Cineworld acquisition pending remaining
regulatory approvals
TORONTO, Feb. 12, 2020 /CNW/ - (TSX: CGX) - Cineplex Inc.
("Cineplex") today released its financial results for the three
months and year ended December 31,
2019. Unless otherwise specified, all amounts are in Canadian
dollars.
Fourth Quarter Results
|
|
|
|
|
2019
|
2018
Revised and
Restated (i)
|
Period over Period
Change
(ii)
|
Total revenues
(iii)
|
$
|
443.2
|
million
|
$
|
427.8
|
million
|
3.6%
|
Theatre
attendance
|
|
16.8
|
million
|
17.0
|
million
|
-0.8%
|
Net income from
continuing operations
|
$
|
4.7
|
million
|
$
|
29.3
|
million
|
-84.0%
|
Net loss from
discontinued operations
|
$
|
(1.2)
|
million
|
$
|
(2.1)
|
million
|
NM
|
Net
income*
|
$
|
3.5
|
million
|
$
|
27.2
|
million
|
-87.2%
|
Box office revenues
per patron ("BPP") (v)
|
$
|
10.79
|
|
$
|
10.73
|
|
0.6%
|
Concession revenues
per patron ("CPP") (v)
|
$
|
6.81
|
|
$
|
6.53
|
|
4.3%
|
Adjusted EBITDA (iv)
(v)
|
$
|
106.5
|
million
|
$
|
83.4
|
million
|
27.8%
|
Adjusted EBITDAaL (i)
(iv) (v)
|
$
|
62.3
|
million
|
$
|
80.0
|
million
|
-22.1%
|
Adjusted EBITDAaL
margin (i) (iv) (v)
|
14.1%
|
|
18.7%
|
|
-4.6%
|
Adjusted free cash
flow (v)
|
$
|
39.1
|
million
|
$
|
60.8
|
million
|
-35.7%
|
Adjusted free cash
flow per common share of Cineplex
("Share") (v)
|
$
|
0.618
|
|
$
|
0.961
|
|
-35.7%
|
Earnings per Share
("EPS") from continuing operations -
basic and diluted
(iv)
|
$
|
0.08
|
|
$
|
0.46
|
|
-82.6%
|
EPS from discontinued
operations - basic and diluted
|
$
|
(0.02)
|
|
$
|
(0.03)
|
|
-33.3%
|
EPS - basic and
diluted* (iv)
|
$
|
0.06
|
|
$
|
0.43
|
|
-86.0%
|
*Net income was
negatively impacted by costs of $11.7 million and non-cash interest
of $12.1 million arising as a result of the Cineworld
Transaction. The adoption of IFRS 16 negatively impacted the
net income by approximately $3.4 million in the current period and
approximately $5.8 million as compared to the fourth quarter of
2018. In total, after tax, net income was negatively impacted
by $23.4 million or $0.37 per Share.
|
Full Year Results
|
|
|
|
|
2019
|
2018
Revised and Restated (i)
|
Period over Period
Change
(ii)
|
Total revenues
(iii)
|
$
|
1,665.1
|
million
|
$
|
1,612.4
|
million
|
3.3%
|
Theatre
attendance
|
66.4
|
million
|
69.3
|
million
|
-4.2%
|
Net income from
continuing operations
|
$
|
36.5
|
million
|
$
|
85.5
|
million
|
-57.3%
|
Net loss from
discontinued operations
|
$
|
(7.6)
|
million
|
$
|
(8.5)
|
million
|
NM
|
Net
income*
|
$
|
28.9
|
million
|
$
|
77.0
|
million
|
-62.5%
|
Box office
revenues per patron ("BPP") (v)
|
$
|
10.63
|
|
$
|
10.46
|
|
1.6%
|
Concession
revenues per patron ("CPP") (v)
|
$
|
6.73
|
|
$
|
6.36
|
|
5.8%
|
Adjusted EBITDA
(iv) (v)
|
$
|
405.8
|
million
|
$
|
262.4
|
million
|
54.7%
|
Adjusted EBITDAaL
(i) (iv) (v)
|
$
|
230.5
|
million
|
$
|
247.3
|
million
|
-6.8%
|
Adjusted EBITDAaL
margin (i) (iv) (v)
|
13.8%
|
|
15.3%
|
|
-1.5%
|
Adjusted free cash
flow (v)
|
$
|
168.5
|
million
|
$
|
182.8
|
million
|
-7.9%
|
Adjusted free cash
flow per common share of Cineplex
("Share")
(v)
|
$
|
2.660
|
|
$
|
2.887
|
|
-7.9%
|
Earnings per Share
("EPS") from continuing operations - basic and diluted
(iv)
|
$
|
0.58
|
|
$
|
1.35
|
|
-57.0%
|
EPS from
discontinued operations - basic and diluted
|
$
|
(0.12)
|
|
$
|
(0.13)
|
|
-7.7%
|
EPS - basic and
diluted* (iv)
|
$
|
0.46
|
|
$
|
1.22
|
|
-62.3%
|
*Net income was
negatively impacted by costs of $11.7 million and non-cash interest
of $12.1 million arising as a result of the Cineworld
Transaction. The adoption of
IFRS 16 negatively
impacted the net income by approximately $14.3 million in the
current period and approximately $25.5 million as compared to
2018. In total, after
tax, net income was
negatively impacted by $43.1 million or $0.68 per Share.
|
i.
|
Prior period figures
have been revised as applicable per IFRS 16 and restated as
applicable per IFRS 5 to confirm to current period
presentation.
|
ii.
|
Period over period
change calculated based on thousands of dollars except percentage
and per share values. Changes in percentage amounts are
calculated
as 2019 value less
2018 value.
|
iii.
|
All amounts are from
continuing operations.
|
iv.
|
2019 includes
expenses related to the Cineworld Transaction in the amount of
$11.7 million.
|
v.
|
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.
|
"Cineplex reported strong results for 2019, as our diversified
businesses showed more meaningful returns," said Ellis Jacob, President and CEO, Cineplex. "Total
revenue increased 3.3% to $1.7
billion with all-time annual records reported for media,
amusement and food service revenue. Our earnings measure
comparisons were impacted by the proposed Cineworld transaction and
the adoption of IFRS 16. Adjusted EBITDAaL was negatively
impacted by transaction related costs of $11.7 million and net income was negatively
impacted by these transaction costs and non-cash interest expenses
of $12.1 million. The adoption
of IFRS 16 negatively impacted net income by approximately
$25.5 million as compared to
2018. In total, after tax, net income was negatively impacted
by $43.1 million or $0.68 per share as compared to 2018."
Subsequent to year end, Cineplex and Cineworld shareholders
approved the proposed acquisition by Cineworld and we are working
to obtain the remaining required approvals to complete the
transaction. Since going public in 2003, Cineplex has remained
steadfast in providing value for its shareholders and delivering a
superior guest and customer experience across our ecosystem of
businesses.
Thank you to our shareholders for their continued support and to
our employees for their hard work in achieving these strong
results."
KEY DEVELOPMENTS IN 2019
On December 15, 2019, Cineplex
entered into an arrangement agreement (the "Arrangement Agreement")
with Cineworld Group, plc, ("Cineworld") , whereby Cineworld agreed
to indirectly acquire all of the issued and outstanding common
shares of Cineplex ("Shares") for $34.00 per Share in cash pursuant to a statutory
plan of arrangement (the "Cineworld Transaction"). The Cineworld
Transaction is supported by Cineplex's Board of Directors, and is
subject to approval by the shareholders of both Cineplex and
Cineworld and receipt of required regulatory and court approvals.
The transaction is expected to close during the first half of 2020.
Upon closing, the Cineplex Shares will cease trading on the Toronto
Stock Exchange and Cineplex would become a wholly-owned subsidiary
of Cineworld.
The following describes certain key business initiatives
undertaken and results achieved during 2019 in each of Cineplex's
core business areas:
FILM ENTERTAINMENT AND CONTENT
Theatre Exhibition
- Reported annual box office revenues of $705.5 million, a 2.6% decrease from 2018 due to
a 4.2% decrease in theatre attendance, despite a 1.6% increase in
BPP to $10.63.
- Reported an annual record BPP of $10.63 for Cineplex, $0.17 or 1.6% higher than $10.46 reported during 2018.
- Opened two new theatres, Cineplex Cinemas Park Royal and
VIP in Vancouver, British
Columbia, an eleven screen theatre featuring all recliner
seating as well as an UltraAVX screen, D-BOX Motion Seats and four
VIP auditoriums; and the other, Cineplex Cinemas at The
Centre in Saskatoon,
Saskatchewan, a seven screen theatre featuring all recliner
seating as well as an UltraAVX screen, D-BOX Motion Seats and
Cineplex Clubhouse.
- Opened a new VIP Cinema in Oakville,
Ontario in December at Cineplex Cinemas Winston
Churchill and VIP with five retrofitted luxury
auditoriums.
- Opened five new 4DX auditoriums, two in Alberta at the Scotiabank Theatre
Chinook in Calgary and the
Scotiabank Theatre Edmonton; and three in Ontario at the Cineplex Cinemas Winston
Churchill in Oakville,
Cineplex Cinemas Hamilton Mountain and the Scotiabank
Theatre Ottawa.
- Opened five new ScreenX auditoriums: Cineplex Odeon Sunridge
Spectrum Cinemas in Calgary,
Alberta; Cineplex Odeon South Edmonton Cinemas in
Alberta; Scotiabank Theatre
Vancouver in British Columbia;
Scotiabank Theatre Toronto in Ontario; and Cineplex Cinemas Yorkdale
in Toronto, Ontario.
- Announced plans for Junxion, a new entertainment concept
which will feature a cinema with reclining seats and in-seat food
service, a space for outdoor screenings, an open lobby and stage
for events, performances, amusement games, virtual reality
experiences ("VR") from VRstudios Inc. ("VRstudios") and a food
hall which will include a bar and an indoor food truck. Cineplex
plans to open 8-10 Junxion locations with the first location
at the Erin Mills Town Centre in Mississauga, Ontario which is scheduled to
open in 2020.
- Announced plans for a new all-in-one entertainment complex at
Kildonan Place in Winnipeg,
Manitoba scheduled to open in 2021. The entertainment
complex will include a six screen theatre featuring all recliner
seating, an UltraAVX screen, a large amusement game and attractions
area featuring VR and a range of dining experiences.
- Announced plans for two new Cineplex VIP Cinemas in
Montreal, Quebec: one at the
Cineplex Cinemas Forum which is expected to open in 2020 and
the other at the Royalmount which is expected to open in
2022. Both locations will include five luxury auditoriums and a
fully licensed lounge.
Theatre Food Service
- Reported record annual theatre food service revenues of
$446.6 million, a 1.3% increase from
2018 due to an annual record CPP of $6.73, a $0.37 or
5.8% increase from 2018.
- During the year, Cineplex expanded alcohol beverage service to
an additional 52 theatres, now totalling 87 (excluding VIP).
- During the year, added nine additional locations to the Uber
Eats delivery platform, which now provides home delivery from 101
theatres.
- Announced an expanded partnership with Skip the Dishes, which
now provides home delivery from 130 theatres.
Alternative Programming
- Alternative Programming (Cineplex Events) included the
theatrical release of the family feature Arctic Dogs, Opera
performances from The Metropolitan Opera, The Bolshoi Ballet,
Fleabag from The National Theatre along with concerts from
Metallica and Roger Waters.
- Cineplex International film programming featured strong
performing Chinese, Filipino, Hindi and Punjabi-language titles in
select markets across the country.
Digital Commerce
- Online and mobile ticketing represented 35% of total theatre
admissions during the year, up from 28% in the prior year.
- Cineplex Store continued to show significant growth with a 57%
increase in active monthly users, reaching over 1.3 million
users.
MEDIA
- Reported record annual media revenues of $196.8 million, 20.8% higher than 2018 as a
result of record cinema media and digital place-based media
revenues.
Cinema Media
- Cinema media reported record revenue of $115.4 million in 2019, $8.6 million or 8.0% higher than 2018, primarily
due to increases in show-time and pre-show advertising.
- Cineplex Media, in partnership with Tangerine Bank, announced
Tangerine Tuesdays, a continuation of the popular Tuesday ticket
program where guests can enjoy discounted movie admission at
theatres, as well as free popcorn upgrades.
Digital Place-Based Media
- Reported record revenues of $81.3
million in 2019, an increase of $25.4
million or 45.3%, compared to 2018 mainly due to higher
project installation revenues.
- Completed the deployment of AMC theatres' digital network at
approximately 630 locations across the
United States, including its box office signage, theatre
menu boards and other ancillary signage.
- Announced a new partnership with Mountain Equipment Co-op
("MEC") to deliver a unique digital signage to optimize the retail
experience for customers at MEC stores across Canada.
AMUSEMENT AND LEISURE
Amusement Solutions
- Reported record annual revenues of $189.1 million in 2019 ($10.9 million from Cineplex theatre gaming and
$178.2 million from all other sources
of revenues). This $13.0 million
increase over the prior year is mainly due to increased route
operations revenues and distribution sales.
Location-based Entertainment
- Reported total annual revenues of $79.2
million including food service revenues of $36.7 million, amusement revenues of $39.1 million and other revenues of $3.4 million, an increase of $12.7 million (19.1%) as compared to 2018.
- Opened two additional locations of The Rec Room: one
located at the Square One Shopping Centre in Mississauga, Ontario and the other at the
Avalon Mall in St. John's,
Newfoundland.
- Opened Canada's first
reinvented Playdium entertainment complex in Brampton, Ontario and the second complex in
Whitby, Ontario.
- Announced plans for two new locations of The Rec Room:
one in the Granville Entertainment District in Vancouver, British Columbia which is expected
to open in 2021, and the other, Quebec's first location of The Rec Room
at Royalmount in Montreal,
Quebec, which is expected to open in 2022.
- Announced plans for two Playdium locations: one in
Dartmouth, Nova Scotia at the
Dartmouth Crossing Shopping Centre, and the other at
Quartier DIX30 in Brossard,
Quebec. Both locations are expected to open in 2020.
LOYALTY
- Membership in the SCENE loyalty program increased by 0.7
million in 2019, reaching 10.3 million members at December 31, 2019.
- SCENE celebrated 10 million members with National No Excuses
Day on September 27, 2019
offering SCENE members exclusive promotional offers, including half
off point redemptions.
CORPORATE
- 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.
- Cineplex was recognized by Brand Z as one of the Top 40
Most Valuable Canadian Brands and honoured with the Best Brand
Experience Award, one of three special awards presented by Brand
Z.
- Entered into the Arrangement Agreement with Cineworld on
December 15, 2019.
- Effective with the May 2019
dividend, the Board of Directors of Cineplex (the "Board")
announced a monthly dividend increase of 3.4% to $0.150 per share ($1.80 on an annual basis) up from $0.145 per share ($1.74 on an annual basis). As a result of the
Arrangement Agreement, Cineplex does not expect to pay any further
dividends after the dividend payable on February 28, 2020, assuming the Cineworld
Transaction is completed.
- Cineplex held its ninth annual Community Day, raising over
$175,000 in support of the Boys and
Girls Clubs of Canada.
OPERATING RESULTS FOR THE THREE MONTHS AND YEAR ENDED
DECEMBER 31, 2019
Total revenues
Total revenues for the three months ended December 31, 2019 increased $15.4 million (3.6%) to $443.2 million as compared to the prior year
period. Total revenues for the year ended December 31, 2019 increased $52.7 million (3.3%) to $1.7 billion as compared to the prior year. A
discussion of the factors affecting the changes in box office, food
service, media, amusement and other revenues for the two periods is
provided below.
Non-GAAP measures discussed throughout this MD&A, including
adjusted EBITDA, adjusted EBITDAaL, adjusted store level EBITDAaL,
adjusted EBITDAaL margin, adjusted store level EBITDAaL margin,
adjusted free cash flow, theatre attendance, BPP, premium priced
product, same theatre metrics, CPP, film cost percentage, food
service cost percentage and concession margin per patron are
defined and discussed in Non-GAAP 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
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Box office
revenues
|
$
|
181,789
|
$
|
182,352
|
-0.3%
|
$
|
705,521
|
$
|
724,244
|
-2.6%
|
Theatre attendance
(i)
|
16,849
|
16,992
|
-0.8%
|
66,360
|
69,272
|
-4.2%
|
Box office revenue
per patron (i)
|
$
|
10.79
|
$
|
10.73
|
0.6%
|
$
|
10.63
|
$
|
10.46
|
1.6%
|
BPP excluding premium
priced product (i)
|
$
|
9.40
|
$
|
9.22
|
2.0%
|
$
|
9.17
|
$
|
8.94
|
2.6%
|
Canadian industry
revenues (ii)
|
|
|
3.1%
|
|
|
-0.5%
|
Same theatre box
office revenues (i)
|
$
|
178,652
|
181,660
|
-1.7%
|
$
|
681,298
|
$
|
711,074
|
-4.2%
|
Same theatre
attendance (i)
|
16,593
|
16,913
|
-1.9%
|
64,396
|
68,017
|
-5.3%
|
% Total box from
premium priced product (i)
|
38.7%
|
44.6%
|
-5.9%
|
41.7%
|
44.1%
|
-2.4%
|
(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
|
Fourth
Quarter
|
Full
Year
|
|
Box
Office
|
Theatre
Attendance
|
Box
Office
|
Theatre
Attendance
|
2018 as
reported
|
$
|
182,352
|
16,992
|
$
|
724,244
|
69,272
|
Same theatre
attendance change
|
(3,433)
|
(320)
|
(37,847)
|
(3,620)
|
Impact of same
theatre BPP change
|
425
|
—
|
8,071
|
—
|
New and acquired
theatres (i)
|
3,092
|
249
|
15,539
|
1,216
|
Disposed and closed
theatres (i)
|
(647)
|
(72)
|
(4,486)
|
(508)
|
2019 as
reported
|
$
|
181,789
|
16,849
|
$
|
705,521
|
66,360
|
(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
2019 Top Cineplex Films
|
3D
|
%
Box
|
Fourth Quarter
2018 Top Cineplex Films
|
3D
|
%
Box
|
1
|
Joker
|
|
15.4%
|
1
|
Dr. Seuss' The
Grinch
|
√
|
8.9%
|
2
|
Frozen II
|
√
|
14.4%
|
2
|
A Star Is
Born
|
|
8.9%
|
3
|
Star Wars: The Rise
Of Skywalker
|
√
|
13.9%
|
3
|
Venom
|
√
|
8.7%
|
4
|
Jumanji : The Next
Level
|
√
|
7.3%
|
4
|
Bohemian
Rhapsody
|
|
8.6%
|
5
|
Maleficent: Mistress
Of Evil
|
√
|
3.6%
|
5
|
Fantastic Beasts: The
Crimes Of Grindelwald
|
√
|
7.2%
|
Box office revenues decreased $0.6
million, or 0.3%, to $181.8
million during the fourth quarter of 2019, compared to
$182.4 million recorded in the same
period in 2018. This decrease was due to a 0.8% decrease in theatre
attendance more than offsetting the impact of a 0.6% increase in
BPP.
BPP for the three months ended December
31, 2019 was a fourth quarter record of $10.79, a $0.06
increase from the prior year period as a result of price increases
in selective markets as compared to the prior year period.
Full Year
|
|
|
|
|
|
Full Year 2019 Top
Cineplex Films
|
3D
|
%
Box
|
Full Year 2018 Top
Cineplex Films
|
3D
|
%
Box
|
1
|
Avengers:
Endgame
|
√
|
8.6%
|
1
|
Avengers: Infinity
War
|
√
|
6.3%
|
2
|
The Lion
King
|
√
|
4.7%
|
2
|
Black
Panther
|
√
|
6.1%
|
3
|
Captain
Marvel
|
√
|
4.3%
|
3
|
Incredibles
2
|
√
|
4.1%
|
4
|
Joker
|
|
4.0%
|
4
|
Jurassic World:
Fallen Kingdom
|
√
|
3.4%
|
5
|
Frozen II
|
√
|
3.7%
|
5
|
Deadpool 2
|
√
|
3.1%
|
Box office revenues for the year ended December 31, 2019 were $705.5 million, a decrease of $18.7 million or 2.6% from the prior year. This
was due to a 4.2% decrease in theatre attendance year over year
despite the increase in BPP. The prior year was a tough
comparator due to Avengers: Infinity War, Black Panther and
Incredibles 2 all which finished in the top ten highest
grossing films of all-time in North
America while only Avengers: Endgame finished in the
top ten in 2019. In particular, the first quarter experienced a
15.6% decrease in attendance resulting in a $24.9 million decrease in box office revenues as
compared to the prior year period due to the weaker film slate.
Cineplex's BPP for the year ended December 31, 2019 increased $0.17, or 1.6%, from $10.46 in 2018 to an annual record of
$10.63 in 2019. 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
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Food service -
theatres
|
$
|
114,678
|
$
|
111,015
|
3.3%
|
$
|
446,639
|
$
|
440,733
|
1.3%
|
Food service -
LBE
|
10,481
|
9,711
|
7.9%
|
36,691
|
34,768
|
5.5%
|
Total food service
revenues
|
$
|
125,159
|
$
|
120,726
|
3.7%
|
$
|
483,330
|
$
|
475,501
|
1.6%
|
Theatre attendance
(i)
|
16,849
|
16,992
|
-0.8%
|
66,360
|
69,272
|
-4.2%
|
CPP (i)
(ii)
|
$
|
6.81
|
$
|
6.53
|
4.3%
|
$
|
6.73
|
$
|
6.36
|
5.8%
|
Same theatre food
service revenues (i)
|
$
|
112,551
|
$
|
110,536
|
1.8%
|
$
|
427,546
|
$
|
430,912
|
-0.8%
|
Same theatre
attendance (i)
|
16,593
|
16,913
|
-1.9%
|
64,396
|
68,017
|
-5.3%
|
(i) See Non-GAAP
measures section of this news release.
|
(ii) Food service
revenue from LBE is not included in the CPP calculation.
|
|
|
|
Theatre food
service revenue continuity
|
Fourth
Quarter
|
Full
Year
|
|
Theatre
Food
Service
|
Theatre
Attendance
|
Theatre
Food
Service
|
Attendance
|
2018 as
reported
|
$
|
111,015
|
16,992
|
$
|
440,733
|
69,272
|
Same theatre
attendance change
|
(2,089)
|
(320)
|
(22,935)
|
(3,620)
|
Impact of same
theatre CPP change
|
4,104
|
—
|
19,569
|
—
|
New and acquired
theatres (i)
|
2,081
|
249
|
12,053
|
1,216
|
Disposed and closed
theatres (i)
|
(433)
|
(72)
|
(2,781)
|
(508)
|
2019 as
reported
|
$
|
114,678
|
16,849
|
$
|
446,639
|
66,360
|
(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
and through delivery services including Uber Eats and Skip the
Dishes. Food service revenues also include food and beverage sales
at LBE venues including The Rec Room and Playdium.
Theatre food service revenues increased $3.7
million (3.3%) as compared to the prior year period to a
fourth quarter record of $114.7
million due to a 4.3% increase in CPP more than offsetting
the impact of a 0.8% decrease in theatre attendance. The operations
of LBE contributed $10.5 million
in the period resulting in a $4.4
million (3.7%) increase in total food service revenues to a
fourth quarter record of $125.2
million. Expanded offerings outside of core food service
products, including offerings at Cineplex's VIP Cinemas and
Outtakes locations and expanded beverage services, have contributed
to increased visitation and higher average transaction values,
resulting in the record CPP in the period.
Food service revenues from LBE increased $0.8 million (7.9%) compared to the prior year
period primarily due to the increase in locations from six in 2018
to nine for the full quarter and one for part of the quarter in
2019.
CPP of $6.81, an increase of 4.3%
compared to the prior year period was an fourth quarter record for
Cineplex. Expanded offerings outside of core food service products,
including offerings at Cineplex's VIP Cinemas and Outtakes
locations and expanded beverage services, have contributed to
increased visitation and higher average transaction values,
resulting in the record CPP in the period.
Full Year
Food service revenues increased $7.8
million, or 1.6% as compared to the prior year to an annual
record of $483.3 million due to a
5.5% increase in LBE revenues and the record CPP more than
offsetting the impact of the lower theatre attendance. CPP of
$6.36 in 2018 increased 5.8% to
$6.73 in 2019, an annual record for
Cineplex. The operations of LBE contributed $36.7 million in 2019. Newer locations typically
experience higher sales volumes in the first year of operations
(honeymoon period) before settling into their expected long-term
run-rate levels resulting in a leveling off of results for older
locations.
While programs including SCENE offers provided on food service
purchases impact CPP, Cineplex believes that this loyalty program
drives incremental visits and food service purchases, resulting in
higher overall food service revenues.
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
|
|
2019
|
2018
Restated
|
Change
|
2019
|
2018
Restated
|
Change
|
Cinema
media
|
$
|
42,171
|
$
|
40,167
|
5.0%
|
$
|
115,415
|
$
|
106,834
|
8.0%
|
Digital place-based
media
|
27,374
|
17,740
|
54.3%
|
81,340
|
55,986
|
45.3%
|
Total media revenues
from continuing operations
|
$
|
69,545
|
$
|
57,907
|
20.1%
|
$
|
196,755
|
$
|
162,820
|
20.8%
|
Media revenues from
discontinued operations
|
248
|
311
|
-20.3%
|
1,075
|
2,189
|
-50.9%
|
Total media
revenues
|
$
|
69,793
|
$
|
58,218
|
19.9%
|
$
|
197,830
|
$
|
165,009
|
19.9%
|
Fourth Quarter
Total media revenues from continuing operations increased 20.1%
to an all-time quarterly record of $69.5
million in the fourth quarter of 2019 compared to the prior
year period. This increase was due to higher cinema media and
digital place-based media revenues. Cinema media increased by
$2.0 million, or 5.0% higher than the
prior year period to an all-time quarter record of $42.2 million as a result of increased pre-show
and show-time. Digital place-based media revenues increased
$9.6 million (54.3%) to an all-time
quarterly record of $27.4 million.
The increase as compared to the prior year period was primarily due
to increased project installation revenues which included rollouts
for new and growth with existing clients.
During the fourth quarter of 2019, digital place-based media
added 752 new locations, an increase of 5.2% over the third quarter
of 2019.
Full Year
Total media revenues from continuing operations increased
$33.9 million, or 20.8%, in the year
ended December 31, 2019 compared to
the prior year, to an all-time annual record of $196.8 million. This increase was due to the
performance of Cinema media, which reported an increase of
$8.6 million (8.0%) compared to the
prior year due primarily to higher pre-show results. Digital
place-based media revenues increased $25.4
million due to higher project installation revenues.
Full year, digital place-based media added 1,809 new locations
(an increase of 13.4%) for a total of 15,311 locations as at
December 31, 2019.
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
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Amusement - P1AG
excluding Cineplex exhibition and LBE (i)
|
$
|
39,931
|
$
|
43,307
|
-7.8%
|
$
|
178,209
|
$
|
165,486
|
7.7%
|
Amusement - Cineplex
exhibition (i)
|
2,668
|
2,697
|
-1.1%
|
10,907
|
10,664
|
2.3%
|
Amusement -
LBE
|
10,872
|
7,469
|
45.6%
|
39,115
|
29,643
|
32.0%
|
Total amusement
revenues
|
$
|
53,471
|
$
|
53,473
|
—%
|
$
|
228,231
|
$
|
205,793
|
10.9%
|
(i) Cineplex receives
a venue revenue share on games revenues earned at in-theatre game
rooms and XSCAPE Entertainment Centres. Amusement -
Cineplex
exhibition reports
the total of this venue revenue share which is consistent with the
historical presentation of Cineplex's amusement revenues.
Amusement - P1AG
excluding Cineplex
exhibition and LBE reflects P1AG's gross amusement revenues,
net of the venue revenue share paid to Cineplex reflected in
Amusement -
Cineplex exhibition
above.
|
Fourth Quarter
Amusement revenues of $53.5
million were flat compared to the prior year period.
Amusement revenues from P1AG decreased $3.4
million (7.8%) primarily due to a decrease in route revenues
in the United States from
theatres, non-family entertainment centres and the retail segment.
Amusement revenues from LBE increased 45.6% or $3.4 million compared to the prior year period as
a result of the additional locations and VR offerings.
Full Year
For the full year period, amusement revenues increased by
$22.4 million (10.9%) to an all-time
annual record of $228.2 million. The
increase as compared to the prior year is due to increased
distribution revenue as well as route business, in part due to the
P1AG agreement with Cinemark, entered in 2018, as well as strong
growth in revenue from the additional locations of LBE venues as
compared to the prior year period.
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
|
|
2019
|
2018
Restated
|
Change
|
2019
|
2018
Restated
|
Change
|
Other revenues from
continuing operations
|
$
|
13,256
|
$
|
13,385
|
-1.0%
|
$
|
51,309
|
$
|
44,080
|
16.4%
|
Other revenues from
discontinued operations
|
—
|
29
|
NM
|
16
|
196
|
-91.8%
|
Total other
revenues
|
$
|
13,256
|
$
|
13,414
|
-1.2%
|
$
|
51,325
|
$
|
44,276
|
15.9%
|
Other revenues from continuing operations decreased 1.0% in the
fourth quarter of 2019 compared to the prior year period. In 2019,
the increase of 16.4% in other revenues was due primarily to higher
volume of digital commerce sales.
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
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Film cost
|
$
|
93,925
|
$
|
91,562
|
2.6%
|
$
|
369,386
|
$
|
379,325
|
-2.6%
|
Film cost percentage
(i)
|
51.7%
|
50.2%
|
1.5%
|
52.4%
|
52.4%
|
—%
|
(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 1.5% increase in film cost percentage in the current period was
as a result of higher settlement rates attributable to the top
films in 2019 compared to 2018.
Full Year
Film cost percentage remained flat year over year as a result of
the top films having comparable settlement rates.
Cost of food service
The following table highlights the movement in cost of food
service and food service cost as a percentage of food service
revenues ("concession cost percentage") for both theatres and
LBE for the quarter and the full year (in thousands of
dollars, except percentages and margins per patron):
|
|
|
Cost of food
service
|
Fourth
Quarter
|
Full
Year
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Cost of food service
- theatre
|
$
|
25,223
|
$
|
23,805
|
6.0%
|
$
|
97,306
|
$
|
91,001
|
6.9%
|
Cost of food service
- LBE
|
2,478
|
2,333
|
6.2%
|
9,517
|
9,190
|
3.6%
|
Total cost of food
service
|
$
|
27,701
|
$
|
26,138
|
6.0%
|
$
|
106,823
|
$
|
100,191
|
6.6%
|
Theatre concession
cost percentage (i)
|
22.0%
|
21.4%
|
0.6%
|
21.8%
|
20.6%
|
1.2%
|
LBE food cost
percentage (i)
|
23.6%
|
24.0%
|
-0.4%
|
25.9%
|
26.4%
|
-0.5%
|
Theatre concession
margin per patron (i)
|
$
|
5.31
|
$
|
5.13
|
3.5%
|
$
|
5.26
|
$
|
5.05
|
4.2%
|
(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 LBE venues 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 increase in the theatre cost of food service as compared to
the prior year period was due to a 0.6% increase in the concession
cost percentage during the period and higher theatre food service
revenues due to sales from an expanded menu and shift in product
mix.
The theatre concession margin per patron increased 3.5% from
$5.13 in the fourth quarter of 2018
to $5.31 in the same period in 2019,
reflecting the impact of the higher CPP more than offsetting the
higher theatre concession cost percentage during the quarter.
The increase in LBE cost of food service as compared to the
prior year period was due to the higher food service revenues as a
result of the increase in operating locations. This was partially
offset by the decrease of 0.4% in LBE 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.
Full Year
The increase in the theatre cost of food service as compared to
the prior year was due to a 1.2% increase in the theatre concession
cost percentage and higher theatre food service revenues. The
theatre concession margin per patron increased from $5.05 in the prior year to $5.26 in 2019, reflecting the impact of the
higher CPP in 2019.
The increase in LBE 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. This was partially offset
by the decrease of 0.5% in LBE food cost percentage as a result of
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
|
|
2019
|
2018
Restated
|
Change
|
2019
|
2018
Restated
|
Change
|
Depreciation of
property, equipment and leaseholds
|
$
|
29,967
|
$
|
30,387
|
-1.4%
|
$
|
116,911
|
$
|
115,016
|
1.6%
|
Amortization of
intangible assets and other
|
3,168
|
3,293
|
-3.8%
|
11,972
|
12,407
|
-3.5%
|
Sub-total -
depreciation and amortization - other assets
|
$
|
33,135
|
$
|
33,680
|
-1.6%
|
$
|
128,883
|
$
|
127,423
|
1.1%
|
Depreciation -
right-of-use assets
|
36,471
|
—
|
NM
|
145,946
|
—
|
NM
|
Total depreciation
and amortization from continuing operations
|
$
|
69,606
|
$
|
33,680
|
106.7%
|
$
|
274,829
|
$
|
127,423
|
115.7%
|
Depreciation and
amortization from discontinued operations
|
—
|
1,119
|
NM
|
3,623
|
4,429
|
-18.2%
|
Total depreciation
and amortization
|
$
|
69,606
|
$
|
34,799
|
100.0%
|
$
|
278,452
|
$
|
131,852
|
111.2%
|
The quarterly decrease in depreciation of property, equipment
and leaseholds from continuing operations of $0.4 million was due to the reduction in
depreciation resulting from fully depreciated assets more than
offsetting the incremental depreciation from new build and
expansions. The annual increase in depreciation of
$1.9 million was primarily due to the
investments in route equipment, furniture and fixtures and
leasehold improvements.
The quarterly and year to date increase in depreciation of
right-of-use assets from continuing operations was as a result of
the adoption of IFRS 16. The right-of-use assets are depreciated
over the lease term. The current quarter and year to date expense
represents the depreciation charge for the periods.
The quarterly and annual decrease in amortization of intangible
assets and other from continuing operations was primarily 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 and the full year (in thousands of
dollars):
|
|
|
Loss on disposal
of assets
|
Fourth
Quarter
|
Full
Year
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Loss on disposal from
continuing operations
|
$
|
868
|
$
|
1,064
|
-18.4%
|
$
|
1,764
|
$
|
2,681
|
-34.2%
|
Loss on disposal from
discontinued operations
|
—
|
—
|
NM
|
—
|
16
|
-100.0%
|
Loss on disposal of
assets
|
$
|
868
|
$
|
1,064
|
-18.4%
|
$
|
1,764
|
$
|
2,697
|
-34.6%
|
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 year to date (in thousands of dollars):
|
|
|
Other
costs
|
Fourth
Quarter
|
Full
Year
|
|
2019
|
2018
Restated
|
Change
|
2019
|
2018
Restated
|
Change
|
Theatre occupancy
expenses
|
$
|
18,493
|
$
|
51,991
|
-64.4%
|
$
|
71,867
|
$
|
209,838
|
-65.8%
|
Other operating
expenses
|
167,416
|
161,741
|
3.5%
|
629,849
|
593,736
|
6.1%
|
General and
administrative expenses
|
29,014
|
12,779
|
127.0%
|
80,977
|
66,783
|
21.3%
|
Total other costs
from continuing operations
|
$
|
214,923
|
$
|
226,511
|
-5.1%
|
$
|
782,693
|
$
|
870,358
|
-10.1%
|
Other costs from
discontinued operations
|
1,471
|
2,054
|
-28.4%
|
7,001
|
8,377
|
-16.4%
|
Total other
costs
|
$
|
216,394
|
$
|
228,565
|
-5.3%
|
$
|
789,694
|
$
|
878,735
|
-10.1%
|
Theatre occupancy expenses
The following table highlights the movement in theatre occupancy
expenses for the quarter and the year to date (in thousands of
dollars) with the prior period presentation revised to provide
comparability to the impact of the transition to IFRS 16:
|
|
|
Theatre occupancy
expenses
|
Fourth
Quarter
|
Year to
Date
|
|
2019
|
2018
Revised
|
Change
|
2019
|
2018
Revised
|
Change
|
Cash rent - theatre
(i) (vii)
|
$
|
39,042
|
$
|
38,625
|
1.1%
|
$
|
156,921
|
$
|
154,545
|
1.5%
|
Other
occupancy
|
18,545
|
17,578
|
5.5%
|
73,736
|
73,435
|
0.4%
|
One-time items
(ii)
|
(62)
|
(550)
|
-88.7%
|
(2,275)
|
(2,776)
|
-18.0%
|
Total theatre
occupancy including cash lease payments
|
$
|
57,525
|
$
|
55,653
|
3.4%
|
$
|
228,382
|
$
|
225,204
|
1.4%
|
Non-cash rent (iii)
(vi)
|
—
|
(2,672)
|
NM
|
—
|
(11,410)
|
NM
|
Rent previously
recognized as a finance lease (iv)
|
—
|
(990)
|
NM
|
—
|
(3,956)
|
NM
|
Cash rent related to
lease obligations (v)
|
(39,032)
|
—
|
NM
|
(156,515)
|
—
|
NM
|
Theatre occupancy as
reported
|
$
|
18,493
|
$
|
51,991
|
-64.4%
|
$
|
71,867
|
$
|
209,838
|
-65.8%
|
(i) Represents the
cash payments for theatre rent during the quarter. See
Reconciliation section of the MD&A for further
details.
|
(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
Reconciliation section of the MD&A for further
details.
|
(iv) Rent payments
that were charged to the finance lease obligations in the previous
reporting period. See Reconciliation section of the MD&A for
further details.
|
(v) Cash rent that
has been reallocated to offset the lease obligations.
|
(vi) See Non-GAAP
measures section of this news release.
|
|
|
|
Theatre occupancy
continuity
|
Fourth
Quarter
|
Year to
Date
|
|
Occupancy
|
Occupancy
|
2018 as
reported
|
$
|
51,991
|
$
|
209,838
|
Impact of new and
acquired theatres
|
920
|
4,182
|
Impact of disposed
theatres
|
(501)
|
(2,232)
|
Same theatre rent
change (i)
|
22
|
750
|
One-time
items
|
488
|
502
|
Other
|
944
|
(24)
|
|
|
|
Impact of IFRS 16
adoption:
|
|
|
Impact of non-cash
rent in prior period
|
2,672
|
11,410
|
Cash rent previously
recognized as a finance lease
|
989
|
3,956
|
Cash rent related to
lease obligations
|
(39,032)
|
(156,515)
|
2019 as
reported
|
$
|
18,493
|
$
|
71,867
|
(i) See Non-GAAP
measures section of this news release.
|
Fourth Quarter
Theatre occupancy expenses decreased $33.5 million during the fourth 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
$1.9 million (3.4%) during the fourth
quarter of 2019 compared to the prior year period. This increase
was due to a decrease in one-time credits and increase in taxes and
insurance.
Full Year
The decrease in theatre occupancy expenses of $138.0 million for the 2019 year compared the
prior year was mainly due to the impact of the adoption of IFRS 16
partially offset by the impact of non-cash rent in the prior year
period.
For the year to date period, theatre occupancy including cash
payments increased $3.1 million
(1.4%) as compared to the prior year period. The increase was
primarily due to the impact of new theatres net of disposed
theatres.
Other operating expenses
The following table highlights the movement in other operating
expenses during the quarter and the year to date (in thousands of
dollars) with the prior period presentation revised and restated to
provide comparability to the impact of the transition to IFRS 16
and application of IFRS 5:
|
|
|
Other operating
expenses
|
Fourth
Quarter
|
Year to
Date
|
|
2019
|
2018
Revised
and
Restated
|
Change
|
2019
|
2018
Revised
and
Restated
|
Change
|
Theatre
payroll
|
$
|
41,925
|
$
|
38,663
|
8.4%
|
$
|
160,593
|
$
|
152,465
|
5.3%
|
Theatre operating
expenses
|
32,986
|
29,940
|
10.2%
|
121,833
|
117,424
|
3.8%
|
Media (i)
|
27,762
|
18,881
|
47.0%
|
88,621
|
66,825
|
32.6%
|
P1AG (i)
|
36,818
|
40,096
|
-8.2%
|
156,687
|
150,558
|
4.1%
|
LBE (i) (ii)
|
14,692
|
11,665
|
25.9%
|
53,110
|
44,733
|
18.7%
|
LBE pre-opening (i)
(iii)
|
603
|
(87)
|
NM
|
2,447
|
1,260
|
94.2%
|
SCENE
|
2,470
|
6,991
|
-64.7%
|
15,549
|
17,447
|
-10.9%
|
Marketing
|
5,128
|
6,663
|
-23.0%
|
16,254
|
19,959
|
-18.6%
|
Business interruption
insurance proceeds
|
—
|
(1,749)
|
NM
|
—
|
(5,449)
|
NM
|
Other (iv)
|
9,686
|
10,329
|
-6.2%
|
32,879
|
28,212
|
16.5%
|
Other operating
expenses including cash lease payments
|
$
|
172,070
|
$
|
161,392
|
8.0%
|
$
|
647,973
|
$
|
593,434
|
9.2%
|
Non-cash rent (v)
(vi)
|
—
|
348
|
NM
|
—
|
302
|
NM
|
Cash rent related to
lease obligations (vii)
|
(4,654)
|
—
|
NM
|
(18,124)
|
—
|
NM
|
Other operating
expenses from continuing operations
|
$
|
167,416
|
$
|
161,740
|
3.5%
|
$
|
629,849
|
$
|
593,736
|
6.1%
|
Other operating
expenses from discontinued operations
|
1,471
|
2,055
|
NM
|
7,001
|
8,378
|
-16.4%
|
Total other operating
expenses
|
$
|
168,887
|
$
|
163,795
|
3.1%
|
$
|
636,850
|
$
|
602,114
|
5.8%
|
(i) Prior period
balances were revised to exclude non-cash rent. See
Reconciliation section of the MD&A for further
details.
|
(ii) Includes
operating costs of LBE locations. Overhead relating to
management of LBE portfolio are included in the 'Other'
line.
|
(iii) Includes
pre-opening costs of LBE.
|
(iv) Other category
includes overhead costs related to LBE and other Cineplex internal
departments.
|
(v) Non-cash rent
included in the 2018 balances in the previous reporting period. See
Reconciliation section of the MD&A for further
details.
|
(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 from continuing operations
|
Fourth
Quarter
|
Year to
Date
|
|
Other
Operating
|
Other
Operating
|
2018 as
restated
|
$
|
161,740
|
$
|
593,736
|
Impact of new and
acquired theatres
|
1,291
|
7,129
|
Impact of disposed
theatres
|
(357)
|
(1,827)
|
Same theatre payroll
change (i)
|
2,607
|
4,307
|
Same theatre
operating expenses change (i)
|
2,767
|
2,968
|
Media operating
expenses change
|
8,881
|
21,796
|
P1AG operating
expenses change
|
(3,278)
|
6,129
|
LBE operating
expenses change
|
3,027
|
8,377
|
LBE pre-opening
change
|
690
|
1,187
|
SCENE
change
|
(4,521)
|
(1,898)
|
Marketing
change
|
(1,535)
|
(3,705)
|
Business interruption
insurance proceeds change
|
1,749
|
5,449
|
Other
|
(643)
|
4,627
|
Impact of IFRS 16
adoption:
|
|
|
Non-cash rent in
prior period
|
(348)
|
$
|
(302)
|
Cash rent related to
lease obligations
|
(4,654)
|
$
|
(18,124)
|
2019 as
reported
|
$
|
167,416
|
$
|
629,849
|
(i) See Non-GAAP
measures section of this news release.
|
Fourth Quarter
Other operating expenses during the fourth quarter of 2019
increased $5.7 million or 3.5%
compared to the prior year period. The increase was primarily due
to higher media operating expenses as a result of higher digital
place-based media project installation revenue as compared to the
prior year period. Same theatre payroll expenses increased due to
higher minimum wages in Alberta,
Quebec and British Columbia. Payroll and other costs
associated with expanded service offerings also resulted in higher
costs. Higher LBE operating expenses were due to an increase in the
number of LBE locations from six in the fourth quarter of 2018 to
ten at the end of 2019. These were partially offset by the
$3.2 million decrease in P1AG costs
due to a decrease in the route business and $4.5 million decrease in SCENE due to timing of
expenses.
Full Year
For the year ended December 31,
2019, other operating expenses increased $36.1 million or 6.1% compared to the prior year.
Media operating expenses increased due to higher CDM project
installation revenue and cinema media volumes as compared to the
prior year period. The increase in other operating expenses can
also be attributed to the net impact of new and acquired theatres.
Cineplex incurred higher amusement and leisure costs due to an
increase in distribution sales and route revenue from P1AG and from
the impact of the increase in the number of LBE venues. Same
theatre payroll expenses increased due to higher minimum wages in
Alberta, Quebec and British
Columbia. During 2018, Cineplex recognized business
interruption insurance proceeds of $5.4
million, as a result of a fire at Cineplex Seton and
VIP. Cost increases were partially offset by a decrease in
marketing due to the timing of campaigns and cash rent allocated to
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 and the year
to date, 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
|
Fourth
Quarter
|
Year to
Date
|
|
2019
|
2018
Revised
|
Change
|
2019
|
2018
Revised
|
Change
|
G&A excluding
LTIP and option plan expense (i)
|
$
|
16,403
|
$
|
13,437
|
22.1%
|
$
|
64,108
|
$
|
60,568
|
5.8%
|
Restructuring
|
189
|
1,022
|
-81.5%
|
1,078
|
5,842
|
-81.5%
|
Transaction costs
(vi)
|
11,711
|
—
|
NM
|
11,711
|
—
|
NM
|
LTIP (ii)
|
466
|
(2,076)
|
NM
|
3,076
|
(1,347)
|
NM
|
Option
plan
|
407
|
395
|
3.0%
|
1,605
|
1,718
|
-6.6%
|
G&A expenses
including cash lease payments
|
$
|
29,176
|
$
|
12,778
|
128.3%
|
$
|
81,578
|
$
|
66,781
|
22.2%
|
Non-cash rent (iii)
(iv)
|
—
|
1
|
-100.0%
|
—
|
2
|
-100.0%
|
Cash rent included as
part of lease obligations (v)
|
(162)
|
—
|
NM
|
(601)
|
—
|
NM
|
G&A expenses as
reported
|
$
|
29,014
|
$
|
12,779
|
127.0%
|
$
|
80,977
|
$
|
66,783
|
21.3%
|
(i) Prior period
balance was revised to exclude non-cash rent. See Reconciliation
section of the MD&A for further details.
|
(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 Reconciliation section of the MD&A for
further details.
|
(iv) See Non-GAAP
measures section of this news release.
|
(v) Cash rent that
has been reallocated to offset the lease obligations.
|
(vi) Transaction
costs include share-based compensation costs and out-of-pocket
expenses.
|
Fourth Quarter
G&A expenses increased $16.2
million during the fourth quarter of 2019 compared to the
prior year primarily due to higher expenses resulting from the
proposed Cineworld Transaction. Included in transaction costs of
$11.7 million are share-based
compensation costs of $8.4 million.
These expenses are due to the impact of the combination of the
valuation of the expected benefits at $34.00 as compared to the share price preceding
the announcement of the Arrangement Agreement and an accelerated
vesting period. The vesting service period was revised to
March 31, 2020, to reflect the
estimated earliest closing date of the Cineworld Transaction which
is expected to occur in during the first half of 2020. Revised
vesting terms of the options as a result of the Cineworld
Transaction also resulted in increased costs in the quarter. The
transaction costs also include $3.3
million of professional fees arising from the Cineworld
Transaction. Excluding the impact of the Cineworld Transaction,
LTIP costs increased $2.5 million due
to an increase in share price in the current quarter as compared to
a decrease in share price in the prior year period.
Full Year
G&A expenses for 2019 increased $14.2
million (21.3%) as compared to the prior year, primarily due
to expenses related to the Cineworld Transaction in the amount of
$11.7 million. Included in
$11.7 million of transaction costs
are the share-based compensation costs of $8.4 million, resulting from the combination of
the valuation of the expected benefits at $34.00 (the price per Share in the Cineworld
Transaction) as compared to the share price preceding the
announcement of the Arrangement Agreement and an accelerated
vesting period. The vesting service period was revised to
March 31, 2020, to reflect the
estimated earliest closing date of the Cineworld Transaction which
is expected to occur in during the first half of 2020. Professional
fees relating to the Cineworld Transaction in the amount of
$3.3 million are also included in the
transaction costs. The increase in G&A can also be attributed
to professional fees relating to the software upgrade undertaken
for IFRS 16. The prior year included expenses incurred relating to
a cost reduction initiative implemented in 2018. Excluding the
impact of the Cineworld Transaction, LTIP costs increased
$4.4 million due to an increase in
share price in the current year period as compared to a decrease in
the share price in the prior year period.
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 and year ended December 31, 2019 as compared to the prior year
periods (expressed in thousands of dollars, except adjusted
EBITDAaL margin):
|
|
|
EBITDA
|
Fourth
Quarter
|
Full
Year
|
|
2019
|
2018
Restated
|
Change
|
2019
|
2018
Restated
|
Change
|
EBITDA
|
$
|
106,905
|
$
|
85,009
|
25.8%
|
$
|
407,584
|
$
|
265,612
|
53.5%
|
Adjusted
EBITDA
|
$
|
106,529
|
$
|
83,351
|
27.8%
|
$
|
405,786
|
$
|
262,357
|
54.7%
|
Adjusted EBITDAaL
(i)
|
$
|
62,327
|
$
|
80,039
|
-22.1%
|
$
|
230,546
|
$
|
247,295
|
-6.8%
|
Adjusted EBITDAaL
margin (i)
|
14.1%
|
18.7%
|
-4.6%
|
13.8%
|
15.3%
|
-1.5%
|
(i) Prior period
figures have been revised to conform to current period
presentation. See Reconciliation section of the
MD&A.
|
Adjusted EBITDAaL for the fourth quarter of 2019 decreased
$17.7 million, or 22.1%, as compared
to the prior year period, to $62.3
million. This decrease was due to additional costs including
transaction costs incurred as a result of the Cineworld Transaction
as well as weaker results from theatre exhibition business
partially offset by strong results from other businesses. As a
result of the Cineworld Transaction, G&A expenses increased as
a result of expenses related to the Cineworld Transaction in the
amount of $11.7 million. Adjusted
EBITDAaL margin, calculated as adjusted EBITDAaL divided by total
revenues, was 14.1% in the current period, a decrease of 4.6% from
18.7% in the prior year period.
Adjusted EBITDAaL for the year ended December 31, 2019 decreased $16.7 million, or 6.8%, to $230.5 million as compared to $247.3 million in the prior year period with the
decrease primarily due to the transaction costs and accounting
adjustments related to the Cineworld Transaction. These were
partially offset by the increases in food service, media and
amusement revenues. Adjusted EBITDAaL margin was down 0.6% to 13.8%
in 2019 compared to 15.3% in 2018.
ADJUSTED FREE CASH FLOW (see Non-GAAP measures section of
this news release)
For the fourth quarter of 2019, adjusted free cash flow per
common share of Cineplex was $0.62 as
compared to $0.96 in the prior year
period. The declared dividends per common share of Cineplex were
$0.45 in the fourth quarter of 2019
and $0.44 in the prior year period.
During the 12 months ended December 31,
2019, Cineplex generated adjusted free cash flow per Share
of $2.66, compared to $2.89 in the prior 12 month period. Cineplex
declared dividends per Share of $1.78
and $1.72, respectively, in each 12
month period. The payout ratios for these periods were 66.9% and
59.6%, 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 from continuing operations. 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. EBITDA, adjusted EBITDA and adjusted EBITDAaL measure
Cineplex's operational performance from continuing operations, and
prior year measurements have been restated to exclude discontinued
operations accordingly.
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 December
31, 2019 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, 2019 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.
LBE food cost percentage: Calculated as total LBE food
costs divided by total LBE 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 Network).
Additionally, Cineplex operates location based entertainment
complexes specially designed for teens and families (Playdium) as
well as Canada's favourite
destination for 'Eats & Entertainment' (The Rec Room). 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:
Wednesday February 12,
2020
10:00 am Eastern
Time
In order to participate in the conference call please dial
647-484-0477, or from outside Toronto and from the U.S., dial 1-800-458-4121
at least five to ten minutes prior to 10:00am ET. Please quote the conference
confirmation code 2521681 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 2521681.
The replay will begin at 1:00pm ET on Wednesday February 12, 2020 and end at 1:00pm ET
on Wednesday February 19, 2020.
Note that media will be participating in listen-only
mode.
Cineplex Inc.
Consolidated Balance
Sheets
(expressed in thousands of Canadian
dollars)
|
|
|
|
December
31,
|
December
31,
|
|
2019
|
2018
|
|
|
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
$
|
26,080
|
$
|
25,242
|
Trade and other
receivables
|
168,065
|
165,586
|
Income taxes
receivable
|
9,757
|
4,944
|
Inventories
|
30,995
|
30,592
|
Prepaid expenses and
other current assets
|
14,226
|
13,862
|
Fair value of interest
rate swap agreements
|
1,022
|
1,457
|
Assets held for
sale
|
6,573
|
—
|
|
256,718
|
241,683
|
|
|
|
Non-current
assets
|
|
|
Property, equipment and
leaseholds
|
662,798
|
634,354
|
Right-of-use
assets
|
1,232,849
|
—
|
Deferred income
taxes
|
14,197
|
13,444
|
Fair value of interest
rate swap agreements
|
472
|
2,063
|
Interests in joint
ventures and associates
|
28,221
|
38,912
|
Intangible
assets
|
88,367
|
108,758
|
Goodwill
|
816,790
|
817,235
|
|
$
|
3,100,412
|
$
|
1,856,449
|
Cineplex Inc.
Consolidated Balance Sheets …
continued
(expressed in thousands of Canadian dollars)
|
|
|
|
December
31,
|
December
31,
|
|
2019
|
2018
|
|
|
|
Liabilities
|
|
|
|
|
|
Current
liabilities
|
|
|
Accounts payable and
accrued liabilities
|
$
|
220,188
|
$
|
186,407
|
Share-based
compensation
|
25,681
|
4,862
|
Dividends
payable
|
9,500
|
9,183
|
Income taxes
payable
|
1,183
|
12,167
|
Deferred
revenue
|
222,998
|
214,016
|
Lease
obligations
|
106,352
|
3,058
|
Fair value of interest
rate swap agreements
|
1,874
|
1,184
|
Liabilities related to
assets held for sale
|
2,808
|
—
|
|
590,584
|
430,877
|
|
|
|
Non-current
liabilities
|
|
|
Share-based
compensation
|
—
|
8,210
|
Long-term
debt
|
625,000
|
580,000
|
Fair value of interest
rate swap agreements
|
10,837
|
7,674
|
Lease
obligations
|
1,261,243
|
10,789
|
Post-employment
benefit obligations
|
10,678
|
9,250
|
Other
liabilities
|
9,813
|
119,110
|
Deferred income
taxes
|
1,263
|
11,528
|
|
1,918,834
|
746,561
|
Total
liabilities
|
2,509,418
|
1,177,438
|
|
|
|
Equity
|
|
|
|
|
|
Share
capital
|
852,379
|
852,379
|
Deficit
|
(264,310)
|
(179,721)
|
Hedging reserves and
other
|
(131)
|
(3,678)
|
Contributed
surplus
|
4,052
|
7,815
|
Cumulative translation
adjustment
|
(887)
|
2,301
|
Total equity
attributable to owners of Cineplex
|
591,103
|
679,096
|
Non-controlling
interests
|
(109)
|
(85)
|
Total
equity
|
590,994
|
679,011
|
|
$
|
3,100,412
|
$
|
1,856,449
|
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,
|
|
2019
|
2018
|
|
2019
|
2018
|
|
|
Restated
|
|
|
Restated
|
Revenues
|
|
|
|
|
|
Box office
|
$
|
181,789
|
$
|
182,352
|
|
$
|
705,521
|
$
|
724,244
|
Food
service
|
125,159
|
120,726
|
|
483,330
|
475,501
|
Media
|
69,545
|
57,907
|
|
196,755
|
162,820
|
Amusement
|
53,471
|
53,473
|
|
228,231
|
205,793
|
Other
|
13,256
|
13,385
|
|
51,309
|
44,080
|
|
443,220
|
427,843
|
|
1,665,146
|
1,612,438
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
Film cost
|
93,925
|
91,562
|
|
369,386
|
379,325
|
Cost of food
service
|
27,701
|
26,138
|
|
106,823
|
100,191
|
Depreciation -
right-of-use assets
|
36,471
|
—
|
|
145,946
|
—
|
Depreciation and
amortization - other assets
|
33,135
|
33,680
|
|
128,883
|
127,423
|
Loss on disposal of
assets
|
868
|
1,064
|
|
1,764
|
2,681
|
Other
costs
|
214,922
|
226,511
|
|
782,693
|
870,358
|
Share of income of
joint ventures and associates
|
(1,597)
|
(898)
|
|
(4,169)
|
(3,748)
|
Interest expense -
lease obligations
|
11,879
|
110
|
|
48,659
|
535
|
Interest expense -
other
|
18,610
|
10,619
|
|
36,063
|
30,155
|
Interest
income
|
(44)
|
(69)
|
|
(252)
|
(274)
|
Foreign
exchange
|
496
|
(1,543)
|
|
1,065
|
(1,981)
|
|
436,366
|
387,174
|
|
1,616,861
|
1,504,665
|
|
|
|
|
|
|
Income from
continuing operations before income taxes
|
6,854
|
40,669
|
|
48,285
|
107,773
|
Provision for
income taxes
|
|
|
|
|
|
Current
|
5,414
|
9,886
|
|
21,759
|
28,894
|
Deferred
|
(3,228)
|
1,521
|
|
(9,990)
|
(6,580)
|
|
2,186
|
11,407
|
|
11,769
|
22,314
|
Net income from
continuing operations
|
$
|
4,668
|
$
|
29,262
|
|
$
|
36,516
|
$
|
85,459
|
Net loss from
discontinued operations, net of taxes
|
(1,196)
|
(2,108)
|
|
(7,625)
|
(8,503)
|
Net
income
|
$
|
3,472
|
$
|
27,154
|
|
$
|
28,891
|
$
|
76,956
|
|
|
|
|
|
|
Net income from
continuing operations attributable to:
|
|
|
|
|
|
Owners of
Cineplex
|
$
|
4,672
|
$
|
29,287
|
|
$
|
36,540
|
$
|
85,556
|
Non-controlling
interests
|
(4)
|
(25)
|
|
(24)
|
(97)
|
Net income from
continuing operations
|
$
|
4,668
|
$
|
29,262
|
|
$
|
36,516
|
$
|
85,459
|
|
|
|
|
|
|
Net income
attributable to:
|
|
|
|
|
|
Owners of
Cineplex
|
$
|
3,476
|
$
|
27,179
|
|
$
|
28,915
|
$
|
77,053
|
Non-controlling
interests
|
(4)
|
(25)
|
|
(24)
|
(97)
|
Net
income
|
$
|
3,472
|
$
|
27,154
|
|
$
|
28,891
|
$
|
76,956
|
|
|
|
|
|
|
Net income per
share attributable to owners of
Cineplex - basic and diluted:
|
|
|
|
|
|
Continuing
operations
|
$
|
0.08
|
$
|
0.46
|
|
$
|
0.58
|
$
|
1.35
|
Discontinued
operations
|
(0.02)
|
(0.03)
|
|
(0.12)
|
(0.13)
|
Total
operations
|
$
|
0.06
|
$
|
0.43
|
|
$
|
0.46
|
$
|
1.22
|
Cineplex Inc.
Consolidated Statements of
Comprehensive Income
(expressed in thousands of Canadian
dollars)
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2019
|
2018
|
|
2019
|
2018
|
|
|
Restated
|
|
|
Restated
|
Net income from
continuing operations
|
$
|
4,668
|
$
|
29,262
|
|
$
|
36,516
|
$
|
85,459
|
|
|
|
|
|
|
Other
comprehensive income from continuing
operations
|
|
|
|
|
|
Items that will be
reclassified subsequently to net income:
|
|
|
|
|
|
Income (loss) on
hedging instruments
|
7,295
|
(9,593)
|
|
(4,853)
|
(7,008)
|
Associated deferred
income taxes (expense) recovery
|
(1,943)
|
2,648
|
|
1,306
|
1,998
|
Foreign currency
translation adjustment
|
(1,189)
|
3,180
|
|
(3,398)
|
5,422
|
|
|
|
|
|
|
Items that will
not be reclassified to net income:
|
|
|
|
|
|
Actuarial gains of
post-employment benefit obligations
|
1,054
|
296
|
|
1,054
|
296
|
Associated deferred
income taxes expense
|
(282)
|
(79)
|
|
(282)
|
(79)
|
Other
comprehensive income (loss)
|
4,935
|
(3,548)
|
|
(6,173)
|
629
|
Comprehensive
income from continuing operations
|
9,603
|
25,714
|
|
30,343
|
86,088
|
Net loss from
discontinued operations, net of taxes
|
(1,196)
|
(2,108)
|
|
(7,625)
|
(8,503)
|
Foreign currency
translation adjustment from discontinued
operations
|
116
|
(212)
|
|
210
|
(304)
|
Comprehensive
income
|
$
|
8,523
|
$
|
23,394
|
|
$
|
22,928
|
$
|
77,281
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income from continuing operations
attributable to:
|
|
|
|
|
|
Owners of
Cineplex
|
$
|
9,607
|
$
|
25,739
|
|
$
|
30,367
|
$
|
86,185
|
Non-controlling
interests
|
(4)
|
(25)
|
|
(24)
|
(97)
|
Comprehensive
income
|
$
|
9,603
|
$
|
25,714
|
|
$
|
30,343
|
$
|
86,088
|
|
|
|
|
|
|
Comprehensive
income attributable to:
|
|
|
|
|
|
Owners of
Cineplex
|
$
|
8,527
|
$
|
23,419
|
|
$
|
22,952
|
$
|
77,378
|
Non-controlling
interests
|
(4)
|
(25)
|
|
(24)
|
(97)
|
Comprehensive
income
|
$
|
8,523
|
$
|
23,394
|
|
$
|
22,928
|
$
|
77,281
|
Cineplex Inc.
Consolidated Statements of Changes in
Equity
(expressed in thousands of Canadian
dollars)
For the years ended December 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 income
|
—
|
—
|
—
|
—
|
28,915
|
(24)
|
28,891
|
Other comprehensive
loss
|
—
|
—
|
3,547
|
(3,188)
|
(772)
|
—
|
(413)
|
Total
comprehensive income
|
—
|
—
|
3,547
|
(3,188)
|
28,143
|
(24)
|
28,478
|
Dividends
declared
|
—
|
—
|
—
|
—
|
(112,732)
|
—
|
(112,732)
|
Share option
expense
|
—
|
1,607
|
—
|
—
|
—
|
—
|
1,607
|
Conversion to
cash-settled option plan
|
—
|
(5,370)
|
—
|
—
|
—
|
—
|
(5,370)
|
|
|
|
|
|
|
|
|
December 31,
2019
|
$
|
852,379
|
$
|
4,052
|
$
|
(131)
|
$
|
(887)
|
$
|
(264,310)
|
$
|
(109)
|
$
|
590,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
Cineplex Inc.
Consolidated Statements of Cash
Flows
(expressed in thousands of Canadian
dollars)
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
|
2019
|
2018
|
|
2019
|
2018
|
|
|
|
Restated
|
|
|
Restated
|
Cash provided by
(used in)
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
|
Net income from
continuing operations
|
|
$
|
4,668
|
$
|
29,262
|
|
$
|
36,516
|
$
|
85,459
|
Adjustments to
reconcile net income to net cash provided by
operating activities
|
|
|
|
|
|
|
Depreciation and
amortization of property, equipment and
leaseholds, and intangible assets
|
|
33,135
|
33,680
|
|
128,883
|
127,423
|
Depreciation of
right-of-use assets
|
|
36,471
|
—
|
|
145,946
|
—
|
Amortization of
tenant inducements, rent averaging
liabilities and fair value lease contract liabilities
|
|
—
|
(2,323)
|
|
—
|
(11,106)
|
Unrealized foreign
exchange
|
|
309
|
(1,112)
|
|
698
|
(1,231)
|
Interest rate swap
agreements - non-cash interest
|
|
11,891
|
1,073
|
|
10,472
|
1,466
|
Accretion of
convertible debentures
|
|
—
|
605
|
|
—
|
2,420
|
Other non-cash
interest
|
|
408
|
893
|
|
1,745
|
1,194
|
Financing fees
included in interest expenses
|
|
—
|
1,718
|
|
—
|
1,718
|
Loss on disposal of
assets
|
|
868
|
1,064
|
|
1,764
|
2,681
|
Deferred income
taxes
|
|
(3,228)
|
1,521
|
|
(9,990)
|
(6,580)
|
Non-cash share-based
compensation
|
|
407
|
395
|
|
1,608
|
1,718
|
Net change in
interests in joint ventures and associates
|
|
(1,466)
|
620
|
|
(4,704)
|
(3,139)
|
Changes in operating
assets and liabilities
|
|
40,670
|
15,532
|
|
8,727
|
(3,659)
|
Net cash provided by
operating activities
|
|
124,133
|
82,928
|
|
321,665
|
198,364
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
Proceeds from
disposal of assets, including asset-related
insurance recoveries
|
|
—
|
100
|
|
—
|
1,930
|
Purchases of
property, equipment and leaseholds
|
|
(51,448)
|
(24,533)
|
|
(146,367)
|
(110,079)
|
Acquisition of
businesses, net of cash acquired
|
|
—
|
—
|
|
—
|
(4,685)
|
Intangible assets
additions
|
|
(2,709)
|
(1,826)
|
|
(7,865)
|
(4,908)
|
Tenant
inducements
|
|
4,832
|
3,113
|
|
13,985
|
14,842
|
Net cash received
from CDCP
|
|
2,882
|
684
|
|
15,394
|
4,266
|
Net cash used in
investing activities
|
|
(46,443)
|
(22,462)
|
|
(124,853)
|
(98,634)
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
Dividends
paid
|
|
(28,498)
|
(27,550)
|
|
(112,415)
|
(108,614)
|
Borrowings under
credit facilities, net
|
|
(24,000)
|
71,000
|
|
45,000
|
111,000
|
Options exercised for
cash
|
|
—
|
—
|
|
—
|
68
|
Repayments of lease
obligations - principal
|
|
(32,352)
|
(878)
|
|
(128,252)
|
(3,420)
|
Financing
fees
|
|
—
|
(1,718)
|
|
(243)
|
(1,718)
|
Repayment of
convertible debentures at maturity
|
|
—
|
(107,500)
|
|
—
|
(107,500)
|
Net cash used in
financing activities
|
|
(84,850)
|
(66,646)
|
|
(195,910)
|
(110,184)
|
Effect of exchange
rate differences on cash
|
|
345
|
137
|
|
483
|
600
|
(Decrease) increase
in cash and cash equivalents from
continuing operations
|
|
(6,815)
|
(6,043)
|
|
1,385
|
(9,854)
|
Cash flows provided
by (used in) discontinued operations
|
|
2,821
|
(1,277)
|
|
(547)
|
(5,501)
|
Cash and cash
equivalents - Beginning of period
|
|
30,074
|
32,562
|
|
25,242
|
40,597
|
Cash and cash
equivalents - End of period
|
|
$
|
26,080
|
$
|
25,242
|
|
$
|
26,080
|
$
|
25,242
|
|
|
|
|
|
|
|
Supplemental
information
|
|
|
|
|
|
|
Cash paid for
interest - lease obligation
|
|
$
|
11,443
|
$
|
110
|
|
$
|
47,018
|
$
|
535
|
Cash paid for
interest - other
|
|
$
|
6,634
|
$
|
7,923
|
|
$
|
25,302
|
$
|
26,306
|
Cash paid for income
taxes, net
|
|
$
|
7,315
|
$
|
6,781
|
|
$
|
36,402
|
$
|
29,048
|
Cineplex Inc.
Consolidated Supplemental
Information
(expressed in thousands of Canadian dollars)
Reconciliation to Adjusted
EBITDAaL
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2019
|
2018
|
|
2019
|
2018
|
|
|
Restated
|
|
|
Restated
|
Net income from
continuing operations
|
$
|
4,668
|
$
|
29,262
|
|
$
|
36,516
|
$
|
85,459
|
|
|
|
|
|
|
Depreciation and
amortization - other
|
33,135
|
33,680
|
|
128,883
|
127,423
|
Depreciation -
right-of-use assets
|
36,471
|
—
|
|
145,946
|
—
|
Interest expense -
lease obligations
|
11,879
|
110
|
|
48,659
|
535
|
Interest expense -
other
|
18,610
|
10,619
|
|
36,063
|
30,155
|
Interest
income
|
(44)
|
(69)
|
|
(252)
|
(274)
|
Current income tax
expense
|
5,414
|
9,886
|
|
21,759
|
28,894
|
Deferred income tax
(recovery) expense
|
(3,228)
|
1,521
|
|
(9,990)
|
(6,580)
|
|
|
|
|
|
|
EBITDA from
continuing operations
|
$
|
106,905
|
$
|
85,009
|
|
$
|
407,584
|
$
|
265,612
|
|
|
|
|
|
|
Loss on disposal of
assets
|
868
|
1,064
|
|
1,764
|
2,681
|
CDCP equity income
(i)
|
(1,803)
|
(1,311)
|
|
(4,827)
|
(4,186)
|
Foreign exchange loss
(gain)
|
496
|
(1,543)
|
|
1,065
|
(1,981)
|
Non-controlling
interest
|
4
|
25
|
|
24
|
78
|
Depreciation and
amortization - joint ventures and associates (ii)
|
23
|
26
|
|
99
|
33
|
Taxes and interest of
joint ventures and associates (ii)
|
36
|
81
|
|
77
|
120
|
|
|
|
|
|
|
Adjusted EBITDA
from continuing operations
|
$
|
106,529
|
$
|
83,351
|
|
$
|
405,786
|
$
|
262,357
|
|
|
|
|
|
|
Cash rent related to
lease obligation (iii)
|
(43,849)
|
—
|
|
(175,240)
|
—
|
Cash rent paid not
pertaining to current period
|
(353)
|
—
|
|
—
|
—
|
Cash rent previously
recognized as a finance lease (iv)
|
—
|
(989)
|
|
—
|
(3,956)
|
Non-cash rent (v)
(vi)
|
—
|
(2,323)
|
|
—
|
(11,106)
|
|
|
|
|
|
|
Adjusted EBITDAaL
(vi) (vii)
|
$
|
62,327
|
$
|
80,039
|
|
$
|
230,546
|
$
|
247,295
|
(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 Reconciliation section of the MD&A for
further
details.
|
(v)
|
Non-cash rent
included in the 2018 balances in the previous reporting period. See
Reconciliation section of the MD&A for further
details.
|
(vi)
|
See Non-GAAP measures
section of this news release.
|
(vii)
|
Prior period figures
have been revised to conform to current period presentation. See
Reconciliation section of the MD&A for further
details.
|
Cineplex Inc.
Consolidated Supplemental
Information
(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,
|
|
2019
|
|
2018
|
|
2019
|
2018
|
|
|
|
Restated
|
|
|
Restated
|
|
|
|
|
|
|
|
Cash provided by
operating activities (i)
|
$
|
124,133
|
$
|
82,928
|
|
$
|
321,665
|
$
|
198,364
|
Less: Total capital
expenditures net of proceeds on sale of assets
|
(51,448)
|
|
(24,433)
|
|
(146,367)
|
(108,149)
|
|
|
|
|
|
|
|
Standardized free
cash flow
|
72,685
|
|
58,495
|
|
175,298
|
90,215
|
|
|
|
|
|
|
|
Add/(Less):
|
|
|
|
|
|
|
Changes in operating
assets and liabilities (ii)
|
(40,670)
|
|
(15,531)
|
|
(8,727)
|
3,660
|
Changes in operating
assets and liabilities of joint ventures and
associates (ii)
|
(131)
|
|
(1,518)
|
|
535
|
(609)
|
Principal component
of lease obligations
|
(32,352)
|
|
(878)
|
|
(128,252)
|
(3,420)
|
Principal portion of
cash rent paid not pertaining to current period
|
(346)
|
|
—
|
|
—
|
—
|
Growth capital
expenditures and other (iii)
|
37,202
|
|
19,871
|
|
114,665
|
88,941
|
Share of income of
joint ventures and associates, net of non-cash
depreciation
|
(147)
|
|
(306)
|
|
(482)
|
(285)
|
Non-controlling
interest
|
4
|
|
25
|
|
24
|
78
|
Net cash received
from CDCP (iv)
|
2,882
|
|
684
|
|
15,394
|
4,266
|
Adjusted free cash
flow
|
$
|
39,127
|
$
|
60,842
|
|
$
|
168,455
|
$
|
182,846
|
Average number of
Shares outstanding
|
63,333,238
|
|
63,333,137
|
|
63,333,238
|
63,332,159
|
Adjusted free cash
flow per Share
|
$
|
0.618
|
$
|
0.961
|
|
$
|
2.660
|
$
|
2.887
|
Dividends
declared
|
$
|
0.450
|
$
|
0.435
|
|
$
|
1.780
|
$
|
1.720
|
(i)
|
Prior period figures
have been revised to conform to current period presentation. See
Reconciliation 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