
|
96,609
|
|
108,758
|
Goodwill
|
817,045
|
|
817,235
|
|
|
|
|
|
$
|
3,067,333
|
|
$
|
1,856,449
|
Cineplex Inc.
Interim Condensed Consolidated
Balance Sheets …
continued
(Unaudited)
(expressed in
thousands of Canadian dollars)
|
March
31,
|
|
December
31,
|
|
2019
|
|
2018
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
168,540
|
|
$
|
186,407
|
Share-based
compensation
|
2,261
|
|
4,862
|
Dividends
payable
|
9,183
|
|
9,183
|
Income taxes
payable
|
1,007
|
|
12,167
|
Deferred
revenue
|
179,324
|
|
214,016
|
Lease
obligations
|
107,705
|
|
3,058
|
Fair value of interest
rate swap agreements
|
1,630
|
|
1,184
|
|
469,650
|
|
430,877
|
|
|
|
|
Non-current
liabilities
|
|
|
|
Share-based
compensation
|
9,317
|
|
8,210
|
Long-term
debt
|
606,000
|
|
580,000
|
Fair value of interest
rate swap agreements
|
12,989
|
|
7,674
|
Lease
obligations
|
1,304,634
|
|
10,789
|
Post-employment
benefit obligations
|
9,120
|
|
9,250
|
Other
liabilities
|
11,699
|
|
119,110
|
Deferred income
taxes
|
6,616
|
|
11,528
|
|
1,960,375
|
|
746,561
|
Total
liabilities
|
2,430,025
|
|
1,177,438
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Share
capital
|
852,379
|
|
852,379
|
Deficit
|
(214,621)
|
|
(179,721)
|
Hedging reserves and
other
|
(9,379)
|
|
(3,678)
|
Contributed
surplus
|
8,204
|
|
7,815
|
Cumulative translation
adjustment
|
787
|
|
2,301
|
Total equity
attributable to owners of Cineplex
|
637,370
|
|
679,096
|
Non-controlling
interests
|
(62)
|
|
(85)
|
Total
equity
|
637,308
|
|
679,011
|
|
$
|
3,067,333
|
|
$
|
1,856,449
|
Cineplex Inc.
Interim Condensed Consolidated
Statements of Operations
(Unaudited)
(expressed
in thousands of Canadian dollars, except per share amounts)
|
Three months ended
March 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
|
|
|
Revenues
|
|
|
|
Box office
|
$
|
156,496
|
|
$
|
181,380
|
Food
service
|
103,058
|
|
116,948
|
Media
|
35,013
|
|
32,513
|
Amusement
|
58,500
|
|
49,905
|
Other
|
11,871
|
|
10,126
|
|
364,938
|
|
390,872
|
|
|
|
|
Expenses
|
|
|
|
Film cost
|
78,721
|
|
95,204
|
Cost of food
service
|
23,436
|
|
24,776
|
Depreciation -
right-of-use assets
|
36,462
|
|
—
|
Depreciation and
amortization - other assets
|
32,855
|
|
31,194
|
Loss on disposal of
assets
|
477
|
|
210
|
Other
costs
|
185,442
|
|
217,454
|
Share of income of
joint ventures and associates
|
(369)
|
|
(897)
|
Interest expense -
lease obligations
|
12,220
|
|
157
|
Interest expense -
other
|
5,417
|
|
6,327
|
Interest
income
|
(74)
|
|
(87)
|
Foreign
exchange
|
541
|
|
(765)
|
|
375,128
|
|
373,573
|
|
|
|
|
(Loss) income
before income taxes
|
(10,190)
|
|
17,299
|
|
|
|
|
Provision for
income taxes
|
|
|
|
Current
|
408
|
|
2,035
|
Deferred
|
(3,238)
|
|
38
|
|
(2,830)
|
|
2,073
|
Net (loss)
income
|
$
|
(7,360)
|
|
$
|
15,226
|
|
|
|
|
Attributable
to:
|
|
|
|
Owners of
Cineplex
|
$
|
(7,350)
|
|
$
|
15,226
|
Non-controlling
interests
|
(10)
|
|
—
|
Net (loss)
income
|
$
|
(7,360)
|
|
$
|
15,226
|
|
|
|
|
Basic net (loss)
income per share attributable to owners of Cineplex
|
$
|
(0.12)
|
|
$
|
0.24
|
Diluted net (loss)
income per share attributable to owners of Cineplex
|
$
|
(0.12)
|
|
$
|
0.24
|
Cineplex Inc.
Interim Condensed Consolidated
Statements of Comprehensive
Income
(Unaudited)
(expressed in thousands of
Canadian dollars)
|
Three months ended
March 31,
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
Net (loss)
income
|
$
|
(7,360)
|
|
|
$
|
15,226
|
|
|
|
|
Other
comprehensive (loss) income
|
|
|
|
Items that will be
reclassified subsequently to net income:
|
|
|
|
(Loss) income on
hedging instruments
|
(7,794)
|
|
|
776
|
Associated deferred
income taxes recovery (expense)
|
2,093
|
|
|
(211)
|
Foreign currency
translation adjustment
|
(1,514)
|
|
|
1,507
|
|
|
|
|
Other
comprehensive (loss) income
|
(7,215)
|
|
|
2,072
|
|
|
|
|
Comprehensive
(loss) income
|
$
|
(14,575)
|
|
|
$
|
17,298
|
|
|
|
|
Attributable
to:
|
|
|
|
Owners of
Cineplex
|
$
|
(14,565)
|
|
|
$
|
17,298
|
Non-controlling
interests
|
(10)
|
|
|
—
|
|
|
|
|
Comprehensive
(loss) income
|
$
|
(14,575)
|
|
|
$
|
17,298
|
Cineplex Inc.
Interim Condensed Consolidated
Statements of Changes in
Equity
(Unaudited)
(expressed in thousands of
Canadian dollars)
For the three months ended March 31, 2019 and 2018
|
|
Share
capital
|
|
Contributed
surplus
|
|
Hedging reserves
and other
|
|
Cumulative
translation adjustment
|
|
Deficit
|
|
Non-
controlling interests
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1,
2019
|
|
$
|
852,379
|
|
$
|
7,815
|
|
$
|
(3,678)
|
|
$
|
2,301
|
|
$
|
(179,721)
|
|
$
|
(85)
|
|
$
|
679,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(7,350)
|
|
(10)
|
|
(7,360)
|
Other comprehensive
loss
|
|
—
|
|
—
|
|
(5,701)
|
|
(1,514)
|
|
—
|
|
—
|
|
(7,215)
|
Total
comprehensive loss
|
|
—
|
|
—
|
|
(5,701)
|
|
(1,514)
|
|
(7,350)
|
|
(10)
|
|
(14,575)
|
Dividends
declared
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(27,550)
|
|
—
|
|
(27,550)
|
Share option
expense
|
|
—
|
|
389
|
|
—
|
|
—
|
|
—
|
|
—
|
|
389
|
TGLP non-controlling
interests capital contribution
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
33
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2019
|
|
$
|
852,379
|
|
$
|
8,204
|
|
$
|
(9,379)
|
|
$
|
787
|
|
$
|
(214,621)
|
|
$
|
(62)
|
|
$
|
637,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1,
2018
|
|
$
|
856,761
|
|
$
|
1,647
|
|
$
|
1,332
|
|
$
|
(2,817)
|
|
$
|
(148,060)
|
|
$
|
—
|
|
$
|
708,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
—
|
|
—
|
|
—
|
|
—
|
|
15,226
|
|
—
|
|
15,226
|
Other comprehensive
income
|
|
—
|
|
—
|
|
565
|
|
1,507
|
|
—
|
|
—
|
|
2,072
|
Total
comprehensive income
|
|
—
|
|
—
|
|
565
|
|
1,507
|
|
15,226
|
|
—
|
|
17,298
|
Dividends
declared
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(26,599)
|
|
—
|
|
(26,599)
|
Share option
expense
|
|
—
|
|
431
|
|
—
|
|
—
|
|
—
|
|
—
|
|
431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2018
|
|
$
|
856,761
|
|
$
|
2,078
|
|
$
|
1,897
|
|
$
|
(1,310)
|
|
$
|
(159,433)
|
|
$
|
—
|
|
$
|
699,993
|
Cineplex Inc.
Interim Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(expressed
in thousands of Canadian dollars)
|
Three months ended
March 31,
|
|
2019
|
|
2018
|
|
Cash provided by
(used in)
|
|
|
|
|
|
Operating
activities
|
|
|
Net (loss)
income
|
$
|
(7,360)
|
|
$
|
15,226
|
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities
|
|
|
Depreciation and
amortization of property, equipment and leaseholds, and intangible
assets
|
32,855
|
|
31,194
|
|
Depreciation of
right-of-use assets
|
36,462
|
|
—
|
|
Amortization of
tenant inducements, rent averaging liabilities and fair value lease
contract liabilities
|
—
|
|
(3,085)
|
|
Unrealized foreign
exchange
|
429
|
|
—
|
|
Interest rate swap
agreements - non-cash interest
|
(558)
|
|
120
|
|
Accretion of
convertible debentures
|
—
|
|
601
|
|
Other non-cash
interest
|
559
|
|
101
|
|
Loss on disposal of
assets
|
477
|
|
210
|
|
Deferred income
taxes
|
(3,238)
|
|
38
|
|
Non-cash share-based
compensation
|
389
|
|
431
|
|
Net change in
interests in joint ventures and associates
|
(1,686)
|
|
(1,205)
|
|
Changes in operating
assets and liabilities
|
2,251
|
|
919
|
|
|
|
|
Net cash provided by
operating activities
|
60,580
|
|
44,550
|
|
|
|
|
Investing
activities
|
|
|
Proceeds from
disposal of assets
|
—
|
|
182
|
|
Purchases of
property, equipment and leaseholds
|
(32,362)
|
|
(25,511)
|
|
Intangible assets
additions
|
(1,612)
|
|
(1,355)
|
|
Tenant
inducements
|
615
|
|
1,876
|
|
Net cash received
from CDCP
|
5,474
|
|
684
|
|
|
|
|
Net cash used in
investing activities
|
(27,885)
|
|
(24,124)
|
|
|
|
|
Financing
activities
|
|
|
Dividends
paid
|
(27,550)
|
|
(26,599)
|
|
Borrowings under
credit facilities, net
|
26,000
|
|
6,000
|
|
Repayments of lease
obligations - principal
|
(32,484)
|
|
(832)
|
|
Financing
fees
|
(243)
|
|
—
|
|
|
|
|
Net cash used in
financing activities
|
(34,277)
|
|
(21,431)
|
|
|
|
|
Effect of exchange
rate differences on cash
|
217
|
|
(54)
|
|
|
|
|
Decrease in cash
and cash equivalents
|
(1,365)
|
|
(1,059)
|
|
|
|
|
Cash and cash
equivalents - Beginning of period
|
25,242
|
|
40,597
|
|
|
|
|
Cash and cash
equivalents - End of period
|
$
|
23,877
|
|
$
|
39,538
|
|
|
|
|
Supplemental
information
|
|
|
Cash paid for
interest - lease obligation
|
$
|
11,687
|
|
$
|
157
|
|
Cash paid for
interest - other
|
$
|
5,895
|
|
$
|
6,773
|
|
Cash paid for income
taxes, net
|
$
|
17,861
|
|
$
|
7,072
|
|
Cineplex Inc.
Interim Consolidated Supplemental
Information
(Unaudited)
(expressed in thousands of Canadian dollars)
Reconciliation to Adjusted
EBITDAaL
|
Three months ended
March 31,
|
|
2019
|
|
2018
|
|
Net (loss)
income
|
$
|
(7,360)
|
|
$
|
15,226
|
|
|
|
|
Depreciation and
amortization - other
|
32,855
|
|
31,194
|
|
Depreciation -
right-of-use assets
|
36,462
|
|
—
|
|
Interest expense -
lease obligations
|
12,220
|
|
157
|
|
Interest expense -
other
|
5,417
|
|
6,327
|
|
Interest
income
|
(74)
|
|
(87)
|
|
Current income tax
expense
|
408
|
|
2,035
|
|
Deferred income tax
(recovery) expense
|
(3,238)
|
|
38
|
|
|
|
|
EBITDA
|
$
|
76,690
|
|
$
|
54,890
|
|
|
|
|
Loss on disposal of
assets
|
477
|
|
210
|
|
CDCP equity income
(i)
|
(317)
|
|
(818)
|
|
Foreign exchange loss
(gain)
|
541
|
|
(765)
|
|
Non-controlling
interest
|
11
|
|
—
|
|
Depreciation and
amortization - joint ventures and associates (ii)
|
29
|
|
2
|
|
Taxes and interest of
joint ventures and associates (ii)
|
11
|
|
13
|
|
|
|
|
Adjusted
EBITDA
|
$
|
77,442
|
|
$
|
53,532
|
|
|
|
|
Cash rent related to
lease obligation (iii)
|
(44,171)
|
|
—
|
|
Cash rent paid not
pertaining to current period
|
1,060
|
|
—
|
|
Cash rent previously
recognized as a finance lease (iv)
|
—
|
|
(989)
|
|
Non-cash rent (v)
(vi)
|
—
|
|
(3,085)
|
|
|
|
|
Adjusted EBITDAaL
(vi) (vii)
|
34,331
|
|
49,458
|
|
|
|
|
(i)
|
CDCP equity income
not included in adjusted EBITDA as CDCP is a limited-life financing
vehicle that is funded by virtual print fees collected from
distributors.
|
(ii)
|
Includes the joint
ventures and associates with the exception of CDCP (see (i)
above).
|
(iii)
|
Balance of cash rents
that have been reallocated to offset the lease
obligations.
|
(iv)
|
Rent payments that
were charged to the finance lease obligations in the previous
reporting period. See IFRS 16 transition section of the
MD&A.
|
(v)
|
Non-cash rent
included in the 2018 balances in the previous reporting period. See
IFRS 16 transition section of the MD&A.
|
(vi)
|
See Non-GAAP measures
section of this news release.
|
(vii)
|
Prior period figures
have been revised to conform to current period presentation. See
IFRS 16 transition section of the MD&A.
|
Cineplex Inc.
Interim Consolidated Supplemental
Information
(Unaudited)
(expressed in thousands of Canadian dollars, except number of
shares and per share data)
Adjusted Free Cash Flow
|
Three months ended
March 31,
|
|
|
|
|
2019
|
|
2018
|
|
|
|
|
Cash provided by
operating activities (i)
|
$
|
60,580
|
|
$
|
44,550
|
|
Less: Total capital
expenditures net of proceeds on sale of assets
|
(32,362)
|
|
(25,329)
|
|
|
|
|
Standardized free
cash flow
|
28,218
|
|
19,221
|
|
|
|
|
Add/(Less):
|
|
|
Changes in operating
assets and liabilities (ii)
|
(2,251)
|
|
(919)
|
|
Changes in operating
assets and liabilities of joint ventures and associates
(ii)
|
1,317
|
|
308
|
|
Principal component
of lease obligations
|
(32,484)
|
|
(832)
|
|
Principal portion of
cash rent paid not pertaining to current period
|
1,037
|
|
—
|
|
Growth capital
expenditures and other (iii)
|
27,692
|
|
20,042
|
|
Share of income of
joint ventures and associates, net of non-cash
depreciation
|
92
|
|
94
|
|
Non-controlling
interest
|
11
|
|
—
|
|
Net cash received
from CDCP (iv)
|
5,474
|
|
684
|
|
Adjusted free cash
flow
|
$
|
29,106
|
|
$
|
38,598
|
|
|
|
|
Average number of
Shares outstanding
|
63,333,238
|
|
63,330,446
|
|
|
|
|
Adjusted free cash
flow per Share
|
$
|
0.460
|
|
$
|
0.609
|
|
Dividends
declared
|
$
|
0.435
|
|
$
|
0.420
|
|
(i)
|
Prior period figures
have been revised to conform to current period presentation. See
IFRS 16 transition section of the MD&A for further
details.
|
(ii)
|
Changes in operating
assets and liabilities are not considered a source or use of
adjusted free cash flow.
|
(iii)
|
Growth capital
expenditures and other represent expenditures on Board approved
projects, exclude maintenance capital expenditures, and are net of
proceeds on asset sales. Cineplex's revolving facility is
available to fund Board approved projects.
|
(iv)
|
Excludes the share of
income of CDCP, as CDCP is a limited-life financing vehicle funded
by virtual print fees collected from distributors.
Cash invested into CDCP, as well as cash distributions received
from CDCP, are considered to be uses and sources of adjusted free
cash flow.
|
SOURCE Cineplex